Claimant Awarded Damages for Copyright Infringement

OUTCOME: Allowed

FEDERAL COURT OF AUSTRALIA

[COMPANY] v [COMPANY] (No 6) [2010] FCA 694 Citation: [COMPANY] v [COMPANY] (No 6) [2010] FCA 694

Parties: [COMPANY] [COMPANY], [NAME], [COMPANY] and [NAME], [COMPANY] v [COMPANY], [NAME] [COMPANY], [NAME], [COMPANY] and [COMPANY] number(s): NSD 680 of 2008

Judges: [NAME] J

Date of judgment: 2 July 2010

Catchwords: [NAME] for damages – Calculation of damages using method of "lost profits" – Inclusion in assessment of damages of sales lost by [NAME] on other products whose [NAME] had not been infringed – Claimable head of damage so long as sufficient causation and foreseeability – Insufficient evidence to calculate damages

Legislation: [NAME] Act 1968 (Cth) ss 36, 37, 115, 119 [NAME] (Digital Agenda) Act 2000 (Cth) Sch 1 [39] Federal Court of Australia Act 1976 (Cth) s 51A Federal Court Rules O35 r 1; O 35A r 3; O 38 r 1

Cases cited: [COMPANY] v [COMPANY] ([NAME]) [COMPANY] (2007) 157 FCR 564 cited [COMPANY] [COMPANY] v [NAME] (1990) 26 FCR 53 cited [COMPANY] v [COMPANY] (1996) 61 FCR 479 cited [NAME] [COMPANY] v [NAME] (1989)23 FCR 38 cited Hall v Busst (1960) 104 CLR 206 cited [NAME] (1991) 172 CLR 84 cited [COMPANY] v [COMPANY] (No 3) [2009] FCA 308 cited [COMPANY] v [COMPANY] (No 4) [2009] FCA 461 cited [COMPANY] v [COMPANY] (No 5) [2009] FCA 859 cited [COMPANY] v [COMPANY] (No 2) (2008) 79 IPR 81 cited [NAME] v [NAME] & [COMPANY] [1926] 2 KB 238 applied [COMPANY] v [NAME] [2006] FCA 94 cited [COMPANY] v [COMPANY] (1999) 85 FCR 436 cited [COMPANY] v [COMPANY] (2003) 77 ALJR 768 cited [COMPANY] v [COMPANY] (No 3) (2007) 158 FCR 444 cited [NAME] v [NAME] [COMPANY] [1992] 1 VR 596 cited

Date of hearing: 15-16 June 2010

Date of last submissions: 16 June 2010

Place: Sydney

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 47

Counsel for the First Applicant: [redacted]

Solicitor for the First Applicant: [redacted]

Counsel for the Third Respondent: [redacted]

Solicitor for the Third Respondent: [redacted]

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION NSD 680 of 2008

BETWEEN: [APPELLANT] [COMPANY]

First Applicant

[COMPANY] Applicant

[COMPANY] Applicant

AND: [COMPANY]

First [COMPANY] Respondent

[NAME] Respondent

[COMPANY] Respondent

[COMPANY] Respondent

JUDGE: [NAME] J

DATE OF ORDER: 2 JULY 2010

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. The parties bring in short minutes of order reflecting the reasons for judgment within 14 days.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION NSD 680 of 2008

BETWEEN: [APPELLANT] [COMPANY]

First Applicant

[COMPANY] Applicant

[COMPANY] Applicant

AND: [COMPANY]

