FEDERAL COURT OF AUSTRALIA AGL Energy Limited v Hardy (No 2) [2017] FCA 863 File number: VID 176 of 2017 Judge: O'CALLAGHAN J Date of judgment: 3 August 2017 Catchwords: CONTEMPT OF COURT – sentencing – where respondent found guilty of contempt for failing to comply with search order made pursuant to r 7.43 of the Federal Court Rules 2011 (Cth) – fine imposed of $25,000 Legislation: Federal Court Rules 2011 (Cth), r 7.43 Cases cited: AGL Energy Limited v Hardy [2017] FCA 420 Australasian Meat Industry Employees' Union v Mudginberri Station Pty Limited (No 2) (1985) 9 FCR 194 Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 Australian Building Construction Employees' and Builders Labourers' Federation v Commonwealth of Australia (1986) 161 CLR 88 Australian Competition and Consumer Commission v ACN 117 372 915 Pty Ltd (in liq) [2016] FCA 1437 Australian Competition and Consumer Commission v Halkalia Pty Ltd (No 3) [2017] FCA 522 Australian Competition and Consumer Commission v World Netsafe Pty Ltd (2003) 133 FCR 279 Australian Industry Group v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union & Ors [2000] FCA 629 Australian Securities and Investments Commission v Michalik [2004] NSWSC 1259; 52 ACSR 115 Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375 Kazal v Thunder Studios Inc (California) [2017] FCAFC 111 Louis Vuitton Malletier SA v Design Elegance Pty Ltd (2006) 149 FCR 494 Microsoft Corporation v Marks (No 1) (1996) 69 FCR 117 Re Colina; Ex parte Torney (1999) 200 CLR 386 Sydney Medical Service Co-operative Limited v Lakemba Medical Services Pty Ltd (No 2) [2016] FCA 1188 Thunder Studios Inc (California) v Kazal (No 2) [2017] FCA 202 Witham v Holloway (1995) 183 CLR 525 Date of hearing: 24 July 2017 Registry: Victoria Division: Fair Work National Practice Area: Employment and Industrial Relations Category: Catchwords Number of paragraphs: 49 Counsel for the Applicants: Mr CJ Murdoch QC Solicitor for the Applicants: Minter Ellison Counsel for the First Prospective Respondent: Mr EP White and Ms R Shann Solicitor for the First Prospective Respondent: Slater and Gordon Lawyers ORDERS VID 176 of 2017 BETWEEN: AGL ENERGY LIMITED (and others named in the Schedule) First Prospective Applicant AND: GREGORY THOMAS HARDY (and another named in the Schedule) First Prospective Respondent JUDGE: O'CALLAGHAN J DATE OF ORDER: 3 August 2017 THE COURT ORDERS THAT: 1. Gregory Thomas Hardy, having been found guilty of contempt of court on 26 April 2017, be fined in the sum of $25,000. 2. The fine referred to in order 1 be paid within 28 days of the date of this order. 3. On or before 4:30 p.m. on 10 August 2017, Mr Hardy file and serve a brief outline of submission and any further material on which he intends to rely on the question of costs. 4. On or before 4:30 p.m. on 15 August 2017, AGL Energy Limited, AGL Loy Yang Pty Ltd and AGL Loy Yang Marketing Pty Ltd file and serve any brief outline of submission and any further material on which they intend to rely on the question of costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT O'CALLAGHAN J: introduction 1 On 26 April 2017, the Court found that Mr Hardy was guilty of contempt of court, in that on 2 March 2017, after being served with a search order made by the Court pursuant to r 7.43 of the Federal Court Rules 2011 (Cth) on 28 February 2017 (the Search Order), he failed to comply with paragraph 11 of that order by refusing to permit members of the "Search Party" to enter the "Premises" (both, as defined in the Search Order) so that they could carry out the search and other activities referred to in the Search Order. 2 The Court must now impose a penalty upon Mr Hardy. The contempt finding 3 The terms of the Search Order are set out at [13]-[41] and in Schedule A to the Court's judgment on liability: AGL Energy Limited v Hardy [2017] FCA 420. The circumstances that led to the finding of contempt are set out at [47]-[57] of that judgment. 4 The relevant findings of fact are as follows: Shortly after 9:00 a.m. on 2 March 2017, Mr Marquet [the independent lawyer] attended the premises with the other members of the search party. Mr Marquet served the order and the documents required to be served with the order on Mr Hardy. The other documents were the application for the search order filed on 27 February 2017; Mr Williams' affidavit date 27 February 2017; the applicants' written submissions in support of the order dated 28 February 2017; a draft originating application; the Rules of the CFMEU Mining and Energy Division; and the transcript of the hearing before me on 28 February 2017: see the affidavit of Mr Williams sworn 9 March 2017. The documents were contained in two lever arch folders. Mr Hardy invited Mr Marquet to enter the premises for the purpose of explaining the terms of the order, which he did. The other members of the search party remained outside. Once inside the premises, Mr Marquet explained the terms of the order to Mr Hardy and told him that he had a two hour window within which to seek legal advice, apply to the Court to vary or discharge the order and to gather together privileged material. Mr Marquet asked Mr Hardy whether he had a lawyer or could contact a lawyer through the CFMEU, to which Mr Hardy responded that he did not. Mr Hardy said words to the effect that he did not want to comply with the order, to which Mr Marquet responded with words to the effect that he had two hours to consider the documents and seek legal advice. Mr Hardy said that he needed to consult with the people he represented and asked Mr Marquet for an