CATCHWORDS COPYRIGHT - infringement of applicant's copyright in plan of Melbourne - plan used as pre-costing guide for courier service - whether reproduction of substantial part of applicant's plan - whether directors liable for company's breach of copyright. TRADE PRACTICES - misleading or deceptive conduct - false statements that respondent responsible for creation of applicant's plan - whether directors involved in conduct under s.75B Trade Practices Act 1974. Copyright Act 1968 ss.10,13,14,31,36 Federal Court of Australia Act 1976 s.32 Trade Practices Act 1974 ss.52,75B,80,82 G.M. (NORTH MELBOURNE) HOLDINGS PTY LTD v YOUNG KELLY PTY LT, NOEL WILLIAM YOUNG and ALLAN KELLY No. VG 240 of 1985 Woodward J. Melbourne 27 May 1986 abe eA a mpm may "My pen ee ee Gee so tyra as ; IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY No. VG 240 of 1985 GENERAL DIVISION BETWEEN : G.M. (NORTH MELBOURNE) HOLDINGS PTY LTD Applicant and YOUNG KELLY PTY LTD, NOEL WILLIAM YOUNG and ALLAN KELLY Respondents MINUTES OF ORDER COURT : Woodward J. DATE: 27 May 1986 PLACE: Melbourne THE COURT ORDERS THAT: 1. The applicant and the respondent Allan Kelly have leave to file and serve short minutes of orders sought in accordance with these reasons for judgment. 2. The matter be adjourned to a directions hearing on a date to be fixed. (NOTE: Settlement and entry of orders is dealt with by 0.36 of the Federal Court Rules.) or Ve pacer "t PT wore te ene eee eee gear emery on i. Ny, et eee a Mee Lote -—e-—- IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) No. VG 240 of 1985 ) ) GENERAL DIVISION BETWEEN : G.M. (NORTH MELBOURNE) HOLDINGS PTY LTD Applicant and YOUNG KELLY PTY LTD, NOBEL WILLIAM YOUNG and ALLAN KELLY Respondents COURT: Woodward J. DATE: 27 May 1986 PLACE: Melbourne REASONS FOR JUDGMENT This is acclaim by a company, which runs a courier service, against a former employee, his business associate, and the company of which they are now both directors and which competes directly with the applicant. The claim relates to a plan or map of Melbourne designed by the applicant, and used by it, its independent carriers and its customers, to determine the cost of each delivery. Put very simply, the plan depicted a regular hexagonal grid or matrix overprinted on an outline map of inner and suburban Melbourne. The cost of a particular delivery was calculated by locating the hexagons in which the pick-up and delivery suburbs Se ee oe eee ee a oe re . " a rte ene ee " t . -_ oe ae . ay 245 , ue a py nae wre es were located, and counting the number of hexagonal units crossed in travelling between the two. The charge was, generally speaking, based on a particular rate per unit crossed. It is not disputed that the respondent company derived from the applicant's plan a similar one. The applicant, however, alleges that the second-named respondent, Mr Young, has falsely claimed to have played a substantial part in the design of the applicant's plan and to be entitled to make use of it as he sees fit. It says that this amounts to false or misleading conduct within the meaning of s.52 of the Trade Practices Act 1974. It also says that it holds the copyright in its plan (which was finally not contested by the respondents) and that its copyright has been infringed by the production and use of the respondents' plan. Both claims, under the Trade Practices Act and the Copyright Act 1968, have been strenuously defended, the latter on the basis that what was copied from the applicant's plan was a minor, and not a substantial, part of it. A third claim, of breach of copyright of the applicant's "Terms and Conditions of Contract", is not denied by the respondents, who say the breach should sound in nominal damages only. Most of the hearing has been taken up with the question of breach of the applicant's copyright in its plan. I shall deal with that major issue first. All that I need say of the Trade Practices Act claim at this stage is that I am satisfied that the sae ~ i. oe of + vn bay 4 ete ee perm eet Se Re wertel Sito may me erm nyeae ee " wrt mee ut . oy eoqens eee yas ¢ claim is genuine and has some substance - sufficient to invoke the jurisdiction of this Court to deal with the associated copyright matter (see Federal Court of Australia Act 1976 5.32). In the course of these reasons for judgment I shail refer generally to "the applicant", although I am conscious of the fact that there have, at all relevant times, been two or three related companies conducting somewhat different courier businesses, using the same map with different titles on it. Each of these companies has changed its corporate name more than once, but they have generally traded under the names of "Golden Messenger", "Integrated Transport Services" and "Cameo Transport". The first