Taito (Australia) Pty Ltd v Eastern Micro Electronics Pty Ltd

330

IN THE

FEDERAL COURT OF AUSTRALIA 1

)

VICTORIA DISTRICT REGISTRY	)	VG m. 194 OF 1984
)

I I .

GENERAL DIVISION

. .

Between:

TAITO (AUSTRALIA) PTY.

LTD. and TAITO

CORPORATION

(Applicants)

' .

(ResDondents)

Coram: Smithers J.

15 October 1984

Before the Court are two motions by the applicant seeking punishment of the second respondent (Mr. Lazar) for alleged contempts of Court in respect of conduct contravening

orders made by Sweeney J. on 4 July 1984 and by Woodward J. on

18 July 1984 and 26 July 1984. The motions are brought in

proceedings commenced by

the applicants-in applications filed

on 2 July 1984 in which they sought relief against the respondents in respect of alleged wrongful conduct on their part in and about their trading in certain amusement machines.

2 .

The

applicants‘ complaint was that

selling

and

otherwise dealing in the machines the respondents infringed

their copyright In literary works -constituting an-.integra3- ;

- --

part of the

machines.

The applicants

sought

injunctions

restraining the respondents whether by themselves, their

servants, agents

or howsoever from:

(1) selling,

renting

dealing

amusement

machines of the

kind

known

“TX-1”

bearing the insignia thereon

- Tazmi;

(ii)

infringing

the

applicants‘

the said amusement machines;

(iii)

engaging in conduct which

was misleading or

deceptive by inducing or creating

a belief

that the firstnamed respondent is the only

person importing or entitled

to import the

said amusement machines into Australia or

the only person importing or entitled to

import the said amusement machines into

Victoria;

(iv) engaging in conduct -which is misleading

.or ..-.

deceptive or

likely to mislead or deceive

any person by inducing or creating

belief

that the firstnamed respondent is entitled

to sell, let

on hire or by way

of trade

' i

- '

offer or expose for sale or hire or by way

trade xhibit

public

the

said

amusement machines;

(V)	parting with power, possession, custody or control (otherwise than to the Applicants) of the said amusement machines and other relief.

"he machines in question are computerised amusement

machines.

The predominant commercial use of those machines in

the hands of their owners was to locate them in amusement

parlours, milk bars

or other places where people congregate

that they are available

to those attending such establishments

for the playing of games. The players place coins being the

fee for playing into

a set in the machine. From time to time

the owner of the machine collects from the machines the

proceeds from the playing of the machine and they are shared

between the owner of the machine and the proprietor of the

amusement establishment.

On 4 July 1984 a motion by the applicants seeking

interlocutory relief was granted and various orders

w e made

in the presence of counsel for the applicants and the

solicitor for. the then respondents, namely, Eastern Micro

Electronics Pty. Ltd. (m) and Mr. Lazar.

A t the conclusion

of the hearing	on	that day	the learned Judge made orders
including:

"The following interlocutory injunctions

go until

. the hearing and determination

of the application

or until further order restraining the respondents

whether by themselves, their servants	or agents or
howsoever from:

selling,

hiring

out

or encumbering

amusement machines ,of the ,kind -known

.'€X-1

and bearing the insignia	Tx-1 and the
name Tazmi;

infringing the applicants copyright in

the said machines;

engaging in conduct which is misleading

or deceptive or likely to mislead or

deceive any person by inducing or

creating a belief that the firstnamed

respondent is the only person importing

or entitled to import the said amusement

machines

into

Australia

or the

only

person importing

entitled to import

the said machines into Victoria;

engaging in conduct which is misleading

or deceptive or likely to mislead or

deceive any persons by inducing or

creating

a belief that the first named

respondent is entitled to sell, let on

hire or

by way of trade, offer for sale

or hire or by way of trade exhibit in

public the said amusement machine.

parting with power, possession, custody

or control

(otherwise

than

the

Applicants)

the

said

amusement

machines or any components or parts therefor, embodying any reproduction of

any

substantial

part

of the

computer

programme

contained

within

the

main

control

panel

of the

said

amusement

machines and any documentation designed

for use with any such reproduction;

selling,

disposing

of, destroying,

altering or

concealing any such item as

is referred

sub-paragraph

(1)

above ;

parting with power, possession, custody

or control

(otherwise

than

the

Applicants) or hiding, defacing, altering

or destroying any documents

(which

expression in this Order includes records

in magnetic or

other computer readable

form) relating

the

importation,

acquisition, distribution, sale

or hire

of any such

item referred to;

4. ...

