Australian Tape Manufacturers Association Ltd & Ors v The Commonwealth of Australia - [1992] HCATrans 65

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No Ml2 of 1990
B e t w e e n -

AUSTRALIAN TAPE MANUFACTURERS
ASSOCIATION LTD, BASF AUSTRALIA
LIMITED and TDK AUSTRALIA PTY

LTD

Plaintiffs

and
THE COMMONWEALTH OF AUSTRALIA

Defendants

MASON CJ
BRENNAN J
DEANE J
DAWSON J
TOOHEY J

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10/3/92

GAUDRON J

MCHUGH J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 10 MARCH 1992, AT 10.17 AM

(Continued from 26/2/91)

MR R.J. ELLICOTT, OC:

Your Honours, I appear with

DR C. HOWARD for the plaintiffs. (instructed by
Blake Dawson Waldron.

MR G. GRIFFITH, OC, Solicitor-General for the Commonwealth:

If the Court pleases, I still appear with my learned friends, MR J.D. MERRALLS, OC, and
MR C.M. MAXWELL, for the defendant. (instructed by
the Australian Government Solicitor)

MASON CJ: Yes, Mr Solicitor.

MR GRIFFITH: If the Court pleases, our submission to the

Court is that the plaintiffs have closed their case
on the copyright issue and should be confined in
argument to the issue of tax and acquisitions.

MASON CJ: Yes. Well, I must say that having regard to what

was said at the conclusion of the hearing on the
last occasion that would be my expectation.

MR GRIFFITH: If Your Honour please.

MASON CJ:

Now, Mr Catterns, is your position still the

same, that you are waiting in the wings and may
apply for leave to intervene at some later stage?

MR D.K. CATTERNS: If that is convenient to the Court,

Your Honour?

MASON CJ: Very well.

MR CATTERNS:

May it please the Court.

MASON CJ: Yes, Mr Ellicott.

MR ELLICOTT:

Your Honours, we have prepared some

submissions. They do cover the question of

copyright. I am rather surprised that the Crown
should get up and ask that we not be heard further
on the matter; after all, we are concerned about

the validity of the Commonwealth statute. However,
we have prepared some outlines and if I can have
those handed to Your Honours and then I could
explain what they are doing.
Your Honours, conscious of the fact that this

matter has occupied the Court's time for a day,
what we have done here, as Your Honours will see,
is to insert in this folder outline of submissions
on each of the major matters, copyright, taxation
and acquisition of property. We have then inserted
a number of documents: the first is our analysis of
the provisions of the part of the Copyright Act
which is under attack; a more lengthy submission on
copyright, having in mind, perhaps, the Court's
reluctance to hear us at great length on the

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10/3/92

matter. Then there is a paper on compulsory
licenses because of their relevance to this matter
and there is a question which arises in relation to

authorization. Now, the outline of submissions on
copyright will be found under tab 1 and
Your Honours may wish to read that.

MASON CJ: Yes. It seems to be a convenient summary of what

was put on the last occasion, Mr Ellicott.

MR ELLICOTT: There are a few additional extras,

Your Honour, but no matter; we can handle it in
reply within the discretion of the Court if my
friend,seeks to invade the sanctity of those
propositions. It is very fundamental to our other
arguments, of course, and particularly the third
argument on acquisition, to understand what the
nature of copyright is as we put it. That is to
say that copyright is the control of copying, and
that needs to be kept steadily in mind if that
submission is correct in relation particularly to
the submission on acquisition of property.
Your Honours, I go to the outline of

submissions on taxation. I take it my friend will
not leap to his feet in relation to that.

MASON CJ:

I would not be too sure, Mr Ellicott.

MR ELLICOTT:

Would Your Honours have read that?

Your Honours wish to read it, or shall I just
address the Court?

MASON CJ:

I think you can proceed, Mr Ellicott.

MR ELLICOTT: If Your Honours please. Could I take

Your Honours first of all just quickly to the sections to identify those to which we are
referring. This argument is put whether or not it

is a law with respect to copyright. It is put on

the basis that a law may be a law as to copyrights,
or any other subject-matter within section 51, but
nevertheless be a law with respect to taxation, and
therefore it has to comply with the provisions of
section 55 of the Constitution. So this argument
is not an alternative to the first submission.
The third argument, about acquisition of

property, is an alternative to the second, but of course it too, just picking up the same point, is
rather dependent on it being established that the
law is a law with respect to copyrights, if indeed
it is as well a law with respect to the acquisition
of property. Copyrights, because that is the only
head under which it could be said, we would submit
it is a law for the purposes of the Commonwealth.

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Now, so far as taxation is concerned, it seems

what we have done here is first to list those
matters which we would say would suggest it is not

a tax. Now, first of all, there is no suggestion
in the relevant legislation that the Parliament
intended it to be a tax; they called it a royalty.
Of course, the word "royalty", as we know, is
misplaced in that provision; it does not have a
meaning there which accords with the ordinary
meaning of "royalty". It is simply an exaction of some money from the vendor of blank tapes and, as such, it is not related in any way with the use of
copyright on those tapes, because the vendor has no
rights to grant, no authority to give, no power
over the copyright. And so the word "royalty"
cannot be given its ordinary meaning; it just does

not bear it in that provision. The draftsman seems
to have been overborne by those instructing him,
because he surely would not have used the word
"royalty" to describe what was being taken from the
vendors.
On the other hand, as one gathers from these provisions, one does riot get the impression that
the Parliament thought it was imposing a tax. So,
that is the first step in an argument.
The second is significant because it takes the'

Court back to a fundamental provision in the
Constitution, and that is section 81:
All revenues or moneys raised or received by the Executive Government of the Commonwealth
shall form one Consolidated Revenue Fund.

As Your Honours know, the words "Consolidated
Revenue Fund" and the concept of the fund come out
of the history of the development of the
relationship between the Parliament and the Crown
in the centuries prior to Federation, and by 1885,
I think it was, when Maitland wrote those passages

that are referred to there, by then a consolidated fund had been established in the United Kingdom and
the colonies, of course, had also, to some degree,
that is, accepted the notion that of a consolidated
fund, but be that as it may, whatever happened
there, so far as the Commonwealth is concerned this

took over the notion of a consolidated fund; it
was a consolidated revenue fund.
"All revenues or moneys raised" - "raised" is

a word appropriate in the dictionaries to the
levying of taxes and, therefore, it would cover -
if this is a tax - anything that was raised, so the
words, "All revenues or moneys raised" are

appropriate to cover these sums. The words then
are "by the Executive Government of the

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Commonwealth". Now, what does that mean? There
are only three powers in the Constitution, as we
would submit it: the legislative power, the
judicial power and the executive power, and the
phrase, "the Executive Government of the
Commonwealth", we would submit, is intended to
embrace all that goes with the executive power,
that is, to sustain and maintain, as section 61
provides, the maintenance of the laws of the
Commonwealth.
The executive power is anything that is

involved in the maintenance and implementation of
the laws of the Commonwealth. It is wrong to think
of the executive power as finishing with the
Executive Council or finishing with a minister or

finishing with some officer in a department. We
would submit the executive power goes right through
and it would go, for instance, to the collecting

society in this case. It would go to the exaction
of money from the vendors and all that money, we
submit, is money raised by the Executive Government
of the Commonwealth.
Now, I do not know of any authority where the

Court has discussed this before but it is
fundamental, we would submit, to parliamentary
government and it is fundamental to the notion that
if a tax is raised then it ought to be in the
Consolidated Revenue Fund so that section 83 of the
Constitution can apply to it, so that Parliament
can say, "That won't be appropriated except for
this purpose." If moneys are allowed to get out into little pockets of funds all over the place, well, that is the first step towards either
corruption, perhaps, or alternatively, towards a
lack of control by Parliament over the
administration of funds.
So, it is a fairly significant proposition and

we would submit that here - first of all, it is a

pointer that it is not a tax. On the other hand,
if it is a tax, then it is invalid because it does
not comply with the provisions of section 81 of the
Constitution. In other words, it is invalid
because it provides for payment into a fund other
than the Consolidated Revenue Fund.
I will not stop to read those passages from

Maitland, but particularly those from page 434
onwards, they deal with the history, the
relationship between the Crown and Parliament, and
they emphasize the extent of the view that
Parliament should have control over funds raised.
In England, and it would appear, here, funds raised
by way of loan do not go into consolidated
revenue - that is a different aspect of it - but

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certainly those funds that are raised, we would
submit, have to.
There really is no basis upon which a law can

be passed consistently with section 81 that can
allow taxes to be exacted or raised which do not
find their way into consolidated revenue. There is
nothing inconvenient about that. If it is
inconvenient, that is unfortunate. It just happens
to be, we would submit, a fundamental
constitutional principle. It is when governments
try to govern outside that principle that they
sometimes get themselves into difficulties.
So that is either a pointer away from it being
a tax or, alternatively, if it is a tax, then it is

an inv·al id tax. The second proposition has , we
would submit, a certain fundamental effect on this

sort of legislation. Then we submit, not having
been paid into consolidated revenue, the proceeds
of the levy are not subject to parliamentary
scrutiny. That is a continuation of that
principle.
Another aspect of this, if it is a tax: there

are no provisions which ordinarily accompany the
imposition of a tax. There i~ no review procedure,
no penalties for late payment, no payment of
interest; all those provisions that the Court is
so familiar with in relation to the taxation
statutes. There is nothing here to indicate that.
Then, the amount of the levy is fixed by

reference to a formula in which A is determined by
a tribunal before which a vendor has no right as

such to appear. Now, this and the next
proposition, and perhaps (g) as well, related to
some of the submissions that were put in
MacCormick's case, in relation to the recoupment
taxes, the recoupment of the bottom of the
harbour tax, but even though in those cases the

Court said, well these are laws with respect to taxation, nevertheless, the fact that these
provisions have this effect are a pointer away from
them being a tax. In other words, one would expect
a tax to be contestable and we say that, looking at
these provisions here, they are in a real sense
incontestable, first of all because the vendors
have no right to appear before the tribunal that
fixes the amount and once it is fixed, that is it
that can be recovered; it is just A times NM, the
number of minutes. And, not only that, when you go
to the provision - and I will take Your Honours to
it in a moment, 153E(7) - the criteria laid down
are very wide and we would submit are wider for
instance than the criteria in Giris' case. Now

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10/3/92

could I take Your Honours to section 153E.
Subsection (2) provides:
An application may be made to the

Tribunal for an order determining, or making provision for determining, the amount per minute of normal playing time of a blank tape that is payable under Part VC by way of royalty for the blank tape.
(3) An application may be made by any person
who has an interest in the matter that is the
subject of the application, including the
collecting society, a vendor or a relevant
copyright owner.

(4) The parties to an application are:
(a) the applicant; and
(b) such persons or organizations as are made
parties -

So, there is no right to the vendors to be there.

(5) Where a person ..... applies ..... to be made
party ..... and the Tribunal is satisfied that
the person ..... has an interest in the matter
that is the subject of the application, the
Tribunal may, if it thinks fit, make that
person ..... a party -

So, it is all in the discretion of the tribunal.
(6) Subject to subsection (9), the Tribunal
shall consider an application under
subsection (2) and, after giving the
parties ..... an opportunity of presenting their
cases, shall make an order determining, or
making provision for determining, the amount
per minute -

et cetera.
(7) In making an order, the Tribunal shall
take into account all relevant matters
including the extent to which blank tapes are
used for the purposes of making copies of
eligible sound recordings and eligible works
for private and domestic use.
Now, the point that we make under (e), I have

covered by reference to paragraphs 4 and 5. The
point we make under (f) is made in relation to 7
because what it is saying, in effect, is that that
provides for something which really is
incontestable because it could lead, in terms of the principles that this Court accepted in those

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cases, to decisions being made upon criteria which
were unknown and which could not be challenged
because there is such a wide discretion. At least,
in Giris' case it was a choice between whether the
taxpayer would be assessed under section 99 of the
Income Tax Assessment Act or section 99A. That, at
least, gave it some sort of limit, but here the
provisions, we would submit, are completely at
large except that they must take into account the
extent to which blank tapes are used for the
purposes of making copies of eligible sound
recordings.
Now, lurking in the second reading speeches in

relation to this legislation is the notion that
these moneys, when they are given to the collecting
society, can be used for all sorts of purposes such
as 15 per cent to Ausmusic, an Australian musical
society. That is a very worthy cause, and we are
not saying that that is not a good idea, but it
just happens to be that in the past that has been
provided, no doubt, through the Department of the
Arts, but in the future, I assume, it is going to come from the blank tape vendors. They are going
to have to pay it, in effect. So, 15 per cent can
go up to 15 per cent, and then they can make
donations to institutions. That seems to be
contemplated in this legislation, and one gets that
out of - and although the regulations cannot pull
it up, we know that, but nevertheless, in the
regulations those propounding this legislation have
already started to introduce those notions. For
instance, 23P, I think, is one worth looking at.

MASON CJ: I do not have it. Is it short? Can you read it

out conveniently, Mr Ellicott?

MR ELLICOTT: I think so. 23P(l):

For the purposes of paragraph 135ZZU -

Now ZZU, I remind the Court, is the provision
relating to the setting up of the collecting
society -
the following provisions are prescribed .....
(c) that the collecting society ensure that
amounts of royalties are collected .....
(d) that the total amount of any gifts for
cultural or benevolent purposes made by the
collecting society in respect of any
accounting period be an amount not exceeding
such percentage of the total amount of the
royalties received by the society ..... as is
specified in the rules.

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Now, the rules are those of the society and

the society may provide as the putative society's
rules, I understand, provide for up to 15 per cent to go. So we are dealing here with something that
this taxpayer could never come to grips with. It
is really incontestable. There is no benchmark
against which it can be measured. So that is a

pointer away from it being a tax. Now, both
MacCormick's case and Truhold's case deal with

those matters. I do not think I need take

Your Honours to those authorities. They are well
known and the propositions - we are not seeking to
gainsay the propositions in those cases or go
behind them, we are simply submitting this, that if you find that something is not contestable, even if
it is a wide discretion, such as Giris, you might
think well, perhaps that is not a tax, but here it
goes that extra step, in our submission, that it
truly is incontestable within the principles in
those cases.
In (g), we say the royalty is an exaction on A

to satisfy what might or might not, but for
Part VC, have been a liability of B to pay an

amount to C. Now Bis the individual who is using
it for private or domestic purposes and C is the
copyright owner. A has no relevant connection with
any obligation by B, present or future, to pay an

amount to C. Now that, we submit is not a law with
respect to taxation and we get that from
Waterhouse's case, 17 CLR, and if I may just take
Your Honours to that. This is the case where the
wife was charged with the land tax and at page 669
Chief Justice Griffith said, half-way down:
The appellants contend that the section

is invalid as not being within the powers
conferred upon the Parliament by the
Constitution. It is objected that the
section, if valid, operates not as imposing

land tax but as imposing a liability upon one
person to pay another's debt, and that such an
imposition is not within the powers of the Parliament enumerated in the Constitution.
Even if it be conceded that Parliament may
under the general power of "taxation" impose a
pecuniary liability upon any person for any
cause it thinks fit, irrespective of the
ownership of property, then, it is said, the
subject of taxation in such a case is the
person taxed, and not property or its
ownership.
Then there is a reference over the page to

Osborne's case, and in the middle of 670:

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In considering the question of the
validity ..... the Court has regard to the
substance of the matter. In my judgment
sec 36 is in substance an attempt to impose a
pecuniary liability as a consequence of a
transfer of land by a husband to his wife, or
by a wife to her husband, which is pro tanto imposing a restraint upon such dealings, and

the question is whether the Parliament has
power to do so.

He goes on to find that it does not. There are,
admittedly, sort of notions about the old doctrine
of implied immunity, et cetera, wandering through

all the cases. Maybe it is there somewhere in that
statement, but in a later case, Barnes, 133 CLR,
the Justices found at 493 in the middle of the
page:
It is submitted that the effect of

s 221P(2) is to require that moneys owing to
the Crown by A be paid out of property to
which Bis beneficially entitled. If
s 221P(2) does no more than that then it is
not a law with respect to taxation.

