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Universal Music Australia Pty Ltd v Sharman Networks Ltd [2006] FCAFC 41 (23 March 2006)
Last Updated: 23 March 2006
FEDERAL COURT OF AUSTRALIA
Universal Music Australia Pty Ltd v Sharman Networks Ltd [2006] FCAFC 41
CONTEMPT OF COURT – question of law referred by primary judge to Full Court – question whether, ‘having regard to nature and terms of’ order alleged to have been disobeyed, a determination of contempt may be made in respect of the contraventions alleged in the statement of charge – order the subject of pending appeal – order must be obeyed until set aside – different possible meanings of ‘equivocal’ and ‘ambiguous’ in relation to orders in earlier cases on contempt – discussion of orders whose meaning is obscure as a matter of construction of their terms, and orders shown to be uncertain or ambiguous in their operation in the context of the facts proved by the evidence – referred question answered, Yes.
Federal Court of Australia Act 1976 (Cth) s 25(6)
Federal Court Rules O 37 r 2
Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483 considered Coflexip SA v Stolt Comex Seaway MS Ltd [1999] FSR 473 cited Commodore Business Machines Pty Ltd v Trade Practices Commission (1990) 92 ALR 563 cited Commonwealth Industrial Gases Ltd v M.W.A. Holdings Pty Ltd (1970) 180 CLR 160 cited Iberian Trust Ltd v Founders Trust and Investment Co [1932] 2 KB 87 considered ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248 referred to Interlego A.G. v Toltoys Pty Ltd (1973) 130 CLR 461 cited Johnson v Walton [1990] 1 FLR 350 cited Life Insurance Company of Australia Limited v Phillips (1925) 36 CLR 60 applied Little v Lewis [1987] VR 798 cited McNair Anderson Associates Pty Ltd v Hinch [1985] VR 309 cited Microsoft Corporation v Goodview Electronics Pty Ltd (2000) 49 IPR 578 referred to Microsoft Corporation v Marks (No 1) (1996) 69 FCR 117 considered Microsoft Corporation v Plato Technology Limited [1999] FSR 834 cited Mikasa (N.S.W.) Pty Ltd v Festival Stores (1972) 127 CLR 617 referred to NATB v Minister for Immigration & Multicultural & Indigenous Affairs (2003) 133 FCR 506 cited Raffles v Wichelhaus (1864) 2 H&C 906 referred to Redwing Ltd v Redwing Forest Products Ltd (1947) 177 LT Rep 387 considered Repatriation Commission v Nation (1995) 57 FCR 25 cited Stancomb v Trowbridge Urban District Council [1910] 2 Ch 190 cited Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 cited Welcome Real-Time SA v Catuity Inc (No 2) (2001) AIPC 91,736 referred to Witham v Holloway (1995) 183 CLR 525 cited
UNIVERSAL MUSIC AUSTRALIA PTY LIMITED AND ORS v SHARMAN NETWORKS LTD AND ORS
NSD 110 of 2004
BRANSON, LINDGREN AND FINKELSTEIN JJ 23 MARCH 2006 SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 110 of 2004 BETWEEN: UNIVERSAL MUSIC AUSTRALIA PTY LIMITED 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
UMG RECORDS, INC. SEVENTH APPLICANT
SHADY RECORDS, INC./INTERSCOPE RECORDS EIGHTH APPLICANT
AFTERMATH RECORDS NINTH APPLICANT
REAL HORRORSHOW PTY LTD TENTH APPLICANT
THE LIVING END PTY LTD ELEVENTH APPLICANT
VIRGIN RECORDS AMERICA, INC TWELFTH APPLICANT
EMI RECORDS LTD THIRTEENTH APPLICANT
CAPITOL RECORDS, INC FOURTEENTH APPLICANT
ARISTA RECORDS, LLC (FORMERLY KNOWN AS ARISTA RECORDS, INC.) FIFTEENTH APPLICANT
CIRCA RECORDS LTD SIXTEENTH APPLICANT
CHRYSALIS RECORDS LTD SEVENTEENTH APPLICANT
SONY MUSIC (AUSTRALIA) PTY LTD EIGHTEENTH APPLICANT
SONY MUSIC ENTERTAINMENT (CANADA) INC. NINETEENTH APPLICANT
SONY BMG MUSIC ENTERTAINMENT TWENTIETH APPLICANT
MAYER MUSIC LLC TWENTY-FIRST APPLICANT
TIMOTHY JAMES FREEDMAN TWENTY-SECOND APPLICANT
WARNER BROS. RECORDS, INC. TWENTY-THIRD APPLICANT
ATLANTIC RECORDING CORPORATION TWENTY-FOURTH APPLICANT
WARNER MUSIC UK LTD TWENTY-FIFTH APPLICANT
J RUBY PRODUCTIONS, INC. DBA SLASH RECORDS TWENTY-SIXTH APPLICANT
ZOMBA RECORDING LLC (FORMERLY KNOWN AS ZOMBA RECORDING CORPORATION) TWENTY-SEVENTH APPLICANT
BMG MUSIC (BMG MUSIC DBA THE RCA RECORDS LABEL, A UNIT OF BMG ENTERTAINMENT) TWENTY-EIGHTH APPLICANT
BMG UK & IRELAND LTD TWENTY-NINTH APPLICANT
LAFACE RECORDS THIRTIETH APPLICANT AND: SHARMAN NETWORKS LTD SECOND RESPONDENT
LEF INTERACTIVE PTY LTD THIRD RESPONDENT
NICOLA ANNE HEMMING FOURTH RESPONDENT
ALTNET INC SIXTH RESPONDENT
BRILLIANT DIGITAL ENTERTAINMENT INC SEVENTH RESPONDENT
KEVIN GLEN BERMEISTER NINTH RESPONDENT JUDGES: BRANSON, LINDGREN AND FINKELSTEIN JJ DATE OF ORDER: 23 MARCH 2006 WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The following question reserved for the consideration of a Full Court, namely: ‘[W]hether, having regard to the nature and terms of order 4 made on 5 September 2005, a determination of contempt of court may be made in respect of the contraventions of that order alleged in the statement of charge’ be answered ‘Yes’. 2. The costs of the referred question of law, including the costs of 30 January 2006, be reserved to the judge who hears the charge of contempt, or should the charge not be proceeded with, to the primary judge, or, should it prove inconvenient or impossible for the primary judge to rule on the appropriate costs order, to another judge of the Court.
