FEDERAL COURT OF AUSTRALIA

Universal Music Australia Pty Ltd v Sharman License Holdings Ltd

[2005] FCA 441

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

NSD 110 of 2004

WILCOX J

15 APRIL 2005

SYDNEY

THE COURT ORDERS THAT:

1.         The notice of motion filed by the first and second respondents on 15 April 2005 be dismissed with costs.

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

REASONS FOR JUDGMENT

WILCOX J:

1                     The Court has before it a notice of motion filed by the first and second respondents today.  This notice seeks an order that the disclosure of assets order made by me on 22 March 2005, insofar as it relates to those respondents, be stayed until further order following determination by the Full Court of either the first and second respondents’ appeals from that order or their application for leave to appeal from that order.

2                     I have decided I should not accede to the stay application.  I will briefly indicate my reasons. 

3                     Mr P M Biscoe QC, senior counsel for the first and second respondents, pressed on me the submission that the matters which his clients wish to raise at the hearing of the application for leave to appeal and/or any resultant appeal are fairly arguable.  In essence, those matters would challenge the correctness of the order made by me on 22 March.

4                     I do not wish to enter into the question whether or not there are substantial arguments to the effect that the order that I made on 22 March was incorrect. I have reached a view adverse to the first and second respondents because of their delay.  In a situation where an order is made by a judge requiring a party to take action within a limited period of time, it is incumbent upon that party to take prompt action if it desires to challenge those orders.

5                     The order I made on 22 March, that is the subject of the stay application, is the order that the first and second respondents file an affidavit disclosing assets by 1 April 2005.  On 23 March 2005, I extended the time for compliance with this order to 8 April 2005.  I allowed a period of 17 days.  Although the first and second respondents were represented by senior and junior counsel at the hearing that gave rise to the orders of 22 March, and were therefore well apprised of the merits of the matters put to me that day, and the reasons why I made the orders, the first and second respondents took no action to challenge those orders until after expiry of the time for filing the affidavits.  They waited three weeks, after the date of the orders made by me, before filing an application for leave to appeal.

6                     It is not acceptable for parties to act in this way.  Mareva orders are significant orders. They may seriously affect people's rights.  Almost invariably, they require prompt compliance action.  Accordingly, anybody who wishes to challenge such an order should act quickly.  Were it not so, it would be possible for a party seeking delay to undermine the efficacy of the remedy.  In saying that, I make no judgment about whether the first and second respondents are motivated by delay in making this application.  I simply point out the reason for the underlying principle.  Even if there are valid arguments that the disclosure order should not have been made in the first place, the first and second respondents should have acted much sooner.  They not having acted promptly, it would be inappropriate for me to stay compliance with the order.

7                     I note the view taken by Hely J, when this matter came before him as duty judge last week.  His Honour was pressed with an argument arising out of the terms of s 125 of the International Companies Act of the Republic of Vanuatu.   This argument was not put to me on 22 March by the then counsel for the first and second respondents.  Apparently it was devised by the first and second respondents’ present counsel, newly instructed by newly retained solicitors.

8                     Hely J was unimpressed with the argument.  I also am unimpressed.  I heard evidence this morning from the solicitor now acting on behalf of the first and second respondents. That evidence makes clear that the solicitor has done little to ascertain who controls the first and second respondents, and whether it is possible for that person to make an affidavit of disclosure without, even arguably, exposing himself or herself to liability under the Vanuatu legislation.

9                     The application is notable for the paucity of evidence put on behalf of the first and second respondents.  In that regard, without repeating them, I agree with the substance of the criticisms made by Mr A J L Bannon SC on behalf of the applicants in the principal proceeding.

10                  In my view, the stay application has no merit.  I order that the notice of motion filed by the first and second respondents on 15 April 2005 be dismissed with costs.

Associate:

Dated:              19 April 2005