Australasian Performing Right Assoc Ltd v Ceridale Pty Ltd & Ors [1990] QSC 231

10 20 30 40 {"...: .. IN THE SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION BEFORE MR. JUSTICE THOMAS BRISBANE, 26 JULY 1990 No. 769 of 1990 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Chief Court Reporter,Court Reporting Bureau.) BETWEEN: ' AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED -and- CERIDALE PTY. LTD. -and- CUSHLA PTY. LTD. -and- VANESSA ALISON BROWN -and- WAYNE SMITH JUDGMENT Plaintiff First Defendant Second Defendant Third Defendant Fourth Defendant HIS HONOUR: In this matter, I propose to refuse the injunction and subject to any submissions to the contrary in relation to form of order as to some further purpose to be served by this action, I would propose to dismiss the action with costs to be taxed. 10 20 30 40 50 50 ·HIS HONOUR: I publish my reasons. HIS HONOUR: .Motion and.action dismissed with costs to be· taxed. 60 60 -Govt. Printer, Qld. 1 -- 1 of 13 -- \ L\, IN THE SUPREME COURT OF QUEENSLAND Before Mr. Justice Thomas BETWEEN: AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED CERIDALE PTY. LTD. CUSHLA PTY. LTD. VANESSA ALISON BROWN WAYNE SMITH No. 769 of 1990 Plaintiff First Defendant Second Defendant Third Defendant Fourth Defendant REASONS FOR JUDGMENT - THOMAS J. Delivered the 26th day of July, 1990. CATCHWORDS: Copyright - performing rights - monopoly power - extraneous purpose of exacting payment of disputed debt - whether breach of s. 46 of Trade Practices Act - refusal to grant licence despite tender - whether defendants should be restrained from performingworks without licence.Trade Practices Act 1974 s. 46(1)(c) Counsel: Solicitors: H.B. Fraser for PlaintiffJ.S. Douglas Q.C. with J.W. Lee for Defendants Morris, Fletcher & Cross for PlaintiffFeez Ruthning for Defendants Hearing dates: 19th July, 1990 3/ -- 2 of 13 -- IN THE SUPREME COURT OF QUEENSLAND BETWEEN: AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED CERIDALE PTY. LTD. CUSHLA PTY. LTD. VANESSA ALISON BROWN WAYNE SMITH No. 769 of 1990 Plaintiff First Defendant Second Defendant Third Defendant Fourth Defendant REASONS FOR JUDGMENT - THOMAS J. Delivered the 26th day of July, 1990. This is a motion for judgment under 0. 57 r. 2. The plaintiff (Australasian Performing Right Association Limited - "APRA") seeks an injunction against two companies and their directors restraining the public performance of various musical works the sole right to perform which in public is vested in the plaintiff. The defendants, or some of them, are the persons who run a nightclub in Ipswich known as the Illusions Nite Club, -- 3 of 13 -- 2 (formerly The Jungle Attic). Various musical works are played by means of recorded music presented by a disc jockey. APRA owns the right of public performance in nearly all current popular copyright music, including the particular musical works named in the notice of motion. The plaintiff collects licence fees from all available sources where musical works are publicly performed and through a complex system returns net proceeds to individual authors. APRA grants licences to persons who perform such works and charges licence fees. It has a practical monopoly upon the public performance of popular musical works. This constitutes a very powerful weapon. To refuse a licence to a business such as that run by the defendants would make it impossible for the business to be run lawfully. The performance of such music is a vital commodity to a discotheque and APRA has the monopoly supply of that commodity. The evidence goes back to 1983 when the first defendant obtained a licence from the plaintiff with respect to the "Ipswich Tavern" as it then was. It would seem that by the middle of 1988 the first defendant owed some arrears of licence fees. It would also seem that at that time the other defendants participated in some reorganisation of the nightclub business and that some confusion existed in relation to what was described as a "change of ownership". In fact the principal change of ownership was in the shares of the first defendant which were acquired by the third and fourth defendants. On this aspect of the dispute the merits appear to be with APRA, but there are other points upon which genuine differences of opinion have -- 4 of 13 -- ' i 3 arisen as to the proper quantum of past licence fees. These include the suggestion that differential assessments ought to apply to those parts of the building respectively used as a cabaret and as a discotheque. Obviously different equipment, different frequency of public performance and different capacity to receive patrons would apply to each, and these factors are capable of producing a lower assessment than the global one on which APRA relies. I do not