Solitaire Homes Pty Ltd v Urban Ventures Pty Ltd
[2010] FMCA 185
•23 March 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SOLITAIRE HOMES PTY LTD v URBAN VENTURES PTY LTD & ORS | [2010] FMCA 185 |
| COPYRIGHT – Alleged infringement of copyright of project home house plans – subsistence of copyright – “substantial part” and house plans – general principles regarding damages or account of profits – cost of the proceedings a factor in the award of exemplary damages. PRACTICE & PROCEDURE – Application to set aside Default Judgment – application granted. EVIDENCE – Application to adduce tendency evidence. |
| Copyright Act 1968 (Cth), ss.10, 13(1), 14(1)(b), 21(3), 31(1)(a)(i), (b), 32(3), 36(1), 115(1) - (4), 116, 126(a), 196(1), 196(3) Evidence Act 1995 (Cth), s.97 Federal Magistrates Court Rules 2001, rr.7.01, 13.07 |
| Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 Ancher, Mortlock, Murray & Woolley Pty Ltd v Hooker Homes [1971] 2 NSWLR 278 Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; (2009) 258 ALR 14; (2009) 83 ALJR 951 Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in Liq) (2007) 239 ALR 702; (2007) 71 IPR 437 Australian Securities and Investment Commission v Rich (2005) 218 ALR 764 Australian Securities and Investment Commission v Vines [2003] NSWSC 1237 Autodesk Australia Pty Ltd v Cheung (1990) 94 ALR 472; (1990) 17 IPR 69 Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 A V Jennings Ltd v Bogdan (2009) 80 IPR 356 Bailey v Namol Pty Limited (1994) 53 FCR 102 Barrett Property Group Pty Ltd v Carlisle Homes Pty Ltd [2008] FCA 375 Barrett Property Group Pty Ltd v Merticon Homes Pty Ltd (2007) 74 IPR 52 Beck v Montana Constructions Pty Ltd [1964-65] NSWLR 229 Brodie v Singleton Shire Council (2001) 206 CLR 512 British Northrop Ltd v Texteam Blackburn Ltd [1974] RPC 57 Burke v LFOT Pty Ltd (2002) 209 CLR 282 Clarendon Homes (Aust) Pty Ltd v Henley Arch Pty Ltd (1999) 46 IPR 309 Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64 Data Access Corporation v Powerflex Services Pty Ltd (1999) 202 CLR 1 Dart Industries Inc v Decor Corporation Pty Ltd(Lettuce Crisper Case) (1993) 179 CLR 101 Deckers Outdoor Corporation Inc v Farley No 5 (2010) 262 ALR 53 Designers Guild Ltd v Russell William (Textiles) Ltd [2001] FSR 113 Dias Aluminium Products Pty Ltd v Ullrich Aluminium Pty Ltd (No.2) (2005) 225 ALR 569; (2006) 66 IPR 561 Dixon Projects Pty Ltd v Hallmark Homes (2004) 60 IPR 8 Dixon Investments Pty Ltd v Hall (1990) 18 IPR 490 Dr Martens Australia Pty Limited v Bata Shoe Coof Australia Pty Ltd (1997) 75 FCR 230 Eagle Homes Pty Ltd v Austec Homes Pty Ltd (1999) 87 FCR 415; (1999) 161 ALR 503; (1999) 43 IPR 1 Eagle Rock Entertainment Ltd v Caisley (2006) 66 IPR 554 Elwood Clothing Pty ltd v Cotton Clothing Pty Ltd (2009) 80 IPR 566 Enzed Holdings Limited v Wynthea Pty Limited (1984) 4 FCR 450; (1984) 57 ALR 167 Francis Day & Hunter Ltd v Bron [1963] Ch 587 Friend v Brooker (2009) 239 CLR 129; (2009) 255 ALR 601 Gaunt v Hille (2008) 75 IPR 33 Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd (2005) 225 ALR 57; (2005) 67 IPR 497 Golden Editions Pty Ltd v Polygram Pty Ltd (1996) 135 ALR 638; (1996) 34 IPR 84 IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 254 ALR 386; 83 ALJR 585; 80 IPR 451 Inform Design and Construction Pty Ltd v Boutique Homes Melbourne Pty Ltd (2008) 77 IPR 523 Interfirm Comparison (Aust) Pty Limited v Law Society of New South Wales (1975) 6 ALR 445 Jacara v Perpetual Trustees WA Ltd (2000) 106 FCR 51 Kovan Engineering (Aust) Pty Ltd v Gold Peg International Pty Ltd (2006) 234 ALR 241 Kenrick & Co v Lawrence & Co (1890) 25 QBD 99 Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 All ER 465 Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited (2010) 83 IPR 582 LED Builders Pty Ltd v Eagle Homes Pty Ltd (1999) 44 IPR 24 Lend Lease Homes Pty Ltd v Warrigal Homes Pty Ltd [1970] 3 NSWLR 265 Louis Vuitton Malletier South Australia v Toea Pty Ltd (2006) 237 ALR 118; (2006) 70 IPR 307 Luxottica Retail Australia Pty Ltd v Grant (2009) 81 IPR 26 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 Metricon Homes Pty Ltd v Barrett Property Group Pty Ltd (2008) 248 ALR 364; (2008) 75 IPR 455 New England Country Homes Pty Ltd v Moore (1998) 82 FCR 500; (1998) 45 IPR 186 Norm Engineering v Digga Australia (2007) 162 FCR 1; 72 IPR 332 Placer (Granny Smith) Pty Limited v Theiss Contractors Pty Limited (2003) 196 ALR 257 Raben Footwear Pty Ltd v Polygram Records Inc (1997) 75 FCR 88; 145 ALR 1; 37 IPR 417 Ratcliffe v Evans [1892] 2 QB 524 SW Hart & Co Pty Ltd v Edwards Hot Water Systems, Autodesk Inc v Dyason (No 2) (1985) 159 CLR 466 Rutter v Brookland Valley Estate Pty Ltd (2009) 81 IPR 549 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 Tamawood Ltd v Henley Arch Pty Ltd (2004) 61 IPR 378 Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 514 Tolmark Homes Pty Ltd v Paul (1999) 46 IPR 321 Ullrich Aluminium Pty Ltd v Dias Aluminium Pty Ltd (2006) 233 ALR 660 University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601 Woolworths Ltd v Olson (2004) 184 FLR 121 Zaknic Pty Ltd v Svelte Corporation Pty Ltd (1995) 61 FCR 171 |
I. Freckleton & H. Selby, Expert Evidence: Law, Practice, Procedure and Advocacy, Fourth Edition (Sydney: Lawbook Co., 2009)
J.D. Heydon, Cross on Evidence (Eighth Australian Edition) (Sydney: LexisNexis Butterworths, 2010)
J. Lahore, Copyright and Designs (Loose-Leaf Service) (Sydney: LexisNexis – Butterworths, 2004)
G. McGowan, “IceTV v Nine Network and the Copyright in Factual Compilations in Australia,” (2009) 83 Australian Law Journal 840-848
S. Odgers, Uniform Evidence Law (Eighth Edition) (Sydney: Lawbook Co, 2009)
T.H. Wells, “Monetary Remedies for Infringement of Copyright,” (1989) 12 Adelaide Law Review 164-200
| Applicant: | solitaire homes pty ltd |
| First Respondent: | urban ventures pty ltd T/As Urban Design and Drafting |
| Second Respondent: | jaime charles farrelly |
| Third Respondent: | a & A Martins pty ltd t/as a & A constructions |
| File Number: | CAG 53 of 2007 |
| Judgment of: | Neville FM |
| Hearing dates: | 17, 18, 19 November 2008 17 and 18 August 2009 |
| Date of Last Submission: | 18 August 2009 |
| Delivered at: | Canberra |
| Delivered on: | 23 March 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Higgs SC Mr Pappas |
| Solicitors for the Applicant: | Nicholl & Co |
| Counsel for the First and Second Respondent: | Ms Olsson SC |
| Solicitors for the First and Second Respondent: | Trinity Law |
| Counsel for the Third Respondent: | Mr Lunney SC |
| Solicitors for the Third Respondent: | Tetlow Tigwell Watch and Pamela Coward Higgins Lawyers |
ORDERS
That the Applicant be declared the copyright owner of the plans for the Solitaire house, and of the dwelling known as the Solitaire house.
That pursuant to section 115(2) of the Copyright Act 1968, the First Respondent pay to the Applicant damages in the sum of $10,000.
That pursuant to section 115(4) of the Copyright Act 1968, the First Respondent pay to the Applicant exemplary damages in the sum of $2,500.00.
That the cross-claim against the Third Respondent by the First and Second Respondents be dismissed.
That the Application to adduce further evidence relating to an account of profits against the Third Respondent be dismissed.
That the Applications to adduce tendency evidence against, respectively, the Second Respondent (by the Applicant), and against the Third Respondent (by the Second Respondent), be dismissed.
That any submissions in relation to costs be filed and served by each of the parties within 28 days of the date of these Orders.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAG 53 of 2007
| SOLITAIRE HOMES PTY LTD |
Applicant
And
| urban ventures pty ltd |
First Respondent
| jaime farrelly |
Second Respondent
| a & A Martins pty ltd t/as a & A constructions |
Third Respondent
REASONS FOR JUDGMENT
Index to Judgment
Introduction and Procedural History
(i) Introduction [1] – [6]
(ii) Summary: Procedural History [7] – [13]
Procedural Events
(i) Default Judgment & the Third Respondent [14] – [19]
(ii) Cross Claim against Third Respondent [20] – [22]
(iii) Applications to Adduce Tendency Evidence [23] – [30]
(iv) Application to Join Extra Party [31]
Evidence of Protagonists
(i) Zelko Pekic [32] – [53]
(ii) Angelo Turcin [54] – [93]
(iii) Jaime Farrelly [94] – [174]
(iv) Agostinho Martins [175] – [219]
(v) Evidence: Summary of Findings [220] – [223]
Evidence of Experts [224] – [281]
(i) Terence Ring [226] – [246]
(ii) John Poiner [247] – [273]
(iii) Christopher Novak [274] – [280]
(iv) Expert Evidence: Summary of Findings [281]
Copyright: Subsistence, Breach & Other Things
(i) Statutory Provisions [282] – [283]
(ii) Jurisprudential Principles [284] – [287]
Questions & Answers [288] – [332]
(i) Does copyright subsist in the plans? [289] – [294]
(ii) Who owned the copyright in the plans? [295]
(iii) Breach of copyright? [296] – [297]
(iv) Damages or account of profits? [298] – [319]
(v) Flagrancy damages? [320] – [323]
(vi) Contribution and indemnity? [324] – [332]
Conclusion [333] – [334]
Introduction & Procedural History
Introduction
These proceedings involve allegations of breach of copyright. Involved are plans for, and the building of, two modest-sized houses. Senior Counsel for the Applicant, Mr Higgs SC, regularly referred to them as ‘small project-type homes.’[1] Such a description seems not to have been disputed during the course of the trial. The houses are located in two relatively new suburbs in the northern region of the Australian Capital Territory.
[1] See, for example, Transcript (18th March 2009) p.59. One of the three expert witnesses called, Mr Novak, referred to them similarly: see Transcript (19th March 2009) p.64. Unsurprisingly, so too did Ms Olsson SC in her submissions on behalf of the First and Second Respondents. See Transcript (18th August 2009) p.261.
The house that was designed for and built by the Applicant, Solitaire Homes Pty Ltd (“Solitaire”), is in the suburb of Gungahlin. Mr Angelo Turcin is the sole director, and an employee, of Solitaire. He is also the nominated building licence holder for Solitaire.
It is alleged that the plans for the second house, which is in the somewhat proximate suburb of Dunlop, were copied by either the First and Second Respondents (Urban Ventures Pty Ltd t/as Urban Design & Drafting: “Urban Design”, and Mr Farrelly respectively), on the one hand, and/or the Third Respondent (A & A Martins Pty Ltd: “A & A Martins”), on the other. The Third Respondent admitted that it built the Dunlop house.
For the purposes of these reasons, for ease of reference, the houses will be referred to as “the Solitaire house” and “the Dunlop house”, respectively.[2]
[2] Coloured photographs of the two houses became exhibits “A” and “B” respectively. Copies of those photographs are in the Appendices to these reasons, marked Appendix A.
