FEDERAL COURT OF AUSTRALIA

Mastec Australia Pty Ltd v Trident Plastics (SA) Pty Ltd (No 2) [2017] FCA 1581

ORDERS

THE COURT ORDERS THAT:

1.    The matter is adjourned to a date to be fixed for further submissions in the light of these reasons.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

WHITE J:

Introduction

1    In 2003, the first applicant (Mastec) contracted with Trident Tooling Pty Ltd (Trident Tooling) to design and manufacture tools for the production of the components of 240 litre mobile garbage bins (MGBs). These were the bin body, the bin lid and the handle pin by which the lid is attached to the body. Since 2003, Mastec has used the tools made by Trident Tooling to manufacture and sell substantial quantities of MGBs.

2    MGBs are the bins in common use for the collection of household waste. They have been adopted by most local government entities in Australia for this purpose. There are other sizes of MGBs but 240 litre MGBs account for approximately 70% of the Australian market.

3    In late 2012, the first respondent (Trident Plastics) commenced manufacturing and selling MGBs. In manufacturing tooling for the lids on its MGBs, Trident Plastics used the design drawings made by Trident Tooling in 2003 for the Mastec tools.

4    Mastec’s pleaded case is that the lids on the Trident Plastics’ MGBs are the same, or substantially the same, as the lids on its MGBs and that the handle pins on the Trident Plastics’ MGBs are substantially similar. The gravamen of its claims concerned the lids as it led very little evidence to support a claim with respect to the handle pins.

5    In these proceedings Mastec seeks relief against Trident Plastics on multiple bases. Originally, these included claims of procuring a breach of contract, misuse of confidential information, breach of fiduciary duty, conversion, misleading or deceptive conduct, passing off, and trademark infringement. Mastec also claims that the second respondent, Mr Saurbrey, is liable for misuse of the confidential information and as an accessory for that conduct of Trident Plastics which constitutes the misleading or deceptive conduct, passing off and trademark infringement. However, at the trial, Mastec did not pursue all these claims.

6    The Court ordered that the trial proceed in two stages, with the liability aspects of Mastec’s claim being heard in the first stage and the remaining claims in the second stage.

7    For the reasons which follow, I consider that Mastec’s claims succeed in part. I uphold its claims that it has beneficial ownership of the computer aided design drawings (CAD Drawings) and the copyright for the products (but not for the tools used to manufacture those products) and its claims that Trident Plastics and Mr Saurbrey have breached the equitable duty of confidence in the CAD Drawings of the tooling for the MGB lids. Mastec has also established that its contract with Trident Tooling included an implied term requiring the latter to keep confidential the information and drawings but that conclusion does not lead to the grant of any relief against the present respondents.

The parties

8    Mastec was incorporated in 2001 and, until 2006, was known as “Waste & Recycling Supplies (SA) Pty Ltd”. It is a manufacturer, distributor, wholesaler and seller of MGBs.

9    The second applicant, Mr Brixton, is Mastec’s sole director and sole shareholder. He has been involved in the waste and recycling industry since about 1985. Between 1985 and 2003, Mr Brixton was engaged in selling MGBs which he had acquired from other manufacturers to customers who were, for the most part, local government entities.

10    Mr Brixton is the registered proprietor of the trademark MASTEC Registered No. 949803 which was registered on 8 April 2003. He has authorised Mastec to use the trademark in the promotion and sale of its products. As the applicants did not pursue a claim of trademark infringement, it is not apparent that Mr Brixton seeks any relief going beyond that claimed by Mastec.

11    Trident Plastics was incorporated in 1995 with the name South Australian Plastic Corporation Pty Ltd (SAPCO). It traded under that name until 1999. From then until 2006 when SAPCO changed its name to Trident Plastics (SA) Pty Ltd, it was a dormant company. In late 2006, Trident Plastics purchased the automotive division of Viscount Plastics (SA) Pty Ltd (Viscount) including Viscount’s manufacturing plant. At the same time, another member of the Trident Group of companies acquired the land and improvements at Woodville at which Viscount had conducted its business. Commencing in 2007, the Trident Group (including Trident Plastics) progressively transferred its manufacturing operations to the Woodville site and, since 2009, has conducted all of its operations from that site.

12    On 9 June 2009, administrators were appointed to Trident Plastics and, from 1 September 2009 until 9 June 2011, it was subject to a Deed of Company Arrangement.

13    Trident Plastics now manufactures, distributes, wholesales and sells MGBs throughout Australia, but that is not its only business. The second respondent, Mr Saurbrey, describes it as a “custom manufacturer” offering a range of services in plastic moulding, including concept development, product design, prototyping, 3D printing, mould manufacture (tooling), CNC (Computer Numerical Control), machining, laser cutting, product manufacturing and painting of automobile parts. It designs and manufactures products in a variety of industries, both locally and overseas, including defence, rail, automotive, construction, fast-moving consumer goods, waste and recycling.

14    Mr Saurbrey is one of two directors of Trident Plastics and the owner of approximately 85% of its shares. He is an experienced tool maker, having completed a tool making apprenticeship in Denmark in 1984.

15    Mr Saurbrey was also one of three directors of, and a principal shareholder in, Trident Tooling which had been incorporated in 1993. Like Trident Plastics, Trident Tooling was one of a number of companies controlled by Mr Saurbrey and members of his family. The primary business activity of Trident Tooling had been the manufacture of tools for the plastic moulding industry, with much of its work being for the automotive industry. Administrators were appointed to Trident Tooling in June 2009. It was later wound up and de-registered on 8 September 2014.

16    When Trident Tooling ceased business in 2009, a number of its employees transferred to Trident Plastics. These included Mr Scott Dalling (Designer Manager), Mr Jan Saurbrey (Manufacturing/General Manager), Mr Chris Heinrich (Chief Financial Officer), Mr Steen Saurbrey, as well as a number of designers and engineers. Over the following one to two years, Trident Plastics employed other former employees of Trident Tooling, including Michael Lozo (Project Manager and Director), Kylie Evans (Human Resources) and four toolmakers.

17    In June 2009, Trident Plastics purchased, by a contract with the Receivers of Trident Tooling, the information technology equipment, general equipment, drawings and archived material of Trident Tooling. This included the CAD files relating to the tooling for the MGB which Trident Tooling had designed and manufactured for Mastec in 2003. When Trident Plastics decided to commence manufacturing MGBs, it used the CAD design files for the Mastec Bins in developing its own tooling.

Background

18    In this section of the reasons, I set out the background to the issues for determination. This background was to an extent uncontentious. On those topics on which there were differences in the evidence, I indicate my findings.

19    In 2002, Mr Brixton decided that Mastec should design and manufacture its own 240 litre MGBs, rather than acquiring the products of others for resale. This would mean that Mastec would be competing with Sulo MGB Australia Pty Ltd (Sulo), Otto Environmental Systems Pty Ltd (Otto) and Nylex Ltd (Nylex), which at that time were the principal suppliers of MGBs. Until 2002, Mastec had been acquiring its MGBs primarily from Otto and Nylex, and Mr Brixton appreciated that, by manufacturing its own bins, it would then be competing with them in particular.

20    In order to manufacture MGBs, Mastec needed injection moulding tools which, as Mr Brixton understood it, had not been designed or constructed in Australia previously. Viscount recommended Trident Tooling to him for this purpose. Trident Tooling had not previously manufactured tools for MGBs but there is a dispute as to whether it had carried out some maintenance or modification of tools of this kind which had been manufactured by others.

21    There were some differences in the evidence as to when Mr Brixton had first spoken to Trident Tooling (the first meeting). Mr Brixton thought that it was in December 2002 when he met Mr Saurbrey and Trident Tooling’s then Tool Room Manager, Mr Heitmann. Mr Heitmann thought that the meeting had occurred “in around November or December 2002”. Mr Saubrey thought that the first meeting had been in about September or October 2002. Little turns on identifying precisely when the first meeting occurred, but I consider it more likely than not that Mr Saurbrey is correct. That is because all witnesses agreed that there then followed some further meetings before Trident Tooling provided an initial quotation to Mastec dated 8 January 2003. It seems improbable that there would have been sufficient time for these further meetings before the provision of the quotation had the first meeting not occurred until December 2002.

22    The first meeting occurred at the premises of Trident Tooling which were then in the Adelaide suburb of Netley.

23    No participant kept a written record or note of what was said at the meetings. Each witness was accordingly relying on his own memory as to what had occurred some 14 years previously. It is accordingly unsurprising that there were some differences in their respective accounts.

24    Mr Brixton’s account was to the following effect. His belief at the time of the initial meeting was that Trident Tooling had had no experience in constructing a bin tool. Accordingly, he wished to discuss the project and to find out whether Trident Tooling was capable of undertaking it. If it was capable, he wished to obtain a quotation for the cost of the design process. Mr Brixton told Mr Saurbrey and Mr Heitmann that his aim was to design a bin with features distinguishing it from other bins in the market so that it would be readily identifiable as Mastec’s bin (noting that at that time Mastec was still known by its former name). He told Mr Saurbrey that he wished to have substantial input into the bin design using his own knowledge of the industry and his market research. Mr Brixton told Mr Saurbrey and Mr Heitmann that the project needed to remain confidential. Given the importance of what was said on this particular topic, I will outline later what each witness said and make findings concerning it.

25    Although Mr Brixton did not refer in his evidence in chief to subsequent meetings with Mr Saurbrey before receiving the design quotation, he accepted that he had attended a number of meetings, and that one or more may have been at Viscount’s premises. His intention at the time had been to engage Viscount to use the tools which would be manufactured by Trident Tooling.

26    Mr Heitmann’s account of the first meeting was that Mr Brixton had said that he wished to have tools constructed for the manufacture of a 240 litre bin. Although Trident Tooling had not manufactured such tools before and it had no experience in the industry, he and Mr Saurbrey decided that Trident Tooling could do the manufacturing. Mr Brixton told them that he wished the bin to be designed so as to be recognisable in the market as a Mastec bin and that, for this purpose, he would use his own experience and knowledge of the industry to identify the required features.

27    Mr Saurbrey’s account was that, at the first meeting, Mr Brixton had told him that he had previously conducted a business providing waste collection services to councils in South Australia; that he had sold replacement bins acquired from other suppliers to those councils; that he was now intending to focus on the manufacture and supply of MGBs; that Viscount had told him that they could manufacture MGBs but could not itself make the tools which were necessary for that purpose; that he did not wish to use toolmakers in New South Wales or Victoria because those who would be suitable also worked for the MGB manufacturers with whom Mastec was intending to compete; that Viscount had recommended Trident Tooling to him; and that Mastec intended to make MGBs having a number of features which were superior to bins in the market at the time.

28    Mr Saurbrey deposed to multiple meetings having occurred before and after Trident Tooling provided its initial quotation dated 8 January 2003: approximately three at the premises of Trident Tooling (some of which were attended by other employees of Trident Tooling including Jan Saurbrey (Operations Manager), Chris Heinrich (CFO) as well as Paul Heitmann (Tooling Manager)); approximately three or four at Viscount’s premises in which a small number of employees of Viscount (including a Mr Malone) also attended; as well as meetings at the Rex Hotel which it seems concerned a different subject matter.

29    Mr Saurbrey said that, at the initial meetings, those present discussed matters relevant to the manufacture of MGBs for Mastec, including tooling requirements, the process of plastic moulding, the requirements of moulding machines including ancillary equipment such as raw material feeders and cooling equipment, the making of the tooling, general estimates of the costs involving making the tooling, the factors which affected the cost of designing and making tooling, the matters which would be included in the price, the cycle times of moulding machines and the approximate cost per moulding cycle. He deposed that Mr Brixton had said on a number of occasions that he wished Trident Tooling and Viscount to understand his needs so that they could come up with the best and most efficient way to produce MGBs, given that his target unit price cost was approximately $8 per bin body.

30    I am satisfied that there were several meetings after the first meeting at which various aspects of Mr Brixton’s project were discussed. Mr Brixton acknowledged that that was so. I am also satisfied that those meetings occurred at the premises of both Trident Tooling and Viscount, given that it was Mr Brixton’s then intention to have Viscount do the actual manufacturing of the MGBs using the tools to be made by Trident Tooling. I am satisfied that the matters canvassed at the initial meetings were, broadly, the matters to which Mr Brixton and Mr Saurbrey deposed. At the subsequent meetings, Mr Brixton took samples of MGBs, and the lids, of the products which were available in the market. These formed the basis of some of the discussions, as Mr Brixton used them to identify desirable features and the modifications he required. I am also satisfied that the Trident Tooling personnel used these samples as a basis for the designs they prepared.

31    Mr Saurbrey also deposed that, on one occasion, Mr Brixton had described himself as really “just the cheque book”. Although Mr Brixton denied making this later statement, I accept that he did say something to that effect. I consider, however, that Mr Brixton had sought, at the same time, to be involved actively in the design process. That desire is evident in the number of meetings which Mr Brixton did attend concerning the development of the designs. Mr Saurbrey also said that in about late November 2002, Mr Brixton had told him that the project was “live” as he had received finance approval.

32    The designs discussed at the meetings were both the product design (the design of the bin body, lid and handle pins) and the tooling design (the design of the tools to be used to manufacture those products). The former was done using a 3D CAD file. The latter was also done with a 3D CAD file using as the source the 3D CAD files containing the product design.

33    There are matters concerning these meetings on which I do not accept Mr Saurbrey’s evidence. I will provide reasons shortly for my conclusion that much of Mr Saurbrey’s evidence was unreliable.

34    I accept, contrary to Mr Saurbrey’s evidence, that Mr Brixton did say words to the effect that he wished to have bin with features distinguishing it from other bins on the market. I do not accept Mr Saurbrey’s evidence that Mr Brixton had said that he wished Mastec’s bins to look similar to existing bins because of a concern that, being new to the market, its bins may be perceived as being of lesser quality than those of existing manufacturers. On the other hand, I think it likely, and so find, that Mr Brixton did say words to the effect that he wished the Mastec bin lid to be compatible with the MGBs of other manufacturers so that, in that respect, the bin bodies had to be of a similar design to those of other manufacturers. Mr Brixton was aware that this was a desirable feature. However, I reject Mr Saurbrey’s evidence that Mr Brixton told him that he wished the Mastec bin body to be able to stack with the bin bodies of other manufacturers. In that respect, I accept Mr Brixton’s evidence that there was no reason for him to have wished to have the Mastec bin body able to stack with other bins and, therefore, it is unlikely that he made such a statement.

