Ellendale Pty Ltd v Graham Matthews Pty Ltd

Re: ELLENDALE PTY LTD
And: GRAHAM MATTHEWS PTY LTD, GRAHAM HAROLD MATTHEWS and GRAHAM MATTHEWS
NOMINEES PTY LTD
No. G74 of 1985
Contempt of Court

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Forster J.

CATCHWORDS

Contempt of Court - action pursuant to s.52 Trade Practices Act resolved upon respondents giving certain undertakings to applicant and to court - action subsequently discontinued - action for contempt alleging breaches of undertaking - standard of proof required - whether breaches of undertaking made out - effect of discontinuance of original action upon jurisdiction of court - whether company not a party to original undertaking properly joined as respondent in contempt proceeding - whether company aided and abetted principal contemnor - factors relevant to assessment of penalty.

Trade Practices Act s.52

Flamingo Park Pty Ltd v. Dolly Dolly Creations Pty Ltd (1985) 59 A.L.R. 247

Teheran Europe Co. Ltd. v. S.T. Belton (Tractors) Ltd (No. 2) (1971) 2 Q.B. 491

Apple Computer Inc. & Ors. v. Popiolek (1984) V.R. 156

Australian Consolidated Press Limited v. Morgan (1965) 112 C.L.R. 483

Seaward v. Patterson (1897) 1 Ch. 545

HEARING

ADELAIDE

#DATE 22:4:1986

ORDER

The respondents pay to the Registrar of the Federal Court of Australia within 28 days a fine of $7,500.

The respondents pay the applicant's costs to be taxed.

Note:

Settlement and entry of orders is dealt with in Order 36 of

the Federal Court Rules.

JUDGE1

In 1983 the applicant took proceedings in this court against the first two respondents pursuant to s.52 of the Trade Practices Act. After these proceedings had continued for a short time they were resolved by a settlement worked out between the parties. Pursuant to this settlement the respondents on 17 February 1984 gave certain undertakings to the applicant and to the court which it will be necessary to recite in full in due course. The parties also entered into an agreement in writing which recited the undertakings and provided for the payment of $4,000 by the respondents to the applicant. The agreement provided that the court should be asked to adjourn the action sine die with liberty to the applicant to call the action on again in the event of any breach of the undertakings by the respondents. It also provided that after the expiry of twelve months from 17 February 1984 if there had been no breach of the agreement by the respondents or either of them during that period the applicant should discontinue the action against the respondents. These proceedings were duly discontinued on 26 March 1985. After the discontinuance the applicant sought in the discontinued proceedings to have the respondents dealt with for contempt of court because of certain alleged breaches of the undertakings given. This attempt failed principally because the proceedings in which it was sought to prosecute the contempt charge had been discontinued. The applicants then brought the present separate proceedings seeking orders that the respondents be dealt with for contempt. The third respondent, incorporated on 1 April 1984, is charged as an aider and abetter of the first two respondents.

In order to put the matter in context certain undisputed facts must be recited. For some time prior to 1983 a company called Glenray Auto Pty Ltd (Glenray) carried on a business known and registered as Kilkenny Castings which manufactured and distributed spare parts for motor vehicles known variously as thermostat housings and water outlets. The terms appear to be interchangeable. The precise function of the part when fitted to the engine of a motor vehicle need not be described but it is fitted to the engine block and through it passes water from the engine block to the radiator and return. The water outlets fitted to the engines of different makes and models of motor vehicles are themselves different. It is necessary that each water outlet when fitted to the engine block has a gasket fitted between it and the block. These gaskets are tailored to fit the appropriate water outlet. Kilkenny Castings supplied gaskets as well as water outlets. For ease of reference for itself, for wholesalers and retailers of spare parts, and for customers who purchased them Kilkenny Castings developed a numbering system for the water outlets and gaskets by reference to a list of which it was possible to find the appropriate water outlet and gasket for a particular make and model of motor car. For instance a Toyota "Corona 18R motor RT104" took a water outlet "WO33" and a gasket "GK33" to fit that water outlet. According to this system blocks of numbers were set aside for various makes of car, for instance with respect to cars made by General Motors Holden the distinguishing letters and numbers ranged from WO6 to WO10. New models added to the list bore the letters and numbers "WO7" as it might be followed by a further letter, for instance "B". Kilkenny Castings claimed a copyright in this system of nomenclature. The water outlets were packed in plastic bags containing a "header" which is a card with letters and figures on it. In the case of the applicant's water outlets the header cards bore numbers from its catalogue as it might be "WO33". Gasket packs were also in plastic bags containing twenty gaskets and with a header appropriately marked.
By agreement dated 15 July 1983 Glenray sold to the applicant (Ellendale) the business known as Kilkenny Castings and by a further agreement dated 5 August 1983 Glenray and one Daly, one of its directors, who is recited to be the author of the numbering system to which I have referred and of which Glenray claimed the copyright, assigned to Ellendale their rights in the copyright in the catalogues and lists of Kilkenny Castings and those in the copyright if it existed in the numbering system. Not long afterwards Ellendale discovered that Graham Matthews Pty Ltd which also dealt in water outlets and gaskets was using a precisely similar system to refer to particular water outlets and gaskets in its catalogues. Ellendale took proceedings under s.52 of the Trade Practices Act against Graham Matthews Pty Ltd and Graham Harold Matthews its governing director. As I have said the hearing of this application proceeded for a short time before being settled on the basis of undertakings given by the respondents to the applicant and to the court in the following terms -