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 NSD 110 of 2004 BETWEEN: UNIVERSAL MUSIC AUSTRALIA PTY LIMITED AND ORS
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
UMG RECORDS, INC. SEVENTH APPLICANT
SHADY RECORDS, INC./INTERSCOPE RECORDS EIGHTH APPLICANT
AFTERMATH RECORDS NINTH APPLICANT
REAL HORRORSHOW PTY LTD TENTH APPLICANT
THE LIVING END PTY LTD ELEVENTH APPLICANT
VIRGIN RECORDS AMERICA, INC TWELFTH APPLICANT
EMI RECORDS LTD THIRTEENTH APPLICANT
CAPITOL RECORDS, INC FOURTEENTH APPLICANT
ARISTA RECORDS, LLC (FORMERLY KNOWN AS ARISTA RECORDS, INC.) FIFTEENTH APPLICANT
CIRCA RECORDS LTD SIXTEENTH APPLICANT
CHRYSALIS RECORDS LTD SEVENTEENTH APPLICANT
SONY MUSIC (AUSTRALIA) PTY LTD EIGHTEENTH APPLICANT
SONY MUSIC ENTERTAINMENT (CANADA) INC. NINETEENTH APPLICANT
SONY BMG MUSIC ENTERTAINMENT TWENTIETH APPLICANT
MAYER MUSIC LLC TWENTY-FIRST APPLICANT
TIMOTHY JAMES FREEDMAN TWENTY-SECOND APPLICANT
WARNER BROS. RECORDS, INC. TWENTY-THIRD APPLICANT
ATLANTIC RECORDING CORPORATION TWENTY-FOURTH APPLICANT
WARNER MUSIC UK LTD TWENTY-FIFTH APPLICANT
J RUBY PRODUCTIONS, INC. DBA SLASH RECORDS TWENTY-SIXTH APPLICANT
ZOMBA RECORDING LLC (FORMERLY KNOWN AS ZOMBA RECORDING CORPORATION) TWENTY-SEVENTH APPLICANT
BMG MUSIC (BMG MUSIC DBA THE RCA RECORDS LABEL, A UNIT OF BMG ENTERTAINMENT) TWENTY-EIGHTH APPLICANT
BMG UK & IRELAND LTD TWENTY-NINTH APPLICANT
LAFACE RECORDS THIRTIETH APPLICANT AND: SHARMAN NETWORKS LTD SECOND RESPONDENT
LEF INTERACTIVE PTY LTD THIRD RESPONDENT
NICOLA ANNE HEMMING FOURTH RESPONDENT
ALTNET INC SIXTH RESPONDENT
BRILLIANT DIGITAL ENTERTAINMENT INC SEVENTH RESPONDENT
KEVIN GLEN BERMEISTER NINTH RESPONDENT JUDGES: BRANSON, LINDGREN AND FINKELSTEIN JJ DATE: 23 MARCH 2006 PLACE: SYDNEY
REASONS FOR JUDGMENT
BRANSON J
INTRODUCTION
1 The primary judge has reserved for the consideration of this Full Court a question of law concerning a matter with respect to which an appeal would lie from a judgment of his Honour to the Full Court (see s 25(6) of the Federal Court of Australia Act 1976 (Cth) (‘the Federal Court Act’)). The matter is the controversy between the applicants on the one hand and six of the respondents on the other as to whether the six respondents have committed contempt of court by disobeying Order 4 of the orders made by the primary judge on 5 September 2005 (‘Order 4’).
2 The question of law referred for the consideration of the Court is:
‘... whether, having regard to the nature and terms of order 4 made on 5 September 2005, a determination of contempt of court may be made in respect of the contraventions of that order alleged in the statement of charge filed on 9 December 2005.’
