Background
8 The applicant commenced these proceedings by Application and Statement of Claim filed on 18 August 2005. As initially formulated, the applicant sought a declaration that the respondent had infringed either directly or indirectly the copyright subsisting in 19 identified drawings made by an employee of the applicant, an injunction restraining the respondent from infringing the applicant's copyright in the plans by making either a two or three‑dimensional reproduction of those plans and either damages or at the election of the applicant, an account of profits.
9 On 23 September 2005, the applicant made an ex parte application by Notice of Motion filed on 21 September 2005 supported by an affidavit of Robert James Robinson sworn 22 September 2005, an affidavit of Sam Orr sworn 23 September 2005 and an affidavit of Michael Wayne Gould filed 22 September 2005 for an order that two solicitors from the solicitors for the applicant, Messrs LeMass Solicitors, together with Mr Gould an expert of Quantec McWilliam, Consulting Engineers (together with one or more employees of Quantec McWilliam), enter upon premises occupied by the respondent for the purpose of ascertaining whether an example of the applicant's 4 in 1 bucket was present on the premises and to inspect and make observations as to whether the 4 in 1 bucket appeared to have been used as a template for either a two or three‑dimensional reproduction.
10 An important aspect of that application involved a question going to the character of the conduct of the respondent. The allegation made by the applicant was that not only had there been a direct and indirect infringement of the copyright in the way contended for in the Statement of Claim but that the infringement was undertaken by the respondent consciously and deliberately. Particular reliance was placed upon the affidavit of Mr Robinson sworn 22 September 2005. The circumstances influencing the exercise of the discretion arising out of the application are identified in Norm v Digga [2005] FCA 1378. A further aspect of that application involved an inference that by reason of the contended conscious and deliberate copying, the applicant would be at risk should the application have been made on notice. For the purposes of the interlocutory application, the Court was satisfied that a prima facie case of infringement had been established subject to the question of whether the conduct of the respondent might not constitute an infringement by reason of ss 74 to 77 of the Copyright Act 1968 (Cth). Although the Court was satisfied that an arguable question as to exculpation arose by reason of ss 74 to 77 of the Copyright Act 1968 (Cth), the material establishing the prima facie case gave rise to a proper foundation for the making of an order.
11 The costs of the application were reserved.
12 On 23 September 2005, the applicant filed a Notice of Motion returnable on 6 October 2005 seeking an interlocutory injunction until further or earlier order restraining the respondent from 'manufacturing or selling equipment known as the Digga 4 in 1 bucket'. On 5 October 2005 the applicant elected not to proceed with its application on 6 October 2005 but rather, on 6 October 2005, the applicant filed with leave an Amended Statement of Claim. By that amendment the applicant abandoned any contention of direct infringement by the respondent by reproduction of the applicant's two‑dimensional drawing (that is, plan to plan copying). The applicant continued to rely upon indirect infringement by the respondent by making a two‑dimensional drawing as the foundation for a three‑dimensional reproduction of the 19 plans in suit.
13 The respondent contends that the allegations of fact of plan to plan copying contained in the Statement of Claim filed on 18 August 2005 were not only not supportable but were never supportable. In any event, by 6 October 2005, the contention of direct infringement of the 19 plans in suit had been abandoned.
14 On 6 October 2005, a directions hearing occurred. On that date, the Court by consent dismissed the notice of motion for an interlocutory injunction and reserved the costs of that motion. The Court gave the applicant leave to file and serve an amended statement of claim by 4.00pm on 6 October 2005 and made a series of directions orders for the case management of the proceeding. The directions orders included orders that there be mutual inspection of discovered documents by 28 October 2005; the matter be listed for hearing on 6, 7,8 and 9 February 2006; the applicant file and serve the statements of all lay witnesses and any expert reports upon which it intended to rely at trial no later than four weeks after the completion of inspection and that the respondent file and serve statements of lay and expert witnesses no later than four weeks after the service of the applicant's statements.