propose to discuss these issues (or other matters bearing on quantum) any further, because in the first place it is plain that it was reasonable on the part of the plaintiff to join all four defendants, and in the second place because it is equally plain that the exercise of the plaintiff since 1988 has been nothing more than a debt collecting exercise in relation to licence fees as to which there is a genuine dispute. One of the general conditions of the licences granted by APRA is the following:- "If the Licensee shall commit any breach of or fail to comply with the terms conditions or provision of this Agreement or fail to make any payment hereby due on the date when such payment falls due, APRA may forthwith terminate this Licence Agreement by written notice sent by certified mail to the Licensee and forthwith upon the giving of such notice this LicenceAgreement shall terminate, save as to the right of APRA to recover any moneys previously due hereunder." There was a lengthy correspondence between solicitors preceding the action during which allegations and counter- allegations were made. It is sufficient to say that there are reasonable grounds for dispute as to the quantum demanded by APRA. On the morning of the proceedings before me the defendants paid to APRA the full balance that, according to -- 5 of 13 -- 4 their calculations, was owing by any of the defendants to APRA. This (I was informed by counsel) was the sum of $3,364.91, which is similar to the final calculations in ex. "R" to Mrs. Brown's affidavit. However, according to the claim of APRA this is not enough; according to its calculations a further amount of approximately $6,000.00 is still owing. The material before me does not enable a determination to be made as to who is correct or as to the true quantum ( if any) of the balance debt in question. That can and should in due course be determined by a Court of competent jurisdiction, probably the Magistrates Court. On 10th April, 1990 APRA's solicitors terminated the first defendant's licence, having previously threatened to do so unless its full demand were met. There fallowed "without prejudice" negotiations in which term payments were offered, in which I infer there remained a dispute as to quantum. It is common ground that in June 1990 there was an offer by the defendants to pay "outstanding fees" at the rate of $500.00 per month. At about that time the defendants' solicitor forwarded the annual application for licence forms for 1990-1991 together with a cheque for fees calculated at $2,314.72. That cheque was tendered on the basis of the applications which accompanied it, namely applications for the licence which the defendants needed in order to continue its business without infringing the rights of the plaintiff. However the solicitors for APRA responded on 27th June, 1990 claiming - "We accept these moneys on behalf of our client on account for part payment only of the moneys due and owing to our client for the outstanding licence fees for the period 1st June, 1985 to 30th May, 1990 and the licence fees in advance for the period 1st June, 't '' -- 6 of 13 -- 5 1990 to 31st May, 1991, in the event that our client grants the defendants requisite licences." The applications for licence had contained the following endorsement:- "This application will only constitute a licence when accepted and signed openly by APRA, and APRA may refuse a licence where the information contained in this application is incorrect or incomplete, or where payment of the initial annual licence fee does not accompany this application." In my view APRA was not entitled to appropriate the cheque in this way. It could reject the cheque if it chose to do so, but could not validly appropriate it to a different disputed debt (Chitty on Contracts 26th ed. paras. 1533, 1534). -If it accepted the cheque on the basis it was tendered, it was obliged to issue a licence in respect of the ensuing period. I do not purport to pronounce finally upon the parties' rights in respect of this particular exchange, but I take the view that the defendants have an arguable case both at law and in equity of a licence or entitlement to a licence in respect of the period 1st June, 1990 to 31st May, 1991. Thus at the present time APRA refuses to issue a licence to the defendants unless its full demands are met; and the defendants need such a licence in order lawfully to perform music of which APRA holds the performing rights. A licence existed in favour of the first defendant until 10th April last, but it was cancelled; and subject to the above submissions in relation to a intended grant of licence, or equitable right to a licence, none has been granted since. It may be noted that by letter of 12th July, 1990 the defendants' solicitors offered