FEDERAL COURT OF AUSTRALIA
Volunteer Eco Students Abroad Pty Limited v Reach Out Volunteers Pty Limited [2013] FCA 731
IN THE FEDERAL COURT OF AUSTRALIA | |
DATE OF ORDER: | |
WHERE MADE: |
THE COURT ORDERS THAT:
1. The parties are to seek to agree upon and file proposed orders which give effect to these reasons for judgment on or before 4:30 pm on 16 August 2013. If the parties cannot reach agreement, they shall each file and serve proposed orders on or before 4:30 pm on 16 August 2013, together with a written outline of submissions of no more than 10 pages in length in support of their respective proposed orders.
2. The matter be listed for mention and further directions at 9:30 am on Tuesday, 20 August 2013.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011
NEW SOUTH WALES DISTRICT REGISTRY | |
GENERAL DIVISION | NSD 380 of 2011 |
BETWEEN: | VOLUNTEER ECO STUDENTS ABROAD PTY LIMITED AS TRUSTEE FOR THE VOLUNTEER ECO STUDENTS ABROAD UNIT TRUST (ACN 135 012 341) Applicant |
AND: | REACH OUT VOLUNTEERS PTY LIMITED (ACN 146 005 316) First Respondent TOM JOWETT Second Respondent PETER JOWETT Third Respondent BEN JOWETT Fourth Respondent |
JUDGE: | GRIFFITHS J |
DATE: | 26 JULY 2013 |
PLACE: | SYDNEY |
REASONS FOR JUDGMENT
1 The applicant, Volunteer Eco Students Abroad Pty Ltd (VESA), operates a business of organising, marketing and conducting “eco tours” to overseas countries. Participants spend approximately half of their time participating in community based volunteer work and the remainder of the tour is spent engaging in adventure tourism activities. VESA’s target market is primarily university students.
2 The first respondent, Reach Out Volunteers Pty Ltd (ROV), also operates a business of organising, marketing and conducting “eco tours”. It is a competitor of VESA. ROV was set up in August 2010. It operates from the Jowett family home in Cremorne. The driving force behind ROV is Tom Jowett. The three directors and shareholders of ROV are Tom Jowett, his father Peter Jowett and his brother Ben Jowett. Tom Jowett was previously employed by VESA in various positions between August 2009 and August 2010. He resigned from his employment with VESA on 10 August 2010 and left on 13 August 2010. It is around this time that he decided to set up ROV as a rival eco tour business to VESA.
3 VESA brings claims for breach of contract, breach of fiduciary duty, copyright infringement and misuse of confidential information against Tom Jowett connected with the termination of his employment with VESA and the setting up of ROV as a rival operation. VESA also brings claims against all respondents concerning the business activities of ROV. These claims primarily involve allegations of misleading or deceptive conduct and copyright infringement. Claims of passing off were not pressed.
4 These reasons are structured as follows:
[5] | |
[6] | |
[12] | |
[14] | |
[15] | |
[19] | |
[20] | |
(d) Tom Jowett’s employment with VESA as a recruitment coordinator | [21] |
(e) Tom Jowett’s employment with VESA as associate marketing director | [25] |
[31] | |
[37] | |
[58] | |
[60] | |
[62] | |
[78] | |
[83] | |
[87] | |
[88] | |
[89] | |
[89] | |
[90] | |
[94] | |
[101] | |
[103] | |
[109] | |
[110] | |
[113] | |
[126] | |
[127] | |
[129] | |
[131] | |
(a) Terms and conditions of the first and second contracts of employment | [133] |
[133] | |
[141] | |
[153] | |
[161] | |
[162] | |
(ii) Taking steps to set up a rival business while employed by VESA | [173] |
[217] | |
[221] | |
[230] | |
[234] | |
(d) VESA’s claims of actual misuse of some of its confidential information | [239] |
[240] | |
[245] | |
[246] | |
[253] | |
[257] |
[270] | |
[272] | |
[280] | |
[285] | |
[292] | |
[294] | |
[300] | |
[320] | |
[337] | |
[351] | |
[367] | |
[373] | |
[378] | |
[378] | |
[381] | |
[385] | |
[388] | |
[389] | |
[394] | |
[455] | |
[471] | |
[472] | |
ROV website pages, Mosman Daily article, GlobaLove advertisement | [472] |
[487] | |
[488] | |
[496] | |
[497] | |
[499] | |
[499] | |
[509] | |
[510] | |
[513] | |
[522] | |
[524] | |
[537] | |
[549] | |
[550] | |
[564] | |
[580] |
Part A: background factual matters
5 It is convenient to set out relevant background factual matters which, I believe, are substantially uncontroversial. I will deal separately with some relevant disputed factual matters and issues of credit.
6 At the time these proceedings were heard, VESA had the following three full-time employees:
1. Mr Thomas Constable-McDowell, who is the managing director of VESA;
2. Ms Shona Luciani, who is the wife of Mr Constable-McDowell and is also a current director of VESA; and
3. Ms Virginia Little, who is the mother of Mr Constable-McDowell and is employed as the ‘participant coordinator’ for VESA.
7 Ms Luciani and Mr Constable-McDowell met in Uruguay in January 2006. They married in October 2010. Ms Luciani and Mr Constable-McDowell first discussed setting up a business running volunteer eco tours on New Year’s Eve 2008, when they were holidaying in Crescent Head in NSW. As a result of those discussions VESA was incorporated on 20 January 2009. The VESA unit trust structure was established on 1 August 2009. The beneficiaries of the VESA unit trust are the Constable-McDowell Family Trust and the Shona Luciani Family Trust.
8 On incorporation, Mr Constable-McDowell was recorded as the sole director and shareholder of VESA. Ms Luciani was added to the ASIC register as a director of VESA on 17 May 2012 (i.e. about two weeks before the hearing of these proceedings began). Although Ms Luciani was not registered as a director with ASIC until 2012, she has been deeply involved in the management of the VESA business, together with Mr Constable-McDowell.
9 Mr Constable-McDowell, although having travelled extensively, had never worked in the volunteer eco tourism industry prior to establishing VESA. Ms Luciani had previously worked in that industry, having been employed by International Student Volunteers, Inc (ISV) as an ‘international recruitment coordinator’ between August 2006 and October 2008. ISV is based in the USA. It also runs travel programs involving volunteer work. It is one of VESA’s main competitors. Ms Luciani worked for ISV both in the USA and in Australia. Her role as international recruitment coordinator for ISV involved organising the university recruitment schedule, and organising travel and accommodation for the recruiters.
10 Ms Luciani terminated her employment with ISV in September 2008 and worked out her 4 weeks’ notice period. Upon leaving her employment with ISV she purchased for $300 the laptop which she had used during her employment there. The day before Ms Luciani left ISV, ISV apparently took the laptop for 24 hours and removed some material from it before returning it to Ms Luciani.
11 Various ISV related documents were left on the laptop, including an ISV “recruiting schedule”, a “campus summary sheet” and a paper application form.
(b) Proceedings brought by ISV in the USA
12 Shortly after leaving ISV, Ms Luciani travelled to Ecuador in October 2008 and assisted a friend, Mr Sam Bailey, set up a business with the business name “Eco Surf Volunteers”. Eco Surf Volunteers organised tours of approximately two weeks to Ecuador, where participants spent half the time surfing and the other half as volunteer teachers in a nearby local school.
13 On 20 October 2009, ISV filed proceedings in the Orange County Court in California against VESA, Ms Luciani, Mr Constable-McDowell, Mr Bailey and Eco Surf Volunteers alleging unfair business practices, unfair competition, intentional interference with prospective economic relations and misappropriation of trade secrets. ISV ultimately discontinued the proceedings.
14 The following documents are used by VESA in its business operations. These documents are the subject of VESA’s copyright claims (in addition to the copyright claims made in respect of logos and taglines discussed below) and some also figure in its claims of breach of confidence.
15 VESA uses both online and paper application forms to recruit participants for its programs.
16 The paper application form used by VESA is said to have been created by Mr Constable-McDowell. Mr Constable-McDowell gave evidence that he created the application form using a “blank cell document” which was created by Mr Bailey, into which Mr Constable-McDowell added the relevant content.
17 The respondents highlight that there are many similarities between VESA’s application form and the application form used by ISV. The respondents allege that the VESA application form was copied from the ISV application form, which it says was retained on Ms Luciani’s computer after it was returned from ISV.
18 The online application form is said by VESA to have been created by Mr Sean St-Quentin of Culture Byte Pty Limited. VESA engaged Mr St-Quentin in February 2009 to set up its website.
(ii) VESA frequently asked questions
19 The VESA frequently asked questions (FAQs), which appear on the VESA website, are said to have been created by Ms Luciani whilst in Canada in February 2009. Ms Luciani sought advice from her mother (who lectures in marketing and business management at a Canadian university) while drafting this document.
(iii) VESA’s email to professors
20 VESA promotes its programs at universities through presentation sessions held on campus. To organise such sessions, VESA’s practice is to approach a university contact person and ask that an email be sent to the student body giving information about VESA and advertising the time and location for a presentation session. VESA uses a template email for this purpose which includes the email to the contact person, as well as the email for students (collectively, the email to professors). The template is modified for use as appropriate. Mr Constable-McDowell is said to have created the template for VESA in February 2009.
(d) Tom Jowett’s employment with VESA as a recruitment coordinator
21 Tom Jowett graduated from La Trobe University with a Bachelor of Business degree, majoring in business management and marketing in mid-2009, aged 21.
22 Ms Luciani met Tom Jowett at the Hotel Mosman in November 2008, where they were both then working as bartenders. At Ms Luciani’s 30th birthday party, held at the Hotel Mosman in early July 2009, Ms Luciani introduced Tom Jowett to her then boyfriend Mr Constable-McDowell.
23 In mid-July 2009, Ms Luciani became aware that Tom Jowett intended to travel to Canada in August 2009. After several discussions, Ms Luciani offered Tom Jowett some paid work as a contract recruiter for VESA. This role involved promoting VESA’s tours at various Canadian universities. Tom Jowett accepted that offer and on 16 August 2009 entered into an agreement with VESA entitled “VESA International Recruitment Coordinator Agreement”. Clause 6 of that agreement provided that the duration of the contract was (subject to the start date being confirmed) from 9 to 25 September 2009. Tom Jowett was to be paid $100 for every student he recruited from the designated university campuses he visited.
24 Ms Luciani provided Tom Jowett with “scripts” which he could use in making announcements at universities or adapt to suit his style if he wished. There was both a short announcement to be made at the start of a lecture, as well as a script for longer presentation sessions. Although the agreement specified that Tom Jowett would work between 9 and 25 September 2009, Tom Jowett ultimately undertook approximately 27 days of recruiting work at various Canadian universities from September to November 2009. Tom Jowett was a very successful recruiter for VESA.
(e) Tom Jowett’s employment with VESA as associate marketing director
25 Tom Jowett returned to Australia in February 2010. In late March/early April 2010, Mr Constable-McDowell met with Tom Jowett at the Mosman Hotel and offered him full time employment as VESA’s associate marketing director. Tom Jowett accepted that offer and commenced his employment with VESA on or about 12 April 2010, being paid from 10 April 2010.
26 As at April 2010, Tom Jowett’s employment contract consisted of oral discussions and emails. In an email dated 6 April 2010 (the full terms of which are set out in [149] below), Mr Constable-McDowell stated that Tom Jowett would be paid a salary of $60 000 per annum plus superannuation and that VESA would provide a laptop and pay certain phone, internet and car expenses. In that email, Mr Constable-McDowell also stated that “we will need a clause that says we have a mutual termination agreement within the first 3 months…” and that “we can work out a sales (increased sales) bonus commission structure also”. It is evident that Tom Jowett was expecting VESA to provide him with a proposed written contract of employment. In an email dated 9 May 2010 to him from Ms Luciani, she said that he would get an agreement as soon as things “settle down”, which is a reference to Ms Luciani being overseas at the time. She told Tom Jowett that she would get an agreement to him the following week. That did not occur. Another email dated 24 June 2010 from Mr Constable-McDowell to Tom Jowett acknowledged that Tom Jowett had not been provided with a written contract or a job description, despite repeated requests.
27 After taking up the full-time position as associate marketing director, Tom Jowett also continued to undertake recruiting work for VESA at some Australian university campuses. He recruited for VESA at the University of Notre Dame (Broadway campus) on Tuesday 13 April 2010. In May 2010, he gave some presentations at the University of Queensland, along with Ms Rachel Ballantyne.
28 Ms Ballantyne had attended a VESA tour in January 2010 to the Amazon. She was subsequently hired in May 2010 by VESA as recruitment coordinator. Ms Ballantyne undertook recruiting work for VESA in Canada and the United Kingdom from August to November 2010. In November 2010, Ms Ballantyne was appointed as a junior tour leader and accompanied Ms Luciani on a tour to Fiji.
29 Tom Jowett was also expected to undertake recruiting work for VESA in Canada from August to November 2010. On or about 12 July 2010, an airline ticket to Canada was purchased for Tom Jowett, departing on 17 August 2010 and returning to Sydney on 15 November 2010.
30 In mid-July 2010, Tom Jowett engaged a friend of his, Mr Joshua Stone, to create a spreadsheet for VESA on which could be recorded information taken from VESA application forms submitted in Canada. The purpose was to compile a database which could be used for future marketing purposes by VESA. On 12 August 2010, Mr Stone issued an invoice to VESA for his work. He met with Ms Little on 19 August 2010 and gave her the spreadsheet on a USB stick. He was paid in cash for his work.
(f) VESA’s working arrangements
31 Tom Jowett worked from his family home in Cremorne in the same home office where both his father (Peter Jowett) and his brother (Ben Jowett) also worked. In that office Ben Jowett had two Apple Macintosh desktop computers which he used for his financial services business, whose email address included the words “income guard”. That was the name of Ben Jowett’s financial services business. One computer had a 17-inch screen and the other a 21-inch screen. There was also a large laser printer. The two computers and the laser printer were connected to the same wi-fi network to which Tom Jowett connected when he was working for VESA at the home office.
32 VESA initially provided Tom Jowett with a Toshiba laptop with a Microsoft operating system. Tom Jowett had asked for a Macintosh laptop, however, this request was refused as Ms Luciani and Mr Constable-McDowell wanted him to work on a PC with a Microsoft operating system. Ms Luciani and Mr Constable-McDowell both worked on such PCs and they were concerned about compatibility issues between Macintosh and Microsoft computers. Tom Jowett chose a Toshiba laptop with an 11-inch screen, selecting that size so that it would be convenient when travelling and undertaking recruiting work.
33 In April 2010, Ms Luciani met Tom Jowett at his family home to deliver some VESA materials and property which Tom Jowett would need to undertake his work while she was overseas. Amongst other things, Ms Luciani dropped off a VESA-supplied printer, which was a small ink-jet printer. The small ink-jet printer was not connected to the wi-fi network used at the Jowett’s home office.
34 In July 2010, Ms Luciani lost her laptop while she was travelling in Ecuador. Ms Luciani said that she would take Tom Jowett’s Toshiba laptop in place of the one that she lost. Mr Constable-McDowell brought the laptop to Ms Luciani when he met her in Africa in July 2010. Ms Luciani then authorised Tom Jowett to purchase an Apple Macintosh laptop.
35 Ms Little also worked for VESA from her own home office. She was assisted by a part-time administrative assistant, Ms Emma Fulton. Ms Fulton worked two to three days per week and provided assistance, including answering phones, filing and sending out documents. Ms Fulton also worked from Ms Little’s home office. Ms Little worked as the participant coordinator for VESA and was the primary contact with customers. A large part of her role was to send out booking forms to participants and to ensure that participants had fully booked and paid for their tours. She also assisted Ms Luciani and Mr Constable-McDowell to monitor the general information email account.
36 When Ms Luciani and Mr Constable-McDowell were in Sydney, they worked from their residence in Cremorne. As can be seen, VESA is essentially a small family-run business.
(g) Tom Jowett engages Fizzbuzz Pty Ltd
37 In May 2010, Tom Jowett contacted Mr Roger Allsopp of Fizzbuzz Pty Ltd (Fizzbuzz), a company specialising in marketing communications, including advertising, graphic design, website design and marketing strategy. VESA was seeking assistance with developing a uniform ‘look and feel’ for the VESA brand, marketing material and communications strategies with universities and university students.
38 On either 9 or 10 May 2010, Fizzbuzz emailed a proposal document and some quotations dated 7 May 2010 to VESA.
39 On 18 May 2010, Tom Jowett sent to his father a “project document” which set out information about VESA and its programs, with a view to developing a brand statement.
40 On 21 May 2010, Fizzbuzz emailed some further ideas for developing a logo, ‘tagline’ and an interim HTML email template. In that email, Mr Allsopp stated that Fizzbuzz always treated client information with “100% confidentiality” and that the intellectual property in any of its work would “pass to our clients once the project has been paid for in full”.
41 On 23 May 2010, Tom Jowett, on behalf of VESA, accepted the Fizzbuzz proposal and asked for the work to proceed. Tom Jowett sought Mr Constable-McDowell’s and Ms Luciani’s input into a ‘market position statement’ that had been requested by Fizzbuzz. Ms Luciani and Mr Constable-McDowell each provided a market position statement.
42 On 6 July 2010, Mr Allsopp emailed Tom Jowett to say that he had considered the position statements and had come up with a simplified version of a position statement, along with the following eight ‘brand statement options’ or ‘taglines’:
Change your life by changing someone else’s.
Change your life with an adventure.
Have a life-changing adventure.
Adventure can change your life / can change lives.
Travel like there’s a tomorrow.
You can change the world with travel.
One adventure could change the world.
43 On 7 July 2010, Mr Allsopp on behalf of Fizzbuzz emailed 10 logo concepts to Tom Jowett and asked for feedback on them. The third of these logo concepts was a hand silhouette with spirals on it (first stage hand logo).
First stage hand logo
44 The first stage hand logo concept also included the tagline “Change the world, one adventure at a time” printed under it, which was not one of the taglines put forward by Fizzbuzz the previous day.
45 On 8 July 2010, Tom Jowett forwarded by email to his father a copy of Ms Luciani and Mr Constable-McDowell’s market position statements, a copy of Fizzbuzz’s simplified position statement and the eight taglines, and a draft “mission statement” for VESA which he had prepared. He later discussed with his father how to draft a mission statement and further refined this document (see [49] to [51] below).
46 Also on 8 July 2010, shortly after sending the documents to his father, Tom Jowett sent an email to Mr Allsopp and provided positive feedback on four of the logo concepts, including the first stage hand logo pictured above. However he raised with Mr Allsopp his concerns that, in respect of the hand logo, “with all the swirls and darkness in it… you would lose the sense of the swirls… and the hand itself” when the logo was printed in low quality on flyers.
47 On 9 July 2010, Mr Allsopp prepared the second stage hand logo himself using an internet image of a hand silhouette and superimposing a spiral design (the second stage hand logo). Mr Allsopp said in his email that the hand logo was “intended to resemble indigenous art applied to the hand silhouette, so I have simplified the drawing style to help communicate this”. There were four second stage logos provided in total. Mr Allsopp gave evidence that he created the second stage logo for VESA pursuant to a quote to “completely redesign a brand logo”.
Second stage hand logo
48 On 11 July 2010, Tom Jowett sought assistance from his father to develop a document which compiled the logos provided by Mr Allsopp in one table so that he could show it to Mr Constable-McDowell and seek feedback.
49 Also on 11 July 2010, Tom Jowett revised his draft mission statement for VESA, sending the revised copy to his father. The last line of that mission statement read:
VESA is changing the world, one village at a time.
50 On 12 July 2010, Tom Jowett forwarded that further revised version of the mission statement to his father.
51 Tom Jowett further revised the mission statement on 13 July 2010, after discussing it with his father. The amendments included slightly amending the last line of the statement to read:
VESA. Changing the world, one village at a time.
52 Around 13 July 2010, Mr Constable-McDowell met with Tom Jowett in Neutral Bay to discuss VESA’s branding, the logos and taglines. They came up with a shortlist of three tagline options derived from what Mr Allsopp had suggested. Tom Jowett emailed that shortlist to Ms Luciani and Mr Constable-McDowell on 13 July 2010 for them to discuss and get back to him. That shortlist was as follows, noting that the second and third taglines were not included in Mr Allsopp’s original list of taglines described above:
Change your life by changing someone else’s.
Change the world, one community at a time.
Have an adventure. Change the world, one village at a time.
53 An email discussion then ensued between Ms Luciani (who was overseas), Mr Constable-McDowell and Tom Jowett over the next three days, culminating in Ms Luciani saying (on 16 July 2010) that she preferred the tagline ‘Change your life by changing someone else’s’, which is the tagline that VESA continued to use at the time of the proceedings.
54 On Friday 16 July 2010, Tom Jowett and Mr Constable-McDowell met at the New Orleans Café in Crows Nest to discuss the proposed logos. Tom Jowett showed Mr Constable-McDowell a document he had prepared displaying the logos in one table. From those, Mr Constable-McDowell selected the logos that he liked. Tom Jowett says that he told Mr Constable-McDowell at this meeting that he was being assisted in his work for VESA by his father. Mr Constable-McDowell denies that part of their conversation. I will deal with that matter in the section dealing with disputed facts.
55 On 18 July 2010, Tom Jowett sent an email to his father which contained a draft of an email which was later sent to Ms Luciani and Mr Constable-McDowell. The email set out the reasons why he thought the VESA logo should be changed, and attached the four logos which Mr Constable-McDowell had chosen at the meeting at Crows Nest. None of these logos was the second stage hand logo. Tom Jowett sent the email attaching the logos to Ms Luciani and Mr Constable-McDowell on the following day, 19 July 2010.
56 Mr Constable-McDowell responded to Tom Jowett on the same day and said that both he and Ms Luciani were not in favour of changing the VESA logo and that he should not spend any more time on the logo rebranding. Ms Luciani confirmed that instruction by a further email on 24 July 2010.
57 After 19 July 2010, no further work was done on the logo project. Fizzbuzz did not issue VESA with an invoice for payment for the work it had done until 3 November 2010, when Fizzbuzz was contacted by VESA’s solicitors who offered to purchase the intellectual property rights in certain artistic works comprising logos that were set out in a letter and schedule prepared by the solicitors. Fizzbuzz issued an invoice for $330 dated 3 November 2010 and was paid accordingly. The description of the work provided on the invoice was: “Present ideas for new VESA logo designs”.
(h) Tom Jowett’s emails to his father
58 Throughout his role as associate marketing director, Tom Jowett emailed various documents to his father, Peter Jowett, usually at the email address “info@incomeguard.com. au” (which was the email address for Ben Jowett’s business). Tom Jowett gave evidence that he emailed these documents to his father for a variety of reasons, including seeking assistance on the substantive content of documents he was preparing, as well as proofreading.
59 In addition to the documents sent to his father in connection with the rebranding work described above, Tom Jowett sent the following documents by email to his father during the course of his role as associate marketing director at VESA:
a business plan created by Tom McDowell in February 2010 which included plans for VESA’s future growth such as tours in South Africa and Laos;
a strategy paper which Tom Jowett drafted himself and also sent to Ms Luciani and Mr Constable-McDowell, which included projected sales figures and a recruiting schedule;
a marketing strategy flow diagram;
a strategic document setting out potential locations for VESA tours to South Africa, including St Lucia;
a contact list of students who applied to participate and/or did participate in VESA tours; and
VESA’s presentation speech scripts, which had been provided to him on 19 August 2009 and 15 March 2010.
(i) Virginia Little and Tom Jowett’s working relationship
60 Between May and August 2010, Ms Little and Tom Jowett had some difficulty working together. There was a dispute in late June 2010 relating to who should have the final say on documents which were sent out to participants. In particular, there was a dispute concerning a group flight booking form. Tom Jowett had amended the form consistently with his marketing strategy. Ms Little took the view that Tom Jowett’s form might be misleading to the participants and she amended the form accordingly, sending the form out to participants without further consultation with Tom Jowett.
61 In the months following this dispute, some steps were taken by Mr Constable-McDowell and Ms Luciani to provide Tom Jowett and Ms Little with position descriptions describing their respective roles with VESA. During this period Tom Jowett also initiated steps to formalise a contract of employment with VESA.
(j) VESA and Tom Jowett’s contract negotiations
62 On 20 July 2010, Tom Jowett prepared a draft contract of employment which he sent by email to Ms Luciani and Mr Constable-McDowell for review (the 20 July draft). The 20 July draft was prepared using Ms Luciani’s previous contract of employment with ISV. Tom Jowett’s position description was described as follows:
While employed as Associate Director Marketing, the Employee’s job description and duties are as follows: Responsibility for the development and implementation of all aspects of the marketing program including but not limited to brand design and development, communication strategy, website development and oversight, implementation of the strategic direction of the company via the marketing program. In addition the Employee will be expected to act as the senior responsible officer of the company for all decision making during any period in which Shona Luciani and Thomas Constable-McDowell are not both located in Australia or are otherwise not contactable. (Emphasis added).
63 In the 20 July draft contract, Tom Jowett requested a $50 daily allowance for additional expenses for each day spent away from home, that the standard of accommodation be 3 star (and up to 4 star where there was no suitable 3 star alternative), and that a $2.00 commission be paid for each contract form received at the VESA office.
64 This draft contract underwent various revisions between 1 August and 7 August 2010, particularly regarding the terms dealing with travel allowances. On 1 August 2010 Ms Luciani and Mr Constable-McDowell sent Tom Jowett a revised contract (the 1 August version). In that version, the standard of accommodation was to be 2 star (and up to 3 star where there was no suitable 2 star alternative) and there was no provision for any daily travel allowance. There was a commission of $10 for each “contract form” received at the VESA office which was the “direct result” of Tom Jowett recruiting at a university. The 1 August version also added a sick leave clause and the intellectual property ownership clause was redrafted.
65 The 1 August version also altered the position description as follows:
While employed as Associate Director Marketing, the Employee’s job description and duties are as follows:
Responsibility for the development and implementation of all aspects of the marketing program including but not limited to brand design and development, communication strategy, website development and oversight, implementation of the strategic direction of the company via the marketing program. In addition the Employee will be expected to act as the delegate of Thomas Constable-McDowell when he is not contactable and the situation is such that a decision should be made. (Emphasis added).
66 On 1 August 2010, Ms Luciani also sent Tom Jowett a separate document entitled “position statement”. That position statement included the following statements:
Knowledge, Skills and Abilities
…
• Work collaboratively and efficiently as a team member.
• Work collaboratively with participant coordinator on any documents that will be sent out to potential existing or past participants.
• Send through all final copies of documents for final approval to a VESA director. (Emphasis added).
67 In response to the 1 August version of the proposed contract of employment, Tom Jowett sent an email to Mr Constable-McDowell dated 3 August 2010 stating that he was willing to forego the commission in favour of a daily food allowance while travelling. He also said that he believed that they had agreed that he would be able to seek out accommodation up to 4-star if there was no other suitable accommodation of a lower standard.
68 On 4 August 2010, Mr Constable-McDowell sent Tom Jowett a further revision of the proposed contract (the 4 August version). The 4 August version added a food allowance of $30 per day Monday to Friday, removed the commission and added to the accommodation clause a statement that “if from time to time the Employee is without a satisfactory accommodation option they are entitled to seek an appropriate alternative at their discretion”. The job description clause remained unchanged. Tom Jowett was asked to sign and return the amended contract by close of business on 6 August 2010.
69 In response to the 4 August 2010 version, Tom Jowett sent an email at 5:34 pm on 6 August 2010 to Mr Constable-McDowell stating:
I have read through everything you have had to say with the follow-up email and contract. This is my position, I could negotiate $40, then you would come back to me with a reduced figure than $30 for the entire week. And we would cause frustration between the both of us before we achieve a final result.
I will compromise with $30 for the entire 7 days per week. I will not budge on this.
I can have the contract signed tonight, but that is my position.
70 The final iteration of the proposed contract was sent by email from Mr Constable-McDowell to Tom Jowett on 7 August 2010 (the 7 August version). The food allowance was changed to $30 per day seven days per week. The accommodation and job description clauses were unchanged. Tom Jowett was asked to print the attached revised version of the proposed employment contract, and to sign and return it via email. Mr Constable-McDowell said that he would do the same when he had access to technology.
71 The 7 August version was never signed by either party.
72 All the draft versions of the proposed contract stated that Tom Jowett was required to provide 4 weeks’ notice to terminate his employment. All draft versions also included provisions regarding the use and protection of confidential information and ownership of intellectual property.
73 On 10 August 2010, Tom Jowett gave notice of his resignation from VESA by email to both Mr Constable-McDowell and Ms Luciani. His email included the following statements:
As I have mentioned in the past, I cannot work under the current conditions. I was offered the job with the responsibility over marketing and, in essence, to give you guys a hand in setting up the marketing side of the business. Given the current structure of the business I cannot continue to work for VESA.
I have spoken to you both about the current reporting structure of the business. I made it very clear in my last email on this topic that I could not and would not work in this situation. Your response has been to assure me that it will be OK, however it only seems to get worse. I have read my new Position Description and I see that I now have another individual in the marketing process that does not report to me. I made it clear that this does not work. It is clear that this is how you want it to be. So be it.
You should understand that another opportunity has arose (sic) and that I have taken it. This is not personal, I need a professional working environment and the current structure is not what I had imagined.
74 After a telephone conversation later that day between Tom Jowett and Mr Constable-McDowell (who was in South Africa with Ms Luciani at the time), it was agreed that Tom Jowett would continue his employment with VESA until the end of the current pay cycle, namely until Friday 13 August 2010.
75 On 10 August 2010, Tom Jowett also emailed Mr Allsopp to inform him of his resignation and to provide the email addresses of Ms Luciani and Mr Constable-McDowell for future correspondence with VESA. Tom Jowett’s email included the following statement:
I have really appreciated the work that you have designed, and am currently in the process of starting my own business. I would like you to help with designing the marketing materials for that. It will also be in the ecotourism market so conflict issues will arise and I am aware that you may not be able to accept work from me. However, if your situation changes in the future please make contact with me as I will be on the look out for a good marketer to assist in growing my business.
76 Tom Jowett returned VESA’s property and merchandise to Ms Little on 13 August 2010, including his VESA-supplied laptop. After resigning from VESA, but prior to returning his VESA laptop to Ms Little, Tom Jowett copied the contents of his VESA email account (his inbox and sent items folder, including some attachments) onto a USB stick, which he retained. The parties are in dispute as to Tom Jowett’s reasons for copying those documents.
77 Tom Jowett did not travel to Canada on 17 August 2010 on the ticket which VESA had purchased for him. No refund was ever obtained for the ticket, either by Tom Jowett or VESA.
78 As noted above, ROV was incorporated on 26 August 2010 by Ben Jowett.
79 The internet domain name “rovolunteers.com” was registered by Ben Jowett on 17 August 2010 and the ROV website went live (using that domain name) in mid-September 2010. ROV uses the tagline: “Reach Out Volunteers: Changing the world, one village at a time” on its promotional material and its website, and has done so since the website was launched in September 2010. It also uses a hand logo as a marketing tool which is substantially similar to the second stage hand logo (see [339] below).
80 ROV usually conducts programs in two parts. Both parts consist of volunteer work. The first part, which takes place during the first week of a two week program, involves community development work. The second week of such a program, at least in South Africa, involves wildlife conservation work. There is no adventure activity component as in the VESA programs. ROV uses local contractors for both components of its programs. For example, in South Africa, the ROV wildlife conservation program is conducted by Wildlife ACT.
81 On Monday 16 August 2010, Tom Jowett booked a flight to South Africa and the USA. He departed on 18 August 2010 for South Africa with the purpose of establishing a ROV tour there, including looking for suitable activities and accommodation. He had previously travelled to South Africa in around June 2010 on behalf of VESA with a view to establishing a South African program for VESA. His visit then included travelling to St Lucia and gathering information about various potential activities, including at the St Lucia Game Reserve. The evidence is unclear as to whether Tom Jowett had any contact with Wildlife ACT during his visit on behalf of VESA, as opposed to his subsequent visit on behalf of ROV.
82 Returning now to Tom Jowett’s subsequent visit to South Africa on behalf of ROV in August 2010, on 2 September 2010, he left South Africa and travelled to the USA to undertake recruiting work for ROV. He returned to Australia on 11 December 2010.
(l) The ROV “dry run” in South Africa
83 Tom Jowett was in South Africa between 18 August 2010 and 2 September 2010. He met with a friend from high school, Ms Victoria Doyle, who had been living in St Lucia. Ms Doyle was involved in running a horse riding business.
84 Ms Doyle introduced Tom Jowett to Mr Chris Viviers who ran the “Bibs Backpackers” Hostel in St Lucia. Mr Viviers was providing accommodation to VESA. Mr Viviers told Tom Jowett that he could not do business with him because he was working for VESA. He said that VESA had put a specific clause in his contract that he should not talk with Tom Jowett. Mr Viviers provided to Tom Jowett the name of a guide whom he could contact.
85 Shortly after arriving in St Lucia, Tom Jowett was joined by his friend, Mr Scott Barros and his brother Ben Jowett. While in South Africa, Tom Jowett also met Ms Jo Aylett. Tom Jowett, Mr Barros and Ms Aylett (and possibly Ben Jowett) undertook various activities with a view to establishing locations and programs for future ROV tours (“the dry run”). Such activities included participating in a game drive at the St Lucia Game Reserve, horse riding (with Ms Doyle’s business), snorkelling and going on a “barge cruise”. They also visited and undertook volunteer work in a local community school in the area surrounding St Lucia. Some of these activities were subsequently used on ROV tours, including activities relating to wildlife conservation. It appears that the game drive at the St Lucia Game Reserve was organised by Wildlife ACT, the company which ROV subsequently engaged to conduct that component of its own program in South Africa. While he was in South Africa in August 2010, Tom Jowett met with Mr Simon Morgan and Mr Johan Maree of Wildlife ACT.
86 Mr Barros and Ms Aylett were not employees of ROV while undertaking the trial activities in August 2010. They both later became employees of ROV and acted as team leaders on ROV tours. Mr Barros was first employed to undertake recruiting work in September 2010. Ms Aylett was first employed to lead tours for ROV between 9 and 23 July 2011.
87 As noted above, on 2 September 2010, Tom Jowett left South Africa and travelled to the USA. There, he promoted ROV’s activities and programs at universities. Ben Jowett did not accompany Tom Jowett to the USA. While recruiting in the USA, Tom Jowett used paper application forms. He admitted to copying the VESA application form for this purpose. Tom Jowett said that from late January-early February 2011, ROV did not use paper application forms, rather it used only an online form. The effect of this evidence is that ROV only used the VESA-copied application form for a limited time and only in the United States.
(n) Engagement of Roger Allsopp
88 In August 2010, Ben Jowett on behalf of ROV contacted Mr Allsopp of Fizzbuzz to design a website and create logos for ROV. Tom Jowett gave evidence that Ben Jowett negotiated the design of the logos with Mr Allsopp and that he had no involvement in choosing the logo. As noted above the logo ultimately chosen for ROV was substantially similar to the second stage hand logo designed for VESA.
Part B: Disputed Facts and Some Issues of Credit
(a) Summary of VESA’s submissions
89 Ms Chrysanthou (who appeared together with Ms Styles on behalf of VESA) submits that, in large measure, the documents tendered in the proceedings are sufficient to establish its various causes of action. In those circumstances, VESA submits that the credit of witnesses plays only a “limited role” in the matter. Nevertheless, VESA submits that credit findings may need to be made in respect of witnesses concerning the following issues:
(a) the conversation between Mr Constable-McDowell and Tom Jowett on 7 April 2010 concerning his terms of employment;
(b) whether or not, after July 2010, VESA authorised Tom Jowett to send the retained materials to his father or brother;
(c) the creation of some of the works in which copyright is claimed;
(d) the conversation between Ms Little and Mr Stone in August 2010 concerning Tom Jowett’s possession of the database created by Mr Stone on behalf of VESA;
(e) the conversations which Tom Jowett claims he had with Ms Luciani and Mr Constable-McDowell in March and early April 2010 concerning the difficulties of his working relationship with Ms Little; and
(f) Tom Jowett’s denials that he has concocted reasons for why he sent documents to the email address of his brother, Ben Jowett.
(i) Issues concerning production of documents
90 Another issue which VESA says goes to the credit of the respondents generally and to the question of remedies (including flagrancy damages and the Court’s discretion to grant or withhold injunctive relief), relates to the alleged failure of the respondents to meet their discovery obligations. In particular, VESA places emphasis on the practice adopted by the respondents of “saving over” previous versions of electronic documents notwithstanding that they must have been aware of the threatened proceedings in August 2010. They also allege that the practice continued after the proceedings commenced in March 2011. VESA says that this practice has resulted in the respondents not being able to discover earlier versions of the ROV website which contained many of the misrepresentations and testimonials complained of. They also point to the respondents’ failure to produce management accounts, BAS statements etc.
91 On the subject of document production, VESA also draws attention to the following matters:
(a) Mr Allsopp was unable to produce documents under subpoena because of a computer failure; and
(b) he wrote over and amended documents forming part of the ROV website in circumstances where ROV had never asked him to do otherwise, even though the proceedings were either threatened or had commenced.
92 While VESA acknowledges that the respondents have put forward several reasons for their failure to produce documents, it urges the Court to draw adverse inferences against the respondents in respect of these matters.
93 VESA invites the Court to make adverse findings on the credibility of both Tom Jowett and, to a lesser extent, Mr Allsopp. I will summarise VESA’s submissions concerning the credit of both those witnesses.
94 VESA makes strong submissions in respect of the credibility of Tom Jowett. It submits that he is a person “who is willing and capable of lying when it suits him”. VESA strongly criticises Tom Jowett’s credit by reference to the statements he made when he announced his resignation from VESA. His statement to Mr Constable-McDowell at that time to the effect that he had been offered a job somewhere else is described as “a complete fabrication”. VESA also draws attention to the fact that, less than an hour after Tom Jowett sent his resignation email on 10 August 2010 to Mr Constable-McDowell, Tom Jowett informed Mr Allsopp by email that he was “currently in the process of starting my own business… it will also be in the eco tourism market… conflicts will arise and I am aware that you may not be able to accept work from me”. Furthermore, VESA attacks Tom Jowett’s oral evidence in cross-examination about these matters, when he denied that he had decided at that time to start up his own business. VESA says that Tom Jowett’s claim that he did not decide to establish ROV until over the course of the weekend of 14 and 15 August 2010 (i.e. following his last day with VESA on 13 August 2010), is inconsistent with the fact that he prepared a spreadsheet with costings for his proposed business at about 11:00 am on 11 August 2010.
95 VESA further challenges Tom Jowett’s credibility by reference to the representations he made concerning ROV’s experience in conducting tours, which is said to illustrate his dishonesty and propensity to make false representations.