3 For the reasons set out below I have concluded that the question of law referred to the Court should be answered, Yes.
BACKGROUND
4 The applicants claim copyright in their respective sound recordings pursuant to the Copyright Act 1968 (Cth) (‘the Act’). At trial the applicants alleged, in effect, that each of the respondents had infringed the copyright of the applicants respectively by authorising the doing in Australia by users of the Kazaa internet file sharing system (‘Kazaa’) of acts comprised in the copyright in 98 identified sound recordings.
5 After a lengthy trial, the learned primary judge made orders on 5 September 2005 which included the following orders: ‘2. It be declared that each of the six respondents named below (‘the infringing respondents’) have infringed the copyright in each of the sound recordings whose title appears in column 2 of the attached Schedule, being a copyright of the applicant (‘the relevant applicant’) whose name is set out in the same row as the title of that sound recording in column 4 of that Schedule by: (i) authorising the doing in Australia by Kazaa users of the following acts (‘the infringing acts’) in relation to the said sound recording: (a) making a copy of the sound recording; (b) communicating the recording to the public; in each case, without the licence of the relevant applicant; and (ii) entering into a common design, with each of the other infringing respondents, to carry out, procure or direct the said authorisation; The infringing respondents are Sharman Networks Ltd, LEF Interactive Pty Ltd, Nicola Anne Hemming, Altnet Inc, Brilliant Digital Entertainment Inc and Kevin Glen Bermeister. 3. It be declared that each of the infringing respondents threatens to infringe the copyright of the applicants in other sound recordings by: (i) authorising the doing in Australia by Kazaa users of the infringing acts; in each case, without the licence of the applicant who is the relevant copyright owner; and (ii) entering into a common design with each of the other infringing respondents, to carry out, procure or direct the said authorisation. 4. The infringing respondents be restrained, by themselves, their servants or agents, from authorising Kazaa users to do in Australia any of the infringing acts, in relation to any sound recording of which any of the applicants is the copyright owner, without the licence of the relevant copyright owner.
5. Continuation of the Kazaa Internet file-sharing system (including the provision of software programs to new users) shall not be regarded as a contravention of order 4 if that system is first modified pursuant to a protocol, to be agreed between the infringing respondents and the applicants, or to be approved by the Court, that ensures either of the following situations: (i): that: (a) the software program received by all new users of the Kazaa file-sharing system contains non-optional key word filter technology that excludes from the displayed blue file search results all works identified (by titles, composers’ or performers’ names or otherwise) in such lists of their copyright works as may be provided, and periodically updated, by any of the applicants; and (b) all future versions of the Kazaa file-sharing system contain the said non-optional key word filter technology; and (c) maximum pressure is placed on existing users, by the use of dialogue boxes on the Kazaa website, to upgrade their existing Kazaa software program to a new version of the program containing the said non-optional key word filter technology; or (ii) that the TopSearch component of the Kazaa system will provide, in answer to a request for a work identified in any such list, search results that are limited to licensed works and warnings against copyright infringement and that will exclude provision of a copy of any such identified work. 6. The operation of order 4 be stayed for a period of two months from today’s date, or for such extended period as a judge may, on application, allow.
7. The applicants’ claims for pecuniary relief against the infringing respondents be reserved for determination at a hearing to be fixed on application for that purpose.
8. There be liberty to all parties to apply, on seven days notice: (a) within a period of one month from today’s date, in respect of the form of order 4 or 5; (b) generally, in respect of any Court approval required for the purposes of order 5, or any order required for purposes related to order 6 or order 7.’
6 No party exercised the liberty to apply reserved to the parties by order 8 above. On 10 October 2005 the Court extended the stay of Order 4 until 5 December 2005. Pursuant to order 1 of further orders made by the primary judge on 24 November 2005, the stay was ‘dissolved at midnight on 5 December 2005’. Although order 2 of the orders made by his Honour on 24 November 2005 granted a conditional further stay of Order 4 no reliance for present purposes is placed on this order. It may be assumed, for present purposes, not to have come into effect.
7 On 30 January 2006 the primary judge had a number of notices of motion before him, including a notice of motion filed by the applicants on 9 December 2005 seeking punishment for contempt of court of those respondents against whom findings had been made on 5 September 2005 (‘the infringing respondents’).
8 The statement of charge filed on 9 December 2005 makes identical allegations against each of the infringing respondents. Those allegations are that since midnight on 5 December 2005:
‘(a) [he, she or it] has operated or participated in the operation of the Kazaa Internet file-sharing system including by: (i) supplying, or permitting the supply of, KMD to Internet users in Australia and elsewhere; (ii) permitting users of KMD in Australia and elsewhere to use KMD so as to make copies of sound recordings of which the applicants are the copyright owners; (iii) permitting users of KMD in Australia and elsewhere to use KMD to communicate to the public sound recordings of which the applicants are the copyright owners; (iv) supplying, or permitting the supply of, advertising to users of KMD in Australia and elsewhere; (v) supplying, or permitting the supply of, Gold files to users of KMD in Australia and elsewhere; without the licence of the relevant copyright owner. (b) the Kazaa Internet file-sharing system has not been modified pursuant to any protocol in accordance with order 5 of the 5 September Orders.’
9 In the case of each of the infringing respondents the statement of charge alleges that by reason of the matters alleged, he, she or it breached Order 4.
