FEDERAL COURT OF AUSTRALIA

Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd (No 6) [2010] FCA 694

THE COURT ORDERS THAT:

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

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

REASONS FOR JUDGMENT

I  -  Introduction

1                     The first applicant, Flashback Holdings Pty Ltd (“Flashback”), is part of a group of companies which licences, sells and distributes DVDs and CDs and which has been doing so since 1999.  On 14 May 2008 Flashback commenced an urgent proceeding in this Court seeking to restrain the first respondent, Showtime DVD Holdings Pty Ltd (“Showtime”), from distributing or selling a range of children’s DVDs on the basis that Flashback had the exclusive licence to distribute those DVDs in Australia.  On the same day Rares J granted an ex parte injunction having that effect.  That injunction has remained in place since that time.  On 30 May 2008 Branson J granted Flashback leave to join the third respondent, Mr Leslie, to the proceeding.  Mr Leslie is the sole director and secretary of Showtime.  As the proceeding was ultimately formulated Flashback’s allegations were:

(a)        that it held an exclusive licence from the owner of the copyright in the DVDs to distribute them in Australia;

(b)       Showtime had infringed the copyright by selling 27,840 of the DVDs to a well-known German grocer, ALDI; and

(c)        Mr Leslie had authorised this conduct of Showtime.

Consequently, so it was said, both Showtime and Mr Leslie were liable to Flashback as exclusive licensee for infringing that copyright.

2                     Following procedural defaults on Showtime and Mr Leslie’s parts I made a self-executing order relating to discovery, non-compliance with which was to result in the striking out of their respective defences and the entry of judgment against both of them: Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd (No 3) [2009] FCA 308.  That order was not complied with: Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd (No 4) [2009] FCA 461.  Consequently I directed the Registrar to draw up a minute recording that their defences had been struck out and judgment entered against them.  The question of damages or an account of profits remained to be determined.

3                     A subsequent application to revoke the original self-executing order was refused: Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd (No 5) [2009] FCA 859.  The question which now falls for determination is the assessment of Flashback’s damages.  Further, at the commencement of the present hearing it indicated that it would not be seeking an account of profits.  The issue which arises is, therefore, the extent of Mr Leslie’s liability in damages to Flashback.  As events transpired, it did not seek damages from Showtime. 

II  -  The Nature of the Earlier Judgments

4                     The hearings in Flashback (No 4) [2009] FCA 461 and (No 5) [2009] FCA 859, which concerned the operation and the effect of the self-executing order, were substantial.  No issue was raised then (or now) as to the power of the Court to enter such a judgment.  However, during the course of the present hearing, Mr Ellicott, who appeared for Flashback, submitted that the nature of the order made was such that Mr Leslie was no longer entitled to be heard and that the inquiry which now remained was one in which the Court only needed to be satisfied that there was evidence making good the damages claimed.

5                     Properly to deal with that submission requires a consideration of the nature of the original order.  It was in these terms:

That in the event of a default [of the discovery order by either the first or third respondent] and without any further order, the first and third respondents’ defences be struck out and judgment be entered for the applicant against the first and third respondents.

6                     Subsequently, following the determination in Flashback (No 4) [2009] FCA 461 that that order had been activated I made the following direction:

The Court directs the Registrar to record upon the Court file that the first and third respondents’ defences were struck out on 18 March 2009 and that judgment was entered against each of them in favour of the first applicant.

7                     In the accompanying reasons I said (at [19]):

That leaves the question of the assessment of damages or account of profits still at large, together with the question of costs, both of the argument which has resulted in these reasons and, more generally, of the proceedings.  I will list the matter for directions with a view to charting its procedural future on Tuesday 19 May 2009.  In the meantime I vacate the trial.  Any applications which are to be made should be served well in advance of that date.