two names are still in use. Mr Young has at times worked in different parts of the overall structure. But it seems that nothing turns on these differences or changes and it is therefore convenient to treat "the applicant" as a single entity for present purposes. By way of background to the copyright claim, it is relevant to note that Young commenced work for the applicant, as sales manager, in August 1977, just as the plan was about to be published. He was chiefly responsible for putting the new costing system into operation and introducing it and the plan to customers. He now makes no claim to have been involved in the plan's design or production. In late 1981 he left the employ of the applicant and went to work for a firm called Elite Couriers ('Elite') which soon afterwards brought out a plan markedly similar to the applicant's. The applicant sued Elite for breach of copyright and Elite consented to judgment against it. Young Le % passe co-operated with the applicant to secure the judgment against Elite on the understanding that he could in due course be re-employed by the applicant. He was re-employed in about March of 1983 and worked first as a salesman and later in his former position of sales manager (though now subordinate to a marketing manager, Mr McKenzie) until he suddenly resigned in March 1985. The managing director of the applicant, Mr Schorer, gave evidence that before re-employing Young he gave him, in effect, a lecture about his responsibilities to the applicant if he should again leave its service. This included reference to the applicant's copyright in its plan. He was corroborated in this by Mr McKenzie, who was present at the interview. Young denied that anything like this was said but, having observed Mr Schorer in the witness box and bearing in mind the Elite incident, I have no hesitation in accepting that such a lecture was given - though it has little direct relevance to the issues I have to determine. It is clear that when Young left the applicant he took with him one or more copies of its plan. It is also clear that he wanted to use the concept behind the plan but, having learnt from the Elite experience, hoped to do so without making himself or his newly-formed company liable for infringement of copyright. Whether, in the event, he succeeded, is the main question which I have to determine. The applicant's plan has a number of distinctive basic features, apart from additional characteristics such as its aopepeerss ee eee re a moe * " Ay Mw. wf ae es Ss ealines Reratad colour, title, size and any further information printed on it. The plan itself has the following features: (a) its boundaries - Craigireburn to the north, Kalorama, Kallista, Belgrave and Berwick to the east, Frankston to the south, and Laverton, Deer Park and Sydenham to the west; (b) its scale; (c) its depiction of the outline of Port Phillip Bay and the mouth of the Yarra River (copied, by arrangement, from a Melway map); {d) the marking of a number of main roads, apparently to assist in following the plan; {e) the over-printing of the complete pattern of hexagons, each of which is numbered for ease of reference; and (f) the placing of selected names of suburbs within those hexagons, with the result that a large number of hexagons (particularly in outer areas) contain no names, many contain one or two, and some contain up to five or six names. In comparing the respondents' plan with the applicant's, it is convenient to deal with each of these characteristics and features in turn. Additional characteristics (i) The applicant's document is dark green and black (or in some cases dark green and light green); the respondents' is yellow and black. oa, y ae aes uke mT. WOT ee ee en tee wt " te . . . as FR oS (ii) The applicant's document is titled "THE GOLDEN GRID SYSTEM" (or "THE INTEGRATED PRE-COSTED TRANSPORT SYSTEM" or "THE CAMEO PRE-COSTED TRANSPORT SYSTEM"); the respondents' is titled "BEELINE COURIER SYSTEMS Pre Costing Guide Map". (iii) The applicant's document measures approximately 43.5 cm by 50 cm; the respondents' is 29.5 cm by 34.5 cm. (iv) The applicant's document gives an index of suburbs in alphabetical order, telephone numbers to ring and the logo and full name of the company concerned; the respondents' merely gives its own telephone numbers and logo. (a) Boundaries The eastern and western boundaries of the applicant's and respondents' plans are identical. The northern boundary of the respondents' plan stops one unit (about 4 kms) short of the northern boundary of the applicant's plan. The only suburb included in the latter and not in the former is Craigieburn. The southern boundary of the respondents' plan extends two units beyond that of the applicant, and adds Mt Eliza, Moorooduc and Mornington. (b) Scale