JUDGMENT No. 1.50.1. 24 CATCHWORDS COPYRIGHT - builders' plans - parties in competition in market for project houses - whether copyright subsisted in applicant's plans - whether respondents' plans infringed applicant's copyright - discussion of difficulties of deciding questions of subsistence and infringement of copyright in context of builders' or architects' plans - reference to significant authorities - whether applicant's claim barred by laches, acquiesence or delay - discussion of remedies of account of profits and damages. Copyright Act 1968, ss.14, 115, 134 LED BUILDERS PTY LIMITED v MASTERTON HOMES (NSW) PTY LIMITED No. NG 589 93 CORAM: SHEPPARD J PLACE: SYDNEY TE: 23 NOVEMBER 1994 RECEIVED 23 NOV 1994 FEDERAL COURT OF AUSTRALIA PRINCIPAL NEW SOUTH WALES DISTRICT REGISTRY ) No. NG589 of 1993 BETWEEN: LED BUILDERS PTY LIMITED (ACN 002 351 957) Applicant AND: Ww. TY MITED {ACN 002 283 963) First Respondent Ss MES _P' MITED (ACN 002 873 047) Second Respondent TERTO S_ (NSW Y LIMIT (ACN 002 283 963) First Cross-Claimant RTON_ HOM: IM (ACN 002 873 047) Second Cross-Claimant LED BUILDERS PTY LIMITED (ACN 002 351 957) Cross Respondent CORAM: SHEPPARD J PLACE: SYDNEY DATE: 23 NOVEMBER 1994 SON. SHEPPARD J: In question is a claim for infringement of copyright. The applicant alleges that the respondents - it is unnecessary to distinguish between them - copied its plans of -2- a project house and used the copy to design a project house which was in competition with the applicant's house. Both the applicant and the respondents ("Masterton") have carried on business for many years as builders of project homes. They carry on business by providing their customers with a service which involves the erection on customers' land of houses designed and built in accordance with one of a range of plans which are available for customers to consider. Sometimes customers order a house precisely in accordance with a particular design; on other occasions variations of that design are sought. From time to time there are exhibitions of houses designed and built by project builders. Both the applicant and Masterton regularly have project homes constructed in exhibition centres or villages so that they may be inspected by potential customers along with project houses designed and built by other companies. The issues in the case concern the questions whether or not copyright subsists in the plan which Masterton is alleged to have copied, whether there was an infringement and, if so, whether the applicant is prevented from succeeding because of laches, acquiescence or delay. There are also questions relating to relief to which the applicant would be entitled if it were successful in establishing infringement of its copyright. I should mention at this point that the cross- claim brought by Masterton against the applicant was discontinued during the hearing. -3- A number of witness were called by each of the parties. Those called by the applicant were Mr W.J. Thompson, who is the General Manager of Beechwood Homes which is a division of the applicant, Mr P.R. Haigh, who acts as a consultant to the applicant, Mr P. Romano who is a design draftsman employed by the applicant, Mr Daniel King, who is now a real estate salesman, but who had formerly been employed in the business of Beechwood Homes and Mr Dounis who had been employed by Beechwood as an estimator. Mr Daniel King's brother, Mr Larry King, had also been employed in the Beechwood business. He was not called as a witness. The witnesses called on behalf of Masterton were Mr W.3. Masterton, who was the principal witness, and three of its employees, Mr R.E. Barnaby, Mr K.F. Ainsworth and Mr A. McLean. Mr McLean has been employed as Design Manager for the past seven or eight years. In 1986 he was in charge of the Masterton drawing office. From 1987 onwards the applicant marketed houses under the name "Essington". The evidence refers to the "Essington" range of houses. This is because a series of alternative designs were offered. Thus there were houses which were of three, four or five bedrooms, houses which had either single or double garages and houses which had rumpus rooms. There were other more minor variations to which it is unnecessary to refer. From about the same time Masterton marketed a range of -4£e houses known as "Carisbrooke". These were in competition with the applicant's Essington range of houses. During the period that the two ranges of houses were on the market, they underwent changes in design. Some of these were of a minor nature; others were more substantial. In 1991, Masterton decided to drop a number of features of the "Carisbrooke" houses which gave them a distinctive appearance, particularly inside. These were marketed as Masterton's "Carisbrooke Limited Edition". These, like the earlier Carisbrooke range of houses, were claimed by the applicant to have been designed and built from plans copied from the applicant's plans. There was no threat of litigation by the applicant in respect of any alleged infringement of copyright until after the "Carisbrooke Limited Edition" came on to the market in 1991. Litigation appears first to have been mentioned in January 1992 in a _ conversation between Mr Ainsworth and Mr Haigh. By that time, if the applicant's case be accepted, there had been a continuing infringement of its copyright for some four or five years. ' Subsistence of Copyright The first question to be determined is whether copyright subsists in the applicant's drawings for the Essington range of houses. No question was expressly raised concerning the issue of ownership of the copyright. But it will be seen that the principal matter relied upon in relation to subsistence is - 5- more properly to be regarded as relating to ownership because it is based on an allegation that the applicant itself copied the plan in which it claims to have copyright. The evidence establishes to my satisfaction that the original sketch plan for the Essington range was drawn by Mr Daniel King. Mr Romano, who, as I have mentioned, is a design draftsman employed by the applicant, was then responsible for drawing all the floor plans for the range. The design sketches are in evidence. Mr Romano described the process whereby the sketches became floor plans and working drawings. He also described how brochures showing the various floor plans were prepared for circulation to members of the public. Sketch plans for an improved Essington range were drawn in July and August 1986. A number of improvements were made to which it is unnecessary to refer. The range contained houses which were described as, "The Essington Four Bedrooms/Ensuite", "The Essington Three Bedrooms/Ensuite", "The Essington Four Bedroom/Rumpus at Rear", and "The Essington Four Bedroom/Rumpus at Side". "the principal submission relied upon by counsel for Masterton in contending that copyright did not subsist in these various plans and drawings was based on a denial that the applicant had expended "a significant amount of skill and labour" in developing the plans. Reference was made to the judgment of this Court in Interlego AG v Croner Trading Pty Ltd (1992) 39 FCR 348 where the expression I have quoted is -6- used by Gummow J (at 379) who wrote the principal judgment. Black CJ and Lockhart J agreed in Gummow J's judgment (at 349). A particular matter upon which counsel for Masterton relied was the similarity between the "Essington 86" design and a pre-existing design known as the "Allworth Harmony". The substance of counsel's submission was that Mr Romano had copied the Allworth plan. That plan was put out by a firm of project house builders not party to these proceedings, Allworth Homes. Mr Romano denied that he had copied the plan and asserted that his sketch plans, to which I shall make reference a little later, were original works. Relevant Authorities on Subsistence and Reproduction Before I come to the detail of the evidence about this aspect of the matter, it is convenient to refer to some authorities about the approach which a court in a matter of this kind should take when determining whether or not copyright subsists in architects' or builders' plans and, if so, * whether or not there has been infringement by the reproduction or copying of another plan. I propose to refer to three authorities, namely, he Mortlock Murra Woolley Pty Ltd v Hooker Homes Pty Ltd [1971] 2 NSWLR 278, Beazley Homes Ltd v Arrowsmith [1978] 1 NZLR 394 and Lend Lease Homes Pty Ltd v Warrigal Homes pty Ltd [1970] 3 NSWR 265. The decision of Street J (as he then was) in Ancher is -7- often referred to in a case such as this. The passage I am about to cite from his judgment is well known. His Honour said (at 283-4): "In a case such as the present, where copyright is claimed in an architect's plan, a cautious approach must be made to the considerations arising both on the aspect of existence of copyright and on the aspect of close resemblance between the original and the reproduction. In Beck v. Montana Constructions Pty. Ltd. (1963) 80 W.N. (N.S.W.) 1578, at p. 1580, Jacobs J. (as he then was) said: 'It is clear I think that the degree of protection of an architectural plan must of its nature be very limited and it seems to me that one of the reasons for the severe limitation in the degree of protection under the law of copyright is that in an architectural plan more than any other forms of literary or artistic reproduction there is a greater element which may be described as common to all plans and that the particular portion of the plan which may be regarded as belonging to the owner of the copyright, the particular features of it and of the expression must consequently be more limited.' Moreover, as is pointed out by Copinger & Skone James, {10th ed.