10 After giving consideration to submissions made by the parties, and after what his Honour described as ‘prolonged discussion about the content and form of the draft orders reserving questions for the Full Court’, his Honour relevantly ordered that the question identified in [2] above be referred to this Full Court. At the time of his Honour’s order the members of this Full Court had been assigned to hear the appeals from his Honour’s judgment of 5 September 2005. We have now heard those appeals and reserved our judgment on them.
11 Before this Court Sharman Networks Ltd, LEF Interactive Pty Ltd and Nicola Anne Hemming shared legal representation as did Altnet Inc and Brilliant Digital Entertainment Inc. Kevin Glen Bermeister was separately represented.
ISSUES
Relevance of Appeals
12 I agree, with respect, with the judgment of the primary judge that it was appropriate for any question of law reserved by his Honour in the contempt proceeding pursuant to s 25(6) of the Federal Court Act to be considered by the Full Court constituted to hear the appeals from his Honour’s judgment in the substantive proceeding. This was an efficient and convenient course from the perspectives of the parties and the Court.
13 However, this has not meant that publication of the Court’s judgment on the reserved question has had to await the publication of judgment on the appeals. As Lord Donaldson MR stated in Johnson v Walton [1990] 1 FLR 350 at 352:
‘It cannot be too clearly stated that, when an injunctive order is made or when an undertaking is given, it operates until it is revoked on appeal or by the court itself, and it has to be obeyed whether or not it should have been granted or accepted in the first place.’
See also Little v Lewis [1987] VR 798 at 804-805 per Kaye J, with whom O’Bryan J and King J agreed.
14 I draw attention to the fundamental and uncontentious principle articulated by the Master of the Rolls because some of the submissions made to the Court on the question of law reserved for its consideration seemed to overlook it. I express no concluded view in these reasons for judgment on whether Order 4, and indeed order 5 of the orders made by his Honour on 5 September 2005, should be varied or set aside on appeal – whether because they are inappropriately framed or otherwise. Even if the infringing respondents establish an entitlement to appellate relief in respect of Order 4, their duty to obey the order in the meantime will be unaffected. That is, and without in any way suggesting that this is such a case, a determination of contempt of court may be made in respect of an order notwithstanding that the order has been drawn in a way previously deprecated by appellate authorities.
Proof of Contempt
15 Since the publication of the judgment of the High Court in Witham v Holloway (1995) 183 CLR 525 (‘Witham’) it has been clear that all charges of contempt in Australia must be proved beyond reasonable doubt (per Brennan, Deane, Toohey and Gaudron JJ at 534 and McHugh J at 535). That is, the facts in issue in all charges of contempt must be proved beyond reasonable doubt; the domestic law and its proper application to established facts are not matters for proof or disproof. 16 The contempt alleged against each infringing respondent by the statement of charge is contempt by disobedience; that is, that that infringing respondent failed to observe the restraint placed on him, her or it by Order 4. In the circumstances proof of the contempt alleged against each of the infringing respondents will involve:
(a) unless the Court dispenses with service under O 37 r 2 of the Federal Court Rules, and subject to O 37 r 2(5), proof of the service of Order 4, or a certified or office copy thereof, bearing the endorsement required by O 37 r 2(3), on the infringing respondent; and (b) the doing by the infringing respondent of that which Order 4 prohibits.
17 It will not be necessary for the applicants to prove that the infringing respondents intended to disobey Order 4 (Stancomb v Trowbridge Urban District Council [1910] 2 Ch 190 at 194; McNair Anderson Associates Pty Ltd v Hinch [1985] VR 309 (‘McNair’) at 314). Of course, proof of wilful or deliberate disobedience is likely to be relevant to any penalties imposed should the charges of contempt be established.
18 However, in respect of each charge of contempt it will be necessary for the applicants to prove that Order 4 was disobeyed. To prove that Order 4 was disobeyed the applicants will have to establish, as a matter of fact, that the infringing respondent, by positive acts or by failure to act, contravened the restraint that Order 4, on its proper construction, imposed on that infringing respondent. If, on the proper construction of Order 4, its operation in respect of an infringing respondent in the circumstances established by the evidence is uncertain, the applicants may be unable to prove beyond reasonable doubt that Order 4 was disobeyed by that infringing respondent (see [30]- [39] below).
The Proper Construction of Order 4
19 The proper construction of Order 4 is not a matter of fact but a question of law.
20 It was suggested by certain of the infringing respondents that it is seldom permissible in contempt proceedings to go behind an order and to examine the reasons for judgment as an aid to construction of the order. They argued that any ambiguity or imprecision in an order means that a finding of contempt in respect of that order cannot be made.
21 It is not necessary to determine on this reference whether the above argument would have merit in the context of an interlocutory order (but see McNair at 312). I do not accept that it reflects the position so far as final orders are concerned. The correct approach to the proper construction of final orders is outlined in the decision of the Full Court in Repatriation Commission v Nation (1995) 57 FCR 25 at 33-34 (see also Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483 (‘Morgan’) esp per Barwick CJ at 492 and Windeyer J at 503).