8                     I would construe this as a judgment for the applicant, damages to be assessed.  It is true that the judgment is only expressed to be a judgment and not a judgment damages to be assessed, but I do not think that that difference matters.  The question of whether a judgment is a judgment damages to be assessed has usually been approached as a matter of substance rather than form.  Thus, in Hall v Busst (1960) 104 CLR 206 Dixon CJ noted (at 214) that the trial judge had answered various questions and then ordered that the action proceed to trial on the issue of damages.  Despite not being expressed to be a judgment the Court nevertheless treated it as such.  The critical question was whether the “judgment” was final.  Dixon CJ said (at 218):

I think that the order was intended as a judgment for the plaintiff for damages to be assessed and therefore that it is final in the sense that word bears in s 35(1)(a)(2) of the Judiciary Act 1903-1955 (Cth).

9                     And indeed the debate about judgments of this kind has not so much centred on the power of the Court to make them but rather on whether they be interlocutory or final.  To that question the answer has generally been given that they are both, that is, final as to the issue of liability, interlocutory as to the question of damages: Light v William West & Sons Ltd [1926] 2 KB 238 at 241-242 per Lord Hanworth MR; Victorian Economic Development Corporation v Clovervale Pty Ltd [1992] 1 VR 596 at 598 per Tadgell J. 

10                  Specific provision is made in the rules of some courts for the calculation of damages by a registrar or master. Indeed in Light v William West & Sons Ltd [1926] 2 KB 238 just such a rule – O XXXVI r 57 – was under consideration.  There is no necessity, however, for a judgment damages to be assessed to be consigned to such a ministerial officer.  As the reasoning in Hall v Busst 104 CLR 206 shows the damages component may simply be left to trial, if necessary, by a judge.   This Court has the power to assign the calculation of damages to a registrar in certain circumstances.  Order 38 r 1 provides:

Ascertainment of damages where a matter of calculation

(1)      Where:

(a)        a respondent admits liability on an applicant’s claim, but denies liability to the extent of the damages claimed; or

(b)        the Court finds that a party is liable to pay damages;

the Court, if it considers that the amount of damages to be recovered is substantially a matter of calculation, may direct that the amount which the party liable shall be ordered to pay be ascertained by the Registrar at the proper place.

(2)       The attendance of witnesses and the production of documents before the Registrar may be compelled by subpoena.

(3)        The Registrar may adjourn the inquiry from time to time.

11                  The Full Court of this Court in Gordon M Jenkins & Associates Pty Ltd v Coleman (1989)23 FCR 38 at 50-51 per Sheppard, Beaumont and Hill JJ held that the words “substantially a matter of calculation” constrained significantly what could be referred to a registrar and in particular limited it to methods of mathematical calculation not calling for the exercise of judgment. 

12                  The Court thought that the rule had been drafted “having in mind the requirement that judicial power be exercised by judges appointed under Chapter III of the Constitution” (at 50).  This may reflect an understanding of the powers of registrars which may well have been superseded by the High Court’s decision in Harris v Caladine (1991) 172 CLR 84 although no present occasion arises to consider that.

13                  The point to be made is that the power to give judgment damages to be assessed is not limited by the terms of O 38 r 1 which, in truth, deal only with the situation where the assessment is to be carried out by a registrar.  In other cases, the power in O 35 r 1 to give “such judgment … as the nature of the case requires” will be sufficiently ample to permit such a judgment.   The decision of Drummond J in Simmons v Levene Pty Ltd [1996] FCA 1217 at [34]-[35] proceeds on the basis that the power was (then) to be located both in O 35 r 1 and O 38 r 1 which, with respect, is correct. 

14                  However, the judgment in this case was not given under either of those provisions.  Instead, it was granted pursuant to O 35A r 3(2)(c), (d) and (e) which provide relevantly:

(2)        If a respondent is in default, the Court may:

            …

(c)        if the proceeding was commenced by an application supported by a statement or claim or the Court has ordered that the proceeding continue on pleadings – give judgment against the respondent for the relief that:

(i)         the applicant appears entitled to on the statement of claim; and

(ii)        the Court is satisfied it has power to grant; or

(d)       give judgment or make any other order against the respondent; or

(e)        make an order specified in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the Court in the proceeding in the time limited in the order.

