Telnet P/L v Takapana Investments P/L
[1994] FCA 99
•10 Mar 1994
THE COURT ORDERS THAT:
Further considerat~on of the proceeding (including the costs thereof to and including this day) be adjourned to a date to be fixed.
The Schedule
Evans : "Why have you left Osborne?" Kirchner: "I have left Osborne to join a more progressive company which will do the right thing by its clients."
Evans : "What do you mean?" Kirchner: "Osborne is having money problems and
can't meet its commitments."
Evans : "But what do you mean by 'doing the right Kirchner: "There may be warranty problems with your
| , , | thing'?" |
| machine before the five years is up." |
Evans : "What do you mean by that?" Kirchner: "Secondhand parts or cheap parts."
NOTE :
- Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA ) VICTORIA DISTRICT REGISTRY ) No. NG126 of 1992 GENERAL DIVISION )
BETWEEN:
TELNET PTY. LTD. and OSBORNE COMPUTERS AUSTRALIA PTY. LIMITED
Applicants
m: TAKAPANA INVESTMENTS PTY.
LIMITED
Respondent
CORAM: Jenkinson J. PLACE : Melbourne DATE: 10 March, 1994 REASONS FOR JUDGMENT
1. Trial of questions in a proceeding.
2. The applicants are in the same beneficial ownership and for present purposes may be conceived as one entity ("Osborne"). Both Osborne and the respondent, which trades
under the name Ipex Information Technology Group ("Ipex"), assemble and sell and after sale maintain and service computer equipment in this country. Each has a significant share of markets in that general field, Osborne's perhaps more substantial than Ipex's. They were at all material times keen competitors in most of those markets. In the first months of 1992 a number of Osborne's employees were approached by Ipex to consider taking employment with Ipex and in March 1992 a number of Osborne's employees gave up their employment and
took employment with Ipex. At about that time events are alleged by Osborne in this proceeding to have occurred upon which are founded the several causes of action pleaded. The questions, in the sense in which that word is employed in Order 29 of this court's rules, which I have tried were limited by an order of a judge of this court to "issues of liability".
3. It is alleged that Ipex obtained without Osborne's
permission and detains, after demand therefor, a copy of a selling price list of computer equipment kept by Osborne for the use of its employees and a copy of a document, entitled "Sales Manual Volume 111", kept by Osborne for the use of its employees. By reproducing parts of the manual Ipex had infringed Osborne's copyright in that work, it was alleged; and it was further alleged that Ipex had in its possession on or about 26 February 1992 an infringing copy of each document. Detinue and conversion were pleaded in reliance on s.116 of the C o ~ v r i a h t Act 1968. Ipex denies having had possession of
either document. 4. The evidence that the two documents were in Ipex's
hands was by Richard James Smith who was at relevant times Osborne's Sales Manager for Victoria. His immediate superior was Ian Johnson, who was Southern Regional Manager. Mr. Smith was in charge of more than 30 employees, most of them engaged in selling. On or about 19 February 1992 a director of Ipex, Yoav Schwalb, invited Mr. Smith by telephone to meet him at
Ipex's Melbourne office at 468 St. Kllda Road. On the day appointed for the meeting, 21 February, Mr. Smith waited in the reception area of Ipex's office for about 30 minutes until he was informed that Mr. Schwalb was not available. Later that day Mr. Smith was informed by an Ipex employee that Mr. Schwalb had believed that the time of their meeting was 11 a.m., whereas Mr. Smith had understood the time to be 10 a.m. Another appointment was made for 26 February.
5. During the 30 minutes Mr. Smith was waiting in the reception area on 21 February he saw, his evidence was, the receptionist typing a standard form letter by printing out standard wording and inserting the name and address of the intended recipient. The layout of the letter appeared very similar to the layout of a standard form letter of quotation lncluded in the Osborne Sales Manual Volume 111, Mr. Smith swore. Later he saw, as he swore, a similar letter near a computer on the receptionist's desk and identified two headings -
"(a) 3 Year On Site Warranty ........ ........ ........ ........ ........ ....e. " (b) Hotline Support."
Two similarly positioned headings in the same terms (except that "5" is in place of "3") are on the Osborne standard form letter.
