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Ladakh Pty Ltd v Quick Fashion Pty Ltd & Anor [2010] FMCA 919 (22 November 2010)
Last Updated: 14 December 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
LADAKH PTY LTD v QUICK
FASHION PTY LTD & ANOR
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COPYRIGHT – Application by second respondent
for summary dismissal – second respondent sole director and shareholder of
the first respondent – applicant’s claim against the second
respondent could not be described as having no reasonable
prospect of success
– Keller v LED Technologies Pty Ltd – premature to say that
the law is settled – application for summary dismissal dismissed –
application by second respondent
in the alternative to strike out amended
statement of claim – amended statement of claim does not clearly
articulate what each
respondent is alleged to have done – amended
statement of claim should be struck out and the claim be repleaded.
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LADAKH PTY LTD (ACN 079 120 595)
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First Respondent:
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QUICK FASHION PTY LTD (ACN 126 154 890)
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Hearing date:
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22 November 2010
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Date of Last Submission:
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22 November 2010
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Delivered on:
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22 November 2010
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REPRESENTATION
Counsel for the
Applicant:
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Mr Heerey
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Solicitors for the Applicant:
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Middletons
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Counsel for the Respondents:
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Ms Gatford
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Solicitors for the Respondents:
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Clayton Utz
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ORDERS
(1) The second respondent’s application for
summary dismissal be dismissed.
(2) The second respondent’s application to strike out the amended
statement of claim filed on 24 June 2010 be allowed.
(3) The applicant have leave to file and serve a further amended statement of
claim within 14 days.
(4) The respondents file and serve any further amended response on or before 20
December 2010.
(5) There be costs in the cause as between the applicant and the second
respondent.
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FEDERAL MAGISTRATES COURT OF AUSTRALIA AT
MELBOURNE
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MLG 669 of
2010
LADAKH PTY LTD(ACN 079 120
595)
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Applicant
And
QUICK FASHION PTY LTD(ACN 126
154 890)
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First Respondent
Second Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
Introduction
- This
is an application by the second respondent for orders that the claim against him
be summarily dismissed, and, in the alternative,
that the amended statement of
claim be struck out as against him. Orders were pronounced at the conclusion of
the hearing, with
very brief, oral reasons, on the basis that complete, written
reasons would be provided later if required. These are those reasons.
- The
applicant is a corporation and claims to be a designer, manufacturer,
distributer and wholesaler of women’s clothing. The
first respondent is a
corporation. The second respondent is its sole director and shareholder.
- The
applicant alleges, and the respondents do not admit, that:
- one
of the applicant’s employees designed a certain fabric print, known as
“butterflies of paradise”; and
- the
respondents infringed or authorised the infringement of the copyright in the
butterflies of paradise print.
- In
the respondents’ joint response, the first respondent admitted that it
imported and sold garments known as the Sweetacacia
Garments. It denied that,
in doing so, it had reproduced or substantially reproduced the alleged copyright
work, or that it knew
or reasonably ought to have known that were made from
fabric with the allegedly infringing print.
The test for summary dismissal
- The
application for summary dismissal is brought under rule 13.10 of the Federal
Magistrates Court Rules 2001. That rule provides as
follows:
- The Court
may order that a proceeding be stayed, or dismissed generally or in relation to
any claim for relief in the proceeding,
if the Court is satisfied that:
- (a) the
party prosecuting the proceeding or claim for relief has no reasonable prospect
of successfully prosecuting the proceeding
or claim; or
- (b) the
proceeding or claim for relief is frivolous or vexatious; or
- (c) the
proceeding or claim for relief is an abuse of the process of the Court.
- There
is also power under s.17A of the Federal Magistrates Act 1999 to
summarily dispose of a proceeding. Section 17A provides as
follows:
- (1) The
Court may give judgment for one party against another in relation to the whole
or any part of a proceeding if:
- (a) the
first party is prosecuting the proceeding or that part of the proceeding; and
- (b) the
Court is satisfied that the other party has no reasonable prospect of
successfully defending the proceeding or that part
of the proceeding.
- (2) The
Court may give judgment for one party against another in relation to the whole
or any part of a proceeding if:
- (a) the
first party is defending the proceeding or that part of the proceeding; and
- (b) the
Court is satisfied that the other party has no reasonable prospect of
successfully prosecuting the proceeding or that part
of the proceeding.
- (3) For the
purposes of this section, a defence or a proceeding or part of a proceeding need
not be:
- (a) hopeless;
or
- (b) bound
to fail;
- for it to
have no reasonable prospect of success.
- (4) This
section does not limit any powers that the Court has apart from this section.
- Section
17A of the Federal Magistrates Act 1999 is in the same terms as s.31A of
the Federal Court of Australia Act 1976. In Boston Commercial
Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352; (2006) 70 IPR 146,
Rares J considered the effect of s.31A and said the following at [42] to
[47]:
- [42] I am
of opinion that properly construed, s 31A(2)(b) requires a person moving a
motion for summary disposal (‘the moving party’) to satisfy the
Court that there is no reasonable
prospect of the party claiming relief
(‘the plaintiff’) successfully prosecuting the proceeding or the
part of the proceeding
in question. Experience shows that there are cases which
appear to be almost bound to fail yet they succeed. As Dixon CJ once said
(Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107
CLR 9 at 20):
- ‘Experience
of forensic contests should confirm the truth of the common saying that one
story is good until another is told...’
- [43] Brennan
CJ and McHugh applied that observation in Jackamarra v Krakouer [1998] HCA 27; (1998)
195 CLR 516 at 522 [9] to a situation which an appellate court was exercising a
discretion to permit a further step to be taken in an appeal that had already
been instituted. Obviously, where there is a contested application under s 31A,
both parties will be present to explain their case, but not in the context of a
trial. The procedure envisaged by s 31A is summary. The concept of a party
having ‘no reasonable prospect of successfully prosecuting a
proceeding’ has some
similarity to the test at common law for determining
whether a jury properly instructed could reach a verdict for the plaintiff.
