FEDERAL COURT OF AUSTRALIA

Vendor Advocacy Australia Pty Ltd v Seitanidis (No 2) [2013] FCA 1390

THE COURT DECLARES THAT:

1.    The Respondent breached the Applicant’s copyright in the VAA Listing Authority referred to in paragraph 24 of the Amended Statement of Claim (‘the VAA Listing Authority’) by developing and using, in the course of his business, a listing authority which reproduced a substantial part of the VAA Listing Authority.

2.    In March 2011, the Respondent breached copyright in the then existing text of the internet website maintained by the Applicant and located at the internet address http://www.vendoradvocacy.com.au (‘the Applicant’s website text) by causing an internet website to be published which reproduced a substantial part of the Applicant’s website text.

THE COURT ORDERS THAT:

3.    The Applicant be entitled, pursuant to section 120(1) of the Copyright Act 1968 (Cth), to proceed with this action without the owner of the copyright in the Applicant’s website text being joined as a party to these proceedings.

4.    The Respondent be permanently restrained, pursuant to section 115(2) of the Copyright Act 1968 (Cth), whether himself or by his employees, agents or otherwise, from reproducing or causing to be reproduced the VAA Listing Authority, or a substantial part of it, without the licence or authority of the Applicant.

5.    The Respondent be permanently restrained, pursuant to sections 115(2) and section 119 of the Copyright Act 1968 (Cth), whether himself or by his employees, agents or otherwise, from reproducing or causing to be reproduced the Applicant’s website text, or a substantial part of it, without the licence or authority of the Applicant.

6.    The Respondent pay the Applicant the sum of $1.00.

7.    The application be otherwise dismissed.

8.    The application of the Respondent for damages pursuant to the Applicant’s undertaking given on 23 September 2011 be dismissed.

9.    The Applicant pay the costs of the Respondent on a party/party basis other than the costs of and in connection with the copyright claim, and the costs of and in connection with the application of the Respondent for damages pursuant to the Applicant’s undertaking given on 23 September 2011.

10.    The Respondent pay the costs of the Applicant on an indemnity basis of and in connection with the copyright claim.

11.    The Respondent pay the costs of the Applicant on a party/party basis of and in connection with the application of the Respondent for damages pursuant to the Applicant’s undertaking given on 23 September 2011.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

INTRODUCTION

1    On 27 September 2013, I delivered my reasons for judgment in the substantial dispute between the parties: Vendor Advocacy Australia Pty Ltd v Seitanidis [2013] FCA 971.

2    I indicated that the application other than in respect of the copyright claim should be dismissed. I also indicated my tentative view as to the orders that should be made by the Court. Following that indication, extensive written submissions have been filed with the Court as to the appropriate orders to make, and an application has been made by Mr Seitanidis for an award of ‘damages’ pursuant to the undertaking given by VAA upon the giving of undertakings by Mr Seitanidis and the grant of interlocutory injunctions, which have been subsequently discharged.

3    Strictly speaking this application by Mr Seitanidis is an application not for damages but for equitable relief at the discretion of the Court. By giving the undertaking VAA became obliged to abide by any order that was subsequently made directing it to make pecuniary recompense to Mr Seitanidis for any loss that he may have suffered by reason of the undertakings given or the injunctions granted.

4    The issues that remain for me to decide are:

(a)    Whether any declarations and injunctions should be made or granted, and if so, upon what terms, in relation of the copyright claim;

(b)    The incidence of costs;

(c)    Whether to make any, and if so, what orders, for ‘damages’ pursuant to the undertaking given by VAA.

DECLARATIONS AND INJUNCTIONS

5    Nothing raised in the recent submissions by Mr Seitanidis has persuaded me to depart from the views I expressed concerning the need for declaratory and injunctive relief – see [271] – [272] of my reasons. In fact, the recent submissions of Mr Seitanidis seem to indicate a failure to acknowledge the formal admission made of liability on the copyright claim, both in respect of the VAA Listing Authority and Applicant’s website text.

6    Mr Seitanidis admitted the pleaded breach of the copyright work, and must be taken to have copied the whole or a substantial part of the work as pleaded. The declarations and injunctions I indicated reflect this, and I propose to make such in the form previously indicated by me.

COSTS

Introduction

7    The dispute as to the incidence of costs of and in connection with the application can be divided into two parts:

(a)    Whether Mr Seitanidis should pay the costs of the copyright claim, and if so, on what basis; and

(b)    Whether VAA should pay Mr Seitanidis his costs of and in connection with the application and if so, on what basis.

