(iii) The patterns and designs are inventions of the Applicant and prima facie owned by the Applicant. Intellectual Property in Australia , McKeough & Stewart para 1302. Between 1994 and 1999, there was no express term or provision in the contract between the Applicant and the First Respondent passing ownership of the inventions to the First Respondent. In respect of patterns and designs made by the Applicant before the Applicant commenced employment with the First Respondent, there is no authority for the existence of an implied term at law or equity which would pass ownership of the inventions to the First Respondent. In respect of the period of time when the Applicant was employed by the First Respondent, it is arguable that the First Respondent would be entitled to the benefit of the inventions ( The Law of Employment Macken, 4th Ed., pp.146-147). If this term were implied into the contract of employment between the Applicant and the First Respondent, it is submitted that it would be an unfair term having regard to all of the circumstances of the relationship between the Applicant and the Respondents and that contracts should be varied to secure a fair outcome. One outcome would . . . . (not here relevant). Another alternative would be to make order 3(d)(i) and (iii) and prohibit the Respondents from continuing to commercialise, exploit, manufacture, market and sell products made from the Applicant's patterns and designs after 28 February 1999. If the order was made, then the First Respondent would have to account for the profits from the use of the designs in the period up to the making of the order.
38 Mr Moses' submissions in this area relied on the provisions of the Copyright Act 1968 (Cth) which codified copyright law in Australia. Section 8 provides to the effect that, leaving aside any prerogative right or privilege of the Crown, "copyright does not subsist otherwise than by virtue of this Act". It was submitted that this Court should not entertain this part of the claim as it is more properly to be dealt with pursuant to the provisions of the Copyright Act. The logo and designs to which these submissions relate can be defined as artistic work for the purposes of s.10(1) of the Copyright Act. Section 35(6) provides to the effect that the copyright in a work created by an employee in the course of employment belongs to the employer. The evidence establishes that the work she performed between February 1994 and 26 February 1999 which involved design work was done as an employee of Full Bloom. Accordingly, the ownership of the copyright resides in Full Bloom of which she is a shareholder. The point was made that no evidence was led in the applicant's case or submissions made as to how the Court quantify the claim. No particulars have been provided and so the claim is bound to fail.
39 I consider that it is inappropriate in these proceedings to make any order in the applicant's favour with respect to the designs. Firstly, the logo design is peripheral in the sense that the "royalty" claim within the summons does not relate to the use of the logo. Secondly, it is clear that the clothing designs identified in the summons and the evidence were created between January and April 1994, as to the first seven designs, or later clearly during employment. These proceedings have dealt with this issue of copyright, intellectual property, damages or account of profits or any other form of remedy only in the most cursory way. There has been virtually no attention to the relevant provisions of the Copyright Act dealing with the remedies for infringements of copyright (see Part V of that Act). Division 4A, Jurisdiction and appeals, of that Act confers jurisdiction on the Federal Court of Australia with respect to actions under this Part (s131C). Section 131A provides that the jurisdiction of the Supreme Court of a State or Territory in an action under this Part shall be exercised by a single Judge of the Court. Prima facie, I would consider that the jurisdiction of this Court under s106 would not extend to a remedy of the kind with which the Copyright Act is concerned. The claim for prohibition on use or the payment of a royalty in relation to the relevant designs in this case seems to me to fall squarely within its compass. Accordingly, I would decline to make any order in that respect.
40 A point arises as to whether, as I understand Mr Pearce's submissions, the designs of clothing here are to be viewed as inventions, that is to say not mere drawings but actual patterns of clothing to be utilised in manufacture, or rather as creative designs in which copyright lies, as Mr Moses contends. If they be viewed as inventions then it appears that, relying upon the text referred to by Mr Pearce, Intellectual Property in Australia, 2nd Ed., McKeough & Stewart, that while the law with respect to patent rights would primarily recognise the inventor as the owner principle, the possibility is that the employer would be viewed as a person to whom an assignment could be made and there may be an implied duty to assign ownership thereof to the employer. These matters were not addressed at any length in the proceedings (See also The Law of Employment (Macken, O'Grady & Sappideen), The Law Book Company. 4th Ed., at p.146). Upon my relatively superficial examination of the matter it would seem that the consequence, whether they be with respect to the drawings or patterns (or both) would by one means or another be similar. I note that no attempt was made to patent the "inventions" in question.
