Fullflow Systems Ltd v Armpower Pty Ltd

[1997] FCA 458

NOT FOR GENERAL DISTRIBUTION
NO QUESTION OF GENERAL PRINCIPLE

IN THE FEDERAL COURT OF AUSTRALIA )
  )

NEW SOUTH WALES DISTRICT REGISTRY )        No NG 321 of 1997
  )

GENERAL DIVISION                 )

BETWEEN:     FULLFLOW SYSTEMS LIMITED

Applicant

AND:     ARMPOWER PTY LIMITED

First Respondent

CHRISTOPHER JOHN ROBERT ARMS

Second Respondent

ANDREW DENIS POWIS

`Third Respondent

POWIS ENTERPRISES PTY LIMITED

Fourth Respondent

MANDY PTY LIMITED

Fifth Respondent

CORAM:LINDGREN J

PLACE:SYDNEY

DATE: 23 May 1997

REASONS FOR JUDGMENT

(ex tempore)

There is before the Court a motion brought by notice of motion filed on 16 May 1997 in which the applicant seeks a declaration that the first, second and third respondents are guilty of contempt of Court in that they failed to comply with an undertaking given by them to the Court. The undertaking was initially given on 30 April 1997 and was extended in its operation from time to time, most recently until 5 pm on 16 May 1997. The undertaking was that they, and each of them, whether by their servants, agents or otherwise, would refrain from making any representation that a certain drainage system being sold or supplied by "the respondent" was the applicant's system or was sold or supplied with the authority or the approval of the applicant.

The relevant statement of charge (see Federal Court Rules, O 40, r 6) is as follows:

“1.On 30 April 1997 the Court made, inter alia, the following orders:

‘1.The Court notes the following undertakings to the Court of the Respondents and each of them:

...

(b)that up to and including 4.15 pm on 9 May 1997, the Respondents and each of them, whether by their servants, agents or otherwise, will refrain from making any representations that the drainage system being sold or supplied by the Respondents is the Applicant’s System or is sold or supplied with the authority or the approval of the Applicant.’

2.The Respondents have consented to the continuation of that undertaking until 5.00 pm, 16 May 1997.

3.By facsimile dated 14 May 1997, the solicitors for the First, Second and Third Respondents forwarded to the solicitors for the Applicant what was described by those solicitors as ‘the only promotional material currently in use by Syfon Systems or Armpower’ (‘the Promotional Material’).

4.Under the heading ‘benefits’ in the Promotional Material there is a drawing which is described as follows:

‘Syphonic system - the proven and most cost effective method of reducing your rainwater drainage problems.’

5.The Promotional material is not the same as the promotional material currently distributed to the public by the First, Second and Third Respondents in connection with the business of Syfon Systems or Armpower.

6.The promotional material distributed to the public by the First, Second and Third Respondents contains, in relation to the same drawing referred to in paragraph 4, the following description:

‘Fullflow Syphonic system - the proven and most cost effective method of reducing your rainwater drainage problems.’ (our emphasis)

7.The description of the drawing in the Promotional Material has deleted from it the word ‘Fullflow’ before the word ‘Syphonic’.

8.By reason of the matters referred to in paragraphs 3-7 (inclusive), the First, Second and Third Respondents have described the Applicant’s syphonic drainage system in promoting the business of Syfon Systems.

9.By reason of the matters referred to in paragraphs 3-7 (inclusive), the First, Second and Third Respondents have represented that the drainage system being sold or supplied by the First Respondent is the Applicant’s system or is sold or supplied with the authority or approval of the Applicant.”

On the hearing yesterday the first, second and third respondents contended that the statement of charge was defective and that on that ground the applicant’s motion could not succeed. The hearing, it was agreed, should be confined to the objection to the form of the statement of charge, and it proceeded accordingly and no evidence was read.

Order 40, r 5, provides that where it is alleged that a contempt has been committed in connection with a proceeding in the Court, an application for punishment for the alleged contempt must be made by motion on notice in the proceeding.  Rule 6 of O 40 is as follows:

“A statement of charge, that is, a statement specifying the contempt of which the accused person is alleged to be guilty, shall be subscribed to, or filed with, the notice of motion or application.” (underlining supplied)

The first, second and third respondents submit that the statement of charge does not adequately “specify the contempt”. They refer to well known authorities which emphasise the strictness with which statements of charge for contempt must be formulated and construed; see, for example, Coward v Stapleton (1953) 90 CLR 573 at 579-580; Doyle v The Commonwealth (1985) 156 CLR 510 at 516; and, more recently, Incitec Limited v Quinphos Fertilisers (Aust) Pty Ltd, unreported, 8 May 1992, Foster J (“Incitec”). In Witham v Holloway (1995) 183 CLR 525, the High Court made clear that the standard of proof in a charge of even "civil contempt" is the “beyond reasonable doubt” standard applicable to criminal prosecutions. This is consistent with the requirement that a charge of contempt be strictly formulated.

