FEDERAL COURT OF AUSTRALIA Wheaton v Football Tasmania Limited [2001] FCA 1518 PRACTICE AND PROCEDURE – Notice of motion – Application to dismiss substantive application – Whether failure to disclose a cause of action – Whether claim against corporate body devolves to successor corporate body – Lack of evidence WORDS AND PHRASES – "devolve" Copyright Act 1968 (Cth) Federal Court Rules 1979 (Cth) O 58 r 16 Webster v Lampard (1993) 177 CLR 598 referred to JON WHEATON trading as MARKETING ADVISORY SERVICES (MAS) (ABN 83 749 876 431) v FOOTBALL TASMANIA LIMITED (ACN 085 213 350) T5 OF 2001 MARSHALL J HOBART 26 OCTOBER 2001 IN THE FEDERAL COURT OF AUSTRALIA TASMANIA DISTRICT REGISTRY T5 OF 2001 BETWEEN: JON WHEATON trading as MARKETING ADVISORY SERVICES (MAS) (ABN 83 749 876 431) APPLICANT AND: FOOTBALL TASMANIA LIMITED (ACN 085 213 350) RESPONDENT JUDGE: MARSHALL J DATE OF ORDER: 26 OCTOBER 2001 WHERE MADE: HOBART THE COURT ORDERS THAT: 1. The substantive application be dismissed. 2. Paragraph 1 of the relief sought in the respondent's Notice of Motion of 24 September 2001 be granted. 3. The Notice of Motion otherwise be dismissed. 4. Subject to further submissions regarding whether such costs be paid on an indemnity basis, the applicant pay the respondent's costs of and incidental to the proceeding, including reserved costs and costs of and incidental to the Notice of Motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA TASMANIA DISTRICT REGISTRY T5 OF 2001 BETWEEN: JON WHEATON trading as MARKETING ADVISORY SERVICES (MAS) (ABN 83 749 876 431) APPLICANT AND: FOOTBALL TASMANIA LIMITED (ACN 085 213 350) RESPONDENT JUDGE: MARSHALL J DATE: 26 OCTOBER 2001 PLACE: HOBART REASONS FOR JUDGMENT 1 The applicant, Mr Wheaton, by his amended application dated 14 September 2001, seeks damages in respect of what he alleges to be a breach of copyright, concerning the publication and reproduction of certain football publications for the years 1995 to 1999 inclusive. 2 Mr Wheaton trades under the business name "Marketing Advisory Services". He describes his occupation as that of a marketing publisher. 3 The respondent, Football Tasmania Limited, ("Football Tasmania") is a body corporate and a successor to the former Tasmanian Football League ("TFL"). 4 By Notice of Motion dated 24 September 2001, Football Tasmania sought to have the substantive application dismissed for failure to disclose a cause of action and for being an abuse of process of the Court. Alternatively, the Motion sought that the applicant be required to give security for costs and that the proceedings be stayed pending the determination of related proceedings in the Magistrates Court in Hobart. 5 At the commencement of the hearing of the motion, counsel for the applicant sought an adjournment of the Motion on the basis that her client only received the respondent's affidavits two days prior to the hearing of the Motion. She conceded that the respondent's affidavits were served on her office on 11 October 2001 in compliance with the order of Registrar Wood. I declined to grant an adjournment as no reasonable basis for it was established. The applicant relied on four affidavits that were filed with the Court this morning. These affidavits are of no assistance to the Court in resolving any issues currently before the Court on the Notice of Motion. 6 The respondent's Notice of Motion is supported by affidavits sworn by: · John Bowes, Senior Administrator and Football Operations Manager for Football Tasmania; · John William Woods, a chartered accountant; and · Guy Frederick Abel, the solicitor for Football Tasmania. 7 Mr Bowes gave evidence that after the 1998 football season, Football Tasmania did not enter into "any commercial or contractual arrangements whatsoever with the applicant in respect to any matter touching the playing, promoting or administration of the game of Australian Rules Football in Tasmania". 8 Mr Woods gave evidence that Football Tasmania was formed at the conclusion of the 1998 football season to take over the control and management of Australian Rules Football in Tasmania. He also gave evidence that on 25 February 1999, a special meeting of members of the TFL was convened and that at that meeting the TFL was wound up as a members' voluntary liquidation, in the belief that there were no unpaid creditors of the TFL. The special resolution, which resulted in the voluntary liquidation, was proceeded by declarations of solvency signed in early 1999 by the members of the TFL pursuant to s 494(1) and (2) of the corporations law applicable at the time. Mr Woods was appointed liquidator of the TFL on 25 February 1999. He gave evidence that: "[t]he declarations of solvency lodged by the members of the TFL… indicated to me that there were effectively no unpaid creditors and no remaining assets of the TFL. I therefore proceeded to conduct the liquidation of the TFL as a members' voluntary winding up." 9 Mr Woods also gave evidence that on 3 December 1999 he held a final meeting of members and creditors of the TFL, and that on 3 March 2000 the TFL was deregistered. 