· 2021-11-18T13:28:13+0000 · 465 posts

Media Campaign Opposed by the Applicant

Registered Clubs Association of New South Wales v Stolz (No 2) [2021] FCA 1418 (17 November 2021)

The first respondent allegedly pursued an "inflammatory media campaign" to improperly pressure the applicant regarding the applicant’s litigation against the respondents. The applicant lodged an application for interlocutory injunction to restrain threatened contempt of court. The Court, in deciding whether or not to make an order restraining the respondent, assessed whether the applicant is motivated by revenge or intention to silence the media.

Facts:

The applicant says that, after his employment ceased, and in breach of his obligations, Mr Stolz did not return all the applicant’s documents and information that he had obtained during the course of his employment. Instead, Mr Stolz disclosed and misused that information. Mr Stolz’s conduct included the disclosure and use of its confidential information to further his own business and commercial interests. On 7 April 2020, proceedings commenced. On 22 April 2020, the respondents, consented to a documentary disclosure regime permitting a forensic analyst (the independent expert) to inspect the respondents’ electronic devices, and email and online accounts.

This is in order to identify information he believed to be: (a) confidential information or (b) intellectual property belonging to the applicant, or (c) information that was evidence of the use, transfer, copying, or disclosure, by either respondent, of that confidential information or intellectual property (the disclosure regime). Through the disclosure regime, the respondents' solicitors may raise, on a per item basis, any objection to the forensic analyst providing the results of his work to the applicant or its solicitors.

On 14 July 2021, the Registered Clubs Association of NSW (generally referred to as Clubs NSW), the applicant filed an interlocutory application. The applicant seeks certain injunctive relief on the basis of a threatened contempt of court; orders to secure compliance by the respondents with previous orders providing a regime for the disclosure of documents; and an asset preservation order. The applicant seeks a permanent injunction against the respondents, restraining them from using, disclosing, or divulging any “confidential information” and “intellectual property” defined in an employment contract and confidentiality agreement between the applicant and the first respondent, Mr Stolz; a declaration that Mr Stolz has contravened s 183 of the Corporations Act 2001 (Cth) (the Act) by using information obtained as an employee of the applicant in order to gain an advantage for himself and/or to cause detriment to the applicant; and an order for compensation pursuant to s 1317H of the Act in respect of the alleged contravention of s 183.

The applicant seeks that the respondents pay or cause to be paid into Court an interest-bearing controlled money account as agreed between the parties, an amount of $75,000 from any net proceeds payable to, or otherwise receivable by, the respondents in consequence of the sale of the property at 51-55 Hakone Road, Woongarrah, NSW 2259, with that amount to be held pending finalisation of the taxation or assessment of the costs payable to the applicants pursuant to the orders made by Yates J on 9 June 2021.

Issue:

Whether or not the injunctions should be granted.

Applicable law:

Corporations Act 2001 (Cth) ss 183 - provides that a person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:

(a) gain an advantage for themselves or someone else; or

(b) cause detriment to the corporation.

Fair Work Act 2009 (Cth) - provides that a contract in restraint of trade or commerce made before the commencement of this sub-section is unenforceable in so far as it confers rights or benefits or imposes duties or obligations on a corporation.

Federal Court Rules 2011 (Cth) r 7.35(4) - provides that the Court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied.

Attorney-General (UK) v Times Newspapers Ltd [1974] AC 273; [1973] 3 All ER 54 - Lord Morris of Borth-y-Gest said that the phrase contempt of court is one which is compendious to include not only disobedience to orders of a court but also certain types of behaviour or varieties of publications in reference to proceedings before courts of law which overstep the bounds which liberty permits.

Australian Broadcasting Corporation v O’Neill [2006] HCA 46; 227 CLR 57 - noted that while the freedom is not absolute, it is one which the Court does not lightly restrain by injunction.

Basetec Services Pty Ltd v Leighton Contractors Pty Ltd (No 2) [2015] FCA 762; 236 FCR 432 - provides that the Court has jurisdiction to grant an interlocutory injunction to restrain a threatened contempt of court.

Basi v Namitha Nakul Pty Ltd [2019] FCA 743 - relied upon by the applicant in pointing out that in order to obtain relief under 7.35(4) of the Federal Court Rules 2011, it is not necessary for it to adduce evidence of an intention on the part of the respondents to dissipate their assets or to prove that dissipation is more probable than not.

Beecham Group Ltd v Bristol Laboratories Pty Ltd[1968] HCA 1; (1968) 118 CLR 618 - explained how the applicant has established a prima facie case that Mr Stolz's conduct is a contempt of court.

Curtis v NID Pty Limited [2010] FCA 1072 - relied upon in holding that there is nothing to suggest that the respondents are proposing to sell the Wongarrah property for anything less than its full market value or that they will deal with the sale proceeds in any way calculated to frustrate the costs order that the applicant has obtained.

Harkianakis v Skalkos (1997) 42 NSWLR 22 - discussed the general principles that apply in cases of contempt by improper pressure on a party.

Hinch v Attorney-General (Vic) [1987] HCA 56; 164 CLR 15 - provides that there must, however, be a “substantial risk of serious interference” or a “real and definite tendency to prejudice or embarrass pending proceedings” or “clear tendency” to interfere with the course of justice.

Meat and Allied Trades Federation of Australia (Queensland Division) Union of Employers v Australasian Meat Industry Union of Employees (Queensland Branch)(1989) 90 ALR 187 - where an interlocutory injunction obtained by the applicants in the proceeding was dissolved because of a press release issued by the applicants which misreported the proceedings and the relief that had been obtained.

Samsung Electronics Company Ltd v Apple Inc [2011] FCAFC 156; 217 FCR 238 - discussed the principles on which interlocutory injunctive relief is granted.

Willshire-Smith v Votino Bros Pty Ltd [1993] FCA 138; (1993) 41 FCR 496 - observed that in assessing whether the requisite degree of inhibition might be calculated to exist there must be some real risk for there will be no contempt if the possibility of influence is remote.

Analysis:

Based on Mr Stolz’s past conduct, the applicant has demonstrated a real threat that Mr Stolz will, unless restrained, continue to engage in that conduct or conduct of substantially the same kind. The uncontradicted evidence suggests that from the time when proceeding was in contemplation, Mr Stolz has sought to generate the public narrative, through the media, that the applicant has made its claims, and brought its proceeding, against him and Mrs Stolz as nothing more than an act of retribution—to “bash” a whistleblower. The object of this conduct has been to arouse not just sympathy for Mr Stolz’s cause, but also to foment public condemnation of the applicant for bringing and maintaining its proceeding, with the object of bringing pressure to bear on the applicant to influence its decision-making in, and in respect of, the proceeding, including whether it should persevere with them, and/or to impede the applicant’s conduct of the proceeding. Evidence suggests that Mr Stolz actively encouraged condemnation by journalists, commentators, and members of the general public against the applicant.

Conclusion:

The Court is persuaded that an injunction, along the lines of the injunction the applicant seeks, should be made. The Court ordered that by 4.00 pm on 26 November 2021, the parties bring in agreed orders to give effect to these reasons and the agreement they have already reached on the other orders that should be made. Leave is granted to the parties to file written submissions on costs, such leave is to be exercised by 4.00 pm on 26 November 2021 with submissions limited to two (2) pages. If the leave granted in Order 2 is exercised, the question of costs be determined on the papers.

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