electronic copy of the documents with which he had been served. Mr Marquet left the premises briefly to speak with Mr Zielinski to make arrangements for this to occur and then went back into the premises. Mr Marquet sat with Mr Hardy in the front room of the premises, until around 10:50 a.m., while Mr Hardy read the order and reviewed the accompanying documents. From time to time Mr Hardy asked questions about the order, which Mr Marquet answered. Mr Marquet said words to the effect that if Mr Hardy did not comply with the order he could be in contempt of court and suggested that he seek legal advice before taking steps that could constitute a contempt. At around 10:00 a.m., Mr Hardy said that he was concerned that the terms of the order permitted the search party to search areas of the premises such as his wife's bedroom drawers. Mr Marquet responded that, while that was so, the focus of the search was on electronic documents stored on devices such as Mr Hardy's computer and mobile phone. Mr Marquet also told him that only electronic documents could be removed from the premises. At around 10:10 a.m., Mr Zielinski [a solicitor from Minter Ellison, AGL's solicitors] informed Mr Marquet by text message that emails had been sent to Mr Hardy attaching the documents with which he had been served. Mr Hardy took no steps in Mr Marquet's presence to access those documents. Several times during the course of his discussions with Mr Marquet, Mr Hardy queried the independence of Mr Marquet, the law firm of which he is a partner, and the firm by which the independent computer expert is employed. Mr Marquet said that he was an independent lawyer with no interest in the proceeding and that the order had been made to preserve evidence. Mr Marquet informed Mr Hardy of the undertakings he had provided to the Court, namely, that he would hold any material obtained during the search pending further order of the Court and that AGL would not be provided with such material until the Return Date (namely, 10 March 2017), at which Mr Hardy would have an opportunity to be heard. Mr Marquet told Mr Hardy that the independent computer expert was in the same position. In response, Mr Hardy said words to the effect that he did not accept this. Mr Marquet drew Mr Hardy's attention to paragraph 26 of the order and said that it required him to prepare an affidavit before the Return Date. As the end of the two hour period referred to in paragraph 15 drew near, Mr Marquet sought to clarify Mr Hardy's response to paragraph 11. Mr Hardy said words to the effect that he "was not prepared to let AGL have [his] stuff" and that there was confidential material on his laptop relating to employees of AGL. Mr Marquet said to Mr Hardy words to the effect that there appeared to be three options available to him: permit the search; not permit the search; or, as a middle ground, permit the search of his computer devices and then discuss the need for further searches. Mr Maquet cautioned Mr Hardy about the consequences of being in contempt and suggested that it may be preferable partially to comply with the order. Mr Hardy said words to the effect that he "did not see any difference between being in contempt by not complying with the [o]rder partially or not complying at all". Mr Marquet then asked Mr Hardy whether he would permit the search, to which he replied that he would not. Mr Marquet indicated that if that was Mr Hardy's position, he would leave the premises. He then did so. From around 11:00 a.m. to 11:56 a.m., Mr Marquet waited outside the premises with the search party. Mr Zielinski spoke with his supervising lawyer, Mr Williams, with whom Mr Marquet also spoke. At around 11:56 a.m., Mr Williams called Mr Zielinski to tell him that he wanted Mr Marquet to go back to the premises to ask Mr Hardy to confirm his position in respect of the order. Mr Marquet then returned to the front room of the premises with Mr Hardy, where Mr Marquet said words to the effect that that would be his final opportunity to comply and that, if he did not, it was likely that AGL would take contempt proceedings. Mr Hardy responded by again saying words to the effect that he "was not letting AGL search his stuff" and that he understood the potential for contempt proceedings. Mr Marquet informed Mr Hardy that if he changed his mind he should call Mr Marquet. They exchanged contact details and Mr Marquet left the premises. (AGL Energy Limited v Hardy [2017] FCA 420 at [47]-[57].) THE ORDERS MADE ON 30 May 2017 5 On 30 May 2017, the Court made consent orders by which Mr Hardy agreed to what the parties called a "protocol", which was designed to achieve in substance that which Mr Hardy's defiance of the Search Order had thwarted. The penalty hearing was then adjourned to enable the consent orders to be complied with. The consent orders are attached as Annexure A to these reasons, with certain personal information redacted. 6 The consent orders have now been complied with and, as a result, a large number of relevant documents have been recovered and produced to the Court (but not to the prospective applicants). 