Practice and Procedure - motion for contempt - alleged breach of undertaking given by respondent - standard of proof applicable - absence of evidence that undertaking served upon respondent - whether proof of service of undertaking required Evidence - hearsay evidence contained in affidavits filed in support of motion - whether admissible under Federal Court Rules 0.33 r.2 - whether motion an "interlocutory hearing" in terms of O.1l r.4 Federal Court Rules 0.1 r.4, 0.33 r.2, 0.40 GLASS CONTAINERS (AUSTRALIA) PTY. LIMITED and §.C.I. OPERATIONS PTY. LIMITED trading as Cargo Newpack Industries at 22F Fitzpatrick Street, Revesby NSW v. HYUNDAI AUSTRALIA PTY. LIMITED of Level 20, Norwich House, 6 0'Connell Street, Sydney No. G10 of 1985 TOOHEY J. PERTH 5 SEPTEMBER 1986 F ~ 8 SEP 1986 FEDERAL COURT OF AUSTRALIA PRINC'PAL REG STRY IN THE FEDERAL COURT OF AUSTRALIA NEM SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION No. G10 of 1985 BETWEEN: GLASS CONTAINERS (AUSTRALIA) PTY. LIMITED and S.C.2. OPERATIONS PTY. LIMITED trading as Cargo Newpack Industries at 22F Fitzpatrick Street, Revesby NSW Applicants and HYUNDAT AUSTRALIA PTY. LIMITED of Level 20, Norwich House, 6 Q'Connell Street, Sydney Respondent MINUTE OF ORDER JUDGE MAKING ORDER: TOOHEY J. DATE OF ORDER: 5 September 1986 WHERE MADE: Perth THE COURT ORDERS THAT: l. The applicants' motion filed 11 June 1986 is dismissed. 2. The applicants pay the respondent's costs of the motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION No. G10 of 1985 wee ee BETWEEN: GLASS CONTAINERS (AUSTRALIA) PTY. LIMITED and S.C.I. OPERATIONS PTY. LIMITED trading as Cargo Newpack Industries at 22F Fitzpatrick Street, Revesby NSW Applicants and HYUNDAI AUSTRALIA PTY. LIMITED of Level 20, Norwich House, 6 O'Connell Street, Sydnev Respondent CORAM: TOOHEY J. 5 September 1980 REASONS FOR JUDGMENT: On 21 January 1985 the applicants filed an application seeking various orders against the respondent in respect of the potential sale of "plastic garbage bags ... packed in outer bags or other packaging marked with the Trade Mark "Miracle" which is Registered No. A309,419 or any part thereof, particularly the word "Miracle" ... without the consent of the Applicants". The applicants also sought orders restraining the respondent from delivering to anyone any of the outer bags in its possession or control, that the respondent deliver all such bags in its possession to the applicants, restraining the respondent from selling or distributing the plastic qarbaqe baaqs while so packaged, restraining the respondent from representina that the plastic garbage bags packed in outer bags bearing the trade mark "Miracle" were the applicants' qoods and damaaqes. They also sought an interlocutory injunction. On 25 February 1985 the Court made certain orders which included noting undertakings given to the Court on behalf of the respondent by their solicitor. Those undertakings, which were set out in a schedule to the order, read as follows: "1. Not to sell or distribute in the Commonwealth of Australia plastic garbage bags packed in plastic outer bags and cartons (if any) bearing the trade mark 'MIRACLE'. 2. Not to represent to any person that the plastic garbage baqs which are now or were prior to the date hereof packed in outer bags and cartons (if any) bearing the trade mark 'Miracle' No. A309,419 are the goods of or in some way associated with the Applicants or any of them. 3. That it will either cause the plastic outer bags and cartons (if any) marked with the trade mark 'MIRACLE' to be destroyed under the supervision of the Applicants at atime and place to be agreed with the Applicants or arrange for same to he shipped to Korea, and adequate and clear proof of shipment to be provided to the Applicants". The Court now has before it a motion by the applicants seeking an order that the respondent breached the undertaking given by it and that by so doing it is in contempt of court. The motion 1s supported by a statement of charge as required by 0.40 r.6 of the Federal Court Rules. This statement particularizes the breach of the undertaking in the following way: "Ca) Causing and or brinagina about the sale and or distribution in the Commonwealth of Australia, and in particular the state of Victoria, of plastic qarbage baqs and plastic outer baqs bearing the trademark 'Miracle' in breach of paragraph 1 of the undertakings given to and filed with this Honourable Court on the 25th February, 1985. (b) Fazrling to cause the plastic outer bags marked with the trademark 'Miracle' to be destroved in accordance with paragraph 3 of the said undertaking. (c) In the alternative to paragraph (b) above failing to cause the plastic outer baqs to be shipped back to Korea in accordance with paragraph 3 of the said undertaking". Order 40 r,.7 requires that evidence in support of a charge be by affidavit though the Court may permit evidence to be given otherwise than by affidavit. The applicants filed a number of affidavits in support of their