35    Trident Tooling provided an initial quotation to Mr Brixton dated 8 January 2003. The copy in evidence has a stamp showing that it was sent by facsimile on 14 January 2003, but I accept Mr Saurbrey’s evidence that this may have occurred after the initial provision of the quotation to Mr Brixton. In any event, I do not consider that, for the purposes of this case, anything turns on whether the quotation was provided on the date it bears, or six days later on 14 January 2003. This document included quotations for the separate components of a 240 litre MGB, including bin dividers and a divider bin clip, as well as quotations for a 140 litre bin and bin cover. Although most of the document was either printed or typed, the payment terms were handwritten. It is not necessary to refer to the terms of this quotation in detail given that Trident Tooling provided a replacement quotation concerning the 240 litre MGB dated 17 January 2003 (Quotation 7150).

36    Mastec did not pursue plans at that stage for the manufacture of a 140 litre MGB. Thereafter the discussions between the parties concerned only the 240 litre MGB.

37    Quotation 7150 was for the manufacture of three tools, being for the 240 litre bin body, the bin lid and the handle pin. The separate price for each of these tools was $473,000, $109,500 and $15,800 respectively. However, Trident Tooling quoted a package price for three items of $588,000. The particulars of each tool included the following:

Tool design included

3D modelling from 2D drawing included

38    The quotation concluded with the following:

Quotation is valid for 30 days. Delivery time is given on best estimates and is subject to change, dependent on workload. Confirmation of delivery time will be given at placement of order. Lead times quoted above and in general are from approval of tool design. No mould flow has been quoted unless specified. Progress payments apply unless otherwise agreed. Prices are subject to change upon disassembly of existing tool. Pick up or delivery is not included unless specified above. Quotation is based on receipt of fully surfaced and trimmed CAD Data in IGES format. This quote excludes Australian Goods & Services Tax which is presently 10%, payable by local customers in addition to the base price.

(Emphasis added)

39    It is evident that further discussions occurred between Mr Brixton and Mr Saurbrey after 17 January 2003 before Mastec placed its order on 28 January 2003. Mastec did so, not by simply indicating acceptance of Trident Tooling’s quotation, but by providing an order on its own letterhead (Order 700). The contract required Trident Tooling, amongst other thing, to create CAD drawings for the design of the tooling for the bin body, bin lid and handle pin.

40    Mr Whelan, a tooling designer employed by Trident Tooling, created the initial CAD files for the MGBs. In doing so, he worked from samples, which I find were those provided by Mr Brixton. The initial designs were then discussed in subsequent meetings with Mr Brixton. Mr Whelan, whose evidence I accept, described the process as follows:

[22]    I do not now recall specifically what design features were discussed at individual design meetings, or the dates when the meetings took place, but I do recall the design features discussed, generally what was said or took place in relation to the selection of design features, and the process by which the components of the Mastec MGB were selected and created. In particular, I recall the following in relation to the design meetings for the Mastec project:

(a)    …

(b)    during the design meetings, including the first design meeting, there was discussion regarding the design features to be incorporated into the design of the bin body, bin lid, handle pin and insert to be manufactured;

(c)    examples of existing MGBs were provided by Mr Brixton and available for consideration and discussion at the design meetings, including MGBs manufactured by Sulo, Otto and Nylex. The existing MGBs were used as the basis for discussing design features for aspects such as lid handles, lid structural support, bin handles, raised middle portions of the bin lid, and the means by which detail would be moulded into the lid;

(d)    when a necessary design feature was considered for the first time, usually Mr Brixton made comments as to his views, preferences or desires for the functionality of the feature, and then the advantages and disadvantages of those features (in comparison to existing MGBs) were discussed by meeting attendees;

(e)    at one of the early design meetings, I presented the “240 litre sulo copy” drawing (in its partially completed state at the time) for consideration and discussion;

(f)    in relation to the bin body and lid, Mr Brixton said that, although he wanted the Mastec MGB to be designed to his specifications and requirements, he did not want to deviate too much from what was commonly available in the marketplace at the time;

(g)    I created the CAD files for the Mastec MGB, and I was responsible for making any modifications to the designs in those files (as discussed during design meetings). As was the case with the CAD file for the Mastec MGB bin body, the initial drawings for other components for which tooling was required were created by me by taking a number of measurements from the sample MGBs, cross-checking those dimensions between samples where compatibility was required, and entering the chosen dimensions into a parametric CAD model. This was not difficult to do, and by way of example, to the best of my recollection now I estimate that I spent approximately 6 to 8 hours creating a working CAD file for the Mastec MGB bin lid that was detailed enough to present to Mastec for review and discussion. …; and

(h)    if I made modifications to designs between meetings, I presented the updated designs at the following meeting so that it could be discussed and confirmed.

(Emphasis added)

41    When the product designs were finalised (in about April 2003), Mr Whelan proceeded with the design of the tool for the bin body and another designer at Trident Tooling proceeded with the design of the bin lid and handle pin tools.

42    Trident Tooling completed construction of the tools for the 240 litre MGBs in mid-2003. Mastec paid Trident Tooling a total of $588,000 plus GST for those tools and took delivery of the tools in July or August 2003. Of the total of $588,000, $109,500 was paid for the design and manufacture of the lid tool and $15,800 for the handle tool.

43    Mastec then commissioned others to manufacture the bins, lids and handles using the tooling. The bin body tool was sent initially to Viscount Plastics (Vic) Pty Ltd for trial manufacture and a month or so later to Active Plastic Pty Ltd. Both of these companies had premises in Melbourne. Following the trials, Mastec contracted Trident Tooling to carry out some modifications to the bin body and lid tools. In late 2003, Mr Brixton contracted with Viscount for it to manufacture the MGBs in Adelaide.

44    At the completion of its contract, Trident Tooling did not provide Mastec with the CAD Drawings for the three tools. Mr Brixton did not request that at that stage but later in 2003 he was prompted to do so by Mr Heitmann who had then taken up employment with Mastec. Mr Heitmann told Mr Brixton that he would need the drawings in order to make repairs to the tooling or to modify them. Mr Brixton deposed:

[41]    As a result, from around late 2003 for the next year or so, I contacted [Mr Saurbrey] on a number of occasions by telephone to request the drawings.

[42]    Whenever I made contact with [Mr Saurbrey] to request the drawings, he remained non-committal about providing the drawings to me. He never said that I was not entitled to them, but nor did he ever provide me with the drawings.

45    Mr Saurbrey acknowledged that Mr Brixton had made one request for the drawings which he thought had been in early 2004. He deposed that he had responded to Mr Brixton with words to the following effect:

(a)    Trident Tooling owned the drawings and CAD data;

(b)    Trident Tooling was not obliged to give the drawings and CAD data to Mastec;

(c)    I believed that Mr Heitmann had retained a copy of the relevant CAD data when he left Trident Tooling, and if he needed that material he should get it from him;

(d)    In view of what had occurred with Mr Heitmann’s employment and the investment by Active Plastic in bin moulding machines, if he wanted anything from Trident Tooling that it was not obliged to give, he would first have to provide some compensation for the nearly $1 million that had been invested in setting up a bin production facility at Active Plastic.

46    Mr Saurbrey also deposed that this had been the only occasion upon which Mr Brixton had requested the drawings.

47    Although Mr Brixton said that he had thought that he had made the request on more than one occasion, he could not remember the details of any other conversation.

48    It is not necessary to refer in any detail to the issue concerning Active Plastic to which Mr Saurbrey referred. It is sufficient to say that Active Plastic was a business established by the Trident Group in about 2003; that Mr Saurbrey deposed that Mr Brixton had given him some intimation that Mastec would place orders for the manufacture of MGBs with Active Plastic; and that on the basis of that information, Active Plastic had acquired a tool for the manufacture of MGBs. Mr Brixton disputed Mr Saurbrey’s account. This was very much a collateral issue in the trial and it is unnecessary to make detailed findings concerning it. Had it been necessary to do so, I would have preferred Mr Brixton’s account because, amongst other things, its seems improbable that, having gone to the considerable expense of obtaining its own tools with which to manufacture MGBs, Mastec would then have contemplated placing orders for the manufacture of MGBs by others.

49    Despite my reservations about the reliability of Mr Saurbrey’s evidence generally, I think it probable that he is correct in asserting that Mr Brixton had contacted him on only one occasion to request the provision of the CAD Drawings. However, that one request was sufficient to put Mr Saurbrey on notice of Mastec’s claim and, through him, both Trident Tooling and Trident Plastics.

50    Since 2003, Mastec has promoted, sold and distributed the Mastec MGBs extensively throughout Australia, making sales to:

    local government authorities;

    retailers;

    waste contractors;

    safety product companies; and

    procurement bodies.

Mastec has sold more than 3.7 million lids.

51    Commencing in about 2004, Mastec manufactured the MGBs using the tools manufactured by Trident Tooling. It did so at the factory of Maxiplas Pty Ltd at Ottoway. In 2008, Mastec acquired that factory and has continued to undertake its own manufacture.

52    Mr Heitmann, a director of Maxiplas, was Trident Tooling’s Tool Room Manager and, in that capacity, had been involved in some of the discussions which Mr Brixton had with employees of Trident Tooling in late 2002 and early 2003.

53    Mastec did contract some of the manufacture to others. In particular, between August 2007 and April 2011, Mastec contracted some manufacture of bin bodies to Trident Plastics. Mr Brixton described this as “overflow” work, by which I understand him to mean the manufacture which it could not carry out itself or through its usual contractors. In this period, Trident Plastics manufactured approximately 192,000 240 litre bin bodies, which included approximately 48,000 140 litre bin bodies. Initially, Trident Plastics used Mastec’s own tooling for this purpose but, from about March-April 2008, used its own tooling.

54    Mastec did not ever contract with Trident Plastics to manufacture MGB lids on its behalf.

55    In 2013, Mastec obtained a second tool for the construction of lids for its 240 litre MGBs. The second lid contained some minor variations from that manufactured using the tool made for Mastec by Trident Tooling.

56    Trident Plastics commenced manufacturing and selling its own MGBs in late 2012. It already had the tools for the manufacture of bin bodies and handles and, as I understand it, had been using them in the manufacture of the bin bodies and handles for Mastec. For the manufacture of the lids on the MGBs, Trident Plastics used tooling for which its Plant Services Manager, Mr Dalling, prepared the design and tooling in late 2011-early 2012. Mr Dalling is also a director of Trident Plastics. He deposed, and I accept, that as his starting point for the lid design, he used the CAD files (contained on a CD) for the Mastec tools. Those CAD files, along with the CAD files for the design of other tooling manufactured by Trident Tooling, were contained in the large container of archived material which Trident Plastics had acquired from the Receivers of Trident Tooling in 2009.

57    Mr Dalling deposed that he loaded the CAD files for the Mastec MGB lid into Trident Plastics’ CAD software. He said that he discussed possible improvements on that design with Steen and Jan Saurbrey and, as a result, modified the CAD files for the Mastec MGB lid. Some other variations were made during the manufacturing process. The modifications to the design of the Mastec tool comprised:

(a)    variations to improve water flow to improve cooling and reduce the cycle time;

(b)    an improvement in the hot tip design to improve cooling (thereby reducing cycle time);

(c)    a tapered tooling insert was added to allow additional information to be included on the MGB lid; and

(d)    the clamp plate layout was changed to improve die change times.

58    Mr Dalling said that in addition, some 12 months later, a change was made to the lower edge of the lid to reduce a gap thereby removing the ability for flies and insects to enter the bins.

59    Mr Dalling deposed that the Trident Plastics’ lids varied from the Mastec lids manufactured using the 2003 tooling in the following respects:

(a)    the hinge pin rib of the Trident MGB is approximately 0.5 mm thicker;

(b)    the Trident MGB lid has a date stamp which the Mastec MGB tool does not;

(c)    the Trident MGB lid has a “gate dome” which is not on the Mastec MGB lid;

(d)    the Trident MGB lid does not have a drill guide which the Mastec MGB lid does;

(e)    the Trident MGB lid has “Made in Australia” embossed in it which the Mastec MGB lid does not;

(f)    the rear lip of the Trident lid is 2 mm longer than the Mastec lid.

Nevertheless, on an ordinary visual examination the Trident Plastics lid is very similar to the Mastec lid. Counsel referred, fairly in my opinion, to the Trident Plastics lid as a “lookalike”.

60    Trident Plastics sells the MGBs it manufactures to the same market as does Mastec.

61    As already noted, several of Mastec’s complaints in these proceedings relate to the use by Trident Plastics of Mastec’s MGB lids and handles design. In addition, Mastec complains that Trident Plastics has engaged in conduct (in its promotional material concerning the MGBs it manufactures and otherwise) which is misleading or deceptive.

62    In July 2016, Trident Plastics commissioned the manufacture of a second tool for the manufacture of MGB lids. It did so in order to increase the volume of lids which it could manufacture. It now uses both tools. There are some minor differences between the lids produced by each tool but these do not seem to be significant for present purposes. Trident Plastics does not offer its customers a choice between the lids manufactured by the two tools and may even fill one order with lids produced by each.

The claimed confidential information

63    Mastec identified the confidential information in respect of which it seeks relief as “the Features” and “the Drawings”. “The Features” were defined as:

(i)    a handle pin, with a distinctive and functional design (handle pin); and

(ii)    a lid (Mastec lid), with a distinctive and functional design by reason of the following features:

1.    Lowered lid handles;

2.    Strong one piece handle;

3.    Large flat lid surface area;

4.    Tapered inserts;

5.    Confidential rubbish lid slot;

6.    Two raised strengthening ribs located between the large flat lid surface area and back hinges.

64    “The Drawings” were identified as the CAD drawings in the form of 3D modelling and 2D drawings for:

1.    the Mastec lid;

2.    the handle pin;

3.    the lid tool;

4.    the pin tool.

As can be seen, these drawings related to both the products and the tools to be used to manufacture those products.

65    Mastec pleaded that the Features and the CAD Drawings were of a confidential kind because (a) in 2003 no other person in Australia had designed tools for the manufacture of MGBs; (b) Mr Brixton had selected the Features making use of his involvement and experience in the MGB industry since 1985; and (c) because the Features had been disclosed to Trident Tooling in confidential circumstances.

The witnesses

66    Because of its significance for the findings of fact which follow, it is appropriate to say a little about the witnesses who gave evidence in the trial. Mastec led evidence from Mr Brixton, his son Adam, Gregory Gornall, Paul Heitmann, Andrew Whittaker, Michael Peters and Peter Donnell. Mr Peters and Mr Donnell were not required to attend for cross examination.

67    Mr Whittaker has expertise in industrial design and gave evidence of an expert kind comparing the Mastec lid (manufactured with the Trident Tooling tool) and the Trident Plastics lid (manufactured with its first tool). I accept his evidence.

68    Mr Gornall has extensive experience in the waste and recycling industry and in particular, in the use and supply of MGBs. He is presently engaged by MGB Environmental Consultants Pty Ltd and provides some consultancy services to Mastec. I regarded his evidence as honest and reliable.

