Fahey, M. v Stephens Publishing Pty Ltd
[1989] FCA 399
•27 Jul 1989
CATCHWORDS
TRADE PRACTICES ACT - Sections 52 & 53 - allegations of misrepresentation as to sponsorship or approval - contract to produce a book - whether book as produced was wlth approval of originator/licencee of character depicted therein - capacity of agent to give approval.
Trade Practices Act (1974) ss.52, 53(c)(d)
RlARYANNE FAHEY, MEDIA ARTS CORPORATION PTY. LTD. and TREVOR YOUNG AND STEPHENS PUBLISHING PTY. LTD. FILM and BOOK PUBLISHING PTY. LTD.
27 July 1989 Sweeney J.
MelbourneIN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) No. VG 459 of 1988 ) GENERAL DIVISION 1 BETWEEN:mARYANNE FAHEY, MEDIA ARTS CORPORATION
PTY. LTD. and TREVOR YOUNG Appllcants
AND : STEPHENS PUBLISHING PTY. LTD.
FILM AND BOOK PUBLISHING PTY. LTD. Respondents
THE COURT: SWeeney J.
PLACE : Melbourne
DATE : 27 July 1989 MINUTES OF ORDER
1. The court orders that the application be dismissed wlth costs, including the costs of the claimsfor interlocutory orders and that the respondents be released from thelr undertaking of 23 December 1988;
2. The Court declares that the applicants are llable to pay to the respondents the damages suffered by them by reason of giving that undertaking and directs that the amount which the
applicants shall be ordered to pay shall be ascertained by
the Registrar in accordance with Order 38;3. The Court orders that Trevor Young pay the respondents's costs of and incidental to the cross claim; and
4. In case there should be any matter of machinery which either party wishes to mention, liberty is reserved to apply on 7 days notice to the other parties.
Note: Settlement and entry of orders is dealt with in Order
36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) No. VG 459 of 1988 ) GENERAL DIVISION ) BETWEEN:mARYANNE FAHEY, MEDIA ARTS CORPORATION
PTY. LTD. and TREVOR YOUNG Applicants
AND : STEPHENS PUBLISH IN^ PTY. LTD.
FILM AND BOOK PUBLISHING PTY. LTD. Respondents
THE COURT: Sweeney J.
PLACE : Melbourne DATE : 27 July 1989 REASONS FOR JUDGMENT
By applicatron dated and filed 23 December 1988 the applicants Maryanne Fahey ("Fahey"), Media Arts Corporation Pty. Ltd. ( "Media") and Trevor Young ("Young" ) sought, amongst other relief, injunctions restraining the respondents Stephens Publlshing Pty. Ltd. ("Stephens Publlshing") and Film and Book Publishing Pty. Ltd. ("Film & Book") from dlstributlng or selling the book referred to in paragraph 13 of the Statement of Clalm (or any modification thereof containing a drawlng or photograph of Kylie Mole or words attributed to her) without the consent of the
applicants, and associated relief.
The book referred to in the Statement of Clalm was to be called "Kylie Mole's Official School Planner". Kylie Mole was described as "a distinctive character" "created and developed" by Fahey for the series of television programs known as "The Comedy Company".
Media was described as the "5xclusive licensee of the rrght to manufacture and to commission to be manufactured clothing, stationery, food stuffs, toys, household goods and other goods bearing the name and image of Kylie Mole".
Young was said to be "the exclusive sub-llcensee of the right to produce or cause to be produced merchandise bearing the name, visual image or other distinctive characteristics of Kylie Mole".
The Statement of Claim alleged that the applicants have since early 1988 extensively publicised and promoted Kylie Mole, so that "the distinctive appearance and sayings of Kylie Mole have become identified with the applicants" who have "accordingly acquired a
substantial and valuable reputation and goodwill associated with the Kylie Mole character". It was alleged that "by an agreement dated 20 September 1988
('the publishing agreement') made between Young on behalf of the applicants and the respondents, the parties agreed that the respondents would produce, publish distribute and offer for publlc sale a book to be called 'Kylie Mole's Official School Planner'.
The Statement of Claim contrnued:
"9. There were terms of the publishrng agreement that:
(a) the respondents would design and produce the book to a format having the full consent and approval of the applicants (such approval not to be withheld unreasonablely); (b) all words and.copy lines used in the book would be provided by the applicants to be placed as indicated within the respondentsp desrgn. 10. The book produced by the respondents -
(a) contarned poor quality and demeanrng caricature representations of Kylie Mole; (b) contained words purportedly spoken by Kylie Mole which were not supplied by the applicants and were out of character with Kylle Mole. 11. On or abo;t 30 November 1988 the respondents presented the book for the approval of the applrcants.
12. By reason of the matters referred to in paragraph 10 the applicants declined to consent to publrcation of the book in the form presented by the respondents but on or about 6 December 1988 provided photographs of Kylie Mole and words suitable for attribution to her for substitution for the caricatures and words contarned in the book produced by the respondents.
13. The respondents have nevertheless, without the
on or about 15 December 1988 copies of the book in consent of the applrcants, distrrbuted and sold from the form origrnally produced by them.
14. The respondents have thereby -
(a)
passed off and are continuing to pass off the book as a book produced by or for or with the approval of or otherwise connected in the course of trade with the applicants or one or more of them;
(b)
passed off and are continuing to pass off therr business as and for a business approved by or connected wlth the business or businesses of the applrcant or one or more of them;
(c)
enabled and are continuing to enable the book and the respondents' business to be passed off as a book and business of or connected with the applicants or one or more of them.
15. Further, the respondents have thereby in the courses of trade and commerce and in connection with the supply or possible supply of the book -
(a)
represented that the book has the sponsorship or approval of the applicants or one or other of them whereas the book in its present form does not have such sponsorship or approval;
(b)
represented that the respondents have the sponsorship qr approval or an affiliation with the applicants or one or other of them whereas the respondents do not have any such sponsorship or approval or affillatlon as represented.
PARTICULARS
The applicants refer to Section 53(c) and (d) of the Trade Practices Act (Cth.).
16. Further the respondents have thereby in the course of trade and commerce -
(a)
engaged in conduct which is misleading or deceptive;
(b)
have engaged in conduct whlch is likely to mislead or deceive.
PARTICULARS
The applicants refer to Sectlon 52 of the Trade
Practices Act (Cth.).17. Further, the respondents have thereby breached the terms of the publishing agreement referred to in
paragraph 9 hereof. 18. The applicants have requested the respondents to discontinue the publcation and distribution of the book but the respondents have refused to do so and threaten and intend and wlll unless restrained by thls Honourable Court continue to do such acts.
19. The respondents have made profits by reason of the acts complained of.
20. The applicants have and each of them has sustained substantial loss and damage by reason of the wrongful acts of the respondent alleged herein and, unless such acts are restrained wlll continue to sustain loss and
damage. " .
The claim for an interlocutory injunction came on for hearlng at 11 a.m. on 23 December, the day on which the application was filed. It was presented on behalf of the applicants by Mr. Macaw Q.C. and Mr. Cosgrave. Mr. Harrison, of counsel, appeared for the respondents. The claim was supported by an affidavit of Ian NcFadyen ("McFadyen") who deposed:
"I am a director of the secondnamed Plaintiff ('Media'). I am authorised to make this affidavit
on behalf of the firstnamed Plaintiff ( ' Fahey' ) who is my wife and the other director of Media".
His affidavit went on to say that Media has slnce 1987 produced a television programme known as "The Comedy Company", which has been marketed as a one hour weekly television comedy consisting of a series of short sketches. Each week, one sketch is based upon a character known as "Kylie Mole". The affidavit
dealt with the creation and recognition of that character and later detailed the steps which he took after he saw the proofs of the book, and the instructions he gave that an interlocutory injunction be sought.
The claim for interlocutory injunctions was further supported
by an affidavit of Young, also sworn 23 December, which lncluded
the following paragraphs:"2. I operate a buslness under the name 'Young Communications' which business is engaged in marketing the products, inter alia, of Media Arts Corporation Pty. Ltd., Mr. Ian McFadyen and Miss Maryanne Fahey.
3. In or about September, 1988 I was approached by Mr. Ron Stephens of Stephens Publishing regarding his desire to publish a book to be called 'Kylie Mole's Official School Planner'. By an agreement made on 20th September, 1988 I, on behalf of Media, Ian McFadyen and Maryanne Fahey, authorised the Defendants to publish, distribute and offer for public sale the said book. ...
