Australian Performing Right Association Ltd v Valamo Pty Ltd

[1990] FCA 336

Re: AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED
And: VALAMO PTY LIMITED and NARENDRA KUMAR JAIN
No. G43 of 1990
FED No. 336
Copyright
18 IPR 216

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Davies J.(1)

CATCHWORDS

Copyright - infringement - Company infringed copyright - whether director personally liable for the infringement - authorization.

Copyright Act 1968 (Cth)

HEARING

SYDNEY

#DATE 18:7:1990

Counsel for the applicant: Mr S.D. Epstein

Solicitors for the applicant: Messrs Phillips Fox

Solicitors for the respondent: Messrs Conway MacCallum

Mr N.I. Pipe, Solicitor, appeared for the respondent

ORDER

The parties bring in short minutes giving effect to the reasons for judgment within 14 days.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

This application seeks relief in respect of breaches of the copyright in certain musical works which were performed either by live bands or on video jukebox at the Old Windsor Tavern, Sydney. The first respondent, Valamo Pty Limited ("Valamo") is the proprietor of the tavern. The second respondent, Narendra Kumar Jain, is one of Valamo's four directors.

1. It was conceded by the respondents that musical works, in respect of which the applicant was the proprietor of the copyright, had been performed or played at the Old Windsor Tavern without the applicant's authority to do so. The solicitor for the respondents, Mr N. Pipe, did not contest that there should be judgment with costs for the applicant against Valamo, that an appropriate injunction should issue and that the question of damages should be remitted to the Registrar for assessment under Order 38, rule 1. However, Mr Pipe contended that Mr Jain was not personally responsible for any of the breaches of copyright which had occurred and that the application, insofar as it related to him, should be dismissed with costs.

2. The day to day operations of the Tavern, which is a licensed hotel, are controlled by the licensee, Mr John Morgan, an employee of Valamo. Mr Morgan is the day manager and has employed another person as night manager. Mr Morgan and the night manager are the persons who select and engage the bands for evening performances and, presumably, are also the persons who select the music videos for playing in the jukebox. Mr Morgan maintains the day to day financial records of the company including cheque and receipt books. Almost all payments are made by cash because it is a cash business. The bands are paid in cash 10% of the night's takings.

3. An annual return of Valamo shows that five people, including Mr Jain, are the directors of the company and four persons, Mr Jain, his wife, Paul Harold Burchell and Gary B. Pocoe are the members. However, asked about the directors, Mr Jain said in evidence that those last four persons were the directors and that he and Mr Burchell were equally responsible. This perhaps accords with the fact that Mr Jain and his wife hold 400 shares, Mr Burchell 400 and Mr Pocoe 200. As Mr Burchell lives in Newcastle, it may be assumed that Mr Jain was more actively involved in the control of the company's affairs than any other person. Mr Jain was described in the annual return as the Principal Executive Officer, a use of the term referred to in s.5(1) of the Companies Code.

4. In evidence, Mr Jain described his position as Financial Controller of the company. He said that he gave his attention to the bank statements of Valamo and concerned himself with its financial affairs. Mr Jain said that he did not involve himself in the day to day operations of the Old Windsor Tavern, which were left to the licensee and the night manager. He said he took no part in the selection of the bands or of the music that they performed. He was concerned with a band only if it appeared that the takings of a night were bad, in which case he would advise the licensee to engage another band. Mr Jain said that he usually had lunch at the Tavern and sometimes went there after work between 5.00 and 6.00 p.m.. On a few occasions, he had attended in the evening for an hour or so for a spot check. However, he was not concerned with the day to day running of the Tavern.

5. Counsel for the applicant relied upon some additional miscellaneous facts. Mr Jain had engaged the licensee, Mr Morgan, who had been licensee of the Tavern for 10 years, while Valamo has been proprietor of the Tavern for only the last 3 years. Mr Jain had given to Mr Morgan the guideline that the bands were to receive 10% of the night time takings. Mr Jain and the other directors were signatories to the bank account and Mr Jain signed such few cheques as the company issued. The accounts for the music videos were paid by cheque.