}, par. 719: 'Copyright is infringed by the production of something which to the eye is a copy of the original... it is naturally more difficult to prove infringement of copyright in a plain building than in one showing marked originality... Slight differences between buildings of no marked originality will prevent them from being held to be copies of each other, which would not be the case if the buildings were of an original character. ' There is undoubted force in the contention that the 'field of architecture is traditionally one in which new ideas are constantly evolving and. being developed. Applications of new architectural ideas and concepts by those who follow the leaders in their profession are legitimate, and will not be restrained by the copyright laws. There is a clear distinction between the protection which the law will afford to an architect's plans on the one hand, and, on the other hand, the absence of any protection to the architectural idea or concept which may happen to be expressed in a given set of plans. The same distinction applies in the case of a completed house. The copyright law will prevent the building of another house which reproduces a substantial part of the original house where such reproduction comes about as a result of a copying of the physical object itself. But the law does not restrict the application and development of architectural concepts and styles: original concepts and styles may, without risk of infringement, be applied and developed by other architects in subsequent buildings. The law does not -prevent one architect from following in the footsteps of a colleague; it does prevent him from copying the plans of his colleague so as to enable him to follow those footsteps; and it does prevent him from physically reproducing those footsteps and thereby following then. I make these general observations to underline the importance that will attach in this and in any other copyright suit to the question of how the alleged infringing work came into existence. An architect may legitimately inspect an original plan or house and then, having absorbed the architectural concept and appreciated the architectural style represented therein, return to his own drawing board and apply that concept and style to an original plan prepared by him and in due course to a house built to such plan. There is a dividing line separating such a legitimate process from an inspection followed by a later copying of a substantial part of the physical object inspected, even though the copying be from memory; the latter exercise does infringe. In many instances it will be daifficult to state categorically whether the dividing line has been crossed. Cases will not always be black or white where the alleged copying is from memory. The borderline area is clouded by a band of grey within which opinions and conclusions may differ. Within this grey band conflicting answers could without error be given to the questions--is that plan or house only a copy of the concept or style of the yoriginal and hence legitimate?, or is it a copy of the author's manifestation of that concept or style and hence an infringement? In this grey band, in answering such questions as these, it can be of critical importance to know how the architect who is said to have infringed went about the preparation and drawing of his plan. It is only after making a finding, either on direct evidence or by inference, of copying, that is to say, of unfair or unconscientious use of the author's plan or building, that significance will attach to the degree of similarity. In a practical sense, of course, the degree of similarity is frequently a most telling element on the question of - 9- copying. To some extent the two aspects overlap, but they are distinct in point of principle and they must be considered with this distinction in mind." Beazley Homes was a decision of McMullin J of the New Zealand High Court. He referred (at 401-2) to a number of authorities including the decision in Lend Lease Homes next to be referred to. His Honour said (at 402-3): "In the present case there is necessarily a degree of sameness about the types of houses which are depicted in the plans produced in the exhibits, and the evidence establishes that in low cost homes, similarities between one plan and another will be apparent. These will be dictated by factors such as limitations on the availability of finance, the minimum size required by institutions engaged in house finance and by local authority bylaws, the need for living accommodation to be kept to one part of the house with the service facilities in another, the economies effected by the use of standard size materials, joinery and fixtures, and economies to be effected by closer adhesion to a standard rectangular shape. Mr Gallen has' submitted that the lack of distinctiveness which characterises this type of housing debars the plaintiffs' plans from any claim to originality and he has referred to a number of plans used in the building industry before Beazley plans were drawn. But I do not think that the similarity which, on account of the considerations I have just mentioned, the plaintiffs' plans bear to other plans of a common type precludes the claim of originality being made for _ them. Indeed in University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601 Petersen J countered the submission that the questions in elementary examination papers were of a common type by stating ',.. this only means that somewhat similar questions have been asked by other examiners' (ibid, 609). Similarities in other designs do not, therefore, preclude a claim being made for originality. Indeed, it seems to me that there may be some force in the plaintiffs' claim that because the range for skill and design are limited, the need for their exercise is greater. The architect and plan drawer are not deprived of all the opportunity for exercising their skill and judgment." - 10 - In Lend Lease Homes Helsham J said (at 270): "The basis [for the defendant's submission] was that the floor plan in the present case is no more than an idea--an adaptation of a common commodity, that is to say a house in common form, the representation of which, at least until produced in the form of proper architectural drawings, is not capable of copyright as a plan; put another way, the floor plan of this ranch-style three-bedroom house is said to be a raw material from which plans capable of attracting copyright might emanate, but only if produced in the usual detailed manner sufficient to enable a building to be erected from then. I do not agree. It seems to me that there is no magic to be found in detailed scale plans if the floor plan contains the exemplification of the original idea. I believe that any reasonably competent draughtsman, given the floor plan, the approximate room sizes, and the total area (as in the present case) could come up with a set of working drawings, and I fail to see how such working drawings could claim the copyright that is said to be denied to the very embodiment of the architect's idea, namely the floor plan. But the argument seeks to obtain support from what is said to be a synthesis of the findings on various matters that were the subject of decision in the case of Purefoy Engineering Co. (Ltd.) v Sykes Boxall & Co. (Ltd,) (1955), 72 R.P.C. 89 (Court of Appeal). There is no exclusive right by a simple diagram to represent an ordinary commodity. A house is an _ ordinary commodity; the issuing of a visual description of it in the shape of a simple floor plan cannot be the means of acquiring copyright for the plan so as to prevent others from producing or issuing their similar visual descriptions of it. So runs the argument. The basic premise will often be correct (cf. Kenrick & Co. v. Lawrence & Co. (1980), 25 Q.B.D. 99). There must be some originality in the work. But the case of Purefoy Engineering Co. Ltd. v. Sykes Boxall & Co. Ltd., supra, does not decide that where there is some originality in the work the fact that the work relates to an ordinary commodity or is a visual description of it, simple or otherwise, prevents copyright from being acquired. This case on this aspect only proceeds, as I read the judgment of the Court delivered by Sir Raymond Evershed, M.R., upon the basis that the holder of copyright in such a work cannot by reason of it prevent another who -i1i1- deals in the same commodity from producing or issuing his own independent description of the same commodity notwithstanding that such description must of necessity resemble or recreate very closely the work of his predecessor competitor. The point of this aspect of the decision, as I read it, is that the competitor must not 'copy' his predecessor's work, because to do so would infringe a copyright, but that he cannot be prevented from producing his own independent but closely resembling work; 'copy' in this sense means make use directly or indirectly of the predecessor's work (Copinger 10th ed. para. 407). Read in this way the decision is not dissimilar in approach and result to that of Jacobs, J., in the case of Beck v. Montana Constructions Pty. Ltd, supra, to which I have already referred." The reference to Beck is a reference to Beck v Montana Constructions Pty Ltda [1964-5] NSWR 229; 80 WN (NSW) 