Top Plus Pty Ltd and Anor v Muse Entertainment Pty Ltd and Ors (No.2)

[2013] FCCA 1363

FEDERAL CIRCUIT COURT OF AUSTRALIA

TOP PLUS PTY LTD & ANOR v MUSE ENTERTAINMENT PTY LTD & ORS (No.2) [2013] FCCA 1363

Catchwords:
ADMINISTRATIVE LAW – Setting aside default judgment – practice and procedure – factors to consider – judgment set aside – no matter of principle.

Legislation:

Copyright Act 1968 (Cth), s.115(5)(b)
Federal Circuit Court Rules 2001 (Cth), r.4.10

Lau v Citic Australia Commodity Trading Pty Ltd [1999] VSCA 34

First Applicant: TOP PLUS PTY LTD

Second Applicant: K-BOX PTY LTD ACN 105 220 157

First Respondent: MUSE ENTERTAINMENT PTY LTD

Second Respondent: CHARLIE JI

Third Respondent: GOLD TYPHOON ENTERTAINMENT LIMITED

Fourth Respondent: EAST ASIA MUSIC (HOLDINGS) LIMITED

Fifth Respondent: EMPEROR ENTERTAINMENT (HONG KONG) LIMITED

Sixth Respondent:  UNIVERSAL MUSIC LIMITED

Seventh Respondent: EAST ASIA RECORD PRODUCTION COMPANY LIMITED

Eighth Respondent: HUMMINGBIRD MUSIC LIMITED

File Number: ADG 216 of 2012

Judgment of: Judge Simpson

Hearing date: 12 September 2013

Date of Last Submission: 12 September 2013

Delivered at: Adelaide

Delivered on: 17 September 2013

REPRESENTATION

Counsel for the Applicant: Mr Hoile

Solicitors for the Applicant: Thomson Lawyers

Counsel for the Respondent: Ms Clark

Solicitors for the Respondent: Commercial and Legal (Legal Services) Pty Ltd

ORDERS

1. Pursuant to Federal Circuit Court Rule 16.05(2)(a) the judgment, declarations and orders made on 20 May and 18 June 2013 are set aside.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

ADG 216 of 2012

TOP PLUS PTY LTD

First Applicant

K-BOX PTY LTD ACN 105 220 157

Second Applicant

And

MUSE ENTERTAINMENT PTY LTD

First Respondent

CHARLIE JI

Second Respondent

GOLD TYPHOON ENTERTAINMENT LIMITED

Third Respondent

EAST ASIA MUSIC (HOLDINGS) LIMITED

Fourth Respondent

EMPEROR ENTERTAINMENT (HONG KONG) LIMITED

Fifth Respondent

UNIVERSAL MUSIC LIMITED

Sixth Respondent

EAST ASIA RECORD PRODUCTION COMPANY LIMITED

Seventh Respondent

HUMMINGBIRD MUSIC LIMITED

Eighth Respondent

REASONS FOR JUDGMENT

1. I have before me an Application in a Case filed on behalf of the first and second respondents on 3 September 2013.  The application seeks the setting aside of a default judgment that was given on 20 May 2013 together with consequential orders that were made on 18 June 2013.  The applicants oppose the application.

2. The orders of 18 June 2013 included six declarations that the first respondent company infringed copyright in certain cinematograph films. Other declarations were made that the first respondent’s infringements were of a commercial scale for the purposes of s.115(5)(b) of the Copyright Act1968 (Cth) and that the second respondent authorised the infringements of the first respondent. Further orders were then made that default judgment be entered against the first and second respondents, that the applicants be awarded damages in the sum of $95,299.56, that the applicants be awarded costs in the sum of $8,605.00 against the first and respondents, and that interest to the date of judgment be fixed in the sum of $4,422.94.

3. The first and second respondents rely on the two affidavits of the second respondent filed on 3 and 11 September 2013 respectively.  The applicants rely on an affidavit of Neil Garfield Sadler, a solicitor with the firm acting for the first and second applicants. 

History of the litigation against first and second respondents

1. The proceedings were commenced on 24 September 2012. 

2. On 16 October 2012, the first and second respondents, through their solicitors, filed Notices of Address for Service. 

3. On 18 October 2012, orders were made by consent for the filing of defences on or before 14 December 2012 and adjourning the matter to 18 December 2012 for further directions. 

4. On 30 November 2012, the first and second respondents filed their Genuine Steps Statement as is required by Rule 4.10 of the Federal Circuit Court Rules 2001 (Cth). They also filed a Defence on their behalf.

5. At the hearing held on 18 December 2012, the first and second respondents appeared by their legal representative.  Orders were made for the filing of their Replies to Defences on or before 21 December 2012.  The matter was referred to court mediation so far as the first and second respondent was concerned (there were other respondents to the action) and other incidental orders were made.

6. On 12 March 2013, solicitors for the first and second respondents indicated to the Court that they were ceasing to act for the respondents.

7. At the hearing on 20 March 2013, the applicants appeared by telephone but there was no appearance on behalf of the respondents.  I made an order adjourning the matter to 20 May 2013 for directions.  I also made an order that parties attend in person or by their solicitors on the adjourned date.  They were advised that if they failed to attend on the adjourned date default orders might be made.

8. On 20 May 2013, the applicants appeared by telephone.  The first and second respondents failed to appear.  The matter proceeded to a default hearing and the Court gave ex-tempore reasons.  An order was made that solicitors for the applicant prepare a Minute of Order consistent with the reasons given that day.  The matter was adjourned to 18 June 2013 for the making of the orders. 

