Henley Arch Pty Ltd v Del Monaco

[2019] FCCA 3848

FEDERAL CIRCUIT COURT OF AUSTRALIA

HENLEY ARCH PTY LTD v DEL MONACO [2019] FCCA 3848

Catchwords:

COPYRIGHT – Infringement – artistic work – project home floorplan – whether alleged infringing work objectively similar – whether alleged infringing work reproduced a substantial part – Respondent claims a friend did not inform him of where the design came from – Respondent largely uncooperative – Copyright Act 1968 (Cth) s.115(3) – loss of opportunity damages – loss of profits – additional damages – Copyright Act 1968 (Cth) s.115(4) – claims upheld.

Legislation:

Copyright Act 1968 (Cth), ss.21(3)(a), 31(1), 32, 35(2), 35(6), 36(1), 115(2), 115(4)
Federal Circuit Court of Australia Act 1999 (Cth), ss.76(2), 76(3)(c)
Federal Circuit Court Rules 2001 (Cth), r.15.03

Cases cited:

Clarendon Homes (Aust) Pty Ltd v Henley Arch Pty Ltd (1999) 46 IPR 309; [1999] FCA 1371

Eagle Homes Pty Ltd v Austec Homes Pty Ltd (1999) 87 FCR 415

Facton Ltd v Rifai Fashions Pty Ltd (2012) 287 ALR 199; [2012] FCAFC 9

Geneva Laboratories Limited & Anor v Prestige Premium Deals Pty Limited & Others (No. 5) [2017] FCA 63;(2017) 122 IPR 279

Halal Certification Authority v Scadilone Pty Limited [2014] FCA 614; (2014) 107 IPR 23

Henley Arch Pty Ltd v Lucky Homes Pty Ltd [2016] FCA 1217
Ron Englehart Pty Limited v Enterprise Constructions (Aust) Pty Limited (2012) 95 IPR 64; [2012] FCAFC 4
SW Hart & Co v Edwards Hot Water Systems [1985] HCA 69; (1985) 159 CLR 466
Tamawood Limited v Habitare Developments Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2015] FCAFC 65; (2015) 112 IPR 439

Truong Giang Corporation v Quach [2016] FCA 50

Applicant: HENLEY ARCH PTY LTD

Respondent: DORIANO MICHAEL DEL MONACO

File Number: MLG 3588 of 2018

Judgment of: Judge Baird

Hearing dates: 11, 12, and 13 November 2019

Date of Last Submission: 13 November 2019

Delivered at: Melbourne

Delivered on: 13 November 2019

REPRESENTATION

Counsel for the Applicant: Mr T Cordiner QC and Mr M Fleming

Solicitors for the Applicant: Kellech Smith, Ashurst

The Respondent appeared in person

ORDERS

THE COURT NOTES THAT:

These orders have been amended pursuant to r.16.05(2)(g) of the Federal Circuit Court Rules 2001 (Cth), as marked, and adding italics and boldening.

THE COURT DECLARES THAT:

1. The Respondent has infringed the Applicant’s copyright in the residential house plan known as the “Colorado 37” (the Colorado Design) (as depicted at Schedule A of these orders) by:

   (a)taking a photograph of a reproduction of the Colorado Design as it appeared in the brochure known as “Colorado Q1” (reproduced at Schedule B to these orders), without any identifying marks or title block, such photograph depicted in Schedule C to these orders (the Colorado Photograph);

   (b)sending an email to Elite Building Services (Vic) Pty Ltd on 28 April 2016 containing the Colorado Photograph;

   (c)authorising Elite to prepare plans for a home to be built at 21B Meeking Drive, Pakenham, Victoria, by reference to the Colorado Photograph (the Elite Pakenham Property Design), a copy of which floor plan appears in Schedule D to these orders; and

   (d)authorising the construction of a house in accordance with the Elite Pakenham Property Design at 21B Meeking Drive, Pakenham, Victoria.

THE COURT ORDERS THAT:

1. The Respondent be permanently restrained, whether by himself, his servants, agents or otherwise, from:

   (a)

   reproducing the Colorado Design, whether in two-dimensional or

   
   

   three‑dimensional form;

   (b)communicating the Colorado Design to the public; and or

   (c)causing or authorising others to do any of the acts above in respect of the Colorado Design,

2. On or before 18 November 2019, the Respondent:

   (a)destroy all materials in his possession, power, custody or control; and

   (b)request that each of Elite and Sketch Building Design Pty Limited take all reasonable steps to destroy all materials in their possession, power, custody or control,

   the reproduction or communication to the public of which would contravene the terms of Order 2 above, provided that each of Elite and Sketch may keep one copy of each version of each of the Elite Pakenham Property Design as submitted to council, and a copy of the working plans embodying the house as built, as required for their business records. 

3. On or before 25 November 2019, the Respondent file and serve an affidavit confirming the steps he has taken in compliance with Order 3 above.

4. Pursuant to section 115(2) of the Copyright Act 1968 (Cth) (Copyright Act), the Respondent pay the Applicant damages in the sum of $42,000 by 31 December 2019.

5. Pursuant to section 115(4) of the Copyright Act, the Respondent pay the Applicant additional damages in the sum of $40,000 by 31 December 2019.

6. The Respondent pay the Applicant interest pursuant to section 77 of the Federal Circuit Court of Australia Act 1999 (Cth), in In the amount of $4,800 by 31 December 2019.

7. By 20 November 2019, the Applicant file and serve:

   (a)any affidavit material upon which the Applicant seeks to rely; and

   (b)an outline of submissions and other materials (of no more than five pages),

   in relation to costs, and on any application to vary dates of payment.

8. By 27 November 2019, the Respondent file and serve:

   (a)any affidavit material upon which the Respondent seeks to rely; and

   (b)an outline of submissions and other materials (of no more than five pages),

   in relation to costs, and on any application to vary dates of payment.

THE COURT DIRECTS THAT:

1. Pursuant to Rule 15.03 of the Federal Circuit Court Rules 2001 (Cth), by consent the question of costs be determined on the papers, unless the Court otherwise directs.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 3588 of 2018

Henley Arch pty ltd

Applicant

And

DORIANO MICHAEL DEL MONACO

Respondent

REASONS FOR JUDGMENT

(Ex Tempore, Revised from Transcript)

Introduction

1. The Applicant, Henley Arch Pty Limited, operates a home design and building business which has been operating since 1989 under a number of divisions and brands including, relevantly, “Clendonvale”.  That division markets and constructs homes according to project home designs, including a design known by the marketing name Colorado Q1.  Henley Arch contends that the Respondent, Mr Doriano Del Monaco, has infringed its copyright in a house plan known as the Colorado 37, which house plan comprises the floor plan and elevation sketches for a four-bedroom house with open plan kitchen, dining and living area, a theatre or television room, and study with an al fresco verandah, an entrance porch and at least a double garage.

2. Henley Arch claims that Mr Del Monaco has infringed its copyright in the Colorado 37 house plan by reproducing an image of the Colorado Q1 marketing plan depicted on the Henley Arch website which marketing plan, in turn, is a reproduction of the Colorado 37 house plan design.  Henley Arch further contends that Mr Del Monaco has authorised the preparation of housing plans for, and the construction of a house at, a property then owned by Mr Del Monaco at 21B Meeking Drive, Pakenham, Victoria (Pakenham property). 

3. Henley Arch claimed that Mr Del Monaco authorised the infringement of copyright in the Colorado 37 house plan by first authorising the reproduction of that house plan in plans for the house at the Pakenham property (Elite Pakenham Property Design), and by authorising a three‑dimensional reproduction of the two-dimensional house plan for Colorado 37 by the construction of the residential dwelling at the Pakenham property.  Henley Arch has sought a declaration that the conduct of Mr Del Monaco constituted copyright infringement, injunctions against him thereby restraining further infringing conduct, delivery up or destruction of the alleged infringing plans, damages, and additional damages.

