Top Plus Pty Ltd v Success Australia Group Pty Ltd - [2013] FMCA 115

FEDERAL MAGISTRATES COURT OF AUSTRALIA

TOP PLUS PTY LTD v SUCCESS AUSTRALIA GROUP PTY LTD & ORS

[2013] FMCA 115

PRACTICE AND PROCEDURE – Failure to comply with orders of the Court – application for default judgment.

Copyright Act 1969 (Cth), ss.115, 116, 131D
Federal Court Rules 2011 (Cth), Division 39.4
Federal Magistrates Act 1999 (Cth), ss.42
Federal Magistrates Court Rules 2001(Cth), rr.4.05(3), 9.04, 13.03A(2)(b)(iii), 13.03B(2)(c)

Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27

Applicant:

TOP PLUS PTY LTD ACN 115 594 477

First Respondent:

SUCCESS AUSTRALIA GROUP PTY LTD ACN 124 485 267

Second Respondent:

KELVYN KIT WING CHONG

Third Respondent:

CHI YUE LAU

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

File Number:

PEG 239 of 2012

Judgment of:

Lucev FM

Hearing date:

20 February 2013

Date of Last Submission:

20 February 2013

Delivered at:

Perth

Delivered on:

20 February 2013

REPRESENTATION

Counsel for the Applicant:

Mr N Sadler

Solicitors for the Applicant:

Thomson Lawyers

For the Respondents:

No appearance

ORDERS

Are to be lodged for entry by the applicant and settled by a Registrar of this Court in accordance with the provisions of Division 39.4 of the Federal Court Rules 2001 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT PERTH

PEG 239 of 2012

TOP PLUS PTY LTD ACN 115 594 477

Applicant

And

SUCCESS AUSTRALIA GROUP PTY LTD ACN 124 485 267

First Respondent

KELVYN KIT WING CHONG

Second Respondent

CHI YUE LAU

Third Respondent

EMPEROR ENTERTAINMENT (HONG KONG) LIMITED

Fourth Respondent

UNIVERSAL MUSIC LIMITED

Fifth Respondent

EAST ASIA RECORD PRODUCTION COMPANY LIMITED

Sixth Respondent

HUMMINGBIRD MUSIC LIMITED

Seventh Respondent

REASONS FOR JUDGMENT

(Edited ex tempore reasons)

