Federal Court of Australia

Geocentric Outdoors Pty Ltd v Nothin But Shorts (International) Pty Ltd [2021] FCA 1535

ORDERS

THE COURT ORDERS THAT:

1.    The respondent is restrained whether by itself, its employees, agents, officers or otherwise howsoever, from exercising, or purporting to exercise, any rights comprised in the copyright subsisting by virtue of the Copyright Act 1968 (Cth) (the “Act”) in subject matter described in an agreement between the applicant and the respondent dated 14 July 2011 (the “Agreement”) as “all motion content rights” related to “TV rights” as defined in the agreement including “all video content” originated for the purpose of either:

(a)    National (Australian) and International television broadcast of events described as the “Action Racing World Series” (“ARWS”) events; or

(b)    for the purpose of delivery online and distribution by smart phone and android devices of the ARWS events; or

(c)    both,

(otherwise described as “the material”).

2.    The respondent is restrained whether by itself, its employees, agents, officers or otherwise howsoever from exercising any rights comprised in the copyright subsisting in the material without the consent of the applicant.

3.    Judgment be entered against the respondent for damages under s 115(2) of the Act to be assessed concerning each infringement of the applicant’s copyright in the material, by an inquiry as to each infringing act and the loss said to be caused to the applicant by each such act and such assessment shall have regard to whether additional damages for the purposes of s 115(4) of the Act are to form part of the assessment of damages upon such an inquiry.

4.    The respondent file and serve by Friday, 28 January 2022, an affidavit identifying:

(a)    all documents (whether in electronic or physical format) in the possession, power or control of the respondent related to any contract, arrangement or understanding with any person or entity (whether constituted by an exchange of letters or emails or set out in a document) concerning any aspect of the video content or the material (as described in Order 1 in each case) concerning the period from 14 July 2011 to the date of these orders; and

(b)    all documents in the possession, power or control of the respondent (whether in electronic or physical format) evidencing or relating to any transaction by which the respondent received any monies directly or indirectly related to the video content or the material as described in Order 1 including, but not limited to, documents such as bank statements, account details into which money has been paid and end of financial year accounts (including balance sheets and profit and loss statements).

5.    To the extent that Mr Anthony Gordon as the guiding mind of the respondent and the decision-maker on behalf of the respondent, has in his possession, power or control any document (whether in electronic or physical format) related to any contract arrangement or understanding howsoever made with any person or entity concerning any aspect of the video content or the material (as described in Order 1) concerning the period from 14 July 2011 to the date of these orders, Mr Gordon is to file and serve by Friday, 28 January 2022, an affidavit identifying any and all such documents.

6.    To the extent that Mr Anthony Gordon as the guiding mind of the respondent and the decision-maker on behalf of the respondent, has in his possession, power or control any document (whether in electronic or physical format) evidencing or relating to any transaction by which any person or entity paid any monies to Mr Gordon or at the direction of Mr Gordon to any other entity or person related, directly or indirectly, to the video content or the material as described in Order 1 concerning the period from 14 July 2011 to the date of these orders, Mr Gordon is to file and serve by Friday, 28 January 2022, an affidavit identifying any and all such documents.

7.    The respondent pay the costs of and incidental to the application.

8.    The costs of the proceeding other than the costs of and incidental to the application are reserved for later determination.

9.    Pursuant to s 23 and s 37P of the Federal Court of Australia Act 1976 (Cth), rule 1.32 and rule 1.36 of the Federal Court Rules 2011, these orders and the reasons for judgment in support of these orders are made and published from Chambers.

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

REASONS FOR JUDGMENT

GREENWOOD J:

1    These proceedings are concerned with an application by the applicant in the principal proceeding, Geocentric Outdoors Pty Ltd (“Geocentric”), under s 31A(1) of the Federal Court of Australia Act 1976 (Cth) (the “FCA Act”) for judgment in that part of the proceeding the applicant seeks to maintain against the respondent, Nothin But Shorts (International) Pty Ltd (“NBSI”).

