Mindshare Communications Ltd v Orleans Investments Pty Ltd - [2007] NSWSC 1352

No judgment structure available for this case.

CITATION: Mindshare Communications Ltd v Orleans Investments Pty Ltd [2007] NSWSC 1352
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 20 – 23 & 31 August, 5 & 16 October and 14 November 2007

JUDGMENT DATE :
27 November 2007

JURISDICTION: Equity

JUDGMENT OF: Hamilton J

DECISION: Plaintiff granted permanent injunctive relief to restrain breaches of contract.

CATCHWORDS: CONTRACTS [120] - General contractual principles - Construction and interpretation of contracts - Other matters - Admissibility of extrinsic evidence - Parol evidence rule - Ambiguity exception - Ambit of proscriptions of derogatory statements concerning parties to deed - TRADE AND COMMERCE [82] – Trade practices and related matters – Consumer protection – Misleading, deceptive or unconscionable conduct – Character and attributes of conduct – Reliance – Onus – Where reliance not established – Weight to be placed on assertions of reliance.

LEGISLATION CITED: Corporations Act 2001 (Cth) ss 46 - 50
Corporations Law s 50
Trade Practices Act 1974 (Cth) ss 52, 80, 87
Uniform Civil Procedure Rules 2005 r 14.7

CASES CITED: Brooks v NSW Grains Board [2000] NSWSC 1049
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd (1992) 38 FCR 471
Gould v Vaggelas (1985) 157 CLR 215
Hanave v LFOT Pty Ltd (1999) 43 IPR 545
Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458
LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74
McRae v Commonwealth Disposals Commission (1950) 84 CLR 377
Prenn v Simmonds [1971] 1 WLR 1381
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989
Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 76 ALJR 436
Shevill v Builders Licensing Board (1982) 149 CLR 620
Smith v Chadwick (1882) 20 Ch D 27
Smith v Chadwick (1884) 9 App Cas 187
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165
Carter, Breach of Contract (2nd ed, 1991) Ch 2
Carter, Peden and Tolhurst, Contract Law in Australia (5th ed, 2007) [28-01], [28-12], [28-13], [29-13] ff
J W Carter & Stewart, “Interpretation, Good Faith, and the ‘True Meaning’ of Contracts” (2002) 18 Journal of Contract Law 182
Lewison, The Interpretation of Contracts (2nd ed, 1997) [5.12]
Macquarie Dictionary (rev 3rd ed, 2001)

PARTIES: Mindshare Communications Limited, Taiwan Branch (P)
Orleans Investments Pty Limited t/as The Orleans Media Consultancy (D1)
Wayne Eckett (D2)

FILE NUMBER(S): SC 1157/05

COUNSEL: N C Hutley SC and J K Kirk (P)
K G Odgers (Ds)

SOLICITORS: Allens Arthur Robinson (P)
Breene & Breen Solicitors (Ds)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

TUESDAY, 27 NOVEMBER 2007

1157/05 MINDSHARE COMMUNICATIONS LIMITED TAIWAN BRANCH v ORLEANS INVESTMENTS PTY LIMITED t/as THE ORLEANS MEDIA CONSULTANCY & ANOR

JUDGMENT

1 HIS HONOUR:

INTRODUCTORY

2 These proceedings concern whether particular communications made by or on behalf of the defendants contravened proscriptions in a deed settling earlier proceedings between the parties; whether that deed had been brought to an end by the defendants accepting a repudiation of it by the plaintiff; whether that deed ought be set aside as procured by misrepresentations either under general equitable principles or under the Trade Practices Act 1974 (Cth) (“the TPA”); and whether the plaintiff should have injunctive relief restraining further communications in breach of the deed.

3 The plaintiff, MindShare Communications Ltd (“MindShare”), engages in the business of purchasing advertising time or space in the various mass media on behalf of its clients. It operates in Taiwan, Hong Kong and other parts of North Asia. It is part of the WPP Group of companies (“the WPP Group”), which operates around the world.

4 The second defendant, Wayne Eckett, is the principal of the first defendant, Orleans Investments Pty Ltd (“Orleans”). From about August 1997 Mr Eckett, through Orleans, was contracted to provide media consultancy services to MindShare. Disputes arose between MindShare and Mr Eckett and on 26 July 1999 MindShare, through its Chairman Asia Pacific, John Steedman, terminated the consultancy arrangement, with payment of three months’ consideration in lieu of notice.

5 Mr Eckett was aggrieved by this termination. He sought legal advice. He corresponded with Mr Steedman, and with MindShare’s lawyers, during July and August 1999 about the alleged breaches by Orleans of its agreement with MindShare by reference to which the contract was said to have been terminated. On 17 November 1999 he complained in a letter to MindShare’s solicitors that the manner of termination of Orleans’ contract was harsh, unfair and unreasonable and that he had been defamed by allegations that services provided by him on behalf of Orleans were disruptive, inferior and untrustworthy. He added that, if the defamatory allegations were not retracted, he would “initiate retaliatory strikes” without further notice. Shortly thereafter he sent a number of communications derogatory of MindShare to clients of MindShare.

6 In 1999 and 2000 MindShare commenced court proceedings against Mr Eckett and Orleans in the Taipei District Court to restrain the disclosure of confidential information; in the Federal Court of Australia alleging contravention of s 52 of the TPA; and in this Court to restrain the disclosure of confidential information and for breach of contract.

7 On 3 May 2001, MindShare, Mr Eckett and Orleans entered into a deed of release (“the deed”) to settle the disputes between them. Two clauses of the deed (cl 7 and cl 10), which are central to these proceedings, impose proscriptions on the parties making certain statements about each other. Those clauses are as follows:

MindShare and Media Rebates

10 Non Disparagement

10.1 Non Disparagement by Eckett and Orleans.

10.2 Non Disparagement of MindShare

8 On 14 October 2002, Mr Eckett sent an email to Sir Martin Sorrell, with copies to Mr Steedman, Peter Arthur and Arthur Carney. Sir Martin Sorrell was the Chairman of the WPP Group worldwide, Mr Arthur was the solicitor at Allen, Allen and Hemsley acting for the plaintiff and Mr Carney was the defendants’ solicitor. The subject of the email was “Misrepresentation and Serious Breaches of Contract”. The email referred to the three misrepresentations set out in [16] below and also to alleged breaches of cl 10.2 referred to in [15] and [24] below. It continued:

“Misrepresentation and a continued pattern of serious breaches of contract designed to inflict recurring financial damage upon my company and myself is neither fair nor reasonable, and is unacceptable. Accordingly, the Deed of Release is hereby terminated and I not [sic] longer consider myself bound by the terms of this contract.”

“Any aggression against myself and/or my company by WPP or any of its servants will immediately incur a series of strategic retaliatory strikes without further notice to you.”

9 Specific threats were made to disclose “the deceptive and dishonest practices of WPP” and to expose “Sir Martin Sorrell as a corrupt businessman who knowingly presides over an empire that relies on revenue from fraudulent activity”.

10 On 12 May 2004, Mr Eckett sent an email to David Ma of a company referred to as FarEasTone, a client of MindShare. On 29 December 2004, Mr Eckett sent an email to persons associated with Diageo plc (“Diageo”), a large distributor in Asia of alcoholic beverages, including Johnnie Walker whisky. Diageo was a client of an associated company of MindShare. These emails were disparaging of MindShare or its associates and MindShare claims that they constituted breaches of cl 7 and cl 10 of the deed.

11 MindShare commenced these proceedings on 21 January 2005, seeking injunctive relief requiring Mr Eckett and Orleans to comply with cl 7 and cl 10 of the deed.

