Bell v Steele (No 3)

Case [2012] FCA 246

FEDERAL COURT OF AUSTRALIA

Bell v Steele (No 3) [2012] FCA 246

Citation: Bell v Steele (No 3) [2012] FCA 246
Parties: RICHARD KENNETH BELL v TANYA STEELE
File number: QUD 391 of 2011
Judge: COLLIER J
Date of judgment: 16 March 2012
Catchwords: COPYRIGHT – unjustifiable/groundless threat of legal proceedings in relation to copyright infringement – threats by respondent filmmaker assisting applicant artist in United States of America of copyright infringement – applicant ceased displaying film in relation to which copyright infringement claimed – threatened proceedings never commenced by respondent against applicant – quantum of damages – claim only permitted for damages arising from unjustifiable threat – whether applicant's undisputed evidence as to losses should be accepted – evidence of lost sales of artworks – costs of proceedings – otherwise than by taxation – costs relate to unjustifiable threats – s 202(1) Copyright Act 1968 (Cth) – r 40.02(c) Federal Court Rules 2011
Legislation: Copyright Act 1968 (Cth) s 202(1)
Federal Court Rules 2011 r 40.02
Cases cited: Avel Pty Ltd v Intercontinental Grain Exports Pty Ltd (1996) 143 ALR 533 cited
Bell v Steele (No 2) [2012] FCA 62 cited
Cowan, B S & Anor v Avel Pty Ltd [1995] FCA 546 cited
Nine Network Australia Pty Ltd v IceTV Pty Ltd [2007] FCA 1172 cited
Ricketson S and Creswell C, The Law of Intellectual Property: Copyright, Designs & Confidential Information (2nd ed, Lawbook Co) cited
Townsend Controls Pty Ltd v Gilead, G & Ors [1990] FCA 250 cited
Ungar v Sugg (1892) 9 RPC 113 cited
World of Technologies (Aust) Pty Ltd v Tempo (Aust) Pty Ltd [2007] FCA 114 cited
Ricketson S and Creswell C, The Law of Intellectual Property: Copyright, Designs & Confidential Information (2nd ed, Lawbook Co)
Date of hearing: 13 March 2012
Place: Brisbane
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 25
Solicitor for the Applicant: Mr J Swinson of King & Wood Mallesons
Counsel for the Respondent: The Respondent appeared in person

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION

QUD 391 of 2011
BETWEEN:

RICHARD KENNETH BELL
Applicant
AND:

TANYA STEELE
Respondent

JUDGE:

COLLIER J

DATE OF ORDER:

13 MARCH 2012

WHERE MADE:

BRISBANE

THE COURT ORDERS THAT:

1.The respondent pay the applicant damages in the amount of $147,000.

2.The applicant’s costs be determined otherwise than by taxation.

3.The respondent pay the applicant’s cost of and incidental to the proceedings, totalling $22,224.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION

QUD 391 of 2011
BETWEEN:

RICHARD KENNETH BELL
Applicant
AND:

TANYA STEELE
Respondent

JUDGE:

COLLIER J

DATE:

16 MARCH 2012

PLACE:

BRISBANE

REASONS FOR JUDGMENT

  1. On 7 February 2012 in Bell v Steele (No 2) [2012] FCA 62 I made the following orders in this proceeding:

    1.The respondent being properly served pursuant to the order of 6 December 2011 and not having filed a defence, the judgment of the…

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AGLC
Bell v Steele (No 3) [2012] FCA 246
Case
[2012] FCA 246
Decision Date

CaseChat Overview and Summary

The case of Bell v Steele (No 3) involves an artist, Bell, who had engaged the services of a filmmaker, Steele, to assist in creating film footage in the United States. Bell claimed that Steele threatened him with legal action over copyright infringement in the film footage, which led to the removal of a film trailer from public exhibition, causing financial loss to Bell. The matter was brought before the court where Bell sought damages and costs related to the unjustifiable threats made by Steele. Steele failed to file a defence or appear in the proceedings, and Bell's claims were supported by affidavits from Bell, an art gallery owner, and Bell's solicitor.

The court was tasked with determining the quantum of damages that Bell could claim for the unjustifiable threats made by Steele. It also needed to assess the costs associated with the proceedings, particularly in light of Steele's failure to appear and defend the claims. The court considered the relevance of lost sales of artworks and the credibility of Bell's evidence regarding his losses.

In its decision, the court accepted Bell's evidence regarding the losses he suffered due to Steele's threats, which included lost sales opportunities and damage to his reputation. The court found that Bell was entitled to damages of $147,000 for the unjustifiable threats. Additionally, the court ordered Steele to pay Bell's costs of the proceedings, which were not to be taxed but rather determined otherwise, and to cover incidental costs amounting to $22,224. The court's decision was grounded in the principle that damages could only be claimed for losses directly arising from the threats, not from any subsequent legal proceedings that were never initiated.