1578 referred to by Street J in Ancher. Jacobs J said (at 1579) that, when one comes to copyright in architectural plans, considerable difficulty may be felt in distinguishing between the idea and the expression of the idea. Helsham J added (at 269): "Bearing in mind the care with which one must approach the claim of copyright in such plans by reason of the existence in relation thereto of features that must be common to all such plans, I find nothing in his Honour's decision or any other decisions which would preclude me from holding that , copyright in a proper case may exist in a floor plan of a building. It is true that the degree of protection which may flow from the copyright which subsists in any such plan may be limited. But if there is originality in the plan it is entitled to the protection afforded by the Act. It seems to me that there is no reason in principle for denying this protection by reason of the fact that the plan was produced for use in a common form intended to be used in as many different instances as the producer could secure for it." -12- Evidence in these proceedings illustrates, in a practical way from those in the industry, how apt the remarks made by the three judges are. In the course of his evidence, Mr Masterton spoke of a method of designing which he likened to "shifting little boxes". His evidence included the following statements: "Some designs come very quickly, is that right?--- They do, yes, when you, it is quite obvious you are working off basically things that you have got, they are only like little boxes and you just shift the little boxes here and there and all around and if you want to shift the laundry to one side, you shift that over to there and all of a sudden you can create a lot of plans very quickly. HIS HONOUR: You can throw it out, cannot you, quite easily?-~--Sorry. If you are not moving your blocks so that they fit in with each other you can throw a plan out?--~Yes, yes, you might find it won't work and you might have to change something on it, change a room or something to make it fit. That is what gives you the headache, is it not?--- Yes, well, it does, yes. Because you are trying to keep it within a particular rectangular space or if not a rectangle, then an L-shape?---It is, your Honour. If you are trying to - if you've got a house about 15 squares and in that you have got to get four bedrooms, two bathrooms, you have got to get a kitchen and a ,/laundry, you have got to get a family room, forget about the rumpus room, you have got to work within certain width of a home, otherwise it will not fit on the block and you have got to try and get a home that will fit on to a 60 foot with a double garage or a 50 foot with a single garage, and if you can't get that you are going to lose 25 or 50 per cent of your sales. So you've only got a perimeter to work with and when you start to plonk these little boxes around and around, there is not too many ways you can go because we all know that your kitchen is the best way for the kitchen is to look out into the garden so that the lady can keep an eye on the children while she is in the kitchen. You need a laundry that you can get access quickly, you know, -13- to the back yard, either to the rear or from the back of the garage to the kitchen, and you try to keep the main bedrooms with the ensuite away, and when you start fitting that around, there are not too many places you can go. eee mm eee Betton eeeaDeseneeseneesaeerEteenenDeeeeneeeseees MR WALKER: All these different factors, money, public taste, the economy, how you move the boxes around, all of those you regard as making the task of designing a project home which is likely to be successful a difficult one, is that right?---In some cases, yes. Well, you regard it as a real skill to be able to do it well; is that correct?---I do. And, in particular, you regard it as a real skill, do you not, to be able to come up with things which are a bit different from what else is in the market; is that right?---That's right, yes. Precisely because of the limited ways you can move rooms around to appeal to the public taste, it is a real skill to come up with something that is not just a copy of someone else's; is that right?---That is right, yes." Two matters emerge from this evidence and from the authorities. The first is that, particularly in the case of low or medium cost housing, the originality of design will be limited by the factors to which Mr Masterton refers. The house has to be of a particular size in order both to keep costs down and to fit it on a standard block of land. It will usually be rectangular or L-shaped. There will be three, or perhaps four, bedrooms, two bathrooms, a family room, a lounge room and a dining roon. The kitchen will need to be accessible to the family room and the dining roon. The bathrooms will need to be accessible to the bedrooms. The bedrooms will usually be together although the principal bedroom may, in some designs, be separate from the others. ~ 14 = There will be an entrance hall or lobby. There may or may not be a hallway off which the bedrooms will run and there will be a laundry, either at the back or at the side of the house. There will either be a single garage or a double garage depending upon the size of the block. Those are the constraints within which the designer must work. In one sense that makes the task more simple than might be the case if the design were of an elaborate house, much larger and more expensive than the ones in question here. On the other hand, the task may be extremely difficult because the very fact that the designer has to work within the constraints which I have indicated means that a degree of skill and professional expertise must be brought to the task. One can well imagine that some designs, as Mr Masterton said, may involve a great deal of work. Others may come more easily. A further matter to be noted is that, where there are two similar plans, it will often be difficult to determine whether or not, upon a simple comparison of the two, one is a reproduction or copy of the other or at least of a substantial part of it; see s.14 of the Copyright Act 1968. That is why, as 'street J remarked, the key to whether infringement of copyright has occurred will so often depend on the evidence which there is, direct or indirect, in relation to actual copying. Another matter to be mentioned is that the evidence discloses that there is substantial competition in the project -~ 15 - home market. This, of course, benefits the consumer. Mr Masterton said that it was standard practice for him and his staff to collect, for the purpose of ordinary market research, handouts from competitors. He said that all builders did this. It was not suggested that there was = anything discreditable about it. Mr Masterton agreed that he had these handouts, which on occasions included floor plans, routinely in order to understand what the market was doing. Scaled and dimensioned floor plans were a common form of handout when a house was open for display at one of the centres. As has been remarked in the authorities, there is a fine line between taking an idea and using one's own form of expression to achieve it and taking the expression of another. The latter will amount to infringement of copyright, assuming copyright subsists; the former will not. Finally, before I return to the evidence, I should say that a superficial examination of the numerous floor plans which are in evidence here would suggest that there is substantial similarity in a comparison of any two of then. Nevertheless, there are certainly differences of detail and approach. That is a matter which I have had to consider very closely in relation to the plans in question in this case. Conciusijons on Subsistence A comparison of the Allworth plan (exhibit 4) with three of Mr Romano's sketch plans (drawings 38, 39 and 72 in exhibit - 16 - PR1) discloses that there are both substantial similarities and substantial differences between the Alliworth plan and Mr Romano's' plans. Mr Romano was cross-examined about this matter at some length and I do not refer to the entirety of his cross~examination. He was taken step by step through similarities between exhibit 4 and drawing 72. He agreed that there were many features which were similar. On the other hand he said that the kitchen was "a lot different". In the course of his evidence he referred to the absence of a hallway from the Allworth plan and the presence of the hallway in his plans. He said: "All our rooms come off a hallway. Now, you try and put a hallway in that Allworth home and you']1 have a completely different plan altogether. It will not work for a start. Will you agree with me that the juxtaposition of the rooms in plan 72 is identical with the Allworth plan that I have just shown you?---Not everything, no. The toilet - the wc is in a different position in the bathroom if that's - - - Apart from features within the room?---As I pointed out, the kitchen is in a different position. HIS HONOUR: You see I do not know what you mean by juxtaposition exactly and it may depend on that but now that he points out the hallway, that to my mind, 'depending on the sense in which you are using juxtaposition, must affect juxtaposition because you have got a hallway so that the rooms are not juxtaposed, they are separated by a hallway. THE WITNESS: When you mention juxtaposition you should also mention the actual entrances into all the bedrooms. Now, all these bedrooms have got different entrances. So, can you call that juxtaposition? MR HODGEKISS: Well, if I could put it this way, the lecation of the rooms in your drawing 72 is identical to the Allworth- - -?