6. Angela Barillaro gave evidence that she was the receptionist on duty at the reception desk on 21 February, that she did not on that day type letters, that her duties did not at any time include the typlng of letters to customers, that she has not seen a letter similar to the Osborne standard form letter, that on 21 February she was engaged in putting invitations to a seminar in envelopes. The invitation she produced as that which she had been putting into envelopes was quite dissimilar to the Osborne standard form letter. Mr. Schwalb swore that Ipex does not use a standard form of quotation and that Ipex has never sent to its customers a letter having either of the headings which Mr. Smith said he had noticed.
7. On 26 February Mr. Smith and Mr. Schwalb kept their appointment. Mr. Smith swore that as he walked with Mr. Schwalb through an area where Ipex employees worked he noticed the cover page of the January 1992 Osborne price list, held in an open white plastic-coated three-ring folder. He further
deposed: "43. I also noticed that the folder contained a number of dividers between the documents in it and they had typewritten notations on them which appeared to be the same as the typewritten notations appearing in the Osborne Manual which I was given in September 1991 when I commenced my role as Sales Manager, Victoria. The folder I saw was a white plastic folder. The Osborne Manual is contained in a white plastic folder. The folder I saw had three rings. The Osborne Manual folder also has three rings.
44. In the Melbourne Branch of the Applicant the Price List is normally placed as the top document in the Sales Manual Guide Volume 111. As a result of the above I came to the conclusion that the Respondent was in possession of a copy of the Applicant's Sales Manual Volume 111."
8. On 13 March 1992 an Anton Piller order was executed in Ipex's premises in Mr. Schwalb's presence. According to the uncontradicted evidence of Mr. Schwalb, Mr. Smith pointed out, at the request of Osborne's solicitor, the place where he claimed to have seen the price list in the folder and then another place where he claimed to have seen other Osborne documents. Lauraine Elizabeth Sayers and Mr. Schwalb gave evidence that she worked at the place first identified by Mr. Smith. She was a journalist employed as a public relations officer . She swore that she had never seen any document similar to the price list or the folder about which Mr. Smith had testified. Annette Mina Charak and Mr. Schwalb gave evidence that she worked at the other place identified by Mr. Smith and she swore that she had never seen any document
similar to any of those about which Mr. Smith had testified. 9. The conversation between Mr. Schwalb and Mr. Smith on 26 November concerned the proposal by Mr. Schwalb that Mr. Smith take employment with Ipex. When Mr. Smith left, the proposal was to be further considered by Mr. Smith. Conflicting evidence was given by the two men as to what was said. To Mr. Schwalb Mr. Smith attributed statements about Osborne's business and Mr. Smith's salary which I was invited
to ~nfer showed knowledge about that business which Mr. Schwalb could have acquired only from an employee of Obsorne. Mr. Schwalb's evidence of what he said could ground no such an inference.
10. Shortly before the proposed 21 February meeting Mr.
Smith informed Ian Millard Johnson, who was then charged by Osborne with the supervision of Mr. Smith's work, that he had been approached by Mr. Schwalb, according to the evidence of both M r . Smith and Mr. Johnson. Mr. Johnson advised Mr. Smith to attend the proposed interview, for the purpose of learning what Ipex planned to do, according to that evidence. After his visit to Ipex's premises on 21 February Mr. Smith reported to Mr. Johnson what he claimed to have observed there. After the 26 February meeting with Mr. Schwalb Mr. Smith reported to Mr. Johnson what he cla~med to have seen of Osborne documents and to have heard from Mr. Schwalb about Osborne's business.
11. Bruce Graeme Isbister was Ipex's Queensland Manager before 1992 at least once, but they had not worked for Ipex in
from November 1990 until March 1992. He had met Mr. Smith
the same city. Mr. Isbister was approached in December 1991 and again in January 1992 by persons acting on Ipex's behalf to consider taking employment with Ipex. Like Mr. Smith, he reported the approaches to his employer. He had a discussion with Mr. Schwalb in Melbourne during January 1992 and again on
4 March 1992. He prepared minutes of that latter meeting for use by Ipex and by himself. The last paragraph of those minutes reads:
"8. ACTION PLAN
ACTION RESPONSIBLE WHEN 1. Confirm Agree-
B I 7 Mar 92 ment between B1
and IPEX
2. Acceptance YS 11 Mar 92 Letter to B1
3. Letters of Offer B1 11 Mar 92 to Queensland
Staff
4. Staff Acceptances B1 18 Mar 92
5. Start Date B I 23 Mar 92 6. Sales Trainlng B1 28 & 29th
Weekend March 92 PCs
Network Products
EIS Product
Imaging
Terms of Business
7. Seminar in April Brisbane
All products."
