Victoria University of Technology v Wilson [2004] VSC 33

Supreme Court of Victoria|2004-02-18|Before: NETTLE J

For the reasons given I conclude that Professor Wilson and Dr Feaver and their companies, Jahupa Pty Ltd and Coap Pty Ltd, should be called to account either by the imposition of a constructive trust of their shares in IP3 Systems and payment of the proceeds of any previous sale of any of their shares, or by the payment to the university of an amount of money equal to the value of the shares and the proceeds of sale of shares already sold (subject in each case to the payment by the plaintiff of subscription moneys and appropriate expenses and allowances).

Subject to what counsel may wish to say concerning the orders to be made, I am also disposed to the view that the assessment of the quantum of the plaintiff's claim against Professor Wilson and Dr Feaver and their companies, Jahupa Pty Ltd and Coap Pty Ltd, should now be referred to a special referee in accordance with Order 50 of the Rules of Court for determination in accordance with the principles I have stated; that the costs of the plaintiff's claims against Professor Wilson and Dr Feaver and their companies should be reserved until quantum has been determined; that the plaintiff's claims against all other defendants should now be dismissed; and that the plaintiff should pay all of those other defendants' costs of the proceeding including any reserved costs.

[1] Which is one of the university's predecessor institutions.

[16] For example, Ex parte Forster; Re University of Sydney [1964] NSWR 1000 at 1007-8; Legal Services Commission of New South Wales v Stephens [1981] 2 NSWLR 697 at 701-2

[18] Verwayen v The Commonwealth (1990) 170 CLR 394

[19] (1990) 170 CLR at 411, 446 and 487 but cf. Riseda v St Vincents Hospital [1998] 2 VR 70 at 77, per Callaway JA

[23] The passage was approved by Mason CJ in Dawson v Westpac [1991] HCA 52; (1991) 104 ALR 295; (1991) 66 ALJR 94.

[28] Grey v Australian Motor & General Insurance Co Pty Ltd [1976] 1 NSWLR 669 at 684_; FAI Insurance Co Ltd v Savoy Plaza Pty Ltd_ [1993] VicRp 76; [1993] 2 VR 343 at 351

[35] Triplex Safety Glass Co. v Scorah [1937] 1 Ch 211 at 127

[36] Worthington Pumping Engine Co v Moore [1902] 20 RPC 41; British Reinforced Concrete Co v Lind (1917) 34 RPC 101; Triplex Safety Glass Co v Scorah ibid; Patchett v Sterling Engineering Coy Ltd [1955] RPC 72 50 at 58; Spencer Industries Pty Ltd v Collins [2003] FCA 542 at [64-67]

[37] Reading v R [1948] 2 KB 268 at 276; Glover, Commercial Equity: Fiduciary Relations at [5.56]

[38] see Chisum on Patents, at par. 22.03[3][b]

[39] In the Matter of Charles Selz Limited's Application to the Comptroller under Section 46 of the Patents Act 1949 (1953) 71 RPC 158

[40] cf Greater Glasgow Health Board's Application [1996] RPC 207 at 212; and see Loughlan, Of Patents and Professors: Intellectual Property, Research Workers and Universities, [1996] 6 EIPR 345 at 346 and 349

[41] cf Patchett v Sterling Engineering Coy Ltd (1955) 72 RPC 50 at 58; Elextrolux Ltd v Hudson [1977] FSPLR 312 at 326; Spencer Industries, supra at [69]

[44] Greater Glasgow Health Board's Application [1996] RPC 207 at 210; cf Harris Patent {1985] RPC 19 at 28; cf Vokes v Heather [1945] RPC 135 at 136; Adamson v Kenworthy [1931] RPC at 57

[45] cf. Stack v Brisbane City Council [1999] FCA 1279; (1999) 47 IPR 525 at 540, per Cooper J

[46] British Reinforced Concrete Engineering Co Ltd v Lind (1917) 34 RPC 101; Edisonia v Forse (1908) 25 RPC 546; Christopher Simon French v Paul Julian Mason & Anor [1999] FSR 597 at 602

[47] [1933] USSC 85; 289 US 178, amended 289 US 706 (1933)

