Streetscape Projects (Australia) Pty Ltd v City of Sydney - [2013] NSWCA 2

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation: Streetscape Projects (Australia) Pty Ltd v City of Sydney [2013] NSWCA 2
Hearing dates: 26, 27, 28 November 2012
Decision date: 01 February 2013
Before: Meagher JA (at [1]); Barrett JA (at [2]); Ward JA (at [239])
Decision:
Short minutes to be filed.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords: EQUITY - fiduciary duty - fact-based fiduciary duty - where plaintiff granted to defendant a licence to exploit technology - finding of breach of contract through exploitation contrary to licence agreement - concurrent finding of existence and breach of fiduciary duty of defendant licensee by reason of same acts - no recognised fiduciary relationship - whether the circumstances gave rise to the fiduciary duty alleged - EQUITY - equitable obligation of confidence - licence agreement imposed confidentiality restraints with respect to information - finding of existence and breach of concurrent equitable duty of confidence - question whether equitable duty may co-exist with contractual duty not in contest - whether information said to be protected by equitable duty sufficiently identified - whether confidential quality sufficiently shown - course of trial such as to prevent adequate inquiry into those questions - need for new trial - TRADE AND COMMERCE - misleading or deceptive conduct - representation as to future matter - whether representation contrary to statute - whether order varying contract affected by such representation properly made
Legislation Cited: Evidence Act 1995, s 55
Local Government Act 1993
Trade Practices Act 1974 (Cth), ss 51A, 52, 82, 87
Cases Cited: AG Australia Holdings Ltd v Burton [2002] NSWSC 170; (2002) 58 NSWLR 464
Athval Management Pty Ltd v Doherty [2000] NSWCA 277; (2000) 20 NSWCCR 687
Attorney-General v Guardian Newspapers Ltd [1990] 1 AC 109
Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199
Breen v Williams [1996] HCA 57; (1996) 186 CLR 71
City of Sydney v Streetscape Projects (Australia) Pty Ltd [2011] NSWSC 831
City of Sydney v Streetscape Projects (Australia) Pty Ltd [2011] NSWSC 1214
City of Sydney v Streetscape Projects (Australia) Pty Ltd [2012] NSWSC 10
Coco v A N Clark (Engineers) Ltd [1969] RPC 41
Coles Supermarkets Australia Pty Ltd v FKP Ltd [2008] FCA 1915
Complete Technology Integrations Pty Ltd v Green Energy Management Solutions Pty Ltd [2011] FCA 1319
Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172; (2007) 73 IPR 326
Elecon Australia Pty Ltd v Brevini Pty Ltd [2009] FCA 1327; (2009) 263 ALR 1
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89
Galambos v Perez [2009] SCC 48; [2009] 3 SCR 247
Hodgson v Amcor Ltd [2012] VSC 94; (2012) 264 FLR 1
Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41
John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1
Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd [1958] HCA 33; (1958) 100 CLR 342
Mid-City Skin Cancer & Laser Centre Ltd v Zahedi-Anarak [2006] NSWSC 844; (2006) 67 NSWLR 569
Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) [1984] HCA 73; [1984] 156 CLR 414
O'Brien v Komesaroff [1982] HCA 33; (1982) 150 CLR 310
Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21; (2010) 265 ALR 281
Re E Dibbens & Sons Ltd [1990] BCLC 577
Re Goldcorp Exchange Ltd [1995] 1 AC 74
Scott v Davis [2000] HCA 52; (2000) 204 CLR 333
Smith Kline & French Laboratories (Australia) Ltd v Department of Community Services and Health (1990) 22 FCR 73
Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514
Watson v Dolmark Industries Ltd [1992] 3 NZLR 311
Texts Cited: "Encyclopaedic Australian Legal Dictionary" (LexisNexis Australia)
Category: Principal judgment
Parties: Streetscape Projects (Australia) Pty Ltd - First Appellant
Moses Edward Obeid - Second Appellant
City of Sydney - Respondent
Representation: B W Walker SC/G K J Rich - Appellants
T M Jucovic QC/S W Climpson/C N Bova - Respondent
Colin Biggers & Paisley - Appellants
Holding Redlich - Respondent

File Number(s): 2012/52247
Decision under appeal

Citation:

City of Sydney v Streetscape Projects (Australia) Pty Ltd [2011] NSWSC 1214

Date of Decision:

2011-10-11 00:00:00

Before:

Einstein J

File Number(s):

2009/298673 and 2010/85353

Judgment

MEAGHER JA: I agree with Barrett JA.

BARRETT JA: The present appeal and cross-appeal arise from a decision of a judge of the Equity Division in Commercial List proceedings heard over some 46 sitting days in 2011. Numerous interlocutory decisions were made. Substantive reasons were delivered on 11 October 2011 (City of Sydney v Streetscape Projects (Australia) Pty Ltd [2011] NSWSC 1214). Orders giving effect to those reasons were made on 1 February 2012, at which time further reasons were published (City of Sydney v Streetscape Projects (Australia) Pty Ltd [2012] NSWSC 10). Further orders were made on 6 February 2012. Unless otherwise stated, references below to the primary judge's judgment are references to the reasons of 11 October 2011.

The proceedings as eventually determined were a consolidation of separate actions commenced in the Supreme Court and the Federal Court. The Federal Court proceeding had been cross-vested to the Supreme Court.

The plaintiff below was the Council of the City of Sydney ("the City"), a local government authority constituted under the Local Government Act 1993. The defendants were Streetscape Projects (Australia) Pty Ltd ("Streetscape") and its sole director, Moses Edward Obeid ("Mr Obeid").

Streetscape and Mr Obeid were substantially unsuccessful at first instance. They are the present appellants. The City, the claims of which were largely upheld by the primary judge, brings a cross-appeal in respect of one matter.

The subject matter of the litigation

The litigation concerned a licence agreement and allied arrangements between the City as licensor and Streetscape as licensee. The licence agreement was entered into in August 2002 and subsequently varied on two occasions in 2007.

The arrangements as a whole concerned exploitation of intellectual property and know-how related to the manufacture of multi-purpose poles for erection in streets and other public places. The poles are known as "Smartpoles". A particular pole might carry one or more of street lighting, traffic lights, pedestrian lights, a warning siren, a CCTV camera, parking signs, street signs, an electronic message board and banners.

The advantage of the Smartpole is its capacity to have several items of different kinds attached to it in an efficient way and thereby to avoid the need for multiple poles at one location. The particular distinguishing feature of the Smartpole was referred to by the primary judge (at [25]) in a passage taken from Streetscape's website:

"The key to its success is an extruded alloy track that allows secure and simple mounting of any number of accessories at any height or face around the pole. Available in 3 distinct sizes, 215, 166 and a twin track model, the system allows itself to be tailored to the client's needs and wishes most economically."

This matter was referred to in evidence given by an expert witness, Dr Green. The judge quoted the following statement made by that witness in cross-examination:

"I might add the principal visual and design characteristic of the Smartpole is the upper extrusion where it includes the so-called C tracks. Now I regard this as the absolute essence of the Smartpole, the manner in which the upper extrusion and its C tracks allows the accommodation of a range of accessories that achieve this flexibility and this capacity to be installed and meet many many requirements."

The "extrusion" is in the nature of a moulded cylindrical outer cladding of aluminium that surrounds a steel pole core and has within itself tracks or channels to accommodate and hold horizontal members and attached items.

There were extensive references in the evidence and in the judgment to "S1", S2" and "S3" poles and extrusions; and to the "Adepole". The "Adepole" was a pole used in the City of Adelaide.

The development of the relationship between the parties

The City developed the Smartpole technology and put the system into effect in parts of Sydney in the period leading up to the 2000 Olympic Games. Streetscape played a part in that activity. In May 1999, the City called tenders for the manufacture and supply of Smartpoles to the City's specifications. Streetscape responded to this invitation and, in the course of doing so, described various ways in which it considered that it could be of assistance to the City.

Streetscape's tender was successful. A contract for the supply of Smartpoles by Streetscape to the City was entered into in March 2000.

At the conclusion of that supply, Streetscape sought and obtained an informal concession from the City under which it could exploit the Smartpole system in return for a royalty for every pole sold by Streetscape to third parties. This arrangement was developed over time through correspondence.

The next phase of the parties' relationship began in July 2001 when the City called tenders for a licence to manufacture and distribute Smartpoles. Streetscape responded in August 2001, offering to enter into a worldwide distribution agreement. The tender was not accepted but negotiations between the City and Streetscape ensued. Matters under discussion included the territory to which a licence would extend.

In November 2001, the City - apparently as a temporary measure - appointed Streetscape as its authorised representative in Australia for the distribution and sale of Smartpoles. After a period of further negotiation and discussion, the licence agreement between the City and Streetscape was concluded in August 2002.

The City's claims at first instance

The City's claims against Streetscape were based on allegations of breach of contract, breach of fiduciary duty, breach of an equitable obligation of confidence and contravention of s 52 of the Trade Practices Act 1974 (Cth). The City sought a range of relief including declarations, injunctions, damages, equitable compensation, account of profits and statutory rescission of a particular contract.

The City alleged against Mr Obeid that he had breached an equitable obligation of confidence binding on him personally and that he was knowingly involved in or party to Streetscape's breach of fiduciary duty and breach of confidence, with the result that he too was liable to render equitable compensation.

The essence of the City's allegation was that the Smartpole technology had been exploited by Streetscape (at the instigation of Mr Obeid) beyond the limits allowed by the licence agreement.

Streetscape cross-claimed against the City. It asserted rights of ownership in certain intellectual property and that it had been misled by certain representations made by the City.

The outcome in brief

The primary judge upheld the City's claims (with one exception) and rejected Streetscape's cross-claim. The orders were, in substance:

(a) an order that Streetscape be permanently restrained from manufacturing, distributing, offering for sale or selling certain poles and related items;

(b) an order that Streetscape be permanently restrained from disclosing and using certain information, from employing certain methods of manufacture and from using a particular registered design;

(c) an order that Mr Obeid be permanently restrained from causing or permitting Streetscape to do the things enjoined by (a) and (b) above;

(d) an order that Streetscape deliver up certain documents and other items;

(e) an order that the second of the deeds varying the licence agreement be itself varied;

(f) judgment against Streetscape for $9,376,043.64 plus interest of $2,747,426.45;

(g) judgment against Mr Obeid for the same amount.

Conclusions central to this result included

(a) that Streetscape was guilty of breach of contract;

(b) that Streetscape owed a fiduciary duty to the City and breached that duty;

(c) that each of Streetscape and Mr Obeid owed to the City an equitable duty of confidence, which duty each of them breached;

(d) that Mr Obeid was knowingly concerned in or party to the breach by Streetscape of its fiduciary duty and the equitable duty of confidence owed by it; and

(e) that Streetscape engaged in misleading or deceptive conduct in relation to the second of the deeds varying the licence agreement.

