Stewart v Gymboree P/L
[2000] QSC 313
•12 September 2000
SUPREME COURT OF QUEENSLAND
CITATION: Stewart & Anor v Gymboree P/L & Anor [2000] QSC 313 PARTIES: RUSSELL WILTON STEWART and ANNE-MAREE STEWART
(applicants)
v
GYMBOREE PTY LTD ACN 010 535 485
(first respondent)
ANDREA MARGARET GRAHAM
(second respondent)FILE NO/S: SC No 5023 of 2000 DIVISION: Trial Division DELIVERED ON: 12 September 2000 DELIVERED AT: Brisbane HEARING DATE: 11 September 2000 JUDGE: Chief Justice COUNSEL: TD Martin SC, with MJ Burns, for the applicants
SL Doyle SC, with DD Bates, for the respondentsSOLICITORS: Sparke Helmore for the applicants
Tucker & Cowen for the respondents
de JERSEY CJ: The exigencies of the case require a ruling now. What follows is brief, but I believe covers the essential points.
The applicants are franchisees of the Gymboree play program. Their territory is in the Mt Gravatt area. Gymboree Pty Ltd is the franchisor. I infer from the evidence that Mrs Andrea Graham is an active director of the company. She also, in her personal capacity, has franchise agreements with her company, covering respectively the territories of Indooroopilly, and McDowall/Everton Park. The company claims to have terminated the applicants’ agreement: the validity of that claim is being litigated.
On 2 July 1999 Byrne J restrained the company from, as relevant, “within the territory assigned to (the applicants) … promoting or advertising the Gymboree Program by local newspapers … in the Territory of the (company’s) business”. He separately restrained the company from informing any person to the effect that the applicants’ franchise agreement had been terminated, or that the applicants were not entitled to carry on the business of a Gymboree franchise (other than in response to unsolicited enquiries).
Mrs Graham subsequently caused advertisements to be included in newspapers distributed within the applicants’ Mt Gravatt area (on 6 April and 3 and 4 May 2000), promoting the Gymboree Program, albeit with reference to Indooroopilly and McDowall/Everton Park. She claims to have done that in her personal capacity, advertising her own franchise businesses. The applicants contend that she should be seen as having done so for the company of which she is an active director, thereby aiding and abetting its breach of the restraining order. In fact a franchisee is contractually obliged to refrain from advertising in another franchisee’s territory. But there is currently no injunction restraining Mrs Graham personally.
Ms Biram gave evidence that on 26 August 1999, by telephone, Mrs Graham informed her that the applicant, Mrs Stewart “did not have a franchise with Gymboree, that it had been terminated in the courts, (that) she had no right to take any advertisement out whatsoever containing the name of Gymboree”. If accepted, and if to be inferred that Mrs Graham was then speaking on behalf of the company, then that would be evidence of contravention of the second part of Byrne J’s order of 2 July 1999.
The applicants have brought an application against the company and Mrs Graham alleging the company has been guilty of contempt of court, and likewise Mrs Graham, in aiding and abetting the company’s contraventions. At the conclusion of the applicants’ case, Mr Doyle SC submitted that the respondents had no case to answer.
Mr Doyle raised four broad submissions:
Essential personal service on the respondents of the order of Byrne J was not established. Neither was it established that the respondents had knowledge of the contents of that order, prior to the alleged contraventions.
Alternatively, in what Mrs Graham did, she was not acting as a servant or agent of the company, but pursuant to her personal position as franchisee.
Further, the restraining order, in its first aspect, is uncertain, such that arguable breach should not lead to a finding of contempt of court in that regard.
The respondents are not in any event shown to have had the requisite intent.
Service
Personal service is not established. I do however infer that by some means Mrs Graham, and through her the company, were notified of the terms of the order prior to any alleged contravention. They are to be taken to have had the requisite knowledge. See rule 904(2)(b).
The inference is to be drawn from the following aggregation of circumstances.
1. At the hearing before Byrne J, the company was represented by lawyers. Both directors swore affidavits. One would expect Mrs Graham in such circumstances to have been advised of the outcome, or if not, to have enquired as to it.
2. On 9 July 1999 the applicants’ solicitors sent a sealed copy of the order to the respondents’ solicitors, drawing attention to some of its terms.
3. In her conversation with Ms Biram on 26 August 1999, Mrs Taylor showed awareness of the court proceedings (transcript page 22).
