Artists Rights & Music Disputes

Contents

  • Litigation risk.
  • Mediation.
  • Benefits.
  • Deal Making Zone.
  • Table.
  • Enforcement under the Singapore Convention.
  • Mandatory Mediation.
  • Business Arrangements & Contractual Matrix.
  • Fiduciary Duties owed by Managers & their Companies to Artists.
  • Copyright.
  • Fair dealing & exceptions.
  • Sampling.
  • Songwriter splits & shares.
  • Trademark.
  • Ownership of goodwill in a Band’s name.
  • Performing rights.
  • Moral Rights.
  • Image rights.
  • Breach of confidence.
  • Duress.
  • Undue Influence.
  • Unconscionable Dealing.
  • Restraint of trade.
  • Mediator Questions.
  • Bibliography.
  • Cases.

See also:

Litigation risk

There is always an unquantifiable element of risk in litigation. It is also rare, even during or at the end of a trial, to have evidential certainty and all the information a party wanted available. Parties develop their cases as they fight them in court, and so the ‘goal posts’ can move. A judge can decide a case on grounds that have not even been pleaded. Following a trial the winner will not usually recover all of their costs, and the loser may end up in negative equity.

Music disputes are pregnant with litigation risk because they are multifaceted, legally complex, often multi-party[i], and can be multi-jurisdictional. A case theory may hinge upon persuading a judge, on the facts, that an evolving doctrine of law avails the claimant of a remedy. Equitable remedies are discretionary. Consequently, there may be a high degree of uncertainty about legal merits and chances of success.

The range of claims is illustrated in the Table below under the heading – ‘Deal Making Zone’, and include:

  • Band splits/departure of a member.
  • Breach of confidence.
  • Breach of Contract e.g. of a Booking Agency Contract, Management Contract, Music Publishing Contract, or Recording Contract.
  • Breach of fiduciary duty under a Management Contract – which is linked to claims for equitable compensation, rescission, and contract vitiation on the grounds of Undue Influence and the doctrine of Restraint of Trade.
  • Image rights (also known as ‘personality rights’ or ‘publicity rights’) i.e. an artist’s proprietary rights in their personality, which is linked to branding and endorsement. In England and Wales these rights are not codified. Unauthorised use of a person’s name and image is litigated by claiming for breach of contract; infringement of a Trade Mark; passing off; defamation and malicious falsehood; breach of confidence; breach of advertising rules; or breach of privacy.
  • Infringement of copyright, plagiarism[ii] and sampling without consent.
  • Violation of Moral Rights.
  • Passing Off.
  • Royalties – Calculation and deductibles.
  • Share of royalties – Claims by session musicians.
  • Songwriter split disputes.
  • Trade Mark infringement – e.g. the Band’s name, which is linked to ownership of ‘goodwill’ in the name.

‘It is now common that contracts regulating the exploitation of rights are drafted in the form of 360-degree agreements, which cover all aspects of valuable assets related to the creativity and image of a musician, such as sound recordings, musical compositions, image rights, merchandising and live performance work. This presents a challenge for musicians who are not supported by large legal teams, because they face not one, but potentially multiple legal regimes, coupled with the complexities of commercialisation over the Internet (mainly jurisdictional issues).’ [‘Mediation and arbitration – An alternative forum for transnational dispute resolution in the music industries’, by Metka Potočnik, Chapter 6, page 127 of ‘The Present and Future of Music Law’, edited by Ann Harrison and Tony Rigg (2023), Bloomsbury] (‘Potočnik’).

Spiralling costs in litigation create a power imbalance between an artist and record company. Likewise in Arbitration, the ‘evidence taking procedure, although flexible and left to the agreement of the parties, will often be expensive, unless the parties agree on restricted evidentiary procedure from the start.’ (‘Potočnik’, page 142).[iii]

Mediation

Unless either: the relationship between the Participants in Mediation [‘P’s’] has irretrievably broken down; the will does not exist to collaborate; or it is not practical/appropriate ‘to do a deal’, then as in the words of the late and great George Michael, Mediation can not only – ‘Heal the pain’, it can also liberate the P’s, by enabling them to work out a creative deal to their mutual advantage. This can be achieved by maximising joint-gains in a way that furthers each P’s individual interests. For all P’s this requires a ‘paradigm shift’, whereby they each decide to apply their talents to a creative endeavour, instead of engaging in litigation – thereby avoiding the costs, risks, stress and publicity of going to war. In Mediation the P’s can agree a commercial framework for settling a dispute on terms that a court has no power and jurisdiction to order[iv]. In other words, commercial Mediation is an opportunity to make/renegotiate ‘a deal’ about the creation, acquisition, adaption, and use of rights, for commercial exploitation, thereby freeing each P to get on with what they enjoy most, and do best as either  creatives, entrepreneurs, or business executives.

Although life can only be understood backwards, it must be lived forwards. Litigation is a backwards looking process, at the end of which a Judge must make a binary choice between competing narratives. Mediation is a forward-looking process in which the participants work out their own solution through a process of engagement. Therefore, the first challenge for a Mediator (‘M’) is to understand what each P wants, needs, prioritizes, and why. This requires empathy and affirmation. The second is to facilitate engagement. As discussed in Part 1 of my article on the ‘Publications’ page about Mediating Probate & Trust Disputes – the ‘hook’ is the making of an ‘interesting offer’. On paper, a theoretical settlement zone exists somewhere in the gap between:

(i)       the maximum net capital value of each P’s claim; and

(ii)      each P’s BATNA (‘best alternative to a negotiated agreement’) – which in litigation is proceeding to trial, i.e. the amount/terms below which a P will walk away from the table. The challenge in reducing the size of the gap is to make adjustments. In other words, throughout the ‘Mediation Process’, each P needs to re-evaluate the calculus underlying their BATNA. A Mediation ‘process’ may involve more than one day of meetings, e.g. where an international commercial dispute involves P’s located in different time zones. Whether the ‘process’ is conducted over the course of one day or several days, a well-constructed Mediation typically involves seven phases:

  • Preparation.
  • Exlporation.
  • Exchange of further information.
  • Formulation of proposals.
  • Negotiation.
  • Adjustments to narrow the gap.
  • Agreement of terms in principle followed by the drafting and execution of a binding Settlement Agreement.

Benefits

In my experience and opinion, the cut and thrust world of commercial litigation has very little to do with abstract notions of justice, and is actually more about perceptions and calculation. So, unless a party needs a court determination to move forward, then why not do a deal instead? In my experience, there is nearly always a deal to be done.

Paradoxically, while a claimant may have gone to court or threatened to issue proceedings because they are being ignored or stonewalled, the voices in the court room are not those of the parties, but of lawyers and judges who have no actual ‘skin in the game.’ Consequently, how participants speak to each other in a Mediation, either directly, or through their legal representatives or the Mediator, is an opportunity to show respect by allowing the other to be heard. That can move the parties along from deadlock about their respective positions to doing a deal in their mutual interests. The skill of allowing a participant in Mediation their voice, i.e., the right to be heard, is linked to both ‘how you talk’ and to ’empathetic listening’, because to switch the dynamic from confrontation to collaboration, you must first show a person that:

(i)     he/she has been heard; and

(ii)     you understand his/her position, and the underlying reasons.

See also:

Deal Making Zone (‘DMZ’)

Parking emotions, greed, ambition, and politics, and irrespective of the fact specific legal merits of a dispute, as the table below illustrates, the settlement of a Music Dispute invariably involves a trade-off  between twelve inter-connected variables along a spectrum of needs, resources, priorities, and ‘Red-line’ dealmaker/breaker imperatives, i.e. each P’s BATNA. The DMZ exists in the space between two interacting parallel dynamics which may converge in the consciousness of each P:

Relative Gains v. Relative Losses [‘P.1 – P.2’].

Common Ground [‘CG’].

Relative Gains v. Relative Losses:

(i)         Legal rights.

(ii)        Creative control[v].

(iii)       Money.

(iv)       Recognition, Reputation/ & Credibility.

Common ground in eliminating litigation risk by doing a deal instead of proceeding to trial includes:

(v)        Saving costs.

(vi)       Saving time.

(vii)      Saving energy.

(viii)     Avoiding further stress and anxiety.

(ix)       Avoiding publicity.

(x)        Avoiding the creation of a legal precedent.

(xi)       Preserving a commercial relationship and goodwill if worth saving.

(xii)      Maximising gain by transforming a conflict into a mutually beneficial commercial arrangement (a ‘Creative Commercial Opportunity’).

I posit that the gap between P1. and P.2 is reduced by the convergence of CG with P.1 – P.2. In other words, the closer P.1 – P.2 is to the underlying CG, the smaller the gap is between P.1 and P.2. That is the DMZ. Visually this can be represented as follows:

Pre- Convergence

P.1 ————————————————————————————–P.2

                                               

 

CG?

 

Convergence

 

P.1————-P.2

          CG

In contrast to Litigation, in Mediation the possibilities are only limited by the imagination of the participants and their legal representatives. Whilst not infinite, ‘doable’ deals that ‘are enough’ are invariably possible.

Table

Please note that C = ‘Claimant’.

 

Claim Dispute Case
Band split. Bourne.[vi]
Breach of confidence. Ash.[vii]

[‘A judge had been correct to prevent the further publication of parts of a book, written and published by the former friend of a well-known recording artist, which contained confidential information about the artist’s personal life that infringed her rights under the Human Rights Act 1998 Sch.1 Part I Art.8 , and those rights were not outweighed by the publisher’s right to freedom of expression under Art.10 of the Act.’ – Westlaw – WL.360995].

 

 

Associated Newspapers.[viii]

[‘(1) There were no unresolved issues of fact that called for a trial. (2) The information in the journal was obviously both confidential and of a private nature, Douglas v Hello! Ltd (No.6) [2005] EWCA Civ 595, [2006] Q.B. 125, [2005] 5 WLUK 429 applied. (3) W had a reasonable expectation that the content of the journal would remain private, Campbell v Mirror Group Newspapers Ltd [2004] UKHL 22, [2004] 2 A.C. 457, [2004] 5 WLUK 97 applied. The employees to whom copies were circulated were all under a contractual duty of confidence and others who received copies had always treated them as confidential. (4) It was significant in the instant case that the contents of the journal had been disclosed in breach of confidence. The test to be applied when considering whether it was necessary to restrict freedom of expression in order to prevent disclosure of information received in confidence was not simply whether the information was a matter of public interest but whether in all the circumstances it was in the public interest that the duty of confidence should be breached. In applying the test of proportionality the nature of the relationship that gave rise to the duty of confidentiality might be important, Campbell v Frisbee [2002] EWCA Civ 1374, [2003] I.C.R. 141, [2002] 10 WLUK 340 considered. The information at issue in the instant case was private information, public disclosure of which constituted an interference with W’s rights under Sch.1 Part I Art.8 of the 1998 Act. There was an important public interest in employees respecting the obligations of confidence that they had assumed. The public interest in disclosure of the journal’s contents did not outweigh the confidential nature of the information and the relationship of confidence under which it had been received. The significance of the interference with Art.8 rights outweighed the prospective interference with Art.10 rights that would have been involved in preventing N from publishing the information. Even in the absence of a breach of confidence W would have had an unanswerable claim for breach of privacy. (5) The judge had been right to conclude that N’s publication of the information did not in the circumstances constitute fair dealing for the purposes of reporting current events under s.30(2) of the 1988 Act. Nor did N have any defence of fair dealing for the purposes of criticism or review under s.30(1) of the 1988 Act’] (Westlaw – WL – 3610056 – 2006].

Blog.
Campbell.
Coe.[ix]
Cox.
Sussex.[x]

[‘The Court of Appeal upheld summary judgments in favour of HRH the Duchess of Sussex in respect of her claims for misuse of private information and copyright infringement after a newspaper group published articles reproducing extensive extracts from a letter she had written to her estranged father. New evidence which had been widely publicised in the press was admitted as a matter of pragmatism. The newspaper group seeking to set aside the judgments had failed to overturn the conclusion that the primary purpose of its articles was to reveal the full content of the letter and not to rebut inaccuracies in an earlier article published in a US magazine.’ – Westlaw – WL 05647562 (2021)].

Jagger.
Mosley.
Injunction granted. Oasis..
Douglas.
Footballer.
Re S.
Theakston.
Breach of contract. Booking agency agreement. Craig Joseph.[xi]

[‘The members of a musical act were successful in their defamation claim against a promoter and entertainment booking company in relation to a posting on the company’s website stating that the act might not honour bookings to perform, but were only awarded nominal damages as one of the members had attempted to deceive the court by fabricating part of the claim for special damages.’ – Westlaw 8866996 – 2012].

 

Gary Marlow.[xii]
Breach of fiduciary duty.

See also:

–      Restraint of Trade &

–      Undue Influence.

Management Contract:

 

 

 

 

Cardi B – Settled:

–      $10 million claim v. artist for breach of contract, unjust enrichment & defamation.

–      Claim against artist’s new manager for knowingly interfering with her contract.

–      Counterclaim by artists for recovery of recording royalties received by her manager who had been ’self-serving and controlling’.

Chance RapperChance the Rapper Sues Ex-Manager Who Sued Him for Millions | Pitchfork
Elton John:

– Contract vitiated – FD owed both by Manager & Companies under his control.

[‘The action concerned a series of publishing, recording and management agreements, entered into by E.J. and his lyricist, B.T., beginning in 1967, when they were unknown and still minors. The agreements were extended and varied from time to time. From 1971, Ds began to set up a network of wholly-owned subsidiaries in the most lucrative world markets in order to sub-publish Ps’ works there and they received substantial rates of commission which, together with the expense of maintaining offices and employing staff, substantially reduced the net earnings of D2, and thus Ps’ share of the gross revenues from their work. Ps’ primary claims were for the setting aside, on the ground of undue influence, of the publishing and recording agreements, the return of the copyrights in all compositions and recordings covered by the agreements and delivery-up of all master recordings. Ps conceded that the Ds should retain all sums received by them so far, save that they should account for (a) all sums wrongly retained by them by way of the sub-publishing agreements and (b) the difference between the royalty rates in the agreements being set aside and the best possible rates obtainable in the market.’ Westlaw – WL – 311792 (1985)].[xiii]

Robbie Williams:

–      C claimed unpaid commission.

–      No breach of FD.

–      Manager had acted in good faith.

Trent – Fraud, Conversion & Breach of FD by Manager.
Commission. Management contract. Wadlow.[xiv]

[On its proper construction, a management agreement entitled a manager of an artist to commission on the artist’s earnings in relation to two music albums, both during the term of the agreement and after its termination.’ – Westlaw – WL 555756 (2007)].

 

Copyright. Contributory liability for infringement of ISP who had specific knowledge of copyright infringement by subscribers on its networks. Sony.
Injunction. Gabrielle.[xv]

 

SABAM.
Shape Of you.

[The court granted a declaration that the claimants’ popular and successful song, “Shape of You”, had not infringed copyright in the defendants’ song, “Oh Why”. Whilst there were similarities between elements of the two songs, there were also differences, and the similarities were readily explained by matters other than copying. The court rejected the defendants’ allegations that the first claimant, songwriter and recording artist Ed Sheeran, had a propensity to copy the musical works of others, or that he had deliberately or unconsciously copied elements of Oh Why in creating Shape of You]. (Westlaw – WL. 01017818 (2022)).[xvi]

 

 

Laches. Fisher:
Plagiarism. Amazing.
Francis Day.[xvii]
Gray.
Shape of you.
Skidmore.
Taylor Swift.
Thinking out loud.
Warner.
Williams.
Williamson.
Publishing contract: Mark Taylor:
Sampling.[xviii] Beloved.
Hawkes.[xix]
Ludlow.
Walmsley.
Song creation/writing royalties: Spandau Ballet:
Armes.
Gloucester Place.[xx]
Website blocking injunction. EMI.
Duress. O’Sullivan.[xxi]
Image rights. Rihanna.[xxii]
Libel. Vardy.
Misrepresentation by conduct. Spice Girls.
Moral rights. Leahy.[xxiii]

Injunction granted because: (i) damages would be an inadequate remedy for both sides; and (ii) the preponderant inadequacy in the case of the plaintiffs, together with (iii) preservation of the status quo, favoured the grant of the injunction sought.

Passing Off.

 

Band name:

 

ABBA.
 

 

Blue:

–      ‘Are you seriously saying that fans of one group would mistake one for the other? One is aged like you and me, the other is a boy band.’

Settled. Agreed that both Bands could use the name.

Irvine.
Halliwell.
Liberty X:

‘Residual goodwill’ & Injunction granted.

One Direction:

–      Claim for $1m in damages & litigation risk of claims for 3 x profits made.

Settled. Agreed that both Bands could use the name

 

P Diddy.
Rihanna.
Waits.
Performer’s rights. Henderson.
Personality rights. Sponsorship agreement. Halliwell.
Ownership of goodwill in a Band’s name. Frankie.
Restraint of trade:

 

Was the contract fair?:

–      Was this an exclusive deal.

–      Relative bargaining power of parties.

–      Did the artist receive independent legal advice.

–      How experienced was the artist of the music business.

–      What are the ‘legitimate’ commercial interests of the Record Company.

–      What restrictions were placed on the artist.

 

 

 

Zang.[xxiv]

[‘A pop group entered into a recording contract with a record company which bound them, collectively and individually, for a period of up to nine years, following the initial seven-month period of the contract. A dispute arose between the group and the company and the group maintained that the contract was unenforceable because it was in restraint of trade. The company argued that even if the contract was unreasonably in restraint of trade, the pop group had waived their objections thereto.’ – Westlaw – WL 649770 (1989)].

 

 

 

Exclusive worldwide record deal.

 

George Michael:

–      Relative bargaining power.

–      As a successful & powerful artist GM  could stand up to Sony.

–      GM was independently advised by a lawyer who was experienced in music business contracts.

–      GM stood to gain financially from the contract.

–      Balancing out these factors the benefits to GM v. the restrictions on him were reasonable to protect Sony’s investment & ‘legitimate’ business interests.

–      Terms were reasonable.

Settled.

Release from an exclusive recording contract in return for: (i) a payment; and (ii) agreement to record new tracks and new versions of old tracks for a greatest hits album to be released by the Record Company.

 

 

Music Publishing Agreement. Frankie.
Taylor.
Macaulay:[xxv]

–      Terms unduly restrictive & an unreasonable restraint of trade.

–      Contract unenforceable.

[‘In determining the enforceability of a contract in restraint of trade the court will consider the fairness of the bargain having regard to whether the restrictions are both reasonably necessary for the protection of the legitimate interests of the promisee and commensurate with the benefits secured by the promisor. The plaintiff, an unknown songwriter aged 21, entered into standard form agreement with the defendant publishers who were to have the exclusive benefit of the plaintiff’s compositions, the full world copyright whereof was assigned to the defendants in return for a fixed percentage of any royalties received. The term of the agreement was expressed to be five years, which term was to be automatically extended by a further five years if the royalties payable to the plaintiff within the first five years should exceed GBP 5,000. The defendants could terminate or assign the benefit of the agreement whereas the plaintiff could do neither. There was no obligation upon the defendants under the agreement to publish or promote any composition of the plaintiff. The plaintiff obtained a declaration that the agreement was void as contrary to public policy’. – Westlaw – WL 41904 (1974)].

 

 

Wayne Rooney:

–      ‘Exorbitance or special feature’ brought contract withing ambit of the doctrine.

–      Included ‘Inequality of bargaining power.’

–      Finding of ‘a very substantial imbalance in bargaining power between the parties.’

–      Length of contract = half player’s [cf. performer’s] working life]. Correlation with the development of an overall strategic approach to exploitation of image rights was no justification.

–      Public policy imperative – restrictions of a person’s freedom to earn a living must be seen to operate fairly.

[CAI – To include cross-ref to extracts from judgment in case in a footnote].

Zomba.
Share of royalties. Session musician claim. Beckingham.[xxvi]
Pink Floyd.
Song-writer split.[xxvii] Cure.
Status Quo.
Trademark. Band name:

 

Bravado.
Cartier.[xxviii]
Gill.[xxix]

[‘In order to successfully oppose the registration of a Community trade mark based on claimed priority from an earlier UK trade mark, the opponent had to demonstrate that the UK law on passing off conferred on it the possibility of prohibiting the use of a subsequent trade mark.’ – Westlaw – WL. 41909515 (2009)].

 

Lady Antebellum:

‘Residual Goodwill.’

Settled.

Lady A and Anita White Trademark Lawsuit Settled Mutually (vulture.com)

Former ‘Lady Antebellum’ Settles Legal Battle Over ‘Lady A’ Name – Billboard

 

Elvis.
Starbucks.
Taylor.
Undue Influence.
Music Management Agreement. Armatrading:

–      C sought a declaration that contract was void for undue influence, terms unreasonable & a restraint of trade. Contract set aside for undue influence. Terms were – ‘unduly onerous and unconscionable.’

–      Contract voidable from start. NB C did not receive independent legal advice before signing

Elton John – Reversal of the burden of proof.

[CAI – To cross-refer to commentary in Enonchong]

Seal:

–      Double-dipping settlement.

–      No UI.

–      Seal had received independent legal advice.

–      Seal was advised by an experienced manager.

–      D was not Seal’s manager at the time. Therefore he could not exercise UI because he was not in a position of trust & confidence with the artist.

Samuel (Professionally Known as Seal) v Wadlow – Case Law – VLEX 793967497

Enforcement under the Singapore Convention

The Singapore Convention will come into force in the UK six months after the UK has deposited its instrument of ratification with the UN Headquarters in New York. The UK will also champion the Convention internationally to encourage further ratifications. Earlier Consultation (02.03.2023) stated:
‘Mediation is an important means of resolving cross‑border disputes, by enabling the disputing parties to reach a suitable and mutually acceptable resolution themselves, without having to go to court, saving valuable time and money. It is a process which the Government considers ought to be integral to the Justice system, and it is estimated that mediation can save businesses around £4.6 billion per year in management time, relationships, productivity, and legal fees. … The Singapore Convention on Mediation aims to provide a harmonised framework to enable parties seeking to enforce a cross-border commercial settlement agreement to apply directly to a Competent Authority (usually a Court) for the enforcement of that agreement. … The Convention may also present opportunities to establish new relationships in the Indo-Pacific, Middle East and Africa, as well as strengthening existing relationships with parties to the Convention, many of whom are members of the Hague Conference on Private International Law.’

The Consultation Response stated:

‘The Government has concluded that it is the right time for the UK to become a Party to the Singapore Convention on Mediation, as a clear signal to our international partners that the UK is committed to maintaining and strengthening its position as a centre for dispute resolution and to promote the UK’s flourishing legal and mediation sectors. Mediation is a dispute resolution process which is integral to the UK justice system, and it is estimated that commercial mediation can save businesses around £5.9 billion per year in management time, relationships, productivity, and legal fees with the value of UK mediated cases each year being estimated at approximately £20bn as of February 2023. … CEDR stated that online mediation is here to stay and that ‘the nature of the field has permanently changed’ … the Government has also set out its vision to integrate mediation as an essential step within the court process for civil claims. Commercial mediation can support businesses who may be looking for more cost-effective methods of resolving their disputes, outside of the traditional routes of litigation and arbitration, with aspirations of preserving their important and potentially long-standing business relationships by reaching an amicable and mutually agreed resolution. The uniform framework for the effective recognition and enforcement of international mediated settlement agreements, which the Convention provides, will increase confidence to trade across borders and between different legal jurisdictions, by providing a clear and expedited process for resolving commercial disputes through mediation.’

See also:

Mandatory Mediation

The 2022 edition of the Chancery Guide, which was revised in June 2023, states;

‘10.8      The court may also stay the case or adjourn a hearing of its own motion to encourage and enable the parties to use ADR. The stay will be for a specified period and may include a date by which representatives of the parties with authority to settle and their legal advisers are required to meet, or a requirement for parties to exchange lists of neutral individuals who are available to carry out ADR and seek to agree on one. If agreement cannot be reached, the CMC can be restored for the court to facilitate agreement. Although the court may strongly recommend mediation, it cannot order that a mediation takes place and will not recommend an individual or body to facilitate ADR. …

10.10     Any order staying the case for ADR may (but is not required to) include an order as to the liability of the parties for the costs they incur in using or attempting to use ADR. Such order will usually be (a) costs in the case or (b) each side to bear its own costs.’

See: The Chancery Guide 2022 | Courts and Tribunals Judiciary

The court also has the power to order mandatory JENE, see my article about JENE on the publications page of this website.

HMCTS ‘Guide to the Intellectual Property Enterprise Court Small Claims Track’ was published in July 2023 states::

4.3    ‘The IPEC SCT is only suitable for claims where the amount in dispute (not including costs) is £10,000 or less. If the claim has a value of more than £10,000, it is unlikely to be suitable for hearing in the SCT, unless the court orders otherwise. The IPEC SCT is suitable for claims where the remedies being sought are damages for infringement, an account of profits, delivery up or destruction of infringing items and/or a final injunction to prevent infringement in the future. Interim remedies (which are remedies ordered before the final hearing of the claim) such as interim injunctions, asset freezing orders and search and seizure orders are not available on the IPEC SCT. A claim seeking these remedies, which would otherwise be suitable for the IPEC SCT, should be made on the IPEC multi-track instead.’ …

7.12 ‘Like all civil courts, the IPEC SCT encourages parties to consider the use of Alternative Dispute Resolution (ADR), as an alternative means of resolving disputes or particular issues within disputes. Parties to IPEC SCT cases may (or if required to do so, must) use ADR, including the Small Claims Mediation Service which is a FREE service provided by HM Courts & Tribunals Service (see Small claims mediation service – GOV.UK (www.gov.uk)). It may only be accessed after a claim has been issued. Mediation appointments are conducted by telephone and so the parties are not required to attend at court or at the mediators’ offices. Parties can also mediate through the small claims mediator without speaking to one another. The mediation appointment is:

  • limited to one hour
  • confidential
  • only proceeds if both parties agree to mediation.

If mediation is unsuccessful then the parties will continue to a final hearing of their IPEC small claim as usual.’

See:

Business Arrangements & Contractual Matrix

Band Agreement.
LLC Articles of Association.
LLC Shareholders’ Agreement.
LLP Members’ Agreement.  
General Partnership Agreement.  
Management Contract. –      Territory.

–      Scope – i.e. activities covered.

–      Authority.

–      Remuneration.

–      Commission on what & how it is calculated.

–      Collection.

–      Expenses.

–      Tax.

–      Exclusivity.

–      Key-person provisions.

–      Term i.e. length of contract.

–      Album cycles.

–      Termination.

Record deal.[xxx] 2 types:

–      Licence[xxxi].

–      Exclusive recording contract.[xxxii]

Variations:

–      Production deal containing elements of both types.

–      360-degree model.[xxxiii]

Commercial issues:

–      Delivery requirements – minimum commitment by the artist.

–      Advances – NB the ‘Min-max’ formula, see Harrison p.101.

–      Payment terms.

–      Costs-inclusive advances.

–      Record budget.

–      Royalties.

–      Release commitments.

–      Accounting.

Licence. –      Exclusive or non-exclusive deal.

–      Term.

–      Territory.

–      Options.[xxxiv]

Exclusive deal. –      Term.

–      Options.

–      Two-album firm deals – Record company commits in advance to a second album.

–      Worldwide v. Territory & split-territory deals.

Development deals. ‘[The] Record label signs an artist up exclusively for a period of time during which the artist may record some demos or enough tracks for one or more EP’s. The artist is given a recording budget and the means to pay for a producer but not usually much more by way of money to live on. … If things go well with the development stage, then the record label usually has the option to decide to go on to make the rest of the album and probably then have options to make more albums as in a normal exclusive record deal.’ [Harrison p.92].
360-degree deals. ‘[These deals] involve all important aspects of an artist’s career. A record label may say to an artist-in effect – “we cannot make enough money just from selling your records to justify the level of advances, royalties and recording costs you want us to pay. We cannot invest the kind of marketing budget this record needs because we can’t make enough money from record sales alone. So, if we are going to sign/extend your record deal we can only do so on the basis that we also get a share of the money you make from other activities.” These activities might be songwriting but more commonly it means they want a share of the money the artist makes from selling tickets to their live concerts, from selling merchandise and from any sponsorship deals the artist does.’ [Harrison p.93].
Production deal. ‘[This] is usually a form of an exclusive recording agreement for the world, but one where the record label is an offshoot business of the record producer, or recording studio owner, or a manager who has access to cheap recording facilities, or a fan, or a songwriter who has decided to set up his own “label” to record an artist he has found who he thinks is talented. … The production company will expect to own the copyright in the sound recordings for life of copyright and to have at least a couple of options to extend the contract beyond an initial period. … The aim of these production companies is either to record up to, say, five tracks to good demo or master quality and use these to tempt a bigger company to come on board, or the production company records and releases some recordings themselves in order to hopefully create interest and have the bigger company come along and either buy the contract off them or license the rights often exclusively in return for an investment into marketing and promotion and reimbursement of recording costs.’ [‘Harrison, p.95].
Publishing deal.[xxxv] ‘Publishers have traditionally had three main roles. Firstly, they issue licences to people who want to use music. Secondly, they actively look for ways to use music-for example, putting a song they publish in an advert or on a film or videogame soundtrack. Thirdly, they collect the income from those licences and uses and account to the writers for their share of royalties. Licensing and collection of income are carried out in conjunction with the collection societies both locally in the home territory and internationally through their links with international collection societies as well as in the developing area of direct digital licensing. … Publishers have also become more adept at finding innovative ways to use the copyrights, including licensing song lyrics for inclusion on merchandise like mugs and T-shirts. Licensing songs for use in ads, films and video games has become even more important, most publishers have strengthened their synchronisation departments. … Neighbouring rights have become another possible source of revenue.’ [Harrison p.114 – 117 – see also the discussion in Harrison at 117 of the performers entitlement to an ‘equitable share’].
4 types:

–      Administration deal.

–      Sub-publishing deal.

–      Single-song assignment.

–      Fully exclusive song-writing deal.

[For a full discussion see Harrison pp. 137-162].[xxxvi]

Key commercial issues:

–      Exclusivity[xxxvii].

–      Rights granted.

–      Territory.

–      Rights period.

–      Term.

–      Fixed terms & rolling advances.

–      Minimum commitment.

–      Advances.

–      Royalties.[xxxviii]

–      Synchronization & cover royalties.

–      Performing income.

–      Accounting.

Production & Distribution deal (‘P&D’). –      Label services deal.

–      Catalogue or single release distribution deal.

[For a full discussion see Harrison pp.195-202].

Key commercial issues:

–      Exclusivity.

–      Term.

–      Territory.

–      Rights granted.

–      Price.

–      Payment terms.

–      Retention of title.

–      Advances.

Merchandising deal.[xxxix] Key commercial issues:

–      Territory.

–      Term.

–      Rights granted.

–      Quality control.

–      Methods of distribution.

–      Advances & guaranteed minimum payments.

–      Royalties & licence fees.

–      Accounting.

–      Trade mark & copyright notices.

–      Termination rights.

–      Enforcement.

–      360-degree models.

[For a detailed discussion see Harrison pp.250-257].

Sponsorship & Endorsement deals.[xl] Key commercial issues:

–      The services.

–      Exclusivity.

–      Territory.

–      Creative control.

–      Term.

–      Banner advertising at venues.

–      Meet & greets.

–      Freebies & promotional activities.

–      Trademark licences & goodwill.

–      Payment.

Booking agency contract.[xli] Key commercial issues:

–      Exclusivity.

–      Territory.

–      Term.

–      Booking agent’s duties.

–      Artist’s/Band’s duties.

–      Fee.

–      Accounting.

–      Assignment & key-person provisions.

Promoter’s contract.[xlii] Key commercial issues:

–      Artist’s/Band’s obligations.

–      Promoter’s obligations.

–      Artists’ riders.

–      Fees.

–      Payment. & accounting.

–      Other income.

–      Restrictions.

–      Regulatory compliance – The Licensing Act 2003[xliii]; Live Music Act 2012[xliv]; and the Private Security Industry (Licences) Regulations 2004[xlv].

[For a detailed discussion see Harrison, pp. 292 – 299].

 

Fiduciary Duties owed by Managers & their Companies to Artists

The essential idea is that a person who undertakes and is entrusted with authority to manage the property or affairs of another, and to make discretionary decisions on behalf of that person, i.e. a manager, is not permitted to use their position for their own private advantage, and is required to act unselfishly in what they perceive to be the best interests of their principal, i.e. the artist.  This is the core of the obligation of loyalty. Loyalty in this context, means being guided:

(i)      solely by the interests of the principal; and

(ii)     not by any consideration of the fiduciary’s own interests.

To promote such decision-making, a manager must:

(iii)     act openly and honestly; and

(iv)    not (without the informed consent of the artist) place                              himself in a position where either:

(a)     his own interests; or

(b)     his duty to another person,

may conflict with his duty to pursue the interests of the artist.

Managers are also liable to account for any profit obtained for themselves as a result of their fiduciary position.

‘The usual remedy where the fiduciary has breached a fiduciary duty is rescission of any transaction entered into by the fiduciary with or on behalf of the principal, and the fiduciary will be liable to disgorge to the principal any profit made from the breach of duty. But equity can also require the fiduciary to compensate the principal for any loss suffered as a result of the breach of fiduciary duty. It follows that the principal may have to elect between disgorgement and compensatory remedies. The choice of remedy will be determined by whether the loss suffered by the principal is greater than the profit obtained by the fiduciary. The principal will not be able to recover both compensatory and disgorgement remedies, since this would result in double recovery. The fiduciary may also hold profit obtained from breaching the fiduciary duty on constructive trust for the principal, so that the principal has an equitable proprietary interest in the property held on trust, which will provide a basis for a proprietary claim.’ (Virgo, paragraph 15.1.5). See also my article about electing between equitable remedies on the ‘Publications’ page of this website.

The following remedial consequences flow from breach of fiduciary duty:

(i)      establishing breach gives rise to a range of equitable remedies which might not otherwise be available, including:

(a)     account and enquiries; and

(b)     obligations to disgorge profits;

(ii)      benefits obtained in breach of fiduciary duty (including bribes and secret commissions), will be held on a constructive trust for the principal, giving him the ability to:

  • recover them in priority to other creditors in the event of

the fiduciary’s insolvency;

  • take the benefit of any appreciation in value; and

(c)     trace or follow them into the hands of third parties and substitute assets.

For a person to be liable for breach of fiduciary duty, he must have breached the duty by an intentional act. An unconscious omission will not be sufficient. To prove breach:

(i)      It is not necessary to demonstrate that the fiduciary has breached some other duty owed to the principal by reason of his self-interest.

(ii)     It is irrelevant that the dealing was ‘fair’, or has benefitted the principal.

(iii)     It is also irrelevant that the fiduciary’s potentially conflicting interest is not one that the principal could himself have exploited.

(iv)    It is not necessary to demonstrate that the fiduciary acted in ‘bad faith’, or ‘dishonestly’.

A fiduciary will therefore be held liable even:

(a)     If he did not act fraudulently or in bad faith.

(b)     Where he honestly believed that he was acting in good faith, (Murad v. Al-Saraj [2005] EWCA Civ 969).

Liability for breach of fiduciary duty is strict. In other words, it is not necessary for the principal to prove  either that:

(c)     They suffered harm as a result of the breach.

(d)     Any profit obtained by the fiduciary can be attributed to the breach. Non-disclosure can amount to breach of fiduciary duty (see my article on the ‘Publications’ page of this website about the ‘Quiet Fiduciary Thesis’), because a fiduciary must not be silent.

It appears that breach of the fiduciary dealing rules which could give rise to a claim in equitable compensation, generates a positive obligation of disclosure, Gwembe Valley Development Company Ltd v. Koshy [2002] EWCA Civ 1805.

Copyright

Copyright underlies all creative aspects of the music industry. See also CLIP | Creators Learn Intellectual Property (goclip.org).

Scope of protection.[xlvi] Copyright protects expressions. Copyright and related rights are national rights.[xlvii] Consequently, the requirement of originality varies from jurisdiction to jurisdiction. Copyright is not concerned with the originality of ideas but with the expression of thought. The originality which is required relates to the expression of the thought. This does not require that the expression must be in an original novel form, but that the work must not be copied from another work, i.e. that it should originate from the author. The standard required for a work to qualify as original is low. No specific measure of originality is required. In substance what is required is that the work is the result of the author’s own intellectual creation, i.e. that it is the result of skill and labour/intellectual creation, see paragraphs 51-54 of the judgment of HHJ Birss QC in Temple Island v. New English Teas [2012]. The governing statute is the Copyright Designs and Patents Act 1988 [the ‘CDPA’]. Section  1(1) CDPA provides:

‘(1)    Copyright is a property right which subsists in accordance with this Part in the following descriptions of work—

(a)     original literary, dramatic, musical or artistic works,

(b)     sound recordings, films or broadcasts, and

(c)     the typographical arrangement of published editions.’

In general, a work will be protected by UK copyright provided either:

(i) that the author is at the material time a ‘qualifying person’ i.e. a British national or is resident or domiciled in one of the countries of the Berne Union or a country which is a party to the Universal Copyright Convention ; or

(ii) that the work was first ‘published’ in one of these countries [Sections 156-156 CDPA]. Section 175 CDPA provides:

‘(1)    In this Part “publication”, in relation to a work—

(a)     means the issue of copies to the public, and

(b)     includes, in the case of a …, musical … work, making it available to the public by means of an electronic retrieval system;

and related expressions shall be construed accordingly.

(2)     In this Part “commercial publication”, in relation to a …  musical … work means—

(a)     issuing copies of the work to the public at a time when copies made in advance of the receipt of orders are generally available to the public, or

(b)     making the work available to the public by means of an electronic retrieval system;

and related expressions shall be construed accordingly.

(4)     The following do not constitute publication for the purposes of this Part and references to commercial publication shall be construed accordingly—

(a)     in the case of a … musical work—

(I)      the performance of the work, or

(ii)      the communication to the public of the work (otherwise than for the purposes of an electronic retrieval system); …

(c)     in the case of a sound recording or film—

(i)      the work being played or shown in public, or

(ii)      the communication to the public of the work].

(5)     References in this Part to publication or commercial publication do not include publication which is merely colourable and not intended to satisfy the reasonable requirements of the public.

(6)     No account shall be taken for the purposes of this section of any unauthorised act.’

Sheet Music. Protected as literary works.
Lyrics. Song lyrics are protected as literary works when they are written down.[xlviii]
Melody – Musical Works. Protected by copyright as a musical work.[xlix]
Master Sound Recording. The sound recording, or phonogram, has its own copyright.[l]
Arrangement, Arrangements

Section 21 of the CDPA provides that it is an infringement of copyright in a musical work to make an “arrangement” of it. A musical arrangement is “an adaptation of a musical composition for instruments or voices for which it is not written” (Shorter Oxford English Dictionary). It is possible that sampling will infringe this right, depending on the sampling in question. More loosely speaking, many arrangements of musical works would amount to copying a musical work (section 16(1)(a) of the CDPA). Changing the key or tempo in which the composition was originally composed would both be capable of constituting an infringement; so too would mixing part of a composition with another composition. This is because the restricted act of “copying” will have taken place. Arguably, both the composition as sampled and the composition in which the sample appears would require the consent of the copyright owners of both compositions appearing in the mix. In cases where the style of the original composition has been used, infringements would be more difficult to prove. However, in Austin v. Columbia Gramophone Co., an infringement of an arrangement was proved where a composer took the original tunes on which the arrangement had been based and imitated the musical ideas but did not use the actual notes used by the plaintiff. It is not, however, an infringement of copyright to make an adaptation or an arrangement of a sound recording.

Rights in the New Arrangement

The author of an arrangement has the right to prevent a third party from copying his arrangement of the composition. In Zyx Music v. Pinnacle it was held that this would be so, irrespective of whether or not the arrangement was made with the consent of the copyright owner of the original composition. In this case proceedings were taken for infringement of the copyright in a “disco” or “dance” version of the song “Please Don’t Go” originally recorded by KC and the Sunshine Band. By mixing two compositions together the producer who mixes the two compositions together may obtain a copyright in that new arrangement. In that event, he will be able to prevent any third party, including the owners of the copyright in both original compositions and sound recordings, from reproducing that arrangement. Copyright protection may subsist if use is made of an earlier work. As stated by the Privy Council in MacMillan & Co. Ltd v. K & J Cooper, “To secure copyright it is necessary that the skill, labour and capital expended should be sufficient to impart to the producer some quality or character which the raw material did not possess, differentiating the product from the raw material”. Although it is doubtful whether the expenditure of “capital” is necessary, a fresh copyright will come into being provided sufficient further skill, labour, taste, judgment or knowledge has been used. In deciding whether or not the new work created by the sampling is such as to merit copyright protection the proper approach is to consider the work as a whole and to ascertain whether or not it is original, and not to inquire whether each part of the work is sufficiently original. To follow the latter course is to ignore the originality that may arise through the assembly and treatment of the individual parts. Copyright may subsist in a work even if it infringes the copyright in another work. In Zyx Music Lightman J. approved the view that a plaintiff in such circumstances is entitled to prevent others from copying his work, subject to his obligation to account to the original author for his due share of any recovery. This approach was upheld by the Court of Appeal.’ (Abrahamson & Bale).

 

Album Artwork. The artwork for a song or album can be protected by copyright as an artistic work: this includes a graphic work, photograph or collage.[li]
Photographs. Copyright subsists in original artistic works,s.1(1)(a) of the Copyright Designs and Patents Act 1988 [‘CDPA’]. ‘Artistic work’ includes a ‘photograph’. ‘Photograph’ means a ‘recording of light or other radiation on any medium on which an image is produced or from which an image made by any means be produced and which is not part of a film’ (s.4(2) CDPA).

In Temple Island v. New English Teas [2012] WSPCC 1 the claimant claimed infringement of copyright. Judge Birss KC in finding in in favour of the Claimant stated: ‘This superficially simple question involves a tricky area of law, i.e. copyright in photographs; and, in the end, turns on a disputed qualitative judgment. … A photograph of an object found in nature or for that matter a building, which although not natural is something found by the creator and not created by him, can have the character of an artistic work in terms of copyright law if the task of taking the photograph leaves ample room for an individual arrangement. What is decisive are the arrangements (motif, visual angle, illumination etc) selected by the photographer. … What then is the scope of photographic copyright? The question is answered by drawing attention to 3 aspects in which there is room for originality in photography:

1.   Residing in specialities of angle of shot, light and shade, exposure and effects achieved with filters, developing techniques and so on;

2.   Residing in the creation of the scene to be photographed;

3.   Deriving from being in the right place at the right time .

[The] composition of a photograph is capable of being a source of originality. The composition of an image will … derive from the “angle shot” … but also from the field of view … elements which the photographer may have created and … elements arising from being in the right place at the right time. The resulting composition is capable of being the aggregate result of all these factors … Ultimately … the composition of the image can be the product of the skill and labour (or intellectual creation) of a photographer and … skill and labour/intellectual creation directed to that end can give rise to copyright.

Copyright is infringed by reproducing the whole or a substantial part of the work in a material form (s.16  and s.17 CDPA). [A] “substantial part” is a matter of quality not quantity. … Copying a photograph does not require a facsimile reproduction, it is enough to recreate the scene or a substantial part of it.  … As a matter of principle photographs, as one species of artistic work in s.4 of the Act, are not to be treated differently from other artistic works and  one consequence must be that s.17 cannot be construed as referring only to facsimile reproductions of a photograph itself. … Visual significance must also be relevant to infringement and to the question of whether a substantial part of an artistic work has been taken. What falls to be considered, in order to decide if a substantial part of an artistic work has been reproduced, are elements of the work which had visual significance. What is visually significant in an artistic work is not the skill and labour (or intellectual creative effort) which led up to the work, it is the product of that activity. The fact that the artist may have used commonplace techniques to produce his work is not the issue. What is important is that he or she has used them under the guidance of their own aesthetic sense to create the visual effect in question. Just because the Act provides for copyright in these original artistic works irrespective of their artistic quality (s.41(a) does not mean that one ignores what they look like and focuses only on the work which went into creating them.  … On the question of copying, I find the common elements between the defendants work and the claimant’s work are causally related. In other words, they have been copied.’

Infringement.[lii] ‘Essentially, [Primary] infringement of the copyright work can be summarised as the taking of the whole, or a substantial part, of the copyright protected work, without permission of the copyright owner or the benefit of a copyright exception. … Each country has its own tests or factors which it will apply to determine if the part taken was substantial. The first thing to know is that there is no numerical number or amount of the work that determines if it is substantial. There is no set number of notes that can be taken from a song, and no length of a sample, that we can say for sure would not constitute infringement. There is a common misconception that there is a minimum number of notes that people can take from a song, or a certain number of seconds from a video clip, in order to avoid infringement. This is incorrect. Instead it depends on the quality of what is taken – not the quantity. The quality of what is taken is determined by referring to the original aspects of the copied work. … In the UK, the meaning a substantial part is developed in the case law. The UK courts have said that it is to be a matter of quality, not quantity, and that quality is to be determined by reference to the reason the work is protected by copyright: the originality. This means that if the parts taken are the original elements of the work, it is more likely to be infringement. However, if the parts taken are the non-original or non-protectable parts, such as the general idea, then it is unlikely to be infringement. … Secondary copyright infringement relates to situations where a person has not themselves directly infringed, but contributed to the infringement. It is also sometimes referred to as indirect infringement, or associated infringement. … The main difference between primary and secondary copyright liability is that for secondary infringement, the person is not liable unless they knew or had reason to believe that they were handling infringing copies, or, in the case of the performance, that the performance would infringe copyright. (Bosher, paragraphs 11.2;11.3; and 11.4).[liii]

 

 

Fair dealing & exceptions

The exceptions are:

  • Research and private study.
  • Criticism, review or quotation.
  • News reporting (which does not apply to photographs).
  • Caricature, parody and pastiche.

While there is no statutory definition of precisely what dealing is fair, the English court applies an objective test enquiring ‘whether any fair-minded honest person would have dealt with the copyright work, in the manner that [the defendant] did, for the purpose [specified]. Hyde Park Residence Limited v. Yelland [2000] EWCA Civ, 37,38 (Lord Justice Aldous): Hyde Park Residence Ltd v Yelland & Ors [2000] EWCA Civ 37 (10 February 2000) (bailii.org)

In Hubbard v. Vosper [1972] 2 Q.B. 84, Lord Denning stated, ‘[it] is impossible to define what is fair dealing. It must be a question of degree.’

Lord Denning proposed three factors:

  • the number and extent of the reproductions;
  • the use made of the reproductions; and
  • the proportion of the work consisting of reproductions compared to the proportion of work consisting of comment and analysis.

He concluded that ‘after all is said and done, it must be a matter of impression.’

‘The CPD provides for a potential exception outside of the provisions reads more like a caveat than an explicitly carved out exception: “Nothing in this part affects any rule of law preventing or restricting the enforcement of copyright, on grounds of public interest or otherwise.” However, this possible defence is rarely applied: thus, there is no well-developed doctrine of public interest defence in the UK. … The European Convention on Human Rights [‘EHCR’], which was incorporated into the law the UK by the Human Rights Act 1998, lists certain acts that are expressly permitted under the CPDA without a licence. In particular, Article 10 of the ECHR, which is generally referred to as “freedom of expression”, includes the right to impart both information and ideas, which may be at odds with copyright ownership. Ashdown v. Telegraph Group Ltd [2001] EWCA Civ.1142, which was ultimately dismissed on appeal, is nevertheless important for establishing that article 10 of the ECHR considerations “might, in an appropriate case, require the court to grant public interest defence beyond the protection offered under s.30 of the [CPDA] for fair dealing.” However, as the court made clear, this defence would not allow for a right to “make free use of another’s work” or profit without adequate compensation.’ (Prowda, p.94).

Research and private study – Section 29 CPDA provides:

(1)     Fair dealing with a. work for the purposes of research for a non-commercial purpose does not infringe any copyright in the work provided that it is accompanied by a sufficient acknowledgement.

(1B)  No acknowledgement is required in connection with fair dealing for the purposes mentioned in subsection (1) where this would be impossible for reasons of practicality or otherwise.

(1C)  Fair dealing with a  work for the purposes of private study does not infringe any copyright in the work.

(3)     Copying by a person other than the researcher or student himself is not fair dealing if—

(a)     in the case of a librarian, or a person acting on behalf of a librarian, that person does anything which is not permitted under section 42A (copying by librarians: single copies of published works), or

(b)     in any other case, the person doing the copying knows or has reason to believe that it will result in copies of substantially the same material being provided to more than one person at substantially the same time and for substantially the same purpose.

(4 )    It is not fair dealing—

(a)     to convert a computer program expressed in a low level language into a version expressed in a higher level language, or

(b)     incidentally in the course of so converting the program, to copy it,

(these acts being permitted if done in accordance with section 50B (decompilation)).

(4A)  It is not fair dealing to observe, study or test the functioning of a computer program in order to determine the ideas and principles which underlie any element of the program (these acts being permitted if done in accordance with section 50BA (observing, studying and testing)).

(4B)  To the extent that a term of a contract purports to prevent or restrict the doing of any act which, by virtue of this section, would not infringe copyright, that term is unenforceable.’

Therefore, subject to a proviso, the principal permitted uses are:

  • research for a non-commercial purpose; and
  • private study.

Criticism, review or quotation – Section 30 CPDA provides:

(1)    Fair dealing with a work for the purpose of criticism or review, of that or another work or of a performance of a work, does not infringe any copyright in the work provided that it is accompanied by a sufficient acknowledgement (unless this would be impossible for reasons of practicality or otherwise)] and provided that the work has been made available to the public.

(1ZA)          Copyright in a work is not infringed by the use of a quotation from the work (whether for criticism or review or otherwise) provided that—

(a)     the work has been made available to the public,

(b)     the use of the quotation is fair dealing with the work,

(c)     the extent of the quotation is no more than is required by the specific purpose for which it is used, and

(d)     the quotation is accompanied by a sufficient acknowledgement (unless this would be impossible for reasons of practicality or otherwise).]

(1A) For the purposes of subsections (1) and (1ZA)] a work has been made available to the public if it has been made available by any means, including—

(a)     the issue of copies to the public;

(b)     making the work available by means of an electronic retrieval system;

(c)     the rental or lending of copies of the work to the public;

(d)     the performance, exhibition, playing or showing of the work in public;

(e)     the communication to the public of the work,

but in determining generally for the purposes of those subsections whether a work has been made available to the public no account shall be taken of any unauthorised act.’

Therefore, subject to provisos, the principal permitted use is use of a quotation from the work (whether for criticism or review or otherwise).

News reporting (which does not apply to photographs) – Section 30(2) and (3) CPDA provides:

(2)    Fair dealing with a work (other than a photograph) for the purpose of reporting current events does not infringe any copyright in the work provided that (subject to subsection (3)) it is accompanied by a sufficient acknowledgement.’

‘(3)    No acknowledgement is required in connection with the reporting of current events by means of a sound recording, film or broadcast where this would be impossible for reasons of practicality or otherwise.’

Therefore, subject to the proviso, the principal permitted use is reporting of current events by means of a sound recording, film or broadcast.

 

Caricature, parody and pastiche –  Section 30(A) CPDA provides:

‘(1)    Fair dealing with a work for the purposes of caricature, parody or pastiche does not infringe copyright in the work.’

Sampling

‘A sample can be used to describe three different but related methods of appropriating and adapting pre-existing musical ideas: a direct sample of a pre-existing recording, usually via digital sampling or digital recording technology: an interpolation, where phrases, melody and/or lyrics are taken from a pre-existing composition but without any attempt to copy the sound or timbre of the original recorded performance: and a replay which recreates part or parts of an existing record with the intention of sounding as close as possible to the original. If using a direct, or phonographic, sample in a new piece of music, there are two copyrights and two sets of clearances required: the copyright of the musical work (the song, including the lyrics, or composition – referred to in the industry as the “publishing copyright” or “publishing”) and the copyright of the recording sampled (the “master copyright” or “master”). When employing either an interpolation or a sample replay, only the copyright in the musical work needs to be cleared.’ (Harrison and Rigg, page 49).

Copyright in the Original Sound Recording

Sampling a sound recording (by copying or mixing the original sounds onto another recording) without the consent of the copyright owner will be an infringement of copyright in the original sound recording, if the amount taken amounts to a “substantial part” of the sound recording (sections 16(1)(a), 16(3)(a) of the CDPA). However, no infringement of the copyright in the sound recording will occur if the actual sounds from the original sound recording are not made use of. This would be the case for re-recordings; see above.2 Depending on what parts of the original sound recording have been sampled, it may be possible to argue that the sound recording bearing the sample does not reproduce a substantial part of the original sound recording. Whether or not a substantial part of the sound recording has been reproduced will always be a matter of degree. It is suggested that the proper test is to ask whether the sounds taken amount to something real and consequential, as opposed to something trifling or insignificant. Copyright in sound recordings is rather different to that in literary, artistic and musical works, when originality is required in order for the work to attract copyright. This may prevent the taking of non-trivial fractions of such works (see below). However, sound recording copyright is different. No originality is required for a recording to attract copyright (except if the recording is a copy of another recording–section 5(2) of the CDPA); hence the test of substantial part is slightly different.3 Accordingly, before sampling a sound recording, the consent of the owner of the original sound recording may well be required, and should be considered in every case.

Copyright in the Original Composition

Similarly with the underlying composition embodied on the sound recording, sampling a sound recording without the consent of the owner of the copyright in the underlying composition will be an infringement of the copyright in the composition if a substantial part of the composition is used. Where the composition consists of music and lyrics it is necessary to bear in mind that there will be two copyrights relating to the musical and literary copyrights respectively. The copyright in the composition will usually (but not always) be owned by the writer’s publisher whose consent will therefore be required (in addition to any necessary consents from the record company) before sampling. The consent of the owner of the copyright in the composition will still be required even where it is intended to sample the composition by re-recording. This is because it is an infringement of copyright in musical and literary works to copy them in any material form (section 17(2) of the CDPA). The test of substantiality in a literary and/or musical work is again one of degree. The quality of what has been taken is more important than the quantity of abstracted material.4 For example, in one case use of a few lyrics, which constituted no more than a very small proportion of the work in question, amounted to an infringement.5 Similarly, in Hawkes & Son Ltd v. Paramount Film Services Ltd 6 28 bars of a well-known march were performed by a band. The extract lasted less than a minute and the whole march would have taken about four minutes. The bars taken constituted the main theme of the march. Not surprisingly, it was held that an infringement had been committed.

On the other hand, a long extract may not amount to an infringement if the selection does not comprise original material.7 A few bars taken from the composition may well be an infringement of copyright, but sampling does not always work like that. Sometimes, it is just the drum or a bass line that is taken and mixed with another composition. Although the drum or bass line may be recognisable, it may be very difficult for the artist or publishing company to establish that that drum or bass line were in fact original to the artist concerned. There are, of course, only so many rhythms in popular music and many drum and bass lines are in fact themselves copies of previous works. If the drum or bass lines are not original, then no action for breach of copyright will lie.

Much modern popular music is computer generated. When a bass or drum line is sampled, very often the sampler will not take the whole bass or drum line from a recording, but will instead take a couple of bars and then play those bars in an endless loop over and over again. Where many recordings make use of drum machines rather than live drummers, the original recording may well have been recorded in this manner in the first place. Whilst a few bars of a whole recording might or might not amount to a substantial part, it is more doubtful whether a couple of bars of just the drum line or bass line would do.

The United Kingdom music industry has developed an unwritten “three second rule”. Where three seconds or less of a work are sampled, no action is customarily taken against the sampler. Whilst this may be the custom of the music industry, it is by no means clear that it is sound in law. Whether or not three seconds of a work can be sampled with impunity must depend on applying the law to the facts of each case.’ (Abrahamson & Bale). See also Bosher, paragraphs 11.2;11.3; and 11.4 – the 3 second rule is a fallacy, and ‘Infringement’ above.

Songwriter splits & shares

‘Writer credits take the form of songwriter “splits.” These splits convey the extent of each writer’s interest in a work. . … [As] the number of writers per song has expanded, so too has the universe of possible split allocations. There are no rules that govern splits. They are entirely the product of negotiation, custom, relationships, and inertia. They may be split evenly among writers or they may be split unevenly: they may be allocated by type of contribution (e.g. lyrics, melody, arrangement, production), or extensive contribution, or without regard to either: they may adhere to customs, or they may appear entirely random or nonsensical. In the end, any allocation as possible so long as it sums to 100%. Songwriter’s differ on how and when to discuss splits. Some prefer to finalise everything prior to collaborating. Some prepare and sign “split sheets”, which stipulate, and allow for signatures to agree to split arrangements. This has obvious advantages, including clarity, formality, and administrators finality – allowing creatives to focus on creativity. It also has drawbacks: many writers feel that interjecting what are effectively legal of monetary negotiations into the music making process can be awkward and uncomfortable, chilling creativity. An upfront approach can also yield a result where splits do not align with actual contributions, which may miff those who end up contributing more. To that end, some prefer to work out splits after a song is complete, based on actual contributions. But the exercise of clinically attempting to quantify intangible inputs can breed its own awkwardness, which some believe can constrain the ongoing relationships that all agree are vital to songwriting careers.’ (Abowd, page 177).

Abowd identifies three principal songwriter dispute scenarios:

  • Where a writer feels that they have been allocated to small a share, or unfairly cut out of a song in its entirety.
  • When a passive or fringe participant asserts a songwriting claim that the other writers dispute.
  • Where a recording artist leverages a larger than deserved split due to outsized bargaining power – ‘Change a word , get a third.’[liv]

Trademark

Ownership of goodwill in a Band’s name

[Frankie case].

Performing rights

‘Performing rights are the rights performers have to prevent someone else from doing certain things with their performances, or with recordings of their performances, without their permission. The basic performing rights are … the right to prevent someone making a recording of a live performance and the right to prevent the communication of it to the public. It is also a performer’s right to prevent someone from making a recording of their performance directly from a broadcast or cable programme. The performers permission has to be obtained to do any of the above. … The performer also has the right to refuse to let someone make a copy of the recording issue a copy of recording to the public: rent or lend copies of the recording to the public: play a recorded performance in public: or include it in a broadcast or cable programme service.’ [Harrison p.80].[lv]

Moral Rights

Moral rights are noneconomic rights in creative works, which protect the superior interests of human genius. Therefore, a work of music must be protected and kept as it emerged from the imagination of its author and later conveyed to posterity. In the UK moral rights continue for the duration of copyright protection, with the exception of the right of attribution which lasts the life of the author plus 20 years, and can pass to an author’s heirs upon death. Section 80 of the Copyright, Designs and Patents Act 1988 [the ‘CDPA’] provides:

‘(2)   For the purposes of this section—

(a)    “treatment” of a work means any addition to, deletion from or alteration to or adaptation of the work, other than— …

(ii)     an arrangement or transcription of a musical work involving no more than a change of key or register; and

(b)    the treatment of a work is derogatory if it amounts to distortion or mutilation of the work or is otherwise prejudicial to the honour or reputation of the author or director…

and in the following provisions of this section references to a derogatory treatment of a work shall be construed accordingly.

(8)    This section has effect subject to sections 81 and 82 (exceptions to and qualifications of right).’

Section 81 CDPA provides:

‘(1)   The right conferred by section 80 (right to object to derogatory treatment of work) is subject to the following exceptions.

(2)    The right does not apply to a computer program or to any computer-generated work.

(3)    The right does not apply in relation to any work made for the purpose of reporting current events.’

It is not clear what amounts to derogatory treatment, but it seems that as well as there being either a distortion or mutilation this must be prejudicial to the honour or reputation of the artist. In Tidy v. Trustees of the Natural History Museum [1196] 39 IPR 501] HHJ Overend, sitting in the Plymouth County Court stated:

“In my judgement what the plaintiff must establish is that the treatment accorded to his work is either a distortion or a mutilation that prejudices his honour or reputation as an artist. It is not sufficient that the author is himself aggrieved by what has occurred.”

Case law on moral rights in the UK is sparse. In Confetti Records Ltd v. Warner Music UK Ltd [2003] EWHC 1274, the court applied the two-part test set forth in section 80(2)(b) of the CDPA (above):

(i)     adaptation that amounted to distortion, mutilation, modification, or other derogatory action, and

(ii)     this would be prejudicial to honour or reputation.

‘Analyzing these factors in light of article 6bis of the Berne Convention, the court concluded that an author can object to distortion, mutilation, or modification of his work only if it is prejudicial to his honour or reputation. The mere fact that the work is distorted is not enough. … The court dismissed the case, in part because it found no evidence of prejudice [to the author’s] honour or reputation, and therefore concluded that there was no derogatory treatment. Some commentators have noted that without a definitive ruling in the High Court after a full trial, or indeed at a higher court at all, the scope of derogatory treatment in the UK remains uncertain. It is clear, however, that there must be prejudice to the author’s honour or reputation and that the test is objective, rather than subjective. Also, taking into account the interpretation of article 6bis of the Berne Convention, “derogatory” would suggest a subjective standard, but still subject to the more objective criterion of prejudice to honour or reputation, and analogous to the personal interests protected by the law of defamation.’ (Prowda, p.116).

Therefore, to succeed at trial, an artist must persuade the court that a distortion, mutilation, modification, or other derogatory action defacement is also prejudicial to his/her honour or reputation. Expert evidence, if it can be obtained and is admissible, is likely to be of assistance to the court. Disparaging tweets and other communications received on social media may also support the artist’s case. While it is generally accepted that mere placement of a work within a larger context would not qualify as a ‘treatment’ since there is no addition, deletion, alteration, or adaption, because Section 80(b) CDPA formulates the legal test of derogatory treatment as including anything that ‘is otherwise prejudicial to the honour or reputation of the author’, it is arguable that placement of a work within a larger context amounts to derogatory treatment where the overall impression is prejudicial to the honour or reputation of the author. For example, a right wing politician playing part of a work by a left wing artist at a political rally.

Image rights

‘Image rights … allow [a person] to control the commercial use of their name, likeness and other personal in dysuria including physical characteristics associated with them.’ These rights are linked to branding and endorsement deals. See Harrison & Rigg, Chapter 12. Note, that ‘there is a cost applied to each branding deal which not only represents the value of the artist endorsement within that certain product category space, but it also represents reputational risk, overexposure and dilution of their market value.’ (Harrison & Rigg, page. 249).

[CAI – Research Douglas & Rihanna cases & read Arnold].

Breach of confidence

[Oasis case]

Duress

Undue Influence

In equity undue influence can be presumed. Where presumed undue influence is alleged the evidential burden falls on the claimant to demonstrate that either:

(i)    there was a relationship giving rise to a presumption of trust and confidence (such as manager and artists) similar to a fiduciary relationship; or

(ii)    that the nature of the relationship that existed between the two parties in fact had this characteristic; and

(iii)   that the transaction cannot be readily accounted for by the ordinary motives of persons ordinarily in that relationship such that exercise of undue influence is the most logical explanation for the transaction (Royal Bank of Scotland Plc v. Etridge (AP) [2001] UKHL 44).

If the parties are in a relationship which gives rise to a presumption of trust and confidence, it is not necessary for the claimant to prove that the donor of a lifetime gift actually reposed trust and confidence in the other party, or that the other party dominated the relationship (Royal Bank of Scotland Plc v. Etridge (AP) [2001]). Nor is there any requirement to prove that the person accused of exercising undue influence did so intentionally or maliciously (Pesticcio v. Huet [2003] All ER (D) 237 (Apr), ChD). Once the presumption has been raised it falls on the other party to rebut it. To dispel the presumption of undue influence it will be necessary to show that all reasonable steps were taken, for example by a solicitor advising on the establishment of a settlement, to conclude that the settlor was acting on his or her own free will, understood what was being done and its effect (Smith v. Cooper [2010] EWCA Civ 722).

In Hart & Anor v. Burbidge & Ors [2013] EWHC 1628 (Ch) (upheld in the Court of Appeal), Sir William Blackburne said that there is no distinction between actual and presumed undue influence as regards the nature of the influence and its effect. The difference lies merely in the manner of its proof. In both it must be shown that the influence in question led to the making of the impugned transaction, and that it was undue in the sense that the transaction was not the result of the free exercise of an independent will on the part of the person at whose expense the transaction was made. In the case of actual undue influence it is for the person complaining of the influence to prove affirmatively that the transaction in question was caused by the influence alleged.

Sir William Blackburne observed that in the case of presumed undue influence the court’s willingness to intervene to reverse the effect of the influence is triggered by proof on a balance of probabilities of essentially two matters. The first is that the person at whose expense the impugned transaction was made reposed trust and confidence in the recipient of the benefit conferred by the transaction or that the latter acquired ascendancy or control over the former. The second is that the transaction is of such a size or nature as to call for an explanation as being not readily explicable by the relationship of the parties. Once that stage is reached the burden of proof shifts to the person seeking to uphold the transaction to demonstrate on a balance of probabilities that the transaction was the result of the free exercise by the transferor of an independent will. The point of the contrast is to highlight the need in cases of actual undue influence to point to some overt act or acts which can be said to be causative of the impugned transaction. The inquiry in the case of presumed undue influence is rather more subtle and the evidence bearing on the influence and its effect is likely to be more indirect.

Unconscionable Dealing

Restraint of trade

Burden of Proof Precedent
   

Mediator Questions

Mediation is the art of knowing how, when and why to ask questions which can bring about a ‘cognitive shift’ in each P’s thinking and behaviour, i.e. a paradigm shift about what they perceive to be at stake and the value of settling. This includes each P’s analysis and evaluation of potential:

  • gains;
  • opportunities;
  • risks;
  • costs (including intangibles e.g. health, relationships, reputation); and
  • losses (including the time-value of money).

Metaphorically, ‘questions’ are the ‘steering-wheel’ whereby a Mediator [‘M’] can navigate a ‘difficult conversation’ with each in order to bring closure by helping each P to sort out their dispute for and by themselves. Within this framework  I have attempted to set out a Mediator’s Toolkit, i.e. a general ‘conceptual framework’ for the structuring of questions by M whilst conducting private sessions with each P, using tools to respond to the challenges that typically arise in the Mediation of a music dispute.

Issue Questions
Parties.
Songwriters.
Band. How and when was the Band formed.
Who are the founding members.

 

Who does what.

 

How was the name of the Band chosen.

NB:

·        The name is the brand.

·        ‘Goodwill’ in the name.

 

Band assets – Who contributed what including loans.
Was a Band Bank Account set up.
What is the legal form & structure of the Band, e. .an LLC or LLP.
LLC:

Articles.

Directors.

Share capital structure.

Shareholder rights.

Rights of pre-emption i.e. if a Band member leaves/dies & method of valuation.

Was a partnership agreement signed.
Have HMRC treated the Band as a general partnership.
Did any Band Member contract through a service company.
Was a Band Agreement signed.
Who is the Manager.
Was there a co-manager.
  Who is the record company
  Who is the Band’s accountant.
  Bank & Accounting Records.
  Advances.
Royalties
  Structuring.
Dispute What legal remedies are being sought.
On what basis.
Band dispute What is the dispute about.
Copyright Who created the musical works in which these rights allegedly exist.
Who contributed what, when, and how to the songwriting process:

 

Songwriting:

 

Interpretation:

 

Performance:
What infringements are alleged.
Music Management Contract Scope & terms.
Was legal advice obtained before signing a Record Contract.
What is being claimed & counterclaimed & by whom.
On what basis – i.e. what breach is alleged & by whom.
Evidence.
Recording contract Was legal advice obtained before signing a Record Contract.
What kind of record deal was agreed:

Term.

Exclusivity.

Territory.

Commitments.

Advances.

Royalties.

Deductions.

Termination.

Royalties How were advances & royalties shared and on what basis.
Songwriter split. What interests are at play.[lvi]
Rights.[lvii]
Power imbalances.[lviii]
Emotional barriers.[lix]
Structural barriers.[lx]
What is at stake
What is the value of what is at stake
What are the litigation & potential costs risks
What is the ‘chance of winning’ multiplied by the ‘net financial gain’ versus the ‘chance of losing’ multiplied by the ‘net financial loss’
What are the benefits of doing a deal? ·        Privacy & Confidentiality.

·        Preserves a working relationship.

·        [Songwriter disputes]

What is a good deal for you
What does the Artist need & prioritise & why Importance of commitment.

Marketing spend.

Importance of creative control:

–      Protecting the integrity of your art.

–      Making a record with minimum interference by the Record Company.

–      Contractual guarantees.

Commitment form the record company – figure for marketing spend.
Importance of money.
What does the Record Company need & prioritise & why i.e. to protect and maximize its investment What are the commercial interests of the Record Company.
What investment has the Record Company made in the Artist.
Financial & creative controls – What restrictions are necessary to protect the Record Company’s interests/investment.
What is the ‘price of doing a deal’ What is the right balance of terms.
What is the ‘commercial gap’
What ‘legal & commercial incentive/leverage’ is there to narrow & close the gap by doing a mutually beneficial deal

 

 

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Arnold, Richard (2021) Performers’ Rights 6th edition, Sweet & Maxwell. (‘Arnold’).

 

Baden-Powell,Ed and Jacek Kruza (2020) Sheeran v Chokri: similar facts of plagiarism alleged – strike-out refusal upheld, Ent.L.R. 2020 (3), 110-113. (‘Baden-Powell,Ed & Kruza’).

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Bosher, Dr Hayleigh (2020) The impact of Skidmore v Led Zeppelin on US music copyright: closing the floodgates after Blurred Lines, Ent.L.R. 2020, 31 (6). (‘Bosher 2020’).

Coote, Jonathan (2022) Ed Sheeran successful in receiving declaration of non-infringement of copyright relating to “Shape of You” in English High Court, E.I.P.R. 2022, 44(8). (‘Coote).

Coulthard, Alan (2007) Music Industry: dispute over agreements, Comms. L. 2007, 12(4), 135-139. (‘Coulthard’).

Eziefula, Nick and Rachael Heeley (2022) Ed Sheeran + no evidence of access = no copyright infringement, Ent.L.R. 2022, 33(6), 220-224. (‘Eziefula & Heeley’).

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Harrison, Ann and Tony Rigg, editors  (2023) The Present And Future Of Music Law, Bloomsbury. (‘Harrison & Rigg’).

Koo, Julian (2020) A justificatory pluralist toolbox: constructing a modern approach to justifying copyright law, E.I.P.R. 2020, 42(8). (‘Koo’).

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O’Connor, Shane (2012) Is the creative use of musical works without a licence acceptable under copyright law?, IIC 2012, 43(4), 401-426. (‘O’Connor’ 2012).

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Stokes, Simon (2021) Digital Copyright Law And Practice, Fifth Edition, Hart. (‘Stokes’).

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Vaver, David (2022) The 14th Annual Sir Hugh Laddie lecture: Mr Justice Laddie and his intellectual property cases: of millefeuilles and a fish called Elvis, I.P.Q. 2022, 3, 119-133. (’Vaver’).

Virgo, Graham (2018). The Principles Of Equity & Trusts. 3rd edition. Oxford University Press. (‘Virgo’).

Wilson, Martin (2022) Art Law And The Business Of Art, Edward Elgar. (‘Wilson’).

Watts KC, Peter and F.M.B Reynolds KC (2021), Bowstead And Reynolds On Agency, Twenty-Second Edition, Sweet & Maxwell. (‘Watts & Reynolds’).

See also:

Cases

Armatrading v. Stone and another [1985] (Unreported]: Undue influence | Lawdit Music

Associated Newspapers v. HRH Prince of Wales [2006] Ch 57 (CA) [‘Associated Newspapers’]. Associated Newspapers Ltd v Prince of Wales: CA 21 Dec 2006 – swarb.co.uk

Beckingham (aka Valentino) v. Hodgens and others [2003]. [‘Beckingham]. See – 13ent04.qxd (entsportslawjournal.com)

Cardi B Case. [‘Cardi B’].  Cardi B Microphone Incident: Rapper Will Not Face Charges – Rolling Stone

Cartier International AG & Others v. British Sky Broadcasting Limited & Others [2016] EWCA 658. [‘Cartier’]: Cartier International AG & Ors v British Sky Broadcasting Ltd & Ors [2016] EWCA Civ 658 | 11 South Square ;Cartier International AG and others (Respondents) v British Telecommunications Plc and another (Appellants)- The Supreme Court

Chance Rapper Case. [‘Chance Rapper’]. Chance the Rapper Sues Ex-Manager Who Sued Him for Millions | Pitchfork

Colonel Bogey Case – Hawkes & Son Limited v. Paramount Film Service Limited [1934]. [‘Hawkes’].  Hawkes & Son (London) Ltd vs Paramount Film … – Lost In Music

Craig Joseph v. Jason Spiller [2009] EWHC 1152 (QB). [‘Craig Joseph’]. Joseph and Others v Spiller and Another – Case Law – VLEX 793867477  ;Microsoft Word – Spiller v Joseph.doc (supremecourt.uk)

Ed Sheeran – ‘Amazing’. [‘Amazing’].  Ed Sheeran previously settled a copyright claim in the US, court told | The Independent

Ed Sheeran – ‘Shape of You. [‘Shape of You’] : Ed Sheeran Awarded $1.1 Million in ‘Shape Of You’ Copyright Case – Billboard

Ed Sheeran – ‘Thinking Out Loud. [‘Thinking Out Loud’]. Ed Sheeran Wins Another “Thinking Out Loud” Copyright Lawsuit | Pitchfork; https://ipkitten.blogspot.com/2023/08/ed-sheeran-us-music-copyright.html

Elton John – Elton John and Bernie Taupin and others v. Richard Leon James, Dick James Music Ltd and This Record Company Ltd  [1991] FSR 397: [‘Elton John’].  John v James: ChD 1991 – swarb.co.uk

EMI and others v. BSky B and others [2013]. [‘EMI’]. Maitland Chambers; EMI Records Ltd and Others v British Sky Broadcasting Ltd and Others – Case Law – VLEX 793709033

Francis Day & Hunter v. Bron [1963]. [‘Francis Day’].  Francis Day and Hunter Ltd v Bron: CA 1963 – swarb.co.uk

Gary Marlow v . Exile Productions [2003] EWHC 2631. [‘Gary Marlow’]. Marlow (t/a Crown Hotel) v Exile Productions Ltd (Damages) – Case Law – VLEX 793597721

Gill v. Frankie Goes To Hollywood [2007] 7 WLUK 840. [‘Gill’]: Trade Mark Inter-Partes Decision O/140/07 (ipo.gov.uk)

Gloucester Place Music v. Simon Le Bon [2016] EWHC 3091 (Ch). [‘Gloucester Place’].  Gloucester Place Music Ltd v Le Bon & Ors | [2016] EWHC 3091 (Ch) | England and Wales High Court (Chancery Division) | Judgment | Law | CaseMine

Heythrop Zoological Gardens Ltd v Captive Animals Protection Society [2016] [‘Heythrop’]: https://mediawrites.law/no-interim-injunction-against-publication-of-images-featuring-zoo-animals-used-for-entertainment/

HRH Duchess of Sussex v. Associated Newspapers Ltd [2021] EWHC 273 (Ch). [‘Sussex’].  HRH The Duchess of Sussex -v- Associated Newspapers Ltd judgment (judiciary.uk)

James Bourne v. Brandon Davis. [‘Bourne’]. BOURNE TO BE … INFRINGED; LATEST JIPLP – The IPKat (ipkitten.blogspot.com)

Jodie Henderson v. All Around The World Recordings Limited [2014]. [‘Henderson’]. Henderson v All Around the World Recordings Ltd | [2015] IP&T 33 | Intellectual Property Enterprise Court | Judgment | Law | CaseMine; https://www.casemine.com/judgement/uk/5a8ff71f60d03e7f57ea8018

Macaulay v. Schroeder Music Publishing Co. Limited [1974] 1 WLR 1308, (HL). [‘Macaulay’]. A Schroeder Music Publishing Co Ltd v Macaulay: 1974 – swarb.co.uk

Marcus Gray et al v. Katy Perry: [‘Gray’].  Marcus Gray, et al. v. Katy Perry, et al. | Music Copyright Infringement Resource (gwu.edu)

Mark Taylor v. Rive Droit Music Limited (November 2005) (Unreported). [‘Taylor’].  Taylor v Rive Droit Music Ltd – 5RB Barristers

Max Moseley Case – Max Moseley v. New Group Newspapers Ltd [2008] EWHC 1777 (QB). [‘Moseley’].  Mosley v Associated Newspapers Ltd (judiciary.uk)

Michael Skidmore v. Led Zeppelin et al. [‘Skidmore‘]. Skidmore v. Led Zeppelin – Harvard Law Review

Morrison Leahy Music v. Lightbond [1993] EMLR 144. [‘Leahy’]. See – JETIR1809968.pdf

Niema Ash v. Loreena McKennit [2006] EWCA 1714: [‘Ash’]. House of Lords Victory for Loreena McKennitt – Carter-Ruck

O’Sullivan v. Management Agency & Music Limited & Others [1985] Q.B. 428. [‘O’Sullivan ‘] .O’Sullivan v Management Agency and Music Limited: CA 1985 – swarb.co.uk.

Pharrel Williams, Robin Thicke and Ti v. Bridgeport Music Inc et al. [‘Williams’]. Pharrell Williams et al v. Bridgeport Music Inc et al (law360.com)

Performing Right Society Limited v Qatar Airways Group Q.C.S.C. [2020] EWHC 1872 (Ch): High Court Judgment Template (bailii.org).

