Park, T. v Enercon Pty Ltd

No judgment structure available for this case.

Re: THOMPSON PARK
And: ENERCON PTY. LTD. and GREGORY WHEAT
No. Q G84 of 1990
FED No. 804
Copyright and Designs

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Beaumont(1), Spender(2) and Pincus(2) JJ.

CATCHWORDS

Copyright and Designs - whether primary judge's finding that no proof of copying open on the evidence - whether obligation of confidence.

Copyright Act 1968

HEARING

BRISBANE

#DATE 13:12:1991

For the Appellant: Mr W. Park

Counsel for the Respondents: Mr M.P. Amerena

Solicitors for the Respondents: Morris Fletcher and Cross

ORDER

The appeal be dismissed.

The appellant pay the respondents' costs of and incidental to the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

By his application and amended statement of claim, Thompson Park, the present appellant, sought damages, an account of profits and injunctions against Enercon Pty. Ltd. and Gregory Wheat, a director of Enercon, the present respondents. A judge of the Court ordered the dismissal of the application. Mr Park now appeals from this order. In order to understand the contentions advanced on the appeal, it is first necessary to refer to the course of the proceedings at first instance.

The issues arising on the pleadings

By his amended statement of claim, Mr Park alleged the following: that Mr Park carried on the business of the design, construction and sale of heating equipment under the name "Multi Energy Australia"; that on 15 April 1985, Mr Park engaged in training Enercon, or alternatively both respondents, to act on behalf of Mr Park on the sale of equipment for baking, cooking, smelting, drying and steam applications to be fired by Mr Park's "Retrofit Furnace" (but not a heater known as a "Coalbrite heater") for swimming pools and other purposes; that Mr Park relied on, inter alia, four "Proprietary Information" agreements dated 15 April 1985 signed by Mr Wheat ("the agreements") and alleged to prohibit the disclosure by the respondents of certain information said to be confidential; that Mr Park manufactured and sold a device used for the purpose of heating water known as a "Coalbrite" boiler; that prior to 15 April 1985, Mr Park drew certain sketches and drawings depicting the Retrofit heater, which heater was proposed to be put on the market for sale; that each of the sketches and drawings was an "artistic" or "literary" work ("the works") for the purposes of the Copyright Act 1968; that Mr Park was, at all material times, a citizen of, or a person resident in, Australia; that each of the works was an "original" work for the purposes of the Copyright Act; that Mr Park was thus the owner of the copyright in the works; that the information described by the works was "confidential information" within the meaning of the said agreements; that the respondents were in the process of becoming the agents of Mr Park; that the respondents carried on business in competition with Mr Park in the sale of water heating systems; that the respondents manufactured and sold a coal burning heater which (i) was a substantial reproduction of Mr Park's works, (ii) was the result of the use by the respondents of confidential information and (iii) was manufactured and sold in breach of one of the agreements; that these acts were done without the licence of Mr Park and the respondents thereby infringed his copyright in the works by reproducing them; that alternatively, Enercon reproduced the works and Mr Wheat authorised this.
By their defence, the respondents put in issue the principal allegations made by Mr Park. Although the respondents admitted the execution of one of the agreements, the respondents alleged that the signatures on the other three agreements were forgeries.
The findings and reasoning of the primary judge
The judge found that Mr Park held patents in respect of some types of Coalbrite boilers, but that there was no evidence that he held any patent in respect of the Retrofit furnace. He made further findings with respect to the relationship of the parties to the effect that their relation was "at least" that of principal and agent.
The judge said:

"Naturally the applicant had brought into existence a number of documents in connection with his product (the documents). They were said to include working sketches and drawings, some more detailed plans and specifications including dimensions of various models of the product, some cost estimates and quotations and perhaps some other documents as well. A selection of this material apparently went into evidence. I say 'apparently' because I am still not clear whether there is in evidence what the ultimate amended statement of claim called 'the Retrofit Furnace or Heater'. Many of the documents tendered and admitted appear to have had nothing to do with the true subject matter of the case."

The judge went on to consider Mr Park's case under the following four headings:

(a) Infringement of copyright

With some reservations, the judge was prepared to assume, for the purposes of the Copyright Act, that Mr Park was a qualified person at the time the said works were made. His Honour also found it unnecessary to decide whether the said works were "original". He then turned to the issue of reproduction and said:

"The evidence on reproduction by the respondent of the applicant's work is based on two simple propositions. The first is that the respondent was seen on one occasion, by a witness Mr Mislin, who was a long time friend and associate of the applicant, to be in the applicant's office after business hours and without supervision or authority, acting suspiciously. Thereafter, he was seen to be leaving the premises with some unidentified documentary materials in his possession. The second was that the applicant and 2 witnesses (Mr Mislin and the applicant's patent attorney, Mr Adams) saw the respondent's Encoal heaters in operation at sites on Bribie Island and at Toowoomba and they looked like, or appeared to work, as Retrofit heaters. They did not see the inside of either unit, only its outside. The applicant's son Mr Robert Park also said that he had occasion to reprimand the respondent for being in his father's office 'snooping around' alone on many occasions. Mr Robert Park said that everything about Retrofit was open for the respondent to see but that he should not have been in the office alone.