12 On 28 January 2005 the Court noted the undertakings of Mr Eckett and Orleans by their solicitor that they would until further order comply with cl 7 and cl 10 of the deed.

ISSUES

13 The issues between the parties have been defined by pleadings. If the deed is operative, the defendants deny that the emails constituted breaches of the clauses and assert that the contraventions are not sufficiently serious as to warrant injunctive relief. In addition, the defendants have submitted on two bases that the deed should not be regarded as operative, so that its terms ought not be enforced.

14 The first basis on which the defendants allege that the deed is not operative is an allegation that MindShare has itself breached cl 10.2 of the deed by doing certain things that directly or indirectly disclosed information, or made or published statements or engaged in conduct that may harm or injure the reputation or name of Orleans or Mr Eckett. It is said that this alleged conduct “evinced an intention no longer to be bound by the agreement which repudiation was accepted” by the defendants on or about 14 October 2002 or alternatively on or about 22 November 2004. On this basis the defendants seek a declaration that they validly terminated the deed and they also seek damages.

15 The defendants rely on three alleged pieces of conduct by the plaintiff as breaches of the deed:

16 The second basis on which the defendants allege that the deed had been or should be rendered inoperative was their claim that their entry into the deed was induced by three misrepresentations made by or on behalf of MindShare, which were such as to entitle the defendants to rescind the deed or to seek orders that it be declared void pursuant to s 87 of the TPA: see the amended defence (“the defence”) par 7 and the amended cross claim (“the cross claim”) pars 3 - 8. The three alleged misrepresentations are:

17 In summary, three broad issues arise in these proceedings:

18 I propose to deal first with Issues (2) and (3), since, if the contract embodied in the deed has been or ought be brought to an end, it will not be necessary to determine whether there has been a breach of its terms.

CREDIT OF WITNESSES

19 Before turning to the issues, I shall set out briefly some conclusions as to the credit of witnesses. The witnesses whose credit was principally under challenge were the second defendant, Mr Eckett, and Mr Steedman, who gave evidence for the plaintiff.

20 Mr Eckett’s credit was compromised in various ways. In cross examination, he was on a number of occasions evasive in his answers. One example was in relation to his approval of the contents of a letter sent over his signature to a Mr Liu. Another was as to whether he believed that communications he made alleging fraudulent conduct against MindShare would get around the advertising market in Taiwan. Bearing in mind his avowed intention to harm MindShare and his knowledge of the prevalence of gossip in the media and advertising industries, I simply do not find credible his answers in cross examination that he did not consider whether the accusations would get into the market place. Also relevant to his credibility is the high emotion he felt as a result of his dismissal by and subsequent dealings with MindShare. I also take into account his demeanour in the witness box. Whilst I do not regard his evidence as valueless without the support of other evidence, I am of the view that his evidence must always be approached with caution.

21 Although Mr Steedman’s credit was heavily attacked, I am of the view that it generally survived that attack. I formed the view that he was a witness who attempted to give and generally gave the Court an accurate account of events. Where his evidence and that of Mr Eckett conflict, I generally prefer Mr Steedman’s evidence.

22 Where the credit of other witnesses who gave oral evidence calls for consideration, I shall give that consideration in due course in dealing with the particular evidence.

TERMINATION BY ACCEPTANCE OF REPUDIATION

23 I turn first to Issue (2). The questions arising under this issue are whether the plaintiff has engaged in conduct in breach of the deed and, if so, whether this conduct was such as to amount to a repudiation entitling the defendants to terminate the deed and claim damages. The defendants’ repudiation claim is based upon allegations that the plaintiff engaged in three acts in breach of the deed amounting to a repudiation that could be accepted.

24 In par 9 of the cross claim, the defendants set out the terms of cl 10.2 of the deed. The three acts relied on as breaching that term are set out in par 10 as follows:

Particulars of conduct in breach of the Deed

25 The plaintiff submits that the defendants’ claim that they accepted a repudiation should be rejected because:

26 The evidence concerning the allegation in particular (a) appended to par 10 is as follows. Mr Eckett deposed in an affidavit:

Ms Wang said: ‘Mr Chih-Chuan (Jonathan) Chen of MindShare has contacted me to say that your are untrustworthy and a liar, and MindShare had sued you for misinforming their clients as to financial practices at MindShare. If he is prepared to make such statements, I cannot recommend your services to members of TAA [Taiwan Advertiser’s Association].’”

27 Mr Eckett was not directly cross examined about this conversation. Mr Hutley stated that he did not propose to put to Mr Eckett the conversations as to which he was at odds with Ms Wang, since the witnesses were clearly at issue, unless the defendants’ counsel said that he should do so, which the defendants’ counsel declined to do.

28 Helen Wang in her affidavit deposed:

“I deny that I called Mr Eckett on that or any other occasion. I deny that I spoke to him the words that are alleged … I deny that Jonathan Chen has ever said to me that Wayne Eckett is untrustworthy and a liar, or any words to that effect.”

29 Ms Wang was cross examined by video link to Taipei. The preparation for the cross examination was deficient, as affidavit material on which she was to be cross examined had not been made available in Taipei for her to see. She gave evidence in Mandarin translated into English. The entire process was not very satisfactory. She repeated her denial that she had ever spoken to Jonathan Chen about Mr Eckett. In a subsequent answer she said that she had no recollection of having done so. She also said that she had no recollection of Mr Chen having told her the things about Mr Eckett that it was said that he had. She was then asked:

30 I bear in mind the difficulties with Ms Wang’s cross examination. In substance, I take her as having maintained her denial, save for admitting the slim possibility that there may have been a conversation between Mr Chen and herself about one particular subject, which she had forgotten because she had been busy. Despite the difficulties in the cross examination process, I formed the impression that Ms Wang was a witness who was doing her best to give the Court a truthful account of the matters on which she gave evidence. She was a quite disinterested witness. I bear in mind what I have said above concerning Mr Eckett’s credit. In all the circumstances, I decline to find on the balance of probabilities that Ms Wang had a conversation with Mr Eckett as deposed to in his affidavit. In those circumstances, the allegation in particular (a) appended to par 10 of the amended cross claim is not made out.

31 As to particular (b) appended to par 10, it would seem that the evidence to be relied on by the defendants was the evidence contained in par 55 of Mr Eckett’s affidavit of 6 September 2005. This was rejected as hearsay and there is no other evidence of the communication complained of. In these circumstances, as I understand it, the defendants do not persist with this complaint.

32 As to particular (c) appended to par 10, the evidence on which the defendants rely is in par 96 of Mr Eckett’s affidavit of 6 September 2005:

33 Mr Patterson’s affidavit evidence as to what he said to Mr Bradley on 2 November 2004 was as follows. He did indeed tell Mr Bradley that he would “like to see a written scope of the work that you would anticipate asking Eckett to do if he is to be involved”, speaking of the Greater China review. He also stated, “You may be aware that there is in existence a legal agreement between Mindshare and Eckett that governs what each party can say and do. In asking this, I am just trying to ascertain whether what Eckett would be doing for Nestle is likely to involve a breach of that agreement.” He also states that he told Mr Bradley “I would still like to see a written scope of work. I don’t want to run into any legal problems.” Mr Bradley said that what they did “with auditors and consultants is really our business.” Mr Patterson responded, “I understand that. But I’ve been asked by our lawyers to ask for a written scope of work so we can make sure there are no problems.” On his account, he did not in that conversation state that Mindshare would refuse to work with the defendants.

