REASONS AT FIRST INSTANCE
69 As I have observed, the primary Judge's findings against Ahmed Taleb, in so far as they concern the alleged trade mark breach, the passing off and, possibly, the design breach, seem to have been based on her conclusions that he:
had the "necessary knowledge";
used Taleb Tyres as "an instrument of his own wrong";
made the tort "his own"; and
had "a close personal involvement" in Taleb Tyres' infringing acts.
70 These conclusions pose numerous questions, such as:
What was the necessary knowledge?
How did he use the company as an instrument of his own wrong?
How did he make the tort his own?
What was his close involvement in the infringing acts?
71 Those questions cannot be readily answered by reference to the evidence, or to her Honour's reasons. To some extent the words have been extracted from the reasons for judgment given by members of the Full Court in Keller v LED Technologies Pty Ltd (2010) 185 FCR 449. In that case, Emmett J recognized, at [83], that a director of a company is not, per se, liable for its torts. See also the reasons of Besanko J at [272] and those of Jessup J at [400]. If his or her own conduct constitutes a tort, it will be no defence that it was committed in the capacity of director. In other cases, a director may be so involved in a tort, committed by or on behalf of the company that he or she, not having committed a separate tort, may be liable as a joint tortfeasor with the company. Where the director has not personally committed the tort, liability as a joint tortfeasor will generally depend upon his or her state of knowledge. A director is obliged to have such knowledge of the business of the company as is necessary in order that he or she can perform a director's duties. It follows that a director who is properly informed as to the affairs of the company will not automatically be liable as a joint tortfeasor with the company.
72 In Keller it was alleged that two companies had infringed registered designs, and that the directors of the companies were liable as joint tortfeasors. The evidence indicated that the directors had substantially greater involvement in the alleged infringements than is disclosed by the evidence against Ahmed Taleb in the present case. In Keller, the primary Judge found that each director was a joint tortfeasor. Emmett and Jessup JJ held that such findings should be set aside. Besanko J would have upheld the finding against one of the directors, but set aside the finding against the other director. For present purposes the relevance of the decision in Keller lies in the various tests applied by the members of the Court in reaching their respective decisions as to the directors' liability. Emmett J said at [83]-[84]:
83 A company cannot act other than through a natural person. In considering whether a natural person is a joint tortfeasor with a company, it is necessary to show something more than that the company acted through that person. Where a person is acting in the capacity of a director, the person will not be liable for the act of the company unless it can be shown that, in so acting, the director was doing something more than acting as a director. The person must do something that makes him or her, in addition to the company, an invader of the victim's rights … . The mere fact that a company is small and that the director has control over its affairs is not, of itself, sufficient to make the director a joint tortfeasor with the company … .
84 Infringement by a principal actor, of course, is an objective matter. For a director of a company to be held to be invading the rights of a victim of the company, by reason of the actions committed in the capacity of a director, there must be some mental element involved. Thus, in circumstances where a director can be shown to be making use of a corporation or company as an instrument whereby infringement is perpetrated, such that the director can be seen to be hiding behind the corporate veil, it may be thought that that director is going beyond actions performed merely in the capacity as director. If a company is merely the alter ego of a director, such that there is no real difference between the mind of the officer and the mind of the company, there may well be circumstances where it will be appropriate to conclude that the officer is invading the rights of a victim of the company.
73 Besanko J identified two relevant tests. At [272] his Honour referred to the "Performing Right Society" test based upon the judgment of Atkin LJ in Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd (1924) 1 KB 1. That test asks whether the director directed or procured the infringing act by the company. The language used in para 161 of the further amended fast track statement reflects this test. However there was no direct evidence of any such direction or procurement, save for the evidence of one possible sale by Ahmed Taleb on 5 June 2009. The second test emerges from the decision in Mentmore Manufacturing Co Ltd v National Merchandising Manufacturing Co Inc (1978) 89 DLR (3d) 195. It would impose liability upon a director for a tort committed by the company where he or she has engaged in the deliberate, wilful and knowing pursuit of a course of conduct that was likely to constitute infringement or which reflected an indifference to the risk of it. Besanko J concluded at [291]:
In my opinion, in considering a director's potential liability as a joint tortfeasor, it is necessary to consider carefully the director's involvement in the unlawful or infringing acts. A close personal involvement in the infringing acts by the director must be shown before he or she will be held liable. The director's knowledge will be relevant. In theory, that knowledge may range from knowledge that the relevant acts are infringing acts to knowledge of an applicant's registered designs to knowledge of acts carried out by others.
74 Jessup J at [401] posed the question:
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?
75 At [404] and [405] his Honour answered the question as follows:
404 Returning to the question which I posed at the end of [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 … . 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. …
405 It will be seen from the foregoing that I agree substantially … [that it is] 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.
76 Obviously enough, there will be cases in which the director performs acts which may constitute a tort by him or her and the company. In other cases, the director may play no part in the physical acts constituting the tort but may be so closely associated with the acts of the company as to attract joint liability with it. As I have previously observed, such association will generally involve knowledge of the breach, including the circumstances in which it occurred.
77 As to the TPA breach, accessorial liability under the TPA depends upon s 75B(1) of that Act which provides:
A reference in this Part to a person involved in the contravention of a provision of Part IV, IVA, IVB, V or VC or of s 95AZN, shall be read as a reference to a person who:
(a) has aided, abetted, counselled or procured the contravention;
(b) has induced, whether by threats or promises or otherwise, the contravention;
(c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or
(d) has conspired with others to effect the contravention.