2    In the principal proceeding, Geocentric claims the following relief against NBSI based on the facts pleaded in the statement of claim.

3    First, damages under s 115(2) of the Copyright Act 1968 (Cth) (the “Act”) for infringement of the applicant’s copyright subsisting in particular audio-visual cinematographic content (the “audio-visual works”).

4    Second, in assessing damages for infringement, the applicant seeks an award of additional damages under s 115(4) of the Act.

5    Third, in the alternative to the first two claims, the applicant seeks an order under s 115(2) of the Act for the taking of an account of profits derived by the respondent by reason of the contended infringing conduct and an order that the respondent pay such sum as found to be due to the applicant upon the taking of an account.

6    Fourth, further, or in the alternative to the above claims, the applicant seeks damages under s 236(1) of the Australian Consumer Law (“ACL”) for contended contraventions of s 18 of the ACL which, of course, is contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth).

7    Fifth, further or in the alternative to the claims under s 236(1) of the ACL, a claim under s 237(1) of the ACL for a compensation order in relation to the contended contraventions of s 18 of the ACL.

8    Sixth, an injunction under s 115(2) of the Act to restrain the respondent from “continuing to commercialise” the audio-visual works in which copyright is said to subsist, owned by the applicant. The applicant also seeks, under s 232 of the ACL, an injunction in respect of the contraventions of the ACL.

9    In the course of oral submissions in support of the application for judgment under s 31A(1) of the FCA Act, the applicant made clear that the claims under the ACL are no longer pressed.

10    The applicant’s contention is that on the material filed in support of the application under s 31A(1), the Court ought to be satisfied that the respondent has “no reasonable prospect of successfully defending the proceeding or that part of the proceeding” pressed by Geocentric: s 31A(1)(b). In order to succeed on such an application, it is not necessary to show that the contended grounds of defence of the respondent are hopeless or bound to fail. The statutory conception (and thus the burden to be discharged by the applicant) is one of showing that the respondent has “no reasonable prospect” of successfully defending that part of the proceeding pressed against it.

11    In the application for judgment, the applicant simply recites all of the claims for relief recited in the originating application including all of the claims said to be both further and in the alternative to others. In the result, the applicant at the hearing exercised its right to make an election between the two alternative claims under s 115(2) of the Act (apart from the remedy of an injunction claimed under s 115(2)) of either damages or an account of profits, by electing to claim damages, and as part of that assessment, additional damages under s 115(4). Relief by way of damages is a common law claim (sourced in the Act) for the loss suffered by Geocentric by reason of NBSI’s infringement of Geocentric’s copyright. A judgment entered in favour of an applicant under s 31A(1) on such a claim would normally be a judgment for damages to be assessed upon an inquiry as to damages supported by procedural orders for the disclosure by a respondent of documents and records relevant to the assessment to be made upon undertaking that inquiry. Relief by way of an account of profits is an equitable remedy which requires the respondent to account to the applicant for the profit it has derived by infringing the applicant’s copyright subsisting in the subject matter of the claims. In this case, Geocentric has elected to claim damages.

12    In these proceedings, the applicant is represented by solicitors. The respondent was formerly represented by solicitors for the purpose of formulating and filing a defence to the various matters alleged in the statement of claim. NBSI subsequently withdrew instructions from those solicitors. On the hearing of Geocentric’s application for judgment under s 31A(1), Mr Anthony Gordon, NBSI’s Director, sought leave to appear to represent the company. Leave was given. In the course of the hearing Mr Gordon made clear that so far as NBSI is concerned (and for that matter, so far as Mr Gordon is concerned), the position is this. Mr Gordon does not dispute the claims of Geocentric in terms of the applicant’s rights in the material the subject of the copyright claim. Mr Gordon accepts that NBSI was granted a licence to exercise certain rights in the audio-visual material produced for the purposes of the agreement between the parties and he says that the agreement was that “the split of profit would be 50/50”: T, p 8, lns 25-33; lns 43-46; T, p 9, lns 1-9; 15-24; T, p 10, lns 9-23. The only point of departure between the parties is that Mr Gordon says that NBSI did not make any profit by exercising the licensed rights and to the extent that Geocentric says that it has suffered loss which is now the subject of a claim for damages, Mr Gordon says that he does not understand how such a loss arises in Geocentric.