34 Mr Patterson’s affidavit account of his conversation with Mr Eckett on 3 November 2004 is as follows:

35 Mr Patterson’s version of that conversation is supported by a contemporaneous email which he sent to Mr Steedman, Mr Arthur, the solicitor, and others on 4 November 2004. Legal advice obtained from Mr Arthur on 2 November 2004 is in evidence and had been sent to Mr Patterson. This is corroborative of the care with which Mr Patterson was seeking to approach the matter.

36 In cross examination Mr Patterson stated unequivocally, when asked if he had said to Mr Bradley that Mindshare was not prepared to work with Mr Eckett as a consultant to Nestle if Mr Eckett’s project included certain services:

”

37 Again, I bear in mind my assessment of Mr Eckett’s credit. On the evidence available, I decline to find that Mr Patterson said to Mr Bradley that MindShare was not prepared to work with Mr Eckett as a consultant to Nestle in certain events.

38 This allegation is thus rejected.

39 Therefore, none of the alleged conduct relied on by defendants in support of their allegation that there was an accepted repudiation is made out.

40 If any of the conduct were made out, there would probably be a good deal of substance in the plaintiff’s propositions (2), (3) and (4) in [25] above. In particular, it is dubious whether any or all of that conduct could be taken as evincing an intention not to be bound by the contract: Shevill v Builders Licensing Board (1982) 149 CLR 620 at 633 per Gibbs CJ at 625 - 6; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 33 per Mason J and 40 per Brennan J. It is also dubious whether the conduct in particular (c) could be taken to be in breach of cl 10.2. However, in view of my finding in [39], there is no need to determine those questions.

THE REPRESENTATIONAL DEFENCES

41 The second basis on which the defendants claim that the contract embodied in the deed has come or ought be brought to an end arises from misrepresentations said to have been made by the plaintiff to the defendants. The issue is whether the defendants have validly rescinded the deed (by Mr Eckett’s email dated 14 October 2002) or whether they are entitled to have the deed set aside under s 87 of the TPA. These claims are based upon allegations that the plaintiff made three fraudulent and/or misleading representations that induced the defendants to enter into or were relied on by the defendants in entering into the deed.

42 The defendants allege that these representations operated as:

The Representations

43 The representations were alleged as follows in par 7 of the defence:

“In answer to the whole of the statement of claim the defendants say as follows:

Particulars

The representation was made by Mr Steedman to Mr Eckett in the course of a meeting at the offices of Allen Allen & Hemsley solicitors.

Particulars

The representation was made by Mr Romas to Mr Eckett in the course of a meeting at the offices of Allen Allen & Hemsley solicitors.

Particulars

The representation was made by Mr Arthur to Mr Eckett in the course of a meeting at the offices of Allen Allen & Hemsley solicitors [sic]

“the deed”

Particulars of Falsity of Representations

The email sent by Michael Cooper on 11 February 2001 was based on information provided to Mr Cooper by Mr Steedman. In about December 1999 Mr Steedman advised Mr Michael Cooper that the first defendant had contacted clients of the plaintiff and given them sensitive information which he (the first defendant) had allegedly stolen from the plaintiff, in relation to payment of rebates.

Particulars

The defendants repeat the particulars to paragraph 7(d) above.

Particulars

The defendants repeat the particulars to paragraph 7(e) above.

h) Were it not for the making of the representations, the defendant would not have entered into the deed.

44 The representations alleged in par 7(a), (b) and (c) were repeated in relation to the misleading and deceptive conduct claim in pars 3, 4 and 5 of the cross claim, the only difference being that, in those paragraphs, the representations were alleged to have been made in trade or commerce.

45 The plaintiff submits that the defendants’ claims in this regard should be rejected because:

46 Whilst in the end there is not a great deal of difference in the plaintiff’s and the defendants’ evidence as to the substance of two of the representations, it is important to set out the background to and the evidence of the representations for the purpose of determining whether the first representation was made and the other issues in relation to the representations, particularly the issue of reliance. The background to the representational claims and the evidence concerning the representations and their effect on the defendants are as follows.

47 After the termination of the defendants’ contract with the plaintiff in 1999 Mr Eckett was in negotiation with a number of other persons to obtain work for Orleans. Those persons included Michael Cooper of OMD. In November 1999 Mr Eckett regarded those negotiations as showing promise, but the negotiations came to nothing when Mr Eckett was unable to contact Mr Cooper from early December 1999.

48 In June 2000, there was a conference at the offices of the plaintiff’s solicitors with a view to settling the disputes between the plaintiff and the defendants.

49 On 21 August 2000 Mr Eckett sent an email to Sir Martin Sorrell in London. The email pressed for settlement of the dispute between Orleans and MindShare.

50 A second settlement conference took place on 28 November 2000. Mr Eckett’s evidence concerning that conference was as follows:

“On November 28, 2000, I attended a second settlement conference at the offices of Allen, Allen & Hemsley. This meeting was also attended by Mr Nick Romas, Mr John Steedman, Chairman of MindShare Asia/Pacific, Mr Peter Arthur and Mr Arthur Carney. The conversation was to the following substance and effect:

51 Mr Steedman’s account of the conversation was as follows:

“On 28 November 2000 I attended another settlement conference, which is referred to at paragraph 36 of the Eckett Affidavit (the Second Settlement Conference ). At the Second Settlement Conference I did not have the conversation with Mr Eckett that he alleges. Rather, the conversation referred to took place in the following words:

I had an agreement to do work for OMD. Now Mike Cooper won’t return my calls. What did you say to him about me?

I haven’t said anything to Cooper that would stop you from getting work.

’

‘

I don’t believe you.

I have not said anything to Mike Cooper that would stop you from getting work.

52 DELETED

53 In cross examination, Mr Eckett gave the following answers:

“Q You say you said to them you had a proposal, you had a proposal with OMD but now Mr Cooper would not return your calls, or words to that effect, correct?
A Yes.

Q And the response that you received from Mr Steedman was words to the effect, ‘I did not say anything about you to Mr Cooper which would prevent you from getting work’, correct?
A Yes.

54 In cross examination about the content of his conversation with Mr Cooper in December 1999, Mr Steedman repeatedly denied that he had called Mr Eckett “a crook”. He agreed that he had assented to a proposition put to him in conversation by Mr Cooper in December 1999 as follows:

“Q And Mr Cooper said to you something to the effect, ‘Wayne Eckett has submitted a proposal to me for work. What’s he like?’ Do you recall Mr Cooper something to that effect?

A Mr Cooper phoned me and he said to me that he had received a proposal from Eckett and that he had heard from his employees in Taipei that Eckett had sent Mindshare clients a letter with confidential information on rebate returns and my response was, ‘Yes, that is correct and we are taking legal - about to commence legal proceedings against him for disclosing confidential information and defamation of the company.’

……

Q Well you said to him, didn’t you, that Mr Eckett had contacted Mindshare’s clients and given them sensitive information that he had removed from Mindshare regarding rebates?

……

WITNESS: No, he said that to me and I confirmed that that was the case.

…

55 On 11 December 2000 Mr Eckett emailed three international financial journalists asking them to supply him with “the names of Sir Martin Sorrell’s business enemies”. He forwarded the email to Sir Martin with the message, “There will be no winners.”

56 On 11 February 2001, Mr Cooper sent to Mr Eckett an email which stated:

“This guy is a crook and is being taken to court by MindShare in Taiwan!”

57 It is quite plain from the context of the email correspondence that this email was sent by Mr Cooper to Mr Eckett by accident, it being intended to be a response to a Keith Smith, to whom Mr Eckett had sent an email advertising the defendants’ services. It induced a belief in Mr Eckett that Mr Cooper was repeating things in the email that had been said to Mr Cooper by Mr Steedman, in particular that Mr Eckett was “a crook”.