First [COMPANY] Respondent

[NAME] Respondent

[COMPANY] Respondent

[COMPANY] Respondent

JUDGE: [NAME] J

DATE: 2 JULY 2010

PLACE: SYDNEY

REASONS FOR JUDGMENT

I - Introduction 1 The first applicant, [APPELLANT] ("[NAME]"), is part of a group of companies which licences, sells and distributes DVDs and CDs and which has been doing so since 1999. On 14 May 2008 [NAME] commenced an urgent proceeding in this Court seeking to restrain the first respondent, [RESPONDENT] ("[NAME]"), from distributing or selling a range of children's DVDs on the basis that [NAME] had the exclusive licence to distribute those DVDs in Australia. On the same day [NAME] granted an ex parte injunction having that effect. That injunction has remained in place since that time. On 30 May 2008 Branson J granted [NAME] leave to join the third respondent, Mr [RESPONDENT], to the proceeding. Mr [RESPONDENT] is the sole director and secretary of [NAME]. As the proceeding was ultimately formulated [NAME]'s allegations were: (a) that it held an exclusive licence from the owner of the [NAME] in the DVDs to distribute them in Australia; (b) [NAME] had infringed the [NAME] by selling 27,840 of the DVDs to a well-known German grocer, [NAME]; and (c) Mr [NAME] had authorised this conduct of [NAME]. Consequently, so it was said, both [NAME] and Mr [NAME] were liable to [NAME] as [NAME] for infringing that [NAME]. 2 Following procedural defaults on [NAME] and Mr [NAME] parts I made a self-executing order relating to discovery, non-compliance with which was to result in the striking out of their respective defences and the entry of judgment against both of them: [COMPANY] v [COMPANY] (No 3) [2009] FCA 308. That order was not complied with: [COMPANY] v [COMPANY] (No 4) [2009] FCA 461. Consequently I directed the Registrar to draw up a minute recording that their defences had been struck out and judgment entered against them. The question of damages or an account of profits remained to be determined. 3 A subsequent application to revoke the original self-executing order was refused: [COMPANY] v [COMPANY] (No 5) [2009] FCA 859. The question which now falls for determination is the assessment of [NAME]'s damages. Further, at the commencement of the present hearing it indicated that it would not be seeking an account of profits. The issue which arises is, therefore, the extent of Mr [NAME] liability in damages to [NAME]. As events transpired, it did not seek damages from [NAME].