In 2004, the Solitaire house and Solitaire Homes Pty Ltd were awarded a Master Builders Association of the ACT Award for Excellence. Unsurprisingly, there was some publicity surrounding that award, which gave some public prominence to the Solitaire house.
It is alleged that the copying of the plans and the building of the Dunlop house were in breach of the copyright pertaining to the plans of, and the building that became, the Solitaire house.[3]
[3] The relevant plans for the Solitaire House are found at Appendix B to these reasons.
Summary: Procedural History
By an Application filed on 11th December 2007,[4] in addition to a significant number of procedural orders, for example in relation to discovery (which matter was the subject of not infrequent contest prior to the eventual commencement of the trial), Solitaire sought:
a)declaratory and injunctive relief against the Respondents
b)damages for breach of copyright under s.115(2) of the Copyright Act 1968 (“the Act”)
c)in the alternative, an account of profits under s.115(3)
d)damages for conversion or detention under s.116
e)additional damages under s.115(4)
f)interest
g)costs on an indemnity basis against the First and Second Respondents, or in the alternative on a party/party basis
h)costs on a party/party basis against the Third Respondent
[4] An Application by the Applicant to seek to join Mr Martins as a Fourth Respondent, and to amend the relief set out in the original application, was made on the last day of the trial, 18th August 2009. For the brief reasons found at Transcript (18th August 2009) pp.237-238, that application was dismissed.
By a Response filed on 20th June 2008, the First and Second Respondents opposed the orders sought by Solitaire in relation to the allegations of breach of copyright.
By an Amended Response filed on 10th November 2008, the First and Second Respondents again opposed the orders sought by Solitaire for breach of copyright and sought relief, by way of cross-claim, against the Third Respondent for contribution and or indemnity for any judgment or relief recovered against them by Solitaire.
The Third Respondent also opposed the orders sought by Solitaire but otherwise sought no relief against any of the other parties to the proceedings.
Original estimates of the duration of the proceedings – of approximately three days – proved to be significantly awry. The case occupied eight days. Unfortunately, given the demands on the three Senior Counsel involved (two of whom were from Sydney), the hearing was conducted over a somewhat protracted period between November 2008, and then March and August 2009.
In Metricon Homes Pty Ltd v Barrett Property Group Pty Ltd, the Full Federal Court (Branson, Sundberg & Kenny JJ) identified three questions which the primary judge in that case [should have] considered. Those questions were: “(a) to identify the work in suit in which copyright subsists; (b) to identify in the alleged infringing work the part taken (that is, derived or copied) from the work in suit; and (c) to determine whether the part taken constitutes a substantial part of the work in suit.”[5]
[5] Metricon Homes Pty Ltd v Barrett Property Group Pty Ltd (2008) 75 IPR 455 at [23]. This approach, and these questions, were approved by a differently constituted Full Court (Lindgren, Goldberg & Bennett JJ) in Elwood Clothing Pty ltd v Cotton Clothing Pty Ltd (2009) 80 IPR 566 at [41] – [42].
Having regard to these questions, in my view, the most efficacious course in resolving the issues before this Court is to pose and to answer the following six (6) questions. These questions will be posed again and answered after the consideration of all the evidence. The questions to be answered are:
a)Does copyright subsist in the plans for and the house built by Solitaire?
b)Who owned the copyright in the plans and the Solitaire house?
c)Was the copyright in either or both the plans and the house breached? If so, how and by whom?
d)If breach of copyright is established, what is the appropriate remedy: damages or account of profits? If “damages” is the more appropriate remedy, what is the appropriate measure of damages?
e)If established, do the facts and findings in relation to breach of copyright warrant the award of flagrancy damages pursuant to s.115(4) of the Copyright Act 1968?
f)If established, do the facts and findings in relation to breach of copyright give rise to a claim for contribution and/or indemnity by the First and Second Respondents against the Third Respondent? If so, what is the scope of such a claim?
Procedural Events
Default Judgment & the Third Respondent
On 23rd May 2008, the solicitors for the Applicant filed an Application in a Case (with supporting affidavit filed on the same date) in which they sought various orders including that default judgment be entered in favour of the Applicant against the Third Respondent, pursuant to Rule 13.07 of the Federal Magistrates Court Rules 2001. Judgment was entered against A & A Martins on 9th June 2008.
There was no dispute that, at the time judgment was entered against the Third Respondent, Mr Martins, who is a director of A & A Martins, was diagnosed with, and receiving treatment for, bowel cancer. Unsurprisingly, he was unable to participate actively in the litigation until the trial was well underway because of his medical treatment. Indeed, when Mr Martins commenced his oral evidence in March 2009, he was still undergoing chemotherapy. When the trial resumed (and he was under cross-examination) in August 2009, his health, fortunately, was much improved.
On 18th November 2008, the Third Respondent filed an Application in a Case in which it sought to set aside the judgment obtained against it. In his supporting affidavit (filed on the same day), Mr Martins explained the sequence of his diagnosis and treatment (surgical and daily chemo- and radiation therapy) for bowel cancer. He explained further that in addition to dealing with bowel cancer, Mr Martins was diagnosed with pancreatitis (which required further treatment), and further, that his new-born son was also diagnosed with cancer. Understandably, his son required urgent and on-going medical treatment.
Mr Martins also deposed to his Father being a director of A & A Martins but who did not speak English. Mr Martins deposed further that, unsurprisingly, his focus for many months was on his and his son’s health rather than on business matters, which included these proceedings.
Although notified late to the other parties, and after some discussion of the application on the first day of the trial (17th November),[6] the actual hearing of the application to set aside the default judgment took place on day three of the trial (19th November 2008).[7] The delay between the application first being raised and being heard is explained simply so as to allow the other parties an opportunity to consider their respective positions (procedurally and otherwise) in the event that the default judgment was set aside. The application to set aside was formally opposed by the First and Second Respondents, as well as by the Applicant.
[6] See Transcript (17th November 2008) pp.13-23.
[7] See Transcript (19th November 2008) pp.11-28.
In addition to my consideration of (a) the interests of justice, (b) the efficient conduct of the proceedings,[8] and (c) ensuring that any issue of prejudice to any party was satisfactorily dealt with, Senior Counsel for A & A Martins, Mr Lunney, pointed out that whatever the result of his client’s application, Mr Martins would most likely (if not certainly) be called to give evidence in the proceedings in any event. It would be better, in his submission, if Mr Martins’ evidence came before the Court in the more usual course – that is, in the course of each party giving evidence – rather than otherwise. In the result, the application to set aside the judgment was granted on 19th November 2008.
[8] Cf. the critical observations by the High Court in relation to principles of case-management in AON Risk Services Australia Limited v Australian National University (2009) 239 CLR 175.
Cross-claim & leave to amend
On 6th November 2008, pursuant to Rule 7.01 of the Federal Magistrates Court Rules 2001, Urban Design and Mr Farrelly filed an Application in a Case (with supporting affidavit filed on the same date) in which they sought leave to file and serve an Amended Response.
The Amended Response included a cross-claim against the Third Respondent, A & A Martins, which pleaded that
(a)the work performed by Urban Design and Mr Farrelly in relation to the Dunlop house was commissioned by A & A Martins and done at the request, and under the direction, of A & A Martins; and
(b)in the event that Urban Design or Mr Farrelly were found liable (in whole or in part) in relation to Solitaire’s claim, they claimed against A & A Martins contribution towards or indemnity for any judgment or relief recovered against it or them.
That application to amend was heard, and granted, on 7th November 2008.
Applications to Adduce Tendency Evidence
Two Notices of Intention to Adduce Tendency Evidence, pursuant to s.97(1) of the Evidence Act 1995, were filed in the proceedings. The first was filed on behalf of Solitaire on 15th August 2008. It was directed to the ‘character, reputation, conduct or tendency to prove that Jaime Farrelly has or had a tendency to act in a particular way or to have a particular state of mind.’ The ‘tendency evidence’ relied upon was set out in two affidavits: (a) Angelo Turcin, sworn 6th December 2007 (pars.39-44), and (b) Washington Romero-Ferre, sworn 15th August 2008.
The conduct or tendency evidence claimed arose out of Mr Farrelly attending a Solitaire display home (not the home the subject of these proceedings) and using a false name recorded in the attendance book at the display home. As stated in the Notice: “The tendency sought to be proved by the evidence is the tendency of the Second Respondent individually and as sole director of the First Respondent to access, view and/or study the latest iteration of the applicant’s architectural plans and to do so surreptitiously in this instance under cover of a false and misleading entry in the applicant’s entrance book.”
The second such Notice was filed on behalf of Urban Design and Mr Farrelly on 16th March 2009. The evidence relied upon was set out in the affidavits of Mr Farrelly of 18th November 2008 and 23rd February 2009.
The Notice in question here referred to tendency evidence relating to A & A Martins, “through [among others] the controlling mind of its directors, officers or agents”, where that company “had a tendency to act in a particular way...” in relation to copying or substantially reproducing a substantive part “of various artistic works, being various building plans, created by the First Respondent.”
The evidence referred to in both Notices was the subject of extensive cross-examination. I deal with it later in these reasons. It is sufficient to note here the import and relevant principles relating to such evidence.
So far as is relevant to the present case, s.97 of the Evidence Act refers to “evidence of the ... conduct of a person to prove that a person had a tendency to act in a particular way.” In addition to giving reasonable notice, it is a requirement of the section that the Court “thinks that the evidence will, either by itself or having regard to other evidence adduced ... have significant probative value.” What is, and what is not “significant probative value” has been the subject of much discussion – judicial and academic.
For example, the Full Court of the Federal Court (Sackville J; Whitlam & Mansfield JJ agreeing) in Jacara v Perpetual Trustees WA Ltd, set out some basic authority in its discussion of the “test of ‘significant probative value’.”[9] At [72] of that judgment, Sackville J referred approvingly to the statement of Lehane J in Zaknic Pty Ltd v Svelte Corporation Pty Ltd,[10] where his Honour said (at pp.175-176): “... what is clearly required, if [tendency] evidence is to be admissible, is that it could rationally affect the assessment of the probability of the relevant fact in issue to a significant extent; that is, more is required than mere statutory relevance.” In the same place, Lehane J said that tendency evidence would have to be “clearly and strongly probative of the relevant fact in issue.”[11]
[9] (2000) 106 FCR 51.
[10] (1995) 61 FCR 171.
[11] More generally, see the list of factors that, it is said, should be considered to assess the strength of the tendency evidence in S. Odgers, Uniform Evidence Law (Eighth Edition) (Sydney: Lawbook Co, 2009) pp.400-402, and the discussion in J.D. Heydon, Cross On Evidence (Eighth Australian Edition) (Sydney: LexisNexis Butterworths, 2010) pp.762-767. Although stated in the context of allegations of breach of statutory duty, note also the cautions expressed by Austin J in Australian Securities and Investment Commission v Vines [2003] NSWSC 1237 at [36] and [45].
To state the obvious, these statements of principle must be borne in mind when considering the evidence of Mr Farrelly and Mr Martins, later in these reasons.
Application to join extra party
On the last day of the trial, the Applicant sought to join Mr Martins in his personal capacity as a Fourth Respondent to the proceedings. Again in accordance with the clear principles regarding, among other things, case-management and delay set out by the High Court in Aon Risk Services Australia Limited v Australian National University, to which I have already referred, because all parties had known of Mr Martins’ relevance to the proceedings as a principal of the Third Respondent since the commencement of the proceedings, at such a late stage of the trial, it was not appropriate to accede to the application. Accordingly the application was refused.
Evidence of Protagonists
Evidence of Mr Pekic
Mr Pekic has qualifications in architecture and environmental design. He is not a registered architect. He “draws plans for a living.”[12] For some 15 years or thereabouts he has designed and drawn plans for houses and, subject to what is said below, operated his business in this regard under the name of Axis Design and Drafting.
[12] See Mr Pekic’s evidence at Transcript (19th November 2008) p.50. As I note in more detail shortly, I took Mr Pekic to be a very credible and completely candid witness.
Since approximately 1999, through his business relationship with Solitaire (which came via his relationship with Mr Turcin – they are personal friends as well as business associates),[13] he has regularly designed houses and drawn plans for Solitaire.