There was no finding that Mr Obeid induced the breach of contract committed by Streetscape.

The main issues on appeal

Streetscape and Mr Obeid challenge the primary judge's decision on numerous grounds. Two particular matters are, however, at the forefront of the appeal. Streetscape and Mr Obeid say that the judge's findings of breach of fiduciary duty and breach of an equitable obligation of confidence (as well as the consequential finding of knowing involvement or complicity in such breaches by Mr Obeid) were erroneous.

These two challenges, if successful, would eliminate the liability of Mr Obeid. They would displace the finding of breach of fiduciary duty by Streetscape (and thus the foundation for the finding of accessorial liability of Mr Obeid), the finding of breach of an equitable duty of confidence by Streetscape (and likewise the basis for the finding of accessorial liability of Mr Obeid) and the finding of breach by Mr Obeid of an equitable duty of confidence binding on him.

Success in the two challenges would not, however, eliminate the liability of Streetscape. The substantial money judgment against Streetscape was on account of breach of contract, as well as breaches of equitable obligations, with no dissection or differentiation as among the several wrongs found by the judge.

Other aspects of the appeal by Streetscape and Mr Obeid concern the second deed amending the licence agreement and the order the judge made under the Trade Practices Act varying the terms of that deed. This aspect concerns the Adepole.

There is a cross-appeal by the City. It also concerns the Adepole. The City says that the judge misconstrued the second deed of variation and should have found that the intellectual property in the Adepole belonged to the City (not Streetscape) and that Streetscape had only a royalty-free licence to manufacture and sell that type of pole either indefinitely or for a particular period.

The case at trial

The issues raised on appeal and, in particular, those concerning breach of fiduciary duty and an obligation of confidence are best understood against the background of the way in which the case at trial was formulated.

The City's sixth further amended commercial list statement ran to 65 pages. It is sufficient, at this point, to outline its principal features.

The sixth further amended commercial list statement began by pleading the licence agreement of August 2002 in relation to intellectual property owned by the City. The provisions regarding payment of licence fees by Streetscape were referred to, as were those concerning royalty obligations and the requirements that Streetscape furnish quarterly statements concerning poles manufactured and sold by it during the period. There were allegations that Streetscape had not made payments required to be made and that it had not duly furnished quarterly statements.

The City then pleaded the terms of the agreement concerning the geographical area to which the licence extended (Australia, New Zealand and Spain), an implied term that Streetscape would not manufacture or sell outside those areas and an implied term of good faith performance. Breaches were alleged by reference to alleged conduct of Streetscape in Singapore.

In the next part of the pleading, the City

(a) pleaded express terms forbidding use and disclosure of the intellectual property (except in exercise of the licence) without the consent of the City;

(b) pleaded that, in addition or in the alternative, Streetscape owed the City "a fiduciary duty to act for or on behalf of or in the interest of" the City in respect of Streetscape's use of the intellectual property, confidential information and product manual and specification documents associated with the licence agreement;

(c) pleaded that, in addition or in the alternative, Streetscape "and/or" Mr Obeid owed the City "an equitable obligation not to disclose or make use of" the intellectual property, confidential property and documents "other than in accordance with the terms of the licence agreement";

(d) pleaded an express term that Streetscape would not "perform or permit any act likely to prejudice or damage" the City; and

(e) alleged breaches of these terms and duties by reason of certain conduct in and about the manufacture and sale of Smartpoles in the United Arab Emirates.

Then followed allegations of like breaches in connection with activities in China, Hong Kong and Bahrain.

The City next concentrated on the second deed of variation. That deed contained a schedule setting out all items to which the City's rights extended and for which Streetscape would be required to pay royalties. It also made provision for a "transition plan" under which, in the closing stages of the enlarged term, Streetscape would deliver certain items to the City (apparently to facilitate the City's assuming the position that Streetscape had occupied). It was alleged that Streetscape failed to deliver the items to the City as required and otherwise to comply with the "transition plan".

Further and in like vein, there were allegations of breach by Streetscape of provisions of the licence agreement requiring delivery up of certain things to the City following termination of the licence agreement. These allegations extended, in particular, to moulds for the manufacture of Smartpoles.

The City alleged that, after 31 August 2009 (the date to which the term of the licence agreement had been extended by the second deed of variation), Streetscape continued to use the City's intellectual property and confidential information; and that by doing so it breached express and implied terms of the licence agreement and the fiduciary duty and duty of confidence previously pleaded.

In relation to Mr Obeid, the pleading alleged knowledge by him of the terms of the agreement, that he induced or procured the several breaches of the agreement by Streetscape, that he himself breached an obligation of confidence binding on him and that he assisted or was knowingly involved in breaches of fiduciary duty and confidence by Streetscape.

The judgment - preliminary

After introductory remarks, the judge outlined the City's claims and the relief it sought. He then provided a similar outline of the cross-claim. Attention was next directed to the poles, the way they were made and the purposes they served, with distinctions drawn between several different types of pole within the "Smartpole" description.

The judge then made (at [37] to [187]) an extensive review of the evidence given by the witnesses, as well as observations on credibility. The observations were negative in relation to three of Streetscape's witnesses (Mr Obeid, Daniel Joseph and Gerard Obeid).

The next section of the judgment ([188] to [195]) dealt with rejection of certain parts of the evidence tendered in the defendants' case.

At [196] to [213], attention was directed to one of the issues raised by the cross-claim, that is, whether the City, as a local government authority created by statute, had power to enter into the various transactions with Streetscape. The judge decided that the defendants' ultra vires contentions were unsupportable.

The next question (addressed at [209] to [220]) also arose from the cross-claim, namely, whether the licence agreement was void for uncertainty because a specification and product manual referred to in it as being attached were not in fact attached. The judge answered that question in the negative.

There was then discussion, at [221] to [262], of particular poles (the "S2", "S3" and "Adepole"), certain activities concerning tendering, the letting of contracts and other matters concerning poles in the period 1999 to 2001 and improvements made to various designs after the licence agreement had been entered into in August 2002. These matters went to the question of ownership of certain items of intangible property as between the City and Streetscape. The general conclusion was that such ownership was with the City.

Moving to a new matter, the judge said (at [263] of the judgment):

"An important submission advanced by the defendants was that the City did not particularise what material was confidential and even if it did, the material did not have the necessary character of confidence. The defendants' proposition was that they could not have breached their contractual or equitable obligations by disclosing such information."

In relation to that submission, the judge began by referring to the licence agreement's definition of "confidential information" and to provisions that excluded from the operation of the agreement certain types of information within that definition. Reference was then made to the defendants' submissions concerning the construction of those provisions and the argument that any implied term could not arise above the express terms on the subject.

The matter of an equitable obligation of confidence was taken up again later in the judgment (see [60] and following below).

The next section of the judgment ([270] to [273]) dealt with the City's allegation that Streetscape breached the licence agreement by continuing to produce poles after the expiry of the licence and Streetscape's response, first, that the poles it produced were not Smartpoles as such and, second, that the agreement provided no protection for the City after expiry of the licence period. Both of Streetscape's arguments were rejected.

Attention was then directed, at [274] to [308], to the deeds of variation and Streetscape's contention that it had entered into them in reliance on representations by the City that were misleading or deceptive. After an examination of the evidence relevant to this, the judge concluded that Streetscape's allegations were not made out; also that the alleged representations were not contractual and did not give rise to any estoppel.

The judgment - clause 5(a) and the Adepole

Issues concerning clause 5(a) of the second deed of variation and ownership of the intellectual property relevant to the Adepole were dealt with by the primary judge at [309] to [352] of the judgment. His Honour decided that, according to the deed of variation on its proper construction, the intellectual property in the Adepole was owned by Streetscape, not the City.

This section of the judgment also dealt with the issue of misleading or deceptive conduct by Streetscape in and about the negotiation and execution of the second deed of variation. His Honour made findings adverse to Streetscape on that aspect and made an order under the Trade Practices Act varying the second deed of variation.

I shall defer further reference to the findings and decision on these matters. They are best taken up in discussion of the submissions on the relevant aspects of Streetscape's appeal and the City's cross-appeal and notice of contention.

The judgment - findings about sales outside Australia

The next section of the judgment, commencing at [353], concerns factual findings about the sale of Smartpoles outside Australia.

At [433] of the reasons, the judge found that:

"(1) Streetscape Projects established a business in the United Arab Emirates (UAE) under the name Streetscape International for the purpose of manufacturing and selling 'Smartpole' poles in the UAE and elsewhere in the Middle East;

(2) Streetscape Projects vested knowledge, skills and intellectual property relating to the 'Smartpole' poles in Streetscape International for the purpose of manufacturing and selling 'Smartpole' poles in the UAE and elsewhere in the Middle East;

(3) Streetscape International used that knowledge, skill and intellectual property to manufacture and sell 'Smartpole' poles in the UAE and elsewhere in the Middle East commencing in and continuing after 2003;

(4) Streetscape International's business continued between 2004 and 2007 with the involvement of Streetscape Projects and Streetscape International entered into numerous contracts with the supplier of 'Smartpole' poles within the UAE and the Middle East."

The judgment - fiduciary duty

The judge next dealt with the fiduciary duty matter in three sections. The first dealt with facts. The second dealt with legal principles. The third dealt with breach. At the outset, however, the judge announced an overall finding that a fiduciary duty was breached by Streetscape because of the conduct described in (1) to (4) of [433] set out above; and that Mr Obeid was knowingly concerned in that breach.

In the part of the subsequent discussion concerning facts, the judge said (at [436] to [438]):

"[436] The relevant pleadings concerning breach of fiduciary duty are at paragraphs 30A, 40, 45B - 45D of the plaintiff's commercial list statement.