"I propose to read certain undertakings that are being given by the respondent to the court and to the applicant. To make a matter of completeness, it is necessary for me to go through a short preamble beforehand.

The respondents acknowledge the following:

(a) That Murray Daly referred to in evidence of this action is the original author of a numbering system for water outlet parts and thermostat housings, hereinafter referred to as the WO numbering system, and is the original author of the applicant's catalogues referred to in these proceedings and produced on behalf of the firm, Kilkenny Castings;

(b) That the applicant, Ellendale Pty Limited is and has been, since approximately 12 July 1983, the owner of the catalogues produced by the said Murray Daly for or on behalf of the firm Kilkenny Castings, whether before or since that date, and referred to in these proceedings;

(c) The applicant has alleged the respondents have infringed copyright in the said WO numbering system by the use of catalogues which used a similar numbering system and the sale of water outlets and thermostat housings with similar identifying housings to those used by the applicant in its numbering system, either on the parts themselves or on headers to the bags in which the parts are packed;

(d) That the respondents have disputed that the applicant owns any copyright in the said WO numbering system as alleged and deny infringing any alleged copyright.

In settlement of the within action, the respondents undertake that they will not use the applicant's said WO numbering system for water outlets and thermostat housing parts, including gaskets, for the same as illustrated in the existing catalogues or any of them referred to in these proceedings, or a substantially similar system, and further will not use the WO prefix in respect of water outlet parts or thermostat housings or gaskets for the same, nor the individual numbers used, whether with or without the prefix WO by the applicant in its numbering system, to identify such parts unless with the consent of the applicant or its successors and assigns. The respondents undertake to the applicant and to the court.

The respondents further undertake that they will not use such numbering system on such parts or on any material in which such parts are packed unless with the consent of the applicant or its successors and assigns.

The respondents also undertake not to use the applicant's WO numbering system or any substantially similar system on any packaging or catalogues promoting the sale of water outlets or on the water outlets or thermostat housings or gaskets for the same in such a way as to identify that numbering system as being replaced by another new number or numbering system.

The respondents undertake to forthwith destroy all existing catalogues in their possession or power containing the applicant's WO numbering system or substantially similar to the applicant's WO numbering system or which are the subject of these complaints in these proceedings. Such destruction shall take place in the presence of the solicitor for the respondents, Mr S. White, who will confirm to the applicant's solicitor that such destruction has taken place in his presence.

The respondents undertake they will delete the WO numbering system complained of by the applicant or any identification taken from such numbering system from all of its stock in its possession and from any header or package in which such stock is or may be placed, on or before 24 February 1984.

The undertaking given by the respondents herein is a joint and several undertaking for themselves and for the servants and agents, that they will not cause, permit or suffer any servant or agent of the respondent's company or the respondent Matthews or any subsidiary or affiliated company to infringe these undertakings.

The parties agree that the terms of this agreement shall be recorded on the court transcript and that the undertakings of the respondent referred to herein are given to the court as well as to the applicant and enforceable by the applicant as well as any other remedy it may have through proceedings in contempt of court.

