Maxims Entertainment Pty Ltd & Ors v Chinatown Enterprises Pty Ltd & Ors [1998] FCA 1707

FEDERAL COURT OF AUSTRALIA

PRACTICE & PROCEDURE - application under Order 10, r 7 against respondents who had failed to comply with directions – proof required – power of Court under Order 33 r 3 to dispense with compliance with rules of evidence on ground that facts are not genuinely in dispute or on the ground of unnecessary or unreasonable expense or delay.

Federal Court Rules, O 10 r 7, O 33 r 3 Australian Securities Commission v Macleod (1994) 54 FCR 309 followed Pearce v Button (1986) 8 FCR 408 applied Arab Monetary Fund v Hashim (No. 7) [1993] 1 WLR 1014 applied

MAXIMS ENTERTAINMENT PTY LTD & ORS v CHINATOWN ENTERPRISES PTY LTD & ORS NG 918 of 1995 Burchett J Sydney 16 December 1998

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 918 of 1995

BETWEEN: MAXIMS ENTERTAINMENT PTY LTD

First Applicant

LONG SHONG PICTURES (HK) LTD

Second Applicant

PRO-VISION ENTERTAINMENT LTD

Third Applicant

POWER WORLD PRODUCTION LIMITED

Fourth Applicant

RISING SUN PICTURES LIMITED

Fifth Applicant

AND: CHINATOWN ENTERPRISES PTY LTD

First Respondent

MANDARIN FILMS (AUSTRALIA) PTY LTD

Second Respondent

WING CHEUNG

Third Respondent

THO VINH HUYNH

Fourth Respondent

JUDGE: BURCHETT J

DATE: 16 DECEMBER 1998

PLACE: SYDNEY

EX TEMPORE REASONS FOR JUDGMENT The applicants move for judgment against the first, third and fourth respondents (the second is in liquidation) pursuant to Order 10, r 7 and Order 20, r 1. There have been clear failures by the respondents to comply with directions, and particularly with a direction I gave on 9 September 1998 requiring the filing, in certain circumstances which have arisen, of an affidavit disclosing the position, insofar as it is able to be ascertained, as to the results of the exploitation of each of the four films in question in this proceeding, and giving in summary form the financial results of each exploitation. That, I ordered, was to be done by 20 November 1998. Up to and including today, there has been no compliance with this direction. The nature and persistence of the respondents' failures lead me to conclude that the case is an appropriate one for the making of orders under Order 10, r 7. The respondents have shown themselves not prepared to co-operate in the process of bringing this matter to readiness for hearing in accordance with the rules. See Australian Securities Commission v Macleod (1994) 54 FCR 309 at 310 and 313. In Macleod, Drummond J held that Order 10, rule 7 does not enable proof of an applicant's case to be dispensed with. I agree. Accordingly, it was necessary for the applicants here to prove their case, though ex parte. However, in considering the evidence, I am entitled, if I think it proper, to afford the applicants the benefit of the exercise of my discretion under Order 33, r 3. Drummond J mentioned this matter in Macleod at 314, saying: "[N]otwithstanding the generally restrictive approach the Court has taken to O 33, r 3, as to which see Pearce v Button (1986) 8 FCR 408, it will often be appropriate on such an application for judgment to exercise in favour of the applicant the dispensing power conferred on the Court by O 33, r 3." His Honour's reference to Pearce v Button (1986) 8 FCR 408 should not be misunderstood. In that case, Lockhart J (at 422) noted that the rule "is in wide terms" which he did not think should be "read down". But he said: "[T]he power conferred upon the court by the rule is limited to dispensing with compliance with the rules of evidence to prove any matter not bona fide in dispute (r 3(a)) or where such compliance might occasion or involve unnecessary or unreasonable expense or delay (r 3(b)). In my opinion although it is for the judge to determine in each case whether the rule may be applied, its essential object is to facilitate the proof of matters which are not central to the principal issues in the case. The rule is not confined to dispensing with the rules of evidence to facilitate the proof of merely formal matters, but a judge should be slow to invoke it where there is a real dispute about matters which go to the heart of the case." Justice Spender said (at 427): "It was argued that this rule should be read down as not applying to matters central to the case. I do not accept that there is any such necessary implication, but the importance of the evidence to the case is clearly a matter of concern as to whether compliance with the rules of evidence should be dispensed with. The criteria for