4. Mr Del Monaco was the owner of the Pakenham property between June 2015 and June 2018.  In summary, the evidence establishes that between May 2016 and 30 January 2017 Mr Del Monaco entered into a building contract with Elite Building Services (Vic) Pty Limited to build a house on the Pakenham property.  In turn, Elite Building engaged a drafting business known as Sketch Building Design Pty Limited to prepare plans, further to instructions passing between Mr Del Monaco, Elite Building, and Sketch Building.

Summary of conclusions

1. The defence raised by Mr Del Monaco, in sum, was to the effect that the plan communicated by him to Elite Building was not prepared by him, but was prepared for him by a mate, and that he did not have access to his own draftsperson.  Furthermore, his defence was that he neither represented that any plan contained in the photograph he communicated to Elite Building was owned by him, nor that he had any rights to reproduce the material, that Elite Building was responsible for the preparation and drafting of all drawings in connection with the Pakenham property, and at no time did he assert that the plan he communicated to Elite Building was designed by his mate.

2. For the reasons that follow, I have concluded that Henley Arch’s claims of copyright infringement succeed.  I reject Mr Del Monaco’s defence that he did not authorise the reproduction of the Colorado 37 (or the Colorado Q1) either in two-dimensional or three-dimensional form, and a defence raised by Mr Del Monaco that Elite Building should have made him aware if there were any possible issues with copyright. 

3. I further reject any defence that changes to the drawings pursuant to which the house on the Pakenham property was built resulted in the house built not being an infringement of copyright in the Colorado 37 (through the use of the Colorado Q1).  I will expand upon this aspect later in my reasons.

Background

1. It is appropriate to first set out the background to what has transpired. In doing so, it is appropriate to describe briefly the matter as it proceeded at trial.  In short compass, at trial Mr Del Monaco represented himself.  In the period before trial, Mr Del Monaco also represented himself.  His communications with the Applicant’s solicitors evince a degree of frustration and a certain intemperance which has not been evident before me.  Mr Del Monaco has composed himself calmly during the trial itself.

2. However, the email correspondence in the period before trial shows certain frustration on both parties part with the other party.  It is apparent that whilst for a period Mr Del Monaco did engage representation (through a person I understand to be his brother, a solicitor), since at least June 2019 Mr Del Monaco has been unrepresented, and has not participated in preparation of evidence for his case, until he appeared at trial. 

3. In the description and findings that follow, I am drawing the facts from the matters that are admitted, or have not been contested, in evidence before me by reason of notices to admit, and otherwise the evidence adduced by Henley Arch without objection. 

4. Henley Arch asserts that its employee, a Mr Jeff Bugeja, an Australian citizen, drew the house plan of the Colorado 37 in about 2011.  As an employee, Mr Bugeja’s drawing of the Colorado 37 was made in circumstances where I find Henley Arch is the owner of copyright in the house plan.  In about December 2011, Henley Arch first began offering the Colorado 37 house plan for construction in Queensland. 

5. In about December 2014, a brochure including a marketing plan of the Colorado 37 was created for Henley Arch by an employee of HIVE Creative Pty Limited.  That marketing plan, also known as the Colorado Q1, depicts in simplified form, the Colorado 37 house plan.  The Colorado Q1 was published in a brochure available to the public on Henley Arch’s website, at least in the period from 5 October 2015, and until at least 5 December 2016. 

6. I am satisfied that the Colorado Q1 is a qualitatively substantial reproduction, in a copyright sense, of the house plan Colorado 37, and that in the circumstances, the creation of it was authorised by Henley Arch, and thus, the marketing of the Colorado Q1 communicated the house plan that is Colorado 37. 

7. In June 2015, Mr Del Monaco purchased the Pakenham property for approximately $380,000.  It was vacant land.  The Pakenham property was in the vicinity of a property at which Mr Del Monaco and his wife then lived.

8. In his defence, Mr Del Monaco states that in around 25 to 27 April 2016, Mr Del Monaco had been searching through the internet for a home design: …that was better defined by the parameters of the block that he had purchased.  He had purchased a large acre property with a big building envelope, and the majority of home building designs that he had looked at to that date were specific for small home lots.  Mr Del Monaco believed that the best design for the Pakenham property would be a ranch-style home.

9. Mr Del Monaco said in his defence that “a couple of days before” sending through an email referred to in annexure C to the statement of claim to Elite Building, and to which I will return, Mr Del Monaco had been discussing the matter with a friend of his, a Mr Troy Barnett, and telling him it was difficult to find designs that would suit, and properly defined, his block.  Mr Del Monaco said in his defence that in the early afternoon of 28 April 2016 or thereabouts, Mr Barnett rang Mr Del Monaco saying that he had found a design on the internet that would meet Mr Del Monaco’s requirements. 

10. Mr Del Monaco claimed Mr Barnett then proceeded to send him by text message a picture of a house design that made no reference to Henley Arch, or any other builder, and, in turn, Mr Del Monaco then rang Mr Bishop at Elite Building and told him that he had found a design he liked which Elite Building could work on.  Mr Del Monaco has not filed any evidence to support this claim set out in his defence.  What the evidence does establish, and I find, is that in the evening of 27 April 2016, a photograph of a computer screen on which was displayed the Colorado Q1 as appeared in Henley Arch’s brochure, and which was available on Henley Arch’s website, was taken using an iPhone 6S Plus.

11. That photograph was sent by email as a jpeg attachment to Elite Building on 28 April 2016 by Mr Del Monaco.  Mr Del Monaco stated in that email: This is a floor plan my mate has defined for me for 21B Meeking drive Pakenham.  Please work off this.  Annexed to these reasons as Schedule C is a copy of that photograph (the Colorado photograph).  It will be apparent that the Colorado photograph does not contain any of the details surrounding the marketing plan as depicted in the brochure depicted on Henley Arch’s website which would identify Henley Arch or the division of its business, Clendonvale, or the name of the plan “Colorado Q1”.

12. The evidence establishes that the Colorado photograph was taken at a house in Dandenong North, Victoria, on 27 April 2016, and that the property at which the photograph was taken is registered in the name of a person who has the name of Mr Del Monaco’s wife’s maiden name.

13. The file properties of the jpeg attachment emailed by Mr Del Monaco to Elite Building on 28 April 2016 thus establish that the Colorado photograph was taken at a house which, it is reasonable to infer, and I find, is registered in the name of a relative of Mr Del Monaco’s wife.

14. It is reasonable to infer, and I find, that the photograph was taken either by Mr Del Monaco, or by a relative or friend of Mr Del Monaco’s, and I further find that Mr Del Monaco by emailing the Colorado photograph to Elite Building, authorised, first, the taking of the photograph, and secondly, the reproduction of that photograph, constituted by emailing the photograph to Elite Building.

15. It has been urged upon me that Mr Del Monaco altered or procured the alteration of the Colorado Q1 marketing plan and the photograph so as to conceal or remove all references identifying Henley Arch as the owner of the copyright in the Colorado Q1 design, and, it would follow, any references to Colorado’s ownership of any house plan which is reproduced in the Colorado Q1 marketing plan.

16. I am not prepared to so draw that inference.  It suffices to observe that the taking of the photograph is such as to reproduce the whole of the image of the house floor plan depicted in the Colorado Q1 marketing plan, and that the taking was an active step done by, or approved by, Mr Del Monaco.  Whilst the consequence may be that the copyright claims and copyright ownership details are not reproduced, I do not consider that it is reasonable to find the level of concealment that the Applicant’s counsel urge upon me.

