The liability of Messrs Keller and Armstrong as joint tortfeasors under the Designs Act 2003 (Cth)
355 In its Fourth Amended Statement of Claim dated 5 May 2008, the respondent to the present appeals, LED Technologies Pty Ltd ("LED Technologies"), alleged that Ren International Pty Ltd ("Ren") had infringed its monopoly in the registered designs by making and importing articles which embodied a design that was identical to, or substantially similar in overall impression to, the registered designs. It alleged that Ren and Olsen Industries Pty Ltd ("Olsen") had infringed its monopoly also by offering for sale and selling in Australia articles which embodied such a design. It made a series of allegations against two of the appellants in appeal VID167/2009, Anthony James Keller and Lawrence Alfred Armstrong. Some of those allegations were (or were effectively) admitted. Thus, each of Mr Keller and Mr Armstrong admitted that he was, at what appeared to have been the material times, a director of each of Ren and Olsen, and the "ultimate shareholder" of 50% of the shares in each. That is to say, Ren and Olsen were each half-owned by Mr Keller and Mr Armstrong; and each man was a director of each company. However, the applicant also alleged against Messrs Keller and Armstrong that each was "acting … in furtherance of a common design" with Ren and Olsen; was "directing or procuring" the conduct of Ren and Olsen; was "making [the conduct of Ren and Olsen] his own"; and was "authorising" the conduct of Ren and Olsen. The applicant alleged that Messrs Keller and Armstrong "acted in concert" with Ren and Olsen in respect of the infringements alleged, or "wrongfully procured and/or induced" Ren and Olsen to infringe its monopoly. It alleged that Messrs Keller and Armstrong were, thereby, "joint tortfeasors" with Ren and Olsen in respect of the infringements alleged. These allegations were denied.
356 Messrs Keller and Armstrong admitted that Ren imported, offered for sale and sold the articles which the primary judge held embodied designs that infringed LED Technologies' monopoly. They denied that Ren had made those articles. They admitted that Olsen had offered for sale and sold those articles.
357 In that part of the primary Judge's reasons which dealt with the operation of s 75(2) of the Designs Act, her Honour made it clear that her judgment against Ren and Olsen did not involve a finding that either of them "made" the articles to which the infringing designs had been applied. That was because the articles had been made outside Australia, and, in her Honour's view, s 71(1) of the Designs Act did not have extraterritorial operation. Her Honour held, however, that Ren and Olsen were secondary infringers within the meaning of s 75(2)(b), in that they had imported the articles, and offered them for sale in Australia. She added that she "would consider" Messrs Keller and Armstrong to be secondary infringers as well, on a similar basis to that upon which Review Australia Pty Ltd v Innovative Lifestyle Investments Pty Ltd (2008) 166 FCR 358 was decided, namely (in the words of her Honour), that "importing or selling, as the case may be, should be understood to also include directing, causing or procuring an infringing item to be imported or sold".
358 In the orders made by the primary Judge on 24 February 2009, her Honour declared that certain Condor lights (identified by code number) "offered for sale and sold" by Ren and Olsen infringed the corresponding registered designs of the applicants. Her Honour restrained Ren and Olsen, and Messrs Keller and Armstrong, from "directly or indirectly making, importing, selling or offering for sale" automotive lamps to which the registered designs, or any design that was identical to, or substantially similar in overall impression to, the registered designs had been applied. In her short reasons given on that day, her Honour explained that the inclusion of the phrase "directly or indirectly" in the order to which I have referred was to leave no doubt but that the injunction extended to any conduct of Messrs Keller and Armstrong by way of "procuring, inducing or authorising" an infringement by Ren or Olsen.
359 Before proceeding to deal with the joint tortfeasor aspect of the present appeal as such, I should make a brief observation as to the context in which the primary Judge relied upon my reasons in Review. That was not a case of importation, but involved an allegation that the respondent had "made" the articles to which the infringing design had been applied. The respondent pointed out (as was the fact) that the articles had not been made in-house, as it were, but had been made for it by a separate business pursuant to contract (to the respondent's specifications). I said (166 FCR at 363 [21]):
With respect to subpar (a) of the applicant's pleading, I do not accept the distinction, sought to be made by the respondents, between a product made by those directly employed by a company, on the one hand, and a product made by an independent contractor at the behest of a company, on the other hand. In the policy context of the Designs Act, I consider that the reference, in s 71(1)(a) thereof, to a person who "makes" a product includes a reference to a person who directs, causes or procures the product to be made by another, whether or not an employee of the person. To accept, as the respondents did, the application of the provision to a situation in which the product is made by an employee of the person necessarily excludes the construction that the word "makes" refers only to the manual task of making by the person himself or herself. That being so, there is no intelligible point, consistent with the scope and purpose of Pt 2 of Ch 6 of the Designs Act itself, at which a line should be drawn so as to exclude the making of a product by a contractor to, but at the direction of, the person.
In this passage, I used the expression "directs, causes or procures" to convey the sense that the respondent had used the contractor as the instrumentality by which it made the infringing articles, no less than if it had used its own employed staff for the purpose, As will appear from the reasons set out below, that was, with respect to the primary Judge, a different context from that in which liability by the operation of joint tortfeasor principles is said to arise.
360 The factual findings which gave rise to the primary Judge's conclusion that Messrs Keller and Armstrong were joint tortfeasors were the following:
At the time of the "relevant events", Mr Keller and Mr Armstrong were directors of Ren and Olsen with Mr Armstrong acting also as Chairman. Mr Keller's evidence was that he, together with Mr Armstrong, "is the boss" of Ren and Olsen. In relation to Version 1 lamps, the "relevant events" included, but were not limited to, the conception and design of the infringing Condor lights at a time when at least Mr Keller was aware of the existence of the Designs, discussions with manufacturers about the manufacture of the those lights and the subsequent importation and sale of them in Australia. In addition, Mr Keller designed and conceived the Version 2 and 3 lights and arranged for their manufacture and importation into Australia. Moreover, Mr Armstrong was the nominated signatory for all applications for CRNs and the addressee for all correspondence from DOTARS relating to CRNs. In addition, he was involved in photometric testing of Condor LED lights and knew what Mr Keller was doing in relation to the Condor Products.
So far as I can see, there does not appear to be any other place in the reasons where her Honour made findings of primary fact for the purpose of determining the liability of Messrs Keller and Armstrong as joint tortfeasors.
