FEDERAL COURT OF AUSTRALIA

Universal Music Australia Pty Ltd v Cooper [2005] FCA 1878

Trade Practices Act 1974 (Cth) 

Universal Music Australia Pty Limited v Cooper (2005) 65 IPR 409 referred to

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 referred to

Microsoft Corporation v TYN Electronics Pty Limited (in liq) (2004) 63 IPR 137 cited

Microsoft Corporation v Goodview Electronics Pty Limited (2000] 49 IPR 578 cited

Australasian Performing Rights Association Limited v Pashalidis Leaders (2000) 48 IPR 610 cited

Microsoft Corporation v Blanch (2002) AIPC 91-813 cited

Microsoft Corporation v Electro-Wide Limited [1997] FSR 580 discussed

Phonographic Performance Ltd v Amusement Caterers (Peckham) Ltd [1963] 3 All ER 493 cited

UNIVERSAL MUSIC AUSTRALIA PTY LIMITED (ACN 000 158 592), EMI MUSIC AUSTRALIA PTY LIMITED (ACN 000 070 235), SONY MUSIC ENTERTAINMENT (AUSTRALIA) LIMITED (ACN 000 033 581), WARNER MUSIC AUSTRALIA PTY LIMITED (ACN 000 815 565), BMG AUSTRALIA LIMITED (ACN 004 157 564), FESTIVAL RECORDS PTY LIMITED (ACN 000 111 197) AND MUSHROOM RECORDS PTY LIMITED (005 594 043) T/AS FESTIVAL MUSHROOM RECORDS AND THE PARTIES LISTED IN THE ANNEXURE v

STEPHEN COOPER, E-TALK COMMUNICATIONS PTY LIMITED T/AS COM-CEN INTERNET SERVICES (ACN 097 058 994), COM-CEN PTY LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 061 300 169), LIAM FRANCIS BAL AND CHRIS TAKOUSHIS

NSD 1551 OF 2003

TAMBERLIN J

22 DECEMBER 2005

SYDNEY

Note:   Certain expressions used in these orders are defined for the purposes of these orders in the Schedule of Definitions

THE COURT DECLARES THAT:

As against the first, second, third, fourth and fifth respondents

1.         The first, second, third, fourth and fifth respondents have infringed the copyright in sound recordings in the Universal Recordings, by:

            (a)        authorising the making of copies of; and

            (b)        authorising the communication to the public of,

            the whole or a substantial part of those sound recordings without the licence of the first applicant or the owner of the copyright.

2.         The first, second, third, fourth and fifth respondents have infringed the copyright in sound recordings in the EMI Recordings, by:

            (a)        authorising the making of copies of; and

            (b)        authorising the communication to the public of,

            the whole or a substantial part of those sound recordings without the licence of the second applicant or the owner of the copyright.

3.         The first, second, third, fourth and fifth respondents have infringed the copyright in sound recordings in the Sony Recordings, by:

            (a)        authorising the making of copies of; and

            (b)        authorising the communication to the public of,

            the whole or a substantial part of those sound recordings without the licence of the third applicant or the owner of the copyright.

4.         The first, second, third, fourth and fifth respondents have infringed the copyright in sound recordings in the Warner Recordings, by:

            (a)        authorising the making of copies of; and

            (b)        authorising the communication to the public of,

            the whole or a substantial part of those sound recordings without the licence of the fourth applicant or the owner of the copyright.

5.         The first, second, third, fourth and fifth respondents have infringed the copyright in sound recordings in the BMG Recordings, by:

(a)        authorising the making of copies of; and

(b)        authorising the communication to the public of,

the whole or a substantial part of those sound recordings without the licence of the fifth applicant or the owner of the copyright.

6.         The first, second, third, fourth and fifth respondents have infringed the copyright in sound recordings in the Festival Recordings, by:

(a)        authorising the making of copies of; and

(b)        authorising the communication to the public of,

the whole or a substantial part of those sound recordings without the licence of the sixth applicant or the owner of the copyright.