15                  For the reasons I have given this Court has the power to give a judgment for damages to be assessed and hence a power to do so under these Rules.  No issue was raised before me about this but it is to be noted that under O 35A – unlike O 35 itself – it is only necessary that the applicant appear entitled to the relief claimed in the pleading.  That difference has led to the view that proof of the claim by an applicant is not necessary under the rule:  Luna Park Sydney Pty Ltd v Bose [2006] FCA 94 at [20] per Jacobson J.

16                  In those circumstances, the nature of the present hearing becomes clear.  It is a trial of the damages issue.  The judgment which has been entered concludes all liability issues against Mr Leslie but leaves him free to conduct defences which go to the issue of quantum.  I reject, therefore, Flashback’s argument that Mr Leslie is shut out of the hearing altogether.

III – Procedural Consequences

17                  During the hearing Mr Leslie sought to put in issue, both by means of evidence and through argument, two propositions.  These were that:

(a)        Flashback did not, in truth, hold an exclusive licence; and

(b)       Mr Leslie was entitled to rely upon the defence conferred by s 115(3) of the Copyright Act 1968 (Cth).

18                  I do not doubt that Mr Leslie could have contended, prior to entry of judgment against him, that Flashback’s licence was not exclusive and that it could not, therefore, seek to rely upon the rights conferred upon an exclusive licensee by Part V Division III of the Act.  However, the contention that Flashback was not an exclusive licensee merged in the judgment and is no longer extant to be litigated.  The controversy as to whether Flashback was, or was not, such a licensee has now been resolved albeit through O 35A.  No other position is consistent with the fact that damages are now to be assessed.

19                  A similar conclusion obtains in the case of s 115(3).  It provides:

Where, in an action for infringement of copyright, 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 under this section to any damages against the defendant in respect of the infringement, but is entitled to an account of profits in respect of the infringement whether any other relief is granted under this section or not.

20                  This provision confers a defence which goes to the respondent’s liability for infringement: Golden Editions Pty Ltd v Polygram Pty Ltd (1996) 61 FCR 479 at 481-482 per Kiefel J (with whom Burchett and Tamberlin JJ agreed); Milwell Pty Ltd v Olympic Amusements Pty Ltd (1999) 85 FCR 436 at 449 [52] per Lee, von Doussa and Heerey JJ; Krueger Transport Equipment Pty Ltd v Glen Cameron Storage and Distribution Pty Ltd (No 2) (2008) 79 IPR 81 at 85 [11] per Gordon J.  As such, it too has ceased to be an issue by reason of the judgment.

21                  Mr Leslie sought to rely upon two affidavits going to these issues – his affidavit of 2 November 2009 and paragraphs 1-25 (paragraph 26 was not contested and was admitted) of his affidavit of 16 May 2008.  At the hearing I rejected all of that evidence and indicated that I would provide my reasons for doing so at the time of delivery of judgment.  My reasons for doing so are because they do not relate to a fact in issue.

IV  -  Relevant Principles

22                  Although it is no longer in dispute because of the judgment which has been entered it is useful to recall the basis of Mr Leslie’s liability.  Section 119 of the Act confers upon an exclusive licensee the same rights it would have if the licensee had taken an assignment of the copyright from the copyright owner.  One of those rights is the right conferred by s 115(2) to damages for infringement of copyright.  Section 37(1) extends the concept of infringement to include, inter alia, the sale of an artistic work without the licence of the copyright owner.  Here Showtime, by selling the 27,840 copies of the children’s DVDs to ALDI, infringed the copyright as a result of which Flashback had a right to sue for damages for that infringement.   Section 36(1), however, also extends the concept of infringement to include a person who authorises any act comprised in the copyright.  Section 36(1A) elaborates on the concept of authorisation:

 In determining, for the purposes of subsection (1), whether or not a person has authorised the doing in Australia of any act comprised in the copyright in a work, without the licence of the owner of the copyright, the matters that must be taken into account include the following:

(a)        the extent (if any) of the person’s power to prevent the doing of the act concerned;

(b)        the nature of any relationship existing between the person and the person who did the act concerned;

(c)        whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.