8    Before going to these matters specifically, I make these observations.

9    Mr Seitanidis has sought to rely upon a number of affidavits of his solicitor Mr Mier, dealing with interlocutory aspects of this proceeding and settlement negotiations and offers. I do not need to rehearse the detail of these affidavits - some of the contents of which involve mere accusations or assertions of position.

10    The Court does not propose to allow this part of the proceeding to descend into the examination of peripheral issues, where it is unproductive to do so. Both parties have expressed a desire to finalise the dispute.

11    I understand that some of the matters sought to be introduced into evidence through Mr Mier are contentious and disputed by VAA. VAA objected to the admission of the affidavits of Mr Mier, or if admitted, it foreshadowed the need for cross-examination and further evidence.

12    I propose to admit the affidavits of Mr Mier into evidence. However, I do not consider the evidence assists Mr Seitanidis in relation to costs, even assuming the material adduced into evidence stands uncontradicted. I do not propose to allow cross-examination upon that evidence, nor to permit VAA to adduce further evidence. Quite simply, the cost and time involved in extending the cost dispute would be out of all proportion to the issues requiring determination. It would involve a “mini-trial”, with the filing of responsive evidence (possibly of the legal representatives involved with the consequences that entails), and cross-examination.

13    I now turn to two specific disputes relating to the incidence of costs.

Copyright claim

14    The copyright claim was properly brought in this Court: see LED Builders v Hope (1994) 53 FCR 10. This is so even if the monetary claim is small, or as in this case, nominal.

15    Mr Seitanidis did not admit liability on the copyright claim until the fourth day of the trial. The copyright claim was never abandoned by VAA, and was clearly part of the dispute before the Court.

16    If Mr Seitanidis had conceded liability on the copyright claim at the earliest possible stage, as in my view he ought have done:

(a)    it would not have been necessary for VAA to put on evidence solely directed at the copyright claim;

(b)    the cross-examination of Mr Ian Reid on documents relevant only to the copyright claim would not have occurred; and

(c)    it would not have been necessary for VAA to deal, in its written submissions, with the principles relevant to the copyright claim or to make submissions directed at Mr Seitanidis’ liability on the copyright claim.

17    In my view, Mr Seitanidis should have immediately admitted his obvious breach of the copyright claim upon the proceedings being commenced. Properly advised, Mr Seitanidis should have known he had no chance of successfully defeating the copyright claim. Whatever damages may have flowed from his breach, his copying was deliberate and liability was clear.

18    The circumstances surrounding his failure to initially admit his liability, and then only doing so on the fourth day of the trial, warrant the grant of indemnity costs against him on that issue.

19    I propose to order that Mr Seitanidis pay the costs of VAA on an indemnity basis, of and in connection with the copyright claim.

Other costs

20    I now turn to the other costs of the application. VAA contends that there should be no order as to costs in this regard; Mr Seitanidis contends for an order of costs in his favour, and on an indemnity basis.

21    I have considered the written submissions filed by Mr Seitanidis, and accept the criticisms made of them by VAA that the submissions mis-state the Court’s findings, have in many instances no evidentiary basis, and are in large part speculative.

22    In considering the issue of costs, the salient factors seem to me to be these:

(a)    both parties were given the opportunity to mediate and settle this proceeding;

(b)    putting aside any dispute as to the extent of co-operation between the respective legal representatives of the parties, there is no evidence that either party acted in bad faith in this process;

(c)    the offers made by Mr Seitanidis were various, but VAA did not act unreasonably in not accepting such offers as the offers:

(i)    were open for acceptance for no longer than 1 business day;

(ii)    effectively required VAA to decide whether to accept then without seeing the evidence Mr Seitanidis proposed relying on; and

(iii)    did not include an acceptable compromise on the copyright claim, as they required VAA to accept a denial of liability;

(d)    the interlocutory processes were controlled by the Court, and specific orders were made as to discovery and particulars of loss and damage, which were in their terms complied with by the parties, and in particular VAA;

(e)    Notices to Admit were delivered by Mr Seitanidis, but I do not consider the failure of VAA to admit the matters sought added to any pro-longing of the trial or other interlocutory steps;

(f)    I generally accepted the evidence of Mr Ian Reid, and was disapproving of some of the conduct of Mr Seitanidis;

(g)    I have not come to the view that the conduct of Mr Seitanidis is such as to deprive him of his costs;

(h)    The issue for determination ultimately came down to a question of fact, based upon all the material presented to the Court, including the Promotional Schedule relied upon by the Court;

(i)    VAA led admissible evidence on the pleaded issues, which did not require the evidence of actual misled consumers;

(j)    Whilst I relied upon the documentary material, the other evidence led by VAA was relevant and was taken into account as being part of the whole context;

(k)    I found in favour of Mr Seitanidis on the principal issue before the Court, and the normal principle is that costs follow that event;

(l)    there was no misleading of the Court, or a lack of candour or unreasonableness, on the part of VAA or its legal representatives as now submitted by Mr Seitanidis.