That test was authoritatively stated by the Judicial Committee in Hocking v
Bell (1947) 75 CLR 125 at 130-131, approving the following statement from the
dissenting judgment of Latham CJ (Hocking v Bell [1945] HCA 16; (1945) 71 CLR 430 at
441-442):
- ‘If
there is evidence upon which a jury could reasonably find for the plaintiff,
unless that evidence is so negligible in character
as to amount only to a
scintilla, the judge should not direct the jury to find a verdict for the
defendant, nor should the Full Court
direct the entry of such a verdict. The
principle upon which the section is based is that it is for the jury to decide
all questions
of fact, and therefore to determine which witnesses should be
believed in case of a conflict of testimony. But there must be a real issue
of fact to be decided, and if the evidence is all one way, so that only one
conclusion can be said
to be reasonable, there is no function left for the jury
to perform, so that the court may properly take the matter into its own
hands as
being a matter of law, and direct a verdict to be entered in accordance with
the only evidence which is really presented in the case.’ (emphasis
added) (see also Swain v Waverley Municipal Council [2005] HCA 4; (2005) 220 CLR 517 at
522 [9] per Gleeson CJ, 561-562 [128]-[131] per Gummow J and 580 [203], 582-583
[208]-[209] per Kirby J; see also at 531-532 [33]-[34] per
McHugh J)
- [44] In a
case to which s 31A applies, where there is a real issue of fact to be decided
in the sense identified in the above principle, and, possibly, where there
is a
real issue of law of a similar kind, it is obviously appropriate that the matter
goes to trial. And, one must be mindful that
in Hocking v Bell (1945) 71
CLR at 487, Dixon J said that in effect, every judge who had heard the matter
(through four trials, two Full Court appeals
and, to that point, the appeal to
the High Court) would have formed the view that the plaintiff should have failed
had they been
able to decide the facts, yet the Privy Council restored the
second jury verdict in her favour and so concluded the litigation.
This raises
a very real question, as to what reasonable prospects are for present
purposes.
- [45] I am
of opinion that in assessing what reasonable prospects of success are for the
purposes of s 31A, the Court must be very cautious not to do a party an
injustice by summarily dismissing the proceedings where, in accordance with
the
principles in Hocking v Bell [1947] HCA 54; (1947) 75 CLR 125, contested evidence might
reasonably be believed one way or the other so as to enable one side or the
other to succeed. As soon
as the evidence may have such an ambivalent character
prior to a final determination, I am of opinion that then, as a matter of law,
at that point there are reasonable prospects of success within the meaning of
s 31A. Unless only one conclusion can be said to be reasonable, the moving
party will not have discharged its onus to enliven the discretion
to authorize a
summary termination of the proceedings which s 31A envisages. In moving the
second reading of the bill introducing s 31A (the Migration Litigation
Reform Bill 2005) the Attorney-General said that it strengthened ‘...
the power of the courts to deal with unmeritorious matters by broadening
the
grounds on which federal courts can summarily dispose of unsustainable
cases’.
- [46] In
Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 at 154-155, Dawson,
Gaudron and McHugh JJ said that a party should not be shut out from litigating
an issue which was fairly arguable
and that the power to grant leave to amend
should be exercised with that in mind. They observed (189 CLR at 154) that
‘...the
ultimate aim of a court is the attainment of justice’.
Obviously, s 31A regulates the attainment of justice by creating an
entitlement
in a party to be protected from claims or defences which fail to meet the
threshold prescribed in the section. In granting
leave to appeal on a decision
involving the application of s 31A, Wilcox J observed in Vans, Inc v
Offprice.Com.Au Pty Ltd [2006] FCA 137 at [12] that it was arguable that the
effect of s 31A was that there could be summary judgment for an applicant
‘... notwithstanding
the possibility that the applicant’s case will
break down at trial; in other words, it is now not enough for a party resisting
a summary judgment application to seek merely to put the other side to
proof’ (his Honour’s emphasis).
- [47] GE
Capital also argued that s 31A required the Court to dismiss a claim or defence
based on a predictive assessment of its prospects,
even though it may be
possible that had the matter gone to trial it would have succeeded. I am of
opinion that this is not how the
section operates. It is engaged only to
determine summarily a claim or defence which has no reasonable prospect of
success. The purpose
of the enactment is to enable the Court to deal with
matters which should not be litigated because there is no reasonable prospect
of
any outcome but one. If there is a reasonable danger that a claim or defence
could be dismissed under s 31A, which could succeed
at a trial, the provision
would create miscarriages of justice. It is a key feature of the judicial power
under Ch III of the Constitution that the Court be in a position to, and in fact
does, quell a controversy. The exercise of the judicial power to prevent the
substantive
agitation of a controversy in which each side has a reasonable
prospect of success would defeat, not advance, the ends of
justice.
- In
Commonwealth Bank of Australia (ACN 123 123 124) v ACN 000 247 601 Pty
Limited (in liq) (Formerly Stanley Thompson Valuers Pty Limited)
[2006] FCA
1416 at [30] Jacobson J summarised the conclusions of Rares J in
Boston Commercial as follows:
- In assessing
whether there are reasonable prospects of success, the Court must be cautious
not to do an injustice by summary dismissal.
- There will be
reasonable prospects of success if there is evidence which may be reasonably
believed so as to enable the party against
whom summary judgment is sought to
succeed at the final hearing.
- Evidence of
an ambivalent character will usually be sufficient to amount to reasonable
prospects.
- Unless only
one conclusion can be said to be reasonable, the discretion under s 31A cannot
be enlivened.
- Boston
Commercial largely concerned factual disputes in summary dismissal
applications. However, the High Court more recently in Spencer v
Commonwealth [2010] HCA 28; (2010) 84 ALJR 612 dealt primarily with disputed questions of
law in summary dismissal applications. In Spencer, the Federal Court had
summarily dismissed the applicant’s claim that certain Commonwealth laws
were invalid. The Full Federal
Court affirmed that decision, partly on the
basis that the applicant’s claim was precluded by existing authority.
- The
High Court overturned the Full Federal Court’s decision. French CJ and
Gummow J said:
- [24] The
exercise of powers to summarily terminate proceedings must always be attended
with caution. That is so whether such disposition
is sought on the basis that
the pleadings fail to disclose a reasonable cause of
action[1] or on the
basis that the action is frivolous or vexatious or an abuse of process.
[2]The same applies
where such a disposition is sought in a summary judgment application supported
by evidence. As to the latter, this
Court in Fancourt v Mercantile Credits
Ltd
said:[3]
The
power to order summary or final judgment is one that should be exercised with
great care and should never be exercised unless
it is clear that there is no
real question to be tried.
More recently, in Batistatos v Roads and Traffic Authority
(NSW)[4] Gleeson CJ,
Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and
Hayne JJ in Agar v
Hyde[5] which
included the following:
Ordinarily, a party is not to be denied the opportunity to place his or her
case before the court in the ordinary way, and after taking
advantage of the
usual interlocutory processes. The test to be applied has been expressed in
various ways,[6] but all
of the verbal formulae which have been used are intended to describe a high
degree of certainty about the ultimate outcome
of the proceeding if it were
allowed to go to trial in the ordinary way.
There would seem to be little distinction between those approaches and the
requirement of a "real" as distinct from "fanciful" prospect
of success
contemplated by s
31A.[7] That
proposition, however, is not inconsistent with the proposition that the
criterion in s 31A may be satisfied upon grounds wider
than those contained in
pre-existing Rules of Court authorising summary dispositions.