10 In order to succeed in this proceeding Mr Wheaton must prove that any claim he may have had against the TFL has now become in law a claim against Football Tasmania. 11 As Mr Abel has disclosed in his affidavit it is difficult to establish what precisely is alleged against the TFL or Football Tasmania because O 58 r 16 of the Federal Court Rules 1979 (Cth) has not been complied with. Order 58 r 16 provides that: "In proceedings for infringement of copyright, particulars of the infringement must specify the manner in which the copyright is alleged to be infringed and must give at least one instance of each type of infringement alleged." 12 The evidence before me discloses that Football Tasmania has not itself had any commercial dealings with Mr Wheaton that would render it liable to pay him any money. Mr Wheaton has asserted in the affidavit accompanying his amended application that Football Tasmania is liable because the "liabilities of the TFL have devolved to Football Tasmania". There is no evidence to support that assertion. No legal argument was advanced in any cogent way to attempt to make good the assertion. 13 I accept the submissions made on behalf of Football Tasmania that it had no legal relationship with the TFL. That is so, notwithstanding that the objects of Football Tasmania include as an object the following: "…to undertake all or any of the liabilities of and to carry on the work of the TFL." 14 At paragraphs 3 to 27 of Football Tasmania's written submissions the following is set out: "3. The Respondent was established to administer and control Australian Rules Football in Tasmania. 4. By paragraph 4 of the Applicant's affidavit dated the 14th September 2001 and filed in these proceedings, the Applicant deposes that by an agreement dated the 25th January 1994… "I obtained from the TFL the sole authorised publishing and distribution rights to a weekly publication called The Football Record for a period of one year with an option to renew such rights for a further one year." 5. The agreement is the document entitled Service Agreement (the Service Agreement) and exhibit "D" to the affidavit of John William Woods filed in these proceedings. 6. The Service Agreement is dated 25th January 1994 and is between Marketing Advisory Services and the TFL. 7. The Respondent is not a party to the Service Agreement. The Service Agreement does not have in it a term that the Agreement binds the successors or assigns of the TFL. 8. The Applicant does not allege in his affidavit of the 14th September 2001, nor did he in the application dated 25th January 2001 and filed in these proceedings on 25th January 2001, that there was ever an agreement between the Applicant and the Respondent in respect to the Service Agreement. 9. The Applicant does not allege in his affidavit of the 14th September 2001, nor did he in the application dated 25th January 2001 filed in these proceedings on the 25th January 2001, that the Respondent breached any term or terms of the service agreement. 10. Devolution is the Involuntary passing of property from one person to another by operation of law, for example upon death, bankruptcy or insolvency, (Butterworths Australian Legal Dictionary 1997 – p.356.) 11. The word devolution refers, in its common usage, to the passing of property to a successor in a deceased estate. To devolve means to pass property from a person dying to a person living. Devolution is marked by the absence of voluntariness (Mason J in O'brien v Komesaroff 1992 41ALR 255 at p.261 – High Court of Australia). 12. The assets and liabilities of the TFL Limited cannot at law and have not devolved to the Respondent so as to render the Respondent liable to the Applicant for any alleged infringement of copyright by the TFL. 13. There has been no devolution of the assets and liabilities of the TFL to the Respondent which at law would make the Respondent liable to the Applicant for damages for alleged infringement of intellectual property and copyright as deposed to by the Applicant in paragraph 13 of the affidavit dated 14th September 2001 and filed in these proceedings. 