That principle is accepted there. The Court goes
on:

But is that its effect? We do not think so
for reasons which appear when the precise
operation of the section is examined.

But the Court accepted the proposition in that form
from Waterhouse's case. Later, I think in
MacCormick's, 158 CLR 638, the Court referred to

this again. Your Honours Justices Deane and
Dawson, with Chief Justice Gibbs and
Justice Wilson, said this first of all, towards the
top:

The section itself did not operate to impose a
tax; it dealt with facts so as to give an
existing tax a different incidence. It was
for that reason that it was not a law with
respect to taxation and not, as was contended
in this case, because it purported to impose a
land tax upon a person in respect of land
which he did not own and so required that
person to satisfy the taxation liability of
another.
A different view of the effect of

Waterhouse's Case appears to have been taken
by Barwick CJ, Mason and Jacobs JJ in Federal
Commissioner of Taxation v Barnes where the
former case was said to establish that a law

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which does no more than require moneys owing
to the Crown by A to be paid out of property to which Bis beneficially entitled is not a
law with respect to taxation. But even if
that view be correct, it was recognized in
Waterhouse's Case -

et cetera.
That passage does not exactly embrace what was

said by others of Your Honours, but including the
Chief Justice, in Barnes' case, but nevertheless,
it leaves it open that Barnes' case is correct, and
that is dicta, obviously, that has to be taken into
account by the Court in making a decision on this
particular proposition, but the proposition is
still there, and Waterhouse's case has been said to
establish what, we would submit, is the proposition
that you cannot, under the guise of attacks,
require a person to pay the liability of another.
That is obviously different to MacCormick's case
and the sections that were under consideration
there because the court held that that was a
distinct and different tax.
Here, however, what we find is that what was

truly the liability of the users of these tapes to
the copyright owners is being extracted from
somebody who has nothing whatever to do with it,
namely, the vendors of the tapes. That, we would
submit, is an indication that this is perhaps not a
tax.
In dealing with the conundrums that this

legislation throws up, Your Honours may wonder what
it is. It may be that it does not fall into any of
these arguments that we propose to put to the

Court. It may find its resting place right outside
legislative authority and just simply not be valid
for that reason. It does not find support
anywhere. It may not find support because it is

not a law with respect to copyrights. It is not a
law - if it is, or if it is not - it is not a tax,
or not a valid tax, or if it is a law with respect
to copyrights, it is not an acquisition on just
terms, and if one asked the question, "What's the
legislature doing?", well it is just trying to take
the moneys of the blank vendor tape sellers, or
distributors, and in that sense it just takes it,
and it cannot do that. There is no authority on
the face of the Constitution for doing it and,
therefore, it just falls - I suppose, on one view,
outside the ambit of the acquisition power.
The thinking behind MacCormick's case and

Waterhouse's case and Barnes' case is relevant to that broader issue and I just mention it, but we

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put it at this stage simply as an indication, well,
is it a tax? If we look at this aspect of it, it
is certainly, even if the Court does not accept the
proposition that we are putting, an indication that
maybe it is not a tax. It is some sort of exaction
from people who really were not intended to be
taxpayers in that sense.
Of course, it has to be remembered that we are

not dealing with legislation or a proposition that
cannot be fulfilled by valid legislation of the
Commonwealth. We are not talking about that. This
is not the sort of last ditch stand of the
Commonwealth to try and implement some proposal
that it has in relation to blank tapes. This could

be done by taxation. I assume the word "tax" has

got some overtones about it these days. You do not
really impose any more taxes, but a tax could be
imposed, presumably - I do not want to concede it
necessarily would be, but on the face of it, it
would appear that the Commonwealth could do what it
wants to do here by imposing a valid tax, putting
it into consolidated revenue, and then making some
sort of grant under the copyrights power to these
people so that it can be passed on to others.
I say that and submit that, not to give the

Commonwealth any joy, but in case there might be
lingering in anybody's mind the idea that this is
something that cannot be done as a matter of
substance in terms of politics. What we are saying
is, as a matter of substance, it cannot be done as

a matter of law. You cannot do it this way but
there are other ways of doing it. This is just a
clumsy attempt to achieve a result where there was
a much clearer path ahead of the draftsman and
those advising the draftsman or the draftsperson in
relation to it.
The next paragraph: it is inherent in the nature of a tax that, although not raised by the

government but by Parliament, it is received by the
government or a governmental authority set up to
receive the tax and apply the proceeds to public

purposes. The levy is not received by the
government but by the collecting society. The
statutory provisions only furnish the legal
machinery for this to happen.
Now, if we be wrong in the argument that the

collecting society is, in a sense, part of the
executive power of the Commonwealth, or the
Executive Government, because it is implementing the purposes of the Executive Government under
statute, then truly the collecting society is a

private organization as it truly is. It is set up

by members, no doubt; it is set up by people with

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commercial interests. It is not set up by any
government. It is only endorsed by the
Attorney-General. So, it is not a public authority
that is getting the money. Now, in that sense, it
can either be said, "Well, it is outside the scope
of section 81", as we have, or, alternatively, "It
is an indication that because it is not a public
authority, that this is not a tax."
In (i) we say: here the levy is not for

public purposes, but private purposes: the
compensation of certain copyright owners for loss

of private rights. We would submit, although in a
broad sense it can be said that copyright owners
might be compensated under some public statute, and
in that rather broad sense there is some sort of
public purpose, the public purpose here, when it is
looked at in terms of the legislation, is
non-existent because it is truly a private purpose.
That is because these copyright owners find it
impractical to locate the young child or the father
or some other member of the family, or whoever,

using a blank tape to copy their music. It is not
practical. But that is a private problem and the
obtaining of recompense for that use of copyright
is, we would submit, a private purpose.
In terms of the criteria set out in Air

Caledonie, we submit the levy is not exacted by a

public authority. A lawful exaction is a
compulsory payment, that is, a collection of money
for which the liability to pay has been created by
law. This levy is exacted by the collecting
society, which is not a public body because it is
set up only to deal with the private rights of

certain copyright holders. Even then it is not
required to adopt a scheme of allocation to reflect
the likely use of works of particular copyright
owners. In other words, it is not the instrument
to implement a defined public policy. And I have
referred, Your Honours, to regulation 23P(l)(d).

will be dealt with because they can go in a number There is no defined policy about how these funds of directions. Your Honours will recall that
section 135ZZM provides that:
Copyright subsisting in a published sound

recording ..... is not infringed by -

private use -
on a blank tape for the private and domestic
use of the person who makes it.

The blank tape royalty, however - so it is confined
in whatever is the apt description as to what it
does, and I will come to that later on acquisition

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of property. It is confined to the use or the
taping of published sound recordings. Now,
straight away, that is all published sound
recordings. That could be by somebody in Germany
first publishing and getting copyright in
Australia. It could be a person who is not a
qualified person in Australia. It could, on the
other hand, be in relation to an eligible sound

recording. An "eligible sound recording" is:
a sound recording the maker of which was .....
an Australian citizen, an Australian protected
person or a person resident in Australia -

in -
a body corporate -

et cetera. So, the lifting or what we say is the
taking away of the sole right and giving it to
everybody, relates to all published sound
recordings, but on the other hand, it is only in relation to the use of the tape by the maker for

the private and domestic use of the maker. You get
that out of subsection (3), what I just said,
because it says:
Where a copy of a sound recording made in reliance on subsection (1) is used otherwise
than for the private and domestic use of the
person who made it, subsection (1) does not
apply, and shall be taken never to have
applied, to the making of the copy.

So that A buys a tape, decides to use it to tape a
published sound recording for his or her private
and domestic use, but then decides, "Oh, I will
give it to my neighbour", and immediately the
neighbour has got no right. If the neighbour plays
it, it is an infringement. That is because
subsection (3) is limited to the person who made

it; that is, the use of that person, the person who
made the recording.

McHUGH J:

Mr Ellicott, has the Commonwealth changed its

attitude in respect of paragraph 24 of the
statement of defence, in relation to a question of
taxation?

MR ELLICOTT:

I do not know, Your Honour.

I assume we will

find out shortly, Your Honour, but I must say I do

not know. I do not know whether Your Honour wishes
my friend to answer it now. Is Your Honour
suggesting that we might be arguing about nothing?

McHUGH J:

So far as the statement of defence is concerned,

that appears to be the case. Paragraph 24 says:

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10/3/92

Further, the relevant provisions do not
constitute a law with respect to taxation.

MR ELLICOTT:

Yes.

He may, of course, say that and go on

saying it. The effect of our submission is this,
that first of all we would point to the factors, as
we think we should in dealing with this matter with

the Court, that show that it is not a tax. But
there are matters which show that it is a tax.
Consistent with some of the statements of this
Court more recently in relation to what is a tax,
this Court could well hold that it is a tax.
So I am not being flat footed in saying it is

not a tax. I am simply wanting to indicate to the
Court those matters which would need to be
considered in determining whether it is; that the
traditional ideas of tax do not seem to fit into
this particular provision, but the idea of it being
a compulsory exaction of money not for payment of
services rendered, and it is enforceable at law and
there is no benefit conferred on the vendors, those
notions which are found in these cases to which we
refer, in the more recent cases, then the Court may
well say, "Yes, it is a tax". That is the basis
upon which we are arguing this aspect of the case.
I just wanted to point out that so far as ZZM,

it had both the limitation, but it extended to all

published sound recordings. The people who get a
benefit, however, are those persons who have

eligible sound recordings. So although something
is done about the copyright and infringement
thereof in relation to all published sound
recordings, nevertheless it is not, say, the person
from Germany with whom perhaps we do not have a
reciprocal arrangement, or the person who is not a
qualified person who first publishes in
Australia,it is not those persons who obtain the
benefit; they do not get any benefit, even though
there is no infringement if their published sound

recordings are used for home purposes.
The only people who get it are the eligible

sound recording owners or makers, and they have to
be Australian citizens, et cetera, or a citizen of
an eligible foreign country.

BRENNAN J:

Mr Ellicott, what is the section which defines the manner of infringement of a musical work?

MR ELLICOTT: Section 36 and, if Your Honour is thinking in

terms of recordings, section 101. Section 31 does not apply to sound recordings; they are dealt with
in Part IV from section 84 onwards. But copyright in recordings is dealt with in 89 and infringement
in 101. Copyright in ordinary musical works is

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10/3/92

dealt with in 31 and infringement in 36,
Your Honour.

BRENNAN J:

What is it that says it is an infringement to

record music?

MR ELLICOTT:

It is the doing of the act comprised in the

copyright.

BRENNAN J: What is the copyright?

MR ELLICOTT:

It is the exclusive right to make by a means

that includes reproduction.

BRENNAN J:	Is the copyright infringed then by making the tape recording or by playing the tape recording
when made?
MR ELLICOTT:	It would be in reproducing it, Your Honour.
BRENNAN J:	By playing the tape.
MR ELLICOTT:	And it would also be an infringement of the

musical work in playing it.

BRENNAN J:

Is it right to say there is no infringement by

taping it?

MR ELLICOTT:

No.

There is an infringement by taping

it -

BRENNAN J: What section is that?

MR ELLICOTT:

- - - because you are reproducing it in a

material form.

BRENNAN J: Are you?

MR ELLICOTT: That is 101:

a copyright subsisting by virtue of this Part

is infringed by a person who, not being the
owner of the copyright and without the license
of the owner of the copyright, does in
Australia, or authorizes the doing in
Australia of, any act comprised in the
copyright.

And those provisions, 97, deal with ownership of copyright and sound recordings, and the nature of copyright in sound recordings is dealt with in
section 85:
unless the contrary intention appears,
copyright, in relation to a sound recording,
is the exclusive right to do all or any of the
following act:

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10/3/92

(a) to make a copy of the sound recording;
(b) to cause the recording to be heard in
public;
(c) to broadcast the recording.

So, to make a copy is an infringement.

DAWSON J:	So there is a distinction between infringing the copyright in the original musical work and
infringing the copyright in the recording?

MR ELLICOTT: In the recording, that is right. But so far

as these recordings are concerned, the relevant
provisions are 85 and 101.

BRENNAN J: What is a sound recording?

MR ELLICOTT:

I think it is defined, Your Honour.

I think

it is defined in electromagnetic terms.

BRENNAN J: That may be it.

DAWSON J:

The trouble is that the sound recording is itself

a copy of the musical work.

MR ELLICOTT: It is, yes.

DAWSON J:

So there is a sort of secondary copyright.

You

cannot copy the copy.

MR ELLICOTT:

Yes.

BRENNAN J: But it is defined to mean, in section 10, as the

"aggregate of the sounds embodied in a record".

MR ELLICOTT:

Yes, and a record is "a disc, tape, paper or

other device in which sounds are embodied".

BRENNAN J: Thank you.

MR ELLICOTT:

But there is no doubt that 135ZZN, if it is

valid, is purporting to relate to published sound
recordings and to the same effect, if the blank
tape is used to record - to make a copy, in other
words, of the sound recording - on the blank tape
for private and domestic use, then it is not an

infringement. So it is taking the sole right to
perform, to copy in other words, away from the
maker and giving it to anybody, so far as it
relates to private and domestic use of the person
who makes it, but only that person, none other.
When that person takes the tape and gives it

to his neighbour or to his relative, or says,
"Would you like to borrow it, I've got a copy of
Phantom of the Opera I took the other night when

they played it on the television. I just took the

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music", the right then goes right back to the maker

again. In other words, the maker can stop the
infringement by the friend who did not make the
sound recording.
It is vital to understand that ZZN is not

related in any way to ZZM because ZZN, although it encompasses everything that M encompasses, it just
makes the vendor pay this amount, whatever the use

to which the tape may be put. It might be put,
yes, to use by making a copy of an eligible sound
recording, but it may be put to any other use that
Your Honours can think of. It could be used to
dictate a judgment or it could be used to get a
member of the family singing, or any use that a
family might want to put it to in the private
domestic area. But it goes beyond that. It might
be a commercial use. Whatever the use to which
that tape is going to be put, the vendor has to pay
this amount.
So there is no identity of relationship

between ZZM, on the one hand, and ZZN and ZZP on
the other and there is no identity of relationship
between ZZM and ZZS or ZZU and the people that it
is intended might get the division of the amounts
collected. There is no identity, because it is
only eligible people, that is, makers of eligible
sound recordings, amongst whom apparently it:~ to
be distributed, and that you recall we get frc

153E(7). So that here is this vast amount of ilivney
taken from these vendors of tapes; the tapes are
used for any conceivable purpose to record
anything, albeit including these recordings and
then M has said it is not an infringement to copy
the published sound recordings, but yet the money
is going to be divided up, not amongst those who
are the makers of published sound recordings, but only of a sub-class of that, namely the makers of
eligible sound recordings.

There is no legislative dichotomy here; it

just will not stand still. You cannot get a theme

running through the legislation. Now, we say here

in this last paragraph of the first part, factors
which suggest it is not a tax. It is not required
to adopt a scheme of allocation to reflect the
likely use of particular copyright owners. True
there is some attempt to give the benefit to some
eligible copyright owners, if I can use that in a
shorthand way, but even there, there is no
certainty that they will get everything, for
instance, the 15 per cent that goes off to the Ausmusic, or the 2 per cent or 1 per cent that
might go in donations somewhere.

