Australian Performing Right Association v Dion

[2016] FCCA 2330

FEDERAL CIRCUIT COURT OF AUSTRALIA

AUSTRALIAN PERFORMING RIGHT ASSOCIATION v DION & ANOR [2016] FCCA 2330

Catchwords:
COPYRIGHT – Infringement of copyright by the first respondent holding the 2014 Soulfest Concert – awarding of additional damages – flagrant breach – failure of the first respondent to comply with requirement of advanced payment – false representation that advanced payment was made – dishonesty by first respondent – failure to provide information –other conduct by first respondent after infringement – failure to pay compensation under s.115(2) – consideration of deterrence – under s.115(4) Copyright Act 1968 (Cth) – assessment of additional damages awarded.

Legislation:

Copyright Act 1968 (Cth), ss.35,115.

Federal Circuit Court Rules 2001, r.13.03C(1)(e).

Cases cited:
Seafolly Pty Limited v Fewstone Pty Ltd [2014] FCA 321
Aristocrat v DAP (2007) 157 FCR 564

Applicant: AUSTRALIAN PERFORMING RIGHT ASSOCIATION

First Respondent: JOHN DION

Second Respondent: SOULFEST INTERNATIONAL PTY LTD

File Number: SYG 2789 of 2015

Judgment of: Judge Street

Hearing date: 6 September 2016

Date of Last Submission: 6 September 2016

Delivered at: Sydney

Delivered on: 6 September 2016

REPRESENTATION

Counsel for the Applicant: Mr M Hall

Solicitors for the Applicant: Banki Haddock Fiora

Solicitors for the Respondents: No appearance by or on behalf of the Respondent

ORDERS

1. The hearing proceed under r.13.03C(1)(e) of the Federal Circuit Court Rules 2001.

2. The First Respondent pay additional damages under s.115(4) of the Copyright Act 1968 (Cth) in the sum of $400,000.00.

3. The First Respondent pay to the Applicant, the Applicant’s costs of the proceedings fixed in the amount of $70,000.00.  

4. Vary order 4 made on 10 March 2016 by deleting the same and the Court hereby orders the Second Respondent pay to the Applicant, the Applicant’s costs of the proceedings up to and including 15 October 2015 fixed in the amount of $50,000.00.  

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2789 of 2015

AUSTRALIAN PERFORMING RIGHT ASSOCIATION

Applicant

And

JOHN DION

First Respondent

SOULFEST INTERNATIONAL PTY LTD

Second Respondent

REASONS FOR JUDGMENT

Application of r.13.03C(1)(e) of the Federal Circuit Court Rules 2001

1. On the material before the Court, I am satisfied this is an appropriate case, in circumstances where the first respondent has failed to appear, to exercise the Court’s powers under r.13.03C(1)(e) of the Federal Circuit Court Rules 2001 and proceed with the hearing. I am satisfied that the first respondent was aware of the hearing date.

2. I am satisfied the first respondent was informed on 9 August 2016 that any adjournment application had to be made by an application in a case and supported by affidavit material. The email sent on 5 September 2016 does not adequately explain circumstance as to why the first respondent is not present.  In my opinion, this is an appropriate matter in which to proceed with the hearing under the said rule.

Background

1. This is a matter within the Court’s jurisdiction under s.131D of the Copyright Act 1968 (“the Act”). The applicant is seeking additional damages under s.115(4) of the Act against the first respondent.

2. A differently constituted Court has earlier made consent orders, as follows: 

   1. Leave be granted to the First Respondent, being the sole director and shareholder of the Second Respondent, to represent the Second Respondent before the Court for today only.

   2. Judgment be entered for the Applicant against the First Respondent in the sum of $34,822.14 for compensatory damages, plus interest of $3,000 (“the Judgment Sum”)

   3. The Judgment Sum to be paid in the following amounts and on the following dates:

   a. $10,000 by 17 March 2016;

   b. $13,000 by 14 April 2016;

   c. $14,822.14 by 19 May 2016.

   4. The Second Respondent pay the Applicant’s costs of the proceeding up to and including 15 October 2015 as agreed or taxed.