4. Approximately two to three weeks before 30 November, 1988 Stephens sent me by facsimile some pages from the proposed book. These included some pages from the proposed book. These included some of the caricatures and some of the text. I explained to Stephens that no book could be published untll it had been approved by Fahey and McFadyen on behalf of Media. I otherwise said little about the caricatures and text provided. I certainly did not state anything in the form of approval for any of the caricatures or text. Towards the end of November, 1988 I contacted Stephens and told him that there was little point in him sending me the proofs of the book in bits and pieces. I said that McFadyen was a d~fficult man to catch and that I was meeting him on 30th November, 1988. I said that Stephens should ensure that I had a full copy of the proppsed book so I could submit it to him at that meeting.
5. Stephens provided me with a full proof of the proposed book for my meeting with McFadyen on 30th November, 1988. ...
6. On 1 December, 1988 I rang Stephens and advised him that the proposed book was totally unacceptable and could not be publ~shed in its existing form. Later that day, Stephens sent me a letter by facsimile.".
"December lst, 1988
FAX TO: Trevor Young
898 6427
FROM: Ron Stephens REPLY FAX: 509 5243
Trevor,
I cannot make changes now in the book without losing my contracts.
We committed to supply Coles, Myer and the trade, all the mechanism is in place and if I don't keep faith, I'll not only lose the contracts but I'll not be accepted for future publications.
I understand your position but our agreement says clearly you accept responsibilrty and also, we had to deliver by December.
We're committed to do that and I'm afrald any changes would have to be considered in a second print run.
I'm afrard you'll have to explain this to Ian.
I can't believe its such a blg issue, and, if it was, you have seen those illustrations before and I think that would have been the time to raise the matter.
I'll have to rely on you to compose the matter.".
The affidavit continued:
"7. On 2 December, 1988 I had conversation with Stephens about the book. Stephens told me how he had used camera ready art which 1s the last stage before printing. It is expensive to alter and he said he mrght lose $30,000-00 worth of art-work. Stephens suggested that we might try changing the caricatured faces by etching on to the film. I later discussed this with McFadyen. Subsequently I had more telephone calls from Stephens in which he expressed concern about his commrtment of the books to Coles Myer Limlted. He wanted to give that company a small order. Because I informed Stephens and he knew that I could not give such approval myself, he asked if he could speak to McFadyen. I told him he could.
8. ... I say further that on 6th December, I
organised the photographer to make new
photographs for inclusion in the booklet and couriered the photographs to Stephens the same day.
9. Later on 6th December, 1988 after the morning meeting, Stephens returned to my office and said that if I read in the paper the followrng day of a body found face down in the rlver it would be his. Stephens then explained hls partner in Stephens Publishing Company, Jeremy Maxwell had gone ahead with the prznting of the book by Quadricolour Industries Pty. Ltd. without effecting any of the changes required by Fahey and McFadyen. Stephens sald that when he discovered this he stopped the printing completely. I said that was good. I asked him whether any of the printed coples of
the book had been distributed. He said he didn't know but he believed not. I asked him to speak to me agaln on the following mornlng with more advice on this point.
10. On 7th December, 1988 Stephens came to my home and told me he didn't know for certain what the position was with regard to distribution of the printed books. He said that he had strong words on the prevlous night wlth Maxwell. On the 7th and 8th December, 1988 I had a number of conversations with Stephens. He advised me that some of the printed books had been distributed. He said however that he believed that they were sent to distant areas of Australia first. He was sorry that some had 'slipped the net1 which he had endeavoured to place over the distributed books. Stephens said he would still produce the book in the form required by Fahey and McFadyen and I told him to give me the amended version of the book so I could fax it to McFadyen in Queensland for his approval.
11. On or about 9th December, 1988 Stephens provided me with details of the numbers of books printed. He explained that approxlmatgly 1280 cartons of 20 books each had been prlnted. Of these, 216 were sent to Western Australia, 56 to Tasmania, 342 to Queensland, 204 to New South Wales, 242 to Myer in Victoria and 220 to the Coles depot in Victoria. He told me that he had been able to stop Coles Myer Ltd. from distributing their copies and he said that the company had agreed to hold the books for replacement with the new books on 9th January, 1989. Stephens said that he could deliver the new books by that time and in fact he had allowed hlmself 2 days extra in which to complete delivery. Stephens also told me that the book had been
which was Newsagents Dlrect Distribution Pty. distributed through three distributors one of Ltd. a company based in New South Wales.".
These affidavits of McFadyen and Young were also read and relled upon at the trial of the application ltself.
Mr. McCaw Q.C. opened the application for ~nterlocutory
relief, making it clear that the agreement relied upon by the
applicants was in writing and "was entered into by the third-named applicant on behalf of the applicants wlth the respondents". He further said:
"The respondents began the production of thls book. From time to tlme in October and November they provided in draft the form which was proposed for various pages of it. There is a conflict on the evidence as to whether Mr. Young who was actlng as the agents (sic) of the applicants for this purpose approved the contents supplied in draft or not. The respondent's version of events is that he did and he led the respondents to believe that the format of the book as .proposed was appropriate. Mr. Young's verslon of events is that he did not; that he always made it plain that the consent of Miss Fahey and Mr. McFadyen were (sic) essential to the flnal book and that untll such consent was obtained then publication could not occur".
Mr. Harrison stated that he was in some difficulty as he dld not have copies of all the exhibits, including the book which was the subject of the dispute. It was, he sald, "the contention of the respondents that via the agency of Mr. Young, the applicants did approve the book and that is detailed in the affidavit of Mr. Stephens" .
Portions of this affidavit are set out below:
"3. I agree that in or about September 1988 I spoke to Mr. Young in relatlon to the book 'Kylie Mole's Officlal School Planner'. I further agree that an agreement was entered into on the 20th September 1988 between Young Communication and the Respondents whereby in consideration for a royalty to be paid to
Young Communications the Respondents were granted a rlght to publlsh a book to be called 'Kylie Molefs Official School Planner' utilising the character of Kylie Mole as appears in the televlslon series 'the Comedy Companyr ...
4. Pursuant to the terms of the agreement the Respondents were requlred to produce a book in
a format to be approved by Young Communications. All words and copylines in the book were to be required by Young Communications along with photographs or materlal to be used for illustration of the characters within the book. After the agreement was entered into these arrangements were varied, and it was subsequently agreed that the Respondents prepare the words or copylines to be used rn the book and the illustrations and submit these to Young Communications for approval.
5. Over the months of October and early November
I discussed virtually every aspect of the
publication with Mr. Young, meetlng him very regularly. On the 2nd day of November 1988 Young Communications forwarded to the Firstnamed Respondent by fax details of the wording by me it required to be inserted on the artwork which had been submitted.
These wordings were inserted as requested. ...
6. A few days after this Mr. Young telephoned me and said he would like to see a layout of the book. I put a copy of the book together and took it tohim. He looked through thls book and said that he was satisfied wlth it and I considered that at that time the book was finally approved by Mr. Young. Accordingly the Respondents proceeded with the production of the book and incurred significant expense in preparing the book for publication.
7. whilst the book was belng prepared for publication, and after it had been approved, Mr. Young asked me to prepare a good copy of the book to be shown to his principals. I delivered such a copy to hlm . . . At no time during our discussions concerning this
additlonal copy dld Mr. Young indlcate to me that approval could not be glven until the book had been shown to the principals, and between the two of us it was clearly understood that the book had been approved at that polnt of time.
8. Approximately two days later Mr. Young telephoned me and advised me that he had a problem in that the Flrstnamed Application (sic) had objected to the book on the ground that two of the illustrations in it were unacceptable. ...
Young advised me that the reason these illustrations were objected to were that they made 'Kylie Mole' look jewish because of the way the nose of the character was illustrated. I advised Mr. Young that it was really too late to do anythlng about it because the books were in the final stages of production. I was, however, anxrous to preserve the relationship between the Respondents and Young Communications for commercial purposes, and for this reason I agreed wlth Mr. Young's request that I meet with Ian McFadyen to discuss the issues.
9. I agree that on the 2nd December 1988 I had discussions with Mr. Young and advised hlm that it was impossible to change the book at this late stage. I expressed concern about my commitments pursuant to the various contracts I had entered into in relation to the distribution of the book. Mr. Young said to me with respect to the proposed changes 'I am sorry about this, I'm entirely on your side'.
At not time in our many meetings did Young ever criticise our material drafts.
10. I agree that there was subsequently a meeting with Mr. Ian McFadyen and myself and Mr. Young which Mr. McFadyen produced a number of amendments which he requlred to be made to the book. I exp-lained that I could not make these at this stage because of the stage production of the book had reached. There was discussion that if a second editlon of the book was done certain amendments could possibly made to it, and I genuinely believe that I have made every effort to co-operate with Mr. Young and his principals within the lrmits of commercial reality.