Despite earlier discovery and the availability of the subpoena, the applicant produced no documentary evidence of a copyright breach; he asks that it be inferred from these two facts proved. Like his son, he frequently stated that all his papers and possessions were 'open' to and for the respondent. How then could the respondent have been acting 'suspiciously' when in the office?

As against that flimsy evidence brought by the party bearing the onus of proof on this issue, the respondent and his father, and a statement from a Mr Hans Brandemeier of Wodonga, Victoria, admitted into evidence by consent without his attendance for cross examination due to his need to remain with his terminally ill wife, all testified to an origin of the respondent's heater different to the applicant and his design. Mr Brandemeier was the inventor of a heater called a 'Branco' which was designed to burn Victorian brown coal. The evidence was that the respondent's 'Encoal' was a conversion of the 'Branco' so that it would burn Queensland black coal, and that the respondent sold his conversion pursuant to a licence agreement with Mr Brandemeier. The respondent denied the allegations of impropriety and stealing. These denials and the respondent's explanations and the evidence of his witnesses, while not without some unexplained or inadequately explained anomalies and inconsistencies, were basically credible..."

For these reasons, the judge held that no infringement of copyright had been made out.
(b) Breach of confidence
The judge found that although the precise relationship between the parties was not clear, there was at least an agency agreement between the parties. He said that a duty of confidence may arise (i) in equity or (ii) by agreement. With respect to (i), the judge adopted the statement of principle of Megarry J. in Coco v A.N. Clark (Engineers) Ltd. (1969) RPC 41 (Ch D) as follows:

"In my judgment, three elements are normally required, if apart from contract, an action of breach of confidence is to succeed. First, the information itself, in the words of Lord Greene MR in the Saltman case (Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203) must 'have the necessary quality of confidence about it'. Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it."

The judge then posed the following question:

"Did an enforceable legal duty (perhaps contractual) arise from the so-called confidentiality agreements?"

The judge said that this raised the forgery issue. He said:

"...the evidence that the three documents are forged is overwhelming and indisputable. There was no remotely satisfactory explanation of why if they were all genuine, there needed to be four agreements or why there were erroneous patent numbers for the Coalbrite boilders in some of them. Yet these unexplained features among others provide additional reason to believe that those three were quite unauthentic. To me there is little doubt as to who performed the forgeries and who was involved in the conspiracy to do so. The evidence also makes it obvious why these sinister crimes were committed. As it happens, the reasons and motives were quite futile because, in my opinion, the documents are legally speaking ineffective non-entities and a waste of paper and effort."

The judge then turned to "the genuine confidentiality agreement", which was as follows:

"MULTI ENERGY AUSTRALIA PROPRIETARY INFORMATION AGREEMENT I, the undersigned on behalf of ENERCON PTY LTD management, committee and staff, do hereby acknowledge the THOMPSON PARK Patent No. 54172) and Patents Pending relative to the *COALBRITE* boiler and heating systems and that all quotations, specifications, sketches, blueprints, product and installation dimensions remain Thompson Parks' property and must neither be used nor disclosed to third persons without his written authority, and are to be returned upon request.

We agree not to disclose any secret and confidential information to any person outside our organisation or to any person within our organisation not having a bona fide 'need to know' same. All documents and information shall be used solely for evaluating a proposal from or supplying a quotation or component. In accordance with Thompson Parks' policy concerning infringement in security of his technology, we agree that discussions undertaken regarding *COALBRITE* heating systems will be confined to the reliability, performance, achievements, merits and money-saving energy bill reductions of the system over previous past systems, rather more than technical specifications, dimensions and techniques.

These terms shall not apply to any information which we can document, was in or enters the public domain, without fault of ours or was in or comes into our possession without restrictions.

(SIGNED) G.O. WHEAT Director"

The judge said:

"I can find no legal basis for a voluntary agreement of such a vague amorphous kind becoming the basis of an enforceable obligation of confidentiality in relation to information gleaned during its existence.

More specifically for present purposes, the document related to 'Coalbrite boiler and heating systems' which were at the time patented or in which patents were pending. This did not describe the Retrofit furnace at that or any time. Further, there was no consideration of any kind for this agreement, especially if it was part of an agreement by the applicant merely to 'train' the respondent as a salesman. Its content is so confusing as to render it effectively meaningless, at least in the context of this case."

The judge went on to find that, even if it be assumed that the respondents did come by information which attracted confidentiality, Mr Park had not shown any relevant breach of confidence. He added:

"Nor is there any evidence of detriment and prejudice in the equitable sense. Further, even if the respondent has breached an obligation imposed by equity, the applicant would still face the difficulty of obtaining any relief if he is found to be seeking equity's help without 'clean hands'. My findings on the alleged forgeries are undoubtedly relevant in this regard."