As against the first respondent

7.                  The first respondent has infringed the copyright in the Universal Hard Drive Recordings by making copies of the whole or a substantial part of those sound recordings without the licence of the first applicant or the owner of the copyright.

8.         The first respondent has infringed the copyright in the EMI Hard Drive Recordings by making copies of the whole or a substantial part of those sound recordings without the licence of the second applicant or the owner of the copyright.

9.         Thefirst respondent has infringed the copyright in the Sony Hard Drive Recordings by making copies of the whole or a substantial part of those sound recordings without the licence of the third applicant or the owner of the copyright.

10.       Thefirst respondent has infringed the copyright in the Warner Hard Drive Recordings by making copies of the whole or a substantial part of those sound recordings without the licence of the fourth applicant or the owner of the copyright.

11.       Thefirst respondent has infringed the copyright in the BMG Hard Drive Recordings by making copies of the whole or a substantial part of those sound recordings without the licence of the fifth applicant or the owner of the copyright.

12.       Thefirst respondent has infringed the copyright in the Festival Hard Drive Recordings by making copies of the whole or a substantial part of those sound recordings without the licence of the sixth applicant or the owner of the copyright.

THE COURT ORDERS THAT:

As against the first, second, third, fourth and fifth respondents

13.       The first, second, third, fourth and fifthrespondents, whether by themselves, their servants or agents or otherwise, be permanently restrained from:

            (a)        making a copy of;

            (b)        authorising the making of a copy of;

            (c)        communicating to the public; or

            (d)        authorising the communication to the public of,

            the whole or a substantial part of any of the sound recordings in the Universal Catalogue including the Universal Recordings without the licence of the first applicant or the owner of the copyright.

14.       The first, second, third, fourth and fifthrespondents, whether by themselves, their servants or agents or otherwise, be permanently restrained from:

            (a)        making a copy of;

            (b)        authorising the making of a copy of;

            (c)        communicating to the public; or

            (d)        authorising the communication to the public of,

            the whole or a substantial part of any of the sound recordings in the EMI Catalogue including the EMI Recordings without the licence of the second applicant or the owner of the copyright.

15.       The first, second, third, fourth and fifthrespondents, whether by themselves, their servants or agents or otherwise, be permanently restrained from:

            (a)        making a copy of;

            (b)        authorising the making of a copy of;

            (c)        communicating to the public; or

            (d)        authorising the communication to the public of,

            the whole or a substantial part of any of the sound recordings in the Sony Catalogue including the Sony Recordings without the licence of the third applicant or the owner of the copyright.

16.       The first, second, third, fourth and fifthrespondents, whether by themselves, their servants or agents or otherwise, be permanently restrained from:

            (a)        making a copy of;

            (b)        authorising the making of a copy of;

            (c)        communicating to the public; or

            (d)        authorising the communication to the public of,

            the whole or a substantial part of any of the sound recordings in the Warner Catalogue including the Warner Recordings without the licence of the fourth applicant or the owner of the copyright.

17.       The first, second, third, fourth and fifthrespondents, whether by themselves, their servants or agents or otherwise, be permanently restrained from:

            (a)        making a copy of;

            (b)        authorising the making of a copy of;

            (c)        communicating to the public; or

            (d)        authorising the communication to the public of,

            the whole or a substantial part of any of the sound recordings in the BMG Catalogue including the BMG Recordings without the licence of the fifth applicant or the owner of the copyright.

18.       The first, second, third, fourth and fifthrespondents, whether by themselves, their servants or agents or otherwise, be permanently restrained from:

            (a)        making a copy of;

            (b)        authorising the making of a copy of;

            (c)        communicating to the public; or

            (d)        authorising the communication to the public of,

            the whole or a substantial part of any of the sound recordings in the Festival Catalogue including the Festival Recordings without the licence of the sixth applicant or the owner of the copyright.