"Bl" signifies Mr. Isbester, "YS" signifies Mr. Schwalb.
A few days after 11 March 1992 Mr. Isbister received from Mr Schwalb a letter of that date which reads:
"Dear Bruce,
RE: YOUR ACCEPTANCE OF EMPLOYMENT
I am pleased with your decision to join IPEX Information Technology Group. I am sure that we will both enjoy a long and fruitful relationship.
Your position with IPEX will be as National
Products Sales Manager.This letter is a confirmation of my original letter of offer to you, the minutes of our meeting and our further discussion on 10th March 1992.
I would also like you to extend my warmest regards and welcome aboard your staff."
The reference to "your staff" is explained by the circumstance that Mr. Isbister had been authorized by Mr. Schwalb to make contracts of employment between Ipex and such persons as Mr. Isbister should select, and on such tens as Mr. Isbister should think appropriate, to carry on Ipex's business in Townsville and Rockhampton. Ipex had no sales staff resident outside Brisbane at the time the letter was written. On 11 March 1992 this proceeding was instituted in the New South Wales Registry and on the same day a judge of the court made an order (the Anton Piller order to which I have referred) that Ipex permit representatives of Osborne to enter Ipex's premises in Melbourne to look for and remove into Osborne's
Volume I11 and of the Osborne Price List. On 12 March Mr. solicitors' custody all copies of the Osborne Sales Manual Isbister told Mr. Schwalb that such an order had been made and warned him that the order would be carried into effect next day. The order was executed on 13 March 1992. No copy of an Osborne document was found.
12. Mr. Isbister's sworn explanation of his knowledge that the order had been made and was about to be executed was that he was told by Mr. Smith. Mr. Smith denied that on oath.
Mr. Isbister deposed in an affidavit sworn 11 November 1992 as follows :
"30. DURING January/February 1992 Smith and I had on at least one or two occasions a conversation in words to the following effect:
Smith said:
'How come you guys in Queensland have such good sales figures when I don't? I'm worried about the sales performance of Victoria and am concerned that Linton may get rid of me.'
31. SMITH also said words to the effect:
'I've been to see Ipex and had an interview with Yoav Schwalb. They have certainly got nicer premises than we have. They seem reasonable enough people. Whether I am convinced to go remains to be
seen. ' At no stage during this conversation did Smith say to me that he had seen any Osborne materlal at Ipex's premises; in particular, the price list and manual.
33. DURING one of those conversations Smith
said:
leaving Ipex. Ian Johnson, my Manager, 'I've been sprung. Somebody saw me told me someone had seen me. I told Johnson that I might have seen an Osborne document while I was there.' 34. SHORTLY prior to 4 March 1992 I telephoned Smith and we had a discussion in words to the following effect:
I said:
'I am coming down to Melbourne to have
another discussion with Ipex.'Smith said:
'I'm interested to find out how it goes.Keep me in mind if you have something down here. Would you llke me to pick you up from the airport?'
I replied:
'I look forward to meeting you and thank
you. ' 35. SMITH picked me up from the airport on 4 March, 1992 and took me to the meeting at Ipex. He dropped me off a couple of blocks away from the premises as he sald to me words to the effect:
'I don't want anyone to see me anywhere
near Ipex.'
36. LATE ln the day on 12 March 1992 Smith telephoned me and we had a conversation in words to the following effect:
Smith said:
'You'll never believe what's happened. That vague reference I mentioned to Ian Johnson about seeing an Osborne document when I was at Ipex - now John Linton has blown it up out of all proportion and has turned it into the whole range of sales manuals. Bruce, I didn't say that. John Linton is just blowing it all up.'
Smith continued:
'We didn't have this conversation. But there is an Anton Pillar coming. So if
of it because Osborne will be around in Ipex has got anything they better get rid the morning.'
