Australasian Performing Right Association Limited, reference brought under section 154 of the Copyright Act 1968
[1992] ACopyT 2
•10 December 1992
CATCHWORDS
Copyright Tribunal ‑ application by performing right society to confirm licence scheme ‑ scheme for the licensing of public performance right in respect of the performance of any of the works within the applicant's repertoire at commercial premises including clubs, hotels, restaurants, discotheques and similar venues where music is provided by the use of records for the purpose of accompanying dancing ‑ meaning and ambit of operation of s 154 of the Copyright Act 1968 ‑ consideration of evidence of basis for fixing reasonable licence fees introduction of "box office" principle ‑ effect on Tribunal's decision of agreement entered into with hotels and licensed clubs.
Copyright Act 1068, ss 136, 137, 154, 157, 159
REFERENCE BROUGHT BY AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED UNDER SECTION 154 OF THE COPYRIGHT ACT 1968
COPYRIGHT TRIBUNAL
No. 1 of 1991
Sheppard P., Mr. Allan Horton and Professor Staniforth Ricketson
10 December 1992
Sydney
COMMONWEALTH OF AUSTRALIA
COPYRIGHT ACT 1968
IN THE COPYRIGHT TRIBUNAL
REFERENCE BROUGHT BY AUSTRALASIAN
PERFORMING RIGHT ASSOCIATION LIMITED
UNDER SECTION 154 OF THE COPYRIGHT ACT 1968
No. 1 of 1991
MINUTES OF ORDER
TRIBUNAL MAKING ORDERS: SHEPPARD P., MR. ALLAN HORTON and
PROFESSOR STANIFORTH RICKETSON
DATE ORDERS MADE: 10 DECEMBER 1992
WHERE MADE: SYDNEY
THE TRIBUNAL NOTES THAT the Applicant undertakes to the Tribunal that:
(a)it will not implement the licence scheme annexed to the decision of the Tribunal, so far as it will affect members of the first and second respondents, respectively the Australian Hotels Association and the Registered Clubs Association of New South Wales, until 1 March 1993;
(b)it will give to each of the first and second Respondents at least twelve months' written notice of any termination of the licence scheme or any variation in the licence fees payable under the scheme;
(c)it will not give such notice before 1 March 1996; and
(d)it will not make any application to the Tribunal in respect of any variation in the licence fees payable under the scheme which would come into effect before 1 March 1997.
THE TRIBUNAL ORDERS THAT:
The licence scheme annexed to the Reasons for Decision of the Tribunal published on 10 December 1992 be confirmed.
There be no order as to costs.
COMMONWEALTH OF AUSTRALIA
COPYRIGHT ACT 1968
IN THE COPYRIGHT TRIBUNAL
REFERENCE BROUGHT BY MSTRALASIAN
PERFORMING RIGHT ASSOCIATION LIMITED
UNDER SECTION 154 OF THE COPYRIGHT ACT 1968
No. 1 of 1991
THE TRIBUNAL: SHEPPARD J., PRESIDENT;
MR. ALLAN HORTON and
PROFESSOR STANIFORTH RICKETSON,
MEMBERS
DATE: 10 DECEMBER 1992
PLACE: SYDNEY
REASONS FOR DECISION
To be determined is a reference filed pursuant to s 154 of the Copyright Act 1968 ("the Act"). Section 154 is as follows:-
“154. (1) Where a licensor proposes to bring a licence scheme into operation, he may refer the scheme to the Tribunal.
(2) The parties to a reference under this section are:
(a) the licensor referring the scheme; and
(b)such organizations or persons (if any) as apply to the Tribunal to be made parties to the reference and, in accordance with the next succeeding subsection, are made parties to the reference.
(3) Where an organization (whether claiming to be representative of persons requiring licences or not) or a person (whether requiring a licence or not) applies to the Tribunal to be made a party to a reference, and the Tribunal is satisfied that the organization or person has a substantial interest in the operation of the scheme to which the reference relates, the Tribunal may, if it thinks fit, make that organization or person a party to the reference.
(4) The Tribunal shall consider a scheme referred under this section and, after giving to the parties to the reference an opportunity of presenting their cases, shall make such order, either confirming or varying the scheme, as the Tribunal considers reasonable in the circumstances.
(5) An order (other than an interim order) of the Tribunal under this section may, notwithstanding anything contained in the licence scheme to which it relates, be made so as to be in force either indefinitely or for such period as the Tribunal thinks fit.
(6) Where a licence scheme has been referred to the Tribunal under this section, the licensor may do either or both of the following things:
(a) bring the scheme into operation before the Tribunal makes an order in pursuance of the reference;
(b) withdraw the reference at any time before the Tribunal makes an order in pursuance of the reference, whether the scheme has been brought into operation or not.
(7) If the scheme is not brought into operation before an order is made in pursuance of the reference, the scheme as confirmed or varied by the order comes into operation, notwithstanding anything contained in the scheme, forthwith upon the making of the order.
(8) After the making of an order in pursuance of the reference, the scheme as confirmed or varied by the order remains in operation, notwithstanding anything contained in the scheme, so long as the order remains in force."
