Orleans Investments Pty Ltd & Anor v MindShare Communications Ltd [2009] NSWCA 40 (10 March 2009)

Last Updated: 11 March 2009

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Orleans Investments Pty Ltd & Anor v MindShare Communications Ltd [2009] NSWCA 40


FILE NUMBER(S):
40114/08

HEARING DATE(S):
10 February 2009

JUDGMENT DATE:
10 March 2009

PARTIES:
Orleans Investments Pty Ltd - First Appellant
Wayne Gregory Eckett - Second Appellant
MindShare Communications Ltd - Respondent

JUDGMENT OF:
Spigelman CJ Allsop P Giles JA

LOWER COURT JURISDICTION:
Supreme Court

LOWER COURT FILE NUMBER(S):
SC 1157/05

LOWER COURT JUDICIAL OFFICER:
Hamilton J

LOWER COURT DATE OF DECISION:
27 November 2007 & 31 January 2008

LOWER COURT MEDIUM NEUTRAL CITATION:
MindShare Communications Ltd v Orleans Investments Pty Ltd [2007] NSWSC 1352; MindShare Communications Ltd Taiwan Branch v Orleans Investments Pty Ltd t/as The Orleans Media Consultancy & Anor, Hamilton J, 31 January 2008, unreported.

COUNSEL:
G Blake SC - Appellants
J K Kirk - Respondent

SOLICITORS:
Somerville & Co - Appellants
Allens Arthur Robinson - Respondent

CATCHWORDS:
PRACTICE AND PROCEDURE - trial judge mistakenly had regard to material not in evidence - later amended reasons - stated had come to his conclusion without regard to the material and had referred to it only as confirmatory of conclusion - whether denial of procedural fairness - whether apprehended bias - mistake disclosed and submissions heard - no question of procedural fairness - from initial reasons, conclusion all but demanded without regard to the material - that the reference was only confirmatory could not reasonably be questioned - no apprehended bias - CONTRACT - promise not to engage in conduct which might harm respondent's name or reputation or that of a related body corporate (as defined) - whether necessary to prove knowledge that conduct might harm or injure etc - including that company disparaged was related body corporate - on construction of contract, not necessary - EQUITY - injunctive relief - breach of negative covenant - relief will be granted in terms of covenant unless good reasons to the contrary - relationship with principle that order should generally be expressed to make clear what is to be done or not done - not absolute principle - goes to discretion - on contract's construction, could be unintentional or unknowing breach - contractual acceptance of risk of unintended or unknowing breach - not satisfactory to leave respondent to remedy in damages - grant of relief upheld with incidental changes.

LEGISLATION CITED:


CATEGORY:
Principal judgment

CASES CITED:
Antoun v The Queen [2006] HCA 2; (2006) 224 ALR 51;
Attorney-General v Punch Ltd [2002] UKHL 50; (2003) 1 AC 1046;
Bankstown City Council v Alamdo Holdings Pty Ltd [2004] NSWCA 325; (2004) 135 LGERA 312;
Concrete Pty Ltd v Parramatta Design & Development Pty Ltd [2006] HCA 55; (2006) 229 CLR 577;
Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337;
Dalgety Wine Estates Pty Ltd v Rizzon (1979) 141 CLR 452;
Doherty v Allman (1878) 3 App Cas 709;
Ebner v Official Trusteel in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337;
ICI Australia Operations Pty Ltd v Trade Practices Commission [1992] FCA 474; (1992) 38 FCR 248; (1982) 110 ALR 47;
Intertransport International Private Ltd v Donaldson [2005] VSCA 303;
re JLR; ex parte CJL [1986] HCA 39; (1986) 161 CLR 342;
Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488;
Kwan v Kang [2003] NSWCA 336;
Low v Innes 1864) De G J & Sm 286; 46 ER 929;
Maggbury Pty Ltd v Hafele Austraia Pty Ltd [2001] HCA 71; (2001) 210 CLR 181;
McGovern v Ku-ring-gai Council [2008] NSWCA 209; (2008) 161 LGERA 170;
Morris v Redland Bricks Ltd (1970) AC 652;
Palmer v Clarke (1989) 19 NSWLR 158;
R v Burrell [2007] NSWCCA 79; (2007) 175 A Crim R 21;
R v Burrell [2008] HCA 34; (2008) 248 ALR 428;
R v Gough [1993] UKHL 1; (1993) AC 646;
Re Media, Entertainment and Arts Alliance; ex parte Hoyts Corporation Pty Ltd [1994] HCA 66; (1994) 119 ALR 206;
Smits v Roach [2006] HCA 36; (2006) 227 CLR 423;
Vakauta v Kelly [1989] HCA 44; (1989) 167 CLR 568;
Y v Z [2007] NSWCA 329; (2007) 70 NSWLR 377.

TEXTS CITED:


DECISION:
Appeal dismissed with costs. Vary the order made by the trial judge by deleting the "including WPP", adding after the reference to cl 8 "a copy of which is set out in the Schedule", and including cl 8 in a schedule.



JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40144/08

SC 1157/05

SPIGELMAN CJ

ALLSOP P

GILES JA

Tuesday 10 March 2009

ORLEANS INVESTMENTS PTY LTD & ANOR v MINDSHARE COMMUNICATIONS LTD

Judgment

1 SPIGELMAN CJ: I agree with Giles JA.

2 ALLSOP P: I agree with Giles JA.

3 GILES JA: Hamilton J made an order restraining the appellants (“Orleans” and “Mr Eckett”) from referring to the respondent (“MindShare”) in particular ways, and from engaging in conduct which might harm or injure the name or reputation of MindShare or any related body corporate (as defined) of MindShare. The order gave effect to clauses in a deed between the parties (“the deed”). The appeal against his Honour’s decision is brought on a number of grounds, some of which if upheld would bring a new trial and others of which if upheld would bring discharge or variation of the orders. For the reasons which follow, one of the grounds of appeal should be upheld but the appeal from the order should be dismissed.

Circumstances

4 It is convenient to adopt the trial judge’s summary of the background to the deed -

“3 The plaintiff, MindShare Communications Ltd (“MindShare”), engages in the business of purchasing advertising time or space in the various mass media on behalf of its clients. It operates in Taiwan, Hong Kong and other parts of North Asia. It is part of the WPP Group of companies (“the WPP Group”), which operates around the world.

4 The second defendant, Wayne Eckett, is the principal of the first defendant, Orleans Investments Pty Ltd (“Orleans”). From about August 1997 Mr Eckett, through Orleans, was contracted to provide media consultancy services to MindShare. Disputes arose between MindShare and Mr Eckett and on 26 July 1999 MindShare, through its Chairman Asia Pacific, John Steedman, terminated the consultancy arrangement, with payment of three months’ consideration in lieu of notice.

5 Mr Eckett was aggrieved by this termination. He sought legal advice. He corresponded with Mr Steedman, and with MindShare’s lawyers, during July and August 1999 about the alleged breaches by Orleans of its agreement with MindShare by reference to which the contract was said to have been terminated. On 17 November 1999 he complained in a letter to MindShare’s solicitors that the manner of termination of Orleans’ contract was harsh, unfair and unreasonable and that he had been defamed by allegations that services provided by him on behalf of Orleans were disruptive, inferior and untrustworthy. He added that, if the defamatory allegations were not retracted, he would “initiate retaliatory strikes” without further notice. Shortly thereafter he sent a number of communications derogatory of MindShare to clients of MindShare.

6 In 1999 and 2000 MindShare commenced court proceedings against Mr Eckett and Orleans in the Taipei District Court to restrain the disclosure of confidential information; in the Federal Court of Australia alleging contravention of s 52 of the TPA; and in this Court to restrain the disclosure of confidential information and for breach of contract.

7 On 3 May 2001, MindShare, Mr Eckett and Orleans entered into a deed of release (“the deed”) to settle the disputes between them. ... ”

5 The communications derogatory of MindShare to which his Honour referred alleged that MindShare improperly retained media rebates to the detriment of the clients. The allegations were extended to allegations of dishonesty and deception by “WPP”, in context a global reference to companies in the WPP Group.

6 The deed provided for payment of sums of money by MindShare to Orleans and to the appellants’ solicitors and, relevantly, that the appellants would not make certain references to MindShare and rebates and the parties would not engage in conduct harmful or injurious to reputations or names. The material clauses were cll 7 and 10, in the terms -

“7 MindShare and Media Rebates

Eckett and/or Orleans covenant that neither they, nor any Eckett Entity, will, whether for the purpose of promoting Orleans’ media auditing services or for any other reason:

(a) refer directly or indirectly to MindShare as a company which receives Rebates in Taiwan or elsewhere in any document or other statement created or made by them;

(b) refer directly or indirectly to MindShare in any document or other statement created or made by them which discusses or refers to or mentions Rebates in Taiwan or elsewhere;

(c) disclose or make use of any information and materials regarding any aspect of MindShare’s business, financial affairs or client and supplier dealings.

Provided that nothing in clause 7(a) and (b) will prevent Eckett and/or Orleans from publishing a report in respect of any media audit of MindShare conducted for third parties/clients of Eckett and/or Orleans in accordance with clause 8.”

“10 Non Disparagement

10.1 Non Disparagement by Eckett and Orleans

(a) Eckett and Orleans each agree and undertake to MindShare that they will not at any time directly or indirectly disclose any information or make or publish any statement or engage in any conduct which may harm or injure the reputation or name of MindShare or the name or reputation of any Related Body Corporate of MindShare, including WPP.

(b) Provided that nothing in (a) will prevent Eckett and/or Orleans from publishing a report in respect of any media audit of MindShare conducted for third parties/clients of Eckett and/or Orleans in accordance with clause 8.

10.2 Non Disparagement of MindShare

(a) MindShare agrees and undertakes to each of Eckett and Orleans that it will not at any time directly or indirectly disclose any information or make or publish any statement or engage in any conduct which may harm or injure the reputation or name of either of them.

(b) Provided that nothing in (a) will prevent MindShare from defending itself against any adverse allegation, finding or recommendation contained in any statement, report or draft report by Eckett and/or Orleans in respect of any media audit of MindShare conducted by Eckett and/or Orleans.”

7 Clause 8 of the deed referred to in the provisos was in the terms -

“8 Media audits by Eckett and/or Orleans

Where Eckett and/or Orleans have been engaged by third parties/clients of Eckett and/or Orleans to carry out a media audit of Mindshare, Eckett and/or Orleans:

(a) will not release any written statement, recommendation or report in respect of that audit to any other person than the third party or client which commissioned the media audit;

(b) will provide Mindshare with a draft of any such statement, recommendation or report at least two business days before releasing the statement, recommendation or report to the third party or client who commissioned it.”