There be no order as to costs."

Pursuant to the agreement entered into at the time these undertakings were given the applicant discontinued the proceedings on 26 March 1985.
The applicant alleges that the respondents have been guilty of contempt of court in committing breaches of the undertakings in various ways. Particulars of the allegations are as follows -

"5. The said Respondent Graham Matthews Pty. Ltd., and/or the Respondent Graham Matthews Nominees Pty. Ltd. with knowledge of the said undertakings, has committed, and in the case of Graham Matthews Nominees Pty. Ltd. has aided and abetted the said Respondent Graham Harold Matthews and/or the said Respondent Graham Matthews Pty. Ltd. in the following breaches of the said undertakings given to this court:-

(I) without the consent of the Applicant used the Applicant's 'WO' numbering system for water outlets by publishing and distributing catalogues thermostat housing parts and gaskets for the same in the years 1984 and 1985 after the 17th day of February 1984, and using the number '33' to identify a thermostat housing for a Toyota Corona motor vehicle. (The said number is now and has at all material times been the same number as used by the Applicant in its catalogues and on its thermostat housings in its 'WO' system to identify its thermostat housings for that make of vehicle);

(II) without the consent of the Applicant used by embossing upon thermostat housings the number '33' which thermostat housings were contained in plastic packs with a header having the number '33' on them for use in a Toyota Corona motor vehicle (in approximately August 1985, but in any event subsequent to the 17th day of February 1984), the said thermostat housing and plastic pack having been distributed to Robaud Agencies of 16 Tarni Avenue, Fairview Park;

(III) without the consent of the Applicant used the said 'WO' numbering system by distributing to Motor Traders (S.A.) Ltd. shortly prior to September 1985, but in any event after the 17th day of February 1984, a water outlet stated to suit a Toyota Corona motor vehicle having the number '33' embossed on it and appearing on the header to the plastic pack in which it was contained;

(IV) without the consent of the Applicant used the Applicant's said 'WO' numbering system by publishing in approximately May 1985 catalogues for thermostat housings identifying in them -

(i) a thermostat housing for a Subaru 4 cylinder 1400,1600 1972-79 with the number '55',

(ii) a thermostat housing for a Subaru 4 cylinder 1600,1800 Leone 1980-84 with the number '56'

(being the same numbers as are now and have at all material times been used by the Applicant in its catalogues and on its thermostat housings to identify the thermostat housings by the Applicant to respectively identify those vehicles in its 'WO' numbering system);

(V) without the consent of the Applicant used the Applicant's said 'WO' numbering system by distributing to the said Robaud Agencies in August or September 1985, but in any event after the 17th day of February 1984, a thermostat housing with the number '55' endorsed on it in a plastic pack having that identifying number on it denoting that it is for use with a Subaru motor vehicle as designated in paragraph

(IV)(i) above;

(VI) without the consent of the Applicant used the Applicant's said 'WO' numbering system by distributing to the said Robaud Agencies in August or September 1985, but in any event after the 17th day of February 1984, a thermostat housing with the number '56' endorsed on it in a plastic pack having the same number endorsed on it denoting that it is for use with a Subaru motor vehicle as designated in paragraph

(IV)(ii) above;

(VII) without the consent of the Applicant used the Applicant's said 'WO' numbering system by distributing to the said Robaud Agencies in or about August 1985, but in any event after the 17th day of February 1984 plastic packs containing gaskets for use with thermostat housings with the Respondent's own part numbers on them but with the following markings on them -

(i) 'Thermostat Housing Gasket Pack Suitable for WO2, WO2A Thermostat Housings',

(ii) 'Thermostat Housing Gasket Pack Suitable for WO8, WO8S Thermostat Housings',

(iii) 'Thermostat Housing Gasket Pack Suitable for WO6, WO7, WO7B, WO9, WO10, WO10A Thermostat Housings',

(iv) 'Thermostat Housing Gasket Pack Suitable for WO1, WO4, WO4XC Thermostat Housings',

(v) 'Thermostat Housing Gasket Pack Suitable for WO13 Thermostat Housings'.