Robyn Rihanna Fenty v. Arcadia Group Brands Limited (t/a Topshop) [2013] EWHC 2310 (Ch). [‘Rihanna’].  Robyn Rihanna Fenty and Others -v- Arcadia Group Brands Limited and Others judgment (judiciary.uk)

SABAM v. Scarlett. [‘SABAM’]. EUR-Lex – 62010CJ0070 – EN – EUR-Lex (europa.eu)

Sawkins v. Hyperion Records [2005] EWCA Civ 565 [‘Sawkins’]: Hyperion Records Ltd v Sawkins – 5RB Barristers

Re S (A Child) [2005] 1 AC 593. [‘Re S’]. House of Lords – In re S (FC) (a child) (Appellant) (parliament.uk)

Rebekha vardy v. Collen Rooney [2022]. ([Vardy’). https://www.judiciary.uk/wp-content/uploads/2022/07/Vardy-v-Rooney-Trial-Judgment.pdf

Sara Cox v. Sunday People Newspaper (Reported in the Guaradin  9 June 2005), [‘Cox’]. Sara Cox wins privacy case | Media | The Guardian

Sony Music Entertainment et al v.Cox Communications Inc.et al. [‘Sony’]. Sony Music Entertainment v. Cox Communications | Loeb & Loeb LLP

The ABBA Case – Lyngstad v. Annabas Productions Ltd [1977] FSR 62: [‘ABBA’]. See – Gilchrist | Trade Mark Strategies of Emerging Music Artists | Entertainment and Sports Law Journal (entsportslawjournal.com)

The A Whiter Shade Of Pale Case – Matthew Fisher v. Gary Brooker [2006] EWHC 3239 (Ch); [2009] UKHL 41 (30 July 2009): [‘Fisher’]. Fisher v Brooker & Onward Music Ltd – 5RB Barristers; Fisher v Brooker and Others: HL 30 Jul 2009 – swarb.co.uk

The Author of a Blog v. Times Newspapers Ltd [2009] EWHC 1358 (QB). [‘Blog’]. The Author of A Blog v Times Newspapers Ltd: QBD 16 Jun 2009 – swarb.co.uk

The Beloved Case – Hyperion Records Limited v. Warner Music (UK) Ltd [1991]. [‘Beloved’];  What Is a Copyright Work? (uq.edu.au);

The Blue Case [‘Blue’]. BBC NEWS | Entertainment | Music | Blue case judge shows his colours

The Cure Case – Tolhurst v. Smith and Others [1994] EMLR 508. [‘Cure’]. LONDON REPORT: The Cure is set to… – Los Angeles Times (latimes.com)

The Eddie Irvine Case – Irvine and Another v. Talksport Limited [2002]. [‘Irvine’]. Irvine v Talksport Ltd [2003] EWCA Civ 423 Case Summary (oxbridgenotes.co.uk)

The Elizabeth Jagger Case. [‘Jagger’] Jagger v Darling & Ors | [2005] EWHC 683 (Ch) | England and Wales High Court (Chancery Division) | Judgment | Law | CaseMine

The Elvis Presley Case – re Elvis Presley Trade Marks [1997] RPC 543. [‘Elvis’]. https://cms-lawnow.com/en/ealerts/1998/06/brands-merchandising-and-the-elvis-presley-case

The George Michael Case – Panayiotou v. Sony Music Entertainment (UK) Limited [1994] EMLR 220. [‘George Michael’]. Panayiotou and Others v Sony Music Entertainment (UK) Ltd: ChD 21 Jul 1993 – swarb.co.uk

The Footballer Case – A v. B & C [2002] EMLR 21. [‘Footballer’]. A v B [2002] 2 All ER 545 (lawteacher.net)

The Frankie Goes To Hollywood Case – Perfect Songs Limited v. Johnson and Others [1993] EMLR 61. [‘Frankie’]. See also: Why Frankie, Elton and Gilbert went to court | Articles | Zang Tuum Tumb and all that (zttaat.com)

The Jamie Theakston Case – Theakston v. MGN Ltd [2002] QB EMLR 22. [‘Theakston’]. Theakston v MGN Ltd: QBD 14 Feb 2002 – swarb.co.uk

The Naomi Campbell Case – Campbell v. MGN Ltd [2004] UKHL 22. [‘Campbell’].  Campbell v MGN Ltd [2004] UKHL 22 (6 May 2004) (bailii.org)

The One Direction Case [‘One Direction’]. One Direction’s Label Sued Over Band Name | News | MTV

The Pink Floyd case [‘Pink Floyd’]: https://forum.songfacts.com/index.php?/topic/3793-pink-floyd-session-singer-wins-settlement/

The Lady Antebellum Case [‘Lady Antebellum’]. https://www.billboard.com/business/legal/lady-antebellum-a-name-change-lawsuits-settlement-1235025794/

The Liberty X Case – Keith Floyd Sutherland v. V2 Music and Ors [2002] EWHC 14 (Ch). [‘Liberty X’]. Sutherland & Ors v V2 Music & Ors | [2002] EWHC 14 (Ch) | England and Wales High Court (Chancery Division) | Judgment | Law | CaseMine

The Ludlow Case – Ludlow Music Inc v. (1) Robert P. Williams, (2) Guy Chambers, (3) EMI Music Publishing  Limited, (4) BMG Music Publishing Limited [2000]./ [‘Ludlow’]. Ludlow Music Inc v Williams & Ors | [2001] FSR 19 | England and Wales High Court (Chancery Division) | Judgment | Law | CaseMine

The Michael Douglas Case – Michael Douglas, Catherine Zeta-Jones, Northern & Shell Limited v. Hello! Ltd [2001] EMLR 199. [‘Douglas’]. Douglas v Hello! Ltd (No 1) – Case Law – VLEX 792679089

The Oasis Case – Creation Records Limited v. News Group Limited [1997] EMLR 444. [‘Oasis’]. Creation Records Ltd. & Ors v News Group Newspapers Ltd | [1997] EWHC Ch 370 | England and Wales High Court (Chancery Division) | Judgment | Law | CaseMine

The Status Quo Case – Lancaster v. Handle Artists Management Ltd [2008] EWCA 1111. [‘Status Quo’]. Lancaster & Anor v Handle Artists Management Ltd & Ors | [2008] EWCA Civ 1111 | England and Wales Court of Appeal (Civil Division) | Judgment | Law | CaseMine

Tom Waits Case [‘Waits’]. http://law2.umkc.edu/faculty/projects/ftrials/communications/waits.html

The Walmsley Case – Richard Walmsley v. Acid Jazz Records Limited [2000]. [‘Walmsley’]. COPYRIGHT – MUSICAL WORKS | Solicitors Humphreys

The Wayne Rooney Case – Proactive Sports Management Ltd v. Wayne Rooney [2010] EWHC 1807 QB (‘Wayne Rooney’). Proactive Sports Management Ltd v Rooney and another – Case Law – VLEX 793652429

The P Diddy Case – Richard Dearlove v. Sean Combes [2007] EWHC 375 (Ch). [‘P Diddy’]. Dearlove (Richard) v Combs (Sean) – Case Law – VLEX 793579385

The Robbie Williams Management Case – Martin-Smith v. Williams [1997] (Unreported): [‘Williams’]. Pop star’s legal defeat could cost him pounds 1m | The Independent | The Independent; WILLIAMS’ MILLIONS (nme.com)

The Seal Case – John Wadlow v. Haney Olusegun Adeola Samuel [2006] EWHC 1492 (QB) June 2006. [‘Seal’]. Seal ordered to pay commission to ex-manager (swanturton.com); Samuel (Professionally Known as Seal) v Wadlow – Case Law – VLEX 793967497

The Spandau Ballet Case – Hadley and Others v. Kemp and Another [1999] (Ch). [‘Spandau Ballet’]. Hadley v Kemp: 1999 – swarb.co.uk

The Spice Girls Case – Halliwell & Others v. Panini [1997] (Unreported). [‘Halliwell’]. See – marilynmonroeposhspiceandme.pdf (ed.ac.uk); https://marketinglaw.osborneclarke.com/marketing-techniques/a-fortune-out-of-fame/

The Spice Girls v. Aprila World Service BV [2000]. [‘Spice Girls’]. Spice Girls Ltd v Aprilia World Service Bv: ChD 24 Feb 2000 – swarb.co.uk

The Springsteen Case – Springsteen v. Flute International Limited & Ors [1998] (Ch). [’Springsteen’]. Springsteen v Flute International Ltd and Others: PatC 10 Dec 1998 – swarb.co.uk

Trim (t/a Trim Productions & Victim Records) v. Bobb [2022] EWCA Civ 62. [‘Gabrielle’]: Trim (t/a Trim Productions & Victim Records) v Bobb (pka Gabrielle) & Ors [2002] EWCA Civ 62 (24 January, 2002) (bailii.org)

Starbucks (HK) Ltd (and others) v. British Sky Group plc [2012] EWHC 3074 (Ch). [‘Starbucks’].  Starbucks (HK) Limited and another(Appellants) v British Sky Broadcasting Group plc and others (Respondents) – The Supreme Court

The Stone Roses Publishing Dispute – Zomba v. Mountfield and others [1993] EMLR 15. [‘Zomba’]. See also: Rights reversion and contract adjustment – GOV.UK (www.gov.uk)

The Taylor Swift Case (2020). [‘Swift’]. https://www.nme.com/news/music/taylor-swift-has-shake-it-off-copyright-lawsuit-dismissed-before-trial-3365900

The Tyler Armes Case. [‘Armes ‘].Post Malone Settles ‘Circles’ Songwriting Lawsuit Just Before Trial – Billboard

Trent Reznor Management Dispute. [‘Trent’]. Reznor Wins Suit Against Former Manager – Billboard

The Wet Wet Wet Case – Bravado Merchandising Services Ltd v. Mainstream Publishing (Edinburgh) Ltd [1990] FSR 205. [‘Bravado’]. Bravado Merchandising Services Ltd v Mainstream Publishing (Edinburgh) Ltd: SCS 1996 – swarb.co.uk

Warner Music Limited and Others v. de Wilde [1987]. [‘Warner’]. Warner Bros Music vs de Wilde – Lost In Music

Warner Music UK Ltd v TuneIn Inc [2021] [‘WM UK’]: https://www.judiciary.uk/wp-content/uploads/2022/07/Warner-v-TuneIn-judgment.pdf

Williamson Music Limited v. The Pearson Partnership and Another [1987] FSR 97. [‘Williamson’].  Williamson Music vs The Pearson Partnership … – Lost In Music

Zang Tumb Recordings Limited and Perfect Songs Limited v. Holly Johnson [1983] EMLR (6). [‘Zang’]. Zang Tumb Tuum Records Ltd & Anor v Johnson | [1993] EMLR 61 | England and Wales Court of Appeal (Civil Division) | Judgment | Law | CaseMine

See also:

[i] So a wide range of interests and underlying dynamics are in play.

[ii] See – what constitutes music plagiarism? (lawyerdrummer.com).

[iii]  ‘Litigation is a profoundly imperfect vessel for resolving split disputes. This is true for several reasons. First, copyright litigation is onerous and expensive… [L]itigants must shoulder massive outcome and cost recovery uncertainty (particularly surrounding expensive and influential expert testimony) in pursuit of what are often underwhelming awards. Music publishing is by no measure a small industry, but only a minuscule fraction of its assets – individual musical works – will ever earn enough [to] justify the cost and uncertainty of litigation. Furthermore, songwriter disputes are complicated. The surge in writers per work ensures that any prospective split dispute claimant has not just one potential defendant to tango with, but rather (on average) four or five other songwriter defendants, as well as each of their respective publishers. Of course, it is not unusual for infringement claims to be brought against dozens of defendants – artists, labels, writers, publishers, etc.  – but unlike the binary, “us vs. them” nature of an infringement dispute, where defendants’ interests are relatively aligned, split disputes are multi-dimensional. Each writer has an interest in guarding their own piece, and no interest in the distribution of the rest of the pie. This dooms split dispute litigations to be complex, multilateral, expensive proceedings.’ (Abowd, page 183).

[iv] Note – Performing Right Society Limited v Qatar Airways Group Q.C.S.C. [2020] EWHC 1872 (Ch): High Court Judgment Template (bailii.org)

Extracts from the judgment of Mr Justice Birss;

‘Foreign copyrights and jurisdiction 14. It was common ground that these proceedings are justiciable in this court, despite the involvement of foreign copyright infringement. It was established by the Supreme Court in Lucasfilm Limited v Ainsworth [2011] UKSC 39 that the English court can have jurisdiction over claims for infringement of copyright by non-UK acts and under non-UK law where there is a basis for in personam jurisdiction. Also, at the hearing the defendant did not rely upon any alleged unavailability of injunctive relief in respect of non-UK acts, although that had been discussed in the evidence. The defendant merely submitted that Lucasfilm itself did not mean that the English courts were necessarily the or the most appropriate forum. I agree that the court in Lucasfilm was not concerned with the issue of forum non conveniens as it arises here (I say that because a different point on forum non conveniens was touched on by Lord Walker at paragraph 111 but it is not relevant). Forum non conveniens – the law 15. The law in this area is well-developed. The leading case is Spiliada Maritime Corp v Cansulex Ltd (The Spiliada) [1987] AC 460 in which Lord Goff set out the relevant principles at 476-478. There is no dispute about the applicability of those principles in general but there is a dispute about how those principles may be summarised and there are disputes on points of detail. 16. The defendant has summarised the test in Spiliada as follows: “(1) Is there another available forum which is clearly and distinctly the natural forum, that is to say, the “forum with which the action has the most real and substantial connection”? (2) If there is, is England nevertheless the appropriate forum, in particular because the court is not satisfied that substantial justice will be done in the alternative available forum?”

  1. The claimant’s rival formulation is: “Stage 1: Qatar Airways bears the burden of satisfying the Court that the Qatari court is an available forum with competent jurisdiction to determine PRS’s claim and is clearly or distinctly a more appropriate forum than England for the trial of the issues. If it fails to satisfy the Court of these matters, a stay should be refused. Stage 2: If the Court determines that the Qatari court is prima facie more appropriate, it must nevertheless refuse to grant a stay if PRS demonstrate that, in all the circumstances of the case, it would be unjust for it to be deprived of the right to trial in England.” 18. The point on onus in the claimant’s summary is not disputed but the defendant does criticise the claimant’s summary on two grounds, arguing that the court should be careful to not shift the focus of the Spiliada test by ignoring the language in that decision (i) which refers to a real and substantial connection in the first stage and (ii) which does not use language of “deprivation” in the second stage. 19. The claimant responds by pointing out that it has used the same wording as Bryan J in Al Khattiya v Owners and / or Demise Charterers of the Jag Laadki [2018] EWHC 389 (Admlty) at [19-20]. The claimant submits that this wording was commended in the White Book at 6.37.22 and that the language correctly reflects the Spiliada test. 20. I doubt there is any real difference between these summaries in practice. I will employ the defendant’s summary because of the two, its language is closer to the words in Spiliada. 21. The second issue is the relevance of the differences in procedure between the English and the Qatari courts. The claimant submits that factors relating to the practicalities of litigation should be considered in the first stage of the Spiliada test. The defendant agreed that issues such as the location of witnesses arose at the first stage but contended (I think) that at least aspects of the points which were debated about expert witnesses (of foreign law) arose at the second stage not the first, referring to Lord Goff in Connelly v RTZ Corporation plc (No 2) [1998] AC 854 at 872G when he said: “if a clearly more appropriate forum overseas has been identified, generally speaking the plaintiff will have to take that forum as he finds it, even if it is in certain respects less advantageous to him than the English forum….Only if the plaintiff can establish that substantial justice cannot be done in the appropriate forum, will the court refuse to grant a stay.” 22. As the defendant says, this passage is clearly focussed on the second stage. The defendant also emphasises the importance of separating the analyses under the first and second stage (Lungowe v Vedanta Resources plc [2019] UKSC 20 per Lord Briggs JSC at [88]).
  2. The claimant accepts that Lord Goff’s words refer to the second stage but maintains that this does not mean factors relating to practicalities should be ignored in the first stage and also refers to Spiliada but at 478A at which Lord Goff stated: “So it is for connecting factors in this sense that the court must first look; and these will include not only factors affecting convenience or expense (such as availability of witnesses), but also other factors such as the law governing the relevant transaction…and the places where the parties respectively reside or carry on business.”. 24. The defendant submits that the focus of the test at the first stage is to establish the appropriate forum rather than the convenient forum and refers to another passage from Spiliada itself in which Lord Goff (at 475B) stated: “..I cannot help thinking that it is wiser to avoid use of the word “convenience” and to refer rather, as Lord Dunedin did, to the appropriate forum”. 25. In my judgment this second dispute suffers from the risk of attempting to lay down a bright line rule about legal practice and procedure where none sensibly exists. The first stage seeks to establish whether there is another forum with which the action has the most real and substantial connection. As Lord Goff’s words at 478A show, there are facets of the practical aspects of the litigation in a given forum that might bear on that issue. If they do then they are relevant at the first stage. On the other hand, some other matters of procedure, and in particular some comparative aspects, to the extent they are relevant at all, are likely to be relevant only at the second stage. The fact that the foreign forum may have features which the claimant would regard as less advantageous is not enough to determine the matter at the second stage. The test is more stringent than that. 26. The third issue, related to the second, is a particular point about costs and how the different rules on litigation cost recovery are to be considered under the Spiliada principles. Both parties drew my attention to the statement by Nourse LJ in Roneleigh v Mii Exports [1989] 1 WLR 619 at 623: “I do not think that [Lord Goff in Spiliada] was going so far as to say that a costs advantage could never be taken into account in carrying out this balancing exercise. It seems to me that there must be cases where a judge could reasonably and properly come to the conclusion that substantial justice would not be done via proceedings in a foreign forum, if the success of the plaintiff in monetary terms would necessarily and substantially be diminished by costs which he would have to pay there but would not have to pay here.” 27. The claimant submitted that an inability to recover litigation costs in Qatar was relevant and referred me to three cases in which the claimant’s inability to recover costs contributed to the decision that permission be given to serve out of the jurisdiction: Roneleigh; or to a stay of proceedings being refused despite another forum being the natural forum: The Al Battani [1993] 2 Lloyd’s Rep 219 and The Vishva Ajay [1989] 2 Lloyd’s Rep 558. 28. The defendant suggested that since the latter two cases were both decided by the same judge (Sheen J) that somehow diminished their significance. It does not. The defendant also submitted that the fundamental test at the second stage was whether substantial justice would not be done in the rival forum. I accept that. It means that in principle the absence of a system for ligation costs recovery in Qatar as compared to England and Wales is only relevant if it supports such a conclusion.
  3. The fourth issue is the relevance of this jurisdiction having specialist intellectual property courts. The defendant submits that this is not a factor and it is an attempt to refer to “the Cambridgeshire factor”, being the argument that “the parties’ advisers have accumulated a body of experience and knowledge in this jurisdiction already” (HRH Emere Godwin Bebe Okpabi v Shell plc [2017] Bus LR 1335 per Fraser J at 42) but that “the Cambridgeshire factor” is too narrow to include it.
  4. The reverse of this point is the relevance of the Qatari courts allegedly not having expertise in the area of intellectual property. The defendant has referred me to the statement of Jonathan Sumption QC (as he then was) sitting as a Deputy Judge in Ceskoslovenska Obchodni Banka AS v Nomura International Plc [2003] ILPr 20 (at [15]): “..it is accepted by both experts that a Czech judge hearing this dispute would probably not come to it with anything like the same background knowledge or the same experience of commercial documents and large-scale litigation as a Judge of the Commercial Court. However, I decline to deduce from this that Czech judges lack the experience to do justice in a case like this one. For different reasons, the same points could be made about many jurisdictions, including some with highly developed legal system.…These courts have to educate themselves by hearing the case, which is the nature of judicial life. This state of affairs no doubt diminishes the efficiency of the system. But it would be absurd to say that substantial justice is not to be had in these places. Specialist Courts such as the Commercial Court are rare in the world of litigation, but even in the Commercial Court, judges have to deal from time to time with complex and wholly unfamiliar fields of business.”
  5. The claimant submits that there is no authority that the level of expertise of the Qatari courts cannot be taken into account at all. The claimant refers to The Varna [1994] 2 Lloyd’s Rep 41 at 48 in which Lord Justice Clarke said that the point was “not…of much weight”, the inference being that in the right case, the point could have more weight.
  6. The question of whether the courts have particular expertise is different from a question about the Cambridgeshire factors. Both are capable of being relevant, but as the passages from Ceskoslovenska Obchodni Banka and The Varna show, the former is unlikely to be a point of much weight. The latter point is really about expertise concerning a particular kind of case, not general expertise in an area of law.
  7. The fifth issue is the weight that is to be placed on the applicable law when considering the first stages of the Spiliada test. The claimant referred me to Konamaneni v Rolls Royce (India) Ltd [2002] 1 WLR 1269 in which Lawrence Collins J (as he then was) at [170] stated that “This is not a factor of great significance in this case because there is no evidence of any difference between English law and Indian law…”; and a similar statement in The Al Khattiya at 244. Accordingly, the claimant submits that, where there is no established difference

between English law and Qatari law, the factor of applicable law is not significant. I will address this point in context below.

  1. The sixth issue is the relevance of an alleged risk that the Qatari courts will not apply the applicable law. The claimant again referred me to The Varna at 48 in which Clarke LJ said that expertise or experience of the court was not of much weight “unless it can be shown that the Court will not apply the relevant law to the facts…”. The claimant also referred to Novus Aviation v Onur Air Tasimacilik AS [2009] 1 Lloyd’s Rep 576 at [78] in support, but the defendant submits that the statement there relates to service out of the jurisdiction, not forum non conveniens. Either way, although there is a debate about the manner in which foreign law is introduced into proceedings in Qatar, I am not satisfied that the courts of Qatar would not apply the relevant law, foreign or domestic.
  2. The seventh issue is a point made by the claimant, that for the defendant to demonstrate that Qatar is the natural forum, the exercise really can only be done sensibly if one knows what is actually going to be in issue, citing Novus Aviation (at [31] and [79]). The defendant cautions again that this is a case dealing with service out of the jurisdiction, not forum non conveniens, but nevertheless accepts the importance of identifying the likely issues. In my judgment that must be right. In other words, it is relevant in assessing the appropriateness of a given forum to have in mind what the issues in a case are likely to be. 36. The final point is the relevance of the fact that the defendant has been served within the jurisdiction. The claimant refers to Spiliada at 476F in which Lord Goff stated that “…the English court will not lightly disturb jurisdiction so established.” The defendant seeks to soften this by pointing out that the Spiliada principles were formulated for a case in which English jurisdiction had been founded as of right and so this factor is not a separate one over and above the Spiliada principles themselves. I accept that. Forum non conveniens – stage 1.
  3. For stage 1, it is convenient to address the issues under the following headings: i) the personal connections the parties have to the countries in question; ii) factual connections which the events relevant to the claim have with the countries; iii) applicable law; iv) factors affecting convenience or expense such as the location of witnesses or documents. Personal connections the parties have to the countries in question.
  4. In respect of PRS’ connection to either the UK or Qatar, PRS is a company limited by guarantee and incorporated in England and Wales. It has 480 members of staff, of which only 2 are not based in the UK and none are based in Qatar. Its employees and representatives are primarily native English speakers. PRS envisages calling evidence from representatives of Global Eagle Entertainment Limited, another company incorporated in England and Wales and a provider of music content to airlines. This evidence would be in respect of the content provided to QA.
  5. QA is a Qatari company based in Doha, Qatar and is wholly owned by the State of Qatar. QA has 128 offices in 73 different countries and approximately 46,000 staff worldwide. QA envisages calling evidence from staff based in Doha, Qatar only and this evidence would be in respect of flight data and the IFE System. In respect of the staff based in Qatar, many speak fluent English. Ms Alexander particularly highlights that the Vice President Legal at QA, Mr Rehan Akram, is a graduate of the University of Cambridge and qualified as an English solicitor.
  6. QA has a UK establishment, under the name of Qatar Airways Group Q.C.S.C., which is registered as an overseas company at Companies House in the UK. This branch is represented by Mr Gary Kershaw who is based in the UK. Mr Enser states that Mr Kershaw has no connection to these proceedings. Mr Enser also states that the UK company is maintained purely for administrative purposes and that the UK branch assists with UK operations, regulatory compliance and sales only. QA maintains 2 offices in London and, in June 2020, the UK branch employed 220 individuals, although this is expected to fall to 180 by August 2020. QA has a presence at Birmingham, Cardiff, London Harrods, London Heathrow and Manchester. Mr Enser states that these outlets are principally desks staffed by third party handlers doing work on behalf of QA and have no relevance to these proceedings. QA also has a presence in the UK through its private jet charter division. Mr Enser states that these offices primarily act as a showroom for sales purposes and have no relevance to these proceedings. During the hearing, QA also stated that the private jet charter division was not operated by QA and did not utilise the IFE System. Ms Alexander asserts that the UK is an important market for QA and refers to various marketing and financial materials of QA in support. Mr Enser states that, in context, the UK is not a particularly important destination to QA.
  7. There was also reference to a convention that there would normally be a licence between a collecting society and an airline in the same country as they are both situated. Each side said this favoured them. The trouble is that what it actually amounts to is simply an observation that in countries in which there is a collecting society and an airline in the same state, the one licenses the other. No doubt that is very sensible but it does not help in the present case because there is no collecting society in Qatar.
  8. Overall, each entity, PRS and QA, has a close and genuine link to its home state, the UK and Qatar respectively. It is fair to say that QA has rather stronger links to the UK than PRS has to Qatar but the degree of that difference is small. Factual connections which the events relevant to the claim have with the countries.
  9. The events relevant to the claim are the playing of music in the aircraft, or at least the availability of that music. Where that occurs depends on where the aircraft are. Mr Enser gives evidence that, based on a comparison in a representative period, about 98% of QA’s flights either start or finish in Qatar, whereas by contrast 5% of QA flights either start or finish in the UK. Mr Enser also explains that UK destinations represent 3.4% of the destinations served by QA. On QA’s case the periods in the air

are most significant because the IFE System is only available during the flight itself, but that fact is in dispute. There is no calculation in the evidence as to what proportion of total QA flight time is in international airspace or the airspace of the UK, Qatar or any other country.

  1. Plainly therefore the aircraft spend more time in Qatar than they do in the UK. Nevertheless to an appreciable degree relevant acts do take place in the UK. Moreover a great deal of the activity in issue takes place in other countries, neither Qatar nor the UK. Applicable law.
  2. It is common ground that, when the relevant aircraft is in Qatar, including Qatari airspace, Qatari law applies to the claims of copyright infringement. It is also common ground that, when the relevant aircraft is in a destination country or its airspace, the law of that country applies. So an aircraft in the UK is subject to UK law. It is also common ground that in international airspace, Qatari law will apply. There remains a dispute about the applicable law when the aircraft is in the airspace of a non-destination country, but for this purpose I will assume (in QA’s favour) the law of Qatar applies instead of the law of that non-destination country.
  3. Since the aircraft will spend more time in Qatar than they do in the UK, it follows that for a given aircraft in the QA fleet in which acts restricted by copyright are committed in relation to the Repertoire Works, Qatari law will apply for more of the time than UK law. Nevertheless UK law will be the applicable law in relation to those acts carried out in the UK and (see above) relevant acts do take place in the UK to an appreciable degree. 5% (or 3.4%) of flights is a much more than de minimis amount. It also remains the case that the law of other states, neither Qatar nor the UK, will be engaged too.
  4. Under the rubric of the applicable law, it is convenient at this stage to turn to the arguments about Qatari law and procedure. Both parties produced expert witness evidence. There is a report and supplementary report from Mr Sultan M. Al-Abdulla for QA and a report from Mr Salman Al Ansari for PRS. Both Mr Al-Abdulla and Mr Al Ansari are Qatari lawyers and partners in Qatari law firms and have various other appropriate positions and accolades on their CVs.
  5. From an English perspective, Qatar can be regarded as a civil law jurisdiction. Five points in particular arose from the expert evidence.
  6. First, the experts disagreed to some extent as to the level of development of copyright law in Qatar. Mr Al Ansari states that the substantive copyright law was only enacted 18 years ago and “has not been litigated as significantly before the Qatari court as other areas of law”. He says that the law has not been amended to address recent developments in the area. Mr Al-Abdulla, on the other hand, states that the area is “sufficiently developed to afford adequate protection to numerous international businesses that operate in Qatar”. He highlights that there was a copyright law in Qatar before the current version, refers to two reported decisions in relation to IP in 2007 and 2015, one being in relation to copyright, and separately states that court judgements are “not regularly published”, which may be some explanation for the low number of reported decisions.
  7. I do not doubt that there are few copyright cases in Qatar. However if the suggestion is that the law of Qatar is not equipped to deal with this case, then I would reject it. Qatar clearly has a copyright law which is capable of being applied to the part of this case for which it is the applicable law, and there are copyright decisions in the Qatari courts, even if not all of them are reported.
  8. Second, both experts agreed that proceedings in Qatar are conducted in Arabic and that all documents in evidence or being considered by the court must, if they are in another language, be translated by a licensed or official translator into Arabic. There was some dispute on the relative costs of such translation services, but while these points might have a bearing at stage 2, they do not bear on stage 1.
  9. Third, in respect of the costs recovery in Qatari courts, Mr Al Ansari stated that: “…the [Qatari] court will award minimal attorney fees, with such fees determined solely by the Court without review of the actual incurred attorney fees. In practice, the costs award in respect of attorney fees is a nominal sum, equivalent to approximately £50-£150 depending on the case, which is paid into court funds rather than to the successful party. In reality the winning party will therefore only recover the amount of damages awarded by the judge and court fees, including expert fees. The winning party will not in practice be able to recover its actual attorney fees.”
  10. In relation to costs, Mr Al-Abdulla responded: “While I do not disagree with Mr Al Ansari’s assertion…that Qatari courts award only minimal attorney fees, it is however not a fact that courts do not award costs generally. For example, the fees of courtappointed experts can be claimed and reimbursed.”
  11. It is clear that the approach to costs recovery is less generous to a successful party than in England and Wales, but that has nothing to do with whether the Qatari forum is one with which the case has the most real and substantial connection. Moreover, I cannot leave this issue without noting that, as experience in IPEC has shown, costs recovery for intellectual property disputes is a more nuanced matter than a simple assumption that generosity to the winning party is always and necessarily a good thing.
  12. Fourth, on the question of how the courts of Qatar would approach foreign law, Mr Al Ansari and Mr Al-Abdulla did not agree. The question was whether the court would hear expert evidence on foreign law or whether, as in some civil law legal systems, such evidence of law would not be admitted and the court would approach foreign legal materials directly. Their respective views were: Mr Al Ansari: “The matters on which experts may opine are limited to factual matters. Accordingly, experts cannot opine on points of law, such as the interpretation and applicability of foreign copyright law.

Mr Al-Abdulla: “…under Article 16 of Law No.16 of 2017…, courts are empowered to appoint experts from outside the pool of approved experts and do so. As a matter of fact, in some cases, Qatari courts have indeed applied foreign legislation. Finally, Article 334 of the Civil Procedure Law allows the parties to mutually select an expert of their choice. In my assessment, Qatari courts…should be at no greater disadvantage in deciding such disputes under foreign law as a foreign court might be in deciding disputes governed by a law other than of its jurisdiction.”

  1. Fifth and finally, in respect of the application of foreign law in the Qatari courts, Mr Al Ansari and Mr Al-Abdulla did not agree about how the Qatari courts would approach foreign law derived from cases rather than statutes, stating respectively: Mr Al Ansari: “The Qatari court will apply a civil law approach even when considering principles of law that derive from common law jurisdictions. The judge will therefore request to see a statutory provision in support of any position put forward, even where the legal principle has a non-statutory basis. Whilst it is open to the Qatari courts to apply and interpret common law precedents, the courts are not required to do so.” Mr Al-Abdulla: “…I disagree with Mr Al Ansari’s view…In my opinion, Qatari courts will not require that a statutory provision be cited in support of arguments and claims based on non-statutory sources in particular judicial precedents. Rather, while applying common law, Qatari courts will be inclined to apply, and rule on the basis of, the relevant principles and binding precedents.”
  2. Taking the fourth and fifth points together, despite the divergent views of the experts about how a Qatari court would go about dealing with foreign law, what was not established to my satisfaction was that the courts of Qatar were not capable of dealing with and applying foreign law appropriately in a case which required it.
  3. I have set out these five points to show the nature of the dispute between the parties. In my judgment none of them have a bearing on whether the dispute has the most real connection with Qatar.
  4. A different point, also advanced in relation to the applicable law, was the submission of PRS that the High Court has particular expertise in intellectual property cases and has experience of dealing with the relatively complicated law on the communication right. Counsel for QA retorted that it was by no means clear that the communication right as enacted in other countries outside the EU as a result of the relevant treaties, would or should necessarily be interpreted in the relatively complicated manner that is now undertaken in the EU, including the UK. This point was also put as a submission that Qatari copyright law was unlikely necessarily to be the same as UK law. I see the force in the submission that the approach to the communication right in countries outside the EU may well not be the same as the approach under EU law. However that is not a point which weighs in favour of one or other party to this application, for the same reason many of the other points do not. Whichever court has to try this case will have to grapple with the laws of other states and grapple with these particular issues to the same extent. Factors affecting convenience or expense such as the location of witnesses or documents.
  5. At present there is a dispute about how the Oryx One system or the Oryx One Play application operate. If that dispute remains in existence until trial then there will need to be some evidence from witnesses based in Qatar, and some documents produced which are in Qatar. I am sure the documents will be needed but as best I can tell at the moment, I am doubtful whether this dispute will still be live by the trial so as to require witnesses. It is not a complicated detailed issue about how the system works. It is a fairly simple question of when and how users can access the system. That is likely to be resolved before trial but if not it will be a minor aspect of the dispute.
  6. Equally there may need to be some evidence from witnesses based in the UK if issues arise relating to the London based company (Global Eagle Entertainment) which provided the Repertoire Works to QA in the first place. However QA contends that there will be no need for that evidence, essentially because it will make admissions. I think that is likely too.
  7. Assuming infringement is established, it follows that at some stage in this dispute – whether at a later damages enquiry or a combined trial of liability and quantum – both QA and PRS are likely to want to call evidence about contracts and licensing. On each side this will require evidence from the UK and Qatar respectively.
  8. Overall on this topic, for whichever court hears the matter, there will be a need to translate into or out of English or Arabic. Conclusion at stage 1.
  9. I have not addressed the so called Cambridgeshire factors because I have not found it necessary to do so.
  10. Overall in my judgment the position is clear. In terms of the personal connections between the parties, the case has real connections to the UK and real connections to Qatar. In terms of the factual events and also the location of witnesses and documents, the best that can be said is again that there are connections to both places. Aside from the point on applicable law, which is addressed below, I do not agree that the connections to Qatar in that respect are significantly stronger than those to the UK.
  11. This dispute is concerned with events which have taken place in a large number of countries and for which the applicable law of a large number of states is relevant. I doubt whether in the end it will prove necessary to examine every single one of those laws distinctly, but whichever court handles the case will be required to examine laws other than its own
  12. The debates about the Qatari legal system, its approach to copyright and to evidence of foreign law are not relevant at this stage.
  13. So far, none of these factors supports a case that Qatar is clearly the natural forum for this dispute.
  14. The final point is the following. A major part of QA’s argument at stage 1 was that a factor strongly favouring Qatar as the natural forum was that Qatari law will apply to the vast majority of the acts complained of and many more than those to which UK law will apply. I accept that in terms of the amount of time, or the number of plays of a work, Qatari law will apply to many more of those instances than UK law, however that is not the whole story. The case is not a Qatari copyright dispute in which the events in and law of the UK and other countries are a kind of ancillary aspect. Every flight (save for domestic ones) engages the copyright laws of at least two states. The case is really a global copyright dispute between a UK holder of those global rights and a Qatari user of the protected content who is using it all over the world. The dispute has a connection to every state to and from which QA flies planes. Nevertheless the dispute does clearly have a more real connection with the UK and Qatar than it does with any other state. However as between the two, the fact that a higher share of any damages may be due for acts to which Qatari law is applicable than those for which UK law is applicable does not make Qatar clearly and distinctly the forum with which the dispute has the most real and substantial connection.
  15. I reject QA’s case on forum non conveniens. There is no need to consider stage 2. I will say that I was doubtful about the argument of PRS at stage 2. In other words, if I had found Qatar to be the natural forum for this dispute, I would have stayed the claim. Stay on case management grounds.
  16. QA argued that even if its forum non conveniens submission failed, the court should stay all the non-UK copyright claims by applying the overriding objective. The submission was that those claims, at least the ones based on Qatari law, have their most real connection with Qatar and the court should in those circumstances be careful not to allow PRS by an English foothold, to bring what are manifestly non-UK claims against a Qatari-domiciled company in the English court.
  17. I reject that submission. Following Lucasfilm v Ainsworth, claims for foreign copyright infringement are justiciable in the English courts. In this claim the defendant is within the jurisdiction of the court and, having got this far, the court has rejected the submission of forum non conveniens. It is in accordance with the overriding objective to manage this case in a proportionate manner. That will involve finding a suitable way to manage the aspects of the claim to which foreign law applies. No doubt expert evidence on Qatari law will be required, but how the other foreign laws will be managed is a matter to consider at a CMC. It may be that some representative jurisdictions will need to be chosen, but that is for another day.
  18. There was also a suggestion that PRS’s pleading of foreign law was deficient. That is no reason for a stay at this stage. The foreign law aspects will need to be managed and it may be that full pleadings of foreign law will be required only for representative jurisdictions, but as I said that is for another day.
  19. I can see no reason on case management grounds to stay all those claims at this stage. Conclusion.
  20. The application is dismissed. Postscript.
  21. On Monday 13th July the parties received a copy of this judgment in draft – marked to be handed down on Friday 17th July. QA wrote to the court a letter dated 15th July asking that the judgment not be handed down until judgment was given by the Supreme Court in the pending case Unwired Planet v Huawei [UKSC 2018/0214].
  22. This arose in the following circumstances. At the hearing there was some discussion about the extent to which the outcome of Unwired Planet v Huawei [UKSC 2018/0214] might have a bearing on this application. At one stage prior to the hearing QA had suggested that the application should only be heard after Unwired Planet was decided by the Supreme Court but then QA’s position changed, and Mr Enser in his second witness statement said that the hearing of the present matter did not need to be delayed for that reason. On behalf of QA he reserved the right to rely on such a decision in any appeal from the order made on this application, if the decision came out later. Then, during the hearing Mr Saunders QC for QA raised Unwired Planet again. I indicated that once the parties received the draft judgment, if anyone wanted me to do anything other than handing it down, they could write to me. So that is what QA has done.
  23. PRS replied in a letter dated 16th July 2020. In the letter PRS contends that the judgment should be handed down, points out the circumstances I have summarised above and argues that Unwired Planet is unlikely to have any bearing on the issues decided on this application.
  24. I have decided that I will hand down this judgment as planned on Friday 17th July. My reason is that the application went ahead despite knowing that the Supreme Court had not given judgment. Until that judgment is given it is not possible to say whether it will have a bearing on the issues addressed on this application.’

[v] ‘For many artists, creative control of their work is at least as important [as money]. Being able to make a record with minimal interference from the record company is crucial to some artists. If creative control is the most important thing for you, then getting that control would mean you had a good deal, even if there was less money on the table as a result. Some record companies are more flexible than others on questions of creative control stop. … Your wish to have creative control must be balanced against putting so many restrictions on what the record company can do that they can’t sell your records properly. They may in such circumstances choose to use another artist recordings-one who isn’t so particular about creative control.’ [‘Harrison, page 73].

[vi] James Bourne, Universal-Island Records Limited, Mercury Records Limited v Brandon Davis (trading as Brandon Davis Publishing) [2006] EWHC 1567 (Ch).

Extracts from the judgment of Mr Mark Herbert Q.C.:

Introduction and conclusions

  1. This is an application by claimants for summary judgment on part of their claim, and for the striking-out of substantial parts of the defence. Under Part 24 of the Civil Procedure Rules 1998 ( rule 24.2 ) I can give summary judgment in respect of an issue only if I am satisfied that the defendant has no real prospect of defending the issue and there is no other compelling reason why it should be disposed of at trial. For reasons which I shall explain below I am satisfied of both those matters, and I shall accordingly give summary judgment on the issue in favour of the claimants. I shall also strike out some passages from the defence, but not all of the passages demanded by the claimants. 
  2. The action relates to a well-known and successful music group called Busted. In legal terms it relates to an alleged infringement on the performer’s property rights (which shall call PPRs) to which one member of the group claims to be entitled under Part II of the Copyright, Designs and Patents Act 1988 . It also raises questions about dealings with PPRs if they become partnership property. The first claimant is James Bourne, a member of the group, and the two corporate claimants are companies to which Mr Bourne has assigned, or purported to assign, the PPRs to which he is entitled in respect of past performances. The claimants appeared before me by Mr Tom Weisselberg of counsel. The defendant is Mr Brandon Davis, who trades as Brandon Davis Publishing, and he also claims to be the assignee of the PPRs in question. He has appeared before me in person. 

The legislation

  1. PPRs are creatures of statute. Part II of the Copyright, Designs and Patents Act 1988 tarts with an introductory provision in section 180(1) :—

‘180. Rights conferred on performers and persons having recording rights

‘180. 

(1)  This Part confers rights

 

(a)  on a performer, by requiring his consent to the exploitation of his performances (see sections 181 to 184), and

 

(b)  on a person having recording rights in relation to a performance, in relation to recordings made without his consent or that of the performer (see sections 185 to 188),

 

and creates offences in relation to dealing with or using illicit recordings and certain other related acts (see sections 198 and 201).’ 

This puts the performer centre-stage, so to speak. Subsection (2) defines ‘performance’ as including’ … (b) a musical performance’, and ‘recording’, in relation to a performance, as meaning ‘a film or sound recording (a) made directly from the live performance, … or (c) made, directly or indirectly, from another recording of the performance’. Subsection (3) provides that PPRs apply to performances occurring before Part II came into force. Subsection (4) provides :—

‘(4)  The rights conferred by this Part are independent of—

 (a)  any copyright in, or moral rights relating to, any work performed or any film or sound recording of, or broadcast or cable programme including, the performance, and

(b)  any other right or obligation arising otherwise than under this Part.’ 

  1. The 1988 Act was substantially amended by the Copyright and Related Rights Regulations 1996 (SI 1996/2967). As a result rights are now conferred by a number of sections numbered from 182 to 188. Each of these sections protects the performer from particular infringement of his rights in relation to a performance or a ‘qualifying performance’: section 182 deals with unauthorised recording and broadcasting; relevantly to this action, section 182A creates a ‘reproduction right’ to protect against unauthorised copying; and section 182B creates a ‘distribution right’ to protect against unauthorised issuing of recordings to the public. Section 182A(1) provides : — ‘(1) A performer’s rights are infringed by a person who, without his consent, makes, otherwise than for his private and domestic use, a copy of a recording of the whole or any substantial part of a qualifying performance.’
  2. And section 182B(1) provides :—

‘(1)  A performer’s rights are infringed by a person who, without his consent, issues to the public copies of a recording of the whole or any substantial part of a qualifying performance.’ 

There are other rights which I need not mention. 

  1. Section 181 provides that a performance is a qualifying performance if it is given by a qualifying individual (as defined in section 206 ) or takes place in a qualifying country. It is common ground that the performance in the present case was a qualifying performance. Section 191A provides that certain rights conferred on a performer are ‘a performer’s property rights’. These include the reproduction right and the distribution right conferred by sections 182A and 182B
  2. Section 191B provides that a performer’s property rights are transmissible by assignment, by testamentary disposition or by operation of law, as personal or moveable property. Importantly section 191B(3) provides :—

‘(3)  An assignment of a performer’s property rights is not effective unless it is in writing signed by or on behalf of the assignor.’ 

Going back to section 191A, subsection (2) provides that, in relation to a performer’s property rights, references to the consent of the performer are to be treated as references to the consent of the rights owner. And subsection (4) provides :—

‘(4)  Where a performer’s property rights (or any aspect of them) is owned by more than one person jointly, references in this Part to the rights owner are references to all the owners, so that, in particular, any requirement of the licence of the rights owner requires the licence of all of them.’ 

  1. It is clear from these provisions that, when several performers combine to produce a performance, the Act provides performer’s rights to each performer severally. It does not provide a single right to all of them jointly. The same conclusion was reached (amongst several others) by Hart J in Experience Hendrix LLC v Purple Haze Records Limited [2005] EWHC 249 (Ch), with whom I respectfully agree.

The facts

  1. In outline the relevant background facts are these. Between about December 2000 and early October 2001 Mr Bourne and three other musicians composed and performed songs together. The four were: Mr Bourne; Mr Matthew Sergeant (now Willis and professionally known as Matt Jay); Mr Kiley (Ki) Fitzgerald; and Mr Owen Doyle. Mr Davis claims that these four constituted a partnership together, and, although the claimants deny that such a partnership existed, they accept that for the purposes of this application I should assume (without in any way deciding the point one way or the other) that they were indeed partners. But no written partnership agreement has been produced to me, and I am not aware of any special terms affecting the partnership. It is not clear whether the four used the name Busted at this period, but I shall assume that they did. They did not then have the benefit of a recording contract, and it is common ground on the pleadings that at this stage they were experimenting with ideas for songs and working on songs and compositions. As part of that process of development, and with the help of a manager called Richard Rashman, they recorded a set of nine songs in a hotel room in London. It is the recording of this somewhat informal performance which is the subject matter of the action.
  2. In October 2001 the group of four musicians ceased to perform together. Mr Bourne and Mr Sergeant linked up with Mr Charlie Simpson, and on 5 March 2002 those three concluded a recording contract with the claimant Universal-Island Records Limited (which I shall call ‘Island’). By that contract, amongst many other terms, Mr Bourne assigned to Island all his rights, including PPRs, in respect of recordings made before the date of the contract. The group of three went on to compose and perform successfully under the name Busted. Mr Fitzgerald and Mr Doyle were not involved with the music performed by that band after October 2001.
  3. In January 2005 Busted broke up (or broke up again), and since August 2005 Mr Bourne has been a member of a new group called Son of Dork. On 11 August 2005 he concluded a new contract with the claimant Mercury Records Limited (an affiliate of Island), and this contract included a similar assignment to Mercury of rights in respect of performances occurring before the date of the contract.
  4. In about September 2005 Mr Davis made and produced a compact disc comprising an album of nine tracks performed by the original group of four performers. The nine tracks are derived from the recording made in Mr Rashman’s hotel room in 2001. It is common ground that Mr Bourne performed on the guitar on all nine tracks and vocally on most of them, The CD was advertised on a web site and by printed flyers, to he sold by mall order.
  5. The claimants reacted instantly. The claim form was issued on 22 September 2005, alleging (1) infringement of Mr Bourne’s PPRs in respect of the performance recorded on the album and (2) passing-off. It claimed relief by way of permanent injunctions, delivery-up of infringing materials and printed flyers, damages (or an account of profits) for infringement of the PPRs, damages or an account of profits for passing-off, and costs. I should mention now that the claimants do not seek to rely on the passing-off claim in their present application for summary judgment. They rely solely on the alleged infringement of PPRs. On 23 September 2005 the claimants obtained an interim injunction from Mann J, restraining Mr Davis from promoting or distributing the album, and ordering delivery-up of various items. That interim injunction was continued on 29 September 2005 by Hart J. On 17 October 2005 the application for an interim injunction was heard by Rimer J, and he ordered the injunctions to stand until trial or further order. Mr Davis admits in his pleadings that he will resume promotion and distribution of the album unless restrained by the court.
  6. In the meantime Mr Davis had not been idle either. On 2 October 2005 Mr Doyle, one of the original group of four who had parted company with Mr Bourne and Mr Sergeant back in October 2001,entered into a written agreement with Mr Davis. It is headed ‘Performer’s Consent’, and the parties are named as, on the one side, Mr Doyle, Mr Fitzgerald, Matt Jay (Mr Sergeant) and Mr Bourne, and Brandon Davis Publishing on the other, It identifies the album containing the nine relevant tracks, and then, in consideration of £100 plus 25 per cent of sales in respect of the album, states that it provides Mr Davis with all necessary consents required under the 1988 Act in respect of the performance and assigns to him the copyright and all PPRs and other rights in connection with it. The agreement uses the first person singular (‘… I irrevocably give and confirm to you … I assign to you …’), and it is signed only by Mr Doyle and Mr Davis. But Mr Doyle’s signature appears under the words ‘Approved and signed on behalf of the partners in the partnership’, and Mr Davis claims that the effect of the agreement is to assign to him the PPRs of all four of the original members of the group, including those of Mr Bourne.

The pleadings

  1. Down to that stage there had been no pleadings in the action. Particulars of claim and a defence have now been served and are in the bundle before me. The particulars of claim plead Mr Bourne’s original individual entitlement under the statute to his PPRs in the relevant performance, and the assignments of those PPRs to Island in March 2002 and/or Mercury in August 2005. For completeness, it pleads in the alternative that the PPRs still belong to Mr Bourne. The particulars describe Mr Davis’s production and marketing of the CD, and claim that he has thereby infringed Mr Bourne’s PPRs, since neither he nor Island nor Mercury has consented to the making or distribution of the CD.
  2. Mr Davis’s defence contains a number of sections with headings. Under the heading ‘Jurisdiction’, paragraphs I to 9 claim that ‘Brandon Davis Publishing’ (BDP) has more than one international division, including a Palestinian division, and that BDP disputes the jurisdiction of the English court as it relates to the Palestinian division. BDP is however no more than a business trading name for Mr Davis himself. I have no doubt that this court has jurisdiction to hear the action, and any permanent injunction granted by the court will be binding on Mr Davis personally. Mr Davis concedes in paragraph 3 of the Defence that what he calls BDP’s English division accepts the jurisdiction of the court and that it will be bound by its injunction.
  3. Under the heading ‘Acceptance/denial of particulars of claim’, paragraphs 10 to 29 contain a systematic admission or denial of the individual paragraphs of the particulars of claim. Much is admitted. The matters which are not admitted are :—
  • (a)  The ownership of the PPRs by any of the claimants. I shall come back to this.
  • (b)  The quality, merits and length of the recording, and the machine on which it was made.
  • (c)  Various express or implied representations which may or may not be relevant to the passing-off claim.
  • (d)  The claim that the album infringes PPRs belonging to the claimants.
  • (e)  Matters relating to loss, the flagrancy of the infringements, and passing-off.
  1. Under the heading ‘BDP’s defence’, paragraphs 30 to 42 contain the essential defence to the claim for infringement, which I can summarise as follows, namely that (1) the original group of four performers constituted a partnership, (2) the PPRs of each partner were partnership assets, (3) each performer therefore had no title to assign his own individual PPRs to a third party (this being the explanation of Mr Davis’s denial that the PPRs in question belong to any of the claimants), (4) by contrast each partner had authority to deal with partnership property in the ordinary course of the business of the partnership under section 5 of the Partnership Act 1890 , (5) Mr Doyle therefore had authority to assign the partnership’s PPRs to Mr Davis by the agreement of 2 October 2005, and (6) Mr Doyle (and indeed Mr Fitzgerald) had a similar authority to consent on behalf of the partnership to what would otherwise be an infringement of its PPRs. The defence contains much else besides, but I have omitted material relevant only to the passing-off claim (such as the quality and merits of the recording and representations implicit from the promotion and distribution of the album), and material relating to the loss alleged to have been suffered by the claimants.

Analysis

  1. Ignoring questions of partnership and its implication, and for the moment having regard only to those provisions of the 1988 Act and the admitted facts, the analysis of the present case is as follows :—
  • (a)  Mr Bourne, as a member of the band of four original performers, had PPRs in the relevant performance, including a reproduction right and a distribution right.
  • (b)  Each of the other four performers had similar and corresponding rights.
  • (c)  Those rights were assignable and, in Mr Bourne’s case, were assigned to Island by the agreement of March2002; alternatively they were assigned to Mercury by the agreement of August 2005; alternatively they remain the property of Mr Bourne. Indeed I see no reason to doubt that the assignment of March 2002 in favour of Island was effective.
  • (d)  Mr Bourne’s PPRs were infringed by the manufacture and distribution of the CD by Mr Davis without consent, and neither he nor Island nor Mercury has consented.
  1. Looking solely at the statutory provisions therefore it is clear that Mr Bourne’s reproduction and distribution rights in the relevant performance were infringed by Mr Davis in the manner claimed in the action. What then is the effect on that analysis of the partnership which I am to assume existed at the time of the original recording? The basis of Mr Davis’s principal argument is that Mr Doyle, as a member of the partnership, had authority by section 5 of the 1890 Act to assign to him PPRs which were partnership property. Section 5 provides :—

‘5.  Every partner is an agent of the firm and his other partners for the purpose of the business of the partnership; and the acts of every partner who does any act for carrying on in the usual way of business of the kind carried on by the firm of which he is a member bind the firm and his partners, unless the partner so acting has in fact no authority to act for the firm in the particular matter, and the person with whom he is dealing either knows that he has no authority, or does not know or believe him to be a partner.’ 

Mr Davis adds that, even if the partnership of four had been dissolved, Mr Doyle had a continuing authority under section 38 of the 1890 Act to dispose of partnership property, including the PPRs, for the purpose of winding-up the partnership.

  1. The corollary of these points is that Mr Bourne alone did not own any PPRs in respect of the performance (because he belonged to the partnership), so that the agreements with Island in 2002 and Mercury in 2005 were ineffective to assign PPRs in respect of the performance at all, and therefore that neither Mr Bourne nor either of his co-claimants has any standing to bring the present action. According to this argument Mr Bourne could, in 2002 or (failing that) in 2005, have assigned the partnership’s PPRs to Island or Mercury, but he did not do so or purport to do so. Instead he purported to assign only his individual PPRs, and according to Mr Davis that is something which he was not entitled to do, I must say at once that this aspect of Mr Davis’s submissions represents an improbable conclusion. The main thrust of the legislation is to give PPRs to individual performers, not to groups as such, so that assignments and consents are in principle required to be given by the performer in question, or his assignee claiming under a written assignment. Mr Davis’s submission would effectively reverse this position, preventing the performer or his assignee from enforcing individual rights, but instead enabling each performer to enforce and exploit the rights of all the members of the group collectively.
  2. The assignment on which Mr Davis principally relies was made on 2 October 2005, more than a week after this action was begun, and even after interim injunctions had been made, and continued, against him. Doubtless recognising this as a possible weakness, seeing that the agreement was not made until after the time of the acts alleged to amount to infringements, Mr Davis relies also on two earlier oral agreements made with Mr Fitzgerald and Mr Doyle in early 2004 and mid 2005 respectively. These oral agreements cannot have amounted to valid assignments of the PPRs, because such assignments are required to be in writing (see section 191B(3) of the 1988 Act). But Mr Davis relies on them as consents, claiming that consents have thereby been given on behalf of all four partners. This involves the submission that each partner has permanent authority, again by force of section 5 , to provide consent on behalf of all the partners to acts which would otherwise be infringements of PPRs which are partnership property.
  3. On behalf of the claimants Mr Weisselberg submits that there is no room in the statutory framework for PPRs to become partnership property, or for beneficial or equitable interests automatically to vest on the creation of a recording in the partnership. He compares and contrasts the position of copyright and patent rights, where equitable interests can subsist, and where the statutory provisions are different. He points particularly to subsection 180(4) of the 1988 Act, which I have cited above, and which has no counterpart in the sections dealing with copyright and patents. He says that, by providing that PPRs are independent of other rights, the subsection means that the PPRs given to performers and their assignees by the Act are exclusive of all other potential interests in those rights.
  4. He also adopted as part of this argument a passage from Mr Richard Arnold’s textbook Performer’s Rights (2004) at paragraph 3.19, which he mentioned during the hearing but sent to me only later. It suggests that PPRs can become partnership property only by express assignment :—

‘It is submitted that the mere fact that the performers who give a particular performance are partners ( eg members of a pop group which trades as a partnership) does not mean that they are joint owners of the performer’s rights in that performance. As discussed in Chapter 2, each performer has his own performer’s rights in relation to his contribution to a collective performance. These are individual rights, some of which are property rights and some of which are not. In the case of the non-property rights, they cannot be jointly owned by partners. As for the property rights, there is no reason to regard these as partnership assets unless this has been expressly agreed by the partners.’ 

A rather non-specific footnote then refers the reader generally to Chapter 18 of LindIey & Banks on Partnership (18th edition).

  1. I certainly accept that PPRs are essentially individual rights for each performer, and that non-property rights do not become partnership property. But I am not prepared to agree that property rights cannot become partnership property without express agreement, or that equitable interests cannot subsist in them. Indeed in my view section 180(4) does not at all mean that the property rights conferred by the Act are exclusive of any other rights, merely that they are independent of any other rights, and by implication additional to those other rights. It is indeed striking that this part of the Act is silent about equitable interests (and partnerships), but in my view that does not prevent equitable interests arising in PPRs, and it does not prevent PPRs from becoming partnership property. On the contrary section 20(1) of the Partnership Act 1890 is in general terms—

‘(1)  All property and rights and interests in property originally brought into the partnership stock or acquired, whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business, are called in this Act partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement.’ 

It seems to me that the PPRs in the present case could reasonably be described as acquired for the purposes and in the course of the partnership business (assuming that there was a partnership at all).

  1. In the context of this application I therefore accept that the PPRs of a performer who is a member of a partnership can become partnership property, and that it is at least arguable that the particular PPRs in question were partnership property. I am not deciding that there was a partnership or that, if there was, the PPRs became partnership property. But it is arguable that they did.
  2. Even so, I do not accept that Mr Davis’s other submissions are correct or that they would have any prospect of succeeding at trial.
  3. To begin with, it strikes me as fanciful to suggest that, almost four years after the original four members of the group stopped playing together, it could be part of the ordinary course of their partnership business for one partner to sell the property rights of the partnership in the circumstances of the assignment made on 2 October 2005. It seems equally fanciful to describe that assignment as being effected in the winding-up of the partnership.
  4. But my principal reason for rejecting Mr Davis’s defence is that, even if the PPRs were partnership property, that does not mean that they became exclusively the property of ‘the partnership’ to the extent of divesting the rights conferred on the four individual performers, or for that matter so as to divest them of their beneficial interests in those rights. In English law — I say nothing about Scots law — a partnership is not a legal person distinct from the partners who constitute it. The effect of such rights becoming partnership property is not to assign or transmit ownership in those rights from the individual partners to a separate entity (the partnership), because there is no such separate entity. Instead the effect is, as section 20(1) of the 1890 Act itself provides, to require the partners to deal with those rights for the purpose of the partnership business. Subject to that, the legal and beneficial ownership of the rights remains in the individual partners. I accept Mr Weisselberg’s submission on this point that the effect of section 20 of the 1890 Act does not create a beneficial interest for the partnership in respect of partnership property. The most the other members of the partnership obtain is a right to have the property applied for the benefit of the partnership, arid this is a lesser interest than beneficial ownership.
  5. What then is the analysis of the 2002 and 2005 assignments by Mr Bourne in favour of Island and Mercury? It is possible, if one partner assigns his PPRs to a third party for his own benefit, that the assignment may be in breach of the rights of his partners. I make no finding that any such breach has occurred, but I recognise that in principle it may do so in those circumstances, Even so, that does not make the assignment to the third party void. It may affect any process of accounting amongst the partners, but they would have no rights against the third party to take the PPRs back. The assignee becomes entitled to the PPR assigned. I therefore have no hesitation in rejecting Mr Davis’s submission that the assignments made by Mr Bourne to his co-claimants were ineffective. Before the assignments Mr Bourne had the full legal and beneficial ownership, and the first of those assignments transferred that ownership to Island as his assignee.
  6. For similar reasons I also reject Mr Davis’s submission that Mr Doyle had authority on 2 October 2005 to assign the PPRs of the partnership to Mr Davis. The PPRs remained the property of the four performers (or their individual assignees), albeit as partners as I am assuming. Mr Davis relies on section 5 of the 1890 Act, but that does not truly help him. Section 5 makes each partner an agent of the firm, but that agency is not irrevocable. The section itself provides that the partner has no power to bind the firm or the other partners if (1) in fact he has no authority and (2) the person dealing with him knows that he has no authority. By the issue and service of these proceedings Mr Bourne made it sufficiently clear that assignments of his PPRs by the other members of the original group did not have his approval, and Mr Davis therefore knew that Mr Doyle did not have the necessary authority.
  7. Besides, even if Mr Bourne’s PPRs were partnership property at the time of the original performance, they must have ceased to be partnership property when Mr Bourne assigned them to Island in March 2002. In my view Island became fully entitled to those tights by virtue of that assignment, and there is no question of them taking those rights subject to adverse beneficial interests belonging to the partnership or to the other partners.
  8. For similar reasons I do not accept that Mr Fitzgerald (in 2004) and Mr Doyle (in 2005) were in a position to consent, on behalf of Mr Bourne, to the distribution of the CD by Mr Davis in September 2005. By March 2002 Mr Bourne’s PPRs had become the property of Island and were on that footing no longer partnership property in which Mr Fitzgerald and Mr Doyle had any interest or over which they had any rights of disposition or control.
  9. Mr Weisselberg also submits that, if Mr Davis is right that the PPRs became the property of the partnership so that all the partners became the owners of the PPRs of each member of the group, then subsection 191A(4) of the 1988 Act is clear that the consent of all of them is required. In my view this is right. When faced with an apparent conflict between section 5 of the 1890 Act, in general terms authorising any one partner to deal with partnership property, and section of the 1988 Act specifically requiring the consent of all owners, it is right to regard the later, more specific provision as overriding the earlier, more general one.
  10. It is for those reasons that I have come to the conclusion that Mr Davis’s reliance on the possible existence of a partnership of the original four performers does not succeed. Mr Bourne had individual PPRs in the relevant performance, and the statute prohibits any infringement of those rights without his consent or the consent of his assignee. That conclusion does not depend on facts which are disputed, and it is a conclusion which can properly be reached in the context of an application under Part 24 . I am prepared to make an order that Mr Davis has infringed the PPRs of Mr Bourne, and to order permanent injunctions in the terms asked. I shall give permission for the claimants to apply for an inquiry as to damages or an account of profits in respect of the infringement which I have found.

Pleadings

  1. That leaves the action on foot so far as concerns the allegations of passing-off. For that purpose the claimants have also sought orders striking out substantial parts of Mr Davis’s defence, essentially those parts which rely on the PPRs being partnership property. Mr Davis concedes that paragraphs I to 9, under the heading ‘Jurisdiction’, ought to be struck out, but he does not concede any of the other claimed deletions. Consistently with the previous parts of this judgment, my approach is to strike out those parts of the defence which assert that the PPRs belong to Mr Davis or do not belong to one or other of the claimants, and to strike out those parts which assert a valid consent to the infringements. But I am not prepared to strike out passages which merely assert that the PPRs were partnership property.
  2. In detail I shall order the following passages of the defence to be struck out—
  • (a)  Paragraphs I to 9.
  • (b)  Paragraph 11, claiming that Mr Bourne’s partners were authorised to give his consent to recording and distribution beyond the limited extent pleaded by the claimants.
  • (c)  Paragraph 13, denying Mr Bourne’s ownership of his PPRs and the validity of his assignments to Island and Mercury.
  • (d)  In paragraph 15 the final words ‘and written and verbal Agreements on behalf of himself and his Partners in “Busted”, including the Claimant James Bourne, giving all necessary consents for BDP to release the Album’, claiming the validity of Mr Doyle’s consent to the CD on behalf of Mr Bourne.
  • (e)  Paragraph 29, denying the reservation by the claimants of certain contentions in regard to copyright.
  • (f)  Paragraph 35, claiming a right for Mr Davis to distribute the CD by virtue of the agreement of 2 October 2005.
  • (g)  In paragraph 36 the sentence ‘This Agreement between BDP and this Partnership specifically included all necessary consents and was on behalf of all the Partners.’ I decline to strike out the remainder of paragraph 36, though the paragraph may thus have become somewhat ineffectual.
  • (h)  Sub-paragraph 38(f), claiming that Mr Doyle was entitled to sign the agreement on behalf of all the partners, hut not paragraph 37 (claiming that the partnership continues) or the remainder of paragraph 38 (claiming that the distribution of the CD is in the interests of the partners), or paragraph 39 (claiming the PPRs to be partnership property).
  • (i)  Paragraphs 40, 41 and 42, denying the validity of the assignments to island and Mercury and their entitlement to bring the action.’

[vii] McKennitt v Ash [2006] EWCA Civ 1714.

Extracts from the judgment of Buxton L.J.:

A taxonomy of the law of privacy and confidence

  1. It will be necessary to refer to the underlying law at various stages of the argument, and it would be tedious to repeat such reference more than is necessary. Since the content of that law is in some respects a matter of controversy, I set out what I understand the present state of that law to be. I start with some straightforward matters, before going on to issues of more controversy. (i) There is no English domestic law tort of invasion of privacy. Previous suggestions in a contrary sense were dismissed by Lord Hoffmann, whose speech was agreed with in full by Lord Hope of Craighead and Lord Hutton, in Wainwright v Home Office [2004] 2 AC 406 , paras 28–35. (ii) Accordingly, in developing a right to protect private information, including the implementation in the English courts of articles 8 and 10 of the European Convention for the Protection of Human Rights and Fundamental Freedoms , as scheduled to the Human Rights Act 1998 , the English courts have to proceed through the tort of breach of confidence, into which the jurisprudence of articles 8 and 10 has to be “shoehorned”: Douglas v Hello! Ltd (No 3) [2006] QB 125 , para 53. (iii) That a feeling of discomfort arises from the action for breach of confidence being employed where there was no pre-existing relationship of confidence between the parties, but the “confidence” arose from the defendant having acquired by unlawful or surreptitious means information that he should have known he was not free to use: as was the case in Douglas v Hello! Ltd (No 3) , and also in Campbell v MGN Ltd [2004] 2 AC 457 . Two further points should however be noted. (iv) At least the verbal difficulty referred to in (iii) above has been avoided by the rechristening of the tort as misuse of private information: per Lord Nicholls of Birkenhead in Campbell’s case, para 14. (v) Of great importance in the present case, as will be explained further below, the complaint here is of what might be called old-fashioned breach of confidence by way of conduct inconsistent with a pre-existing relationship, rather than simply of the purloining of private information. Something more now needs to be said about the way in which the rules laid down by articles 8 and 10 enter English domestic law.
  2. Most of the articles of the Convention impose negative obligations on the state and on public bodies. That accordingly affects the content of the articles and the obligations that they create, which are obligations owed only by public bodies. When those articles were introduced into English law by the medium of the Human Rights Act 1998 , and recited in Schedule 1 to that Act, that content did not change and could not have changed. That is why, whatever the structure adopted by English law for giving effect to the Convention, most of the articles, since their content is restricted to creating obligations on public bodies, do not and cannot create obligations owed by private parties in private law. Article 8 has, however, always been seen as different; as, in this regard, has article 11 , freedom of assembly, on which the latter see Plattform “Ärzte für das Leben” v Austria (1988) 13 EHRR 204 , para 32. Not in its terms, but as extended by jurisprudence, article 8 imposes not merely negative but also positive obligations on the state: to respect, and therefore to promote, the interests of private and family life. That means that a citizen can complain against the state about breaches of his private and family life committed by other individuals. That has been Convention law at least since Marckx v Belgium (1979) 2 EHRR 330 , and a particularly strong statement of the obligation is to be found in X and Y v The Netherlands (1985) 8 EHRR 235 . 
  3. More difficulty has been experienced in explaining how that state obligation is articulated and enforced in actions between private individuals. However, judges of the highest authority have concluded that that follows from section 6(1) and (3) of the Human Rights Act 1998, placing on the courts the obligations appropriate to a public authority: see per Baroness Hale of Richmond in Campbell’s case [2004] 2 AC 457, para 132; per Lord Phillips of Worth Matravers MR in Douglas’s case [2006] QB 125 , para 53; and in particular per Lord Woolf CJ in A v B plc [2003] QB 195 , para 4:

“under section 6 of the 1998 Act, the court, as a public authority, is required not to act ‘in a way which is incompatible with a Convention right’. The court is able to achieve this by absorbing the rights which articles 8 and 10 protect into the long-established action for breach of confidence. This involves giving a new strength and breadth to the action so that it accommodates the requirements of those articles.” 

  1. The effect of this guidance is, therefore, that in order to find the rules of the English law of breach of confidence we now have to look in the jurisprudence of articles 8 and 10 . Those articles are now not merely of persuasive or parallel effect but, as Lord Woolf CJ says, are the very content of the domestic tort that the English court has to enforce. Accordingly, in a case such as the present, where the complaint is of the wrongful publication of private information, the court has to decide two things. First, is the information private in the sense that it is in principle protected by article 8 ? If “no”, that is the end of the case. If “yes”, the second question arises: in all the circumstances, must the interest of the owner of the private information yield to the right of freedom of expression conferred on the publisher by article 10 ? The latter inquiry is commonly referred to as the balancing exercise, and I will use that convenient expression. I take the two questions in turn. Some aspects of the jurisprudence overlap between the two questions, but it remains necessary to keep the underlying issues separate. *82 I have well in mind, in addressing article 8 , the warning given by Lord Nicholls in his speech in Campbell’s case [2004] 2 AC 457 , para 21:

“in deciding what was the ambit of an individual’s ‘private life’ in particular circumstances courts need to be on guard against using as a touchstone a test which brings into account considerations which should more properly be considered at the later stage of proportionality. Essentially the touchstone of private life is whether in respect of the disclosed facts the person in question had a reasonable expectation of privacy.” 

Article 8: was the information private?

Background

  1. The judge listed a large number of parts of the book that were said by the first claimant to consist of private information. He refused protection for many of them because he regarded their content as “anodyne”, imprecise or already known to the public. In an authority shown to us after argument had closed, M v Secretary of State for Work and Pensions [2006] 2 AC 91 , para 83, Lord Walker of Gestingthorpe pointed out that interference with private life had to be of some seriousness before article 8 was engaged. The spirit of that guidance was indeed respected by the judge in the analysis just described. It will be necessary to describe the remaining matters, in respect of which the judge did grant injunctive relief, with some particularity, but the general nature of the information sought to be restrained was indicated by the judge at para 11:

“(i)  Ms McKennitt’s personal and sexual relationships. (ii) Her personal feelings and, in particular, in relation to her deceased fiancé and the circumstances of his death. (iii) Matters relating to her health and diet. (iv) Matters relating to her emotional vulnerability. (v) The detail of an unhappy dispute between Ms McKennitt, on the one hand, and Ms Ash and Mr Fowkes on the other, concerning moneys advanced to them by Ms McKennitt to assist in the purchase of a property in 1997 and the subsequent litigation in the Chancery Division (which was settled on the basis of a Tomlin order without ever coming to a public hearing).” 

  1. I should say straight away that the last matter, which I shall refer to as the property dispute, raises issues different from the other matters complained of, and I will deal with it separately towards the end of the judgment. The other parts of the book in respect of which relief was granted can be identified as follows, for convenience repeating the numeration in the claim, which was also used by the judge. (i) Item 4: what the judge describes, at para 17, as “a rather intimate conversation between Ms McKennitt and Ms Ash (which would otherwise certainly not have been in the public domain)”. (ii) Item 5: what the judge describes, at para 18, as “extensive references in the book to Ms McKennitt’s relationship with her fiancé, who died in the boating accident in 1998”. (iii) Item 9: a detailed account of events at the first claimant’s cottage in Ireland, and of the physical arrangements there, including a period when the first defendant and Mr Fowkes did building work at the cottage. (iv) Item 13: what the judge described, at para 142, as “intimate revelations” about the state of the first *83 claimant’s health after the bereavement described in (ii) above. (v) Item 14: revelations about the first claimant’s fragile condition during a visit to Tuscany after the bereavement. (vi) Item 15: discussion of terms and conditions of a contract entered into by the first claimant with a recording company. (vii) Item 34: an incident in a hotel bedroom shared by the first claimant and the first defendant; and a report of a telephone conversation in which the first claimant revealed the state of her health. 
  2. The nub of Mr Price’s argument in this part of the case, based both on the account given in the judgment and repeated above, and also on the more detailed examination of the book that we undertook in the private part of the hearing, was that the judge’s finding that all of the above was private information went far beyond anything previously decided. That, it was suggested, could be seen by comparison with the facts of cases like Campbell’s case and Douglas’s case. I am not at all sure that that argument is correct, even on its own terms. Campbell’s case concluded that although it was not, on the facts, private information that Ms Campbell suffered from drug addiction it was private information that she was seeking treatment for that addiction. Douglas’s case concluded that unauthorised photographs of a wedding were private even though the couple were perfectly content, indeed contractually bound, to allow authorised photographs of the same event to be published. I would be hard pressed to say that the matters listed by Eady J were less obviously intrusive into the first claimant’s life. But there is a much more formidable reason why this assault on Eady J’s conclusions must fail. That is to be found in the nature of the relationship between the first claimant and the first defendant, to which I now turn. 

A pre-existing relationship of confidence

  1. Recent leading cases in this area, such as Campbell’s case, Douglas’s case, and the most recent case in the European Court of Human Rights, Von Hannover v Germany (2004) 40 EHRR 1 , have wrestled with the problem of identifying the basis for claiming privacy or confidence in respect of unauthorised or purloined information: see para 8(iii) above. There, the primary focus has to be on the nature of the information, because it is the recipient’s perception of its confidential nature that imposes the obligation on him: see for instance per Lord Goff of Chieveley in Attorney General v Guardian Newspapers Ltd (No 2) (“Spycatcher”) [1990] 1 AC 109 , 281 a . But, as Lord Goff immediately goes on to say, in the vast majority of cases the duty of confidence will arise from a transaction or relationship between the parties. And that is our case, which accordingly reverts to a more elemental inquiry into breach of confidence in the traditional understanding of that expression. That does not of course exempt the court from considering whether the material obtained during such a relationship is indeed confidential; but to inquire into that latter question without paying any regard to the nature of the pre-existing relationship between the parties, as the argument for the first defendant in this court largely did, is unlikely to produce anything but a distorted outcome. 
  2. The judge made substantial findings of fact as to the nature of the relationship between the first claimant and the first defendant, and the expectation of confidence that that created. None of this was challenged on appeal, nor could it have been. Because of the importance of this aspect of the case I set out part of the judge’s account, at paras 71–74:

“71.  It is also clear from a number of quite explicit passages in the book that Ms Ash realised that substantial parts of it, at least, would fall within the scope of a reasonable expectation of privacy or a duty of confidence. Mr Browne drew a number to my attention. At the beginning of the book, for example, Ms Ash actually describes an ‘intimate relationship of almost 20 years with an unfledged small town girl’. She also announces to readers that she will be ‘releasing personality frailties previously concealed in the protective cocoon of anonymity’. It is obvious that she was only able to do so by reason of the ‘intimate relationship’.

“72.  On p 18, Ms Ash records that Ms McKennitt ‘confided to me’ information about her London friends—which she then proceeds to reveal. Likewise, on p 84, she sets out another piece of information which she expressly states was ‘confided to me’. The tit-bit in question may not be of particular significance, but it does illustrate that Ms Ash was well aware that some material was imparted to her in the context of a close friendship and that she is, nevertheless, prepared to reveal it in order to attract readers. The point is again emphasised on p 93, where she states, ‘She cared for us and we cared for her. We were her closest friends and she knew she could count on our unqualified loyalty.’ That is, of course, a fundamental aspect of Ms McKennitt’s complaint.

 “73.  Similarly, on p 82, she refers to ‘my friend Loreena who had revealed her innermost self to me; who had trusted me with her vulnerability’. Two pages later, she describes herself and Mr Fowkes as ‘Loreena’s close friends, [who] occupied a privileged, unique position’.

“74.  The degree of intimacy between the two women is again emphasised on p 118: ‘We talked non-stop. No topic was off-limit. Loreena told me about boyfriend problems, musician problems, office problems, plans for improving her Stratford farmhouse, her office, plans for her next album …’ On the next page she refers to the ‘real essence of our friendship’: ‘Our closeness was tangible. Loreena would always be there for me. I would always be there for her. Our trust was implicit. I no longer required an exchange of blood to cement friendship. I felt our bond to be so special it was like something secret. Nothing could diminish it.’” 

  1. The judge added to his findings about the nature of the relationship and the first defendant’s perception of it, at para 90:

“I am quite satisfied … that Ms Ash was only too aware, at the time of and prior to publication, that much of the content of the book would cause concern and distress to Ms McKennitt because of its intrusive nature. Accordingly, not only a reasonable person standing in her shoes, but Ms Ash herself would be conscious that she was thereby infringing the ‘trust’ and ‘loyalty’ to which she referred in the book. I shall consider the specific complaints in due course, although I need hardly add that it is not everything in the book which infringes privacy (and Ms McKennitt does not suggest otherwise).” 

  1. The judge accordingly approached, and correctly approached, his consideration of the passages complained of against the background of a pre-existing relationship of confidence, known to be such by the first *85 defendant, while at the same time not assuming that that covered everything that happened between the two women with the cloak of confidence. I will briefly review his findings on the items listed in para 13 above, all of which findings are unassailable. 
  2. Item 4 concerned what the judge, at para 132, described as “private and intimate observations”: the first defendant must have known that she was not at liberty to broadcast them to the world. 
  3. Item 5 deals with the first claimant’s relationship with her fiancé and the outcome of his death in 1998. The judge, at para 133, described the passages in the book as “remarkably intrusive and insensitive”. Having had the benefit, if that is the right word, of reading the whole of the book’s treatment of this subject, I would think that the judge’s characterisation was, if anything, restrained. 
  4. Item 9 was addressed by the judge at paras 135–136:

“135.  Item 9 concerns Ms McKennitt’s Irish cottage. It is not her only house, but it is nevertheless a home. That is one of the matters expressly addressed in article 8(1) of the Convention as entitled to ‘respect’. Correspondingly, there would be an obligation of confidence. Even relatively trivial details would fall within this protection simply because of the traditional sanctity accorded to hearth and home. To describe a person’s home, the décor, the layout, the state of cleanliness, or how the occupiers behave inside it, is generally regarded as unacceptable. To convey such details, without permission, to the general public is almost as objectionable as spying into the home with a long distance lens and publishing the resulting photographs.

 “136.  True it is that over five or six years Mr Fowkes was engaged, from time to time, in renovation works at the cottage. Ms Ash, too, did a lot of hard work to make it habitable after Ms McKennitt acquired it in 1992. Some of the work was remunerated and some was not. That seems to me to make no significant difference. Whether one is allowed into a person’s home professionally, to quote for or to carry out work, or one is welcomed socially, it would clearly be understood that the details are not to be published to the world at large.” 

