Federal Court of Australia

Vehicle Monitoring Systems Pty Limited v SARB Management Group Pty Ltd trading as Database Consultants Australia (No 13) [2025] FCA 1078

ORDERS

THE COURT ORDERS THAT:

1.    The applicant notify the second respondent of its election between damages and an account of profits in writing by no later than 21 days of the date of this Order.

2.    The applicant pay the costs of the hearing on 10 July 2025 and the preparation therefor.

3.    The applicant pay the costs related to its application to re-open and rely on the affidavit of Mr Piesiewicz sworn 21 July 2025.

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

REASONS FOR JUDGMENT

BURLEY J:

1.    INTRODUCTION

1    The present dispute concerns whether the successful applicant in patent infringement proceedings, Vehicle Monitoring Systems Pty Ltd (VMS), should be obliged at this point to make an election between damages and an account of profits. The first respondent is SARB Management Group Pty Ltd t/as Database Consultants Australia. The second respondent is the City of Melbourne (City).

2    By way of background, the proceedings were heard in March and April 2021 by Besanko J, who determined that a number of the patent infringement allegations advanced by VMS succeeded and that a cross-claim alleging that the patents in suit were invalid failed: Vehicle Monitoring Systems Pty Limited v SARB Management Group Pty Ltd trading as Database Consultants Australia (No 8) [2023] FCA 182. SARB appealed from that decision and on 9 February 2024 the Full Court delivered its reasons, allowing the appeal in part but nonetheless finding that some valid claims had been infringed: SARB Management Group Pty Ltd T/A Database Consultants Australia v Vehicle Monitoring Systems Pty Limited [2024] FCAFC 6; 176 IPR 391 (Burley, Jackson and Downes JJ).

3    Following the remittal of the balance of the matter to the primary judge, his Honour Besanko J retired from the Court and the matter was allocated to me in relation to the remaining issues, which concern the question of pecuniary relief.

4    Since June 2024, I have managed the proceedings and several issues have arisen and been addressed during case management hearings. VMS has issued notices to produce to the respondents and the respondents have filed affidavits, accompanied by supporting documentation, concerning the number of infringing devices that they have made (in the case of SARB) and used or kept for use (in the case of City). VMS has filed points of claim in relation to its claim for pecuniary relief and the respondents have filed points in answer. In the points of claim, VMS has identified the bases upon which it seeks both damages and, in the alternative with respect to the claim against City, an account of profits.

5    In answer to the direction that it file evidence, broadly, to enable VMS to ascertain the quantum of a claim for an account of profits, City filed a lengthy affidavit affirmed by Dean Robertson, the Director of City Safety, Security and Amenity for City.

6    After some disputation, ventilated in correspondence between the parties, City contended that VMS had received sufficient information to enable it to make an election between damages and an account of profits. That position was foreshadowed at a case management hearing on 22 November 2024. At that case management hearing, counsel for VMS also foreshadowed that by the time it filed its points of claim, VMS would be in a position to make the election. VMS filed amended points of claim on 14 April 2025. By consent orders made on 13 May 2025, I directed that by 23 May 2025 VMS notify City as to its election or, if it contended it could not do so, the reasons for that contention (Order 5). In the same orders, I directed that if the parties were unable to resolve the issue of election (and two other issues that are not presently material) each party should provide short written submissions on their respective positions and the matter would be addressed on 10 July 2025 (Orders 6, 7). The parties duly provided submissions. VMS also supplied a bundle of documents upon which it intended to rely and both parties made reference to those documents in oral argument.

7    The dispute between the parties is now whether the Court should direct VMS to make an election between seeking damages or an account of profits from City. VMS opposes that course. In order to address this, it is necessary first to describe the procedural steps taken thus far.

2.    PROCEDURAL BACKGROUND

8    On 21 June 2023, Besanko J made final orders in the proceedings prior to the appeal. Order 21 of those orders directed City to file an affidavit attesting to, and providing supporting documentation as to, information relevant to quantum including City’s bona fide estimate of the revenue generated from all Parking Infringement Notices (PINs) issued by City using Pinforce Version 1 (PV1) and Pinforce Version 3 (PV3) from and after 9 May 2013.