There was evidence from an expert witness that the scale of the respondents' plan is 1 : 135,000 whereas the applicant's is 1: 140,850 - which is 4.3% smaller. This evidence escaped attention at the time it was given and in final addresses, but it is clearly wrong. The scale of the applicant's plan is some 50% larger than the respondents'. For example, the distance from Williamstown to Frankston, 1n a direct line, is some 18 cm on the caida San pee SERNERannaR naan eens ATT aft + tsar, . respondents' plan and 27.5 cm on the applicant's. My own rough calculations give scales of about 1 : 200,000 for the respondents' plan and 1 : 130,000 for the applicant's. These are based on the expert's other evidence, which I accept, that the width of the units marked on the applicant's plan varies between 3.464 and 3.64 km apart, while the units on the respondents' plan are approximately 3.6 km apart. (c) Port Phillip Bay and Yarra River I accept evidence, given for the respondents, that the Bay outline and Yarra River mouth on their plan was obtained from a Readers Digest Atlas. It differs, as to details, from the applicant's plan. It is also slightly wider, when blown up to approximately the same scale as the applicant's plan. However it is interesting to note that the way in which it is set on the document, which gives a precisely vertical north point, is the same in each case. This 1s the way the Melway map, and therefore the applicant's plan, is presented. The Readers Digest map has north several degrees left of vertical, so it seems clear that the respondents' Bay outline has been skewed through several degrees so that it conforms on the page with the applicant's Bay outline. (ad) Main Roads A number of main roads are marked on the applicant's plan and some of them are named. It is not clear to me why they are marked, unless it is to help in the finding of suburb names, because charges are based on the rather arbitrary placing and meee ee re oe — v ae poe i" Br ye mn ee en eee wate -? ary moa. Ue a grouping of suburbs into units and not on the precise location of pick-up or delivery sites. There are no roads marked on the respondents' plan. (e) Hexagons The units used in the applicant's plan are fairly uniform hexagonal shapes. I say "fairly uniform" because it is apparent that there are some divergences in size. In measuring rows of ten hexagons in different parts of the plan, I have found the measurements vary from 27 cm to 27.5 cm. It seems that this is likely to be due to the use of photography in the process of reproduction - which tends to distort distances slightly, particularly at the outer edges. The units in the respondents' plan are dots. Again there is some distortion, and measurements of ten units (that is the space between eleven dots) varied from 17.8 cm to 18.1 cm. As I have already indicated, expert measurement shows that the distance on the ground between the parallel sides of the applicant's hexagons varied from 3.464 km to 3.64 km - an average of 3.552 km. The average distance between the centres of the respondents' dots was 3.6 km. (f) Suburb selection and placement There are some 260 suburbs selected and placed on the applicant's plan. Some of the selections are unexpected and there are some strange omissions - notably Brunswick. Two suburbs are included twice (Kingsville and Heidelberg). (This was said by ego Mr Schorer to have been deliberate, to catch copiers, but I have some doubts about this explanation because of the confusion which must have been caused. I note that the duplication is not repeated in the latest issue of the applicant's plan.) The grouping together of some suburbs is quite arbitrary, and the positioning of names within the group is sometimes erroneous. The respondents' plan (i) has added Moorabbin Airport, (il) has moved Sandringham one unit west, to its correct position on the bayside, and (iii) has moved Coburg one unit north, to its correct position north of Moreland. Apart from that, and the fact already noted that the respondents' plan omits one name to the north and adds three to the south, the selection and placement of suburbs is identical. The respondent's plan includes the duplication of Kingsville and Heidelberg and the omission of Brunswick. It also misspells the names of two or three suburbs, such as "Forest Hills" instead of Forest Hill, as does the applicant's plan. The applicant's plan places the names unevenly in the hexagons, and several different type-faces have been used. But their allocation to the top or bottom halves of the hexagons, and the1r sequence, has been exactly reproduced in the neat placement of names above or below the dots on the respondents' plan. . — wee ee eres oa Th ia alse as een ad steer See tne me ee ee 1 ae me ar ' ? resheber ebtenstts - 10 - These factors leave me in no doubt that there has been a copying of parts of the applicant's plan in the preparation of the respondents'. The artist given the task of drawing up the respondents' plan, Mr Inns, says that he derived the names of the suburbs himself, partly from a Melway Street Directory (which lists suburbs) and partly from the list on the applicant's plan - which he had been given by Young, with instructions that the plan he drew had to be different. Having studied the two plans I have no doubt at all that, apart from the three sensible amendments listed above, and the three additions to the south (for which Melway may well have ' been consulted), the selection and placement of suburbs was copied directly from the applicant's plan. I am quite unable to accept Mr Inns' evidence to the contrary. Equally implausible is Mr Inns' evidence as to how he came to have exactly the same number of units in the areas common to both plans - e.g. 14 units in each case from Laverton to Wattle Glen, from Eltham to Frankston North and from Port Melbourne' to Berwick. He said that he was given no instructions as to the size of the units (the distance apart of the dots); this was left to his discretion. I find this quite incredible because the whole costing system is based upon the size of the units and the Placement and grouping of suburbs within those units. ? we BO DR ts errno yrange cerns perenne anaes eT a ricer mage pre ane magenta pee ere arin . eat, ets t t . - . ' - ll - Mr Young said that he instructed Mr Inns to place the dots 4 km apart. In my view, the fact that they are 3.6 km apart, are centred on the Melbourne G.P.0. as are the applicant's hexagons, and correspond closely with the centres of the hexagons when overlaid on the same scale (although with some divergence towards the outer edges, but still within their respective hexagons) shows clearly that copying occurred. dust how it occurred is a matter for speculation. Mr Inns gave one explanation in an affidavit as to how he positioned the dots, anda different explanation in the witness box. Neither was at all convincing. I am satisfied that, in one way or another, the size and placement of the units (by which I mean their angles on the page and their placement in relation to the Bay outline) was copied from the applicant's plan. The applicant's case is pleaded on the basis that the copyright in its plan, as an artistic work, has been infringed. It seems clear that the Golden Messenger plan is a "drawing" for the purposes of the Copyright Act 1968; that word is defined in s.10 of the Act to include "a diagram, map, chart or plan". Section 10 also defines an "artistic work" as including "a painting, sculpture, drawing, engraving or photograph, whether the work is of artistic quality or not". The infringement of which the applicant complains is based on s.36 of the Act, which provides that: "(1) Subject to this Act, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner eS pre oy eee ET SR er eg err = ee eos ~ mot a o wae ee ae ren an MegT ee oo ee Ps awe ayes oy ee re ee, - 12 - of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright." By virtue of s.13(1), an "act comprised in the copyright" in an artistic work "should be read as a reference to any act that, under this Act, the owner of the copyright has the exclusive right to do". Under s.3l of the Act, in the case of an artistic work and so far as 1s relevant, copyright is the exclusive right (i) to reproduce the work in a material form, and (ii) to publish the work. Finally, reference should be made to s.14(1)(b) of the Act, which provides that a reference to reproduction includes a reference to a reproduction of a substantial part of the work. It was tentatively argued by the respondents that there could be no copyright subsisting in the hexagonal grid pattern developed and used by the applicant. The hexagonal form, it was said, is a simple geometric shape, and its use in a_ continuous regular grid or matrix appears commonly both in nature (a honeycomb is an obvious example) and as a man-made pattern. That argument, which involves some consideration of the concept of "originality" in copyright law, was not developed, because the claim that copyright subsisted in the applicant's plan which incorporated the hexagonal matrix, was finally not disputed by the respondents. Nor was the fact that the applicant is entitled to the protection of s.3l in issue between the parties. woos wks ogee we ree ee eer ey) "> toe a aaa ier ded et we ~ la, -13- The question that I must therefore decide is whether the Beeline plan reproduces a substantial part of the applicant's plan. There is no guidance in the Copyright Act as to what amounts to "reproduction of a substantial part" of a work. The authorities