361 To someone with no understanding of the way the law has developed in this area, and possessed only of a copy of the Designs Act, the idea that damages for infringement might be awarded against someone other than the primary infringer himself or herself might (and in my view would) appear rather odd. The statutory regime for relief against infringement is tight and specific. Section 71 sets out the acts which constitute infringement. They do not include any of the conventional categories of accessorial or derivative liability. By s 73, infringement proceedings may be brought "against another person alleging that the person has infringed the registered design". By s 75, the remedies that may be granted may include damages. There is no provision for obtaining damages from a person other than the infringer. However, it is said that, in the way the law has developed, damages for infringement may also be obtained against the director of an infringing company, at least where he or she directed or procured the doing of the acts under s 71 which constituted the infringement. It is said that this exposure to damages arises even in cases where there was no conscious intention on the part of the director that the company should infringe: consciously to direct or procure the act which, objectively, amounted to an infringement will suffice. In the present case, the primary Judge took this approach. As will appear, there was no shortage of authority to justify her doing so. For reasons which follow, however, and with respect to those who take a contrary view, I consider that that approach was and is unsound.
362 In holding that Messrs Keller and Armstrong were joint tortfeasors with Ren and Olsen in relation to the infringing conduct of the latter, the primary Judge adverted to what she described as two lines of cases, which propounded different tests for the liability of an individual said to be a joint tortfeasor with the company of which he or she was director. The first was the test derived from Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1, 14-15, and the other was the test derived from Mentmore Manufacturing Co Ltd v National Merchandising Manufacturing (1978) 89 DLR (3d) 195. Her Honour mentioned the judgment of the Full Court in Allen Manufacturing Co Pty Ltd v McCallum & Co Pty Ltd (2001) 53 IPR 400 and, like the Full Court in that case, held that the choice of test would make no difference to the outcome in the case before her. Either way, Messrs Keller and Armstrong were to be regarded as joint tortfeasors. Her Honour said:
The position here is the same. This is not a case in which Messrs Keller and Armstrong acted only as directors of the infringing companies. Each had personal knowledge of the Designs and of the other facts and matters set out above (see [169]). To adopt the language of the Full Court, it was clear that each of Messrs Keller and Armstrong "was personally an actor invading [LED Tech's] rights: by creating the [Condor Products]" and taking the other steps outlined above. These sequences of actions were "the deliberate, wilful and knowing pursuit of a course of conduct" that was likely to constitute infringement or, at least, reflected a conscious indifference to the risk of infringement. As a result, each of the Directors also engaged in the design infringement. Each is a joint tortfeasor to the design infringement as each had "a common design" with Ren and Olsen to infringe the Designs and is jointly and severally liable to LED Tech for the damages assessed.
363 Performing Right was a copyright case. The company in question managed a theatre, and had engaged a group of musicians who chose their own music. Some of the music which they played was the subject of copyright, and they had no licence to play it. The company was held liable for the breach, and did not appeal. The manager of the company was also held liable for the breach, and he appealed to the Court of Appeal. All members of the court decided the appeal favourably to the manager, substantially on the ground that a servant of a company - even one in a position of management - was not vicariously liable for the tortious conduct of other servants. In the course of his reasons, Atkin LJ went further, and adverted to the principle by reference to which such a manager might be liable for such a tort. His Lordship referred to the following observation by Lord Buckmaster in Rainham Chemical Works Ltd (in liq) v Belvedere Fish Guano Company Ltd [1921] 2 AC 465, 476:
If the company was really trading independently on its own account, the fact that it was directed by [its directors] would not render them responsible for its tortious acts unless, indeed, they were acts expressly directed by them. If a company is formed for the express purpose of doing a wrongful act or if, when formed, those in control expressly direct that a wrongful thing be done, the individuals as well as the company are responsible for the consequences, but there is no evidence in the present case to establish liability under either of these heads.
In Performing Right, Atkin LJ said that it would not be necessary for any such direction to be express, and that an implied direction would be sufficient. His Lordship said ([1924] 1 KB at 15):
If the directors themselves directed or procured the commission of the act they would be liable in whatever sense they did so, whether expressly or impliedly.
This observation has been of significant impact in the years which have followed, particularly in the area of intellectual property. It is difficult to conceive of anything done by a company which is not, directly or impliedly, directed or procured by a director, or by a manager at some level. The potential reach of Atkin LJ's dictum is particularly conspicuous in the context of civil wrongs which do not require a mental element (such as infringement of design).
364 Rainham Chemical involved a Rylands v Fletcher (1868) LR 3 HL 330 situation in which, as it happened, Lord Buckmaster held that the individual defendants, who were the original occupiers of the premises upon which the non-natural user was carried out, had not done sufficient to pass occupation to the company which they had formed: see [1921] 2 AC at 478. Their liability, therefore, was neither vicarious nor by way of joint tortfeasance: they were directly liable as occupiers. Strictly, therefore, what his Lordship said was obiter. But, in the passage later referred to by Atkin LJ, Lord Buckmaster was concerned to deal with, and to reject, the basis upon which the case had been decided by Scrutton LJ in the Court of Appeal. Scrutton LJ had held that agreements entered into by the company (eg for the appointment of a manager and by way of policies of assurance) were paper shams and made no difference to the reality. Lord Buckmaster, however, held that the existence of a company could not be disregarded simply because it was found, in the course of legal proceedings, that all the capital of the company took the form of fully-paid shares, and that there was no free capital for working. His Lordship continued ([1921] 2 AC at 475):
[In] truth the Companies Acts expressly contemplate that people may substitute the limited liability of a company for the unlimited liability of the individual, with the object that by this means enterprise and adventure may be encouraged. A company, therefore, which is duly incorporated, cannot be disregarded on the ground that it is a sham, although it may be established by evidence that in its operations it does not act on its own behalf as an independent trading unit, but simply for and on behalf of the people by whom it has been called into existence.
It is in this latter sense that I read so much of his Lordship's judgment as was extracted by Atkin LJ in Performing Right. That is to say, when Lord Buckmaster referred to those in control of a company expressly directing that a wrongful thing be done, his Lordship had in mind a situation in which the directors were in effect using the company as an instrument for their own ends.
365 Atkin LJ's statement of the position in Performing Right was based upon what Lord Buckmaster had said in Rainham Chemical, qualified only to the extent of allowing for an implied direction to give rise to liability on the part of the director. What I understand his Lordship to have meant was that, if company directors in effect used the company as their instrument to carry out a tortious act, they would be liable. It was in this sense, in my view, that his Lordship used the otherwise uninformative expression "directed or procured".
366 Mentmore Manufacturing was a patent infringement action with respect to a mechanism for retractable ball point pens. The question which arose was whether the owners and directors of the infringing company were personally liable for the infringement. During at least part of the period that was relevant, both of the directors were aware of the existence of the patent, and of the patentee's allegations of infringement. Nonetheless, it seems that their company continued to manufacture the articles that were later held to be infringing. In his judgment on behalf of the Appeal Division of the Federal Court, Le Dain J set out the approach which the trial judge had taken to the liability of the directors as follows:
The trial Judge found that "Goldenberg and Berkowitz imparted the practical, business, financial and administrative policies and directives which ultimately resulted in the assembling and selling of some goods … which I have found infringed the plaintiff's rights", but that this was not enough to make Goldenberg personally liable for the infringement. He expressed the test to be applied in the following passage from his reasons for judgment:
In my opinion, there must be some evidence of intention (or evidence from which a reasonable inference can be drawn) that Goldenberg (or Goldenberg and Berkowitz jointly) deliberately or recklessly embarked on a scheme, using the company as a vehicle, to secure profit or custom which rightfully belonged to the plaintiffs. I add that I make a distinction between the intention I have referred to in dealing with the liability of a person as a director and the overall matter of intention in respect to infringement generally.
