The Law
140 In pars 1 and 2 of its outline the applicant puts its case as follows:
'1. This proceeding raises for determination by the Court the extent of the obligations of a owner of market premises, where it is drawn to the owner's attention that, over a period of years, some of the stallholder licensees are engaging in the unlawful conduct of selling counterfeit goods and thereby infringing a number of registered trade marks.
2. It is contended that where, as here, the landowner takes no effective steps to stop the conduct but by acts or omissions tacitly accepts it, the landowner in fact joins in the tort and becomes independently liable as a joint tortfeasor.'
141 In the course of the trial, the applicant sought to base its case on three different propositions, namely:
· that a person in control of premises who benefits from another's activities on those premises is liable for torts committed by that other person in conducting those activities;
· that a licensor who, having knowledge of past torts committed by a licensee on the relevant premises, permits the licensee to continue using the premises is liable for any further torts (of the same kind) committed by the licensee; and
· that a licensor is liable for torts committed by a licensee in carrying out their joint enterprise.
142 In the course of oral submissions counsel put the case in this way (at TS 200 ll 25-30):
'Our starting point is very simple, your Honour. When one goes to The Koursk([1924] P 140) which has been adopted as the foundation of the principle of joint tortfeasorship by the High Court in Thompson's case, [Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574] and we've set it out in paragraph 18 of our outline, Scrutton LJ spoke of two persons who agree on a common action in the course of, and to further which one of them commits a tort.
And that's the foundation of what are joint tortfeasors. In this case, in our respectful submission, the evidence is clear that Toea, as landlord or land owner, and the stallholders, who are two or more persons, agree on a common action, the common action being the promotion of their joint businesses at the market.'
143 Given that the relevant cause of action is created by the Trademarks Act 1995 (Cth) (the "Trademarks Act"), one might reasonably have expected the applicant's case to commence with an examination of the relevant statutory provisions, with a view to identifying the extent to which either of the respondents could be said to have infringed in the sense defined in s 120. Pursuant to ss 125 and 126, proceedings may be brought for such an infringement, seeking injunctive relief, damages or an account of profits. Criminal liability is imposed by Pt 14. Section 150 provides that a person who aids, abets, counsels, procures or is knowingly concerned in the doing of an act outside of Australia which, if done in Australia, would be an offence, is taken to have committed the offence. That section is said to be without prejudice to the operation of s 5 of the Crimes Act 1914 (now s 11.2 of the Criminal Code) which deals with aiding, abetting, counselling and procuring an offence committed by another person within Australia. However no provision extends civil liability to 'secondary' tortfeasors. Thus the applicant seeks to rely on principles as to liability in tort drawn from the general law.
144 Although the applicant's case has been put in various ways, my understanding is that the case against each of the respondents depends upon the allegations in par 34 of the further amended statement of claim (exhibit 13) that:
'By reason of the matters referred to above (Toea) and/or (Mr Rosenlund) have infringed and continue to infringe one or more of the Louis Vuitton trademarks as the conduct of the infringing stallholders was conduct undertaken with the concurrence of (Toea) and/or (Mr Rosenlund) and pursuant to their common design.'
145 The reference to 'the conduct of the infringing stallholders' relates to pars 14, 15 and 16 of the further amended statement of claim in which allegations are made against Mr Alcock, Ms Byrne and Ms Gallop respectively. Those allegations include specific allegations of infringement of the applicant's trademarks by sale of identified products on identified dates. The evidence concerning those transactions has been set out above. However there are also allegations, completely unparticularized, of infringement by manufacture, importation, advertisement and offering for sale, distribution or supply. Although there is some evidence of items, apparently bearing Louis Vuitton trademarks, having been seen at stalls (other than those items which were the subject of trap purchases), none of those items was examined by either Mr Bombardi or Mr Pichon. There is no evidence that they were counterfeit. I do not understand the applicant to rely upon display of those items. In the end the claims against each respondent depend upon the various trap purchases.