[437] The facts said to give rise to Streetscape's fiduciary duty are:

(1) Streetscape owed the City a fiduciary duty to act for or on behalf of or in the interests of the City in respect of Streetscape's use of Intellectual Property, Confidential Information, Product Manual and Specifications;

(2) The plaintiff provided particulars of this fiduciary duty in a letter to the defendant's solicitors dated 12 July 2011. The particulars included that the fiduciary duty arose in circumstances where the Intellectual Property, Confidential Information, Product Manual and Specifications was property which was owned by the City and had been provided to Streetscape on a limited basis. In those circumstances, Streetscape was obliged to act for the City in all respects concerning its use and disclosure of the Information and was not, without the authority and consent of the City, permitted to obtain a benefit for itself, or to assist third parties to obtain a benefit for themselves from such use and/or disclosure or to be in a position of conflict in relation to the use and/or disclosure of the same;

(3) These obligations were breached in the circumstances listed below;

(4) Mr Moses Obeid was knowingly involved in or a party to the breach of fiduciary duty;

(5) Damages are pleaded at paragraphs 42A and 46 of the commercial list statement;

(6) The facts, matters and circumstances evidencing the fiduciary duty include the circumstances relating to Streetscape's Tender 9912, the Interim Licence Agreement, Streetscape's Tender 0115 and the Licence Agreement itself;

(7) Streetscape initially obtained authorised access to the Intellectual Property, Confidential Information, Product Manual and Specifications (all as defined in the Licence Agreement) pursuant to Tender 9912 in the circumstances referred to in paragraphs 114-127 commercial list statement. In its tender, Streetscape sought to deal with the City on the basis that it would act in the City's interests in the exploitation of the 'Smartpole' System and envisaged an exploitation of the City's interest in the 'Smartpole' System and a relationship between the City and Streetscape which extended beyond the immediate supply of 'Smartpole' poles under that Tender such that the City would be in a position to obtain a further return on its investment in the 'Smartpole' System;

(8) In this regard, the tender included a document entitled 'Streetscape Vision Statement' in which Streetscape refers to its proposed 'Mission' to be the 'custodian' of the 'Smartpole' pole on behalf of the City and to provide to the City 'a total asset management service in respect of the 'Smartpole' System and to manage all aspects of the engineering, supply, roll out, management, maintenance and marketing of the 'Smartpole' System on behalf of the City; and proposing, as part of the 'commercialisation' of the 'Smartpole' System, to market the 'Smartpole' System to other major Australian and international public works projects enabling the City to obtain a return on its investment, stating that it is in the best position to successfully market 'Smartpole' poles to domestic and international third party customers 'on behalf of COS'. It also stated that the primary objective in the establishment of Streetscape was to provide support to the City in respect of its implementation of the 'Smartpole' program;

(9) The Interim Licence Agreement was entered into against a background of correspondence which confirmed that Streetscape had acted and would continue to act in relation to the 'Smartpole' System in accordance with the role it had envisaged in the 'Streetscape Vision Statement'. Under the Interim Licence Agreement, Streetscape sought and obtained interim authority from the City to market and supply the 'Smartpole' System in Australia and overseas on behalf of the City. In obtaining and acting under the Interim Licence Agreement, Streetscape professed to the City that it had and would act in good faith and in the best interests of the City and as a partner with the City in relation to the exploitation of the 'Smartpole' System;

(10) Streetscape also obtained access to the Information pursuant to tender 0115 in the circumstances. In its tender, Streetscape stated that it had developed a sophisticated marketing strategy and was ideally placed 'to continue its efforts in the promotion of the Smartpole System on behalf of the City of Sydney, both nationally and internationally' and proposed itself as taking the role of 'protector of the intellectual property';

(11) Notwithstanding that from 9 October 2001 the negotiations between the parties proceeded on the basis that the proposed Licence Agreement would be limited to Australia, New Zealand and Spain, Streetscape continued to carry on its marketing activity;

(12) The Licence Agreement was executed in August 2002. Although the licence was limited to the sale and manufacture of 'Smartpole' poles in Australia, New Zealand and Spain, the Licence Agreement did not prohibit Streetscape from promoting and marketing the 'Smartpole' poles in other territories or to seek out prospective contracts in those territories. However, if Streetscape wished to use the Information to manufacture and sell 'Smartpole' poles outside Australia, New Zealand or Spain and to distribute in other territories, it required the authority and consent of the City to do so; and

(13) There are clauses in the Licence Agreement which are consistent with Streetscape carrying on promotional activities outside the prescribed territories:

(a) Clause 12.4 which provides that Streetscape Projects is to take steps it considers reasonable in relation to the defence of intellectual property in the 'Smartpole' pole outside Australia; and

(b) clause 15.5 provides that if Streetscape Projects distributes the 'Smartpole' pole in any area which is not authorised by the Licence, that the City may recover as a debt due an amount calculated by reference to certain annual licence fees and royalty rates.

[438] Other circumstances relevant to the existence of a fiduciary duty include the terms of the Licence Agreement itself which reflect the dependence by the City upon Streetscape using the Information which the City had provided to it in conformity with the limited purposes for which it was provided. In this respect, the City was unable to supervise or control the manner in which the Information was used by Streetscape so as to ensure that it was only used for the purposes for which it had been provided."

In relation to legal principles, the judge quoted several passages in the judgments in Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41. He referred also to Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) [1984] HCA 73; [1984] 156 CLR 414 and Elecon Australia Pty Ltd v Brevini Pty Ltd [2009] FCA 1327; (2009) 263 ALR 1. Then followed this conclusion (at [449]):

"The Court accepts that the factual circumstances referred to above give rise to Streetscape owing a fiduciary duty to the City to act for and on behalf of the interests of the City in respect of the Information. In this respect, Streetscape was obliged to act for the City in all respects in relation to its use and disclosure of the Information and was not, without the authority and consent of the City, permitted to obtain a benefit for itself, or to assist third parties to obtain a benefit for themselves, from such use and/or disclosure or to be in a position of conflict in relation to the use and/or disclosure of the same."

In the third section of his treatment of the fiduciary duty matter (concerning breach), the judge said (at [450]):

"The evidence before the Court establishes the following :

(1) Streetscape Projects (and Mr Moses Obeid) knew of the terms of the Licence Agreement.

(2) Streetscape Projects (and Mr Moses Obeid) knew that it was not permitted to:

(a) use the Information other than in accordance with the terms of the Licence Agreement;

(b) use or disclose the Information to commence or carry on a business, or to assist a third party to commence and carry on a business, in the United Arab Emirates, which included the manufacture of 'Smartpole' poles and the supply of those 'Smartpole' poles in the United Arab Emirates;

(c) use or disclose the Information for the purposes of manufacturing and selling, or alternatively assisting a third party to manufacture and sell 'Smartpole' poles in the United Arab Emirates; or

(d) enter into any agreement with a third party whereby the third party would receive the Information for the purposes of manufacturing and selling 'Smartpole' poles in the United Arab Emirates.

(3) Streetscape Projects (and Mr Moses Obeid) knew that if Streetscape Projects manufactured and sold 'Smartpole' poles in the United Arab Emirates it would be required to pay royalties to the City of Sydney in relation to such sales.

(4) During 2002 and 2003, Streetscape Projects established a business in the UAE under the name Streetscape International for the purpose of manufacturing and selling 'Smartpole' poles in the UAE and elsewhere in the Middle East.

(5) Streetscape Projects vested knowledge, skills and intellectual property relating to the 'Smartpole' poles in Streetscape International for the purpose of manufacturing and selling 'Smartpole' poles in the UAE and elsewhere in the Middle East.

(6) Streetscape International used that knowledge, skill and intellectual property to manufacture and sell 'Smartpole' poles in the United Arab Emirates and elsewhere in the Middle East commencing in and continuing after 2003.

(7) The business of Streetscape International between 2004 and 2007 continued with the involvement of Streetscape Projects and Streetscape International entered into numerous contracts for the supply of 'Smartpole' poles within the United Arab Emirates and the Middle East.

(8) Streetscape Projects (and Mr Moses Obeid) knew of their conduct and the conduct of Streetscape International and took no steps to either inform the City of Sydney of that conduct, Streetscape International's conduct or to prevent Streetscape International from engaging in the conduct.

(9) The City received no benefit and was offered no benefit. It was entitled to prevent the conduct because it was a use outside the Licence Agreement. Streetscape Projects and Streetscape International obtained a benefit without reference to the City.

(10) Mr Moses Obeid assisted and/or was involved in Streetscape Projects' breach of fiduciary duty.

(11) The conduct of Streetscape Projects and Mr Moses Obeid referred to above was contrary to normal acceptable standards of honest conduct. An honest person would not have engaged in such conduct.

(12) Mr Moses Obeid was knowingly involved in or a party to the breach of the fiduciary duty by Streetscape Projects and is liable for such breaches. In this respect, the breaches were the consequence of deliberate conduct on the part of Streetscape Projects carried out for its own purposes inconsistently with the rights which accrued to the City in respect to each such duty and hence dishonest and fraudulent breaches of duty and/or the assistance and involvement of Mr Moses Obeid was the consequence of deliberate conduct on the part of Mr Moses Obeid carried out for his own purposes inconsistently with the rights which accrued to the City with respect to each such duty and hence was dishonest and fraudulent."

After thus finding that Streetscape breached a fiduciary duty that it owed the City, the judge moved to the matter of Mr Obeid's knowing complicity in Streetscape's breach of fiduciary duty. After referring to Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 and the general requirement that a court see "that a case of fraud is clearly proved", the judge stated the following conclusion:

"For the reasons set out above, having carefully considered the whole of the evidence placed before the Court in relation to the plaintiff's fiduciary case against Mr Obeid, the finding is that the case has been made out to the requisite standard."

The judgment - equitable obligation of confidence

The judge's treatment of the issues concerning an equitable duty of confidence appears at [458] to [460] of the judgment. There is reference first to the pleaded case as follows under a heading "The Pleadings":

"[458] Streetscape and Mr Moses Obeid owed the City an equitable duty not to disclose the Intellectual Property, the Confidential Information, the Product Manual and the Specification ('the Information') other than in accordance with the terms of the Licence.

[459] Breach of the duty of confidence by Streetscape is pleaded in paragraph 40 of the commercial list statement and breach by Mr Moses Obeid is pleaded at paragraph 45A. Paragraphs 45B to 45D also plead Mr Moses Obeid's knowing involvement in the breach of Duty of Confidence by Streetscape.

[460] Damages are pleaded in paragraph 42A commercial list statement against Streetscape and at paragraph 46 of the commercial list statement against Mr Moses Obeid."

The terms "Intellectual Property", "Confidential Information", "Product Manual" and "Specification" (all with initial capital letters) are defined in paragraph 30B of the sixth further amended commercial list statement. Each is said to have the same meaning as in the licence agreement. By importing the same terms into [458] of his reasons (and using initial capital letters), the judge obviously intended to adopt the defined meanings.

Paragraph [461] of the reasons was in these terms:

"Particulars concerning the circumstances in which the duty of confidence arose are given at paragraph 30B of the commercial list statement. The particulars refer to the confidentiality clauses pertaining to Tender 9912, the 2000 Agreement, Tender 0115 and the License Agreement."

Paragraph 30B of the sixth further amended commercial list statement was in these terms:

"Further or in the alternative to paragraphs 29, 30 and 30A above, Streetscape Projects and/or Moses Edward Obeid owed the City of Sydney an equitable duty not to disclose or make use of the:

(a) Intellectual Property (as defined in the Licence Agreement) used in the manufacture and supply of Smartpoles;

(b) Confidential Information (as defined in the Licence Agreement);

(c) Product Manual (as defined in the Licence Agreement) and/or

(d) Specification (as defined in the Licence Agreement).

other than in accordance with the terms of the Licence Agreement."

Particulars to paragraph 30B refer to the circumstances in which the items referred to in sub-paragraphs (a) to (d) of that paragraph were communicated to Streetscape under and for the purposes of the licence agreement and the circumstance that those items thereby became known to Mr Obeid, who was the director of Streetscape and knew the terms of the licence agreement.