[25] Section 31A(2) requires a practical judgment by the Federal Court as to
whether the applicant has more than a "fanciful" prospect
of success. That may
be a judgment of law or of fact, or of mixed law and fact. Where there are
factual issues capable of being disputed
and in dispute, summary dismissal
should not be awarded to the respondent simply because the Court has formed the
view that the applicant
is unlikely to succeed on the factual issue. Where
the success of a proceeding depends upon propositions of law apparently
precluded by existing authority, that may not always
be the end of the matter.
Existing authority may be overruled, qualified or further explained. Summary
processes must not be used
to stultify the development of the law. But where
the success of proceedings is critically dependent upon a proposition of law
which would contradict a binding decision
of this Court, the court hearing the
application under s 31A could justifiably conclude that the proceedings had no
reasonable prospect
of success. (emphasis added)
The second respondent’s arguments for summary dismissal
- The
second respondent argued that there were no pleaded facts to the effect that he
did anything other than act as the director of
the first respondent. Indeed,
the respondents’ solicitor said in an affidavit that he had reviewed the
discovered material
and all of the affidavits that the applicant had filed for
the trial and had discerned no evidence at all supporting the applicant’s
claims against the second respondent.
- The
second respondent argued that the question of the liability of directors in
copyright and intellectual property matters had been
a vexed issue but had
recently been resolved by the Full Federal Court’s decision in Keller v
LED Technologies Pty Ltd [2010] FCAFC 55; (2010) 185 FCR 449. The second respondent
submitted that it was now established that merely being the director of a
company did not suffice to establish
the director’s liability for the
tortious acts of the company.
- Keller
was a case under the Designs Act 2003. There is no provision for
accessorial or derivative liability set out in that Act. The company in
Keller was small, but it had two directors. It was alleged, and the
primary judge accepted, that the two directors had authorised, directed
and
procured the infringing conduct.
- Jessup
J, at [361], said the following:
- ... There
is no provision for obtaining damages from a person other than the infringer.
However, it is said that, in the way the
law has developed, damages for
infringement may also be obtained against the director of an infringing company,
at least where he
or she directed or procured the doing of the acts under s
71 which constituted the infringement. It is said that this exposure to
damages arises even in cases where there was no conscious intention
on the part
of the director that the company should infringe: consciously to direct or
procure the act which, objectively, amounted
to an infringement will suffice. In
the present case, the primary Judge took this approach. As will appear, there
was no shortage
of authority to justify her doing so. For reasons which follow,
however, and with respect to those who take a contrary view, I consider
that
that approach was and is unsound.
- At
[83], Emmett J said:
- A company
cannot act other than through a natural person. In considering whether a natural
person is a joint tortfeasor with a company,
it is necessary to show something
more than that the company acted through that person. Where a person is acting
in the capacity
of a director, the person will not be liable for the act of the
company unless it can be shown that, in so acting, the director was
doing
something more than acting as a director. The person must do something that
makes him or her, in addition to the company, an
invader of the victim’s
rights (see O’Brien v Dawson [1942] HCA 8; (1942) 66 CLR 18 at 32-3). The mere fact that a
company is small and that the director has control over its affairs is not, of
itself, sufficient
to make the director a joint tortfeasor with the company (see
Evans Limited v Spritebrand (1985) 1 WLR 317 at 329).
- Jessup
J said:
- 400 It is
universally accepted that a director is not liable for the wrongs of his or her
company merely by reason of the office
of director which he or she holds. In
other words, there is no special rule of law that makes a director liable in
such circumstances.
The problem has arisen from the application to directors of
the general rules of law by which a person who has not directly committed
a
civil wrong will be liable for the wrong of another because of his or her
relationship with that other (eg where the person is
the master and the other
the servant) or involvement in the wrong done by that other (eg where the wrong
itself was done pursuant
to a common enterprise; or where the wrong was done by
the other at the direction of the person).
- 401 It has
likewise been observed on occasion that there is no reason why a person should
be immune from liability, pursuant to general
rules of the kind to which I have
referred, merely because he or she happens to be a director of the company which
is the direct
wrongdoer. This seems clear as a matter of principle, but there is
a sense in which it goes no further than to beg the question in
a situation in
which the director himself or herself was the human agency through which the
company acted in committing the wrong.
I am, of course, here dealing not with
cases in which the director would be directly liable for something done by him
or her in the
service of the company (such as negligently driving the company
vehicle so as to cause injury to a pedestrian), but with cases in
which there
would be no wrong at all but for the acts of the company (such as the
importation of goods in infringement of design).
What is it about the position
of the director whose actions have caused the company to commit the wrong which
should make him or
her liable in addition to the company?
- 402 As I
observe it, there are several aspects of such additional liability that have
troubled courts in the past, notwithstanding
the apparent simplicity of the
verbal formula in Performing Right. At base is the circumstance that a
company is an artificial person which can act only through the agency of
individuals. When a
company does something, there will usually be someone who
has directed or procured it to be done. When a company breaches its contract,
there will often be an individual whose decision has caused the company so to
act. However:
- A company
"cannot act in its own person for it has no person" (Ferguson v. Wilson
(1866) 2 Ch. App. 77, at p. 89). So it must
of necessity act by directors, managers, or other agents. The company, if it
were guilty of a breach of its
contracts in this case, acted through its
director the respondent Doyle, but it is neither "law nor sense" (Lagunas
Nitrate Co. v. Lagunas Syndicate (1899) 2 Ch. 392, at p. 431) to say that
Doyle in the exercise of his functions as a director of the company combined
with it to do any unlawful act
or become a joint tortfeasor. Again, it is
equally fallacious to assert that Doyle knowingly procured the company to break
its contract.
The acts of Doyle were the acts of the company and not his
personal acts which involved him in any liability to the plaintiff.
- (O’Brien
v Dawson 66 CLR at 32, per Starke J). With respect to those who take a
contrary view, I consider that there is something conceptually doubtful
about a
proposition that would have a director in the position of Mr Doyle in
O’Brien v Dawson directing or procuring the company to act in a
particular way.
403 Another cause for concern relates to the matter of limited liability.
While perhaps more an issue of policy than of analysis,
the fact is that, to
make a director liable for the wrongs of his or her company – when he or
she would not otherwise be liable
– would be to expose those who serve the
company to greater liability at the suit of third parties than are the
proprietors
themselves. As a matter of principle, it is no answer to this
concern to rejoin that the director would in any event be answerable
to the
company for the external consequences of his or her internal mistakes: so it may
be in some cases, but it provides no rational
jurisprudential basis for making
the director liable directly to the third party. I also consider that it is
altogether too simplistic
an approach to assume that a director will necessarily
be liable at the suit of the company for the consequences of any wrong committed
by the company by reason of his or her conduct. Merely to have acted in a way
that exposed the company to a claim by a third party
will not always amount to a
breach of duty to the company, the remedy for which would correspond closely
with that achieved by the
third party as against the company.