37. I then telephoned Yoav Schwalb and informed him of the conversation I had with
Smith. "
Mr. Linton had not "blown it up out of all proportion" in any
affidavit filed in support of the application for the Anton Piller order. His affidavit and the affidavit of Mr. Smith filed in support of that application did not travel beyond the allegations about Osborne documents in Ipex's premises which
were maintained on the trial of the proceeding. He dld, however, slgn and distribute to employees of Osborne a memorandum which included an allegation that during three interviews between Mr. Schwalb and Messieurs Isbister, Smith and Ralph Meyen respectively Mr. Schwalb claimed to have in hls possession -
"Sales Manual I
Sales Manual I1
Sales Manual I11
Management Manual I
Management Manual I1
Current Price Lists
Organisational Charts
Remuneration Package Details"
Ralph Meyen was in March 1992 an Osborne employee. No attempt was made at trial to prove the allegation that Mr. Schwalb had made such a claim, although evldence was adduced to show that what Mr. Schwalb had said to Mr. Smith justified the inference that Mr. Schwalb had confidential information about Osborne's affairs which could not be derived from the documents Mr.
Smith claimed to have seen in Ipex's premises. 13. Mr. Jacobs Q.C., who appeared with Mr. Panna for Osborne, did not submit that Mr. Smith had not told Mr. Isbister on 12 March about the Anton Piller order. In written submissions on behalf of Osborne appears the following:
"2.9 Smith's evidence is that he saw the documents on 26 February 1992 and on 19 February 1992. At that time, only Isbister had received any offer from the Respondent, namely on 28 January 1992, to
join the Respondent. On probabilities, it is Isbister that supplied the documents to the Respondent. And it is for that reason that he, immediately upon being told by Smith of the impending search pursuant to the Anton Piller order of the Respondent's premises, tipped off Schwalb."
Mr. Smith had vehemently denied under cross-examination that
he told Mr. Isbister of the Anton Plller order. In an affidavit sworn 16 May 1992, when he was still employed by Osborne, Mr. Smith deposed:
"I have a degree in Computer Science and Chemistry from Victoria University, Wellington, New Zealand, and I am completing a Law degree at Monash University in Victoria."
As he admitted under cross-examination Mr. Smith had not undertaken any course of study at Victoria University, nor had he undertaken the study of Law at Monash University. It may be, although he did not say so, that Mr. Smith had represented to Osborne that he had the qualifications claimed in the
the misrepresentation because he feared to lose his employment affidavit, and that he succumbed to the temptation to maintain or feared ridicule by those to whom he had pretended. Although very serious, the falsehoods were not directed to any issue in the case, nor calculated to gain any forensic advantage for Osborne, so far as appears. The falsehoods in the affidavit might not have precluded reliance on other evidence by Mr. Smith. But his oral evidence in chief and his responses to cross-examination about the falsehoods gave rise to serious doubt of his reliability as a witness. His oral
evidence in chief was:
"May I take you back to the affidavit of 15 May
1992, paragraph 2. It is there deposed that
you have a degree in computer science and chemistry. Is that a correct statement of your academic record?---No, it is not.
What is the correct statement?---I have a diploma in computer science from Wellington Polytechnic whlch is a funded school from the Victoria University in Wellington."
In cross-examination Mr. Smith gave this evidence:
"Now in your evidence yesterday you sought to correct one paragraph of one of your affidavits. In your affidavit of 15 May, paragraph 2, you deposed to the fact that you had a degree in computer science and chemistry from Victoria University, Wellington, New Zealand?---That was the statement in the affidavit, yes.
You said yesterday in evidence, that, in fact, you do not have a degree in computer science and chemistry from Victoria University, is that so?---I sought to correct the statement, yes.
Because you do not have a degree in computer science and chemistry?---I didn't prepare that
part of the affidavit, when I noted the error. I wonder if you can just listen to the question. You do not have a degree in computer science and chemistry?---No.
And you have never attended Victoria
University?---No, that is not correct, I have.You said that you had obtained a diploma of computer science from Wellington Polytechnic, is that right?---That's correct.
What year was that?---I completed the prescribed course of study in 1984. I have a copy of the acknowledgment certificate here.
Do you have that in court, do you?---Yes, I do.
I wonder if you could provide that to us. Correct me if I am wrong, but neither of these appear to make any reference to the Wellington Polytechnic?---The course of study is dictated by both Victoria University and Wellington Polytechnic. It is carried out by an employer.
You said that Wellington Polytechnic was a funded school from Victoria University, did you not?---I did.
Now I want to suggest to you, first of all, that Wellington Polytechnic does not have any connection with Victoria University, dld not during the 1980's have any connection with Wellington University?---I don't believe that to be the case.