[13] See Mr Pekic’s evidence, Transcript (19th November 2008) p.54.
He said, and it was essentially unchallenged, that in about January 2002 Mr Turcin approached him to design and prepare drawings for a project home, which ultimately became the Solitaire house.
Mr Pekic operated his business out of premises owned by his accountant. Out of those same premises another company, Laopair Pty Ltd (“Laopair”), also operated. Mr Pekic thought that this company had formerly been in the building industry.
Mr Pekic owed some money to Laopair. He sometimes caused invoices to be written under the name of his business, Axis Design or Axis Design and Building, but with Laopair’s ABN on the invoice. Sometimes it was Mr Pekic’s practice to arrange for cheques to be made payable to Laopair or, on other occasions, to endorse cheques he received to Laopair.[14]
[14] This somewhat convoluted historical background to Mr Pekic’s book-keeping is set out at Transcript (19th November 2008) pp.29-33 & 46-49. The background is relevant because the ownership (and or assignment) of the copyright, either as between Mr Pekic and Mr Turcin and or Solitaire was not formally admitted. See Transcript (19th November 2008) p.32.
Two tax invoices were issued to Solitaire, in relation to the design and plans for the Solitaire house, by an entity known as Axis Design, which was the then trading name of Mr Pekic. Those invoices became Exhibit M.
Between January and July 2002, Mr Pekic and Mr Turcin met a number of times to discuss plans for the Solitaire house. Mr Pekic confirmed that Mr Turcin emphasised to him that he (Mr Turcin) wanted a “stand out” home of contemporary design “with unique external and internal features.”[15]
[15] See Mr Pekic’s affidavit affirmed 12th November 2008 (filed 13th November 208) par.5.
Mr Pekic deposed to there being six particular features of the Solitaire house that are unique or unusual and, in his view, “had not been done before (particularly in the ACT where I practice).” As listed by him, those six features are:
a)the tiled blade wall to the front balcony/ porch;
b)the upstairs home theatre;
c)the use of the theatre balcony as the front porch;
d)the combined use of flat roofing and hipped roofing;
e)the total front elevation appearance – the general composition of the front façade being unique;
f)the informal L-shaped living areas on the ground floor which separates the master bedroom at the front of the home from the other bedrooms located at the rear of the residence.[16]
[16] Mr Pekic’s affidavit affirmed 12th November 2008, par.7. Throughout his affidavit he maintained that the features to which he referred were all unique, that he was not influenced by any other work, and that he did not copy the design or the plans, or any part of them, from anything else. See, for example, pars.8 & 9 of his affidavit.
In pars.10 - 13 of his November 2008 affidavit Mr Pekic recounted the various amendments to the original plans he drew. Those working drawings were either annexed to his affidavit or exhibited to him at the time of its swearing.
Mr Pekic deposed that he, and he alone, designed and drew all of the plans and working drawings in relation to the Solitaire house. I accept his evidence without hesitation in this regard.
The amended plans were lodged, by Mr Turcin, with the Australian Capital Territory Planning and Land Authority (“ACTPLA”) on or about 1st November 2002.
The same plans were presented to the Master Builders Association of the ACT in about April 2004. They were awarded the 2004 prize for the best Medium Density Small Lot Housing by that Association “for excellence in design and building.”[17]
[17] Pekic affidavit, par.15.
The same plans and the house, said Mr Pekic, were finalists in the Housing Industry Association of Australia awards. In particular, this occurred in the categories of 2004 Small Lot Housing and 2004 Custom Built Home ($250,000 – 400,000).
In the remainder of his affidavit, Mr Pekic confirmed that (a) in the course of construction, the house attracted significant attention (including being photographed by the local newspaper, The Canberra Times), (b) the certificate of occupancy was not issued until 16th July 2004, and (c) Mr Turcin expressed concern about Mr Pekic doing similar plans for other builders, to which Mr Pekic responded, saying that he did not want Solitaire/Mr Turcin to hold exclusive copyright either. Accordingly Mr Pekic proposed that he (through his business, Axis Design and Drafting) and Mr Turcin own the copyright jointly.
Mr Pekic confirmed that the final and draft plans, annexed and exhibited to his affidavit, were the first plans that he created “in consultation with Mr Turcin for this style of home.” He also confirmed that Solitaire built the home in accordance with his plans. He undertook some supervision of the work, by which he later confirmed that he meant to convey that he attended the site to see that the house was being built as he had envisaged in the drawn plans.[18]
[18] See Transcript (19th November 2008) p.64.
On 6th December 2007 Mr Pekic executed a Deed of Assignment of Copyright in the plans. The other parties to the deed were Mr Turcin and Solitaire. A copy of that deed is annexure C to Mr Pekic’s affidavit. By that deed, Mr Pekic and Mr Turcin transferred the copyright in the plans for the Solitaire house to Solitaire “from the date of the creation of the plans.”[19]
[19] Recital C to the Deed of Assignment of Copyright. Mr Turcin’s capacity to transfer was predicated upon he and Mr Pekic having jointly owned the copyright in the plans since July 2002. In relation to assignment of copyright, on the facts in this case, there has been compliance with ss.196(1) & (3) of the Copyright Act.
Originally Mr Pekic was not intending to charge Mr Turcin any fee for the design of the Solitaire house because Mr Turcin was intending to live in it himself, and because Mr Pekic and Mr Turcin were friends. At Mr Turcin’s insistence, Mr Pekic issued an invoice for what he described as a “nominal fee.”[20]
[20] Transcript (19th November 2008) p.54.
While he agreed that three features of the front of the house – the blade wall, the recessed entrance and the position of the garage, were, to a degree, dictated by the lease conditions and the planning requirements, he maintained that the combination of the blade wall with ceramic tiling (which was not on the first draft of his plans) with the recessed entrance, were unique features of the Solitaire house.[21]
[21] Transcript (19th November 2008) pp.57-59.
He confirmed that the blade wall, of itself, did not make the Solitaire house unique. He confirmed, however, that it was the first blade wall in Canberra that was tiled.[22] Implicit in this statement is that it is in the context of project homes. Mr Pekic’s actual statement or assertion, in my view, was not seriously challenged in the course of the trial.
[22] Transcript (19th November 2008) p.62.
Mr Pekic said that a year or so after completion of the Solitaire house he and Mr Turcin spoke about a licence fee for the use of the plans for that house. He said that they had agreed on an “exorbitant fee” of $40,000.[23] The fee was set so as to dissuade people from using the plans, even under licence. But he also agreed that if someone was prepared to pay such a fee, so be it.
[23] Transcript (19th November 2008) p.65.
Mr Pekic confirmed that, from start to finish, the preparation and drawing of the plans for the Solitaire house took approximately 70 or 80 hours to complete. This would have been over a six to eight month period.
I have already noted that Mr Pekic was a very credible witness. I have no difficulty in accepting his evidence in its entirety.
Evidence of Mr Turcin
Mr Turcin’s evidence is considered in two parts – (a) his affidavit and oral evidence in relation to the plans and construction (and related issues) concerning the Solitaire house; (b) matters relating to the “tendency conduct” of Mr Farrelly.
Evidence in Relation to the Solitaire House: Unsurprisingly, at the outset of his affidavit and oral evidence[24] Mr Turcin outlined his discussions with Mr Pekic and the principles or concepts that guided him to settle on the design that became the plans for and the building of the Solitaire house. In his own words, “this house was ... to become the signature against my company name.”[25]
[24] Mr Turcin’s primary affidavit was sworn on 6th December 2007 and filed the following day. His evidence is located at Transcript (17th & 18th November 2008) beginning at p.26. See also pars.7-16 of his December 2007 affidavit. This section of his affidavit also deals with the discussion Mr Turcin had with Mr Pekic regarding the copyright in the Solitaire plans. It mirrors the discussion, recorded earlier in these reasons, from Mr Pekic’s evidence. I need not traverse it again here.
[25] Transcript (17th November 2008) p.36.
He confirmed that the element of the “blade wall” was inspired by an article he read in a building magazine.[26] He maintained, without too much opposition, that his tiled blade wall in the Solitaire house was, at the time of its construction, unique in project homes in the ACT.
[26] He confirmed that he endeavoured to keep abreast of latest developments by reading trade and other journals. Transcript (17th November 2008) p.28.
Mr Turcin also maintained that having two informal living areas (i.e. the downstairs kitchen and the upstairs “home theatre” in the Solitaire house) were also unique to project houses in the ACT up to the beginning of 2005. Likewise, he contended that a project home with a “home theatre”, between 2003 and early 2005, had never been built in the ACT.[27]
[27] Transcript (17th November 2008) p.34. In the course of cross-examination Mr Turcin confirmed that the Solitaire house ‘has not been built anywhere else’, other than in Gungahlin. See Transcript (18th November 2008) p.31.
He confirmed that when the plans were drawn up for the Solitaire house, it did not include a letter box. It will be seen plainly from the photographs of both houses that each of them has a similarly styled, and located, letterbox.
In both his affidavit (par.19) and in his oral evidence, Mr Turcin confirmed and described his attempts to make secure the building site on which the Solitaire house was being constructed. He indicated that when he was on the site, it was common to have people wander in to try to look at the house under construction, such was the interest in it. Part of that interest may well have come from the fact that the Solitaire house was the only double storey house in the street, which otherwise comprised single-storey project homes.[28] There seemed to be no contention against this proposition. Indeed, as will be seen later in these reasons, there was independent evidence that confirmed the uniqueness of the Solitaire house, at the very least, in it being the only two storey dwelling in the street.
[28] Transcript (17th November 2008) p.32.
In order to protect the Solitaire house, its design and ‘special features’ – in so far as that might be possible – Mr Turcin confirmed that the house was secured by fencing.
Mr Turcin confirmed that in 2004 he received two inquiries about licensing the use of the Solitaire plans. He quoted a fee of $40,000 in each instance. Nothing ever came of those inquiries. He stated with singular force that, as at the date of the trial, ‘no one has built this house.’[29] And, in any event, he said, he always preferred to build a house rather than to license someone else to do so. Indeed, apart from ensuring the quality of each house he builds, Mr Turcin said that “I’ve never sold a plan and my intention is never to sell a plan....”[30]
[29] Transcript (17th November 2008) p.37.
[30] Transcript (17th November 2008) p.38.
Mr Turcin also confirmed that the Master Builders Award for the Solitaire house led to significant publicity. This resulted, among other things, in the house being photographed for the Canberra and Region Building News in the Souvenir Edition of June 2004, which contained the 2004 Boral Excellence in Building Awards.[31]
[31] The front page of this Magazine, as well as the page containing the photograph of the Solitaire house, became Exhibit F.
There was an awards dinner, with attendant photographs, on that occasion.[32]
[32] See Transcript (18th November 2008) p.18.
Matters of awards and attendant publicity are, of course, relevant to the fact that some fundamental details of the Solitaire house were, so to speak, “out in the market place” (and prominently so) at least from the time of the Master Builders Awards in mid-2004. This also included Mr Turcin giving an interview to The Canberra Times newspaper. An article subsequently appeared in that newspaper.[33]
[33] The article, which contained two photographs of the Solitaire house, is annexure A to Mr Turcin’s December 2007 affidavit. See also Transcript (18th November 2008) pp.42-43.
In the course of cross-examination, Ms Olssen, quite properly, sought to question Mr Turcin’s credit. Briefly stated, it occurred this way.
Mr Turcin did not acquire his builder’s licence until 2004. Prior to that time, Mr Turcin’s Father had been the nominated builder for Solitaire. He confirmed that the company (Solitaire) purchased three blocks of land in April 2002 in Gungahlin, the last of which was used for the Solitaire house.
Building of the Solitaire house commenced in 2002, at which time Mr Turcin did not have his builder’s licence. There was a company licence for Solitaire, which it acquired after commencement of the building of the Solitaire house. And, as I have said, Mr Turcin senior was the licensee and holder of the requisite builder’s licence.
Mr Turcin advised the Master Builders Fidelity Fund that his Father was the builder, at a time when Solitaire (through Mr Turcin) was constructing the house.