146 In par 34, the applicant also asserts that the conduct of infringing stallholders was 'conduct undertaken with the concurrence of the first and/or the second respondents and pursuant to their common design.' The allegation of 'concurrence' is particularized in earlier paragraphs of the further amended statement of claim. The applicant's case is that, with knowledge of past infringements, the respondents permitted the infringing stallholders to continue to trade at the Market. As to the question of 'common design', this assertion was developed in oral submissions, but no such design is particularized in the further amended statement of claim. It seems that the applicant asserts that the common design was to achieve success for the market through the success of individual stalls including, in particular, those of the infringing stallholders.
147 At this point I should make two comments concerning the applicant's case. Firstly, the case has been conducted upon the basis that no distinction should be drawn between the liability of Toea and that of Mr Rosenlund. Secondly, the applicant has not demonstrated that Mr Rosenlund or Toea was actually aware, in advance of any sale, that a relevant stallholder had counterfeit products at the Market or intended to sell such products. As I have said, in many cases the goods were not on display, but were produced from places of concealment in response to requests from the applicant's agents.
148 I have previously referred to the applicant's reliance on the decision of the Court of Appeal in The "Koursk" (supra). However I suspect that it has misconceived that decision. The case arose out of a collision at sea involving the "Clan Chisholm", The "Koursk" and the "Itria", leading to the loss of the "Itria". The owners of the "Itria" sued the owners of the other vessels, alleging separate and independent acts of negligence against each of them. The question was whether judgment recovered against the owners of the "Clan Chisholm" barred a further action by the owners of the "Itria" against the owners of The "Koursk". This depended upon whether the two ship owners (of the "Clan Chisholm" and The "Koursk") were joint or several tortfeasors. Bankes LJ adopted the following proposition from Clerk and Lindsell on Torts, 7th ed at p 59:
'Persons are said to be joint tortfeasors when their respective shares in the commission of the tort are done in furtherance of a common design.'
149 Scrutton LJ said at 155:
'The substantial question in the present case is: What is meant by "joint tortfeasors"? and one way of answering it is: "Is the cause of action against them the same?" Certain classes of persons seem clearly to be "joint tortfeasors": The agent who commits a tort within the scope of his employment for his principal and the principal; the servant who commits a tort in the course of his employment, and his master; two persons who agree on common action, in the course of, and to further which, one of them commits a tort. These seem clearly joint tortfeasor; there is one tort committed by one of them on behalf of, or in concert with another.'
150 The applicant fastens on the proposition concerning two persons who agree on common action in the course of which one commits a tort, submitting that the present case fits that description. However that observation by Scrutton LJ must be read in the context of his Lordship's later remarks at 156 where he referred with approval to the statement in Clerk and Lindsall (to which Bankes LJ had referred), that:
' "Persons are said to be joint tortfeasors when their respective shares in the commission of the tort are done in furtherance of a common design" … "But mere similarity of design on the part of independent actors, causing independent damage, is not enough; there must be concerted action to a common end." Still more so when there is not even similarity of design, but independent negligence accidentally resulting in one damage.'
151 At 159 Sargant LJ adopted the same passage.
152 The applicant points to the reference by Scrutton LJ to 'common action' and asserts that in this case, the common action agreed upon between the respondents and each stallholder was 'the function of their joint businesses at the Market'. No doubt the respondents desired that the Market be successful and took steps to achieve that aim. No doubt, too, each stallholder desired that his or her stall be successful and took steps to achieve that aim. However that does not lead to the conclusion that the respondents and each stallholder had agreed on common action. Aims are not actions. The term 'common action' must surely mean 'steps to be taken'. At p 155 of The "Koursk", Scrutton LJ was identifying common relationships in which joint torts generally occur, rather than the underlying principle which defines the relationship of joint tortfeasors. At 156, his Lordship addressed that principle, holding that each party must share in the commission of the tort in furtherance of a common design, not merely in furtherance of similar designs.
153 I turn to the decision of the House of Lords in CBS Songs Limited v Amstrad Consumer Electronics PLC [1988] 1 AC 1013. The facts appear sufficiently from the head note as follows:
'The plaintiffs, suing on behalf of themselves and other copyright owners in the music trade, claimed that the defendants, by manufacturing, advertising and offering for sale hi-fi systems with facilities for, inter alia, recording at high speed from pre-recorded cassettes onto blank tapes, had authorised and incited members of the public to infringe their copyrights, were joint infringers with such members of the public and were in breach of a duty of care owed to the copyright owners not to supply the machines without taking such precautions as would reasonably ensure that the copyrights would not be infringed by their use. They sought an injunction to retrain the defendants from parting with possession of the machines, or any like machines, without taking such precautions.'
154 At 1055, Lord Templeman said:
'BPI next submitted that Amstrad were joint infringers; they became joint infringers if and as soon as a purchaser decided to copy a record in which copyright subsisted; Amstrad could become joint infringers not only with the immediate purchaser of an Amstrad model but also with anyone else who at any time in the future used the model to copy records. My Lords, Amstrad sells models which include facilities for the receiving and recording broadcasts, disc records and taped records. All these facilities are lawful, although the recording device is capable of being used for unlawful purposes. Once a model is sold Amstrad have no control over or interest in its use. In these circumstances the allegation that Amstrad is a joint infringer is untenable. In Townsend v Haworth (1875) 48 L.J.Ch. 770n, decided in 1875 but reported in 1879 the defendant sold chemicals to be used by the purchaser in an infringement of patent and agreed to indemnify the purchaser if the patent should prove to be valid. Mellish L.J. said, at p.773:
"Selling materials for the purpose of infringing a patent to the man who is going to infringe it, even although the party who sells it knows that he going to infringe it and indemnifies him, does not by itself make the person who so sells an infringer. He must be a party with the man who so infringes, and actually infringe."
Mr Kentridge on behalf of B.P.I. relied on the decision in Innes v Short & Beal (1898) 15 R.P.C. 449. In that case the defendant Short sold powdered zinc and gave instructions to a purchaser to enable the purchaser to infringe a process patent. Bigham J said at p 452:
"There is no reason whatever why Mr Short should not sell powdered zinc, and he will not be in the wrong, though he may know or expect the people who buy it from him are going to use it in such a way as will amount to an infringement of Mr Innes' patent rights. But he must not ask the people to use it in that way, and he must not ask the people to use it in that way in order to induce them to buy his powdered zinc from him."
Assuming that decision to be correct, it does not assist BPI because in the present case Amstrad did not ask anyone to use an Amstrad model in a way which would amount to an infringement.
In Dunlop Pneumatic Tyre Co Ltd v David Moseley & Sons Ltd [1904] 1 Ch 164,171, … the defendant sold tyre covers which were an essential feature of a combination patent for tyres and rims. The tyre covers were adapted for use in the manner described in the patent, but not necessarily solely for use in that manner. Swinfen-Eady J said … that most of the "covers would probably ultimately be used in one or other of" the patented methods but that
"those are not exhaustive of the purposes to which the covers may be put, and that they would be useful for other purposes in connection with other tyres …"
…'
155 At 1057 his Lordship continued:
'My Lords, joint infringers are two or more persons who act in concert with one another pursuant to a common design in the infringement. In the present case there was no common design. Amstrad sold a machine and the purchaser or the operator of the machine decided the purpose for which the machine should from time to time be used. The machine was capable of being used for lawful or unlawful purposes. All recording machines and many other machines are capable of being used for unlawful purposes but manufacturers and retailers are not joint infringers if purchasers choose to break the law. Since Amstrad did not make or authorise other persons to make a record embodying a recording in which copyright subsisted, Amstrad did not entrench upon the exclusive rights granted by the Act of 1956 to copyright owners and Amstrad were not in breach of the duties imposed by the Act.'
156 In Thompson v Australian Capital Television Pty Ltd (supra) the facts, according to the head note, were as follows:
'A television station broadcast live to viewers in the Australian Capital Territory a current affairs programme produced by another station. The licence to broadcast was granted by PBL which was a related entity of the producer. The content of the broadcast was defamatory of T. T settled with the producer and gave it a release. T sued the broadcaster in the Supreme Court of the Territory. The broadcaster joined the producer and PBL as third parties, seeking contribution and also damages for breach of an implied condition of the licence agreement that they would exercise reasonable care to ensure that the relayed programme would not include defamatory material.
Although the broadcaster took no part in the production of the programme, it acted in its own right and had the ability to control and supervise the material it televised. The broadcaster voluntarily decided to broadcast live. It sought to defend the proceedings on the grounds that it and the producer were joint tortfeasors and that the release granted to the producer by T also released it.'
157 At 580-581, the majority (Brennan CJ, Dawson and Toohey JJ) said:
'The difference between joint tortfeasors and several tortfeasors is that the former are responsible for the same tort whereas the latter are responsible only for the same damage … . As was said in The "Koursk" …, for there to be joint tortfeasors "there must be a concurrence in the act or acts causing damage, not merely a co-incidence of separate acts which by their conjoined effect cause damage". Principal and agent may be joint tortfeasors where the agent commits a tort on behalf of the principal, as master and servant may be where the servant commits a tort in the course of employment. Persons who breach a joint duty may also be joint tortfeasors. Otherwise, to constitute joint tortfeasors two or more persons must act in concert in committing the tort.'
158 At 600, Gummow J (Gaudron J concurring) also identified the decision in The "Koursk" as defining joint liability for the purposes of Australian law. At 601 - 602, his Honour distinguished the decision in CBS Songs on its fact but did not doubt its correctness.
159 Finally, I should refer to the decision of the Court of Appeal in Credit Lyonnais Bank Nederland NV v Export Credit Guarantee Department [1998] 1 Lloyd's Rep 19. It is not necessary to set out the rather complex facts of the case, but I will include two extended extracts from the reasons for judgment of Stuart-Smith and Hobhouse LLJJ. Stuart-Smith LJ said at 35:
'Be that as it may, it seems to me to be well established that a person who acts with another to commit a tort in furtherance of a common design will be liable as a joint tortfeasor. It is not enough that he merely facilitates the commission of the tort unless his assistance is given in pursuance and furtherance of the common design.'
160 His Honour referred to the The "Koursk" and another case, and then observed that Lord Justice Mustill, in Unilever PLC v Gillette (UK) Ltd [1989] RPC 583:
'… stated the common law rule that two persons were joint tortfeasors -
… where the two were concerned in a joint act done in pursuance of a common purpose.
After reviewing the patent cases and the speech of Lord Templeman in CBS Songs Ltd v Armstrad… Lord Justice Mustill said at p 609 that the relevant question is whether:
(a) there was a common design between B and G to do acts which, if the patent is upheld, amounted to infringements, and (b) B had acted in furtherance of that design. I use the word "common design" because they are readily to hand, but there are other expressions in the cases, such as "concerted action" or "agreed or common action" which will serve just as well.'
161 Hobhouse LJ sought to compare treatment in the criminal law of parties to offences with the treatment of persons 'involved' in the commission of torts. His Lordship (at 42-43) identified three categories of persons other than the actual offender, to whom criminal liability attaches, namely:
· those who solicit or incite another to commit a crime or conspire with another to commit a crime;
· those who aid another in the commission of a crime, often known as 'aiding, abetting, counselling and procuring'; and
· principals whose agents commit offences.
162 Hobhouse LJ subsequently referred to The "Koursk", CBS Songs and Unilever, concluding (at 46) that these cases established that:
'It is only conduct which comes into the first or the third of the categories I have set out above which constitute the commission of a tort. The criminal law for obvious policy reasons goes further than the civil law. Acts which knowingly facilitate the commission of a crime amount to the crime of aiding and abetting but they do not amount to a tort or make the aider liable as a joint tortfeasor.'
163 His Lordship continued:
'Accordingly, in my judgment there is no second category in the law of tort. Mere assistance, even knowing assistance, does not suffice to make the "secondary" party jointly liable as a joint tortfeasor with the primary party. What he does must go further. He must have conspired with the primary party or procured or induced his commission of the tort (my first category); or he must have joined in the common design pursuant to which the tort was committed (my third category).'
164 In Kerly's Law of Trademarks and Trade Names 14th ed at par 19-044, the learned authors observe, in connection with trademarks, that:
'For the general principles applicable in relation to joint liability based on procurement or common design see CBS v Armstrad and Credit Lyonnais v Export Credit Guarantee Department'.
Those decisions are based on that in The "Koursk". The High Court's view of that case appears from the decision in Thompson v Australian Capital Television and is the relevant test for present purposes.
165 The applicant puts some emphasis upon Toea's legal capacity to control use of the Market premises. It implicitly asserts that the respondents failed to prevent infringement notwithstanding that power, and that such failure is a basis for inferring their 'concurrence' in the infringement. The question of control has arisen frequently in connection with breach of copyright. Subsection 36(1) of the Copyright Act 1968 (Cth) (the "Copyright Act") provides that a person infringes a copyright if he or she 'not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorises the doing in Australia, any act comprised in the copyright.' In University of New South Wales v Moorhouse (1974-1975) 133 CLR 1, the High Court considered the case of a university library which had provided photocopying machines on its premises, one of which had been used to make an unauthorized copy of a literary work. The question was whether the university had infringed by authorization. At 20-21, Jacobs J, with whom McTiernan J agreed, said concerning the word 'authorises':
'It is established that word is not limited to the authorising of an agent by a principal. Where there is such an authority the act of the agent is the act of the principal and thus the principal himself may be said to do the act comprised in the copyright. But authorisation is wider than authority. It has, in relation to a similar use in previous copyright legislation, been given the meaning, taken from the Oxford Dictionary, of "sanction, approve, countenance". …I have no doubt that the word is used in the same sense in section 36(1). It is a wide meaning which in cases of permission or invitation is apt to apply both where an express permission or invitation is extended to do the act comprising the copyright and where such a permission or invitation may be implied. Where a general permission or invitation may be implied it is clearly unnecessary that the authorising party have knowledge that a particular act comprised in the copyright will be done.
The acts and omissions of the alleged authorising party must be looked at in the circumstances in which the act comprised in the copyright is done. The circumstances will include the likelihood that such an act will be done. "… (t)he Court may infer an authorisation or permission from acts which fall short of being direct and positive; … indifference, exhibited by acts of commission or omission, may reach a degree from which authorisation or permission may be inferred. It is a question of fact in each case what is the true inference to be drawn from the conduct of the person who is said to have authorised …" '
166 See also CBS Songs (supra) at 1053-1055 and Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 67 ALJR 315 at 317.
167 Frequently, the capacity to authorize will depend upon the capacity to control. In that sense, the question of control is implicit in the concept of authorization. Subsequent amendments to s 36 of the Copyright Act have made that clear. Subsection 36(1A) now provides that in determining whether or not a person has authorized the doing of any act, matters to be taken into account include:
'(a) the extent (if any) of the person's power to prevent the doing of the act concerned;
(b) the nature of any relationship existing between the person and the person who did the act concerned;
(c) whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.'
168 There will be cases in which the relationship between the person who commits a tort and another person may be such as to amount to both authorization (in the case of copyright) and also to satisfy the test for joint tortfeasors laid down in The "Koursk" and Thompson v Australian Capital Television. However to prove authorization is not necessarily to prove infringement. As the present case demonstrates, control does not, itself, imply a common purpose. However the extent of control may be relevant evidence in determining whether such a common purpose existed at the relevant time.
169 As I have previously observed, I do not consider that Toea's control of the Market premises, either alone or in conjunction with the other evidence, would justify the inference that either Toea or Mr Rosenlund shared a common purpose with any of the infringing stallholders. In any event, I am satisfied that it would have been virtually impossible for the respondents to control stallholders so as to prevent infringement, save in the case of the most blatant misconduct. In this case, the extent of the demonstrated misconduct by infringing stallholders was not such as to lead the respondents to the conclusion that there would be further infringement. They were entitled to accept assurances given by infringing stallholders that they would not again infringe.
170 In the course of argument the applicant referred to three American cases concerning 'secondary' liability for trademark infringements. Given the clear statement of principle in connection with tortious liability in Thompson v Australian Capital Television, I see no point in discussing those cases in this judgment.