The expression "licence scheme" is defined in s 136 of the Act to mean a scheme formulated by a licensor setting out the classes of cases in which the licensor is willing to grant licences and the charges (if any) subject to payment of which, and the conditions subject to which, licences would be granted in those classes of cases. "Licence" is defined in s 136 to mean a licence granted by or on behalf of the owner of the copyright in a literary, dramatic or musical work, or of the copyright in a sound recording. In the case of a literary, dramatic or musical work, the licence is, inter alia, to perform the work or an adaptation thereof in public. In the case of a sound recording, the licence is, inter alia, to cause the recording to be heard in public.
Sections 136 and 154 are in Part VI of the Act which is entitled, "The Copyright Tribunal". Section 137 is headed, "Cases to which licence schemes apply". The section provides that, for the purposes of the Part, a case shall be deemed to be a case to which a licence scheme applies if, in accordance with a licence scheme for the time being in operation, a licence would be granted in that case.
It will be necessary later on to come back to the provisions of s 154 in order to consider the ambit of its operation.
The reference in this matter was filed in the Tribunal on 22 October 1991. It said that the applicant owned or represented the owner of the copyright, in respect of its application to the performance in public of musical and literary works, in "practically all musical and literary works performed in public throughout Australia". Members of the applicant were said to constitute about 8,500 Australian composers, authors and publishers of music. Works written by members of the applicant and by members of affiliated societies in countries throughout the world were said to comprise the applicant's repertoire. There is no issue about these matters. The applicant's membership, the nature of its activities and its method of operation are more fully discussed in the Tribunal's decision in Reference by Australasian Performing Right Association Ltd.; re Australian Broadcastina Corporation (the ABC case) (1985) 5 IPR 449 at pp.452‑3.
The reference said that the applicant proposed to bring into operation a new licence scheme to licence the public performance of recorded musical and literary works to accompany dancing. The Tribunal was requested by the applicant to make such order confirming or varying the proposed licence scheme as the Tribunal considered reasonable in the circumstances.
Annexed to the reference was a copy of the proposed licence agreement which was then the subject of the reference. Clause 1 ‑of the agreement provided that the licence was a licence for the licensee, and its employees and agents, to perform in public any and all of the works from within APRA's repertoire at commercial premises including clubs, hotels, restaurants, discotheques and similar venues, where music was provided by the use of records (other than those contained in coin operated machines) for the purpose of accompanying dancing. The critical clause was clause 3 which provided for licence fees. Essentially the clause provided that the licence fee "for the Initial Period" and "for each subsequent annual period" was to be 3 per cent of the gross sums paid for admission to the premises or 15 cents per person admitted to the premises during the period in question whichever was the greater. The "Initial Period" was the first 12 months of the licence and the "subsequent annual periods" were the years which followed; see clause 5.
In bringing in the licence scheme which it then proposed, the applicant was seeking to make a fundamental change to the method which is currently used to calculate licence fees for this kind of use. In summary this method yields a fee which is calculated by reference to the capacity of the premises in which music is provided and the number of functions conducted on the premises. There is a minimum fee of $80. Rates per function for the year 1993 (arrived at after an adjustment in accordance with the consumer price index), unless there is a change, will be, where the capacity of the venue is under 100 persons, $2.50; where it is between 100 and 299 persons, $5.89; where it is between 300 and 499 persons, $8.40; and where it is over 499 persons, $10.07. The change which the applicant wishes to bring about will substantially increase the licence fees currently payable but, in the applicant's submission, the method currently in use does not truly reflect the value of the public performance right which is licensed and yields licence fees which, in many cases, are nominal, even derisory. What the applicant seeks to do is to apply to the situation what is known in the industry as "the box office principle" In other words it wants the licence fee calculated upon the basis of the numbers of people who pay admission for the performance. Gross revenue is to be the yardstick.
Mr. B.R. Cottle is the Chief Executive of the applicant. He has held that position since 1 July 1990. He was employed as the applicant's legal officer from March 1977 to June 1985. Mr. Cottle has had a long experience in the musical copyright area. In para. 18 of an affidavit sworn by him on 7 August 1992 he referred to his earlier employment with the applicant as a legal officer. He continued:-
"At that time APRA had not secured widespread acceptance of the box office principle in valuing the use of its repertoire. The principle was accepted by commercial radio and television stations and had recently been agreed to by concert promoters. It was, however, vigorously opposed by the Australian Broadcasting Commission (as it was then.) and by cinema exhibitors. APRA decided to refer its case against the ABC to the Copyright Tribunal with the result that the licence scheme for discotheques, as well as for other kinds of public performance, had a low priority for APRA. To the best of my recollection the current licence scheme for discotheques was introduced with the aim of achieving immediate acceptance and was accompanied by little or no discussion or negotiation with licensees."