(The said lettering and numbers are the letters and numbers which are now and have at all material times been used by the Applicant to identify gaskets supplied by it under its 'WO' numbering system for thermostat housings having the identification letters and numbers for such housing respectively appearing above);

(VIII) without the consent of the Applicant used the said 'WO' numbering system by distributing to Amor's Auto Parts shortly prior to September 1985, but in any event after the 17th day of February 1984, a thermostat housing suitable for use on the following vehicles -

Holden HX - WB Torana LX

Commodore 6 cyl. 1976-84.

with the following reference on the header to the pack in which it was contained, namely -

'Part No. THO-22 Water Outlet to suit Holden HX-WB

Torana LX

Commodore 6 cyl. 1976-1984 Replaces Part No. 99 39227 Interchange with Part No. WO 7B'.

(The said letters and numbers are now and have at all material times been used by the Applicant in its 'WO' numbering system to identify the same part, namely a thermostat housing as being suitable for use upon the abovementioned vehicles.)

(IX) without the consent of the Applicant used the said 'WO' numbering system by distributing to Amor's Auto Parts shortly prior to September 1985, but in any event after the 17th day of February 1984, a water outlet with a reference to 'Equivalent to Part No. ARH-4XC' on the header to the pack in which it was contained stated to suit with a Falcon-Fairlane XC-XE 6 cyl. 1976-84.

(The reference '4XC' is the same reference as is now and at all material times has been used by the Applicant in its 'WO' numbering system to denote thermostat housings for the same vehicles).

(X) without the consent of the Applicant used the said 'WO' numbering system in breach of the said undertaking by displaying in a photograph contained in a catalogue distributed in about August 1985 or in any event after the 17th day of February 1984 a packet of gaskets on which the following wording appeared -

'Thermostat Housing Gasket Packs Suitable for WO13 Thermostat Housings.'"