5. That the firstnamed respondent by a director do upon Affidavit to be filed and served on the solicitors of the applicants within seven days

this date disclose -

L r . L

(a) the whereabouts of

all the said amusement

I	machines and the documents referred to in paragraph 3 of this Order;

(b)

(i) the names and addresses of the person or persons from whom the firstnamed Respondent

has obtained any of the said

amusement

machines or documents

referred

paragraph 3 of this Order;

(ii) the names and addresses of the person or persons to whom the firstnamed respondent has

supplied any

of the said amusement machines

prior to the service of this Order.

6. The respondents do within 24 hours of service of a copy of this order deliver up or cause to be

delivered up into the custody

of the Applicants'

solicitors

all of

the said amusement machines

and the documents referred to in paragraph 3 of

this Order.

7. Liberty be reserved generally to any party to apply on not less than 24 hours' notice."

On 5 July 1984 a sealed copy of the order made was served on Mr. Lazar personally. The copy order contained an endorsement to the effect that if the person to whom it was directed disobeyed the order he might be committed to prison. On 18 July 1984 Woodward J. heard a motion on behalf of EME and Mr. Lazar seeking an order discharging the order of Mr.

Justice Sweeney dated 4 July 1984.

In support of that motion

Mr.

Lazar filed an affidavit sworn on 13 July 1984.

That

motion was dismissed. On the same day the applicants sought an order joining Mazz Enterprises (Australia) Pty. Ltd. (Mazz)

as a

'respondent

and seeking declarations and injunctions

against it similar to those made againnt EME and Mr. Lazar.

Woodward J. so ordered.

By motion dated -16 August . 1984-

the. ..applicants -sought

- .

committal of Mr. Lazar for alleged contempt of

the order of

Sweeney J. of 4 July 1984 and the orders of Woodward J. of 18

July 1984 and 26 July

1984 as alleged in a statement of charge

of that date. The statement of charge alleges that:-

(a)	Mr. Lazar on various dates between 12 July and 30 July

1984 sold five TX-1 machines and thereby infringed the applicants' copyright and engaged in conduct which was misleading and deceptive, and

(b)

that Mr. Lazar parted with power, possession, custody and control over three of the said machines by installing one of them at premises at 163 Sladen Street, Cranbourne on 14 July 1984, and another at 22 Glengala Road, West Sunshine on 25 July 1984 and by releasing

another machine to Ian

Sykes on 24 July 1984.

During the hearing of this motion before me the applicants sought leave to amend the statement of

charge by

alleging the following in

lieu

paragraph (a) last

mentioned:-

"(a)

On various dates between 12th July 1984 and 30th July 1984 the first named Respondent

acting

through the secondnamed Respondent

sold 5 "X-1 machines to Moreland Finance Pty. Ltd., alternatively sold the said 5 machines to the thirdnamed Respondent.

(b)

Alternatively on 14th July 1984

alternatively

23rd

July 1984. the

secondnamed

Respondent

sold

the said 5

machines to Moreland Finance -Pty. Ltd.

_. .

behalf of the rthirdnarned.~Respon~t.;-_

I-.::. -.-

aforesaid, the

secondnamed respondent sold

the said 5 machines.

(d)	By reason of the said sales the Respondents

infringed the Applicants' copyright and engaged in conduct which was misleading and deceptive and so acted in contempt of the orders recited in paragraphs 1, 2 and 3 hereof. "

After argument I granted leave to amend the statement	of
charge.