In the course of his oral evidence, Mr. Cottle was asked why the applicant did not adopt the box office principle in 1979 with a lower percentage. Mr. Cottle said:
"I think we should have adopted the box officeprinciple. At the time, as I have referred to in my affidavit, we were fighting on a number of fronts. Again, if I may say so, it was not my job at the time to prioritise on which fronts we should fight and in which order. Our main priority at that stage was certainly the ABC, to gain acceptance of the box office principle there. Next cab off the rank was the cinemas, so far as we were concerned, and those were two subjects which subsequently occupied us over a number of years. It was really just a case of prioritising the order in which we would seek acceptance. I think also in the late 1970s the dance club or the discotheque, the popularity of discotheques had been very high in the 60s and had then waned in the 70s and in the 70s the most popular form of entertainment in hotels and clubs was live music, so commercially it didn't then have the priority that it has now."
Presently 1,485 organisations and undertakings of various kinds have entered into licence agreements with APRA in the form of the current licence agreement which is based on the capacity of the premises. Each of these licensees was notified of the reference by letter. The matter came into the list for directions for the first time on 4 November 1991. Directions were made for the publication of advertisements in a leading daily newspaper in each of the States and Territories. The advertisements were published on Saturday, 16 November 1991. They were display advertisements and appeared in the news sections of each of the papers, not in the classified advertising sections. In most cases they appeared on a page of the newspaper where there were news items and other advertisements connected with the entertainment industry. It is unnecessary to set out the terms of the advertisement. But amongst other things it said that any inquiry should be directed to the applicant's solicitors whose address was given. It was further said that any person wishing to be joined in the proceedings should make an application to the Tribunal on or before 17 December 1991 when the matter was again in the list. The applicant's solicitors received only one inquiry. A copy of the reference was sent to the enquirer from whom nothing more was heard.
Additionally, notice of the reference, and also a copy of it, was given to the Licensed Clubs Association of South Australia, the Cabaret Owners' Association of Western Australia and the Queensland Cabaret Association.
When the matter came into the list again on 17 December 1991 there were appearances for three substantial organisations. These were the Australian Hotels Association, the Registered Clubs Association of New South Wales and the Nightclub Owners' Association of Victoria Inc. The Australian Hotels Association is an industrial organisation registered under the provisions of the Industrial Relations Act 1988. Amongst others the Association represents hotels which provide dance facilities as part of the overall range of attractions which are available. Approximately 562 members of the Association have signed licence agreements with the applicant in the existing form, that is, in the form of the old agreement. The Registered Clubs' Association of New South Wales is an industrial organisation registered under the Industrial Relations Act 1991 (NSW). It has a very large membership representing as it does the vast majority of all clubs registered in New South Wales under the provisions of the Registered Clubs Act 1976 (NSW). Approximately 452 of these clubs are licensees of the applicant under the present scheme. The Victorian Nightclub Owners' Association apparently now has only 17 members but, as the Tribunal understands what was said by its solicitor, it had a much greater membership in the past and has familiarity with the way in which nightclubs are run in Victoria.
The Association is incorporated. The Australian Hotels Association and the Registered Clubs Association were represented by the same solicitor and counsel.
At the directions hearings directions were made for the filing of statements of points in support of the applicant's case and statements of points in support of the cases of the three organisations to which I have referred who became known as the first, second and third respondent respectively. These statements were all filed.
Directions were also made for the filing of affidavits by the applicant and by the respondents. The applicant, the Australian Hotels Association and the Registered Clubs Association filed a number of affidavits. The Victorian Nightclub Owners Association filed none but were represented at the hearing of the reference by a solicitor, Mr. Dwyer. The principal affidavits filed on behalf of the applicant were those of Mr. Cottle and a Ms. Gabriel Stott. Ms. Stott gave evidence of visits which she had made to a number of clubs, hotels, discotheques, nightclubs and other venues where the applicant's repertoire was being played in conjunction with dancing. Her visits were to establishments in Brisbane, Melbourne and Sydney. She was accompanied on these visits by Ms. S.L. Faulkner, the applicant's legal officer, who also swore an affidavit.
The principal affidavit relied upon by the Registered Clubs Association and the Australian Hotels Association was that of Mr. T.J. Vella who is an accountant. Mr. F.R.V. Palmer, who is a hospitality industry consultant and Mr. E.J. Camilleri, who is the Chief Executive of the Revesby Workers' Club, swore affidavits describing the nature of venues where the applicant's repertoire was played and making comments on Ms. Stott's first affidavit. Mr. Camilleri filed a later affidavit also dealing with this matter.
In reply the applicant relied upon some further evidence from witnesses who had also sworn affidavits and an affidavit of Mr. R.J. Filmer who is an economist.
The central issue which emerged from the statements of the parties' cases and the evidence was whether it was appropriate to change the basis for the calculation of the licence fee from the existing basis to the box office basis.
This case was fixed for hearing on 7 December. On 4 December 1992 the applicant and the Registered Clubs Association and the Australian Hotels Association compromised the matter. The Tribunal was informed of this compromise on 4 December 1992 and, on the morning of 7 December 1992, there was handed up a new licence agreement which gave effect to the compromise which had been reached. It provided in clause 4A that the licence fee for a registered club or hotel should be 1.69 per cent of the gross sums paid for admission to the premises or 8.45 cents per person admitted to the premises whichever was the greater. The ,Tribunal inquired as to the manner in which these two figures had been arrived at and was told that they had been arrived at by a process of negotiation. The detail of this was explained to the Tribunal. Although the percentage of 1.69 per cent might preferably have been rounded slightly up or down, the explanation given satisfies us that in the circumstances there was good reason why this was not a practical course.
