Re Martin Engineering Company and ESS Engineering Services and Supplies Pty Limited v Nicaro Holdings Pty Limited; Matflo Engineering Pty Limited and Richard Couper [1991] FCA 64; 20 IPR 241/100 ALR 358 (6 March 1991)

FEDERAL COURT OF AUSTRALIA

Re: MARTIN ENGINEERING COMPANY and E.S.S. ENGINEERING SERVICES AND SUPPLIES
PTY LIMITED
And: NICARO HOLDINGS PTY LIMITED; MATFLO ENGINEERING PTY LIMITED and RICHARD
COUPER
No. N G427 of 1987
FED No. 69
Patents
(1991) AIPC para 90-800
[1991] FCA 64; 20 IPR 241/100 ALR 358

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Burchett J.(1)

CATCHWORDS

Patents - damages for infringement - whether a director who authorized and took part in the infringement by his company was liable to pay damages personally.

HEARING

SYDNEY
6:3:1991

Counsel for the Applicants: Mr D.K. Catterns

Solicitors for the Applicants: Messrs Williams Niblett

Solicitor for the Respondents: Mr W.D. Clapin of Messrs Clapin,

Robinson and Carbone

ORDER

The Respondents and each of them be restrained by themselves, their servants and agents and the servants and agents of each of them from making, selling, offering for sale, promoting, advertising or by way of trade displaying:

(a) conveyer belt cleaning systems examples of which are
Exhibits 12A and 13A in these proceedings having:
(i) mounting components, an example of which is
Exhibit 4A in these proceedings; or
(ii) mounting components, an example of which is
Exhibit 5A in these proceedings; or
(iii) mounting components, an example of which was Exhibit 3
at the interlocutory hearing in these proceedings; or
(iv) mounting components, an example of which was
Exhibit 4 at the interlocutory hearing in these
proceedings; or
(v) any combination of the mounting components
referred to in subparagraphs (i) to (iv).
(b) Spare parts in kit form for the assembly of conveyer belt
cleaning systems referred to in Order 1(a).

The Third Respondent be restrained from jointly infringing, procuring the

infringement of or aiding and abetting infringement of patent No 512902 in breach of Order 1.

The Respondents Matflo Engineering Pty Limited and Richard Couper pay to the First Applicant damages in the sum of $9,750.60 within fourteen days of the date of this Order.

The Respondents Matflo Engineering Pty Limited and Richard Couper pay to the Second Applicant damages in the sum of $40,367.48 within fourteen days of the date of this Order.

The Respondents pay the Applicants' costs of these proceedings including the costs of the interlocutory hearing.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

In this matter I published reasons for judgment on 12 February 1991 in which I found in favour of the applicants upon the question whether what was described as "the respondents' apparatus" infringed the applicants' patent. I assessed damages, and directed the applicants to bring in short minutes of orders in conformity with my reasons. Upon the bringing in of the short minutes, the question was raised whether the third respondent Richard Couper, as well as the second respondent Matflo Engineering Pty Limited, should be ordered to pay the damages assessed. This question had not originally been debated before me, and is not discussed in detail in my earlier reasons. However I did make an express finding that Mr Couper "is a director and the moving spirit" of the companies which are the other respondents. There is no doubt, on the evidence which I have accepted, that he authorized, directed and promoted the infringements which I have found proved. He was personally involved in the activities.

2. The question is whether participation of this order is sufficient to render the third respondent liable to pay damages, notwithstanding that the sales of the infringing product were effected, not by him, but by his company. I have now had the benefit of a full citation of authority on this point.

3. In British Thomson-Houston Co. Ld. v. Irradiant Lamp Works Ld. (1924) 41 RPC 338 at 340, Eve J. said:

"(T)he participation of these directors in the affairs of
the Company was such as to make them liable for the
consequences of the Company's tortious acts because they
must be taken to have impliedly authorised, permitted and
taken part in them."

In British Thomson-Houston Co. Ld. v. Sterling Accessories Ld. (1924) 41 RPC 311 at 317, Tomlin J. (as Lord Tomlin then was) indicated that a defendant could be liable for a tort on the basis that he was "the person on whose instructions the tort has been committed." These statements are consistent with the Privy Council decision in Wah Tat Bank Limited v. Chan Cheng Kum (1975) AC 507 at 514-515 where Lord Salmon said:

"A tort may be committed through an officer or servant of a
company without the chairman or managing director being in
any way implicated. There are many such cases reported in
the books. If, however, the chairman or managing director
procures or directs the commission of the tort he may be
personally liable for the tort and the damage flowing from
it: Performing Right Society Ltd v. Ciryl Theatrical
Syndicate Ltd (1924) 1 KB 1, 14, 15, per Atkin L.J. Each
case depends upon its own particular facts."

This passage was cited by the Court of Appeal in C. Evans and Sons Ltd v. Spritebrand Ltd (1985) 1 WLR 317 at 325. In that case (at 324) Slade LJ. said: "(J)udical dicta of high authority are to be found in English decisions which suggest that a director is liable for those tortious acts of his company which he has ordered or procured to be done." The last mentioned case was cited by Davies J. in Australasian Performing Right Association Ltd v. Valamo Pty Ltd (1990) 18 IPR 216. In that case a director was not liable for infringement of copyright by his company, but the decision is not at all at odds with the principle of the cases to which I have referred. Davies J. (at 220) said:

"He is not shown to have any knowledge of the works being
performed or any personal involvement in their performance.
He certainly did not directly authorise, procure or instruct
their performance. Nor did he impliedly authorise the
performance of the particular works or of works which
infringed copyright."

In Kalamazoo (Aust) Pty Ltd v. Compact Business Systems Pty Ltd (1985) 84 FLR 101 at 127, Thomas J. said:

"It does not automatically follow that a director of a
company will be guilty along with his company of any tort
that the company commits, even though the company be small
and his control over it effective: (he cited Evans v.
Spritebrand at 329). However, the discussion in that case
suggests that in the usual course a director who procures or
directs his company to perform a tortious act will be liable
along with the company."

On this basis, he held directors liable "for authorising and directing the particular course which the company followed".

4. In my opinion, the decision in Australasian Performing Right v. Valamo falls on one side of a line on the other side of which this case falls. Mr Couper's personal involvement brought him squarely within the principle of liability, and the awards of damages to be made in this case should be made against him as well as against Matflo Engineering Pty Limited.