---No, it's not identical. -17 - In what way is it not?---Well, as I mentioned, you can't have something in that position and make it work out the same as what ours are. As the main feature, as I said, the hallway, all our bedrooms come off the hallway, right. He's got bedrooms coming off everywhere and you have to walk through our kitchen in order to get to the back of the family room, you don't walk through his kitchen, right. The front part, as I mentioned yesterday, we had that before him. So, yes, they would be in the same juxtaposition as ours but only because we had that before him, okay. So, the front part of that house was our idea originally. Now, as far as the back part is concerned, he's relocated the kitchen, he's pushed that out, he's put the bedroom 2 off the meals area, he's put in a different bathroom. The toilet's on the other side of the house. The actual bathroom is only half the size of our bathroom which if he tried to put in a bathroom the size of ours would extend his house much further. Our family room is much bigger - much longer than what his is. Now you try and get the family room the same length as ours and that plan will fall to bits." Mr Haigh also denied copying. He was cross-examined along the same lines as Mr Romano. Amongst other things, Mr Haigh said: "The bedroom end of the house is the boring end of the house. There are only so many places you can put the bedrooms anyway. The significant unique part of the house tends to be the more impressionable parts of the house, the kitchen, the position of the kitchen, the dining room is an impressionable part, the lounge. The bedrooms are the boring end and there are only so many places you can put them. So all right, they are basically in the same position as the Allworth plan but they are not designed the same, the wardrobes are not in the same position, the doors are not in the same position." Mr Haigh added: "We fine-tune our designs to the inch. It can take us 12-18 months to produce a plan. Now, to many people here that may seem incredible but a simple plan, simple project home can take that long to - 18 - design. We take 12-18 months to genuinely design our houses and work on then. We have seen the sketches here provided by Mr Romano and that is all tuned to money and impression. The plan has to be impressionable when you first look at it. It has got to be simple to read, where the clients can imagine their furnishing positioning and things like that. That has been the success of the Essington and it was very easy to understand, unique in its design originally and that proved its success. Yes, we do attune them to the price all the time in this market." Mr Thompson also gave evidence about this matter. He too denied copying. His evidence included the following: "Are you aware if any of those features were adopted by Beechwood because they were features which competitors already had in their homes?---No, they were clear changes that we'd made. You look, it wouldn't be hard to go to anyone of thousands of plans and find an open kitchen. It would not be very hard to go to thousands of plans and perhaps find the access into our bed 2 was the same as perhaps one other. That is not hard to do but within the terms of the whole plan each of these things took place. So you say there is nothing original, there was nothing original when those changes were made in each of those features that you list in paragraph 16?---Singularly I wouldn't suggest that any of them were but as a whole and the plan as a whole when it was completed, I would definitely argue that that was one of a kind." ,;In the course of my deliberations, I have looked closely at the Allworth plan and compared it with the other plans, particularly drawings 38, 39 and 72 in exhibit PRi. Having done so, I am not persuaded that such similarities as there are should displace the very clear evidence of the three witnesses called by the applicant to whom I have referred. I do not have any misgivings about their evidence. I think that I should accept it and I do so. -19 - Accordingly, I am satisfied that the applicant did not copy the Allworth plan. Evidence to which I have referred shows quite clearly that a significant amount of skill and labour does go into preparing original plans of the kind here in question. One criticism made by counsel for Masterton was that there was little evidence from the applicant's witnesses of the amount of skill and labour which had gone into the preparation of the design for the Beechworth range of houses. But I think, in the light of the totality of the evidence which there is and Mr Masterton's acknowledgment of the skill and labour which is required for original work in this area, that I should infer that there was here involved a not insignificant amount of skill and labour. I find, therefore, that copyright did subsist in the applicant's plans which it alleges were copied by Masterton without its consent. nfringement j.e. U thorised Reproductj The next question is whether the applicant's copyright was infringed. Both counsel subjected the relevant plans and drawings to a critical examination. Counsel for the applicant was 'concerned to emphasise similarities which there are in the plans; counsel for Masterton was concerned to emphasise the aifferences. For the moment it is enough to say that there are plainly similarities and differences in detail. But the fact that there are similarities does not necessarily mean copying and the fact that there are differences does not necessarily mean that there was not copying. Indeed, a clever - 20 - copier would endeavour to mask what had been done by making some changes so that these could be relied upon as supporting a case of no copying. On the approach I take of the matter, it will be of vital importance for the outcome of the case to decide whether I accept Mr Masterton's evidence. The thrust of his evidence is that he did not copy any of the applicant's plans. Although the onus of establishing infringement remains throughout upon the applicant, it seems to me that, if I come to the conclusion that I should reject Mr Masterton's evidence, the applicant's case will be found to be established. On the other hand, if I accept Mr Masterton's evidence, the consequence must be that infringement is not established. A difficult situation will arise if ny conclusion is that I cannot be sure whether Mr Masterton is telling the truth or not. I should say at this point that I think that at the heart of the case is the question of Mr Masterton's probity. I suppose there are not many cases which one has to decide which directly involve questions of that kind. Usually questions of credibility are not decided upon the basis of whether evidence is dishonest; more often the question is one of accuracy of recollection and overall reliability. In this case, however, Mr Masterton must know whether he copied the applicant's plans. I thus have the unenviable task of making up my mind about him as a witness in that context. Neither counsel put the case upon the basis that it was one of unconscious copying. - 21 - In relation to the standard of proof, the case is one in which I must be guided by the judgment of Dixon J (as he then was) in Briginshaw v Briginshaw (1938) 60 CLR 336 especially at 361-362 and 363. But, although I should caution myself accordingly, I should also remember what was said by the High Court in Rejfek v McElroy (1965) 112 CLR 517. 'The Court said {at 521-2): ",..the standard of proof to be applied in a case and the relationship between the degree of persuasion of the mind according to the balance of probabilities and the gravity or otherwise of the fact of whose existence the mind is to be persuaded are not to be confused. The difference between the criminal standard of proof and the civil standard of proof is no mere matter of words: it is a matter of critical substance. No matter how grave the fact which is to be found in a civil case, the mind has only to be reasonably satisfied and has not with respect to any matter in issue in such a proceeding to attain that degree of certainty which is indispensable to the support of a conviction upon a criminal charge:..." Because of the way this case has developed, the issue whether Mr Masterton copied the applicant's plans became a somewhat narrow one. In the end the question turns upon the view I take of Mr Masterton's evidence in relation to a sketch plan:on a piece of tracing paper, described in the evidence as "butter paper". The sketch plan is one of a number of rough drawings produced by Masterton on discovery. Each of them is on tracing paper. The tracings together became exhibit N. Eventually one of the tracings became critical for the outcome of the case. It was separately marked exhibit Nl. In addition to depicting the rough outline for the design of the -22- floor plan of a house, it contains some notation. It has a time and date on it, namely, 6.15 am on Wednesday, 12 November. Additionally, there are two words which I cannot decipher. It is not important that they be understood. Finally it is signed by Mr Masterton. He acknowledged his signature during the course of the cross-examination and identified the plan as having been drawn by hin. Mr Masterton's evidence earlier referred to establishes that, at the time he drew the plan, he could have had access, using that