7 Mr Hardy has made claims of legal professional privilege and civil penalty privilege in respect of many of those documents. The penalty hearing Mr Hardy's apology 8 At the penalty hearing on 24 July 2017, Mr White, who appeared with Ms Shann for Mr Hardy, commenced his submissions by reading a statement to the Court on Mr Hardy's behalf. The statement was as follows: I have now had the opportunity to reflect deeply on the events of 2 March 2017, and the judgment made against me in this proceeding. I unreservedly apologise to the Court for my conduct. I understand the importance of following orders made by this Court, and will do so in the future. Mr Hardy circumstances 9 Although the Court heard submissions on the question of the admissibility of some of the material concerning Mr Hardy's personal circumstances, ultimately the prospective applicants, AGL Energy Limited, AGL Loy Yang Pty Ltd and AGL Loy Yang Marketing Pty Ltd (collectively, AGL), consented to that material going into evidence. Accordingly, it is not necessary to deal with the submissions made on behalf of Mr Hardy concerning the admissibility of that evidence. 10 Counsel for Mr Hardy informed the Court that Mr Hardy is no longer an official with the Construction, Forestry, Mining and Energy Union (the CFMEU), and that subject to some minor questions, to do with calculations, Mr Hardy intends to accept a redundancy offer made to him by AGL. 11 Mr Hardy is a married man. He is 56 years old, with three adult children, one of whom is still living in the family home. One of his children is married with children of his own, and Mr Hardy is regularly needed to assist in the care of his grandchildren. One of his children is unemployed and receives assistance in his day-to-day living from Mr Hardy. One of Mr Hardy's children is unwell and unable to work and Mr Hardy and his wife assist with that child's day-to-day living expenses. 12 Mr Hardy and his wife are the main caregivers to Mr Hardy's elderly aunt and Mr Hardy also has certain care responsibilities with respect to his uncle. Mr Hardy's wife also has elderly parents, who are increasingly dependent upon Mr and Mrs Hardy. 13 Mr Hardy commenced employment in 1978 as a trainee electrical operator with the State Electricity Commission of Victoria (the SECV). In 1980, he transferred from the Transmissions Operations Department of the SECV to the Power Generation Department at the Hazelwood Power Station. He commenced as a trainee unit attendant and was successively promoted through the ranks, until he became a unit controller. In March 1990, he was transferred to the Loy Yang A Power Station as a unit controller. Mr Hardy has worked in that position ever since. 14 Mr Hardy held various union positions from 2001 until recently. From 2004 until 2014, he was the District Secretary of the Victorian District of the Mining and Energy Division of the CFMEU, representing power workers in the La Trobe Valley. From 2001 until 29 March 2017, he was an elected workplace representative of CFMEU members at the Loy Yang Power Station. He was also one of the negotiators for employees of AGL for a renegotiation of an enterprise agreement. Mr Hardy no longer holds any position with the union or as a negotiator. 15 Since 14 March 2017, Mr Hardy has been on sick leave at full pay with a net pay of $4,367 per fortnight. Mr Hardy's wife does not work and the family income is that derived by Mr Hardy through his work at AGL. 16 Mr Hardy and his wife are joint proprietors of their family home and own no other property. 17 Mr Hardy has also recently been diagnosed as having an adjustment disorder with anxiety and depression, from which it seems likely that he has been suffering since at least August 2016. Character references 18 Mr Hardy provided two character references to the Court. 19 The first character reference was from Mr Richard Elkington, who has known Mr Hardy since the early 1980s, and worked most closely with him between 2004 and 2008. During the latter period, Mr Elkington occupied the post of General Manager, Power and Environment, at the Loy Yang A Power Station. Mr Elkington said this of Mr Hardy: I have always valued the maintenance of good personal relationships with Union officials of any rank and I am sure that [Mr Hardy] valued this. In my long association with him, I have always found him to be trustworthy and reliable, motivated by principles of preserving the terms and conditions of employees in providing a high degree of job security. 20 The second character reference was from Ms Leanne McKenzie, who is the deputy principal of a local school in Traralgon, where Mr Hardy lives. Ms McKenzie has known Mr Hardy as a personal friend for 25 years. Ms McKenzie described Mr Hardy as "a man of integrity" who "can be relied upon to deal honestly and directly with those he encounters". Her reference also states as follows: [Mr Hardy] has been an extremely hard-working man who has devoted his life to his family, his friends and his fellow workers. He is driven by a keen sense of social justice as evidenced by his union work. He is a man who is prepared to form a considered opinion and back this with cogent action. [Mr Hardy] is articulate, and has a keen mind. He has been prepared to put these skills at the disposal of the union for the betterment of local and national workers. I have never known [Mr Hardy] to be self-serving, his focus is always on the common good and improving the circumstances of those around him. His union work over the years has come at great personal cost both in time and well-being, these were sacrifices he was prepared to make to ensure the wellbeing of his fellow workers. He has an affinity with the workers and has a keen sense of their worth and their needs. Although he values unionism and its work on behalf of workers he is considered and measured in both thought and action. 