   5. The matter is otherwise stood over for further directions on 31 May 2016 at 10:00am, before me.

   NOTE: The Court notes the agreement signed by the First Respondent and the solicitor for the Applicant, a copy of which is annexed and marked “A”.

3. The orders were made pursuant to an agreement on 10 March 2016 between the parties which is as follows:- 

   1. Judgment for the applicant against John Dion (also known as John Denison) in the sum of $34,822.14 for compensatory damages, plus interest of $3,000.00.

   2. Order that the said judgment may be satisfied by payment by instalments:

   1.   By 17/3/16 of $10,000

   2.   By 14/4/16 of $13,000

   3.   By 19/5/16 of $14,822.14

   3. Order the Second Respondent may pay to the Applicants costs of the proceedings up to and including 15 October 2015.

   4. Questions of additional damages and costs against the 1st Respondent be adjourned for hearing on…. 2016.

4. The above order 1 reflects an award of compensatory damages under s. 115 (2) of the Act. The current application is now for additional damages under s.115(4) of the Act in accordance with order 2 above against the first respondent only. The award of additional damages arises as a result of the copyright infringement by the first respondent contrary to s.36 of the Act in the unlicenced holding of live performances known as the 2014 Soulfest Concert.

5. Prior to the making of the consent orders the applicant had served submissions upon the first respondent which were filed on 17 February 2016. The submissions included reference to the seeking of additional damages against the first respondent, identifying the principles in that regard and a significant number of decisions of this Court and the Federal Court of Australia in relation to the award of additional damages in relation to infringements in other cases. Those submissions recommended damages in the amount of $300,000. It is relevant that the respondent has not bothered to appear in relation to the assessment and award of damages in the amount recommended under s.115(4) of the Act.

Additional damages sought against the First Respondent

1. The first respondent has an alias, John Denison, which the first respondent has used in relation to his identity as a director of the corporate entity that held the 2014 Soulfest Concert. That corporate entity, International Events Group Pty Limited, has been placed into administration. It is in those circumstances that the application for additional damages is pursued only against the first respondent, who is the sole shareholder, sole director and corporate mind of the entity International Events Group Pty Ltd and, relevantly, was the person who authorised the doing of the acts of infringement in relation to the 2014 Soulfest Concert.

APRA Licence application

1. On 15 September 2014 the first respondent signed, using the alias name, John Denison, an Australian Performing Rights Association (“APRA”) licence application for concert promoters with the applicant. That signed concert promoter application was in the name of the corporate entity which is now in administration, International Events Group Pty Ltd.  That licence application related to the intended holding of the 2014 Soulfest Concerts at Victoria Park, Sydney on 18 October 2014, at the Sidney Myer Music Bowl, Victoria on 19 October 2014 and at Brisbane Riverstage, Queensland on 25 October 2014. 

2. When the entity International Events Group Pty Ltd sought to obtain from the applicant the concert promoters licence, an officer of the applicant carefully considered the application and was aware of the alias used by the first respondent of John Denison. That officer identified that APRA had repeatedly experienced significant difficulties in relation to licencing concerts connected with the first respondent in which the applicant had authorised the performance of musical works in Australia. The officer noted that the first respondent’s history of failing to comply with his licence obligations dated back many years and that there were three disputes with the first respondent that were ongoing at the time of this proposed licence.

3. The applicant holds the exclusive rights to licence the live performance of works of the APRA members as well as holding similar rights on behalf of affiliated overseas entities that hold exclusive rights in relation to overseas artists. The applicant holds these rights for the benefit of the owners of copyright in musical and literary works the subject of the proposed live performances. The role the applicant plays in protecting the copyright of its members is of considerable significance and importance to musical artists in Australia and also in protecting the copyright of overseas artists. 

4. It is apparent from the evidence before the Court, that the first respondent was well aware of and alive to the obligation to obtain a licence in respect of the 2014 Soulfest Concert. The making of the application for the concert promoters licence in the name of International Events Group Pty Ltd, clearly proves the first respondent’s knowledge and awareness of the licencing obligations in relation to the live performance that was proposed in relation to the 2014 Soulfest Concert.