22 This Court is not in a position to reach a final view on the proper construction of Order 4. The submissions received by us on the reserved question do not disclose the respective constructions of Order 4 for which the applicants and the infringing respondents contend. Without the benefit of submissions directly on this question, it seems to me that one issue aside, the proper construction of Order 4 is likely to prove relatively uncontroversial although its application in particular circumstances could give rise to difficulties (see [29]-[30] below). The issue to which I refer is that Order 4 is drawn in the plural (‘[t]he infringing respondents’) while each of the two preceding orders is drawn in the singular (‘each of the ... respondents’).
Ambiguity
23 The central contention advanced by the infringing respondents was that Order 4 is so ambiguous that it is devoid of any legal meaning and incapable of giving rise to liability on a charge of contempt.
24 So far as the law of contempt is concerned, an undertaking given to a court is to be equated to an injunctive order made by a court. Guidance with respect to issues raised concerning the referred question may thus be found in authorities concerning breaches of undertakings as well as authorities concerning failures to comply with court orders.
25 In considering the significance of alleged ambiguity in a court order, it is appropriate to turn immediately to Microsoft Corporation v Marks (No 1) (1996) 69 FCR 117 (‘Microsoft v Marks’). Microsoft v Marks is a decision of the Full Court of this Court. No party has suggested that it is plainly wrong; indeed both the applicants and the infringing respondents placed reliance on it. Its ratio decidendi should be treated as binding on this Court (NATB v Minister for Immigration & Multicultural & Indigenous Affairs (2003) 133 FCR 506 at [61]).
26 Microsoft v Marks involved an appeal from a dismissal of a contempt proceeding instituted by Microsoft alleging a breach by Mr Marks of an order of the Court. The leading judgment was that of Beaumont J, with whom Lehane J agreed, and Lindgren substantially agreed while making certain observations of his own.
27 The order alleged to have been disobeyed by Mr Marks was an order (‘order 1(a)’) restraining him from ‘reproducing or authorising the reproduction of the whole or a substantial part’ of any of certain identified computer programs. The order made no reference to the licence or consent of Microsoft. Beaumont J at 139 identified three possible constructions of the order and expressed a tentative preference for one of the three. The critical passage from his Honour’s reasons for judgment for present purposes is the following passage:
‘Yet it must follow, in my opinion, that to this extent order 1(a) should be treated as equivocal and its meaning as ambiguous. That being so, and since the question whether Microsoft had, in fact, consented was put in issue in the contempt proceedings, it must further follow that any attempt by Microsoft to move for contempt for alleged breach of such an order must have failed.
In any event, this outcome probably follows from an application of the general observations made in Witham on the relevance of the criminal standard of proof; there is a doubt as to the meaning of order 1(a) in an important respect, and ... that doubt is a reasonable one. In any event, the approach suggested is supported by authority which appears to be squarely in point. In Redwing Ltd v Redwing Forest Products Ltd (1947) 177 LT Rep 387 (Redwing) Jenkins J said (at 390): "I cannot say I think that the undertakings contained in the order were clearly drawn and I cannot say I regard the questions of construction involved in them as entirely easy questions, but in my judgment, a defendant cannot be committed for contempt on the ground that upon one of two possible constructions of an undertaking being given he has broken his undertaking. For the purpose of relief of this character I think the undertaking must be clear and the breach must be clear beyond all question."’ (emphasis in original)
28 The above passage from the reasons for judgment of Beaumont J gives rise to questions. First, it is not clear precisely what his Honour intended to convey by describing order 1(a) as ‘equivocal’ and ‘ambiguous’. Secondly, it is not clear whether his Honour was (a) intending to lay down a principle of law or (b) acknowledging a problem of proof.
29 To describe a court order as ‘equivocal’ or ‘ambiguous’ is to assert (at least) one of two possible things; either that its intended meaning is unclear or that, although its intended meaning is clear, its application in particular circumstances is uncertain. This point is well illustrated by reference to Life Insurance Company of Australia Limited v Phillips (1925) 36 CLR 60 (‘Phillips’), a case concerning an insurance contract. In Phillips Isaac J at 78-79 observed:
‘A document purporting to be a contract may be ambiguous. But the term "ambiguity" is itself not inflexible. It may arise from doubt as to the construction in their totality of the ordinary and in themselves well-understood English words the parties have employed. That is true construction. Or it may arise from the diversity of subjects to which those words may in the circumstances be applied. That is rather interpretation of terms. Or again, it may arise from obscurity as to the full expression in ordinary language of some abbreviated term or arbitrary form that has been adopted. That again is interpretation of terms. Very different consequences attach according as the ambiguity rests in construction or in interpretation ...
As to construction, there is always one and only one true meaning to be given to fully expressed words. Sir Montague Smith, speaking for the Judicial Committee in McConnel v. Murphy, said:- "In questions of difficult interpretation, not only two, but frequently many constructions may be suggested. And, after all, there must be one true construction; and if that true construction can be arrived at with reasonable certainty, although with difficulty, then it cannot properly be said that there are two meanings to the contract." Once there is established the full mutual expression of the agreement in English words, the construction of the document is, as Lindley L.J. says, a pure matter of law.’ (citation omitted)
30 A court order, like a contract of insurance, may need to be construed to enable its true meaning to be ascertained. Once its true meaning has been ascertained it may nonetheless be found to be ambiguous because, for example, a term used in the order may apply to two different subject matters. In Phillips, Isaac J illustrated this possibility in the context of a contract by reference to the facts of Raffles v Wichelhaus (1864) 2 H&C 906. In that case a contract referred to cotton ‘to arrive ex Peerless from Bombay’ when two ships equally answered that description. Lindgren J in his reasons for judgment on the question of law reserved to this Full Court, which I have had the benefit of reading in draft, provides an excellent hypothetical example of an order that may, albeit that its true meaning is clear, be found to have an ambiguous or uncertain operation. His Honour’s example is an order which restrains a person from doing something ‘in daylight’; should the person do the thing at twilight the operation of the order may be found to be uncertain although its operation would be certain had the person done the thing at noon.
