O'Brien v Komesaroff

High Court of Australia|1982-05-21|Before: Brennan JJ, Mason J, O'Bryan J

High Court of Australia Mason, Murphy, Aickin, Wilson and Brennan JJ. O'Brien v Komesaroff [1982] HCA 33

ORDER Appeal dismissed with costs. Cross appeal dismissed with costs.

The respondent, the plaintiff in the action, claimed against the appellants relief for breach of copyright and for breach of confidence. Both at first instance and in the Full Court of the Supreme Court of Victoria the respondent succeeded in relation to breach of copyright but was unsuccessful in relation to breach of confidence. From the decision of the Full Court the appellants appeal and the respondent cross appeals to this Court.

The respondent is an experienced solicitor who appeared in person. The first appellant ("the appellant") is an accountant and life insurance salesman. The second and third appellants are companies with which the appellant and members of his family have been closely associated. The respondent alleged that the appellants infringed his copyright in certain unit trust deeds and articles of association in 1974 and thereafter. The action for breach of confidence is founded upon an alleged confidential communication to the appellant of, and consequential misuse of, certain information relating to, first, the form of a unit trust deed drafted by the respondent which expressed a concept to minimize taxation and estate duty for the beneficiaries of the trust and, secondly, a scheme designed to minimize taxation by using an overseas trust in a suitable "tax haven" country in conjunction with an Australian trust entity.

In the late 1950s the respondent became professionally interested in the use of various devices as a means of minimizing taxation. At that time it was common for persons possessing considerable assets and income to use discretionary trusts to minimize the incidence of income tax. In the same period public unit trusts were in common use in the community. This concept involved the vesting of property in a trustee who was bound by a trust deed to deal with the property as directed by the manager (usually a private corporation). The trust property was held for the benefit of "unit holders", these being members of the public who subscribed to the trust and derived income from their investment in proportion to their unit holding. In 1959 or 1960, as a result of proposed changes to income tax legislation, the respondent researched the possibility of developing a private unit trust for an individual family as an alternative tax minimization device.

Between 1960 and 1974 the respondent drafted a number of unit trust deeds for clients of his firm. It was in 1960 that he drafted his first private unit trust. The trial judge, O'Bryan J., found that this deed was in similar form to a deed tendered in evidence (Ex. "B1"). His Honour found that it contained some original drafting by the respondent, some modification and adaptation from a precedent of a public unit trust deed, certain machinery clauses which use common legal language, and modifications and adaptations from a number of regulations contained in Table A, Fourth Sch. to the Companies Act 1961 Vict.; and that the plaintiff had produced by his own intellectual efforts a document that had never been produced in that form previously.

On 1 January 1967 the respondent went into partnership in legal practice with one Aarons. Most of the unit trust deeds drafted by the respondent were drafted whilst this partnership was subsisting (the partnership being dissolved, we are told, in 1977, though it would appear that it has not been wound up).

Two unit trust deeds, which were tendered in evidence (Ex. "7" and "B20") were of particular importance. The ownership of these two deeds came to be the principal question in this appeal.

Exhibit "7" superseded Ex. "B1" and came into existence in about 1970, approximately three years after the respondent formed his partnership with Aarons. The trial judge found that Ex. "7" differed from Ex. "B1" in six particular respects, those differences being immaterial to this appeal. The differences arose from discussions that took place between the respondent and Aarons over a period of months in the course of conducting their legal practice. Nevertheless, the trial judge found that Ex. "7" "evolved from" Ex. "B1" and it was not disputed in this Court that the respondent should be regarded as the sole author of Ex. "7".

In 1973 either the respondent or Aarons devised the concept of dividing the units into classes. This necessitated the re-drafting of cll. 3 and 4 in Ex. "7", the end result being that Ex. "B20" came into existence in 1974. It is clear that Ex. "B20" "evolved from" Ex. "7" and again the finding of the trial judge that the respondent was the sole author of the deed went unchallenged in this Court.

The respondent also claimed an infringement of copyright in a set of articles of association. These were tendered in evidence (e.g. Ex. "C37"). The articles of association were connected to Exs. "7" and "B20" - the trustee of the private unit trust created by those deeds was usually a proprietary company. From documentary evidence the use of the articles of association can be traced back to 1968, during the course of the respondent's partnership with Aarons, but the uncontradicted oral evidence of the respondent was that they were devised several years before that. No challenge was made to the respondent's authorship of the articles.