As to the matter of "intention in respect to infringement generally", the trial Judge had pointed out that intention was immaterial in a patent infringement action.
367 Le Dain J continued:
What is involved here is a very difficult question of policy. On the one hand, there is the principle that an incorporated company is separate and distinct in law from its shareholders, directors and officers, and it is in the interests of the commercial purposes served by the incorporated enterprise that they should as a general rule enjoy the benefit of the limited liability afforded by incorporation. On the other hand, there is the principle that everyone should answer for his tortious acts. The balancing of these two considerations in the field of patent infringement is particularly difficult. This arises from the fact that the acts of manufacture and sale which are ultimately held by a Court to constitute infringement are the general business activity of a corporation which its directors and officers may be presumed to have authorized or directed, at least in a general way. Questions of validity and infringement are often fraught with considerable uncertainty requiring long and expensive trials to resolve. It would render the offices of director or principal officer unduly hazardous if the degree of direction normally required in the management of a corporation's manufacturing and selling activity could by itself make the director or officer personally liable for infringement by his company. [Emphasis added.]
Le Dain J said that this principle should apply no less in the case of a "small, one-man or two-man corporation" than in the case of large corporations. His Honour noted that it had been held that "the mere fact that individual defendants were the two sole shareholders and directors of a company was not by itself enough to support an inference that the company was their agent or instrument in the commission of the acts which constituted infringement or that they so authorized such acts as to make themselves personally liable", referring in this respect to British Thomson-Houston Co., Ltd v Sterling Accessories, Ltd (1924) 41 RPC 311 and to Prichard & Constance (Wholesale), Ltd v Amata, Ltd. (1924) 42 RPC 63. His Honour continued:
It is the necessary implication of this approach, I think, that not only will the particular direction or authorization required for personal liability not be inferred merely from the fact of close control of a corporation but it will not be inferred from the general direction which those in such control must necessarily impart to its affairs. I, therefore, have no difficulty in concluding, with respect, that the learned trial Judge was correct in holding that the fact "Goldenberg and Berkowitz imparted the practical, business, financial and administrative policies and directives which ultimately resulted in the assembling and selling of some goods (in National's over-all stock of goods) which I have found infringed the plaintiff's rights" was not by itself sufficient to give rise to personal liability.
What, however, is the kind of participation in the acts of the company that should give rise to personal liability? It is an elusive question. It would appear to be that degree and kind of personal involvement by which the director or officer makes the tortious act his own. It is obviously a question of fact to be decided on the circumstances of each case. I have not found much assistance in the particular case in which Courts have concluded that the facts were such as to warrant personal liability. But there would appear to have been in these cases a knowing, deliberate, wilful quality to the participation: see, for example, Reitzman v. Grahame-Chapman and Derustit Ltd. (1950), 67 RPC 178…; Oertli AG v EJ Bowman (London) Ltd [1956] RPC 341…; Yuille v B & B Fisheries (Leigh), Ltd & Bates [1958] 2 Lloyd's Rep 596; Wah Tat Bank Ltd v Chan Cheng Kum [1975] A.C. 507 (PC). [Emphasis added]
368 Having considered English and American authorities on the point, Le Dain J continued:
I do not think we should go so far as to hold that the director or officer must know or have reason to know that the acts which he directs or procures constitute infringement. That would be to impose a condition of liability that does not exist for patent infringement generally. … But in my opinion there must be circumstances from which it is reasonable to conclude that the purpose of the director or officer was not the direction of the manufacturing and selling activity of the company in the ordinary course of his relationship to it but the deliberate, wilful and knowing pursuit of a course of conduct that was likely to constitute infringement or reflected an indifference to the risk of it. The precise formulation of the appropriate test is obviously a difficult one. Room must be left for a broad appreciation of the circumstances of each case to determine whether as a matter of policy they call for personal liability. Opinions might differ as to the appropriateness of the precise language of the learned trial Judge in formulating the test which he adopted - "deliberately or recklessly embarked on a scheme, using the company as a vehicle, to secure profit or custom which rightfully belonged to the plaintiffs" - but I am unable to conclude that in its essential emphasis it was wrong. [Emphasis added.]
In the result in Mentmore Manufacturing, the directors were held not to be jointly liable for their company's infringement.
369 It is apparent that Mentmore Manufacturing was quite a different case from the hypothetical case referred to by Atkin LJ in Performing Right. The conduct which was held to constitute an infringement of patent was otherwise a conventional and legitimate business activity for the company concerned. In no sense were the directors using the company for their own tortious purposes. They were aware of the patent, and of the patentee's allegations. They knew that the products in question continued to be made. But the infringing conduct was part of the general business activity of the company, and the directors' involvement in it was by way of "the direction of the manufacturing and selling activity of the company in the ordinary course of [their] relationship to it …". Le Dain J was unable to say that the trial Judge was wrong to formulate the test in terms which involved using the company "as a vehicle" to achieve an end which was infringing. The essence of this test is not, in my view, so far removed from that of the Performing Right test (as explained above) as some of the authorities have appeared to discern.
370 The question with which we are here concerned has, in one form or another, come before the Full Court on three occasions. The first was King v Milpurrurru (1996) 66 FCR 474. A company, of which there were three directors, infringed copyright by importation. Only one of the directors was involved in the day-to-day operations of the company, and he had been the person who made the arrangements by which the goods bearing the infringing reproductions were imported. The other two directors had no role in that activity and, it seems, knew nothing of it until the proceeding in question was commenced. At that point, they were informed by the first director that the infringing importation had ceased. As it happened, that was not the case, and the two non-executive directors were, at trial, held liable along with the company (and the executive director) for infringement of copyright as joint tortfeasors. Their appeal to the Full Court was successful.
371 In the Full Court, Jenkinson J noted that the trial Judge had approached the question of directors' liability by reference to the Performing Right test. His Honour (the trial Judge) had held the directors liable because he inferred that they took no action, when served with the proceedings, other than to accept the explanation of the executive director that the infringing importation had ceased. Jenkinson J held that that inference did not go far enough to establish liability. His Honour said (66 FCR at 480-481): "[F]or tortious liability to be imposed on the respondents what is required is that they confer on [the executive director] and [the company] their authority to commit the torts so that they can be said to have agreed in the commission …." His Honour added that the evidence which the trial Judge had accepted could not support a finding that the non-executive directors did confer that authority.
