Warner Music Australia Pty Ltd v Swiftel Communications Pty Ltd - [2005] FMCA 627

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WARNER MUSIC AUSTRALIA PTY LTD & ORS v SWIFTEL COMMUNICATIONS PTY LTD & ORS

[2005] FMCA 627

PRACTICE AND PROCEDURE – Transfer of proceedings to the Federal Court.

Copyright Act 1968 (Cth)
Federal Magistrates Act 1999 (Cth), s.39
Federal Magistrates Court Rules 2001 (Cth)

First Applicant:

Second Applicant:

Third Applicant:

Fourth Applicant:

WARNER MUSIC AUSTRALIA PTY LIMITED

UNIVERSAL MUSIC AUSTRALIA PTY LTD

EMI MUSIC AUSTRALIA PTY LTD

SONY BMG MUSIC ENTERTAINMENT (AUSTRALIA) PTY LTD

First Respondent:

Second Respondent:

Third Respondent:

Fourth Respondent:

Fifth Respondent:

SWIFTEL COMMUNICATIONS PTY LTD

SWIFT BROADBAND PTY LTD

PEOPLE TELECOMMUNICATIONS PTY LTD

PEOPLE TELECOM LTD

JOHN DOE

File Number:

SYG596 of 2005

Judgment of:

Driver FM

Hearing date:

16 March 2005

Delivered at:

Sydney

Delivered on:

16 March 2005

REPRESENTATION

Counsel for the Applicants:

Mr Hennessy

Solicitors for the Applicants:

Gilbert + Tobin

Counsel for the Respondent:

Mr Burley

Solicitors for the Respondent:

Clayton Utz

ORDERS

THE COURT DIRECTS THAT:

The matter be listed for interim hearing at 10.15am on 7 April 2005.

PENDING FURTHER ORDER, THE COURT ORDERS THAT:

Until further order of the Court, except in the ordinary course of business in which event not less than seven days written notice shall be given to the solicitors for the applicants, the first, second, third and fourth respondents, whether by themselves, their servants, agents or otherwise shall not move, destroy, alter, conceal or remove from the premises or part with possession or control of any items which are relevant materials except by delivery to the first, second, third and fourth respondents’ solicitors.
The first, second, third and fourth respondents shall keep the websites disabled and inaccessible by members of the public or the first, second, third and fourth respondents.
The first, second, third and fourth respondents shall not knowingly host any new website that employs BitTorrent technology or is a Direct Connect hub and still disable any such website where notice has been provided of likely infringing activity.

THE COURT ORDERS THAT:

The material seized, copied and retained by the applicants following the execution of the Anton Pillar order made by this Court on 9 March 2005 is not to be further copied by the applicants and that material be returned to the solicitors for the first, second, third and fourth respondents within 28 days.
Orders 8, 10, 11, 12 and 13 made by this Court on 9 March 2005 are vacated.
The applicants are to file and serve on the respondents a statement of claim and any further evidence on which they intend to rely in support of their application for the continuation of the interlocutory orders no later than 30 March 2005.
The first, second, third, fourth and fifth respondents are to file and serve on the applicants a defence and any affidavit evidence on which they intend to rely in relation to the interlocutory orders no later than

5 April 2005.
Costs of today’s hearing are reserved.
Parties have liberty to apply for further orders or directions on three days notice.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG596 of 2005

WARNER MUSIC AUSTRALIA PTY LIMITED

First Applicant

UNIVERSAL MUSIC AUSTRALIA PTY LTD

Second Applicant

EMI MUSIC AUSTRALIA PTY LTD

Third Applicant

SONY BMG MUSIC ENTERTAINMENT (AUSTRALIA) PTY LTD

Fourth Applicant

And

SWIFTEL COMMUNICATIONS PTY LTD

First Respondent

SWIFT BROADBAND PTY LTD

Second Respondent

PEOPLE TELECOMMUNICATIONS PTY LTD

Third Respondent

PEOPLE TELECOM LTD

Fourth Respondent

JOHN DOE

Fifth Respondent

REASONS FOR JUDGMENT

(revised from transcript)