69    I considered that Mr Michael Brixton gave his evidence honestly. Counsel for the respondents conceded as much by saying “essentially in the main he was giving honest answers”. Mr Brixton was willing to make concessions which were seemingly against his and Mastec’s interests. It was evident that, in some respects, Mr Brixton did not have a good memory of some matters of detail but, except when I indicate otherwise, I regarded his evidence as reliable.

70    Mr Heitmann’s firm, Maxiplas, performs much of Mastec’s overflow work. I had the impression that Mr Heitmann allowed his sympathy for Mastec’s cause in the present litigation to influence his evidence and he was, to an extent, prone to be argumentative. Mr Heitmann’s evidence contradicting Mr Saurbrey’s claim that Trident Tooling had performed maintenance and modification works on tooling relating to MGBs in the period from 1996 to 2002 was proven to be incorrect. However, on my assessment, that was due to a slip in his memory rather than to more general unreliability. When presented with the objective evidence, Mr Heitmann readily accepted his error. I considered that, overall, it was appropriate to regard Mr Heitmann’s as reliable although some circumspection is necessary.

71    I regarded the evidence of Mr Adam Brixton as both honest and reliable and accept it. I will refer to the significance of that later.

72    The respondents lead evidence from Mr Saurbrey, Mr Scott Dalling, Mr Gerald Whelan and Mr Lindsay Gardner.

73    Mr Saurbrey is a native of Denmark. He has lived in Australia since about 1988 when, as I understand it, he was about 25 years old. Mr Saurbrey is reasonably fluent in English but it was evident that it is not his first language.

74    I did not form a favourable impression of Mr Saurbrey’s evidence and consider that, in a number of respects, it was not reliable. He had a tendency to understate or overstate matters. I had the distinct impression that Mr Saurbrey “invented” some matters as his evidence proceeded.

75    I mention some of the matters which gave rise to my concerns about the reliability of Mr Saurbrey’s evidence. The first was the dishonest statements which he caused Trident Plastics to make in its promotional brochures concerning its experience in the MGB industry. Most of these statements were the subject of Mastec’s misleading or deceptive conduct claim, about which I will make detailed findings later. Regrettably, I consider that these statements should be characterised as having been lies at the time they were made.

76    Mr Saurbrey acknowledged that he was the source of the information contained in the documents containing the dishonest statements. He had also read them and approved their use.

77    Mr Saurbrey’s attempts at explaining the lies did not do him credit. For example, he described the false claim that Trident Plastics had designed and built a 140 litre MGB as “accidental”. He could not explain the changes in the number of MGBs which Trident Plastics claimed to have manufactured for Mastec contained in the successive iterations of its promotional material.

78    I had the strong impression from this evidence that Mr Saurbrey was prepared to make statements as and when they suited him, without regard to their truth. I also considered that that attitude had carried over into the witness box.

79    The second matter raising concerns about Mr Saurbrey’s reliability was his claim to have had experience with, and knowledge of, MGBs at the time Mr Brixton contacted him in late 2002. As I understand it, Mr Saurbrey sought by this means to diminish the significance (including the confidentiality) of the matters disclosed by Mr Brixton during the negotiations and later discussions concerning the designs, and also to establish his own ability to speak with authority about the MGB industry even before 2003.

80    In the affidavit containing his evidence in chief, Mr Saurbrey deposed:

[15]    In addition to work with the automotive industry, from about 1996 Trident Tooling performed tooling work for Viscount Plastics (which I discuss in more detail below) and Nylex to maintain and modify tooling used in the manufacturing of [MGBs] in South Australia. As at 2002, Trident Tooling was still performing this type of work.

…

[29]    Through my work at the various companies in the Trident Group described above, including at Trident Tooling and Trident Plastics, I have gained extensive experience in the plastics and tool-making industries in Australia. In relation to MGBs, as I describe in more detail throughout my affidavit, my experience includes:

(a)    since at least 1996, the maintenance and modification of tooling for MGBs (through work for Nylex);

…

[30]    … As a result of my involvement and business interest in MGBs since 1996, I have also developed a knowledge of the MGBs that have been on the market in Australia since that time.

81    Faced with the affidavit from Mr Peters which indicated that Trident Tooling had not undertaken any tooling work for Viscount in South Australia or in Victoria in the period between 1997 and 2002, Mr Saurbrey deposed in his second affidavit:

I did not intend by [paragraph 15 of my first affidavit] to suggest that Trident Tooling had done work for Viscount Plastics in respect of tooling for MGBs.

This was surprising as his statement in paragraph [15] had appeared to be saying just that, even though it was false.

82    In the second affidavit, Mr Saurbrey set out to establish that Mr Heitmann’s statement that Trident Tooling had not done any maintenance or modification work for tooling used by Nylex in relation to MGBs in the period from 1996 to 2002 was wrong. Mr Saurbrey did demonstrate that, but the same evidence indicated that in fact Trident Tooling had done very little work involving MGBs and much less than Mr Saurbrey had appeared to claim. The documentary evidence indicated only four relatively isolated instances on which Trident Tooling had carried out modification and repair work in the period from 7 May 1998 until 2002. Some of this work did not relate to 240 litre MGBs at all, but instead to 120 litre rubbish bins.

83    In his oral evidence, Mr Saurbrey said that he could remember other instances of the tools for MGBs being brought to Trident Tooling’s premises for repair or modification for which he could not produce supporting documents. He claimed to remember matters such as the cranes which had been used to lift them and the dropping of the tool from the crane on one occasion. He also claimed to have been asked to provide a quotation for the manufacture of a 360 litre MGB. The latter claim seemed particularly implausible given that Mr Saurbrey said that Trident Tooling had provided that quotation some two years or more before 360 litre MGBs were even introduced into the Australian market. It was all the more implausible because Mr Saurbrey recalled doing so only during the course of his cross examination. This was surprising given the obvious attention Mr Saurbrey had given, before coming into the witness box, to the challenge to his experience with MGBs (as demonstrated by his second affidavit). I considered at the time, and have maintained the same view on reading and re-reading the transcript, that this was one instance of Mr Saurbrey “inventing” a recollection to suit his purpose. Given my assessment of Mr Saurbrey generally, I do not accept that evidence.

84    I am satisfied that Mr Saurbrey had had relatively little involvement with MGBs before 2003 and in particular with the MGB industry which he claimed.

85    A further matter which caused me to have doubts about the reliability of Mr Saurbrey’s evidence concerned his account of a telephone conversation which he had had with Adam Brixton in November 2011. Mr Saurbrey’s account was as follows:

[70]    Trident Plastics’ MGB tooling and moulding machines required significant levels of production to make its investment commercially viable. In about November 2011, I made a telephone call to Adam Brixton of Mastec. I said to him that Trident Plastics was concerned that it had not received any recent orders from Mastec of significant volume for the manufacture of MGBs, and if Trident Plastics did not receive significant volume of manufacturing orders from Mastec, Trident Plastics would consider utilising its knowhow and equipment by manufacturing and selling its own MGBs direct to the market. Adam Brixton said to me words to the effect that Mastec only intended to place orders with Trident Plastics for overflow manufacturing when that was necessary.

86    Mr Saurbrey deposed that his brother Jan, Mr Dalling and Mr Heinrick had been present when he had made that call and that he had relayed Adam Brixton’s response to them immediately after its conclusion. Of those persons, Trident Plastics led evidence only from Mr Dalling.

87    Mr Dalling’s account of the conversation matched that of Mr Saurbrey almost word for word. While it is theoretically possible that that was so because both were accurately recounting what had been said, I consider that to be unlikely. For a number of reasons, I think it improbable that the conversation had occurred at all.

88    First, Adam Brixton denied having a conversation to the effect claimed by Mr Saurbrey and Mr Dalling. As already indicated, I thought that Adam Brixton was an honest and reliable witness. I doubt very much that he would have forgotten that conversation, had it occurred. Mr Saurbrey said that he was sure that Adam Brixton would have understood his statement to be in the nature of a threat by Trident Plastics to go into business in competition with Mastec if Mastec did not place further orders with it. That being so, I consider it highly probable that Adam Brixton would have remembered such a threat, had it been made, and the fact that he did not counts strongly against it having been made. Secondly, contrary to the implication in Mr Saurbrey’s account, Mastec had not been placing overflow with Trident Plastics for some time before November 2011. Mr Saurbrey’s own evidence indicated that Trident Plastics had manufactured only 18,916 and 4,820 bin bodies for Mastec in 2010 and 2011 respectively. He acknowledged that those volumes were not significant. This being so, it is evident that Trident Plastics had not been reliant upon Mastec for significant levels of production and could not have been looking for a continuation of work from Mastec, as seemed implicit in Mr Saurbrey’s account. Thus, Mr Saurbrey’s explanation for making the telephone call lacks plausibility. Thirdly, Mr Dalling acknowledged that he had been sent a copy of Mr Saurbrey’s affidavit, although he claimed that he could not remember reading it. Despite that claim, the fact that Mr Dalling had seen Mr Saurbrey’s affidavit provides a plausible explanation for the similarity in their accounts. Fourthly, Mr Dalling modified his account of the conversation in his cross examination as he said that the threat may only have been “implied”.

89    My firm impression was that Mr Saurbrey made the claim concerning the conversation in November 2011 as a means of justifying Trident Plastics’ conduct. The more likely explanation is that, having just concluded a period of operating under a deed of Company Arrangement, Trident Plastics was looking for new areas of activity. Whether that be right or wrong, I regarded Mr Saurbrey’s account of the conversation with Adam Brixton in November 2011 as implausible and therefore as affecting his reliability more generally.

90    I will mention other matters which caused disquiet about Mr Saurbrey’s evidence later in these reasons.

91    I had some reservations about aspects of Mr Dalling’s evidence, in particular, arising from the circumstance that he had been provided with a copy of Mr Saurbrey’s affidavit. I considered his claim that he had not read that affidavit to be implausible. I do not accept at all his account of Mr Saurbrey’s telephone call to Adam Brixton in November 2011, and thought that he had sought to understate his use in 2012 of the Mastec tool CAD Drawings.

92    I regarded Mr Whelan as a reliable witness.

93    Mr Gardner was not an impressive witness. I had the strong impression that he knew that the statements he incorporated into Trident Plastics’ promotional material were false, especially as he had caused some to be increased, or decreased, in subsequent iterations. I considered that his acknowledgement that he had made one reduction in the numbers of bins Trident Plastics claimed to have manufactured for Mastec in order to “tone it down” indicated that he had been aware at the time that the claimed numbers were exaggerated.

Mastec’s contract with Trident Tooling

94    On my understanding, Mastec made its claims with respect to the content of its contract with Trident Tooling in order to provide the basis for other claims made against Trident Plastics and Mr Saurbrey. These included its claim that both had interfered with that contract. As will be seen, I do not consider that Mastec has established an entitlement to relief on these bases, but it is appropriate nevertheless, first to identify the Mastec-Trident Tooling contract and its terms.

95    Mastec pleaded that its contract with Trident Tooling contained written, oral and implied terms. It identified the written terms as being (relevantly) that Trident Tooling would:

    produce tool designs, CAD drawings and the tools;

    deliver the CAD drawings to Mastec at the completion of the contract; and

    on delivery of the drawings to Mastec, either not maintain any copy itself or retain a copy only for the confined purpose of record keeping.

96    The express oral terms of the contract pleaded by Mastec were:

    that any details of the features of the 240 litre MGB provided by Mastec to Trident Tooling for the purpose of the contract would be kept confidential; and

    that Trident Tooling would keep confidential the CAD Drawings.

97    The implied terms pleaded by Mastec were:

    Mastec would be the legal or beneficial owner of the CAD drawings and the beneficial owner of the copyright in the drawings;

    Trident Tooling would keep confidential the CAD drawings; and

    Trident Tooling would not make use, other than for the purposes of performing its contract with Mastec or for the benefit of Mastec, any information concerning the features of the Mastec MGB provided by Mr Brixton or contained in the CAD Drawings as well as the CAD Drawings themselves.

Relevant principles

98    There was no significant difference between the parties as to the principles relevant to the ascertainment of contractual terms and to contractual construction, and reference can be made to them briefly.

99    In Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104, French CJ, Nettle and Gordon JJ referred at [46] to the rights and liabilities of parties under a provision of a contract being determined objectively by reference to text, context and purpose and continued:

[47]        In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

[48]        Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

[49]        However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.

[50]        Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations.

[51]        Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption “that the parties ... intended to produce a commercial result”. Put another way, a commercial contract should be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.

(Citations omitted)

100    This statement of the principles was approved by the High Court in Victoria v Tatts Group Ltd [2016] HCA 5; (2016) 328 ALR 564 at [391]. An appreciation of the commercial purpose of a contract may call for an understanding of the genesis of the transaction, the background and the market to which it relates: International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151 at [8] (Gleeson CJ).

The claimed written terms

101    It was common ground that, insofar as the contract between Mastec and Trident Tooling was in writing, it was contained in Trident Tooling’s Quotation 7150 dated 17 January 2003 and in Mastec’s Order 700 dated 28 January 2003. The latter followed closely the terms of the former. Leaving aside formal parts, the terms of Mastec’s Order were as follows:

Please find following order

1.    1 x 240 Litre Bin Body as per sample

•    1 cavity tool

•    Mould flow included at $8,000.00

•    Tool design included

•    3D Modelling and 2D drawings included

•    …

•    Beryllium Copper included (for rib areas) 40 shot per hour to be achieved together with Viscount Plastics and Trident Tooling

•    Material included at $216,000.00

•    …

Price $473,000.00

2.    1 x 240 Litre Bin Lid as per sample

•    1 Cavity Tool

•    Tool design included

•    3D Modelling and 2D drawings included

•    …

Price $109,500.00

3.    1 x 240 Litre Bin Handle Pin and Bin Handle Inserts

•    8 Cavity Tool (4 x 4 Pins and 4 x 4 Handle Inserts)

•    Tool Design included

•    3D Modelling and 2D drawings included

•    …

Price $ 15,800.00

Total order price $588,000 + gst

•    Warranty on Items 1,2 & 3 will be for 1 million shots per item

•    Tool Build time on items 1,2 & 3 to be 24 weeks from placement of this order

•    Tools (items 1, 2 & 3) are to produce a part that meets the German Din [sic] Standards and also the EN 840 Standard as per samples supplied

•    Payment terms are as follows

30% Progress Payment on purchase of Steel

30% Progress Payment after machining of blocks (estimated time late April 2003)

30% Payment after first die trial (estimated July 2003)

10% Payment on final tool approval (estimated August 2003)

…

•    Progress reports to be made by way of phone calls, fax or emails as to how the tools and words are progressing

•    Steen Saurbrey of Trident Tooling and Mike Brixton of Waste & Recycling Supplies to discuss and verify final design once drawings are completed to ensure all aspects have been covered

•    The above order is based on receipt of fully surfaced and trimmed CAD Date in IGES format.

