Supreme Court New South Wales Medium Neutral Citation: The City of Sydney v Streetscape Projects (Australia) Pty Limited & Anor [2011] NSWSC 1214 Hearing dates: 11/4/2011 - 15/4/2011, 1/8/2011 - 5/8/2011, 8/8/2011 - 12/8/2011, 15/8/2011 - 18/8/2011, 22/8/2011 - 26/8/2011, 29/8/2011 - 31/8/2011, 1/9/2011 - 2/9/2011, 5/9/2011 - 9/9/2011, 12/9/2011 - 16/9/2011, 26/9/2011 - 28/9/2011, 30/9/2011 Decision date: 11 October 2011 Jurisdiction: Equity Division - Commercial List Before: Einstein J Decision: The Plaintiff is entitled to: 1. Injunctive relief [502] - [506]; 2. Damages [507] - [513]; and 3. Equitable compensation [507] - [513]. The plaintiff may elect for an account of profits [514]. Streetscape Projects (Australia) must deliver up documents and moulds to the City [515] -[543]. Catchwords: Proceedings brought by City of Sydney against Streetscape Projects (Australia) and Mr Moses Obeid in relation to "Smartpole" poles CONTRACTS - Action for breach of contract - Contractual interpretation - Confidential information - Deeds of variation - Whether particular clauses were penalty clauses - Claim that plaintiffs suffered no loss - Distinction between liquidated damages clause and penalty clause - Damages when proof of loss is difficult - Foreign law- Presumption of identity - Principles for interpreting terms of a contract to avoid capricious consequences EQUITY - Equitable duty - Duty of confidence - Fiduciary duty - Fiduciary duty under a commercial contract -Accessorial liability - Barnes v Addy ADMINISTRATIVE LAW - Ultra Vires - Scope of Local Councils authority - Broad interpretation TRADE PRACTICES CLAIM - Misleading and deceptive conduct - Section 52 Trade Practices Act - Proof of representations - Reliance on representations - Failure to take reasonable care-Section 51A Trade Practices Act - Misleading representation as to future without reasonable basis-No need to prove reliance - Appropriate relief under Section 87 (2) of Trade Practices Act - Varying the terms of a contract for misrepresentation Legislation Cited: Civil Procedure Act 2005 (NSW) Competition and Consumer Act 2010 (Cth) Constitution Act 1902 (NSW) Copyright Act 1968 (Cth) Designs Act 2003 (Cth) Evidence Act 1995 (Cth) Fair Trading Act 1987 (NSW) Local Government Act 1928 (NSW) Local Government Act 1993 (NSW) Patents Act 1990 (Cth) Supreme Court Act 1970 (NSW) Trade Marks Act 1995 (Cth) Trade Practices Act 1974 (Cth) Trade Practices Revision Act 1986 (Cth) Cases Cited: Akron Securities v Iliffe (1997) 41 NSWLR 353 Allied Westralian Finance Ltd v Wenpac Pty Ltd (1992) ATPR 46-082 Alma Spinning Co, In re; Bottomley's Case (1880) 16 Ch D 681 AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 Argy v Blunts & Lane Cove Real Estate Pty Ltd. (1990) 26 FCR 112 ASX Operations Pty Ltd v Pont Data Aust Pty Ltd (No. 2) (1991) 27 FCR 492 Attorney-General v Great Eastern Railway Company (1880) 5 App Cas 473 Australasian Performing Right Association Ltd v Grebo Trading Co Pty Ltd (1978) 23 ACTR 30 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 Baden Delvaux & Lecuit v Societe Generale pour Favoriser le Development du Commerce et de l'Industrie en France SA [1993] 1 WLR 509; [1992] 4 All ER 161 Bank of Credit and Commerce International (Overseas) Ltd v Akindele [2001] Ch 437; [2000] 4 All ER 221 Barnes v Addy (1874) LR9ChApp 244 Bevanere Pty Ltd v Lubidineuse (1985) 7 FCR 325 Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384 Boral Resources (QLD) Pty Ltd v Johnstone Shire Council [1990] 2 Qd R 18 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Briginshaw v Briginshaw (1938) 60 CLR 336 Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 Carlton and United Breweries Pty Ltd v Tooth & Co Ltd (1986) 7 IPR 581 City of Sydney v Streetscape Projects (Australia) Pty Ltd and Anor [2011] NSWSC 831 Coco v AN Clark (Engineers) Ltd [1969] RPC 41; (1968) 1A IPR 587 Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; [1982] HCA 24 Collins Marrickville Ply Ltd v Henjo Investments Pty Ltd (1987) 72 ALR 601 Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 Council of the City of Sydney v Goldspar Pty Ltd & Anor (2004) 62 IPR 274 Damberg v Damberg (2001) 52 NSWLR 492 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 Digi-Tech (Australia) Ltd v Brand [2004] NSWCA 58 Dingjan Re; Ex parte Wagner (1995) 183 CLR 323 Dundee Harbour Trustees v D & J Nicol [1915] AC 550 Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 Elecon Australia Pty Ltd v Brevini Australia Pty Ltd (2009) 263 ALR 1; [2009] FCA 1327 Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (No 2) (1987) 16 FCR 410 F J Bloemen Pty Ltd v Council of the City of Gold Coast [1973] AC 115 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 Fitzgerald v Masters (1956) 95 CLR 420 Ford-Hunt v Raghbir Singh [1973] 2 All ER 700 Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235 General Tire and Rubber Co v Firestone Tyre and Rubber Co Ltd [1975] 2 All ER 173 Gould v Vaggelas (1985) 157 CLR 215 Henjo Investments Ply Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales (1975) 6 ALR 445 JR & EG Richards (NSW) Pty Ltd v Scone Shire Council & Anor [1995] NSWLEC 200 Kewside Pty Ltd v Warman International Ltd [1990] ASC 55-964 Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2008] NSWCA 5 Locke v Dunlop (1888) 39 Ch D 387 Lutheran Church of Australia South Australia District Incorporated v Farmers' Co-operative Executors and Trustees Ltd (1970) 121 CLR 628 Lynch & Standon v Brisbane City Council [1961] Qd.R. 463 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 McGrath Re; Pan Pharmaceuticals Ltd (in liq) v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230 Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157 Michael Wilson and Partners Ltd v Nicholls [2009] NSWSC 1033 Moorgate Tobacco Co Ltd v Philip Morris Ltd (No. 2) (1984) 156 CLR 414 Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302 Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54; (2005) 223 CLR 331 Nelson v Nelson (1995) 184 CLR 538 New Zealand Netherlands Society 'Oranje' Incorporated v Kuys [1973] 2 All ER 1222 Nicholls v Michael Wilson & Partners [2010] NSWCA 222 Pacific Carriers Limited v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 Parramatta City Council v Randr Fazzolari Pty Ltd; Parramatta City Council v Mac'S Pty Ltd [2008] NSWCA 132 Pavich v Bobra Nominees Pty Ltd (1988) 84 ALR 285 Pedler v Richardson (Young J, Supreme Court of New South Wales, 16 October 1997, unreported) Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 Reading v R [1949] 2 KB 232 Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 Reg Russell & Sons Pty Ltd v Buxton Meats Pty Ltd (1994) ATPR (Digest) 46-127 Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 Review Australia Pty Ltd v Innovative Lifestyle Investments Pty Ltd & Anor [2008] FCA 74 Ringrow Pty Limited v BP Australia (2005) 224 CLR 656 Robophone Facilities Ltd v Blank [1966] 1 WLR 1428; [1963] 3 All ER 128 Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; 76 ALJR 436 Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378; [1995] 3 All ER Smith Kline & French Laboratories (Australia) Ltd v Secretary, Department of Community Services and Health (1990) 95 ALR 87; Smith Kline & French Laboratories (Australia) Ltd v Secretary, Department of Community Services and Health (1991) 20 IPR 643 Sutton v A J Thompson Pty Ltd (In liq) (1987) 73 ALR 233 Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 Tenji & Anor v Henneberry & Associates Pty Ltd & Ors (2000) 98 FCR 324 Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227 Thompson v Mastertouch TV Service Pty Ltd (No 2) (1977) 15 ALR 487 Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 Watson v Foxman (1995) 49 NSWLR 315 Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522 [2005] HCA 17 Wright v TNT Management Pty Ltd (1989) 15 NSWLR 679 Yorkshire Dale Steamship Co Ltd v Minister of War Transport [1942] AC 691 Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530 Texts Cited: Fentiman R, Foreign Law in English Courts (1998) Oxford University Press Heydon JD, Cross On Evidence, 7th Ed, LexisNexis Butterworth 2004 Meagher Gummow and Lehane's Equity: Doctrines and Remedies, LexisNexis, December 2002 (Meagher RP, Heydon JD, Leeming MJ) Category: Principal judgment Parties: The City of Sydney (Plaintiff) Streetscape Projects (Australia) Pty Limited (First Defendant) Moses Edward Obeid (Second Defendant) Representation: Counsel: Mr T Jucovic QC, Mr S Climpson, Mr C Bova (Plaintiff) Mr S Couper QC, Mr J Gooley, Mr R Higgins (Defendants) Solicitors: Holding Redlich (Plaintiff) Colin Biggers & Paisley (Defendants) File Number(s): 2009/00298673 & 2010/0085353 Judgment The proceedings 1The litigation before the Court concerns what came to be known as the Smartpole Project developed by the City of Sydney ("the City") in around 1996/1997 in preparation for the 2000 Sydney Olympic Games. Its purpose was to consolidate and refine street infrastructure (such as street lights, traffic lights, signage and banners) into a single system. 2Proceedings were commenced in both this Court and the Federal Court and were eventually cross-vested to this Court. The parties agreed that evidence in one proceeding was to be evidence in the other. The Court made a formal order to this effect on 12 April 2011. 3Whilst the pleadings are complex, in substance the claims and cross claims in both proceedings are concerned with disputes arising from the City and Streetscape's contractual arrangements constituted by an agreement made on about 26 August 2002 ('Licence Agreement') and varied by deeds dated 30 March 2007 ('First Deed') and 19 October 2007 ('Second Deed'), which relate to multifunction streetpoles referred to as 'Smartpoles'. The parties to the litigation 4The City is the plaintiff, and on its case, is a body politic having the legal capacity and powers of an individual both in and outside the state. The extent of the City's powers to contract was a live issue in the proceedings. 5The first defendant, Streetscape Projects (Australia) ("Streetscape"), was incorporated on 22 June 1998 "with the specific intention of providing the city with the highest standard of support, management and implementation of the Smartpole project." 6From its inception, the design, manufacture, supply and operation of the Smartpole system represented the 'core business' of Streetscape. According to its own documents, Streetscape was "conceived, incorporated and developed with the sole objective of successfully undertaking... Smartpole related tasks as contractor to [the City]." 7The second defendant, Mr Moses Obeid, has since November 2003 been the sole director and secretary of Streetscape. Streetscape's' former directors include Mr Gerard Obeid, the brother of Mr Moses Obeid, who resigned as a director on 17 November 2003 and Mr Robert Matchett who resigned as a director on 18 February 2000. Standing back from the proceedings to focus upon the real issues 8It has to be said that aside from questions concerning the proper construction of the deeds entered into by the parties, the litigation was marked by the need for the Court to make findings concerning many conversations and meetings between the various witnesses. On some occasions intimate private one-on-one conversations took place between representatives of the City and representatives of Streetscape. 9In that sense the Court was called upon to assess the veracity of the evidence given by the witnesses called. The evidence of each of the many witnesses called by the parties have been be carefully studied by the Court in order to determine the truthfulness of the evidence given by those witnesses. There were particularly critical witnesses under cross-examination for many days. As often occurs the Court was able to call on a number of tools in making these assessments, principally by reference to contemporaneous documents such as the innumerable e-mails, as well as focusing upon differences in the versions of facts put forward by the witnesses called. The relief claimed by the plaintiff 10The plaintiff makes a number of claims for relief in its summons and related pleadings. Contract claims 11The plaintiff claims the following relief: (1)Judgment in the amount found to be owing in respect of the annual licence fee and unpaid royalty fees together with interest. (2)An enquiry into the amount payable in respect of royalty payments for the period 1 April 2009 to 30 June 2009. (3)An enquiry into the amount payable in respect of royalty payments for the period 1 July 2009 to 31 August 2009. (4)An order that the first defendant deliver up documents required by the Second Deed of Variation and the Licence Agreement. (5)A declaration that the plaintiff is the owner of all moulds developed or used by the first defendant or its agents in connection with the manufacture and sale of Smartpole poles pursuant to the Licence Agreement, including any moulds used in the manufacture and sale of the products listed in the Schedule annexed to the letter from Holding Redlich to Colin Biggers & Paisley dated 29 July 2009 and the poles: (a)listed in Table 1, Table 2, Table 3, Table 4, Table 5 and Table 6 of the defendants' Commercial List Response served on or around 13 May 2010; and (b)listed in the defendants' Statement in Answer to Interrogatories dated 9 July 2010, (the Poles). (6)An order that the First Defendant deliver up to the Plaintiff all moulds developed or used by the First Defendant or its agents in connection with the manufacture and sale of Smartpole poles pursuant to the Licence Agreement, including any moulds used in the manufacture and sale of the products listed in the Schedule annexed to the letter from Holding Redlich to Colin Biggers & Paisley dated 29 July 2009 and the poles listed in various correspondence which were detailed in the Seventh Further Amended Summons. (7)An order restraining the defendants from manufacturing, distributing, offering for sale or selling the Poles. (8)An order restraining the defendants from using the intellectual property: (a)in the Poles; and (b)pleaded in paragraphs 87(a), 87(b) and 90 of the Fourth Further Amended Commercial List Statement. (9)A declaration that to the extent (which is denied) the first defendant is the legal owner of the intellectual property in the Poles, it: (a)holds that intellectual property for the benefit of, or on constructive trust for the plaintiff; and (b)is obliged to assign legal ownership of that intellectual property to the plaintiff. (10)A declaration that to the extent (which is denied) the first defendant is the legal owner of the intellectual property pleaded in paragraphs 87(a) and 90 of the Fourth Further Amended Commercial List Statement, it: (a)holds that intellectual property for the benefit of, or on constructive trust for the plaintiff; and (b)is obliged to assign legal ownership of that intellectual property to the plaintiff. (11)An order that the first defendant do all things necessary to transfer legal ownership of the intellectual property referred to in orders 8 and 9 above to the plaintiff. (12)Judgment in an amount calculated in accordance with clause 15.5 of the Licence Agreement or, alternatively, damages. (13)An enquiry into the sales of products by the first defendant and the proper calculation of royalties from the period 1 April 2007 to 31 August 2009. (14)An order that the first defendant pay to the plaintiff a sum calculated in accordance with clause 15.5 of the Licence Agreement or, alternatively damages for breach of the Licence Agreement and/or the agreements entered into between the plaintiff and the first defendant during the period 1999 to 2004 in an amount to be assessed together with interest thereon pursuant to section 100 of the Civil Procedure Act 2005 . Equitable claim (15)An order that the first defendant pay to the plaintiff equitable compensation or equitable damages for breach of fiduciary duty and/or breach of duty of confidence in an amount to be assessed together with interest thereon pursuant to section 100 of the Civil Procedure Act 2005 . (16)An order that the second defendant pay to the plaintiff damages for procuring the breaches of the Licence Agreement and/or the agreements entered into between the plaintiff and the first defendant during the period 1999 to 2004 in an amount to be assessed together with interest thereon pursuant to section 100 of the Civil Procedure Act 2005 . (17)14A. An order that the second defendant pay to the plaintiff equitable compensation or equitable damages for breach of duty of confidence in an amount to be assessed together with interest thereon pursuant to section 100 of the Civil Procedure Act 2005. (18)14B. Further or in the alternative to order 14A, an order that the second defendant pay to the plaintiff equitable compensation or equitable damages for being knowingly involved in or party to the first defendant's breach of fiduciary duty and/or breach of duty of confidence in an amount to be assessed together with interest thereon pursuant to section 100 of the Civil Procedure Act 2005 . (19)An order that an inquiry be held to determine the amount to be paid in accordance with clause 15.5 of the Licence Agreement or, alternatively to determine the nature and extent of the plaintiff's loss and damage by reason of the first defendant's breaches of the Licence Agreement and/or the agreements entered into between the plaintiff and the first defendant during the period 1999 to 2004 and the second defendant's procuring of such breaches and to assess the quantum thereof. (20)15. An order that an inquiry be held to determine to determine the nature and extent of the plaintiff's loss and damage by reason of the first defendant's breach of fiduciary duty and/or breach of duty of confidence and the second defendant's breach of duty of confidence and/or knowing involvement in or party to the first defendant's breach of fiduciary duty and/or breach of duty of confidence. (21)In the alternative to the relief sought in the immediately preceding two paragraphs, and at the plaintiff's option, an order that an account be taken of the profits made by the first defendant by its breaches of the Licence Agreement and/or the agreements entered into between the plaintiff and the first defendant during the period 1999 to 2004 and an order that the first defendant and the second defendant pay to the plaintiff such profits together with interest thereon pursuant to section 100 of the Civil Procedure Act 2005 . (22)16A. In the alternative to the relief sought in paragraphs 13A, 14A, 14B and 15A, and at the plaintiff's option, an order that an account be taken of the profits made by the first defendant by its breach of fiduciary duty and/or breach of duty of confidence and the second defendant by his breach of duty of confidence and/or knowing involvement in or party to the first defendant's breach of fiduciary duty and/or breach of duty of confidence and an order that the first defendant and the second defendant pay to the plaintiff such profits together with interest thereon pursuant to section 100 of the Civil Procedure Act 2005 . Relief sought in relation to S2 Poles 12The plaintiff seeks the following relief : (1)A declaration that the first defendant is not permitted to use the intellectual property in the "S2" poles including the Registered Designs (as defined in paragraph 86 of the Cross-Claim) to manufacture and sell street poles. (2)A declaration that the first defendant holds the Registered Designs (as defined in paragraph 86 of the Cross-Claim) on trust for the plaintiff. (3)In the alternative to the relief sought in the immediately preceding paragraph, a declaration that the first defendant is obliged to assign to the plaintiff all right, title and interest which it has in the Registered Designs (as defined in paragraph 86 of the Cross-Claim). (4)An order that the first defendant be permanently restrained from using the intellectual property in the S2 poles including the Registered Designs (as defined in paragraph 86 of the Cross-Claim) to manufacture and sell street poles. (5)An order that the first defendant do all things necessary to transfer the Registered Designs (as defined in paragraph 86 of the Cross-Claim) to the plaintiff. (6)In the alternative to the relief sought in the immediately preceding paragraph, an order that the first defendant assign to the plaintiff all right, title and interest which it has in the Registered Designs (as defined in paragraph 86 of the Cross-Claim). (7)Further in the alternative, an order pursuant to s 93(1) of the Designs Act 2003 (Cth) that registration of Australian Registered Design No. 146087 be revoked. Relief pursuant to the Trade Practices Act 13The plaintiff furthers each of the following orders : An order pursuant to pursuant to section 87(2)(a) of the Trade Practices Act 1974 (Cth) declaring void clause 5(a) of the Second Deed of Variation, to the extent that it purports to vest Intellectual Property subsisting in "the Adepole (catalogue item 41). Overview of the cross claims 14Streetscape also makes a number of cross claims. These are set out in the Amended Cross Summons ('Cross Summons') and the Further Amended Commercial List Cross-Claim Statement ('Cross Claim') filed in the Supreme Court proceeding. The cross claim in the Federal Court proceeding is in substantially the same terms. Cross Claim causes of action relied upon 15Streetscape seeks: (1)A declaration that in the events which have occurred the agreement for the purchase of the Intellectual Property between CofS and SPA ought to be specifically performed and an order that it be specifically performed accordingly. (2)A declaration that in the events which have occurred the CofS holds the Intellectual Property on trust for SPA. (3)Alternatively, a declaration that in the events which have occurred the CofS holds the Intellectual Property on trust for sale to SPA. (4)A declaration that in the events which have occurred the Licence Agreement and Deed of Variation and Second Deed of Variation to the extent that they purport to licence the Intellectual Property and to claim royalties in respect of the use of the Intellectual Property is ultra vires the CofS and is void and of no effect, or unenforceable, and an order setting aside the Licence Agreement and Deed of Variation and Second Deed of Variation to that extent. (5)Alternatively to 4, a declaration that in the events which have occurred, the Licence Agreement and Deed of Variation and Second Deed of Variation to the extent that they purport to licence the Intellectual Property and to claim royalties in respect of the use of the Intellectual Property outside Australia is ultra vires the CofS and is void and of no effect, or unenforceable, and an order setting aside the Licence Agreement and Deed of Variation and Second Deed of Variation to that extent. (6)Orders pursuant to section 87 of the TP Act declaring the Licence Agreement and Deed of Variation and Second Deed of Variation to the extent that they purport to licence the Intellectual Property and to claim or entitle the CofS to royalties in respect of the use of the Intellectual Property to be ultra vires the CofS and void and varying and modifying the Licence Agreement and Deed of Variation and Second Deed of Variation by deleting, modifying and varying the provisions of the Agreement and Deeds to the extent that they purport to licence the Intellectual Property and to claim or entitle the CofS to royalties in respect of the use of the Intellectual Property and consequential orders. (7)Alternatively to 6, orders pursuant to section 87 of the TP Act declaring the Licence Agreement and Deed of Variation and Second Deed of Variation to the extent that they purport to licence the Intellectual Property and to claim or entitle the CofS to royalties in respect of the use of the Intellectual Property outside and not for the purposes of the City of Sydney, or, alternatively, outside Australia, to be ultra vires the CofS and void and varying and modifying the Licence Agreement and Deed of Variation and Second Deed of Variation by deleting, modifying and varying the provisions of the Agreement and Deeds to the extent that they purport to licence the Intellectual Property and to claim or entitle the CofS to royalties in respect of the use of the Intellectual Property outside and not for the purposes of the City of Sydney, or, alternatively, outside Australia, and consequential orders. (8)Further, in the premises of the March 2007 Representations, (a)an order pursuant to s87(2)(a) of the TP Act or s 72 of the Fair Trading Act 1987 (NSW) (the "FT Act") declaring part of the Deed of Variation dated March 2007 to be void, as it relates to the royalties payable in relation to the four S2 streetpoles. (b)an order pursuant to s87(2)(c) of the TP Act or s 72 of the FT Act directing the CofS to refund money paid by the SPA pursuant to the Deed of Variation dated March 2007. (9)Further, in the premises of the September 2007 Representations SPA seeks the following order: (a)an order pursuant to s87(2)(a) of the TP Act or s 72 of the FT Act declaring part of the Second Deed of Variation dated March 2007 to be void, as it relates to the ownership of the intellectual property of the four S2 streetpoles. (10)A declaration that the CofS has not acquired and is not entitled to, or, alternatively, to enforce or protect or exploit, any reputation in or to the name and mark SMARTPOLE in Australia or in Singapore or the United Arab Emirates or elsewhere outside Australia. (11)An order and injunction restraining CofS from, by itself, its servants or agents or otherwise howsoever, enforcing or protecting or purporting to licence or exploit, or asserting any rights to enforce, protect or exploit, the name and mark SMARTPOLE or any reputation in or to the name and mark SMARTPOLE in Australia or in Singapore or the United Arab Emirates or elsewhere outside Australia. (12)An order pursuant to section 88 of the Trade Marks Act, 1995 (Cth) that the registered trademarks be removed from the Register of Trade marks. (13)An order pursuant to section 92 of the Trade Marks Act, 1995 (Cth) directing the Registrar of Trade Marks to remove the registered trade marks from the Register of Trade Marks. (14)An order and injunction restraining CofS from, by itself, its servants, agents or otherwise howsoever, using in any way or publishing the Registered Designs, the Drawings, or the Confidential Information. (15)An order and injunction restraining CofS from, by itself, its servants, agents or otherwise howsoever, infringing SPA's Registered Designs. (16)An order and injunction restraining CofS from, by itself, its servants, agents or otherwise howsoever, infringing SPA's copyright by reproducing or authorising the reproduction of the Drawings or a substantial part thereof or otherwise infringing copyright in the Drawings without the licence of SPA. (17)An order and injunction restraining the CofS, its servant and agents, from using or disclosing Confidential Information concerning SPA's method of manufacture and trade secrets permanently or for such period of time as the Court determines. (18)An order that the CofS deliver up to SPA all documents and other records of any description in its possession, custody or power identifying or relating to the Confidential Information, and all copies of the Drawings and the Registered Designs within 7 days from the date of this order being made. (19)Damages pursuant to section 82 of the Trade Practices Act, 1974 (Cth) or s 68 of the FT Act as claimed in paragraphs 46, 60, 67, 68 and 147 above. (20)Damages for breach of contract as claimed in paragraphs 72 to 74 and 97 above. (21)Damages or an account of profits for infringement of copyright, including: (a)damages or an account of profits for infringement of copyright pursuant to s 115(2) of the Copyright Act 1968; (b)additional damages pursuant to s 115(4) of the Copyright Act 1968; and (c)damages for conversion pursuant to s 116 of the Copyright Act 1968, in an amount to be assessed together with interest pursuant to s 100 Civil Procedure Act 2005. (22)Equitable compensation as sought in paragraphs117 above, or at the option of SPA, an account of profits. (23)Such further and other enquiries and accounts as may be necessary and appropriate. (24)Interest pursuant to section 51A of the Federal Court of Australia Act, 1976 and/or s100 Civil Procedure Act 2005 . (25)Costs including Indemnity Costs. Understanding the various poles the subject of this litigation 16There are four main types of poles the subject of this litigation. They are: (1)The S1; (2)The S2; (3)The S3; and (4)The Adepole. 17The parties were at odds as to which of these poles could be properly classified as Smartpole. It is therefore convenient to commence by describing some of the main features of a Smartpole pole. 18The Smartpole was developed by the City in around 1996/1997 in preparation for the 2000 Sydney Olympic Games and in order to consolidate and refine street infrastructure (such as street lights, traffic lights, signage and banners) into one single system. 19The Smartpole is a product system that uses an extruded alloy track (the Upper Extrusion) , which allows simple and secure mounting of any number of accessories at any height or face around the pole. By this means, the Smartpole reduces the number of individual poles required in a streetscape, hence being known as a "multi-function pole". 20The Court accepts that the Upper Extrusion is an essential element of the Smartpole . It is cylindrical in cross section incorporating no more than four channels displaced to one-another at 90 degrees, which together with fixing components provides flexibility in vertical and radial positioning by visually unobtrusive bolting and clamping. 21The Smartpole system can be scaled and adapted, at minimal cost, to suit the requirements of different street hierarchies, and in different cities. These benefits were highlighted by Streetscape on its website in response to the question "Can I make it look different?" "Customisation is easy with Smartpole. The flexible nature of the system ensures that your Smartpole is distinctive from others and specific to your urban domain. Some simple options include custom colour schemes, personalised design features and select ing interesting luminare options. The look and feel is limited only by your imagination. Streetscape Projects offers a full design service to customise the Smartpole to a required specification." 22By reason of the Upper Extrusion, the Smartpole accommod ates various combinations of functions which include: (1)street lighting; (2)traffic signal lights; (3)pedestrian signalling devices; (4)signage, including street name and parking restrictions; (5)CCTV cameras; (6)banners; (7)telecommunication devices; and (8)other street pole furniture. 23Other key visual, although not necessarily essential, elements of the Smartpole are: (1)a lower steel pole complete with lower flange; (2)a lower extruded ribbed cladding (or lower extrusion) with vertical grooves; and (3)a cast transition rim (collar) which makes a visual transition between the lower extruded panels and the upper extrusion, the four recesses in the periphery of the collar aligning with the groves in the upper extrusion. 24The Upper Extrusion and the visual elements referred to in the preceding paragraph are pictured below: 25The importance of the Upper Extrusion is emphasised by Streetscape in its website which states as follows: "Smartpole - The revolutionary Smartp ole System was born out of a need to consolidate and refine street infrastructure onto one single system. Developed by the City of Sydney and enhanced by Streetscape Projects for the 2000 Olympics programme, its success has generated a revolution in the way planners and designers implement traffic and lighting management in the public domain. The key to its success is an extruded alloy track that allows secure and simple mounting of any number of accessories at any height or face around the pole. Available in 3 distinct sizes, 215, 166 and a twin track model, the system allows itself to be tailored to the client's needs and wishes most economically. Flexibility and the ability to accommodate future services has allowed the Smartpole to be the most recognisable and useful piece of public furniture this Century." (emphasis added) "What is a Smartpole? - The Smartpole is termed a "Multi-Function" pole and accommodates a range of accessories at any given time. Lights, traffic signals, signage, banners, CCTV cameras and a host of other services integrate seamlessly with the Smartpole system. What makes the Smartpole unique is its patented track that allows for simple installation of a broad range of accessories at any height or angle around the pole. Made from high strength extruded aluminium alloy; the track is integral to the success of the Smartpole System". The Smartpoles ability to consolidat e existing and future street infrastructure onto a single pole has transformed the way government authorities, developers, designers and the public interact with the urban domain. Any existing services available on a street pole at present can be accommod ated onto Smartpole. Smartpole is the only multi-function pole to be acknowledged by NSW Roads and Traffic Authority and Energy Australia. The poles conform to internationally recognised standards in manufacturing and design - Australian (AS), British (BS) and American (ASHTO). The Smartpole has won recognition the world over and holds both an Australian Design Award & prestigious Chicago Athenaeum Good Design Award" (emphasis added). 26On the City's case there are two predominant ranges of the Smartpo le poles known as the "S1" series of " Smartpole " poles (the S1 poles) and the "S2" series of Smartpole poles (the S2 poles). The defendant denied the S2 was a Smartpole , claiming it was a separate multi-function pole. 27The S1 poles have a diameter of 215mm and range in height between 4.8m and 12.6m. 28The S2 poles have a diameter of 166mm and range in height between 4.8m and 7.2m. Given that the S2 poles are smaller in diameter than the S1 poles they are more appropriate for environments such as the inner city, for example Darlinghurst and Glebe. 29Both the S1 poles and the S2 poles accommodate four extruded alloy tracks as part of their Upper Extrusion. 30The extrusion of the S1 pole is pictured below (redacted): 31The extrusion of the S2 pole is pictured below (redacted): 32A third range of the poles is known as the "S3" series of poles. The S3 pole has a diameter of 120mm and as such can only accommodate two extruded alloy tracks as part of its Upper Extrusion. 33There is also another set of poles called the Adepole whose status was also a live issue in the proceedings. 34Smartpole poles are installed in prominent places throughout Sydney (and other parts of Australia). Examples in Sydney include Macquarie Street, Martin Place, George Street, William Street, Taylor Square, Oxford Street and Darlinghurst Road. 35The City is the owner of registered trademarks for the word SMARTPOLE in classes 6, 11 and 19. It is also the owner of an Australian and Spanish patent, which relates to the Smartpole and the copyright in the drawings which are used to manufacture the Smartpole and various Australian registered designs. 36During the term of the Licence Agreement, Streetscape manufactured and sold thousands of poles to the City, other government authorities and private contractors. Some of those poles were manufactured by Streetscape under the Licence Agreement using moulds which were based on the drawings and specifications the subject of the Licence Agreement. Evidence given by the witnesses 37While some of the issues in this case were to be determined objectively from the documents or on the basis of legal argument, a large part of the case turned on the Court's assessment of the various witnesses. It is therefore appropriate to consider the witnesses at the beginning and in considerable detail. The plaintiff's witnesses 38On the whole, I formed a favourable view of the plaintiff's evidence. Even after lengthy cross-examination, the plaintiff's witnesses were shown to be honest, careful and informative. Ms Baird SC, and later Mr Couper QC, were meticulous in cross-examination, yet despite their diligence, in all, save for a very limited number of areas discussed below, the highest the cross-examination rose was a mere suggestion of impropriety. On none of the significant issues in the case, did Counsel for the defendants prove on the balance of probabilities that any plaintiff witness was lying. The greatest concern the Court had in accepting the plaintiff's evidence was an apparent desire by some witnesses to tailor their answers in order to assist the plaintiff's case. This was a factor the Court considered in the overall evidentiary case put forward by the plaintiff, but given the otherwise accurate and reliable nature of the plaintiff's witnesses, their evidence was largely accepted. Evidence of Michael Farrelly 39Mr Farrelly was the first witness to be called by the plaintiff. Due to his travel schedule, Mr Farrelly gave evidence via video link from Auckland. 40Mr Farrelly is an experienced metal designer, previously working for KWA, the original designer of the Smartpole. His evidence was that in this role he had little to do with the Smartpole. However, from mid 2000 until the end of 2001 Mr Farrelly worked for Streetscape, where he was involved in the development of the Smartpole. 41The thrust of Mr Farrelly's evidence was that at the request of Mr Matchett of Streetscape, the witness designed the S2 Smartpole. Mr Farrelly described the S2 as a scaled down version of the S1, but with all the important features of the original pole. The purpose of his evidence was to show that, contrary to the defendants' case, the S2 was not substantially different to the S1. 42Ms Baird's cross-examination focused on two areas: (1)Mr Farrelly's motive for giving this evidence; and (2)An inaccuracy in the timeline of design. Motive 43In cross-examination Ms Baird elicited from the witness that Mr Matchett, a friend of the witness, had now left Streetscape and worked for a company called Hubb. Hubb are the new manufacturers of the Smartpole on behalf of the City of Sydney. Ms Baird suggested to the witness that it is in his interests that the Court finds that Streetscape does not own the intellectual property in the S2 and this was his motivation for giving evidence. This suggestion was vigorously denied by the witness and while legitimately put to the witness, proved ultimately baseless. Timeline 44Secondly, Ms Baird took the Court at length through all the documents in Exhibit # D1. She did this in response to paragraph 7 of Mr Farrelly's affidavit in which he deposed that he commenced designing the S2 from mid 2001. 45From Exhibit # D1 Ms Baird successfully proved that the S2 was actually designed 6 months earlier. Mr Farrelly admitted he must have made a mistake in his dairy. From this, the Court can conclude that Mr Farrelly designed the pole 6 months earlier than he thought, but in my view this doesn't turn on the substantive issue in his affidavit, that is whether the S2 is simply a smaller version of the S1. 46Looking at Mr Farrelly's evidence as a whole, the Court viewed him as a good witness and the cross-examination did not significantly dent his credibility. His evidence that the S2 was designed using the confidential information provided to Streetscape by the City is accepted. Evidence of Kylie McRae 47Secondly, the plaintiff called Ms McRae, an accountant formerly employed by Deloitte to audit Streetscape for the purposes of calculating unpaid royalties owed to the City. 48Ms McRae gave evidence on two key areas: (1)The process she followed to audit Streetscape; and (2)The conversations that led up to the two deeds of variation. The audit 49Ms McRae gave evidence about the differences in access provided to the auditors in respect of the first and second audit. Her evidence was that in the first audit Streetscape provided her team free access to all the necessary business records, but in the second audit these records were not forthcoming. 50The cross-examination focused on the method Ms McRae used to categorise the poles in respect of which royalties were payable and also her communication with Ms Hobbs from the City and how this influenced the audit. 51Mr Couper's suggestion throughout was that Ms Hobbs was very eager to maximise royalties payable and disregarded any explanation for why royalties weren't due by Streetscape. Mr Couper suggested that Ms McRae relied too heavily on Ms Hobbs and was not really independent. Mr Couper highlighted the extensive collaboration between Ms McRae and Ms Hobbs, particularly in reference to an internal audit report (MFI #D5). Counsel suggested that this collaboration distorted Ms McRae's independence. Conversations leading up to the deeds of variation 52Ms McRae also denied Mr Obeid's version of events leading up to the deeds of variations. Her evidence refuted any suggestion there was an oral agreement and stated that such an agreement would be contrary to the probity requirements of the City. 53The witness was subject to significant cross-examination on this point. In cross-examination, Mr Couper highlighted some apparent inconsistencies or prima facie implausibility in certain parts of the witness's explanation for why the conversations deposed by Mr Obeid could not have taken place. In my view, the cross-examination rose no higher than a suggestion that her answers were implausible. The following section is illustrative: Q. What I'm trying to understand is this, if Streetscape, under contract, was the sole supplier of Smartpoles to the city, where, if anywhere, was the absence of probity in a city representative saying to Streetscape, "This is what we anticipate the dollar value of future supply to be"? HIS HONOUR Q. Do you want that question put again? A. I think so, yep. MR COUPER Q. I'll take it in stages. Streetscape, you knew, was the sole supplier of Smartpoles to the city, correct? A. Correct. Q. You knew it had a contract to supply them? A. Correct. Q. You knew that if the city was going to buy them they'd buy them from Streetscape? A. Correct. Q. It's a pretty obvious proposition, isn't it, that Streetscape would be interested to know what sort of orders it might expect in the future, pursuant to its contract? ... Q. Let me ask you this question, Ms Hobbs (as said). Where is the absence of probity in the city informing Streetscape what dollar value of orders it might be receiving in the future? A. Because I believe that it was referring to future orders and the agreement was ending. Q. Which event was ending? A. The licence agreement. Q. You didn't think for a moment the supply agreement was ending, did you? A. No. Q. The orders being discussed were patently orders under the supply agreement and not the licence agreement, correct? A. I don't recall. Q. If there were orders they must have been under the supply agreement, correct? A. Correct. Q. And not the licence agreement, correct? A. Correct. Q. The imminent end of the licence agreement would be irrelevant to the future orders under the supply agreement, correct? A. Correct. Q. I'll ask you my question again, what was the absence of probity in the city informing Streetscape what dollar value of orders they might expect in the future under the supply agreement? A. Only that I don't believe it was relevant to those discussions because we were talking about past events at these meetings, not future ones. Q. So are you saying that it would have been improper for Ms Hobbs to have talked about future orders under the supply agreement because it would have been irrelevant to discussions about the licence agreement, is that what you're saying? A. That's correct. Q. Did you genuinely hold that view? A. Yes. Q. Just explain to me how it would be improper to talk about future orders under the supply agreement because you regarded that topic as being irrelevant? A. I'm sorry, you'll have to rephrase the question. I don't understand what you're asking. Q. I'll try again. You just told me, as I understand it, and correct me if I'm wrong, that it would have been improper for Ms Hobbs to talk about future orders under the supply agreement at this meeting because that topic was irrelevant, is that right? A. Yes. Q. You adhere to that position? A. Yes. And I believe that the $6 million in orders was talking about orders that might be coming Streetscape's way. 54My overall assessment of Ms McRae is that she was a well-prepared and careful witness who gave accurate evidence. There was some suggestion that she was too close to Ms Hobbs and this influenced her evidence. It was clear from her conduct under cross-examination that she was "in the camp" of the plaintiff, but the Court did not view this as impacting in any material sense the veracity of her evidence. Evidence of Steven Newman 55Mr Newman was one of the City's principal witnesses. He is an industrial designer and was employed by the City as a project manager for the specific purpose of overseeing the development of the Smartpole. 56Mr Newman gave detailed evidence concerning the development of the Smartpole and his role in managing the project. His evidence formed the evidentiary basis for a large part of the plaintiff's case and consequently he was a very important witness. 57The cross-examination ventured over a day and a half and properly delved into a large number of important areas. It was apparent that some of Mr Newman's evidence in cross-examination was influenced by his view of what was in the interests of the plaintiff's case. At certain points Mr Newman sought to pre-empt the point being made by counsel and answer the way he thought would be best for the plaintiff. Importantly, despite this observation it does not follow that Mr Newman is to be disbelieved. Indeed, throughout the duration of the cross-examination, Mr Couper was unable to significantly undermine the apparent honesty of Mr Newman on any of the key issues. I formed the view that Mr Newman gave a generally truthful and accurate account. 