17. Turning to the next steps in the events that occurred.  On the same day, 28 April 2016, that Elite Building received Mr Del Monaco’s email and jpeg attachment of the Colorado photograph, Elite Building forwarded those materials to its draftsperson at Sketch Building.  The draftsperson produced a house plan drawing within the day. 

18. It appears that the draftsperson at Sketch Building, through a process of telephone conversations and emails, slowly progress with the drawings they make until they are completed.  The evidence is that:

    Sketch was able to produce the drawing (the reference is at court book 444), that Sketch does a lot of this type of work in their office, so they have a good idea of what window sizes and so forth to put on plans in the first draft.  We have a large blocks library of baths, vanities, kitchen items, et cetera, that we use for our drafting work, and our usual procedure is to follow the layout we are given as best we can, and then send it back to the builder for review and then they send it back to us with any mark-ups or adjustments they are after. 

The alterations to the design of the Pakenham property

1. Between 29 April 2016 and 4 May 2016, Mr Del Monaco instructed Elite Building to incorporate a façade into the design for his house, which has a similarity to a façade known as the “Campbell façade”, which was depicted in a photograph promoting the Colorado Q1 marketing plan which was displayed on Henley Arch’s website, at least as at 1 April 2016. 

2. The plans went through at least three iterations before being finalised.  Between May 2016 and 30 January 2017, as I have said, Mr Del Monaco entered into a building contract with Elite Building to build a house on the Pakenham property, thereafter paid Elite Building to build the house, and in around December 2016, Mr Del Monaco submitted, or procured the submission of, the Elite Pakenham property design to the local shire council for building approval.  That approval was granted on about 11 December 2016.

3. Before me, Mr Del Monaco accepts that the house built was built in accordance with the plans as approved by council.  Elite Building built the house that presently stands on the Pakenham property in the period in January 2017 to 25 August 2017, at which time Mr Del Monaco and his wife obtained possession of the house.

Attempts to resolve dispute

1. On 11 October 2017, Henley Arch sent the first letter of demand to Mr Del Monaco, alleging copyright infringement of its Colorado design. 

2. In that demand, Henley Arch claims ownership of a floor plan for a project home known as the Colorado and houses constructed in accordance with what it refers to as the Colorado design, enclosed a copy of the Colorado photograph, and alleged copying and authorising of the copying in infringement of the copyright.  The demand informed Mr Del Monaco that Henley Arch is entitled to damages and costs, and that a court can make an award not only to compensate for damage caused, such as Henley’s lost profit, but, where copying is flagrant, make an award for additional damages, which amounts can be substantial. 

3. Henley Arch informed Mr Del Monaco that in a recent case they sought payment of over $568,000 in legal costs alone.  Henley Arch invited Mr Del Monaco to avoid legal costs by entering into a plan to resolve the matter.  In response, Mr Del Monaco informed Henley Arch that he did not appreciate the threat of legal costs, denied sending Elite Building Henley Arch’s brochure, and directed communications to his brother, a lawyer.  Henley Arch followed that demand with a letter the next day, which referred to a plan known as the Colorado Q1, which appeared on what appears to be a marketing brochure under the division name “Plantation Homes”.   

1. A more detailed letter of demand followed on 1 November 2017, including copies of the floor plan of the Colorado 37 and elevations, as well as a copy of Mr Del Monaco’s email to Elite Building of 28 April 2016 and attached JPEG file.  On 15 November 2017, Henley Arch sent a letter by email to Monaco Lawyers, who were then representing Mr Del Monaco, requesting payment of the sum of $67,700 in damages, representing Henley’s lost profit. 

2. In the interim, Monaco Lawyers had sent a letter to Henley Arch stating that Mr Del Monaco had embarked on a trip around Australia, that there would not be any benefit in having a discussion if Henley Arch was reserving its right to damages, and that Mr Del Monaco is “not a builder in the process of selling or making a profit from the sale of the property”. 

3. In February 2018, Mr Del Monaco listed the Pakenham property, with the completed house, for sale.  The house was sold in about 22 March 2018 for $1,150,000.  Settlement occurred some months later, on about 26 June 2018. 

4. In the course of the correspondence between the parties, Mr Del Monaco asserted that a Mr Troy Burnett had allegedly provided the photo of the Colorado photograph to Mr Del Monaco.  However, despite Henley Arch, and later, their solicitors, seeking details of that person, no such details were forthcoming.  The correspondence is not edifying.

5. I have noted the chronology reveals that in the period from 11 October 2017 until November 2018, Henley Arch or its lawyers communicated, in writing, at least 21 times with Mr Del Monaco, or his lawyers.  Much of the correspondence was taken up with endeavouring to obtain further information, or engaging in disputation as to who is to meet with whom, and whether any details were going to be provided about Mr Del Monaco’s alleged friend.  In the meantime, Henley Arch’s solicitors obtained material and information from both Elite Building and from Sketch Building.  It is apparent that they ascertained that neither Elite Building, nor Sketch Building, originated the house plans for the Pakenham property, but, rather, that the house plans were prepared further to the provision of the Colorado photograph to Elite Building, and thence to Sketch Building, and that further development of the plans was approved by, and directed by, communications originating from Mr Del Monaco.

The proceeding in this Court

1. On 26 November 2018, Henley Arch filed the present proceeding in this Court seeking the relief I have described above.  Mr Del Monaco has submitted to this Court that he had sought to discuss and mediate the matter with Henley Arch.  As I have informed Mr Del Monaco, where there is not a meeting of minds as to amount in terms to a settlement, the communications are without prejudice, and I have not received any such material. 

2. I have referred above to Mr Del Monaco’s defence dated 8 March 2019, in which he denied infringement.  In Mr Del Monaco’s defence, he denied infringement and denied the taking of the Colorado photograph, but accepted the email communication of the photograph by him to Elite Building.  He denied reproduction or procuring of the reproduction of the Colorado 37, or the Colorado Q1, or the Colorado photograph, but admitted that there had been communications between Elite Building and Sketch Building regarding the development of the Elite Pakenham Property Design. 

3. As I have said, Elite Building built the house that stands on the Pakenham property in accordance with the instructions of Mr Del Monaco.  Mr Del Monaco has admitted the marketing and sale of the Pakenham property and the transfer to the new owners.  As I have said, in his defence, Mr Del Monaco asserted that Elite Building should have made him aware if there were any issues in copyright. 

Mr Del Monaco’s property dealings and financial position

1. Before I turn to the copyright in the plans and the infringement, it is appropriate to refer to Henley Arch’s evidence in relation to Mr Del Monaco’s experience, and his assets and liabilities.  In the conduct of the proceeding it appears that Henley Arch has operated on a belief that Mr Del Monaco is a professional operating in the building industry, and that as a person who has a real estate agent’s licence, and is the director of several companies associated with the building industry, he should be held to a higher standard than laypersons in dealing in copyright works without authorisation.

2. There is evidence before me that Mr Del Monaco is, or has been, either by himself, as a joint proprietor, or as a tenant in common, the owner of 17 parcels of land in Victoria and one parcel of land in Western Australia.  Whilst, however, Mr Del Monaco is so recorded, the picture that emerges from the evidence, first as read or tendered by Henley

   
   

   Arch, and secondly, as contained in bundles of bank statements, demands and final notices, and other material tendered by Mr Del Monaco, is somewhat different. 

3. In part from the bar table, and in part as may be inferred from the title details put in evidence by Henley Arch, it appears that Mr Del Monaco is one of at least three brothers, who, Mr Del Monaco has said from the bar table and I accept, are the beneficiaries of property left by their parents, who died in about 2012, and that Mr Del Monaco with his brothers is also a director, and I understand a shareholder, in at least one investment vehicle having considerable property interests.  Other properties held or formerly held in Mr Del Monaco’s name as sole proprietor or with his wife are subject to significant loans. 