58 On 3 May 2001, there was a further settlement conference, again at the office of the plaintiff’s solicitors. Mr Eckett’s account of what was said at that conference commenced with discussion of the monetary amount that was being offered by the plaintiff as consideration for a settlement. Mr Eckett’s account of what occurred continued:

[42]

[44]

[55]

59 DELETED

60 Mr Eckett’s affidavit continued:

61 Thus the plaintiff’s evidence confirms the making of two of the statements alleged to amount to misrepresentations, being the statements made by Mr Romas and Mr Arthur alleged in par 7(b) and (c) of the defence. As to the par 7(b) allegation, it is important to note that Mr Romas’ statement at the 3 March 2001 meeting,

“Steedman has already answered this issue. Neither he nor anyone else at MindShare have done anything to prevent you from getting work”,

“That has nothing to do with Mr Steedman or MindShare. This is just a person expressing an opinion”,

62 I turn now to the question of whether the first misrepresentation alleged, the statement by Mr Steedman set out in par 7(a) of the defence, was in fact made. In this regard, the allegation in the pleading is that Mr Steedman represented to the defendants that he had not said anything about the first defendant to Mr Cooper. Mr Eckett’s evidence in support of this is that Mr Steedman said to Mr Eckett, “I said nothing to Mike Cooper about you.” Mr Steedman conceded that he had spoken to Mr Cooper about Mr Eckett, rather than denying it. But his version was that he said in November 2000, “I haven’t said anything to Cooper that would stop you from getting work”, rather than the bald statement alleged by the defendants that Mr Steedman had not said anything at all to Mr Cooper about Mr Eckett. In my view, those statements are substantially different. If I accept that the statement made was as deposed to by Mr Steedman, rather than as deposed to by Mr Eckett, in my opinion the representation alleged in the pleading would not be made out.

63 I do in fact accept Mr Steedman’s version of what was said at the 28 November 2000 meeting. I have already recorded that in general terms I accept Mr Steedman’s evidence in preference to Mr Eckett’s where they conflict. In the circumstances, I find that the making of the representation alleged in par 7(a) of the defence and in par 3 of the cross claim is not established.

64 The questions of whether the representation alleged to have been made by Mr Steedman was untrue or made fraudulently therefore do not arise and it is not necessary to determine them. The question of whether the representations made by Mr Romas and Mr Arthur were made fraudulently really does not arise, since the same consequences would flow from the representations, if untrue, whether fraudulent or innocent. However, it is only fair to those gentlemen, particularly bearing in mind Mr Arthur’s status as a senior solicitor, to state that in my view there is not a skerrick of evidence that either of them was in making the statements guilty of fraud. It is at least doubtful whether, in its context, either representation could be found to be untrue, but it is unnecessary to determine this, in the light of my finding about inducement or reliance.

Reliance

65 In relation to this issue, a classic statement more than a century old as to the inducement necessary to be established for a misrepresentation to be operative is that of Jessel MR in Smith v Chadwick (1882) 20 Ch D 27. His Lordship said at 44 - 45:

Brownlie v Campbell

Smith v Chadwick

66 The most frequently quoted modern statement is from the judgment of Wilson J in Gould v Vaggelas (1985) 157 CLR 215 at 236, where his Honour stated the applicable principles as follows:

67 Both Smith v Chadwick and Gould v Vaggelas were cases of fraudulent misrepresentation, but the principles as to inducement or reliance are the same in relation to innocent misrepresentations and misrepresentations under the TPA: Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd (1992) 38 FCR 471 at 483.

68 A case in which reliance was found to have been negatived is the decision of the Court of Appeal in Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458, a case under the TPA. Gleeson CJ said concerning the issue of reliance at 476:

“The fact is that, as negotiations progressed, the question whether Mr Lam would or would not sign the subordination agreements was influenced, not by assertions that were being made to him about likely sale prices or possible purchasers of the hotel, but rather by his own financial commitments and the relief in that regard which he hoped to obtain with the assistance of AGC and BAC. … [H]is case failed principally for the reason that it was held that his willingness to enter into the subordination arrangements was not the consequence of any reliance on his part upon what was being represented to him. Rather it was because he took the view that it was in his own commercial interests, dictated by the financial pressure he was under given his creditors, to do so.”

Gould v Vaggelas

69 This is not a case in which the defendants rely only upon the inference arising from the making of a representation calculated to induce entry into the transaction. As set out above, Mr Eckett has deposed to actual reliance on the representations. Such formulaic evidence of reliance must always be approached with caution, since it is easily given and not easy to disprove: see the decisions of the Full Court of the Federal Court in Dominelli Ford supra and Hanave v LFOT Pty Ltd (1999) 43 IPR 545 at [50].

70 In all the circumstances of this case, I have come firmly to the view that the defendants have not discharged the onus ultimately upon them of establishing that they were induced to enter into the deed or entered into the deed in reliance upon any of the three misrepresentations alleged.

71 Whilst this is a conclusion I have reached upon the consideration of all the evidence, the following factors were of importance in my coming to the conclusion:

72 I also take into account my view of Mr Eckett’s credit. I simply do not accept that Mr Eckett was induced by or relied in any way on any representation made on behalf of the plaintiff in deciding that the defendants should enter into the deed. In view of this conclusion, it is not necessary to determine contentions (2), (3) and (4) in [45] above.

73 The representational claims therefore all fail. The defendants’ purported termination of the deed on the ground of the misrepresentations was not effective, nor will the Court set aside or vary the deed. In those circumstances the deed continued (and continues) in force and it is necessary to determine whether the plaintiff is entitled to relief under it.

THE PLAINTIFF’S CLAIM FOR INJUNCTIVE RELIEF

74 The two provisions of the deed entered into on 3 May 2001 central to this claim are cl 7 and cl 10.1(a), set out in [7] above. The plaintiff does not claim damages for breach of these clauses, but does claim injunctive relief to restrain further breaches of them.

75 The defendants deny any breach of these clauses and any entitlement to injunctive relief. They do not concede that, even if the breaches be established, they should be bound by injunction to refrain from further breaches. In face of these submissions by the defendants, if breaches are found to be established, there is a basis for the grant of permanent injunctive relief to restrain further breaches.

76 Although the criterion adopted in cl 10.1(a) to proscribe conduct is “conduct which may harm or injure the reputation or name”, it is to be noted that the allegation made in par 7(d) of the statement of claim is that the defendants engaged in conduct “which harmed the reputation and name of the Plaintiff and its related bodies corporate.”

77 It is not in dispute that on 12 May 2004 Mr Eckett sent an email to David Ma of FarEasTone, which the plaintiff alleges was a client of MindShare (“the FarEasTone email”):

“Good afternoon David. Are you satisfied with the service and performance of your media agency?

I am an independent media consultant based in Taiwan. Since 1994, I have worked with Unilever, Johnson & Johnson, Levis Strauss, Seagram, L’Oreal and Nestle, providing innovative services not available through a media agency. The Orleans Media Consultancy is not a media agency and does not compete with media agencies. Contracted on a project basis, we provide technical media services to clients to supplement media agency functions.

The objective of my company’s services is to improve the productivity of the client’s media investment with a focus on increased efficiency and effectiveness.