As against the first respondent

19.       The first respondent, whether by himself, his servants or agents or otherwise, be permanently restrained from:

            (a)        making a copy of;

            (b)        authorising the making of a copy of;

            (c)        communicating to the public; or

            (d)        authorising the communication to the public of,

            the whole or a substantial part of the Universal Hard Drive Recordings without the licence of the first applicant or the owner of the copyright.

20.       The first respondent, whether by himself, his servants or agents or otherwise, be permanently restrained from:

            (a)        making a copy of;

            (b)        authorising the making of a copy of;

            (c)        communicating to the public; or

            (d)        authorising the communication to the public of,

            the whole or a substantial part of the EMI Hard Drive Recordings without the licence of the second applicant or the owner of the copyright.

21.       The first respondent, whether by himself, his servants or agents or otherwise, be permanently restrained from:

            (a)        making a copy of;

            (b)        authorising the making of a copy of;

            (c)        communicating to the public; or

            (d)        authorising the communication to the public of,

            the whole or a substantial part of the Sony Hard Drive Recordings without the licence of the third applicant or the owner of the copyright.

22.       The first respondent, whether by himself, his servants or agents or otherwise, be permanently restrained from:

            (a)        making a copy of;

            (b)        authorising the making of a copy of;

            (c)        communicating to the public; or

            (d)        authorising the communication to the public of,

            the whole or a substantial part of the Warner Hard Drive Recordings without the licence of the fourth applicant or the owner of the copyright.

23.       The first respondent, whether by himself, his servants or agents or otherwise, be permanently restrained from:

            (a)        making a copy of;

            (b)        authorising the making of a copy of;

            (c)        communicating to the public; or

            (d)        authorising the communication to the public of,

            the whole or a substantial part of the BMG Hard Drive Recordings without the licence of the fifth applicant or the owner of the copyright.

24.       The first respondent, whether by himself, his servants or agents or otherwise, be permanently restrained from:

            (a)        making a copy of;

            (b)        authorising the making of a copy of;

            (c)        communicating to the public; or

            (d)        authorising the communication to the public of,

            the whole or a substantial part of the Festival Hard Drive Recordings without the licence of the sixth applicant or the owner of the copyright.

As against the first respondent (Website)

25.       The first respondent whether by himself, his servants or agents or otherwise, be permanently restrained from operating or hosting, assisting in the operation or hosting of, or being knowingly concerned inthe operation or hosting ofthe website that was located at the URL www.mp3s4free.net (thewebsite) without the licence of the applicants or the owner of the copyright in the relevant sound recording.

As against the second, third, fourth and fifth respondents (website)

26.       The second, third, fourth and fifth respondents, whether by themselves, their servants or agents or otherwise, be permanently restrained from operating or hosting, assisting in the operation or hosting of, or being knowingly concerned in (including by advertising, whether by use of the Com-Cen logo or otherwise) the website that was located at the URL www.mp3s4free.net (thewebsite) without the licence of the applicants or the owner of the copyright in the relevant sound recording.

As against the first respondent (costs)

27.       The first respondent pay the applicants’ costs on and from 21 October 2004 of and associated with proof of subsistence and ownership of copyright in the Universal Recordings, the EMI Recordings, the Sony Recordings, the Warner Recordings, the BMG Recordings and the Festival Recordings except insofar as such costs are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, the applicants will be completely indemnified by the first respondent in respect of such costs.

As against the first, second, third, fourth and fifth respondents (costs)

28.       The applicants should otherwise only recover 80 per cent of their costs of the proceedings up to and including the delivery of judgment on 14 July 2005 as agreed, taxed or fixed pursuant to O 62 r 4(2).

29.       The costs of the applicants should be apportioned between the respondents as follows:

(a)        70 per cent to be paid by the first respondent;

(b)        20 per cent to be paid by the second to fourth respondents; and

(c)        10 per cent to be paid b y the fifth respondent.