Clause 4A.1 and and clause 4A.2 provided for the staging in of the new licence fees to be paid. For the first year the fee was to be 1 per cent of the gross sums paid for admission or 5 cents per person admitted to the premises whichever was the greater. For the second year the licence fee was to be 1.35 per cent or 6.8 cents per person admitted. Thereafter the figures of 1.69 per cent and 8.45 cents were to apply.
Clause 4B provided for the licence fee payable by persons or organisations other than registered clubs or hotel's. In their case the licence scheme, subject to there being some phasing in, maintained the original 3 per cent and 15 cents per person admitted. Clause 4C provided for a consumer price index adjustment.
Although the applicant and two of the principal respondents had achieved a settlement of the reference and although the first and second respondents represented over two‑thirds of the existing licensees, the matter could not proceed to finality by consent as would have been the case if the matter had come to the Tribunal under some other provisions of the Act. Because the Tribunal Is ‑decision had the potential to affect the terms upon which numbers of unspecified people would be able to deal with the applicant if they required its repertoire in the circumstances contemplated by the licence scheme, the Tribunal had to inquire into the appropriateness of what was proposed.
The Tribunal then heard Mr. Dwyer who informed the Tribunal that, until 4 December last, he and his clients had anticipated relying on the evidence to be presented on behalf of the Australian Hotels Association. He said that the settlement had taken him by surprise. The Tribunal pointed out to him that there was no evidence before it from his clients and that no intimation had been given to the Tribunal that it was his intention to rely on the evidence of another party. Mr. Dwyer was asked whether he wanted an adjournment of the application and he then made a lengthy submission in which he recounted his understanding of what he described as "the Melbourne nightclub scene". We do not refer to this account in detail. It contained a great number of factual assertions about the way in which nightclubs in Melbourne are conducted, their current financial difficulties, the differences which there are between clubs in Sydney and nightclubs in Melbourne, the fact that a number of his client's members were also members of the Australian Hotels Association and a number of other matters. It was pointed out to Mr. Dwyer that, whilst the Tribunal was not bound by the rules of material the Tribunal can objectively assess and which can be evidence (see para 164(b) of the Act), it requires there to be, if not evidence in the legal sense, then at least the subject of consideration and criticism by other parties to the reference. Mr. Dwyer said that he understood this, but wished to be excused from further attendance.
There was one period in his submission during which there seemed to be an ambivalence between his remaining to pursue an application for an adjournment and leaving. In the course of what he said, he complained about the fact that the Tribunal had elected not to sit in Melbourne and was sitting in Sydney in a matter that was of substantial concern to a number of establishments in Melbourne and indeed Victoria. It was pointed out to Mr. Dwyer that the Tribunal had endeavoured to ensure that notice of the reference was widely published. The Tribunal said that, if it had emerged that a number of Melbourne interests had wished to give evidence, the Tribunal would have made arrangements to sit in Melbourne. The Tribunal also said that much of what Mr. Dwyer had informed the Tribunal was not to be found in any part of the existing evidence including that to be led on behalf of the Australian Hotels Association. It was suggested to him that his initial statement that he intended to rely on this evidence, that providing a reason why he had not led evidence of his own, did not stand well with the submission which he was then propounding, namely, one in which the Tribunal was in some way remiss for not having arranged for part of the hearing to take place in Melbourne.
Eventually it emerged that the Association for which Mr. Dwyer appeared did not have the 400 or so members suggested in the points in support of its case. In fact it had 17 paid up members which Mr. Dwyer then named. It further emerged that Mr. Dwyer's client would be satisfied if it could have the benefit of the same settlement as had been reached between the first and second respondents and the applicant. The matter was then adjourned to enable the parties to have discussions. When the Tribunal resumed, it was announced that the applicant had decided not to approach the matter differentially but would accord the same licence fee to all. In short the scheme would now involve licence fees of 1.69 per cent of gross revenue or 8.45 cents per person admitted whichever was the greater. A fresh licence was proffered. Clause 4B was omitted and the licence was expressed to apply across the board. The CPI adjustment was retained in a new clause 4B. The licence thus formulated became the licence scheme which the applicant wished made the subject of the reference. A copy of it is appended to these reasons.
After this was announced, Mr. Dwyer expressed himself as satisfied with the outcome and sought leave to withdraw. That was granted. Nothing more was heard of the suggestion that the matter be adjourned or that the Tribunal sit to take evidence in Melbourne. The matter thereafter proceeded with only the applicant represented, counsel for the first and second respondents having withdrawn earlier in the day.
What the Tribunal is asked to do is to confirm the licence scheme as varied, i.e. the licence scheme which is in terms appended hereto.