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10/3/92

Now, Your Honours, clearly enough on the other

hand, it could be said that this was a compulsory
exaction of money; no doubt about that, the vendors
have been told to pay and the statutory provisions
are there to enforce payment. There is no sense in
which it is a payment for services rendered to or
at the direction or request of the vendors on whom

it is imposed. They get no benefit out of it.
When we come to "just terms", I will develop that a little more to show that really they are not just
terms, which is another way of saying that they do
not get anything in return. There may be factors,
we say, under the first section of this, that
Your Honours will disagree with our submissions and
they will go onto this tax side of the balance.
And then the collection of the amount of the levy
is enforceable at law and no benefit conferred on
the vendors.
Underlying these provisions is the notion,

perhaps, that this might be passed on, but there is
no requirement that it be passed on and there is no
practical certainty that it will be passed on.
This is not necessarily a provision which has all
the notions, say, of sales tax or excise in it, but
if it is a tax, then clearly enough, it is an
excise. If it is a tax, then, of course, the
sections, we would submit, it being an amending act, we would say the whole Act falls, not only these provisions but the whole of them. Either on
the ground of what Your Honours said in Air
Caledonie about section 55 and its effect, and we
have set out the reference there in paragraph 3, or
alternatively, even though it is very difficult to
discern the rationale running through these
provisions, that is a constant rationale,
nevertheless they do appear to be so interconnected
as to be - but we do not have to succeed in this
argument - they do appear to be inseverable in that
sense, that the Court would, if it treated ZZN
and ZZP as being invalid because section 55 was not

complied with, then the other provisions would fall, or alternatively, took the view that the
whole of the amending Act was invalid, or the third
course would be simply to say, "Well, the taxing
parts are valid, but the non-taxing parts are
invalid".
Whichever way the Court approached the issue

satisfies our argument but, at the end of the day,
we would submit, the total effect is to destroy the
whole of these provisions either because of the
application of what the Court has said in Air
Caledonie in relation to section 55, or
alternatively, because of the application of the

doctrines of severability. Your Honours, that is
our argument in relation to taxation.

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10/3/92

May I take Your Honours to our submissions in

relation to acquisition of property? This is put
alternatively to B, that is, the taxation argument.
We say that each of the sections is a law with
respect to the acquisition of property from persons
but is not on just terms, and then, as to P and Q,
is not for any purpose in respect of which the
Parliament has power to make laws. That accepts,
of course, that Mis a law with respect to
copyright and, therefore, it is for the purposes of
the Commonwealth within the provisions of
section Sl(xxxi).
But, having regard to our submissions as to

whether they are laws with respect to copyright,
those provisions that exact this amount, those
from ZZN onwards, we say, that if we are successful
in that argument, that on one ground alone,
section (xxxi) is not satisfied, that is, that they
are not for any purpose in respect of which the
Parliament has power to make laws, because they cannot be upheld on any other ground, so we do not
have to repeat our submissions, my friend will be
glad to know, in relation to copyright.
Your Honours, in relation first of all to P

and Q, if I can just take Your Honours to those, N
makes the royalty "payable for each blank tape",
P - we have said P and Q, but one perhaps should
include Nin this argument. They all fit in

together. One says the royalty is payable, but P
makes it a requirement in subsection (2):
A vendor shall, within 21 days ..... pay to

the collecting society an amount equal to the
sum of the amounts of royalty payable by the
vendor for blank tapes first sold, let for
hire or distributed by the vendor during that
quarter.

McHUGH J:	Mr Ellicott, in your written submissions, the reference to Mis really a reference to N, is it
not?

MR ELLICOTT:

No, Your Honour.

McHUGH J: Is it 135ZZN?

MR ELLICOTT:

No.

McHUGH J: Is that a reference to it?

MR ELLICOTT:

We say that M takes away something from the copyright owners and is invalid because it offers

no compensation. It is clear that those people who

do not make eligible sound recordings do not get

anything.

So it is clearly inseverable, therefore

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10/3/92

it is not on just terms. So we attack M. But I
was just saying that N should go into the

collection of P and Q; it is really N, P and Q.

BRENNAN J:

Why do you say that M takes anything away?

Why

is it that what is given is not to be understood as
given subject to M?

MR ELLICOTT:

Your Honour, Mis wider than the

compensation - I will call it the compensation for
the moment - that is provided. It is wider because
it covers sound recordings which are made by people
who do not fall into the category of people who
make eligible sound recordings.

BRENNAN J: But the statutory right, which is the copyright

in sound recordings, conferred by section 85 does
not include a right which is otherwise covered by
ZZM. There is nothing to be compensated for; it
was not ever given.

MR ELLICOTT: With respect, 85 confers - - -

BRENNAN J: 89, I suppose.

MR ELLICOTT:	Yes:
the maker was a qualified person at the time
when the recording was made.

BRENNAN J: Copyright is a statutory right under this Act.

The statutory right does not extend to what is

covered by ZZM. Where is the expropriation?

MR ELLICOTT: Because 85 says it is the exclusive right to

do all or any of the following acts, to make a copy
of the sound recording.

BRENNAN J:

So what you are saying is that the legislature,

if it confers a right in absolute terms, cannot, by

the same piece of legislation, qualify that right
without paying compensation for the qualification.

MR ELLICOTT: Well, it cannot, having given it, take it

away. It cannot transfer it to somebody else. It
cannot acquire it and give it to somebody else.
And that is what it is seeking to do under M.

McHUGH J:

I must say, I thought you would be relying

strongly on Mon the basis that the rest of the
Act, or the rest of this Part, makes your clients
pay for the doing of something by other people
which they are lawfully entitled to do.

MR ELLICOTT: Yes, we do, Your Honour, and it is in that

sense that - and we have put our other arguments.
This comes at the end.

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10/3/92

MCHUGH J: Well, I know, but you have got to strike this

down.

MR ELLICOTT:	I beg Your Honour's pardon?
McHUGH J:	You want to strike this section down.
MR ELLICOTT:	Yes, well, if we strike it down the rest will

fall. There is no question that if this is struck
down there will be no compensation to anybody. In
other words, we can knock a lot of pins over and
get the result that, litigiously, we seek to get to
knock this legislation down, because if M goes
everything else goes. But, Your Honour, may I say
I do not reject what Your Honour put to me because that is a preferred argument that we have and we
stress that in our argument in relation to
copyright. There is no doubt about that.
But our first argument is on acquisition,

because we are trying to answer the conundrum which
the Court had presented to it last time: what is
this if it is not a law with respect to copyright?
We are saying, alternatively, the provisions in
relation to the royalty, as distinct from the
provisions in relation to lifting the infringement,
those themselves are laws acquiring property on
other than just terms, because what is taken is the

property of the vendors. They are told, in P, to
pay to the collecting society an amount equal to
the sum, et cetera. That is money. It is taking
their money and giving it to the society.
There are refined sort of arguments that can be put that somehow this is creating a debt and,
you know, you are not really taking their property.
That surely, we would submit, cannot be correct.
It is not to be analysed that way, that all you are
doing is creating a statutory right to recover some
money and it really is not an acquisition of

property. The legislation has to be considered

under Sl(xxxi) as a matter of substance, not as a

matter of form. And the substance here is that A's
property, as money, is taken and given to B, and
that is an acquisition of property.
Supposing it was not money but it was some

chattel, personal chattel - a motor car, if you like - and there was some legislation that said that the motor vehicles owned by X shall be given
by X to Y and then it said, if X does not pass them
over, then Y can sue X and recover them under some
statutory action.
Well, simply because it created a cause of

action, you could not say that was not an
acquisition of property from X in motor cars, to

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10/3/92

give them to Y, whether it is money or whether it
is just property in that sense. If, on the other
hand, it is said in relation to a particular bank
account the money that is in that account shall no
longer vest in that vendor, but shall vest in this
collecting society, well that would be an
acquisition of property. So, the purpose of this
analysis is simply to rebut any submission that in
any way this can be said to be not an acquisition
of property simply because it is the creation of a
statutory debt.
Now we say in 10, the property is the subject

of an "acquisition" within the meaning of

section 51 (xxxi) by operation of the law. An
amount is taken away from the vendor and given to
the collecting society. This is not the mere
creation of a contractual right in the collecting society to recover the amount of the royalty from
the vendor. Considered as it should be as a matter
of substance the practical effect is that the
vendor must either pay the amount of the royalty to
the collecting society of its own volition under
S135ZZP or under Court order obtained under
sl35ZZQ. In either case, the vendor is forced to
part with possession of his money.
Then we having so submitted, we submit that

the acquisition of the royalties is not an
acquisition on just terms, because the vendor gets
nothing in return, which is its pecuniary
equivalent, and that just embodies what was said in
those two cases, and there is a well-known
proposition, and I will not trouble to take
Your Honours to those two, but then we set out why
in paragraph 12 why they are not just terms. There
is nothing in the statute itself to compensate the
vendors; there is no provision that says, we will
have an inquiry before the copyright tribunal to
compensate the vendors; nothing of that sort.
There is not even, Your Honours will find, any way

in which they can get back anything.
Under ZZR and zzs, the prescribed organizations which are bodies such as say ABC or
SBS or an exempt body which is made exempt under
ZZT, they can avoid payment, because the vendor is not liable, provided the vendor gives the
particulars that are set out in ZZR, because the
vendor may not give the particulars, in which event
the vendor is liable. But then under Sunder
paragraph (1) the:
prescribed organisation or an exempt body -

can recover -

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10/3/92

whether or not the amount of royalty has been
paid.

And ZZS(2) says well, that does not apply where the
vendor is not liable. And (3) relates to a person
who can swear a declaration in effect that says
that they will not use it to make a copy of a sound recording except with the permission or the licence of the copyright owner. But nowhere in there is
there any refund back to the vendor. Lying within
these sections is the notion that maybe the vendor
will pass it on.
But the fact that the vendor may pass it on,

or could pass it on, is not just terms. You cannot
leave a person to get his own compensation if you
take that person's property and simply to allow it
to do its best to recover it, and that is really
what it means, is not compensation.

DAWSON J: There is nothing which prohibits the vendor from

selling without paying royalty, nothing in the
nature of a licence, he just is liable to pay it if
he sells?

MR ELLICOTT:

Yes.

do not know whether Your Honour is

thinking of the Pharmaceutical Benefits case or
anything like that, but where it was suggesting the
chemists do not have to be part of the scheme, and
the vendors do not have to sell tapes, but the fact
is that the occasion for the payment is the first
sale, so that although they do not have to, if they
do sell, their money is taken and the question then
is, "If that is the taking of property, then where
are the just terms for it?", and we say that there
are no just terms because, to find them, first of
all·they ought to be on the fact of the
legislation, they cannot be left, for instance, to
the chance that the vendor may recover it. The
vendor may add it to the cost of a tape in some
cases but provide those on credit and may never get

of that description. In other words, there are so it; no provision for bad debts in here, or anything
many imponderables in relation to leaving the
vendor to its own devices that that could not
conceivably, we submit, be just terms.

So the first thing is: we say the theoretical ability of the vendor to pass on the amount of the
royalty does not amount to just terms. Then we
say, as a matter of commercial reality, the vendor
may not be able to pass on the amount of the
royalty. It just may not be able to do it because
of competitive and other forces, or it may be that
there are commercial practices; the way in which
they charge for tapes, for instance. It is common
to charge $4.95 or $4.99.

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DEANE J:

Mr Ellicott, is it an offence for a vendor to sell

blank tapes and not pay the fee?

MR ELLICOTT:

I do not think it is, Your Honour.

DEANE J:

How is it going to work?

How is anybody going to

find out what a vendor has sold?

MR ELLICOTT: Well, that is part of this argument,

Your Honour, and I will indicate how they find out
and the injustice of it. That is a sort of end
submission, Your Honour, the injustice of it, but I
will come to that, if Your Honour allows me to.
At the top of page 4, the payment made by the

blank tape vendor is not made for the doing of any
act comprised in copyright. In other words, there
is no quid pro quo, he does not have any such

right. The blank tape vendor cannot authorize or
prevent third parties from making copies of
published sound recordings or works included in
published sound recordings. There is no
consideration given to others. That could be
relevant, perhaps, if it was; if he had the power
to authorize it might be so but, as we have

submitted, there is no power to authorize. And
that is critical, in a sense, to our argument in
relation to whether it is a law with respect to
copyright because there is no power to authorize
and therefore merely putting the tape into the
system does not amount to an authority to infringe

or an incitement to infringe. So there is no
consideration given to others.
The blank tape vendor is not able to recover the royalty in all circumstances where a blank tape
is not used to make a copy of a published sound
recording and works included in a published sound
recording in which copyright subsists, for

instance, if he does not sell but distributes. He

cannot recover it in any way whatsoever. Now, he

has got to distribute by way of trade but, we would
submit, that means a distribution, for instance,
that a blank tape vendor might make to promote the
sale at some fair, as an example. It still has to
pay, because it is a distribution by way of trade,

but can never recover it by passing it on. That is
the end of it.
The blank tape vendor cannot recover the royalty where the blank tape is used to make a copy
of a sound recording in circumstances other than
those described in M - and I have already dealt
with that - and, of course, cannot recover it at
all where it is used for non-sound recording
purposes. If it is just used to copy a book
reading out of a book that is out of copyright, or

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10/3/92

indeed used for a copyrighted book, it cannot

recover it. The owner of the copyright of the book
can.
The value of the tape is not enhanced by the

payment of an amount equal to the royalty. That is
the whole basis upon which this legislation has
been introduced, that there is no chance of
recovering it from private users and you do not get
anything for - in other words, there is no added
value to the tape simply because section 135ZZM has
come into operation.
A person who acquires a blank tape from a

vendor henceforth is unlikely to attach any greater

value to the tape by reason of the enactment. In
consid.ering the justness of the terms, regard

should also be had to ZZY. Now, Your Honours, this
is where we submit that there is some injustice.
It is fair to say that some of the tape

manufacturers are also record makers, sound
recording makers, and that has to be remembered.
For instance, I think it is fair to say that but also record manufacturers. So, they have got a
dual interest, but their interest in the collecting
society is that here is ZZY enabling a complete
inspection of the records of the vendors:
The collecting society may, in writing, notify a vendor who is liable to pay royalty that the
society wishes, on a day specified in the
notice, being an ordinary working day ..... to
inspect all records held by the vendor at the
premises specified in the notice, being
records that relate to the sale ..... blank
tapes by the vendor and such other records
held at those premises as are relevant to the
assessment of the amount of royalty payable by

the vendor to the society.

(2) Where the collecting society gives a
notice, a person authorised ..... may, during
ordinary working hours ..... inspect the
records.

(3) A person who hinders or obstructs a
person in the exercise of the powers ..... is
guilty of an offence -

And that could be very wide, of course:
so there is an offence:

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10/3/92

(4) A person who, whether directly or
indirectly, makes a record of, or discloses or

communicates -

so here is a passing on of the prescribed
information, but that is little protection to
somebody if the person investigating is also a
competitor. It is very difficult to box it up. It
may be wrong for them to use it, but how would you
ever prove that they did? But, quite apart from
that, this is a very direct invasion and it is a
harsh provision. This is how the vendor is
treated. He gets no compensation. Indeed, he gets
the threat of committing an offence if he or she
does not comply.
That might be thought to be unjust terms, but

it certainly is not just terms. It is a provision
in the context of just terms which could be
defensible, but not in the context of not giving
anything to these people who are there simply
selling their tapes, albeit, they may be used in a
particular way but they have no capacity to control
or regulate in any way how their tapes will be
used. So, it is a taking in that sense, and
another thing about it is that if one is thinking
about just terms the vendor will normally be a
person who - he may be selling by wholesale - in
fact, that is what this anticipates, a first
wholesaler, a first seller in Australia, and has to
pay sales tax. Sales tax is exacted on the sale
price and if the sale price includes, if he does
add on the royalty, so-called, then his sales tax

is increased. Not only that, the vendor has the
administrative cost of running his business so
that, in effect, the cost of taking his property
and accounting for it to others, is borne by him.
So, there are clear indications in the legislation, in a practical sense, of harsh treatment of the
vendors because they do not get anything; their
obligation is to pay and pay things that really

they cannot recover.

DEANE J: What is the position in relation to blank tapes

imported by the consumer? Is there a corresponding
adjustment in customs duty?

MR ELLICOTT:

I do not know of that, Your Honour.

I do not

think there is. I do not think there is anything
that went into the Customs Act to complement this.
People who come through customs - they might buy
some tapes overseas, as long as they are not in
commercial quantities, as we read on that form,

they bring them in. They do not obviously have to
pay anything. I doubt very much, although I must
confess I have not looked at it - I just sense it
would have been drawn to our attention - whether

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10/3/92

there is any complementary provision in the customs
law. But we will check that, Your Honour.
Then, Your Honours, we submit that it is not

an acquisition for any purpose in respect of which
Parliament has power to make laws. That is in paragraph 13. In 14 and 15, we say ex hypothesi it
is not a tax, because this is an alternative
argument, and it is not a penalty. In other words,
it does not fall within the well-known exceptions
that apply. If it is not a tax, then it will need
to meet the requirements of 31, as Your Honour
Mr Justice Brennan said, to escape the annihilating
operation of the condition attached to the

acquisition power. Your Honour in that case, I
would submit, had in mind that if it did not become
a tax, then it fell foul of 31.
Your Honours, so far as we are aware -

Mr Justice Deane was asking me - the Act is
confined by the definition of vendor as:
a person who, in the usual course of his or
her business, sells, hires or otherwise
distributes blank tapes.