II - The Nature of the Earlier Judgments 4 The hearings in [NAME] (No 4) [2009] FCA 461 and (No 5) [2009] FCA 859, which concerned the operation and the effect of the self-executing order, were substantial. No issue was raised then (or now) as to the power of the Court to enter such a judgment. However, during the course of the present hearing, Mr [APPELLANT], who appeared for [NAME], submitted that the nature of the order made was such that Mr [NAME] was no longer entitled to be heard and that the inquiry which now remained was one in which the Court only needed to be satisfied that there was evidence making good the damages claimed. 5 Properly to deal with that submission requires a consideration of the nature of the original order. It was in these terms: That in the event of a default [of the discovery order by either the first or third respondent] and without any further order, the [NAME]' defences be struck out and judgment be entered for the applicant against the [NAME]. 6 Subsequently, following the determination in [NAME] (No 4) [2009] FCA 461 that that order had been activated I made the following direction: [ADDRESS] directs the Registrar to record upon the Court file that the [NAME]' defences were struck out on 18 March 2009 and that judgment was entered against each of them in favour of the first applicant. 7 In the accompanying reasons I said (at [19]): That leaves the question of the assessment of damages or account of profits still at large, together with the question of costs, both of the argument which has resulted in these reasons and, more generally, of the proceedings. I will list the matter for directions with a view to charting its procedural future on Tuesday 19 May 2009. In the meantime I vacate the trial. Any applications which are to be made should be served well in advance of that date. 8 I would construe this as a judgment for the applicant, damages to be assessed. It is true that the judgment is only expressed to be a judgment and not a judgment damages to be assessed, but I do not think that that difference matters. The question of whether a judgment is a judgment damages to be assessed has usually been approached as a matter of substance rather than form. Thus, in Hall v Busst (1960) 104 CLR 206 Dixon CJ noted (at 214) that the trial judge had answered various questions and then ordered that the action proceed to trial on the issue of damages. Despite not being expressed to be a judgment the Court nevertheless treated it as such. The critical question was whether the "judgment" was final. Dixon CJ said (at 218): I think that the order was intended as a judgment for the plaintiff for damages to be assessed and therefore that it is final in the sense that word bears in s 35(1)(a)(2) of the Judiciary Act 1903-1955 (Cth). 9 And indeed the debate about judgments of this kind has not so much centred on the power of the Court to make them but rather on whether they be interlocutory or final. To that question the answer has generally been given that they are both, that is, final as to the issue of liability, interlocutory as to the question of damages: [NAME] v [NAME] & [COMPANY] [1926] 2 KB 238 at 241-242 per Lord Hanworth MR; [NAME] v [NAME] [COMPANY] [1992] 1 VR 596 at 598 per Tadgell J. 10 Specific provision is made in the rules of some courts for the calculation of damages by a registrar or master. Indeed in [NAME] v [NAME] & [COMPANY] [1926] 2 KB 238 just such a rule – O XXXVI r 57 – was under consideration. There is no necessity, however, for a judgment damages to be assessed to be consigned to such a ministerial officer. As the reasoning in Hall v Busst 104 CLR 206 shows the damages component may simply be left to trial, if necessary, by a judge. [ADDRESS] has the power to assign the calculation of damages to a registrar in certain circumstances. Order 38 r 1 provides: Ascertainment of damages where a matter of calculation (1) Where: (a) a respondent admits liability on an applicant's claim, but denies liability to the extent of the damages claimed; or (b) the Court finds that a party is liable to pay damages; the Court, if it considers that the amount of damages to be recovered is substantially a matter of calculation, may direct that the amount which the party liable shall be ordered to pay be ascertained by the Registrar at the proper place. (2) The attendance of witnesses and the production of documents before the Registrar may be compelled by subpoena. (3) The Registrar may adjourn the inquiry from time to time. [ADDRESS] of this Court in [NAME] [COMPANY] v [NAME] (1989)23 FCR 38 at 50-51 per Sheppard, Beaumont and Hill JJ held that the words "substantially a matter of calculation" constrained significantly what could be referred to a registrar and in particular limited it to methods of mathematical calculation not calling for the exercise of judgment. [ADDRESS] thought that the rule had been drafted "having in mind the requirement that judicial power be exercised by judges appointed under Chapter III of the Constitution" (at 50). This may reflect an understanding of the powers of registrars which may well have been superseded by the High Court's decision in [NAME] (1991) 172 CLR 84 although no present occasion arises to consider that. 13 The point to be made is that the power to give judgment damages to be assessed is not limited by the terms of O 38 r 1 which, in truth, deal only with the situation where the assessment is to be carried out by a registrar. In other cases, the power in O 35 r 1 to give "such judgment … as the nature of the case requires" will be sufficiently ample to permit such a judgment. The decision of Drummond J in [NAME] v [COMPANY] [1996] FCA 1217 at [34]-[35] proceeds on the basis that the power was (then) to be located both in O 35 r 1 and O 38 r 1 which, with respect, is correct. 14 However, the judgment in this case was not given under either of those provisions. Instead, it was granted pursuant to O 35A r 3(2)(c), (d) and (e) which provide relevantly: (2) If a respondent is in default, the Court may: … (c) if the proceeding was commenced by an application supported by a statement or claim or the Court has ordered that the proceeding continue on pleadings – give judgment against the respondent for the relief that: (i) the applicant appears entitled to on the statement of claim; and (ii) the Court is satisfied it has power to grant; or (d) give judgment or make any other order against the respondent; or (e) make an order specified in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the Court in the proceeding in the time limited in the order. 15 For the reasons I have given this Court has the power to give a judgment for damages to be assessed and hence a power to do so under these Rules. No issue was raised before me about this but it is to be noted that under O 35A – unlike O 35 itself – it is only necessary that the applicant appear entitled to the relief claimed in the pleading. That difference has led to the view that proof of the claim by an applicant is not necessary under the rule: [COMPANY] v [NAME] [2006] FCA 94 at [20] per Jacobson J. 16 In those circumstances, the nature of the present hearing becomes clear. It is a trial of the damages issue. The judgment which has been entered concludes all liability issues against Mr [NAME] but leaves him free to conduct defences which go to the issue of quantum. I reject, therefore, [NAME]'s argument that Mr [NAME] is shut out of the hearing altogether.