11. I reiterate that the book in the form which
was published was approved by Mr. Young on behalf of his principals, and that the Respondents have complled wlth the terms of
the agreement between the parties. ...".
That agreement wasexhiblt TY1 to Young's affidavit and it read as follows:
A CONTRACTURAL AGREEMENT BETWEEN :
STEPHENS PUBLISHING PTY LTD
Suite 4/15 Wanda RoadNorth Caulfield, Victoria
"I L
Lb.. m3-m GLM. C. Qb&.Ll~d~h) U
| 2 Trentwood Avenue | North Balwyn, Victoria |
| The Parties of the First Pa r t henceforth referred to a s the Publishers |
AND .
YOUNG COMMUNICATIONS
Diamond House
30-32 Rutland Road
Box Hill, Victoria
The Parties of the Second Par t henceforth referred to a s Trevor Young.
(Trevor Young affirms that Young Communications has full authority to represent andto nct 2s rnzmger, promoter, organiser and spokesperson for Mr & Mrs I McFayden
of .... I?.?.~:vJ.~..P '- , ... ........ ...... ........ ....... ... ..].C? ........ ........ ........ ........ ....... ~ G R P ~ R ~ ~ O ~ I P r y L- in the matter of publishing material described in thls document.)
This is a contract between the parties in which the Publishers
publish, distribute and offer for public sale a book to be called "Kylie
Planner" and to place it in the Australian Market prior to December, the
Elghty Eight, and any subsequent market outside Australia should demand occur.
/
The Publishers shall;
| (1) &sign and produce such a book to a folmat which has the full consent and approval |
of Trevor Young and Parties of the Second Part and such approval shall not be wlthheld
unreasonably.
| (2) All words and copy llnes used in the book shall be provided by the Part~es | of the,. |
Second Part and Trevor Young to be placed as indicated within the Publisher's deslgn.
| (3) The Parties of the Second Part and Trevor Young shall provide i | f | d |
f * .
photog~aphs, or material to be used for illustration of characters which appear in the televlsloll series, "The Comedy Company", and shall approve their reproduction in the book. These shall include the persons referred to by name repeatedly in the script of "The Comedy Company" by the character named "Kylie Mole".
L
( J ) The Partles of the Second Part and Trevor Young shall solemnly agree that there is
| . | no legal bar or rest~iction -c .-A on the reproduction of the said material in the book to be called "Kylle Mole'slSchool Planner", or a vanet of that name, and further state that the publishers of the book shall enjoy full copyright to all its contents as approved by the parties, and affirm that the content, publlcatlon and public side of the said book is not inhibited in any way by any prior publishing contractural agreements made by the Parties of the Second Part and Trevor Young. |
(5) The Partles of the Second Part and Trevor Young undertake, herewith to Indemnify
the Partles of the First Part [the Publishers and their agents, suppliers, employees and sub-contractors against any c l a m by a third party for compensation for breach of a prior copyright or agreement made between that third party and the Parties of the Second Part, and to take full responsibility for settlement of any such claim should it arise.
ROYALTY
(1) The Publishers agree to pay to the Party of the Second Part a royalty of ten percentum of the recommended retail price of each copy of the book sold for each editlon printed or reprinted with or without amendment approved by the parties.
(2) Books and records for independent audit shall be kept of all such retail sales and, submitted for examination by the Parties of the Second Part and Trevor Young at any
time upon reques t. . (3) Royalties shall be computed from the returns made to the Publishers by their sales agents for the book or a quantlty basis from the date upon which the book is released for
public sale in all Australian states.(4) The book shall be distributed to major outlets where books are sold including major supermarket groups, department stores, newsagents and bookstalls, and the first edition shall be a mlnlmurn of fifty thousand copies, any subsequent edition being based on the experience of sales demand for the first edition.
(5) The Publishers shall not be obligated to pay any royalty on any unsold books in any
edition at any time. (6) The Publishers shall bear all costs of production and distribution of the first edition of the book and to reserve full rights to re-sell to any other publishing house in Australia or overseas, rights to reproduce the book, should this be a commercially viable proposition, and warrants, further, that should such an eventuality occur, any contract so made by the Publ~sher with any Third Party Publisher, such a Third Party Publisher would be l eg l ly bound to pay the Parties of the Second Part and Trevor Young a ten percentum royalty on all books sold, and to be fully accountable for all records of sale.
b .
-
publish any other merchandise Mole" and other characters of
at the date of t h ~ s z m w r r -
~ ~ e . , + , A
Dated this ...... .-.: ........ ........ ........ ........ ...... day
of ........ .... s ~ ? ~ v ~ Z C ........ ..... 1988 Stephens Publishing P/L
WA Public Relations P/L ........ ........ ........ ........ ........ ...... Trevor Young Communications
........ ........ .....
[for all Partizs of the Second Part deposed In this document]
It transpired that this contract had been prepared by Stephens and was submitted by Young to McFadyen who requlred the deletlon of Clause 7 and of the word "illustrations" In Clause 3 and the insertion of the word "Official" in the tltle of the book on page 1, but otherwise approved of its being signed by Young, which he accordingly did. Both McFadyen and Young in their affidavits referred to the arrangement and contract as having been entered into by Young on behalf of Fahey and Media.
Mr. Harrison said that the respondents had been served with a copy of the affidavit of Young, but not with McFadyenPs affidavit which had been handed to Mr. Harrison "about ten mlnutes ago". At that time Stephens was not present in court and Mr. Harrison stated that he had no instr;ctions in relation to paragraphs 9 and 10 of Young's affidavit. The hearlng was then adjourned until 1.15 p.m. to enable Stephens to come to court. At the end of the day the parties were able to agree on a solution of most of the problems to which the interlocutory application gave rise.
The respondents by therr counsel undertook that they would book and the applicants by their counsel gave the usual
not without the consent of the applicants distribute or sell the
undertaking as to damages. The applicants had sought an order that "the respondents forthwith take all steps open to them to recover all copies of the book already distributed by them in whlch property has not passed from them to any third party". I refused to make thls order. Costs were reserved and the directions hearing was adjourned to 14
February 1989. The case came on for trial on 6 March, when Mr. Dwyer, Q.C. and Mr. Cosgrave appeared for the applicants and Nr. Kendall for the respondents. At a later stage, Mr. Harrison also appeared for the respondents. Mr. Dwyer Q.C., began his opening by referring to the written agreement which he agreed was the foundation of the whole case and submitted that the parties to it were Fahey, McFadyen, Media and Young on the one hand and Stephens Publishing and Film & Book Publishing Pty. Limited ("Film & Book") on the other.
Mr. Dwyer referred to exhibit RRSl to an affidavit of Stephens, which was the respondents' part of the contract. It showed that "L.J.A. Public Relations" had been struck out as one of "the Parties of the First Part" and Film & Book lnserted in its place. No corresponding alteration had been made to the execution clause which had been signed by Mr. Leslie Jabara, a director of Film & Book, on behalf of that company but opposite the name "L.J.A. Public Relations". This was agreed by the parties to be
the fact. Having referred to the terms of the written agreement, Mr. Dwyer agreed that his case rested upon that document as properly construed.
He also said that the reference in the contract to Young as
the "manager promoter, organizer and spokesperson for Nr. & Mrs.McFadyen of Media Arts Corporation Pty. Ltd." "carries with it the view that if Mr. Young said to the respondents or any of them, 'So far as Mr. & Mrs. McFadyen are concerned, you can go ahead', then clearly under this clause they would be bound by that, Mr. & ~ r s .
McFadyen would be bound by that". When asked whether a spokesperson could bind the McFadyens wlthout expressly stating that he was speaking on their behalf, he said that would depend upon the proper inference to be drawn from the evidence, but "our case will be that it was not like that. Our case will be that Mr. Young made it very clear, first of all, when matters were raised that he would have to get instructions from Mr. McFadyen in particular and secondly, he made it very clear when he was conveying messages on Mr. McFadyenrs behalf".
Mr. Dwyer stated that the matter, on hls understandlng, seemed to have proceeded "on the footing that as between Mr. & Mrs McFadyen, Mr. McFadyen was the spokesperson". The contract was said to have been signed about the middle of October, although it bore the date 20 September. The parties eventually agreed that this was so. Young was shown the document in mld October and said that he would have to show it to McFadyen.
