FEDERAL COURT OF AUSTRALIA
Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 10) [2023] FCA 1656
File number: VID 1157 of 2017 Judgment of: BEACH J Date of judgment: 21 December 2023 Catchwords: CORPORATIONS – assessment of damages – adoption of report of special referees – compensatory damages – exemplary damages – additional damages under s 115 of Copyright Act 1968 (Cth) – orders made Legislation: Copyright Act 1968 (Cth) s 115
Federal Court of Australia Act 1976 (Cth) ss 37P(2), 54A
Cases cited: Directed Electronics OE Pty Ltd v Gridtraq Australia Pty Ltd [2023] FCAFC 149
Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 8) [2022] FCA 1404
Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 9) [2023] FCA 462
Re Hallett’s Estate (1880) 13 Ch D 696
Re Oatway [1903] 2 Ch 356
Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 134 Date of hearing: 14 December 2023 Counsel for the Applicant Mr M Wise KC and Ms N Hickey Solicitor for the Applicant: K & L Gates Counsel for the Seventh Respondent: Mr C Mills appeared on his own behalf. Counsel for the other Respondents: No appearance ORDERS
VID 1157 of 2017 BETWEEN: DIRECTED ELECTRONICS OE PTY LTD (ACN 130 647 737)
Applicant
AND: OE SOLUTIONS PTY LTD (ACN 119 188 019)
First Respondent
HANHWA AUS PTY LTD (ACN 614 943 092) (IN LIQUIDATION)
Second Respondent
HAN HWA HIGHTECH AUSTRALIA PTY LTD (ACN 153 718 435) (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
BEACH J
DATE OF ORDER:
21 DECEMBER 2023
OTHER MATTERS:
Defined terms in these orders have the same meaning as those in the orders made in this proceeding on 29 March 2023.
THE COURT ORDERS THAT:
1.The Fourteenth Respondent be substituted with Daniel Peter Juratowitch, in his capacity as Trustee of the Bankrupt Estate of Johnny Meneses and the title of the proceeding be amended accordingly.
2.Pursuant to s 54A(3) of the Federal Court of Australia Act 1976 (Cth) and rule 28.67(1)(a) and (e) of the Federal Court Rules 2011 (Cth), the report of the Honourable Peter Riordan KC and Mr Greg Meredith (being the Referees appointed pursuant to previous orders) delivered on 31 October 2023 (the Referees’ Report) be adopted in whole.
3.Meneses, Mills, Hanhwa Korea, Leemen Korea and Ryan Lee are jointly and severally liable to pay Directed the sum of $139,320,383 in damages.
4.Meneses, Mills, Hanhwa Korea, Leemen Korea and Ryan Lee are jointly and severally liable to pay Directed the sum of $26,347,772, being compound interest on the sum of $139,320,383 at the rate of 4% above the Cash Rate Target from time to time set by the Reserve Bank of Australia in accordance with paragraph 2.2 of the Federal Court of Australia General Practice Note – Interest on judgments (GPN-INT), compounded on yearly rests to 15 November 2023.
5.Hanhwa Korea and Leemen Korea…
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- Case
- [2023] FCA 1656
- Decision Date
CaseChat Overview and Summary
The primary legal issues before the court involved the assessment of damages for the breaches of contract and copyright, the calculation of compound interest on the awarded damages, and the imposition of exemplary and additional damages under the Copyright Act. The court had to decide on the appropriate quantum of damages for the various breaches, taking into account the special referees' report. This report had detailed findings on the losses suffered by Directed Electronics and the culpability of the various defendants. The court also needed to consider whether the exemplary and additional damages were justified given the nature of the breaches.
In its reasoning, the court adopted the findings of the special referees, which comprehensively analysed the breaches and the resulting losses. The court found that the defendants were jointly and severally liable for significant compensatory damages, including compound interest. Exemplary damages were awarded to account for the deliberate and egregious nature of the misconduct, particularly against Ryan Lee. The court also granted additional damages under the Copyright Act for the infringements. The court's decision was meticulous in apportioning liability among the defendants and ensuring that the damages reflected the true extent of the harm caused.
The court made several orders to reflect its findings, including the substitution of a respondent, the adoption of the special referees' report, and the imposition of joint and several liability for damages. The orders also included specific sums for compensatory, exemplary, and additional damages, as well as declarations of copyright ownership and equitable charges over certain properties to secure payment of the awarded damages. Finally, the court ordered the defendants to pay Directed Electronics' costs of the proceeding.
Orders
Orders of the court
1. The Fourteenth Respondent be substituted with Daniel Peter Juratowitch, in his capacity as Trustee of the Bankrupt Estate of Johnny Meneses and the title of the proceeding be amended accordingly.