8 Mr Eckett came to reject the deed, and sent further communications derogatory of MindShare. It is again convenient to adopt from the trial judge’s reasons -

“8 On 14 October 2002, Mr Eckett sent an email to Sir Martin Sorrell, with copies to Mr Steedman, Peter Arthur and Arthur Carney. Sir Martin Sorrell was the Chairman of the WPP Group worldwide, Mr Arthur was the solicitor at Allen, Allen and Hemsley acting for the plaintiff and Mr Carney was the defendants’ solicitor. The subject of the email was “Misrepresentation and Serious Breaches of Contract”. The email referred to the three misrepresentations set out in [16] below and also to alleged breaches of cl 10.2 referred to in [15] and [24] below. It continued:

‘Misrepresentation and a continued pattern of serious breaches of contract designed to inflict recurring financial damage upon my company and myself is neither fair nor reasonable, and is unacceptable. Accordingly, the Deed of Release is hereby terminated and I not [sic] longer consider myself bound by the terms of this contract.’

The last paragraph threatened that:

‘Any aggression against myself and/or my company by WPP or any of its servants will immediately incur a series of strategic retaliatory strikes without further notice to you.’

9 Specific threats were made to disclose ‘the deceptive and dishonest practices of WPP’ and to expose ‘Sir Martin Sorrell as a corrupt businessman who knowingly presides over an empire that relies on revenue from fraudulent activity’.

10 On 12 May 2004, Mr Eckett sent an email to David Ma of a company referred to as FarEasTone, a client of MindShare. On 29 December 2004, Mr Eckett sent an email to persons associated with Diageo plc (“Diageo”), a large distributor in Asia of alcoholic beverages, including Johnnie Walker whisky. Diageo was a client of an associated company of MindShare. These emails were disparaging of MindShare or its associates and MindShare claims that they constituted breaches of cl 7 and cl 10 of the deed.”

The issues at trial and their resolution

9 The first issue at trial was whether the deed remained operative. The appellants contended that it had ceased to be operative, on two bases. One was that their entry into the deed had been induced by misrepresentations made by or on behalf of MindShare, and that they had rescinded it or were entitled to have it declared void pursuant to s 87 of the Trade Practices Act 1974 (C’th). The other was that MindShare had itself breached cl 10.2 of the deed, the breach had been repudiatory and the appellants had terminated the deed for repudiation. The trial judge held that one of the representations on which the appellants relied had not been made and that, although the other two had been made, the appellants had not established that they were induced to enter into the deed by, or entered into it in reliance upon, any of the representations. His Honour did not decide whether the first representation if made would have been untrue and said that it was “at least doubtful” that the other representations could be found to be untrue. He did not accept that the conduct alleged to constitute breach by MindShare of cl 10.2 of the deed had been made out, and doubted that it would have constituted repudiatory breach. Accordingly, he held that the deed remained operative.

10 The second issue was whether sending the two e-mails, the FarEasTone e-mail of 12 May 2004 and the Diageo e-mail of 29 December 2004, was in breach of the deed. The sending of the e-mails was not in dispute, and the trial judge determined a number of sub-issues concerning the construction of cll 7 and 10.1(a), the entities to which the e-mails referred and what the e-mails conveyed. His Honour held that sending the FarEasTone e-mail was in breach of cl 7 and sending the Diageo e-mail was in breach of cll 7 and 10.1(a). He considered that he did not need to decide whether sending the FarEasTone e-mail was in breach of cl 10.1(a).

11 The third issue was whether injunctive relief should be granted. The trial judge’s direct treatment of this issue in his reasons published on 27 November 2007 was brief. His Honour said -

“137 Thus relevant breaches of the negative stipulations in both clauses are established. The defendants submit that at least some of the breaches are in all the circumstances so minor as not to justify the grant of injunctive relief. I do not take that view. The deed was entered into in the context of a savage war of words between the parties. Non disparagement terms of wide import were solemnly entered into to bring this to an end. Where it is found that those provisions have been the subject of breaches, which have not been admitted by the defendants, I am of the view that it is entirely appropriate to grant injunctive relief in terms of the contractual provisions to restrain further breaches.”

The order

12 The substantive order made was -

“Orleans Investments Pty Ltd and Wayne Gregory Eckett are restrained from:

(a) referring directly or indirectly to the Plaintiff as a company which receives any bonus, rebate, volume discount or other financial benefit provided to media purchasing companies by media vendors or suppliers in respect of the media purchased by them (Rebate) in Taiwan or elsewhere in any document or other statement created or made by them;

(b) referring directly or indirectly to the Plaintiff in any document or other statement created or made by them which discusses or mentions or refers to Rebates in Taiwan or elsewhere; and

(c) directly or indirectly disclosing any information or making or publishing any statement or engaging in any conduct which may harm or injure the name or reputation of the Plaintiff or the name or reputation of any related body corporate of the Plaintiff (as defined in Sections 46-50 of the Corporations Law as at 3 May 2001), including WPP,

except in so far as either or both of them publish a report in respect of any media audit of the Plaintiff for third parties or clients of either or both of them in accordance with clause 8 of the Deed of Release between the parties dated 3 May 2001.”

First ground: procedural fairness and apprehended bias

13 Ground of appeal 1 was -

“”The Orders made by the Trial Judge on 31 January 2008 are affected by:

(a) Procedural unfairness; and

(b) Apprehended bias, by reason of His Honour’s consideration of material (namely, an Affidavit of Nick Romas filed on behalf of the Respondent) that was not in evidence before him.”

14 There was consideration of Mr Romas’ affidavit, and it was not in evidence. However, there is much more to be explained.

15 The appellants alleged three misrepresentations inducing their entry into the deed. One, the para 7(a) representation, was that at a settlement conference on 28 November 2000 part of the negotiations towards the deed Mr Steedman of Mindshare “represented to the defendants that he (Steedman) had not said anything about the first defendant to Mr Michael Cooper, the Chief Executive Officer of Optimum Media Direction Asia (‘OMD’)”. Another, the para 7(b) representation, was that at the final settlement conference on 3 May 2001 Mr Nick Romas also of MindShare represented “that neither Mr Steedman nor the plaintiff had done anything to prevent the defendants from obtaining work”. The third, the para 7(c) representation, was that at the same settlement conference on 3 May 2001 MindShare’s solicitor Mr Arthur represented ”that an e-mail sent by Mr Michael Cooper to the second defendant on 11 February 2001 had nothing to do with Mr Steedman or the plaintiff”.

16 The trial judge published his reasons on 27 November 2007, and directed that short minutes should be brought in “to encompass my decisions”. It is desirable, I think, to set out the paragraphs from the reasons directly concerned with whether these representations were made. I put in bold the references to material found in Mr Romas’ affidavit.

“50 A second settlement conference took place on 28 November 2000. Mr Eckett’s evidence concerning that conference was as follows:

‘On November 28, 2000, I attended a second settlement conference at the offices of Allen, Allen & Hemsley. This meeting was also attended by Mr Nick Romas, Mr John Steedman, Chairman of MindShare Asia/Pacific, Mr Peter Arthur and Mr Arthur Carney. The conversation was to the following substance and effect:

I said: ‘I had a basic agreement with OMD and now Mike Cooper won’t return my calls. Do you know anything about that?’

Mr Steedman said: ‘Mike Cooper only said you submitted a proposal. I didn’t say anything about you to Mike Cooper.’

I said: ‘I don’t believe you.’

Mr Steedman said: ‘I said nothing to Mike Cooper about you.’

I said: ‘I also had a reasonably good relationship with Howard Wang of Carat, and Anthony Young of Zenith, now they don’t return my emails or phone calls. Do you know anything about that?’

Mr Steedman said: ‘I have said nothing about you to OMD, Carat or Zenith, or any other company. I have said and done nothing to prevent you from getting work.’

51 Mr Steedman’s account of the conversation was as follows:

‘On 28 November 2000 I attended another settlement conference, which is referred to at paragraph 36 of the Eckett Affidavit (the Second Settlement Conference). At the Second Settlement Conference I did not have the conversation with Mr Eckett that he alleges. Rather, the conversation referred to took place in the following words:

Eckett said: ‘I had an agreement to do work for OMD. Now Mike Cooper won’t return my calls. What did you say to him about me?’

I said: ‘I haven’t said anything to Cooper that would stop you from getting work.’

Eckett said: ‘I don’t believe you.’

I said: ‘I have not said anything to Mike Cooper that would stop you from getting work.’’

52 Mr Romas’ account of the conversation was virtually identical to Mr Steedman’s, save that Mr Romas said that Mr Eckett said ‘I don’t believe that’ rather than “I don’t believe you’.

53 In cross examination, Mr Eckett gave the following answers:

‘Q You say you said to them you had a proposal, you had a proposal with OMD but now Mr Cooper would not return your calls, or words to that effect, correct?

A Yes.

Q And the response that you received from Mr Steedman was words to the effect, ‘I did not say anything about you to Mr Cooper which would prevent you from getting work’, correct?

A Yes.

Q Well, you agree with me it flowed from that, that Mr Steedman was accepting that there had been a discussion between you and Mr Cooper about, between Mr Steedman and Mr Cooper about you, but during that discussion Mr Steedman was asserting that nothing had been said which would prevent you from getting work?

A Yes.’

...

58 On 3 May 2001, there was a further settlement conference, again at the office of the plaintiff’s solicitors. Mr Eckett’s account of what was said at that conference commenced with discussion of the monetary amount that was being offered by the plaintiff as consideration for a settlement. Mr Eckett’s account of what occurred continued:

‘I said: ‘You can forget about AUD240,000. I am convinced MindShare has defamed me and prevented me from working across the Asia region.’

Mr. Romas said: ’There is no defamation.’

I said: ‘During our previous conference John Steedman denied making any statements about me to Mike Cooper of OMD.’

I placed the email dated February 11, 2001, from Mr Mike Cooper of OMD [42] on the table for Mr Romas and Mr Arthur to read. Mr Steedman left the room and did not return.

I said: ‘How do you explain this?’

Mr Arthur said: ‘That has nothing to do with Mr. Steedman or MindShare. This is just a person expressing an opinion.’

Mr Romas said: ‘Steedman has already answered this issue. Neither he nor anyone else at MindShare have done anything to prevent you from getting work. Now, if you mention any figure greater than AUD240,000 again, I am going to walk right out of here and we will fight it out in court for the next five years. Or we’ll just discontinue.’