  1. Criticism was made of the introduction to this passage, in that article 8 cases have tended to be concerned with the security or stability of residence, rather than with privacy within the home. But the judge clearly spoke only by analogy, pointing out that it should have been and was obvious that events in a person’s home cannot be lightly intruded upon; and in the event, as he said, at para 138, “it is intrusive and distressing for Ms McKennitt’s household minutiae to be exposed to curious eyes”. And I would also respectfully agree with his comparison with long distance photography, an exercise generally considered to raise privacy issues. If anything, on the judge’s findings as set out in para 17, above, the first defendant knew a good deal better than might a casual photographer that publication of the fruits of her inspection of the cottage and of what happened there was unacceptable. 
  2. Item 13 concerns revelations about the state of the first claimant’s health, their intrusive nature being made the worse by her fragility having been associated with the bereavement. A person’s health is in any event a private matter, as Campbell v MGN Ltd [2004] 2 AC 457 demonstrated. It *86 is doubly private when information about it is imparted in the context of a relationship of confidence. The judge was entirely right to say, at para 142, that there is a reasonable expectation of privacy in relation to such matters. The same is true of his holding, at para 143, in relation to item 14. 
  3. Item 15 relates to the first claimant’s contractual dealings, dealings that we were told, and the judge assumed, were not public knowledge. If the contractual documents had fallen off the back of a lorry and been picked up by a third party there might be some question as to whether they were of such a nature that he was bound to hold them in confidence. The documents might not come within the category of self-evident privacy that was in the mind of Laws J in his famous example in Hellewell v Chief Constable of Derbyshire [1995] 1 WLR 804 , 807. But there is no such issue in the case of a person who finds out details of contractual terms because she is in a relationship of confidence with the contracting party. As the judge said, at para 144:

“There is a general discussion on p 26 [of the book] of the contractual terms and of concessions made. Even though it is general, it seems to me that Ms McKennitt is entitled to a reasonable expectation of privacy as to her contractual terms. They are certainly not for Ms Ash to reveal.” 

  1. Item 34 was seen by the judge as more of a borderline case, but he thought that both occasions were ones on which privacy was to be expected by the first claimant of the first defendant. He was clearly entitled so to hold. 
  2. I would therefore respectfully agree with all of the judge’s conclusions as to the reach of article 8 . It may also be added, as an indication that he did not approach the case with any preconception, nor any unreasonable hostility to the first defendant, that there were many stories about the relationship between the two women reproduced in the book that the judge held not to have been breaches of confidence. I would only comment that in some of those cases I myself might have taken a different view. 
  3. I must however now deal with a number of arguments presented by the first defendant that claim that the judge failed to apply general considerations that indicated that the items that he identified were not confidential to the first claimant. The principal of these are the concept of “shared experience”; and the effect and authority of the decision of this court in Woodward v Hutchins [1977] 1 WLR 760 . I shall also need to say something about the recent decision of the European Court of Human Rights in Von Hannover v Germany 40 EHRR 1 ; and the impact on this appeal of the claim in contract. 

Shared experience

  1. The first defendant argued that all of the matters set out above were not merely the first claimant’s experience, but her own experience as well. That gave her a property in the information that should not be subordinated, or at least should not be readily subordinated, to that of the first claimant. This argument is of relevance to the first defendant’s claim under article 10 , that she is entitled to tell her own story that includes her various experiences with the first claimant, but as I understood it the contention is also relied on to say that the information was not confidential in the first place. 
  2. Some support was sought from passages in the judgment of this court in A v B plc [2003] QB 195 . We shall have to return to that case in more detail when addressing article 10 . It is sufficient here to say that it concerned a married professional footballer (A) who sought to prevent publication by a newspaper (B) of his casual sexual relations with two women (C and D). C and D had sold their story to B. In the course of a wide-ranging review of how a court should handle such a claim, this court said that the right of protection of one party to a bilateral relationship might be affected by the attitude of the other party, and continued, at para 43(iii):

“although we would not go so far as to say there can be no confidentiality where one party to a relationship does not want confidentiality, the fact that C and D chose to disclose their relationships to B does affect A’s right to protection of the information. For the position to be otherwise would not acknowledge C and D’s own right to freedom of expression.” 

By the same token, it was suggested, the first defendant’s decision that her shared relationship with the first claimant should not be treated as confidential undermined the first claimant’s contention that it was confidential.

  1. On the facts of our case, as found by the judge, that argument was wholly misconceived. First, the relationship between the first claimant and the first defendant, testified to in many places, and not least in the judge’s citations from the book set out in para 17 above, was miles away from the relationship between A and C and D. In the preceding paragraph I deliberately and not merely conventionally described the latter as a relationship of casual sex. A could not have thought, and did not say, that when he picked the women up they realised that they were entering into a relationship of confidence with him. Small wonder that Lord Woolf CJ said A v B plc [2003] QB 195 , para 45:

“Relationships of the sort which A had with C and D are not the categories of relationships which the court should be astute to protect when the other parties to the relationships do not want them to remain confidential.” 

Lord Woolf CJ would have been unlikely to say the same about the relationship between the first claimant and the first defendant. 

  1. Second, the judge made a series of factual findings about the relationship that completely destroy this argument. While the first defendant had been involved in some of the matters revealed, and (which is rather different) a spectator of many others, the book, which is what this case is concerned with, is not in any real sense about her at all. She gives vent to many complaints about the first claimant; but the interest of those is that they are complaints about the first claimant, and not at all that the complaints are made by the first defendant. The judge made that clear in two passages, in paras 68 and 89 of the judgment:

“68.  … It would appear that the fundamental purpose of the book, which Ms Ash has described on its cover as ‘a must for every Loreena McKennitt fan’, was to provide information to her admirers which would not otherwise be available. Much of the content of the book would be of *88 no interest to anyone, I imagine, but for the fact that Ms McKennitt is the central character.”

 “89.  As I have already suggested, whatever Ms Ash’s true appreciation of the situation may be, from her perspective, it is difficult for an outsider to understand how the book would be of any interest to the general reader if it were not for the fact that Ms Ash is giving an account of her intimate dealings with a person who is known to many millions of people, throughout the world, interested in folk music and her music in particular. Returning to the Boswell/Johnson analogy, one may characterise the exercise to that extent as largely parasitic. It is the central role of Ms McKennitt, and the revelations about her, which provide the main reason for people to acquire the book. It is, I have no doubt, why her name appears in the title.” 

  1. Those conclusions, which were neither challenged nor could have been, confirm that the matters related in the book were specifically experiences of and the property of the first claimant. The first defendant cannot undermine their confidential nature by the paradox of calling in aid the confidential relationship that gave her access to the information in the first place. 

Woodward v Hutchins

  1. This case dates back to an era when the Convention had not invaded the consciousness of English lawyers. I bear well in mind the warning of Lord Woolf CJ in A v B plc [2003] QB 195 , para 9 that “authorities which relate to the action for breach of confidence prior to the coming into force of the 1998 Act … are largely of historic interest only”. Nevertheless, Woodward v Hutchins [1977] 1 WLR 760 has never been overruled; and its subject matter has some commonalty with our case, since it concerned the dismissed publicity agent of a well-known group of singers who wished to write a series of articles dealing with their private lives and conduct. 
  2. The group failed to obtain an interlocutory injunction to prevent publication. The decision was based on two grounds. First, the only reason given by Lawton LJ, with whom Bridge LJ agreed in full, was that to grant interlocutory relief in a case where there were concurrent claims in breach of confidence and defamation would or might undermine the rule in Bonnard v Perryman [1891] 2 Ch 269 , preventing interlocutory relief in a defamation case where it is proposed to justify. Lord Denning MR took the same view; but his main reason was that articulated by Bridge LJ [1977] 1 WLR 760 , 765:

“It seems to me that those who seek and welcome publicity of every kind bearing upon their private lives so long as it shows them in a favourable light are in no position to complain of an invasion of their privacy by publicity which shows them in an unfavourable light.” 

  1. Eady J, at para 103, thought that the application in Woodward v Hutchins failed because the revelations were in the public interest. It would however seem that the view of Lord Denning MR and Bridge LJ was more fundamental than that, in that they thought that in the circumstances the enjoined material was not confidential at all. 
  2. Woodward v Hutchins has come in for a good deal of criticism, of which the point most relevant to our inquiry is that the court was not reminded of the relevance of the contractual relationship between the agent and his former employers. That largely deprives the decision of any direct authority in or relevance to our case. But there is another reason why in any event Woodward v Hutchins is of no assistance to us. We were constantly reminded, not least by the first defendant, that all of these cases are fact-sensitive. I have set out the judge’s findings of fact about the first claimant’s attitude to publicity in para 6 above. That is very far different from the sort of conduct and attitude that, in the view of Bridge LJ, would deprive a person’s behaviour of the quality of confidence. 

Von Hannover v Germany

  1. We shall have to return to this authority in connection with article 10 , but it also has some relevance to the reach of article 8 . There is little doubt that Von Hannover v Germany 40 EHRR 1 extends the reach of article 8 beyond what had previously been understood, which is no doubt why the first defendant and, more particularly, the media parties put before us a series of reasons why we should be wary of the case. I am quite clear that, for the reasons already set out and as given by the judge, the first claimant can establish her position under article 8 without going anywhere near Von Hannover’s case; but since the case was much debated before us, and was referred to by the judge, it is necessary to say something about it in relation to article 8 . 
  2. Princess Caroline of Monaco sought to prevent the publication in two German magazines of photographs of her indulging in what must be said to have been fairly banal activities in public or effectively public places. The European Court of Human Rights held that by refusing her relief the German courts had failed in their duty to respect private life under article 8 . The court’s most general statement was at para 50 (cited by Eady J in para 50 of his judgment):

“Furthermore, private life, in the court’s view, includes a person’s physical and psychological integrity; the guarantee afforded by article 8 of the Convention is primarily intended to ensure the development, without outside interference, of the personality of each individual in his relations with other human beings. There is therefore a zone of interaction of a person with others, even in a public context, which may fall within the scope of ‘private life’.” 

Based on that general principle, the European Court of Human Rights held, at para 53, that “In the present case there is no doubt that the publication by various German magazines of photos of the applicant in her daily life either on her own or with other people falls within the scope of her private life”. 

  1. Eady J suggested, at para 58, that that approach was consistent with the assumption in Campbell v MGN Ltd [2004] 2 AC 457 that article 8 protected a person’s reasonable expectation of privacy. That is so in broad terms, but at the same time it is far from clear that the House of Lords that decided Campbell’s case would have handled Von Hannover’s case in the same way as did the European Court of Human Rights. Very extensive argument and discussion was seen as required before Ms Campbell was able to enjoin the publication of photographs of her in the public street, and *90 then only because of their connection with her medical condition. Had the House had the benefit of Von Hannover’s case a shorter course might have been taken. 
  2. That does not however mean (to anticipate an argument that will arise again under article 10 ) that the English courts should not now give respectful attention to Von Hannover’s case. The House of Lords in Campbell’s case made no specific findings as to the content of article 8 save in the very general terms extracted by Eady J. As it is put in a work shown to us by the media parties, Fenwick & Phillipson , Media Freedom Under the Human Rights Act (2006) , p 764, “the test propounded-of a reasonable expectation of privacy, of whether the information is obviously private-is to be structured by reference to the article 8 case law”. It thus remains for the national court to apply that case law, as it currently stands, to the facts before it. It was therefore certainly open to Eady J to have regard to Von Hannover’s case in relation to the very different facts of the present case. 
  3. Perhaps realising the force of observations such as the foregoing, the media parties, in particular, were most anxious to persuade us that the European Court of Human Rights went no further in Von Hannover’s case than to hold that the Princess’s privacy had been invaded by a campaign of media intrusion into her life, of which the enjoined photographs were the fruit. The taking and publication of the photographs would otherwise not have been in itself an invasion of privacy. They cited in support some observations of Fenwick & Phillipson at p 768 of their book, though it is fair to say that the learned authors also say that that analysis is not without its difficulties. The judge, at para 53, did not accept that analysis, nor would I. While it is quite correct that there is reference in the judgment of the European Court of Human Rights to media intrusion, it is not possible to say that the general statements of principle set out in para 38 above are so limited. And Mr Browne was able to show us authority from the European Court of Human Rights decided since Von Hannover’s case that applies those statements in situations that were not ones of media intrusion. Of those, the most significant is Sciacca v Italy (2005) 43 EHRR 400 , paras 27 and 29 of the judgment of the European Court of Human Rights applying Von Hannover’s case to a case that was not one of press harassment, and citing the jurisprudence of Von Hannover’s case in entirely general terms. 
  4. I would therefore conclude that to the extent that it is the first defendant’s case that the judge should not have had regard to Von Hannover’s case when considering the first question of whether article 8 was engaged; and to the extent if at all that the issue matters for the determination of this part of the case; that complaint is unfounded. …

 Article 10: the balancing exercise

The role of this court

  1. Despite the very extensive analysis of the facts and issues that the speeches contain, the ratio of the majority of the House of Lords in Campbell v MGN Ltd [2004] 2 AC 457 appears to have been that, in the absence of an error of principle on his part, the Court of Appeal should not have interfered with the trial judge’s assessment of the balance between articles 8 and 10 : see per Baroness Hale, at para 158, and Lord Hope, at paras 87 and 101, together with Lord Hope’s criticism of the unreality of the approach of the Court of Appeal, at para 99, the latter view being endorsed by Lord Carswell, at para 165 of his speech. That approach is, with great respect, plainly correct. It was properly, albeit inevitably, adopted by Mr Price. The very short answer to this part of the appeal is, therefore, that the judge indeed made no error of principle, and therefore his conclusion rejecting the first defendant’s case under article 10 must stand. However, lest that seems too bloodless a resolution of the disputes, and in order to demonstrate that the judge indeed made no error of principle, I will descend into somewhat greater detail. 

The judge’s methodology

  1. In a passage headed “A need to balance Convention rights” the judge, basing himself on Campbell’s case and on In re S (A Child) (Identification: Restrictions on Publication) [2005] 1 AC 593 , set out the principles to be applied when article 8 rights were relied on to restrain publication. No criticism was made of the formulation or the relevance of those principles, nor could it have been made. The judge’s principles were: (i) neither article has as such precedence over the other; (ii) where conflict arises between the values under articles 8 and 10 , an “intense focus” is necessary upon the comparative importance of the specific rights being claimed in the individual case; (iii) the court must take into account the justifications for interfering with or restricting each right; and (iv) so too, the proportionality test must be applied to each. 
  2. Three comments may be made. First, it was a recurrent complaint of the first defendant that the judge had not paid respect to or applied section 12(4) of the 1998 Act, which requires “particular regard” to be paid to the article 10 right. But from his statement of the principles the judge clearly had in mind what was said by Lord Steyn in In re S (A Child) at para 17, that neither article 8 nor article 10 “as such” has precedence over *92 the other. That guidance bound him, as it binds us. Second, it is well worth noting that one of the cases specifically mentioned in article 10(2) is preventing the disclosure of information received in confidence. 
  3. Third, the first defendant complained that the judge, when addressing the individual items of which complaint is made, had not then applied the balancing test separately to each one of them. But that conflicts with what the judge said, at para 67:

“I need naturally to consider each of the passages in the book singled out for complaint separately, not only to decide whether in each case the threshold test for privacy is passed (that is to say, whether or not there would be a reasonable expectation of privacy), but also to consider, if that initial test has been satisfied, whether any other ‘limiting factor’ comes into play such as public domain or public interest.”

 The suggestion that the judge, having so directed himself, needed none the less to repeat that direction as a mantra every time he came to a specific issue is quite unreal. And when significant issues in relation to article 10 did arise in a particular instance those issues were addressed by the judge separately from the general guidance that he had given himself. 

  1. However, I need to address some general complaints raised by the first defendant. Those were that the judge had not respected the right of the first defendant to tell her own story; a complaint that the judge had not given sufficient weight to the extent to which information in the book was already in the public domain; and a complaint that the judge had undervalued the public interest in the disclosure that the first defendant wished to make, in the course of that analysis failing to follow the binding guidance of this court in A v B plc [2003] QB 195 . …

The public domain

  1. It is perhaps inevitable that, although the inquiry is now under article 10 , it still tends to be conducted in the traditional terms of the English law of confidence. As we shall in due course see, that is particularly the case in A v B plc . But the general principle is no doubt correct in both cases, that information that is already known cannot claim the protection of private life. Mr Price however advanced a striking extension of that principle, that once a person had revealed or discussed some information falling within a particular “zone” of their lives they had a greatly reduced expectation of privacy in relation to any other information that fell within that zone. This argument was used in particular in respect of the first defendant’s revelations about the first claimant’s health and her distress at the death of her fiancé. The material said to contain revelations by the first claimant falling within the same zone were remarkably sparse, which is in itself an indication of how protective the first claimant has been of her privacy. The judge dealt with the argument in these terms, at paras 79–80:

“79.  … Ms Ash produced a number of articles on the basis of which she argued that, at least in certain respects, Ms McKennitt had revealed aspects of her personal life and beliefs to the general public. She chose to confine her submissions to a limited number of articles, partly for reasons of time, although it is reasonable for me to proceed on the basis that she selected the examples which she thought best illustrated her point. If that is so, I did not find the submission very compelling in the light of the material contained in the book. Conversations with, or behaviour in the presence of, close personal friends would appear to me to be significantly different from the sort of material revealed by Ms McKennitt in the past. Also, as I have already pointed out, there is in this context a significant difference between choosing to reveal aspects of private life with which one feels ‘comfortable’ and yielding up to public scrutiny every detail of personal life, feelings, thoughts and foibles of character.

“80.  In any event, it is important that a large proportion of the material Ms Ash relied upon was specifically revealed by Ms McKennitt in the context of her attempts to promote water safety and to support the Cook-Rees Memorial Fund. A classic example is provided by an interview in May 1999 with the journal ‘Le Lundi’. It is somewhat surprising that Ms Ash should think that this carefully measured, and no doubt in itself distressing, exposure of her own feelings in a particular context should give her the right to reveal at considerable length what Mr Browne described as ‘her pitifully grief-stricken reaction to the death of [her fiancé], his brother and a friend’. It goes on for some eight pages. One’s reactions and communications to a friend in the immediate aftermath of personal bereavement are surely a classic example of material in respect of which there would a ‘reasonable expectation’ that one’s privacy would be respected.” 

  1. I respectfully agree. It was cruelly insensitive to use the first claimant’s promotion of the Cook-Rees fund, and her explanation of her *94 reasons for setting up the fund, to suggest that she had thereby opened up whole areas of her private life to intrusive scrutiny. 
  2. Mr Price expressed concern at the judge’s view that a person can limit publication to what he wishes to be published. But, with respect, the judge seems to me to have been completely right. If information is my private property, it is for me to decide how much of it should be published. The “zone” argument completely undermines that reasonable expectation of privacy. Mr Price’s real concern was, I think, not with the judge’s view in general terms, but with the possibility that he thought to be contained within it that a public figure could censor or control what was published about them. That raises questions of a different order, to which I now turn. 

The public interest: and the first claimant as a public figure

  1. One might instinctively think that there was little legitimate public interest in the matters addressed by the book, and certainly no public interest sufficient to outweigh the first claimant’s article 8 right to private life. That is what the judge thought and, as already pointed out, in the absence of error of principle his view will prevail. That conclusion was contested under this head in two respects, which it is necessary to keep separate. First, there was a legitimate public interest in the affairs of the first claimant because she was a public figure, and for that reason alone . Second, if a public figure had misbehaved, the allegation in the present case being of hypocrisy, the public had a right to have the record put straight. The parallel for that argument was the case of Ms Campbell, who could not retain privacy for the fact that she was a drug addict because she had lied publicly about her condition. 
  2. The first of these arguments involves consideration of two recent authorities, already introduced, Von Hannover v Germany 40 EHRR 1 and A v B plc [2003] QB 195 , to which I must now return. 

Von Hannover v Germany

  1. There is no doubt that the European Court of Human Rights has restated what were previously thought to be the rights and expectations of public figures with regard to their private lives. The court recognised the important role of the press in dealing with matters of public interest, and the latitude in terms of mode of expression there provided: 40 EHRR 1 , para 58. But a distinction was then drawn between a watchdog role in the democratic process and the reporting of private information about people who, although of interest to the public, were not public figures. The European Court of Human Rights said, at paras 63–64:

“63.  The court considers that a fundamental distinction needs to be made between reporting facts—even controversial ones—capable of contributing to a debate in a democratic society relating to politicians in the exercise of their functions, for example, and reporting details of the private life of an individual who, moreover, as in this case, does not exercise official functions. While in the former case the press exercises its vital role of ‘watchdog’ in a democracy by contributing to ‘impart[ing] information and ideas on matters of public interest’ it does not do so in the latter case.

 “64.  Similarly, although the public has a right to be informed, which is an essential right in a democratic society that, in certain special *95 circumstances, can even extend to aspects of the private life of public figures, particularly where politicians are concerned, this is not the case here. The situation here does not come within the sphere of any political or public debate because the published photos and accompanying commentaries relate exclusively to details of the applicant’s private life.” 

  1. There is more in the same sense. If we follow in this case the guidance given by the English courts, that the content of the law of confidence is now to be found in articles 8 and 10 (see para 10 above), then it seems inevitable that the first defendant’s case must fail. Even assuming that the first claimant is a public figure in the relevant sense (which proposition I suspect the European Court of Human Rights would find surprising), there are no “special circumstances” apart from the allegation of hypocrisy dealt with in the next section to justify or require the exposure of her private life. But the first defendant argued that English courts could not follow or apply Von Hannover’s case to the facts of the present case because we were bound by the contrary English authority of A v B plc [2003] QB 195 . That effectively required the first claimant’s private affairs to be exposed to the world, hypocrite or not. 

A v B plc

  1. The facts have already been set out. The judgment of this court is notable for the detailed guidance that it contains as to how a court should address complaints about invasion of privacy by public or allegedly public figures. The first defendant placed particular reliance on the court’s para 11(xii):

“Where an individual is a public figure he is entitled to have his privacy respected in the appropriate circumstances. A public figure is entitled to a private life. The individual, however, should recognise that because of his public position he must expect and accept that his actions will be more closely scrutinised by the media. Even trivial facts relating to a public figure can be of great interest to readers and other observers of the media. Conduct which in the case of a private individual would not be the appropriate subject of comment can be the proper subject of comment in the case of a public figure. The public figure may hold a position where higher standards of conduct can be rightly expected by the public. The public figure may be a role model whose conduct could well be emulated by others. He may set the fashion. The higher the profile of the individual concerned the more likely that this will be the position. Whether you have courted publicity or not you may be a legitimate subject of public attention. If you have courted public attention then you have less ground to object to the intrusion which follows. In many of these situations it would be overstating the position to say that there is a public interest in the information being published. It would be more accurate to say that the public have an understandable and so a legitimate interest in being told the information. If this is the situation then it can be appropriately taken into account by a court when deciding on which side of the line a case falls. The courts must not ignore the fact that if newspapers do not publish information which the public are interested in, there will be fewer newspapers published, which will not be in the public interest. The same is true in relation to other parts of the media.”  

  1. The first defendant relied on two parts of this account. First, that “role models”, voluntary or not, have less expectation of privacy. That was reinforced by a later passage in the judgment, at para 43(vi):

“Footballers are role models for young people and undesirable behaviour on their part can set an unfortunate example. While [the trial judge] was right to say on the evidence which was before him that A had not courted publicity, the fact is that someone holding his position was inevitably a figure in whom a section of the public and the media would be interested.” 

The first claimant, it was said, was inevitably a figure in whom a section of the public would be, and was, interested. Second, the general interest in supporting the “media” in the publication of the sort of material that sells newspapers should extend to biographies and literary works generally, such as the book was claimed to be. 

  1. The width of the rights given to the media by A v B plc cannot be reconciled with Von Hannover’s case. Mr Price said that whether that was right or wrong, we had to apply A v B plc , in the light of the rule of precedent laid down by the House of Lords in Kay v Lambeth London Borough Council [2006] 2 AC 465 , in particular by Lord Bingham of Cornhill, at paras 43–45. Put shortly, the precedential rules of English domestic law apply to interpretations of Convention jurisprudence. Where, for instance, the Court of Appeal has ruled on the meaning or reach of a particular article of the Convention, a later division of the Court of Appeal cannot depart from that ruling simply on the basis that it is inconsistent with a later, or for that matter an earlier, decision of the European Court of Human Rights.  
  2. I would respectfully and fully agree with the importance of that rule. The alternative, as an earlier constitution of this court said, is chaos. But I do not think that the rule inhibits us in this case from applying Von Hannover’s case. If the court in A v B plc had indeed ruled definitively on the content and application of article 10 then the position would be different; but that is what the court did not do. Having made the important observation that the content of the domestic law was now to be found in the balance between articles 8 and 10 , the court then addressed the balancing exercise effectively in the former English domestic terms of breach of confidence. No Convention authority of any sort was even mentioned. It may well be that aspect of the case that caused a later division of this court to comment, per Lord Phillips of Worth Matravers MR in Campbell v MGN Ltd [2003] QB 633 , paras 40–41:

“40.  … When Lord Woolf CJ spoke of the public having ‘an understandable and so a legitimate interest in being told’ information, even including trivial facts, about a public figure, he was not speaking of private facts which a fair-minded person would consider it offensive to disclose. That is clear from his subsequent commendation of the guidance on striking a balance between article 8 and article 10 rights provided by the Council of Europe Resolution 1165 of 1998.

“41.  For our part we would observe that the fact that an individual has achieved prominence on the public stage does not mean that his private life can be laid bare by the media. We do not see why it should necessarily *97 be in the public interest that an individual who has been adopted as a role model, without seeking this distinction, should be demonstrated to have feet of clay.” 

  1. However that may be, and wherever that leaves courts that would have to apply the guidance given in A v B plc , it seems clear that A v B plc cannot be read as any sort of binding authority on the content of articles 8 and 10 . To find that content, therefore, we do have to look to Von Hannover’s case. The terms of that judgment are very far away from the automatic limits placed on the privacy rights of public figures by A v B plc . 
  2. But, in any event, even if we were to follow A v B plc , the guidance that that case gives does not produce the outcome in our case that is sought by the first defendant. First, as to the position of the first claimant, she clearly does not fall within the first category mentioned by Lord Woolf CJ, and “hold a position where higher standards of conduct can be rightly expected by the public”: that is no doubt the preserve of headmasters and clergymen, who according to taste may be joined by politicians, senior civil servants, surgeons and journalists. Second, although on one view the first claimant comes within Lord Woolf CJ’s second class, of involuntary role models, I respectfully share the doubts of Lord Phillips MR, set out in para 63 above, as to the validity of that concept; and it would in any event seem difficult to include in the class a person such as the first claimant, who has made such efforts not to hold herself out as someone whose life is an open book. Third, it is clear that Lord Woolf CJ thought that role models were at risk, or most at risk, of having to put up with the reporting of disreputable conduct: such as was the conduct of the claimant before him. The first claimant does not fall into that category; but to make that good I need to go on to the second part of this argument, that exposure is legitimate to demonstrate improper conduct or dishonesty.  
  3. In so doing I have not overlooked Lord Woolf CJ’s second general point, that weight must be given to the commercial interest of newspapers in reporting matter that interests the public. That view has also received criticism, and it seems clear that this court in Campbell’s case, in the passage cited above, was not entirely happy with it. It is difficult to reconcile with the long-standing view that what interests the public is not necessarily in the public interest, a view most recently expressed by Baroness Hale in Jameel (Mohammed) v Wall Street Journal Europe Sprl [2007] 1 AC 359 , para 147:

“The public only have a right to be told if two conditions are fulfilled. First, there must be a real public interest in communicating and receiving the information. This is, as we all know, very different from saying that it is information which interests the public-the most vapid tittle-tattle about the activities of footballers’ wives and girlfriends interests large sections of the public but no one could claim any real public interest in our being told all about it.” 

It is fortunately not necessary to pursue that issue further, because it is merely a general factor that cannot be said to have any significant impact on the present case. 

Hypocrisy

  1. This is the charge brought against the first claimant, which is said to justify telling the world about her private behaviour and attitudes. Much of the book (for instance the matters about health or bereavement) does not fall into this category in any event. The complaint is that the first claimant treated the first defendant, and others, badly in two main respects, in the Irish cottage and in connection with the property dispute, and that that was inconsistent with her public position about proper behaviour and respect for others. 
  2. Once again, this argument simply fails on the facts. The judge made findings, at paras 98–100, about the material on which the first claimant’s alleged announcement of her principles was based, the “compass points”. He found them, as I do, a fragile basis for any public interest defence; and indeed said, at para 100, that they were “simply being used as an excuse by Ms Ash to enable her to escape her obligations of confidence and, in her own phrase, ‘unqualified loyalty’”. And the judge concluded that in any event the first claimant had not behaved disreputably or insincerely in any way. 
  3. Some criticism is made of the judge having said, at para 97, that “a very high degree of misbehaviour must be demonstrated” to trigger a public interest defence. As an entirely general statement, divorced from its context, that may well go too far. But the judge was speaking of the particular situation argued before him, where not the conduct in itself, but the fact that it had previously been lied about or treated with hypocrisy, was said to be the basis for disclosure. In Campbell v MGN Ltd [2004] 2 AC 457 it was the fact that Ms Campbell had not merely said that she did not take drugs but had gone out of her way to emphasise that she was in that respect unlike other fashion models that deprived otherwise private material of protection: see per Lord Nicholls, at para 24. By contrast, as the judge clearly thought, at para 97, the conduct complained of in the case of the first claimant fell well below the level that would justify complaint on the ground of hypocrisy. 
  4. The most sustained attack in the book on the first claimant’s probity and honesty is to be found in the last 40 pages, that address the property dispute. The judge found that all or almost all of the allegations were untrue, and that the incident revealed nothing whatever to the first claimant’s discredit: see para 41 of the judgment. But since this part of the case involves other difficulties I deal with it separately. 

The property dispute

Background

  1. In April 1997 Mr Fowkes and the first defendant were contemplating buying a house in London in (informal) partnership with a Ms Gavin. A third share in the house required a contribution of £30,000, which Ms Gavin had promised. When she dropped out of the project the first claimant offered to contribute the £30,000 in her place. Contemporary documents demonstrated, and the judge found, that Mr Fowkes accepted and intended that the first claimant was to have a third share in the property. In October 1998, without informing the first claimant, Mr Fowkes re-mortgaged the property, the name of the mortgagee eventually appearing on *99 the Land Register being different from the body that, belatedly, had been identified to the first claimant’s solicitors by Mr Fowkes. Because they were uncertain as to what was afoot the solicitors registered a caution on the property on 28 January 1999. 
  2. Desultory exchanges with a view to settling the parties’ interests then took place but, with matters not resolved, in January 2001 the Land Registrar instructed the first claimant to issue proceedings: which she did but, as the judge found, only with reluctance. In those proceedings the first defendant and Mr Fowkes claimed, as Eady J held falsely, that the first claimant’s contribution of £30,000 had been a gift; and documents produced on discovery in the present proceedings showed, as the judge again found, that the first defendant’s intention was to further her bargaining position by attacking the first claimant’s reputation, and that that explained her motivation in writing the book: see Eady J at paras 121 and 122. The proceedings were eventually settled by way of a Tomlin order. Eady J further found, at paras 126–127, that evidence that it was alleged would be given in support of the first defendant’s defence in the property proceedings, and which was set out in the book, was untrue. 
  3. In the present proceedings the first defendant alleged that the first claimant had brought the Chancery proceedings dishonestly. That very serious allegation was withdrawn shortly before trial. But the first defendant continued to claim throughout the trial that the first claimant had no moral right to claim her money and that she was being vindictive in doing so: see Eady J’s judgment at para 125. 

The privacy claim

  1. The history of the property dispute occupies the last 40 pages of the book. They make a detailed and on its surface compelling attack on the first claimant’s conduct, and on her hypocrisy in presenting herself to the world as a moral, or even half-decent, person. As Eady J found, those pages are seriously misleading. He had to address that issue because this part of the book was strongly relied on as demonstrating the public interest in revealing the true nature of the first claimant’s character: see para 69 above. Leaving aside for the moment the implications of the untruthfulness of the material, can the first claimant prevent its publication on the ground that it infringes her privacy? 
  2. This issue is not as straightforward as the other issues in the case. By the time that the dispute came to litigation the relationship of trust and confidence between the first claimant and the first defendant had broken down. The placing of the caution on the property, and certainly the issuing of proceedings, had placed the dispute in the public arena. The mere fact of the payment of £30,000 could not be a private matter. However, the judge took a fairly short approach to this issue. Having referred at some length to the litigious correspondence, and the first defendant’s revelatory document with regard to her motivation in the proceedings, he continued, at para 124:“All of this would have remained confidential, were it not for the publication of Ms Ash’s book. The whole point of a Tomlin order (recording the ultimate settlement figure of £67,500) is that the parties are able to keep the terms of settlement confidential. Furthermore, there was *100 no need for all the correspondence to become public. There would be no public entitlement of access to those documents or indeed even to the parties’ statements of case (save for the particulars of claim). There can be little doubt, therefore, that Ms McKennitt had a ‘reasonable expectation’ of privacy in relation to all these matters.”

 6. That passage is criticised by the first defendant as suggesting that matters included within a Tomlin order by that fact alone become, or remain, confidential. Such a proposition would be too wide. But attention to the judge’s whole finding, and to the context in which it is placed, indicates that he was principally concerned not about the bare bones of the claim, which in themselves were routine enough, but about the motivation of the first defendant’s defence, and the allegations that were made in support of it, which were going to be sustained if the matter came to trial. That becomes the more obvious if one reads the book, as the judge of course had. There the whole matter is in effect relitigated in terms that had been abandoned as a result of the Tomlin order, and there is a sustained and highly critical commentary on the first claimant’s correspondence and the handling of the negotiations before trial. The judge is therefore in effect saying that the dispute, so far as it concerned the motives and conduct of the first claimant, had originated in the relationship of trust between the first claimant and the first defendant and represented an attempt by the first defendant to show that that trust had been broken. If the matter had come to trial, not only the narrowly legal terms of the dispute but no doubt also the whole history between the two women would have been dragged into the spotlight. Then the first claimant might not have been able to complain of the extensive relation of that history in the book. But that is not what happened. The effect of the Tomlin order was, as the judge said, that the correspondence and the details of the dispute were kept from the public eye. The first claimant was well entitled to expect that those matters, private in their nature as arising out of her relationship with the first defendant, would remain private; and they would have remained private had the first defendant not chosen to reveal her version of them in the book. The judge was well entitled so to find.

 

  1. I would, therefore, in principle uphold the judge’s enjoining of the last part of the book, that addresses the property dispute. The complaint is made that that forbids the recitation even of matters that are plainly in the public domain, such as the caution and the pleadings. That may be so. But Mr Browne was entitled to point out that the first defendant had taken no steps to discuss with the first claimant or her advisers what it was acceptable to reveal and what was not acceptable. She cannot therefore complain if the breadth of her treatment draws in matters that, taken on their own, might be publishable. 

The falsity of the allegations: and herein of defamation

  1. Mr Price however had a further answer. The judge had found that most or all of the book’s allegations about the property dispute were untrue. There could therefore be no claim in breach of confidence. Whatever the position in defamation, the falsity of what the first defendant had written was a complete defence, a defence in no way undermined by the first defendant’s case at trial having been that the whole of the book was true.
  2. It would not reflect well on our law if that plea were to succeed. The first claimant and her advisers cannot be criticised for choosing the wrong cause of action. They came to court to contest the truth of the book’s allegations, and the judge made his findings about those allegations, because the falsity undermined the public interest defence, and not because an allegation of falsity was inherent in the basic claim itself. If it could be shown that a claim in breach of confidence was brought where the nub of the case was a complaint of the falsity of the allegations, and that that was done in order to avoid the rules of the tort of defamation, then objections could be raised in terms of abuse of process. That might be so at the interlocutory stage in an attempt to avoid the rule in Bonnard v Perryman [1891] 2 Ch 269 : a matter, it will be recalled, that exercised this court in Woodward v Hutchins [1977] 1 WLR 760
  3. That however is not this case. I would hold that provided the matter complained of is by its nature such as to attract the law of breach of confidence, then the defendant cannot deprive the claimant of his article 8 protection simply by demonstrating that the matter is untrue. Some support is given to that approach by the European cases shown to us by Mr Browne that indicate that article 8 protects “reputation”, broadly understood; but it is not necessary to rely on those cases to reach the conclusion that I have indicated. 

Disposal

  1. I would therefore dismiss the appeal. In so doing I would pay tribute to the judgment of Eady J and to his handling of the case. This cannot have been an easy case to try, but the judge succeeded in isolating the essential elements and producing a judgment that is of the greatest help in understanding the case without at the same time releasing into the public domain any of the matter that he rightly held should not be there.’

 

[viii] HRH Prince of Wales v Associated Newspapers Ltd [2006] EWCA Civ 1776.

Extracts from the judgment of Blackburne J.:

The claim in confidence

  1. The modern starting point in a claim of this kind is the decision of the House of Lords in Campbell v MGN Ltd [2004] 2 AC 457 . In that case the claimant, a famous fashion model, sued the defendant for damages for breach of confidentiality by publishing details of the therapy she was receiving for drug addiction, including photographs of her in a street as she was leaving a self-help group meeting. Although the House was divided over whether publication of this information constituted an unjustified infringement of the claimant’s right to privacy in respect of the details of her therapy (the majority finding that it did) there was no division of opinion over the relevant approach in law.  
  2. Central to the arguments in that case was the interaction of the rights and the qualifications of those rights set out in articles 8 and 10 of the Convention for the Protection of Human Rights and Fundamental Freedoms , as set out in the Human Rights Act 1998, Schedule 1, Part I . Article 8 provides:

“1.  Everyone has the right to respect for his private and family life, his home and his correspondence.

 

“2.  There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.” 

  1. Article 10 provides:

“1.  Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers.” 

“2.  The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.” 

  1. In Campbell’s case [2004] 2 AC 457 Lord Nicholls of Birkenhead, after explaining, at paras 17 and 18, that the values enshrined in articles 8 and 10 were now part of the cause of action for breach of confidence, stated, at para 20, that the initial question was “whether the published information engaged article 8 at all by being within the sphere of the complainant’s private or family life”. He said, at para 21: “Essentially the touchstone of private life is whether in respect of the disclosed facts the person in question had a reasonable expectation of privacy.” He made clear that this initial question was distinct from the quite separate question which arises which is whether interference with the right by, for example, publication of the information, is justified by recourse to article 8(2) or by recourse to article 10 which, like article 8(2) , recognises by article 10(2) that there are occasions when protection of the rights of others may make it necessary for freedom of expression to give way. He said, at para 20: “When both these articles are engaged a difficult question of proportionality may arise.” 
  2. Lord Hope of Craighead referred to the exercise of balancing the competing rights of privacy and free speech enshrined in articles 8 and 10 , once the initial threshold requirement of the need to demonstrate the private (or confidential) nature of what was (or was to be) published had been met, in the following terms [2004] 2 AC 457 , para 105:

“The rights guaranteed by these articles are qualified rights. Article 8(1) protects the right to respect for private life, but recognition is given in article 8(2) to the protection of the rights and freedoms of others. Article 10(1) protects the right to freedom of expression, but article 10(2) recognises the need to protect the rights and freedoms of others. The effect of these provisions is that the right to privacy which lies at the heart of an action for breach of confidence has to be balanced against the right of the media to impart information to the public. And the right of the media to impart information to the public has to be balanced in its turn against the respect that must be given to private life.”

  1. Stressing the importance of the safeguards to be afforded to the press in a democratic society, Lord Hope cited Jersild v Denmark (1994) 19 EHRR 1 , para 31 that “Not only does the press have the task of imparting such information and ideas [i e information and ideas of public interest]: the public also has a right to receive them”. In a later passage [2004] 2 AC 457 , para 113, Lord Hope said:

“Any interference with the public interest in disclosure has to be balanced against the interference with the right of the individual to respect for their private life. The decisions that are then taken are open to review by the court. The tests which the court must apply are the familiar ones. They are whether publication of the material pursues a legitimate aim and whether the benefits that will be achieved by its publication are proportionate to the harm that may be done by the interference with the right to privacy. The jurisprudence of the European Court of Human Rights explains how these principles are to be understood and applied in the context of the facts of each case. Any restriction of the right to freedom of expression must be subjected to very close scrutiny. But so too must any restriction of the right to respect for private life. Neither article 8 nor article 10 has any pre-eminence over the other in the conduct of this exercise.” 

 

  1. Baroness Hale of Richmond put the matter as follows, at para 134:

“The position we have reached is that the exercise of balancing article 8 and article 10 may begin when the person publishing the information knows or ought to know that there is a reasonable expectation that the information in question will be kept confidential.” 

 

  1. She later emphasised, at para 137:

“that the ‘reasonable expectation of privacy’ is a threshold test which brings the balancing exercise into play. It is not the end of the story. Once the information is identified as ‘private’ in this way, the court must balance the claimant’s interest in keeping the information private against the countervailing interest of the recipient in publishing it. Very often, it can be expected that the countervailing rights of the recipient will prevail.” 

 

  1. She too pointed out that neither right takes precedence over the other, that both are qualified and, at para 139, that:

“They may respectively be interfered with or restricted provided that three conditions are fulfilled. national law which conforms to the Convention standards of legality. (b) It must pursue one of the legitimate aims set out in each article. Article 8(2) provides for ‘the protection of the rights and freedoms of others’. Article 10(2) provides for ‘the protection of the reputation or rights of others’ and for ‘preventing the disclosure of information received in confidence’. The rights referred to may either be rights protected under the national law or, as in this case, other Convention rights. (c) Above all, the interference or restriction must be ‘necessary in a democratic society’; it must meet a ‘pressing social need’ and be no greater than is proportionate to the legitimate aim pursued; the reasons given for it must be both ‘relevant’ and ‘sufficient’ for this purpose.” 

 

  1. Lady Hale went on to explain, at para 140, that application of the proportionality test

“is much less straightforward when two Convention rights are in play, and the proportionality of interfering with one has to be balanced against the proportionality of restricting the other. As each is a fundamental right, there is evidently a ‘pressing social need’ to protect it.”

 

  1. She added, at para 141, that the proportionality test in such a case

“involves looking first at the comparative importance of the actual rights being claimed in the individual case; then at the justifications for interfering with or restricting each of those rights; and applying the proportionality test to each.” 

 

  1. In a later passage Lady Hale pointed out, at para 148, that, where freedom of expression was being asserted,

“There are undoubtedly different types of speech, just as there are different types of private information, some of which are more deserving of protection in a democratic society than others. Top of the list is political speech. The free exchange of information and ideas on matters relevant to the organisation of the economic, social and political life of the country is crucial to any democracy. Without this, it can scarcely be called a democracy at all. This includes revealing information about public figures, especially those in elective office, which would otherwise be private but is relevant to their participation in public life. Intellectual and educational speech and expression are also important in a democracy, not least because they enable the development of individuals’ potential to play a full part in society and in our democratic life. Artistic speech and expression is important for similar reasons, in fostering both individual originality and creativity and the free-thinking and dynamic society we so much value. No doubt there are other kinds of speech and expression for which similar claims can be made.”

 

  1. In In re S (A Child) (Identification: Restrictions on Publication) [2005] 1 AC 593 , para 17 Lord Steyn said that four principles emerged from the opinions in Campbell v MGN Ltd [2004] 2 AC 457 arising out of the interplay between articles 8 and 10 :

“First, neither article has as such precedence over the other. Secondly, where the values under the two articles are in conflict, an intense focus on the comparative importance of the specific rights being claimed in the individual case is necessary. Thirdly, the justifications for interfering with or restricting each right must be taken into account. Finally, the proportionality test must be applied to each.” 

 

  1. With that brief introduction to the relevant principles I come next to the application of those principles to the facts as disclosed by the evidence. I propose to consider the two questions: namely, reasonable expectation of privacy and the carrying out of the balancing of the claimant’s article 8 right to privacy against the defendant’s article 10 right to freedom of expression, by reference to the Hong Kong journal and then to consider separately the position of the other seven journals. 

(1) A reasonable expectation of privacy: the Hong Kong journal

  1. Did the claimant have a reasonable expectation of privacy in respect of the contents of his Hong Kong journal? For the purpose of this application the question is whether the defendant has no real prospect of successfully contending that the claimant had no such expectation. If that question is resolved in the claimant’s favour it is clear that at the time the *84 defendant made disclosures of the contents of the Hong Kong journal in the 13 November edition it was on notice of the claimant’s claim to privacy in respect of the contents of that and the other journals: it was put on notice by both Sir Michael Peat and the claimant’s solicitors. 
  2. The first point to note is that, whether the Hong Kong journal was circulated among up to 75 recipients (as Mr Bolland claims) rather than to no more than 21 recipients (as the claimant’s evidence suggests), the information in it, that is to say the claimant’s description of events during the Hong Kong tour and his impressions and views prompted by those events, was not in the public domain until the defendant issued its 13 November edition of the “Mail on Sunday” in which many of these matters were set out and commented upon. In Douglas v Hello! Ltd (No 3) [2006] QB 125, para 55, the Court of Appeal said:

“information will be confidential if it is available to one person (or a group of people) and not generally available to others, provided that the person (or group) who possesses the information does not intend that it should become available to others.” 

 

  1. There is no suggestion in the evidence that the information in the Hong Kong journal was generally available to others.

 

  1. It is perfectly plain that the claimant intended these journals to be and to remain confidential notwithstanding their circulation to hand-picked recipients. They were sent in envelopes marked “Private and Confidential”. The fact that they could be read and, let it be assumed, were read by staff in the claimant’s private office, all of whom on the claimant’s uncontradicted evidence were subject to duties of confidentiality which clearly extended to matters such as the impressions and views of the claimant of the kind contained in the Hong Kong journal, does not in the least undermine this obvious fact. For the reasons already explained, there is no evidence- beyond, at the most, the assertions of the unnamed source referred to by Mr Wright-to indicate that the claimant had any intention, when writing and distributing his journals, to influence the political (or any other) opinions of those to whom they were sent. I reject Mr Warby’s submission that Sir Michael Peat’s comment that the claimant finds it valuable to have the views of those to whom he sends the journals in response to what he has written is indicative of a wish by the claimant to influence their opinions. But even if the claimant did have such an intention I cannot see why that fact should detract from his expectation of confidentiality in what he had written.

 

  1. Was the claimant’s expectation of privacy in respect of the contents of his journal a reasonable expectation? Mr Warby urged a number of reasons for submitting that it was not or—and this would be sufficient on an application of this kind—that there is a real prospect of showing that it was not. Some of those matters seem to me to go much more to the application of the proportionality test and the carrying out of the balancing exercise rather than to satisfaction of the threshold requirement but I accept, without going into the authorities, that the distinction is not always easy to draw.

 

  1. The first was that the material in the Hong Kong journal did not relate to the claimant’s private life in any significant way but rather to the public life of a public figure concerning political events, setting out views *85 and impressions which Mr Warby described as “of a political character”. By “political” Mr Warby meant, as he explained, issues of governmental policy and public governance. The information, he said, was obtained and the views were formed by the claimant in the course of official duties carried out on behalf of the nation and at public expense and, to that extent, were of a public and governmental nature rather than of a private and personal character and the fact that these matters were recorded in an unofficial document does not undermine the point. At best, he said, the information was at the margin of the distinction between these two species of information. It was, he said, a world away from the type of “celebrity information” which has formed the staple fare of many of the post- Human Rights Act 1998 privacy claims.

 

  1. Second, Mr Warby submitted that there can be no confidentiality, or no reasonable expectation of confidentiality, in information which, if held by a public authority, would or may well be disclosable under the Freedom of Information Act 2000 . As the claimant’s Hong Kong visit was at public expense and was carried out on behalf of the public it is highly likely, said Mr Warby, that much of what the claimant did and said was recorded in reports to the Foreign Office or found its way on to other public records. Although the defendant was unable to produce any evidence to indicate that such reporting had occurred, and although (as I was told) no Freedom of Information Act request has yet been made, it was “likely” he said to be there and, if it was, would be disclosable in the course of preparation for a trial or would be obtained under the Act before the claim came on for trial.

 

  1. Third, Mr Warby submitted that the claimant is the epitome of the public figure referred to by Lord Woolf CJ in A v B plc [2003] QB 195 (“the Flitcroft case”), who has courted public attention and has done so for views of the same or a similar kind to those contained in the Hong Kong journal. The claimant, he said, has made no secret of his views of the Chinese Government, his boycotting (as the defendant contends it to have been) of the 1999 Chinese Embassy banquet, his reception of the Dalai Lama, and his views on politicians as publicised in Mr Dimbleby’s biography and on other matters of a political nature. Not only, said Mr Warby, has the claimant never before brought proceedings or even complained to any newspaper on those occasions when his otherwise secret communications with ministers have been leaked to the press but, according to the evidence of Mr Richard Kay, the Daily Mail’s royal correspondent for 17 years until 2003 and currently the diary editor of that newspaper, he has on at least one occasion, in September 2002, expressly authorised disclosure of an otherwise secret communication, namely a letter said to have been sent by the claimant to the then Lord Chancellor decrying the litigation culture in this country. As a result, the claimant has, it was submitted, “opened up to legitimate public scrutiny” this “zone” of his life and, having made these matters “public property”, cannot now claim a reasonable expectation of privacy in respect of the contents of a journal which covers similar matters.

 

  1. Fourth, Mr Warby submitted that as a persistent and ardent lobbyist of ministers and others on a range of public issues, wielding the influence which only his special status can provide, the electorate has the right to know his views in order to assess and evaluate the conduct of the government. This was said to lead to the conclusion (as I understood the submission) that the *86 claimant could not have any reasonable expectation of privacy in respect of information of a similar political nature merely because it is contained in one of his journals.

 

  1. Fifth, the “political behaviour” of the claimant as heir to the throne is such as to represent, it was said, a marked departure from established constitutional conventions, alternatively an attempt to alter such conventions and establish new ones, both of which matters raise questions whether such behaviour is “democratically acceptable” and about which the electorate has a right to know and reach a decision. As with the previous matter, I understood the submission to be that the claimant could not have any reasonable expectation of privacy in respect of information, so far as contained in his journals, which might reasonably be thought to cast light upon this topic.

 

  1. Sixth, the claimant could not reasonably expect that, having, as the evidence strongly suggested, deliberately boycotted the 1999 Chinese Embassy banquet and intentionally made himself unavailable for the 2005 Buckingham Palace banquet, any information in his Hong Kong journal which might throw light on that matter should be kept confidential.

 

  1. As I have mentioned, several of these matters—particularly the last three—seem to me to go to the proportionality test and balancing exercise and not to whether the claimant had any reasonable expectation of privacy in respect of information contained in his Hong Kong journal. That apart, I am very firmly of the view that, whether taken individually or together, the matters to which Mr Warby referred me do not justify the conclusion that the claimant had no reasonable expectation of privacy in the contents of that journal.

 

  1. The fact that the journal deals with events most of which are a matter of public record is irrelevant. The point about the Hong Kong journal is that it was a record of the claimant’s impressions of the events in which he took part on the occasion of his Hong Kong tour. It is his impressions and the musings prompted by those events (and, it may be said, the choice of the events themselves) which are what is significant about the journal.

 

  1. To an extent, as Mr Tomlinson conceded, the claimant’s reflections appearing from that journal can be said in the widest sense to be political but I fail to see why that fact should mean that the claimant can have no reasonable expectation of privacy in respect of what he has written. No less immaterial are that the claimant is, assuming he is, a persistent and effective lobbyist, that he is in a position to wield influence, that he is heir to the throne and that in the way he goes about these activities he may not be acting in accordance with constitutional convention. Also immaterial in my view is the fact that the public is curious to know what the claimant thinks about the events in which he participates on the nation’s behalf.

 

  1. Nor do I see how recourse to the Freedom of Information Act 2000 assists the defendant. There is no evidence that the claimant has filed with a public authority any records of the tours to which the eight journals relate. There is certainly no evidence that he has ever filed with any public authority a copy of any of the eight journals. The possibility that he may have done is speculation without the least evidential foundation.

 

  1. The fact that the Hong Kong journal is not of a highly personal or private nature, in the sense that it does not deal with matters of an intimate *87 or medical nature or about members of his family and that its contents are a very long way from the often salacious celebrity information that sometimes features in privacy claims, does not rob the claimant of a reasonable expectation of privacy in the matters to which in his Hong Kong journal he refers.

 

  1. In particular, I dissent from the view that, by speaking out publicly both in speeches and in published articles on issues which in the widest sense are political, the claimant has somehow forfeited any reasonable expectation of privacy in respect of such matters when committed to a handwritten journal not intended by the claimant to be open to public scrutiny. Were it otherwise no politician could ever have any reasonable expectation of privacy in a private diary in which he expresses political views. In this respect there is, to my mind, a world of difference between this case and the situation discussed in A v B [2005] EMLR 851 where by going public on some aspects of his private life—in that case it was the claimant’s drug-taking—a person may no longer reasonably expect to maintain privacy, whatever his personal wishes, in respect of related matters. Whether in any case this is so and what in such circumstances the “zone” is of the person’s life that is thereby opened up to legitimate public scrutiny—matters which were discussed in A v B [2005] EMLR 851 , para 28—must turn on the particular facts of the case. This is not such a case.

 

  1. For these reasons, the claimant establishes, and does so without any real prospect of the defendant demonstrating to the contrary, that he had a reasonable expectation of privacy in the contents of the Hong Kong journal.

 

(2) The balancing exercise

  1. I have already set out what the balancing exercise—sometimes known as the parallel analysis—involves. Before coming to the parties’ submissions on the matter two particular points need to be made. 
  2. The first is that it is important not to overlook the fact that what may be in the public interest to know and thus for the media to publicise in exercise of their freedom of speech is not to be confused with what is interesting to the public and, therefore, in a newspaper’s commercial interest to publish. This is particularly so in the case of someone like the claimant whose every thought and action is, in some quarters at least, a matter of endless fascination.

 

  1. The second is to note that there is a particular tension where a public figure is involved. In the Flitcroft case [2003] QB 195 , 208, Lord Woolf CJ pointed out that a public figure must, because of his public position, “expect and accept that his actions will be more closely scrutinised by the media” and that “Conduct which in the case of a private individual would not be the appropriate subject of comment can be the proper subject of comment in the case of a public figure”. He said that “If you have courted public attention then you have less ground to object to the intrusion which follows”. He nevertheless made clear that “A public figure is entitled to a private life”. In Campbell v MGN Ltd [2004] 2 AC 457 , para 50, Lord Hoffmann emphasised that human rights law has identified “private information as something worth protecting as an aspect of human autonomy and dignity” and, at para 51, that the new approach to an action for unjustified publication of personal information

“focuses upon the protection of human autonomy and dignity—the right to control the dissemination of information about one’s private life and the right to the esteem and respect of other people.” 

 

  1. In McKennitt v Ash [2006] EMLR 178 Eady J summarised the importance of this consideration, to which impetus has been given by recent Strasbourg jurisprudence (in particular Von Hannover v Germany (2004) 40 EHRR 1 ), when he said [2006] EMLR 178 , para 57:

“It is clear that there is a significant shift taking place as between, on the one hand, freedom of expression for the media and the corresponding interest of the public to receive information, and, on the other hand, the legitimate expectation of citizens to have their private lives protected. As was made clear [in the Von Hannover case 40 EHRR 1 , para 77], even where there is a genuine public interest, alongside a commercial interest in the media in publishing articles or photographs, sometimes such interests would have to yield to the individual citizen’s right to the effective protection of private life.” 

 

  1. He also warned, at para 95, that, in the case of information about well known persons, it was necessary, in order to protect the legitimate rights of such persons to a private life, “to scrutinise with care any claims to public interest—which are sometimes made by the media and their representatives on a rather formulaic basis”. 
  2. I come then to the balancing exercise. The starting point is to identify what for the purposes of article 8(2) the legitimate aim is which is said to justify interference with the claimant’s right of privacy in respect of the contents of the Hong Kong journal enshrined by article 8(1) and why it is necessary that that right should be interfered with. 
  3. Mr Warby identified as the legitimate aim the electorate’s right to receive information of four kinds: (i) information which will enable it to understand the nature of the lobbying to which their elected leaders are subject; (ii) information which will enable it to assess and pass judgment on the political conduct of the heir to the throne; (iii) information which will assist it to evaluate the conduct of the claimant in failing to take part in the Chinese Embassy banquet of 1999 and the Buckingham Palace banquet of 2005; and (iv) information which corrects the claimant’s own public statements about his non-attendance at the 1999 banquet.
  4. Mr Warby submitted that the relevant context for these claims was: (i) the claimant’s status as a persistent and influential lobbyist of ministers and other elected politicians on a range of issues of public interest; (ii) his status as heir to the throne and the expectation that as future King he should maintain political neutrality, comparing that status and expectation with the claimant’s involvement in matters of controversy; (iii) his willingness, when it suits him, to make available otherwise confidential documents to enable his views on political matters to be conveyed (for example by means of the authorised biography written by Mr Jonathan Dimbleby); (iv) the strong perception, not least from the evidence of Mr Bolland, that the claimant deliberately boycotted the return banquet in the Chinese Embassy in 1999 which was to be contrasted with his subsequent public denials of any such intention; and (v) more generally, the claimant’s dislike of the Chinese Government. It was necessary in a democracy, said Mr Warby, that a newspaper such as the defendant’s should be free to make disclosures from the claimant’s Hong Kong journal which touch on these matters. The price of political activism, he said, is transparency.

 

  1. Mr Warby submitted that, given the limited weight to be attributed to the claimant’s right of privacy (assuming the claimant was able to establish it) in the contents of the Hong Kong journal (in that they dealt with the claimant’s participation in public events and set out his views and impressions of those events, many of which were political in nature, and did not deal with matters of a personal or family nature), and given also his willingness by speech and articles and by allowing persons such as Mr Dimbleby when writing his biography in 1994 to have access to a whole range of his otherwise confidential papers and, not least, to have access to travel journals, it was proportionate to the legitimate aim earlier identified to interfere with the claimant’s right of privacy to the extent that the defendant had done so in the articles which appeared in the 13 November edition. He submitted that there was a pressing social need for the interference since the aims identified were for the protection of the rights and freedoms of the electorate. He further submitted that the defendant was entitled in accordance with well-established Strasbourg jurisprudence to a wide latitude in the presentation and details of the information from the Hong Kong journal contained in the articles and that the defendant had not overstepped those bounds. 
  2. Coming to the article 10 analysis, although Mr Warby accepted that a legitimate aim to justify interference with the defendant’s article 10 right had been identified—namely protecting the claimant’s confidentiality in the Hong Kong journal—he submitted, nevertheless, that the weight to be attributed to that aim was, in view of the journal’s contents, so slight that it could not outweigh the importance of the defendant’s right to impart (and the public’s corresponding right to receive) the information, views and opinions on the topics covered in the articles. 
  3. In short, he submitted, the analysis yields the same result in both cases, namely that the claimant’s right of privacy in respect of the contents of the Hong Kong journal was legitimately overridden. 
  4. It is necessary in my view to examine carefully what the Hong Kong journal actually says and what the articles appearing in the 13 November edition seek to draw from that journal. 
  5. As to the claimant’s activities as a lobbyist and the concerns to which that fact is said to give rise, there is no mention of lobbying ministers or other politicians in the articles and (with one exception which I will come to) no suggestion in them that any of the information in the journal casts any light on communications between the claimant and ministers. It is in any event no secret that the claimant writes to ministers. It is mentioned in Mr Dimbleby’s book. The Hong Kong journal contributes nothing to the subject and the articles have nothing to say about the matter either. 
  6. What then of the claimant’s political conduct as heir to the throne and in particular any concern that he may be acting contrary to what constitutional convention requires of him? Again, there is nothing in the articles to suggest that his conduct is being assessed and a judgment made about it. There is not a hint of this in the editorial comment. The articles certainly assert that the Hong Kong journal shows that the claimant entertains strong views about the Chinese Government and other matters. *90 They do not suggest that, for example, the claimant used the opportunity of his Hong Kong tour to involve himself in contentious matters or to press his views on others. The most that is said in the articles is that “the memoirs”— plural—“provide a fascinating insight into how [the claimant] discreetly contributes to the formation of foreign policy”. Having read and re-read the Hong Kong journal it is not evident how that particular memoir enables such a conclusion to be reached unless it is because the claimant briefly shared the company (during the tour) of the Prime Minister during which he suggested, in what is the only specific reference to the claimant expressing any views to a British politician, that the best way for Britain to find a fresh national direction was “to concentrate on all the things that we do best as a nation and try to work out how they can be put to best use in a modern context”. It might be thought that that is an expression of view couched at a very high level of generality.  
  7. What then of the contribution that the Hong Kong journal makes to the claimant’s absence from the 1999 and 2005 banquets, the debate that those absences have prompted and the controversy over whether privately the claimant had arranged for the media to understand that his absence was intended to show his disapproval of the Chinese Government when he was denying publicly that that was the reason for his absence? The Hong Kong journal certainly shows the claimant’s scepticism of the Chinese Government and its ways and his fears for the future on that account. But it is difficult to see how his comments on these matters cast any but the most peripheral light on his absence two years later from the 1999 embassy banquet, let alone his absence from a banquet eight years later. 
  8. The conclusion from all of this can only be that the contribution that the Hong Kong journal makes to any public debate or to any process of informing the electorate about the various matters identified by Mr Warby in the course of his submissions is at best minimal. 
  9. In these circumstances it is to my mind impossible to say that the disclosures made by the defendant from the journal’s contents are necessary in a democratic society for the protection of the rights and freedoms of others and that, in consequence, the claimant’s entitlement to confidentiality in respect of that journal should be overridden. Not the least of the considerations that must be weighed in the scales is the claimant’s countervailing claim to what was described in argument as “his private space”: the right to be able to commit his private thoughts to writing and keep them private, the more so as he is inescapably a public figure who is subject to constant and intense media interest. The fact that the contents of the Hong Kong journal are not at the most intimate end of the privacy spectrum does not, to my mind, lessen the force of this countervailing claim. The claimant is as much entitled to enjoy confidentiality for his private thoughts as an aspect of his own “human autonomy and dignity” as is any other. 
  10. What then of the other side of the equation? The defendant’s right to freedom of expression enshrined in article 10 is obviously extremely important. The vital role of the press in a modern democracy is not in doubt. But article 10(2) makes explicit that the exercise of the right to freedom of expression carries responsibilities, one of which is preventing the disclosure of information received in confidence. That plainly includes the right to protect the confidentiality of a private journal.
  11. Mr Tomlinson submitted that this is a case where interference with the defendant’s article 10(1) right is justified under article 10(2) . He submitted that there is a strong public (as well as the claimant’s own private) interest in preserving the confidentiality of private journals and communications within private offices. He submitted that it is clear from the editorial comment in the 13 November edition, and from the other articles, that the defendant does not suggest that the Hong Kong journal reveals material about the claimant previously unknown to the public which casts doubt on his suitability to perform his public functions or which casts new light on his opinions on public issues or which contributes to any current political debate. He submitted that it is clear from the presentation of the material in the 13 November edition that its primary importance is said to be as a “historic document”. He submitted that, in any event, the interference with the defendant’s article 10 right is a limited one. The defendant was not prevented from publishing information derived from the Hong Kong journal. It has exercised its freedom of expression. The interference is limited to compensation in respect of that publication. 
  12. Overall, he submitted that the “parallel analysis” reveals that an interference with the claimant’s article 8 rights is not justified while interference with the defendant’s article 10 rights is justified. He submitted that the “public interest” considerations all point one way. 
  13. I agree. Mr Tomlinson submitted that it would be remarkable if in a case of this sort there were to be a public interest justification for disclosure where it is not alleged that any of the traditionally recognised categories apply. There was no question of exposure of any kind of wrongdoing or of hypocrisy, or, given the defendant’s case, of exposure of anything new about the claimant’s opinions. He accepted, of course, that the public interest in disclosure of matters of confidence is not limited in the way that it was once thought to be and must be approached more generally. 
  14. Standing back from the matter in the way that Mr Tomlinson suggested, it would indeed be remarkable if, in the interests of press freedom, the claimant cannot enjoy confidentiality in the musings and reflections which “as a bit of fun” (to quote Mr Bolland) the claimant chose to commit to paper in the course of his return flight to this country.
  15. I must finally ask myself whether these are matters which should not be resolved on an application for summary judgment but should be left to a trial because the defendant has a real prospect of defending the claim at trial or because there is some other compelling reason why the claim should be disposed of at trial. 
  16. I am not persuaded that the matter should go to trial. The parallel analysis depends upon an examination of the contents of the Hong Kong journal and the use made of those contents in the 13 November edition. There is no issue about the extent of the claimant’s various public activities both as heir to the throne and otherwise and also in respect of his “political” views and lobbying of ministers; for the purpose of this application it has been assumed on the claimant’s behalf that these matters are as the defendant states them to be. The only factual issues are those identified earlier which go to whether the claimant had a reasonable expectation of privacy in the contents of his journals. Stripping away those differences in the evidence which go to matters of detail, there is, for the reasons set out earlier, no real prospect of the defendant showing that *92 the claimant did not have that reasonable expectation of privacy or that, at the time of publication of the 13 November edition, the defendant was not fully on notice of the claimant’s claim to confidence and the reasons for it. 
  17. The claim for breach of confidence in respect of the Hong Kong journal, therefore, succeeds. As already noted, the relief sought is limited to compensation for the breach. …

The claim in copyright

  1. There is no doubt that copyright subsists in the journals and that the claimant is the author of them. There is no suggestion that any of them have been copied from other sources. The journals are, for copyright purposes, original literary works in that original skill and labour were expended in their creation. The contrary is not arguable. (For what it is worth, the defendant itself said, in one of the articles which appeared in the 13 November edition, that the journals established the claimant as “a literary figure of genuine stature”.) 
  2. The only issues which arise are, first, whether the claimant is the owner of copyright in the journals, second, if he is, whether the defendant has infringed his copyright in the journals (or any of them), third, whether, if infringement is otherwise established, the defendant can available itself of any and if so what defences to infringement and, fourth, what relief the claimant should obtain for whatever infringements are established. 

(1) Copyright ownership

  1. As undisputed creator of the journals, the claimant is the author of them for copyright purposes and, as such, the first owner of copyright in them: see sections 9(1) and 11(1) of the Copyright, Designs and Patents Act 1988 . *94 There is no suggestion that he has assigned or otherwise dealt with copyright in the works. The only point raised is a contention that the journals are subject to Crown copyright.

 

  1. Section 163 of the 1988 Act, which deals with Crown copyright, provides:

“(1)  Where a work is made by Her Majesty or by an officer or servant of the Crown in the course of his duties … (b) Her Majesty is the first owner of any copyright in the work.

 

“(2)  Copyright in such a work is referred to in this Part as ‘Crown copyright’ …” 

 

  1. There are two answers to this contention. The first is that the claimant is not an official or servant of the Crown in the sense intended by that subsection, namely someone engaged in the service of the executive branch of government: see Laddie, Prescott & Vitoria , The Modern Law of Copyright and Designs , 3rd ed (2000), para 36.4. The fact that some or all of the claimant’s overseas tours are at taxpayers’ expense does not make him an official or servant of the Crown for the duration of the tour in question. Nor, because he may be deputising for the Queen, is he to be somehow regarded as “Her Majesty” for the purposes of the subsection.

 

  1. The second answer is that, in any event, the journals were not made by the claimant “in the course of his duties”. They  

(2) Infringement

  1. The acts of infringement that are alleged are of two kinds. The first, which concerns acts of primary infringement, consists of the copying of the journals and the issuing to the public of copies of the Hong Kong journal, in each case without the licence of the claimant as owner of the copyright in them. 
  2. It is not in dispute that the defendant made copies of all of the journals, each in its entirety, and did so without the claimant’s licence. This occurred, at the latest, when one of the journals was given to Ms Goodall to return to the claimant and the defendant retained a further set for its own use. This is apparent from para 17 of Mr Wright’s witness statement and para 11 of Mr Wellington’s. It is not suggested that the defendant had been furnished by the unnamed intermediary with more than one copy of each journal. The making of copies without the claimant’s licence was contrary to section 17 of the 1988 Act which prohibits the reproduction of the copyright work in any material form. 
  3. Copying for this purpose extends to reproduction of a substantial part of the work: see section 16(3) of the 1988 Act. It is not in dispute that parts of the Hong Kong journal were reproduced in the 13 November edition and that copies of that newspaper were distributed, by sale or otherwise, to the public. Subject only to whether the extracts so copied were a “substantial part” of the Hong Kong journal and to the so-called fair dealing defences, it is clear that the copying constituted an infringement of copyright contrary to section 17 of the 1988 Act and that the issue of copies to the public constituted an infringement of copyright contrary to section 18 of the 1988 Act. I will come shortly to those defences. 
  4. The other act of infringement relied upon, which is in the nature of a secondary infringement, is possession by the defendant in the course of its business and without the claimant’s consent as copyright owner of infringing copies of the eight journals knowing or having reason to believe that the copies are infringing copies, contrary to section 23 of the 1988 Act. The defendant admits possessing such copies. It is clearly on notice of the claimant’s copyright claim to the eight journals. Whether or not the defendant had reason to know in detail of these matters before the claim form was issued (I would be surprised if it did not) the claim to copyright and the reasons for it are explicitly set out in the particulars of claim. Aside from the Crown copyright contention, with which I have dealt, and a further and general contention that it was not in any event appropriate for the claimant to resort to copyright law to vindicate his privacy in the journals (a submission I will come to later), the only defence raised in argument to this part of the copyright claim went to the appropriateness of the relief claimed, in particular whether, as the claimant seeks, I should order delivery up of the infringing copies in the defendant’s possession and restrain the defendant from further copyright infringement. 

(3) The defences raised

(a) “Substantial part”

  1. The defendant contends that what was reproduced in the articles published in the 13 November edition was not a substantial part of the Hong Kong journal. This defence, if it is good, goes only to the acts of infringement based on issuing copies to the public contrary to section 18 . The other infringing acts relate to the copying of the entirety of each journal.  
  2. The defendant has calculated that the extracts quoted verbatim from the journal add up to just over 15% of the whole. It is trite law, however, that substantiality in this context depends upon the quality of what is taken, not its quantity. The parts taken are set out in schedule 3 to the particulars of claim. Not only are they, as Mr Tomlinson and Ms Lane pointed out in their skeleton argument, the parts of the Hong Kong journal which touch on the claimant’s opinions and which, not surprisingly, are most likely to be of interest to the newspaper’s readers, but they also are the parts which most exactly demonstrate what one of the articles described as the “poignant, insightful and witty” passages of the journal.

 

  1. I am in no doubt that, taken as a whole, the extracts quoted form a substantial part, qualitatively, of the Hong Kong journal. For what the point is worth I also consider that they are substantial in quantitative terms. Mr Warby referred only to the fact that the quotations from the articles were short and that the events concerned were well known and described in unoriginal terms. These matters do not go to the question of substantiality. The question is one of law. A trial will not add anything. (b) The fair dealing defences.
  2. These are two in number. Like the substantiality defence, these defences go only to reproduction of extracts from the Hong Kong journal. They do not affect the acts of infringement based upon making and possessing copies of the journals. 
  3. I will take the fair dealing defences in the order in which they were argued before me. 

(i) Fair dealing for the purpose of reporting current events

  1. Section 30(2) of the Copyright, Designs and Patents Act 1988 provides:

“Fair dealing with a work (other than a photograph) for the purpose of reporting current events does not infringe any copyright in the work provided that … it is accompanied by a sufficient acknowledgement.”

 

 

  1. The test is objective. The words “reporting current events” are of wide and indefinite scope and require liberal interpretation: see Pro Sieben Media AG v Carlton UK Television Ltd [1999] 1 WLR 605 , 614. The defence is intended to protect the role of the media in informing the public about matters of current concern to the public: see Ashdown v Telegraph Group Ltd [2002] Ch 149 . That case concerned newspaper articles published in late November 1999 which quoted from a minute of an important and highly confidential meeting between, among others, the then leader of the Liberal Democrats and the Prime Minister, which had taken place two years earlier. The meeting had discussed possible future co-operation between the Liberal Democrats and the government. The Court of Appeal upheld the decision of Sir Andrew Morritt V-C [2001] Ch 685 to grant the claimant summary judgment in its claim alleging copyright infringement (there was also a claim in breach of confidence which, however, was not the subject of a summary judgment application). Accepting that, although it had taken place two years before the articles had appeared, the meeting was “arguably a matter of current interest to the public”, the court stated [2002] Ch 149 , para 64:

“In a democratic society, information about a meeting between the Prime Minister and an opposition party leader during the then current Parliament to discuss possible close co-operation between those parties is very likely to be of legitimate and continuing public interest. It might impinge upon the way in which the public would vote at the next general election. The ‘issues’ identified by the ‘Sunday Telegraph’ may not themselves be ‘events’, but the existence of those issues may help to demonstrate the continuing public interest in a meeting two years earlier.” 

 

  1. Mr Warby submitted that it is the “events” which need to be “current” not the words being used and that, in the instant case, the current events included the state visit of the President of China, the claimant’s not-attendance at the Buckingham Palace banquet, relations generally between Britain and China, and the claimant’s “political conduct and its constitutional implications”. 
  2. Mr Tomlinson submitted that the claimant’s opinions, so far as disclosed by the Hong Kong journal, are not in themselves a current event and that it is plain that the purpose of the articles in the 13 November edition was to reveal the contents of the Hong Kong journal and report on that revelation as itself a current event rather than to report on some other current event. He submitted that the vast majority of the articles was about *97 the contents of the Hong Kong journal with very little attempt to relate those contents to any separate current event. 
  3. Although there is much in the articles which cannot conceivably relate to current events, for example the passages reproducing those extracts of the Hong Kong journal concerned with the decision to decommission the Royal Yacht Britannia and with the claimant’s amused surprise that, on the flight out, he was travelling club class rather than first class, there are features of the articles which, in the very broadest sense, can arguably be said to relate to current events, taking that expression to include matters of current interest to the public, namely the light that his views on the Chinese Government might throw on his absence, a few days before the articles appeared, from the state banquet at Buckingham Palace held in honour of the visiting President of China. Beyond that matter, and, very possibly, the continuing public debate on the claimant’s conduct of his role as heir to the throne and any faint light that his comments in the Hong Kong journal might be thought to cast on that matter, it is difficult to see to what other “current events” the extracts from the journal can be said to relate. 
  4. It is also necessary to consider whether the dealing was “fair”. In Ashdown’s case [2002] Ch 149, para 70, the Court of Appeal quoted as an accurate and helpful summary of the test of fair dealing the following passage, set out in para 20.16 of Laddie, Prescott & Vitoria , The Modern Law of Copyright and Designs :

“It is impossible to lay down any hard-and-fast definition of what is fair dealing, for it is a matter of fact, degree and impression. However, by far the most important factor is whether the alleged fair dealing is in fact commercially competing with the proprietor’s exploitation of the copyright work, a substitute for the probable purchase of authorised copies, and the like. If it is, the fair dealing defence will almost certainly fail. If it is not and there is a moderate taking and there are no special adverse factors, the defence is likely to succeed, especially if the defendant’s additional purpose is to right a wrong, to ventilate an honest grievance, to engage in political controversy, and so on. The second most important factor is whether the work has already been published or otherwise exposed to the public. If it has not, and especially if the material has been obtained by a breach of confidence or other mean or underhand dealing, the courts will be reluctant to say this is fair. However this is by no means conclusive, for sometimes it is necessary for the purposes of legitimate public controversy to make use of ‘leaked’ information. The third most important factor is the amount and importance of the work that has been taken. For, although it is permissible to take a substantial part of the work (if not, there could be no question of infringement in the first place), in some circumstances the taking of an excessive amount, or the taking of even a small amount if on a regular basis, would negative fair dealing.” 

 

  1. The court in Ashdown’s case, at para 71, went on to observe that, although based on a summary of the authorities before the Human Rights Act 1998 came into force, the principles summarised in that citation were still important when balancing the public interest in freedom of expression against the interests of owners of copyright, while emphasising that it was *98 essential not to apply inflexibly tests based on precedent but to bear in mind that considerations of public interest were paramount. 
  2. The context for this observation was the court’s consideration (para 67) of why it should ever be contrary to the public interest that a newspaper should have to pay compensation, or account for the profit made, when it makes unauthorised use of the work product of another and its conclusion that section 30 provides examples of situations where this may be justified when set against the fact, recognised by Strasbourg jurisprudence, that the award of damages may discourage the participation by the press in matters of public concern. This in turn led the court to conclude, at para 69, that the fair dealing defences under section 30 should lie

“where the public interest in learning of the very words written by the owner of the copyright is such that publication should not be inhibited by the chilling factor of having to pay damages or account for profits.” 

Earlier in its judgment, at para 39, the court had observed:

“in most circumstances, the principle of freedom of expression will be sufficiently protected if there is a right to publish information and ideas set out in another’s literary work, without copying the very words which that person has employed to convey the information or express the ideas. In such circumstances it will normally be necessary in a democratic society that the author of the work should have his property in his own creation protected.” 

The court, nevertheless, accepted, at para 43, that, as Strasbourg jurisprudence had recognised:

“There will be occasions when it is in the public interest not merely that information should be published, but that the public should be told the very words used by a person, notwithstanding that the author enjoys copyright in them. On occasions, indeed, it is the form and not the content of a document which is of interest.” 

