Nine Films & Television Pty Ltd v Ninox Television Limited

REASONS FOR JUDGMENT 1 This is an Amended Notice of Motion by the second respondent, Television New Zealand Limited ("TVNZ"), filed in Court on 8 March 2005, which seeks orders against the applicants, Nine Films & Television Pty Ltd and Nine Network Australia Pty Ltd (which will be referred to collectively together as "Nine"), that the originating process and its service be set aside as against TVNZ or that the proceedings be dismissed as against TVNZ or that TVNZ be removed as a party to the proceedings. On 8 March 2005, I made orders dismissing the application and reserved the question of costs. I now publish my reasons for making these orders. 2 The Motion is opposed by the first and third respondents in the proceeding as well as by the applicants. 3 TVNZ is a public broadcaster in New Zealand and does not carry on business outside New Zealand. 4 The claim of Nine is that the first respondent, Ninox Television Limited ("Ninox"), has improperly alleged a breach of copyright by Nine and has improperly threatened proceedings contrary to s 202 of the Copyright Act 1968 (Cth) ("the Act"), which is concerned with groundless threats of legal proceedings, and that it has breached s 52 of the Trade Practices Act 1974 ("Cth) ("the TPA"). TVNZ says that no evidence has been filed by Nine which provides any basis for joining TVNZ or retaining it as a party and, accordingly, for the purposes of the Notice of Motion, TVNZ has filed a conditional appearance. 5 The evidence indicates that Ninox and TVNZ entered into a production agreement ("the Agreement") in June 1999 for the production of a television program entitled "Dream Home". The Agreement stated that the copyright in the program, including the concept and format, was to be shared equally between Ninox and TVNZ. By agreement of 13 November 2002, TVNZ appointed Ninox as the distributor of the format rights in "Dream Home". The right to produce the program was licensed to Nine. Only one series of the program was ever made by Nine. 6 In the Statement of Claim, Nine says that in early June 2002, it commenced production of a television program known as "The Block". According to Nine, "The Block" achieved substantial ratings success and from about mid-2003, it commenced licensing formal rights to "The Block" in a number of foreign countries, including the United States, the United Kingdom, South African, Denmark and Canada. 7 TVNZ says that in 2003, Ninox and Mr McEwen, who is the third respondent and the sole director and shareholder in Ninox, approached TVNZ with a view to issuing proceedings against Nine on the basis that "The Block" infringed copyright in "Dream Home". On 10 December 2003, TVNZ wrote to Ninox stating that it did not wish to be a party to any proceedings against Nine. Ninox and McEwen, the first and third respondents, instructed their American and Australian solicitors to write letters to Nine and various other television companies alleging misconduct on the part of Nine. TVNZ said it had nothing to do with these letters and that they were written by or on behalf of Ninox alone. It says that it has never made any threats to Nine nor ever sanctioned or countenanced the making of such threats. 8 Nine sought undertakings from Ninox on 8 April 2004, however, no such undertakings were sought from TVNZ. On 7 December 2004, Nine sought and was granted orders, on an ex partebasis, to serve outside the jurisdiction of the Court an originating process on both Ninox and TVNZ. TVNZ says that it did not receive any notification prior to service of the Application and Statement of Claims of Nine's intention to commence proceedings against it. On 16 December 2003, TVNZ wrote to Nine's solicitors confirming that it consented to the making of a declaration that the applicants had not infringed any copyright owned by the first respondent and/or the second respondent relating to the television program known as "Dream Home" by producing, exploiting, licensing, broadcasting and authorising the broadcast of the television program known as 'The Block". 9 TVNZ contends that the pleadings disclose no case against it or any necessity for it to remain as a proper party. The Motion is based on O 6 r9, O 9 r 7 and O 20 r 2 of the Federal Court Rules, which provide for the Court to set aside an originating process, remove parties and dismiss proceedings as frivolous or vexatious. 10 TVNZ refers to the fact that it does not reside or carry on business in Australia and that it is incorporated in New Zealand. It submits that the Statement of Claim alleges no act or omission by TVNZ in Australia and nor does it allege a case for specific relief against TVNZ in its own rights apart from the declaration. TVNZ contends that none of the evidence presently before the Court discloses that TVNZ made any threats or sanctioned the threats being made by Ninox. It contends that because there is no prima facie case for relief against TVNZ, leave ought not to have been given to serve process on TVNZ nor, in the alternative, ought the proceedings to continue as against TVNZ. It maintains that there are insufficient prospects of success to warrant the hardship to TVNZ arising from the time and expenditure in defending the claim. It says that any dispute is exclusively between Nine and Ninox. It also says that, at its highest, there is a bare claim for relief made against TVNZ in the Application without any reliance or reference to any cause of action in respect of TVNZ. 11 With respect to the proceedings under the Act and the TPA, TVNZ says they are not brought against Ninox as a joint owner of the copyright but rather as an entity that has made certain representations. TVNZ maintains that it has made no such representations and, in any event, it not necessary to join it as a joint owner of copyright in the proceedings insofar as the only basis for joinder is that TVNZ is a joint owner of the copyright. It is further said that it is not a proper basis for retaining a party in proceedings to rely on the consideration that discovery can be obtained against it if it is a party in order to assist the applicant in obtaining documents relating to the conduct of its case. 12 As counsel for Nine submits, the declaration sought is that there is no infringement in respect of the copyright which is owned by both the first and second respondents. In these circumstances, it is not appropriate that a declaration be made by consent, prior to conclusion of the proceedings, against only one of the joint copyright owners. A declaration for relief as to the rights of parties should only be made after there has been a determination of the necessary facts and legal issues which arise in the dispute. The Motion seeks a declaration of proprietary rights in rem. In my view, where a declaration is sought which affects the proprietary rights of a respondent, parties with an interest in that property are, generally speaking, proper parties: cf the remarks of Else-Mitchell J in Davlon Pty Ltd v Ku-ring-gai Municipal Council (1968) 3 NSWR 638 at 639-40 and see P W Young, Declaratory Orders, Butterworths, Sydney, 1984 at [1001]-[1004] (Declaratory Orders). 