Mothership Music Pty Ltd v Flo Rida

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.

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