Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Mothership Music Pty Ltd v Flo Rida (aka Tramar Dillard) [2012] NSWCA 344 Hearing dates: 15 October 2012 Decision date: 25 October 2012 Before: Meagher JA Decision: (1)The respondent (Flo Rida) provide security for the applicant's (Mothership's) costs of the appeal in the sum of $21,000 within 28 days. (2)That security be provided by paying that sum into Court or by such other means as the parties agree or, in default of such agreement, as the Court may order, any such order to be sought by application to the Registrar on notice to the respondent. (3)That the proceedings on the appeal be stayed until the respondent provides that security. (4)That the applicant's notice of motion filed on 26 September 2012 otherwise be dismissed. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: PROCEDURE - appeal from judgment given in absence of party - whether leave to appeal required - whether final judgment although may be set aside under UCPR r 36.16(2)(b) - judgment final and conclusive of rights - leave to appeal not required. PROCEDURE - security for costs - appellant resident outside Australia - no assets in Australia - evidence not establish has sufficient assets in place of residence or that order could readily be enforced there -security for costs ordered. Legislation Cited: District Court Act 1973 Uniform Civil Procedure Rules 2005 Cases Cited: Carr v Finance Corporation of Australia Ltd [No 1] [1981] HCA 20; 147 CLR 246 Computer Edge Pty Ltd v Apple Computer Inc [1984] HCA 47; 54 ALR 767 Connop v Varena Pty Ltd [1984] 1 NSWLR 71 Energy Drilling Inc v Petroz N.L. (1989) ATPR 40-954 Equuscorp Pty Ltd v Haxton [2012] HCA 7; 86 ALJR 296 Farmitalia Carlo Erba SrL v Delta West Pty Ltd (1994) 28 IPR 336 Hall v Nominal Defendant [1966] HCA 36; 117 CLR 423 Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; 77 NSWLR 205 Licul v Corney [1976] HCA 6; 180 CLR 213 Linprint Pty Ltd v Hexham Textiles Pty Ltd (1991) 23 NSWLR 508 New Brunswick Railway Co v British and French Trust Corporation Ltd [1939] AC 1 P S Chellaram & Co Ltd v China Ocean Shipping Co [1991] HCA 36; 102 ALR 321 Piras v Egan [2007] NSWCA 26 Texts Cited: Res Judicata, 4th ed, (2009) Lexis Nexis Category: Interlocutory applications Parties: Mothership Music Pty Ltd (Applicant) Flo Rida (aka Tramar Dillard) (Respondent) Representation: Counsel: J Sleight (Applicant) N E Furlan (Respondent) Solicitors: Neville & Hourn Legal (Applicant) Kliger Partners (Respondent) File Number(s): 2012/270469 Decision under appeal Citation: [2012] NSWDC 111 Date of Decision: 2012-08-03 00:00:00 Before: Gibson DCJ File Number(s): 2012/116306 Judgment 1MEAGHER JA: On 13 April 2012 the applicant (Mothership) commenced proceedings in the District Court against the respondent (Flo Rida) for damages for breach of contract. On 15 June 2012 Gibson DCJ made an order that the respondent file a defence within 28 days and a further order that in the event a defence was not filed, judgment be entered against the respondent and the matter listed for hearing for assessment of damages on 3 August 2012. No defence was filed and, following a hearing on 3 August 2012, orders were made for judgment for the applicant against the respondent for $380,400.60. Those orders were entered on 6 August 2012. 2The respondent, by a notice of appeal filed on 30 August 2012, appeals from that judgment. 3By its notice of motion filed on 26 September 2012, the applicant seeks two orders. First, it seeks an order pursuant to UCPR r 51.41 that the appeal be dismissed as incompetent. Secondly, it seeks an order pursuant to UCPR r 42.21(1)(a) or UCPR r 51.50 that the respondent provide security for its costs of the appeal in the sum of $60,000. Judgment final and leave to appeal not required 4The applicant submits that the judgment entered on 6 August 2012 was an "interlocutory" judgment within s 127(2)(a) of the District Court Act 1973 so that the respondent requires leave to appeal. That argument is put in two ways. First, it is said that the judgment ordered on 3 August 2012 and entered on 6 August 2012 was not final because it was liable to be set aside or varied under UCPR r 36.16(2)(b) as it was given or made in the absence of the respondent. Secondly, it is said that before that judgment was ordered, there was no "hearing on the merits" on the issue of liability. Presumably for that reason it is said that the judgment could not give rise to any issue estoppel and did not therefore take effect as a final judgment: Spencer, Bower and Handley, Res Judicata, 4th ed, (2009) Lexis Nexis, para 1.02. 