expression in a general way, to one or more plans er designs of houses marketed by others including the applicant. As evidence earlier quoted establishes, it is common practice in the industry for competitors in it to obtain drawings of competitors and to keep them in stock. Changes to designs made by competitors are followed closely and, as changes occur, so additional plans become available. One of the ways in which this occurs is that competitors visit display houses of competitors. Often at these display houses there are copies of floor plans which visitors may take away to consider. It was submitted by the applicant that the likelihood was that, either Mr Masterton or one of his employees, had picked up one of these floor plans from a then recently completed house in the Beechwood range marketed by the applicant. There is a question, however, whether that could have occurred before 12 November 1986 which is the agreed date of - 23 - Mr Masterton's sketch plan, exhibit Ni. There is evidence which suggests that the first house in the new Essington range was not open for inspection before December 1986. If that were so, no copy of a plan obtained at the time of the inspection of that house could have been copied by Mr Masterton on 12 November 1986. The matter was put to Mr Thompson in the course of his cross-examination. His evidence was as follows: "So, it might, in fact, have been the case that the brochures were not released to the public until round about December 1986?---If the brochure wasn't, there may have been a handout available at that time which would be just a copy of the master plan. You don't necessarily have to produce a brochure every time. We work from fliers. See, when you/'re building something and releasing something very quickly before Christmas, very often you don't have time to get your brochure off to the - off to the printer so you may, in fact, just take a copy of your plan, if you like, which is this portion of the master, here, and actually release that to your sales people so that they can actually sell it, because Christmas is your busy time. yYou're trying to, you know, get as much out and about as you can before Christmas. Before we had the adjournment, I think you agreed with me that the normal course was that the brochure would only come into existence after the master plan had been finalised?---That's right, yes. ,/And I think I asked you in relation to the Essington whether you could think of any example where a brochure had come into existence prior to the finalisation of the master plan and you could not, at that stage, recall any such example?---No, but that's not what I've just said. What I'm saying is you - you just take a photocopy of your - of your master plan. You might do a hundred of them just for the purposes of having the sales people hand them out before there's a brochure actually ready. Would I be correct in saying that there is no way for you to be able to date MFI1?---I'm sorry, that's this plan? - 24 - HIS HONOUR: That is the one you have been looking at, yes. Number 8?---It doesn't have a date on it but I know full well from having built the exhibition home which is not a_ three-bedroom version, from my memory. I think it was a four- bedroom version, but it was definitely in being at the time at the house was built. It had to be for us to build it. You can't build an exhibition home without a master plan." The reference to MFI1 is a reference to part of exhibit A being an exhibit to Mr Thompson's affidavit sworn on 3 August 1993. The exhibits to his affidavit contain a number of Grawings marked with the letters "WJT" and numbers which designate each drawing. The reference to number 8 is a reference to the drawing in exhibit A which was marked MFI1. My understanding of his evidence is that fliers to which he referred may well have been in existence prior to the house being open for inspection. Nevertheless, I must bear in mind that there is question whether Mr Masterton could have had the opportunity to copy the Beechwood plan. If he had no opportunity the case on infringement must fail. There are in evidence two plans prepared by the applicant for its display houses. These became exhibits V and W. Exhibit V was identified by Mr Dounis. He said that it was a typical example of a simplified floor plan made from working drawings. The plan was drawn to a scale of 1 to 100. Mr Dounis said that the scale was not distorted by the photocopying. He could not give evidence of when exhibit V came into existence because his employment did not commence until 1988. - 25 - The evidence enables one to be more precise about exhibit W. In the course of his cross-examination, Mr Masterton agreed that it was a reversal of a floor plan exhibited to one of Mr Thompson's affidavits, exhibit WJT1{(7), which is dated 6 October 1986. The plan was for a four- bedroom Essington house having its bathrooms and laundry on the right hand side of the drawing and its kitchen and garage of the left hand side. Exhibit W was a plan for a three- bedroom house having its bathrooms on the left hand side and its laundry, kitchen and garage on the right hand side. Subject to the fact that the laundry is on the right hand side of both houses, that is what is meant by saying that exhibit W is a reversal of exhibit WJT1(7). During his cross-examination, Mr Masterton was asked to compare the two plans. He did not perform any detailed exercise but assented readily to the proposition that the two plans were closely similar. One can do the necessary exercise oneself by turning over exhibit W and overlaying it on the other exhibit. Allowing for the fact that one house has three bedrooms and the other four and that this accounts for the different position of the laundry relative to the third bedroom in exhibit W, there being no fourth bedroom, a comparison of the two plans establishes that they are fundamentally the _ same. This was no doubt immediately apparent to Mr Masterton's trained eye. That is why he did not need to perform the exercise to which I have referred. ~ 26 - The evidence thus establishes that "flyers", to use Mr Thompson's word, depicting the Essington four-bedroom house could have been available in the industry in October or early November 1986. The next and critical question is whether I should be satisfied that exhibit N1 is a tracing in whole or substantial part of exhibit W. When Mr Masterton was first asked about exhibit Nl, he claimed that it was a freehand drawing and that it had not been drawn and had not been copied from any other plan. This was his clear and unequivocal assertion. Counsel for the applicant showed him exhibit W and asked him to overlay exhibit Nl on it. The exercise is one which one needs to do for oneself. I gave consideration to appending to this judgment copies of exhibits N1 and W but did not think that the reader would necessarily be assisted by such a course because, unless one overlays the tracing exhibit N1 on the applicant's plan, exhibit W, one cannot see the effect of what has been done. It is enough, I think, to say that there is a basis for saying that part of exhibit N1 could be a tracing of part of exhibit W. That is so in respect of part of the eastern exterior wall as it is prolonged towards the north or top of the plans. It is also true of the southern and northern walls. The western walls of the two plans would be identical except for differences brought about by protrusions of the western wall at the point of the two bathrooms in - 27 - exhibit W when compared with the continuous protrusion of the western wall once it reaches the ensuite bathroom adjoining the main bedroom in exhibit N1. As to the interior, there are similarities and differences. The position and layout of the kitchens and laundries are substantially identical. On the other hand, the dimensions and shapes of the ensuite bathrooms are different. Furthermore, the entrances to the houses are not precisely the same and the layout of the other bathroom relative to the two smaller bedrooms is not drawn in exhibit Ni. An important matter that emerged during the course of the cross-examination was a concession made by Mr Masterton that he was in error in saying that the plan was a freehand sketch. He was persuaded it was not, because, whether or not it is similar to or the same as exhibit W, it was drawn to the same scale. The scale was 1 to 100. Thus the evidence established that Mr Masterton could have had the opportunity to copy one of the applicant's plans and, further, that, despite his assertion that the sketch was a freehand sketch, it was drawn to a scale, albeit somewhat roughly. There is no scale and no measurement on it. This meant, and Mr Masterton conceded as much, that it must have been traced or partly traced from a drawing which was drawn to scale. Whether or not that drawing was the applicant's drawing is the matter which I have to determine, - 28 - The Masterton case was conducted upon the basis that the Carisbrooke range of houses was developed from an earlier range known as the Bovis range. Mr Masterton said that this was so in his affidavit and in his cross-examination. Mr Masterton would have been entitled to copy plans from the Bovis range because Masterton, notwithstanding that formal steps to assign copyright were not taken until early 1987, was entitled to the benefit of it in 1986. Counsel for the applicant conducted an exercise in which he asked Mr Masterton to point to the similarities which were claimed to exist between the Bovis design