9. On 18 June 2013, the applicants again appeared by telephone.  There was no appearance on behalf of the first respondent.  The second respondent appeared in person and asked for an adjournment.  In the circumstances, the Court was not prepared to adjourn the matter.  The Court made final orders.

10. On 3 September 2013, the respondents filed their application to have judgment set aside.

Evidence from the second respondent

1. The second respondent says in his first affidavit that he had intended to be present at the hearing on 20 May 2013 to make submissions in relation to himself as well as for the first respondent.  He says that he was unable to attend the hearing for legitimate reasons (as detailed later in these reasons).

2. The second respondent says that on 30 April 2013 he travelled to Hong Kong to visit his grandfather who was very ill.  He had intended to return to Adelaide on 7 May 2013 in time for the hearing on 20 May 2013. 

3. He says that whilst in Hong Kong, he was admitted to hospital due to complications from a pre-existing medical condition.  He says that he was unwell for the period 7 to 28 May 2013.  He says that as a result of his ill health and hospitalisation, he was forced to change his itinerary and to reschedule his return flight to Adelaide.  On 7 May 2013 he changed his return flight from 7 May 2013 to 28 May 2013. 

4. He says that on 20 May 2013 he sent a letter my facsimile to the Court advising of his inability to attend the hearing that day.  He says that he returned to Adelaide on 29 May 2013, however, he received news a short time later that his grandfather had passed away. 

5. He says that on 4 June 2013, he departed Adelaide to return to Hong Kong for his grandfather’s funeral.  He says that he ensured that he would be back in Adelaide in time for the next hearing on 18 June 2013.  He says that on 13 June 2013 his girlfriend, Yuwei Zhang, filed an affidavit outlining the reasons why he had not been in attendance at the hearing on 20 May 2013.[1] 

   [1]     The affidavit was received by the Registry but given little weight as Ms Zhang was not authorised to file affidavit material on behalf of the respondents.

6. The second respondent says that on 9 July 2013 he instructed new solicitors to act for him and the first respondent.  He says that his new solicitors wrote to solicitors for the applicants on 6 August 2013 advising that they intended to make an application to set aside judgment.

7. He says that on 21 August 2013 he was served with a Bankruptcy Notice.  The applicants had also issued and served a Creditor’s Statutory Demand on the first respondent. 

8. When the Application in the Case first came before me on 10 September 2013, it was clear that the evidence that had been provided in the second respondent’s first affidavit omitted important facts relevant to whether or not judgment should be set aside namely, whether the two parties had prima facie defences to the proceedings.  I agreed to the matter being adjourned for 48 hours to enable the second respondent to put a further affidavit on file. 

9. The second respondent’s Affidavit filed on 11 September 2013 provides evidence that indicates that the second respondent may have a good defence to the claim brought against him.  There is no evidence however in the affidavit that enables me to say that the first respondent has a prima facie good defence.  The material that has been provided in the affidavits together with the cross-examination of the second respondent on 12 September 2013 caused me to believe that there is now some uncertainty about the damages that might be payable in the event that the applicant is ultimately successful in its action against the respondents.

10. I have taken into account the comments of Winneke P in Lau v Citic Australia Commodity Trading Pty Ltd[2] in relation to an application that sought to invoke the discretion of the Court to set aside a default judgment that was entered regularly.  He stated that an applicant:

    “… must demonstrate to the Court grounds upon which the discretion ought to be exercised in his favour.  The primary consideration for the Judge is that there are merits in the defences to which the Court should pay heed.  If there are merits in one or more over those defences the Court will ordinarily exercise its discretion in favour of allowing the matter to pass to final adjudication, provided that the applicant shows that he has an adequate explanation for his failure to file a defence …

    It is not for the Judge, on an application of this nature, to determine the merits of the defence for himself or to seek to resolve factual issues that might at that stage appear to exist on the material before him.”

    [2] [1999] VSCA 34

11. So far as the prejudice that the parties might suffer as a result of the setting aside of the judgment and orders is concerned, it is clear to me that the respondents would suffer the greater prejudice.  The first respondent will be put into liquidation and the second respondent will be made bankrupt.  The prejudice that the applicants would suffer if I decide to set aside the judgment and orders, is that they will be delayed in obtaining an enforceable judgment and to receive any damages payable.

12. I am satisfied on the material before me that the second respondent had a legitimate excuse for not attending Court of 20 May 2013.  Whilst he has been somewhat lax in dealing with this litigation he certainly did what he could to advise the applicants and the Court that he was having difficulty in attending Court on 20 May 2013.  As the second respondent was in Hong Kong and unable to return to Adelaide for the hearing on 20 May 2013, he should have taken steps at the earliest opportunity to reinstruct solicitors to act for himself and the company at the hearing on 20 May 2013.  He failed to do so.  Having his girlfriend prepare and file an affidavit was not the correct course.  Persons who are neither parties to the action nor solicitors for parties to the action are not permitted to file documents in proceedings.

13. Taking all matters into account, I have come to the conclusion that the appropriate course is to set aside the Judgment, Declarations and Orders made on 20 May and 18 June 2013 in toto.

14. I make the orders to be found at the beginning of these reasons.

15. I will hear from the parties about any consequential or other orders that may be appropriate.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Judge Simpson

Associate: 

Date:  17 September 2013