 

  1. Against that background, Mr Warby submitted that depending on the circumstances the actual words of the document may be of importance, not just the bald information contained in the document, so that in such a case it will be legitimate to use quotation rather than mere paraphrase or the reporting simply of the substance of the document. Taking each of the three matters referred to in the passage from Laddie, Prescott & Vitoria , he submitted that the defendant’s use of extracts from the Hong Kong journal did not commercially compete in any way with the claimant’s exploitation of that journal since it was not intended for commercial exploitation, that the material was not in any event confidential but had been widely circulated and that the defendant had used no more than a moderate amount of the work and had done so for the purpose of political reporting. In considering this last element it was appropriate, he said, to allow the defendant reasonable latitude as regards the selection of precise words and turns of phrase used and the extent to which they are extracted or shown in context. He referred to Fressoz and Roire v France (1999) 31 EHRR 28 , para 54, emphasising that article 10 of the Convention on Human Rights leaves it to journalists to decides whether or not it is appropriate to reproduce particular material to ensure credibility where *99 the disclosure is of information “on issues of general interest provided that they are acting in good faith and on an accurate factual basis and are providing ‘reliable and precise’ information in accordance with the ethics of journalism”. He referred also to what Lord Hoffmann had stated in Campbell v MGN Ltd [2004] 2 AC 457 , paras 62–63, that “The practical exigencies of journalism demand that some latitude must be given” and that “It is unreasonable to expect that in matters of judgment any more than accuracy of reporting, newspapers would always get it absolutely right”. 
  2. Mr Tomlinson submitted that, taking each of the considerations referred to in the passage from Laddie, Prescott & Vitoria , although it was true that the claimant has not sought to exploit commercially his Hong Kong journal and has no current intention of doing so it is possible, as Sir Michael Peat in his first witness statement made clear, that edited extracts may one day be published after the claimant’s death. Second, he said, the Hong Kong journal has not been published or exposed to the public but its contents had been passed to the defendant in clear breach of confidence as the claimant, through his advisers, made clear to the defendant in advance of publication of the 13 November edition. Third, and in any event, the amount taken by the defendant for the Hong Kong journal was substantial and far greater than necessary to make any point about a current event, rather than merely giving publicity to the claimant’s views. 
  3. In my judgment, there is no real prospect that this defence will succeed. The copy of the Hong Kong journal was obtained by the defendant as a result of a breach of confidence. The defendant was put on notice of the fact. On the evidence the defendant has no real prospect of showing otherwise. Taken as a whole, the articles were not confined, even allowing a reasonable margin of appreciation, to dealing with current events. The theme of the editorial content was the claimant’s fitness to be King and his skills as a chronicler of historical events (a point emphasised by the heading at the top of the two-page spread). The significance of the journal’s contents in explaining (to the very limited extent that it might be thought that they do) the claimant’s non-attendance at the banquet in Buckingham Palace a few days earlier and his non-attendance at the embassy banquet six years earlier form only a part of the overall contents of the articles, as does any faint light that they throw on the claimant’s conduct of his role as heir to the throne. The overall impression conveyed by the articles, which I am as well able on this application to assess as will a judge at a trial, is that the choice passages from the journal have been selected for publication and comment, and that this has been done with the purpose of reporting on the revelation of the contents of the journal as itself an event of interest. In Ashdown v Telegraph Group Ltd [2002] Ch 149, para 82, the Court of Appeal criticised the extent of the reproduction of the confidential minute in that case in the following terms:

“It appears to us that the minute was deliberately filleted in order to extract colourful passages that were most likely to add flavour to the article and thus to appeal to the readership of the newspaper. Mr Ashdown’s work product was deployed in the way that it was for reasons that were essentially journalistic in furtherance of the commercial interests of the Telegraph Group.” 

*100 Those comments precisely reflect the view that I take of the use made by the defendant of the contents of the Hong Kong journal in the 13 November edition. 

(ii) Fair dealing for the purpose of criticism or review

  1. The relevant provision is section 30(1) of the Copyright, Designs and Patents Act 1988 which, so far as material, is as follows (incorporating amendments made by regulations 3 and 10(1) of the Copyright and Related Rights Regulations 2003 (SI 2003/2498) with effect from 31 October 2003):

“(1)  Fair dealing with a work for the purpose of criticism or review … does not infringe any copyright in the work provided that it is accompanied by a sufficient acknowledgement and provided that the work has been made available to the public.

 

“(1A)  For the purposes of subsection (1) a work has been made available to the public if it has been made available by any means, including-(a) the issue of copies to the public … but in determining generally for the purposes of that subsection whether a work has been made available to the public no account shall be taken of any unauthorised act.” 

  1. The defendant’s reliance on this provision is misplaced since it is plain that the Hong Kong journal has not been made available to the public. Circulation of copies of the journal to a number of carefully selected recipients, even if the overall total is as many as Mr Bolland claimed, does not amount to making it available to the public. The defendant has no real prospect of showing otherwise. Mr Warby endeavoured to persuade me that the journal was lawfully made available to the public by the defendant’s own lawful publication of it for the purpose of reporting current events. But if it has been lawfully published for that purpose, the defendant has no need to rely on any defence under section 30(1) whereas, if it has not, the defence on his own argument does not lie. Since I do not consider that the extracts were lawfully published under section 30(2) , or for that matter under any more general public interest defence (as to which see later), it follows that the point does not arise. I should add that the fact, if fact it be, that information contained in the journal has been lawfully published by the defendant, for example as a result of the parallel analysis which arises where the court is required to carry out a balancing exercise between articles 8 and 10 when considering whether the claimant’s right of privacy in the contents of the journal is overridden, does not mean that the copyright work itself has been made available to the public. 
  2. The articles’ description of the Hong Kong journal as “a remarkable historic document which could define [the claimant] as one of the greatest chroniclers of our time” and as “poignant, insightful and witty” and as revealing “a thoughtful perceptive man, deeply committed to its country whose King he will one day be” and as establishing the claimant “as a literary figure of genuine stature” lead me to the conclusion that the defendant would have had a reasonable prospect of establishing a fair dealing defence under section 30(1) if it could have established or, for present purposes, demonstrated a real prospect of establishing that the copyright work had already lawfully been made available to the public. This is because, taken as a whole, the articles seem to me to deal with the Hong *101 Kong journal for the purpose of criticism or review, rather than for the purpose of reporting current events. 

(c) A wider public interest defence?

  1. Mr Warby submitted that if section 30(2) does not provide a defence the defendant can rely on a public interest defence under section 171(3) of the 1988 Act on the same grounds as are relied on in respect of the confidence claim. 
  2. Section 171(3) preserves the defence of public interest in copyright cases. In Ashdown v Telegraph Group Ltd [2002] Ch 149 , para 58, the Court of Appeal made clear that the circumstances in which public interest may override copyright are not capable of precise categorisation or definition and pointed out that, with the 1998 Act in force, “there is the clearest public interest in giving effect to the right to freedom of expression in those rare cases where this right trumps the rights conferred by the 1988 Act”. The court emphasised, however, that it would be very rare for the public interest to justify the copying of the form of a work to which copyright attaches rather than refer simply to the information conveyed by the copyright work. This is no doubt because, as the court pointed out later in its judgment, at para 66, the fair dealing defences under section 30 will normally afford the court all the scope it needs properly to reflect the public interest in freedom of expression and, in particular, the freedom of the press and therefore “There will then be no need to give separate consideration to the availability of a public interest defence under section 171 ”. 
  3. Mr Tomlinson pointed to those passages and submitted that the public interest must be greater to justify using the form of the words appearing in the copyright work than to justify the use of the information contained in the work. He submitted that in the absence of any specific clear public interest considerations, over and above those available under the fair dealing defences, it would be wholly disproportionate to extinguish the claimant’s property rights in his copyright work, as will be the case if a public interest defence can be established. I agree. I can see no basis for supposing that, having no real prospect of establishing either of the fair dealing defences, the defendant has any greater prospect of establishing a public interest defence preserved by section 171(3) . There is nothing in the material before me to indicate that this is or may be one of those rare cases where the public interest trumps the rights conferred by the 1988 Act. Mr Warby did not seriously suggest that this is or may be such a case. 

(d) Surrogacy

  1. Mr Warby submitted that the copyright claim was put forward as a fall-back to the claim in privacy and that, given the stated absence of any intention on the claimant’s part to publish the journals, the claim was not motivated by commercial considerations. The claimant’s objective, he said, is to prevent disclosure of information rather than to protect the expression of his works or to sanction (by damages) the disclosure which has already occurred. He quoted from Barendt , Freedom of Speech , 2nd ed (2005), p 262 that “The use of copyright to protect personal privacy can be regarded as an abuse of the former right … It is surely wrong to allow a copyright *102 action to succeed, when it acts as a surrogate for a privacy claim which would, rightly or wrongly, almost certainly fail.” 

He cited as an illustration of this proposition the refusal of Lightman J in Service Corpn International plc v Channel Four Television Corpn [1999] EMLR 83 to grant an interim injunction to restrain the broadcasting by the defendant of a film indicating that the claimant engaged in malpractices in the conduct of one of its funeral homes. 

  1. In that case the claimant, aware that the defendant intended to broadcast the film, threatened that if it was shown a claim might be brought in defamation and for breach of confidence. In the event, the claims brought were for breach of confidence, breach of copyright and trespass. The judge, in dismissing the application for an interim injunction, found that there were no arguable causes of action in respect of any of those three claims, that the evidence suggested a good prospect of the defendants having a public interest defence to the copyright claim and that in any event the relief should be refused on discretionary grounds relating to limited prospects of success coupled with the public interest in disclosure of a matter deeply affecting the public, balance of convenience and delay. In the course of his judgment, Lightman J observed that if a claim based on some other cause of action was in reality a claim brought to protect reputation and reliance on the other cause of action was merely a device to circumvent the rule against the grant of an interlocutory injunction where the claim was in defamation and the defendant intended to plead justification (as seemed likely in the case of the claims advanced before him), then the overriding need to protect freedom of speech required the same rule to be applied. 
  2. I can quite see that the court will not countenance reliance on copyright to prevent disclosure of some kind of wrongdoing, such as was suggested by the evidence in the Service Corpn case. In the field of copyright this is a matter covered by the public interest defence preserved by section 171(3) : see, for example, Lion Laboratories Ltd v Evans [1985] QB 526 discussed in Ashdown v Telegraph Group Ltd [2002] Ch 149 . That is not this case. Nor, of course, is this a disguised claim in defamation. The contrary has not been suggested. Once one strips away any possible public interest defence and any suggestion that this is some kind of disguised claim to protect reputation, there is no scope in my view for arguing, as in effect the defendant does, that the court will only entertain a copyright action if the claimant can demonstrate an intention to publish his work or otherwise exploit it for some commercial purpose. As was pointed out in Ashdown’s case, para 30, copyright is essentially a negative not a positive right. It gives the copyright owner the right to prevent others from doing what the 1988 Act recognises the owner alone as having a right to do. The right is not conditional, even inferentially let alone expressly, on an intention to exploit the copyright work commercially. Copyright is a property right. Subject to the “exceptions, exemptions and defences” provided for in the 1988 Act, including, residually, any general public interest defence, a copyright owner does not have to justify the assertion of his copyright. The fact alone that the copyright owner may have no present intention of exploiting his property right does not justify another in expropriating that right for himself for free. The fact, if fact it be, that the copyright owner asserts his copyright in a work in order to maintain privacy in the work does not appear to me to be any kind of abuse of his ownership right. The position is no different where the claim is advanced as an alternative or, as it is put, as a fall-back to a claim in privacy. It was not suggested in Ashdown’s case that the fact that the claimant advanced a claim in confidence as well as in copyright (which alone was the subject of the summary judgment application) provided any kind of impediment. 
  3. In my judgment, there is no substance in this further suggested defence. 

(4) Relief

  1. The relief for his copyright claims which the claimant seeks in respect of the Hong Kong journal is an injunction to restrain further infringement of his copyright in the work and an inquiry as to damages in respect of any loss which he can demonstrate that he has suffered arising out of the defendant’s infringement of his copyright in it. He does not seek an account of profits. 
  2. In Ashdown v Telegraph Group Ltd [2002] Ch 149 , paras 45, 46, the court recognised that, even in those rare cases where the right to freedom of expression comes into conflict with the protection afforded by the 1988 Act, notwithstanding the express exceptions to be found in that Act, the court is bound, in so far as it is able, to apply the Act in a manner which accommodates the right to freedom of expression. It envisaged the first way in which it may be possible to do so might be by declining the discretionary relief of an injunction, commenting that usually such a step would be sufficient. The court went on to observe that if a newspaper considered it necessary to copy the exact words created by another it could see no reason in principle why the newspaper should not indemnify the author for any loss caused to him. “Freedom of expression” the court said “should not normally carry with it the right to make free use of another’s work”. 
  3. In the present case I can see no reason why in respect of the Hong Kong journal the claimant should not be granted the inquiry as to damages which he seeks for copyright infringement, an injunction to prevent further infringement of his copyright in that work and delivery up of all infringing copies of it in the defendant’s possession, power, custody or control. Having established his cause of action, damages, if he can show any loss, seem to me to follow almost as a matter of course. 
  4. It was submitted on the defendant’s behalf, however, that now that all of the information contained in the Hong Kong journal was in the public domain, any further injunction to prevent copyright infringement would be inappropriate, that the defendant like the rest of the media was now entitled to deal fairly with the work under section 30 of the 1988 Act and, therefore, that the defendant should not be obliged to exercise those rights “in the shadow of contempt proceedings”. I do not agree. There is nothing disproportionate in granting an injunction against further copyright infringement and an order for the delivery up of all infringing copies of that journal. The defendant has already exercised its freedom of expression by commenting at length on its contents and quoting freely from it. The fact that all of the information contained in it is now in the public domain does not give the defendant, or anyone else, any right to infringe the claimant’s copyright in the work. Any risk that the defendant runs from any further attempt at a fair dealing with the journal does not, in the circumstances, seem to me disproportionate given the claimant’s entitlement to protect his copyright interest in it. 
  5. As regards the other seven journals, the claimant seeks an injunction to prevent infringement of his copyright in them and the delivery up of all copies of them in the defendant’s possession, power, custody or control, together with an inquiry as to damages in respect of any loss which he can show that he has suffered in consequence of these further acts of copyright infringement. 
  6. The defendant resists any relief in respect of the seven other journals, whether for an injunction to restrain any further infringement of copyright or for the delivery up of all infringing copies, or for damages, on the ground that, as I have already mentioned, although their contents were not put in evidence, they have been read by Mr Wright and by Elizabeth Hartley and their evidence, which the claimant has not attempted to contradict, is that “they are of a similar character” to the Hong Kong journal and “contain many matters of considerable legitimate interest to the public”. Mr Warby submitted that if it is permissible to deal fairly with a copyright work for the purpose of section 30 it must be permissible to possess a copy of the work itself otherwise the right is rendered meaningless. Possession of a copy for such a purpose, he submitted, falls within the ambit of “dealing” for the permitted section 30 purpose. He further submitted that the court has never yet ordered delivery up of a work that a newspaper asserts is or may be in the public interest to publish merely because the copy of the work may infringe the copyright of the person seeking the order for its delivery up. He submitted that the court should, therefore, be slow to do so in this case, particularly as the defendant has undertaken not to publish any part of the contents of those seven journals without first giving the claimant’s lawyers at least 24 hours’ prior notice of its intention to do so. He drew my attention to passages in the judgments in Microsoft Corpn v Plato Technology Ltd (unreported) 15 July 1999; Court of Appeal (Civil Division) Transcript No 1239 of 1999 and Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289 to emphasise that relief by way of injunction or delivery up must be tailored to match the case and be fair to the defendants and that there may be circumstances where no relief by way of injunction or delivery up is appropriate. 
  7. Ms Lane submitted that the relief claimed in respect of the other seven journals is entirely standard. It cannot be right, she said, that merely on the off-chance that a person may be able to establish a fair dealing with a copyright work at some future date that person is to be permitted in the meantime, and for what may be an indefinite period of time, to make and retain infringing copies of the work and, for all the copyright owner knows, distribute copies to others, without risk of any kind of sanction. The fact that the defendant has not yet formed any intention to deal in any way with the other seven journals does not put it in any more favourable position. Nor does the fact that the person in possession of the infringing copy is a newspaper. For the court to decline any relief in such a case would, she said, be tantamount to robbing the copyright owner of his property in the work. 
  8. I see very great force in what Ms Lane submits. But I remind myself that this is an application for summary judgment. I

regard as eminently *105 arguable that, just as the defendant may be able to demonstrate at trial that-at any rate in advance of the court having seen what they contain-the court should not prevent by permanent injunction the possible future use of information contained in the other seven journals when, for all the court knows, circumstances may arise which may make the disclosure an entirely appropriate exercise of the defendant’s right of freedom of expression, so also should the defendant be free, as part and parcel of the exercise of that right, to quote verbatim extracts from the journals and that, in the meantime, it would be an illegitimate curtailment of its article 10 rights to have to return the copies it has of those seven journals. I regard this as a difficult question. It brings into play the impact of the 1998 Act on the protection afforded to copyright by the Copyright, Designs and Patents Act 1988 . This particular aspect of the dispute was not debated at any great length before me. I am left in sufficient doubt about the correct answer to think that it would not be right to come to any final conclusion on the point on an application of this kind. 

Result

  1. The application succeeds in respect of the claims in confidence and copyright concerning the Hong Kong journal. The claims in respect of the other journals must go forward to trial.’

 

[ix] See – https://www.theguardian.com/politics/2004/may/30/uk.pressandpublishing

 

[x] HRH Duchess of Sussex v Associated Newspapers Ltd [2022] 4 W.L.R. 81 (2021).

Extracts from the judgment of Sir Geoffrey Vos M.R.:

Introduction

  1. The central question in these appeals is whether the judge (Warby J—now Warby LJ) was right to make orders for summary judgment in favour of the claimant, Meghan, Duchess of Sussex (“the Duchess” or “the claimant”) against the publishers of the Mail on Sunday newspaper and the MailOnline , Associated Newspapers Ltd (“Associated Newspapers” or “the defendant”). Summary judgment was granted in respect of the Duchess’s claims for misuse of private information and infringement of copyright [2021] EWHC 273 (Ch); [2021] 4 WLR 35 . The claims relate to the publication in a number of Mail articles (the articles) of about half the contents of a five-page handwritten letter which the Duchess had sent on 27 August 2018 to her father, Mr Thomas Markle.

 

  1. The Duchess contended and the judge found that the contents of the letter were private and concerned personal matters that were not matters of legitimate public interest, and in which she enjoyed a reasonable expectation of privacy. He held that the articles interfered with that reasonable expectation, and were not a necessary or proportionate means of correcting certain inaccuracies about the letter contained in an article published on 6 February 2019 in People magazine in the USA (“the People Article”). Taken as a whole, the disclosures in the articles were manifestly excessive and, therefore, unlawful, and there was no prospect of a different result being reached after a trial. The interference with freedom of expression which this outcome represented was a necessary and proportionate means of pursuing the legitimate aim of protecting the Duchess’s privacy.
  2. The judge approached the application for summary judgment on the basis that Associated Newspapers would be able to make good its pleaded case (except where it was manifestly untenable). As will appear, however, events since the judgment have forced Associated Newspapers to withdraw or amend some aspects of its pleaded case, but, as will also appear, that does not seem to me to affect the outcome of this appeal.

 

  1. In mounting its appeal, Associated Newspapers relied on a number of supposedly novel features of the facts it alleges, which I can summarise very briefly as follows:
  • (i)  The letter was written by a very high-profile public figure as part of a media strategy to enhance her image. This is one of the allegations which is not now pursued, though it is still alleged that the Duchess thought, at the time that the letter was prepared with the benefit of comments from Mr Knauf, that it was likely to reach the public domain.
  • (ii)  The letter’s contents were unusual in that they included details of communications between the Duchess and Mr Markle, which were in some respects false.
  • (iii)  The contents of the letter were briefed to the prospective publishers of the book Finding Freedom written by Omid Scobie and Caroline Durand with the Duchess’s co-operation, and to People magazine.
  • (iv)  Mr Markle had a history of going to the media, which was what the letter complained about.
  • (v)  The articles were the continuation of a debate on a matter of public interest, which the Duchess had initiated through the agency of friends.
  • (vi)  Much of the true position was peculiarly within the Duchess’s own knowledge and could not be ascertained in advance of disclosure and trial.

 

  1. Associated Newspapers’ main points on the privacy case seem to have shifted as the appeal has progressed. Rather than track these developments, I will recite the six grounds relating to privacy points on which it was granted permission to appeal, namely (1) the judge failed to make findings on the factors relied on as undermining or diminishing the weight of the Duchess’s privacy right, (2) the judge wrongly thought that the Duchess’s disclosures of the letter to People magazine and the book were relevant only to the issue of public domain, and not to her conduct and ambivalence, (3) the judge failed to recognise that the Duchess’s disclosures to People magazine and the book and her intentions in relation to disclosing the letter were relevant to the assessment of the Murray factors (taken from Murray v Express Newspapers plc [2008] EWCA Civ 446; [2009] Ch 481, para 36 ) at stage one, (4) the judge gave inadequate weight to the article 10 rights engaged, and assessed them on an overly restrictive basis, especially in relation to reply to attacks, (5) the judge failed to attach sufficient significance to the prospect that Associated Newspapers’ pleaded case would be made good at trial, and (6) the judge wrongly assessed what further evidence was likely to be available at trial.

 

  1. The main point made by Associated Newspapers is perhaps that the judge failed to realise how the People Article traduced Mr Markle, and did not even mention aspects that entitled him to reply to the attack that it constituted on him. The main elements of that attack were, as Mr Andrew Caldecott QC, leading counsel for Associated Newspapers, put it: Mr Markle cold-shouldered her at [really in the run-up to] the wedding, the most important point of her life, lied about her shutting him out, and gave a cynical and self-interested response ignoring her pleas for reconciliation in a loving letter, all in the teeth of his daughter being always dutiful and supporting him with incredible generosity.

 

  1. The main legal points in this appeal are that:
  • (i)  The judge wrongly stated the test, by suggesting that the defendant had to justify an interference with the claimant’s right of privacy, when the proper approach was to balance the competing rights and interferences under articles 8 and 10 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“ECHR”) (“the appropriate test issue”);
  • (ii)  the judge adopted a flawed analysis of the factors undermining the Duchess’s alleged reasonable expectation of privacy (“the reasonable expectation of privacy issue”);
  • (iii)  the judge was wrong to apply a strict test of necessity and proportionality to Mr Markle’s right of reply to the People Article; a much broader approach to the facts was required on authority (“the right of reply issue”).

 

  1. As to copyright, Associated Newspapers’ two main grounds of appeal are that:

 

  1. The Duchess supported the judge’s reasoning, but filed a respondent’s notice contending that Associated Newspapers’ defence, even if relevant to the issues, had no reasonable prospect of success. The Duchess submitted that a trial would be a further intrusive process in a case in which it could already be seen that there could have been no justification for the publication of large tracts of her private letter. In essence, the Duchess contended that the judge was right to reject Associated Newspapers’ primary case that Mr Markle was entitled to put the letter into the public domain in order to correct the record created by the People Article. The letter, for the most part, merely reinforced the points made against Mr Markle in the People Article. The judge correctly identified the inaccuracies in the People Article and also correctly held that it was not necessary or proportionate for Mr Markle to publish “long and sensational articles revealing and commenting on extensive extracts from the letter, without first approaching [the Duchess]”. …

The judge’s reasoning

Summary judgment principles

  1. The judge dealt with the principles applicable to strike out and summary judgment at paras 10–18. Neither side has made any criticism of his treatment, so I can take these passages shortly.

 

  1. The judge recorded the provisions of CPR r 24.2 , which allows the court to give summary judgment against a defendant if it considers “(a) … that the defendant has no real prospect of successfully defending the claim or issue; and (b) there is no other compelling reason why the case or issue should be disposed of at a trial”. The judge then said correctly that “in this context there is no assumption that what is asserted in the defence is true; evidence to the contrary is admissible, and is commonly adduced by the applicant and by the respondent. But it is possible to seek summary judgment on the footing that the claim is plainly meritorious and the defence contentions, even if true, could not amount to an answer to the claim”. That was, as I have said, essentially the basis on which the matter was argued before the judge and before us.

 

  1. The judge then cited Lewison J’s judgment in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15] (approved by the Court of Appeal in AC Ward & Sons Ltd v Catlin (Five) Ltd [2009] EWCA Civ 1098; [2010] Lloyd’s Rep IR 301 ). He adjusted the seven principles to be taken from that case as follows: 

“(i)  The court must consider whether the [defendant] has a ‘realistic’ as opposed to a ‘fanciful’ prospect of success;

 

“(ii)  A ‘realistic’ [defence] is one that carries some degree of conviction. This means a claim that is more than merely arguable …

 

“(iii)  In reaching its conclusion the court must not conduct a ‘mini-trial’ …

 

“(iv)  This does not mean that the court must take at face value and without analysis everything that a [defendant] says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents …

 

“(v)  However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial …;

 

“(vi)  Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case …;

 

“(vii)  On the other hand, it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent’s case is bad in law, he *10 will in truth have no real prospect of … successfully defending the claim against him … Similarly, if the applicant’s case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: …”

  1. The judge referred to Mummery LJ’s warning in Bolton Pharmaceutical Co 100 Ltd v Doncaster Pharmaceuticals Group Ltd [2006] EWCA Civ 661 ; [2007] FSR 6 at paras 10 and 11 that the court should be alert to “the defendant, who seeks to avoid summary judgment by making a case look more complicated and difficult than it really is”, and “the cocky claimant, who … confidently presents the factual and legal issues as simpler and easier than they really are and urges the court to be ‘efficient’ …” As the judge also correctly said, neither CPR Pt 24 , nor the overriding objective, permits the court to enter judgment on the basis that the claimant has a strong case, the defence is not likely to succeed, and the time and costs involved in a trial are disproportionate to the potential gains. The judge said that his focus had to be on “whether it [was] realistic or fanciful to suppose the claims might fail at trial”. The judge did not gain much help from the rarity of summary judgments in the privacy field. 

Essential legal principles

  1. At paras 28–32, the judge dealt with the essential legal principles governing the misuse of private information. Uncontroversially, he pointed out that the Human Rights Act 1998 obliged the court to interpret, apply and develop English law in conformity with the ECHR , so that the court must, in a privacy claim against the media, ensure that it properly reconciles the competing rights under the ECHR : article 8(1) requires the state to respect a person’s “private and family life … and [her] correspondence”, and article 10(1) “guarantees the right to transmit and receive information and ideas without state interference”. Both rights are qualified, so that interferences are justified only if they are prescribed by law, and are necessary and proportionate in pursuit of one of the legitimate aims identified in articles 8(2) and 10(2) . The judge said that: “here, on each side of the equation, the legitimate aim for consideration is `the protection of the rights of others’.”

 

  1. The judge summarised the two-stage test for the tort of misuse of private information in domestic law by reference to ZXC v Bloomberg LP [2020] EWCA Civ 611; [2021] QB 28 (“ZXC”) at paras 40–48 and 103–109 and Sicri v Associated Newspapers Ltd [2020] EWHC 3541 (QB); [2021] 4 WLR 9 (“Sicri”) at paras 63–74, 111–119, and 120–122. He summarised the two stages in ways that were not much disputed before us as follows:

“30.  At stage one the question is whether the claimant enjoyed a reasonable expectation of privacy in respect of the information in question. One way the question has been put is to ask whether a reasonable person, placed in the same position as the claimant and faced with the same publicity, would feel substantial offence. There must be something of a private nature that is worthy of protection. In some cases, the answer will be obvious; but the methodology is to make a broad objective assessment of all the circumstances of the case. These include (1) the attributes of the claimant, (2) the nature of the activity in which the claimant was engaged, (3) the place at which it was happening, (4) the nature and purpose of the intrusion, (5) the absence of consent and whether it was known or could be inferred, (6) the effect on the claimant and (7) the circumstances in which and the purposes for which the information came into the hands of the publisher (‘the Murray factors’). If the information, or similar information about the claimant, is in the public domain, or is about to become available to the public, the court must have regard to that. In such a case it is a matter of fact and degree as to whether the legitimate expectation of privacy has been lost. Privacy rights can survive a degree of publicity for the information or related information.

 

“31.  At stage two, the question is whether in all the circumstances the privacy rights of the claimant must yield to the imperatives of the freedom of expression enjoyed by publishers and their audiences [Associated Newspapers would add ‘or vice versa’]. The competing rights are both qualified, and neither has precedence as such. The conflict is not to be resolved mechanically, on the basis of rival generalities. The court must focus intensely on the comparative importance of the specific rights being claimed in the particular case; assess the justifications for interfering with each right; and balance them, applying a proportionality test. The court must have regard to the extent to which it is or would be in the public interest for the material to be published. The decisive factor at this stage is an assessment of the contribution which the publication of the relevant information would make to a debate of general interest. Other factors to be weighed in the balance are the subject-matter, how well-known the claimant is, the claimant’s prior conduct, and editorial latitude. When examining the demands of free speech, the court should be slow to interfere in respect of matters of technique, form and detail; it should defer, to the extent appropriate on the facts, to the professional expertise and judgment of journalists and editors.” 

 

  1. The judge noted that, where, as here, the defendant publisher was bound by the Editors’ Code of Conduct (“the Code”) enforced by the Independent Press Standards Organisation the court was obliged to have regard to it. He mentioned clauses 2 and 3 and the definition of privacy.

 

  1. The judge dealt with the two stages of the alleged misuse of private information between paras 64 and 129.

 

Stage one—reasonable expectation of privacy

  1. At para 64, he explained his approach to the first stage, stating the issue, which he said reflected the legal position, as: whether the claimant enjoyed a reasonable expectation that the contents of the letter were private and would remain so. He said that: “at this stage of the analysis the issue is binary, the only available answers being yes or no”. The judge then explained that

“The claimant will fail on the issue, and the defendant will succeed, only if the court concludes that the information at issue and/or the surrounding circumstances were such that it would be unreasonable for the claimant to expect the defendant to treat the information as private and not for publication or—putting it another way—that the reasonable person of ordinary sensibilities placed in the position of the claimant would not feel substantial offence at the disclosure in question.” 

The judge thought that “factors relied on as undermining the claimant’s case [at stage one], but which fall short of defeating it altogether, may come into play at the second, balancing stage”. 

  1. At para 66, the judge asked and answered the two main stage one questions in the negative: the defence had not set out any case which, assuming it to be true, would provide a reasonable basis for finding that there was, at any material time, no reasonable expectation of privacy, and the defendant had no realistic prospect of successfully defending this issue at trial. Further, there was no real prospect of the court concluding after a trial that, at the time the articles were published or later, the contents of the letter were not private, or that the claimant did not enjoy a reasonable expectation that they would remain private. 
  2. The following was, the judge said, plain and obvious and pointed to a reasonable expectation of privacy, paras 67–70: none of the detailed contents of the letter had entered the public domain. That was the “very essence of the [articles], which trumpeted that they ‘Revealed’ the contents of the letter ‘for the first time’ over four pages of ‘World Exclusive’ print coverage”. The People Article had, as the articles said, disclosed the existence of the letter. In relation to the Murray factors, it was, objectively assessed, obvious that: (1) the claimant was a public figure, who had a high public profile, and about whom much was written and published, (2) the activity she was engaged upon in writing the letter was not an aspect of her public role, but a communication to her father about his behaviour, (3) which she was doing in a private letter sent by courier to him alone, (4) the “intrusion” involved the publication of much of the letter over four pages of a popular newspaper and online to a very large readership, (5) there was no consent, (6) the unwanted disclosure was likely to cause the claimant at least some distress in the context, (7) the information was given to the defendant by the claimant’s father. The judge said that the argument made it necessary for him to consider six aspects in more detail: the claimant’s status and role, whether the letter or its contents were private in nature, the character and location of the recipient, the public domain, other disclosures by the claimant and claimant’s intentions. 
  3. The judge concluded that the defendant’s allegation that the facts it relied upon as showing that the claimant’s conduct and familial relationships were subject to public scrutiny could not lead the court to conclude that they deprived the claimant of any reasonable expectation of privacy in the contents of the letter.

 

  1. On the private nature of the letter, the judge concluded that the facts pleaded by Associated Newspapers did not support the conclusion that the claimant had no right to expect that the contents of her letter would be treated as private and would not be published. 
  2. On the nature of the contents of the letter, it was plainly correspondence containing matter relating to the claimant’s family life, so that article 8 was engaged. Whilst that was not conclusive as to the claimant’s reasonable expectation of privacy, the case that the letter contained her deepest and most private thoughts and feelings corresponded with the description given in the articles: “Meghan’s private letter revealing true tragedy of her rift with her father”. Associated Newspapers pleaded at para 13.2 of its defence that “as a general principle, a recipient of a letter is not obliged to keep its existence or contents private, unless there are special circumstances, such as a mutual understanding between sender and recipient that the contents of a letter should be kept private”, but that approach was rightly not pursued. It was at odds with a large body of authority. None of Associated Newspapers’ submissions was capable of supporting the conclusion, on the facts, that the claimant had no right to expect that the contents of her letter would be treated as private. It was not a business letter. It was delivered only to Mr Markle. The majority of what was published was about the claimant’s own behaviour and feelings. These features were reflected in the headline to the first article and the language used. If it were appropriate to use that formulation, this information was the claimant’s not her father’s. What information related to Mr Markle did not relate to him alone. Mr Markle’s undoubted right to tell his own life story did not override the claimant’s right to keep the contents of her letter private, which itself did not significantly impinge on Mr Markle’s right. All he was prevented from doing was using the contents of the letter as a means of telling his story. A close examination of the information showed that there was relatively little in the letter that Mr Markle could claim was shared experience, engaging his privacy rights. The judge gave examples pointing out that, even where the letter concerned his conduct, the focus was on the impact his actions had had on the claimant. Where the claimant accused Mr Markle of lying over denying that he was working with the paparazzi, the evidence showed he had, and the articles bore out that he had apologised. 
  3. On the character and location of Mr Markle, neither the claimant’s knowledge that Mr Markle was likely to disclose the letter to the media, nor the fact that US law made publication lawful, was capable of defeating the claimant’s case that objectively she had a reasonable expectation of privacy. 
  4. As to whether the letter was in the public domain, Associated Newspapers’ pleaded case fell short of alleging actual disclosure. All that was said was that the claimant permitted information about the existence of the letter and a description of its contents to enter the public domain. There was no real prospect of any evidence arising that the contents of the letter entered the public domain except through the articles. Associated Newspapers’ elaborate case as to how the People Article arose did not bear on the public domain issue, because contents were to be distinguished from description. The book did not appear until August 2020, and, when it did, it did not contain any words from the letter that had not already been published by the defendant. Its pleaded case that the information in the book about Mr Markle and the letter could only have come from the claimant was manifestly untenable. 
  5. Although public domain disclosures of similar information might weaken a reasonable expectation of privacy, it was fanciful to suppose that any of the disclosures relied upon placed so much relevant information about these matters in the public domain that the claimant lost any right to privacy in the contents of the letter. 
  6. As to the allegations that the claimant wrote the letter either intending to disclose it or knowing disclosure to be very likely, the judge held that these allegations did not operate to rebut the claim to a reasonable expectation of privacy. Moreover, the inferential case that the claimant was “considering using the letter as part of a media strategy to improve or enhance her image” (which has now been dropped) had no sound basis in law. The claimant had no need to prove her intention to keep the letter private in order to establish that she had a reasonable expectation of privacy. 
  7. On the basis of the reasons I have shortly summarised, the judge concluded at para 95 that the claimant would be bound to win at trial on her reasonable expectation of privacy. 

Stage two—the balancing exercise

  1. The judge described the stage two issues as (i) whether the interference with the claimant’s reasonable expectation of privacy involved in publishing the articles was necessary and proportionate in pursuit of the legitimate aim of protecting the rights of others, and (ii) whether the interference with freedom of expression that would be represented by a finding of liability was necessary and proportionate in pursuit of the legitimate aim of protecting the rights *13 of the claimant. It may be noted here that Associated Newspapers criticised the judge’s use of the word “necessary” in the second formulation. The judge recorded the submission that was also made to us to the effect that the factors raised at stage one were relevant also at stage two to reduce the claimant’s expectation of privacy that she may have had. He concluded at the outset of this section that: “taking the defendant’s case on each of those factors at its highest”, there was no real prospect of the court “striking the balance against the claimant and in favour of the defendant and its readers”. 
  2. The judge then cited Lord Hoffmann at para 57 in Campbell v MGN Ltd [2004] UKHL 22; [2004] 2 AC 457 (Campbell) , where he said that: “A person may attract or even seek publicity about some aspects of his or her life without creating any public interest in the publication of personal information about other matters.” 
  3. The judge dealt with three factors to which he thought a court would not attach great significance in the balancing exercise: (i) that the People Article was authorised by the claimant, and that she passed information about the contents of the letter to friends and to the authors, (ii) the fact and content of disclosures made to the authors for the purposes of the book, and (iii) the inference that the claimant was ready and willing to publicise details of her own private life and did not object to publicity about her, so long as it was favourable. 
  4. The judge said that the court should take into account the Strasbourg jurisprudence that “articles aimed solely at satisfying the curiosity of a particular readership regarding the details of a person’s private life, however well-known that person might be, cannot be deemed to contribute to any debate of general interest in society” (see Dupate v Latvia (Application No 18068/11) (2020) 72 EHRR 34, para 51 ). 
  5. The judge thought that the real issue on this part of the case was whether the articles might be justifiable for the purposes of correcting the record or, to adopt the language of the Code: “preventing the public from being misled”. If that were established, the defence would in all probability succeed, regardless of the weight attached to the other circumstances under consideration. 
  6. Campbell was the highest authority for the proposition that the disclosure of otherwise private information may be justified if the claimant has herself misled the public, and the disclosure is necessary for and proportionate to the purpose of putting things right. The court had also to take account of editorial latitude (see also Ali v Channel 5 Broadcasting Ltd [2019] EWCA Civ 677 at [83] and [92] , and Sicri at paras 67(3) and 111–119). The relevant provisions of the Code were consistent with these principles. 
  7. The judge analysed the defendant’s case on stage two at paras 109–127. The question was whether the disclosure was justified by the misleading nature of the People Article and the consequent damage to Mr Markle’s reputation. Because of the “somewhat muddied nature of the evidential position”, the judge focused first on the defence at paras 15.3–15.7 about the People Article being one-sided and misleading and depicting Mr Markle as having acted unreasonably and unlovingly from the week before the wedding, which Mr Markle believed to be false. That part of the defence was “entirely hopeless” because it could not be the law and there was no authority that the mere fact that a person “believes” his portrayal is untrue is enough to justify a reply: “moreover, the notion that the use of the letter is legitimate or even relevant to bolster such a reply is not just unexplained, it is unsustainable”. It was fanciful that the court would find the disclosure of the contents of the letter necessary or proportionate. …

The copyright claim

  1. At paras 130–152 the judge dealt with the essential legal principles, the issues, originality and infringement, before turning to the fair dealing for the purpose of reporting current events and the public interest defences at paras 153–158, which are the subject of this appeal.

 

  1. On fair dealing, the judge said that his previous analysis led “ineluctably to the conclusion that this defence could not succeed”. The defendant’s case identified five current events, broadly summarised, as: (i) the claimant’s relationship with her father, (ii) the People Article disclosing the existence of the letter, (iii) Mr Markle’s reaction to the People Article, (iv) Mr Markle’s dispute with the version put into the public domain, and (v) his dispute with the version of the claimant’s conduct towards him. (ii)-(v) arguably qualified as public events. The only requirement of the defence which was satisfied was the acknowledgment of the author. Summary judgment dismissing fair dealing defences had been given in Hyde Park Residence Ltd v Yelland [2001] Ch 143; [2000] 3 WLR 215 (“Hyde Park”) , Ashdown v Telegraph Group Ltd [2001] EWCA Civ 1142; [2002] Ch 149 (“Ashdown”) , and HRH Prince of Wales v Associated Newspapers Ltd [2006] EWHC 522 (Ch) ; [2008] Ch 57 . Guidance was to be found in Ashdown at para 70 (approving an extract from Laddie, Prescott and Vitoria, The Modern Law of Copyright and Designs , 3rd ed (2000), para 20.16):

“by far the most important factor is whether the alleged fair dealing is in fact commercially competing with the proprietor’s exploitation of the copyright work, a substitute for the probable purchase of authorised copies, and the like. If it is, the fair dealing defence will almost certainly fail. If it is not and there is a moderate taking and there are no special adverse factors, the defence is likely to succeed, especially if the defendant’s additional purpose is to right a wrong, to ventilate an honest grievance, to engage in political controversy, and so on. The second most important factor is whether the work has already been published or otherwise exposed to the public. If it has not, and especially if the material has been obtained by a breach of confidence or other mean or underhand dealing, the courts will be reluctant to say this is fair. However this is by no means conclusive, for sometimes it is necessary for the purposes of legitimate public controversy to make use of ‘leaked’ information. The third most important factor is the amount and importance of the work that has been taken. For, although it is permissible to take a substantial part of the work (if not, there could be no question of infringement in the first place), in some circumstances the taking of an excessive amount, or the taking of even a small amount if on a regular basis, would negative fair dealing.” 

 

  1. The judge said that the letter was not intended for commercial exploitation, but the defendant knew it was unpublished. Communicating the letter to the defendant here may have been unlawful. The copying of large parts of the original literary content of the letter infringed the claimant’s privacy rights and was irrelevant and disproportionate to any legitimate reporting purpose. The reproduction was essentially for the purpose of reporting the contents of the letter, which was not a current event. The use made was not fair.

 

  1. On public interest and article 10 , section 171(3) of the Copyright Designs and Patents Act 1988 (“CDPA ”) preserved the common law defence. The court refuses to allow its process to be used for purposes that are contrary to the public interest (see Hyde Park at para 43). The protection of freedom of speech under article 10 was one aspect of the public interest: “freedom of expression would prevail, in the public interest, in `those rare cases where this right trumps’ those conferred by the CDPA: Ashdown para 58”. The judge said that such cases will be few because: (i) copyright was itself a right protected by article 1 of the First Protocol to the ECHR , (ii) the protection of copyright was a legitimate aim capable of justifying an interference with freedom of expression, and the court had to strike a fair balance, (iii) it would be very rare for the public interest to justify the copying of the form of a work to which copyright attaches: Ashdown para 59, and (iv) the fair dealing defence will normally itself properly reflect the public interest in freedom of expression: Ashdown para 66. 
  2. The judge thought that this was not one of the rare cases referred to in Ashdown . There was “no basis on which the court could conclude that, although the copying of the work was not fair dealing for news reporting purposes, the public interest [required] the copyright to be overridden” for the reasons given under the heading of fair dealing. 

The central issues

  1. I have summarised Associated Newspapers’ case on this appeal at paras 5–9 above. I shall deal with the main issues raised in this appeal as follows:
  • (i)  The new evidence issue : Whether the new evidence provided by each of the parties should be admitted.
  • (ii)  The nature of the attack issue : Whether the judge mistakenly failed to recognise the significance and importance of the People Article’s attack on Mr Markle.
  • (iii)  The reasonable expectation of privacy issue : Whether the judge adopted a flawed analysis of the factors undermining the Duchess’s alleged reasonable expectation of privacy.
  • (iv)  The appropriate test issue : Whether the judge wrongly stated the test, by suggesting that the defendant had to justify an interference with the claimant’s right of privacy, when the proper approach was to balance the competing article 8 and article 10
  • (v)  The right of reply issue : Whether the judge wrongly applied a strict test of necessity and proportionality to Mr Markle’s right of reply to the People Article.
  • (vi)  The public interest/ article 10 copyright issue : Whether the judge failed properly to evaluate the interference with article 10 , saying that it would be a rare case in which freedom of expression would outweigh copyright.
  • (vii)  The fair dealing copyright issue : Whether the judge wrongly relied on his privacy analysis to reject the fair dealing defence to breach of copyright, bearing in mind the limited scope of the copyright in the letter and the wide scope of the concept of reporting current events.  

Introduction to the issues

  1. The introduction to this judgment serves to demonstrate the way in which the parties have complicated and elaborated the relatively simple issues raised by this appeal. The grounds of appeal, for which Bean LJ granted permission (see para 6 above), have been neither followed nor much mentioned in argument. The extensive new evidence seems to have been more directed at correcting allegations raised in the pleadings than at issues that are relevant to the question at hand, namely whether the judge should have granted summary judgment in this case. Indeed, the parties exchanged lengthy amended draft pleadings in correspondence placed before us, even after the judge awarded final judgment.

 

  1. It would not be an exaggeration to say that no expense has been spared in advancing and resisting the appeal. Unfortunately, however, it rapidly appeared in oral argument that what was lacking was a clear focus on the factual and legal errors that the judge was alleged to have made. 
  2. The judge said at para 119, as I have already mentioned, that he had the full text of the People Article, the letter and the articles and could interpret them as well as a judge could do after a trial. He thought he was in as good a position as a trial judge to assess “the extent to which the People Article misled the public about the letter in a way that, making the fullest allowance for editorial judgment, made it relevant, necessary and proportionate to make the disclosures”. Despite prompting from the bench, Associated Newspapers has not, even after a 2½ day hearing, clearly identified the triable issues that falsify this reasoning. Obviously, if the judge applied the wrong test, that is one thing, but on an appeal from the grant of summary judgment, the first question is usually to identify the factual issues that require oral and documentary evidence to be fairly resolved. 
  3. The new evidence issue: Should the new evidence provided by each of the parties be admitted?
  4. The new evidence has been provided to the court, and also widely publicised in the press, nationally and internationally. In these circumstances, it would be surprising for us to decide that it is inadmissible, and that we could, even if we wanted to do so, close our eyes to it. 
  5. As I have said, the new evidence is more directed to the drafting of the letter and to what the claimant knew about the contacts between the Kensington Palace Communications Team and the authors of the book than any of the central issues in the appeal. The fact that the Duchess permitted her staff to meet with the authors, as the judge said or at least correctly inferred at paras 84, 99 and 100, was of no consequence to what he had to decide: “it does not matter how the quotations got into the book. All that matters is the timing and extent of publication, which was plainly not enough to defeat the claimant’s rights against the defendant”. The book was published long after the articles. The contents of the letter were not in the public domain at the time the articles were published. 
  6. In these circumstances, I would admit the new evidence as a matter of pure pragmatism. I very much doubt that the criteria for the admission of new evidence set out in Ladd v Marshall [1954] 1 WLR 1489 are satisfied in respect of it, but the parties have both filed numerous argumentative documents and correspondence referring to it. Indeed, their draft amended pleadings, filed since judgment, are founded on it. In these circumstances, I take the parties to have tacitly agreed that the court should, if necessary or appropriate, have regard to the new evidence. I do not think it is of any important relevance to the appeal, but I have nonetheless considered it. 
  7. There is, however, one point that should be mentioned. One aspect of the new evidence was an acknowledgment by the claimant that her pleaded case had been inaccurate. A pleading served for the claimant on 17 November 2018 said that “the [claimant] does not know if, and to what extent, the Communications Team were involved in providing information for the book, but the Communications Team did not otherwise contact the [claimant] for clarification of any matters relating to the book, save in respect of the request for a photograph … which the [claimant] declined”. After service of Mr Knauf’s evidence, disclosing that he had provided some information to the authors of the book with her knowledge, the Duchess said in a witness statement that, when she had approved the pleading, she had not had the benefit of seeing the relevant e-mails, and apologised to the court for the fact that she had not remembered the relevant exchanges at the time. This was, at best, an unfortunate lapse of memory on her part, but it does not seem to me to bear on the issues raised in the grounds of appeal, and it has been given no prominence in Associated Newspapers’ oral argument.  
  8. The nature of the attack issue: Did the judge mistakenly fail to recognise the significance and importance of the People Article’s attack on Mr Markle?
  9. This is, in one sense, the issue at the heart of Associated Newspapers’ factual appeal. Shortly stated, it is said that the judge focused on Mr Markle’s dealings with the press, rather than on the attack that the People Article had mounted upon him. Had the judge realised the significance of that attack, he would have realised that Mr Markle was fully entitled to respond to it in the public domain. People magazine has some 40 million US readers. Mr Markle was being traduced. Whether or not the claimant was directly responsible for passing information to People magazine, but particularly if she was, the letter was a central part of the attack, and Mr Markle could not effectively and publicly respond to it without disclosing the contents of the letter. Merely giving his side of the story was not enough. 
  10. As I have already said, Mr Caldecott identified three features of the attack on Mr Markle in People magazine, which the judge neglected, as being that Mr Markle (i) cold-shouldered his daughter at the time of her wedding, which was the most important point in her life, (ii) lied about her daughter shutting him out, and (iii) ignored her pleas for reconciliation in a loving letter, to which he responded in a cynical and self-interested way. These attacks were all made in the context of the Duchess being portrayed as always dutiful and as supporting Mr Markle with incredible generosity. 
  11. It is true that, in reciting the facts, the judge did not quote extensively from the People Article (see para 20 above). But that, in my judgment, does not mean that he had not understood its full import. Indeed, his treatment of the stage two issues focused at paras 109–127 on the misleading and attacking nature of the People Article and the consequent damage to Mr Markle’s reputation. He dealt specifically with the allegations in Associated Newspaper’s defence about Mr Markle’s right to reply to the People Article. 
  12. We were taken in detail to the People Article itself, and to its online sequels. The People Article does indeed provide an encomium of the Duchess: for example, the start of the article describes her as “warm, thoughtful, generous and kind”, and the online headline reads: Meghan Markle in her friends’ own words: “She personifies elegance, grace, philanthropy.” But, fairly read, the People Article is responding to her treatment in the UK press as, for example, “Duchess difficult” and as an uncaring daughter. The People Article dealt also with Mr Markle, but he was not its primary focus, any more than the letter itself was its primary focus. I accept that the People Article made some serious allegations against Mr Markle as Mr Caldecott submits, but I do not accept that the judge misunderstood those allegations. It is true that the fourth passage cited by the judge stops before quoting the allegations against Mr Markle that “He’s never called; He’s never texted. Its super-painful because Meg is so dutiful …” But the letter was not an answer to that allegation. It was simply more of the same. 
  13. Moreover, the passages the judge cited from the People Article do reflect most of the allegations on which Associated Newspapers rely. I accept that the People Article uses the existence of the letter and Mr Markle’s response to it as evidence of both his bad behaviour and the Duchess’s good character. But I do not think the judge overlooked the thrust of the People Article. The judge’s focus was simply on whether it was necessary or proportionate to deploy the contents of the letter in answer to the People Article. As I have said, if the test is wrong, that is one thing (which I will deal with under the fourth issue below), but the judge did not misunderstand the facts. 
  14. It is also worth mentioning that the contents of the articles themselves are actually more important than the details of the People Article. As the judge found, those articles were remarkable because they were focused on revealing the contents of the letter, not on providing Mr Markle’s defence to the allegations in the People Article. The judge referred to the headline: “Revealed: The letter showing true tragedy of Meghan’s rift with a father she says has ‘broken her heart into a million pieces’” and to the first line of the first of the articles: “the full content of a sensational letter written by [the Duchess] to her estranged father shortly after her wedding can be revealed for the first time today”. Mr Markle’s responses were somewhat incongruously reported in answer to line-by-line quotations from the letter. 
  15. Finally, and perhaps most importantly in this connection, it is suggested that the judge wrongly found that the allegation in the People Article that the letter was an olive branch was not an attack on Mr Markle, and wrongly found that the effect of the inaccuracy of the People Article on Mr Markle’s reputation and private life was modest (see para 125). This seems to me to address the wrong question. The question is whether it was appropriate (to use a neutral word) to publish large parts of the detailed contents of the letter in order to rebut the allegation that the letter was an olive branch. The judge thought it was not, partly because, as he said at para 125(1), the use of the term “olive branch” was more a misdescription of the claimant’s behaviour in writing the letter than an attack on Mr Markle. The real questions here, though, are (i) whether the judge was wrong to think that further evidence was not needed to decide the issue, and (ii) whether the judge was wrong to decide it was inappropriate to deploy the content of the letter in answer to the People Article. 
  16. As to the first question, it is hard to see what evidence could be adduced at trial that would alter or bear upon the issue. In reality, the judge at the summary judgment stage, just like the judge at trial, would have to look at the People Article and at the letter (and perhaps at the articles) to decide if the deployment of the contents of the letter was appropriate to rebut the allegations made. As the judge said at para 119, how Mr Markle understood the letter was “of scant relevance” and he assumed anyway that what was pleaded was true. I will deal with the second question identified at para 78 above under the fifth issue below. 
  17. The reasonable expectation of privacy issue: Did the judge adopt a flawed analysis of the factors undermining the Duchess’s reasonable expectation of privacy?
  18. I have set out the judge’s reasoning on stage one of his analysis in some detail at paras 37–47 above, because it is important to see the lengths he went to in order to analyse whether the Duchess could, in all the circumstances of the case, truly be said to have retained her reasonable expectation of privacy in the letter. The judge thought she could. It is not suggested that he was wrong about the legal test, nor that the test only admitted of a binary answer. What is suggested is that, at trial, undermining features could have been advanced to reduce the extent of the privacy that the Duchess might reasonably expect in the letter. In particular, it is submitted that “the extent of the claimant’s dealings with the authors of the book and People magazine could not be properly addressed summarily” and that the “fresh evidence after summary judgment bears out this complaint”. The judge should, it is said, have taken the letter from Addleshaw Goddard dated 21 December 2020 as an indication that such evidence would become available (see paras 163 and 164 of the judgment referring to the Addleshaw Goddard letter in a different context). 
  19. In my judgment, the judge dealt in impeccable detail with each of the Murray factors and with each of the points that were relied upon to undermine the privacy in the letter. Whilst Mr Caldecott did not abandon the suggestion that there was no privacy in the letter, he did not press the point in oral argument. I think he was right. I agree with the judge’s analysis at paras 64–95. 
  20. As regards the submission that further evidence was likely to become available as to the claimant’s contacts with People magazine and the authors, that was obviously true. 
  21. At para 84, the judge accepted that there was a triable issue as to whether the authors were given a copy of the letter, but thought that it was, in relation to whether the letter was in the public domain for the purposes of the claimant’s reasonable expectation of privacy, one “of no consequence”. As he said, it did not matter how the quotations got into the book; all that mattered was the timing and extent of publication: “which was plainly not enough to defeat the claimant’s rights against the defendant, even from the date of publication of the book”. I agree. 
  22. In my judgment, the defendant is wrong to suggest that proving further dealings between the claimant and the authors and People magazine, before or even after publication of the articles, could abrogate her reasonable expectation of privacy in the detailed contents of the letter. I accept, as does the defendant and as did the judge, that (a) the reasonable expectation of privacy question is binary, and (b) that if the claimant had put the contents of the letter into the public domain, that might have had the effect of destroying her reasonable expectation of privacy. But it was and is plain that she did not do so before the articles, even if it was disclosed to the authors. The judge thought that it was manifestly untenable to plead, as the defendant had, that the information about Mr Markle and the letter, contained in the book, “could only have come” from the claimant. In addition, the judge said, and I agree, that Mr Verity’s evidence that the authors were given a copy raised a triable factual issue, but that it was of no consequence for the purposes of the public domain question. In these circumstances, neither the Addleshaw Goddard letter nor the possibility of further evidence about the claimant’s dealing with the authors or People magazine could possibly have deprived her of the reasonable expectation of privacy that she had in the detailed contents of the letter, as the judge found on the basis of a copious analysis of the Murray factors. 
  23. Associated Newspapers also argued that the judge failed to have sufficient regard to the possibility that, at trial, the claimant might be shown to have been ambivalent to publication of the contents of the letter, as had been found in quite different circumstances in AAA v Associated Newspapers Ltd [2012] EWHC 2103 (QB); [2013] EMLR 2 at paras 96–101 and 116, [2013] EWCA Civ 554 at [25], [29]  and [34]. I do not think that case assists the defendant. Of course, such a finding would be possible if there were any evidence that the claimant had published or intended to publish the contents of the letter. But that evidence or anything approaching it was lacking. Indeed, it was not pleaded. Moreover, the new evidence militates against such a case ever being available to the defendant. It is plain from Mr Knauf’s evidence that the claimant did not want the contents of the letter put into the public domain even if she was prepared for the possibility that it might become public. 
  24. Finally, the defendant argued under this heading that the question of whether the letter was personal and private and written for a single addressee ought not have been decided summarily. I disagree for the reasons I have given. 
  25. The appropriate test issue: Did the judge wrongly suggest that the defendant had to justify an interference with the claimant’s right of privacy?
  26. The right of reply issue: Did the judge wrongly apply a strict test of necessity and proportionality to Mr Markle’s right of reply to the People Article?
  27. These two issues can conveniently be dealt with together. Associated Newspapers contended that the judge did not adopt the correct approach to the proportionality or balancing test at stage two. It accepted that the law was, as I have said (subject to one small amendment), correctly reflected in para 31 of the judgment, but says that he lost sight of what he had said when he undertook the balancing exercise at paras 96–128. 
  28. The judge should, the defendant submitted, have followed the dictum of Baroness Hale of Richmond in Campbell [2004] 2 AC 457 at paras 137 and 140–141 , applying the approach of the Court of Appeal enunciated in In re S (A Child) (Identification: Restrictions on Publication) [2003] EWCA Civ 963; [2004] Fam 43(subsequently upheld by the House of Lords at [2005] 1 AC 593, para 17 per Lord Steyn) as follows:

“137.  It should be emphasised that the ‘reasonable expectation of privacy’ is a threshold test which brings the balancing exercise into play. It is not the end of the story. Once the information is identified as ‘private’ in this way, the court must balance the claimant’s interest in keeping the information private against the countervailing interest of the recipient in publishing it. Very often, it can be expected that the countervailing rights of the recipient will prevail.”

 

“140.  The application of the proportionality test is more straightforward when only one Convention right is in play: the question then is whether the private right claimed offers sufficient justification for the degree of interference with the fundamental right. It is much less straightforward when two Convention rights are in play, and the proportionality of interfering with one has to be balanced against the proportionality of restricting the other. As each is a fundamental right, there is evidently a ‘pressing social need’ to protect it. The Convention jurisprudence offers us little help with this. The European Court of Human Rights has been concerned with whether the state’s interference with privacy (as, for example, in Z v Finland (1997) 25 EHRR 371 ) or a restriction on freedom of expression (as, for example, in Jersild v Denmark (1994) 19 EHRR 1 , Fressoz and Roire v France (1999) 31 EHRR 2 , and Tammer v Estonia (2001) 37 EHRR 857 ) could be justified in the particular case. In the national court, the problem of balancing two rights of equal importance arises most acutely in the context of disputes between private persons.

 

“141.  Both parties accepted the basic approach of the Court of Appeal in In re S [2004] Fam 43, 72–73, paras 54–60 . This involves looking first at the comparative importance of the actual rights being claimed in the individual case; then at the justifications for interfering with or restricting each of those rights; and applying the proportionality test to each. The parties in this case differed about whether the trial judge or the Court of Appeal had done this, the appellant arguing that the Court of Appeal had assumed primacy for the article 10 right while the respondent argued that the trial judge had assumed primacy for the article 8 right.” 

  1. Instead, the defendant submitted that the judge approached the matter as if he were dealing with a state intervention under article 8(2) (or article 10(2) ) where the interference must be necessary in a democratic society (see In re JR38 [2015] UKSC 42; [2016] AC 1131 (“JR38”) at paras 67 and 72). The defendant referred to the judge’s use of the formulation “necessary or proportionate” at paras 28, 96, 105, 112, 119, 120, 125 and 128. At para 128, the judge reached the “inescapable conclusion is that, save to the very limited extent I have identified, the disclosures *20 made were not a necessary or proportionate means of serving that purpose [namely, correcting inaccuracies about the letter in the People Article]”. Moreover, at para 35, the judge appeared, submitted the defendant, to have approved the claimant’s submission that the defendant had a burden to advance a viable justification for interfering with her reasonable expectation of privacy. He may have taken that approach from Simon LJ’s judgment in ZXC at para 46 where he referred expressly to JR38 at paras 88 and 105.

 

  1. Further, the defendant complained that the judge had adopted at paras 86 and 91 the starting point that the objective of the law was “to protect the individual’s right to respect for her autonomy”. There was no priority to either fundamental right. The objective was to balance the respective weight of the competing rights and the degree of interference with those rights which the grant or refusal of relief would represent. 
  2. Associated Newspapers referred to the line of defamation authorities culminating in Adam v Ward [1917] AC 309 , where Lord Atkinson had said, at p 339:

“These authorities, in my view, clearly establish that a person making a communication on a privileged occasion is not restricted to the use of such language merely as is reasonably necessary to protect the interest or discharge the duty which is the foundation of his privilege ; but that, on the contrary, he will be protected, even though his language should be violent or excessively strong, if, having regard to all the circumstances of the case, he might have honestly and on reasonable grounds believed that what he wrote or said was true and necessary for the purpose of his vindication, though in fact it was not so.” 

 

  1. On this basis, it was argued by analogy that the judge was wrong to suggest at paras 112 and 116 that there was no authority for the proposition that the mere fact that a person believes the portrayal to be untrue is enough to justify a reply. The parameters of Mr Markle’s entitlement to reply to the attack in the People Article were said to be much too narrowly stated. This led the judge at para 103, the defendant argued, to reject the suggestion that disclosure of the letter was a contribution to a debate of general or public interest, rather than simply for the purpose of satisfying public curiosity. 
  2. As I have already mentioned at para 56 above, the judge dealt with the defendant’s pleaded allegation that it was “necessary, proper and in the public interest to publish the true and full story concerning the letter and the response to it” so that the public was not misled. It is a slight irony that the cornerstone of their case on appeal is to say that he applied the wrong test by holding that the publication was not necessary. I can deal with this contention shortly. In my judgment, the judge correctly stated the test he was applying at para 31 of his judgment, and completely understood that he was bound by the House of Lords’ decisions in Campbell and In re S . Both are repeatedly referred to in his recent judgment in Sicri which he cited at para 106. 
  3. I do not think that the judge thought that the defendant had any burden of proof requiring it to establish that it should be allowed to publish the letter. Nor do I think that, on a fair reading of the judge’s judgment, that he thought the defendant had to show that publication was necessary in the public interest in order to outweigh the claimant’s reasonable expectation of privacy. I accept that the judge fell in to the shorthand use of the question whether the publication was necessary and proportionate in pursuit of a legitimate aim. In my judgment, he used the word necessary as meaning “justified” just as Baroness Hale did at para 152 in Campbell itself. 
  4. There is another reason why the defendant’s submission that the judge applied the wrong tests must be rejected. The judge did exactly what the parties had asked him to do. He decided whether the binary test at stage one was answered in favour of the claimant, identifying his reasons in great detail, and then looked at stage two to see whether the article 10 right to freedom of expression outweighed the claimant’s reasonable expectation of privacy. He took into account the alleged weakening of the claimant’s right caused by the pleaded disclosures to People magazine and the authors. He took into account the realities of the allegations against Mr Markle in the People Article, and the realities of the nature of the publication in the articles. His main conclusion was that the publication of extensive extracts from the verbatim contents of the letter was disproportionate to the limited right to reply that Mr Markle undoubtedly had. Indeed the contents of the letter, as I have said more than once, were a further rendition of the claimant’s point of view, and therefore not naturally likely to be a reasonable way of rebutting allegations against Mr Markle. The way that the articles deployed the letter was anyway not by way of defence for Mr Markle. Instead, the letter was splashed as a new public revelation. Even the response to the crucial para 15 of the letter (as numbered by the judge at para 45, and at para 18 above) alleging Mr Markle had lied and demanding that he stop going to the press was *21 not answered with any rebuttal—just with a comment that Americans did not use the expression “you are so far down this rabbit hole”. It is true that the sub-headline reading “How Meghan’s media fightback led her Dad to reveal letter he wanted to keep secret” suggested that the People Article was the catalyst for the publication of the letter. But even that small section of the articles only provides slim justification for the letter being deployed to rebut the allegations that the People Article had made against him. It says that the letter was not a loving one and did not reach out to him, and that the claimant could not have it both ways. But the remainder of the articles simply glorify the disclosure of the contents of the letter, which, as I have said, are actually more of the same in the sense that they accuse Mr Markle of bad behaviour; the opposite of a rebuttal by way of defence. To answer the second question posed at para 78 above, in my judgment the judge was right to decide that it was inappropriate and disproportionate to deploy the detailed content of the letter in answer to the People Article.
  5. The public interest/ article 10 copyright issue: Did the judge fail properly to evaluate the interference with article 10 ?
  6. I am taking the article 10 defence first, because Mr Adrian Speck QC, who argued this part of the case for Associated Newspapers, put it first. Mr Speck criticised the judge for relying on Ashdown without mentioning the key differences between that case and this: there the justification for quoting from Mr Ashdown’s memorandum was to establish authenticity and to prove that the journalist actually had it in his possession, whereas there was no such issue here. Moreover, the letter was not obtained improperly as it had been in Ashdown , so that the defendant did not need to show this to be a rare case as the judge had thought at para 157. The judge lumped freedom of speech together with fair dealing, and used his arguments on privacy to reject both, without even considering Mr Markle’s own right to free speech. The judge had also failed to evaluate the extent or weight of the copyright, in the sense of the intellectual creativity in the letter. Had he done so, he would have realised that the letter had a low level of copyright protection to put in the balance against the article 10 rights. It was wrong also to assume that using large parts of the letter was more objectionable than using less, since using more allows fairer evaluation. 
  7. It is true that the judge dealt with the article 10 defence shortly at paras 157–158, having rejected the fair dealing defence broadly for the reasons that he rejected the defences to the privacy claim. It is true also that the balancing exercise between a copyright, which is a property right, on the one hand and freedom of speech on the other hand is not identical to the balancing exercise that the judge had undertaken between article 8 and article 10 rights. It is also true that the letter contained some pre-existing facts which were not themselves protected by copyright. 
  8. In my judgment, however, the judge understood that “the nature and degree of the originality involved in a work can affect the availability of defences such as fair dealing, public interest, and … freedom of expression” (para 139). Secondly, nothing advanced by Mr Speck suggested that there was any triable issue that would look different after a trial. The balancing exercise that had to be undertaken was between the claimant’s copyright in the letter on the one hand and the article 10 rights of Mr Markle and Associated Newspapers. Whilst it is true that the judge did not expressly mention Mr Markle’s article 10 rights, that was the context to the exercise he was undertaking. Thirdly, I think that Mr Speck’s criticisms of the judge’s references to Ashdown were overstated. Indeed, at para 39, Lord Phillips of Worth Matravers MR said in Ashdown that “in most circumstances, the principle of freedom of expression will be sufficiently protected if there is a right to publish information and ideas set out in another’s literary work, without copying the very words which that person has employed to convey the information or express the ideas. In such circumstances it will normally be necessary in a democratic society that the author of the work should have his property in his own creation protected”. At para 58, Lord Phillips MR said: “We prefer the conclusion of Mance LJ [in Hyde Park at para 82] that the circumstances in which public interest may override copyright are not capable of precise categorisation or definition. Now that the Human Rights Act 1998 is in force, there is the clearest public interest in giving effect to the right of freedom of expression in those rare cases where this right trumps the rights conferred by the [CDPA]”. These dicta were relevant to what the judge had to decide, even bearing in mind the different factual context in Ashdown . Fourthly, I cannot see that the defendant has seriously impugned the balancing exercise that the judge carried out in what was a careful and detailed decision. I do not think it is a valid criticism to suggest that he did not set out all the arguments again under this heading, when he correctly explained the exercise he had to undertake and reached a clear conclusion. In the result, I also agree with the conclusion he reached.

 

  1. The fair dealing copyright issue: Did the judge wrongly rely on his privacy analysis to reject the fair dealing defence?
  2. Associated Newspapers adopted similar arguments on the fair dealing defence to those advanced under article 10 . As I said at para 61 above, the judge’s main reason for rejecting the fair dealing defence was that the reproduction of the letter was essentially for the purpose of reporting its contents, which were not a current event, and that the use made of the letter was not fair.  
  3. In Pro Sieben Media AG v Carlton UK Television Ltd [1999] 1 WLR 605 (“Pro Sieben”) , Robert Walker LJ explained at p 614 that: “‘Criticism or review’ and ‘reporting current events’ are expressions of wide and indefinite scope. Any attempt to plot their precise boundaries [was] doomed to failure. They [were] expressions which should be interpreted liberally”. The judge identified four topics at para 153 that he considered current events (the People Article’s description of the letter, Mr Markle’s reaction to the People Article and his dispute with it and with the claimant’s view of her conduct towards him), and accepted that some other events might also arguably qualify. But the judge did not comment on the defendant’s pleading that the letter and the claimant’s views had entered the public domain by wide reporting. It was, the defendant argued, impossible to evaluate the fairness of the publication summarily. Moreover, the judge failed to understand how liberally the concept of fair dealing was to be interpreted and elided the question of fairness with the question of what was, in the context, reporting current events. According to Mr Speck, the judge simply took too narrow a view of the public interest in the current events surrounding the estrangement of the claimant and Mr Markle. And the articles did report some of the events that the judge had himself accepted were current events. 
  4. My reasons for rejecting this ground of appeal are similar to those expressed above in relation to the public interest defence. The judge did understand the nature and degree of the originality involved in the letter, and that it could affect the fair dealing defence. 
  5. Secondly, once again, Mr Speck did not point to a triable issue in relation to fair dealing, save to say that the evaluation of fairness should be done after a trial. I cannot see why. The judge could evaluate the copyright in the letter and balance it with what the People Article had made into current events, so as to take a view about what those current events were and the fairness of allowing publication of what was reproduced in the articles. The judge accepted the existence of the letter and its description of its contents had been put into the public domain by the People Article. The extract he cited at para 154 from Laddie, Prescott and Vitoria, The Modern Law of Copyright and Designs made clear that that defence would often succeed if the defendant’s purpose was to right a wrong or to ventilate an honest grievance. The liberal reporting of current events adumbrated by Pro Sieben might, for completeness, have been mentioned by the judge, but does not really impact his reasoning at paras 155 and 156 to the effect that the defendant knew it was dealing with an unpublished work, it copied a large and important proportion of the work’s original literary content, most of which infringed the claimant’s privacy rights and was disproportionate to any legitimate reporting purpose. The fairness of the reproduction was, therefore, very limited. Most importantly, perhaps, the use made of the letter was unfair, because it was not about reporting current events, but reporting the actual contents of the letter to make the splash of publication already referred to. 
  6. Thirdly, I cannot see that the defendant has been able here, any more than under article 10 , seriously to impugn the balancing exercise that the judge carried out between the copyright protection on the one hand and the fairness of publication on the other hand in the context of his determinations as to what were current events. In essence all that could be, and was, properly undertaken by reference to the People Article, the letter and the articles. I repeat that the judge’s decision, looked at as a whole, was careful and detailed. 

Conclusions

  1. For the reasons I have given, I would admit the new evidence filed by both parties, and dismiss Associated Newspapers’ appeal on all the grounds for which permission was given. 
  2. I should not leave this case without reiterating the narrowness of the issues we have had to decide. The appeal was against the judge’s decision that it could be seen mainly on the basis of the central documents in the case (viz the People Article, the letter, and the articles themselves) that the claimant’s reasonable expectation of privacy and copyright in the letter had been infringed. After careful consideration of his detailed judgment, I agree with the views the judge expressed on these very confined, mostly factual, questions. 
  3. Essentially, whilst it might have been proportionate to disclose and publish a very small part of the letter to rebut inaccuracies in the People Article, it was not necessary to deploy half the contents of the letter as Associated Newspapers did. As the articles themselves demonstrate, and as the judge found, the primary purpose of the articles was not to publish Mr Markle’s responses to the inaccurate allegations against him in the People Article. The true purpose of the publication was, as the first four lines of the articles said: to reveal for the first time [to the world] the “the full content of a sensational letter written by [the Duchess] to her estranged father shortly after her wedding”. The contents of the letter were private when it was written and when it was published, even if the claimant, it now appears, realised that her father might leak its contents to the media.’

[xi] Jospeh v. Spiller [2012] EWHC 2958 (QB).

 

Extracts from the judgment of Mr Justice Tudenghat:

The Meaning of the Words Complained of

  1. The first, and often the most important, question in a libel action is whether the words complained of are defamatory, and if so, what they mean. In deciding this question, the court is not concerned with any meaning which is not defamatory. If a meaning is not defamatory, there can be no claim in libel in respect of it.
  2. The Practice Direction to Part 53 of the CPR requires that the Claimants in a libel action specify in the particulars of claim the defamatory meaning or meanings which they allege that the words complained of conveyed. Where (as here) defendants allege that the words complained of are true, or are honest comment, the defendants are required to specify the defamatory meaning which they seek to justify, or defend as honest comment. It is for the court at trial to decide whether the words complained of are defamatory of a claimant, and, if so, what defamatory meaning they bear. A defendant must also give details of the matters on which he relies in support of any defence of justification or honest comment. 
  3. The trial court is not bound by the meanings pleaded by either party. But the court will not attribute to the words complained of a meaning more serious than the meaning attributed to them by the claimant. And it is in any event helpful to the court to have regard to the meanings which each party attributes to the words complained of.
  4. The words complained of may contain a number of different allegations, and so a number of different meanings. The court is not concerned with what the writer or publisher intended, nor with what any actual reader may have understood, still less with what the claimants understood. The meaning (or each of the meanings where there are multiple allegations) must be a single meaning, that is, a meaning which the court finds would be understood by the hypothetical reasonable reader ( Slim v Daily Telegraph [1968] 2 QB 157 ). 
  5. Where the judge is sitting without a jury, as I am in this case, the judge must decide what the words mean. In deciding what meaning the hypothetical reasonable reader would attribute to the words complained of, the court must adapt the well known test which is applied where the issue before the court is what meanings the words complained of are capable of bearing. That test was most recently set out by Sir Anthony Clarke MR in Jeynes v News Magazines Limited [2008] EWCA Civ 130 at paras 14 and 15. It is as follows:

“The legal principles relevant to meaning … may be summarised in this way: (1) The governing principle is reasonableness. (2) The hypothetical reasonable reader is not naïve but he is not unduly suspicious. He can read between the lines. He can read in an implication more readily than a lawyer and may indulge in a certain amount of loose thinking but he must be treated as being a man who is not avid for scandal and someone who does not, and should not, select one bad meaning where other non-defamatory meanings are available. (3) Over-elaborate analysis is best avoided. (4) The intention of the publisher is irrelevant. (5) The article must be read as a whole, and any “bane and antidote” taken together. (6) The hypothetical reader is taken to be representative of those who would read the publication in question. (7) … the court should rule out any meaning which, “can only emerge as the produce of some strained, or forced, or utterly unreasonable interpretation…” (8) It follows that “it is not enough to say that by some person or another the words might be understood in a defamatory sense”. …

  1. A further question that may arise on meaning is whether a meaning is a statement of fact or a statement of opinion (comment). I shall return to this question later in this judgment, after setting out the defences that the Defendants raise.

The Defences

  1. The Defendants rely on each of the two defences, justification (truth) and honest opinion. This defence has long been known as fair comment, and more recently referred to as honest comment. But I shall from hereon adopt the more recent practice of referring to it as honest opinion, because that more accurately conveys what the defence is. …

The Law on Truth

  1. It is generally a complete defence to a libel action that the words complained of are substantially true. In applying this rule the court must not be too literal in its approach, and must allow for some degree of exaggeration. But if the defendant cannot prove that the words complained of are substantially true, then, subject to the Defamation Act 1952 s5 , the defence will fail. See Gatley on Libel and Slander 11th edn para 11.9ff. 
  2. The Defamation Act 1952 s5 . provides:

“In an action for libel or slander in respect of words containing two or more distinct charges

against the plaintiff, a defence of justification shall not fail by reason only that the truth of every charge is not proved if the words not proved to be true do not materially injure the plaintiff’s reputation having regard to the truth of the remaining charges.” 

  1. Matters may become more complicated if a single publication contains more than one allegation, only one of which is proved to be true. It is not always easy in practice to decide whether words complained of contain two charges which are distinct, or two charges which have a common sting.
  2. Facts or events which occur subsequently to the publication of the words complained of may be relied on if they are apt to prove the truth of the words complained of. This most often occurs where the words complained of convey a general imputation. See Gatley on Libel and Slander 11th edn para 11.8. 
  3. Matters may also be complicated by the fact that, as here, a publication is made over an extended period. I shall return to consider the law in more detail when I have set out my findings of fact on what is true and not true. 

The Law on Honest Opinion

  1. The elements of the defence of honest opinion were authoritatively set out in the judgment of the Supreme Court in Spiller v Joseph [2010] UKSC 53; [2010] 3 WLR 1791 at paras [3], [4] and [105] as follows:

“[i]  … First, the comment must be on a matter of public interest. ….

 

[ii]  Second, the comment must be recognisable as comment, as distinct from an imputation of fact. If the imputation is one of fact, a ground of defence must be sought elsewhere, for example, justification or privilege. Much learning has grown up around the distinction between fact and comment. For present purposes it is sufficient to note that a statement may be one or the other, depending on the context. Ferguson J gave a simple example in the New South Wales case of Myerson v. Smith’s Weekly (1923) 24 SR (NSW) 20, 26

‘To say that a man’s conduct was dishonourable is not comment, it is a statement of fact. To say that he did certain specific things and that his conduct was dishonourable is a statement of fact coupled with a comment.’

[iii]  Third, the comment must be based on facts which are true or protected by privilege: see, for instance, London Artists Ltd v Littler [1969] 2 QB 375 , 395. If the facts on which the comment

purports to be founded are not proved to be true or published on a privilege occasion, the defence of fair comment is not available. 

[iv]  Next the comment must explicitly or implicitly indicate, at least in general terms, the facts on which it is based. 

[v]  Finally, the comment must be one which could have been made by an honest person, however prejudiced he might be, and however exaggerated or obstinate his views: see Lord Porter in Turner v Metro-Goldwyn-Mayer Pictures Ltd [1950] 1 All ER 449 , 461, commenting on an observation of Lord Esher MR in Merivale v Carson (1888) 20 QBD 275 , 281. It must be germane to the subject-matter criticised. Dislike of an artist’s style would not justify an attack upon his morals or manners. But a critic need not be mealy-mouthed in denouncing what he disagrees with. He is entitled to dip his pen in gall for the purposes of legitimate criticism: see Jordan CJ in Gardiner v Fairfax (1942) 42 SR (NSW) 171 , 174.

 

These are the outer limits of the defence. The burden of establishing that a comment falls within these limits, and hence within the scope of the defence, lies upon the Defendant who wishes to rely upon the defence. 

[vi]  A Defendant is not entitled to rely on the defence of fair comment if the comment was made maliciously”.’

 

[xii] GaryMarlow T/A The Crown Hotel v Exile Productions Ltd & Anor [2003] EWHC 2631 (QB).

Extracts from the judgment of Mr Justice Cresswell:

‘50..  At common law, the right of a contracting party to claim damages for breach of contract may be limited by the express terms of the contract, provided the language employed to do so is plain. Subject to the law as to penalties and to the general principles of the law of contract, such as illegality, the courts will enforce a contractual provision designed to operate in the event of a breach. But the Unfair Contract Terms Act 1977 imposes some statutory restrictions on attempts to limit liability for breach of contract (see Chitty on Contracts 28 th edition volume 1 paragraph 27–011). 