motion. Much of their contents was attacked by counsel for the respondent, mainly because it was hearsay. Order 33 r.2 empowers the Court, in relation to evidence "other than evidence onan issue at a trial", to admit hearsay evidence where a statement on information and belief is made and the source and qround of information are given. Order 1 r.4 defines "trial" to include "anv hearing other than an interlocutory hearing". Does this contempt motion involve an interlocutory hearing? Speaking of criminal contempts, whether or not the legal proceedings with which they are concerned have been completed, Northrop J. commented in Viner v. Australian Building Construction os Employees and Builders' Labourers' Federation (1981) 38 A.L.R. 550 at 554: "There is authoritv for the proposition that contempts of that kind are separate from the proceedings which give rise to the contempt." Order 40 r.5 itself draws a distinction between a contempt alleqed to have been committed in connection with a proceeding in the Court (in which case "an application for punishment for the alleged contempt must be made by motion on notice in the proceeding") and a contempt alleged to have been committed, but not in connection with the proceeding in the Court {in which case "the proceeding for punishment of the alleaed contempt must be commenced as a substantive proceeding"). An undertaking given to the Court by a party or his legal representative has been treated as equivalent to an injunction granted by the Court. The relevant authorities are collected in Borrie and Lowe's Law of Contempt 2nd ed. 406 and Arlidge and Eady The Law of Contempt 269. Some reservations were expressed by Bowen C.J. in Trade Practices Commission v. C.G. Smith Pty. Ltd. (1978) 30 F.L.R. 368 at 375 in the context of whether service of an undertaking was a prerequisite for contempt proceedings. But, for the purpose of the point presently under discussion, it seems to me that a motion for contempt for breach of an undertaking given in connection with a proceeding is by way of an interlocutory hearing. In O'Shea v. Q'Shea and Parnell; Ex parte Tuohy (1890) 15 P.D. 59 Cotton L.dJ. said at pp.62-63: "The present proceeding 1s for a contempt of court. of course, there are many contempts of court that are not of a criminal nature; for instance, when a man does not obev an order of the court made in some civil proceeding, to do or to abstain from doing somethina - as where an initunction is granted in an action aqainst the defendant. and he does not perform what he is ordered to perform, and then a motion is made to commit him for contempt - that 1s really onliv a procedure to get something done in the action, and has nothing of a criminal nature in 1t." That 1s much the position here although, as will appear, circumstances are such that the respondent says 1t cannot now comply with para.3 of 1ts undertaking. It follows then that hearsay evidence, conforming with 0.33 r.2,- may be admitted. But the matter is within the discretion of the Court. A contempt motion is a serious matter, carrying serious consequences. The standard of proof appears to lie somewhere between a balance of probabilities and satisfaction beyond reasonable doubt. See Flamingo Park Pty. Ltd. v. Dolly Dolly Creations Pty. Ltd. (1985) 59 A.L.R. 247 at 262. cf. Mudqinberri Station Pty. Ltd. v. The Australasian Meat Industry Employees' Union £1985] A.T.P.R. 40-628. In those circumstances the Court should be slow to admit hearsay evidence pursuant to 0.33 r.2 except perhaps on formal matters. The evidence attacked by the respondent could not be described as formal and in a number of instances the deponents of the affidavits failed to give the source and ground of information relied upon. I therefore acceded in large measure to the respondent's objections and much of the contents of the affidavits was struck out. n Some of the material disallowed was directed to showing that plastic baqs in an outer container bearing the word "Miracle" were sold at a market in Victoria. There was nothing to connect such a sale with the respondent though some of the evidence was almed at showing that the baqs in their containers were those brought in to Australia by the respondent. But it is apparent from the evidence adduced by the applicants themselves, which included a letter written by the respondent's solicitors to the applicants' solicitors, that there was a sale by the Australian Customs Service, pursuant to 1ts statutory power to sell warehoused qoods for arrears of rent or charges, of the qarbagde bags which had been imported from Korea and which gave rise to the institution of proceedings in the Federal Court. There was a paucity of evidence as to the circumstances in which the goods were imported and their precise fate thereafter. The first allegation against the respondent was that it had breached para.l of its undertaking by causing or bringing about the sale or distribution of plastic garbage bags and plastic outer bags bearing the trademark "Miracle". There may be a preliminary question whether causing or bringing about a sale or distribution 1s itself a breach of an undertaking not to sell or distribute. But I need not spend time on that matter for the evidence went no further than to show a forced sale by the Australian Customs Service. Counsel for the applicants argued that by standing by and allowing the sale to take place, the respondent was in breach of para.l of the undertaking. I do not accept this submission. There is a charae of contempt of court and the applicants must make good that charge by evidence that 7. meets the requisite standard of proof. Such evidence as there was suaqested that the respondert did not hecome aware of the auction uritul about the time it took place. The charge 18s that the respondent breached its undertakina by causing or bringing about the sale or distribution of the goods. The precise circumstances under which the garbage baqs arrived in Australia 1s far from clear. Some correspondence was tendered in evidence but it did not qo so far as to show that the qarbage bags were consigned to the respondent. Something was said by counsel for the applicants, though not made the subject of evidence, to suggest that the respondent brought the garbage bags from Korea following an arrangement with a Mr. Dion Abrahams for their sale, an arrangement that did not come to fruition because of a dispute as to the quality of the bags. The evidence in this regard was left ina most uncertain state. Again this may not matter a areat deal in the end so far as para.1 of the undertaking is concerned because that undertaking is in general terms, not related to a specific consignment of goods. Whatever view he taken of these matters, the applicants have simply failed to establish that the respondent sold or distributed in Australia any goods described in the undertaking or that it caused or brought about their sale or distribution. No reliance was placed by the applicants upon para.2 of the undertaking and I need spend no time on that matter except to note the apparent reference to an existing quantity of plastic garbage bags with packaging bearing the name "Miracle". Paragraph 3 of the undertaking picks up the reference to "the plastic outer baqs and cartons (1f anv) marked with the trademark 'Miracle'"". It imposes an obligation on the respondent to destrov these qoods under the supervision of the applicants "at a time and place to be aareed with the applicants" or arrange for the goods to be shipped to Korea and provide proof of shipment to the applicants. Although the undertaking was qiven on 25 February 1985, there was no evidence of any approach by the applicants to the respondent until 26 June 1986 when the applicants' solicitors wrote to the respondent's solicitors in the following terms: We act for Cargo Newpack and have been asked to produce the evidence of shipment to Korea of the container of plastic bags branded 'Miracle' which were the subject of the proceedings. We attach a copy of Mr. Jamieson's undertaking to provide this evidence which is dated 25 February 1985. Your urgent attention to the request would be appreciated". The letter reads rather awkwardly but clearly enough the intention is to call upon the respondent's solicitors to produce evidence of shipment. In my view para.3 of the undertaking offers the respondent a choice. It 1s not bound to ship the goods to Korea. But if it does not do so and refuses to take reasonable steps to reach agreement with the applicants for a time and place for the destruction of the goods, it is then bound to ship the goods to Korea or risk being in breach of its undertaking. wo It 1s arquablie whether para.3 imposes an undertaking on the applicants or on the respondent to initiate discussion about the destruction of the aoods. But, in the absence of some approach by the applicants that the aoods be destroyed, it 1s hard to see how the respondent could be quilty of a breach of that part of its undertaking. Certainlv, when the applicants' solicitors wrote to the respondent's solicitors on 26 June 1986, para.3 of the undertaking came into operation. But the evidence was that by that date the qoods were not in the possession or control of the respondent, indeed that they had already been sold by the Australian Customs Service. The letter in reply written by the respondent's solicitors (which was tendered in evidence by the applicants and therefore has some evidentiary weight, particularly in the absence of any evidence to the contrary) referred to the sale by the Australian Customs Service and continued: As soon as we became aware of the auction, steps were taken both by this office and by our client directiy, in an attempt to ensure that the outer bags could be either destroyed under your client's supervision or shipped back to Korea. We have been informed that a small number of the outer bags onsold by one of the three purchasers of the bags from the auction, have now been destroyed by the person to whom they were