404 Returning to the question which I posed at the end of para 401 above, I
believe that the answer lies in the application of the
conventional rules of law
as to joint liability to the particular circumstance where the primary wrongdoer
is an artificial person
who can act only by human agency. Each of the two main
conventional rules to which I have referred – directing another to commit
a tort and participation in a joint enterprise – requires, or at least
assumes, a duality (or multiplicity) of actors. In this
sense, the presentation
of the problem has much in common with that of inducement to breach of contract
with which Starke J dealt
in O’Brien v Dawson. For a director to be
liable because he or she directs or procures his or her company to commit a
wrong, the context must be such
that the director is effectively standing apart
from the company and directing or procuring it as a separate entity. There must
be
a sense in which the director is using the company as the instrument of his
or her own wrong. This is, as I have explained earlier,
the original sense in
which Atkin LJ’s words in Performing Right are to be understood, at
least to the extent that they drew upon what Lord Buckmaster had earlier said in
Rainham Chemical. Likewise with a joint enterprise, unless the director
is conceptually separate from the company, there is, it seems to me, no
"jointness"
about the enterprise at all, but merely a one-person wrong in which
the company is actor.
405 It will be seen from the foregoing that I agree substantially with so
much of the judgments of Le Dain J in Mentmore Manufacturing, of Nourse J
in White Horse and of Beazley J in Milpurrurru as make it a
requirement of liability that the director should make the tort his or her own.
Other courts have at times expressed
reservations about this formula but, in my
view, its utility lies in the focus it gives to an understanding of the
principle of dual
or multiple participation as I have attempted to explain it
above. It would be a mistake to attempt to resolve cases by reference
to a
search for the moment in time when a director made the company’s
wrongdoing his or her "own". We are not here dealing
with a species of property,
or with ownership in any sense. However, in a situation in which the
company-role and the personal-role
of the director may be blurred, the formula
does highlight the crucial distinction between acts which are done for and in
the service
of the company and acts which, in addition, are done in the
director’s own personal capacity – a "non-company capacity"
as it
were.
406 I consider that effectively the same end point is reached if the first
of Chadwick LJ’s four propositions in MCA Records is taken to its
logical conclusion – a conclusion which, at least generally, is both just
and in accordance with principle.
I can, with respect, see no reason to limit
the proposition to so much of the activities of a director as involve him or her
voting
at board meetings. In practice, problems nearly always arise in this area
in the case of executive directors. I see no reason to
draw the line at the
proceedings of the board, but short of acts done by a director consistently with
board decisions. I would apply
the proposition to any act done by a director in
what he or she, in good faith, reasonably perceives to be the interests of the
company.
In such a circumstance, the act of the director should be seen as the
means by which the company itself acts, and not as the director
"directing or
procuring" the company to act, or participating in some joint enterprise. To
regard the act in either of the latter
senses would, in my view, be to take a
quite artificial approach to the matter.
407 Although I have discussed the problem above with reference to directors
as such, and although the context of the present appeal
is so limited, it will
be apparent that the solution which attracts itself to me is not, in point of
principle, limited in its application
to a situation in which it is a director
whose acts have brought about the commission of the tort. What I have said
applies equally
to any servant or agent whose acts have that consequence.
Indeed, one of the anomalies of the present state of the law (such as it
is), in
my respectful view, may be seen in the distinction which Branson and Kenny JJ
drew in Cooper between a person in a position to determine what the
company itself would do and a person in a subordinate role. The latter, it
seems,
could never be liable in accordance with the test in Performing
Right. In my view, this is an unsatisfactory distinction. The point should
not be whether the individual sought to be made liable can,
or did, determine
how the company might act, but whether there was a dimension to his or her role
which was separate from the good
faith discharge of his or her duties in the
service of the company. If so, there will be a basis, in accordance with general
principles,
for making the individual liable because he or she was involved in a
joint, wrongful, enterprise with the company.
408 In my view, the question arising in the present case should be resolved
in accordance with the approach to which I have referred.
The facts set out at
para 360 above are not such as would, consistently with that approach, sustain a
finding that either of Messrs
Keller and Armstrong was a joint
tortfeasor with Ren or Olsen in the infringement of LED Technologies’
registered designs. Their appeals
against the primary Judge’s findings of
infringement should be allowed.
The applicant’s arguments against summary dismissal
- The
applicant argued that the respondents had misunderstood the claim against the
second respondent, in that the claim was not one
of joint tortfeasorship but of
authorisation. On the hearing of the application, the applicant stated that the
allegation against
the second respondent was that he personally infringed the
applicant’s copyright and in the alternative that he authorised
the
infringement of the applicant’s copyright by the second respondent. The
applicant submitted that the second respondent,
as the sole director and
shareholder of the first respondent, had ultimate control over all of the
actions of the first respondent
and thus authorised any infringing conduct of
the first respondent.
- Section
36 of the Copyright Act 1968 provides that:
- (1) Subject
to this Act, the copyright
in a literary, dramatic, musical or artistic
work is infringed by a person who, not being
the owner of the copyright,
and without the licence
of the owner of the copyright,
does in Australia,
or authorizes
the doing in
Australia
of, any act comprised in the copyright.
- (1A) In
determining, for the purposes of subsection (1), whether or not a person
has authorised
the doing in Australia
of any act
comprised in the copyright
in a work,
without the licence
of the owner of the copyright,
the matters that must be taken into account
include the following:
- (a) the
extent (if any) of the person's power to prevent the doing of the act concerned;
- (b) the
nature of any relationship existing between the person and the person who did
the act concerned;
- (c) whether
the person took any reasonable steps to prevent or avoid the doing of the act,
including whether the person complied
with any relevant industry codes of
practice.
- (2) The
next three succeeding sections do not affect the generality of this section.
- The
applicant argued that the present case was readily distinguishable from
Keller, because the Copyright Act, unlike the Designs Act,
makes express provision for liability as an infringer where a person has
authorised infringing conduct by another. The applicant
argued that, because
the second respondent was in complete control of the first respondent, the
second respondent must have either:
- personally
undertaken the first respondent’s infringing conduct; or
- authorised
any infringing conduct of the first respondent.
