Universal Music Australia Pty Ltd v Sharman License Holdings Ltd - [2004] FCA 934

FEDERAL COURT OF AUSTRALIA
Universal Music Australia Pty Ltd v Sharman License Holdings Ltd
[2004] FCA 934
Telecommunications (Interception) Act 1979 (Cth) ss 6 and 7
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 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
N 110 of 2004
WILCOX J
1 JULY 2004
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 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

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:

1 JULY 2004

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The order sought in para 1 of the notice of motion filed on 21 June 2004 by the first to fifth respondents be refused.
2.The first to fifth respondents pay the costs of the applicants in respect of that paragraph of the motion. Those costs may be assessed or taxed forthwith.

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

N 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

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:

1 JULY 2004

PLACE:

SYDNEY

REASONS FOR JUDGMENT
WILCOX J:

The Court has before it a notice of motion, dated 21 June 2004, filed on behalf of the first to fifth respondents. The only part of that motion with which I am presently concerned is para 1, which seeks the following order:
‘That the Applicants and their representatives file and serve evidence disclosing the steps taken during the execution of the Anton Piller orders made on 6 February 2004 to monitor, intercept, capture, record or retrieve any communications at any of the “Kazaa Parties”, “Supernode Parties” and “Website Parties” premises, by 16 July 2004.’
The first to fifth respondents say there is a possibility that, in the execution of the Anton Piller orders on 6 February 2004, there was a breach of s 7(1) of the Telecommunications (Interception) Act 1979 (Cth) (‘the Act’). That subsection reads as follows:
‘A person shall not:
(a) intercept;
(b) authorize, suffer or permit another person to intercept; or
(c) do any act or thing that will enable him or her or another person to intercept;
a communication passing over a telecommunications system.’
In order to understand the limits of that subsection, it is necessary to refer to s 6 of the Act. Section 6(1) provides:
‘For the purposes of this Act, but subject to this section, interception of a communication passing over a telecommunications system consists of listening to or recording, by any means, such a communication in its passage over that telecommunications system without the knowledge of the person making the communication.’
Subsection (2) sets out three circumstances in which an act is not an interception of a communication for the purposes of the Act. The subsection reads as follows:
‘Where a person lawfully on premises to which a telecommunications service is provided by a carrier, by means of any apparatus or equipment that is part of that service:
(a)listens to or records a communication passing over the telecommunications system of which that service forms a part, being a communication that is being made to or from that service;
(b)listens to or records a communication passing over the telecommunications system of which that service forms a part, being a communication that is being received at that service in the ordinary course of the operation of that telecommunications system; or
(c)listens to or records a communication passing over the telecommunications system of which that service forms a part as a result of a technical defect in that system or the mistake of an officer of the carrier;
the listening or recording does not, for the purposes of this Act, constitute the interception of the communication.’
It is conceded by Mr R J Ellicott QC, senior counsel for the first to fifth respondents, that the persons who entered the premises of the parties referred to in para 1 of the notice of motion, in execution of the Anton Piller orders, were all persons lawfully on the particular premises. However, he says there is a question whether the recordings that were made on those premises answered the requirement of s 6(2) of the Act of being recordings ‘by means of any apparatus or equipment that is part of that service.’
The only evidence presently before the Court, relevant to the question whether or not there was a possible breach of s 7(1) of the Act on 6 February 2004, is an account of the activity at premises of The Internet Group Ltd (i-Hug), at 83-85 Commonwealth Street, Surry Hills (‘the Commonwealth Street premises’) and Level 2, 23 Foster Street, Surry Hills (‘the Foster Street premises’). That account is set out in an affidavit sworn on 18 February 2004 by Lavinia Irene Hobman, a solicitor employed by Gilbert + Tobin, the solicitors for the applicants in the principal proceeding.
It appears from Ms Hobman's affidavit that, on 6 February 2004, she went to the Commonwealth Street premises with an independent solicitor (Brian Elkington), a forensic expert (Bob Mitchell) and two investigators (Brian Single and Barry Fitzgibbons). Mr Mitchell and the two investigators were, of course, people assisting with the applicants’ case. At the Commonwealth Street premises, Ms Hobman met Gareth Bissland, the General Manager of i-Hug, Ben Foote, the Marketing and Sales Manager of that company, Cameron Nolte, Technical Manager of i-Hug and Tim Eduard, an officer of i-Hug's parent company, Jiva Online Pty Ltd. Mr Bissland sought legal advice from Shane Barber, a partner of Truman Hoyle lawyers. Shortly thereafter, Mr Barber arrived with another solicitor who was apparently employed by his firm. It will be seen that, by that stage, there were six people present who were associated with i-Hug or its parent company.
There was a discussion between Mr Nolte and Mr Mitchell about technical aspects of obtaining the information identified in the Anton Piller orders. Mr Nolte said that the relevant information was likely to be at the Foster Street premises, the location of i-Hug’s call centre.
Mr Nolte, Mr Elkington, Mr Mitchell, Mr Fitzgibbons and Ms Hobman visited the Foster Street premises. Thereafter, action was taken to obtain the information by accessing a router through which data passed to and from a server. This server is described as ‘a computer in the Akamai “cluster” of computers’ housed at the Foster Street premises.
Ms Hobman’s affidavit provides the whole of the relevant evidence. No evidence has been adduced from any of the people associated with i-Hug who were present on that occasion.
There is no evidence as to what happened at the premises of any of the Kazaa Parties, Supernode Parties or Website Parties, other than i-Hug. That being the case, there is plainly no basis for making the wide order sought by the first to fifth respondents. The proposed order would impose on the applicants a considerable task; the Anton Piller orders were executed at numerous premises on 6 February 2004. It would be necessary for the many people who were involved in the execution of the Anton Piller orders to set out in detail everything that happened. I would not be justified in doing that merely on the basis of a suggestion of a possible illegality at the Commonwealth Street premises or the Foster Street premises.
Even confining the matter to the Commonwealth Street premises and the Foster Street premises, it seems to me it would not be a correct exercise of the Court's discretion to require the applicants to procure further affidavits about what happened on that occasion, at least until there is material suggesting that the router was not part of the relevant telecommunications service. I gather from Ms Hobman's affidavit that the router is a permanent part of the equipment used for communications to and from the computers operated by i-Hug. It is not apparent to me why it should be thought the router was not apparatus or equipment that is part of the telecommunications service.
Additionally, as Mr Bannon has pointed out, there is a prior question: whether what was recorded was a ‘communication’ within the meaning of the Act. It may or may not have been so. I have no information that enables me to determine that matter. It would have been possible for the first to fifth respondents to provide that information to the Court. A secure copy of the i-Hug material recorded on 6 February 2004 is now held by Blake Dawson Waldron, the firm that supplied most of the independent solicitors used in executing the Anton Piller orders on 6 February 2004. The first to fifth respondents have been permitted access to that material. However, they have strenuously resisted the applicants having access to it. Because of the attitude of the first to fifth respondents, which I do not criticise, I have taken the view that access to the material should not be granted to the applicants’ solicitors, at least pending completion of general discovery.
It would be wrong for me to require the applicants to undertake the task of providing detailed information about what happened on 6 February 2004, with the attendant work and expense, before it is even made clear to the Court that what was recorded at the Commonwealth Street premises and the Foster Street premises falls within the statutory definition of ‘communication’. It would also be wrong for me to do this without having evidence suggesting that the router, which is the alleged intercepting agent, was not apparatus or equipment that was part of the relevant telecommunications service.
The applicants in the principal proceeding submit that the Court lacks power to make orders of the nature sought in the notice of motion. That question has not been fully argued. My immediate reaction is adverse to the submission. It seems to me that the Court has wide powers to ensure that Anton Piller orders are carried out in a proper manner, without any abuse of authority or illegality. Without reaching a definite conclusion on the matter, I incline to the view that these powers extend to requiring evidence to be put before the Court about any prima facie case of illegality.
In the present case, there is no evidence in respect of any premises other than the Commonwealth Street premises and the Foster Street premises. Accordingly, an order that extended beyond i-Hug would be unwarranted. In relation to the Commonwealth Street premises and the Foster Street premises, there is no material which suggests any recording was made by means of apparatus or equipment that was not part of a telecommunications service. Accordingly, I refuse the orders sought in the notice of motion.
[There was a discussion about costs.]
Mr A J L Bannon SC, counsel for the applicants in the principal proceeding, seeks an order for costs on an indemnity basis. I think his clients should have an order for the costs of para 1 of the notice of motion, but I am not prepared to make the order on an indemnity basis. The problem I always have about indemnity costs orders is that I am uncertain about their practical effect in terms of quantum. It seems to me the present motion was unnecessary but that conclusion is reflected in the usual costs order.
Although I am not prepared to go beyond making the usual order for costs, I will order that the amount of the costs be assessed or taxed forthwith. There is no reason why payment should await final orders in the proceeding.
The formal orders that I make are that the order sought in para 1 of the notice of motion filed on 21 June 2004 by the first to fifth respondents be refused and that the first to fifth respondents pay the costs of the applicants in respect of that paragraph of the motion. Those costs may be assessed or taxed forthwith.