6. Counsel also relied upon a letter of complaint which was written by the applicant to Mr Jain giving him the description "Proprietor Old Windsor Tavern". The solicitors for Valamo subsequently responded to that and another letter stating "We act for the proprietors of the Old Windsor Tavern". Counsel sought to draw some admission from this. However, as the evidence is clear that Valamo, not Mr Jain, is the proprietor of the Old Windsor Tavern, the letter seems to be of no consequence so far as Mr Jain is concerned.

7. Counsel for the applicant submitted that as a company acts through its directors, servants and agents, an executive or controlling director of a company which infringes copyright is personally involved in the contravention and responsible for it. Counsel referred to the decision of de Jersey J. in Australasian Performing Right Association Ltd v. Tolbush Pty Ltd (1985) 82 FLR 52. However, his Honour did not lay down any such principle as was contended for by counsel.

8. The general principle to be applied is that stated by Atkin L.J. in Performing Right Society Ltd v. Ciryl Theatrical Syndicate Ltd (1924) 1 KB 1, where his Lordship said at pp 14-15:-
   

"Prima facie a managing director is not liable for tortious acts done by servants of the company unless he himself is privy to the acts, that is to say unless he ordered or procured the acts to be done."

His Lordship referred to Rainham Chemical Works Ltd (In Liquidation) and Ors v. Belvedere Fish Guano Co. (1921) 2 AC 465 and went on to say:-

"... I conceive that express direction is not necessary. If the directors themselves directed or procured the commission of the act they would be liable in whatever sense they did so, whether expressly or impliedly."

1. Performing Right Society Ltd v. Ciryl Theatrical Syndicate Ltd involved facts which were analogous to those with which we are now concerned. In that case, a company was the lessee of a theatre and the managing director held a licence to have stage plays performed thereat. The managing director undertook to produce a play at the theatre and the company undertook to provide the theatre and a band of four musicians. The managing director, by agreement with a bandmaster, engaged a band of four musicians to perform at the theatre under the direction of the bandmaster. In the absence, and without the knowledge of the managing director, the band on two occasions performed musical works in breach of copyright.

2. Dealing with the issue as to whether the managing director had personally authorised the performances complained of, Atkin L.J. said at p 15:-
   

"In this case there is no suggestion that the appellant was privy to the commission of this wrongful act. He was away at the time. He had no idea what pieces were being performed. He gave no instructions or directions to the band to play the works in question. No one would think of holding a managing director responsible for all the wrongful acts committed by servants of the company in such circumstances. How does this particular wrongful act differ from others? It is said that the appellant authorized the performance within the meaning of the Act. I think the plain answer is that he did not. The employers of the band may be said to have authorized the performance in pursuance of a general authority, on the footing that an employer may be deemed to authorize acts done by his servant in the general scope of his employment; but that doctrine does not apply to a servant whose business is to engage other employees and even to dismiss them, and in the general scope of whose business the act complained of does not fall. To make such a servant liable he must be privy to the tortious act."

Dealing then with the question whether the managing director had permitted the theatre to be used for the performance, Atkin L.J. said:-

"The other suggestion is that the appellant permitted the theatre to be used for the performance of the works for his private profit. How did he permit the theatre to be used? He was a servant of the company. If anybody permitted the theatre to be used it was the company who were the lessees in law and in fact".

Bankes L.J. and Scrutton L.J. delivered opinions to the same effect.

1. To the like effect is the decision of Tomlin J. in British Thomson-Houston Co Ltd v. Sterling Accessories, Limited (1924) 2 Ch 33 in which his Lordship held that the two directors of a company were not liable for an infringement of patent by the company merely because they were the sole directors and shareholders of the company and, indeed, had executed on behalf of the company an agreement for the sale of the infringing articles.

2. Performing Right Society Ltd v. Ciryl Theatrical Syndicate Ltd has been cited with approval on many occasions. See, e.g., The Corporation of the City of Adelaide v. Australasian Performing Right Association Ltd (1928) 40 CLR 481 in the opinions of Isaacs, Higgins, Gavan Duffy and Starke JJ., O'Brien v. Dawson and Ors (1941) 41 SR (NSW) 295 per Jordan C.J. at p 308; Australian Performing Right Association Ltd v. Miles and Ors (1961) 3 FLR 146 per Jacobs J. at p 147. In Wah Tat Bank Ltd and Anor v. Kum (1975) AC 507, Lord Salmon, delivering the opinion of the Privy Council, said at pp 514-5:-
   

"No doubt the fact that the respondent is chairman and managing director of H.S.C. does not of itself make him personally liable in respect of that company's tortious acts. A tort may be committed through an officer or servant of a company without the chairman or managing director being in any way implicated. There are many such cases reported in the books. If, however, the chairman or managing director procures or directs the commission of the tort he may be personally liable for the tort and the damage flowing from it: Performing Right Society Ltd. v. Ciryl Theatrical Syndicate Ltd. (1924) 1 KB 1, 14, 15, per Atkin L.J. Each case depends upon its own particular facts."

1. More recently, in C. Evans and Sons Ltd v. Spritebrand Ltd and Anor (1985) 1 WLR 317, in which the question was whether proceedings against a director should be dismissed on the ground that the pleadings disclosed no reasonable cause of action against him, the Court of Appeal considered that the proceedings should not be dismissed at that stage, that is to say merely on the pleadings. Slade L.J., with whom O'Connor L.J. and Cumming-Bruce L.J. agreed, examined the authorities both in the United Kingdom and overseas. At p 329, his Lordship said:-
   

"The authorities, as I have already indicated, clearly show that a director of a company is not automatically to be identified with his company for the purpose of the law of tort, however small the company may be and however powerful his control over its affairs. Commercial enterprise and adventure is not to be discouraged by subjecting a director to such onerous potential liabilities. In every case where it is sought to make him liable for his company's torts, it is necessary to examine with care what part he played personally in regard to the act or acts complained of."

At pp 330-1, his Lordship said:-

"The Federal Court of Appeal of Canada in the Mentmore case, 89 DLR 195 eschewed any attempt to give a precise definition of the nature and extent of participation in the tortious act which will render a director who has directed or authorised it personally liable as a joint tortfeasor. As it rightly observed, this is an 'elusive question', a 'question of fact to be decided on the circumstances of each case.' Nor, with respect, do I dissent from that court's assumption that under English law, at least in some cases, broad consideration of policy may be material in deciding on which side of the line his participation fell. If there has been no 'knowing, deliberate, wilful quality' in his participation, the court may naturally be more reluctant to hold the director personally liable. Lord Salmon himself observed in the Wah Tat Bank case (1975) AC 507 that 'each case depends upon its own particular facts."

1. In the present case, Mr Jain was only one of several directors, though he was more actively engaged in the company's activities than were the others. He is not shown to have had any knowledge of the works being performed or any personal involvement in their performance. He certainly did not directly authorise, procure or instruct their performance. Nor did he impliedly authorize the performance of the particular works or of works which infringed copyright. Counsel for the applicant contended that, since the letter I have mentioned was written to him, Mr Jain had done nothing to alter what happened at the Old Windsor Tavern and that the conclusion should be drawn that Mr Jain was reckless as to whether or not breaches of copyright occurred. The evidence does not, however, justify that contention. Recklessness, or the failure to perform a duty or function that resided in him has not been proven against Mr Jain.

2. It follows, in accordance with the authorities I have mentioned, that Mr Jain was not personally liable for Valamo's breaches of the applicant's copyright.

3. The application against him must be dismissed with costs.

4. As the terms of the injunction to be granted against the company have not been agreed upon or formulated, and as the parties may wish to come to some agreement as to costs, I direct that within 14 days the parties bring in short minutes to give effect to these reasons.