- The
applicant noted the second respondent’s claim that the first respondent
had five employees. However, the respondents have
not alleged, in affidavit
form or otherwise, that any infringing conduct was undertaken by an employee
without authority. On the
contrary, the applicant noted that the first
respondent had admitted that it had imported and sold the relevant items, albeit
with
a denial that there was any copyright infringement involved.
- The
applicant referred to the High Court’s decision in University of New
South Wales v Moorhouse [1975] HCA 26; (1974) 133 CLR 1. In that case, the High Court held
that the University of New South Wales had authorised the infringement of
literary copyright by
providing a photocopier in the University library,
notwithstanding that there was no express permission given by the University to
anyone to photocopy anything.
- In
reaching that conclusion, Jacobs J said at pages 20 and 21:
- 9. It is
established that the word is not limited to the authorizing of an agent by a
principal. Where there is such an authority
the act of the agent is the act of
the principal and thus the principal himself may be said to do the act comprised
in the copyright.
But authorization is wider than authority. It has, in relation
to a similar use in previous copyright legislation, been given the
meaning,
taken from the Oxford Dictionary, of "sanction, approve, countenance”. ...
I have no doubt that the word is used in
the same sense in s.
36 (1). It is a wide meaning which in cases of permission or invitation is
apt to apply both where an express permission or invitation
is extended to do
the act comprised in the copyright and where such a permission or invitation may
be implied. Where a general permission
or invitation may be implied it is
clearly unnecessary that the authorizing party have knowledge that a particular
act comprised
in the copyright will be done.
- 10. The
acts and omissions of the alleged authorizing party must be looked at in the
circumstances in which the act comprised in
the copyright is done. The
circumstances will include the likelihood that such an act will be done. ". . .
(t)he Court may infer
an authorization or permission from acts which fall short
of being direct and positive; . . . indifference, exhibited by acts of
commission or omission, may reach a degree from which authorization or
permission may be inferred. It is a question of fact in each
case what is the
true inference to be drawn from the conduct of the person who is said to have
authorized . . . " (per Bankes L.J.
in Performing Right Society Ltd. v.
Ciryl Theatrical Syndicate Ltd. (1924) 1 KB 1, at p 9 ).
- Gibbs
J said at pages 12 to 14:
- 10. ... A
person cannot be said to authorize an infringement of copyright unless he has
some power to prevent it: Adelaide Corporation v. Australasian Performing
Right Association Ltd. (1928) 40 CLR, at pp 497-498, 503. Express or formal
permission or sanction, or active conduct indicating approval, is not essential
to constitute an authorization; "Inactivity or 'indifference, exhibited by acts
of commission or omission, may reach a degree from
which an authorization or
permission may be inferred'": Adelaide Corporation v. Australasian
Performing Right Association Ltd. (1928) 40 CLR, at p 504. However, the word
"authorize" connotes a mental element and it could not be inferred that a person
had,
by mere inactivity, authorized something to be done if he neither knew nor
had reason to suspect that the act might be done. Knox
C.J. and Isaacs J.
referred to this mental element in their dissenting judgments in Adelaide
Corporation v. Australasian Performing Right Association Ltd. Knox C.J.
(1928) 40 CLR, at p 487 held that indifference or omission is "permission" where
the party charged (amongst other things)
"knows or has reason to anticipate or
suspect that the particular act is to be or is likely to be done". Isaacs J.
apparently considered
that it is enough if the person sought to be made liable
"knows or has reason to know or believe" that the particular act of infringement
"will or may" be done (1928) 40 CLR, at pp 490-491 . This latter statement may
be too widely expressed: cf. Sweet v. Parsley [1969]
UKHL 1; (1970) AC 132, at p 165. It seems to me to
follow from these statements of principle that a person who has under his
control the means by which
an infringement of copyright may be committed - such
as a photocopying machine - and who makes it available to other persons,
knowing,
or having reason to suspect, that it is likely to be used for the
purpose of committing an infringement, and omitting to take reasonable
steps to
limit its use to legitimate purposes, would authorize any infringement that
resulted from its use.
- 11. ... The
University was aware of the assertions of the Australian Copyright Council that
"unlawful and undesirable practices are
commonplace within the universities",
and although it may have regarded these claims as exaggerated, it had been given
enough information
to raise the suspicion that some infringing copies were
likely to be made. ...
- In
the present case, the applicant argued that the court could be satisfied that
the second respondent had reason to suspect the first
respondent’s
infringement of the applicant’s copyright because:
- the
applicant had made oral complaints to one of the first respondent’s
employees, namely Jenny, about an earlier alleged infringement
in 2008; and
- a
letter of demand dated 11 July 2008 concerning the earlier alleged infringement
was addressed and sent to the first
respondent.[8]
- The
applicant argued that these circumstances, which occurred before the butterflies
of paradise print had been designed, were sufficient
to give the second
respondent reason to suspect that there was an infringement in relation to the
butterflies of paradise print.
- The
applicant referred to the decision of Gummow J, sitting in the Federal Court, in
WEA International Inc v Hanimex Corporation Ltd (1987) 17 FCR 274. His
Honour reviewed the development of the concept of authorisation in copyright
law, saying at pages 283 to
286:
- 31. ... The
introduction of the concept of "authorization" plainly was designed to meet
perceived deficiencies in existing legislation.
Thus, the lessee of a hotel who
employed a band to play there did not "lawfully cause or permit an authorized
performance (of certain
musical works) knowing it to be unauthorized" within the
meaning of s.3 of the Copyright (Musical Compositions) Act (1888)(Imp):
Sarpy v Holland (1908) 2 Ch. 198 at 199. The word "cause" was
deliberately discarded in favour of "authorize"; Winstone v Wurlitzer
Automatic Phonograph Co. of Australia Pty. Ltd. [1946] VicLawRp 53; (1946) VLR 338 at 344.
- 32. It
should be added that infringement of copyright statutes for long has been
considered tortious, so as to make applicable the
common law principles as to
liability of joint tortfeasors. However, those principles would not have
provided an answer for plaintiffs
in cases such as Sarpy v Holland (supra). This
was because the circumstance that two or more persons assisted or concurred in
or
contributed to an act causing damage is not of itself sufficient to found
joint liability; some common design is necessary: Morton-Norwich Products
Inc. v Intercen Ltd. (1978) RPC 501 at 515-516. The position in the
United States as regards liability at general law for common design to effect
infringement of copyright
created by federal law is unsettled: Nimmer on
Copyright 2'12.04 (A) fn 4.
- 33.