2. Pursuant to s 54A(3) of the Federal Court of Australia Act 1976 (Cth) and rule 28.67(1)(a) and (e) of the Federal Court Rules 2011 (Cth), the report of the Honourable Peter Riordan KC and Mr Greg Meredith (being the Referees appointed pursuant to previous orders) delivered on 31 October 2023 (the Referees’ Report) be adopted in whole.
3. Meneses, Mills, Hanhwa Korea, Leemen Korea and Ryan Lee are jointly and severally liable to pay Directed the sum of $139,320,383 in damages.
4. Meneses, Mills, Hanhwa Korea, Leemen Korea and Ryan Lee are jointly and severally liable to pay Directed the sum of $26,347,772, being compound interest on the sum of $139,320,383 at the rate of 4% above the Cash Rate Target from time to time set by the Reserve Bank of Australia in accordance with paragraph 2.2 of the Federal Court of Australia General Practice Note – Interest on judgments (GPN-INT), compounded on yearly rests to 15 November 2023.
5. Hanhwa Korea and Leemen Korea are jointly and severally liable to pay Directed the sum of $2,000,000 in exemplary damages.
6. Ryan Lee is liable to pay Directed the sum of $1,500,000 in exemplary damages.
7. By reason of their conduct in causing Directed to purchase product at marked up prices from OE Solutions without disclosing that OE Solutions was owned by Meneses, OE Solutions and Meneses are jointly and severally liable to pay Directed the sum of $665,400.
8. Meneses, Mills, Hanhwa Korea, Leemen Korea and Ryan Lee are jointly and severally liable to pay Directed the sum of $1,000 for infringements of Directed’s copyright.
9. Mills is liable to pay Directed the sum of $250,000 in additional damages for infringements of Directed’s copyright, pursuant to section 115(4) of the Copyright Act 1968 (Cth).
10. Hanhwa Korea, Leemen Korea and Ryan Lee are jointly and severally liable to pay Directed the sum of $50,000 in additional damages for infringements of Directed’s copyright, pursuant to section 115(4) of the Copyright Act.
11. It is declared that Directed is and has been at all material times the beneficial owner of copyright in the following documents since their date of creation:
(a) DIR6200 Works:
(i) Master Feature List for the DIR6200;
(ii) Equalizer Graphs and Drawings for the DIR6200;
(iii) User’s Manual for the DIR6200; and
(iv) Graphical User Interface (GUI) for the DIR6200; and
(b) DIR8000 Works:
(i) Master Feature List for the DIR8000;
(ii) GUI for the DIR8000; and
(iii) Renderings for the DIR8000.
12. Directed:
(a) is entitled to and has an equitable charge over 9 Palm Grove Boulevard, Aspendale Gardens VIC 3195 (Aspendale Gardens Property), being the property more particularly described in Certificate of Title Vol 10440 Fol 979 in respect of Meneses’ interest in the Aspendale Gardens Property to secure payment of the sum of $1,120,223.97;
(b) subject to (c), is entitled to be subrogated to the rights of Westpac Banking Corporation (Westpac) in respect of its mortgage registered on the title to the Aspendale Gardens Property (Aspen Gardens Mortgage), with respect to Meneses’ interest in the Aspendale Gardens Property in the sum of $1,120,223.97 (Aspendale Gardens subrogation right); and
(c) is entitled to enforce the Aspendale Gardens subrogation right only after Westpac has been repaid in full the amount secured by the Aspen Gardens Mortgage.
13. Directed:
(a) is entitled to and has an equitable charge over 15 Jarrod Drive, Hastings VIC 3915 (Hastings Property), being the property more particularly described in Certificate of Title Vol 10940 Fol 511 in respect of Meneses’ interest in the Hastings Property to secure payment of the sum of $40,000;
(b) subject to (c), is entitled to be subrogated to the rights of Westpac Banking Corporation (Westpac) in respect of its mortgage registered on the title to the Hastings Property, with respect to Meneses’ interest in the Hastings Property in the sum of $40,000 (Hastings subrogation right);
(c) is entitled to enforce the Hastings subrogation right only after Westpac has been repaid in full the amount secured by the Hastings Mortgage.
14. OE Solutions, Meneses, Mills, Hanhwa Korea, Leemen Korea and Ryan Lee are jointly and severally liable to pay Directed’s costs of the proceeding from 29 March 2023 (including Directed’s costs of the reference to the Referees including any of the Referees’ fees paid by Directed) in a lump sum in an amount to be determined by a Registrar of the Court and in accordance with such directions as the Registrar considers appropriate.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
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