Case: New England Country Homes Pty Limited v Bradley Moore [1998] FCA 345
Outcome: cited
Bogdan says that if the respondents had agreed to pay a licence fee to Jennings of $20,000.00, it would follow that Jennings would have no claim for the construction profit as the respondents would not have engaged Jennings to do the work. Mrs Bogdan says that conversely, if an assumption is made that Jennings would have been engaged to construct the respondents' house, there would be no licence fee. More fundamentally, Mrs Bogdan says that Jennings has not suffered any loss of profit based on construction because "we weren't intending to hire A V Jennings to build our house". Mrs Bogdan said that she had obtained advice from lawyers who advised her that on the authority of New England Country Homes Pty Limited v Bradley Moore [1998] FCA 345 , per Burchett J, the appropriate fee for use of a project home drawing was found to be $750.00 and that the case is authority for the proposition that no claim for loss of profit can be sustained in the face of evidence that the infringing respondent would not have engaged the plaintiff to construct the home. Mrs Bogdan says: This is exactly the case here. There is no evidence or even suggestion that the respondents would have engaged Jennings to construct the house in question and indeed such a claim is not even alleged in the statement of claim. More generally, Mrs Bogdan in making the point that the respondents are not project home builders or in the business of building houses, said this: ... to close, we say that we're not business. We're not intending to make business out of our home. We built it for us. We're not builders. We've got an owner/builder permit to do our own home. Mrs Bogdan referred to the authority of New England Country Homes Pty Limited v Bradley Moore (supra) and observations made by Burchett J. In that case, Burchett J considered a claim for compensatory damages in circumstances where, like this case, the respondent "did not construct a house for sale, but as a home to live in" (p 7). His Honour at p 8 referred to a number of authorities that support the proposition that the Court may adopt as a measure of damages where it thinks the course appropriate, a fair fee for the use of the plan the subject of the infringement. Burchett J noted that the applicant sought an assessment of damages on the basis of the profit it would have earned by the sale of a kit for the construction of the respondents' house. However, the evidence demonstrated that the respondent would never have purchased a kit home from the applicant "under any circumstances" and thus the infringement did not cause the loss of profit on the sale of a kit home. The applicant sought an assessment of damages on the basis of a licence fee of $6,000.00 for the use of the kit home construction plans. His Honour referred to evidence that suggested a licence fee based on a fee paid to a draftsman of $535.00 was a more likely fair licence fee and thus awarded the applicant damages of $750.00, as mentioned in submissions by Mrs Bogdan. In this case, it is equally clear that had Jennings quoted to the respondents an amount of $198,550.00 (including GST) as the price for the construction of the Bogdan home including the variations to the plan the subject of the amount of $16,424.00 mentioned in the evidence of Mr Henesey-Smith, the Bogdans would not have accepted that quote. Jennings would not have undertaken the project and would not have derived the construction profit or any profit. Accordingly, in assessing the damages on that footing, I take into account these matters. In this case, the respondents, like the respondent in New England Country Homes , chose to devise a plan for and then construct a home to live in rather than a house for sale. In doing so, Mr Bogdan engaged in conduct of reproducing the appellant's plan in a material form. There is no suggestion that either respondent will engage in any further infringing conduct. Nor is there any evidence that Jennings has suffered a diminution in its revenue by reason of this transactional act of infringement. Moreover, the evidence demonstrates that Jennings would not have derived any profit from the project as the respondents would not have either paid a licence fee to or contracted with Jennings for the design and construction of their home. Nevertheless, the fact that the respondents would not have contracted with Jennings is not an answer to the Jennings' claim for damages suffered as a result of the infringement. It is necessary to formulate the damages referable to the act of infringement by attempting to disaggregate the bundle of services Jennings supplies to a client so as to isolate the best estimate of damages possible on the evidence available as a measure of the appellant's loss directly related to infringement. In undertaking that exercise, it is not appropriate to bring into account the cost of the additions to the Bogdan plan not reflected in the Cortona 290 . Jennings says that the direct cost of design and construction of a Cortona 290 in January 2004 was $118,912.00. A margin of 25% based on those foundation costs would amount to $29,728.00. Jennings, of course, says that its 25% margin is struck on the gross turnover value excluding GST which in respect of the Cortona 290 excluding the Bogdan additions seems to be $164,076.00 representing a margin of $41,019.00 on the preferred method adopted by Jennings. That method of calculating a margin on the turnover value excluding GST is a calculation of its design and construction profit. Damages ought not to be calculated on that footing. An examination of these approaches to the calculation of profit is simply an indication of the net loss Jennings might have derived had it undertaken the project (leaving aside the variations for this purpose). One way of forming a view of the contribution of the copyright in the plan to that profit is to appreciate the aggregation of services which give rise to the profit and to then disaggregate those services and apportion some part of the profit to the use of the plan as an analogue of loss suffered by Jennings by reason of the use by Mr Bogdan of the Jennings plan as joint author with Mr Florien Bogdan. The profit calculation is simply a base starting point. Doing the best I can on the available evidence which is very limited, I estimate the contribution of the copyright in the plan at about 10%. The vast majority of the profit is, no doubt, referable to the quantities of materials supplied and the construction, supervision and completion of the home itself. On that footing, the damages would range between $2,972.00 and $4,101.00. It seems to me that the appropriate amount is the average of the two namely, $3,536.00. There is no basis for an award of exemplary damages.