[48] Kaplan v Johnson 409 F. Supp. 190, 192 (N.D. Ill 1976), rev'd in par, sub nom, Kaplan v Corcoran, [1976] USCA7 673; 545 F.2d 1073 (7th Cir. 1976)

[49] Chew, Faculty-Generated Inventions; Who Owns The Golden Egg, (1992) Wisc.LR 259; Chisum on Patents, at par 22.03[2]

[50] ibid. at 264, note 20; see also Houghton v United States, 23 F. 2d 386, 390 (4th Cir. 1928), cert. den, 277 US 592 (1928)

[51] 12 SR, 2d (1943) 590 (Supreme Court of Florida)

[63] Meaher, Gummow & Lehane, Equity: Doctrines and Remedies, 4th Ed. at [5-100]

[64] Hivac Ltd v Park Royal Scientific Instruments Ltd [1946] 1 Ch 169 at p.174.

[66] cf. Fine Industrial Commodities Ltd v Powling (1954) 71 RPC 253; Woods v W M Car Services (Peterborough) Ltd [1981] ICR 157; Blyth Chemicals v Bushnell [1933] HCA 8; (1933) 49 CLR 66 at 81, 82

[67] Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 at 97, per Mason J;

[68] Nottingham University v Fishel (QBD) [2000] ICR 1462 at 1490, per Elias J

[69] see, for example, Reading v Attorney General [1951] UKHL 1; [1951] AC 507 at 517 per Lord Normand_; Industrial Development Consultants Ltd v Cooley_ [1972] 1 WLR 443; Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488; Angus & Coote Pty Ltd v Render (1989) 16 IPR 387; State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (unreported, Sup Ct of NSW, O'Keefe CJ in Comm D, 14 September 1994); Colour Control Centre Pty Ltd v Ty (1996) 39 AILR s5-058 (Santow J) at 4,318-4,320; EFG Australia Ltd v Kennedy [1999] NSWSC 922 (Hodgson CJ_)); Francis v South Sydney District Rugby League Football Club Ltd_ [2002] FCA 1306 [265]; Canadian Aero Services Ltd v O'Malley (1983) 40 DLR 371 at 391; Guth v Loft, Inc 23 Del. Ch. 255, 5 A.2d. 503 (1939)

[70] Hospital Products Ltd v United States Surgical Corportion supra at 97, per Mason J; Nottingham University v Fishel (QBD) [2000] ICR 1462 at 1491-2, per Elias J

[71] Nottingham University v Fishel, ibid. at p.1494

[72] New Zealand Netherlands Society "Orange" Incorporated v Kuys [1973] 1 WLR 1126 at 1129; Consul Developments Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 CLR 373 at 377

[73] Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544 at 557-8

[74] Chan v Zaccharia [1984] HCA 36; (1984) 154 CLR 178 at 199

[75] Warman International Ltd v Dwyer supra at 562

[76] (1978) 18 ALR 1 at 3; Consul Developments Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 CLR 373 at 399, per Gibbs J; Chan v Zaccharia [1984] HCA 36; (1984) 154 CLR 178 at 205,per Deane J; Austin, Fiduciary Accountability for Business Opportunities, in Equity and Commercial Relations, Ed. Finn, Law Book Company, 1987 at p.146

[80] An expert computer scientist called by the plaintiff.

[82] Hospital Products Ltd v United States Surgical Corporation, supra at 108-110

[83] Consul Development Pty Ltd v IPC Estates Ltd [1975] HCA 8; (1975) 132 CLR 373 at 385; Kooratang v ANZ Banking Group [1998] 3 VR 16 at 89-90; Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 at 157

[84] Jones v Dunkell [1959] HCA 8; (1959) 101 CLR 298; JPQS Pty Ltd v Cosmarnan Constructions Pty Ltd [2003] NSWCA 66 at [24]

[88] Sparango v Corporate Investment Australia Funds Management Ltd [2003] FCA 1025 at [60]

[89] Doneley v Doneley [1998] 1Qd R 602 at 612

[90] By analogy with the rule in Keech v Sandford (1726) Sel. Cas. t. King 61 [25 ER 223]; Warman, supra at 560

