Yau's Entertainment Pty Ltd v Asia Television Ltd

Federal Court of Australia (Full Court)|2002-11-27|Before: Dawson J, Mason CJ, Hely JJ

1 For reasons given on 28 March 2002 the Court as at present constituted allowed the appellant's appeal and made other orders as follows: "2. The finding of the primary judge that the letter agreement was validly terminated by notice dated 7 April 1999 be set aside and substitute for that determination a finding that the letter agreement was not validly terminated by notice dated 7 April 1999. 3. The declaration and order made on 10 March 2000 be set aside. 4. Declaration 7 made on 30 June 2000 and the orders made on that date be set aside. 5. The order made on 29 June 2001 that the respondent pay the applicant the sum of $24,960 in damages be set aside. 6. The matter be remitted to the primary judge for determination of the quantum of ATVE's monetary claim against the appellant in the light of these reasons. 7. Yau's cross claim be remitted to the primary judge for determination of Yau's claim for damages for wrongful termination of the licence agreement. 8. ATV/ATVE to pay Yau's costs of the appeal. The costs of the proceedings at first instance should be remitted to the primary judge for reconsideration having regard to the outcome of the appeal."

2 Before the orders were entered the respondents filed a notice of motion seeking an order that the Court "reconsider its reasons for judgment dated 28 March 2002 and/or vary or set aside its orders dated 28 March 2002 under Order 35 Rule 7 of the Federal Court Rules". The Court gave directions for the filing of written submissions, stating that it would determine the motion on the papers. Written submissions were filed. 3 Order 35 rule 7(1) provides that the Court "may vary or set aside a judgment or order before it has been entered". In Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 ("Autodesk") at 317 Dawson J, speaking of the High Court's power to vacate its orders, said:

"While the Court has jurisdiction to entertain an application to vacate orders which it has made, at all events before those orders have been perfected by the entry of judgment (that not having occurred in this case), it is a jurisdiction to be exercised cautiously, bearing in mind the public interest in the finality of litigation. In Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684 the Court said:

'the circumstances in which this court will reopen a judgment which it has pronounced are extremely rare. The public interest in maintaining the finality of litigation necessarily means that the power to reopen to enable a rehearing must be exercised with great caution. Generally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard.'"

Mason CJ, after referring to the passage in Wentworth quoted by Dawson J, added (at 302):

"But these statements do not exclude the exercise of jurisdiction to reopen a judgment which has apparently miscarried for other reasons, at least when the orders pronounced have not been perfected by the taking out of formal orders."

His Honour then gave some examples of cases in which judgments had been re‑opened on grounds not involving a failure to hear a party, and continued:

"These examples indicate that the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law."

See also at 328 per Gaudron J. The Autodesk approach as to the scope of powers analogous to those conferred on this Court by Order 35 rule 7(1) has been applied to that rule: Wati v Minister for Immigration and Multicultural Affairs (1997) 148 ALR 578 at 584‑585.

4 It has been said repeatedly that a heavy burden is cast upon the applicant for reopening to show that such an exceptional course is required "without fault on his part, ie without the attribution of neglect or default to the party seeking reopening": De L v Director General, NSW Department of Community Services [No 2] (1997) 190 CLR 207 at 215; DJL v Central Authority (2000) 201 CLR 226 at 265; Diamond Hill International Pty Ltd v XU [2001] FCA 531 at [10]; Maritime Union of Australia v Geraldton Port Authority [2001] FCA 236 at [20]. 5 In support of the motion the respondents first submit that the Court "may have misconstrued the basis for the award of damages under section 115(4) of the Copyright Act 1968". The $24,960 in par 5 of the Orders set out in [1] was made up of $11,700 damages (nine hours of film at $1,300 per hour), $11,700 damages pursuant to s 115(4) of the Copyright Act and a further $1,560 for licence fees pursuant to the licence agreement. In his reasons Hely J, with whom the other members of the Court agreed, said at [87]: "The parties argued this appeal on the implicit assumption that the resolution of the issue as to the validity of the termination of the letter agreement would resolve ATV's monetary claim, although if the termination was found to be invalid, that would leave outstanding Yau's cross claim for damages for breach of contract. In particular, counsel for ATV/ATVE did not argue on the hearing of the appeal that the finding of infringement of copyright in respect of the films 'Flaming Brothers' and 'Forest Cat II' could be sustained if it were found that the termination of the letter agreement was invalid. However, as the damages under s 115(2) of the Copyright Act 1968 (Cth) were assessed upon the basis of a licence fee approach, it would seem to follow that the sum of $11,700 would, in any event, be payable pursuant to the letter of agreement in relation to the reproduction of these films. The Full Court was not provided with any submissions on this question, but it is a matter which needs to be addressed and, for that reason, the amount of ATVE's monetary claim against Yau's should be remitted to the primary judge for determination in the light of these reasons."

Hely J went on to say that the award of damages pursuant to s 115(4) must be set aside.