Where the infringer is a corporation questions frequently arise as to the
degree of involvement on the part of directors necessary
for them to be rendered
personally liable. Those questions are not immediately answered by principles
dealing with "authorization"
or joint tortfeasance. Rather, recourse is to be
had to the body of authority which explains the circumstances in which an
officer
of a corporation is personally liable for the torts of the
corporation: Polaroid Corporation v Sole N Pty. Ltd.(1981) 1 NSWLR 491 at 498, C. Evans and Sons Ltd v
Spritebrand Ltd. (1985) 1 WLR 317, Kalamazoo (Aust) Pty. Ltd.
v Compact Business Systems Pty. Ltd. (1985) 84 FLR 101 at 127; cf Yorke v Lucas
[1985] HCA 65; (1985) 158 CLR 661. The present is not such a
case. Nor is there any issue as to vicarious liability of an employer for the
torts of an employee. (emphasis
added)
- 34. The
first question that arose with the introduction of "authorization" into the
legislation was whether it added anything to
the common law principles governing
the liability of joint tortfeasors and, if it did so, whether it was
conceptually distinct from
those principles.
- 35. Scrutton
L.J. expressed the view that the inclusion of the word "authorize" in s.1 of the
1911 Act was superfluous: Performing Rights Society Ltd. v Ciryl Theatrical
Syndicate Ltd. (1924) 1 KB 1 at 12. So did McCardie J.:
Performing Rights Society Ltd. v Mitchell and Booker (Palais De Danse)
Ltd. (1924) 1 KB 762 at 773. But that was a view that
did not prevail. It was clear after Ash v Hutchinson and Co. (Publishers)
Ltd. (1936) 1 Ch. 489, that the 1911 Act gave, for
example, the owner of copyright in a literary work both the sole right of
reproducing it and the sole
right of authorizing such reproduction and that
those rights were separate and distinct so that infringement of each was a
distinct
tort. That the same was true of "authorization" in respect of the 1968
Act was accepted by the High Court in The University of New South Wales v
Moorhouse [1975] HCA 26; [1975] HCA 26; (1975) 133 CLR 1.
- 36. However,
the circumstance that the concept of "authorization" in the legislation had its
own independent operation from what
one might call primary infringement, did not
exclude the general law principles dealing with joint-tortfeasors from operation
upon
primary infringement.
- 37. Thus,
in Ravenscroft v Herbert (1980) RPC 193 at 209-210, the plaintiff
complained of publication by the second defendant of a manuscript of the first
defendant which allegedly
infringed copyright in the plaintiff's literary work.
Brightman J. (as he then was) held that the first defendant was liable with
the
second defendant as a joint-tortfeasor, by reason of a common design between
them for publication of the manuscript. See also
Amstrad Consumer
Electronics PLC v The British Phonographic Industry Ltd. (1986) FSR 159 at 210-213.
- 38. The
question then arose as to what was meant by "authorization" on the footing that
it was not mere surplusage and that it did
not merely reproduce the common law
principles as to joint-tortfeasance. Uninstructed by authority, one might have
thought that the
existence of the common law principles provided some support
against an overly expansive view of what constituted authorization and
in favour
of a view which gave authorization a discrete area of operation readily
distinguishable from joint tortfeasance.
- ...
- 44. The
evolution of the meaning of "authorization" in the 1911 Act and the 1968 Act has
pursued perhaps an even more tortuous course
than the doctrine of contributory
infringement in the United States. One view of the 1911 Act was that the
expression "to authorize"
described a situation where the defendant purported to
confer on a third party, for example as an agent or licensee, a right or
authority
to perform activity which in truth would be, if carried out, an
infringement of the plaintiff's copyright: Transatlantic Film Co. Ltd. v
Albion Cinema Supplies Co. (1917-23) Macg. C.C. 118 at 121, Finn v
Pugliese (1918) 18 SR NSW 530 at 541, Evans v E.
Hulton and Co. Ltd. (1924) WN 130 at 131, Falcon v Famous Players
Film Co. (1926) 2 KB 474 at 499. This would have given to
"authorization" a conceptually distinct field of operation from that of
principles of joint tortfeasance.
- 45. Further,
such an interpretation might be thought to draw strength from the expanded
references to "authorization" in the 1968
Act. As I have indicated, the term
appears not only in the provisions dealing with primary infringement of
copyright in works (s.36)
and in subject matter other than works (s.101) but
also in s.13 which speaks of "the exclusive right to authorize a person...". It
might be thought that authorization was a statutory tort catching those who
purport to have power or authority to license the activity
of the primary
infringer and that it was concerned with appropriation of the right of the
copyright owner to license the acts comprised
in his or her copyright.
- 46. Certainly
the concept of "authorization" applies to such a situation. An illustration is
provided by Finn v Pugliese (1918) 18 SR (NSW) 530 at 541, where the
defendant was fixed with liability for authorization for having directly and
expressly agreed with another party
to produce for him a film from a screen play
which infringed the plaintiff's copyright in a novel.
- 47. But the
course of authority has shown that the concept of "authorization" is not so
confined. In The University of New South Wales v Moorhouse (supra), a
case concerning the 1968 Act, the High Court, following The
Corporation of the City of Adelaide v The Australasian Performing Right
Association Ltd. [1928] HCA 10; (1928) 40 CLR 481 at 489, accepted that the word
"authorized" as used in s.36 of the 1968 Act had the meaning of "sanction,
approve, countenance".
This meant that express or formal permission or active
conduct indicating approval was not essential to constitute an authorization.
That view has not always been accepted in England in recent times. In
Amstrad Consumer Electronics PLC v The British Phonographic Industry Ltd.
(1986) FSR 159 at 207, Lawton L.J., speaking of
the current United Kingdom legislation (Copyright Act 1956), said that
the concept of granting or purporting to grant to a third person the right to do
the act complained of came much nearer
to the meaning of the word "authorize"
than the synonyms approved by the High Court of Australia in The University
of New South Wales v Moorhouse (supra). Be that as it may, the position in
Australia with respect to the 1968 Act is presently settled by
Moorhouse's Case.
- The
applicant also relied on the Full Federal Court’s decision in Cooper v
Universal Music Australia Pty Ltd [2006] FCAFC 187; (2006) 156 FCR 380. In that case, the Full
Court considered s.101(1) of the Copyright Act, which concerns sound
recordings, but is otherwise materially identical to s.36(1). French J, as his
Honour then was, agreed with
Kenny J, who said:
- 142 The
question what degree of control can constitute a sufficient basis for a finding
of authorization does not admit of a straightforward
answer. As the authorities
show, it will be a question of fact and degree in each case.
- 143 In
Adelaide Corporation, a majority of the High Court held that a lessor of
a hall had not ‘permitted’ the lessee to perform songs in a concert
in breach of copyright, notwithstanding that the lessor was told that the
proposed program would infringe copyright and did nothing
to dissuade the
lessees from performing the songs. In a passage referred to in
Moorehouse, Gavan Duffy and Starke JJ at 504 cited Performing Right
Society v Ciryl Theatrical Syndicate [1924] 1 KB 1 at 9 per Bankes LJ in support of
the proposition that:
- Mere
inactivity or failure to take some steps to prevent the performance of the work
does not necessarily establish permission. Inactivity
or ‘indifference,
exhibited by acts of commission or omission, may reach a degree from which an
authorization or permission
may be inferred...’