It is not funded by Victoria University and was not in the 1980's?---I don't believe that to be the case.
And can I suggest to you that it does not conduct a course which provides a diploma in computer science?---That is definitely not the case.
Are these the documents that you refer to as the diploma of computer science?---That's correct, yes.
Your Honour, I tender these two documents but I
am happy for them to be replaced by photocopies
if that is convenient to Mr. Smith.
HIS HONOUR: Yes, well perhaps I had better give them separate numbers. Exhibit 3,
certificate of training dated 27 April 1984. EXHIBIT 3 - CERTIFICATE OF TRAINING DATED 27
APRIL 1984Exhibit 4 is certificate relating to a course of instruction dated 19 November 1982.
EXHIBIT 4 - CERTIFICATE RELATING TO A COURSE OF
INSTRUCTION DATED 19 NOVEMBER 1982.MR BURNSIDE: Perhaps I can ask, before I forget, your Honour, if I could be permitted to ask Mr. Smith if he wants those originals back.
HIS HONOUR: Yes, would you prefer that we photostat those, yes, very well.
MR BURNSIDE: . Smith, when I asked you the question a few minutes ago that Wellington Polytechnic is completely - was in the 1980's completely independent of Victoria University, your answer was, you don't believe so; is it the positlon that you cannot contradict that fact?---Today?
As in the 1980s?
MR PANNA: Well, your Honour, I object - he has
- my learned friend has said it is a fact; it
is only an assertion by my learned friend.
HIS HONOUR: Well, it is a common mistake, but
Mr. Smith will understand that of course it is
only evidence from the witness box that counts.
If it - if somebody provides evidence that there was no connection in the 1980s, you do not offer to contradict that?---I have no statement of proof to contradict it, no. I would also state that my attendance there was in the 1970s.
MR BURNSIDE: Now, you have said in your affidavit, sworn on 15 May, that you are completing a law degree at Monash University in Victoria, right?---I didn't prepare that particular clause, but I was registered there, yes.
Yes. Under what name are you enrolled at Monash University?---I am no longer enrolled there.
Right. When were you first enrolled at Monash University?---My first application would have been made in the beginning of 1990 upon my arrival in Australia. HIS HONOUR: I am sorry, I did not hear - - -?- --My first application would have been made at the beginning of 1990 when I arrived in Australia.
Yes.
MR BURNSIDE: I did not ask when you first applied, I asked when you were first enrolled; did you enrol at Monash University in 19901--- No, I was rejected, my application was rejected.
Right. Did you apply subsequently to be
enrolled at Monash University?---Yes, I did.Was - when was that?---In the following year.
And was that application successful?---No , it was not. Did you apply in 1992 to enrol at Monash
University?---Yes, I did.
Was that application successful?---No, it was
not.The fact is, is not it, that you have never been enrolled at Monash University?---Not as a full time student, no.
Not in any capacity, Mr. Smith?---Not to my belief. The instruction has always been that I must continue re-applying to obtain certification at the university, that is exactly what I have done.
Yes?---Thank you.
So you have never been enrolled as a student of law or anything else at Monash University, have you?---Sorry, could you repeat the question?
Yes. I suggest to you, you have never been enrolled as a student of law or anything else at Monash University?---Correct.
So you have never started a law degree at
Monash Univers~ty?---At Monash, no. No. When you swore in your affidavit of 15 May that you were at that time completing a law degree at Monash University, that was a lie,
Mr. Smith, you swore that affidavit?---I repeat was not it?---I didn't prepare that part of the affidavit. my statement, I did not prepare that part of
the affidavit, it was done for me.You swore to the truth of it?---I did. You made a correction yesterday of a sentence immediately before that one?---No, I believed when I spoke to Mr. Panna that I was correcting the clause and the statement.
Right. And you did not correct or seek to correct the statement that you were completing a law degree at Monash University?---No, as I just said, I believed that I was correcting the clause within the affidavit.
Right. That Statement that you were completing a law degree at Monash University is a lie, is not it?---I do not believe so.
I see.
HIS HONOUR: Well, why? Why do you say that?-- -Because I have continued to apply for enrolment at Monash University.
But you - at what age did you leave school?---
Sorry?At what age did you leave school?---l7 or 18, I can't recall.
Well, it is really a matter of your command of the English language, is not it? How can one say I am completing a law degree at Monash if the fact is that one has merely unsuccessfully applied to be admitted as a law student?---I didn't prepare that part of the affidavit, it was prepared for me.