make it clear that the degree of reproduction is a question of fact for the court to decide, and that its determination involves two aspects: first, there must be an actual copying of the protected article, and secondly, that the offending work must closely resemble the original (see Ancher, Mortiock, Murray & Woolley Pty Ltd v Hooker Homes Pty Ltd [£19711 2 NSWLR 278 and Copinger and Skone James on Copyright llth Ed., 1971, paras 406-408). The two aspects or "limbs" of the test overlap somewhat, and obviously the degree of close resemblance may be indirect evidence that copying in fact occurred. However, the two aspects "are distinct 1n point of principle and they must be considered with this distinction in mind .... It is only after making a finding, either on direct evidence or by inference, of copying ... that significance will attach to the degree of similarity" (per Street J in the Ancher, Mortlock case at 284). It is not disputed that in this case some copying has occurred. Senior counsel for the respondents conceded in his address that "there has been to an extent an actual copying. There is no question of that." - 14 - However, whether the respondents' plan so closely resembles the applicant's as to amount toa reproduction of a substantial part is strongly contested. It has been said that "the question whether [a person] has copied a substantial part depends much more on the quality than on the quantity of what he has taken" (per Lord Reid in Ladbroke (Football) Ltd v William Hill (Football) Ltd £1964] 1 WLR 273 at 276 and see also Edwards v S.W. Hart & Co (1983) 49 ALR 605 per Franki J at 622-4 and Geographia Ltd v Penguin Books Ltd £19853 FSR 208 at 219). The question must also be approached by a careful examination of the whole of the original and offending works. In the case of works that can be considered "compositions" or "compilations", such as here where it is alleged that some aspects of the applicant's plan have been taken or reproduced and others either abandoned or significantly altered, it can be misleading to examine each component separately and determine whether copyright exists in it, and whether it has been substantially reproduced. As was said in Hogg v Scott (1874) LR 18 Eq 444 at 458, "the true principle in all[Ecases of composite works] is, that the Defendant is not at liberty to use or avail himself of the labour which the Plaintiff has been at for the purpose of producing his work - that is, in fact, merely to take away the result of another man's labour", (see also Lord Hodson in Ladbroke's case at 286-7). This approach was adopted by Whitford J in the Geographia case, who noted "that avery great deal of skill, labour and expense was involved in the production of the LCalleged ah OE rr eee ere ee ee ae, STR ay pre arte ery ee pee : wie tyro . aan POST en nee — men ee 7 rae) , atm - 15 - infringing] map", (at 219 and at 209-10, citing with approval a passage in an American map case, General Drafting Company Incorporated v Andrew 37 F 2d 54). Another matter considered of some relevance in the Geographia case, was "whether having regard to the quantity and quality of the information taken there has been any real prejudice to the interests of the copyright owner" (at 219). A comparison with decided cases dealing with, for example, the reproduction of musical works or architectural plans, will be of limited value in deciding a case involving the copying of maps or plans. Indeed, an examination of those cases referred to in argument which did deal with maps, Sands & McDougall Pty Ltd v Robinson (1917) 23 CLR 49 and the Geographia case, is itself of no great assistance. Each case will be a matter of impression, and will turn on the particular characteristics of the maps or plans before the court. T have reached a decision that in this case there has been an infringement of copyright. Although there are obvious differences between the two plans, the similarities I have already discussed, and particularly the selection and placement of suburbs in particular units a particular distance apart, lead me to the conclusion that those aspects of the plan so closely resemble the original that a reproduction of a substantial part of the applicant's plan has occurred. pamercs hr Seay -16- The respondents' counsel emphasised that it is the form or layout of the plan that is protected by copyright, not the idea. That is true (see Catnic Components Ltd v Hill and Smith Ltd £19823 RPC 183 at 223), and if Mr Young had himself, or through Mr Inns, simply used the idea of the pre-costing system, calculated the most appropriate unit distance for his purposes, identified which suburbs were most commonly needed for his business, and then placed them within the most appropriate unit on his plan, the applicant