So it is only related to the business operation,
and it is all designed to impact on vendors who are
conducting a business.
Your Honours, we then go on to deal with ZZM,

and we come to this as a final argument in the

sense that I have already put to Your Honours. The
effect of it is to take away from the copyright
owner the right to copy for private and domestic
use and to vest it in all those who choose to
exercise it in the circumstances therein mentioned.
Every such person in those circumstances therefore
acquires the right to make a copy.
Your Honours, I did refer to section ZZM(3),

but could I take Your Honours back to it, because it seemed to us to be an important point to make.
This is not the extinction of a right. This is the
transfer of the right to copy from the maker, in
effect to everybody who would like to make it, but
if the otherwise infringer gives it to somebody
else, the right to stop that person in relation to
that making of a copy remains, because (3) says it
is only the person who made it who is not
infringing:
Where a copy of a sound recording made in reliance on subsection (1) is used otherwise
than for the private and domestic use of the
person who made it, subsection (1) does not

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apply, and shall be taken never to have
applied, to the making of the copy.
And ZZK defines private and domestic use:
shall be taken not to have been made for the
private and domestic use of the person who
made it if it is made for the purpose of:
(a) selling -

et cetera -
(b) distributing the copy, whether for the
purpose of trade or otherwise;
(c) by way of trade exhibiting the copy in
public;
(d) broadcasting the recording; or
(e) causing the recording to be heard in
public.

And;
(b) distributing the copy, whether for the
purpose of trade or otherwise;

would seem to cover the case where - assuming that
you do it for your own private use if you do it for
the use of close members of your family, but if you
do it for a friend then it is not for private and
domestic use, even though the friend may use it for
private and domestic use, and the same notion is
in 3 so that this is not destroying any right, the
right is there all the time. It has to be a copy
made for the domestic use of the person who makes
it.
Now we draw from that the proposition in 20:

the right to copy therefore remains in existence if
it is transferred as the circumstances apply. It

people who make the copy for their own private and is transferred in certain circumstances, that is,
domestic use share the right, but people who get it
- get that ·very recording, and put it to their
private and domestic use, do not share the right.
So in relation to a particular recording, the
right which the copyright maker has is never
destroyed, it is just shared and then in relation
to the first making by the person who made it, but
then it is withdrawn and becomes a sole right
again, against people who use it but who did not
make it.
Now that indicates, we would submit, that we

are not just talking about the extinction of a
right. In a sense I am answering something
Your Honour Mr Justice Brennan put to me about why

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10/3/92

can the legislature not confine copyright and say
what is an infringement and what is not. That is
not what this is doing in our submission. It is
actually taking something away; the right to
control the copying and taking it away from the
maker of the sound recording and giving it to
others as well. That is an acquisition of
property. That is a transfer of property, and the
question then that one has to ask is: is it on just
terms? And in 21 we say, in relation to copyright
owners being "relevant copyright owners" this
acquisition is not effected on just terms because
at least 15 per cent or some percentage - it is not
in the legislation but it is contemplated that - it
is not guaranteed, in other words - you cannot find
any guarantee that they will get it in either 153E
or in the provisions relating to the collecting
society and the Attorney-General's capacity to deal

with the collecting society. So that there is no
guarantee of a full payment even of the amount, nor
is there any guarantee that the amount that they
get will be equal to what would be the true value
of the use of the copyright.

BRENNAN J:

Mr Ellicott, where does this come from about

Ausmusic and 15 per cent?

MR ELLICOTT:

Your Honour, it came out of the second reading

speech of the Attorney-General and as I say, it is
not in the legislation, but the regulations that I
read this morning do contemplate some sort of
limitation on amounts that may be given to others.

BRENNAN J: What is Ausmusic?

MR ELLICOTT: Ausmusic is, I think, a society which protects

contemporary Australian music writers, composers;
that is my understanding of Ausmusic, and it is a
very worthy object.

McHUGH J:

The matter is referred to in paragraph 25 of your

amended amended statement of claim.

MR ELLICOTT:

I am just reading from the second reading

speech, if I may just read it, Your Honour:

One very important feature of the scheme is
that 15 per cent of the royalty raised will be
set aside by copyright owners for the benefit
of those people in the Australian music

industry most in need of assistance. The
Government is gratified that the music
industry has agreed to provide part of the
royalty to the Australian Contemporary Music
Development Co, recently established by the
Government, to foster Australian contemporary

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10/3/92

music and, most importantly, young, up-and-coming Australian musicians.

And I think, Your Honours, in due course - this is
not before the Court - but I think the society that
has got to be approved will have provisions for
such a payment in its memorandum and articles of
association, so there is no doubt that that is
contemplated by the Attorney-General and what we
are really saying is the provisions of the Act are
so loose that they do not prevent it being paid,
because they would enable the Attorney-General to

approve of an organization that did pay it. He
might want to limit it to 10 per cent or
15 per cent, and there may be other donations that
they might want to make to worthy musicians in
need, 6r something of that description, but the
point is that there is no guarantee of just terms
to the people from whom the moneys are taken.
The royalty available for distribution, we

say, to relevant copyright owners, will also
exclude an amount for administrative costs and
other outgoings of the collecting society.
Further, the scheme may not result in receipt of an
amount of royalty by relevant copyright owner,
commensurate with the value of the property

acquired. The provisions of division 3 and 4 may
not suffice to ensure that the royalties are
distributed by the collecting society to copyright

owners at all or in the manner contemplated. We
would submit that on their true construction, those
provisions do not guarantee anything at all. They
do not really say anything; the most they say is
that the society shall have rules for distributing
amounts, but they do not make it essential that the
amounts we distribute amongst those people and
153E(7) says that in fixing the factor A in the
formula, the tribunal shall take into account what
use may be made of eligible music recordings.

The notion of just terms in the sense of

pecuniary equivalent is not there and, even if one goes to the broader notions of just terms that the
Court looks at, that is community interests, it is
impossible to quantify them in this legislation so
as to be able to say, according to those notions,
that there are just terms.
Then we say, in relation to copyright owners

who are not relevant copyright owners no terms are
provided, only relevant copyright owners are
entitled to become members of the collecting
society. It follows that, copyright owners not
being relevant copyright owners, will not receive
any amount of the royalties collected.

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10/3/92

Now:
"relevant copyright owner" means the owner of
the copyright in an eligible sound recording
or eligible work.

Eligible sound recording, eligible work, is
restricted in the way in which I have already
indicated, but the phrase "published sound
recording" in M will cover recordings in which the
copyright is in persons who do not so qualify. For
instance, the person who, under the convention gets
copyright in Australia from a foreign country that
does not have a tape royalty provision. That
person does not get anything but loses his
copyright in Australia, to the extent of ZZM.
That, in a sense, is enough to condemn this
provision, once it is found that it involves an
acquisition of property, because those people get
nothing, and no way of severing it. So unless
everybody is shown to be in - and they are not
shown to be - then the section must fall.
Your Honours, those are our submissions in

relation to acquisition of property and if, at the
end of the day, the Court is left with just a
provision that takes some money from the vendors,
then it does not have to be categorized under

anything. There is no foundation for it under our

constitutional provision. One does not have to put
it into a niche, it just does not have a basis and
therefore, if it is not a law with respect to
copyright, it is not a tax, if it is not an
acquisition of property, it can nevertheless be
invalid because it does not satisfy any
constitutional basis for bringing it into law. For
those reasons, we would submit that the question
should be answered in terms of invalidity.

MASON CJ: Thank you, Mr Ellicott. Yes, Mr Solicitor.

MR GRIFFITH:

If the Court pleases, may I hand to the Court

substitute copies of our contentions for those
handed up last time. They have additional
contentions in respect of the tax and acquisitions
point. We also annexe to this document a document
headed "Annexure B", which is the index which we
foreshadowed at the end of the argument on the last
occasion to the Commonwealth's volumes of
materials.
If the Court pleases, my friend, in accepting the Court's ruling that his argument was to be

limited to the taxation and acquisitions issue, has
left with the Court in this blue volume under
flyleaves 5, 6, 7, a considerable volume of
material under flyleaf 5. It looks very much like

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10/3/92

the full further argument on copyright that my
learned friend was directed not to give orally to
the Court and there are other large attachments
dealing with the papers on compulsory licences
authorizing the ..... of infringement.

MASON CJ:

It would be unwise to assume that we will not be

looking at it, Mr Solicitor.

MR GRIFFITH:

Your Honour, that is the issue that I was

going to address myself, Your Honour.

MASON CJ: Quite obviously, we cannot make some decision

that we will not look at the material that is
relevant to an issue that is before the Court.

MR GRIFFITH: Yes, Your Honour. My point was, Your Honour,

this material was dated on 8 March, which is
Sunday, and if we had had the advantage of it on
Sunday or Monday - it could have been faxed to me
on Sunday - we would be in a position to respond to
it, but, of course, having it handed to us after it
was handed to the Court, we have no knowledge of
the content, Your Honour, other than to assume that
this is what my learned friend would have said if
he had an opportunity of saying it today.
Your Honour, my learned friend says he does not
mind if I put in a subsidiary submission, but my
general submission, Your Honour, is that is an
inappropriate mechanism of argument of an order
which has already been disrupted by the plaintiff's
application to the Court to -

MASON CJ:

One would have expected him to have provided you

with a copy in advance.

MR GRIFFITH: That is my point, Your Honour, so our

arguments, as presented today orally, will not
address those yet as unread matters and my learned
friend makes an obvious concession that, if there

is something to reply to, Your Honour, that can be
done later. But it, Your Honour, perhaps adds
weight to the developing practice, as in the Broadcasting case, that there should be full submissions given beforehand so one does not have a
double trial by ambush, otherwise the combination
and the operation of 78B, Your Honour, is that we
will never get to a point where the Court is in a
position to give judgment in these matters.

MASON CJ: Yes.

MR GRIFFITH:

Your Honours, we refer to annexure B, attached

to our contentions. The Court will recollect that
on the last occasion we handed as appendix A a
summary of the operation of statutory schemes under
the Copyright Act. If the Court does not still

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have that I have additional copies here. Perhaps
it is convenient to hand that up as well so then
the two appendices are there. My learned friend,
Mr Merralls, took the Court to that material.

McHUGH J: It is the same document, is it not, that was

handed up on the last occasion.

MR GRIFFITH:

The same one, Your Honour, retyped on a new

machine that has different typeface so it looks
prettier.

McHUGH J:

I will stick to the old.

MR GRIFFITH: If Your Honour please. It is our submission

that the materials which are before the Court, and
I will briefly take the Court to them as dealt with in appendix B, and that includes a short review of international practice - establish that the
mechanism for levy is the only practical means of
recouping the owners of copyright for use of their

copyright material. We submit that there is
nothing new or radical about the approach
contemplated by Part VC of the Act - schemes
of ..... and distribution of royalties have been
operating by performing rights associations for
generations. It is our submission that it is no
consequence in relation to the copyright power
itself that there is no precise correlation between
particular copyright material used and moneys
received by the copyright owner.
The point is, we submit, that the scheme is an

appropriate or reasonable means and we would go
further here and say that inquiries and foreign
experience would seem to demonstrate it is probably
the only workable means for levying and
distributing payments to the owners of copyright
material who otherwise would be left without
remuneration or remedy for uncontrollable
infringement. It is submitted that it is

sufficient connection with copyright power to
impose a levy on the object sold for likely and
probably use for infringement of copyright,
especially if, as here, it is demonstrated to be
the only practical means of recouping or

recompensing the owners of copyright. The law here
deals with situations where breach and often
multiple breach of copyright is likely to be

involved. The imposition is upon that which is
assessable for use for infringement of copyright
and which, in the ordinary course of user, will be
so used.
And we would submit that that makes this

relevant Part VC of the Act a law within the heart
of being characterized as a law with respect to

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10/3/92

copyright. Or, at the least, must be regarded as

clearly incidental to it. The scheme protects the
right of copyright holders by providing for a
conferral and definition of a right and the
mechanism for enforcement which is in ordinary form
having regard to the other procedures for schemes
for the levying and collection of payments in
respect of copyright user, which makes, in this
case, particular provision appropriate to ensure
that the copyright holders have some enjoyment of
their right.
The question has been restated, as is

indicated by the question reserved book before the

Court, in the form of the question which His Honour

Justice Dawson has stated to the Court. I should
indicate to the Court that the amended pleadings
which were before the Court on the previous
occasion by way of a demurrer by the plaintiff to
the defendant's defence are agreed, for the
purposes of this case, in particular paragraph 39
of our further amended defence, which is included
in the questions reserved book, it is agreed
between the parties that this matter is to proceed
before the Court on the basis that the matters
alleged in the defence paragraph 39 are admitted by
the plaintiffs for the purpose of this proceeding
only, although they are not admitted generally.
In other words, the argument will proceed on

the same basis as on the last occasion. The Court
will recollect that those parts of the question
reserved book in particular refer to the issue of
the tapes being ordinarily used. It also has
allegations of factors to the numbers of sales of
tapes. In particular, paragraphs (a) to (d) may be
regarded as common ground between the parties.
Paragraph (d) on page 26 of the question reserved
book provides that:
tapes of the relevant kind are tapes of a kind

ordinarily purchased or hired for use for
making copies of sound recordings.

BRENNAN J:

I do not understand how a concession as to facts

is to found a judgment on constitutional validity.

MR GRIFFITH:

Your Honour, I think it was the desire of both

parties for this matter to - - -

BRENNAN J:	I am not doubting the desire of the parties.
MR GRIFFITH:	Your Honour, an issue of fact which would be

relevant to a trial on the issue for the
Commonwealth to make good its pleading of defence,
Your Honour, would be the matter alleged in
paragraph (d) of paragraph 39 of the defence. It

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10/3/92

was our case by pleading that in defence that on a
trial of that issue of fact, we could establish

that fact. The material is before the Court.
The three volumes of material which the Court

now has does give considerable support, we would
say, Your Honour, to that statement. In fact we
would say it establishes it, but, Your Honour, the
plaintiffs, for the purpose of the demurrer,
accepted that as a fact and the case came before
the Court on the basis that validity was to be
determined by reference to a fact before the Court,
which would be in the same form, Your Honour, as if
there were facts stated by a judge before reserving
a question to the court.

BRENNAN J:

Yes·, but would a judge state facts before

reserving a question of constitutional validity on the basis of a concession for the purposes of that
argument only? Was this not a matter that was
raised in the Tooth case before the Federal Court,
if I remember correctly, and the view was taken
that no declaration would be made?

MR GRIFFITH:

Your Honour, that may well be the case, but it

is our understanding that the plaintiffs do not
contend otherwise.

BRENNAN J: That may be so, but how can it be that if

anything turns on paragraph (d), a decision on this
occasion might be in favour of validity and so soon
as the factors changed and ..... litigation, the
answer may be otherwise.

MR GRIFFITH: Well, Your Honour, that is an issue perhaps

which now should be addressed.

McHUGH J:

From recollection, in the Barley case, the facts

were not agreed, the stated case had contentions of
the parties in respect to some facts.

MR GRIFFITH: Yes, and that has happened in other

constitutional litigation before this Court.

McHUGH J:

It may have been some other cases, but there has

certainly been some case in the last couple of
years.

MR GRIFFITH:

Your Honour, sometimes when we find we cannot

agree on the facts we just state that "one party
contends" and in the response the other party says,
"Well, that is irrelevant; it is not decisive to

the result". I think it happened in the Dam case,
amongst others.
Your Honour, certainly so far as again considering validity, of course there is nothing

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ever to prevent a party coming back before the
Court to argue the legislation is invalid which has
already been held by the Court not to be invalid,
if one thinks of a new constitutional argument, or
there is a new doctrine which would apply to that
issue which has been elucidated by the Court. So
we would say, Your Honour, there is never an
estoppel against arguing the invalidity of
legislation; the difficulty is to persuade the
Court that you are right.