30.       The applicants have leave to tax the costs referred to in orders 27 and 29 forthwith.

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

ANNEXURE

ADDITIONAL APPLICANTS

schedule of definitions

The Universal Recordings means the sound recordings within the meaning of the Copyright Act 1968 (Cth) set out in Schedule A.

The EMI Recordings means the sound recordings within the meaning of the Copyright Act 1968 (Cth) set out in Schedule B.

The Sony Recordings means the sound recordings within the meaning of the Copyright Act 1968 (Cth) set out in Schedule C.

The Warner Recordings means the sound recordings within the meaning of the Copyright Act 1968 (Cth) set out in Schedule D.

The BMG Recordings means the sound recordings within the meaning of the Copyright Act 1968 (Cth) set out in Schedule E.

The Festival Recordings means the sound recordings within the meaning of the Copyright Act 1968 (Cth) set out in Schedule F.

The Universal Catalogue means the catalogue of sound recordings that the first applicant controls, which contains recordings within the meaning of the Copyright Act 1968 (Cth) including the Universal Recordings as at the date of these orders.

The EMI Catalogue means the catalogue of sound recordings that the second applicant controls, which contains recordings within the meaning of the Copyright Act 1968 (Cth) including the EMI Recordings as at the date of these orders.

The Sony Catalogue means the catalogue of sound recordings that the third applicant controls, which contains recordings within the meaning of the Copyright Act 1968 (Cth) including the Sony Recordings as at the date of these orders.

The Warner Catalogue means the catalogue of sound recordings that the fourth applicant controls, which contains recordings within the meaning of the Copyright Act 1968 (Cth) including the Warner Recordings as at the date of these orders.

The BMG Catalogue means the catalogue of sound recordings that the fifth applicant controls, which contains recordings within the meaning of the Copyright Act 1968 (Cth) including the BMG Recordings as at the date of these orders.

The Festival Catalogue means the catalogue of sound recordings that the sixth applicant controls, which contains recordings within the meaning of the Copyright Act 1968 (Cth) including the Festival Recordings as at the date of these orders.

The Applicants’ Catalogues means the Universal Catalogue, the EMI Catalogue, the Sony Catalogue, the Warner Catalogue, the BMG Catalogue and the Festival Catalogue.

The Universal Hard Drive Recordings means the sound recordings within the meaning of the Copyright Act 1968 (Cth) set out in Schedule G.

The EMI Hard Drive Recordings means the sound recordings within the meaning of the Copyright Act 1968 (Cth) set out in Schedule H.

The Sony Hard Drive Recordings means the sound recordings within the meaning of the Copyright Act 1968 (Cth) set out in Schedule I.

The Warner Hard Drive Recordings means the sound recordings within the meaning of the Copyright Act 1968 (Cth) set out in Schedule J.

The BMG Hard Drive Recordings means the sound recordings within the meaning of the Copyright Act 1968 (Cth) set out in Schedule K.

The Festival Hard Drive Recordings means the sound recordings within the meaning of the Copyright Act 1968 (Cth) set out in Schedule L.

SCHEDULE A

UNIVERSAL RECORDINGS

SCHEDULE B

EMI RECORDINGS

SCHEDULE C

SONY RECORDINGS

SCHEDULE D

WARNER RECORDINGS

SCHEDULE E

BMG RECORDINGS

SCHEDULE F

FESTIVAL RECORDINGS

SCHEDULE G

universal hard drive RECORDINGS

SCHEDULE H

emi hard drive RECORDINGS

SCHEDULE I

sony hard drive RECORDINGS

SCHEDULE J

warner hard drive RECORDINGS

SCHEDULE K

BMG hard drive RECORDINGS

SCHEDULE L

festival hard drive RECORDINGS

REASONS FOR JUDGMENT

1                     These reasons concern the form of orders to be made arising from my reasons for judgment given in this matter on 14 July 2005, in which the applicants succeeded on claims against the respondents for authorisation of infringement of copyright in the sound recordings: see Universal Music Australia Pty Limited v Cooper (2005) 65 IPR 409. On some claims, the applicants were unsuccessful.