would not have cause for complaint. However, that has not occurred; the most original and important part of the applicant's work - the part upon which the whole charging system is based - has been taken, to the prejudice of the applicant, and consequently the applicant 1s entitled to relief. The remedies available under the Copyright Act and sought by the applicant are injunctions restraining the respondents from reproducing or using in their business the grid outline, the Golden Messenger map, the applicant's Terms and Conditions of Contract, or any reproductions of those, an order for delivery up of any original or infringing plans or plates in the respondents' possession, and damages (including additional damages under s.115(4) of the Act) or an account of profits. It was agreed by the parties that any claim for damages should be argued after my findings on liability are available. Accordingly, I need not deal with that question here. It would be appropriate for short minutes of orders for injunctions, and for delivery up of any infringing plans or plates, to be filed and served before the date of the directions hearing which I shall fix to determine the further course of this action. wr, . "—II557 a ay -17- I turn again to the claim made under s.52 of the Trade Practices Act. Paragraph 9 of the Statement of Claim alleged that "The Respondents and each of them have represented to members of the public that the grid outline and the Golden Grid Map were created by them or one or other of them, are owned by them and may be used by them and others without the licence or consent of the Applicant." The evidence on which this allegation was based came from Mrs Day, who met and spoke with the respondent Young about the Beeline map in December 1985, and Mr Gordon, who was employed by Elite when Mr Young worked there in October 1981. Mrs Day said she was told by Young, after inquiring about the Beeline services and the origin of its plan, that he had thought up the idea of the Beeline map himself, and that he and another (unnamed) person had "made up" the Golden Messenger map. T accept from the evidence given by Mr Schorer, and as was admitted by Mr Young himself, that Young played no part in the design or production of the applicant's plan. As sales manager of Golden Messenger, he introduced the plan and the pre-costed charging system on which it was based "into the market". He did not, however, devise the concept of the plan or "make" the Golden Messenger plan in conjunction with another person or at all. Mrs Day was asked to contact Young and Beeline by Mr McKenzie of Golden Messenger. No doubt in making that request there was a hope that Young could be tempted to make the kind of statement he did. However, I accept Mrs Day's evidence as a truthful and accurate account of what took place, and I accept operas at tow — ares "ae vt - 18 - that the applicant has proved the falsity of Young's statements. It is also clear that, in making those false representations, Young was acting on behalf of his company. In those circumstances, the applicant has established its claim under s.52 against the first respondent. However the breach is such that it is of no significance when compared with the breach of copyright which I have found. So far as the evidence of Mr Gordon is concerned, I note that any representations that might have been made by Young, ezrther directly or indirectly, arose before the period of limitation prescribed by s.82(2) for actions for damages. However, Gordon's evidence does serve to indicate a possible propensity to claim credit for the applicant's plan, and I have taken this into account in reaching my finding on this issue. I need only briefly mention a further submission of the applicant, that the s.52 claim could also be argued on the basis that the similarities between the two plans, taken together with Young's conduct, somehow implied that Beeline was entitled to use or copy the Golden Messenger plan or system. I think the applicant would have serious difficulties in establishing that that conduct of itself amounts to misleading or deceptive conduct. However, as I have already found in favour of the applicant on both the copyright and s.52 claims, and as I am prepared to grant injunctions preventing further use or distribution of the respondents' plan, I make no finding on this point. S92 - rhs Be a a rr eee . ' . ns : ote . 