96 VESA also urges the Court not to accept Tom Jowett’s explanation as to why he sent VESA documents to the email address of his brother, Ben Jowett. VESA submits that his explanation to the effect that he did not purchase any software with his original laptop in order to save VESA additional expense should not be accepted because the evidence demonstrated that he had in fact spent an additional $179 on a software program “Microsoft Office Home and Student”, which was said to be an adequate alternative to the “iWorks” program he preferred to use by accessing his brother’s computer. VESA complains that, despite Tom Jowett’s earlier evidence that the two programs were “very similar” and that he preferred iWorks, when budgeting for the purchase of a new computer for his new business ROV, he selected Microsoft Office, not iWorks. VESA also says that the Court should not accept Tom Jowett’s explanation that he forwarded VESA documents to Ben Jowett’s email address in order to take advantage of his brother’s superior printer, compared with that which he had been issued by VESA. All that evidence is said by VESA to be “totally irrelevant” because it says that other evidence demonstrated that Tom Jowett did not need to email documents to Ben Jowett’s email address in order to print them on the larger printer.
97 In further challenging Tom Jowett’s credibility, VESA draws attention to what are said to be other inconsistencies in his evidence (which was given over the course of almost four hearing days, the bulk of which was taken up by cross-examination). VESA points to the following matters:
(a) while saying that he had had his first conversation with Mr Allsopp about the latter working for ROV in August 2010, he later said that he did not speak directly with Mr Allsopp in August 2010 about the logo; and
(b) while claiming that his brother, Ben, was in charge of designing the hand logos and that Tom Jowett did not make any suggestions, this was inconsistent with his earlier evidence that his brother Ben was simply the “conduit” through which he passed information to Mr Allsopp.
98 VESA urges the Court to prefer the evidence of Ms Luciani and/or Mr Constable-McDowell to that of Tom Jowett on the following matters:
(a) whether or not Tom Jowett told Mr Constable-McDowell that Peter Jowett was helping his son with his work for VESA;
(b) Tom Jowett’s insistence that he was to be the person in control of VESA while Ms Luciani and Mr Constable-McDowell were both away; and
(c) while Tom Jowett claimed that he had raised this matter with both Ms Luciani and Mr Constable-McDowell in March and April 2010, he did not produce any emails to support that claim. VESA says that if this matter was so important to him it would have been recorded in a contemporaneous email.
99 VESA says that Tom Jowett’s credibility is further undermined by his admission that he copied ISV documents from Ms Luciani’s former ISV laptop and used that material to create a recruiting schedule for VESA, in circumstances where Ms Luciani specifically denied authorising Tom Jowett to use that material. Tom Jowett accepted in cross-examination that the only document he was ever authorised to use from Ms Luciani’s former ISV laptop was her old ISV employment contract.
100 Finally, VESA submits that, because neither Peter nor Ben Jowett was called to give evidence, the Court should infer that their evidence would not have assisted the respondents’ case.
101 While submitting that Mr Allsopp was, for the most part, an honest witness, VESA contends that he was not forthright in his evidence concerning his dealings with VESA in that:
(a) he dealt with ROV despite being aware of the conflict of interest which that created for him vis-à-vis VESA;
(b) as the sole director of Fizzbuzz, he promised VESA that he would not do work for Tom Jowett in eco tourism for one year from 23 August 2010, yet he clearly broke that promise and failed to disclose to VESA that he was working for ROV;
(c) the Court should not accept his attempts to explain his association with ROV by drawing the distinction which he advanced between promises made by him on behalf of the corporate entity Fizzbuzz, as opposed to him acting in his personal capacity for ROV. In this respect, attention is drawn to the fact that, in his email dated 30 August 2010, he provided quotations to ROV as Fizzbuzz, and also that he consistently used the Fizzbuzz email address when dealing with ROV; and
(d) he purported to create a hand logo for ROV, when the copyright in that logo was VESA’s and in circumstances where, given the feedback he had received, he must have known that VESA was particularly interested in the hand logo.
102 Accordingly, in the light of these matters, VESA submits that, where Mr Allsopp’s evidence is contradicted by any document, preference should be given to the documentary evidence.
(b) Summary of respondents’ submissions
103 Mr Gration, who appeared on behalf of the respondents, agreed that most of the issues in dispute between the parties were capable of being resolved by reference to documents. He submitted, however, that the Court should make adverse findings in respect of some of Ms Luciani’s evidence, particularly her evidence relating to the use of ISV documents which were retained on her ISV laptop, as well as her conduct in assuming the pseudonym of “Sandra Moore” for the purpose of extracting information from ROV.
104 There are two particular disputed matters in respect of which the respondents also say that the evidence of Tom Jowett is to be preferred to that of either Mr Constable-McDowell or Ms Luciani. The first relates to the issue whether Tom Jowett told Mr Constable-McDowell that he was sending VESA materials to his father for his advice and assistance. Tom Jowett gave evidence to the effect that he informed Mr Constable-McDowell of these matters at a meeting between them at the New Orleans Café in Crows Nest on 16 July 2010 before Mr Constable-McDowell flew out to South Africa. He said that at that meeting he showed Mr Constable-McDowell a flow chart, as well as the proposed hand logos. He said that Mr Constable-McDowell was impressed with the flow chart which Tom Jowett had prepared, at which point Tom Jowett says he said words to the following effect:
My father helps me with these works, because he has got so much experience in the area. He did years of marketing and was a solicitor, and so he helped me produce this.
105 In cross-examination, Tom Jowett agreed that Mr Constable-McDowell had not granted him permission to enlist his father’s help. But when asked under re-examination how Mr Constable-McDowell responded when he was told that Tom Jowett was getting help from his father, Tom Jowett said:
There was no, “that’s great”, but there was no, “I have got no problems with that”. Just conversation just kind of rolled on.
106 It was directly put to Mr Constable-McDowell in cross-examination that Tom Jowett had told him, shortly before Mr Constable-McDowell flew to South Africa, that his father had been helping him with some of his work. Mr Constable-McDowell’s response was to say “that’s absolutely false”. When it was put to him that it must have been obvious that a person of Tom Jowett’s age, fresh out of university and with no practical experience in marketing could not have produced work of the quality that he did without outside help, Mr Constable-McDowell said that it was a “complete and utter falsehood” to suggest that this was obvious to him.
107 The second matter relates to whether or not Ms Luciani was aware of the office arrangements at the Jowett family home in Cremorne whereby Tom Jowett worked in close proximity in the same room to both his father Peter and his brother Ben. Ms Luciani denied any knowledge of those arrangements. Tom Jowett gave evidence to the effect that Ms Luciani had visited his family home in Cremorne and had been shown the office set-up. He says that he introduced her to Ben in the room used as an office.
108 For reasons which are given below at [117] and [119], I prefer and accept Tom Jowett’s evidence on both those matters.
109 In my view, it is unnecessary to make findings on credit in relation to all the matters raised by VESA. I will now deal, however, with the matters of some potential significance.
(i) Issues concerning production of documents
110 I do not accept VESA’s contention that adverse findings should be made in relation to the respondents’ credit because of their failure to produce some documents which VESA says were properly discoverable. VESA’s primary complaint is directed to ROV’s practice, which was introduced around September 2010, of saving over earlier documents rather than creating new and separate documents, which had the effect of automatically deleting earlier versions of a document. VESA complains that this practice, which it describes as a “document destruction policy”, resulted in the deletion of potentially relevant documents, such as other testimonials or other representations which it claims may have been misleading or deceptive.
111 Tom Jowett gave evidence, which I accept, that the practice of saving over earlier documents was introduced and maintained in order to reduce space on ROV’s “cloud” electronic storage system. I do not consider that the practice warrants any adverse finding for the credit of Tom Jowett or any of the other respondents. Nor do I accept VESA’s argument that the practice ought to have changed after Tom Jowett was put on notice by a letter dated 26 August 2010 from VESA’s solicitors, which raised the prospect of litigation. That letter contained some intemperate language. It also wrongly asserted that VESA was entitled to set-off the lost value of Tom Jowett’s air ticket to Canada from his unpaid VESA wages. In my view, nothing in that letter should have caused Tom Jowett or ROV to adopt a different storage practice. The practice was not implemented or maintained with the intention of depriving VESA of potentially relevant documents. Ideally, the practice ought to have been reviewed after the proceedings were commenced in March 2011, but the failure to do this does not, of itself, warrant the serious adverse findings sought by VESA.
112 Nor do I accept VESA’s submission, which was only faintly put, that an adverse inference should be drawn against Mr Allsopp because of his inability to produce certain documents in response to a subpoena. I unreservedly accept Mr Allsopp’s explanation that that inability resulted from a major computer failure which was beyond his control. The comments above concerning ROV’s practice of saving over documents apply equally to Mr Allsopp’s similar practice while working on ROV’s website.
113 It is appropriate if I now make some findings and general observations regarding Tom Jowett’s evidence.
114 Tom Jowett was about 22 years old when the relevant events occurred in 2010. Over the course of him giving evidence over almost four days, he came across as being an intelligent and honest man. He showed that he had a good memory of events. Nevertheless, when he had any difficulty recollecting a particular event he did not hesitate to say so or seek to reconstruct events. He tried to tell the truth. He was not evasive. He did not take opportunities to advance his own case. Several times in cross-examination, he made admissions and concessions even though it was clear that they harmed his case. He candidly acknowledged that some of his actions had been wrong, such as copying and using VESA’s paper application form in the early stages of ROV’s operations in North America, and also the inaccuracies in some of the representations made in ROV’s marketing materials about its experience. Tom Jowett also candidly admitted that ROV’s e-mail to professors was written by him using VESA’s document as a precedent.
115 It is apparent that, while he worked with VESA, he relied heavily on his father not only to check his work, but also to provide creative input and to make his work look better than would have been if he had done it alone.
116 As will emerge throughout these reasons for judgment, I do not accept that the matters raised by VESA warrant an adverse finding concerning Tom Jowett’s credit. On the contrary, he impressed me as a witness of truth. Many of the matters raised by VESA in attacking his credit are not borne out by a close examination of the evidence. For example, the alleged inconsistencies in Tom Jowett’s evidence relied on by VESA (see [97] above), are either without foundation or are seriously overstated. In my view, there is no inconsistency in his evidence regarding his dealings with Mr Allsopp. It is entirely plausible that he spoke at a general level with Mr Allsopp in August 2010 about Mr Allsopp working for ROV (as raised in Tom Jowett’s email dated 10 August 2010), while not speaking with Mr Allsopp about the specific topic of logos. And as to the claimed inconsistency in Tom Jowett’s evidence that his brother Ben was in charge of designing the logos and Tom Jowett’s earlier evidence that Ben was merely a “conduit” through which Tom Jowett passed information to Mr Allsopp, the following points should be noted:
(a) his evidence that Ben Jowett was in charge of developing the logos was given in the express context of “the period of August of 2010”;
(b) his evidence concerning Tom Jowett being a “conduit” (incidentally, a word which was put to him by the cross-examiner and accepted by him) related to the subsequent period when Tom Jowett had gone to the USA and Ben Jowett had returned from South Africa to Australia;
(c) furthermore, the specific context of his evidence relating to this latter period was not the logos as such, but more generally the development of flyers, posters and banners; and
(d) in any event, the alleged inconsistency was never directly put to Tom Jowett for comment.
117 Turning now to deal with some of the important disputed issues of fact, I accept Tom Jowett’s evidence that Ms Luciani visited him at his home and, at her request, he showed her the office arrangements which indicated that he worked there in close proximity to his father Peter and his brother Ben. I do not accept Ms Luciani’s claim that she was unaware of those arrangements.
118 I also accept Tom Jowett’s evidence concerning his practice of forwarding documents to his father and the purpose for which he did so. In my view, there is no evidence to support a finding that there was a conspiracy involving Tom Jowett and members of his family to steal VESA’s materials in order to establish a rival business. Tom Jowett’s explanation for sending VESA’s material to the income guard email account is credible. I accept that he was either sending the material to the bigger iMac screens or to enable him or his father or both of them to work on draft documents. It is also plausible that he would send the material to various email accounts in order to check for any problems with the presentation of documents.
119 I prefer Tom Jowett’s account of his meeting with Mr Constable-McDowell at the New Orleans Café in Crows Nest in July 2010. I accept his evidence that he then told Mr Constable-McDowell that he was getting help from his father. It was at that meeting that he showed Mr Constable-McDowell the flow chart which he and his father had prepared, together with other materials, such as some of the hand logos and taglines in which his father had had some input. It is understandable that he would feel embarrassed that this was not all his own work and that it was an appropriate time for him to disclose to Mr Constable-McDowell that he was getting help from his father. For reasons which I will give below, I did not always find Mr Constable-McDowell to be a sound or convincing witness.
120 Tom Jowett’s explanation as to the reasons why he quit VESA were also convincing. He described it as “a slap in my face” to read the proposed position description forwarded to him by Ms Luciani and the requirement that he collaborate with Ms Little when he had previously made it clear to both Mr Constable-McDowell and Ms Luciani that he was not prepared to work under such arrangements.
121 As to VESA’s challenges to Tom Jowett’s credibility in relation to events surrounding his resignation from VESA, Tom Jowett’s statement that another opportunity had arisen and that he had taken it was not correct, but it should be kept in proper perspective. He was an inexperienced 22 year old who was quitting his first serious job. I view his reference to another opportunity having arisen as an attempt by him to preserve some goodwill with his employers and to avoid “a heated discussion”. Bearing in mind that his second work engagement with VESA only lasted approximately four months, I accept his evidence that that “was a way for me to get out of it. I was thinking about Reach Out Volunteers, as well as other working opportunities but I didn’t have anything”. I do not regard the false statement in his resignation email as indicating a propensity on his part to tell lies. It is a classic “white lie”.
122 Nor in my view is there any reason to disbelieve Tom Jowett’s evidence that he had not decided as at 10 August 2010 to set up his own business and that he only came to a final decision on that matter over the course of the weekend of 14 and 15 August 2010 i.e. following his last day at work with VESA on 13 August 2010. The reference in his email dated 10 August 2010 to Mr Allsopp that he was currently in the process of starting his own business is not of itself inconsistent with his evidence that he was clearly thinking about the matter at that time (as is reflected in the fact that he prepared a spreadsheet with costings during the morning of 11 August 2010 i.e. the day after he notified VESA that he was resigning). I accept his evidence that he only came to a final decision to set up ROV a few days later after those events when he had given the matter more thought.
123 I do not accept VESA’s submissions that adverse findings should be made about Tom Jowett’s credibility because of the material he took from Ms Luciani’s laptop. He was asked to obtain a copy of her contract of employment from her laptop. He freely admitted that he also removed a copy of a schedule prepared by ISV and that he was not authorised to remove any document other than the contract of employment. It is evident, however, that he removed the schedule for the purposes of using it to develop a schedule for VESA, i.e. whether rightly or wrongly, his motivation was to assist his then employer. The same can be said about him enlisting his father’s help. I am not prepared to find that he removed the schedule with a view to using it as part of ROV’s business. There is no evidence to suggest that he had made a decision at that time to set up a rival business, or that he was even thinking about it. That came later.
124 Nor do I accept VESA’s submissions concerning the reasons why Tom Jowett forwarded emails and documents to the income guard email address. It was put to him that his answers were all incorrect and that the real explanation for his conduct was to have the information from VESA available to set up his own business. Many of the documents were being forwarded to that email address as early as May 2010 i.e. barely a month after he took up his second position with VESA and well before there was any evidence of any consideration being given by him to setting up a rival business. In my view, the evidence indicates that Tom Jowett was trying to do his best at this time to impress his new employer, including by enlisting the assistance of his father in carrying out his work.
125 Finally, I reject VESA’s challenge to Tom Jowett’s credibility on the ground that he did not produce any emails to support his claim that he raised with his employers the issue of who was to be in control of VESA while Ms Luciani and Mr Constable-McDowell were away. On 24 June 2010, Tom Jowett sent an email headed “Marketing Responsibilities” to both Mr Constable-McDowell and Ms Luciani specifically raising this issue and stating:
I should be allowed to do my role as the associate marketing director and the junior do hers, we should not interfere with each other’s work.
126 As noted above, while accepting that Mr Allsopp was generally an honest witness, VESA contends that, because of certain matters set out in [101] above, if Mr Allsopp’s oral evidence is contradicted by any document, preference should be given to the documentary evidence. In my view, Mr Allsopp’s oral evidence is material to only one topic of disputed fact in the proceeding. That topic concerns his creation of various hand logos for both VESA and ROV. It is unnecessary to make any general finding one way or the other concerning Mr Allsopp’s credit other than to state that, on this particular topic of the creation of the hand logos, I found his evidence to be entirely credible and I accept it.
127 Overall, I did not find Ms Luciani to be an impressive witness. In cross-examination, she was prone to give unresponsive answers if she felt that a responsive answer might damage her case. She was ready to deny any knowledge of relevant events where she felt that the subject matter did not advance her case. She was equally alert to take advantage of any opportunity to promote her case, even if it meant giving an unresponsive answer. While I do not suggest that all her evidence is to be disbelieved, I would not prefer her evidence to that of Tom Jowett on any issue of disputed fact where the issue turns on whose oral evidence is to be believed.
128 The unfavourable view I formed of Ms Luciani’s credibility is based primarily on the following matters:
(a) her evidence regarding the establishment of a fictitious person and email address for Sandra Moore in order to extract information from ROV and her acceptance of the proposition that she believed it was okay to tell a lie if justified by the end being served, which in this case was to expose ROV’s allegedly unlawful actions. Her clandestine use of the pseudonym occurred over several weeks. It is of a different order of magnitude compared with Tom Jowett’s opportunistic “white lie”. It was also entirely unconvincing of her, in cross-examination, to seek to defend the reference to “my parents are just wondering” in one of the Sandra Moore emails inquiring about ROV’s history, on the basis that Ms Luciani’s mother was “actually quite interested” in that topic;
(b) her evidence generally on what she did or did not copy of ISV’s material was unimpressive and self-serving. It was evident that she took the view that whatever ISV left on her computer was able to be used by her in any way she wished and that she simply ignored any relevant limitations imposed by her contract of employment with ISV or constraints imposed by the law of copyright;
(c) her evidence regarding the nature and extent of her role in assisting Sam Bailey in 2008 and 2009 in establishing Eco Surf Volunteers was unconvincing, possibly because of her embarrassment that her actions were possibly in breach of the restraint of trade clause with ISV; and
(d) her evidence regarding ISV’s online-application form for 2008 and 2009 was also unimpressive, particularly because her lack of recall contrasted so sharply with her close attention to detail on other matters which were favourable to her case.
129 One important issue of disputed fact to which Mr Constable-McDowell’s credit is relevant is whether or not he was told by Tom Jowett in July 2010 that he was receiving help from his father in doing his work for VESA. The competing evidence is summarised at [104] to [106] above.
130 Mr Constable-McDowell’s evidence was at times questionable. On several occasions he showed a propensity in cross-examination to seek to advance his case rather than to respond directly and forthrightly to questions. He also demonstrated a surprising unwillingness to accept responsibility for some matters. For example, he went to some lengths to distance himself from various letters sent by VESA’s solicitors notwithstanding that he is the managing director of VESA and gave instructions for the letters to be sent. He acknowledged that he had read one of the letters (the letter dated 26 August 2010) in draft before it was sent. He also had no reservations or concerns about Ms Luciani’s actions in assuming the pseudonym “Sandra Moore”, notwithstanding that he ultimately accepted that this involved his wife telling lies on behalf of VESA. He said that her conduct was “ok” in this particular instance because he did not think that anyone was hurt by it. These matters, coupled with his demeanour at times in the witness box, cause me not to prefer his account as to whether Tom Jowett told him about the assistance he was getting from his father. I strongly prefer Tom Jowett’s account on this and other matters where he and Mr Constable-McDowell gave conflicting evidence.
131 VESA claims that Tom Jowett breached two separate contracts of employment by:
(a) failing to give four weeks’ notice of termination of his employment;
(b) failing to train his replacement;
(c) prior to leaving VESA, planning to set up a rival business;
(d) using without authority information of VESA which is claimed to be its property and/or confidential;
(e) retaining VESA’s property, confidential information and/or other documents which he then used in setting up ROV’s business;
(f) copying literary and artistic works in which VESA owns the copyright;
(g) using and reproducing VESA’s confidential information, as defined, in the course of carrying out ROV’s business without VESA’s permission; and
(h) using and/or reproducing retained material, as defined, other than confidential material, as defined, in the course of carrying on ROV’s business without VESA’s permission.
132 It is convenient to deal with the issue of the relevant terms of the first and second contracts of employment, before dealing with the alleged breaches (noting that not all pleaded breaches were ultimately pressed by VESA).
(a) Terms and conditions of the first and second contracts of employment
(i) First contract of employment
133 It is common ground that Tom Jowett’s first contract of employment with VESA is a written document dated 16 August 2009. The contract is expressed to be between Volunteer Eco Students Abroad Pty Ltd and Tom Jowett, who is referred to throughout the agreement as “International Recruitment Coordinator” or “IRC”. Clause 5(a) is in the following terms:
IRC Agrees To:
(a). Work as an Independent Contractor (Sole Trader) and in accordance with the guidelines and policies set forth by VESA, communicating the details of the VESA summer student program with the upmost integrity and in accordance and consistent with VESA’s training and promotional materials (including but not limited to the VESA website) regarding the program.
134 The first contract also contains on the final page the following unnumbered provision dealing with VESA’s confidential information:
VESA’s Confidential Information:
IRC recognises and accepts the VESA policy that all VESA materials (including but not limited to student recruiting, staff recruiting, program, training, etc.), all correspondence, all university recruiting methodology, all program methodology, etc., created by IRC and/or any other VESA staff person, are the sole possession of VESA and belong explicitly to VESA. IRC further agrees to keep all such materials/information/methodology confidential and will not give these materials/ information/methodology (written, electronic or verbal) to any individual, company and/or organisation.
135 The respondents emphasise that, in accepting the position of IRC with VESA, Tom Jowett agreed to act as an independent contractor. Consequently they say that obligations owed by employees which might ordinarily arise under a contract of employment do not arise here.
136 Clause 6 of the first contract deals with the duration of the contract. It states that the contract would begin with the IRC’s first campus visit on 9 September 2009 and end at the conclusion of two and a half weeks recruiting on 25 September 2009. It is common ground that that term was later varied by consent and Tom Jowett continued to work for VESA under the first contract of employment until at least November 2009.
137 In my view, the first contract was discharged by performance in November 2009 or, at the very latest, in January 2010 when Tom Jowett received his final commission payments owing under that first contract of employment. Although clause 6(c) states that the parties were “desirous of a possible long term working arrangement”, I consider that that statement is merely aspirational and did not override the express provision in clause 6(a) for the contract to end at the end of the recruiting period.
138 That is not to say, however, that the confidentiality clause on the final page of the contract did not survive the discharge of the contract. Whether or not it did is a question of construction (see Photo Production Ltd v Securicor Transport Ltd [1980] AC 827). The object of the clause was to protect VESA’s confidential information. It can be assumed that the parties, acting as reasonable persons, proceeded on the basis that that object would not terminate on discharge of the contract leaving the other party at liberty to disclose information which was protected by the clause. In my view, such a term should be implied in the first contract of employment even though Tom Jowett was engaged as an independent contractor.
139 It remains, however, for VESA to discharge its onus of establishing that:
(a) Tom Jowett was given particular and specifically identified material that fell within the meaning of “VESA materials” for the purposes of that clause; and
(b) Tom Jowett failed to keep those specific materials “confidential” in circumstances where the material was in fact confidential, bearing in mind that the concept of “confidential information” is not defined in the contract.
140 Those matters will be addressed in the section below dealing with breach. It is also important to bear in mind, as the respondents point out, that some of the materials particularised by VESA for the purposes of this complaint did not actually come into existence until after the contract was discharged by performance in either November 2009 or, at the latest, in January 2010.
(ii) Second contract of employment
141 The parties agree that Tom Jowett took up the position of associate marketing director with VESA in April 2010. They disagree, however, on the terms and conditions of his second contract of employment. In broad terms, VESA says that, although the parties never signed the document, the terms and conditions of the second contract of employment are those set out in a document entitled “Employment Contract” which was attached to an email dated 7 August 2010 from Mr Constable-McDowell to Tom Jowett (the Employment Contract). The respondents deny that claim and say that the terms and conditions of the second contract of employment are partly oral and partly in writing, the latter being set out principally in an email dated 6 April 2010 from Mr Constable-McDowell to Tom Jowett. The respondents say that the parties were still negotiating the proposed variations to that agreement when Tom Jowett announced his resignation on 10 August 2010.
142 Despite the parties’ dispute as to the terms and conditions of the second contract of employment, they are agreed that the second contract of employment contained an implied term that Tom Jowett would carry out his duties as an employee in good faith and with fidelity.
143 It is convenient to first summarise VESA’s submissions concerning the terms and conditions of Tom Jowett’s second contract of employment, before summarising those of the respondents and then determine the issues in dispute.
144 (1) Summary of VESA’s arguments: In support of its primary contention that the terms and conditions of Tom Jowett’s second contract of employment with VESA are those set out in the Employment Contract, VESA submits that:
(a) the core question of what were the terms of the second contract of employment turns on the terms agreed by the parties as determined objectively on the evidence;
(b) there were no outstanding issues in dispute between the parties regarding Tom Jowett’s job and duties description. It was made clear in clause 1 of the Employment Contract that Tom Jowett was authorised to make marketing decisions as Mr Constable-McDowell’s delegate when he was uncontactable;
(c) the only material issues which were the subject of extended negotiation in late July and early August 2010 concerned the level of accommodation to which Tom Jowett was entitled when travelling on VESA’s behalf and his daily allowance. VESA submits that the accommodation issue was ultimately resolved in a phone call between Mr Constable-McDowell and Tom Jowett on 3 August 2010. As to the stipend issue, VESA relies on Tom Jowett’s email dated 6 August 2010 which he sent to Mr Constable-McDowell at 5:34 pm stating he would not budge from a daily $30 stipend for each day of the week and that he could have the contract signed that night if that was accepted. VESA says that Mr Constable-McDowell agreed to Tom Jowett’s demands on 7 August 2010 and inserted a 7 day $30 stipend into clause 10(a), before emailing the revised final version of the proposed contract to Tom Jowett for his signature;
(d) the case falls within the fourth category of Masters v Cameron (1941) 91 CLR 253 in the sense that, while the parties entered into an employment contract in early April 2010, they mutually intended that Tom Jowett’s employment would also be subject to a subsequent written document containing more detailed terms; and
(e) although the 7 August 2010 version of the contract was never signed, its contents were nevertheless agreed. VESA argues that Tom Jowett’s email dated 6 August 22010 at 5:34 pm constituted an offer, which Mr Constable-McDowell accepted on 7 August 2010 when he sent his email at 12:43 am.
145 VESA’s submission that this case falls within the fourth category of Masters v Cameron needs some elaboration. The submission is directed to the following passage from McLelland J’s judgment in Baulkham Hills Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 at 628:
There is in reality a fourth class of case additional to the three mentioned in Masters v Cameron, as recognised by Knox CJ, Rich J and Dixon J in Sinclair, Scott & Co v Naughton (1929) 43 CLR 301 at 317, namely, “… one in which the parties were content to be bound immediately and exclusively by the terms that they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms”.
146 McLelland J’s decision was affirmed on appeal (G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631) and was cited approvingly by the Full Court in Graham Evans Pty Ltd v Stencraft Pty Ltd [1999] FCA 1670 [44]-[45] per French, Whitlam and Dowsett JJ. The fourth category is generally recognised as being a variation of the first category in Masters v Cameron, namely that the parties intend to be bound immediately, while expressing a desire to draw up their agreement in a more formal document at a later stage.
147 On the basis that the document dated 7 August 2010 constitutes the final second contract of employment, VESA submits that the following express terms reinforce Tom Jowett’s duties of good faith and fidelity:
(a) clause 21 prevents him from undertaking or pursuing any business activity which competes with the current or anticipated business activities of VESA;
(b) the same clause prevents Tom Jowett from directly or indirectly engaging or participating in any other business activities that VESA reasonably determines to be in conflict with its own best interests;
(c) clauses 22 to 28 require Tom Jowett to keep all of VESA’s confidential information confidential, which term is stated to survive termination;
(d) clauses 29 and 30 state that all intellectual property owed or used by VESA continues to be owned by it;
(e) clauses 29 and 32 state that any intellectual property created or amended by Tom Jowett is owned by VESA; and
(f) clauses 34 and 35 prevent Tom Jowett from directly or indirectly inducing any VESA employee to leave VESA or interfere with or disrupt VESA’s relationship with any of its employees or contractors.
148 VESA also contends that, having regard to Tom Jowett’s position as an executive employee with managerial responsibilities and the power to bind VESA to contracts (such as those entered into with Mr Stone and Mr Allsopp), Tom Jowett was in a fiduciary relationship with VESA.
149 (2) Summary of respondents’ arguments: The respondents argue that the terms of the second contract of employment are those which were agreed by the parties in April 2010 and that their subsequent conduct cannot be taken into account to interpret that contract (relying upon Codelfa Construction Pty Limited v State Rail Authority of New South Wales (1982) 149 CLR 337). They say that the terms of the contract were “very basic” and were essentially those set out in the email dated 6 April 2010 from Mr Constable-McDowell to Tom Jowett which said as follows:
I anticipate that we will begin on a sales incentive (bonus structure) program for you from the start of the Australian season next year (Feb 2011), this will give time for us to identify sales revenue, targets and give you the chance to improve on these with tangible, realistic and generous remuneration for performance exceeding said targets.
A nominal recruiting bonus based on agreements received for Canada/UK 2010 will be discussed on top of your salary.
As discussed your salary will be $60,000 plus super making a total package of $65,400.
In addition, your phone will be paid up to a cap agreed by us per month, probably $69+$8 for internet capability (500MB) which gives you $650 including $120 international calls. Any extra you should pay yourself; ie $99 cap.
We will also supply you with a new laptop, wireless internet and access to our Skype account for international calls.
Car will be included (Mitsubishi Lancer Sportscar NKC, Westie muffler included) inclusive of rego, insurance, petrol and tolls. Shona will want it back for the few weeks that she is in Sydney.
This package amounts to well over $70,000 per annum with incentives to be discussed. Next year could see this total remuneration increase significantly with the introduction of your sales based bonus.
Hope this suits you well.
Speak regarding it tomorrow.
150 Another email was sent the following day to Tom Jowett by Mr Constable-McDowell in the following terms:
I am going to start you on wage from next week, Monday the 12th of April. $60k a year equals $2308 a fortnight. Your tax is $494 per fortnight. Your pay will be $1818 fortnightly. An additional $5400 will be paid to the superannuation account of your choice once (1) per annum. Plus phone ($69) a month, internet, car (all paid, insurance, rego, tolls and fuel unless you drive to Darwin to see an ex-missus/sidewinder type in which case I want photos or you pay yourself)
We will need a clause that says we have a mutual termination agreement within the first 3 months if it isn’t working for either of us.
We can work out a sales (increased sales) based commission structure also but I think that should take effect from Aus/NZ recruiting 2011. Your thoughts?
I would like for you to have some incentive program for Canada/Uk 2010. We can discuss this later.
151 The respondents say that correspondence between Tom Jowett and VESA in the subsequent period 20 July 2010 and 7 August 2010 was an attempt to negotiate the terms of a proposed variation to the second contract of employment, but that Tom Jowett did not accept the final offer put forward by Mr Constable-McDowell on 7 August 2010. They rely upon the following matters in support of that submission:
(a) there must be an unequivocal offer which leaves nothing left to be negotiated between the parties (citing Ballas v Theophilos (No 2) (1957) 98 CLR 193);
(b) Mr Constable-McDowell stipulated a particular method of acceptance in his email dated 7 August 2010, namely that Tom Jowett sign the document and return it via email. This meant that the only way in which the proposed contract emailed to Tom Jowett on 7 August 2010 could be accepted by him was by the method stipulated by Mr Constable-McDowell (citing A L Corbin, Corbin on Contracts (West Publishing Company, 1963), Volume 1 at p 88);
(c) the email sent on 7 August 2010 by Mr Constable-McDowell did not correspond with the last discussion he had had with Tom Jowett in relation to the standard of accommodation, with the consequence that that issue remained outstanding. In a discussion between them on 3 August 2010, Tom Jowett had offered to accept accommodation up to a four star level if he could not find other suitable accommodation, whereas clause 10(a) of the document forwarded under cover of the email dated 7 August 2010 referred to standard accommodation being “two star” with an option for the employee to stay at “three star” accommodation where no suitable two star accommodation was available; and
(d) although it is said that the respondents need not establish why Tom Jowett did not accept the proposed variations forwarded to him on 7 August 2010, they point to the unresolved issue of Tom Jowett’s role as associate marketing director and Ms Little’s role or responsibilities (if any) on such matters. They draw attention to Ms Luciani’s email dated 1 August 2010 in which she forwarded to Tom Jowett a description of the position of associate marketing director, which included the following statement:
Work collaboratively with participation co-ordinator [ie Virginia Little] on new documents that will be sent out to potential, existing or past participants.
152 The respondents say that the Employment Contract was not agreed and never attained any legal effect, with the consequence that the terms of Tom Jowett’s second contract of employment remained unchanged from what was agreed in April 2010. The upshot of all this, they say, is that the alleged breach of contract claims made by VESA in respect of the second contract of employment which depend upon express clauses of the proposed variation document emailed on 7 August 2010 should all be rejected.
153 In my view, for the following reasons, the respondents’ submission should be accepted that Tom Jowett never accepted the revised offer as set out in the Employment Contract.
154 First, in accordance with general principle, an acceptance is generally effective to conclude an agreement where the fact of that acceptance is communicated to the offeror. Here, Tom Jowett did not communicate any such acceptance to the Employment Contract. It may well be that, having regard to what had passed between them during the negotiations, particularly during the period 4 to 6 April 2010, Mr Constable-McDowell had a strong expectation that Tom Jowett would accept the revised Employment Contract as attached to his email. But that did not occur.
155 Secondly, in reaching that view I do not consider that it is necessary to rely upon the principle advanced by the respondents, namely that Mr Constable-McDowell had prescribed the only method of acceptance of his offer, namely by Tom Jowett signing and returning the document via email. That principle can arise in circumstances where there is a question as to whether there is a binding agreement where the offeror prescribes the method of acceptance and the offeree purports to accept the offer by some other method other than that prescribed (see, for example, George Hudson Holdings Ltd v Rudder (1973) 128 CLR 387). In my view, a different issue arises here. It is simply whether Tom Jowett ever conveyed to Mr Constable-McDowell the fact of his acceptance of the revised offer conveyed by the latter’s email dated 7 August 2010. The evidence demonstrates that there was no conduct on Tom Jowett’s part which conveyed such acceptance, whether in the form of his signature on the Employment Contract or otherwise.
156 In my view, the relevant principle is reflected in the following passage from the judgment of Mellish LJ in Parker v South Eastern Railway Co (1877) 2 CPD 416 at 421:
In an ordinary case, where an action is brought on a written agreement which is signed by the defendant, the agreement is proved by proving his signature, and, in the absence of fraud, it is wholly immaterial that he has not read the agreement and does not know its contents. The parties may, however, reduce their agreement into writing, so that the writing constitutes the sole evidence of the agreement, without signing it; but in that case there must be evidence independently of the agreement itself to prove that the defendant has assented to it.
157 Thirdly, while I accept the respondents’ submission that there is no burden on them to establish why Tom Jowett did not accept the proposed variations forwarded to him on 7 August 2010, it is evident that the following issues remained outstanding as at 7 August 2010:
(a) the issue of the standard of his accommodation, as summarised in [151(c)] above; and
(b) a far more significant issue relates to Tom Jowett’s job description. This matter is complicated by the fact that, notwithstanding that clause 3 of the revised Employment Contract dealt with “Job Title and Description” and Tom Jowett had not indicated any difficulty with that description, he had also been provided by Ms Luciani on 1 August 2010 with a separate document which described his position in a different form to clause 3 of the Employment Contract. In particular, Ms Luciani’s proposed position description contained the following two items under the heading “Knowledge, Skills and Abilities”:
• work collaboratively and efficiently as a team member.
• work collaboratively with participant coordinator on any documents that will be sent out to potential, existing or past participants.
158 I accept Tom Jowett’s evidence that he did not look at Ms Luciani’s proposed position description until over the weekend of 7-8 August 2010 because he was busy with other tasks. I also accept his evidence that, when he then found time to review the document, it caused him concern because, having regard to the past difficulties of his working relationship with Ms Little (i.e. the participant coordinator), which he had raised with both Mr Constable-McDowell and Ms Luciani, he saw the proposed job description as “a slap in my face”. It was at that point that he decided that he would not be able to continue to work in the role of associate marketing director. That was a decision which he apparently came to over the weekend of 7-8 August. It may be inferred that his decision to resign from VESA was one which was reached by him after he sent his email at 5:34 pm on Friday, 6 August 2010 to Mr Constable-McDowell (which indicated a willingness to sign the proposed Employment Contract, but only if he received a stipend of $30 for the entire seven days per week when travelling for VESA). It may also be inferred that he sent that email before revisiting Ms Luciani’s proposed position description.
159 Fourthly, and for what it is worth, it appears that VESA’s claim that the parties had agreed the terms and conditions set out in the Employment Contract is something of an afterthought. That was not its initial position, as is reflected in the letter dated 26 August 2010 Tom Jowett received from VESA’s solicitors (as referred to in [111] above). This letter made a number of serious allegations and assertions, some of which were expressed in unnecessarily confrontational language, while another aspect was, as noted above, simply wrong in law. Of immediate relevance, however, is the fact that the letter was written on the express basis that the parties were still negotiating the terms of a replacement contract of employment and that “no written contract was executed in relation to your appointment as marketing manager in April 2010”. In my view, at least this aspect of the letter correctly stated the legal position.
160 Fifthly, I do not accept VESA’s argument that the second contract of employment was formed upon Mr Constable-McDowell’s acceptance on 7 August 2010 of what is described as Tom Jowett’s “offer” on 6 August 2010. The final terms and conditions had not been agreed at that point. Not only was there still an issue outstanding regarding Tom Jowett’s job description (noting the important differences between the relevant clause in the Employment Contract and the position description provided to Tom Jowett by Ms Luciani on 1 August 2010), but, as the respondents point out, Mr Constable-McDowell’s document attached to his email dated 7 August 2010 did not correspond with the conversation he had had with Tom Jowett on 3 August 2010 concerning the standard of accommodation.
(b) Alleged breaches of contract
161 It is convenient to summarise the parties’ respective arguments concerning each of the alleged breaches of contract. I will then state my reasons in respect of each of those alleged breaches.
162 (1) Summary of parties’ arguments: VESA alleges that Tom Jowett breached his second contract of employment when he resigned on 10 August 2010 because he did not honour his contractual obligation to provide four weeks’ notice, as required by clause 40 of what VESA says is the final second contract. VESA contends that, while Tom Jowett’s employment relationship with it ended on 13 August 2010 (i.e. his last day at work when he agreed to work beyond 10 August 2010 to accommodate VESA’s wages cycle), his employment contract continued on foot until 7 September 2010, reflecting the four weeks’ notice it says he was required to give. VESA did not press its claim that Tom Jowett was also in breach of clause 40 in that he failed to assist VESA in training his replacement, presumably because, as a matter of fact, he was not replaced.