The Parties settled on AUD190,000 and I signed both the deed of Release [44] (“the deed”) and withdrawal of allegations [55]. My signature was witnessed by Mr. Arthur Carney. Both Mr Romas and Mr. Steedman executed the deed on behalf of MindShare.’

59 Mr Romas’ account of these events is substantially the same as Mr Eckett’s account quoted above. In particular, he confirms as accurate Mr Eckett’s account of what was said by Mr Eckett, Mr Arthur and himself after the email was placed on the table. He states that he had not seen the email before that time.

60 Mr Eckett’s affidavit continued:

‘In agreeing to stay the proceedings and enter into a deed of Release with MindShare, I relied on:

(a) the Statement made by Mr Steedman in the second settlement conference that he had said nothing to Mr Cooper and had not said or done anything to prevent me getting work;

(b) the statement made by Mr. Arthur in the third settlement conference that Mr Cooper’s email dated February 11, 2001 had nothing to do with Mr Steedman or MindShare; and

(c) Mr Romas’ statements that there was no defamation and that neither Mr Steedman nor anyone at MindShare had done anything to prevent me from getting work.’

61 Thus the plaintiff’s evidence confirms the making of two of the statements alleged to amount to misrepresentations, being the statements made by Mr Romas and Mr Arthur alleged in par 7(b) and (c) of the defence. As to the par 7(b) allegation, it is important to note that Mr Romas’ statement at the 3 March 2001 meeting,

‘Steedman has already answered this issue. Neither he nor anyone else at MindShare have done anything to prevent you from getting work’,

was made after Mr Eckett had placed the Cooper email on the table in front of Messrs Romas and Arthur and after Mr Steedman had walked out of the meeting. There was no possibility of consultation between Mr Romas (or Mr Arthur) on the one hand and Mr Steedman on the other as to the contents of the email prior to each of them saying what he did. Thus, it was evident from the circumstances that Mr Romas was simply repeating Mr Steedman’s earlier position, based upon Mr Steedman’s earlier statements. The circumstances of the par 7(c) allegation are similar. Mr Arthur’s statement,

‘That has nothing to do with Mr Steedman or MindShare. This is just a person expressing an opinion’,

was in response to Mr Eckett’s question, ‘How do you explain this?’, referring to the Cooper email. Mr Eckett accepted that Mr Arthur’s response was made without communicating with Mr Steedman. It was plain that Mr Arthur was simply commenting on what was apparent from the face of the email. And those comments were entirely correct: the email simply records a statement by Mr Cooper, who is not connected with MindShare, and makes no reference to either Mr Steedman or to MindShare.

62 I turn now to the question of whether the first misrepresentation alleged, the statement by Mr Steedman set out in par 7(a) of the defence, was in fact made. In this regard, the allegation in the pleading is that Mr Steedman represented to the defendants that he had not said anything about the first defendant to Mr Cooper. Mr Eckett’s evidence in support of this is that Mr Steedman said to Mr Eckett, “I said nothing to Mike Cooper about you.” Mr Steedman conceded that he had spoken to Mr Cooper about Mr Eckett, rather than denying it. But his version was that he said in November 2000, “I haven’t said anything to Cooper that would stop you from getting work”, rather than the bald statement alleged by the defendants that Mr Steedman had not said anything at all to Mr Cooper about Mr Eckett. In my view, those statements are substantially different. If I accept that the statement made was as deposed to by Mr Steedman, rather than as deposed to by Mr Eckett, in my opinion the representation alleged in the pleading would not be made out.

63 I do in fact accept Mr Steedman’s version of what was said at the 28 November 2000 meeting. I have already recorded that in general terms I accept Mr Steedman’s evidence in preference to Mr Eckett’s where they conflict. Furthermore, Mr Romas corroborated Mr Steedman’s account and, in particular, that the words Mr Steedman used were, ‘I didn’t say anything to him that would prevent you from getting work’. Mr Romas was not cross examined and there was no challenge to his credit. In the circumstances, I find that the making of the representation alleged in par 7(a) of the defence and in par 3 of the cross claim is not established.”

17 In summary, in [52] his Honour referred to Mr Romas’ account of the conversation of 28 November 2000, in [59] he referred to Mr Romas’ account of the events of 3 May 2001, and in [63] he referred to Mr Romas’ corroboration of Mr Steedman’s account of the conversation of 28 November 2000. When the mistaken regard to Mr Romas’ affidavit was discovered the reference in [59] to Mr Romas’ account of the events of 3 May 2001 was not treated as significant, no doubt because it was substantially the same as Mr Eckett’s account, nor was it treated as significant on appeal.

18 An affidavit had been sworn by Mr Romas, and had been filed and was included in an “agreed bundle of pleadings and affidavits” provided to the trial judge. We were informed that the trial judge asked the parties to “strip out” the tender bundle, but that that had not occurred in relation to the affidavits. However, the affidavit was not read, and there was no direct evidence from Mr Romas of what was said at the meetings. It was accepted that the trial judge mistakenly had regard to his affidavit.

19 After publication of the reasons of 27 November 2007 the respondent drew the mistake to the trial judge’s attention. At a further hearing on 31 January 2008 his Honour received submissions on, amongst other things, amendment of his reasons.

20 In reasons delivered on that day he relevantly said -

“1. ... The error is a reference in [52], [59] and [63] of my judgment to an affidavit of Mr Nick Romas, which although on the file in the proceedings was not in fact read at the trial. The relevant paragraphs of the affidavit went to the making of the representation in par 7(a) of the defence in a settlement conference which occurred on 28 November 2000.

2. In [63] of my reasons for judgment where I came to my conclusion concerning the making of that representation, after stating that I accepted Mr Steedman’s version of what had been said and referring to the fact that I generally accepted Mr Steedman’s evidence in preference to that of Mr Eckett in case of conflict, I referred to Mr Romas’s evidence as corroborating Mr Steedman’s account of the relevant statement.

3. The amendment of my reasons proposed on behalf of the plaintiff is that I should omit [52] and [59], where I refer to Mr Steedman’s version and the two sentences in [63] where I refer to that version as corroborating Mr Steedman.

...

5. I have a clear recollection that I had come to the conclusion expressed in [63] that I accepted Mr Steedman’s word on this matter without reference to Mr Romas’s evidence. I regarded that evidence when I adverted to it as merely confirmatory of that conclusion. I did not refer to it in [63], but I did set out in [53] of my judgment cross examination of Mr Eckett concerning this subject matter, which derogated from his evidence in chief. As is apparent from my inclusion of that matter if [53], it is another of the matters that I took into account in discarding Mr Eckett’s examination in chief on this subject matter.

6. Mr Kirk, of counsel for the plaintiff, has set out in his useful written submission principles concerning the variation of judgments and the amendment by Judges of their reasons for judgment. This, of course, is a case in which, although a decision has been announced and reasons for judgment have been delivered, no orders have yet been made, much less entered. I have no doubt that I have power to amend the reasons for judgment by expunging the error which is under discussion.

7. The appropriate course in my view is that advocated by Mr Kirk, that [52] and [59] of the reasons be deleted along with the third and fourth sentences of [63]. The only other amendment that I make is that the first of the words of the next and last sentence of [63] are ‘In those circumstances”. I intend to amend those words by substituting for the word ‘those’ the word ‘the’ so that the sentence commences ‘In the circumstances’.”

21 Apart from the change from “those” to “the”, the trial judge thus deleted from his reasons the passages which I earlier put in bold. Amended reasons were in due course published.

22 Since the trial judge found that the appellants had not established that they were induced to enter into the deed by, or entered into it in reliance upon, any of the representations, it may be asked whether a flawed finding that the para 7(a) representation was not made is of any consequence. The appellants submitted that the trial judge’s rejection of Mr Eckett’s account of the conversation of 28 November 2000 might have influenced his view of Mr Eckett’s credit more generally, including as to reliance on the representations, and that a new trial on all issues should be ordered. It is not necessary to decide whether this should be accepted.

23 It is an undoubted principle that a judge’s decision should be made on the basis of the evidence and arguments in the case, and not “on the basis of information or knowledge which is independently acquired”: Re Media, Entertainment and Arts Alliance; ex parte Hoyts Corporation Pty Ltd [1994] HCA 66; (1994) 119 ALR 206 at 210 per Mason CJ and Brennan, Deane, Dawson and Gaudron JJ, describing it as an aspect of “the rule against bias”. Their Honours said that this aspect of the rule is similar to the rule of procedural fairness, but not identical because the question is whether in the circumstances the parties or the public “might entertain a reasonable apprehension that information or knowledge which has been independently acquired will influence the decision”.

24 The trial judge’s decision as found in the reasons of 27 November 2007 included regard to the material in Mr Romas’ affidavit. The error was exposed and the reasons were amended. With the exposure and receipt of submissions on amendment of the reasons, there was no longer any question of denial of procedural fairness.

25 The proper area of discourse was that commonly spoken of as apprehended bias. Did the trial judge’s decision as found in the amended reasons, with the explanation in the reasons of 31 January 2008, fail the now well established test of whether “a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide”: Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 at [6]: see also Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488 at [11]; Antoun v The Queen [2006] HCA 2; (2006) 224 ALR 51 at [1], [51], [82]; Concrete Pty Ltd v Parramatta Design & Development Pty Ltd [2006] HCA 55; (2006) 229 CLR 577 at [110].

26 In Ebner v Official Trustee in Bankruptcy it was said at [8], and has been affirmed in (for example) Smits v Roach [2006] HCA 36; (2006) 227 CLR 423 at [53], [56], that the application of “the apprehension of bias principle “requires two steps -

“First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits.”

27 The appellants submitted that the steps were satisfied in two ways.

28 One was that the trial judge had initially come to his decision with regard to the material in Mr Romas’ affidavit, and that this infringement of the aspect of the rule against bias was “ineradicable” because that the lay observer might reasonably apprehend that, despite the trial judge’s explanation that he had come to the conclusion that he accepted Mr Steedman’s word on the matter without reference to Mr Romas’ evidence, he might not have brought to the choice between Mr Eckett’s evidence and Mr Steedman’s evidence a mind free from the material in Mr Romas’ affidavit. The lay observer, according to the submission, might see the Romas material and other material on which the trial judge came to his decision as “not disentangleable”.