23    In light of these factors, it seems to me clear that in respect of the application the appropriate order is that VAA pay the costs of Mr Seitanidis on a party/party basis other than in respect of the copyright claim.

‘Damages’ pursuant to undertaking

24    The Court previously directed that any evidence to be relied upon by Mr Seitanidis on the question of ‘damages’ be filed so the Court could proceed to a prompt determination on this issue. The application for ‘damages’ brought by Mr Seitanidis relies heavily upon some of the evidence before the Court led by VAA. Without reliance on the evidence, Mr Seitanidis could not succeed in his application. It is not for the Court to further direct what evidence or what form of evidence Mr Seitanidis should put before the Court: Mr Seitanidis has had his opportunity to present his case, and I will determine the matter on the evidence presently before me.

25    In my opinion, the claim to ‘damages’ is wholly untenable upon the evidence now relied upon by Mr Seitanidis.

26    The submission of Mr Seitanidis involves the follows steps, relying as it does primarily upon the evidence of VAA:

(a)    Websites operated by VAA achieved certain page rankings on Google, and resulted in an identifiable number of sales of properties;

(b)    Websites operated by Mr Seitanidis would (had his undertakings not been given and the injunctions not been granted) achieved and maintained certain page rankings on Google, and would have resulted in an identifiable number of sales of properties;

(c)    VAA’s evidence demonstrates that it achieved a particular number of sales per visitor to its website;

(d)    If Mr Seitanidis’ undertakings had not been given and the injunctions not been granted, Mr Seitanidis would have achieved sales per visitor to his websites at the same rate as did VAA in respect of visitors to VAA’s website.

27    Before addressing the essential flaw in this approach, I need to briefly mention the relative positions of VAA and Mr Seitanidis.

28    VAA had over a number of years spent considerable revenue in promoting its business.

29    A primary promotional tool used by VAA was the booklet ‘Fatal Real Estate Traps Exposed’, which had been widely distributed in hard-copy and which was also available for download via VAA’s website.

30    VAA’s website and promotional material made extensive and predominant use of the persona of Mr Ian Reid.

31    VAA’s website and Mr Seitanidis’ websites looked very different.

32    Mr Seitanidis did not offer the booklet ‘Fatal Real Estate Traps Exposed’, nor any other booklet, from his websites.

33    VAA has carried on a vendor advocacy business since 2001, although not throughout all Australia, and by reference primarily to Ian Reid. VAA had a number of employees, and was the largest business of its kind in Australia.

34    Ms Seitanidis has worked on his own, and has a much smaller business.

35    There is no direct evidence that if Mr Seitanidis had not been subject to the undertakings he gave and the injunctions he would have:

(a)    attracted visitors to ‘vendoradvocacy.com’ and ‘vendoradvocacyaustralia.com’; or

(b)    converted website visitors into sales at the same rate as did VAA.

36    In my view, VAA’s “conversion ratio” of website visitors to sales is unique to VAA. It is a product of factors including, the content of VAA’s website, the existence and content of ‘Fatal Real Estate Traps Exposed’, VAA’s reputation in the market resulting, in part, from its expenditure on marketing, the level of fees charged by VAA and the level of service provided by VAA.

37    Mr Seitanidis’ success in ‘converting’ visitors would depend on factors specific to Mr Seitanidis.

38    It is also to be recalled that while Mr Seitanidis was effectively restrained from operating websites at two domains (www.vendoradvocacy.com and www.vendoradvocacyaustralia.com), he continued to operate websites at various other domains promoting his vendor advocacy services.

39    In my view, the Court cannot proceed on the assumption that Mr Seitanidis would convert visitors to clients at the same rate as did VAA.

40    I make a further observation on other evidence relied upon by Mr Seitanidis.

41    In the written submissions filed on behalf of Mr Seitanidis his analysis is put as follows:

In his affidavit of 1 October 2012 (CB Vol 8 @ pages 3480-3490) the Respondent exhibits “PS-84” – a case study showing the percentage of visitors to a website based on the position in a Google search. The Report shows a 36.4% click through rate (CTR) for a position 1 on page 1. For VAA to have received 1,167 visitors per month from Google searches alone (taking the figures presented to the Court by VAA), there would have been on average 3,206 searches for “vendor advocacy” or “vendor advocacy Australia”.