21 Mr Hardy has no prior convictions of any kind, including for contempt. Applicable principles 22 "[T]he cardinal feature of the power to punish for contempt" is "that it is an exercise of judicial power by the courts, to protect the due administration of justice": see Re Colina; Ex parte Torney (1999) 200 CLR 386 at 429 [112] per Hayne J (emphasis in the original), quoted with approval in Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375 at 388 [41] per French CJ, Kiefel, Bell, Gageler and Keane JJ. 23 In Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375 at 395 [65], Nettle J summarised the nature of contempt proceedings as follows: A proceeding for punishment for contempt constituted by disobedience of an injunction granted in a civil proceeding is not part of the criminal justice system in the sense essayed in [Environmental Protection Authority v] Caltex [Refining Co Pty Ltd (1993) 178 CLR 477], X7 [v Australian Crime Commission (2013) 251 CLR 196] or Do Young Lee v The Queen [(2014) 253 CLR 455]. Although "all proceedings for contempt 'must now realistically be seen as criminal in nature'", not all contempts are criminal. Failure to obey an injunction is not a criminal offence unless the failure to comply is defiant or contumacious. A proceeding for contempt is not a proceeding for criminal contempt if the proceeding appears clearly to be remedial or coercive in nature as opposed to punitive. A criminal contempt is a common law offence, albeit not part of the ordinary common law. But even a proceeding for criminal contempt is not a criminal proceeding. (Citations omitted.) 24 In Witham v Holloway (1995) 183 CLR 525 at 530, Brennan, Deane, Toohey and Gaudron JJ, referring to the technical distinction between civil and criminal contempt, said: In general terms, the distinction between civil and criminal contempt is that a civil contempt involves disobedience to a court order or breach of an undertaking in civil proceedings, whereas a criminal contempt is committed either when there is a contempt in the face of the court or there is an interference with the course of justice. However, disobedience or breach of an undertaking amounts to a criminal contempt if it involves deliberate defiance or, as it is sometimes said, if it is contumacious. As well, in the case of some orders, described in Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd as involving 'arbitrary classification', disobedience constitutes criminal contempt. They are orders forbidding interference with a ward of court, orders for the delivery up of a child and non-molestation orders. And it has been held that breach of a court order by a solicitor or by a liquidator is also a criminal contempt. (Footnotes omitted). 25 In Thunder Studios Inc (California) v Kazal (No 2) [2017] FCA 202, Rares J said (at [4]-[5]): Our society is structured on the basis that the Courts of law must be accessible to all persons, rich or poor, weak or strong, popular or unpopular, and whose cases may or may not be considered by others or the public to be good or bad. It is essential that everyone knows that the Courts are independent, not only of government but also of other influences, and that the Courts are also seen to be entirely free from outside influences, including public pressure. It is also fundamental that persons must obey, and cannot be allowed to ignore, orders that the Courts make. The due administration of justice requires that everyone be able to access the Courts to hear and determine disputes, that all persons in our society accept that the orders made by the Courts reflect the application of the law by which all are governed and that those orders must be obeyed while they are in force. It is a very serious matter where a person disobeys a Court order knowing the Court has made it. If that conduct went unpunished by the Courts, a fundamental aspect of our society would suffer. Other people would come to think that they also could disobey or flout orders that a Court had made. The rule of law would be seriously undermined were such a situation left unpunished. Justice could not be done satisfactorily if the ordinary respect that members of our society have for the authority of the Courts to resolve disputes, as a part of our system of government, came to be undermined by persons openly disobeying Court orders or bringing public pressure on a litigant in proceedings that sought to influence the litigant or condemn him, her or it in the public eye for pursuing or defending the litigation … 26 In Kazal v Thunder Studios Inc (California) [2017] FCAFC 111, the Full Court quashed two of the convictions in respect of which Rares J had found Mr Kazal guilty of contempt and resentenced him on four of the other charges. The statements of principle from the judgment of Rares J to which I have made reference are not affected by the Full Court's reasons. 27 In Louis Vuitton Malletier SA v Design Elegance Pty Ltd (2006) 149 FCR 494, Merkel J set out (at [25]) a number of factors accepted by the parties in that case, as they were in this case, to be relevant to the question of the appropriate penalty: It was common ground between the parties that the following factors…are relevant to penalty. 1.5 In deciding the appropriate penalty, a court should consider the following factors: (1) contemnor's personal circumstances; (2) nature and circumstances of the contempt; (3) effect of the contempt on the administration of justice; (4) contemnor's culpability; (5) need to deter the contemnor and others from repeating contempt; and (6) absence or presence of a prior conviction for contempt. However, other criminal history is irrelevant. 