2                     The applicants have prepared draft Short Minutes of Order.  Pursuant to orders made by me on 8 August 2005, the parties have each filed written submissions on the form of the orders and costs.  The parties are in disagreement as to several matters arising from the applicants’ Short Minutes of Order, including whether declarations should be made, the terms of any such declarations, whether injunctive relief should be granted, the terms of any such injunctions and the apportionment, nature and extent of orders as to costs.

declarations

3                     The first six draft orders are in the form of declarations of right sought against each of the respondents.

4                     The second to fifth respondents do not object to the making of the declaratory orders, however, they make submissions as to the extent and wording of these declarations. 

5                     Stephen Cooper, the first respondent, objects to the making of declaratory orders on the basis that they are not necessary and the terms of the declarations are not appropriate as regards him.  Mr Morris QC for Stephen Cooper submits that the proposed declarations lack utility and will produce no foreseeable consequences, as they are merely summaries of the findings of fact, inappropriately recast in the form of declarations.  Mr Morris QC submits that the declarations are advisory and hypothetical and do not declare the rights of the parties and therefore the declarations should not be made: see Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-2.

6                     I do not accept the submission of Mr Morris QC.  Each of the six orders is in the form of a declaration that copyright has been infringed in specified ways and that there has been no licence for such activities.  These declarations of infringement arise directly from the application of the law to the facts as found and are rulings that the law has been infringed.  These are determinations of law and not simply a reformulation of the factual findings.  In so far as the declarations pronounce that there have been infringements, they declare the consequence of the application of the law to the circumstances of the case.

7                     All the respondents object to the terms of the first six declarations on the ground that they are said to travel beyond the evidence and the specific findings made.  This is said to arise because it has not been established that every recording in the catalogues referred to in the proceedings has been proven to have been infringed and, therefore, the claim for infringement of copyright has not been established in relation to each of these recordings.  The declarations refer, for example, to “sound recordings in the Universal Catalogue, including the Universal Recordings”.  The expressions “Universal Catalogue” and “Universal Recordings” are defined in the Schedule of Definitions to the Short Minutes of Order.  The specific claim levelled by the respondents is that the declarations cover a very large number of sound recordings and include sound recordings other than those specific “Universal Recordings”, as defined in the Schedule, which are dealt with in the evidence and referred to in the reasons for judgment.  It is said that in order for the declarations, as sought, to be made, it would be necessary to make further findings and to consider more evidence.

8                     It has been suggested by Mr Cohen for the second to fourth respondents, that this difficulty could be overcome by limiting the declaration to a finding concerning the “Universal Recordings”, as defined in the Schedule, and by omitting the reference to the “Universal Catalogue”.  I agree with this proposal and consider that declarations in such terms would accurately reflect the findings made.  I have modified the declarations accordingly.

9                     The next four declarations, namely, draft orders 7 to 12 in the Short Minutes of Order, concern the first respondent only and relate to infringement of copyright by the making of copies of the whole or a substantial part of the sound recordings contained in, for example, the “Universal Hard Drive Recordings”.  This expression is defined in the Schedule of Definitions to the Short Minutes of Order.  There was evidence of infringement of copyright in relation to these sound recordings in the form of screenshots of the hard drive of Stephen Cooper’s computer (pp 54-65 of Exhibit E).  I have made findings that Stephen Cooper has infringed copyright by making copies of sound recordings and I consider that the declarations in the Short Minutes of Order accurately reflect my reasons for judgment.

injunctive relief

10                  Draft orders 13 to 18 in the Short Minutes of Order provide for injunctions consequent upon the Court’s findings of infringement by the first to fifth respondents by the authorisation of acts of copyright infringement occurring via the mp3s4free.net website.  The draft orders would restrain the respondents from the authorisation of the acts listed in sub-pars (a) to (d) as well as the commission by the respondents of those primary acts of infringement.  The draft orders cover not only the particular sound recordings that were the subject of specific proof in the proceedings but also the applicants’ catalogues of sound recordings.