By motion dated 6 September 1984 the applicants sought the committal of Mr. Lazar for contempt

alleged

the

statement of charge of that date.	In that statement of charge
it was alleged that:-

or about 7 July 1984

the

first named respondent

through the second named respondent

sold two of the said

machines bearing serial numbers 407621 and 407520;

on or about 7 July 1984 the first named respondent

through the

second named respondent parted with power,

possession or control over

the said two machines, by

agreeing to sell them as aforesaid;

on or about

28 July 1984 the first named respondent

through

the eecond named respondent accepted further

payment for the said two machines in the sum of $20,500.00 and thereby, and to that extent, parted with power or control over the said machines.

The notice of motion of 16 August 1984 together with statement of charge of that date was served personally on Mr. Lazar. The notice of motion dated 6 September 1984 together with statement of charge of that date was served on Mr. Lazar's solicitors.

The two notices of motion in respect of

the alleged

contempt came on for hearing before me on 21 September 1984.

Mr. Barnard and Mr. Burnside appeared for the applicants and

Mr. R.

Gillard appeared for the three respondents. By order

made during the hearing of the motion dated 16 August 1984 the motions were heard together. From the evidence placed before me by the parties it is apparent that at all material times

Mr. Lazar and his wife, Ann Lazar have been the only

shareholders of EME and Mazz and have been the only director6 of those companies. At all material times EME has carried on the business of selling video amusement machines throughout the State of.Victoria. It does not manufacture such machines or import them into Victoria. Such machines are imported by Mazz and then purchased by PIE. Before 13 July 1984 Mazz had imported nine TX-1 machines from Japan.

Prior to the end of June 1984 EME had dealt with certain of the machines which it had purchased from Mazz.

particular it had sold machines numbered

302555, 407520 and

407621 to	one Colin Knight and machine numbered 406595 to	one
John Angel.

By 13 July 1984 two of the machines sold to Mr. Knight had been purchased back from him by EME.

Those two machines

were sold to one Ian Sykes by EME before 13 July 1984. The situation of EME in relation to its dealings in the machines was set forth in the affidavit of M r . Lazar sworn and filed on

13 July 1984.

He stated:-

"Eastern carries on the business of selling Video Amusement Machines throughout the State of Victoria. It does not manufacture such machines nor does it import them into this country. It does, however, purchase such machines from Mazz Enterprises (Australia) Pty. Ltd. ("Mazz") , a

company of which I

am also a Director, and it

has

purchased TX-1 Video

Amusement Machines from Mazz.

Mazz imported these machines into this country and it is those machines which form the subject matter of these proceedings.

...

The making of the interlocutory orders and their continuance has and will cause Eastern serious and irreparable harm. If Eastern is unable to complete the sales of the four !E-1 machines which

it has already agreed to sell and the ninth

machine which it has not yet sold, this will mean that it has substantial working capital tied up in stock which it is unable to realize. Eastern has borrowed some THIRTY-FIVE THOUSAND DOLLARS ($35,000) to finance the purchase of the TX-1 machines and it is incurring interest charges on this loan. The continuance of the prohibition against selling the TX-1 machines therefore adversely affects . the liquidity of Eastern. Furthermore, in as much as Eastern is unable to complete the sales it has made, this will have the

effect of disappointing the expectations of the purchasers and the owners of the sites on which the machines are planned to be located. It will deprive the salesmen of commission on these sales. It will adversely affect the goodwill of Eastern as a reliable supplier of goods."

10.

On 23 June 1984 EME advertised that it had available for sale two machines in two of the best locations in Melbourne with profits of.approximately $400 to $500 per week for an investment of just $19,000 per machine. Mr. and Mrs. Sykes of Morwell were attracted by this advertisement, communicated

with Mr. Lazar, and agreed to purchase the two machines at a total cost of $38,000. This transaction was reduced to writing. The two machines the subject of this transaction

, bear serial Nos. 407621 and

407520.

The transaction was

negotiated by Mr. and Mrs. Sykes with Mr. Lazar personally. One Leslie Smith, ostensibly a salesman but in fact an independent associate of some kind of EKE, was in attendance.