41 It is inconceivable to me that the limited number of items designed and manufactured over the period of years with which this case was concerned could have occupied the applicant for any considerable period. Mr Simpson's evidence was that Ms Elkins had not designed anything for the last several years. It is obvious that her work in sales and marketing was a significant feature of the whole period. I am not prepared to find that the applicant worked 40 hours per week for the duration of the employment relationship. No attempt over a mere assertion of that fact was made in the applicant's case to establish the hours worked. Ms Simpson asserts that the position was about 15 hours per week in the first year and about 30 hours per week thereafter. I find a considerable doubt arises with respect to hours and that the evidence does not permit to find on the balance of probabilities that the applicant did work the hours she claimed.
42 The heart of the case as argued concerns the payment of what is described as a "reasonable remuneration for all work performed" of the applicant over the five years between 2 February 1994 and 26 February 1999 and 12 months payment in lieu of notice. Before dealing with those claims I set out certain relevant facts extracted from Full Bloom's balance sheet as at 26 February 1999. Total assets were valued at $97,596 and total liabilities at $204,387. Of the latter figure $189,816 comprised total shareholders' loans to the company. Those loans, which constituted a liability of the company, were $193,063 from Ms Simpson and $3,600 from Mr Villanti. The balance sheet records Ms Elkins as being indebted to the company in the amount of $6,848. It follows that such loans as Ms Elkins made to Full Bloom, including $18,453 loaned after the sale of her house in Armidale (see para 9 above) had been repaid in full. Mr Pearce made a criticism, in the sense that it was another element of unfairness, of the fact that Ms Simpson had been able to take a floating charge over the assets of the company to assist in securing her position. When that charge is seen in the context of the levels of indebtedness of the company to the shareholders, it is entirely unsurprising that she would so act. It visited no unfairness on Ms Elkins who had no outstanding loans to secure but was indebted to the company herself.
43 It is to be noted that Full Bloom's accounts do not show any expense related to accommodation of the business. The reason for this is that Ms Simpson provided part of her domestic premises to house the business, free of rent.
44 I consider the wages claim of a minimum of $30,000 per annum from the commencement of the arrangement in March 1994 to be quite without merit. When Ms Elkins and Ms Simpson, together with an original co-founder, entered into their enterprise by way of joint venture, it could only have been understood that the success of their venture and thus their future was uncertain. It was obvious that the prospect of receiving income, particularly of a more substantial kind, was not realistic at the outset. The fact is that during the five years employment of the applicant in the enterprise, no person engaged therein, other than the applicant, received income of $30,000 per annum. In the last seven months of employment the applicant received income of $22,000 which actually exceeded that rate. She was alone in that respect, others receiving less, or in Ms Simpson's case, nil.
45 It seems to me that the making and the pressing of that aspect of the claim involved a high degree of unreality. As soon as one engages in the exercise of assessing some "just and reasonable" wage in these circumstances in retrospect, the conundrum is raised as to the effect upon the other co-venturers. The wage is not argued for on the basis of some performance which would distinguish the applicant over the others. Accordingly, it could only be that some finding as to what might be a just and reasonable wage for the work done might apply equally, or to an extent, to those others. However, not only would the operation not support equal treatment of the co-venturers in that respect it could not on a financial basis support an order of that kind for only one of them. When asked where the justice would lie in an order of that kind Mr Pearce submitted that the second and third respondents had retained the opportunity to work in the business. While the financial history of the business might make that distinction dubious, the deprivation of the opportunity to work in the business is not a matter which could justify the retrospective, arbitral assessment of reasonableness with respect to the applicant's income.
46 Further, it is clear that the first respondent, being a corporation in respect of which the applicant retains 32.5 per cent shareholding, would be unable to meet an order of that kind. Its liabilities exceed to a considerable extent its assets. Should then the second and third respondent bear in whole or in part liability in respect of salary ordered to be payable to the applicant? I am quite unable to see any justice in so viewing the matter. Far from being beneficiaries in some way to the detriment of the applicant, they have merely retained the opportunity to struggle to make the operation viable which, if they be successful, could redound to the applicant's advantage as a shareholder. This does not, in my view of it, put them in the position where they could be said to have benefited at the applicant's expense.