31 The observations of Jenkins J in Redwing upon which Beaumont J placed reliance in Microsoft v Marks had earlier received consideration in Morgan. In Morgan the appellant sought support from Redwing and Iberian Trust Ltd v Founders Trust and Investment Co [1932] 2 KB 87 (‘Iberian Trust’) for the submission that unless the language of the undertaking was unambiguous and certain, it should not be enforced by contempt proceedings. In Redwing a defendant in a passing off action had given certain undertakings which became embodied in an order of the court. Jenkins J refused to attach the defendant’s directors for contempt of court because the undertakings contained in the orders were not clearly drawn and the questions of construction involved were not easy. In Iberian Trust a proceeding for contempt had failed because the order in question had not in terms directed the alleged contemnor to do anything; it had directed an outcome rather than conduct of any kind.
32 In Morgan Barwick CJ at 492 expressed the view that the authorities relied upon did not support the submission of the appellant. In a passage reminiscent of the approach taken by Isaacs J in Phillips, the Chief Justice stated at 492:
‘If the order or undertaking is so expressed as to be meaningless, there is of course nothing which can be enforced. But, if it bears a meaning which the Court is satisfied is one which ought fairly to have been in the contemplation of the person to whom the order was directed or who gave the undertaking as a possible meaning, the fact that that meaning results from a process of construction and involves a choice of possible meanings does not, in my opinion, preclude the Court from enforcing the order or undertaking in the sense which the Court assigns to it.’
33 Windeyer J also invoked the construction/interpretation dichotomy identified by Isaacs J in Phillips. His Honour at 503 said:
‘This is not a case in which the extent of obligations undertaken is ascertainable simply by construing the undertaking according to ordinary grammatical rules. If that were so, I would agree that a mistake in construction could not excuse disobedience, although it might perhaps mitigate its consequences ... If its true meaning, although not immediately plain, can be ascertained according to ordinary rules of construction, then the person giving the undertaking is bound by it in that sense. But the uncertainties that lurk in the words of this undertaking, and which were exposed during the argument, cannot be resolved in that way, for they do not arise from a debatable construction but from an uncertain denotation.’
34 The third member of the High Court in Morgan was Owen J. After expressing agreement with statements of general principle from Redwing and Iberian Trust, Owen J at 516 said:
‘In my opinion the ambiguity of and lack of precision in the appellant's undertaking which, it should be remembered, was originally drawn by the respondents' solicitors in the District Court proceedings are such that a finding of contempt should not be made.’ 35 It seems to me, particularly in light of Windeyer J’s expressed agreement with his Honour, that Owen J must be understood to have intended to convey by the above passage that, on its true construction, the meaning of the appellant’s undertaking (in the language of Windeyer J, the ‘denotation’ of its words) was uncertain.
36 Having regard to the views expressed by the members of the High Court in Morgan, Beaumont J’s description in Microsoft v Marks of order 1(a) as ‘equivocal’ and ‘ambiguous’ is, in my view, to be understood as a finding that on its proper construction, order 1(a) had an uncertain meaning such that proof that it had not been complied with would prove problematic. His Honour’s reference to the question of whether Microsoft had consented having been put in issue by the alleged contemnor indicates that his Honour regarded order 1(a) as providing a possible foundation for a charge of contempt. If the order were not capable as a matter of law of founding a charge of contempt it would be immaterial whether the question of Microsoft’s consent had been put in issue. I therefore conclude that relevantly the ratio decidendi of Microsoft v Marks is that an appeal from a dismissal of a charge of contempt will fail for want of proof if the order alleged to have been disobeyed is, on its proper construction, of uncertain application in the circumstances giving rise to the alleged disobedience.
37 As noted in [29] above, there is an inherent ambiguity in the contention advanced by certain of the infringing respondents that Order 4 cannot found a charge of contempt because it is equivocal or ambiguous.
38 Assuming the above contention to raise an issue as to the proper construction of Order 4, the authorities discussed above reveal that an injunction is not rendered invalid, or incapable of founding a charge of contempt, merely because it leaves a respondent with room to wonder whether future conduct falls within it. At least where the true construction of the order is one which ought fairly to have been in the contemplation of the person to whom the order was directed (see [32] above), the court which entertains the charge of contempt will be required to determine that construction. Of course, it may be highly relevant to the question of punishment that a respondent failed to comply with the order because he, she or it placed a construction on the order that was not its true construction.
