Last year Holman Webb Lawyers Brisbane (“HWLB”) successfully obtained orders against a company director and a company officer for contempt of court. The contempt orders were necessary to enforce injunctive orders previously obtained by HWLB on behalf of Beech Ovens Pty Ltd. These proceedings are an exemplar of the personal liability which directors and company officers have for the actions of their company in complying with Court orders.
Background to the proceedings
In early 2015 the plaintiff (“Beech”) commenced District Court proceedings alleging, inter alia, that the defendant (“Style Global”) had engaged, and continued to engage, in misleading and deceptive conduct in breach of s18 of the Competition and Consumer Act 2010 (“the CCA”). In light of the continuing nature of the alleged misleading and deceptive conduct, Beech simultaneously filed an application with the Court for injunctive relief pursuant to s232 of the CCA.
Beech are the makers of high-end ovens. They work with various up-market restaurants and celebrity chefs to conceptualise, design, and create high-specification ovens and oven installations. Previously, they had engaged one of the guiding hands of Style Global (“the Company Officer”) to assist with part of the this process.
Since that time, the Company Officer become involved with another entity, Style Global. Style Global had placed numerous photographs of Beech ovens and oven installations on their website, the use of which was vigorously objected to by Beech.
The Injunctive Orders
In February that year, Everson DCJ granted injunctive orders in Beech’s favour (“the Injunctive Orders”) . Relevantly, these orders restrained Style Global by injunction from “using any photographs of any products, or any other products, or photographs of part of products, manufactured by any other party under contract for the plaintiff”. Further, Style Global was ordered to remove all such photos from its website within 8 days.
A month later Style Global had failed to comply with Injunctive Orders.
With Style Global failing to comply with the Injunctive Orders, Beech made application for contempt of court against Style Global, its director, and the Company Officer pursuant to Part 7 Chapter 20 of the Uniform Civil Procedure Rules 1999 (“the UCPR”). This application sought the detention of the two individuals at Her Majesty’s leisure, and an indemnity costs order in favour of Beech.
On 14 April the contempt application was heard before Devereaux SC DCJ.
At the hearing, Style Global and the Company Officer argued that they had failed to comply with the Injunctive Orders as these were confusing and unreasonable. It should be noted that the offending photographs were removed from Style Global’s website on 27 March – 3 days after the contempt proceedings were filed.
At the hearing, Beech argued that Style Global’s conduct in removing the photographs from its website on 27 March showed that they understood the orders, and that the failure to remove the pictures prior to this date was wilful disobedience. Beech abandoned it claim for the imprisonment of the director and the Company Officer, but continued to seek findings of guilt, and orders for payment of Beech’s costs of and incidental to the application on an indemnity basis.
The Contempt Orders
Two months later Devereaux SC DCJ handed down judgment of the District Court (Beech Ovens Pty Ltd v Style Global Pty Ltd  QDC 153).
Style Global, the director, and the Company Officer (together: “the defendants”) were found guilty of contempt by failing to comply with the Injunctive Orders. Relevantly, the individual director and the Company Officer were held personally liable for Style Global’s contempt pursuant to r898 and r921 of the UCPR.
Devereaux SC DCJ made clear the defendants personal liability for their company’s failure to comply with the Injunctive Orders:
“[The relevant Act] provides that a person is in contempt … if the person, without lawful excuse, fails to comply with an order of the court. [The injunctive order] … was a non-money order. When such an order requires a person to do an act within a specified time, and there is failure to comply, the order may be enforced by punishing the person for contempt. Where, as here, the person was a corporation, punishment may be directed to ‘any officer of the corporation’.”
Furthermore, His Honour firmly refused the director’s defence that he was unaware of Injunctive Orders as he had not attended the original hearing:
“I have already expressed satisfaction that [the Company Officer] and [the director] are properly named respondents to the application. The latter was the sole director of Style Global. The material shows he and [the Company Officer] were aware of the orders sought. It is inconceivable, given the personal and business relationship between the two men, the continuing nature of the dispute and the size of the corporation, that [the director] was ignorant of the orders once they were made and communicated to Style Global and that he did not direct or knowingly approve of the manner in which [the Company Officer] responded to the orders. … I accept the applicant’s submission that, at least, [the director] failed to adequately inform himself of the terms of the orders when he knew his company’s actions might affect the efficacy of a possible court order.”
In short form, the Court found the defendants; were aware of the Injunctive Orders, were not confused by the Injunctive Orders, wilfully failed to comply with the Injunctive Orders - and that this wilful failure to comply was not just causal, accidental, or unintentional. The defendants were ordered – in their personal capacity - to pay Beech’s costs on an indemnity basis as sanction for their contempt, pursuant to r932 of the UCPR.
The Beech decision offers a reminder of the importance of fully complying with Court orders. Should a company fail to comply with Court orders, its directors and officers may be found personally liable for contempt.
In Beech the personal indemnity costs orders display how seriously the Court takes contempt proceedings. Whilst the director and the Company Officer were not ultimately handed down custodial sentences, such sentences remain a distinct possibility for those who fail to comply - or ensure their company comply - with Court orders.