III – Procedural Consequences 17 During the hearing Mr [NAME] sought to put in issue, both by means of evidence and through argument, two propositions. These were that: (a) [NAME] did not, in truth, hold an exclusive licence; and (b) Mr [NAME] was entitled to rely upon the defence conferred by s 115(3) of the [NAME] Act 1968 (Cth). 18 I do not doubt that Mr [NAME] could have contended, prior to entry of judgment against him, that [NAME]'s licence was not exclusive and that it could not, therefore, seek to rely upon the rights conferred upon an [NAME] by Part V Division III of the Act. However, the contention that [NAME] was not an [NAME] merged in the judgment and is no longer extant to be litigated. The controversy as to whether [NAME] was, or was not, such a licensee has now been resolved albeit through O 35A. No other position is consistent with the fact that damages are now to be assessed. 19 A similar conclusion obtains in the case of s 115(3). It provides: Where, in an action for infringement of [NAME], 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 [NAME], 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. 20 This provision confers a defence which goes to the respondent's liability for infringement: [COMPANY] v [COMPANY] (1996) 61 FCR 479 at 481-482 per [NAME] (with whom Burchett and Tamberlin JJ agreed); [COMPANY] v [COMPANY] (1999) 85 FCR 436 at 449 [52] per [NAME], [NAME] JJ; [COMPANY] v [COMPANY] (No 2) (2008) 79 IPR 81 at 85 [11] per Gordon J. As such, it too has ceased to be an issue by reason of the judgment. 21 Mr [NAME] sought to rely upon two affidavits going to these issues – his affidavit of 2 November 2009 and paragraphs 1-25 (paragraph 26 was not contested and was admitted) of his affidavit of 16 May 2008. At the hearing I rejected all of that evidence and indicated that I would provide my reasons for doing so at the time of delivery of judgment. My reasons for doing so are because they do not relate to a fact in issue.

IV - Relevant Principles 22 Although it is no longer in dispute because of the judgment which has been entered it is useful to recall the basis of Mr [NAME] liability. Section 119 of the Act confers upon an [NAME] the same rights it would have if the licensee had taken an assignment of the [NAME] from the [NAME]. One of those rights is the right conferred by s 115(2) to damages for infringement of [NAME]. Section 37(1) extends the concept of infringement to include, inter alia, the sale of an artistic work without the licence of the [NAME]. [NAME], by selling the 27,840 copies of the children's DVDs to [NAME], infringed the [NAME] as a result of which [NAME] had a right to sue for damages for that infringement. Section 36(1), however, also extends the concept of infringement to include a person who authorises any act comprised in the [NAME]. Section 36(1A) elaborates on the concept of authorisation: In determining, for the purposes of subsection (1), whether or not a person has authorised the doing in Australia of any act comprised in the [NAME] in a work, without the licence of the owner of the [NAME], the matters that must be taken into account include the following: (a) the extent (if any) of the person's power to prevent the doing of the act concerned; (b) the nature of any relationship existing between the person and the person who did the act concerned; (c) whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice. 23 The concept of authorisation has been the subject of frequent judicial interpretation. However, much of that dialogue predates the insertion of s 36(1A) by the [NAME] (Digital Agenda) Act 2000 (Cth) Schedule 1 [39]. In [COMPANY] [COMPANY] v [NAME] (1990) 26 FCR 53 at 61 Sheppard, [NAME] JJ thought that the concept of authorisation came close to "countenance". However, that approach may not be compatible with the injunction in s 36(1A) that the three matters set out in subsections (a)-(c) must be taken into account. Quite apart from the judgment – which, of course, resolves this issue – there could be little doubt that Mr [NAME], as the sole director and secretary of [NAME], satisfied these requirements. Unlike more complex corporate veil situations Mr [NAME] and [NAME] were, in essence, alter egos. 24 It is then useful to say something of the principles governing the assessment of damages for infringement of [NAME]. Of course, [NAME] was bound to elect between pursuing damages and an account of profits – s 115(2). At the outset of the damages trial its counsel did so and elected to pursue damages. I take as a useful summary of the relevant principles for an assessment of damages under s 115(2) the reasons of [NAME] J in [COMPANY] v [COMPANY] (No 3) (2007) 158 FCR 444 at 495-496 [203]-[208]. For present purposes his Honour's analysis contains seven points of relevance.