372 Beazley J undertook a lengthy examination of the authorities with respect to the liability of directors for the wrongful conduct of their companies. Her Honour referred to the tests in Performing Right and in Mentmore Manufacturing. She preferred the latter. She said (66 FCR at 500):
However, I do not consider that the principles stated in the Performing Right Society case pay sufficient regard, either to the separate legal existence of the company, or to the fact that the company acts through its directors. Nor do I find the language used sufficiently describes the need to find conduct over and above that engaged in as part of the management of the company to find a director personally liable for the tortious conduct of the company.
Her Honour found the Mentmore Manufacturing line of authority "a more satisfactory approach to the question of personal liability of a director" at least in the circumstances of the delict with which the Full Court was then concerned. Referring to s 37 of the Copyright Act 1968 (Cth),Beazley J said (66 FCR at 500): "A director will be liable if, having the requisite mental element prescribed by s 37, he commits or directs the commission of the tort, deliberately or recklessly, so as to make the tortious conduct his own." Quite clearly, the actions of the non-executive directors in the case before the Full Court did not meet that description.
373 The third member of the Full Court in Milpurrurru, Lee J, dissented. In the result, while there was a majority view that the non-executive directors in the case were not liable for their company's infringement of copyright, there was no single articulation of the jurisprudential basis for that view.
374 The point next came before the Full Court in Allen Manufacturing. This was a design case involving hinges. The director, and the person in control, of the infringing company had previously worked for the company which later became the owner of the registered design. After that design had been registered, and had commenced to be used commercially, the director applied for registration, in his own name, of a design for a hinge which was held to be a fraudulent imitation. The question was whether the director was, along with his company, liable for the infringement.
375 The Full Court referred to the tests in Performing Right and Mentmore Manufacturing. Their Honours referred to the approaches which had been taken by different members of the court at first instance in various cases. They said (53 IPR at 410 [43]):
The difference between the two tests may be more apparent than read [sic]. We are not aware of any case in which it has been held that a director or officer of a company directed or procured the company's infringing act, yet that person escaped liability because he or she did not deliberately, wilfully or knowingly pursue a course of conduct that was likely to constitute infringement or that reflected indifference to the risk of infringement. This may be because, in practice, an act of direction or procurement will generally meet the Mentmore test. It is notable that, in Mentmore itself, the Canadian Federal Court of Appeal declined (at 204) to "go so far as to hold that the director or officer must know or have reason to know that the acts which he directs or procures constitute infringement". The court declined to do this because that "would be to impose a condition of liability that does not exist for patent infringement generally".
Their Honours observed that, to the extent that there was "a real difference between the tests, each [had] eloquent supporters". They took the view that, on either test, the director of the infringing company in the case before them would be liable.
376 The point was also considered in Cooper v Universal Music Australia Pty Ltd (2006) 156 FCR 380. One of the appellants was a person who operated a website which facilitated the downloading of music from third party sources, much of which was copyright. The other appellants were one of two companies which together operated an Internet service provider business, the director (and controlling mind) of both those companies and an employee of the other of them. The first appellant's website was hosted by the Internet service provider. The appellants had been held liable at first instance for copyright infringement under the terms of s 101(1) and (1A) of the Copyright Act. The appellant company and the director failed in their appeals, but the employee succeeded in his. In relation to the company, Branson J decided the case wholly by reference to s 101, although she passed briefly on the principles with which we are here concerned. In relation to the director, her Honour observed (156 FCR at 391 [54]) that he did not challenge the conclusion of the primary Judge that, as the controlling mind of the Internet service provider company, he was liable for its infringing conduct.
377 As I read her reasons, Kenny J too determined the matter adversely to the Internet service provider company under s 101. With respect to the position of the director, her Honour adverted to Allen Manufacturing, and expressed the view that "the law concerning the liability of directors and other officers for corporate wrong doings is unclear" (156 FCR at 413 [160]). Her Honour referred to the tests deriving from Performing Right and from Mentmore Manufacturing and to a third test which was articulated by Finkelstein J in Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 177 ALR 231, 268 [146] in the following terms: "The director's conduct must be such that it can said of him that he was so personally involved in the commission of the unlawful act that it is just that he should be rendered liable." (156 FCR at 414 [161]). Kenny J said that she "[tended] to agree with his Honour's approach" (156 FCR at 414 [161]). Her Honour said that the director of the Internet service provider company in the case before the Full Court was "plainly liable for the wrongdoing of the company" (156 FCR at 414 [163]). She said that he would be liable for copyright infringement whichever test were applied. She continued:
[The director] directed and procured [the company's] authorization, in circumstances where he knew about the contents of the website and the copyright difficulties to which the website gave rise. He knew that, by hosting the site, [the company] was permitting internet users to download and copy sound recordings in which copyright subsisted. He consented to the arrangement entered into between his companies and [the website operator], whereby they advertised on the website in return for largely free hosting. Through his companies, he sought to derive financial benefit from the internet users' use of the website. [The director] took no steps to prevent the infringing acts after [the website operator] failed to comply with [the company's] request to take the website down, although, as the controlling mind of [the company], he could have caused [the company] itself to take the website down or decline to continue to host the site.
As a second basis for her conclusion, Kenny J said that the director was, apart from the principles referred to above, directly liable because of his authorization of the company's conduct, pursuant to the deeming provisions of s 101 of the Copyright Act (156 FCR at 414-415 [164]).
378 The employee of the service provider company who appealed in Cooper was the primary point of contact as between that company and the person who operated the website. It is implicit at least in the reasons of the Full Court that he was well aware of the nature of that operation, and of the fact that it facilitated the downloading of music from third-party sites. At the technical and operational level, it would seem that whatever needed to be done on behalf of the Internet service provider company was done by this employee. However, both Branson J and Kenny J held that he was not liable for copyright infringement. There was unchallenged evidence that his was a subordinate role in the way of technical support. Branson J noted that it was not entirely clear upon what basis the primary Judge had found the employee liable. Her Honour noted that the primary Judge had specifically rejected the proposition that the employee was a joint tortfeasor with his company. Her Honour rejected the proposition that he fell within the terms of s 101(1A) of the Copyright Act. She held that the employee would not be liable either under the Performing Right test or under the approach favoured by Finkelstein J in Root Quality. Her Honour's short reasons for this conclusions were as follows (156 FCR at 394 [74]):
Further, for the reasons given above, the evidence before the primary judge was insufficient to demonstrate that [the employee] held an executive or managerial role within either [of the internet service provider companies] such that his involvement with their acts of copyright infringement rendered him personally liable for those acts of copyright infringement.