(c) Liability in connection with an application for a patent in

respect of the Retrofit heater

The judge rejected a submission by Mr Park that his inability to obtain a patent was due to the "public revelation by the respondent of the 'secret invention' in contravention of patent law". He held that the failure to obtain a patent "had nothing at all to do with the respondent".
(d) Damages
The judge said that Mr Park had failed to tender any evidence of loss or damage.
The grounds of appeal
Although the litigation was complex, Mr Park was unrepresented at first instance and before us. By his notice of appeal, Mr Park advanced many grounds of appeal, some of which were expressed in extravagant language. Amongst other arguments, Mr Park submitted that the order dismissing the proceedings should be set aside because, in substance, the primary judge failed to state his essential findings and reasons and this constituted an error of law. I say "in substance" because the argument was not clearly expressed. However, I think that this was the essence of one of Mr Park's contentions.
Conclusions on the appeal
I have come to the conclusion that there is substantial force in Mr Park's submission.
Recent authority in this country holds that it is the duty of a trial judge to state the essential or necessary grounds for his or her decision, including findings of essential or necessary facts (see Pettitt v Dunkley (1971) 1 NSWLR 376 at 382; Soulemezis v Dudley (Holdings) Pty. Ltd. (1987) 10 NSWLR 247 at 268, 271, 280; W. and J. Investments v Federal Commissioner of Taxation (1987) 76 ALR 293; Jones v Hyde (1989) 85 ALR 23, per Brennan J. at 23, per McHugh J. at 24-5; Dornan v Riordan (1990) 95 ALR 451 at 460-461; Rushes Pty. Ltd. v Thomas, unreported, Court of Appeal, 9 May 1990; Mifsud v Campbell (1991) 21 NSWLR 725; Farrelly v Minister for Immigration, unreported, 9 May 1991; Commissioner for Railways for the State of Queensland v Peters, (1991) 102 ALR 579. Where no issue of credit arises, an appellate court may be able itself to make the necessary findings of fact. But, in the present case, issues of credit did arise (see, e.g. Government Insurance Office of New South Wales v Evans (1990) 21 NSWLR 564).
In the present case, for the reasons which appear below, I am of the opinion, with respect to the judge, that there was a failure to provide those findings and reasons which enable "a proper understanding of the basis upon which the verdict entered had been reached" (see Pettitt v Dunkley, above, at 382). In N.R.M.A. Insurance Ltd. v Tatt (1989) 92 ALR 299, Samuels J.A., with the concurrence of Hope J.A., said (at 312-3):

"By recording only one side of the judicial equation he has deprived this court of the opportunity of assessing the weight to be given to the finding on credit, which might thus be accorded for greater cogency than in the whole of the context it properly deserves. It is, to my mind, impossible for a judge to make a finding on credit in a vacuum, as it were, without relating the witness' evidence, demeanour and particular circumstances to the other material evidence in the case. In Uranerz (Aust) Pty Ltd v Hale...Gibbs J. (with whom Stephen, Mason and Wilson JJ. agreed) dealing with the deference which an appellate court generally accords to the trial judge's findings on credibility said:

'Gallop J. was not entitled to reverse the finding of the tribunal which was based on its view of the credibility of the witnesses unless it was seen clearly to be wrong on grounds which did not depend merely on credibility - for example, on the ground that the evidence which was accepted was inconsistent with established facts, or was so improbable that no reasonable person could accept it, or that the judgment of the tribunal disclosed that its conclusion was affected by some error of law or fact. The evidence of Mrs Hale no doubt was such that it might well have been viewed with suspicion, but it was not inherently improbable and it was not inconsistent with any facts which were indisputable or established by other evidence which the tribunal accepted.'

It is important to observe that this passage emphasises that the comparison which an appellant court may make is between findings made by the judge below, that is to say his or her finding on credibility viewed against findings on other evidence. It is only by this means that the appellant court can judge whether deference or disagreement is the appropriate response. In the present case we cannot say what view the judge took of the expert and other evidence and because of his failure to consider it to the point of conclusion we cannot review the weight to be given to the finding on credibility.

For these reasons I am of the opinion that the appeal must succeed. The appellant asks us, in that event, to consider the evidence ourselves and substitute judgment for the appellant. But although the appeal, in my view, has been made good, it does not follow that upon a full analysis of the evidence judgment for the appellant would be the proper result. Furthermore it would be impossible for this court itself to decide the case without the benefit of any findings of primary fact, and without the benefit of seeing the witnesses. The only course open, regrettable though it is, is to send the action back for a new trial on both liability and damages."

I have come to the regrettable conclusion that these remarks are apposite here also, for the reasons which follow.
For this purpose, I propose to deal with the substantial allegations made in the amended statement of claim in the order in which they were pleaded.

(1) Breach of confidence

The first allegation

By para 1, it was alleged as follows: "At all material times the Applicant has carried on the business of inter alia, the design construction and sale of heating equipment under the name Multi Energy Australia'.