163 In support of the distinction between the contract of employment and the employment relationship, VESA relies upon the following statement by Brennan CJ, Dawson and Toohey JJ in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 427:
… it does not appear to have been doubted in this country that a wrongful dismissal terminates the employment relationship notwithstanding that the contract of employment may continue until the employee accepts the repudiation constituted by the wrongful dismissal and puts an end to the contract. That was accepted by both the majority and minority in Automatic Fire Sprinklers Pty Ltd v Watson (citations omitted).
164 VESA submits that the principle applies equally to wrongful termination by an employee provided the employer remains willing and able to honour the contract (citing Tullett Prebon v Simon Purcell [2008] NSWSC 852 at [24] per Brereton J and Purcell v Tullett Prebon [2010] NSWCA 150).
165 The respondents’ short answer to this complaint is that, because they say the document dated 7 August 2010 was never accepted, it attained no legal effect and VESA cannot rely on any of its provisions, including the requirement that he provide VESA with four weeks’ notice.
166 (2) Consideration: For reasons given above, I reject VESA’s claim that the terms and conditions set out in the Employment Contract were legally effective. But in the circumstances here, in the absence of any express term under the second contract of employment relating to notice, there is an implied term that reasonable notice had to be given. Reasonableness is determined at the time notice is given, not when the contract is made (Quinn v Jack Chia (Australia) Pty Ltd [1992] 1 VR 567 at 580). The purpose of the obligation to give reasonable notice is to allow the other party a reasonable period in which to take appropriate steps to minimise the disruption. As McHugh JA observed in Crawford Fitting Co v Sydney Valve and Fittings Pty Ltd (1988) 14 NSWLR 438 at 448:
The chief purpose of a notice for a reasonable period, therefore, is to enable the parties to bring to an end in an orderly way a relationship which, ex hypothesi, has existed for a reasonable period so that they will have a reasonable opportunity to enter into alternative arrangements and to wind up matters which arise out of their relationship…
167 In a case such as here, where an employee is giving notice, this will ordinarily mean a reasonable period for the employer to secure a replacement employee or, alternatively, to put in place alternative arrangements to address the employee’s departure.
168 In my view, the following matters are of particular relevance in determining what amounts to reasonable notice in the circumstances here:
(a) Tom Jowett’s relatively junior role in VESA, notwithstanding his title “associate marketing director”;
(b) the relevantly short period of time he worked with VESA as associate marketing director (approximately four months);
(c) the fact that arrangements had been made for him to fly to Canada on VESA’s behalf a week after the day he announced his resignation;
(d) nevertheless, VESA had recently appointed an additional recruiter in Canada which may have gone some way to minimising the disruption caused by Tom Jowett’s resignation and inability to travel to Canada; and
(e) the fact that Tom Jowett’s position was not filled by a new employee, but was rather merged together with Mr Constable-McDowell’s duties and responsibilities.
169 Having regard to all these circumstances, I consider that four weeks’ notice was a reasonable period of notice.
170 But does that mean that Tom Jowett breached a relevant implied term? I think not, for the following reasons. Tom Jowett announced his resignation on 10 August 2010, apparently intending for it to take effect immediately as is reflected in his offer to return all VESA’s property and documentation to Ms Little on that same day. As events turned out, however, that is not what occurred. It is common ground that, upon tendering his resignation by email to Mr Constable-McDowell and Ms Luciani, Tom Jowett and Mr Constable-McDowell agreed in a telephone conversation that Tom Jowett would work out the rest of the week and finish up with VESA on 13 August 2010. It is evident that this agreement was principally reached in order to accommodate VESA’s wages cycle and to not disrupt tax arrangements, but the extra time also enabled a more orderly hand-over to occur than would otherwise have been the case.
171 In my view, this oral agreement between the parties superceded the implied obligation to give reasonable notice. On 11 August 2010, Mr Constable-McDowell gave instructions to Tom Jowett as to what steps he should take over the remainder of the week to finalise his employment, including the “hand-off” to other employees. On 11 August 2010, Tom Jowett emailed Mr Constable-McDowell a detailed list of his current activities for VESA. He said that he would continue to work through to Friday, at which time he would pack up all VESA’s property and deliver it to Ms Little, along with his VESA-supplied car. Later that day, he was directed by Mr Constable-McDowell (who was in London) to return all VESA property to Ms Little by close of business on Friday, 13 August 2010 and also to seek a refund for his pre-booked flight to Canada (which he never did).
172 In cross-examination, Mr Constable-McDowell acknowledged that, upon learning of Tom Jowett’s resignation, he did not insist that he give four weeks’ notice. Mr Constable-McDowell gave evidence that he felt that persuading Tom Jowett to work until the end of the week was the best he was going to achieve. He resisted the proposition that there was a consensus between the parties for Tom Jowett to work out the week. But in my view, that is precisely what occurred. There was a discussion between Tom Jowett and Mr Constable-McDowell in the context of Tom Jowett having tendered his resignation effective immediately, but after their discussion both agreed that Tom Jowett would work until close of business on Friday, 13 August 2010. It may well be that Mr Constable-McDowell felt that he had no other choice but to seek to persuade Tom Jowett to stay with VESA until at least the end of that working week but, viewed objectively, I consider the agreement they reached constituted a variation to the second contract of employment. Accordingly, I reject VESA’s claim that Tom Jowett breached his obligation to provide reasonable notice.
(ii) Taking steps to set up a rival business while employed by VESA
173 (1) Summary of parties’ arguments: VESA complains that, while he was still employed by VESA, Tom Jowett engaged in conduct which was in breach of the implied term of good faith and fidelity, his fiduciary duties and also clauses 21 and 29 of what VESA describes as the final second contract of employment. The conduct in question is said to be:
(a) on 11 August 2010, while he was still employed by VESA, he used VESA’s Mac Book laptop to prepare a spreadsheet setting out the estimated expenses of setting up a rival business;
(b) on 10 August 2010, using VESA’s email address to contact Mr Allsopp (then VESA’s design consultant) stating that the business relationship they had developed during Tom Jowett’s time with VESA could continue and informing Mr Allsopp that he was in the process of starting his own business in the eco tourism market;
(c) using tools provided to him by VESA (such as his VESA email address and VESA supplied computers), Tom Jowett forwarded highly confidential strategic documents concerning VESA to his father and brother for the purpose of using that material to set up a rival business to VESA;
(d) the material forwarded to his father and brother, together with other material, was also copied by Tom Jowett onto a computer USB stick when he copied his VESA email account after he resigned, thereby retaining VESA’s material without authority for the purposes of establishing ROV and acting in breach of the implied term of good faith and fidelity and clause 29 of the asserted final second contract; and
(e) Tom Jowett’s appropriation of the second stage hand logo for ROV not only breached the implied term of good faith and fidelity as well as his fiduciary duties but also, in breach of those same duties, he failed to disclose the existence of that hand logo to VESA thereby making it harder for VESA to take action against him for misappropriation.
174 Furthermore, VESA complains of other actions by Tom Jowett in the period leading up to September 2010 (i.e. the date which VESA claims is the termination date for the final second contract taking into account the requisite four weeks’ period of notice), which is also said to be in breach of those same duties and terms. Those steps were:
(a) on 17 August 2010, directing his brother to register the domain name rovolunteers.com;
(b) about 17 August 2010, helping and encouraging his friend Mr Stone (whom he had employed on behalf of VESA on 13 July 2010), to send an email to VESA threatening to sell VESA’s confidential information to the highest bidder if an invoice (which provided for 30 day terms and was received by VESA only on 12 August 2010) was not paid;
(c) on 18 August 2010, travelling to Africa to conduct the “dry run tour” with a view to setting up a rival business to VESA;
(d) on 26 August 2010, causing ROV to be incorporated, with himself as one of the directors;
(e) in early September 2010, recruiting for or promoting ROV programs in the United States, together with Mr Barros; and
(f) on 7 September 2010, causing ROV to obtain an ABN.
175 It is convenient to summarise the respondents’ response to VESA’s allegations by separate reference to the first and second contracts of employment. Dealing with the first contract of employment, the respondents broadly contend:
(a) the conduct complained of cannot be in breach of the first contract of employment because that contract was discharged by performance in November 2009 (or at the latest, in January 2010 when Tom Jowett received his final commission payments under that initial contract) and the “confidentiality clause” was not expressed to survive the discharge of the contract;
(b) VESA did not lead any evidence establishing that materials provided to him while he was engaged under that contract were not publicly available and were confidential;
(c) even if the confidentiality clause survived the discharge of the contract, VESA failed to establish that it supplied Tom Jowett with specifically identified material within the meaning of “VESA materials”, that the material was confidential or that he had disclosed it. Moreover, in circumstances where there is no definition of “confidential information” in the first contract, the respondents say that VESA carries the onus of establishing that the identified material is confidential; and
(d) furthermore, some of the material the subject of VESA’s complaint did not come into existence until after the first contract had been discharged by performance, such as the business plan created by Mr Constable-McDowell in February 2010.
176 As to the alleged breaches of the second contract of employment, the respondents’ submissions may be summarised as follows:
(a) they repeat their primary contention that the second written contract of employment is that dated 6 April 2010, and not the Employment Contract emailed to Tom Jowett on 7 August 2010, which remained unsigned;
(b) the parties’ subsequent conduct cannot be used to interpret a contract, with the consequence that the terms of the second contract are those that were agreed in April 2010 and cannot be interpreted by reference to the parties’ subsequent conduct; and
(c) the terms of the second contract were very basic and were essentially those set out in the email dated 6 April 2010 from Mr Constable-McDowell to Tom Jowett (see [149] above).
177 In addition, the respondents make the following submissions concerning the general legal principles applicable to preparatory steps taken by an employee before leaving and setting up a rival business:
(a) there is no absolute bar, under either fiduciary or contractual principles, to an employee taking certain preparatory steps in establishing a rival business while remaining in the service of their existing employer, but there are limits (citing Labelmakers Group Pty Ltd v LL Force Pty Ltd [2012] FCA 512 at [111] per Tracey J); and
(b) the more senior the employee’s position, the greater the restrictions on an employee taking such preparatory steps (citing Victoria University of Technology v Wilson (2004) 60 IPR 392).
178 The respondents emphasise that, despite Tom Jowett’s title as “associate marketing director”, he was a relatively junior employee in a small family business and was paid only $60,000 per year. Moreover, after announcing his resignation on 10 August 2010, the only step he took towards setting up ROV before finishing with VESA on 13 August 2010, was the preparation of a very basic spreadsheet setting out the possible expenses. They say that Tom Jowett did not make a final decision to proceed to establish a rival business until the weekend of 14-15 August 2010, with the implication that his actions leading up to that point were only tentative. Finally, they emphasise the fact that no complaint is made of Tom Jowett having sought to poach any of VESA’s customers.
179 As to VESA’s complaints of breach in respect of VESA documents which are non-confidential (i.e. the application forms, photos of VESA students on VESA programs, online FAQs, the acceptance notification, the questionnaire, the “what to bring” memorandum and the email to professors), the respondents say that the second contract of employment, as formed they say in April 2010, did not include any express or implied terms concerning the use of non-confidential documents. In any event, even if VESA’s reliance on the Employment Contract as constituting the final second contract of employment is accepted, the definition of “Confidential Information” in clause 32(a) expressly excludes information which becomes generally available to the public without any wrongful act by the employee. The respondents say that all the relevant non-confidential VESA documents were documents which are published on VESA’s own website and/or are provided by it to clients or potential clients, therefore falling within the exclusion in the definition in clause 32(a).
180 (2) Consideration: For reasons given above, in my view, the express clauses in the Employment Contract relied upon by VESA as constituting the second contract of employment are inapplicable because that document never had operative effect.
181 It is common ground, however, that Tom Jowett had an implied contractual obligation to serve VESA in good faith and with fidelity. I will now deal together with VESA’s causes of action founded on contract and equitable obligations (including breach of fiduciary duty).
182 Many of the relevant general principles are helpfully set out by Tracey J in Labelmakers Group Pty Ltd at [105]-[117] which, although lengthy, should be set out in full (apart from [106] which is not relevant):
The scope of this duty was outlined by Palmer J in Digital Pulse Pty Ltd v Harris (2002) 166 FLR 421 at 424. His Honour there said:
“[20] An employee has a duty to act in the interests of the employer with good faith and fidelity. That duty is implied in every contract of employment if it is not otherwise imposed by an express term. In addition, the duty is imposed upon every employee by the law of fiduciaries, the relationship of employer and employee being recognised as a paradigmatic fiduciary relationship.
[21] The obligations imposed by the duty are not coterminous with the employee's normal working hours: they govern all the activities of the employee, whenever undertaken, which are within the sphere of the employer's business operations and which could materially affect the employer's business interests. Whether a particular activity could materially affect the employer's business interests is a question of fact and degree.
[22] The duty of loyalty requires that an employee not place himself or herself in a position in which the employee's own interest in a transaction within the sphere of the employer's business operations conflicts with the employee's duty to act solely in the employer's interest in relation to that transaction. A fortiori, an employee may not take for himself or herself an opportunity within the sphere of the employee's business operations without the employer's fully informed consent.
…
The relevant equitable principles are those expounded by the High Court in Chan v Zacharia (1984) 154 CLR 178 and Warman International Limited v Dwyer (1995) 182 CLR 544.
In Chan (at 199) Deane J (with whom Brennan and Dawson JJ agreed) said that:
Stated comprehensively in terms of the liability to account, the principle of equity is that a person who is under a fiduciary obligation must account to the person to whom the obligation is owed for any benefit or gain (i) which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between his fiduciary duty and his personal interest in the pursuit or possible receipt of such a benefit or gain or (ii) which was obtained or received by use or by reason of his fiduciary position or of opportunity or knowledge resulting from it. Any such benefit or gain is held by the fiduciary as constructive trustee …
This statement of principle was adopted and applied by the Court in Warman International. The Court there said (at 557-8) that:
… the authorities in Australia and England deny that the liability of a fiduciary to account depends upon detriment to the plaintiff or the dishonesty and lack of bona fides of the fiduciary. Gibbs J in Consul Development Pty Ltd v DPC Estates Pty Ltd stated:
Where the rule applies, the liability of the person in a fiduciary position does not depend on the fact that the person to whom the duty is owed has suffered injury or loss.
A fiduciary must account for a profit or benefit if it was obtained either (1) when there was a conflict or possible conflict between his fiduciary duty and his personal interest, or (2) by reason of his fiduciary position or by reason of his taking advantage of opportunity or knowledge derived from his fiduciary position. The stringent rule that the fiduciary cannot profit from his trust is said to have two purposes: (1) that the fiduciary must account for what has been acquired at the expense of the trust, and (2) to ensure that fiduciaries generally conduct themselves ‘at a level higher than that trodden by the crowd’. The objectives which the rule seeks to achieve are to preclude the fiduciary from being swayed by considerations of personal interest and from accordingly misusing the fiduciary position for personal advantage.
Thus, it is no defence that the plaintiff was unwilling, unlikely or unable to make the profits for which an account is taken or that the fiduciary acted honestly and reasonably. So, in Regal (Hastings) Ltd. v Gulliver, although the directors acted in good faith and in the interests of the company of which they were directors in taking up shares in a subsidiary which the company could not afford to take up, they were held accountable for the profit made on the sale of the shares. And, in Phipps v Boardman, the solicitor was held accountable for the profit he made, notwithstanding that he acted bona fide and in the interests of the trust and that the opportunity would not have been availed of but for his skill and knowledge.
Consistently with these principles a duty falls on a fiduciary not to place him or herself in a position of conflict. If he or she does so the duty is breached. As Besanko J (with whom Finkelstein and Jacobson JJ agreed) observed in Blackmagic Design Pty Ltd v Overliese (2011) 191 FCR 1 at 22, “fiduciary duties are proscriptive and not prescriptive.”
Fiduciary and contractual obligations do not provide an absolute bar to employees who may wish to make preparations for the establishment of a competitive business whilst remaining in the service of their existing employer. They do, however, limit what an employee may do in pursuing that objective. The weight of restrictions will fall more heavily the more senior the standing of the employee: see Victoria University of Technology v Wilson (2004) 60 IPR 392 at 438. Another relevant variable will be the extent to which the time and effort of the existing employee is directed to the establishment of a competitive business: WA Fork Truck Distributors Pty Ltd v Jones [2003] WASC 102 at [40].
Whilst it is permissible for some preparatory work to be undertaken outside normal business hours, fiduciary and contractual obligations can, and do, continue to bear on employees when they are not engaged in work for their employer. Such obligations cannot, routinely, be cast aside at the factory or office door. As Palmer J observed in Digital Pulse the “obligations imposed by the duty are not coterminous with the employee's normal working hours.” The issue to be determined is whether particular activities, undertaken by the particular employees in relation to the establishment of a competitive business, could materially affect their employer's business interests. As his Honour said, the answer to this question involves matters of fact and degree.
One activity which will normally be found to be in conflict with an employee's contractual and fiduciary obligations is approaching clients of the employer and attempting to have them become customers of the proposed new business. As Lord Greene MR said in Hivac Limited v Park Royal Scientific Instruments Limited [1946] Ch 169 at 177 “[it] would be a curious result if … [an employee] could set himself during his spare time deliberately to injure the goodwill of his master's business by trying to get his customers to leave him.” See also: Wessex Dairies Limited v Smith [1935] 2 KB 80 at 85; AMP Services Limited v Manning [2006] FCA 256 at [60]; Deeson Heavy Haulage Pty Ltd v Cox (2009) 82 IPR 521 at [101].
It matters not whether it is the employee or the prospective customer who initiates the discussion in which the employee seeks to obtain the customer's business for the new enterprise: see Sanders v Parry [1967] 2 All ER 803 at 808-809; Dinte v Hales [2009] QSC 63 at [24].
A conflict will also arise if the employee seeks to persuade fellow employees to resign their employment and accept positions in the new business: see Warman International at 556, 566. To act in this way is to breach an employee's duty “not to improperly use his position to cause detriment to his employer”: see WA Fork Truck Distributors at [67].
If an employee who is taking preparatory steps with a view to setting up a competitive business fails to inform his or her employer about what he or she is doing and actively seeks to ensure that the employer does not become aware that the preparatory steps are being taken, it may reasonably be inferred that the employee is aware that what he or she is doing is antipathetic to the interests of the employer: see Able Tours v Mann (2009) 187 IR 1 at [185]-[186].
A breach of duty will also arise if the employee uses his or her employer's resources to assist in the establishment of a competitive business: Digital Pulse at 439 [127]-[128].
183 There is one qualification which I would make to the last statement of principle set out immediately above. In my view, whether or not the relevant obligations are breached because an employee uses his or her employer’s resources to assist in the establishment of a competitive business is, like many other questions in this area, ultimately one of fact and degree. As the learned authors of Macken’s Law of Employment (Law Book Co, 7th ed, 2011) state at [5.920]:
The decisions in this area are particularly “fact sensitive”.
184 In Digital Pulse Pty Ltd v Harris (2002) 166 FLR 421 (one of the decisions cited by Tracey J in the extracts set out above), it was found that the relevant employees “had spent a great deal of time for which they were being paid by Digital in attending to the affairs of [the rival business they were establishing]” (at [127] per Palmer J). Their conduct involved using their employer’s email and office facilities during business hours “to subvert” their employer’s business. They had also by that time established rival business premises, with facsimile, telephone and email facilities and had prepared stationery, including standard contractual terms of engagement. Palmer J found in that case that all of their work and efforts in establishing a competitive business to Digital was completed before the relevant employees finished their employment with Digital.
185 Each case will necessarily turn on its own facts, but I consider that the relevant facts here are far removed from those which arose in either Digital Pulse or Labelmakers. In my view, the matters of particular significance here are as follows. The only evidence of Tom Jowett taking any steps while employed by VESA to set up a rival business to VESA’s are him:
using his VESA-supplied laptop on 11 August 2010 to prepare a spreadsheet of estimated expenses; and
using his VESA-supplied email address on 10 August 2010 to email Mr Allsopp advising him of his resignation from VESA, telling him that he was currently in the process of starting his own business and indicating that, while he hoped Mr Allsopp would assist him in developing marking materials, conflict issues would arise.
186 I do not regard those two matters to be of such a nature or character as to give rise to a breach of the obligation of good faith and fidelity, whether those steps are viewed individually or collectively. In my opinion, they are relatively innocuous. I accept Tom Jowett’s evidence that, at the time that these events occurred, he was giving some consideration to the possibility of setting up a rival business, but he was also considering various other options and he had not yet made a final decision to establish ROV. I might add that, even if he had made a firm decision at that time to set up a rival business, I am not convinced that these two steps alone would put him in breach of either the relevant contractual obligation or any fiduciary duty.
187 Nor do I accept VESA’s contention that the many documents and the information regarding VESA’s business which Tom Jowett forwarded to his father and/or to the income guard email address during the period 1 May 2010 up until he left VESA were steps taken by him clandestinely and with a view to using his employer’s information and intellectual property to set up a rival business. In my view, that was not the purpose for which he forwarded the relevant material to his father. Rather, as noted above, I accept Tom Jowett’s evidence that:
(a) he forwarded the material principally to obtain assistance and input from his father in carrying out his work for VESA; and
(b) he told Mr Constable-McDowell in mid-July 2010 that he was receiving that assistance and input from his father.
188 In my view, the forwarding of that material for that purpose was not in breach of Tom Jowett’s contractual obligation of good faith and fidelity to VESA, nor any fiduciary duty. That conclusion is not inconsistent with the fact that, subsequently, Tom Jowett used some of the material to set up ROV. The relevant issue is his purpose in emailing the material at the time that it was sent and while he was still working for VESA.
189 VESA also argues that, even if the Court found that Tom Jowett told Mr Constable-McDowell about his father’s assistance, any such finding should be confined to him telling Mr Constable-McDowell that his father had helped him with the flow chart, which was to be discussed during the relevant meeting. I reject that submission. It is inconsistent with the following evidence given by Tom Jowett, which I accept:
As he was looking at the flow chart? --- he was quite impressed. And at this point, I said that “my father helps me with these works because he has got so much experience in the area. He did years of marketing and was a solicitor, and so he helped me produce this”. (Emphasis added).
190 In my view, it is plain from that evidence that Tom Jowett was referring not only to the particular flow chart, but to “works” generally.
191 It is appropriate to now deal with VESA’s other complaints regarding conduct which it alleges was undertaken as part of setting up ROV, namely the matters relating to the USB stick and the second stage hand logo summarised in [173(d) and (e)] above.
192 As to the former matter, whether or not Tom Jowett’s action in retaining VESA’s materials put him in breach of his contractual or equitable obligations turns on his purpose. VESA alleges that his purpose in sending the materials to his father and in downloading his VESA email box to a USB stick without authority was to use the material in establishing ROV, which put him in breach of his implied term of good faith and fidelity. This argument must fail. I have found above that I do not accept that that was his purpose in forwarding the VESA materials by email to his father.
193 Nor do I accept that his purpose in copying over his VESA email account onto a USB stick is as alleged by VESA. In the course of his evidence in chief, Tom Jowett described the USB incident in the following terms:
So, really, what happened is when I left VESA I wasn’t sure that I was going to start up Reach Out Volunteers or not. There were lots of things going on. But it was one of my ideas. So once-well, long story short, that I know if I did go down that path there was a high chance a litigation would occur (sic). So I copied those emails onto a USB. I took that USB with me, and then when I was in the States I realised that I didn’t have a way of getting volunteer contact details. So I guess I must have – when I say “I guess” – I used VESAs application form. (Emphasis added).
194 I accept that evidence. It is inconsistent with VESA’s assertion that Tom Jowett’s purpose at the relevant time was to use the information on the USB in setting up ROV.
195 As to VESA’s allegations concerning the second stage hand logo, it relies on the following alleged facts in claiming that Tom Jowett breached his contractual obligation of good faith and fidelity and his fiduciary duties to VESA:
the second stage hand logo was developed for VESA by Mr Allsopp with suggestions from Tom Jowett;
although Tom Jowett showed Mr Constable-McDowell eight first stage hand logos drawn by Mr Allsopp, he never showed either him or Ms Luciani the second stage hand logo;
emails were sent to and from Tom Jowett from “Ben” at the income guard email address and one of those emails dated 11 July 2010 is said to have attached an earlier version of the hand logo, which VESA claims Tom Jowett could not explain, nor could he explain the appearance of the word “key” in that email; and
Tom Jowett and his brother Ben appropriated VESA’s second stage hand logo and asked Mr Allsopp in mid-August 2010 to “adapt” that logo for use by ROV.
196 In response to these allegations, the respondents’ primary submissions may be summarised as follows:
there is no evidence that Tom Jowett disclosed the first or second stage hand logos to any of the other respondents;
the evidence establishes that Ben Jowett dealt directly with Mr Allsopp in August 2010 in creating a hand logo for ROV from “scratch”. Mr Allsopp drew the hand image himself and then superimposed spirals using drawing tools available in a software package called “Adobe Illustrator”. Mr Allsopp described the process of using Adobe Illustrator to create the ROV hand logo in the following terms:
Specifically, this was hand drawn, using an illustration package called Adobe Illustrator, so it has a number of different drawing tools that you can use, so that you can draw a – a freehand shape using the – using the mouse. Then you subsequently edit that shape. It’s difficult to describe, but basically what it does, it constructs a number of points, and in between those points, there are straight lines and curves, and so you can draw a freehand shape, and then you can go back in, and – and use a – a pointer tool to edit those points, to – to – well, basically to refine your – your – your shape. And – and so that’s how that was drawn, and then it has some other options in there, in – in terms of producing other shapes – circles, lines, patterns – as well, so those were obviously generated, and laid on top of the – top of the – the – the hand.
Mr Allsopp said that the first stage logo was a “comping” image which he had downloaded from the internet, with the consequence that it was not confidential to VESA;
in any event, even if the second stage hand logo was confidential to VESA, any use of that logo by Mr Allsopp as a basis for creating ROV’s hand logo did not involve any breach by Tom Jowett of his duty to VESA; and
finally, there is no evidence that Mr Allsopp did in fact use the second stage hand logo as the basis for creating ROV’s hand logo. Rather, the more likely explanation is that he used the publicly available “comping” image as the basis for the logo he ultimately created for ROV.
197 In my view, for the following reasons, VESA has failed to make good its claims relating to the second stage hand logo.
198 The evidence falls well short of what VESA alleges. For example, as noted above, it makes several claims in respect of an email dated 11 July 2010, which it said attached an earlier version of the hand logo. It identified the relevant document as exhibit 56. That reference is clearly wrong. Exhibit 56 is an email dated 11 July 2010 which attaches a copy of the document entitled “Mission Statement”. That one page document does not contain any hand logo or, indeed, even any reference to such a logo.
199 A time consuming search of the tender bundle suggests that the document VESA meant to refer to is in fact exhibit 67, not exhibit 56. If that is so, it is equally wrong of VESA to say that Tom Jowett was unable to explain the email or what the word “key” meant. Tom Jowett’s evidence was that he did not know who had sent the email, but merely because it contained the word “key” immediately above Ben Jowett’s name did not mean that the email had come from Ben Jowett. He explained that such a signature block can automatically appear on some emails. When the Court asked whether he knew what the word “key” meant, he said that he could not give an exact answer but that it may well have been that he sent the email to himself and that he sometimes put in a short word, such as “test” or “kk”. I accept that evidence.
200 In my view, there is nothing in the relevant email dated 11 July 2010 which advances VESA’s claims and VESA’s reliance upon it for this purpose is rejected.
201 Furthermore, I accept the respondents’ submissions, as summarised above, regarding the absence of any evidence to the effect that Tom Jowett impermissibly disclosed any of VESA’s hand logos. I also accept their submissions concerning Mr Allsopp’s creation of the ROV hand logo without reliance upon any of VESA’s hand logos. These matters also arise in that part of VESA’s case concerning breach of confidence.
202 I also reject VESA’s claims that Tom Jowett breached the implied term of good faith and fidelity and his fiduciary duties on the basis of VESA’s allegation that he never disclosed the second stage hand logo to VESA. VESA further contends that the non-disclosure was deliberate because Tom Jowett wanted to keep the second stage hand logo secret from his employers so that he could use it in his own rival business.
203 The evidence regarding precisely which logos Tom Jowett showed to Mr Constable-McDowell is unclear. There is no doubt that Tom Jowett received the second stage hand logo from Roger Allsopp by email on 9 July 2010. It is also clear that he discussed the topic of VESA’s logos with Mr Constable-McDowell at their meeting at the New Orleans Café on Friday, 16 July 2010 (quite apart from Tom Jowett’s evidence on this matter, his email dated 19 July 2010 to both Mr Constable-McDowell and Ms Luciani makes specific reference to him having spoken with Mr Constable-McDowell “about our Logo on Friday”). The email Tom Jowett sent to both Mr Constable-McDowell and Ms Luciani on 19 July 2010 annexed eight proposed logos, none of which included the second stage hand logo. In his examination in chief, Tom Jowett was shown a copy of Mr Allsopp’s email dated 9 July 2010 to him, which attached the second stage hand logo (exhibit 38). He was asked whether he remembered if he had shown Mr Constable-McDowell the email or the logos attached to it. Tom Jowett’s response was as follows:
When I showed Tom McDowell the logos they had the proposed taglines beneath them, and VESA was written in different ways under each of the logos. Now, this has both of them, so I would assume that I showed him this logo.
204 In cross-examination Tom Jowett was again taken to exhibit 38 and asked various questions about it. The relevant evidence was as follows:
And you didn’t show those second-stage logos to Tom and Shona? --- No, I don’t think I did.
Well, if you look now---? --- I don’t know.
--- back at tab 81(a), those two particular second stage logos don’t appear in what you’ve sent Tom and Shona on 19 July? --- that I sent to Tom and Shona? Yes. They don’t.
Is that because you liked those second stage logos so much you wanted to use them for your future business? --- No.
But there’s no other reason is there, why you didn’t send those logos to Tom and Shona? --- I would imagine there are.
None that you can think of? --- When I showed Tom the printouts, may be, he may have selected a few, because you can see I’ve only attached one, two, three, four under VESA logos, but the one that I printed out to him, there was something like eight logos. So he may not have liked it. I’m not sure.
205 It is evident that Tom Jowett did not have a clear recollection of precisely which hand logos he showed to Mr Constable-McDowell on 16 July 2010. His evidence in chief was to the effect that he assumed that he did show Mr Constable-McDowell the second stage hand logo. Then, in cross-examination, he said at first that he did not think that he had shown the second stage hand logo to Mr Constable-McDowell and Ms Luciani. That evidence was given in response to a question which dealt with “Tom and Shona” jointly and not severally. After saying that he did not think that he had shown the logo to “Tom and Shona”, Tom Jowett then immediately added “I don’t know”, further indicating the uncertainty of his memory on this issue. When he was pressed further as to why he did not send the logo to “Tom and Shona”, he said that, while he was not sure, one of the reasons why the second stage hand logo was not attached to his email dated 19 July 2010 (which was addressed to both Mr Constable-McDowell and Ms Luciani) was because Mr Constable-McDowell may not have liked it. This confirms that Tom Jowett believed that he had shown the second stage hand logo to Mr Constable-McDowell on 16 July 2010.
206 Mr Constable-McDowell was shown a copy of exhibit 38, which included the second stage hand logo. He was asked whether he had previously seen it. He said he had not, thereby implying that he had not been shown the second stage hand logo by Tom Jowett.
207 The issue is complicated even further by Tom Jowett’s re-examination. Mr Gration asked Tom Jowett a series of questions about his meeting with Mr Constable-McDowell at the New Orleans Café on 16 July 2010. But the re-examination focused not on exhibit 38, but on exhibit 67 (which is an email dated 11 July 2010 from someone using the income guard email address to Tom Jowett and attached to it are eight logos, only one of which is a hand logo and it appears to be the first stage hand logo, not the second stage hand logo). Tom Jowett’s evidence in re-examination on that document was to the effect that he showed that document to Mr Constable-McDowell and that they discussed it. Tom Jowett was not asked any questions in re-examination regarding exhibit 38.
208 The uncertainty of all that evidence is apparent. There is no doubt in my mind that Tom Jowett was doing his best to recall matters in respect of which he did not have a strong recollection. But his evidence was honestly given. If the issue ultimately turned on a choice between his evidence that he believed he did show Mr Constable-McDowell a copy of the second stage hand logo and Mr Constable-McDowell’s evidence that he had not previously seen a copy of the second stage hand logo, I would prefer Tom Jowett’s evidence. I am not satisfied that VESA has discharged its onus of establishing on the balance of probabilities that Tom Jowett did not disclose the second stage hand logo to Mr Constable-McDowell. In my view, the evidence suggests that he probably did, but a positive finding cannot be made one way or the other.
209 In any event, even if a contrary finding was made to the effect that Tom Jowett did not disclose the existence of the second stage hand logo to either Mr Constable-McDowell or Ms Luciani, I would not be prepared to find that the reason for such non-disclosure was that Tom Jowett wanted to keep the existence of that logo hidden from his employers so that he could use it in his own rival business. There is simply no evidence to support that serious allegation made by VESA. It was expressly denied by Tom Jowett when it was put to him. I accept his denial.
210 Accordingly, I reject VESA’s claims based upon its contention that Tom Jowett never disclosed the second stage hand logo to VESA.
211 VESA also alleges that Tom Jowett breached the non-solicitation clause in what VESA describes as the “final second contract” (i.e. the Employment Contract). Reliance is placed on clause 35 of that document. VESA alleges that Tom Jowett approached and attempted to induce employees and contractors of VESA, including Mr Allsopp, to end their contractual relationships with VESA and to work with ROV.
212 Those allegations must be rejected having regard to my finding above that the provisions of that document never became legally effective.
213 Likewise, since the second contract of employment did not encompass the Employment Contract, VESA’s allegations concerning Tom Jowett’s dealings with his friend Mr Stone should also be rejected.
214 Nor, in my view, is there basis for VESA’s claim that Tom Jowett was in breach of his fiduciary duty to VESA because of some aspects of his dealings with Mr Stone. In particular, I have difficulty in seeing how Tom Jowett’s involvement in drafting an email dated 17 August 2010 for Mr Stone to send to VESA regarding work he had done for VESA at Tom Jowett’s request could constitute such a breach. Tom Jowett engaged his friend, Mr Stone, in July 2010 to compile a marketing database for VESA relying on application forms submitted by potential VESA customers. Tom Jowett later became concerned that, given his friendship with Mr Stone, Mr Stone would not be paid once Tom Jowett left VESA. Accordingly, he drafted an invoice for him which was sent to VESA on 12 August 2010 (i.e. the day before Tom Jowett finished with VESA). He also drafted for him an email dated 17 August 2010 to VESA in the form of a letter of demand. That email from Mr Stone included the following final paragraph:
Please advise when I can expect payment. If payment is not received within 30 days of the date on the invoice the database will be sold to the highest bidder.
215 VESA alleges that Tom Jowett’s involvement in drafting that paragraph constitutes a breach of his fiduciary duty. That submission must be rejected. There is no evidence that this email was drafted by Tom Jowett while he was employed by VESA. Indeed, all the evidence points to the email having been drafted by him after he left VESA on 13 August 2010. There is simply no factual foundation for the alleged fiduciary duty. The position might be different if the issue involved the post-employment use of confidential information acquired during the course of employment (see Breen v Williams (1996) 186 CLR 71).
216 VESA also makes various claims of breach of contractual or equitable obligations in respect of Tom Jowett’s retention and/or use of various information or materials of VESA, which are said to be either confidential or “retained materials”. It is convenient to deal with those matters in the next section dealing with confidentiality and retained materials.
PART D: BREACH OF CONFIDENCE AND RETAINED MATERIALS
217 VESA claims that Tom Jowett breached his obligations of confidence as an employee of VESA, principally by using VESA’s confidential information in the course of setting up and carrying on ROV’s business. VESA also complains that Tom Jowett, in breach of his first and/or second contract of employment failed to return to VESA upon his employment ending various materials of VESA which came into his possession during the course of his employment (the retained materials). Some, but not all, of the documents which are the subject of the cause of action for breach of confidence are retained materials. There is also an overlap between VESA’s contract claims (which relate in part to some of the retained materials as discussed in Part C above) and its claims here.
218 VESA’s breach of confidence claims relate to:
(a) contractual duties which VESA says were imposed under the first and/or second contract of employment; and
(b) the equitable duty of an employee not to disclose or use an employer’s confidential information other than for the purpose of that employee’s employment.
219 VESA also alleges that Peter and Ben Jowett assisted the pleaded breaches of confidence and claims relief against them as recipients of confidential information.
220 It is not easy to follow VESA’s complaints concerning breach of confidence and the retained materials, possibly because of the vast number of documents involved, but also because, as the case was presented, there is an uncertain overlap between the two matters. Further uncertainty is created by the fact that VESA did not press all the matters raised in its third further amended statement of claim. To minimise the risk of overlooking some aspect of VESA’s case it is necessary to provide a full summary of the relevant parts of its pleading, even though that task is a little tedious.
(a) VESA’s case as pleaded and presented
221 In the third further amended statement of claim, VESA identified the following materials as constituting the retained materials:
questionnaires for filling out by imminent fully paid participants in eco tours;
library of photographs;
templates for newspaper advertisements;
all draft marketing slogans or taglines;
frequently asked questions;
online application forms and hard copy application forms for participation in eco tours;
flyers;
emails to professors;
acceptance notification;
medical forms;
what to bring lists;
sponsorship package;
group flights forms and all correspondence;
campus summaries;
“get excited emails” concerning the Fiji and Amazon tours;
All “setting out program documents”, including but not limited to:
- biographies of Mr Constable-McDowell and Ms Luciani;
- agreements with Pepe/Margarita/Eko Selvain in Ecuador;
- memorandum of understanding with PCDF in Fiji;
- memorandum of understanding with CSM;
VESA position description;
VESA recruiter agreements;
business plan created by Mr Constable-McDowell in February 2010;
Ecuador visa documents for Ms Luciani and Mr Constable-McDowell;
marketing documents created by Fizzbuzz or by Tom Jowett whilst employed by VESA;
agreements, emails and contact information pertaining to VESA’s new African program;
database created by Mr Stone;
contact list of students who applied to participate and/or who did participate in VESA eco tours;
list of universities, including names and contact details of staff relevant to conducting presentations to students regarding eco tours;
recruiting schedule showing dates of VESA presentations at specified universities;
presentation speech script; and
classroom announcement script.
222 Of those retained materials, VESA pleads that the following information or documents were confidential:
various tag-lines as particularised which were devised by or on behalf of VESA and were not yet published by VESA;
agreements with Pepe/Margarita/Eko Selvain Ecuador;
memorandum of understanding with PCDF;
memorandum of understanding with CSM;
Ecuador visa documents for Ms Luciani and Mr Constable-McDowell;
business plan created by Mr Constable-McDowell in February 2010;
marketing documents created by Fizzbuzz or by Tom Jowett whilst employed by VESA and not yet published by VESA;
agreements, emails and contact information pertaining to VESA’s new African program;
the first and second stage hand logos (which are set out in [43] and [47] above respectively);
database created by Mr Stone;
contact list of students who applied to participate and/or who did participate in VESA eco tours; and
lists of universities, including names and contact details of staff relevant to conducting presentations to students regarding eco tours.