14. The TFL was deregistered on the 3rd March 2001 and upon such deregistration it ceased to exist (Corporations Act Section 601 AD). 15. The Applicant did not lodge a proof of debt with the liquidator of the TFL asserting that the TFL was indebted to him for damages. It was open to the Applicant to do so. 16. The Applicant's failure to lodge a proof of debt was not fatal to him pursuing the TFL for damages. However, the Corporations Act at Section 500 would have prevented the Applicant issuing proceedings against the TFL except with the leave of the Court. It was then open to the Applicant to make application to the Court seeking such leave pursuant to Section 500 (2) of the Corporations Law (as it then was). He did not do so. 17. It still remains open to the Applicant to apply to the Court for the re-registration of the TFL. 18. A company's constitution has the effect of a contract between: (i) the company and each member; (ii) the company and each director and company secretary; and (iii) a member and each other member. (Section 140 Corporations Act – formerly Section 140 Corporations Law). 19. If a company has a constitution it MAY set out the objects of that company (Section 125 Corporations Act). 20. The Respondent has a constitution and in that constitution objects are set out. One of the objections is to at "1.2.1 – to take over and acquire the whole or any part of the real and personal property of the body known as TFL ACN 009 556 432… whether divested in trustee or not and to undertake all or any of the liabilities of and carry on the work of the TFL." 21. The objects of the company in its constitution are simply that – objects. So far as a company's relationship with an outsider is concerned, the company does not at law have to carry out its objects. The objects do not create a legal relationship between the company and outsiders. 22. The objects have no relevance to relations between the Applicant and the Respondent. Object 1.2.1 does not therefore operate to make the Respondent liable to pay damages to the Applicant. (See p.51 Gillies The New Corporations Law 2nd Edition 1992 Federation Press). 23. The Respondent as a corporate entity has the legal capacity and powers of an individual person (Section 124 Corporations Act). 24. The Applicant does not allege against the Respondent that the interests of the TFL in the Service Agreement were in someway assigned to the Respondent by agreement (eg: by novation). 25. The Applicant alleges only that the Service Agreement was at all material times made between the Applicant and the TFL. 26. The Applicant alleges only that it was the TFL that allegedly infringed "…my rights as owner of the Football Guide and the copyright and intellectual property therein…". The Applicant makes no such allegation against the Respondent. 27. The Applicant alleges only that the TFL caused his loss and damage. The Applicant makes no such allegation against the Respondent." 15 I agree with those contentions and am of the view that no case is made out against Football Tasmania by Mr Wheaton on the current state of the evidence. Counsel for Mr Wheaton was unable to disagree with the proposition, put to her by the Court, that Mr Wheaton's contention that the TFL's liability devolved to Football Tasmania was not supported by evidence, as distinct from mere assertion. 16 I also note that a claim made inter alia against Football Tasmania for breach of copyright and breach of contract in the Hobart Magistrates Court was struck out as against Football Tasmania as disclosing no cause of action. Mr Wheaton attempted to appeal to the Supreme Court of Tasmania, but the application was out of time and was dismissed by Underwood J on 13 September 1999. 17 In my view, the application in this Court in the form of the amended application is bound to fail on the basis of the evidence currently before the Court. See Webster v Lampard (1993) 177 CLR 598. Consequently, the relief sought in paragraph 1 of Football Tasmania's Notice of Motion should be granted. The Notice of Motion will otherwise be dismissed. The Court will order that the applicant pay the respondent's costs of and incidental to the proceeding, including reserved costs and costs of and incidental to the respondent's Notice of Motion dated 24 September 2001. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. Associate: Dated: 26 October 2001 Counsel for the Applicant: Ms M Lovett Solicitor for the Applicant: Hunt & Hunt Counsel for the Respondent: Mr G Abel Solicitor for the Respondent: Wallace Wilkinson & Webster Date of Hearing: 26 October 2001 Date of Judgment: 26 October 2001