51..  I turn to consider whether clause 10 (f) (vi) was unfair under the provisions of the Unfair Contract Terms Act 1977 (“UCTA”)? 

52..  Section 3 (1) of UCTA (Liability arising in contract) provides that section 3 applies as between contracting parties where one of them deals on the other’s written standard terms of business. It is common ground that Mr Marlow contracted on Exile’s written standard terms of business. 

53..  Section 3 (2) provides (so far as material):—

“As against that party [Mr Marlow], the other [Exile] cannot by reference to any contract term —

 

(a)  when himself in breach of contract … restrict any liability of his in respect of the breach ….

except in so far as … the contract term satisfies the requirement of reasonableness.”

54..  In relation to a contract term, the requirement of reasonableness for the purposes of UCTA is that “the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.” ( Section 11(1) of UCTA ). 

55..  Thus the time for determining the reasonableness of the term is the time at which the contract was made.

56..  Section 11 (2) of UCTA provides that in determining for the purposes of sections 6 or 7 whether a contract term satisfies the requirement of reasonableness, regard should be had in particular to the matters specified in schedule 2 . Thus the five guidelines in schedule 2 are only made expressly applicable for the purposes of section 6 (sale and hire-purchase) and section 7 (miscellaneous contracts under which goods pass), but they are frequently regarded as being of general application (see Chitty supra 14–082). In any event they are not exhaustive. The guidelines are:

  • “(a)  the strength of the bargaining positions of the parties relative to each other, taking into account (among other things) alternative means by which the customer’s requirements could have been met;
  • (b)  whether the customer received an inducement to agree to the term, or in accepting it had an opportunity of entering into a similar contract with other persons, but without having to accept a similar term;
  • (c)  whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties); …”
  • [(d) and (e) are on any view not applicable to the present case]. 

57..  Section 11(4) of UCTA provides (so far as material):—

“Where by reference to a contract term … a person seeks to restrict liability to a specified sum of money, and the question arises … whether the term … satisfies the requirement of reasonableness, regard shall be had in particular (but without prejudice to subsection (2) above in the case of contract terms) to

 

(a)  the resources which he could expect to be available to him for the purpose of meeting the liability should it arise, and

(b)  how far it was open to him to cover himself by insurance.”

58..  According to Chitty supra 14–083:—

“This provision was clearly designed to provide some alleviation to the small business, and to professional persons, who may not have the resources available to meet unlimited liability or who may not be able to obtain insurance or who may be exposed to claims in excess of the sums for which insurance cover can be obtained. But it might in some circumstances be construed to operate against those enterprises with such resources or which are able to insure. It seems probable that the words “a specified sum of money” would embrace a determinable sum e.g. the contract price. But it is more questionable whether (b) covers the situation where insurance cover can be obtained, but only on terms which are uneconomic in relation to the margin of profit achieved.”

59..  The onus of proving that it was fair and reasonable to incorporate the term in the contract lies on the party so contending [i.e. Exile] ( section 11(5) of UCTA ). …

  1. The claim for loss of trading profits for the year ended 5 March 2003 (and continuing).

100..  It is common ground that the relevant legal principles as to this head of claim are set out in the following passage from Chitty supra volume 1 paragraph 27–071

“Loss of reputation. Damages for loss of reputation as such are not normally awarded for breach of contract, since protection of reputation is the role of the tort of defamation. However, where the breach of contract causes a loss of reputation which in turn causes foreseeable financial loss to the claimant, he may recover damages for that financial loss: in Malik’s case [1998] AC 20, the House of Lords held that where, by conducting a dishonest and corrupt business, the employer had broken his obligation to his employee (under the implied “trust and confidence” term) the employee could recover damages for the financial loss suffered by him where his future employment prospects were prejudiced by the stigma of his former employment. A further exception arises where the contract gave an opportunity to the claimant to enhance his reputation as an author or an actor damages may be awarded for loss flowing from a failure to provide promised publicity, which loss may include loss to existing reputation. Subject to remoteness, damages are recoverable where the breach of contract causes loss of commercial reputation involving loss of trade.”

101..  It is again necessary, when considering this head of claim, to bear in mind the serious concerns as to the accuracy of the accounting and other records of the business (and related issues) referred to above./

 

[xiii] John v James [1991] F.S.R. 397.

Extracts from the judgment of Nicholls J.:

Sub-publishing

I shall deal first with the sub-publishing and licensing claims. Although these claims will not arise as such if the agreements are set aside, the plaintiffs prayed in aid their complaints over sub-publishing and licensing in support of their rescission claim. This makes it necessary for me to determine these complaints before deciding the rescision claim.

 

The first question which arises on the sub-publishing claim concerns the nature and extent of the exploitation obligations of the publisher (DJM). The defendants were not disposed to dispute that there is a fiduciary obligation on DJM to account for royalties received, but their case was that the publishing agreements did not give rise to any fiduciary obligation regarding exploitation. Counsel for the defendants submitted that under the agreements items of property (copyrights) were transferred outright for value to the publisher, and in making decisions on whether and when and how to exploit that property the publisher was at liberty to consult its own commercial interest. For example, although it might be in the writers’ interest that a particular composition should be published at once and with maximum publicity and promotional effort, nonetheless the publisher, having regard to its assessment of the prospects of success and the expenses of promotion, was free to take the view that publication was not justified for the time being or that there should be publication but accompanied only by a low level of promotional effort and expense. This freedom for the publisher to consult its own interests, which might be in conflict with those of the writers, was recognised in this context by Lord Reid in the Schroeder case ( [1974] 1 W.L.R. 1308 at 1313), and this freedom negatived the existence of a fiduciary duty to exploit, because if the obligation to exploit was of a fiduciary nature it required the person owing the duty to act at all times in the best interest of the person to whom the duty was owed without ever permitting his interest to conflict with his duty.

 

The defendants’ own formulation of its obligation regarding exploitation was that, in addition to an implied term to use reasonable diligence to publish, promote and exploit compositions accepted under the publishing agreements, the publisher was obliged to act honestly and not to organise sub-publishing in a way which no reasonable publisher would have done. Those were the limits of its obligations, and those obligations were contractual and not fiduciary.

 

I am unable to accept this. This formulation would, for instance, leave DJM free to publish abroad itself, or (which is of no relevant commercial difference) through a wholly-owned subsidiary company, and to fix for itself or its subsidiary once and for all or from time to time the rate at which it or its subsidiary should be paid for that work. So long as DJM honestly considered that exploitation on those terms was for the joint benefit and the terms were commonly found in the publishing trade, the writers could not object. That cannot be right. On a natural, fair reading of the documents one would have expected that the writers’ entitlement to sums equal to one half of the royalties “received from persons authorised to publish the musical compositions in foreign territories” (clause 9(c) of the 1967 publishing agreement) carried with it the protection for the writers that, in fixing with the overseas “persons” the amount of the royalties to be remitted, DJM would be negotiating with another person an arm’s length deal in which the interests of DJM and of the writers would not be in conflict. Likewise under the equivalent clauses in the 1971 publishing agreements.

 

For my part I am in no doubt that under the publishing agreements DJM occupied a fiduciary position in respect of any exploitation which it carried out. In particular, in addition to being under a duty to exploit the assigned copyrights only in a way it honestly considered was for the joint benefit of the parties, DJM was under a duty not to make for itself any profit not brought into account in computing the writers’ royalties.

 

I consider this to be a natural, indeed an obvious, consequence of the arrangements made by the publishing agreements for the exploitation of the assigned copyrights. The agreements were to endure for the whole life of the copyrights and the copyrights were to comprise all the compositions of the writers for a period of three or six years. The copyrights were to be assigned to the publisher, and to become its property, but with the intention that they would be exploited by the publisher, which would have complete control over the method of exploitation, not for its benefit alone but for the joint benefit. Thus, commercially, the arrangement was in the nature of a joint venture, and the writers would need to place trust and confidence in the publisher over the manner in which it discharged its exploitation function. As to the mechanical royalties, the agreements envisaged that in respect of its work in the U.K. and Ireland the publisher would be rewarded by having to account for only a specified, agreed percentage of royalties received by it from sales of records, and in respect of its overseas exploitation the publisher would be rewarded by having to account for only the stated percentage of royalties received by it from those authorised to publish in the foreign countries. The latter contemplated a receipt from a third party. I consider that in these provisions it is implicit that the publisher’s pool of profit obtained from mechanical royalties would comprise, and would comprise only, the one which it shared financially with the writers.

 

I do not think that the publisher’s freedom to consult its own commercial interest in balancing expense and risk against prospects of success is inconsistent with the existence of fiduciary duties such as I have stated. The *434 object sought to be achieved by exploitation was maximising the pool of royalties received by the publisher and in which the writers would share. In seeking to attain that object, in which the parties had a joint interest, the publisher would exercise its own commercial skill and judgement; but in doing so the publisher would not be free to pursue its own commercial interests (as distinct from the joint interest).

 

Nor, I add, can I see any reason why the publisher’s ability to assign its rights under the publishing agreements should negative the existence of a fiduciary duty regarding exploitation. This duty can exist as much in the case of an assignee who undertakes exploitation as a burden to which he becomes subject when he acquires the benefit of the publisher’s rights, as in the case of the original contracting party.

 

From the above statement of DJM’s fiduciary duties, it follows that DJM has committed breaches of those duties. In the same way as opening and running a branch office in the USA would not have entitled DJM itself to keep in respect of that office an additional percentage of royalties, so opening and running such a branch office through a wholly owned subsidiary company did not entitle DJM when accounting to the writers to treat as a deduction from the royalties received by DJM USA the percentage of the royalties retained by the latter. A fortiori in respect of France, Australia and the territories of the 1975 subsidiaries, as regards the royalties retained by those subsidiaries over the percentages paid to the local managers or administrators.

 

I turn to the consequences of those breaches. For what sums is DJM accountable to the plaintiffs? Or, which comes to the same in this case, what compensation is payable by DJM for the breaches of its fiduciary duties? The court has power to make an allowance to a fiduciary: whether the power should be exercised, and if so in what terms, depends upon the circumstances of each case, the object being to achieve a result which the justice of the individual case demands (see O’Sullivan v. Management Agency Ltd. [1985] 1 Q.B. 428 , especially Fox L.J. at 467–468). So I must now consider the commercial justification for the arrangements made by the DJM group. To see these arrangements in perspective, it is pertinent to have in mind what were the financial consequences to each party of DJM subsidiaries, as well as DJM itself, retaining a share of the royalties received overall. These are illustrated vividly by noting what was the financial effect on the writers when the 1975 subsidiaries were formed and the sums retained in those territories were increased from 25 per cent. (or less) to 50 per cent. Where the writers were entitled to 50 per cent. of overseas royalties received independent sub-publisher had been retaining 25 per cent. the effect was as follows. If after the formation of the subsidiary the royalties received overseas continued at the same level as before, the income of the writers fell by one third whilst the income of the DJM group rose by the same fraction. For the writers to be in the same position as before, the royalties received overseas needed to increase by 50 per cent., but in that event the income of the DJM group would be doubled. To take some simple figures: if the royalties received by the foreign sub-publisher before the introduction of the 1975 subsidiary totalled £200, the sub-publisher retained £50 (25 per *435 cent.), and the balance of £150 remitted to DJM in London was split equally between the writers and DJM, each receiving £75. After the introduction of the 1975 subsidiary, the administrator received £50 (25 per cent.) as before, but the DJM group’s share increased from £75 to £100 (£50 net retained by the overseas subsidiary out of its 50 per cent., plus one-half of the £100 remitted to DJM), whilst the writers’ share dropped from £75 to £50. If the overseas royalties then increased by one half, from £200 to £300, the administrator would retain £75 (25 per cent.), and the writers would receive £75 as one half of the remitted £150: but the DJM group’s share now would be £150, double the amount received by the writers (namely, £75 net retained by the subsidiary, plus one half of the £150 remitted by the subsidiary to DJM). The adverse effect of the change on the writers, and the beneficial effect on the DJM group, would be even more marked where the writers’ royalty rate was 60 per cent.

 

What was the justification for such an apparently one-sided change in the arrangements, and for such an arrangement having existed throughout in the USA, France and Australia? The defendants’ case was that the evidence established that there are advantages in sub-publishing through a subsidiary, and that the most effective form of sub-publishing was likely to be and was through a subsidiary established abroad with its own staff, as in the USA. I agree. The writers have obtained the benefits of the sub-publishing work done by DJM USA, and an appropriate allowance must be made for that work. The defendants said further that there were advantages in having a subsidiary even without offices and staff of its own, because a subsidiary could exercise greater control over an independent administrator than DJM could over an independent sub-publisher. This made the exploitation in the local territory more efficient, so increasing the local royalty income. Thus the subsidiary could “hire and fire” administrators more frequently, because on termination of an administrator’s employment the administrator (unlike the sub-publisher) did not become entitled to receive royalties for a “run-on” period on the copyrights which he was sub-publishing. Moreover, from July 1976 a sub-publishing contract would only be recognised by the European collection societies if it had a duration of at least three years. There was no such minimum duration for an administration agreement, where the subsidiary would continue as the registered owner of the copyrights regardless of who was the administrator. This latter fact also meant that use of a subsidiary and an administrator avoided “fragmentation” of a catalogue between successive sub-publishers and the cumbersome administrative steps required when changing a sub-publisher with a catalogue containing some 7,500 songs. Again, in practice DJM enjoyed greater freedom to interfere with an administrator’s activities and give directions to an administrator than it did with a sub-publisher’s activities. Further, it was advantageous to a writer for the copyrights to remain always with the subsidiary of the publisher, and for his publisher to have the enhanced reputation of the head of an international group.

 

In my view the evidence did establish that there are some advantages in having a subsidiary company even where it is only a “shell” administered by a local administrator, although I consider that the importance of these was *436 exaggerated in some of the evidence adduced on behalf of the defendants. The importance of the extra leverage made possible by the ability to hire and fire more frequently and with less administrative upset has to be weighed against the background that the three year rule only applied from July 1976 and (as appears from what I have set out earlier) many of the administration agreements were for fixed initial periods of between two and five years. So in practice DJM seems not to have set much store by the need to keep the administrators on a short time leash. Moreover, of the territories of the 1975 subsidiaries, change was forced upon DJM in Japan. Of the remaining four territories, in three of them the existing sub-publisher was appointed to be administrator of a new subsidiary when it was formed, in each case for an initial fixed term (where now known) of 2½ years or more. It is evident that in these three territories at least there was no substantial dissatisfaction with the existing sub-publishers.

 

Much mention was also made of the effectiveness of an arrangement made by DJM Germany with its administrator Global whereby a named employee of Global was assigned specific responsibility for the DJM Germany catalogue. I confess to having been unable to perceive why such an arrangement could not equally well have been made with a sub-publisher.

 

More importantly, the evidence leaves me unconvinced that (save for the limited period when DJM France had local offices and staff) the use of subsidiaries in conjunction with administrators had led to any significant increase in the costs incurred or the work done by the DJM group. Some cost was involved in the incorporation of the companies, and the formal auditing of accounts and making of annual returns or the like, but on the evidence before me this was not substantial. Other items, such as visits by Mr. Stephen James to the subsidiaries’ territories, frequent postal and telephone contact between DJM in London and the local subsidiary, and the supply of tapes or records, cannot fairly be regarded as increased costs or work caused by the existence of the subsidiaries: such expenses and effort, incurred and undertaken in prompting and assisting an administrator, could equally well have been incurred and undertaken by DJM in prompting and assisting a sub-publisher. Those matters arose in an effort by DJM to increase sales in the overseas territory, and if successful DJM benefited from its share of the increased amounts of royalties remitted to this country. I have not seen or heard any evidence leading me to conclude that the nature or amount of those expenses, or of the work done by DJM regarding these subsidiaries, was such that DJM ought fairly to obtain some additional allowance or benefit.

 

Witnesses for the defendants made much play of a claim that for 25 per cent. or less a sub-publisher could be expected to do, and only did, a “collection job,” whereas for its 50 per cent. DJM subsidiaries did a “full sub-publishing job,” working on the “back” catalogue, and not just “cherry picking.” But an administrator received not more than 25 per cent., and his duties expressly included that of exploiting the DJM catalogue, and that duty DJM expected him to discharge.

 

The commercial reality underlying this aspect of the case is that the subsidiaries were set up by DJM in the 1960s and later in the mid-1970s as *437 the first steps towards an international network of local offices with local staff as in the USA. Except in the USA and for a short period in France, this commercial objective has yet to be attained. Meanwhile, in line apparently with the practice of some other companies in the music publishing business, the subsidiary sub-publishers appointed administrators to run their businesses on terms that gave the subsidiaries a profit additional to that of the parent. Apparently a 50 per cent. retention by the subsidiaries was normal in the industry. Whatever may be the rights or wrongs of this as far as other writers with their own publishing contracts with DJM or other companies are concerned, the terms of which may be materially different, I am in no doubt that in this case DJM was in breach of its fiduciary duty to Mr. John, Mr. Taupin and their employer companies.

 

I shall come back to the question of what allowance should be made to the defendants after considering the defences based on limitation, laches, estoppel and acquiescence, to which I now turn. The defendants’ primary case here was that the plaintiffs are estopped from making any complaint in respect of the present sub-publishing arrangements: the plaintiffs cannot be heard now to assert either that they have any complaint regarding those arrangements to date or that a continuance of those arrangements for the future will give rise to complaint. Reference was made to the decision of the Court of Appeal in Habib Bank Ltd. v. Habib Bank AG Zurich [1981] 1 W.L.R. 1265 , where Oliver L.J. (at page 1285) emphasised the need for a broad approach to issues of estoppel, directed at ascertaining whether in particular circumstances it would be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment.

 

The defendants pointed to the long history of the absence of any complaint regarding the sub-publishing arrangements despite the knowledge by the individual plaintiffs or their advisers of the nature and terms of the arrangements. In particular, in March 1971 Berger Oliver knew that outside sub-publishers were not employed in the USA, France and Australia, that in respect of those countries 50 per cent. of the mechanical royalties was retained, and that this was a higher proportion than in countries where third party sub-publishers had been appointed. In order to complain the individual plaintiffs and their advisers needed to know no more save to find out what was an appropriate retention for a sub-publisher if they considered 50 per cent. was excessive. Then in September 1973 Mr. Eastman wrote to Mr. Reid of the strong case that could be made that DJM had failed to account properly because of the use of wholly-owned subsidiaries. But nothing was done: Mr. Reid’s evidence was to the effect that he did not take action but “let it be for the time being” partly because, unlike Mr. Eastman, Mr. Oliver was discouraging and partly because of the need to retain DJM’s co-operation over the withholding tax problem and in connection with the recording agreements which were to continue until 1975. Mr. Stephen James gave evidence that, had DJM been aware of a claim regarding DJM’s sub-publishing arrangements, DJM would not have opened the 1975 subsidiaries, nor would it have spent any large sums of money in continuing to promote the product. Accordingly it would be *438 unconscionable for the plaintiffs to be permitted now to deny that the sub-publishing arrangements adopted for so long constituted a proper mode of performance by DJM of its obligations under the publishing agreements.

 

I am unable to accept this estoppel argument. Acquiesence, through failure to complain for many years, in the mode in which sub-publishing was carried out in the USA cannot be regarded as acquiesence in a commercially different mode of sub-publishing adopted by DJM but of which the plaintiffs knew nothing until after this action was started. I am referring to the use of “shell” companies run by third party administrators for a commission of 25 per cent. or less. Thus in setting up the 1975 subsidiaries, to be run by such administrators, DJM could not properly or reasonably have relied on the plaintiffs’ failure to complain concerning what they did know.

 

Nor do I think that the failure to complain for so many years has made it unconscionable for the plaintiffs ever to be heard to complain regarding the defendants’ operation in the USA: in particular, I have heard no evidence which satisfies me that DJM or DJM USA or any other company in the group has spent any substantial sums in promoting Elton John/Bernie Taupin compositions in the USA or elsewhere in the world which would not have been spent if DJM had known of a serious claim that an excessive sum was being retained in the USA.

 

The defendants’ next line of defence was limitation. They submitted that the plaintiffs’ claim is essentially one of breach of contract in failing to pay sums to which the writers were entitled under the publishing agreements, and thus the ordinary six-year limitation period applies. The plaintiffs disputed this categorisation of their claim. In short, their case was that an unauthorised profit made by a fiduciary and for which he is accountable to his principal is held upon a constructive trust, so that a claim by the principal against the fiduciary to recover that profit is an action by a beneficiary under a trust

“to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, or previously received by the trustees and converted to his use” ( section 21(1)(b) of the Limitation Act 1980 ).

 

Section 21(1) expressly provides that no statutory period of limitation shall apply to such an action. I was then referred to a passage in that invaluable work, Snell’s Principles of Equity, 28th edition, at page 290 , which after quoting the material words of section 21(1) reads:

“In these excepted cases, the trustee and, it seems, recipients from the trustee other than bona fide purchasers, remain liable indefinitely. No laches will bar the claim unless, indeed, it is doubtful whether any trust exists and the delay may have led to a loss of evidence of the alleged trust.”

In reliance on this passage and the authorities there mentioned, it was initially submitted for the plaintiffs that (save in the stated case) laches provides no defences to a claim to recover property held on a constructive trust. However Mr. Littman felt constrained to accept (and in my view rightly) that there was no absolute rule on this. He submitted that the laches case would need to be a very strong one for a plaintiff to be refused recovery of his property from a trustee when Parliament had expressly provided for no statutory period of limitation. 

 

Since in my judgment the submission of the plaintiffs based on section 21(1)(b) must fail for another reason, I need not pursue this laches point beyond saying this: having regard to the classic statement of the principle of laches by Lord Selborne in Lindsay Petroleum Co. v. Hurd (1873) 5 App. Cas. 221 (to which I shall return later), I am unable to see why that principle, by which a court of equity refuses relief where it would be practically unjust to give a remedy, should not be applicable, and in appropriate circumstances applied, to claims by a beneficiary to recover trust property from a trustee. In my view in so far as the quoted passage from Snell may suggest the contrary it is misleading and needs reconsideration, and it is not supported by the authority ( Attorney-General v. Fishmongers’ (1841) 5 Mylnes and Craig 16 ) on which it purports to be based. In the Fishmongers’ case Lord Cottenham L.C. (at pages 17 and 18) was addressing himself to the effect of mere lapse of time, which is only one of the factors to which regard is had under the principles of laches.

 

I consider, however, that this submission by the plaintiffs fails for the short reason that the plaintiffs’ claim that DJM should account for the unauthorised profit made by it in the course of a fiduciary relationship is not a claim to recover “trust property” within section 21(1)(b). Royalties received by a publisher under an agreement such as the publishing agreements in this case are not impressed with a trust in favour of the writers (see In re Grant Richards ex p. Warwick Deeping [1907] 2 K.B. 33 ), and the amount of an unauthorised profit made by a fiduciary is recoverable by a plaintiff either as money had and received to his use or as an equitable debt ( Reading v. The King [1949] 2 K.B. 232 , per Asquith L.J. at 237): the relationship between the fiduciary and the plaintiff “is that of debtor and creditor; it is not that of trustee and cestui que trust” ( per Lindley L.J. in Lister & Co. v. Stubbs (1890) 45 Ch. 1 at 15).

 

The plaintiffs’ alternative case was that, if the statutory period of six years is applicable, either under section 5 or section 21(3) or section 23 or otherwise, the statutory fraudulent concealment provisions apply to prevent time running in this case. Under section 26 of the Limitation Act 1939 , where a right of action was concealed by the fraud of the defendant or his agent the period of limitation does not begin to run until the plaintiff has discovered the fraud or could with reasonable diligence have done so. “Right of action” includes a cause of action: see section 31(7). “Fraud” in this context includes conduct which, having regard to some special relationship between the parties, was an unconscionable way for the one to behave towards the other: see Kitchen v. Royal Air Force Association [1958] 1 W.L.R. 563 , per Lord Evershed M.R. at pages 572–573. To the same effect Lord Denning M.R. observed in King v. Victor Parsons and Co. [1973] 1 W.L.R. 29 , at pages 33–34, that in section 26 fraud is used in the equitable sense to denote conduct by the defendant or his agent such that it would be against conscience for him to avail himself of the lapse of time. He contrasted knowingly or recklessly committing a breach of contract unlikely to be found out for many a long day and unwittingly committing such a breach.

 

Section 7 of the Limitation Amendment Act 1980 substituted a new *440 section for section 26 of the 1939 Act, and that new section is to be found now in section 32 of the consolidating Limitation Act 1980 . So far as material, section 32(1) provides that where

“(b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant the period of limitation shall not begin to run until the plaintiff has discovered the . . . concealment . . . or could with reasonable diligence have discovered it.”

 

So the initial requisites are concealment of a fact relevant to the right of action, which was done deliberately.

 

Nothing in the Limitation Act 1980 enables any action to be brought which was barred by that Act or the 1939 Act before 1 August 1980 (see Schedule 2, paragraph 9). Thus the statutory limitation provisions applicable in respect of causes of action which accrued here prior to 1 August 1974 are those set out in the 1939 Act as subsequently interpreted by the court; the provisions applicable to causes of action which accrued between 1 August 1974 and 1 October 1976 are set out in the Limitation Act 1980 . Causes of action which arose from 1 October 1976 onwards are not statute barred.

I turn to apply those statutory provisions to the facts, starting with the USA. From the earliest days the defendants made no secret of the arrangements existing there. The sub-publisher was a DJM subsidiary and it was retaining 50 per cent. of all mechanical royalties. True, the defendants always presented this arrangement in the most favourable light. In March 1971 Mr. James pointed out the normality of the terms and the built-in advantages afforded to Mr. John. The arrangements were defended by Mr. James to Mr. Reid in October 1972, and in October 1976 the auditors were told in writing that the contracts between DJM and its overseas subsidiaries were based on normal, commercial terms. In fact, they were not. Whether or not it is correct, as Mr. James said in evidence, that 50 per cent. was and still is genuinely regarded in the music publishing industry as the “norm” of the rates to be paid to a sub-publishing subsidiary by its parent, it is plain that at the material times 50 per cent. was not the rate normally paid to independent sub-publishers after arm’s length bargaining. The mechanical royalty rate charged by DJM USA as sub-publisher in respect of original recordings has remained unchanged at 50 per cent. since 1964. I am in no doubt that at all material times in this action that rate was, and is now, excessive. At all material times the DJM catalogue was an attractive catalogue, partly because of the Beatles. DJM had entered into sub-publishing publishing agreements with many independent sub-publishers, but in no case from 1964 to 1981 did DJM agree terms with an independent sub-publisher whereby that independent sub-publisher retained more than 25 per cent. in respect of original recordings. The terms of all these arrangements were negotiated by Mr. James personally. The evidence of the defendants’ publishing expert, Mr. Coachworth, was to the effect that in the early 1960s overseas publishers usually retained 50 per cent. of all mechanical royalties, but with the advent of the singer/songwriter that *441 percentage changed during the late 1960s and early 1970s so that the sub-publisher kept about 25 per cent. (unless he achieved active, successful promotion, as with a cover recording, in which case he retained 50 per cent.). This is in line, amongst other matters, with the sub-publishing arrangements made by DJM with Sonora in the 1960s, and the evidence of Mr. Sture Borgedahl who was its managing director and is experienced in the trade. Nor am I persuaded that DJM USA provided a service as a sub-publisher which justified payment on original recordings in the DJM catalogue at a rate above the highest rate which would normally have been paid to an independent sub-publisher. Despite this, it seems to me that there was not, in relation to the USA, anything of the nature of a “cover-up.” Those acting for the individual plaintiffs, both solicitors and accountants, and Mr. John’s manager, Mr. Reid, knew who was doing what in that territory and what was being charged. Being told that the rates were normal, commercial rates, they would expect that a profit element would be included for DJM USA. The matter was discussed with counsel in October 1972. They also knew the lower rates being charged by the independent sub-publishers. None of these matters was concealed from Mr. John or Mr. Taupin or their advisers. In relation to sub-publishing in the USA I do not think there has been conduct by the defendants such that it would be against conscience to avail themselves of the lapse of time or that there has been deliberate concealment of a fact relevant to the plaintiffs’ cause of action.

 

The position regarding the other sub-publishing subsidiaries is altogether different. Crucial to a proper understanding of the sub-publishing arrangements in France, Australia and in due course the territories of the 1975 subsidiaries was the knowledge that (save for a brief period, late in the history, in France) in those countries the subsidiary companies did not function as did DJM USA in its territory. Unlike DJM USA, they had no offices or local staff and their businesses were carried on by administrators, but they retained for themselves a percentage of the mechanical royalties substantially larger than the percentage paid to the administrators.

 

Mr. Dick James is an able businessman. I have no doubt that he appreciated the impact which disclosure of such knowledge would be likely to have had, for example, on Mr. Oliver or on Mr. Reid. What happened was that these matters were not disclosed when royalties were accounted for year after year, nor in March 1971 when Mr. James explained to Mr. Oliver the built-in advantages which he said the writers enjoyed under DJM sub-publishing arrangements, nor on any of the other occasions when the publishing arrangements were discussed or raised in correspondence from 1971 onwards, nor in the course of any of the audits. To my mind it is straining credulity too far to regard the non-disclosure in these circumstances as inadvertence, due to oversight or office muddle. In my view the conclusion is irresistible that the failure to inform the writers or their advisers of the arrangements made with administrators was deliberate. In the event, as already stated, the plaintiffs and their advisers knew nothing of these arrangements until after the commencement of this action.

 

I am in no doubt that having regard to the relationship between Mr. John, Mr. Taupin and their employer companies on the one hand and DJM on the *442 other, this was unconscionable conduct on the part of DJM. Thereby DJM intentionally concealed from the writers and their employer companies and their advisers facts relevant to the plaintiffs’ right of action: that the subsidiaries had no local offices or staff but that despite this they were retaining for themselves, after paying the sums charged by the local administrators for running the business, some 30 to 35 per cent, of the mechanical royalties on original recordings. In my judgment, that was a deliberate concealment within section 32(1)(b) of the Limitation Act 1980 and a concealment of the plaintiffs’ cause of action by fraud within section 26(b) of the 1939 Act.

 

As stated, the concealment was not discovered until after the issue of the writ. The fact that the plaintiffs were able to, and did, start their proceedings without knowledge of the administration agreements does not rob the concealment point of its force. The ability to launch an action without full knowledge of the relevant facts does not entitle a defendant to cry down the importance of those facts when he has kept them firmly to himself for many years.

 

I should add that this is not a case in which by the exercise of reasonable diligence the plaintiffs or their advisers could have discovered the concealment. Mr. James’s offer in October 1972 of an audit at any time and anywhere does not assist the defendants when the professional audits which did take place (and it has not been suggested that they were conducted inadequately) did not result in discovery of the administration agreements.

 

Accordingly, the limitation defence on sub-publishing succeeds in relation to DJM USA but fails regarding DJM France, DJM Australia and the 1975 subsidiaries.

 

My conclusion is that, as already indicated, in respect of DJM France, DJM Australia and the 1975 subsidiaries, in accounting now to the plaintiffs in general no allowance from the mechanical royalties received by those companies would be appropriate beyond the sums paid to the administrators. DJM France incurred extra costs for which an allowance should be made when running its office and employing staff (between about 1978 and 1981). The evidence, of a general nature, was to the effect that for that period the whole of DJM France’s income was absorbed by its costs. Accordingly, painting as I think I should with a broad brush, for that period the allowance to be made in respect of all mechanical royalties should be at the full rate provided in the sub-publishing agreement between DJM and DJM France. As to DJM USA, in respect of the six year period for which it is accountable, this company has carried on other activities besides acting as sub-publisher for DJM which would make it difficult, if not impossible, now to identify the costs incurred by DJM USA in running its sub-publishing business. As already mentioned, the plaintiffs accepted that DJM USA should be allowed to retain royalties at the rate which would have been charged by an independent sub-publisher. This seems to me to be a reasonable approach. On the evidence a reasonable mechanical royalty rate would not have exceeded 25 per cent, on original recordings, and I shall fix this as the rate to be allowed. In passing, I note that this rate still leaves with the DJM group in respect of exploitation in the USA of recordings made *443 originally outside the USA, 55 per cent. of the mechanical royalties (or 62½ per cent., where the writers’ entitlement was 50 per cent. and not 60 per cent.).

 

Finally on the sub-publishing claim, I add that I do not think the plaintiffs would be in a better position than I have set out above on their alternative claims under the publishing agreements or for damages for breaches of an implied term. Accordingly, I shall say no more about these.

 

Licensing

The starting point of the defendants’ answer to the licensing claim was to identify the entitlement of Mr. John and his employer companies under the recording agreements. They submitted that under clause 5 of the 1967 recording agreement (and the equivalent clauses under the later recording agreements) the artist was entitled to, but only to, a royalty calculated as a percentage of “net monies” received by TRC “in respect of the master recordings.” He was not entitled to a share of any other money or profits of TRC. In particular, he was not entitled to a share in any receipts derived from the manufacture, marketing, distribution or sale of the records themselves, as distinguished from licensing of the master recordings. These were separate, commercial activities outside clause 5 and in the profits of which it was never contemplated that the artist would share. These profits were not money received by TRC as a production company.

 

The defendants pointed to the consequence that would follow if the proceeds of the records themselves (namely, the price at which the records were sold to dealers) fell to be treated as net money received by TRC “in respect of the master recordings.” In that event the cash pool of which Mr. John was entitled to a share would increase to such an extent that his share would rise from being the equivalent of 2 per cent. of the retail sales value of the records to 13 per cent. That 13 per cent. would have been an absurd figure for a recording artist at the start of his career as Mr. John was in the 1960s is not disputed.

 

As to any criticism of the actual terms of the arrangement between TRC and DJM Records, the defendants’ case was that the applicable test here was the same as with the publishing agreements: so long as the exploitation arrangement was made honestly and was not one which no reasonable record production company would have made, it was unimpeachable. On the facts, it was submitted, that test was satisfied.

 

I can accept the defendants’ argument to this extent: by listing in clause 5 production costs but no other costs, it is evident that the form of exploitation envisaged by the 1967 agreement was that the company would grant licences on terms whereunder no substantial extra costs would fall on it. The 1970 and 1971 agreements seem to have envisaged the same, even though when they were made the 1969 pressing and distribution deals with Pye had already been entered into. Where I am unable to accept the defendants’ argument is that from this it follows that if TRC chose to exploit the master recordings by a different means than licensing, namely, by itself manufacturing, marketing, distributing and selling the records (with the *444 assistance of a pressing and distribution deal with a company such as Pye), it was free to fix for itself a royalty rate at which it should account to the artist for “net monies” received “in respect of the master recordings.” In my view, as with the publishing agreements, so also with the recording agreements: TRC was under fiduciary obligation to the artist in respect of any exploitation which took place of the master recordings similar to those I have already stated regarding any exploitation of the copyrights under the publishing agreements. Thus, if TRC chose to manufacture, market, distribute and sell records itself, or through a wholly-owned subsidiary company (Mr. Newman rightly did not suggest that this made any material difference) TRC would be entitled to deduct its expenses or those of its subsidiary when accounting to the artists. When claiming his share of the profit arising from the manufacturing, marketing, distribution and sale of the records, the artist must give credit for the costs—the out-of-pocket expenses—which were incurred by TRC (or DJM Records, in the event) in obtaining the wholesale price of the records: namely, the manfuacturing, marketing, distribution and sale costs. Those expenses, it seems to me, must include all the items which can reasonably and fairly be identified as such expenses. They would include the four heads of deductible costs proposed by the plaintiffs. But I can see no basis, either on the construction of the recording agreements or generally, why the allowable costs should be confined to those four heads if others, reasonably and fairly identifiable as out-of-pocket expenses incurred in manufacturing, marketing, distributing and selling the records, exist.

 

However, subject to deduction of those expenses, TRC is prima facie accountable to the artist for the balance of the money obtained from the sale of the records as the profit arising from such sale. That profit is money received in respect of the exploitation of the master recordings from the method chosen by TRC, and is none the less so because it was retained in DJM Records.

 

In deciding whether any additional allowance should be made to TRC, and in deciding similar limitation issues to those raised on the sub-publishing claim, I must consider how the TRC/DJM Records arrangement and the pressing and distribution deals came to exist and how they were implemented. The deal with Pye in January 1969 was triggered by Philips’ refusal to agree to release a proposed album of Elton John for the time being. By this date the DJM group already had some experience of coping with the difficulty raised by the clause 5 type of royalty clause when the production company became involved in a pressing and distribution agreement. Page One Records Limited, half owned by DJM and of which Mr. James was a director, had a comparable recording agreement with the Troggs, and in that case the solution adopted (in fact, before the 1967 recording agreement was made) was the same in principle as that subsequently adopted by TRC: the production company formed and licensed a wholly-owned subsidiary, which entered into a pressing and distribution deal. The purpose of this type of arrangement was to ensure that the artist did not receive more than DJM conceived was his entitlement under the recording agreement: a share of the royalties obtained from *445 licensing the master recordings. The thinking behind this was that if Elton John, for example, was not entitled to a share of the profits made by Philips under the Philips agreement, why should he be entitled to a share of the profits made by TRC if TRC undertook the business activities formerly undertaken by Philips? Thus what was needed was a subsidiary company which would be responsible for all the manufacturing, marketing, distribution and sale costs, and a licence between the production company and the subsidiary on terms not less favourable than (in the case of Mr. John) those of the Philips agreement. In other words, a subsidiary should take the place of Philips.

 

So in 1969, after a discussion between Mr. Dick James and Mr. Silver, at which Mr. Stephen James was present, DJM Records was set up. Thenceforward it paid to TRC a royalty at a marginally better rate than that payable under the 1966 Philips agreement, the marginal improvement being the non-deduction of any packaging allowance.

 

This was done without Mr. John (or his advisers) being consulted or informed either in 1969 or when the 1970 recording agreement was entered into or when the 1971 recording agreements were made, although he and they did know that DJM Records was distributing Elton John’s records after Philips stopped doing so. Mr. Dick James’s explanation of the failure to consult in 1969 was that Mr. John might not have understood, and that to have changed the royalty provisions in the recording agreement to one based on a percentage of the retail price would not have been as advantageous to the artist as clause 5 (which provided for a single rate worldwide, and was so drawn that the artist would share in advances made by record companies, even before the records were sold).

 

In my view, the subsequent history affords a classic illustration of why the law is right not to countenance situations where a fiduciary is so placed that his interest and his duty conflict. To this day the royalty rate paid by DJM Records to TRC remains unchanged. This is so, even though the rates of the commission payable to Pye improved in DJM Records’ favour as sales increased. Mr. Stephen James’s evidence was that he had never considered reviewing the royalty rate because he always felt that Mr. John’s overall, worldwide income was “more than fair.” Mr. Stephen James accepted that by 1973 the commercial rate payable under an agreement of the Philips’ type had risen to 16 per cent., but he sought to justify the 10 per cent. paid by DJM Records on the footing that TRC had artistic and marketing control over which records DJM Records would release and the way in which they would be released, whereas it did not have such control under the Philips agreement, nor could it have negotiated an agreement with a third party under which TRC had such control for a royalty anywhere approaching 16 per cent. (if, indeed, such an agreement would have been arranged at all).

 

I do not see how this consideration can afford justification for DJM Records not paying TRC the going commercial rate. Like any other record manufacturer and distributor, DJM Records only manufactured and released the records which it thought or hoped would sell or would assist its sales. The stock and other risks borne by DJM Records were not greater than or different from those borne by other record manufacturing and *446 distribution companies (such as Philips). If Philips would have been prepared to pay 16 per cent., why should DJM Records not have done so? The fact that it was advantageous to Mr. John to have access to an in-house record manufacturer did not justify keeping the royalty rate paid by DJM Records below the market rate.

 

Thus, even if one accepts (which I do not) that without the artist’s agreement TRC was entitled to set up a subsidiary to stand in Philips’ shoes without accounting for any profits made, in my view TRC’s subsequent conduct over royalty rates cannot stand scrutiny. The statement which Mr. Dick James recalled having made to Mr. John when he signed the 1967 recording agreement, to the effect that the better the licensing deal which TRC could negotiate the larger would be Mr. John’s receipts from royalties, rings hollow having regard to what happened subsequently.

 

As to the limitation defence, the nature of the claim in respect of the licensing agreements is the same as the claim in respect of the publishing agreements. So the only issue to be determined here is that of fraudulent concealment. The defendants pointed out that the claim was never raised until after the proceedings were started in 1982, although it was known by Mr. John and, in due course, his advisers that the records were being sold under the DJM Records label, and that under the recording agreements he was being paid 20 per cent. (later 40 per cent., 50 per cent. and 60 per cent.) of something. That something must have been ascertainable as the royalty being paid by DJM Records, since it was obvious that DJM Records was engaged in the business of marketing the records being manufactured and distributed for it. It was also obvious that there must have been profits.

 

The difficulty I have with this defence is that there is no evidence that before October 1976 Mr. John or his accountancy, legal or other advisers were adequately aware of the arrangements with DJM Records. Neither the fact that DJM Records was retaining a profit nor the terms of any arrangement between TRC and DJM Records was mentioned to Mr. Oliver by Mr. James in 1971 or discussed with Mr. Reid in 1972. Thus, none of these matters was referred to in instructions to counsel or at the conference held with him in 1972, nor were they raised with or by Mr. Eastman. The way the matter seems to have come out into the open was that when Shears embarked on their audit early in 1976, Mr. Ellis (who by then had joined John Reid Enterprises) suggested to Mr. Lyons in March 1976, at Mr. Reid’s instigation, that the audit should be extended to include the books and documents of DJM Records relating to the sales of Elton John records. On 5 July Mr. Lyons sent Mr. Ellis a written report on the progress of the audit, enclosing schedules of the systems in operation within the DJM group. These schedules seem to have been compiled from Shears’ internal working papers, prepared by Mr. Feigenbaum. No witness was called from Shears, but it is likely that those working papers came into being in the first half of 1976 as part of the 1976 audit. The schedules showed the payment of a recording royalty by DJM Records to TRC and the accompanying notes stated that the rate was 10 per cent. of 90 per cent. of the retail price of records sold. On the following day, 6 July 1976, Mr. Ellis pointed out to Mr. Lyons that in his report he had not commented on the contractual *447 arrangements between DJM Records and TRC, and it was arranged that Mr. Lyons would ask to see a copy of the contract. This he did in his letter of 27 July 1976, which, with Mr. Allen’s reply dated 11 October and the ensuing correspondence, I have already mentioned.

 

I accept Mr. Reid’s evidence that, although he knew that Mr. John was receiving the equivalent of 6 per cent. on retail in the United Kingdom when he had his discussion with Mr. Stephen James about a possible new recording agreement and although he then knew of the existence of DJM Records and that there was a pressing and distribution agreement with Pye, he did not know what was the relationship between that company and TRC until he saw Mr. Allen’s letter of 11 October 1976. Mr. Stephen James, I should add, did not suggest that he then (or at any other time) explained to Mr. Reid what that relationship was or that, in addition to its share of the “royalties,” the DJM group was making a profit from the arrangements made by it for the manufacture, marketing, distribution and sale of the records.

 

Has the defendants’ conduct been such that, having regard to the relationship between the parties, it was an unconscionable way for them to behave towards Mr. John (or his employer companies)? Have the defendants deliberately concealed any fact relevant to the right of action now in point? In my view the answer to both those questions is yes.

 

The effect of the arrangements made with DJM Records in 1969 was that thenceforth, as to the U.K. and the other countries concerned, Mr. John’s royalty was being pegged to marginally more than the rate arising under the Philips agreement (which was being ended). It would improve only if and when TRC should so decide. That was very different from what had been envisaged by Mr. James when the 1967 recording agreement was made. But Mr. John was not told of this in 1969, Mr. James apparently taking the view that it was not necessary to do so because the new arrangement, although different from the one contemplated in January 1968, was still fair to Mr. John. The matter did not rest there. Royalty statements were rendered periodically thereafter. From this and from what occurred in 1969 it is really self-evident that a decision was made within the Dick James group, not only that TRC should account on the footing of treating as “net monies received” by TRC only that part of the money received by TRC and its wholly-owned subsidiary from the exploitation of the master recordings which TRC decided so to treat, but additionally (and this is the crucial point) that it should do so without disclosing that this was what was being done or what were the sums DJM Records had received or what was the amount of its profit. Moreover, nothing was said to Mr. John regarding these matters when he was invited to enter into the 1970 recording agreement, which contained a similar royalty clause to clause 5 of the earlier agreement. And, whatever difficulty there might have been in explaining the financial significance of the new U.K. recording arrangements to Mr. John himself, nothing was said to Mr. Oliver in 1971 when some discussion of licensing arrangements did take place, or when the royalty provisions in the 1970 recording agreement were carried forward unchanged into the 1971 agreements. Nor, yet again, and importantly, in June 1971 when the new *448 licensing deal with MCA and improvements in the royalty rate worldwide were negotiated.

 

To my mind it is not acceptable that defendants can conduct their affairs in such a fashion and, when an action is brought within six years after the relevant facts have come to light, then turn round and plead limitation. In my view that conduct was unconscionable, and as such amounted to deliberate concealment within section 32(1) of the Limitation Act 1980 . Here again, this is not a case where with reasonable diligence the plaintiffs could have discovered the breaches: they were entitled to proceed on the basis that the defendants had made full disclosure of all material facts affecting the plaintiffs’ royalty entitlement.

 

Accordingly the defence of limitation fails.

 

I return to the question whether any additional allowance ought to be permitted to TRC. In my view it should. Mr. John has benefited from the group’s efforts over the records, and I do not think that it would be proper to exclude TRC from all reward for those efforts. The objective of the court is not the punishment of the defendants, but the attainment of a result that in practice would be just as between the parties. I consider therefore that over and above expenses as already mentioned, TRC should have a reasonable allowance for the skill and labour of TRC and DJM Records in manufacturing, marketing, distributing and selling the records, that allowance to include a fair profit element.

 

The plaintiffs’ two alternative formulations of their claim regarding licensing would not result in the plaintiffs being in a better position than above, and so I will not pursue them further.

 

Rescission

I turn to the plaintiffs’ primary claim, to have the various recording and publishing agreements set aside on the basis that they were procured by undue influence. On the law I have the advantage of the recent authoritative exposition given by the House of Lords in the case of National Westminster Bank Ltd. v. Morgan [1985] 2 W.L.R. 588 , 3 which concerned a claim by a wife that her signature to a mortgage of the matrimonial home in favour of a bank had been procured by the bank manager exercising undue influence over her. In the leading speech Lord Scarman (at pages 597–598) observed that the principle justifying the court in setting aside a transaction for undue influence was the need to protect one party from being victimised by the other. He quoted approvingly a passage from the judgment of Lord Shaw of Dunfermline in the Privy Council case of Poosathurai v. Kannappa Chettiar L.R. 47 I.A. 1 on the subject of undue influence, which commenced with the sentence:

“It must be established that the person in a position of domination has used that position to obtain unfair advantage for himself, and so to cause injury to the person relying upon his authority or aid.”

 

 

Lord Scarman then said (at page 599):

“The wrongfulness of the transaction must, therefore, be shown: it must be one in which an unfair advantage has been taken of another. The doctrine is not limited to transactions of gift. A commercial relationship can become a relationship in which one party assumes a rôle of dominating influence over the other. In Poosathurai’s case , L.R. 47 I.A. 1 the Board recognised that a sale at an undervalue could be a transaction which a court could set aside as unconscionable if it was shown or could be presumed to have been procured by the exercise of undue influence. Similarly a relationship of banker and customer may become one in which the banker acquires a dominating influence. If he does and a manifestly disadvantageous transaction is proved, there would then be room for the court to presume that it resulted from the exercise of undue influence.”

So, in short, and whatever be the precise form of words used, the substance of the two ingredients required before the court will set aside a transaction is, first, a relationship in which one person has a dominating influence over the other and, secondly, a manifestly disadvantageous transaction resulting from the exercise of that influence. In appropriate circumstances presumptions may be employed regarding either of the two ingredients: in appropriate circumstances the existence of a dominating influence may be presumed; the court may also, again in appropriate circumstances, presume that where a dominating influence exists, a manifestly disadvantageous transaction was the result of the exercise of undue influence.

 

This is all subject to the warning given by Lord Scarman at the conclusion of his speech (at page 602):

“There is no precisely defined law setting limits to the equitable jurisdiction of a court to relieve against undue influence. This is the world of doctrine, not of neat and tidy rules. The courts of equity have developed a body of learning enabling relief to be granted where the law has to treat the transaction as unimpeachable unless it can be held to have been procured by undue influence. It is the unimpeachability at law of a disadvantageous transaction which is the starting point from which the court advances to consider whether the transaction is the product merely of one’s own folly or of the undue influence exercised by another. A court in the exercise of this equitable jurisdiction is a court of conscience. Definition is a poor instrument when used to determine whether a transaction is or is not unconscionable: this is a question which depends upon the particular facts of the case.”

 

The defendants’ case was that neither of the necessary ingredients existed in this case regarding any of the agreements. Thus, for example, as to the 1967 publishing agreement, DJM never acquired a dominating influence over Mr. John or Mr. Taupin, nor was the transaction manifestly disadvantageous either at its inception or as it was subsequently implemented. On whether Mr. James (because he alone was the person concerned for DJM) assumed a rôle of dominating influence, the gist of the defendants submission was that although DJM, like the banker in the Morgan case, was in a much stronger bargaining position, the relationship of music publisher and would-be writers did not per se give rise to a presumption of undue influence, and Mr. James never crossed the line which divides a normal business relationship from one of undue influence. *450 Mr. James never sought to persuade or encourage the two individual plaintiffs to enter the publishing agreement.

 

I shall consider the various agreements in turn, starting with the 1967 publishing agreement. Under this the writers tied themselves exclusively to DJM for what would be a period of six years if DJM exercised its option. DJM was entitled to obtain and retain for all time the full copyright in all their works produced in that period (unless, as was unlikely, DJM rejected any work as unsuitable) and to do so even if DJM never published the work or works in question. In return for this, viewed in strict terms of legal obligations of DJM, the writers obtained precious little. They obtained a right to royalties. The defendants claimed that the writers also obtained the benefit of an implied obligation that DJM would use reasonable diligence to publish, promote and exploit the compositions accepted, but even if this was so such an obligation was necessarily so loose and imprecise that it would have afforded the writers little protection.

 

The defendants further claimed that under an oral contract made at the same time as the written agreement DJM was obliged to pay Mr. John and Mr. Taupin £20 per week between them during the currency of the 1967 publishing agreement as an advance on royalties. Mr. James’s evidence was that he intended to commit himself to pay this sum for the whole life of the agreement come what may. He explained that he suggested to Mr. John that the weekly payments should not be mentioned in the agreement, even though they were to endure for its full term, because the sum might be increased from time to time, in which event letters would have to be exchanged if the payments were included in the written agreement. I am unable to accept Mr. James’s evidence on this. I have no doubt that if, for example, the two writers had failed miserably to produce any work of any potential and there was no realistic prospect of them earning any royalties other than of a minimal amount and Mr. James had wished not to continue with the 1967 publishing agreement, he would have considered himself free, after a reasonable time and on giving reasonable notice, to discontinue the weekly payments long before the end of the six-year period (the renewal option was exercisable by the writers as well as by the publisher). I am not satisfied that there was a binding contract beyond this.

 

It may be inherent in the nature of this type of publishing agreement that the publisher’s strictly legal obligations will be very limited. What Mr. John and Mr. Taupin wanted was a foot in the door, the entrée to the popular music publishing world, and in practice they obtained this by the 1967 publishing agreement. They were put on the “books” of a leading publisher; they obtained the use of a studio; and they also obtained the financial means enabling them to pursue their ambitions. The value of this to the two young would-be writers is not to be underestimated. They were fortunate to have found in Mr. James a leading music publisher who was willing to encourage and support them. But the agreement contained no provision for early termination or return of copyrights if, for example, successful publication was not achieved and the writers became aware of another publisher who had more confidence in their songs. Conversely, and more importantly, if, as was no doubt the hope in every case, the writers succeeded enormously, *451 their entire output for six years was bound to DJM effectively for ever, whether published or not, and there was no provision for any increase in royalty rates.

 

Obviously it takes time for a new writer to succeed. Mr. James’s estimate was that on average between one and two years is needed before there is any success, if there is to be any. The publisher is entitled to a reasonable period to obtain a proper reward for taking on the new writers, paying the (comparatively modest) costs of making demonstration records, providing studio facilities, seeking to promote the works and, in this case, paying the writers their weekly retainer. But six years is an appreciable time in anyone’s professional career, particularly at the threshold of so uncertain a career as that of pop music writer. I consider that to have tied these two young men to DJM in 1967 for six years on the terms in question represented an unacceptably hard bargain.

 

Did Mr. Dick James assume a rôle of dominating influence? I consider that, brief though their acquaintance had been at this stage, he did. Once he had decided that the two young men, who like so many others were anxious to be signed by him, were worth pursuing and encouraging, he really took charge of the arrangements. At his request they assigned the copyright in the 17 songs to Gralto Music Limited, even though they were under no obligation to do so. And although, understandably after so many years, some obscurity now surrounds precisely what was said at the relevant meetings, and, indeed, it is uncertain how many meetings there were, what does emerge clearly is that Mr. James did not regard himself as obliged to give Mr. John or Mr. Taupin, nor did he give them, a thorough explanation of the terms of the proposed agreement. In particular, he did not explain to them that, whatever might happen in practice, under the agreement all the songs they wrote over the next three years, or six years if DJM exercised its option, would belong to DJM for ever, regardless of how successful those songs might be and whether published or not, and that for those songs, again regardless of how successful they might be, they would be entitled to receive only the one fixed rate of royalties. When the typed form of agreement was produced, no one went through the four and a half pages, explaining the practical implications of the 18 clauses. Mr. John and Mr. Taupin were young and inexperienced minors. They were very apprehensive at meeting such a giant in the music publishing industry, and they were very anxious to be taken on by him. No negotiation took place. They would have been disinclined to question the terms of any agreement Mr. James put before them, the more so when he told them that the terms were the standard terms within the industry. They were, as must have been obvious to him, trusting and relying on him that the contractual terms were fair and reasonable. The formality of requiring parental signature in the circumstances of these two young men and their parents was not an adequate counterbalance to this. In my view it is clear that the reason why Mr. John and Mr. Taupin signed the agreement for such an onerously long period lies not only in their keenness to be signed by Mr. James but also, and importantly, and this is partly why they were so keen, in the trust they reposed in him as a man of stature in the industry that he would treat them fairly.

 

My conclusion is that, in respect of the period for which the artists were bound and because of the circumstances in which the agreement was entered into, at its inception the 1967 publishing agreement was an unfair transaction (I prefer to use this expression rather than “unconscionable transaction,” but without intending any different meaning).

 

In stating this conclusion I wish to emphasise that there is no question of Mr. James having sought consciously to obtain an unfair advantage. At the time he thought his normal terms for a publishing agreement were standard in the trade and therefore fair. And if, contrary to what normally happened in the popular music business, these two young writers succeeded spectacularly, it would have been his intention to increase their royalty rates, as indeed in the event happened. But finding, as I do unhesitatingly, that in this transaction Mr. James was acting in good faith does not in my view provide a complete answer to the undue influence claim. One can obtain an unfair advantage by the exercise of a dominating influence without intending to act unfairly.

 

I come next to the 1967 recording agreement, regarding which I make the same finding on Mr. James’s good faith. Under this agreement Mr. John bound himself exclusively to TRC in respect of all his recording activities, with some immaterial exceptions, for a period which, when the agreement was signed in January 1968, had some 4¾ years to run. TRC became the owner of the master recordings for all time and, under the annexed “standard artists condition” no. 6, TRC was expressed to have the right in its discretion to decide whether and when to start, stop or re-start production of records. Mr. John was precluded from making recordings of any work performed by him under the agreement for five years from the date when it was recorded for TRC. In return TRC was, as the plaintiffs accepted, under an obligation to make master recordings sufficient to produce the agreed minimum of four sides of single records. TRC was also obliged to pay a royalty of one-fifth of all “net monies” received by TRC in respect of the master recordings. The defendants alleged that in addition TRC was under an implied obligation to use reasonable diligence to procure the distribution, sale, promotion and exploitation of records embodying the minimum number of master recordings. Such an implication is far from easy to make having regard to condition 6, but I do not pursue this further for the same reason as mentioned earlier when dealing with the comparable allegation regarding the 1967 publishing agreement.

 

I am in no doubt that at its inception this agreement was significantly disadvantageous to the artist Mr. John, in one important respect. At the time he was unknown as a writer or artist and the royalty rate specified was not unreasonable for such an artist. TRC was entitled to protection in the form of exclusivity for a reasonable period, so that it would have a fair opportunity to recoup and benefit from the expenses incurred by it on unsuccessful master recordings. The success rate in this field is low. As a rough guide, a recording company will recoup its recording costs with not more than one artist in ten, and it will make a significant profit with not more than one artist in thirty. Bearing this in mind, and that on average a new artist will take three years to become established, a five year tie in this *453 instance may not have been unreasonable. But whether this was so or not, where the agreement fell short of striking a reasonable balance was that it made no provision for any improvement in the royalty rate if, as happened here, the artist became a major success. The experts called by the parties were in agreement that clause 5 was a most unusual provision, the defendants’ expert (Mr. David Betteridge) saying that he had not seen a royalty clause like this before. In 1967 the royalty rate was normally a percentage of retail sale prices, there being one percentage for U.K. sales, and another smaller percentage (of the order of one half or two-thirds of the U.K. rate) for overseas sales. The U.K. market represented about 6½ per cent. of the worldwide record market at all times material in this action, although obviously the sales in different countries will vary greatly from one artist to another. In January 1968 20 per cent. of “net monies” received by TRC under the Philips agreement equalled approximately 2 per cent. of the retail selling price in the U.K. This was somewhat less than the average going rate for the U.K. for an untried artist at the beginning of his career, but since under clause 5 the same rate applied worldwide, the overall result probably was to leave Mr. John in a not significantly better or worse position than other untried, unknown artists. But for Mr. John to have remained tied to TRC for five years at this beginners’ rate, however successful he might be, would have been obviously unfair.

 

As with the 1967 publishing agreement, so with this agreement, I think it is clear that at the time it was entered into, some two or three months after Mr. John had become linked to Mr. James and his organisation, Mr. James was exercising a dominating influence over Mr. John regarding his career. Again, no proper explanation was given on the substantial implications of the agreement. Mr. John, to whom to be given any recording agreement was “heaven sent,” could not recall being furnished with any explanation of its terms before signing it. Although Mr. James’s evidence was that he gave some explanation, I am satisfied from the general tenor of his evidence that in this case also he did not feel obliged to give and he did not give a proper explanation of the way in which the basic provisions of this agreement concerning its length and one fixed royalty rate would, under the agreement as it stood, work unfairly to Mr. John if he were to become a major success. Mr. John, for his part, as he stated in evidence, “just trusted Mr. James and the contract.” In my view it was because of this trust, which Mr. James must have known Mr. John was placing in him, that Mr. John entered into this agreement. I consider that in these circumstances this agreement also, with the single fixed low royalty rate, if for no other reason, constituted an unfair transaction.

 

I must come now to the 1970 recording agreement, prefacing what I have to say on this by reference to an issue which arose on whether or not, having regard to the terms of the 1968 management agreement, DJM was acting as Mr. John’s manager in March 1970 in respect of his recording activities. The management agreement proposal arose some weeks after the 1967 publishing agreement had been entered into, at a time when, although the 1967 recording agreement had probably not yet been signed by the parties, Mr. John had accepted that he should enter into a recording agreement with *454 the DJM group. The defendants’ case was that in respect of his composing and recording activities Mr. John did not need a manager, and they pointed out that DJM never took a management commission from Mr. John on his publishing and recording royalties. Mr. Dick James’s evidence was that he never intended to assume managerial responsibility for recording and publishing, and that Mr. John clearly understood from what Mr. James said to him at the time that recording and publishing were not included in the management arrangements. Mr. Stephen James’s evidence was to the like effect. Mr. John’s recollection was far less certain, but he accepted frankly that when the 1970 recording agreement was made in March 1970 he did not expect Mr. James to advise him on its terms.

 

There is force in the consideration that, publishing and recording arrangements with the DJM group having already been seen to, there would have been no point in DJM assuming a managerial responsibility for Mr. John in February 1968 in those fields. Moreover, I think Mr. John was told that there would be no further deductions, by way of a management commission, from the publishing and recording royalties. But the opening words on the management agreement are unambiguous: “the Artist hereby appoints the Managers to be his sole managers to manage on behalf of the Artist all the affairs of the Artist relating to his professional career in any medium of professional entertainment,” and phonographic recording was one of the six branches of the entertainment industry then specified. If the width of these clear terms is to be cut down in reliance on an oral agreement or the common intention of the parties, convincing proof is required. I would have to be satisfied that both parties understood and accepted that, despite the terms of the agreement, none of those terms was to apply at all to any of Mr. John’s activities as a composer or in the recording field. Having heard the evidence I am not satisfied on this. In particular, whatever was said to Mr. John at the time, I do not think that he clearly understood that regarding his composing and recording activities DJM was to have no functions whatever as his manager. Rather he thought that, although the management would be primarily in the field of live performances, DJM as manager would generally guide his career.

 

With that preface I turn to consider whether the 1970 recording agreement was an unfair transaction. On this, in the first place, I am in no doubt that in March 1970 Mr. James with his genial, ebullient personality was exercising a dominating influence over the young artist, all of whose professional activities were, under one agreement or another, bound so closely to the DJM group. This was so in practice, whether or not as a matter of strict law DJM was Mr. John’s manager in respect of his recording activities. As Mr. John said in his evidence regarding entering into this new recording agreement, “everything was built on trust anyway.” He always regarded Mr. James as a “benevolent father-figure.” I add that at the time, when the “Elton John” album had not yet been released and tested in the market place, Mr. John thought that the new contract was a very generous one.

 

In considering whether indeed any unfair advantage was taken of Mr. John, several points must be borne in mind. The genesis of the new *455 agreement was that by March 1970 Mr. John had not had a hit record, but he was well considered as an up and coming artist. The suggestion of a new agreement came from Mr. James. He was concerned to extend the period for which Mr. John would remain tied to him (the expiry date was deferred from 9 November 1972 to 28 February 1975) and to improve the royalty rates. By March 1970 Mr. John had been with DJM for over two years. Although still a young man, not quite 23 years of age, he was no longer without personal experience of long-term publishing and recording contracts (and in passing I refer to the events of 1969 involving Mr. Gee and Island Records). Mr. John knew Mr. James and his organisation, and he knew whether he wanted to remain signed with them. In fact he was very pleased with the efforts DJM had been making on his behalf regarding the “Elton John” album. Mr. John also understood that the new contract involved a commitment for five years, and he was happy to accept that. The royalty rates were increased to 40 per cent. in respect of master recordings produced in the first two years of the five year term of the new agreement, and 60 per cent. in respect of master recordings produced in the remaining three years. Under the licensing agreement then in force in the USA and the arrangement being implemented between TRC and DJM Records, the 40 per cent. rate equalled about 4 per cent. of the retail sale prices in the USA and the U.K. On the expert evidence this 4 per cent. rate at the time, even on a worldwide basis, for an artist placed as was Mr. John in 1970, was not generous.

 

Weighing all these matters, my conclusion is that, given the significant increase in Mr. John’s experience and his awareness of what the new agreement involved, and given also the improved and escalating royalty rates, this agreement taken as a whole and having regard to the circumstances in which it was entered into was not an unfair transaction.

 

I add that this was so, although, as I have found, DJM’s management agreement at the time extended to Mr. John’s recording activities. This is an important circumstance to be taken into account. But even if an arm’s length negotiation by DJM as Mr. John’s manager with another record company at the time would have resulted in better terms for Mr. John, as it might well have done, I do not think it necessarily follows, and I do not think that it was the case here, that the transaction entered into between DJM and Mr. John was unfair. All the circumstances have to be taken into account.

 

I move on to 1971. The defendants placed considerable reliance on the termination of the existing publishing and recording agreements effected by the new agreements entered into in March and April 1971 as part of Mr. John’s and Mr. Taupin’s double employment schemes. For the defendants it was emphasised that in relation to the 1971 agreements the individual plaintiffs were advised by independent solicitors experienced in the field of entertainment agreements (and it is right to recognise that it was at Mr. James’s suggestion that Mr. John first consulted solicitors). The 1971 agreements could not have been, and indeed were not alleged to have been, procured by undue influence.

 

I am unable to accept the defendants’ argument on this. Berger Oliver were not instructed to consider whether the existing agreements were unfair  *456 or impeachable on any ground. Mr. Oliver (who did not give evidence) seems, not surprisingly, to have proceeded on the footing that there were in existence valid contracts and that one of the parties had offered to vary the terms of one of those contracts. Mr. Oliver took part in negotiations with Mr. James concerning the proposed variations, and advised Mr. John and Mr. Taupin thereon, and his firm prepared the documents required for the tax mitigation scheme, reflecting therein the agreed variation. No one suggested that the defendants’ rights under the existing contracts might be impeachable, and with the one exception of the improvement in the publishing royalty rates, the defendants stood on their rights under the existing agreements and the terms of those agreements were carried over into the new agreements. Thus the negotiations took place, and the independent advice was given, not against a background of Mr. John and Mr. Taupin being free or possibly being free from any existing obligations to the defendants, but against a background of the existing agreements upon which, with one exception, the defendants were standing firm. I do not see how such negotiations and advice, followed by the 1971 agreements, by themselves can have been operated to cure the taint attaching to the 1967 agreements. On the contrary, any existing taint was carried over and, subject to any complications arising from the difference in the parties to the 1971 agreements, in so far as the existing publishing and recording agreements were then still capable of being set aside on the ground that they were procured by undue influence, so also at their inception were the corresponding 1971 agreements.

 

Laches and the case for equitable relief

In considering whether a case has been made out for the grant of equitable relief in respect of the agreements which I have found were unfair transactions at their inception, and in addition to the matters already mentioned concerning the terms of the agreements and the circumstances in which they were entered into, I must consider the way in which the agreements were carried out and the benefits each party has acquired thereunder: have the agreements, in the events which happened, operated unfairly on the plaintiffs?

 

I must also consider the defences of laches and acquiescence. No statutory limitation period applies to the claim to set aside the agreements, but laches may provide a defence. I refer to Lord Selborne’s oft-quoted formulation, in Lindsay Petroleum Company v. Hurd (1873) 5 App.Cas. 221 at 239:

“Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are *457 the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.”

On that passage Lord Blackburn added this comment in Erlanger v. New Sombrero Phosphate Co. (1878) 3 App.Cas. 1218 at 1279:

“I have looked in vain for any authority which gives a more distinct and definite rule than this; and I think, from the nature of the inquiry, it must always be a question of more or less, depending on the degree of diligence which might reasonably be required, and the degree of change which has occurred, whether the balance of justice or injustice is in favour of granting the remedy or withholding it.” In this case no distinction falls to be drawn between laches as so described and acquiescence, and the touchstone I propose to apply is whether, having regard to all the circumstances, the balance of justice or injustice is in favour of setting aside the agreements or not.

 

One of the features which strikes me first about the present case is the lapse of time involved. The agreements sought to be set aside go back to 1967. It was almost 15 years thereafter before the defendants were given any notice of a claim to set aside the agreements on any ground. Secondly, it is to be noted that the subject matter of the agreements comprises copyrights and master recordings which DJM and TRC were to spend effort and money in exploiting. In all fairness it behoves a party who wishes to claim the return of such property to act promptly when he becomes dissatisfied with the terms on which the property was transferred to the other party. In the event, before the claim was first made in 1982 the DJM group did spend substantial effort and sums of money in promoting the copyrights and master recordings. The following remarks made by Lindley L.J., in the context of a gift, in the leading case of Allcard v. Skinner (1887) 36 Ch.D. 145 at 187, are equally applicable mutatis mutandis to commercial transactions such as those involved in the present case:

“A gift made in terms absolute and unconditional naturally leads the donee to regard it as his own; and the longer he is left under this impression the more difficult it is justly to deprive him of what he has naturally so regarded. So long as the relation between the donor and the donee which invalidates the gift lasts, so long is it necessary to hold that lapse of time affords no sufficient ground for refusing relief to the donor. But this necessity ceases when the relation itself comes to an end; and if the donor desires to have his gift declared invalid and set aside, he ought, in my opinion, to seek relief within a reasonable time after the removal of the influence under which the gift was made. If he does not the inference is strong and if the lapse of time is long the inference becomes inevitable and conclusive, that the donor is content not to call the gift in question, or, in other words, that he elects not to avoid it, or, what is the same thing in effect, that he ratifies and confirms it.”

Thirdly, it should be noted that the plaintiffs have never made any criticism of the DJM organisation’s skill or diligence in carrying out its work of exploitation from 1967 up to date. Mr. John stated candidly in his evidence that they always gave him “100 per cent. support.” I can see no reason to doubt that, in addition to giving Mr. John and Mr. Taupin their *458 chance to start at all, the DJM group has made a significant contribution to their subsequent success.

 

Fourthly, the joint venture has indeed been outstandingly successful. Elton John has become a household name. Mr. John and Mr. Taupin have succeeded in their chosen careers to an extent, surely, beyond even their wildest hopes or expectations in 1967. Measured in financial terms, under the agreements now sought to be avoided Mr. John in particular but also Mr. Taupin have received very substantial sums of money. Their royalty rates were increased in March 1971, and, in the case of Mr. John’s recording contracts, in March 1970 and then in June 1971, and (in effect) again in June 1974 in respect of the USA. Excluding performing fees, up to the end of 1982 Mr. John and Mr. Taupin (or their employer companies) had received about £1.2 million and £1.1 million respectively under the publishing agreements, and in the same period Mr. John (or his employer companies) had received about £13.4 million under the recording agreements. The comparable figures for the DJM group are less certain because of the room for debate on how much of the costs of the group can fairly be set against the gross receipts in arriving at its net profit from these agreements. Suffice it to say, the group also has benefited very substantially.

 

The initial publishing and recording agreements sought to be set aside were made respectively in November 1967 and January 1968. In 1969 Mr. John discussed his wish to get out of these contracts with Mr. Gee, but did not pursue this. Later in the same year Island Records did its best to obtain his release from the defendants; but thereafter everything between Mr. James and Mr. John was straightened out. In his evidence Mr. John stated with frankness that he had no qualms whatsoever about staying with the Dick James organisation. He accepted that he made a conscious and deliberate decision to stay although he knew that, at any rate according to Island Records, his contracts might well be void. I say “according to Island Records,” because although he was very flattered by Island Records’ interest in him, Mr. John viewed this advice with some scepticism, coming as it did from a company anxious to acquire him after some groundwork had been done to establish his name. I have no ground for thinking that from that time in 1969 onwards Mr. John ever sought or wished to resile from his decision to stay with Dick James until, that is, shortly before the start of this action in October 1982.

 

In 1971, when Berger Oliver were instructed and participated in negotiations with the Dick James organisation, Mr. John did not raise with his solicitors the possibility that his contracts might be void. In evidence he said that he really did not see any point in doing so, because “I was quite happy where I was.” Neither did Mr. Taupin raise the point, although his position is not so clear cut, because of some difference of recollection between Mr. Taupin and Mr. John over the former’s knowledge of what was said by Mr. Blackwell in 1969. I am satisfied that, although he did not meet Mr. Blackwell, Mr. Taupin was subsequently told by Mr. John the gist of what had occurred at his meeting with Mr. Blackwell. Mr. Taupin and Mr. John were sharing accommodation at the time, and the matter was of considerable professional importance to both of them even though the *459 Island Records proposal only concerned Mr. John as a recording artist. Thus at the time in 1969 Mr. Taupin did have brought to his attention that there was an avenue to be explored if he was interested in getting out of his Dick James contract. Nevertheless, like Mr. John, Mr. Taupin was sufficiently content with his contract with DJM not to pursue this, in 1971 or at any other time prior to 1982.

 

In October 1972—and for the moment I will concentrate now on Mr. John’s position—counsel was instructed for Mr. John and one of the issues discussed was whether, in the light of the Schroeder case, the publishing agreements could be attacked as being void as oppressive and the return of the copyrights obtained. Counsel, who did not have much in the way of background information, expressed the view that the publishing agreement was unobjectionable. The plaintiffs relied on this advice in the context of a submission to the effect that before it can be unfair to permit a plaintiff to enforce his right to have a transaction set aside he must have known that he had that right. Several authorities were cited to me, but I do not think that this is the occasion for a review of them. Suffice it to say, I gratefully adopt the words of Harman L.J. in Holder v. Holder [1968] Ch. 353 at 394 (which, if I may respectfully say so, seems to me to be eminently sound) that there is “no hard and fast rule that ignorance of a legal right is a bar, but the whole of the circumstances must be looked at to see whether it is just that the [plaintiff] should succeed against the [defendant].”

 

Mr. Reid, through John Reid Enterprises, became Mr. John’s manager when the 1971 management agreements expired in May 1973, although the formal agreement was not signed until later. Mr. Reid kept Mr. John informed on the outcome of the October 1972 discussions with solicitors and counsel and with Mr. James and of his subsequent meeting with Mr. Eastman. As already mentioned, Mr. Reid advised Mr. John to wait out his present publishing agreement. For his part, Mr. John gave Mr. Reid carte blanche to carry on in whatever way he considered best, and followed his advice, for Mr. John was fully occupied with his work. In the circumstances I must treat Mr. Reid’s actions and decisions as having had Mr. John’s approval.

 

Mr. Reid’s evidence established that in some respects he did not agree with Mr. Butler’s opinion that there was nothing wrong with the publishing contract, or the advice of Berger Oliver that probably Mr. John did not have a leg to stand upon over the sub-publishing arrangements. Nevertheless he decided that to let matters lie for the time being and not to raise them with DJM was the most practical course: further information on sub-publishing was needed before a final decision could be taken. Mr. Reid’s first priority was the promotion of Mr. John’s very busy career, and Mr. Reid did not wish to upset or irritate Mr. James when his continuing co-operation and goodwill were needed over the American tax problems and when Mr. John was still tied to the Dick James organisation until 1975 under the recording agreements. For his part Mr. John (as he said in evidence) had a very good relationship, at that time anyway, with Mr. Dick James: the recordings were successful; he himself really did not then have any axe to grind with Mr. James; and although Mr. Reid was concerned over something, he (Mr. *460 John) was quite happy being on DJM Records with Mr. James. So, on Mr. Reid’s advice, he preferred to keep on with his contracts with the Dick James organisation rather than rock the boat.

 

So matters were let be, and for a very long time, because the first occasion when it was suggested to the defendants that the plaintiffs might have a claim to set aside the agreements or to obtain back the copyrights or master recordings was the letter before action written in September 1982. Mr. John’s present solicitors were not consulted, as I have said, until August 1981.

 

Meanwhile, up to the expiration of the publishing agreements in 1973 and thereafter of the recording agreements in 1975 and thereafter again, year after year, Mr. Reid obtained from Mr. James and his organisation what he sought: the continuing goodwill, co-operation and business effort of the DJM group accruing to Mr. John by Mr. James being kept unaware that claims might be brought in respect of the agreements. Looking at the matter from the point of view of the DJM group, for years it has conducted its business, and its relationship with Mr. John and Mr. Taupin, on the footing and in the belief that it was entitled to the copyrights on the terms of the publishing agreements.

 

This state of affairs is not acceptable as a basis on which plaintiffs should come to the court in 1982 and ask for the publishing agreements to be set aside.

 

I have very much in mind the important facts that Mr. Reid was a young man when he took over the management of Mr. John, that he is not a lawyer and that the legal advice given in 1972 by counsel and concurred in by solicitors on the invalidity of the publishing agreement and the possibility of recovery of the copyrights was firmly against the success of any such claim. But a thread running through much of the evidence of Mr. Reid, who is both astute and tenacious, was that from 1972 onwards he always wanted to keep open the possibility of making claims, of uncertain extent, against the DJM group in respect of Elton John’s contracts. I also have in mind that (as I have already concluded) DJM and TRC owe fiduciary obligations to the plaintiffs in respect of any exploitation which takes place of the copyrights and master recordings. The copyrights and master recordings acquired by the defendants under the various agreements are of considerable value, and many (36 songs and 24 recordings) have not yet been published or released. The breaches of these fiduciary obligations committed by the defendants for many years do not constitute an altogether attractive basis for the parties’ future relationship (although co-operation between the parties has in fact continued even since the writ was served).

 

But taking into account all these matters, including the extent of the benefits which Mr. John as well as DJM has acquired in fact over the years under the publishing agreements and the work done by DJM in exploiting the copyrights (obtaining 800 cover recordings and so forth) before and after November 1973, and looking at all the circumstances in the round in my view, so far as this case relates to Mr. John’s claim to set aside the publishing agreements, it falls squarely within Lord Selborne’s description of one where it would be practically unjust to give a remedy because the party *461 seeking the remedy has by his own conduct put the other party in a position in which it would not be reasonable to place him if the remedy were afterwards to be asserted. The balance of justice is firmly against setting aside the publishing agreements now. In my judgment this is so with respect to the original 1967 publishing agreement and the agreements which replaced it in 1971 for the remainder of the original term of six years expiring in November 1973. In this regard, Mr. John’s company, Bong, cannot be in a better position than Mr. John nor can Happenstance, as assignee from Sackville, Mr. John’s other employer company.

 

I turn to the only other agreement which I have decided was at its inception an unfair transaction: the 1967 recording agreement. This agreement ended on 28 February 1970. In the two year period from January 1968 until the end of February 1970 Mr. John’s endeavours as an artist met with strictly limited success, but they paved the way for his future. In practice the “Elton John” album attracted royalties at the 40 per cent. rate fixed by the 1970 recording agreement. I do not think that for Mr. John to have been paid, and to be paid, royalties at the equivalent of 2 per cent. of retail prices (which is now a very low rate) in respect of the other recordings made in that limited period, and for TRC to continue to own the master recordings made then, is unfair when judged in the overall context. Accordingly as events turned out I do not think that, for the limited period for which it continued and for the purposes for which it remains extant, this agreement has operated unreasonably as far as Mr. John is concerned. For this reason I do not think that a case for equitable relief now in respect of this agreement has been made out.