The first matter I have before me is the application filed in court on 16 March 2005 for the transfer of these proceedings to the Federal Court. That application was made by the first to fourth respondents to the proceedings. Section 39 of the Federal Magistrates Act 1999 (Cth) (“the Federal Magistrates Act”) and Part 8 of the Federal Magistrates Court Rules 2001 (Cth) (“Federal Magistrates Court Rules”) deal with the transfer of proceedings from this Court to the Federal Court. Subsection 39(3) provides that in deciding whether to transfer a proceeding to the Federal Court, this Court must have regard to any rules of court made, whether the proceeding is in respect of an associated matter pending in the Federal Court, whether the resources of the Federal Magistrates Court are sufficient to hear and determine the proceeding, and the interests of the administration of justice.
Leaving aside the Rules for the moment, I am satisfied that, while there are other proceedings being conducted in the Federal Court which raise at least some of the issues arising in these proceedings, the proceedings are not associated in the sense meant by section 39(3)(b) of the Federal Magistrates Act. As to the resources of this Court, the resources are adequate to hear and determine the matter. The interests of justice can be met as well in this Court, as they might be met in the Federal Court.
The issue of transfer is more directly influenced by the provisions of rule 8.02 of the Federal Magistrates Court Rules. The additional factors raised in those rules are whether the proceeding is likely to involve questions of general importance, such that it would be desirable for there to be a decision of the Federal Court on one or more of the points in issue and whether, if the proceeding is transferred, it is likely to be heard and determined at less cost and more convenience to the parties than if the proceeding is not transferred; further, whether the proceeding will be heard earlier in this Court and the availability of particular procedures appropriate to the class of proceeding, and the wishes of the parties.
In this matter, the respondents obviously wish the proceedings to be transferred to the Federal Court. Mr Burley put to me that these proceedings are novel and raise important issues relating to the obligations of internet service providers, in particular issues arising requiring the interpretation of amendments made to the Copyright Act 1968 (Cth) in January this year in consequence of the Free Trade Agreement entered into between Australia and the United States. That is so. However, while I am presently without guidance from the Federal Court on those important issues, it may be that guidance will be provided in the reasonably near future as a result of cases being considered by Wilcox J in the Kazaa litigation[1] and by Tamberlin J in the Cooper litigation[2] that has been referred to by counsel in argument.
[1] Universal Music Australia Pty Ltd v Sharman License Holdings Ltd
[2] Universal Music Australia Pty Ltd v Cooper
The Court has the ability to adopt flexible procedures to suit different proceedings. The Court has the ability to adopt as necessary the procedures of the Federal Court to deal with more complex proceedings. The Court was established to deal quickly, simply and cheaply with less complex litigation to assist the Federal Court, but that does not mean that the Court should shy away from dealing with novel issues or difficult issues.
It is probable that the Court could hear this matter more quickly than the Federal Court, albeit at the risk of causing inconvenience to other litigants. The matter could also probably be dealt with at less cost than in the Federal Court having regard to the fixed event based cost scale in this Court. The applicants, having chosen to commence proceedings in this Court, if the proceedings remain in the Court, must take the risk that they may not recover, if successful, all or even a substantial part of the costs that they may incur in the proceedings. The same goes for the respondents. However, the costs rules provide a level playing field and ensure that parties are able to make informed judgments as to the amount that it is desirable to spend on the litigation. This is, in my view, to the advantage of both parties.
Having regard to all of those considerations I am not persuaded that at this point the proceedings should be transferred to the Federal Court. That is not to say that that position may not change, depending on the course of litigation still under way in the Federal Court and depending on the course of this litigation.
The other matters raised orally by Mr Burley concern the form of the orders made by me on 10 March this year. Those orders were for relief in the form of an Anton Piller order as well as interlocutory restraining orders. While debate may be had about the terms of the Anton Piller order granted, those orders have been executed. A matter of principal interest to the respondents is the retention of material seized pursuant to those orders. Commonly, the party enjoying the benefit of the Anton Piller orders would not be able to retain a copy of the material pending further order of the Court. In this case I decided that, given that this Court is not a court where discovery orders, and in particular preliminary discovery orders, are generally made, it would be a simpler, quicker and cheaper course to provide the applicants with access to the material seized, principally for the purpose of identifying whether further respondents should be joined to the proceedings. The applicants currently have a copy of the material seized following the execution of the Anton Piller orders.
