Universal Music Australia Pty Ltd v Sharman License Holdings Ltd - [2004] FCA 1463

FEDERAL COURT OF AUSTRALIA
Universal Music Australia Pty Ltd v Sharman License Holdings Ltd
[2004] FCA 1463
UNIVERSAL MUSIC AUSTRALIA PTY LTD, FESTIVAL RECORDS PTY LTD AND MUSHROOM RECORDS PTY LTD TRADING AS FESTIVAL MUSHROOM RECORDS, EMI MUSIC AUSTRALIA PTY LIMITED, SONY MUSIC ENTERTAINMENT (AUSTRALIA) LIMITED, WARNER MUSIC AUSTRALIA PTY LIMITED, BMG AUSTRALIA LIMITED, UMG RECORDINGS, INC, SHADY RECORDS, INC/INTERSCOPE RECORDS, AFTERMATH RECORDS, REAL HORRORSHOW PTY LTD, THE LIVING END PTY LTD, VIRGIN RECORDS AMERICA, INC, EMI RECORDS LTD, CAPITOL RECORDS, INC, ARISTA RECORDS, LLC (FORMERLY KNOWN AS ARISTA RECORDS, INC), CIRCA RECORDS LTD, CHRYSALIS RECORDS LTD, SONY MUSIC (AUSTRALIA) PTY LTD, SONY MUSIC ENTERTAINMENT (CANADA) INC, SONY BMG MUSIC ENTERTAINMENT, MAYER MUSIC LLC, TIMOTHY JAMES FREEDMAN, WARNER BROS RECORDS INC, ATLANTIC RECORDING CORPORATION, WARNER MUSIC UK LTD, J RUBY PRODUCTIONS, INC DBA SLASH RECORDS, ZOMBA RECORDING LLC (FORMERLY KNOWN AS ZOMBA RECORDING CORPORATION), BMG MUSIC (BMG MUSIC DBA THE RCA RECORDS LABEL, A UNIT OF BMG ENTERTAINMENT), BMG UK & IRELAND LTD AND LAFACE RECORDS v SHARMAN LICENSE HOLDINGS LTD, SHARMAN NETWORKS LTD, LEF INTERACTIVE PTY LTD, NICOLA ANNE HEMMING, PHIL MORLE, ALTNET INC, BRILLIANT DIGITAL ENTERTAINMENT INC, BRILLIANT DIGITAL ENTERTAINMENT PTY LTD, KEVIN GLEN BERMEISTER, ANTHONY ROSE
NSD 110 of 2004
WILCOX J
27 OCTOBER 2004
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 110 of 2004

BETWEEN:

UNIVERSAL MUSIC AUSTRALIA PTY LTD
FIRST APPLICANT

FESTIVAL RECORDS PTY LTD AND MUSHROOM RECORDS PTY LTD TRADING AS FESTIVAL MUSHROOM RECORDS
SECOND APPLICANT

EMI MUSIC AUSTRALIA PTY LIMITED
THIRD APPLICANT

SONY MUSIC ENTERTAINMENT (AUSTRALIA) LIMITED
FOURTH APPLICANT

WARNER MUSIC AUSTRALIA PTY LIMITED
FIFTH APPLICANT

BMG AUSTRALIA LIMITED
SIXTH APPLICANT

UMG RECORDINGS, INC
SEVENTH APPLICANT

SHADY RECORDS, INC/INTERSCOPE RECORDS
EIGHTH APPLICANT

AFTERMATH RECORDS
NINTH APPLICANT

REAL HORRORSHOW PTY LTD
TENTH APPLICANT

THE LIVING END PTY LTD
ELEVENTH APPLICANT

VIRGIN RECORDS AMERICA, INC
TWELFTH APPLICANT

EMI RECORDS LTD
THIRTEENTH APPLICANT

CAPITOL RECORDS, INC
FOURTEENTH APPLICANT

ARISTA RECORDS, LLC (FORMERLY KNOWN AS ARISTA RECORDS, INC)
FIFTEENTH APPLICANT

CIRCA RECORDS LTD
SIXTEENTH APPLICANT

CHRYSALIS RECORDS LTD
SEVENTEENTH APPLICANT

SONY MUSIC (AUSTRALIA) PTY LTD
EIGHTEENTH APPLICANT

SONY MUSIC ENTERTAINMENT (CANADA), INC
NINETEENTH APPLICANT

SONY BMG MUSIC ENTERTAINMENT
TWENTIETH APPLICANT

MAYER MUSIC LLC
TWENTY-FIRST APPLICANT

TIMOTHY JAMES FREEDMAN
TWENTY-SECOND APPLICANT

WARNER BROS RECORDS, INC
TWENTY-THIRD APPLICANT

ATLANTIC RECORDING CORPORATION
TWENTY-FOURTH APPLICANT

WARNER MUSIC UK LTD
TWENTY-FIFTH APPLICANT

J RUBY PRODUCTIONS, INC DBA SLASH RECORDS
TWENTY-SIXTH APPLICANT

ZOMBA RECORDING LLC (FORMERLY KNOWN AS ZOMBA RECORDING CORPORATION)
TWENTY-SEVENTH APPLICANT

BMG MUSIC (BMG MUSIC DBA THE RCA RECORDS LABEL, A UNIT OF BMG ENTERTAINMENT)
TWENTY-EIGHTH APPLICANT

BMG UK & IRELAND LTD
TWENTY-NINTH APPLICANT

LAFACE RECORDS
THIRTIETH APPLICANT

AND:

SHARMAN LICENSE HOLDINGS LTD
FIRST RESPONDENT

SHARMAN NETWORKS LTD
SECOND RESPONDENT

LEF INTERACTIVE PTY LTD
THIRD RESPONDENT

NICOLA ANNE HEMMING
FOURTH RESPONDENT

PHIL MORLE
FIFTH RESPONDENT

ALTNET INC
SIXTH RESPONDENT

BRILLIANT DIGITAL ENTERTAINMENT INC
SEVENTH RESPONDENT

BRILLIANT DIGITAL ENTERTAINMENT PTY LTD
EIGHTH RESPONDENT

KEVIN GLEN BERMEISTER
NINTH RESPONDENT

ANTHONY ROSE
TENTH RESPONDENT

JUDGE:

WILCOX J

DATE OF ORDER:

27 OCTOBER 2004

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The notice of motion filed by the tenth respondent on 21 June 2004 be dismissed with costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 110 of 2004

BETWEEN:

UNIVERSAL MUSIC AUSTRALIA PTY LTD
FIRST APPLICANT

FESTIVAL RECORDS PTY LTD AND MUSHROOM RECORDS PTY LTD TRADING AS FESTIVAL MUSHROOM RECORDS
SECOND APPLICANT

EMI MUSIC AUSTRALIA PTY LIMITED
THIRD APPLICANT

SONY MUSIC ENTERTAINMENT (AUSTRALIA) LIMITED
FOURTH APPLICANT

WARNER MUSIC AUSTRALIA PTY LIMITED
FIFTH APPLICANT

BMG AUSTRALIA LIMITED
SIXTH APPLICANT

UMG RECORDINGS, INC
SEVENTH APPLICANT

SHADY RECORDS, INC/INTERSCOPE RECORDS
EIGHTH APPLICANT

AFTERMATH RECORDS
NINTH APPLICANT

REAL HORRORSHOW PTY LTD
TENTH APPLICANT

THE LIVING END PTY LTD
ELEVENTH APPLICANT

VIRGIN RECORDS AMERICA, INC
TWELFTH APPLICANT

EMI RECORDS LTD
THIRTEENTH APPLICANT

CAPITOL RECORDS, INC
FOURTEENTH APPLICANT

ARISTA RECORDS, LLC (FORMERLY KNOWN AS ARISTA RECORDS, INC)
FIFTEENTH APPLICANT

CIRCA RECORDS LTD
SIXTEENTH APPLICANT

CHRYSALIS RECORDS LTD
SEVENTEENTH APPLICANT

SONY MUSIC (AUSTRALIA) PTY LTD
EIGHTEENTH APPLICANT

SONY MUSIC ENTERTAINMENT (CANADA), INC
NINETEENTH APPLICANT

SONY BMG MUSIC ENTERTAINMENT
TWENTIETH APPLICANT

MAYER MUSIC LLC
TWENTY-FIRST APPLICANT

TIMOTHY JAMES FREEDMAN
TWENTY-SECOND APPLICANT

WARNER BROS RECORDS, INC
TWENTY-THIRD APPLICANT

ATLANTIC RECORDING CORPORATION
TWENTY-FOURTH APPLICANT

WARNER MUSIC UK LTD
TWENTY-FIFTH APPLICANT

J RUBY PRODUCTIONS, INC DBA SLASH RECORDS
TWENTY-SIXTH APPLICANT

ZOMBA RECORDING LLC (FORMERLY KNOWN AS ZOMBA RECORDING CORPORATION)
TWENTY-SEVENTH APPLICANT

BMG MUSIC (BMG MUSIC DBA THE RCA RECORDS LABEL, A UNIT OF BMG ENTERTAINMENT)
TWENTY-EIGHTH APPLICANT

BMG UK & IRELAND LTD
TWENTY-NINTH APPLICANT

LAFACE RECORDS
THIRTIETH APPLICANT

AND:

SHARMAN LICENSE HOLDINGS LTD
FIRST RESPONDENT

SHARMAN NETWORKS LTD
SECOND RESPONDENT

LEF INTERACTIVE PTY LTD
THIRD RESPONDENT

NICOLA ANNE HEMMING
FOURTH RESPONDENT

PHIL MORLE
FIFTH RESPONDENT

ALTNET INC
SIXTH RESPONDENT

BRILLIANT DIGITAL ENTERTAINMENT INC
SEVENTH RESPONDENT

BRILLIANT DIGITAL ENTERTAINMENT PTY LTD
EIGHTH RESPONDENT

KEVIN GLEN BERMEISTER
NINTH RESPONDENT

ANTHONY ROSE
TENTH RESPONDENT

JUDGE:

WILCOX J

DATE:

27 OCTOBER 2004

PLACE:

SYDNEY

REASONS FOR JUDGMENT
WILCOX J:

This is an application, by notice of motion filed on 21 June 2004, to dismiss the tenth respondent, Anthony Rose, from the proceeding.
The notice of motion actually refers to the striking out of certain paragraphs of the Amended Application and the Statement of Claim, insofar as they apply to the tenth respondent. However, there is a reference in the motion to Order 20 rule 2 of the Federal Court Rules (‘the Rules’). Mr J M Ireland QC, who appears with Mr K M Connor for Mr Rose, has submitted, and no doubt correctly, that this suggests the application was for a general stay or dismissal of the proceeding as against Mr Rose. I am happy to interpret the motion in this way.
For various reasons, the hearing of the motion was delayed until today. In the meantime, a Second Further Amended Application and an Amended Statement of Claim were filed.
The basis of the motion was set out in a submission filed on 25 June 2004. The fundamental points taken in that submission were, first, disconformity between the terms of the Amended Application and the Statement of Claim and, second, that the applicants’ pleadings had extended beyond the claims which were before the Court when Mr Rose was joined as a respondent. It was suggested that, if this amplification of the applicants’ claims had occurred at an earlier time, the application for joinder of Mr Rose would not have complied with the requirements of Order 6 rule 2 of the Rules.
Mr Rose was joined, along with four other respondents, by an order made in an ex parte application on 23 March 2004. It is correct to say that, at that time, the proceeding was confined to copyright and trade practices claims. Subsequently, the applicants' pleadings were revised so as to include other causes of action, including common law causes of action and, in particular, a claim of conspiracy.
In granting leave to add the additional respondents on 23 March 2004, I observed that, if joinder was refused, it would, in any event, be open to the applicants to file a separate proceeding against those persons. I thought there would be no prejudice to the additional respondents in being joined at that early stage of the preparation of the case.
At a directions hearing on 7 April 2004, all of the new respondents, including Mr Rose, were represented by Mr Lesley Pozniak, solicitor. There was discussion about a number of matters. I decided not to make any directions on that day. Rather, I asked the parties to consider the matters discussed, in particular in the light of views I had expressed about of some of them, and to transmit draft consent orders to my associate. This was done on the following day, 8 April 2004, when I made consent orders in chambers.
There was nothing in the consent orders of 8 April 2004 relating to dismissal of the proceeding as against any respondent. This was not mentioned as an issue on 7 April 2004. The issue did not emerge until, at least, the filing of the motion on 21 June 2004. Throughout the intervening period, Mr Rose was regularly represented at directions hearings.
As I have said, the basis of the motion, as it was originally filed, was that there was disconformity between the Amended Application and the Statement of Claim and that the applicants’ case was subsequently extended beyond the case pleaded when leave was granted. Both of those allegations were correct. However, the pleading disconformity has been cured, as Mr Ireland concedes, in the current pleadings.
It remains true that the case, as now pleaded against the tenth respondent, refers to causes of action that were not contemplated, or at least not disclosed, on 23 March 2004. This is hardly surprising. The facts underlying this case are complex. An enormous amount of work has been done by all parties. Considerable quantities of documents have been discovered. It is not surprising that, during this process, the applicants have thought it desirable to refine their case and to plead additional causes of action.
I would be concerned if the expanded allegations had resulted in unfairness to Mr Rose. However, in a lengthy and helpful submission filed by counsel for Mr Rose, there was no suggestion that Mr Rose has suffered unfairness or prejudice because of what has occurred. I can conceive no basis upon which it might be said he has been taken by surprise, or otherwise prejudiced, by the fact that the case against him has been refined and expanded to include additional causes of action.
The submissions put to the Court on behalf of Mr Rose, both in written form and orally, made much of the alleged weakness of the case against Mr Rose. Mr Ireland put to me orally that there was no prospect of the case against Mr Rose succeeding. He advanced reasons why he made this assertion. He cited alleged difficulties in the applicants’ case against all respondents but, in particular, against Mr Rose.
I understand what Mr Ireland has said. The case involves provisions of the Copyright Act1968 (Cth) that were enacted relatively recently and have had little, if any, judicial consideration. There are issues as to how they are to be construed. I have no view at all as to whether they support the case sought to be made by the applicants. There are also factual issues.
I have an inkling of the way in which the applicants put their case. On that way, I can see a basis for the applicants being able to obtain relief against Mr Rose.
Mr Ireland suggests that the way in which the applicants put their case cannot be correct. I emphasise that I am not rejecting that suggestion. Mr Ireland may well be correct; it may well be that Mr Rose will end up succeeding in his defence. However, that is not a matter for determination at this time.
Mr Ireland asserts that, on no view of the case, would the Court make injunctive orders against Mr Rose. Once again, he may turn out to be correct. However, I cannot be certain of that. I think it is undesirable, and it would be wrong in principle, for me to speculate about what might be the appropriate form of relief if the applicants succeed in their claim against Mr Rose.
A strike out application which is argued on the basis that the applicants’ case is misconceived can succeed only if the Court is satisfied there is no prospect for success by the applicants. Without going to the considerable volume of detail which is referred to in counsels’ submissions, it is sufficient for me to say that I am not so satisfied.
I wish to make clear that I am expressing no views at this stage about the legal and factual issues that arise in this case. I have no concluded views. I think I have gained some understanding of the way in which the parties put their respective cases, but I say no more than that.
In my view, the appropriate order is that the notice of motion filed by the tenth respondent on 21 June 2004 be dismissed with costs. I so order.