23                  The concept of authorisation has been the subject of frequent judicial interpretation.  However, much of that dialogue predates the insertion of s 36(1A) by the Copyright Amendment (Digital Agenda) Act 2000 (Cth) Schedule 1 [39].  In Australasian Performing Right Association Ltd v Jain (1990) 26 FCR 53 at 61 Sheppard, Foster and Hill JJ thought that the concept of authorisation came close to “countenance”.  However, that approach may not be compatible with the injunction in s 36(1A) that the three matters set out in subsections (a)-(c) must be taken into account.  Quite apart from the judgment – which, of course, resolves this issue – there could be little doubt that Mr Leslie, as the sole director and secretary of Showtime, satisfied these requirements.  Unlike more complex corporate veil situations Mr Leslie and Showtime were, in essence, alter egos. 

24                  It is then useful to say something of the principles governing the assessment of damages for infringement of copyright.  Of course, Flashback was bound to elect between pursuing damages and an account of profits – s 115(2).  At the outset of the damages trial its counsel did so and elected to pursue damages.  I take as a useful summary of the relevant principles for an assessment of damages under s 115(2) the reasons of Finkelstein J in TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) (2007) 158 FCR 444 at 495-496 [203]-[208].  For present purposes his Honour’s analysis contains seven points of relevance.

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

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

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

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

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

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

7.         Other lost profits, not directly arising from lost sales, may also be recoverable so long as they are causally connected to the infringement and not too remote.  One common example given is that of the loss of profits arising from foregone sales of chattels (such as CD containers) in which the copyright article would have been sold.

25                  To these seven I would add an eighth:

8.         There is a difference between cases where a plaintiff cannot adduce precise evidence of what has been lost and cases where a plaintiff, although able to do so, has not done so: Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768 at 774 [37]-[38] per Hayne J (with whom Gleeson CJ, McHugh and Kirby JJ agreed); applied to s 115(2) by the Full Court in Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd  (2007) 157 FCR 564 at 569-570 [35]-[39] per Black CJ and Jacobson J, 581-582 [101]-[103] per Rares J.

V –  Evidence of Lost Sales

26                  Flashback’s claims for damages fell into two categories:

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

2.         Lost future sales of the children’s DVDs sold to ALDI in the period between December 2008 and May 2010 in the order of 90,000 discs.  Here the argument was that ALDI had ceased to do business with Flashback after the dispute between Flashback and Showtime became known to it.  Again, a rate of profit of $1.68 was claimed for a total of $151,200. 

27                  I accept the claim in (1) but I reject the claim in (2).  My reasons for this are as follows.

28                  Mr Hume, one of Flashback’s directors, gave evidence on its behalf and was cross-examined.  In his affidavit he deposed to an estimate on his part of 30,000 DVDs at a profit margin of $1.68.  The pleaded case was that Showtime had sold 27,840 copies of the DVDs to ALDI.  There was a separate pleaded case relating to the sale of another 30,000 DVDs to a different entity but that case was not pursued at the damages hearing.  The entered judgment stands for the proposition that Mr Leslie authorised the sale by Showtime of 27,840 DVDs to ALDI and is therefore liable to Flashback in damages.  I proceed on the basis of 27,840 DVDs.

29                  The unexpressed premise in Flashback’s argument is that ALDI would have purchased the DVDs from Flashback if it had not purchased them from Showtime.  In favour of concluding that that premise is sound is the fact that Flashback is the exclusive licensee so that, in the ordinary course of events, ALDI would not have been able to purchase them elsewhere.  Against it, however, is the absence of any evidence to indicate that ALDI would have agreed to pay Flashback’s asking price of $3 per DVD.  There is no ready way to resolve that debate save by observing that the facts at least bespeak a desire on ALDI’s part to purchase the DVDs.  In the circumstances I propose to proceed on the basis of a finding that a sale of 27,840 DVDs by Flashback to ALDI would have occurred.