4. The picture that has emerged, I find, is rather of a person who uses what equity there may be in one property to take advantage of a low interest environment to acquire further properties, which then, in turn, appear to provide a basis for further loans to purchase further properties. 

5. In sum, two houses in the Mount Beauty area in Victoria, previously owned by Mr Del Monaco, have been sold within the last few months, in July and August 2019, and the document put in evidence by Mr Del Monaco show that there is approximately a net $60,000 in credit as at November 2019.   There are at least four land parcels in Victoria which are held by Mr Del Monaco as a tenant in common with his two siblings.  At least two of those places are located in Berwick in Victoria.  There is an outstanding home loan mortgage on another property in Berwick, in which the amount owed at 6 November 2019 is $597,527.  Another property is subject to a home loan, owing as at 7 November 2019, $476,154. 

6. There are a further three properties which Mr Del Monaco appears to own jointly with his three siblings.  There is a block of six units located in the Dandenongs which Mr Del Monaco is on title as a joint proprietor with his three brothers.  There is also one property located in Western Australia held by him and his siblings. 

7. Mr Del Monaco and his wife own 2 properties, their present family home in Belgrave South, and a previous family home in Packenham in the same street as the Packenham property at the centre of this proceeding.  Both properties were the subject of online price appraisals tendered by the parties.  By reference to the website OnTheHouse.com.au and CoreLogic the remaining Pakenham house has an estimate price range calculated between $900,000 and $1 million, with a mid-range of $920,000.

8. The Belgrave South property has an estimated midpoint of $1.8 million by reference to OnTheHouse, and $1.79 million by reference to CoreLogic website calculations.  To counter this, Henley Arch tendered what appears to be a price estimate using the Domain website, which provides an estimate range in the low range of $2.23 million, a midrange of $2.75 million, and a high range of $2.9 million for the Belgrave South property.  However, further investigation of that report shows that it is based on two sales:  one in January 2012 at $1.45 million, and one in March 2018 of $2.65 million.

9. The $2.65 million private treaty sale was the sale of the Belmont South property to Mr Del Monaco.  Further, and curiously, there is a page entitled Equity Calculator which provides an estimated property price and an outstanding loan amount.  It is not clear to me how those figures were arrived at, or the basis on which the estimate range was arrived at.  Accordingly, I do not give great weight to the Domain estimation. 

10. In any event, the evidence also shows that the Belgrave South property is subject to a home loan mortgage pursuant to which as at 31 October 2019, Mr Del Monaco and his wife owe approximately $2,288,222 in debt.  The remaining Pakenham house is subject to a home loan, owing the sum of $767,314 as at 7 November 2019. 

11. The total picture of indebtedness able to be ascertained from a rather confused bundle of documents tendered by Mr Del Monaco reveals that he has liabilities of at least $4 million, secured against realty, and over the past year at least, has been in default on motor vehicle chattel loans, and other personal loans, and hire purchase loans for items such as mowers.  It is also apparent from the bundle of documents tendered that Mr Del Monaco’s financial affairs are not in an orderly state.  Land tax has not been paid on a number of properties.  It is not possible with any degree of clarity to ascertain Mr Del Monaco’s true financial position. 

12. Mr Del Monaco’s LinkedIn profile reveals a number of directorships and associations.  He has been, or is, a director of two businesses known as “Del Monaco Coffee”.  He is the director of a concreting and excavation business, a director of a “maintenance service for real estate agent, rental property, body corporate, and the general public”, a licensed real estate agent, and has three directorships with companies which have property investment portfolios, identified as “Delcorp Projects”, “Lombard House Pty Limited”, and a “Delcorp Development Trust”.  It is not in dispute that with Mr Del Monaco’s siblings, Mr Del Monaco is a director of Lombard House Pty Limited, which, has a Melbourne CBD commercial investment portfolio.  

13. Mr Del Monaco’s experience set out in his LinkedIn profile is in a business “Del Monaco Constructions”.  “Del Monaco Constructions” is not, as the name might initially suggest, a building company, but is a provider of fencing.  The evidence read by Henley Arch in relation to that company depicts it as providing various forms of metal and other fencing, extending from timber fencing through Colourbond, and basic concreting and new estate work. 

14. I have referred in some detail to the financial position of Mr Del Monaco, and his apparent work and business experience because it is relevant to Henley Arch’s claim for additional damages. 

Relevant legislation and principles – subsistence and ownership of copyright

1. Section 32 of the Copyright Act 1968 (Cth) provides that copyright subsists in an original artistic work. Pursuant to s.10, such a work includes a drawing, whether a work of artistic quality or not, and a building, whether the building is of artistic quality or not.  Thus, copyright can subsist in a work which may have commonplace elements, or may have a high level of creativity.  The question is rather, whether the work is an original work made with some independent intellectual effort as described and referred to in, for example, IceTV Pty Limited v Nine Network Australia Pty Limited (2009) 239 CLR 458; [2009] HCA 14, at [33] per French CJ, Crennan and Kiefel JJ. Irrespective, thus, of artistic quality, copyright can subsist in house plans and houses as artistic works.

2. As to ownership, s.35(2) of the Act provides that:

   Subject to this section, the author of a literary, dramatic, musical or artistic work is the owner of any copyright subsisting in the work.

3. Furthermore, s.35(6) of the Act then relevantly provides that:

   …where a [work] is made by the author in pursuance of the terms of his or her employment by another person under a contract of service or apprenticeship, that other person is the owner of any copyright subsisting in the work …

Consideration

1. In the present case, I am satisfied that Mr Bugeja was acting in the course of his employment under by Henley Arch under a contract of service when he created, and is the creator of, the house plan known as the Colorado 37, and that the Colorado 37 is, within the concepts of copyright, an original artistic work in which copyright subsists.  A copy of the Colorado 37 house plan is attached to these reasons as Schedule A.

2. I have already referred to the marketing plan known as the Colorado Q1.  A copy of the marketing plan Colorado Q1 is attached to these reasons as Schedule B.  The concepts of substantial reproduction applicable to infringement also apply to an authorised reproduction.  In the present case, I find, by reason of the provisions to which I will refer in relation to infringement, that the marketing plan Colorado Q1, is a reproduction of the Colorado 37 within the meaning of s.31 of the Act, and by reference to s.10, s.36 and then s.13 of the Act.

3. Whilst in his defence, Mr Del Monaco denied that Henley Arch is the owner of copyright subsisting in the Colorado 37 design (and by the Colorado 37 design is inclusively encompassed the Colorado 37 and the Colorado Q1), by reason of the service of a notice to admit facts dated 30 May 2019, and that Mr Del Monaco did not serve a notice disputing any of the facts or the authenticity of the documents referred to in the Notice to Admit pursuant to r.15.31 of the Federal Circuit Court Rules 2001 (Cth), Mr Del Monaco is taken to admit, for the purpose of the proceeding the following, and I find that:

   (a)Henley Arch is the owner of copyright subsisting in the Colorado 37;

   (b)Henley Arch is the owner of copyright subsisting in the Colorado Q1 design, and with this refinement, the Colorado Q1 design is, in turn, a reproduction in an authorised manner of the copyright in the Colorado 37.

4. Further, the evidence is that the Colorado Q1 marketing plan was created by an employee of HIVE Creative Pty Limited which, in turn, was engaged by Henley Arch to create the brochure.

5. Whilst I have found that the Colorado Q1 is an authorised reproduction of the Colorado 37, to the extent that there is any separate copyright in the Colorado Q1, the following facts are admitted for the purposes of this proceeding, and therefore I find that:

   (a)the brochure in which the Colorado Q1 is depicted was created by Ms Debbie Fetralakis in around late 2014 or early 2015;

   (b)that she is, and was at that time, an Australian citizen, and an employee of HIVE Creative;

   (c)her duties included creating brochures for clients of HIVE Creative, and she was acting in her capacity as an employee of HIVE Creative at the time she created the brochure; and lastly

   (d)HIVE Creative assigned in writing all right, title and interest in the brochure to Henley Arch on 2 March 2018.