The facts, except with respect to the gasket packs referred to in para. (VII) of the statement of charge, are not much in dispute. I should say at this stage that I accept that in this case the standard of proof required before I should find any of the respondents guilty of contempt of court on the footing that they have committed or aided and abetted the commission of breaches of the undertakings of 17 February 1984 falls short of proof beyond reasonable doubt. The standard nevertheless is higher than merely on the balance of probabilities. Although the civil standard of proof should be applied it should be applied bearing in mind the seriousness of the allegations and the seriousness of the possible consequences to the contemnor. Indeed in a case like this where the consequences of an adverse finding may include the winding up of companies, the imprisonment of an individual and fines to a company or to an individual, the standard required will fall little short of proof beyond reasonable doubt (see Flamingo Park Pty Ltd v. Dolly Dolly Creations Pty Ltd (1985) 59 ALR per Wilcox J.).
It is in the interpretation of the undertaking and its application to the facts that the parties differ. After the undertakings were given the respondent Matthews took steps to comply with them. He destroyed existing catalogues and adopted a new designation for water outlets and gasket packs which consisted of the prefix THO and a number. These numbers were those of the castings for the manufacture of the water outlets assigned to them by the manufacturer of the water outlets K.B. Castings, the proprietor of which one, Bergemann, gave evidence. Matthews instructed his staff of two when packing water outlets or gaskets for distribution to see that the number embossed on the water outlet itself was filed off if it were one of the applicant's numbers and the staff were also instructed to black out on the header cards the old designation of "WO" followed by a number and substitute the designation of "THO" followed by the appropriate number according to the new designations based on Bergemann's numbers. This was done by using a black "texta" pen.
It happened that the number 33 according to the Bergemann system referred to a Toyota Corona motor car, the vehicle with respect to which outlets and gaskets according to the applicant's system, were marked "33" on the water outlet and "WO33" on the header cards. Matthews was aware of this coincidence but nevertheless continued to use the designation 33 and THO 33 for water outlets and header cards. The facts alleged in paras. (I), (II) and (III) in the statement of charge are not disputed but it is argued that this use of the number 33 on water outlets, their headers for their packs and their headers for gasket packs and catalogues did not constitute a breach of the undertaking.
When the undertaking was given on 17 February 1984 the applicant did not yet distribute water outlets or gaskets to fit Subaru motor vehicles but plans were well advanced for it to do so. Indeed the evidence satisfies me that the parts had been manufactured and catalogues were prepared but not distributed in January or early February 1984. A new catalogue containing reference to two Subaru vehicles gave the references of WO55 and WO56 to them and this catalogue was distributed in March 1984. Matthews caused to be published a catalogue giving the designation THO55, and THO56, for the parts for the same Subaru vehicles. This catalogue was first published in August 1984 and a later catalogue was published in May 1985. Both these catalogues contain references to thermostat housings for Subaru vehicles designated as THO55 and THO56. The facts alleged in paras. (IV), (V) and (VI) are not disputed but it is argued by the respondents that they constituted no breach of the undertaking.
The facts with respect to paragraph (VII) are in dispute. It is not disputed that on 27 August 1985 Pasquale Cannizzaro purchased from Ian Jones Auto Parts Pty Ltd (Ian Jones) four packets of gaskets which contained header cards bearing the words "suitable for WO (followed by a number) thermostat housings". On the same day Cannizzaro ordered three more packets of gaskets which he collected from Ian Jones Auto Parts on 30 August 1985. The header cards contained in these packs were similarly marked. It is proved that all these packets of gaskets were supplied to Ian Jones or its predecessor by Robaud Agencies Pty Ltd (Robaud) and had been supplied to Robaud by the respondents. Robaud is a small company the directors and only shareholders of which are one Coleman and his wife. Coleman gave evidence that the method which he employed for storing and displaying for sale gasket packs was to place them on hooks on a board, packs of particular gaskets all being on one hook. He sold and distributed packs from the front of the hook and when the number of packs on a particular hook was reduced to one or two he usually ordered more packs which were placed on the front of the hook. Coleman said unequivocally that after the respondents numbering system changed from WO to THO no gasket packs or water outlets were received by Robaud which did not have the WO number blacked out and a THO number substituted on the header card. He said that the gasket packs supplied to Ian Jones in response to the order of 27 August 1985 must have been old stock from the back of the respective hooks. So far as the gasket packs purchased on 27 August 1985 from Ian Jones he says these must have been old stocks held by Ian Jones predecessor Hendry, and bought by Ian Jones from him. Coleman impressed me as being a partisan witness anxious to assist the respondents if he could and I have doubts about the accuracy of his evidence but I am unable to say that I am satisfied that his evidence was inaccurate, whether untruthful or mistaken. Bearing in mind the standard of proof required to which I refer above, I am unable to be satisfied that the seven gasket packs supplied by the respondents to Robaud and by it to Ian Jones or Hendry were so supplied after the giving of the undertaking.