According to the

evidence of Mr. Sykes his first contact

with Mr. Lazar was on 2 July 1984 by telephone. He had written a letter to EME on 27 June 1984 but had received no reply. He said he had also gone to the premises of EME on the

afternoon of

Saturday 30 June 1984 but there was nobody then

in attendance. In

his telephone conversation of 2 July 1984

Mr. Sykes indicated willingness to acquire the two machines, discussed financing the purchase, placement of the machines in

various

sites and

the expected returns, and other matters.

Between 2 and 7 July 1984 there were telephone conversations between Mr. Lazar rand Mr. Sykes andson the morning of 7 July

he went to the premises of EME and met Mr. Lazar. Mr. Lazar

introduced him to Mr. Smith. Mr. Smith took Mr. and Mrs. Sykes to Matt's Blue Room where they inspected one of the TX-1 machines. They then returned to EME. Mr. Sykes agreed to

11.

purchase the two machines for a total of $38,000 and signed a

written agreement embodying the transaction. In that agreement

EME was the vendor, Mr. Sykes was referred to as the operator.

"he machines were described,.. the .price was stated.. - Adeposit	- 9	1
of $3,800 was provided for and Mr. Sykes gave his cheque for

that amount on that day. The document was dated 29

June 1984.

Mr. Sykes asked why the agreement was so dated. According to

him he was told that from a tax point of view it would be advantageous that it be so dated. If this transaction was carried out on 7 July 1984 it is clear that it was a transaction carried out in disobedience of the order of Mr. Justice Sweeney which had been made on 4 July 1984 and it was entered into in contempt thereof.

On behalf of Mr. Lazar, however, it is said that in

fact

the transaction was completed and

the document signed on

Saturday, 30 June 1984. It is said that it

was dated 29 June

1984 in compliance with a suggestion of his that that would be

a good date to adopt because it was the last banking day of

the financial year ending on 30 June 1984. Mr. Lazar has

nowhere deposed to the truth of this explanation. Mr. Smith

was called and said that the agreement was made and signed on

30 June 1984. But between Mr. Sykes and Mr. Smith I am quite

satisfied that Mr. Sykes is stating the situation accurately

and that Mr. Smith is in error. I found Mr. Sykes a most

refreshing and convincing witness and -accept his evidence fully. He gave a good account of his movements at the

relevant

period.

Mr. Smith,

on the other hand, I found

unconvincing.

So far as an objective factor bears upon the

12.

probabilitiee it is to

noted that the cheque dated 29

June

1984 for

$3,800 deposit was paid into

€ME'S bank on

9 July

1984. That would

be normal for a cheque given

to EME on 7

July.

In thelcircumstances .one would hardly expect.it to have

been held by

PIE for so long if EME

really received it on 30

June. And of course if the agreement had been signed on 30 June there was no reason for choosing another date as the date of the sale. But if the agreement was signed on 7 July, it was essential with the injunction in force that PIE and Mr. Lazar choose another date and that the date chosen be a date before 4 July 1984.

According to Mr. Sykes, Mr. Lazar told him on 7 July

that he was expecting another five machines to arrive shortly.

Mr. Sykes indicated

to Mr. Lazar that

he was interested in

acquiring those machines.

Mr. Sykes negotiated a price of

$17,000 per machine instead of $19,000 for

the additional five

machines.

With respect to that proposed transaction finance

was necessary. Mr. Lazar

suggested the Moreland Finance

Corporation (Vic) Pty. Ltd. Mr. Sykes called on that company on 10 July 1984 and applied for finance for the seven machines for a total sum of $127,000.

Mr. Sykes said that on 14 July he went to €ME where the negotiations .for the. five machines

- were-f

inalised --and

-"the

paper work" was carried out. According to Mr. Smith this

- .

occurred on 7 July and that the paper work included the

signing.of a document post-dated 11 July -1984.

13.

The written agreement

for the second purchase namely the

purchase of the five machines does bear the date

11 July 1984.

This does not seem to have been questioned

by Mr. Sykes. He

observed, however, that the agreement was in the name of Mazz

as vendor. His understanding-until then was that

was

dealing with EME.