39 Assuming the above contention to raise the possibility that Order 4, on its proper construction, will prove to have an uncertain application to the facts relied upon as establishing the alleged contempt by any or all of the infringing respondents, this Court is not in a position to deal with that possibility. The applicants have not yet adduced the evidence upon which they will rely in support of the charges of contempt. The evidence when adduced might establish, for example, that the infringing respondents jointly decided that neither they, nor any of them, would accord any respect to the orders made by the primary judge on 5 September 2005 but rather, both individually and together, they would encourage existing Kazaa users to continue copying the sound recordings identified in the Schedule to the orders dated 5 September 2000 and recruit new Kazaa users to do the same. I cannot see how it could be argued that Order 4 had an uncertain application in the context of evidence of that character.
Appropriate Form of an Injunction 40 Nothing said above is intended to throw doubt on the validity of the following observation made in ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248 (‘ICI v TPC’) by Lockhart J, with whom in this regard Gummow J agreed and French J generally agreed, at 259:
‘Plainly injunctions should be granted in clear and unambiguous terms which leave no room for the persons to whom they are directed to wonder whether or not their future conduct falls within the scope or boundaries of the injunction. Contempt proceedings are not appropriate for the determination of questions of construction of the injunction or the aptness of the language in which they are framed ...’ (citations omitted)
41 However, as his Honour went on to observe in that case at 260:
‘The drafting of injunctions is ultimately a practical question. In some cases it presents no difficulties to the draftsman, but in others the exercise is far from easy.’
42 There is Full Court authority for the proposition that any practice of granting injunctions in a form which reproduces, with the risk of sanctions for contempt, that which an Act forbids is to be discouraged (Commodore Business Machines Pty Ltd v Trade Practices Commission (1990) 92 ALR 563 (‘Commodore v TPC’) at 574). Such a practice is to be particularly discouraged in respect of interlocutory injunctions lest contempt proceedings present for judicial determination the very issues to be determined at trial (see Commodore v TPC at 515 and Morgan per Barwick CJ at 489). However, the authorities do not support the proposition that an injunction which incorporates the terms of a statutory prohibition should never be made, or if made, cannot found a charge of contempt.
43 Indeed, there is UK authority, which I found persuasive in Microsoft Corporation v Goodview Electronics Pty Ltd (2000) 49 IPR 578, that injunctions should be granted in broad terms in cases of trademark and copyright infringements where the defendants have shown themselves to be ‘untrustworthy’ or ‘dishonest’ (see Coflexip SA v Stolt Comex Seaway MS Ltd [1999] FSR 473 at 486 (this issue was not dealt with on appeal) and Microsoft Corporation v Plato Technology Limited [1999] FSR 834).
44 In Welcome Real-Time SA v Catuity Inc (No 2) (2001) AIPC 91,736 (‘Welcome Real-Time’) Heerey J stated that in the context of patent infringement there was no basis for any suggestion that an injunction should only go to restrain conduct of the kind considered at trial. His Honour at [9] said:
‘Particularly when the validity of the patent has been an issue, the patentee is entitled to an injunction restraining all infringement, and not just the particular form of infringement which was the subject of evidence at the trial.’
45 Heerey J in Welcome Real-Time noted what he described as the ‘invariable practice’ of the High Court to grant injunctions which simply restrain infringing the patent. His Honour cited in this regard Commonwealth Industrial Gases Ltd v M.W.A. Holdings Pty Ltd (1970) 180 CLR 160 at 171; Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 at 606, 622 and Interlego A.G. v Toltoys Pty Ltd (1973) 130 CLR 461 at 489. 46 It may also be observed that in Microsoft v Marks the only criticism made by the Full Court of order 1(a) was its failure to make any reference to the licence, or consent, of Microsoft. Yet the order was drawn in wide terms restraining Mr Marks from ‘reproducing or authorising the reproduction of the whole or a substantial part of any of the computer programs’ (emphases added).
47 It may for some purposes be necessary to distinguish between injunctions granted by this Court in reliance on s 23 of the Federal Court Act and injunctions granted under a statutory provision which expressly provided for the grant of injunctive relief (see ICI v TPC per Gummow J at 263-267). However, the authorities do not suggest that the distinction is one relevant to the issue now under consideration. It is thus appropriate to note that in Mikasa (N.S.W.) Pty Ltd v Festival Stores (1972) 127 CLR 617 (‘Mikasa’) the High Court made no adverse comment with respect to an injunction that restrained the appellant ‘from engaging in the practice of resale price maintenance in respect of tableware marketed ... under the trade name "Mikasa"’ (emphasis added). Indeed, Barwick CJ at 632 said that the making of such an injunction was ‘plainly authorized’ by s 90AA of the Trade Practices Act 1965 (Cth).
48 In Commodore v TPC the Full Court declined to modify an injunction made in the exercise of the discretion vested in the Court by s 80 of the Trade Practices Act 1974 (Cth) which restrained the appellant ‘from engaging in the practice of resale price maintenance in the manner alleged in the statement of claim or in any similar manner’ (emphasis added). The Court at 575 noted:
‘The difficulty of which Commodore complains is the addition to the injunction of the concluding words "or any similar manner". However, senior counsel for the Commission submitted that a narrower form of injunction would leave Commodore at liberty to repeat its conduct in slightly different circumstances and encourage it to "sail close to the wind"; the risk of this would be lessened by use of an expression such as "similar manner" or "like effect".