223 According to its pleading, VESA’s complaints regarding the retained materials are that Tom Jowett used and/or reproduced the following materials in the course of carrying on ROV’s business:
application forms;
photos of VESA students on VESA programs used in ROV presentations;
online FAQs on website;
acceptance notification containing terms and conditions of eco tour;
questionnaire;
what to bring; and
email to professors.
224 It is evident from the above that, despite the breadth of the information and documents which VESA alleges to be the retained materials, its cause of action in respect of those materials (which is limited to contract) only relates to a relatively small sub-set of the retained materials.
225 Likewise, VESA’s pleaded case concerning the alleged misuse of its confidential information is confined to an even smaller sub-set of the retained materials, namely:
the taglines “Changing the world, one village at a time…” and “Change your life by changing someone else’s”;
lists of universities including names and contact details of staff relevant to conducting presentations to students regarding eco tours; and
the first and second stage hand logos as depicted in [43] and [47] above respectively.
226 Adding a further layer of complication, as the respondents point out, VESA’s pleaded case of breach of confidence was presented somewhat differently at the hearing. VESA’s outline of written submissions (which, as noted above, was said by its counsel to define its case, at least in the sense that if a matter was not dealt with in those submissions, it was abandoned), allege that Tom Jowett had breached VESA’s confidence (and also his second contract of employment, but not the first contract or employment), by forwarding to his father and/or his brother the following materials (noting that those materials are broader than the materials pleaded in the relevant part of the third further amended statement of claim):
a document containing taglines and a draft mission statement;
a business plan created by Mr Constable-McDowell in February 2010;
a strategy paper drafted by Tom Jowett containing sales figures and recruiting schedule;
a project document for Mr Allsopp;
a marketing strategy flow diagram;
a draft mission statement;
a draft position statement;
a strategic document setting out potential locations for VESA tours to South Africa;
potential logos for VESA; and
contact list of students who applied to participate and/who did participate in VESA eco tours.
227 VESA confirmed in reply that its claims of actual misuse of confidential information are limited to the three areas as set out in [225] above, but it adds that its allegations of breach of confidence go beyond those matters and include claims that Tom Jowett retained VESA’s confidential information and disclosed it to his father and brother, even if the material was not then actually used by ROV. VESA acknowledges that its entitlement to damages and/or an account of profits would only arise if the Court is satisfied that ROV has used its confidential information. But it says that if the Court finds that Tom Jowett disclosed its confidential information to his father and brother, that is relevant to other remedies it seeks, including injunctions to prevent any future use of VESA’s confidential information and orders directing the return of its confidential information.
228 VESA then adds that its alleged breaches of confidence were repeated by Tom Jowett when he copied his VESA email account onto a USB stick shortly before he left VESA’s employment. That allegation was not pleaded.
229 VESA’s written submissions primarily focused on the alleged breaches of confidence concerning ROV’s use of the tagline “Changing the world, one village at a time…”, the first and second stage hand logos, and an allegation that Tom Jowett breached VESA’s confidence by causing Mr Stone to provide him with a copy of the data base that Mr Stone had created for VESA.
(b) Summary of respondents’ case
230 The respondents admit that Tom Jowett was subject to an equitable duty not to disclose or use VESA’s confidential information other than for the purposes of his employment, but they deny that there are any relevant express contractual obligations in either the first or second contracts of employment. This reflects the respondents’ primary submissions that the first contract of employment (which contained a provision dealing with confidentiality) did not survive its discharge and, in the case of the second contract of employment, because the Employment Contract was never operative.
231 The respondents also argue that VESA should be held to its case as pleaded and particularised and should not be permitted to expand that case in closing address. In that context, they emphasise that, in response to two requests for particulars, the only information particularised by VESA as being confidential information is that set out in [225] above.
232 The respondents deny that there was any breach of the equitable obligation because they say that either the relevant information is not confidential or, in the alternative, there is no evidence that the information was disclosed by Tom Jowett.
233 Against that background, it is now convenient to outline the relevant legal principles, before determining VESA’s claims.
(c) Summary of legal principles
234 The elements of an action for breach of confidence in Australia were described by Gummow J in Smith Kline & French Laboratories (Australia) Ltd v Secretary, Department of Community Services & Health (1990) 22 FCR 73 at 87 as follows:
A general formulation apt for the present case of an equitable obligation of confidence has four elements: (i) the plaintiff 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 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, without the consent of the plaintiff.
235 In that case, Gummow J left open the question whether it is also necessary to demonstrate that a breach or apprehended breach of confidence would cause detriment to the plaintiff. If he had had to decide that issue, his Honour indicated that, in his view, detriment is not an essential element to the equitable action. Moreover, even if it were, his Honour said that he would have been satisfied that sufficient detriment was shown in that case by the apprehended prejudice to the plaintiff from the presence in the market of a rival and cheaper product which had been developed using the relevant confidential information.
236 As Tracey J pointed out in Labelmakers Group at [296], there is ongoing conflicting authority in Australia as to whether an applicant who relies on the equitable obligation of confidence must establish unauthorised use of the information to its detriment, citing Smith Kline at 112; Dais Studio Pty Ltd v Bullet Creative Pty Ltd (2007) 165 FCR 92 at 113 per Jessup J and Krueger Transport Equipment Pty Ltd v Glen Cameron Storage & Distribution Pty Ltd (2008) 78 IPR 262 at 287 per Gordon J. It is not necessary to resolve that conflict here if any of the other elements of the action is not established.
237 VESA argues that Tom Jowett’s employment relationship imports an obligation of confidence (citing University of Western Australia v Gray (2009) 179 FCR 346). As to the necessary quality of confidence, VESA cites Gray at [164]:
While an ex-employee is entitled to make full use of the general knowledge, skill and experience – the “know-how” – which as a result of the previous employment has become his or her own (E Worsley & Company Ltd v Cooper [1939] 1 All ER 290 at 309-10), what the employee cannot do is to use or disclose confidential information that can fairly be regarded as a separate part of the employee’s stock of knowledge which a man of ordinary honesty and intelligence would recognise to be the property of his old employer, and not his own to do as he likes with: Printers & Finishers Ltd v Holloway (No 2) [1965] 1 WLR 1 at 5.
238 I will now address VESA’s claims, dealing with them in the following order:
(a) its claims that some confidential information was misused;
(b) its broader claims regarding other confidential information; and
(c) its claims regarding the retained materials.
(d) VESA’s claims of actual misuse of some of its confidential information
239 It is convenient to deal in turn with each of the types of confidential information which VESA alleges were disclosed by Tom Jowett and actually used by ROV, as specified in [225] above.
240 Although two taglines were particularised in VESA’s third further amended statement of claim, its case as presented was limited to ROV’s use of the tagline: “Changing the world, one village at a time…”. VESA alleges that that tagline was created by Tom Jowett on or about 11 July 2010 in the course of preparing the VESA draft ‘mission statement’. It says that Tom Jowett created that tagline after reviewing a series of suggested taglines put forward by Mr Allsopp on 6 and 7 July 2010, none of which was in precisely the same terms as the tagline complained of. VESA claims that the relevant tagline was chosen by Tom Jowett after he spoke with his father in the course of preparing the draft mission statement for VESA. The tagline read:
“VESA. Changing the world, one village at a time”.
241 It further argues that, although Tom Jowett gave evidence that he was not responsible for choosing that tagline for ROV, he must have recognised that tagline when it was chosen for ROV either by Peter or Ben Jowett. VESA says that Ben Jowett could only have known about the tagline by reviewing VESA’s confidential information which was retained by Tom Jowett, or by discussions with Peter Jowett. It argues that Peter Jowett only became aware of the proposed tagline because Tom Jowett sent him VESA’s draft mission statement.
242 ROV’s short response is that the relevant tagline is not confidential because it is publicly available other than by reason of any alleged breach of confidence by Tom Jowett. It points out that the same tagline appeared on the internet in 2008 in the Summer Magazine published by Bowling Green State University in Bowling Green, Ohio.
243 In reply, VESA says that the fact that the same tagline appeared elsewhere in the world does not mean that the communication by Mr Allsopp was not confidential, containing as it did his expert advice that the tagline was appropriate to market VESA’s business.
244 I accept the respondents’ submissions on this matter. The relevant tagline was not confidential. It was in the public domain for the reason given above. Furthermore, VESA’s argument concerning the confidentiality of Mr Allsopp’s advice cannot be accepted. That is because the relevant tagline was not the subject of any advice he gave to VESA. He suggested taglines to VESA which, although containing many of the words in the relevant tagline used by ROV, were nevertheless differently worded. Tom Jowett changed the wording suggested by Mr Allsopp to produce the relevant tagline.
(ii) The lists of universities
245 No submissions were addressed to this aspect of VESA’s case. In accordance with its counsel’s statement, it can be assumed that this claim was abandoned.
246 VESA claims breach of confidence with respect to both the first and second stage hand logos. VESA argues that the fact that Mr Allsopp, as a paid consultant, had devised and impliedly recommended the hand logos, was information confidential to VESA. It says further that it is irrelevant if Tom Jowett was not personally involved in the decision to adopt the ROV hand logo because he became aware of that decision soon after it was made when reviewing the ROV website. VESA says that Ben Jowett was clearly familiar with VESA’s confidential documents, pointing to evidence of a conversation between Tom and Ben Jowett in August 2010 when Ben Jowett assured Tom Jowett that the hand logo he had chosen for ROV was different from the second stage hand logo which Mr Allsopp had prepared for VESA.
247 The respondents say that the uncontested evidence is that both the first and second stage hand logos were created by Mr Allsopp in July 2010 and that VESA chose not to use either of them. They deny that these hand logos are confidential to VESA. The respondents argue that the first stage hand logo is not confidential as it was a ‘comping’ image downloaded from an internet library of stock images. They argue that even if the second stage logo was confidential to VESA (which they deny) any use of that logo by Mr Allsopp as a basis for creating the ROV logo did not involve any breach by Tom Jowett of his duty to VESA.
248 The respondents also say that there is no evidence of disclosure of the logos to Ben Jowett, nor is there evidence that Mr Allsopp did in fact use the second stage logo created for VESA as the basis for creating the ROV logo. They argue that the evidence establishes that Ben Jowett liaised directly with Mr Allsopp in August 2010 and that Mr Allsopp created a new logo for ROV ‘from scratch’ by drawing the hand image himself and then superimposing the spirals utilising the drawing tools available in the Adobe Illustrator software. They rely on evidence given by Mr Allsopp that he had forgotten that he had created the second stage hand logo for VESA until he was reminded in cross-examination. The respondents submit that the more likely explanation is that Mr Allsopp used the publicly available ‘comping’ image as inspiration for the logo he created for ROV.
249 In reply, VESA makes the following submissions:
(a) contrary to the respondents’ claim, there is evidence of disclosure of the hand logos because of Tom Jowett’s evidence of a conversation he had with Ben Jowett in which they discussed the similarities between the new ROV logo and the VESA logo;
(b) an inference should be drawn from an email dated 20 August 2010 from Mr Allsopp to Ben Jowett (which attaches some revised suggested hand logos for ROV, including one which is substantially similar to the second stage hand logo), that the second stage hand logo had been disclosed to Ben Jowett who then asked Mr Allsopp to adapt it. It added that Ben Jowett was not called to deny that inference;
(c) Tom Jowett’s evidence that he discussed the logos prepared for VESA by Mr Allsopp with his father and showed them to him; and
(d) the respondents’ contention that there was no evidence that Mr Allsopp in fact used the second stage hand logo as the basis for creating ROV’s logo should be rejected. VESA says that Mr Allsopp’s evidence was to the effect that he accepted that the second stage hand logo he created for VESA was identical to the one which he prepared for ROV.
250 In my view, VESA has failed to establish that the ROV hand logo is the product of a misuse of VESA’s confidential information which was disclosed by Tom Jowett while he was working at VESA and then used by Mr Allsopp, in conjunction with either Ben or Peter Jowett, to come up with the ROV hand logo. The fundamental difficulty with VESA’s argument is the fact that, although Mr Allsopp ultimately accepted in cross-examination that there were substantial similarities between the second stage hand logo he prepared for VESA in July 2010 and the ROV hand logo he prepared for ROV and forwarded to Ben Jowett on 20 August 2010, his evidence is clear that he did not rely on the VESA second stage hand logo in creating the ROV hand logo. His evidence, which I accept, is that both hand logos were developed independently of each other by using an internet stock image to provide the silhouette of the hand, upon which he then superimposed the spiralling effect by using the software package Adobe Illustrator. As the following evidence in cross-examination demonstrates, Mr Allsopp was adamant that the ROV hand logo was drawn by him from scratch:
It’s correct, isn’t it, that what you did for Reach Out Volunteers was to take – I should limit my question. What you did for Reach Out Volunteers in this first stage was to take the hand logo you prepared for VESA, and adapt it by changing the word “VESA,” and taking out the tagline, and putting in the words “Reach Out Volunteers”? --- It would appear so. I mean, there may have been other changes, such as, you know, colouration, but I can’t tell that from a black and white print.
And then, perhaps some time later down the track, when you were carrying out work for Reach Out Volunteers ---? --- Yes.
--- you smooth the edges of the hand shape for Reach Out Volunteers?--- To be technically 100 percent accurate, the-the-the final version of the Reach Out Volunteers hand was – was actually drawn. It was drawn. It wasn’t sort of retouched. It was actually drawn from scratch. (Emphasis added).
251 In my view, in the final part of that extract from the transcript Mr Allsopp corrected his earlier answer to the effect that it appeared that he had created the ROV hand logo by simply modifying the earlier version he had prepared for VESA. Reading his answer as a whole, his evidence, which I accept, is that he prepared the ROV hand logo from scratch, albeit by using a similar methodology to that which he used for VESA. VESA did not submit that Mr Allsopp’s evidence on this topic should not be believed. Indeed, it relied on this part of the transcript of his oral evidence in support of its own case. The fundamental difficulty is that the evidence does not support the submissions put by VESA.
252 Accordingly, I reject VESA’s claim that ROV’s hand logo is the product of a misuse of confidential information disclosed by Tom Jowett.
(c) VESA’s broader claims concerning confidentiality
253 As noted above, VESA’s pleading identified only three types of information which it claims involves the misuse of its confidential information. Each of those matters has been dealt with above and rejected. In its closing address, however, VESA also argues under this part of its case that Tom Jowett breached VESA’s confidence by causing Mr Stone to provide him with a copy of the database that Mr Stone had created for VESA. The basis for this contention was Ms Little’s evidence of a conversation she had with Mr Stone when he delivered the database on a USB stick to her at her home, at which time he also provided a signed confidentiality agreement. According to Ms Little, Mr Stone told her at that time that: “I’ll have to tell Tom Jowett not to use this information”.
254 In cross-examination, Tom Jowett was asked whether the database was provided to him when it was completed and he said “No”. VESA submits that that denial should be rejected.
255 Even if VESA was permitted to raise this matter, I would reject its assertions. Ms Little’s evidence as to what Mr Stone told her does not support the serious allegation made by VESA that Tom Jowett caused Mr Stone to give him a copy of the database. In any event, I accept Tom Jowett’s denial that he ever obtained the database.
256 In view of my rejection of all VESA’s claims concerning misuse of confidential information, it is unnecessary to deal with the points it makes concerning the liability of third parties or accessorial liability.
(d) VESA’s claims concerning some of the retained materials
257 I will now deal with VESA’s separate claim that Tom Jowett breached the first and second contracts of employment by using and not returning to VESA a sub-set of the retained materials (as identified in [61A] of the third further amended statement of claim and also set out in [223] above).
258 In my view, only the first contract of employment is relevant in this context. That is because I have found that the Employment Contract never became operative. As far as the second contract of employment is concerned, the relevant question is whether there was an implied term dealing with the return of VESA’s non-confidential materials (noting my finding above that there was an implied term dealing with confidential materials). In my view, there is no basis for implying such a term in relation to materials which are not confidential. In particular, I do not consider that such a term is necessary to give business efficacy to the contract, or that it is obvious (see BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266). Thus, in my view, the second contract of employment has no application to the issue of VESA’s non-confidential retained materials.
259 Turning then to consider the application of the first contract of employment, the relevant provision is set out in [134] above. It is immediately apparent that it is not a well drafted clause. Its meaning is not self-evident. Construed objectively, however, the clause has the following relevant features:
(a) for reasons given above, the clause survived the discharge of the first contract of employment, at least insofar as VESA’s confidential information is concerned;
(b) to the extent that the clause extends beyond VESA’s materials which are not confidential, I also find that the clause survived the discharge of the contract;
(c) the clause does not contain a definition of the core concepts of “VESA materials” or “VESA’s confidential information”;
(d) not all of VESA’s materials are confidential because many are in the public domain. In fact all of the sub-set of “retained materials” the subject of VESA’s complaint in contract are of that character because they are pitched at existing or prospective customers;
(e) reading the clause as a whole, it plainly does not make sense to construe it as precluding the international recruitment coordinator from publishing or distributing non-confidential VESA materials. That would prevent the distribution to prospective customers of the very materials which are critical to VESA’s business success. As noted above, all of the documents in the relevant sub-set are in that category;
(f) nevertheless, it seems that the first part of the clause is directed to securing VESA’s proprietary rights in all material created by it or on its behalf. In my view, the provision should be construed as obliging Tom Jowett to return to VESA upon request all materials which are “VESA materials”; and
(g) the clause should be construed as applying only to relevant VESA materials which were either in existence or were created during the course of the period covered by the first contract of employment and which came into Tom Jowett’s possession during that period and not thereafter.
260 In light of these matters, I consider that VESA carries the onus of establishing inter alia that:
(a) each of the documents within the relevant sub-set falls within the meaning of “VESA materials”; and
(b) each of those documents was provided to Tom Jowett during the currency of his first contract of employment (i.e. from 16 August 2009 to either November 2009 or, at the latest, January 2010 when he received his final commission payments).
261 There are several fundamental difficulties with this aspect of VESA’s case. First, there is a distinct lack of particularity in its description of the documents which fall within the relevant sub-set (see [223] above). For example, which application forms are being referred to in the first item of the sub-set? Does the description include both paper and online application forms and, if so, which particular versions and when were they provided to Tom Jowett? In the case of the second item (i.e. the photographs of VESA students on VESA programs used in ROV presentations), which photographs are being referred to? If the ocelot photo is one of them, the evidence is undisputed that that photograph was taken on 20 May 2010, which is outside the relevant period of Tom Jowett’s first contract of employment. No other relevant photographs were clearly identified in relation to this part of VESA’s case.
262 Similar difficulties afflict the third and last items of the sub-set i.e. the online FAQs on the VESA website and the email to professors respectively. Ms Luciani gave evidence that the FAQs had varied over time, and she believed that the version in evidence was published on the website from August 2010. Mr Constable-McDowell gave evidence that the email to professors was created by him, but that it was then amended several times to include different countries. The question then arises: which versions are being referred to in the relevant items? These matters were left in a state of some uncertainty.
263 There is also a distinct lack of precision in the fourth item, i.e. the “acceptance notification”. Mr Constable-McDowell confirmed that a document dated 1 May 2010 is what VESA describes as “the acceptance notification”. But it is unclear whether that version of the document is the one complained of. Mr Constable-McDowell gave evidence that he created the document in February while he was in Ecuador, but the evidence was unclear whether he was referring to February 2009 or February 2010. It may also be inferred that the document was also modified to take account of different countries being added to or subtracted from VESA’s tours.
264 The fifth item relates to the “questionnaire”. Ms Luciani gave evidence that this document was created in September 2009. On its face it appears to be a document which is sent to people who have already been accepted to participate in a VESA tour, rather than a document which would be in the possession of and distributed by an international recruitment coordinator.
265 The sixth item, i.e. the “what to bring list”, is also problematic. VESA tendered a document headed “List of Things To Bring (or Not to Bring)”. It was annexed to an email dated 28 April 2010 from Ms Little to Tom Jowett. Accordingly, it was sent to him during the period he was associate marketing director, when the first contract of employment had ceased.
266 Secondly, and related to the first difficulty, there is no evidence that the items in the relevant sub-set were actually provided to Tom Jowett during the relevant period, namely during the course of his engagement as international recruitment coordinator for VESA, as opposed to his second period of employment with VESA as associate marketing director.
267 It seems that VESA’s complaint is primarily directed to the fact that Tom Jowett copied these materials onto a USB stick shortly before he left VESA in August 2010. But that conduct occurred well after he had ceased to be an international recruitment coordinator for VESA. The evidence suggests that most, if not all, of the relevant material complained of came into his position in his capacity as associate marketing director. There is no direct evidence which establishes that Tom Jowett was provided with the relevant items while he was an international recruitment coordinator. Indeed, it is unlikely that he would have been provided with many of the items complained of while he was an international recruitment coordinator, such as the online FAQs (which were available on the VESA website from August 2010), the acceptance notification and questionnaire (which both appear to be documents which are issued by VESA itself after an application has been received and accepted), and the ocelot photograph (which was taken well after Tom Jowett ceased employment with VESA as international recruitment coordinator). Nor is there any evidence that, as an international recruitment coordinator, Tom Jowett was provided with VESA’s form described as “what to bring”. It is more likely that that form was distributed by VESA itself in response to inquiries from interested persons.
268 While an inference might be drawn that Tom Jowett was provided during the relevant period with application forms to be distributed to interested persons as he carried out his work as international recruitment coordinator, VESA did not identify any evidence which establishes which version he was given and whether that version is the same as was transferred to the USB stick.
269 For these reasons, I find that VESA has failed to make good its case concerning the relevant retained materials.
270 VESA alleges infringement of its copyright in respect of the online application form, a paper application form, online FAQs, the second stage hand logo, certain taglines, the email to professors and a photograph of an ocelot. VESA did not press its complaints of copyright infringement in respect of another five works which were included in its final pleading.
271 Before proceeding to deal with VESA’s copyright claims, it is appropriate to set out my reasons for both granting and refusing certain amendments to VESA’s pleadings which relate to copyright.
(a) Rulings on VESA’s proposed amendments
272 On 4 June 2012, I gave various rulings concerning VESA’s application for leave to amend the then second further amended statement of claim. One of the proposed amendments had been flagged on the second day of the trial (29 May 2012). The other two sets of amendments were notified to the respondents on Sunday, 3 June 2012 (i.e. after the fourth day of the trial). The proposed amendments were supported by an affidavit sworn on 3 June 2012 by VESA’s instructing solicitor.
273 It is convenient to describe the three categories of proposed amendments. The first related to VESA’s complaints regarding a photograph which was said to be of a volunteer student holding an ocelot (a type of wild cat). That photograph figured in VESA’s causes of action relating to breach of copyright and failure to return retained materials. It should also be noted that, on the first day of the trial (28 May 2012), I granted leave for VESA to file a second further amended statement of claim which added a new copyright claim in [63]. That claim was to the effect that, on 20 May 2010, the ocelot photo had been created and that its author was Ms Kelly Sargent, a Canadian student who had participated in a VESA tour to Ecuador. VESA then subsequently sought leave to further amend that claim. It sought to further amend the name of the author by substituting for Ms Kelly Sargent, the names Shona Luciani or Jake Allison. It did not seek to amend the date it claims the photograph was taken, i.e. 20 May 2010.
274 The second category of proposed amendments related to the second stage hand logo.
275 The third category of proposed amendments related to “taglines”, which are used by ROV on various marketing materials, including flyers.
276 The relevant principles concerning an application for leave to amend pleadings, particularly one made as here during the course of a trial, are set out in decisions which include Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261 at [51] and Dye v Commonwealth Securities Limited (No 2) [2010] FCAFC 118 at [22], [23] and [58].
277 The relevant principles may be summarised as follows:
(a) delay on the part of the party seeking leave to amend should not be looked at in isolation from other relevant considerations. It needs to be weighed together with other matters, such as prejudice to the other party (either assumed or established by evidence), any explanation for the delay, whether the amendments involve substantial extra costs, and the significance of the issue the subject of the proposed amendments in the context of the wider proceedings;
(b) the correct approach is broadly reflected in the following passage from Aon at [102]:
It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case;
and
(c) the principles need to be applied with careful regard to the particular circumstances in which an application for leave to amend is made: Aon does not provide a “one size fits all” solution to every case.
278 Another relevant consideration which can arise is the utility of granting leave. If the proposed amendments involve points which are unarguable there is no utility in granting leave (see, for example, Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2006] NSWSC 1073 at [11] where Barrett J said that the question to be addressed is whether the added claim is so obviously untenable that it cannot possibly succeed and to allow it would involve useless expense).
279 Having regard to those principles and the evidence referred to above, as well as the parties’ detailed written and oral submissions, I gave leave to amend in respect of the second and third categories, but refused leave in respect of the first category of proposed amendments. My reasons for doing so are as follows.
280 My reasons for refusing leave to further amend in respect of the ocelot photograph are as follows. First, VESA candidly acknowledged that it wanted to amend its pleading in respect of the claimed authorship of the photograph because it emerged during the course of Ms Luciani’s evidence on 30 May 2012 that incorrect legal advice had been given to her when she provided instructions to her lawyers regarding the authorship of the photo. Ms Luciani gave evidence to the effect that she believed that the photograph had not been taken by Ms Sargent (contrary to VESA’s pleading in the second further amended statement of claim), but “would have” been taken either by Ms Luciani or by her co-tour guide, Mr Jake Allison, who is an American citizen. As the respondents submitted, Ms Luciani’s evidence on this question was far from definitive. On one view, it was nothing more than a guess on her part based on what she said was the normal practice of tour leaders taking photographs on tours.
281 Secondly, and more significantly, the respondents claimed that they would be prejudiced if the amendments were allowed because of the difficulties in developing a case as to Mr Allison’s employment status with VESA at the time when the photograph was said to have been taken (which was 20 May 2010). Ms Luciani gave oral evidence to the effect that Mr Allison was employed by VESA during the period May to July 2010 and that he accompanied her on the tour to Ecuador where the photograph was taken. VESA tendered a document entitled “VESA Pty Ltd/Program Leader Agreement”. The agreement was dated 20 August 2010 and the parties to it were VESA and Mr Allison. It contained clauses which, on one view, suggested that Mr Allison was an employee of VESA for some unspecified period. The document referred to VESA agreeing to provide Mr Allison with an “international air fare from Canada, UK, USA or Australia to Fiji, Ecuador or South Africa and return”. It also recorded an agreement to provide Mr Allison with a group certificate for tax purposes. The agreement contained details of Mr Allison’s bank account in which his pay would be deposited. The agreement further recorded that VESA would make such payments twice per annum.
282 Part of the respondents’ claimed prejudice related to the fact that VESA had failed to produce any evidence of any financial payments made to Mr Allison, notwithstanding the provisions summarised above. Mr Gration also raised for consideration the fact that, if the amendments were allowed, the respondents would need time to make further enquiries of Mr Allison. It was evident that Ms Luciani was in contact with Mr Allison. She gave evidence that she believed Mr Allison was currently leading a tour for another organisation in Nicaragua. She had apparently obtained this information via Facebook. Given Mr Allison’s remote location and engagement at that time, there was little doubt that the respondents would be hard-pressed to make urgent enquiries of him, let alone possibly arrange for him to give evidence during the remaining days of the trial. I accepted the respondents’ claims of prejudice were leave to be granted and refused VESA’s application.
283 Thirdly, I accepted the respondents’ submission that, at the time leave to amend was sought and determined, the only evidence which VESA said it would adduce going to the alleged copyright infringement relating to the photograph concerned events which took place at Colorado State University in Colorado, USA. Having regard to of the Copyright Act 1968 (Cth) (Copyright Act), Mr Gration submitted that such conduct occurring outside Australia would not be protected under Australian law. I accept that submission. Accordingly, there was no sufficient utility in allowing the amendment.
284 For all these reasons, I refused leave to make the first category of amendments.
(ii) Second stage hand logo and taglines
285 The proposed amendments concerning the second stage hand logo and taglines raised somewhat different considerations from the ocelot photo. It is convenient to deal with the second stage hand logo and taglines together.
286 It was not disputed that VESA was on notice from at least around 13 August 2010 that the second stage hand logo had been created. It must have become aware of that matter when it obtained access at that time to Tom Jowett’s VESA-supplied computer. Stored on that laptop was an email exchange which occurred during the period 7 to 9 July 2010 between Tom Jowett and Mr Allsopp in which Mr Allsopp forwarded to Tom Jowett what he described as the “second-stage logos”, which included a logo which is substantially similar to the logo now used by ROV on its marketing materials and which is the subject of VESA’s copyright complaint.
287 Likewise, VESA was aware since at least October 2011 of the taglines which ROV was intending to use on its marketing flyers. An email dated 11 September 2010 disclosing that intention was included in the discovered documents produced by the respondents in October 2011.
288 Although VESA offered no adequate explanation for its delay in seeking to amend its pleadings in respect of these two subject matters, that is not determinative of whether or not leave should be granted. The fact of delay and its extent needs to be weighed with other relevant matters, including the significance of the issue to the party seeking leave to amend, the costs associated with any amendment and any prejudice to the other parties. In my view, the hand logo issue is a significant issue to VESA because it is central to ROV’s marketing and appears on many of its materials. The respondents said that, if leave was granted, they would wish to recall Mr Allsopp to deal with the amendments in respect of both the second stage hand logo and the taglines. VESA did not oppose that course and added that it would consent to Mr Allsopp’s evidence being taken by telephone. That would reduce the inconvenience created for him being recalled in circumstances where he is self-employed and based in Brisbane.
289 The taglines issue is not as significant an issue to VESA, but it seems to me that it was appropriate that leave to amend should also be granted in respect of this matter, noting that the respondents did not point to any prejudice. The issue could also conveniently be dealt with if Mr Allsopp was to be recalled in any event to deal with the second stage hand logo topic.
290 For all these reasons, I granted leave to amend the pleadings in respect of the second and third categories of amendment, but not the first.
291 The grant of leave to amend was conditional upon satisfactory arrangements being made for Mr Allsopp to give his evidence by telephone from Brisbane on one of the remaining days set aside during the second week of the trial commencing 4 June 2012. I also ordered that VESA pay the respondents’ costs thrown away by the grant of leave in respect of the second and third categories of amendment and that it also pay the respondents’ costs of its unsuccessful application in respect of the first category of amendments.
(b) Summary of relevant copyright issues
292 The principal issues which arise for determination in respect of the copyright infringement claims are:
(a) whether the persons identified by VESA are in fact the author of the relevant works in relation to the paper and online application forms, the taglines and the ocelot photo;
(b) whether each work is an “original work” within the meaning of s 32 of the Copyright Act;
(c) whether the taglines are too trivial or insubstantial to constitute a literary work; and
(d) whether the alleged infringements constitute the “doing in Australia, or authorising the doing in Australia of, any act comprised in the copyright” for the purposes of s 36(1) of the Copyright Act.
293 It is appropriate to deal with each of the relevant works in turn, addressing both these principal and other relevant issues.
294 (1) Summary of parties’ arguments: VESA claims that Mr St Quentin was retained by VESA in February 2009 to create the VESA online application form and that he then assigned his copyright to VESA. Mr St Quentin set up VESA’s original website. He worked with a business called Culture Byte.
295 The respondents say that the applicant failed to adduce any evidence establishing that Mr St Quentin was an employee of VESA, so that no automatic assignment would occur under s 35(6) of the Copyright Act. Furthermore, they say that VESA failed to adduce any evidence of any assignment in writing of copyright as required by s 196(3) of the Copyright Act. Consequently, they contend that there is no basis for a finding that VESA owns the copyright in the online application form
296 (2) Consideration: I accept VESA’s submission that Mr St Quentin is the author of the VESA online application form. However, VESA did not adduce any evidence to establish that:
(a) he was an employee of VESA; or
(b) he created the online application form in pursuance of the terms of his employment with VESA such that copyright automatically vested in VESA as his employer. Indeed, the evidence (limited as it was) suggests that Mr St Quentin was engaged by VESA as an independent contractor, either directly or indirectly through the retention of Culture Byte. VESA’s counsel described him as an independent contractor.
297 Nor did VESA adduce any evidence to establish that copyright in the VESA online application form had been assigned to VESA by either Mr St Quentin or Culture Byte. I upheld an objection to the tender by VESA of a document dated 12 March 2012 (i.e. after the commencement of the proceedings) which related to unspecified and undated online application forms. Even if VESA had been permitted to rely on the document, it is difficult to see how it would demonstrate that VESA owned the copyright as at August 2010.
298 VESA did not argue that there was an equitable assignment (see, for example, Acorn Computers Ltd v MCS Micro Computer System Pty Ltd (1984) 6 FCR 277). As the respondents point out, it is a requirement of s 196(3) of the Copyright Act that any assignment must be in writing and signed by or on behalf of the copyright owner. In the absence of any such evidence, I reject VESA’s contention that it owns the copyright in the VESA online application form.
299 Accordingly, VESA’s claim in copyright in respect of this work must fail.
300 (1) Summary of parties’ arguments: VESA claims that Mr Constable-McDowell is the author of the VESA paper application form. He is a director and employee of VESA. VESA contends that the cells for the document were set up by Mr Bailey, but that Mr Constable-McDowell was then fully responsible for producing all the substantive content in the form.
301 The respondents contend that the Court should find that the paper application form was not authored by Mr Constable-McDowell, but was in fact copied from an application form used by ISV. This contention is based on what was described as the “striking similarities” between the two forms. Consequently, the respondents say that the paper application form is not an original work and VESA does not own copyright in it.
302 The respondents then say that, even if VESA owns the copyright in the paper application form, there can be no liability under the Copyright Act for infringement in circumstances where Tom Jowett admitted copying the VESA paper application form when he was in the USA in September 2010. They say that, having regard to the terms of s 36(1) of the Copyright Act, that reproduction could not constitute an infringement of VESA’s copyright even if it were shown to exist.
303 In their evidence, both Ms Luciani and Mr Constable-McDowell strongly denied that VESA’s application form was copied from ISV’s form. VESA contends that, even if the Court considered that the VESA paper application form bears some similarities with the ISV application form, the VESA application form is an original work in which copyright subsists because there is no direct evidence of copying.
304 VESA accepts that it has no cause of action for infringement of copyright where the reproduction occurs overseas, but it says that Tom Jowett infringed its copyright in the paper application form when he copied it, together with other VESA documents, onto a USB stick in Australia in the period 10 to 13 August 2010, while he was still employed by VESA. It says further that it is entitled to some quantum of damages for this infringement under s 115(2) of the Copyright Act and that it is also entitled to additional damages under s 115(4) of the Copyright Act. VESA also reserved its right to elect to request an account of profits in respect of any copyright infringement (see further below at [317] to [319]).
305 The respondents resist VESA’s claim in relation to this work because they say that, even if copyright subsists in the work and is owned by VESA, it was open to Tom Jowett, while an employee of VESA, to take reasonable steps to store or back up his VESA email box onto a USB stick. They emphasise that there is no evidence that Tom Jowett had been given any instructions by his employer as to how to handle and back up his VESA email correspondence. Accordingly, they say that it was within the ordinary course of his employment for him to determine for himself when and how to store that data, including the VESA application form.
306 The respondents also rely on the fair dealing provision in s 43(2)(a) of the Copyright Act, which, relevantly, is in the following terms:
43 Reproduction for purpose of judicial proceedings or professional advice
(1) …
(2) A fair dealing with a literary… work does not constitute an infringement of the copyright in the work if it is for the purpose of the giving of professional advice by:
(a) a legal practitioner; or
…
307 The respondents argue that it was fair dealing within the meaning of s 43(2)(a) of the Copyright Act on Tom Jowett’s part to copy the contents of his email box onto a USB stick so that he could have a record of all the documents in his VESA email box if he needed to obtain legal advice in respect of any dispute which he thought could occur with VESA surrounding his resignation and the possible creation of a rival volunteer eco tourism business. Tom Jowett gave evidence, which I accept, that although he had not decided by 13 August 2010 that he would set up a rival business to VESA’s, he considered that there was “a high chance” litigation could occur. The respondents point to the fact that, as events unfolded, his concerns were proven correct because, on 26 August 2010, he received the threatening letter from VESA’s solicitors relating to his resignation. He was also in dispute with VESA around that time over his employee entitlements.
308 VESA says that s 43(2)(a) of the Copyright Act has no application in circumstances where:
(a) that provisions relates to the giving of advice, not the seeking of it;
(b) in any event, there is no evidence that Tom Jowett copied the VESA paper application form (or, indeed, any of the other documents in his VESA email box) for the purpose of seeking legal advice, nor is there any evidence that he was provided with any legal advice in relation to that matter; and
(c) his true motive for copying the paper application form is revealed by his conduct in using the form in the course of establishing ROV’s business.
309 VESA also submits that there is no evidence to support a finding that Tom Jowett copied the form for the purpose of his employment by having it stored or backed-up on a USB stick.
310 (2) Consideration: Dealing with each of these disputed matters, my findings are as follows. First, as to authorship, I accept VESA’s submission that Mr Constable-McDowell is the author of the VESA paper application form. Although I have misgivings about some of other aspects of his evidence, I accept Mr Constable-McDowell’s evidence that he provided the substantive content to the cells created by Mr Bailey and produced the VESA paper application form. Given Mr Constable-McDowell’s association with VESA, I find that VESA owns the copyright in that work.
311 Secondly, I do not accept the respondents’ submission that VESA copied the ISV application form and that consequently the work is not an original work. Although there are some similarities between the two forms, I do not consider that the similarities are “striking”. In my view, that differences between the two forms far exceed their similarities, both quantitatively and qualitatively. Those differences are manifest in the formatting and structure of the two documents, as well as in the questions asked and information sought or provided. The differences are most pronounced in respect of:
(a) the request for information relating to project or program preferences;
(b) the wording of health-related questions;
(c) the more extensive information sought in the ISV form relating to the suitability of a person to participate in an ISV tour, university attendance commitments, hobbies and interests, and availability of supplementary services; and
(d) information provided on liability.
312 It is perhaps not surprising that there are some similarities between the two forms having regard to the fact that both VESA and ISV are rivals in the volunteer eco tourist industry and conduct substantially similar tours which are targeted at a substantially similar customer base. Thus they are both likely to be interested in providing and receiving similar information to and from their customers. Such similarities do not provide a sufficient basis to find that the ISV document was copied.
313 Nor, in my view, should any inference be drawn that VESA copied the ISV application form in circumstances where:
(a) both Ms Luciani and Mr Constable-McDowell strongly denied the allegation of copying and, despite my concerns about some other aspects of their evidence, there is no reason to doubt the veracity of their denials in respect of this particular matter; and
(b) the respondents adduced no additional evidence to support their allegation of copying, apart from inviting the Court to compare the two relevant documents. As found above, I do not consider that the similarities between the documents are striking or, indeed, even substantial.
314 Thirdly, and turning to the issue of infringement, the only reproduction which is relevant is Tom Jowett’s action in copying his VESA email box (which contained the VESA paper application form) onto a USB stick. The further reproduction which occurred in the USA, when he used the VESA paper application form to create ROV’s application form occurred in the USA and falls outside s 36(1) of the Copyright Act. It could, however, be relevant to discretionary relief.