9    On 1 May 2024, the Full Court made orders in the appeal proceedings declaring that PV3 did not infringe the relevant patents, and varying the final orders made by Besanko J accordingly (including Order 21). In purported compliance with the varied Order 21, City filed an affidavit of Mr Robertson affirmed 21 June 2024 (the Second Robertson Affidavit).

10    At a case management hearing on 23 October 2024, VMS was critical of the Second Robertson Affidavit. I considered it to be inadequate and non-compliant with the varied Order 21. I ordered that a further, compliant affidavit be provided that met the requirements of varied Order 21 and that City and SARB (who had also failed to comply with a similar order requiring affidavit evidence) pay VMS’s costs of and incidental to the unnecessary case management hearing forthwith (Order 2, Order 4). The Orders of 23 October 2024 annexed varied Order 21, which set out as follows:

Within 28 days, the Second Respondent file an affidavit that attests to, and provides supporting documentation as to:

(a)    the total number of Pinforce Version 1 and Pinforce Version 3 used (or previously used), or kept for use, by the Second Respondent from and after 9 May 2013;

(b)     the total number of Pinforce Version 1 and Pinforce Version 3 presently in the possession, custody or control of the Second Respondent;

(c)     the number of Parking Infringement Notices (PINs) issued by the Second Respondent using: (i) Pinforce Version 1; and (ii) Pinforce Version 3 from and after 9 May 2013;

(d)     The Second Respondent’s bona fide estimate of the revenue generated from all PINs issued by the Second Respondent attributable to its use of (i) Pinforce Version 1; and (ii) Pinforce Version 3 from and after 9 May 2013 (such revenue to include parking fines in fact paid to the Second Respondent and extra fee levies paid to the Second Respondent but to exclude parking fines that have not been paid and parking fines paid to Vic Fines) and particulars as to how that estimate has been made; and

(e)     The Second Respondent’s bona fide estimate of its costs incurred in generating the revenue referred to in (d) above and particulars as to how that estimate has been made, including:

(i)     a break-down of costs paid to SARB or its related parties, on the one hand, and any other costs incurred, on the other;

(ii)     an explanation of any one-off or anomalous costs.

11    On 6 November 2024 Mr Robertson affirmed a further more detailed affidavit (the Third Robertson Affidavit).

12    In the Third Roberston Affidavit, Mr Robertson gave evidence that in a previous role with City he was responsible for overseeing the On-street Support and Compliance Services branch of Council (which has since been restructured into the City Safety, Security and Amenity Services branch). In that role, he oversaw the use of parking enforcement technologies by City, including dealing with representatives of SARB.

13    Mr Robertson stated that City’s records relating to PINs issued from 9 May 2013 to when PV1 was phased out in 2016 were stored in four databases: Pinforce, Sentinel, Pathway and TechOne. City maintains reporting databases which comprise subsets of data from those databases for reporting purposes. From June 2017, Mr Robertson instructed a staff member to build and maintain weekly reports tracking City’s PIN revenue and expenses and the cost of PIN issuing processes, as well as a summary spreadsheet to track financial performance. The summary spreadsheet contains some data from City’s reporting databases which is used as is, such as total PIN receipts, and some data which requires accounting treatment (i.e. apportioning) for it to be meaningful, such as overhead costs. A copy of the summary spreadsheet exported in November 2024 is annexed to the Third Robertson Affidavit as Confidential Annexure DR-22.

14    The summary spreadsheet in Confidential Annexure DR-22 shows the formulas used by City to apportion data. For example, the total in-ground sensor (IGS) PINs expenses are calculated by adding direct contract expenses (i.e., payments made by City to SARB for Pinforce) with ‘Branch Expenses’ (i.e., other indirect expenses incurred by City’s parking enforcement function and other branches supporting it). Column S shows the Branch Expenses apportioned to PINs issued using IGS. The formula applied to column S shows that the Branch Expenses figures (column I) are multiplied by the percentage of total PINs issued which were IGS PINs (column L).