4. On 6 September 1999 the respondents’ solicitors wrote to the applicants’ solicitors about the circumstances which led to Mrs Graham’s exchange with Ms Biram on 26 August. The terms of the letter of 6 September strongly suggest consultation had previously occurred between the solicitors and Mrs Taylor about the scope of the order of Byrne J – one would infer proximately to the conversation with Ms Biram.
5. On 31 March 2000 the solicitors for the applicants asserted that a prospective advertisement arranged by Mrs Graham would contravene the court order. On 4 April 2000 the respondents’ solicitors replied, contending that for a particular reason it would not. (The advertisement was then published on 6 April.)
The conclusion should be drawn beyond reasonable doubt from this collection of circumstances, that prior to any of the alleged contraventions, Mrs Graham was aware of the contents of the order. It would be fanciful to think otherwise.
I have in mind also what was said in Madeira v Roggette Pty Ltd [1990] 2 QdR 357, 366:
“A company director who … knew that a court order had been made, knew some of its terms, appreciated its rationale, and appreciated that taking certain steps would defeat its purpose entirely, could hardly repel contempt proceedings by establishing that he had not seen the order and read all of its detailed provisions, even though he could have done so had he wished.”
On appeal, Thomas J, as he then was, said ([1992] 1 QdR 394, 403:)
“I agree with the above observation and accept that it is not necessary to prove that a person charged with contempt was aware of the full terms of the court order. It is enough that he knows the substance of the prohibition and knowingly acts contrary to it.”
Servant or agent of company
In placing the advertisements, Mrs Graham claims to have been acting personally, as franchisee in her own right. There is presently no injunction restraining her personally. What she did would appear to have been in breach of contract. But the only subsisting injunction, in relation to promotion of the program, restrains the company, “whether by itself or by its servants or agents or otherwise howsoever”. On the face of it, there is nothing to establish the contrary of what Mrs Graham claims in this regard.
The submission of Mr Martin SC for the applicants, that the company “let” Mrs Graham, as its director, grant the approval necessary under clause 6.01(b) of the franchise agreement, and thereby “otherwise howsoever” facilitated promotion of the program in contravention of the order, cannot be sustained. The submission assumes a matter not established, that the procedure set up by the franchise agreement was followed through. It also seeks to raise a particular of charge which has not been pleaded in the application.
I turn to the alleged breach of the second aspect of Byrne J’s order, restraining the company from informing any person to the effect that the applicants’ franchise agreement had been terminated or that the applicants were not entitled to carry on the business of a Gymboree franchise. The terms of Mrs Graham’s exchanges with Ms Biram, as recounted by Ms Biram, do leave reasonably open the inference that Mrs Graham was then speaking as a director of the company. What she then said could reasonably be interpreted as a representation on behalf of the company, and not just as herself speaking on her own account as franchisee. See page 22 of the transcript, notwithstanding page 25.
Certainty of order
The last inelegantly included words of paragraph 3(b)(iii) of the order, “in the Territory of the Plaintiff’s business”, are plainly to be read as if there were added, after those words, “as run by the defendants”, or “as assigned to the defendants”. I consider the prohibition to have been stated sufficiently clearly in the order as to lead, upon proof of contravention, to penal sanction in contempt proceedings of this character.
Intent
It suffices for me to say that the requisite intent of Mrs Graham in relation to the exchange with Ms Biram could properly be inferred for the purposes of this claim for relief.
Conclusion
The respondents have a case to answer on the allegations in relation to the exchange with Ms Biram on 26 August 1999, but not otherwise.
SUPREME COURT OF QUEENSLAND
CITATION: Stewart & Anor v Gymboree P/L & Anor [2000] QSC 313 PARTIES: RUSSELL WILTON STEWART and ANNE-MAREE STEWART
(applicants)
v
GYMBOREE PTY LTD ACN 010 535 485
(first respondent)
ANDREA MARGARET GRAHAM
(second respondent)FILE NO/S: SC No 5023 of 2000 DIVISION: Trial Division DELIVERED ON: 15 September 2000 DELIVERED AT: Brisbane HEARING DATE: 11-12 September 2000 JUDGE: Chief Justice ORDER: 1. Each respondent is guilty of contempt of court in that, on or about 26 August 1999, the first respondent through its agent the second respondent, and the second respondent thereby aiding the first respondent, informed Raelene Kay Biram to the effect that the applicants’ franchise agreement with the first respondent had been terminated, and that the applicants were not entitled to carry on the business of a Gymboree franchise;
thereby contravening the order of the Honourable Justice Byrne made on 2 July 1999.