58The most blatant example of Mr Newman's attempts to assist the City, concerned Mr Newman's definition of a Smartpole. The witness provided no clear answer as to what are the essential characteristics of a Smartpole and constantly changed his answer until he was left with a definition so broad that in his view anything with a track could be deemed a Smartpole: Q. I think perhaps you and I are having a problem about the definition of "essential", Mr Newman. What I'm trying to find out from you is what you regard as being the essential features of a Smartpole. What must a pole have in order to be a Smartpole in your view. That's what I'm trying to find out? A. Then I would say you could even delete the internal square steel section. If it has an exterior extruded sleeve with tracks, four tracks to be specific, it is following the City of Sydney Smartpole design. Q. Let's deal with - we can take that in stages. Does that mean then, in your view the shape or the configuration of the internal supporting system is not relevant to whether a pole is or is not a Smartpole, is that what you say? A. Yes, I would say that. Q. Let me understand what you say is relevant to a pole being a Smartpole. Four external tracks, is that right? A. Yes. Q. So, for example, if there were two external tracks you would not regard the pole as being a Smartpole, correct? A. I have made comments in my affidavits in regard to a design which probably only had two tracks but those tracks were exact copies of the Smartpole tracks. So, yes, as long as it had a track that copied the Smartpole track I would regard it as part of the Smartpole family. Q. We'll try and tie down "essential" again, if we may. We'll leave the number of a moment. External tracks, in your view does the dimension of the track matter as to whether the pole is or is not a Smartpole? A. Yes it does. Q. So what dimension of track is required for the pole to be a Smartpole? A. It just needs to follow the form of the City of Sydney Smartpole which, therefore, allows all the brackets that have been designed for it to utilise that track. Q. Perhaps I should break it down. My question might not have been as clear as it should have been. Let's take two different elements, shape and size. Let us deal firstly with the shape of the track. Does the shape of the track matter as to whether the pole is or is not, in your view, a Smartpole? A. Yes. Q. Then - we may come to a drawing to do this, if it's of assistance. What shape of track is required for a pole to be a Smartpole? A. It's basically the internal dimensions of that track, being the width across the face and the internal dimensions that therefore allow the brackets to work within it. Q. Perhaps I could approach it in this way. We'll come to drawings in due course. A. Yes. Q. I'll take you to a drawing if you wish. You're familiar with, and indeed you speak about, drawings which have been described as the 4930 issue C drawings? A. Yes I am. Q. And those drawings contain a cross-section of the upper extrusion of a pole? A. Yes. Q. Which show both shape and dimension of the tracks, correct? A. Yes. Q. Are you saying that for a pole to be a Smartpole the tracks must have the shape and dimension - or shape and size of the tracks shown in the 4930 issue C drawings? A. Yes I am. Q. So if, for example, the track had the same configuration but was smaller, that would not be a Smartpole, correct? A. I could see that you could start to infringe upon the Smartpole rights by scaling everything down of the Smartpole to be of a more miniature size and I would assume that that would cause the city some concern. Q. I'm not so much asking about the city's concern, I'm trying to establish from you what you regard as being the features which are the essential characteristics of a Smartpole, because you refer to Smartpoles and form the view that certain poles are or are not Smartpoles throughout your affidavit. What I'm trying to find out from you is by what criteria you make that decision. So, can I ask you again, in your view if the external track had the same shape as the shape shown in the 4930 issue C drawings but was smaller, would you regard that as being a Smartpole? A. Yes. Q. If the track - if you had a pole with four external tracks but of a different shape to the shape shown in the 4939 issue C drawings, would you regard that pole as a Smartpole? A. I may. Q. You may? What are the parameters within which you may describe a pole, having a different track shape, as a Smartpole? A. If it was trying to fulfil the same - similar functions in the same market, meaning multi-function street poles. Q. Is the diameter of the pole itself relevant to the question, is the pole a Smartpole, in your view? A. No. Q. So, for example, if you had a pole with a diameter of, say, 400 millimetres, a very large pole which had four tracks, would you regard that as a Smartpole? A. Yes. Q. Why? A. Because it's capable of all the similar things that the Smartpole does. Q. Are we at this stage - and please tell me if I'm wrong about this, in your view any pole which has four tracks, perhaps of whatever shape or dimension, capable of being used to hold brackets to hold up lights, traffic lights, signs is properly regarded as a Smartpole? A. Yes. Q. So it really doesn't matter what size the pole is, what shape the tracks are or, indeed, what the internal structural mechanism is, any pole which fulfils the function of having brackets affixed to four sides to hold up signs and the like is a Smartpole. Is that your view? A. Could you repeat it? Q. Yes. I think, and correct me if I'm wrong about this, we've reached the stage where you say the diameter of the pole doesn't matter, correct? A. Yes, I said that. Q. The internal structural mechanism, that is, hollow square section, hollow circular section or anything else doesn't matter, correct? A. Yes. Q. Size of the track doesn't matter? A. Yes. Q. Shape of the track doesn't matter? A. Yes. Q. Indeed, four tracks as opposed to two might not matter, is that right? A. Yes. Q. So that the only criterion by which you judge a Smartpole is if it is a pole with a track or tracks to which one can affix a bracket which might hold up a traffic light or a street light or a sign, correct? A. Yes. Q. And is that the way you have approached the question of what is or is not a Smartpole in your affidavits? A. No. In my affidavit we were specifically looking at poles that were very much the same as the city's design 59This was not an impressive definition and as such I approached the evidence of Mr Newman with a degree of caution because of his evident desire to mould his answer's to fit the plaintiff's case. However, assessing his evidence in light of the other plaintiff witnesses and in comparison to the defendants', despite the witnesses' motivation, his evidence was shown to be truthful. Mr Couper's cross-examination was unable to persuade the Court that Mr Newman had fabricated any evidence, on any of the key issues in the case. Evidence of Trent Scrivener 60Mr Scrivener was the project engineer for Woollahra Council tasked to deliver infrastructure projects. He had some control over the tender process for Smartpoles in Woollahra Council. 61Mr Scrivener's credibility was questioned because it was suggested that he disseminated confidential tender documents. He said he sought permission from his manager to do this. In my view, not much turned on this issue. 62The key reason for the plaintiff calling Mr Scrivener was because of Exhibit # P7. This was a folder, which on Mr Scrivener's evidence, was received by Woollahra Council from Streetscape Australia as part of their tender. The documents in the folder make mention of Streetscape's international projects, including projects in the UAE. The inference sought to be drawn by the plaintiff was that Streetscape Australia and International are one entity and represented this in their tenders. 63Mr Couper's cross-examination on this matter was effective. The defendants created significant doubt as to whether this folder was received as part of the tender application. This doubt turned on the fact that Mr Scrivener received all the materials from the document registry at the Council and didn't see the tender as it arrived. It was therefore possible that the registry combined the tender with the Streetscape International folder which was received at a different time. Another important point raised was that the folder wasn't listed in the contents of the tender bundle itself. 64While I accept counsel raised doubt in cross-examination as to whether the folder was part of the tender, stepping back from the cross-examination and considering the issue as a whole, as a matter of logic and probability the document must have been part of the tender. There was no conceivable alternate explanation for how the council got the folder other than as part of the tender. Mr Couper's theory was purely speculative. In my view, on the balance of probabilities the folder was part of the tender. 65It is important to note this was not the only evidence put forward by the plaintiff that Streetscape Australia and Streetscape International were one entity. The Court's view of Mr Scrivener's evidence formed just one part in its overall consideration of whether Streetscape Australia and International were two separate entities or rather one. Evidence of Robyn Hobbs 66Ms Hobbs was until very recently the Executive Manager of the City, Community and Cultural Services Division. She was the primary point of contact for Streetscape in its dealings with the City. In this respect, Ms Hobbs was a key witness in these proceedings. 67The case put forward by the City is heavily reliant on the evidence of Ms Hobbs and in particular what representations she made to the City at the time of entering into the two deeds of variation. Therefore, if the Court accepts her as a witness of truth, a large part of plaintiff's case succeeds and the defendants' misleading and deceptive claims, as well as other aspects of their case, fall away. 68In deference to the lengthy submissions put by both parties on the issue of Ms Hobbs' credit, it is appropriate that the Court makes a clear finding in this regard. I accept Ms Hobbs as a witness of truth. Except in a small number of areas which are discussed below, the contemporaneous documentary evidence wholly supported her account. In challenging Ms Hobbs' evidence, the highest Mr Couper's assertions rose was suggestions of impropriety. On the essential issues which Ms Hobbs gave evidence, she was not shown to be lying. 69While Ms Hobbs was a witness of truth, her demeanour in the witness box indicated that she was intent on being an advocate for the City's case. Ms Hobbs frequently provided non-responsive or overly lengthy explanations in an attempt to assist the plaintiff. Importantly, despite the underlying motivations for Ms Hobbs giving evidence, her evidence was supported by the contemporaneous documents and was consistent with the other evidence in the case. 70It is not necessary or possible to recount the totality of Ms Hobbs' evidence, however to illustrate the reasons for this finding, it is appropriate to address some of the key examples cited by the defendants as reasons why the Court should make an adverse credit finding against Ms Hobbs. 71Mr Couper's cross-examination was broad, but focused on six key propositions. They were: (1)Ms Hobbs cannot be believed; (2)Mr Obeid always owned the intellectual property in the S2 poles; (3)Ms Hobbs made representations to Mr Obeid that the City would sell the intellectual property in smart poles to him and this induced him to enter into the deeds of variation; (4)The City did not always strictly follow probity requirements and these requirements would not have prevented a sale of the intellectual property to Mr Obeid; (5)The contracts were terminated for political reasons and everything else was an excuse; and (6)The CEO of the City was not misled personally when she signed the deeds of variation. 72The first important question concerning Ms Hobbs' credit related to her delay in addressing Streetscape International's alleged breaches of the City's intellectual property rights. Ms Hobbs was notified of these alleged breaches in mid 2008 but did not raise the issue with Mr Obeid until 3 December 2008, some six months later. It was suggested by Mr Couper that the Dubai poles issue was not really a concern and that the City used it as an excuse to stop using Mr Obeid's company and replace it with Mr Matchett's. Mr Couper also asked the witness why she didn't confirm whether Mr Obeid told people in the City about Streetscape International. It was suggested that this was because the whole issue was nothing but an excuse. Ultimately, these objections to Ms Hobbs evidence were suggestions and assertions of oddity, they rose no higher. 73Other questions raised by Mr Couper concerned the "bridge climb precedent" and probity. The bridge climb precedent refers to the City of Sydney awarding the rights to conduct bridge climbs to a company without the need for a tender because of the significant amount of money that the company invested to get bridge climb tours operating. Mr Obeid repeatedly requested the same treatment in acquiring the intellectual property in the smart poles without a tender. Ms Hobbs emphatically denied she ever made representations to Mr Obeid that he could purchase the intellectual property in the Smartpoles without a tender. 74This line of questioning continued, with Mr Couper referring the Court to Clause 3.3 of the Licence Agreement which details the conditions on which the City may extend Streetscape's license beyond the original three-year term. Mr Couper indicated that the extension conditions were not met, yet the City chose to extend the license. The point made was that this decision was made without a tender. In other words, a commercial decision was made against proper probity protocols. Mr Couper questioned why, in these circumstances, Ms Hobbs was so resolute that the intellectual property in the Smartpoles could not be sold without a tender. This raised some doubt in the Court's mind as to the veracity of Ms Hobbs' evidence but again was not sufficient to displace its truth. 75Mr Couper also questioned Ms Hobbs as to whether Streetscape was bullied into giving up its legitimate rights to the S2 pole because the City would not do business with it unless it did and why Ms Hobbs met alone with Mr Obeid at the Sheraton on the Park. I accept that it was peculiar that Ms Hobbs and Mr Obeid met at a hotel and not at Town Hall and that no contemporaneous notes were taken but rather a solicitor recorded the meeting post the event. However, despite the apparent oddity, nothing more was able to be made of the issue. 76The two other areas of focus were on whether the no dispute requirement in the tender was a pressure clause and whether the Adepole was used as a bargaining chip. The suggestion sought to be made was that Mr Obeid's concessions in the two deeds of variations do not reflect the true state of ownership in the S2 pole. It was suggested that Streetscape was forced to make these concessions for commercial reasons. Ultimately these were just suggestions and do not significantly affect the real issues in the case. 77Mr Jucovic's re-examination was short and focused on: (1)The no dispute "pressure" clause being completely reasonable given the history of litigation concerning smartpoles and the need for an ongoing relationship between the City and whoever won the tender; (2)The confidential value of the IP and how the upper limit meant that by law a sale could only take place through a tender (s55 Local Government Act); (3)The apparent links between the license and supply agreement; and (4)The express clarity of the requirement for probity in the sale of any IP in correspondence between the parties 78Without repeating the findings above, after lengthy cross-examination by competent counsel, it is not surprising that some inconsistencies or oddities arise. These oddities were not sufficient for the Court to make a finding other than Ms Hobbs is a witness of truth. Evidence of Garry Harding 79Mr Harding was the Director of Community Services at the City of Sydney and Robyn Hobbs' boss. Mr Harding had the overall responsibility for negotiations with Streetscape. Mr Harding was a good, honest witness. He was direct, confident and displayed a good knowledge of the issues. 80The first area of cross-examination explored by Mr Couper concerned notes taken by Mr Harding of important meetings. Mr Couper sort to make the point that in most of the earlier meetings Mr Harding made notes, however in the overwhelming majority of conversations deposed to in Mr Harding's most recent affidavit, there were no notes. The inference was that these latest conversations were simply made up to close a perceived gap in the plaintiff's case, namely the fact that the decision maker was never made aware of the apparently misleading statements by Streetscape. 81The second area of cross-examination was in relation to the ownership of the Adepole. It is an area of substantial importance. In the First Deed of Variation the Adepole was marked TBD (to be determined), however in the second, the rights were signed over to Streetscape. Mr Couper suggested that the only reason the City claimed any rights over the Adepole was to use it as a bargaining chip so that they could secure rights over the low impact pole. Mr Harding denied this version, stating their decision to relinquish claim over the Adepole was made on the basis of representations by Streetscape only. Mr Couper questioned this evidence, suggesting the City did not relinquish their rights on the basis of representations made by Streetscape but rather conducted investigations and relinquished their rights based on these investigations. 82Mr Harding was a careful witness whose evidence was accepted by the Court in most areas. Importantly, his evidence was not accepted in relation to the City's reliance on representations made by Streetscape as to the nature of the Adepole. The reasons for this finding are discussed in more detail later in the judgment. Evidence of Lynette Nicholson 83Currently Ms Nicholson is special counsel at Holding Redlich and has worked closely with the City of Sydney over most of the course of the negotiations with Streetscape, particularly while employed at Thomas Playford. 84Ms Nicholson was cross-examined in respect of a number of areas, particularly in relation to the Adepole. She was perceived as a witness of truth who took her obligations to the Court seriously. Her account was consistent with other witnesses for the plaintiff. Evidence of Michael Royle 85Mr Royle was first introduced to Streetscape in 2000, when Interium Designs, a company that he worked for, were engaged by Streetscape to work with it on the First Fleet Park Project. Since that time the witness has had business dealings with Streetscape and its employees. Mr Royle gave detailed evidence of the establishment of Streetscape International and its apparent links to Streetscape Australia. In particular Mr Royle gave evidence of introducing Mr Al Mohammed to Gerard Obeid, which on Mr Royle's evidence prompted Streetscape Australia to expand into the UAE. 86Mr Couper's cross-examination sought to challenge Mr Royle's knowledge of the links between Streetscape Australia and Streetscape International. In particular Mr Couper emphasised that Mr Royle had no material dealings with Streetscape between 2003 and 2006 and could not have known if they were associated. 87The witnesses' recall of conversations with Mr Gerard Obeid was also challenged and it was put to Mr Royle that conversations that he gave evidence of, did not occur but were rather the product of assumption: Q. Can I suggest this to you, that Gerard Obeid was not at the meeting where you presented your product to John McLeod, what do you say to that? A. He was in the room. Q. And, if we look at paragraph 36 of your first affidavit, I'd suggest to you that Mr Obeid did not say the words which you ascribe to him? A. That's how I remember it. Q. Tell me, going to paragraph 43 of your most recent affidavit, how you came to recall the additional words at that same meeting which you've set out in paragraph 43? A. Because they're in the email of 8 October - sorry, 8 November, referred to in paragraph 44. Q. Is your recollection of the words spoken in paragraph 43 of your most recent affidavit based entirely on the email referred to in paragraph 44? A. Correct. Q. Let us look then at the email, which is behind tab 23 of exhibit MTSR2. Do you agree that the email says nothing whatever about Gerard Obeid being needed for a Streetscape International project in Qatar? A. He said he would return to Dubai in ten days and apparently Streetscape Dubai had just been awarded a major contract, that's how I recollect it. Q. Did you, in your affidavit, put two and two together and make the assumption that Mr Obeid's return to Dubai must have had something to do with that contract? A. Correct. Q. He certainly didn't say to you he was needed for that project, did he? A. I can't remember. Q. What you have included in your affidavit at paragraph 43, as part of the conversation, that is, "And I am needed for that project" is simply speculation on your part, Mr Royle, correct? A. I don't know. 88The Court had difficulty in assessing the veracity of Mr Royle's evidence. In significant areas his recall was either patchy or flawed. Evidence given by the witness on important conversations was not altogether coherent or consistent. For this reason, the Court cannot accept the evidence of Mr Royle in its entirety. His recall on important issues was not sufficient or reliable. His evidence was not of assistance to the Court. Evidence of Robert Matchett 89Mr Matchett held various roles throughout the development of the Smartpole. Originally Mr Matchett was a director of KWA, he was then employed by Streetscape and now works for the defendants' competitor Hubb. The Court generally accepted him as an honest witness who exhibited a good recollection of the entirety of events in question. However, at certain points I was concerned with the plausibility of the witnesses' explanations. Ultimately, not strictly being in either camp, Mr Matchett was an informative witness whose evidence supported the City's case at certain points and in others contradicted it. 90One very important aspect of Mr Matchett's evidence was his explanation of the wholly oral terms in the Hubb supply agreement. This oral term permitted Hubb to sell Smartpoles to private developers without paying royalties to the City. These representations were not made in writing, but were wholly oral and recorded in the minutes of the meeting in which they were made (Exhibit # D13). The relevant cross examination was as follows: Q. Now, is this the agreement which you say gives HUB the right to sell smartpoles to private developers within the boundaries of the City of Sydney? A. This is the contract under which I made that statement, yes. Q. I take it you're familiar with this contract? A. I have read it. Q. Could you perhaps assist me and point out the provision or provisions of that contract which give HUB the right to sell Smartpoles to private developers within the City of Sydney? A. I can't point to it specifically. What I can tell you is it was discussed in - like, without going through it and finding it specifically, what I can tell you is that it has been discussed in numerous meetings with the City of Sydney and a specific procedure has been adopted which allows us to provide Smartpoles to developers in the City. Q. Let me take this in stages, if I may; have you ever performed the exercise of looking through this contract to ascertain for yourself whether any part of it gives HUB the right to sell Smartpoles to the City - to private developers in the boundaries of the City of Sydney? A. I haven't had to question what the City officers and HUB discussed in our meetings. Q. Well is the answer to my question then no, you've never read the document to see if it actually contains the rights to let HUB sell Smartpoles to-- A. No, I haven't checked this document in that regard. Q. So then do you say that you've worked on an assumption that conversations with officers of the City meant that HUB was entitled to sell Smartpoles to private developers? A. Minuted meetings. Q. Minutes meetings. With whom and when? A. The one I - I can't recall a date or time. I can produce the minutes if necessary, but it was with Ian Rudgley, Allan Saxby, Paul Gowan. That's all I can recall - and myself and Anton Beardmore from HUB. 91This evidence was very surprising in light of the plaintiff's case that officers of the City could have not made oral representations to Mr Obeid, because such representations would be contrary to probity requirements. This assertion seems to be contradicted by Mr Matchett's evidence. 92Another significant area of cross-examination focused on the extent to which the design specifications and other confidential information were distributed by Streetscape to interested parties. Mr Matchett's evidence was that much of this information was freely sent out without any confidentiality conditions, as indicated in Exhibit # D7. In re-examination Mr Jucovic asked questions about the standard procedures for quotes and Mr Matchett explained that it was standard procedure for such quotes to require confidentiality undertakings. Despite this explanation, it was clear from Mr Matchett's evidence that a number of apparently confidential documents were freely distributed to interested parties. This seemed to support the defendants' case that the designs were not confidential to the extent that the City maintains. 93A further interesting area of cross-examination related to the Adepole issue. Contrary to other plaintiff witnesses, Mr Matchett unequivocally stated that Streetscape notified the City of Sydney about the Adepole: Q. Do you recall that the City of Adelaide then asked you to get from the City of Sydney, some assurance that the City of Sydney owned the intellectual property rights in what would be the Adepole? A. Yeah I do recall. Q. And you communicated to the City of Sydney, the fact that Streetscape wished to sell a Smartpole variant called the Adepole to the City of Adelaide, correct? A. I communicated to whom? Q. The City of Sydney? A. Yes. Q. And you sought from the City of Sydney some form of assurance of indemnity which you were to give the City of Adelaide to say Sydney stands behind the ownership of these poles? A. Yes I do recall that. Q. Now amongst those communications you had were communications with Mr Vladeta of the City? A. If he was there then yes. Q. In any event, you made it clear to the City of Sydney's representatives that Streetscape wanted to sell the Adepole to Adelaide and it was being impeded because of this issue about ownership of the rights in the Smartpole. Correct? A. It was being impeded because Doug was making certain assertions about ownership. Q. When you say 'Doug' you mean Doug Rawson-Harris of Goldspar? A. I do. Q. And he was making assertions that Goldspar owned the rights? A. Correct. Q. And what you made clear to the City of Sydney representatives was that your dealings with Adelaide about being able to sell Smartpoles to Adelaide were being held up while that issue was up in the air, correct? A. I communicated the message that Doug was sending to Adelaide. I communicated that Adelaide was nervous but wanted to progress with Streetscape and I asked the City to provide something to Adelaide that would give them the confidence to progress, yes. Q. Amongst those communications, you made it plain to the City of Sydney's representatives that the pole Streetscape wanted to sell to Adelaide was a Smartpole or a number of Smartpoles? A. That's right. Q. And that was the reason why Adelaide was looking to the City of Sydney? A. That's right. Everyone knew it was a Smartpole, just dressed up. Q. And it's the case is it not that you referred to the pole in your dealings with City of Sydney as the Adepole? A. Correct. 94The Court considered this evidence important, because it supports the defendants' case that the City was not misled by the defendants as to the nature of the Adepole, but rather the City understood that the Adepole was a Smartpole and made a conscious decision not to pursue royalties in the second deed of variation. 95The final important area of cross examination related to Mr Matchett's evidence concerning the link between Streetscape Australia and Streetscape International. In Mr Matchett's affidavits, he was resolute that the entities are the same. Under cross-examination, this evidence was seriously challenged: Q. Can I ask you to take up your first affidavit Mr Matchett, the affidavit sworn on 19 May, the affidavit behind tab 45 in the Court book? Can you come please to page 7 of that affidavit, page 729 of the Court book? Can I take you to paragraph 45 of that affidavit? When do you say that Gerard Obeid informed you that he had secured a contract for the supply of Smartpoles for the development of Dubai Marina? A. I can't recall the date. It was during the time that he was travelling to the Middle East on a regular basis. Q. See, Mr Obeid never told you that did he? A. He did tell me that. Q. Do you say you ever saw any document recording or referring to such a contract? A. No, I don't say that. Q. Come to paragraph 46 if you would? It's right to say isn't it that you do not know what material Joshua Abood took to Dubai, correct? A. I can't recall specific instances, dates of him walking out of the office with various things in his hand. What I can recall is him being given various pieces of information, various tools so that he could use those to promote the Smartpole in the UAE. They included the digital presentation, the brochure, various pieces of information and collateral, promotional collateral. Q. When you come to paragraph 47 of your affidavit what do you mean when you say, "I also observed another Streetscape employee, Adam Smith, leave the Streetscape office in Australia with these types of materials". What does that mean? A. He -Adam went and stayed in Dubai for one or two or three periods, I can't recall how many and he would take with him again information that described the Smartpole system. Q. Did you look inside his briefcase before he went, is that what you're saying? A. No, that's not what I'm saying. Q. Is it fair to say you've got no real idea what documents Mr Smith took to Dubai? A. It's fair to say that it was a small office, we all knew what each other was doing and I was aware that he was going over there. So having someone take pieces of material to assist the activity that was going on in the UAE was a normal thing to do. It was cheaper and more reliable than putting them in a package and sending them to wherever he was going to work. Q. Is the extent of your actual knowledge this Mr Matchett, that you knew that Mr Smith was taking something to Dubai to assist him in promoting Smartpoles? A. I don't believe Adam ever promoted the Smartpoles directly, I believe Adam went there to provide technical support to the activity that was going on there I-- Q. What did you mean - finish Mr Matchett? A. --don't believe Adam ever went to promote the Smartpole. Q. What did you mean in paragraph 47 of your affidavit when you said, "When he was leaving for a trip to Dubai to promote the Smartpole"? A. Well that's probably not completely accurate - well it's not accurate. I don't believe he went there to promote Smartpole. I believe - he may have attended meetings with Gerard and Josh and provided technical backup, so if that's promoting then-- Q. Go on, finish your answer? A. That's finished. Q. Are these your words in the affidavit which you swore to Mr Matchett? A. Yes, they are. Q. So you swore using your own words that Mr Smith was leaving for a trip to Dubai to promote the Smartpole, correct? A. Well to clarify he wasn't directly responsible for promoting the Smartpole, that was Gerard and Joshua took on that responsibility. Adam went to Dubai in order to provide technical supports. So if he went to meetings and answered technical questions as part of presentations then that's a form of promotion. Q. Are you saying that you don't know what if any involvement Mr Smith had in promotion so you're speculating, is that what's going on? A. I am speculating about his role in regard to promotion. Q. Just explain how that speculation led you to swear the positive statement that he was leaving for a trip to Dubai to promote the Smartpole Mr Matchett? A. My view at that time was that all trips they were all - before I left Streetscape all of the trips were in the early phase of Streetscape's activity in the UAE and the great majority of the activity that was undertaken in the UAE at that time was for promotional purposes in order to attempt to secure contracts. 96Mr Matchett's evidence concerning the establishment and early relations between Streetscape Australia and Streetscape International was an important aspect of the plaintiff's contention that Streetscape Australia and Streetscape International were one entity. Mr Couper's cross-examination instilled significant doubt as to the reliability of this witness's evidence. For this reason, the Court does not attach substantial weight to Mr Matchett's evidence on the issue of Streetscape Australia's conduct in the UAE. Evidence of Dr Green 97Dr Green is the City of Sydney's expert. He has a doctorate in industrial design and lectures at the University of New South Wales. Dr Green has been involved in litigation concerning Smartpoles for a significant period of time and in that respect has a good knowledge of the field. 98The Court considered Dr Green's evidence of importance as his reports provided an expert opinion as to what constitutes a Smartpole. Dr Green's evidence was also important because it categorised a number of poles the subject of this litigation and in that respect aided the Court in determining whether they are or are not Smartpoles. 99Mr Couper cross-examined Dr Green at length. An important issue that emerged early in the cross-examination was Dr Green's difficulty in defining the essential characteristics of a Smartpole. This is a theme that ran through all of the plaintiff's witnesses: Q. Can we come back to your first report, the report of 19 May. Can we come back to where we were, page 6, page 874 of the Court book. When you refer in that page to the essential design characteristics, should we understand you to mean that a pole must have each of those characteristics before it can properly be described as a Smartpole? A. Not necessarily. Not necessarily. Q. Well in what respect can any characteristic be essential if it can be missing and the pole still be a Smartpole? A. I use the word essential as in the terms of the predominant characteristics. Q. I confess I don't understand what you mean Dr Green. How is - how does essential mean predominant? A. Well that was the terminology that I used. Q. I understand that, I'm asking you how does essential mean predominant? A. These are the principal visual characteristics that define the Smartpole. Q. Did you form a view about how many of the essential characteristics you had to have in order for you to describe a pole as a Smartpole? A. It is the combination of these characteristics which I believe defines the Smartpole. I might add the principal visual and design characteristic of the Smartpole is the upper extrusion where it includes the so-called C tracks. Now I regard this as the absolute essence of the Smartpole, the manner in which the upper extrusion and its C tracks allows the accommodation of a range of accessories that achieve this flexibility and this capacity to be installed and meet many many requirements. 100From the plaintiff's witnesses' the Court concluded that defining the essential characteristics of a Smartpole is very difficult. It is a system and family of poles. In this respect, assessing what is and what is not a Smartpole is always subjective. This was a point emphasised by the defendants: Q. You come to paragraph 34 of your report at page 13, page 926 of the Court book. What do you mean when you say in the second last line, "Its visual consistency extends the family of street poles", is family some sort of design concept, what's it meant to mean Dr Green? A. Well in the - I suppose it might be part of design jargon within the field of product and industrial design as where we differentiate an original product to form spin offs of that original product. So and in some instances there is a family resemblance to the poles, such that the visual language of those within the family look consistent in their appearance. Q. Is the use of the term family one which leads to a very fuzzy comparison between designs Dr Green? A. Only which is defined by visual consistency. Q. So is visual consistency, in order to form part of a family, in the eye of the beholder? A. It is certain characteristics that distinguish that consistency. Q. Would you accept that informed opinion might reasonably differ about whether the S3 pole might properly be regarded as being in the same family as the S1 pole? A. Just repeat that if you don't mind. Q. Would you accept that informed opinion might reasonably differ about whether the S3 pole might properly be regarded as being in the same family as the S1 pole? A. I can't speculate on the opinions of others. Q. I don't understand your answer, are you suggesting that there is some degree of certainty about whether the S3 pole is properly regarded as being in the same family as you put it, as the S1 pole? A. The - I stated that I believed the S3 was part of a consistency, a family if you like, of products that have been caused to differentiate the original design. Now when I answered your question earlier I - I - you said informed opinion, I thought you meant the opinion of others. Q. I did mean the opinion of others, what I'm asking you is, is there room for a legitimate difference of opinion between experts about that question? A. Well of course, there always is. Q. And is that because the concept of designs being in the same family is a concept which has no fixed criteria? A. Well it has criteria associated with key visual elements of the design. 101Despite this subjectivity, it is for the Court to consider the evidence as a whole and determine for itself which poles it considers to be a Smartpole. 102Beyond these definitional questions, in some areas, Dr Green's report was shown to be based on speculation. In particular, when examining the Woollahra Council folder (Exhibit # P7), certain poles, which the witness identified as being Smartpoles in Dubai, were shown to be in Sydney. 103Issue was also taken in cross-examination about the photos on which Dr Green's report was based. The website extract from Streetscape International which was attached to Dr Green's instructions contained very small pictures, which Dr Green admitted could not form the basis of any reasonable assessment. It was Dr Green's evidence that he had the benefit of magnified photos. 104The final matter of significant importance was the defendants' challenge to the underlying logic of Dr Green's conclusions. After protracted debate, the Court granted the defendants leave to rely on the affidavit of Alexander Rhydderch for the purposes only of cross-examining Dr Green ([2011] NSWSC 990). 105Dr Green gave evidence that certain poles in the UAE were Smartpoles. To paraphrase his process of reasoning, the witness said that the poles in the UAE had essential features of the Smartpole. This differed from existing prior art and therefore the poles must have been copied from Smartpoles. 106The affidavit relied on by the defendants was significant because it indicated that contrary to statements in Dr Green's reports, there was patented prior art which was substantially similar to the design of the Smartpole: Q. Having seen these three patents do you accept that the patents to which you had regard for the purpose of your report, did not disclose all of the relevant prior art? A. The patent did not describe these particular aspects of the prior art. Q. And in that respect, reliance on that patent you did not consider relevant aspects of the prior art, correct? A. Firstly I was not asked to consider. Secondly the subject patent applies to multi function poles. Now the three examples that we've looked at here are utility poles and maintenance free posts but they are not defined as multi function poles, therefore I believe that the patent attorneys FB Rice would've considered the prior art to be Streetpoles and describe the prior art associated with Streetpoles. Q. Do you accept that an obvious application of the pole and bracket system shown in figures 3 and 5 of the patent 4142343 of March 6 1979 was for use in Streetpoles? A. In this particular example the patent refers to a system of locating components that might be connected to this utility power pole. You have stated that this would be applied to Streetpoles. That's my understanding of your question. Q. My question is: Would it not be an obvious application of that system to apply it to Streetpoles? A. It could be. It could be, yes. ... Q. No, I'm asking you now Dr Green, having seen this patent do you accept that it is relevant prior art considering questions about the uniqueness of the Smartpole? A. I would think it would be very important prior art in the consideration of the multi function pole, I would consider it as quite important. 107In this regard, the defendants were successful in raising doubt concerning the process of reasoning adopted by Dr Green. 108In re-examination, Mr Jucovic attempted to clarify Dr Green's position. Importantly, Dr Green explained that on reflection and after properly considering the patents out of the witness box, he did not consider the patents relevant prior art. The witness gave brief reasons for his views. 109Despite the witnesses' later explanation, ultimately whether Dr Green considered the patents prior art is irrelevant. Mr Couper successfully established that there were patents available in the public domain that contained features of the Smartpole which Dr Green described as unique. Whether or not these should have been considered by Dr Green is irrelevant. The reports suffered from a false logic and in light of the patents annexed to the Rhydderch affidavit, Dr Green's conclusions that the poles in the UAE must have been copied from the Australian designs cannot be maintained. 110While Dr Green's reports suffered from significant logical flaws, he was clearly an informed witness with a good knowledge of the field. He was also shown to be honest and where challenges to his integrity were raised, I accepted Dr Green's evidence. Ultimately, I found Dr Green's evidence informative, but viewed it with significant caution. The Court formed its own conclusions from the factual material put forward by the witness. Although his explanations were of great assistance, their probative value was diminished in light of the flaws discussed. Sundry evidence 111The plaintiff also relied on multiple affidavits by solicitors at Holding Redlich. The majority of this material related to the day-to-day conduct of the hearing and often was filed for the sole purpose of annexing relevant material. 112The one affidavit of importance was Ms Fernandez's of 25 January 2011. In this affidavit, Ms Fernandez sets out a conversation she had with Mr Fathi. On Ms Fernandez's evidence, Mr Fathi explained that Streetscape Australia was involved in installing poles in the UAE. Despite Ms Fernandez's best endeavours, Mr Fathi did not swear an affidavit in these proceedings. Without more, the Court does not attach any weight to this evidence. The defendants' witnesses 113The defendants also relied on a number of witnesses to support their case. The detailed cross-examination of these witnesses showed that some witnesses and in particular Mr McLeod, Mr Vladetta and Mr Deaker did their best to recall the events in question and by and large were accepted. The Court considered their evidence of significant value. However I had considerable reservation in accepting the evidence of Mr Moses Obeid, Mr Gerard Obeid and Mr Joseph. I approached their evidence with a high degree of caution and was careful to consider it in light of the contemporaneous documentary evidence in the case. Evidence of Moses Obeid 114Mr Moses Obeid is the second defendant in these proceedings and a director of the first defendant, Streetscape. Despite lengthy cross-examination, Mr Obeid remained polite and patient in the witness box. Notwithstanding Mr Obeid's demeanor, I formed an unfavorable view of the truthfulness of his evidence. The witness was shown to have manufactured key aspects of his affidavit. Further, under cross-examination, Mr Obeid attempted to deflect evidence that he saw as damaging by denying knowledge of the events or documents. The Court also noted that certain aspects of Mr Obeid's evidence in cross-examination contradicted the defendant's pleaded case. Mr Obeid's evidence concerning the City's representations 115The entirety of the early part of the cross-examination focused on the events leading up to the two deeds of variations and the evidence deposed by Mr Obeid concerning representations apparently made by the City. After protracted cross-examination, Mr Obeid made an important admission, which proved detrimental to the defendants' case. Mr Obeid gave evidence that he did not rely upon the City's representations with respect to international marketing rights when entering the deeds. Q. You did not enter into the second deed of variation in reliance upon any holding out by or representation by the city that you would be granted international marketing rights? A. At that stage international marketing rights didn't really have a great deal more to do with it. Q. Is the answer to my question yes? A. Just repeat the question again sorry. Q. You did not enter into the second deed of variation in reliance upon any representation by the city that you would, that is your company would be granted, international marketing rights? A. Not international marketing rights no. Q. So the answer to my question is yes? A. No, the answer to your question is yes. 116The plaintiff then turned to Mr Obeid's case concerning the City's alleged representations to sell the intellectual property in the Smartpoles. Mr Jucovic raised questions as to Mr Obeid's state of mind prior to entering the deeds of variation. I formed the overall view that in respect of the sale of Smartpoles, the City and Streetscape were very much aware of each other's concerns at the time of entering into the deeds of variation, however the City did not represent that they would sell the intellectual property to Streetscape. Indeed on Mr Obeid's own evidence, the City indicated the contrary: Q. The City's position, as at this date, and as the date of entry into the second deed of variation, was as follows, was it not. Firstly, there were probity processes which had to be gone through. Correct? A. Yes sir. Q. You understood that? A. Of course. ... Q. You knew did you not, that the probity process required the City to be transparent and open in its processes. Yes sir, I did. Q. And not to allow it to enter into agreements in relation to the sale of the intellectual property to the Smartpole. Correct? A. Correct. Q. You knew that that was the City's position as at the date of entry into the deed of variation. Correct? A. Yes. 117Further doubt was cast over Mr Obeid's evidence that the City represented there would be a sale of intellectual property considering there was no evidence that the price of the intellectual property was discussed. 118I formed the view that Mr Obeid had no more than a hope and desire to purchase the intellectual property in the Smartpole. The City understood this position, but did not represent to Mr Obeid that a sale was a certainty, nor did Mr Obeid rely on any representation when entering into the deeds of variation. 119The next representation addressed was the claim that the City represented to Streetscape that $6 million worth of work was forthcoming. Mr Jucovic suggested that the City did not make that representation, but rather Mr Obeid deduced this from examining the City's budget. Mr Jucovic was not able to take this beyond suggestion, however Mr Joseph's subsequent evidence supports the plaintiff's contention. Streetscape's motives for signing the deed 120It is the plaintiff's case that Streetscape was not induced to sign the deeds in reliance on any representations, but rather because of commercial considerations. 