Background

There is an oral application for default judgment this morning by the applicant on the basis of a failure by the first, second and third respondents to comply with the Court’s orders of 29 January 2013.
The Court’s orders of 29 January 2013 provide that:
(1) Each of the first, second and third respondents file and serve a separate defence on or before 15 February 2013.
(2) Pursuant to rule 9.04 of the Federal Magistrates Court Rules (2001) (Cth) the first respondent’s defence to be filed and served under order 1 is to be prepared, filed and served by a lawyer.
(3) The matter be listed for further directions at 9.30 am on 20 February 2013 or for summary judgment on the oral application of the applicant in the event of failure to comply with order 1 or 2 by any of the first, second and third respondents.
(4) That the costs of today be reserved.
There has been a failure to comply with the orders, in particular orders 1 and 2. Before determining whether to grant default judgment, the Court considers it necessary in the circumstances to set out the history of this litigation. The application was filed on 5 October 2012. The application seeks relief under sections 115 and 116 of the Copyright Act 1969 (Cth),[1] and for breach of contract including an order for specific performance. The application is commenced in the Court’s jurisdiction under section 131D of the Copyright Act and in the Court’s associated jurisdiction.
[1] “Copyright Act”.
The orders sought by the application include declarations against the first respondent for the infringement of copyright in cinematographic films contained in various works, a declaration that the first respondent did the infringing acts flagrantly, and a declaration that the infringements were on a commercial scale for the purposes of section 115(5)(d) of the Copyright Act, and a declaration that the second and third respondents authorised those infringements.
There are also orders sought for permanent injunctions as against the first respondent in respect of restraint from infringing the copyright in any of the cinematographic films contained in the various works, and against the second and third respondents for authorising the same. There are also orders sought for damages, costs and interest. The application was accompanied by a detailed and particularised statement of claim which:
a)dealt with the ownership of the copyright of the various works, the applicant’s exclusive licence in Australia and New Zealand in relation to the copyright in the works;
b)dealt with the infringement by the first respondent and the authorisation of infringement by the second and third respondents;
c)gave particulars with respect to loss and damage; and
d)pleaded that the acts concerned had been done flagrantly with knowledge of copyright and a reckless disregard for that copyright, with an intention to obtain a commercial advantage.
The application was also accompanied by a genuine steps statement setting out the steps the applicant says were taken in an endeavour to resolve the dispute prior to instituting proceedings. Evidence of service of the application, statement of claim and genuine steps statement was provided: service taking place by registered post on 8 October 2012, according to the affidavit of Julia Kate Elizabeth Connelly sworn 26 October 2012 and filed the same day.
The matter came on for a first directions hearing on 29 October 2012. There was no appearance by any of the respondents and the Court made the following orders:
(1) The first respondent file and serve any defences on or before 13 November 2012.
(2) The applicant file and serve any reply to defences filed and served pursuant to order 1 within 14 days of being served with a defence.
(3) Any application in a case for leave to serve the initiating proceedings in this proceeding outside Australia be filed on or before 14 December 2012, and made returnable before the court on the next court date.
(4) The proceeding be listed for further directions and the hearing of any interlocutory applications on a date suitable to the court.
(5) The parties be at liberty to apply on three days’ notice.
(6) Costs reserved.
The second directions hearing took place on 29 October 2012. Again, there was no appearance by any of the respondents, and primarily what occurred on that date was an extension of time for the first respondent to file any defences. That time was extended to 13 November 2012 with consequential timing amendments for the other orders. It is relevant to note that there was no compliance with the orders made at the first directions hearing, as would be apparent from the necessity to extend them. It is also necessary to observe that there was no compliance with the orders made at the second directions hearing on 29 October 2012.
On 16 November 2012, there having been no such compliance, a consent order was made, and once again the principal effect of that was to extend time frames. In particular the first order provided for the first, second and third respondents to file and serve any defences on or before 27 November 2012. On 28 November 2012 the first respondent filed late, under the orders made on 16 November 2012, and without leave, what purported to be a defence. It was of less than one-and-a-half pages. It was nine paragraphs. It was in letter form. It was more submission than defence, and did not appropriately respond to the substantive allegations made in the statement of claim in any real detail whatsoever. It was not filed and prepared by a lawyer for the first respondent which is a corporation, contrary to rule 9.04 of the Federal Magistrates Court Rules 2001(Cth).[2] It suffices to say that the so-called defence was embarrassing.
[2] “FMC Rules”.
The third directions hearing in this matter occurred on 17 December 2012. Once again there was no appearance by any of the respondents. Consistent with what the Court has just observed with respect to the so-called defence, it was struck out by the first order made on 17 December 2012. The second order made on 17 December 2012 extended time for the first, second and third respondents to file and serve their defences to 7 January 2013, and made consequential amendments with respect to other orders previously made by the court.
On 7 January 2013, the second respondent prepared and filed, purportedly on behalf of the first and third respondents as well as himself, a response, and not a defence as ordered by the Court on 17 December 2012. The document as filed is two pages, numbered 1 and 3. It would appear that page 2 is missing, but in any event it was never supplied by the respondents on behalf of whom it was purportedly filed. The two partial paragraphs which were filed suffer from much the same defects as the earlier so-called defence. Just one sentence will suffice to indicate the embarrassment from which the response suffers, and that is the second sentence of the second paragraph which says that:
The premise has four rooms, not five as claimed, usage only by exclusive customers and inaccessible to public.
It is evident that the response simply did not come to grips in any way, shape or form with the statement of claim, and insofar as it was filed, it is embarrassing and vague.
The Court then, at a further directions hearing on 29 January 2013 at which there was no appearance for the respondents, made the orders which are referred to above.[3]
[3] See para.2 above.