The scope of services offered by my company relative to the perceived needs of FarEasTone in Taiwan is summarized as: 1 Benchmarking market TV costs for comparison to both competitors and current costs to identify whether buying is competitive and media charges are artificially inflated (indications are that FarEasTone’s CPRP appears to be 10 to 15% above market costs where it should be significantly below, this means that current media costs may be inflated by around 25-30%). 2 Analyses of the Terrestrial/CATV ratio and budget allocations to determine if the distribution of funds will generate optimum return on investment, and CATV channel mix to ensure that selection has been conducted to optimize market coverage, not to maximize rebate revenue. 3 Development of a strategy for negotiations with the media to deliver substantial reduction in CPRPs and Print costs, plus improved buying conditions and concessions. 4 Improvement in the quality of media planning and buying services provided by the media agency, and negotiation of a reduction in fees. 5 Advice on the media agency contract with payment linked to achievement of agreed targets as a performance incentive scheme, plus rebate auditing to ensure transparency and all secret media commissions paid by the media to be refunded to FarEasTone. 6 Staff training programs to give marketing personnel the skills to evaluate media plans in reference to achievement of marketing objectives, and how to detect substandard media work or corrupt practices.

78 Mr Eckett also on 29 December 2004 sent an email to Kester Fielding, a senior executive of Diageo. At the time of the email the plaintiff alleges that Diageo was a client of Maxus Communications Ltd (“Maxus”), a company associated with MindShare. In the second half of 2004 Maxus was the media buyer for an advertising campaign for Johnnie Walker called the “Tree campaign”. The subject of the email was “Gross Mismanagement of Johnny [sic] Walker TV Investment [sic]”. The body of the email was as follows:

“Good morning Kester and seasons greetings. The following content and attachments are communicated to you on a confidential basis.

I have taken the liberty of monitoring Diageo’s Johnny Walker Tree campaign with respect to CATV scheduling in Nov/Dec on Taiwan Television. The attached Powerpoint file contains 9 slides of interest.

In summary, buying on CATV has been grossly mismanaged. It is estimated that around 75% of GRPs scheduled on CATV are ineffectual for the three reasons outlined. As Johnny Walker’s investment on CATV represents approximately 70% of the Television Budget, this poor stewardship has resulted in 52.5% of Diageo’s TV media investment wasted. The same negative forces may be at work in Diageo’s Smirnoff campaign.

From my experience, a policy to maximize rebate revenue can require that up to 60% of a client’s TV budget be compromised: sacrificed to low audience potential TV media vendors and programs to return high rebates. It would be in Diageo’s best interests to neutralize the rebate issue in Taiwan and other markets across the Asia region.

79 In relation to cl 10.1(a), there would be a breach of the clause:

may

80 In relation to cl 7(a) and (b) of the deed, the documents would constitute a breach:

81 The plaintiff contended that breaches of the deed have occurred as follows:

82 As to contention A, the plaintiff’s submission is that the gravamen of the Diageo communication is that the Johnnie Walker Tree campaign had been grossly mismanaged by the media buyer; that the campaign had wasted much of the expenditure by Diageo; that the campaign had been ineffective to achieve its objectives; and that this failure had been driven by the self interest of the media buyer to maximise its own rebates gained from cable television companies. In other words, it was a direct attack on the efficacy and integrity of the media buyer employed in relation to this campaign. There could scarcely be a clearer breach of cl 10.1(a) of the deed. Maxus is a related body corporate of MindShare within the meaning of the deed. The plaintiff need establish only that the material published may harm or injure the reputation of MindShare or the related body corporate, despite the fact that in par 7(d) of the statement of claim actual harm was alleged.

83 As to contention B, so far as the Diageo communication is concerned, there is a breach at least of cl 7(b) of the deed, in that there was an indirect reference in the email to MindShare as an associated or controlling company of Maxus and references to rebates.

84 As to contention C, the plaintiff’s claim is that in the FarEasTone email MindShare is identified by the reference to “the service and performance of your media agency”. The affidavit and oral evidence of Mr Patterson was that FarEasTone was a client of MindShare at the relevant time. The references to rebates are made by the statement that FarEasTone’s current media costs may be inflated by around 25 – 30 per cent, together with an offer to ensure that selection of channel mix “has been conducted to optimize market coverage, not to maximize rebate revenue”. On a fair reading of the email, the suggestion is conveyed that the present media agency has dishonestly selected channel mix so as to maximise rebate revenue to the agency, an allegation which may harm or injure the reputation or name of MindShare.

85 As to contention D, so far as the FarEasTone email is concerned, at least cl 7(b) is breached. Although MindShare is not named, it was in fact FarEasTone’s then current media agency. This fact was well known in the industry. It is referred to as FarEasTone’s media agency in the email. There is also clearly reference in the email to rebates.

86 The submissions put by the defendants may be conveniently grouped under the following headings in relation to the alleged breaches of cl 10.1(a) and cl 7 respectively.

As to cl 10.1(a):

(1) that the matter is to be determined on the basis that actual harm must be established, since that is what the plaintiff has chosen to allege in par 7(d) of the statement of claim;
(2) that it is not established that Maxus is a related body corporate to MindShare;
(3) that neither Maxus nor MindShare can be taken to be referred to in the material, particularly when it is not established that Mr Eckett knew that Maxus or MindShare was the service provider; and
(4) that the material is not to be construed as derogatory of MindShare or Maxus.
As to cl 7:
(5) that no breach is established, bearing in mind that there is no direct or indirect reference to MindShare to base a finding that there is a breach of this clause. Clause 7 mentions only MindShare and makes no mention of any related body.

87 The matters in contest may conveniently be determined under the following headings.

88 It is to be borne in mind that neither communication refers directly to MindShare and cl 7, unlike cl 10.1(a), makes no mention of breach by reason of reference to a related body corporate of MindShare as a body that receives rebates in Taiwan.

89 As to the breach of cl 10.1(a) by either the Diageo communication or the FarEasTone email:

(1) Whether the matter is to be determined on the basis that actual harm was caused

90 As to whether the Diageo communication breached cl 10.1(a) of the deed, I have already noted in [76] above that the plaintiff’s case as pleaded in par 7(d) and par 8 of the statement of claim is that cl 10 was breached by the defendants publishing a statement which harmed the reputation and name of the plaintiff and its related bodies corporate. What cl 10.1(a) in fact proscribes is conduct etc that may harm or injure the reputation or name of MindShare or its related body corporate. On the wording of the clause, that is all the plaintiff needs to show to establish a breach of the deed. But the defendants submit that, as the plaintiff has chosen to allege its case on the basis of actual harm, it must prove actual harm in order to succeed, ie, it must fulfil the allegation that it has chosen to make in the pleading.

91 In my view, that is not correct. Under the modern system of pleading, the pleader alleges not the elements of the cause of action, as under the old common law pleading system, but “a summary of the material facts on which the party relies”: Uniform Civil Procedure Rules 2005 r 14.7. The plaintiff is entitled to relief if the facts that it proves establish a cause of action in its favour. This is emphasised by r 36.1 which provides:

“36.1 At any stage of proceedings, the court may give such judgment, or make such order, as the nature of the case requires, whether or not a claim for relief extending to the judgment or order is included in any originating process or notice of motion.”

92 The larger allegation that the conduct in fact caused harm contained the lesser allegation that the conduct was such as might cause harm. There is no question of the defendants being misled or disadvantaged in any way. There was no defence which they might have pleaded or relied on that they were precluded from pleading or relying on. If such conduct is established as might cause harm, then a breach of the deed is established for which relief can be obtained in these proceedings, without requiring an amendment of par 7(d) of the statement of claim.

(a) whether it is established that Maxus is a related body corporate to Mindshare;

(b) whether Maxus can be taken to be referred to by the Diageo communication, particularly in light of the defendants’ allegation that Mr Eckett did not know that Maxus was the service provider;

(c) whether the Diageo communication is to be construed as breaching the provision in relation to Maxus.