In sum, Ms Olssen’s point was that Mr Turcin used his Father’s building licence (and name) as a matter of convenience at a time when he (Mr Turcin) did not have a licence. Mr Turcin confirmed that although he did the work for Solitaire in the construction of the house, his Father was regularly on site. Mr Turcin also agreed that he did not distinguish between the company (Solitaire) and himself.[34]
[34] Further detail of this discussion can be found at Transcript (17th November 2008) pp.46-55.
Whatever the particulars of the ownership of the land upon which the Solitaire house was built, and the details of who held the requisite builders licence at the time (initially Mr Turcin senior, and from 2004, Mr Turcin), and the undoubted importance of the correct details being given to the Master Builders Fidelity Fund,[35] for my part, this discussion assisted me little in the resolution of the principal issues to be determined.
[35] The certificate issued by the Master Builders Fidelity Fund, dated 4th October 2002, became Exhibit G. It shows Mr Josip Turcin as the builder, and Mr Turcin [junior] as the “owner/beneficiary.” The contract price for the construction of the Solitaire house is listed as $195,000.
I found Mr Turcin to be a very committed witness who gave his evidence candidly. I have no reason not to accept his evidence. He has obviously invested heavily – at a personal level and otherwise – in the litigation under consideration.
Mr Turcin’s Evidence Regarding Mr Farrelly: There are three sources for this evidence: (a) Mr Turcin’s primary affidavit; (b) his oral evidence; and (c) a DVD that was played in Court being CCTV footage of Mr Farrelly’s attendance at another home built by Solitaire. In addition to this material there is an affidavit from Mr Romero-Ferre, filed on 18th August 2008. He is a casual employee of Solitaire.
Stated generally, the evidence in the sources referred to relates to Mr Farrelly’s alleged conduct, which was said to establish his propensity to view, access and or study Solitaire’s work. In turn, this propensity and or course of conduct relates to the principal contention that Mr Farrelly copied the plans and/or the [alleged] unique design features of the Solitaire house.[36]
[36] These matters, in turn, are relevant to the Court’s consideration of two legal issues, namely, (a) if copying is established, was it conscious or unconscious, and (b) if copying is established, was it a “substantial part” of either the plans or essential features/concepts of the Solitaire house? Such matters are dealt with later in these reasons. It is nonetheless apt to note here a few of the authorities to which reference is made later. On conscious/subconscious copying, see, for example, the comments of the Full Federal Court in Clarendon Homes (Aust) Pty Ltd v Henley Arch Pty Ltd (1999) 46 IPR 309 at [24] & [39]; Inform Design and Construction Pty Ltd v Boutique Homes Melbourne Pty Ltd (2008) 77 IPR 523 at [62] (Weinberg J). On “substantial part”, see the Full Court decision in Tamawood Ltd v Henley Arch Pty Ltd (2004) 61 IPR 378 at [55]; Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd (2006) 225 ALR 57 at [172] and, at [188], “The taking of quite small portions of a work may still amount to a “substantial part” for the purposes of the legislation.” (Crennan J) Her Honour’s judgment was not disturbed on appeal: Kovan Engineering (Aust) Pty Ltd v Gold Peg International Pty Ltd (2007) 234 ALR 241. See also the High Court’s comments in IceTV at [30] where French CJ, Crennan & Kiefel JJ referred to “slivers of information.” In my view, in this case, rather more than “slivers” were appropriated for use in the revised plans of the Dunlop house.
The alleged conduct is in two parts. The first relates to Mr Turcin contending that he saw Mr Farrelly “in the near vicinity of” the site of the Solitaire house. In his oral evidence, Mr Turcin confirmed that he saw Mr Farrelly “in front of” the Solitaire house “half a dozen times” during its construction.[37]
[37] See Mr Turcin’s December 2007 affidavit, par.20, and Transcript (17th November 2008) pp.42-45. As already noted, Mr Turcin confirmed that he took steps to “secure” the site of the Solitaire house.
The second part of the conduct arose this way. Mr Turcin was constructing another house in the new Canberra suburb of Harrison (“the Harrison house”). In his evidence, he described it as a “larger version of” the Solitaire house.[38]
[38] Transcript (18th November 2008) p.4. It was not completely clear if every feature in one house was replicated in the other. For example, Mr Turcin confirmed that the Harrison house featured a built-in “Aquavision TV” in the shower (presumably this was not designed as a water-saving feature). He maintained that this was the first time such a “feature” had appeared in a house in Australia. Clearly this was not a feature in the Solitaire house the subject of these proceedings.
Mr Turcin gave evidence concerning two things in relation to the Harrison house. The first was that he had prepared detailed “entry conditions” for anyone wishing to enter and view the Harrison house. A copy of those “entry conditions” is annexure “A” to Mr Romero-Ferre’s affidavit filed on 16th March 2009.[39] The entry conditions were developed in early 2007, which is also to confirm that they were put in place after the commencement of these proceedings.
[39] Mr Romero-Ferre’s affidavit was formally read by Mr Higgs SC; Mr Romero-Ferre was not required for cross-examination. See Transcript (17th November 2008) p.41.
Mr Turcin said that he developed these conditions “to prevent any of these people to come in there [to the Harrison house] and taking ideas” The reference to “these people” referred to one of the conditions of entry, which stated: “No builders, architects or agents unless approved.” The conditions also confirmed that “plans will not be provided.”
Mr Turcin also confirmed that he developed the “entry conditions” so that “if Mr Farrelly turned up he was to read that and leave.”[40]
[40] Transcript (17th November 2008) p.41.
The second matter of evidence concerned (a) the unchallenged affidavit evidence of Mr Romero-Ferre, and (b) the CCTV footage of Mr Farrelly visiting the Harrison house on 24th June 2007.
The substance of Mr Romero-Ferre’s evidence was that he was employed by Solitaire to supervise the entrance of persons to the Solitaire display house at Harrison: thus, to provide them with information and to ensure that persons wishing to view the display home signed a “sign-in book” or “entrance register.”
He deposed that on 24th June 2007 a gentleman of specified height and dress attended the Harrison house. Mr Romero-Ferre asked him to read the conditions of entry and to sign the requisite book. The person spoken to said that he would rather not do so. Mr Romero-Ferre said that if he did not sign the book he could not be permitted to enter the house. The said person signed the book.
A short while later, Mr Romero-Ferre saw Mr Turcin speaking with the person, shortly after which the said person left the building. Mr Turcin then advised Mr Romero-Ferre that the “said person” was Mr Farrelly with whom he was engaged in legal proceedings.[41]
[41] See also Mr Turcin’s account of these events in his December 2007 affidavit, pars.39-44.
Mr Romero-Ferre then went on to depose to Mr Turcin asking to see the sign-in book. Mr Romero-Ferre pointed to the signature of Mr Farrelly in the book. He had signed the name “Matt Alchin” and not Jaime Farrelly. A copy of the page from the sign-in book with this signature is Annexure “B” to Mr Romero-Ferre’s affidavit. There is neither name nor signature that reflects or remotely resembles the name “Jaime Farrelly” in the entrance register.
I note, too, that the ‘entrance register’ does not require visitors to provide telephone contact details. The provision of a telephone number is listed as “optional.” In such circumstances, Mr Farrelly’s comment/explanation (noted below) that he did not wish to be ‘followed up by sales agents’, in my view, rings quite hollow. I do not suggest that, by itself, this evidence suggests any particular mens rea (used, of course, in a non-criminal sense) on the part of Mr Farrelly. Rather, in my view, it is part of the often jumbled and disjointed, if not flawed, mosaic that was Mr Farrelly’s evidence, which I deal with in more detail later in these reasons.
It is as well, if not more convenient here, to record in more detail Mr Farrelly’s comment or answer as to why he used a false name in the entrance book at the Harrison house. He said that he “didn’t want to be followed up by sales agents and people that might use your name for that purpose.” He also said that he took the view that he was [simply] “a member of the public”; that he had gone through other homes in the display village, and that he “did not have any reason to think there was an issue with me going into this home.” Candidly, he also admitted that his visit “may not have been the smartest thing to do.”[42]
[42] Transcript (17th March, 2009) pp.69-74.
While I accept Mr Farrelly’s candour, his explanations are, respectfully, far-fetched. He was not ‘just a member of the general public.’ And he certainly could not wear that description when visiting a Solitaire display home in circumstances where he and his business were engaged in litigation with Solitaire. I do not accept, in any respect, Mr Farrelly’s explanations in relation to the Harrison house.
The “sign-in” book is headed “Entrance Register.” Among other things, it advises prospective viewers of the Harrison house that “the home is under 24 hour, 7 day a week, video surveillance with cameras fitted throughout the home.” Notwithstanding this, as already indicated, Mr Farrelly ventured through the Harrison house. The Court viewed, in open court, the CCTV recording of his visit.[43]
[43] The CCTV DVD became Exhibit H. Mr Turcin’s commentary on the DVD recording is located at Transcript (18th November 2008) pp.2-7.
Among other things, it was put to Mr Farrelly, but denied, that in the course of his somewhat brief inspection of the Harrison house he ‘paced out’ certain dimensions of the house.[44] Such an interpretation is not far-fetched, although for reasons noted shortly below, I do not need to make any formal findings in relation to Mr Farrelly’s conduct at or in the Harrison house.
[44] Transcript (17th March 2009) pp.76-77.
Although Mr Farrelly was asked, and essentially denied, numerous questions about his actions recorded on the CCTV recording, in my view, the more salient points of this evidence were that (a) he went to the Harrison house that was built by Solitaire, (b) at a time when he was aware of a significant dispute with Mr Turcin and Solitaire, (c) he clearly and deliberately signed a false name to gain entry to the display home, and (d) his incongruous, if not incredible, response of signing a false name so as to avoid being pursued by sales agents, when there was no requirement to provide contact details.
While Mr Farrelly’s actions appear on the DVD recording as somewhat suspicious, and he could be taken, in some respects, as suggested by Mr Higgs, to be ‘pacing out’ certain dimensions of the house – and I take Ms Olssen’s point that people go to display homes precisely for the purpose of examining ‘every nook and cranny’ (my words)[45] – for the purposes of these reasons I do not need to make any finding about those actions, other than the observations already made in the preceding paragraph. At the very least, his completely inappropriate action in visiting the Harrison house, and where he signed a false name, did not put his evidence in the most favourable light.[46]
[45] See for example Transcript (18th November 2008) pp.18-19.
[46] I deal formally with the application to use this evidence in relation to Mr Farrelly in the application under s.97 of the Evidence Act later in these reasons.
There are now only two other matters to deal with in relation to Mr Turcin’s evidence. The first is that he received an inquiry from a Dr Maldoni on or about 2nd August 2005 regarding houses built by Solitaire. Mr Turcin annexed to his December 2007 affidavit a copy of an email from Dr Maldoni.[47] The relevance and or importance of this is that Dr Maldoni and his wife ultimately purchased the Dunlop house from Mr Martins and had no further contact with Mr Turcin and Solitaire. The coincidence was not explained or explored to any great degree. It remains a curiosity – at least.
[47] The Annexure itself is designated I. In the body of the affidavit there is a mis-description of the annexure number. See Mr Turcin’s affidavit, par.37.
The second matter of relevance is that, upon reviewing the plans for the Dunlop house, Mr Turcin deposed to estimating that the net profit on its construction would be in the order of $70,000.[48] In cross-examination, however, he said that he thought an expected profit margin on the Dunlop house by a project builder would be in the order of $40,000, or possibly a tad more.[49]
[48] See Mr Turcin’s December 2007 affidavit, par.46.
[49] Transcript (18th November 2008) p.46.
In this regard, the solicitors who originally acted for Mr Turcin and Solitaire sent a letter of demand to the First and Third Respondents, dated 9th October 2006, in which, among other things, damages were claimed in the sum of $48,000.[50]
[50] This letter is annexure B to Mr Turcin’s affidavit.
Evidence of Mr Farrelly
Mr Farrelly swore four substantive affidavits in these proceedings, and a fifth affidavit, which annexed answers to interrogatories administered by the Applicant to the First and Second Respondents. The four substantive affidavits, so-called, were filed respectively on 13th and 18th November 2008, 24th February 2009, and 5th August 2009.
By way of overview, the affidavit filed on 13th November 2008 detailed what might be described as Mr Farrelly’s evidence in chief. Helpfully, it annexed, among other things, copies of plans relevant to the proceedings. There was, however, one unexplained omission to which I will come in due course.