the operation of O 33, r 3(b) are 'unnecessary or unreasonable expense or delay'. Such terms are inherently relative. What is 'unnecessary' or 'unreasonable' will vary with the particular circumstances, and with the nature of the evidence sought to be admitted, but the paramount consideration in such a determination must be justice between the parties." Their Honours' approach to the rule has also been adopted in relation to a similar, but not identical, rule in England, Order 38, rule 3 of the Rules of the Supreme Court. In Arab Monetary Fund v Hashim (No. 7) [1993] 1 WLR 1014, at 1024, Neill LJ, with whom Hirst LJ agreed, said: "It would be inappropriate … to attempt to catalogue the circumstances in which an order under Ord. 38, r. 3 may be made. But I am quite satisfied that the order … in this case should not include any documents whose authenticity is challenged or any facts which remain genuinely in dispute." When applying those statements to the present matter, I should bear in mind that the respondents' conduct has resulted in a justified application under Order 10, rule 7, and has also resulted in a hearing, of which the respondents had notice, proceeding ex parte. In the circumstances, I do not regard the facts which the applicants have to prove as genuinely in dispute in the sense intended by the authorities relevant to Order 33, rule 3. They must be proved, but that does not make them facts in dispute. Furthermore, in those circumstances, I think unnecessary and unreasonable expense and delay would be occasioned by compliance with all of the rules of evidence. Accordingly, I dispense with such compliance to the extent necessary to enable me to receive the affidavit evidence tendered of the effect of contracts and arrangements entered into in Hong Kong, and also those of which complaint is made, hearsay evidence, summaries of the effect of writings, including in Chinese, and the rather generally expressed accounts in the affidavits of events in Hong Kong and elsewhere. I am satisfied that the evidence shows the copyright in the films in question belongs to one or other of the applicants. I accept the proof of the attributions of copyright on the films themselves as evidence from which this can be inferred. The accounts in the affidavits also show it. The evidence shows, too, that the first respondent has infringed each of those copyrights, and that the third respondent was personally involved in and party to each of those infringements. I am not satisfied that the fourth respondent has been shown to have been so involved. It was acknowledged, in argument, that the evidence against him rose no higher than to prove he was a director who was put on notice, at some stage, of the applicants' claims. The applicants seek damages. They have proved the receipt by the first respondent of various sums by the exploitation of the films. They have also proved by the evidence of the manager of the first applicant, Karen Wong, that it had entered into a number of distribution agreements pursuant to which, had the infringements not occurred, she says a total sum of $15,680 would have been received. I accept her evidence in this regard, and I also accept her evidence that the sum of $HK60,000, equivalent to $10,714.28, had already been paid out by the first applicant in respect of these films. It follows that a measure of the damages is the full sum of $15,680, part of which would have represented recoupment of an expenditure already incurred, and part of which would have represented a modest profit. I do not think the applicants can have that sum and also claim damages measured by the sums they have proved were received by one or more of the respondents. Accordingly, I think the correct sum to award as damages is the sum of $15,680. As regards costs, I think that the first and third respondents should be ordered to pay seven-eighths of the applicants' costs, including reserved costs. I have reduced the costs order to the extent indicated to allow for occasions when costs in this very long-standing matter were increased for reasons attributable to defaults of the applicants rather than the respondents. Therefore, the orders I make are that judgment be entered for the applicants against the first and third respondents for the sum of $15,680 and that the first and third respondents pay seven-eighths of the applicants' costs including any reserved costs. As regards the fourth respondent, I strike the matter out with no order as to costs. I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Burchett