315 Fourthly, I reject the respondents’ reliance upon the concept of “fair dealing” under s 43(2)(a) of the Copyright Act for the following reasons:
(a) In its terms, s 43(2)(a) is directed to a dealing in a literary work for the purpose of the giving of professional advice by a legal practitioner. There is no equivalent provision in Part III of the Copyright Act to s 104 (which appears in Part IV), the effect of which is to create a fair dealing defence where an allegedly infringing act is done for the purpose of seeking professional advice from a legal practitioner. The provision can have no application where Tom Jowett is not a lawyer and was not giving professional legal advice; and
(b) in any event, even if the provision is construed as extending to the seeking of legal advice, I also accept VESA’s submission that the respondents did not lead any evidence to establish that Tom Jowett copied the VESA paper application form for the purpose of seeking professional advice from a legal practitioner. Although I accept his evidence that he was concerned that he could find himself in dispute with VESA arising from his resignation, he did not say that he kept a copy of the VESA paper application form for that purpose. Even if he anticipated that he might end up in a dispute – even legal proceedings – with VESA arising from his resignation, I cannot see how the VESA paper application form could have any relevance to any such dispute and that he might need to seek legal advice in relation to that particular document. That document just happened to be one of many VESA documents he downloaded to the USB stick shortly before his employment ceased with VESA.
316 Fifthly, I do not accept the respondents’ argument that there is no infringement of copyright where Tom Jowett backed-up his email box by downloading it to a USB stick in circumstances where no instructions had been given to him by VESA for storing or backing-up such material. It is plain that Tom Jowett’s action in transferring his VESA email box to the USB stick was not a case of an employee taking the prudent precautionary step of backing-up electronic material in the course of his employment. His evidence was clear that he did so because he anticipated that he might be drawn into a legal dispute by VESA and he wanted to have a copy of all the relevant material with him.
317 As to the issue of relief, in its originating application filed on 31 March 2011, VESA seeks damages under s 115(2) of the Copyright Act, additional damages under s 115(4) of the Copyright Act and, in the alternative, at VESA’s option, an order that an account be taken of the profits made by the respondents by reason of a copyright infringement, with liberty to apply for such directions as may be necessary to enable VESA to make an election between its claim for damages and its claim for account of profits.
318 Tom Jowett gave evidence that he reproduced the VESA paper application form from the USB stick while he was in the USA and modified it so that it could be used as ROV’s paper application form. He also gave evidence that ROV used that modified paper application form for a short period in the USA and also perhaps in Canada, but that ROV then relied solely on an online application form because of the difficulties experienced in using the paper application form. To the best of his recollection, ROV’s paper application form was replaced with the online form around February 2011. He said that ROV never used the modified paper application form in Australia. I accept Tom Jowett’s evidence concerning the short period in which ROV used the modified paper application form in both the USA and possibly in Canada. The form was used for a short period of only several months before it was replaced with an online application form.
319 In those circumstances, it is premature to determine all the relief to which VESA is entitled in respect of the infringement of its copyright in the paper application form.
320 (1) Summary of parties’ arguments: VESA contends that the online FAQs were created by Ms Luciani in Canada in February 2009. VESA tendered Ms Luciani’s handwritten notes which she said she prepared in February 2009 while sitting on a couch with her mother, who is a Canadian academic teaching marketing and business management. Ms Luciani denied that her mother co-authored the FAQs. Although her mother provided her with some advice, Ms Luciani said that her mother did not have any creative input into the draft FAQs. Ms Luciani’s handwritten notes form the basis of the VESA online FAQs which first appeared on the VESA website in August 2010.
321 VESA says that the evidence is unclear whether there was an infringement of its copyright in the online FAQs in Australia or in the USA. While Tom Jowett accepted that it looked like the VESA online FAQs had been copied, he did not recall copying them himself. VESA submits that the Court should infer that the copying occurred in Australia and that Peter Jowett was responsible for that copying in circumstances where Tom Jowett said that his father had helped him create the ROV document. VESA also emphasises that the respondents made no submission, either orally or in writing, regarding VESA’s allegation that its FAQs had been copied.
322 As to the legal principles applying to the determination whether copyright has been infringed, VESA draws attention to s 36 of the Copyright Act which provides that copyright in a work is infringed where a person who, not being the owner of the copyright and without the licence of the owner of the copyright, does in Australia (or authorises the doing in Australia), of any act comprised in the copyright. It also draws attention to s 14(1) of the Copyright Act, which is to the effect that, unless the contrary intention appears:
(a) a reference to the doing of an act in relation to a work or other subject-matter shall be read as including a reference to the doing of that act in relation to a substantial part of the work or other subject-matter; and
(b) a reference to a reproduction, adaptation or copy of a work shall be read as including a reference to a reproduction, adaptation or copy of a substantial part of the work, as the case may be.
323 VESA says that the proper approach in determining whether copyright has been infringed (i.e. whether part of a work which is copied is a “substantial part” within the meaning of s 14(1)) is reflected in the following passage from Mason CJ’s judgment (in dissent) in Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 at [10]-[11]:
It is clear that the phrase “substantial part” refers to the quality of what is taken rather than the quantity [19]. In Ladbroke (Football) Ltd. v William Hill (Football) Ltd. , Lord Pearce stated [20]:
Whether a part is substantial must be decided by its quality rather than its quantity. The reproduction of a part which by itself has no originality will not normally be a substantial part of the copyright and therefore will not be protected. For that which would not attract copyright except by reason of its collocation will, when robbed of that collocation, not be a substantial part of the copyright and therefore the courts will not hold its reproduction to be an infringement. It is this, I think, which is meant by one or two judicial observations that ‘there is no copyright’ in some unoriginal part of a whole that is copyright.
As this statement makes clear, in determining whether the quality of what is taken makes it a “substantial part” of the copyright work, it is important to inquire into the importance which the taken portion bears in relation to the work as a whole: is it an “essential” or “material” part of the work? (Footnotes omitted).
324 (2) Consideration: In my view, this is a case where, on an objective comparison of the two documents, a strong inference can be drawn that the VESA document has been copied. As the Full Court observed in Pacific Gaming Pty Ltd v Aristocrat Leisure Industries Pty Ltd (2001) 116 FCR 448 at [19]:
Whether there has been copying is a question of fact. Where the objective similarities are sufficiently great and it has been shown that the alleged infringer had an opportunity to gain access to the copyright owners work the court will drawn an inference of copying.
325 A comparison between the VESA FAQs and the ROV FAQs reveals many similarities. The wording of many of the questions is identical and they are generally in the same order in both documents. Moreover, while there are some difference in the information provided in respect of those questions (explicable perhaps by the fact that both businesses conducted tours to different countries, with the only common country being South Africa), the information provided in respect of many of the questions is virtually identical.
326 The point can be illustrated by reference to the question which appears in both forms “What is included in the cost?”. In the VESA FAQs, the following information appears under that heading:
The cost includes:
• Non refundable deposit of $AUD350 to secure your space.
• All accommodation for the duration of the program.
• All ground transportation in country.
• All meals (3 meals per day) whilst in Ecuador, South Africa and Fiji, except for the free day. We can cater to vegetarians and some types of food allergies.
• Unlimited bottled water in Ecuador and when necessary in Fiji and Africa.
• Some snacks.
• Building materials needed for volunteer projects.
• Hiring of local skilled trades people to assist in the volunteer projects.
• A monetary donation to the local host organisation.
• Guided 5 day jungle tour (Ecuador) or 6 day island hopping adventure (Fiji) or 5 day Safari (Africa).
• All admission fees to local parks and sites.
• All accompanying VESA staff members.
• All administration costs.
• Certification (if requested) of completion of the volunteer program. Great for your resume (emphasis in original).
327 The ROV document contains the following information under the identically-worded heading “What is included in the cost?”:
The cost includes
• Non refundable deposit of $350AUD to secure your space
• All accommodation for the duration of the program
• All ground transportation
• All meals (3 meals per day) whilst except for any free day (sic). We can cater for vegetarians and for certain types of food allergies.
• Unlimited bottled water while in South Africa
• Snacks
• Building materials needed for volunteer projects
• Education materials for the orphanages and the village schools
• The hire of local skilled trade’s people to assist in the volunteer projects.
• Designated activities while you are there
• Reach Out Volunteer gifts and donations to the local community
• All admission into Game Reserves.
• The Wildlife Conservation Projects and materials
• All accompanying Reach Out Volunteer staff members
• All administration costs
• Certification (if requested) of completion of the volunteer program. This will look great on your resume! (emphasis in original).
328 It is evident not only from this particular example, but also from a comparison of the entirety of the two documents, that the ROV document is substantially based on the VESA document and that copying has occurred. It is also telling that the grammatical error in the fourth dot point of the ROV document (“whilst except for any free day”) is clearly derived from that part of the equivalent dot point in the VESA document (i.e. “whilst in Ecuador, South Africa and Fiji, except for the free day”).
329 Tom Jowett gave evidence, which I accept, that the ROV FAQs appearing on the ROV website from September 2010 until at least 24 March 2011 were prepared by him and his father. Tom Jowett was overseas when the FAQs were being created. He said that the FAQs were selected after he and his father reviewed similar questions presented by various travel industry organisations, including Wildlife ACT (whom he believed had given its consent to that use). He also gave evidence, which I accept, that the VESA FAQs were not on the USB stick which he took to the USA after he had resigned from VESA.
330 When asked if he also looked at the VESA FAQs in preparing the ROV FAQs, Tom Jowett responded by saying that he asked his father to look at various online volunteer projects and he was not sure if the VESA FAQs had been looked at. I accept that evidence. It is evident that Peter Jowett was more heavily involved in preparing ROV’s FAQs than his son. But an inference can be drawn that Peter Jowett copied the VESA FAQs, which were on VESA’s website from August 2010. That inference can be drawn all the more strongly because Peter Jowett was not called to give evidence.
331 In cross-examination, Tom Jowett’s attention was drawn to many similarities in the headings used in the VESA and ROV FAQs and also to the fact that the headings were generally in the same order. It was then put to him directly that, given those matters, ROV must have deliberately copied the VESA FAQs. Tom Jowett responded by saying that he could “see how it looks that way”, but that to the best of his recollection “they” had used a lot of Wildlife ACT’s questions.
332 When pressed on the issue whether the VESA FAQs had been deliberately copied, he said it was “tough to say” that that had occurred when his father also worked on the ROV FAQs, but that he agreed that it looked like they had copied VESA FAQs. I agree with that assessment. I also find that the copying was done by Peter Jowett.
333 In determining whether VESA’s copyright in the FAQs has been infringed, I accept VESA’s submission that the correct approach is that which was stated by Mason CJ in Autodesk Inc. A similar approach has been taken in other more recent cases. For example, in Clarendon Homes (Aust) Pty Ltd v Henley Arch Pty Ltd (1999) 46 IPR 309 at [18] and [37], the Full Court said:
The trial judge did state the principles to be applied in deciding whether there was infringement. They were not controversial and may be summarised from his Honour's reasons for judgment: (1) the question of reproduction for the purposes of copyright law involves the two elements of resemblance to, and actual use of, the copyright work; (2) there is no reproduction for the purposes of the Copyright Act 1968 (Cth) where two persons produce substantially similar works through independent effort; (3) in determining whether “a substantial part of the work” has been reproduced, greater weight must be given to the quality of what is copied than to its quantity; (4) the degree of protection under copyright law of an architectural plan may be limited by reason of the significant proportion of features which are common to all plans, with the result that the remaining portion of a plan in which copyright will subsist is consequently limited; (5) whether the alleged infringing work is sufficiently similar to the work in which copyright subsists to amount to a reproduction of a substantial part of that work is for the Court to determine. The Court can be assisted by expert evidence which is of value in exposing the facets of the ultimate question to which the expert opinion evidence is directed.
…
Whether a substantial part of the plaintiff's work has been taken is always a question of degree. The allegation will be made out if what has been taken is an important or material part of the plaintiff's work: Dixon Investments Pty Ltd v Hall (1990) 18 IPR 490 at 494. It is not necessary to show that the copy is a perfect reproduction of a substantial part of the plaintiff's work: British Northrop Ltd v Texteam Blackburn Ltd [1974] RPC 57 at 72. But it must always be borne in mind that a part of the plaintiff's work which by itself has no originality will not normally be a substantial part of the copyright and therefore will not be protected: Ladbroke [1964] 1 WLR at 293. It is for this reason that one finds a warning in the cases that it is difficult to establish infringement of copyright in building plans especially plans for project homes where many common features are shared: see eg Beck v Montana Constructions Pty Ltd (1963) 80 WN (NSW) 1578 at 1580; Ancher, Mortlock [1971] 2 NSWLR at 283 . However, as Eagle; Homes Pty Ltd v Austec Pty Ltd (1999) 161 ALR 503 shows, this warning should not be taken too far. Frank Lloyd Wright wrote that “an architect practises a fine art as a profession with the commercial and the scientific of his time as his technique”: F Guthiem (ed), On Architecture-Selected Writings 1894-1940 (1941). An architect is not only imitative, but innovative as well. This is true for all sorts of architectural works, from shelters to houses to great public buildings. Accordingly there is no reason why an architect's creative work should not be considered in the same way as great art or high drama.
334 And even more recently, in IceTV Pty Limited v Nine Network Australia Pty Limited (2009) 239 CLR 458 at [30], French CJ, Crennan and Kiefel JJ said:
… in order to assess whether material copied is a substantial part of an original literary work, it is necessary to consider not only the extent of what is copied: the quality of what is copied is critical. (Footnotes omitted).
See also their Honours’ views at [32] and [52].
335 Applying that approach to the facts found here, I am comfortably satisfied that a substantial part of VESA’s FAQs was reproduced by ROV.
336 As to relief for this copyright infringement, it will be necessary to adopt the same course as that described in [317] above in respect of the infringement of VESA’s copyright in the paper application form.
337 (1) Summary of parties’ arguments: VESA contends that the second stage hand logo (which, for convenience, is again depicted below) was created by Mr Allsopp and that he assigned his copyright in it to VESA in November 2010. It is said to be an artistic work.
338 The evidence established that Mr Allsopp produced what was described as the first stage hand logo for VESA. For convenience, I will set out again the first stage hand logo:
339 ROVs hand logo is as follows:
340 VESA did not press its claim of infringement of copyright in respect of the first stage hand logo. Rather, its claims focused only on the second stage hand logo which was created by Mr Allsopp after he received Tom Jowett’s comments on the first stage hand logo. VESA emphasised that the second stage hand logo was created for VESA pursuant to a retainer to VESA to “completely redesign a brand logo”. Mr Allsopp also gave evidence to the effect that, when he was retained by VESA to undertake such creative work, VESA would acquire all copyright in his created works once the project had been paid for in full. VESA was not invoiced for Mr Allsopp’s work on the second stage hand logo until 3 November 2010 (after he received a request from VESA’s solicitors to send an invoice). His invoice in the amount of $330.00 was paid in full shortly thereafter. VESA also says that this is consistent with the contract which it entered into with Fizzbuzz in May 2010, which provided that VESA would ultimately own the copyright in any work completed by Fizzbuzz for VESA. VESA contends that the objective intention of the parties was that copyright title would pass to VESA subject only to the condition that Fizzbuzz’s invoices were paid.
341 The respondents submit that, in the light of Mr Allsopp’s evidence as to how he created the second stage hand logo by downloading a stock image of a hand silhouette and then superimposing spirals on it, the second stage hand logo was a deliberate adaptation of the first stage hand logo and was created in response to the feedback he had received from Tom Jowett while he was working for VESA. Accordingly, the respondents submit that the second stage hand logo is not an original work for the purpose of the Copyright Act and that Mr Allsopp did not own the copyright in it. Alternatively, they say that, unlike Tom Jowett, Mr Allsopp was not an employee of VESA, so that no automatic assignment of copyright occurred under s 35(6) of the Copyright Act.
342 Finally, as to VESA’s claims that it acquired the copyright when Fizzbuzz was paid $330.00 in November 2010, the respondents say that even if that payment included an assignment of the copyright in the second stage hand logo, VESA would not have owned the copyright at the relevant time (i.e. late August or early September 2010) when Mr Allsopp created ROV’s hand logo which is said to constitute an infringement of VESA’s copyright. At that time Mr Allsopp still owned the copyright in the ROV logo and it is immaterial that it may have been assigned subsequently to VESA because that assignment would have been subject to ROV’s pre-existing licence under s 196(4) of the Copyright Act.
343 VESA’s reply submissions may be summarised as follows:
(a) it is irrelevant that Fizzbuzz did not invoice VESA for the second stage hand logo on the basis of a policy that Fizzbuzz did not charge a client for its work if the client did not accept the work;
(b) there was an implied term of the contract between VESA and Fizzbuzz to the effect that it was not open to Fizzbuzz to deny VESA intellectual property in the product of work done by Fizzbuzz for it by simply deciding not to invoice for that work;
(c) the Court should construe the “Fizzbuzz IP term” as meaning that, once a literary or artistic work was brought into existence by Fizzbuzz, copyright vested in VESA, subject to a condition subsequent that if Fizzbuzz invoiced for that work, VESA had to pay the invoice within the period allowed for payment, otherwise copyright in the work reverted to Fizzbuzz;
(d) the requirements of s 196(3) of the Copyright Act were satisfied by Mr Allsopp’s email dated 21 May 2010 to Tom Jowett;
(e) accordingly, VESA owned the legal title in the second stage hand logo from the moment it was created and, when Fizzbuzz invoiced VESA in November 2010 (after being requested by VESA’s solicitors to do so) and was paid, the condition subsequent was satisfied;
(f) the Court should not accept the respondents’ submission that, if the payment in November 2010 amounted to an assignment of copyright, then it occurred after ROV’s pre-existing licence of that work because VESA says that it owned the copyright in the second stage hand logo from the moment it was created by Mr Allsopp for VESA and its title “was merely perfected” by the payment;
(g) alternatively, if VESA did not own the copyright between July 2010 and November 2010, Mr Allsopp held that title on trust for VESA by reason of the terms of their contract;
(h) VESA denies the respondents’ claim that the second stage hand logo was a deliberate adaptation of the first stage hand logo and (somewhat curiously) it referred the Court to Mr Allsopp’s evidence concerning how he created the ROV logo (and not his evidence concerning his creation of the second stage hand logo);
(i) because Mr Allsopp only invoiced ROV $150 for the ROV hand logo, it can be inferred that he did little work on it. It also relies on Mr Allsopp’s reference in his email dated 20 August 2010 in which he forwarded the ROV hand logo to Ben Jowett saying that he had “adapted the hand logo”;
(j) VESA contends that the evidence is “clear” that Mr Allsopp drew the second stage hand logo for VESA in July 2010 and then copied it for ROV on 20 August 2010 at Ben Jowett’s request and says that, to the extent that Mr Allsopp’s oral evidence is inconsistent with the documentary evidence, it should not be accepted; and
(k) in any event, even if the second stage hand logo is a derivative of the first stage hand logo, Mr Allsopp’s independent labour and skill was used to produce a logo which is “clearly different” to the first stage hand logo and copyright subsists in the derivative work.
344 (2) Consideration: For the following reasons, I reject VESA’s claims that the ROV hand logo infringed what it alleges is its copyright in the second stage hand logo.
345 First, it is important not to lose sight of the ultimate issue. That is whether Mr Allsopp’s creation of the ROV hand logo was an infringement of what is alleged to be VESA’s copyright in the second stage hand logo. VESA’s case, as presented, tended at times to obscure that ultimate issue.
346 Secondly, in my view, even if VESA established that it owned the copyright in the second stage hand logo, I would reject its contention that the ROV hand logo infringed that copyright. That is because, accepting Mr Allsopp’s evidence as I do, I find that he created the ROV hand logo independently of his earlier creation of the second stage hand logo for VESA. Despite the similarities between the two works, I accept his evidence that he created the ROV hand logo “from scratch”, albeit using the same general methodology as that which he used in previously creating the second stage hand logo i.e. using Adobe Illustrator to superimpose the spiralling onto an internet stock image of the silhouette of a hand.
347 In my opinion, the facts here comfortably satisfy the following relevant principles as outlined in Lahore, Copyright and Designs (Butterworths, 3rd rev ed, 2004) Vol 1 at 34,110:
If there is no causal connection between the work in which copyright subsists and the alleged infringing work there is no act of infringement. There must be some copying whether it is direct or indirect, conscious or subconscious. A person who, for example, reproduces, publishes or publicly performs a work which is substantially similar to another work in which copyright subsists will not commit any infringing act in relation to the latter work if the former work has been independently created. The necessity for such a causal connection, whether it be implicit in the legal concept of “copyright” or capable of being deduced from the Act, is well established in copyright law as Diplock LJ indicated in Francis Day & Hunter Ltd v Bron. In contrast to patent law, the law of copyright does not give to the copyright owner any right to restrain others from dealing as they wish with works or other subjects which have been independently made. If two authors produce independently the same result copyright may subsist in each work as a separate subject-matter of copyright.
348 Thirdly, and in any event, at the time when VESA alleges that the respondents infringed its copyright (i.e. August or September 2010), copyright in the second stage hand logo was owned by either Mr Allsopp or his company Fizzbuzz and not VESA. That is because:
(a) Mr Allsopp is the author of the artistic work;
(b) the second stage hand logo is an original work because, although it is an adaptation of the first stage hand logo, I am satisfied, having regard to Mr Allsopp’s evidence of the process involved in creating such a logo, that sufficient skills and labour were involved in creating the adapted work so as to make it a fresh original work. Moreover, I am satisfied that, on a visual comparison, the second stage hand logo is not a mere copy of the first stage hand logo (see generally Interlego AG v Croner Trading Pty Ltd (1992) 39 FCR 348 at 378-379 per Gummow J);
(c) Mr Allsopp/Fizzbuzz did not assign the copyright in the second stage hand logo to VESA until November 2010, when VESA paid Fizzbuzz’s invoice dated 3 November 2010;
(d) I do not accept VESA’s argument that, during the period July to November 2010, Mr Allsopp/Fizzbuzz held the copyright in the second stage hand logo on trust for VESA. That is inconsistent with the terms of the contract between Fizzbuzz and VESA. VESA’s engagement of Fizzbuzz was made on the express term that copyright would not revert to VESA until payment in full was received by Fizzbuzz in respect of the relevant work (see Mr Allsopp’s email dated 21 May 2010 to Tom Jowett and Tom Jowett’s acceptance of that term in his email dated 23 May 2010); and
(e) I also reject VESA’s arguments based on an implied term of the type described in [343(b)] or a condition subsequent as outlined in [343(c)] above. The alleged implied term is inconsistent with an express term of the contract as set out in Mr Allsopp’s email dated 21 May 2010. Moreover, the condition subsequent contended for by VESA is also inconsistent with the express terms of the contract. Mr Allsopp’s email dated 21 May 2010 made it abundantly clear that copyright remained with Fizzbuzz up until such time as full payment was received for the relevant work. VESA was also fully informed that Fizzbuzz did not expect payment for work which was not accepted by the client.
349 Furthermore, if, contrary to the above, the ROV hand logo reproduced the second stage hand logo, I would find that Mr Allsopp/Fizzbuzz granted a licence to ROV in September 2010 when the ROV hand logo was created. Thus, even if VESA subsequently acquired copyright in the second stage hand logo in November 2010 when it paid Fizzbuzz’s invoice, that assignment was subject to ROV’s pre-existing licence under s 196(4) of the Copyright Act.
350 For these reasons, therefore, VESA’s case in copyright in respect of the ROV hand logo is rejected.
351 (1) Summary of parties’ arguments: VESA contends that the respondents have infringed their copyright in two taglines which are said to be literary works. The first tagline was created by Mr Allsopp in July 2010 and comprised the words “Change your life by changing someone else’s”. VESA says that copyright in that tagline was assigned to VESA. The second tagline is said to be constituted by the words “Changing the world, one village at a time”, which VESA says was created by Tom Jowett in July 2010 when he was an employee of VESA and VESA owns the copyright.
352 With respect to the first tagline, the respondents repeat what they say with respect to the second stage hand logo, i.e. that there was no automatic assignment of copyright from Mr Allsopp to VESA (because Mr Allsopp was not an employee of VESA) and that even if the payment of $330 pursuant to the November 2010 invoice constituted an assignment of copyright in the taglines, VESA would not have owned the copyright at the relevant time.
353 The respondents also say that the second tagline is not an original work in which copyright subsists because it is a substantial reproduction of the earlier tagline “Change the world, one adventure at a time” which was created by Mr Allsopp (first appearing under the first stage hand logo in an email to Tom Jowett dated 7 July 2010). Accordingly, they say that Mr Allsopp is the author of the tagline and he authorised ROV to use it when he did the work creating the ROV website in September 2010. They say that, even if VESA paid Mr Allsopp for the work on the taglines in November 2010, then that assignment (if any) is subject to ROV’s pre-existing licence.
354 The respondents also submit that the taglines are too trivial or insubstantial to constitute a literary work in which copyright subsists.
355 In reply, VESA says that if the Court accepts the respondents’ submission that the tagline “Changing the world, one village at a time” is a substantial reproduction of the tagline “Change the world, one adventure at a time”, then the Court should find that ROV’s use of the tagline “Changing the world, one village at a time” is an infringement of “Change the world, one adventure at a time”. VESA also argues that the Court should not accept the respondents’ argument that Mr Allsopp authorised ROV to use the tagline “Changing the world, one village at a time” because of the work he did on the ROV website in September 2010. That is because there is no evidence that Mr Allsopp formed the view that that tagline was a substantial reproduction of the tagline “Change the world, one adventure at a time”.
356 (2) Consideration: It is convenient to deal first with the question whether copyright subsists in the two relevant taglines. VESA submits that it does because its evidence regarding the creation of those taglines demonstrates that sufficient judgment, effort or skill was involved in the creation of those taglines for them to constitute an original literary work (citing Fairfax Media Publications Pty Ltd v Reed International Books Australia Pty Ltd (2010) 189 FCR 109). In particular, VESA submits that the eight word tagline (“Changing the world, one village at a time”) cleverly conveys at the same time both a literal and “an emotionally inspiring meaning” relevant to the subject matter to which it relates, which is to be contrasted with an eight word phrase that merely conveys “commonplace information”.
357 Fairfax Media related to the question whether copyright subsisted in newspaper headlines. The relevant principles are set out in Bennett J’s judgment at [44] and [45] as follows:
Headlines generally are, like titles, simply too insubstantial and too short to qualify for copyright protection as literary works. The function of the headline is as a title to the article as well as a brief statement of its subject, in a compressed form comparable in length to a book title or the like. It is, generally, too trivial to be a literary work, much as a logo was held to be too trivial to be an artistic work (Cortis Exhaust Systems Pty Ltd v Kitten Software Pty Ltd (2001) ATPR 41-837 at [33] per Tamberlin J), even if skill and labour has been expended on creation (Exxon).
Copyright can only subsist in a “work”. Originality does not require novelty, inventiveness or creativity, whether of thought or expression, or any form of literary merit. Any words written by an author, original in that sense and not copied, could be said to satisfy the “literary” part of a literary work for which copyright is claimed. Those words could well convey information and instruction (such as “go outside, the sun is shining”) or pleasure (such as “you look beautiful”). However, not every piece of printing or writing which conveys information will be subject to copyright (IceTV at [45]). To obtain copyright protection under the Act, there must be a literary work. I appreciate that this has been the subject of much judicial consideration but I find it helpful to resort to dictionary definitions of “work”. The Macquarie Dictionary relevantly defines “work” as “that on which exertion or labour is expended; the product of exertion, labour, or activity: a work of art, literary or musical works”. There may well be writings of original words or phrases that simply do not reach the level of constituting a “work”, regardless of literary merit. This is not just because they are short, as a deal of skill and effort can go into producing, for example, a line of exquisite poetry. It is because, on its face and in the absence of evidence justifying its description as a literary “work”, the writing does not, qualitatively or quantitatively, justify that description. A headline is, generally, no more than a combination of common English words (Dicks v Yates at 88 per Jessel MR). It is “does not involve literary composition, and is not sufficiently substantial to justify a claim to protection” (Francis Day at 122-123); it does not, in the words of Jacobson J in Sullivan at [112], have “the requisite degree of judgment, effort and skill to make it an original literary work in which copyright may subsist” for the purposes of the Act.
358 Ultimately, the issue is one of fact and degree and it is apparent that the evidence in a particular case may justify a finding that copyright subsists in a particular newspaper headlines, even if copyright does not exist in newspaper headline as a class (see, for example, Newspaper Licensing Agency Ltd v Meltwater Holding BV [2010] EWHC 3099 and also on appeal Newspaper Licensing Agency Ltd v Meltwater Holding BV (2012) 93 IPR 341 at [16]-[22]).
359 It is also relevant to note the following additional observations of Bennett J in Fairfax Media at [39]:
The authors of Laddie H, Prescott P, Vitoria M et al, The Modern Law of Copyright and Designs (3rd ed, Butterworths, 2000) commented at [3.62] that most cases in which a work was considered too slight a matter to deserve copyright protection were cases concerning titles of publications and advertising slogans. This is so even where it is apparent that skill and labour had gone into the creation of the word (eg “ExxonI”) or title (eg “Where there's a Will there's a Way”). Interestingly, the authors acknowledge that courts may now be more ready to afford copyright protection to advertising copy to recognise that such material may require creative activity of a high order (at [3.62], footnote 10 and see Budget Eyewear Australia Pty Ltd v Specsavers Pty Ltd (2010) 86 IPR 479). However, they observe that the courts may in fact be denying protection on the ground that some advertising slogans and titles are too short to be a literary work at all, regardless of any skill or labour. Copinger also refers to the reluctance of English courts to confer copyright protection on titles of newspapers, magazines, books and the like (at [3-16]). Examples of refusal extend to the clever use of words to convey more than a simple description of the subject matter. The authors note that the courts have, however, been careful not to rule out the possibility for such protection in appropriate circumstances, although also noting that no such decision has ever been made.
360 In Budget Eyewear Australia Pty Ltd v Specsavers Pty Ltd (2010) 86 IPR 479, which involved an application for interlocutory relief in respect of the copying of inter alia print advertisements, Bennett J was satisfied that there was a prima facie case of copyright infringement in respect of an advertisement which used the words “if your glasses are not all they are cracked up to be, don’t worry, we’ll come to the rescue”. Her Honour said at [17]:
In my view Budget Eyewear has an arguable case that the way in which a concept is expressed in an advertisement intended to attract customers may involve originality that attracts copyright protection. It is necessary for the creator of the advertisement to choose words and expressions carefully and to put those words and phrases together in a particular considered way. Expressions such as “if your glasses are not all they are cracked up to be, don't worry, we'll come to the rescue” may involve ordinary words, as does much literary language, but the fact that the words are commonplace does not mean that the way in which they are put together cannot have a degree of originality.
361 In Sullivan v FNH Investment Pty Ltd t/as Palm Bay Hideaway (2003) 57 IPR 63 at [112]-[114], in considering whether copyright existed in advertising slogans “Somewhere in the Whitsundays” or “the Resort that Offers Precious Little”, Jacobson J held that copyright did not subsist in the absence of evidence of “the requisite degree of judgment, effort and skill to make it an original literary work in which copyright may exist”.
362 In my view, the relevant principles to be applied in Australia are similar to those which have been established in Great Britain. In Sinanide v La Maison Kosmeo (1928) 139 LT 365, the Court of Appeal of England and Wales rejected an argument that copyright subsisted in the slogan “Beauty is a social necessity, not a luxury”. Part of the Court’s reasons for rejecting that claim related to its finding that the subject matter was trifling and no proprietary value should be attached to it. The Court accepted the possibility of copyright subsisting in an advertisement slogan if it was original.
363 Applying those principles here, I am not satisfied that VESA has pointed to sufficient evidence that the requisite degree of judgment, effort and skill was applied in creating either of the two taglines. In my opinion, the relevant taglines simply involve the stringing together of a series of ordinary and commonplace words. Moreover, I am not satisfied that the way in which the words are put together in either of the relevant taglines displays a sufficient degree of originality to constitute a literary work which attracts copyright protection.
364 It is convenient to now deal with the respondents’ claims that, even if copyright subsists in the taglines, VESA does not own that copyright. As might be gathered from the summary of the parties’ argument, the relevant issues here are similar to those which arise in respect of VESA’s copyright case concerning the second stage hand logo. My reasons for rejecting VESA’s contention that it owned the copyright in that logo at the time of the alleged infringement by the respondents (see [348] above) apply equally here to the first tagline (noting that, although the invoice dated 3 November 2010 refers only to the logos, an inference can be drawn that it also covered the associated taglines, particularly since Mr Allsopp’s original quotation covered both logos and corporate taglines together).
365 As to the second tagline, although that tagline was ultimately coined by Tom Jowett in July 2010 while he was working for VESA, I accept the respondents’ contention that it is a substantial reproduction of the earlier tagline “Change the world, one adventure at a time”, which was created by Mr Allsopp. Accordingly, Mr Allsopp is the author of the second tagline and I accept that an inference can be drawn that he licensed ROV to use the amended version by including it is the ROV website which he created in September 2010. Accordingly, even if copyright subsisted in the second tagline, any assignment of that copyright to VESA in November 2010 when VESA paid Fizzbuzz’s invoice dated 3 November 2010 would be subject to ROV’s pre-existing licence.
366 For these reasons, therefore, I reject VESA’s copyright claims in respect of the first and second taglines.
367 (1) Summary of parties’ arguments: VESA says that Mr Constable-McDowell is the author of a pro forma email to professors, which is said to be a literary work created in March 2009, but was then subsequently assigned to VESA. The pro forma email to professors describes VESA’s activities and was designed to obtain the support of professors at universities where VESA proposed to conduct recruitment sessions. VESA also complains that Tom Jowett copied the email to professors onto a USB stick while in Australia and that he did not have authority to do so.
368 The respondents’ short answer to this matter is to rely on Tom Jowett’s evidence that he was in the USA in September/October 2010 when he used VESA’s precedent to create the email to be used by ROV which is said to infringe VESA’s copyright. As the conduct occurred outside Australia, it cannot constitute an infringement under the Copyright Act and is relevant only to discretionary relief.
369 As to VESA’s complaints regarding the USB backup stick, the respondents rely on s 43(2)(a) of the Copyright Act as outlined above.
370 (2) Consideration: The respondents did not dispute that VESA’s email to professors was an original literary work or that VESA owned the copyright. In my view, VESA has also established that its copyright was infringed, both when Tom Jowett downloaded a copy to the USB stick (which cannot be regarded as a step taken in the ordinary course of his employment with VESA), and also when he used the VESA precedent in the USA to create a document for use by ROV. The latter infringement is only relevant to relief.
371 As to the respondents’ reliance on s 43(2)(a) of the Copyright Act, that provision has no application to the circumstances here for the same reasons given above in respect of the paper application form.
372 As to relief for the infringement which occurred in Australian, it will be necessary to adopt the same course as that described in [317] above in respect of the infringement of VESA’s copyright in the paper application form.
373 (1) Summary of parties’ arguments: Notwithstanding that its pleading asserts that Kelly Sargent is the author of the ocelot photograph and also noting that VESA was unsuccessful in its attempt to further amend that pleading, VESA submits that it is the owner of the copyright in this work. VESA submits that either Jake Allison or Ms Luciani is the author of the ocelot photo when it was taken in Ecuador in May 2010. The photo is said to be a literary work. VESA argues that because both Mr Allison and Ms Luciani were employees of VESA at that time, copyright vests in VESA. In addition to complaining of Tom Jowett’s reproduction of the photograph in the USA to assist ROV’s marketing, VESA also complains of his conduct in Australia in August 2010 in copying the photograph onto the USB stick.
374 The respondents draw attention to the fact that, consistently with s 10 of the Copyright Act, the author of a photograph is the person who took the photograph. They further point out that, according to VESA’s pleading, the date of the photograph is said to be 20 May 2010. Thus, they say that it is clear that Ms Luciani could not have been the author because Mr Constable-McDowell gave evidence that she was with him in Fiji on 20 May 2010 and did not leave Suva until 23 May 2010. As to the claim that Mr Allison may have been the author, the respondents submit that the only evidence to support that claim is Ms Luciani’s oral evidence to the effect that she could not remember who took the photograph and then added that “it would either have been Jake Allison or myself”.
375 The respondents also rely upon the fact that the alleged further copying of the ocelot photo occurred in the USA on 5 October 2010 at Colorado State University. Accordingly, even if VESA established that it owned copyright in the work, that conduct could not constitute an infringement of the Copyright Act in circumstances where the alleged infringement occurred overseas. As to the copying in Australia involving the USB stick, the respondents rely again on s 43 of the Copyright Act.
376 (2) Consideration: For the following reasons, I do not accept that VESA has a cause of action for infringement of copyright in the ocelot photograph:
(a) VESA unsuccessfully sought to amend its pleading so as to substitute the names of Shona Luciani and Jake Allison for the name of Kelly Sargent as the author of the ocelot photograph which, it says, was taken on 20 May 2010. In the light of those matters, it is difficult to see how it is entitled to conduct its case on the basis that it is the owner of the copyright in the ocelot photograph because the author of the photograph is either Ms Luciani or Mr Allison, both of whom are said to be VESA employees as at 20 May 2010;
(b) even if that matter could somehow be overcome, I do not accept that VESA has established the authorship of the photograph. Ms Luciani’s evidence was that the photograph was taken either by Jake Allison or herself, but she could not remember which of them had done so. Her evidence that the photographer was either Jake Allison or herself was based on the fact that the photograph was taken on a VESA tour to Ecuador, when she and Mr Allison were the tour leaders and the general practice was for volunteers to have the tour leaders take photographs while a volunteer held the baby ocelots. She said that that was the practice for every VESA tour in the relevant village in Ecuador. She also gave evidence that Mr Allison was an employee of VESA and was paid a weekly wage;
(c) having regard to Mr Constable-McDowell’s evidence that his wife was not in Ecuador on 20 May 2010, but was in Fiji with him, it is plain that Ms Luciani could not have been the photographer. VESA submits that the Court should not make that finding based on Mr Constable-McDowell’s evidence in circumstances where the proposition was never put to Ms Luciani. The difficulty with that submission is that Mr Constable-McDowell gave his evidence after Ms Luciani and it was only during the course of his evidence that it emerged that Ms Luciani could not have been in Ecuador on 20 May 2010; and
(d) since Ms Luciani was not in Ecuador on 20 May 2010 when the ocelot photograph was said to have been taken, I cannot accept her evidence that either she or Mr Allison took the photograph. Plainly she did not take the photograph because she was not there and, because she was not there, her evidence that Mr Allison took the photograph cannot be accepted. It appears that she has confused the Ecuador tour which took place on 20 May 2010 with some other tour where she was present together with Mr Allison as tour leaders.
377 For these reasons, therefore, I find that VESA has failed to establish any basis upon which it can be regarded as the owner of the copyright in the ocelot photograph and I reject this aspect of VESA’s copyright claims.
Part F: Misleading or deceptive conduct
378 In broad terms, VESA complains of misleading or deceptive conduct (or conduct which is likely to mislead or deceive) in respect of some aspects of ROV’s marketing and promotional activities. The complaints relate to various statements and representations made in e mails, ROV’s website and Facebook page, testimonials, a video, a local newspaper and another organisation’s Facebook page. The conduct which is said to be misleading or deceptive primarily relates to claims concerning ROV’s experience as an eco tour operator, whether various persons who provided testimonials concerning their experience with ROV had in fact participated as volunteers on any ROV tour at the time the testimonials were made, as well as certain statements which suggested that ROV had charitable status.