The finding on the first allegation

After pointing out the difficulties created by reason of Mr Park's decision to be unrepresented in this complex litigation, the judge said:

"As it turned out, the applicant's basic case was in substance quite simple. He claims to have invented what he called the Retrofit heating device to serve as an adjunct to a coalfired boiler. Its purpose was to provide a means of using coal to heat water, to introduce the coal into the furnace mechanically rather than by direct manual feed, and to generate a temperature, by airflow under pressure and other means so that sufficient heat was available whenever needed for the heater's purpose and application. Part of the operation involved trapping the smoke emitted from the burning coal and treating it within the system so that it did not escape into the atmosphere. All this was to be achieved with a design and construction that would be appropriate for domestic or commercial application and at significantly less cost, both in equipment and operation, than other heating systems. The actual heat generated was intended to be somewhat greater and more consistent and reliable than for example can be supplied by solar power. As I understand the evidence, the coal would be delivered to the site and, if not stored there, introduced into the heater by mechanical means if it was not to be handled. If stored on site, a suitable mechanical device would have to be installed if the site owner was not to be required to feed the coal into the furnace manually. The ash residue had to be removed by hand."

The second allegation

By para 4 it was alleged as follows:

"On or about the 15th April 1985, the Applicant engaged in training the First Respondent, or alternatively the First and Second Respondents, to act on behalf of the Plaintiff in every aspect of the sale of the Plaintiff's Industrial, Commercial Heating equipment for baking, cooking, smelting, drying and steam applications to be fired by the Plaintiff's Retrofit Furnace and in particular not the current Coalbrite Heaters for swimming pools, caravan parks, nurseries, motels, boarding schools, central heating and swimming pools."

The findings on the second allegation

As has been said, the judge found "at least" an agency relationship. The judge noted that in earlier versions of his pleading, Mr Park had alleged that Mr Wheat had been engaged to sell equipment on his behalf and that the allegation that his role was to "train" Mr Wheat was raised during the trial. The judge said:

"The resolution of the commercial and legal relationship between the parties was to play quite an important role in this litigation.

Whatever it was, the respondent's involvement was at one time related to what were described as a 'Coalbrite' boiler and a 'Retrofit' heater. In the initial statement of claim the relevant heating equipment for the copyright claim was called a Retrofit boiler. Later, an apparently accidentally typed 'Coalbrite boiler' in one of the amendments was replaced by the term 'Retrofit heating device'. In the last amended Statement of Claim, this became a 'Retrofit Furnace and in particular not the current Coalbrite Heaters'. It is odd that the applicant did not seem to know what his product was."

Later, the judge described Mr Wheat's evidence as follows:

"As to the nature of his original working arrangement with the applicant to which reference has been made earlier, the respondent said that he was engaged as a commission agent for the applicant's heating system and that they were negotiating a distributorship. He alleged that he has only received some of the commission due to him, and that only in settlement of legal proceedings instituted by the respondent, to the order of $2500.

The respondent said that his was never an exclusive commitment to the applicant and that at the same time he held other agencies and performed his own work."

When the judge came to deal with the claim of breach of confidentiality, he said:

"In my opinion, the respondent's account of his original agreement to associate with the applicant is to be preferred. There seems little doubt that there was at least an agency agreement between the parties. This does not entirely exclude the applicant's very belated assertion that their agreement was that the applicant would engage in some 'training' of the respondent in his device and its operational and design features so that the respondent could be an effective salesman or agent. That would be an entirely normal and expected feature or part of such an agreement. But the applicant's last minute proposition that training was all the agreement comprised so that the respondent and his business would gain no material benefit of any kind unless and until he had received and successfully passed a 'training' course of indeterminate length and definition, is far fetched and in my view false. Judged by the applicant's explanation to me of his claimed invention, and of his case, I doubt that the applicant could ever have been a successful teacher, at least within a reasonable period of time, of the technology involved."

The third allegation

This allegation was made in the form of "Particulars" of para 4 as follows:

"PARTICULARS

The agreement was partly written and partly oral. Insofar as it was oral, it was made in conversation between the Applicant and Second Respondent in March/April 1985. Insofar as it (sic) written, it is contained in the following documents

(i) a one page document headed 'Proprietary Information Agreement' signed by the Second Respondent and dated the 15th April 1985;

(ii) A one page document also headed 'Proprietary Information Agreement' signed by the Second Respondent on behalf of the First and Second Respondents and dated 15th April, 1985;

(iii) a document headed 'Proprietary Confidential Information Agreement' signed by the Second Respondent on his behalf, or alternatively by him on his behalf and on behalf of the First Respondent, and dated the 15th April 1985.

(iv) A one page document headed 'Proprietary Information Agreement' signed by the Second Respondent on behalf of the First Respondent, dated the 15th April 1985. The applicant will refer to these documents at the trial for their full terms true meaning and effect."

The finding on the third allegation

By their defence, the respondents claimed that documents (i), (ii) and (iii) above were forgeries. They admitted the execution of document (iv) but contended, inter alia, that it was not enforceable.
Except in the general description of the relationship of the parties, the judge made no finding with respect to the alleged oral agreement. With respect to the written agreements, he found that documents (i), (ii) and (iii) were forgeries.
The fourth allegations
By para 5 it was alleged as follows:

"By the documents referred to in (i) and (ii) of the preceding paragraph, the Respondents agreed that:

(i) that all quotations, specifications, sketches, blue prints, product and installation dimensions relating to one of the Applicant's products, being a 'Coalbrite' boiler, would remain the Applicant's property and must neither be used nor disclosed to third persons without his written authority and are to be returned upon request;

(ii) that they would not disclose any secret and confidential information to any person acquired by the Respondents by reason of their acting on behalf of the Applicant."