1. One way of describing the measure of damages for [NAME] infringement is as the depreciation caused by the infringement to the value of the [NAME] as a chose in action. But this is not to be thought an exclusive measure.

2. Another, perhaps preferable way, is to assess the position a plaintiff would have been in if there had been no infringement.

3. Damage is not the gist of the action so that a plaintiff is entitled, at least, to nominal damages on proof of infringement.

4. Compensation is not limited to pecuniary loss and may extend to matters such as goodwill.

5. The two usual, but not invariable, ways of assessing damages are the licence fee method and the lost profits method. The licence fee method will be appropriate where the plaintiff in all likelihood would have granted a licence to the infringing party, and, in that case, the measure of damages is the royalties foregone under that notional licence. Under the lost profits approach, which would ordinarily be appropriate where the plaintiff and the defendant are in competition with each other, the plaintiff seeks to prove the extent of its lost sales with a view to recovering its lost profits.

6. The assessment of lost profits requires, or may require, a degree of speculation and, at times, the calculations involved may be rough and ready.

7. Other lost profits, not directly arising from lost sales, may also be recoverable so long as they are causally connected to the infringement and not too remote. One common example given is that of the loss of profits arising from foregone sales of chattels (such as CD containers) in which the [NAME] article would have been sold. 25 To these seven I would add an eighth:

8. There is a difference between cases where a plaintiff cannot adduce precise evidence of what has been lost and cases where a plaintiff, although able to do so, has not done so: [COMPANY] v [COMPANY] (2003) 77 ALJR 768 at 774 [37]-[38] per [NAME] (with whom Gleeson CJ, [NAME] and [NAME] agreed); applied to s 115(2) by the [ADDRESS] in [COMPANY] v [COMPANY] ([COMPANY] (2007) 157 FCR 564 at 569-570 [35]-[39] per [NAME] and [NAME] J, 581-582 [101]-[103] per [NAME].

V – Evidence of Lost Sales 26 [NAME]'s claims for damages fell into two categories:

1. Lost profits arising from the sale by [NAME] to [NAME] of 27,840 copies of the children's DVDs on 28 February 2008. The argument, in short, was that if [NAME] had not sold the DVDs to [NAME], [NAME] would have done so. The foregone profit was said to be $1.68 per DVD on a sale price of $3 which amounted to $46,771.20.