379 Many of VESA’s complaints relate to representations or statements concerning ROV’s experience as an eco tour operator. In particular, VESA challenges various claims and suggestions that ROV had conducted eco tours to various destinations at a time earlier than ROV’s first paid eco tour, which did not take place until May 2011 when ROV conducted a tour to South Africa. One of the key issues for determination is whether, in assessing the relevant claims regarding ROV’s experience, it is appropriate to take into account the “dry run” conducted by Tom Jowett and several friends in South Africa in August 2010, just after he left VESA. Another key issue is whether the use of the personal pronoun “we” in ROV’s marketing material should be understood as referring only to the legal entity ROV itself or also to individuals who are associated with it.
380 Before proceeding to deal with each of the relevant matters complained of, it is convenient to outline the relevant legal principles, noting that there is substantial agreement between the parties on those principles.
(b) Outline of relevant legal principles
381 VESA’s submissions as to the relevant legal principles concerning misleading or deceptive conduct under ss 52 and 53 of the Trade Practices Act 1974 (Cth) (TPA) and to the broadly comparable provisions in ss 18 and 29 of the Australian Consumer Law (ACL) (Schedule 2 to the Competition and Consumer Act 2010 (Cth) (CCA)) may be summarised as follows:
(a) conduct is likely to mislead or deceive for the purpose of s 52 of the TPA if there is a real or not remote chance or possibility of misleading or deception regardless of whether it is more or less than 50 percent. The question of whether conduct is misleading or deceptive or likely to mislead or deceive is an objective question which the Court must determine for itself (citing Equity Access Pty Limited v Westpac Banking Corporation (1989) 16 IPR 431 at 440 per Hill J);
(b) it has recently been held that the use of a meta tag or Google ad word can amount to misleading and/or deceptive conduct (citing the Full Court’s decision in Australian Competition and Consumer Commission v Google Inc (2012) 201 FCR 503, which has subsequently been reversed on appeal: see Google Inc v Australian Competition and Consumer Commission [2013] HCA 1; 294 ALR 404);
(c) on accessorial liability, reliance was placed on s 75B of the TPA and related caselaw, including Benchmark Certification Pty Ltd v Standards Australia International Ltd (2004) 212 ALR 464; Yorke v Lucas (1985) 158 CLR 661 at 667 and 670 and Rural Press Limited v Australian Competition and Consumer Commission (2002) 188 FCR 236 at [157] and [160]. It is unnecessary that the accessory should have appreciated that the relevant conduct was unlawful;
(d) damages under s 82 of the TPA are to be measured according to tort principles (citing Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1);
(e) the seriousness with which false testimonials have been viewed is illustrated by Australian Competition and Consumer Commission v Advanced Medical Institute Pty Ltd (No 3) (2006) 69 IPR 462;
(f) the combined effect of ss 29(1)(e) and (f) and ss 29(2) and (3) of the ACL is to introduce a new change to the law affecting false or misleading testimonials and those provisions manifest a particular concern by the legislature in relation to such matters. Those provisions apply to conduct occurring on and after 1 January 2011. Sections 29(1)(e) and (f) provide as follows:
29. False or misleading representations about goods or services
(1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods of services or in connection with the promotion by any means of the supply or use of goods or services:
…
(e) make a false or misleading representation that purports to be a testimonial by any person relating to goods or services; or
(f) make a false or misleading representation concerning:
(i) a testimonial by any person; or
(ii) a representation that purports to be such a testimonial;
relating to goods or services; or
…
Sub-sections 29(2) and (3) provide as follows:
(2) For the purposes of applying subsection (1) in relation to a proceeding concerning a representation of a kind referred to in subsection (1)(e) or (f), the representation is taken to be misleading unless evidence is adduced to the contrary.
(3) To avoid doubt, subsection (2) does not:
(a) have the effect that, merely because such evidence to the contrary is adduced, the representation is not misleading; or
(b) have the effect of placing on any person an onus of proving that the representation is not misleading;
(g) on the significance of the fact that some of the conduct the subject of complaint occurred overseas, VESA contends that:
(i) section 5 of the CCA (and the former TPA), has the effect that conduct engaged in outside Australia by certain persons, such as Australian citizens, falls within the scope of the Act. That is subject, however, to the exception is s 5(4), the effect of which is to put beyond the reach of the CCA/TPA conduct outside Australia insofar as ss 82 and 87 of the TPA, ss 87(1) and (1A) of the CCA and ss 237 and 238 of the ACL relief is concerned (unless the Minister’s consent has been obtained). But that exception does not apply to other available remedies, such as injunctions under s 80 of both the CCA and TPA and its ACL equivalent (i.e. s 232);
(ii) if the Court finds that some representations made by the respondents were only made outside Australia, even though the applicant cannot recover damages for such conduct, the Court has a discretion to grant an injunction to prevent the respondents from engaging in that misleading and/or deceptive conduct in the future (citing cases such as Australian Competition and Consumer Commission v Chen [2003] FCA 897 at [40]-[42] per Sackville J and Tritech Technology Pty Ltd v Gordon (2000) 48 IPR 52 at [31], [34] and [41] per Finkelstein J);
(iii) the Court is entitled to rely on evidence of conduct outside Australia to draw reasonable inferences as to what conduct was likely engaged in within Australia; and
(iv) as to the discretion concerning injunctive relief under s 80 of both the TPA and the CCA and s 232 of the ACL, the relevant statutory provisions make it clear that the discretion to grant an injunction may be exercised whether or not it appears to the Court that the person intends to repeat the conduct or has previously engaged in such conduct. Moreover, even if there is no evidence indicating an intention to repeat the offending conduct, the Court may still view it as appropriate to grant injunctive relief in order to mark the Court’s disapproval of the conduct in question (citing Trade Practices Commission v Mobil Oil Australia Ltd (1985) 4 FCR 296 at 299 per Toohey J) or to deter any repetition of the conduct (citing ICI Australia Operations Pty Limited v Trade Practice Commission (1992) 38 FCR 248 at 268 per French J).
382 The respondents’ submissions regarding the relevant legal principles may be summarised as follows:
(a) the question whether particular conduct is misleading or deceptive is a question of fact to be determined by the Court in the context of all the relevant evidence. Conduct is not misleading or deceptive unless there is evidence that the conduct has actually led a person into error (citing Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 and Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191). Since the applicant adduced no evidence of any actual confusion or misleading of any person, this aspect of its case should be rejected;
(b) conduct is likely to mislead or deceive only if there is a real or not remote chance or possibility of that occurring (citing Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82);
(c) a distinction should be drawn between characterising conduct as misleading or deceptive when the public at large (or a relevant section thereof) is involved, as opposed to conduct which occurs in the context of commercial negotiations between identified individuals (citing Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [25]-[28] per French CJ);
(d) the respondents also contend that if, contrary to their primary submission that VESA should not be permitted to complain about certain representations which were not pleaded or particularised, those representations were mere “puffery” (citing General Newspapers Pty Ltd v Telstra Corporation Ltd (1993) 45 FCR 164 at 178 and Pappas v Soulac Pty Ltd (1983) 50 ALR 231 at 234 per Fisher J);
(e) in respect of several of the other representations complained of by VESA in which the word “we” is used, the respondents say that the key question is whether the use of that term was likely to be seen as referring only to ROV as a legal entity, as opposed to the particular individuals who are associated with ROV;
(f) the relevant section of the public to be considered in determining whether or not conduct which is directed at a class of persons is likely to mislead or deceive is university students who are interested in undertaking volunteer eco tourism activities and the applicant needs to establish that a not insignificant number of persons within that class would be likely to be misled (citing, for example, Hansen Beverage Company v Bickfords (Australia) Pty Ltd (2008) 171 FCR 579 at [46] per Tamberlin J and at [66] per Siopis J); and
(g) on the issue of relief and the Court’s discretion:
(i) in order to recover damages, the applicant must prove that any loss or damage it suffered as a result of a contravention of the ACL was caused by that conduct;
(ii) the applicant has not established any loss or damage;
(iii) if any contravention of s 18 of the ACL is found, the Court retains a discretion whether or not to grant injunctive relief (citing Baxter v British Airways PLC (1988) 82 ALR 298; ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 256-257 per Lockhart J and Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liquidation) (2007) 161 FCR 513);
(iv) ROV is now an experienced operator of volunteer eco tourism tours and the risk of any repetition of the conduct involving misrepresentations concerning its experience or that of its staff is minimal;
(v) likewise, any misrepresentation made in respect of the issue of ROV being a charity was not intentional and the risk of any future repetition is minimal;
(vi) similarly, any misrepresentation in respect of the use of meta-tags or Google word advertising was unintentional and immediate steps were taken to terminate such conduct after the applicant complained, and the risk of any future repetition is minimal; and
(vii) in determining whether or not to grant injunctive relief under s 80 of the TPA (also s 80 of the CCA and s 232 of the ACL), the Court can take into account overseas conduct.
383 In my view, the respondents’ identified class of relevant consumers (see [382(f)]) is expressed too narrowly. Having regard to the character of ROV’s activities and the demographics of its target clientele, the relevant section of the public should include not only university students who are interested in undertaking volunteer eco tourism activities, but also their parents or guardians. It can reasonably be expected that those persons would have a particular interest in their children’s involvement and welfare in any such activities.
384 I also consider that, in addition to the principles identified by the parties, the following legal principles are also relevant here:
conduct complained of must be viewed as a whole, taking into account all relevant words and acts (Parkdale Custom Built Furniture v Puxu Pty Ltd (1982) 149 CLR 191 at 199 per Gibbs CJ);
in the case of advertising in relation to a mass-marketed product for general use, the question is whether the misconceptions or deceptions are likely to be experienced by ordinary and reasonable members of the class of prospective purchasers (Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at [103] and [105]); and
whether a representation is puffery depends on the particular facts considered in the light of the ordinary incidents and character of commercial behaviour (Australian Competition and Consumer Commission v Henry Kaye and National Investment Institute Pty Ltd [2004] FCA 1363 at [122]).
(c) The conduct complained of by VESA
385 The conduct which VESA asserts is misleading or deceptive or likely to be misleading or deceptive is primarily identified in the third further amended statement of claim. As will emerge below, VESA also particularised some of that conduct. ROV complains, nevertheless, that additional conduct was raised for the first time in VESA’s closing address and had not been pleaded or particularised. ROV submitted that VESA should not be permitted to raise that unpleaded conduct. I will deal with that matter below.
386 The relevant conduct complained of by VESA relates to the following broad matters.
(a) certain representations made by ROV concerning its experience as an operator of eco tours (the experience representations);
(b) certain testimonials posted on ROV’s website (the testimonials);
(c) certain representations as to whether ROV is a charity or not for profit organisation (the charity representations); and
(d) ROV’s conduct in embedding the meta-tag “VESA” throughout various web pages on its promotional websites and taking out Google advertising words in a way which suggests that ROV is somehow connected with VESA (meta-tags and Google ad words representations).
387 I will now deal with each of those matters in turn.
(d) Representations concerning experience
388 VESA alleges misleading or deceptive conduct in respect of various representations made on the ROV website, ROV Facebook page and in various emails. It also complains about a video which was linked to ROV’s website and Facebook page. I will deal with VESA’s complaints about the video before turning to deal with each of the other individual representations about which it complains. In respect of each individual representation, I shall set out its terms, summarise the parties’ arguments and then set out my analysis and findings.
(i) Experience representations on the promotional video
389 The promotional video was not created by ROV, but by Wildlife ACT, which is a South African based business which conducts wildlife conservation tours in South Africa. ROV engaged Wildlife ACT to conduct the wildlife conservation component of ROV’s South African program. VESA complains that both the video and other material on the ROV Facebook page which provided a link to the video, misrepresented to people interested in participating in a ROV program that:
(a) ROV had experience conducting volunteer eco tours; and
(b) the persons pictured in the video had attended a ROV program and were recommending it to others.
390 VESA says that the same misrepresentations were conveyed if a person accessed the video by following the link on ROV’s website to the video.
391 According to ROV, the relevant question concerning the video is whether there is a real or not remote chance or possibility that a significant number of persons in the relevant class viewing the video would conclude that the persons depicted in it were actual ROV volunteers and that ROV had personally conducted the program shown in the video.
392 As noted above, I consider that the relevant consumer class comprises university students (and their parents or guardians) who are interested in undertaking eco tourism activities. I do not consider that it is likely that a not insignificant number of persons in that class who viewed the video would form the impressions alleged by VESA. I accept ROV’s submission that, if such persons thought about the question at all, they are likely to assume that the video portrays activities which are likely to be carried out in the relevant part of an ROV tour to South Africa. But I see no reason why such a person would assume that ROV itself was personally supplying the wildlife conservation component of the program, as opposed to outsourcing it to a local sub-contractor, such as Wildlife ACT. All the more so when it should be assumed that reasonable members of the relevant class would be aware that ROV is an Australian-based company.
393 Nor is it likely in my view that a not insignificant number of the members of the relevant class would consider that the persons depicted in the video were actual ROV volunteers, as opposed to being volunteers participating in wildlife activities as a component of a program such as that offered by ROV. In other words, I consider that persons in the relevant class viewing the video would have an expectation that the events and persons depicted in the video are representative of what they can generally expect to experience if they (or a person for whom they were responsible) were to participate in the wildlife component of an ROV program in South Africa. The same is likely to be the case with a VESA promotional video, because it too outsources its overseas activities to local service providers.
(ii) Other individual experience representations
394 I will now deal with each of the other individual representations which VESA says are either misleading or deceptive or likely to mislead or deceive.
(i) ROV website statement in March 2011 that: “In addition our volunteers often make lifelong friendships while involved in experiences that are invaluable in clarifying and assisting in future career goals”.
395 VESA contends that this statement is misleading and deceptive (or likely to be so) in circumstances where ROV was only set up in August 2010 and did not conduct any tours until May 2011.
396 The respondents’ primary submission is that VESA should not be allowed to complain about this representation because it was not pleaded in the third further amended statement of claim, nor was it identified as conduct which was complained of in further particulars provided by VESA on 27 April 2012 following a request by the respondents’ solicitors in early December 2011.
397 VESA’s response to this pleading point was a little difficult to follow. The primary arguments which it appears to rely upon are:
(a) the absence of particulars is not determinative because the respondents were provided in advance of the trial with outlines of evidence and bundles of documents;
(b) the tender of evidence by VESA without objection by ROV overcomes any lack of particularisation; and
(c) in any event, even if the applicant is precluded by lack of particularisation from relying on the three additional representations, they are relevant to the issue of discretion and the grant of injunctive relief.
398 As an alternative to their pleading objection, the respondents also say that if VESA is permitted to complain about this particular representation, the relevant statement is an “aspirational statement about future friendships that may (or may not) come about from participating as a volunteer on an eco tour”. Literally, the statement cannot be true or false until a volunteer dies because only then would it be known whether the friendship was “lifelong”. The respondents submit that a hypothetical person in the relevant class reading the statement would quickly and instinctively appreciate that it is one not to be taken literally, but involves “typical marketing language” and is a mere “puff”.
399 In my view, VESA should not be permitted to raise a complaint regarding this aspect of ROV’s website in circumstances where the conduct complained of was not identified in its pleadings. Nor was it particularised notwithstanding that, in a letter dated 1 December 2011, ROV’s solicitors specifically requested particulars in respect of the relevant paragraphs of the pleadings.
400 Relevant guidance on this matter was provided by the Full Court in Betfair Pty Ltd v Racing New South Wales (2010) 189 FCR 356 at [49] to [60] (this aspect of the matter was not taken on appeal to the High Court). The Full Court outlined the relevant principles in the following paragraphs:
Pleadings provide a structure for a proceeding for the purpose of the attainment of justice. The pleadings identify the material facts upon which the parties rely and the issues the parties seek to have determined. Because the pleadings require the parties to identify all material facts and issues, the pleadings provide the benchmark for discovery before trial and the admissibility of evidence at trial. Parties are required to plead the material facts upon which the party relies and the issues which that party seeks to have resolved for the further purpose of giving the opposing party fair notice of the case to be met at trial thereby minimising any risk of injustice by taking the opposing party by surprise. Pleadings incidentally are the record of the proceeding for the purpose of any subsequent arguments relating to res judicata or issue estoppel or any like issue.
At trial a party is entitled to have the opposing party confined to that party's pleadings because the first party is entitled to come to trial to meet only the issues raised on the pleadings. However, if the first party does not seek to so confine the opposing party but allows the other party to raise other material facts and issues for the determination of the Court, then in our opinion the Court is permitted and possibly obliged to decide the proceeding on the further material facts and issues raised and addressed at trial: Banque Commerciale at 296-297; Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in Liquidation) (1916) 22 CLR 490 at 517. If it were otherwise, the party who has failed to plead all of the material facts or issues upon which the party's case relies, but has brought those material facts or issues to the attention of his or her opponent at trial, would be denied natural justice if at the end of the trial the Court decided the proceeding on the pleadings without notice to that party. The first party in those circumstances would have been denied the opportunity to apply to amend those pleadings so as to formalise what was in fact addressed at the trial.
Pleadings are a means to an end and not an end in themselves (Banque Commerciale per Dawson J at 292-3). As early as 1916 Isaacs and Rich JJ said, in Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in Liquidation) (1916) 22 CLR 490 (at 517):
Undoubtedly, as a general rule of fair play, and one resting on the fundamental principle that no man ought to be put to loss without having a proper opportunity of meeting the case against him, pleadings should state with sufficient clearness the case of the party whose averments they are. That is their function. Their function is discharged when the case is presented with reasonable clearness. Any want of clearness can be cured by amendment or particulars. But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest.
401 In my view, none of the matters raised by VESA which are summarised in [397(a) to (c)] above provides an adequate response to its failure properly to plead or particularise all the conduct which it now alleges contravened s 18 of the ACL. The respondents were entitled to be given prior notice of the particular representations complained of. VESA amended its pleadings on numerous occasions, including during the course of the hearing and in respect of its case alleging misleading or deceptive conduct. The case was eventually conducted on the basis of the third further amended statement of claim. As noted above, some of VESA’s proposed amendments were rejected, but it had every opportunity to seek leave for any proposed amendments. It never sought leave to amend in respect of this (and some other) representations.
402 In my view, no significance attaches to ROV’s failure to raise any objection to the tender of documents in a case such as this where hundreds of documents were tendered by VESA (many of which were not ultimately relied on). The respondents should not have to seek to divine for themselves from a vast body of such materials which representations are contested. Litigation should not be approached on the basis that it is akin to looking for a needle in a haystack.
403 Even if I had been minded to allow VESA to rely upon this unpleaded representation, I would have rejected its case. I substantially agree with ROV’s alternative submissions concerning this representation. In particular, I agree with their submissions that the representation ought to be regarded as marketing puffery, as is reflected in much of the language used, such as “often make lifelong friendships” and “involved in experiences that are invaluable in clarifying and assisting in future career goals”. Those concepts are inherently nebulous and are virtually incapable of objective substantiation (see Jainran Pty Ltd v Boyana [2008] NSWSC 468 at [117] per Bryson AJ and Procter & Gamble Australia Pty Ltd v Energizer Australia Pty Ltd [2011] FCA 1347 at [168] to [172] per Bennett J). The reference to “our volunteers” is, on one view, literally false because ROV had not at that time conducted any programs and thus had no volunteers. In my view, however, the statement has to be assessed as a whole and it is very much in the nature of puffery. In this particular context, I do not consider the reference to “our volunteers” to constitute a sufficiently definitive statement as to cause the representation to lose its character as mere puffery (see Procter & Gamble Australia Pty Ltd v Energizer Australian Pty Ltd [2011] FCA 1347 [168] to [172] per Bennett J). In assessing whether the appearance of the phrase “our volunteers” in this particular context is likely to mislead and deceive, I consider that it is also relevant to bear in mind that Tom Jowett and his two companions did undertake some volunteer work at a local community school as part of the dry run which was conducted in South Africa in August-September 2010.
(ii) ROV Facebook page statement on 11 March 2011 that: “See what our volunteers have to say about our program and get a feel for the wildlife conservation work you could be undertaking”.
404 VESA says that this statement, which appeared on the ROV Facebook page, directed any reader to the video which showed Wildlife ACT’s experience, not ROV’s experience. The video was also linked to the ROV website. VESA emphasises that, as at March 2011, ROV had not had any volunteers at all and thus there were no volunteers who could say anything about ROV’s program involving wildlife conservation work. VESA also says that ROV adduced no evidence to establish that the video was used with Wildlife ACT’s consent, nor was there any evidence of Wildlife ACT’s experience.
405 The respondents say that Simon Morgan from Wildlife ACT authorised ROV to use Wildlife ACT’s video. They deny that the statement carries the impression suggested by VESA. Rather, they say it should be regarded as a statement of opinion about the Wildlife ACT conservation part of ROV’s program which Tom Jowett and his two companions had personally experienced when he was in South Africa in August and September 2010 and which ROV volunteers could expect to experience in the second week of ROV’s South African tour, when the wildlife conservation component took place.
406 In my view, members of the relevant class are unlikely to form the impressions alleged by VESA in respect of the video. I accept the respondents’ evidence that ROV had authority to use Wildlife ACT’s video. That video depicted the sorts of activities which a person could expect to experience on the wildlife conservation part of an ROV South African program, which ROV had sub-contracted to Wildlife ACT. Tom Jowett and his two companions personally participated in such a tour as part of the dry run conducted by them in South Africa in August-September 2010.
407 The reference to “our volunteers” is literally incorrect because ROV had not conducted any tours at that time. But there are two reasons why I do not consider that this false aspect of the statement is sufficient to render the statement as a whole likely to mislead or deceive. First, I consider that the statement needs to be read as a whole. A hypothetical member of the relevant class would not dissect the statement in the manner suggested by VESA. Viewed reasonably and as a whole, I consider that such a person would regard the statement as a whole as involving puffery. The statement is likely to be seen by members of the relevant class as involving typical marketing language which exhorts them to look at the video to obtain an overall impression of what they could reasonably expect to experience if they participated in the wildlife conservation component of the ROV South African program.
408 Secondly, while it is true that the participants on the wildlife tour depicted in the video were not ROV volunteers, they were participants on a Wildlife ACT tour and that company had been engaged by ROV to conduct similar tours for it. In this particular context, I consider that the incorrect reference to “our volunteers” is insignificant and insufficient to make the representation as a whole one which is likely to mislead or deceive (see Australian Competition and Consumer Commission v Lovelock Luke Pty Ltd (1997) 79 FCR 63 at 68 per Lockhart J and Australian Competition and Consumer Commission v Unilever Australia Ltd (1997) 40 IPR 354 at 387-8 per Mansfield J).
(iii) Email dated 20 October 2010 from Tom Jowett to an individual inquiry: “We have been involved in programs in Ecuador on the Mekong River and on the islands of Fiji...”.
409 VESA points out that this email was sent in direct response to a request by a parent (called “Wendy”) for information about ROV in circumstances where her son had recently applied to join its South African program. VESA denies that the representation is mere puffery. VESA emphasises that, as at 20 October 2010, ROV had not conducted any tours in Ecuador, the Mekong River, or elsewhere and that no director or person employed by ROV had conducted any such tours. VESA draws attention to the fact that much of Tom Jowett’s email appears to be a template email that was sent out in response to inquiries, suggesting that it may have had a wider circulation than this single email. VESA also emphasises that Tom Jowett accepted that there were some inaccuracies in the email.
410 The respondents say in response that the reference to “programs in Ecuador on the Mekong River” is clearly a typographical error (or “Tomism”, which is a term coined by Tom Jowett’s family to describe his malapropisms), and was intended to be a reference to “programs in Ecuador on the Amazon River”. They say that any reasonable reader of the email would have appreciated the obvious geographic misdescription. Neither VESA nor ROV has ever run volunteer programs to the Mekong River. In any event, they emphasise that the email was sent by Tom Jowett while he was in North America. Accordingly, the relevant conduct occurred outside Australia for the purposes of ss 5(3) and (4) of the CCA and can only be relevant to the exercise of discretion under s 80 TPA, s 80 of the CCA or s 232 of the ACL.
411 In addition (and as noted above), the respondents say that in respect of both this statement (and other representations dealt with below) a key issue is whether the use of the words “we” or “our” is a reference to the legal entity which is Reach Out Volunteers Pty Ltd and its relevant experience or whether those pronouns also refer to particular individuals who are associated with ROV. They say that, as matter of logic, it can only be a reference to the individuals who undertake ROV’s business activities and not just the experience of the corporate entity. They accept that the ROV business only became operational in August 2010 and that the relevant legal entity was not incorporated until 26 August 2010. They rely, however, on the fact that Tom Jowett had been involved in the volunteer eco tourism business since August 2009 when he became a contract recruiter for VESA. He recruited for VESA in Canada in late 2009 for volunteers wishing to attend programs in Ecuador and Fiji in 2010. When Tom Jowett subsequently worked as VESA’s associate marketing director from April to August 2010, he developed material to be used in conjunction with those programs, such as emails to participants, and, to that extent, was “involved” with those programs. The respondents also say that the use of the word “involved” in the website statement carries with it a degree of puffery.
412 While there may be some force in the respondents’ submission, one difficulty is that Tom Jowett accepted in cross-examination that the claim made in his email that “we have been involved in programs… on the islands of Fiji” was wrong. In making that admission, it is plain that he accepted that when he used the word “we” in this particular email he was intending to refer specifically to ROV. That is perhaps understandable in circumstances where he was responding to an email which sought information about ROV and was headed “questions about your organisation’. In my view, that is also the way in which it could be expected that the recipient of Tom Jowett’s email would understand the meaning of the word “we” in this context. Independently of Tom Jowett’s intention, I consider that the representation is likely to mislead or deceive.
413 Tom Jowett also accepted in cross-examination that he had included the particular statement in his reply email because he wanted to give the impression that ROV had more experience at the time than it really had. He sought to explain his conduct by saying that he was under a good deal of pressure and stress at the time and was trying to prove to his family that he could make a success of the ROV business. He said he was not “proud” of his conduct and that he was not “happy about that”. Although Tom Jowett’s intention is not an essential element in establishing a contravention of s 18 of the ACL, it is relevant to the extent that it accords with the finding that, viewed through the eyes of the inquirer and recipient of the email, Tom Jowett’s statement is likely to mislead or deceive.
414 In finding that the representation is likely to mislead or deceive I place particular emphasis on the context in which the representation was made. It was made in direct response to an inquiry by an interested parent who sought additional information about ROV in circumstances where her son had recently applied to participate in an ROV South African tour. However, the reference in the statement to “programs in Ecuador on the Mekong River” is a clear mistake and is likely to have been so understood by the inquirer or a hypothetical reasonable person in the inquirer’s shoes. As Smart J observed in O’Shea v Sullivan (1994) ATPR 46-124 at 53,604, s 52 of the Trade Practices Act 1974 (now replaced by s 18 of the ACL) did not subsume the law of negligence and “[n]ot every careless mistake that is made in carrying out a task or a process or service amounts to conduct that is misleading or deceptive or likely to mislead or deceive”. I would exclude that part of the representation from the finding of misleading conduct.
415 Although some aspects of Tom Jowett’s statement are likely to mislead or deceive, I accept Tom Jowett’s evidence that the relevant email was sent by him while he was in North America. VESA did not challenge that evidence.
416 In these circumstances, although I consider that part of the relevant representation is likely to mislead or deceive, the relevance of that finding is limited to the issue of whether or not injunctive relief should be granted in respect of contraventions of s 18 of the ACL in respect of other representations which were made in Australia. I will deal with that issue below.
(iv) Email dated 12 December 2010 by Tom Jowett to individual inquiry: “It does look great and everyone involved in this part of the program really gets a buzz out of even the simple tasks like tracking and counting endangered species”.
417 This email was sent by Tom Jowett while he was in Australia on 12 December 2010 in apparent response to comments which he had received from various persons who had seen the Wildlife ACT video, including from a person called “Latonya”. The terms of Latonya’s comments were not in evidence so the statement made in Tom Jowett’s reply email cannot be read in their full context. In particular, there is no evidence to support a finding that Tom Jowett’s email was sent in direct response to a request for further specified information about ROV, as opposed to responding to positive comments about the video. Merely because Tom Jowett attached to his email a brochure about ROV does not support any inference being drawn as to whether the inquirer specifically sought information about ROV. In other words, the context in which Tom Jowett included the statement which is now complained of is different from other representations complained of where information was provided about ROV in direct response to specific requests received from inquirers.
418 VESA contends that the statement made by Tom Jowett in his email implies that there were past participants in the ROV program when in fact no such program had taken place. VESA further complains that the inquirer was referred to the ROV website to view the video (which is the subject of separate complaints because of inter alia allegedly false testimonials).
419 This is another representation which is objected to by the respondents on the basis that it was neither pleaded nor particularised. As to that objection, VESA raises the same arguments as outlined in [397] above. In addition, it says that the email dated 12 December 2010 was “particularised” because it was discovered together with another document containing a separate representation which was particularised (i.e. representation (v) below). In my view, VESA should not be permitted to raise this particular complaint in those circumstances. For reasons given above, I do not accept VESA’s submissions which seek to overcome this deficiency in the presentation of its case. And merely because the email was discovered along with another representation which was particularised does not overcome the respondents’ objection that they were not given proper notice of VESA’s claim.
420 In any event, I would reject the complaint. VESA says that the email implies that ROV had conducted programs previously in South Africa, when that was not the case as at 12 December 2010. I do not accept that it is likely that the recipient of the email would have been misled or deceived in this regard. As noted above, the video depicts what happened on a Wildlife ACT conservation tour. ROV proposed at that time that Wildlife ACT would provide the wildlife conservation component of its South African program. Tom Jowett, together with his two companions, had participated in the Wildlife ACT tour as part of the dry run. Without doubt, there is an element of marketing hyperbole in the claim that “everyone involved in this part of the program really gets a buzz…”. But it was never put to Tom Jowett that he personally had not got “a buzz” out of the wildlife activities he experienced when he personally participated in the Wildlife ACT tour in August-September 2010. For these reasons, I do not consider that the representation is likely to mislead or deceive.
(v) Email dated 14 December 2010 from Tom Jowett to individual inquiry: “This is our first year in South Africa however we have been involved in delivering programs such as this in Ecuador and in Fiji. These programs have been underway for three years now. Yes, there are many people who have been on our trips. All of them are young students such as yourself and we do not give out their names and contact details. If you would like someone to contact you I am sure this can be arranged…”.
421 VESA emphasises that this email was sent in response to a direct email sent to both ROV’s and Tom Jowett’s email addresses inquiring as to how long the organisation had been established and whether there were any people who had previously gone on the tour to South Africa whom the inquirer could contact. The response came from ROV’s email address, but the author is not identified in the email.
422 VESA also emphasises that, as at 14 December 2010, ROV had never conducted any tours in Ecuador, Fiji or anywhere else and that it never conducted tours in Ecuador or Fiji at any time. VESA adds that no director or person employed by ROV as at 14 December 2010 had attended or conducted any tours to Ecuador or Fiji. ROV had only been incorporated since 26 August 2010 and its programs had not been “underway for three years”. Moreover, no one had been on an ROV program at that time, let alone “many people”. VESA draws attention to the fact that Tom Jowett never attended any VESA tours and that he also accepted in cross-examination that the following statements in the email were incorrect:
(a) “… we have been involved in delivering programs such as this in Ecuador and in Fiji”;
(b) “These programs have been underway for three years now”; and
(c) “Yes, there are many people who have been on our trips”.
423 VESA also points out that, although Ms Aylett was involved in the dry run in August 2010, the respondents admitted in a notice to admit dated 18 May 2012 that Ms Aylett had never participated in an ROV ecotour in any capacity on or before 11 March 2011. VESA contends that that admission is inconsistent with the proposition raised by the respondents during the hearing to the effect that the dry run held in South Africa in August 2010 amounted to a ROV program.
424 In response, the respondents say that the early part of the email is true in the sense that ROV was in its first year in South Africa because it had conducted a dry run of its activities in August 2010 and that it had commenced recruiting in North America in October 2010 for volunteers to participate in the programs scheduled for May 2011. They also repeat their submission as to why they say it was not false for Tom Jowett to state that “we had been involved in delivering programs such as this in Ecuador and Fiji”. They accept that those programs had only been underway for just two and not three years.
425 In my view, some of the statements made in this email are likely to mislead or deceive. First, it is notable that the email was sent in direct response to some quite specific questions raised by the inquirer, who had attended an information session at San Diego State University and stated that she wanted to find out more about the ROV program before she placed a deposit. One of her specific inquiries related to how long ROV had been established and for how long it had been sending students to do humanitarian work in South Africa. In my view, this provides important context in which to assess whether or not the statements are likely to mislead or deceive that inquirer.
426 Secondly, as noted above, Tom Jowett accepted in cross-examination that three aspects of the email were incorrect. The overall impression conveyed by those three incorrect statements is that ROV and persons associated with it had greater experience than in fact was the case in delivering similar programs in Ecuador and in Fiji. Tom Jowett’s involvement with VESA in delivering programs to Ecuador and Fiji was relatively limited. He personally had not participated in any VESA tour to either of those countries. The email was also incorrect in saying that the programs in Ecuador and in Fiji and been underway for three years when in fact the period was two years. Looked at in isolation this inaccuracy might be excused as trivial or insignificant, but I do not consider that such leniency is appropriate in the circumstances here. That is because it is reasonable to infer that the author’s purpose in making these statements was to embellish ROV’s actual experience with a view to reassuring the inquirer. The same can be said for the false claim that “many people have been on our trips”, which was plainly intended to give the impression that many volunteers had participated in ROV’s programs. In my view, the inquirer would have understood those statements to mean that which was evidently intended by the author. They are likely to mislead or deceive.
427 It is important to note, however, that there is no evidence establishing that Tom Jowett was the author of this email. When he was asked in cross-examination whether he knew who wrote the email, he said: “No, I don’t”. I accept that evidence.
(vi) Email dated 19 January 2011 from Tom Jowett’s mother to “Sandra Moore”: “We have been involved in these programs for three years… I have attached our testimonials page. We have a number of ROV Ambassadors who are past volunteers… If you wish you can contact Matt Cork at [email address provided]. He will be happy to discuss his experiences with you.”
428 VESA points out that, as at January 2011, ROV had only been incorporated for a few months and it did not have any past volunteers at all, let alone “a number of them”. Further, it says that Matt Cork has never participated as a volunteer on an eco tourist program operated by ROV. It also complains that the attached testimonials page contained false testimonials.
429 In response, ROV submits that the email complained of was sent to a fictitious person, namely “Sandra Moore” who in fact is Ms Luciani and who sent her email inquiry for the purpose of entrapping ROV. The representations complained of were made to an individual and not to a class of individuals. The respondents contend that, because Ms Luciani had actual knowledge that ROV had begun its business in August 2010, she could not have been misled nor was it likely that she would be misled by anything in the email or its attachments.
430 I accept the respondents’ submissions in respect of this matter. Ms Luciani was not misled or deceived (or likely to be so) by the representations or testimonials complained of because of her own personal knowledge of the relevant matters. The challenged representations were made to her directly and specifically as an individual inquirer.
(vii) ROV general mail out by email dated 24 January 2011, including to “Sandra Moore”: “In the past, many volunteers have indicated that they would have loved to spend more time really getting to know the African bush, and implement their newly learnt skills in the field.”
431 VESA complains that this representation was false because, as at 24 January 2011, ROV did not have any past volunteers, let alone “many volunteers”.
432 ROV objects to VESA’s complaints regarding this representation on the basis that the representation was not pleaded or particularised. I uphold that objection for similar reasons as given above. The respondents also say that the statement is a more puff.
433 If VESA had been permitted to complain about this representation, I would have rejected it on the basis that the statement as a whole is a mere puff. The introductory words (i.e. “In the past, many volunteers have indicated that…”) introduce elements of factual detail, namely that ROV has had volunteers in the past and many of them had indicated that they wanted to spend more time in South Africa. Those factual claims would be false if Tom Jowett and his two companions had not participated in the dry run. Taking into account the fact that those three individuals did participate in the dry run as if they were volunteers (including undertaking volunteer work at a local community school), together with the context in which the statement is made, which is unashamed marketing with a view to encouraging students to extend their tour in South Africa, I accept that the statement as a whole is puffery. I also consider that it is likely to have been so viewed by members of the relevant class. The overall character of the statement as a puff is reinforced by the presence in the statement of phrases such as “many volunteers”, “would have loved to”, “really get to know” and “implement their newly learnt skills in the field”.
(viii) Email from Tom Jowett’s mother dated 28 January 2011 to individual inquiry as to ROV’s experience in running these volunteer programs (in terms of how many people, how many trips, etc): “We have been involved in these programs for three years some in South America and some in the South Pacific… Each individual program takes about 20 students and we run programs in each location twice a year… that should give you some idea of numbers.”
434 The statements complained of were made in response to a direct inquiry from a female in Canada who emailed ROV asking for background information on the organisation, including how long ROV had been working in South Africa and how much experience it had in running volunteer programs in terms of people and trips. She made it clear in her inquiry that she wanted to ensure that the tour would run smoothly.
435 VESA complains that the statement is likely to mislead or deceive because, as at 28 January 2011, ROV had never conducted any tours in South America, the South Pacific or elsewhere. It also complains that the information provided to the inquirer represented that ROV had run eight programs in each location twice a year, involving approximately 20 students each time, which inferred that it had had 960 past participants, which was false and misleading. VESA also submits that Tom Jowett’s mother, who authored the email, must have known that these statements were false and that this bears upon the Court’s discretion to grant injunctive relief.
436 In response, the respondents say that VESA’s complaint ignores other relevant parts of the email. In particular, the respondents emphasise the importance of the following matters which were set out in the email after the reference to “South Pacific”:
We are developing a new program at present in central Asia. The programs take a long time to come online. As you can imagine, from concept to students actually on the ground can take over one year’s planning and implementation. Always the hardest part is finding the right people on the ground to work with in the new location.
437 The respondents say that, having regard to the omitted text, it is wrong to conflate the first part of the extract (which relates to the statement that “we have been involved in these programs for three years”) with the second part (which relates to “each individual program takes about 20 students…”). ROV submits that the first statement is not misleading or deceptive because Tom Jowett was “involved” with volunteer programs in the three years 2009, 2010 and 2011. The first two of those three years related to his work with VESA, and he then worked with ROV at the end of 2010 and in 2011. The respondents also say that the second part of the representation, when read in context with the sentences omitted by VESA, refers to future tours under the then proposed ROV program in central Asia.
438 In my view, VESA’s complaints should be rejected for the following reasons. First, although it is notable that the inquirer raised quite specific questions concerning ROV and its experience of conducting tours to South Africa, the email in reply is not directly responsive to those questions. In particular, it is notable that the email contains no explicit or implicit reference to ROV having been involved in any previous programs in South Africa. Rather, the early part of the email refers to involvement in “these programs” for three years, some in South America and others in the South Pacific. Secondly, as the respondents point out, VESA’s complaint omits to take account of other aspects of the email which are relevant to the overall context. After referring to programs in South America and the South Pacific, reference is then made in the email to the development of a new program in central Asia. Further information is then provided which plainly is directed to the development of programs at a new location. It is in that context that reference is then made to student numbers.