102    The first of the express written terms alleged by Mastec was not controversial.

103    Mastec alleged that the express written term as to delivery of the CAD Drawings to it at the completion of the contract was contained in the stipulation in relation to each of the three tools that “3D Modelling and 2D drawings included” was part of Trident Tooling’s work and in the stipulation that “the above order is based on receipt of fully surfaced and trimmed CAD Data in IGES format”. It submitted that the effect of these terms was that Trident Tooling was to prepare the 3D modelling and 2D drawings and that it (Mastec) was to receive the CAD data in IGES format. Mastec also relied on these terms in support of its submission that the drawings, modelling and data were confidential to Mastec, to which I will return shortly.

104    The statement in Mastec’s order “3D modelling and 2D drawings included” differed from the corresponding statement in Trident Tooling’s Quotation 7150 which, in relation to each tool, had said “3D modelling from 2D drawing included” (emphasis added in each case).

105    It appropriate at this point to refer to some evidence of Mr Saurbrey. Trident Tooling’s first quotation of 8 January 2003 had also included, in relation to each tool, “3D modeling [sic] from 2D drawing included” (emphasis added). Mr Saurbrey said that at the time he had issued the quotation on 8 January, he had thought that Mastec would be providing completed CAD drawings which Trident Tooling could use in manufacturing the tools. He said that it had become apparent only after 8 January, and before the provision of Quotation 7150 on 17 January 2003, that Trident Tooling was to perform that work as well.

106    I regarded this evidence as implausible for a number of reasons and do not accept it. First, it must have been obvious to Mr Saurbrey by 8 January that neither Mastec nor Mr Brixton had the expertise to produce CAD drawings; that they had not engaged others to do so; and that they were relying on Trident Tooling for that purpose. This is especially so given the number of meetings which had occurred. It is difficult to conceive that, despite the number of meetings, it had not been apparent to Mr Saurbrey that Trident Tooling would be preparing the CAD Drawings. Secondly, a requirement that Trident Tooling prepare the CAD drawings rather than making use of drawings provided by Mr Brixton would have constituted a significant change in the scope of the work. Yet Trident Tooling’s quoted price for the three tools did not change from between 8 January and 17 January 2003. Thirdly, Mr Saurbrey made no mention in the affidavit containing his evidence in chief of this change in arrangements for the provision of CAD drawings even though he had addressed expressly, at [48], the course of the preparation of the CAD drawings. Related to this is that there was no challenge to Mr Brixton’s account on this topic in his cross examination. On the contrary, counsel seemed to assume the truth of his account. This was another topic on which I considered that Mr Saurbrey was prepared to develop an account, or to change his evidence, during his cross examination as he perceived it to suit his interest.

107    For present purposes, I consider that there is no particular significance in the change of expression from “3D modelling from 2D drawing included” to “3D modelling and 2D drawings included”. I consider that the change to the latter is more likely to reflect Mr Brixton’s consideration that the conjunctive “and” made clearer the understanding that the preparation of CAD drawings in both 3D and 2D was work to be performed by Trident Tooling. In particular, it made clear that CAD drawings were not to be provided by Mastec.

108    Counsel for Mastec submitted that the words in Mastec’s Order 700 of 28 January 2003 that “the above order is based on receipt of fully surfaced and trimmed CAD Data in IGES format” constituted an express term that Trident Tooling was to deliver to Mastec the CAD drawings and, by implication, that they were the property of Mastec.

109    If this term in the contract is read out of context, I agree that it could have that meaning. However, when read in context, I am satisfied that the term does not have the effect for which Mastec contends.

110    First, the same term appears in Trident Tooling’s Quotation 7150 of 17 January 2003. Mr Saurbrey said that the passage in which it appeared formed part of Trident Tooling’s standard terms of quotation and I accept that that was so. In that context, it is plain that the words referred to the receipt by Trident Tooling, and not its customer, of the CAD data. It is reasonable to infer that when Mr Brixton incorporated the same term (with one difference which is presently immaterial) into Order 700, the same meaning was intended and understood.

111    Secondly, the term should, in my opinion, be understood in the light of the term which immediately preceded it, namely:

Steen Saurbrey of Trident Tooling and Mike Brixton of Waste & Recycling Supplies to discuss and verify final design once drawings are completed to ensure all aspects have been covered.

In that context, the term indicating that the order was based on receipt of fully surfaced and trimmed CAD data should be understood as a statement that the order was conditional upon the conclusion of the CAD drawings to the satisfaction of Mr Saurbrey and Mr Brixton.

112    Thirdly, the manner of expression of the term was more apt to indicate that the contract was based on Trident Tooling having finalised CAD data. That explains why it states that the order was “based on” the receipt of the CAD data in the specified format rather than indicating that, in addition to the other work to be performed by Trident Tooling, it was to deliver the CAD data to Mastec.

113    Fourthly, the process of design by 2D drawings, 3D modelling and preparation of the CAD data had in fact commenced by 28 January 2003. That course of work forms part of the factual matrix in which the contract is to be construed. It is consistent with the construction of the terms which I prefer.

114    Accordingly, I reject the submission of Mastec as to the second and third express written terms. I consider that it was an express term of the contract that (a) Trident Tooling would prepare two dimensional drawings, three dimensional modelling, and the CAD Drawings; and (b) that Mastec’s order was subject to a condition subsequent, namely, its satisfaction with the final design and adequacy of the drawings. The contract did not contain any express term for the delivery to Mastec of the CAD Drawings. Although Mastec could easily have asked for that in order to make its assessment of them for the purposes of giving final approval, it had not done so.

The express oral term

115    It was common ground that Mastec-Trident Tooling contract did contain an express oral term with respect to confidentiality. The parties disagreed, however, as to the scope and duration of the term.

116    Mr Brixton’s evidence regarding the confidentiality term was as follows:

[23]    At this first meeting, I said to Mr Saurbrey and Mr Heitmann that the project needed to remain confidential. We spoke of this in the context of the information that I was to divulge to Trident Tooling for the purposes of completing the project. We also spoke of this in the context of the drawings for the tools that would need to be prepared for the project. I said words to the effect that this was important because I wanted to design a bin with distinguishing features and did not want my competitors to become aware of the features that I intended to include in the bin.

[24]    I said at this first meeting that I did not want [Mastec’s] competitors to become aware of the project. I explained that it was, to my knowledge, a unique concept to design these tools in Australia. It was my understanding then (and now) that all other bin tools in use in the marketplace at that time had been designed and manufactured overseas (the majority in Europe). My recollection is that I explained this at the first meeting.

[25]    I said to Mr Saurbrey and Mr Heitmann that I did not want [Mastec’s] suppliers to become aware that I was constructing tools to enter the manufacturing side of the industry. I said that I was concerned that these suppliers would stop supplying bins to [Mastec] because [Mastec] would, at that stage, leave the market as a purchaser of their products. I was concerned that until its tools were built, [Mastec] would not be able to supply customers if suppliers were to cease to deal with [Mastec].

[26]    At this meeting, Mr Saurbrey verbally assured me that they would keep the information relating to the project confidential.

117    Mr Heitmann gave evidence to similar effect, saying:

[12]    At this meeting, Mr Brixton said to us that it was critical to keep the project confidential. In particular, Mr Brixton said that he did not want competitors to become aware of the features that he was to include in his bin, as he was concerned that they would copy the bin. He said that he was also concerned that [Mastec’s] competitors would stop supplying [Mastec] with bin products, which he was at that [stage] using to supply to his own customers, if they became aware of the project. Mr Brixton was adamant of the need to keep the project confidential and both I and Mr Saurbrey assured Mr Brixton that we and Trident Tooling would do so.

118    The evidence of Mr Saurbrey and of Mr Whelan, Trident Tooling’s Design Engineer, was to the effect that Mr Brixton had explained that he did not wish his suppliers (and future competitors) to become aware of Mastec’s plan to manufacture its own MGBs because of the risk that they would withdraw supply to him before he could commence manufacture. Neither Mr Saurbrey nor Mr Whelan could recall Mr Brixton saying that he did not wish his competitors to become aware of the features that he intended including in his MGBs because of the risk of them imitating those features. Mr Saurbrey also said that Mr Brixton had not said anything to indicate a requirement for confidentiality beyond completion by Trident Tooling of its project.

119    On this topic, I consider that the evidence of Mr Brixton and of Mr Heitmann is reliable, and accept it. Nevertheless, it is apparent from their evidence that the subject of the express agreement as to confidentiality was the protection of Mastec’s position until it could get its MGBs into the market. Mr Brixton did not ask for confidentiality extending beyond that point. Once the Mastec MGBs were in the market, the need for confidentiality for that purpose would no longer exist because Mastec’s competitors would then know what Mastec was doing, and would be able readily to ascertain the features of its MGBs. Mr Brixton recognised this in his cross examination. He conceded that confidentiality of a permanent kind did not make “commercial sense” once his MGBs were in the market place and subject to inspection, reverse engineering and imitation by competitors. I am satisfied that the oral term as to confidentiality was confined to the “project” and operated only until Mastec commenced manufacture and sale of MGBs using the tools made for it by Trident Tooling.

An implied term as to beneficial ownership

120    The first implied term alleged by Mastec concerned the beneficial ownership of the CAD Drawings and of the copyright in those drawings. The second and third concerned the confidentiality of the CAD Drawings and the use which could be made of them.

121    The matters to be established when a party alleges that a term is to be implied into a contract as a matter of fact are well known: the term must be reasonable and equitable; necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; be so obvious that “it goes without saying”; be capable of clear expression; and not contradict any express term of the contract: BP Refinery (Western Port) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; Codelfa Construction Pty Ltd v State Railway Authority (NSW) (1982) 149 CLR 337 at 346 (Mason J).

122    In relation to contracts which are not complete on their face (such as the Mastec-Trident Tooling contract), the test is not so stringent. In this kind of case, all that is usually required for the implication of a term is that it be necessary for the reasonable or effective operation of the contract in all the circumstances: Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd [2005] FCA 1521; (2005) 225 ALR 57 at [79]. See also Hawkins v Clayton (1988) 164 CLR 539 at 573; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422-3.

123    In support of the first claimed implied term, Mastec referred to Gold Peg which concerned, in part, the question of whether a term should be implied for the ownership of copyright in the design of an invention. Crennan J noted, at [81], that there are numerous cases in which courts have found an implied term that the author of a copyright work will assign to the other party the legal title to the work when called upon to do so because the equitable ownership of the copyright does not belong to the author. Her Honour noted that frequently such an implied term has been found in cases of a commissioning arrangement for the preparation of copyright material, at [82]. Provisions such as s 35(6) of the Copyright Act 1968 (Cth) do not conclude the position because they concern only the legal ownership. Crennan J then went on to cite with approval the following passages in the judgment of Lightman J in Robin Ray v Classic FM Plc (1998) 41 IPR 235 at 247-9:

The issue in every such case is what the client under the contract has agreed to pay for and whether he has “bought” the copyright. The alternatives in each case are that the client has bought the copyright, some form of copyright licence or nothing at all …

The general principles governing the respective rights of the contractor and client in the copyright in a work commissioned by the client appear to me to be as follows:

(1)    the contractor is entitled to retain the copyright in default of some express or implied term to the contrary effect;

(2)    …

(3)    the mere fact that the contractor has been commissioned is insufficient to entitle the client to the copyright. [Absent legislative provision] the client has to establish the entitlement under some express or implied term of the contract;

(4)    ...

(5)    where … it is necessary to imply the grant of some right to fill a lacuna in the contract and the question arises how this lacuna is to be filled, guidance is again to be found in [Liverpool City Council v Irwin [1977] AC 239]. The principle is clearly stated that in deciding which of various alternatives should constitute the contents of the term to be implied, the choice must be that which does not exceed what is necessary in the circumstances …. In short, a minimalist approach is called for. An implication may only be made if this is necessary, and then only of what is necessary and no more;

(6)    accordingly if it is necessary to imply some grant of rights in respect of a copyright work, and the need could be satisfied by the grant of a licence or an assignment of the copyright, the implication will be of the grant of a licence only;

(7)    circumstances may exist when the necessity for an assignment of copyright may be established. … [T]hese circumstances are, however, only likely to arise if the client needs in addition to the right to use the copyright works the right to exclude the contractor from using the work and the ability to enforce the copyright against third parties. Examples of when this situation may arise include:

(a)    where the purpose in commissioning the work is for the client to multiply and sell copies on the market for which the work was created free from the sale of copies in competition with the client by the contractor or third parties;

(b)    where the contractor creates a work which is derivative from a pre-existing work of the client, eg when a draughtsman is engaged to turn designs of an article in sketch form by the client into formal manufacturing drawings, and the draughtsman could not use the drawings himself without infringing the underlying rights of the client;

(c)    where the contractor is engaged as part of a team with employees of the client to produce a composite or joint work and he is unable, or cannot have been intended to be able, to exploit for his own benefit the joint work or indeed any distinct contribution of his own created in the course of his engagement …

In each case it is necessary to consider the price paid, the impact on the contractor of assignment of copyright and whether it can sensibly have been intended that the contractor should retain any copyright as a separate item of property;

…

(Emphasis added)

124    Counsel for Mastec pointed to the following features as justifying the implied term as to beneficial ownership of the CAD Drawings and of the copyright in them.

(a)    Mastec was paying Trident Tooling to assist with the design of its tool and to produce the CAD drawings for those tools. That is to say, it was paying Trident Tooling both for the design and the manufacture of each of the tools;

(b)    Mastec was an established participant in the MGB industry and Trident Tooling was not. Trident Tooling’s business was tool making and not manufacturing MGBs or their components. There was no reason why, viewed objectively, Trident Tooling should have had any expectation that it could retain the CAD Drawings for itself or for the benefit of a competitor of Mastec. The circumstance that it was not permitted to make commercial use of the drawings did not create difficulties for it;

(c)    Mr Brixton brought his expertise with respect to MGBs to bear and had a substantial input into the design;

(d)    Mastec was seeking to establish itself in the market for MGBs using the tools designed and manufactured by Trident Tooling and its capacity to do so profitably would be undermined if a competitor could take advantage of the drawings so as to produce identical or substantially similar products without the same capital investment;

(e)    Mastec had paid a significant sum for the design and manufacture of the tools;

(f)    Mastec had engaged Trident Tooling because of its wish to use a toolmaker with no connection to, or involvement with, the MGB industry and not because of its knowledge or experience with the MGB industry.