BRENNAN J: Well, it might not be a difficulty in future

litigation but - it may not matter in this case but
if it does matter, that it is an essential fact to
the validity of this legislation that tapes of the
relevant kind are ordinarily purchased or hired for
the making of copies of sound recordings, then why
should this Court give, for the purposes of this
litigation only, a declaratory judgment?

MR GRIFFITH:

Your Honour, perhaps it is not for me to argue

too far on that because this is Commonwealth
legislation duly enacted. For us it is valid until

the Court holds it is invalid in any respect. It
is my learned friends representing the plaintiffs,

Your Honour, that seek an order for invalidity. As
Your Honour said in Gerhardy v Brown and other
occasions, the Court may inform itself as
appropriate as to constitutional facts and matters
relevant to constitutional validity and,
Your Honour, we have three volumes of materials
before the Court which we would assert, in an
alternative, are sufficient to establish to the
Court that that is the case, that they are
ordinarily so used and we did not understand my
learned friend to submit to the Court that anything
else was the position.

DAWSON J:

You may look at Mabo (No 1) in this regard,

Mr Solicitor.

MR GRIFFITH: What a dreadful threat, Your Honour. Perhaps

it is for my learned friend to indicate whether it
is for the purposes of the case or merely the
purpose of this question, because if he does not
desire to have the Court finally determine it,
really it is not for us to strive officiously to
keep it before the Court. We would like to have
the issue of validity determined by this Court, but
if the Court expresses the view that it requires a
finding on this question of fact, absent my learned
friend indicating that this acceptance of
paragraph (d) in particular is one which is made
unconditionally for the purpose of this case, we
have to accept the Court's ruling in the matter.
We have attempted to operate - - -

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McHUGH J:

I must say I regard paragraph (i) as of some

importance.

MR GRIFFITH: Well, Your Honour, we say all of 39. We

pleaded it all advisedly on the basis that was

pleaded as a pure defence. We were looking, absent
agreement from the plaintiffs, Your Honour, to a

trial on those issues. Now, in the context that it
seemed that the plaintiff was desirous of having the consitutional issue determined, it demurred,
Your Honour. In other words, it accepted that
pleading and the matter came on before the Court.
We know why it went off, and then it was quite appropriate, of course, Your Honour Justice Dawson,
to state the particular questions, but because,
without some treatment of them that matter of pleading would not be part of the question so
stated, the agreement was made in the terms I have

read to the Court. Now, if that is insufficient
for the Court for the reason stated by Your Honour
Justice Brennan, my learned friend is not able to
make an unconditional agreement for the purposes of
this case in the terms, we say, of all of
paragraph 39 of our defence, we are not in a
position to take the matter any further other than
to say that we are prepared, if the Court accepts
the fact that it is appropriate, to argue the case

on that basis. I do not know whether it is
appropriate for my learned friend to indicate his
position now or whether it can be done later.

MASON CJ: Well, we may as well hear from Mr Ellicott at

this stage, Mr Solicitor. What do you say about
this, Mr Ellicott?

MR ELLICOTT:

Your Honours, so far as we are concerned, we

are here to argue the validity or invalidity of
those provisions, and they will depend upon such
facts as the Court can properly take into account.
It so happens apparently that there has been some
agreement that these facts are facts, but the Court

may decide that it will ignore them; we are seeking the Court's decision and declaration as to the
validity of these provisions.

McHUGH J: But they are only facts until the day of judgment

on these questions.

MR ELLICOTT:

Yes, but the Court will be looking at the

validity based on what facts it is proper to take
into account and normally, in the Barley case, for
instance in relation to section 92, it would be
appropriate to have matters of fact, perhaps
determined by a single Justice or a Federal Court,
before the matter goes on, but it is very rare that
facts become necessary for constitutional
determination, in fact I doubt if the Court would

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100

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encourage it, because fundamentally the legislation
has to be looked at on its face. Fairfax's case,
what does it do, how does it operate, what does it

purport to achieve on its face? You do not need
facts to determine that. The Court will inform
itself about background facts and it may be all
very interesting to know that our clients are
selling tapes that fall within the definition, for
instance, looking at (d), of "blank tapes". That is, "a kind ordinarily purchased or hired for use
for making copies of sound recordings". Well that
is what (d) says on page 26. That fact has been
admitted, that we actually make them, so it does
not assist in the determination of the validity of
the sections and so far as the Court considers
those facts are not relevant, then to determine the
constitutional issues, then they should be ignored,
but in so far as they could be relevant - they
might be relevant on just terms, for instance.

BRENNAN J: Well, is the demurrer still alive?

MR ELLICOTT: Well, so far as we are concerned, we came here

to argue questions of·law which were stated by

His Honour Mr Justice Dawson. Now we have done
that and we do not see the question of whether it
is alive or not and it probably is still alive, in
a sense. We do not see that as determining in any
way how this matter should be dealt with by the

Court. The Court should deal with this matter on
the basis of certain questions having been asked
and there they are and it will do it in the
ordinary way.

McHUGH J: But supposing you came to the conclusion that the

scheme was within power because, in terms of
paragraph 39(i), copyright owners cannot by any
practicable means recover remuneration in respect
of unauthorized copying of sound recordings of the
relevant kind.

MR ELLICOTT:

Yes.

McHUGH J: That may be a critical fact.

MR ELLICOTT:

It may be, but we would want to submit that,

in a sense, that would only be relevant to just
terms, for instance. It cannot determine the
question of whether there is an acquisition of
property. It cannot determine the question of
whether it is a tax or whether it is a law with
respect to copyrights.

McHUGH J: Perhaps it does go to the latter matter because

if copyrights are being breached, and this scheme
is perhaps the only way it can be done to

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compensate the owners of a copyright, well it
might just get up on the incidental powers.

MR ELLICOTT:

When I am able to argue about that, I will

want to say that the Court will look at the
legislation and find out what it does, what it
seeks to achieve, and you must find the invalidity,
or the validity, within the terms of the
legislation, read with such facts that the Court
can take judicial notice of, and that is the

ordinary course which one takes. If the Court is
legislating, and it is not, of course, it is a
different matter. It would need to know these
policy considerations, but there is no purpose or
object stated in the legislation or even in the
second reading speech that can assist the Court.
The Acts Interpretation Act cannot assist the Court
to determine, by looking at what the
Attorney-General said, whether the sections are
valid or not, we would submit.

McHUGH J: Should you not have struck out some of these

paragraphs of the statement of claim - - -

MR ELLICOTT:

We may have, Your Honour, but we did not

choose to do that because, as I understand it, when
the matter came before Justice Dawson it was
decided that questions would be stated, and that is
what happened and that is within the Court's power
and that is how things are best put to this Court,
we would submit, on constitutional matters. You do
not normally want facts, need facts, to argue or to
decide these issues, and this is such a case.

BRENNAN J:	Mr Ellicott, if your limitat~on on the admission has the effect at the end of the day that in the view of the Court, validity or no turns on the ascertainment of the fact, it may be that the fact
would have to be ascertained before a declaration
could be made.
MR ELLICOTT: Yes.

BRENNAN J: If, however, the Court were able to reach a conclusion without reference to the fact, then

there would be no harm in disregarding the
limitation on your concession in any event.

MR ELLICOTT:

Your Honour, with very great respect, that is

what we are trying to say, perhaps inadequately, that the Court is able to proceed with this. We would be very surprised if the Court came to the
view that it needed some facts to be found before
it could form a view, but if it did, then it could
send us off to find the facts.

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MASON CJ:

Mr Ellicott, I can understand some reluctance on

your part to make an absolute admission in relation
to (i), but what about (d)?

MR ELLICOTT:

(d), Your Honour, that is no problem because,

in a sense, that relates - if I could put it this
way - to locus, in a sense, to challenge the
legislation because we are vendors of blank tapes,
that is, they are of a kind ordinarily purchased
for - it is part of the definition. So, all that
is doing, is saying, "We are selling blank tapes
within the meaning of the Act".

MASON CJ: But there would not be any need to make a

qualified admission about that.

MR ELLICOTT:

No.

MASON CJ:

None at all.

You would make an absolute

admission about that.

MR ELLICOTT:

Yes, that is so. That is not a problem, but

again, it is not an admission we would need to make for the Court, only for the purposes of being here.

MASON CJ:	No.
MR ELLICOTT:	It really only goes to our locus, in other

words.

MASON CJ: Yes, Mr Solicitor?

MR GRIFFITH:

Your Honour, it would seem the problem is one

that commonly arises when there is a change of
counsel in mid-flight in litigation. This may be a
case, Your Honour, where it is necessary to call
each of our respective junior counsel to find out
what happened. But if I could outline to the Court
the situation in this case as we see it: when the
writ was served on us, Your Honour, we drew a

wished to rely and have findings on which then to defence which pleaded matters of fact on which we argue constitutional validity or to argue against
the claim for invalidity.
There were then protracted discussions between

counsel, Your Honour, as to the extent to which the
plaintiff would be prepared to admit, I think it
was paragraph 21 of our first defence, which made
allegations of this sort of fact which is now in
paragraph 39. As a result of those discussions,
agreement was reached on a form of words which, if
pleaded in an amended defence, the plaintiff
indicated it would then admit those facts by way of
a demurrer which could come before the Court so the
matters of fact would be before the Court as fact
for the purpose of constitutional validity without

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any reservations or conditions, as in the case of
any demurrer.
Accordingly, the Commonwealth amended its

defence to provide in paragraph 21 in the amended
defence a precise form of words agreed with
plaintiff's counsel was appropriate for the - which
were accepted by the plaintiff, including the
wording in paragraph (i) for the purpose of the
plaintiff then, as it indicated, being able to
demur to it so the case would come before the Court
on the basis that the relevant constitutional facts
for the purpose of our argument for validity were
before the Court in this form.
If that form had not been agreed, we would

have then required the matter to be remitted,
Your Honour, for a trial to be held on those facts

and those facts held for the purpose of this case
as it came back to the Court to argue the issue of
validity. Our whole argument before the Court,
both on the last occasion and today, has been
predicated upon these facts being firm facts before
the Court on which can be based our argument and on
which basis we contend the issue of validity or
invalidity to be determined by the Court.
When the matter was adjourned on the last

occasion, Your Honour will remember that
Your Honour indicated it could be appropriate for a
Justice of this Court to define the questions
because of the great uncertainty existing then as
to what the plaintiff wished to put before the
Court in a new and amended form, when already it
had made principal submissions before the Court
that the parties were agreed that whatever was
involved here, there was not a tax, and also its
principal submission was that there was no
acquisition.
The order of His Honour Justice Dawson, which

appears in the question reserve book, states in
questions which the plaintiff indicated it desired
to raise on its amended pleading, including, I
point out on page 40 of the question reserve book,
question l(d) which is a question the plaintiff
desired to put before the Court; we have difficulty
in understanding what exactly the question is, but
those are the questions before the Court.
It was appreciated between counsel during

these discussions that it would be necessary to
deal with the issue that the matter will be coming
back to the Court, not on a demurrer, but by way of

a question reserved. There were protracted
discussions between counsel occurring over many
months to settle on a form of amended statement of

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claim which could then be pleaded to by an agreed
form of defence which would come back to the Court
on the same basis as the original matter, namely, for the purposes of the hearing, the questions of
fact now pleaded in paragraph 39, are agreed for
the purpose of determining constitutional validity
as fact.
On 27 November, junior counsel in each case

signed a memorandum of understanding - I only have
got one copy of this, so perhaps I could read it to
the Court - dealing with these issues. It reads:
1. In order to facilitate the further conduct
of this proceeding by way of questions
reserved for the consideration of the
Full Court pursuant to section 18 of the
Judiciary Act 1903 of the Commonwealth it has
been agreed between counsel for all parties as
follows.
2. The present state of the pleadings is that
the plaintiffs, pursuant to the order of

Justice Dawson of 19 September 1991, have
filed and served an Amended Statement of
Claim; the defendant has filed and served a
Further Amended Defence; the plaintiffs'
original Reply and Demurrer joining issue with
the Amended Defence which preceded the Further
Amended Defence has not been replaced by any
later pleading; and questions are being
reserved by Justice Dawson for consideration

by the Full Court. The Defendants also served
on the plaintiff a Request for Particulars,
but that is not relevant to this memorandum.
3. Paragraph 39 of the Further Amended Defence
is identical with paragraph 21 of the Amended
Defence. It consists of material allegations
of fact which, in the Amended Ddefence, stood

denied by reason of the plaintiffs' joinder of

issue in their Reply. The allegations now
stand denied by reason of the non-delivery of
a Reply or Amended Reply joining issue with
the Further Amended Defence.
4. The parties wish to ensure that although
the matter is now proceeding by way of
reserved questions rather than demurrer, the
allegations of fact will still be treated as
admitted for the purposes of the legal
argument. Accordingly, it has been agreed
between counsel that the Court be requested
ore tenus at the opening of argument to allow
the matter to proceed on the basis that the
facts alleged in paragraph 39 of the Further
Amended Defence are admitted by the plaintiffs

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for the purpose of this proceeding only and
are not admitted generally.

DEANE J:

Mr Solicitor, does the Commonwealth ever have to

prove facts? Does not the presumption of validity
really mean that if a view of the facts is
feasible, it needs to be negatived?

MR GRIFFITH: Yes, Your Honour, but we need the

determination of the Court that we are up on the
first limb before we know we do not have to worry about the second. The Court will remember in the Queensland Forest case, our argument was conceded
by the Commonwealth as being one which rested
entirely upon establishing certain matter of facts
before the Court, indeed, to the extent that we not
only put materials before the Court on the facts,
but we went first in the argument.
Your Honour, in this case we would submit that

the finding of fact in paragraph 39(i) is a
relevant matter of fact integral to a strong
argument for validity now broadened to deal with
cross-relationship of -arguments and not just
copyright, but also taxation and acquisitions. If
my learned friend, Your Honour, coming in it with a fresh mind, is merely able to say, "Well, this is a matter for the Court to determine by reference
particularly to the legislation and the
regulations" without, presumably, I would say, if
he turned his mind to it, regard to the information
contained in our three volumes of materials, and
without now conceding even for the purpose of his
argument today the matter of fact in paragraph (i),
in that case, Your Honour, the matter, in our
submission, is before the Court on a basis where
the.Commonwealth is not in a position to put the
full weight of its defence to the validity of this
legislation which is based on the matters of fact
pleaded in paragraph 39, as well as obvious
inferences - and, of course, they are obvious and

many matters are common knowledge, Your Honour.
But in important legislation of this sort, indeed
for even less important legislation, the
Commonwealth would do all that is appropriate,
Your Honours, to defend the validity of its
legislation when it is attacked by proceedings in
this Court. It would be, in a way, a dereliction
of obligation to the Court for us to seek to put
forward one level of defence on the basis,
Your Honour, that we would expect to win on that
and there is no necessity to go to the next level
referring to particular facts.
Here, we would refer to paragraph (i) as being

one which, we say, close to forecloses the issue of validity under the copyright power. Of course, now

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we have arguments not originally raised by
reference to tax and acquisitions, but my learned
friend says that the issues which arise on
copyright are closely interrelated to his

propositions on tax and acquisitions. We would
seek, in that context, Your Honour, if my learned
friend is not prepared to admit these facts in a
way acceptable to this Court, to say in that case
the matter has to go off for trial on these issues,
and that is our submission.

MASON CJ:

Mr Solicitor, you heard what Justice Brennan said

earlier. Why cannot the matter proceed and, in the
event that the Court comes to the conclusion that
(i) does become a matter of importance in terms of
making a declaration, the matter can be considered
then?

MR GRIFFITH:

Your Honour, we are in the hands of the Court

on that but it is an integral part of our argument,
Your Honour, that that is a fact, and our arguments
are prepared on that basis.

MASON CJ:

I can understand that, having regard to the

memoranda.