1.6 In deciding the amount of any fine the Court should take into account the contemnor's financial means. The court may also suspend the fine on terms. Contrition and apology 1.7 Genuine contrition and a full and ample apology may also reduce the penalty. … (Citations omitted.) 28 In Australian Competition and Consumer Commission v World Netsafe Pty Ltd (2003) 133 FCR 279, Spender J summarised the relevant considerations as follows (at [16]): Considerations which are relevant in deciding what is the appropriate penalty include: (a) The relative seriousness of the contempt, which is determined by the extent to which the contemnor appreciated that a contempt was being committed. (b) Whether the contemnor subjectively intended to disobey the order. (c) The importance of bringing home to the contemnor the seriousness of the contempt. (d) Whether the contemnor has offered any explanation or apology for his conduct. (e) An acknowledgment by the contemnor that a contempt was committed may be a mitigating factor. (Citations omitted.) (See also Australian Securities and Investments Commission v Michalik [2004] NSWSC 1259; 52 ACSR 115 at 123 [29] per Palmer J; Sydney Medical Service Co-operative Limited v Lakemba Medical Services Pty Ltd (No 2) [2016] FCA 1188 at [15] per Flick J; Australian Competition and Consumer Commission v ACN 117 372 915 Pty Ltd (in liq) [2016] FCA 1437 at [40]–[42] per Moshinsky J; Thunder Studios Inc (California) v Kazal (No 2) [2017] FCA 202 at [8]–[11] per Rares J; and Australian Competition and Consumer Commission v Halkalia Pty Ltd (No 3) [2017] FCA 522 per Tracey J.) 29 The parties also accepted as relevant and uncontroversial the following statement in Australasian Meat Industry Employees Union' v Mudginberri Station Pty Ltd (1986) 161 CLR 98, where Gibbs CJ, Mason, Wilson and Deane JJ said (at 112-113): …lying behind punishment for a contempt which involves wilful disobedience to a court order, is the very substantial purpose of disciplining the defendant and vindicating the authority of the court. In our view…a deliberate commission or omission which is in breach of an injunctive order or undertaking will constitute such wilful disobedience unless it be casual, accidental or unintentional. 30 As the Full Court most recently said in Kazal v Thunder Studios Inc (California) [2017] FCAFC 111 (at [104] per Besanko, Wigney and Bromwich JJ): It follows from the foregoing that it is essential to the due administration of justice that contempt of court, and in particular serious contempt of court, remains relatively rare. Vigilance is required to help ensure contempt remains a rare problem. Whenever there is a real need for deterrence, be it specific or general, that will always be a vitally important consideration in determining the appropriate penalty. Consideration Nature of the contempt 31 In this case, there is no doubt that the conduct of Mr Hardy in refusing to comply with the Court's 28 February 2017 order, in the circumstances I found established beyond reasonable doubt in AGL Energy Limited v Hardy [2017] FCA 420 (especially at [47]-[57]), was deliberately defiant and contumacious: see Witham v Holloway (1995) 183 CLR 525 at 530. 32 The penal notice on the front page of the Search Order was in the terms set out in the example form of a search order annexed to the Court's Search Orders Practice Note (GPN-SRCH). The penal notice said, among other things, in capital letters and in bold type: IF YOU (BEING THE PERSON BOUND BY THIS ORDER): (A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THE ORDER FOR THE DOING OF THE ACT; OR (B) DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU NOT TO DO, YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT. 33 Mr Hardy was afforded repeated opportunities to comply with the Search Order. The independent lawyer, Mr Marquet, repeatedly explained to Mr Hardy, in the clearest of terms, the implications of a refusal to comply with the Search Order, including the possibility of contempt proceedings being brought against him. Moreover, as the Court has already found, Mr Hardy knew that he was committing contempt when he refused access to the independent lawyer to his home to retrieve the relevant electronic devices. 34 In those circumstances, the contempt was, self-evidently, deliberately defiant and contumacious. It follows that Mr Hardy's failure to obey the Search Order constitutes a criminal offence: see Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375 at 395 [65] per Nettle J; Witham v Holloway (1995) 183 CLR 525 at 530. Relevance of the protocol 35 Mr Hardy's counsel submitted that, in light of the medical evidence concerning Mr Hardy's psychological condition (discussed further at [44] below), his agreement to the protocol and its successful implementation and Mr Hardy's apology, the Court, viewing the evidence as a whole, should regard the contempt as being serious, rather than contumacious. I reject that submission. Quite apart from anything else, there is no evidentiary basis for it. 36 Senior counsel for AGL, Mr Murdoch QC, submitted that Mr Hardy's agreement to the "protocol" contained in the consent orders and its successful implementation, and his apology, are properly to be characterised as acts of mitigation relevant to penalty. I agree with that approach. 37 Once Mr Hardy had refused to comply with the Search Order on 2 March 2017, the contempt was not capable of being "undone". The protocol was agreed to some considerable time after the contempt, and even then at the suggestion of AGL, and its implementation was the only effective way that the contempt could be addressed. 