I know that but I suppose you read it before you swore it?---I believe actually at the time that I pointed out the error to Ms. Jansz at Levingston's and when I was given a copy of the affidavit again I pointed out the error to Mr.
Panna . MR BURNSIDE: I see. Are you just telling his Honour, on your oath, that you told Mr. Panna recently that that statement, that reference to you completing a law degree was false?---That is correct.
statement when you were giving evidence I see. You had an opportunity to correct that yesterday, did not you?---Sorry, as I said, I believed that I was doing so when the clause was bought up in evidence yesterday. I wonder if I can remind you of what you said in evidence yesterday about that. At page 71
of the transcript Mr. Panna said this to you:May I take you back t o the a f f i d a v i t o f 15 May 1992, paragraph 2? I t i s t h e r e deposed t h a t you have a degree i n computer s c i ence and chemis t r y . I s t h a t a correct
s ta tement o f your academic record?
You said, 'No, it is not'. Mr. Panna then asked you, 'What is the correct statement?' and you said, 'I have a diploma in computer
science from Wellington Polytechnic which is a funded school from the Victoria University in Wellington'. And that is where your answer stopped. Now, did you think when you gave that evidence that that was sufficient to correct the erroneous impression that you were completing a law degree at Monash University?-- -I believed that it was substituting the clause, yes, I did."
Copies of exhibits 3 and 4 are appended to these reasons for judgment.
14. I am not persuaded that Mr. Smith saw in Ipex's premises any document which he had reason to believe to be an Osborne document. The evidence of Angelo Barillaro, Lauraine Sayers and Annette Charak, if accepted, is hardly to be reconciled with Mr. Smith's evidence of what he saw. I do accept the evidence of those three women. It was submitted by Mr. Burnside that the evidence by Messieurs Isbister and Schwalb that Mr. Isbister had warned Mr. Schwalb of the making and the impending execution of the Anton Pillar order was unlikely to have been volunteered if Mr. Isbister had in fact
supplied Ipex with the documents Mr. Smith swore that he saw
in Ipex's premises. If it be found that Mr. Isbister had not
supplied the documents, the submission continued, the conclusion should be drawn that Ipex had no such documents. Mr. Burnside thus joined in the submission advanced on behalf of Osborne, that Mr. Isbister was the only source of the documents which the whole of the evidence suggested. However, if an employee or former employee of Osborne other than Mr. Isbister had been the source (a possibility which I think
cannot be altogether disregarded) and Messieurs Schwalb and Isbister were confident that that circumstance would not be revealed at the trial of this proceeding, they might have thought that by naming Mr. Smith as the source of the information received by Mr. Schwalb of the impending execution of the Anton Pillar order they would greatly damage Mr. Smith's credit and enhance their own credit. Accordingly I have not weighed the considerations Mr. Burnside advanced in that submission against acceptance of Mr. Smith's evidence of what he saw at Ipex's premises. (I should, however, say that I am certainly not persuaded that Mr. Smith did not tell Mr. Isbister of the making of the Anton Piller order. Mr. Isbister's evidence of his belief that upon receipt of the letter from Mr. Schwalb which is reproduced in paragraph 11 of these reasons he was not contracted to take employment by Ipex was justifiably criticised by Mr. Jacobs as disingenuous. Other evidence he gave of his activities in Queensland after receipt of that letter attracted suspicion of the same fault. But the strong overall impression his evidence gave me was of
a man who would not stoop to the villainy of falsely attributing to Mr. Smith the statement that an Anton Piller order had been made.) I have so little confidence in the reliability of Mr. Smith's evidence and such confidence in the reliability of the evidence of the three women as to be unable to accept his evidence of what he saw. Nor am I persuaded that Mr. Schwalb said to Mr. Smith at their meeting on 26 February 1992 anything which would justify an inference that
Mr. Schwalb had acquired confidential information about
Osborne's affairs by unlawful means.15. Those conclus~ons lead me to the result that upon the causes of action pleaded in paragraphs l, 2, 3, 4, 10, 11,
and 27(d) of the further amended statement of claim filed 16
February 1993 there must be judgment for the respondent.