13    Geocentric says that it has made good, on the basis of the affidavit material filed in support of the application, each element of its cause of action giving rise to the claim for damages (and an entitlement to an injunction) and notes, in effect, that Mr Gordon confines his area of contention to the proposition that NBSI simply made no profit and that there is no basis for a claim for damages, apparent to him.

14    Notwithstanding the position adopted by Mr Gordon that he takes no issue with the agreement and the primary elements of the applicant’s claim (thus confining his attention to the issue of “profit”, on the one hand, and a lack of understanding of any basis for a claim for “damages”, on the other hand), it is necessary to observe that the Court is satisfied of the following matters on the basis of the present material.

15    By email exchanges on 14 July 2011 between Mr Gordon and Mr Craig Bycroft, the applicant’s Managing Director, the parties entered into an agreement in relation to international television and video rights concerning action sporting events described as the “Action Racing World Series” (“ARWS”). Geocentric carries on business as a professional action adventure sports events manager and promoter, and it engages with national and international athletes seeking to participate in such events. Two such events it owns, manages and promotes are the ARWS and the “XPD Expedition Race” (“XPD”). In January 2010, Geocentric entered into a contract with NBSI for the provision by NBSI of video recording and production services for Geocentric’s 2010 XPD event in Cairns. Similar discussions took place concerning the 2011 XPD event to be held in Tasmania. In April, May and June 2011, NBSI and Geocentric exchanged emails and documents concerning NBSI’s proposal to provide film and production services concerning the 2012 ARWS event. It is not necessary to go into the detail of these exchanges, but they provide context to the exchanges on 14 July 2011. Further exchanges occurred on 13 July 2011 including the submission by NBSI of a draft “TV Rights Agreement”. Changes were suggested by Mr Bycroft and the final text of the “Heads of Agreement” was agreed on 14 July 2011.

16    There is no dispute that this document operates as an agreement between the parties. It provides that “[s]eries creation and all motion content rights remain with GO [Geocentric]”. Although some expressions used in the document are not entirely clear, there is no dispute that the relevant rights in the material to be created under the document vested in Geocentric and the agreement concerned conferring a licence on NBSI to secure contracts for “National and International” television broadcast of the ARWS events and “[o]nline delivery and distribution via smart phone and android devices” of the events. Mr Gordon says: “[T]here was always an agreement … and yes it was always agreed that we would split profits 50/50 if and when that occurred [that is, making a profit]”: T, p 9, lns 1-7. Mr Gordon says that there was no profit and “nothing to split”: T, p 9, lns 17-20. Geocentric contests that proposition. I will return to that matter later in these reasons.

17    The agreement provides for a licence granted by Geocentric to NBSI to represent Geocentric for a period of three years in securing “TV rights” for the ARWS events for 2012, 2013 and 2014: see Heads of Agreement, Overview, clause 1. The licence to represent Geocentric by reference to the term “TV rights” encompassed “management &/or production of all video content with [a] view to broadcast” on the nominated mediums described at [16] of these reasons, “all in conjunction with GO [Geocentric]”. There was to be “an initial milestone period of 12 months to achieve TV Series sponsorship” as an element of the licence: Overview, clause 1. Within that period, NBSI was “to achieve TV Series sponsorship”. NBSI’s role included liaising with potential and current sponsors of the event for their inclusion and “value propositions within programming”: Overview, clause 4. A condition of the licence was that NBSI was to “give full disclosure and seek full approvals from GO [Geocentric] for all matters of dealings listed in this agreement”: Overview, clause 5. The agreement then sets out other obligations specific to NBSI and obligations specific to Geocentric.