13 It is well settled that declaratory relief is essentially final in nature and that interlocutory declarations if ever made are rare: see International General Electric Co of New York Ltd v Commissioner of Customs and Excise [1962] Ch 784 at 789. Upjohn LJ at 400 said: "… An order declaring the rights of the party must in its nature be a final order after a hearing when the court is in a position to declare what the rights of the parties are, and such an order must necessarily be res judicata and bind the parties forever, subject only of course to a right of appeal." (Emphasis added) 14 In the present case, the offer made by TVNZ is for the making of a declaration before the hearing and dismissal of it as a party. 15 In support of the submission that TVNZ is not a necessary or proper party, reference is made to the decision in Prior v Sheldon (2000) 48 IPR 301 at [79] (Prior), where Wilcox J observed that since copyright is held as tenants in common, it is not necessary to have all owners joined in an action for infringement. However, Prior does not assist TVNZ. It is the converse of the present case and it is well-settled law that one of two joint owners can bring proceedings for breaches in respect of jointly held property. A finding in such a case would mean that there was an infringement of the rights of both joint owners in the absence of any licence or permission by either of them: cf E P Skone James et al., Copinger and Skone James on Copyright, 13th edn, Sweet & Maxwell,London, 1991 at 7-4. The declaration of non-infringement sought by Nine is relief which it is entitled to pursue as against both joint owners. The case involves the determination of a dispute as to the nature and extent of the copyright of Ninox and TVNZ in "Dream Home". Resolution of the dispute will therefore impact on the common proprietary rights of the respondents. The essential purpose of proceeding under s 202 in this case is to enable Nine to dispel uncertainty as to whether "The Block" is in breach of copyright having regard to its format and production. I accept the submission of counsel for the applicant that such a declaration is properly made at the time of final orders and this is an important reason why TVNZ should remain a party until after resolution of disputed questions of fact and law. It is not an answer for TVNZ to simply agree to a declaration at this stage and for it to be removed from the action. It is necessary that at the time the declaration is made, after resolution of any outstanding issues, TVNZ should be a party. 16 On the issue of discretion, I do not consider that there is any undue hardship on TVNZ in remaining a party to the proceeding. Their position can readily be accommodated by excusing them from further attendance in the proceedings until such point when they decide it is in their interest to appear to take an active part in the proceedings and make submissions. The problem is that they do not wish to do this at any point, except perhaps in relation to the question of costs. 17 A further important consideration is that generally declarations of right (or non-right in this case) should not be made by consent: see Declaratory Orders at [601] and the cases there referred to. 18 It is said for TVNZ that to keep it in the proceedings solely for the purpose of obtaining discovery against it is not a reason on its own for retaining them in the proceeding unless there is some other basis. I accept this, however, in this case, there is an independent and sufficient basis for retaining TVNZ as a party, namely, the making of a final order in the form of a declaration after all the relevant issues have been canvassed. 19 It is suggested that there would be no detriment to the applicants in relation to the availability of discovery for relevant documents if TVNZ were removed from the proceedings because it would be possible for the applicants to subpoena TVNZ in New Zealand. This proposition should not be given significant weight having regard to the practical difficulties in obtaining leave to file and serve outside the Australian jurisdiction. In addition, subpoenas are less effective than discovery in relation to a party because generally a party will have a far greater appreciation of relevant documents than a non-party and there is the added advantage of verification. 20 TVNZ also submits that the documents which might be discoverable can all be obtained from other parties. This is no answer to a claim for discovery against a party and it is by no means self-evident that all relevant documents will be available to Nine from other respondents. 21 Finally, it cannot be said that the present proceedings are an abuse of process as against TVNZ. The present case falls far short of satisfying the threshold test stated by Barwick CJ in General Steels Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128-129. 22 For the above reasons, I conclude that TVNZ should remain a party to the proceedings. I am prepared to excuse it from further attendance in the proceedings, if it so wishes, until such time, if any, as it may later seek to participate and make submissions. In my view, this course will considerably alleviate any difficulty or hardship which TVNZ may claim as a consequence of refusal of the Motion. 23 Accordingly, the aApplication by TVNZ is dismissed. I excuse TVNZ from further attendance until such time as it may apply to participate further in the proceeding. I reserve the question of costs.