It is appropriate now to say something of the nature ofthe jurisdiction which the Tribunal is exercising. The terms of s 154 have been earlier set out. By subsec.(2) the parties to a reference under the section are the licensor and such organisations or persons (if any) as apply to the Tribunal to be made parties to the reference and, in accordance with subsec.(3), are made parties to it. Subsection (4) obliges the Tribunal to consider a scheme referred to it under the section and, after giving the parties an opportunity of presenting their cases, to make such order, either confirming or varying the scheme, as the Tribunal considers reasonable in the circumstances. Subsection (7), so far as presently relevant, provides that the scheme, as confirmed or varied by the order of the Tribunal, comes into operation forthwith upon the making of the order. Subsection (8) provides that, after the making of an order in pursuance of the reference, the scheme as confirmed or varied by the order remains in operation so long as the order remains in force.
Section 154 needs to be read in conjunction with ss 157 and 159. It is convenient to refer to s 159 first of all. Subsec.159(1) is as follows:‑
"Where an order made on a reference under this Part with respect to a licence scheme is for the time being in force and a person, in a case to which the scheme as confirmed or varied by the order applies, does anything that, apart from this subsection, would be an infringement of copyright but would not be such an infringement if he were the holder of a licence granted in accordance with the scheme, as confirmed or varied by the order, in so far as the scheme relates to cases to which the order applies, that person shall, if he has complied with the relevant requirements, be in the like position, in any proceedings for infringement of that copyright, as if he had at the material time been the holder of such a licence."
It is unnecessary to refer to the definitionof “the relevant requirements” in subsec. (2) or to the balance of the section.
Section 157 enables applications to be made to the Tribunal in the circumstances there referred to. The immediately relevant provision is subsec.157(2) which provides that a person who claims, in a case to which a licence scheme applies, that he requires a licence but that the grant of a licence in accordance with the scheme would, "in that case", be subject to the payment of charges, or to conditions, that were not reasonable in the circumstances of the case, may apply to the Tribunal. Pursuant to para.157(6)(b) the Tribunal in such a case, shall make an order specifying the charges, if any, and the conditions that the Tribunal considers reasonable in the circumstances in relation to that applicant.
In the course of the discussion which occurred between counsel for the applicant and the Tribunal the question was raised whether s 154 contemplated the making of an order confirming a licence scheme not in relation to particular organisations or persons joined as parties but generally ,so that all persons, whether joined as parties to the reference or not, would be affected by it if they wished a licence from the applicant for the particular use contemplated in the licence scheme. The language of both subsecs 154(2) and (3), if considered in isolation, is capable of suggesting that the section was not intended to have any effect or operation otherwise than as between the parties to the reference, the parties being those who were made parties by the Tribunal pursuant to subsecs (2) and (3).
The Tribunal has given this matter consideration. It has taken into account the provisions of subsecs 154(7) and (8), subsec.159(1) and the definition of "licence scheme" in s 136. It has also considered what was said in the Report of theCommittee appointed by the Attorney-General of the Commonwealth to Consider what Alterations were Desirable in the Copyright Law of the Commonwealth (1959) (the Report of the Spicer Committee), paras 361‑365. A majority of the Committee were in favour of allowing a licensing body to initiate proceedings before the Tribunal in respect of a scheme or proposed scheme.
The Tribunal has reached the conclusion that s 154 does have the meaning and effect contended for by the applicant and that it is within the Tribunal's jurisdiction to confirm the licence scheme as varied so that it will have general application and not bind only those organisations who were parties to the reference.
In reaching its conclusion, the Tribunal has taken into account the fact that it is always open to the applicant and a proposed licensee, notwithstanding the confirmation of the licence scheme, to make their own agreement. The existence of the scheme does not prevent them from reaching an agreement in relation to licence fees or other terms or conditions more appropriate for their own needs. The fact that these may be quite different from those provided for in the scheme is of no relevance. Furthermore, the relevant provisions of s 157 earlier referred to show that a person who wishes a licence in terms different from those provided for in the licence scheme may seek an order from the Tribunal for a licence more appropriate to his or her circumstances.
The critical question is whether the licence scheme should be confirmed. Reference has earlier been made to the change from an audience or premises capacity measure to a gross revenue measure. What is sought is the application of a box office or gross revenue basis for determining remuneration. In the ABC case the Tribunal said (5 IPR at p.479):
"A percentage of revenue has a long history of acceptance as a measure of the worth of copyright. It is accepted in the area of literary works where the owners of copyright in books receive a percentage of retail sales. It also applies in the case of sales of sheet music where again percentages of sales are taken as a guide to what the copyright owner should receive. And it is accepted in the theatre and concert areas where copyright owners receive a percentage of the box office receipts. The philosophy underlying this approach must be the one referred to by Mr. Freegard in his evidence, namely, that over the years the copyright owner has been perceived to have an interest in the success or otherwise of his work. If it is highly successful and substantial returns are yielded, he should receive more. If his work is a failure, he will receive little or nothing. This approach has particular application in commercial cases, that iswhere the licensee, in this area of copyright use, the broadcaster, is a commercial entity."
The box office or gross revenue approach has therefore the solid basis of past experience in a variety of areas to commend it.