Para 6 was in similar terms but in respect of document (iii).
The finding on the fourth allegation
As has been said, the judge found that documents (i), (ii) and (iii) were forgeries.
The fifth allegation
Para 7 was as follows:

"At all material times the Applicant manufactured and sold a device used for the purposes of heating water known as a 'Coalbrite' boiler."

The finding on the fifth allegation

In their defence, the respondents did not admit this allegation. However, it appears to have been common ground. It seems that the judge assumed it and it appears that his assumption was justified. However, his findings do not distinguish, in any detail, between the "Coalbrite" and the "Retrofit".
The sixth allegation
Para 8 was as follows:

"Prior to the 15th April 1985, the Applicant drew certain sketches and drawings depicting the Retrofit Heater. The Retrofit was to be put on the market for sale."

The findings on the sixth allegation

The judge made a general finding in this area which has already been set out in the context of the copyright claim. The finding did not refer to any specific documents.
The seventh allegation
Paras 9, 10, 11 and 12 dealt specifically with copyright and it will be convenient to consider them later in that context. Para 13 was as follows:

"The information described by the works is 'confidential information as that term is used in the agreements referred to herein."

The findings on the seventh allegation

As has been said, the judge did not identify "the works" so that no finding was made in respect of this allegation.
The eighth allegation
Para 14 was as follows:

"The Respondents have never been agents/representatives of the Applicant but was in the process of becoming an agent."

The finding on the eighth allegation

As has been noted, the judge accepted Mr Wheat's evidence that he was "engaged as a commission agent for the applicant's heating system and that they were negotiating a distributorship".
The ninth allegation
Para 15 was as follows:

"The Respondents, or alternatively, the First Respondent have, since ceasing to act on behalf of the Applicant as a trainee and confidant in the Applicants Priority secret technology, carried on business in competition with the Applicant in south east Queensland and elsehwere in the sale of water heating systems."

The finding on the ninth allegation

As has been noted, the judge rejected Mr Park's evidence to the effect that he provided Mr Wheat with a formal training course. However, the judge made no specific findings as to the nature of the information, confidential or otherwise, given by Mr Parks to Mr Wheat in the course of their agency relationship. As has been noted, no finding was made as to the information in the works.
With respect to the claim that the respondents unlawfully carried on business in competition with Mr Park, apart from the evidence as to "reproductions", dealt with by the judge in the context of the copyright claim and set out above, the judge made no specific findings.
The tenth allegation
Para 16 was as follows:

"The Respondents, or alternatively, the First Respondent, in the course of that business have manufactured and sold a coal burning heater which:

(i) is a reproduction, or a reproduction of a substantial part, of the Applicant's works referred to herein:

(ii) is the result of the Respondents' use of the said confidential information.

(iii) has been manufactured and sold in breach of the term of the agreement referred to in paragraph 5(iv) herein."

Some particulars were given.

Item (i) will be considered later in the copyright context.
The finding on the tenth allegation
With respect to item (ii), no specific finding was made since the judge did not identify the confidential information, if any, in the works.
With respect to item (iii), this is apparently a reference to the agreement in para.(iv) of the particulars. Although the judge sought to distinguish the "Coalbrite" from the "Retrofit", no details of the distinction were given. Without those details, it is difficult to decide whether, expressly or by implication, the agreement in (iv) applied to the "Retrofit".
Conclusion on the breach of confidentiality claim
This was a complex claim, involving claims under the general law and in contract of the kind considered in, e.g., Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41. In order that such a claim could be considered, it was essential and necessary that the judge find the relevant primary facts underlying their relationship. Here, Mr Park relied on, inter alia, an alleged oral contract but no findings of the primary fact in that connection were made. A similar problem exists with respect to the alleged confidential information in the works. No specific findings were made so as to identify the drawings in question. Yet, as Lockhart, Gummow and Von Doussa JJ. said in ASX Operations Pty. Ltd. v Pont Data Australia Pty. Ltd. (1980) 97 ALR 513 at 535, citing Mason J. in O'Brien v Komesaroff (1982) 150 CLR 310 at 323-8:

"...it is difficult in confidential information cases to state general conclusions without regard to the facts of each particular case as it arises..."

It follows, in my opinion, that the judge made an error of law in the present context.
(2) Breach of copyright
Paras 8 and 16 have already been set out.
The other material allegations
Paras 9, 10, 11 and 12 were as follows:
"9. Each of those sketches or drawings was an 'artistic

work' and/or a 'literary work' within the meaning of those expressions used in the Copyright Act 1968.

10. At all material times the Applicant has been a citizen

or a person resident in Australia.

11. Each of the said works is an 'original' work as that

term is used in the Copyright Act.

12. In the premises, the Applicant is, and at all material

times has been the owner of the copyright in the works."