5. The officer of the applicant who received the application, took into account the first respondent’s past history and determined that it was appropriate in relation to the entity International Events Group Pty Limited and the first respondent who was using his alias John Denison, to impose an obligation for a payment in advance for the conduct of this particular Soulfest Concert. 

6. The applicant is well alive to the importance of promoting licenced live performance for musical artists in Australia. Ordinarily the applicant would permit concert promoters who agree to the licence conditions a period of credit subsequent to the performance to facilitate payment of the licence fee which relevantly to the calculation of the fee include an obligation under the licence to provide information to the applicant.  That ordinary practice of the applicant facilitates and promotes the live performance of music in Australia which is much to be encouraged.  Licenced live performance of music in Australia benefits the copyright owners, the performing artists, the audience as well as being, like all performing art, to the general advancement, welfare and enjoyment of the Australian community.

Requirement of Advanced payment of the Licence

1. It was entirely appropriate and reasonable for the officer in the present case, taking into account the first respondent’s history, to determine that the copyright owners’ interests were best protected in the present case by requiring an advance payment. The officer, on the information available at the time of the application, initially imposed an advance payment requirement in the sum of $82,357.51. As a result of further information provided by the first respondent in relation to the current sales for Sydney, Melbourne and Brisbane, a revised advance fee was calculated in the sum of $30,724.56. 

2. The first respondent had earlier signed an application in relation to the full advance fee of $82,357.51 on 15 September 2014. As a result of the revised fee, the first respondent again signed an APRA application for licence, very shortly before the commencement of the proposed concerts. The first respondent again signed using the name John Denison. 

3. The applicant acted reasonably and properly by revising the advance amount payable in light of the information provided by the first respondent in order to try and ensure and encourage the performance of live music in Australia. The first respondent was clearly alive to the obligation to obtain a licence in order to conduct the 2014 Soulfest concert and signed the amended licence application requiring payment in advance of $30,724.56 in respect of the proposed performances to commence in two days’ time. The first respondent failed to pay that advance amount or to cause International Events Group Pty Limited to pay that advance amount. 

4. The 2014 Soulfest Concerts were held in contravention of the term that required advance payment by International Events Group Pty Ltd. The licence that had been granted was identifying as having a particular scope in clause 1.1. Under clause 1.1:-

   1.1 APRA grants the Applicant a licence to perform in public Works within APRA’s repertoire in the circumstances and by the methods described on the front of this agreement.

5. The reference in the licence to “in the circumstances and by the method as described on the front of this agreement” relevantly include, the requirement for the advance payment. By reason of the failure to pay in advance the live performance was unauthorised and there was no licence to hold the 2014 Soulfest Concerts. In these circumstances, International Events Group Pty Limited and the first respondent authorised the doing of acts in Australia that constitute an infringement of the musical and artistic works of both the Australian members of APRA and for its affiliated entities’ overseas artists. 

Deliberate Infringement of s.36(1) of the Copyright Act 1968

1. On the evidence before the Court, there was a flagrant infringement of s.36(1) of the Act by the first respondent and International Events Group Pty Ltd. The Court finds the infringement was deliberate and calculated to obtain a pecuniary advantage by the first respondent. Recordings were made of part of those performances and the evidence before the Court proves that they were artistic works by members of APRA that were the subject of live performance at the 2014 Soulfest Concert.

False representation that the advanced payment had been made

1. Shortly prior to the commencement of the 2014 Soulfest Concert, the first respondent made representations to a solicitor on behalf of the applicant that payment of the advance amount had in fact been made.  Those representations were false. The Court finds that the false representation as to advance payment was made knowingly by the first respondent. That is scandalous and blatant conduct that adds to the gravity and flagrance of the infringement by the first respondent in the present case. The first respondent provided to the solicitor for the applicant a purported receipt sent undercover of an email dated 17 October 2014, sent at 8.34 pm, purporting to record the transfer from a particular account to APRA of the amount of $31,000.00. That receipt, on the evidence before the Court, is a false document.