121The plaintiff made the point that on one view of the facts, the deeds represented a good commercial deal for the defendants. The Deloitte audit found that in excess of $700 000 was owed, however the deeds only required a $400 000 payment. It was suggested that this was sufficient to induce Mr Obeid to enter into the agreement: Q. There were claims at your meetings with the City, in relation to this schedule. Correct - but at the end of the day, you negotiated a settlement. Correct - a compromise? A. We negotiated an all-encompassing compromise because of representations that were made. Q. Mr Obeid, you negotiated a compromise on the City's claim for $735,000. Correct - and that compromise that you would pay 400,000. Correct? A. No, sir. I don't believe that that is correct... 122The plaintiff also questioned Mr Obeid at length about the consequences for Streetscape not entering into the deeds. Mr Obeid acknowledged that the potential for litigation was real and this would have been detrimental: Q. You had a choice didn't you, of compromising the claim of $735,000 or going to Court about that sum? A. Yes. Q. And you had a choice about asserting your claims to the intellectual property to the S2, or going to Court. Correct? A. Going to Court, sir, was not really in my mind. There is no benefit to Streetscape is going to Court and no benefit to any party in going to Court. That was always my position. Q. Your position was that you would rather maintain good relations with the City than to go to Court. Correct? A. Yes. Q. And it was in your interests - that is Streetscape Projects interests - as at 30 March 2007, to maintain your good relationship with the City at all levels. Correct? A. I would say that that's a fair comment. Yes. 123Further reference was made to Streetscape's global vision and the consequences of not entering into the deeds. Exhibit P #27 was an email from Moses Obeid to Daniel Joseph. In this email Mr Obeid makes clear that investment banks have told him that unless there is certainty as to Streetscape's entitlements to use the Smartpole intellectual property, they will not fund Global Light and Data Solutions. Mr Jucovic suggested that it was Mr Obeid's vision for a global enterprise which induced him to enter into the deeds and unless he accepted the final terms set out in the deeds the consequences for Streetscape would have been serious: Q. As you will agree, "any bank that we have to or do speak to including Mac, FBR, Investec and B&B, have all said this is critical". Correct? A. Yes. Q. You were - at that point, being told by Macquarie Bank, FBR, Investec and Babcock & Brown, that it was important for Streetscape Projects to demonstrate an entitlement, not only to the S2 and the S3 but the S1 as well. Correct? A. To acquire it - to acquire the S1. Q. They were telling you that you needed to demonstrate that you had intellectual property. Correct? A. No. They were telling me that we - the aim would be to acquire it; to buy it from the City. The concept behind that sir, was to eliminate potential competitors coming into the market at a later stage. Q. I understand what you're saying but I'm trying to understand this, Mr Obeid, What I'm putting to you is that - as I understand your answer - it was critical to acquire both the S1 and to demonstrate ownership to the S2 and the S3. Correct? A. Well, yeah, that would be a fair comment. Q. Critical to the future strength of the business model - do you see that? A. Yes. Q. The future strength of the business model depended upon a demonstration of ownership of intellectual property. Correct or incorrect? A. Well that would be correct Mr Obeid's evidence regarding the Streetscape International issue 124The most substantive area of cross-examination focused on Streetscape Australia's links with Streetscape International. There was a plethora of seemingly contradictory evidence on this issue. After cross-examination I formed the view that Streetscape Australia and Streetscape International operated as separate commercial entities but did business under the same holding company. Thus while there was a technical separation, there was substantial overlap and co-operation such that I formed the view that Streetscape was one parent company with two subsidiaries. This was essentially a condensed model of the Global Light and Data vision exhibited repeatedly throughout Streetscape' presentations to investment banks. 125I primarily formed this view on the basis of the contemporaneous documents. Invoices and emails indicated that parts of the poles being used by Streetscape Australia were produced in the same factory as Streetscape International. Further, important parts including the extrusions were built to the same specifications. 126The most damaging part of the plaintiff's cross-examination was the series of individual bundles put before Mr Obeid relating to Streetscape's dealings in other countries such as Romania and Canada. In light of the documentary evidence put before the witness, Mr Obeid's claim that Streetscape International was an overseas competitor was proven patently false. 127Particularly damaging for Mr Obeid in the witness box was the Memorandum of Understanding and the subsequent emails contained in Exhibit #P35. This document evidenced a clear intention on the part of Streetscape Australia and International to work together and indicated that they were essentially two branches of the same overriding entity. Indeed Mr Joseph, on a Streetscape letterhead and signing as Chief Operating Officer of Streetscape, directly acted on behalf of Streetscape International Holdings fze. The Court considered the letter of importance and it is extracted below: 18 th September 2007 Mr John Elcham Kingdom Holdings SRL 9-9A Prof. Dimitrie Pompeiu, sector 1, Bucharest, Romania RE: STREETSCAPE AGENCY AGREEMENT Dear John, I understand that you have generated a significant sales lead in the territory of Romania. I am pleased to confirm that Streetscape International Holdings fze would be happy to appoint your company or its nominee as Agent for Streetscapes' products in Romania. We can commence the process of establishing the Agency Agreement once you have confirm ation of your dealings with the authority responsible for implementing the Smartpole System. I understand a meeting is imminent. We ask you to note our Non-Disclosure Agreement signed on 27 April 2006 of which remains on foot. As you would be aware Stree tscape products supply for your region operates from the office in the UAE port city of Dubai. The agency agreement is bound by terms and conditions that can be dealt with in greater detail at the appropriate time. A draft agreement will be forwarded to you in due course. Should you have any further questions in relation to this matter, please do not hesitate to contact the undersigned. Yours faithfully Daniel Joseph Chief Operating Officer Streetscape Projects (Aust) P/L 128The evidence of Streetscape Australia and International being one entity was strengthened when Mr Obeid was shown Exhibit #P37, a bundle of documents relating to the Macquarie Bank presentation and the FBR presentation. 129The evidence in relation to Streetscape Australia's overseas operations concluded with Exhibit # P38. This was a document that set out correspondence Streetscape Australia had with a strategic consultancy firm, Venture Group. 130Mr Obeid acknowledged in cross-examination that he was given the opportunity to make any corrections to this document. Despite being given this opportunity, the report clearly indicated that Streetscape Australia had sold poles in Dubai and that the Obeid family owned a 50% share of Streetscape International. Mr Obeid claimed that the 50% share referred to Mr Joshua Abood. Whatever the true state of affairs in this regard, Mr Obeid's claim that the entities are separate is negated by the express representation by Streetscape Australia to Vic Roads (Exhibit #P39) that Streetscape Australia and Streetscape MENA have the same parent company. 131At the conclusion of cross-examination it was clear that the separation between Streetscape Australia and Streetscape International was only for billing purposes. In terms of co-operation and commercial opportunities they operated as subsidiaries of the same entity. Any evidence given by Mr Obeid to the contrary was false. Confidential information 132The final area of cross-examination concerned Streetscape Australia's disclosure of confidential information to Streetscape International. Mr Jucovic suggested that as part of Streetscape's endeavour to establish a supply chain in Dubai Streetscape handed the confidential designs over to Streetscape in Dubai. Credit 133Aside from the contentious issues, an important aspect of Mr Obeid's cross-examination related to credit. The defendants rely on Mr Obeid's evidence to support their case. Therefore the issue of Mr Obeid's credit was therefore one of the most important of the case. 134The inconsistencies in Mr Obeid's evidence caused the Court to form an unfavourable view of the credibility of Mr Obeid's evidence. Mr Obeid exhibited a tendency to provide vague and unresponsive answers when questions were raised which were damaging to his case. At numerous times Mr Obeid denied seeing documents that it was later proven he had full knowledge of. The first instance of this tendency arose out of the cross-examination relating to Streetscape's dealings with Macquarie Bank and FBR. I was concerned that Mr Obeid was attempting to hide the extent of Streetscape's involvement with investment banks and shield from evidence Streetscape's global vision. Certain materials within the presentations to the banks contained information potentially damaging to the defendants' case. This included the overall structure of Global Light and Data and its inclusion of Streetscape International within its broad structure. Mr Obeid attempted to deflect responsibility for the contents of the presentation onto Mr Joseph and away from Streetscape to Streetsmart infrastructure. Mr Obeid's answers were surprising considering Streetscape's logo was on the foot of the presentation. 135This tendency to provide vague and at times untruthful answers in areas that were potentially damaging to the defendants' case was repeated in other areas. In the three tenders to the City, Streetscape provided a definition of intellectual property that Mr Obeid appeared not to accept in the witness box. To avoid accepting the definition put forward by Streetscape in the tenders, Mr Obeid stated that he did not read the tenders in detail and was merely briefed on their contents. The Court did not accept that Mr Obeid would fail to carefully examine a document, which was so critical to the future of his company. This view was reinforced by the fact that Mr Obeid signed statutory declarations at the end of the tenders indicating that all the information contained within the tenders was true. 136The statutory declarations were also significant in that at point 4 of the document, Mr Obeid swore that he was not aware of any matter which would affect the City's decision to award Streetscape the tender. However, shortly before signing this declaration, Streetscape, with Mr Obeid's knowledge, registered the S2 design. Mr Obeid admitted that this design was registered to assert rights against the City in respect of the S2 pole. Q. At that stage you were attending to assert as against the City, ownership of the S2, correct? A. Yes that's correct. Q. It was your intention when you registered the design, when the Streetscape Projects made an application for the registered design to assert ownership of the S2, is that correct or incorrect? A. Well it would be an assumption as to why Robert Matchett made the application but of course it would've been to assume ownership of it. Q. Mr Obeid, Mr Matchett made the application at your request? A. No he did not sir. Mr Matchett was an owner of the company. He brought the investment of this company to me. I was merely an investor. The concept, the idea, how it would all work, was Mr Matchett putting to me. At the early stages sir up until Mr Matchett left, I was merely an investor. Q. I wonder if you'd mind just attending to my question. Perhaps I'll ask another question. A. Certainly. Q. I put to you that you knew that Mr Matchett had been instructed to register the design, correct or incorrect? A. That's incorrect. Q. And you knew that your brother Gerard would have given such an instruction, correct or incorrect? A. No. Gerard would've given any instruction, he wouldn't had any authority over Mr Matchett. Q. And you yourself gave such an instruction, correct or incorrect? A. Incorrect. Q. You knew however that an application had been made, correct? A. Yes that's true. 137Considering the importance that the City placed on protecting their intellectual property, this is a matter which should have been disclosed to the City. This failure to disclose such an important issue and the subsequent signing of a statutory declaration, which swore there was no matter of which the City should be aware, weighed against Mr Obeid's credit. 138The Court drew a further negative impression of Mr Obeid's credit from his evidence concerning Streetscape's website. On Monday 5 September 2011, commencing at page 59 of the transcript, Mr Obeid gave evidence that he did not look at Streetscape's website prior to it being launched. His evidence was as follows: Q. In about 2005 or 2006 you engaged Blue Dog to create a new website, did you not? A. Daniel did, yes. Q. And he did it with your authority? A. Well I had to sign the cheque. Q. He did it with your authority? A. Well, yes, you could-- Q. What was put on the website was done with your authority? A. No. That was, that was-- Q. It was put on the website by Mr Daniel Joseph. It was done with your authority, was it not? A. Daniel had the authority to act in a means that he saw fit. Q. So that you delegated to Mr Joseph all necessary power to put up and maintain the website, did you not? A. Yes, sir, when Daniel became a manager of Streetscape I basically took a backward step from the business and allowed him and John to run the business. Q. Did you see the website that Mr Joseph caused to be put up before it was put up? A. No. Q. After it was put up? A. Yeah, look, I may have looked at parts of it afterwards. I can't tell you how frequently. Q. But not before it was put up? A. I don't believe I would have. There was a series of special photographs taken for the website. I do recall looking at the photographs that were to be posted on the website. Q. And you don't resile from the proposition that what is on the website is on the website pursuant to your authority and consent, correct? A. Sir, if you mean by authority and consent that I would have had to have approved everything that went on the website that would not be correct. It would just simply not be feasible for me to oversee absolutely everything that the staff did. 139However, when Mr Jucovic showed the witness Exhibit # P34, a bundle of documents which contained correspondence relating to the website, it was evident that this evidence was untrue. Of particular interest was the email from Jaeme Lin to Candice Dunn of 7 December 2005. Commenting on the website design, Jaeme Lin indicated that the CEO, Mr Obeid, had reviewed the website and asked for a section of the website to be removed. In the witness box Mr Obeid confirmed that he made this request. 140Paragraph 162(d) of Mr Obeid's 5 February affidavit was also shown to be blatantly false. In that paragraphs Mr Obeid deposed: "I refute the assertion that I gave Streetscape International permission to use SPA's website or that I saw benefits in sharing costs of a website." 141However, in an email from Mr Joseph to Streetscape International to which Mr Obeid was ccd, Mr Joseph specifically invites Streetscape International to adopt their website: From: Daniel Joseph [Daniel@streetsmart.com.au] Sent: Monday, 13 February 2006 9:30 To: 'Mohan Kumar' Cc: 'Joshua Abood', Moses Obeid Subject: FW: [#46631088] Google AdWords proposal for Streetsmart Infrastructure Group (Confidential) Attachments: Streetsmart_Infrastructure_Group_Google_Proposal.pdf Mohan What are your thoughts with respect to this? We are within the final two weeks from launch of our new website. I must admit, that I would like you guys to adopt our new website as well and tailor it to MENA. I can get this done very cheaply for you. With respect to this email though, what are your thoughts to putting a campaign together through google. I am aiming for the search engine optimisation to cover (n)both google and yahoo. Look forward to your thoughts. Regards Dan PS, I will send over a large file which is the new streetscape website for you guys to view. We will launch in test mode next week and you will be able to view it online. 142This was not simply a case of mistaken evidence from the witness box. I formed the view that both in Mr Obeid's affidavit and oral evidence, the witness falsified evidence in order to assist his case. Evidence of Daniel Joseph 143Mr Joseph became involved with Streetscape in 2005 as an investor and was its Chief Operating Officer from February 2006 until very recently. The witness' family trust remains a shareholder. Mr Joseph had a good command of the evidence and sequence of events on which he was cross-examined. The cross-examination proceeded in a similar fashion to Mr Obeid's. That is, Mr Jucovic focused on the contentious issues seriatim. 144The first issue addressed was the nature of the representations made by the City to Streetscape. Mr Joseph's evidence relating to the representations 145On the defendants' case, Streetscape entered the deeds of variation based on representations made by the City, however under cross-examination Mr Joseph's evidence indicated a contrary version of facts. 146Mr Joseph gave evidence that the City would not listen to Streetscape's concerns leading up to and at the time of entering into the first deed of variation: Q. Mr Joseph the City was put on notice of issues that Streetscape Projects wanted to have resolved, right, as at 30 March? A. No. The City refused to listen to anything that Streetscape wanted resolved as at 30 March. Q. Mr Joseph I'm not asking you whether they listened or not, what I'm asking you is that the City was put on notice of issues which Streetscape Projects wished to resolve, correct or incorrect? A. Incorrect. Q. So it's your evidence is it that the City refused to listen to the issues that Streetscape Projects wanted resolved, is that correct? A. Yes. Q. And had refused to listen to the issues which Streetscape Projects wished to resolve during the whole of the period up to and including 19 October 2007, is that correct? A. In fact I would go further, the City has never listened to anything that we wanted to say, ever, period. Q. And that was especially so in the period between February 2007 and 19 October 2007 is that correct, is that your evidence? A. Yeah I would say so. In fact I think I wrote a letter which was never responded to somewhere in the early part of April. That's why I'm absolutely certain the issues were not resolved at 30 March. 147The witness then gave evidence that the City repeatedly told him that they would not entertain Streetscape's issues until the City's were resolved. This evidence is wholly inconsistent with the defendants' allegation that the City made representations that their outstanding issues would be met after signing the deeds: Q. Mr Joseph the position as at 30 March 2007 was that the City had communicated to you a willingness to discuss Streetscape Project's outstanding issues, correct or incorrect? A. I would say that's a subjective question. In my opinion no. Q. Had the City communicated to Streetscape Projects prior to 30 March a willingness to participate in discussions to resolve Streetscape Project's outstanding issues? A. No. Q. So far as you were concerned, as at 30 March the City would not seek to assist Streetscape Projects to resolve its outstanding issues, is that correct? A. The modus operandi of the City was consistent every single time. They wanted to resolve their issues, would not listen to our issues. So at 30 March the best I could do was pen a letter and say these are some of the issues that we have. If you call that communicating and then - as I said it's subjective and dialogue, well my opinion on the matter was no, I don't think they actually wanted to engage and they did not engage. 148Mr Joseph also gave evidence that he did not accept or believe the representations, which the defendants plead, induced them to enter into the deeds of variation: Q. You believed that it was unlikely that $6 million worth of work in aggregate would come to Streetscape Projects, correct or incorrect? A. Correct. Q. Now just going back to your answer to me in relation to the sale of the intellectual property you referred to various factors in your answer to me and I wanted to ask you something about those factors. As I would understand your answer, Mr Joseph, what you were saying to me is that there were various reasons in your mind which you thought would lead the City to sell to Streetscape Projects the intellectual property, correct or incorrect? A. Correct. Q. And as I understand your answer you were making an assessment as a businessman as to the likely reasons why the City would enter into a transaction with Streetscape Projects, correct or incorrect? A. Based on my understanding of specifically clause 5 of the second deed of variation, correct but obviously upon legal advice given then and there. 149Mr Joseph gave further evidence that he communicated his views as to the unlikeliness of the City resolving Streetscape's issues to Mr Obeid: Q. I'll start again. During the negotiations you formed the view that there was no $6 million worth of work available from the City going into the future? A. No that's not correct. There's certainly was in excess of $6 million worth of work. Miss Hobbs even later in clarification to this letter in fact I said to Moses to go forward and clarify it. Miss Hobbs then sends him an email-- Q. Mr Joseph, you formed the view as I understand your previous answers and correct me if I'm wrong? A. Sure. Q. During the course of negotiation there was no assurance of $6 million worth of work correct or not? A. My personal view is that if they were not prepared to ink it in writing I you know-- Q. There was no assurance of it? A. There was no assurance of it. Q. Thank you-- A. But it was certainly what persuaded Moses in his decisions. Q. When you say "what persuaded Moses" you had a discussion with Mr Obeid-- A. Mm-hmm. Q. And you told him what you thought correct? A. Certainly. Q. You told him that he ought to get an assurance of $6 million worth of work included in a written agreement with the City correct? A. Absolutely. Q. And you told him that the City could not be trusted correct? A. He said to me that he trusted Robyn 150Considering the evidence given by Mr Joseph, the defendants' claim that the City made misleading representations and that Streetscape relied on them is unsustainable. Mr Joseph's evidence relating to Streetscape International 151The next area of cross-examination was Streetscape Projects Australia's interaction with Streetscape International. Mr Joseph sought to draw a clear distinction between multi-function poles and Smartpoles. Mr Joseph defined a Smartpole very narrowly as a particular brand of multi-function pole which the City owned: Q. You insist on using the word multifunction poles, do you? A. Smartpoles is a brand sir which - which Streetscape promoted. Q. So your attitude is if you don't call it a Smartpole then it isn't a Smartpole is that what you're saying to his Honour? A. No sir. A Smartpole is as defined in the manuals. That's what a Smartpole is. Streetscape promoted that brand of product. We had other brands of product. 152Yet Mr Joseph admitted that the multi-function poles which Streetscape installed in Singapore were substantially identical to the Smartpole: Q. And you were going to provide poles which contained aluminium extrusions of the same type and nature as the aluminium extrusions that you find in Smartpoles erected throughout Australia, correct? A. On Adepoles correct. It's the exact same extrusion sir as I'm led to believe. I'm not an engineer. Q. And it's the exact same extrusion as found on Smartpoles within the City of Sydney correct? A. I believe so, yes. Q. And you're trying to assist the Court in your evidence Mr Joseph are you? A. Sorry I don't understand the question. Q. By trying your best to assist the Court in your evidence are you? A. Yeah, yes sorry. Q. And you know that these negotiations came to fruition? A. Ultimately yes. Q. And poles were provided for the Orchard Road contract for Orchard Road in Singapore, correct? A. A tender - a tender was entered into and Streetscape - well our agent secured the tender. Q. And you supplied the poles according to that tender? A. We supplied poles. Q. You supplied the poles according to that tender? A. You're now asking into a technical element. I don't know if it was exactly the same pole as what was tendered. In fact I sincerely doubt it would have been. Q. Five poles according to the tender which contained exactly the same extrusions - aluminium extrusions as you find on poles known as Smartpoles in the City of Sydney? A. Sure. 153Ultimately, the Court found that this distinction was artificial and that the City owned the poles installed in Singapore. 154The witness was also cross-examined over a series of letters written by Streetscape Australia to various entities in which it was clear that Mr Joseph considered Streetscape Australia and Streetscape International as one entity operating together. Streetscape International made the same representations. One such example of Streetscape International regarding Streetscape Australia as part of the same parent company is contained in an email from Mohan Kumar of Streetscape Dubai to BPO: From: Mohan Kumar mohan@streetscape.ae Date: Thu, 4 Aug 2055 17:43:46 =0400 T: andy.coney@bpo-solutions.co.uk, andrew.ramshaw@bpo-solutions.co.uk Subject: Meshhopper for Sydney Dear Andy, It has been long since we last corresponded. Pleased to inform you that we have signed few interesting contracts in Dubai for rolling out Smartpoles. Important ones are Dubai International Financial Centre and two major roads of Dubai city for Dubai Municipality. The Palm Jumeirah project is going on but it is one year behind schedule and hence we did not get chance to get back to you for Meshhopper. We have already introduced the technology to the project and we will contact you at the right point of time. In the meantime, our Australia office (emphasis added) has intensified their offerings in communication related equipment like Surveillance, Variable Message System, eBanners, etc. A dedicated division called StreetSmart has been set up to develop system in co-ordination with Government Authorities... 155Any separation the witness sought to draw between Streetscape Australia and Streetscape International was shown to be false in light of Streetscape Australia's Indian tender. In this document, Streetscape Projects Australia makes unequivocally clear that they have operations in the Middle East. Indeed, the company listed the Palm Island Jumeirah and Dubai Marina projects as examples of the company's work. Further, Streetscape lists as its revenue a combination of its Australian and International branches. In light of this evidence, the Court does not accept that Streetscape Australia and Streetscape International are distinct entities. 156This link was made even clearer in an email from Mr Joseph to Andie Laight of 27 November (Exhibit # P52). This email, which formed part of Streetscape Australia's tender for the London Olympics, states under the heading "Who are Streetscape Projects" that "In 2002, Streetscape vested knowledge, skills and IP to its Middle East subsidiary based in Dubai...". I do not accept the explanation given by Mr Joseph at paragraph 58 of his 27 July 2011 affidavit that this statement was not intended to convey a legal meaning. From all the documentary evidence, it is clear that Streetscape was one entity with an Australian and a Middle Eastern subsidiary and the statement in Exhibit #P52 intended to convey this fact. 157It was clear from the cross-examination that Mr Joseph sought to give speeches in aid of the defendants' case and was not prepared to make basic concessions in cross-examination even in the face of damning documents. A prime example of this is Mr Joseph's insistence that it was Streetsmart Infrastructure Group and not Streetscape projects that pursued the planned business association with Cisco in the Middle East and the related agency arrangement with Streetscape International. Mr Joseph sought to draw fine distinctions to aid the defendants' case when it was clear that the documents indicated a contrary position: Q. You referred to Mr Joshua Abood as the managing director of Middle East operations, "our managing director of Middle East operations"? A. The managing director? Q. You say that, "our managing director of Middle East operations". That's Mr Joshua Abood of Streetscape International, is it not - look at the second paragraph, Mr Joseph? A. Alright. Q. You referred to Mr Joshua Abood as, "our managing director of Middle East operations. Correct? A. Bear in mind, I'm at Streetsmart. Yes. As far as I'm concerned, he's acting as my agent to assist me to get technology. Q. Mr Joseph, you realise that this email which you have been asked to comment on, is an email which was written by you in the ordinary course of business, in attempting to obtain business that you were engaged in, in February 2006. Correct? A. As Streetsmart. Correct. Q. And you intrude in your answer for Streetsmart, because you realise that the way in which you were expressing yourself in this email, is inconsistent with the position with which you wish to maintain with the Court as to your contact with Streetscape International, in the second half of the year 2005 and thereafter? A. No, sir. No, not at all. 158For these reasons, Mr Joseph's evidence could not be accepted at face value unless his evidence was supported by contemporaneous documents or corroborated by other witnesses whose testimony was accepted. Evidence of John McLeod 159Mr McLeod is the General Manager of Streetscape and has worked for the company since 1999. For two short periods, Mr McLeod worked in Dubai with Streetscape International and was involved in the Dubai Marina project. The witness gave evidence about his involvement with Streetscape over this period. Mr McLeod's credit 160In my view Mr McLeod was a good witness who took his obligations to the Court seriously. The witness provided truthful and informative responses in cross-examination, even where this evidence was contradictory to the defendants' case. 161The witnesses' evidence was however shown to be false in one significant area. In paragraph 22 of Mr McLeod's 27 July 2011 affidavit, the witness swore that he signed the Indian tender document. However, in the witness box Mr McLeod denied signing this document and said that his signature was placed on the bottom of the pages electronically. Mr McLeod seemed distressed about this topic and was particularly shaken when Mr Jucovic suggested to him that he was lying for the benefit of the defendants' case. Considering Mr McLeod's conduct in the witness box throughout cross-examination, I do not accept that he was lying for the benefit of the defendants' case. Rather, I accept that the witness was simply mistaken at the time of swearing his affidavit. Mr McLeod was clearly under pressure at the time of swearing his final affidavit. It was drafted quickly in response to a late amendment to the plaintiff's case. In these circumstances, it is understandable that an entirely honest witness could become confused, notwithstanding a genuine attempt to assist the Court in giving truthful evidence. Mr McLeod's definition of a Smartpole 162The witness defined the City's rights to a Smartpole very narrowly. I accept that Mr McLeod's belief as to what constitutes a Smartpole was genuine and he acted in accordance with this belief. 163The witness explained that in his view, whether the City had the intellectual property in a multifunction pole did not depend on whether the pole contained an extrusion considered the City's intellectual property pursuant to the Licence Agreement or deeds of variation, but rather depended on whether Streetscape had supplied that pole to the City: Q. The position is that you have documents relating to poles? A. Yes. Q. And those documents are withheld on the basis that the City didn't purchase those poles, is that correct? A. Correct. It's simply yes. If we haven't sold it to the City then we don't believe they're entitled to it. Q. So, for instance, if you sold it to another city in Australia, you don't believe that the city is entitled to it, is that correct? A. I don't believe the City are entitled to it, that's correct. Q. I wonder if you could answer my question. As an example, if you've sold poles to the Willoughby Council, you don't believe that the city is entitled to those documents, evidence that relate to those poles? A. Well the Willoughby City Council poles, they requested a particular design and we designed it for them and we supplied it to them, and we don't believe it's owned by the City of Sydney. Q. And just to be clear those poles use S1 extrusion? A. And the S2 extrusion. Q. And the S3 extrusion as well? A. No, they do not. Q. So I just want to ensure that we've clarified the position? A. Yes. Q. There are a number of places throughout Australia to whom you have sold poles? A. Yes. Q. In respect of which you have documentation? A. Correct. Q. And those poles used one or a number of the S1, S2 or S3 extrusions? A. Correct. Mr McLeod's evidence concerning Streetscape Australia's relationship with Streetscape International 164Under cross-examination Mr McLeod acknowledged that he was involved in the development and roll out of 750 Smartpoles for the Dubai Marina project. The witness accepted that Streetscape Australia was invoiced for the extrusions sent to Dubai. These invoices were contained in Exhibit # P59. 165Mr McLeod also candidly acknowledged that Streetscape Australia and Streetscape International used the same supplier for important parts of multi-function poles. 166Further Mr McLeod gave evidence about the co-operation between Streetscape Australia and Streetscape International in 2003. It was his evidence that when he left Australia he understood the Dubai Marina project to be a joint venture between Streetscape Australia and Streetscape International: Q. At this stage in 2003 Streetscape Projects was operating in cooperation with the people in Dubai, correct? A. Yes, I would agree with that in 2003. Q. It was supposed to be part of a venture that was being undertaken by Streetscape Projects, correct? A. Well I believe that that's - that was the start of it, definitely. Q. And that was the position so far as you understood it in 2003? A. Well certainly when I arrived-- Q. Is that the position which you understood it during your visit to Dubai in 2002, correct? A. In 2002, in 2002 Streetscape - my trip to Streetscape Projects-- Q. Mr McLeod I wonder if you'd answer my question? A. Okay, sorry sir, could you ask that again. Q. When you visited Dubai in 2002 you understood that was part of a project being undertaken by Streetscape Projects, correct? A. Yes sir, yes sir. Q. And when you visited Dubai in 2003 for a period of approximately four and a half months? A. Yes, yes. 167In re-examination the witness explained that when he left Dubai, he did not believe that the two entities were co-operating with the same degree of closeness. However, as part of the initial co-operation, Mr McLeod took electronic copies of drawings to Streetscape International. 168The overall impression I formed from Mr McLeod's evidence was that Streetscape International was set up as a subsidiary to co-operate with Streetscape Australia. While the entities operated separately on some projects, they shared information, designs and personnel. Mr McLeod's evidence on the delivery up issue 169Mr McLeod's evidence on this issue was unambiguous. The witness indicated that Streetscape is still in possession of design moulds and electronic copies of S1 and S2 extrusions, as well as a variety of modifications to these extrusions. 170The witness did not see this as problematic because it is his belief that unless a pole had been provided to the City of Sydney, Streetscape is not obliged to deliver up the moulds or specifications. This is despite some drawings containing the exact extrusions that the City claims as their intellectual property. 171Mr McLeod also indicated that Streetscape continues to use these designs to build poles. Mr McLeod's evidence on the Adepole issue 172Mr McLeod gave direct evidence that certain Adepoles contained S1 or S2 extrusions. The witness defined an Adepole as a suite of poles sold to the Adelaide Council. Some were multi-function poles containing the S1 or S2 extrusion, while others were standard steel poles: Q. Can we get the dictionary this way, there's a suite of poles known as multifunction poles which are supplied to the City of Adelaide which contain either the S1 or the S2 extrusion, correct? A. Well the Adepole suite was really an idea where at least three types of extrusions, S1, S2 and S3 in conjunction with poles that don't feature an extrusion or an upper extrusion at least and they were all integrated in one sort of visual suite like a range of cars or clothing or something like that. Q. I just want to get some form of dictionary correct and maybe-- A. Adepole wasn't just S1 and S2. Q. It was also S3? A. S3 and another range of poles that also looked like they're from the Adepole suite but they don't feature the track. Q. So there's some with the track? A. Correct. Q. And there's some without the track? A. Correct. 173Again, Mr McLeod maintained that Streetscape had not acted improperly because the City of Sydney did not own the intellectual property in the S1 and S2 extrusions, provided those poles had not been sold to the City. Mr McLeod's evidence about the supply of multi-function poles after the termination of the supply agreement 174Mr McLeod was taken to Exhibit #P20 which contained a series of invoices relating to the supply of multi-function poles after Streetscape's supply agreement with the City was terminated. Mr McLeod acknowledged that Streetscape continued to supply poles containing the S1 and S2 extrusions after the termination of the agreement, but said Streetscape did not supply any of the poles they sold to the City. However, in cross-examination the witness did identify one invoice which on its face indicated that a pole of the same specifications as one sold to the City was supplied to another entity: Q. And that is a invoice of 11 November 2010 to Bovis Lend Lease? A. Correct. Q. And those are S1 poles? A. They're S1 poles and again that order was taken before the end of the licence agreement. Q. And supplied after the end of the licence agreement. A. Yes. Yes, that's-- Q. And can I ask you, they are poles which have been supplied to the city of Sydney. Correct? A. They're of the same specification as the City of Sydney's poles, yes. Evidence of Gerard Obeid 175Mr Gerard Obeid is the brother of Mr Moses Obeid, the second defendant. Gerard has had substantial involvement with Streetscape from its inception and was also involved with Streetscape International for a considerable period of time. 176Mr Gerard Obeid was an unimpressive witness. His lack of recall of commercially significant events was very concerning. Further, there were important contradictions between his affidavit and the evidence he gave in cross-examination. As a result, I do not accept any of the evidence given by Mr Gerard Obeid, unless it is supported by documentary evidence or other witnesses. 177Throughout the cross-examination it was clear that Mr Gerard Obeid was not attempting to assist the Court, but rather was intent on giving evidence favourable to the defendants' case. He stated he did not know the terms of the Licence Agreement and did not know when it expired. This was despite the fact that documents indicated he was at the meeting which discussed the terms of the agreement: Q. Can Mr Obeid be shown volume 10 of the tender bundles. Before I ask you to go to any particular document there I just want to clarify some matters with you. You were involved in the preparation of the tender to the City of Sydney that gave rise to the issue of the licence agreement? A. No, sir. Q. You know that there was a tender called for the grant of rights to the intellectual property under the licence agreement, correct? A. To be absolutely honest, sir, I really didn't - the tender - I really didn't know too much about the tender. I didn't have much to do with the tender. Robert Matchett was the one that was controlling every aspect of the tender and all that process. Q. And is it your case that you - it was something that was done within Streetscape Projects without consultation with you? A. Well I wouldn't have been - yeah I would say because I wasn't - I was more like a dogsbody at that stage, you know I was still learning the craft. Q. And it's your case that you did not read the tender document which Streetscape Projects sent to the City in relation to the licence agreement? A. No sir, I would have just - if I needed to sign something I would have signed it. Q. And it's your position is it that that was left to Mr Matchett? A. Yes, yes sir. Q. And is it also your position that that was left to your brother Moses Obeid? A. Not really sir because I think - well early on in that period Robert Matchett was a big Streetscape Projects. He was controlling, he had the relationships with the City of Sydney. He was controlling that whole tender process you know Streetscape Projects so I'm sure he would have let Moses know what he needed to know but the detail of the Smartpole was only really known by Robert Matchett. The detail of the business of Streetscape was a lot known by Robert Matchett. Moses probably would have been more involved in the financial side of the business. You know if the business needed money I think Moses was a bit involved at that stage. Q. Can I ask you to volume 10, tab 159? A. Sorry sir. Q. Volume 10, tab 159? You see that is an email of 9 October 2001? A. Yes. Q. From Robert Matchett to Petar Vladeta. See that? A. Yes. Q. At page 2332? A. Yes. Q. Now who to your knowledge was Mr Petar Vladeta? A. He was - he worked for the City of Sydney. Q. And this document contained - was sent to you. Correct? A. Yes, by the looks of it, yes. Q. And it dealt with a modified licence agreement for Australia, New Zealand and Spain. You can see that in the heading and from the form of the document can't you? A. Yes. Q. And could I ask you to go to tab 162. Now could I suggest to you Mr Obeid that you attended a meeting on or about 10 October 2001 with Mr Matchett and your brother? A. I don't recall. Q. And present were Mr Vladeta and other officers of the City, Mr Newman and Mr Bill Carter? A. I know Steve Newman. But I've never met a Bill Carter, never even heard of the name before to be truthful. Q. I want to suggest to you that on or about 10 October you took part in a meeting between the City and Streetscape Projects where the terms of the proposed licence agreement were discussed? A. I don't recollect. Q. Could I go back to tab 159? A. Yes sir. Q. What I want to suggest to you Mr Obeid is that you knew on or about 9 October 2001 that Streetscape Projects proposed that it be granted a licence from the City for Australia, New Zealand and Spain. Do you agree or disagree? A. I - well I think we actually asked for the worldwide licence. I don't recall, I don't recall asking for a licence for just Australia, New Zealand and Spain. Q. If you would answer my question. I want to suggest to you that as at 9 October 2001 you were aware that Streetscape Projects was proposing to the City that the formal licence agreement that would be entered into would be for Australia, New Zealand and Spain. Do you agree with me or not? A. Well sir I don't remember this email and I'm telling you what I do remember. I do remember that Streetscape tendered for a worldwide licence which the city put out to tender. That's what I do remember. 178At other points, the evidence Mr Gerard Obeid gave in the witness box was directly contradictory to his affidavit. For example, he denied seeing the FBR presentation that set out Streetscape's global vision. However at paragraph 67 of his affidavit he indicated that he considered this presentation for the purposes of swearing his affidavit. 179The witness also repeatedly refused to answer the questions put to him by Mr Jucovic and instead insisted on providing his own version of events. Frequently these answers were not responsive to the questions put to him. 180For these reasons, I formed the view that Mr Gerard Obeid was not a credible witness and his evidence should not be relied upon, unless corroborated by contemporaneous documents or other credible witnesses. Evidence of Petar Vladeta 181Mr Vladeta swore three affidavits in these proceedings, the first on behalf of the plaintiff and the remainder on behalf of the defendants. Mr Vladeta worked for the City of Sydney between 1995 and 2008 in a legal capacity. He gave evidence of his dealings with Streetscape. Significantly the witness was not involved in the contentious negotiations relating to the first and second deeds of variations. 182I accept Mr Vladeta as a witness of truth. 183The cross-examination was short and focused on the reliability of Mr Vladeta's evidence. 184The only issue of real significance in Mr Vladeta's affidavit, was the conversation with Mr Moses Obeid, he deposed to in paragraph 45 of his 24 May 2010 affidavit. In this conversation Mr Vladeta sets out his recollection of what Mr Moses Obeid told him about representations apparently made by Ms Hobbs. 185I accept that this conversation between Mr Moses Obeid and Mr Vladeta took place, but importantly the conversation is not evidence of the fact that the representations took place. The Court made an evidentiary ruling that limited the use of this evidence to evidence of the conversation, but not as evidence of the truth of its contents. Evidence of Margaret Brice 186Ms Brice has been the financial controller of Streetscape since 2006. She gave evidence of her involvement in the negotiations leading up to the deeds of variation and of her role in Deloitte's audit. 187Ms Brice attempted to assist the Court by giving her best recollection, however it must be noted that despite her endeavours there are no notes of the conversations deposed. For this reason, the weight the Court attached to Ms Brice's recall of Ms Hobbs' representation about $6m worth of work being forthcoming is diminished. I accept that there were discussions about the topic of future work, but the exact nature of these discussions and whether they amounted to representations must be assessed against all the evidence in the case. The Court ' s findings on the critical issues Ruling on the Voir Dire 188It is common ground that during the hearing (and with the consent of both parties) the Court permitted certain evidence to be adduced on the basis that it was to be admitted on the voir dire only. I indicated that the parties would then be given an opportunity in final address to contend either that particular evidence was or was not admissible. This approach was adopted to ensure that the hearing continued at a satisfactory pace. A mainstay of the defendants' contentions 189It is appropriate to first treat with a mainstay contention put by the defendants. 