5Whether an order is characterised as "final" or "interlocutory" depends on its legal and not its practical effect. A final order is one which finally determines the rights of the parties in a principal cause pending between them: see Hall v Nominal Defendant [1966] HCA 36; 117 CLR 423; Licul v Corney [1976] HCA 6; 180 CLR 213 at 225; Carr v Finance Corporation of Australia Ltd [No 1] [1981] HCA 20; 147 CLR 246 at 248. 6The judgment entered on 6 August 2012 did finally dispose of the rights of the applicant and the respondent in relation to the applicant's claim for damages for breach of contract by reason of the respondent's failure to perform at the "Fat As Butter Festival" held in Newcastle in October 2011. Section 81 of the District Court Act in terms states that subject to that Act or any other Act, a judgment in an action shall, unless set aside in accordance with that Act, be final and conclusive between the parties to the action. 7The fact that the judgment could be set aside under r 36.16(2)(b), because it was given or made in the absence of the respondent, does not mean that it is not properly characterised as "final": Linprint Pty Ltd v Hexham Textiles Pty Ltd (1991) 23 NSWLR 508 at 517-518, 526. See also Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; 77 NSWLR 205 at [36]. 8Nor does the fact that the judgment may have involved an assessment of damages following a default judgment on liability mean that its legal effect is not finally to determine the rights of the parties. A default judgment, entered following a defendant's default in appearing and defending is capable of constituting a final judgment giving rise to issue estoppels provided it finally determines the rights of the parties on the cause pending between them: New Brunswick Railway Co v British and French Trust Corporation Ltd [1939] AC 1 at 21-22; Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 at 1012; Spencer, Bower and Handley, Res Judicata at para 6.04. 9It is not clear whether any judgment as to liability was entered following the respondent's failure to comply with the order made on 15 June 2012. If such a judgment for liability had been entered, it would have been interlocutory: Computer Edge Pty Ltd v Apple Computer Inc [1984] HCA 47; 54 ALR 767; Equuscorp Pty Ltd v Haxton [2012] HCA 7; 86 ALJR 296. Nevertheless, the primary judge appears to have proceeded at the hearing on 3 August on the basis that judgment for damages to be assessed had been given in favour of the applicant. Following the hearing as to damages, final judgment for $380,400.60 was entered for the applicant. 10The respondent (Flo Rida) did not require leave to appeal from that judgment. For that reason, the application for an order pursuant to UCPR r 51.41 is dismissed. Security for costs of appeal 11The Court may make an order for security for costs under UCPR r 42.21(1)(a) if an appellant is "ordinarily resident outside New South Wales" and under UCPR r 51.50 in "special circumstances". 12It is convenient to deal with this application under UCPR r 42.21(1)(a). The purpose for ordering costs against a moving party ordinarily resident outside Australia is to ensure that the successful respondent has a fund available within the jurisdiction against which it can enforce the judgment for costs without having to bear the risk as to the certainty of enforcement in a foreign country and as to the time and complexity of the action which might be necessary to effect enforcement: Energy Drilling Inc v Petroz N.L. (1989) ATPR 40-954 at 50,422. Ordinarily, and in the absence of countervailing considerations, the fact that the moving party is resident out of and has no assets in Australia is to be given significant weight when considering whether to order security under this rule: P S Chellaram & Co Ltd v China Ocean Shipping Co [1991] HCA 36; 102 ALR 321 at 323. Those countervailing considerations include whether the party has assets in a foreign jurisdiction in which the costs order could be enforced, the complexity associated with those enforcement proceedings and the additional costs involved in pressing them, whether the assets in that jurisdiction might easily be moved in order to avoid enforcement and whether the making of an order for security would stifle the prosecution of an arguable appeal or other proceeding. 