93 The evidence clearly establishes that Maxus was the media buying agency for Diageo in relation to the Johnnie Walker Tree campaign. The breach alleged in this regard is a breach of the prohibition in cl 10.1(a) of making or publishing any statement which may harm or injure the name or reputation of any related body corporate of MindShare.

94 As to Question 2(a), whether Maxus was a related body corporate of MindShare at the relevant times (there is no suggestion of any change of status during the times relevant to these proceedings). The term “Related Body Corporate” is defined in cl 1.1 of the deed to mean, in relation to a body corporate, “a body corporate which is related to it within the meaning of section 50 of the Corporations Law”.

95 At the relevant time (ie 3 May 2001) s 50 of the Corporations Law (“the CL”) provided (as s 50 of the Corporations Act 2001 (Cth) (“the CA”) still provides) as follows:

96 The concept of a subsidiary is expanded upon in ss 46 - 49 of the CL (also identical in the CA). A body will be a subsidiary of another body if it is a subsidiary of a subsidiary of the other body. A subsidiary relationship will also arise where the other body either controls the composition of the first body’s board; or is in a position to cast, or control the casting of, more than one-half of the maximum number of votes that might be cast at a general meeting of the first body; or holds more than one half of the issued share capital of the first body (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital): see s 46.

97 There is in evidence as Exhibit B a chart outlining the relationship of the companies in the WPP Group. This chart indicates that Maxus is a wholly owned subsidiary of a series of companies (each in a wholly owned relationship) leading back to WPP Dutch Holdings Ltd (“WPP Dutch Holdings”) in England. The same chart also establishes that WPP Dutch Holdings is the holding company at the top of a chain that leads down to MindShare, again through a series of wholly owned subsidiaries. WPP Dutch Holdings is itself a subsidiary, through a series of wholly owned subsidiaries, of the ultimate holding company, being WPP Group plc in England.

98 The only point at which the defendants contend that the chain of subsidiary relationships between MindShare and Maxus is broken is the link between MindShare and Russell Square Holding BV (“Russell Square”).

99 The nature of this relationship is depicted in more detail in a diagram in an affidavit of Mr Patterson. That diagram reveals that Russell Square itself owns only a very minor shareholding in MindShare, with the rest of the shares owned by two other companies. But Russell Square owns 50 per cent of each of those companies, and the other 50 per cent is held by WPP Group (Nominees) Ltd, which holds those interests on trust for Russell Square.

100 The trust deeds of these two trusts are in evidence. Pursuant to cl 3 of each deed the trustee “will deal with and dispose of the Share and exercise all rights conferred by his holding the Share as the Beneficial Owner directs”. Russell Square was thus in a position to direct the trustee companies as to the exercise of voting rights at shareholder meetings of MindShare. So the chain is not broken as submitted by the defendants at the link between Russell Square and MindShare.

101 Thus each of Maxus and MindShare is a subsidiary in the relevant sense of both WPP Dutch Holdings and WPP Group plc. They are thus related bodies corporate within the meaning of s 50 of the CL. Maxus is a body corporate related to MindShare for the purposes of cl 10.1(a) of the deed.

102 As to Question 2(b), that is, whether the Diageo communication can be taken to refer to Maxus, particularly in light of the defendants’ allegation that Mr Eckett did not know that Maxus was the service provider for the Johnnie Walker Tree campaign, as already stated Maxus was in fact the service provider to Diageo at the time of the Diageo communication. In that sense, a reference to Diageo’s service provider was a reference to Maxus. It was contended for the defendants that Mr Eckett did not know at the time that he sent the Diageo communication the identity of the media buying agency responsible for the Johnnie Walker Tree campaign. It was contended that, in the absence of such knowledge on the part of Mr Eckett, the Diageo communication could not be taken to refer to Maxus. The Diageo communication could not therefore be in breach of cl 10.1(a).

103 The plaintiff makes two answers to this contention. The first is that there is no requirement for knowing breach in cl 10.1(a) of the deed. The breach may occur whether the reference in the communication was knowing or not. The substantial question is whether the publication is disparaging of Maxus. The second contention is that Mr Eckett’s disavowal of knowledge should be rejected and a finding should be made that he did in fact know that Maxus was the service provider.

104 Question 2(b) leads to two inquiries. The first relates to the degree of Mr Eckett’s knowledge as to who was Diageo’s service provider for the Johnnie Walker Tree campaign. The second inquiry is as to the ambit of the relevant prohibition contained in cl 10.1(a) of the deed, on its true construction. It is to be remembered that the heading of cl 10.1 is “Non Disparagement by Eckett and Orleans” and the terms of the relevant prohibition are against making or publishing any statement which may harm or injure the reputation or name of any related body corporate of MindShare. Those two inquiries, though different, have some relationship to each other.

105 Some evidence must be traversed in order to answer the two inquiries.

106 First, there is Mr Eckett’s evidence as to the state of his knowledge as to who was Diageo’s service provider. It was submitted on behalf of the defendants that “Mr Eckett believed that neither MindShare nor Maxus had the account”. Mr Eckett’s evidence relied on in this regard was the following passage in his cross examination:

“Q You are unable to comment, do you tell his Honour, as to how easy or difficult it might have been in 2000 and December 2004 to have ascertained whether Diageo was a client of MindShare or Maxus? You are just unable to comment?
A No, I'm not unable to comment. It was, my latest information was that MindShare or Maxus had lost that business.
……

107 Moreover, in relation to Mr Eckett’s knowledge, the timing of the email to Diageo is significant. The date of the Diageo communication was 29 December 2004. By email of 22 November 2004, Mr Eckett had purported to terminate the deed. He did so by reference to allegations relating to alleged breaches of the deed by MindShare. Further emails were exchanged leading to an email from Mr Eckett on 29 November 2004. In that email Mr Eckett stated that WPP should “be advised that any legal action against Orleans and/or Eckett or other act of aggression, will trigger an equally swift response to expose the dishonest and fraudulent practices of WPP across the Asia Region”. That threat must be seen in the light of Mr Eckett’s actions in sending damaging emails to major clients of MindShare in 1999 following the termination of his consultancy. The threat bespeaks the motivation of Mr Eckett in December 2004 to make statements damaging to MindShare: see [5] above.

108 Secondly, there is in evidence a body of material concerning the nature of the market in which the plaintiff and the defendants operated. This is relevant to the credibility of the claim that Mr Eckett did not know the identity of the service provider and also, potentially, to the construction of cl 10.1(a), as going to the matrix of facts in which the agreement embodied in the deed was made: see Prenn v Simmonds [1971] 1 WLR 1381 at 1383 - 1385; Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 at 995 - 996.

109 Mr Eckett said in evidence that he was “experienced in almost every aspect of the media function” and had “a detailed operational understanding of the complexities of media markets in China, Hong Kong, South Korea, Pakistan, Taiwan and Thailand as a result of experience gained” during 15 years working in the Asia region. The very nature of his business was acting as a media consultant in relation to advertising campaigns. In the Taiwan and North Asia market, the number of players is comparatively limited. It is clear that information as to the business being done by the various players circulates freely among the players. Mr Eckett himself testified that in his experience “there is a great deal of gossip in the media and advertising industries in Taiwan, China and Hong Kong”.