The respondent first met the appellant in 1973. The appellant believed that the respondent had developed concepts in relation to private discretionary family trusts that were unusual and likely to be advantageous to him in the course of selling life insurance. The appellant received from the respondent copies of Exs. "7" and "B20" and a copy of the articles of association appropriate for those deeds. Between 1974 and 1977 the appellants prepared unit trust deeds for their clients containing either identical or very similar clauses to Exs. "7" and "B20" and they persistently copied the respondent's articles of association.

In this Court the question in relation to the relevant documents, Exs. "7", "B20" and "C37", is not whether they were "literary works" capable of attracting the protection of the Copyright Act 1968 Cth ("the Act"), nor whether the appellants infringed the copyright in those works, all this being conceded. The only real question is whether the respondent was "the owner" of the copyright in relation to those documents, s. 115(1) of the Act providing that:

Subject to this Act, the owner of a copyright may bring an action for an infringement of the copyright. A preliminary question also arises as to the competence of the appellants to argue the question of ownership in this Court.

Subject to this section, the author of a literary, dramatic, musical or artistic work is the owner of any copyright subsisting in the work by virtue of this Part. As I indicated earlier, sole authorship by the respondent of the relevant "literary works" is admitted by the appellants.

But the appellants point out that s. 35(1) makes the provision of s. 35, including sub-s. (2), subject to, inter alia, Pt X of the Act. Section 196(1), which is in Pt X, provides:

Copyright is personal property and, subject to this section, is transmissible by assignment, by will and by devolution by operation of law.

The appellants then contend that ownership in copyright was vested in the respondent and Aarons jointly by the operation of s. 24(1) of the Partnership Act 1958 Vict.. That sub-section provides:

All property and rights and interests in property originally brought into the partnership stock or acquired whether by purchase or otherwise on account of the firm or for the purposes and in the course of the partnership business are called in this Act partnership property and must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement. According to the appellants, there is a general presumption that where property is used for the purpose of a partnership business it becomes partnership property (Higgins and Fletcher, Law of Partnership in Australia and New Zealand, 4th ed. (1981), p. 140).

One of the difficulties confronting the appellants is that, by virtue of s. 35(2) and s. 196(1) of the Act, in general there is a continuing subsistence of ownership of the literary copyright of the work in the author of that work unless and until it is transmitted by assignment, by will or by devolution by operation of law. Sub-section 35(4), (5) and (6) then qualify this general proposition. They provide that, in the special situations with which they deal, ownership vests, not in the author but in another person, e.g. the proprietor of a newspaper, magazine or similar periodical who employs the author under a contract of service or apprenticeship, the author making the literary work for the purpose of publication in the newspaper, magazine or periodical; and the employer of an author of a literary work when the work is made by the author in pursuance of the terms of his employment under a contract of service or apprenticeship. Significantly there is no similar provision in the case of a literary work made by a partner in the course of a partnership for the purpose of the partnership business.

It follows that the appellants' case of joint ownership depends on the existence of a transmission under s. 196(1), both in relation to any copyright that antedated the partnership and in relation to any copyright that was brought into existence during the course of the partnership. In each case by virtue of s. 35(1) the respondent became the owner by virtue of his authorship, subject to a transmission under s. 196(1). As I understand the appellants' argument, they do not suggest that there was an assignment, for an assignment of copyright must be in writing, signed by the assignor (s. 196(3)). The only writing signed by the respondent which could possibly bear on the matter is the deed of partnership dated 5 June 1967. By cl. 1 the respondent agreed to sell to Aarons a share in his practice and in certain assets. The assets listed in cl. 4 did not include any copyright. Nor was the subject of copyright mentioned anywhere in the deed.

The consequence is that the appellants are compelled to say that there was a transmission by devolution by operation of law, relying on s. 24 of the Partnership Act to bring this about. As we shall see, there are formidable obstacles to the success of this argument. But at this point it is convenient to examine the preliminary question, whether it is open to the appellants to argue the point. The Full Court answered this question adversely to the appellants, finding that the argument had not been put clearly to the primary judge.