 

Moreover, and I will deal with this very shortly, assuming that (contrary to my conclusion) the 1970 recording agreement at its inception was an unfair transaction, particularly because at that time DJM’s contractual management functions included recording, in my view that agreement and the successor recording agreements have, in the event, not worked unfairly to Mr. John. The recording rates have progressively been increased, and the great bulk of Mr. John’s albums attracted and attract royalties at the 60 per cent. worldwide rate. Other record companies would have paid better rates, particularly as time passed and Mr. John became ever more famous, but it is a matter for speculation whether arrangements with such companies would have benefited Mr. John overall. Considering the terms of the 1970 recording agreement in the light of all the subsequent history I do not think that a case for equitable relief in respect of this agreement has been established.

 

Mr. Taupin’s position is different from Mr. John’s. Like Mr. John he was an honest witness, but his evidence suffered from the drawback that he had little or no recollection on many relevant events. The explanation lies in his temperament: he was not much interested in the sort of matters which Mr. Reid raised with Berger Oliver and Mr. Eastman in 1972 on behalf of Mr. John. Although Mr. Reid became Mr. Taupin’s manager in the manner already described from 1974, he was never given authority to act for Mr. Taupin regarding such matters. So what was Mr. Taupin’s attitude to the 1967 and later publishing agreements? I have already dealt with what Mr. *462 Taupin knew of Mr. Blackwell’s conversation with Mr. John in 1969, and commented on the absence of any mention of this to Berger Oliver by Mr. Taupin in 1971. Thereafter Mr. Taupin did become aware that Mr. Reid had seen Mr. Eastman, concerning a dispute over DJM contracts and subsidiary companies but, again through lack of interest, he did not pursue this with anybody. Mr. Taupin ceased writing for DJM in November 1973, and by then his own recording activities with the DJM group had come to nothing. Thereafter Mr. Taupin did not lack opportunity or means to question the fairness of the agreements had he wished to do so. He emigrated in 1977 and apparently he was not further concerned with the matters now in dispute until after Mr. John had consulted his present solicitors in August 1981.

 

I think that the right inference to be drawn from this history is that until he was stirred up by others in 1982 Mr. Taupin was content with his publishing arrangements with DJM and to receive his royalty payments as they came in.

 

Given the lapse of time in the circumstances of the DJM group being left to continue to exert itself in exploiting the copyrights, and given also the extent of the benefits received by Mr. Taupin, coupled with what amounts to a decision by him in the past not to concern himself with any disputes with DJM, I consider it is too late now for Mr. Taupin to claim such a drastic remedy in respect of the publishing agreements as setting them aside. I think that it would be practically unjust now to give that remedy in Mr. Taupin’s case also.

 

The conclusions so far stated on the setting aside claim are reached on the footing and take into account (first) that under the publishing and recording agreements DJM and TRC owed to the other parties the fiduciary obligations already mentioned and (secondly) the breaches which have occurred. But here I should elaborate on a submission made for the plaintiffs regarding all the agreements. When the 1967 publishing agreements was entered into DJM already had in operation in the USA, France and Australia sub-publishing arrangements under which the DJM group was making an additional, unauthorised profit. When the 1967 recording agreement was made in January 1968, TRC was dealing at arm’s length with Philips in its licensing arrangements, but this was no longer so when the 1970 recording agreement was made. By then DJM Records had been formed and it had entered into the October 1969 Pye agreement, and the DJM group was making or planning to make an additional, unauthorised profit there also. I have already decided that these arrangements constituted breaches of DJM’s and TRC’s fiduciary duties. Counsel for the plaintiffs submitted that in determining whether the various agreements were unconscionable bargains at the outset, or have operated unfairly, I should take into account these breaches and also that DJM intended to commit such breaches from the inception of the publishing agreements and from the inception of the 1970 and subsequent recording agreements. With regard to the 1967 recording agreement, it was submitted that even in this case, having regard to what had already occurred in Page One Records , the possibility of TRC re-organising its record manufacturing agreements as it did in 1969 must have been a real one when this agreement was entered into in January 1968. *463

 

I accept that these are matters to be taken into account. Put broadly, those to whom the royalties are payable ought to be able to have trust and confidence that the publishing and record companies will treat them fairly in the exploitation arrangements made. And I have in mind the critical views I have expressed on some accounting aspects of the defendants’ conduct in this regard. But in all the circumstances of this case these matters are not sufficient to tip the balance of justice or injustice in the plaintiffs’ favour on the setting aside claim. In particular they do not cause me to revise my view that overall the 1970 recording agreement was not an unfair transaction or my view that in the light of all that has occurred from 1967 onwards, it would not be just now to set aside the 1967 and subsequent publishing agreements or the 1967 recording agreement. I have reached this conclusion principally because, regarding claims for past breaches which are not statute-barred, compensation is an adequate remedy in respect of the defendant’s unauthorised profit-taking. As to the future, I do not doubt that the defendants will keep in mind the nature of their obligations to the plaintiffs as determined by this trial.

 

Other claims

The plaintiffs’ claim based on the management agreements is related to the two periods which started on 1 February 1968 and ended in one case in May 1970 and in the other in December 1970, when by amendment publishing and recording activities respectively were removed from the scope of the management agreements. The claim is based essentially on DJM’s management obligation to endeavour to secure the best possible terms for Mr. John’s publishing and recording activities. I can deal with this claim shortly. In my view it must fail. For similar reasons to those I have expressed earlier, even if the claim is expressed as a claim against a fiduciary to recover as an unauthorised profit the difference between the payment rates in the publishing and recording agreements and the best obtainable, the claim is not one to recover “trust property”; it is one to which the normal six-year period of limitation applies. That period expired long before the writ was issued. No case of fraudulent concealment was put forward in respect of the breaches alleged regarding the payment rates in the publishing agreements: these rates were known, and it was open to Mr. John, certainly for more than six years prior to the issue of the writ, to pursue a claim that those rates were less than the best obtainable if he wished to do so. Regarding the recording agreements it was submitted that without knowing what were the arrangements between TRC and DJM Records Mr. John could not have known whether the rates stated in the unique clause 5 represented the best obtainable. I cannot accept this. I can see no reason to doubt that the material enabling a comparison to be made between clause 5 and other rates was readily available (in particular, the number of records being sold, and their retail prices); and the way the clause operated in relation to the USA, a very important market, was known clearly by Mr. John’s advisers at the time of the negotiations with MCA in June 1971.

 

The plaintiffs’ claims include also a claim against Mr. James personally. *464 The plaintiffs reserved their right to argue in a higher court that notwithstanding what was said by McCardie J. in Said v. Butt [1920] 3 K.B. 497 at 506 and Lord Evershed M.R. in D.C. Thompson v. Deakin [1952] Ch. 646 at 680–681 , Mr. James was personally liable for procuring DJM and TRC’s breaches of obligation to the plaintiffs. Before me the claim was presented on two bases. The first was that Mr. James was personally liable under the first limb of what is sometimes known as the rule in Barnes v. Addy (1874) 9 Ch.App. 244 at 251, as a person who received and became chargeable with trust property. For reasons already given, in my view the profits for which the DJM group is accountable are not trust property, and hence the claim against Mr. James based on his receipt of sums derived directly or indirectly from such profits did not render him personally accountable under this head. The second basis was that Mr. James personally assumed a direct fiduciary obligation towards Mr. John and Mr. Taupin. I agree that he did, in some respects. But what is in issue before me is liability to account for an unauthorised profit made where there was a fiduciary obligation on one party (DJM or TRC) arising under a contract made with that party. The accounting claim springs from the contract, and the obligations arising thereunder. I can see no justification for spelling out from the facts of this case any personal accounting liability on Mr. James additional to that on the contracting parties. In truth this formulation of the plaintiffs’ claim is a disguised reformulation of the Barnes v. Addy claim.

 

As to the taking of any accounts not arising out of the other heads of relief, the defendants agreed to the taking of the only one such account ultimately sought by the plaintiffs: that is, in respect of the items relating to compilation records listed at the top of page 41 of Mr. Ashton’s report. The taking of the account is for the purpose only of ascertaining the entitlement of Mr. John or his employer companies to interest on the sums in question, and the order that such an account be taken is not to prejudice any right which the defendants may have to dispute the plaintiffs’ entitlement to claim payment in respect of any delay.

 

Conclusion

For these reasons the setting aside claim, and the claims under the management agreements and against Mr. James personally fail. The claims in respect of sub-publishing and licensing succeed against DJM and TRC to the extent indicated. I will hear counsel on the terms of the accounts and inquiries to be ordered, and also (because this was not a point really pursued before me) on whether the accounting parties should include other DJM subsidiaries.

Claims under management agreement dismissed. Claims in sub-publishing and licensing allowed in part. Questions as to form of order and costs adjourned.’

 

[xiv] Wadlow v. Samuel (aka Seal) [2007] EWCA Civ. 155.

Extracts from the judgment of Lord Justice Toulson:

The Grounds of Appeal

  1. The appellant advanced the following grounds:
  2. on its proper construction, the management agreement did not entitle the respondent to commission in respect of the first and second albums after the termination of the agreement;
  3. similarly, on its proper construction the settlement agreement did not entitle the respondent to commission in respect of the first and second albums;
  4. the management agreement was varied but not superseded by the settlement agreement, and the appellant was therefore prima facie entitled to rescind it for undue influence;
  5. if the settlement agreement superseded the management agreement, the appellant was entitled to rescind it on grounds of the undue influence which affected the preceding agreement;
  6. the judge was wrong to find laches and acquiescence. 
  7. It is logical to consider first the construction issues, then undue influence and finally laches and acquiescence. …

Did the Settlement Agreement Vary or Supersede the Management Agreement?

  1. The sole reason for this issue being debated was because of its possible relevance in relation to undue influence. 
  2. The chapter in Chitty on Contracts, 29th Ed (2004), on discharge by agreement begins by stating (at para 22–001) that the discharge of a contract by agreement is a subject of considerable artificiality and refinement, and that the niceties of legal reasoning which appear in this branch of the law are not easy to justify. 
  3. The case law on the subject has mainly arisen from the Statute of Frauds and similar statutory provisions. A good example is United Dominions Corporation (Jamaica) Limited v Shoucair [1969] 1 AC 340 . The case arose from a Commonwealth statute based on section 6 of the UK Moneylenders Act 1927 , which made unenforceable any contract for the payment of interest on money lent, and any security given by the borrower in respect of any such contract, unless it was supported by a note or memorandum signed by the borrower and containing all the terms of the contract. A lender advanced money to a borrower on mortgage at an interest rate of 9%. Later the rate of interest was varied to 11%. The original contract was supported by a note which complied with the statutory requirements, but the variation was not. The lender sought to enforce the contract at the original rate. The question was whether the variation, itself unenforceable, made the prior agreement also unenforceable. 
  4. Lord Devlin, at pages 347–349, set out the possible approaches to the problem:

“… the difficulty about enforcing the original mortgage in this case is that, although itself untouched by the statute, it is no longer the real contract between the parties. In reality, although the statute prevents reality from being proved, there is no longer a mortgage at 9% but one at 11%. Since, however, the real contract is not evidenced in the way required by the moneylending law, it cannot be enforced. This is the approach made by Douglas J in the Supreme Court and by Lewis J, who gave the leading judgment for the majority in the Court of Appeal.

 

Another way of arriving at the same result is to treat a variation of contract as something that necessarily requires the rescission of the old contract and the substitution of a new one. On this view the old contract cannot be enforced because it has been rescinded and the new contract cannot be enforced because it is not properly evidenced. This was the conclusion reached by the Divisional Court in Williams v Moss’ Empires [1915] 3 KB 242 and adopted by the Court of Appeal in Morris v Baron [1918] AC 1 . As Sankey J put it in the former case: “The result of varying the terms of an existing contract is to produce, not the original contract with a variation, but a new and different contract.”

 

The disadvantage of this view is that a minor variation may destroy the effect of the whole of the transaction between the parties. The alternative view, adopted by the House of Lords in Morris v Baron and again in British and Benningtons Limited v NW Cachar Tea Company Limited [1923] AC 48 (where Lord Sumner referred to the former view as possibly correct “as a matter of formal logic”), is based on the intention of the parties. They cannot have that which presumably they wanted, that is, the old agreement as amended; so the court has to make up its mind which comes nearer to their intention — to leave them with an unamended agreement or without any agreement at all. The House answered this question by rejecting the strict view propounded by Sankey J and distinguishing between rescission and variation. If the new agreement reveals an intention to rescind the old, the old goes; and if it does not, the old remains in force and unamended.

 

If the principle in Morris v Baron applies to this case, the mortgage of April 22 remains in force. The contrary has not been and could not be argued. It would be impossible to contend that a temporary variation in the rate of interest reveals any intention to extinguish the debt and the mortgage …

 

The choice before the board lies between solving the problem by means of what Lord Sumner called formal logic or solving it by giving effect as far as possible to the intention of the parties as was done in Morris v Baron .”

  1. The Privy Council chose the latter course. 
  2. However, it may not be easy to determine whether the parties “intended” that the original contract should continue to exist as a matter of legal analysis but in varied form, or whether as a matter of legal analysis it was intended to be discharged and replaced, since the distinction is one of legal theory which might have little commercial meaning for the parties. 
  3. In the present case it is plain what the parties intended to be the effect of the settlement agreement in terms of their ongoing financial rights and obligations; but to ascribe to them an intention to achieve that result by variation of the management agreement, as distinct from its replacement by the settlement agreement, or vice versa, is artificial. From a practical viewpoint it is a distinction without a difference. 
  4. In Morris v Baron the House of Lords used a variety of expressions to formulate a test. In British and Benningtons Limited v NW Cachar Tea Company Limited Lord Sumner, at 67, collected the various phrases used and said that the question was whether the common intention of the parties was to abrogate, rescind, supersede or extinguish the old contract by a substitution of a completely new self-contained or self-subsisting agreement, containing as an entirety the old terms, together with and as modified by the new terms. 
  5. In this case the settlement agreement was plainly intended in a broad sense to supersede the management agreement and the publishing agreement, but whether it was intended to extinguish the prior agreements is more debatable. The settlement agreement dealt comprehensively with the parties’ continuing obligations, but it did so in language which imported parts of the management agreement. 
  6. Mr George submitted rightly that the management agreement could be terminated without being discharged (that is, ceasing to have any legal effect). If the management agreement had been terminated in accordance with the notice provisions in that agreement, the post-termination provisions would continue to have legal force, because the contract would continue to have validity although the term of the management contract would have expired. Similarly, he submitted, the termination of the agreement by the settlement agreement did not extinguish the contract as an entirety. He pointed to expressions in the settlement agreement such as “subject as hereinafter appearing [the parties] agree to release each other from their respective obligations under and the further performance of the terms of the Management Agreement” and “notwithstanding the termination of the Management Agreement [the respondent] shall be entitled to his commission entitlement as defined in clause 7 of the Management Agreement” and “[the appellant] agrees pursuant to clause 5(c) of the Management Agreement that he will use his reasonable endeavours…” as showing that the management agreement was not being entirely extinguished. 
  7. The respondent argued that the continuing obligations took their force only from the terms of the settlement agreement and that the reference, for example, to him being “entitled to his commission entitlement as defined in clause 7 of the Management Agreement” was merely a convenient way of identifying his rights. 
  8. It is a fine question. I consider that it is also a sterile question. The law about undue influence is based on broader concepts and I do not believe that its application to the present case should be affected by whether technically the settlement agreement discharged the management agreement.
  9. The principle in Morris v Baron was brought into existence in order to deal with the technical problems produced by legislation analogous to the Statute of Frauds . The less that it is brought into other parts of the law to deal with problems of a different nature which do not require a formalistic approach, the better. 

Undue Influence

  1. Contract law is built on the principle that bargains freely entered into should be enforced. The cardinal principle of autonomy also has another side. In circumstances where one party has taken improper advantage of the other, so that the agreement cannot fairly be regarded as an exercise of free will, rules have been developed to protect the vulnerable party. The rules relating to misrepresentation, duress and undue influence share in this respect a common objective. 
  2. In Royal Bank of Scotland PLC v Etridge (No 2) [2001] UKHL 44, [2002] 2 AC 773 , Lord Nicholls went back to first principles in analysing the modern law of undue influence. He expressed the founding principle developed by the courts of equity as a court of conscience as follows (at para 7):

“The law will investigate the manner in which the intention to enter into the transaction was secured: “how the intention was produced”, in the oft repeated words of Lord Eldon LC, from as long ago as 1807 ( Huguenin v Baseley 14 Ves 273 , 300). If the intention was produced by an unacceptable means, the law will not permit the transaction to stand. The means used is regarded as an exercise of improper or “undue” influence, and hence unacceptable, whenever the consent thus procured ought not fairly to be treated as the expression of a person’s free will. It is impossible to be more precise or definitive . The circumstances in which one person acquires influence over another, and the manner in which influence may be exercised, vary too widely to permit of any more specific criterion.” (Emphasis added)

 

 

  1. If two parties enter into an agreement which is voidable for undue influence, and the same parties later enter into a related agreement but without any additional undue influence, in my opinion Lord Nicholls’ guiding principle must apply to the question of the validity of the second agreement, whether or not the second agreement was technically intended to discharge the first agreement. The court must look at the full circumstances (which may vary infinitely from one case to another) in order to determine whether the second agreement ought fairly to be treated as the expression of free will of the person later seeking to challenge it. 
  2. That the doctrine of undue influence may apply in such circumstances was established by the decision of this court in Yorkshire Bank PLC v Tinsley [2004] EWCA Civ 816 [2004] 1 WLR 2380 . Gray J distinguished the decision on the facts. Mr George submitted that he was wrong to do so. 
  3. Mrs Tinsley and her husband jointly executed two mortgages over their home as security for the husband’s current and future business debts. Mrs Tinsley acted under the undue influence of her husband, of which the bank had constructiveknowledge. The bank’s security over the home was therefore unenforceable against her. Sometime later the marriage broke down. It was arranged that the matrimonial home would be sold and part of the proceeds used to buy a smaller property for Mrs Tinsley. The bank insisted on her signing a new mortgage in its favour over the new property as a condition of its agreement to discharge the mortgages on the matrimonial home. Mrs Tinsley did so. The court held that the bank’s mortgage over her new property was no more enforceable against her than its mortgages over the matrimonial home. The undue influence which affected the earlier had also affected the later. 
  4. The leading judgment was given by Longmore LJ. Two passages from his judgment gave rise to debate in the present case as to their proper interpretation. The first was this, at para 18:

“A substitute contract will often come into existence in a different factual context from an earlier contract, and that factual context may show that the second contract is not a true substitute for the first. But if the factual situations are materially similar, and if it is a condition of the rescission or release of the original void or voidable bargain that the parties enter into a new bargain, that new bargain must be as open to attack as the old one.” 

  1. It was suggested in argument that Longmore LJ was there seeking to lay down a principle of law that a contract which is “a true substitute” of an earlier contract voidable for undue influence will be automatically unenforceable, subject to laches or the like. That suggestion led to rather unsatisfactory attempts to formulate definitive tests of what would amount to “a true substitute”. That trail leads quickly back to the sort of problems already looked at when considering whether the second agreement involved a discharge or variation of the first. 
  2. As I read the passage, Longmore LJ was not seeking to create such a test. Rather, he was drawing a distinction between the type of case which the court was considering (a case of the simple substitution of one mortgage for another at the insistence of the bank) and other possible cases where there might be material differences between the first and second agreements in their content or in their factual context. He went on in the next sentence to say that whether the new contract would be as open to attack as the old one would be partly a question of construction, implying that the court needs to look at what the parties have agreed as well as at the factual context in order to decide whether the second agreement was open to the same attack as the first. 
  3. There was also some debate about para 19 of the judgment of Longmore LJ in which he said:

“If a mortgage or guarantee is voidable for undue influence as against a husband and against a bank, a replacement mortgage, even if undue influence is not operative at the time of such replacement, will itself be voidable, at any rate if the replacement mortgage is taken out as a condition of discharging an earlier voidable mortgage. This should be the case even if there is a new contract rather than a mere variation of an old contract.”

  1. The debate was about the meaning of the words “even if undue influence is not operative at the time of such replacement”. 
  2. I would not read that as meaning “even if the original undue influence has ceased to be operative”, but rather as “even if there is no fresh undue influence”. I say that for two reasons. First, that reading is consistent with the judgments of the other two members of the court. Secondly, it would be inconsistent with the fundamental notion of undue influence to set aside an agreement which was not entered into under the continuing effect of undue influence but as a true exercise of free will. 
  3. Peter Gibson LJ took as his starting point that the conscience of the bank had been affected during the subsistence of the prior mortgages because it had constructive knowledge of the equitable wrong done to Mrs Tinsley by her husband, and he asked rhetorically at para 32:

“Why should the bank’s conscience not continue to be affected when it had made its consent to the exchange transaction conditional on Mrs Tinsley giving the bank a mortgage of 113 London Road in substitution for the voidable mortgages? The bank insisted on the substitution and thereby it connected inseparably the new mortgage to the earlier mortgages.” 

  1. Peter Gibson LJ also considered, at para 35, how a lender could protect himself against the risk of earlier undue influence affecting a later transaction. He said that he could see no reason why a lender should not be able to do so, in much the same way as the law requires lenders to do in order to avoid being on constructive notice of an equitable wrong to a wife, by taking steps to ensure that the wife received independent advice on the transaction into which she was to enter with the lender. Those observations are relevant in this case, because the appellant had independent legal advice at the time of the settlement agreement, although as a result of a combination of lapse of time, faulty memories and loss of documents it was not altogether clear what advice he received. 
  2. Rix LJ in a short judgment emphasised, in para 39 that the new mortgage was inseparably connected with the previous mortgages and that there was nothing to cause the earlier undue influence to have ceased to be operative in connection with the new mortgage. As a result, the mere fact that there was no additional undue influence was not determinative.
  3. Gray J considered that the present case was very different on its facts from Yorkshire Bank plc v Tinsley , and he found that the settlement agreement was not procured by undue influence. He listed a number of considerations which led him to this conclusion. By the time of the settlement agreement, the relationship between the parties had ceased to be one of trust and confidence. The appellant had already effectively replaced the respondent as his manager by Mr Cavallo. He received independent legal advice from Ms Searle in relation to the settlement agreement. The factual context in which the settlement agreement came into existence was fundamentally different from the factual context of the management agreement. The settlement agreement terminated not only the management agreement but also the publishing agreement, the validity of which had not been questioned. The terms agreed were not unreasonable or oppressive from the appellant’s viewpoint. The continuing obligation to pay post-termination commission had to be taken in conjunction with other provisions of the agreement, which included significant concessions by the respondent. 
  4. The concessions were indeed significant. The publishing agreement, as amended, entitled BSM to rights in up to five albums. At the date of the settlement agreement, only two albums had been released. BSM gave up its rights in respect of the further albums. This enabled the appellant to enter into an agreement in the next year with Perfect Songs, under which he received £2million as an advance. BSM’s term of exploitation would have lasted for 5 years after the fifth album. The period was greatly reduced. The respondent’s ongoing commission was limited to the first and second album notwithstanding that there was a substantial volume of other material recorded by the appellant prior to the settlement agreement. Further, the appellant’s share of the proceeds from the first and second albums was increased. 
  5. In my judgment the judge was entitled to conclude that the settlement agreement was properly to be regarded as an exercise of the appellant’s free will and was therefore enforceable. 

Laches and Acquiescence

  1. The judge dealt with this issue briefly, because it was academic on his conclusions as to the construction of the agreements and undue influence. Since I would uphold his conclusions, I will be similarly brief on this issue. 
  2. The appellant’s claim to rescind the management agreement and the settlement agreement came very late. It was more than 15 years after the management agreement and more than 11 years after the settlement agreement. Much water had flowed under the bridge. Looking backwards, it is noteworthy that the respondent failed on the issue of undue influence in relation to the management agreement because of his inability to rebut a presumption. Part of the respondent’s difficulty related to unearthing the legal advice which the appellant had received as a result of the many years which had passed before the issue was raised. Looking forwards, the consequences of rescission so long after the contracts would be highly problematic. On the face of things, the appellant would be entitled to repayment of all sums under the management agreement and the settlement agreement. The court would have jurisdiction to make an allowance to the respondent for his labour and expenses on the appellant’s behalf, but the respondent would face the problem of having to provide a basis for their quantification many years after the event. The rescission of the settlement agreement would also, on its face, revive retrospectively the publishing agreement. However, under the settlement agreement BSM had forgone rights and reassigned copyrights which had in turn been assigned to third parties. 
  3. Mr George emphasised that there was no evidence that the appellant had actual knowledge of a right to rescind either the management agreement or the settlement agreement for undue influence before the point was finally raised. That was a relevant factor, but there is no hard and fast rule that ignorance of a legal right is a bar to laches or acquiescence. The authorities show that ultimately the court has to look at the whole of the circumstances and decide whether on balance it is just that the agreement should be set aside: see John v James [1991] FSR 397 , 459 (Nicholls J) and Goldsworthy v Brickell [1987] Ch 378 , 411–412 (Nourse LJ) and 416–417 (Parker LJ). 
  4. The judge inferred that it was likely that Ms Searle would have advised the appellant about the possibility of raising undue influence at the time when the settlement agreement was being negotiated. Mr George submitted that this inference could not properly be drawn from the evidence. I do not think that it is necessary to examine the evidence in detail on that point, because that was not the sole factor which influenced the judge. Leaving that matter aside, I would have considered it surprising in any event if the judge had concluded that it was equitable to set aside the management agreement or the settlement agreement having regard to the very considerable passage of time and its effects. 
  5. I would dismiss the appeal.’

[xv] Trim (t/a Trim Productions & Victim Records) v Bobb (pka Gabrielle) & Ors [2002] EWCA Civ 62.

Extracts from the judgment of Lord Justice Aldous;

1..  This is an application by Mr Trim for permission to appeal out of time a decision of Jacob J of 12th June 1996. By his order the judge awarded an injunction to Perfect Songs Ltd restraining Mr Trim from infringing Perfect Songs’ copyright in the lyrics of the song called “Dreams”. He also granted an injunction restraining Mr Trim from infringing copyright in the music (excluding the lyrics) of that song. The order also required Mr Trim to deliver up all copies of recordings embodying any reproduction of the whole or the substantial part of the lyrics or the music of the song. 

2..  This application is brought on the basis that Mr Trim now says that he has a real prospect of success on a number of matters to which I shall have to come, and because he has fresh evidence, namely the master tape of the original recording of Dreams, which was not available to him at the trial. Mr Trim seeks leave to adduce that evidence, and seeks a stay of execution of the order of the judge pending the outcome of the appeal. 

3..  The case that came before the judge involved the disputed ownership of various copyrights in the song Dreams. Gabrielle, who is the first defendant, named Louisa Gabriella Bobb, is now a well-known performer. She recorded the song Dreams in November 1999. She also wrote the lyrics. In 1993 she brought an action for an injunction against Mr Trim in respect of his alleged breaches of her rights in her recorded performance of Dreams. In response Mr Trim brought an action for an injunction by way of counterclaim against Gabrielle and Perfect Songs, to whom she had assigned her copyright in the lyrics on 1st June 1993. His claim was for breaches of what he claimed to be his copyright in the lyrics of Dreams, and for an injunction against a company called Zomba Music Publishers Ltd in respect of what he claimed to be his copyright in the music of Dreams. The other parties to the action were Go! Discs Ltd, who were the record company who commercially released the song Dreams, against whom Mr Trim also sought an injunction; and also Mr Laws was joined as a third party to the counterclaim. He claimed to be the author of the music and he had assigned his rights in the music to Zomba. 

4..  Mr Trim’s case was that he had written the music to Dreams in early 1991 and that Gabrielle had assigned to him her copyright in the lyrics of Dreams during a meeting between Mr Trim, Gabrielle and her then manager, Mr Morgan, in a motor car in Shepherd’s Bush. 

5..  The judge rejected both of those contentions. In respect of the lyrics he found that, whilst a conversation may have taken place as alleged by Mr Trim, no concluded agreement was reached. The copyright in the lyrics remained therefore with Gabrielle until she assigned it to Perfect Songs in June 1993. 

6..  In respect of the ownership of the copyright in the music, rather more detailed findings were made by the judge. Mr Trim claimed to have composed the music. In support of his contention he sought to rely on the written statement of a Mr Palmer of Jet Star Phonographics Ltd, to whom he claimed to have played the music in early 1991. Mr Palmer did not attend trial and the judge refused to allow the statement to be put in evidence, holding that it would be valueless without the opportunity of cross-examination. 

7..  The judge rejected in robust terms Mr Trim’s evidence of how he composed the music. He said this, at page 19 of the transcript:

“I heard very explicit evidence from Mr Trim and Mr Kokis (PK) that Mr Trim, or Mr Trim and/or Mr Kokis, had composed the music in early 1991. I think that was nothing short of blatant perjury. 

Mr Kokis gave evidence. In his evidence-in-chief, when Mr Trim was asking him how he had come to compose the music, he stopped. His head sagged in the witness box and he did not move. I had to rise for five minutes. I consider he was near to choking on the lie he was about to tell. 

Mr Kokis had an interest in the case, as he accepted under cross-examination, even though Mr Trim is now claiming to be the sole composer — something different from that which he said in his affidavit at the interlocutory stage. There is apparently some arrangement whereby Mr Trim will give him a share of the proceeds, but not as much as 50–50%. 

Mr Kokis was wholly unable to explain how Mr Trim could have given the instructions to compose the music. He seemed not to know the names of the various kinds of track, or sounds. He put forward, shortly before trial, although they have been pressed for a long time, two disks which were originally put forward as the original disks. Examination of the disks by Mr Oxendale — very shortly before trial, because the disks were only provided very shortly before trial, indeed, one of them was provided during the trial at the very beginning — showed that the disks had been made on a machine which did not even exist in 1991, an Akai S1000. Both Mr Kokis and Mr Laws did have an Akai S900 in 1991, but the disk which was produced not only could not be played on an Akai S900, but was not simply a reproduction of something that could have been played on an S900 but adapted for an S1000. It had been broken up into two programs, something which an S1000 could play, but which an S900 cannot. No explanation of how that happened was offered, or could make sense except by way of some sort of fabrication for this case. 

Furthermore, Mr Laws’ disks and the two disks produced by Mr Kokis, had on them either a group track or vestiges of a group track — depending on which of the two. Mr Laws had a group track. The first disk produced had vestiges of a group track. The second one had it all. 

When this first emerged Mr Kokis, in the presence of others, as he accepted under cross-examination, said he never used group tracks. When asked to explain how the disk he produced had a group track, or the vestige of a group track. he suggested that maybe he had taken a disk from Tim Laws during the course of the recording process, Mr Laws having worked on it, and that was how Mr Laws’ group track had got on to it. But that is not an explanation which makes sense at all.

 

Mr Laws explained that use of a group track was for composing, for recording and marking various tracks that he was using. That would have been wholly unnecessary if he had simply started with a complete record. 

Mr Laws also gave some evidence to the effect that he had at one point played a guitar, as opposed to taking the section from the Tracy Chapman album ‘Fast Car’. That is to be found on the multi-track tape. There is no suggestion that either Mr Trim or Mr Kokis can play the guitar, whereas Mr Laws has been playing it since he was five years old. 

Mr Bradbury suggested there was something wrong with Mr Laws’ explanation of how he had composed the music. The principal complaint was that the piano appears to be track 1. That all came to bits when Mr Laws was recalled to explain that in fact the way he had done it involved the first six or eight tracks being put through together. 

The fact is that the whole story about Mr Kokis and Mr Trim writing the music in early 1991 is fiction, and a deliberate fiction.”  

8..  The judge found that the music to Dreams had been composed by Mr Laws in the middle of 1991. He also found that Mr Laws made the arrangements for the recording of Dreams in November 1991 at his studio, and as such was the owner of the copyright to the sound recording pursuant to section 9 of the 1988 Act. 

9..  There were two principal releases of Dreams. The first on Mr Trim’s Victim Records label. The judge held that this was intended to be a limited “white label” promotional pressing. The other release was by Go! Discs. However, Mr Trim continued to press copies of Dreams until he was restrained by interim injunction in 1993. Mr Trim had permission to press up to 1,000 copies of Dreams; by the time of the interim injunction he had pressed in the order of 16,000.

10..  The trial progressed without the benefit of the master tape of the original recording of Dreams being before the court. Mr Trim says that he now has the tape in his possession. The disappearance of tapes from Mr Laws’ studio in November 1991 was itself a matter of dispute at the trial. The judge referred to this in his judgment. He said this:

“The next event is also in controversy. It relates to Mr Trim taking DATs for ‘Dreams’ and the multi-track, which is now in evidence (a large tape) from Mr Laws’ studio. According to Mr Trim he was getting worried about the fact that Tim Laws was not giving him studio time. He had telephoned him on a number of occasions. Mr Laws was non-committal and indicated that he was too busy. According to Mr Trim, he invited PK to join him on an expedition to discuss the time question. According to PK, Mr Trim did not tell PK why they were going to the Re-mix Rooms until they were on the way there, when he was told they were going to collect the tapes. There is a conflict between Mr Trim’s version and PK’s version at this stage. Mr Trim saying basically that he was going there to discuss whether he would get time, PK saying the expedition was to collect the tapes.

 

The two of them arrived in the evening. According to Mr Laws, Mr Trim barged in unannounced. That may have been the impression given, although others have said that there was a ringing of a bell and a knock. According to Mr Laws, after some discussion Mr Trim became intimidating. Mr Laws feared either for himself or his equipment. According to Mr Laws, Mr Trim just took the tapes.

 

According to Mr Trim’s witness statement, the whole matter passed off completely peaceably. Mr Laws simply handed over the tapes when asked.

 

I reject the latter version of events. It was not supported by Mr Laws, by Mr Curran, who came to give evidence, or, indeed, PK. Mr Trim came to take the tapes. He took them contrary to Mr Laws’ wishes. Mr Laws told me, and I believe, that he considered calling the police, but did not do so. He was shocked at the time.”  

11..  The judgment does not go on to deal with the subsequent location of the tapes. 

12..  A statement dated 10th November 2001 has been submitted in support of Mr Trim’s application to introduce fresh evidence by his cousin, Mr Braithwaite. In this statement Mr Braithwaite says that Mr Trim gave him, amongst other things, the master tape for safekeeping in May 1992. In January 1993, when these proceedings commenced, Mr Trim had asked Mr Braithwaite for the tape, but he was unable to find it. However, when he subsequently came to move house in January 2000 the tape came to light whilst unpacking boxes in November 2000. 

13..  The label on the tape states that the “Producer” of the recording of Dreams made on 8th November was “Tim Lamb, Victor Trim and Peekay” and against “Source” are written the words “For Trim Productions”. Trim Productions was of course the trading name of Mr Trim. Mr Trim says that the handwriting on the label on the tape is that of Mr Laws and he asked me to compare it with a letter written by Mr Laws of 4th December 1991. 

14..  The proposed grounds of appeal fall into two categories. The first category relates to the new evidence. The material item is the new evidence to which I have referred, which is said to be the master tape. That it is said supports the case of Mr Trim that he was the owner of the copyright and discredits the evidence of Mr Laws. 

15..  Second, it is said that the order made by the judge made no provision for the ownership of the copyright in the original sound recording. 

16..  Third, it is said that the order made by the judge does not deal with the relief which would be appropriate to such a finding. 

17..  Fourth, it is said that Gabrielle and Mr Laws misled the court at trial. Mr Trim says that there is evidence that they did that. He referred to a number of documents, the evidence in Mr Carl Palmer’s witness statements, certain invoices. He adds to that the master tape to which I have referred. 

18..  I come now to the application for permission to appeal. It is brought, even allowing for the fact that it would have been brought under the old Order 59, almost five and a half years out of time. The only new piece of evidence is the master tape of the original recording. I need to consider that separately.

19..  I turn first to the matters that Mr Trim would seek to argue attacking the judgment. He puts forward a number of grounds. At the heart of them is the fact that his legal aid was not available to him at the hearing. He therefore arrived before the judge with no legal representation. He was given, I think, one day’s adjournment to prepare. The judge refused an extension of time for him to seek to obtain restoration of his legal aid and legal representation. He also attacks the judgment on a number of matters to which I have shortly referred. 

20..  No explanation is given in the documents before me as to why an appeal was not brought earlier in respect of those matters of which complaint is now sought to be made. The allegations which are sought to be raised, attacking the evidence of Gabrielle and Mr Laws, could have been raised shortly after the judgment was given, as could the ground of appeal on the basis that he had no legal aid. 

21..  I say there was no explanation in the documents. Mr Trim had the help of a McKenzie Friend who addressed me eloquently. He told me that Mr Trim’s life had been ripped apart at about this time. His house had been repossessed, and he had no legal advice and nowhere to turn for legal advice. He submitted that there was a real injustice here that needed to be put right and therefore permission to appeal should be given. 

22..  That cannot in my view be an adequate explanation for five and a half years’ delay. Justice of course comes into it, but there has been five and a half years’ delay and the events in dispute took place in 1991. When considering justice one has to look at it from both sides. There has to be finality to litigation. The purpose of the rules providing for time limits in which to apply for permission to appeal is to enable litigation to be resolved in a reasonable period of time. The explanation given is in my view not sufficient to excuse a five-and-a-half-year delay. 

23..  If I did extend time to enable these points to be raised five and a half years late, that would be likely to cause severe injustice to the defendants. Most of the evidence depends upon recollection. The matter is now over 10 years old, and in my view it would not be right to extend time for Mr Trim to seek to argue those points in this court. 

24..  I come next to the master tape. It is quite clear that Mr Trim has had this in his possession for 13 months prior to making the application. That of course has added to the delay before he comes to this court for permission to introduce it. The evidence, I accept, could have played a material part in the case. However, it was only a brick in the wall. It would not have been conclusive. The judge still would have had to have analysed the evidence and decided who he believed. 

25..  This is case here where there has been delay once the evidence came into the hands of Mr Trim of over a year. The explanation given by Mr Braithwaite is not satisfactory. It was in his loft all the time. He does not say whether he looked in the loft. He does not give an explanation which is sufficient to excuse the delay. Despite the fact that the formal requirements of Ladd v Marshall [1954] 1 WLR 1489 are no longer sacrosanct, I do not believe that there would be a chance of introducing this fresh evidence before this court, in view of the absence of an adequate explanation and the continuing delay in doing so. 

26..  This is a case where five and a half years’ delay cannot be excused when the matters in issue arose over 10 years ago. It would be a severe injustice to allow the matter to be reopened. This is an application which I therefore refuse. 

ORDER: Applications for permission to appeal, an extension of time, permission to rely on further evidence and a stay of execution refused.’

[xvi]Sheeran v. Chokri [2002] EWHC 827. Ch.

Extracts from the judgment of Mr Justice Zacaroli:

B. The issues

  1. It is common ground that copyright subsists in the musical work “Oh Why”. The issue that lies at the heart of this case is copying. Without establishing copying the defendants’ case cannot succeed, and the stated desire of the writers of Shape to clear their name depends upon defeating the claim of copying. Accordingly, this issue is the main focus of this judgment. 
  2. The defendants’ pleaded case is that each of Mr Sheeran, Mr McCutcheon and Mr McDaid had access to Oh Why and “as a result” reproduced a substantial part of the OW Hook in writing Shape. By the end of cross-examination of Mr McDaid and Mr McCutcheon, it was made clear that the defendants do not contend that either Mr McDaid or Mr McCutcheon copied the OW Hook, whether deliberately or subconsciously. The allegation of copying is made, therefore, only against Mr Sheeran (albeit that if that allegation is made good, the consequences will impact on each of the claimants as owners of the copyright in Shape). 
  3. The principal way in which the defendants put their case against Mr Sheeran is that he copied from the OW Hook, deliberately and consciously, in creating the OI Phrase. Alternatively, they contend that he did so subconsciously. 
  4. So far as conscious copying is concerned, Mr Sutcliffe QC (who appeared for the defendants) submitted that there is sufficient similarity between the works, clear evidence of access and other indicia of copying that the evidential burden should shift to the claimants, which they have failed to discharge. The matters on which he relies are, in summary, as follows.
  • (1)  The extent of similarity between the musical works, strengthened, it is said, by the following alleged matters: the OW hook is a memorable and portable phrase; the first recording of the OI Phrase is remarkably similar to the OW Hook; Mr Sheeran, in the course of writing Shape, moved away from the OW Hook before re-instating it; he had a clear idea of what the OI Phrase should sound like; the OI Phrase sits in stark contrast to the rest of Shape; and the absence of anything comparable in 250 years.
  • (2)  It is alleged that Mr Sheeran had access to Oh Why through a number of channels. *312
  • (3)  It is also alleged that Mr Sheeran has a propensity to collect ideas for songs in advance of writing them (which, they say, contradicts Mr Sheeran’s evidence that he wrote Shape from scratch in a couple of hours on 12 October 2016), and habitually copies, ‘references’ or ‘interpolates’ other artists. The defendants rely on other instances of alleged copying, in particular in relation to: (1) a section from an early version of the pre-chorus in Shape; (2) a song called “Photograph” written by Mr Sheeran and Mr McDaid in 2012; and (3) a song called “Strip That Down” (written by Mr Sheeran and Mr McCutcheon in October 2016).

 

  1. The claimants deny that Mr Sheeran (or any of the writers of Shape) copied any part of the OW Hook in creating the OI Phrase. 
  2. Even if copying is established, the claimants do not accept that the defendants have established, as a matter of fact, that the elements of the OW Hook said to be similar to the OI Phrase represent the expression of the intellectual creativity

of Mr Chokri and Mr O’Donoghue. In addition, the claimants contend that the elements of the OW Hook on which the defendants rely are not protectable because they do not represent that which confers originality on Oh Why as a musical work. 

  1. Finally, the defendants contend that even if Shape was not copied from Oh Why, the claimants are nevertheless not entitled to the declaration sought by them, on various discretionary grounds.
  2. The law
  3. Copyright subsists in, among other things, original musical works, defined as “a work consisting of music, exclusive of any words or action intended to be sung, spoken or performed with the music”: Copyright, Designs and Patents Act 1988 (”CDPA”), s.1(1) *313 and s.3(1)(b) . A separate literary copyright claim may be made in respect of lyrics, but no such claim is made here (”Oh I…” is clearly not copied from “Oh Why…”). 
  4. Copyright in a musical work may be infringed if, among other things, it is copied, which means “reproducing the work in any material form”: s.17(2) of CDPA .
  5. To amount to an infringement, however, the copying must be of either the original work or a “substantial part” of it: s.16(3)(a) of CDPA . This is a qualitative, not quantitative, question. The test is whether the part in question contains elements which are the expression of the intellectual creation of the author of the work: Newspaper Licensing Agency Ltd v Meltwater Holding BV [2011] EWCA Civ 890 , at [24]-[28], applying Infopaq International A/S v Danske Dagblades Forening [2009] E.C.D.R. 16 . The essential consideration is to ask whether a defendant has taken that which conferred originality on the claimant’s copyright work (or a substantial part of it): Mitchell v BBC [2011] EWPCC 42 , per HHJ Birss QC at [28]-[29].

 

  1. As observed by Lord Millett in Designers Guild v Russell Williams [2000] 1 W.L.R. 2416 , at p.2425E-F (in a case concerned with artistic works):

”The first step in an action for infringement of artistic copyright is to identify those features of the defendant’s design which the plaintiff alleges have been copied from the copyright work. The court undertakes a visual comparison of the two designs, noting the similarities and the differences. The purpose of the examination is not to see whether the overall appearance of the two designs is similar, but to judge whether the particular similarities relied on are sufficiently close, numerous or extensive to be more likely to be the result of copying than of coincidence. It is at this stage that similarities may be disregarded because they are commonplace, unoriginal, or consist of general ideas.”

  1. In music cases, it is the sounds that are more important than the notes: see Copinger and Skone James on Copyright (18th ed) at [3-125]. This depends to a large degree on the aural perception of the judge: Francis Day & Hunter v Bron [1963] Ch. 587 , per Upjohn LJ at p.618.

 

  1. While the legal burden rests with the person alleging infringement, in the case of conscious copying the evidential burden shifts to the alleged infringer if there is proof of sufficient similarity and proof of access. There was some debate as to whether what was required was proof of access, or proof of the possibility of access. 
  2. The weight of authority supports the former: see, for example, Designers Guild (above), per Lord Millett at p.2425E; Baigent v Random House [2007] EWCA Civ 247 at [4], although I do not think anything turns on it in this case. Tens of thousands of new songs are uploaded to internet sites daily. It clearly cannot be enough to shift the burden of proof that a song was uploaded to the internet thereby giving the alleged infringer means of accessing it. In every case, it must be a question of fact and degree whether the extent of the alleged infringer’s access to the original work, combined with the extent of the similarities, raises a sufficient possibility of copying to shift the evidential burden. Where, for example, the original work was highly individual or intricate, and the alleged infringing work was very close to it, then only limited evidence of access may be sufficient in order to shift the burden. The same would not be true, on the other hand, where the original work was simple and involved relatively common elements.  
  3. Irrespective of where the burden lies, infringement requires there to have been actual copying, which necessarily entails that the alleged infringer not only had access to the original work, but actually saw or heard it.
  4. The leading case on subconscious copying is Francis Day & Hunter v Bron (above), in which the Court of Appeal established that, although it was possible to demonstrate that a person had infringed copyright without intending to do so, it was nevertheless necessary to establish “proof of familiarity” with the allegedly copied work, as a prerequisite to establishing infringement: and that there was a causal link between the alleged infringing work and the original work: see Wilmer LJ at p.614 (with whom Upjohn LJ agreed). Diplock LJ also spoke of the clear need for a causal connection between the two works (at p.624). 
  5. Whether there has been subconscious copying is a question of fact to be determined on the basis of all the evidence (and does not rest on the shifting of an evidential burden: see Mitchell v BBC (above) at [39]). There will rarely, if ever, be direct evidence of subconscious copying, so it is necessary – as with any issue where direct evidence is lacking – to reach a conclusion based on inferences from other evidence. The following direction which the trial judge, Wilberforce J, had given himself was approved by the Court of Appeal in Francis Day (at pp.614-615):

”The final question to be resolved is whether the plaintiffs’ work has been copied or reproduced, and it seems to me that the answer can only be reached by a judgment of fact upon a number of composite elements: The degree of familiarity (if proved at all, or properly inferred) with the plaintiffs’ work, the character of the work, particularly its qualities of impressing the mind and memory, the objective similarity of the defendants’ work, the inherent probability that such similarity as is found could be due to coincidence, the existence of other influences upon the defendant composer, and not least the quality of the defendant composer’s own evidence on the presence or otherwise in his mind of the plaintiffs’ work.”

  1. Copying
  2. I address the matters relied on by the defendants in support of the allegation that Mr Sheeran copied the OI Phrase from the OW Hook by reference to the following matters: (1) similarities and differences between the two works and their significance; (2) the likelihood of Mr Sheeran having access to Oh Why; (3) the alleged propensity to copy and conceal, including similar fact evidence; (4) criticisms made by the defendants of Mr Sheeran’s evidence and of the three “key fingerprints” of Mr Chokri which the defendants say are found in Mr Sheeran’s work. …
  3. Relief
  4. The claimants seek a declaration that in creating and exploiting Shape they have not infringed copyright in Oh Why. The conclusion that they have not done so follows inevitably from the findings set out in this judgment. 
  5. The defendants nevertheless contend that the declaration sought should not be granted. The court’s power to make declarations is a discretionary one. When considering whether to grant a declaration, the court should take into account “justice to the claimant, justice to the defendant, whether the declaration would serve a useful purpose and whether there are any special reasons why or why not the court should grant the declaration”: Financial Services Authority v Rourke [2002] C.P. Rep. 14 , per Neuberger J at p.11. In Nokia Corp v InterDigital Technology Corp [2006] EWCA Civ 1618 , the Court of Appeal said:

”15.  Normally before the Court will exercise its discretion to grant a declaration, there must be some real reason for doing so. Normally it will decline to grant a declaration in favour of a party against whom no claim has been formulated for the obvious reason that there is no real point in doing so. *348

  1. … There would have to be a real commercial reason for the person seeking the declaration to have standing to do so.”’

[xvii] Francis Day & Hunter v. Bron [1983) Ch 167 (CA) – Copyright—Infringement—Musical work—Subconscious copying—Considerable degree of similarity between substantial part of alleged infringing work and original—Denial by composer of alleged infringing work of deliberate copying or conscious knowledge of original—Whether unconsciously copied—Whether unconscious reproduction an infringement— Copyright Act, 1956 (4 & 5 Eliz. 2, c. 74), ss. 2 (5), 49 . Held:

 

(1)  That of the three relevant processes forbidden by section 2 (5) of the Copyright Act, 1956 , 3 namely, “reproduction,” arrangement,” and “transcription,” only “reproduction” could arise in this case since “ arrangement” and “transcription” were necessarily the result of a conscious and deliberate process (post, p. 611).

(2)  That “reproduction” need not be identical reproduction since infringement of copyright in music was not a question of note for note comparison but depended upon whether the alleged infringing work was substantially the same as the original work (post, p. 611).

(3)  That proof of similarity between the alleged infringing work and the original, coupled with proof of access to the original, did not raise any irrebuttable presumption of copying, but at most raised a prima facie case for the defendant to answer (post, p. 612).

(4)  That reproduction by subconscious copying was a possibility which, if it occurred, might amount to an infringement, but that to establish liability on this ground it must be shown that the composer of the offending work was in fact familiar with the original work, and that there was some causal connection between the alleged infringing work and the original work (post, p. 614).

(5)  That it was therefore a simple question of fact whether the degree of objective similarity proved was sufficient to warrant the inference that there was a causal connection between the two works. Here it was impossible to say that the judge had reached a wrong conclusion on this question of fact, and therefore the appeal should be dismissed (post, p. 614).

Extracts from the judgment of Wimer L.J:

 

‘It appears to me that the question must be considered in two stages, namely, (1) whether subconscious copying is a psychological possibility, and (2) if so, whether in a given case it is capable of amounting to an infringement of the plaintiffs’ copyright. 

As to the first of these questions, it was suggested by Mr. Arnold that medical evidence should always be required before a finding of subconscious copying could be justified. I cannot think that this is necessary; for the psychological possibility of subconscious copying was clearly recognised by Luxmoore J. and in the various American decisions, which must be regarded as of high persuasive authority. What Luxmoore J. said, in relation to the defendants before him in the Ricordi case, was: “If there has been any infringement, it must have been subconsciously, because the persons responsible knew the air complained of so well that they have taken it because they knew it.” Similarly, in two American cases in which the plaintiff succeeded on the ground of subconscious copying, namely, Fred Fisher Inc. v. Dillingham and Edwards & Deutsch Lithographing Company v. Boorman, the decision was based on the finding of a high degree of familiarity with the plaintiffs’ work. From this emerges the conclusion, which seems to me to be consonant with good sense, that if subconscious copying is to be found, there must be proof (or at least a strong inference) of de facto familiarity with the work alleged to be copied. In the present case, on the findings of Wilberforce J., this element is conspicuously lacking. 

On the second question, namely, whether any subconscious copying proved could amount to an infringement of the plaintiffs’ copyright, it seems to me that all that can be said is that at least the dictum of Luxmoore J. envisages the possibility. On this point I do not think that much help is to be derived from the American decisions which have been cited, since the American statute under which they were decided is markedly different in its terms. No evidence of American law was adduced, and in its absence it is not for us to construe the American statute. It may, however, be observed (as was pointed out by Mr. Skone James) that in order to establish an infringement of copyright, it is not necessary to prove anything in the nature of mens rea. The printer, for instance, may be held guilty of infringement though he has no conscious intent. 

The conclusion at which I arrive on this part of the case is that subconscious copying is a possibility which, if it occurs, may amount to an infringement of copyright. But in order to establish liability on this ground, it must be shown that the composer of the offending work was in fact familiar with the work alleged to have been copied. This view is, I think, not inconsistent with the submissions put forward by Mr. Skone James. In the course of an argument which, for my part, I found convincing, he submitted that in considering whether there has been reproduction, so as to constitute an infringement within the Act, it is wholly irrelevant to inquire whether any copying has been conscious or subconscious. It is for this reason, he modestly suggested, that the textbooks are silent on the subject of subconscious copying. Mr. Skone James presented his argument in four propositions which, if I understood him correctly, may be summarised as follows: (1) In order to constitute reproduction within the meaning of the Act, there must be (a) a sufficient degree of objective similarity between the two works, and (b) some causal connection between the plaintiffs’ and the defendants’ work. (2) It is quite irrelevant to inquire whether the defendant was or was not consciously aware of such causal connection, (3) Where there is a substantial degree of objective similarity, this of itself will afford prima facie evidence to show that there is a causal connection between the plaintiffs’ and the defendants’ work; at least, it is a circumstance from which the inference may be drawn. (4) The fact that the defendant denies that he consciously copied affords some evidence to rebut the inference of causal connection arising from the objective similarity, but is in no way conclusive. 

If this is the right approach (as I think it is) it becomes a simple question of fact to decide whether the degree of objective similarity proved is sufficient, in all the circumstances of the particular case, to warrant the inference that there is a causal connection between the plaintiffs’ and the defendants’ work. This is the way in which, as it seems to me, Wilberforce J. in the present case approached the question which he had to decide. In his judgment, he directed himself as follows: “The final question to be resolved is whether the plaintiffs’ work has been copied or reproduced, and it seems to me that the answer can only be reached by a judgment of fact upon a number of composite elements: The degree of familiarity (if proved at all, or properly inferred) with the plaintiffs’ work, the character of *615 the work, particularly its qualities of impressing the mind and memory, the objective similarity of the defendants’ work, the inherent probability that such similarity as is found could be due to coincidence, the existence of other influences upon the defendant composer, and not least the quality of the defendant composer’s own evidence on the presence or otherwise in his mind of the plaintiffs’ work.” In my judgment that was a proper direction, against which no criticism can fairly be brought. 

Having so stated the question to be determined, and the matters to be considered, Wilberforce J. stated his conclusion as follows: “In this case, after taking account of the respective character and similarities of the two works as previously discussed, and relating this to the fact that there is no direct evidence that Mr. Peter de Angelis ever knew the work of ‘Spanish Town’ before he composed ‘Why,’ I have come to the conclusion that I have not sufficient factual material from which to draw an inference that he had sufficient knowledge or memory of ‘Spanish Town’ at the date of composition, to justify me in finding, against his express denial, that in composing ‘Why’ he copied, without knowing that he did so, ‘Spanish Town’ or a part of ‘Spanish Town.’ Putting it in another way, it does not seem to me that the degree of similarity shown, coupled with the fact, which I think is as far as it is possible to go by inference, that at some time and in some circumstances Mr. de Angelis must have heard ‘ Spanish Town,’ is enough to make good the plaintiffs’ case.” 

The question, being one of fact, is eminently one for the determination of the trial judge, as I think is recognised in the American cases which were cited to us. It is to be remembered that Wilberforce J. not only had the advantage, denied to us, of himself seeing and hearing the witnesses at first hand; he also had the advantage, which strikes me as being of great importance, of hearing how the musical experts who were called as witnesses illustrated the technical evidence which they gave by demonstrations, both vocally and on the piano. Bearing this in mind, and having regard to the judge’s acceptance of the evidence given by de Angelis, it is, in my judgment, impossible for us in this court to say that he reached a wrong conclusion on what was eminently a question of fact for him. I should perhaps mention one further consideration which appears to me to be of possible significance, and which was not dealt with specifically by Wilberforce J. I have already referred to the fact that the six quavers which form the opening bar of  “Spanish Town” are, as the judge observed, a commonplace series to be found in other previous musical compositions. Our attention was drawn, for instance, to an Austrian dance tune composed in the early nineteenth century by Von Lichnowsky, the opening bar of which is identical with that of “Spanish Town.” The same sequence of notes is also to be found in a song entitled “Let Us Sing Merrily,” although in this case there is a difference of tempo. In these circumstances, the fact that “Why” begins with an opening bar containing a similar, though not identical, phrase is of no special significance. By itself it would not be sufficient to warrant the inference that, if the phrase was copied, it was copied from the plaintiffs’ work rather than some other composition. What is significant is the fact that both in “Spanish Town” and “Why” the opening phrase enunciated in the first bar is developed over the remainder of the first eight bars by the use of the same devices or tricks of composition, namely, repetition followed by a pause, followed again by further repetition with a slight variation. It is this circumstance which produces the degree of similarity between the two compositions. If it could be said that this method of development was so distinctive and idiosyncratic as to preclude the possibility that its adoption by the two composers was the result of coincidence, this would be a very strong argument in the plaintiffs’ favour. But, as pointed out by Wilberforce J., the devices used by the two composers for developing the phrase stated in the first bar are among the commonest tricks of composition and, I would add, exactly the sort to be expected from the composer of a popular song. I do not think, therefore, that in the circumstances of this case, the fact that de Angelis developed the opening phrase stated in the first bar by way of the same devices as were employed by the composer of ‘Spanish Town “ can be taken as in any sense proof of copying. There is at least an equal probability that his choice of these devices was the result of coincidence. 

In my judgment, no sufficient reason has been shown for interfering with Wilberforce J.’s decision, and I would, accordingly, dismiss the appeal.’

 

Extracts from the judgment of Upjohn L.J.:

 

‘I agree with the judgment which has just been delivered. When Mr. Foster opened this appeal, he invited us in the name of international comity to say that a right of property (that is, copyright) which is the subject of international convention must be protected in a most special and unique way. We were invited to say that if similarity of the alleged infringing work to the original work was established as a fact, and if it was further established that the alleged infringer had had some access to the original work, then although a denial of conscious plagiarism was accepted, we were bound, as an irrebuttable presumption of law, to say that the alleged infringer must have unconsciously copied the original work. The doctrine was said to be necessary to protect the author of the original work, for otherwise (so it was argued) any infringer could escape the consequences of plagiarism by denying that he had done so. Alternatively, it was said that if some undefined higher degree of similarity between the two works could be proved – something higher than is necessary to prove similarity in fact – then that would be sufficient to establish a similarity from which we were bound to infer unconscious copying. 

Apart from the appeal to international comity, no authority and no textbook has been cited in support of this remarkable doctrine. Copyright is statutory, and depends upon section 2 of the Copyright Act, 1956 . No hint of this doctrine appears there. 

As to international comity, while it is true that in the United States of America a number of authorities (to some of which I shall have occasion to refer later) accept the doctrine that subconscious or unconscious copying may be inferred in a proper case and operate as a breach of copyright, not one of those authorities gives any support to this alleged and startling doctrine. The authorities in question in each case treated the question of unconscious copying as purely a question or inference of fact which might be drawn in the circumstances of a particular case, and not as a presumption of law. We were not referred to the laws of any other convention country, and the relevant paragraph (No. 4) of the Brussels Convention itself lends no support to the doctrine. I therefore reject this submission. 

The truth is that the plaintiff in a copyright action must show that a substantial part of the original work has been reproduced; see section 2 (5) and section 49 of the Copyright Act, 1956; and, although not expressed in the Act, it is common ground that such a reproduction, in the words of Mr. Skone James, must be causally connected with the work of the original author. If it is an independent work, then, though identical in every way, there is no infringement. If a true infringer wrongly persuades the court that it is his own unaided work, the plaintiff fails, as do other plaintiffs when fraudulent defendants unhappily succeed (as, no doubt, they sometimes do) in persuading the court that they have not been fraudulent. The question, therefore, in this case is whether there has been a breach of section 2 (5); that subsection has been read by my Lord, and I will not read it again. 

This is really a question of fact and nothing else, which depends on the circumstances of each case; but it is a question of fact which must be taken in two stages. The first stage is objective, and the second stage subjective. The first question is whether in fact the alleged infringing work – which for the sake of brevity I will inaccurately call the defendant’s work, for though the composer was a witness, he was not a defendant – is similar to the work of the original author – which again for the sake of brevity I will, with equal inaccuracy, call the plaintiff’s work. Is it then proper to draw the inference that the defendant’s work may have been copied from the plaintiffs’ work? This is purely an objective question of fact, and depends in large degree upon the aural perception of the judge, but also upon the expert evidence tendered to him; but it is essentially a jury question. A defendant might in theory go into the witness-box and say that he had deliberately made use of the plaintiff’s work, but that it is not an infringement, either because he did not make use of a substantial part of the plaintiff’s work, or that, though the plaintiff’s work has been utilised, he has been able so to alter it that it cannot properly be described as a reproduction. The onus is on the plaintiff to prove the contrary as a matter of purely objective fact, and if he cannot do so then the morally dishonest defendant will escape the consequence of the allegation of infringement. No such question arises in this case. At this stage similarity has been found by Wilberforce J., and that is not challenged before us. For myself, I think that perhaps I would have used rather stronger adjectives than “definite” or “considerable” similarity, which were the words used by the judge; the adjective “close” would be more appropriate, but nothing, I think, turns upon that matter. 

The next stage is the subjective stage and is equally a question of fact, though, of course, the degree of similarity is most important in reaching this subjective conclusion. The question at this stage, put bluntly, is: has the defendant copied the plaintiff’s work, or is it an independent work of his own? Mr. Skone James, in an attractive argument, agrees that the plaintiff, in order to succeed, must prove a causal connection *619 between his work and the defendant’s work; but he submits that, providing that upon a proper inference from the known facts, it is right to assume that the alleged infringing work was derived from the plaintiff’s work, it matters not whether it was done consciously or unconsciously. There is, he submits, no difference in principle between a conscious act of piracy and an unconscious act of piracy; all that must be established is a causal connection. 

While conscious acts of piracy may be established in the witness-box, unconscious acts of piracy must clearly be a matter of inference from surrounding circumstances. The alleged infringing work may be an identical reproduction of the original work with all its idiosyncrasies, and all the same mistakes. Theoretically and mathematically, that may be a complete coincidence, and both works may be the product of entirely independent brains; but the judge has to judge of these matters on the balance of probabilities; and such an identical reproduction may lead him to reject the evidence of the defendant, who otherwise appears to be an honest witness. Much less than complete identity may properly lead the judge, on the balance of probabilities, to reject the evidence of an apparently honest witness on this question. This is a question of pure fact in every case. It does not arise in this case for Wilberforce J. accepted the author’s evidence that he did not consciously derive the composition of “Why” from “In a Little Spanish Town,” and that has not been challenged before us. 

At this stage, therefore, the question is whether, on the facts of the case, it is proper to infer that de Angelis has derived “Why” unconsciously from the plaintiff’s work, which he had heard at some earlier time. This again is purely a question of the proper inference of fact to be drawn from all the relevant and admissible known facts. There may be cases which, if the circumstances do not justify the conclusion that the defendant, in denying conscious plagiarism, is not telling the truth, yet justify the conclusion that he must have heard the plaintiff’s tune, and subconsciously reproduced it. 

I do not pause to recapitulate the facts of this case in any detail for they have been set out in much meticulous detail in Wilberforce J.’s judgment, and also by Willmer L.J., that I do not repeat them. I draw the conclusion that although, as I have already stated, the resemblance is a close one, that resemblance, in the circumstances of this case, is little evidence of conscious or unconscious copying.  

Wilberforce J. said: “Thirdly, the theme of ‘Spanish Town’ is made up of common-place elements, or, as some witnesses have called them, cliches. The first six notes are a commonplace enough series; they are found in an Austrian country dance and in a song, ‘Let Us Sing Merrily.’ The device of repetition, of resting for two bars on a long note and of repetition in sequence, are the commonest tricks of composition. But many writers of great music have used clichès to produce masterpieces; indeed, some of them have found in the commonplace character of their basic phrase their stimulus. Professor Nieman gave some interesting examples from the music of Mozart, and most writers of popular songs use, and can use, nothing else. No example was given of precisely this combination having been used in other compositions, though it was apparent that the musical dictionaries and the experience of the witnesses had been thoroughly combed.” 

Having heard the arguments of counsel, accompanied by very helpful demonstrations on the piano, I reach the conclusion of fact that, apart altogether from de Angelis’s denial of conscious plagiarism, which was accepted, it is not a mere legal or mathematical possibility, but a real live practical possibility that the defendant’s composition of “Why” is an independent composition. This practical possibility again does not conclude the matter, for the defendant’s composition may nevertheless be the result of unconscious memory. But first it is necessary to establish the probability that the defendant has heard the plaintiff’s composition. 

Wilberforce J. had to deal with a difficult situation as to whether de Angelis had heard, or even played, as a youth in a dance band, the plaintiff’s composition. I think it is possible that, although in perfect good faith he stated the contrary, de Angelis did hear the music, and possibly played it in his early youth. Each case must depend upon its own facts, and it is not possible to lay down any criteria. But it does seem to me that where, for the reasons I have given, there is evidence from the music itself that there is a real practical possibility of independent composition by the defendant, it requires quite strong evidence to support the view that there may have been unconscious copying. To my mind, the possibility that the defendant had heard it, or even played it in his early youth, is a quite insufficient ground upon which it would be proper to draw the inference of unconscious copying. It may be that in the future medical evidence will be available to guide us upon this point, but in the absence of acceptable and probative medical evidence I think it requires quite strong evidence, in a case such as this – where, as I have already pointed out, independent composition is a real practical possibility – to establish, as a matter of probability, that de Angelis’s subconscious ego guided his hand.  

The cases in the United States to which we have been referred offer some instructive comparison on their facts, although I do not lose sight of the fact, of course, that cases are only authorities for legal propositions; but, nevertheless, I think the cases cited are helpful. In the first case, that of Fred Fisher Inc. v. Dillingham , that great judge, Judge Learned Hand, in giving the famous composer, Jerome Kern, the benefit of the doubt, said : “On the whole, my belief is that, in composing the accompaniment to the refrain of ‘Kalua,’ Mr. Kern must have followed, probably unconsciously, what he had certainly often heard only a short time before.” That is in marked contrast to the facts of this case. 

Then, in a rather different case, Edwards and Deutsch Lithographing Co. v. Boorman , the plaintiffs prepared, printed, published and distributed certain discount tables, the copyright work. The defendants published very similar tables. But there it was established that the defendants had sold and handled the plaintiffs’ publications for years, and on that the inference was drawn of unconscious copying. Again the facts of that case are very different from the one before us. 

Wilberforce J. put the relevant points to himself quite accurately, and my Lord has read that part of his judgment; and his summary, which I will venture to repeat, was this: “In this case, after taking account of the respective character and similarities of the two works as previously discussed, and relating this to the fact that there is no direct evidence that Mr. Peter de Angelis even knew the work ‘Spanish Town’ before he composed ‘Why,’ I have come to the conclusion that I have not sufficient factual material from which to draw an inference that he had sufficient knowledge or memory of ‘Spanish Town’ at the date of composition, to justify me in finding, against his express denial, that in composing ‘Why’ he copied, without knowing that he did so, ‘Spanish Town,’ or a part of ‘Spanish Town.’” I entirely agree with that conclusion of fact reached by Wilberforce J. 

That makes it unnecessary to decide the really interesting question in this case whether Mr. Skone James is right when he says there is no difference in law between conscious and unconscious copying. It seems to me that that is an interesting question upon which I express no opinion, for, as I have said, it does not arise. Mr. Skone James, in support of his argument, has pointed out that an infringer may be entirely ignorant of knowledge of plagiarism; normally the printer and publisher will also be guilty of infringement though they have no reason even to suspect that any plagiarism can be suggested. 

This, however, does not meet my difficulty. You do not necessarily have to show knowledge or suspicion of plagiarism against every defendant, but the plaintiff always has to prove that the alleged infringement is not the independent work of the alleged infringing author or composer, but is causally connected with the plaintiff’s work. 

The real question is this: can it be said to be an “act” of reproduction, for the purposes of section 2 (5) of the Copyright Act, 1956 , if the alleged infringing work is not the conscious act of the infringer? It has been argued that Luxmoore J. in Ricordi’s case  expressed the view that subconscious copying could be an infringement of copyright; but I do not think that he intended to express any view on the law at all. For my part, I think that this question, therefore, remains entirely open.’

 

Extracts from the judgment of Diplock L.J.:

 

‘This appeal seems to me to turn entirely upon a question of fact: was the judge entitled, notwithstanding the similarities between the melodies of the plaintiffs’ song “In a Little Spanish Town” and the defendants’ song “Why,” to refuse to infer that the composer of the latter work copied it from the former work? 

It is conceded on the one hand (as is obvious to the ear) that the two works show considerable similarities, and on the other hand that the composer of “Why” did not intentionally copy it from “In a Little Spanish Town’”; but it was found by Wilberforce J. that the composer of “Why” must at some time and in some circumstances have heard “In a Little Spanish Town”; and it is contended by the plaintiffs that the only proper inference of fact is that he must have stored it in his memory and reproduced it without being aware that he was performing an exercise of recollection and not an act of independent creation.

 

To this assumed mental feat there has been applied the conveniently ambiguous term “subconscious copying”; and we have heard much argument as to whether, if it is established, it constitutes an infringement of the copyright in the work which has been unconsciously copied. For my part, I think that the law is perfectly clear, and that such difficulties as there are in this appeal are solely due to the absence of any factual information about the mental process involved in “subconscious copying.” We know not whether it is rare or common, general or idiosyncratic, nor indeed whether it is possible to remember, not a mere isolated phrase, but a “substantial” part of the remembered work without remembering that one is remembering. 

First, as to the law; and for this purpose I will assume that it is established that the composer of “Why” did in fact use his recollection of “a substantial part of” the melody of “In a Little Spanish Town “ as the model for his own composition, although he was unaware that he was doing so, and genuinely thought that “Why” was his own independent creation. The word “to copy” is not used at all in the Copyright Act, 1956 , nor was it in the Copyright Act, 1911 . Nevertheless, it is well established that to constitute infringement of copyright in any literary, dramatic or musical work, there must be present two elements: first, there must be sufficient objective similarity between the infringing work and the copyright work, or a substantial part thereof, for the former to be properly described, not necessarily as identical with, but as a reproduction or adaptation of the latter; secondly, the copyright work must be the source from which the infringing work is derived. The necessity for the second element was expressly laid down by the Court of Appeal in Purefoy Engineering Co, Ltd. v. Sykes Boxall & Co. Ltd., and is, indeed, implicit in all thee compilation cases, including the recent case in this court of William Hill (Football) Ltd. v. Ladbrokes (Football) Ltd. , where tables of betting odds were unanimously held not to infringe the copyright in substantially identical tables because the authors of the later tables, although very familiar with the earlier tables, had, in fact, worked out the odds for themselves. But while the copyright work must be the source from which the infringing work is derived, it need not be the direct source: see Hanfstaengl v. Empire Palace Ltd. Mr. Skone James, I think put it with his usual accuracy when he said there must be a causal connection between the copyright work and the infringing work. To borrow an expression once fashionable in the law of negligence, the copyright work must be shown to be a causa sine qua non of the infringing work.

The necessity for a causal connection between the copyright work and the infringing work, although well established under the Copyright Act, 1911 , either as being implicit in the legal concept of “copyright,” or in the word “reproduce,” is, I think, more easily deduced from the wording of the current Copyright Act of 1956 . Section 1 (1) defines “copyright” in relation to a work as the exclusive right to do and to authorise other persons to do certain acts “in relation to that work”; and subsection (2) defines “infringement” as the doing of any of those acts by a person who is not the owner of the copyright or his licensee. The acts, which are defined in section 2, and include “reproducing the work in any material form,” if they are to constitute infringement must thus be done “in relation to the work,” an expression which connotes a causal connection between the copyright work and the act relied upon as an infringement. If the existence of the copyright work has no causal connection with the production of the alleged infringing work, even though the latter be identical with the former, there is no infringement of copyright. 

It is, however, in my view, equally clear law that neither intention to infringe, nor knowledge that he is infringing on the part of the defendant, is a necessary ingredient in the cause of action for infringement of copyright. Once the two elements of sufficient objective similarity and causal connection are established, it is no defence that the defendant was unaware (and could not have been aware) that what he was doing infringed the copyright in the plaintiff’s work. This is expressly recognised by sections 17 and 18 of the Copyright Act, 1956 , which restrict the remedies available against an innocent infringer, but recognises his liability. Thus under section 18 , which gives to the copyright owner remedies in conversion and detinue in respect of infringing copies of his work, a defendant who “believed and had reasonable grounds for believing that they were not infringing copies “is relieved of any liability in damages, but not of his liability to deliver up any infringing copies in his possession. 

”Unconscious copying” in the sense in which it has been used in the argument postulates, first, such objective similarity between the copyright work and the alleged infringing work that the latter may properly be said to reproduce the former; secondly, that there is a causal connection between the copyright work and the alleged infringing work; thirdly, that the composer of the alleged infringing work believed (and may indeed have had reasonable grounds for believing) that there was no such causal connection. The first two, if established, in my view constitute breach of copyright; the third is irrelevant on liability although it may be relevant on remedy. 

The real difficulty in this case is not one of law, but of fact. It involves an inquiry into the working of the human mind. It may well be that this is a matter upon which expert evidence is admissible; but cases in English courts are normally conducted upon the tacit assumption that where no question of disease of the mind is involved, the ordinary man, whether sitting in the jury-box or on the bench: is capable of determining (where it is relevant) what went on in the defendant’s mind. 

The present case was so conducted before Wilberforce J. No expert evidence was called as to how the human memory or musical creative faculties work; no investigation was made into the mental idiosyncrasies of the composer of “Why” or his methods of composition. Wilberforce J. was left to draw the inference of “subconscious copying” from the evidence (1) of the similarities between the melodies of “In a Little Spanish Town” and “Why” as explained by the conflicting evidence of expert musicians; (2) of the likelihood of the composer of “Why” having at some time heard “In a Little Spanish Town”; and (3) of his denial that he had consciously copied “In a Little Spanish Town.” 

On this state of the evidence, there were three possible explanations of the similarities: conscious copying, unconscious copying, coincidence. The first Wilberforce J. rejected. He accepted the denial of the composer of “Why.” This is a finding of primary fact, and it depends ultimately on credibility. The appellants do not seek to disturb it. This reduces the possible explanations to two: unconscious copying, or coincidence. Wilberforce J. did not reject the possibility that “unconscious copying” of musical works can occur. He proceeded to consider, in the light of the conflicting expert evidence, which was the more probable explanation of the similarities, unconscious copying, or coincidence. The relevant similarities were to be found in the first eight bars of the melody of “In a Little Spanish Town” which, it is common ground, do constitute a substantial part of that musical work. They are described clearly (and it is conceded accurately) in Wilberforce J.’s judgment. 

The rival contentions, supported by expert evidence, may be summarised thus: The plaintiffs, conceding that the first bar by itself was a musical cliche in which there was no copyright, contended that the similarities in the use made of the cliche in eight successive bars in each of the two works were too great to be explained by coincidence. The defendants contended that, once a composer of popular songs had decided to use, as a basis of the theme of a popular song, the musical cliche contained in the first bar, the use which was in fact made of it in both “Why” and “In a Little Spanish Town” in the succeeding bars was a device by no means uncommon in musical composition, and the similarities were readily explicable by coincidence. Wilberforce J. was not satisfied that the similarities were due to unconscious copying. This, no doubt, was an inference of fact, but one which depends, in part at least, upon the degree of conviction which the evidence of the respective experts carried, and thus one with which an appellate court should be slow to interfere. No attempt has been made to demonstrate that he has overlooked or misunderstood any of the evidence. 

How, then, is the case for the appellants put? The procedure of the English courts, says Mr. Foster, is ill-adapted to deal with such esoteric problems as “subconscious copying.” It places too heavy a burden upon those who seek to establish that it has occurred. Copyright is an international proprietary right, and English law should keep in step with foreign law. They order these things better in more sophisticated (though unspecified) jurisdictions. But the only foreign law to which we have actually been referred is to be found in the United States cases which my brethren have discussed; and there, it seems, the matter is dealt with in the same unsophisticated way as that in which Wilberforce J. dealt with this case, without making it impossible for the courts to find (where the evidence, so warrants) that unconscious copying has taken place. 

Faced with the difficulty that “unconscious copying” is by definition not susceptible of direct proof in the present state of psychological techniques, it must always be a matter of inference from other facts, Mr. Foster’s first bold submission was, that if the plaintiff proves (1) the presence of the necessary element of objective similarity between the copyright work and the alleged infringing work; and (2) the mere possibility of access to the copyright work by the author of the alleged infringing work, there is an irrebuttable presumption (that is, a presumption of law) that the author of the alleged infringing work unconsciously copied the copyright work; or, put more briefly, what cannot be proved must be presumed. With all respect, this is bad logic as well as bad law. For, unless “the law is an ass” – which I must ex officio irrebuttably presume it is not – the essential, though unexpressed, premise of this proposition is that the similarities cannot be due to coincidence; proof of possibility of access is thus unnecessary; access as well as unconscious copying can be irrebuttably presumed. But this is merely a roundabout way of saying that proof of a causal connection between the copyright work and the alleged infringing work is not a necessary element in infringement of copyright; and that is not the law. 

Mr. Foster’s alternative submission (although I understood it to be presented as one of law) was, I think, upon analysis merely one as to the proper inferences of fact to be drawn from varying degrees of similarity between the copyright work and the alleged infringing work. The degree of objective similarity is, of course, not merely important, indeed essential, in proving the first element in infringement, namely, that the defendant’s work can properly be described as a reproduction or adaptation of the copyright work; it is also very cogent material from which to draw the inference that the defendant has in fact copied, whether consciously or unconsciously, the copyright work. But it is not the only material. Even complete identity of the two works may not be conclusive evidence of copying, for it may be proved that it was impossible for the author of the alleged infringing work to have had access to the copyright work. And, once you have eliminated the impossible (namely, copying), that which remains (namely, coincidence) however improbable, is the truth; I quote inaccurately, but not unconsciously, from Sherlock Holmes. 

No useful purpose can thus be served by seeking to classify degrees of similarity into categories which must be taken to be sufficient to prove unconscious copying where access to the copyright work by the author of the alleged infringing work is proved (1) as a certainty; (2) as a probability; (3) as a possibility, and (4) as an impossibility. That is not how questions of fact are decided in courts of law, or anywhere else.  