16. Another cause of action is pleaded in paragraphs 18, 19, 20 and 21 of that statement of claim, thus: "18. Further and in the alternative on or about 6 July 1992 the Respondent by its employee Warren Kirchner made the following representations to a customer of the Applicants:
(a)
That the Applicants are in financial difficulty;
(b)
That the Applicants are unable to honour their five year warranty;
(c)
That the Applicants use inferior parts in the computers supplied to customers;
(d) That the Applicants use secondhand parts in the computers supplied to customers. 19. The representations and each of them were false in that:
(a)
As to the first representation: the Applicants are not in financial diff iculty;
(b)
As to the second representation: The Applicants are able to honour their five year warranty;
(c)
As to the third representation: the Applicants do not use inferior parts in the computers supplied to customers;
(d)
As to the fourth representation: the Applicants do not use second hand parts in the computers supplied to customers.
20. By reason of the above the Respondent has in the course of Trade and Commerce engaged in conduct which is or was misleading or deceptive of which is or was likely to mislead or deceive contrary to Section 52 of the Trade Practices Act and the Applicants have thereby suffered and will continue to suffer loss and damage."
The customer was Andrew William Evans, who at relevant times was employed in Brisbane by the Australian Taxation Office and who had purchased computer equipment from Osborne for use in his own home. Warren Bernard Kirchner had been the employee of Osborne who had delivered the equipment. He left his employment by Osborne in March 1992 and immediately entered into employment as a salesman by Ipex. In April he sent Mr. Evans a letter on Ipex note paper in these terms:
"I believe the challenge of Computer suppliers
this decade is to deliver business tools and services that provide true freedom of access to all of an organisation's information, no matter
where that may be held.In essence the supplier of the 90's must be a total solutions facilitator, combining innovative hardware and software platforms into a tangible business benefit.
With this in mind very much over the past few months, I recently decided to move to the IPEX Information Technology Group, to be part of a new National Initiative based from new Brisbane premises.
There are exciting products, tools most appropriate for your business, that I wish to
be part of, and I look forward to meeting with you again over the next few weeks in my new role.
I thank you for your past patronage and am sure you will find the IPEX group has much to offer both you personally and your organisation."
Mr. Evans telephoned Mr. Kirchner when he received the letter.
Concerning the telephone conversation . Evans deposed as
follows : "In or about April 1992, I had a telephone conversation with Warren Kirchner, an employee of the Defendant. To the best of my recollection part of our conversation was to the following effect:
Evans : 'Why have you left Osborne?' Kirchner: 'I have left Osborne to join a more progressive company which will do the right thing by its clients.'
Evans : 'What do you mean?' Kirchner: 'Osborne is having money problems and
can't meet its commitments.'
Evans : 'But what do you mean by "doing the
right thing"?'
Kirchner: 'There may be warranty problems with your machine before the five years is
UP.'
Evans : 'What do you mean by that7' Kirchner: 'Secondhand parts or cheap parts.'"
Mr. Kirchner denied in evidence that he said Osborne are in
financial difficulty, or that there may be warranty problems in respect of the computer equipment sold by Osborne to Mr. Evans, or that Osborne uses second-hand parts of computer
equipment in fulfilling its warranty obligations, or that Osborne uses cheap parts of computer equipment in fulfilling those obligations.
17. Both men were cross-examined. Mr. Kirchner gave evidence in terms which did not engender confidence in his reliability. Mr. Evans' evidence did engender confidence in his reliability. No motive for Mr. Evans to give a false account of the conversation appeared. I accept the evidence of Mr. Evans.
18. I accept the evidence that the statements I have found M r . Kirchner made to Mr. Evans were false. And they were made in trade and commerce as part of the solicitation of Mr. Evans' custom.
19. I am not persuaded that any director of Ipex or any superior of Mr. Kirchner in his employment by Ipex authorised the making of any of the statements. Section 84(2) of the
Trade Practices Act 1974 provides: "(2) Any conduct engaged in on behalf of a body
corporate -
(a)
by a director, servant or agent of the body corporate within the scope of the person's actual or apparent authority; or
(b)
by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, servant or agent,
shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate."
As a salesman of computer equipment Mr. Kirchner had, as I find, apparent authority to make to a consumer criticism of a competitor's goods and services in seeking to persuade the consumer to deal with the salesman's employer rather than the competitor. The statements I have found that he made were unauthorised and unlawful modes of exercising that authority, but not, as I find, outside the scope of that authority. Accordingly the misleading conduct which the statements constituted is to be deemed the misleading conduct of Ipex.