11                  Draft orders 19 to 24 are specific to the first respondent and seek to restrain him from committing or authorising any of the acts of copyright infringement listed in sub-pars (a) to (d).  These draft orders relate to the “Hard Drive Recordings” of each of the applicants as set out in Schedules G to L of the Short Minutes of Order.

12                  The respondents all submit that injunctive relief is inappropriate.  It is said that there is no need for such relief because there is no evidence of any threat or likelihood of repetition of copyright infringement by any of the respondents and that the terms of the injunctive relief in the Short Minutes of Order are too wide.  It is also said that the proceeding has, with its associated expense and inconvenience, achieved its purpose of discouraging any further infringing conduct.

13                  This case has been hard fought on the issue of authorisation of copyright infringement, and indeed on all grounds, and the applicants have succeeded on the issue of authorisation.  The evidence indicates, and the findings are, that massive scale infringement of copyright has occurred and has been carried out systematically over a substantial period of time by the respondents.  In the circumstances of this case, there are, in my view, ample grounds on which to grant an injunction to restrain the acts proven and also to justify injunctive relief on an anticipatory basis to prevent any further infringements.  The fact that a party says to the Court that he or she will not infringe copyright in the future because they have learnt their lesson as a consequence of the litigation is an insufficient reason to deprive the applicants of the protection sought.  In this case, in order for the rights of the parties to be vindicated and given effect to, injunctive relief in the broad terms sought in the Short Minutes of Order is appropriate.  There is precedent for the grant of injunctions in broad terms in relation to infringement of catalogues of music.  Taking into account the preventive purpose of injunctive relief and the large scale of the infringement indicated by the evidence, I consider that the broad terms of the injunctions are appropriate: see Microsoft Corporation v TYN Electronics Pty Limited (in liq) (2004) 63 IPR 137 at [37]; Microsoft Corporation v Goodview Electronics Pty Limited (2000) 49 IPR 578 at [67]; Australasian Performing Rights Association Limited v Pashalidis Leaders (2000) 48 IPR 610 at [26]; Microsoft Corporation v Blanch (2002) AIPC 91-813 at [37]-[42]; Microsoft Corporation v Electro-Wide Limited [1997] FSR 580 at 597-8.  In the latter Microsoft case, the Court found that there was a general threat to infringe copyright in a class of software, and injunctions were granted which extended to any piece of operating system computer software in which the plaintiff owned copyright.  See also Phonographic Performance Ltd v Amusement Caterers (Peckham) Ltd [1963] 3 All ER 493 at 494.

14                  This is an appropriate case for injunctive relief in the broad terms of draft orders 13 to 24 and I do not accept the respondents’ submissions that injunctive relief would be inappropriate.

15                  Draft orders 25 and 26 would essentially restrain the respondents from operating or hosting in future of the mp3s4free.net website or any website under a different name or at a different location that includes links to infringing copies of the applicants’ copyright sound recordings.  There is no evidence of the respondents setting up another such website, or threatening to do so.  Therefore, I make orders in the terms of draft orders 25(a) and 26(a), however, it is not appropriate to make orders in the terms of subpar (b) of each of those draft orders.

Costs

16                  In relation to costs, the first issue that arises is whether the applicants should bear some of their own costs. 

17                  The ordinary rule is that costs follow the event and that a successful litigant receives its costs in the absence of special or exceptional circumstances justifying some other order.  In this proceeding, the applicants made claims on a number of grounds.  They succeeded on one important basis against all five respondents, namely, authorisation of infringement of copyright.  They also succeeded in relation to the direct infringement of copyright by Stephen Cooper by making copies of the sound recordings on the hard drive of his computer.  Some time was spent on a number of other issues on which the applicants did not succeed, including the direct infringement of copyright by communicating the sound recordings or making them available to the public and the claims in relation to the Trade Practices Act 1974 (Cth).  It is true that the applicants’ claims were, to some extent, related and based on a common substratum of fact.  However, in the circumstances, I consider that an allowance should be made for the failure of the applicants on these other issues and, in my assessment, the applicants should only recover eighty per cent of their costs to make due allowance for their lack of success on other issues.