2. On the evidence before the Court, the first respondent attempted to deceive the applicant in relation to the holding of the 2014 Soulfest Concert by falsely suggesting that payment had been made to the applicant for the holding of those live performances. This is blatant dishonest conduct by the first respondent in relation to the flagrancy of the infringement. The attempted deceit as to payment shows knowledge on the part of the first respondent as to the role and importance of the licencing requirements for the conduct of the live performance. The attempted deceit also shows the first respondent was prepared to be dishonest in order to permit the applicant to be deceived into believing a payment had been made to facilitate the live performance for the first respondent to reap financial benefits. The circumstances mean that the first respondent was well aware that there was no licence, authority or right to hold the concerts under the scope of the licence issued by the applicant in the absence of payment in advance. 

3. Deceiving the applicant in relation to its licencing activities is grave and scandalous conduct that is a significant aggravating factor in respect of the need for deterrence. This conduct demands a substantial and heavy response in the assessment of additional damages to protect the interests of those who own copyright works. There is obviously a real need in the assessment to specifically deter the first respondent from such conduct. There is also a real need to deter others from similar conduct. The first respondent has failed to appear at this hearing, having been given notice of the same and having been served with the submissions in relation to the additional damages being sought by the applicant. 

4. The absence of the first respondent supports the Court drawing the adverse inferences in relation to the dishonesty of the first respondent in the provision of that false receipt. That dishonest conduct by the first respondent was clearly intended to prevent the applicant from enjoining the first respondent and the corporate entity from the holding of the unauthorised and unlicenced live performances. Such an injunctive step is obviously one in which it is most unfortunate in respect of the artists and intended concert goers where the concert promoter holds no licence for a live performance. I find that the first respondent knew that the Court would grant injunctive relief to prevent infringement of copyright if payment in advance had not been made. The Court will be quick to protect the rights of holders of copyright by injunctive relief where a prima facie case has been made out. This in fact occurred in respect of the first respondent and the 2015 Soulfest Concert. 

Infringement for failure to make advance payment

1. A further infringement in respect of a different corporate entity, which was owned and controlled by the first respondent was prevented by the grant of injunctive relief. The first respondent proposed to hold a 2015 Soulfest Concert through a different corporate vehicle. Shortly before the 2015 Soulfest Concert the first respondent was, through the corporate vehicle, granted a licence for live performances that required an advance payment.

2. The first respondent had not had not made the payment required by the licence to facilitate holding the 2015 Soulfest Concert. An injunction was obtained from this Court differently constituted which prevented the holding of that concert without a licence from the applicant. The injunction was granted by reason of the failure of the first respondent to cause payment of the required advance licence fee.

3. The first respondent, within almost 24 hours of the time for holding the same, cancelled the 2015 concert. The first respondent informed the public, on the evidence before this Court, that the cancellation was due to poor ticket sales. 

4. The Court finds that the first respondent falsely conveyed to the public that the cancellation was due to low ticket sales when, in fact, the cancellation was due to the failure of the first respondent and his corporate entity to be willing to pay the licence fee to the applicant for the holding of that concert. In my opinion, this blatant subsequent conduct by the first respondent is a relevant matter within s.115(4) of the Act that the Court can and has taken into account in considering the quantum of additional damages to be awarded in the present case.

5. Section 115(4) of the Act provides:-

   (4)  Where, in an action under this section:

   (a)  an infringement of copyright is established; and

   (b)  the court is satisfied that it is proper to do so, having regard to:

   (i)  the flagrancy of the infringement; and

   (ia)  the need to deter similar infringements of copyright; and

   (ib)  the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff's copyright; and

   (ii)  whether the infringement involved the conversion of a work or other subject-matter from hardcopy or analog form into a digital or other electronic machine-readable form; and

   (iii)  any benefit shown to have accrued to the defendant by reason of the infringement; and

   (iv)  all other relevant matters;

   the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances.