Findings made

As has been said, the judge made no findings with respect to the claims in paras. 10, 11 and 12. Moreover, as has been noted, the judge did not identify "the works". These were crucial matters to be dealt with in accepting or rejecting this claim. It must follow, in my view, that in this respect also, the appeal should be allowed and a new trial ordered.
Mr Park's other arguments
As has been said, Mr Park advanced other arguments in support of the appeal, but it is not necessary to consider them.
Result of the appeal
In the result, I propose that the appeal be allowed; that the orders made at first instance be set aside; that there be a new trial; and that the respondents be granted costs certificates under ss.6(1) and 8(1) of the Federal Proceedings (Costs) Act 1981.
Given the complexity of the litigation, in my opinion, it is clearly in the interests of both parties, at least in terms of time and expense, that the further proceedings be conducted by their legal representatives.

JUDGE2

This is an appeal from a judgment of Einfeld J. given in an intellectual property case. His Honour dismissed the application which was before him with costs and made an order that certain matters be drawn to the attention of the Director of Public Prosecutions.

At the hearing of the appeal, the appellant was, in large part, represented by his son who is not a lawyer. That is, the appellant's son made most of the submissions, but from time to time was corrected by the appellant, who also made some independent addresses about various matters. When asked what was the nature of the case, the appellant's son said that the essence of the claim is a copyright dispute. It appears from the amended statement of claim dated 16 February 1990 that, in addition to a claim for breach of copyright, the appellant set up an entitlement to relief on the ground of misuse of confidential information.
As to the copyright claim, the statement of claim alleged that the appellant made and sold a device for the purpose of heating water, known as a "Retrofit" heating device. It said that, prior to 15 April 1985, the appellant drew "certain sketches and drawings" depicting that device, each of which was an artistic work or a literary work within the meaning of the Copyright Act 1968 - and, further, an original work, copyright in which was owned by the appellant. The pleading said that the respondents, or else the first respondent, had made and sold a coal-burning heater which was a reproduction, or a reproduction of a substantial part, of the copyright works.
As to the confidential information case, the pleading alleged a business connection between the appellant and the respondents under an agreement which was partly oral and partly in writing. The pleading identified four documents as constituting the writing, three headed "Proprietary Information Agreement" and one headed "Proprietary Confidential Information Agreement", allegedly signed by the second respondent and all dated 15 April 1985. In reliance upon the terms of three of those documents, the appellant set up that the respondents were obliged not to disclose "any secret and confidential information to any person acquired by the Respondents by reason of their acting on behalf of the Applicant". The pleading also set up that one of the documents, that headed "Proprietary Confidential Information Agreement", imposed certain other obligations mentioned in paragraph 6 of the pleading.
The confidential information agreements we have mentioned were relied on in the pleading (paragraph 13) as protecting the copyright works and it was said that the respondents, or else the first respondent, had made and sold a coal-burning heater as a result of use of confidential information. That manufacture and sale were also said to have been in breach of the terms of one of the four agreements.
It is convenient to divide discussion of the appeal into two sections: first, copyright and, second, the four agreements.
Copyright
The Judge held that, assuming that the appellant had copyright in the material on which he relied, there was no breach of the copyright.
In more detail, the findings were to the following effect:

The Retrofit heating device which the appellant said he had invented was designed to serve as an adjunct to a coal-fired boiler. The appellant made a number of drawings relating to it and prepared specifications. The respondents' corresponding product was called an "Encoal" heater and the second respondent asserted that the Encoal heater was significantly different from the Retrofit device and was designed before the second respondent became associated with the appellant.

The appellant's case was that the second respondent was seen in the appellant's office after business hours acting suspiciously and thereafter left with some documents in his possession. Witnesses on behalf of the appellant also said they saw the respondents' Encoal heater in operation at various sites and that they "looked like, or appeared to work as, Retrofit heaters. They did not see the inside of either unit, only its outside". There was also evidence that the second respondent was reprimanded for being in the appellant's office "snooping around" on many occasions. No documentary evidence of copyright breach was produced to the Court.

For the respondents, evidence was admitted to the effect that the Encoal heater was a conversion of one called a "Branco" invented by one Brandemeier and that the Encoal was produced and sold under a licence agreement with Brandemeier. The respondents' account of these matters was accepted and, in particular, it was accepted that the Encoal heater was not copied from the Retrofit device.

One of the difficulties at the trial was that the allegedly copyright drawings, produced over some years, appear never to have been clearly identified. However, that lack of identification cannot assist the appellant. Although the appellant appeared for himself at the trial, it was his task and not that of the Court to make clear what was the cause of action on which he wished to proceed. It does not appear necessary for present purposes to attempt to resolve this problem, for the Judge was prepared to approach the matter fairly broadly, without insisting upon precise particulars of the appellant's copyright works.
With regard to the Judge's finding that the respondents' heater was not copied from the appellant's, it seems clear that there was no direct evidence of copying, so that attention has to be directed to the issue whether the Judge was obliged to infer that copying took place. Of course, if by accident the respondents independently created a heater substantially the same as that depicted in the appellant's drawing, that would be no breach of copyright.
The written contentions supplied by the appellant had this to say on the subject:

"Grant Adams, the Appellant's Patent Attorney (a former copyright examiner), evidence was contrary to the verdict. His evidence and expertise and his eye witness account was dropped in favour of people who mistakenly feel that this technology (Retrofit technology) is freely available at any library".