190On a number of occasions throughout the hearing, the defendants sought to traverse the Court's decisions when faced with certain objections to their cross-examination of the plaintiff's witnesses. A number of formal judgments were handed down shortly after the Court made rulings disallowing these attempts. 191Most of the evidence admitted on the voir dire relates to the contention by the defendants that certain drawings or other documents should be put into evidence and made issue of. For this reason, it is appropriate the Court sets out the salient parts of the judgment in City of Sydney v Streetscape Projects (Australia) Pty Ltd & Anor [ 2011] NSWSC 831, to explain why such an attempt should not be entertained. 192Paragraphs [48 - 55] of that judgment read: The loss of confidentiality and no confidentiality issue [48] Under this category, the defendants sought to amend their pleadings to claim that the drawings and specifications in relation to "Smartpoles" were not confidential or alternatively, confidentiality in the designs was lost. Further, the defendants raised a new argument that the drawings were in all material respects the same as those available to Goldspar and on this basis the plaintiff's confidentiality argument failed. [49] The defendants claimed that this pleading is defensive and arises out of serious claims of breach of confidence put against Mr Obeid in the plaintiff's latest amended list statement. Mr Couper submitted that because of the unconventional way in which these allegations are pleaded, it is necessary for the defendants to plead their argument this way. [50] The plaintiff disputed this submission in their overnight written submissions claiming: (1)The proposed amendments are in response to paragraph 32 FACLS which pleads that a disclosure of certain information was in breach of a contract (not a breach of equitable duty). They are not responsive to the pleading in paragraph 32 that there was a disclosure of confidential information as defined in the Licence Agreement. As such, the proposed pleading of a disclosure to the RTA and other sub-contractors or that the information was not inherently confidential is irrelevant to and does not meet the pleading in paragraph 32. As such, it is liable to be struck out as disclosing no reasonable defence and having a tendency to clause prejudice, embarrassment and delay (Rule 14.28). (2)The proposed additional sub-paragraph do not appear to relate at all to the contractual terms which are referred in the existing pleading at sub-paragraph 17(e)(vii) and (viii), namely clause 9.3(a) and 9.3(d) of the Licence Agreement. (3)The plaintiff has requested particulars of the facts, matters and circumstances relating to the alleged "disclosures" and the basis of the allegation of "inherently not confidential" in these sub-paragraphs (see Holding Redlich letter of 25 July 2011, paragraphs 5(c)(iii), (iv), (v), (vii) and (viii)). Until those particulars are provided, the plaintiff is unable to know the case which it has to meet. (4)Notwithstanding the refusal to provide those particulars, the defendants have said they intend to seek to elicit this evidence from the plaintiff's witnesses by way of cross-examination (paragraph 5, CBP letter dated 29 July 2011). Senior counsel for the defendants obliquely referred to this intention in his opening (T36 line 40-50). They have said there are documents which will evidence these matters and which they will seek to include in a tender bundle (para 5 CBP letter dated 29 July 2011) but they are yet to identify those documents to the plaintiff. (5)Once those particulars are provided, they may open up a new area of factual inquiry which will need to be responded to. It may be that that evidence will need to come from some of the plaintiff's existing witnesses, including Mr Newman. [51] In relation to the defendant's newest amendment, being the last part of 17(e)(xi) the plaintiff submitted: (1)Sub-paragraph 17(e)(xi) incorporates the no copyright pleading matters in proposed paragraph 4(a)(2A) and (2B) referred to above. The submissions in relation to those proposed additional paragraphs apply equally here. (2)Further, the introduction of the Issue A Drawings from the Goldspar proceedings causes significant prejudice to the plaintiff as it is required to investigate the creation and use of those drawings in around the period 1996/1997. [52] The proposed re-agitation of the Issue A Drawings would open up a new debate as to the ownership of copyright in those drawings; a debate which lasted four days before Gyles J. Given that the defendants place reliance on Goldspar being the owner of copyright in the Issue A Drawings, the plaintiff would be entitled to argue that KWA Design was the owner of copyright in the Issue A Drawings. This opens up a new and complex area of factual debate between the parties in which it will be necessary for the plaintiffs to investigate the relationship between Goldspar and KWA Design, including taking detailed instructions from at least Mr Matchett and Mr Newman in relation to the issue. It may also be necessary to confer with representatives of Goldspar and issue a subpoena for the production of documents. [53] Contrary to the defendants' submission, this area of factual controversy was not live on the evidence of the parties. There was no pleaded issue in this regard. To the contrary, the detailed chronology in paragraph 4 of the Commercial List Response - upon which the case has been conducted for the past 12 months - commenced with the 6400 Issue A Drawings which were created for the purposes of the 9912 Tender (in around May 1999). [54] I accept if these amendments are allowed, there will also be a debate as the similarities between the Issue A Drawings and the 4930 Issue C Drawings. In order to prepare for such a debate it will be necessary for the plaintiff to confer at least with Mr Newman, Mr Matchett and Dr Green. [55] Finally, Senior Counsel for the defendants submitted that any criticism that these additional paragraphs ought be "somewhere else" in the pleading was a "matter of form" and that the only question is whether the paragraphs "respond to the new case against us". I reject that submission because the submissions are seeking to raise new defences in relation to pre-existing claims which are not the breach of equitable duty claims. 193Paragraphs 68 and following treated with the well-known proposition that the days when the Court would permit a party to blithely, at the last moment, seek to alter its pleadings without a very special reason having been given being long gone. I made the point that to the contrary, the Court takes into account the importance of the litigation proceeding in the fashion in which each party intended. Ambush is no longer tolerated. 194The same judgment treated with the recent decision of the High Court of Australia in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 setting out sections from the majority judgment. The Court also observed in paragraph 72 : "In truth these proceedings are actually now in their ninth day and a considerable period has been set aside for the continuance of the proceedings. There are other litigants awaiting the Courts time. The simple fact of life is that the many changes to the state of the pleadings which would in exorbitantly result if the defendants' alterations to the pleadings were permitted could not be case managed without a further adjournment of the matter probably for a significant period of time. This because of the nature of the proceedings and because of the complexity of the proceedings and because of the delicate nature of the subject matter of the proceedings." Rulings on the voir dire 195For those reasons most of the defendants submissions require to be rejected. The following evidence is not admissible as allowing it would traverse the numerous rulings made by the Court that the defendants are not permitted to raise late issues if these issues would cause significant prejudice to the plaintiff (transcript references given): (1)Steven Newman - 8 August 29:35 to 40:7; (2)Steven Newman - 8 August 41:35 to 43:40; (3)Nicole Schrool - 12 August 15:1 to 18:4; (4)Robert Matchett - 22 August 13:1 - 20:30; (5)Robert Matchett - 22 August 49.11 - 56.40; (6)Robert Matchett - 23 August 2:23 - 21:15; (7)Robert Matchett - 23 August 30:1 - 32:20; (8)Robert Matchett - 23 August 37:1 - 42:37; (9)Robert Matchett - 24 August 5:1 - 7:20. The defendant's contention that the Licence Agreement was ultra vires 196An important contention raised by the defendants was their ultra vires claim. It is necessary to deal with this claim at the outset, as the Court's findings on this issue, will have a significant impact on the remainder of the judgment. 197The defendants' contentions in this regard were as follows : (1)s 51 of the Constitution Act 1902 [NSW] provides for a system of local government for the State and, by s 51 (2), that the manner in which local government bodies constituted and the nature and extent of their powers, authorities, duties and functions shall be as determined by or in accordance with the laws of the Legislature (2)The principal statute governing City, as the Council responsible for the City of Sydney Local Government Area, is the Local Government Act 1993 ("LGA"). Pursuant to section 220 of the LGA, City, as a council, has legal status as a body politic, having the legal capacity and powers of an individual. (3)It does not follow, however, that it may exercise of those powers other than in the proper exercise of its functions and for the purposes of those functions. (4)The purposes of LGA are set out in S7. In the furtherance of those purposes, City, as a council, has the functions conferred upon it by or under LGA : S 21 , or by or under any other Act or law: S 22. (5)Councils have such functions as on so conferred all imposed as required to fulfil the current and future needs of their local communities, in the case of City, the local community of the City of Sydney Local Government Area, and as within councils Charter, set out in chapter 3, LGA (6)Thus S 24 provides : A council may provide goods, services and facilities and carry out activities, appropriate to the current and future needs within its local community and of the wider public, subject to this act, the regulations and any other law (7)Section 3 LGA provides that "A council may do all such things as are supplemental or incidental to, or consequential one, the exercise of its functions". Provisions such as S 23, however, cannot expand the exercise of a council's functions beyond the purposes provided by statute (8)Streetscape contends that the functions and powers so conferred cannot empower a council to authorise a person to exploit property other than for the purposes of, and so were seen, its local community. (9)A council has no function, and thus no power, to be an Australia Wide, or international, entrepreneur and so to exploit asset property rights outside Its Territory. Intellectual property is intangible personal property cannot expand the statutory limitations of councils functions and powers. (10)Streetscape contends that neither the LGA nor any other law provides any statutory basis for the exploitation of intellectual property rights, if any, and whether in "Smart poles" or otherwise, outside the City of Sydney. To exercise any such rights cannot be appropriate to the current and future needs within the local community of the City of Sydney or of the wider public within that area (11)City, by the Licence Agreement, has purported to license the exploitation of "Intellectual Property" outside of the City of Sydney. That purported license is outside its functions and beyond power. Streetscape submits that it follows that the Licence Agreement is ultra vires and avoid ab initio. Dealing with the ultra vires issue 198This allegation by the defendants has little merit. The claims to declarations 4 and 5 must fall away. Section 220 of the Local Government Act 1993 (NSW) is a complete answer to the defendant's contention that the material agreement was ultra vires. This section is a definitive exclusion of any application of the concept of ultra vires as it invests in the City the legal capacity and powers of an individual both in and outside the State. 199Furthermore, the Local Government Act 1993 (NSW) grants the City wide powers with considerable flexibility in the performance of its functions. This is clear from the terms of s 24 which provides that the City "may provide goods, services and facilities, and carry out activities, appropriate to the current and future needs within its local community and the wider public". 200These powers are extended further by s23 of the Local Government Act which permits the City to "do all such things" that are "supplemental", "incidental" or "consequential" to the performance of its function. I accept that these words are of the widest import. This view is consistent with the view expressed by the Court of Appeal in Parramatta City Council v Randr Fazzolari Pty Ltd; Parramatta City Council v Mac'S Pty Ltd [2008] NSWCA 132 at [134] - [135]: [134] Section 24 is drafted in the widest terms. It is entirely permissive and in no way prescriptive. Relevantly, it empowers a council to carry out activities appropriate to the current and future needs within its local community and of the wider public. According to the Introduction, which by s 6 is provided to assist in the understanding of the text of the Act, that function includes the provision, management or operation of, amongst other things, land and property development and housing. The Introduction to Ch 6 notwithstanding, in my opinion whatever might be the ultimate width of s 24, its ambit includes the implementation of the Civic Place Master Plan. In so saying, I reject the finding of the primary judge that the LG Act contained no equivalent to s 321(1)(a)(iv) of the 1919 Act (see [124] above and the submission of the respondents which I have recorded in [131] above). [135] The foregoing receives support following passage from the judgment of Stein J (as his Honour then was) in JR & EG Richards (NSW) Pty Ltd v Scone Shire Council & Anor [1995] NSWLEC 200 (24 November 1995) unreported: "The approach to council powers and functions under the 1993 Act is very different from that under the former legislation. In many ways the 1919 Act was more limited and prescriptive in its grants of power to councils to carry out functions. The 1993 Act approaches council powers and functions in a broader fashion: see for example s 24 quoted above. Indeed, it has been suggested that the wide grant of power in ss 21-24 of the Act was an attempt to overcome deficiencies of power under the 1919 Act and the application of the doctrine of ultra vires." 201The defendant's assertion that the City's dealing with the relevant intellectual property by way of creating a License Agreement constituted the exercise of an incidental power is not without merit. Accepting this proposition for the time being, it does not automatically follow however that the City's exploitation of such intellectual property could be characterized as a "commercial enterprise" separate to the fulfillment of its statutory functions. 202The City developed the Smartpole for use by the City as part of the 2000 Sydney Olympic games. It was clearly entitled to do this under s24 of the Local Government Act . Similarly, the terms of ss23 and 24 make it clear that the City was entitled to license the "intellectual property" in the Smartpole for use by Streetscape Projects both throughout Australia and internationally. 203The License Agreement involves the licensing of property owned by the City as a consequence of the development by the City of the Smartpole and as such involved the exercise of its powers under ss 23 and 24 of Local Government Act . 204The Court also finds against the defendant's submission that the City's grant of a Licence Agreement can at best be "convenient or economically advantageous" as opposed to incidental. The creation of a Licence Agreement in this case was in aid of satisfying the primary purpose of supplying Smartpoles and thus satisfies the "reasonable connected" requirement in my view: Attorney-General v Great Eastern Railway Company (1880) 5 App Cas 473. 205In support of its contention in this regard, the defendants relied on Boral Resources (QLD) Pty Ltd v Johnstone Shire Council [1990] 2 Qd R 18 at 21-22: "The headnote to that decision states: "A municipality, though it has power in the Local Government Act 1928 to quarry stone for use in the construction or maintenance of streets and roads in the municipal district, and incidentally to dispose of any by-product of the quarry, has no power to carry on the business of quarrying and selling road-making materials."" Connolly J then went on to cite the passage from the reasons of Lowe J referred to above. His Honour then continued: "In the case before Lowe J the power which was suggested as supporting the carrying on of the business of quarrying and selling the material was a power to borrow money for permanent works or undertakings. Permanent works or undertakings were defined to include the setting up of machinery for quarrying stone and the provision of gravel. There was no direct grant of power for carrying on quarrying. The only relevant direct grant was the power to construct and maintain streets and highways within the local authority area. The decision of Lowe J therefore was simply that there was no direct grant of power to carry on quarrying and that the local authorities power to quarry was simply incidental to its power to construct and maintain the shire roads. So understood the decision was inevitable." 206The answer to this contention is to be found in that part of the judgment not quoted. At 21-22 Connolly J stated: "The headnote though accurate tends to mislead anyone who does not read the judgment itself. His Honour first stated the settled rule that a statutory corporation has only the powers which are expressly or by necessary implication conferred upon it, referring to the decision of the House of Lords in Dundee Harbour Trustees v D & J Nicol [1915] AC 550. His Honour then observed that it is nothing to the point that the powers sought to be exercised are powers which may be conveniently or economically exercised in conjunction with the powers conferred, if they cannot be properly described as incidental to or consequential upon those powers. ...The decision of Lowe J. therefore was simply that there was no direct grant of power to carry on quarrying and that the local authority's power to quarry was simply incidental to its power to construct and maintain the Shire roads. So understood the decision was inevitable. It is however no authority for the view that a local authority empowered by law to undertake, maintain and manage quarries may not lawfully sell the produce. Reliance is also placed on Lynch v Brisbane City Council [1961] Qd.R. 463. ... This decision in my respectful opinion says nothing to the case of an express grant of power to undertake, maintain and manage a quarry. Inherent in such a grant of power is the disposal of the produce, insofar as it is not required for the use of the operator itself, and to do so on a commercial basis." 207In this case, the City was empowered to produce poles for use within its local area. In order to do this it obtained the rights to intellectual property in these poles. There is no reason why as an incidence of this power to create poles, the City cannot deal with the intellectual property on a commercial basis. 208If the position were to be as the defendant submits, the City would be empowered to obtain intellectual property but would be unable to deal with such rights in a manner consistent with the objectives upon which the plaintiff entity was founded. This is contrary to the terms of ss 23 and 24 of the Local Government Act. The City ' s ownership of intellectual property in the various poles 209The definition of a Smartpole was one of the most contentious and important issues in this case. The parties agreed that it was a matter of contractual interpretation and was to be decided by the Court with reference primarily to the 2002 Licence Agreement, but also agreements pre and post dating this agreement. 210The Licence Agreement defines a Smartpole as: "the pole types, the accessories and the spare parts set out in the Specification and/or the Product Manual, and includes a variation or addition of any of them" 211The Specification and Product Manual were those said by the City to be attached to the Licence Agreement and in evidence as annexures RM-2 and RM-3 to the affidavit of Robert Matchett of 19 May 2010. 212Clause 7.1 of the Licence Agreement makes clear that the City is the proprietor of all Intellectual Property subsisting in the Smartpole. 213The starting point is therefore to consider the content of the Product and Specification manuals. The Product and Specification Manuals 214Streetscape contended that the Licence Agreement between the City and Streetscape is void for uncertainty and unenforceable because there was no Specification and/or Product Manual attached to the Licence Agreement. The defendants submitted that in these circumstances, it is impossible to adequately define the poles the subject of the Licence Agreement. The Court rejects this claim. 215The evidence shows that Streetscape had the Product Manuals and Specification drawings in its possession prior to the entry into the Licence Agreement and during the currency of the Licence Agreement. It is also clear that Streetscape used the Product Manuals and Specification drawings, being Annexures "A" and "B", for the purposes of manufacturing Smartpoles and as part of the delivery up regime at the end of the Licence Agreement, hard copies of Annexures "A" and "B" were returned by Streetscape to the City. 216The Court rejects Streetscape's contention that there was no Specification and/or Product Manual attached to the Licence Agreement for the following reasons: (1)In September 2001, prior to the entry into the Licence Agreement, Streetscape Projects was provided with copies of the Product Manuals and Specification drawings by the City for the purposes of demonstrating the Smartpole" to the City of Barcelona; (2)Mr McLeod conceded that Streetscape Projects had the Product Manuals and Specification drawings in its possession during the term of the Licence Agreement; (3)Mr McLeod agreed that Streetscape Projects had used the Product Manual and Specification drawings from time to time for the purpose of manufacturing poles and stated that " [the Product Manuals] help you in making the poles, yes, they do "; (4)Parts of the Product Manuals were appended to the Tender submitted by Streetscape Projects to Woollahra Council in 2008; (5)Mr McLeod used the Product Manuals and Specifications in late June 2009 to prepare a spreadsheet as requested by Joseph setting out where a product was designed by the City or Streetscape Projects and where the drawings appeared in the City's Product Manuals; and (6)Mr McLeod conceded in cross examination that Streetscape Projects continues to retain, among other documents which form part of the City's intellectual property, the City's Product Manuals and Specification Drawings in "native" format, that is, in electronic form. 217Even if the manuals were not attached to the Licence Agreement at the time of entering into the Licence Agreement, pursuant to clause 2.3 of the Licence Agreement, the Licence Agreement could operate as long as Annexures "A" and "B" had been provided to Streetscape to the City. 218Clause 2.3 of the Licence Agreement provides that: "As soon as practicable after the Licence Commencement Date the Licensor [the City] must deliver to the Licensee [Streetscape Projects] the Product Manual and the Specification (unless that material is already in the possession of the Licensee [Streetscape Projects])." 219The evidence clearly shows that the Product Manuals and Specification drawings: (1)were in the possession of Streetscape Projects prior the entry into the Licence Agreement and during the currency of the Licence Agreement; (2)were being used by Streetscape Projects for the purposes of manufacturing " Smartpole " poles; and (3)hard copies were returned to the City as part of the delivery up regime. 220The real issue is whether the Product Manuals and Specification drawings, which were the subject of the Licence Agreement, have been identified between the parties. It is clear they were and therefore there is no issue of uncertainty between the parties. Streetscape had the Annexures before the entry into the Licence Agreement, during the term of the Licence Agreement and returned hard copies of them as part of the delivery up regime. The content of the Product and Specification Manuals 221Accepting that Streetscape was in possession of the manuals, the next step for the Court is to consider the content of the manuals. 222The Product and Specification manuals referred to in the Licence Agreement do not contain drawings of the S2 extrusion or the Adepole. They are limited to the Issue C Drawings of 19 June 2001. According to the definition of a Smartpole in the Licence Agreement, it is only the Issue C Drawings that constitute a Smartpole for the purposes of the agreement. For a drawing other than that contained in the manuals to be considered a Smartpole for the purposes of the Licence Agreement, it can only be so if it is a "variation" or "addition" within the meaning given in the definition of a Smartpole. 223Whether the terms "variation" or "addition" are included to encompass all variations or additions up to the date of entry into the Licence Agreement or rather are only intended to encompass future variations and additions was a matter of contention between the parties. 224In my view, the purpose of attaching the manuals to the Licence Agreement was to provide a consolidated list of the City's intellectual property in the Smartpole at the date of entering into the Licence Agreement. This was the evidence of the City's own witness Mr Matchett at paragraph 23 of his 19 May 2010 affidavit. On this basis, I understand any reference to variations or additions to refer to future variations and additions, not additions or variations to the drawings existing at the time. This is consistent with the City's intent that the Smartpole system would be constantly evolving and it is important that the City protected its rights as the system developed. This forward-looking definition is also consistent with the definition of Intellectual Property under the Licence Agreement as: "any and all inventions, discoveries, patents, trade marks, designs (whether registered or unregistered), copyright (including any copyright in any computer software or hardware or any works associated with such software or hardware), technical know-how and commercially sensitive or valuable information and all other proprietary rights (whether registered or unregistered) and whether existing now or in the future which subsist in relation to the "Smartpole" poles" 225Had the Court adopted the opposite approach, it would not have been necessary for the City to update its manuals before the Licence Agreement. It would have been sufficient for the City to include one diagram of an S1 extrusion and rely on the terms "variation" and "addition" in the definition of a Smartpole to encompass all variations of that design to date. This was not the approach taken by the City. It is clear from paragraph 89 of Mr Newman's first affidavit, that he was asked to prepare an updated version of the manuals in order define the City's intellectual property in the Smartpole. Included in this process was Mr Newman's request to Streetscape to provide any modified drawings to be included in the tender process. To define variations or additions as anything but forward looking would contradict the City's perceived need for the City to update its product manuals prior to entering into the Licence Agreement. 226The Court accepts the defendants' alternate proposition that at the date of entering into the Licence Agreement, a Smartpole is limited to the poles defined in the Specification and Product Manuals. The status of the S2 227The S2 was designed by Streetscape sometime in May 2001. As explained above it is visually similar to the S1, containing the same 'C track', however has a smaller diameter, which makes it more suitable for urban environments. As it was designed prior to the entry of the 2002 Licence Agreement, but was not included in the Product and/or Specification manuals, it is not a Smartpole for the purposes of the Licence Agreement. If the City owns the intellectual property in the S2, it could only be so under a previous agreement. The Supply Contract 2000 (Tender 9912) 228On or around 8 November 1999, the City of Sydney resolved that: (1)the contract for the supply of "Smartpole" street poles pursuant to Request for Tender 9912 be awarded to Streetscape Projects and LaMER Australia Pty Ltd; (2)authority be delegated to the General Manager to determine the final details of the order to be placed with Streetscape Projects and LaMER; and (3)authority be delegated to the General Manager to enter into a supply contract with Streetscape Projects and LaMER. 229By letter dated 18 November 1999 from the City of Sydney to Streetscape, the City of Sydney confirmed the resolution referred to in the preceding paragraph, and informed Streetscape that it intended to enter into a contract for the supply of Smartpoles in the amount of $1,094,333 and that contractual documentation was being prepared for execution. 230On or around 20 March 2000 the City of Sydney and Streetscape entered into a contract for the supply of "Smartpole" street poles (" 2000 Agreement "). 231Clause 8.3 of the 2000 Agreement stated: 8.3 Supply of Documents by Council The Council shall supply to the Supplier the number of copies stated in the Annexure, or if no number is stated, then 3 copies of the Drawings, Specification and other documents required by the Contract to be supplied to the Supplier by the Council. Documents supplied to the Supplier by the Council shall remain the property of the Council and shall be returned by the Supplier to the Council on demand in writing. The documents shall not, without the prior written approval of the Council, be disclosed, used, copied or reproduced for any purpose other than the execution of the work under the Contract. 232Drawings were defined by the 2000 Agreement to mean the drawings referred to in, or annexed to, the Contract (as defined), including the drawings comprising Specification: Part C Drawings and any modification of such drawings notified to the Supplier by the City of Sydney and includes such other drawings as may from time to time be supplied to the Supplier by the City of Sydney, or the use of which has been permitted by the City of Sydney, for the purposes of the Contract (as defined). 233Contract was defined by the 2000 Agreement to mean the agreement entered into between the City and Streetscape and comprises the Conditions of Contract, the Specification, the Drawings, the Request for Tender and the Tender. 234"Intellectual Property" means all inventions, patents, patent applications, trade marks, designs, copyright (including copyright in any computer software or hardware or any works associated with such software or hardware), technical know-how and commercially sensitive or valuable information, which is created in the course of or arises out of this Contract whether by the Council or the Supplier. 235Product was defined by the 2000 Agreement to mean the pole types, the accessories and the spare parts as depicted and described in the Specification, to be supplied by Streetscape under the Contract (as defined) and which are to be handed over to the City of Sydney or a person designated by the City of Sydney. 236I accept that by reason of the preceding paragraphs and pursuant to clause 8.3 of the 2000 Agreement, the Tender 9912 6400 Issue A Drawings and the 6400 Issue B Drawings: (1)are the property of the City of Sydney; (2)must be returned by Streetscape Projects to the City of Sydney on demand in writing; and (3)shall not be disclosed, used, copied or reproduced for any purpose other than the execution of the work under the 2000 Agreement, without the prior written approval of the City of Sydney. 237Streetscape acknowledged that the City of Sydney was the proprietor of all Intellectual Property prior to or in the course of the Contract and that the Intellectual Property is supplied to or used by Streetscape for the purposes only of manufacturing and delivering the Product under the Contract. This is set out in clause 10 of the 2000 Agreement: PATENTS, DESIGN COPYRIGHT AND OTHER INTELLECTUAL PROPERTY RIGHTS The Supplier acknowledges that Council is the proprietor of all Intellectual Property prior to or in the course of this Contract and that it is supplied to or used by the Supplier for the purposes of manufacturing and delivering the Product under this Contract only. The Supplier shall have no rights in respect of any of the Intellectual Property (which it acknowledges is the exclusive property of the Council) and the Supplier shall not use any of the Intellectual Property except for the purposes of manufacturing and supply of the Product to the Council in accordance with this Contract. The Supplier shall not place any logo or trademark on any of the Product without the prior written consent of the Council. The Supplier shall affix to the Product such copyright and any other trademark or other notice (if any) as may be specified by the Council from time to time. 238By reason of the preceding paragraphs and pursuant to clause 10 of the 2000 Agreement: (1)The City of Sydney is the proprietor/owner of the "Intellectual Property" in the Tender 9912 6400 Issue A Drawings and the 6400 Issue B Drawings; (2)Streetscape Projects has no rights in respect of the Tender 9912 6400 Issue A Drawings and the 6400 Issue B Drawings; and (3)Streetscape Projects was not permitted to use Tender 9912 6400 Issue A Drawings and the 6400 Issue B Drawings except for the purposes of manufacturing and supply of the Product (as defined) in accordance with the Contract (as defined). 239The process for designing the S2 was described by Mr McLeod in his 24 May 2010 affidavit as follows: (1)In or around April 2000 Michael Farrelly and he designed and drew the S2 extrusion which has a diameter of 166mm; (2)Exhibit P2 contains a cross-section of the S2 extrusion; (3)He and Michael Farrelly designed and drew drawings for streetpoles which incorporated the S2 extrusion, see Tender Bundle [6:71]; (4)The specification drawings were produced by Michael Farrelly and John McLeod, both employees of Streetscape. (5)The specification drawings that were produced were then reviewed by engineers; (6)Prototypes of the multi-function streetpoles were manufactured and evaluated; (7)The specification drawings for the multi-function streetpoles were then sent to a foundry who produced their own drawings in order to facilitate the manufacture of moulds for the multi-function streetpoles; (8)The moulds are then used to produce individual parts of the multi function streetpoles in the S2 Range; and (9)The parts are then assembled as a completed multi-function streetpole; (10)The multi-function streetpole is then installed. 240The Court accepts this evidence. Clearly the S2 required significant engineering work, however it was built upon the confidential information provided to Streetscape by the City of Sydney. Mr Matchett gave evidence at paragraphs 25 to 28 of his May 2010 affidavit that the S2 was created by simply scaling down an S1 design on a CAD system. Further explanation of the process is given by the witness at paragraph 25 of his 10 December 2010 affidavit. Despite the modifications to the S1 designs, it was created using the City's confidential information. This was a breach of the 2000 agreement. 241By virtue of clause 10 of the 2000 agreement, the City is owner of all Intellectual Property in the S2 design. This ownership includes S2 poles that have not been sold to the City of Sydney but use the S2 design. 242In response to this clause, Streetscape stated that the only intellectual property that is the subject of cl 10 is that which is created in the course of or arises out of the 2004 Supply Agreement. Streetscape accepts that changes made to drawings provided by the City for the purpose of supplying poles based on those drawings to the City fall within this definition. However, when the changes are for a purpose other than the supply of poles to the City, those changes are not created in the course of or arising out of the 2004 Supply Agreement. On the defendants' case they are not Intellectual Property as defined by the Agreement, and are not subject to clause 10. 243This interpretation narrows the clear intention of clause 10. The clause intends to protect the City's intellectual property in the broadest sense. Anything "created in the course" of the agreement should not be understood to mean anything created for the purpose of supply to the City. In the course of the agreement should be understood to mean anything created whilst the agreement is on foot and whilst Streetscape has possession of the City's confidential information. This is irrespective of whom the design is created for. This interpretation is the only one that reflects the intent of clause 10 of the agreement. The registration of the S2 244On or around 30 November 2001 Streetscape obtained registration for the S2 Extrusion being Australian Design Registration No. 146087 . 245On the evidence it was established that at all material times, the City of Sydney had no knowledge of the registered design. 246For the reasons given above, the registered design is based upon the City's intellectual property, namely: (1)Tender 9912 6400 Issue A Drawings; (2)6400 Issue B Drawings (3)38 6400 July 01 Issue Drawings; (4)6400 July 01 Issue Drawings; (5)Further 6400 Revision Drawings; (6)Streetscape Parts Drawings; 247And was in breach of: (1)clause 10(a) of the Request for Tender 9912; (2)clauses 8.3 and/or 10 of the 2000 Agreement; and/or (3)the Interim Licence Agreement. 248For these reasons, the Court accepts that Streetscape holds the Registered Design for the benefit of, or on constructive trust for the City and is obliged to return the design to the City. My decision does not differ to Gyles J in this regard cf: Council of the City of Sydney v Goldspar Pty Ltd & Anor (2004) 62 IPR 274 at [143]. The S3 249Streetscape says that in around July 2001, it designed an extrusion with an oval shape and configuration and a width of 120mm which is referred to by Streetscape as the S3 Extrusion. It was also produced using the City's confidential information and for the reasons given above, this design is also owned by the City of Sydney. The Adepole prior to the second deed of variation 250After being approached by the City of Adelaide, Streetscape designed a suite of poles referred to as the Adepole. On Mr McLeod's evidence these poles contain S1 and S2 extrusions as well as other non multi-function poles. 251The ownership of Adepoles, which do not contain a Smartpole extrusion, remains with Streetscape. However, poles, which are built on the City's intellectual property, namely those that contain an S1 or S2 extrusion in any form, are the intellectual property of the City of Sydney. They incorporate the City's confidential information and are therefore breaches of the relevant agreements. 252The Court makes this finding independent of the two deeds of variation, which will subsequently be considered and ultimately alter the Court's position as to ownership of the Adepole. Improvements to the poles after the Licence Agreement 253There was also an issue between the parties as to the ownership of improvements, variations or additions to the Smartpole drawings and designs after entry into the Licence Agreement. 254The terms of clause 7 of the Licence Agreement and in particular clause 7.4 are clear. All material Improvements made during the licence period are to be owned by the City of Sydney. The City's rights are not limited to Material Improvements, but improvements more generally, per clause 7.6. 255Improvements are defined in the Licence Agreement as: "Any and all improvements, enhancements, modifications, adaptations or extensions to the Smartpole poles created after the Licence Commencement Date and during the Licence Period." 256On this basis, Streetscape has no rights to any Improvements to Smartpoles post the Licence Agreement. 257Streetscape put into issue the proper construction to be given to clause 5(c) of the Second Deed of Variation and its impact on clause 7 of the Licence Agreement. 258Clause 5(c) reads: "Pursuant to clause 7 of the Agreement Licensor and Licensee acknowledges that the intellectual property in any Improvements to Smartpoles other than for lighting, traffic signage, street signs or banner installations vests in Licensee." 259I understand this clause to be referable to clause 7.11 only. Clause 7.11 specifically makes reference to lighting, traffic signage, street signs or banner installations and affords the City discretion in determining the ownership of improvements attached to the Smartpole. The purpose of clause 5(c) is to remove this discretion to ensure the company owns any street furniture or accessories designed by Streetscape. This view accords with Ms Hobb's 23 September 2010 affidavit at paragraphs 52 to 56. 260If clause 5(c) was referable to the whole of clause 7 of the Licence Agreement it would substantially vary the relationship between the parties. It would remove all protections the City of Sydney had emphasised throughout the tenders were of utmost importance. The clause should not be construed to have this meaning. It would be an absurdity of the kind authorities such as Australian Broadcasting Commission v Australasian Performing Right Association (1973) 129 CLR 99 indicate should be construed in light of the apparent intentions of the parties. Given the clear ambiguity as to what part of clause 7, 5(c) is intending to refer, it should be construed according to the interpretation that would remove any capricious or absurd consequences. 261This result is furthered by the fact that, had the position been different, the construction of clause 5(c) would be inconsistent with clause 5(b) of the Second Deed of Variation. 262Clause 5(b) provided a regime for determining the ownership of poles that may be produced subsequent to the Second Deed of Variation. There would be no need for such a clause if clause 5(c) had the effect which Streetscape contends, that is, that it is the owner of any improvements to the Smartpole. The defendants ' contention that the City has no confidential information 263An important submission advanced by the defendants was that the City did not particularise what material was confidential and even if it did, the material did not have the necessary character of confidence. The defendants' proposition was that they could not have breached their contractual or equitable obligations by disclosing such information. 264Confidential Information is defined by the License Agreement as: "all ideas, concepts and information concerning the Intellectual Property disclosed by the Licensor to the Licensee, including all information contained in the Specification and the Product Manual" 265Clause 9.3 provides that the terms of the Licence Agreement do not apply to any Confidential Information which: (1)"the Licensee can prove was already in the Licensee's possession prior to disclosure by the Licensor to the Licensee pursuant to this agreement; (2)is disclosed by the Licensor pursuant to a prior written consent from the Licensor to any person authorised by the Licensor; (3)is disclosed subsequent to the Licence Commencement Date to the Licensee without any obligation of confidence by a third party, excluding where that third party has obtained, received or derived that Confidential Information directly or indirectly from the Licensor; and (4)is or becomes generally available to the public in printed publications in general circulation through no act or default on the part of the Licensee or any agent of the Licensee" 266The defendants submitted that: (1)Clause 9.3(a), dealing with information already in Streetscape Projects' possession, makes no distinction between information provided by the City or a third party. It makes no distinction between information that was provided in circumstances giving rise to an obligation of confidence, and information that was not. (2)It follows that, regardless of the character of the information or how Streetscape Projects became aware of it, if that information was in Streetscape Projects' possession as at 26 August 2002 when the License Agreement came into operation, it was not Confidential Information protected by the terms of the License Agreement. (3)The City seeks to argue that on its proper construction, cl 9.3(a) had no operation on Confidential Information that: (6FACLS [100]) (4)given to Streetscape Projects by the City prior to the Licence Agreement; and/or (5)given to Streetscape Projects by the City under an obligation of confidence. (6)There is no basis for such a construction. The language of cl 9.3(a) is clear. If the information was in Streetscape Projects' possession prior to it being provided by the City pursuant to the Licence Agreement, it was not Confidential Information for the purposes of the Licence Agreement. (7)Alternatively, the City seeks to imply a term on a similar basis (6FACLS [101]). Such a term would be contrary to the express language of the Licence Agreement. An implied term must not contradict the express terms of the contract: BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347. Clause 9.3(a) expressly states that any information in Streetscape Projects' possession prior to disclosure by the City under the Licence Agreement is not confidential. The City now seeks to imply a term that such information is confidential. The two clearly conflict. No such terms can be implied. (8)As with its equitable claim, the City fails to particularise the contractual Confidential Information that Streetscape Projects is said to have used. Nevertheless, some guidance can be found by the documents referred to in relation to the City's claim for a breach of duty of equitable confidence. Many of these documents predate the Licence Agreement, and there is no dispute over the fact that they were in Streetscape Projects' possession prior to the Licence Agreement. (9)The only documents referred to by the City that do not pre-date the License Agreement are documents produced by Streetscape Projects. Any alterations made by Streetscape Projects to information previously provided by the City are not "disclosed by the Licensor to the Licensee". Such alterations are therefore not Confidential Information within the terms of the Licence Agreement. (10)In these circumstances, even if the Court concludes that Streetscape Projects gave information to Streetscape International that it used to manufacture and sell poles in the UAE, there is no basis upon which it can be inferred that the information was information that post-dated the Licence Agreement. Streetscape Projects already had all of the information it needed to build poles prior to its entry into the Licence Agreement. It had, after all, been building those poles and supplying them to the City since June 2000 (11)While there are terms of earlier agreements that the City alleges in the 6th Further Amended Commercial List Statement provide it with contractual confidentiality rights, the City has not alleged that these agreements have been breached. The only contractual breach of confidence claim brought by the City relates solely to the Licence Agreement. (12)As neither the alterations, being not something disclosed by the City to Streetscape Projects, nor the documents on which those alterations were based, being documents that came into Streetscape Projects' possession prior to the signing of the Licence Agreement, constitute Confidential Information for the purposes of the Licence Agreement, it follows that all document post-dating the Licence Agreement, and all of the information in those documents, do not constitute Confidential Information. (13)The Confidential Information provisions of the Licence Agreement provide no protection at all to the City. If there was confidentiality, the terms of the agreement that the City chose to enter into fail to protect it. 267The defendants also submitted: (1)For completeness, it is submitted that as a matter of common sense construction of the commercial document, "Confidential Information" is defined as information which is actually confidential. Objectively construed, it is not the intention of the Licence Agreement to make that which is not otherwise confidential into confidential information for some fiction worked by definition. Clause 9.3 is a strong textual indicator that the agreement is concerned with genuinely confidential information. The fact that the definition is linked to the definition of "Intellectual Property" which itself refers to "technical know how and commercially sensitive or valuable information" is another indicator to the same effect. (2)If, as the defendants contend, that is the proper construction of the definition, then the plaintiff's contractual confidential information claims fail for the same reason the claims made based on the alleged equitable duty of confidence fail. The City has failed to prove the existence of confidential information. (3)The point of the submissions concerning cl 9.3(a) is that, even if the definition captures information which is not genuinely confidential, all the relevant information was in the hands of Streetscape Projects prior to the Licence Agreement. This means the contractual claims fail. 268I do not accept for the purposes of clause 9.2 that the plaintiff was required to define in any more specificity than it did in the contract the confidential information. Nor do I accept that if the material lost its confidential character during the term of the agreement that clause 9.2 no longer applied as between the parties. Maggbury Pty Limited v Hafele Australia Pty Limited (2002) 201 CLR 181 indicates that under a contract parties determine their contractual rights and the content of the information the subject of these rights. The material to be kept confidential by Streetscape was defined in the contract. Streetscape had a contractual obligation to keep this material confidential whether all of it had the necessary degree of confidence at the time of the contract or at anytime subsequent. 