FEDERAL COURT OF AUSTRALIA

Universal Music Australia Pty Limited v Brown [2003] FCA 1213

CORPORATIONS – statutory demands – application to set aside – whether defect causative of substantial injustice – whether some other reason why demands should be set aside – failure to identify debt – history of proceedings of failure to particularise claim

Corporations Act 2001 (Cth) ss 459H, 459G, 459J(1)(a), 459J(1)(b), 459J(2)

Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452 applied

Delta Beta Pty Ltd v Everhard Vissers (1996) 20 ACSR 583 cited

Kalamunda Meat Wholesalers Pty Ltd v Reg Russell & Sons Pty Ltd (1994) 51 FCR 446 cited

Eastern Metropolitan Regional Council v Four Seasons Constructions Pty Ltd (2002) 20 ACLC 352 cited

Moutere Pty Ltd v Deputy Commissioner of Taxation (2000) 34 ACSR 533 applied

UNIVERSAL MUSIC AUSTRALIA PTY LIMITED v ROBERT GEOFFREY BROWN

W3008 of 2003

CENTENARY AUSTRALIA PTY LIMITED v ROBERT GEOFFREY BROWN

W3009 of 2003

RD NICHOLSON J

31 OCTOBER 2003

PERTH

THE COURT ORDERS THAT:

1.                  In matter W3008 of 2003:

a.       The statutory demand dated 26 March 2003 served on the plaintiff on 31 March 2003, purportedly amended on 10 April 2003 and re-served on 14 April 2003, be set aside.

b.      The purported amended statutory demand dated 10 April 2003 and re-served on 14 April 2003 be set aside.

c.       The defendant’s notice of motion dated 9 May 2003, his amended notice of motion dated 12 May 2003 and his further notice of motion filed 8 August 2003 be refused. 

d.      The defendant pay the plaintiff’s costs (including reserved costs) of the application.

2.                  In matter W3009 of 2003:

a.       The statutory demand dated 26 March 2003 served on the plaintiff on 31 March 2003, purportedly amended on 10 April 2003 and re-served on 14 April 2003, be set aside.

b.      The purported amended statutory demand dated 10 April 2003 and re-served on 14 April 2003 be set aside.

c.       The defendant’s notice of motion dated 9 May 2003, his amended notice of motion dated 12 May 2003 and his further notice of motion filed 8 August 2003 be refused. 

d.      The defendant pay the plaintiff’s costs (including reserved costs) of the application.

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

REASONS FOR JUDGMENT

1                     In each of these proceedings an application is brought on behalf of the plaintiffs in reliance upon s 459G of the Corporations Act 2001 (Cth) (‘the Act’) seeking an order setting aside statutory demands by the defendant served on each of the plaintiff companies.  One statutory demand is dated 26 March 2003 and was purportedly amended on 10 April 2003 and the other statutory demand was dated 10 April 2003 and re-served on 14 April 2003.

2                     The evidence for the plaintiffs is in the form of affidavits from Mr Sullivan, a director of the first and second plaintiffs.  The evidence for the defendant comprises four affidavits in each proceeding.

3                     The defendant has filed a notice of motion (later amended) to strike out the applications.  In addition he has brought a further motion seeking orders for payment.

4                     The original statutory demands in each case assert that the plaintiff owes to the defendant the amount of $41 000 000 being the amount of debt described in the schedule as ‘6.25% of Copyright Earnings’.  In each of the purportedly amended statutory demands the words ‘of the Twain Lange Copyright’ were added to the description in the schedule in each case. 

5                     The plaintiffs submit that the history of litigation between the defendant and each of the plaintiffs is explicative of that to which the demand may relate.  That history appears from published reasons in the following proceedings: 

Brown v Edwards [2001] FCA 1169 (being a decision of von Doussa J on 16 August 2001)

Brown v Edwards [2001] FCA 1659 (being a decision of the Full Court constituted by Gray, Dowsett and Stone JJ on 5 December 2001)

Brown v Edwards [2002] FCA 538 (being a decision of Carr J on 30 April 2002)

Brown v Edwards [2002] FCA 839 (being a decision of Stone J on 2 July 2002)

It is not necessary to repeat here the matters referred to in those reasons.  It is sufficient to state that they resulted in the striking out or dismissal of alleged claims brought on behalf of the present defendant against one or both of the present plaintiffs in respect of an alleged infringement of his copyright resulting in non-payment of royalties to him.  His alleged claims were unparticularised and resulted in the outcomes to which I have referred. 