He asked Mr. Lazar why the agreement was in

the name of

Mazz and was told by

Mr. Lazar that it was another

of his companies which

he wanted to put it through.

Mr. Sykes

was satisfied to accept this, thinking that the finance

company would make sure of title to the machines.

As to the

circumstances and date of signature of the agreement with

respect to the five machines

I accept the evidence of

Mr.

Sykes.

The date was one week after

the signing of

the

agreement to buy the first two machines. Mr. Smith also puts

the signing of the second agreement

one week after the

signing of the first.

The contents of the affidavit of

Mr.

Lazar of 13 July 1984 also bear on the date of the signing of the agreement in respect of the five machines. He speaks of

there being nine machines imported. He

indicated that at 13

July 1984 there were only five of the nine which were not sold

although as to four of that five,

EME had agreed

to sell them.

With one sold to Knight and one to Angel and two to Sykes there were five of the nine unsold on 13 July 1984. If the

purchase agreement between Mazz and Sykes was signed on

7 or

11 July Mr. Lazar could not have said on 13 July that

EME had

-agreed to sell four of the last five.

He would have known

that

Mazz had already sold all of the last five.

curious that

he speaks of

an agreement by

EME to sell four of

the last five machines leaving the last machine unsold.

14.

explanation of that was forthcoming from either counsel. But it is important that the agreement to sell four of the last five is stated to have been a sale by EME and not Mazz, that it is EME and not Makz which is -'intending -to sell the last machine and that it does not mention that Mazz had sold the last five machines on 7 or 11 July. The sale by EME to Sykes

is spoken of, not as a completed agreement, but rather as an

agreement yet to be completed. This is consistent with the sale to Sykes being in a state of agreement not yet finalised,

as was

the

fact.

Had

the agreement concerning the five

machines been already signed the machines had been sold by Mazz and there would have been no point in Lazar contending that EME was selling the machines and still had one to sell.

If the situation were that the sale of the last five machines

to Sykes had been made on 7 July and deliberately so made, as

is asserted, by Mazz rather than EME while there was no

injunction applicable to Mazz, the application by EME of 13 July 1984 for relief from the injunction against it, was, for practical purposes, quite unnecessary. EME would by then have

had no selling to do. All these considerations support Mr. Sykes' evidence that the agreement concerning the five

machines was signed on 14

July 1984.

Whatever notion might have existed in the mind of the respondents as at 13 July 1984 as to the possible use

of Mazz

as a vendor to Sykes the situation as

explained to the Court

by the affidavit of Mr. Lazar of that date was that EME owned the machines and had the right to sell and control them and was entitled and intended to sell them. And having regard to

15.

the basic situation as between EME and Mazz that Mazz was the importer and EME was the seller the immediate transfer of the machines from Mazz to EME immediately they were available

would be natural enough.

The following passage in the evidence of Mrs. Lazar is

also relevant:-

“Mrs. Lazar

does

Mazz employ anybody by way of

permanent staff? --- No.

It does not carry on

any business, does it? --- It

can, it	has the ability to	sell if it wants
to.

But it does not? --- It does - it did.

What Staff has it got?

--- It has not got any

regular staff.

What stock has it got? --- We bring - we are an	importing company so we import machines from
overseas; that is its stack.

When they are imported

Mazz,

they

are

automatically transferred to Eastern; is that

not so? ---

Not always. no.

Mostly then? --- Mostly, yes. ’’

I am quite satisfied that on 13 July 1984 as against Mazz, EME

was the owner or entitled to become the owner and entitled to

full power,

possession,

custody

and control of the five

machines sold to Mr. Sykes on 14 July 1984.

It is apparent that until the document of purchase was

signed by Mr. Sykes he believed that he was dealing with EME.

It is apparent also that the only reason that Mazz was.

introduced into

the transaction was to attempt to avoid the

16.

effect of the injunction against

EME.

But the ownership of

the goods having been in

EME at least until

13 July 1984

Mazz

could only enter into the agreement with Sykes if in some way

it was clothed 'with authority

EME to act -on-its

-behalf, or

as its nominee, or it acquired the property and control

of the

machines from FIE.