Sub-paragraphs (a) to (d) of paragraph 30B of the pleading made use of the following definitions in the licence agreement:

"Intellectual Property means any and all inventions, discoveries, patents, trade marks, designs (whether registered or unregistered), copyright (including any copyright in any computer software or hardware or any works associated with such software or hardware), technical know-how and commercially sensitive or valuable information and all other proprietary rights (whether registered or unregistered) and whether existing now or in the future which subsist in relation to the 'Smartpole' poles."

"Confidential Information means all ideas, concepts and information concerning the Intellectual Property disclosed by the Licensor to the Licensee, including all information contained in the Specification and the Product Manual."

"Product Manual means the manual for the assembly, configuration and installation of the Smartpole poles and their accessories annexed to this Agreement and marked 'B', as that manual may be developed, refined or improved during the Licence Period."

"Specification means the specification annexed to this Agreement and marked 'A' as that specification may be developed, refined or improved during the Licence Period."

At [462] to [467] of the reasons, the judge referred to equitable principles concerning duty of confidence. Then, at [468] under a heading "Application of principles to Streetscape and Mr Moses Obeid", he said:

"The three elements of a breach of an equitable Duty of Confidence identified by Megarry J in Coco v AN Clark (Engineers) Ltd [1969] RPC 41 at 47, are as follows:

(1) The information must 'have the necessary quality of confidence about it;';

(2) the information must have been imparted in circumstances importing an obligation of confidence; and

(3) there must have been an unauthorised use of that information to the detriment of the party who communicated the information."

From there, the judge proceeded to address the three elements in turn. In relation to the first element, he said (at [469] to [471]:

"The quality of confidence in the Information (which included the Product Manual and Specifications) is readily apparent from the circumstances surrounding Tender 9912, the 2000 Agreement, Tender 0115 and the Licence Agreement. In each circumstance, there was recognition of the confidential nature of the Information being provided by the City.

Further, Streetscape and Mr Moses Obeid understood the commercially valuable nature of the information provided and the importance of maintaining its confidential nature.

Streetscape and Mr Moses Obeid well understood that the Information was provided on a confidential basis, was not to be disclosed to other parties and was only to be used for the purposes which had been identified."

The significance of the reference at [469] to Tender 9912 and the 2000 Agreement is illuminated by an earlier finding (at [236]):

"I accept that by reason of the preceding paragraphs and pursuant to clause 8.3 of the 2000 Agreement, the Tender 9912 6400 Issue A Drawings and the 6400 Issue B Drawings:

(1) are the property of the City of Sydney;

(2) must be returned by Streetscape Projects to the City of Sydney on demand in writing; and

(3) shall not be disclosed, used, copied or reproduced for any purpose other than the execution of the work under the 2000 Agreement, without the prior written approval of the City of Sydney."

The reference at [236] to the "preceding paragraphs" points back to contractual provisions under which Streetscape undertook to the City not to disclose, use or reproduce particular material except in pursuing certain courses consistent with contractual obligations.

The judge's ultimate finding as to the equitable duty of confidence (at [458]) was:

"Streetscape and Mr Moses Obeid owed the City an equitable duty not to disclose the Intellectual Property, the Confidential Information, the Product Manual and the Specification ('the Information') other than in accordance with the terms of the Licence."

It is unnecessary to deal, at this point, with the judge's treatment of the second and third elements.

The judgment - relief

After dealing with the matter of injunctive relief, the judge referred to the City's claim for damages (at [496]):

"The City also seeks damages against Streetscape in relation to the post 1 September 2009 sales. Damages are sought on the three alternative bases. They are breach of clause 7.2 of the Licence Agreement (paragraphs 78 and 79 of the sixth further amended commercial list statement); breach of the agreements which pre-date the Licence Agreement (paragraph 80A(b) of the sixth further amended commercial list statement) and breach of equitable duties (paragraphs 80E and 80F of the sixth further amended commercial list statement). Damages are also sought against Moses Obeid for breach of equitable duty to the City in relation to those sales (paragraphs 85F-85I of the sixth further amended commercial list statement)."

Findings were recorded (at [507]):

"The findings are as follows :

(1) The City, in addition to injunctions, is entitled to damages for the breaches of agreement/breach of equitable duties.

(2) The appropriate orders to be made against Streetscape Projects and Moses Obeid are orders to pay damages and/or equitable compensation in relation to Streetscape Projects' distribution of " Smartpole " poles and the other poles which the City owns after 1 September 2009.

(3) Streetscape Projects was prohibited from using the Intellectual Property after 1 September 2009 without the prior written consent of the City. The City was entitled to an injunction restraining Streetscape Projects from using the Intellectual Property without its consent.

(4) The price for that consent would have been royalties. Clause 15.5 of the Licence Agreement evidences the appropriate measure of those royalties and the price for the City's consent to use the Intellectual Property.

(5) The equitable duties owed by Streetscape Projects and Moses Obeid to the City required that they obtain the authority of the City before using the property of the City to manufacture and sell Smartpole poles in the UAE or Singapore. The consent of the City would not have been forthcoming without an undertaking to pay royalties and licence fees. The Licence Agreement contemplates the measure of those royalties and fees in clause 15.5 which evidences the amounts that would be payable as the price for that consent.

(6) This is in conformity with the particulars of the City's claim. Paragraph 42A of the Commercial List Statement particularises the loss for breach of equitable duty (pleaded in paragraph 40) as "loss of opportunity to obtain royalties and other fees from Streetscape International in respect of the use of Intellectual Property and the Confidential Information" (emphasis added). Paragraph 39 of the Commercial List Statement pleads that the business of Streetscape International was derived from Streetscape Projects and was carried on for and on behalf of Streetscape Projects. Accordingly, the loss is the loss of royalties and licence fees from Streetscape Projects itself."

There was then an analysis of sales records and a quantification of proceeds obtained by Streetscape (this was refined and amplified in a subsequent judgment).

The method of calculating damages was stated (at [509]):

"The damages for either breach of clause 7.2 Licence Agreement, breach of the terms of the pre-licence agreements or breach of equitable duties is calculated by applying the rate provided in clause 15.5 to the total sales of poles owned by the City following the expiry of the Licence Agreement. That amount is $3,364, 393.38 ($3,379,053.08 - $14,659.70 for sales of Adepoles in Adelaide). Royalties is 10% of that amount or $336, 439.34 plus any applicable license fee."

Questions about delivery up and other matters were then addressed.

The licence agreement

It is necessary, at this point, to refer to the provisions of the licence agreement between the City as licensor and Streetscape as licensee. The core provision is clause 2.1:

"The Licensor grants to the Licensee a licence to use the Intellectual Property in the Territory for the Licence Period subject to the terms and conditions of this Agreement."

Clause 2.2 provides:

"The licence operates exclusively or non-exclusively, or in a combination of exclusivity or non-exclusivity, as specified in Item 8."

The "Territory" and the specifications of exclusivity and non-exclusivity are

Australia - exclusive

New Zealand - exclusive

Spain - non-exclusive.

Clause 2.1 refers to the "Intellectual Property". The definition of "Intellectual Property" is in clause 1.1 and is set out at [65] above.

The definitions of "Product Manual" and "Specification" in clause 1.1 are also set out at [65] above.

The "Licence Period" was an initial period of five years computed from the date of the agreement (August 2002). Provision was made for extension in certain circumstances. These matters are dealt with in clause 3.

Streetscape, as licensee, was required to pay both an annual licence fee and a royalty calculated by reference to quantities of Smartpoles manufactured and sold during each calendar quarter. Detailed provision was made for the keeping of financial records by Streetscape and the provision by it of financial and other information relevant to the calculation of royalties. These and other financial matters were dealt with by clauses 4, 5 and 6.

Clause 7, headed "Ownership of intellectual property", contained provisions binding on Streetscape as licensee, include the following:

"7.1 The Licensee acknowledges that the Licensor is the proprietor of all Intellectual Property subsisting in the Smartpole poles and that the Licensee will have no rights in respect of the Intellectual property except as granted under this Agreement.

7.2 The Licensee shall not use the Intellectual Property except for the purposes of this Agreement without the prior written consent of the Licensor.

7.3 The Licensee may not place any logo or trade mark on the 'Smartpole' poles without the prior written consent of the Licensor. The Licensee shall affix to the 'Smartpole' poles any copyright notice or other notice as may be specified by the Licensor from time to time.

7.4 All material Improvements made by the Licensor, the Licensor's agent, the Licensee or the Licensee's agent during the Licence Period will be owned by the Licensor and the Licensee agrees to assign and must procure the assignment of such Improvements made by it or its agent during the Licence Period.

...

7.8 During the Licence Period, the Licensee will provide the Licensor with written information including all relevant technical information relating to material Improvements made by the Licensee or the Licensee's agent within a reasonable time and this information will contain sufficient detail to enable the Licensor to apply the Improvements without undue experimentation. Such amendments shall not be made without the prior written consent of the Licensor if they affect the physical appearance of the Smartpole poles."

Clause 8, headed "Moulds", is as follows:

"8.1 The Licensee acknowledges and agrees that the Licensor is or will be the proprietor of all moulds for the Smartpole poles.

8.2 If at the Licence Commencement Date the Licensee has possession of moulds manufactured for the purposes of any prior agreement between the Licensor and the Licensee, the Licensee will either:

(a) pay a fee nominated by the Licensee and accepted by the Licensor for the continued right to use the moulds; or

(b) deliver up the moulds referred to in clause 8.1 at a location nominated by the Licensor within the greater metropolitan area of Sydney and the Licensee shall as soon as practicable after receiving such a request from the Licensor deliver up the moulds to the Licensor."

Clause 9 is headed "Confidentiality undertakings" and is as follows:

"9.1 The Licensee undertakes at all times to use all Confidential Information solely for the purposes of the Agreement except with the prior written consent of the Licensor.

9.2 The Licensee undertakes that it will not at any time during and subsequent to the Licence Period, directly or indirectly, without the prior written consent of the Licensor use, disclose or publish any Confidential Information for any purpose, except for or in connection with the proper and lawful commercial exploitation of the Licensee's rights under this Agreement.

9.3 The provisions of this Agreement do not apply to any Confidential Information which:

(a) the Licensee can prove was already in the Licensee's possession prior to disclosure by the Licensor to the Licensee pursuant to this Agreement;

(b) is disclosed by the Licensee pursuant to a prior written consent from Licensor to any person authorised by the Licensor;

(c) is disclosed subsequent to the Licence Commencement Date to the Licensee without any obligation of confidence by a third party, excluding where that third party has obtained received or derived that Confidential Information directly or indirectly from the Licensor; and

(d) is or becomes generally available to the public in printed publications in general circulation through no act or default on the part of the Licensee or any agent of the Licensee."

The expression "Confidential Information" was defined in clause 1.1 as follows:

"'Confidential Information' means all ideas, concepts and information concerning the Intellectuial Property disclosed by the Licensor to the Licensee, including all information contained in the Specification and the product Manual."