6. The principles governing s.115(4) of the Act have been discussed in Seafolly Pty Limited v Fewstone Pty Ltd [2014] FCA 321 at [623-629] and are usefully identified in Aristocrat v DAP (2007) 157 FCR 564 at [41]-[45] as follows:

   Flagrancy is not an essential prerequisite for an award of additional damages . It is sufficient if the Court is satisfied that any one or more of the circumstances set out in s 115(4)(b) is established: Raben Footwear Pty Ltd v Polygram Records Inc [1997] FCA 370; (1997) 75 FCR 88 at 93 (Burchett J), 103 (Tamberlin J), 104 (Lehane J); see also Polygram Pty Ltd v Golden Editions Pty Ltd (1997) 76 FCR 565 at 575 (Lockhart J); Sony Entertainment (Australia) Ltd v Smith [2005] FCA 228; (2005) 215 ALR 788 at [158].

   Additional damages under s 115(4) may be awarded on principles that correspond to those governing awards of aggravated and exemplary  damages  at common law: Autodesk Inc v Yee (1996) 68 FCR 391 at 394 (Burchett J). The principle stated inLamb v Cotogno [1987] HCA 47; (1987) 164 CLR 1 at 9-10, cited by Rares J at [114] is therefore applicable.
   
   The objectives of an award of additional damages  include deterrence: s 115(4)(b)(ia). An element of penalty is an accepted factor in the remedy; Autodesk v Yee 68 FCR at 384.
   One of the factors referred to in s 115(4)(b) is any benefit shown to have accrued to a defendant by reason of the infringement : see s 115(4)(b)(iii). In construing the English equivalent provision, Brightman J said that “benefit” implies that the defendant has reaped a pecuniary benefit in excess of the damages  otherwise payable: Ravenscroft v Herbert [1980] RPC 193 at 208. It is possible, however, that the benefit need not be confined to a pecuniary one: Polygram v Golden Editions 76 FCR at 576.
   
   There need not be any proportionality between the amount of compensatory  damages  awarded under s 115(2) and the amount of additional damages ordered under s 115(4): Raben 75 FCR at 93, 103, 104; see also Microsoft Corporation v PC Club Australia Pty Ltd [2005] FCA 1522; (2005) 148 FCR 310 at 409-410 (Conti J).

1. For the reasons already given, I am satisfied that it is proper in the present case to award additional damages to the applicant against the first respondent under s.115(4) of the Act. I am satisfied that the applicant has proved infringement of copyright, on the evidence before the Court, by the first respondent holding unlicenced live performances being the 2014 Soulfest Concerts.

2. The Court finds the conduct of the first respondent in the infringement that occurred in the present case was deliberate, for financial benefit and as such a flagrant disregard of the licencing requirements and the interests of copyright owners. More importantly and to the strongest disapproval of the Court the infringement conduct involved dishonesty on the part of the first respondent. This is conduct by the first respondent that must be clearly deterred by the quantum of the additional damages if copyright in Australia is to be properly protected.

Deterrence of First Respondent’s conduct and others

1. The Court takes into account the need to deter the first respondent from similar scandalous infringements of copyright in the future. as There is evidence that has been adduced in relation to the holding of further events involving the first respondent and the obtaining of licences. The conduct in the present case is also aggravated by the failure to comply with the obligations imposed in respect of the provision of information to the applicant following the conduct of those concerts. That is further conduct is a relevant matter to take into account in respect of the quantum of the additional damages in the present case. The Court takes into account after the act of infringement the conduct of the first respondent and corporate entity in failing to provide proper information in respect of that 2014 Soulfest Concert to the applicant. 

2. The award of additional damages must also take into account, in relation to the need to deter similar infringements, the deterrence of others.  In the present case, the gravity and flagrance of the infringing conduct involving dishonesty is something that this Court must take into account in ensuring the clearest discouragement to others in relation to the infringement of copyright

Failure to pay compensation under s.115(2)

1. The Court also takes into account the failure of the first respondent and the corporate entity controlled by the first respondent to make any payment after the holding of that 2014 Soulfest Concert to the applicant prior to the commencement of these proceedings. The Court also takes into account in the present case that the first respondent obtained the benefit of consent orders for instalment payments referrable to the compensatory damages that were ordered by the Court in respect of the act of infringement relevantly, by the first respondent.