13The position in this case is as follows. The respondent resides in Florida. He may be entitled to licence fees as a copyright owner in respect of the use of his music within Australia. However, the evidence provides no basis for assessing what amounts are involved and whether any of those amounts could be made the subject of execution in Australia. The respondent's Australian solicitor, on information and belief from the respondent's "manager", asserts in one affidavit that the respondent has assets of "over $1 M" and, in another affidavit sworn four days later, that he has assets "in excess of $2 M". That evidence does not disclose where those assets are, what form they take, whether they can be moved easily, whether they are subject to any charges, liens or other forms of security and what, if any, liabilities the respondent has. The evidence also indicates that on 28 August 2012 a "notice of federal tax lien" was issued by the Department of the Treasury - Internal Revenue Service giving notice that taxes including interest and penalties in an amount of US$1,040,777.45 had been assessed against the respondent. 14In summary, the evidence establishes that the respondent resides outside Australia. It does not establish that he has any assets in New South Wales or that he has net assets, either in Florida or elsewhere, which would be sufficient to satisfy an order for costs should the appeal be unsuccessful: see, for example, Farmitalia Carlo Erba SrL v Delta West Pty Ltd (1994) 28 IPR 336 at 342. No evidence was given or submission made on behalf of the respondent that the making of an order for security for costs would stifle the prosecution of the appeal. 15Because the evidence does not show that the respondent has net assets in Florida against which an order for costs could be enforced, it is not necessary to consider whether in the circumstances it is appropriate only to make an order for security to the extent of the additional costs of enforcement in that State: see, for example, Connop v Varena Pty Ltd [1984] 1 NSWLR 71 at 74-75. That said, the evidence as to the enforceability of any costs order in Florida was not overly satisfactory. The Uniform Out-of-Country Foreign Money-Judgment Recognition Act of the State of Florida permits the enforcement of a foreign judgment which is "final and conclusive and enforceable where rendered". Such a judgment is not regarded as "conclusive" if the "foreign jurisdiction where that judgment was rendered would not give recognition to a similar judgment rendered" in the State of Florida. It was not suggested that there were in force any international arrangements by which a judgment for costs in proceedings in Florida might be enforced in New South Wales. To overcome any apparent difficulty in relation to enforcing a costs order of this Court in Florida, the respondent undertook not to object to the registration of any such order or judgment. It has not been necessary to decide whether any weight could be given to such an undertaking in view of the difficulties in enforcing it. 16In the circumstances, the interests of justice require that there be an order for security for costs. The applicant's solicitor estimates the solicitor-client costs of the conduct of the appeal at $60,000. The respondent's solicitor estimates those costs at about $30,000. Neither party took issue with the position being that the applicant's party and party costs would be a percentage in the range 60 to 70 per cent of its likely solicitor-client costs. The question in the appeal is whether the District Court had jurisdiction over the respondent who was not personally served with originating process in Australia. That question mainly involves legal rather than factual issues. For that reason, it is unlikely that it will occupy more than half a day. On that basis, I prefer the respondent's solicitor's estimate of the likely costs. Accordingly, the respondent should provide security of $21,000 for the applicant's costs of the appeal. 17The orders of the Court are: (1) The respondent (Flo Rida) provide security for the applicant's (Mothership's) costs of the appeal in the sum of $21,000 within 28 days. (2) That security be provided by paying that sum into Court or by such other means as the parties agree or, in default of such agreement, as the Court may order, any such order to be sought by application to the Registrar on notice to the respondent. (3) That the proceedings on the appeal be stayed until the respondent provides that security. (4) That the applicant's notice of motion filed on 26 September 2012 otherwise be dismissed. 18I have not made any order in relation to the costs of the motion. Each party has been in part successful in relation to the orders sought. For that reason, it is appropriate that there be no order as to the costs of the motion. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 October 2012