Redrow Homes Ltd v Bett Brothers Plc
| Jurisdiction | England & Wales |
| Judge | LORD GOFF OF CHIEVELEY,LORD JAUNCEY OF TULLICHETTLE,LORD SLYNN OF HADLEY,LORD HOPE OF CRAIGHEAD,LORD CLYDE |
| Judgment Date | 22 January 1998 |
| Judgment citation (vLex) | [1998] UKHL J0122-2 |
| Date | 22 January 1998 |
| Court | House of Lords |
| Docket Number | No 5 |
[1998] UKHL J0122-2
HOUSE OF LORDS
Lord Goff of Chieveley
Lord Jauncey of Tullichettle
Lord Slynn of Hadley
Lord Hope of Craighead
Lord Clyde
And Others
And Others
My Lords,
I have had the advantage of reading in draft the speeches which have been prepared by my noble and learned friends, Lord Jauncey of Tullichettle and Lord Clyde. For the reasons they have given I would dismiss this appeal.
My Lords,
The single issue in this appeal concerns the proper construction of sections 96 and 97 of the Copyright Designs and Patents Act 1988 (the Act of 1988). It is whether a pursuer in an action for infringement of copyright is entitled to obtain from the defender both an account of profits and a sum of money by way of additional damages.
The pursuers aver that they are residential developers and builders of detached houses to a number of designs in respect of which they own the copyright. They further aver that the defenders who are in the same line of business are building houses which are flagrant copies of the pursuers' designs. The pursuers seek inter alia (a) an order for production of a full account of profits realised by the defenders by reason of their infringement and for payment of a sum equivalent to such profits, and (b) a sum of money as additional damages in terms of section 97(2) of the Act of 1988. The defenders took a plea to the relevancy inter alia of the pursuer's averments anent additional damages but the Lord Ordinary after a hearing in Procedure Roll allowed a proof before answer of all the pursuers' averments. On a reclaiming motion the Second Division sustained the defenders' plea to the relevancy of the above averments. The pursuers now appeal to Your Lordships' House.
Sections 96 and 97 of the Act of 1988, which occur in the Chapter of Part 1 thereof dealing with remedies for infringement, are in the following terms:
"Rights and remedies of copyright owner
"96.–(1) An infringement of copyright is actionable by the copyright owner.
"(2) In an action for infringement of copyright all such relief by way of damages, injunctions, accounts or otherwise is available to the plaintiff as is available in respect of the infringement of any other property right.
"(3) This section has effect subject to the following provisions of this Chapter.
"97.–(1) Where in an action for infringement of copyright it is shown that at the time of the infringement the defendant did not know, and had no reason to believe, that copyright subsisted in the work to which the action relates, the plaintiff is not entitled to damages against him, but without prejudice to any other remedy.
"(2) The court may in an action for infringement of copyright having regard to all the circumstances, and in particular to–
(a) the flagrancy of the infringement, and
(b) any benefit accruing to the defendant by reason of the infringement,
award such additional damages as the justice of the case may require."
The appellants accepted that they could not competently claim both damages and an account of profits under section 96(2) but they argued that section 97(2) provided an independent remedy of additional damages which was sui generis and which could therefore be sought in addition to an account of profits. They relied particularly on (i) the difference in wording between the two sections and their predecessor, section 17 of the Copyright Act of 1956, and (ii) Cala Homes (South) Ltd. v. Alfred McAlpine Homes (East) Ltd. (No 2) [1996] F.S.R. 36, in which Laddie J. held that additional damages could be awarded as well as any other form of financial relief ordered under section 96(2). The respondents maintained that "additional" meant additional to other damages and that the Cala Homes case had been wrongly decided.
The court was first empowered to award additional damages for infringement of copyright in section 17 of the Act of 1956 which resulted from the Gregory Committee Report (Cmnd. 8662 (1952)). This report recommended, inter alia, in paragraph 294:
"That the court should be given discretionary power to impose something equivalent to exemplary damages in cases where the existing remedies give inadequate relief."
This recommendation was given effect to in section 17 of the Act of 1956 which provided, inter alia:
"Action by owner of copyright for infringement. "17.– (1) Subject to the provisions of this Act, infringements of copyright shall be actionable at the suit of the owner of the copyright; and in any action for such an infringement all such relief, by way of damages, injunction, accounts or otherwise, shall be available to the plaintiff as is available in any corresponding proceedings in respect of infringements of other proprietary rights.
"(2) Where in an action for infringement of copyright it is proved or admitted–
(a) that an infringement was committed, but
(b) that at the time of the infringement the defendant was not aware, and had no reasonable grounds for suspecting, that copyright subsisted in the work or other subject-matter to which the action relates,
the plaintiff shall not be entitled under this section to any damages against the defendant in respect of the infringement, but shall be entitled to an account of profits in respect of the infringement whether any other relief is granted under this section or not.
"(3) Where in an action under this section an infringement of copyright is proved or admitted, and the court, having regard (in addition to all other material considerations) to –
(a) the flagrancy of the infringement, and
(b) any benefit shown to have accrued to the defendant by reason of the infringement,
is satisfied that effective relief would not otherwise be available to the plaintiff, the court, in assessing damages for the infringement, shall have power to award such additional damages by virtue of this subsection as the court may consider appropriate in the circumstances."
I have italicised the words in subsection 3 for reasons which will appear later.
The distinction between exemplary or punitive damages on the one hand and aggravated but nevertheless compensatory damages on the other had become somewhat blurred prior to Rookes v. Barnard [1964] A.C. 1129 and Broome v. Cassell & Co. Ltd. [1972] 1 A.C. 1027, so that it cannot be certain which of the two categories of damage the Gregory Committee had in mind in 1952. What is certain, however, is that section 17(3) restricted the court's power to award additional damages to cases in which it was already assessing damages for the infringement. My reasons for this conclusion may be stated quite shortly.
Section 17(1) contemplated, inter alia, an action of damages for infringement. Subsection (2) provided that such damages should not be available against an innocent infringer. When subsection (3) referred to "assessing damages" it referred back to the damages mentioned in subsection (1) and (2), that is to say, normal compensatory damages for infringement. Subsection (3) made clear that it was only in assessing such damages that the court had power to award additional damages. There could thus have been no question of additional damages being awarded where an account of profits had been awarded. Additional damages in the subsection were damages additional to those being awarded under section 17(1).
The Act of 1988 was preceded by the Whitford Committee Report on the Reform of copyright law (Cmnd. 6732 (1977)), and paragraph 704 thereof, which alone of all the paragraphs refers to the remedy of additional damages, is in the following terms:
"No one has submitted that exemplary damages in cases of flagrant infringement should be abolished, and we are of the opinion that this provision should undoubtedly be retained. The condition that such damages shall only be awarded if the court is satisfied that effective relief would not otherwise be available to the plaintiff has, we understand, been interpreted as referring to relief which might be obtained outside copyright law. It is our view that the provisions for exemplary damages should if anything be strengthened and that the power of courts to award additional damages if there has been a flagrant infringement should not be fettered by any requirement that the plaintiff must show some particular benefit which has accrued to the defendant or that the plaintiff must satisfy the court that effective relief could not otherwise be available. In the case of flagrant infringement the court should be left with a complete discretion to make such award of damages as may seem appropriate to the circumstances, so that the existence of this provision will act as a deterrent if the existing deterrent of conversion damages is removed."
This paragraph is instructive in that although it recommends the strengthening of the provisions for additional damages in two respects it nowhere suggests that such damages should in future be capable of being awarded independently of normal...
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