29 The other was that, although the trial judge’s explanation in the reasons of 31 January 2008 included that Mr Eckett’s cross-examination as set out in [53] was a matter he took into account, his Honour had not in the reasons of 27 November 2007 said that he took it into account. This, it was said, might be seen as “bolstering-up” the explanation that the conclusion in [63] had been reached without reference to Mr Romas’ evidence, and itself was a basis for the lay observer reasonably to apprehend that the trial judge might not have brought to his decision that Mr Steedman’s evidence was to be accepted a mind free from the material in Mr Romas’ affidavit.

30 The ultimate decision that Mr Steedman’s evidence was to be accepted was not by way of reconsideration excluding regard to the material in Mr Romas’ affidavit. The trial judge did not in the reasons of 31 January 2008 express a reconsideration. He explained his earlier consideration.

31 Accordingly, the “logical connection” inherent in the applicant’s submissions was that, despite what the trial judge said in the reasons of 31 January 2008, acceptance of Mr Steedman’s evidence might have involved more than confirmatory regard to Mr Romas’ affidavit; and more, that there might have been “bolstering-up” because of a disposition to maintain a conclusion which had not in fact been reached without contribution from regard to Mr Romas’ affidavit. When the trial judge stated the “clear recollection” that he had come to his conclusion without reference to Mr Romas’ evidence, and that he had regarded Mr Romas’ evidence as “merely confirmatory” of that conclusion, these are serious matters.

32 The two “mights” in the test reflect the importance that justice must both be done and be seen to be done, and the need for public confidence in the administration of justice. But the hypothetical lay observer is taken to be reasonable, and although the observer does not have a detailed knowledge of the law or the character or ability of the particular judge, reasonableness involves appreciation of ordinary judicial practice and of the judge’s professional training and obligations of dispassionate decision-making. Reference may be made to the joint judgment of Gleeson CJ and Gaudron, McHugh, Gummow, and Hayne JJ in Johnson v Johnson at [12]-[13], and to the observation by Callinan J at [80] that -

“ ... it is important to keep in mind that the notional, fair-minded observer is a rational person not unacquainted with the legal process, the oath or affirmation that judges have taken and judicial obligations generally, and in broad terms what has occurred and may occur in the case before and after the challenged conduct.”

33 In Concrete Pty Ltd v Parramatta Design & Development Pty Ltd at [111], Kirby and Crennan JJ said, referring to Johnson v Johnson, that it is “important to bear in mind the characteristics of modern litigation”. It is common-place for judges to be provided with bundles of materials, documents for tender and also affidavits, not all of which will be tendered or read. The efficient dispatch of business requires pre-reading. As well, judges gain knowledge of material on which they must rule if admissibility is in question. Much material may come to a judge’s attention which does not end up in evidence.

34 As was said by McClellan CJ at CL, Sully and James JJ agreeing, in R v Burrell [2007] NSWCCA 79; (2007) 175 A Crim R 21 -

“7. It is important when considering a submission of apprehended bias in a judicial officer to bear in mind the assumptions which must inform that consideration. Objectively, independence and firmness of mind are essential characteristics of a judge. A judge will be assumed to have a capacity to put from his or her mind evidence of a prejudicial kind which has been heard or seen but is not relevant to the determination of the question before the Court. In the Victoria v Australian Building Construction Employees and Builders Labourers Federation [1982] HCA 31; (1982) 152 CLR 25 Gibbs CJ rejected the suggestion that a judge could be influenced by the media. In the course of his reasons the Chief Justice said (at 58):

‘It is the everyday task of a judge to put out of his mind evidence of the most prejudicial kind that he has heard and rejected as inadmissible.’

8. In the same case Stephen J said (at 76):

‘Judges are necessarily engaged daily in hearing and later banishing from their minds evidence which is of a prejudicial nature and which proves to be inadmissible. They should both by experience and training, be better able to do so than most people.

...

11. ... There are many occasions upon which a judge, either at a trial or on an appeal, may be asked to reconsider a ruling which he or she has made, a factual determination or a decision upon a matter of law. Matters are routinely returned from an appellate court to the trial judge to be determined according to law. The ordinary fair minded person understands that in the exercise of the judicial function it will be necessary, from time to time, for a judge to reconsider matters which have previously been considered or which may have been pronounced upon by that particular judge. Such a person, properly informed, would not in my opinion reasonably apprehend that the judge or judges would bring other than an impartial mind to the determination of the matter: R v Reid [2004] NSWCCA 301; (2004) 148 A Crim R 425 at [26] R v Kearns [2003] NSWCCA 367.”

35 Mistakes can occur, as occurred in the present case. In R v Burrell the Court reconsidered an appeal when it was realised that the factual basis on which it had acted, as set out in a document in a folder containing written submissions, was out of date and should not have been included in the filed material, and rejected the submission of reasonable apprehension of bias. The Court’s observations concerning apprehended bias are not affected by the High Court decision that there had not been power to re-open the appeal, Burrell v R [2008] HCA 34; (2008) 248 ALR 428, a matter not in issue in the present case.

36 As I have said, the present case is not one of reconsideration. Appreciation of judicial capacity impartially to reconsider, however, informs also the perception of an explanation such as that given by the trial judge. A judge’s later statement can be taken into account in assessing any apprehension which the lay observer might reasonably hold, see Johnson v Johnson at [14], referring to re JRL; ex parte CJL [1986] HCA 39; (1986) 161 CLR 342 and Vakauta v Kelly [1989] HCA 44; (1989) 167 CLR 568, and more widely the acceptance of proper expression of tentative views in that case and in cases such as Antoun v R and Concrete Pty Ltd v Parramatta Design & Development Pty Ltd; in McGovern v Ku-ring-gai Council [2008] NSWCA 209; (2008) 161 LGERA 170 at [81] Basten J said succinctly, “In a case where the decision-maker has publicly identified that prejudicial material has been available, the observer would be entitled to take account of a statement that it has not affected the decision-maker’s approach to the decision, but need not be expected to accept the disclaimer: see, eg, Re JRL; ... “.

37 The appellants referred to the observation by Lord Goff in R v Gough [1993] UKHL 1; (1993) AC 646 at 659, cited by this Court in Kwan v Kang [2003] NSWCA 336 at [101], that “bias is such an insidious thing that, even though a person may in good faith believe that he was acting impartially, his mind may unconsciously be affected by bias”. They relied particularly on Kwan v Kang. In an interlocutory judgment the judge had made findings involving fraud by a party. The party asked that the judge disqualify himself. The judge declined, and handed down a “revised” judgment in which the findings were changed to findings of reasonable grounds for fraud and it was said that they were open to be “controverted for the purposes of the substantive issues still to be determined”. It was held that, in the whole of the circumstances, the strong impression created by the original findings “expressed in emphatic language of absolute finality” was not eradicated by the statements in the revised judgment that they were made only at a prima facie level.

38 The facts in Kwan v Kang were very different from those in the present case. In particular, the Court said at [68] that it was important to note that in the revised judgment the judge did not say that in the original judgment he had “said something that he did not mean, or that he had said something by mistake, or had not said something he meant to say”. Their Honours said at [102] that had the judge -

“ ... stated that in making what appeared to be absolute and unconditional findings he had made a mistake, had not intended to make findings on that basis and his use of language was in error, a different conclusion may have been open, but as already observed in [68] and [88] above, neither in the revised judgment nor at any other time did his Honour explain his earlier remarks in this way.”

39 The present case must be addressed on its own facts, according to the test stated above.

40 Assessing the lay observer’s perception, including the effect of the trial judge’s later statement, should begin with what on a fair reading would be made of the trial judge’s reasons published on 27 November 2007. What, from those reasons, was the part played by regard to Mr Romas’ affidavit in the conclusion expressed at [63] that his Honour accepted Mr Steedman’s version of what was said at the 28 November 2000 meeting? The acceptance was stated in the first sentence of [63], with explanation in the following sentences in that paragraph. However, it was to be read with the preceding paragraphs, all of which informed coming to the conclusion.

41 Three matters may be noted. First, Mr Eckett’s evidence of what was said on 28 November 2000 included Mr Steedman saying, as a general statement preceded by reference to OMD, that he had “said and done nothing to prevent you from getting work”. This was at the least open to be understood as applying to the statement that he had said nothing to Mr Cooper about Mr Eckett. Secondly, the trial judge expressly set out at [53] that in cross-examination Mr Eckett had agreed that Mr Steedman’s response to his complaint that Mr Cooper would not return his calls was words to the effect, “I did not say anything about you to Mr Cooper which would prevent you from getting work”. Thirdly, Mr Eckett’s account of what occurred at the conference of 3 May 2001 included Mr Romas saying, plainly referring to the earlier meeting on 28 November 2000, that Mr Steedman had said that neither he nor anyone else at MindShare had done anything to prevent Mr Eckett from getting work. This was evidence of what Mr Steedman had said, corrobative of Mr Steedman’s own account.

42 Quite apart from Mr Romas’ affidavit, then, and particularly with Mr Eckett’s agreement in cross-examination to the words “which would prevent you from getting work”, the evidence to which the trial judge referred in the paragraphs preceding [63] all but demanded acceptance of Mr Steedman’s version of what was said at the 28 November 2000 meeting. Setting out that evidence necessarily underlay the acceptance stated in the first sentence of [63], and contrary to the appellants’ submission the word “Furthermore” introducing the regard to Mr Romas’ affidavit plainly denoted confirmatory regard.

43 I do not think that the lay observer could reasonably have questioned the trial judge’s explanation, in the reasons of 31 January 2008, that he had come to the conclusion expressed in [63] without reference to Mr Romas’s evidence and regarded that evidence as merely confirmatory. That is particularly so when the trial judge had at [53] set out Mr Eckett’s evidence in cross-examination in which he agreed that Mr Steedman’s response was in words which included “which would prevent you from getting work”. Although it was not specifically mentioned in the original [63] (or indeed the amended [63]), the point of setting out that evidence could only have been that Mr Eckett in cross-examination relevantly concurred with Mr Steedman’s version of what was said at the 28 November 2000 meeting. With an understanding of the reasons published on 27 November 2007, there was no “bolstering-up” and perception of “bolstering-up” was not reasonably open.

44 There is not the contrast between initial emphatic statement and later correction found in Kwan v Kang, and the trial judge’s statement of his recollection and the confirmatory role of the regard to Mr Romas’ affidavit were in the circumstances unexceptional. I do not think that apprehended bias, according to the test earlier stated, has been made out.

45 This ground of appeal should not be upheld.

Inadequacy of reasons

46 Ground of appeal 2 was -

“The Trial judge failed to give adequate reasons for his criticism of the credit of the Appellant, Mr Eckett (incorrectly described in His Honour’s Reasons for Judgment as “the Second Defendant”) and his preference for the evidence of Mr Steedman, an officer of the Respondent.”