After the making of the alterations which McFadyen required, the contract was srgned by Young and Stephens at Young's offlce. Stephens later sent Young a copy of the contract executed by Jabara. Mr. Kendall read Stephenst affidavit of 23 December and then the affidavit of Jabara, which had been sworn on 14 February 1989 in support of a notice of motlon dated 14 February in which the respondents sought a release from their undertaklng of 23 December and an order that they be permitted to distribute and sell the remaining copies of the book. It proved unnecessary to decide this motion as it was possible to flx the trlal itself for hearlng in March.
~abara's affidavit included the following:
"2. On or about the 14th October 1988 Mr. Ron Stephens and I flrst met the Thirdnamed Applicant to discuss an idea of producing a book featuring 'Kylie Mole'. At that stage we had not formulated any idea of the format of the book. It was Trevor Young who suggested that the book should be a school planner and this was settled on at that meeting.
Some discu$sion took place at that meeting about Young's authority and he assured us he was able to agree on behalf of the Flrstnamed Applicant and the Secondnamed Applicant to any arrangements concerning the book. we then discussed an appropriate Title for the book in order to ensure that the book did not conflict with the publication being prepared by Penguin Books. At the meetlng the royalty rate was also discussed, and Young insisted that the royalty be 10% of retail price of the book whlch is significantly higher than normal. He made it clear that the royalty was not negotiable and accordlngly the arrangement was
accepted. 5. On the afternoon of the 1st December 1988 I received a telephone call from Young requesting Stephens' home telephone number. Mr. Young sounded agltated or upset which was quite out of character for him. I asked him what was wrong and he sald words to the effect 'The bitch has jacked on us'. I asked him what he meant and he explained that Fahey had instructed him that two of the plctures in it made her look 'too Jewish'. I proceeded to give him Stephens' home phone number.".
speaking of a conversatlon on 2 December 1988, Jabara
continued:
"6. ... stephens telephoned Young on our conference telephone and after some discussions about the objections to the book Stephens stated to Young that he wanted to telephone McFadyen himself to discuss the matter. Young gave us McFadyenfs home number and mobile phone number and that was the end of the discussion. I was able to hear both parties throughout. this telephone call and say that at no tlme did Stephens suggest that he wanted to speak to McFadyen in order to arrange for the printing of a small number of books in order to fulfil1 the Coles/Myer contract as 1s alleged by Young in hls Affidavit apparently sworn on the 23rd December 1988. There was no discussion concerning the Coles/Myer contract in the course of this telephone conversation.".
Referring to a telephone conversation with McFadyen on the same day, 2 December 1988 the deponent sald:
"7. ... Again this conversation was conducted on a conference telephone and I was able to hear both parties to the conversation. McFadyen outlined hls objections to the book and stated that he wanted to have a meeting with Stephens. Stephens explained to him that the book was possible already printed and there
was little that could be done about changing it. McFadyen reacted with some amazement to this and stated that the book couldn't be prlnted because he had only just seen it. Stephens then explained that the book had been approved by Young, and that the various requests Stephens had made throughout the production of the book to meet with Fahey to discuss the contents of the book had been rejected by Young on the ground that she was too busy to meet us. Stephens also explained that we had a contractural (sic) arrangement with Young and had complled fully wlth the contract. After a long pause McFadyen then returned to the subject of amending the book and he and Stephens started to talk about amendments in a second edition. At no tlme did McFadyen deny that Young was authorised to contract with us on behalf of Fahey and Media Arts and he did not say that Young could not approve the book on behalf of them. McFadyen indicated that in the circumstances he believed that everything would be all right, and that any amendments required could be made in the later edition. At the end of this telephone conversation I was of the clear understanding that McFadyen was satisfied with the explanation given by Stephens and was happy for the book to proceed subject to an agreement to look into the possible amending of the material for any second edition. There was certainly no comment by HcFadyen to the effect that he did-not wish publication of the book to continue nor any demand for its withdraw1 (sic).".
Counsel for the respondents then read Stephensr affidavit of 19 February 1989 in which he said:
"2. I refer go the contract between 'Young Communications' and the Respondent dated 20 September 1988 but which in fact was executed on 20 October 1988, ... At all times leading up to the formulation of the contract and after it was entered into the Thirdnamed Applicant represented to me that he had absolute authority to approve or reject material for the book and this is stated in the preamble of the contract. The allegation in paragraph 4 of the Affidavit of Trevor Young apparently sworn 23 December 1988 ('Young's Affidavit1) to the effect that Young explained to me that no book could be published until it had been approved by Fahey and McFadyen on behalf of
Thirdnamed Applicant did approve of the the Secondnamed Applicant is totally untrue. The illustrations. Originally the illustrations were drawn without any saying being attributed to the Kylie Mole character and owners of the book were invited to insert their own captions as with the illustrations being exhibit 'RRS4' to my Affidavit of 23 December 1988. It was Young who suggested the words be inserted by us, and he supplled the wordings to be used in the facsimile which was exhibit 'RRS2' to my affidavit of 23 December 1988. Young further saw the finished illustrations in the form they now take in the book and approved them at a meeting between Young and myself of 28 November 1988 when he saw the whole of the book in its present form and approved it immediately before I delivered the material to the printer for printing. The text of the book was also approved by Young. On 15 November 1988 I sent Young by facsimile the four main text pages together wlth a letter asking if he could approve these. ...".
(This facsimile of 15 November 1988 from Stephens to Young was tendered as exhibit 2.).
"Shortly after these were sent to Young he telephoned and advised me that a number of changes were required and I made these as he dictated them over the phone. Now produced and shown to me and marked 'RRS6' are true copies of the pages on which I wrote the amendments required by Young.".
(These pages were tendered as exhibit 3.)
"The pages in the book have been amended in accordance wlth Young's requests. At no stage in making these changes did Young suggest that the material was subject to any further approval by the Firstnamed Applicant or the Secondnamed Applicant.
3. I refer to the second half of paragrapah 4 of
Young's Affidavit and say that it was on 29 November 1988 that Young asked for a copy of the book to show to Ian McFadyen. The book was, at this time, at the printers and Young indicated that he was simply showing the book to McFadyen for his information. There was no suggestion that it was subject to any approval.
4 .
I say that the discussion referred to therein is In relation to paragraph 7 of Young's Affidavit
misrepresented by Young. At the time of the
discussion I did not know whether the book had been printed, and the suggestion about etchlng the film was raised only as a posslbrllty if the book had not been printed. I deny absolutely that the meeting with McFadyen was requested because I knew Young could not give approval to an arrangement concerning books for Coles Myer Limited. ...
5 . I deny the suggestions in paragraphs 8, 9 and 10 of Young's Affidavit to the effect that I at any time agreed not to distribute the book. I did halt the distribution of the book for approximately four hours on 6 December 1988 to ascertain whether we could resolve the matter with McFadyen, and at that
time we were talking about doing a second print of the book with the amendments required by the Firstnamed Applicant and the Secondnamed Applicant, at the expense of the Applicants. When it was apparent this would not be agreed to I arranged for the distribution of the book to proceed. I did consider the possibility of replacing any undistributed stock held in the warehouses of our customers with copies of a revised edition rf we found it possible to produce one. However, I had no control over the release of such stock. Until I met McFadyen at Young's office on December 6, 1988 the only complaints whlch the Applicants had made about the book concerned the drawings. NO complaint was made about the words used in the book, until McFadyen arrived at the above meeting with material with which he wanted to replace what was in the book already.
6. The costs of production of the book totalled
approximately $100,217.34, made up as follows:"(he then set out the details)
"All of the above costs (excluding dlstributlon costs) had been incurred at the tlme the Applicants sought to change the copy of the book on 6 December 1988.".
The affidavit did not contain paragraph 7 or 9, however two paragraphs marked "8" were not read, nor were paragraphs 10 or 11.
"12. I refer to paragraph 20 of the affidavit sworn by Ian McFadyen on 23rd December 1988 ('McFadyenrs Affidavit') . . . I deny that what I supplied to Young was 'a flnal proof' of the book. It was a photocopy of the flnished art for the book
which I placed inside a cover to show him how the book would appear when printed. The book was then ready for printing. I note that McFadyen states that on 30 November 1988 he told Young that Medla would not agree to publication of the book in its present form. Young did not convey that to me. All Young asked me was to make two mlnor changes to two drawings. ...
I refer to paragraph 23 of McFadyen's affidavit and say that although on about 2 December 1988 Young discussed with me the possibility of making changes to two of the caricatures in the book, he made no complaint whatsoever about the words used in the book.