269I accept that any information in the possession of Streetscape prior to the signing of the Licence Agreement was not confidential by virtue of 9.3(a) of the Licence Agreement. However, any information supplied by the City to Streetscape for prior tenders or agreements was also confidential under the terms of the agreement under which it was supplied. Clause 9.3(a) does not render this information un-confidential. It simply means that the confidentiality undertaking in the Licence Agreement does not apply to that information. That information is governed by previous agreements. Continued production of poles after the Licence Agreement 270The City alleges that Streetscape has breached the terms of the Licence Agreement by its continued use of the Intellectual Property subsisting in the Smartpole. It makes this claim on the basis of: (1)An express term that Streetscape Projects would not use the Intellectual Property subsisting in the 'Smartpole' poles (which included the S1, S2 and S3 poles) except for the purposes of the Licence Agreement without the prior consent of the City and, further and in the alternative; and (2)an implied term that Streetscape Projects would not use the Intellectual Property subsisting in the 'Smartpole' poles (which included the S1, S2 and S3 poles) to manufacture and sell streetpoles as and from the expiry of the Licence Agreement. 271Streetscape responded that they are not producing Smartpoles but rather other multi-function poles. The Court has earlier rejected this argument. As a fall back, Streetscape contended that even if they have continued to use the City's Intellectual Property (as defined in the Licence Agreement), now that the Licence Agreement has terminated it provides no protection to the City for the reasons set out below: (1)Streetscape Projects accepts that it is an express term of the Licence Agreement that it shall not use the Intellectual Property (as defined in the Licence Agreement) except for the purposes of the Licence Agreement without the prior consent of the City (cl 7.2). Unlike the City's pleaded case, this clause makes no reference to S1, S2 or S3 poles, and nor does the definition. For the reasons set out above, the manufacture of poles by Streetscape Projects does not use the Intellectual Property; (2)Regardless of this, cl 7.2 of the Agreement has now ceased to have any effect. The Licence Agreement is over. The contract has ceased to operate. As a matter of construction, the clause does not survive the expiry of the Licence Agreement. (3)The subject matter of the agreement is the use of the Intellectual Property by Streetscape Projects. The City seeks to argue that the agreement continues to regulate that use even after the expiry of the Agreement. This is a substantive matter. Substantial obligations generally do not survive the end of contracts: F J Bloemen Pty Ltd v Council of the City of Sydney [1973] AC 115. (4)This is also supported by the text of the Licence Agreement. There is no express statement in the Licence Agreement that specifies that cl 7.2 survives expiry. This can be compared to an obligation to make payment for accrued indebtedness and give information to enable calculation of those payments (cl 6.3), where a right surviving expiry is specifically contemplated. (5)Further, cl 15.3 of the Licence Agreement states: "The termination of this Agreement does not affect any provision of this Agreement expressed to operate or have effect subsequent to termination and is without prejudice to any accrued right or remedy of a party in relation to any breach of or default under this Agreement by the other party occurring prior to termination. (6)Both of these clauses suggest that the parties turned their mind to what clauses would survive the end of the Licence Agreement, and cl 7.2 was not one of those clauses. (7)There is also no basis to imply a term that Streetscape Projects would not use the Intellectual Property after the expiry of the Licence Agreement. (8)In response to a request for particulars in relation to paragraph 151 of the Points of Claim (a paragraph in identical terms), the City claimed that the term was implied to give business efficacy to the contract. (9)The implied term does not give business efficacy to the agreement. If the City has any copyright, trademark, design or patent rights, it can protect these under the relevant statutes without recourse to the Licence Agreement. If the City has any confidential information rights, it can protect these at equity. The City has not contended that the terms of the agreement relating to Confidential Information survive termination. However, if the issue is one of material provided under these provisions, it is difficult to see why a term relating to the broader topic of Intellectual Property would be implied. (10)If the City contends that the definition of Intellectual Property is broader than those rights that can otherwise be enforced, business efficacy does not require that the City be able to enforce these rights against Streetscape Projects after the expiration of the Licence Agreement when they can be enforced against no one else. Entry into the Licence Agreement should not place Streetscape Projects at a disadvantage to its competitors in the market after expiration of the Agreement. This is the opposite of business efficacy. (11)There is therefore no basis to imply the term that the City seeks to imply. 272The Court wholly rejects this argument. F J Bloemen Pty Ltd v Council of the City of Gold Coast [1973] AC 115 addressed the continuation of contractual obligations following a repudiation of the contract. This Licence Agreement terminated due to the effluxion of time. It was not repudiated. Whether or not a contractual term operates after termination depends on the intention of the parties, actual or inferred, and is therefore a question of construction cf Photo Production Ltd v Securicor Transport Ltd [1980] AC 827. Some terms creating primary obligations are intended to operate after termination, even if not strictly procedural in character. For example, a term requiring an employee not to disclose confidential information, or a term restraining an employee from competing with his or her employer may be intended to operate after termination see Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227 and Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 341. The terms of clause 7.2 indicate that it is intended to secure the City's rights and operates from the date of termination until Streetscape ceases to breach its rights. From the time of expiry, any use by Streetscape of the City's intellectual property was a breach of the agreement and continues to be a breach of the agreement. The same is true for poles not subject to the Licence Agreement, but still the property of the City by virtue of the terms of the 2000 Licence Agreement. 273Any use and production of the City's intellectual property after the termination of the Licence Agreement is a breach of contract. The exception being the continued production of the Adepole for the City of Adelaide, for the reasons given below. Deeds of variation 274In February and March 2007 there was conflict between the City and Streetscape. Ms Hobbs gave evidence in her 10 March 2010 affidavit that the principal concern of the City at this time was royalties owed by Streetscape to the City for the period of 2002 to 2007. In their evidence, Mr Obeid and Mr Joseph set out the concerns of Streetscape at this time, including the sale of intellectual property in the Smartpole, securing future work and international rights. 275During February and March 2007 representatives of the City and Streetscape met to resolve these issues. As a result of these meetings the City and Streetscape agreed that Deloitte would inspect Streetscape' sales of S martpoles and accessories and report back. The evidence also established that at these meetings, Streetscape raised their concerns repeatedly and maintained its assertion to the ownership of the S2 series of poles 276The Deloitte report was received in mid-March 2007 and calculated that $735,110 was owed by Streetscape to the City. 277On 30 March 2007, after numerous meetings, the City entered into a Deed of Variation of the Licence Agreement with Streetscape which resolved the dispute as to outstanding royalties and licence fees. The City agreed to accept $400,000 from Streetscape. This payment was to be made by instalments during the period 30 March 2007 to 30 August 2008. 278Schedule 2 of the First Deed of Variation also contained a list of the different types of poles which were being manufactured by Streetscape at that time and in respect of which royalties were payable. As indicated by clause 3.2 of the First Deed, the purpose of the list was to set out which products Streetscape was (and was not) required to pay royalties in relation to. Streetscape was required to pay royalties in respect of the items referred to in Column 1 of Schedule 2 to the First Deed of Variation. Streetscape was not required to pay royalties in respect of the items referred to in Column 2 of Schedule 2 to the First Deed of Variation. Some poles were listed as "TBD" or to be determined. 279During the period April to September 2007 the City and Streetscape discussed a number of other matters including an extension of the Licence Period. As a result of those discussions on 19 October 2007, the City entered into a second Deed of Variation of the Licence Agreement with Streetscape. 280Pursuant to the Second Deed of Variation, the City agreed to extend the Licence Agreement until 31 August 2009. Further, pursuant to the Second Deed of Variation Streetscape and the City clarified the ownership of intellectual property in the poles listed in Schedule 2 to the First Deed of Variation. Streetscape ' s misleading and deceptive claims 281Streetscape claims that the deeds of variation were a poor commercial opportunity and Streetscape entered them in reliance on representations made by the City. 282Section 52(1) of the Trade Practice Act 1974 (Cth), now s18 of Schedule 2 of the Competition and Consumer Act 2010 (Cth), provides: A corporation must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. The March 2007 meeting and representations 283On 23 March 2007 representatives of City and Streetscape met to discuss issues surrounding the First Deed of Variation. During that meeting, Ms Hobbs and Mr Obeid met separately. 284It is the defendants' case that during that meeting, Ms Hobbs represented that (1)Streetscape would receive new orders for the supply of Smartpoles and the S2 streetpoles to City in an amount of $6,000,000 over the course of the following two years pursuant to capital works projects of City, which had a budget of approximately $300,000,000; (2)Streetscape would receive the written purchase order by City in the amount of $ 624,488 plus GST for the supply of Smartpoles and accessories and the S2 streetpoles which were to be used as part of Glebe Point Road Streetscape Upgrade, (the order for which had been stopped prematurely); (3)City would sell all of its intellectual property in the Smartpoles during the first quarter of 2008; (4)Streetscape would be offered the intellectual property in the Smartpoles during the first quarter of 2008; (5)Streetscape would continue to remain the supplier of Smartpoles and accessories and S2 streetpoles to City for as long as City owned the intellectual property and would continue to maintain them; (6)Streetscape would be permitted to market and sell Smartpoles, S2 streetpoles and associated accessories internationally; (7)None of the above would occur unless Streetscape executed a deed of variation to the Licence Agreement; and Streetscape agreed to pay royalties to City in relation to four identified S2 streetpoles. 285Streetscape contended that in reliance on the representations City made through Ms Hobbs at the 23 March 2007 meeting, it agreed, contrary to its immediate interests, to pay the sum of $400,000 in full settlement of City's claims for royalties and licence fees, to pay future royalties in respect of four S2 streetpoles product numbers 106, 107, 108, 109, and to enter into a deed recording that agreement. The September 2007 meeting and representations 286On 21 September 2007 Mr Obeid and Ms Hobbs met again at the Sheraton on the Park Hotel. There is a dispute between them as to what occurred during this meeting. It is the defendants' case that Ms Hobbs represented that the City would: (1)Sell the Intellectual Property in the Smartpole and the S2 to Streetscape in early 2008; (2)continue to have a supply agreement and maintenance contracts with Streetscape; (3)go ahead with the infrastructure projects and give Streetscape $6 million worth of orders; and (4)Ms Hobbs would contact ICAC and discuss with them how to structure the sale of the intellectual property in the Smartpole. 287Streetscape contended that in reliance on the representations the City made through Ms Hobbs at the 21 September 2007 meeting, it agreed, contrary to its immediate interests, that the four S2 streetpoles constitute Smartpole intellectual property vested in City and to enter into a deed recording that agreement. The Court ' s findings on Streetscape ' s misleading and deceptive claims 288This was an area where the witnesses gave substantially alternate versions of what was said at these two meetings. In the end, the Court's decision was formed on the basis of which side's witnesses gave more credible evidence in light of the documentary evidence and significant cross-examination. 289Earlier in the judgment I have indicated that I accept Ms Hobbs to be a witness of truth who gave a substantially accurate and truthful recount of events. Even under sustained cross-examination, the most Mr Couper was able to achieve was suggestions of impropriety. When questioning Ms Hobbs in relation to the meeting of 21 September 2007, the following was put to the witness: Q. Do you agree that you and Mr Obeid had a meeting at the Sheraton on the Park Hotel on 21 September 2007? A. I think that is the date. It was September 2007. Q. And it was your suggestion that the meeting be at the Sheraton on the Park Hotel wasn't it? A. No. Q. Do you say Mr Obeid suggested that? A. Yes. Q. Mr Obeid had asked to meet with you and Mr Harding, had he not? A. I don't recall Mr Couper. But I know Mr Harding wasn't available on the day. ... Q. All right and just explain to me why you say it was that Mr Harding was for some reason unable to meet with you and Mr Obeid? A. I believe that Mr Harding had a council meeting that he needed to go to, so he asked me to go without him. Q. A council meeting on one day? A. Well by way of an explanation your Honour sometimes meetings are referred to as council meetings without them being the formal meetings of the committee or of the council. ... Q. Ms Hobbs there was no good reason why you could not have found a time shortly after 20 September when you and Mr Harding could both have met with Mr Obeid, correct? A. I don't recall us discussing that Mr Couper. Q. I'm not asking whether you discussed it, I'm suggesting to you that it was easily possible for you to have arranged a meeting as Mr Obeid requested between him and you and Mr Harding had you chosen to do so, what do you say to that proposition? A. Yes. Q. So it was your decision to meet with Mr Obeid privately in the absence of Mr Harding, correct? A. No. Q. Did you consult Mr Harding about whether he should attend such a meeting? A. I discussed it with Mr Harding and because Mr Harding already had some prearranged meetings he asked that I go - he asked that I go. Q. Look at paragraph 166 of your affidavit. Do I understand you to be saying that Mr Obeid said to you he did not wish to come to Town Hall because his wife had just given birth and was staying at a post natal clinic in Kirribilli? A. Yes. Q. Did he ever explain to you why the fact of his wife being at Kirribilli made it impossible or difficult for him to go to Town Hall as opposed to somewhere else in the city? A. Well I assumed it was on his route from where he lived. Q. Sorry, what was on his route? A. The Sheraton. Q. You say at paragraph 168, "I organised to meet with Moses Obeid at the Sheraton on the Park on 24 September, that's true isn't it? A. Yes. Q. It was you who proposed the Sheraton on the Park as the meeting place? A. No. Q. Did you make any notes of that meeting Ms Hobbs? A. No Mr Couper. Q. Is what you did this, ring up Ms Nicholson and have her make a note? A. Yes. Q. Why did you not make your own note of your own meeting Ms Hobbs? A. Well a meeting is taking place it's not the thing that you do is to take - if there are only two people involved is to actually contemporaneous notes during the meeting. Because the city solicitor had diary notes of all the other meetings and Mr Harding wasn't back, I rang Ms Nicholson and told her exactly what had happened at the meeting and she recorded a diary note. Q. Did you think that the content of this meeting was going to be contentious Ms Hobbs? A. No, Mr Couper, I didn't. 290However these suggestions could not be substantiated. 291Conversely, the Court does not accept Mr Obeid's evidence unless substantiated by contemporaneous documents. For this reason it is necessary to look at each representation in seriatim. The defendants ' claim concerning $6 million in sales 292Subsequent to the execution of the First Deed of Variation on 30 March 2007, representatives of Streetscape met with the City's Projects Groups to discuss future orders. The meeting with the City's Projects Group on 3 April 2007 was arranged at the meeting on 28 March 2007. 293Ms Hobbs meeting request sets out the three areas which were to be discussed at the meeting, namely: (1)"projects with high level of certainty" "projects with a reasonable level of certainty; (2)projects which are currently under design & are scheduled for construction in the next year"; and (3)"projects which have City budgets allocated to them and will hopefully go to construction in 1 to 3 years time". 294Under cross-examination, Mr Moses Obeid accepted that the discussion at the 3 April 2007 meeting organised itself around those three areas. Mr Joseph's diary note of the meeting refers to projects that are immediate (high certainty), reasonable certainty and future projects. This is consistent with the Hobbs meeting request. Due to his established relationship as a supplier of Smartpole s to the City, Mr Moses Obeid knew that it would be very unusual for Mr Saxby not to be aware if there were projects afoot and it was clearly not established at this meeting that there were $6 million in future orders . 295Further, Streetscape did not raise the issue of the $6 million of ongoing orders in its letter of 10 April 2007 to the City. This letter had been written by Joseph after discussion with Mr Moses Obeid as a letter that set out Streetscape' ongoing issues after entry into the First Deed of Variation. Mr Joseph asserted in cross-examination that Mr Moses Obeid did not have any input into the letter. In my view this was an attempt to distance Mr Moses Obeid from the fact that the letter makes no reference to $6 million orders. 296The City's procedure for ordering Smartpoles required the submission and approval of a quotation and the issue of a purchase order. This remained unaltered after the execution of the First Deed of Variation to the expiry of the Licence Agreement in 2009. Mr Moses Obeid knew that Ms Hobbs did not have authority to subvert this procedure. At the time of entry into the Second Deed of Variation on 19 October 2007, Mr Moses Obeid knew that the City had no ongoing requirement for Smartpoles over the next 2 years in the order of $6 million. If Mr Moses Obeid had genuinely believed that the City had agreed to sell Streetscape that quantity of poles, he could have raised it. The failure to do so is consistent with a finding that no such representation was made and also consistent with a finding that it was not relied upon. The sale of the intellectual property representation 297Mr Moses Obeid understood that that the City was required to follow the process required by statute. The evidence established that he was familiar with the probity requirements in the Local Government Act , which required the City to tender for goods and services over the value of $150,000. He acknowledged that he was not asking the City to act in breach of its statute 298Mr Moses Obeid also knew that the City was insisting on compliance with the probity process of an open tender. He knew that acquisition of the intellectual property in the Smartpole was dependant on the probity process, the price and the terms and conditions being subject to a process of negotiation. 299The City repeatedly stated in correspondence in 2007, that a tender process would be required in relation to any future sale of the intellectual property in the Smartpole. In particular, on 12 September 2007, the City's solicitors wrote to Streetscape's solicitors stating inter alia: "...Our client has stressed with your client a number of times that in order for the City to consider selling the intellectual property in relation to the Smartpoles, it will need to go through an appropriate process. Such a process requires the City to be transparent and open in its processes and not allow it to enter into any agreements such as that contemplated which would bind the City to agree to sell the Intellectual Property rights to the Smartpole. My client has confirmed that once it embarks on this process, an appropriate level of regard will be given to the City's relationship with Streetscape and whether it is appropriate, as that process unfolds, to negotiate directly with Streetscape in relation to a potential sale. However, at this point, it will be entirely inappropriate for the City to agree to any such arrangement or understanding with Streetscape." 300In the circumstances, I do not accept that Mr Obeid could have believed that the City would sell Streetscape the intellectual property in the Smartpole following entry into the Deeds of Variation. Representations as to world wide marketing rights 301Mr Obeid stated that he was aware that the City did not have any intellectual property rights outside Australia. Under cross-examination Mr Obeid conceded that he did not rely on any representations as to international marketing rights to enter into the First Deed of Variation: Q. You did not enter into the second deed of variation in reliance upon any holding out by or representation by the city that you would be granted international marketing rights? A. At that stage international marketing rights didn't really have a great deal more to do with it. Q. Is the answer to my question yes? A. Just repeat the question again sorry. Q. You did not enter into the second deed of variation in reliance upon any representation by the city that you would, that is your company would be granted, international marketing rights? A. Not international marketing rights no. Q. So the answer to my question is yes? A. No, the answer to your question is yes. 302It is therefore clear that Streetscape considered it unnecessary to have a licence to market and sell Smartpoles internationally. It follows that it could not have and did not rely on any alleged representations by the City to the effect that it would be permitted by the City to market the Smartpoles internationally. 303For the above reasons, the Court rejects the defendants' misleading and deceptive claims. Breach of Contract 304Streetscape also asserts that the March 2007 representations and the September 2007 representations formed a contract which was breached by the City. The Court accepts the plaintiff's submission that the alleged representations could never constitute a contract. Essential terms such as price were not agreed. 305Further, the existence of a contract is inconsistent with the position the City took during the course of the negotiations. The First Deed of Variation and the Second Deed of Variation documented the issues which could be resolved. The position of the City, which was known to Streetscape, was that it would not (and could not) resolve at the one time all of Streetscape's issues. 306For these reasons the defendants' breach of contract claim fails. Estoppel 307Alternatively, Streetscape asserts that the City is estopped from relying on and enforcing the First Deed of Variation and the Second Deed of Variation by reason of the March 2007 Representations and the September 2007 Representations. 308The Court rejected that such representations were made and therefore this claim must fail. Also, Mr Obeid's own evidence of the conversations cannot be said to give rise to clear and unambiguous representations. The second deed of variation and the Adepole 309Clause 9 of the Second Deed of Variation reads: "If this Deed is inconsistent with Agreement (the 2002 Licence Agreement), this document prevails to the extent of the inconsistency" 310Clause 5 of the Second Deed of Variation is unambiguous in its division of intellectual property rights in the various poles listed in Schedule 2 of the First Deed of Variation: 5 INTELLECTUAL PROPERTY ACKNOWLEDGEMENT (a) Licensee acknowledges that all items set out in Schedule 2 to the Variation marked royalty "yes" constitute Smartpole intellectual property vested in the Licensor. Further, the two items in Schedule 2 to the Variation marked TBD are now confirmed as follows: the intellectual property in the Adepole (catalogue item 41100) vests in Licensee and the intellectual property in the Low Impact Pole (catalogue item 41130) vests in Licensor. (b) Licensor and Licensee agree to co-operate to identify any product items not listed in Schedule 2 to the Variation that have been or are subsequently developed and classify them as Smartpoles or otherwise for the purpose of determining intellectual property ownership of those items. (c) Pursuant to clause 7 of the Agreement Licensor and Licensee acknowledge that the intellectual property in any Improvements to Smartpoles other than for lighting, traffic signage, street signs, or banner installation vests in Licensee. 311In answer to this clause, the City claims that intellectual property at large in the S1,S2 and S3 was not vested to Streetscape. The City contends that any rights vested were limited to a single pole to be sold only to the City of Adelaide. Further and in the alternative, the City claims it was misled by Streetscape into believing that the Adepole was not a Smartpole. 312In support of the first argument, the City advanced the following propositions. (1)The terms of the Second Deed of Variation are to be construed by ascertaining the objective intention of the parties which is to be determined by reference to the terms of the Second Deed of Variation and the relevant mutually known extrinsic facts: Pacific Carriers Limited v BNP Paribas (2004) 218 CLR 451 at [22]; Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at [40]; Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at 188 [11]. (2)There is a difference between surrounding circumstances and matters of subjective intention. As explained by Mason J in Codelfa Constructions Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at p 352: "It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification." (3)In Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2008] NSWCA 5 at [30] the Court stated that "[i]nterpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure": see McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; 203 CLR 579 at [22] (Gleeson CJ), quoted with approval in Wilkie v Gordian Runoff Ltd [2005] HCA 17; 221 CLR 522 at [15] (Gleeson CJ, McHugh, Gummow and Kirby JJ). (4)The requirement that the construction of a written agreement is to be undertaken by reference to the understanding of a reasonable person in the position of the parties may be seen as another way of excluding as irrelevant evidence of the subjective intention of the parties. This may be seen as another way of excluding as irrelevant evidence of subjective intentions of the parties: Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2008 ] NSWCA 5 at [30]. However, that gives rise to a question as to what information the reasonable person in the position of the party would have available. As explained in Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at [22]: "That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to [the parties], and the purpose and object of the transaction. In Codelfa Constructions Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at 350, Mason J set out with evident approval the statement by Lord Wilberforce in Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 at 995-996: 'In a commercial contract it is certainly right that the Court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating.'" These principles were affirmed in Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; 76 ALJR 436 at [9] - [11]; see also Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235 at [7] - [13] (Spigelman CJ). (5)Where the language permits the Second Deed of Variation are to be construed to give a common sense or commercially workable meaning: McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at [22] per Gleeson CJ; Zhu v Treasurer of the State of New South Wales (2005) 218 CLR 530 at [82]. (6)Commercial agreements will be construed to avoid absurdity or inconsistency: Fitzgerald v Masters (1956) 95 CLR 420 at 426 and 437; Australian Broadcasting Commission v Australasian Performing Right Association (1973 ) 129 CLR 99 at 109. 313In oral submissions, the plaintiff indicated that it wished the Court to pay particular regard to statements by Gibbs J in Australian Broadcasting Commission v Australasian Performing Right Association (1973) 129 CLR 99 at 109. His Honour indicated that if the language is open to two constructions, the Court should prefer one which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust even if the construction adopted is not the most obvious or most grammatically accurate. Secondly, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid inconsistency between that provision and the rest of the instrument. 314At 109, Gibbs J said: "It is trite law that the primary duty of a Court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the Court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The Court has no power to remake or amend a contract for the purpose or avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the obvious, or the most grammatically accurate', to use the words from earlier authority cited in Locke v Dunlop (1888) 39 Ch D 387 at 393, which, although spoken in relation to a will are applicable to the construction of written instruments generally; see also Bottomley's Case (1880) 16 Ch D 681 at 686. Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument. Finally, the statement of Lord Wright in Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 at 514, that the Court should construe commercial contracts 'fairly and broadly, without being too astute or subtle in finding defects', should not, in my opinion, be understood as limited to documents drawn by businessmen for themselves and without legal assistance (cf Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 437." 315On the face of clause 5(a), there is no ambiguity. The language of the clause is not open to two constructions, as opposed to clause 5(c). This clause typifies the kind of agreement Gibbs J was referring to when his Honour said: "If the words used are unambiguous the Court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The Court has no power to remake or amend a contract for the purpose or avoiding a result which is considered to be inconvenient or unjust." 316Clause 5(a) states that intellectual property in the Adepole (catalogue item 41100) is vested generally in Streetscape. Whatever the City's intentions when agreeing to the Second Deed of Variation, clause 5(a) is clear. The intellectual property in the Adepole (catalogue item 41100) vests in the licensee (Streetscape). There is no need to consider the extrinsic circumstances relied upon by the plaintiff in an attempt to circumvent the unambiguous wording of the clause. Was the City misled as to the nature of the Adepole? 317As a secondary proposition, the City claims it was misled by Streetscape into believing that the Adepole was not a Smartpole. 318The City alleges that Streetscape made the following representations to the City: (1)the "Adepole" which had been sold to the Adelaide City Council was not a "Smartpole"; (2)because the "Adepole" was not a "Smartpole" no royalties were payable to the City in relation to the manufacture and sale of that pole under the Licence Agreement; (3)the "Adepole" had been developed by Streetscape Projects exclusively for the Adelaide City Council; (4)only a very limited number of "Adepoles" had been sold to the Adelaide City Council in the past; (5)the "Adepole" would only be sold to the Adelaide City Council; (6)the "Adepole" was a single pole type which had been developed for and sold to the Adelaide City Council; (7)the "Adepole" was not an S1 pole or an S2 pole. 319The city contends this was misleading because: (1)Streetscape Projects had sold and continued to sell a range of products know as the "Adepole Range" to parties other than the Adelaide City Council; (2)The poles in the "Adepole Range" included the S1 Extrusion, the S2 Extrusion and the S3 Extrusion (which poles were in truth "Smartpoles" and royalties were payable in relation therein under the Licence Agreement); (3)Streetscape Projects intended to sell poles in the "Adepole Range" to parties other than the Adelaide City Council; (4)Streetscape did not have reasonable grounds for representing that it would only sell "the Adepole" to the Adelaide City Council. 320At paragraphs 102 -107 of Ms Hobbs' affidavit of 23 September 2010, she gives evidence that it was because of these misrepresentations made by Streetscape that she entered into the Second Deed of Variation on behalf of the City. The witness gave evidence that had she understood that the Adepole used an S1, S2 or S3 extrusion she would not have agreed to the terms of clause 5(a). 321The Court accepts the plaintiff's evidence that Streetscape made express representations that the Adepole was not a Smartpole to Kylie McRae, Robyn Hobbs and Lynette Nicholson between March and October 2007. 322The next issue to determine is if these representations misled or deceived the plaintiff or were likely to mislead or deceive them. The impact of Streetscape ' s misleading and deceptive representations 323In Bevanere Pty Ltd v Lubidineuse (1985) 7 FCR 325, the full Federal Court decided that this section is not confined to misleading statements to members of the public, but also operates with respect to private individuals in business negotiations. The test is an objective reasonable person test, considering the class of persons to which the conduct is directed, Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45. 324Mr Couper focused a significant amount of time in cross-examination to the question of whether the City truly relied or otherwise should have reasonably relied on Streetscape's representations in relation to the Adepole. 325There have been a number of cases in which the Court has considered how it should deal with the position of a person who has been misled because he or she did not take reasonable care. In Argy v Blunts & Lane Cove Real Estate Pty Ltd. (1990) 26 FCR 112 at 137, Hill J set out the principles as follows: The Full Court of this Court in Sutton v A J Thompson Ply Ltd (In liq) (1987) 73 ALR 233 in response to a submission that the applicants in that case had failed to take reasonable care in their own interests by not investigating more closely the affairs of the business which they had purchased described as a "bold submission" the proposition: "You should not have believed me when I misled you" and after referring to the four propositions enunciated by Wilson J in Gould v Vaggelas (1985) 157 CLR 215 set out earlier, continued (at 240): ". .. the possibility that a foolish person might be misled by some misrepresentation which no normal person would take seriously, is covered by the exclusion of representations which are not 'calculated to induce' entry into the contract - the test is objective, but must take into account the respective positions of the parties, including such matters as their knowledge of each other through previous dealings and their respective familiarity with the subject-matter of the contract. Similarly, if a person is so determined to enter into a contract that he is not in truth influenced by some false representation made to him, he clearly has no case. But there is nothing in the principles cited, or in any other authority which has been brought to our attention, to suggest that a person who has been misled into entering a contract, by false representations of a type which were likely to produce that result, and in fact did so, can be deprived of his remedy because of his failure to check the accuracy of those representations: see, to the contrary, Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302 at 309; and Collins Marrickville Pty Ltd v Henjo Investments Ply Ltd (1987) 72 ALR 601." In Collins Marrickville Ply Ltd v Henjo Investments Ply Ltd (1987) 72 ALR 601 on appeal Henjo Investments Ply Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 at 96, Lockhart J with whose reasons Burchett J agreed, referred to what was said by Wilson J in Gould v Vaggelas and to the decision of Pincus J in Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302 where it had been held that the causal chain required for recovery of damages under s 82 of the Trade Practices Act had not been broken where the applicant failed to take reasonable care of his own interests by undertaking a proper investigation of the circumstances presented to it and commented: "These decisions support the view that recovery under s 52 is founded by the applicant's actual reliance upon the misleading or deceptive conduct of the respondent although that conduct was not the only factor in the applicant's decision to enter a particular agreement, and although the applicant did not seek to verify the representations or did so inadequately and so failed to discover their falsity." A case may perhaps be imagined where an applicant is so negligent in protecting his own interests that there will be a finding of fact that the representation complained of was not in the circumstances a real inducement to his entering into a contract. In such a case the element of causation between misrepresentation and damage will have been severed by the intervention of the negligence of the applicant. However, in my view, the present cannot be said to be that case. A somewhat similar view was recently expressed by French J in Kewside Pty Ltd v Warman International Ltd [1990] ASC 55-964, at 58-821: "The damages recoverable under s 82 of the Trade Practices Act for a contravention of s 52 are measured by the loss or damage suffered by reason of the contravention. The causal connection is not that of the strict logician, but is to be understood according to common sense concepts - Yorkshire Dale Steamship Co Ltd v Minister of War Transport [1942] AC 691 at 706. Selection principles influenced by policy and not merely logic operate. Concepts such as contributory negligence and mitigation have no role as such in this process but analogous notions may apply to decide whether or not a claimed loss was truly caused by the contravention in question: Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 712; Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1987) 16 FCR 410 at 418-419; Pavich v Bobra Nominees Pty Ltd (1988) 84 ALR 285." 326The law is further clear that no conduct can be misleading or deceptive unless the person to whom the representation is directed labours under some error Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177. 327Under cross-examination Ms Hobbs maintained that she relied and believed Mr Obeid's representations that the Adepole was not a Smartpole. However, Ms Hobbs was unable to explain why, if she held this belief, did she not agree in the First Deed of Variation that Streetscape owed no royalties on the Adepole: Q. Dealing with the Adepole, by 30 March 2007, you understood that Streetscape's position was this, did you not, that the Adepole was not a Smartpole and that it was a pole which had been designed for and installed in Adelaide? A. Yes Mr Couper. Q. Now notwithstanding that that's what Streetscape's position had been - I'll start again, I'll retract that. In the first deed of variation the Adepole went into the TBD category, correct? A. Yes. Q. That is, you were not prepared to accept that the Adepole was not a Smartpole, correct? A. I - could you repeat the question please? Q. You were not prepared to accept that the Adepole was not a Smartpole were you? A. I did accept that that was Mr Obeid's comment to me that the Adepole was not a Smartpole. Q. If you had accepted that, the Adepole would have gone into the no column rather than the TBD column, correct? A. I don't recall. Q. No it's not a question of recalling, it's a question of logic Ms Hobbs. If you accepted the Adepole was not a Smartpole, the inevitable consequence would have been that the Adepole would have been placed in the no column in the first deed of variation, correct? A. I don't recall Mr Couper. Q. Do you recall anything about how the Adepole came to be placed in the TBD column in the first deed of variation? A. It was the same as the other poles which were mentioned at that time, and that was the hybrid pole and the RTA pole and the explanation for the hybrid pole and the RTA pole seemed logical but what we had first been informed of through the audit report and the book which had identified that there were sales to Adelaide city council which was called the Adepole, and that was the first that we - I believe we were aware of that. ... Q. Now what I'm asking you, why did you agree that TBD should be written beside that item in that column on 30 March 2007? A. I'm sorry Mr Couper I can't recall. Q. Is it the case is it not, that you received no new information from Streetscape about the Smartpole between - sorry about the Adepole, between 30 March 2007 and the date of the execution of the second deed of variation, correct? A. I'm sorry Mr Couper I can't recall. Q. Is it the case is it not, that you received no new information from Streetscape about the Smartpole between - sorry about the Adepole, between 30 March 2007 and the date of the execution of the second deed of variation, correct? A. Yes. Q. You and Mr Harding decided that you would use the Adepole as a bargaining chip to reach agreement with Streetscape that the low impact pole would be treated as a Smartpole, correct? A. The low impact pole was a Smartpole. Q. Can I ask you to come please to your fifth affidavit, page 530 of the Court book? A. I'm sorry what paragraph Mr Couper. Q. At paragraph 77. You were there recording the content of discussion between you and Mr Harding on 24 July 2007, correct? A. Yes Mr Couper. Q. Where you say "I think we can agree that no royalties are payable in relation to the Adepole. Streetscape has said they are only sold the Adelaide City Council and sales are limited." I stop there. What you record in the second sentence, "Streetscape has said they are only sold to the Adelaide City Council and sales are limited" was something said on behalf of Streetscape before 30 March 2007, correct? A. Yes Mr Couper. Q. If you go over the page to paragraph 77 you record Mr Harding as saying, "I agree. Maybe we can agree on a trade off between the Adepole and the low impact poles." Is that what was said by Mr Harding? A. Yes. Q. You and he decided to use the Adepole as a bargaining chip to reach agreement that the intellectual property in the low impact pole would be agreed as the city's, correct? A. Yes. Q. You had heard nothing different from Streetscape about the Adepole since before 30 March 2007 at the time you decided to use the Adepole as a bargaining chip, correct? A. Sorry can you repeat the question? Q. Yes. You had heard nothing different from Streetscape about the Adepole since before 30 March 2007 at the time you and Mr Harding decided to use the Adepole as a bargaining chip, correct? A. Yes. Q. You and he made a commercial decision that that is the way in which you would proceed to negotiate the agreement, correct? A. Yes. Q. You had undertaken no investigation about what the Adepole was or was not between 30 March 2007 and the date of execution of the second deed of variation, correct? A. No. Q. You're agreeing with me? A. No I'm not agreeing with you. Q. So what investigation do you say you did between 30 March 2007 and the date of the execution of the second deed of variation about what the Adepole was or was not? A. The city relied on Mr Obeid's assurances. Q. By that do you mean that Mr Obeid said again, the same things he had said before 30 March 2007? A. Yes. Q. Was that the full extent of your investigation? A. Well there was no reason to doubt Mr Obeid. Q. You had doubted Mr Obeid on 30 March when you refused to accept his statement the Adepole was not a Smartpole, correct? A. No I - when the Adepole was identified in the Deloitte's report, Mr Obeid was asked about it and the assurance that he gave the city, myself and Mr Harding, was that the Adepole was not a Smartpole, it was produced for the City of Adelaide in limited quantities. That was repeated on numerous occasions. There was no reason for the city to doubt that assurance by Mr Obeid. Q. I'll ask one more time, I don't wish to be tedious about this. Why then was the Adepole not included in the no column in the first deed of variation? A. And I'm sorry Mr Couper I'm unable to recall. 