Case: The Commonwealth v Verwayen [1990] HCA 39 ; (1990) 170 CLR 394
Outcome: applied
In The Commonwealth v Verwayen [1990] HCA 39 ; (1990) 170 CLR 394 at 444 Deane J said: "Since an estoppel will not arise unless the party claiming the benefit of it has adopted the assumption as the basis of action or inaction and thereby placed himself in a position of significant disadvantage if departure from the assumption be permitted, the resolution of an issue of estoppel by conduct will involve an examination of the relevant belief, actions and position of that party." 129 I have examined the evidence of Harold and Saul about the ownership of the name Squires Loft at [63] to [68]. As there indicated, I am not persuaded that either of them was alert to the difference between a permission to use Lionel and Joel's intellectual property, in particular the name, and a conferring of ownership rights in that property or name. Notwithstanding the stance they have since taken, namely that they became joint owners of the intellectual property, I am satisfied that all they thought they were getting was a right to use the name in the conduct of the City restaurant. The same applies to the other items of intellectual property: the recipes for the sauces for example. 130 Even if I had concluded that Harold and Saul believed they were being given ownership rights in the intellectual property, in particular the name, I would not have upheld the estoppel. In Verwayen at 444-445 Deane J said: "The question whether such a departure would be unconscionable relates to the conduct of the allegedly estopped party in all the circumstances. That party must have played such a part in the adoption of, or persistence in, the assumption that he would be guilty of unjust and oppressive conduct if he were now to depart from it. The cases indicate four main, but not exhaustive, categories in which an affirmative answer to that question may be justified, namely, where that party: (a) has induced the assumption by express or implied representation; (b) has entered into contractual or other material relations with the other party on the conventional basis of the assumption; (c) has exercised against the other party rights which would exist only if the assumption were correct; (d) knew that the other party laboured under the assumption and refrained from correcting him when it was his duty in conscience to do so. ... In cases falling within category (a), a critical consideration will commonly be that the allegedly estopped party knew or intended or clearly ought to have known that the other party would be induced by his conduct to adopt, and act on the basis of, the assumption." 131 Did Lionel and Joel play such a part in the adoption of the pleaded assumption that they would be guilty of unjust or oppressive conduct if they were now to depart from it? In my view they did not play such a part. I do not regard any of the matters listed in [126] as constituting conduct by them that they would have thought would lead Harold and Saul to assume that the parties were joint owners of the intellectual property, in particular the name. In relation to matter (c) in [127], the tenor of the St Kilda joint venture agreement is inconsistent with the Squires Loft name being owned by the parties rather than Squires Loft Pty Ltd. At the time of the conduct in [127] I am satisfied that Lionel and Joel did not know or intend that Harold and Saul would be induced by it or any of it to adopt, and act on the basis of, the assumption that the parties were joint owners of the intellectual property, in particular the name. Nor do I consider that Lionel and Joel clearly ought to have known that they would. 132 The second assumption pleaded by the applicants is not a live issue. Lionel and Joel accept, in my view correctly, that Harold and Saul have the right to operate the City restaurant under the name Squires Loft. Had they not accepted that position, I would have upheld the second assumption, and held that they were not at liberty to depart from it by preventing Harold and Saul from so operating the City restaurant. I will deal later with whether the right has been lost.