unsold. We have been unable to ascertain the whereabouts of the bags purchased by the other two purchasers at the auction. We are continuing our enquiries but in the case of at least one of those purchasers we do not anticipate being able to obtain any relevant information until the end of this month. If you are able to provide us with anv aunformation as to the current whereabouts of the bags, we'would ask you to let us know so that we can follow the matter up further. Our client regrets that the present situation has arisen and is doing all things within its power to see that the outer bags are recovered and accordingly disposed of". An undertaking given to the Court 18 of course a serious matter and its breach attracts serious consequences. A breach need not be wilful. On the other hand an undertaking is not necessarily absolute so as to impose a liability for contempt if circumstances occur that render it impossible to fulfil the undertaking. Liabilitv must be measured by the terms of the undertaking and a consideration of the circumstances that are said to have prevented its fulfilment. In the present case there was no evidence of anv communication between the applicants and the respondent after the undertaking was given, until the applicants' solicitors wrote on 26 June 1986. The evidence, was that by that date the goods, without the foreknowledge of the respondent, had been sold by auction, that steps were taken by the respondent and its solicitors to ensure that the outer bags might be destroyed or shipped back to Korea, but that those attempts were only partiv successful. It appears that there were three purchasers at the auction, that in the case of one of the purchasers the outer bags were destroved by the person to whom they were later sold, but that it was not possible to locate the whereabouts of the bags purchased by the other two buyers. In all the circumstances and having regard to the evidence 'presented on behalf of the applicants, I am not persuaded that the respondent was in breach of either para.l or 3 of its undertaking. il. There was a further submission by the respondent that in anv event the motion must be dismissed in the absence cf evidence that a copy cf the order of 25 February 1985 had been served on 1t. It is clear that there can be no contempt for breach of an order of the Court without proof that the party bound by the order knew that it had been made. Ordinarily that proof is furnished by evidence of service of a copy of the order. In the case of an undertaking qiven personally, it 1s not necessary to serve a copy of the order to around contempt. D. v. A. and Co. C19003 1 Ch. 484. Where an undertaking has been given on behalf of a party, it would appear to be sufficient to show that the party had notice of the undertaking, at least where the undertaking is of a negative character. D. v. A. and Co. at 487. Where the undertaking is of a positive nature, there is authority that personal service of the undertaking is required. Ronson Products Ltd. v. Ronson Furniture Ltd. €19661 Ch. 603 at 614. There was no evidence whether any officer of the respondent was present in Court when the undertaking was given. A copy of the undertaking itself was exhibited to the affidavit of Don Graham, the qeneral manager of the flexible packaging division of Cargo Newpack Industries. It was an undertaking signed by the solicitor for the respondent. In Trade Practices Commission v. €.G. Smith Pty. Ltd., mentioned earlier, Bowen C.J3. said that it would have been advisable that the undertaking given to the Court on behalf of the ae csr reer wyggrrassr sors On rere respondent companv should have been served unon those officers whom 1t was sought to hold liable in contempt ror a breach of the undertaking. At 375 Bowen ¢.d. said: "I consider the fact that it was not served. while not an absolute bar to the making of an order on the present motion, 1s a factor to be taken into account in decidina what should be done." But his Honour appears to have reached that conclusion against the background of a finding that "each respondent appreciated he was bound personally" (at 374). In the present case there was no evidence of any communication between the applicants and the respondent until the letter of 26 June 1986. It is possible to infer from the reply of 11 July that the respondent was aware of the undertaking given on its behalf and, as a matter of commonsense, one would expect that the undertaking would not have been given except on the instructions of the respondent. Because I am of the opinion that the applicants have failed to establish a breach of any part of the undertaking + nu contained in the order of 25 February 1985, I prefer to dispose of a the matter on that ground. fe oS re OR The motion will be dismissed with costs. a I certify that this and the preceding eleven pages are a true copy of the reasons for judgment herein of his . Honour Mr. Justice Toohey. f / f f LL ' Associate ' ' vee ye Dated: 5 September 1986 "aT "nt