Orders

Orders of the court

1. The respondent pay the applicant damages in the amount of $147,000.

2. The applicant’s costs be determined otherwise than by taxation.

3. The respondent pay the applicant’s cost of and incidental to the proceedings, totalling $22,224.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

At the time of making the orders on 13 March 2012 I stated that I would shortly thereafter deliver my reasons for those orders. These are my reasons.Background The orders of 7 February 2012 and 13 March 2012 were made in light of findings which I made in Bell v Steele (No 2) [2012] FCA 62, in summary that:·The applicant is an artist based in Australia who had engaged the respondent to assist him in the United States to make film footage.·The cost to the applicant of making this footage was claimed at $43,000, in addition to which he paid the respondent $4,000 and gave her a painting for her services.·A film trailer made by the applicant was distributed to Milani Gallery at Wooloongabba in Brisbane on 10 September 2011.·The respondent claimed copyright in the footage and demanded the trailer be removed from public exhibition. This was done. The applicant suffered financial loss.·The applicant has served the respondent in the United States with document relevant to these proceedings, including originating process and affidavit material.·Notwithstanding this service the respondent failed to file a Defence to these proceedings. No explanation was given for this course of action. In support of his claim for damages and costs, the applicant filed written submissions and the following three affidavits:·an affidavit of Ramon Milani sworn 16 February 2012;·an affidavit of the applicant sworn 16 February 2012;·an affidavit of John Swinson filed 16 February 2012. No material has been filed by the respondent. No appearance has been entered by the respondent at any time in this proceeding.Material filed by the applicant in support of ordersSubmissions of the applicant The applicant provided written submissions in support of his claim to damages and costs and, through his solicitor Mr Swinson, oral submissions. In relation to the claim for damages for unjustifiable threats, the applicant contends, in summary, as follows:·As a result of the respondent’s unjustifiable threats, actions were taken by the applicant’s agent, Mr Milani, which in turn resulted in the applicant losing the opportunity to promote and sell his artworks at an opportunistic time (namely, in conjunction with a successful exhibition at the Gallery of Modern Art in Brisbane where two of the applicant’s works were headlined).·The applicant also suffered damage in the US market due to the respondent’s threats, although the applicant is not seeking damages in relation to any losses suffered in the United States.·The applicant’s artistic credibility and integrity is very important in maintaining his reputation and the marketability of his art works.·The facts of this case are egregious in that:othreats of legal action were made in a calculated fashion by the respondent through her New York law form;othreats were made to both the applicant and Mr Milani;othe threats took no account of Australian legal principles;onotwithstanding the threats no legal action was commenced by the respondent, nor an appearance entered by the respondent.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Mr Swinson is the solicitor with carriage of the matter for the applicant. In summary, Mr Swinson deposes that:·documents in the proceedings were properly served upon the respondent in accordance with my orders of 6 December 2011;·the Court fees paid by the applicant to date are $3.008;·professional fees for legal services provided to the applicant amount to more than $30,000 for over 70 hours work including settlement discussions with the respondent’s New York counsel. The applicant claims its legal professional fees in the amount of $17,430, and makes no claim for costs associated with settlement discussions or dealings with the respondent’s law suit apparently filed in New York.ConsiderationDamages The applicant has been successful in obtaining an order pursuant to s 202(1) of the Copyright Act 1968 (Cth) which provides:Groundless threats of legal proceedings in relation to copyright infringement(1) Where a person, by means of circulars, advertisements or otherwise, threatens a person with an action or proceeding in respect of an infringement of copyright, then, whether the person making the threats is or is not the owner of the copyright or an exclusive licensee, a person aggrieved may bring an action against the first-mentioned person and may obtain a declaration to the effect that the threats are unjustifiable, and an injunction against the continuance of the threats, and may recover such damages (if any) as he or she has sustained, unless the first-mentioned person satisfies the court that the acts in respect of which the action or proceeding was threatened constituted, or, if done, would constitute, an infringement of copyright. In Ricketson S and Creswell C, The Law of Intellectual Property: Copyright, Designs & Confidential Information (2nd ed, Lawbook Co) paragraph 2.195 the learned authors summarise damages a copyright owner may claim in respect of groundless threats in the following terms:Where a person, by means of circulars, advertisement or otherwise, threatens a person with an action or proceeding for infringement of a patent, copyright, circuit layout or design, a person aggrieved may bring an action against the person making the threats for a declaration to the effect that the threats are unjustified, as well as an injunction against the continuance of the threats. Such an action may be brought, even if the threats were made in good faith, albeit ultimately found to be unjustified. It is also possible to obtain relief by way of damages to compensate for any damage that the person threatened has sustained as a result of these threats but such damage must flow from the making of the threats, not from any legal proceedings that may be subsequently commenced by the copyright owner.(Footnotes omitted.) (Emphasis added.) In my view this comment accurately states the law. That the applicant can only make a claim in respect of damages arising from the threats was clearly explained by Lord Esher MR in Ungar v Sugg (1892) 9 RPC 113 at 118, cf von Doussa J in Townsend Controls Pty Ltd v Gilead, G & Ors [1990] FCA 250 at [16]. (I note that, although both cases concerned threats in respect of infringement of a patent, identical principles in respect of damages apply as in the case before me.) So, for example:·impacts upon the readiness of third parties to do business with the applicant (World of Technologies (Aust) Pty Ltd v Tempo (Aust) Pty Ltd [2007] FCA 114 at [124]);·losses arising from threats to the applicant’s customers (Avel Pty Ltd v Intercontinental Grain Exports Pty Ltd (1996) 143 ALR 533 at 542);·lost sales or lost potential sales (Cowan, B S & Anor v Avel Pty Ltd [1995] FCA 546 [1995] FCA 546 at [25]); and·the cost to the applicant of instituting relief – such as a declaration – following receipt of the threat (Nine Network Australia Pty Ltd v IceTV Pty Ltd [2007] FCA 1172 at [234]).may all be compensable in damages. Conversely, losses arising from such events as rumours which may spring up but are not attributable to the party making the threat, or damage to the threatened party flowing from the actual commencement of legal action by the party who made the threats, are not compensable as damages sustained from groundless threats.