- 144 Nationwide
News Pty Ltd v Copyright Agency Ltd (1996) 65 FCR 399 ("Nationwide News")
considered the relationship between control, knowledge and inactivity, albeit in
obiter dicta. In a passage on which the appellants
relied, Sackville J, with
whom Jenkinson and Burchett JJ agreed, said at 422 that "a person does not
authorise an infringement merely
because he or she knows that another person
might infringe the copyright and takes no step to prevent infringement".
Referring, amongst
other cases, to Adelaide Corporation and
Australian Tape Manufacturers, his Honour added at 424 that "[k]nowledge
that a breach of copyright is likely to occur does not necessarily amount to
authorisation,
even if the person having that knowledge could take steps to
prevent the infringement".
- 145 On the
one hand, mere inactivity or indifference will be insufficient, especially where
there is no knowledge or reason to suspect
that the infringement might occur. On
the other hand, inactivity or indifference, coupled with other factors, may
support an inference
of authorization. In [Australian Performing Rights
Association Ltd v] Jain [(1990) 26 FCR 53], the combination of inactivity,
knowledge and control led the Full Court to uphold the finding at first instance
that a company’s chief executive officer had authorized the infringement
of copyright that occurred in the unlicensed performance
of musical works in a
hotel owned by the company. The chief executive officer, who was also a
director, was not involved in the daily
operations of the hotel. The company
employed a manager to select and arrange performances. In upholding the finding
below, the Full
Court emphasised that the finding of authorization was one of
fact. It said at 61-62:
- The judgment
of the High Court in the Moorehouse case establishes that one of the
meanings of the word ‘authorise’ in the context in which it is here
used is ‘countenance’.
It may be that not every act which amounts to
the countenancing of something is an authorisation. Every case will depend on
its own
facts. Matters of degree are involved. But the evidence in the present
case reveals, in our opinion, a studied and deliberate course
of action in which
Mr Jain decided to ignore the appellant’s rights and to allow a situation
to develop and to continue in
which he must have known that it was likely that
the appellant’s music would be played without any licence from it. It was
within his power to control what was occurring but he did nothing at all. In
those circumstances we have reached the conclusion that
the appellant
established that Mr Jain authorised the infringement of copyright in question
contrary to s 36 of the Act.
- For
decisions to like effect, see Australasian Performing Right Association Ltd
v Canterbury-Bankstown League Club Ltd [1964-5] NSWR 138 ("Canterbury-Bankstown")
at 140 per Ferguson J with whom Heron CJ agreed and Australasian Performing
Right Association Ltd v Metro on George Pty Ltd [2004] FCA 1123; (2004) 210 ALR 244 ("Metro on George") at
252 per Bennett J.
146 As such cases as Jain and Canterbury-Bankstown emphasize,
prior to s 101(1A), an alleged authorizer’s failure to take reasonable
steps to prevent the infringing act that
the person knows, or had reason to
suspect, would be, or would be likely to be, done was also treated as a
consideration relevant
to a finding of authorization: see also Metro on
George at 259.
147 The Court is now required by s 101(1A) to consider three matters that
the authorities had previously identified as relevant to
the High Court’s
concept of ‘authorization’. These factors are: (1) the extent (if
any) of the person’s power
to prevent the doing of the infringing act; (2)
the nature of the relationship between the alleged authorizer and the person who
did the infringing act that was supposedly authorized; and (3) whether the
alleged authorizer took reasonable steps to prevent or
avoid that infringing
act.
- In
relation to the three matters set out in s.36(1A) of the Copyright Act,
the applicant argued that:
- as
the sole director and shareholder of the first respondent, the second respondent
clearly had the power to prevent the first respondent’s
infringement;
- the
relationship between the first and second respondents was one of absolute
control; and
- there
was no evidence, at least at present, that the first respondent took any steps
at all to prevent the infringement.
The second respondent’s reply regarding summary dismissal
- The
second respondent argued that the earlier alleged infringement had not been
proved and, in any event, it related to a dress design
rather than a fabric
print. Moreover, the second respondent argued, there was no evidence that the
complaint had been passed on
to him.
- The
second respondent also argued that he had not misunderstood the claim against
him. He argued that Keller was not distinguishable, because the tests
that apply in determining whether action can be taken against a director solely
because
he is a director are the same under the Copyright Act as they are
under the Designs Act.
Conclusion on summary dismissal
- It
seems to me that the applicant’s claim against the second respondent could
not be described as having no reasonable prospect
of success. Although the
second respondent argued that a previously vexed area of the law had been
settled authoritatively and definitively
by the Full Federal Court’s
decision in Keller, that decision is only about six months old. It refers
to a contrary body of opinion in the Federal Court, and, indeed, Besanko J
and
Jessup J had somewhat different reasons for their conclusions. As we well know,
differently constituted Full Federal Courts sometimes
decline to follow each
other. It is probably premature to say that the law is settled in a particular
area until a decision of an
appellate superior court has stood unchallenged for
a considerable period of time, or until the High Court determines the
matter.
- Moreover,
it is reasonably arguable that Keller is distinguishable on the basis
that it concerns the Designs Act, which, unlike the Copyright Act,
makes no provision for infringement by authorisation. Section 36 of the
Copyright Act indicates that authorising an unlawful act comprised in the
copyright is itself an infringement. That liability is separate from
any notion
of joint tortfeasorship.
- The
decision in Keller, particularly the judgment of Jessup J, at paragraph
400, makes it clear that a director is not liable for the wrongs of his or her
company, merely by reason of being a director. That is not controversial.
However, the present case may be distinguishable from Keller because the
second respondent is not simply a director, but the sole director of the
company. I consider that there is some force
in Mr Heerey’s submissions
that as the sole director the second respondent was ultimately responsible for
all of the acts of
the first respondent. That may be a materially different
situation to the case where there is a board of directors and one or the
other
of them is not, perhaps, at all conscious or aware or personally in control of
any particular act done by the company.
- The
applicant has filed its trial affidavits. However, the facts are yet to be
determined. There will clearly be a challenge to the
claim that the second
respondent at the very least ought to have suspected that the first respondent
was infringing the applicant’s
copyright. However, at this stage, it does
not seem to me that it could be said that there is no realistic prospect of any
outcome
but one, being an outcome favouring the second respondent. Moreover,
there may be scope for a good deal of argument about the legal
consequences of
the facts as found in this case.