379 Kenny J held (156 FCR at 415 [167]) that the employee could not be liable under any of the three tests to which she had adverted (ie Performing Right, Mentmore Manufacturing and Root Quality). Her Honour regarded that proposition as quite plain. She said that the employee's role was to provide technical support, that he had no control over the company's affairs, that he had no policy-making role in the company, and that, when problems arose, or a decision affecting the company needed to be made, he went to his superiors.
380 The third member of the court, French J, agreed with the reasons of both Branson J and Kenny J.
381 The uncertain state of the law as revealed by these three Full Court authorities (particularly Allen Manufacturing and Cooper) is reflected in judgments of single members of the court. As noted above, Finkelstein J had to deal with the problem in Root Quality, and, after a very comprehensive review of the cases, his Honour formulated the test to which I have referred. In another judgment about seven years later, TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) (2007) 158 FCR 444, Finkelstein J considered the problem again, and stated that he was not persuaded that his approach in Root Quality had been in error (158 FCR at 491 [186]).
382 In Microsoft Corporation v Auschina Polaris Pty Ltd (1996) 71 FCR 231, Lindgren J also undertook a careful examination of the authorities as they then stood. His Honour made two distinctions which are, in my respectful view, of singular importance (71 FCR at 241-242). The first was between what he called "dealings cases" and other cases. Where the injured party had chosen to "deal" with the company instead of the director, there would, as I understand his Honour, be a more obvious reason for confining him or her to remedies which may be secured as against the company. The second distinction was between cases in which the law imposed a duty on the director personally, and those in which it did not. The example which his Honour gave was of a director who negligently drove a motor car into a fence: the fact that he or she was acting as a company director (and that the company would, therefore, be vicariously liable) would not derogate from the director's personal liability for his or her negligent act.
383 This second distinction is, in my view, of more importance than is often appreciated, particularly in the field of intellectual property. There are some delicts which, of their nature, can be done by anyone. The reproduction of a literary work is an example. To take the simple case of photocopying such a work, if the director stood at the photocopier and performed that function, he or she would have infringed. So would the company of which he or she was a director. The position would be no different if the director had instructed a clerk to take a copy of the work. In that case, the director would be liable because, in essence, the act of photocopying was his or her own. The role of the clerk would be purely instrumental (a circumstance which would not, of course, absolve the clerk of liability in addition to that of the director). In this case the company would be liable because the infringement was done by its director and employee.
384 The situation is different where, of its nature, the delict cannot be done by a person other than the company itself. In Microsoft, Lindgren J was faced with just such a situation. The copyright infringements there alleged were the importation and sale of articles the marketing of which, if done in Australia, would have amounted to infringements. His Honour noted that the director neither imported nor sold the articles. Although not so stated in terms, what his Honour clearly had in mind was the circumstance that it was the company which obtained, had and disposed of property in the articles, and that the director (and any other person) was, therefore, incapable of direct infringement. This put the class of cases with which his Honour was concerned outside the conventional "joint tortfeasor" line of authority as represented, most typically, by Brooke v Bool [1928] 2 KB 578.
385 In Microsoft, Lindgren J referred to Mentmore Manufacturing, and to the preference for the "made the tortious act his own" criterion expressed by Nourse J in White Horse Distillers Ltd v Gregson Associates Ltd [1984] RPC 61. His Lordship had identified the Mentmore Manufacturing principles in the following terms ([1984] RPC at 91):
Before a director can be held personally liable for a tort committed by his company he must not only commit or direct the tortious act or conduct but he must do so deliberately or recklessly and so as to make it his known [sic], as distinct from the act or conduct of the company. It is unnecessary for him to know, or have the means of knowing, that the act or conduct is tortious. It is enough if he knows or ought to know that it is likely to be tortious. The facts of each case must be broadly considered in order to see whether, as a matter of policy requiring the balancing of the two principles of limited liability and answerability for tortious acts or conduct, they call for the director to be held personally liable.
Noting that this was a higher test than that referred to by Atkin LJ in Performing Right, Nourse J continued ([1984] RPC at 92):
Subject to the question of policy, there is, in my view, much to be said for the higher test, particularly in regard to its requirement that the director should make the act or conduct his own as distinct from that of the company. That would seem to be an entirely rational basis for personal liability. Conversely, it would seem to be irrational that there should be personal liability merely because the director expressly or impliedly directs or procures the commission of the tortious act or conduct. In the extreme, but familiar, example of the one-man company, that would go near to imposing personal liability in every case. As for deliberateness or recklessness and knowledge or means of knowledge that the act or conduct is likely to be tortious, I think that these may on examination be found to be no more than characteristic, perhaps essential, elements in the director's making the act or conduct his own.
In Microsoft, Lindgren J reacted to this passage as follows (71 FCR at 245):
With respect, I do not find the formula, "making the tortious act his own", particularly illuminating, and, for reasons given earlier, in my opinion the reference to "limited liability" is confusing. The reference to "deliberateness" and "recklessness" is also troublesome in view of the fact, which no-one seems to doubt, that the director need not have known that the conduct was tortious.
His Honour referred also to the judgment of Beazley J in King v Milpurrurru and expressed his preference (departing from her Honour) for the "directed or procured" test deriving from Performing Right.
386 The Performing Right test as preferred by Lindgren J in Microsoft has been followed in a number of subsequent first-instance judgments of the court: see Henley Arch Pty Ltd v Clarendon Homes (Aust) Pty Ltd (1998) 41 IPR 443, [463]-[464]; Microsoft Corporation v Goodview Electronics Pty Ltd (2000) 49 IPR 578, 586-587 [39]-[41]; Sony Music Entertainment (Aust) Ltd v CEL Music Pty Ltd (in liq) (2002) 54 IPR 289, 295-296 [28]-[29]. In other cases, however, Judges have noted the existence of the two competing tests, and decided the matters before them without the need to resolve the uncertainty: see Wellness Pty Ltd v Pro Bio Living Waters Pty Ltd (2004) 61 IPR 242, 249-250 [38]-[39]; Australasian Performing Right Association Ltd v Metro on George Pty Ltd (2004) 210 ALR 244; AMI Australia Holdings Pty Ltd v Bade Medical Institute (Aust) Pty Ltd (No 2) [2009] FCA 1437, [96]-[105].
387 Notwithstanding the preference of Lindgren J, Judges of the court have at times expressed reservations as to the Performing Right test. I have referred to the judgment of Finkelstein J in Root Quality. His Honour adverted to the difficulties with the test that the judgments which had applied it did not confront. His Honour said (177 ALR at 260 [125]):
A corporation is an abstraction; a creature of statute. It can carry out acts only because the law attributes to the corporation certain actions of its directors and officers. Thus a corporation can interfere with the rights of a third party only when the acts constituting the unlawful interference are attributed to the corporation. There is a reason why, in that circumstance, the law should not impose liability both on the corporation for unlawful interference and separate liability on the director or officer for procuring that interference.