Clause 11 headed "Licensee's undertakings" is:

11.1 The Licensee must at all times during the Licence Period:

(a) keep in full force and effect all Authorisations necessary or desirable for performance of the obligations under this Agreement;

(b) observe and comply with all laws relating to the performance of its obligations under this Agreement;

(c) keep complete, up-to-date and accurate accounting books and records and statistical information relating to the performance of its obligations, including (without limitation) records which enable proper verification of the Royalty payable by the Licensee to the Licensor pursuant to this Agreement;

(d) use its best efforts to promote the sale of the Smartpole poles and take into account any reasonable and proper suggestion or direction of the Licensor in relation to sales, promotion and marketing;

(e) assist, to the extent possible, any action taken by or on behalf of the Licensor to protect the Licensor's Intellectual Property.

11.2 The Licensee must not at any time during the Licence period, except with the prior written consent of the Licensor;

(a) represent or hold out to any person in any manner that the Licensee is an employee, agent, partner or joint venturer of the Licensor;

(b) perform, omit or permit any act likely to prejudice or damage the Licensor;

(c) raise, or cause to be raised, on any ground or for any reason of any nature or description any objection or challenge to the legal title of the Licensor in or to the Intellectual Property."

The City, for its part, gave certain promises in clause 12. It promised to take reasonable steps to defend intellectual property in the Smartpole poles within Australia and to assist the protection of the intellectual property by Streetscape elsewhere. The intellectual property remained the property of the City.

The agreement ran to 28 clauses and one schedule in all, covering 20 pages. There is no need to refer to the other provisions, although clause 28 should be noted:

"The Licensee agrees that:

(a) nothing in this Agreement constitutes or is construed to constitute, the Licensee as the partner, agent, employee or representative of the Licensor;

(b) the Licensee has no power to incur obligations on behalf of, or pledge the credit of, the Licensor in any manner whatsoever; and

(c) the Licensee has no authority to act for, or to create, or assume any responsibility or obligation for, or on behalf of the Licensor."

Relevant provisions of the two deeds of variation will be referred to as necessary below.

Fiduciary duty - principles

The case propounded by the City at trial was that certain conduct of Streetscape in and about the use of the Smartpole system and technology and the manufacture and supply of poles was in breach of, first, the licence agreement, second, a fiduciary duty and, third, a duty of confidence. The three species of duty - contractual duty, fiduciary duty and duty of confidence - were put forward as co-extensive, at least to the extent (and in the sense) that the particularly alleged conduct was said to amount to breach of each duty.

The pleaded fiduciary duty is not an incident of any of the established fiduciary relationships recognised by equity. It is, rather, fact-based. The particular circumstances of the case are said to be the source of Streetscape's fiduciary responsibility to subordinate its own interests and to afford paramountcy to those of the City.

The claim founded on a fact-based fiduciary duty is made in circumstances where the parties chose to enter into a comprehensive written contract in August 2002, some three years after their relationship began. And the claim is framed in terms corresponding precisely with those of a duty created by the contract.

The City emphasised that, until the comprehensive written contract was made, the relationship had been relatively informal, particularly during the phase beginning in 1999 that preceded the execution of the licence agreement (see [12] to [16] above). The City argued that that informality, coupled with the respective roles of the parties (with one exploiting commercial advantages developed by the other and doing so in a largely unsupervised way), warranted a conclusion of fiduciary duty on Streetscape's part during the subsistence of the informal relationship. There is no need to decide whether such a duty existed during that period. The actions said to have amounted to breach of fiduciary duty occurred after the parties had entered into the licence agreement of August 2002; and it is to the relationship existing after the contract had been concluded that attention must be directed.

The main and obvious source of rights and obligations, from that point, was the comprehensive written contract. Streetscape had given, and the City had received, detailed and explicit promises regulating its right to turn the Smartpole technology to account and forbidding certain activities - chief among them exploitation of the product contrary to the contract's terms, including by sales outside the permitted territory.

A fiduciary duty may exist in a contractual setting. Reference need only be made to the following statement by Mason J in Hospital Products Ltd v United States Surgical Corporation (above) at 97:

"That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship."

Mason J continued (also at 97):

"In these situations it is the contractual foundation which is all-important because it is the contract that regulates the basic rights and liabilities of the parties."

And then:

"The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction."

The contractual terms are paramount. A fiduciary duty cannot detract from or contradict them. The two types of obligation - contractual and fiduciary - will, in general, co-exist only if and to the extent that the sanctions available for breach of contract (including any implied terms) are insufficient to deal with some possibility of unconscionable conduct to which one party is exposed.

The point is illustrated by Gummow J's discussion, in Scott v Davis [2000] HCA 52; (2000) 204 CLR 333 (at [229]), of the position of an agent as against his or her principal:

"A claim by the principal for moneys had and received by the agent to the use of the principal may be made in cases such as those where the principal has entrusted money to the agent for a particular purpose which the agent has not carried out. Likewise where the agent has received money on behalf of the principal. Equity supplements the common law respecting principal and agent and adds a further dimension to their relationship by treating the agent as a fiduciary who is disqualified from asserting against the principal rights unconscientiously acquired, and who also is bound to account for profits improperly made and, in some circumstances, to answer as a constructive trustee; further, the principal may have tracing remedies in respect of abuse by the agent of the fiduciary relationship." [citations omitted]

The common law provides a remedy by action for money had and received in the first two situations referred to by Gummow J, that is, where the agent receives money from the principal for a particular purpose which the agent does not carry out and where the agent receives money for the principal and does not hand it over. Beyond that, the common law remedy does not run in a case of bare agency and, as Gummow J put it, equity "supplements the common law" by adding "a further dimension to their relationship" by imposing fiduciary requirements upon the agent.

In Breen v Williams [1996] HCA 57; (1996) 186 CLR 71 (at 132), Gummow J referred to another but allied example. He cited partnership as an obvious relationship involving both contractual and fiduciary duties and said that the mere presence of a contract does not exclude the co-existence of concurrent fiduciary duties. At the same time, however:

"[A] contractual term may be so precise in its regulation of what a party may do that there is no scope for the creation of a fiduciary duty."

In Re E Dibbens & Sons Ltd [1990] BCLC 577 (at 582), Harman J took the view that the relationship between a warehouse company and customers for whom it stored furniture for reward was exclusively contractual and "no fiduciary obligation could usefully be added to the contractual obligations which arise between the parties".

A similar approach was taken in Re Goldcorp Exchange Ltd [1995] 1 AC 74. A bullion company had sold unsegregated gold forming part of a bulk on terms that it would be stored for buyers pending their requests for delivery. Those buyers had clear contractual rights. The Privy Council rejected the proposition that they were also the beneficiaries of fiduciary duties. Their Lordships accepted (at 98) that "the fact that one person is placed in a particular position vis-à-vis another through the medium of a contract does not necessarily mean that he does not also owe fiduciary duties to that other by virtue of being in that position". One argument put by the claimants was that the seller by whom their gold was stored in mingled form owed them fiduciary duties because of the trust they reposed in it to satisfy their entitlements. Their Lordships dealt with that argument thus (also at 98):

"But the essence of a fiduciary relationship is that it creates obligations of a different character from those deriving from the contract itself. Their Lordships have not heard in argument any submission which went beyond suggesting that by virtue of being a fiduciary the company was obliged honestly and conscientiously to do what it had by contract promised to do."

The following important point was then made:

"Many commercial relationships involve just such a reliance by one party on the other, and to introduce the whole new dimension into such relationships which would flow from giving them a fiduciary character would (as it seems to their Lordships) have adverse consequences far exceeding those foreseen by Atkin LJ in In re Wait [1927] 1 Ch 606. It is possible without misuse of language to say that the customers put faith in the company, and that their trust has not been repaid. But the vocabulary is misleading; high expectations do not necessarily lead to equitable remedies."

The adequacy of remedies for breach of contract is therefore, in general, the determinant of whether there is scope for equity to play a supplementing role by way of the imposition of a fiduciary duty upon a contracting party; and the mere fact that one party puts faith and trust in the other is not of itself sufficient to bring equity to centre stage in that way.

The City places particular reliance on the decision of the New Zealand Court of Appeal in Watson v Dolmark Industries Ltd [1992] 3 NZLR 311. That case concerned manufacture and distribution in New Zealand by Dolmark of plastic trays that Watson had been marketing in Australia. An oral agreement was made under which Dolmark was given sole rights in New Zealand and agreed to pay Watson a royalty of $2 per tray. Dolmark's principal (Davies) dishonestly concealed sales and created false invoices. Watson was successful at first instance upon a cause of action in contract and recovered a judgment for damages. Dolmark, however, was "not in a position to satisfy the judgment" and Watson, on appeal, pressed an alternative claim for breach of fiduciary duty by Dolmark and knowing involvement in the breach by Davies.

The Court of Appeal upheld that claim. Reference was made by Cooke P to Hospital Products Ltd v United States Surgical Corporation (above) and, in particular, to the following passage in the judgment of Mason J (at 101):

"HPI's position as custodian of USSC.'s product goodwill in Australia may be likened in a general way to that of a bailee whose duty is to protect and preserve a chattel bailed to him. It has been well recognized, at least since the judgment of Jessel M.R. in In re Hallett's Estate [(1880) 13 Ch D 696 at 708-9], that a bailee stands in a fiduciary relationship with the bailor when the bailor entrusts to the bailee goods to be held or dealt with by him for the benefit of the bailor or for certain limited purposes stipulated by the bailor."

Cooke P then said (at 315) of the case before him:

"Applying that principle, it can be seen that here the appellant entrusted to Dolmark property (namely the dies) and relied on Dolmark to deal with it for the benefit of the appellant (by way of royalties, though not of course for her exclusive benefit) or for purposes authorised by the appellant as well as Dolmark) and not otherwise. The entrusting of property means that there was more than an obligation to account, which is the analysis for which Mr Henry has contended. Sinclair J rejected the fiduciary argument because he thought that the appellant was never placed in a vulnerable position vis-a-vis the first respondent, given her immediate powers to uplift the dies and terminate the contract. I respectfully agree that vulnerability is an important, indeed cardinal, feature of a fiduciary relationship; but it seems to me to have existed here, for the appellant was dependent on the faithfulness of Dolmark for knowledge of the extent of manufacturing and marketing in New Zealand."

Gault J said (at 318):

"I respectfully differ from the learned Judge on his finding that no fiduciary duty arose. His view appears to have flowed from his finding of the terms of the verbal agreement between the appellant and the first respondent as to production and sale of articles made in the moulds. I consider that the bailment which involved entrusting the dies to the control of the first respondent in another country in circumstances leaving her dependent upon its good faith to employ them in accordance with the arrangement from which both were to benefit, gave rise to the fiduciary obligation to use those moulds for that purpose and not to use them for separate purposes of the first respondent. The very absence of express contractual terms governing the use of the moulds emphasises the element of trust involved."