MR GRIFFITH: So, Your Honour, it is not entirely

satisfactory to have a wait-and-see, so far as the
argument goes, with the Court.

MASON CJ:

It is certainly not satisfactory that the Court

should be in the position that this matter should
stand adjourned once again.

MR GRIFFITH:

We agree, Your Honour, but with respect we

have done all that we could have done to get the

matter before the Court. We were ready last time,
and we were ready as it stood today.

MASON CJ: Yes, but you have the advantage that you can put

your argument on the basis outlined in the

memoranda. If some difficulty arises subsequently, the Court can identify it and decide what action it
will take.

MR GRIFFITH:

If the Court pleases. Can I turn briefly now

to the materials which are summarized in appendix B
to our contentions. At page 181 of volume 1 of our
material is an extract from Stewart's work on
International Copyrights and Neighbouring Rights.
At paragraph 1.11 Stewart says:
Each copyright system has to strike a balance
between two public interests, the rights
accorded to the copyright owner and the
reasonable demands of organised society.

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Then the author goes on:
The basic limitations which are peculiar to copyright flow directly from this balance
between the interests of the copyright owner and the interests of the copyright users and
the public as a whole. These limitations
which, as copyright is a creature of statute,
are statutory limitations, are of three kinds:

and, in particular, we refer to the third
category -
In some cases the right owner is not given an absolute right subjecting all uses of the protected work to his prior authorisation, but only the right to equitable remuneration.

Turning then to the particular statutory material, as analysed in Appendix B, the first
category we refer to is material indicating the

universality and the scale of the problem. If I
could take the Court briefly to material with

reference to the position in Australia. The Court
has already been briefly referred by my learned
friend to the second reading speech, which appears
particularly on page 2 and 3 of volume 1 of the
materials, which outlines the problem in terms
which I need not take the Court to detail. But
then there is a useful discussion of the position,
firstly in a speech by Senator Gareth Evans, when
Attorney-General, a speech which commences on
page 35, headed, "Audio-Visual Copyright Law:
Sharing the Benefits of New Technology". That is
the speech delivered in 1983 indicating the stately
progress on which reforms in this area proceed.
But the speech and its considerable annexures

are a full summary of the issues and the relevant
considerations and opportunity for representations
being made by others which have been the genesis of

this legislation. On page 36, at the foot, under
the heading, "Purpose of Copyright Law", the point
is made an:
Anglo-American legal system copyright is seen
generally as a means of encouraging creation
of original materials by providing the
creators with a means for securing economic
rewards so that copyright serves the public
interest by encouraging creativity.

Under the heading, "Effects of Technological
Change" on page 37, there is an obvious point made
as to the effect of technology of which the Court,
at this stage of the hearing, would be aware, and
at pages 41 to 43, possible solutions are

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considered and on page 42 the conclusion is made
that the solution proposed on royalty on blank
audio recording tape is an appropriate solution
referring to the possible other solution of levy

made on recording instruments. So that is
expressed as being the preferred solution on
pages 41 to 43.
At pages 63 to 64, there is a discussion of

domestic copying, and on page 64 there is a
discussion of the amount of domestic audio copying.
If I could take the Court to the table on page 66,
which indicates in 1981 there were some 69 million
blank tapes purchased and some 50 million records
taped, which indicates, as is summarized, records
as a percentage of all taping, 82 percent.
Of course, since 1981 there has been, as other

material will show, a great increase in other
mechanisms of music reproduction: the cassette
tape itself and also the disc. The proportions
would seem, on the basis of other material which is
before the Court, to be, if anything, a little bit
low. There is other material indicating higher
percentages are usual.
Pages 87 to 88 is a brief reference to the

House of Representatives Standing Committee Report
on Expenditure indicating the nature of the
problem, and at page 88 making a recommendation
that:
The Government should, as a matter of
priority, introduce a levy on the sale of
blank audio recording tape -

The position in other countries is, not

unexpectedly, very similar. I will not take the
Court to the materials in great detail as to that, but firstly in Stewart that I have just referred to
at page 186 - the Stewart edition was 1983, as is

shown on page 180 - there is a section on home
taping at paragraph 4.32. At the bottom of that
page, the author makes the point:
although home taping is clearly an
infringement of copyright it is impossible to
enforce the infringed rights as such
enforcement would constitute an intolerable
intrusion in the privacy of the home.

There have been various reports in the United
Kingdom, and if I could take the Court to volume 2
of the materials with respect to references to
those, the first report is the Whitford Report of
1977 which appears at page 280.

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BRENNAN J:

I notice the suggestion that the Commonwealth

should pay direct subsidies was not regarded as an
appropriate method.

MR GRIFFITH:	No, Your Honour, because it is Commonwealth money being paid for recompense for private rights,
as it were.
BRENNAN J:	Even if there was a tax imposed on a sale of

cassettes.

MR GRIFFITH:

Your Honour, I should concede at once,

Your Honour, that the Commonwealth does have power,
we would submit, to the Court, rather concede, to
impose a tax on blank tapes, but that is not the
mechanism which has been followed in this case. If
it had been, Your Honour, the argument would have
been, perhaps, shorter or non-existent. So, in
answer to Your Honour Justice McHugh's question to
my learned friend, we do not resile from the
amended paragraphs of our defence alleging that it
is not a tax. It is not a tax.

McHUGH J: Your original paragraph 24 specifically alleged

that. There is no similar paragraph.

MR GRIFFITH:

I think we have done it again, Your Honour,

because there are three paragraphs alleging it is a
tax, Your Honour, and we have denied all three of

them. I can give Your Honour the numbers.

McHUGH J: Yes, I know that - - -

MR GRIFFITH: Yes, but we have denied the allegation it is a

tax, so that is the same point.
Your Honour, at page 282 - perhaps I could

just say, generally, that the extracts are included
as being extracts which are all entirely relevant,
so having said that, I will not take the Court to
the detail which makes the point, but one will see

on page 282, there is a discussion of the problem
paragraph. Page 294 refers to a survey of the
increase of access to materials.

McHUGH J: But is there any necessity to, in effect, read us

this information? You are only transmitting

information to us which is there to be read. if
is different if you want to use it as a basis for
argument.

MR GRIFFITH:

Your Honour, we would agree.

On page 3 of

appendix B, we do make a particular point in
indexing and saying that there are similarities in
the current features in other models as to the
mechanisms adopted, and you will see in
paragraph 5, Your Honour, we make a point which is

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relevant to this 15 per cent levy for cultural
purposes. Ausmusic that my learned friend concedes
it a good object, but not to be benefitted by this
scheme, in his submission, to show foreign
analogues in that respect, and we also have
references on reciprocal treatment which is obviously relevant on the issue of eligible

copyright. Your Honour, our scale on paragraph (e)
on the second page lists the various mechanisms
used by other foreign jurisdictions by way of
example, and I could indicate to the Court that on
pages 386 and 387 to 390, in fact, in an American
congressional paper which commences on page 334, It
is Copyright & Home Copying Technology Challenges
the Law, published by the Congress of the United
States Office of Technology Assessment.
Obviously by reason of the title, the whole

document is recommended to the Court. But the
summary, between pages 387, 388, 389 and 390, shows

the various collecting schemes, including -

Australia is listed as not yet implemented. One
can see that there is, in fact, a column for
cultural fund on the right-hand side which is a
mechanism and providing for the various
distributions and also, Your Honours, indicating
whether it is merely schemes which impose on blank
tapes or also the equipment as well or sometimes
only the equipment.
I should indicate here, Your Honours, the materials shown in respect of Germany is listed

first under (e). The original German solution was
a levy on the equipment and that was found to be
inadequate and there is now proposed a - what is
now in force, Your Honours, at pages 409 and 411, a
levy on blank tapes.
So far as recent developments are concerned,

in volume 3 of our materials, at pages 436 and
following, there is information in respect of the

current bill before the United States Congress.
The text of the bill appears commencing on
page 440, the extract from the Senate Congressional
Record. There is a discussion before that by the
introducing senator, Mr De Concini, just explaining
why it is the bill is now being introduced and the
scheme of that Act, as appears on subchapter Bon
pages 441, 442, 443 is to provide for a royalty to
be paid both on recording equipment - I think it is
a maximum sum of $8 per equipment - and also on

digital recording media. The percentage, I think,
is 3 per cent of the price.
On page 443, in the middle column, about

point 3, there is an indication of funds providing for some 4 per cent to be distributed to musicians

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in the American Federation of Television and Radio
Artists in the proportions stated.
The last document is a copy - it looks like a

press release or a report dated November indicating

the structure of the legislation in November. And
for completeness could I indicate that there is a
letter dated February 1992 from the
Attorney-General's Department's legal counsellor in
Washington just indicating where the bill now is.
There is an earlier letter of 8 November from the
same person indicating where it was in November. So in that way, to answer Your Honour
Justice McHugh's question, the material, we would
submit, when looked at in its detail does confirm
the universality and scale of the problem, does
confirm a trend of international response very much
confirmatory, that it would seem a levy on blank
tapes is more or less the only way to provide for
remuneration of the user which otherwise cannot be
controlled, with the possible adjunct of levy on
the recording equipment rather than the tape or as

well as the tape. And the material with respect to
the European Community, which is listed under paragraph 2(d) on page 1 of Appendix D, would indicate that the European Community as a whole
having first recommended in 1977 on this issue, is
heading towards the same direction as the European
development which is not surprising when one looks
on the next page, paragraph (e) to see the various
European countries are heading in that direction.
The one country which stands out of this at

the moment is United Kingdom because although each
of the Whitford report and the following reports of 1985 made strong recommendations of levies, firstly
on the machine in 1977 and then on the tape, and in
1985 it was announced the government would
introduce legislation for a blank tape royalty, in
fact, in 1988, as appears from an extract of

parliamentary debates and a press cutting, it was
decided not to proceed with the United Kingdom
legislation, notwithstanding the various material
which indicated that there was no other mechanism
to enforce rights in respect of copyright.

AT 12.55 PM LUNCHEON ADJOURNMENT

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UPON RESUMING AT 2.17 PM:

MASON CJ: Yes, Mr Solicitor?

MR GRIFFITH:

One small matter in the materials, volume 3.

At page 439 and following, appears an extract of
the Congressional Record of the Senate. It does
seem to be a miscasting of the typographical
structure on page 441. At the bottom right-hand
column beginning, "(5) 'Distribute' means to sell"
down to the end of (6) in fact should appear, as
far as we read the document, as commencing on the
top left-hand column. It just seems to be

misplaced. So from (5) onwards up to the top left
corner.
Perhaps as a suffix to my answer to Justice Brennan on the question of whether or not
the scheme could have been imposed as a tax,
perhaps one warning about imposing it as a tax is
if one goes to the materials in volume 2 at
page 386, there is a note of the Swedish scheme
which is by way of taxation. In the right-hand
column, it is noted that under the Swedish scheme,
some $US20,000,000 was collected in Sweden in 1987,
1988, but under the taxation scheme only $470,000
of that was distributed to rights holders in the
music field, and $132,000 to producers of records.
The state retained $19.8 million.

BRENNAN J: That is a matter within the control of the

Parliament, I suppose, if it was done there, is it
not?

MR GRIFFITH: It is, Your Honour. It is just an interesting

statistic to see what can happen with the tax. If
I may take the Court briefly to the speech of - - -
If I may take the Court briefly to the speech

of Lord Templeman - - -

BRENNAN J: Is there any other reason why, given the objects

of the material that you have been pointing to,
that if the Parliament saw fit to do so it would

not impose the tax, in the same terms virtually as
the royalty and then distribute them in whatever
fashion it saw fit?

MR GRIFFITH:

If Your Honour predicates that question with,

"If it can't be done this way, is there any reason
why it can't?", the answer is, "No, there's no

reason". "Are there reasons why it was not done by
way of tax in preference to this?" I understand,
Your Honour, that there were policy reasons that it
was regarded as following the usual structure, as I

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understand the position, of collecting societies to
have an, as it were, industry administered
mechanism on the basis that the government itself
had no desire to participate in the revenues or the
mechanisms of the operation of the system, and I
think there are other technical reasons which led
to the preference.

BRENNAN J:	I see none of those countries to which you have drawn our attention which have the same
constitutional distribution of power as in ours.
MR GRIFFITH:	No, Your Honour, no one has the same

distribution as us, so yes.

BRENNAN J:	No.
MR GRIFFITH:	I mean, if Your Honour says it could have been

done by way of tax, the unequivocal answer to
Your Honour's question is yes, that the choice was
known to be available, Your Honour, and it was not
taken for various reasons which, no doubt, could be
listed, but it was a conscious decision,
Your Honour, to take the non-tax choice.
If I could take the Court briefly to the

speech of Lord Templeman in CBS Songs v Amstrad.
It was referred to by my learned friend,
Mr Chernov, (1988) 1 AC, in particular at page 1060
of His Honour's speech. That was dealing, of
course, with the argument of an alleged authority
to use by selling the equipment. At point Eon
page 1060, Lord Templeman drew the threads
together, as it were, and said:
From the point of view of society the present position is lamentable. Millions of
breaches of the law must be committed by home

copiers every year. Some home copiers may
break the law in ignorance, despite extensive

publicity and warning notices on records,

tapes and films. Some home copiers may break
the law because they estimate that the chances
of detection are non-existent .... Whatever the
reason for home copying, the beat of Sergeant
Pepper and the soaring sounds of the Miserere
from unlawful copies are more powerful than
law-abiding instincts or twinges of

conscience. A law which is treated with such
contempt should be amended or repealed.

And further down, at H:
No one is to blame for the present situation.
Copyright law could not envisage and now cannot cope with mass-production techniques
and inventions which create a vast market for

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the works of a copyright owner but also
provide opportunities for his rights to be
infringed.

And then he makes some references to views that
Parliament might take, the Whitford Report to which
I have already referred the Court and the Court has
copies of it, and at page 1062 he says:
These proceedings will have served a useful
purpose if they remind Parliament of the
grievances of the recording companies and
other owners of copyright and if at the same
time they draw the attention of Parliament to
the fact that home copying cannot be
prevented, is widely practised and brings the
law into disrepute.

The argument presented to the Court briefly by the
Commonwealth on the last occasion of this matter
before the Court was directed at showing the
historical development of the law of copyright and,
at a quick perusal of my learned friend's materials
under tab 4 put to the Court today, there seems to
be a quick running over of the same area of
discussion covered by our submissions last time.
But we submit that that historical development and
my learned friend's summary, as much as ours, shows
that there has been extension of copyright to new
subject-matters and that there have been
developments of statutory licencing schemes
designed to facilitate as well as to regulate
public access to copyright material, whilst at the
same time remunerating copyright holders.
The appendix A, a copy of which I again handed up to the Court this morning, does summarize the
long-established schemes under the Copyright Act
which have their counterparts under copyright laws
of the world and we would submit that this confirms
that this particular scheme is anything but novel,

even though it must have particular and original
provisions dealing with the particular and
unprecedented area for regulation.
But the present scheme, in essence, is just

another mechanism adjusted to a particular area of
copyright protection to complement and extend the

body of statutory licence, it seems. The
particular scheme here, we submit, exhibits all the
characteristics of other schemes under the Act.
Firstly, there is the removal of relevant conduct
from the field of copyright infringement on
condition that a royalty is paid, and in one case
that a licence is obtained; is a collection and
distribution of royalties by collecting societies;
there is royalty fixing by the copyright tribunal;

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there is collective licensing abuses under
copyright tribunal supervision and there is use of
sampling procedures for determining use and
distributing royalties.
The same model guidelines which appear in

volume 3, the slim volume, at page 423, are
proposed in respect of the collecting society to be
utilized under Part VC as in the case of collecting
societies under Part VA dealing with educational
copying of broadcasts and Part VB, it dealing with
educational photocopying. This appears from page
423. They are common form guidelines; there is
nothing particular to provide unusual provisions
dealing with blank tapes as distinct with these
other collecting societies.
As is said in the 1988 European Commission Green Paper, appearing in volume 2 at page 257,
paragraph 3.10.2:
Copyright laws should seek to ensure that
right holders in_audio-visual works can
authorize, prevent or at least require
remuneration, for any reproduction of their
protected works -

and we submit that as in existing schemes under the
copyright power, the legislative protection here or
of the right to copy, comprises firstly provisions
dealing with the conferral and definition of the
right and, secondly, mechanisms for enforcement
designed to ensure, in a reasonable and practical
manner, the owner's enjoyment of the right.
So our principal submission is that the scheme

is ·an appropriate and reasonable means of effecting the payment of royalties to the owners of copyright who otherwise would not be remunerated for the use

of their material. As such, we submit, the blank

tape levy cannot be a tax or an acquisition.
Cassettes are ordinarily used, we submit, to copy
original sound recordings without permission and
hitherto this copying has constituted an
infringement, without the copy holder having any

effective right to prevent infringement. Of
course, each instance of private copying, if taken
separately, involves minimal impact upon the
copyright owner's market, but the aggregate effect
on copyright owners of such copying obviously is

substantial. The table in volume 1 at page 66
indicates at least 50 million in the year 1981 - I
think 30 million - and the materials in volumes 1
and 2 indicate user of that proportion in overseas
use.