and the Carisbrooke design. Although Mr Masterton maintained his assertion that the Carisbrooke was developed from the Bovis, I have substantial difficulty in understanding how this could be so in the light of the substantial differences which are revealed by the comparison which was made. It should be mentioned that Mr McLean claimed that the Carisbrooke range had evolved from earlier Masterton houses, particularly the "Exclusive", the "Arlington" and the "Coral". Mr McLean was extensively cross-examined about this assertion. ' ' The cross-examination demonstrated that it could not be supported. A further matter which needs to be considered is that, on 19 November 1986, Masterton lodged a building application with the Blacktown City Council. The application was for approval of a new dwelling to be constructed on a site in the Blacktown - 29 - municipality. The plan accompanying the application was for the erection of a house in the Carisbrooke range. The house had four bedrooms, a dining room, a living room, a family room, a kitchen, two bathrooms and a laundry. If one superimposes the tracing, exhibit N1, over the plan annexed to the building application, the outer walls coincide almost exactly. They do not do so precisely because the plan annexed to the building application is for a house longer than that in the tracing. The reason for this is no doubt due in substantial measure to the fact that the tracing was for a three bedroom house and the plan annexed to the building application for a four bedroom house. Of course, it would be expected that there would be this similarity between the tracing and the plan submitted to the Council by Masterton. That is especially so in the light of Mr Masterton's evidence that after he had prepared the rough sketch, exhibit N1, he gave it to Mr McLean and instructed him to proceed to draft detailed plans to give effect to what was in the sketch. Mr McLean gave effect to these instructions very quickly because no more than one week later a fully drawn flocr plan together with elevations was lodged with the Council. Counsel for the applicant relies on this circumstance because, in his submission, it would have been impossible for Masterton, if it had not copied the design, to be in a position to seek approval for the building of a house only one week after the sketch plan had been approved. In his - 30 ~- submission this indicated that there must have been copying; otherwise the process would have taken much longer. I do not think that this necessarily follows. Once Mr Masterton gave Mr McLean the go-ahead, as he said he did on 12 November 1986, it would only have been a matter for Mr McLean's skill and experience to take over and convert Mr Masterton's rough sketch into reality. The starting point was the sketch. It is the starting point whether Mr Masterton copied the plan or whether it was original. In either case Mr McLean did what he did within the week. The date on the plan, 12 November 1986, which was not challenged, and the date of the application to the Council demonstrate that this must have been the case. It follows that, in my consideration of the matter, I have decided that I should omit considerations arising from the lodgment of the building application with the Council out of account. I think that is a neutral factor not of assistance either to the applicant or to Masterton. I should next say something of my impression of Mr Masterton as a witness. He did not appear to be young; no evidence of his age was given. He has been in the project home business for a very long time. He appealed to me as an astute and canny business man. He was forced to make corrections to his evidence. His claim that the sketch, exhibit N1, was a freehand drawing was untenable. He agreed that it must have been traced from another plan. Although he did not concede it, it became obvious that his claim that the -31- plan was derived from the Bovis home could not be sustained. He said that he could not recall from what he had traced the sketch plan, exhibit N1. In fairness to him it should be said that he was being asked about events which had occurred approximately seven and a half years before he gave his evidence. Furthermore, he was not prepared for the turn of events because he went into the witness box upon the basis that the plan was a freehand sketch. A further point which should be made is that the plan was produced on discovery. This may not be particularly significant; much justice has been done over the years as a consequence of the discovery process. Nevertheless, a dishonest man perceiving his problem may well have seen to it that the plan did not see the light of day when he was asked by his solicitor for relevant documents. Mr Masterton was certainly not an evasive witness. He was not dismayed by the fact that he had to make the very important concession that the plan was not a freehand sketch but had been drawn to scale. This meant that it was a tracing and thus had been copied from something else. Nevertheless, northing in Mr Masterton's demeanour suggested to me that he was dishonest or lacking in integrity. Throughout a long period of intensive questioning he maintained his assertion that he had not copied any of the applicant's plans. But my perception of Mr Masterton as a witness does not make his evidence in fact honest or reliable. I must look at the matter objectively. I must bear in mind the cautions sounded -32- in Briginshaw. But I must also remember that I must decide the matter on the balance of probabilities. I confess that I have found the task one of substantial difficulty. Since I reserved my decision some months ago, my mind has fluctuated about this question. I am very conscious of the significance of the decision that will be made in this case for the businesses of both parties. Success or failure for either one will have a significant impact. The question really is whether the objective factors in play should persuade me that, notwithstanding my views of Mr Masterton as a witness, I should find adversely to him. Having given the matter the consideration I have indicated, I have reached the conclusion that the objective factors, as I have called them, militate against the acceptance of Mr Masterton's evidence. My reasons for this conclusion may be summarised as follows: (a) There are substantial similarities between exhibit Ni and exhibit W. ' ' (b) Mr Masterton could have had a plan such as exhibit W available to him at the time he traced exhibit N1. (c) He asserted at first that exhibit N1 was a freehand sketch. He was forced to concede that it was not. - 33 - (a) This in turn forced him to concede that, the plan being drawn to scale, it must have been traced from another scaled plan. (e) I find it difficult to accept that a person of Mr Masterton's experience would not have recognised all along that the sketch plan, exhibit N1, was a tracing rather than a freehand sketch. I have reluctantly concluded that his evidence that it was a freehand sketch was deliberately false. (£) Mr Masterton asserted that exhibit N1 came from the Bovis range of houses. This cannot be correct. (g) He was unable to suggest what other plan could have been traced. Notwithstanding the lapse of time between 12 November 1986 when exhibit N1 was drawn and the end of March 1994 when Mr Masterton gave evidence, I find it difficult to understand why, with the aid of the access to documents which Mr Masterton has had in order to prepare his case, he found himself in this difficulty unless the fact be that he did trace the sketch plan from a plan such as exhibit W. I have relied on these matters cumulatively. Taken together they lead to the conclusion that the only credible - 34 - explanation for the similarities between exhibit Nl and exhibit W was deliberate copying or tracing by Mr Masterton. In arriving at my conclusion I have wondered whether there may not have been an element of subconscious copying in what Mr Masterton did. This was not suggested by either party and I do not think that the suggestion could withstand any scrutiny. Experience teaches that, if an exercise such as this involving the copying of another's plan were carried out, it would be carried out consciously with an awareness of what was involved. It is not something that I think a man of Mr Masterton's astuteness and experience would forget let alone do subconsciously. Accordingly, I conclude that the applicant's case on infringement is made out. The evidence establishes that Mr Masterton in fact copied the applicant's plan or at least a substantial part of it. che (-] s e ' ' The next question is whether the Court should refuse relief on the basis of laches, acquiescence or delay. It is necessary, first of all, to refer to some further evidence. Mr Haigh said: "In 1987 when the Carisbrooke came on the market, myself and Larry King were absolutely amazed that this house appeared in the form it appeared. It was so close to our Essington design we couldn't believe - 35 - it, however, we were - we did get a little bit of enjoyment out of the fact that Masterton had decided to include into this Carisbrooke the Essington design. They had decided to include some cosmetic features that took the price of that particular house into another market segment. That's why I was surprised when the barrister said the price difference was only 5000. I was of the opinion it was closer to $10,000 difference, and I am sure that can be checked but I am almost certain it's closer to 10 than it is to 5. Masterton