Key factors identified were thus that there was only a "verbal agreement" (that is, there was no written agreement), the entrusting of the dies by Watson to Dolmark, the fact that Dolmark was "in another country in circumstances leaving [Watson] dependent on [Dolmark's] good faith to employ them in accordance with the arrangement from which both were to benefit" and the "very absence of express contractual terms governing the use of the moulds". The case was one of a bare and rudimentary contract the terms of which were not necessarily clear and provided little by way of safeguards for a licensor whose absence in another country meant that there was very limited ability to exercise practical oversight and self-help. The protection and redress available as a matter of contract were tenuous.

Some of these factors were at work also in Hospital Products Ltd v United States Surgical Corporation. As French CJ, Gummow, Hayne, Heydon and Kiefel JJ pointed out in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1 (at [93]), the dissenting view of Mason J as to the existence of a fiduciary duty in Hospital Products came from the circumstance that the overseas party was "a remote principal lacking the capacity to observe what was happening half the world away" and in a situation where the Australian distributor was the only person in touch with the Australian market and thus positioned so as to enrich itself at the overseas principal's expense. This, their Honours said, created the principal's "vulnerability to the distributor's abuse of its position".

Mason J was the only member of the High Court in Hospital Products Ltd v United States Surgical Corporation who considered that the Australian distributor owed a fiduciary duty to the overseas party. The finding in Watson v Dolmark Industries Ltd in favour of the existence of a fact-based fiduciary duty is thus to be contrasted with the reasoning employed by the other members of the High Court.

Gibbs CJ expressed (at 72) two reasons for rejecting the fiduciary claim: first, the distributorship arrangement was "a commercial one entered into by parties at arm's length and on an equal footing, with the principal able to include in the contract whatever provisions it thought necessary for its protection;" and, second, the whole purpose of the transaction was that the distributor should make a profit.

Deane J (at 122) had regard to the nature of the parties' relationship, characterising it as one of seller and buyer, with the distributor, as buyer, seeking, in its own interests, to sell as much of the product as possible. He also noted (at 123) that the contract did not make the relationship a partnership or joint venture; nor did it authorise the distributor to act as the manufacturer's agent or require it to subordinate its own interests.

Dawson J said (at 143):

"By its very nature a distributorship agreement does not ordinarily give rise to a relationship in which any conflict between duty and interest must be eliminated. It is, if anything, an exception to the adage that a man cannot serve two masters. Whilst the parties have the common aim of exploiting a market and, no doubt, rely upon that coincidence of aim as much as any contractual provision to ensure the success of their arrangement, nevertheless their interests do not always and entirely coincide"

Wilson J agreed generally with Gibbs CJ and Dawson J. He saw as applicable to the circumstances of the case an observation of Dixon CJ, McTiernan and Fullager JJ in Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd [1958] HCA 33; (1958) 100 CLR 342 (at 351):

"It cannot be suggested that the plaintiff and the defendant at any stage stood in any fiduciary relationship one to the other. The position is simply that business men - or business firms - were engaged in ordinary commercial transactions with each other, dealing with each other, as the saying goes, at arm's length."

A key passage in the joint judgment in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (above) is the following (at [83]):

"The only vulnerability of the Club was that which any contracting party has to breach by another. The only reliance was that which any contracting party has on performance by another. If JACS committed any breach of contract, it was quite open about it. If the Club could have established that JACS was in breach of contract, it had an ample array of contractual remedies to protect itself. It chose not to do so. It spoke of the difficulty of a social club giving an undertaking as to damages, and of the inutility of damages to a social club which wishes to continue its past activities in a new guise on the same site. It also said that monetary remedies against impecunious companies like JACS and Poplar were worthless. These factors do not justify converting the contractual relationship between JACS and the Club into a fiduciary relationship."

In the present case, the City likewise had at its disposal "an ample array of contractual remedies". It did not face any of the obstacles that apparently dissuaded the relevant party in the John Alexander's Clubs case from resorting to the readily available contractual remedies. To the contrary, the City relied squarely and openly on its contractual rights. It saw those rights as a source of precisely the relief that it sought, in a parallel way, for breach of a supposed fiduciary duty.

The Supreme Court of Canada emphasised in Galambos v Perez [2009] SCC 48; [2009] 3 SCR 247 that a fact-based fiduciary duty cannot arise unless one party undertakes, expressly or impliedly, to act in the particular factual context solely in the interests of the other. The word "solely" deserves particular emphasis. That essential requirement shows why fiduciary duties, of their nature, do not ordinarily attend bargains struck at arm's length between sophisticated parties with equal bargaining power who, in pursuing their own financial ends, take care to document their respective rights and obligations in a comprehensive way. A person of that kind who makes such a bargain in that way safeguards his or her own interests and aims to achieve the particular advantage sought for the person's own benefit. The contract may import implied duties of good faith performance. One party may have a clear interest in fostering the ability of the other to perform and in seeing that other derive the advantages that the contract is intended to confer. A relationship with a contented counterparty is usually more productive than a relationship with a hostile one. But none of this alters the reality that each party's role is a selfish role, not one of self-denial and subordination of personal interest.

Fiduciary duty - decision

With those thoughts in mind, I return to the circumstances of this case. The City alleged a fiduciary duty on the part of Streetscape. There was no allegation that Mr Obeid owed any such duty. The allegation against him was one of knowing involvement in a breach of fiduciary duty by Streetscape.

The primary judge not only found that the conduct of Streetscape said by the City to amount to breach of the alleged fiduciary duty also amounted to breach of the licence agreement but also awarded damages (or, in the case of the fiduciary duty, equitable compensation) of precisely the same amount for each such wrong (and also for breach of the alleged equitable duty of confidence). In taking that course, the judge, in my respectful opinion, showed precisely why the conclusion as to existence of a fiduciary duty was flawed.

The parties chose to protect their respective positions by entering into a comprehensive written contract. As was demonstrated by the decision regarding breach of contract (not challenged on appeal), the City succeeded in securing for itself, by means of that contract, full redress for the conduct in which Streetscape engaged. The case was not one of a bare and rudimentary contract that provided little by way of safeguards for the City. Nor was it a case of unequal bargaining power. Nothing was left to depend on unspoken assurances of good conduct or solicitude. The only vulnerability to which the City was subject was, in the words used in John Alexanders Clubs Pty Ltd v White City Tennis Club Ltd (above), "that which any contracting party has to breach by another"; and, to echo the words of Lord Mustill speaking for the Privy Council in Re Goldcorp Exchange Ltd (above), the argument in favour of the existence of a fiduciary duty did not rise above the suggestion that, by virtue of being a fiduciary, Streetscape was obliged honestly and conscientiously to do what it had by contract promised to do in any event.

The primary judge noted (at [445]) the observation of Mason J in Hospital Products Ltd v United States Surgical Corporation that contractual and fiduciary duties may co-exist between the same parties. At [447], he referred to statements by both Gibbs CJ and Mason J that a person may be a fiduciary in some activities but not others. He then (at [449]) stated the conclusion set out at [57] of these reasons.

The statement of the primary judge that contractual and fiduciary duties may co-exist between the same parties within a given factual context was unexceptionable. But the conclusion his Honour then reached about the case before him was incorrect. Mason J referred to "a basic contractual relationship" and the "foundation" it provides for the "erection of a fiduciary relationship". But Mason J went on immediately to say that "it is the contractual foundation that is all-important because it is the contract that regulates the basic rights and liabilities of the parties" and any fiduciary relationship "must accommodate to the terms of the contract so that it conforms with it".

It is that important point that the primary judge did not recognise. His Honour did not refer to the treatment of the subject in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (that case was not mentioned in the judgment). He therefore did not refer to the need there emphasised to identify some foundation for a finding of fiduciary obligation going beyond the mere vulnerability to breach of contract that is the lot of every contracting party.

The case before the judge was one of breach of a detailed commercial contract. The circumstances in which the contract had been made and in which performance was required did not indicate in any way that remedies for breach of contract would not be adequate for the vindication of the rights and the protection of the interests involved. There was simply no need for equity to provide supplementation in the form of fiduciary obligation.

The primary judge's conclusion that Streetscape owed the City a fiduciary duty was, in my respectful opinion, in error. There was accordingly no proper basis for either a finding of liability of Streetscape for breach of fiduciary duty or a finding of knowing involvement by Mr Obeid in any such breach by Streetscape.

The City argued that a fiduciary duty applied at some stage before the making of the licence agreement in August 2002. At the earlier stage, Streetscape helped the City to exploit the Smartpole in the context of a contractual relationship that was largely undeveloped and apparently was rudimentary (see [12] to [16] above). The City points to various aspects of the documents applying to the earlier relationship, including those by which Streetscape put itself forward as the "custodian" of the Smartpole on behalf of the City and as providing "a total asset management service in respect of the 'Smartpole' system and to manage all aspects of the engineering, supply, roll out, management maintenance and marketing of the 'Smartpole' system on behalf of the City". There were other references to Streetscape acting, in certain respects, "on behalf of" the City or for the benefit of the City.

(3) Streetscape Projects intended to sell poles in the 'Adepole Range' to parties other than the Adelaide City Council;

(4) Streetscape did not have reasonable grounds for representing that it would only sell 'the Adepole' to the Adelaide City Council."

At [321], the judge found that Streetscape had, between March and October 2007, represented to certain named persons that the Adepole was not a Smartpole. His Honour then proceeded to assess the impact of the representations. Conclusions were stated at [332] and [333]:

"Despite conducting no further enquires, on 19 October 2007, the City entered into the Second Deed of Variation and accepted that the intellectual property in the Adepole vests with Streetscape. In my view this was a commercial decision made by the City in an effort to secure its other intellectual property rights. The City did not accept Streetscape's representations as to the status of the Adepole but chose to conduct no further enquiries.

I accept Ms Hobbs' evidence at paragraphs 102 to 107 of her 23 September 2010 affidavit that had she understood and appreciated the full extent of what clause 5(a) of the Second Deed of Variation meant she would not have entered into the agreement. However, I do not accept Ms Hobbs was misled by Streetscape's representations. On Mr Harding's evidence, the City did not believe any of the representations put to them by Streetscape. The City wished to carry out their own enquiries. The City could have carried out enquiries in relation to the Adepole but decided not to. In these circumstances the City was not misled by Streetscape's representations. Rather the City entered into a contract without properly investigating the implications of its decisions. This is not a situation of a person failing to take reasonable care to discover untruths in representations. This is a situation where Streetscape's representations were not material in the City's decision. In these circumstances, the City must bear the consequences of its bargain."

These findings concerned representations by Streetscape that the Adepole was not a Smartpole, that is, representations as to the then present status or nature of the Adepole. The central finding was that the City did not accept or rely upon what Streetscape had represented in that respect but chose to rely on its own inquiries and assessment. The conclusion was therefore that no breach of the Trade Practices Act had occurred through the making of those representations because the relevant causal link was absent.