6. It follows, and I find, to the extent there is any separate copyright in the marketing plan Colorado Q1, Henley Arch is, by reason of assignment, the copyright owner of that copyright.  I am also satisfied by a visual comparison of the Colorado Q1, as against the Colorado 37 plan, that the Colorado Q1 is, in the copyright sense, a qualitatively substantial reproduction of the copyright in the Colorado 37. 

Copyright infringement

1. The legal principles applicable to infringement of copyright are well established. Section 115 of the Act provides that an owner of copyright may bring an action for infringement of copyright. Section 36(1) of the Act provides the copyright in an artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright.

2. An act comprised in the copyright in a work is a reference to any act that under the Act the owner of the copyright has the exclusive right to do. Relevantly, pursuant to s.31(1)(b) of the Act, copyright in relation to an artistic work is the exclusive right to reproduce the work in a material form, or to communicate the work to the public. By reason of s.21(3)(a) of the Act, the exclusive right to reproduce an artistic work includes, in the case of a work in two-dimensional form - if a version of the work is produced in three‑dimensional form.

3. In short, the above means that the building of a house can infringe the copyright in the floor plan.  Indeed, in the present case, as Mr Del Monaco readily accepted, it is possible in the floor plan to readily visualise what the house looks like, and, indeed, given that if there is a pitched roof, the appearance of the pitches of the roof of the house.

4. Reproduction of a work requires two elements, or aspects: resemblance to, or an objective similarity with, the copyright work, and, secondly, actual use of the copyright work: see SW Hart & Co v Edwards Hot Water Systems [1985] HCA 69; (1985) 159 CLR 466 at [472]; and also Clarendon Homes (Aust) Pty Limited v Henley Arch Pty Limited [1999] FCA 1371; (1999) 46 IPR 309 at [314]. As was said by the Full Court of the Federal Court in Ron Englehart Pty Limited v Enterprise Constructions (Aust) Pty Limited (2012) 95 IPR 64; [2012] FCAFC 4 at [46]:

   Whether or not there has been a reproduction of a work or a substantial part of a work raises two discrete but often overlapping issues.  First, it must be shown that the copyright work and the putative infringement have a “sufficient degree of objective similarity”.  Second, it must be shown that this objective similarity is the result of copying. …

5. Notwithstanding that a house plan may be a simple drawing, or there might be commonality of elements, a sufficient objective similarity may nonetheless exist even where there is not an identity between the two project homes.  A heuristic might be to ask whether the copyright drawing can still be seen embedded in the allegedly infringing drawing.  That is, whether the allegedly infringing drawing has adopted what has been described as the essential features and substance of the copyright work: see, e.g, Eagle Homes Pty Ltd v Austec Homes Pty Ltd [1999] FCA 138; (1999) 87 FCR 415 at [91], cited by the Full Court of the Federal Court in Tamawood Limited v Habitare Developments Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2015] FCAFC 65; (2015) 112 IPR 439 at [33] per Greenwood J, and [170] per Jagot and Murphy JJ.

6. In the usual case that this requires a qualitative assessment rather than a quantitative assessment.  In the present case, I have had regard to the summary set out by Justice Beach in Henley Arch v Lucky Homes [2016] FCA 1217; (2016) 120 IPR 317 at [157] to [164], which it is not necessary to repeat here.

7. I turn first to consider the question of reproduction between the Colorado 37 and the Colorado Q1.  It is apparent from a visual comparison with the floor plan design of the Colorado 37, that the Colorado Q1 has an identity with it in the floor plan design, in the orientation and layout, and proportion, of each of the rooms, and corridors, the location of bathrooms, bedrooms, kitchen, ensuites, and the overall arrangement and layout of all of the rooms. 

8. The Colorado Q1 brochure does not depict title information or dimensions and specifications, but those are apparent and readily ascertainable from the positioning of windows and doors, walls and voids.  In my view, the removal of the title information, dimensions and specifications, does not take away from the overall objective similarity of those two works, and it is possible readily to calculate dimensions and specifications from the Colorado Q1.   

9. When I turn to the Colorado photograph, I have already found that the photograph was taken from the Henley Arch website display of the Colorado Q1 marketing plan in the brochure available online.  I find that the photograph is identical in every respect to the Colorado Q1 marketing plan, save that the external dimensions on the plan, whilst there, are hard to discern in the blurred photograph.  The brochure in which the Colorado Q1 marketing plan is depicted also contains a table of dimensions and specifications.  As with the comparison between the Colorado 37 and the Colorado Q1, so between the Colorado photograph and the Colorado Q1, I do not consider that the omission of those dimensions and specifications takes away from the objective similarity of the two works. 

1. It follows that through the intermediate form of the Colorado Q1, I find that the Colorado photograph is a reproduction in a copyright sense of the Colorado 37.  It is not disputed that it is made without Henley Arch’s authorisation. 

Similarities between the Elite Packenham Property and Colorado Q1

1. I turn next to the house plans for the Packenham Property, and next the council plans - the Elite Packenham Property Design - which are annexed as Schedule D to these reasons. 

2. A comparison of the floor plans of the Colorado 37 ground floor plan and the Elite Packenham Property Design floor plan illustrates the following: 

   (a)each of the homes have identical, or virtually identical, footprints, including substantially identical overall lengths, widths and outline outer walls;

   (b)the plans contain the same layout and arrangement of rooms. Whilst there is a different numbering of bedrooms 2, 3 and 4, I do not consider that those numberings take away from the objective similarity;

   (c)the plans contain substantially the same positioning, size and orientation of windows and doors within each of the rooms, and again in their overall arrangement and layout;

   (d)the plans have the same essential features:  a horizontal or ranch design; a master suite of bedrooms contained on the right of the entry; and, down a corridor on the left, the 3 other bedrooms, each with a walk-in robe;

   (e)there is a bathroom servicing each of bedrooms 2, 3 and 4.  Comprised in the master bedroom suite, there is an ensuite and 2 dressing rooms, described as “his and her” dressing rooms in the Elite Pakenham Property Design, but which have the same layout and arrangement in the Elite Pakenham Property Design as in the Colorado 37;

   (f)through the entry from the front of the house, on the right in each plan is a study, or what might in earlier days have been called a “den”, and on the left is a theatre, or what might in earlier days have been called a “media room”, or a “television room”;

   (g)moving towards the back of the house, at the rear of each of the plans, there is a powder room, or toilet and basin, comprising a bathroom, often for guests; 

   (h)each plan depicts a pantry accessible from both the kitchen and from the hallway to the bedrooms.  This is described in the Elite Pakenham Property Design simply as a “pantry”, and is described in the Colorado 37 as a “butler’s pantry”.  The slight differences in description do not change the similarities; 

   (i)there is an open-plan kitchen leading on to a dining or meals area; and to the right of the kitchen, a large family or living room.  The dining room and living room in both plans, by window/glass doors, move to an outside living area/covered veranda, which completes the envelope of that part of the house into a rectangle; 

   (j)coming back to the front of the house, there is an entrance porch having a reverse L-shape, of substantially similar proportions in each case, and substantial columns or roof supports framing the entranceway. 

3. Accordingly, I am satisfied that a substantial part of the Colorado 37 floorplan is reproduced in the Elite Pakenham Property Design.  I am satisfied that the Elite Pakenham Property Design is also a reproduction of a substantial part of the Colorado Q1, and thus they are both qualitatively substantial reproductions of the Colorado 37.  It is also not in doubt that the Colorado photograph was the starting point for the making of the Elite Pakenham Property Design by Sketch Building under instructions from Elite Building and, in turn, on instructions from Mr Del Monaco.