Had the Respondent’s website remained in position 6 on page 1, the case study shows that it would have received on average 4.1% of the 3,206 visitors – that is, it would have received 131.44 (3,206 x 4.1%) visitors per month. If, however, the Respondent’s website was in position 2, then it could have potentially received 400.75 (3,206 x 12.5%) visitors per month.

42    PS-84 is a summary by ‘Search Engine Watch’ of a study conducted by ‘Optify’. It also refers to a study by Neil Walker and a study by ‘Chitika’. The underlying data is not provided. The Court cannot assess the reliability or accuracy of material published in ‘Search Engine Watch’, nor the reliability or accuracy of the studies apparently conducted by Optify, Neil Walker and Chitika. I do not place any weight on PS-84, and rule it to be inadmissible.

Conclusion

43    Mr Seitanidis has not proved by admissible evidence any entitlement to ‘damages’ pursuant to the undertaking.

44    Mr Seitanidis has not proven that he would have obtained any particular number of visitors to the two relevant websites, nor, if visitors were obtained, they would be converted into sales at any particular rate. Further, he has not demonstrated any loss of profit, as distinct from loss of revenue.

45    This is not a case where the Court is left to calculate the loss as best it can, a task which in appropriate circumstances, it will undertake. The lost opportunity of Mr Seitanidis to earn income by reason of his undertakings and the injunctions has not been shown to exist by admissible or probative evidence.

46    It is essential for this causative element to be shown and demonstrated by evidence. There is no rigid rule, this being an application of an equitable nature. However, in this case, it must be shown that the lost opportunity of Mr Seitanidis as claimed flowed directly from the undertakings given or the injunction granted (and could have been foreseen when the injunction was granted) – see Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1979) 146 CLR 249 at pp 266-267 per Aickin J and see generally Spry, “Equitable Remedies” (2014) (9th Ed) pages 684-687. This has not been demonstrated by Mr Seitanidis.

47    Therefore, I dismiss the application of Mr Seitanidis for ‘damages’ pursuant to the undertaking given by VAA to the Court, with costs.

DISPOSITION

48    Therefore, the declarations and orders I will make are:

1.    The Respondent breached the Applicant’s copyright in the VAA Listing Authority referred to in paragraph 24 of the Amended Statement of Claim (‘the VAA Listing Authority’) by developing and using, in the course of his business, a listing authority which reproduced a substantial part of the VAA Listing Authority.

2.    In March 2011, the Respondent breached copyright in the then existing text of the internet website maintained by the Applicant and located at the internet address http://www.vendoradvocacy.com.au (‘the Applicant’s website text) by causing an internet website to be published which reproduced a substantial part of the Applicant’s website text.

3.    The Applicant be entitled, pursuant to section 120(1) of the Copyright Act 1968 (Cth), to proceed with this action without the owner of the copyright in the Applicant’s website text being joined as a party to these proceedings.

4.    The Respondent be permanently restrained, pursuant to section 115(2) of the Copyright Act 1968 (Cth), whether himself or by his employees, agents or otherwise, from reproducing or causing to be reproduced the VAA Listing Authority, or a substantial part of it, without the licence or authority of the Applicant.

5.    The Respondent be permanently restrained, pursuant to sections 115(2) and section 119 of the Copyright Act 1968 (Cth), whether himself or by his employees, agents or otherwise, from reproducing or causing to be reproduced the Applicant’s website text, or a substantial part of it, without the licence or authority of the Applicant.

6.    The Respondent pay the Applicant the sum of $1.00.

7.    The application be otherwise dismissed.

8.    The application of the Respondent for damages pursuant to the Applicant’s undertaking given on 23 September 2011 be dismissed.

9.    The Applicant pay the costs of the Respondent on a party/party basis other than the costs of and in connection with the copyright claim, and the costs of and in connection with the application of the Respondent for damages pursuant to the Applicant’s undertaking given on 23 September 2011.

10.    The Respondent pay the costs of the Applicant on an indemnity basis of and in connection with the copyright claim.

11.    The Respondent pay the costs of the Applicant on a party/party basis of and in connection with the application of the Respondent for damages pursuant to the Applicant’s undertaking given on 23 September 2011.

Associate:

Dated:    19 December 2013