38 In those circumstances, although the contempt was deliberately defiant and contumacious, Mr Hardy's actions since the time the contempt occurred must be regarded as going to mitigate what would otherwise be the appropriate penalty. I have little doubt that the appropriate penalty, had Mr Hardy not agreed to and complied with the protocol, and apologised, would likely have involved a substantial sentence of imprisonment. Specific deterrence 39 The issue of specific deterrence is not particularly significant in this case. First, Mr Hardy has offered a complete apology (albeit on the day of the penalty hearing), in which he also says that he will in the future obey court orders. Secondly, Mr Hardy no longer holds any union position. Thirdly, it seems highly likely that, within a very short time, Mr Hardy will cease to be an employee of AGL. General deterrence 40 Turning to the issue of general deterrence, as Merkel J said in Australian Industry Group v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union & Ors [2000] FCA 629 at [79]-[80]: The rule of law in a democratic society does not permit any member of that society, no matter how powerful, to pick and choose the laws or court orders that are to be observed and those that are not. Maintenance of the rule of law in our society does not only require that parties are able to resort to courts to determine their disputes…, it also requires that parties comply with the orders made by the courts in determining those disputes. If the individual respondents believed that the orders of [the judge] were wrongly made, then it was open to them to appeal, or apply for leave to appeal, against those orders. Instead, they breached them. The fact that the breaches are by union leaders holding important offices in a federation of national trade unions makes them more, rather than less, serious... (Citations omitted.) 41 Despite the fact that the agreed "protocol" was complied with, general deterrence remains of fundamental significance in this case: see also Kazal v Thunder Studios Inc (California) [2017] FCAFC 111 at [104]. Were it otherwise, the idea might get abroad that parties upon whom search orders, or other orders, are served could opt to defy them without suffering serious consequences, in the hope, or expectation, that, in due course, they will be able to agree to some alternative procedure that is more to their liking. That would subvert the "underlying rationale of every exercise of the contempt power" by encouraging the disobeying of orders with impunity, with the result that the whole administration of justice would be brought into disrepute: Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 107 per Gibbs CJ, Mason, Wilson and Deane JJ, citing Borrie and Lowe's Law of Contempt, 2nd ed (1983). Mr Hardy's financial circumstances 42 The evidence about Mr Hardy's financial position is scant. All the court knows is that he owns his home together with his wife, and that he receives fortnightly income of $4367. 43 If he accepts a redundancy from AGL, as his counsel suggested is likely, Mr Hardy will presumably receive some amount of money in return. However, the Court was not provided with any details as to what that amount might be. In any event, even if Mr Hardy had limited financial means, and, as I say, there is no evidence to enable me to determine whether that is so, the observation of Merkel J in Louis Vuitton Malletier SA v Design Elegance Pty Ltd (2006) 149 FCR 494 at [28] would remain apt, namely that: …that should not prevent the imposition of significant fines as the penalties…should be those that are necessary to vindicate the Court's authority and to deter others from engaging in similar conduct. Medical evidence 44 Counsel for Mr Hardy sought to rely on medical evidence which is to the effect that Mr Hardy has been diagnosed as having an adjustment disorder with anxiety and depression. It was submitted that the Court should draw the inference that, because Mr Hardy has been diagnosed with that condition, and likely laboured under it on 2 March 2017, "faced [on that date] with the sudden intrusion and stressful situation, would not be conducive to calm, reflective and pensive thought and that it would also…be open to infer that illness of that kind does impact on people's thinking and thinking processes". It is not entirely clear what was meant by that submission, but in any event, there is no evidence before the Court to enable any finding to be made about any connection between the condition with which Mr Hardy has been diagnosed and his defiance of the Court's order on 2 March 2017. Apology 45 In assessing the appropriate penalty, I have had regard to the fact that Mr Hardy's apology, although no doubt genuine, was made at the last moment. Character evidence 46 I have also taken into account the content of the character references referred to at [18]-[20] above, both of which, in essence, provide the basis for the Court to accept, and I do accept, that Mr Hardy is a man of integrity, that he is a trustworthy person and that he has worked selflessly for many years in support of workers. penalty 47 Weighing all of those considerations in the balance, in my view the appropriate penalty to be imposed on Mr Hardy is a fine of $25,000. I will order that the fine be paid within 28 days of the date of the Court's order imposing the fine. costs 48 As to the question of costs, AGL submitted that the Court should make an order that Mr Hardy pay costs on an indemnity basis, because, relevantly, "Mr Hardy was aware of what was required of him [by the Search Order] and, notwithstanding that, did not satisfy the order", Mr Hardy accepts that his disobedience to the order was wilful and it was only through a full contested hearing on the contempt charge that AGL was able to "achieve belatedly the fruit of the original order". 