110 The evidence of Helen Wang, Secretary General of the Taiwan Advertiser’s Association, was that it “is a very easy matter to find out who is the media buyer for any corporation of any size in Taiwan”, by calling people in the sales departments of cable TV stations. Similarly, Mr Titan Wang, President at the relevant time of Nielsen Media Research in Taiwan, testified that “the identity of the agency that buys media for any advertiser of any size in Taiwan is widely known within the communications industry and readily ascertainable”, again referring to the ability to contact the sales departments of any cable TV station.

111 Beyond inquiries and gossip, there are media industry journals that contain material about current contracts. There is an extract from “Brain” magazine that indicates that MindShare/Maxus was the number two rating media agency in 2004. The position was the same in 2003. Further, an article was published in another media industry magazine entitled “Media”, which featured Johnnie Walker and its recent advertising campaigns. On the second page of that article, on the lower right hand side, it is stated that MindShare handles media in relation to Johnnie Walker in, inter alia, Taiwan. Indeed, Mr Patterson’s picture is shown in the article. The date at the bottom of the article is 17 December 2004.

112 Turning to the ambit of the prohibition in cl 10.1(a) and the standard to be applied in determining whether or not there was a breach of it, these in the end are to be determined as matters of construction. In McRae v Commonwealth Disposals Commission (1950) 84 CLR 377 the question was whether a contract for the sale of a ship should be taken to promise that the ship existed. At 407 – 408 Dixon and Fullagar JJ said:

Clifford v Watts

113 As to the standard by which performance is to be judged, see Carter, Breach of Contract (2nd ed, 1991) Ch 2 and Carter, Peden and Tolhurst, Contract Law in Australia (5th ed, 2007) [28-01], [28-12], [28-13], [29-13] ff.

114 Turning to the law as to the circumstances in which extrinsic evidence may be adverted to in the construction of documents, I refer to passages from two well known judgments in the High Court. The first is from the oft quoted judgment of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352:

“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

………………

115 The second is from the joint judgment of the Court in Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at [40]:

Pacific Carriers Ltd v BNP Paribas

116 There has been a deal of discussion, judicial and academic, as to whether the English and Australian law have diverged as to the necessity for an ambiguity to permit adversion to extrinsic evidence: see the decisions of Palmer J in Brooks v NSW Grains Board [2000] NSWSC 1049 and of the Court of Appeal in LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 and J W Carter & Stewart, “Interpretation, Good Faith, and the ‘True Meaning’ of Contracts” (2002) 18 Journal of Contract Law 182.

117 However, in Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 76 ALJR 436 the majority of the High Court said at [39] that Australian courts, if they discern any inconsistency with Codelfa, should adhere to Codelfa until the matter is definitely decided in the High Court.

118 If, as I assume, ambiguity in the deed is a necessary precondition to taking into account in construing it any of the evidence set out above, in my view it is clear that the deed is “ambiguous or susceptible of more than one meaning” in the requisite sense. What cl 10.1(a), under the heading “Non Disparagement”, in terms required Orleans and Mr Eckett to do was not to make or publish any statement which may harm or injure the reputation of MindShare or a related body corporate. As I have said, the prohibition does not in terms require knowledge. The defendants’ contention is that it should be construed as requiring knowledge. The plaintiff’s contention is that it is an absolute obligation. In this regard, cl 10.1(a) is ambiguous or susceptible of more than one meaning. In view of this, the circumstances surrounding the making of the deed may be taken into account.

119 I approach the deed on that basis. The relevant clause is headed “Non Disparagement”. The heading may be taken into account in construing the clause: Lewison, The Interpretation of Contracts (2nd ed, 1997) [5.12]. The definition of “disparage” in the Macquarie Dictionary (rev 3rd ed, 2001) is:

120 Both the word “disparage” and the expression “conduct which may harm the reputation of” a specified person contain some suggestion of deliberateness or intent. However, the provisions for non disparagement in the deed are wide. There were in the background to its execution bitter conflicts, curial and non curial, between the parties. These conflicts included the publication of scurrilous material. The relevant area in which the purpose of the deed was to restrain disparaging disclosures is the media market in Taiwan or in North Asia generally. The evidence set out above shows that this is a market with a comparatively small number of players. Orleans and Mr Eckett were highly experienced in and knowledgeable concerning this market, as was MindShare. The evidence shows that information such as the identity of the entity which was the media buyer for a particular advertiser in the market was either in the public domain, through journal articles or otherwise, was the subject of gossip in the market place or could readily be ascertained by appropriate inquiries. In these circumstances, it should be taken that the parties to this deed either knew or could easily ascertain the identity of media buying agencies in relation to particular contracts. On this basis, the intention of the parties to the deed should be taken to be that the non disparagement provisions would operate without reference to proof that any breaches of the clause were committed knowingly. It may be that, if it were established that publication was made in circumstances where the identity of a particular operator was unknown and unable after inquiry to be ascertained, a publication which turned out to refer to one of the proscribed entities would not be taken to be breach of the provision. But, that, as will appear, was not the case here.

121 In light of this interpretation of the prohibition in the deed, I turn to my conclusions as to the state of Mr Eckett’s knowledge. I do not accept Mr Eckett’s statement that it was his belief that MindShare or Maxus had lost the Diageo account. In coming to this conclusion, I refer to my views as to Mr Eckett’s credit and the caution with which his evidence must be approached. He gave no source of the supposed information to this effect. I take into account that his associated statement that he was not aware of Diageo ever being a client of MindShare or Maxus was subsequently accepted by him, when faced with a document of his, to be wrong. I bear in mind the evidence as to the readiness with which this information could have been obtained, including the fact that the relationship between MindShare and Johnnie Walker was published in a trade journal in December 2004. I take account of his threatening email of 29 November 2004. I find that Mr Eckett knew on 29 December 2004 that Maxus was the service provider to Diageo.

122 If this conclusion be not correct, I find for the reasons set out above that Mr Eckett could readily have ascertained at that time that Maxus was the service provider to Diageo and that he was obliged, to carry out his obligations under the deed, to make inquiries to ascertain whether that was so. There is no evidence that he made such inquiries. As a result, the Diageo communication, if it was of the proscribed character, would constitute a breach of cl 10.1(a).

123 As to Question 2(c), that is, whether, if the Diageo communication can be taken to refer to Maxus, it is to be construed as breaching cl 10.1(a), the defendants’ contention is that the communication does not convey that 60 per cent of the client’s TV budget was sacrificed to low audience potential TV media vendors for the sake of greater rebates. All the communication did was to ask the question whether this had occurred. In any event, the real situation was already known to the marketing and media personnel at Diageo by reason of the post buy analysis carried out by Maxus.

124 In dealing with this contention, I bear in mind that, as already stated, all the plaintiff need establish for a breach to be found is that the conduct may harm or injure the reputation or name of Maxus. Actual harm does not have to be established. Whether there is the potentiality of harm is what must be determined.

125 I do not accept the contention that the email only asks a question and does not make the suggestion that Maxus has engaged in the conduct referred to. On a fair reading of the material, that suggestion is in my view conveyed. The suggestion conveyed is, as the plaintiff has submitted, that the present media agency has dishonestly selected channel mix so as to maximise rebate revenue to the agency. That allegation is a serious allegation about a media agency and clearly one that may harm the name or reputation of a media agency.

126 In the circumstances set out above, I find that the Diageo communication constituted a breach of cl 10.1(a) of the deed.

(a) whether MindShare can be taken to be referred to by the Diageo communication, particularly in light of the defendants’ allegation that Mr Eckett did not know that MindShare or Maxus was the service provider; and

(b) whether the Diageo communication is to be construed as breaching the provision in relation to MindShare

(i) directly, or

(ii) indirectly because of any connection between the identity and reputation of Maxus and MindShare.