Similar considerations apply in various areas of the general law in which it has been customary to grant injunctions enjoining conduct of a similar character or to the like effect of that conduct which has been found against the defendant. In some cases, there is a risk that an injunction drawn too precisely may encourage evasion of the spirit but not the letter, whilst a wider form of injunction will not place the defendant in any real position of doubt as to what is expected of him.’
49 For the above reasons I reject the contention of the infringing respondents that Order 4 is incapable of founding a charge of contempt because it is drawn in terms which reproduce the requirements of the Act rather than in terms which proscribe particular conduct.
CONCLUSION ON REFERRED QUESTION
50 For the reasons given above, particularly at [39], I conclude that the answer to the question of law referred to this Court should be answered, Yes.
COSTS 51 On 30 January 2006, when reserving the question of law for the consideration of this Court, the primary judge also reserved for the determination of this Court the costs of 30 January 2006. I agree that the costs of 30 January 2006 should be regarded as costs of and incidental to the costs of the question of law reserved for the consideration of this Court. However, it is, in my view, premature to determine the appropriate costs order on the reserved question of law. If the charges of contempt are proceeded with, it may be appropriate (I do not say that it would be appropriate) for the costs of the reserved question of law to be costs in the cause on those charges. If the charges of contempt are not proceeded with, or are not proceeded with to finality, different considerations might come into play.
52 The appropriate costs order, in my view, is that the costs of the referred question of law, including the costs of 30 January 2006, be reserved to the judge before whom the contempt charges are heard, or should these charges not be proceeded with, to the primary judge or, should it prove inconvenient or impossible for his Honour to rule on the appropriate costs order, to another judge of the Court.
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson.
Associate:
Dated: 23 March 2006
IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 110 of 2004 BETWEEN: UNIVERSAL MUSIC AUSTRALIA PTY LIMITED AND ORS AND: SHARMAN NETWORKS LTD AND ORS JUDGES: BRANSON, LINDGREN AND FINKELSTEIN JJ DATE: 23 MARCH 2006 PLACE: SYDNEY
LINDGREN J
53 I have reached Branson J’s conclusion substantially for the reasons given by her Honour.
54 We are required to address the question of law referred, in an evidentiary vacuum. I would emphasise the words in the question referred, ‘having regard [only] to the nature and terms of Order 4’ and ‘may be made’ (my emphasis). At [39] of her reasons, Branson J refers to facts, at this stage hypothetical, which demonstrate why the question of law should be answered ‘yes’.
55 If an order restrains a person from doing something ‘in daylight’ and the person does the thing at midday in broad daylight, it is no answer to a charge of contempt that the order might have had an uncertain application requiring a dismissal of the charge if the evidence had shown that the person did the thing at twilight. The facts hypothesised would have suggested that the potential uncertainty of operation could have been avoided if the order had been expressed in terms of hours of the day, rather than in terms of ‘in daylight’. This does not signify, however, that ‘the nature and terms’ of the order were such that a charge of contempt was always destined to fail.
56 Microsoft Corporation v Marks (No. 1) (1996) 69 FCR 117 was a case of uncertainty of operation. That uncertainty arose from the failure of the order to address at all the question of the consent or licence of the copyright owner. In terms of the distinction made by Isaacs J in Life Insurance Company of Australia Ltd v Phillips (1925) 36 CLR 60 at 78-79 (quoted by Branson J at [29]), the problem was one of ambiguity of ‘interpretation’ (due to the order’s incompleteness of expression), rather than one of ‘construction’. Importantly, the alleged contemnor had put in issue at trial the question whether the copyright owner had consented. I agree with Branson J’s description (at [36]) of the ratio decidendi of Microsoft Corporation v Marks (No 1).
I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.
Associate:
Dated: 23 March 2006
IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 110 of 2004 BETWEEN: UNIVERSAL MUSIC AUSTRALIA PTY LIMITED AND ORS AND: SHARMAN NETWORKS LTD AND ORS JUDGES: BRANSON, LINDGREN AND FINKELSTEIN JJ DATE OF ORDER: 23 MARCH 2006 WHERE MADE: SYDNEY
REASONS FOR JUDGMENT FINKELSTEIN J
57 I agree in the reasons for judgment of Branson J. I also agree in the additional observations of Lindgren J.
I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.
Associate:
Dated: 23 March 2006
Counsel for the Applicants: AJL Bannon SC with R Cobden SC, JM Hennessy and C Dimitriadis
Solicitor for the Applicants: Gilbert + Tobin
Counsel for the Second, Third JM Ireland QC with SCG Burley and NR Murray and Forth Respondents:
Solicitor for the Second, Clayton Utz Third and Forth Respondents:
Counsel for the Sixth and S Finch SC with M Leeming Seventh Respondents:
Solicitor for the Sixth and Landerer and Company Seventh Respondents:
Counsel for the Ninth G Griffiths QC with M Goldblatt Respondent:
Solicitor for the Ninth Landerer and Company Respondent:
Date of Hearing: 20-24 February 2006
Date of Judgment: 23 March 2006