15    Confidential Annexure DR-24 to the Third Robertson Affidavit contains a number of spreadsheets, including spreadsheets showing how individual line item costs incurred by City were apportioned to the Branch Expenses, before the Branch Expenses figures are then apportioned in DR-22 to the IGS PINs. For example, an indirect line item cost relating to a parking compliance officer might be almost totally allocated to Branch Expenses, given the majority of the officer’s role relates to parking compliance. However, a line item cost relating to a business planning employee might have a smaller percentage allocated to Branch Expenses, reflecting the employee’s lesser involvement in parking compliance. Mr Robertson gives evidence that the allocations for each line item were determined by the administration team within the relevant branch, and reflect the fact that the branches have multiple functions outside of parking infringement (such as permits, animal management, etc).

16    At [28(a)] of the Third Robertson Affidavit, Mr Robertson states in response to the varied Order 21 that the estimated revenue generated from all PINs issued by City attributable to use of PV1 is nil. Mr Robertson gives the following explanation for this outcome:

(1)    During the relevant period, City received a total of $24,233,864 in revenue from IGS PINs;

(2)    Also during the relevant period, City incurred $22,077,038 in total expenses in connection with the IGS PINs. Subtracting these total expenses from the total revenue equals $2,156,826 (subject to a rounding error in the spreadsheet used by Mr Robertson);

(3)    However, Mr Robertson estimates that the amount of this revenue attributable to PV1 is nil for the following reasons:

(a)    PV1 increased parking compliance rates and hence reduced PIN revenue due to overstay, compared to other parking enforcement methods (such as ‘chalking’ tyres). This was evidenced by a significant decrease in the parking overstay rate observed during the relevant period that PV1 was in use, compared to prior rates and when compared to regions where PV1 was not in use; and

(b)    PV1 did not result in any material reduction in costs to City of issuing PINs.

(4)    Accordingly, Mr Robertson stated that PV1 “did not offer any benefit, in generating overstay PIN revenue or parking meter revenue, over other systems available at similar or lower cost (namely, the chalking method)” and hence the estimated revenue attributable to PV1 was nil.

3.    THE SUBMISSIONS

17    City contends that it has been 7 months since it served the Third Robertson Affidavit and 5 months since VMS filed its points of claim. It submits that the choice facing VMS is not complex and is between damages in the form of a reasonable licence fee and an account of City’s profits (if any) attributable to City using and/or keeping for use the PV1, noting that VMS has elected to seek damages against SARB. The information provided to VMS in the Third Robertson Affidavit has been summarised above, and includes the total revenue that City derived from all IGS PINs in the relevant period and the cost base for that revenue. It submits that it is not conducive to the just resolution of quantum issues as quickly, inexpensively and efficiently as possible for VMS to pursue, in aid of making an election, an inquiry seeking to disprove City’s estimate of profit attributable to the use of PV1.

18    VMS submits that it is not presently able to make an informed election based on the Third Roberston Affidavit. It notes that according to Mr Robertson’s evidence, City received total revenue from IGS PINs of $24,233,864 but that the estimated revenue generated from all such notices attributable to the use of PV1 is nil. It submits that the profits information in the Third Robertson Affidavit is opaque and that it is entitled to make an informed election based on sufficient information to “test and assess the assumptions made” by City in the evidence provided. As an example, VMS notes that [REDACTED] is said to be the amount of indirect overheads that City asserts are attributable to its use of PV1, but VMS cannot understand the bases upon which this figure was derived and, despite seeking clarification, has not received any. Specifically, VMS raises concerns about the allocations applied to each line item in Confidential Annexure DR-24 to determine the amount apportioned to Branch Expenses (and subsequently used to calculate the total IGS PINs expenses), as described in paragraphs [14] and [15] above. It says it cannot understand the reasoning behind these allocations because it does not know how the council operates, and therefore cannot undertake a reasonable alternative apportionment exercise. It submits that if the election order is made, VMS will be required to speculate as to whether or not the sum recoverable by way of damages will exceed that recoverable under an account of profits.

19    VMS submits that it should not be compelled to make its election by 17 July 2025 and that it may need to see the lay and expert evidence filed before making its election.

4.    CONSIDERATION

20    The right of an applicant who has established infringement of a patent is to claim either damages or an account of profits. By s 122 of the Patents Act 1900 (Cth) the applicant has the option of one or the other. The section contains no indication of the time by which the election must be made.