4. It is not necessary to go into further detail in these reasons about the qualitative significance of each of the similarities between the plans, because, overall and looking at each part, I am satisfied that there is such a copying of the work, that the essential features and substance of the Colorado 37 is reproduced.  I do not need to be assisted in the present case by any argument on animus furandi.  Any such arguments are not necessary in order to reach my own conclusion of qualitative reproduction and infringement. 

Authorisation

1. Henley Arch contends that Mr Del Monaco authorised the reproductions.  Authorisation in the context of copyright can be summarised, as counsel for Henley Arch has done in their written submissions, which I adopt, as follows:

   [45]Generally, to “authorise” is to “sanction, approve or countenance”.  However, a person may not be said to “authorise” unless that person has a “power to prevent” the particular conduct.  However, having “power to prevent” may be a necessary condition for “authorise”, but it may not be a sufficient condition.

   [46]A person who engages in, personally participates in or personally directs the relevant acts of infringement, coupled with the power to prevent, may be held to have authorised infringement, although something less than that may be sufficient.

2. Mr Del Monaco has submitted he instructed Elite Building to build the house on the Pakenham property, and I am satisfied that Mr Del Monaco, through his email and further instructions, instructed or authorised Elite Building to prepare the Elite Pakenham Property Design.  I find that he did so, first, by emailing the Colorado photograph, and thereby, the Colorado Q1 design, to Elite Building.  Mr Del Monaco was responsible for engaging Elite Building as the designer and builder, and, in turn, Elite Building engaged Sketch Building.  Thus, I find that Mr Del Monaco was personally involved in their actions in the preparation of the plans and building and constructing the house in reproduction of the Colorado Q1, and thus the Colorado 37.  Mr Del Monaco had a personal interest in the outcome of those actions, it being the house that he and his wife were going to live in.  Secondly, I find that by his actions communicated in his email correspondence with Elite Building, which has been tendered in evidence Mr Del Monaco was actively engaged in the process of preparation of the house plans and the appearance of the house being built, in particular, by giving Elite Building direct instructions, in relation to the façade of the Pakenham property house.

3. In the circumstances, I am satisfied that Mr Del Monaco authorised the making of the Elite Pakenham Property Design, and, in turn, that he authorised the building of the house.  If I have not already made it clear, I am satisfied that the house is a three-dimensional reproduction of the plans.  I observe that, ultimately, it was not in serious contention that the house was a three-dimensional reproduction in a copyright sense of the two-dimensional plans. 

Relief sought

1. I now turn to the relief sought by Henley Arch.  As I have said, Henley Arch seeks declarations, injunctive relief, compensatory damages on the basis of the profit Henley Arch has lost by the loss of opportunity to build a home in accordance with the Colorado 37, and additional damages.

2. This is a case involving a reproduction of the Colorado 37 in the design of house plans and the building of a house for one residential home which I accept was intended to be the home of Mr Del Monaco and his wife.  Notwithstanding the LinkedIn profile of Mr Del Monaco, I am not prepared to assume, or accept, that Mr Del Monaco is a builder or engaged in project home or other house building activities.  That said, given that, on the pleadings, Mr Del Monaco has denied infringement, and, until his appearance and participation at the hearing, had maintained that denial, I consider it is appropriate to make a declaration as to infringement, and to award injunctive relief.

3. Whilst I observe that, at present, Mr Del Monaco, from his demeanour in Court, has clearly indicated that he has now learned a very salutary lesson about assumptions as to the taking of house plans and photographs, it is, in the Court’s view, appropriate that there be an injunction preventing Mr Del Monaco from, in the future, infringing copyright in Henley Arch’s copyright in the Colorado 37 and the Colorado Q1.  By reason of Mr Del Monaco’s directorships and shareholdership, including in family companies, I consider it appropriate to extend the injunction to restrain not only Mr Del Monaco directly, but also whether by himself, his servants, agents or otherwise.

4. I also consider that, in the present instance, it is appropriate to require Mr Del Monaco, to the extent that he has any plans or materials left in his possession, to destroy them.  As a practical matter, I record that such destruction also includes deletion of email copies and copies saved on computer.  I also consider it appropriate that Mr Del Monaco be required to request Elite Building and Sketch Building each to take reasonable efforts to destroy what materials they have in their possession, power, custody or control of the Elite Pakenham Property Design, except I consider it appropriate that they maintain at least one copy of the council drawings and the working drawings, and such records as are necessary for their record-keeping and their business purposes.  I will craft an order appropriately.

5. Since the property has been sold, and was sold before proceedings were commenced, I do not consider it appropriate to require the third party purchaser to make any changes to the house.

Compensatory damages

1. Section 115(2) of the Act enables a successful copyright applicant to obtain damages or an account of profits. Henley Arch has sought compensatory damages on the basis of the profit it lost by reason of Mr Del Monaco engaging Elite Building to build the house rather than engaging Henley Arch to build a house on the property in accordance with the Colorado 37.

2. The material that has been put forward in support of Henley Arch’s claim has been subject to confidentiality orders.  The claim of lost profits is put on the basis of the loss of a sale that would have otherwise been likely to have been made.  Henley Arch says that a notional licence fee is not appropriate because the evidence is that Henley Arch does not generally licence third parties to reproduce its plans or to build houses.  Henley Arch itself is a substantial builder of what are described as project homes, in Victoria alone, of approximately 1300 a year.

3. Counsel for Henley Arch has relied heavily the decision of Beach J in Lucky Homes, a proceeding brought by Henley Arch.  In that case, Henley Arch relied on the same estimator for the cost of the house, who filed evidence in the present case.  It will suffice to refer to some parts of the Lucky Homes decision where Beach J considered Henley Arch’s claim for compensatory damages on a lost profit basis.  I warn that it is important not to confuse such a lost profits method with an account of profits.

4. I am also conscious that Beach J did not accept unconditionally Henley Arch’s submissions, and that there were some significant differences in that case.  Most relevantly, in Lucky Homes, the owners had had previous dealings with Henley Arch, and had started the process of designing a home with them, and become frustrated.

5. In the present case, the following factors are appropriate to take into account:  first, Mr Del Monaco expressed his desire to build a house using the Colorado photograph, as he liked the plan.  Secondly, that it is reasonable to infer that Mr Del Monaco was aware that the plan had originated from a third party, and probably Henley Arch.  Thirdly, that Mr Del Monaco had previously searched for plans and had landed on the Colorado Q1 plan.  Fourthly, there is no evidence that there is an alternative home design that Mr Del Monaco wanted or would use for the property with the particular property envelope of his land, and, lastly, as a builder of project homes in Victoria, it is reasonable to assume that Henley Arch was ready, willing and able to build the Colorado Q1, and thus the Colorado 37, and thus the Elite Pakenham Property Design.

6. The estimator, Mr Veljanovski, has given evidence of the pricing of homes according to the Colorado 37 floor plan in the time period when Mr Del Monaco was in the process of procuring the design and build of his plan.  By reference to five properties, Mr Veljanovski’s calculation for lost profit, as set out in the letters of demand to Mr Del Monaco, is in the region of $67,000 ex GST.

7. I do not have any countering submissions as to the reasonableness or otherwise of that amount.  I note Lucky Homes at [235], Beach J discounted the amount for contingencies and uncertainty, and then rounded down the amount. In the present case, I consider it is appropriate, similarly, to discount the amount, and, similarly, in the absence of other submissions, I discount it for contingencies and uncertainty by 10%. So discounting, I am rounding down $67,000, to $60,000.