49 Mr Hardy's counsel submitted that he should be given the opportunity to make a further brief written submission in relation to costs, with the benefit of having considered the Court's reasons on the question of penalty. I agreed to that course, and the Court's orders will provide accordingly. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice O'Callaghan. Associate: Dated: 3 August 2017 ANNEXURE A Federal Court of Australia District Registry: Victoria Division: Fair Work No: VID176/2017 AGL ENERGY LIMITED and another/others named in the schedule Prospective Applicant GREGORY HARDY Prospective Respondent ORDER JUDGE: JUSTICE O'CALLAGHAN DATE OF ORDER: 30 May 2017 WHERE MADE: Melbourne THE COURT ORDERS BY CONSENT THAT: 1. In this Order; (a) Electronic Document means any record of information stored on any of Non-Privilege Claim Electronic Places, Privilege Claim Electronic Places and/or Online Storage Facility, and includes: (i) anything on which there is writing; or (ii) anything on which there are marks, figures, symbols, or perforations having a meaning for persons qualified to interpret them; or (iii) anything from which sound, images or writings can be reproduced with or without the aid of anything else; or (iv) a map, plan, drawing or photograph. (b) The Independent Computer Expert means Mr Martin Sisk of PWC. (c) The Independent Lawyer means the independent lawyer, agreed between the parties or in the absence of agreement, appointed by the President of the Law Institute of Victoria to act in that capacity in accordance with the terms of these orders and who the President is satisfied has not acted for or against any of the prospective applicants or prospective respondents. (d) Online Storage Facility means any online storage facilities or file sharing platforms used or operated on any of the Non-Privilege Claim Electronic Places, Privilege Claim Electronic Places, including but not limited to: (i) cloud based resources (for example Dropbox); and (ii) cloud based servers (for example virtual servers running software in Amazon Cloud). (e) NuLegal means NuLegal Pty Ltd. (f) Listed Thing means: (i) any Electronic Document containing or consisting of: (A) correspondence, communications or other evidence of exchanges between Mr Hardy and employees of the Second Prospective Applicant during the period from 12 to 18 January 2017 inclusive relating to: (I) the performance of work by any employee of the Second Prospective Applicant in a manner different from that in which it is customarily performed, or the adoption of a practice in relation to work by an employee, the result of which is a restriction or limitation on, or a delay in, the performance of the work; (II) a ban, limitation or restriction on the performance of work by any employee of the Second Prospective Applicant or on the acceptance of or offering for work by any employee of the Second Prospective Applicant; (III) a failure or refusal by employees of the Second Prospective Applicant to attend for work or a failure or refusal to perform any work at all by employees of the Second Prospective Applicant who attend for work; (B) correspondence, communications or other evidence of exchanges between Mr Hardy and officers, employees or members of the Second Prospective Respondent during the period from 12 to 18 January 2017 inclusive relating to: (I) the performance of work by any employee of the Second Prospective Applicant in a manner different from that in which it is customarily performed, or the adoption of a practice in relation to work by an employee of the Second Prospective Applicant, the result of which is a restriction or limitation on, or a delay in, the performance of the work; (II) a ban, limitation or restriction on the performance of work by any employee of the Second Prospective Applicant or on the acceptance of or offering for work by any employee of the Second Prospective Applicant; (III) a failure or refusal by employees of the Second Prospective Applicant to attend for work or a failure or refusal to perform any work at all by employees of the Second Prospective Applicant who attend for work; (C) records relating to the personal/carer's leave of employees of the Second Prospective Applicant during the period from 12 to 18 January 2017 inclusive; (D) records relating to the hours or work and availability of employees of the Second Prospective Applicant during the period from 12 to 18 January 2017; (E) digital records, data or other electronic traces that demonstrate that the things listed in paragraphs (1)(i)(A)-(D) above were once contained on any Storage Device, in any Online Storage Facilities and/or in any Email Accounts; (F) emails passing between the following during the period from 12 January to 18 January 2017 inclusive: (I) any electronic mail account relating to Glenn Loechel; and (II) xxxxxxxxxxxxxxxxxxxxxxx and/or xxxxxxxxxxxxxxxxxxxxx; (ii) Any Electronic Document recording telephone calls or sms communications made, sent or received by Mr Hardy during the period from 12 to 18 January 2017 inclusive. (iii) Any other Electronic Documents not listed in paragraphs (a) or (b) relating to, or containing information regarding, the following aspects of the Second Prospective Applicant's business: (A) information relating to the availability of members of the Second Prospective Respondent to work overtime for