15 These directions orders contemplated that the action would proceed in the manner framed by the amended statement of claim to be filed that day which relied upon indirect infringement of 19 identified drawings.
16 Inspection of documents was completed between the parties between 15 November and 25 November 2005.
17 On 22 December 2005, the trial dates of 6, 7, 8 and 9 February 2005 were vacated as it was clear that the remaining interlocutory steps could not be completed so as to safely enable the trial to commence on 6 February 2006. Dates of 20 March to 27 March 2006 were allocated. On 8 March 2006, those dates were also vacated as the report of the applicant's expert, Mr Michael Gould, which, in accordance with the time table, ought to have been filed and served upon the respondent by the end of the week immediately before Christmas was not filed and served until 27 February 2006. The respondent and its expert were not able to deal with and respond to the report of Mr Gould in sufficient time to enable the trial to commence on 20 March 2006.
18 On 6 March 2006, the applicant's solicitors gave notice to the respondent's solicitors of a proposed further amendment to the statement of claim. The Court made further orders on 8 March 2006 granting leave to the applicant to further amend the statement of claim; ordered the applicant to pay the respondent's costs of and occasioned by amendments made by leave to the amended statement of claim in the form of the Further Amended Statement of Claim; ordered the applicant to pay the costs of the directions hearing on 7 February 2006 and reserved the costs of and occasioned by vacating the commencement of the trial on 20 March 2006.
19 The report of Mr Gould filed and served on 27 February 2006 raised and addressed five additional drawings which gave rise to the foreshadowed amendment to the statement of claim. On 7 March 2006, the applicant formulated its Further Amended Statement of Claim which was the subject of leave granted on 8 March 2006. By that pleading, the applicant abandoned any reliance upon 17 of the 19 drawings previously pleaded; continued to rely upon two of the plans previously pleaded, namely, BC 41 A003 (an assembly drawing) and BC 41 D013 (a drawing for a 'side cutter bar'). Apart from preserving reliance upon those two drawings, the pleading of 7 March 2006 introduced five additional plans into the proceeding namely BC 41 A004 (a front assembly drawing); BC 41 D018 (an outside mounting bracket drawing); BC 41 D016 (an inside mounting bracket drawing); BC 41 D014F (a front side plate drawing); and BC 41 D015 (a drawing for a pivot mechanism).
20 Accordingly, the applicant re‑formulated the action to found the proceeding upon seven drawings described as plans 185A to 185G made up of two of the original 19 plans plus five new plans.
21 On 29 May 2006, the applicant filed its lay evidence in relation to ownership and provenance concerning the subsistence of copyright in the five additional drawings.
22 One aspect of the relief claimed by the applicant was a claim for damages or alternatively an account of profits. By letter dated 1 December 2005 from the respondent's solicitors to the applicant's solicitors, the respondent agitated for the applicant to make an election between damages or an account of profits. In that letter, the respondent urged upon the applicant that it must make its election at the 'earliest reasonable opportunity'; that the applicant had been provided with sufficient financial information to enable an election to be made; that delay in making the election influenced the preparation of reports from the respondent's expert and that a failure to make an election would delay preparation of the action for trial generally. These propositions were put in response, in part at least, to the applicant's contention that it could not make an election 'until disclosure is complete and [the applicant] has had the advantage of expert analysis and consideration of that material'. The applicant had contended on or about 1 December 2005 that it was under no obligation to make an election at that stage of the proceeding.