125    Counsel for the respondents submitted that the examples in Robin Ray to which Crennan J had referred in Gold Peg should be distinguished. Unlike the first example, Trident Tooling had not prepared the CAD Drawings with the intention of Mastec selling multiple copies of them, but instead so that it (Trident Tooling) could use them in the manufacture of one tool of each kind. Unlike the second example, the CAD Drawings prepared by Trident Tooling had not been derived from existing works of Mastec and their creation did not otherwise involve any infringement of the rights of Mastec. Unlike the third example, Trident Tooling had not been engaged as part of a team with employees of Mastec to produce the CAD Drawings.

126    The respondents accepted that Mastec may have had a limited perpetual non-exclusive licence in respect of the CAD Drawings which entitled it to a copy of them. However, whether it did or not was not put in issue in the present proceedings.

127    The examples given in Robin Ray are not to be understood as though they are statutory provisions. On the contrary, Lightman J was stating them as examples only. On my understanding, the underlying rationale for the first example given in Robin Ray is the client’s need to use the copyright to achieve the purpose for which the document was brought into existence. The replication and sale of copies of the document is but one instance of such a need.

128    In this case the CAD Drawings were brought into existence as a necessary incident of the manufacture of the tools. I infer (as there was no indication to the contrary), that the parties’ contemplation in early 2003 was that that manufacture would be a one off event. There was some evidence that resort to the original CAD Drawings was also necessary when tools are repaired or modified. Mr Saurbey gave this as one of the reasons why Trident Plastics had wished to purchase all the CAD data from the receivers of Trident Tooling – he expected that Trident Plastics would be contracted to carry out repairs or modifications to many of the tools Trident Tooling had manufactured. Mastec was not of course bound to use Trident Tooling for repairs or modifications of the tools and, in the events that happened, it did not. However, whatever need Mastec had for the CAD Drawings in connection with repairs and modification would not justify an implied term as to the beneficial ownership of the Drawings or of the copyright. I accept the respondents’ submission that an implied term giving Mastec a limited non-exclusive license to use the CAD data in relation to repairs and modifications would have been sufficient to satisfy this need.

129    It was not, and could not have been, suggested that the second of the examples given in Robin Ray (a work derived from an earlier work of the client) was applicable in the present case.

130    The third kind of case referred to in Robin Ray requires more detailed consideration. It is true that Trident Tooling was not engaged as part of a “team” with employees of Mastec to produce the CAD Drawings. It was, however, engaged to work closely with Mr Brixton in the preparation of the Drawings and he did in fact participate in that way. As already indicated, the product designs from which the CAD Drawings were derived were prepared by Mr Brixton working in conjunction with Mr Whelan, and with both making use of the samples of other products which Mr Brixton took to Trident Tooling’s factory. This is not an instance of a designer commissioned to produce drawings having been left to his or her own devices or to exercise his or her own creativity, judgment and ideas in developing a design from the client’s concept. In this case, the designer carried out his task in close collaboration with the principal and at almost every stage incorporated the ideas and requirements of the principal. The resultant design of the products was derived from Mr Brixton’s inputs as much, if not more, than those of Mr Whelan. The latter brought his technical skills to bear, but he was very much giving effect to Mr Brixton’s ideas.

131    However, it is necessary to keep in mind that two kinds of drawings were involved: the drawings of the product and the drawings of the tool to be used to manufacture the product. Mr Brixton’s input related to the former. Once the product designs had been finalised, the preparation of the CAD Drawings for the tools to be used to manufacture them was almost exclusively within Mr Whelan’s province. I do not understand Mr Brixton to claim to have participated as closely in the preparation of the tool drawings, although he had an interest in them. My understanding is that he was concerned with such matters as cycle times, cooling times and the like, but not with the technical means by which these matters were to be achieved.

132    In these circumstances, I consider that there is a reasonable basis on which Mastec can claim beneficial ownership of the CAD Drawings relating to the products, but not of the CAD Drawings relating to the tooling. In particular, I do not regard the preparation of the CAD Drawings for the tooling as involving any of the circumstances which Lightman J in Robin Ray gave as illustrations.

133    The respondents raised a number of matters by way of answer to Mastec’s claims with respect to the implied terms. Mr Saurbrey said, more than once, that resort to prior work was a necessary and ordinary incident of a tool maker’s work. For example:

Q:    Had you looked at those Mastec drawings or CAD data between 2003 and 2009?

A:    Yes. We had.

Q:    And what was the purpose of that?

A:    To help designing the Nylex bins and our own bin tools. Like I said … we can’t operate our business. No tool room [can] if they don’t rely on prior work to facilitate designing and implement[ing] new tools.

134    On my assessment, this evidence of Mr Saurbrey did not distinguish between making use of the skill and knowledge acquired in the course of work for one client when carrying out later work for another client, on the one hand, and making use of one client’s design and drawings to create a product for a later client, on the other. One may readily accept that acquired skill and know-how would become part of a tool maker’s stock of knowledge which it could reasonably be expected could be used in the performance of later contracts. However, that is a different thing from using one client’s design and the drawings brought into existence to give effect to that design to manufacture a product for a later client. In my assessment, this was yet another example of Mr Saurbrey’s tendency to overstatement.

135    Counsel for the respondents also emphasised that many, if not all, of the features which Mr Brixton wished the Mastec MGB lids to have were present in some of the MGB lids already in the market. This is a topic to which I will return. As will be seen, I consider that, while many of the features were already known, the CAD Drawings of the products and in turn the tools, reflected the combination of particular features which Mr Brixton, with his expertise and experience in the MGB industry, regarded as desirable and which, after some reasonably rigorous evaluation, were settled on.

136    In Gold Peg, Crennan J referred, at [85], to Briggs Group Ltd v Evans [2005] EWCA (Civ) 11; (2005) FSR 31 in which the Court of Appeal described as “fantastic” a conclusion that the commissioned designer of a logo had retained the legal and beneficial interest in the logo subject only to a limited licence as to use by the commissioning party. The Court of Appeal considered that the hypothetical officious bystander would surely have been given the answer “of course not” if asked whether the parties intended that the designer should retain those rights.

137    I consider that the hypothetical officious bystander would have been given the same answer in the present case in relation to the CAD Drawings of the products. A number of indicia suggest that that must be so: although many, if not all, of the features which Mr Brixton wished to be included in the Mastec MGBs could be found in some of the existing MGBs in the market, he was conveying to Trident Tooling, in a confidential context, the particular features which he (as a person with experience and expertise in the MGB industry) regarded as desirable; Mastec was paying Trident Tooling substantial sums for its work of which the preparation of the CAD Drawings was an essential incident; and it seems improbable that either party could have intended that Trident Tooling would be free, immediately after the conclusion of its contract with Mastec, to make such use as it chose of the CAD Drawings of the products or of the tools, including using them to commence manufacture MGBs itself or providing them to others for that purpose.

138    Mr Brixton said:

At that time, Trident Tooling only operated a tool room. … It did not cross my mind that Trident Tooling would itself use the drawings created for the project to manufacture the Mastec bin body or [the] Mastec lid itself.

That evidence has the ring of truth about it. It confirms my conclusion about the likely answer to the question from the hypothetical officious bystander.

139    Accordingly, I consider that Mastec has made good its claim that it was the beneficial owner of the CAD Drawings of the products and of the copyright in those drawings.

140    However, I consider, for the reasons earlier given, that the CAD Drawings for the tools stand differently. Mastec has not shown that it had the beneficial ownership of those drawings or of the copyright in them. Any restraints on Trident Tooling’s use of them are to be found in the protection which the law affords to misuse of confidential information.

An implied term as to the confidentiality of the CAD Drawings and as to their use

141    Mastec submitted that its contract with Trident Tooling included an implied term requiring the latter to keep confidential the CAD drawings (of both the products and the tools) and the information it had provided for their preparation. It referred in this respect to Saltman Engineering Co Ltd v Campbell Engineering Co Ltd [1963] 3 All ER 413 at 414 in which Lord Greene MR said:

If two parties make a contract, under which one of them obtains for the purpose of the contract or in connexion with it some confidential matter, then, even though the contract is silent on the matter of confidence, the law will imply an obligation to treat that confidential matter in a confidential way, as one of the implied terms of the contract; but the obligation to respect confidence is not limited to cases where the parties are in a contractual relationship.

142    Mastec relied on the same features identified above in relation to the implied term as to the ownership of the CAD Drawings and copyright for the implied term that Trident Tooling would keep confidential the information and the CAD Drawings and, by implication, not make use of them for its own benefit.

143    The submissions of the parties did not suggest that any distinction was to be drawn between the ascertainment of confidentiality of information for the purposes of the claimed implied term, on the one hand, and for the equitable duty of confidence, on the other. In Australian Medic-Care Co Ltd v Hamilton Pharmaceutical Pty Ltd [2009] FCA 1220; (2009) 261 ALR 501, Finn J gave the following summary of the principles bearing upon the ascertainment of the confidentiality of information:

[633]    The essential attribute of confidential information is what has been described as “relative secrecy”: … Whether this attribute exists in a given case will be often a question of degree and a variety of criteria have been invoked in varying contexts to sharpen the inquiry to be made:

(i)    is the information in question widely known, or publicly available in the relevant industry, trade, etc: ... ;

(ii)    has the confider made the information public by using it in its manufactured products and placing it on the market, or would the ascertainment of the information from the manufactured product by reverse engineering or otherwise require the expenditure of time, effort, money or experimentation: … ;

(iii)    did the confider produce or obtain the information only after the expenditure of time and/or money by way of research or in the application of skill and ingenuity; … could another person acquire or duplicate the information only by going through a like process: … ;

(iv)    what steps has the confider taken to preserve the secrecy of the information and to prevent it becoming public knowledge: … ;

(v)    is the information intrinsically valuable or is it valuable to the confider or to a competitor or other interested party: … ; and

(vi)    would a reasonable person in all the circumstances recognise the information to be the “property” of the confider: ...

[634]    There is no single test for determining when the communication of confidential information will import an obligation of confidence. As Gowans J said in Ansell Rubber (at 40):

That obligation may come into existence by reason of the terms of an agreement, or what is implicit in them, by reason of the nature of the relationship between persons, or by reason of the subject-matter and the circumstances in which the subject-matter has come into the hands of the person charged with the breach.

(Citations omitted)

144    An important matter (but not the only matter) bearing on the existence of this claimed implied term is whether the individual features conveyed by Mr Brixton to Trident Tooling were truly confidential and, even if so, whether the parties could reasonably have expected that confidentiality to be continued once the Mastec MGBs entered the market.

145    For this purpose, it is necessary to make findings about the features of the Mastec MGB lid claimed by Mastec to be distinctive. I indicate now my conclusion that, other than in limited respects, Mastec has not made out its claim of distinctiveness in respect of the individual features. It is apparent, however, that the combination of individual features did distinguish the Mastec lids from most others in the market.

One piece handle design

146    Mr Brixton deposed that the MGBs of other manufacturers had a two piece handle design, that is, handles on either side of the upper rear of the bin body and with a gap between the two handles. Based on his observations of consumer use, he considered that a single handle design would be preferable and had Trident Tooling incorporate that feature into the design of the Mastec MGBs.

147    A one piece handle design was not, however, distinctive to Mastec. A number of samples of bin lids of different manufacturers, which had been available in 2003, were tendered as part of the evidence in the trial. From those samples, it is apparent (and I find) that at least some MGBs manufactured by Sulo and Otto had a one piece handle design.

148    Mastec also pleaded that its one piece handle had a distinctive and functional design but it did not lead any evidence to establish that that was so.

Lowered handles

149    Mr Brixton deposed that the lids on the MGBs of other bin manufacturers had handles which were elevated above the height of the lid surface. These are the handles used to lift the lid of the MGB. Mr Brixton had appreciated that, if the handle heights were lowered, it would be possible to increase the number of lids which could be stacked on top of one another and then placed inside a MGB. This was advantageous in facilitating the freight of the MGBs. Accordingly, he wished the Mastec MGBs to have a lowered lid handle.

150    Many of the tendered MGB lids did have raised handles and those on the Mastec lid are lower than most others. However, a lid manufactured by Sulo in 1994 had lowered handles which (other than in respects which are presently immaterial) are not perceptibly different from those on the Mastec lid. Mastec did not establish that the lowered handles on its lids meant that 13 lids could be placed inside an MGB whereas that was not possible with the corresponding lids manufactured by Sulo.

Large flat lid surface

151    Mr Brixton deposed that the lids of other bin manufacturers had a “small surface area that was slightly convex in its design”. He considered that this also created difficulties with the stacking of lids for transportation and limited the number and size of the inserts for labelling which could be stamped on the lids. Accordingly, he ensured that the Mastec lids had “a larger and flatter lid surface in the design”.

152    All of the sample bin lids manufactured before 2003 which were tendered in evidence had a raised area in the middle of the lid. In some instances, these lids had a convex profile. The Mastec lid has a raised flat area in the middle of the lid which is larger than that on the pre-2003 samples. In a number of instances, the raised area in the middle of the lids included stamped information, commonly the name of the manufacturer and the year of manufacture.

153    A number of the samples of lids manufactured since 2003 include a larger raised area in the middle of the lid corresponding approximately with that on the Mastec lid so that the Mastec lid is no longer distinctive in that respect. I accept, however, that in this respect the Mastec lid was different from those in the market in 2003, but I am not willing to accept that the change was such as to make the Mastec lid distinctive.

Tapered inserts

154    Mr Brixton had noticed that a number of customers placed stickers or labels on the MGBs, containing statements such as “This Side to the Road” or “No Hot Ashes or Liquids”. A tapered insert is a device which can be inserted into the tool allowing information of that kind to be stamped into the MGB during the process of manufacture. Mr Brixton wanted the tool for the Mastec lids to allow for the use of tapered inserts in this way.

155    However, the samples of lids manufactured before 2003 indicate that this was not distinctive. A number of the lids included stamped information, suggesting that tapered inserts may have been used. One cannot be certain that that was so because of the possibility that the provision for the stamping of this information was in the tool itself and not derived from an insert. However, given the known use in the industry at the time of tapered inserts to achieve the same effect, it is probable (and I so find) that the stamped information on the sample lids in existence in 2003 had also been incorporated using tapered inserts. At the least, it can be said that Mastec did not prove that its use of tapered inserts in the way contemplated by Mr Brixton was distinctive.

Confidential rubbish lid slot

156    Mr Brixton deposed that it was the practice of a number of customers to modify the MGB lids, post manufacture, by manually cutting a slot in the lid so that, with the lid padlocked, the MGB could be used for the disposal of confidential material. He said that this often resulted in an “uneven cut and unappealing finished appearance”. Accordingly, he had Trident Tooling incorporate into the design the etching for an inbuilt slot which could easily be removed post manufacture, if that was required by the customer.

157    None of the sample bins tendered in evidence had this feature and I accept that the Mastec lid was, to this extent, distinctive.

Two raised ribs

158    Mr Brixton deposed that he considered that the incorporation of two raised ribs from the elevated flat area of the lid surface to the handle would strengthen the lid. He had this feature built into the Mastec lid, saying that he also thought it would give the Mastec lid “a specific look” which would result in it being identifiable to customers.