21    In Australian Mud Company Pty Ltd v Globaltech Corporation Pty Ltd (No 3) [2022] FCA 596, Besanko J said the following concerning the election at [11]:

In LED Builders Pty Ltd v Eagle Homes Pty Ltd (No 3) [1996] FCA 972; (1996) 70 FCR 436 (LED Builders) (at 442–449), Lindgren J in a case involving a breach of copyright carried out a historical review of the cases — a number of which were patent cases — concerning the timing of an election and its effect. His Honour considered that Lightman J had stated correctly the relevant principles in Island Records Ltd v Tring International Plc [1996] 1 WLR 1256; [1995] 3 All ER 444. Those principles were set out by Lindgren J in LED Builders as follows (at 447):

1.    While a plaintiff can apply for damages and an account of profits in the alternative, he can obtain judgment only for one or the other (his Lordship cited Neilson v Betts and De Vitre v Betts).

2.    Once judgment has been entered for damages or for an account of profits, any right to elect for the other remedy is forever lost (his Lordship referred to United Australia Ltd v Barclays Bank Ltd at 30).

3.    “Third, a party should in general not be required to elect or be found to have elected between remedies unless and until he is able to make an informed choice. A right of election, if it is to be meaningful and not a mere gamble, must embrace the right to readily available information as to his likely entitlement in case of both the two alternative remedies. It is quite unreasonable to require the plaintiff to speculate totally in the dark as to whether or not the sum recoverable by way of damages will exceed that recoverable under an account of profits” (at 1258H–1259A; 447). (His Lordship referred to Mate v Samuel Stephen Ltd (1930) MacG Cop Cas (1931) 257 at 261.)

4.    The exercise of the right of election must not be unreasonably delayed to the prejudice of the defendant.

22    The reasoning in LED Builders v Eagle Homes Pty Ltd (No 3) [1996] FCA 972; 70 FCR 436 followed in Australian Mud Company, was set out in 1996, before Part VB of the Federal Court of Australia Act 1976 (Cth) (FCA Act), and specifically s 37M, formed an important part of the fabric of the conduct of cases in this Court. A balance must be struck between the statements in that case concerning the fullness of knowledge and the efficient conduct of the case in accordance with the FCA Act. Section 37M(1)(b) provides that:

The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes… as quickly, inexpensively and efficiently as possible.

23    In LED Builders at 446–8, Lindgren J referred to the UK decision of Lightman J in Island Records Ltd v Tring International Plc [1996] 1 WLR 1256; [1995] 3 All ER 444. In that decision, Lightman J noted the need for a process which enables a plaintiff “to secure the wherewithal to make an informed election before thereafter with reasonable promptitude committing himself to either remedy”, and that such a process was desirable to support “the practice of limited discovery in case of split trials and of encouraging a plaintiff who is so entitled to enter judgment at an early stage in the proceedings (thereby saving court time and costs)” (at 1259).

24    Lightman J then referred to the Australian decision of Minnesota Mining & Manufacturing Co v C Jeffries Pty Ltd [1992] FCA 589; 37 FCR 294, in which Sheppard J made an order for limited discovery to enable the applicant to make an informed election between damages and an account. In that decision, Sheppard J observed (at [7]):

Here the applicant seeks to keep its options open notwithstanding that there has been the grant of injunctive relief. But it only wishes to defer making an election until it has had access to the respondents' documents. Once it has inspected them, it will make its election with the consequence that the election will be made prior to the hearing of the claim for damages or an account of profits and, importantly, before any other step is taken towards the preparation of that case for hearing by both the applicant and the respondents.

25    In making the order, Sheppard J also noted that the applicant did not seek general discovery, and the relevant documents would likely need to be discovered regardless of the election made so there was no question of costs being thrown away (at [8]).

26    After considering Sheppard J’s reasons in Minnesota Mining, Lightman J stated (at 1259-60):

To secure that the plaintiff has the required information, the court may direct discovery, but if the information may be made available by some other satisfactory means (e.g. in an affidavit by the defendant or by way of audited accounts or reports) the court may hold that the alternative means be adopted… There should be no over-lengthy or unnecessarily sophisticated exercise. The plaintiff is not entitled to know exactly the amount of any damages or profits to which he is entitled, but only to such information as the court considers to be a fair basis in the circumstances of the particular case for an election.