6 The respondent submits that the Court did not explain why the award pursuant to s 115(4) should be set aside. It is said that implicit in the passage set out in [5] is an assumption that s 115(4) damages "would not have arisen if the Licence Agreement had not been terminated". The submission goes on to say that: "The infringement of copyright in relation to various episodes of Flaming Brothers and Forest Cat II arose from the conduct of the Appellant in obtaining copies of these programmes prior to termination of the Licence Agreement and before the Respondents had agreed to distribute those programmes to the Applicant. The infringement founding the claim for damages under section 115(4) of the Act therefore created an independent right which had accrued irrespective of whether the Licence Agreement had been validly terminated by the Respondents."

It is then submitted that the Court's "misunderstanding" is within its power to remedy under Order 35 rule 7.

7 The respondents' submission does not bring the case within the parameters adopted in the cases referred to in [3] and [4]. It is not claimed that the Court failed to hear the respondents' argument on s 115(4). The Court's statement (set out in [5]) that it was not argued that the finding of infringement of copyright in respect of Flaming Brothers and Forest Cat II could be sustained if it were found that the termination of the letter agreement was ineffective, is not challenged. The statement is set out in full in the respondent's written submissions in support of the motion, without demur. The submission quoted in [6], namely that the infringement in relation to Flaming Brothers and Forest Cat II arose from conduct of the appellant before the respondents had agreed to distribute those programmes to the appellant, is said to be supported by two affidavits. That of Judy Kwan does not support the submission, and in any event was not before the primary judge or before us on the appeal. The affidavit of Desmond Chan sworn 17 May 1999 provides some support for the submission. In his written submissions counsel for the appellant informed us that the affidavit was not relied on by the respondents at trial. The respondents did not take issue with this claim. The affidavit was not before us on the appeal. In any event, even if the "conduct" constituting the infringement occurred before the respondents had agreed to distribute the programmes to the appellant, we do not regard that as constituting a ground for reconsidering our judgment. Assuming there to have been some misapprehension of the facts, we are of the view that having regard to the way in which the appeal was conducted by the respondents, that misapprehension was attributable to their conduct in permitting the case to proceed on the basis that a finding of infringement in respect of the two programmes could not be sustained if the termination of the letter agreement was ineffective. See the cases referred to in [4] and Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 169. 8 The respondents' second submission is that the Full Court "may have overlooked the issue as to whether First Term (defined below) was one to be inferred into the Licence Agreement". The term the respondents claimed was to be inferred and implied was that the appellant would not distribute any programmes produced or co‑produced by or exclusively licensed to the respondents except programmes supplied by the respondents to the appellant. The primary judge concluded that that term could be inferred from the express terms of the contract "without being troubled by the Codelfa tests", although he was of the view that it comfortably met those tests. The Full Court disagreed with the primary judge. In support of the motion it is contended that the Court "does not appear to have expressly considered" whether the term was capable of being inferred as opposed to whether it was to be implied. 9 In our view the complaint does not attract the power in Order 35 rule 7(1). There is no assertion that the respondents were not heard on the question whether the term should be inferred, or that the Court proceeded on a misapprehension as to the law. All that is claimed is that the Court appears not to have expressly considered the claim. It is implicit in the formulation of the complaint that the issue was dealt with, but not as clearly or as expressly as the respondents would have liked. Indeed the issue was dealt with. Paragraph 37 of Hely J's reasons is headed "Are the pleaded terms to be inferred or implied?" His Honour then set out the primary judge's conclusion that the term could be inferred and that it also comfortably met the Codelfa tests (ie could also be implied) and continued: "I would agree, with respect, with this conclusion if it were confined to the programmes which were the subject matter of the letter agreement.… However, the implied term pleaded is not so confined. It extends to programmes co-produced by ATV/ATVE. The primary judge did not accept that such programmes were the subject of the licensing arrangements."

Despite the fact that in the second paragraph his Honour referred only to the implied term pleaded, the sentences quoted are a clear rejection of the primary judge's view that the term was to be inferred, although it could also be implied. This is repeated later in his Honour's reasons where, after disagreeing with the primary judge's conclusion that another term was to be implied, Hely J said at [53]:

"Having regard to the way in which the case was pleaded and conducted, the issue was whether the first and second terms as formulated in FAPC were to be inferred or implied as a term of the letter agreement; not whether some differently formulated term(s) should be inferred or implied."

It is thus clear that Hely J posed as the question for decision whether the two terms were to be inferred or implied. His Honour recited the primary judge's conclusion that the first term was to be inferred, though it could also be implied, and disagreed with it. And then, at [53], in explaining why the respondents were not entitled to terminate the letter agreement on the grounds referred to in their letter of 7 April 1999, he said that neither of the terms relied on in that letter were to be inferred or implied.

10 The motion should be dismissed with costs. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Solicitors for the Appellant: Frank Low Yeung & Co

Solicitors for the Respondents: Allens Arthur Robinson

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