47 Early in his reasons the trial judge said -

“19 Before turning to the issues, I shall set out briefly some conclusions as to the credit of witnesses. The witnesses whose credit was principally under challenge were the second defendant, Mr Eckett, and Mr Steedman, who gave evidence for the plaintiff.

20 Mr Eckett’s credit was compromised in various ways. In cross examination, he was on a number of occasions evasive in his answers. One example was in relation to his approval of the contents of a letter sent over his signature to a Mr Liu. Another was as to whether he believed that communications he made alleging fraudulent conduct against MindShare would get around the advertising market in Taiwan. Bearing in mind his avowed intention to harm MindShare and his knowledge of the prevalence of gossip in the media and advertising industries, I simply do not find credible his answers in cross examination that he did not consider whether the accusations would get into the market place. Also relevant to his credibility is the high emotion he felt as a result of his dismissal by and subsequent dealings with MindShare. I also take into account his demeanour in the witness box. Whilst I do not regard his evidence as valueless without the support of other evidence, I am of the view that his evidence must always be approached with caution.

21 Although Mr Steedman’s credit was heavily attacked, I am of the view that it generally survived that attack. I formed the view that he was a witness who attempted to give and generally gave the Court an accurate account of events. Where his evidence and that of Mr Eckett conflict, I generally prefer Mr Steedman’s evidence.”

48 On occasions the trial judge referred back to his general conclusion as to the credit of Mr Eckett when making findings on disputed questions of fact: for example, that he bore in mind his assessment of Mr Eckett’s credit (at [37], a finding concerning conduct on the part of MindShare alleged to have been repudiatory of the deed); that he generally accepted Mr Steedman’s evidence in preference to Mr Eckett’s where they conflicted (at [63], see above); that he took into account his view of Mr Eckett’s credit (at [72], a finding on whether there was inducement or reliance on any of the representations in entry into the deed); and that he referred to his views on Mr Eckett’s credit (at [121], a finding on Mr Eckett’s knowledge of the identity of Diageo Plc’s media buying agent).

49 The appellants submitted that the trial judge gave inadequate reasons for the adverse view he took of Mr Eckett’s credit, and that the specific reasons he gave in [20] other than the reference to demeanour did not support that adverse view. The submissions rather conflated inadequacy of reasons and incorrectness of reasons. It was said, however, that once the unsupportive reasons were put aside there remained preference for Mr Steedman’s evidence on the basis of credit without proper reasons.

50 We were taken to the evidence underlying the examples of evasiveness. It is sufficient to say, without elaboration, that the printed word amply supports what the trial judge said, and it must be remembered that characterising Mr Eckett’s answers as evasive involved the impression conveyed to the trial judge from seeing and hearing him under cross-examination. The appellants submitted that it was not explained how Mr Eckett’s intention to harm MindShare, and his knowledge of the prevalence of gossip in the media and advertising industries, bore upon the credibility of his evidence concerning whether the accusations would get into the market place. The trial judge brought ordinary knowledge of human affairs to his fact-finding, and further explanation was not necessary. It was also submitted that the trial judge did not explain how the high emotion bore upon Mr Eckett’s credibility, to which the same response is appropriate.

51 The appellants referred to Intertransport International Private Ltd v Donaldson [2005] VSCA 303 at [19] for the statement, with citation of Palmer v Clarke (1989) 19 NSWLR 158 at 170, that a judge’s expression of preference for one witness over another on the basis of credit ordinarily does not constitute adequate reasons. Reliance on that case was misplaced. The citation from Palmer v Clarke was concerned with what Kirby P there described as “bald findings on credit, where there remain substantial issues to be dealt with”. The case was concerned with findings on the basis of credit, not findings as to credit. The trial judge did not state bald findings on the basis of the credit of Messrs Eckett and Steedman. There was analysis of the evidence on the occasions of factual dispute, the trial judge’s view of Mr Eckett’s credit being part only of coming to his conclusions. The trial judge’s findings as to Mr Eckett’s credit are a different matter.

52 In explaining his view of Mr Eckett’s credit it was not incumbent on the trial judge to recount each and every occasion on which he considered Mr Eckett had been evasive; it was sufficient to explain, with illustrations, that he did so. His Honour gave further reasons for his view. It was apparent from the reasons why the trial judge considered that Mr Eckett’s credit was compromised, and in my opinion there was no inadequacy of reasons.

53 This ground of appeal should not be upheld.

Breach of the deed

54 Grounds of appeal 3 and 3A were -

“3. The Trial judge erred, in his construction of clause 10.1(a) of the Deed of Release dated 3 May 2001, in determining (in [120]) that its ‘non-disparagement provisions’ operated without reference to proof that breaches of the clause were committed knowingly.

3A. The Trial judge erred in finding that the Appellants breached clause 10.1(a) of the Deed by sending the Diageo communication.”

55 The error in ground 3A turned upon the error in construction in ground 3; the appellants contended that sending the Diageo e-mail was not a knowing breach of cl 10.1(a). While supporting the challenged construction of cl 10.1(a), the respondent submitted that the evidence made out knowing breach. What was meant by knowing breach differed between the trial and the appeal.

56 Even if cl 10.1(a) of the deed were to be construed as requiring proof of knowing breach, knowledge was established in the case of the FarEasTone e-mail. Upholding these grounds of appeal would leave breaches of cll 7 (the Diageo e-mail) and 10.1(a) (the FarEasTone e-mail) to found a claim for injunctive relief.

57 The Diageo e-mail asserted poor stewardship in and gross mismanagement of Diageo Plc’s media investment, and was plainly harmful or injurious to the reputation or name of the entity which was acting as media buying agent for Diageo Plc. That entity was Maxus Communications Ltd (“Maxus”), not Mindshare. The e-mail did not refer directly to Maxus, or to MindShare. As one of the sub-issues MindShare contended that Maxus was a Related Body Corporate of Mindshare within cl 10.1(a), and the trial judge found that it was.

58 The trial judge identified as a sub-issue, apart from whether Maxus was a Related Body Corporate of MindShare -

“(b) whether Maxus can be taken to be referred to by the Diageo communication, particularly in light of the defendants’ allegation that Mr Eckett did not know that Maxus was the service provider”.

59 When he came to this sub-issue his Honour said -

“102 As to Question 2(b), that is, whether the Diageo communication can be taken to refer to Maxus, particularly in light of the defendants’ allegation that Mr Eckett did not know that Maxus was the service provider for the Johnnie Walker Tree campaign, as already stated Maxus was in fact the service provider to Diageo at the time of the Diageo communication. In that sense, a reference to Diageo’s service provider was a reference to Maxus. It was contended for the defendants that Mr Eckett did not know at the time that he sent the Diageo communication the identity of the media buying agency responsible for the Johnnie Walker Tree campaign. It was contended that, in the absence of such knowledge on the part of Mr Eckett, the Diageo communication could not be taken to refer to Maxus. The Diageo communication could not therefore be in breach of cl 10.1(a).

103 The plaintiff makes two answers to this contention. The first is that there is no requirement for knowing breach in cl 10.1(a) of the deed. The breach may occur whether the reference in the communication was knowing or not. The substantial question is whether the publication is disparaging of Maxus. The second contention is that Mr Eckett’s disavowal of knowledge should be rejected and a finding should be made that he did in fact know that Maxus was the service provider.

104 Question 2(b) leads to two inquiries. The first relates to the degree of Mr Eckett’s knowledge as to who was Diageo’s service provider for the Johnnie Walker Tree campaign. The second inquiry is as to the ambit of the relevant prohibition contained in cl 10.1(a) of the deed, on its true construction. It is to be remembered that the heading of cl 10.1 is “Non Disparagement by Eckett and Orleans” and the terms of the relevant prohibition are against making or publishing any statement which may harm or injure the reputation or name of any related body corporate of MindShare. Those two inquiries, though different, have some relationship to each other.”

60 As to the first inquiry, the trial judge referred at [106] to Mr Eckett’s evidence that he “wasn’t aware of Diageo being a client of MindShare Maxus”, and noted that this was subsequently admitted by Mr Eckett to be wrong when he was shown an e-mail from him that mentioned Johnny Walker as a client of MindShare. He referred at [107] to e-mails in the latter part of 2004 culminating in a threat by Mr Eckett to “expose the dishonest and fraudulent practices of WPP across the Asia Region”, and said that the threat “bespeaks the motivation of Mr Eckett in December 2004 to make statements damaging to MindShare”. In [108]-[111] he described evidence of the nature of the market and Mr Eckett’s experience in it, including that in a media industry magazine in December 2004 it was stated that MindShare ”handles media in relation to Johnny Walker” in, inter alia, Taiwan.

61 As to the second inquiry, his Honour said at [112] that “the standard to be applied” in determining whether there was a breach of cl 10.1(a) was in the end to be determined as a matter of construction, and after a discussion of the use of extrinsic evidence said -

“118 If, as I assume, ambiguity in the deed is a necessary precondition to taking into account in construing it any of the evidence set out above, in my view it is clear that the deed is ‘ambiguous or susceptible of more than one meaning’ in the requisite sense. What cl 10.1(a), under the heading ‘Non Disparagement’, in terms required Orleans and Mr Eckett to do was not to make or publish any statement which may harm or injure the reputation of MindShare or a related body corporate. As I have said, the prohibition does not in terms require knowledge. The defendants’ contention is that it should be construed as requiring knowledge. The plaintiff’s contention is that it is an absolute obligation. In this regard, cl 10.1(a) is ambiguous or susceptible of more than one meaning. In view of this, the circumstances surrounding the making of the deed may be taken into account.

119 I approach the deed on that basis. The relevant clause is headed ‘Non Disparagement’. The heading may be taken into account in construing the clause: Lewison, The Interpretation of Contracts (2nd ed, 1997) [5.12]. The definition of “disparage” in the Macquarie Dictionary (rev 3rd ed, 2001) is:

‘1 to bring reproach or discredit upon; lower the estimation of.

2 to speak of or treat slightingly; depreciate; belittle.’