439 In my view, the statements made, when viewed in their entire context, are sufficiently ambiguous to lead to a conclusion that it is unlikely that the inquirer, who can be expected to act reasonably and to look after her own interests, would interpret the statements as referring directly to South Africa, notwithstanding the specificity of her questions. In effect, her questions were side-stepped by the information provided in the reply email without any suggestion being made that the information given related specifically to South Africa and not to the other programs elsewhere as mentioned in the email.
(ix) Email dated 28 February 2011 from Tom Jowett to individual inquiry from a parent about when ROV started running the program in Zululand and how many 14 day tours it had run as well as information about team leaders and comments from people who had participated in the program: “Reach Out ran the first program in South Africa in May of 2010. We have run four programs in Zululand… Each group has three team leaders. Each team leader is selected by us and must have been on a prior program… The team leaders for this set of programs will be 1. Rachel Ballantyne who is a resident of Brisbane in Australia and who has led numerous programs in Equador as well as Fiji over a number of years; 2. Victoria Doyle who has been a resident of St Lucia in South Africa for the past 6 years and was a leader in the South African program of 2010. 3. myself, I am a resident of Sydney Australia and was involved in the programs in South Africa in 2010 and was also instrumental in the development of the Fiji program.”
440 VESA emphasises that the information provided in this email was in direct response to a detailed inquiry made by a father about when ROV started running its program in rural Zululand. His daughter was proposing to participate in ROV’s South African program. The father asked how many 14 day tours ROV had run there. He also sought information about team leaders and comments from people who had experienced the program. VESA complains that many of Tom Jowett’s statements in reply are false.
441 As at 22 February 2011, ROV had not conducted any tours at all and it had no team leaders who had been on any prior programs. VESA also points out that Rachel Ballantyne was employed by ROV in February 2011 and that she had previously worked for VESA as a recruiter from April 2010. In early 2010 she had attended a VESA tour as a volunteer but she had not led any programs in Ecuador for VESA or any other organisation. Her only experience conducting tours was as a junior tour leader in Fiji for a few months from November 2010 until 13 February 2011 for VESA. VESA further complains that Tom Jowett had not been involved in any programs in 2010, nor had he attended or organised any tour at that stage. It further complains that ROV did not have a Fiji program and that Tom Jowett was not involved in the development of the VESA Fiji program. VESA further points out that despite the inquirer confronting Tom Jowett with the false information provided in his emailed response, Tom Jowett did nothing to ensure that ROV stopped misrepresenting itself to the public.
442 In response, the respondents draw attention to the fact that Tom Jowett frankly and unhesitatingly accepted that there were inaccuracies in his email. It accepts that ROV did not run its first program in South Africa until August 2010 (if the dry run is to be regarded as such a program). It also points out that Ms Ballantyne had been a (junior) tour leader in Fiji, but not in Ecuador. They say that Tom Jowett had been involved in a relevant sense in VESA’s Fiji program, but they accept that he was not “instrumental” in the development of that program. Finally, the respondents contend that the misrepresentations in the email are not actionable because Tom Jowett sent the relevant email when he was in Canada and the relevant conduct therefore occurred outside Australia for the purposes of ss 5(3) and (4) of the CCA.
443 In my view, VESA has made out its case that these statements are likely to mislead and deceive. However, I also accept the respondents’ submission that the conduct is not actionable because it occurred outside Australia. I will deal below with VESA’s further proposition that the conduct is nevertheless relevant to the issue of the grant of injunctive relief.
(x) Email dated 20 September 2011 from Ben Jowett to individual inquiry: “ROV was established approximately two years ago by myself and my brother Tom Jowett”.
444 VESA points out that this statement was made in response to a direct inquiry seeking information as to when ROV was formed and who runs it. As at 20 September 2011, ROV had been incorporated for just over a year.
445 In response, the respondents draw attention to the fact that Tom Jowett honestly and unhesitatingly conceded in cross-examination that the business had only been conducted for about a year.
446 In my view, it is important to read that statement in the broader context in which it was made. The inquirer sent an email which was in the following terms:
i was just wondering where i can get information such as when your organisation was formed… who runs it… ect… (sic)
thank you.
In response, Ben Jowett sent the following email (I will emphasise the sentence about which VESA complains):
Hi Shauna,
Reach Out Volunteers (ROV) is a Non Government Organisation based in Australia. ROV operates in Australia, New Zealand, Canada, America, Great Briton (sic) and France. We run programs in South Africa, Thailand and Cambodia.
ROV was established approximately two years ago by myself and my brother Tom Jowett. Tom was the driver for the starting of the business as he had worked at another volunteer organisation and was not happy with the quality of programs and how little was being put back into the communities we work with. Tom has a degree in Business and has spent many years travelling across most of the globe.
To give you some background on myself. I’m one of three directors at ROV. Unlike my brother Tom, I am not nearly as extensive a traveller. I have a long background in business and have run my own financial planning firm for almost a decade now. When Tom began ROV, the integrity of what was delivered appealed to volunteers that went on the program and very quickly the number of people who were volunteering meant that Tom was unable to properly run his back office and attend to the volunteer programs. So I have taken on that role for him and we are now partners in ROV.
Volunteering has always been a passion of mine and when the opportunity came to get involved in ROV I jumped at it. I have not looked back. I love what we do and I do not miss the financial planning at all!
If you would (sic) to find out more about our programs and the work we do (sic). ROV publishes a number of videos on YouTube under Reach Out Volunteers.
I hope the above helps.
Regards
Ben Jowett B Bus, Dip FP, CFFB
447 In my view, when viewed in its context, the relevant representation is not likely to mislead or deceive. Although ROV had been in operation for only approximately 13 months when the statement was made, it is significant that the representation was qualified by the word “approximately”, which made clear to the inquirer that the information was in general, and not precise, terms. In circumstances where ROV was also in its second year of operation, I do not consider that the representation is likely to mislead or deceive.
(xi) Email dated 3 October 2011 from Tom Jowett’s mother to individual inquiry: “Reach Out Volunteers ha[s] been in operation for 2 years… our directors have been involved in business – including volunteer programs – for many years.”
448 VESA says that, as at 3 October 2011, ROV had been incorporated for just over one year. It also draws attention to the fact that Tom Jowett accepted in cross-examination that, contrary to the statement in the email, he had not been “involved in business – including volunteer programs for many years”.
449 VESA also submits that the representations made in this email (and also those made in the email the subject of sub-paragraph (x)) were made after the proceedings were commenced, thereby highlighting the need for injunctive relief to be granted.
450 In response, the respondents say that the representation complained of is ambiguous. They accept that the ROV business had been operating at that time for only approximately 14 months, but it had been in operation during part of both 2010 and 2011. They say that a hypothetical member of the relevant class would not have understood that representation to have been intended to convey an exact time period.
451 In my view, it is important to assess the representations the subject of VESA’s complaint in their broader context. The representations complained of were made by Tom Jowett’s mother in response to an email inquiry a few days earlier in which the inquirer indicated that she had applied to participate in a ROV Cambodian tour and wanted to ask some questions about the program before she paid a deposit. The inquiry was in the following terms:
Hello
I recently applied to be a volunteer for the Cambodian Siem Reap program. I was accepted into the July1st-July14th program and the next step for me was to put down a deposit to secure my placement.
I was wondering what the deposit amount was for the 2-week Siem Reap program as well as the deadline for making this deposit payment. In addition I had a few questions about the volunteer program before I made this deposit payment.
Would it be possible for me to contact any volunteers who have been previously involved with the Cambodian Siem Reap program? Also, I wanted to enquire into general information about the Reach Out Volunteer Program. How long ago was the Reach Out Volunteer Program initiated and which organisations do you collaborate with during the Siem Reap program? In addition to the 20 volunteers travelling for the Siem Reap program, how many group leaders/additional members will be travelling with the volunteer group? I also wanted to enquire as to how far the Kro Bei Riel village is from the nearest city center.
I was wondering if I could also get into contact with other Canadian students who have been accepted into this program.
Thank you for reading this email and I look forward to receiving a reply at your earliest convenience.
452 Ms Tainsh’s response was in the following terms (emphasising the sentences about which VESA complains):
Hi Kripa
Thanks for contracting us with your queries. I’ll do my best to assist.
The deposit required to secure your place on one of our programs is $400. There is no deadline to pay once you have been accepted by us however the sooner you pay, the more likely it is that you will secure a place on this program. Once a program is full it is closed – as is the case with our January programs.
Reach Out Volunteers ha (sic) been in operation for 2 years. We are an Australian based business and operate under the Australian company code. Our directors have been involved in business – including volunteer programs – for many years.
For 20 participants we would have one program leader and at least one – maybe two Team Leaders. You would have a Reach Out leader with you at all times once you arrive. We’re very excited about our project work in the Kro Bei Riel village and have been involved in establishing this project this year. The Kro Bei Riel village is about 30 minutes from Siem Reap and you will be staying in Siem Reap – with all of it access to modern health care facilities and quality food handling. Please email Tom Jowett on tjowett@rovolunteers.com for additional information on the program. He can also be contacted on + 1 520 906 8455.
Once you are a participant on the program we can offer to put you in contact with Canadians in your area who are also on this program for the purposes of fund raising and travel arrangements. This is done closer to the program commencement.
Hope this information helps. We’d love to have you join us as a volunteer.
Kind Regards
Kaye Tainsh BA, B Ed
Volunteer and Program Coordinator
453 Viewed in that broader context, I do not consider that the relevant representations are likely to mislead or deceive. As the respondents point out, the ROV business had been operating for two years, in the sense that its operations had begun in 2010 (with the dry run) and continued in 2011 and were ongoing as at the date of the reply.
454 Nor do I consider that the statements regarding the directors’ business experience is likely to mislead or deceive. It is true that Peter Jowett and Ben Jowett had been involved in business for many years as at that date. While there is no evidence that either of them had been involved in volunteer programs, it is the case that Tom Jowett had been involved with VESA in 2009 and 2010 and then with ROV from August 2010 up to and including the date of the email. The statement complained of did not assert that every one of the ROV directors had been involved in volunteer programs for many years.
455 VESA complains of various testimonials relating to ROV’s business as the supplier of volunteer eco tourism programs. The only testimonials complained about in the third further amended statement of claim relate to testimonials which appeared on either ROV’s website or Facebook page. During the course of the hearing, however, VESA also complained about additional testimonials. The respondents opposed VESA being able to rely on any unpleaded testimonials. I will deal with that matter further below.
456 The pleaded testimonials relate to statements made on the ROV website or Facebook page during the period from September 2010 to approximately June 2011. Those testimonials were in the following terms:
(a) “One of the biggest eye opening experiences of my life. The satisfaction of knowing that you have made a difference in the lives of others, is truly remarkable. I still can’t believe that I firstly had the opportunity to work with some of the happiest kids in the world. But that I also did hands on work with wildlife, still makes me smile. Ps Giraffes are the best”: Matt Cork
(b) “This was the best thing I have ever done. I want to go back tomorrow! I will certainly be back next year!”: Sara Bordina
(c) “I had the most amazing time in South Africa. I really enjoyed the two weeks. It was a lot more hands on than I had expected. I would highly recommend this program to anyone”: James Shaw
(d) “Life changing is the best description. I hope our 5 year reunion happens. It will be great to see the changes in the community and what all the team are doing then”: Jo Aylett
(e) “This was a great time. Such wonderful people in such a beautiful country. Thank you for this opportunity. I will never forget it”: Scott Baros
457 VESA also complains about various testimonials which appeared on ROV’s Facebook page, which then provided a link to the video (the video was also accessible through ROV’s website). VESA says that the video appeared on ROV’s Facebook page on or before 10 March 2011 and that the video contained a series of edited testimonials which were purportedly to be given by persons who had attended ROV tours. VESA’s specific complaints may be summarised as follows:
(a) a consumer viewing the video would be misled into believing that references to the tour organisers were references to ROV when in fact the tour organiser was Wildlife ACT;
(b) none of the people on the video who spoke about their experiences on the wildlife conservation tour had attended an ROV program;
(c) the Facebook page introducing the video, and the video itself, misrepresented to people interested in attending an ROV program that ROV had experience conducting eco tours and that persons depicted in the video were recommending the ROV program; and
(d) the same misrepresentations were communicated via the video being accessible on the ROV website.
458 VESA also sought to rely on some additional testimonials which had not been pleaded. First, VESA complains that ROV was responsible for publishing a flyer which was handed out at Australian universities during February and March 2011 which contained an allegedly false testimonial given by Ms Sara Bordina. That testimonial was in the same terms as that set out in [456(b)] above. Secondly, VESA complains about testimonials which were forwarded by email on 25 January 2011 to the fictitious “Sandra Moore”, a pseudonym for Ms Luciani. As noted above, the respondents object to VESA being permitted to raise these unpleaded testimonials.
459 The respondents do not deny that the pleaded testimonials were published by or on behalf of ROV. Indeed, they draw attention to the fact that, prior to the hearing, they admitted that Mr Matt Cork, Ms Sara Bordina and Mr James Shaw had never participated as a volunteer on an eco tour or volunteer program operated by ROV and that none of those three persons had ever participated in a ROV eco tour or volunteer program in any capacity on or before 11 March 2011. They also draw attention to the fact that Tom Jowett unhesitatingly conceded as much in cross-examination. They also say that Mr Baros had participated in the dry run in South Africa in August 2010 and undertook the activities that paying volunteers would be doing the following year. In those circumstances, they say that his particular testimonial is not misleading, deceptive or false.
460 The respondents also say that Ms Aylett had done volunteer projects in South Africa, including the activities during the dry run which ROV subsequently used for its volunteer programs in that country. They also say that the testimonials set out in [456(a) to (e)] above were removed from the ROV website in about May or June 2011 (which is shortly after the proceedings were commenced on 31 March 2011). They rely upon this conduct as relevant to the Court’s discretion concerning relief.
461 As to the video testimonials, the respondents repeat the submissions outlined above in respect of the experience representations which were made on the video. In other words, they say it is not likely that a significant or substantial proportion of members of the relevant class viewing the video or seeing the link on the ROV Facebook page or website would regard the persons depicted in the video as ROV volunteers and that ROV had personally conducted the actual program shown (see [391] above). They say that if such persons turned their mind at all to the question, it was far more likely that they would understand that ROV uses local contractors.
462 After noting that s 29 of the ACL came into force on 1 January 2011 and that there were no previous equivalents to s 29(1)(e) or (f) or ss 29(2) or (3), the respondents acknowledge that, to the extent that the relevant testimonials were published by ROV after 1 January 2011, the testimonials in [456(a) to (c)] inclusively, were contrary to fact.
463 VESA’s reply submissions on the subject of testimonials may be summarised as follows. First, as to the pleading objection, VESA repeats the sort of submissions outlined in [397] above, emphasising that no objection was taken to the tender of the unpleaded documents; that they are ROV documents and ought not to catch the respondents by surprise and that the additional matters are simply further instances of the false testimonials which were pleaded in the third further amended statement of claim. VESA adds that the additional publication of the false testimonials by ROV is relevant to the Court’s discretion concerning injunctive relief.
464 VESA also submits that the Court should not count Ms Aylett’s participation in the dry run because that was not a volunteer ecotour. It says further that the respondents had also admitted in answer to a notice to admit that Ms Aylett had never participated in a ROV eco tour or volunteer program on or before 11 March 2011.
465 Finally, VESA seizes upon the fact that the respondents ultimately accepted that certain of the testimonials were contrary to fact, yet they offered no explanation for their previous denial of the pleaded claims that the testimonials were false. They say that the respondents’ denials and then belated acceptance at the end of the hearing that some of the testimonials were contrary to fact weighs in favour of granting injunctive relief.
466 Although the evidence is unclear as to when the pleaded testimonials first appeared on the ROV website or Facebook page, screen shots dated 24 March 2011 of ROV’s website clearly show that each of the pleaded testimonials appeared on the ROV website on that date. Since that date is post 1 January 2011, the new provisions dealing with testimonials introduced by the ACL apply. As noted above, the respondents concede that the testimonials referred to in [456(a) to (c)] were false. Accordingly, I find that the publication of each of those testimonials was in contravention of s 29(1)(e) and (f) of the ACL.
467 As to the remaining two pleaded testimonials, these testimonials were given by Mr Baros and Ms Aylett respectively. As noted above, the new statutory provisions dealing with testimonials inserted by the ACL apply to these testimonials. The respondents carry an evidentiary onus to rebut the presumption created by s 29(2) that the testimonials are misleading. In my view, for the following reasons, they have done so. Evidence was adduced by the respondents to the effect that both Mr Baros and Ms Aylett accompanied Tom Jowett to South Africa in August-September 2010 and they all participated in the dry run, which included the activities offered by Wildlife ACT and volunteer work at a local community school. Similar activities would also be available to paying volunteers joining the ROV South African program in mid-2011. The testimonial attributed to Mr Baros relates to his experience of the wildlife component of the dry run. Given the fact that Wildlife ACT would also provide the wildlife conservation component of ROV’s future South African program, I do not consider that his testimonial is false or misleading.
468 For the same reasoning, I consider that the testimonial given by Ms Aylett is not misleading or deceptive. I reject VESA’s submission that that finding is precluded by the respondents’ acceptance in a notice of dispute dated 18 May 2012 that “Jo Aylett had never participated in a ROV eco tour or volunteer program in any capacity on or before 11 March 2011”. The dry run was not a “ROV eco tour of volunteer program”, but the wildlife conservation component experienced by Ms Aylett was broadly comparable to what might be expected in a ROV South African program in circumstances where the wildlife conservation component would be supplied by the same operator, namely Wildlife ACT. The same can be said in relation to the volunteer activity component of the tour. Different considerations arise in respect of the other three testimonials, which were given by persons who did not participate in the dry run and had no direct experience of participating in a wildlife conservation tour conducted by Wildlife ACT.
469 As to the testimonial by Ms Bordina which appeared on the A5 flyers distributed at Australian universities, it is in the same terms as the testimonial described in [456(b)] above, except that there was no photo of Ms Bordina. Nothing of significance attaches to that difference. Accordingly, my findings and reasons above in relation to that testimonial equally apply.
470 As to the other unpleaded testimonials described in [458] above, although I would otherwise be inclined to refuse leave to VESA to raise the unpleaded representations for similar reasons as apply to its unpleaded experience representations, different matters arise here because the additional testimonials duplicate some of the pleaded testimonials. Thus the respondents are not caught by surprise in relation to those additional testimonials. In the case of the testimonials forwarded by email to “Sandra Moore” on 19 January 2011, four of the testimonials are identical to those set out in [456 (a) to (d)] above, except that the photos of the testimonial givers do not appear. Although nothing of significance attaches to those differences, for the same reasons as given above, Ms Luciani (aka “Sandra Moore”), was not misled by the testimonials because of her subjective knowledge. Accordingly, I reject VESA’s unpleaded claims relating to the testimonials sent to Ms Luciani.
(f) The charity representations
471 VESA also complains about various statements which appeared on the ROV website, the Mosman Daily and in an advertisement posted by a body called “GlobaLove” on Facebook. The statements are said to be misleading or deceptive (or likely to be so) because VESA claims that they represent that ROV was a charity, which is false. I will deal with each of those matters in turn.
(i) The parties’ submissions summarised
ROV website pages, Mosman Daily article, GlobaLove advertisement
472 In its written submissions (which, as noted above, were said by VESA’s counsel to set out all its case in the sense that if a matter was not dealt with in the written submissions it had been abandoned), VESA identifies two different sets of statements on different pages. The first set of statements appeared on a page of the ROV website which had as its main heading “Why People Volunteer In Charitable Organisations”. Part of the information provided under that heading included the following material, about which VESA complains:
Why People Volunteer In Charitable Organisations
…
If you want to know the answer, here are some reasons why individuals offer their services to charitable organisations… However, this can be alleviated when you give your services to charitable causes because you can gain a sense of satisfaction, plus you can meet new friends. Overall, there are many reasons why you should volunteer. If you find such a passion within yourself, then you can contact the organisation in this website. This institution works on different programmes to help various communities. (Emphasis added).
473 A second statement concerning the issue of charitable status complained about by VESA is a statement which appeared on another page of the ROV website under the heading “Helping Preserve The Marine Environment”. The relevant statement complained of was in the following terms:
Helping Preserve The Marine Environment
….
If you want to actively participate in saving Mother Earth, you can join with a non-profit organisation like the one on this website.
474 Mr Allsopp gave evidence, which I accept, that both these pages had been inserted by him onto ROV’s website pages in around September 2011. The pages were inserted under a process described by Mr Allsopp as “search engine optimisation” (SEO). That process involves imbedding certain words throughout the ROV website so that when a person carries out an internet search for any of those particular words, the ROV website would appear as one of the top hits. Mr Allsopp described SEO as follows:
Search engine optimisation generally consists of encouraging lots of inbound traffic into a website, in order to make that website appear to be very popular under a particular search term or terms. This perceived popularity then causes Google to elevate the position of that website within its own index, so that you end up in a situation where you might have a website that is maybe positioned on – in position 100 on a Google search under a particular search term. Following this SEO – or search engine optimisation – work, the perceived popularity differentiates it from all the other sites in its category under that search term – and the final objective, really, is to get that website listed on page 1 of that Google search.
475 Mr Allsopp described the practical steps under SEO as follows:
We would create a number of pages, which are very heavily saturated with key words and phrases that we would like people to be searching for, that fit within our category for this website. Second to that, we would then network with lots of other websites, so that they have the opportunity to link to those pages, and obviously every person that clicks a link, and comes to those pages, is an inbound visitor. That’s – and – and – lots and lots of those together are what causes this surge in perceived popularity by Google. Google can see all of those links coming into the website.
476 One of the issues which arises in respect of the two web pages concerns the extent to which they were publicly accessible. I will deal with that issue below.
477 VESA also complains about a statement which appeared in an article in both the online and hard copy versions of the Mosman Daily on or around 1 March 2012. The article was accompanied by a picture of four people who were described as “fundraisers”, one of whom was Tom Jowett. The text of the article was as follows:
Ex-school mates in charity drive
A GROUP of alumni from SCECGS Redlands have banded together to throw a bumper fundraiser tonight to give much needed help to struggling communities throughout the world.
Daniella Richter, Samantha Houben, Nicolette Houben and Sarah Butler formed such a firm friendship while attending the Cremorne school. They attended university and travelled extensively overseas together.
Visiting less fortunate areas in South East Asia, South America and Europe, the girls’ travels inspired them to work for charity GlobaLove together.
Now they have joined forces with Reach Out Volunteers; another charity which originated at the school and will host tonight’s fundraiser as the first event in what they hope will be a long partnership.
Reach Out Volunteers founder Tom Jowett and Scott Barrosalso attended SCECGS Redlands.
…
Reach Out Volunteers provides volunteer support in Cambodia, South Africa, Mozambique and Peru. (Emphasis added).
478 The advertisement which appeared on the GlobaLove Facebook page was as follows:
We would love you to come and join us at the GlobaLove for Reach Out fundraiser. With a desire to help those in need. Reach Out organise incredible volunteer programs in developing countries around the world. Reach Out offers a life changing experience supporting villagers with vital infrastructure, assisting in local schools and working with endangered wildlife. The organisation is young and full of energy and they donate all of their funding to the communities they support.
The advertisement which appeared on GlobaLove’s Facebook page promoted a function which was to be held in Manly that night by both ROV and GlobaLove for the stated purpose of raising funds. Persons who accessed GlobaLove’s Facebook page were told that “100% of the proceeds go directly to the building and construction of community development projects in third world countries” and that it was hoped to raise enough funds to build a classroom in Cambodia, a new crèche in South Africa and another one in Peru. Readers were told that the cost of attending the fundraiser was $15.00 per person and that “fantastic auction and raffle prizes” would be available.
479 It is common ground that ROV is not and never has been a charity, nor is it disputed that donations made to ROV (as opposed to tour and other commercial fees) were passed on in their entirety to the community organisations with whom ROV was associated.
480 VESA submits that the Court should infer that ROV supplied information concerning its charitable status to the Mosman Daily and GlobaLove, yet ROV did nothing to rectify the inaccuracies in either the newspaper article or the GlobaLove Facebook page advertisement. Indeed, VESA says that the fact that the Mosman Daily and GlobaLove were mistakenly of the view that ROV is a charity is evidence that actual deception and confusion had arisen from ROV’s own misleading promotion of its business, including claims made by it on its website which was available to the public at large, including in Australia. VESA says that each of the charity representations was false at the time it was made and likely to mislead and/or deceive and that each of those representations was made in trade or commence to customers or prospective customers. Accordingly, for all these reasons VESA says that, in publishing the false representations, ROV engaged in misleading and deceptive conduct in contravention of both the TPA and the ACL.
481 The respondents’ arguments in respect of these matters may be summarised as follows. As to the representations made on the ROV website, they say that the relevant web pages were entered on ROV’s website by Mr Allsopp as part of the SEO work undertaken by him in September 2011. They say that the relevant pages were not to be read as such, but were intended to encourage third party search engines, such as Google, to increase the likelihood that the ROV website would be included in users’ search results. They emphasise that the relevant web pages were accessible only by following the “very small and subtle link at the bottom of each page of the ROV website”, which was marked “Worthwhile Reading”. They rely on Mr Allsopp’s evidence that the material was never intended to be read by people, but was there merely to increase the likelihood that the ROV website would be added to search engines. Tom Jowett also gave evidence that the words “marine environment”, which appeared in different colouring on the ROV website page, provided a link to sites other than ROV’s involving charitable organisations.
482 The respondents also submit that, even if those pages were read by the relevant audience (which they say is constituted by ordinary or reasonable university students, but which as I have already indicated ought to be enlarged to also include the parents or guardians of such students), such persons would not have concluded that ROV was representing in those web pages that it was a charity, charitable organisation, or not-for-profit organisation. Further, they say that the evidence consistently established that if ROV was asked to clarify whether the fees it received for tours were tax deductible, it always said “no”. They point out also that the applicant did not adduce any evidence establishing that any of those enquiries concerning tax deductibility resulted from an inquirer having read the relevant web pages. Finally, they say that even if that had been the case, it is insufficient that conduct caused confusion or wonderment for it to be misleading or deceptive: something more is required (citing cases such as Lego Australia Pty Limited v Paul’s (Merchants) Pty Ltd (1992) 60 FLR 465 and Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177).
483 As to the Mosman Daily article, the respondents point to the fact that there was no evidence that Tom Jowett had read the article or turned his mind to the question whether it might be misleading. Accordingly, his failure to have the material corrected could not be found to be deliberate. The respondents also drew attention to the fact that the ROV press release which was provided to the Mosman Daily in advance of the article appearing does not refer to ROV being a charity, charitable organisation or not-for-profit organisation. The press release contains a true statement to the effect that “every single cent that is donated to Reach Out Volunteers is spent on the projects they are involved with. No donation money is spent on admin”.
484 As to the GlobaLove Facebook page advertisement set out in [478] above, the respondents say that the reference to “they donate all of their funding to the communities they support” is not inaccurate, having regard to Tom Jowett’s evidence that all donations made to ROV went to the communities in which the volunteers work (as opposed to the fees paid by volunteers to ROV to arrange their tours, which fees were retained by ROV).
485 The respondents also say, to the extent that VESA is complaining of ROV’s silence in not correcting the inaccurate claims, there is no evidence that ROV deliberately refrained from initiating remedial steps (citing familiar cases such as Rhone-Poulenc Agrochimie AS v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 and Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31). Indeed, they point to the fact that Tom Jowett’s evidence was to the effect that when he read the GlobaLove advertisement he thought that “it seemed fine at the time”. Accordingly, any failure on his part to rectify the matter could not have been deliberate, as he did not believe the material to be inaccurate.
486 In reply, VESA makes the following additional submissions:
(a) merely because the relevant statements did not appear on one of the main pages of the ROV website is not to the point, because the statements could be accessed by the public (Mr Allsopp gave evidence that the page was publicly accessible and Ms Luciani was able to follow the links on the ROV website) and they were either misleading and deceptive or likely to mislead or deceive;
(b) representations of the kind found on the ROV website must have misled the Mosman Daily and GlobaLove into believing that ROV was a charity;
(c) Tom Jowett’s explanation that the statement in the GlobaLove advertisement was not inaccurate should not be accepted because the fact is that ROV is a business which is intended to make a profit and it only donates donations which it receives – not all of its funding – contrary to the suggestion made in the relevant statements;
(d) as to the article which appeared in the Mosman Daily, VESA relies on Tom Jowett’s evidence that he did read a copy of the article at about the time that it appeared and he accepted in cross-examination that the statement that ROV was a charity was incorrect; and
(e) Tom Jowett displayed an early predisposition towards a marketing style which creates an impression that organisations such as VESA or ROV were charitable in nature as a means of increasing sales. VESA relies in particular on the following extract from a business plan which was prepared by Tom Jowett in April 2010 for VESA:
No person that works within VESA should refer to VESA as a “Business”. We are a volunteer organisation. We must focus attention on the good that we do. The success of our business in critical but will follow from being successful in the volunteer work we promote. “Business” smacks of sales of goods and/or services in order to make a profit for the short and long term. “Organisation” can be charity or volunteer and does not have the same impact as the term business on students which (sic) should try and limit the term “Sales”. We need to look closely at our vocabulary and ensure that it is consistent with our core values and Position Statement.
487 I will deal in turn with VESA’s complaints regarding the statements on the ROV website pages, the statements which appeared in the Mosman Daily and the GlobaLove Facebook page advertisement.
488 In my view, the statement which appeared on the ROV website page under the heading “Why People Volunteer In Charitable Organisations” is likely to mislead or deceive. In my view, it is likely that a not insignificant number of persons in the relevant class reading this web page would be left with the distinct impression that ROV was a charitable organisation. That impression is strongly conveyed by the repeated references to “charitable organisations” and the impression is then heightened by the invitation to any person who has a “passion” to become a volunteer to “contact the organisation in this website”. A reasonable reader in the relevant class would understand that to be a reference to ROV, on whose website the statements appear. That understanding would be strengthened by the further reference to “[T]his institution works on different programmes to help various communities”. Further reinforcement of that impression would also be obtained by the following statement which appears at the top of the web page, alongside the ROV hand logo and the words “REACH OUT VOLUNTEERS”:
Delivering valuable infrastructure, teaching at the local school, making lifelong friendships, you will enjoy an unforgettable experience and bring lasting change to peoples’ lives.
489 For what it is worth (because ultimately it is a matter for the Court to determine the question whether statements are likely to mislead or deceive), it might also be noted that, while Tom Jowett initially resisted in cross-examination that the statements appearing on this web page imputed that ROV was a charitable organisation, ultimately he seemed to accept that he could see how the statements “could be misinterpreted”.
490 I also consider that the statements objected to by VESA on the other page of the ROV website, relating to the marine environment, are likely to mislead and deceive. In my view, a not insignificant number of people in the relevant class would read the particular page and obtain an impression that ROV is a non-profit organisation. That message is strongly conveyed by the particular statement at the end of the page which is set out in [473] above. The reference to joining “a non-profit organisation like the one on this website” would likely be read as referring to ROV itself. That impression is reinforced by the introductory words on the page which are juxtaposed with the ROV hand logo and the name of ROV. Those matters are identical to the information provided on the other page of the ROV website which is objected to. Again, for what it is worth, Tom Jowett said in cross-examination that he could “see how it [i.e. the reference] would be misinterpreted”. Significance also attaches to the fact that the relevant statements appeared on a page of ROV’s own website.
491 As noted above, one of the issues which arises is the extent to which the particular ROV web pages could be accessed by the public. The respondents emphasise the difficulty of obtaining access to the particular material. That difficulty was presented by the fact that, to obtain access to the relevant web pages, a reader had to detect and click onto what was described as “a very small and subtle link at the bottom of each page of the ROV website”, which was marked “Worthwhile Reading”. Mr Allsopp gave evidence, which I accept, that because SEO pages exist not to advertise a client or its products but “purely to drive traffic”, they tend to be hidden away. He explained, however, that by clicking onto the link “Worthwhile Reading”, a reader would be taken from the main website into the SEO pages. Mr Allsopp further explained that the reason why the link is so indistinct is because “these aren’t pages that we necessarily want the public to see”; their purpose is to increase inbound traffic.
492 Although it may be difficult to get access to the relevant ROV web pages, the evidence is clear that it is possible to do so. I accept Ms Luciani’s evidence that she obtained access to the relevant pages by following the links. In my view, the practical difficulties of accessing the pages does not bear upon liability, but it may have some relevance to discretion as to relief (see further [577] below).
493 I also accept that, by clicking onto the words “marine environment” (which formed part of the text objected to), a reader would be taken to other sites unrelated to ROV involving charitable organisations. Even so, in my view, that does not avoid the likelihood that a reasonable member of the relevant class reading ROV’s web page would be left with a strong impression that ROV itself is a charitable organisation.
494 Despite these findings, I do not accept VESA’s submission that these statements on ROV’s website were consistent with an alleged predisposition by Tom Jowett to adopt a marketing style which deliberately aimed to present organisations such as VESA or ROV as charitable organisations in order to increase sales. In particular, I reject VESA’s submission that the draft business plan prepared by Tom Jowett in April 2010 for VESA manifested such a predisposition. The thrust of that material was to emphasise the desirability of promoting VESA as “a volunteer organisation”, and not a business. Indeed, having regard to Mr Allsopp’s evidence as to how these particular web pages were created as part of SEO and Tom Jowett’s evidence generally in relation to those pages, I find that their likely misleading or deceptive effect was an incidental and unintended effect of employing SEO. This has relevance to the issue of relief (see further [577] below).
495 I will now deal with VESA’s complaints concerning statements in the Mosman Daily and GlobaLove advertisement.
496 The author of the Mosman Daily newspaper article erroneously described ROV as “another charity”. There is nothing in the press release material, which was prepared by Mr Allsopp on behalf of ROV and forwarded to the Mosman Daily, which indicates that ROV was responsible for that misdescription. Nor do I consider that it was incumbent upon Tom Jowett, upon reading the article, to take remedial steps in relation to the misdescription. The context in which the article appeared was the holding of a charity function that evening by both ROV and GlobaLove, from which all proceeds would be donated to “struggling communities throughout the world”. No evidence was adduced which casts any doubt on the genuineness of those statements. It is reasonable to infer that the author of the newspaper article erroneously assumed that, because all the proceeds of the fundraising event that night were to be donated to charitable causes, both ROV and GlobaLove themselves were charitable organisations. In my view, VESA has failed to establish any basis upon which liability for that misstatement should attach to the respondents.
GlobaLove Facebook page advertisement
497 The position is perhaps even clearer in relation to the relevant statement on the GlobaLove Facebook page. VESA’s case focused particularly on the statement made there to the effect that ROV donates “all of their funding to the communities they support”. There is no evidence to support a finding that Tom Jowett was responsible for that statement. Nor do I consider that he was under any obligation to have the statement corrected. I agree with his evidence that that particular statement is not inaccurate. That is because it would sensibly be read by a reasonable member of the relevant class as referring to ROV donating to the communities in which it works all funding received by it at the fundraising event which was being promoted on the GlobaLove Facebook page. This is all the more so in circumstances where, elsewhere on the GlobaLove Facebook page, there is an express statement that “100% of the proceeds go directly to the building and construction of the community development projects in third world countries”.
498 I also accept Tom Jowett’s evidence that when he read the material “it seemed fine at the time”. Accordingly, Tom Jowett did not believe at the relevant time that there was any problem with the statement. Accordingly, no liability can arise from the fact that he took no steps then to correct the material. I accept the respondents’ submission that there is no evidence that ROV deliberately refrained from correcting the advertisement. For these reasons, therefore, I reject VESA’s complaints regarding the article in the Mosman Daily and the GlobaLove advertisement.
(g) Meta-tags and Google advertising words representations
(i) Summary of parties’ submissions
499 Acting on advice from Mr Allsopp, ROV decided in August-September 2011 to employ SEO as a tool to obtain a competitive advantage over its rivals. In simple terms, the SEO process involves embedding certain words throughout the ROV website so that when a person does an internet search for any of those words, the ROV website would appear as one of the top hits. VESA contends that ROV embedded the meta-tags “VESA” and “VOLUNTEER ECO STUDENTS ABROAD” on the ROV website, Facebook page and YouTube.
500 VESA also complains separately about aspects of ROV’s use of Google advertising words as part of what is described as search engine marketing. In its third further amended statement of claim, VESA claims that ROV has purchased Google word advertising in respect of the phrases “VESA” and “VOLUNTEER ECO STUDENTS ABROAD”. It says that those words are identical to VESA’s marks. It further pleads that the effect of ROV’s Google word advertising is to present web links to a ROV website page to any potential customer who conducts a web search of the terms identical to or substantially similar with either “VESA” or “VOLUNTEER ECO STUDENTS ABROAD”.
501 VESA submits that it has acquired a reputation in Australia in the name and brand of VESA and VOLUNTEER ECO STUDENTS ABROAD as a result of its own substantial marketing activities. It says that these particular words are its “marks”. It says further that, by embedding the meta-tags and using Google ad words, ROV falsely represented that it is connected with, or enjoys the sponsorship, approval or affiliation of VESA. In the third further amended statement of claim VESA complained that this conduct contravened both the TPA and/or the ACL, as well as amounting to passing off. VESA’s passing off claim was abandoned during the course of the hearing.
502 VESA tendered various copies of Google searches carried out by Ms Luciani and Mr Constable-McDowell while they were in Montreal, Canada. These documents were all dated 23 September 2011. The documents show the first page of the result of Google searches carried out on that day in Canada in respect of the following terms or phrases: “vesa”, “vesa ROV” and “volunteer eco students abroad”.
503 In the case of the Google search of the word “vesa”, the following item, which was identified on the page as an advertisement, appeared at the top of the page:
Volunteer Eco Students|rovolunteers.com
www.rovolunteers.com/
Vesa student volunteer programs volunteer in africa and cambodia
(Emphasis in original).
504 The Google search of the words “vesa ROV” produced the following item on the right-hand side of the page under the heading “ads”:
Vesa
www.rovolunteers.com/
Volunteer Eco Students Abroad
student volunteer programs
(Emphasis in original).
505 The Google search of the phrase “volunteer eco students abroad” produced the following item at the top of the right-hand side of the page under the heading “Ads”:
Eco Students Abroad
www.rovolunteers.com/
Vesa student volunteer programs
volunteer in africa and cambodia
(Emphasis in original).
506 In response, the respondents admit that Tom Jowett embedded the meta-tag “Vesa” (emphasising that the word is not fully capitalised) on certain URL addresses within YouTube in September 2011, when he was in North America. They say that that meta-tag was promptly removed after ROV received a complaint from VESA’s solicitors on about 28 September 2011. ROV denies that it embedded the meta-tags “VESA” or “VOLUNTEER ECO STUDENTS ABROAD” on Facebook or the ROV website and they say that VESA adduced no evidence to the contrary. The respondents emphasise that the relevant conduct in relation to YouTube took place outside Australia and is therefore beyond the reach of the ACL, except as to discretion.