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: 15 July 2004

Counsel for the Applicants: Mr A J L Bannon SC, Mr R Cobden, Mr J Hennessy, Mr C Dimitriadis

Solicitor for the Applicants: Gilbert + Tobin

Counsel for the First to Fourth Respondents: Mr R J Ellicot QC, Mr M R Ellicot

Counsel for the Fifth Respondent: Mr R Webb SC, Mr M R Ellicot

Solicitor for the First to Fifth Respondents: Clayton Utz

Date of Hearing: 1 July 2004

Date of Judgment: 1 July 2004

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 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
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:	1 JULY 2004
WHERE MADE:	SYDNEY

JUDGE:	WILCOX J
DATE:	1 JULY 2004
PLACE:	SYDNEY

Counsel for the Applicants:	Mr A J L Bannon SC, Mr R Cobden, Mr J Hennessy, Mr C Dimitriadis
Solicitor for the Applicants:	Gilbert + Tobin
Counsel for the First to Fourth Respondents:	Mr R J Ellicot QC, Mr M R Ellicot
Counsel for the Fifth Respondent:	Mr R Webb SC, Mr M R Ellicot
Solicitor for the First to Fifth Respondents:	Clayton Utz
Date of Hearing:	1 July 2004
Date of Judgment:	1 July 2004