328Ms McRae gave further evidence that Ms Hobbs was very sceptical of Mr Obeid's assertions that the Adepole was not a Smartpole: Q. Was it your view that the Adelaide pole was likely to be a Smartpole sold pursuant to the licence agreement? A. Yes. Q. Was that a view you discussed with Ms Hobbs? A. Well according to my affidavit, yes, I did. Q. Did Ms Hobbs agree with that view, that the starting point position was the Adepole was likely to be a pole sold pursuant to the licence agreement? A. I believe so, yes. Q. And is it right to say - let's go back to the S2 pole for a moment, it's pretty plain that Ms Hobbs was not prepared to accept Mr Obeid's view that the S2 pole was not a Smartpole, correct? A. That would be correct. Q. Would Ms Hobbs approached from your observation of her that she wouldn't accept Mr Obeid's position about whether poles were or were not Smartpoles without some sort of further objective proof? A. I'm sorry, can you rephrase the question, I'm not clear on what you're asking. Q. I'll put it in these terms. From your observation of Ms Hobbs in her dealings with the Streetscape people she was no prepared to take Mr Obeid's word for anything about whether a pole was or was not a Smartpole, correct? A. No, I would not say that's correct. Q. All right, well how would you put her attitude to Mr Obeid's position about whether particular poles were or-- A. In the meetings that I was present at, and I can only comment on those, there was significant discussions about specifically that. Q. When you say "discussions" do you mean disagreements? A. I would call them robust discussions. Q. Robust discussions where the parties took and maintained contrary views, correct? A. That would be fair to say. Q. Did the parties take and maintain contrary views about Adepoles at the meetings you attended? A. To the best of my recollection Adepoles were subject to far less discussion than the Smartpole 2. Q. Well whether they were subject to less discussion or more discussion, was there discussion to your recollection at which the parties took contrary views that the Adepole was or was not a Smartpole? A. Yes. Q. And that involved the notion that Mr Obeid ascertained at the Adepole was not a Smartpole and Ms Hobbs disagreed, correct? A. I believe so. Q. And it's right to say isn't it that at no time in any discussion with you did Ms Hobbs say that she was prepared to accept Mr Obeid's contention that the Adepole was not a Smartpole? A. I don't recall that. Q. Is it your understanding that the result of those competing contentions in the meetings you attended was that the Adepole was put into a to be determined category when it came to the Deed of Variation? A. Yes. Q. That is the parties had exchanged their views, were in disagreement and that's how it remained? A. Yes. 329Mr Harding gave evidence as to the City's views of Streetscape leading up to the first deed of variation: Q. Streetscape Projects up to and including 30 March asserted that the low impact pole was not a Smartpole, correct? A. That's correct. Q. The city was not prepared to accept that assertion was it? A. At that time I wanted more information about the Smartpole and that's what we decided with the first deed of variation. That why it was to be determined, there needed to be further discussion about the low impact pole. Q. You weren't prepared to take the word of anybody from Streetscape when they said the low impact pole was not a Smartpole, correct? A. Just repeat that again for me please. Q. You weren't prepared to take the word of anybody from Streetscape that the low impact pole was not a Smartpole, correct? A. That's correct at that time. Q. Yes and that's why the low impact pole was marked TBD in the first deed of variation? A. Correct. Q. Because you wanted to find out for yourselves and form your own view about whether the low impact pole was a Smartpole, correct? A. I wanted some further information, correct. Q. Yes and you wanted information independently of what Streetscape Projects asserted, correct? A. Correct. Q. Now Streetscape Projects up to and including 30 March 2007 was asserting that the Adepole was not a Smartpole, correct? A. That's correct. Q. You weren't prepared to take their word about that either, were you? A. No it was a - there was - the information I got on the 29th and 30th from Robyn Hobbs was that those matters were still to be resolved. Q. Yes and you'd agree with Robyn Hobbs that you should not take the word of Streetscape's representatives that the Adepole was not a Smartpole, correct? A. Well Streetscape had made the - not made there was a claim that the Adepole was not a Smartpole. Q. You weren't prepared to accept that, were you? A. Yes we were. 330I do not accept that the City would not be willing to accept Streetscape's assertions as to one set of poles but not the other. On the balance of probabilities, the City must have not accepted Streetscape's representations concerning the Adepole either. 331Mr Harding concurred with Ms Hobbs that on the date of signing the Second Deed of Variation, the City had not conducted any further investigations. As far as they were concerned the status of the Adepole was still to be determined: Q. Did she say anything to suggest that independently of Streetscape anybody from the city had tried to work whether the Adepole was or was not a Smartpole? A. I don't know. Q. You don't know? A. No. Q. At the time of the execution of the second deed of variation, the state of your knowledge was exactly the same as it was at 30 March 2007, that is Streetscape asserted that the Adepole was not a Smartpole and the city disagreed. Correct? A. Streetscape's position and I didn't get this from them directly but through Robyn, earlier was that the Adepole was not a Smartpole. 332Despite conducting no further enquires, on 19 October 2007, the City entered into the Second Deed of Variation and accepted that the intellectual property in the Adepole vests with Streetscape. In my view this was a commercial decision made by the City in an effort to secure its other intellectual property rights. The City did not accept Streetscape's representations as to the status of the Adepole but chose to conduct no further enquiries. 333I accept Ms Hobbs' evidence at paragraphs 102 to 107 of her 23 September 2010 affidavit that had she understood and appreciated the full extent of what clause 5(a) of the Second Deed of Variation meant she would not have entered into the agreement. However, I do not accept Ms Hobbs was misled by Streetscape's representations. On Mr Harding's evidence, the City did not believe any of the representations put to them by Streetscape. The City wished to carry out their own enquiries. The City could have carried out enquiries in relation to the Adepole but decided not to. In these circumstances the City was not misled by Streetscape's representations. Rather the City entered into a contract without properly investigating the implications of its decisions. This is not a situation of a person failing to take reasonable care to discover untruths in representations. This is a situation where Streetscape's representations were not material in the City's decision. In these circumstances, the City must bear the consequences of its bargain. 334These findings mean the Court does not need to consider the consequences of the City's failure to call Ms Barone. 335Even had the above findings been incorrect, Ms Nicholson gave evidence that she attended the meeting with Ms Barone on 23 March 2007 with Ms Hobbs and Mr Harding. This renders irrelevant the question of whether or not Ms Nicholson's notes were shown to Ms Barone. Clearly Ms Barone was informed. In these circumstances, the failure to call Ms Barone has no heinous consequences in Jones v Dunkel terms. S51A - Streetscape ' s representations as to the future 336The defendants also rely on s51A of the Trade Practices Act . That section provides: 51A Interpretation (1)[Misleading representations] For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading. (2)[Representations respecting future matters] For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation. (3)[Subsection (1) not limiting] Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead. 337In Digi-Tech (Australia) Ltd v Brand [2004] NSWCA 58, the Court of Appeal commencing at paragraph [91] set out the approach to be taken to this section as follows: [91] Section 51A was inserted in the Trade Practices Ac t as part of the Trade Practices Revision Act 1986 (the " Revision Act "). The Second Reading Speech to the Revision Act does not cast any light on the particular purpose of s 51A. It does, however, make clear that the purpose of the Revision Act was "to extend the protection afforded to consumers by the [ Trade Practices] Act ": see Trade Practices Revision Bill 1986, Second Reading Speech, Hansard, House of Representatives, Vol 147 at 1624. [92] The Explanatory Memorandum to the Trade Practices Amendment Bill 1995 (which was the Bill in which s 51A first appeared - it was superseded by the Revision Act Bill because of opposition in the Senate to s 50(2C)) explained that s 51A was introduced to deal with difficulties which had occurred in relation to the ability of provisions in Div 1 of Pt V of the Trade Practices Act 1974 to deal with false or misleading statements, representations, or predictions, about future matters. These difficulties, it pointed out, were highlighted in Thompson v Mastertouch TV Services Pty Ltd (No 2) (1977) 15 ALR 487 which identified two problems. The first was, as Franki J observed (at p 495): "[A] prediction or statement as to the future is not false within the words of [s 59(1)] if it proves to be incorrect unless it is a false statement as to an existing or past fact which may include the state of mind of the person making the statement or of a person whose state of mind may be imputed to the person making the statement." The second was, as, Franki J observed (at p 495), in order for the prosecution to prove that a prediction of the profitability of a business was false, it was necessary for the informant "to prove that the defendant did not believe that the forecast or prediction would be satisfied or was recklessly indifferent concerning the forecast or prediction." This was a difficult task. [93] The distinction which the common law drew between a representation as to an existing fact and a promise to do something in the future was explored by McHugh JA in his dissenting judgment in Wright v TNT Management Pty Ltd (1989) 15 NSWLR 679 at 688 ff. His Honour pointed out (at 688): "The common law drew a distinction between a representation as to an existing fact and a promise to do something in the future. At common law, a promise as to a future intention or event was actionable in contract. But a representation as to a future event was not actionable. A representation was actionable only when it concerned an existing or past fact. Moreover, statute apart, a non-contractual promise that something was to be done in the future did not constitute a representation of an existing fact 'unless out of it can be spelt a representation as to the present existence of an intention, belief or state of knowledge on the part of the promisor." His Honour described the effect of s 51A in the following terms (at 690): "... for the purposes of Part V, s 51A must be taken to have abolished the distinction between a promise and a representation with respect to a future event. A promise to do something in the future is to be regarded as a representation that it will be performed. It will be deemed misleading, therefore, unless the corporation proves that it had reasonable grounds for making the promise." Although McHugh JA was in dissent in the case concerned, the force of his observations are, with respect, self-evident. 338Their Honours also noted at [107]: "The wording of s 51A is not complex, nor is it difficult to understand. It is undesirable to apply past judicial pronouncements as to factors relevant in other cases as some sort of code of conditions that has to be satisfied for the section to apply in every case. The ordinary meaning of the language used in s 51A is plain enough to provide the key to whether it applies in a particular case." 339Importantly, s51A does not require the plaintiff to prove that the City relied on any misleading representations. Rather, the plaintiff must prove that Streetscape made representations with respect to a future matter and that those representations did not materialise. Upon discharging this onus, the evidential burden shifts to Streetscape per s51A(2) to show that they had reasonable grounds for making those representations c.f. Re McGrath; Pan Pharmaceuticals (in liq) v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230. 340In respect of future matters, the plaintiff pleaded that Streetscape represented that in the future it would only sell "the Adepole (catalogue item 41100)" to the Adelaide City Council and it did not have reasonable grounds for making such representations. 341I accept the plaintiff's evidence that Streetscape and in particular Mr Obeid made these representations to the City. In particular I accept the evidence given by Ms Hobbs at paragraphs 80 to 82 of her 23 September 2010 affidavit. This finding follows from the Court's favourable view of Ms Hobb's evidence. 342Considering these misleading representations were made, it is incumbent on the defendants to meet their evidentiary onus in providing evidence of the reasonableness of making such representations. Rather than produce evidence in defence, the defendants' evidence was to the contrary. In Mr McLeod's affidavit of 11 December 2009 at paragraph 78, the deponent gave evidence that Streetscape has actively attempted to sell Adepoles to the City of Perth, Streetscape did not intend to limit its sales to Adelaide and there was therefore no reasonable basis for making these representations: I am aware that the current executive officer of the C of S, Ms Robyn Hobbs, has contacted Michael Murphy the Principal Urban Designer of the Urban Development Unit of the City of Perth and other Perth representatives to discourage the acceptance of Streetscape's tender bid for that Council and to assert that Streetscape would be supplying Smartpoles to the City of Perth and not its own poles if it were the successful tenderer. This is untrue, Streetscape notes that the tender bid to the City of Perth was made by Streetscape during the period of the Licence Agreement which conferred exclusive rights upon Streetscape to market Smartpoles nationally. Further it is Streetscapes intention to supply Adepole poles (as appropriately branded and customised) to that Council. 343Mr McLeod's evidence was wholly consistent with the marketing brochures produced by Streetscape, which offered a wide range of poles for sale, including the Adepole. 344It was Ms Hobbs' evidence that had she understood that these poles would be sold outside of Adelaide, she would not have vested copyright in the Adepole to Streetscape. While I do not accept that Ms Hobbs relied upon the City's representations as to existing facts, with respect to future matters there were no conceivable steps the City could have taken to verify the truth of these representations. Either way, s51A does not require such steps to be taken. Streetscape made misleading representations to the City without any reasonable basis. Appropriate relief for breach of s51A 345Section 51A of itself does not create a cause of action. The relevant cause of action and relief is to be found in Part VI of the Act. 346One such form of relief is s87. That section provides: (1)Without limiting the generality of section 80, where, in a proceeding instituted under this Part, or for an offence against section 44ZZRF or 44ZZRG, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this subsection) in contravention of a provision of Part IV, IVA, IVB, V or VC, or of the Australian Consumer Law, the Court may, whether or not it grants an injunction under section 80 or makes an order under section 82, 86C, 86D or 86E, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage. (1A) Without limiting the generality of sections 51ADB and 80, the Court may: (d)on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of Division 2 of Part IVB; or (e)on the application of the Commission in accordance with subsection (1B) on behalf of one or more persons who have suffered, or who are likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of Part IV (other than section 45D or 45E) or Division 2 of Part IVB; or (ba) on the application of the Director of Public Prosecutions in accordance with subsection (1BA) on behalf of one or more persons who have suffered, or who are likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of section 44ZZRF or 44ZZRG; make such order or orders as the Court thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2)) if the Court considers that the order or orders concerned will: (f)compensate the person who made the application, or the person or any of the persons on whose behalf the application was made, in whole or in part for the loss or damage; or (g)prevent or reduce the loss or damage suffered, or likely to be suffered, by such a person. (1B) The Commission may make an application under paragraph (1A)(b) on behalf of one or more persons identified in the application who: (h)have suffered, or are likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of Part IV (other than section $%D or 45E) or Division 2 of Part IVB; and (i)have, before the application is made, consented in writing to the making of the application. (1BA) The Director of Public Prosecutions may make an application under paragraph (1A)(ba) on behalf of one or more persons identified in the application who: (j)have suffered, or are likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of section 44ZZRF or 44ZZRG; and (k)have, before the application is made, consented in writing to the making of the application. (1C) An application may be made under subsection (1A) in relation to a contravention of Part IV, IVA, IVB, V or VC, or of a provision of the Australian Consumer Law, even if a proceeding has not been instituted under another provision in relation to that contravention. (1CA) An application under subsection (1A) may be made at any time within 6 years after the day on which the cause of action that relates to the conduct accrued. (2)The orders referred to in subsection (1) and (1A) are: (l)an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after such date before the date on which the order is made as is specified in the order; (m)an order varying such a contract or arrangement in such manner as is specified in the order and, if the Court thinks fit, declaring the contract or arrangement to have had effect as so varied on and after such date before the date on which the order is made as is so specified; (ba) an order refusing to enforce any or all of the provisions of such a contract; (n)an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to refund money or return property to the person who suffered the loss or damage; (o)an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage; (p)an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, at his or her own expense, to repair, or provide parts for, goods that had been supplied by the person who engaged in the conduct to the person who suffered, or is likely to suffer, the loss or damage; (q)an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, at his or her own expense, to supply specified services to the person who suffered, or is likely to suffer, the loss or damage; and (r)an order, in relation to an instrument creating or transferring an interest in land, directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to execute an instrument that: (i)varies, or has the effect of varying, the first-mentioned instrument; or (ii)terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first-mentioned instrument. 347In Akron Securities v Iliffe (1997) 41 NSWLR 353, Mason P discussed in considerable length the approach to be taken in determining the appropriate remedy for a breach of the Act under s87. I accept the following principles enunciated by his Honour as trite law: (1)Early case law took a narrow approach to s 87 of the Trade Practices Act 1974 (Cth), with Courts fearing to move far from the familiar coastline of traditional common law and equitable approaches. But it is now clearly established that s 87 is to be given no restrictive interpretation. In the words of Gummow J in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 37-38: "... whilst contractual rights subsist ... between the parties their relationship is not governed simply by the general law as to vendor and purchaser. The legislation regulates the existence and exercise of what would otherwise be the rights at general law and, in addition, itself creates new rights and remedies ...[It] should be no inhibition to giving effect to what, on its proper construction, is provided for in the legislation, that the result may be to achieve consequences and administer remedies which differ from those otherwise obtaining under the general law ...." A Court should not restrict the exercise of its discretion "by imposing upon itself technicalities which might defeat the policy of the section": (2)The very scope of s 87 means that the Court "must consider all the circumstances before it in the exercise of its discretion": Henjo (at 564), per Lockhart J. In Reg Russell & Sons Pty Ltd v Buxton Meats Pty Ltd (1994) ATPR (Digest) 46-127 at 53,614, Ipp J of the Supreme Court of Western Australia said: "The Court has a very wide discretion under s 87(1) .... In exercising its discretion the Court will take into account whether there is a causal link between the loss or damage suffered or likely to be suffered by the plaintiff, whether and to what extent the plaintiff is the author of his or her own misfortune, and whether another remedy is or was at hand to recover the loss or damage in question." (3)There is no point in having a remedial smorgasbord if the table is not scanned at least briefly to see what is best on offer. In this, the task of a judge whose findings of detrimental reliance have presented the key to s 87 is not unlike that facing a trustee of a discretionary trust who has a power to distribute: cf Lutheran Church of Australia South Australia District Incorporated v Farmers' Co-operative Executors and Trustees Ltd (1970) 121 CLR 628 at 639, 652. 348I also adopt what French J (as his Honour then was) said in Tenji & Anor v Henneberry & Associates Pty Ltd & Ors (2000) 98 FCR 324 at 333: "Loss or potential loss causally linked to contravention conditions the exercise of the remedial powers under s 87 and their exercise must be directed to compensate for that loss. The same may be said, limited to actual loss, for the award of damages under s 82. The conditions for the exercise of power under s 87 having been satisfied and the compensatory outcome identified, the grant of such relief is discretionary as is the particular kind of order under s 87(2) that may be made. The exercise of that discretion and the choice of order may then be affected by other considerations. The making of an order under s 87(2)(a) declaring a contract to be void may be based upon a number of factors including those which would affect the grant of analogous relief in equity. But, while relevant, they are not determinative. The question whether there has been a disaffirmation or a commitment to the performance of the contract by the party suffering loss will generally be relevant. The question whether the party would have decided to continue with the purchase, even if aware of the true position, may also be relevant although, as has been pointed out, that does not determine the availability of equitable rescission." 349In cases of misleading and deceptive conduct there have been occasions where the Court has found that in balancing all the relevant considerations, the remedy which will best to do justice between the parties is to vary the terms of the contract in accordance with s87(2)(b). 350In Allied Westralian Finance Ltd v Wenpac Pty Ltd (1992) ATPR 46-082, Murray J spoke of the discretion to vary a contract in the following terms: "Whilst under s87(2)(b) it is clear that among the orders generally contemplated by the section is an order varying a contract or arrangement between the parties and, if appropriate, declaring that the varied contract or arrangement shall be regarded as having had effect from a point of time prior to the judgment, it is clear that such action should only be taken to the extent it is necessary to provide proper compensation for the particular loss of which complaint is made and, the Court so it has been held, "must be slow to impose upon the parties a regime which could not represent the bargain they would have struck between them" 351This position has been echoed in other cases such as ASX Operations Pty Ltd v Pont Data Australia Ltd (1991) 27 FCR 492. 352The bargain struck between the parties was that the intellectual property in the Adepole is to be vested in Streetscape. However, Streetscape represented, without any reasonable basis for doing so, that the Adepoles were produced only for the City of Adelaide and would be sold only to that entity. For this reason, the most appropriate remedy to alleviate the damage suffered by the City, without altering the terms of the arrangement beyond what was fairly agreed, is to vary clause 5(a) of the Second Deed of Variation such that it has the effect that from the date of entering into this deed, the City vested intellectual property in the Adepole (catalogue item 41100) only to the extent that the pole is designed for the Adelaide City Council and is to be sold to that council. This variation most clearly reflects Streetscape's representations to the City and the City's understanding of the effect of the agreement being entered into. Distribution of Smartpoles overseas 353A large part of this case centred on the relationship (or lack of) between Streetscape Projects (Australia) and Streetscape International. 354The plaintiff alleged that Streetscape Australia provided confidential information and drawings to Streetscape International. It was the plaintiff's case that the two entities were really one operating under the same parent company. The plaintiff argued that Streetscape International sold Smartpoles around the world with the knowledge and consent of Streetscape Projects Australia. 355The defendants disputed this contention, maintaining that the two entities were completely separate. Streetscape Projects (Australia) denied vesting any confidential information to Streetscape International. The defendants claimed to have little knowledge of Streetscape International's operations other than from the contact the two companies had through consultancy agreements and various co-operation on projects. 356The Court's decision on this issue relied primarily on the credibility of each party's witnesses. I have adumbrated in substantial length the reasons why I prefer the plaintiff's witnesses to the defendants'. A large part of this assessment was formed on the basis of my negative view of the defendants' witnesses on the Streetscape International issue. 357In this regard, the Court accepts the following findings in relation to Streetscape International: (1)In February 2002, Gerard Obeid and Andrew Gifford for Streetscape Projects travelled to the Middle East and gave presentations to Dubai, Abu Dhabi and Bahrain municipalities in relation to Smartpole poles . They identified substantial opportunities and real prospects for the sale of Smartpole poles in the Middle East . (2)In May 2002, Moses Obeid and Gerard Obeid for Streetscape Projects travelled to Dubai and made presentations of the Smartpole poles to the municipality in Dubai and to Abu Dhabi municipality and in Bahrain. Moses Obeid also travelled to the UAE on 2 July 2002 for 12 days, 8 September 2002 for 5 days and 21 October 2002 for 6 days. Gerard Obeid travelled to the UAE with Moses Obeid on 10 April 2002, 3 July 2002, 8 September 2002 and 21 October 2002. (3)In mid-2002, Moses Obeid for Streetscape Projects reached an agreement with Al Ashram that Streetscape Projects would develop, design, manufacture and supply products, systems and marketing know how to the Middle East and Al Ashram would provide working capital and local business knowledge. (4)Over several other trips in 2002 and 2003, Gerard Obeid for Streetscape Projects met with and marketed Streetscape Projects to various public authorities and private companies and made contact with companies with manufacturing capabilities to establish a supply chain of raw materials and fabricators within the UAE for the purpose of setting up a local company to carry out the manufacture and supply of Smartpole poles in the UAE. (5)During 2002 and 2003, Streetscape Projects established a business in the United Arab Emirates under the name Streetscape International for the purpose of manufacturing and selling Smartpoles in the United Arab Emirates and elsewhere in the Middle East. (6)Streetscape Projects vested knowledge, skills and intellectual property relating to the Smartpole poles in Streetscape International for the purpose of manufacturing and selling Smartpole poles in the United Arab Emirates and elsewhere in the Middle East. Streetscape International used that knowledge, skill and intellectual property to manufacture and sell Smartpole poles in the United Arab Emirates and elsewhere in the Middle East commencing in and continuing after 2003. (7)Streetscape Projects controlled and had an ownership interest in Streetscape International from its inception. The business conducted in the name of Streetscape International was a business wholly derived from and emanating from Streetscape Projects and was carried on for and on behalf of Streetscape Projects. (8)The agreement which Moses Obeid reached with Al Ashram in mid-2002 was performed prior to December 2003/February 2004 and continued at all times thereafter to be performed. In reaching this finding, the Court rejects the Defendants' evidence that there were conversations relating to some falling out between Streetscape Projects and Al Ashram or Joshua Abood in December 2003/February 2004 which resulted in Streetscape Projects having no further interest in Streetscape International for the sale of Smartpole poles in the Middle East. The Court rejects the attempts by Moses Obeid and Daniel Joseph in their evidence to explain the relationship between Streetscape Projects and Streetscape International and Joshua Abood (other than an established and continuing relationship from 2002). (9)Between April and September 2003, John McLeod for Streetscape Projects lived in Dubai and set up a project and manufacturing division of Streetscape International and directed the implementation of 750 Smartpoles for the Dubai Marina Project. The project and manufacturing division of Streetscape International did in fact manufacture and supply Smartpole poles for the Dubai Marina Project and, thereafter, continued to manufacture and supply Smartpole poles for numerous other projects. (10)In 2003, Adam Smith of Streetscape Projects was posted to the Middle East to set up a self-sustaining design and development centre for Streetscape International. (11)By 23 July 2003, as described by Streetscape Projects in its letter to Holophane of that date, Streetscape Projects had taken steps to market the Smartpole System internationally by establishing Streetscape International in Dubai and Streetscape International was engaged in a number of projects at that time in the Middle East and would be the entity that would provide the know-how, technology and IP underpinning the Smartpole System. Streetscape International continued to be so engaged. (12)In August 2003, Streetscape International signed a contract to roll out the Smartpole System on the Emaar Properties Dubai Marina Development in Dubai. (13)On 17 November 2003, Gerard Obeid ceased to be a director of Streetscape Projects. He moved to the UAE on a permanent basis to be involved in the operation of Streetscape International and he continued to be involved in those operations. (14)Between July 2003 and July 2004, Streetscape Projects and Moses Obeid were engaged in negotiations for a proposed joint venture involving Streetscape International for the supply of Smartpole poles with Acuity/Holophane in the USA under which Streetscape International would provide the know-how, technology and IP underpinning the Smartpole system in the proposed joint venture. Joshua Abood who was involved with that proposed joint venture was nominated as one of the important employees who would work in the joint venture and was proposed as one of the advisory committee that would have management responsibility for the joint venture. (15)In the second half of 2004, Moses Obeid and Gerard Obeid engaged in negotiations concerning proposed joint ventures in Australia and in South Africa concerning Smartpole poles. Streetscape International was the proposed vehicle for the joint venture in South Africa. (16)Throughout 2004 to 2007, the business of Streetscape International continued and Streetscape Projects remained involved in that business and during that time Streetscape International entered into numerous further contracts for the supply of Smartpole poles within the United Arab Emirates and the Middle East. Distribution of Smartpoles in the UAE 358I accept the plaintiff's evidence that in mid-2008, the City became aware through an internet website operating under the name Streetscape International that Smartpoles had been sold in the Middle East. The international website referred to over 7,000 "Smartpole" poles that had been sold or were in the process of being sold in the UAE and Saudi Arabia (in addition to Smartpoles that had been sold in Australia and Spain). 359The international website was substantially similar to Streetscape Australia's website and made similar claims to that website including: (1)That Streetscape International was the sole manufacturer and seller of "Smartpole" poles; (2)that Streetscape International had installed "Smartpole" poles which were located in specific sites within Sydney and other parts of Australia; (3)that Streetscape International had its origin and association with the City of Sydney dating back to 1998; and (4)that Streetscape International was selling multifunction poles (known as "Smartpoles") which had been developed in connection with the Sydney Olympic Games. 360Mr Joshua Abood, an Australian citizen and the cousin of Mr Moses Obeid is the executive director of Streetscape International FZE. 361There was an abundance of documentary evidence, which proved the plaintiff's allegation. One document of particular interest was Exhibit #P7, a glossy brochure under the name Streetscape International as part of Streetscape' tender to supply Smartpoles to the Woollahra Municipal Council in late 2007. That brochure contained similar claims to those in the international website referred to above, including that Streetscape International's project portfolio included Australia, Dubai and Saudi Arabia. 362A significant number of other documents were provided to the Court by the plaintiff which contained other admissions to the same effect, namely, that Streetscape had distributed the Smartpoles in the Middle East and that the intellectual property and the confidential information relating to the Smartpoles had been used for that purpose. Four of the key documents were: (1)Memorandum of Information prepared for Macquarie Bank by Streetscape Projects in February 2006; (2)Presentation made to FBR by Streetscape Projects in December 2006; (3)Expression of Interest in relation to street lighting in Delhi from Streetscape Projects to PWD in about September 2007; and (4)Email from Streetscape Projects dated 26 March 2009 attaching a Streetscape brochure for a prospective purchaser of Smartpole poles in Darling Harbour 363In the Memorandum of Information prepared for Macquarie Bank referred to in 9(a) above, Streetscape stated: " With its first international operations established in the Middle East and headquartered in Dubai, the company is pursuing evolving ventures in China, Russia, South Africa, United Kingdom, Spain and North America" (p.5);" "...Streetscape has a well and established presence/pipeline of related projects in Australia, Barcelona and the Middle East." (p.18)". 364Page 32 of the information memorandum contains a list of projects in Australia and the Middle East which are also referred to in the glossy brochure under the name Streetscape International referred to above and in the international website. 365Further, in a separate presentation by Streetscape to FBR at a meeting in December 2006, there was a separate profit and loss statement of Streetscape Australia and Streetscape International and a "consolidated" figure for both entities for the year ending 30 June 2006. It contained a forecast of the growth of both entities and referred to the "senior management team" as including Gerard Obeid (the brother of Moses Obeid) and Joshua Abood (the cousin of Moses Obeid). In the presentation, Streetscape stated: "In Dubai, we are commencing the process of establishing a warehousing and assembly facility justified by the forecast growth. Also, we are commencing a process of expansion into other Emirates and countries in the Middle East including Qatar, Saudi Arabia and Libya." 366In the Expression of Interest dated September 2007 from Streetscape to PWD in India, Streetscape Projects identified projects involving the installation of Smartpoles in the UAE as evidence of Streetscape "suitability, technical know-how and capability" to supply Smartpoles in India. Streetscape Projects listed several installations of Smartpoles in the Middle East as Streetscape Projects installations. 367In the email from Streetscape to a prospective purchaser of Smartpoles for Darling Harbour, it was said on behalf of Streetscape: "We have done similar poles for the Dubai Marina and recently for Singapore Developments". 368The Streetscape catalogue attached to that email contained the following statements: "Streetscape Projects are the exclusive supplier of the Smartpole System. Smartpole installations can be found in capital cities Sydney, Adelaide, Barcelona, Shanghai, Dubai, Abu Dhabi and Bahrain". "In 2002, Streetscape vested knowledge, skills and IP to its Middle East subsidiary based in Dubai due to the successful outcome of tenders in the UAE. It is Streetscapes intention to transfer this know-how to the UK and establish a local manufacturing and assembly facility should we be successful in our 2012 Olympic bid". 369In addition to denying that Streetscape distributed Smartpoles in the UAE, Streetscape also said that the poles sold in the UAE were not Smartpoles. This denial was on the basis of the overly narrow definition of a Smartpole adopted by Streetscape. I have earlier rejected that definition. Having rejected that definition, it is clear from Mr Matchett's evidence that the poles sold in the UAE were either Smartpoles as defined in the 2002 License Agreement or otherwise used the intellectual property of the City of Sydney as a result of the 2000 agreement. Streetscape's claim for Unpaid Royalties in the UAE 370Clause 15.5 of the Licence Agreement provides: "Without limiting any other right conferred under this Licence, or at law, if [Streetscape Projects] distributes the Smartpole poles in one or more areas which is not authorised by this Licence, then the [City] may recover from [Streetscape Projects] on demand as a debt due and owing the aggregate of the following in respect of each unauthorised area: (a) the highest Annual Licence Fee specified in Item 6 of Schedule 1; and (b) an amount determined by applying the highest Royalty Rate specified in Item 7 of Schedule 1 to the number of "Smartpole" poles distributed in the unauthorised area." 371Based on Streetscape's admissions in its various documents, there are in excess of 10,000 poles that have been sold in the UAE during the term of the License Agreement. The City also claims royalties are due and payable in relation to the distribution of Smartpole poles into other territories including the Kingdom of Saudi Arabia and Singapore. 372In response, Streetscape claims that the amount claimed and calculated purportedly in accordance with clause 15.5 of the Licence Agreement is uncertain or otherwise extravagant and unconscionable and greater than any loss which would have been suffered by the City. The City had and has no rights and does not claim any rights, which it could or can enforce overseas to receive any fees or royalties. Clause 15.5 was not and is not a genuine pre-estimate of damages. 373As to uncertainty the defendant contended: (1)It becomes apparent that there is a difficulty for the City in the construction of clause 15.5. The clause refers to "one or more areas which is not authorised". Nowhere is the term "areas" defined. "Territory" is defined in clause 1.1 to mean the geographical location or locations identified in Item 8 of the Schedule. It is to be noted that geographical location or locations is used as a distinct term from area or areas. Item 8 of the Schedule identifies three territories Australia, New Zealand and Spain; and (2)One cannot tell from the Licence Agreement what is relevantly an area. If, for example, Streetscape Projects had distributed Smartpole poles in France and Germany or in the United States of America and Mexico or in all of those countries is one or more than one Annual Licence Fee payable pursuant to clause 15.5. Is any of them, or any combination of them an area? The clause permits of no certain answer. It is submitted that the clause is void for uncertainty. 374The Court rejects that there is any uncertainty. The agreement defines "territory" as those identified in Item 8. These territories are those validly subject to the Licence Agreement. Area is intended to refer to any other country not listed in Item 8. Clause 15.5 could not refer to territories, because a territory is a defined term. The purpose of using the word "area" is to distinguish between the distribution of Smartpoles in authorised territories and any unauthorised area. An area is an unlicensed territory and should be given this meaning. From the agreement between the parties it is clear that a territory is a country. The geographical scope of an area is not uncertain. It also refers to a country. 375The next question is whether Clause 15.5 is a valid liquidated damages clause or an unenforceable penalty. The defendants' premise their submission on the basis of the allegations that the City: (1)had no valuable rights outside of Australia which it could exploit by way of granting licences; and (2)has made no attempt to prove that it had valuable intellectual property rights outside of Australia which it could potentially exploit. The plaintiff ' s loss 376The defendants claim that the City has no valuable intellectual property rights outside of Australia. They therefore contend that it has suffered no loss arising out of the distribution of Smartpoles in the UAE. The defendants maintain that any claim for damages is penal and is exorbitant, considering the City has suffered no loss. This submission misstates the nature of the loss suffered as a result of Streetscape's breach of the Licence Agreement. 377Intellectual property, like other forms of property, vests in the owner certain rights including the right to prevent others from using their property without their consent. Streetscape has infringed this valuable right. 378The traditional approach to measuring damages for misuse of intellectual property rights is the wronged party's loss of license fees. However this is not the exclusive measure. In Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales (1975) 6 ALR 445 Bowen CJ in Eq commented at 446 that it would be wrong to treat this approach to damages as: "having, in effect, the force and rigidity of statutory provision. The purpose of damages is to compensate the plaintiff for the loss which he has suffered as a result of the defendant's breach. It would, in my opinion, be wrong to regard it as the exclusive measure of damages for breach of copyright appropriate to all circumstances". 379In Australasian Performing Right Association Ltd v Grebo Trading Co Pty Ltd (1978) 23 ACTR 30 Blackburn CJ clarified the approach to damages of this nature is a robust one. His Honour said at 31: "The phrase 'the depreciation of the value of the copyright as a chose in action' is no more than a convenient label for the various ways of assessing damages which are available in particular cases. In the case before me, the phrase means that the copyright has been less valuable to its owner than it was before the infringement, because it then had the potentiality of generating the income which would have been derived from the lawful performance of the music works, and it has not in fact generated that income. The difference is the income which should have been generated; that is to say, the fees which the infringers should have paid in order to perform the works lawfully. That amount, for the purposes of this case, is the 'depreciation of the value of the copyright'." 