23 On 23 December 2005, the applicant's expert, Mr David Van Homrigh, a chartered accountant and partner of KPMG prepared a report ('DVH1' to Mr Van Homrigh's affidavit field 1 June 2006) which addressed two areas of enquiry. First, an analysis of a series of 'worksheets' forwarded by email to KPMG by the respondent dated 24 November 2005 (Annexure 'B' to Mr Van Homrigh's report, 'DVH1') setting out calculations of costs, profits and losses incurred by the respondent in the manufacture and sale of the respondents 4 in 1 buckets (a 1550MM flat floor bucket and a 1727MM flat floor bucket). Mr Van Homrigh undertook a review of the respondent's calculations, produced an amended calculation of profits derived by the respondent and compared those outcomes with the applicant's data on costs and profits. Secondly, Mr Van Homrigh sought to calculate the damage suffered by the applicant by reason of the infringement of copyright. Mr Van Homrigh identified a method for the calculation of the applicant's damages which is the subject of discussion in Norm v Digga [2007] FCA 761 at [272] - [290]. The report provides a critique of the alternative forms of relief.
24 On 2 May 2006, the respondent filed an affidavit sworn 2 May 2006 by Mr Warwick Alan Parker, a consulting chartered accountant. Mr Parker annexed an expert report to his affidavit ('WP‑1') which addresses comments arising out of his of Mr Van Homrigh's report. Mr Parker's report deals with the approach to the calculation of damages identified by Mr Van Homrigh and aspects of the proper approach to determining an account of profits derived by the applicant so as to properly illustrate the loss said to have been suffered by the applicant.
25 On 1 June 2006, Mr Van Homrigh prepared a further report ('DVH3' to Mr Van Homrigh's affidavit sworn 1 June 2006) which addresses comments in response to the report of Mr Parker.
26 It is clear from all this material that an extensive professional exchange occurred both in relation to the proper approach to the calculation of profits on the part of the respondent, the methodology for the calculation of damages on the part of the applicant.
27 On 16 June 2006, the applicant elected to claim damages rather than an account of profits.
28 On 19 June 2006, the trial of the action commenced.
29 The applicant made an election on 16 June 2006 informed by an examination of the respondent's worksheets and other discovery aided by the initial report of Mr Van Homrigh, the responsive report of Mr Parker and Mr Van Homrigh's supplementary report of 1 June 2006.
30 Plainly enough, there is no obligation on a party to exercise a remedial election until the applicant is in a position to make an informed and meaningful choice between the two alternative remedies. The election ought not to be unreasonably postponed. However, considerations that condition whether a party has acted reasonably in all the circumstances may vary widely (LED Builders Pty Ltd v Eagle Homes Pty Ltd (No. 3) (1996) 70 FCR 436 per Lindgren J; Dr Martens Australia Pty Ltd v Bata Shoe Co of Australia Pty Ltd (1997) 75 FCR 230 per Goldberg J). In this case, the applicant made an election on 16 June 2006 against the background of the expert reports. The conduct of the trial proceeded on the footing that cross‑examination of experts and other witnesses (in relation to this aspect of the case) was directed to the applicant's claim for damages where the issues of liability and damages were dealt with in one hearing. There may be cases where interlocutory processes of the Court reveal all there is to know to enable an applicant to reasonably reach a meaningful and informed election. Such a point is unlikely to be reached in the absence of the filing and serving of relevant statements and experts' reports. In other cases, it may be that an election cannot properly be made until an applicant has had the benefit of cross examining experts to determine the final state of the evidence on all aspects of the controversy including differences in an approach to the calculation of damages or the basis upon which an account of profits might be struck. Although a remedial election ought not to be postponed unreasonably or deferred in a way prejudicial to the respondent, the Court ought not to adopt an approach to the exercise of the election which is unnecessarily prescriptive.
31 The question to be determined is whether the applicant, having regard to the way in which the controversy is framed, the extent to which interlocutory processes have revealed information relevant to the exercise of the election and the extent to which evidence, particularly expert evidence addresses the merits or otherwise of one remedy as against another, has been put in a position where an informed decision, objectively viewed, might reasonably be made as to an election between a claim for damages on the one hand or an order for an account of the profits derived by the respondent by reason of the infringement, on the other.
32 In this case, the applicant acted reasonably in preserving the exercise of the election until the applicant and its advisers had the benefit of informed commentary upon the basis for calculating damages as compared with the considerations influencing the approach to the calculation of the profits derived by the respondent.