. . . 14. I refer to paragraph 24 of McFadyenrs affidavit. I deny that I asked Media to allow me to distribute 40,000 copies of the book to Coles Myer Ltd. I was not in a contractual relationship with Media and did not need its permission to distribute. I had no arrangement to supply 40,000 copies of the book to Coles Myer. That number referred to the entire group of department stores in which they were included. It is correct that I said that I or Stephens Publishing stood to lose 100,000.00 and that I had dealt with Young throughout, and that Young had at all times assured me that he had full authority to approve not just the art work, but the entire contents of the book. I believe that any claim by McFadyen and Fahey that all art work had to be approved by them arises from the terms of the contract between Media and Young. This appears from clause 6 of the exhlbit 'IMcF5' to McFadyenls affidavit.".
(This refers to the agreement between Media and
Young, already tendered as exhibit G.)."Indeed throughout the Respondents' dealings with Young he was at all times anxlous to prevent their representatives having any contact with Fahey. He said that she was, in effect, temperamental and
difficult to get along with. 15. I refer to paragraph 26 of McFadyenls affidavit. I did not speak to McFadyen by telephone call during the meeting referred to. However, I did speak to Mr. Young by telephone and he requested a meeting. He did not request or mention that I should stop publication or printing.
16. I refer to paragraph 27 of NcFadyenfs
affidavit. The meeting referred to took place on 6th December 1988. I deny that I agreed to stop preparation for, or printing, of the book. On the day of the meeting I did not know if the book had been put on the presses. The changes referred to, and discussed, related to the proposed second edition of the book. I made it plaln that the Respondents could not carry the costs of simply destroying what had been prlnted or the costs of new art work and I said that to McFadyen at the meeting on December 6. I further said that the Respondents had commitments to distributors and to retailers. I certainly refused McFadyenrs suggestion that he to (sic) speak to Coles Nyer. The dealings between the Respondents and our customers were not part of his business. I deny that McFadyen made the statement or any statement to the effect claimed in the last sentence of that paragraph.".
The next affidavit chronologically was that of Young of 21 February 1989 in reply to Stephens' affidavit of 19 February. Young's affidavit included the following statements:
(c) In relation to the-suggestion that I approved any illustrations, that is absolutely denied. 5 do, however, recall at an early stage
supplying Stephens with 'Kylie Mole' sayings;
(d) In relation to the allegatron that I attended a meeting on the 28th November, 1988 and approved the whole of the book immediately, that is absolutely denied. The first time I saw the whole of the book in its exhibrted form, was on the 30th November, 1988 when Mr. Stephens merely dropped in a proof of the book to me at approximately 4.30 p.m. on that day. I am able to recollect this distinctly as I had a meeting with Ian McFadyen at 6.00 p.m. on that evening in relation to a further matter; (e) In relation to the suggestion that I approved the so called main text pages, I say that I recall these being faxed through to me and making comments in relation to some of the words used in the draft. However, it was made clear that the total book had to be approved including the text pages by the first and secondnamed Applicants. This matter was
firmly stated on many occasions to Stephens;".
It was at this point, immedrately following the luncheon adjournment on the first day of the hearrng that the applicants for the first time sought leave to amend the Statement of Claim. They sought to amend paragraphs 8 and 9 and they foreshadowed an intention to rely, not merely upon the terms expressed in the written contract, but also upon oral and implied terms allegedly arising out of a series of meetings in October 1988.
Mr. Dwyer for the applicants then resumed reading Young's affidavit of 21 February 1989;
"(f) In relation to paragraph 3 of the Stephens' Affidavit, I say that the suggestion that I would simply show the book to McFadyen for his information is ludicrous. The reason why I informed Stephens that the book had to be shown was for appreval and that was something which was made clear to him at the time the draft book was supplied. I am surprised to learn that Stephens would have forwarded a draft or proof of a book to the printers prior to any approval;
(g) In relation to paragraph 4 thereof, I say that the contents are absolutely denied. Stephens went to great lengths to see what could be done regarding the etching and provided me with details. ... (h) ... In fact on the 6th December, 1988 what Stephens informed me was that he had not got to the printers in time to stop some of the printing. I asked hlm then to whether or not there was any chance of stopping the distribution of the copies of the books printed thus far;".
(paragraphs 2(i), (j), (k), (l), (m) and (n)
were not read.).
"3. In relation to the Affidavits of Leslie Colin John Jabara ('Jabara') sworn the 14th day of February,
1989 I say as follows:- (a) In relatlon to paragraph 2 thereof, I say that I first met Ron Stephens and Jabara on the 13th day of October 1988. In this conversation I agree that it was I who suggested that a school planner be utzllsed as merchandising the character of 'Kylie Mole'.
I recall advising that I acted as an agent on
behalf of the Applicant. Stephens and Jabara were told that I was to report back to my principals in relation to the final format of the book. I say that the royalty of 10% is a normal royalty, when considering the popularity of the character;
(b) In relation to paragraph 5 I say, this 1s a
total and absolute fabrication. I have never used the words ascribed to me or come close to using such words nor would I use such words in relation to a client and personal friend of mine. ...
(C) In relation to paragraph 6, I say I recall being asked to provide the telephone numbers of Ian McFadyen as Stephens wanted to communicate with him in relation to the lack of approval he had with the final form of the book. . . . I deny that the Coles/Myer Contract was not mentioned at this time. It was the prime reasons suggested by Stephens. He maintained he had promised that organisation thatshe would deliver to them a copy of the draft book by the 1st December, 1988;".
Counsel for the applicants then read the affidavit of McFadyen of 21 February 1989 commencing at paragraph 2:
"2. I refer to. the Affidavit of Ronald Reginald Stephens ('Stephensr) sworn the 19th day of February, 1989 (SIC.), in particular paragraph 4 where he states he arranged to speak to me. In fact he had been trying to contact me for sometime as I recall some messages had been left. Eventually he telephoned me at my offices at Channel 10, he was extremely agitated at the prospect of the delay in printing and requested that I attend a meeting. This telephone conversation took place on the 5th December, 1988. At that time I was in my offices at Channel 10.
3. In the course of this conversation I recall the reason he gave for his concern was that he had a contract with Coles/Myer to dellver 40,000 books to that organlsatlon as at the 1st December, 1988. Stephens did not Indicate that the book was actually being printed at this stage nor did he indicate that it had been sent to the printer. In fact discussions between Stephens and myself involved some technical ways of changing the artwork.
4. I was sympathetic to his plight wlth Coles/Myer. I indicated that I would have a round table discussion wlth my wife and Trevor Young that night and that he should contact me at home in order to find out what had been resolved by us in relation to the draft
submitted for approval.
5 . ... On that evening ... Stephens contacted
us at home to enquire the outcome of the meeting. An arrangement was entered Into that he meet with us the following morning. It was arranged by me that we would meet at Trevor Young's office the following morning, being Tuesday the 6th day of December, 1988.".
(Paragraph 6 was not read.)
"7. I refer to the Affidavit of Leslie Colin Jabara ('Jabara') sworn the 14th day of February, 1989 and say in relation to paragraph 7 theseof, the recollection of Jabara is incorrect. In fact the conversation with Stephens took place on the 5th day of December, 1988. I do not recall being advised by Stephens that thrs was a conference telephone call. In fact there was no indication that the call was other than a telephone conversation with a person holding the mouth piece directly to their mouth. ...
... I reiterate that what Stephens used in
order to negotiate, my approval of the draft was the suggestion that he had to deliver to Coles/Myer 40,000 books by the 1st December, 1988 and that he was already late in the printing. I recall emphasizing in the conversation that my wife and I had to approve all the artwork before any book was prrnted let along distributed. There was no denial of this proposition by him during the telephone conversatron. ...
8. ... On the morning of the 6th December, 1988
at no time did Stephens ever mention to either myself or Young during that meeting that the book in fact had been printed. He was handed a replacement text and a proof sheet of
photographs. " .
Paragraphs 9, 10, 11 and 12 were not read.
No further affidavrts were read.
Trevor Douglas Young was then sworn and Mr. Dwyer commenced his examination-in-chief.
Young said that it was stated by him from the outset of his first meeting with Stephens, Jabara and Maxwell that Fahey & McFadyen "had to approve anything that goes on merchandise to do with Comedy Company characters". According to Young, Stephens "agreed with what I had said".
At the second meeting, in Jabara's office, between the same persons, Young said that he stated "quite firmly that Ian McFadyen had the final say, Ian and Maryanne had the final say on all art work, whether it should be approved or not".
The contract was taken away by Young to be shown to McFadyen "to get his approval".