I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox.
Associate:
Dated: 12 November 2004

Counsel for the Applicants: Mr A J L Bannon SC, Mr R Cobden,
Mr J M Hennessy, Mr S Balafoutis

Solicitor for the Applicants: Gilbert + Tobin

Counsel for the Tenth Respondent: Mr J M Ireland QC, Mr K M Connor

Solicitor for the Tenth Respondent: Ebsworth & Ebsworth

Date of Hearing: 27 October 2004

Date of Judgment: 27 October 2004

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 110 of 2004

BETWEEN:	UNIVERSAL MUSIC AUSTRALIA PTY LTD FIRST APPLICANT FESTIVAL RECORDS PTY LTD AND MUSHROOM RECORDS PTY LTD TRADING AS FESTIVAL MUSHROOM RECORDS SECOND APPLICANT EMI MUSIC AUSTRALIA PTY LIMITED THIRD APPLICANT SONY MUSIC ENTERTAINMENT (AUSTRALIA) LIMITED FOURTH APPLICANT WARNER MUSIC AUSTRALIA PTY LIMITED FIFTH APPLICANT BMG AUSTRALIA LIMITED SIXTH APPLICANT UMG RECORDINGS, INC SEVENTH APPLICANT SHADY RECORDS, INC/INTERSCOPE RECORDS EIGHTH APPLICANT AFTERMATH RECORDS NINTH APPLICANT REAL HORRORSHOW PTY LTD TENTH APPLICANT THE LIVING END PTY LTD ELEVENTH APPLICANT VIRGIN RECORDS AMERICA, INC TWELFTH APPLICANT EMI RECORDS LTD THIRTEENTH APPLICANT CAPITOL RECORDS, INC FOURTEENTH APPLICANT ARISTA RECORDS, LLC (FORMERLY KNOWN AS ARISTA RECORDS, INC) FIFTEENTH APPLICANT CIRCA RECORDS LTD SIXTEENTH APPLICANT CHRYSALIS RECORDS LTD SEVENTEENTH APPLICANT SONY MUSIC (AUSTRALIA) PTY LTD EIGHTEENTH APPLICANT SONY MUSIC ENTERTAINMENT (CANADA), INC NINETEENTH APPLICANT SONY BMG MUSIC ENTERTAINMENT TWENTIETH APPLICANT MAYER MUSIC LLC TWENTY-FIRST APPLICANT TIMOTHY JAMES FREEDMAN TWENTY-SECOND APPLICANT WARNER BROS RECORDS, INC TWENTY-THIRD APPLICANT ATLANTIC RECORDING CORPORATION TWENTY-FOURTH APPLICANT WARNER MUSIC UK LTD TWENTY-FIFTH APPLICANT J RUBY PRODUCTIONS, INC DBA SLASH RECORDS TWENTY-SIXTH APPLICANT ZOMBA RECORDING LLC (FORMERLY KNOWN AS ZOMBA RECORDING CORPORATION) TWENTY-SEVENTH APPLICANT BMG MUSIC (BMG MUSIC DBA THE RCA RECORDS LABEL, A UNIT OF BMG ENTERTAINMENT) TWENTY-EIGHTH APPLICANT BMG UK & IRELAND LTD TWENTY-NINTH APPLICANT LAFACE RECORDS THIRTIETH APPLICANT
AND:	SHARMAN LICENSE HOLDINGS LTD FIRST RESPONDENT SHARMAN NETWORKS LTD SECOND RESPONDENT LEF INTERACTIVE PTY LTD THIRD RESPONDENT NICOLA ANNE HEMMING FOURTH RESPONDENT PHIL MORLE FIFTH RESPONDENT ALTNET INC SIXTH RESPONDENT BRILLIANT DIGITAL ENTERTAINMENT INC SEVENTH RESPONDENT BRILLIANT DIGITAL ENTERTAINMENT PTY LTD EIGHTH RESPONDENT KEVIN GLEN BERMEISTER NINTH RESPONDENT ANTHONY ROSE TENTH RESPONDENT
JUDGE:	WILCOX J
DATE OF ORDER:	27 OCTOBER 2004
WHERE MADE:	SYDNEY

JUDGE:	WILCOX J
DATE:	27 OCTOBER 2004
PLACE:	SYDNEY

Counsel for the Applicants:	Mr A J L Bannon SC, Mr R Cobden, Mr J M Hennessy, Mr S Balafoutis
Solicitor for the Applicants:	Gilbert + Tobin
Counsel for the Tenth Respondent:	Mr J M Ireland QC, Mr K M Connor
Solicitor for the Tenth Respondent:	Ebsworth & Ebsworth
Date of Hearing:	27 October 2004
Date of Judgment:	27 October 2004