127 In view of my conclusion in [126] above that the Diageo communication constituted a breach of cl 10.1(a) of the deed in relation to Maxus, I do not need to deal with this Question.

(a) whether MindShare can be taken to be referred to by the FarEasTone email, in light of the defendants’ allegation that Mr Eckett did not know that MindShare was the service provider; and

(b) whether the FarEasTone email is to be construed as breaching the provision in relation to MindShare.

128 The issue in relation to the breach of cl 10.1(a) of the deed by the FarEasTone email arises only in relation to MindShare, as the evidence clearly establishes that FarEasTone was MindShare’s client. The defendants submit that the FarEasTone email cannot have constituted a breach of cl 10.1(a). It cannot have caused any harm to MindShare’s reputation. It does not refer to MindShare, only to an unnamed media agency. The whole email offers a service which will enable FarEasTone to determine if there are problems in relation to its media buying, but does not state that such problems in fact exist.

129 As to Question 4(a), whether MindShare can be taken to be referred to, particularly in light of the defendants’ allegation that Mr Eckett did not know that MindShare was the service provider to FarEasTone, I refer to the body of material set out in [106] - [111] above in relation to the Diageo communication. There are differences in the material in so far as it relates to the FarEasTone email. First, there is no statement in evidence by Mr Eckett that he did not know that FarEasTone was a client of MindShare. As the question of knowledge was in play at the trial, this is significant. Secondly, Mr Eckett’s email of 22 November 2004 cannot be taken into account, as it postdated the FarEasTone email. I do not forget that, overall, the plaintiff bears the onus of proof of establishing the breach. Nevertheless, bearing in mind the evidence of the availability of the relevant information in the market place and the lack of his denial, I find that Mr Eckett knew that FarEasTone was MindShare’s client when the FarEasTone email was sent. Alternatively, I find that Mr Eckett could easily have ascertained this fact by inquiry, which there is no evidence that he made.

130 As to Question 4(b), whether the material is to be construed as breaching the provision in relation to MindShare, I find that it is. I reject the submission that the email merely offers a service that will enable FarEasTone to determine if there are problems in relation to its media buying, and does not state that such problems in fact exist. On a fair reading of the text, it does clearly suggest that such problems do exist. Whilst I rely on the whole of the text, the statements that “indications are that FarEasTone’s CPRP appears to be 10 to 15% above market costs where it should be significantly below, this means that current media costs may be inflated by around 25-30%” and that the channel mix should be selected “to optimize market coverage, not to maximize rebate revenue” are of particular significance in leading to this conclusion.

131 In the circumstances set out above, I find that the FarEasTone email constituted a breach of cl 10.1(a) of the deed.

132 As to the breach of cl 7 by either the communication to Diageo or the FarEasTone email:

(a) whether the Diageo communication refers directly or indirectly to MindShare;

(b) if so, whether the Diageo communication refers directly or indirectly to MindShare as a company which receives rebates in Taiwan (cl 7(a)) or whether the document discusses or refers to or mentions rebates in Taiwan (cl 7(b)).

133 In view of my conclusion in [126] above that the Diageo communication constituted a breach of cl 10.1(a) of the deed in relation to Maxus and my conclusion in [136] below that the FarEasTone email constituted a breach of cl 7 of the deed in relation to MindShare, I do not need to deal with this Question.

(a) whether the FarEasTone email refers directly or indirectly to MindShare;

(b) if so, whether the FarEasTone email refers directly or indirectly to MindShare as a company which receives rebates in Taiwan (cl 7(a)) or whether the document discusses or refers to or mentions rebates in Taiwan (cl 7(b)).

134 As to Question 6(a), for the reasons given in [129] above in relation to Question 4(a), I find that the FarEasTone email referred to MindShare.

135 As to Question 6(b), an examination of the FarEasTone email leads inevitably to the conclusion that it at least mentions rebates in Taiwan, thus fulfilling that requirement of cl 7(b). In light of that conclusion, there is no need to consider whether cl 7(a) is fulfilled.

136 In the circumstances, I find that the FarEasTone email breached cl 7 of the deed.

137 Thus relevant breaches of the negative stipulations in both clauses are established. The defendants submit that at least some of the breaches are in all the circumstances so minor as not to justify the grant of injunctive relief. I do not take that view. The deed was entered into in the context of a savage war of words between the parties. Non disparagement terms of wide import were solemnly entered into to bring this to an end. Where it is found that those provisions have been the subject of breaches, which have not been admitted by the defendants, I am of the view that it is entirely appropriate to grant injunctive relief in terms of the contractual provisions to restrain further breaches.

138 Short minutes should be brought in to encompass my decisions. Questions of costs may be raised at that time.

**********

05/02/2008 - Deletion of [52] and [59] and removal of 2nd and 3rd sentences of [63] - Paragraph(s) [52], [59] and [63]

Citations

Mindshare Communications Ltd v Orleans Investments Pty Ltd [2007] NSWSC 1352

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CITATION:	Mindshare Communications Ltd v Orleans Investments Pty Ltd [2007] NSWSC 1352 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	20 – 23 & 31 August, 5 & 16 October and 14 November 2007
JUDGMENT DATE :	27 November 2007
JURISDICTION:	Equity
JUDGMENT OF:	Hamilton J
DECISION:	Plaintiff granted permanent injunctive relief to restrain breaches of contract.
CATCHWORDS:	CONTRACTS [120] - General contractual principles - Construction and interpretation of contracts - Other matters - Admissibility of extrinsic evidence - Parol evidence rule - Ambiguity exception - Ambit of proscriptions of derogatory statements concerning parties to deed - TRADE AND COMMERCE [82] – Trade practices and related matters – Consumer protection – Misleading, deceptive or unconscionable conduct – Character and attributes of conduct – Reliance – Onus – Where reliance not established – Weight to be placed on assertions of reliance.
LEGISLATION CITED:	Corporations Act 2001 (Cth) ss 46 - 50 Corporations Law s 50 Trade Practices Act 1974 (Cth) ss 52, 80, 87 Uniform Civil Procedure Rules 2005 r 14.7
CASES CITED:	Brooks v NSW Grains Board [2000] NSWSC 1049 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd (1992) 38 FCR 471 Gould v Vaggelas (1985) 157 CLR 215 Hanave v LFOT Pty Ltd (1999) 43 IPR 545 Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458 LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 McRae v Commonwealth Disposals Commission (1950) 84 CLR 377 Prenn v Simmonds [1971] 1 WLR 1381 Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 76 ALJR 436 Shevill v Builders Licensing Board (1982) 149 CLR 620 Smith v Chadwick (1882) 20 Ch D 27 Smith v Chadwick (1884) 9 App Cas 187 Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 Carter, Breach of Contract (2nd ed, 1991) Ch 2 Carter, Peden and Tolhurst, Contract Law in Australia (5th ed, 2007) [28-01], [28-12], [28-13], [29-13] ff J W Carter & Stewart, “Interpretation, Good Faith, and the ‘True Meaning’ of Contracts” (2002) 18 Journal of Contract Law 182 Lewison, The Interpretation of Contracts (2nd ed, 1997) [5.12] Macquarie Dictionary (rev 3rd ed, 2001)
PARTIES:	Mindshare Communications Limited, Taiwan Branch (P) Orleans Investments Pty Limited t/as The Orleans Media Consultancy (D1) Wayne Eckett (D2)
FILE NUMBER(S):	SC 1157/05
COUNSEL:	N C Hutley SC and J K Kirk (P) K G Odgers (Ds)
SOLICITORS:	Allens Arthur Robinson (P) Breene & Breen Solicitors (Ds)