I am asked to make orders to require the return of that material to the solicitors for the first to fourth respondents. I am persuaded, having heard Mr Hennessy, that the applicants have not yet had sufficient time to determine whether further respondents should be joined. I am prepared to give them some further time in order to make that judgement. However, at the end of that time I will require the material seized and copies held by the applicants to be returned to the solicitors for the first to fourth respondents. In the meantime, that material should not be further reproduced. If, following the return of that material, the applicants wish to seek discovery orders, that application can be made and will be considered.
I will order that the material seized, copied and retained by the applicants following the execution of the Anton Piller orders made by this Court not be further copied by the applicants and that that material be returned to the solicitors for the first to fourth respondents within 28 days.
The respondents also seek to vary orders 8 and orders 10 to 13 made by me last week. At the time I made those orders I was concerned that the orders should do no more than is necessary in order to preserve and protect the asserted interests of the applicants pending the further consideration of the issues by the Court. I was concerned that the businesses engaged in by the respondents should not be disrupted any more than is necessary in order to grant the interlocutory relief reasonably required on an ex parte basis by the applicants. Having heard from Mr Burley and Mr Hennessy I am persuaded that orders 8 and orders 10 to 13 go further than was and remains necessary.
In lieu of those orders the first to third respondents offer undertakings. While those undertakings are in large part satisfactory they are inadequate in several respects. The first of those is that the undertakings are offered only by the first to third respondents. No undertakings are offered by the fourth respondent. Indeed, the fourth respondent seeks that it be relieved of any further obligations under the present orders of the Court. Relief was granted by me against the fourth respondent last week having regard to evidence of what appeared to be a controlling interest by the fourth respondent over the other respondents and the potential for the fourth respondent to play an active role in the businesses the subject of the proceedings. I am not persuaded at this point that I was wrong in granting relief against the fourth respondent. Accordingly, I will not relieve the fourth respondent at this point from obligations under the orders as they will be amended by me. That said, I do not rule out the possibility that the fourth respondent might be relieved of further obligations at some future point, or indeed the fourth respondent might be deleted as a respondent altogether. That can await further developments in the proceedings.
The other difficulties I had with the undertakings offered by the first to third respondents are first, that they leave open the possibility of the destruction of information in the ordinary course of business. Secondly, that they place the onus on the applicants to advise of further likely infringing activity before the respondents are required to take action in relation to any new websites. Having regard to those concerns I will vacate orders 8 and 10 to 13 of the orders made by me on 9 March 2005 and in lieu thereof make the following orders:
1.Until further order of the Court except in the ordinary course of business in which event not less than seven days written notice shall be given to the solicitors for the applicants the first, second, third and fourth respondents whether by themselves, their servants, agents or otherwise shall not move, destroy, alter, conceal or remove from the premises or part with possession or control of any items which are relevant materials except by delivery to the respondent's solicitors.
2.Until further order of the Court the first, second, third and fourth respondents shall keep the websites disabled and inaccessible by members of the public or first to fourth respondents.
3.Until further order of the Court the first, second, third and fourth respondents shall not knowingly host any new website that employs BitTorrent technology or which is a direct connect hub and shall disable any such website where notice has been provided of likely infringing activity.
I will hear further argument on interlocutory relief on 30 March 2005 at 10.15am. I will direct that the applicants file and serve any further affidavits in support of their application for the continuation of interlocutory orders no later than Tuesday, 22 March 2005. I will direct that further argument on interlocutory relief be listed for hearing at 10.15 am on 7 April 2005. The applicants are to file and serve on the respondents any further affidavit material by 30 March 2005. The respondents are to file and serve any further affidavit material by 5 April. The applicants are to file and serve on the respondents a statement of claim by 30 March 2005 and the respondents are to file and serve on the applicants a defence by 5 April 2005. On that basis I won't require a response. It would be a formal document in any event. I expect that it would merely seek the dismissal of the application with costs.
I will reserve costs of today's hearing and grant the parties liberty to apply on three days notice.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Driver FM

Associate:

Date: 25 May 2005