The facts with respect to para. (VIII) are not in dispute. On 5 September 1985 Frank Cannizzaro, a director of the applicant, purchased from Amor's Auto Parts a thermostat housing in a plastic bag, the header for which bore the words, letters and figures particularised in para. (VIII). This header which contains the letters and figures THO22 must have been produced after the undertaking was given when the THO nomenclature system was adopted by Matthews. Although the facts are not disputed it is argued that they constitute no breach of the undertaking.
The facts with respect to para. (IX) are also not in dispute. Frank Cannizzaro purchased on 5 September 1985 from Amor's Auto Parts a water outlet packed in a plastic bag with a header containing the words amongst others "equivalent to part no. ARH4XC". The applicant's designation for the appropriate part for the vehicle concerned is WO4XC. What is called in the motor trade a "genuine" part is a part produced by the manufacturer of the vehicle, in this case the Ford Motor Company. The "genuine" part would be designated by Ford "ARH" followed by a simple number. Ford never uses letters after the letters ARH. All of this is conceded by the respondents but they say that there has not been a breach of the undertaking.
The facts with respect to para. (X) are not in dispute. In about August 1985 Matthews caused to be produced a light cardboard folder for distribution to the respondents' customers. The folder was designed to be a handy container in which the customers could keep periodically issued catalogues and price lists. On the back of this folder is a coloured photograph of approximately a dozen plastic bags containing header cards but otherwise empty. There is also an unidentified spare part unwrapped, the plastic bags and the part being arranged as a display. The header card in one of the plastic bags contains the words "thermostat housing gasket pack suitable for WO13 thermostat housings" and carries the logo of Graham Matthews Pty Ltd. In the photograph this header card measures approximately 35mm by 10mm and is not prominent. Matthews conceded in evidence that it was wrong to include this header card in the photograph and says that it was sheer mischance that it was used without the WO13 being blacked out. I do not believe this. I think it more likely that wishing to include a header card for gasket packs in the photograph Matthews thought that a card with part of it blacked out and substitute letters and figure hand-printed on it would be less artistically pleasing in the photograph and simply hoped that the use of a proscribed header card would not be noticed.
I turn now to the interpretation of the undertaking in its application to each of the numbered paragraphs in the statement of charge to which I have referred. By the first paragraph of the undertaking after the recitals the then respondents undertake not to use the applicant's WO numbering system. It is argued by the respondents that the WO numbering system as a whole is referred to and that this necessarily involves the "clustering" of numbers for parts for vehicles of a certain type or from a certain manufacturer. It is argued that the simple use of a number even with the prefix WO is not a use of the applicant's system unless a whole group or cluster of numbers is used. I do not accept this argument. It seems to me that the use by the respondents of a single designation WO followed by a number, particularly if that designation refers to the same type of vehicle as it refers to in the applicant's system is a use of the applicant's system. If the undertaking went no further than not to use the applicant's WO numbering system it might be argued successfully that the use by the respondents of a number as it might be "33" without the prefix WO or with a different prefix would not constitute a use of the applicant's system. The first paragraph must be read as a whole however and it goes on to say that the respondents will not use the WO prefix ... "nor the individual numbers used". It is argued that to undertake not to use particular figures because they have been used by the applicant is impossibly wide and could not have been intended. This may be right but the phrase should be read as "individual numbers used by the applicant to identify such parts" as illustrated in the existing catalogues. In the existing catalogues the number 33 is used with the prefix WO to identify the part for a Toyota Corona car and it seems to me that the use of the number 33 by the respondents to refer to parts for the same type of vehicle as alleged in paras. (I), (II) and (III) in the statement of charge constitute breaches of the undertaking and thus contempts of court.
So far as paras. (IV), (V) and (VI) are concerned the position is not quite so clear. All three paragraphs cover the use by the respondents of the numbers "55" and "56" with respect to water outlets for two models of Subaru motor vehicles. The respondents used the numbers with the prefix THO and in the applicant's system water outlets for the same models of Subaru vehicles referred to as WO55 and WO56. It follows from what I have said earlier that this would appear to be a use by the respondents of the applicant's WO system. However it should be noted that the first paragraph of the undertaking refers to the system "as illustrated in the existing catalogues or any of them referred to in these proceedings". The respondents go on to undertake not to use "the individual numbers used whether with or without the prefix WO by the applicant in its numbering system". The catalogue of the applicant which contained WO55 and WO56 was probably in existence at the time the undertaking was given but it was not an "existing catalogue referred to in these proceedings". I cannot be satisfied that Matthews knew of the allocation by the applicant of the numbers 55 and 56 in the unpublished catalogue at the time the undertaking was given. It seems to me that the respondents undertake not to use the applicant's system nor the WO prefix nor the individual numbers as used by the applicant at the time the undertaking was given. If the undertaking had been intended to proscribe the use by the respondents in the future of any numbers which happen to be used by the applicants in the future which numbers they were not using at the time the undertaking was given then it would have been simple enough for the undertaking to have said so. I am doubtful that the new catalogue in the course of preparation at the time of the undertaking has been satisfactorily shown to be in existence at that time. Whereas the undertaking may well preclude the respondents from ever using the prefix WO I do not think that it precludes them from using new numbers taken alone which the applicant used publically for the first time after the undertaking was given. I therefore consider that the use by the respondents of the numbers 55 and 56 on water outlets did not constitute a breach of the undertaking or a contempt of court.