a written undertaking to APRA -- 7 of 13 -- ,6 pursuant to s. 108 of the Copyright Act to pay such amount as might be determined by the Copyright Tribunal as remuneration "to the owner for the causing of the recording to be heard in public". Whilst such an undertaking means that copyright in the sound recording is not infringed by a person who causes the recording to be heard in public, this does not afford a protection against infringement of APRA' s exclusive right to perform such works in public under s. 31(1) of the Act. Mr. Fraser ( on behalf of APRA) has satisfied me that this distinction is valid, and wh~lst Mr. J.S. Douglas Q.C. (for the defendants) did not abandon the point he did not submit to the contrary. There is no corresponding means afforded by the Act that would enable the defendants to avoid infringement of APRA's exclustve right of performance. I turn to the question whether APRA should be granted an injunction upon this material. A final injunction is sought. The grant of such an injunction is within the discretion of the Court. The statutory power recognised ins. 115(2) to grant an injunction for infringement remains discretionary. However, when a proprietary right or interest such as copyright (or in this instance a right of public performance) is established the Court will usually grant an injunction restraining breach of it unless satisfied that the right would adequately be protected by an award of damages. injunctive relief is However there are many instances when refused, including cases where defendant will not repeat the conduct complained of the (cf. Armstrong Oil Limited v. Patent Axelbox and Foundry Co. Limited (1910) 27 R.P.C. 362). The present case in my view is not ! l I ', -- 8 of 13 -- 7 entirely dissimilar to such a situation. The true dispute between the parties is as to the quantum of a past debt. There is no doubt whatever that the defendants desire to obtain and have tried to obtain a licence and to pay the proper fees to APRA with respect to the future period for which the injunction is sought. They have even tendered them. The only basis for refusal is that the defendants will not give in to APRA' s demands in relation to a past debt. That can and should be resolved in the proper way by a Court, not upon a unilateral demand by a party possessed of a monopoly right who is prepared to use it to enforce agreement with its demands. The defendants' tender, quite apart from any question as to its efficacy, shows that there is no intention to flout APRA' s rights in the future or wish to avoid payment of the proper fee therefor. APRA's response to this seems to be that it has the legal right to do so and that the Courts ought to protect it. This raises the further major point advanced on behalf of the defendants. Mr. Douglas Q.C. submits that by acting in this way APRA is breaching s. 46 of the Trade Practices Act. Section 46 relevantly provides:- "46(1) A corporation that is in a position substantially to control a market for goods or services shall not take advantage of the power in relation to that market that it has by virtue of being in that position for the purpose of - ... (c) deterring or preventing a person from engaging incompetitive conduct in that market or in any othermarket." There is no doubt that APRA is in the position of having the substantial monopoly control of a commodity, and I do not -- 9 of 13 -- 8 understand it to be seriously· suggested that it is not "in a position substantially to control a market for goods or services". I do not doubt that the mixed supply of goods and services involved in the running of a nightclub or discotheque amounts to a market, and that the supply of the performing rights of the music that is played to the patrons is an integral part of it and indeed may be regarded as a market in itself. APRA has the monopoly control of that latter market. The principal questions are whether APRA is seeking to "take advantage" of its power, and the further question whether it would be doing so for the purpose of deterring the defendants from engaging in that market or another market. The refusal to grant a customer (such as the defendants) a licence which would enable the customer to obtain that commodity is plainly an exercise of market power ( cf. Midland Milk v. Victorian Dairy (1988) A.T.P.R. 49, 254, at 49, 268, 49, 254-5). In that case Foster J. held that the refusal of a milk authority to grant a statutory allowance to a distribution company was capable of being regarded as an exercise of market power in this context. Mr. Fraser for APRA submitted that by refusing to issue a licence to the defendants, APRA was not taking advantage of that market power. However it seems to me that it is directly by virtue of its control of that market that it can choose to refuse to supply, and that this is the power of which it is taking advantage (cf. Queensland Wire Industries Pty. Ltd. v. Broken Hill Proprietary Co. Limited 167 C.L.R. 177, 192, 1g7, 202, 216). The absence of competition is the very reasqn why ' V -- 10 of 13 -- 9 APRA is able to take the stand of refusing to issue the licence. The advantage it seeks is to avoid litigation and to have its own way in relation to the disputed debt. The fact that the power arises pursuant to a property right has no necessary bearing upon whether there has been an exercise of market power in contravention of s. 46. I reject the submission that all the plaintiff has done is take advantage of its legal right and that therefore it cannot be said that it has taken advantage of its "market power". Such a view was convincingly dispelled by the reasons of Dawson J. at p. 202 of the Queensland Wire Industries case. Mr. Fraser went on to submit that APRA could not be shown to have a purpose contrary to the requirements of s. 46. I may say that there is no issue here of competition in APRA's own market, that is in the supply of the performing rights. The potential deterrence or prevention of the defendants is with respect to "any other market" (vide s. 46(1)(c)) that is to say in the nightclub market and possibly other related markets where the defendants compete with other similar businesses. Mr. Fraser's submission is that the evidence fails to show that APRA's actions are for the purpose of preventing the defendants from engaging in competitive conduct in the provision of a nightclub. In my view that is precisely what it is attempting to do. It is attempting to do so as the very means of forcing the defendants to come to terms and pay the full amount that APRA is demanding, notwithstanding that there is a dispute as to the correct amount and as to whether any debt remains at all~ -- 11 of 13 -- 10 The deterrence of the defendants' nightclub activities is an integral and substantial part of its purpose. I accept Mr. Douglas' submission on behalf of the defendants that the proper characterisation of APRA's actions is that they are directed to taking advantage of its power in the market to prevent the defendants from engaging in competitive conduct in another market simply in order to collect a disputed debt. It must be very difficult for the holder of a monopoly power such as this to exercise proper restraint when a dispute arises, and to avoid abuse of such a power. In this context one may note the threat contained in APRA's solicitors' letter of 8th November, 1989. They saw fit to repeat the demand for the amount claimed by their client and to forestall a suggested application by the defendants in this way: "Further, we are instructed by our client that if proceedings are instituted under the Copyright Act no subsequent application by you for the grant of Licence will be considered nor a Licence granted unless and until all of our client's costs {being our client's party and party costs and including its solicitor and own client costs) incurred in anticipation of,preparatory to and in relation to the said proceedings are paid by you." In this case the licensing power is being used for extraneous purposes, and ultimately for the luxury of permitting APRA to be judge in its own cause. I am not prepared to grant an injunction the object and effect of which is to force a business to pay a debt which is subject to a genuine dispute. Such a dispute should be resolved by a Court, and not as a game of monopoly. It is true that 'in -- 12 of 13 -- 1 1 many copyright cases the interests of the copyright owner are not adequately protected by an award of damages, especially where this would be tantamount to granting a compulsory licence to a defendant to use the plaintiff's intellectual property subject to the payment of a royalty by way of damages (cf. Ricketson, The Law of Intellectual Property para. 2.12). But the remedy remains discretionary, and in the present case there are substantial reasons why an injunction should be refused. The plaintiff sought a final judgment in these proceedings and it has failed on the merits, at least in the sense of persuading the Court of its entitlement to the relief claimed. It elected to fight the case in this way and has had its day in Court. On my view there should simply be judgment for the defendants. Issues which have not been resolved by this limited litigation .may be pursued in the appropriate Court. However as submissions mentioned the possibility of further proceedings in this action I shall hear submissions as to any alternative form of order. My inclination is to refuse the injunction and grant judgment for the defendants in the action with costs to be taxed. -- 13 of 13 --