de Garis, B.K. v Neville Jeffress Pidler P/L

[1992] FCA 889

Re: BRIAN KELVIN DE GARIS and MATTHEW MOORE
And: NEVILLE JEFFRESS PIDLER PTY. LIMITED
No. N G1319 of 1988
FED No. 889
Number of pages - 7
Costs

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Beaumont J.(1)

CATCHWORDS

Costs - Newspaper clipping service infringed journalists' copyright - account of profits - judgment for small sum - whether applicants entitled to costs of proceedings for account.

HEARING

SYDNEY

#DATE 13:11:1992

Counsel and Solicitors Mr D.K. Catterns and
for Applicants: Ms S.J. Goddard, instructed

by Taylor and Scott

Counsel and Solicitors Mr A.J.L. Bannon and
for Respondent: Ms R. Soffroniou, instructed

by Mallesons Stephen Jacques

ORDER

THE COURT ORDERS THAT:

1. Judgment be entered for the applicants as against the respondent in the sum of $2.65 (two dollars and sixty-five cents).

2. The applicants pay the respondent's costs of the proceedings for an account of profits.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

BEAUMONT J. The applicants seek an account of profits pursuant to orders made in my judgment of 6 July 1990. The account is sought under s.115(2) of the Copyright Act 1968. The history of this litigation subsequent to the orders on the issue of liability is as follows.

1. On 1 November 1990 it was ordered that the respondent file and serve affidavit evidence stating how many of the Moore and de Garis works ("the infringing copies") had been made and what had been charged for them. Subsequently, there was a purported election to claim damages instead of profits, but it appears this was done by inadvertence and the damages claim has been abandoned and the matter reinstated as a claim for profits.

2. On 15 April 1991 it was ordered, pursuant to order 39 of the Federal Court Rules, that an account be taken. The account was to be in the form of an affidavit by the respondent. In May 1991 there was an exchange of correspondence between the parties in which the respondent offered to pay $200 in full satisfaction of all claims. (I mention this as part of the history of the matter for present purposes, but it is really only relevant to the question of costs.) On 6 June 1991 Mr Pidler, a director of the respondent and its representative for present purposes, swore an affidavit purporting to verify an account of the profits made from making and supplying the infringing copies. By an order of 7 June 1991, provision was made for the applicant to inspect the respondent's account books. This inspection took place in June 1991, but by letter dated 27 June 1991 the applicants' solicitors sought to inspect further documents.

3. On 11 December 1991, it was ordered by consent that a chartered accountant, (Mr Widin) be appointed as court expert to inquire into and report upon the questions which are set out in annexure A to these reasons. On 24 April 1992, Mr Widin and a partner (Mr Ryan) produced a lengthy report in answer to these questions. For reasons given in the report, it was not possible to answer some of the questions in the terms in which they were framed. However, in essence, the expert report dealt with the matters now in issue as follows.

4. The experts calculated that the costs of the respondent's "News Express Service" in September 1987 totalled $59,074, and that the estimated number of clippings/copies despatched to clients totalled 200,000. Thus the direct cost to the respondent of copying an article published in the Sydney Morning Herald in September 1987 was 29.5 cents. On the revenue side of this service, the experts concluded that the gross amount received by that service for each clip/copy was 34 cents. The difference, therefore, was 4.5 cents per clip/copy.

5. The experts did a similar exercise in respect of the respondent's "Comprehensive Service" for September 1988 (the date of the infringing publication in the West Australian). They calculated the direct unit cost of each copy to be $1.39 and the gross amount received per clip/copy in September 1988 to be $1.79. The difference for this service, therefore, was 40 cents per clip/copy.

6. The respondents called no expert accounting evidence. There was, however, evidence from Mr Pidler who is engaged in the conduct of the respondent's business on a day to day basis and has represented the respondent in these proceedings. Mr Ryan, in the absence of Mr Widin, was cross-examined on the court expert's report. He agreed that he did not allow any amount for the reading function involved in the provision of the news services. It was also put to him that he failed to make an apportionment by distinguishing between the provision of a photocopy and the provision of an original clip.

7. As to the latter point, there is evidence from Mr Pidler in his affidavit of 10 November 1992 that this distinction is not significant. The point put to Mr Ryan in cross-examination was elaborated in legal argument by reference to Windeyer J.'s well known exposition in Colbeam and Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 42 - 46.

8. In principle, it is clear that if an apportionment is appropriate, then a fair basis of apportionment should be established on the evidence. However, I have difficulty in accepting the relevance of that principle to this case, where there is no evidence to suggest the respondent ever made such an apportionment for its own purposes. Moreover, there is no material in the accounts provided pursuant to the court order to make any such apportionment a viable exercise. In those circumstances, I am left only with the court expert's evidence. In the absence of either primary or opinion evidence to indicate a method of apportionment, I will proceed on the basis that an apportionment is not a practicable matter and, as a matter of legal principle, should not be pursued.

9. The applicants then submitted that in relation to the "Comprehensive Service" I should find, by reference to Mr Pidler's affidavit of 6 June 1991, that 45 infringing copies were made. The respondent argues that the figure 45 could include some original documents, but if that be so, it made no attempt to establish how many originals, if any, were involved. Again, in the absence of such evidence and in the absence of any practicable way of establishing what if any were the original documents, I should proceed on the footing that there were in fact 45 infringing copies. I think the expert's figure of 4.5 cents profit in respect of this service is appropriate, so that gives a total profit for that service's infringements of $2.25.

10. Additionally, in respect of the "News Express Service", there is evidence of only one infringing copy. This was the copy ordered by Mr Hall, one of the applicants' legal representatives, as a "trap" purchase. Whilst I acknowledge the force of the respondent's submission that this account is a discretionary remedy and Mr. Hall's purchase was carried out for the purposes of litigation, nonetheless he paid for the document, and I consider that there should be an account made for any profit made on that purchase. I accept the court expert's figure of 40 cents as appropriate.

11. It follows that there should be judgment for the applicant in respect of both services for a total of $2.65, and I so order. I turn now to the question of costs.

12. The proper order for costs on this branch of the case (the applicants already having their costs on the issue of liability) is that the applicants pay the respondent's costs on the account of profits.

13. It is true, as the applicants' counsel pointed out, that the claim made today was, in terms, upheld. However, it must be remembered that at all material times the applicants have known that they could expect, at best, to recover only a small sum from the exercise. This has proved to be true.

14. It is further submitted for the applicants that the order made in respect of the production of account books by the respondent was imperfectly performed. This is a contentious matter, but even if it be assumed for argument's sake that the respondent's production did not conform with the letter and spirit of that order, no particular consequence follows to the issue of costs. This is because, regardless of any order for production of account books or expert analysis of such material, the applicants knew that at best all they could recover from this aspect of the litigation was a nominal amount.

15. There are other, more general, policy considerations to be considered. In some instances it is appropriate that the court entertain a matter which has the character of a test case to provide guidance for the resolution of other disputes - this is a common feature of much of the work of this court. However, if there were a precedential aspect to this case, it was on the issue of liability. The issue of the account of profits, as these reasons indicate, has been decided on the particular evidence before me and very much on the facts revealed in that evidence.

16. In these circumstances, the appropriate order is that the respondents should have their costs of this branch of the litigation.