120 Both the word ‘disparage’ and the expression ‘conduct which may harm the reputation of’ a specified person contain some suggestion of deliberateness or intent. However, the provisions for non disparagement in the deed are wide. There were in the background to its execution bitter conflicts, curial and non curial, between the parties. These conflicts included the publication of scurrilous material. The relevant area in which the purpose of the deed was to restrain disparaging disclosures is the media market in Taiwan or in North Asia generally. The evidence set out above shows that this is a market with a comparatively small number of players. Orleans and Mr Eckett were highly experienced in and knowledgeable concerning this market, as was MindShare. The evidence shows that information such as the identity of the entity which was the media buyer for a particular advertiser in the market was either in the public domain, through journal articles or otherwise, was the subject of gossip in the market place or could readily be ascertained by appropriate inquiries. In these circumstances, it should be taken that the parties to this deed either knew or could easily ascertain the identity of media buying agencies in relation to particular contracts. On this basis, the intention of the parties to the deed should be taken to be that the non disparagement provisions would operate without reference to proof that any breaches of the clause were committed knowingly. It may be that, if it were established that publication was made in circumstances where the identity of a particular operator was unknown and unable after inquiry to be ascertained, a publication which turned out to refer to one of the proscribed entities would not be taken to be breach of the provision. But, that, as will appear, was not the case here.”

62 Thus the contest at trial was over the need for, and existence of, knowledge that Maxus was the media buying agent for Diageo Plc. It did not concern knowledge that the Diageo e-mail might harm or injure the reputation or name of whatever entity was the media buying agent, or knowledge that Maxus was a Related Body Corporate of Mindshare.

63 As to knowledge, the trial judge continued -

“121 In light of this interpretation of the prohibition in the deed, I turn to my conclusions as to the state of Mr Eckett’s knowledge. I do not accept Mr Eckett’s statement that it was his belief that MindShare or Maxus had lost the Diageo account. In coming to this conclusion, I refer to my views as to Mr Eckett’s credit and the caution with which his evidence must be approached. He gave no source of the supposed information to this effect. I take into account that his associated statement that he was not aware of Diageo ever being a client of MindShare or Maxus was subsequently accepted by him, when faced with a document of his, to be wrong. I bear in mind the evidence as to the readiness with which this information could have been obtained, including the fact that the relationship between MindShare and Johnnie Walker was published in a trade journal in December 2004. I take account of his threatening email of 29 November 2004. I find that Mr Eckett knew on 29 December 2004 that Maxus was the service provider to Diageo.

122 If this conclusion be not correct, I find for the reasons set out above that Mr Eckett could readily have ascertained at that time that Maxus was the service provider to Diageo and that he was obliged, to carry out his obligations under the deed, to make inquiries to ascertain whether that was so. There is no evidence that he made such inquiries. As a result, the Diageo communication, if it was of the proscribed character, would constitute a breach of cl 10.1(a).”

64 On appeal the appellants’ written submissions as to knowing breach cast a wider net, to the effect that there could not be breach of cl 10.1(a) unless the appellants were aware that the conduct might harm or injure the reputation or name of MindShare or a Related Body Corporate. It was submitted orally that the relevant knowledge was “knowledge that the information, statement or conduct had the required character”, explained as meaning that it may harm or injure the reputation or name of MindShare or the reputation or name of any Related Body Corporate and including whether the company disparaged was a Related Body Corporate of MindShare.

65 This went beyond the contest at trial; it had to in order to bring a different result, since the trial judge found that Mr Eckett “knew ... that Maxus was the service provider to Diageo” (at [121]) and there was no challenge to the factual finding on appeal.

66 It may be questioned whether it was open to the appellants to go beyond the contest at trial. However, MindShare did not object to the wider question of construction raised on appeal. Its submission that the evidence made out knowing breach addressed the lack of knowledge on which the appellants relied, which was confined to knowledge that Maxus was a Related Body Corporate of MindShare. There is utility in at least deciding the wider question of construction, and so clarifying the parties’ rights and obligations.

(a) Construction

67 I have set out the trial judge reasons in [120]. The appellants submitted that the trial judge erred in four respects. First, he took account of the heading “Non Disparagement” to cl 10, but cl 1.2 of the deed provided that headings were “for convenience only and do not affect interpretation”. Secondly, he failed to take account of other clauses in the deed, cll 2, 3 and 4, in which there was reference to matters of which the parties “are or ought reasonably to be aware”; the submission was that these references to actual or constructive knowledge suggested that knowledge was otherwise material to the parties’ relationship, and so to be brought into cl 10.1(a). Thirdly, he did not take account of the world-wide operations of the corporate ground of which MindShare was part, specifically invoked by the reference to WPP in the clause, or the complexity of the corporate inter-relationships as illustrated in the evidence going to whether Maxus was a Related Body Corporate of MindShare. In cl 1.1 of the deed “Related Body Corporate” was defined to mean “in relation to a body corporate, a body corporate which is related to it within the meaning of section 50 of the Corporations Law”, and it was said that the wide reach of cl 10.1(a) could bring unintended breach and called for knowledge that the entity whose reputation or name was disparaged was within the class so described. Finally, and not entirely as an error, it was said that the trial judge’s reservation in the penultimate sentence in [120] was inconsistent with his construction of the clause, and involved recognition of the significance of its wide reach but failure to take it into account.

68 The trial judge should not have taken into account the heading to clause 10. But he placed that consideration on the appellants’ side of the ledger, through the word “disparage” containing “some suggestion of deliberateness or intent”, and it did not lead to error in the construction of the deed.

69 The references to actual or constructive knowledge elsewhere in the deed would suggest, if anything, that knowledge that the reputation or name of the entity might be harmed or injured and that Maxus was a Related Body Corporate of MindShare was not necessary. Express reference to knowledge could give point to absence of reference to it in cl 10.1(a). However, the clauses were on quite different subject matters. They were sufficiently disparate that I do not think that this rather remote application of an expressio unius principle is warranted. I do not think there was error in this respect.

70 Of more significance is the wide reach of cl 10.1(a), but it must be placed in context. As the trial judge noted, the deed was entered into against the background of bitter conflicts involving the publication of disparaging material. As a brief summary, in 1999 and 2000 Mr Eckett sent to clients of MindShare a number of faxes or e-mails alleging impropriety in retaining media rebates. Some of them said that senior management at WPP were aware of the practice, and extended the allegation to the WPP group: for example, a fax to about eight clients in the latter part of 2000 included that “[d]isclosure of deceptive and dishonest practices within WPP is a matter of public interest”. Mr Eckett agreed in his evidence that he was telling the clients that MindShare was engaged in fraud, and that he did it to harm MindShare. Then in October 2000 Mr Eckett sent to Sir Martin Sorrell an e-mail purporting to apologise for the damage to his good name of “disclosure of WPP’s deceptive and dishonest practices”. In December 2000 he sent to journalists at the New York Times, the Wall Street Journal and the Financial Times an e-mail saying that he needed allies in proceedings in which “WPP are suing my company to prevent disclosure of certain financial practices with [sic] WPP” and, “Can you supply the names of Sir Martin Sorrell’s business enemies?” A copy was sent to Sir Martin Sorrell with the observation, “There will be no winners”, and Mr Eckett agreed that it was his strategy to put pressure on Sir Martin Sorrell to end the litigation. In February 2001 Mr Eckett sent to a Mr Matt Drudge, who was based in the United States and ran an internet report called the Drudge Report, an invitation to be “interested in” his disclosure of practices which “within this global advertising agency network result in inflated advertising costs”. This e-mail was copied to Mr Steedman in Sydney, and Mr Eckett agreed that he “wanted to use the leverage to settle”.

71 Against this background, there is no occasion to read into cl 10.1(a) additional notions of intention or knowledge. The deed was intended to prevent continuance of what may reasonably be described as a campaign directed at the WPP group. Clause 10.1(a) was framed in wide terms, extending to “indirect” conduct which “may” harm or injure the name or reputation of any Related Body Corporate of Mindshare. MindShare undertook reciprocal obligations in cl 10.1(b). By the wide terms, and in conformity with the purpose of the deed, the appellants for their part and MindShare for its part accepted the exposure inherent in “indirect”, in “may” and in reputational injury, in the case of the appellants involving the members of a class.

72 It would not be a sensible operation of the deed that the appellants or MindShare could disclose information, publish a statement or engage in other conduct without giving thought to whether there might be harm or injury to the name or reputation of the other, and in the case of the appellants of a member of the class, and without making inquiries; nor would it be a sensible operation of the deed that MindShare, in particular, had to prove what was in Mr Eckett’s mind in order to establish breach. By the risk allocation in the deed, even if despite the thought and inquiries there was conduct which unintentionally or unknowingly might cause reputational injury there was breach. The parties committed themselves to the objective facts of conduct of a particular kind which might harm or injure the reputation or name of the other of them and, in the case of cl 10.1(a), of a Related Body Corporate of MindShare.

73 In my opinion, the trial judge was correct in his construction of cl 10.1(a). It was not necessary that Mr Eckett know that Maxus was the media buying agent for Diageo Plc; it was enough that it was. Nor was it necessary that Mr Eckett know that the Diageo e-mail might harm or injure the reputation or name of whoever was the media buying agent; it was enough that Maxus’ reputation or name might be harmed or injured and that it was a Related Body Corporate of MindShare.

(b) Knowledge

74 It is not necessary to decide whether the evidence made out knowledge, that Maxus was a Related Body Corporate of MindShare, but something should be said of it.

75 Consistently with the issue as to knowledge at trial, the trial judge did not deal with the state of Mr Eckett’s knowledge in connection with cl 10.1(a) otherwise than in [121]-[122] earlier set out, it seems referring back also to [106]-[108]. The appellants submitted in support of ground 3A that there was “no evidence” that Mr Eckett knew that Maxus was a Related Body Corporate of the Respondent. MindShare’s submissions that the evidence made out knowing breach responded to that submission. The thrust of its submissions was that MindShare and Maxus were closely linked in the communications market in Taiwan; that from his experience in the market Mr Eckett knew of their close relationship and at one point in his evidence asserted that he was not aware of Diageo Plc being a client “of MindShare Maxus”; and that a motivation to make statements damaging to MindShare, found by the trial judge at [107] and put into effect by the Diageo e-mail with knowledge that Maxus was the buying agent of Diageo Plc, meant that Mr Eckett knew “that the two companies were part of the same group”.

76 Relationship within the meaning of s 50 of the Corporations Law is complex. It is a holding company/subsidiary relationship, not necessarily in direct line, the concept of a subsidiary being explained in ss 46-49. The trial judge referred to these provisions in deciding that Maxus was a Related Body Corporate of MindShare, but not in relation to Mr Eckett’s knowledge of the relationship. Even if Mr Eckett knew that there was a close relationship between Maxus and MindShare, as particularly indicated by his (disbelieved) evidence that he was not aware of Diageo Plc being a client “of MindShare Maxus”, it does not follow that the relationship was to his knowledge that particularly required by s 50.