(Emphasis added)

27    Lightman J ordered discovery in the form of an audited schedule, and required that the plaintiff make its election within seven days of receipt of the schedule (at 1260).

28    Island Records was later considered in Brugger v Medicaid Ltd [1996] FSR 362, which concerned how much information should be given to the successful applicant prior to it making its election (363). Jacob J noted that the plaintiffs had sought an audited schedule of products made and sold and the sums receivable, and an audited schedule of costs incurred by the defendant (364). His Honour observed that this “could potentially involve a substantial amount of work and I do not believe that was what was envisaged in the Island Records case” (at 364). Instead, his Honour stated:

It seems to me that it is sufficient for an informed election to be made that the defendants should supply an affidavit setting forth the numbers of infringing devices made and sold, the sums received or receivable and an approximate estimate of the costs incurred, that approximate estimate to include a statement as to how the estimate was made.

29    This understanding of the scope of disclosure an applicant may receive prior to election was recently cited by the UK Court of Appeal in Lufthansa Technik AG v Panasonic Avionics Corporation [2023] EWHC 1043 at [26]. The Court noted that the information provided to the applicant “did not have to be exact and should not be the product of an overly lengthy or sophisticated exercise”.

30    In Australia, LED Builders, Minnesota Mining, Island Records and Brugger were considered by Goldberg J in Dr Martens Australia Pty Ltd v Bata Shoe Company of Australia Pty Ltd [1997] FCA 505; 75 FCR 230, where his Honour declined to order that an applicant elect between damages and an account of profits prior to any hearing and prior to any decision as to whether liability and quantum should be determined at separate hearings.

31    The principles of election set out above in LED Builders, Minnesota Mining, Island Records, Brugger and Dr Martens are widely accepted and have been cited on numerous occasions (see, for example, Artistic Builders Pty Ltd v Elliot & Tuthill (Mortgages) Pty Ltd & Ors [2002] NSWSC 16 at [159]–[161]; Acme Office Service Pty Ltd v Ludstrom and Others [2002] NSWSC 277 at [39]; Polyaire Pty Ltd v K-Aire Pty Ltd (No 2) [2005] SASC 386 at [10]–[13]; Hexiva Pty Ltd v Lederer [2006] NSWSC 318 at [60]; Norm Engineering v Digga Australia (No 3) [2007] FCA 953; 73 IPR 77 at [30]; Optus Networks Pty Ltd v Telstra Corporation Ltd (No 4) [2011] FCA 485 at [37]–[38]; Tivo Inc v Vivo International Corporation Pty Ltd (No 3) [2013] FCA 797 at [39]–[44]; Integrated Medical Technology Pty Ltd v Gilbert (No 2) [2015] QSC 124 at [78]–[81]; Australian Mud Company at [11]; Firmtech Aluminium Pty Ltd v Xie [2024] NSWSC 1427 at [11]–[13]).

32    In Hexiva, Brereton J considered the issue of election in the context of whether the proceedings should be heard in two parts, with issues of liability to be heard separately and before questions of quantum ([52]). His Honour observed at [60], citing Minnesota Mining, LED Builders, Island Records, Brugger and Dr Martens (among other cases) that:

Thus, a plaintiff should not be required to elect, at least until all the evidence is complete, and if the trial is not split, the parties will have to call evidence addressing both damages and an account of profits, as would the respondents; whereas if the trial is split, so that there is a separate inquiry as to the quantum of compensation, then the issue does not arise until after liability has been determined, and the election is made before the inquiry as to quantum is embarked upon.

(Emphasis added)

33    His Honour went on to order that the trial should be split, stating that (at [64]):

… I think that the just determination of the proceedings, the efficient disposal of the business of the court, and the efficient use of available judicial and administrative resources, as referred to in the Civil Procedure Act, s 57(1), tend to favour the prior determination of the issues of liability, as equity ordinarily would. In particular, that will have the result that the evidence as to compensation is limited to the particular remedy the plaintiffs elect, if they succeed, and will not be required at all, if they fail.