18    As to NBSI’s commitments, the first was to develop a “scalable TV series over a 3 year period within the ARWS”: NBSI Commitment, clause 1. The clause seems to contemplate the development of a demonstration program in 2011 (called the “2011 teaser”) and a series being made for the 2012, 2013 and 2014 ARWS events which would give rise to a right of extension upon performance.

19    The second NBSI commitment was to develop a “TV Series teaser for a bespoke website add on to the ARWS [website]”. Geocentric was to manage the development of this “holding page” with NBSI.

20    The third commitment was a requirement of NBSI to work “closely and transparently with Geocentric [so] as to create a mutually agreeable sponsorship agreement”.

21    The fourth commitment was to find sponsors for the TV series for the term of the licence and thus for the events in 2012, 2013 and 2014.

22    The fifth commitment reflected in the final two bullet points seems to be a commitment by NBSI to the “initial costs” and the costs of the “teaser”.

23    Geocentric’s obligations included an obligation to forward to NBSI “all enquiries by external parties for broadcast, filming, content creation and use (all video based)” for review by NBSI; and NBSI being authorised (consistent with the “licence to represent”) to “conduct 3rd party discussion in order to secure broadcasting rights and sponsorship to cover all NBSI costs”.

24    These were the terms on which NBSI had a licence from the rights owner, Geocentric, of “[s]eries creation and all motion content rights”.

25    On 13 September 2013, during the Port Augusta event, NBSI advised Geocentric that NBSI was terminating the 14 July 2011 agreement with immediate effect. Geocentric sought clarification of NBSI’s position on 4 November 2013 and received no response. On 28 February 2014, Geocentric, by a letter of that date, accepted NBSI’s repudiation of the agreement thus discharging Geocentric from any further obligation to perform its commitments under the agreement, subject to the continuing commitment accepted by Geocentric of working with NBSI on the sale and promotion of Season 1 to support existing sponsors (as set out in Geocentric’s letter to NBSI of 28 February 2014). In that letter, NBSI was requested not to suggest to any relevant parties that NBSI enjoyed any rights to negotiate a Season 2 series. Geocentric emphasised that a new agreement would be required in order to enable NBSI to continue “to distribute Season 1 under the ARWS name”. Geocentric (consistent with NBSI’s position on the present application), asserted that the agreement with NBSI was that “any profit made from the sale of the series [Season 1] is to be split 50/50 between NBSI and Geocentric”. Geocentric also contended in that letter, that production costs paid by it (and those paid by NBSI) would be reimbursed first and the profit remaining would be split 50/50 between Geocentric and NBSI. Geocentric says that it contributed production and related costs of $118,383.48 of which $92,864.00 was paid directly to NBSI to fund production costs. There seems to have been a further amount paid by Geocentric of $18,470.70 towards production related costs.

26    NBSI says that it has incurred production costs of $316,000.00 in producing Season 1. Mr Godfrey (as a person with some real knowledge of production and filming costs) disputes that costs of that order could have been incurred and, in any event, Geocentric says that it paid NBSI directly an amount of $92,864.00 towards production costs. It is not clear whether the total costs are said by NBSI to be, in effect, $408,864.00 or whether NBSI incurred costs of $316,000.00 of which $92,864.00 was paid by Geocentric leaving a balance of $223,136.00. It seems, however, that Mr Gordon is saying that NBSI incurred production costs itself of $316,000.00. Mr Godfrey has made an estimate of the production costs likely to have been incurred based on his experience, and in his judgment, the production costs are likely to have been approximately $109,450.00 (see the detail of the breakdown of costs at CB-4 to Mr Bycroft’s affidavit of 13 September 2021).

27    This contest over the quantum of the production costs incurred by NBSI leading to Mr Gordon’s contention that there simply is no profit to distribute, led to Geocentric’s election to claim damages rather than seek an account of profits.

