An appeals court in Australia appears to have settled questions over a much-disputed contract between Universal Music Australia and Modular Recordings and whether the agreement was ever binding. In June the Supreme Court ruled in favor of Universal, which would have enabled the major to absorb Modular’s stable of artists.
At question is whether Modular founder Stephen “Pav” Pavlovic — acting through emails via his lawyer Stephen Gorry written last December — had entered into a legal contract with Universal given that he never technically signed it. The Supreme Court ruled that Pavlovic acted in ways that signaled his compliance — including Gorry’s email stating that “he will sign” — but this week the New South Wales Court of Appeals threw that argument out.
“Whichever way the matter is looked at, I do not think that a binding agreement was reached,” said Chief Justice Bathurst CJ. “First, as a matter of construction, the words ‘he will sign’ written by Mr. Gorry are in the nature of a statement that his client would enter into a contract with Universal, rather than an acceptance of Universal’s offer.”
The president of the court, Beazley P, said the email exchange between Universal and Gorry/Pavlovic “was not language that demonstrated that Mr. Pavlovic considered himself thereby bound by the terms of the Proposed Deed… 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.”
In a statement posted to the label’s Facebook page, Pavlovic applauded the court’s decision and said he was excited to get back to business.
“We are disappointed by the appeal court’s ruling because last year’s settlement agreement was intended to help achieve an orderly process for Mr. Pavlovic’s exit, and now we are compelled to pursue in court the terms that we had believed were settled last year,” writes Karen Don, general manager, Legal & Business Affairs, Universal Music Australia, in a statement.
“After 12 months of litigation, a waste of time, a waste of energy, a waste of money and a shit ton of stress the NSW court of Appeal just ruled in my favour and blocked Universal Music from taking my 50 percent shareholding in Modular Recordings,” he said. “We’re thrilled with the outcome and look forward to getting back to the business of releasing great records. Stand by for news on forthcoming releases from Movement, Bag Raiders and The Avalanches.”
As Universal Music points out in its statement, the case will return to Australian Supreme Court “for the next phase of Universal’s case.”
Modular has a long track-record of breaking cutting-edge acts on the world stage. With Pav at the helm, the label signed and delivered a string of acts from Tame Impala to The Avalanches, Ladyhawke, Cut Copy and Wolfmother.
Updated, Oct. 6, 4:25PM ET: A statement from Universal Music has been added.