47 Accordingly, I would dismiss the application for the payment of a reasonable wage for all work performed.
48 I turn to the claim for payment in lieu of notice. This claim depends upon the applicant establishing that she was either actually or constructively dismissed from employment by the respondent/s. That question revolves entirely around the circumstances which developed up to and upon Friday, 26 February 1999. The main issue which provoked those events was the applicant's concern to increase her level of income. I do not consider that the conflict between the evidence of Ms Elkins and Ms Simpson concerning the suggestion by the latter that the former wished to increase time available to pursue her creative interests is material in this regard. If it were necessary to resolve that issue I would do so in favour of the respondents. The fact was that the relationship between Ms Elkins and Mr Villanti had degenerated for reasons which I need not recite but do not reflect poorly on Mr Villanti. There was dissatisfaction with significant aspects of Ms Elkins' work. However, the income level issue, once raised, caused Ms Simpson to focus upon a means by which she could accommodate Ms Elkins' desires and also achieve a resolution of what she perceived as a dysfunctional office environment, a view which on balance I accept was justified. I do not impute to Ms Simpson any degree of malice or ill-will in pursuing these issues and an acceptable solution to them with Ms Elkins. I accept that from her perspective there were a number of problems which required resolution in both the interests of the company and Ms Elkins. Having determined to address those problems it is understandable that her frustrations with Ms Elkins would have increased as she found a continuing lack of responsiveness to her proposal. I am prepared to find that Ms Elkins was being uncooperative in her response to these matters and that she was following a course which was creating frustration, if not deliberately designed so to do.
49 When Ms Simpson on 26 February 1999 threatened termination of employment if the unresponsiveness continued, it seems to me she was doing no more than she was entitled, indeed obliged, to do in the interests of the company. The threat was not a threat of dismissal of a kind which demonstrates that the employer was seeking to initiate a termination (see Allison v Bega Valley Council (1995) 63 IR 68 at 76 and St Vincent's Hospital Sydney Limited v Harris (1998) 81 IR 173 at 182). The threat was designed to cause an unresponsive employee to act appropriately. The response called for was not necessarily a yes or no answer, for there remained between the parties an opportunity to attempt to find some other solution if Ms Simpson's suggestion was thought by Ms Elkins to be inappropriate. In the face of the ultimatum given on 26 February 1999, Ms Elkins did not seek to allay Ms Simpson's concerns or appease them in some way or indeed to agree to respond to them. She had no intention of uttering even a conciliatory word. She took matters into her own hands, which involved the removal of the patterns from Ms Li's premises and the later return to the company's premises that night to withdraw her machines and other possessions therefrom. That act was a signal which evidenced the attitude of Ms Elkins at that point: she had no intention of returning to work in the business. Her daughter's utterance to Ms Simpson, as they were leaving the office on 26 February, captured the spirit: "The beginning".
50 It is necessary that I make some observations concerning the relative shareholding in Full Bloom. I have noted in paragraphs 12-14 above that there was a reallocation of shares giving Ms Simpson 62.5 percent, Ms Elkins 32.5 percent and Mr Villanti 5 percent thereof. The allocation to Mr Villanti cannot be a matter of complaint here, for the reason Ms Elkins claimed in her evidence that she suggested an allocation to him should be made. While the reallocation of some of her shares to Ms Simpson was a matter she agreed to, she said under duress, no actual claim is made in the proceedings which would seek to deal with or remedy that position in some way.
51 It is also significant that the claims identified in the summons for relief requiring Ms Simpson and Mr Villanti to purchase Ms Elkins' shareholding in Full Bloom at what I understand to be a price of $250,000 plus interest were not pressed in the proceedings.
52 I have not attended to certain arguments of counsel concerning jurisdiction, preferring to resolve the matter on the merits, making full assumptions in that regard. Examples of such issues were whether Mr Villanti and Ms Simpson were substantive parties in a relevant sense to any contract or arrangement whereby work was performed, and whether s109A of the Act operates to restrict jurisdiction in whole or in part with respect to the summons.
53 It follows from these conclusions that the summons for relief must be dismissed. I so order. The issue of costs has not been addressed. I will hear the parties in the event they cannot resolve that issue between them.