20. Because Mr. Evans professed in evidence his utter disbelief of the statements at and since the time when they were made to him, it may be that Osborne suffered no damage as
a result of the engagement by Ipex in that misleading conduct. But that is for another day. There will be a declaration that
the conduct contravened s.52 of the T r a d e P r a c t i c e s A c t 1974. 21. The remaining causes of action pleaded are torts of inducing breach of contracts of employment, namely that term which required reasonable notice of termination of each contract. I have set out in paragraph 11 of these reasons the "Action Plan" recorded in the minutes of Mr. Isbister's meeting with Mr. Schwalb on 4 March 1992. Mr. Isbister
thereafter spoke to Mr. Kirchner about the possibility of Kirchner's taking employment with Ipex. By memorandum dated
24 March 1992 to his superior, Mr. Cribb, Mr. Kirchner wrote :
"I tender my resignation effective today". Mr. Kirchner had taken employment with Osborne by accepting in writing an offer in writing. The terms of the offer included the following:
"4. Em~lovment Conditions
(a)
The first three months of employment are considered to be probationary and during this period, the company reserves the right to terminate your services on giving of one weeks notlce. Should you wish to resign from the company during this period, you will be required to leave the company the day you resign; ie. you are not required to give any notlce of your intention to leave.
(b)
After the first three months the company will give you a notice period of four weeks or some lesser period if that is mutually agreed. If you resign from the companys employment, the company retains the right to ask you to leave on the same day you advise your intention of leaving."
Because there was evidence by Mr. Linton that Osborne's general policy in 1992 was that an employee who resigned was required to leave his place of employment forthwith after resignation, Mr. Burnside submitted that it was an implied term of Mr. Kirchner's contract of employment that no period of notice of his intention to terminate his employment was required. I do not accept that submission. I would imply a term that reasonable notice was required. But I would not regard Mr. Kirchner's statement, "I tender my resignation effective today", as constituting, or as evidencing an intention to commit, a breach of that term. I infer that Mr. Kirchner believed when he sent the memorandum to Mr. Cribb that his intention to take employment with Ipex would be immediately suspected by his superiors and that in accordance with the general policy his immediate departure from his place of employment would be required. In those circumstances his statement should be regarded as a proposal that his termination of employment should be immediate, not as a breach of a term of his contract of employment, nor as a statement of his intention to commit such a breach.
22. Mr. Isbister's written resignation dated 23 March 1992 included an enquiry : "Do you require me to work my four weeks' notice?" After an acrimonious telephone conversation with Mr. Linton, Mr. Isbister received by telephone a negative answer to his enquiry. He therefore did not breach the suggested term of his employment. Each of the other two employees of Osborne in respect of whom evidence was adduced
Brian Gregory - gave four weeks' written notice of his in relation to these causes of action - Michael Walker and intention to terminate his employment. Four weeks was as I
find reasonable notice.23. Upon each cause of action for inducing breach of contract there will be judgment for Ipex.
I certify that this and the 26
preceding pages are a true copy of
the Reasons for Judgment of theHonourable Mr. Justice Jenkinson.
Associate
Dated: 10 March, 1994
Counsel for the Applicants Mr. M.S. Jacobs Q.C. and Mr. A. Panna Counsel for the Respondent Mr. J.W. Burnside Q.C. and Mr. S. Anderson Solicitors for the Applicants Levingstons
Solicitors for the Respondent Roth Warren Dates of Hearing 12, 13, 14 and 15 July,
JUDGES' CHAMBERS,
FEDERAL COURT OF AUSTRALIA,
450 LImLE BOURKE STREET,
MELBOURNE 3000
4 March, 1994
Ms. Jan Costello,
Principal Registry,
Federal Court of Australia,
Level 16,
Law Courts Building,
Queens Square,SYDNEY. N.S.W. 2000.
Dear Ms. Costello,
Re: Computerised Leqal Information Retrieval Svstem
I enclose the following word processing disk (judgment
included) for inclusion in the data base of Federal Court
Judgments.1. Telnet Pty. Ltd. and Anor. v. Takapana Investments Pty. Limited - NG126 of 1992 - Single Judge - Jenkinson J. - Melbourne - 10 March, 1994.
Please return the disk when finished with for further use
Yours faithfully,
Lois Bendall Secretary to Mr. Justice Jenkinson
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