30                  Mr Hume gave evidence that the profit margin was $1.68 on a sale price of $3.  He provided no supporting documentation for that figure but under cross-examination he explained the basis upon which it was calculated and indicated that the primary documentation was available if the cross-examiner wished to have access to it.  The hearing extended over two days and that answer was given on the first day.  No attempt was made on Mr Leslie’s behalf to call for the documents referred to by Mr Hume.  In the circumstances I accept the validity of his calculation of $1.68 as the relevant profit margin. 

31                  The application of that figure to 27,840 DVDs results in a damages sum of $46,771.20.  I propose to reduce this to $40,000 to reflect the possibility that ALDI may well have sought a lower price than $3 per DVD. 

32                  I turn then to the second claim.  Mr Hume sought a sum based on sales of 90,000 of the children’s DVDs for the 17month period from December 2008 to May 2010.  The steps in this argument were:

(a)        after ALDI became aware of the situation between Showtime and Flashback it ceased to do business with Flashback; and

(b)       but for that occurrence Flashback would have sold a further 90,000 of the children’s DVDs to ALDI. 

33                  The figure 90,000 was said to be derived from assessing Flashback’s past sales to ALDI in the years following 2004.

34                  I would accept the first step (a) which, in substance, requires an assessment of the motives of ALDI.  Mr Leslie objected that the evidence showed that ALDI was still dealing with Flashback and that the alleged cessation of trading had not, in fact, occurred.  Reliance was placed on a facsimile sent by ALDI to Flashback dated 16 January 2009 which called for tenders from interested suppliers.  Mr Hume gave evidence, from which he was not shaken, that this facsimile was a standard pro-forma tender request which Flashback, along with others, received.  The difficulty was, so he said, that none of Flashback’s tenders were accepted.  I accept this evidence not only because Mr Hume was not moved from it but because the facsimile in question is addressed to “Dear David Ogilvy” which has the appearance of being a computer generated correspondence. 

35                  Accepting then that ALDI has, in fact, ceased dealing with Flashback the question then arises, why? 

36                  During the hearing three theories contended for the field:

(a)        ALDI had chosen not to deal with Flashback out of a concern not to become embroiled in a dispute about copyright ownership and was avoiding dealing either with Flashback or Showtime;

(b)       ALDI had decided to move out of the product range being offered by Flashback and the cessation of dealing was, therefore, unconnected to anything done by Showtime; 

(c)        ALDI had continued to be willing to accept tenders from Flashback but the quality of Flashback’s tenders were so poor or uncompetitive that none of them had been successful.

37                  Both Mr Leslie and Mr Hume gave evidence about the intentions of ALDI.  Most of Mr Leslie’s evidence on this score was excluded by reason of objections which were raised but many of Mr Hume’s statements about this topic were received into evidence when no objection was taken.  Despite that, I propose to treat all such evidence as having no weight.  Ascertainment of the motives of ALDI is to proceed by reference to inferences drawn from objectively available facts, not the subjective opinions of the protagonists.  For completeness, no party sought to adduce evidence from ALDI but neither was under any obligation so to do.

38                  I reject the proposition that ALDI had decided to move out of the relevant product range.  The evidence for this proposition was said to consist, I think, of ALDI and Big W catalogues.  However, none of them was tendered in evidence and I remain ignorant of their contents.  Mr Hume was asked some questions about them – indeed he produced some of them from his briefcase during his cross-examination – but none of his answers advanced the proposition now under consideration.  A later attempt on Mr Leslie’s behalf to prove something about an ALDI advertisement extracted from the internet petered out before any document was tendered.  In the circumstances, there is simply not a sufficient basis in the evidence to embrace this view.  It was also put that Flashback’s sales to ALDI could be seen as declining.  However, whilst, the evidence suggested that in one year the sales were lower than in the previous year this is simply not a sufficient basis to conclude the existence of a trend.  Still less could it provide a basis for deducing that the decline was caused by any particular set of circumstances.