2. Matter adjourned to a date to be fixed for the purpose of hearing submissions as to penalty and costs.
CATCHWORDS: PROCEDURE – CONTEMPT, ATTACHMENT AND SEQUESTRATION – CONTEMPT – WHAT CONSTITUTES – DISOBEDIENCE OF ORDERS OF COURT – INJUNCTIONS – whether respondents committed contempt of court, contravening order of Byrne J during telephone conversation – comparison of the reliability of two witnesses’ accounts of the conversation – whether comments amounted to contravention – whether unsolicited – whether comments made with necessary wilful intent – whether comments made by second respondent acting as franchisee or as director of the franchisor company
Madeira v Roggette Pty Ltd [1990] 2 QdR 357, followed
COUNSEL: TD Martin SC, with MJ Burns, for the applicants
SL Doyle SC, with DD Bates, for the respondentsSOLICITORS: Sparke Helmore for the applicants
Tucker & Cowen for the respondents
de JERSEY CJ: In view of my ruling on the submission of no case to answer, the remaining live issue is whether the applicants have established beyond reasonable doubt that, respectively, the company and Mrs Graham committed a contempt of court. The applicants’ case is that the contempt involved contravention of the order of Byrne J of 2 July 1999. The relevant parts of that order follow:
“Until the trial of this action or further Order the Plaintiff (Gymboree Pty Ltd) be restrained, and an injunction be granted restraining the Plaintiff, whether by itself or by its servants or agents, or otherwise howsoever, from …
(c) Apart from responding to unsolicited enquiries of the Plaintiff, publishing, notifying or informing any person of information to the effect that:
(i) The Franchise Agreement has been terminated; or
(ii)The Defendants are not entitled to carry on the business of a Gymboree franchise.”
“The Franchise Agreement” is defined elsewhere in the order as the agreement between the company and the applicants of 8 April, 1994.
The contempt is alleged to have arisen from Mrs Graham’s informing Ms Biram, on or about 27 August 1999, “to the effect that: (i) The Franchise Agreement had been terminated; (ii) The Applicants were not entitled to carry on the business of a Gymboree franchise”. As to the company, Mrs Graham is alleged then to have been its agent. As to her own personal role, Mrs Graham is said thereby to have aided and abetted the company’s breach.
The competing versions of the critical conversation were provided by Ms Biram, in her affidavit of 6 September 1999 and her oral evidence given (without objection) by telephone during the trial; and by Mrs Graham, who gave oral evidence in court.
I regrettably found Mrs Graham an unsatisfactory witness in a number of respects. She was on many aspects equivocal and evasive. Although generally uncertain as to the precise detail of the conversation, yet she held adamantly to a version which may have supported her position in critical respects. Where, in the course of her evidence, the significance of an arguable concession became apparent, she withdrew from it. Her demeanour left me with the feeling she was reconstructing opportunistically, rather than giving an actual recollection.
I was particularly affected by the following aspects of Mrs Graham’s evidence:
1. as to when, in relation to her conversation with Ms Biram, she spoke with her husband (p 65 l 1, p 68 ll 20-40);
2. as to the significance of her conversation with her husband (p 68 l 30, p 69 l 50);
3. as to the capacity in which she spoke to her solicitor, Mr Lutvey, about which she made a concession from which she subsequently, unimpressively resiled (p 70 ll 1-10; p 70 l 40);
4. notwithstanding a general vagueness (p 76 l 20), her assurance that she used the rather unusual words “under termination” (p 77 l 30), and her disjointed evidence as to why in any event she raised that topic (p 75), conceding she need not have raised it at all (p 77 l 1);
and by her generally unsatisfactory demeanour.
On the other hand, Ms Biram, who apparently has no particular “axe to grind” in this matter (p 80, l 10), gave credible oral evidence, clearly, and expressing an apparently reliable recollection. Her oral evidence was generally consistent with her affidavit. I have no hesitation in accepting all her evidence.