7 mye amare ley ah ~ 19 - It only remains for me to consider the liability of the iundividual respondents, Messrs Young and Kelly, the directors of the first-named respondent. It was submitted that both were liable for the infringement of copyright and the breach of s.52 of the Trade Practices Act. The infringement of the exclusive right given under s.31 of the Copyright Act to reproduce a copyright work is a tort (Ash v Hutchinson and Co (Publishers) Ltd £19361 Ch 489). It is actionable in a civil suit on the application of the copyright owner (s.115(1) of the Copyright Act). The applicant has succeeded in its infringement claim against the corporate respondent. However, the personal liability of directors, arising from the commission of a corporate tort, is a complex and burgeoning field of law. In White Horse Distillers Ltd v Gregson Associates Ltd £19841 RPC 61 (a passing off case), Nourse J in the Chancery Division of the High Court of Justice summarised {at 91) the principles of liability found in a Canadian patents decision, Mentmore Manufacturing Co Ltd v National Merchandising Manufacturing Company Inc (1978) 89 DLR 195, as follows; "Before a director can be held personally liable for a tort committed by his company he must not only commit or direct the tortious act or conduct but he must do so deliberately or recklessly and so as to make it his own, as distinct from the act or conduct of the company. It is unnecessary for him to know, or have the means of knowing, that the act or conduct is tortious. It is enough if he knows or ought to know that it is likely to be tortious. The facts of each case must be broadly considered in order to see whether, as a matter of policy requiring the balancing of the two principles of limited liability and answerability for tortious acts or conduct, they call for the director to be held personally liable." ? a aeey eee Greene gee meee wa tte ee ee oS ae sete eS pene emer rar > wT. vo th . eet Tl aw HT - 20 - Whilst it was not strictly necessary for him to so decide, Nourse J found (at 92) "much to be said" for the "Mentmore test" which "correctly represents the law of England". Nourse J's decision was recently considered by the Court of Appeal in C. Evans & Sons Ltd v Spritebrand Ltd £19853 1 WLR 317 (a copyright case). After a careful analysis of the relevant authorities, Slade LJ (with whom Cumming-Bruce and O'Connor LdJd agreed) questioned the universal application of the Mentmore principles to all torts, and particularly any requirement that a plaintiff prove a particular state of mind or knowledge on the part of a director of a company when the commission of the tort did not itself require such proof (as in the case of a copyright infringement action). Whatever the correct position be in Australia, I am satisfied that the applicant has made out its case against Mr Young. Young not only specifically directed Mr Inns to carry out the tortious conduct of reproducing the applicant's plan, he did so at least recklessly and knowing that it might be an infringement of copyright, although hoping it would not. The act was his own, as well as that of the corporate respondent. On the other hand, I find that Mr Kelly, who was' rather belatedly called to give evidence after the applicant's final submission, acted neither recklessly nor deliberately in relation to the reproduction; nor did he authorise, direct or procure the Suntan re sop oe on ees wae ee we t at A ree es gics capes ae od eras oa) f « eee | en - 21 - infringing act. He was in many ways a "silent partner", providing capital and marketing advice, and was not directly involved in the production of the first-named respondent's plan. In relation to the claim against Young and Kelly for the breach of s.52 of the Trade Practices Act, it was submitted that they were both "involved in" the contravention within the meaning of s.75B of the Act. The interpretation of that section has recently been considered by the High Court in Yorke v Lucas (1985) 61 ALR 307. I need not discuss the law or the facts in any detail, but simply say that the evidence clearly shows that Young knew of the falsity of his statements when he engaged in the offending conduct, and that he is thereby liable to be enjoined and, subject to argument as to the triviality of the breach, to an award of damages under ss.75B, 80 and 82 of the Act. There was, however, nothing to show that Kelly was involved in the production of the Beeline plan or that he knew or approved of Young's statements. The claims against him must fail. I shall reserve all questions of costs for the directions hearing to be held on a date to be fixed. yooats Sar Teepe ree mee were ee ong Pail Reeeetateet I toed 2s en See " oe 8 Mane SET -22- I certify that the twenty-one (21) preceding pages are a true and accurate copy of the Reasons for Judgment herein of The Hon Mr Justice Woodward CAS pe Associate Dated: 27 May 1986 Dates of hearing: 21, 22 and 23 April 1986 Counsel for the applicant: Mr A.C. Archibald QC and Mr P.J. Cosgrave Solicitors: Mills, Oakley and McKay Counsel for the respondents: Mr J.G. Larkins QC and Mr M.T. Bevan-John Solicitors: Ambrosy and Fox