(Emphasis added)

34    His Honour plainly considered that after the hearing on liability was determined, an election would be made prior to the second hearing on quantum, such that the evidence would be limited to the remedy elected by the plaintiff. However, as observed by Campbell J in Artistic Builders at [161] referring to Island Records and Dr Martens, ultimately it is the case that “[p]recisely when the present plaintiff will be required to make its election between the remedies will depend upon when it has enough information to enable it to make an informed choice between them”.

35    The parties in the present proceedings also referred to two Federal Court authorities, being Australian Mud Company and Norm Engineering. In Australian Mud Company, after setting out the principles in LED Builders extracted above, Besanko J also noted that the respondents had drawn attention to ss 37M and 37N of the FCA Act and the obligation on the parties to act in a way that avoids unnecessary costs and delay (at [16]). His Honour ultimately found, however, that the applicants were entitled to take a cautious approach and assess the respondents’ evidence in answer on damages prior to making their election, in order to test the merits of their own expert’s approach to calculation of damages and the factual circumstances underlying the evidence ([18]–[19]). His Honour ordered that the applicants make their election within 14 days of receipt of the evidence in answer.

36    In Norm Engineering, Greenwood J held that the applicant had acted reasonably in preserving the exercise of election until it had the benefit of informed commentary comparing the basis for calculating damages against the calculation of the profits ([32]).

37    This brief survey of the authorities demonstrates that a successful party has a right to information before an election, but that this is not at large. It is limited to what is required to put the party in a position whereby an informed and meaningful decision can be made, and is also constrained by the dictates of practicality, costs and the principles of case management. It should not be an over-lengthy or unnecessarily sophisticated process. Usually, it will be sufficient for the respondents to supply an affidavit setting out the numbers of infringing devices made and sold, the amount received and an estimate of the costs, explaining the basis of the estimate.

38    That is what City provided in the present case.

39    VMS does not criticise the Third Roberston Affidavit as failing to comply with the varied Order 21 requiring it to be produced. Nor does it contend that it does not include City’s bona fide estimate of the costs incurred. Nor does it seek any additional discovery. Instead, it wishes to make its election between damages and an account of profit at a later point in the proceedings, possibly after lay and expert evidence has been filed but possibly later. That would put the respondent in the position of having to file its evidence going both to damages and an account of profits, in circumstances where a trial on liability has been conducted and the additional work, reflected in the Third Robertson affidavit, has been undertaken.

40    In the particular circumstances of this case, I am not satisfied that such an approach accords with s 37M of the FCA Act, or the principles to which I have referred above. Accordingly, the Order that I will make is that the applicant notify the second respondent of its election between damages and an account of profits in writing by no later than 21 days of the date of this Order.

5.    POSTSCRIPT

41    Some 10 days after the hearing, VMS made an application by email to my chambers for liberty to re-open the debate, seeking leave to rely on an affidavit of its solicitor, referring to expert evidence that had been obtained after the hearing which is said to be relevant to the issue in question. City indicated that it opposed the grant of leave and the parties were invited to provide further short written submissions on the question.

42    The further affidavit was not supplied, but its effect was summarised in submissions. VMS accepts that the further evidence reflects the submissions already made at the hearing. In that regard, it would appear that it would add nothing to the debate. No adequate reasons are given as to why the evidence could not have been available prior to the hearing. VMS submits, apparently by way of explanation, that the hearing was conducted as a “case management issue” and that because no formal interlocutory application had been filed, all the relevant facts and legal consequences attendant upon the issue were not before the Court. I reject that submission. I have described above the directions made by the Court that led to the filing of the Third Robertson Affidavit and the subsequent directions, made by consent, leading to the hearing. VMS supplied written submissions in advance of the hearing and also relied on evidence in the form of the bundle to which I have referred. In my view, VMS had sufficient notice of the nature of the dispute to formulate its position and to present it.

43    I refuse the application for leave to re-open and rely on the further affidavit. The costs payable by VMS should include the costs related to this application.

Associate:

Dated:    4 September 2025