The affidavits filed on 18th November 2008 and 24th February 2009 might most conveniently be described as Mr Farrelly’s response to, among other things, Mr Martins’ affidavit of 17th November 2008.
Mr Farrelly’s affidavit filed on 5th August 2009 explained why certain “invoice request forms” (which are annexed to the affidavit) were not previously discovered.[51]
[51] Unless otherwise required, I will not refer to other materials, for example in relation to “schedule of relevant correspondence,” which was filed on 22nd September 2008.
In addition to the significant volume of these affidavits, Mr Farrelly spent significant time in the witness box.[52]
[52] Mr Farrelly’s evidence at the trial is located at Transcript (17th March 2009), (18th March 2009) pp.5-31 & pp.68-76, (19th March 2009) pp.3-61, and (17th August 2009) pp.93-114.
After setting out very briefly some specific matters, Mr Farrelly’s evidence might conveniently be considered under two, discrete but obviously related categories: (a) his affidavit evidence in relation to the plans for the Dunlop house, and (b) his oral evidence at trial.
Affidavit Evidence: Mr Farrelly obtained his formal qualifications in architectural drafting in 1997. He is a director of the First Respondent (Urban Ventures Pty Ltd), which was incorporated in 2001, and which carries on a design and drafting business under the name of Urban Design and Drafting (“Urban Design”).
In his affidavit filed 13th November, Mr Farrelly deposed to the following: that prior to reading Mr Turcin’s affidavit of 6th December 2008, (a) he had never seen the plans for the Solitaire house; and (b) he had never seen photographs of the Solitaire house. He also stated that he had never visited the Solitaire house.
The Plans for the Dunlop House: Mr Farrelly’s evidence essentially focussed upon two things, both of which were set out in his affidavit of 13th November 2008, and repeated regularly in his oral evidence. Those two things were: (a) that Mr Martins, and not either of the first and second respondents, was responsible for the design of the Dunlop house, and (b) that Mr Martins sat with Mr Farrelly at the latter’s computer (at Mr Farrelly’s office) while he made suggestions/directions for Mr Farrelly to alter or amend the plans for the Dunlop house.
Urban Design was retained by A & A Martins Pty Ltd (“A & A Martins”) to draft plans for the Dunlop house. The agreement between the two companies was oral.
Mr Farrelly contended that in approximately 2003, Mr Martins telephoned him and said words to the effect: “I want you to put a plan on Block 3, Section 135. Use the plan from Block 19, Section 145 Dunlop and fax me a sketch.” It was uncontested that Urban Design and A & A Martins had worked together since about 2001 and in doing so, Mr Martins, on behalf of A & A Martins, had, from time to time, asked Urban Design, through Mr Farrelly, to re-use (and sometimes adapt) a certain plan from a previous job for other projects.[53]
[53] See pars.4-6 & 8 of Mr Farrelly’s affidavit filed on 18th November 2008.
Between 2003 and 2005, on behalf of Urban Design, Mr Farrelly employed other persons to draft plans, in particular, Mr Ian Dawn whose initials, “ID”, appear on many of the plans before the Court.
Sketch plans were sent by fax to Mr Martins, by Mr Farrelly, on 3rd June 2003. Copies of them comprise annexure H to Mr Farrelly’s affidavit filed on 13th November 2008; copies of the relevant plans are to be found at Appendix C to this judgment. Over the course of a few days (still in June 2003), various changes to the plans were suggested by Mr Martins and effected by Mr Farrelly, each of them acting on behalf of their corporate entities.[54]
[54] See annexures I, J, K & L to Mr Farrelly’s 13th November 2008 affidavit. Unless otherwise required, all references to annexures should be taken to be from this affidavit, which will be styled the “November affidavit.”
Mr Farrelly deposed that, on or about 10th January 2005, Mr Martins came to his office in Griffith (ACT) and indicated that he wanted some changes to the plans for the Dunlop house.[55] Mr Farrelly maintained that Mr Martins sat next to his computer workstation and indicated to Mr Farrelly the changes he wanted to the plans. The amended plans were given directly to Mr Martins (they are annexure M to the November 2008 affidavit).
[55] This and the following conversations and events are set out in Mr Farrelly’s November affidavit, pars.27 – 48.
Mr Farrelly next deposed that on or about 12th January 2005 Mr Martins again came to his office and had a conversation to the following effect. Mr Martins is alleged to have said: “The layout of the site on the site plan appears to be wrong. Can we check the site shape please[?]” Mr Farrelly confirmed that he would do so.
Mr Farrelly maintained that, after checking the site plan and confirming that it was incorrect, Mr Martins again sat next to his computer workstation and gave specific directions to correct and to revise the plans. Mr Farrelly said that upon completing the corrections he gave Mr Martins a copy of the plans, which comprise annexure N to his 13th November 2008 affidavit.
On or about 19th January 2005, Mr Farrelly contended that Mr Martins again came to his office to ask for further amendments to the plans to the Dunlop house, and again sat beside Mr Farrelly’s computer workstation to indicate the changes he wanted. Annexure O to Mr Farrelly’s 13th November 2008 affidavit contains the amended plans which Mr Farrelly said he gave to Mr Martins at that time.
Mr Farrelly next said that “shortly thereafter”(i.e after the 19th January visit to his office) Mr Martins came to Urban Design’s office and said that he wanted to add a second storey to the Dunlop house plans.[56] Again, Mr Farrelly said that Mr Martins sat next to his workstation and directed the changes to the plans, and that he gave him a copy of the amended plans, which comprise annexure P to his November 2008 affidavit. In particular, Mr Farrelly drew attention to the proposed amendments on a document entitled “Drwg No 1”, being an abbreviated reference to “Drawing No 1.”
[56] See in particular pars.39 – 40 of Mr Farrelly’s November 2008 affidavit.
What might be called, in a short-hand manner, ‘the same routine’ continued to be asserted by Mr Farrelly in relation to further amendments to plans for the Dunlop house, which took place on or about 27th January 2005. Again, Mr Farrelly contended that Mr Martins attended his office in Griffith and, seated next to his workstation, directed changes to the plans. A copy of those plans is annexure Q to Mr Farrelly’s 13th November 2008 affidavit.[57]
[57] Copies of relevant parts of the plans for the Dunlop house, as they evolved, are located at Appendix D to these reasons.
Mr Farrelly said that he understood that A & A Martins lodged an amended development application “in or about February 2005.”
Mr Farrelly went on to state that he received a telephone call from Mr Martins on or about 22nd February 2005 after having faxed Mr Farrelly a copy of an objection received in relation to the amended development application. It was unchallenged that Mr Martins requested Mr Farrelly to deal with the objection.
Annexure R to Mr Farrelly’s 13th November 2008 affidavit is a copy of the objection, which was sent under cover of a letter from the ACT Planning and Land Authority (“ACTPLA”), dated 16th February 2005. Urban Design’s response, dated 21st February, is also part of annexure R.
Finally, Mr Farrelly said that (a) he understood that the amended development application was approved, and (b) at around this time, Mr Martins again came to his office to ask for a few other amendments to be made to the plans for the Dunlop house. Again, he deposed that Mr Martins sat next to his computer workstation and directed the changes to be made.
The only other matters to note at this juncture are that (a) Mr Farrelly could not (at that stage) locate the relevant invoice for the plans and the various amendments in relation to the Dunlop house, but indicated that the usual fee was $990.00, and (b) after the completion of the plans, neither Urban Design (nor Mr Farrelly) had any other involvement in the construction, nor the selection of materials concerning that house; nor did he or Urban Design have any interest in the subsequent sale of the Dunlop house. These matters were unchallenged.
In fact, two invoices were sent by Urban Design to A & A Martins in relation to “design, working drawings & disbursements; [&] energy rating” concerning Block 3 Section 135 Dunlop: the first, dated 30th June 2003, was for the sum of $979.00; the second invoice, dated 1st February 2005, which bore the same description of “design, working drawings, etc”, was for the sum of $1,100.00. Copies of both invoices were annexed to Mr Martins’ affidavit, filed on 17th November 2008 (annexures B & F respectively).
Mr Farrelly’s Evidence at Trial: Mr Farrelly’s evidence at trial may conveniently be dealt with under three aspects: (a) the general account of designing and drafting the plans for the Dunlop house (including [briefly] the production and relevance of Urban Design invoices), (b) the change in plans from a single to a double storey, and (c) other matters.
Design or Only Drafting Plans? It is intended as a statement of fact that Mr Farrelly’s evidence, particularly in relation to the design and drafting of the Dunlop house, waxed and waned to a significant degree. (Formal findings are made later in these reasons.) Over many hours in the witness box, he stated, as firmly as he could, that he designed, or was involved in the design of, the Dunlop house. Sometimes this was qualified by saying that he was involved [only] in the “concept drawing” of the plans, with or without Mr Martins.[58]
[58] See Transcript: (17th March 2009) pp.39 & 41-42; (18th March 2009) pp.13, 27, 73 & 75; (19th March 2009) p.56; (17th August 2009) pp.111, 112 & 113.
On other occasions, he was just as adamant that his involvement in the plans was simply, and solely, as the person drafting them, under Mr Martins’ direction and instruction.[59] This is also to say that Mr Farrelly sought to emphasise that he was simply drafting or giving effect to Mr Martins’ design specifications; thus, he contended that Mr Martins was the true designer of the Dunlop house.[60]
[59] See Transcript: (17th March 2009) pp.23, 24, 31 & 39; (18th March 2009) p.25; (19th March 2009) p.44; (17th August 2009) pp.111, 112 & 113.
[60] In the course of final submissions, I inquired of Mr Higgs SC whether he agreed with the [metaphorical] description of Mr Farrelly as the puppet and Mr Martins as the puppeteer. Mr Higgs submitted that that was what Mr Farrelly was alleging. He went on to submit that such a proposition regarding the roles of Mr Farrelly and Mr Martins was “just unbelievable.” See Transcript (18th August 2009) p.241.
In addition to this, particularly in the lengthy and regularly visited questions surrounding the production (late or otherwise) of invoices by Urban Design, Mr Farrelly insisted (in effect) that invoices were rarely if ever changed and, therefore, they contained a standard reference to “Design, Working Drawings & Disbursements.”[61] His evidence was that the reference to “design, etc” was basically a pro-forma or template invoice which was generated as a matter of routine and without, necessarily, bearing any direct correlation or reference to the actual work done on any particular job, including whether there was in fact any design work, as opposed to only the drafting of plans.[62]
[61] In relation to the late production of invoices and related documents, especially ‘Invoice Request Forms’, see also Mr Farrelly’s affidavit filed on 5th August 2009.
[62] Generally, see Mr Higgs’s further cross-examination on day seven of the trial at Transcript (17th August 2009) pp.104-114.
Of the two positions propounded, unsurprisingly, Mr Farrelly might be taken as emphasising the denial of anything to do with the design of the Dunlop house. As the trial wore on, I had the distinct impression that Mr Farrelly’s evidence in relation to certain matters, particularly that Mr Martins was truly the person responsible for the design of the Dunlop house and that he was merely the compliant draftsman, became more firm, or at least significantly more firm than at the commencement of the trial. I should not be taken as accepting Mr Farrelly’s emphasis on him being the compliant draftsman.
However, Mr Farrelly was rather definite on the other position at other times in the course of his cross-examination. For example, early in the trial an exchange took place, noted below, between Mr Farrelly and Mr Higgs SC. It did so in the context of discussion in relation to the discovery of and complaint by Mr Martins that the original (12th January) plans for the Dunlop house did not fit on the block.
After acknowledging that (a) Mr Martins told him that he (Mr Martins) wanted to start building [soon], (b) Mr Martins wanted the “mirror-reversal” error of the plans corrected, and (c) Mr Martins was not happy with the situation (Mr Farrelly agreed with all of the above, which was somewhat different to the account he gave as set out above taken from his affidavit), the discussion between Mr Higgs SC and Mr Farrelly was as follows:[63]
Mr Higgs: ... Now, so can I take it that apart from the bad language you are in general agreement with the account of the conversation of Mr Martens [sic] with you where he asked you to fix up the problem about the site, the building on the block that occurred on or about 12 January 2005?
Mr Farrelly: We had that conversation.