[91] Hospital Products Ltd v United States Surgical Corporation, [1984] HCA 64; (1984) 156 CLR 41 at 110, per Mason J

[92] Chan v Zaccharia, supra at 204-5, per Deane J; In re Coomber, Coomber v Coomber [1911] 1 Ch 723 at 728-9

[94] SEA Food International Pty Ltd v Lam (1988) 16 ACLC 552 at 557_; Ford's Principles of Corporations Law_, at [9.23]

[95] Glover, Commercial Equity, supra at [5.46]

[96] Cook v Deeks [1916] 1 AC 554 at 563; Consul Development Pty Ltd v IPC Estates Ltd, supra at 397; Ravinder Rohini Pty v Kriziac [1991] FCA 318; (1991) 30 FCR 300 at 312

[98] Warman International Ltd v Dwyer, supra at 563-4

[99] see, for example, O'Sullivan v Management Agency Ltd [1985] 1 QB 428; Kearney, Accounting for a Fiduciary's Gains, in Equity in Commercial Relations, Ch 7; cf Guinness plc v Saunders [1989] UKHL 2; [1990] 2 AC 663

"Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying. The existence of an estoppel based on a convention between the parties has often been recognized: Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507 at p 547; Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641 at pp 657, 675-677_; Legione v Hateley_ [1983] HCA 11; (1983) 152 CLR 406 at pp 430-431; Amalgamated Investment & Property Co Ltd (in liq.) v Texas Commerce International Bank Ltd (1982) QB 84, at pp 121, 126, 130-131; Spencer Bower and Turner, Estoppel by Representation (1977) 3rd ed., at pp.157-177. But in our opinion the doctrine has no application to the present case for two reasons. First, there is no estoppel unless it can be shown that the alleged assumption has in fact been adopted by the parties as the conventional basis of their relationship: Dabbs v Seaman [1925] HCA 26; (1925) 36 CLR 538 at p 549. In the absence of proof of custom, there is no evidence that the parties adopted the alleged assumption. Secondly, just as estoppel by representation requires a representation of fact, so too estoppel by convention requires the assumed state of affairs to be an assumed state of fact: Greer v Kettle [1938] AC 156, at p 170; Spencer Bower and Turner, Estoppel by Representation (1977) 3rd ed., at pp 167-168. The state of affairs relied on by Con-Stan is that the parties conducted their business relationship on the basis that the broker was alone liable to the insurer for the premiums. That is clearly an assumption as to the legal effect of their conduct, and not an assumption of fact. The submission with respect to estoppel accordingly fails. "

"Stated comprehensively in terms of the liability to account, the principle of equity is that a person who is under a fiduciary obligation must account to the person to whom the obligation is owed for any benefit or gain (i) which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between his fiduciary duty and his personal interest in the pursuit or possible receipt of such a benefit or gain; or (ii) which was obtained or received by use or by reason of his fiduciary position or of opportunity or knowledge resulting from it. Any such benefit or gain is held by the fiduciary as constructive trustee (see ; Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd [1958] HCA 33; (1958) 100 CLR 342 at 350). That constructive trust arises from the fact that a personal benefit or gain has been so obtained or received and it is immaterial that there was no absence of good faith or damage to the person to whom the fiduciary obligation was owed. In some, perhaps most, cases, the constructive trust will be consequent upon an actual breach of fiduciary duty: eg, an active pursuit of personal interest in disregard of fiduciary duty or a misuse of fiduciary power for personal gain. In other cases, however, there may be no breach of fiduciary duty unless and until there is an actual failure by the fiduciary to account for the relevant benefit or gain: eg, the receipt of an unsolicited personal payment from a third party as a consequence of what was an honest and conscientious performance of a fiduciary duty. The principle governing the liability to account for a benefit or gain as a constructive trustee is applicable to fiduciaries generally including partners and former partners in relation to their dealings with partnership property and the benefits and opportunities associated therewith or arising therefrom (see Birtchnell v Equity Trustees, supra, at pp 395 and 408; Consul Development Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 CLR 373, at 394)."

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