78 In finding that Ahmed Taleb was knowingly concerned, directly or indirectly, in Taleb Tyres' conduct which infringed ss 52 and 53(a) the Act, the primary Judge referred to the decision of the Full Court in Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 at [1]-[16] and [17]. However the seminal authority concerning s 75B is the decision of the High Court in Yorke v Lucas (1985) 158 CLR 661. In that case, at 667-8, Mason ACJ, Wilson, Deane and Dawson JJ observed that the words in para 75B(1)(a) are derived from the criminal law "where they are used to designate participation in a crime as a principal in the second degree or as an accessory before the fact". Their Honours further observed:
If para (a) of s 75B imports the requirements of the criminal law it is clear … that Lucas could only be brought within that paragraph if he intentionally aided, abetted, counselled or procured a contravention by the Lucas company of s 52 of the [TPA]. Upon the findings of the trial judge, however, Lucas lacked the knowledge necessary to form the required intent. A contravention of s 52 involves conduct which is misleading or deceptive or likely to mislead or deceive and the conduct relied upon in this case consisted of the making of false representations. Whilst Lucas was aware of the representations - indeed they were made by him - he had no knowledge of their falsity and could not for that reason be said to have intentionally participated in the contravention.
79 Their Honours adopted this approach to s 75B(1)(a) and continued at 669-670:
So far we have dealt only with para (a) of s 75B which refers to involvement of persons who are accessories. The appellants also rely upon para (c) of the same section which extends the definition of a person involved to a person who has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention. There can be no question that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention. It cannot, therefore, be suggested that Lucas falls within the first limb of para (c). It might be thought possible to construe the express requirement of knowledge as extending not only to being "concerned in" but also to being "party to" a contravention. However there are two reasons in our view why it is inappropriate to do so.
First, the natural construction of para (c) is to regard the word "knowingly" as qualifying only the words "concerned in" which immediately follow it. The punctuation strongly suggests such a construction. Secondly, the word "knowingly" would be an unnecessary qualification of the words "party to". In the context of the paragraph a person could only properly be said to be "party to" a "contravention" if his participation was in the context of knowledge of the essential facts constituting the particular contravention in question. Whilst it is not a contradiction in terms to speak of a person being "party to" something of which he is unaware, some indication is needed to convey such a meaning. There is nothing in the paragraph itself which would point to any conclusion other than the words "party to" are used to refer to a participant in the nature of an accessory. Moreover, the wider context of the whole section leads to the same conclusion. We have already indicated why para (a) requires knowledge. Paragraph (b), which speaks of inducing a contravention by threats, promises or otherwise, and para (d), which speaks of conspiring with others to effect a contravention, both clearly require intent based upon knowledge and there is force, we think, in the observation made in the judgment of the Full Court below … that there is -
"... no reason why Parliament would have intended that a section which renders natural persons liable for a contravention by a corporation should require some mental element or absence of innocence in every case to which it refers except one which itself requires in its first limb that the person was "knowingly" concerned in the contravention."
In our view, the proper construction of para (c) requires the party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention.
80 In circumstances which are explained in the reasons prepared by Finn and Bennett JJ, Ahmed Taleb did not give evidence at the trial. I accept that his reasons for failing to give evidence were not satisfactory. The primary Judge relied upon the decision in Jones v Dunkel (1959) 101 CLR 298 as strengthening the adverse inferences able to be drawn from the evidence. That case establishes that a court may, in some circumstances, rely upon a party's failure to call a witness as strengthening an inference adverse to that party, provided that such inference is otherwise available on the evidence. After holding that other evidence supported a finding that a motor vehicle was, at the time of a collision, on the wrong side of the road, Kitto J continued at 308:
Whether that inference ought to be drawn was, of course, a question for the jury. But they should not have been sent away to consider that question without proper guidance as to the relevance of the defendants' failure to put Hegedus into the witness-box. On that question a juryman actually asked the trial judge to supplement his summing-up, and counsel for the plaintiff submitted that if there was evidence to go to the jury they were entitled to take into consideration (meaning, obviously, on the question whether they should infer negligence) that "there was one person who could have told them the facts and they have no answer from that person". In my opinion, the direction which the judge proceeded to give was insufficient, and, because of its incompleteness, was incorrect. His Honour told the jury that the fact that Hegedus had not gone into the box left them in this position, that they could accept the facts given by the plaintiff as proved, and that the question for them then was whether they thought that from the proved facts an inference of negligence ought to be drawn. It was right enough to point out, in effect, that the evidence given might be the more readily accepted because it had been left uncontradicted, and that the omission to call Hegedus as a witness could not properly be treated as supplying any gap which the evidence adduced for the plaintiff left untouched. But what should have been added, and not being added was in the circumstances as good as denied, was that any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence. The jury should at least have been told that it would be proper for them to conclude that if Hegedus had gone into the witness-box his evidence would not have assisted the defendants by throwing doubt on the correctness of the inference which, as I have explained, I consider was open on the plaintiff's evidence. In my opinion what his Honour said on the point amounted to a misdirection.
81 At 312, Menzies J said:
In my opinion a proper direction in the circumstances should have made three things clear: (i) that the absence of the defendant Hegedus as a witness cannot be used to make up any deficiency of evidence; (ii) that evidence which might have been contradicted by the defendant can be accepted the more readily if the defendant fails to give evidence; (iii) that where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference.
82 See also the reasons of Windeyer J at 317-321.
83 I stress that the decision makes it clear that the absence of a witness may only be used to strengthen an inference otherwise available on the evidence, and not to relieve a party of the need to prove a matter concerning which he or she bears the onus of proof.