The first comment to be made is that the appellants did not plead the case which they now seek to argue. In his amended statement of claim the respondent alleged in par. 3 that he "is and has been at all material times the author and owner of the copyright". In their amended defence the appellants say that they "deny each and every allegation contained in paragraph 3" of the amended statement of claim. Later they deny that the respondent "is or at any material time has been the author and owner of copyright" in the works.

The amended statement of claim pleaded a case of ownership by virtue of authorship. The amended defence was a traverse of that case. It did not plead transmission of ownership from author to partnership, as it should have done in order to reflect the case now argued. The appellants should have pleaded the facts and circumstances giving rise to an assignment or to a transmission by devolution by operation of law, e.g. the deed of partnership, authorship during the course of the partnership for the purposes of the partnership business. Proof of these matters was essential to the case which the appellants now argue. The onus of establishing a transmission rested with the appellants because it constitutes a positive answer to the case of ownership based on authorship set up by the respondent. In no sense can it be said that the matters which the appellants desire to establish amount to a mere denial or traverse of the respondent's claim. In a very real sense they confess and avoid the claim to sole ownership. Their defence is similar to a defence based on assignment by the plaintiff of his copyright. And it can scarcely be suggested that a defence based on assignment by the plaintiff can be raised under a traverse of an allegation of ownership by virtue of authorship. A traverse of such an allegation would not raise an issue of assignment or, in the circumstances of this case, any issue going to transmission.

There are some cases in which an issue, though not sufficiently pleaded, is made an issue by the conduct of the parties at the trial. This is not such a case. Perhaps the Full Court went too far in asserting that the appellants "stood by" at the hearing. Counsel for the appellants suggested to the respondent in cross-examination that his copyright in the unit trust deeds became an asset of the partnership (which he denied) and that the deeds were used in the course of the partnership business (which he admitted). When the relevance of a similar question was queried by the primary judge, the response of counsel for the appellants was that it went to the issue of ownership. Later in counsel's final address there was a fleeting reference to s. 24 of the Partnership Act, but none at all to s. 196 of the Copyright Act. The judge was not asked to make specific findings of fact relevant to either section. In these circumstances it cannot be said that the matter was made an issue at the trial by the conduct of the parties. The respondent did not concede that it was an issue; the point was the subject of fleeting reference only by the appellants' counsel; moreover, they failed to make any reference to s. 196 which was an essential preliminary to any meaningful discussion of s. 24. Indeed, this omission may well account for his Honour's thinking that the real issue was one of authorship. He made no mention in his comprehensive judgment of the partnership issue. Nothing that the appellants' counsel said suggested that they were raising a case of assignment or transmission. Rather, it seems that they were suggesting that s. 24 overrode s. 35 (2) and created a fourth category similar to those dealt with in s. 35(4), (5) and (6) - a suggestion which his Honour was entitled to brush aside. That this is so emerges from the remarks of the appellants' counsel in the final address:

We submit that if Mr. Komesaroff has copyright in either the articles as a whole or those clauses, that copyright belongs jointly - is owned jointly by him and Mr. Aarons. We say so because of the provisions of the Partnership Act, and because of the construction of the partnership deed. If I could take Your Honour to s. 24 of the Partnership Act 1958 He quoted s. 24 and continued: I am not quite sure how far that takes us, but what we say is that this is property, copyright is property. It is brought into existence for the purposes of the partnership business and therefore regardless of who is the author of a particular work, if copyright exists it is owned jointly, by the partners. And that situation would only be different if there was something in the partnership deed to make a contrary position

In some cases when a question of law is raised for the first time in an ultimate court of appeal, as for example upon the construction of a document, or upon facts either admitted or proved beyond controversy, it is expedient in the interests of justice that the question should be argued and decided (Connecticut Fire Insurance Co. v. Kavanagh [14] ; Suttor v. Gundowda Pty. Ltd. [15] ; Green v. Sommerville [1] ). However, this is not such a case. The facts are not admitted nor are they beyond controversy.

[1892] A.C. 473, at p. 480. 2. (1950) 81 C.L.R. 418, at p. 438. 3. (1979) 141 C.L.R. 594, at pp. 607-608.

The consequence is that the appellants' case fails at the threshold. They cannot argue this point on appeal; it was not pleaded by them nor was it made an issue by the conduct of the parties at the trial.