I have already disposed of the charge in para. (VII).
As to para. (VIII) of the charge the words used on the header card referred to seem to me to constitute a plain breach of the undertaking. To say as the card does "part no. THO22 ... interchange with part WO7B" indicates that the water outlet contained in the pack may be used instead of the applicant's water outlet designated WO7B and vice versa. This seems to be both a use of the applicant's WO numbering system simpliciter and a breach of the third paragraph of the undertaking being a use of the applicant's WO numbering system "in such a way as to identify that numbering system as being replaced by another new number or numbering system". In my view the fact proved with respect to para. (VIII) constitute a contempt of court.
As to para. (IX) of the charge at the time the undertaking was given "WO4XC" was the designation given by the applicant to water outlets for certain models of Ford Falcon and Ford Fairlane motor vehicles. The header card printed and used by the respondents for the packing of a water outlet for the same models of Ford Falcon and Ford Fairlane vehicles state that the part was "equivalent to part no. ARH4XC". "ARH4XC" taken as a whole is a designation used neither by the Ford Motor Company nor the applicant, or indeed by anyone else so far as the evidence goes. Matthews was unable to explain how the header card came to be printed and used in this form and said simply that it must have been a mistake. It seems to me however that the inclusion of "4XC" in the designation of the part to which the respondents part is said to be equivalent is a use of one of the "individual numbers used" and is thus a breach of the undertaking and a contempt of court.
As to para. (X) I am of the view that the use of one of the old header cards without "WO13" being blacked out and another designation substituted was a deliberate conscious breach of the undertaking. However the representation of the header card is small and the offending printing is small and not easy to read. No doubt there is a contempt of court involved in the production of this photograph but in my view it is not a very serious one.
Before assessing a penalty or penalties with respect to what I have found to be contempts of court two further matters must be dealt with. The first is the argument that because the action in which the undertaking was given was discontinued before the present proceedings were brought the undertaking was spent and, as it was put, the court now lacks jurisdiction to deal with the contempt. It would I think have been better put that the discontinuance of the action carried with it a discontinuance or vacation of the undertaking and that no conduct by the respondents could amount to a breach of a non existent undertaking to the court and thus a contempt. The second matter is the position of the third respondent in these proceedings, Graham Matthews Nominees Pty Ltd which was not a party to the original undertaking which was given by the first two respondents.
As to the first matter I should first observe that at the hearing at which the undertaking was given then counsel for the respondents and also incidentally the then trial judge plainly contemplated that if there should be any breach of the undertakings given to the court at some time after the action had been discontinued the applicant could take separate proceedings for contempt and if any breach occurred before the action was discontinued the action could be brought on again so that the matter of contempt could be dealt with. There is no suggestion in the terms of the undertaking nor in the written agreement between the parties which even suggests, much less provides, that the undertaking given should come to an end on the discontinuance of the proceedings. This does not of course conclude the matter but is simply an indication of what counsel and the judge thought and what the parties intended. Does the discontinuance of the action in the course of which they were given bring to an end undertakings as to the future conduct which the parties and the court plainly thought would continue in force after discontinuance? Unaided by authority I should have thought that it does not. The proceedings were on one view simply the vehicle through which the parties got before the court. The then respondents then gave the relevant undertakings which they intended should be unlimited in time. Once the proceedings came to an end by discontinuance the undertakings given to the court remained as they would have done if the proceedings came to an end by judgment being given.
I have neither been referred to nor found any case on all fours with the present but such authority as I am aware of supports the view which I have tentatively taken. In Teheran Europe Co. Ltd v. S.T. Belton (Tractors) Ltd (No. 2) (1971) 2 QB 491 it was held that an order for costs made in an interlocutory step in the proceedings survived the later striking out of the action for want of prosecution and the argument that the dismissal of the action put an end to it once and for all and for all purposes was rejected. In Apple Computer Inc. and Others v. Popiolek (1984) VR 156 it was held in an action for injunctions and damages which was settled at an interlocutory stage by the defendant consenting to perpetual injunctions as sought in the writ the injunctions survived the later discontinuance of the action.