Mr Higgs: Right, ... what did you do in order to try and fix up the problem, as you promised that you would?
Mr Farrelly: Redraft – the plan was redrafted to suit that correct block shape.
[63] Transcript (17th March 2009) p.39. See also Transcript (18th March 2009) pp.72-73, where Mr Farrelly recounts that he gave Mr Martins a copy of a “concept plan” which he (Mr Farrelly) later developed into more detailed working drawings.
Mr Higgs: Right, and did you undertake that work yourself?
Mr Farrelly: No, it would have been undertaken by myself, yes – I did the design works. It would have been done by myself, yes.
Although it might be said that this cross-examination is not inconsistent with Mr Farrelly’s position that he only did the drafting of (including making amendments to) plans and not any design, in my view, because it refers so directly (and rather emphatically so) to design I have the greatest difficulty in accepting Mr Farrelly’s contention that his role was solely as the draftsman of the plans for the Dunlop house and that he was not in any way involved in their design. I note again that Mr Farrelly’s qualifications and experience were in architectural drafting; Mr Martins’ qualifications and experience (noted below) were not. I take it to be understood that architectural drafting necessarily involves at least some basic elements of design.
Immediately after the exchange set out above, Mr Higgs also discussed with Mr Farrelly what happened next, after the plans had been corrected. Again, contrary to his affidavit evidence where he repeatedly stated that Mr Martins came to his office and sat with him while plans were either drawn or amended (and, once finished, handed Mr Martins a copy of the corrected plans), he agreed with Mr Higgs’ question/comment, which was to the effect that, after the plans had been corrected, (a) he contacted Mr Martins, and (b) he faxed Mr Martins a copy of the amended plans.[64] The question can be posed, not unreasonably, why fax plans to someone if, as is alleged, that person was sitting beside you?
[64] See Transcript (17th March 2009) pp.39 & 40.
It might be explained that Mr Farrelly gave Mr Martins a copy of the concept plan and later faxed him the detailed working drawings. However, such an explanation was not proffered by Mr Farrelly and, therefore, I can only deal with the evidence before the Court. Given Mr Farrelly’s evidence, including his agreement with the proposition that he faxed the plans to Mr Martins, I cannot accept his contention that he gave a copy of the plans to Mr Martins at his office.
Put as neutrally as possible, Mr Farrelly’s oscillation in his evidence did not assist his case.
The Change from Single to Double Storey: A significant area of contention was the sequence of events and the design and drafting of plans that resulted in the Dunlop house going – and rather quickly so – from a single to a double storey.
As will be seen later in these reasons, Mr Martins maintained that the quite sudden change from a single to a double storey in the plans for the Dunlop house was Mr Farrelly’s initiative. It was, he said, Mr Farrelly’s concept, design and drafting. Mr Farrelly had a rather different account. I have detailed it from his affidavit earlier in these reasons. It is time to consider it in the light of his cross-examination. This should best take place in the context of a brief narrative of the plans and the dates taken from the annexures to Mr Farrelly’s affidavit filed on 13th November 2008.
Annexures G – N of that affidavit all detail a single storey dwelling. In each and all of those plans, at the front of the house there is located a double garage and a room described as “Dining Lounge”. These two rooms are separated by the entrance to the house, which is stated to be through a porch.
The dates of the plans are important. Annexure G is dated 21st September 2002; annexure L is dated 30th June 2003; annexure M is dated 10th January 2005. It is annexure M and the following annexed plans that were the primary focus of the contest before the Court.
Most of the plans have an “ACT house energy rating scheme” stamp which also displays the date. For example, in relation to the plans at annexure M there is a correlation between the date of the plans and the energy rating, both being 10th January 2005.
It is also worth noting here that each set of plans typically records, among other things, the client, the block and section numbers, the job number, the drawing number of each plan, the date, and the initials of the person who did the drawing. I need not consider other matters, such as the scale of the plans, and the suburb, which are other pieces of information recorded and immediately obvious on the face of the plans.[65]
[65] Parenthetically, I might note that on some plans, the suburb is noted as “Amaroo”, but for the most part, the relevant suburb is “Dunlop.” I do not think that too much should be drawn from such discrepancies.
Thus, again to take the plans at annexure M, the client is shown as “A & A Constructions”; the plans concern “Block 003, Section 135”; the job number is “A03261”; there are three (3) drawings in the annexure; the date is recorded as “10/01/05”; and the initials on the plans are “ID.” In this instance, the initials “ID” refer to Mr Ian Dawn, who, as I have previously noted, formerly worked for Urban Design.[66]
[66] Mr Farrelly deposed that Mr Dawn was now residing in New Zealand and that he had not been employed by Urban Design since 2005. See Mr Farrelly’s affidavit filed on 18th November 2008, par.25.
The plans at annexure N are somewhat different to those previously noted, essentially because they are described as “concept plans”, as opposed to the more detailed working drawings found in other plans, both earlier and later. The plans at annexure N are dated 12th January 2005. As with previous plans they show, at the front of the house, a double garage and a dining – lounge configuration, separated by the entry to the house. As at 12th January, the Dunlop house remained a single storey dwelling.
The plans at annexure O show a number of significant changes to previous plans. Formally, twelve (12) changes are listed on drawing number 2. Most relevantly for current purposes, the changes refer to the correction of the orientation of the block, the [re]location of the master bedroom and ensuite to the front of the house, and the change to the front facade to include parapet walls. The plans also note (see drawing number 2) that there is [only] a roof above the entrance porch. This is relevant to later changes, which disclose changes so that there is a terrace above the porch.[67]
[67] A few other matters might also be noted about the plans that are at Annexure O to Mr Farrelly’s affidavit. First, they bear no approval stamp from ACTPLA. They do bear an “ACT House Energy Rating Scheme” stamp, dated 19th January 2005. It was affixed by Mr Farrelly. The plans themselves are dated “10/01/05”. The plans note, among other amendments, at no.7 “Front facade changed – parapet walls.” So far as I can see, there are no parapet walls shown on these plans. Annexure C to Mr Martins’ affidavit filed on 17th November 2008 purports to be a copy of the same plans. Like those at annexure O to Mr Farrelly’s affidavit, they are dated “10/01/05”. There are some curious differences between the plans annexed to Mr Martins’ affidavit and those annexed to Mr Farrelly’s. First, Mr Martins’ annexed plans bear an ‘energy rating stamp’ from Mr Farrelly dated 10th January 2005 (rather than 19th January). Secondly, they also bear a formal approval stamp from ACTPLA, dated 11th January (Mr Farrelly’s do not). Thirdly, there is no reference in the amendments to “Front facade changed – parapet walls”, but very curiously, parapet walls do appear on the plans – at drawing no.3. I can make no findings, nor is it necessary to do so, in relation to these inconsistencies and anomalies between the plans produced and used by the Respondents which otherwise bear the same dates.
Although the plans themselves bear the date of 10th January 2005, they carry an ‘energy rating stamp’ dated 19th January 2005. The initials on the plans indicate that Mr Ian Dawn was again the person responsible for drafting them. The plans continued to show that the Dunlop house remained a single storey dwelling.
Another, and unexplained, curiosity of the plans that comprise annexure O, was explored by Mr Lunney, Senior Counsel for Mr Martins. Late in the trial he questioned Mr Farrelly about differences in the font style in the drawings numbered 3 and 4. They appear to be perhaps handwritten, but certainly they are quite different to the style and font of other drawings. They are also in a slightly different place or location on the plans to all other drawing numbers.
Among other things, this anomaly in font style and location of the drawing number led Mr Lunney to suggest to Mr Farrelly, in accordance with Mr Martins’ evidence (noted below), that the plans that are at annexure O came into existence after the plans that comprise annexure P. This would be congruent, he suggested, with the [alleged] suggestion or advice to expedite approval of the plans given by Mr Farrelly to Mr Martins that, given the urgency of correcting the plans and to commence construction, the plans for a single storey house could be lodged with ACTPLA first, and then the second storey plans could be lodged as an amendment to the earlier plans. Unsurprisingly, Mr Farrelly rejected this scenario.[68]
[68] See Transcript (17th August 2009) pp.93-102.
The plans at annexure P brought rather more significant changes to the Dunlop house. On their face, they are dated 19th January 2005. Five (5) drawings comprise the plans. Mr Farrelly was unable to explain why drawing number 3 was not part of the plans available to the Court. This omission was remedied by the complete plans that were annexed to Mr Martins’ affidavit (annexure D), filed on 17th November 2008. The missing page 3 of the plans presents the “Upper Floor Plan”, with the description “home theatre.”
The first and second pages of the plans at annexure P clearly show a staircase, leading to an upper floor, which is noted on the face of the plans as one of two amendments (the other being an amended “EER” – “energy efficiency rating”).
Drawing number 5 of the plans at annexure P details, among other things, what was described often in the proceedings as a “blade wall” at the front of the house. Mr Farrelly agreed with a suggestion from the Bench that, to the untrained observer, the drawing of the blade wall indicated a finish with tiles. There was no dispute that the blade wall of the Solitaire house was finished in tiles. However, Mr Farrelly could offer no explanation as to why he had drawn the blade wall of the Dunlop house with what appears to be a tile finish. He simply opined that he was following Mr Martins’ instructions, but otherwise, he could offer no information or explanation.[69]
[69] See Transcript (18th March 2009) pp.18-20. Shortly before this evidence, Mr Farrelly denied any conversation with Mr Martins in which the latter said that he wanted something modern looking for the Dunlop house.
Mr Farrelly claimed clear recollection of many things about the plans, their drafting, to whom they were given, and such things. On such a matter of detail as the blade wall, which was such a significant feature on both houses, the lack of explanation was, at the very least, unfortunate if not somewhat surprising.
While I accept that ‘Drawing 5’ of the plans of 19th January 2005 (annexure P) has no written explanation directed to the blade wall, and that the plans have what I take to be standard notations, such as “External finish as selected”, I take the drawing as presented to the Court, which clearly shows patterned markings, to be an indication of tiles or something similar. The markings on the blade wall are certainly and clearly different to other details of other walls shown on the plans. In the absence of any evidence to support any other finding, it seems to me that the blade wall for the Dunlop house was drawn so as to indicate, or at least to suggest, that it be clad in tiles of some sort.
Accepting that blade walls were not, in 2005, in themselves, an unique architectural feature, in the context of the design and construction of the Dunlop house, and in the context of the original design and construction of the Solitaire house, in my view, the blade wall was a significant feature – as part of the overall design (and particularly the facade) of the Dunlop house.[70]
[70] Among other places, see Ms Olsson SC’s submissions in relation to the nature of the architecture involved in these two project homes. Transcript (18th August 2009) p.261. In the course of cross-examination of a number of witnesses, quite uncontentiously she pointed out that blade walls had been around at least since the time of famous architects, such as Frank Lloyd Wright (1867 – 1959) and Mies van der Rohe (1886 – 1969). Mr Turcin said, quite matter of factly, that he had never heard of these prominent architects. I have no difficulty with his evidence in this regard.
In the light of the above principles, and in the light of the evidence and findings previously set out, in my view, the following is clear and should be taken as formal determinations (using the language of Weinberg J in Inform Design and the authorities he cited):
(i)There is “sufficient objective similarity between the infringing work [the Dunlop house] and the copyright work [the plans for and the Solitaire house], or a substantial part thereof, for the former to be described, not necessarily as identical with, but as a reproduction or adaptation of the latter.”
(ii)On the evidence before the Court, “the copyright work must be the source from which the infringing work is derived.” In my view, such is clearly the case here: the Solitaire house was the source ‘from which the infringing work [the Dunlop house] was derived.’
(iii)Having regard to Willmer LJ’s four propositions in Francis Day & Hunter, cited with approval by Gibbs CJ in SW Hart & CO Pty Ltd v Edwards Hot Water Systems, all of which have been consistently cited in most of the cases referred to in [296] above, including Weinberg J in Inform Design (above), in my view, each of those four propositions has been satisfied on the evidence in these proceedings.
(iv)“Copying in relation to building plans is not confined to tracing and can be established even where there are significant differences between the finished products.” (Weinberg J in Inform Design at [64]: internal citations omitted). Whatever the differences between the plans for, and the two houses themselves, details of which were helpfully provided by the expert evidence of Mr Poiner, they do not detract or disturb the basic and fundamental similarities of essential or material elements of the Solitaire house found in the Dunlop house.