In oral argument for the appellant, also, the strength of Mr Adams' evidence was stressed.

It seems desirable to say something of Mr Adams' evidence, since he appears to be relied on as falsifying the Judge's conclusion with respect to breach of copyright.
Mr Adams explained the principle of what was described as the "Retrofit heater" and said that he had inspected two Encoal heaters. He answered as follows a suggestion put to him by the appellant that an accurate description - apparently meaning an accurate description of the operation of the appellant's heater -

"... would be that it would be a trapped windstorm, with air jets flowing into the windstorm causing the turbulence to all sides?---That would be one way to describe it".

He was then asked about the Encoal heater and said:

"They had air being blown into the combustion chamber. I mean, I could not see the internal construction of the chamber, because both heaters were in operation".

The evidence proceeded:

"Yes, but was there a difference between Greg Wheat's ultimate heater, the Encoal, and mine?---The only differences I could see were differences in the plumbing and things like the pumps, which the air blowers would appear to have - it would appear to have just been matters of engineering selection. The blower units appeared to be off the shelf units".

The evidence then diverged into a discussion of patents and suggestion was made, to which Mr Adams seemed to agree, that the appellant might have lost his opportunity to obtain a patent of the product.

Some days later, an affidavit of Mr Adams was produced to the trial Judge by the appellant. It did not appear to take the case significantly further.
It is plain that to find a breach of copyright or any other illegality on the basis of Mr Adams' evidence would have been impossible. His evidence seemed to suggest that the two heaters looked similar in basic design, but that could not be enough.
The appellant called another witness, one Constantine Mislin, in support of his copyright claim. Mr Mislin made an affidavit in which he described himself as "an engineering Design Contractor" with a Manchurian diploma and said that he was also qualified in "plumbing, draining and gas fitting and design draughting (sic)". He said that he met the appellant about 1981 and became interested in various ideas the appellant had "which simply seemed so easy yet no one else seemed to have thought of them". He said, in effect, that one idea called "Retrofit heating" was a gasification system reburning volatile gases. "(I)t was unique in that it was a seperate (sic) add on furnace which transformed an oil burning boiler to a coalfired one". His affidavit extolled the appellant's heating systems on account of their efficiency and the like. Mr Mislin said he was never introduced to the second respondent, but saw him in the appellant's office on many occasions:
"Every time I saw Wheat in Parks office he ignored me and left in a hurry as soon as I was arriving ... I saw him reading Parks files and literature in Parks office on many occasions during February to December 1985".
On one occasion, Mr Mislin entered an engineering works carrying on business under the name "Engineering Applications" and saw a boiler which he described as similar to the Retrofit boiler, but said he was prepared to "appear in Court to testify that they were manufacturing a device identical to Parks Retrofit heater and coalbunker ..." (emphasis added).
In the Judge's reasons, it is said in reference to the appellant and Messrs Mislin and Adams' inspection of Encoal heaters that they "did not see the inside of either unit, only its outside". That does not accord with Mr Mislin's version of events.
On the respondents' side, evidence was called from witnesses who disputed that the Encoal heater was a copy of the appellant's design. It does not appear necessary to summarise all of that, but two pieces of evidence should be mentioned. One, an affidavit of a Mr Brandemeier, on which it appears the Judge particularly relied, directly supported the respondents' story that the respondents' heaters were derived from a Branco boiler designed by Mr Brandemeier, who was not cross-examined. Another witness called for the respondents was a patent attorney, Mr John Pizzey, who examined drawings of the appellant's device and examined various types of the respondents' heaters. He came to the conclusion that there was only "superficial visual similarity" between the two, but "all other aspects of the design are different".
The evidence of Mr Pizzey was that of an independent expert; no such witness was called on behalf of the appellant. That is not to say that the Judge was obliged to accept Mr Pizzey and reject the appellant's evidence, but it seems impossible to hold that the conclusion at which the Judge arrived, on this purely factual question, has been shown to be wrong. That conclusion was that the Encoal heater was not a copy of the Retrofit and that the Judge was not persuaded that "the respondent's heaters resulted from or were reproductions of the applicant's drawings and sketches".
Agreements
The second respondent said that he had signed only one of the four agreements referred to above and that the other three were forgeries. The Judge's reasons relating to the agreements were, in substance, as follows:

The applicant said that on 15 April 1985 he told the second respondent that he required the four agreements to be signed and presented them to the second respondent who took them away. Later in the same day the second respondent brought them back to the applicant and signed them in the presence of the applicant and others. A handwriting expert was called by the respondents to support their forgery allegation and the applicant tendered a report from another handwriting expert which gave further support to that case as to the lack of authenticity of three of the signatures. The applicant argued that the second respondent had signed the three disputed documents in such a way as to make them appear forged, a contention which was described as "preposterous". On the "overwhelming and indisputable" evidence, the three documents were forged and there was "little doubt as to who performed the forgeries ...". As to the one genuine agreement, the Judge thought it to be vague and amorphous and not to relate to the Retrofit furnace. The Judge clearly regarded it as not giving rise to any relevant obligation of confidence. However, he held that in any event the allegations of breach of confidence were not made out. Apart from an alleged breach of confidence which relied upon the same matters as the claim for breach of copyright, the only additional allegation was that the second respondent discussed confidential information with a Mr Ian Hay. The Judge remarked "(n)o evidence of this was provided and it was denied by Mr Hay and by the respondent".