77 On the evidence available, the inference of knowledge of a relationship within the meaning of s 50 may be difficult. But there may have been further evidence, and knowledge that the two companies were part of the same group and had the necessary relationship may have been put to Mr Eckett, had knowledge that Maxus was a Related Body Corporate of MindShare been a sub-issue at trial. This adds point to questioning whether it was open to the appellants to go beyond the contest at trial.

78 Since the trial judge was correct in his construction of cl 10.1(a), grounds 3 and 3A should not be upheld.

Discretionary error

79 Grounds of appeal 4 and 5 were -

“4. In granting an injunction against the Appellants, the Trial Judge failed to take into account the following considerations:

(a) The absence of any evidence of damage to the Respondent, and the Respondent’s abandonment of any claim to damages, arising from breaches of the Deed by the Appellants.

(b) The absence of any continuing threat of breaches on the part of the Appellants.

(c) Uncertainty attaching to provisions of the deed (clauses 7 and 10.1) paraphrased by the Injunction.

(d) Uncertainty attaching to the identity of the Respondent.

(e) The uncertain and oppressive character of the Injunction.

5. The Trial Judge erred (in [137]) in finding that the fact that breaches of the Deed found by His Honour had not been admitted by the Appellants was a sufficient reason to justify the grant of an injunction (and, moreover, an injunction in terms paraphrasing clauses 7 and 10.1 of the Deed).”

80 The trial judge’s consideration of the grant of injunctive relief is found in [137] set out above, together with what he said when there was further attention to the form of the orders in the reasons of 31 January 2008 -

“9 There are two other matters for consideration this morning. The first is the form of the orders that should be made. The plaintiff has brought forward a form of judgment embodying the orders. The plaintiff is named in the proceedings as MindShare Communications Limited, Taiwan Branch. Despite some inconclusive discussions during the course of the trial as to what precisely was referred to by that expression, no further evidence or submissions were brought forward during the trial and no application was made for any amendment of the proceedings. In those circumstances, I am of the view that the plaintiff must be named in the form of judgment by the name which it has borne throughout the proceedings, namely, MindShare Communications Limited, Taiwan Branch. The reference to the plaintiff in the injunctive orders should be as “the plaintiff”, rather than by any name.

10 The other matter put to me by Mr Barham in relation to the form of the orders is that the related bodies corporate of the plaintiff referred to in order 1(c) should be defined by name, if not in the body of the order, then in a list attached to the form of judgment. Mr Kirk reminds me of my statement in [137] of my reasons for judgment that the injunctive relief I propose to grant should be in terms of the contractual provisions.

11 I am very much appreciative of the need for precision and certainty in orders, because of their potential in the case of disobedience to be the foundation of proceedings for contempt of court. However, the relief in this case is in support of a negative stipulation in a contract and I am of the view that it is appropriate in this case to adopt the terms which the parties themselves adopted in the contract. Furthermore, although some companies have been revealed in the evidence as being bodies corporate related to the plaintiff, it is clear that the identity of all the related bodies corporate is not revealed in the evidence. In the circumstances, as I have said, I propose that the order should follow the terms of the negative stipulation in the contract.”

81 Ground of appeal 5 was not well framed. The trial judge did not find that the fact that breaches of the deed had not been admitted by the appellants was a sufficient reason to justify the grant of an injunction. His Honour referred to that fact as a consideration material to the grant of injunctive relief.

82 The submissions in support of the ground were to the effect that, although the breaches were not admitted, there was room for genuine contest over the construction of cl 10.1(a), and that the appellants’ resistance to the respondent’s claims did not suggest that injunctive relief for the future was necessary; it was added that there had been no suggestion of conduct in breach of cll 7 and 10.1(a) since the end of 2004.

83 There is no substance in these submissions. After MindShare commenced the proceedings in January 2005, undertakings were given that the appellants would “comply with clauses 7 and 10 of the Deed of Release”. The undertakings explain the absence of subsequent conduct in breach of the clauses. The appellants’ resistance to MindShare’s claims went far beyond contest over the construction of cl 10.1(a), and included major factual contest in which Mr Eckett was not accepted. The evidence established a disposition, to say the least, to engage in conduct of the kind proscribed by cll 7 and 10.1(a) after the deed was entered into, and resistance to MindShare’s claims could contribute to whether the disposition continued and might be given effect in the future. In my opinion, there was no error in the trial judge taking into account, when deciding whether injunctive relief was appropriate, that the breaches of the deed had not been admitted.

84 Ground of appeal 4, should be considered in the light of the submissions to the trial judge. They were relevantly in the written submissions, which proffered five considerations under the heading “Discretionary considerations militating against the awarding of injunctive relief”. The considerations were -

(a) that MindShare had unclean hands, in that by its own unlawful conduct it had induced the appellants to enter into the deed and had itself breached the deed;

(b) that the orders sought were expressed in such a manner that it would not be reasonably clear to the appellants what they were required to do in order to comply;

(c) that the conduct of the appellants had not caused any damage to MindShare because no harm had been caused to its reputation or that of Maxus;

(d) that there was no likelihood of further breaches because Mr Eckett had said in his third affidavit that he would comply with the deed if his cross-claim (for relief to the effect that the deed was no longer operative) was unsuccessful; and

(e) that MindShare had delayed in commencing the proceedings, in that it commenced them some eight months after the FarEasTone e-mail of 12 May 2004 and only after the Diageo e-mail of 20 December 2004 and did not bring the FarEasTone e-mail in as a breach in July 2007.

85 The appellants put the bold submission that the trial judge had “failed to recognise that he had a discretion”, and had not addressed the exercise of a discretion at all; it was said that he had simply reasoned from breach of the deed to the grant of injunctive relief. I do not accept that an experienced Equity judge failed to appreciate that the grant of injunctive relief is discretionary. His Honour had received submissions on discretionary matters, and [137] plainly recognised a discretion in the reference to breaches so minor as not to justify the grant of injunctive relief and in the grant of that relief being described as “appropriate”. The submission should not be accepted.

86 As to consideration (a) put to the trial judge, his Honour had rejected the appellants’ case of inducement by misrepresentation and breach by MindShare. As to consideration (e) put to the trial judge, there was no delay between the Diageo e-mail of 20 December 2004 and the commencement of the proceedings in January 2005, and failure to act immediately on the FarEasTone e-mail could not reasonably weigh against the grant of relief claimed when the offending conduct was repeated. These considerations were without substance, and did not need expressly to be despatched by the trial judge; they were correctly not raised on appeal.

87 Consideration (c) put to the trial judge was raised on appeal, but in my view no error in this respect has been shown. Proof of past damage is not essential for a claim to injunctive relief, and damage if the appellants engaged in similar conduct to that of sending the FarEasTone and Diageo e-mails was readily foreseeable. The contractual undertaking in cl 10.1(a) in the terms of “may” made actual damage unnecessary, and MindShare was entitled to protection against conduct which might injure or harm the name or reputation of it or a Related Body Corporate – it did not have to take the risk that there would be actual harm. In relation to cl 7, in cl 8(c) of the deed the appellants acknowledged that the remedy at law for breach of that clause would not be adequate and that injunctive relief could be granted without the necessity for proof of actual damage. The submission as to past damage scarcely deserved mention, but it was indirectly recognised in his Honour’s view that the breaches were not so minor as not to justify the grant of injunctive relief. In my opinion, it was not necessary to deal with it more fully.

88 Of the discretionary considerations proffered to the trial judge, there remain considerations (b) and (d). They were taken up, in different terms, in paras (c) and (e) and in para (b) of ground of appeal 4. The ground of appeal adds para (d), uncertainty attaching to the identity of MindShare. I take these in reverse order.

89 Uncertainty attaching to the identity of MindShare was not raised as a discretionary consideration at trial. The manner of MindShare’s naming in the judgment, a different matter, came up on 31 January 2008, and was dealt with appropriately in the circumstances. Assuming that uncertainty in identity can be raised on appeal when it was not put below, there was no relevant uncertainty. MindShare was incorporated in Hong Kong. Its correct name was known. The words “Taiwan Branch” were surplusage, not going to its identity.

90 Going to continuing threat of breaches, it was again submitted that the trial judge had not referred to Mr Eckett’s promise of compliance with the deed if it were held to remain operative. The trial judge’s view of Mr Eckett’s credit left little or no weight in Mr Eckett’s promise. The demonstrated campaign against the WPP group, and Mr Eckett’s high emotion to which the trial judge referred at [20], were better indicators of how he might in the future conduct himself. In the context of the reasons as a whole the trial judge can not have overlooked whether there was a continuing threat of breaches, against which what Mr Eckett said in his third affidavit counted for little. Within what the trial judge said at [137] was that injunctive relief was necessary in order to restrain further breaches, and I do not accept that his Honour failed to take into account whether there was a continuing threat of further breaches.

91 I go then to uncertainty and oppression. As I have said, the submission to the trial judge was that it would not be reasonably clear to the appellants what they were required to do in order to comply with the orders sought. The submission as amplified in the written submissions was that it would not be clear what could amount to an “indirect” disclosure of information; that it would not be clear whether a disclosure, statement or other conduct “may” harm or injure the reputation or name of MindShare or a Related Body Corporate; and that in order to comply with the order Mr Eckett would have to know the business activities and client list of MindShare and the identity of all Related Bodies Corporate and their business activities and client lists. It was added that it was not clear what was meant by the exception of a media audit.

92 These matters were material to the grant of injunctive relief as sought by MindShare, essentially in the terms of cll 7 and 10.1(b). There is no indication in [137] that they were taken into account, and regard to them as going to injunctive relief can not be found elsewhere in the reasons. If they were taken into account, there is no explanation of the trial judge’s decision nonetheless to grant injunctive relief “in terms of the contractual provisions”. In the reasons of 31 January 2008 his Honour acknowledged the need for precision and certainty in orders, but said only that relief was in support of a negative stipulation in a contract and that he was of the view that it was “appropriate in this case to adopt the terms which the parties themselves adopted in the contract”. This was said in apparent response to a submission concerning listing of the Related Bodies Corporate, and did not go to the other matters on which the appellants had relied.