380In cases for breach of copyright, the Court has accepted that trespass of one's intellectual property can diminish its value, even where the wronged party is unable to prove a loss of license fee. In Review Australia Pty Ltd v Innovative Lifestyle Investments Pty Ltd & Anor [2008] FCA 74, Jessup J considered the appropriate compensation for the sale of a dress which infringed a registered design in circumstances where there was no evidence of loss of sales. His Honour accepted that the applicants placed significant value on perceived originality and the infringement of this design diminished the value of the design. His Honour also noted that it was very difficult to assess the quantum of the loss. 381In the present case, the City's rights to control the use of its intellectual property were infringed by the sale of Smartpoles in the UAE. This contractual breach will undoubtedly cause loss to the City. The evidence shows that the City placed significant value on being the sole owner and controller of the intellectual property in the innovative Smartpole design. Streetscape recognised this in their tender documents. Streetscape's construction of poles in the UAE depreciated the uniqueness and control the City sought to protect. 382The Court accepts that placing a value on this damage is extremely difficult. This is all the more reason why the Court should be hesitant to depart from a liquidated damages clause. The parties contractually agreed that the price of an infringement of the City's intellectual property was to be calculated by reference to clause 15.5 of the Licence Agreement. This is the value that the City placed on its intellectual property rights and is therefore the value of the loss that the City has suffered as a result of this contractual breach. Whether or not the City has rights outside of Australia is beside the point. The parties agreed on the value of a breach of the City's contractual rights. As a result, it cannot be said that the provision is "out of all proportion to damage likely to be suffered as a result of breach." cf: Ringrow Pty Limited v BP Australia (2005) 224 CLR 656 at [27]. The legal principles in support of the Court's decision on clause 15.5 383The law in this area starts with the proposition that the parties are afforded contractual freedom. The application of the penalty principle is exceptional. 384The law does not discourage agreed damages clauses. The law encourages certainty and enables the parties to provide for compensation in situations where loss may be difficult or impossible to quantify or, even if quantifiable, may not be recoverable at common law AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 193. 385In Ringrow Pty Limited v BP Australia (2005) 224 CLR 656 the Court at [27] said: Among the different words which have been used to describe how extensive the difference must be before the transaction creates a penalty are the words employed by Mason and Wilson JJ in AMEV-UDC Finance Ltd v Austin - a "degree of disproportion" sufficient to point to oppressiveness . But their Honours were not asserting any doctrine of the kind relied on by the appellant, which would rest on a disproportion between the innocent party's commercial interests and the promise extracted to protect them. That type of idea underlies the law relating to contracts in restraint of trade, which recognises certain interests which it is legitimate for a covenantee to seek to protect by a covenant in restraint of the covenantor's trade, so long as the covenant is not wider than is reasonably necessary to protect those interests. Such an idea is not, however, part of the law relating to penalties. Mason and Wilson JJ initially made the point that an agreed sum should only be "characterised as a penalty if it is out of all proportion to damage likely to be suffered as a result of breach". Later their Honours referred to proportionality as follows: [E]quity and the common law have long maintained a supervisory jurisdiction, not to rewrite contracts imprudently made, but to relieve against provisions which are so unconscionable or oppressive that their nature is penal rather than compensatory. The test to be applied in drawing that distinction is one of degree and will depend on a number of circumstances, including (1) the degree of disproportion between the stipulated sum and the loss likely to be suffered by the plaintiff, a factor relevant to the oppressiveness of the term to the defendant, and (2) the nature of the relationship between the contracting parties, a factor relevant to the unconscionability of the plaintiff's conduct in seeking to enforce the term. The Courts should not, however, be too ready to find the requisite degree of disproportion lest they impinge on the parties' freedom to settle for themselves the rights and liabilities following a breach of contract. (Emphasis added) 386The latitude given by law to contracting parties to determine their rights and obligations was referred to in AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 190 per Mason and Wilson JJ, where the Court said: "However, there is much to be said for the view that the Courts should return to the Clydebank and Dunlop concept, thereby allowing parties to a contract greater latitude in determining what their rights and liabilities will be, so that an agreed sum is only characterized as a penalty if it is out of all proportion to damage likely to be suffered as a result of breach: see Robophone Facilities Ltd v Blank (1966) 1 WLR 1428; U.K. Law Commission, pars. 33, 42-44." 387There may be positive advantages in an agreed damages clause. In AMEV-UDC Finance Ltd v Austin at 193 per Mason and Wilson JJ, the Court said: "In the case of provisions for agreed compensation and, perhaps, provisions limiting liability, that latitude is mutually beneficial to the parties. It makes for greater certainty by allowing the parties to determine more precisely their rights and liabilities consequent upon breach or termination, and thus enables them to provide for compensation in situations where loss may be difficult or impossible to quantify or, if quantifiable, may not be recoverable at common law. And they may do so in a way that avoids costly and time-consuming litigation." 388The fact that damages may be difficult to assess was the consideration that formed the basis for the decision in Dunlop : The consideration which formed the basis for the decision in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd was that the damages for breach by the defendants would have been difficult to assess and the sum stipulated (5) was not an extravagant pre-estimate of the plaintiffs' loss. Lord Dunedin said: It is no obstacle to the sum stipulated being a genuine pre-estimate of damage, that the consequences of the breach are such as to make precise pre-estimation almost an impossibility. On the contrary, that is just the situation when it is probable that pre-estimated damage was the true bargain between the parties. 389In Ringrow Pty Limited v BP Australia (2005) 224 CLR 656 at [32], the Court said: Exceptions from that freedom of contract require good reason to attract judicial intervention to set aside the bargains upon which parties of full capacity have agreed. That is why the law on penalties is, and is expressed to be, an exception from the general rule. It is why it is expressed in exceptional language. It explains why the propounded penalty must be judged "extravagant and unconscionable in amount". It is not enough that it should be lacking in proportion. It must be "out of all proportion". It would therefore be a reversal of longstanding authority to substitute a test expressed in terms of mere disproportionality. However helpful that concept may be in considering other legal questions, it sits uncomfortably in the present context. Clause 15.5 is proportionate to the damage likely to be suffered upon breach 390The onus is on the defendants to prove that clause 15.5 is out of all proportion to the damage likely to be suffered by the City upon Streetscape's breach of the Licence Agreement for unauthorised use of the intellectual property. 391Cases involving infringement of intellectual property rights offer a useful point of analogy to the present facts. 392In General Tire and Rubber Co v Firestone Tyre and Rubber Co Ltd [1975] 2 All ER 173, the House of Lords stated at 177-178 per Lord Wilberforce: Other patents of inventions are exploited through the granting of licences for royalty payments. In those cases, if an infringer uses the invention without a licence the measure of the damages he must pay will be the sums which he would have paid by way of royalty if instead of acting illegally, he had acted legally. 393In a statement of principle of more general application, in Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157, it was said at 164-5 by Fletcher Moulton LJ: There is one case in which I think the manner of assessing damages in the case of sales of infringing articles has almost become a rule of law, and that is where the patentee grants permission to make the infringing article at a fixed price-in other words, where he grants licences at a certain figure. Every one of the infringing articles might then have been rendered a non-infringing article by applying for and getting that permission. The Court then takes the number of infringing articles, and multiplies that by the sum that would have had to be paid in order to make the manufacture of that article lawful, and that is the measure of the damage that has been done by the infringement. The existence of such a rule shows that the Courts consider that every single one of the infringements was a wrong, and that it is fair-where the facts of the case allow the Court to get at the damages in that way-to allow pecuniary damages in respect of every one of them. I am inclined to think that the Court might in some cases, where there did not exist a quoted figure for a licence, estimate the damages in a way closely analogous to this. 394The Licence Agreement imposed an obligation on Streetscape to pay an annual licence fee and royalties in consideration for the rights granted to it under the licence, including the right to exploit the City's intellectual property on terms. Clause 15.5 recognises this commercial arrangement and extends its operation to apply in instances of unauthorised distributions of Smartpoles in areas outside of Australia. 395The effect of clause 15.5 is wholly consistent with the price the parties bargained for the right to exploit the intellectual property. It is therefore also consistent with the judicial approach outlined in the above authorities to the measure of damages in analogous circumstances to the present. It operates on the hypothetical premise that Streetscape would pay the agreed price, in the form of a royalty, for each unauthorised distribution of Smartpoles and the relevant licence fee for its operation in each additional territory. 396The clause is a proportionate measure and mirrors the approach the Court would take in assessing the damage the City would suffer by virtue of the unauthorised distributions of Smartpoles. On this basis, clause 15.5 is not a penalty and is enforceable. In coming to this conclusion I note that the clause adopts the royalty rates and license fees for other overseas areas the subject of agreement. The clause does not impose an obligation disproportionate to the amount agreed for other territories. Rejection of proposed amendments of the defendants' Commercial List Response relating to clause 15.5 397The defendants submit that the City has failed to establish that it has rights capable of licensing internationally such that it would be unsuccessful in claiming substantive damages for distributions of Smartpoles outside of Australia. 398In City of Sydney v Streetscape Projects Pty Ltd and Anor [2011] NSWSC 831, the Court refused leave to the defendants to amend their Commercial List Response by pleading proposed paragraphs 16(e), 16(f), 17(ta) and 17(tb). 399The import of these proposed paragraphs was to expand on the defendants' pleading that clause 15.5 of the Licence Agreement operates as a penalty by asserting that the City has failed to plead that it has rights capable of being licensed in the United Arab Emirates and Singapore. The paragraphs were in the following form: 16(e) On the true construction of the Licence Agreement or pursuant to a term implied in the Licence Agreement, the City was entitled to the Licence Fee and Royalty referred to in clause 15.5 only if the City had Intellectual Property Rights capable of being licensed by it in the relevant area. 16(f) The City had and has no rights and does not claim any rights which it is capable of licensing in Singapore. 17(ta) Streetscape Projects repeats and relies on paragraph 16(e) herein. 17(tv) The City had and has no rights which it was capable of licensing in the United Arab Emirates. 400Notwithstanding that leave was refused in relation to these amendments, the defendants now submit in essence that the City has failed to plead that it has rights capable of being licensed internationally, for which it contends serious consequences flow including the consequence that clause 15.5 operates as a penalty, as set out in paragraphs [157] to [158]. 401The defendants' submissions are rejected for two principal reasons : (1)On the basis that they seek to elaborate on issues that are not the subject matter of pleaded allegations; (2)In any event has failing to treat adequately with the situation concerning foreign law. Foreign law 402The propositions the defendants' submissions advance in relation to the City's claim for recovery under clause 15.5 against Streetscape for its unauthorised distributions of "Smartpole " poles in the UAE can be stated as follows: (1)The City failed to plead and prove what the law is in the UAE; (2)such failure of proof gives rise to the presumption of identity, which operates to presume the law of the UAE is identical to the law which applies in New South Wales; (3)given that no relevant law of New South Wales enables the City to obtain intellectual property rights which it could exploit in the UAE, it follows that the City would not have been able to grant a licence in relation to rights which do not exist; (4)as a consequence, the City would not have been able to have obtained an award for damages, as no rights could have been said to have been breached; and (5)as a further consequence, absent any prospects of the City recovering substantial damages, clause 15.5 necessarily acts as a penalty because the sum that would be payable under the clause would be out of all proportion to the nominal damages which would flow from breach of the Licence Agreement. 403The defendants' proposition is flawed insofar as it implies the City had an obligation to plead and prove what the law in the UAE is. It does not. 404This issue is raised by the defendants in the context of their defence to clause 15.5, namely that it is void as a penalty. As an essential step in their defence, they wish to assert what the position is as to the law in the UAE. As the onus of proving foreign law rests on the party seeking to assert it (Heydon, JD. Cross On Evidence (7 th Ed, 2004) [41005]) the onus rests on the defendants, as an element of their burden of proving their defence. 405The defendants have not led any evidence as to the nature and content of the law of the UAE. In Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491, the High Court per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said at [70]: ...[I]f the defendant seeks to rely upon a foreign lex causae, then, in the ordinary way, it is for the defendant to allege and prove that law as an exculpatory fact. 406On this basis, the presumption of identity cannot be called in aid of the defendants' deficiencies in pleading and proving the foreign law Further reasons for rejecting the defendants' submissions on the subject 407Furthermore the defendants' submissions proceed on the assumption that the 'presumption of identity' would necessarily be invoked in relation to the Copyright Act 1968 (Cth) and the Trade Marks Act 1995 (Cth) and presumably other statutory rights such as rights under the Patents Act 1990 (Cth) . They rely on the High Court decisions in Zhang and Neilson v Overseas Projects Corporation of Victoria Ltd (2005) 223 CLR 331 in support of their submission, both of which approach the question in the context of the law of tort. 408In Michael Wilson and Partners Ltd v Nicholls [2009] NSWSC 1033, the decision in Damberg v Damberg (2001) 52 NSWLR 492 is referred to as standing to the contrary of the proposition that where foreign law is not proved it will be presumed to be the same as the lex fori. In Damberg , the Court of Appeal considered whether the presumption of identity should operate in relation to a German tax statute. Heydon JA said at [152]-[153]: German law on the point must be statutory. German law is not a common law-based system. According to the children, the conduct of the husband was criminal and fraudulent: whether it was criminal depends on the terms of legislation, and whether any fraud had relevant consequences depends on the terms of the legislation also. There is a risk that there may be special machinery and highly individual provisions in German law as there are in Australian tax law: indeed the only evidence of German law, from Mr Stiegler, suggests that it is quite different from Australian law. Taxation law cannot be assumed to be a field resting on great and broad principles likely to be part of any given legal system. Beyond those considerations, however, there is a decisive factor. The resistance of the children to the resulting trusts which the trial judge found depends on showing some aspect of German law defeating those resulting trusts. They appeal to Nelson v Nelson [(1995) 184 CLR 538]. The High Court majority in Nelson v Nelson called for a close analysis of the relevant German statutory provisions. To substitute for an analysis of relevant German statutory provisions an analysis of irrelevant Australian statutory provisions is simply to fail to carry out the mandate of Nelson v Nelson . 409On appeal in Nicholls , Lindgren AJA said at [2010] NSWCA 222: [331]-[332]: In Damberg the law in question consisted of particular statutory provisions dealing with avoidance or evasion of capital gains tax, and there was therefore reason to think that the foreign law was not the same as the Australian law. Heydon JA's remark that taxation law cannot be assumed to be a field "resting on great and broad principles likely to be part of any given legal system" is important. Heydon J did not perceive any inconsistency. As a member of the Court in Neilson, he stated (at [267]): "The general correctness of that approach (pursuant to which the relevant foreign law is assumed to be the same as the lex fori if there is no, or only incomplete, proof of the foreign law) has been questioned [his Honour cited Fentiman , Foreign Law in English Courts (1998) pp 149-156], but no argument adverse to its general correctness was advanced in this appeal, and it was described by the respondents as "trite". The only relevant argument was that that approach should not be permitted to result in the plaintiff's success, for that would destroy, by a side-wind, the requirement that only the domestic lex loci delicti be applied. For reasons given below, there is not, in the present case, any requirement of that kind. Further, this Court in [ Zhang ] said nothing about the approach in question." 410From the above, it is clear that the principle in Damberg is good law. 411In Damberg , the Court considered the following matters to be relevant to its decision not to invoke the presumption of identity: (1)Germany was not a common law country; (2)the law in question was statutory; (3)the law in question was likely to be complex; and (4)the law in question was unlikely to rest on great and broad principles likely to be part of any given legal system. 412There is no evidence as to what system of law operates in the UAE. The above conditions would be similarly apposite in relation to the relevant laws of the UAE relating to trade marks, copyright and patents. 413Based on Damberg , the presumption of identity cannot be called in aid of the defendants' deficiencies in pleading and proving the foreign law that they submit to be relevant to the issue going to whether or not clause 15.5 is a penalty. Absurdity of the presumption of identity 414Another basis upon which Courts are reluctant to invoke the presumption of identity is where its fiction is patently absurd. In Damberg , Heydon JA said at 504, in relation to the German tax law: [the German position is] so radically different from the Australian position as to suggest that to make an assumption that German and Australian law are the same for any purposes in relation to capital gains tax is to embrace an entirely artificial and almost certainly misleading fiction. 415In Neilson , the relevant presumption to be made by the High Court was that the approach to statutory construction of the Courts in the People's Republic of China would be the same as the approach taken by the Courts in Australia in relation to an Australian statute. Kirby J, in dissent, said (at 223 CLR 395-397): [I]t would be an absurd fiction to pretend that the elaborate principles of statutory construction developed by, or applicable to, Australian Courts have exact equivalents in the Courts of China, given the divergent historical and jurisprudential traditions of the two legal systems ... With all respect to the majority view, I regard it as straining even credulity to impose on an Australian Court the fiction of presuming that the law of China (the place of the wrong) which is an essential element in this case, is the same as the law in Australia. Or that a written law of China would be interpreted and applied by a Chinese Court in the same way as an Australian judge would do in construing a similar text. 416The effect of the defendants' submissions is to ask the Court to accept that the relevant UAE laws mirrored at all times and for all purposes the relevant Australian laws. 417To illustrate the incredulity of the point, the defendants set out the elaborate changes that were made to the Copyright Act 1968 (Cth) in 2004 and then ask the Court to assume that the UAE laws were similarly amended at the same time. As the plaintiffs have contended this is a fiction which cannot be countenanced. 418It is only in exceptional circumstances that a Court deems a contractual provision to be a penalty. The primary position is the doctrine of freedom of contract, which has at its core the right for parties to agree on certain terms by which to govern their commercial dealings. 419In any event, the clause is not penal in character. It is a proportionate response to the desirable course of parties to contracts apportioning and allocating risk in an effort to avoid engaging in costly and time consuming litigation. 420The defendants seek to avoid the clause on the basis that it calls for payment that would not otherwise be realisable if the City was put to the task of proving its loss in Court. This argument is predicated on the proposition that the City has no rights capable of exploiting in the UAE. However, and as Mason and Wilson JJ in AMEV-UDC Finance Ltd v Austin made clear, the parties can agree on a loss that may be difficult or impossible to quantify, or if quantifiable, may not be recoverable in law at all. 421The defendants submissions as to the absence of the City's rights to exploit its intellectual property internationally are rejected for the following reasons: (1)They are founded upon proposed pleadings for which leave was expressly denied in the interlocutory decision of 4 August 2011; and (2)they are built on misconceptions relating to: (a)The onus of proof in relation to foreign law; and (b)the application of the presumption of identity. Smartpoles in Singapore 422There was no dispute between the parties that Streetscape sold multi-function poles within Singapore. However, Streetscape claimed that the poles sold in Singapore were not Smartpoles. This denial was based on Streetscape's narrow definition of the City's intellectual property. The Court has rejected this definition. The poles sold in Singapore contained the S1 and S2 extrusions and were therefore the property of the City. 423In reaching this conclusion, the Court partly relied on Dr Green's evidence. Dr Green was shown photographs of multi-function poles installed in Orchard Road Singapore (the location which is admitted by Streetscape as being the location where poles were installed by it in Singapore). Dr Green's opinion was that the multi-function poles identified in the photographs taken by Mr Ponniya were Smartpoles . This was by reason of the fact that the poles depict the essential design characteristics and key visual elements of the Smartpoles, being: (1)The design principle by which ancillaries or accessories can be affixed to the upper pole extrusion in a manner which allows a street sign to be position conveniently at a number of different heights and in the, north, east, south and west orientations; (2)the shape and form of the upper pole extrusion; (3)the presence of the "C" track and fixing nuts; (4)the manner of connection of the outreach arm to the upper pole extrusion; (5)the appearance of the transition rim and its relationship to the upper pole extrusion and the lower cladding; (6)the alignment of the recesses in the transition rim with the tracks in the upper pole extrusion; (7)the suggestion of ribs in the lower cladding; and (8)the structure and appearance of the lower steel pole. 424Dr Green observed the following differences between the Smartpole and the poles supplied in Singapore by Streetscape: (1)That the poles appeared to be greater in height than the S1 poles; and (2)that the top cap differs visually. 425In Dr Green's view the minor visual differences did not detract in any way from the presence of the key visual elements and essential design characteristics of the Smartpole in the Singapore poles. The minor differences did not alter his conclusion that the Singapore poles are Smartpoles. Despite the difficulties with Dr Green's evidence, I accept his conclusions in this regard. It is supported by the other evidence in the case and particularly by a number of admissions by Streetscape itself. 426There were a number of admissions by the defendants' witnesses that the poles in Singapore are Smartpoles. These included: (1)Streetscape Projects took steps to sell " Smartpole " poles in Singapore; (2)the Singapore poles used the same upper pole extrusions as the " Smartpole " poles sold and installed in Australia by Streetscape Projects ; and (3)the components of the poles sold and installed in Singapore were manufactured in Australia and are the same as " Smartpole " components. 427Further, the City's contention that the poles sold and supplied by Streetscape in Singapore are Smartpoles is further supported by Streetscape's own documents, including: (1)A facsimile from Moses Obeid to Tim Carr of Arup dated 3 April 2007, Mr Obeid states: "At Streetscape Projects we offer a complete customisation package that will allow you and your client to fully decide every aspect of your pole, from colour, function to look and feel. Smartpole is designed for a +30yr life cycle, is sustainable and can be tailored to suit even the most demanding budgets. With precincts the world over investing in Smartpole technology, we look forward to the Orchard Road challenge. The document attached depicts various Smartpoles including S1A, S1B, S2B and S2C." (2)In an email from Kiok Ong of Streetscape Projects to Roslina of Technolite dated 20 February 2008, the email states: "Attached please find the drawings relating to Smartpole sample we intend to send to Singapore." (3)In an email from John McLeod to Technolite attached is a document titled " Smartpole for Orchard Road " this in drawing entitled " 456 - Orchard Road Catenary General Assembly " dated 22 February 2008 notes that the " Smartpole " intended to be used utilises an extrusion of 215mm. 428I accept the plaintiff's evidence that the amount received by Streetscape in relation to the sale of Smartpoles in Singapore was $1,734,689 and the amount received from sale of Smartpole accessories in Singapore was $368,854 429Streetscape is liable for payment of a license fee and royalties at the rate specified in clause 15.5 for poles containing the S1, S2 or S3 extrusion sold in Singapore. Smartpoles in other territories 430The City alleged that Streetscape breached the same contractual provisions in territories in other parts of the world. 431I accept the defendants' contention that the City's case in this area is entirely speculative. There is no evidence that Streetscape or anyone allegedly associated with Streetscape has built poles in any territories outside of the Licence Agreement other in the UAE and Singapore. While the City's counsel spent days cross-examining Streetscape' witnesses on possible deals in foreign countries, all that the evidence amounts to is that Streetscape promoted poles in other countries. Advertising and promotion is not distribution. 432The City has therefore failed to establish that Streetscape "distributed 'Smartpoles' in other parts of the world" . This is the only act of breach the City pleads in relation to other territories. As the City has failed to establish the act which it claims constitutes the breach, its case fails. Treating with the breaches of the equitable duties and/or fiduciary duties 433It is necessary to carefully chronicle the duties which the Court finds were owed by Streetscape and Mr Moses Obeid to the City. The Court's finding is that Streetscape owed a fiduciary duty to the City to act for and on behalf of or in the interests of the City in respect of its use of Intellectual Property, Confidential Information, Product Manual and Specification ("the Information "). The Courts finding is that that duty was breached due to the following conduct: (1)Streetscape Projects established a business in the United Arab Emirates ( UAE ) under the name Streetscape International for the purpose of manufacturing and selling " Smartpole " poles in the UAE and elsewhere in the Middle East; (2)Streetscape Projects vested knowledge, skills and intellectual property relating to the " Smartpole " poles in Streetscape International for the purpose of manufacturing and selling " Smartpole " poles in the UAE and elsewhere in the Middle East; (3)Streetscape International used that knowledge, skill and intellectual property to manufacture and sell " Smartpole " poles in the UAE and elsewhere in the Middle East commencing in and continuing after 2003; (4)Streetscape International's business continued between 2004 and 2007 with the involvement of Streetscape Projects and Streetscape International entered into numerous contracts with the supplier of " Smartpole " poles within the UAE and the Middle East. and that Mr Moses Obeid was knowingly concerned in that breach. 434Streetscape and Mr Moses Obeid had a duty of confidence to the City in relation to the Information. This duty was also breached in the above circumstances. 435Alternatively, Streetscape breached that duty of confidence and Mr Moses Obeid was knowingly concerned in that breach. Facts giving rise to a fiduciary duty 436The relevant pleadings concerning breach of fiduciary duty are at paragraphs 30A, 40, 45B - 45D of the plaintiff's commercial list statement. 437The facts said to give rise to Streetscape's fiduciary duty are: (1)Streetscape owed the City a fiduciary duty to act for or on behalf of or in the interests of the City in respect of Streetscape's use of Intellectual Property, Confidential Information, Product Manual and Specifications; (2)The plaintiff provided particulars of this fiduciary duty in a letter to the defendant's solicitors dated 12 July 2011. The particulars included that the fiduciary duty arose in circumstances where the Intellectual Property, Confidential Information, Product Manual and Specifications was property which was owned by the City and had been provided to Streetscape on a limited basis. In those circumstances, Streetscape was obliged to act for the City in all respects concerning its use and disclosure of the Information and was not, without the authority and consent of the City, permitted to obtain a benefit for itself, or to assist third parties to obtain a benefit for themselves from such use and/or disclosure or to be in a position of conflict in relation to the use and/or disclosure of the same; (3)These obligations were breached in the circumstances listed below; (4)Mr Moses Obeid was knowingly involved in or a party to the breach of fiduciary duty; (5)Damages are pleaded at paragraphs 42A and 46 of the commercial list statement; (6)The facts, matters and circumstances evidencing the fiduciary duty include the circumstances relating to Streetscape's Tender 9912, the Interim Licence Agreement, Streetscape's Tender 0115 and the Licence Agreement itself; (7)Streetscape initially obtained authorised access to the Intellectual Property, Confidential Information, Product Manual and Specifications (all as defined in the Licence Agreement) pursuant to Tender 9912 in the circumstances referred to in paragraphs 114-127 commercial list statement. In its tender, Streetscape sought to deal with the City on the basis that it would act in the City's interests in the exploitation of the " Smartpole " System and envisaged an exploitation of the City's interest in the " Smartpole " System and a relationship between the City and Streetscape which extended beyond the immediate supply of "Smartpole" poles under that Tender such that the City would be in a position to obtain a further return on its investment in the " Smartpole " System; (8)In this regard, the tender included a document entitled "Streetscape Vision Statement" in which Streetscape refers to its proposed "Mission" to be the "custodian" of the " Smartpole " pole on behalf of the City and to provide to the City "a total asset management service in respect of the " Smartpole " System and to manage all aspects of the engineering, supply, roll out, management, maintenance and marketing of the " Smartpole " System on behalf of the City; and proposing, as part of the "commercialisation" of the " Smartpole " System, to market the "Smartpole" System to other major Australian and international public works projects enabling the City to obtain a return on its investment, stating that it is in the best position to successfully market "Smartpole" poles to domestic and international third party customers "on behalf of COS". It also stated that the primary objective in the establishment of Streetscape was to provide support to the City in respect of its implementation of the " Smartpole " program; (9)The Interim Licence Agreement was entered into against a background of correspondence which confirmed that Streetscape had acted and would continue to act in relation to the "Smartpole" System in accordance with the role it had envisaged in the "Streetscape Vision Statement". Under the Interim Licence Agreement, Streetscape sought and obtained interim authority from the City to market and supply the "Smartpole" System in Australia and overseas on behalf of the City. In obtaining and acting under the Interim Licence Agreement, Streetscape professed to the City that it had and would act in good faith and in the best interests of the City and as a partner with the City in relation to the exploitation of the "Smartpole" System; (10)Streetscape also obtained access to the Information pursuant to tender 0115 in the circumstances. In its tender, Streetscape stated that it had developed a sophisticated marketing strategy and was ideally placed "to continue its efforts in the promotion of the Smartpole System on behalf of the City of Sydney, both nationally and "internationally and proposed itself as taking the role of "protector of the intellectual property"; (11)Notwithstanding that from 9 October 2001 the negotiations between the parties proceeded on the basis that the proposed Licence Agreement would be limited to Australia, New Zealand and Spain, Streetscape continued to carry on its marketing activity; (12)The Licence Agreement was executed in August 2002. Although the licence was limited to the sale and manufacture of "Smartpole" poles in Australia, New Zealand and Spain, the Licence Agreement did not prohibit Streetscape from promoting and marketing the "Smartpole" poles in other territories or to seek out prospective contracts in those territories. However, if Streetscape wished to use the Information to manufacture and sell "Smartpole" poles outside Australia, New Zealand or Spain and to distribute in other territories, it required the authority and consent of the City to do so; and (13)There are clauses in the Licence Agreement which are consistent with Streetscape carrying on promotional activities outside the prescribed territories: (a)Clause 12.4 which provides that Streetscape Projects is to take steps it considers reasonable in relation to the defence of intellectual property in the " Smartpole " pole outside Australia; and (b)clause 15.5 provides that if Streetscape Projects distributes the " Smartpole " pole in any area which is not authorised by the Licence, that the City may recover as a debt due an amount calculated by reference to certain annual licence fees and royalty rates. 438Other circumstances relevant to the existence of a fiduciary duty include the terms of the Licence Agreement itself which reflect the dependence by the City upon Streetscape using the Information which the City had provided to it in conformity with the limited purposes for which it was provided. In this respect, the City was unable to supervise or control the manner in which the Information was used by Streetscape so as to ensure that it was only used for the purposes for which it had been provided. Some principles relevant to establishing a fiduciary duty 439In Hospital Products v United States Surgical Corporation (1984) 156 CLR 41 at 141, Dawson J said that, notwithstanding the existence of clear examples, no satisfactory single test has emerged which will serve to identify a relationship which is fiduciary. His Honour went on to say that it is usual that in such a relationship one party should place confidence in another in acting on his behalf or in his interest in some respect, but not every case where that happens will result in a fiduciary relationship. 440In that same came Gibbs CJ referred to Reading v R [1949] 2 KB 232 at 236 where Asquith LJ, in relation to a case in which a soldier had obtained bribes by abuse of his position, said that a "fiduciary relation" exists whenever: "the plaintiff entrusts to the defendant property, including intangible property as, for instance, confidential information, and relies on the defendant to deal with such property for the benefit of the plaintiff or for purposes authorised by him, and not otherwise. Gibbs CJ noted that the decision was approved in the House of Lords, although Lord Porter said that the words "fiduciary relationship" in that setting were used in a "wide and loose sense". 441Further, Mason J in Hospital Products v United States Surgical Corporation said at 100: "In truth, every such transaction must be examined on its merits with a view in ascertaining whether it manifests the characteristic of a fiduciary relationship." 442His Honour continued at 102: "the categories of fiduciary relationships are infinitely varied and the duties of the fiduciary vary with the circumstances which generate the relationship...it is now acknowledged generally that the scope of the fiduciary duty must be "moulded" according the nature of the relationships and the facts of the case." 443At page 96 and following, Mason J also said: "that the critical feature in the relationships which are traditionally those of fiduciaries is that the fiduciary undertakes or agrees to act for or on behalf of or in the interest of another person in the exercise of a power or discretion which will affect the interest of that other person in a legal or practical sense." 444His Honour went on to say that the relationship was therefore one which gives the fiduciary "a special opportunity to exercise the power or discretion to the detriment of the person who becomes vulnerable to abuse by the fiduciary of his position and that the expressions "for", "on behalf of", and "in the interest of" signify that the fiduciary acts in a representative character in the exercise of his responsibility." 445At page 97, Mason J explained that contractual and fiduciary duties may co-exist between the same parties and that, in many situations, the existence of a basic contractual relationship provided a foundation for the erection of a fiduciary relationship and that, "in these situations, it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties and that the fiduciary relationship, if it exists, must accommodate itself to the terms of the contract so that it conforms with it. In this respect, he said that he fiduciary relationship cannot be superimposed upon the contract in a way so as to alter the operation of the contract according to its true construction." 446Clearly the principles adumbrated by Mason J have been followed notwithstanding that his Honour was in the minority in relation to the question of whether there was a fiduciary relationship on the facts. 447At page 98, Mason J pointed out that a person may be a fiduciary in some activities but not others. Gibbs CJ made the same point at page 73, referring (with approval) to Lord Wilberforce in New Zealand Netherlands Society 'Oranje' Incorporated v Kuys [1973] 2 All ER 1222 , that a person: "may be in a fiduciary position quoad a part of his activities and not quoad other parts: each transaction or group of transactions must be looked at". Gibbs CJ also referred to Lord Wilberforce in Birtchnell v Equity Trustees, Executors and Agency Co Ltd where Dixon J said: "The subject matter over which the fiduciary obligations extend is determined by the character of the venture or undertaking from which the partnership exists, and this is to be ascertained, not merely from the express agreement of the parties... but also from the course of dealing actually pursued by the firm." 448Gibbs CJ went on to point out that Lord Wilberforce said that although these remarks were made in the context of a partnership, the principle must be of general application and that it is clear that in the case of every fiduciary relationship, it is critical to determine what is the subject matter of the fiduciary obligation. Also see the principles referred to in Moorgate Tobacco v Philip Morris (2) 156 CLR 414 at 436-437 referred to in Elecon Australia Pty Ltd v Brevini Australia Pty Ltd (2009) FCA 1327 also at (2009) 263 ALR 1 at [261-269]. 449The Court accepts that the factual circumstances referred to above give rise to Streetscape owing a fiduciary duty to the City to act for and on behalf of the interests of the City in respect of the Information. In this respect, Streetscape was obliged to act for the City in all respects in relation to its use and disclosure of the Information and was not, without the authority and consent of the City, permitted to obtain a benefit for itself, or to assist third parties to obtain a benefit for themselves, from such use and/or disclosure or to be in a position of conflict in relation to the use and/or disclosure of the same. Breach of fiduciary duty 450The evidence before the Court establishes the following : (1)Streetscape Projects (and Mr Moses Obeid) knew of the terms of the Licence Agreement. (2)Streetscape Projects (and Mr Moses Obeid) knew that it was not permitted to: (a)use the Information other than in accordance with the terms of the Licence Agreement; (b)use or disclose the Information to commence or carry on a business, or to assist a third party to commence and carry on a business, in the United Arab Emirates, which included the manufacture of "Smartpole" poles and the supply of those "Smartpole" poles in the United Arab Emirates; (c)use or disclose the Information for the purposes of manufacturing and selling, or alternatively assisting a third party to manufacture and sell "Smartpole" poles in the United Arab Emirates; or (d)enter into any agreement with a third party whereby the third party would receive the Information for the purposes of manufacturing and selling " Smartpole " poles in the United Arab Emirates. (3)Streetscape Projects (and Mr Moses Obeid) knew that if Streetscape Projects manufactured and sold "Smartpole" poles in the United Arab Emirates it would be required to pay royalties to the City of Sydney in relation to such sales. (4)During 2002 and 2003, Streetscape Projects established a business in the UAE under the name Streetscape International for the purpose of manufacturing and selling " Smartpole " poles in the UAE and elsewhere in the Middle East. (5)Streetscape Projects vested knowledge, skills and intellectual property relating to the "Smartpole" poles in Streetscape International for the purpose of manufacturing and selling "Smartpole" poles in the UAE and elsewhere in the Middle East. (6)Streetscape International used that knowledge, skill and intellectual property to manufacture and sell "Smartpole" poles in the United Arab Emirates and elsewhere in the Middle East commencing in and continuing after 2003. (7)The business of Streetscape International between 2004 and 2007 continued with the involvement of Streetscape Projects and Streetscape International entered into numerous contracts for the supply of "Smartpole" poles within the United Arab Emirates and the Middle East. (8)Streetscape Projects (and Mr Moses Obeid) knew of their conduct and the conduct of Streetscape International and took no steps to either inform the City of Sydney of that conduct, Streetscape International's conduct or to prevent Streetscape International from engaging in the conduct. (9)The City received no benefit and was offered no benefit. It was entitled to prevent the conduct because it was a use outside the Licence Agreement. Streetscape Projects and Streetscape International obtained a benefit without reference to the City. (10)Mr Moses Obeid assisted and/or was involved in Streetscape Projects breach of fiduciary duty. (11)The conduct of Streetscape Projects and Mr Moses Obeid referred to above was contrary to normal acceptable standards of honest conduct. An honest person would not have engaged in such conduct. (12)Mr Moses Obeid was knowingly involved in or a party to the breach of the fiduciary duty by Streetscape Projects and is liable for such breaches. In this respect, the breaches were the consequence of deliberate conduct on the part of Streetscape Projects carried out for its own purposes inconsistently with the rights which accrued to the City in respect to each such duty and hence dishonest and fraudulent breaches of duty and/or the assistance and involvement of Mr Moses Obeid was the consequence of deliberate conduct on the part of Mr Moses Obeid carried out for his own purposes inconsistently with the rights which accrued to the City with respect to each such duty and hence was dishonest and fraudulent. 451In these circumstances, Streetscape and Mr Moses Obeid breached their fiduciary obligations to the City. 452In finding that the evidence has established that Mr Obeid was knowingly involved in Streetscape's breach of fiduciary duty, the Court has carefully considered the statements of the High Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89. Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ said at 163 -164: "Against this background, it has been customary to analyse the requirement of knowledge in the second limb of Barnes v Addy by reference to the five categories agreed between counsel in Baden v Societe Generale pour Favoriser le Development du Commerce et del'Industrie en France SA (251): "(i) actual knowledge; (ii) wilfully shutting one's eyes to the obvious; (iii) wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make; (iv) knowledge of circumstances which would indicate the facts to an honest and reasonable man; (v) knowledge of circumstances which would put an honest and reasonable man on inquiry." In Bank of Credit and Commerce International (Overseas) Ltd v Akindele (BCCI) (252), Nourse LJ observed that the first three categories have generally been taken to involve "actual knowledge", as understood both at common law and in equity, and the last two as instances of "constructive knowledge" as developed in equity, particularly in disputes respecting old system conveyancing. After noting that in Royal Brunei (253) the Privy Council had discounted the utility of the Baden categorisation, Nourse LJ in BCCI (254) went on to express his own view that the categorisation was often helpful in identifying the different states of knowledge for the purposes of a knowing assistance case. Although Baden post-dated the decision in Consul , the five categories found in Baden assist in an analysis of that for which Consul provides authoritative guidance on the question of knowledge for the second limb of Barnes v Addy . Thus, support in Consul can be found for categories (i), (ii) and (iii) (255). Further, Consul also indicates that category (iv) suf- fices (256). However, in Consul , Stephen J held that knowledge of circumstances which would put an honest and reasonable man on inquiry, later identified as the fifth category in Baden , would not suffice. Gibbs J left open the possibility that constructive notice of this description would suffice (257). Barwick CJ agreed with Stephen J. The result is that Consul supports the proposition that circumstances falling within any of the first four categories of Baden are sufficient to answer the requirement of knowledge in the second limb of Barnes v Addy , but does not travel fully into the field of constructive notice by accepting the fifth category. Through acceptance of the fourth category, the proposition that the morally obtuse cannot escape by failure to recognise an impropriety that would have been apparent to an ordinary person applying the standards of such persons. These conclusions in Consul as to what is involved in "knowledge" for the second limb represent the law in Australia. They should be followed by Australian courts, unless and until departed from by decision of this Court." 453The evidence establishes actual knowledge on the part of Mr Obeid. Even if the Court were wrong, the second, third and fourth categories of knowledge are made out. 454There is a plethora of authority in support of the proposition that the Court is bound to see that a case of fraud is clearly proved. An allegation of fraudulent intent is one of the most serious allegations capable of being made. Actual dishonesty is said to be "the hallmark of fraud". 455The gravity of the allegation has been said to be such that whereas section 140(1) of the Evidence Act 1995 (NSW) stipulates a single standard of proof for all civil cases, namely the balance of probabilities, s140(2) preserves the doctrine in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362; Pedler v Richardson (unreported, Supreme Court of NSW, 16 October 1997, Young J) at 10-11. See also McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319. 456In Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 the High Court put the matter in the following terms: "The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary "where so serious a matter as fraud is to be found". Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct." 457For the reasons set out above, having carefully considered the whole of the evidence placed before the Court in relation to the plaintiff's fiduciary case against Mr Obeid, the finding is that the case has been made out to the requisite standard. Equitable Duty Of Confidence The Pleadings 458Streetscape and Mr Moses Obeid owed the City an equitable duty not to disclose the Intellectual Property, the Confidential Information, the Product Manual and the Specification ("the Information") other than in accordance with the terms of the Licence. 459Breach of the duty of confidence by Streetscape is pleaded in paragraph 40 of the commercial list statement and breach by Mr Moses Obeid is pleaded at paragraph 45A. Paragraphs 45B to 45D also plead Mr Moses Obeid's knowing involvement in the breach of Duty of Confidence by Streetscape. 460Damages are pleaded in paragraph 42A commercial list statement against Streetscape and at paragraph 46 of the commercial list statement against Mr Moses Obeid. Duty of confidence 461Particulars concerning the circumstances in which the duty of confidence arose are given at paragraph 30B of the commercial list statement. The particulars refer to the confidentiality clauses pertaining to Tender 9912, the 2000 Agreement, Tender 0115 and the License Agreement. Principles 462The equitable jurisdiction to deal with cases of breach of confidence is said to be ancient: see Coco v A N Clark (Engineers) Ltd (1968) 1A IPR 587, at 590, where Megarry J traced its origins at least to the time of the Statute of Uses 1535 . The fundamental notion underlying the intervention of equity in relation to confidential information is that the circumstances: "are such that the conscience of a recipient or possessor of information is so affected as to make it "unconscionable" on his part to publish or use the information. (ie Deta Nominees Pty Ltd v Viscount Plastic Products [1979] VR 167 at 191). " 463The initial question to be addressed is whether the information has been imparted in confidence so as to bind the conscience of the defendant (or respondent) in a particular way: Smith Kline & French Laboratories (Australia) Ltd v Secretary, Department of Community Services and Health (1990) 95 ALR 87, at 101, per Gummow J. 464In Coco v Clark , Megarry J stated at 590 that three elements are normally required if, independently of contract, a case of breach of confidence is to succeed: (1)First, the information itself... must "have the necessary quality of confidence about it"; (2)Secondly, that information must have been imparted in circumstances importing an obligation of confidence; and (3)Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it." 465Although there is doubt as to whether detriment is always essential, Megarry J's formulation has been cited with approval in Australia: Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39, at 51, per Mason J; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199, at 222 [30], per Gleeson CJ. 466In Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434, at 443, Gummow J regarded it as settled that a plaintiff or applicant must satisfy four criteria to make out a case in equity for the protection of allegedly confidential information: "The plaintiff: (i) must be able to identify with specificity, and not merely in global terms, that which is said to be the Information in question; and must also be able to show that (ii) the information has the necessary quality of confidentiality (and is not, for example, common or public knowledge); (iii) the information was received by the defendant in such circumstances as to import an obligation of confidence; and (iv) there is actual or threatened misuse of that information." Although his Honour dissented as to the result, the majority did not disagree with this formulation. 467As Gleeson CJ observed in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 227 [45], the difficultly in any given case is to determine what a " properly formed and instructed conscience" has to say about the particular circumstances. The circumstances include the nature of the allegedly confidential information and the manner in which it was communicated to the defendant. Application of principles to Streetscape and Mr Moses Obeid 468The three elements of a breach of an equitable Duty of Confidence identified by Megarry J in Coco v AN Clark (Engineers) Ltd [1969] RPC 41 at 47, are as follows: (1)The information must "have the necessary quality of confidence about it;"; (2)the information must have been imparted in circumstances importing an obligation of confidence; and (3)there must have been an unauthorised use of that information to the detriment of the party who communicated the information. The Information has the necessary quality of confidence about it 469The quality of confidence in the Information (which included the Product Manual and Specifications) is readily apparent from the circumstances surrounding Tender 9912, the 2000 Agreement, Tender 0115 and the Licence Agreement. In each circumstance, there was recognition of the confidential nature of the Information being provided by the City. 470Further, Streetscape and Mr Moses Obeid understood the commercially valuable nature of the information provided and the importance of maintaining its confidential nature. 471Streetscape and Mr Moses Obeid well understood that the Information was provided on a confidential basis, was not to be disclosed to other parties and was only to be used for the purposes which had been identified. Information imparted in circumstances importing an obligation of confidence 472Megarry J in Coco v A N Clark (Engineers) Ltd said as follows in relation to the second element: "If the circumstances are such that any reasonable man standing in the shoes of the recipient of the information would have realised that upon reasonable grounds the information was being given to him in confidence, then this should suffice to impose upon him the equitable obligation of confidence." 473Mr Moses Obeid was a director of Streetscape. On each occasion that the information was provided to Streetscape, the information become available to Mr Moses Obeid who at all times was actively involved in the management of the company. The reasonable man standing in Mr Moses Obeid's shoes would have realised that the information being given to Streetscape and thus becoming available to him, was being provided in confidence. 474Mr Moses Obeid appreciated the commercially sensitive and valuable nature of the Information that was provided to Streetscape and it was apparent to him that that Information was not to be disclosed by him to others and was only to be used for the limited uses for which it was provided. Unauthorised use of the Information to the detriment of the party who communicated it 475T he true test of breach of confidence is whether the defendant has made "unconscientious use" of the Information provided ( Smith Kline & French Laboratories (Australia) Ltd v Secretary, Department of Community Services and Health (1991) 20 IPR 643). 476The Court's finding is Mr Moses Obeid or Streetscape reached an agreement with Mr Al Ashram in mid 2002 that Streetscape would develop, design, manufacture and supply products, systems and marketing know-how to the Middle East and that Mr Al Ashram would provide working capital and local business knowledge. 477The further finding is that Mr Moses Obeid was actively involved with Streetscape in establishing a business in the UAE under the name "Streetscape International" for the purpose of manufacturing and selling Smartpoles in the UAE and elsewhere in the Middle East. 478The finding is that Mr Moses Obeid was actively involved in Streetscape vesting its knowledge, skills and intellectual property relating to the Smartpole in Streetscape International and in Streetscape International's use of that knowledge, skill and intellectual property to manufacture and sell Smartpoles in the UAE and elsewhere in the Middle East commencing in and continuing after 2003. 479Each of the above matters involved the unauthorised use or disclosure of the Information to the detriment of the City which had provided the Information to Streetscape and Mr Moses Obeid in confidence. 480The conduct of Mr Moses Obeid referred to above was in breach of his duty of confidence to the City. 481The conduct of Streetscape referred to above was in breach of its duty of confidence to the City. 482Alternatively, Mr Moses Obeid was knowingly involved in or a party to a breach of the Duty of Confidence by Streetscape. In this regard because: (1)Mr Moses Obeid knew that Streetscape Projects was under a duty of confidence to the City in relation to the Information; (2)Mr Moses Obeid knew that Streetscape Projects was not permitted, under that duty of confidence, to: (a)use or disclose the Information for the purposes of manufacturing or selling or alternatively assisting a third party to manufacture and sell "Smartpole" poles in the UAE; or (b)enter into any agreement with a third party whereby the third party would receive the Information for the purpose of manufacturing and selling "Smartpole" poles in the UAE; (3)Mr Moses Obeid knew of his own conduct referred to above and took no steps to inform the City of Sydney of that conduct, Streetscape Projects' conduct, Streetscape International's conduct or to prevent Streetscape Projects or Streetscape International from engaging in that conduct; and (4)the conduct of Mr Moses Obeid referred to above was conduct contrary to normal acceptable standards of honest conduct. An honest person would not have engaged in such conduct. Parameters of the defendants' approach to the accessorial liability of Mr Obeid 483The defendants have correctly identified the critical paragraphs in the plaintiffs pleading is as follows Paragraphs 45B to 45D plead that the conduct of Moses Obeid "outlined in paragraphs 33, 34A, 35, 36, 37, 38, 38A and 38AA" amounted to his assisting or being involved in Streetscape Projects' breaches of the alleged fiduciary duty and the alleged duty of confidence. Paragraph 45C alleges that Mr Obeid had knowledge (put in various ways) of the breaches of duty. Paragraph 45D alleges that the breaches were the consequence of deliberate conduct on the part of Streetscape Projects "carried out for its own purposes inconsistently with the rights which accrued to the City of Sydney" "and hence dishonest and fraudulent breaches of duty". Alternatively it is alleged that the involvement of Moses Obeid was "the consequence of deliberate conduct on the part of Moses Obeid carried out for his own purposes inconsistently with the rights which accrued to the City of Sydney with respect to each such duty and hence was dishonest and fraudulent". 484The defendants then make the following points in relation to what has been described as the Barnes v Addy (1874) LR9ChApp 244 claims. 485They are made in reliance on the second limb of accessorial liability in Barnes v Addy . The pleadings attempt to allege, consistently with the formulation in Barnes v Addy at 251, assistance "with knowledge in a dishonest and fraudulent design on the part of the trustees". It is accepted that the second limb of Barnes v Addy applies to breaches of fiduciary duty. ( Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 164.) 486The defendants then contend that the above decisions do not support the proposition that Barnes v Addy second limb accessorial liability is available in the case of a breach of an equitable duty of confidence. 487It is trite to observe that every case requires close examination. Accessorial liability, depending upon the circumstances, may be found in the case of a breach of equitable duty of confidence. 488The Court has already made the point (citing Hospital Products per Dawson J, Gibbs CJ, and Mason J) that in truth it is usual that in a fiduciary relationship one party should repose confidence in another in acting on his behalf or in his interest in some respects, but not every case where that happens will result in a fiduciary relationship. 489Gibbs CJ cited Reading v R for the proposition that a fiduciary relationship exists whenever the plaintiff entrusts to the defendant, property including intangible property as, for instance, confidential information, and relies on the defendant to deal with such property for the benefit of the plaintiff or for the purposes authorised by him, and not otherwise. Gibbs CJ noted that the decision was approved in the House of Lords, although Lord Porter said that the words "fiduciary relationship" in that setting were used in a "wide and loose sense". 490The defendants' contention that the equitable duty of confidence has at its base notions of unconscionability, removed from the underlying foundations of breach of fiduciary duty must be carefully considered. 491To my mind, the view expressed in Meagher, Gummow & Lehane's, Equity: Doctrines and Remedies, at [41-110], that Barnes v Addy liability should be applied in cases of breach of confidence, is patently correct. The contra position taken by the defendants challenging this position is incorrect because it is based upon an unsustainable analogy with breach of fiduciary duty. Dealing with relief 492Both parties made detailed submissions in relation to relief. 493In general terms, the Court's decision upholds the plaintiff's claims to relief. 494The Licence Agreement expired on 1 September 2009. Streetscape continued to sell Smartpoles beyond this date. The City seeks injunctions to restrain that conduct as well as damages for the Smartpoles distributed after 1 September 2009. Pleadings 495The pleading in relation to injunctive relief is at paragraphs 70-80G of the sixth further amended commercial list statement. The injunctions are sought on three grounds. First, breach of clause 7.2 of the Licence Agreement (paragraphs 74-77 and 80 of the sixth further amended commercial list statement). Second, breach of the agreements that pre-date the Licence Agreement (paragraph 80A of the sixth further amended commercial list statement) ( pre-licence agreements ) [The terms of the pre-licence agreements include that the information provided be confidential and is to be used for particular purposes only]. Third, breach of equitable duties to the City (paragraphs 80B-80G of the sixth further amended commercial list statement). The injunctions sought are orders 6, 7 and 20 of the summons. 496The City also seeks damages against Streetscape in relation to the post 1 September 2009 sales. Damages are sought on the three alternative bases. They are breach of clause 7.2 of the Licence Agreement (paragraphs 78 and 79 of the sixth further amended commercial list statement); breach of the agreements which pre-date the Licence Agreement (paragraph 80A(b) of the sixth further amended commercial list statement) and breach of equitable duties (paragraphs 80E and 80F of the sixth further amended commercial list statement). Damages are also sought against Moses Obeid for breach of equitable duty to the City in relation to those sales (paragraphs 85F-85I of the sixth further amended commercial list statement). Terms of the Licence Agreement 497Clause 7.2 of the Licence Agreement provides: "[Streetscape Projects] shall not use the Intellectual Property except for the purposes of this Agreement without the prior written consent of the [City]". 498The Licence Agreement expired on 31 August 2009. 499Under clause 15.4 of the Licence Agreement, Streetscape was required, following expiry of the Licence Period to deliver up to the City all documents containing the Intellectual Property, Product Manuals and Specifications together with all documents containing any Confidential Information. 500Under clause 8.1, Streetscape acknowledged and agreed that the City was the proprietor of all moulds for the Smartpoles and, under clause 8.2, agreed it would deliver up the moulds to the City as soon as practicable after receiving a request from the City. 501It is clear that, under clause 7.2, Streetscape was not to use the Intellectual Property except for the purposes of the Agreement. The purposes were limited to the manufacture and sale of the Smartpoles in the Territory (as defined) for the Licence Period (as defined) [See recital B and clause 2.1 of the Licence Agreement]. Implied within clause 7.2 was an obligation not to use the Intellectual Property in the Smartpoles to manufacture and sell such poles after the expiry of the Licence Agreement. But as the plaintiff has contended that implication is within the express words of clause 7.2 and is a term implied in law (See Carlton and United Breweries Pty Ltd v Tooth & Co Ltd (1986) 7 IPR 581 at 605-606). That meaning is made plain by the comprehensive obligations to deliver up documents and moulds referred to above. Injunction 502From 1 September 2009 and thereafter, Streetscape continued to sell Smartpoles utilising the City's intellectual property. This is evidenced by: (1)invoices recording sales by Streetscape Projects of S1 and S2 poles after 1 September 2009 [Exhibit P20 - being documents produced in answer to Notice to Produce for records of sales of S2 poles and Adepoles as and from 1 September 2009 (as defined in orders made 14 December 2009). See sales for example, behind Tab 2 (S1 pole), Tab 13 (S1 pole), Tab 14 (S2 pole), Tab 18 (S2 pole), Tab 32 (S2 pole) and Tab 36 (S1 pole)]; and (2)evidence given by McLeod that Streetscape Projects has continued to use S2 moulds for making poles and is using those moulds to manufacture and supply poles and that the invoices in P20 are sales of S1 and S2 poles by Streetscape Projects post expiry of Licence Agreement [T McLeod 13/9/11:44:20-27. Also see T McLeod 13/9/11:48:44-51:13]. The approach taken by streetscape projects in relation to injunctions 503Streetscape appears to attempt to justify continuing to manufacture and sell Smartpoles by reason of its claims under paragraph 4 of the Commercial List Response to the effect that: (1)Streetscape Projects is the owner of the Intellectual Property subsisting in all or some of the S1 poles set out in Tables 1 and 2; (2)Streetscape Projects is the owner of the Intellectual Property subsisting in all or some of the S2 poles set out in Tables 3 and 4; (3)Streetscape Projects is the owner of the Intellectual Property subsisting in all or some of the S1 and S2 poles set out in Table 5 (which are described as being part of the "Adepole Range"; and (4)Streetscape Projects is the owner of the Intellectual Property subsisting in all or some of the S3 poles set out in Tables 6. 504The Court has rejected the defendants' claim and ruled that the intellectual property in the S1, S2 and S3 extrusions vests in the City by reason of the Licence Agreement or agreements predating this agreement. 505The Court accepts that the continued distribution of Smartpoles after 1 September 2009 is in breach of clause 7.2 of the Licence Agreement. It is also in breach of the pre-licence agreements which contain independent and co-ordinate rights concerning Streetscape's use of the Intellectual Property (as pleaded in paragraph 80A of the sixth further amended commercial list statement). The continued distribution of Smartpoles is also in breach of the fiduciary duty and/or duty of confidence (as pleaded in paragraphs 80C-80D the sixth further amended commercial list statement). 506The further finding is that unless retrained, Streetscape will continue to use the intellectual property subsisting in the Smartpoles to carry on its business in breach of the abovementioned obligations. The appropriate order should reflect the Court's finding that Streetscape should be restrained from using the City's intellectual property in the S1, S2 and S3 extrusions and any other intellectual property owned by the City without their consent. This restraint will not be enforceable so far as Streetscape makes use of the extrusions and other property for the purpose of dealing with Adepoles within the boundaries of the City of Adelaide and for that council. Damages 507The findings are as follows : (1)The City, in addition to injunctions, is entitled to damages for the breaches of agreement/breach of equitable duties. (2)The appropriate orders to be made against Streetscape Projects and Moses Obeid are orders to pay damages and/or equitable compensation in relation to Streetscape Projects' distribution of " Smartpole " poles and the other poles which the City owns after 1 September 2009. (3)Streetscape Projects was prohibited from using the Intellectual Property after 1 September 2009 without the prior written consent of the City. The City was entitled to an injunction restraining Streetscape Projects from using the Intellectual Property without its consent. (4)The price for that consent would have been royalties. Clause 15.5 of the Licence Agreement evidences the appropriate measure of those royalties and the price for the City's consent to use the Intellectual Property. (5)The equitable duties owed by Streetscape Projects and Moses Obeid to the City required that they obtain the authority of the City before using the property of the City to manufacture and sell Smartpole poles in the UAE or Singapore. The consent of the City would not have been forthcoming without an undertaking to pay royalties and licence fees. The Licence Agreement contemplates the measure of those royalties and fees in clause 15.5 which evidences the amounts that would be payable as the price for that consent. (6)This is in conformity with the particulars of the City's claim. Paragraph 42A of the Commercial List Statement particularises the loss for breach of equitable duty (pleaded in paragraph 40) as "loss of opportunity to obtain royalties and other fees from Streetscape International in respect of the use of Intellectual Property and the Confidential Information" (emphasis added). Paragraph 39 of the Commercial List Statement pleads that the business of Streetscape International was derived from Streetscape Projects and was carried on for and on behalf of Streetscape Projects. Accordingly, the loss is the loss of royalties and licence fees from Streetscape Projects itself. 508The table below sets out an analysis of the sales records produced by Streetscape and contained in Exhibit # P20. Tab No. in Exhibit P20 Smartpole Product Customer Amount 1 Three types of Smartpoles and accessories City of Ryde $ 40,352.95 2 Smartpole S1B 9.6m and accessories Energy Australia $ 54,916.40 3 Smartpole S1B 9.6m and accessories AYZ Landscapes $ 24,118.60 5 Smartpole poles S1A (12m) and S1B (12m and 9.6m) Bovis Lend Lease $ 345,827.00 6 Smartpoles S1A (12m) and S1B (12m and 9.6m) Bovis Lend Lease $ 345,827.00 7 Smartpoles S2 (4.5m) and accessories City of Ryde $ 15,955.50 8 Smartpole Standing No. 7 PM Electric $ 1,650.00 9 Smartpoles and all accessories and spare poles PowerServe $ 154,087.45 10 Smartpoles and all accessories and spare poles PowerServe $ 37,488.55 11 S2 external GPO Boxes City of Ryde $ 1,848.00 12 Removal of Smartpole Roads and Traffic Authority $ 3,590.40 13 Smartpoles and all accessories and spare poles PowerServe $ 29,678.00 14 Smartpoles and accessories Billbergia Developments Pty Ltd $ 96,954.00 15 Smartpole S1A poles Ford Civil Contracting Pty Ltd $ 11,495.00 16 Smartpoles and installation Heyday Group Pty Ltd $ 5,108.40 17 Maintenance and assembly of replacement pole Roads & Traffic Authority $ 10,920.00 18 Smartpoles S2 poles and accessories and installation Heyday Group Pty Ltd $ 15,325.20 19 Smartpole S2 poles and accessories and installation Heyday Group Pty Ltd $ 20,433.60 20 Credit note for the above sale 21 Smartpole S1A (9.6m) poles Ford Civil Contracting Pty Ltd $ 2,420.00 22 Smartpole accessories Darwin Waterfront Corporation $ 5,086.40 23 "Little India" Multifunction poles and accessories Technolite (Singapore) Pte Ltd $ 233,024.86 24 "Little India" Multifunction poles and accessories Technolite (Singapore) Pte Ltd $ 231,835.83 25 "Little India" Multifunction poles and accessories Technolite (Singapore) Pte Ltd $ 123,711.34 26 "Little India" Multifunction poles and accessories Technolite (Singapore) Pte Ltd $ 693,992.70 27 Smartpole accessories and sign assembly Technolite (Singapore) Pte Ltd $ 1,413.58 28 Passenger Information Display pole Roads and Traffic Authority of NSW $ 62,601.00 29 Smartpole accessories and foundation Total Communications Infrastructure $ 6,952.00 30 Smartpole S2 poles and accessories GW Building Pty Ltd $ 4,909.30 31 Two types of multifunction poles and accessories Macquarie University $ 59,188.00 32 Smartpole S2 poles accessories Rexel Australia $ 15,394.50 33 Removal and repair of pole and accessories City of Ryde $ 5,467.00 34 Smartpole S1 and S2 poles and accessories Bovis Lend Lease $ 39,400.46 35 Two types of multifunction poles and accessories Macquarie University $ 59,188.00 36 Two types of Smartpoles and accessories Gillmore Electrical Services Pty Ltd $ 110,343.36 37 MFP and accessories Hender Lee Electrical Contractors Pty Ltd $ 245,847.80 38 MFP poles and accessories Hender Lee Electrical Contractors Pty Ltd $ 243,863.40 39 Two types of RTA poles and accessories Port Macquarie-Hastings Counsel $ 4,177.80 40 Adepole and accessories Adelaide City Council $ 14,659.70 Total sales $ 3,379,053.08 [No. 26: The Invoice for this distribution at Exhibit P20: Tab 26 was issued in USD in the amount of $569,500.00. Using the invoice at Exhibit P20: Tab 25, which was issued on the same date in both AUD ($123,711.34) and USD ($150,750.00), a conversion rate of USD$1 = AUD$1.2186 can be calculated by dividing 150,750 by 213,711.34. This conversion rate was then applied to the amount in the invoice at Exhibit P20: Tab 26 to yield the figure of AUD$693,992.70. No. 27: The Invoice for this distribution at Exhibit P20: Tab 27, which was issued on the same date in both USD in the amount of $1,160.00. Using the invoice at Exhibit P20: Tab 25, which was issued in both AUD ($123,711.34) and USD ($150,750.00), a conversion rate of USD$1 = AUD$1.2186 can be calculated by dividing 150,750 by 213,711.34. This conversion rate was then applied to the amount in the invoice at Exhibit P20: Tab 27 to yield the figure of AUD$1,413.58] 509The damages for either breach of clause 7.2 Licence Agreement, breach of the terms of the pre-licence agreements or breach of equitable duties is calculated by applying the rate provided in clause 15.5 to the total sales of poles owned by the City following the expiry of the Licence Agreement. That amount is $3,364, 393.38 ($3,379,053.08 - $14,659.70 for sales of Adepoles in Adelaide). Royalties is 10% of that amount or $336, 439.34 plus any applicable license fee. 510Under section 68 Supreme Court Act , where the Court has power to grant an injunction against any breach of contract or the continuance of any wrongful act, it may award damages to the party injured in addition to the injunction. That section enables the Court to address the issue of losses caused to the City by reason of Streetscape's breaches that are not completely addressed by the order for injunctive relief [See, for example, Ford-Hunt v Raghbir Singh [1973] 2 All ER 700 where equitable damages were awarded in addition to a decree for specific performance to a purchaser of land to compensate him for the losses occasioned by the vendor's delay in completing the contract]. The Court accepts that is a further basis on which damages of 10% of the abovementioned total ought to be ordered. Maggbury v Hafele 511The City have submitted and the Court accepts that City is entitled to relief by way of injunction and damages regardless of whether or not the Intellectual Property is "confidential" apart from the Licence Agreement. In this regard, even if the Intellectual Property was in the public arena (which is claimed by Streetscape and is denied) or some of the Intellectual Property was legally "owned" by Streetscape before the Licence Agreement (which is claimed by Streetscape and is denied) the City is still entitled to relief. 512The High Court authority for this proposition is Maggbury Pty Limited & Hafele Australia Pty Limited (2001) 210 CLR 181. 513The position in Maggbury Pty Limited was as follows: (1)Maggbury entered into a confidentiality agreement with Hafele under which it was contemplated that there would be later discussions about the commercial exploitation of inventions and related know how concerning a folding ironing board. The agreement provided that Hafele would treat the information as "private and confidential" and would not at any time thereafter use it for any purpose without Maggbury's consent and that it would "forever observe the obligations of confidence" set out in the agreement. (2)No agreement was made between the parties for the commercial exploitation of ironing boards. However, Hafele commenced manufacturing the ironing board in Germany. By that time, the invention had been publicly disclosed by Maggbury at trade fairs in Australia and by publication of an application under the Patent Co-Operation Treaty. (3)Maggbury sued Hafele to enforce the confidentiality agreement. The trial judge found that Hafele had used information provided by Maggbury under the agreements and granted an injunction restraining them from manufacturing or distributing the ironing board. (4)The Queensland Court of Appeal upheld an appeal by Hafele, concluding that the confidentiality agreement was unenforceable because it had no time limit. (5)It also held that no injunction should be granted under general law because the information had been made public and that an injunction, if granted, would have to be confined in its operations to information not publicly available. (6)On appeal from the Queensland Court of Appeal, the High Court considered two issues. First, whether the confidentiality agreement was enforceable notwithstanding the public disclosure of the information and, second, whether the provisions of the agreement were invalid as being a restraint of trade. (7)Gleeson CJ, Gummow and Hayne JJ held that the first question is to be determined by reference to the construction of the agreement , not by reference to whether confidentiality had been lost by reason of the information being put into the public domain. In this regard, their Honours drew a distinction between circumstances where the relationship between the parties was contractual rather than equitable, as was the case before the High Court [ Maggbury P/L v Hafele Australia P/L [2001] 210 CLR at 201 line 46-49]. Their Honours found that, where the relationship is contractual, the first question is one of construction of the agreements, the relevant enquiry being: "What then is the effect, upon their proper construction, of the contractual restraints in question here?" [ Maggbury P/L v Hafele Australia P/L [2001] 210 CLR at 201 line 51-52]. (8)Their Honours found that, on a proper construction of the agreement, the use of the information by Hafele was in breach notwithstanding that the information was in the public arena and that an injunction would follow. (9)However, their Honours then went on to consider whether the contractual terms survived the restraint of trade doctrine, concluding on the facts that it did not. Plaintiff's entitlement to elect 514It is trite to observe that the plaintiff has an entitlement to elect after the reasons for judgment are handed down to seek an account of profits in the alternative to equitable compensation. The plaintiff's claims in relation to delivery up of the "Smartpole" intellectual property 515The City claims delivery up of the Smartpole intellectual property by Streetscape. The delivery up falls into two categories: (1)delivery up of documents required to be delivered up pursuant to the Licence Agreement as varied; and (2)delivery up of moulds required to make the component parts of the " Smartpole " poles. 516The delivery up of documents is dealt with below. The delivery up of moulds is dealt with in turn. The parties' positions on delivery up of moulds 517The City seeks orders requiring Streetscape to deliver up all documents it possesses containing the City's intellectual property. 518Streetscape resists delivery up of documents other than the documents returned to the City in July 2009 (which comprised in the main the Product Manual and Specification Drawings annexed to the Licence Agreement) on the basis that it is entitled to all Improvements to the Smartpole under clause 5(c) in the Second Deed of Variation. 519Streetscape also contends that it is entitled to all documents relating to the poles which Streetscape claims, in paragraph 4 of its Commercial List Response, belong to it. 520The City disputes the claims made by Streetscape in paragraph 4 of its Commercial List Response and claims all documents containing the "Intellectual Property" in those poles referred to in paragraph 4 should be delivered up, being the drawings referred to in paragraphs 87 and 92 of the Commercial List Statement. The Licence Agreement 521Streetscape was obliged under the Licence Agreement to give delivery up in two tranches. The delivery up regime is set out in the Second Deed of Variation and the Licence Agreement. Under the transitional provisions of the Second Variation Deed, Streetscape was obliged to give certain delivery up of intellectual property prior to the expiry of the Licence Agreement. Under the provisions of the Licence Agreement Streetscape was to give further delivery up following the expiry of the Licence Agreement. 522It was a term of the Second Variation Deed that the City and Streetscape would implement the Transition Plan set out in Schedule 1 to the Second Variation Deed. 523The Transition Plan provided that: (1)Six months prior to the expiry of the Licence Agreement, Streetscape Projects would deliver to the City of Sydney a current product list and a reconciliation of items as between the product list and the City of Sydney's Intellectual Property consistent with Schedule 2 to the First Deed of Variation ( Item 1 ); (2)Streetscape Projects would, at that time, provide a list of all documents it held relating solely to the City's Intellectual Property, such as manuals or specifications. Where specifications are held by third parties, such as manufacturers, Streetscape Projects was to provide all contact details for those third parties and provide each of those parties with an authority to deal with the City of Sydney in substitution for Streetscape Projects as from termination of the Licence ( Item 2); and (3)three months prior to expiry of the Licence Agreement, Streetscape Projects was to deliver to the City of Sydney's solicitors, to be held for security pending expiry, the documents and details referred to in the preceding paragraphs together with all relevant underlying specifications etc (sic) referred to in the list of items outlined above ( Item 3 ). 524Clause 15.4 of the Licence Agreement provided that Streetscape Projects was required, following termination of the Licence Agreement, or expiry of the Licence Period to: (1)deliver to the City all documents containing intellectual property, product manuals and the specification whether or not provided by the City, together with all documents containing any confidential information; and (2)promptly deliver to the City a list of the names and addresses of customers of Streetscape Projects in relation to the "Smartpole" poles. Events of 2009 - Conduct of Streetscape in breach of Licence Agreement 525On 1 March 2009, in breach of the Second Variation Deed, Streetscape did not deliver up the items specified in Items 1 and 2 of the Transition Plan. 526On 1 June 2009, in breach of the Second Variation Deed, Streetscape did not deliver up the items specified in Item 3 of the Transition Plan. 527Further, in breach of clause 15.4 of the Licence Agreement, Streetscape has failed to deliver up any drawings referred to in the Schedule enclosed with the letter from Holding Redlich to Colin Biggers & Paisley dated 16 September 2009: (1)relating to the development, refinement or improvement of the " Smartpole " poles during the course of the Licence Agreement; and (2)relating to products numbered 110-137, 206-249, 305-309, 314-315, 318-320, 405-406, 480-410, 413, 501-502, 510-513, 515-517 and 519. 528Streetscape has also failed to deliver up drawings held by over 35 specialised sub-contractors of Streetscape who assisted in the manufacturing of components of the Smartpoles. 529Streetscape has failed to deliver up: (1)the drawings referred to in paragraphs 87 and 92 of the Commercial List Statement and any developments, refinements or improvements to those drawings and any other drawings which were used in the manufacture and sale of the products referred to in Tables 1-6 of paragraph 4 of the Commercial List Response ( Tables 1-6 ); (2)the products referred to in the schedule under the heading "Explanation 1" to the Statement in Answer to Interrogatories sworn 9 July 2010 ( Additional Table ); and (3)the products referred to under the heading "Explanation 2" and "Explanation 3" in the Statement in answer to interrogatories sworn 9 July 2010 ( Designs ). 530Each of the following matters relied upon by the City in this regard are made out : (1)Streetscape Projects' discovery in the proceedings contains numerous documents containing the "Smartpole" intellectual property belonging to the City; (2)McLeod's evidence that he formed his own view of what Streetscape Projects was obliged to deliver up without regard to the proper construction of the Licence Agreement; (3)McLeod's evidence that Streetscape Projects' has not delivered up drawings containing the City's " Smartpole " intellectual property if the poles were sold to an entity other than the City, despite the fact that such drawings relate to " Smartpole " poles featuring the S1 upper pole extrusion, S2 upper pole extrusion and S3 upper pole extrusion. (4)McLeod's evidence that Streetscape Projects has copies of the Product Manual and Specification in native format, that is, electronic format; (5)McLeod's evidence that Streetscape Projects has not delivered up the hard or soft copy master file of revisions of any drawings containing the City's intellectual property in the " Smartpole " pole; and (6)the fact that Hayman Industries Pty Limited, a contractor of Streetscape Projects, has possession of numerous drawings of the " Smartpole " poles containing the City's intellectual property, including an updated version of the 6400 Issue C Drawings , which it produced under subpoena. Relief sought in relation to delivery up 531It is plain on the above facts that Streetscape has to date failed to deliver up the documents containing the City's intellectual property that it is obliged to deliver up under the provisions of clause 15.4 of the Licence Agreement and the Second Variation Deed. 532It follows that the City has made good its claims to delivery up of the documents identified above, except in relation to the Adepole. 533The City has proved an entitlement to orders requiring Streetscape to fulfil its obligations and deliver up all documents, whether in hard copy or electronic form, held by it containing the City's intellectual property. Streetscape may retain any documents that contain designs specifically used in the Adepole. Delivery up of moulds 534Smartpoles have a number of different sized upper pole extrusions, being the S1 extrusion, S2 extrusion and S3 extrusion. The poles which feature these extrusions are variously described by the defendants as the S1 pole, the S2 pole and the S3 pole. The "Adepole" poles also use the S1 extrusion, the S2 extrusion and the S3 extrusion. 535Moulds enable manufacturers of street poles to produce street poles which conform to the dimensional and form requirements specified in the relevant drawings on a mass scale. Having the possession and use of the relevant moulds necessary to produce the various components, including the upper pole extrusion, comprising the Smartpole ( Moulds) is therefore fundamental to the overall process of manufacturing the Smartpole and an important element of the City's intellectual property. 536Pursuant to clause 8.2(b) of the Licence Agreement, Streetscape acknowledged and agreed that the City was the proprietor of all moulds for the Smartpoles and would deliver up the moulds on request. 537Streetscape currently retains possession of the Moulds. Being moulds applicable to Smartpoles, the City is the proprietor of the Moulds under the terms of clause 8 of the Licence Agreement. As proprietor, the City has power under clause 8 of the Licence Agreement to require Streetscape to deliver up all these Moulds it has in its possession. 538On 29 July 2009, the City exercised this power by sending a letter to Streetscape requesting it to deliver up of the Moulds on 1 September 2009. 539In breach of clause 8 of the Licence Agreement, Streetscape refused to deliver up all or any moulds in respect of the Smartpoles and accessories. 540The City relies on the following facts to establish Streetscape' breach of its obligation under clause 8 of the Licence Agreement: (1)on 2 October 2009, Streetscape Projects contended that the City had no proprietorship in the Moulds and that it was not "practicable" for Streetscape Projects to return the moulds in a period of less than four months from 2 October 2009; (2)on 11 December 2009, the City became aware for the first time that Streetscape Projects was continuing to use Moulds (and the Intellectual Property) relating to the S2 poles in the manufacture and sale of street poles, notwithstanding the expiry of the Licence Agreement on 31 August 2009. (3)on 14 December 2009, Streetscape Projects gave undertakings to the Court that it would provide to the City letters of authority directed to manufacturers of the " Smartpole " poles who retained Moulds relating to the S1 Poles ; (4)on or about 24 May 2010, when McLeod 3 was served on the City, the City became aware for the first time that, notwithstanding the undertakings referred to in the preceding subparagraph, Streetscape Projects continued to use Moulds (and the Intellectual Property) relating to: (a)the S1 poles; (b)the S2 poles; (c)the S3 poles; and (d)the Adepole poles. 541The Court accepts that on the above facts and the proper construction of the Licence Agreement, the City is entitled to delivery up of the Moulds. 542The Court accepts that the City is similarly entitled to restrain Streetscape from using the Moulds. 543As per the Court's previous orders, Streetscape is entitled to retain any moulds that they own in the Adepole because they were vested in Streetscape by the second deed of variation. Corrigendum The following amendments have been made to the judgment: Paragraph Remove Replace with 30 Confidential diagram redacted 31 Confidential diagram redacted 41 "McLeod" Matchett 43 "McLeod" Matchett 57 "they way" "the way" Heading to 60 "Scrivner" Scrivener 60 - 65 "Scrivner" (throughout) Scrivener 74 "License Agreement" Licence Agreement 87 "gave of evidence of" gave evidence of 136 "effect" affect 158 "by of other witnesses" by other witnesses 158 "accepted," accepted. 177 "he was at meeting" he was at the meeting 269 "do not apply" does not apply 272 "fluctuation" / "their" effluxion / its 274 "principle" principal 279 "13 October" 19-Oct 292 "Project Groups" Projects Group 333 "the City's representations" Streetscape's representations 357(8) "should reject" rejects 357(8) "should also reject" rejects 358 "In mid-2008" in mid-2008 469 "provided to by" provided by 478 "used" use 489 "to defendant" to the defendant 489 "House of Lord's" House of Lords 489 ""wide and loose sense." "wide and loose sense." 511 "The defendants have submitted" The City has submitted ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 October 2011