8. In Lucky Homes, his Honour then applied a 20% reduction to that net amount, on the basis that he said it was only 80% likely that, absent the infringing conduct, the homeowners in that case would have contracted with Henley Arch.  I am not, in the present case, persuaded that 80% is an appropriate figure because of the special feature, in that case, that there had already been a significant level of engagement with Henley Arch.  It is a question of compensation.  There is a level of heuristics about it.  I am not persuaded that there is as high as an 80% likelihood of engagement with Henley Arch.

9. Mr Del Monaco said in correspondence between the parties, after being made aware of the infringement, and after some heated exchanges over time, that he had spent $500,000, and to the effect that he would not have engaged Henley Arch in any event.  I do not consider that, in the circumstances that is any surer guide of engagement (or non‑engagement).  I consider that there is approximately two-thirds chance of a likelihood.  It is certainly higher than 50%, and I do not consider it is as high as 80%.  I would approximate the likelihood of engagement as being in the order of 70%, and so I take from the amount of $60,000 a reduction of 30%.

10. I reach an amount in the order of $42,000.  I follow Beach J in Lucky Homes at [239]. I do not consider there is any basis for apportioning some part only of the lost profit to the infringement of Henley Arch’s copyright. Henley Arch uses the copyright in its plans to build the houses, and I consider it is appropriate that the whole of the profit, with these discounts and percentage probabilities, is the opportunity that has been lost.

11. In the circumstances, I will award by way of compensatory damages the amount of $42,000.  I consider that it is appropriate to award interest on that sum for a period to judgment.

12. Henley Arch seeks interest on the amount of compensatory damages, pursuant to s.76(2) of the Federal Circuit Court of Australia Act 1999 (Cth), and an order pursuant to sub-s.76(3) of that Act in the circumstances there set out. I am not satisfied that good cause has been shown for not making an order under the subsection. I may either order that amount at a rate, or, without proceeding to calculate interest in accordance with sub-s.76(3)(c) of that Act order that there be included in the sum for which judgment is given, a lump sum in lieu of any such interest. I see no reason not to award interest at the Federal Court scale, which is 5.5%.

13. There was opportunity for Mr Del Monaco, at least from 11 October 2017, to have compensated Henley Arch for his infringement of its copyright.  I consider it reasonable, in the circumstances, to order interest payable on the sum of $42,000 from the date of the letter of demand. I note that the letter of demand was sent by email, so I consider it reasonable, in those circumstances to award interest on and from 11 October 2017 to today.

14. I record the assistance of Mr Del Monaco just now in calculating interest on the sum of $42,000 for the period which I have considered appropriate in the present circumstances, being the date of the letter of first demand from Henley Arch to Mr Del Monaco, 11 October 2017, to today.  That sum is $4,822.52.  In the circumstances, I will round down that amount marginally, to $4,800, and add to the sum of $42,000 compensatory damages a sum for interest to judgment today in the lump sum amount of $4,800.

Additional damages

1. I turn now to the question of additional damages.  Henley Arch seeks an amount of additional damages in the sum of $200,000. 

2. Whilst called “additional damages”, such damages colloquially have also been referred to as “flagrancy damages”. The ability of a successful applicant obtaining compensatory damages to seek additional damages is provided by s.115(4) of the Act, which provides:

   (4)Where, in an action under this section:

   (a)an infringement of copyright is established; and

   (b)the court is satisfied that it is proper to do so, having regard to:

   (i)the flagrancy of the infringement; and

   (ia)the need to deter similar infringements of copyright; and

   (ib)the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff’s copyright; and

   (ii)whether the infringement involved the conversion of a work or other subject‑matter from hardcopy or analog form into a digital or other electronic machine‑readable form; and

   (iii)any benefit shown to have accrued to the defendant by reason of the infringement; and

   (iv)all other relevant matters; the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances.

1. The principles relating to the award of additional damages have been set out in many cases in the Federal Court, and relied on in this Court in intellectual property proceedings, particularly in relation to copyright and trade mark infringement.  I have found useful the discussion of such damages in the decision of Bromwich J in the trade mark and copyright matter of Geneva Laboratories Limited & Anor v Prestige Premium Deals Pty Limited & Others (No. 5) [2017] FCA 63;(2017) 122 IPR 279, at [74] and following.

2. His Honour there referred to the decision of the Full Court in Facton Ltd v Rifai Fashion Pty Ltd [2012] FCAFC 9; (2012) 199 FCR 569 and in the trade mark matter before Wigney J in Truong Giang Corporation v Quach [2016] FCA 50. Henley Arch has relied on, as I have said, the decision of Beach J in Lucky Homes, in which his Honour discussed the relevant principles at [241] to [252].

3. The following principles may be summarised from these authorities.  First, it is not necessary that any amount of additional damages be proportionate to any award of compensatory damages.  Secondly, an award of additional damages involves an element of penalty.  Thirdly, part of the functions of an award of additional damages is to mark the court’s disapproval or opprobrium of the infringing conduct.  Fourthly, the matters set out in sub-s.115(4)(b) are not preconditions to an award of additional damages.  Fifthly, conduct that may properly be seen as flagrant includes conduct which involves a deliberate and calculated infringement, a calculated disregard of an applicant’s rights, or a cynical pursuit of benefit.  Sixthly, post‑infringement conduct (as the authorities observed at least in the context of trade marks), is unlikely to include the respondent’s conduct in the infringement proceedings.  Such conduct is more relevant to an appropriate order as to costs.  That said, Wigney J in Truong at [138] commented it may be that conduct of proceedings, which involved high-handedness, dishonesty, recalcitrance or flagrant disregard of, or deficiencies in compliance with, discovery orders or notices to produce, might at least suggest a greater need for an award of additional damages that would deter future infringing conduct by the respondent.

1. Perram J in Halal Certification Authority v Scadilone Pty Limited [2014] FCA 614; (2014) 107 IPR 23, observed that if additional damages are appropriate, the amount of damages to be awarded must operate as a sufficient deterrent to ensure that the conduct will not occur again. It should also be noted that, whilst additional damages encompass, they are not the same as aggravated or exemplary damages at common law. Further, as Bromwich J in Geneva observed, at [80] (referring to Truong), specific deterrence has a role to play, including general deterrence.

2. It is not always the case, however, that additional damages must be given, nor that they be such as to be given in an award and an amount as claimed by an applicant.  I adopt what Bromwich J said in Geneva at [82]:

   Additional damages may be seen as encompassing broad concepts not always readily amenable to precise measurement or quantification.  This includes having regard to capturing aspects of loss that have not been able to be ascertained because of the imperfect nature of litigation and evidence gathering in reflecting all aspects of wrongdoing and the total damaging effect of infringing or contravening conduct.  It also entails giving a dollar figure to otherwise intangible considerations of punishment, giving effect to judicial disapproval and sanction and future-looking considerations of specific and general deterrence.

3. In the present case, Henley Arch has submitted that I should take into account the following: 

   (a)first, that Mr Del Monaco is a licensed real estate agent, and a director of several companies associated with the building industry, and as a professional operating in the industry, he should be held to a higher standard than lay persons (such as the homeowners in Lucky Homes.) I pause here to note that in Lucky Homes, additional damages were awarded against the homeowners in the sum of $10,000; 

   (b)secondly, Henley Arch submit that Mr Del Monaco acted in flagrant disregard of Henley Arch’s copyright, in that he obtained, or, it is submitted, a member of his family obtained, the Colorado photograph from a brochure on Henley Arch’s website;

   (c)thirdly, the assertion made by Henley Arch is that he concealed from Elite Building the fact he was not permitted to use the Colorado Q1 design;

   (d)fourthly, throughout the proceeding he has continued to deny his involvement in the selection and reproduction of the Colorado Q1 design by shifting the blame to Mr Barnett, and failing to provide any evidence to substantiate that claim; 

   (e)fifthly, that Mr Del Monaco has maintained a false position in his correspondence with Henley Arch and its solicitors and in Court documents, including in relation to the provenance of the Colorado photograph;

   (f)sixthly, that in correspondence, Mr Del Monaco has been obstructive and aggressive (I should say there that I have observed that there has been a heightening antagonism between the parties that is evident on both sides).  Mr Del Monaco has also failed or refused to properly engage with the Court’s processes, and until this week, has not actively participated in the conduct of the proceeding;   

   (g)seventhly, that Mr Del Monaco has substantial assets, and therefore has a further capacity to pay an award of additional damages (and I have already referred to the evidence and the qualifications I have given in that regard); 

   (h)lastly, that Mr Del Monaco appears to have made a substantial capital game from the sale of the property. 