It is para 6 of the statement of charge which comes closest to alleging a representation of the kind which the respondents undertook to the Court not to make.  However, para 6 does not follow the familiar pattern of alleging that on a certain day one or more of the identified respondents, either in person or through a particular person or persons identified in the charge, made a particular representation to a particular person or persons. 

The expression "[t]he promotional material distributed to the public by the First, Second and Third Respondents contains" is unclear in its meaning. In context, the word “distributed” is ambiguous. It might refer to promotional material which “has been distributed” at some unidentified time in the then past, and can therefore be described as “distributed”, as containing the offending material.  On that view, the allegation could be that it is promotional material which was distributed prior to the giving of the undertaking on 30 April 1997, that is alleged to contain the offending material.

On the other hand, the allegation may be that promotional material which, in an ongoing sense, “is being distributed” to the public, contains the offending material. But the notion, “is being distributed”, might mean “is being distributed [daily]” or “is being distributed [from time to time over the last 12 months]”, for example. According to the latter meaning, the allegation in the statement of charge might, depending on frequency of distribution, be satisfied, in whole or in part, by distribution prior to the giving of the undertaking on 30 April 1997.

A third possibility is that the allegation is that material distributed during the closed period from the giving of the undertaking on 30 April to the time when it expired, namely 5.00 pm on 16 May 1997, contains the offending representation. Even according to this construction, questions remain as to how, by whom, to whom, and when, the representation is alleged to have been made.

Reference to earlier paragraphs does not remove the difficulty in understanding para 6. Paragraph 5 refers to "the promotional material currently distributed".  It is easy to say that the word "currently" refers to 15 May, the date of the statement of charge. In a sense it certainly does.  But the composite expression "currently distributed" runs into the same problem as that thrown up by para 6 to which I have referred. The expression "currently distributed" can mean "in a state", as at 15 May, of having been distributed.

I have no doubt that, read in isolation, para 6 is defective for lack of particularity.

The question which next arises is what is the correct, or appropriate, way of disposing of the motion.  Senior counsel for the first, second and third respondents submits that the motion should be dismissed.  Senior counsel for the applicant seeks leave to amend. These submissions raise several questions. First, the question arises, "Amend what?" Presumably, the notice of motion would not be amended but the statement of charge would be.  The power of amendment given by O 13, r 2, relates to any document in a proceeding.  I think that the statement of charge is a document in a present proceeding for this purpose. Accordingly, I think that I have power to grant leave to amend the statement of charge.

Should that power be exercised?  I have come to the view, subject to one matter shortly to be mentioned, that it should not, and that the motion should be dismissed. The reason is that the defect is so fundamental that, in substance, a new statement of charge entirely will be required.  I do not regard this as a case where I can identify what are "the real questions raised by" the proceeding for contempt, and, accordingly, O 13 sub-r 2(2) does not apply. If I could identify the issue or issues raised by the statement of charge and merely matters of expression were involved, it might be appropriate to allow amendment, but this is not that case. Subject to the one matter to which I have previously referred, I would exercise my discretion as Foster J exercised his discretion in Incitec. His Honour said in that case that the statement of charge was "substantially defective" and that in such a circumstance the only proper approach for the Court to take was to treat the proceeding as being so defective as to warrant dismissal.

The one qualification to which I referred is that I think it important that the applicant should be at liberty to move again for contempt, if it so sees fit, upon a properly formulated statement of charge, alleging a contempt occurring during the period 30 April 1997 to 16 May 1997.  The question which arises is whether dismissal of the present motion would prevent the applicant from charging the first, second and third respondents again with contempt.

Of course, as I indicated earlier, there has been no trial on the merits and the dismissal of the motion is for no reason other than the formal one that it could not succeed on the present statement of charge.  There is authority, admittedly not on the Rules of this Court, to the effect that in a case such as the present, where there has been a dismissal because of a defect in the statement of charge, the party moving for a finding of contempt can apply again: see Jelson (Estates) Ltd v Harvey [1983] 1 WLR 1401; Harmsworth v Harmsworth [1987] 3 All ER 816 at 822, 824-5. Quite apart from that authority, I would have thought, on general principle, that it should remain open to the applicant, notwithstanding dismissal of the present motion on the ground mentioned, to charge the first, second and third respondents in appropriate form with a particular contempt occurring during the period to which I have referred. The fact of the matter is that the present statement of charge is so bad that I do not know whether it alleges a making of the representation during that period.

Of course, all that I have said is not to encourage or to discourage the filing of a fresh notice of motion, but it is to make clear the view that I hold and the basis on which I think it proper to dismiss the present motion. Accordingly, the orders of the Court are that:

1. the motion brought by notice of motion filed by the applicant on 16 May 1997, in so far as it includes paras 2 and 3, be dismissed.

1. the applicant pay the costs of the first, second and third respondents of the hearing of the motion, in so far as is it comprises those two paragraphs.

I certify that this and the preceding 9 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.

Associate:

Dated:30 May 1997

Heard:       22 May 1997

Place:       Sydney

Decision:     23 May 1997

Appearances:  Mr B W Walker SC instructed by Clayton Utz appeared for the applicant.

Mr T K Tobin QC instructed by Baker & McKenzie appeared for the respondents.