507 As to the Google ad words, the respondents make the following submissions:
(a) ROV admits that Google word advertising was procured on its behalf by Fizzbuzz Pty Ltd on or about 21 September 2011 in respect of the word “Vesa” (emphasising that not all the word is capitalised) and also the phrase “Volunteer Eco Students Abroad” (emphasising again that not all the phrase is capitalised) as part of their search engine marketing. But they say that this conduct occurred in North America from 21 September 2011 until about 1 October 2011, when it ceased upon receipt of a letter from VESA’s solicitors on or about 28 September 2011. The resulting advertisements were displayed only for users conducting searches from an internet protocol address physically located within North America;
(b) as to VESA’s claim that the Google ad words amounted to representations that ROV enjoyed some connection or affiliation with VESA, the respondents rely on evidence given by Ms Luciani and Mr Constable-McDowell that the terms “volunteer eco tours”, “volunteer tourism” and “eco tourism” were descriptive terms of the type of business carried on by VESA and ROV. In other words, they say that the term “VESA” is non-distinctive, as is highlighted by the fact that a search of those words conducted in Canada produced results for entities such as the “Video Electronics Standards Association”, the “Victorian Emergency Service Association”, “The Vehicle Security Association of South Africa” and the “UK Vocational Education and Support Agency”; and
(c) finally, the respondents say that because the Google word advertising was confined to North America alone, such overseas conduct is not caught by the TPA or ACL and they say that VESA’s counsel conceded as much, primarily in the light of the High Court’s decision in Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575. Accordingly, the relevant conduct occurred outside Australia for the purposes of ss 5(3) and (4) of both the TPA and the CCA and can only be relevant to discretion.
508 In reply, VESA says that it is not fatal to its case that the acronym VESA is also used by other organisations. It says that the relevant question in determining reputation is whether that reputation exists in relation to the particular goods or services in question (citing McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Ltd (1980) 49 FLR 455). VESA says that it has acquired a reputation in the provision of eco tours to underprivileged countries in which participants engage in volunteer work and adventure activities. The other organisations which appear on the Google search of the word “vesa” carried out in Canada on 23 September 2011 which use the acronym VESA have no connection with those services and are irrelevant.
(ii) Consideration
509 For the following reasons, I reject VESA’s complaints concerning both the use of meta-tags and Google word advertising.
510 First, I accept the respondents’ submission that the only evidence before the Court of the use of meta-tags in relation to ROV’s business is Tom Jowett’s evidence that, while he was in North America in September 2011, he placed the meta-tag “Vesa” on certain URL addresses within YouTube. VESA could point to no evidence that either of the meta-tags about which it complains was ever embedded on the ROV website, Facebook page or YouTube.
511 Secondly, the only evidence adduced by VESA as to the actual effect of embedding the meta-tag “Vesa” on YouTube, was a document dated 8 September 2011 which showed the results of a search in Canada on YouTube of the phrase “volunteer eco students abroad”. VESA did not explain why this document shows results for a search of that phrase and not the meta-tag “Vesa”. As noted above, there is no evidence which directly establishes that ROV or anyone associated with it embedded a meta-tag on YouTube in the terms of “volunteer eco students abroad”. Putting that curiosity to one side, however, the YouTube search results reveal that ROV appeared in 5 of the 22 results. The various results relating to ROV all appear towards the bottom of the list, whereas there are several references to VESA towards the top of the list. I accept the respondents’ submission that an inference may be drawn from this material that ROV appears in the search results because the word “volunteer” appears in its name. In other words, the terms “volunteer”, “eco”, “students” and “abroad” are descriptive of both VESA’s and ROV’s businesses. In my view, the applicant has not established that it has any proprietary right in relation to each of those words. They are simply descriptive.
512 Thirdly, even if those findings are incorrect, it is clear on the evidence that the conduct complained of occurred overseas and could, therefore, only be relevant to discretion. But in view of my findings above, I do not consider that the conduct is relevant even to that issue because, based on the evidence placed before the Court, that conduct is not misleading or deceptive or likely to mislead or deceive.
513 I also reject VESA’s complaints concerning the Google ad words, substantially for the reasons advanced by the respondents.
514 As noted above from the summary of VESA’s pleading in respect of the Google ad words, the burden of VESA’s complaint is that the person doing a Google search of the word “VESA” or the phrase “VOLUNTEER ECO STUDENTS ABROAD” would be presented with a web link to ROV’s website, which it says constitutes a representation by ROV that it has some connection, approval or affiliation with VESA.
515 The respondents admit that they used the word “Vesa” and the phrase “Volunteer Eco Students Abroad” in their Google word advertising in North America for a period of less than two weeks at the end of September 2011.
516 I do not consider that ROV’s Google word advertising is likely to mislead or deceive. That is because I do not consider that a not insignificant number of members of the relevant class conducting a Google search of the ROV Google ad words complained of by VESA would be likely to assume that there was some connection, association, affiliation or other sponsorship arrangement between ROV and VESA. My reasons for reaching that conclusion are as follows. First, I do not accept that VESA has established that it had built a strong business name or brand reputation in North America by September 2011 by reference to either of the terms “VESA” or “VOLUNTEER ECO STUDENTS ABROAD”. The VESA business had only been in operation for less than three years. I do not doubt that considerable time, money and resources were expended in creating and developing its business, but there is no evidence before me which suggests that, by September 2011, it had acquired a reputation or brand name recognition which was widely known among its target customer base in North America (where access to the Google ad words was confined). The strength and notoriety of VESA’s business name and reputation at that time cannot be compared in any meaningful way with the relevant businesses which were the subject of consideration in the McWilliam’s Wines case, upon which VESA strongly relied.
517 Secondly, it is also notable that, while each of the Google search pages relied upon by VESA resulted in a prominent advertisement appearing for ROV, those searches also produced entries for a wide range of other businesses or entities apart from VESA. For example, the first page of the Google search result for the word “vesa” resulted in advertisements for ROV, VESA Monitor Mounts and Vesa Wall Mount Info. And although there are Google entries for VESA on that page, there are also entries on that page for several unrelated entries. For example, there is a Wikipedia item relating to a body known as VESA, which is described as an international standards body for computer graphics. There is also a separate entry on the page for another body called VESA, which operates in the United Kingdom to support the development of vocational, applied and work-related learning. There is a further entry on the page for the “Victoria Emergency Services Association”. In my view, the juxtaposition of such a number and variety of advertisements and entries indicates that a relevant reader is unlikely to be misled or deceived into thinking that there is some association or connection between ROV and VESA.
518 The same can be said in respect of the Google searches for the phrases “vesa ROV” and “volunteer eco students abroad”, both of which produced advertisements not only in respect of ROV, but also a variety of other businesses or entities entirely unrelated to VESA. For example, the Google search of the phrase “volunteer eco students abroad” produced Google advertisements not only for ROV, but also for organisations with the following internet addresses: www.letsgoglobal.ca, www.crossculturalsolutions.org and www.volunteerhq.org. In the case of the search of “vesa ROV”, advertisements appeared not only for ROV, but also for seven other businesses apparently involved in the supply of underwater equipment. No complaint is raised that any of those other websites has any connection with VESA. I can see no basis for any argument that a relevant reader of the first page of the Google search of the phrases “vesa ROV” or “volunteer eco students abroad” is likely to be misled or deceived into thinking that there is some connection between ROV and VESA.
519 Thirdly, the same general reasoning applies to the Google search results in respect of the phrase “volunteer eco students abroad”. But there is a further issue which arises in respect of that particular Google search result, because of the reference to the word “Vesa” in the ROV advertisement (the same reference appears in the Google search of the phrase “vesa ROV”). The relevant question is whether the presence of that word in those contexts and taking into account all relevant surrounding circumstances is likely to mislead or deceive a not insignificant number of members of the relevant class of persons conducting such Google searches. In my view, for the following reasons, that question should be answered “no”:
(a) it is important to note that VESA made no claim in either the third further amended statement of claim or its submissions that it had proprietary rights in the word “Vesa”, as opposed to “VESA”;
(b) it is the word “Vesa” which appears in the ROV advertisements which appear in the Google searches for the terms “vesa ROV” and “volunteer eco students abroad” respectively; and
(c) it may well be that the appearance of the word “Vesa” in the ROV advertisements which appear in both those Google searches could cause a degree of confusion or uncertainty in the minds of some of the members of the relevant class who saw the references to “VESA” in some of the Google entries and the word “Vesa” in the ROV advertisement, but that does not determine the matter in VESA’s favour. The relevant question is whether the relevant conduct is likely to amount to a misrepresentation or misleading or deceptive conduct, not simply whether the conduct creates confusion, uncertainty or bewilderment (see, for example, Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Pty Ltd (1978) 140 CLR 216 at 229-230 per Stephen J; McWilliam’s Wines at 476 per Fisher J; Parkdale Custom Built Furniture at 210 per Mason J and Chase Manhattan Overseas Corporation v Chase Corporation Ltd (1986) 12 FCR 375 at 377 per Lockhart J.) In circumstances where VESA claims no mark or proprietary rights in respect of the word “Vesa”, and also where I do not consider that VESA has established that it had a strong and well-known business name or reputation in North America as at September 2011, any confusion or uncertainty created by ROV’s use of the word “Vesa” in its Google word advertising is not likely to mislead or deceive a not insignificant number of persons in the relevant class in the manner alleged by VESA.
520 For those reasons, I reject VESA’s claims concerning the Google ad words.
521 For completeness, I should add that VESA’s complaints regarding ROV’s Google word advertising did not involve any allegation that ROV’s choice of the business name “Reach Out Volunteers” was itself misleading or deceptive because it conveyed some association or affiliation with VESA. Rather, its complaint was squarely directed at the results produced by ROV’s choice of Google ad words.
522 VESA’s case dealing with accessorial liability needs only be considered in respect of its partly successful claims concerning copyright infringement and misleading and deceptive conduct. There is no need to consider matters raised by it relating to accessorial liability concerning its claims in contract and breach of confidence/retained materials because it has failed to establish any primary liability in respect of those claims.
523 I will deal separately with the copyright and misleading or deceptive conduct causes of action. I will outline the parties’ respective arguments on the relevant matters involving accessorial liability, before determining those matters in respect of each of those two relevant causes of action.
524 The following copyright infringements have been established:
(a) Tom Jowett’s conduct in Australia in reproducing onto a USB stick, VESA’s paper application form, FAQs and the email to professors. His subsequent conduct in the USA in copying and using both VESA’s paper application form and its email to professors for ROV’s business is not actionable in Australia, but is said by VESA to be relevant to discretion and flagrancy; and
(b) Peter Jowett’s conduct in Australia in copying VESA’s FAQs.
525 It is important to emphasise at this juncture that ROV has no liability for the first of those copyright infringements. That is because the relevant conduct constituting the infringement occurred while Tom Jowett was still employed by VESA. ROV had not even been incorporated at that time. Accordingly, the liability is Tom Jowett’s alone, not ROVs. If Tom Jowett’s subsequent conduct which took place in the USA, after ROV was incorporated, had been actionable under the Copyright Act, ROV would have had primary liability. But it is common ground that that conduct is not actionable in Australia.
526 The position is different, of course, in respect of Peter Jowett’s conduct. That occurred in Australia, after ROV had been incorporated, and when Peter Jowett had been appointed as one of its directors.
527 (1) VESA’s case summarised: VESA says that both Peter and Tom Jowett were directly involved in ROV’s copyright infringements and, therefore, they should be held liable for their conduct. In the third further amended statement of claim, VESA alleges that Tom, Peter and Ben Jowett incited and/or authorised ROV’s infringements. In its amended application, VESA also sought a declaration that each of Tom, Peter and Ben Jowett is liable as a joint tortfeasor to ROV’s copyright infringement.
528 VESA relies on the fact that Tom Jowett admitted that he copied the relevant documents onto the USB stick shortly before he left VESA’s employment and that subsequently, while he was in the USA, he copied VESA’s paper application form and email to professors. It says further that Peter Jowett should be held liable for his conduct in Australia in copying VESA’s FAQs.
529 For completeness, I should also add that VESA argued that relief should be granted against Ben Jowett personally for his involvement in what it alleges were various infringements by ROV of its copyright. This matter need be taken no further because I have rejected VESA’s claims of copyright infringement in which Ben Jowett had some involvement.
530 (2) The respondents’ case summarised: In support of their submission that the Court should not find any accessorial liability on the part of Tom, Peter or Ben Jowett for any copyright infringements, the respondents rely on s 36(1A) of the Copyright Act, which deals with whether or not a person has authorised an infringing act. It is convenient to set out the terms of s 36 in full:
36 Infringement by doing acts comprised in the copyright
(1) Subject to this Act, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright.
(1A) In determining, for the purposes of subsection (1), whether or not a person has authorised the doing in Australia of any act comprised in the copyright in a work, without the licence of the owner of the copyright, the matters that must be taken into account include the following:
(a) the extent (if any) of the person’s power to prevent the doing of the act concerned;
(b) the nature of any relationship existing between the person and the person who did the act concerned;
(c) whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.
(2) The next three succeeding sections do not affect the generality of this section.
531 The respondents emphasise that knowledge without control or some other sufficient connection will not suffice to constitute authorisation of an infringement (citing cases such as Australian Tape Manufacturers Association Ltd v Commonwealth (1993) 176 CLR 480 at 497-499). They say that VESA has not adduced any evidence that either Peter or Ben Jowett “sanctioned, approved or countenanced” any infringement of VESA’s copyright. They say that there is no evidence that either of those persons had:
(a) actual knowledge of any infringement of VESA’s copyright; or
(b) any level of control over Tom Jowett.
532 (3) Consideration: As noted above, Tom Jowett must bear personal liability for the copyright infringement relating to his action in Australia in reproducing VESA’s copyright materials onto a USB stick. ROV bears no liability for that conduct because it had not even been incorporated at that time.
533 For the following reasons, no sufficient basis has been shown to hold either Peter or Ben Jowett also liable for Tom Jowett’s infringement. There is simply no evidence that they incited him to reproduce VESA’s copyright materials while he was employed by VESA. Moreover, I am not satisfied that there is any evidence to warrant a finding that they authorised him to take that step.
534 The factors set out in s 36(1A) of the Copyright Act are not exhaustive (see Cooper v Universal Music Australia Pty Ltd (2006) 156 FCR 380 at [13] per Branson J and at [135] per Kenny J), but taking those and other relevant factors into account, I am not satisfied that VESA has established any basis for its allegations that Peter or Ben Jowett incited or authorised Tom Jowett to reproduce the relevant VESA copyright materials onto a USB stick. It is important to note in this context that Tom Jowett’s copyright infringement occurred while he was still an employee of VESA and before ROV was established and he become a co-director, along with his father and his brother. At the relevant time, even though Peter and Ben Jowett had some influence over Tom Jowett as members of his family, I am not satisfied that they had any relevant power to prevent him from reproducing VESA’s copyright materials.
535 Nor do I accept that Tom Jowett either incited or authorised his father to infringe VESA’s copyright in its FAQs. Tom Jowett gave evidence, which I accept, that he asked his father to look at “various online volunteer projects” in the course of preparing FAQs for ROV, but no evidence was adduced which establishes that Tom Jowett instructed his father to use VESA’s FAQs. In helping Tom Jowett to prepare FAQs for ROV, Peter Jowett was plainly acting as ROV’s servant or agent and ROV is liable for his conduct. In my opinion, ROV alone should bear liability for Peter Jowett’s conduct in infringing VESA’s copyright.
536 I also reject VESA’s claim that Tom, Peter and Ben Jowett were joint tortfeasors. VESA has not established either that:
(a) those persons acted in concert with each other pursuant to a common design in the infringement (see CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] AC 1013 at 1057 per Lord Templeman); or
(b) that one of those persons procured the others to do an infringing act and they shared a common design (see CBS v Amstrad at 1058 per Lord Templeman).
(b) Misleading and deceptive conduct
537 The following conduct by ROV has been found to contravene either ss 52 and 53 of the TPA or ss 18 and 29 of the ACL (depending upon the time when the relevant conduct occurred), on the basis that the conduct is likely to mislead or deceive:
(a) making the representations identified as (v) in Part F above;
(b) publishing on the ROV website the three testimonials identified in [456(a), (b) and (c)] above;
(c) publishing a testimonial by Ms Bordina (the same testimonial as identified in [456(b)] above) on A5 flyers distributed at Australian universities; and
(d) publishing the charity representations on the ROV website.
538 (1) Summary of VESA’s arguments: VESA argues that Tom Jowett should be held personally liable under s 75B(1) of the TPA or s 75B(1) of the CCA for ROV’s contraventions. It argues that Tom Jowett had actual knowledge of the contravening conduct because, as a director of ROV, he was aware of its promotional material on its websites and in its emails to potential customers.
539 VESA also says that, given the office arrangements at the Jowett family home in Cremorne and the involvement of other members of the Jowett family in Tom Jowett’s work, the Court should infer that both Peter and Ben Jowett were aware of the relevant conduct which gave rise to the contraventions set out above. It also relies on the fact that both Peter and Ben Jowett were directors of ROV.
540 VESA emphasises that its application for relief against Peter and Ben Jowett personally is based on the submission that they had actual knowledge of the misleading and deceptive representations being made by ROV.
541 (2) Summary of respondents’ arguments: The respondents say that VESA failed to adduce any evidence which establishes that either Peter or Ben Jowett had actual knowledge or were “wilfully blind” in relation to the conduct which contravened the ACL. They rely on the following observations of the Full Court in Rafferty v Madgwicks (2012) 203 FCR 1 at [261]:
… it is important to bear in mind that the knowledge that a person must have in order to be “a person involved in a contravention” within s 75B(1)(a) or (c) is actual knowledge. The weight of authority is now clear on this point. See Rural Press at 74 [48] and Quinlivan v Australian Competition and Consumer Commission (2004) 160 FCR 1 at 4 per Heerey, Sundberg and Dowsett JJ; see also Bowler v Hilda Pty Ltd [2000] FCA 899 at [77] per Finn J. This means that, notwithstanding occasional judicial statements to the contrary (e.g., Ridgway v Consolidated Energy Corporation Pty Ltd (1986) 7 IPR 452 at 457) constructive knowledge is not enough. The existence of actual knowledge may be inferred from wilful blindness (see Australian Competition and Consumer Commission v IMB Group Ltd [2003] FCAFC 17 at [135]) or from dishonest or deliberate ignorance (see Giorgianni at 482-483, 495, 507-508). Brennan J's reference (in Yorke v Lucas at 677) to “honest ignorance” was an indirect reference to this latter concept; that is, his Honour was referring to a state of mind from which no inference of actual knowledge might be drawn. (Emphasis added).
542 (3) Consideration: VESA has the burden of establishing actual knowledge on the part of Tom, Peter or Ben Jowett in order to attract the operation of s 75B of either the TPA or the CCA. It is well established that for a person to be “involved in a contravention” for the purposes of s 75B(1) of the TPA, it is necessary to demonstrate that the person had knowledge of the essential matters which go to make up the contravention (see, for example, Yorke v Lucas (1985) 158 CLR 661 at 666-667). As the Full Court held in Rafferty v Madgwicks at [252], Yorke v Lucas “stands for the position that for a person to aide, abet, counsel, procure, or be knowingly concerned in, a relevant contravention under s 75B(1), he or she must have knowledge of the essential elements of the TPA contravention”. It is equally clear that it is not necessary to show that the accessory appreciated that the relevant conduct was unlawful.
543 As to the question of Tom Jowett’s accessorial liability, that matter has to be approached by reference to the individual representations which have been found to contravene the relevant legislation. As to representation (v), which I have found was likely to mislead or deceive, the author has not been identified in the evidence. Although the email was sent by someone acting on behalf of ROV, there is no evidence that Tom Jowett was the author or that he otherwise had actual knowledge of the contents of the email. Accordingly, there is no evidence to support a finding that he is an accessory to ROV’s contravention.
544 Turning now to consider whether Tom Jowett is an accessory in respect of ROV’s contraventions concerning the three testimonials and the charity representations, the central question is whether he had actual knowledge that those testimonials and representations were false.
545 The evidence suggests that it was principally Peter and Ben Jowett who were actively involved in reviewing and making comments to Mr Allsopp on the ROV website shortly before it was launched and also finalising ROV’s A5 flyers. Tom Jowett’s involvement was limited, probably because he was overseas at the time. I am not prepared to find, on the basis of the evidence and also having regard to the seriousness of the allegation, that Tom Jowett was knowingly concerned in those contraventions.
546 I will now deal with the question whether either Peter or Ben Jowett were persons who were “involved in” any of the contraventions. In the context of a contravention of either ss 52 and 53 of the TPA or ss 18 and 29 of the ACL, this means that it must be demonstrated that Peter and Ben Jowett had actual knowledge of, or were wilfully blind to, the falsity of the relevant representations which appeared on the ROV website and on the A5 flyers.
547 I am not satisfied that VESA has established that either Peter or Ben Jowett actually knew that the representations were false or that they were wilfully blind to that matter. Merely because both of them closely reviewed the ROV website shortly before its launch in mid-September 2010 does not establish that they had actual knowledge of the falsity of the relevant representations or that they were wilfully blind to that matter. They may have been aware of the existence of the representations, but more than that is required for them to become accessories. The same applies to the relevant A5 flyer.
548 For these reasons, I decline to make any orders against Peter or Ben Jowett personally based on their alleged accessorial liability under the TPA or CCA.
549 In its amended application VESA included no less than 42 separate prayers for relief. Having regard to the Court’s rejection of all VESA’s claims relating to contract and breach of confidence/retained materials, it is only necessary to deal with issues of relief in respect of those parts of VESA’s claims concerning copyright infringement and misleading or deceptive conduct which have been established. I will deal with those matters by first summarising the parties’ respective arguments, before determining the relevant questions.
(a) Copyright
550 The relevant infringements are summarised in [524] above.
551 (1) Summary of VESA’s arguments: In relation to the copyright infringements which have been established, VESA seeks declarations, injunctions, damages, additional damages and orders for the return and/or destruction of items on which the works appear. VESA makes the following submissions in respect of the remedies it seeks for the copyright infringements. First, damages under s 115(2) of the Copyright Act are compensatory (citing Aristocrat Technologies Australia Pty Ltd v D.A.P Services (Kempsey) Pty Ltd (2007) 257 FCR 564 at 568 and Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd (No 2) (2008) 76 IPR 763 at [11] per Besanko J). It is open to the Court to infer, in the light of all the evidence, that the copyright owner has suffered loss and damage, but if there is no evidence at all of any damage the Court can award a nominal sum to vindicate the invasion of the owner’s proprietary right (citing, for example, Futuretronics at [16] per Besanko J)).
552 Secondly, merely because only a nominal sum is awarded does not prevent substantial “flagrancy” damages being awarded (citing Futuretronics at [35] per Besanko J). Additional damages are also available under s 115(4) where the conduct of the defendant is such that an award of punitive damages should be made to mark the Court’s recognition of the opprobrium attached to the defendant’s infringing conduct (citing Facton Ltd v Rifai Fashions Pty Ltd [2012] FCAFC 9 at [35]-[37] and Futuretronics at [11] per Besanko J).
553 Thirdly, VESA urges the Court to take into account the following matters in assessing the level of any additional damages:
(a) the steps allegedly taken by Tom Jowett to conceal the fact that he appropriated the second stage hand logo;
(b) the respondents’ failure to keep accurate financial records or to discover any adequate financial records, which makes proof of loss more difficult (citing Aristocrat Technologies at [53]);
(c) an award of additional damages under s 115(4) is not dependent upon the adequacy or inadequacy of an award of damages under s 115(2) (citing Allam v Aristocrat Technologies Australia Pty Limited (2012) 95 IPR 242 at [364] and [414]); and
(d) VESA submits that the Court can make an award of “flagrancy” damages prior to any inquiry into damages for copyright infringement.
554 VESA also seeks an inquiry to determine the extent of its loss and damage in respect of the copyright infringements so that it may make an election between damages or an account of profits in relation to this cause of action.
555 (2) Summary of respondents’ arguments: It appears that the respondents did not make any specific submissions relating to the issue of relief for copyright infringement.
556 (3) Consideration: It is convenient to set out the relevant terms of s 115 of the Copyright Act, which deals with actions for infringement:
115 Actions for infringement
(1) Subject to this Act, the owner of a copyright may bring an action for an infringement of the copyright.
(2) Subject to this Act, the relief that a court may grant in an action for an infringement of copyright includes an injunction (subject to such terms, if any, as the court thinks fit) and either damages or an account of profits.
…
(4) Where, in an action under this section:
(a) an infringement of copyright is established; and
(b) the court is satisfied that it is proper to do so, having regard to:
(i) the flagrancy of the infringement; and
(ia) the need to deter similar infringements of copyright; and
(ib) the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff’s copyright; and
(ii) whether the infringement involved the conversion of a work or other subject-matter from hardcopy or analog form into a digital or other electronic machine-readable form; and
(iii) any benefit shown to have accrued to the defendant by reason of the infringement; and
(iv) all other relevant matters;
the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances.
…
557 As noted above, VESA has reserved its right to make an election between damages and an account of profits in relation to any copyright infringement. It submits, however, that the Court can determine its application for additional damages under s 115(4) of the Copyright Act prior to VESA making its election.
558 Besanko J made some helpful general observations on the subject of additional damages in Futuretronics at [17]:
In relation to the claim for additional damages under s 115(4) of the Act, it is appropriate to begin by making the following general observations. First, there is no need for me to consider if an award of additional damages can be made under s 115(4) if no damages are awarded under s 115(2) because I have awarded nominal damages under s 115(2) (Polygram Pty Ltd, Island Records Ltd & A & M Records Inc v Golden Editions Pty Ltd, Hoghton Hughes (No 2) 76 FCR 565 at 576; 148 ALR 4 at 13-14; 38 IPR 451 at 459-61 (Polygram) per Lockhart J; MJA Scientifics at 283-284 per Sundberg J). Secondly, it is not necessary that there be a proportionate relationship between the additional damages awarded under subs (4) and the damages awarded under subs (2): Flags 2000 Pty Ltd v Smith (2003) 59 IPR 191; [2003] FCA 1067 at [31]-[34] (Flags 2000) per Goldberg J. An award of additional damages under subs (4) is not dependent upon the adequacy or inadequacy of an award of damages under subs (2). Thirdly, the matters in subs (4)(b)(i)-(iv) inclusive are not preconditions to an award of additional damages. In other words, and using the flagrancy of the infringement as an example, the Court must have regard to the flagrancy of the infringement in determining whether to award additional damages, but it is not the case that additional damages can be awarded only if the breach involves a particular degree of flagrancy. Fourthly, in the recent case of Flags 2000 Goldberg J suggested that there is a distinction between conduct of a defendant after an infringement (or after being informed that he has allegedly infringed the plaintiff's copyright) and relevant to the substantive allegations against him on the one hand, and the defendant's conduct of his defence to an action for an infringement of copyright in relation to procedural matters on the other. The former matter is within the terms of s 115(4)(b)(ib) of the Act, whereas it has been suggested that the latter matter is a matter to be taken into account in determining the appropriate order as to costs. In Flags 2000 Goldberg J said(at [45]-[46]):
[45] The applicants submitted that the insertion of subparas (ia) and (ib) was declaratory of the position which had existed prior to the amendments. There is substance in that submission as can be seen from cases such as Carson v John Fairfax & Sons (1992) 178 CLR 44 at 71; 113 ALR 577 at 597 and Microsoft Corp v Goodview Electronics Pty Ltd (2000) 49 IPR 578. However, the conduct taken into account in those cases was conduct which was relevant to the substantive allegations made against the respondents. For example, in the Microsoft case the respondent filed a defence which proved to be false. Branson J took that fact into account in conjunction with other evidence which showed an intention on behalf of the respondent to conceal the identity of their suppliers to find “a deliberate pattern of conduct by the respondents in which they recognised the illegality of the enterprise they are engaged in and actively sought to conceal it”.
[46] I do not consider that the conduct of the respondent contemplated by subpara (ib) of s 115(4)(b) is referable to conduct of the defence in so far as it relates to procedural matters and matters whereby the applicants are put to the proof of their case, albeit unreasonably. I consider that these are matters more appropriately dealt with by an appropriate order for costs.”
In certain circumstances, the distinction may be a difficult one to apply and there is an obvious need to avoid double-counting. Nevertheless, I agree with the distinction identified by Goldberg J in Flags 2000.
Fifthly, an award under s 115(4) of the Act can encompass damages which at common law would be aggravated damages and exemplary damages: Bailey at FCR 113-14; ALR 238; IPR 156-7.
559 For the following reasons, I do not consider that this is an appropriate case in which to award additional damages against either Tom Jowett personally or ROV. First, dealing with flagrancy, I do not consider that Tom Jowett’s conduct in copying the relevant materials onto a USB stick constitutes flagrant conduct on his part. As noted above, I have accepted his evidence that his purpose at that time in reproducing those materials was not to use them in setting up a rival business. He had made no decision then to establish ROV. His purpose in copying the materials related to his apprehension that he could end up in a legal dispute with VESA.
560 Nor do I consider that Peter Jowett’s conduct in copying VESA’s FAQs constitutes flagrant conduct so as to warrant additional damages against ROV in respect of that infringement. His conduct is regrettable, but VESA pointed to no evidence establishing that his conduct occurred as part of a calculated disregard of VESA’s rights or in the cynical pursuit of a valuable benefit for ROV. There is no evidence that his infringement was deliberate or calculated. Flagrancy is not established merely by an inference that Peter Jowett knew that he was copying VESA’s FAQs. More is required (see International Writing Institute Inc v Rimila Pty Ltd (1994) 30 IPR 250 at 255 per Lockhart J).
561 Secondly, nor am I satisfied that additional damages are appropriate having regard to the other matters set out in s 115(4) of the Copyright Act. I do not consider that such a remedy is necessary to deter similar copyright infringements, nor is there any conduct on the part of either Tom Jowett or ROV which has occurred subsequent to the infringements which is of such a serious nature as to warrant that relief. There is no evidence which establishes that ROV derived a significant benefit from the infringements so as to attract additional damages.
562 Thirdly, although Tom Jowett’s actions in the USA in further infringing VESA’s copyright in the paper application form and email to professors are not actionable in Australia, I have taken those actions into account in assessing whether this is an appropriate case for additional damages. In my view, those matters are not of a sufficiently serious nature to tilt the balance in favour of an award of additional damages. The paper application form was used for only a matter of months. It is also apparent that ROV’s email to professors, which was initially written by Tom Jowett based on VESA’s precedent, underwent various subsequent revisions and rewriting.
563 For these reasons, I consider that VESA is entitled to declaratory relief in respect of the infringements of its copyright by Tom Jowett in respect of the USB conduct and by ROV in respect of Peter Jowett’s conduct in copying the VESA FAQs. I do not consider that there is any basis for granting injunctive relief in relation to those infringements, primarily because any risk of repetition is only minimal. This is reflected in the steps taken by ROV in the past when confronted by allegations of copyright infringement. If necessary, appropriate orders can be made requiring that the relevant materials be either returned or destroyed. I have no reason to believe that ROV would continue to use materials which infringe VESA’s copyright. Nor do I consider that this is an appropriate case in which to order additional damages. I will make appropriate orders to enable VESA to be placed in a position where it may elect whether it wishes damages or an account of profits in respect of the two copyright infringements.
(b) Misleading or deceptive conduct
564 The conduct which has been found to contravene ss 52 and 53 of the TPA and/or ss 18 and 29 of the ACL is set out in [537] above.
565 (1) Summary of VESA’s arguments: Some of VESA’s arguments concerning relief concerning its successful claims under the TPA/ACL have been summarised in [381] above. VESA’s additional relevant submissions may be summarised as follows.
566 First, it is not necessary for a person to have relied on a false representation in order to obtain damages under s 82 of the TPA or s 238 of the CCA.
567 Secondly, although misleading or deceptive conduct occurring overseas is not directly actionable, it can be taken into account in determining whether or not to grant injunctive relief should be granted under the relevant legislation in respect of contraventions which occur in Australia.
568 VESA seeks damages, declarations and injunctions in respect of the relevant misleading and deceptive conduct. On the issue of declaratory and injunctive relief, it says that the Court should take into account such matters as:
(a) the respondents’ conduct in continuing to send out misleading emails about their experience until September 2011, after the proceedings had commenced in March 2011;
(b) their failure to alter their online testimonials on the ROV website until May or June 2011;
(c) continuing to make the charity misrepresentations on the ROV website;
(d) Tom Jowett did not take adequate steps to remedy ROV’s misleading and deceptive representations notwithstanding that he was “caught out lying” by Mr Smordin;
(e) the Court should infer that many of the misleading representations made by ROV were made in circumstances when its directors and employees knew that the representations were knowingly false;
(f) the respondents’ conduct in denying in their defence filed on 19 October 2012 that the misrepresentations were misleading or deceptive, notwithstanding that Tom Jowett gave evidence in which he admitted that some of the representations or testimonials complained of were false; and
(g) the respondents have failed to show sufficient appreciation of the significance of their wrongful conduct. In particular, VESA says that Tom Jowett lacked “insight” as to his past conduct, which they say is reflected in his attempts at times to find excuses for it (such as family pressure to succeed), and his belated raising of the dry run.
569 For all these reasons, VESA says that injunctions are necessary to prevent the respondents from retaining and using VESA’s materials, infringing VESA’s copyright and misleading the public.
570 On the issue of damages for misleading or deceptive conduct, VESA accepts that it needs to establish that it has suffered some damage.
571 (2) Summary of respondents’ arguments: On the question of remedies for ROVs contraventions of the TPA/ACL, the respondents emphasise that VESA has not established any loss or damage as a result of the misleading or deceptive conduct. On the contrary, they submit that VESA has significantly increased its profits after Tom Jowett ceased his employment with VESA.
572 On the issue of discretionary relief, the respondents rely upon the following factors as indicating that injunctive relief should not be made:
(a) ROV is now an experienced operator of volunteer eco tourism tours and there is barely a minimal risk of any repetition of its conduct in misrepresenting its experience;
(b) likewise, the risk of any future repetition of the conduct which was likely to mislead or deceive in respect of its charitable status is unlikely to be repeated because that conduct was not intentional and the respondents now have a better understanding of their legal obligations; and
(c) the relevant overseas conduct is not of a character as to warrant injunctive relief.
573 (3) Consideration: In my view, VESA has not established that it suffered any damage as a result ROV’s contravening conduct. Accordingly, its claim for damages must be rejected.
574 VESA is, however, entitled to appropriate declaratory relief in respect of the contravening conduct and I will invite the parties to see if they can agree proposed declaratory orders.
575 The issue of injunctive relief is more complicated. It seems to me that the central question is whether or not such relief is appropriate and desirable because there is a risk that the contravening conduct will be repeated by ROV. For the following reasons, however, I think that risk is minimal.
576 First, much of the contravening conduct involves misrepresentations concerning ROV’s experience in conducting volunteer eco tourist programs at a time when it had just commenced operations. ROV has now been in operation for almost three years. It has conducted programs in South Africa, Mozambique, Peru, Cambodia and Thailand (although at the time of the hearing, it no longer conducted any program in Thailand). I accept the respondents’ submission that, in those circumstances, the risk of that type of contravening conduct being repeated is minimal. Similar considerations apply to the risk of repetition of the testimonials, which related to the same general subject matter.
577 Secondly, as to the charity misrepresentations, I do not consider that there is a sufficient risk of that conduct being repeated to warrant the grant of injunctive relief. I do not consider that the relevant misrepresentations were made deliberately by ROV with a view to misleading or deceiving relevant consumers. On the contrary, the consequences of the relevant conduct was inadvertent. It is reasonable to expect that ROV will take appropriate steps to remove the relevant material from its website (assuming that it has not already done so). I have also taken into account the difficulties of an ordinary member of the relevant class accessing the particular pages.
578 Thirdly, I do not consider that the other matters raised by VESA provide a sound basis for concluding that injunctive relief is warranted. Many of the matters it raises contradict my findings that Tom Jowett is an honest, credible and generally reliable person. And in my view, in the context of the relief VESA seeks, there is no force in VESA’s criticisms of the respondents’ conduct in respect of this part of their case or their financial record keeping.
579 Fourthly, I do not consider that the conduct which occurred overseas is of such a nature or character as to tilt the balance in favour of granting injunctive relief. That conduct generally related to the topic of ROV’s experience as a volunteer eco tourist operator and, for the same reasons as given above, I consider that there is no higher than a minimal risk that ROV would repeat those misrepresentations in the future.
580 The parties should seek to agree orders giving effect to these reasons for judgment. Those orders will need to deal with at least the following matters:
(a) proposed declaratory orders in respect of the copyright infringements, as well as:
(i) proposed directions for any inquiry prior to VESA making an election as to whether it seeks damages or an account as to profits; and
(ii) any orders for the return or destruction by ROV of any VESA copyright materials;
(b) proposed declaratory orders concerning ROV’s contraventions of ss 52 and 53 of the TPA or ss 18 and 29 of the ACL (noting, however, the issue raised above regarding VESA’s failure to seek any relief in respect of the misrepresentations concerning ROV’s charitable status); and
(c) costs.
581 The proposed orders should also deal with an outstanding issue, which I will describe shortly, relating to whether or not some of the documents tendered by VESA are confidential and should be the subject of a non-confidentiality order.
582 The issue arises from the fact that, during the course of the hearing, VESA tendered various documents over which it sought confidentiality. The documents were admitted on the basis that they were “tentatively confidential”, with VESA having the onus of establishing the documents were truly confidential. The parties were able to agree that many of the documents were confidential (I agree with their consensus), but ten documents remained in dispute.
583 The ten disputed documents relate to the following matters:
VESA’s recruiting schedules and university contact details for 2010;
versions of a suggested business strategy and flowchart created by Tom Jowett for VESA in mid-2010;
copies of a business strategy written by Mr Constable-McDowell for VESA in early 2010; and
a marketing plan prepared by Tom Jowett for VESA on 6 April 2010.
584 In my view, it is appropriate that a non-publication order be made in respect of each of the ten contested documents. I accept VESA’s submission that, notwithstanding the fact that the documents are more than two years old, they are commercial in confidence. In the case of the recruiting schedules and university contact details, although much of the information in the schedules could be derived from publicly available sources, the confidentiality of those schedules relates to the fact that the information is presented on conveniently-arranged schedules which were plainly not intended to be made available to persons outside VESA and were only to be used by VESA’s staff (see Prime Creative Media Pty Ltd v Vranjkovic [2009] FCA 1030 at [15] per Ryan J).
585 The other relevant documents relate to VESA’s internal business strategies. I do not consider the passage of two years since they were created as sufficiently long to destroy their confidentiality.
586 Accordingly, I am satisfied that non-publication orders ought to be made in respect of all of the documents the subject of VESA’s confidentiality application.
587 The parties will have 21 days hereof to seek to agree proposed orders on all relevant matters. If they cannot reach agreement, they should each file and serve within that 21 day period their respective proposed orders, together with a written outline of submissions in support of their respective orders. The outline should not exceed 10 pages in length.
588 The matter will be listed for mention and further directions at 9:30 am on Tuesday, 27 August 2013.
I certify that the preceding five hundred and eighty-eight (588) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths. |
Associate:
