Sharman boss ordered to front court

Sharman Networks boss Nikki Hemming has for the first time been ordered to face questioning in court about the assets she enjoyed at the peak of the Kazaa peer-to-peer file-sharing software's popularity. In the Federal Court in Sydney today, Justice Michael Moore granted record companies' request to cross-examine Hemming on her assets.

Sharman Networks boss Nikki Hemming has for the first time been ordered to face questioning in court about the assets she enjoyed at the peak of the Kazaa peer-to-peer file-sharing software's popularity.

In the Federal Court in Sydney today, Justice Michael Moore granted record companies' request to cross-examine Hemming on her assets. Hemming has to date declined to give evidence throughout long-running court proceedings brought by the music industry against parties associated with the Kazaa software over alleged copyright-infringing behaviour.

The companies are pursuing millions of dollars in damages against Sharman after a September Federal Court ruling that found the Sydney-based company -- through Kazaa -- authorised copyright infringement in sound recordings.

The record companies want details of Sharman's structure and assets, particularly relating to the company's trust fund, based in Vanuatu. The country has strict laws on the release of commercially sensitive information, which has to date frustrated the record companies' efforts. Sharman claims the company is incorporated in Vanuatu for tax reasons.

"Counsel for the applicants described that structure as opaque," said Moore.

"This is an apt description," he said.

The court had previously concluded Hemming held a financial interest in the trust, but would put this to her, according to Moore.

"If this issue is explored in cross examination then the court will be left with a greater measure of certainty about whether she does," he said.

The record companies also raised questions over Hemming's transfer of her multi-million dollar home to Sharman accountant Simon Myers, which occurred during final submissions in the trial.

Moore noted the possibility that the transferred property might still be an asset of Hemming's.

"Real doubts arise about, and uncertainty surrounds, the reasons why this transaction took place when it did and whether the moneys transferred to TIL [Trustees International Ltd] were, in truth, in satisfaction of a loan or continues to constitute an asset of, and requires disclosure by [Hemming]," Moore said.

"Greater clarity about this matter may arise from the cross examination," he said.

The scope of the cross examination would be subject to later directions, according to Moore.

In addition to being cross-examined on her assets, Moore ordered Hemming file an affidavit of all assets of Sharman Networks, "wherever situated". This would include details of bank accounts, names and addresses of nominee asset owners, and contracts related to the disposition of assets. The affidavit is due by 9 December.

A Sharman spokesperson said the company was "disappointed" with the decision.

Proceedings will continue on 25 November.

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