His Honour then referred to the Said v Butt [1920] 3 KB 497 and O'Brien v Dawson (1942) 66 CLR 18 line of cases, which emphasised the conceptual inappropriateness of regarding a company officer, relevantly controlling the actions of the company, as contemporaneously inducing the company to breach a contract which it has with a third party. In formulating his own test (to which I have referred) Finkelstein J implicitly rejected the Performing Right test (while recognising that it remained the test then being applied in the English courts).
388 In the same year as Finkelstein J decided Root Quality, Finn J decided Oakley Inc v Oslu Import & Export Pty Ltd (2000) 48 IPR 32. Although his Honour did not advert to Performing Right as such, it is clear that he approached with much reserve the notion that a director might, by reason of his or her position as such, be liable for a tort committed by his or her company. His Honour said (48 IPR at 39 [35]):
While judges in this court in other intellectual property settings have discussed the nature of this liability … such are both the controversies surrounding it in the common law world and its implications for small companies … that, in the absence of argument directed to the foundation of the tort - and in particular to whether it properly is to be regarded in the present setting as an intentional tort - I am not prepared to assume liability from the fact that, as the company's alter ego, [the director] directed the actions that gave rise to the infringements.
As events turned out, his Honour listed the case for further hearing on the issue of the liabilities of the director, and, on 10 April 2001, he held that the director was liable: [2001] FCA 385. His Honour followed Sundberg J in the judgment to which I next refer, while recognising that "the question of accessorial liability of a director [was] a vexed one on which views differ".
389 Pioneer Electronics Australia Pty Ltd v Lee (2000) 108 FCR 216 was also a copyright case involving importation. Sundberg J observed that the law was in "an uncertain state". He identified four separate views which had judicial support, namely (108 FCR at 233):
1. A director will be liable along with the company when he has procured or directed it to commit the tort: Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1 at 14; Kalamazoo (Aust) Pty Ltd v Compact Business Systems Pty Ltd (1985) 84 FLR 101 at 127; Martin Engineering Co v Nicaro Holdings Pty Ltd (No 2) (1991) 100 ALR 358; Microsoft Corporation v Auschina Polaris Pty Ltd (1996) 71 FCR 231; 142 ALR 111; Lott v JBW & Friends Pty Ltd (2000) 76 SASR 105; Henley Arch Pty Ltd v Clarendon Homes (Aust) Pty Ltd (1998) 41 IPR 443 at 464.
2. A director will be liable only if he has made the wrongful act his own as distinct from it being an act of the company: Mentmore Manufacturing Co Ltd v National Merchandising Manufacturing Co Inc (1978) 89 DLR (3d) 195; White Horse Distillers Ltd v Gregson Associates Ltd [1984] RPC 61 at 91; King v Milpurrurru (1996) 66 FCR 474 at 495-501; 136 ALR 327 at 346-351.
3. A director will be liable if he has assumed responsibility for the company's acts: Trevor Ivory Ltd v Anderson [1992] 2 NZLR 517.
4. A director is not liable for procuring the company to infringe the rights of others: Said v Butt [1920] 3 KB 497; O'Brien v Dawson (1942) 66 CLR 18 at 32, 34; Rutherford v Poole [1953] VLR 130; Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 177 ALR 231.
Sunberg J said (at 234) that the "clear preponderance of authority" favoured the first approach. His Honour was not convinced that that approach was clearly wrong, and he applied it.
390 It was in this state of things that Allen Manufacturing was decided at first instance: McCallum & Co Pty Ltd v Allen Manufacturing Co Pty Ltd (2001) 52 IPR 550. Gyles J noted that there had been "divergence of opinion" on the question of the liability of a director for the wrongs of his or her company "which has not been authoritatively settled" (52 IPR at 555 [30]). As noted above in these reasons, no such settlement emerged from the judgment of the Full Court in the same case.
391 The present state of the law in England, such as it is, was laid down in the judgment of the Court of Appeal in MCA Records Inc v Charly Records Ltd [2002] FSR 26. Chadwick LJ, who delivered reasons with which Tuckey and Simon Brown LJJ agreed, said ([2002] FSR at 415) that the basis of an assertion of joint tortfeasor liability in relation to an alleged infringement of a statutory right had been explained by Mustill LJ in Unilever Plc v Gilette (UK) Ltd [1989] RPC 583. That was a patent case in which the plaintiff sought to add as defendant the US parent of the existing defendant, on the basis that it was jointly liable because of a common design. The interlocutory application was decided substantially by reference to the question whether the parent company could be so jointly liable. In a judgment with which the other members of the Court of Appeal agreed, Mustill LJ said ([1989] RPC at 602-603):
In a case such as the present, where the infringement alleged includes (for example) the sale of the patented product made up into a marketable form, and the importation of the product, a literal interpretation of the section might lead to the conclusion that only the person who has actually sold the product and imported it can be an infringer - apart, perhaps, from the exceptional case, contemplated by Sir George Jessel M.R. in Townsend v. Haworth (1878) 48 L.J. Ch. 770 at 772 where the direct infringer is the "mere cat's-paw" of someone else. This is not however the way in which the law has developed. It has gone further than this, in two stages.
The first of these stages was the development of the principle of joint tortfeasance: The Koursk [1924] P 140; Brooke v Bool. The second stage was the recognition that someone who had not directly infringed a patent could nonetheless be liable because of his or her involvement in a common design with the primary infringer. In Unilever, it was held that, given the existence of a common design (which was alleged), the parent company could be liable, and the amendment was allowed.
392 However, Unilever was not concerned with the question of a director's personal liability for the wrongs of his or her company. The other party sought to be joined was a shareholder. The separation of ownership and control implicit in the structure of a modern joint stock company will mean that it will not often be a shareholder who (in that capacity) directly performs (or authorizes) the acts of his or her (or its) company. The directors have both the legal and the practical obligation to do that. Neither Performing Right nor Mentmore Manufacturing was considered in Unilever, and I do not regard it as direct authority on the question with which we are presently concerned.
393 Returning to MCA Records, in the result Chadwick LJ set down four "propositions" which were considered to be consistent with the authorities. With the assent of the other members of the court, his Lordship said ([2002] FSR 26 at [49] - [52]):
49. First, a director will not be treated as liable with the company as a joint tortfeasor if he does no more than carry out his constitutional role in the governance of the company - that is to say, by voting at board meetings. That, I think, is what policy requires if a proper recognition is to be given to the identity of the company as a separate legal person. Nor, as it seems to me, will it be right to hold a controlling shareholder liable as a joint tortfeasor if he does no more than exercise his power of control through the constitutional organs of the company - for example by voting at general meetings and by exercising the powers to appoint directors. Aldous LJ suggested, in Standard Chartered Bank v Pakistan National Shipping Corporation (No 2) [2000] 1 Lloyd's Rep 218 , 235 - in a passage to which I have referred - that there are good reasons to conclude that the carrying out of the duties of a director would never be sufficient to make a director liable. For my part, I would hesitate to use the word "never" in this field; but I would accept that, if all that a director is doing is carrying out the duties entrusted to him as such by the company under its constitution, the circumstances in which it would be right to hold him liable as a joint tortfeasor with the company would be rare indeed. That is not to say, of course, that he might not be liable for his own separate tort, as Aldous LJ recognised at paragraphs 16 and 17 of his judgment in the Pakistan National Shipping case.