The judge then turned his attention to the second aspect of the misleading or deceptive conduct case advanced by the City. That aspect involved Streetscape's representations that the Adepole would only be sold to the Adelaide City Council. It was therefore necessary to consider s 51A of the Trade Practices Act, which is concerned with a particular type of representation potentially caught by s 52, that is, a representation with respect to a future matter. Section 51A is in these terms:

"(1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.

(2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.

(3) Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead."

Section 51A imposes a particular regime of presumption and displacement of presumption in relation to the particular species of misleading or deceptive conduct that consists of the making of a representation with respect to a future matter. After discussing the scope of s 51A and relevant case law, the judge stated these findings (at [340] to [342]):

"In respect of future matters, the plaintiff pleaded that Streetscape represented that in the future it would only sell 'the Adepole (catalogue item 41100)' to the Adelaide City Council and it did not have reasonable grounds for making such representations.

I accept the plaintiff's evidence that Streetscape and in particular Mr Obeid made these representations to the City. In particular I accept the evidence given by Ms Hobbs at paragraphs 80 to 82 of her 23 September 2010 affidavit. This finding follows from the Court's favourable view of Ms Hobb's evidence.

Considering these misleading representations were made, it is incumbent on the defendants to meet their evidentiary onus in providing evidence of the reasonableness of making such representations. Rather than produce evidence in defence, the defendants' evidence was to the contrary. In Mr McLeod's affidavit of 11 December 2009 at paragraph 78, the deponent gave evidence that Streetscape has actively attempted to sell Adepoles to the City of Perth, Streetscape did not intend to limit its sales to Adelaide and there was therefore no reasonable basis for making these representations:

'I am aware that the current executive officer of the C of S, Ms Robyn Hobbs, has contacted Michael Murphy the Principal Urban Designer of the Urban Development Unit of the City of Perth and other Perth representatives to discourage the acceptance of Streetscape's tender bid for that Council and to assert that Streetscape would be supplying Smartpoles to the City of Perth and not its own poles if it were the successful tenderer. This is untrue, Streetscape notes that the tender bid to the City of Perth was made by Streetscape during the period of the Licence Agreement which conferred exclusive rights upon Streetscape to market Smartpoles nationally. Further it is Streetscape's intention to supply Adepole poles (as appropriately branded and customised) to that Council.'"

The relevant representations with respect to future matters were thus identified as representations about the geographic area in which Streetscape would in future sell Adepoles. The judge continued (at [344]):

"It was Ms Hobbs' evidence that had she understood that these poles would be sold outside of Adelaide, she would not have vested copyright in the Adepole to Streetscape. While I do not accept that Ms Hobbs relied upon the City's representations as to existing facts, with respect to future matters there were no conceivable steps the City could have taken to verify the truth of these representations. Either way, s51A does not require such steps to be taken. Streetscape made misleading representations to the City without any reasonable basis."

At [352], the judge said:

"The bargain struck between the parties was that the intellectual property in the Adepole is to be vested in Streetscape. However, Streetscape represented, without any reasonable basis for doing so, that the Adepoles were produced only for the City of Adelaide and would be sold only to that entity. For this reason, the most appropriate remedy to alleviate the damage suffered by the City, without altering the terms of the arrangement beyond what was fairly agreed, is to vary clause 5(a) of the Second Deed of Variation such that it has the effect that from the date of entering into this deed, the City vested intellectual property in the Adepole (catalogue item 41100) only to the extent that the pole is designed for the Adelaide City Council and is to be sold to that council. This variation most clearly reflects Streetscape's representations to the City and the City's understanding of the effect of the agreement being entered into."

At the beginning of his discussion of s 51A and representations as to future matters, the judge had said this (at [339]):

"Importantly, s51A does not require the plaintiff to prove that the City relied on any misleading representations. Rather, the plaintiff must prove that Streetscape made representations with respect to a future matter and that those representations did not materialise. Upon discharging this onus, the evidential burden shifts to Streetscape per s51A(2) to show that they had reasonable grounds for making those representations c.f. Re McGrath; Pan Pharmaceuticals (in liq) v Australian Naturalcare Products Pty Ltd [2008] FCAFC 2; (2008) 165 FCR 230."

Decision on the s 87(2)(b) order

In challenging the s 87(2)(b) order, Streetscape and Mr Obeid place special emphasis on the paragraph of the judgment just quoted ([339]) and, in particular, its first sentence. They say that the judge was obviously in error in what he said about s 51A and the absence of any requirement to prove reliance; and that, since the decision on the matter of the representations as to future conduct was affected by that error, the resultant order cannot stand. The City accepts that the judge was wrong in what he said about s 51A at the start of paragraph [339] but maintains that, despite that error, the judge came to a correct decision on the matter of the representations about future conduct.

The question is whether, despite the erroneous statement, his Honour found that the City had suffered loss or damage "by" the misleading or deceptive representations of Streetscape as to the relevant future matters; or, alternatively (and if no such finding was made), whether his Honour ought to have so found. The proposition that, if no finding was made, it should have been made is advanced by the City by notice of contention.

It cannot be said that the judge made and enunciated any such finding in an explicit way. But the finding is one that he had ample grounds for making and ought to have made. His Honour expressly accepted (at [344]) Ms Hobbs' evidence that, had she understood that Adepoles would be sold beyond Adelaide, she would not have vested the Adepole "copyright" in Streetscape - that is, that the City would not have agreed to the part of clause 5(a) of the second deed of variation by which the parties confirmed that the "intellectual property" in the Adepole was vested in Streetscape. Ms Hobbs was an officer of the City intimately involved in relevant events. She was a decision-maker for the City. The judge accepted her as a witness of truth. The finding about what Ms Hobbs would not have done, coupled with the finding that the City could not have taken steps to verify the truth of Streetscape's statements about its own future conduct, amply supports the contention of the City that it relied on Streetscape's representations that future sales of the Adepole would be confined to Adelaide. That reliance was of the kind necessary to supply the form of connection between misleading or deceptive conduct on the one hand and loss or damage on the other that is required by the word "by" in s 87(1) of the Trade Practices Act. It is unnecessary to repeat the well-known discussion, in Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 (at 525 per Mason CJ), of the meaning and significance of "by" in the closely allied s 82 context. And the loss or damage inherent in being misled into conceding a right to exploit a lucrative opportunity without limitation as to geographic area (rather than on some geographically restricted basis) needs no explanation or elaboration.

It follows that, for the reason advanced by the City in its notice of contention, the challenge to the primary judge's decision to make the particular order under s 87(2)(b) of the Trade Practices Act should not be upheld.

The Adepole and the City's cross-appeal

The City, by its cross-appeal, raises another issue concerning the Adepole and clause 5(a) of the second deed of variation. It is an issue of construction. As noted at [194] above, I have proceeded to this point on the basis that the effect of the words "vests in" in clause 5(a) was to confirm that Streetscape had outright ownership of relevant property rights in respect of the Adepole. The City argued at trial that that is not the correct construction and that Streetscape obtained under clause 5(a) no more than a royalty free licence to manufacture and sell the Adepole to the Adelaide City Council for use by that council either for the term of the licence agreement or for an unlimited time.

The primary judge did not accept that argument. He held that the second deed of variation was, in relevant respects, free from ambiguity and that "vests in", used in relation to "intellectual property", carried its ordinary and usual connotation of ownership.

The City challenges the correctness of that decision. In doing so, the City says that insufficient weight was given to various matters of context. Some of those matters of context are to be gathered from the second deed of variation itself and, because clause 5(a) refers back to the first deed of variation in ways already noticed and operates upon the licence agreement, others are to be derived from the first deed and the licence agreement.

The City points to the fact that the first deed of variation settled differences that had arisen about royalties and licence fees due under the licence agreement and that the context was one in which the City owned all intellectual property and allied rights, with Streetscape enjoying no more than a licence. The City says that introduction of ownership rights on the part of Streetscape through the second deed would have been inconsistent with that pre-existing and established structure.

The first deed left two matters in an unresolved state. These were identified by the "TBD" (presumably, "to be decided") notations in its Schedule 2. Those notations appeared in a system of columns within Schedule 2 obviously intended to indicate no more than whether or not royalty was payable in respect of a particular item. This, the City says, makes it clear that, once the first deed had been executed, the only matter left to be decided regarding the "TBD" items was whether royalties were payable in respect of them. No issue of ownership of intellectual property arose.

The City then points to the first part of clause 5(a) of the second deed of variation and the acknowledgement of Streetscape that two of the Schedule 2 items marked "Yes" (being the S1 and S2 poles) constituted "Smartpole intellectual property vested in the Licensor". That, it is said, made it plain that the City, as against Streetscape, was entitled to the S1 and S2 extrusions, they being integral to the City's design; and this was consistent with clauses of the licence agreement which, as the second deed of variation stated in clause 2, was to remain unchanged "otherwise than as specified". The clauses of the licence agreement said to be of particular relevance are 7.1, 7.2, 8 and 15.4 all of which, in one way or another, acknowledged and confirmed the City's ownership of and rights to the S1 and S2 extrusions. It would be inconsistent with clause 2, the City says, to place on the part of clause 5(a) concerning the Adepole a construction that entirely cuts across this acknowledged ownership by the City of central components of the Adepole.

The City next says that the words "intellectual property" in the part of clause 5(a) dealing with the Adepole are to be distinguished from the term "Intellectual Property" to which the licence agreement (and, via its own clause 1, the second deed of variation) gives a defined meaning. The defined term refers to all rights to the Smartpole, including the S1 extrusion; and the City sees it as significant that the relevant part of clause 5(a) avoids the use of that defined term.

The City contends that, when regard is had to this context, there is ambiguity as to what is meant by "vests" and "intellectual property" in the part of clause 5(a) dealing with the Adepole. The ambiguity is demonstrated or emphasised, the City says, by the juxtaposition of the first part of the clause (which acknowledges the City's ownership of rights to the S1 and S2 extrusions) with the part concerning the Adepole which, on the construction for which Streetscape contends, means that rights to the S1 and S2 extrusions as an element of the Smartpole belong to Streetscape. This is said to be an absurd result. The absurdity is resolved, according to the City, by regarding the first part as concerned with ownership and the part about the Adepole as concerned with licence and royalties.

The response of Streetscape is that there is no absurdity and that it is perfectly sensible for someone having rights in respect of some whole to concede like rights to someone else in respect of a part of the whole so that the continuing rights of the conceding party extend to the balance only.

Streetscape's core submission is that the Adepole is, in substance, a variant of or improvement on the Smartpole (in that it incorporates certain features of the Smartpole, notably the S1 or S2 extrusion or both of these) but that it also has new and distinctive features of its own, so that the parties were confronted by a particular difficulty of characterisation when they came to the task of dealing with the Adepole as one of the "TBD" matters left over from the resolution of differences achieved by the first deed of variation. That difficulty required new thinking and new decision-making.