159    However, the samples in evidence of lids manufactured before 2003 show that the Sulo lids at least had the same feature. This cannot be regarded as distinctive.

Conclusion on distinctiveness

160    In summary, I consider that, with few exceptions, the individual features which Mr Brixton regarded as distinctive were available on at least some of the MGB lids in the market in late 2002. In disclosing those individual features to Trident Tooling, Mr Brixton was not disclosing confidential information.

The features in combination

161    Mr Brixton’s disclosure of the particular features in combination which he regarded as desirable stands differently. Trident Tooling received that information from a person who, by reason of his involvement and experience in the MGB industry, had expertise which it did not. I note again my earlier rejection of Mr Saurbrey’s claim to have had significant experience of the MGB industry at the time he met Mr Brixton.

162    In addition, Trident Tooling received Mr Brixton’s explanation for the desirability of the features he wished to have included. I referred earlier to Mr Whelan’s evidence that Mr Brixton wished to have the Mastec MGBs designed to his specifications and requirements; that at the various design meetings Mr Brixton had conveyed his views, preferences and desires for the functionality of the features in question; and that the advantages and disadvantages of the features were then discussed by those present. In this way, the employees of Trident Tooling received detailed information from an expert about what made particular features desirable and attractive. This was a form of confidential information.

163    It is not readily to be supposed that either party intended that Trident Tooling would be free, on the conclusion of its contract with Mastec, to use the information for its own purposes or to make it available to others. Had the question been raised at the time the contract was negotiated, it is obvious that the answer would have been “of course not”. I am satisfied that Mr Brixton would not have proceeded with the contract had there not been unanimity on that question. I have already referred to his evidence that it had not crossed his mind that Trident Tooling could use the CAD Drawings and the information they contained for his own purposes.

164    The respondents sought to diminish the significance of the confidentiality by emphasising the ease with which they could have engaged in a process of reverse engineering. They led evidence from Mr Dalling to the effect that, if he had not had the CAD files for the Mastec MGB lid available to him in late 2011, he would have taken the following steps to create the design for the Trident MGB lid tooling:

(a)    obtained a lid from an MGB manufactured by Mastec or another manufacturer;

(a)    used a 3D scanner to scan the lid so as to create an electronic data file containing the dimensions and configuration of the lid; and

(b)    taken the data collected by the 3D scanner and loaded it into Trident Plastics’ CAD software to create a CAD file of the scanned object. That CAD file could then have been used in the same way as any other CAD file.

165    Mr Dalling deposed that the scanning aspects of this process could be carried out relatively quickly and at modest expense (less than USD $5,000).

166    Mr Whittaker deposed that, for the purposes of preparing his report in connection with these proceedings, it had taken him five to 10 days to obtain the STL files created by the 3D scanning of lid samples provided to him at a cost of approximately $1,500. Thereafter, it had been a matter of a few minutes to import the STL files into the 3D CAD viewing program.

167    One may accept that, with modern digital equipment, the process of reverse engineering can be carried out reasonably quickly. Nevertheless, this is possible only with the use of reasonably sophisticated equipment. Furthermore, it remains significant to my mind that in late 2011 or early 2012 Trident Plastics considered it cheaper and more expeditious to locate the CD containing the Mastec CAD files amongst the archived material acquired from the receiver of Trident Tooling and to use those files rather than the “straightforward” process which it now contends was open to it. Further, the time at which Trident Tooling became subject to the duty of confidence was in 2003, and Trident Plastics in 2009. The evidence did not indicate that the modern scanning techniques were available in 2003 and I note that Mr Whelan did not depose to having made use of any scanning device when in early 2003 he was preparing the CAD Drawings for the Mastec MGB bin lids or hinge pins.

168    I consider that it is also appropriate to take into account that, after Mastec had carried out trials using the tools manufactured by Trident Tooling, it returned those tools to Trident Tooling in about October 2003 for modifications and adjustments. Trident Tooling rendered an invoice to Mastec for this work. It indicated that its total costs were $106,000 but that it was willing to accept $50,000 in satisfaction of the account.

169    The invoice indicated that Trident Tooling had raised a charge of $10,000 for “design modification cost” so as to be able to “fit one more bin into transport stack”. It appears therefore that Trident Tooling had modified the CAD Drawing to effect an improvement thought necessary after the conduct of trials. Mastec submitted that Trident Plastics’ use of the CAD Drawings for its tools meant that it had been saved at least of some of the trial work which it had had to undergo in 2003, as well as the expense of modifications to take account of the lessons learnt during the trials. I accept that submission. In doing so, I do not regard as persuasive Mr Dalling’s evidence to the effect that the work described in Trident Tooling’s invoice did not appear to be significant. I consider that to be an example of Mr Dalling seeking to understate the significance of matters as and when he perceived it to suit the interests of Trident Plastics.

170    In short, I am not satisfied that the ease of replication meant that Trident Tooling was not subject to a duty of confidence with respect to the CAD Drawings.

171    In my opinion, the implied term for which Mastec contended was reasonably necessary for the effective operation of the contract. Without it, the contract would not have proceeded at all.

172    The reasons I will give in respect to the implied equitable duty also support this conclusion.

173    As will be seen however, this conclusion will not itself lead to a form of relief in favour of Mastec, as its contract was with Trident Tooling and not Trident Plastics.

The duty of confidence in Equity

174    Next, Mastec claimed that Trident Tooling had been subject to the equitable duty of confidence having regard to the nature of the information, the circumstances in which the information had been disclosed, and Trident Tooling’s relationship with Mastec. The duty had both positive and negative aspects: a duty to maintain the confidentiality of the information, and a duty not to use the confidential information for any purpose other than the completion of the contract. It submitted that that duty precluded Trident Tooling and others from making use of the CAD Drawings, again of both the products and the tools.

175    Mastec contended that by taking and using the CAD Drawings for their own benefit, each of Trident Plastics and Mr Saurbrey had misused the confidential information.

176    Equity will grant relief against an actual or threatened abuse by a recipient of confidential information provided by a confidor providing that three elements are established: Australian Medic-Care at [632]. Those elements, derived from Saltman Engineering and Coco v A N Clark (Engineers) Ltd [1969] RPC 41 at 46, are:

(a)    the information in question must be identified with specificity;

(b)    it must have the necessary quality of confidence; and

(c)    it must have been received in circumstances importing an obligation of confidence.

177    The accepted basis of the equitable jurisdiction to relieve against an actual or threatened abuse of confidential information lies “… in the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained”: Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 at 438; Australian Medic-Care at [631].

178    For the reasons given in relation to the implied contractual duty with respect to the confidentiality, I am satisfied that the elements for the equitable duty of confidence are also established. In particular, I am satisfied that Mr Brixton’s selection of the particular features which he wished to have incorporated, and his explanations and justifications for that selection constituted confidential information. Trident Tooling received that information in circumstances which imported an obligation of confidence extending beyond that for which the express oral term provided.

179    Counsel for the respondents emphasised that, providing that there is no infringement of intellectual property rights, a manufacturer may copy the design of a rival so as to manufacture and distribute a product which is similar to that of the rival: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191. Counsel also emphasised the ease by which any competitor could, once the Mastec MGB was in the market, engage in a process of reverse engineering so as to imitate its design. That being so, this was not a case in which there should be any intervention by Equity.

180    However, the authorities show that the equitable duty of confidence has been applied even in circumstances of the kind to which counsel referred. The requisite confidentiality is commonly found in cases in which a commissioning client has disclosed confidential information to a manufacturer in order that the latter may produce an item for the client.

181    An early example is Saltman Engineering in which Lord Greene MR said at 415:

[I]t is perfectly possible to have a confidential document, be it a formula, a plan, a sketch, or something of that kind, which is the result of work done by the maker on materials which may be available for the use of anybody; but what makes it confidential is the fact that the maker of the document has used his brain and thus produced a result which can only be produced by someone who goes through the same process.

What the defendants did in this case was to dispense in certain material respects with the necessity of going through the process which had been gone through in compiling these drawings, and thereby to save themselves a great deal of labour and calculations and careful draughtsmanship. No doubt, if they had taken a finished article, namely, the leather punch, which they might have bought in a shop, and given it to an expert draughtsman, that draughtsman could have produced the necessary drawings for the manufacture of machine tools required for making that particular finished article. In at any rate a very material respect they saved themselves that trouble by obtaining the necessary information either from the original drawings or from the tools made in accordance with them. That, in my opinion, was a breach of confidence.

182    In Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37, Gowans J reviewed a number of the authorities in this area and, at 44-5, quoted with approval the following passage from the judgment of Roxburgh J in Terrapin Ltd v Builders’ Supply Co (Hayes) Ltd [1967] RPC 375, at 391-2:

As I understand it, the essence of this branch of the law, whatever the origin of it may be, is that a person who has obtained information in confidence is not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication and springboard it remains even when all the features have been published or can be ascertained by actual inspection by any member of the public. The brochures are certainly not equivalent to the publication of the plans, specifications, other technical information and know-how. The dismantling of a unit might enable a person to proceed without plans or specifications, or other technical information, but not, I think, without some of the know-how, and certainly not without taking the trouble to dismantle. I think it is broadly true to say that a member of the public to whom the confidential information had not been imparted would still have to prepare plans and specifications. He would probably have to construct a prototype, and he would certainly have to conduct tests. Therefore, the possessor of the confidential information still has a long start over any member of the public. The design may be as important as the features. It is, in my view, inherent in the principle upon which the Saltman Case rests that the possessor of such information must be placed under a special disability in the field of competition in order to ensure that he does not get an unfair start; or, in other words, to preclude the tactics which the first defendants and the third defendants and the managing director of both those companies employed in this case.

183    In Australian Medic-Care, Finn J identified the necessity for the expenditure of time, effort, money or experimentation in ascertaining information from a manufactured product by a process of reverse engineering as being one indication that the information conveyed had been confidential.

184    Likewise, in Krueger Transport Equipment Pty Ltd v Glen Cameron Storage & Distribution Pty Ltd [2008] FCA 803, Gordon J said, at [89]:

[T]he standard that must be met to establish the necessary quality of confidence is low. For example, confidentiality can attach to information that is not entirely novel or original, provided the information was not commonly or publicly known at the time of the alleged breach. Confidentiality can also attach to a design that draws on already known information to create a new solution to a problem. In British Celanese Ltd v Courtaulds Ltd (1935) 52 RPC 171 at 193, Lord Tomlin observed that there may well be inventive merit in combining in one combination, integers which are themselves old or the subject of common knowledge. In fact, that which is required to transform common knowledge into a matter of commercial confidence may involve little more than “work done by the maker upon materials which may be available for the use of anybody, so as to achieve a result which can only be achieved by somebody who goes through the same process”: …

(Citation omitted)

185    These authorities reflect the more general principle that, when confidential information is conveyed, its use and further disclosure is limited to the purpose for which it was given in the first place and that Equity will intervene to restrain a use for any other purpose: Torrington Manufacturing Co v Smith & Sons (England) Ltd (1966) 83 RPC 285 at 301; Australian Medic-Care at [637]. Reference may also be made to Ackroyds (London) Ltd v Islington Plastics Ltd [1962] RPC 97.

186    In view of the matters to which I have referred in connection with the implied contractual terms and the principles established above, I am satisfied that Mastec has made good its claim of a duty of confidence.

187    The submissions as to the liability of Trident Plastics and of Mr Saurbrey for the breach of confidence were remarkably brief. In particular, the respondents did not seem seriously to dispute Mastec’s claim that, if a breach of confidence was otherwise established, they had been a knowing participants in that breach and thereby amenable to relief in Equity. In these circumstances, detailed discussion in these reasons is not necessary. It is sufficient to refer to the authorities noted by the authors of Meagher, Gummow and Lehane’s Equity: Doctrine and Remedies, 5th Edition at [42-155].

Breach of fiduciary duty

188    Mastec’s Statement of Claim included an allegation that Trident Tooling and Mr Saurbrey had come under duties of loyalty and fidelity so as to be subject to a fiduciary duty not to misuse the confidential information. By [21] of the Statement of Claim, Mastec alleged that by procuring and arranging for the provision of the confidential information to, and use by, Trident Plastics, Mr Saurbrey had been in breach of his fiduciary duty as well as the equitable duty of confidence. However, Mastec did not advance any separate submissions in support of the claimed fiduciary duty or its breach, and I took it not to be pressed.

Conversion

189    Mastec’s pleaded claim was that Trident Plastics had, by acquiring and retaining the CAD Drawings or, in the alternative, by acquiring the Drawings and appropriating them for its own use, converted the Drawings for its own use.

190    The submissions made by each party concerning this cause of action were brief but counsel for Mastec indicated that it was pursued.

191    The respondents’ submissions were as follows:

… Mastec is not, and has never been, the owner of the Drawings. Further, it has never had any right to possession of the Drawings to the exclusion of Trident Tooling and, later, Trident Plastics. Accordingly Mastec’s claim in conversion should be rejected at this threshold level.

192    The tort of conversion involves dealing with a chattel in a manner repugnant to the immediate right of possession of the person who has the property or special property in the chattel. It may take the form of a disposal of the goods by way of sale or other intended transfer of an interest followed by delivery, or of the destruction or change of the nature or character of the thing: Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 at 229 (Dixon J).

193    The elements of the tort were also summarised by Lord Nicholls in Kuwait Airways Corporation v Iraqi Airways Co (No 3) [2002] UKHL 19; (2002) 3 All ER 209 at 221-2:

In general, the basic features of the tort are threefold. First, the defendant’s conduct was inconsistent with the rights of the owner (or other person entitled to possession). Second, the conduct was deliberate, not accidental. Third, the conduct was so extensive an encroachment on the rights of the owner as to exclude him from use and possession of the goods. The contrast is with lesser acts of interference. If these cause damage they may give rise to claims for trespass or in negligence, but they do not constitute conversion.

194    I have found that Mastec had beneficial ownership of the CAD Drawings relating to the products but not of the tools. Mastec’s claim of conversion, as I understand it, relates to the latter. It did not have a right to possession of those CAD Drawings to the exclusion of Trident Tooling.

195    Accordingly, the elements of the tort of conversion are not established in the present case.

Procuring breach of the Trident Tooling contract

196    Mastec’s next claim was that the respondents had “procured and arranged” (a) for the provision of the confidential information by Trident Tooling to Trident Plastics; and (b) its use by Trident Plastics, in breach of the terms of Mastec’s contract with Trident Tooling, knowing and intending that Trident Tooling would breach that contract.

197    The principles concerning the tort of interference with contractual relations were summarised by Bray CJ in Davies v Nyland (1975) 10 SASR 76 at 98 as including (relevantly):

1.    A knowing and intentional interference by the defendant with the plaintiff’s contractual rights without justification is an actionable tort.