50. Second, there is no reason why a person who happens to be a director or controlling shareholder of a company should not be liable with the company as a joint tortfeasor if he is not exercising control through the constitutional organs of the company and the circumstances are such that he would be so liable if he were not a director or controlling shareholder. In other words, if, in relation to the wrongful acts which are the subject of complaint, the liability of the individual as a joint tortfeasor with the company arises from his participation or involvement in ways which go beyond the exercise of constitutional control, then there is no reason why the individual should escape liability because he could have procured those same acts through the exercise of constitutional control. As I have said, it seems to me that this is the point made by Aldous J (as he then was) in PLG Research Ltd v Ardon International Ltd [1993] FSR 197 .
51. Third, the question whether the individual is liable with the company as a joint tortfeasor - at least in the field of intellectual property - is to be determined under principles identified in CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013 and Unilever Plc v Gillette (UK) Limited [1989] RPC 583. In particular, liability as a joint tortfeasor may arise where, in the words of Lord Templeman in CBS Songs v Amstrad at page 1058E to which I have already referred, the individual "intends and procures and shares a common design that the infringement takes place".
52. Fourth, whether or not there is a separate tort of procuring an infringement of a statutory right, actionable at common law, an individual who does "intend, procure and share a common design" that the infringement should take place may be liable as a joint tortfeasor. As Mustill LJ pointed out in Unilever v Gillette, procurement may lead to a common design and so give rise to liability under both heads.
These propositions have been used by English courts since then.
394 As to these four propositions, I would, with respect, make the following observations. The first proposition does not, it seems to me, come to grips with the kind of practical questions that have arisen in the cases, or that are likely to arise. It challenges one to contemplate what a director might do that was more than merely voting at board meetings. What would be, for example, the position of a director who had been a member of a board sub-committee that recommended a particular investment? As his Lordship recognised, his propositions were not intended to be prescriptive principles, but I would regard the first of them as going no further than establishing the most basic of starting points.
395 His Lordship's second proposition likewise operates, if I may so observe, at a very basic level. It seems to be no more than that the circumstance that the putative defendant is a director of the company which is the primary wrongdoer will not absolve him or her from liability, if otherwise that liability would arise under normal principles - ie by reference to his or her participation or involvement in the wrongful act. The proposition does not grapple with the question of what participation or involvement will be required in a case in which the primary wrongdoer was a company and the individual was a director doing more than merely voting at board meetings.
396 In his Lordship's third proposition, Chadwick LJ linked the liability of an individual as a joint tortfeasor with his or her company first to CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013. The joint tortfeasor question which arose there was whether the makers of sound recording equipment sold into the consumer market were liable for infringement of copyright along with those who purchased their equipment and used it to reproduce copyright works. As to that question, with the assent of the other members of the House of Lords, Lord Templeman said ([1988] AC at 1058):
My Lords, I accept that a defendant who procures a breach of copyright is liable jointly and severally with the infringer for the damages suffered by the plaintiff as a result of the infringement. The defendant is a joint infringer; he intends and procures and shares a common design that infringement shall take place. A defendant may procure an infringement by inducement, incitement or persuasion.
His Lordship went on to hold that the makers of the equipment had not acted in this way merely by advertising and selling the equipment to consumers. However, like Unilever, CBC Songs did not involve the liability of a director for the wrongs of his or her company, and it did not deal with the different tests in Performing Right and Mentmore Manufacturing. Because it contains no analysis of the conceptual issues which have been drawn to attention in the judgments of this court to which I have referred, I am disposed to think that CBS Songs does not, save by way of general background, provide much assistance in the resolution of the present question.
397 I also consider, with respect, that Chadwick LJ's fourth proposition takes the matter no further than the third, in the sense that it affirms the point that an individual who intends, procures and shares a common design with the primary infringer that the infringement should take place may also be liable. Further, there is a certain tentativeness about the fourth proposition, in that it is proposed that such an individual "may" be liable as a joint tortfeasor. Consistently with the principle which his Lordship appeared to be upholding, it is difficult to see how an individual could not be liable if he or she intended that the infringement take place, procured it to take place and shared a common design with the primary infringer that it should take place.
398 For the above reasons, I am not persuaded that MCA Records (which as I have said, represents the currentstate of the law in England) comes satisfactorily to grips with the conceptual and practical issues that troubled Le Dain J in Mentmore Manufacturing , Beazley J in Milpurrurru and Finkelstein J in Root Quality. Indeed, I am disposed to think that the "literal interpretation of the section", which Mustill LJ implied (in Unilever) might be regarded as the more obvious basis for determining who should be liable in patent and analogous cases (see para 391 above) would represent a more jurisprudentially convincing approach to take. However, because of the limited nature of the argument which we received here, the present case is not the right occasion to consider whether someone other than the primary infringer under s 71 of the Designs Act can ever be liable in damages. I shall limit my consideration of the problem to the dimension of it which concerns the liability of directors in circumstances in which their companies are the primary infringers.
399 It will be apparent that the law is in an uncertain state. I do not consider it a satisfactory resolution of the present appeal for us to go no further than to note that circumstance, and to attempt to decide the matter in a way which avoids confronting the uncertainty. On two previous occasions, Full Courts have adopted such an approach and, while I do not for a moment imply that they were not entitled to do so in the circumstances with which they were dealing, the result has been that the state of the law as to the liability of a director for the torts of his or her company is unclear. This lack of clarity is, if I may say so with respect, very neatly encapsulated in the short extract from the judgment of Sundberg J in Pioneer Electronics which I have set out above. The point is directly raised in the present appeal and, so far as may be done, I consider that we ought attempt to resolve some of the issues disclosed in the authorities.
400 It is universally accepted that a director is not liable for the wrongs of his or her company merely by reason of the office of director which he or she holds. In other words, there is no special rule of law that makes a director liable in such circumstances. The problem has arisen from the application to directors of the general rules of law by which a person who has not directly committed a civil wrong will be liable for the wrong of another because of his or her relationship with that other (eg where the person is the master and the other the servant) or involvement in the wrong done by that other (eg where the wrong itself was done pursuant to a common enterprise; or where the wrong was done by the other at the direction of the person).