(v)‘In the absence of any direct evidence of copying, or access by the respondent[s] to the applicant’s work, the causal link can be inferred. The greater the degree of objective similarity, the more likely it will be that inference will be drawn.’ (Weinberg J in Inform Design at [69]: internal citations omitted). I agree with Ms Olsson’s submission that there is no direct evidence of copying. In my view, however, on the evidence, there is such significant similarity between the two houses (in particular, the various aspects of the facade, together with the second storey, complete with ‘home theatre’) that the causal link can confidently be inferred, supported by the circumstances surrounding the sudden and dramatic change of plans.
(vi)“The operative similarity need not be, and indeed rarely will be, to the entire work. However, correspondence to a substantial part of the applicant’s design will be sufficient to ground infringement. … It is not necessary to show that the alleged copy is a perfect reproduction of a substantial part of the applicant’s work.” (Weinberg J in Inform Design at [70]: internal citations omitted). In my view, on the evidence before the Court, these criteria, summarised and specified from significant earlier authority by Weinberg J, have been clearly made out in this case. There is, as already said on more than one occasion, ‘correspondence to a substantial part of the applicant’s design, and the applicant’s house.’
(vii)“Determining whether a “substantial part of the work” has been reproduced is a question of fact and degree. …greater weight must be given to the quality of what is reproduced than to its quantity. …An allegation of substantial reproduction will be made out if what has been taken is an essential or material part of the applicant’s work.” (Weinberg J in Inform Design at [71]: internal citations omitted).[150] In my view, the elements identified by Mr Pekic at [38] – [41] above, save perhaps for the detail in relation to the combination of flat and hipped roofing, constitute “an essential or material part of the applicant’s work.”[151]
(viii)“If a person independently creates a work that is substantially similar or even identical to another in which copyright subsists, the copyright holder has no recourse.” (Lindgren J in Eagle Homes Pty Ltd v Austec at [86]: internal citations omitted). In my view, there was no credible evidence to support any suggestion that Mr Farrelly arrived at the design for the Dunlop house, with its significant array of features that are congruent with the Solitaire house, independently. Indeed, on the evidence, I am firmly of the view, previously expressed, that Mr Farrelly copied the design of the Solitaire house and applied it to the plans for the Dunlop house. He did so, in my view, not to cause injury to Solitaire (or to Mr Turcin) but to solve the predicament in which his company, Urban Design, found itself, in relation to the understandably irate Mr Martins, whose company was about to commence construction of a house that was to become his own home but which had been incorrectly drawn on the plans provided by Urban Design. It also follows from these findings that, in my view, Mr Martins was not complicit with Mr Farrelly in the appropriation and use of the Solitaire plans/house.
If breach of copyright is established, what is the appropriate remedy: damages or account of profits? If “damages” is the more appropriate remedy, what is the appropriate measure of damages?
[150] In relation to the same matters, see especially French CJ, Crennan & Kiefel JJ in IceTV at [30] – [32].
[151] See also Mr Ring’s evidence at [244] – [245] above.
Section 115(2) of the Copyright Act provides: “Subject to this Act, the relief that a court may grant in an action for an infringement of copyright includes an injunction (subject to such terms, if any, as the court thinks fit) and either damages or an account of profits.”
A fulsome account of principle in relation to remedies that arise out of breach of copyright is in the joint judgment of Black CJ and Jacobson J (“the joint judgment”), at [23] – [39], and the separate judgment of Rares J, at [95] – [103], in Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in Liq).[152] Relevantly, their Honours make the following points.
[152] (2007) 71 IPR 437.
First, at [2], the joint judgment makes clear that in infringement of copyright cases, “... the applicant bears the onus of proof. But as Bowen LJ said over a century ago, as much certainty is required as is reasonable, having regard to all the circumstances; to require more "would be the vainest pedantry"; Ratcliffe v Evans [1892] 2 QB 524 at 532-533; see also Placer (Granny Smith) Pty Limited v Theiss Contractors Pty Limited [2003] HCA 10; (2003) 196 ALR 257 at [37].”
Secondly, at [24], the authorities are clear that “... an applicant cannot claim both damages and an account; an election must be made before judgment; Dr Martens Australia Pty Limited v Bata Shoe Coof Australia Limited (1997) 75 FCR 230 (Goldberg J).”
Thirdly, at [25] and [34], the joint judgment makes clear that the “...purpose of an award of damages for breach of copyright is to compensate the plaintiff for the loss which he has suffered as a result of the defendant’s breach"; see Interfirm Comparison (Aust) Pty Limited v Law Society of New South Wales (1975) 6 ALR 445 at 446 (Bowen CJ); Bailey v Namol Pty Limited [1994] FCA 1401; (1994) 53 FCR 102 at 111 (Burchett, Gummow and O’Loughlin JJ).”
Fourthly, at [35], the joint judgment said:
If a court finds that damage has occurred it must do its best to quantify the loss, even if some degree of speculation and guess work is involved; Enzed Holdings Limited v Wynthea Pty Limited (1984) 57 ALR 167 at 183 (Sheppard, Morling & Wilcox JJ). But, as their Honours emphasised, this principle applies only where a court finds that loss or damage has occurred; it is not enough merely to show wrongful conduct by a defendant. See also the observations of Mason CJ and Dawson J in The Commonwealth v Amann Aviation Pty Limited [1991] HCA 54; (1991) 174 CLR 64 at 83.
Finally, at [36] of the joint judgment, their Honours said: “In Placer at [37] – [38] Hayne J pointed to the stricter approach taken by the courts in assessing damages where a plaintiff has not adduced evidence that was apparently available to prove the loss.” The reference to Placer is to Placer (Granny Smith) Pty Ltd v Theiss Contractors Pty Ltd.[153]
[153] (2003) 196 ALR 257.
The High Court reference to Placer is important because of the remarks of Hayne J, cited in full by Rares J at [101] in Aristocrat and with which the joint judgment agreed, at [36]. It is important in this case to recall Hayne J’s remarks in Placer.
At [37] – [38] in Placer, Hayne J said (with Gleeson CJ, McHugh & Kirby JJ agreeing) (internal citations have been omitted):
Placer undoubtedly bore the burden of proving not only that it had suffered damage as a result of Thiess Contractors' breach of contract, but also the amount of the loss it had sustained. It goes without saying that it had to prove these matters on the balance of probabilities and with as much precision as the subject matter reasonably permitted.
It may be that, in at least some cases, it is necessary or desirable to distinguish between a case where a plaintiff cannot adduce precise evidence of what has been lost and a case where, although apparently able to do so, the plaintiff has not adduced such evidence. In the former kind of case it may be that estimation, if not guesswork, may be necessary in assessing the damages to be allowed. References to mere difficulty in estimating damages not relieving a court from the responsibility of estimating them as best it can may find their most apt application in cases of the former rather than the latter kind.In the current case, two things should be stated at the outset. First, subject to what is noted below from the Applicant’s final submissions, Solitaire clearly claimed damages, as opposed to any accounts of profits.[154] Thus the election was made, as required. Secondly, however, there is no evidence before the Court from the Applicant as to any precise figure of any loss or damage suffered.
[154] This is clear both from the original Application, and in submissions from Mr Higgs SC. See Transcript (18th August 2009) p.245.
In his final submissions, Mr Higgs SC submitted, in the alternative, that (a) flagrancy damages should be awarded against Urban Design/Mr Farrelly under s.115(4) (dealt with below), or (b) there should be an award of damages which approximated the expected profits on the [sale of the Dunlop] house (of between $40,000 - $70,000), or (c) (subject to formal findings and a number of other procedural matters, which included seeking leave to adduce further evidence regarding the profit made by the Third Respondent) there should be an account of profits from the Third Respondent, or (d) (based on Mr Martins’ evidence) the award of damages should be $40,000.[155] Nearly all bases were covered. However, as Ms Olsson SC observed, although in the application, there was no submission in relation to injunctive relief and the delivery-up of plans.[156]
[155] These various submissions are located at Transcript (18th August 2009) pp.243-246.
[156] See Transcript (18th August 2009) p.259.
Ms Olsson SC submitted that, because (a) her clients (the First and Second Respondents) gained no profit from the copying of the plans – except for the quite modest professional fess charged, and (b) there is no evidence of damage suffered by the Applicant, or depreciation in the value of the Applicant’s plan or house, any damages - if awarded - should be minimal. It also followed (and was clearly implicit in her submissions) that any claim for an account of profits had no basis, at least so far as her client was concerned, because there was no profit gained by her client arising out of the sale of the Dunlop house.[157]
[157] Generally, see Ms Olsson’s submissions in relation to remedies at Transcript (18th August 2009) pp.259-262. The point in relation to the inapplicability of an account of profits in this case is supported clearly by the High Court observation in Dart Industries Inc v Decor Corporation Pty Ltd (1993) 179 CLR 101 at p.114 (Mason CJ, Deane, Dawson & Toohey JJ): “The equitable principle of an account of profits is not to compensate the plaintiff, nor to fix a fair price for the infringing product, but to prevent the unjust enrichment of the defendant.” Emphasis added.
I agree with Ms Olsson’s observations, which were to the effect that (a) the case concerned “project homes” (which is also to say – with no disrespect to any of the parties - that the proceedings involved homes of modest proportion, modest architectural significance, and, compared to many other houses and projects, of modest financial significance), and (b) the infringement was a “limited one-off, isolated incident.”[158] These circumstances also, in her submission, militated against any substantial award of damages. It is certainly clear that there was no evidence, or even a hint, of profiteering on the part of any of the Respondents in relation to the Dunlop house.
[158] See Transcript (18th August 2009) p.261. In the same place, even more succinctly but to proper effect Ms Olsson said that these were not `Harry Seidler houses or [by] Mies van der Rohe.’
I also accept Mr Olsson’s submission that there is no basis for any award of damages against Mr Farrelly personally. All of his actions that were the subject of scrutiny in these proceedings (with the exception of his visitation of the Harrison residence, in relation to which there were no claims), in my view, were conducted on behalf of the First Respondent, Urban Design.
For his part, Mr Lunney SC made submissions in relation to remedies primarily on the basis that the Applicant had not discharged its responsibility of adducing evidence to support any award of damages or account of profits. Solitaire relied, he submitted, simply on Mr Martin’s evidence, in the course of cross-examination, that the Dunlop house had been built on a “cost-plus” basis. Other than that, there was little substantive evidence on which the Court could or should rely.
In my view, in the light of the clear statement of principle by the Full Federal Court in Aristocrat an account of profits has no application in these proceedings in relation to the First and Second Respondents (I deal with the position of the Third Respondent shortly).
A recent exposition of relevant principle in relation to damages is the detailed judgment of Tamberlin J in Eagle Rock Entertainment Ltd v Caisley.[159] Beginning at [10], his Honour outlined the two approaches regarding the assessment of damages. The first is the “licence fee approach”, which refers to the loss of licence fees by the applicant as a consequence of the infringement; the second approach relates to the extent to which sales of the copyright owner’s product were lessened as a result of the competition posed by the infringing work.
[159] (2006) 66 IPR 554. See also Autodesk Australia Pty Ltd v Cheung (1990) 17 IPR 69 (Wilcox J), Gaunt v Hille (2008) 75 IPR 33, and Greenwood J’s judgment in AV Jennings Ltd v Bogdan (2009) 80 IPR 356.
Respectfully, on the facts in this case, I adopt the view expressed by Greenwood J in AV Jennings where, at [96], his Honour said that “... damages should be assessed on the footing that damages are, in this case, at large.” In that case, which is not completely dissimilar to the present one and also involved plans for a residential house, his Honour estimated damages on the basis that the contribution of the copyright in the plan at “about 10%.” The estimate of the cost of design and construction of the house in that case was said to be $118,912. The “margin” on that house was determined to be $41,019. On these figures, his Honour said that damages should be in the range of $2,972 and $4,101. On the facts and findings in that case, Greenwood J awarded damages of $3,536.
In Tolmark v Paul, Beaumont J awarded damages of 5% of a total building cost of $66,000, which resulted in an award of $3,300.[160]
[160] See Tolmark v Paul 46 IPR at [62] – [64]. This calculation by his Honour was on the basis of the “licence fee” approach to which I have referred.