Later in the same week Young and Stephens met in the latter's office and the contract, with the alterations which McFadyen had required was initialled and signed by both men. Young said that Stephens "was saying how short a time there was to produce the book and we had to get moving on it. I agreed we had
Mr. McFadyen with the final proof, that cannot be done Instantly to get moving but I said also 'you have to allow me tlme to see
it usually takes a couple of days'. Stephens was sald to have replied 'Yes, that is OK'". Young said that at a meeting some time later in October, Stephens showed him a text to go inslde the pages of the book, to which he replied:
"Maryanne writes 99 per cent of Kylie Mole material. There
is a good chance or a better than average chance that she will knock it back instantly". He told Stephens "We wlll submit it anyway and I will show her" adding that "I do not like your chances still and saying I thought it was a waste of time". Young later said that he told Stephens that he could not give approval on the text.
According to Young, Stephens kept pushing, in a later conversation, for some sort of a response as to the text. "I reiterated on& again that Ian had to see the text. I said there was (sic) quite a few grammatical errors and being an ex-journalist I went through some of the grammar that I thought we could fix up to show Ian in a better - so it looked a little bit better than what it was first given to me as". He denied Stephens' statement in his affidavit that ''at no stage in making these changes did Young suggest that the material was subject to any further approval by the firstnamed applicant or the secondnamed applicant".
Young said that on 28 November Stephens told him that he had
an order for 40,000 books from Coles Myer and I congratulated hlm.
afternoon of 30 November. He sald that he first saw the whole of the book in the late He denied Stephens' statement in his affidavit that he had on 28 November seen and approved the whole of the book. He stated that he had told Stephens that he needed a final proof of the book "So I can show Ian to get his approval so we can get started on it".
After showing the proof to McFadyen on 30 November, Young stated that on 1 December "I conveyed to Mr. Stephens that Ian specially did not like the illustrations contained within the book and it was also - he said that the text would not be suitable and that we would have to come up with changes ... The book was not to be printed, Ian had not approved it, and that was it, there was no question".
He deniedThaving told Jabara that "the bitch has lacked up on us" or that Fahey had intimated to him that "two of the pictures in it made her look too Jewish".
Young agreed that he received the facsmile letter from Stephens on 1 December which has been set out above, and that he dld not reply to in writing.
He stated that he had probably two conversations on 2 December with Stephens, who "by this time had become quite agitated". The latter wanted to keep face with Coles Myer and he wanted to see if McFadyen would allow a small order to go to Coles
probably not allow it and that he would be very difficult to to pacify them. He stated that he replied that McFadyen would catch, but he gave him McFadyen's telephone numbers. He then gave evidence in relation to the discussions which ensued between him and Stephens about posslble alterations to the illustrations in the book, the possible substitution of photographs for the illustrations, and later the fact that
printing had begun, had been stopped and then had been completed, and the question whether the proposed changes related to the first edition or to a second edition.
On 3 March, the third day of the trial, Mr. Dwyer sought and obtained leave to file and deliver the amended Statement of Claim which he had earlier foreshadowed.
Paragraphs 8-13 of the Amended Statement of Claim read as
follows:
PARTICULARS
9. There were terms of the publishing agreement that:
(a) the Respondents would design and produce
the book to a format having the full consent and approval of all the Applicants (such approval n o t t o be withheld unreasonably); PARTICULARS OF FORMAT
Format includes the general appearance or style of the book, the size and shape of the book, the quality of paper used, the type faces used, the
the book and the binding of the book.
(b)
all words and copy lines used in the book would be provided by the Applicants to be placed as indicated within the Respondents' design;
(C) all photographs or material to be used for illustration of characters which appear in the television series 'The Comedy Company' should be provlded by the Applicants who should approve their reproduction in the book.
(d) proofs of the book had to be approved by the firstnamed Applicant and Ian McFadyen before printing or publication.
9A. In breach of the publishing agreement the Respondents printed, published and distributed the book :
(a) without seeking or* obtaining the consent or approval of all the Applicants or any of them for the format designed and produced by the Respondents; (b) containing words and copy lines which had not been provlded by the Applicants; (c) containing material for illustration of characters who appear in the television series 'The Comedy Company' which had not been provlded by the Applicants and the reproductionof which in the book had not been approved by the Applicants; (d) when proofs of the book had not been approved by the firstnamed Applicant or Ian McFadyen. 10. The book produced by the Respondents -
(a)
contained poor quality and demeaning caricature representations of Kylie Mole;
(b)
contained words purportedly spoken by Kylie Mole which were not supplied by the Applicants and were out of character with Kylle Mole.
11. On or about 30 November 1988 the Respondents presented the book for the approval of Applicants.
12. By reason of the matters referred to in paragraph 10 the Applicants:
(a)
declined to consent to or approve of the format desrgned and produced by the Respondents, such approval not being withheld unreasonably;
(b)
declined to approve the reproduction in the book of material used for illustration of Kylie Mole a character appearing in the television series 'The Comedy Companyr in the
orm resente
and the firstnamed Applicant and Ian McFadyen aeclined to approve publication of the book in the form presented by the Respondents but on or about 6 December 1988 the Applicants provided photographs of Kylie Mole and words suitable for attribution to her for substitution for the caricatures and words contained in the book produced by the Respondents.
PARTICULARS
(a) On 1 December 1988 the thirdnamed Applicant on behalf of the Applicants and Ian NcFadyen told Stephens that the book was totally unacceptable; (b) On S December 1988 Ian McFadyen for himself -and on behalf of the Applicants told Stephens that the book as then presented by the Respondents must not be published o K distributed; (C) 13. The Respondents have nevertheless, without the consent of the Applicants, distributed and sold from on or about 15 December 1988 coples of the
book in the form originally produced by them.".
In their Amended Defence and Cross Claim the respondents, amongst other things, denied that they entered into the contract alleged in the Amended Statement of Clalm.
The respondents made a cross-claim against Young alleging in paragraph 22 that at all times Young
l ' . . . represented to them, and thereby warranted
that he represented the first and the second Applicants and had full authority to approve and consent to the preparation, publication, distribution and sale of the said book and that he gave full approval for the preparation, publication, distribution and sale of the said book in the form in which it was published and distributed for sale.
23. The Respondents dispute the Applicantsr claim upon the grounds appearing in their Defence but in the event that they are found liable to the Applicants, or one or more of them, the Respondents claim indemnity from the third Applicant for all sums including all legal costs which they may be found liable to pay the Applicants, or any of them, and claim damages from the third Respondents upon the grounds set forth in paragraphs 2 3 A . 24 and 25 hereof. ".
The evidence in chief of Fahey was given on 9 March. She stated that she had not .authorised the printing of the book. Asked "Do you have any criticisms of the book?" she replied "Yes, a lot". She objected to the text, to the language attributed to Kylie Mole which was inconsistent with the character, and also internally inconsistent. She did not like the caricatures and thought it was "a very cheap publication on very poor quality paper". She detailed her objections to the text.She said the
The witness was given the opportunity of preparing a list of her text was out of character with Kylie Hole and the way she spoke. objections to the text overnight. On the following morning she produced the list, three pages of which related to the language and a further one and a half pages were under the heading "Content"
In the course of his evidence, McFadyen produced an agreement between Young trading as Young Communications, referred to as the licensee, and Media described as the licensor. Thls agreement was made in 1988, before any negotiations between Young and the respondents.
Clause 2(1) read as follows:
"2. Licence
( 1 ) The Licensor grants Young Communications the following
rights:-
(a) A licence to manufacture and distribute for sale Merchandise incorporating the Features where Young Communications sells the Merchandise to wholesalers and/or retailers and is paid the wholesale purchase price; and
(b) A licence to enter agreements with third parties to allow the third parties to manufacture and
distribute for sale merchandise incorporating the Features provided that the conslderatlon given by the third parties is a percentage of the wholesale purchase price of each unit of the Merchandise
sold. " .
In Clause 1, it was stated that "the Features means the name
of the Character, the visual image of the Character and words andphrases and characteristics associated with the Character;". The
Character means the character known as Kylie Mole.
Clause 6 was in the following terms:
"6. Approval
(i) Young Communications will submit all artwork for planned Merchandise to the Licensor for the Licensor's approval prior to the 'use of such artwork in the manufacture of merchandise.
(ii)If the Licensor does not approve artwork submitted, Young Communications will not manufacture any merchandise which uses such artwork.".
In his evidenceMcFadyen described Young as a go-between, with a fair amount of authority. He said:
"As an agent, he either makes the first contact or responds to the first contact or responds to the first contact with the manufacturer. He briefs them and, from his experience, explains what our requirements are, what our limits are, what we are looking at, what we can supply, what we cannot supply, and guides them through the preliminary stages which could lead up to what you could call a presentation to us".