In any event the substantive argument has little to commend it. There being no written assignment of the copyright, the appellants' argument must be that in some fashion s. 24(1) works a "devolution by operation of law" within the meaning of s. 196(1), thereby displacing the prima facie operation of s. 35(2) of the Copyright Act. The real question, then, is whether the situation where a person's property becomes partnership property involves a "devolution by operation of law" within s. 196(1).

In general terms the Act adopted much of the Copyright Act 1956 U.K. and the wording of s. 196(1) is very similar to that of s. 36(1) of the United Kingdom Act, which provides that "copyright shall be transmissible by assignment, by testamentary disposition, or by operation of law". In the context of this legislative adoption, the addition of the word "devolution" in the Australian Act may be of some significance.

In its common usage the word "devolution" appears to refer to the passing of property to a successor in a deceased estate (Parr v. Parr [2] , where Sir John Leach M.R. said [3] "To devolve means to pass from a person dying to a person living"; see also Earl of Zetland v. Lord Advocate [4] ).

(1833) 1 My. & K. 647 [39 E.R. 826]. 2. (1833) 1 My. & K., at p. 648 [39 E.R., at p. 826]. 3. (1878) 3 App.Cas. 505, at p. 520.

A wider view of the term "devolution" was taken in Wallis v. Smith [5] . In that case a bank had obtained judgment against Wallis for £3,200. Wallis in turn obtained judgment against Smith for £5,000. A garnishee order was made on the £5,000 in favour of the bank directing that Smith pay £3,200 to the bank. The bank succeeded in an application to be made a party in the action between Wallis and Smith, Bacon V.C. holding that the Rules of Court were satisfied in that by virtue of the garnishee order there was a "devolution of estate by operation of law" within O.L., r. 2 of the Rules.

The common thread running through these decisions is that absence of voluntariness is essential to the concept of "devolution". This is brought out in the American cases. In Francisco v. Aguirre [6] it was said that:

An estate is said to "devolve" upon another when by operation of law, and without any voluntary act of the previous owner, it passes from one person to another; but it does not devolve from one person to another as the result of some positive act or agreement between them. The word is itself of intransitive signification, and does not include the result of an act which is intended to produce a particular effect. It implies a result without the intervention of any voluntary actor. Instances of its appropriate use are found when speaking of the succession of estates upon death, or upon a change of official incumbents; also in proceedings in bankruptcy or insolvency See also Babcock v. Maxwell [7] ; First National Bank of San Jose v. Menke [8] . 1. (1892) 29 P. 495, at p. 497. 2. (1903) 74 P. 64, at p. 66. 3. (1900) 60 P. 675, at p. 677.

The word "devolution" therefore contemplates a legal consequence flowing from an involuntary act. Is there any relevant difference between the passing of property upon an intestacy or a bankruptcy and the passing of property from a sole owner into partnership? There is an obvious distinction between death or bankruptcy and entry into a partnership. Entry into a partnership which provides for the transfer of property to the partnership or for the creation of partnership property is not the legal consequence of an involuntary act. Rather the act involves an agreement between persons who have the positive intention of attracting that legal consequence and provide for it. Accordingly the acquisition by a partnership of the ownership of copyright, whether by means of one partner bringing his ownership into the partnership property on its creation or by means of the partnership acquiring ownership of copyright in a work prepared by a partner in the course of the partnership for the purpose of the partnership business, is not a "devolution by operation of law" within the meaning of s. 196(1). The circumstances of the acquisition may involve an actual assignment in writing - the partnership agreement may so provide - or the creation of a trust, the partner who owns the copyright holding it on trust for the partnership. With these possibilities we are not concerned because assignment and trust were neither pleaded nor argued.

An examination of s. 24 of the Partnership Act gives added force to the conclusion that its application does not give rise to a "devolution by operation of law". The first point to be made is that s. 24 is descriptive of property which, apart from the section, would ordinarily be held to be partnership property. Its purpose is to describe the property in or to which the partners have right inter se in virtue of their partnership and to which creditors of the partnership may look in satisfaction of their debts. It does not follow from the circumstance that particular property is partnership property that each partner has title to it; his right may be limited to the beneficial right to have it applied in due course of administration (see Federal Commissioner of Taxation v. Everett [9] ;Canny Gabriel Castle Jackson Advertising Pty. Ltd. v. Volume Sales (Finance) Pty. Ltd. [10] ; United Builders Pty. Ltd. v. Mutual Acceptance Ltd. [11] ). Accordingly, the fact that property is partnership property within the meaning of s. 24 does not mean that the partner having legal title to it cannot maintain an action in respect of it.

(1980) 143 C.L.R. 440, at pp. 446-447. 2. (1974) 131 C.L.R. 321, at pp. 327-328. 3. (1980) 144 C.L.R. 673, at pp. 679, 688.

The second point to be made is that not all the property of each partner used for the purposes of the partnership business can be said to be brought into the partnership. It may in some circumstances remain the separate property of one partner: Gian Singh & Co. v. Nahar [12] ; Harvey v. Harvey [13] . Whether the property of a partner becomes partnership property depends on the agreement of the parties. In Harvey v. Harvey [14] Barwick C.J. said:

Of course the answer to the question whether or not the land itself has been brought into the partnership as distinct from a mere licence to use it for partnership purposes, must ultimately depend on the agreement which the partners have made. See also Menzies J. at p. 553, Walsh J., at pp. 562-563; Higgins and Fletcher, op. cit., p. 137; Lindley on the Law of Partnership, 14th ed. (1979), p. 445. What I have said applied with equal force to both limbs of s. 24. The acts and intention of the parties, not the operation of s. 24, determine finally and ultimately the question whether property owned by a partner becomes partnership property. 1. [1965] 1 W.L.R. 412; [1965] 1 All E.R. 768. 2. (1970) 120 C.L.R. 529. 3. (1970) 120 C.L.R., at p. 549.

The case for breach of confidence, upon which the cross appeal is based, has two aspects. The first aspect relates to the use by the appellants, already discussed, of the concept expressed in the unit trust deeds evidenced by Ex. "7" and "B20" in relation to which, the respondent claimed, an obligation of confidence arose. The second aspect of the claim concerns the "overseas trust concept". In 1974 the appellant approached the respondent about the possibility of minimizing the tax of a client, one Cester. The respondent and Aarons had conceived a scheme to take advantage of the withholding tax provisions of the Income Tax Assessment Act 1936 Cth. The scheme was in an embryonic state, but the respondent and Aarons knew it would be essential to use a "tax haven" country. A theoretical scheme only was outlined to the appellant by the respondent. Approximately nine months later, after consultations with and advice from counsel and overseas journeys by Aarons, Cester and the appellant, a viable scheme was devised. As with the first aspect of the claim, the respondent claimed that the appellants breached a duty of confidence which arose in relation to the information.

In relation to the unit trust deeds, the primary judge was not satisfied that any information of a confidential nature was imparted to the appellant by the respondent. His Honour held that there was much that was public property and common knowledge in the deeds and that, although the respondent's skill and ingenuity went into producing them, the deeds ought not to be regarded as containing confidential information capable of founding an action for breach of confidence. His Honour said that he was not satisfied that a reasonable person in the position of the appellants would recognize that the documents contained information which was, apart from the question of copyright, the property of the respondent: Deta Nominees Pty. Ltd. v. Viscount Plastic Products Pty. Ltd. [15] .

I should set out in some detail the primary judge's findings in relation to the claim that the respondent disclosed to the appellants confidential information in connexion with the overseas trust concept. These findings underly the Full Court's conclusion that the respondent did not identify the information alleged to be confidential. The primary judge stated:

Nowhere in the evidence do I find that a meeting ever took place between the plaintiff and the defendant in which the plaintiff communicated to the defendant a viable concept of an overseas trust. No meeting occurred, between the plaintiff and the defendant, such as occurred in the case of the private unit trust. Many of the essential matters involved in the operation of the overseas trust for Cester were learned by the defendant and Aarons when they travelled abroad on two occasions accompanied by Mr. Cester. Certain essential matters about the overseas trust came to the defendant's knowledge through documents which Cester insisted the plaintiff should make available to the defendant. Aarons kept the defendant informed of developments and the plaintiff did likewise. During the trial I was conscious of the fact that the plaintiff had considerable difficulty identifying precisely the confidential information about an overseas trust that he communicated in confidence to the defendant. He had difficulty identifying any occasion or occasions when he discussed the overseas trust concept in detail with the defendant. The information that was imparted initially to the defendant was certainly not of a confidential nature because the concept of using the "withholding tax" provisions in the Income Tax Act to minimise taxation rates was then well known in Australia to accountants and lawyers alike. There was nothing novel or confidential about using a "tax haven" country such as Liechtenstein to enable a person to take advantage of s. 128B of the Income Tax Act, nor was there anything novel or confidential about interposing a United Kingdom private company to avoid existing banking and exchange control provisions and the necessity to obtain a taxation clearance certificate. I am quite satisfied that the scheme eventually used to avoid the consequences of reg. 8 of the Banking (Foreign Exchange) Regulations originated from the mind of the plaintiff alone, but it was only part of a much broader concept. The plaintiff did not plead in his amended statement of claim that the breach of confidence involved in the overseas trust concept related only to the proposition which was put to Dr. Pannam in conference so as to avoid the consequences of reg. 8. It was not until the concluding stages of the trial that the plaintiff sought to rely upon a communication which he alleged he made to the defendant in confidence of a proposal to avoid reg. 8.

I interpose here to say that Dr. Pannam Q.C. was consulted on more than one occasion about the application of the regulations to the proposed scheme.

I am unable to conclude that the defendant, or any reasonable man placed in similar circumstances, should have known that, having received information about the overseas trust arrangements, which were to be used for the Cester family, he must not publish it or use it to his own advantage. The defendant had become the recipient of the information in the course of acting in conjunction with others for a client who had made it quite clear that he, the defendant, should receive a copy of all relevant documents and information. Some of the essential information to the concept of the Cester overseas trust I suspect the defendant probably obtained himself whilst travelling overseas with Aarons. The Full Court dismissed an appeal by the respondent, holding that "a vital question at the root of the case, namely what was the information which was the subject of the alleged wrongful use or communication" was answered neither by the respondent's pleadings nor by his submissions.

Mr. Komesaroff was repeatedly asked by all members of the Bench, what was the intelligence that was "entrusted and communicated to the defendants (appellants) and each of them in confidence", and we obtained no answer less vague than that provided by the pleadings themselves.

The Full Court held that Ex. "B20", when read on its own, without the proof of further material facts, none of which were pleaded, was not a sufficiently precise definition of what was the confidential information which was to be the foundation of an action for breach of confidence.

The respondent, as the Full Court stated, was given every opportunity to define more specifically the information upon which he relied. The respondent could do no more than rely on Ex. "B20". And, as the Full Court said, there is nothing in Ex. "B20" per se which gives any indication that it is information of confidential nature. It is merely a unit trust deed. In effect, there was no information of sufficient particularity to enable the Court to embody it in an order.

In this Court the respondent agreed to submit written submissions on the matter, after several requests to carefully define the confidential information upon which he relied. The respondent in his written submissions contends that he communicated to the appellant the effect and practical operation of his unit trust scheme. But this still begs the vital question. What did he communicate?

According to the written submissions now presented to us the confidential information relates to (1) discretionary trusts and private unit trusts; and (2) private unit trusts having an overseas trust in a "tax haven" country as a beneficiary, being information which was valuable for tax avoidance or tax minimization purposes. The confidential information is then described as comprising information which is embodied: (1) in the unit trust deeds drafted by the respondent in Ex. "B20"; (2) in the respondent's draft memorandum and articles of association for a proprietary company; (3) in oral communications by the respondent to the appellant in 1973 and 1974 as to the effect and practical operation of discretionary trusts and of the unit trust scheme devised by the respondent; (4) in oral communications by the respondent to the appellant in November 1975 and 1976 -

as to the manner in which and means whereby, in a unit trust established in Australia, an overseas trust in a tax haven country might be a beneficiary and how the income derived in Australia might be distributed to such a trust so that such income was for the purposes of the Income Tax Acts interest subject only to withholding tax under s. 128B and s. 128D of the Income Tax Acts. This information indicated how the income distributed to the overseas beneficiary would be actually paid to it but would be retained and invested in Australia. The method devised was for the local trust to receive income as interest which income by s. 128A(3) of the Income Tax Acts retained the character of interest for the purposes of withholding tax on a distribution to an overseas beneficiary. This income was to be applied in issuing to the overseas beneficiary special units ("Z" units) so that the distribution and the investment of the income did not require approval by the Reserve Bank under the provisions of reg. 8 of the Banking (Foreign Exchange) Regulations. The information consisted of the advice by the respondent as to the operation of the above sections of the Income Tax Acts and the Banking (Foreign Exchange) Regulations, the form of appropriate resolutions in relation to the issue of and investment in the special units, the provisions in the trust deed for the local trust which enabled it to make such distributions and investment and the minutes and resolutions required to give effect to the proposal outlined; and (5) in oral communications by the respondent to the appellant as to the legal and practical defects and legal inadequacies of a discretionary trust which had been adopted by lawyers and accountants in Australia and the United Kingdom as a means of reducing income tax and estate duty and the manner in which the "unit trust" overcame these defects and inadequacies.

Plainly enough, in the light of the findings of the primary judge and the evidence, there is very little, if anything, in the documents mentioned in pars. (1) and (2) above that can constitute confidential information. Generally speaking the contents of the unit trust deeds and the articles of association were matters of common knowledge. Information may be categorized as public knowledge though only notorious in a particular industry or profession: see Finn, Fiduciary Obligations (1977), p. 146. Only those improvements evolved by the respondent could give rise to a claim for relief for breach of confidence. See generally Saltman Engineering Co. Ltd., Ferotec Ltd. and Monarch Engineering Co. (Mitcham) Ltd. v. Campbell Engineering Co. Ltd. [16] ; Seager v. Copydex Ltd. [17] ; Coco v. A.N. Clark (Engineers) Ltd. [18] . It is at this point that the respondent has consistently failed to identify the particular contents of the documents which he asserts constitute information the confidentiality of which he is entitled to protect. The consequence is that he has failed to formulate a basis on which the court could grant him relief on the assumption that some part or parts of the documents constitute confidential information.

(1948) 65 R.P.C. 203, at p. 215. 2. [1967] 1 W.L.R. 923, at p. 931; [1967] 2 All E.R. 415, at p. 417. 3. [1969] R.P.C. 41, at p. 47.

It is a fundamental problem with the information which the respondent seeks to protect that it is information which, by way of advice to others, he regularly publishes to the world at large, albeit for a limited purpose. The nature of such information ill accords with the accepted conception of confidentiality, which in substance involves the person seeking to protect the information largely keeping it to himself. SeeAnsell Rubber Co. Pty. Ltd. v. Allied Rubber Industries Pty. Ltd. [19] . In the result the respondent's relief in respect of the documents should be confined to infringement of copyright.

The information mentioned in pars. (3) and (5) above falls into the same category. To simply say that the information is as to the effect and practical operation of discretionary trusts and private unit trust schemes does not identify the information and enable the Court to formulate an order. One needs to know not only what was the information conveyed but also what part of that information was not common knowledge.

The description of the information referred to in par. (4) suffers from the same defect. It consists of (a) advice (unspecified) as to the effect of three sections of the Income Tax Assessment Act and the Banking (Foreign Exchange) Regulations; (b) the form of resolutions for the issue of, and investment in, special units; (c) the provisions of the trust deed; and (d) minutes and resolutions giving effect to the proposal.

The description thus given invites the comment that the material would be more likely to lend itself to a claim for copyright than to a claim for confidential information. In particular I have some difficulty in perceiving how advice as to the general legal effect of statutory provisions can constitute confidential information. And the form of minutes, resolutions and the provisions of a trust deed seem unlikely repositories of confidential information. Again the problem is caused by the generality of the description which the respondent has chosen as a means of identifying the information which he seeks to protect. It is so general that we cannot satisfy ourselves, in the light of the findings of fact made by the primary judge, that the information so described was imparted by the respondent to the appellants, that it was imparted in circumstances which gave rise to an obligation of confidence and that it does not include material which is common knowledge.

A somewhat similar question arose in Amway Corporation v. Eurway International Ltd. [20] . Brightman J. [21] had this to say about the question which arose there and the approach which should be taken to it:

I asked the plaintiffs' counsel if he could point in his literature to some particular piece of information which he said was confidential and which he claimed the defendants were wrongly using. He told me that he pointed to nothing in issue here but to the entirety of the plaintiffs' documentary material which is in evidence.

It seems to me that a claim for abuse of confidential information cannot really be dealt with in that way. If I made an order restraining the defendants from using for their own purposes any of the documentary material contained in the plaintiffs' business literature, but did not identify the particular information that the defendants are not to impart, they would be placed in a most embarrassing situation. I do not know how they could decide what business methods, literature and paper-work to avoid using in order to keep clear of contempt of court; and I think that that is an insuperable difficulty in the plaintiffs' claim under this head. It is really another facet of the same point that the court cannot protect know-how of this type - cannot restrain defendants from making use of this type of information which they have acquired. I am not satisfied that the plaintiffs' literature ever came into the hands of defendants under any confidential badge; but, even if it had, it seems to me that it is merely know-how which the plaintiffs cannot keep exclusively to themselves. It is know-how which the law does not protect, and it is quite impracticable for this court to grant an injunction in the sort of wide general terms that the plaintiffs seek.

See also Deta Nominees [22] . There Fullagar J. said [23] "I do not think that equity will exert itself to protect allegedly confidential information so widely expressed". 1. [1974] R.P.C. 82. 2. [1974] R.P.C., at pp. 86-87. 3. [1979] V.R., at pp. 189-190. 4. [1979] V.R., at p. 190.

The subject of the alleged confidential information in Amway was know-how. In some respects the information which the respondent seeks to protect in this case resembles know-how. The information represents his accumulated knowledge, skill and experience in a particular field. He asserts that it is all confidential information. Obviously this cannot be right. Much of it is common knowledge, as the findings of fact made by the primary judge indicate. As to the problems associated with the classification of know-how as confidential information, see Amway [24] ; Stephenson Jordan & Harrison Ltd. v. MacDonald & Evans [25] . Even so, if the respondent were able to identify some particular pieces of information and show that they were confidential or that an obligation of confidence had arisen with respect to them he would be entitled to protection of them. But this is just what the respondent has failed to do. He has persisted in making a global claim for protection that covers the entirety of the schemes that were evolved and the entirety of the documentation by which they were implemented. He is not entitled to that protection and, accordingly, his claim must fail. My conclusion is that in the circumstances he is not entitled to any greater protection than that given to him in respect of his ownership of copyright.

[1974] R.P.C., at pp. 85-86. 2. (1951) 69 R.P.C. 10, at p. 15.

In the result I would dismiss the appeal and the cross appeal.

The appeal and cross appeal should fail for the reasons given by Mason J.

The respondent sought equitable relief to protect copyright in legal documents used to promote his tax-avoidance schemes. The appellants conceded that the documents were literary works within the meaning of the Copyright Act 1968 Cth, but I am far from satisfied that the concession was correct.

The appellants did not raise in the courts below or in this Court whether equitable relief should be extended to assist in anti-social activities. (See the legislative policy expressed in the Income Tax Assessment Act 1936 Cth, s. 260, which was in force at the time.) I referred in Interstate Parcel Express Co. Pty. Ltd. v. Time-Life International (Nederlands) B.V. [26] to the doctrine of clean hands which is applicable in the sphere of monopoly rights. (See Precision Instrument Manufacturing Co. v. Automotive Maintenance Machinery Co. [27] .) The appeal and cross appeal should be dismissed.

(1977) 138 C.L.R. 534, at pp. 560-562. 2. (1945) 324 U.S. 806, at p. 814 [89 Law. Ed. 1381, at p. 1386]. Aickin J.

In this matter I have had the advantage of reading the reasons for judgment prepared by my brother Mason. I am in complete agreement with his reasons and conclusions and there is nothing I can usefully add.

The appeal and the cross appeal should be dismissed.

I also would dismiss the appeal and the cross appeal. I have had the advantage of reading the reasons prepared by Mason J. I agree with those reasons, and there is nothing that I could usefully add.

I agree with the reasons for judgment of Mason J., though I should wish to reserve for future consideration the question whether a person is entitled to protection of confidential information with respect to the means of avoiding the operation of a law where that information is not imparted in the course of and for the purpose of giving legal professional advice to a particular client in relation to that client's affairs. As his Honour points out, the question of copyright in legal precedents devised for use in minimizing liability to income tax was not argued.

At a glance

Court

Decision date

Before

Source

Judgment (74 paragraphs)

Parties