the Second Prospective Applicant; and/or (B) information relating to the personal leave patterns of members of the Second Prospective Respondent who work for Second Prospective Applicant during the period from 12 to 18 January 2017 inclusive. (iv) Any Electronic Document demonstrating the use of software or other means to delete, in bulk, any Electronic Documents referred to in paragraphs (1)(f)(i) to (iii) above. (g) NuLegal Search Parameters means: (i) Any Electronic Document in the Privilege Claim Electronic Places produced, amended, modified or deleted during the period 12 to 18 January 2017 (save for any automated or computer generated modifications or amendments, which are expressly excluded); (ii) Any Electronic Document in the Privilege Claim Electronic Places that contains words that refer to following dates, 12 January 2017, 13 January 2017, 14 January 2017, 15 January 2017, 16 January 2017, 17 January 2017, 18 January 2017, including any commonly used abbreviations or abridgments used to refer to those dates. (h) NuLegal Search Report means a report of the Electronic Documents identified by NuLegal in the Privilege Claim Electronic Places that respond to the NuLegal Search Parameters, after de-duplication of those Electronic Documents, along with copies of each of those Electronic Documents. (i) Non-Privilege Claim Electronic Places means the following devices of Mr Hardy: (i) Astone USB stick (512 MB) (ii) Imation USB stick (4 GB) (iii) SanDisk Cruzer Glide USB stick (16 GB) (iv) Two Telstra mobile broadband 'dongle' devices – USB type. (j) Privilege Claim Electronic Places means the following devices and email accounts of Mr Hardy: (i) One Dell XPS laptop (512 GB SSD); (ii) Two Seagate 'Backup Plus' external hard drives (3.63 TB each); (iii) One Telstra mobile phone (described as a basic 'flip style' phone); (iv) Email account: xxxxxxxxxxxxxxxxxxxxxxx (v) Email account: xxxxxxxxxxxxxxxxxxxxx TREATMENT OF NON-PRIVILEGED DOCUMENTS 2. Mr Hardy will, within 5 business days of the date of this order, produce to or grant access to the Independent Lawyer the Non-Privilege Claim Electronic Places. 3. The Independent Computer Expert (under the supervision of the Independent Lawyer) will: (a) make copies or digital images of the Non-Privilege Electronic Places; and (b) search the Non-Privilege Claim Electronic Places for any Listed Things; and (c) return the Non-Privilege Claim Electronic Places to Mr Hardy. 4. The Independent Computer Expert (under the supervision of the Independent Lawyer) will produce to the Court and Mr Hardy (but not to the Prospective Applicants or their solicitors) copies of any Listed Things located as a result of the search carried out by them under Order 3, within 10 business days of Mr Hardy's production. TREATMENT OF PRIVILEGED DOCUMENTS 5. Noting that Mr Hardy objects to production of the Privilege Claim Electronic Places on the basis that they may contain documents, data or material that may tend to prove that he is liable to a civil penalty and/or documents, data or material that is subject to client legal privilege, Mr Hardy will, within 5 business days of the date of this order produce to or grant access to NuLegal, the Privilege Claim Electronic Places. 6. Within 10 business days of the date of this order: (a) NuLegal will conduct searches over the Privilege Claim Electronic Places to identify documents that fall within the NuLegal Search Parameters to prepare the NuLegal Search Report; and (b) NuLegal will provide the NuLegal Search Report to the solicitors for Mr Hardy (but will not provide the NuLegal Search Report to the Prospective Applicants or their solicitors). (c) the solicitors for Mr Hardy will conduct searches of the documents identified in the NuLegal Search Report to identify any Listed Things. 7. Within 15 business days of the date of this order, Mr Hardy will: (a) prepare an affidavit containing so many of the Listed Things to which objection to production is taken on the basis of his claim for civil penalty privilege and/or client legal privilege and deliver them to the Court; and (b) file and serve on the Prospective Applicants a separate affidavit setting out the basis of any objection with respect to those documents. 8. NuLegal will destroy any copies of the Privilege Claim Electronic Places held by it after preparing the NuLegal Search Report and providing that report to the solicitors for Mr Hardy. 9. If a claim for privilege is made by Mr Hardy: (a) the Court will, on a date to be fixed and pursuant to s 128A(4) of the Evidence Act 1995 (Cth), and after hearing from the parties, determine whether or not there are reasonable grounds for the objection; and (b) copies of any Listed Things in respect of which a claim for privilege is upheld will be retained by the Court in a sealed envelope (with originals returned to Mr Hardy) until further order. (c) produce to the Court (but not the Prospective Applicants or their solicitors) copies of any Listed Things in respect of which no claim for penalty privilege and/or client legal privilege is made. 10. The Costs associated with orders 6(a) to (b) be borne by Mr Hardy. 11. The Costs associated with orders 3 and 4 be borne by the Prospective Applicants. 12. The parties have liberty to apply. Date that entry is stamped: 30 May 2017 Schedule No: VID176/2017 Federal Court of Australia District Registry: Victoria Division: Fair Work Second Prospective Applicant AGL LOY YANG PTY LTD Third Prospective Applicant AGL LOY YANG MARKETING PTY LTD Second Prospective Respondent CONSTRUCTION, FORESTRY, MINING and ENERGY UNION