4. Additionally, Henley Arch’s Counsel submit that whilst it may be accepted that continuing infringement conduct often gives rise to a large additional damages award, that is generally in the context of infringements with respect to low value works, such as software and the like, they say that where it is a large‑value work in issue, the Court should not be dissuaded from a large quantum. 

5. In the present case, it is a matter of opportunity.  Counsel contend if the alleged infringer is thought to have been likely to commit further infringements but simply could not because of the time and effort involved in doing so, that should not tend against the quantum of additional damages being significant, and Mr Del Monaco needs to be deterred.  Henley Arch points to Mr Del Monaco’s interest on Pinterest of liking many house plans and designs, and that he continues to do so. As has already been discussed, Mr Del Monaco, through his connection to his siblings, has a significant property portfolio, additionally, significant awarded damages would act as a deterrent to others, and for these reasons Henley Arch seeks an award of $200,000. 

6. I am not persuaded that Mr Del Monaco, but for being involved in this litigation, would have become a serial offender.  The evidence is that he has engaged third parties to build one house, his family home, on a previously purchased block of land.  Otherwise, he has invested in existing housing stock.  He ran a fencing business.  I am not persuaded that a large amount of additional damages should be awarded in circumstances where, absent other factors, the party is not involved in a business operation with multiple and continuing infringements, such as, for example, in cases such as Geneva, and counterfeit cases, and in situations where there are trade rivals.  In short, I am not persuaded that Mr Del Monaco is a trade rival. 

7. I do not consider the fact of being a real estate agent at some point in his working life means that Mr Del Monaco, at the point of building the house, was engaged in such a course of conduct that called for a large award of damages.  I do find that Mr Del Monaco took the photograph or procured its taking without the title details, and that he maintained a certain story, of which, simply put, there is no evidence, and which appears, at the least, to have been maintained by a certain amount of delusion. 

8. As to the question of substantial capital gain, realised by the sale of the Pakenham Property, Mr Del Monaco has, in correspondence, asserted that it cost him some $500,000 to build the house.  Whilst that is a considerable difference from what it would have cost him had he engaged Henley Arch, I consider that for a bespoke house, built to a plan specifically for Mr Del Monaco, and not with any benefit of scale (as Henley Arch has), the amount of $500,000, whilst a ball-park figure, is not unrealistic.  That leaves approximately $200,000 profit once real estate agent’s fees, and, I presume, taxes, are paid.  This appears to be the total of what Henley Arch contends.

9. I note that in Lucky Homes senior counsel for Henley Arch, the applicant in that case, sought an amount of additional damages of $250,000. The Court, after taking into account a number of factors set out at [253], awarded the amount of $25,000 against two of the respondents, and as I have said, $10,000 against the homeowner respondents. There were some significant instances of unacceptable behaviour and unsatisfactory evidence detailed in that case. In the present case, after a period of non-compliance, and intemperate emails to the Henley Arch’s solicitors, some of which were copied to the Court, Mr Del Monaco has appeared in Court by himself and has reiterated claims of having mental issues which, despite the Court’s invitation, were not evidenced until a doctor’s certificate was produced on the second day of trial.

10. The doctor’s certificate provided in evidence certifies a diagnosis of moderately severe depression and moderately severe anxiety resulting in anti-depressants being prescribed, impaired concentration, and, inter alia, sleep and appetite losses.  I note however, that the stress identified has been mainly from the business, and this Court case.  There is also reference to Mr Del Monaco’s wife having a moderately severe anxiety disorder and panic attacks two years ago.  I accept that evidence.  

11. Mr Del Monaco, from the bar table, gave some colour to circumstances outside this case in relation to that diagnosis of anxiety and, indeed, to the circumstances leading to the sale of the house.  They are, however, assertions from the bar table, and accordingly I am not in a position to take them into account.  On the other hand, the correspondence between Henley Arch and Mr Del Monaco evinces a level of non‑engagement and erratic behaviour consistent with this diagnosis.  That does not make the Henley Arch’s solicitors’ task any easier, but it does, perhaps, find its measure in costs rather than in an award of additional damages.  I also take into account the disorder evident in Mr Del Monaco’s financial affairs as tendered in a bundle of bank statements, and a bundle of demands from bank managers and creditors which show a chaotic financial situation.

12. In these circumstances, as Beach J decided in Lucky Homes, I consider that Henley Arch’s suggested figure is well outside the appropriate order of magnitude.  I note that whilst assessments in other cases provide a guide, they are arrived at in the particular factors operating in each case, both in the higher amounts, and in the lower amounts, awarded.  I do not consider there is a great need for specific deterrence in the present case.  I consider the litigation itself has demonstrated to Mr Del Monaco the inappropriateness of his conduct, and I consider that he is unlikely to repeat this conduct, and that the present episode, with the benefit of hindsight, is a one-off event.

13. I do consider that it is appropriate to award an amount for general deterrence.  In that regard, the award of damages is a message that the Court gives to persons generally that it is a breach of copyright for a person to take off the internet, or from elsewhere, the house plan of another person – the copyright owner, and observing that in the present case (as there well may be in the case of other house plans, but not all), there was a statement that the copyright is owned by a third party, in the present case, by Henley Arch, or a division of Henley Arch.

14. Copyright is a valuable asset for a business such as Henley Arch.  It is not surprising that they would wish to protect that copyright interest.  The Court acknowledges that interest in the award of compensatory damages and interest.  In relation to additional damages, I consider it appropriate to express the Court’s opprobrium in relation to such copying conduct not only to Mr Del Monaco, but to all persons who would otherwise consider it is, expressed colloquially, “all right” to appropriate copyright. 

15. I accept that Mr Del Monaco’s conduct was active, and was done on notice of the copyright being owned by somebody else, whether or not it was Henley Arch, even if I were to accept, at its highest, the assertions of Mr Del Monaco that somebody else found the plan for him, which I have grave reservations in doing. 

16. In these circumstances, I observe that $25,000 was awarded against two of the respondents in the Lucky Homes case a couple of years ago.  Without going further into the financial circumstances I am satisfied that Mr Del Monaco has the capacity to pay the amount of additional damages I propose to award, albeit he may need to make some arrangements to do so. 

17. After taking all the above into account, I consider it appropriate to award an amount of $40,000 as additional damages.  I do note that this amount is considerably more than what was awarded against the homeowners by Justice Beach in Lucky Homes.  However, in the present case, even taking into account Mr Del Monaco’s behaviour having some excuse by reason of his mental state, the post notice conduct has, in large part, exacerbated the circumstances of this case, and acknowledging that Mr Del Monaco has appeared today, it is late in the course of the proceeding, and so I award $40,000.  That leaves the question of costs.

Conclusion

1. I will make declarations and orders on liability and quantum today.  

2. I will hear the parties as to the appropriate directions in relation to the issue of costs. 

I certify that the preceding one hundred and twenty-two (122) paragraphs are a true copy of the reasons for judgment of Judge Baird

Associate: 

Date:  6 February 2020