put some cosmetic changes into that design, which were purely cosmetic, rake ceiling,sunken lounge went in and I think it was fireplace in the entrance or a bar, some sort of brick work in the entrance, but purely cosmetic features which, fortunately, at the time, took it into a market segment. We were talking about 95,000 instead of 85,000, as a simple example, and myself and Mr King were quite relieved about that. We did decide to speak to and seek legal opinion as to our chances of success with a copyright case. We were advised that the success could not be guaranteed, so we had to think about our position, do we take it on or do we let it ride and see how it affects our market, bearing in mind that the house was some $10,000 more than ours, not less than ours as it is today, by the way. The other factor that caused me to think very seriously about legal action was a personal factor, I had been involved in a nasty beating up in 1982 when I left Masterton Homes. Three months after leaving Masterton Homes I finished up in hospital, I had a couple of heavy people came in my office and beat me up. We have no proof today who did it, but it was very widely rumoured around the industry - ~ -" At this point, counsel for the applicant divined that I was anxious about this evidence, notwithstanding that there had jseen no objection. He said that it was not evidence against anyone but was evidence of motivation or belief. I said I would not stop the evidence because there had been no objection. Thereupon counsel for Masterton objected and a discussion followed. Eventually, Mr Haigh was permitted to say, over the objection of counsel for Masterton, that hearsay in the industry was such that his ex-employer, that is Masterton by whom he had previously been retained, had - 36 - arranged for him to be beaten up. He gave some detail of what he had heard. The Mr King referred to by Mr Haigh in his evidence was not the Mr King who was called. Mr Larry King was a former manager of the applicant. His absence from the witness box was a matter of strong comment by counsel for Masterton. I have taken that matter into account, but I do not think that Mr L. King's failure to give evidence is critical for the outcome of any of the principal issues to be decided. Mr D. King also gave evidence about this matter. Mr King said that he was involved in discussions about what the applicant should do concerning the Carisbrooke in 1987. He said that there had been advice obtained from a barrister and a solicitor. He mentioned previous litigation between the parties, the outcome of which had been that, after much expense, the applicant did not receive a great deal of satisfaction. He said that the barrister who was consulted would not give any "guarantees" as to what the eventual outcome would be. Mr King said that, at that stage, because of the costs involved, the time and their previous experience, they were not encouraged to pursue the matter. It was felt that the Carisbrooke at that time was in a higher price range; it was not directly affecting the applicant's business. Accordingly, the applicant opted not to proceed with any further litigation. It may be noted at this point that counsel for the respondent had said before either Mr Haigh or - 37 - Mr King gave their evidence that market share was not taken away from the Essington range until the Carisbrooke Limited Edition came on to the market in 1991. He thought that this resulted in a drop in the Masterton price of about $5,000 - that is the matter to which Mr Haigh referred in the quotation from his evidence. It is clear from the evidence that the reason why Masterton was able to reduce the price, whether by $10,000 or $5,000 matters not, was because of the removal of the features which the Carisbrooke had had such as a rake ceiling, a sunken lounge, a fire place and brickwork at the entrance. The evidence discloses that there were some others as well. The presence of these features plainly masked the underlying similarity in design between the Carisbrooke and the Essington houses. When the features were removed, the similarity in the two designs was starkly revealed. The first formal intimation to Masterton that the applicant was likely to take legal action came in a letter dated 6 April 1992 written to it by the applicant's then solicitors. Correspondence passed between the solicitors for the two parties. It concluded with a letter dated 5 June 1992 from the applicant's solicitors informing Masterton's solicitor that it was the applicant's intention to proceed against Masterton for breach of copyright. It was said that counsel had been instructed to draft the originating process so that proceedings might be instituted without further delay. - 38 - Notwithstanding that letter, proceedings were not in fact commenced until 3 August 1993 when the application in this matter was filed in the Registry of this Court. There was thus an interval of some 16 months between the threat of legal action and the institution of proceedings. There was an interval of over 5 years between knowledge by the applicant of the breach and any threat of legal proceedings and an interval of almost 7 years between knowledge of the infringement and the institution of proceedings. A further point to be noted is that the statement of claim which was filed with the application on 3 August 1993 sought relief only in respect of a reproduction which involved plans of the Carisbrooke Limited Edition range of houses. Infringement was not claimed in respect of the plans for the Carisbrooke range until an amendment to the statement of claim was made on the first day of the hearing, 21 March 1994. Presumably notice of the applicant's intention to amend in this respect was given Masterton's solicitors in advance of the hearing. There was no objection to the amendment. I should say something of the evidence of Mr Haigh and Mr King to which I earlier referred. I accept the evidence which they have given. I do not, however, give any weight to Mr Haigh's evidence concerning the assault which was committed. Whilst I understand his position, I do not think evidence about the assault provides a reason why the applicant was justified in not suing within a reasonable time after it learnt of the infringement of its rights. I confess that I - 39 - have wondered whether the evidence was led rather for its prejudicial effect than for any other reason. I accept, however, that it was understandable that the applicant did not sue for commercial reasons. Despite the similarity of design, the differences in the actual products as they appeared to customers were substantial because of the features included in the Carisbrooke range. Furthermore, there was the price differential which has been referred to. It was that, no doubt, which gave the Carisbrooke a place in the market. What I think occurred was that each of the ranges of houses sold reasonably well until the recession overtook the real estate market in or about 1990. Once that happened, the Beechwood had a distinct advantage because it was $5,000~ $10,000 cheaper than the Carisbrooke. In order to compete Masterton had to get the price down. The only way it could do this and remain profitable was to remove the features. It was then that the applicant realised that it may have to take action to protect its rights. I think that the evidence given by Mr King about advice received concerning the uncertainties of the outcome of litigation provided another reason why, in all the circumstances, it was understandable that no action should have been brought until after the Carisbrooke Limited Edition came on to the market. - 40 = Both counsel agree that the principle which should guide me in resolving this question is that stated by Goff LJ (as he then was) in H.P. Bulmer Ltd v J. Bollinger SA [1978] RPC 79. His Lordship said (at 136): "It seems to me, therefore, that the true test whether equitable relief should be withheld in the case of a continuing legal wrong on the ground of delay by the plaintiff in enforcing his rights is that the facts must be such that the owner of the legal right has done something beyond mere delay to encourage the wrongdoer to believe that he does not intend to rely on his strict rights, and the wrongdoer must have acted to his prejudice in that belief; that is to say the case approximates to what would totally destroy his right." It follows that the question I need to consider is whether the applicant here did something beyond mere delay to encourage Masterton to believe that it did not intend to rely on its strict legal rights. If that be established, I must also be satisfied that Masterton acted to its prejudice in that belief. There is no evidence led by Masterton that it believed that the applicant would not rely on its legal rights. That was no doubt, at least in part, because of Masterton's assertion that it was not in breach of copyright, not only because of the dissimilarities it claimed existed in the two designs but because of its assertion that it had done no wrong. According to its case, it copied nothing. Moreover there is no evidence by it that it had acted to its prejudice in that belief. There could not be any such evidence because there is no evidence of the belief for the reasons I have stated. It follows that neither of the defences of laches or delay can succeed. The respondent has not provided evidence -~41-<- which would support then. Nor can it rely on the defence of acquiescence because the evidence of Mr Haigh and Mr King