2. At the time that the Court made those orders, albeit differently constituted, the first respondent was informed in person that a failure to comply with the instalment arrangement identified was a matter that could be taken into account in relation to the award of additional damages. The first respondent has not put on evidence to explain his failure to pay the instalments or to explain his financial circumstances in that regard.

3. There is evidence of expectations that the first respondent might receive further funds from other activities that he was carrying out.  There has not however, been any candid explanation by the first respondent as to the circumstances surrounding his failure to make those payments.  The failure to pay the compensation ordered is a relevant matter in relation to the conduct of a party to proceedings in respect of the copyright infringement.

4. Accordingly, the Court also takes into account the fact that to date the first respondent has ignored and failed to pay the applicant any amount in relation to the 2014 Soulfest Concert. No payment was made prior to the commencement of these proceedings or after the making of orders by this Court facilitating a payment in that regard. The Court notes this is not a matter in relation to which there is any need to have regard to s.115(4)(b)(ii) of the Act.

Gross Benefits

1. The Court also takes into account that the first respondent, through his corporate vehicle, is likely to have obtained gross receipts in relation to the conduct of that 2014 Soulfest Concert of at least $1.9 million.  Whilst the sum of $1.9 million is a gross figure, the first respondent has clearly benefited from authorising the flagrant infringement in respect of the live performances that were conducted at the 2014 Soulfest Concert. 

2. On the evidence, the Court is satisfied that the first respondent benefited from the receipt of a gross amount of at least $1.9 million, albeit the Court accepts that a substantial portion of that gross receipt would have been paid to other creditors and the performers. 

3. The first respondent however, has not appeared to explain to the Court the actual quantum that was received or how those receipts, in respect of that benefit, were applied. On the evidence before the Court, the Court finds the first respondent obtained a substantial benefit from part of those gross receipts which the first respondent, through his corporate entity, obtained by reason of the infringement. It is part of the object of additional damages under s.115(4) to strip the first respondent of the benefit received by flagrant infringement.

Other Factors

1. The Court has taken into account that the first respondent does now appear to be complying with licencing obligations in Australia in relation to the conduct of more recent licenced performances. The Court takes into account the advantage to the applicant, the artists represented by the applicant and the Court that the first respondent and the second respondent consented to the orders that were made pursuant to the document dated 10 March 2016 signed by the first respondent using the name John Dion.

2. In the evidence before the Court, it does not appear that the use of the alias John Denison has been used by the first respondent to deceive the applicant. A birth certificate was provided by the first respondent to the solicitor for the applicant in 2014. It is not apparent why the first respondent has used other than his true name in dealings with ASIC but that is not a matter which this Court takes into account in determining the additional damages under s.115(4) of the Act.

3. The Court does however, take into account the aggravating conduct by the first respondent in which the first respondent was willing to cancel the 2015 Soulfest Concert in circumstances which I find were due to the failure to pay the licence fee to ASIC and to falsely represent to the public that the cancellation was due to poor ticket sales. The Court also takes into account that it was necessary for the applicant to approach this Court to make out a prima facie case in relation to another corporate entity in order to prevent the first respondent authorising acts of infringement in respect of the 2015 Soulfest Concert.

4. The Court has also had regard, to the failure to pay pursuant to the compensation reflected in orders made by this Court. The dishonesty of the first respondent and flagrancy of the infringement that have earlier been identified, together with the other matters to which I have referred, are taken into account by this Court in assessing an appropriate award of additional damages for infringement under s.115(4) of the Act. I am satisfied that it is appropriate to award substantial additional damages.

5. In my opinion, the appropriate assessment of additional damages, taking into account the matters I have referred to in the circumstances of this flagrant infringement involving dishonesty and to make manifest the Court’s disapproval of this conduct, is an award of damages in the sum of $400,000.00.

I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of Judge Street

Date: 17 November 2016