In support of his submissions, counsel for the applicant stressed two main matters. The first was the agreement achieved between the applicant, the Australian Hotels Association and the Registered Clubs Association. He said that these were arms' length transactions between parties in equal bargaining positions. The agreements reached between them, he claimed, should be accorded great weight by the Tribunal in its consideration of the matter. The agreements provided a benchmark upon which the Tribunal could safely proceed particularly bearing in mind the fact that the two organisations between them represented over two‑thirds of the applicant's current licensees.
The Tribunal agrees that these agreements ought to be accorded substantial weight, but it is unable to accord to them the weight which they would have had had they been negotiated away from the shadow of the contested hearing between the parties which was about to commence. The ultimate question is what licence fee is fair and reasonable. Parties considering the settlement of litigation usually take into account a variety of matters one only of which consists of the commercial considerations which would have applied had no litigation been involved. There are many reasons why litigation is settled. Sometimes the prospect of substantial legal costs is a factor. There is also the fact that most people, especially those in an ongoing relationship, prefer to settle their differences without an adversarial hearing, and there are no doubt other factors which may or may not be present to the minds of litigants when they decide to compromise. We therefore need to guard against taking too much from the two settlements. Nevertheless, they are matters to be given weight in our overall consideration of the problem.
On the other hand, the Tribunal has to be practical. It is faced with a fait accompli. The applicant and two organisations representing over two‑thirds of the applicant's existing licensees have agreed upon the form of the licence which is henceforth to apply. If the Tribunal selects a basis of charging more favourable to licensees than that which has been agreed upon, its decision may have an impact on agreements already reached with the possibility that that which has been achieved may be undone or attempted to be undone. This consideration is not conclusive, but it must be taken into account.
The other substantial matter upon which counsel relied was that the existing formula yielded payments which were nominal or de minimis. What was involved was the value of the public performance right, that is, the value of the music to the various establishments in which it was played. Counsel stressed that, without the music, there could be no activity such as is conducted in the large variety of establishments referred to in the evidence. This is undoubtedly true, but it is also true to say that the performance which is involved owes its success to a number of factors all of which need to be present and taken into account. Usually there is a presenter or disc jockey whose personallity will often be critical to the success of the establishment. Some disc jockeys are paid very substantial fees. There is the level of admission charges and also the level of charges made for drinks (alcoholic or non‑alcoholic). There is the type of person who is attracted to the establishment and there are other factors such as the degree of security which is offered, the geographical location of it and so on. The Tribunal would not wish to indicate any view other than that it recognises the importance and value of the music which is played and the importance of composers of that music receiving a proper remuneration. But the matter needs to be looked at overall and a proper balance needs to be struck.
That having been said, it does appear to the Tribunal that, for a considerable time now, the licence fees paid for the music used by the various establishments have yielded only small returns. The present economic situation in which the community finds itself is not one where it is very often appropriate to grant large increases in any charge for any service. This is something which has concerned the Tribunal very much. If the increases contended for are confirmed, there will be involved in most cases a doubling or a trebling of the existing licence fee. In some cases the licence fee may increase fourfold. But these increases have to be kept in perspective. They have to be considered in the light of what real sums of money are involved. In absolute terms they are not substantial. Furthermore, the scheme provides for a two year staging in of the new regime. The percentage payable for 1993 is 1 per cent and the amount per person admitted 5 cents. For the year 1994 the figures will be 1.35 per cent and 6.8 cents. It will only be in 1995 that the proposed 1.69 per cent and 8.45 cents will become applicable.
Of course, it would have been possible for the applicant to have evolved a licence scheme yielding similar increases but still based upon capacity of premises rather than gross revenue. In the end the ultimate matter the Tribunal has to consider is the reasonableness or otherwise of the amount. The method or base which is used to calculate it is important because the selection of a proper method is likely to yield the fairest result. But the result which is thus yielded must be considered against the background of the past, in particular the level of fees payable down to the present time. If the adoption of the amount achieved would suggest an extravagant outcome, the matter needs to be reconsidered.
In the course of our review of the evidence we were taken to material giving some information about what currently is charged for this type of use in the United Kingdom, Canada, the United States and South Africa. in some cases gross revenue is used as the base; in others it is not. Comparisons are very difficult to draw. The evidence does not enable us to be certain that the use is substantially similar to the use in question here. There are difficulties in selecting appropriate exchange rates and also in drawing comparisons when one is uncertain of the comparative purchasing power of money in different countries. And there is the fact that the existence of a rate elsewhere does not of itself establish that it is inherently correct. To rely on it as a benchmark may be productive of error. In any event our examination of this evidence enables us to say that the adoption of rates such as are contended for by the applicant would not appear to lead to a situation in which Australian rates will be markedly out of step with those being charged overseas. In some cases the Australian rates will be somewhat lower; in others they are higher, but the differences are not substantial.
We have had to conduct our review of the material in this case in a reference which became uncontested. We have not therefore had the benefit of a keen contest between two opposing parties which is often productive of a much closer consideration of a problem such as this. The Tribunal of course encourages the settlement of matters before it and is pleased that so many of the differences in this reference were resolved amicably. The point it makes, however, is that it has not had the benefit of the analysis of the evidence and the submissions that it would have had if the matter had been fought out.