2.    Such an interference may be, inter alia, the procuring of a breach of a legally binding contract not yet fully performed between the plaintiff and the third party or preventing the performance of such a contract.

3.    The interference in question must be unlawful but “where it is direct, the persuasion, procurement, inducement, or other form of interference is regarded by the law as wrongful in itself; where it is indirect, the means by which the interference is effected must be, or include, an unlawful act, that is, an act which the defendant is not in law at liberty to commit”.

4.    The defendant must have knowledge of the existence of the contractual relations interfered with …

5.    The interference must be intentional.

(Citations omitted)

198    The requirement for the interference with the plaintiff’s contractual rights to be intentional is to be noted. See also in this respect Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 at 41-3 (Lindgren J).

199    Neither party made detailed submissions in relation to this cause of action of Mastec. I consider that the resolution of the case does not require a detailed consideration of the tort. That is because it is plain that Mastec cannot establish that the interference of which it complains was intentional. Although I have, for the reasons mentioned, reservations about the reliability of Mr Saurbrey’s evidence, I accept the genuineness of his evidence that he believed that Trident Tooling had no continuing contractual obligations to Mastec. I also accept the genuineness of his evidence that, in 2009 when Trident Plastics acquired the archived material from the Receivers of Trident Tooling, he had not adverted to the inclusion of the CAD drawings relating to Mastec’s MGBs in particular in the material acquired.

200    Accordingly, this claim of Mastec fails.

Misleading or deceptive conduct

201    Mastec claimed that Trident Plastics had engaged in misleading or deceptive conduct of three kinds:

    by its distribution of certain material by which it promoted its MGBs;

    by its distribution of the same material in conjunction with the promotion, distribution and sale of its MGBs; and

    by the promotion, distribution and sale of its MGBs.

The conduct comprising the last form of misleading or deceptive conduct was said also to constitute a form of passing off.

Relevant principles

202    Mastec alleges that the conduct of Trident Plastics of which it complained contravened ss 18(1) and 29(1)(g) and (h) of the Australian Consumer Law (the ACL) contained in Sch 2 to the Competition and Consumer Act 2010 (Cth) (the CC Act).

203    Section 18(1) provides:

A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

204    Section 29(1) provides (relevantly):

A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:

…

(g)    make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or

(h)    make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation; or

…

205    Sections 18 and 29 are counterparts of the former ss 52 and 53 of the Trade Practices Act 1974 (Cth). The case law developed in relation to ss 52 and 53 has been applied in relation to ss 18 and 29 of the ACL. It is also established that, despite the slight difference in terminology, there is no significant difference in meaning between “misleading or deceptive” and “mislead or deceive” in s 18 and “false or misleading” in s 29(1): Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682 at [14], cited with approval by Allsop CJ in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634; (2014) 317 ALR 73 at [40].

206    Many of the principles relating to the application of ss 18 and 29 were summarised by Allsop CJ in Coles Supermarkets at [35]-[47]. The principles which are of present relevance are:

(a)    provisions such as s 18 of the ACL are remedial in character and so should be construed so as to give the fullest relief which the fair meaning of their language will allow: Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 503;

(b)    conduct is misleading or deceptive if it has the tendency to lead into error. There must be a sufficient causal link between the conduct and the error on the part of the person exposed to the conduct: Coles Supermarkets at [39];

(c)    the question of whether conduct, including conduct by way of representations, contravenes ss 18 or 29 of the ACL is one of fact to be determined by an objective consideration in the light of the relevance surrounding facts and circumstances: Puxu at 198-9; Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60, (2004) 218 CLR 592 at [109];

(d)    the application of s 18 of the ACL requires identification of the conduct said to be misleading or deceptive or likely to mislead or deceive. Once that conduct has been identified, the court will consider separately whether the conduct was misleading or deceptive or likely to be so: Google Inc v Australian Competition and Consumer Commission [2013] HCA 1; (2013) 249 CLR 435 at [89];

(e)    consideration of the conduct as a whole and in its proper context may include considerations of the type of market, the manner in which the goods or services are sold, the habits and characteristics of purchasers in that market, as well as any relevant disclaimers or explanations: Coles Supermarkets at [41]; Butcher v Lachlan Elder Realty at [49].

Promotional material

207    Mastec alleged that the misleading or deceptive statements were contained in promotional brochures concerning Trident Plastics’ experience in the MGB industry.

208    Using information provided by Mr Saurbrey, Mr Gardner prepared a document setting out a history of Trident Plastics under the heading “Trident Plastics: Ten years in the making”. As Mr Gardner acknowledged, the purpose of the document was to give Trident Plastics some credibility with its prospective purchasers. The brochure underwent revision from time to time. It is not clear when Mr Gardner first prepared the document but on the evidence it is apparent that Trident Plastics made use of it from at least August 2014.

209    The content in the iteration of the “Ten years in the making” document provided to Mr Gornall in August 2014 to which I will refer as the “First Brochure” (omitting the entries for 2013 and 2014) is as follows:

210    The respondents acknowledged, and other evidence indicated, that a number of the claims in the First Brochure were false:

    contrary to the claims for the period 2003-5, Trident Plastics had not manufactured over 250,00 240 litre bins for Mastec and nor had it designed and built a 140 litre bin mould for Mastec. In fact, Trident Plastics has never had any dealings at all with Mastec in relation to the manufacture of bin tools (140 litre or otherwise), because Mastec’s contract had been with Trident Tooling. Even if the distinction between Trident Tooling and Trident Plastics is ignored, Trident Tooling did not ever design and manufacture a tool for a 140 litre bin. The discussions which Mr Brixton had had with Trident Tooling on that topic in January 2003 did not proceed beyond a preliminary design;

    contrary to Trident Plastics’ claim for the year 2006, the Woodville site from which Trident Plastics now operates had not manufactured approximately 150,000 140 and 240 litre bin bodies and lids for Mastec: it had manufactured only 22,456 240 litre bin bodies and only 422 140 litre bin bodies. Further, and in any event, Trident Plastics did not have any association with the Woodville site in 2006. At that time it had been Viscount which conducted business at the site;

    contrary to the claim made for 2007, Trident Plastics had not manufactured approximately 200,000 bin bodies for Mastec in that year: it had manufactured only 49,502 bin bodies;

    contrary to the claim made for 2008, Trident Plastics had not manufactured 200,000 bin bodies and lids for Mastec: it had manufactured only 77,490 bin bodies;

    contrary to the claim made for 2009, Trident Plastics had not manufactured 150,000 bin bodies and lids for Mastec: it had manufactured only 51,000 bin bodies;

    contrary to the claim for 2010, Trident Plastics had not manufactured approximately 150,000 bin bodies and lids for Mastec: it had manufactured only 18,916 bin bodies; and

    contrary to the claim for 2011, Trident Plastics had not ended its relationship with Mastec. Instead, Mastec had not placed any further orders with Trident Plastics after April 2011.

211    By its false statements, Trident Plastics conveyed the impression in the Ten Years in the Making document that it had had a manufacturing relationship with Mastec between 2003 and 2006 when that was not the case, and greatly exaggerated the extent of its relationship with Mastec during the 2007-2010 years. In particular, the document conveyed falsely that Trident Plastics had manufactured bin lids for Mastec in the 2008-2010 years when it had not (having manufactured only bin bodies and pins).

212    A second iteration of the “Ten years in the making” brochure (the Second Brochure) was provided to a council in February 2015 in support of Trident’s tender to that council. It was as follows (omitting the entries for the 2013 and 2014 years):

213    In the Second Brochure, Trident Plastics introduced the new (and false) claim that it had been commissioned to design bin moulds for One Stop Garbage Shop and Nylex in 2003 and now claimed that instead of building the twin capacity bin mould tool capable of producing 110 heavy duty bin bodies per hour in 2008, it had done so in 2004. Mr Saurbrey’s evidence in the trial included yet another variation of this claim, namely, that this tool had been constructed “in or around 2006” and, as will be seen, a later iteration of the “Ten years in the making” document said that it had been in 2007.

214    In respect of the 2006 year, Trident Plastics claimed in the Second Brochure that it had manufactured approximately 100,000 bin bodies and lids for Mastec (that figure was 150,000 in the First Brochure) and claimed (falsely) that it had been in that year that it had manufactured a “bin mould” for Mastec for both 140 litre and 240 litre bins. The claimed quantities of bin bodies and lids manufactured in the 2007 and 2008 years remained the same as in the First Brochure, but different assertions were made in respect of the quantities manufactured in the 2009 and 2010 years. The claims for both of these years were now 250,000, an increase of 100,000 from the corresponding claims in the First Brochure. For the reasons previously given, all these claims were false.

215    In 2016, Trident Plastics prepared a third document setting out its experience. This document was in effect a third iteration of the “Ten years in the making” document, although it did not have that title. It comprised Schedule 14 in a tender to a council for the provision of MGBs. Under the subheading “Years engaged in the type of work required by the Contract”, Trident Plastics stated (again excluding the entries for the 2013-2016 years):

Trident Plastics have been actively engaged in the design, tool making, and manufacture of bins since 2003.

Please find below a brief chronology of Trident Plastics as evidence of our engagement in the design and manufacture of bin tools as well as our commencement of manufacture of bins under the Trident brand name.

216    As can be seen, in this schedule, Trident Plastics no longer asserted that it had designed and built a 140 litre bin mould for Mastec, but maintained the false claim that it had been the entity which had built the 240 litre mould for Mastec.

217    In respect of the 2006 year, Trident Plastics reduced the number of bin bodies and lids said to have been manufactured for Mastec from approximately 150,000 to approximately 100,000. Trident Plastics now claimed that it had built the twin cavity 240 litre bin mould in 2007 (and not in 2004, 2006 or 2008 as previously claimed). The numbers of bin bodies and lids which Trident Plastics claimed to have manufactured in 2007 and 2008 (200,000) remained the same as claimed in the First and Second Brochures. The number claimed to have been manufactured in 2009 and 2010 (250,000) remained the same as the numbers claimed in the Second Brochure but were again 100,000 more in each year than had been claimed in the First Brochure.

218    Mr Gardner said in his evidence that the Second Brochure had been used by Trident Plastics since October 2014 but that on five occasions a shorter form version had been used.

219    All in all, the “Ten years in the making” document had been used in either in its long or short forms on some 12 occasions.

220    Mastec’s second claim of misleading or deceptive conduct concerned a promotional brochure provided in support of a quotation supplied to the waste contractor, Bettatrans, in June 2016.

221    The request for quotation by Bettatrans included the following:

As you are aware, we usually purchase the Mastec brand and have found [their] product to hold up well in the field. My brother and business partner has reservations of swapping to another brand so I need to be assured the Trident bins we may purchase are consistent with other products in the market place. How long [has] Trident been manufacturing bins and what major contracts have used your bins[?]

222    In support of Trident Plastics’ quotation to Bettatrans (and to answer its question), Mr Gardner prepared, using the information previously provided to him by Mr Saurbrey, a document with the heading “Trident Plastics’ Overview”. The overview stated (relevantly):

Trident’s heritage in bin making goes back to 2003.

As a tool maker, Trident has made many different bin moulds for companies such as One Stop Garbage Shop, Nylex, Mastec and of course now our own range of 80, 100, 120, 140, 240 and 360L bins.

2003 – 2005 Manufactured bin injection moulding tool for One Stop Garbage / Nylex

2005 – Manufactured 60,000 x 240L bins for One Stop Garbage Shop in Victoria

2006 – Manufactured approx 100,000 bins as a subcontractor

2007 – Build own twin cavity 240L Injection Moulding tool

2007 – Manufactured approx 200,000 bins as a subcontractor

2008 – Manufactured approx 200,000 bins as a subcontractor

2009 – Manufactured approx 250,000 bins as a subcontractor

2010 – Manufactured approx 200,000 bins as a subcontractor

2011 – Relationship ends with Mastec

…

223    Mr Gardner confirmed that the only entity for which Trident Plastics had manufactured bins as a subcontractor was Mastec. Accordingly, all of the numbers claimed in the Bettatrans document to have been manufactured by Trident Plastics “as a subcontractor” were claims in respect of Mastec.

224    As can be seen, the claimed manufacturing in the Bettatrans document for the 2010 year was now reduced from the 250,000 claimed in the second and third iterations of the Ten Years in the Making document to 200,000. Mr Gardner could not explain why he had reduced this number, saying “it wasn’t something I had done with any thought to the consequence, other than to reduce that number down”. Later, he said he had reduced the number to 200,000 in order to “tone it down”.

225    Mastec pleaded that Trident Plastics’ representation in the Bettatrans document that in the period from 2006 until 2011 it had manufactured over 950,000 MGBs for Mastec was false, as Trident Plastics had manufactured only approximately 192,000 240 litre MGBs for it between 2008 and April 2011.

226    The third document which was the subject of Mastec’s misleading or deceptive conduct claim comprised a page published on Trident Plastics’ website. Under the heading “Features” and subheading “Quality”, Trident Plastics included a list of claims concerning its 240 litre MGB. The list included the statement “Compatible with Mastec 240L”.

227    The final promotional representation made by Trident Plastics which Mastec pleaded was misleading or deceptive was the statement which Mr Saurbrey made to Mr Gornall at a meeting at Trident Plastics premises on 21 August 2014. The pleaded representation was as follows:

Our bins are the same as Mastec, the same design. We made the Mastec 240L bin mould, we’ve been manufacturing Mastec’s bins for years.

228    In August 2014, Mr Gornall was providing consultancy services to Handybin Waste Services Pty Ltd (Handybin Waste). Trident Plastics had provided a quotation to Handybin Waste and that company requested Mr Gornall to make some enquiries on its behalf concerning Trident Plastics’ product. Mr Gornall deposed that he attended at Trident Plastics’ premises on 21 August 2014 and had a conversation with Mr Saurbrey to the following effect:

Mr Gornall:    My client has some concerns about your low price and the quality of your product. What’s your warranty?

Mr Saurbrey:    Ten years.

Mr Gornall:    It is all well and good at having a long warranty but you don’t have a long track record [having] only recently being involved in the industry.

Mr Saurbrey then handed Mr Gornall a copy of the First Brochure and said:

Mr Saurbrey:    Oh that’s not a concern, have a look at the document that I just handed to you – we have been manufacturing bins for Mastec for years, we know what we’re doing.

Mr Gornall:    Okay, I understand that, but your bins are not Mastec bins.

Mr Saurbrey:    No, but they are the same, the same design, we made the Mastec 240L bin mould.

Mr Gornall:    Yes, the bins do look almost identical. I noticed you have similar gaskets that the hinge pins fit in. In my experience, nobody except Mastec have that design. Your lid looks very similar too.