401 It has likewise been observed on occasion that there is no reason why a person should be immune from liability, pursuant to general rules of the kind to which I have referred, merely because he or she happens to be a director of the company which is the direct wrongdoer. This seems clear as a matter of principle, but there is a sense in which it goes no further than to beg the question in a situation in which the director himself or herself was the human agency through which the company acted in committing the wrong. I am, of course, here dealing not with cases in which the director would be directly liable for something done by him or her in the service of the company (such as negligently driving the company vehicle so as to cause injury to a pedestrian), but with cases in which there would be no wrong at all but for the acts of the company (such as the importation of goods in infringement of design). What is it about the position of the director whose actions have caused the company to commit the wrong which should make him or her liable in addition to the company?
402 As I observe it, there are several aspects of such additional liability that have troubled courts in the past, notwithstanding the apparent simplicity of the verbal formula in Performing Right. At base is the circumstance that a company is an artificial person which can act only through the agency of individuals. When a company does something, there will usually be someone who has directed or procured it to be done. When a company breaches its contract, there will often be an individual whose decision has caused the company so to act. However:
A company "cannot act in its own person for it has no person" (Ferguson v. Wilson (1866) 2 Ch. App. 77, at p. 89). So it must of necessity act by directors, managers, or other agents. The company, if it were guilty of a breach of its contracts in this case, acted through its director the respondent Doyle, but it is neither "law nor sense" (Lagunas Nitrate Co. v. Lagunas Syndicate (1899) 2 Ch. 392, at p. 431) to say that Doyle in the exercise of his functions as a director of the company combined with it to do any unlawful act or become a joint tortfeasor. Again, it is equally fallacious to assert that Doyle knowingly procured the company to break its contract. The acts of Doyle were the acts of the company and not his personal acts which involved him in any liability to the plaintiff.
(O'Brien v Dawson, 66 CLR at 32, per Starke J). With respect to those who take a contrary view, I consider that there is something conceptually doubtful about a proposition that would have a director in the position of Mr Doyle in O'Brien v Dawson directing or procuring the company to act in a particular way.
403 Another cause for concern relates to the matter of limited liability. While perhaps more an issue of policy than of analysis, the fact is that, to make a director liable for the wrongs of his or her company - when he or she would not otherwise be liable - would be to expose those who serve the company to greater liability at the suit of third parties than are the proprietors themselves. As a matter of principle, it is no answer to this concern to rejoin that the director would in any event be answerable to the company for the external consequences of his or her internal mistakes: so it may be in some cases, but it provides no rational jurisprudential basis for making the director liable directly to the third party. I also consider that it is altogether too simplistic an approach to assume that a director will necessarily be liable at the suit of the company for the consequences of any wrong committed by the company by reason of his or her conduct. Merely to have acted in a way that exposed the company to a claim by a third party will not always amount to a breach of duty to the company, the remedy for which would correspond closely with that achieved by the third party as against the company.
404 Returning to the question which I posed at the end of para 401 above, I believe that the answer lies in the application of the conventional rules of law as to joint liability to the particular circumstance where the primary wrongdoer is an artificial person who can act only by human agency. Each of the two main conventional rules to which I have referred - directing another to commit a tort and participation in a joint enterprise - requires, or at least assumes, a duality (or multiplicity) of actors. In this sense, the presentation of the problem has much in common with that of inducement to breach of contract with which Starke J dealt in O'Brien v Dawson. For a director to be liable because he or she directs or procures his or her company to commit a wrong, the context must be such that the director is effectively standing apart from the company and directing or procuring it as a separate entity. There must be a sense in which the director is using the company as the instrument of his or her own wrong. This is, as I have explained earlier, the original sense in which Atkin LJ's words in Performing Right are to be understood, at least to the extent that they drew upon what Lord Buckmaster had earlier said in Rainham Chemical. Likewise with a joint enterprise, unless the director is conceptually separate from the company, there is, it seems to me, no "jointness" about the enterprise at all, but merely a one-person wrong in which the company is actor.
405 It will be seen from the foregoing that I agree substantially with so much of the judgments of Le Dain J in Mentmore Manufacturing, of Nourse J in White Horse and of Beazley J in Milpurrurru as make it a requirement of liability that the director should make the tort his or her own. Other courts have at times expressed reservations about this formula but, in my view, its utility lies in the focus it gives to an understanding of the principle of dual or multiple participation as I have attempted to explain it above. It would be a mistake to attempt to resolve cases by reference to a search for the moment in time when a director made the company's wrongdoing his or her "own". We are not here dealing with a species of property, or with ownership in any sense. However, in a situation in which the company-role and the personal-role of the director may be blurred, the formula does highlight the crucial distinction between acts which are done for and in the service of the company and acts which, in addition, are done in the director's own personal capacity - a "non-company capacity" as it were.
406 I consider that effectively the same end point is reached if the first of Chadwick LJ's four propositions in MCA Records is taken to its logical conclusion - a conclusion which, at least generally, is both just and in accordance with principle. I can, with respect, see no reason to limit the proposition to so much of the activities of a director as involve him or her voting at board meetings. In practice, problems nearly always arise in this area in the case of executive directors. I see no reason to draw the line at the proceedings of the board, but short of acts done by a director consistently with board decisions. I would apply the proposition to any act done by a director in what he or she, in good faith, reasonably perceives to be the interests of the company. In such a circumstance, the act of the director should be seen as the means by which the company itself acts, and not as the director "directing or procuring" the company to act, or participating in some joint enterprise. To regard the act in either of the latter senses would, in my view, be to take a quite artificial approach to the matter.
407 Although I have discussed the problem above with reference to directors as such, and although the context of the present appeal is so limited, it will be apparent that the solution which attracts itself to me is not, in point of principle, limited in its application to a situation in which it is a director whose acts have brought about the commission of the tort. What I have said applies equally to any servant or agent whose acts have that consequence. Indeed, one of the anomalies of the present state of the law (such as it is), in my respectful view, may be seen in the distinction which Branson and Kenny JJ drew in Cooper between a person in a position to determine what the company itself would do and a person in a subordinate role. The latter, it seems, could never be liable in accordance with the test in Performing Right. In my view, this is an unsatisfactory distinction. The point should not be whether the individual sought to be made liable can, or did, determine how the company might act, but whether there was a dimension to his or her role which was separate from the good faith discharge of his or her duties in the service of the company. If so, there will be a basis, in accordance with general principles, for making the individual liable because he or she was involved in a joint, wrongful, enterprise with the company.
408 In my view, the question arising in the present case should be resolved in accordance with the approach to which I have referred. The facts set out at para 360 above are not such as would, consistently with that approach, sustain a finding that either of Messrs Keller and Armstrong was a joint tortfeasor with Ren or Olsen in the infringement of LED Technologies' registered designs. Their appeals against the primary Judge's findings of infringement should be allowed.