2. Lost future sales of the children's DVDs sold to [NAME] in the period between December 2008 and May 2010 in the order of 90,000 discs. Here the argument was that [NAME] had ceased to do business with [NAME] after the dispute between [NAME] and [NAME] became known to it. Again, a rate of profit of $1.68 was claimed for a total of $151,200. 27 I accept the claim in (1) but I reject the claim in (2). My reasons for this are as follows. 28 Mr [NAME], one of [NAME]'s directors, gave evidence on its behalf and was cross-examined. In his affidavit he deposed to an estimate on his part of 30,000 DVDs at a profit margin of $1.68. The pleaded case was that [NAME] had sold 27,840 copies of the DVDs to [NAME]. There was a separate pleaded case relating to the sale of another 30,000 DVDs to a different entity but that case was not pursued at the damages hearing. The entered judgment stands for the proposition that Mr [NAME] authorised the sale by [NAME] of 27,840 DVDs to [NAME] and is therefore liable to [NAME] in damages. I proceed on the basis of 27,840 DVDs. 29 The unexpressed premise in [NAME]'s argument is that [NAME] would have purchased the DVDs from [NAME] if it had not purchased them from [NAME]. In favour of concluding that that premise is sound is the fact that [NAME] is the [NAME] so that, in the ordinary course of events, [NAME] would not have been able to purchase them elsewhere. Against it, however, is the absence of any evidence to indicate that [NAME] would have agreed to pay [NAME]'s asking price of $3 per DVD. There is no ready way to resolve that debate save by observing that the facts at least bespeak a desire on [NAME]'s part to purchase the DVDs. In the circumstances I propose to proceed on the basis of a finding that a sale of 27,840 DVDs by [NAME] to [NAME] would have occurred. 30 Mr [NAME] gave evidence that the profit margin was $1.68 on a sale price of $3. He provided no supporting documentation for that figure but under cross-examination he explained the basis upon which it was calculated and indicated that the primary documentation was available if the cross-examiner wished to have access to it. The hearing extended over two days and that answer was given on the first day. No attempt was made on Mr [NAME] behalf to call for the documents referred to by Mr [NAME]. In the circumstances I accept the validity of his calculation of $1.68 as the relevant profit margin. 31 The application of that figure to 27,840 DVDs results in a damages sum of $46,771.20. I propose to reduce this to $40,000 to reflect the possibility that [NAME] may well have sought a lower price than $3 per DVD. 32 I turn then to the second claim. Mr [NAME] sought a sum based on sales of 90,000 of the children's DVDs for the 17month period from December 2008 to May 2010. The steps in this argument were: (a) after [NAME] became aware of the situation between [NAME] and [NAME] it ceased to do business with [NAME]; and (b) but for that occurrence [NAME] would have sold a further 90,000 of the children's DVDs to [NAME]. 33 The figure 90,000 was said to be derived from assessing [NAME]'s past sales to [NAME] in the years following 2004. 34 I would accept the first step (a) which, in substance, requires an assessment of the motives of [NAME]. Mr [NAME] objected that the evidence showed that [NAME] was still dealing with [NAME] and that the alleged cessation of trading had not, in fact, occurred. Reliance was placed on a facsimile sent by [NAME] to [NAME] dated 16 January 2009 which called for tenders from interested suppliers. Mr [NAME] gave evidence, from which he was not shaken, that this facsimile was a standard pro-forma tender request which [NAME], along with others, received. The difficulty was, so he said, that none of [NAME]'s tenders were accepted. I accept this evidence not only because Mr [NAME] was not moved from it but because the facsimile in question is addressed to "[NAME]" which has the appearance of being a computer generated correspondence. 35 Accepting then that [NAME] has, in fact, ceased dealing with [NAME] the question then arises, why? 36 During the hearing three theories contended for the field: (a) [NAME] had chosen not to deal with [NAME] out of a concern not to become embroiled in a dispute about [NAME] ownership and was avoiding dealing either with [NAME] or [NAME]; (b) [NAME] had decided to move out of the product range being offered by [NAME] and the cessation of dealing was, therefore, unconnected to anything done by [NAME]; (c) [NAME] had continued to be willing to accept tenders from [NAME] but the quality of [NAME]'s tenders were so poor or uncompetitive that none of them had been successful. 37 Both Mr [NAME] and Mr [NAME] gave evidence about the intentions of [NAME]. Most of Mr [NAME] evidence on this score was excluded by reason of objections which were raised but many of Mr [NAME] statements about this topic were received into evidence when no objection was taken. Despite that, I propose to treat all such evidence as having no weight. Ascertainment of the motives of [NAME] is to proceed by reference to inferences drawn from objectively available facts, not the subjective opinions of the protagonists. For completeness, no party sought to adduce evidence from [NAME] but neither was under any obligation so to do. 38 I reject the proposition that [NAME] had decided to move out of the relevant product range. The evidence for this proposition was said to consist, I think, of [NAME] and [NAME] catalogues. However, none of them was tendered in evidence and I remain ignorant of their contents. Mr [NAME] was asked some questions about them – indeed he produced some of them from his briefcase during his cross-examination – but none of his answers advanced the proposition now under consideration. A later attempt on Mr [NAME] behalf to prove something about an [NAME] advertisement extracted from the internet petered out before any document was tendered. In the circumstances, there is simply not a sufficient basis in the evidence to embrace this view. It was also put that [NAME]'s sales to [NAME] could be seen as declining. However, whilst, the evidence suggested that in one year the sales were lower than in the previous year this is simply not a sufficient basis to conclude the existence of a trend. Still less could it provide a basis for deducing that the decline was caused by any particular set of circumstances. 39 I also reject the argument that [NAME]'s tenders were of insufficient quality. There were, I think, two aspects to this point. First, there was an undated product submission form with the list of children's DVDs attached to it and handwritten words "DVD Children" on the front. I do not accept that this is an example of [NAME]'s tender documentation. A number of such tenders were in evidence and they were detailed including, as might be expected, prices, quantities, samples and so on. I can fathom no reason why [NAME]'s tenders might generally be of acceptable quality but be of substandard quality in the case of [NAME]. 40 The second point was allied to the first. None of the tenders provided by Mr [NAME] were tenders to [NAME]. The point being made was that there had been no such tenders by [NAME] and this is why no orders were being received from [NAME]. Mr [NAME] agreed that he had not been able to locate any such tenders within [NAME]'s records and that they must have gone missing. Unlike tax invoices, however, I can see no pressing reason why such documents would necessarily need to be kept. I accept the anomaly of some, but not all, of [NAME]'s tender documents being available but I do not feel that I can conclude from that that I should reject Mr [NAME] evidence that tenders to [NAME] had been done. I am fortified in that conclusion by the absence of any compelling reason why [NAME] would stop tendering to a large client like [NAME]. 41 That leaves only the fact that [NAME] ceased using [NAME] after the dispute became known to [NAME]. I can well understand why its attitude may well have been to cease to deal with either [NAME] or [NAME] so as not to involve itself needlessly in a potentially dyspeptic dispute about an inexpensive range of children's DVDs. I note, for completeness, that Mr [NAME] gave evidence that [NAME] had not used the services of [NAME] since the events in question. In those circumstances, I conclude that [NAME] ceased to deal with [NAME] because it did not wish to be involved with disputing parties with questionable title to the product they were tendering to sell. 42 Mr [NAME] estimated that there would have been a further 90,000 of the children's DVDs sold to [NAME]. The evidence relied upon Mr [NAME] to make good that proposition was the invoices for all sales made by [NAME] to [NAME] in the years 2004-2008. 43 Those invoices do not bear out Mr [NAME] arithmetic. They reveal the following volumes of sales for each years 2004-2007: 2004 14,140