The Judge added that it was not shown that, if there was confidential information, it was used in any unauthorised way.

Determination of the appeal requires some discussion of the Judge's finding that three of the four documents relied on by the appellant were forged. The written submission, which was presented on behalf of the appellant on the hearing of the appeal said, with reference to the Judge's forgery finding:
"The Respondent is the one who committed these crimes".
From that and the oral argument presented, it may be deduced that the findings of forgery are not challenged. However, the appellant may have intended to argue for a position set up at the hearing and explained by the Judge:

"The applicant's assertion was that the respondent had signed all four documents but on the three alleged forgeries had done so in such a way as to make them appear forged".

That view of the matter was not adopted by the Judge, who implied that the appellant had been responsible for the forgeries.

One starts from the proposition that there now seems to be no dispute that the three signatures appear to be forgeries. In view of the uncontradicted expert evidence, no finding to the contrary would be open. The theory that the second respondent deliberately made signatures designed to look like forgeries seems too absurd to warrant discussion. In any event, it was not put at the forefront of the oral arguments advanced on appeal; they were along the lines that the appellant did not "knowingly bring forgeries to court". It was further contended that the appellant "didn't know that if he's relying on forged documents ... you are going to do forgery yourself".
The foundation of the confidential information case was the collection of agreements, three of which were forged. In view of the factual findings, which are not challenged by any detailed analysis of the evidence, it does not appear that there is any possibility of upsetting the Judge's conclusions on this aspect of the case. At least, that is so unless the Court is obliged to endeavour to devise for itself from the papers before it some rational bases on which to upset those conclusions. In our opinion, it is not so obliged and it lies upon the appellant, represented or not, to identify such bases; that has not been done.
This part of the case should not be departed from, however, without making some observations upon the Judge's views concerning the claim for breach of confidence. His Honour said, in effect, that the one genuine agreement was voluntary, vague and amorphous and could not become the basis of an enforceable obligation of confidentiality. The obligation to respect confidences depends on "the circumstances in or through which the information was communicated or obtained": Moorgate Tobacco Co. Limited v Philp Morris Limited (No. 2) (1984) 156 CLR 414 at 438. The authorities show that a wide variety of circumstances can give rise to such an obligation and one would not wish to deny the possibility that such circumstances could include the making of promises, even vague promises, for no consideration. There is a broad principle "that he who has received information in confidence shall not take unfair advantage of it": Seager v Copydex Limited (No. 1) (1967) RPC 349 at 368. While we would express these reservations concerning the Judge's reasoning, we see no reason to doubt the correctness of his conclusion, namely that no actionable breach of confidence was proved.
General
Both in the written and in the oral submissions, much general criticism of the way in which the trial was conducted was put forward. The submissions impugned, amongst other things, the Judge's impartiality, technical competence and grasp of the evidence.
The trial must have been a difficult one to conduct. Although the statement of claim set out the appellant's allegations clearly enough, the evidence adduced was such as to make it difficult to appreciate what the appellant believed to be the relevance of much of what was put forward, or whether it had any relevance. To take but one example, the evidence of Mr Mislin referred to above contained a detailed explanation of a dispute in which the appellant was involved, concerning the cost of plans drawn by the appellant for a pipe line to be built at Beams Road, Brisbane; as far as one can tell, this had absolutely nothing to do with the case. More generally, the record of the evidence presented suggests that the appellant regarded the case as one relating to an invention he had made; he thought some relief under the patent legislation should be granted to him, but the statement of claim does not assert any patent rights. In the written submissions on appeal to which reference has been made, under the mysterious heading "Ingravescent", the appellant "seeks in lieu of the judgement (sic) appealed from ... The Right to Patent". The appellant apparently desired to have some protection for a patent application which the evidence showed he had lodged but later withdrawn.
It is true, as the appeal record and the Judge's reasons manifest, that there was experienced some difficulty in identifying precisely what were the issues the appellant wished to have determined. Perhaps the most important lack of definition was as to which of the various drawings, some quite old, were relied on in the copyright claim. Despite these problems the reasons appears to have dealt, insofar as that could be done, with the substance of what seemed to be the issues raised by the pleadings. Apart from the slip with respect to Mr Mislin's evidence referred to above, no factual error in the Judge's reasons was identified on the hearing of the appeal. No ground which could warrant a reversal of any of the Judge's ultimate findings, or the grant of a new trial, has been shown and the appeal should be dismissed with costs.

Citations

Park, T. v Enercon Pty Ltd & Anor [1991] FCA 804

Cases Citing This Decision

0

Cases Cited

11

Statutory Material Cited

0

Director of Public Prosecutions (NSW) v Elias [2013] NSWSC 28

DL v The Queen [2018] HCA 26

Jones v Hyde [1989] HCA 20

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[1991] FCA 804

13 DECEMBER 1991