18                  The second issue that arises is whether there should be any apportionment of costs among the respondents and, if so, the amount that should be paid by each of the respondents. 

19                  In my view, Stephen Cooper was the principal respondent in the proceeding.  He did not call any evidence and put the applicants to proof of matters which the other parties did not dispute, in particular, subsistence and ownership of copyright in the applicants’ sound recordings.  In addition, it was the website of Stephen Cooper which was at the heart of the litigation.  Stephen Cooper played the principal role in the infringing conduct and the establishment of the website.  In my view, there should be an apportionment of costs liability as between the respondents.  It would be unfair to require an employee such as Chris Takoushis to be liable for the whole of the costs.  Likewise with respect to Com-Cen and Bal.  I consider, having regard to the way in which the case was conducted, the issues raised and the relevant importance of the roles played by the parties, that the appropriate apportionment of liability is seventy per cent to be paid by Stephen Cooper, twenty per cent to be paid by the second to fourth respondents and ten per cent to be paid by Chris Takoushis.  As indicated, Chris Takoushis was an employee of the Com-Cen and Liam Bal was the controlling mind of E-Talk and Com-Cen on the findings that have been made.

20                  The third matter that arises concerns a claim by Stephen Cooper that he should recover costs or at least should not have to pay any costs because an offer of settlement was made before the proceedings commenced.

21                  This offer of settlement is contained in a letter dated 27 October 2004 from Stephen Cooper’s solicitors, Barwick Stevens Lawyers.  The letter was given by Ms Stevens to Mr Williams, the applicants’ solicitor, on the morning of 27 October 2004.  This was the third day of the hearing.  All the lengthy preparation for the trial had been completed by then.  The letter stated that the offer would remain open until 2.15 pm that afternoon, a period of only a couple of hours.  The offer of settlement was that the first respondent would pay a total of $5,000 to the applicants and would undertake to refrain from operating a website using the domain name in issue.  The parties would each bear their own costs.  The payment of $5,000 was to be in full satisfaction of all claims and the settlement and its terms were to remain confidential save as to costs.

22                  In my view, this letter could not be said to be an offer that could justify the applicants being deprived of their costs.  The amount offered is minimal.  By the third day of the hearing, the costs incurred by the parties were very substantial and the offer that each party pay its own costs was unrealistic.  There was no admission of liability by the respondents.  The undertaking was between the parties.  The offer to refrain from operating the website with a particular domain name was totally inadequate and unduly limited.  The time span for the offer was unreasonable.  Accordingly, I do not consider that this letter in any way assists the case of Cooper in relation to costs.

23                  The fourth matter that arises is the question of whether costs should be awarded at this point in time or should be deferred pending the outcome of the proceedings.  It was suggested by Mr Morris QC, on behalf of Stephen Cooper, that any damages that might be recovered after a final hearing as to damages may be insignificant and disproportionate to the quantum of damages asserted by the applicants.  It was said that the offer of settlement may therefore prove to be relevant at a later stage of the proceedings and that it is not appropriate to determine the question of costs at this stage.

24                  I do not agree with this submission because the applicants have already succeeded on a major part of the case and have obtained injunctive and declaratory relief.  Even if the amount of damages recovered at the end of the proceedings is less than the $5,000 offered in the letter of 27 October 2004, this does not alter the fact that the applicants have succeeded in relation to injunctive and declaratory relief and should be awarded their costs to date.  The proceedings have dealt with liability and relief by way of declarations and injunctions.  The remainder of the proceedings will deal with other aspects of relief including damages, compensation and loss of profits.  The proceedings to this stage are discrete from further issues as to remedies and it is appropriate that costs should be awarded in respect of the proceedings to this point. Moreover, I am of the view that the applicants should have leave to tax and recover their costs forthwith without awaiting the determination of the proceedings.