Mr Saurbrey:    Yes, you can be confident that the lid fitting to the body is the same, it is a good design.

…

Mr Gornall:    I didn’t realise that you’d made a 140L mould for Mastec.

Mr Saurbrey:    Yes, we’ve made various moulds for them.

Mr Gornall:    I’m surprised looking at the sheet how many bins you’ve made for them.

Mr Saurbrey:    Don’t worry about quality – we have the experience to manufacture to the Mastec quality.

229    Both Mr Saurbrey and Mr Gardner disputed some aspects of this conversation. However, as indicated earlier, I regarded Mr Gornall as an honest and reliable witness and his account of the conversation was not challenged in the cross examination. I accept his evidence in preference to that of Mr Saurbrey and Mr Gardner.

230    The particular representations arising from these publications and statements which Mastec pleaded were misleading or deceptive were:

(a)    the claims in the First Brochure that Trident Plastics had designed and built 140 litre and 240 litre bin moulds for Mastec, as Trident Plastics had done neither;

(b)    the representations in the First Brochure that Trident Plastics had manufactured over one million MGBs for Mastec between 2003 and 2011 which were false as Trident Plastics had only manufactured approximately 192,000 240 litre bin bodies and approximately 48,000 140 litre bin bodies for Mastec between 2008 and April 2011;

(c)    the representation in the Bettatrans document that Trident Plastics had manufactured over 950,000 MGBs for Mastec between 2006 and 2011 which was false for the same reason just given.

231    As already noted, the respondents acknowledged the falsity of these claims and of the individual elements of the claims.

The promotional material in conjunction with the promotion and distribution of the lookalike lid

232    Mastec’s next claim was that the representations contained in the various brochures, and the oral representation made to Mr Gornall, whether considered separately or collectively, taken in conjunction with the promotion, distribution and sale of Trident Plastics’ lookalike lid and handle pin, were representations that Trident Plastics:

(a)    had the sponsorship, endorsement or approval of Mastec in its promotion, distribution and sale of its products;

(b)    was affiliated with Mastec;

(c)    was authorised by Mastec to produce and market its (Trident Plastics) product.

233    Mastec alleged that each of these representations was false, misleading or deceptive because it had not provided the sponsorship, endorsement, approval or authority and Trident Plastic had no affiliation with Mastec.

Misleading or deceptive conduct by passing off

234    Mastec’s third claim of misleading or deceptive conduct was that Trident Plastics’ conduct in promoting, distributing and selling the lookalike MGB lid and handle pin had made the same representations as are set out in [232] above. As indicated earlier, this was, in effect, a claim that Trident Plastics had engaged in misleading or deceptive conduct by a form of passing off.

Consideration

235    I referred earlier to the markets in which both Mastec and Trident Plastics sold their MGBs. These comprised local government authorities, waste contractors, procurement bodies, safety product companies and retailers. It is apparent that the principal markets to which entities such as Mastec and Trident Plastics sell MGBs are local government authorities and waste contractors who are required, as part of their contracts with councils, to provide residents with MGBs. Trident Plastics made the representations in the promotional material in support of its tenders and quotations. The effect of Trident Plastics’ false or misleading statements is to be assessed by reference to the reasonable person in those market categories.

236    Counsel for Mastec submitted that Trident Plastics’ purpose in making the representations in the brochures was to seek to draw upon Mastec’s “pedigree” and to attempt to align Trident Plastics with it. I consider that is a fair characterisation of Trident Plastics’ conduct. In order to obtain for itself the benefits of Mastec’s pedigree, it was willing to exaggerate grossly the extent of its relationship with Mastec.

237    I am satisfied that the history of the MGB provider is an important consideration for decision-makers within local government authorities, waste contractors and others making bulk purchases. It was a matter about which Mr Gornall had enquired in the interests of his client Handybin Waste when he spoke to Mr Saurbrey in August 2014. It was also a matter about which Bettatrans made an express enquiry and to which Mr Gardner responded, as set out earlier. Mr Gardner acknowledged that the supplier’s history is a matter of concern to Councils and other purchasers. Both Mr Brixton and Mr Saurbrey spoke of the importance which prospective purchasers placed on industry experience.

238    In addition to that express evidence, the materiality of Trident Plastics’ representations as to its pedigree may be inferred from the very lies it made about that pedigree. As the Full Court observed in S & I Publishing Pty Ltd v Australian Surf Life Savers Pty Ltd (1988) 88 FCR 354 at 362:

[W]here the intention to mislead or deceive is found, it logically would be likely that a court would more easily find that the conduct was misleading or deceptive …

See also Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 at [33] in which the High Court said:

However, it is well established by the authorities referred to by the Privy Council in Cadbury-Schweppes Pty ltd v Pub Squash Co Ltd that, where there is such a finding of intention to deceive, the Court may more readily infer that the intention has been or in all probability will be effective.

(Citation omitted)

239    For these reasons I am satisfied that Mastec has made good its claims of misleading or deceptive conduct in contravention of s 18 of the ACL by Trident Plastics in its promotional representations.

240    However, I have reached a different conclusion with respect to the second and third claims of misleading or deceptive conduct alleged by Mastec. The mere fact that Trident Plastics manufactured MGBs with lookalike lids to those of Mastec does not indicate misleading or deceptive conduct. A manufacturer does not contravene s 18(1) or s 29(1)(g) and (h) of the ACL merely by manufacturing and distributing a product which, although properly labelled with the manufacturer’s name, very closely resembles, and is intended to be seen to closely resemble, the product of another manufacturer which has previously been, and is still, advertised and marketed: Puxu. Further, conduct which merely causes some uncertainty in the minds of relevant members of the public, does not contravene s 18(1) or s 29(1). A rival trader is entitled to copy the product of another and to seek to take some of its market share (in the absence of any infringement of a formal intellectual property right), so as long as the rival does not mislead or deceive the public or pretend, by conduct, that its goods are the goods of another: Peter Bodum A/S v DKSH Australia Pty Ltd [2011] FCAFC 98; (2011) 280 ALR 639 at [202].

241    Mastec sought to circumvent this difficulty by the submission that the terminology used by Trident Plastics in its promotional documents contained, impliedly, representations that it had some approval, endorsement or authority of Mastec or that it was affiliated in some way with Mastec.

242    In my opinion, the words used in the promotional material cannot reasonably be understood in that way. First, while it is reasonable to infer that the persons to whom the promotional material was directed had some general knowledge of Mastec MGBs, there is no evidence that they were, when considering the representations, making side by side comparisons of samples of the Mastec MGBs and the Trident MGBs. That is to say, Mastec has not established that the representations in the promotional material were made in conjunction with the presentation of the Trident MGB in such a way that the physical appearance of the Trident MGB added to the representation being conveyed.

243    Secondly, each of the three iterations of the “Ten years in the making” document said expressly in respect of the year 2011 “Trident ends relationship with Mastec as third party manufacturer”. That statement was misleading for the reasons already given, but it did convey to the reader that Trident Plastics’ relationship with Mastec as manufacturer of its bins had concluded.

244    Thirdly, it is reasonable to suppose that those to whom the promotional material was directed had some awareness of Mastec and of its MGB products. In particular, it seems reasonable to infer that they were aware that Mastec continued to be a participant in the market. The limited number of manufacturers supports that inference, as does the nature of the purchasers to whom the promotional material was directed. In my opinion, the reasonable reader of Trident Plastics’ quotations would have understood that Trident Plastics had commenced manufacturing and selling MGBs on its own account in 2012 and, further, that it was doing so in competition with Mastec. In that context, it is improbable that the reasonable reader would have understood Trident Plastics’ promotional material as conveying a representation of affiliation with, endorsement of, or authority of Mastec.

245    Mastec’s claim with respect to the lookalike lids faces other difficulties. In a case like the present in which the conduct alleged to be misleading or deceptive is said also to constitute the tort of passing off, the Court may be guided by similar principles: Flexopack SA Plastics Industry v Flexopack Australia Pty Ltd [2016] FCA 235 at [273]. The tort of passing off involves three elements:

(a)    reputation;

(b)    misrepresentation; and

(c)    damage.

See Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 355-6; Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157, (2002) 55 IPR 354 at [60].

246    The first of these elements, reputation, requires an applicant to establish that its goods have the requisite reputation in the particular jurisdiction.

247    One may readily accept that the name “Mastec” has a reputation in Australia with respect to MGBs. However, that is not to say that Mastec’s MGBs are recognised as being distinctively different so as to have acquired a reputation for their appearance. Mastec did not adduce evidence that the consumers of its products (in this case mainly institutional consumers) may be deceived into thinking that a particular MGB is a Mastec MGB merely because of similarity in appearance. As the respondents noted, the majority of sales of MGBs in Australia are made to large volume users, mostly by tender, and mostly involving the provision of detailed information concerning the manufacturer, its products and capabilities through tender documents. Mastec has not established that the appearance of an MGB lid is a factor taken into account by such purchasers. Instead, purchasers seem to be influenced by factors such as price, quality and the reputation for reliability of the manufacturer based on its industry experience.

248    This is an industry in which the MGBs of the various manufacturers have a number of generic features. This may reflect the circumstance that, generally, the institutional purchasers of MGBs like them to be compatible. Mr Brixton acknowledged that this was so.

249    The following passage in Mr Brixton’s cross examination is also pertinent in the present context:

Q:    [D]o you accept it’s difficult to distinguish one Australian [MGB] from another …

A:    Yes.

Q:    And that’s why you prominently put your name, Mastec, on the bins, isn’t it, on the bin lid?

A:    On the lid.

Q:    Yes. Because as you were saying before the lid is the first thing the people see. And that’s why you put your name so prominently on it?

A:    Correct.

Q:    And that’s why you change the font and look of it because it’s important to you, isn’t it?

A:    Yes.

Q:    And you know that Trident Plastics put their name on the lid as well, don’t they?

A:    Yes. They do.

Q:    And [they] do that for the same purpose, don’t they, in order to distinguish their bin from your [bin] from your Sulo bin?

…

A:    Yes.

Q:    And you agree also someone looking at a Trident bin, and they look at the lid and they see the Trident name on it, that person is not going to think that’s a Mastec bin and lid, are they?

A:    They’re viewing Trident as in the Trident name. Yes. I would agree with that.

250    In my opinion, this evidence, together with the earlier matters, indicates that the second and third ways in which Mastec put its claim of misleading or deceptive conduct (whether under s 18 or s 29(1)) cannot succeed. This is not a case in which Trident Plastics has made a false or misleading representation that it, or its MGBs, had the sponsorship, approval or other characteristics of Mastec’s MGBs which were false or misleading. These matters also indicate that Mastec’s passing off claim cannot succeed, and it need not be considered separately.

Trademark infringement

251    The applicants did not pursue this part of their claim, and it is not necessary to consider it.

The claim of accessorial liability against Mr Saurbrey

252    Mastec’s claim against Mr Saurbrey in his personal capacity was that he was liable as an accessory for the contraventions of ss 18(1) and 29(1) of the ACL. On my findings, that claim can now relate only to the misleading or deceptive conduct in which Trident Plastics engaged by making representations in its promotional material.

253    The ACL authorises orders to be made against a person “involved in” a contravention of its provisions.

254    The term “involved” is defined in s 2(1) of the ACL as follows:

A person is involved, in a contravention of a provision of this Schedule or in conduct that constitutes such a contravention, if the person:

(a)    aided, abetted, counselled or procured the contravention; or

(b)    has induced, whether by threats or promises or otherwise, the contravention; or

(c)    has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or

(d)    has conspired with others to effect the contravention.

255    The elements of accessorial liability under provisions such as these contained in the ACL are well established. In order to be knowingly concerned in, or party to, a contravention, a person must have engaged in some conduct which “implicates or involves” him or her in the contravention, so that there is a “practical connection” between the person and the contravention: Qantas Airways Ltd v Transport Workers’ Union of Australia [2011] FCA 470; (2011) 280 ALR 503 at [324]-[325]; and Construction, Forestry, Mining and Energy Union v Clarke [2007] FCAFC 87; (2007) 164 IR 299 at [26]. In order for a person to have been knowingly concerned in a statutory contravention, that person must have been an intentional participant, with knowledge of the essential elements constituting the contravention: Yorke v Lucas (1985) 158 CLR 661 at 670. However, it is not necessary that a person with knowledge of the essential elements making up the contravention also know that those elements do amount to a contravention: Yorke v Lucas at 667; Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75, (2003) 216 CLR 53 at [48]. Actual knowledge of the essential elements constituting the contravention is required. Imputed or constructive knowledge is insufficient: Young Investments Group Pty Ltd v Mann [2012] FCAFC 107; (2012) 293 ALR 537 at [11].

256    In this case, counsel for the respondents made a formal concession during the course of Mr Saurbrey’s cross examination that he (Mr Saurbrey) had known about each of the promotional documents containing the misleading and deceptive conduct identified by Mastec and, further, that he had known of them prior to their publication. I am satisfied that Mr Saurbrey also knew of the falsity of the various representations identified earlier in these reasons. As I indicated earlier, I am satisfied that the representations, derived from information provided by Mr Saurbrey were lies in the sense that, not only were they untrue, they were known by Mr Saurbrey to be untrue at the time he authorised them to be made.

257    That being so, the accessorial liability claims of Mastec concerning Mr Saurbrey are established.

Conclusion

258    In summary, I have found that Mastec has made good its claims that it is the beneficial owner of the CAD Drawings concerning the product designs (but not of the CAD Drawings relating to its tools); that Trident Plastics has made unlawful use of its confidential information; and that Trident Plastics has engaged in misleading or deceptive conduct in contravention of s 18(1) and s 29(1) of the ACL.

259    The relief which Mastec claimed at this stage of the trial comprised declarations and injunctions.

260    Mastec is entitled to declarations that it is the beneficial owner of the CAD Drawings concerning the product designs, that Trident Plastics has engaged in conduct in contravention of s 18(1) of the ACL, that Trident Plastics has made an unlawful use of its confidential information, that Mr Saurbrey was involved in the contraventions of s 18, and that he was a participant in Trident Plastics’ unlawful use of the confidential information.

261    About one month before the trial, Trident Plastics and Mr Saurbrey provided undertakings to Mastec not to repeat certain of the representations which they acknowledged had been false. Despite that, I consider that Mastec is entitled to the injunctions it seeks with respect to the misleading or deceptive conduct which I have found established.

262    Mastec’s claim for injunctions was listed as part of the first stage in the trial. However, the parties addressed very few submissions as to the appropriate form or duration of the injunctions which were appropriate if the claims of misuse of confidential information were upheld.

263    In those circumstances, I consider it appropriate to accede to the respondents’ request that the Court publish its reasons and invite the parties to make submissions concerning the injunctions and other forms of relief appropriate to give effect to the conclusions stated above.

Associate:

Dated:    21 December 2017