39                  I also reject the argument that Flashback’s tenders were of insufficient quality.  There were, I think, two aspects to this point.  First, there was an undated product submission form with the list of children’s DVDs attached to it and handwritten words “DVD Children” on the front.  I do not accept that this is an example of Flashback’s tender documentation.  A number of such tenders were in evidence and they were detailed including, as might be expected, prices, quantities, samples and so on.  I can fathom no reason why Flashback’s tenders might generally be of acceptable quality but be of substandard quality in the case of ALDI.

40                  The second point was allied to the first.  None of the tenders provided by Mr Hume were tenders to ALDI.  The point being made was that there had been no such tenders by Flashback and this is why no orders were being received from ALDI.  Mr Hume agreed that he had not been able to locate any such tenders within Flashback’s records and that they must have gone missing.  Unlike tax invoices, however, I can see no pressing reason why such documents would necessarily need to be kept.  I accept the anomaly of some, but not all, of Flashback’s tender documents being available but I do not feel that I can conclude from that that I should reject Mr Hume’s evidence that tenders to ALDI had been done.  I am fortified in that conclusion by the absence of any compelling reason why Flashback would stop tendering to a large client like ALDI. 

41                  That leaves only the fact that ALDI ceased using Flashback after the dispute became known to ALDI.  I can well understand why its attitude may well have been to cease to deal with either Flashback or Showtime so as not to involve itself needlessly in a potentially dyspeptic dispute about an inexpensive range of children’s DVDs.  I note, for completeness, that Mr Leslie gave evidence that ALDI had not used the services of Showtime since the events in question.  In those circumstances, I conclude that ALDI ceased to deal with Flashback because it did not wish to be involved with disputing parties with questionable title to the product they were tendering to sell.

42                  Mr Hume estimated that there would have been a further 90,000 of the children’s DVDs sold to ALDI.  The evidence relied upon Mr Hume to make good that proposition was the invoices for all sales made by Flashback to ALDI in the years 2004-2008.

43                  Those invoices do not bear out Mr Hume’s arithmetic.  They reveal the following volumes of sales for each years 2004-2007:

44                  Taking an annual average this amounts to 11,348 sales per annum whereas Mr Hume’s evidence proceeds on the basis of sale of 90,000 over 17 months.  More significantly, the invoices show that the items sold were not the children’s DVDs but, perhaps unsurprisingly, a miscellany of titles including CDs and DVDs and ranging from karaoke to romantic comedy.  In that circumstance, I cannot conclude that Flashback lost sales of 90,000 of the children’s DVDs in the periods between December 2008 and May 2010.

45                  However, as I have previously indicated, loss may be recovered even in respect of items which are not the copyright works themselves.  In this case, it is a reasonable inference that ALDI’s decision not to treat with Flashback has cost it profits not only on the children’s DVDs but on all of its other product lines too.  The invoices in evidence suggest total sales of 45,392 DVDs and CDs at a total cost (excluding GST) of $180,534.52.  Adjusted for the 17 month window between December 2008 and May 2010 this would suggest sales in the vicinity of $63,939.31.  However, whilst Mr Hume gave evidence about the profit margin on the children’s DVDs he did not give evidence on the margin on other products.  In those circumstances, it has not proved this element of its loss.  To be plain, the reason for this is because:

(a)        I am affirmatively satisfied that Flashback would not have sold 90,000 of the children’s DVDs to ALDI in the period December 2008 to May 2010;  and

(b)       whilst I am satisfied that revenue of $63,939.31 on a range of titles has probably been foregone I cannot perceive the profit margin and, therefore, cannot calculate the profits which have been lost.

46                  Put another way, this is a case not of difficulty of calculation but of failure to prove loss.

VI  -  Relief

47                  In the circumstances it is appropriate to give judgment in favour of Flashback against Mr Leslie in the sum of $40,000 together with interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth).  Given the circumstances of the litigation, it is appropriate to grant the injunctive relief sought.  I see no utility, however, in granting any additional declaratory relief.  I will hear further argument on the question of costs on a date to be arranged with my Associate.  The parties are to bring in short minutes of order giving effect to these reasons within 14 days.

Associate:

Dated:         2 July 2010