If the proper inference is that

Mazz acted

simply as agent or nominee for

EME then the sale to Sykes was

in direct contravention with the injunction against EME.

on the other hand Mazz sold by arrangement between itself and

EME that it sold to Sykes as

a principal, then, either EME

sold the machines back

to Mazz or it transferred to

Mazz its

power, possession, custody and control	of the machines and
thereby disobeyed the injunction.

In all the operations of

-EME the relevant conduct was

that of Mr. Lazar. It

was he who negotiated with Mr. Sykes

with respect to the sale of the first two machines and then

the five machines. He was obviously

the

manager and an

executive operative of EME and Mazz.

He was a director of

both companies. The acts constituting the conduct of

EME were

the acts of

Mr. Lazar.

He was at all relevant times aware

the terms of the order of the Court.

He must have understood

that the purpose of the order was to preserve the property in

the machines and their locations

as they were when the order

was made and that	what	was done by him frustrated those
purposes.

In so far as the conduct of

PIE was in contempt of the

order of 4 July 1984 Mr. Lazar being

a director was equally in

17.

contempt.

Where, as in this case, the acts

of the director

are the acts of contempt

the part

of the company, the

actual responsibility accords with the legal responsibility.

The director's .acts .being the .company'.s .acts .and being. the.

_ _

_ '

acts constituting the contempt

of both the company and the

director the order of Sweeney

against the company would

have been effectual to bind the director whether

o not that

order had included

an order binding him in express terms. The

liability of a director of

a company in the contempt of the

company in disobeying

an order of which

he is aware .is

explained

in Ronson Products Ltd. v. Ronson Furniture Ltd

E19661 1 Ch 603; Biba Ltd.

v. Stratford Investments Ltd.

E19731 1 Ch 281 and Phonoqraphic Performance Ltd.

Amusement

Caterers (Peckham) Ltd C19631

All ER 493.

In this case there is

an order expressly made against

Mr.

Lazar.

Mr.

Gillard

urged

that

extended

only

forbidding Mr. Lazar from selling or otherwise dealing with

the machines as

a principal. He said the

Mr. Lazar did not do

that.

He urged, quite properly, that

a party against whom an

injunction is made is bound only

far as its terms speak

clearly and unambiguously. In this case

Mr. Lazar knew that

he and EME were enjoined against selling the machines in

question. In my opinion that order also clearly enjoined him

against arranging

for ranother party to sell the machines.

That is what he

did. Not only did

he arrange for Mazz to

enter into an agreement to

sell the machines to Mr. Sykes but

he was personally involved in

a transaction with

Mazz in which

EME authorised

Mazz to enter into that agreement as agent

18.

nominee for EME or in which EME transferred its right title and interest in the machines to Mazz to enable it to enter into the agreement with Mr. Sykes in the capacity, for that

transaction, of a-

principal; -In my opinion whichever- of

these - . .

events

occurred Mr. Lazar

instigating,

managing

and

arranging them was guilty of conduct constituting selling the machines within the meaning of the order and that that would have been be so understood by Mr. Lazar.

In addition the order enjoined both EME and Mr. Lazar from parting with the possession, power, custody and control of the machines. The transactions by Mazz with Mr. Sykes as agent or nominee of EME or as principal involved EME in parting with such possession, power, custody and control.

Further, in his

capacity

as the executive representative of

both PIE and Mazz, Mr.

Lazar had certain power over and

control of the machines. By the order he was enjoined against parting with such power and control which he had in that or any capacity. But he did part with such power and control by

arranging the transactions between EME, Mazz and

Mr. Sykes.

I am	satisfied that the situation existing between PIE

and Mazz was that Mazz entered into the transaction with Mr. Sykes as agent or nominee for EME rather than that it acted as

a principal having purchased -the machines from EME.-There is

no evidence of a transaction of purchase by Mazz from PIE. Also the sum of $20,500 being part of the sum of $24,300 paid

by Mr. Sykes on a package purchase including the five machines

the subject of

the second sale and

the two previous machines

19.

was credited on cancellation of part of that package to Mr.