Consideration

The respondents have not appeared in Court in these proceedings, and in particular the first, second and third respondents who, as the Court understands it, are the only respondents who have been served to date.
No proper defence has ever been filed, and latterly and most importantly, no or no proper defence has been filed by the first, second and third respondents in accordance with the Court’s orders of 16 November 2012, 17 December 2012 and 29 January 2013, and no defence or no proper defence was filed by the first respondent in accordance with the Court’s orders of 29 October 2012, or in accordance with rule 4.05(3) of the FMC Rules at the outset of the proceedings.
On the face of it there is sufficient non-compliance to warrant the making of orders for judgment pursuant to rr.13.03A(2)(b)(iii) and 13.03B(2)(c) of the FMC Rules.
The Court also has regard to s.42 of the Federal Magistrates Act 1999 (Cth)[4] which obliges the Court to ensure that proceedings are not protracted, and that is consistent with, and the Court has further regard to, its obligation to manage its cases and the resources of the Court properly under the principles set out by the High Court in Aon Risk Services Australia Limited v Australian National University.[5]
[4] “FM Act”.
[5] (2009) 239 CLR 175; [2009] HCA 27 (“Aon Risk Management”).
The Court notes that these proceedings are almost five months old. Despite multiple opportunities the first, second and third respondents have not filed a defence, or any proper defence, and at no stage have the first, second or third respondents appeared in the number of directions hearings that have been held. Those circumstances favour the grant of judgment for the applicant pursuant to rr.13.03A(2)(b)(iii) and 13.03B(2)(c) of the FMC Rules.
The Court also notes that at about 4.45 pm Western Standard Time yesterday a letter and a doctor’s certificate were faxed to the Perth Registry addressed to the presiding Federal Magistrate by the second respondent. The letter in its substantive terms is as follows:
Re: Seeking your kind compassion to extend or postpone the case between Top Plus Pty Ltd and Success Australia Group Pty Ltd due to unforeseen illness and inability to appear in court on the prescribed 20/1/2013 [which is obviously an error].
I do apologise and regret to inform you that I have been bogged down by rather bad illness such as headache, shivering, together with a rather bad asthma, which would prevent me from being able to attend the court case to be mentioned tomorrow. Was advised by my doctor that my work related issues, as well as personal issues with my wife actually contributed to this stress-related illness and a medical certificate was issued to me by my doctor and attached in this facts [which should be fax] for your kind and compassionate consideration to postpone this case to be held tomorrow to a further date.
Hence I would greatly appreciate it if you could give me another date so that any judgment would be made under reasonable and fair condition. Please be assured that I should be legally and physically prepared and fully prepared for the next hearing with your kind and compassion grant of an extension due to reasons not within my control.
Thank you once again, your honour
and regret for any inconvenience caused.
The letter is signed by the second respondent personally.
Attached to the letter is a pro-forma medical certificate on the letterhead of Thomsons Lake Medical Centre purportedly from a Dr Peter Cowan, dated yesterday, which simply certifies that he has examined the second respondent (whose residential address is inserted), and then says that the second respondent is unable to work for two days.
The Court notes that no formal application in a case to adjourn the proceedings has been filed and there is no supporting affidavit by the second respondent or the doctor. With respect to the medical certificate, what has been sent to the Court, seemingly by facsimile, is a copy: the original is not before the Court. The medical certificate appears to be a computer generated document. The signature is illegible. The second respondent is said to be unfit for work. It has not said that he is unfit to attend Court, or why he would be unfit to attend Court, and the doctor has not said what is wrong with the second practitioner at all.
There is no indication in the medical certificate that the doctor was made aware that it would be used for the purposes of the second respondent endeavouring to justify yet another non-appearance in Court in this matter.
In the circumstances, the Court regards the bare medical certificate as wholly unsatisfactory, and the Court places no weight upon it, and disregards the letter and the doctor’s certificate. In any event, the letter and doctor’s certificate:
a)are conduct which is entirely consistent with the non-appearance of the first, second and third respondents throughout these proceedings;
b)do not explain why the first and third respondents do not appear or file a defence which was due by 15 February 2013;
c)do not explain why, prior to becoming ill, apparently yesterday, the second respondent did not file and serve a defence by 15 February 2013 as ordered; and
d)do not explain why the first respondent did not engage a lawyer to prepare, file and serve a defence by 15 February 2013 as ordered.
Having regard to the history of the proceedings, and the provisions of the FM Act, the FMC Rules, and the principles in AON Risk Management, the Court considers that it is appropriate that there be default judgment for the applicant, and that there be orders essentially in terms now sought by the applicant pursuant to a minute of proposed order which was provided to the Court today, but with the following amendments:
a)in the introduction after the words, “THE COURT,” and before “ORDERS” the following words to be inserted:
PURSUANT TO RULE 13.03A(2)(b)(iii) AND RULE 13.03B(2)(c) OF THE FEDERAL MAGISTRATES COURT RULES 2001 (CTH)
b)a further two orders at the end of the proposed existing orders:
i)the first of those orders to be that the application as against the 4^th, 5^th, 6^th and 7^th respondents be dismissed, and
ii)the further order that the proposed orders (including schedules) be lodged for entry by the applicant, to be settled by a Registrar of this Court, in accordance with the provisions of Division 39.4 of the Federal Court Rules 2011 (Cth).

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Lucev FM

Associate:

Date: 22 February 2013