6                     The plaintiffs submit that, presuming the statutory demands are not defective, there is a genuine dispute pursuant to s 469H of the Act. Theyrely upon Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452.  There it was stated that a genuine dispute requires that the dispute must be bona fide and truly existing in fact and the grounds for alleging the existence of a dispute are real and not spurious, petty, illusory or misconceived.  It is argued that although the affidavit material provided on behalf of the plaintiffs supports the view there is a genuine dispute as to the existence of some so-called debt, the defendant has been unable to articulate a claim.  The plaintiffs also say that the statutory demand fails to identify to the plaintiffs what it is that the statutory demand refers to.  This, it is submitted, constitutes a ‘defect’ why the demand should be set aside:  s 459J(1)(a). 

7                     It is then submitted for the plaintiffs that the so-called amended statutory demands do not purport to be statutory demands as they do not purport to take effect from any date of service, save with respect to service of the original statutory demand.  Additionally, no provision is made in the legislation for amendment of a statutory demand. 

8                     The plaintiffs also submit that the statutory demands (whichever one the defendant may be able to rely on) are defective for a number of reasons.  Firstly, it is said that given the number of recordings said to have been made by Ms Twain, the inference must be that there are multiple debts and therefore it is necessary to specify each debt making up a total:  Delta Beta Pty Ltd v Everhard Vissers (1996) 20 ACSR 583.  Secondly, there is a failure to have the notes of the prescribed form:  cf Kalamunda Meat Wholesalers Pty Ltd v Reg Russell & Sons Pty Ltd (1994) 51 FCR 446.  Thirdly, there is insufficient detail as to the calculation of the amounts claimed.  Fourthly, the failure of the defendant to state the source of knowledge in the affidavit is apparent:  Eastern Metropolitan Regional Council v Four Seasons Constructions Pty Ltd (2002) 20 ACLC 352. 

9                     It is submitted that, in any event, there is ‘some other reason’ to set the demand aside.  In particular, reference is made to the fact that the use of the statutory demand procedure to coerce a person to pay a disputed amount or to put coercive pressure on the alleged debtor falls within the description of ‘some other ground’:  Moutere Pty Ltd v Deputy Commissioner of Taxation (2000) 34 ACSR 533.

10                  This latter ground arises from the reference in an affidavit of the defendant filed on 11 July 2003 indicating that it would be in the best interests of all concerned that he be contacted with a cash offer to defer the winding up of the plaintiffs ‘and the avoidance of criminal prosecution of all directors for fraud’.  The defendant also filed other affidavits which in some respects are obtuse or incoherent or irrelevant. 

11                  Additionally the defendant brought a notice of motion and amended notice of motion seeking that the plaintiffs’ applications to set aside the statutory demands be struck out. 

12                  In oral submissions the defendant argued that because the plaintiffs were controlled by Zomba Music Publishers or other Zomba interests, it was sufficient that he had (in matter W3018 of 2003) served those interests and they had not sought to bring an application pursuant to s 459G of the Act.  That cannot be the case.  The matter involving the Zomba interests will be dealt with in that other matter and the application here must be dealt with in these proceedings. 

13                  In my opinion the defects in the statutory demands (being those originally served) are such that substantial injustice would be caused unless they were set aside:  s 459J(1)(a).  The defects are more than ‘mere’ defects because they fail to identify any basis for the statutory demand:  s 459J(2).  Alternatively, there is ‘some other reason’ why the demands should be set aside in terms of s 459J(1)(b) in that it seeks to be coercive.

14                  Being so satisfied I consider that the Court should order that the statutory demands and, to remove any doubt, the amended statutory demands, should be set aside and the defendant’s notice of motion dated 9 May 2003 and the amended notice of motion dated 12 May 2003 should be refused. 

Associate:

Dated:              31 October 2003