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Of course, the proliferation of home taping

does not merely benefit consumers and manufacturers
of blank tape. Markets have been created for
manufacturers, distributors, retailers. Industries
have been built predicated upon universal practices
of copyright infringement and there has been no
offsetting benefit to compensate the copyright
owners for free use of their material.
As prohibition is impossible, the only possible mechanism for copyright protection is for
the copyright owner to be compensated by payment in
respect of home taping which otherwise would
constitute copyright infringement. In volume 2 at
page 288 the Whitford Committee, in 1977, said:
the only possible solution ..... lies in a
blanket licensing approach -

and we submit that Part VC and section 153E of the
Act take account of these realities.
For the purpose of the copyright argument, in distinction from the acquisitions argument put
today by my learned friend, the validity of
section ZZM is not challenged. So that the
pleading made in respect of the copyright power
remains a pleading that does not challenge the
validity of ZZM, although, as my learned friend
indicated, there is a challenge to its validity on
one aspect of the acquisitions argument.
We submit that ZZM is not to be considered in isolation. It is an integral part of the scheme to
permit home copying in circumstances where there is
payment of a royalty for each blank tape sold of a
kind ordinarily used for home copying when first
sold for hire or otherwise distributed in
Australia.

Our submission is that if the scheme is

invalid, then section ZZM would fall with it. The
provision is obviously, we submit, included only to
operate as the complement to the operation of the
scheme providing for a collecting society to
distribute blank tape levies. Otherwise the
position would be, on the plaintiffs' argument in
respect of the validity of the scheme, if
section ZZM survived a successful attack on the
other parts of section SC, then the position with
respect to home copying will be that it will be
wholly constituting a non-infringing user and there
would be no compensation for the copyright owners.
We submit that that obviously was not the intention
of the legislature in passing.

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McHUGH J: If Division 3 and other divisions go, is it your

argument that Division 2 has got to go as well,

that dealing with M? Is M severable?

MR GRIFFITH:

No, your Honour, in our submission it is not.

It must go.

McHUGH J:

So the whole part goes?

MR GRIFFITH:

The whole part goes, yes, Your Honour.

It is

a scheme to provide remuneration instead of a
non-enforceable right to complain of infringement.
We submit, Your Honour, that you cannot break it up
and say, "Well, we'll keep the good bits for the
benefit of selling tapes with unrestricted right
lawfully to copy", without having the corresponding
financial obligation provided under the scheme.
We do not want to enlarge on that,

Your Honour. We just say it is self-evident, but
we do point out the pleading does not challenge M.
Whether it is challenged or not on the copyright,
we would concede, and in fact argue, Your Honour,
if we lose the parts that are challenged, we lose
ZZM as well. Perhaps it is easier to call it
Division 2; it is only one section.
The royalty, of course, is payable on each

tape other than exempt tape of a kind ordinarily
purchased or hired for the making of copies of

sound recordings. We proceed on the basis of our
pleading in paragraph 39(i) that accepted the
situation of fact, as we discussed before lunch,
for the purposes of the argument at this stage.

Perhaps one last reference to that matter: I

am told that the question of the situation in
relation to the facts was discussed when the matter
came on for hearing before Justice Dawson for the
fixing of the question, and the possibilities of

either continuing the old proceeding by way of demurrer; secondly, having a question stated in the form of the question stated by His Honour in
fact; or thirdly, having a case stated, were made
a matter of submissions before His Honour, and in
the end the view was taken with the agreement that
I have read, confirming an agreement made between
counsel prior to the hearing, was the course
adopted. But that is just by way of further
explanation of the circumstances as they occurred.
Of course, the ordinary use for the purpose of

copying eligible sound recordings is something

which can be ascertained with some accuracy. The
provisions of section 153E(2) of the Act ensure
that proper account is taken of the level of

copying of non-copyright material. We submit a

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practical system of exemptions and refunds is
provided for consumers who do not use blank tapes
to copy copyright sound recordings, in particular,

section ZZR and ZZT. And, in addition, it has been
pointed out to the Court, the tribunal in fixing
the amount of the royalty must have regard to:
the extent to which blank tapes are used for
the purposes of making copies of eligible
sound recordings and eligible works -

that is section 153E(7), and that is further
explained in volume 1 of the materials, pages 34 to 35, and also paragraph 236 of the explanatory
memorandum which appears in volume 1 at page 34 of
the materials, which means that the amount fixed in
reference to the levy on each blank tape sold is
not a levy fixed by reference to the unlawful
copying of all works, but merely in respect of
having regard to the fact of the proportion of
works which are eligible sound recordings within
the definition of section ZZJ.
So, there is no element of windfall payment to

those relevant copyright owners as defined in that
section ZZJ by reason of the fact that non-eligible

works also are copied. The amount to be
distributed on a basis of sampling in the surveys
is to have a relationship to those entitled to the
distribution to the amount of copying of works of
those who are eligible, not in relation to the

overall market. I hope I made that point clear in

expressing it in those terms. Of course, under
section ZZN(2), the royalty is calculated by
reference to the amount of the normal playing time
of the tape. So, we submit, in close approximation
the amount of royalty collected is proportionate to
xhe amount of copying of copyright, and, indeed,
copyright eligible material, eligible works, and
copyright owners are not over-compensated.

BRENNAN J: Is this copyright owners as a class who are not

over-compensated or individual not over-
compensated?

MR GRIFFITH:	Your Honour, the individual ones, we submit, should be considered as any other potential
recipient of distributions from a collecting
society, that there are well-known and usual
mechanisms for allocation sampling the amount of
public broadcasting sales, the extent to which one
is more popular than another, so that we would
submit, Your Honour, that as practice for all
collection societies, the Court is in a position to act on the basis that there will be, under this
scheme - and the scheme is enacted so to provide -
a rational, fair distribution system between those

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who are entitled. But, Your Honour, it is, as for
other schemes, on the basis of sampling and
surveys, not on the relationship of direct payment
of a sum in respect of a particular copying, as in
the case of all collecting societies.
But, Your Honour, we submit that the fact that

the scheme for the collection of royalties, given
that there is no effective means by which they may
be collected from the person who actually does the
copying or, in the case of the examples postulated
by my learned friend, the person who is given an
infringing copy and then plays it, seeing that
there is no reasonable, practical or even possible
scheme to provide for those persons to pay the
royalty, we submit, Your Honour, that the simple
mechanism of imposing the royalty on the first
seller to a single collecting society is an
appropriate and obviously efficient mechanism to
provide for the collection of the amounts for
distribution.

BRENNAN J: Is this a case of a collection of the amounts or

is it a case of a scheme to provide compensation
for the inability to collect what would otherwise
be a royalty?

MR GRIFFITH:

Your Honours, it is sufficient to say it is to

provide for compensation in proportion to the use
made of copyright material. It is necessary - we
say appropriate, Your Honour, in the essence of
copyright, if you cannot stop it you provide for
remuneration and what we submit to Your Honours is
that this is a scheme which, in the circumstances
as they have been briefly summarized to the Court -
perhaps I need not say it is the only way of doing
it but we submit it is obviously a reasonable

mechanism adapted to provide for remuneration. But
we would say it would be not necessary to qualify
it in the way Your Honour expressed it. The mere

fact that it provides for remuneration,
compensation if you like, to the person who does

own the copyright material, is sufficient. I
would, in due course, refer to the form of ZZM
which provides, of course, that user for
non-private use is non-infringing, but what we say
is that is - put briefly, Your Honour, in our
submission, just the mechanism for expressing the
reciprocal for the payment of compensation, that
you can use it, and we would say for
characterization it does not make any difference
whether the user is expressed to be non-infringing
or infringing.
The provision in respect of lawful user,

however expressed, has as its compensating factor
the provision for moneys to be paid, levies to be

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collected and distributed in a rational - and as
far as one can, given that one is dealing with,
perhaps, 50 or 100 million incidents of copying,
and potential copyright works that might be copied
on each one of those copies, in the context that
there is a rational scheme of the sort which exists
now in respect of the various other collecting
societies which have long been in operation.
So perhaps leading from that, we submit it is

not essential for validity that a payment in
respect of copyright be made to the copyright owner
by the person using the material, and we have
already made the point that we submit that it is
not essential that payment be referable to each
particular copying. In numerous instances the
payer is different from the copier and the
collector is different from the copyright owner.
Collecting societies are well established vehicles for collecting and distributing royalties in these
sort of situations and one can refer to other
sampling procedures, for example, now with library
photocopying, so that.when one goes to section 83
of the Copyright Act one can see there that the
public performance on broadcasting of sound
recording, one has the Phonographic Performance
Copying of Australia Limited Collecting Society
distributing royalties on a sampling basis.
Similarly under section 31 dealing with the

public performance or broadcasting of works, the
Australian Performing Rights Association works on

sample logs from broadcasting and then distributes
them on the points system. Possibly Mr Catterns is
in a position to give the Court more technical
detail about that, but that is the mechanism under
which they work, as we understand it.
We have already made the point that here we

see that we have a society set up in similar form

and we have model rules that are proposed not being
peculiar to it but just model laws applicable to

other collecting societies. So that, at the end of
the day validity here is determined, we submit, by

whether the provision is amenable to
characterization as being a law with respect to
copyright and, as the scheme at Part VC is to
secure to the creator and publisher of original
work a fair recompense to its use, we say that that
is directly relevant to and connected with the
right to copy, it is directed to compensate the
copyright owners for use of their copyright
material, there is a mechanism to secure the
enjoyment of the right, and that that is sufficient
to enable the characterization to be made as being
within the copyright power.

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I refer briefly to section ZZP, which provides

for royalties to be paid on sales over a

three-month period. We submit that average use
can be assumed so that, for example, if 90 per cent
or 95 per cent of tapes sold were used for home
copying, well then, over a three-month period one
would find that most sales by a wholesaler would be
used for the particular purpose. It does not
matter for our submissions whether the percentage
is 90, slightly more or slightly less.
Dealing with my learned friend's point that

there is no benefit to the seller from the
mechanisms of the Act: firstly, of course, we have
already made the point in passing that the
manufacturers and sellers of tapes have the benefit
of the market created, by reason of demand, to buy
tapes which have as their ordinary and usual
purpose - an expression in paragraph 39(i) of our
contentions is "tapes ordinarily used for copying"
of copyright material.
So, the market is driven by the demand for

copying of copyright material and my learned
friend's response is, we understand, is to say,
"Well, there is no way of enforcing the copyright
owner's rights, therefore the seller derives no
benefit from a mechanism that does provide for
compensation for those rights." As well as having
an existing benefit of the market, which now is
utilized for unlawful copying, of course, we would
submit from a legal analysis, there is a benefit to
the seller; the product becomes one of enhanced
legal value, even if it may, as my learned friend
suggests, be less likely to have a perceived value
in the uninstructed intending purchaser intends to
copy what otherwise would be a copyright material,
because the tape can be sold with the attribute of
being available freely to be used under the
provisions of ZZM(l) of private copying for the
purposes of the person who has bought the tape

subject, of course, to the qualification in respect
of passing on under section ZZM(3).
So that there is a benefit in that lawful use

is available for the product which is being sold
and we submit that, quite apart from this point,
there is no reason in principle why the sellers
cannot be made liable for the payment of royalty in the first instance. After all, it is the mechanism
to be used for the infringing purpose which is
being sold and in this regard we would submit there
is no relevant difference to an imposition on the
recording machine itself or on the tape which is to
be used in the recording machine.

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Although my learned friend, Mr Ellicott, does

not now concede in his argument before the Court
today, my learned friend, Mr Chernov, on the last
occasion did several times put to the Court that
obviously the amount of the levy would be passed on
to the consumer entering into the price of the goods sold, just of course one would expect an excise to, would.
I would point out that, just on a quick

perusal of my learned friend's discursive argument
on copyright under tab 5 of the material as he

handed to the Court today, page 18, paragraph 31,
there is some, I suppose, description - I hesitate
to call it "evidence" - given by the submissions as
to price points, or statements, to use a neutral
expression, given in respect, price points, as to
whether you can pass on the full amount of the
levy. Well perhaps we will not make a submission
on that in writing, in due course, but the point we
would make is that, we would submit, that in the
ordinary course one can make the assumption,
conceded by my learned friend on the last occasion,
that a levy of this sort will operate as any other
excise in respect of the first sale of goods and to
be passed on by entering into the price of the

goods sold. We say, it is mere assertion to
contend that that will not happen.
There is no discrimination in the tape. Every

seller of tapes must pay the sum so that if there
is a levy of, say, 50 cents a tape, we say that it
would be self-evident that there cannot be any
relative disadvantage to a seller as a result of
passing on that increase. Of course, that is not
decisive, but it is to answer my learned friend's
point.
So the scheme, we submit, does protect

copyright owners' rights by means that are

appropriate to the circumstances and, of course,
are no way original and we have referred the Court
to the solutions and foreign considerations and
other legislations which all seem to be heading in
the one direction to identify a levy, particularly
on the blank tape rather than on the machine used
for the purpose of taping, and one can see why a
levy on the tape could be more appropriate because
a levy on the machine sold can only be paid once,
whereas a levy on the tape is in relation to the
sale of the product which is actually used and it
can only be used, one supposes, to infringe a
particular copyright one at a time, although it
could be used in series, and is more adapted to
provide compensation for use to copy what otherwise
would be infringing material than a levy on the

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machine itself, which may or may not be used to a
greater or lesser extent.

BRENNAN J:

It may not be used for that purpose at all, may

it? It may be used for other purposes.

MR GRIFFITH:	The tape or the machine, Your Honour?
BRENNAN J:	The tape.
MR GRIFFITH:	Your Honour, it may. I was going to get to

that, but there are exemptions under the Act: there
is exempt institutions; the Court has not been

taken in detail to exemptions. I was going to
refer to the mechanism and there are mechanisms,
Your Honour, for recovering refunds. There is not
a mechanism for an individual who desires to use a

tape for non-private use, to obtain a refund. So
that if a person uses it for an infringing purpose, Your Honour, there is not a provision in the Act to
enable that person to obtain a refund, but I was
going to turn to that as a - dealing with it as an
isolated matter, but, Your Honour, in the context
of ones dealing with a mechanism of, perhaps, sales
of 50 million tapes, our submission is that the
scheme, so far as it goes in providing for
exceptions in respect of blind persons, particular
institutions enabling refunds, although not
covering the entire field, goes as is reasonably
practicable to do that and there is material in the
materials I handed to the Court which indicates a
view in overseas experience that it is not
reasonably practical to have a complete and utter
system for refunds, but if I could get to that
shortly.