28    Geocentric says that NBSI’s entitlement to represent it and exercise any right to enter into agreements conferring any right on any party to broadcast the copyright subject matter owned by Geocentric or exercise any right comprised in the copyright subject matter was entirely dependent on the licence and compliance by NBSI with the conditions of the licence as earlier described and set out in the agreement. Geocentric says that NBSI’s failure to seek approval from Geocentric for any and all agreements it made, and its failure to give Geocentric “full disclosure” of each agreement at the material time surrounding each agreement, placed NBSI in breach of the licence and took it outside the scope of any lawful exercise of the licence of the copyright and thus placed it in infringement of the copyright on each occasion when it purported to act under the licence.

29    Geocentric says that on 17 February 2021, in the course of these proceedings, NBSI served Geocentric with a collection of licensing agreements entered into by NBSI with third parties for the broadcasting of Season 1, without the approval of Geocentric, between 29 March 2012 and 21 November 2020. The agreements are these:

30    Although it is true that Geocentric has now been provided with copies of these agreements (by the email of 17 February 2021), Geocentric was entitled, as a condition of the licence, to be provided with “full disclosure” of each proposed agreement and was entitled to approve (or not) each agreement. Moreover, NBSI’s representation of Geocentric in relation to the “TV rights” was to be undertaken in relation to the relevant mediums “all in conjunction with GO”.

31    Apart from providing Geocentric with copies of the above agreements on 17 February 2021, Mr Gordon says that he has provided Geocentric with 10 years of balance sheets and profit and loss statements to support his contention that NBSI made no profit: T, p 7, lns 18-20. Mr Tarabay, the solicitor for Geocentric, says that that is not so: T, p 12, ln 47. Mr Tarabay says that the correct position is that on 16 May 2021, on behalf of Geocentric, he was provided with the following material by Mr Gordon:

(i)    balance sheet from EOFY [End of Financial Year] 2016 [Exhibit KT25]

(ii)    annual financial statements from EOFY 2017 and associated material [Exhibit KT26]

(iii)    balance sheet from EOFY 2018 [Exhibit KT27];

(iv)    annual financial statements from EOFY 2019 [Exhibit KT28];

(v)    annual financial statements from EOFY 2020 [Exhibit KT29]; and

(vi)    profit and loss statement for period between EOFY 2016 – EOFY 2020 [Exhibit KT30].

32    The affidavit material filed on behalf of Geocentric in support of the application supports the factual contentions of Geocentric. Geocentric seeks damages for all losses attributable to NBSI’s infringing conduct. Whether the infringing conduct gives rise to a loss in Geocentric is a matter to be determined upon conducting an assessment of damages and, for that purpose, an inquiry as to damages, which will address, if there be a proven loss, the quantum of that loss. Such an inquiry will also examine whether, and to what extent, an assessment of damages is to take into account the factors identified at s 115(4) of the Act. It is not necessary to set out those statutory factors in these reasons.

33    Geocentric is entitled to judgment against NBSI for damages to be assessed for infringement of the copyright subsisting in the material the subject of the agreement and, in undertaking that assessment under s 115(2) of the Act, the assessment will take into account whether, and if so to what extent, the assessment is to include an award of additional damages appropriate in the circumstances having regard to s 115(4) of the Act.

34    Having regard to the factual material which demonstrates that NBSI failed to give full disclosure at the material time and failed to seek Geocentric’s full approval at the material time in relation to agreements granting, in effect, a sub-licence of rights licensed by Geocentric to NBSI, Geocentric is entitled to an injunction retraining NBSI from exercising any rights comprised in the copyright in the subject matter of the agreement in which copyright subsists.

35    Procedural orders will also be made for the production of records relevant to an assessment of damages. The costs of the proceeding will be reserved for later determination (other than the costs of the present application). The respondent will be ordered to pay the costs of and incidental to the application.

Associate:

Dated:    7 December 2021