In the result, the Tribunal having considered the whole of the material before it and the matters put to it by counsel for the applicant and Mr. Dwyer, has reached the conclusion that it ought to accede to the application and confirm the licence scheme. In its deliberations the Tribunal has given consideration to the terms and conditions of the scheme other than those relating to remuneration. It has concluded that none of these call for particular comment.
In the circumstances of this case it is not appropriate to make any order as to costs.
I certify that this and the 16 preceding pages are a true copy of the reasons for decision herein of the Copyright Tribunal
Associate to the President
Dated
LICENCE NO. Licence Scheme F(a)3
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(Recorded music to accompany dancing)
LICENCE AGREEMENT
NATURE OF THE AGREEMENT
AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED hereby grants to
of
("the Licensee")
a licence for the Licensee, and the employees and agents of the Licensee, to perform any and all of the works from within APRA's repertoire, together with any words usually associated therewith, at commercial premises including clubs, hotels, restaurants, discotheques and similar venues, where music is provided by the use of records (other than those contained in coin operated machines) for the purpose of accompanying dancing.
SCOPE OF THE LICENCE
This Licence is granted subject to the terms and conditions hereof, and is restricted to the public performances at the locations and in the manner specified herein. It is not to be implied that this Licence in any way authorises any acts not falling within the scope of this Licence; additional licence or licences should be obtained where necessary
In particular this Licence shall not extend to nor shall it authorise any of the following
(a) any act not expressly authorised by this Licence(b)the transmission or public .reception of any performance beyond the precincts of the premises
(c)the performance of dramatico-musical works in their entirety, or excerpts from such parts of any dramatico‑musical work as consists of words and music written expressly therefor, if accompanied by visual representation of that same dramatico-musical work
(d)the performance in whole or in part of any music and/or associated words composed or used for ballet if accompanied by a visual representation of that ballet or part of it
(e)the performance of oratorios and/or large choral works (i.e. those of more than twenty minutes' duration) in their entirety, and/or
(f)the performance of any music and/or associated words so as to burlesque or parody the work, or of any music and/or associated words which have been notified by APRA to the Licensee in writing as being prohibited from performance by any. Means
PAYMENT OF LICENCE FEES
In consideration of the grant of this Licence, the Licensee shall pay to APRA by the method set out in clause 6:
(i)the Licence Fee for the First Licence Period, together with the stamp duty on the Agreement, and
(ii)the Licence Fee for the Second and each subsequent Licence Period
4A. LICENCE FEES
Subject to Clauses 4A.1 and 4A.2, the Licence Fee shall be 1.69% of the gross sums paid for admission to the premises or 8.45 cents per person admitted to the premises during the period in question, whichever is the greater
4A.1The Licence Fee for a Licence commencing in the First Year shall be 1% of the gross sums paid for admission to the premises or 5 cents per person admitted to the premises during the period in question, whichever is the greater
4A.2The Licence Fee for a Licence commencing in the Second Year shall be 1.35% of the gross sums paid for admission to the premises or 6.8 cents per person admitted to the premises during the period in questions, whichever is the greater
4B. CPI
The amounts per person referred to in clauses 4A, 4A.1, and 4A.2 are to be indexed annually in accordance with the Sydney All Groups Consumer Prices Index September quarter
Where APRA is satisfied that the premises at which the works are publicly performed is operated for charitable purposes then APRA may at its discretion waive the payment of the whole or part of the Licence Fee
DURATION OF THE LICENCE
Subject to the terms and conditions set out herein, this Licence shall be for a period of twelve (12) calendar months from the Commencement Date ("the First Licence Period"), and shall thereafter continue for successive annual periods ("the Second and subsequent Licence Periods'? until determined by either party by the giving to the other, by certified mail, of at least one month's notice in writing.
METHOD OF PAYMENT AND SUPPLY OF INFORMATION
(a) The Licensee shall pay to APRA:‑
(i)a provisional fee on account of the Licence Fee for the First Licence Period (as calculated in (b)), together with the Stamp Duty on the Agreement, no later than 14 days after the Licensee is notified by APRA of its execution of this Agreement, and
(ii)a provisional fee on account of the Licence Fee for the Second and each subsequent Licence Period (as calculated in (c)), on or before the commencement of the annual period in question.
(b) The provisional licence fee for the First Licence Period shall
(i)in the case of premises where music has been used to accompany dancing for the previous 12 month period, be based on the gross sums paid for admission to the premises and/or the number of persons admitted to the‑premises during that period.
(ii)in the case of premises where music has been used to accompany dancing for a period of less than 12 months, be based on the gross sums paid for admission to the premises and/or the number of persons admitted to the premises adjusted for a 12 month period.