Young had produced to him the contract which had been drawn
up by the respondents and after "skimming" the document, he
indicated the amendments which he required.Young had told McFadyen that "at one stage that they had
faxed him some rough sketches and I said, well, tell them to get
the material over to us when it is in some sort of form, thesooner the better". McFadyen said that his preference was that the planner should be published later rather than sooner "because it seemed to me we had enough coming out for the Christmas market and we also had the Rylie Mole Diary which was a novelette virtually coming out. We did not want there to be any confusion between a school planner and a diary".
He said that he saw the book itself for the first tlme on 17 December in a newsagency. He ha; not authorised it. He had seen a "virtually identical item" on 30 November when Young had handed it to him. He thought he probably had it in his possession for about 20 minutes and was "very very disappointed with it. I saw immediately that we had a very blg problem on our hands. I told Mr. Young to convey to the publishers, who I had not at that stage met, that they were goin4 to have to reconsider the artwork to begin with and we would probably have to reconsider the text. We would have to look at the text but the most important thlng was they had to start again on the artwork, in some way".
McFadyen said that on 5 December Stephens telephoned him and
explained to him the pressures that he was under. Stephens then
sald: "But Mr. McFadyen I have been deallng with Mr. Young. Now I was under the impression that Mr. Young had full authority to approve all the work on thls diary, or this planner".
McFadyen replied:
"Mr. Young has authority to negotiate with you but as is stated in the contract and as I am sure Mr. Young has explained to you, we must have final approval of the art work if it is going to bear the Kylie Mole name".
When he gave this evidence, it seems clear that McFadyen had in mind the terms of Clause 6 of the agreement between Young Communications and Medla.
Asked by Mr. Dwyer whether he had said anything else "in relation to that question of authority and approval", McFadyen replied:
"No, I dismissed it fairly quickly. I said 'Yes, but we must have the final approval. We always have the final approvalr. That was really the end of that discussion. We then moved on to the matter of solving the problem".
On 6 December Young, Stephens and NcFadyen met and McFadyen had with him the draft with all the amendments he required and some handwritten sheets to be inserted.
In the course of cross-examlnation McFadyen said that his
understanding was that the contract did not specify a date for
undertaking of the publishers to place the book in the Australian publication. The fact was that the contract contained the market prior to 1 December 1988. He regarded the contract between Media Arts and Young as "our guarantee that Young will not authorize anything that we do not approve of".
Speaking of the book as it was when he first saw it, he said:
"As soon as I had it before me I would have said
'it is imposslblef".
He agreed that "Young may have told me that he had been faxed some drawings". Later he said that Young had told him early in November that they had faxed him some drawings, adding "I presumed they would be cartoonish in nature".
When asked:
"Did you see them?", he replied "I do not think I did. I am
pretty sure I did not".
He thought that Young said he was working on some text with Stephens. Young had his authority to work on the text and make suggestions to Stephens of what it might be. "His approval was only in terms that they could put it into the submission, put it into the draft, the dummy".
He agreed that if he had seen the art work sufficiently to reject it in the middle of November, photographs could have been substituted for it and the text could have been fixed up quickly.
He said that Young was "under a general instruction not to pass on any material in bits and pleces. That was his job to take care of things in the preparatory stages. We simply wanted to see what the final product was going to look like". He said that in an interview with the "Sun" newspaper, he told its reporter:
"I took one look at it and decided that it was
unsuitable and knew that Haryanne would hit the
roof when she saw it".
He said that he knew that on 30 November and added:
"I would have hoped to show Maryanne a revised version of it for her scrutiny. Why unnecessarily distress her by showing her these awful pictures?"
He said that it was on 2 December "that I understood that there was any massive time constraint. That there was a matter a panic here".
Shown the fax of 1 December 1988 from Stephens to Young, McFadyen said that he could not remember when he flrst saw it, but he could say that everything in it was conveyed to him by Young in his conversation with him on 2 December. He said:
"I took the whole document to be saying that the
book is going to be run as it is and if there are to be any changes they will have to be in the second print run. I do not know about the second print run, but they would not consider changes for this run".
Later, he said that Young "put it in the terms that Stephens said it was too late to make any changes in it at all". McFadyen said that stephens put the suggestion of a second edition or a second print run to him on 5 December.
In reference to the meetlng on 6 December he was asked:
"I put it to you that Mr. Stephens did not agree to
cease publication of the book in the form it was
produced?",
he replied:
"He was instructed to cease publication in that
form".
To the question:
"I put it to you that he did not accept that?",
he replied:
"He did not refute the instruction".
When asked whether Stephens was, "throughout this meetlng attempting to come to some compromise with you about your complaints?", he replied:
"Well, his compromise, as I have outlined was that he be able to print some of the books in the form they were in and take our suggestions on board for the second edition".
McFadyen said that he rejected this proposal, adding "My intention was to suppress this publication absolutely". He knew that "they were poised to print. The fllm had been done and I imagine that they were walting for the go-ahead".
~e-examined, McFadyen listed his objections to the book
It was common ground that if the applicants were to fail on the Trade Practices Act claims, they would fail on passing-off.
The contract of 20 October 1988 was a layman's document, prepared by Stephens. It begins by descrlblng itself as "a contractural (sic)" agreement between Stephens Publishing and Film and Book Publishing "The parties of the First Part henceforth referred to as the Publishers" and Young Communications and "the Parties of the Second Part heiceforth referred to as Trevor Young".
A certain obscurity appears in Clause (1) when the agreement refers to "a format which has the full consent and approval of Trevor Young and Parties of the Second Part". There is inconsistency between th'is term and the description of the agreement as one between the Publishers and Young Communications. Inconsistency also appears in Clauses 2, 3, which refer to the "Parties of the Second Part and Trevor Young".
The flrst name appearing in the executron clause was
"Stephens Publishing Pty. Ltd." with the signature of Stephens
had not been struck out in favour of Fllm and Book Publlshlng Pty. opposite. Then followed "LJA Public Relations Pty. Ltd." whlch Ltd., as occurred in the heading of the agreement. Opposite this name there appeared in due course the slgnatute of Jabara. The execution clause ended with the words "Trevor Young Communications (for all Parties of the Second Part deposed in this document)" and opposite them was the signature of Young.
The applicants evidently accepted the agreement as having been executed on behalf of Film & Book Publishing Pty. Ltd., as they have sued that company as the party on whose behalf it was signed by Jabara.
In paragraph 8 of the original Statement of Claim filed on 23 December 1988 the applicants said:
"By an agreement date'd 20 September 1988 ('the publishing agreementr) made between Young on behalf of the applicants and the respondents, the parties agreed that the respondents would produce, publish distribute and offer for public sale a book to be called 'Kylie Mole's Offlclal School Planner' ('the book')".
In opening the claim for interlocutory relief on 23 December 1988 Mr. Macaw Q.C. described the agreement as one entered into by Young on behalf of the applicants with the respondents and both Young and McFadyen so described it in thelr affidavits.
The execution clause did not make provision for signature by
McFadyen, Fahey or Media Arts, and the signature of Young opposite"Trevor Young Communications (for all Parties of the Second Part
deposed in this document)" should, in my opinion, be read as another reference to Young's affirmation of hls authority to represent McFadyen and Fahey. Doing the best one can to construe a contract drawn by a lay party and acted upon by these litigants, I prefer the view that the only parties to the agreement were the publishers and Young, the latter asserting his "full authority" to represent and to act
as manager, promoter, organizer and spokesperson for Mr. and Mrs. I. McFadyen (sic) of Media Arts Corporation Pty. Ltd. "in the matter of publishing material described in this document".
Nowhere in the agreement is there a reference to Young's affirming that he had full authority to act for Media Arts. The affirmation is made only in respect of "Mr. and Mrs. McFadyen of Media Arts Corporation Pty. Ltd.", the latter part of which may fairly be read as being merely descriptive of them. This conclusion is strengthened by the fact that as originally drawn by Stephens there was a blank space in the agreement after the words "Mr. and Mrs. McFadyen of" and the words "Media Arts Corporation Pty. Ltd." were supplied by Young. In my opinion, there is no basis for concluding that Media Arts was a party to the agreement. While Fahey, Media Arts and Young sued as applicants, McFadyen, who was referred to in the agreement in the same way as Fahey, did not seek to become an applicant, even after the Amended Statement of Claim was filed.
It is perhaps fortunate for the parties that the outcome of
the case does not turn on the question of the identity of the
were made adversely to the respondents, it is diff icult to see how parties to the agreement, except in the sense that if findings judgment could be entered in favour of Media Arts. In the Amended Statement of Claim, the agreement was alleged to have been made between Fahey, Nedia Arts and McFadyen by their agent, Young and the respondents. It was said to have been "partly written, partly oral and partly implied". The vital
term alleged in the conversations was "that proofs of the book had to be approved by Fahey and McFadyen before printing or publication". This statement was said to have been made by Young and agreed to by Stephens in three separate conversations.