25                  The fifth matter that arises concerns draft order 27 of the Short Minutes of Order.  The applicants seek an order that Stephen Cooper pay the applicants’ costs on and from 21 October 2004 and associated with proof of subsistence and ownership of copyright in the sound recordings on an indemnity basis.  This order is sought on the basis that Stephen Cooper has unreasonably and without any justification put the applicants to proof of the subsistence and ownership of copyright whereas the other respondents did not adopt such a course.  The order excludes costs that are of an unreasonable amount or were unreasonably incurred by the applicants.  The significance of the date, 21 October 2004, is as follows.  The proceedings were commenced ex parte on 17 October 2003, at which time the applicants adduced evidence, in a form appropriate in an interlocutory hearing, in relation to the subsistence and ownership of sound recordings including those that were later the subject of specific proof in the proceedings.  On 30 April 2004, Stephen Cooper disputed the subsistence and ownership of copyright in the sound recordings.  Stephen Cooper did not seek any discovery from the applicants in relation to these matters.  In July and August 2004, detailed evidence was sworn on behalf of the applicants as to the subsistence and ownership of copyright and, after objection by Stephen Cooper, was admitted into evidence.  On 21 October 2004, Stephen Cooper filed an opening statement in which he said that he did not dispute the evidence adduced by the applicants that they control over 85% of commercially released sound recordings in Australia.  Notwithstanding this concession, Cooper continued to dispute the subsistence and ownership of copyright in the sound recordings dealt with in the evidence.  Shortly before the commencement of the hearing, Cooper served an extensive list of objections including objections to the affidavits filed by the applicants dealing with the subsistence and ownership of copyright.  By written submissions filed on 11 February 2005, during oral address on the final day of the hearing, Stephen Cooper conceded that he could not dispute the applicants’ claims as to the subsistence and ownership of copyright in respect of the recordings the subject of specific proof.

26                  In my opinion, there are sufficient grounds in this case, having regard to the above circumstances, to justify an exceptional order for indemnity costs as against Stephen Cooper after 21 October 2004, because there was no real basis for him to put the subsistence and ownership of copyright in issue.  Therefore, I propose to make an order that he should pay the costs of the applicants incurred after 21 October 2004 on an indemnity basis in relation to subsistence and ownership of copyright.

27                  The final matter that arises concerns the costs of recovery of additional emails by the applicants.  The emails in question were identified in the screenshot exhibited to the affidavit of Chris Takoushis sworn on 5 December 2003, however, they were not produced by the respondents.  Some interlocutory skirmishing took place in December 2004 and January 2005 in relation to these emails, which the applicants alleged ought to have been discovered by the second to fourth respondents.  The second to fourth respondents contend that the costs incurred by the applicants in recovering these emails were unnecessary because nothing had been recovered which was of any use to the applicants or which had not already been produced by the second to fourth respondents.  Therefore, the second to fourth respondents submit that the applicants should pay their own costs of these interlocutory applications.  I am not persuaded that these interlocutory applications were unnecessary or unreasonable in the circumstances and, in my view, attempts by the applicants to locate the emails were properly instituted.  In the course of the proceedings, copies of the emails were produced and received into evidence as a result of the applicants’ investigations.  These emails assisted (see reasons for judgment at [122]) towards the finding that there had been authorisation of infringement of copyright by Chris Takoushis.  The emails that were recovered by the applicants as a result of their investigations totalled 78.  Accordingly, I consider that the applicants should have the costs of these interlocutory proceedings in December 2004 and January 2005 and other costs incurred in relation to the recovery of any deleted emails that were not produced on discovery.  

28                  I note that, during the course of the proceedings, I made orders as to the payment of costs in relation to particular applications and, having heard and resolved the first part of these proceedings concerning liability and injunctive and declaratory relief, I do not propose to vary those previous orders.

Associate:

Dated:              22 December 2005