- I
acknowledge that the test for summary dismissal is no longer that the case is
bound to fail or is absolutely hopeless. However,
I am not persuaded that the
applicant should be shut out from a full hearing with the second respondent on
the basis that there is
no reasonable prospect of success. The application for
summary dismissal will be dismissed.
The application to strike out the amended statement of claim
- Order
11 rule 16 of the Federal Court Rules 1979 provides as
follows:
- Where a
pleading:
- (a) discloses
no reasonable cause of action or defence or other case appropriate to the nature
of the pleading;
- (b) has a
tendency to cause prejudice, embarrassment or delay in the proceeding; or
- (c) is
otherwise an abuse of the process of the Court;
- the Court
may at any stage of the proceeding order that the whole or any part of the
pleading be struck out.
- As
far as the pleading point is concerned, the question is whether the claim as
pleaded discloses a cause of action. On a pleading
summons, there is no
obligation on a party to put forward the evidence that substantiates the claim
or defence. The court assumes
that the party will be able to make out the
allegations.
- The
amended statement of claim filed on 24 June 2010 states at paragraphs 10 and 11
the following:
- 10. From a
date currently unknown to the Applicant, but since at least 9 January 2010, the
Respondents or either of them, without
the knowledge, licence or authority of
the Applicant, have imported, manufactured, advertised, marketed, promoted,
distributed, offered
for sale and sold:
- (a) a
fabric which reproduces or substantially reproduces the Copyright Work,
and
- (b) garments
which are manufactured from a fabric which reproduces or substantially
reproduces the Copyright Work;
- or have
authorised the carrying out of the said
conduct.
The Applicant refers to the First Respondent’s
“Sweetacacia” branded garment with style number
“S71611-9”
(Sweetacacia Garment).
On 9 January 2010, a representative of the Applicant purchased a sample of
the Sweetacacia Garment from the “Cocoland”
retail outlet located at
Shop U3/L33, McCarthur Square in the State of New South Wales. The Sweetacacia
Garment was purchased for
a retail price of $40. The receipt for the purchase
had the ABN 22 091 404 250 printed on it which is the ABN for Co Co Land Pty
Ltd. The Sweetacacia Garment purchased together with the receipt can be
inspected at the offices of the Applicant’s solicitors
by prior
appointment.
By letter dated 15 January 2010 from the Applicant’s solicitors to Co
Co Land Pty Ltd, the Applicant made a number of demands
of Co Co Land Pty Ltd
including that it disclose the name of the wholesaler from whom it purchased the
Sweetacacia Garment. By letter
dated 2 February 2010 from Kim & Associates,
the solicitors acting for Co Co Land Pty Ltd to the Applicant’s
solicitors,
Co Co Land Pty Ltd advised that the Sweetacacia Garment was
purchased from Quick Fashion Pty Ltd.
At all material times the Second Respondent was:
(i) the sole director and shareholder of the First Respondent;
(ii) directing or procuring the conduct of the First Respondent;
(iii) personally involved in the conduct of the First Respondent;
(iv) acting with the First Respondent towards a common goal; and
(v) authorising the conduct of the First Respondent.
11. In the premise of paragraph 10, the Respondents or either of them have,
without the licence or authority of the Applicant, infringed
or authorised the
infringement of the Applicant’s copyright in the Copyright Work
by:
- (a) reproducing
or substantially reproducing the Copyright Work or authorising such
conduct;
- (b) manufacturing,
importing for sale, selling or by way of trade offering or exposing for sale,
advertising, marketing, promoting
or exhibiting in public the fabric used to
manufacture the Sweetacacia Garment in circumstances where the Respondents, or
either
of them, knew or ought reasonably to have known that the making of the
fabric used for the Sweetacacia Garment, if the fabric had
been made in
Australia, would have constituted and (sic) infringement of the
Applicant’s copyright in the Copyright Work; and
- (c) manufacturing,
importing for sale, selling, or by way of trade offering or exposing for sale,
advertising, marketing, promoting
or exhibiting in public the Sweetacacia
Garment in circumstances where the Respondents, or either of them, knew or ought
reasonably
to have known that the making of the fabric used to manufacture the
Sweetacacia Garment, if the fabric had been made in Australia,
would have
constituted and (sic) infringement of the Applicant’s copyright in the
Copyright Work.
- I
consider those paragraphs in particular to be confused and confusing. They do
not clearly articulate what each respondent is alleged
to have done. In
particular, they do not clearly state whether each respondent is alleged to have
infringed or authorised the infringement
of the applicant’s copyright.
However, the gist of the applicant’s argument on the strike out
application was that the
first respondent infringed and the second respondent
authorised the infringement. That should be clearly stated. The statement of
claim should be struck out and the claim against each respondent should be
repleaded.
Costs
- There
were two aspects to the application before the court today. One was a summary
dismissal application and the other was a pleading
application. The second
respondent has been successful on the second point but not on the first. The
summary dismissal issue took
up more of the court time today and I dare say more
of the preparation time as well. The amendment of the statement of claim is
required
to get the case on a proper footing and to make it clear what the case
is going to turn on. I think ultimately that the proper costs
order for today is
costs in the cause. There will be orders
accordingly.
I certify that the preceding
forty (40) paragraphs are a true copy of the reasons for judgment of Riley FM
Date:
[1] General Steel
Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at
125-130; [1964] HCA 69; 38 ALJR 253 per Barwick
CJ.
[2] Dey v
Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 91 per Dixon
J.
[3] Fancourt v
Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87 at 99; [1983] HCA 25; 57 ALJR 621. See also
Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598 at 602-603; [1993] HCA 57; 67 ALJR 886 per Mason
CJ, Deane and Dawson JJ.
[4] Batistatos v
Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256 at [46]; 80 ALJR 1100.
[5] Agar v
Hyde [2000] HCA 41; (2000) 201 CLR 552 at [57]; 74 ALJR
1219.
[6] Dey v
Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 91 per Dixon J;
General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112
CLR 125 at 130; [1964] HCA 69; 38 ALJR 253 per Barwick
CJ.
[7] In A v
Essex County Council [2010] UKSC 33; [2010] 3 WLR 509, the criterion of “real prospect
of success” was variously equated to whether the plaintiff “could
succeed at a
trial”, whether there was a “triable issue” and
whether there was the “least doubt”: at [44] per Lord
Clarke of
Stone-cum-Ebony JSC; at [119] per Baroness Hale of Richmond JSC; at [133] per
Lord Brown of Eaton-under-Heywood JSC; at
[163] per Lord Kerr of Tonaghmore JSC.
[8] Affidavit
affirmed by Keith Raymond Richards on 17 November 2010
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