Counsel on both sides cited authorities concerning the correct approach to matters of construction of written contracts. There is no need to refer to these since, on the view I take, there is no ambiguity and the meaning of the part of clause 5(a) concerning the Smartpole is clear.

The parties did not intend to use "intellectual property" in clause 5 (where it appears on five occasions) as the equivalent of "Intellectual Property" as defined by the licence agreement. They showed this by using lowercase "i" and "p". They referred, on each of the five occasions, to "intellectual property" in its general sense as illustrated by the following entry in the "Encyclopaedic Australian Legal Dictionary" (LexisNexis Australia):

"Intellectual property: Exclusive rights to the results of creative and intellectual effort, protected by common law or statute in areas such as copyright, design, patent, circuit layouts, plant varieties, confidential information, trade mark and business reputation (passing off and trade practices). Intellectual property comprises industrial property (patent, design and trade mark) and artistic property (copyright)."

The disputes that the parties were attempting to resolve by means of the two deeds of variation concerned the freedom to manufacture and sell certain types of poles, with emphasis on the question whether the City was in a position to restrain action by Streetscape. The extent of the City's "rights", to use a neutral term, was an issue. The debate took place in circumstances where Streetscape had developed the Adepole, which incorporated some components or features in relation to which the City claimed "rights" but also had distinctive features of its own. The debate was ongoing. It produced the first deed of variation in March 2007 and the second seven months later in October 2007. By the first deed, the parties identified, in Schedule 2, certain poles or items in respect of which royalties would be payable in the future and others in respect of which royalties would not be so payable. Two poles, of which the Adepole was one, were identified in Schedule 2 but not included in either the class attracting royalties or the class not attracting royalties. The "TBD" designation meant precisely what the letters suggested - that the position concerning the two particular types of pole was to be the subject of future decision.

The future decision was recorded by the second deed. That deed, in clause 5(a), recorded an agreement regarding the "vesting" of "intellectual property" in not only the two "TBD" poles but also those marked "Yes" as to royalty in Schedule 2 to the first deed. The agreement was that the "intellectual property" in the "Yes" poles "vested in" the City, as did the "intellectual property in" the second of the "TBD" poles (that is, the one that was not the Adepole) but that "intellectual property" in the Adepole "vested in" Streetscape which had developed the Adepole, albeit in a way that incorporated the S1 and S2 extrusions previously developed by the City. By clauses 5(b) and 5(c), the parties agreed certain matters as to "ownership" or "vesting" of "intellectual property" in poles not yet invented or developed and adaptations of the Smartpole for new purposes.

The agreements as to "vesting" of "intellectual property" operated, of course, only between the two parties. The substance of their bargain was that, to the extent that any rights (that is, rights against the world) within the general concept of "intellectual property" indicated by the dictionary definition set out above subsisted in or in relation to a particular pole, one party would desist from asserting any claim to those rights as against the other party, to the intent that that other might, as against the world at large, take advantage of the rights (or assign them, if assignable, or otherwise turn them to account) free from interference by the first party.

This was a rational outcome. There is nothing absurd about it. Nor, in my opinion, is there ambiguity. The final phase of the negotiation produced acknowledgements in favour of the City that the "intellectual property" in all but one of the existing pole types was "vested" in the City and an acknowledgement in favour of Streetscape that the "intellectual property" in the remaining pole type (the Adepole) was "vested" in Streetscape, the intent being that the party with the benefit of such vesting not only did not have to pay royalties but was free to do as it lawfully might in relation to the pole type in question. The fact that the Adepole had been developed by Streetscape (albeit from a base in Smartpole components) no doubt played a part in the thinking that caused both parties to acknowledge that the Adepole intellectual property was vested in Streetscape.

The City has not made good its contentions with respect to the construction of clause 5(a) concerning the Adepole and has therefore not established any entitlement to the relief sought by its cross-appeal.

Delivery up

Streetscape and Mr Obeid say that orders made by the primary judge with respect to delivery up by Streetscape of documents, drawings and moulds cannot stand and must be modified.

The orders refer to various classes of items including:

"all drawings (including in electronic form) held by any suppliers to or subcontractors of the First Defendant [Streetscape] who were involved in or assisted in manufacturing any of the poles or accessories referred to in order 1 above."

The point made by reference to this particular item (and more broadly) is that Streetscape cannot deliver up things that are not in its possession, custody or control and that it should not be ordered to do the impossible upon pain of possible punishment for contempt of court.

The City's response is that the question of such an express limitation upon the orders was canvassed before the primary judge and that his Honour declined to impose the limitation in the absence of evidence of impossibility to comply with orders in absolute terms.

I am of the opinion that the orders should be left as they are. If and when the City commenced proceedings for contempt because of alleged non-compliance with a relevant order, the question of the correct construction of the order would arise for consideration and the fact, if it were the case, that they required Streetscape to do something that it was impossible for it to do (for example, to deliver up a copy of a relevant document that Streetscape itself had given to its own lawyers for the purposes of this appeal) would militate against any finding of contempt.

Conclusion

In my opinion, the appeal and the cross-appeal should be disposed of as follows:

1. The cross-appeal should be dismissed.

2. The appeal should be allowed to the extent that it challenges the findings of existence and breach of:

(a) fiduciary duty on the part of Streetscape;

(b) equitable duty of confidence on the part of Streetscape; and

3. The appeal should be allowed to the extent that it challenges the findings of knowing complicity of Mr Obeid in breach by Streetscape of fiduciary duty and an equitable duty of confidence.

4. The issues of existence and breach of an equitable duty of confidence by Streetscape and Mr Obeid (and knowing complicity of Mr Obeid in any such breach by Streetscape) and related issues should be remitted to the Equity Division for re-trial as stated in paragraphs [179] and [180] above.

5. The appeal should be otherwise dismissed.

Because of the complexity of the orders made by the primary judge and the need to ensure that the result on appeal is appropriately accommodated, the parties should submit short minutes of orders to give effect to the decision of this Court. In view of the mixed result on appeal, the parties should also make written submissions on the question of costs. I propose that directions be made as follows:

1. Direct that, if the parties agree on the form of the orders appropriate to give effect to the decision of this Court, they shall within 14 days file short minutes of those orders.

2. Direct that, if the parties do not agree on the form of the orders appropriate to give effect to the decision of this Court, each shall within 21 days file short minutes of the orders for which it contends together with brief written submissions in support of the making of those orders.

3. Direct that the parties exchange brief written submissions on costs and that those submissions be filed within 21 days.

WARD JA: I agree with Barrett JA.

**********

Decision last updated: 01 February 2013

Medium Neutral Citation:	Streetscape Projects (Australia) Pty Ltd v City of Sydney [2013] NSWCA 2
Hearing dates:	26, 27, 28 November 2012
Decision date:	01 February 2013
Before:	Meagher JA (at [1]); Barrett JA (at [2]); Ward JA (at [239])
Decision:	Short minutes to be filed. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	EQUITY - fiduciary duty - fact-based fiduciary duty - where plaintiff granted to defendant a licence to exploit technology - finding of breach of contract through exploitation contrary to licence agreement - concurrent finding of existence and breach of fiduciary duty of defendant licensee by reason of same acts - no recognised fiduciary relationship - whether the circumstances gave rise to the fiduciary duty alleged - EQUITY - equitable obligation of confidence - licence agreement imposed confidentiality restraints with respect to information - finding of existence and breach of concurrent equitable duty of confidence - question whether equitable duty may co-exist with contractual duty not in contest - whether information said to be protected by equitable duty sufficiently identified - whether confidential quality sufficiently shown - course of trial such as to prevent adequate inquiry into those questions - need for new trial - TRADE AND COMMERCE - misleading or deceptive conduct - representation as to future matter - whether representation contrary to statute - whether order varying contract affected by such representation properly made
Legislation Cited:	Evidence Act 1995, s 55 Local Government Act 1993 Trade Practices Act 1974 (Cth), ss 51A, 52, 82, 87
Cases Cited:	AG Australia Holdings Ltd v Burton [2002] NSWSC 170; (2002) 58 NSWLR 464 Athval Management Pty Ltd v Doherty [2000] NSWCA 277; (2000) 20 NSWCCR 687 Attorney-General v Guardian Newspapers Ltd [1990] 1 AC 109 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199 Breen v Williams [1996] HCA 57; (1996) 186 CLR 71 City of Sydney v Streetscape Projects (Australia) Pty Ltd [2011] NSWSC 831 City of Sydney v Streetscape Projects (Australia) Pty Ltd [2011] NSWSC 1214 City of Sydney v Streetscape Projects (Australia) Pty Ltd [2012] NSWSC 10 Coco v A N Clark (Engineers) Ltd [1969] RPC 41 Coles Supermarkets Australia Pty Ltd v FKP Ltd [2008] FCA 1915 Complete Technology Integrations Pty Ltd v Green Energy Management Solutions Pty Ltd [2011] FCA 1319 Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172; (2007) 73 IPR 326 Elecon Australia Pty Ltd v Brevini Pty Ltd [2009] FCA 1327; (2009) 263 ALR 1 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 Galambos v Perez [2009] SCC 48; [2009] 3 SCR 247 Hodgson v Amcor Ltd [2012] VSC 94; (2012) 264 FLR 1 Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1 Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd [1958] HCA 33; (1958) 100 CLR 342 Mid-City Skin Cancer & Laser Centre Ltd v Zahedi-Anarak [2006] NSWSC 844; (2006) 67 NSWLR 569 Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) [1984] HCA 73; [1984] 156 CLR 414 O'Brien v Komesaroff [1982] HCA 33; (1982) 150 CLR 310 Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21; (2010) 265 ALR 281 Re E Dibbens & Sons Ltd [1990] BCLC 577 Re Goldcorp Exchange Ltd [1995] 1 AC 74 Scott v Davis [2000] HCA 52; (2000) 204 CLR 333 Smith Kline & French Laboratories (Australia) Ltd v Department of Community Services and Health (1990) 22 FCR 73 Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 Watson v Dolmark Industries Ltd [1992] 3 NZLR 311
Texts Cited:	"Encyclopaedic Australian Legal Dictionary" (LexisNexis Australia)
Category:	Principal judgment
Parties:	Streetscape Projects (Australia) Pty Ltd - First Appellant Moses Edward Obeid - Second Appellant City of Sydney - Respondent
Representation:	B W Walker SC/G K J Rich - Appellants T M Jucovic QC/S W Climpson/C N Bova - Respondent Colin Biggers & Paisley - Appellants Holding Redlich - Respondent
File Number(s):	2012/52247
Decision under appeal	Citation: City of Sydney v Streetscape Projects (Australia) Pty Ltd [2011] NSWSC 1214 Date of Decision: 2011-10-11 00:00:00 Before: Einstein J File Number(s): 2009/298673 and 2010/85353