In Deckers Outdoor Corporation v Farley (No 5), Tracey J said, at [79]:[161] “Even though the evidence may be deficient, the court is, nonetheless, obliged to do the best it can to make a just and fair assessment of the quantum of damages.” Respectfully, I adopt his Honour’s comments.[162]
[161] (2010) 262 ALR 53.
[162] Generally, see also T.H. Wells, “Monetary Remedies for Infringement of Copyright,” (1989) 12 Adelaide Law Review 164-200.
In my view, there was a clear breach of copyright by Urban Design in relation to the plans for the Solitaire house. I accept that the state of the evidence in relation to damages relied upon by the Applicant is poor; it is more by inference than by anything else. Indeed, it is difficult to see, and (as already stated) there is very little evidence of, any actual damage the Applicant has suffered.
However, ‘doing the best to make a just and fair assessment of the quantum of damages’, and having regard to (a) the limited – and sometimes somewhat conflicting - evidence in relation to the cost of construction of the Dunlop house, (b) the fact that none of the Respondents ever actually owned the Dunlop house, (c) the “exorbitant licence fee” proposed by Mr Pekic and Mr Turcin for the use of the Solitaire plans, (d) the somewhat speculative nature of the “profit” on the sale of the Dunlop house (taken notably from comments – as opposed to documentary evidence of any kind - from Mr Turcin in cross-examination, and likewise from Mr Martins’ cross-examination), (e) the fact that there is no evidence of any continuing or repetition of any infringement[163] – indeed, I accept without hesitation Ms Olsson’s submission that this was a “one-off event” – and, (e) the cases to which I have referred, in my view an appropriate award of damages is $10,000, which represents 25% of the asserted profit on the building of the Dunlop house.
Do the facts and findings in relation to breach of copyright warrant the award of flagrancy damages pursuant to s.115(4) of the Copyright Act 1968?
[163] I infer also that it is highly unlikely that there will be any further infringing conduct by the First Respondent.
Section 115(4) provides:
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.
There is significant authority in relation to the application of this section and the considerations relevant to an award of exemplary damages. The following cases are but a sample: Raben Footwear v Polygram Records Inc,[164] Woolworths Ltd v Olson,[165] Norm Engineering v Digga Australia,[166] Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in Liq),[167] Luxottica Retail Australia Pty Ltd v Grant,[168] Rutter v Brookland Valley Estate Pty Ltd,[169] and Deckers Outdoor Corporation Inc v Farley.[170]
[164] (1997) 75 FCR 88 (Burchett, Tamberlin & Lehane JJ).
[165] (2004) 184 FLR 121 (Einstein J).
[166] (2007) 162 FCR 1 (Greenwood J).
[167] (2007) 71 IPR 437 (Black CJ, Jacobson & Rares JJ).
[168] (2009) 81 IPR 26 (White J).
[169] (2009) 81 IPR 549 (Buchanan J).
[170] (2010) 262 ALR 53 (Tracey J).
Accepting the evidence before the Court and the findings I have made, especially in relation to Mr Farrelly’s conduct on behalf of the First Respondent, in my view, some award of damages under s.115(4) is appropriate. In the light of the authorities to which I have referred,[171] and in the circumstances of this case, including the fact that (a) Urban Design is a very modest commercial enterprise, (b) there has been no profiteering by either the First or Second Respondents, and (c) there has not been, and is unlikely to be, any future infringement, an award of $2500.00 should be made in favour of the Applicant against the First Respondent by way of exemplary damages.
[171] See also Burchett J’s counsel in New England Country Homes Pty Ltd v Moore (1998) 82 FCR 500, at pp.505-506 that a court should adopt a cautious approach to such damages. More recently, see Einstein J’s detailed summary of principles relevant to the Court’s exercise of power under s.115(4) in Woolworths v Olson 184 FLR at [343] – [344].
In making award of damages under s.115(4)(b)(iv), the Court is entitled to take into account “all other relevant matters.” In these proceedings, I am acutely conscious of the significant burden – financial and other – that the proceedings themselves will have already imposed on all parties.[172] In my view, in the overall circumstances of the case, this is a not insignificant consideration. Indeed, having regard to the number of Senior and other Counsel involved, the length of the trial, the all-embracing and far-reaching involvement of solicitors, and numerous interlocutory Court events, it might be inferred that the combined legal costs are likely to exceed the cost of construction of either or both of the houses in question. I recorded earlier in these reasons, at [55], that Mr Turcin said in evidence that “this house was ... to become the signature against my company name.” To state the obvious, “principles” or ‘signature houses’ are costly matters to protect.
Do the facts and findings in relation to breach of copyright give rise to a claim for contribution and indemnity by the First and Second Respondents against the Third Respondent? If so, what is the scope of such a claim?
[172] White J took a similar view in Luxottica Retail Australia Pty Ltd v Grant (2009) 81 IPR 26, especially at [43] & [50], where his Honour referred to the expenditure of considerable resources by the parties in prosecuting the case, but where, in his Honour’s view, the “procedures and costs appear to be out of proportion to the amount at stake.”
There were few, if any, submissions in relation to contribution or indemnity.[173] There were certainly no references to any cases on these subjects. In the light of such a jurisprudential vacuum, the following brief observations may be made.
[173] Briefly, Ms Olsson SC submitted that perhaps the “best conclusion” was that the Dunlop house was a “collaborative process” between Mr Farrelly and Mr Martins. See Transcript (18th August 2009) p.258. Cf. Mr Higgs’ SC submission that there was no evidence of any collaboration in relation to the design of the Dunlop house; each of them (Mr Farrelly and Mr Martins) say that it was the other person who was responsible for the design. Transcript (18th August 2009) p.269. Subject to other formal findings, I accept this submission.
To some degree, relevant to the consideration of this question is the operation of s.115(3) of the Copyright Act. That section provides:
Where, in an action for infringement of copyright, it is established that an infringement was committed but it is also established that, at the time of the infringement, the defendant was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of the copyright, the plaintiff is not entitled under this section to any damages against the defendant in respect of the infringement, but is entitled to an account of profits in respect of the infringement whether any other relief is granted under this section or not.
Relevant jurisprudence in relation to (a) s.115(3), and (b) more generally in relation to contribution/indemnity more generally (both at common law and in equity) would include the following representative cases: (a) Golden Editions Pty Ltd v Polygram Pty Ltd,[174] Louis Vuitton Malletier South Australia v Toea Pty Ltd;[175] (b) Albion Insurance Co Ltd v Government Insurance Office (NSW),[176] Burke v LFOT Pty Ltd,[177] and Friend v Brooker.[178]
[174] (1996) 34 IPR 84 (Burchett, Tamberlin & Kiefel JJ).
[175] (2007) 70 IPR 307 (Dowsett J).
[176] (1969) 121 CLR 342.
[177] (2002) 209 CLR 282.
[178] (2009) 255 ALR 601.
On the facts, as I have found and determined them, there was no “common purpose” or “common action” as between Mr Farrelly (on behalf of Urban Design) on the one hand, and Mr Martins (on behalf of A & A Martins) on the other hand, in relation to the use of the Solitaire plans and or the construction of the Dunlop house.[179] On this factual basis, and in the light of the authorities to which I have referred in the previous paragraph, I can find no basis upon which the claim for contribution or indemnity can succeed.
[179] See the discussion of Dowsett J in Louis Vuitton Malletier South Australia v Toea Pty Ltd (2007) 70 IPR at [148] – [163], and the cases there cited. See also the High Court’s blunt statement in Friend v Brooker (2009) 255 ALR 601 at [63] – [66] (French CJ, Gummow, Hayne & Bell JJ), and at [92] (Heydon J agreeing) in relation to “common design” not being part of the law of Australia. The plurality judgment in Friend v Brooker, at [38] – [60] sets out the distinguishing features between equitable contribution and contribution sought at common law.
In my view, on the facts in this case, there can be no foundation for any claim by either the First and or Second Respondents against the Third Respondent either as a joint tortfeasor, or on any other ground for that matter, in relation to the breach of copyright perpetrated by the First Respondent.[180] Accordingly, the cross-claim of the First and Second Respondents against the Third Respondent must be dismissed.
[180] See also the discussion by the High Court in relation to joint tortfeasors in Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 514 at pp.580-81 (Brennan CJ, Dawson & Toohey JJ) and p.600 (Gummow J: Gaudron J concurring), cited by Dowsett J in Louis Vuitton at 70 IPR [156] – [158].
In my view, the defence provided by s.115(3) has been made out. As the terms of the section make clear, and using those terms, ‘... at the time of the infringement, on the facts which I have accepted, the Third Respondent, in my view, was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of the copyright.’ As the joint judgment of Burchett and Tamberlin JJ in Golden Editions Pty Ltd v Polygram (at p.86) stated plainly: “... in general the question is not whether the defendant knew the identity of the owner of the copyright, but whether the defendant has established a lack of awareness, and of reasonable grounds for suspecting, that the relevant act was an infringement of the copyright which was infringed, in whomsoever that copyright might be vested.”
In the light of the findings I have made, and in particular my acceptance of Mr Martins’ evidence and the rejection of Mr Farrelly’s evidence, in my view, the defence under s.115(3) has been made out.
In my view, the Applicant is not entitled under this section to any damages against the Third Respondent in respect of the infringement.
Mr Lunney SC also submitted, in my view correctly, that there was no evidence before the Court that the Third Respondent ever owned the land on which the Dunlop house was constructed. It was originally owned by Primavera, and later by Mr Martins. In such circumstances, I do not see any legal basis upon which any claim for an account of profits could be pursued against the Third Respondent. Also, as previously indicated, having regard to how, and over the long period of time, the proceedings were conducted by the Applicant, there was more than ample opportunity to adduce any relevant evidence against the Third Respondent in relation to any claim for an account of profits. The Applicant has been long-represented by experienced solicitors; the conduct of the proceedings always reposed in their hands. The application to seek leave to allow the Applicant to adduce further evidence in relation to an account of profits against the Third Respondent should not be granted.
Conclusion
All parties have endured a long trial and doubtless have incurred very significant costs as a result of the protracted proceedings. As already indicated, in my view, in accordance with authority,[181] those costs and the other burdens have been part of my consideration of an appropriate award of damages, which flow from my determination that the First Respondent had infringed the Applicant’s copyright in the plans of the Solitaire house.
[181] In particular, the decision of the Supreme Court of New South Wales in Luxottica Retail Australia Pty Ltd v Grant (2009) 81 IPR 26.
Finally, as requested by all parties at the close of submissions, I will make no orders in relation to costs at this stage. The parties are to provide written submissions in relation to costs within 28 days of the date of this judgment.
I certify that the preceding three hundred and thirty-four (334) paragraphs are a true copy of the reasons for judgment of Neville FM
Associate: D-R Gale
Date: 23 March 2010
Index to Appendices
Appendix A
- Photograph: the “Solitaire House”
- Photograph: the “Dunlop House”
Appendix B: Solitaire House Plans
- Ground Floor Plan
- Upper Floor Plan
- Back and front elevation
- Right and left elevation
Appendix C: Dunlop House - 2003
- Siteplan: 30th June 2003
- Floorplan: 30th June 2003
- Elevations & Section Plan: 30th June 2003
Appendix D: Dunlop House - 2005
- Concept Plans (floor plan) - 12th January 2005
- Concept Plans (floor plan & facade) - 12th January 2005
- Site plan:10th January 2005, approval granted 11th January 2005,
- Floor plan:10th January 2005
- Elevations & Section Plans (South, East, North and West elevations):10th January 2005
- Site plan:19th January 2005, approval granted 19th January 2005.
- Lower Floor Plan:19th January 2005
- Upper Floor Plan:10th January 2005 [sic]
- Elevations (South, West and North elevations): 19th January 2005
- Elevations & Sections (East elevation and Section A A): 19th January 2005
- Upper Floor Plan: approved 5th April 2005
- Lower Floor Plan: approved 5th April 2005
- Elevations (South, West and North elevations): approved 5th April 2005.
- Elevations & Sections (East elevation and section AA): Approved 5th April 2005
Appendix A
The “Solitaire House”
The “Dunlop House”
Appendix B
Appendix C
Appendix D
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