establishes that it did not acquiesce in the infringement. The fact that no complaint was made when it learnt of the infringement in 1986 or 1987 does not warrant the conclusion that there was acquiescence on its part. A further matter relied upon by counsel for the respondent was the claim, not so much that evidence which might have been available to Masterton was lost to it, but that the delay in the matter put it at a disadvantage because its witnesses, particularly Mr Masterton, would not have as clear a recollection of events as would have been the case in earlier years. I have some sympathy with the thrust of this submission but I do not think it can succeed. This, I think, emerges from what was said by Wilson, Toohey and Gaudron JJ in Orr v Ford (1989) 167 CLR 316. Their Honours said (at 330) that, where entitlement depended on factual matters which were fairly open to dispute, they saw no reason why prejudice occasioned by the loss of evidence as a result of delay on the part of the claimant might not be raised in answer to a claim. * They continued (at 330): "The question of prejudice resulting from unavailability of evidence necessarily involves some degree of speculation, but it is not a question of pure speculation. The issue is not whether evidence may have been lost but whether evidence which may have cast a different complexion on the matter has been lost. Thus in Crago v. McIntyre [1976] 1 NSWLR 729 a defence of laches was successful because a different conclusion may have been reached 'if all of the witnesses, including the doctors, who could - 42 - have given first-hand accounts of the plaintiff's behaviour, and of other relevant circumstances, had been available to be called as witnesses' [1976} 1 NSWLR at p.748." Here it cannot be said that evidence which may have cast a different complexion on the matter has been lost. Accordingly, the applicant's substantial delay in bringing the proceedings does not provide Masterton with a defence to then. Relief I therefore reject the defences of laches, acquiescence and delay. The question of damages and/or an account of profits was agreed to be one which should be left until after the Court's decision on the question of liability was known. There were, however, some matters argued concerning the way in which both damages and an account of profits should be calculated in this case. The remedies are, of course, alternative and it will be for the applicant to elect whether it wishes damages or an account of profits. That is something that it will no doubt do now that the question of liability has been decided. The entitlement to both remedies has its origin in s.115 of the Copyright Act. Section 115, so far as relevant, is as follows: "115. (1) Subject to this Act, the owner of a copyright may bring an action for an infringement of the copyright. - 43 - (2) 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. (3) 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 fo 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." I have not quoted subsec 115(4) which provides for aggravated damages. The applicant will, if it maintains a claim for damages, claim aggravated damages but subsec 115(4) is not relevant for present purposes. Counsel for the respondent claimed that the remedies were discretionary. I have reached the conclusion that the remedies of injunction and account of profits are discretionary but I do not take the same view of damages. The matter of an account of profits is, in my opinion, governed by the decision of Windeyer J in Colbeam Palmer [td v Sto Affiliates pty Lta (1968) 112 CLR 25 where his Honour said (at 34) that the remedy of injunction provided by statute to prevent the infringement of a registered trade mark reflected the history of the way in which equity protected and established a property in trade marks before they were recognised by statute. He said that the account of profits retained the characteristics of its origin in the Court of - 44 < Chancery. He said that the liability to account was not necessarily co-extensive with acts of infringement. The account was limited to the profits made by the defendant during the period when he knew of the plaintiffs rights. He added, "So it was in respect of common law trade marks. So it still is in respect of registered trade marks..." Counsel for the applicant sought to distinguish Colbeam Palmer from the present case because this is an action for infringement of copyright not for an infringement of trade mark. He drew attention to differences between the statutory provisions providing for the remedies in each case. Section 65 of the Trade Marks Act 1955 provides that the relief which a court may grant in an action or proceeding for an infringement of a registered trade mark includes an injunction and, except in the case of a trade mark registered in Part Cc of the Register, at the option of the plaintiff, either damages or an account of profits. Counsel drew attention to subsec 115(3) of the Copyright Act which provides that, where, in an action for infringement, 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 to any damages against the defendant in respect of the infringement, "but jis entitled to an account of profits in respect of the infringement whether any other relief is granted". [It is upon - 45 - the words "is entitled" that counsel concentrated. But, in my opinion, those words are to be explained by the fact that subsec 115(3) is dealing with the special case there provided for. Subsection 115(1) and (2) are dealing with the general position. In each subsection the operative word is "may". In that respect s.115 of the Copyright Act is not in terms different from s.65 of the Trade Marks Act. I would not suggest that the presence of the word "may", especially in subsec 115(2), means that the Court in an ordinary case ought not give the remedies there provided for if a case for them has been made out. But I do think it right to take the view that the remedies of injunction and an account of profits being equitable remedies and thus discretionary were intended to be applied in cases for infringement of copyright in the way that they have been applied over the years both under the general law and under statute law such as the intellectual property statutes to which I have referred. It follows, that in my opinion, what Windeyer J said in Colbeam Palmer should be applied here. Thus any account of profits to which the applicant may be entitled will be limited to the profits made by Masterton during the period when it knew of the applicant's rights. That conclusion, in my opinion, does not take Masterton very far. That is because I have found an intentional and deliberate breach of the applicant's copyright has been committed by Mr Masterton for whose acts Masterton is - 46 =- responsible. Thus Masterton knew of the infringement from the moment it was committed. It follows that, notwithstanding the long delay in the matter, the account, if the applicant elects for an account of profits, will go back to the original infringement. The alternative view is that it should not commence until April 1992 when the applicant's solicitors complained of the breach or August 1993 when these proceedings were commenced. In some cases that may be an appropriate outcome, but I do not think it is so in this case for the reason that here there was, on my findings, a deliberate copying of the applicant's plans. So far as damages are concerned, I do not think there can be any room for the exercise of a discretion. Section 134 of the Copyright Act provides a time bar for actions for infringement of 6 years from the time when the infringement took place. That date was 12 November 1986 more than 6 years prior to the commencement of these proceedings. But, on the basis that there is an infringement each time a reproduction is made, it seems to me that damages are recoverable for the period commencing on 3 August 1987, 6 years before the proceedings were instituted. Damages for the period since 3 August 1993 are also recoverable. My reason for thinking that there is no discretion in relation to damages is that I fail to see why they are not to be regarded as a common law remedy. There would be no discretion, for instance in an action for damages for personal injury, to reduce damages or - 47 - limit them in some way because a plaintiff sued in the last month of the 6 year period rather than at an earlier time. It follows that, in my opinion, the applicant is entitled, whether it elects for an account of profits or damages, to have its damages or the amount yielded by an account of profits to be calculated for the period 3 August 1987 to date. In addition to these remedies, the applicant is entitled to an injunction in an appropriate form. I do not propose now to make final orders. Rather I propose that the matter stand over for a short time to enable counsel and the parties to consider what I have said. When the matter is again in the list, counsel for the applicant is to bring in short minutes of order to give effect to my decision. I certify that this and the 46 preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice Sheppard. Associate ie. woh Geeb~ 23 Nodal 1% Dated Counsel for the Applicant: B.W. Walker SC I.M. Jackman Solicitors for the Applicant: Speed and Stracey Counsel for Respondents: c.c. Hodgekiss M. Christie Solicitor for the Respondents: C.R. Fieldhouse Dates of Hearing: 21, 22, 23, 29, 30 March 11 April 1994 Date of Judgment: 23 November 1994 Place of Hearing: Sydney