I find that prior to telephoning Ms Biram, Mrs Graham spoke with her solicitor Mr Lutvey (p 70 l l1-10)and her husband (p 69 l 1), in each case about how the company could stop what she perceived to be unauthorised use of advertising material. When she spoke to Ms Biram, she was very angry (p 22, p 79 l 15). The immediate spark was irritation over finding that Ms Biram’s magazine was contemplating publishing an advertisement for the applicants’ organisation utilising Mrs Graham’s CD. The relationship between Mrs Graham and Mrs Stewart was then generally strained. I infer that Mrs Graham was concerned to leave no doubt in Ms Biram’s mind that if she published the advertisement, she would end up in serious legal trouble.
To that end, Mrs Graham informed Ms Biram, on 26 August 1999, that Mrs Stewart had no franchise with Gymboree; that they had been to court and the franchise had been terminated; that Mrs Stewart had no right to take out any advertisement containing the name Gymboree (pp 22, 25); and that if Ms Biram’s magazine published the advertisement, it would be sued. She also called Mrs Stewart a “liar”.
Mrs Graham was comprehensively cross-examined about her competing account. For the reasons broadly expressed already, I found her evidence unconvincing. I accepted the evidence of Ms Biram where it conflicted with that of Mrs Graham.
What Mrs Graham said amounted, directly, to an assertion that the relevant franchise agreement had been terminated, and in effect, through the reference to the absence of a franchise and the absence of any right to advertise, to an assertion that the applicants were not entitled to carry on the business of a Gymboree franchise. On the evidence of Ms Biram, which I accept, Mrs Graham’s observations were unsolicited (vide the opening words of sub-para (c) of the order). As would be clear, I rejected Mrs Graham’s evidence – “she asked me why” – at p 62 l 23 (inter alia).
Did Mrs Graham speak these words with the intent necessary for her doing so to have amounted to contempt of court? Did she do so wilfully, as would be so necessary, or on the other hand, in a merely casual or accidental or unintentional way? See Madeira v Roggette Pty Ltd [1990] 2 QdR 357, 363.
I accept Mrs Graham’s evidence that prior to speaking to Ms Biram, she was aware of the terms of the order of Byrne J; in fact she was keenly alive to the constraints it imposed upon her (p 62 ll 40-55, p 75 l 42). Prior to that conversation, she took legal advice (p 61 l 50). I am satisfied that she approached Ms Biram with angry (p 2 l 15) deliberation, determined – as I have put it – to leave Ms Biram in no doubt that if she went ahead and published the advertisement, she would end up in serious legal trouble. This was not a casual, accidental or unintentional approach: Mrs Graham did have the relevant deliberative, wilful intent.
The question remains as to the capacity in which Mrs Graham was acting, when she spoke with Ms Biram. Was she speaking as franchisee in her own right, as she contends, or as a director of the franchisor company?
There was support through Mrs Graham’s evidence, especially in various parts of the evidence given in cross-examination, for the conclusion that she was then acting as director of the company, in that it would usually fall to her in that capacity to pursue such a matter (p 67 l l1-35). She takes an active role in that area (p 67 l 10).
There is the further consideration, had she been speaking as a fellow franchisee, why she would have been raising the termination of Mrs Stewart’s franchise agreement, held by the applicants from the company, and the court proceedings (in which the company was the only relevant opposing entity – p 71 l 30).
The terms of what I find Mrs Graham said to Ms Biram (p 22 ll 10-20, p 25 ll 5-38) themselves support her having been speaking as a director of the franchisor company.
Significantly also, as I find, Mrs Graham telephoned Ms Biram shortly after speaking on the same matter with the company solicitor Mr Lutvey, which she said she did in her capacity as a director of the company (p 70 l1 1-10); and after speaking, in the same capacity, to her husband (p 69 l 1).
The proper conclusion from this collection of circumstances is that Mrs Graham was, when speaking to Ms Biram, acting in her capacity as a director of the company.
I accordingly find each respondent to have been guilty of contempt of court in that, on or about 26 August 1999, the first respondent through its agent the second respondent, and the second respondent thereby aiding the first respondent, informed Raelene Kay Biram to the effect that the applicants’ franchise agreement with the first respondent had been terminated, and that the applicants were not entitled to carry on the business of a Gymboree franchise;
thereby contravening the order of the Honourable Justice Byrne made on 2 July 1999.
I adjourn the matter to a date to be fixed for the purpose of hearing submissions as to penalty and costs. Administrative listing arrangements should be made through my Associate.
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