The answer, as Wilberforce J. said at the conclusion of an impeccable summary of the evidence, “can only be reached by a judgment of fact upon a number of composite elements.” Those elements on which the judge directed himself have already been read by my Lord, and I need not repeat them. 

I agree that it is impossible for this court, which has not heard the evidence or seen the witnesses, to say that Wilberforce J. came to a wrong conclusion of fact.’

[xviii] ‘[M]usical creativity requires a reasonable degree of freedom to make creative use of existing materials. At present copyright law does not properly encourage the practice of making creative use of musical works without a licence; recent case law suggests that even the use of a very small portion of an original work may result in infringement. This is particularly evident in light of the recent cases of Infopaq International v. Danske Dagblades Forening  (ECJ) and Newspaper Licensing Agency v. Meltwater (UK). Furthermore, this is not solely an issue of concern in the context of musical creativity; evidence from other jurisdictions shows similar conflicts can arise with regard to other creative works, including works of literature and drama. It is suggested here that a more flexible approach to exceptions would encourage musical creativity. … [C]opyright infringement envisages the unauthorised or unlicensed use of a musical work. However, making creative use of existing musical materials is common in musical practice. Although the term “musical borrowing” is sometimes used to denote this, the term is problematic because it is rarely the case that materials are “returned” to the place where they were originally found. In fact, the practice appears to denote the unlicensed taking and use of musical materials in contexts where such use is justified as part of creative practice. As such the idea of making “creative use” of musical works, in whole or in part, is a more accurate way of conveying this idea of “justifiable use” than the notion of “musical borrowing”. … Regarding authorship of music, it is widely acknowledged that making creative use of musical materials is an ancient practice that pervades many, if not all, forms of music. For instance, with regard to European classical, operatic and “art” music, it is notable that up until the 19th century, many composers felt able to “copy” and re-arrange material from their own, and each other’s, previous works. For instance, it was not illegal, nor was it seen as “unoriginal” or “wrong” for composers to re-use melodies and to compose variations on themes which had originated with other composers. Examples of composers who partook in this kind of “creative use” include Mozart, Beethoven, Bach, Handel and Brahms. Therefore, in Europe during the early 18th century this kind of creative re-use of musical works was widespread; consequently, it was seen as “benign”. It was not illegal at the time and therefore it was not seen as “unoriginal”. 

Successful examples of creative use of previous works by artists including Beethoven, Mozart, Bartok and Ives have been noted. However, it has also been noted that during the 19th century, this kind of practice ceased to be tolerated by composers of “written” music. In this regard, it was not until the 19th century that the concept of original, autonomous authorship became dominant in the context of European “art” music. In fact, during the 18th and 19th centuries it is possible to observe the continuing ascent of the twin concepts of “the work” and the “Romantic author”. The rapidly expanding market for “sheet music” was a determining factor in the rise of  “the work”, as composers sought to protect their rights under copyright. Thus, the notion of the “composer” as the sole “author” of a piece of music naturally led to a “loss of status” for the “performer” who was now seen as a mere “executant”; in conjunction with the idea of the “composer as author”, “the work” was held out as an “expression of the composer’s soul”. However, as discussed further below, while it may have largely ceased in the context of European classical music, the creative use of existing materials continued to play an important part in a number of other musical cultures and contexts. Furthermore, as discussed further below, “originality” must be seen as embedded within certain contexts, and the same idea of originality may not be applicable in all musical contexts. 

  1. b) Blues, Jazz and Hip Hop

One context which features a high degree of creative use of existing musical materials, and which has been well documented, is the blues music tradition of the US. Notions of “originality” and “authorship” within the blues tradition are difficult to define. Nonetheless, it is clear that a notion of “originality” is still vital within this tradition. However, it is a different type of “originality” than the standard under copyright law. For example, it is accepted that within the blues tradition “originality” is generally expressed through arrangement and performance. The structure of the music stays relatively rigid, yet within the boundaries of e.g. “twelve-bar blues”, a vast array of performers are able to express themselves in an original way. This blues culture has been classed as an “oral culture”. In this regard, it is said to be “strongly determined by the need to reproduce knowledge” as opposed to an overriding focus on originality of “the work”. As a result, these forms of traditional music have been described as “iterative-variative in structure, rather than differentiated as in the case of musical works”. 

Cohen has observed that traditional blues and jazz music typically involve a “ceaseless process” of making creative use of existing materials. For instance, the jazz performer is of paramount importance. The same composition can be arranged and performed in innumerable different ways, depending on the skill of the musician. Further to this, some jazz musicians have copied and creatively used other composers works as the basis for their own compositions. For example, Charlie Parker often created new works from pre-existing compositional structures. Thelonious Monk’s “In Walked Bud” was based on a chord progression from a previous copyright work, John Coltrane used Miles Davis’ “So What” as the basis for his own work “Impressions” and Miles Davis used the foundational structure of Bill Evan’s “Peace Piece” for his own composition “Flamenco Sketches”. 

Regarding music in the context of the US, it is not only blues and jazz that are potentially restricted by copyright law, but also “hip-hop”. In recent decades, the “sampling” culture of hip-hop music has been criticised for being unoriginal; it has even been described as “theft”. However, unlike other forms of creative use, sampling often involves direct use of a copyright sound recording. For this reason some commentators seek to differentiate this type of creative use from other examples. Nonetheless, there have also been copyright disputes over the use of a small portion of the underlying “musical work” in a “Hip Hop” song, such as the dispute between the Beastie Boys and James Newton. Furthermore, it has been argued that “Hip-Hop” musical practices have been negatively affected by copyright licensing requirements. 

Continuing with the specific example of blues music, Toynbee has noted that in the early to mid 20th century, blues melodies were frequently re-arranged and re-used by musicians working within the blues tradition.29 As discussed further below, it is possible that these practices could lead to complications with respect to copyright law. 

Vaidhayanthan has noted that it was common for Muddy Waters and other blues singers to copy an old blues song in whole or in part and then to add their own stylistic originality to the song. The resulting blues song would probably be best described as a new arrangement of the underlying work. This type of authorship resulted in songs such as “Walking Blues”. The song is a common blues standard. It had been previously recorded in 1937 by Robert Johnson, while Muddy Waters learned it from a recording of Son House. In each version, it is recognisably the same song, but each recording reflects the unique performance and arrangement style of each musician. 

This type of authorship is clearly fundamental to the notions of “tradition, inspiration and improvisation” within blues music. The relevant underlying work may well have been in the public domain, and if so it may well have been possible to avoid legal difficulties regarding the use of the underlying work. There would only be a possible action if it was alleged that a particular copyright arrangement of the public domain work had been infringed. In any event, no infringement was alleged. As Toynbee has noted, it was largely unheard of for blues musicians of this era to litigate regarding the taking of elements of one of their works. Due to the fact that the copyright law of the early 20th century was not strictly enforced in relation to blues music, musicians were able to continue utilizing this process.

 

However, in the case of a blues composition which is not in the public domain, an infringement action is more likely. The discussion of blues “style and presentation”, as referred to above, is relevant to the dispute which occurred in the 1980s involving blues composer and musician Willie Dixon and the British pop group “Led Zeppelin”. Dixon alleged that Led Zeppelin’s composition “Whole Lotta Love” infringed his earlier work “You Need Love”, which had been recorded in the early 1960s. From a musical point of view, there is not a great difference between the situation where Robert Johnson, Son House and Muddy Waters all play different versions of the same blues song, and the case of Led Zeppelin playing a blues song that took elements from Willie Dixon’s blues composition. Furthermore, there is nothing less “original”, from a musical perspective, in what early blues musicians did in the early-to-mid 1900s and what Led Zeppelin did in the late 1960s. The only difference is that in one case a “public domain” composition was used, and no licence was apparently required, whereas in the other case, Willie Dixon’s copyright composition was used, and therefore a licence was required. In light of the Dixon case and other cases involving blues “com positions”, it is possible that an increased level of awareness of copyright law within the music industry has altered the acceptability of creative use of musical works, or portions thereof, even with respect to a form of music that is “traditional” in origin.

  1. c) The 1960s Folk Revival and Pop Music Boom

As with jazz and blues, making creative use of existing songs and melodies was also emblematic of the folk revival of the 1960s in the UK, Ireland and the US. Jones and Cameron have noted the strong necessity for continual creative re-use of musical materials within the British folk song tradition, something which was evident during the post-War folk revival. A number of commentators have noted similar examples occurring in the context of Irish traditional music, which also experienced a post-War boom in the public houses of Britain and Ireland. In relation to the US, the same trend is visible, and one particular example stands out. Many of Bob Dylan’s early songs were adaptations of earlier British, Irish and North American folk songs. In some cases entire tunes were copied, “creatively used” and put to new lyrics written by Dylan. 

In addition, much of what we term “pop music” today is influenced by forms of traditional music and it is, in many ways, rich with musical materials mined from the past. Furthermore, the recent UK case of Fisher v. Brooker  illustrates creative use in the context of pop music. In Fisher v. Brooker, the musical work “A Whiter Shade of Pale” by Procol Harem was at issue. The demo version of the musical work was created by songwriter, and Procul Harem band member, Gary Brooker. However, the song is perhaps most famous for its organ instrumental sections. These instrumental sections were created by Matthew Fisher, during the performance and recording process, in response and counterpoint to the chord structure devised by Gary Brooker. This contribution by Matthew Fisher amounted to a significant and original contribution to the work in order for a share of authorship to be awarded. For the purpose of this article, it is interesting to note that both “the song”, as composed and presented to the band members in demo form by Gary Brooker, and the organ solo featured in “the work” (i.e. the final recorded “arrangement” of the song), as composed by Matthew Fisher, were adapted to some extent from separate musical pieces originally composed by Bach, i.e. musical works which reside in the public domain. This is a clear example of creative use of existing musical materials from Bach’s works by both Gary Brooker and Matthew Fisher. However, because the works reside in the public domain, no infringement could be alleged by the original copyright holder.

 

Recently the guitarist and composer Joe Satriani settled a dispute in the US against the British group Coldplay. Satriani had alleged that the Coldplay song “Viva La Vida” infringed his earlier work. The songwriter Yusuf Islam (formerly known as Cat Stevens) has also argued that “Viva La Vida” infringed his earlier work, which also pre-dates Joe Satriani’s composition. If it were the case that Coldplay had re-used parts from Satriani’s composition, just as Brooker and Fisher had borrowed from Bach, then from a musical perspective there would be little difference between the creative acts in each case. The crucial difference from a copyright perspective is that in one case the work at the centre of the dispute was in the public domain and in the other case it was not. As with the above blues examples, acts involving public domain works appear to be much less controversial than acts of creative use involving copyright works. This may make sense from a copyright lawyer’s perspective. Nevertheless, from the point of view of musical practice, it is arguable that there is little difference between the acts of creativity involved. 

The examples above illustrate two important points. The first point centres on the fact that creative use of existing musical works plays an important part in musical cultures. However, the second point reveals that one person’s legitimate “creative use” may be another person’s copyright theft. In this view, it is clear that musical cultures can change; what was once acceptable “creative use” can eventually come to be seen as “copyright infringement”. In order to examine the relationship between music and copyright law more closely, it is necessary to examine how copyright defines the “musical work”.’ [McDonagh].

[xix] Hawkes and Son (London), Limited v Paramount Film Service, Limited [1934]. Ch.593 (1934). (CA).

Extracts from the judgment of Lord Hanworth M.R.:

The plaintiffs say, and it is not disputed, that they are the owners of the copyright in this musical march “Colonel Bogey,” and that in the course of this film this march has been played and reproduced; it is reproduced to the extent, I think, of some 28 or more bars, and it takes something like 50 seconds to one minute to reproduce. On the other hand, the defendants say that it is quite true that this march has been reproduced in the film, but it was reproduced only as incidental to the other features of the day which were portrayed in this film; that it was entirely subordinate to the general purpose of the film; and that in any case the march, and this part of the march, played a subsidiary part, and only a subsidiary part, in this picture film; and they suggest that it would be a hampering of trade, if they were restrained from this kind of reproduction, more especially because the film itself is what is called a news film, that is to say, a film which is taken of some incidents of a day’s proceedings, and afterwards shown at a picture theatre for a short time, and that the value of the film depends upon its rapid production in the course of the next few days.

 

We have to look at the Copyright Act, 1911 , to see whether the plaintiffs are entitled to the injunction which they *602 seek against the Olympic Kinematograph Laboratories, Ld. With regard to their claim against the distributing company, that company is, as I understand, in close association with the second defendants, and Mr. Archer says that it matters very little what is the precise position of the Paramount Film Service, Ld., in the matter, because there could be no separation of costs, and any order against the Olympic Kinematograph Laboratories, Ld., would practically carry with it the subsidiary service rendered in distribution by the first-named defendants. Now first of all let me point out that there is no question here, on the evidence before us, of the attitude of the plaintiffs being one under which they wish to place a serious or real impediment on the work that is being done, and legitimately done, by the defendants. They do not at all intend or desire to hamper trade. All that they say is this: that if this reproduction of a copyright musical march is allowed or is sought by the defendants, then, on a payment, that licence can be granted. I do not think there is much in the plea of the defendants that the rapidity with which they have to reproduce these new films makes it difficult, or indeed impossible, for them to obtain a licence from the owners of the musical copyright. Some system could no doubt be arranged whereby, if there is a possibility of some infringement of copyright, there could be a licence applicable to the occasion, so as to avoid any damage to the plaintiffs or other owners of copyright.

 

I turn therefore simply to look at the statute, and I bear in mind two or three points which have been rightly called to our attention. It is quite plain from what Lindley L.J. said in Hanfstaengl v. Empire Palace 11 that we have to consider the statute upon broad lines; to bear in mind the necessity for the protection of authors whether of musical or of literary compositions. The Acts have to be construed with reference to that purpose, and they are not to be made the instruments of oppression and extortion. On the other hand, as the learned Lord Justice says, “the intention of an infringer is immaterial,” and as *603 Slesser L.J. has pointed out, Parker J. said in Weatherby & Sons v. International Horse Agency and Exchange, Ld. 12 , that the right of the owner of a copyright is not determined or measured by the amount of actual damage to him by reason of the infringement; copyright is a right of property, and he is entitled to come to the Court for the protection of that property, even though he does not show or prove actual damage. Lindley L.J. says this 13 : “Guided by the foregoing considerations. … I ask myself whether these sketches are such copies of the plaintiff’s pictures, or such reproductions of the designs thereof, as are struck at by the statute which confers copyright in such pictures.” That was his test.

 

Now applying all that has been culled from the various authorities to which our attention has been drawn, I refer to the Act to see what are the rights of the plaintiffs and the corresponding rights by way of defence of the defendants. There is no doubt that, the plaintiffs are the owners of the copyright in this march, and that means under sub-s. 2 of s. 1 of the Copyright Act, 1911 , that they have the sole right to produce or reproduce the work or any substantial part thereof, and to perform it; and that includes also the sole right to make any record by means of which the work may be mechanically performed or delivered, and to authorize any such acts as aforesaid. It is plain that the second defendants have made a record, by the contrivance of which the “Colonel Bogey” march may be mechanically performed, and they have in so doing infringed the right of the owner of the copyright. But it is said, first, that there is no substantial part of this musical work taken, and that the cases show that we must look into the question of the degree and what was the nature of the reproduction. In one case to which Lindley L.J. refers, he points out that in that case a worsted work copy of an engraving was held not to be an infringement of the copyright therein. On the other hand, photographs of pictures have been held to infringe the copyright, although there is a vast difference between a photographic reproduction and the *604 picture itself. Therefore, when one deals with the word “substantial,” it is quite right to consider whether or not the amount of the musical march that is taken is so slender that it would be impossible to recognize it.

 

In order that we might give the defendants every chance, we decided to go and see this film reproduced, and we have done so this morning, and it appeared plain to us that there is an amount taken which would be recognized by any person. We have evidence before us which must not he overlooked – evidence “that certain small exhibitors do, if they can get hold of news films, use the sound track for the purpose of what we call a non-synchronous interlude, and that sort of thing,” and “in the case of some of the smaller theatres, it was probably just a means of getting over the coming in and going out of the people; and they do not worry very much about the value of that sound.

 

Having considered and heard this film, I am quite satisfied that the quantum that is taken is substantial, and although it might be difficult, and although it may be uncertain whether it will be ever used again, we must not neglect the evidence that a substantial part of the musical copyright could be reproduced apart from the actual picture film.

 

Then I turn also to see what is the justification the defendants can rely upon. First they say that under s. 2, sub-s. 1: “the following acts shall not constitute an infringement of copyright:- (i.) Any fair dealing with any work for the purposes of private study, research, criticism, review, or newspaper summary.” I cannot hold that any of those words are apt to cover what has been done by the defendants. It was suggested by Mr. Macgillivray that in a sense a news film was a newspaper, but the collocation of the words “criticism, review, or newspaper summary” clearly points to the review or to notices of books which appear in newspapers, and not to anything of the nature that was done in the present case. I cannot hold that this was a review or a newspaper summary.

 

If that be so, we have to consider sub-s. 2 of the same section “Copyright in a work shall also be deemed to be *605 infringed by any person who – (a) sells or lets for hire, or by way of trade exposes or offers for sale or hire; or (b) distributes either for the purposes of trade …. or (c) by way of trade exhibits in public …. any work which to his knowledge infringes copyright. ….” These are the directions of the statute as to what shall be deemed to infringe copyright. In the present case it appears quite plain that there has been a reproduction of a portion of this march – a substantial portion, as I have already held – a work which the defendants did know to be copyright, and that they have, for the purposes of trade, exhibited or dealt with it within the meaning of sub-s. 2.

 

Under these circumstances it appears to me that the plaintiffs are entitled to the relief that they ask against the second defendants. We need not deal further with the first defendants. The appeal must be allowed with costs both here and below.’

[xx] Gloucester Place Music Limited v Simon Le Bon, Nigel Taylor, Nicholas Bates, Roger Taylor, Andrew Taylor, Noticevale Limited, Hintcrest Limited, Youngstown Limited, Exitglen Limited, Humbleward Limited, Vetchcrest Limited, Actionlink Limited [2016] EWHC 3091 (Ch).

Extracts from the judgment of Mr Justice Arnold:

Introduction

  1. In these proceedings the Claimant seeks declarations that the Defendants, who comprise the current or former members of the pop group Duran Duran and their service companies, have acted in breach of various music publishing and associated agreements (“the Agreements”) by serving a series of notices under section 203 of the United States Copyright Act 1976 (“the Notices”) terminating assignments to the Claimant of the US copyrights in 37 Duran Duran songs, or will be in breach if the Notices are not withdrawn. The Defendants deny that the Claimant is entitled to such declarations. Whether the Defendants have breached, or will breach, the Agreements by service, or non-withdrawal, of the Notices depends on the correct interpretation of those Agreements, which are governed by English law and confer exclusive jurisdiction on the courts of England. 

Background

  1. The contractual history is in summary as follows. On 28 July 1980 each of the five members of Duran Duran (a “Group Member”) entered into a music publishing agreement (a “Group Member Music Publishing Agreement”) with the Claimant (then called Tritec Music Ltd) which contained a worldwide assignment of copyright in works written or composed by the Group Member during the term of the Agreement in return for the payment of advances and royalties. The initial term of these Agreements was one year, with provision for extensions through a series of one year “option periods”. The Claimant extended each Group Member Music Publishing Agreement through two “option periods” until 1 June 1983, when these Agreements were terminated by and on the terms of a series of agreements in the form of letters (“the Termination Letter Agreements”). They were so terminated so as to enable each Group Member to provide songwriting and associated services in respect of future compositions through UK service companies and rest of the world service companies. Accordingly, each Group Member’s service companies entered into music publishing agreements (the “ UK Service Company Publishing Agreements ” and the “ Rest of World Service Company Publishing Agreements ”) on 1 June 1983. Each Group Member also entered into an agreement with the Claimant in the form of a letter (a “ Group Member Letter Agreement ”) at the same time, which was provided as an inducement to the Claimant to enter into the Service Company Publishing Agreements . On 1 July 1993 agreements were entered into between the Claimant and certain of the Group Members and their Service Companies for the sale, transfer, and assignment of part of the Claimant’s interest in the compositions. 
  2. During the term of the Music Publishing Agreements , the Group Members between them wrote the music and/or lyrics of 37 songs (“the Compositions”). These include many of Duran Duran’s best-known songs, including “Girls on Film”, “Rio”, “Hungry Like The Wolf” and “Is There Something I Should Know?”. Some of the Compositions were written pursuant to the Group Member Music Publishing Agreements and some pursuant to the Service Company Music Publishing Agreements , but nothing turns on this. 
  3. The Notices were served by letters from the Defendants’ representatives dated 11 March 2014 and 24 June 2014. The Notices specify various effective dates of termination for the purposes of section 203(a)(4) of the US Copyright Act in respect of the Compositions. For some of the Compositions, these dates have now passed; for others, the specified effective dates fall between now and 2020. 

The Agreements

  1. It is common ground that, so far as is relevant to the present dispute, the Music Publishing Agreements are in essentially identical terms. By way of example, the parties referred me to a set of the Agreements between the Claimant and Nigel John Taylor (known as John Taylor) and his service companies. It is also common ground that little turns on the differences between the Group Member Music Publishing Agreements and the Service Company Music Publishing Agreements . Accordingly, I can concentrate on the Group Member Music Publishing Agreement between the Claimant and John Taylor and on the Group Member Letter Agreement between the Claimant and John Taylor. 
  2. The relevant clauses of the Group Member Music Publishing Agreement are in the following terms (with John Taylor being referred to as “the Writer” and the Claimant being referred to as “the Publishers”). Clause 3(a) provides, so far as relevant:

“The Writer as beneficial owner (and by way of assignment of future copyright and rights where appropriate) hereby assigns to the Publishers all the copyrights and all other rights whatsoever and howsoever now or hereafter known (subject as hereinafter provided) in all musical compositions and/or lyrics and/or original arrangements of musical works (whether or not such musical works so arranged are in the public domain) which may prior to the date hereof have been written composed or created in whole or in part by the Writer and not been assigned by the Writer to any third party and which may during the term hereof be written composed or created in whole or in part by the Writer including the titles words and music thereof (all of such musical compositions lyrics and arrangements being hereinafter together called ‘the said works’) throughout the world and the right to renew and extend such copyrights and other rights and the ownership of such renewed and extended copyrights and other rights as may now or hereafter be conferred by the laws of any territory so that the entire copyrights and all other rights in the said works shall be vested in the Publishers absolutely free from the adverse claims of any third party…” 

 

  1. Clause 4 provides:

“Without prejudice to the generality of the grant of rights hereinabove contained the Publishers shall have the right to make and publish and to authorise others to make and publish:—

 

(a)  new adaptions, orchestrations, dramatisations and arrangements of the said works

 

(b)  additions and alterations to and deletions from the said works subject to prior consultation with the Artist by the Writer

 

(c)  new lyrics or lyric translation in any language to the music of the said works and new music to the lyrics of the said works

 

all of such rights in such modifications and new matter to be exercised in such manner as the Publishers shall think fit so that the entire copyrights and all other rights whatsoever and howsoever throughout the world in such modifications and new matter shall be vested in the Publishers absolutely for the full term thereof and all renewals and extensions thereof subject always to payment of the Writer’s share of all fees and royalties as provided for herein”. 

 

  1. Clause 6 provides, so far as relevant:

“The Writer hereby warrants and agrees:—

 

(b)  that he is or will be the sole owner (subject to the terms of this Agreement and subject to the existence of any collaborator referred to in Clause 5 thereof) of the copyright and of all other rights of the nature referred to in Clause 3(a) hereof in the said works and that he has not previously granted transferred to [sic] assigned and will not grant transfer or assign any interest in the copyright or such other rights in the said works or any of them or any part thereof to any other person firm or corporation

 

…” 

 

  1. Clause 12 provides:

“The Writer shall at the Publishers expense take such steps and proceedings as the Publishers may reasonably require to renew and extend any and all copyrights and other rights which may now or may hereafter exist in the said works and after such renewal and extension shall transfer and assign to the Publishers for their own use and benefit the rights herein granted for such renewed or extended term so that each such transfer or assignment shall be in the form annexed hereto marked ‘Exhibit A’ subject to the payment of royalties provided for herein In the event that the Writer shall after written request fail to do so the Writer hereby appoints the Publishers to be his Attorney and to take all and any such steps and proceedings in the name and on behalf of the Writer but at the Publishers expense and execute and deliver to the Publishers in the name of the Writer any such transfer and/or assignment”. 

 

  1. Clause 18 provides, so far as relevant:

“This Agreement shall be governed by and construed under the laws of England whose courts shall have exclusive jurisdiction …” 

 

  1. The Group Member Letter Agreement provides, so far as relevant:

“I hereby confirm warrant and guarantee to you that:

 

(b)  The Companies are in a position to enter into the Publishing Agreements and to assume all the obligations and to give to you all the warranties and undertakings contained therein and all rights in the said works (as defined therein) and are the absolute owners of all copyright and any other rights in the said works throughout the world for the full period of copyright and all renewals and extensions thereof whether now or hereafter possible.

 

 

(d)  I will do all that is required of me under the Employment Contracts to ensure that the Companies will duly and punctually perform discharge and implement all their obligations and undertakings under the Publishing Agreements insofar as they require my co-operation.

 

… 

(f)  If either of the Companies should for any reason refuse duly to perform and observe or procure the performance and observance of each and all of the terms and conditions of the relevant Publishing Agreement then you shall be entitled to serve written notice on both me and the Company requiring me and the Company to do all in our power to procure that the said terms and conditions of the relevant Publishing Agreement are performed and observed and if I shall not take all steps within my power which I am able to take within the next thirty days after service of such notice you may serve a further written notice on me upon service of which I shall be deemed added as a direct party to that Publishing Agreement jointly and severally with that Company without prejudice to any rights you may have against the Company …

 

(g)  As Beneficial Owner I hereby assign to you (to the extent of my interest if any and to the extent that I have not already assigned the same to one or other of the Companies or the Performing Right Society Limited (‘the PRS’)) the entire copyright and all other rights throughout the world and all renewals and extensions thereof whether now or hereafter existing in the said works subject only as the Publishing Agreements respectively provide. …” 

Section 203 of the US Copyright Act

  1. Section 203 provides, so far as relevant, as follows: 

“(a)  CONDITIONS FOR TERMINATION. — In the case of any work other than a work for hire, the exclusive or non-exclusive grant of a transfer or license of copyright or of any right under a copyright, executed by the author on or after January 1, 1978, otherwise than by will, is subject to termination under the following conditions:

….

 

(3)  Termination of the grant may be effected at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant; or, if the grant covers the right of publication of the work, the period begins at the end of thirty-five years from the date of publication of the work under the grant or at the end of forty years from the date of execution of the grant, whichever term ends earlier.

 

(4)  The termination shall be effected by serving an advance notice in writing, signed by the number and proportion of owners of termination interests required under clauses (1) and (2) of this subsection, or by their duly authorized agents, upon the grantee or the grantee’s successor in title.

 

(A)  The notice shall state the effective date of the termination, which shall fall within the five-year period specified by clause (3) of this subsection, and the notice shall be served not less than two or more than ten years before that date. A copy of the notice shall be recorded in the Copyright Office before the effective date of termination, as a condition to its taking effect.

 

(B)  The notice shall comply, in form, content, and manner of service, with requirements that the Register of Copyrights shall prescribe by regulation.

 

(5)  Termination of the grant may be effected notwithstanding any agreement to the contrary, including an agreement to make a will or to make any future grant.

 

(b)  EFFECT OF TERMINATION. — Upon the effective date of termination, all rights under this title that were covered by the terminated grants revert to the author …”

 

 

  1. There is no dispute that, as is obvious, the purpose of section 203 is to protect authors from the consequences of transactions which involve assignments of copyrights for the full term of those copyrights. It should be noted, however, that no expert evidence as to US law was adduced by either party. I shall return to this point below. 

Jurisdiction and applicable law

  1. There is no dispute that this Court has (exclusive) jurisdiction over the present dispute or that the applicable law is English law by virtue of the parties’ express choice of that law in the Music Publishing Agreements . Despite the absence of dispute on the points, it is necessary to say a little more on this subject for reasons that will become apparent later in this judgment. 
  2. The Court is required to give effect to the parties’ choice of law by Article 3 of the Rome Convention on the law applicable to contractual obligations, to the extent that it is given the force of law in the United Kingdom by section 2 of the Contracts (Applicable Law) Act 1990 . The applicable law determines the parties’ “contractual obligations” including questions of material validity ( Article 8(1) ), interpretation ( Article 10(1)(a) ) and performance ( Article 10(1)(b) ). It is important to note that section 2(2) of the 1990 Act provides that Article 7(1) of the Rome Convention , which provides for effect to be given to the mandatory rules of the law of another country with which the situation has a close connection, does not have the force of law in the United Kingdom. 
  3. The rule at common law is that the question of whether, and to what extent, title to copyright is assignable depends on the law under which that copyright was created (the lex loci protectionis , that is to say, the law of the country “where protection is claimed” in the words of Article 5(2) of the Berne Convention for the protection of literary and artistic works, which is properly interpreted as being the law of the country in respect of which protection is claimed): see Campbell Connelly & Co Ltd v Noble [1963] 1 WLR 252 at 255 (Wilberforce J). There is no reason to think that the position is any different under the Rome Convention : see Dicey, Morris & Collins, The Conflict of Laws (15th ed) at 24–069. 
  4. If and to the extent that title is assignable under the lex loci protectionis , the question of whether, and to what extent, title has in fact been assigned by an agreement governed by English law depends on the effect of the agreement applying English law, and in particular English principles of contractual interpretation: see Peer International Corp v Termidor Music Publishers Ltd [2002] EWHC 2675 (Ch) at [24] (Neuberger J) (affd [2003] EWCA 1156, [2004] Ch 212). 

The relevance of US copyright law

  1. It is common ground that US copyright law forms an important part of the background to the dispute between the parties. It is also common ground that:
  2. i)  US copyrights of the kind in issue in the present case are assignable for their full term;
  3. ii)  an assignment of US copyright for the full term of copyright will be effective throughout that term unless and until the author serves notice of termination in accordance with section 203(a)(4) ;
  • iii)  the Notices served by the Defendants are valid and effective as a matter of US law, and have the consequence that ownership of the US copyrights in the Compositions has reverted, or will revert, to the relevant Group Members as from the dates on which the Notices take effect. 
  1. The Claimant contends that, save to the extent that it forms part of the background as stated above, US copyright law is irrelevant to the dispute. 
  2. The Defendants rely upon the following statement made by Brian Howard of the Defendants’ solicitors in paragraph 6 of his witness statement:

“As a consequence of Section 203 , a US Court would not allow a claim for damages for breach of a contractual agreement because the statutory termination right supersedes any contractual right. This applies whether that contract was governed under English or US law.” 

  1. The Claimant contends that this statement is neither admissible in evidence nor relevant. I agree, for the following reasons. First, these proceedings have been brought by way of Part 8 claim on the basis that the issue between the parties was one of interpretation of the Agreements applying English law and on the basis that there is no dispute as to fact, whereas foreign law is a question of fact. Secondly, and consistently with the first point, the Defendants neither sought nor obtained permission to adduce expert evidence as to US law. Thirdly, Mr Howard claims no expertise in US law. Fourthly, Mr Howard gives no basis for the statement. In particular, he does not identify any decided case to that effect. Fifthly, Mr Howard only purports to state the current position under US law. He does not say what US law was in the period from July 1980 to June 1983. It follows that his evidence is not relevant to the interpretation of the Agreements.
  2. Counsel for the Defendants submitted that Mr Howard’s statement was admissible because it was unchallenged. This is a non sequitur . Each side’s solicitor made a brief witness statement outlining his client’s position. In effect, these statements functioned as statements of case. In the absence of any reply to Mr Howard’s statement, the Claimant can be taken to have joined issue with it. In any event, the Claimant did not need to challenge inadmissible and irrelevant evidence contained in it. 
  3. Counsel for the Defendant submitted that Mr Howard’s statement was relevant because his statement of the current law was to be taken to represent the law at the relevant time. But that assertion would require evidence to support it. 

The relevance of English public policy

  1. Counsel for the Defendants suggested that a term of a contract governed by English law and subject to the exclusive jurisdiction of the English courts that expressly prohibited an author from exercising his right of termination under section 203 of the US Copyright Act would be unenforceable as a matter of English public policy. In my judgment it is not open to the Defendants to rely upon this suggestion. It was not advanced in Mr Howard’s witness statement. Nor was it advanced in counsel’s skeleton argument. Even in counsel’s oral submissions, the suggestion was not advanced by way of a positive case of the Defendants’, but as a point which the Court should consider of its own motion. In my judgment, if the point was to be taken, some form of advance notice was required, not least so that the Claimant could have the opportunity to consider whether to seek to adduce evidence as to US copyright law.

 

  1. Even if the point is open to the Defendants, I am not persuaded that it is correct as a matter of law. Counsel for the Defendants admitted that he was unable to cite any authority in support of the proposition. Nor did he advance any cogent argument of principle in support of it, other than a vague reliance upon comity. The general rule, however, is that English courts will enforce a contract which is valid and enforceable under English law even if the contract would be unenforceable as contrary to public policy in another country with which the contract has a connection: see In re Missouri Steamship Co (1889) 42 Ch D 321 at 335–337 (Lord Halsbury LC) and Vita Foods Products v Unus Shipping Co Ltd [1939] AC 277 at 296–298 (Lord Wright). It is true that English courts will not enforce a contract the performance of which would be unlawful in its place of performance (see e.g. Ispahani v Bank Melli Iran [1998] Lloyd’s Rep Bank 133 at 136–137 (Robert Walker LJ)), but counsel for the Defendants did not invoke that principle here. 

Applicable principles of English law

  1. For the reasons explained above, the resolution of the dispute depends on the application of two areas of English law: first, the interpretation of written agreements; and secondly, the doctrine of non-derogation from grant. 

Interpretation of written agreements

  1. There is no dispute as to the general principles applicable to the interpretation of written agreements, which have been considered by the House of Lords and the Supreme Court in a series of recent cases, including Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 , Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101 , Re Sigma Finance Corp [2009] UKSC 2, [2010] 1 All ER 571 , Rainy Sky SA v Kookmin Bank [2011] UKSC 50 [2011] 1 WLR 2900 , Aberdeen City Council v Stewart Milne Group Ltd [2011] UKSC 56, [2012] SLT 205 and Arnold v Britton [2015] UKSC 36, [2015] AC 1619 . In brief summary, the interpretation of a contract is an objective exercise in which the court’s task is to ascertain the meaning that the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
  2. Nor is there any dispute that, as Peter Prescott QC sitting as a Deputy High Court Judge stated in Oxonica Energy Ltd v Neuftec Ltd. [2008] EWHC 2127 (Pat) at [11]:

“The background knowledge that the neutral, reasonable person employs when understanding a commercial document can include knowledge of the relevant law …” 

By relevant law, he meant the law which formed part of the background to the agreement (in that case, international patent law).

Non-derogation from grant

  1. The law concerning the doctrine of non-derogation from grant was summarised by Neuberger J in Platt v London Underground Ltd [2001] 2 EGLR 121 at 122 as follows:

“1.  It is well established that a landlord, like any grantor, cannot derogate from his grant. To put it in more normal language, as has been said in a number of cases, a landlord cannot take away with one hand that which he has given with the other — see, for instance per Younger L.J. in Harmer v Jumbil Nigeria Tin Areas Ltd (1921) 1 Ch 200 at 225 to 226 and Lord Denning MR in Molton Builders Ltd v City of Westminster (1975) 30 P&CR 182 at 186.

 

  1. In orde to determine whether a specific act or omission on the part of the landlord constitutes derogation from grant, it is self-evidently necessary to establish the nature and extent of the grant — see, for instance, Leech v. Schweder (1874) 9 App Cas 463 at 467, per Mellish LJ.

 

  1. ‘[The exercise of determining the extent of the implied obligation not to derogate from grant] involves identifying what obligations, if any, on the part of the grantor can fairly be regarded as necessarily implicit, having regard to the particular purpose of the transaction when considered in the light of the circumstances subsisting at the time the transaction was entered into’ per Sir Donald Nicholls V.C. in Johnson & Son Ltd v. Holland [1988] 1 EGLR 264 at 267M.

 

  1. There is a close connection, indeed a very substantial degree of overlap, between the obligation not to derogate from grant, the covenant for quiet enjoyment, and a normal implied term in a contract. Thus, in words which apply equally to an implied term in a contract, Bowen LJ said in Myers v Catteson (1889) 42 ChD 470 at 481, in relation to the derogation from grant principle, that one should give effect to what he called ‘the obvious intention of the parties, so as to give the transaction between them a minimum of efficacy and value which upon any view of the case it must have been their common intention that it should have.’ In Southwark Borough Council v. Mills (1999) 4 AER 449 at 467F Lord Millett explained that, to a large extent, the covenant for quiet enjoyment, and the obligation of a landlord not to derogate from his grant amounted to much the same thing.

 

  1. The terms of the lease will inevitably impinge on the extent of the obligation not to derogate. Express terms will obviously play a part, possibly a decisive part, in determining whether a particular act or omission constitutes a derogation. An express term should, if possible, be construed so as to be consistent with what Hart J called ‘the irreducible minimum’ implicit in the grant itself. However, as he went on to say, a covenant relied on by the landlord ‘if construed as ousting the doctrine in its entirety is repugnant … and should itself be rejected in its entirety’: see Petra Investments Ltd v Jeffrey Rogers plc (2000) L&TR 451 at 471.

 

  1. When considering a claim based on derogation from grant, one has to take into account not only the terms of the lease, but also the surrounding circumstances at the date of the grant as known to the parties: see Chartered Trust plc v Davies (1997) 2 EGLR 83 at 87C, per Henry LJ.

 

…” 

  1. It is common ground that the doctrine of non-derogation can apply to property other than real property. In British Leyland Motor Corp Ltd v Armstrong Patents Co Ltd [1986] AC 577 it was applied by the House of Lords to copyrights. Although the application of the doctrine in the circumstances of that case was and remains controversial, that was not because it was being applied to copyrights.
  2. It is debatable whether the doctrine of non-derogation of grant is an independent rule of law or an aspect of the law of implied terms; but as the fourth paragraph of Neuberger J’s summary indicates, even if it is an independent principle, it is closely related to those which govern implied terms. The general principles governing implied terms were recently re-stated by Lord Neuberger in Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72, [2016] AC 742 at [18]-[29].

Assessment

  1. As is so often the case, the dispute in this case arises because the Music Publishing Agreements do not explicitly address the issue in question, here the exercise of the right of termination under section 203 . In a nutshell, the Claimant says that the Group Members assigned their US copyrights to the Claimant for the full term of those copyrights, and that, in the absence of any express reservation by the Group Members of the right of termination under section 203 , the exercise of that right was precluded. In a nutshell, the Defendants say that the US copyrights which they assigned were inherently subject to the right of termination, and in the absence of any express prohibition upon the exercise that right, the Group Members were free to do so. 
  2. In addressing these contentions, the starting point is that it is common ground that:
  3. i)  the parties are to be taken to have been aware when entering into the Agreements, at least in general terms, of the effect of section 203 ;
  4. ii)  the effect of clause 3(a) of the Group Member Music Publishing Agreements was in substance to transfer the US copyrights in the relevant Compositions to the Claimant; and
  • iii)  in the absence of the service of notices under section 203 , those copyrights would remain vested in the Claimant until they expired. 
  1. There was a dispute between counsel as to whether clause 3(a) was properly to be construed as an assignment of, or as an agreement to assign, the US copyrights in the Compositions. In my view it is not possible to determine who is right about this in the absence of evidence as to US copyright law, but it does not matter anyway. As set out above, there is no dispute that, either way, the effect of the clause was in substance to transfer the rights to the Claimant. If it only amounted to an agreement to assign, it is common ground that clause 12 required the execution of a confirmatory assignment in the form of Exhibit A.
  2. Although the arguments ranged more widely, the principal points made by each side were as follows. 
  3. Counsel for the Claimant focussed upon the following words in clause 3(a) of the Group Member Music Publishing Agreements , and in particular the words I have italicised:

“… and the right to renew and extend such copyrights and other rights and the ownership of such renewed and extended copyrights and other rights as may now or hereafter be conferred by the laws of any territory so that the entire copyrights and all such other rights in the said works shall be vested in the Publishers absolutely free from the adverse claims of any third party …” 

  1. He submitted that clause 3(a) obliged the Group Members to vest “the entire copyrights and all such other rights” in the relevant Compositions in the Claimant, and that included the temporal entirety of those copyrights. 
  2. Counsel for the Claimant further submitted that this interpretation was reinforced by the following:
  3. i)  clause 4 of the Group Member Music Publishing Agreements , which provides for “the entire copyrights … in such modifications and new matter” to be vested in the Claimant “for the full term thereof and all renewals and extensions thereof”;
  4. ii)  clause 6(b) of the Group Member Music Publishing Agreements , by which the Group Members agreed not to “grant transfer or assign any interest in the copyright or such other rights in the said works … to any other person firm or corporation” than the Claimant; and
  • iii)  clause (b) of the Group Member Letter Agreements &, by which the Group Members warranted that, immediately prior to entry into the Service Company Music Publishing Agreements 5 the Service Companies were (as employers of the Group Members) “the absolute owners of all copyright … for the full period of copyright and all renewals and extensions thereof” in the compositions which were to be assigned under the Service Company Music Publishing Agreements . 
  1. Accordingly, counsel for the Claimant argued that what the contractual language would have conveyed to a reasonable person having the relevant background knowledge was that the parties’ intention was that the “entire copyrights” in the Compositions should vest, and remain vested, in the Claimant for the “full period” of the copyrights. Furthermore, he argued that the exercise by the Group Members of their rights of termination under section 203 would derogate from that grant.
  2. Counsel for the Defendants submitted that clause 3(a) of the Group Member Music Publishing Agreements was purely concerned with the transfer of copyrights from the Group Members to the Claimant, and not with creating obligations on the Group Members restricting their rights after the transfer of the copyrights. He accepted that clause 3(a) was effective to transfer the US copyrights in the Compositions to the Claimant, and that absent termination the transfer would endure for the full term of those copyrights, but he submitted that that was not determinative of the issue between the parties. What mattered, he argued, was that there was no provision which excluded the Group Members’ statutory rights of termination which arose in consequence of, and subsequent to, that transfer.

 

  1. Counsel for the Defendants further submitted that none of the other clauses relied upon by the Claimant advanced its case for the following reasons:
  2. i)  Clause 4 of the Group Member Music Publishing Agreements was concerned with modifications and new matter, and in any event it simply confirmed that the transfer was of the full term of the copyrights.
  3. ii)  Clause 6(b) of the Group Member Music Publishing Agreements did not preclude the exercise of the right of termination under section 203 , in particular because it did not preclude transfers to the Group Members themselves.
  • iii)  Clause (b) of the Group Member Letter Agreements simply confirmed that the transfer was of the full term of the copyrights. 
  1. Finally, counsel for the Defendants submitted that the doctrine of non-derogation from grant did not assist the Claimant. If the Agreements on their true construction prohibited the Group Members from exercising their rights of termination, the doctrine added nothing. If the Agreements on their true construction did not prohibit the Group Members from doing so, then there was no basis for contending that it was necessary to imply such a term to give efficacy to the Agreements. 
  2. A point which was common ground between counsel was that there was a requirement for commercial certainty as to the effect of clause 3(a) in terms of the duration of the assignment, because the Claimant would have entered into agreements with third parties (such as sub-publishers in other countries, and in particular the USA) premised upon the grant contained in clause 3(a). Counsel for the Claimant submitted that this supported the Claimant’s construction while counsel for the Defendants disputed that. 
  3. In my view these arguments are finely balanced. In the end, and not without hesitation, I have come to the conclusion that the Claimant’s interpretation of the Agreements is the correct one for the following reasons. The language of clause 3(a) is wide and general. Particularly when read together with clause 4, I consider that what the language would have conveyed to a reasonable person having the relevant background knowledge was that the parties’ intention was that the “entire copyrights” in the Compositions should vest, and remain vested, in the Claimant for the “full term” of the copyrights. That implicitly precludes the Group Members from exercising rights under US law which have the result that the Claimant’s ownership of the copyrights is brought to an end prior to their expiry. Moreover, this interpretation is reinforced by clause 6(b), by which the Group Members promised not to transfer any interest in the copyrights to any other person, which I read in context as meaning any person other than the Claimant. (This is clearer from the wording of clause 6(b) of the Service Company Music Publishing Agreements , which refers to “any person, firm or corporation other than Tritec”.) In effect, what the Group Members have done by exercising their rights of termination is to transfer the reversionary interest in the copyrights from the Claimant to themselves. Although I do not consider that the doctrine of non-derogation of grant provides the Claimant with an independent route to this conclusion, I do consider that it supports the Claimant’s interpretation of the Agreements. On the other hand, I consider that the requirement for commercial certainty is a neutral factor.

 

Conclusion

  1. For the reasons given above, I conclude that the Defendants have acted in breach of the Agreements by serving the Notices or, where they have not yet taken effect, will do so if they are not withdrawn. I will hear counsel as to the terms of the declarations sought by the Claimant.’

[xxi] O’sullivan v Management Agency & Music Limited & Others [1984] CA.

Extracts from the judgment of Lord Justice Dunn:

Raymond O’Sullivan (professionally known as Gilbert O’Sullivan) to whom I shall refer as “O’Sullivan” is a well known composer and performer of popular music. The retail sales of records of his music between 1970 and 1978 realised a gross figure of some £14.5 million. In addition he has achieved world wide fame as an artiste playing to packed houses in this country and the U.S. He has won many awards. In 1970 he was 23 years old, and although he had a publishing agreement with April Music Ltd., and a recording agreement with C.B.S. Ltd., all his compositions and recordings had been failures. But he was convinced of his own talent and determined to attain success in the music world both as a composer and performer. 

In 1969 he approached the 3rd Defendant to whom I shall refer as “Mills” , known internationally as a manager, producer and performer, who managed amongst others Tom Jones and Engelbert Humperdinck. Mills operated through three public companies in which he was a substantial share holder and the chairman of at least one of them. Mills was concerned mainly with the artistic side of the operation. The parent company was the 1st. Defendant and the subsidiaries the 2nd Defendant, the publishing company, and the 5th Defendant, the recording company. William Smith (Smith) was also a shareholder in and Managing Director of these companies, and was responsible for the business side. The companies shared offices in Bond Street, and were known collectively as “MAM” . 

On the 25th February 1970 O’Sullivan signed a management agreement with Mills, and a sole agency agreement with the 1st Defendant. The agreements were for 5 years with an option exercisable by the Defendants to extend the period for a further 2 years. At an early stage in their relationship Mills realised that O’Sullivan had enormous potential, and in July 1970 O’Sullivan signed a publishing agreement with the 2nd Defendant, which was post dated to the 1st February 1972 to coincide with the release of O’Sullivan from his contract with April Music. At about the same time O’Sullivan moved into a cottage in the grounds of Mills’ house near Weybridge. He was given £10 per week pocket money, his previous wage as a postal clerk, and all his outgoings were paid by one or other of the Defendant Companies. In addition he was entitled to draw and did draw cheques for any monies he required by way of advances on his royalties although his requirements were modest. Mills acted as his producer without any additional charge save for the 20% on all earnings to which he was entitled under the management agreement. On 5th October 1970 O’Sullivan signed a recording agreement with the 5th Defendant, which was issuing its first label which was attended by very wide publicity. O’Sullivan was one of the artistes to benefit from that publicity. He had total confidence in Mills and trusted him implicitly. 

By 1972 O’Sullivan had achieved enormous success. 6.5 million of his records were sold and were at or near the top of the charts in this country and the U.S. He was voted the biggest selling solo artiste in the world by the lusic Business Association. In that year he moved out of the cottage and bought his own house for £95,000 with the assistance of a loan of £60,000. His success continued in 1973 with more records and a new album. He was composing at a prolific rate and travelling all over the world promoting his records. He was blissfully happy, having achieved his ambition. 

In 1973 a change was made in the contractual arrangements, for perfectly lawful tax avoiding reasons. The 2nd Plaintiff, wholly owned by O’Sullivan, was set up to receive his earnings in relation to the United Kingdom. Another company, the 4th Defendant, had been set up to receive the earnings of Jones, Humperdinck and O’Sullivan from outside the United Kingdom. The 4th Defendant was a private trust company of which the directors were Smith and a Mr. Landau who were entitled to profits from the company as beneficiaries of discretionary trusts in which their wives and families also had interests. Although this information was disclosed in the reports and accounts of the 1st. Defendant, it was not known to O’Sullivan. On the 7th September 1973 O’Sullivan signed service agreements with the 1st Plaintiff and the 4th Defendant and on the same day both companies entered into recording agreements with the 5th Defendant. All these agreements were to continue until the 31st July 1979. 

In 1974 O’Sullivan was advised by Mills that he should leave the country for tax reasons, and he spent about eight months abroad. By that time Mills was living mostly in the U.S. Nonetheless another album was produced which sold well in the U.K. although badly in the U.S. During the production of this album disagreements arose between O’Sullivan and Mills, both of whom wished to have control of the production of the recordings, particularly the “mix” of the music and the artistic presentation of the records. Despite these disagreements another hit record was produced in 1975 which had been recorded by O’Sullivan and Mills in the U.S. In 1976 O’Sullivan and Mills recorded their last LP in Los Angeles. But their disagreement had become such that the record was never published, and thereafter Mills ceased to act as producer although he remained de facto as O’Sullivan’s Manager, notwithstanding that the management agreement expired. O’Sullivan returned to England and produced an album himself which was recorded by the 5th Defendant, but it was not a success. Mills by then was spending most of his time in the U.S. where Jones and Humperdinck were living. 

In 1976 there was another change in the contractual arrangements. MAM did not have a fully developed recording company and the group required the services of a large marketing pressing and distribution organisation with international outlets. On the 7th June 1976 agreements were made between the 1st., 4th. and 5th Defendants and E.M.I. whereby E.M.I. were granted exclusive rights in respect of the recordings of O’Sullivan’s music in consideration of an advance of U.S. $1.2. million by E.M.I. to those Defendants. E.M.I. were to exploit the recordingsworld wide outside North America. On the 14th June 1976 a similar agreement was made between the 1st. and 6th. Defendant for the exploitation of records of various artistes, including O’Sullivan, in North America. The advance to the 1st. Defendant under this agreement was U.S. $600,000. On the same day O’Sullivan signed a letter of inducement, i.e. an agreement to be bound in the terms of that agreement. 

By this time O’Sullivan was unhappy with his contractual arrangements. He was disillusioned with Mills and did not trust Smith. He was horrified to discover that he was spending more and earning less than he used to. He consulted solicitors who eventually on the 15th May/1979 wrote alleging that all the agreements referred to above were illegal, and these proceedings were commenced. 

This summary of the facts has omitted all reference to one matter. Right from the outset O’Sullivan had wanted what he called a “joint publishing company” . This is an arrangement whereby a company is set up in which the composer and the publisher each has a 50% interest. All the composer’s copyrights are assigned to the company which pays the composer a royalty. ??o that in addition to the royalty the composer retains 50% ownership in his copyrights. This is clearly a very valuable asset for the composer. 

O’Sullivan thought that he had been offered such an arrangement by April Music, but in fact the agreement which he had provided for the retention of the copyrights by the composer, or a company formed by him for the purpose, with a licence to the publisher to reproduce the works for a period of 5 years on payment of a 50% royalty, after deduction of 15% expenses. O’Sullivan showed the April Music agreement to Mills who said his company would do the same. Thereafter O’Sullivan raised the question of the Joint publishing Company on numerous occasions both with Mills and Smith, but it was never achieved although he was told he would get it. A minute of the Board of Directors of the 2nd Defendant dated the 2nd May 1974 was in the following terms: “ Gilbert O’Sullivan A schedule giving brief details of new agreements which were proposed should be entered into with this Artiste Composer was available for the Board to consider. The proposals as regards Management & Agency Services (renewed on same terms until 31st January 1979) were considered most satisfactory as were the terms for renewal of the Recordings Agreement for the same period at royalty rates rising during the year to July 31st 1979 to a maximum of 8%. 

“The new proposal as regards Music Publishing was discussed and although accepted by the Board was subject to certain reservations made particularly by Mr. C. Berlin, and Mr H. Davison. The new agreement would provide for the formation of a New Company into which all existing copyrights composed by Gilbert O’Sullivan and at present held by M.A.M. (Music Publishing) Ltd. would be transferred for the U.K.

 

“Gilbert O’Sullivan to enter into an agreement with the New Company as a composer until the 31st July 1979. The shares of the New Company to be held 50% each by M.A.M. (Music Publishing) Ltd. and Gilbert O’Sullivan. Mr W.L. Smith stated that this new agreement was being made in recognition of what had always been an obligation of the Company to Gilbert O’Sullivan as expressed by both the Chairman and himself” — “ what had always been an obligation of the Company to Gilbert O’Sullivan as expressed by both the Chairman and himself.” — “The hope was shared by all that Gilbert O’Sullivan’s success as a composer would extend to writing material for other artistes than himself” . But the proposed company was never set up and no agreement on the lines indicated in the Minute was ever made in spite of continued requests from O’Sullivan. Eventually at a stormy meeting on the 19th September 1978 smith produced a manuscript memorandum setting out the terms for the formation of the new company and arrangements for dealing with the copyrights of released and future titles. A contract was drafted incorporating those terms but O’Sullivan never signed it. He consulted solicitors who advised him not to do so. 

The Judge accepted O’Sullivan’s evidence as to these events in preference to the evidence of Mills and Smith. Their importance is not that they go directly to any question in issue in this Court, but because they explain one of the principal reasons for O’Sullivan’s disenchantment with MAM and its Directors, and also because they clearly affected the Judge’s view as to the conduct and credibility of Mills and Smith. I agree with the observations of Waller L.J., whose judgment I have read in draft, as to the Judge’s finding of deceit. In this Court Mr. Miller for the Appellants made it plain that the Appellants recognised an obligation to set up the Joint Publishing Company for the benefit of O’Sullivan, and were still prepared to do so on the terms of Mr. Smith’s memorandum.

 

On the 5th May 1982 after a long hearing the Judge gave a short judgment stating his conclusions, and gave his reasons in a full judgment on the 22nd July. He made declarations that all the agreements referred to in this judgment, except the service agreement between O’Sullivan and the 2nd Plaintiff, were and always had been void and un-enforcible and were to be set aside, and that the inducement letter of the 14th November 1976 did not and never had created any contractual obligation binding upon O’Sullivan. He ordered the re-conveyance to O’Sullivan of the copyrights assigned under the various agreements, and delivery up of the master tapes. He also ordered an account to be taken by an Official Referee of all profits made by the Defendants from the copyrights and recordings, and payment to O’Sullivan of all sums found due on the taking of the account, with compound interest at 1% above Bank rate or minimum lending rate. He directed on a claim for indemnity by the 6th Defendant that the Official Referee should assess the amount of damages and interest due from the 1st Defendant to the 6th Defendant for breach of contract, and he awarded O’Sullivan his costs against the 1st five Defendants, and the 6th Defendant its costs against the 1st Defendant. 

The Judge held that the agreements were void and unenforcible because they were in restraint of trade on the basis of Schroeder v. Macaulay (1974) 1 W.L.R. 1308 and because they had been obtained by undue influence on the basis of Lloyds Bank Ltd. v. Bundy (1975) 1 Q.B. 327 . O’Sullivan himself said in evidence that no actual pressure had been exerted upon him to sign the agreements, but the Judge held that undue influence was to be presumed because of the special relationship between O’Sullivan and the defendants. There is no appeal against that finding that the agreements were in restraint of trade, although it was submitted on behalf of the Appellants that where as here the restriction is during the pendancy of the agreement the agreement is not void ab initio but unenforcible so far as unperformed, and that property rights assigned pursuant to the agreement are not recoverable. Nor was it disputed that Mills was in a position of confidentiality vis a vis O’Sullivan and that he had failed on the Judge’s findings, which were not disputed on this issue, to offer O’Sullivan independent advice. Accordingly it was accepted that Mills was in a fiduciary relationship to O’Sullivan. But it was said that none of the companies was in such a relationship so that the doctrine of undue influence did not apply to the agreements between O’Sullivan and the companies. On the other hand it was conceded that as the contracts were presumed to have been obtained by the undue influence of Mills, and as the companies knew of Mills’ confidential relationship with O’Sullivan, it would be inequitable for the companies to take any benefit from the contracts other than that which they would have obtained from a reasonably negotiated agreement. Although it was stated by Lord Reid in Schroeder’s case supra at page 1315 that in circumstances such as this contracts in restraint of trade are unenforcible so far as unperformed, this point is academic in this case because it was conceded that transactions obtained by undue influence can be set aside on terms, and that persons presumed to have exercised undue influence, i.e. persons in a fiduciary position are liable to account. The first question for decision is therefore whether the companies were in a fiduciary position vis a vis O’Sullivan. 

The Judge referred to clause 6 of the management agreement whereby Mills was given complete and unlimited discretion to appoint any agent for the purpose of obtaining engagements or furthering O’Sullivan’s career, and that such agent could be a company in which Mills was interested. Further Mills was entitled to assign the benefit of all his interest in the management agreement to any company in which he was a shareholder. The Judge found that both Mills and Smith knew that it would be unjust and unfair to expect O’Sullivan to know where his best interests lay without independent legal and professional advice. They did not advise him to seek such advice because they knew that they would not have been able to tie O’Sullivan so firmly to their organisation and get his services on such bargain basement terms if they had. The Judge also held that O’Sullivan did not deal directly with Mills about business matters. It was Smith who did that. He was Managing Director of the companies and he got O’Sullivan to sign the various documents. O’Sullivan never asked about those documents before he signed them and was never told he ought to have independent legal advice. 

None of those findings was challenged on appeal and they were amply supported by the evidence. This showed that, in the eyes of O’Sullivan, Mills and the Companies were indistinguishable. Although the companies were not formally appointed Managers by Mills, in fact they carried out most of the management functions and this was the intention from the outset. From the moment he joined Mills the affairs of O’Sullivan were run by the companies. They took it upon themselves to look after him, as Mills himself said in evidence. Mills was chairman of one of the companies and Smith and the other Directors knew the situation as well as Mills. They knew they were dealing with a young and inexperienced man who was content to put himself entirely in their hands and relied entirely on them to give him a fair deal. They were responsible for the contractual arrangements and they were just as much in a confidential relationship to O’Sullivan as was Mills himself. In those circumstances the Judge was right to hold that the companies as well as Mills were fiduciaries, just as in Lloyds Bank v. Bundy supra and National Westminster Bank v. Morgan (1983) 3 A.E.R. 85 the Banks were held to be fiduciaries in relation to their customers, because their Managers had put themselves into a confidential relationship with the customers.

 

On the footing therefore that the companies were in a fiduciary relationship with O’Sullivan, and consequently all the agreements were obtained by undue influence, the principal question on the appeal was what is the appropriate remedy against Mills and the companies? 

Mr. Miller submitted that the Judge was wrong to order the re-conveyance of the copyrights and delivery up of the master tapes because the contracts, if induced by undue influence, were voidable and not as the Judge had held void, and that they could not now be set aside because it was impossible to achieve restitutio in integrum since the contracts had all been performed, and the parties had altered their positions irrevocably. He submitted that the proper remedy for O’Sullivan as against Mills was damages for breach of contract in failing to advance O’Sullivan’s career, and he conceded (without formally accepting liability) that the companies should pay what he called “equitable compensation” on the basis of Nocton v. Ashburton (1914) AC 932 . Mr. Bateson, although accepting that the contracts were voidable, submitted that the doctrine of restitutio in integrum applied only to the rescission of contracts for misrepresentation or mistake, and did not apply to equitable relief where contracts had been entered into as the result of undue influence, the influencer being a fiduciary relationship with the person influenced. In such a situation the influencer was not allowed to retain any profit that he had made from the transaction, and the well established equitable remedy was to order an account of profits. 

Lany authorities were cited in support of these rival propositions. In Clarke v. Dickinson (1858) EBE 148 (a case of fraud) and Western Bank of Scotland v. Addie (1867) L.R. 1 HL 145 (a case of misrepresentation by Directors) rescission was refused because in both cases the companies in which the plaintiffs had bought shares had changed their structure so that the plaintiffs could not return that which they had received. The companies in which they had bought shares had been destroyed. In Erlanger v. New Sombrero Phosphate Co. (1878) 3 AC 1218 a contract for the purchase of an island containing valuable mines by the company from a syndicate was set aside on the ground that the members of the syndicate were in a confidential relationship with the company, notwithstanding that since the contract had been made the mines had been extensively worked so that they were much less valuable. Although Lord Blackburn’s speech was expressed to be limited to the question of laches, which was the principal issue in the House of Lords, he said at page 1278: “It is, I think, clear on principles of general justice, that as a condition to a rescission there must be a restitutio in integrum. The parties must be put in statu quo. See per Lord Cranworth in Addie v. The Western Bank . It is a doctrine which has often been acted upon both at law and in equity. But there is a considerable difference in the mode in which it is applied in Courts of Law and Equity, owing, as I think, to the difference of the machinery which the Courts have at command. I speak of these Courts as they were at the time when this suit commenced, without inquiring whether the Judicature Acts make any, or if any, what difference. 

It would be obviously unjust that a person who has been in possession of property under the contract which he seeks to repudiate should be allowed to throw that back on the other party’s hands without accounting for any benefit he may have derived from the use of the property, or if the property, though not destroyed, has been in the interval deteriorated, without making compensation for that deterioration. But as a Court of ?? has no machinery at its command for taking an account of such matters, the defrauded party, if he sought his remedy at law, must in such cases keep the property and sue in an action for deceit, in which the jury, if properly directed, can do complete justice by giving as damages a full indemnity for all that the party has lost: see Clarke v. Dixon and the cases there cited. 

But a Court of Equity could not give damages, and, unless it can rescind the contract, can give no relief. And, on the other hand, it can take accounts of profits, and make allowance for deterioration. And I think the practice has always been for a Court of Equity to give this relief whenever, by the exercise of its powers, it can do what is practically just, though it cannot restore the parties precisely to the state they were in before the contract.” 

This statement, although obiter, has been approved by the House of Lords in subsequent cases and must be regarded as of high authority. The order in that case (see sub nom New Sombrero Phosphate Co. v. Erlanger 5 Ch per Sir George Jessel M.R. at page 125) was that the contract should be set aside, that the purchase price should be re-paid with interest at 4??, that those shares forming part of the sale consideration which had not been parted with should be returned to the defendants and that the company should account for any profit derived from the mines. In Adam v. Newbigging (1888) 13 AC 308 a contract to become a partner in a business was set aside on the ground of innocent misrepresentation, though the business which was restored was worse than worthless. The decree (see 34 Ch.D at page 585 sub nom Newbigging v. Adam ) was that the defendants were liable to repay the amount paid by the plaintiff with interest at 4% per annum after deducting sums drawn out by the plaintiff with interest, and that the defendant should indemnify the plaintiff against all debts of the partnership to which he had become liable. The order for an indemnity was varied slightly in the House of Lords. In Lagunas Nitrate Co. v. Lagunas Syndicate (1899) 2 Ch. 392 there was a claim for rescission of a contract for the purchase of shares on grounds that the directors of the company were also members or agents of the vendor syndicate, and that the prospectus contained misrepresentations. Lindley and Collins LJJ refused rescission, holding that there was no misrepresentation and that restitutio in integrum was impossible, although Lindley LJ held at page 433 that the issue of the prospectus was a clear breach of duty on the part of the directors. Rigby L.J. dissented, holding that the members of the syndicate owed a fiduciary duty to the company as directors, and that the company had not lost its right to rescission through alteration of the property, since that had in effect been the act of the vendor syndicate by its directors. In a passage subsequently cited with approval by Lord Thankerton in Spence v. Crawford (1939) 3 A.E.R. 271 Rigby L.J. said at page 456: “Now, no doubt it is a general rule that in order to entitle beneficiaries to rescind a voidable contract of purchase against the vendor, they must be in a position to offer back the subject-matter of the contract. But this rule has no application to the case of the subject-matter having been reduced by the mere fault of the vendors themselves; and the rule itself is, in equity, modified by another rule, that where compensation can be made for any deterioration of the property, such deterioration shall be no bar to rescission but only a ground for compensation.” He then cited the dictum of Lord Blackburn in Erlanger’s case supra at page 1278. 

In Boyd & Forrest v. Glasgow & S.W. Railway Co. (1915) SC 20 , a claim for rescission of a contract for the construction of a railway line was dismissed on the grounds that there was no misrepresentation, and that assuring there was restitutio in integrum was impossible, since all the work under the contract had been completed before the action. 

So far no very clear distinction is discernible from the authorities between claims for rescission at Common Law and claims in Equity for recovery of property acquired by undue influence although in Lagunas Nitrate Co. v. Lagunas Syndicate supra at page 433: Lindley M.R. said: “These facts are very different from any with which the Court had to deal with in Erlanger’s Case. Still, if this were a case of fraud, the Court would be justified in making an order for repayment of the purchase-money (including the amount realised by the sale of the shares) on the plaintiffs accounting for all their profits. The defendants could not effectually set up their own wrong as a reason for not giving such relief against them. But, there being in this case no fraud, the reasoning which in a case of fraud would justify such an order is inapplicable.” 

The distinction between the two types of relief was however explained by MacCardie J. in Armstrong v. Jackson (1917) 2 K.B. 822 . That was a case in which a broker, pretending to execute a mandate to buy, sold his own shares to the plaintiff. The sale was rescinded notwithstanding that the value of the shares had decreased between the date of the sale and the date of the action for rescission. MacCardie J. cited, at page 824, the words of Lord Wynford in Rothschild v. Brookman (1831) 5 Bli (N.S.) 165 at page 197: “If any man who is to be trusted places himself in a condition in which he has an opportunity of taking advantage of his employer, by placing himself in such a situation, whether acting fairly or not, he must suffer the consequences of his situation. Such is the jealousy which the law of England entertains against any such transactions” and continued at page 825: “It follows that in the present case the plaintiff is prima facie entitled to a decree setting aside the transaction in question. But Mr. Disturnal, for the defendant, vigorously contended that no such decree can here be made. In the first place it was argued that, inasmuch as the contract between the parties was executed, no rescission can be granted unless fraud be proved against the defendant. Now it is undoubted law that where the vendor has procured the sale of his property by misrepresentation the purchaser can set aside the contract of purchase, prior to completion, even though the misrepresentation be innocent: see per Jessel M.R. in Redgrave v. Hurd ; per Lord Bramwell and Lord Herschell in Derry v. Peek . But if the contract has been executed by the completion of a conveyance or lease, or the formal assignment of a chattel, then rescission cannot be obtained on the ground of innocent misrepresentation by the vendor or lessor. When the contract is so completed, fraud must be proved before rescission can be granted: see per Lord Campbell in Wilde v. Gibson; Seddon v. North Eastern Salt Co. and Angel v. Jay . 

That is the settled rule, and it is too late to regret the limitation which has been placed on the equitable doctrine of rescission on the grounds of misrepresentation. It is curious that the doctrine should cease to apply when the formal instrument of transfer has been executed, or the formal delivery of a chattel has taken place. In many cases the misrepresentation cannot, or may not, be discovered until the purchaser has secured his legal title and has therefore entered into possession of his newly acquired property. But in my opinion the rule formulated in Seddon v. North Eastern Salt Co. has no application to such a case as the present. It is to be observed that in that case the dispute was between vendor and vendee. In Angel v. Jay the dispute was between lessor and lessee. In Wilde v. Gibson Lord Campbell was referring in his opinion to a dispute between seller and purchaser. In none of these cases did the question of fiduciary relationship arise. Where that relationship exists the rule is infinitely stricter and more severe. The position of principal and agent gives rise to particular and onerous duties on the part of the agent, and the high standard of conduct required from him springs from the fiduciary relationship between his employer and himself. His position is confidential. It readily lends itself to abuse. A strict and salutary rule is required to meet the special situation. The rules of English law as they now exist spring from the strictness originally required by Courts of Equity in cases where the fiduciary relationship exists. Those requirements are superadded to the common law obligations of diligence and skill: see per Lord Cranworth in Aberdeen Ry. Co. v. Blakie Brothers and per Curiam in Oliver v. Court. 

It is, I think, immaterial that the plaintiff in the present case took a transfer of the shares and became the registered holder thereof. Those facts do not impair his right to rescission. So to hold would gravely and injuriously impair the powers of the Court. In Gillett v. Peppercorne the plaintiffs had taken a transfer of shares in circumstances similar to those now before me, yet Lord Langdale at once set aside the transactions and directed the defendant to repay the purchase-money with interest. The contract in that case was as fully executed as in the present case. In Rothschild v. Brookman the contracts were also, I think, as much executed as in the present case. Yet the House of Lords, without hesitation, set aside the transactions. I also refer to the case of York Buildings Co. v. Mackenzie referred to by Lord Cranworth in Aberdeen Ry.Co. v. Blakie Brothers and to the case of Oliver v. Court . These decisions are clearly opposed to the contention of Mr. Disturnal. I may add that the various authorities I have referred to are quite independent of the proof of actual fraud as defined by Derry v. Peek . The ratio of those decisions is wholly different from the ratio in Derry v. Peek , for they rest upon the fundamental basis of fiduciary relationship, and they are unaffected by the opinion of the House of Lords in Derry v. Peek . But none the less it is clear that the agent who secretly sells his own property to a principal is guilty of dishonesty; and it was said by Lord Eldon in Ex parte Dyster, that if a man “mixes in a transaction, in which he is ostensibly the broker, but really a buyer or seller, this is a gross fraud” . 

I decide against the first contention of Mr. Disturnal.”

 

MacCardie J. then dealt with the second contention of Mr. Disturnal that restitutio in integrum was impossible. He referred to the words of Lord Blackburn in Erlanger v. New Sombrero Phosphate Co. supra at page 1278 and said at page 828: “I think that such words refer to a delay which occurs after a plaintiff has ascertained his right to rescind and whereby the position of a defendant is substantially altered and prejudiced. No such delay has here occurred, inasmuch as the plaintiff acted with promptitude in issuing his writ when he became suspicious of the defendant’s conduct. The phrase ‘ restitutio in in tegrum’ is somewhat vague. It must be applied with care. It must be considered with respect to the facts of each case. Deterioration of the subject-matter does not, I think, destroy the right to rescind nor prevent a restitutio in integrum. Indeed, it is only in cases where the plaintiff has sustained loss by the inferiority of the subject-matter or a substantial fall in its value that he will desire to exert his power to rescission” . MacCardie J. then referred to Clarke v. Dickinson , Western Bank of Scotland v. Addie and Adam v. Newbi??in supra. He ordered that the transaction should be set aside and that the defendant should re-pay with interest at 5% per annum all sums received by him from the plaintiff less credit for any dividends received, and that the share should be transferred to the defendant on such payment. 

This distinction between the remedies at Common Law and the Equitable remedy is reflected in the later cases. In Spence v. Crawford (1939) 3 ?? 271 a contract for the sale of shares was set aside on the ground of fraudulent misrepresentation by the purchaser, although the shares had increased in value since the sale. Lord Thankerton at page 276 said: “It is well established that the doctrine” (restitutio in integrum ) “is not to be applied too literally” and having citedv Western Bank of Scotland v. Addie, Erlanger v. New Sombrero Phosphate and Lugunas Nitrate Co. v. Lagunas Syndicate supra, said at page 281: “None of these statements deals directly with the case of the vendor seeking relief against the purchaser in regard to the effect on the application of the doctrine of changes in the subject-matter while in the hands of the purchaser, and it is in regard to this question that, in my opinion, there may well be a different conclusion according as the misrepresentations are fraudulent or not. While the decision in any case must turn on the terms of the contract under reduction and on the facts of the particular case, I may say broadly that in my opinion, the defender who, as purchaser, has been guilty of fraudulent misrepresentation is not entitled in bar of restitution to found on dealings with the subject purchased, which he has been enabled by his fraud to carry out.” 

Lord Wright said at page 288: “A case of innocent misrepresentation may be regarded rather as one of misfortune than as one of moral obliquity. There is no deceit or intention to defraud. The Court will be less ready to pull a transaction to pieces where the defendant is innocent, whereas in the case of fraud the Court will exercise its jurisdiction to the full in order, if possible, to prevent the defendant from enjoying the benefit of his fraud at the expense of the innocent plaintiff. Restoration, however, is essential to the idea of restitution. To take the simplest case, if a plaintiff who has been defrauded seeks to have the contract annulled and his money or property restored to him, it would be inequitable if he did not also restore what he had got under the contract from the defendant. Though the defendant has been fraudulent, he must not be robbed, nor must the plaintiff he unjustly enriched, as he would be if he both got back what he had parted with and kept what he had received in return. The purpose of the relief is not punishment of both parties to the status quo ante, but it is generally the defendant who complains that restitution is impossible. The plaintiff who seeks to set aside the contract will generally be reasonable in the standard of restitution which he requires. However, the Court can go a long way in ordering restitution if the substantial identity of the subject-matter of the contract remains. Thus, in the Lagunas case, though the mine had been largely worked under the contract, the Court held that, at least if the case had been one of fraud, it could have ordered an account of profits or compensation to make good the change in the position. In Adam v. Newbigging , where the transaction related to the sale of a share in a partnership, which had become insolvent since the contract, the Court ordered the rescission and mutual restitution, though the misrepresentation was not fraudulent, and gave ancillary directions so as to work out the equities. These are merely instances. Certainly in a case of fraud the Court will do its best to unravel the complexities of any particular case, which may in some cases involve adjustments on both sides.” 

In Equity the term “fraud” embraces not only actual fraud but certain other conduct which falls below the standards demanded by equity, and is known as constructive fraud, one of the examples of which is a transaction which has been procured by undue influence, or where one party is in ?? of a fiduciary duty to another. As Fox L.J. said in the course of argument, it is questionable whether it is morally worse to obtain a benefit by making a statement known to be false, or to obtain the same benefit by taking advantage of a confidential or fiduciary relationship. 

The latter situation arose in Regal (Hastings) Ltd. v. Gulliver and Others (1967) 2 A.C. 134 . In that case directors in breach of their fiduciary duties had bought and sold shares in a subsidiary company of Regal (Hastings) Ltd. They were ordered to pay the profit which they had made on the transactions with interest at 4% per annum. Lord Sankey stated the rule at page 137G: “As to the duties and liabilities of those occupying such a fiduciary position, a number of cases were cited to us which were not brought to the attention of the trial Judge. In my view, the respondents were in a fiduciary position and their liability to account does not depend upon proof of mala fides. The general rule of equity is that no one who has duties of a fiduciary nature to perform is allowed to enter into engagements in which he has or can have a personal interest conflicting with the interests of those whom he is bound to protect. If he holds any property so acquired as trustee, he is bound to account for it to his cestui que trust ” . Having cited cases concerning trustees of specific property, Lord Sankey went on to say that the rule applied equally to directors or to persons in a fiduciary capacity. Lord Russell of Killowen stated the rule at page 144G as follows: “The rule of equity which insists on those, who by use of a fiduciary position make a profit, being liable to account for that profit, in no way depends on fraud, or absence of bona fides; or upon such questions or considerations as whether the profit would or should otherwise have gone to the plaintiff, or whether the profiteer was under a duty to obtain the source of the profit for the plaintiff, or whether he took a risk or acted as he did for the benefit of the plaintiff, or whether the plaintiff has in fact been damaged or benefited by his action. The liability arises from the mere fact of a profit having, in the stated circumstances, been made. The profiteer, however honest and well-intentioned, cannot escape the risk of being called upon to account” . 

Having cited various cases Lord Russell said at page 149F: “In the result, I am of opinion that the directors standing in a fiduciary relationship to Regal in regard to the exercise of their powers as directors, and having obtained these shares by reason and only by reason of the fact that they were directors of Regal and in the course of the execution of that office, are accountable for the profits which they have made out of them.” 

Lord Mc??illan stated the rule at page 153D: “The equitable doctrine invoked is one of the most deeply rooted in our law. It is amply illustrated in the authoritative decisions which my noble and learned friend Lord Russell of Killowen has cited. I should like only to add a passage from Principles of Equity by Lord Kames, 3rd ed. (1778) vol. 2, page 87, which puts the whole matter in a sentence: “Equity,” he says, ‘prohibits a trustee from making any profit by his management, directly or indirectly.” 

“The issue thus becomes one of fact.” 

Lord Porter said at page 159B: “Directors, no doubt, are not trustees but they occupy a fiduciary position towards the company whose board they form. Their liability in this respect does not depend upon breach of duty but upon the position that a director must not make a profit out of property acquired by reason of his relationship to the company of which he is director. It matters not that he could not have acquired the property for the company itself — the profit which he makes is the company’s, even though the property by means of which he made it was not and could not have been acquired on its behalf. Adopting the words of Lord Eldon L.C., in Ex parte James : “…the general interests of justice require it to be destroyed in every instance; as no Court is equal to the examination and ascertainment of the truth in much the greater number of cases.” 

These principles were applied in Boardman v. Phipps (1967) 2 AC 46 . That was a case where trustees, or in the case of Boardman a solicitor to the trustees, of a will bought on their own behalf shares in a company using information which they had acquired in their capacity as trustee, since the trust held some shares in the company which enabled the trustees to obtain confidential information as to its financial state. The trustees were held liable to account for the profit they had made from the transaction. The case shows the strictness of the rule, since no moral blame attached to the trustees, who had consulted their fellow trustees and obtained their consent from all save one who was senile. In recognition of this the Court ordered that they should be given credit not only for their expenses but also given a liberal allowance for their skill and work in producing the profit. 

