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Modular Founder 'Vindicated' By Court Of Appeals Win Against Universal Music

6 October 2015 | 3:55 pm | Staff Writer

"I'm obviously greatly relieved"

The protracted legal battles between Universal Music Australia and Modular Recordings founder Stephen 'Pav' Pavlovic appear to have ended in favour of the latter following a decision by the NSW Court Of Appeal to overturn an earlier ruling by Supreme Court justice John Sackar.

According to a statement released by Modular, the Appeal Court decision was a unanimous finding between the chief justice of the state's Supreme Court, His Honour Bathurst CJ; the president of the Supreme Court Of Appeal, Her Honour Beazley; and His Honour Meagher JA, contravening the June decision handed down by Justice Sackar, who presided over Universal's action against the Modular founder for allegedly wrongfully retained artist advances as well as disputing the binding nature of settlement deeds issued to Pavlovic at the end of last year, as business relations between the entrepreneur and label were coming to a close.

The Appeal Court decision, however, attested that "whichever way the matter is looked at … a binding agreement was [not] reached", finding that Universal should have to cover both the lower-court and appeal-court costs for the case as a result. Also per the decision, Pavlovic will retain a 50% share in Modular Records, of which he also will remain a co-director.

"I am of the opinion that his Honour erred in finding that a binding agreement had been concluded between the parties on 24 December 2014," Beazley P said in her finding. 

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"The language of the email ... was not language that demonstrated that Mr Pavlovic considered himself thereby bound by the terms of the Proposed Deed," she continued.

"In my opinion, no contract was formed between the parties on 24 December 2014. As that was the only case advanced by Universal, it follows that the appeal must be allowed."

Justice Meagher concurred: "From early October 2014 the parties and their solicitors were negotiating on the basis that any consensus between them as to how they would terminate their business relationship would be recorded in writing and not binding until such time as that writing was executed by each of them, and copies of the executed document exchanged.

"The email communications between the solicitors on 23 and 24 December 2014 did not depart from that continuing and orthodox expectation."

Speaking of his victory in a statement, Pavlovic said: "I’m obviously greatly relieved that my position has been vindicated by such powerful minds. I built Modular out of sheer passion and a belief in unique creativity. I regret terribly that the bands I have nurtured and adored all these years were caught in the cross-fire between Universal and I."

At the same time, as Pavlovic boldly predicted back in June, an international lawsuit at the hands of BMG over alleged missing royalties also looks ready to fizzle, with the Southern District Court of New York set to dismiss the case in the near future.

To read the full appeals judgment, see the NSW Caselaw website.