If the applicants are to succeed, the evldence of Young must be accepted in preference to that of Stephens and Jabara. The two versions are diametrically opposed. It is not a case which turns upon precision of recollection bu't of truthfulness. In resolving the clash, it is useful to begin by examining the probabilities. It is clear that the undertaking to publish the book was a substantial one for the joint publishers, involving as it did expenditure of the order of $100,000, a considerable sum in relation to the scale of their operations. The written agreement provided that the book was to be placed in the Australian market before 1 December 1988. According to Young's evidence, he repeatedly said, and Stephens agreed, that proofs had to be approved by Fahey and McFadyen before printing or publication. The respondents are depicted as having gone ahead and prepared the book for printing without any intimation that Fahey and McFadyen had approved the proofs, or that they had even seen them. By
doing so, they would have been running the risk that their work and expenditure would turn out to be wasted in whole or in part. On Young's version of the conversatlons, the respondents were content, in the absence of approval, to enter Into contracts to supply companies like Coles Myer, a new and higly valued customer, with copies of the book for delivery to them on 1 December 1988. Indeed the whole program of the respondents for the sale of the
books in the pre-Christmas market would have been reckless, if embarked upon without the prior approval of Fahey and NcFadyen which, if Young's evidence were true, they must have known to be essential. The conduct of the respondents is consistent with their evidence as to what transpired between Young and themselves.
It is also helpful to look at the written evidence. In the first place, the affirmation in the contract of Young Communicationsf "full authorit+ to represent and to act as manager, promater, organiser and spokesperson for" Fahey and McFadyen is not easy to reconcile with what the respondents in their final submission described as an "over-rlding term" that prior approval by Fahey and McFadyen of "proofs of the book" was essential. On that submission, Young became, in effect, a mere messenger. If the parti-es had, as the respondents submitted, reached agreement before Young executed the contract that this approval was essential, it is strange that they did not include it in the document, but allowed the affirmation of full authority to remain. It is to be remembered that Young submitted the agreement to McFadyen who required changes to other parts of it. It seems to me to be more probable than not that McFadyen, who continued to
assert his faith in Young throughout the trlal, was content to rely on the clause in the agreement between Nedia and Young requiring the latter to submit all artwork to Nedia for its approval prior to its use. As has been noted he admitted that he regarded that contract as "our guarantee that Young will not authorise anything that we do not approve of". It would have been easy for McFadyen to say that he required Young to insert a clause in similar terms in the agreement with the respondents. Even if
he had done so, it would have applied only to art work. The fax whrch on 1 December 1988 Stephens transmitted to Young, which has been set out above, affords strong support for the case of the respondents. It included this passage:
"I understand your position but our agreement
says clearly you accept responsibility and also, we
had to deliver by December.We're committed to do' that and I'm afraid any changes would have to be considered in a second print' run.
I'm afraid you'll have to explain thls to Ian".
Had the truth been, as Young claimed, that Stephens had been repeatedly told and had agreed that prlor approval of the proofs by Fahey and McFadyen was'essential, it would have been strange indeed for Stephens to have sent such a fax, and stranger still for Young, a public relations man, to have failed to contradict it in writing. McFadyen evidently did not Instruct hlm to make any written response.
Turning to the witnesses, I am bound to say that I cannot accept Young as a witness of truth. I do not accept his evidence that he told Stephens and Jabara, either repeatedly or at all, that prior approval by Fahey and McFadyen was necessary and that Stephens agreed on behalf of the respondents.
The probable explanation of Young's conduct is that he believed that he could safely predict that the contents of the book which he had seen and approved would turn out to be
acceptable to McFadyen and Fahey, and when his belief proved to be wrong, he lacked the courage to tell them what he had done. He may well have hoped that the matter mlght never come to litigation. When it did he felt that he was locked into a position from which it would have been very costly to retreat, having regard to the commercial importance of McFadyen and Fahey continuing to have confidence in him.
Where his evidence conflic'ts with that of Stephens and Jabara, as, for example, on the essential question of the necessity for prior approval of Fahey and McFadyen, I prefer their evidence. They impressed me as truthful witnesses. I accept their evidence that at the first meeting with Young, the latter assured them "that he was able to agree on behalf" of Fahey and Media "to any arrangements concerning the book". It is not necessary to make findings as to the preclse dates of the various events, which is fortunate as the evidence about them fluctuated considerably.
Stephens gave evidence on 23 December under considerable
difficulties when he was called to the court at short notice to
then, and remained at the trial, a voluble wltness, who displayed respond to the claim for an interlocutory inlunctlon. He was a lively sense of Injustice and a disposition to argue his case rather than content himself with the role of witness. However, I am satisfied that he spoke truly and accurately when he gave hls account of Young's statements to hlm of his authority to agree, on behalf of Fahey and McFadyen, to the contents of the book, and when he denied Young's allegations that he repeatedly told
Stephens that proofs of the book had to be approved by Fahey and
McFadyen themselves before printing or publication.Much criticism of Stephens' evidence was based upon the discussions which he had wlth McFadyen about posslble changes to the book. I am satisfied that, having clearly stated his position, as, for example, in the fax of December 1, he entered into those discussions in the hope of flnding a basis upon which confrontation could be avoided. Be was further encouraged to take this attitude by his hope of doing further publishing work in relation to another Comedy Company character. McFadyen agreed that Stephens mentioned this hope to him and that he "held out some sort of carrot" to Stephens.
This acceptance of the evldence of Stephens and Jabara and the rejection of that of Young leads to the conclusion that the applicants have not established the contract alleged in their Amended Statement of Claim which included the term that "proofs of the book had to be approved by Fahey and McFadyen before printing or publication". This was, in the end, the only contract for which the applicants contended and it was the foundation of their
claims against the respondents. Their failure to establish it is fatal to thelr claims. The applicants did not choose to rely upon an alternative plea based solely on the terms of the written contract. In my opinion, they could not have succeeded on such a plea. Young's affirmation in the contract of his "full authority to represent and to act as Manager, promoter, organiser and spokesperson for Mr. & Mrs. I. McFadyen" and his repeated statements to the respondents of his consent and approval would have been fatal to any such plea by him. Any such pleas by Fahey or Media would, in my opinion, have also failed. McFadyen had authority to speak for Fahey and Media. When Young submitted the written agreement to McFadyen, he instructed Young to have the amendments made whrch have been noted above and authorised Young to enter Into in its amended form. In the original Statement of Clarm the applicants described the written agreement: as having been made "between Young on behalf'of the applicants and the respondents". Fahey and Media, through McFadyen, approved of Young's affirmation in the agreement of his full authority and so clothed him wrth that authority. what he did thereafter rn his dealings with the respondents, as deposed to by them, was, in my oprnion, withrn the authority so conferred upon hrm.
The evidence of Fahey and McFadyen was, generally speaking, predicated on the proposition that the respondents were not entitled to publish the book as a result of any approval by Young of its contents. That evidence included a full expositron of the reasons why they disapproved of the book. I have not found it
necessary to refer to their evidence in greater detarl as I am satisfied that the respondents were entrtled to act on the communication of approval by Young made on his and their behalf. The Court orders that the applicatron be dismissed with costs, including the costs of the claimsfor interlocutory orders and that the respondents be released from therr undertaking of 23 December 1988. The Court declares that the applicants are liable
to pay to the respondents the damages suffered by them by reason of giving that undertaking and directs that the amount whlch the applicants shall be ordered to pay shall be ascertained by the Registrar in accordance with Order 38.
It is not necessary to make any order in respect of the cross claim by the respondents against Young, except in relation to costs. In my opinion it was proper and prudent for the respondents to make that cross claim and it is ordered that Young pay the respond;ntsl costs of and incidental to it. In case there should be any matter of machinery which any party wishes to mention, liberty is reserved to apply on 7 days notice to the other parties.
I certify that this and the
preceding f iftyone ( 51) pages
are a true copy of the Reasons
for Judgment hereln of theHonourable Mr. Justice Sweeney
Counsel for the applicants: ~ r . J.L. Dwyer Q.C. with Mr. P.J. Cosgrave
Solicitors for the applicants: Slater & Gordon Counsel for the respondents: Mr. R. Kendall;
Mr. C.W.R. HarrisonSolicitors for the respondents: James Taylor & Co. Date of hearing: 6 March 1989
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