The distinction between the remedies at law and in equity was explained by Dixon C.J. in Alati v. Kruger (1955) 94 CLR 216 at page 223: “If the law had to be decided according to the principles of the common law, it might have been argued that at the date when the respondent issued his writ he was not entitled to rescind the purchase, because he was not then in a position to return to the appellant in specie that which he had received under the contract, in the same plight as that in which he had received it: Clarke v. Dickson . But it is necessary here to apply the doctrine of equity, and equity has always regarded as valid the disaffirmance of a contract induced by fraud even though precise restitutio in integrum is not possible, if the situation is such that, by the exercise of its powers, including the power to take accounts of profits and to direct inquiries as to allowances proper to ??e made for deterioration, it can do what is practically just between the parties, and by so doing restore them substantially to the status quo; Erlanger v. New Sombrero Phosphate Co?? Brown v. Smitt ; S??ence v. Crawford . It is not that equity asserts a power by its decree to avoid a contract which the defrauded party himself has no right to disaffirm, and to revest property the title to which the party cannot affect. Rescission for misrepresentation is always the act of the party himself: Reese River Silver Mining Co. v. Smith . The function of a Court in which proceedings for rescission are taken is to adjudicate upon the validity of a purported disaffirmance as an act avoiding the transaction ab initio, and, if it is valid, to give effect to it and make appropriate consequential orders: see Abram Steamship Co. Ltd. v. Westville Shipping Co. Ltd. The difference between the legal and the equitable rules on the subject simply was that equity, having means which the common law lacked to ascertain and provide for the adjustments necessary to be made between the parties in cases where a simple handing back of property or repayment of money would not put them in as good a position as before they entered into their transaction, was able to see the possibility of restitutio in integrum, and therefore to concede the right of a defrauded party to rescind, in a much wider variety of cases than those which the common law could recognise as admitting of rescission. Of course, a rescission which the common law courts would not accept as valid cannot of its own force revest the legal title to property which had passed, but if a Court of equity would treat it as effectual the equitable title to such property revests upon the rescission.” 

This distinction was recognised by Lord Denning, M.R. in Lloyds Bank v. Bundy supra, when he said at page 337: “I put on one side contracts or transactions which are voidable for fraud or misrepresentation or mistake. All these are governed by settled principles.” 

Schroeder’s case supra, a case somewhat similar on its facts to the present, was treated as a case of restraint of trade so that the above principles were not applied. But in another case concerning song writers Clifford Davis Management Ltd. v. W.E.A. Records Ltd. (1975) 1 WLR 61 , Lord Denning, M.R. in an interlocutory appeal suggested at page 64 that the principles stated in Lloyds Bank Ltd. v. Bundy supra, might have been applied in Schroeder’s case, and that the assignments of copyrights in the Clifford David case might well be invalid and should be set aside. 

This analysis of the cases shows that the principle of restitutio in integrum is not applied with its full rigour in equity in relation to transactions entered into by persons in breach of a fiduciary relationship, and that such transactions may be set aside even though it is impossible to place the parties precisely in the position in which they were before, provided that the Court can achieve practical justice between the parties by obliging the wrongdoer to give up his profits and advantages, while at the same time compensating him for any work that he has actually performed pursuant to the transaction. Erlanger v. New Sombrero Phosphate Co. is a striking example of the application of this principle.  

Mr. Bateson submitted that the Defendants had gained the following advantages (1) Profits from the agreements, and (2) The copyrights in the songs and master tapes for the life of O’Sullivan and 50 years thereafter. He pointed out that none of the agreements obliged the Defendants to do any work on behalf of O’Sullivan whether by promoting or exploiting him or his works or at all, although he conceded that the Defendants had in fact done such work gratuitously. He accepted that the Defendants in accounting for their profits were entitled to credit in respect of their proper and reasonable expenses for the work done, including work done gratuitously, but that they were not entitled to credit for any profit element in such work. He submitted that the exception made in Boardman v. Phipps supra, where the trustees were morally blameless should not become the rule. 

I do not think that equity requires such a narrow approach. It is true that in this case moral blame does lie upon the Defendants as the Judge’s findings of fact show. On the other hand it is significant that until O’Sullivan met Mills he had achieved no success, and that after he effectively parted company with Mills in 1976 he achieved no success either. During the years that he was working with Mills his success was phenomenal. Although equity looks at the advantage gained by the wrongdoer rather than the loss to the victim, the cases show that in assessing the advantage gained the Court will look at the whole situation in the round. And it is relevant that if Mr. Bateson’s approach is applied O’Sullivan would be much better off than if he had received separate legal advice and signed agreements negotiated at arms length on reasonable terms current in the trade at the time. This point was made forcibly by Mr. Miller at the conclusion of his address in reply, when he relied on the maxim “He who seeks equity must do equity” and submitted that equity required that the position of O’Sullivan was relevant in considering the appropriate remedy. 

In my judgment the Judge was right to set the agreements aside and to order an account of the profits and payment of the sums found due on the taking of the account. But in taking the account the Defendants are entitled to an allowance as proposed by Fox L.J., whose judgment I have read in draft for reasonable remuneration including a profit element for all work done in promoting and exploiting O’Sullivan and his compositions, whether such work was done pursuant to a contractual obligation or gratuitously. What constitutes “reasonable remuneration” will depend on evidence on the taking of the account, but not the evidence of Mr. Levison who approached the question on a different basis. 

The assignments of the copyrights were made pursuant to the agreements. It was said on behalf of the Appellants that each seperate assignment was made for good consideration, and consequently that the copyrights cannot be re-assigned. Mr. B teson submitted that the individual assignments were made for no consideration and that the only consideration was contained in the agreements themselves. However that may be I accept that the validity of the individual assignments depends on the validity of the agreements themselves, and if the agreements are set aside I see no reason why the copyrights should not be re-assigned to O’Sullivan. 

The same consideration applies to the delivery up of the master tapes. It is true that the copyright of those tapes vests in the maker under section 12 of the Copyright Act 1956 . But the copyright in the tapes is subordinate to the original copyright in the compositions themselves (see Gramophone Co. Ltd. v. Stephen Cawardine & Co. (1934) 1 Ch. 450 ) and if the original copyrights are to be re-assigned, and O’Sullivan’s consent to the use of the copyrights in the tapes is withdrawn by the setting aside of the agreements, then the Defendants have no right to use the tapes and they must be returned to O’Sullivan. 

I say that subject to one matter which arises under the 1976 agreements with E.M.I. and the 6th Defendant, C.B.S. Ltd. The effect of the agreement with C.B.S. was to give C.B.S. the right to exploit records already in existence and made by the 5th Defendant, and any other records to be made during the continuance of the agreement. Pursuant to the agreement master tapes were actually sent to C.B.S. The Judge held that neither the 1st Defendant nor C.B.I. gave any consideration for the inducement letter and that C.B.S. were entitled, as against the 1st Defendant, to damages for breach of contract in failing to give a good title to the master tapes. 

With respect to the Judge I think that he was wrong to hold that no consideration was given for the inducement letter. Mr. Bateson submitted that there was no benefit to O’Sullivan since he was not in contractual relations with the lst/in defendant relation to records, but only with the 5th Defendant. But there is sufficient consideration if there is detriment to the promisee (see Chitty on Contracts 25th Edition paragraphs 144 and 145 ) and there was here detriment to C.B.S. because they incurred the obligation of paying royalties and advances. 

The situation therefore is that C.B.S. acquired the tapes and the right to exploit them for good consideration without knowledge of undue influence by any of the Defendants. In those circumstances on well established principles they are entitled to retain the tapes pursuant to the terms of their agreement with the 1st Defendant, and no claim for damages for breach of contract arises. The same considerations apply to tapes delivered to E.M.I. The order for delivery up of the master tapes should be amended accordingly. 

Mr. Miller submitted that there was no implied term in the agreements of the 7th September, 1973 between the 4th Defendant and O’Sullivan and the 1st Plaintiff and the 5th Defendant that there should be any accounting to O’Sullivan or the 2nd Plaintiff for any royalties or advances made by E.M.I. or C.B.S. to the 1st Defendant, although he said that in fact the Defendants had accounted to O’Sullivan in accordance with the terms of the recording agreements. This is an academic point because under the terms of the order which I propose the Defendants will be bound to account to O’Sullivan for all sums received from E.M.I. or C.B.S., credit being given for reasonable remuneration to the Defendants for work done on O’Sullivan’s behalf. 

I turn now to consider the question of tax. The Defendants have already paid corporation tax on monies received by them pursuant to the varicus agreements, and insofar as no claim for re-payment has been made within 6 years of any payment it is irrecoverable (see section 33 Taxes Management Act 1970 ). On the other side of the coin it seems likely that O’Sullivan will have to pay tax on any sums which he received pursuant to the order and attributable to the last 6 years (see Spencer v. Commissioners of Inland Revenue (1941) 24 Tax Reports 311 and section 34 Taxes Management Act 1970 ). O’Sullivan is said now to be resident in Ireland and may be entitled to what is called Artist’s Exemption, but those are/matters as to which there is no evidence and I would accept the general proposition that he is liable to pay such tax either here or in Ireland, or perhaps both if the Double Taxation provisions do not apply. 

Mr. Bateson submitted that the appropriate form of order for an account was that made in Peter Pan Manufacturing Corporation v. Corsets Silhouette Ltd. (1964) 1 WLR 96 , which contained no provision for the deduction of tax. But in that case no question of tax arose, and we were referred to no reported case where tax had been paid by the accounting party and was irrecoverable. The matter therefore falls to be decided on principle. 

Looking at the position in equity, that the Defendants are bound to account for their actual profits, with the credits to which I have referred, their actual profits do not include tax paid and irrecoverable. In my opinion therefore it is right that in computing the sums payable to O’Sullivan for the years during which tax was actually paid and is not re-claimable, credit should be given to the Defendants for all sums paid to any tax authority or which would have been paid but for the utilisation of tax losses or group relief or Advanced Corporation Tax surrendered. Sums payable to O’Sullivan in subsequent years should be paid without regard to tax. 

Finally the question of interest. This is a financially significant matter since we were told that on the basis of the Judge’s order it is estimated that the amount of principal payable by the Defendants is some £2.6 million and the amount of interest £4.37 million. The Judge awarded compound interest in reliance on the case of Wallersteiner v. Moir (1975) 1 Q.B. 373 . He held that since the Defendants were fiduciaries who had used the money for the purposes of their business and had made a profit out of it he was justified on the authority of Wallersteiner’s case in ordering compound interest. 

Mr. Miller conceded that in respect of one particular matter the order for compound interest was justified, subject to his submissions as to general liability. The 2nd Defendant had foreign subsidiaries in Germany and New Zealand. 90% of the amount of the foreign sales was paid by the foreign publisher to the subsidiary in the foreign country. Of that 90%, 50% was sent to the U.K. of which half was paid to O’Sullivan. The remaining 40% was sent from Germany to the U.K. as a dividend for the 2nd Defendant. From New Zealand the remaining 40% was sent to New York and kept by MAM (New York). Under the terms of the publishing agreement O’Sullivan was entitled to a royalty of 50% from the 2nd Defendant, and had no knowledge of the deductions in respect of foreign sales which reduced his royalty to 25% of 90%. Mr. Miller did not attempt to defend the arrangements with regard to royalties from foreign sales and conceded that O’Sullivan’s royalty should be calculated at source, that is to say at 50% of the sums received by the foreign subsidiaries without any deduction. And in calculating reasonable remuneration for the Defendants a similar method should be used and compound interest should be charged in accordance with the Judge’s order on all sums found due. 

But in respect of all other sums Mr. Miller submitted and I agree that simple interest should be ordered. 

It is only in cases of breaches of fiduciary duty that compound interest can be awarded, since at common law the position is governed by section 3 (1) of the Law Reform (Miscellaneous Provisions) Act 1934 which provides that interest cannot be charged on interest. But in equity compound interest can be charged where the profits made in breach of a fiduciary duty have been used in trade. It is noteworthy that none of the cases cited in this judgment, some of which involve breaches of fiduciary duty, was compound interest ordered, although in some of them at least it seems likely that the money must have been used in trade. In Wallersteiner’s case the evidence was that Wallersteiner was a financier operating through a complex structure of companies, and that he used the monies which he obtained or its capital equivalent in his operations. In those circumstances it was presumed that the money was worth to him the equivalent of compound interest at commercial rates with yearly rests at least. In the present case, accepting that the money was used by the Defendants for their business purposes, part of it must have been used for the benefit of O’Sullivan himself. 

If the various cases involving breach of fiduciary duty in which simple interest has been awarded in the past had been cited to the Judge, and if the distinction between this case and Wallersteiner’s case had been pointed out to him, I doubt if he would have awarded compound interest throughout. As they were not I am satisfied that he fell into error. I would vary the order as to interest by deleting the provision for annual yearly rests and awarding simple interest at 1% above Bank rate or minimum lending rate in operation from time to time save for the calculation of profits from foreign sales under the publishing agreement. Sums payable in respect of those profits should carry compound interest with the rests and at the rates ordered by the Judge. 

In computing the amount of simple interest payable the same formula with regard to tax should be applied to that which I have proposed for the computation of the sums due by way of principal. The tax position with regard to compound interest is more complicated. 

The purpose of the exercise is to remove from the defendants the profits to which they are not entitled. In calculating compound interest on such sums as are found due on the taking of the account, it will be necessary therefore to deduct in each and every year the amount of corporation tax paid or payable by the defendants, since it is only the net amount after payment of tax which would be available to them for investment in the succeeding year. The interest should accordingly be compounded year by year at the rate ordered by the Judge less tax at the appropriate rate which would have been paid by the defendants. 

I would accordingly allow the appeal and vary the order of the Judge in the following respects:-

  • (1)  That on taking the account of the sums payable to the Plaintiff, the Defendants are entitled to an allowance for reasonable remuneration for work done in promoting and exploiting the compositions and performances and managing the business affairs of O’Sullivan, including a profit element.
  • (2)  That in computing the sums payable under (1) above, credit should be given to the Defendants in respect of the years during which tax was paid and is not re-claimable for all the sums paid to any tax authority or which would have been paid but for utilisation of tax losses or group relief or advance corporation tax surrendered.
  • (3)  That the order for delivery up of the master tapes be varied so as to exclude all those tapes which have been delivered to E.M.I. or the 6th Defendant, and that the appeal of the 6th Defendant be allowed.
  • (4)  That the order for interest be varied so as to provide that simple interest be paid on all sums found due on the taking of the account at 1% above Bank rate, save for sums found due in respect of foreign sales under the publishing agreement, which will carry interest with yearly rests at the rates ordered by the Judge.
  • (5)  That in computing simple interest credit should be given for tax paid or payable as in (2) above.
  • (6)  That compound interest where appropriate should be compounded year by year at the rate ordered by the Judge less tax which would have been paid by the Defendants. 

I would like to hear Counsel as to the form of the Order.’

 Extracts from the judgment of Lord Justic Fox:

We are concerned with four agreements relating to Mr. O’Sullivan namely (1) the recording Agreement of the 5th October 1970 between Mr. O’Sullivan and MAM Records Ltd. (2) the publishing Agreement of 1st February 1972 between Mr. O’Sullivan and MAM (Music Publishing) Ltd. (3) the employment Agreement of 7th September 1973 between Mr. O’Sullivan and Ebostrail. (4) the recording Agreement between Ebostrail and MAM Records Ltd., also of the 7th September 1973. And we are concerned also with the assignments of copyright made by Mr. O’Sullivan in pursuance of the provisions of the publishing Agreement, and with the letter of inducement of the 14th June 1976 to the 6th Defendant. 

It is accepted on behalf of the Defendants (1) to (5) (that is to say MAM Ltd., MAM (Music and Publishing) Ltd., Mr Mills, Ebostrail and MAM Records Ltd.) that (a) there was inequality of bargaining powers between the Plaintiffs and these Defendants. (b) Mr. Mills as Mr. O’Sullivan’s manager owed him a duty to advise on the agreements and to obtain independent professional advice thereon having regard to the fact that Mr. Mills was chairman of and a shareholder in MAM Ltd. (c) that given independent advice the Plaintiffs would or might have negotiated better terms than those in the agreements. (d) that accordingly the agreements were voidable. 

In my view the facts go rather beyond these concessions. It is, I think, clear that Mr. O’Sullivan, who was at all material times a young man with no business experience, reposed complete trust in Mr. Mills and executed those agreements to which any of the MAM companies was a party without independent advice and because of his trust in Mr. Mills. Those agreements conferred benefits on companies in which Mr. Mills was personally interested. The agreements, though not prepared by Mr. Mills himself, were prepared by Mr. Smith who with Mr. Mills has de facto control the 1st 2nd and 5th Defendants and himself had interests in those companies. 

In these circumstances I think that the agreements executed by Mr. O’Sullivan are to be presumed to have been procured by the undue influence of at any rate Mr. Mills. The relationship between him and Mr. O’Sullivan at the material times was that described by Lord Chelmsford L.C. in Tate v. Williamson (1866) 2 Ch. App. 55 at page 61: “Whenever two persons stand in such a relation that, while it continues, confidence is necessarily reposed by one and the influence which naturally grows out of that confidence is possessed by the other …” . There was no positive pressure by Mr. Mills upon Mr. O’Sullivan to execute the agreements but that does not matter. The fiduciary relationship existed. The onus was then upon those asserting the validity of the agreements to show that they were the consequence of the free exercise of Mr. O’Sullivan’s will in the light of full information regarding the transaction. That has not been done. He had no independent advice about these matters at all. 

Two questions then arise. First, what persons are affected by the fact that the agreements were procured by undue influence? Secondly, what are the consequences of those persons? 

As to the first of those questions, Mr. Mills himself is affected since the undue influence is presumed to be his. The two recording Agreements and the publishing Agreement were however entered into, not by Mr. Mills, but by the companies(MAM Records Ltd. and MAM Music Publishing Ltd., respectively). And it is said that the companies were in no fiduciary relationship to Mr. O’Sullivan and neither exercised nor can be presumed to have exercised any undue influence over him. If that be correct, I do not think that it matters. In my view the operation of the doctrine of undue influence is not limited to cases where the influence is exerted to obtain a benefit for the person exerting it. Thus, in Bullock v. Lloyds Bank (1955) Ch. 317 the plaintiff made the settlement in consequence of the undue influence of her father. The primary trusts were for the plaintiff and her issue and spouse, if any. The father took only a limited interest on the failure or determination of those trusts. Nevertheless the whole settlement was set aside. That, I think, is merely an example of the operation of the principle stated in Bridgeman v. Green (1757) Wilmot 58 at 65 as follows: “Whoever receives (the gift) must take it tainted or infected with the undue influence and imposition of the person procuring the gift; his partitioning and cantoning it out among his friends and relations will not purify the gift and protect it against the equity of the person imposed upon…”

 

Those cases were dealing with the interests of volunteers but I see no reason why the position should be different, whether one is dealing with volunteers or not, if the other party to the instrument had notice of the undue influence. If he was and if the benefit to him derived from undue influence, the transaction is, in my view, assailable, even if some consideration is given. 

In the present case, the MAM companies were in the de facto control of Mr. Mills and Mr. Smith. The agreements were procured by the undue influence of Mr. Mills, were prepared by Mr. Smith and executed to the knowledge of both of them by Mr. O’Sullivan without any independent advice at all. In those circumstances I think it would be quite unreal to regard the companies as being without notice of the facts. 

Ebostrail seems to me to be in no different position essentially. The Judge found that it was Mr. O’Sullivan’s “youth and inexperience and his complete trust in Mr. Mills which led him to sign the (Ebostrail) agreement without reading it” . Mr. Smith was a director and shareholder in Ebostrail and was aware that Mr. O’Sullivan was entering into the agreement without independent advice. 

The result, in my opinion, is that the MAM companies and Ebostrail are in no better position than Mr. Mills himself.

That brings me to the second question namely the consequences of the undue influence. 

It seems to me that the general rule of equity is that if a person obtains a profit from his fiduciary position he is accountable for that profit. In Regal (Hastings) Ltd. v. Gulliver (1967) A.C. 134 at page 144 Lord Russell of Killowen said: “The rule of equity which insists on those who, by use of a fiduciary position, make a profit, being liable to account for that profit in no way depends on fraud or absence of bona fides …The liability arises from the mere fact of a profit having, in the stated circumstances, been made. The profiteer, however honest and well-intentioned cannot escape the risk of being called upon to account.” 

And Lord Macmillan, at page 153, after observing that the directors entered into the transaction in good faith said: “However, that does not absolve them from accountability for any profit which they made if it was by reason and in virtue of their fiduciary office” . 

It seems to me, therefore, that, the agreements having been procured by the undue influence of Mr. Mills, the contracting companies and Mr. Mills are liable to account to Mr. O’Sullivan for any profits that they, respectively, obtained thereby. Further Mr. O’Sullivan is, I think, prima facie entitled to have the agreements and the assignments of copyright made in pursuance of them set aside and the master recordings transfered to Mr. O’Sullivan. I agree that Mr. O’Sullivan did not himself make the master recordings; they were made by MAM Records Ltd. But MAM Records were only enabled to make them in consequence of the agreement between itself and Mr. O’Sullivan — an agreement which he only made in consequence of improper influence. 

It is contended however by Mr. Miller that these remedies are not available because restitutio in integrum is now impossible. 

The first 5 Defendants (the MAM companies and Mr. Mills) he says cannot now be restored to the position they were in before the agreements were made. Thus he says that, in particular, prior to the action: (i) Those Defendants put in much work to improve Mr. O’Sullivan’s position from that of a relatively unknown composer and performer to an international star. (ii) The agreements had all expired by effluxion of time. (iii) The Defendants had produced master recordings of all Mr. O’Sullivan’s work and had published them all. The master recordings have been published world-wide.

 

It is not suggested that the Plaintiffs should be left without remedy but that they should simply be compensated for loss upon the principle in Nocton v. Ashburton (1914) A.C. 932 . I do not accept that. The basic principle is that the first 5 Defendants must account for the profits obtained by them from the improper agreements. Whilst as I indicate hereafter certain limits must be placed upon that I do not think that the restitutio in integrum doctrine is an answer to the claim. 

In cases where a plaintiff was seeking to obtain rescission for breach of contract the requirement of restitutio in integrum seems to have been strictly enforced at common law (see for example Hunt v. Silk (1848) 2 Ex 783 and Blackburn v. Smith (1848) 2 Ex 783 ). But the equitable rules were, or became, more flexible. The position is stated in the dissenting judgment of Rigby, L.J. in Lagunas Nitrate Co. v. Lagunas Syndicate (1899) 2 Ch. 392 (and was approved by the House of Lords in Spence v. Crawford (1939) 3 All E.R. 271, 279 and 285 as follows: “Now, no doubt it is a general rule that in order to entitle beneficiaries to rescind a voidable contract of purchase against the vendor, they must be in a position to offer back the subject-matter of the contract. But this rule has no application to the case of the subject-matter having been reduced by the mere fault of the vendors themselves; and the rule itself is, in equity, modified by another rule, that where compensation can be made for any deterioration of the property, such deterioration shall be no bar to rescission, but only a ground for compensation. I adopt the reasoning in Erlanger’s Case of Lord Blackburn as to allowances for depreciation and permanent improvement. The noble Lord, after pointing out that a Court of law had no machinery for taking accounts or estimating compensation, says: ‘But a Court of equity could not give damages, and, unless it can rescind a contract, can give no relief. And, on the other hand, it can take accounts of profits, and make allowances for deterioration. And I think the practice has always been for a court of equity to give this relief whenever, by the exercise of its powers, it can do what is practically just though it cannot restore the parties precisely to the state they were in before the contract’ . This important passage is, in my opinion, fully supported by the allowance for deterioration and permanent improvements made by Lord Eldon and other great equity Judges in similar cases …” 

The result, I think, is that the doctrine is not to be applied too literally and that the Court will do what is practically just in the individual case even though restitutio in integrum is impossible. The case of Spence v. Crawford was itself concerned with misrepresentation. But the principles stated by Rigby, L.J. are, I think, equally applicable in cases of abuse of fiduciary relationship and indeed Rigby, L.J. regarded Lagunas itself as such a case (see page 442). 

It is said on behalf of the Plaintiffs that, if the principle of equity is that the fiduciary must account for profits obtained through the abuse of the fiduciary relationship there is no scope for the operation of anything resembling restitutio in integrum. The profits must simply be given up. I think that goes too far and that the law has for long had regard to the justice of the matter. If, for example, a person is by undue influence persuaded to make a gift of a house to another and that other spent money on improving the house, I apprehend that credit could be given for the improvements. That, I think, is recognised by Lord Blackburn in Erlanger v. New Sombrero Phosphate Company 3 A.C. 1278 and by Rigby, L.J. in Lagunas in the reference to allowance for permanent improvements in the passage which I have cited. 

Accordingly, it seems to me that the principle that the Court will do what is practically just as between the parties is applicable to a case of undue influence even though the parties cannot be restored to their original position. 

That is, in my view, applicable to the present case. The question is not whether the parties can be restored to their original position; it is what does the justice of the case require? 

That approach is quite wide enough, if it be necessary in the individual case, to accommodate the protection of third parties. The rights of a bona fide purchaser for value without notice would not in any event be affected. 

The next question is, it seems to me, the recompensing of the appellants. The rules of equity against the retention of benefits by fiduciaries have been applied with severity. In Phipps v. Boardman (1967) 2 A.C. 46 , where the fiduciaries though in breach of the equitable rules, acted with complete honesty throughout, only succeeded in obtaining an allowance “on a liberal scale” for their work and skill. They were allowed that in the High Court by Wilberforce, J.(1964) 1 W.L.R. 993 at page 1018 on the ground that it would be inequitable for the beneficiaries to take the profit without paying for the skill and labour which produced it. The point does not seem to have been disputed thereafter. In the Court of Appeal (1965) Ch. 992 Pearson L.J. at page 1030 said: “It is to my mind a regrettable feature of this case that the plaintiff seems likely to recover an unreasonably large amount from the defendants (the fiduciaries) even when under the judgment the defendants have been credited with an allowance on a liberal scale for their work and skill. The rule of equity is rigid. The agent who has made a profit from his agency, without having obtained informed consent from his principal, has to account for the whole of the profit…” 

Russell L.J., at page 1032 said that, without intending to throw doubt on the defendants right to the liberal allowance, he preferred to express no view on the law, the matter not having been argued.

 

Lord Denning, M.R. at page 1020 said: “Ought Boardman and Tom Phipps to be allowed remuneration for their work and skill in these negotiations? The plaintiff is ready to concede it, but in case the other beneficiaries are interested in the account, I think we should determine it on principle. This species of action is an action for restitution such as Lord Wright described in the Fibrosa case. The gist of it is that the defendant has unjustly enriched himself, and it is against conscience that he should be allowed to keep the money. The claim for repayment cannot, however, be allowed to extend further than the justice of the case demands. If the defendant has done valuable work in making the profit, then the Court in its discretion may allow him a recompense. It depends on the circumstances. If the agent has been guilty of any dishonesty or bad faith, or surreptitious dealing, he might not be allowed any remuneration or reward” . 

In the House of Lords (1967) 1 A.C. 46 , Lord Cohen (at page 104) and Lord Hodson (at page 112) agreed with Wilberforce J., that the allowance should be on a “liberal scale” . 

These latter observations (and those of Lord Denning and the actual judgment of Wilberforce J., at first instance) accept the existence of a power in the Court to make an allowance to the fiduciary. And I think it is clearly necessary that such a power should exist. Substantial injustice may result without it. A hard and fast rule that the beneficiary can demand the whole profit without an allowance for the work without which it could not have been created is unduly severe. Nor do I think that the principle is only applicable in cases where the personal conduct of the fiduciary cannot be criticised. I think that the justice of the individual case must be considered on the facts of that case. Accordingly, where there has been dishonesty or surreptitious dealing or other improper conduct then, as indicated by Lord Denning, it might be appropriate to refuse relief; but that will depend upon the circumstances.

 

What the first 5 Defendants in substance are seeking is that the parties should be put in a position in which they would have been if the agreements had been on the basis which Mr. Levison, an expert witness, thought might reasonably have been negotiated if Mr. O’Sullivan had received independent advice from experienced persons. I do not feel able to accept that. In the first place, Mr. Levison’s evidence was really only directed to the question of what might reasonably have been negotiated. The question what recompense in the circumstances of this case it would be reasonable to allow was not investigated. If, for example, there was any failure by the MAM companies or Mr. Mills to promote Mr. O’Sullivan’s interests as vigorously or competently as they might have been expected to do, with the result that Mr. O’Sullivan suffered loss that might affect the position. 

Secondly, an order which, in effect, would involve substantial division of the profits between the beneficiary on the one hand and the fiduciary (and persons for whom he procured benefits) on the other, goes far beyond anything hitherto permitted. 

Once it is accepted that the Court can make an appropriate allowance to a fiduciary for his skill and labour I do not see why, in principle, it should not be able to give him some part of the profit of the venture if it was thought that justice as between the parties demanded that. To give the fiduciary any allowance for his skill and labour involves some reduction of the profits otherwise payable to the beneficiary. And the business reality may be that the profits could never have been earned at all, as between fully independent persons, except on a profit sharing basis. But be that as it may, it would be one thing to permit a substantial sharing of profits in a case such as Phipps v. Boardman where the conduct of the fiduciaries could not be criticised and quite another to permit it in a case such as the present where, though fraud was not alleged, there was an abuse of personal trust and confidence. I am not satisfied that it would be proper to exclude Mr. Mills and the MAM Companies from all reward for their efforts. I find it impossible to believe that they did not make a significant contribution to Mr. O’Sullivan’s success. It would be unjust to deny them a recompense for that. I would, therefore, be prepared as was done in Phipps v. Boardman to authorise the payment (over and above out of pocket expenses) of an allowance for the skill and labour of the first five Defendants in promoting the compositions and performances and managing the business affairs of Mr. O’Sullivan. and that an enquiry (the terms of which would need to be considered with Counsel) should be ordered for that purpose. Such an allowance could include a profit element in the way that solicitors costs do. 

In my view this would achieve substantial justice between the parties because it would take account of the contribution made by the Defendants to Mr. O’Sullivan’s success. It would not take full account of it in that the allowance would not be at all as much as the Defendants might have obtained if the contracts had been properly negotiated between fully advised parties. But the Defendants must suffer that because of the circumstances in which the contracts were procured. On the basis that the first five Defendants are remunerated as I have mentioned I see no reason in equity why the agreements and the assignments of copyright should not be set aside, the master recordings transferred to Mr. O’Sullivan and an account of profits ordered. 

I should refer to the argument advanced by the Plaintiffs that quite apart from any question of undue influence, the agreements were wholly void as being in restraint of trade. The fact that the agreements were in restraint of trade does not, in my view, render them void. They are unenforceable (see Chitty on Contracts, 25th ed., Vol. 1, paragraph 1092) . Thus in Schrceder v. Macaulay (formerly Instone) (1974) 1 W.L.R. 1308 , the agreement was held to be in restraint of trade. Lord Reid at page 1315 said: “It must therefore follow that the agreement so far as unperformed is unenforceable” . That was also the view of the Court of Appeal (1974) 1 A.E.R. 171 at page 181. Accordingly, I do not think this argument advances the Plaintiffs case. 

So far as the questions of compound interest, the bringing into account of income tax and the appeal of the 6th Defendant are concerned I agree with the judgment of Dunn L.J. 

I would, therefore allow the appeals only in relation to remuneration, compound interest, the bringing into account of tax payable and the appeal of the 6th Defendant.’

Extracts from the judgment of Lord Justice Waller:

In this case the appellants accept the substance of the learned Judge’s finding of fact but submit that the Judge (1) was in

 error in finding that the contracts were void and should have found them voidable and unenforceable. (2) Was in error in finding the defendant companies to have been in a fiduciary relationship with the plaintiff. (3) In his order failed to make proper provision for the work done by the defendants. (4) Was in error in awarding compound interest. (5) Went too far in making certain criticisms of the third defendant and Mr. Smith, the Managing Director of the first defendants. The appellants accept however that these criticisms do not affect the substance of the appeal. It is further submitted that there should have been a direction to the Official Referee about tax and the appellants accept that they were at fault in not drawing this to the attention of the Judge. 

On behalf of the appellants it was accepted that the third defendant, Mills, was in a fiduciary relationship with the plaintiff and that this affected all the contracts. It was argued however that the fiduciary relationship did not extend to the defendant companies. The evidence showed, and the Judge found, that Mills, the third defendant, had a conflict of interest in that he was not only the plaintiff’s manager but was Chairman of defendant companies. Furthermore the Judge found that Smith, the Managing Director, ought to have warned the plaintiff to have independent advice before signing the contract and Smith accepted that he never gave such warning. Smith was working closely with Mills; he knew of Mills’ two positions (Manager for the plaintiff and Chairman of MAM); all the contracts were of considerable complexity and had far-reaching consequences and Smith as Managing Director of MAM was fully acquainted with the forms which were put forward. MAM was a large music publishing company which was entering into contractual relations with a young man in his early twenties, of very limited experience, and employed as a postal worker. Furthermore he, Smith, was working closely with that young man’s manager. I agree with the Judge that Smith clearly ought to have given such a warning to O’Sullivan. The authorities show that when someone in the position of Smith is acting on behalf of his employers, a company, that company will also be in a fiduciary position. (See Lloyds Bank Ltd. v. Bundy (1975) 1 Q.B. 326 .) I am satisfied that both Mills and Smith were acting in the course of their employment and accordingly that the defendant companies were in a fiduciary relationship with the plaintiff both through their Chairman and through Smith their Managing Director. 

The learned Judge found that the publishing agreement and the Ebostrail agreement were both in unreasonable restraint of trade. The effect of such an agreement was considered in Instone v. Schroeder Music Publishing Co. (1974) 1 A.E.R. 161 , affirmed in the House of Lords under the name Schroeder v. Macaulay (1974) 1 W.L.R. 1308 . The Court of Appeal held that because the agreement was in unreasonable restraint of trade it was unenforceable as it had not been carried out. And Lord Reid, dismissing the appeal against that decision, concluded in his speech with these words: “It must therefore follow that the agreement so far as unperformed is unenforceable” . The effect of this finding taken by itself is that the two agreements to which I have referred were unenforceable so far as they have not been performed and not void. 

The Judge also found that these contracts were obtained by undue influence. This finding is not disputed by the appellants, the dispute being the nature of the remedy. In Erlanger v. New Sombrero Phosphate Company 3 A.C. 1218 , a case in which it was sought to set aside a contract on the grounds of breach of fiduciary duty, Lord Blackburn said (at page 1277): “Some things are to my mind clear. The contract was not void, but only voidable at the election of the company” . He then went on, at page 1278: “It is, I think, clear on principles of general justice, that as a condition to a rescission there must be a restitutio in integrum. The parties must be put in statu quo. See per Lord Cranworth in Addie v. The Western Bank . It is a doctrine which has often been acted upon both at law and in equity. But there is a considerable difference in the mode in which it is applied in Courts of Law and Equity, owing, as I think, to the difference of the machinery which the Courts have at command. I speak of these Courts as they were at the time when this suit commenced, without inquiring whether the Judicature Acts make any, or if any, what difference. 

It would be obviously unjust that a person who has been in possession of property under the contract which he seeks to repudiate should be allowed to throw that back on the other party’s hands without accounting for any benefit he may have derived from the use of the property, or if the property, though not destroyed, has been in the interval deteriorated, without making compensation for that deterioration. But as a Court of Law has no machinery at its command for taking an account of such matters, the defrauded party, if he sought his remedy at law, must in such cases keep the property and sue in an action for deceit, in which the jury, if properly directed, can do complete justice by giving as damages a full indemnity for all that the party had lost: see Clarke v. Dixon , and the cases there cited. 

But a Court of Equity could not give damages, and, unless it can rescind the contract, can give no relief. And, on the other hand, it can take accounts of profits, and make allowance for deterioration. And I think the practice has always been for a Court of Equity to give this relief whenever, by the exercise of its powers, it can do what is practically just, though it cannot restore the parties precisely to the state they were in before the contract. And a Court of Equity requires that those who come to it to ask its active interposition to give them relief, should use due diligence, after there has been such notice or knowledge as to make it inequitable to lie by.” 

Mr.Miller submitted that restitutio in integrum is not possible in this case and submitted that Equity would order a sum to be paid by way of compensation to put the plaintiff in the position in which he would have been if the agreement had been of the form which Mr. Levison thought would have been possible with independent bargaining. He relied on Nocton v. Ashburton (1914) A.C. 932 . Mr.Bateson also submitted that restitutio was not possible and he submitted, relying on Peter Pan Manufacturing Corporation v. Corsets Silhouette Ltd. (1964) 1 W.L.R.96 and Instone v. Schroeder (1974) 1 A.E.R. that 171 all advantage gained by the defendants should be given to the plaintiff. In Lagunas Nitrate Co. v. Lagunas Syndicate (1899) 2 Ch. 392 , at 456, Rigby L.J. said: “Now, no doubt it is a general rule in order to entitle beneficiaries to rescind a voidable contract of purchase against the vendor, they must be in a position to offer back the subject-matter of the contract. But this rule has no application to the case of the subject-matter having been reduced by the mere fault of the vendors themselves; and the rule itself is, in equity, modified by another rule, that where compensation can be made for any deterioration of the property, such deterioration shall be no bar to rescission, but only a ground for compensation” . He then went on to quote the passage I have quoted above from Lord Blackburn where he uses the words “do what is practically just” . In Spence v. Crawford (1939) 3 A.E.R. 271 Lord Thankerton quotes the words of Rigby L.J. and Lord Blackburn with approval and says: “It is well established that the doctrine ( restitutio ) is not to be applied too literally” . In my judgment therefore in the present case it is possible to achieve what is practically just by granting rescission and restitution together with Orders for Accounts. 

It is next necessary to consider on what basis those accounts should be taken. There are many reported cases of bargains being set aside because they were made under undue influence, e.g. moneylending transactions with improvident heirs Aylesford v. Morris 8 Ch. App.484 , Benyon v. Cook (1874) Ch. App. 389 ; a doctor abusing the confidence of his patient Billage v. Southee 9 Hare 534 ; a solicitor making a champertous agreement James v. Kerr 40 Ch. Div.449 . In each case the order of the Court included the payment of a reasonable sum, e.g. 5% interest instead of 60%, reasonable charges in the case of the doctor and patient and in the case of the solicitor and client. There are on the other hand cases where/trustees and directors have used their position and knowledge to make a secret profit and in those cases the whole profit except for expenses was ordered to be paid over. In Tate v. Williamson 2 Ch. App. 55, Lord Chelmsford, at page 61, said: “Wherever two persons stand in such a relation that, while it continues, confidence is necessarily reposed by one, and the influence which naturally grows out of that confidence is possessed by the other, and this confidence is abused, or the influence is exerted to obtain an advantage at the expense of the confiding party, the person so availing himself of his position will not be permitted to retain the advantage, although the transaction could not have been impeached if no such confidential relation had existed” . In Regal (Hastings) Ltd. v. Gulliver (1967) 2 A.C. 134 , where Lord Wright, at 154, said: “That question can be briefly stated to be whether an agent, a director, a trustee or other person in an analogous fiduciary position, when a demand is made upon him by the person to whom he stands in the fiduciary relationship to account for profits acquired by him by reason of his fiduciary position, and by reason of the opportunity and the knowledge, or either, resulting from it, is entitled to defeat the claim upon any ground save that he made profits with the knowledge and assent of the other person. The most usual and typical case of this nature is that of principal and agent. The rule in such case is compendiously expressed to be that an agent must account for net profit secretly (that is, without the knowledge of his principal) acquired by him in the course of his agency. The authorities show how manifold and various are the applications of the rule.” There is also Phipps v. Boardman (1965) Ch. 997, (1967) 2 A.C. 46 and Lloyds Bank Ltd. v. Bundy (1975) 1 Q.B. 326 . 

In the present case the plaintiff had no idea of what would have been the proper price to pay or to be paid. Indeed it is not clear whether he knew what price he was being paid. This is not a case where one party is doing something while the other party is passive as in the trustees cases, e.g. Phipps v. Boardman , where the former party is making a profit which the passive party knows nothing about. Nor is it a case where one party is providing a service for another and because of the confidential relationship overcharging that other as for example in the doctor case. This is a case where both parties are contributing effort towards a joint objective. The plaintiff until he had come in contact with the third defendant and the defendant companies was an unknown and unsuccessful singer earning his living as a postal worker. As a result of his association with the third defendant he became a pop star of worldwide renown. This was the result of joint enterprise in which both parties played an important part. The agreement between the two parties was unfair in that the defendants were taking a bigger share of the profits than the plaintiff appreciated but each party contributed to the joint success. No reported case has been shown to us where the effect of undue influence on any similar agreement or indeed any agreement where both parties have been contributing has to be considered. In the case of trustees making use of information for their own benefit they were not working for the interests of the beneficiary. In the case of doctors, moneylenders, etc., the other party was not doing work. In my judgment the approach which the Court should make is that indicated in the passage from Lord Blackburn quoted by Rigby L.J. and approved by Lord Thankerton. The important words of Lord Blackburn are that equity should give relief “whenever by the exercise of its powers it can do what is practically just” . In my judgment this Court is not concerned with punishing the defendants for their behaviour. We are concerned to see that the plaintiff gets the profit to which he is entitled and at the same time see that the defendants receive fair remuneration but no more for all the work that they have done in pursuance of this joint project. Although the trustee authorities indicate that the trustee should retain no profit secretly made and only reasonable remuneration for their work as trustees, and although the present case is a fiduciary situation it is a case where the defendants, as the plaintiff knew, were doing a considerable amount of work. They are entitled to reasonable remuneration for that work. To apply the words of Lord Wright in Regal (Hastings) Ltd. v. Gulliver , the defendants here did make some profit with the knowledge and assent of the plaintiff. This the defendants are entitled to keep and would be reasonable remuneration. On the other hand it is clear that the profit which the defendants kept was excessive. The excess profit was retained without the knowledge of the plaintiff. The defendants must account for this profit. It will be for the Official Referee to decide what would be reasonable remuneration. It must include all expenses and a fair profit. 

In the present case the publishing agreement for overseas is different from the other contracts. In that case there were deductions made and part of the overseas receipts was transferred before any account was made to the plaintiff. When this account is taken it will require very careful enquiry to see that only legitimate costs are deducted. 

It was part of the defendant’s argument that the decision of this court should be confined to compensation and should not include the transfer of all copyrights back to the plaintiff. Since I would adopt Lord Blackburn’s approach of doing what is practically just, I have come to the conclusion that restitution requires that the Court order should include the transfer of all the plaintiff’s copyrights back to him and, disagreeing on this point with Dunn and Fox L.J.J., that only the master recording in which the copyright would be in the maker should remain with the maker. Since all, or nearly all, the master recordings have been transferred to third parties for good consideration this question is probably academic and I do not further discuss it. 

I next consider the payment of interest. There is no doubt that interest should be paid on all sums as from the time when these sums should have been paid to the plaintiff but two questions arise (1) should tax be taken into consideration and (2) should the interest be compound? Over the whole period the defendants have paid Corporation Tax and so far as the last six years are concerned payments of Corporation Tax wrongly paid can be recovered. Accordingly, in my opinion, during this period no tax should be deducted. Over the earlier period, however, no Corporation Tax can be reclaimed. On payments in those earlier years the plaintiff would have had to pay tax (and probably at rates higher than Corporation Tax). Accordingly in my opinion justice requires that payments for those earlier years should be after deduction of Corporation Tax. 

Should the interest be compound? When the question of compound interest was raised the learned Judge was referred only to the case of Wallersteiner v. Moir (1975) 1 Q.B. 373 . This was a case of very special facts and quite different from the present case. It was also a case decided at a time of low steady rates of interest. The reason for awarding compound interest was that the interest which had not been paid must be taken to have been used by the defaulting party to make a profit for himself. We have not been referred to any other modern case where compound interest has been involved. In this case there is a joint venture and the effect of the joint venture would mean that in part at any rate the interest was being used to further the joint venture. Furthermore whilst compound interest is payable in equity matters it must be borne in mind that at common law it has been made unlawful and this indicates the nature of the circumstances required to justify it. I am of opinion therefore that this being a joint venture with one reservation I would not award compound interest. The reservation is with regard to the foreign royalties under the publishing agreement. In that case there were secret deductions which were not used in the joint interests of the plaintiff and the companies. As Dunn L.J. has explained in his judgment a substantial proportion of these royalties were diverted to foreign subsidiaries of the defendants without the knowledge of the plaintiff. Accordingly it is to be inferred that the defendants had the use of the money for commercial purposes and Mr. Miller has conceded that compound interest should be charged. Insofar as it has been shown clearly that it was not used for commercial purposes then only simple interest should be charged (see The Attorney General v. Alford 4 deG.M.& G. 843 ). It is clear from this that the basis for ordering compound interest is that the defendant has actually used the money in trade. The principle therefore is that he must disgorge the profits which he has made. On this basis the adjustment which will have to be made to the rate of interest is to deduct the equivalent of Corporation Tax which would have had to be paid on those profits. Since this is a hypothetical calculation the rate to be calculated by way of compound interest will be the same throughout the whole period, ignoring the question of whether or not tax would be reclaimable by the defendants. The rate should be at 48% of market rate taking Corporation Tax as 52% for this purpose. 

Finally I come to the submissions that the Judge made criticisms of the third defendant and of Mr. Smith that were not justified by the evidence. Although it is possible to argue that had the Judge not found the agreement dated February, 1972, was made in 1972, whereas it was in fact made in 1970, he would not have criticised Mills and Smith in the way he did, I do not propose to express any view about this. I say that (1) because it does not affect the reasoning of my judgment and it would not have been possible to appeal on this finding of fact alone (see Lake v. Lake (1955) 2 A.E.R. 538 ) and (2) because the Judge’s comments reflect his view of the witnesses at the trial and as he saw and heard them he has an advantage wholly denied to this Court. 

To the extent that I have set out above I would allow this appeal.’ 

ORDER: Appeal allowed in part. Minutes of Order to be submitted. Plaintiffs to pay one-third of 1st to 5th defendants’ costs, and all costs of indemnity. Plaintiffs to pay all 6th defendants’ costs including Third Party costs. Application by 1st to 5th defendants for leave to appeal to the House of Lords refused. Application by plaintiffs to crosspetition refused.

[xxii] Robyn Rihanna Fenty v Arcadia Group Brands Ltd (t/a Topshop) (No.1) [2013] EWHC 1945 (Ch).

Extracts from the judgment of Birss J.:

‘1.  At the start of 2011, Topshop sold a T-shirt which carried a picture of the famous pop star Rihanna on it. The image was the subject of a copyright licence from the owner of the copyright in the photograph (not Rihanna), but no permission from Rihanna or from any company deriving rights from her was obtained.

  1. As is common in the music business, Rihanna’s trading activities include a substantial merchandising operation selling authorised merchandise, including images of the star herself. Rihanna’s full name is Robyn Rihanna Fenty, she is the *962 first claimant. The other claimants are companies through which she carries out her licensing and merchandising business. The defendant runs Topshop. 
  2. The claimants sued for passing off and trademark infringement. The trademark claim is settled. The passing off claim is due to come to trial in two weeks’ time, floating from 15 July. The essential question in the claimant’s claim in passing off is whether, by virtue of the use of the image on the T-shirt, purchasers will be likely to be deceived into believing that the T-shirt is approved or connected with or authorised by the claimant. I should say that there is no doubt that the image is recognisably Rihanna. 
  3. At the case management conference Master Marsh set a timetable for witness statements of witnesses of fact, with statements due in December 2012. The parties were given permission to apply for directions about expert evidence. No directions were applied for, so neither party has permission to rely on expert evidence. Witness statements were exchanged on 13 June 2013; the shift from December arose as a result of general delays arising from disclosure and two requests for extensions of time from the defendants. 
  4. On 26 June the defendant’s solicitors objected to a large part of the claimant’s evidence: five witness statements in their entirety and parts of the statement of the claimant’s main witness, Ms Perez. The five witness statements are Mr Coyle, Mr Daffner, Mr Dapron, Mr Joseph and Mr Robinson. The evidence objected to is what is often called trade evidence. The five witnesses all describe their experience in their particular businesses, and then describe that field and make various statements which I will come back to. All five witnesses have experience in licensing and merchandising. The focus of Mr Coyle and Mr Daffner is in the clothing and fashion sphere, while the focus of Messrs Dapron, Joseph and Robinson is in the music business. Ms Perez is the main witness for the claimants, as I have said. In effect she acts as a mouthpiece for Ms Fenty. She also explains her experience in the merchandising side of the music business and makes statements about that trade. 
  5. The main objection is that the evidence is expert evidence which is inadmissible without permission and no permission has been sought. The defendant also contends that the evidence is objectionable because it is expressing an opinion about what consumers would think, is repetitive, and, even if it is admissible, is of negligible value. There are some further points specifically in relation to Ms Perez in that some of her evidence consists simply of commenting on documents. 
  6. The matter came before me on 3 July. Mr Geoffrey Hobbs QC and Mr Hugo Cuddigan, instructed by Mishcon de Reya, appear for the defendants. Mr Martin Howe QC and Mr Andrew Norris, instructed by Reed Smith, appear for the claimants. 
  7. Mr Hobb’s submissions essentially are these. First, he says this is the correct time to take this objection, i.e. in advance of trial. He refers to the Chancery Guide of January 2013, para.4. I will say now that I accept that submission. The clear purpose of the Guide and the paragraph I have referred to is to aim to have disputes like this resolved in advance of trial so that whatever needs to be done about it before trial can be done. 
  8. Secondly, Mr Hobbs submits the evidence is expert evidence. This involves looking into the cases on the issue, which I will return to, and looking at the statements themselves. Thirdly, submits Mr Hobbs, if it is expert evidence, then it is inadmissible without permission. That is CPR Rule 35.4(1) . Moreover, if it is *963 expert evidence, then, even if it is permitted, the regime in Part 35 applies with various consequences relating to the duties of the witness and the protocol on instructions. Mr Hobbs also refers to the recent decision of the Court of Appeal in the Force India case. That concerned a different kind of evidence from the evidence before me, but the point was made clearly there, particularly in the judgment of Stanley Burnton L.J., of the dangers of circumventing the requirements of CPR Part 35 , albeit, as I say, in different circumstances. Fourthly, Mr Hobbs submits that this evidence should be excluded on case management grounds on any view. There are various problems: it is repetitive, much of it is based in the United States and of no real value. He points to the recent guidance from the Court of Appeal in the Interflora cases about survey evidence in trademark cases. As Mr Hobbs puts it, the direction of travel and the emphasis is on a consideration of whether evidence to be called in trademark and passing off cases will be of REAL value. He says this evidence is not useful and should be ruled out. 
  9. Mr Howe’s submissions essentially are these. First, he says that this evidence is not expert evidence at all, it is trade evidence commonly given in passing off and trademark cases. The issues raised by Mr Hobbs may go to its weight, but that is best dealt with at trial. Secondly, the evidence complained of is of the very same character as evidence which the defendants themselves have called. They call trade witnesses who describe the trade and express opinions about views of consumers in this business, and refer to their experience in that trade to bolster the value of their views. Thirdly, submits Mr Howe, it is not fair to take these case management objections in this way at this stage. In effect, this would be a retrospective case management conference conducted far too late for the parties to do anything about it. Although under the new Rule 32.2 of the CPR that rule will give the court power to restrict evidence generally, that does not apply in this case and it is not fair to impose an equivalent in this way. 
  10. Finally I should say that Mr Hobbs accepted that his client’s evidence did contain material which, if his submission was correct, would be expert evidence and only admissible with leave. Mr Hobbs also submitted that if the evidence was expert evidence, then it is not a matter of discretion, the evidence in inadmissible, without permission, and so the matter needs to be ruled upon. 
  11. After I heard the parties, I expressed the following concern. On Mr Hobb’s case, both sides have submitted inadmissible expert evidence. If that is what has happened, then the consequences need to be applied fairly. Therefore, in order to deal with the issues on this application, I need to rule on that issue first and give the parties time to think about the implications of it for this case. The other case management issues can wait a few days, albeit that the trial is coming up soon. This judgment is my ruling on that question. 

Is trade evidence in trademark cases expert evidence within CPR Part 35?

  1. I have not found this an easy question to address and, given the potential ramifications for the conduct of trademark and passing off cases, I will try and address all the material which has been cited to me. 
  2. Section 2(3) of the 1972 Civil Evidence Act , provides that rules of court can be made to regulate the admission of expert evidence, but it does not define what expert evidence is. The modern regulation of expert evidence is set out in CPR Part 35.4(1) and (2) :
  • “(1)  No party may call an expert or put in evidence an expert’s report without the court’s permission.
  • (2)  When parties apply for permission they must provide an estimate of the costs of the proposed expert evidence and identify –
  • (a)  the field in which expert evidence is required and the issues which the expert evidence will address; and
  • (b)  where practicable, the name of the proposed expert.”

 

 

  1. At one stage Mr Hobbs submitted that this was a novelty in the CPR . That is not right. Previously, Rules of the Supreme Court O.38, r.35 was to the same effect as CPR 35.4(1) , i.e. expert evidence was not allowed to be admitted without leave. That was in force since at least the 1980s. It is true, however, that the regime governing expert evidence today is much more developed now under the CPR than it was before. 
  2. In O2 Holdings Ltd v Hutchinson 3G Ltd [2006] EWHC 601 (Ch); [2006] R.P.C. 30 , Lewison J. (as he then was) was asked to consider evidence about a survey by an employee of a market research company, and rule whether it was expert evidence. He said as follows:

“9.  The identification of what is or is not expert evidence is difficult to formulate. I think that in most cases one knows expert evidence when one sees it but to try and formulate an overall test would I think be an impossibility.

  1. I have been referred to the decision of Hobhouse J. in The Torenia [1983] 2 Lloyds Rep. 210 , in which he gave a ruling on the question of admissibility of certain evidence at 232 and following. Hobhouse J. analysed the evidence in this way at 233:

‘First, evidence is adduced which can be described as direct factual evidence which bears directly on the facts of the case. Second, there is opinion evidence which is given with regard to those facts as they have been proved; and then, thirdly, there is evidence which might be described as factual, which is used to support or contradict the opinion evidence. This is evidence which is commonly given by experts because in giving their expert evidence they rely upon their expertise and their experience, and they do refer to that experience in their evidence. So an expert may say what he has observed in other cases and what they have taught him for the evaluation of the facts of a particular case. So also experts give evidence about experiments which they have carried out in the past or which they have carried out for the purposes of their evidence in the particular case in question.’

 

  1. The two submissions which Hobhouse J. had to consider were, on the one hand, that any factual evidence given by somebody who happens to be an expert is to be treated as evidence of fact; and, on the other hand, that if factual evidence is relevant only to the expert opinion of the experts, then it must be treated as expert evidence and expert evidence alone. Hobhouse J. preferred the latter of these two submissions.”
  2. There are three things to note from the passage to which I have just referred. First, it is impossible to formulate an overall test. Secondly, in addition to opinion evidence, factual evidence given by an expert can also be expert evidence. Thirdly, I note the reference to the reliance on the expertise of the person giving the evidence.
  3. Another general point which I should make is this. The law used to be that experts could not opine on the ultimate question before the court, and that can be seen reflected in some of the older cases in this area. That is no longer the law, and so one needs to take care with the older cases to check that that is not the root of the objection they are dealing with.

The evidence in trademark and passing off cases

  1. It is clear that in trademark and passing off cases for many years, trade witnesses have been called as witnesses, and in doing that have not been subject to an expert witness regime. I will start by reference to the passage from Lord Evershed in George Ballantine & Sons Ltd v Ballantyne Stewart & Co Ltd [1959] R.P.C. 273 . In that case he described a common kind of trade evidence. He said this:

“It is no doubt true … that the question of whether a mark is likely to cause confusion or lead to deception is the question for the court’s decision and, accordingly, it is not legitimate for a witness to state or suggest by way of evidence expressed in general terms the answer which it is the court’s duty to give. But it is, in my opinion, going too far to say that a witness expert in the trade which is involved in the proceedings before the court, may not legitimately say in giving his evidence that, according to his experience of how the business in which he is and has been concerned is conducted, traders or customers will adopt certain characteristics or practices, though the weight to be attached to such evidence will always be a matter for the court.” 

 

  1. I note that the first part of Lord Evershed’s statement is a reflection of the principle I have just referred to which used to apply, that experts could not give an opinion about the ultimate question of the court, which is no longer the law. I should say that whether such opinions today are useful in a given case is a different question.

 

  1. An issue which commonly arises in this debate is about what exactly such trade witnesses may say. That has always attracted a degree of controversy. It is a common phenomenon to find trade witnesses who describe the circumstances of the trade but then go on and express opinions about how customers will react. In Sodastream v Thorn Cascade [1982] R.P.C. 459 , Kerr L.J. dealt with this and said the following at p.468, line 32:

“The learned judge criticised all this evidence very severely on a number of grounds, although it was virtually uncontradicted. First, he regarded much of the evidence as inadmissible, because the deponents, and the persons who were questioned by the deponents, expressed opinions as to what would be thought or done by other members of the staff, and to some extent by customers. When I first read these criticisms in the judgment, I was very surprised. It seemed to me, and still seems to me that it is perfectly proper and admissible for someone in the trade to express opinions about the likely reaction of others in relation to matters which are within his or her sphere of work; indeed it is part of their responsibility to form a view on such matters. In particular it seems to me this kind of evidence must be admissible in affidavits in interlocutory proceedings although at trial the witnesses will of course be cross-examined about the opinions expressed by them.”

 

 

  1. Now, Mr Hobbs pointed out that this was a case about an interlocutory injunction and also that what Kerr L.J. said appears not to have been the subject of argument before the court. Mr Hobbs submitted that what Kerr L.J. had said was not of high weight in terms of legal precedent. That may be, but this statement of Kerr L.J. has been followed and applied since. In the Gucci case in 1990 ( Guccio Gucci SpA v Paolo Gucci [1991] F.S.R. 89 ), the Vice-Chancellor, Sir Nicholas Browne-Wilkinson, considered it. There he reconciled a number of conflicting authorities on this point, which pointed the other way, as follows, at p.91:

“Mr Beloff submits, in reliance on a substantial body of authority, that I am not entitled to have regard to the evidence given by the trade witnesses. He refers to a number of cases: North Cheshire & Manchester Brewery Company v. Manchester Brewery [1889] AC 83 ; George Ballantine & Sons v. Ballantyne Stewart & Co. [1959] RPC 273 ; Island Trading & Ors. v. Anchor Brewing [1989] RPC 287 , as cases in which it was said that the court must not rely on evidence from witnesses as to whether or not others apart from that witness would be confused. On the other hand, Kerr L.J. in Sodastream v. Thorn Cascade [1982] RPC 459 , at 468 could see no reason why regard should not be had to that evidence.

 

In my judgment, the distinction is this. If you ask an ordinary witness with no trade expertise what he thinks other people will do, he has no specific knowledge greater than anyone else as to what other people’s reaction will be. Those cases which are relied on by Mr Beloff are all cases where it either is not clear who the witnesses were or it is clear that they were not expert witnesses in any ordinary sense. If, on the other hand, you are in an area which requires specialist knowledge, it is the function of the expert to instruct and inform the court as to those things which the court would otherwise not know, and in the process of so doing the expert is frequently asked the very question which the court has to answer. In my judgment, where you have a specific area of the market of which the judge is ignorant, such as I am in this case of the designer label market, it is legitimate to produce evidence from those who are skilled in that market and know of it, and the likelihood of confusion amongst customers in that same market. For those reasons, I think I am entitled to look at the evidence for myself. I do not regard it in any sense as decisive. I would have reached that conclusion without it.” 

I note there that the Vice-Chancellor is referring to the trade evidence before him as expert evidence. 

  1. The words of Kerr L.J. in Sodastream [1982] R.P.C. 459 were also mentioned by the Court of Appeal in the Taittinger case in 1993 ( Taittinger SA v Allbev Ltd [1994] 4 All E.R. 75; [1993] F.S.R. 641 ) . There, Peter Gibson L.J. did not have to rule on it but he remarked on what he called the good sense of what Kerr L.J. and the Vice-Chancellor in Gucci [1991] F.S.R. 89 had said. I also note that Sodastream was applied by Ferris J. at the trial of the NAD case in 1997 ( NAD Electronics Inc v NAD Computer Systems Ltd [1997] F.S.R 380 ).

 

  1. In 1998 the issue came before the Court of Appeal in The European Ltd v The Economist Newspaper Ltd [1998] E.T.M.R. 307; [1998] F.S.R. 283 . Millett L.J. said the following:

“The evidence of confusion or no confusion consisted of (i) evidence of witnesses purporting to testify to actual confusion; (ii) evidence of witnesses who had responded to a survey carried out on behalf of the plaintiff; and (iii) evidence of trade witnesses who gave their opinion of the likelihood of confusion. I agree with the judge that the last category of evidence was almost entirely inadmissible on the present case. The function of an expert witness is to instruct the judge of those matters which he would not otherwise know but which it is material for him to know in order to give an informed decision on the question which he is called on to determine. It is legitimate to call evidence from persons skilled in a particular market to explain any special features of that market of which the judge may otherwise be ignorant and which may be relevant to the likelihood of confusion. It is not legitimate to call such witnesses merely in order to give their opinions whether the two signs are confusingly similar. They are experts in the market, not on confusing similarity.

 

In the present case the only witness who in my opinion gave relevant evidence was Mr Shield who testified.

‘In my experience, the general public are used to distinguishing titles of publications without difficulty given the fact that most titles are descriptive of [their] contents and therefore there are many publications on a particular subject matter with similar names.’

 

That evidence was probably unnecessary in that the judge could have taken judicial notice of the facts to which the witness deposed, but it was at least relevant evidence of the nature of the market-place in which the parties were operating and of the degree of similarity which is tolerable in that market- place without causing confusion.”

 

Mr Hobbs submitted that this is a ruling that trade evidence is expert evidence within the rules of court.

 

  1. Next Mr Hobbs relies on the esure case, which is esure Insurance Ltd v Direct Line Insurance Plc [2008] EWCA (Civ) 842; [2008] R.P.C. 34 . In that judgment, Arden L.J., at [62] and [63], recognised the role for an expert where the market is one which is unfamiliar to judges, referring back to Taittinger [1993] F.S.R. 641 and also echoing what Millett L.J. had said in The European [1998] F.S.R. 283 . She suggested that surveys may be the best way of addressing customer perception but recognised the potential cost and the need for early case management in relation to surveys. Jacob L.J. in that case deals with the issues at [72]–[76]. He explains that the problem was caused by a so-called “branding expert”, Mr Blackett. He was not an expert in the actual field in question, and his evidence consisted of a series of argumentative assertions. Jacob L.J. regarded it as empty rhetoric of no value. Maurice Kay L.J. agreed with the other judgments and added something about Mr Blackett. He thought, like Jacob L.J., that Mr Blackett’s evidence was not expert evidence at all. On the definition of expert evidence, he referred to the judgment of Evans-Lombe J. in the Barings [2001] P.N.L.R. 22 case as follows, at p.942: *968

“… expert evidence is admissible under section 3 of the Civil Evidence Act 1972 in any case where the Court accepts that there exists a recognised expertise governed by recognised standards and rules of conduct capable of influencing the Court’s decision on any of the issues which it has to decide and the witness to be called satisfies the Court that he has a sufficient familiarity with and knowledge of the expertise in question to render his opinion potentially of value in resolving any of those issues. Evidence meeting this test can still be excluded by the Court if the Court takes the view that calling it will not be helpful to the Court in resolving any issue in the case justly. Such evidence will not be helpful where the issue to be decided is one of law or is otherwise one on which the Court is able to come to a fully informed decision without hearing such evidence.”

 

Maurice Kay L.J. continued and referred to the words of Stuart Smith L.J. in the Court of Appeal about expert witnesses in road traffic cases, noting that that expert evidence contributed nothing to those cases save expense.

 

  1. Next Mr Hobbs relies on Floyd J. (as he then was) in the Hasbro case at [37] ( Hasbro v 123 Nahrmittel [2011] EWHC 199 (Ch); [2011] F.S.R. 21 ). However, the passage at [37] in Hasbro is not the only relevant passage, and I think Floyd J.’s judgment bears closer consideration.

 

  1. In Hasbro [2011] F.S.R. 21 both sides called expert evidence. Floyd J. cited both The European [1998] F.S.R. 283 and esure [2008] R.P.C. 34 and also GE [1972] F.S.R. 225 , and then said this at [37]:

“Mr Hobbs QC, who appeared on behalf of Hasbro with Mr Douglas Campbell, submitted that these authorities do not go as far as to say that expert evidence is not admissible on the subject of whether the use of a sign takes unfair advantage of or is detrimental to the distinctive character or repute of a trademark. That is true. But insofar as those issues demand a consideration of what a customer will think when he or she sees a particular word or sign, it seems to me that similar considerations apply.”

 

Then at [38], having set out an extract from the conclusion of Mr Grant, who was one of the experts in question, Floyd J. said this:

“38.  These are all points on which a judge is able to form his or her own view, both as to whether they are established and whether they have relevance. For these reasons I did not think that this was a case in which either side needed to call any expert evidence.”

 

  1. But the experts were not the only witnesses called in Hasbro . The claimant also called trade witnesses. Floyd dealt with those at [22]–[29]. There is no need to set them out. It is quite clear that the learned judge did not regard that trade evidence as “expert evidence”. These witnesses gave evidence about what happened in the trade and expressed opinions about customer’s behaviour. In fact Floyd J. did not find the evidence of much use, but it is notable that it was not regarded as expert evidence as such.

 

  1. Finally, I need to refer to Arnold J. in Samuel Smith Old Brewery (Tadcaster) v Lee (t/a Cropton Brewery) [2011] EWHC 1879 (Ch); [2012] F.S.R. 7 . That evidence included witnesses from the claimant itself describing the claimant’s business and its use of trademarks, as well as third partie’s use of other trademarks. *969 This is, in effect, evidence from trade witnesses, although it was not necessarily expressing opinions about what customers would do. The claimant also called an expert witness. It was Mr Blackett again. The defendants submitted it was inadmissible following esure [2008] R.P.C. 34 . The claimant replied, arguing that although in esure Mr Blackett had no expertise in the insurance industry and was just a “branding expert”, in relation to the Samuel Smith case Mr Blackett had actual experience in the brewing industry. Arnold J. did not accept that that distinction helped, and at p.276 he said the following:

“The Court of Appeal’s criticisms of Mr Blackett’s evidence in that case did not rest upon his lack of expertise with regard to the insurance industry, but upon more fundamental objections to the nature of the evidence. In my judgment those criticisms are equally applicable to his evidence in the present case. In my view, Mr Blackett’s evidence concerning the distinctive character of the Trade Mark has some limited weight, but his evidence with regard to the likelihood of confusion, unfair advantage and detriment to the Trade Mark has no weight at all.”

 

 

  1. Pulling all this together, I can state the following.

 

  1. First, the category identified by Maurice Kay L.J. is not the only kind of expert witness evidence covered by CPR Part 35 . For example, in patent cases expert evidence is routinely called from persons who are not professional experts and do not necessarily belong to bodies with recognised standards and rules of conduct.

 

  1. Secondly, independence is not what takes such evidence into the relevant category. There are numerous examples of evidence from experts who are not in fact independent at all. That may be fine, as long as the nature of any link with either side is identified and taken into account.

 

  1. Thirdly, it seems to me that the nature of the proceedings and the role the evidence is to play in those proceedings is an important element in characterising the evidence in question.

 

  1. Fourthly, sometimes parties do call an expert report identified as such in trademark and passing off cases. An example was the report of Mr Blackett in the two cases I have referred to already. It is important to note that there was no issue in esure [2008] R.P.C. 34 or Samuel Smith [2012] F.S.R. 7 that Mr Blackett’s evidence was expert evidence. As I say, it was identified as such. So the difficulty before me did not arise in those cases. I should say that in this judgment I am not expressing a word of disagreement with the decisions I have referred to above, which emphasises the lack of utility of anyone – trade witness or a self-identified expert in “branding” – giving an opinion on the likelihood of confusion in a case about a market that the court is likely to be familiar with.

 

  1. Fifthly, for years trademark and passing off cases have routinely included evidence from persons in the relevant trade describing the circumstances of the trade, the nature of customers and so on. Such evidence will always have explained the experience of the witness in order to justify their evidence and add credibility to it. That evidence will always consist of factual statements about the trade. Although it is primarily factual, it will sometimes include statements which are, properly analysed, expressions of opinion. These are not necessarily opinions simply on the likelihood of confusion but are expressions of opinion about how customers behave. However, it is clear, and I refer, for example, to Hasbro [2011] F.S.R. 21 , that such evidence has not always been treated as expert evidence as *970 such and has not hitherto been regarded necessarily as subject to the regime in CPR Rule 35 . Hasbro is also an example showing that as long as it is kept in its proper place, not characterising it as expert evidence within CPR Part 35 does not matter.

 

  1. Moreover, to impose the further burden of the duties and responsibilities of expert witnesses on such witnesses is capable of having a chilling effect in trademark and passing off cases. The sort of trade evidence I am talking about is not given by persons who identify themselves as “expert witnesses”, and they are different from the self-identified experts such as the individual referred to in esure [2008] R.P.C. 34 and Samuel Smith [2012] F.S.R. 7 . Mr Hobbs referred to the recent Interflora cases in the Court of Appeal. Their aim is to seek to ensure that costly survey evidence of little probative value is eliminated from trademark and passing off cases. Of course one of the alternative sources of relevant evidence in trademark and passing off cases is cogent evidence from persons in the trade describing the circumstances of that trade to the court. When properly done, that evidence is much less costly overall than a badly-conducted survey.

 

  1. There are two different issues in play in this debate. One is the court’s ability to regulate the evidence and second is the imposition of the requirements relevant to expert evidence such as the obligations, and so on, referred to in Part 35 . It is the impact of that latter issue in trademark and passing off cases which concerns me much more than the former. In fact the problem may have been potentially more significant in the past than it is today because of amendments to the CPR following the Jackson Review. They emphasise that all the evidence before the courts is now to be controlled, and I refer to the new Rule 32.2 . Thus, we are moving towards a regime more like the Patents County Court system. The significance of that is that the ability to restrict evidence does not now depend on whether it is characterised as expert evidence or not. It is now clear that evidence can be controlled, however it is characterised.

 

  1. In future it is clear that trade evidence will be subject to the regulation under Rule 32.2 . In the Patents County Court system for the last three years, what has happened is this. At the case management conference the court would ask the litigants what sort of evidence they intended to call. The litigants know that they need to be able to give a rational answer to that question. In a trademark and passing off case, one obvious potential category is trade witnesses. As a judge in the PCC, if a party wanted trade evidence I would generally permit a limited number of trade witnesses. It would all depend on the circumstances, and there is no reason why the same approach cannot be taken in general terms at the CMC under Rule 32.2 . Indeed, it seems to me that in order to exercise the power in Rule 32.2 , a party will need to be able to say at the case management conference what sort of evidence they intend to call. In a High Court case, a limit on the numbers or the type of evidence may or may not be appropriate, but at least if the question is asked at the case management conference, steps can be taken.

 

  1. In conclusion on the principles, just as Lewison J. (as he then was) in O2 [2006] R.P.C. 30 found, it seems to me that to provide a definition of expert evidence is impossible. Plainly trade evidence can be presented as an expert’s report, such as the branding expert evidence of Mr Blackett. The cases show that that evidence can have little value. But, in my judgment, in a trademark and passing off case, evidence of the factual circumstances of a trade by a person in that trade, even when they deploy their experience in that trade to bolster what they are saying, is *971 not necessarily “expert evidence” within CPR Part 35 . Apart from anything else, there is no reason to treat it as such. However, the fact that evidence is not labelled as an expert’s report does not mean it is not in truth expert evidence. The evidence which was the subject of the criticisms in esure was obviously expert evidence, whether it had been labelled as such or not. A witness who expresses an opinion on the ultimate question before the court – for example, will the relevant public think due to the presence of the photograph of Rihanna on a T-shirt that the Rihanna T-shirt is in fact licensed by or authorised by Rihanna? – is expressing an expert opinion. A witness called to say that would need to comply with CPR Part 35 .

 

  1. To decide whether the trade evidence called by both sides in this case is in fact expert evidence cannot be done without a closer examination of those statements. I will apply what I have said to this case. I start with the following:
  2. a)  Although T-shirts are ordinary consumer goods, this case is very much concerned with a particular segment of the market, i.e. T-shirts aimed at young teenage girls. It is not a market the court is likely to be so familiar with that proper trade evidence will be pointless. Speaking for myself, I would be assisted by proper evidence focusing on the nature and circumstances of that market.
  3. b)  Although most trademark cases and passing off cases involve the question of “What do relevant customers think when they see the sign complained of?”, this is not a case in which the primary issue is whether the sign is or is not too similar to another sign. The issue in this case is a more subtle one. The sign is Rihanna. The question is: what do customers think about it?
  4. c)  All the witnesses that I have referred to emphasise and explain their experience in the trade. Each of them is seeking to rely on that experience to justify their evidence.

 

  1. First, Mr Coyle. He gives evidence about licensing in the clothing trade worldwide and in the United Kingdom. He addresses the impact of unauthorised goods in the market. His evidence is not focused on the specifics of the T-shirt in question but on the general nature of the trade.

 

  1. Secondly, Mr Daffner, he is similar to Mr Coyle and potentially duplicative. He deals with fashion and celebrity licensing in the same area. He states:

“I know from direct experience that fans believe there is a direct connection between the celebrity and the merchandise which bears their name, image or artwork.”

 

Again, he is addressing the trade in general and not this T-shirt.

 

  1. Thirdly, Mr Dapron. He is similar to the previous two but is focused on music and merchandising in that trade. He says:

“Fans want and expect T-shirts with an image of the artist to be authorised.”

 

Again, he is addressing the trade in general.

 

  1. Pausing there, in my judgment, these three witness statements are not expert evidence within CPR Part 35 . They are rather duplicative, and Mr Daffner and Mr Dapron are very US-centric and I query their relevance, but those are case management questions.

 

  1. Next, Mr Robinson. He is a music industry consultant. His job has been to study fans. He says that fans expect High Street retailers with the stature of Topshop to *972 sell official merchandise. He also refers to research he has done but cannot now find, and cross-refers to a colleague who is also involved in research, and says his colleague shares the same view. In my judgment, this is expert evidence and is subject to CPR Part 35 . The determinants in the case of Mr Robinson are the reference to and reliance on research, and also the nature of his role as a researcher generally. As he puts it, his job has been to study fans. I might also add that, having read the statement, I am not impressed with the utility and probative value of the references to unidentified research and to the views of Mr Robinson’s friend in any event. If the claimants wish to rely on Mr Robinson, they will need leave, and CPR 35 will need to be complied with.

 

  1. Next Mr Joseph. He is also in the music merchandising business. He discusses the control of the image of artists. His company took a licence from the claimant to promote her current worldwide tour. He explains in general terms the value of that licence and discusses the impact of unauthorised goods. I think this is relevant evidence. I do not think it is expert evidence within Part 35 at all. It is basically factual trade evidence.

 

  1. Next the segments from Ms Perez’s statement. Ms Perez is the main witness for the claimants. Most of it is not objected to. Some of Ms Perez’s evidence which is objected to is duplicative of what I have dealt with already. It relates to the licensing business in the music and fashion area. The high point of Ms Perez’s evidence on the question of whether it is expert evidence is [81]–[83]. Here effectively Ms Perez articulates the claimant’s case why the T-shirt in this case is said to create a misrepresentation that it is authorised and why the claimant is concerned about it. I think this is natural evidence for the claimant to give. It is not expert evidence. It is difficult to see how this case could be articulated otherwise.

 

  1. A different problem with relation to Ms Perez’s evidence is the way in which she comments on documents, which I must say seems rather pointless, and I query whether it is useful on case management grounds.

 

  1. I will now turn to consider the defendant’s evidence. First, Sheena Sauvaire. She is the head of marketing at Topshop. She explains her experience in the trade and describes the licensing at Topshop. She says at [44]:

“It is my experience that consumers expect a more overt level of marketing communication before they will assume a connection between a celebrity and a brand.”

 

In saying that, she is referring to what she says is the marketing communication given by the T-shirt in question in this case. I think this is natural evidence for someone in her position to give in a trademark case. The court, as I say, is not necessarily familiar with the shopping habits of teenage girls. The defendants did not seek permission under Rule 35 . I think they were right not to do so. To say that this sentence turns the entire evidence given by Ms Sauvaire, which runs to some 46 paragraphs, into expert evidence seems to me to be wrong, and to impose the expert evidence regime as a result would be a sledgehammer to crack a nut. In my judgment, it is outside CPR 35 .

 

  1. Finally, I need to deal with Mr Chatalo’s evidence. He is the source of the T-shirt in this case. He describes his business and the application of images to T-shirts. In my judgment, this is useful evidence too, just like the trade evidence from the claimants. It is not expert evidence either, and I will admit it. *973

 

  1. In conclusion, I find that Mr Robinson’s evidence is expert evidence; it requires permission under Rule 35 . Otherwise I reject the defendant’s arguments that the rest of this evidence is formally inadmissible as a matter of principle under Rule 35 . There are some serious case management questions which bear consideration and there will be a further hearing next week to address the consequences. In particular, the claimants need to consider the duplicative nature of some of their evidence, and Ms Perez’s approach to the documents. That is my judgment.’

[xxiii] Morrison Leahy Music Ltd v Lightbond Ltd [1993] EM.LR 144 (1991).

Extracts from the judgment of Mr Justice Morritt:

‘By this motion the plaintiffs Morrison Leahy Music Ltd and George Michael seek an injunction until trial or further order restraining the defendants from (I quote from the notice of motion)

manufacturing advertising for sale offering for sale selling, supplying, distributing or otherwise dealing in records referred to by the defendants under the title Bad Boys Megamix or any other record embodying sound recordings of literary or musical works written by the second plaintiff and to which there have been additions to/deletions from or alterations of the same.

The second plaintiff George Michael is a well-known and successful composer of both the music and lyrics for popular songs. From 1982 to 1986 he performed his own compositions and no doubt others, as a member of a two-man group called Wham. The other member was Andrew Ridgeley. 

Since 1986 the first plaintiff has continued to perform as a soloist but the evidence indicates that his wish would be to be remembered primarily as a composer.

 In May 1982 the second plaintiff entered into a publishing agreement with the first plaintiff whereby the copyrights in the five compositions with which I am concerned were vested in the first plaintiff. Those compositions were made in the period 1982 to 1986. Schedule 1, paragraph 3 of the Copyright, Designs and Patents Act 1988 shows that the law to be applied in relation to alleged infringements occurring after the commencement of the Act is the law enacted in the 1988 Act. By the combined effect of