The breach of undertakings given to the court may be punished as contempt in the same way as breaches of injunctions (Australian Consolidated Press Limited v. Morgan (1965) 112 CLR 483). If perpetual injunctions survive a discontinuance of the proceedings in which they occur I can see no reason in principle why undertakings to the court intended to be perpetual should not also survive discontinuance and I so find.
The second matter is the position of Graham Matthews Nominees Pty Ltd (the Nominee Company). This company was not a party to the original undertaking. It was incorporated in July 1983 and it was Matthews intention that the company would operate the business as a trustee of a family trust. The earlier proceedings to which I referred at the outset intervened and it was not until they were disposed of that the Nominee Company started to operate the business on 1 May 1985. Thereafter the respondent Graham Matthews Pty Ltd was inactive and the Nominee Company carried on the business under the business name Graham Matthews Auto Products. The link between the two companies is Matthews himself who is the governing director of each. Such breaches of the undertakings as were committed prior to 1 May 1985 were committed by Matthews personally and by Graham Matthews Pty Ltd. Such breaches of the undertakings as were committed after 1 May 1985 were committed by Matthews personally and by the Nominee Company. Matthews personally is the common link and as I have said is governing director of both companies. It is not possible to fix precise dates with respect to various breaches of the undertakings which have occurred. Some no doubt occurred before 1 May 1985 and some after that date. So far as those which occurred prior to that date are concerned the breaches were committed by Matthews and the second respondent. So far as those which occurred after that date are concerned they were committed by Matthews and the third respondent. The third respondent was not a party to the undertakings and after 1 May 1985 it was acting as a principal in carrying on the business of Graham Matthews Auto Products. With respect to breaches which occurred after 1 May 1985 Matthews is seen to be a principal contemnor and in my view Graham Matthews Nominees Pty Ltd is an aider and abetter of Matthews. Counsel for the respondents conceded this in argument and also conceded that the Nominee Company was properly joined as a party in these proceedings. Seaward v. Patterson (1897) 1 Ch 545 is authority for the proposition that a knowing aider and abetter may be dealt with for contempt.
I come now to deal with the question of penalty. I have found that the respondents have been guilty of contempt in a number of different ways. First, there was the use of the number 33 to designate the water outlet for Toyota Corona motor cars. This was a single instance of the copying of one number in more than forty used by the applicant at the time of the undertaking. Matthews mistakenly thought that since he got the number from Bergemann and did not copy the applicant's number the coincidence of numbers was not a breach of the undertaking. He was mistaken but I do not regard the contempt as contumacious or indeed particularly serious. Second, there was the use of the header card containing the words "interchange with part no. WO7B". There is evidence that apart from this particular header card referred to in para. (VIII) of the statement of charge Matthews had set about having a number of header cards printed containing similar words and reference to one of the applicant's WO designations. The evidence is that with respect to ten different water outlets including the one mentioned in para. (VIII) he used similar printed header cards containing the words "interchange with part no. WO" followed by the applicant's appropriate number. This started in June 1985 and continued until 12 November 1985 the day after proceedings were served upon Matthews and the companies. During this period something more than one thousand and fifty water outlets were distributed with the offending header cards. Notwithstanding Matthews' protestation to the contrary I consider the use of this header card to be a deliberate breach of the undertaking and thus a serious matter. Although only one instance is charged it is hardly an isolated instance and I take into account the background of similar admitted contraventions against which it should be viewed. I regard this as the most serious breach of the undertaking proved.
Third, there was the use of the applicant's designation 4XC in the phrase "equivalent to part no. ARH-4XC". Matthews was unable to offer any explanation for this but I must regard it as deliberate conduct which as I have said constitutes in my view a breach of the undertaking. I find it difficult to accept that it may have been due to inadvertence and I think that it must have been intended to provide a reference to the parts distributed by the applicant. I do not regard this breach as being as serious as the one I have just dealt with but it is not trivial.
Fourth, there is the use of an old unamended header card in the display which was photographed for the catalogue and price list container. This was in my view a deliberate breach of the undertaking. It was said by counsel for the respondents that this was a "de minimis" matter but I am unable to agree. It is true that the representation of the proscribed header card was small and the print very small but the breach was conscious and deliberate and it must be given some weight.
I have had some difficulty in assessing the appropriate penalty to be imposed. I have decided that I should fix one penalty encompassing all four breaches of the undertaking. I do not consider that the matter is serious enough to warrant the winding up of either of the companies or the imprisonment of Matthews. It is difficult if not impossible to assign blame for the conduct indulged in as between the two companies and Matthews and I think that justice requires that I impose a fine to be paid jointly leaving it to the respondents to decide between themselves how the fine should be paid. Taking all relevant matters into account and in particular that some of the breaches were deliberate and fairly serious and others less so and the fact that the proved breaches by the respondents encompass a relatively small part of their total operation I have decided that the appropriate penalty is a fine of $7,500 to be paid by all three respondents jointly. Although some of the charges have failed I think it proper that the respondents should pay the costs of these proceedings to be taxed and I so order.

[1986] FCA 149

22 APRIL 1986