Sykes' liability to

EME.

I accept Mrs.. Lazar's evidence .only

- .to the extent that.

- .

she counselled performing the sale of the machines to Mr. Sykes in the name of Mazz. She said she took control of the

sale to Mr. Sykes for the purpose of making it

a transaction

by Mazz rather than EME,

but she did nothing to indicate that

there was any reality in this.

She took no part in any of the

negotiations with Sykes. The credibility of

Mrs. Lazar leaves

much to be desired. Apart from her failure to perform as one

would have reflected if she took that transaction into her

own

hands as

a genuine Mazz transaction it is clear that

so f r as

she associated herself with the transaction she knew that she

was inviting

Mr.

Sykes and the finance company to buy the

machines without even

a warning that there

was a serious

machines valueless to those parties. She says she instructed

Smith to sell to Sykes for Mazz, but although Smith did sign

the agreement, he did

so in accordance with

Mr. Lazar's

decision to put the transaction through another of his

companies.

It is a reasonable inference that Smith was chosen

to sign the sale agreement of

14 July because, in view

of the

existing

injunction,

neither

Mr.

nor

Mrs.

Lazar

desired

actually to make the sale

to Mr. Sykes. In the end what was

done was to use the name

of Mazz. It is to be observed that

the sum of $85,000 received

the

vendors

the

five

I *

machines was paid

to the solicitors for both companies and

applied at least in part to pay off PIE'S borrowings for the

2 0 .

purchase of stock.

I am	quite satisfied beyond reasonable doubt that Mr.

Lazar wilfully engaged.in the-.conduct referred to intending thereby to frustrate the purpose of the order restraining him and PIE from selling or parting with the machines. He thereby

engaged in conduct forbidden by

the order and was guilty of

contempt in respect of conduct

of himself and

EME relating to

the sale of two machines to	Mr. Sykes of 7 July 1984 and the
conduct of himself and EME	relating to the sale of the five
machines.

In committing these contempts he did

so in circumstances

in which two things

have happened:

the applicants have lost the benefit

of the order; and

2. substantial

interests

innocent

third

parties

have

been placed

at serious risk.

All this has been done on behalf of

EME

so that it could

discharge some of its debts. This was	a ruthless piece of
conduct.

It is my view that an order should now be made which will reflect the view of

the court concerning the matter of

wilful disobedience of orders of this kind. Orders of this

kind are made every day in this court and parties rely upon

them. It is essential to the administration

of justice that

21.

there should be full confidence that such orders will be

obeyed and that people will not frustrate them by using

technicalities to conceal the realities of

a situation. It is

not asking too much for parties to behave themselves in

commonsense way. Lazar's conduct was wilful and serious. It

may be that the respondents will win this action

on he ground

that the applicants' copyright claim is unsound. But the

order was made on the basis that the copyright claimed by the

applicant

was

supported

the

evidence

an extent

sufficient

to require that the machines be kept in their

existing ownership and control pending trial. It is perfectly

clear that if the respondents do not win this action Mr. Sykes

and Moreland Finance have handed

EME $109,000 and it

has used

it, it is said, for its own purposes. But for all

I know, EME

has still got it. What has to happen, it seems to me, is that

the position has to be restored and the only way

of restoring

it at the moment is to

get the machines back.

The respondents

can only regain the machines back by returning the money back

the

people

who

have

paid

it.

default

that,

restoration may be to some extent achieved by the respondents

repaying the money received into Court.

the

position

were

restored,

one

would

take

different view of this matter, and one wonders

why it cannot

be restored. Every consideration of commonsense and ordinary morality requires that the situation be restored so that the litigation can progress. The evidence would suggest that it

is probably within the resources available to the respondents

to restore the situation.

22 .

What I have in mind is to commit Mr. Lazar to Pentrldge

Prison for three months on each motion with an intimation that

if the money received by the respondents is paid into court

together with costs he may apply for reconsideration in the

matter.

The appropriate order is that which

I made on 3

October 1984.

[1984] FCA 330

15 Oct 1984