2005 4,752

2006 11,750

2007 14,750

Total 45,392

44 Taking an annual average this amounts to 11,348 sales per annum whereas Mr [NAME] evidence proceeds on the basis of sale of 90,000 over 17 months. More significantly, the invoices show that the items sold were not the children's DVDs but, perhaps unsurprisingly, a miscellany of titles including CDs and DVDs and ranging from karaoke to romantic comedy. In that circumstance, I cannot conclude that [NAME] lost sales of 90,000 of the children's DVDs in the periods between December 2008 and May 2010. 45 However, as I have previously indicated, loss may be recovered even in respect of items which are not the [NAME] works themselves. In this case, it is a reasonable inference that [NAME]'s decision not to treat with [NAME] has cost it profits not only on the children's DVDs but on all of its other product lines too. The invoices in evidence suggest total sales of 45,392 DVDs and CDs at a total cost (excluding GST) of $180,534.52. Adjusted for the 17 month window between December 2008 and May 2010 this would suggest sales in the vicinity of $63,939.31. However, whilst Mr [NAME] gave evidence about the profit margin on the children's DVDs he did not give evidence on the margin on other products. In those circumstances, it has not proved this element of its loss. To be plain, the reason for this is because: (a) I am affirmatively satisfied that [NAME] would not have sold 90,000 of the children's DVDs to [NAME] in the period December 2008 to May 2010; and (b) whilst I am satisfied that revenue of $63,939.31 on a range of titles has probably been foregone I cannot perceive the profit margin and, therefore, cannot calculate the profits which have been lost. 46 Put another way, this is a case not of difficulty of calculation but of failure to prove loss.

VI - Relief 47 In the circumstances it is appropriate to give judgment in favour of [NAME] against Mr [NAME] in the sum of $40,000 together with interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth). Given the circumstances of the litigation, it is appropriate to grant the injunctive relief sought. I see no utility, however, in granting any additional declaratory relief. I will hear further argument on the question of costs on a date to be arranged with my Associate. The parties are to bring in short minutes of order giving effect to these reasons within 14 days. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the [NAME] [NAME].

Associate: Dated: 2 July 2010