93 In the well-known passage from his speech in Doherty v Allman (1878) 3 App Cas 709 at 719-720, Lord Cairns LC said that -

“ ... if there had been a negative covenant, I apprehend, according to well-settled practice, a Court of Equity would have had no discretion to exercise. If parties for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of Equity has to do is to say, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done; and in such case the injunction does nothing more than give sanction of the process of the Court to that which already is the contract between the parties. It is not then a question of the balance of convenience or inconvenience, or of the amount of the balance of convenience or inconvenience, or of the amount of damage or of injury – it is the specific performance, by the Court of that negative bargain which the parties have made, with their eyes open, between themselves.”

94 MindShare referred the trial judge to all but the first sentence of this passage in its submissions, and it is likely that he had it in mind. Unfortunately, the appellants did not fortify their submissions by taking his Honour to cases suggesting a less absolute approach. In Dalgety Wine Estates Pty Ltd v Rizzon (1979) 141 CLR 452 at 560 Gibbs J described Lord Cairns’ dictum that there was no discretion as an overstatement, and at 576 Mason J said that “[t]raditionally it has been thought that the negative covenant constitutes a strong foundation for relief by way of injunction, at least in cases in which the court is concerned only with private rights”. In Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 71; (2001) 210 CLR 181 at [102] Callinan J, with whom Kirby J relevantly agreed, said of a negative covenant -

“It is established that, in such cases, the correct approach is to grant the injunction unless there are good reasons to the contrary. Yeldham J in Broken Hill Proprietary Co Ltd v Hapag-Lloyd Aktiengesellschaft expressed the matter in terms with which I would agree:

‘[I]t is plain, in my opinion, from a long series of cases of authority, that the breach of a negative covenant, especially where private rights only are concerned, 'constitutes a strong foundation for relief by way of injunction'93. In J C Williamson Ltd v Lukey and Mulholland Dixon J said: 'If ... a clear legal duty is imposed by contract to refrain from some act, then, prima facie, an injunction should go to restrain the doing of that act’.”'

95 The less absolute approach leaves room for the principle that an order should generally be expressed so as to make clear what is to be done or not done. So it was said in Low v Innes (1864) De G J & Sm 286; 46 ER 929 at 295; 933 that

“ ... the Court has adopted the language of the covenant; but if the language of the covenant be ambiguous and uncertain, it is a reason for not granting an injunction upon it, or, at all events, it does not supply a reason for introducing the indefinite and uncertain language of the covenant into an order of the Court, which the party enjoined disobeys, as I have said, at the peril of imprisonment.”

96 Sometimes the certainty principle is itself put in rather absolute terms, as in ICI Australia Operations Pty Ltd v Trade Practices Commission [1992] FCA 474; (1992) 38 FCR 248; (1982) 110 ALR 47 at 259; 59 where it was said that -

“Plainly injunctions should be granted in clear and unambiguous terms which leave no room for the persons to whom they are directed to wonder whether or not their future conduct falls within the scope or boundaries of the injunction. Contempt proceedings are not appropriate for the determination of questions of construction of the injunction or the aptness of the language in which they are framed.”

See also Morris v Redland Bricks Ltd (1970) AC 652 at 666 per Lord Upjohn (in relation to restoration of support to land, that “the court must be careful to see that the defendant knows exactly in fact what he has to do and this means not as a matter of law but as a matter of fact”), and Attorney-General v Punch Ltd [2002] UKHL 50; (2003) 1 AC 1046 at [111] per Lord Hope (“an injunction must always be expressed with precision and with clarity”).

97 Broad statements like these may not fully apply where the question is enforcement of a negative contractual stipulation. Certainty is important because contempt of court by infringement of the injunction may bring a heavy penalty, but “[e]xcessively narrow formalism in framing the injunction may wreak its own injustice” (per Callinan J in Maggbury Pty Ltd v Hafele Australia Pty Ltd at [104]). It was said by this Court (Meagher, Handley and Cripps JJA) in Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337 at 349 that the principle “is a counsel of perfection rather than a mandatory standard, and there are limits to its application”, an observation endorsed by Spigelman CJ in Bankstown City Council v Alamdo Holdings Pty Ltd [2004] NSWCA 325; (2004) 135 LGERA 312 at [106], Ipp JA and I agreeing, and by Ipp JA in Y v Z [2007] NSWCA 329; (2007) 70 NSWLR 377 at [76], Spigelman CJ relevantly agreeing. Uncertainty or oppression in an injunction taking up the terms of cll 7 and 10.1(a) was to be evaluated and taken into account, but as a discretionary consideration and not as a bar to relief if there were less than complete clarity for the appellants’ future conduct.

98 It was not taken into account, and in my opinion in this respect the trial judge’s exercise of discretion miscarried. This ground of appeal should be upheld. The discretion should be re-exercised by this Court, and that can conveniently be done together with consideration of the remaining ground of appeal.

The terms of the injunction

99 Ground of appeal 6 was -

“6 The injunction granted by the Trial Judge is in terms uncertain and oppressive.”

100 The appellants’ submissions in some respects differed from, and were wider than, the submissions at trial. It was said that the order infringed the principle, as expressed in ICI Australia Operations Pty Ltd v Trade Practices Commission, that contempt proceedings were not the appropriate time to resolve questions of the scope of the conduct proscribed, and that they were also contrary to the observation in that case at 262; 62 that injunctions “should be self-contained as far as possible” because persons other than immediate parties could incur responsibility for infringement.

101 The specific submissions were that –

· paras (a) and (b) of the order were not self-contained because it was necessary to refer to the deed for the definition of “document”;

· paras (a) and (b) were oppressive because in proscribing references to MindShare they inhibited free speech and were contrary to public policy;

· paras (a), (b) and (c) were not self-contained because it was necessary to refer to cl 8 of the deed to understand the scope of the exception;

· para (c) was uncertain because there was no indication of what entity was referred to by “WPP”; and

· para (c) was uncertain, and therefore oppressive, because it was not possible to know what information, statement or conduct might harm or injure the reputation or name of MindShare or any Related Body Corporate.

102 Most of these matters, in my view, are of little or no significance to the grant of injunctive relief in the terms of the order. While “document” was defined in the deed, the definition is not taken up in the order. The order will have effect according to the words “document or other statement”, which are sufficiently clear. I do not see a public policy inhibition on enforcing the appellants’ contractual undertaking not to refer to MindShare and rebates as in paras (a) and (b) of the order, when Mr Eckett’s references to it in relation to rebates had been allegations of impropriety, plainly harmful and intended to be harmful. Benevolent reference to MindShare and rebates can for practical purposes be put aside. There can be no doubt what cl 8 was and said. It does not appear that anyone other than Mr Eckett and Orleans is likely to be affected in his, her or its conduct by the restraint in the order, but this need not be further debated because in the re-exercise of the discretion cl 8 can be set out in the order; I am not persuaded that what is meant by a media audit is not clear. The reference to “WPP” did not bring uncertainty, because it was surplusage; the class was Related Bodies Corporate, of which “WPP” was said to be a member.

103 Uncertainty and oppression in the operation of para (c) of the order took up the discretionary consideration put to the trial judge. In short, it was submitted that the appellants could unintentionally or unknowingly breach cl 10.1(a) and infringe para (c) of the order, or could be hamstrung because they could not safely foresee indirect or possible (“may”) consequences of their conduct to name or reputation or be confident of knowing whether an entity which might be affected was a Related Body Corporate of MindShare.

104 I accept that the appellants could be subject to difficulties of this kind. It does not follow that, in the re-exercise of the discretion, an order in the terms of that made by the trial judge should not be made. Also important in the exercise of the discretion are that the appellants freely accepted contractual obligations which exposed them to the same difficulties, and that a different form of words can not reasonably be arrived at to give MindShare the protection to which it is contractually entitled while removing the difficulties. The appellants did not suggest practicable modifications, save for the insertion of “defamatory” in paras (a) and (b) of the order to overcome what they submitted was inhibition on freedom of speech.

105 Injunctions are practical tools in the administration of justice. There are limits to the precision and clarity which can be attained; reflecting the words of Callinan J earlier cited, MindShare should not suffer an injustice through undue insistence on precise statement of what the appellants must do or not do. Orders are often made in the terms that the defendant must not do certain things “so as to cause a nuisance”, see for example Bankstown City Council v Alamdo Holdings Pty Ltd, and in ICI Australia Operations Pty Ltd v Trade Practices Commission an order relevantly restraining engaging in the practice of resale price maintenance in the manner alleged in the statement of claim “or in any similar manner” was upheld. In the unusual circumstances in Y v Z, an order that the defendant not publish any “imputation of and concerning [a person] which is calculated to expose her to hatred, ridicule and contempt” was upheld. In Maggbury Pty Ltd v Hafele Australia Pty Ltd at [106] Callinan J said that the “potential for embarrassment for want of certainty” was no greater than in cases where courts had restrained defendants from using confidential information or know-how despite the long recognition “that the boundary between know-how and personal skills can be hard to draw”. His Honour’s dissent in the result does not affect these or the observations to which I earlier referred.

106 In the present case the appellants’ obligations were undertaken with legal advice and, as earlier described, in resolution of a bitter conflict and with acceptance of the risk of unintended or unknowing breach of cl 10.1(a). A court should not too readily decline to require that the appellants perform their obligations solemnly undertaken, and it would not be satisfactory to leave MindShare to its remedy in damages for any future breach: loss from harm or injury to reputation would be difficult to assess, and under the deed MindShare is entitled to have the appellants refrain from conduct which might harm or injure reputation or name, not just conduct which does harm or injure reputation or name.

107 To fulfil their contractual obligations the appellants must carefully address whether there might be harm or injury to the name or reputation of MindShare or a Related Body Corporate, and must make inquiries, and the same goes for compliance with the order. Should they unintentionally or unknowingly infringe the order, that can be taken into account in the event that contempt proceedings are brought against them. That is not leaving resolution of uncertainty to contempt proceedings, but anticipating possible explanation of how the infringement came about.

108 In my view, the appellants should be left with such “potential for embarrassment for want of certainty” as there is, rather than MindShare be left without enforcement of the clauses by injunctive relief. I would grant relief in the same terms as the order made by the trial judge, save for deleting the surplus “including WPP”, adding after the reference to cl 8 “a copy of which is set out in the Schedule”, and including an appropriate schedule. I add that, if I were wrong in my view of the proper construction of cl 10.1(a) in relation to knowledge, the unchallenged breach of cl 10.1(a) by sending the FarEasTone e-mail (see [56] above) would suffice for that grant of relief.

Orders

109 The changes to the order made by the trial judge are incidental to the substantive matters in issue on appeal, and do not affect costs. I propose that the appeal be dismissed with costs, but that the order made by the trial judge be varied in the manner last mentioned.

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LAST UPDATED:
10 March 2009