(iii)otherwise, be based on a reasonable and genuine estimate of the expected gross sums paid for admission to the premises and/or the expected number of persons admitted to the premises during the period.
c)Within two weeks of the expiry of the First Licence Period, and of the Second and each subsequent Licence Period, the Licensee shall deliver to APRA a true and accurate statement in the form of the Schedule hereto specifying the gross sums paid for admission to the premises and the number of persons admitted to the premises during the completed period in questions. APRA may, in its discretion, require any such statement to be in the form of a statutory declaration.
(d)(i) APRA, its representative or nominee, may for the purpose of verifying any
statement in (c) above, inspect the records and documents within the possession of the Licensee showing, or which are capable of being used to calculate or show directly or indirectly the number of persons admitted to he premises and/or gross sums paid for admission to the premises;
(ii)the Licensee will, within 14 days of written request from APRA, make available all such records and documents and do all things so as to enable APRA, its representative or nominee, to verify and inspect them and
(iii)the costs of any such inspections and verifications will be borne by APRA PROVIDED THAT IF there is revealed by such inspection a number of persons admitted to the premises and/or an amount of gross sums paid for admissions ("the revealed amount") which exceeds by more than 10% the number of persons admitted to he premises and/or that amount of gross sums paid for admission supplied by the Licensee to APRA ("the supplied amount") then the costs of such inspection shall be borne by the Licensee.
(e)Upon APRA's receipt of the statement referred to in (c) APRA shall, after giving credit for the provisional licence fee, notify the Licensee of the balance of such Fee owing to APRA and the Licensee shall pay that balance to APRA within 14 days of such notification. In the event that the provisional licence fee exceeds the Licence Fee, APRA shall refund the excess to the Licensee within 14 days of receipt of the statement.
(f)When APRA is notified of any changes to the particulars supplied by the Licensee herein including by way of a statement referred to in (c), then upon APRA's acceptance of same this Licence shall hereafter apply with such particulars as amended by, and in accordance with, the details of that notice.
(g)APRA, by its accredited representative, shall have an unrestricted right of entry to the premises during performances, subject only to APRA, its servants and agents conforming with the usual dress code enforced at the premises and paying the usual admission fee.
(h)The Licensee will within 28 days of written request by APRA supply to APRA a list of each and every work publicly performed at the premises with the names of the author, composer, arranger and publisher of each such composition and the number of times performed during any 7 day period nominated by APRA PROVIDED THAT APRA shall request such a list no more than once per month.
BREACH OF THE LICENCE
If the Licensee breaches any provision of this Licence or fails to make payment of the Licence Fees when due or thereafter within thirty days of APRA's first request for payment of such overdue fees, APRA may forthwith determine this Licence by written notice sent to the Licensee at the address shown in this Licence and thereupon this Licence shall determine. Termination shall not extinguish or prejudice APRA's rights to recover any monies due under this Licence. All sums payable under this Licence shall be recoverable by APRA in any court of competent jurisdiction. In any such proceedings proof that a notice of revised provisional and/or Annual Licence Fee/s purporting to have been calculated in accordance with the terms of this Licence has been sent to the Licensee shall be prima facie evidence that the sum therein mentioned is the sum payable by the Licensee to APRA under this Licence.
The Licensee shall not assign or sub‑licence any of the rights granted by this Licence without APRA's prior consent in writing
Unless the contrary is specified, any notice from one party to the other shall be deemed to havebeen duly given if sent by ordinary pre‑paid post addressed to the party at the address shown in this Licence, and the date of the giving of such notice shall be deemed to be two days after the date of posting.
DEFINITIONS
In this agreement, including the Schedule hereto
"Commencement Date" means the date on which the Licence is entered into
"dramatico‑musical work" means an opera, operetta, musical play, revue or pantomime, insofar as it consists of words and music written expressly therefor
"gross sums paid for admission" means, in relation to a period, the gross receipts of the Licensee during that period in respect of monies collected by the Licensee or his agents as an admission fee in respect of that part of the premises where music is used to accompany dancing including membership fees but excepting membership fees collected and retained by a Registered Club;
"record" means a disc, tape, paper or other device in which sounds are embodied.
"First Year" means that period of twelve (12) months following a Commencement Date occurring on or between 1 March 1993 and 28 February 1994
"Second Year" means that period of twelve (12) months following a Commencement Date occurring on or between 1 March 1994 and 28 February 1995
"Registered Club" means a club registered under the Registered Clubs Act (NSW) or equivalent legislation in any other State or Territory
INTERPRETATION
Throughout this Licence, whenever required by the context, the use of the singular number shall be construed to include the plural, and the use of any gender shall include all genders
No waiver of any breach of thk agreement shall be deemed to be a waiver of any preceding or succeeding breach and no waiver shall be effective unless in writing
A P P E A R A N C E S
Counsel for the Applicant: Mr. D.K. Catterns, Q.C.
Solicitors for the Applicant: Phillips Fox
Counsel for the First and Second
Respondents: Mr. D.M. Yates
Solicitors for the First and Second
Respondents: Pigott Stinson Stuart Thom
Solicitor for the Third Respondent: Mr. P. Dwyer of Dwyer & Co.
(Melbourne)
Dates of Hearing: 7 and 8 December 1992
Place of Hearing: Sydney
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