McHUGH J: There is also the definition of exempt tape,

which is -

MR GRIFFITH: Yes, Your Honour, I think that is a matter

that was covered the last time, that microcassettes

such as are used for dictating are not covered,
reel to reel tapes are not covered, and one is
really left with the cassette which is normally put
into a machine that is attached to a radio receiver
with a recording device, press record and play, and
you record; that sort of cassette.
It is put, Your Honour, that one of the exempt

users, for example, be for the purpose of legal

proceedings. So that if you buy the tape for legal
proceedings as an individual, if I wished to tape
my address that I intended to give to the Court to
see how it sounded and I used not a dictating tape
but a cassette tape, I would not be entitled to an
exemption. But the rhetorical question we would

ask, Your Honour, is: how often does that ever

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happen? The obvious answer would seem to be that
it just would seem probably never to happen,
Your Honour.
The mechanisms would seem to be consistent

with such reasonable inquiries both here and
overseas as to how far you can reasonably go to
provide a definition which limits itself to these
sorts of tapes that are used ordinarily for the
purposes and excluding other sorts of specialized
tapes that are not, providing exemptions to
institutions, blind institutions and other bodies,
educational purposes, but admittedly, Your Honour,
leaving a small gap for theoretical innocent non-
infringing use and also there is a gap for
infringing use.

DEANE J:

Why would you not come within ZZS(3),

Mr Solicitor?

MR GRIFFITH:

The answer is I probably would, Your Honour.

I am indebted to Your Honour; I probably would.
It perhaps extends the point I was seeking to make,
Your Honour, that the Act goes more or less the
country mile in providing exemptions, but does
leave some particular gaps. But perhaps I was
conceding - - -

DEANE J:	Does it?
MR GRIFFITH:	Does it go the country mile?
DEANE J:	Does it leave gaps?
MR GRIFFITH:	Your Honour, there is a gap that if you buy a

tape for the purpose of infringing use, to use it
for non-private use, you pay the levy, and there is
no mechanism to get a refund. But at the same
time, there is no effective mechanism to get the

impost from you for the infringing use. So that in
a rough and ready way, it would be a peculiar

scheme which would say that you do not have to pay

the levy because your use is infringing. It is a
bit rough at that point, Your Honour, but we would
submit that it is rational and does not take the
scheme out of power. There is a reference I will
give the Court in due course in the materials
saying this is really as far as you can reasonably
go.
It really comes back - we say, the test is,

"Is it reasonable and practical to go that far with
exemptions without covering the theoretical case
such as those postulated by my learned friend?",
and we say it does go far enough. We say that this
is sufficient for validity as being a scheme within
power and if I just give the Court passing

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references to the well-known statements of the
Court as to tests for validity.
Firstly, the Second Fringe Benefits Tax

Case, (1987) 163 CLR 329, at 354, the Tasmanian Dam
Case, (1983) 158 CLR 1 at pages 118, 119, 152 and

at page 275, and dealing with the contention I
earlier made that there is an actual and immediate
operation within the field assigned to the
Commonwealth as a subject of legislative power, at
the very heart of a subject-matter of the power,
may I refer to Melbourne Corporation v The
Commonwealth, (1947) 74 CLR 31, at page 79, and
also Murphyores v The Commonwealth,
(1976) 136 CLR 1, at page 11 and 19.
I have already said something in passing on

the arguments put against validity on the basis of the lack of connection between the royalty payment
under ZZM and the acquisition of a right to copy,
but we submit that when one looks at ZZM operating
of its own forces as contended by my learned
friend, it operates only in respect of blank tapes,
and once the commencement day is past, the effect
of ZZN(l) is that every blank tape "sold, let for
hire or otherwise distributed" must bear the
copyright royalty. So, if one puts on one's side
tapes already in circulation, which one really
cannot do anything about in a practical sense and
will gradually age and fall away from the market,
and putting on one side privately imported tapes
which were referred to this morning which, we would
submit, reasonably can be regarded as something not
requiring special legislation which, of its nature,
could not be enforced, and this is consistent with
the recommendations of foreign inquiries in reports
which, as seen in the three volumes of materials
before the Court, one would be in the position
after the commencement of the scheme that of the
sales of tapes ordinarily used for the purpose of
copying copyright material, then each such tape

under ZZN will, on its first sale, et cetera, bear
the levy.
So, in substance, a payment of the royalty at

the time of purchase is the price paid for the
right privately to copy with impunity and, as we have said, we say the fact that this attaches to
the physical material used for copying rather than
to the copyright itself is sufficient connection
with the copyright power given the circumstance
that there would seem to be no other mechanism
capable of effective implementation to provide for
some compensation to be paid in respect of what
otherwise would be an infringing user.

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It might be that owners of copyright have lost

not a very effective right to sue for infringement
as a result of ZZM, but they did have such a right.
It is also put, as we understand it, on the
collective arguments last time and today that there
is a lack of connection between the royalty payment
and the right to copy because the obligation is to
pay, whether or not the person making the payment
uses the copy of the sound recording for private or
domestic purposes.
Now, section ZZK lists a number of uses which

fall out of the scope of private and domestic use
and, as I have already mentioned, if a copy is used
for a non-private use, then there would still be
theoretical liability - not theoretical, actual
legal liability to the copyright owner for
infringement of the copyright.
Of course, ZZM in its form does not transfer

copyright or any other right from the copyright owner to the person who makes the copy. All it
does is to provide for that person being able
innocently to make a copy without infringing the
copyright. There is no transfer of right and, of
course, subsection (3) makes clear that a
transferee of the instrument used to copy with
infringing material on it does not carry any rights
further away from the copyright holder because the
person who takes that tape and plays it is
infringing the copyright of the musical work and
the person who then makes another copy in that
circumstance would infringe the copyright.
So that the structure of ZZM is not to make

innocent by taking all right from the copyright
holder, it is merely to provide that in a
particular circumstance of private use, then there
is no infringement of the copyright of the
copyright owner, which continues otherwise
unrestrictedly to exist.

So, we would submit that the fact that one can

postulate that a person who utilizes for
non-private use does not get the benefit of ZZM,
one is not, in that situation, saying that the
scheme falls outside the copyright power because

that person is paying something for nothing. A
royalty payment which has been made for non-private
use would seem logically to be a payment in respect
of use as much as payments made by a private user.
The non-private user is still deriving a benefit to
which the royalty payment is referable, although it
is a benefit which non-private copiers are not

presently being called upon to pay. The
non-private copier does not get exemption from the
obligation to pay a royalty, but why should he?

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The fact that he has made a nominal payment whilst
remaining liable to the copyright owner for
infringement, if that theoretical right could be
enforced, does not in any way disconnect the
payment made on purchase of that tape by that
person from the copyright's power and, as we have
submitted, there is no evidence to support the
assertion that this will involve a significant
proportion of those who pay the royalty, and we
have referred to the other provisions of the Act.
It might have been theoretically possible to

provide for a non-private user who otherwise would
infringe to claim a refund of the tape levy paid,
but in the context that there is no effective
mechanism to enforce, by way of obtaining
compensation for that infringement, it is
undetectable and, because it is only isolated and
one tape at a time, from a realistic point of view,
not actionable - one could not even afford to go to
a solicitor to obtain advice about it because one
would need something like, I suppose if it is
50 cents a tape you would need 1000 tapes infringed
before you would have the lawyer's fee to advise
you about the cause of action and, in that
circumstance, we say that it would be perverse if
there were a section in the Act providing for the
non-innocent infringer to obtain the refund saying
that because the use was in breach of the copyright
owner's right, therefore a refund should be
obtainable by turning, as it were, the vice into
the virtue.
In that circumstance we say that it would be

perverse if there were a section in the Act
providing for the non-innocent infringer to obtain
the refund, saying that because the use was in
breach of the copyright owner's right therefore a
refund should be obtainable by turning the, as it

were, vice into the virtue. I have referred
briefly to the exemption provisions. They are

contained in section ZZR, there is reference to

prescribed organizations or exempt bodies. The
regulations - I understand from what Your Honour
the Chief Justice said this morning, the Court does
not have a copy of the regulations before it, that
is the Copyright Regulations - - -

McHUGH J:

I have a copy now.

MR GRIFFITH: Well, that is statutory rule No 5 of 1990 and

there one can see regulation 23L, prescribed
organizations are listed and it is quite a wide
land rational category of organizations for the

purposes ZZR, ZZS and ZZT. I will not read that to
the Court, but it is an extensive list of - and we
say a reasonably broad list and one will pick up

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from the Australian materials at the start of
volume 1 to which I referred the Court, an anxious
inquiry as to the extent of what exemption should
be provided to such organizations and there is
similar sort of exemptions provided in the foreign
legislations in the references which the Court has.
So the condition of exemptions or refunds

provided for in respect of purchasers' refunds -
there is a vendor's exemption under ZZR and a

purchaser's refunds under ZZS. Exempt bodies are
provided for under ZZT and they either do not have
to pay or if they pay they can recover from the
collecting society and I refer the Court to ZZT(2)
for exempt bodies and ZZS3(b)(ii) for other persons
and bodies and we say collectively these provisions
ensure within reasonable proximation non-infringing
use does not attract royalty and we do not resile
from that assertion if given postulations of
particular individual examples such as the sort
that my friend has referred to and I have just
referred to where one can say a person would not be
able to obtain a refund.
And I have mentioned the example of use in legal proceedings: section 104, and fair dealing
for research or study under section 103C, although
I am grateful for Your Honour Justice Deane

pointing out section ZZS(3). I mentioned before
that there is a reference to this sort of minor
aspect of precise correspondence between
infringing, copying, collection of the royalty and

could I give the Court reference to the materials.
In the 1975 Whitford Report in volume 2 of the
materials, page 296, paragraph 3.4 the comment is,
"The element of rough justice will be small", and
at page 300, paragraph 7.9, it is reported, "It is
not administratively feasible to allow exemptions
to individuals". Now that is always a matter of
degree, but we say it is a matter of degree in

judgment where there is a reasonable basis upon the
legislature to have adopted the balancing process,
if anything going a little bit too far in favour of
exemptions, but certainly as far as necessary for
validity.
Then may I refer briefly to ineligible

copyright owners. My learned friend made the point
by reference to the definition of "eligible
copyright holders" in section ZZJ and also by
reference to section 153E(7), where the tribunal is
told to take into account as a relevant matter the
extent to which blank tapes are used for the
purpose of making copies of eligible sound
recordings and eligible works.

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Perhaps if I could indicate to the Court that,

of course, many works which would be copied would
be Australian works coming within the definition of
the first part of the definition of "eligible
work" , paragraph (a) :
an Australian citizen, an Australian protected
person or person resident in Australia.

Foreign countries, I am instructed, perhaps not unexpectedly, the greatest in proportion would
be American material, which is some 35 per cent or
so at the moment, something in that order, so that,
dealing with possibilities of eligible foreign
countries - and this is just a matter of looking
down the track a bit - in the event that the
American legislation is passed in a form similar to that which is in volume 3 of the materials, that will have a great effect on the width of the
operation of the definition of "eligible work" and
then accordingly, the tribunal would necessarily
have to take that into account under section
153E(7), in fixing the amount of the levy, because
there would be a wider pull of copyright holders
participating.
That is the reciprocal of the windfall

argument; if the number of copyright holders goes
up a lot, well then, because the levy is not merely
on their copyright material, but on the entire use
of all tapes, whether eligible works or not, then
one would expect that the levy would have to go up,
because to have fair recompense to a greater
proportion of those within the category, there
would be a greater sum, but we say that is a
reasonable proportionality - no element of

windfall. If you had more people who are entitled,
well you have to make the pool a little bit bigger by increasing the levy, because a levy is over all tapes.

The society, of course, can only distribute to

relevant copyright holders and we submit that that
does not make the law any the less a law with

respect to copyright. I have already referred the

Court to the materials on reciprocal treatment. On
annexure B, attached to our contentions, the last
page, there is a reference to reciprocal treatment
being provided for already in the legislation of
Canada, Iceland, Finland, indicating it is to be
included in the United States Bill - well, perhaps
we will have to refer to the particular provisions
of the Bill, so perhaps if I can not make that
submission for the moment.
We would say there is nothing particularly new

about provisions in respect of the collection of

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remuneration in respect of copyright utilization to look for reciprocal recognition in making available
benefits from a municipal source and could I take
the Court - it is not on our list of materials -
but a brief reference to the International
Copyright Act, 1886, 49 & 50 Viet, Chapter 33.
That applied, of course, as an Imperial Act in the colonies at the time, and section 4 of that Act
provided:
Where an order respecting any foreign country
is made under the International Copyright Acts
the provisions of those Acts with respect to the registry and delivery of copies of works
shall not apply to works produced in such
country except so far as provided by the
order.

Then subsection (2):
Before making an Order in Council under the
International Copyright Acts in respect of any
foreign country, Her Majesty in Council shall
be satisfied that that foreign country has
made such provisions (if any) as it appears to
Her Majesty expedient to require for the
protection of authors of works first produced
in the United Kingdom.

So that the element of reciprocal operation and recognition is one well-established in the
19th century and we would say that the element of
reciprocal recognition here is one appropriate for
operation, and that is something which is referred
to in the Australian material, which appears in the
early part of volume 1.
If I could take the Court to the second

reading speech, page 3, volume 1, the Minister says
- this is the right-hand column, point 2:

One aspect of the scheme the Government
has examined very closely is how to treat

foreign-owned copyright material. The
Government has been concerned to prevent
outflow of funds from Australia to foreign
countries which do not reciprocate with
similar benefits to Australian copyright
owners. For this reason, the royalty will be
collected for the benefit of only 'relevant'
copyright owners; that is, owners of
Australian audio copyright materials and
owners of audio copyright materials in
countries which have similar schemes which
provide comparable benefits to Australian
owners. This will ensure that Australia
adheres to the spirit of the relevant

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international copyright conventions without
providing a windfall to foreign owners in
countries which have not addressed the problem
of home-taping.

So, also the materials of the then Attorney-General which are attached at page 69 to 70, paragraph 3.4,
discuss the approach to this issue under the
heading:
Reciprocity or National Treatment -

it should be "of", I think, rather than ''or", on
page 69 of volume 1 - and it addresses the issue or
refers to the debate of whether there is an
obligation under the Berne Convention and the
conclusion is made:
Royalty distribution could therefore be

limited to Australian composers, performers
and record makers and to citizens of countries
which make reciprocal arrangements: this
should result in a much lower royalty until
such time as the major producers (USA and UK)
paid royalties themselves from which
Australians could benefit.

So there seems to be progress on the United States

relationship. The other major area, as we have
seen, the United Kingdom, at the moment there does
not seem to be movement for similar legislation
because of present government policy.
So we would submit that this exclusion is not

arbitrary or unreasonable, but has a clear,
defensible, and we would say historical, rationale
and purpose. It embodies the concept of reciprocal
copyright protection. It reasonably can be
inferred that to operate as a stimulus to copyright
owners in other countries to promote the

introduction of bills of similar schemes, of laws
of similar schemes, for the benefit of those
entitled to copyright protection who are

Australian. The United States bill is an example
of a bill which will extend eligibility to
copyright holders, including Australian copyright
holders. So, by definition, overseas schemes will
confer benefits on Australian copyright owners
referable to the exercise of copyright owners.
The 1985 Copyright Report in Canada, which

appears at volume 2, page 226, of our materials, is
a particular example of providing for compensation

on a reciprocal basis. I have already made the
point that this condition or exclusion of foreign copyright owners from a share in the royalty pool
does not produce a windfall for Australian

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copyright owners. I need not refer to that again
because of the duties of the tribunal.
My learned friends have also referred to the

15 per cent payment to the worthy purpose of

Ausmusic, as my learned friend put it. I must say
the allegations in this case is the first time I
have seen pleaded in a pleading, as on page 18 of
the question reserved book, a second reading
speech, particularly dealing with an issue of
constitutional validity. But the fact that it is
pleaded-in that way really is confirmatory of the
Court of the fact that there is nothing within the
legislative scheme at all requiring for this
payment of 15 per cent.
It is a contemplation in the terms of the

provision, but one which has been volunteered and
offered by the collecting society representing the
copyright owners. When one goes to regulation 23P,
upon which my learned friend made some reliance, of
course the function of 23P(d) is not to provide
that there should be a percentage of 10, 15 or
90 per cent, but to do the opposite, to say that
any percentage provided so far as dispositions
other than to be distributions that are required
basically for the benefit of paying administration
costs and then distributing to copyright holders
under a rational scheme of distribution cannot

exceed a certain amount. So it is a ceiling

provision. The only function of the reference in
the second reading speech in fact is to indicate
that the ceiling is 15 per cent.
If I could again refer the Court, without

taking you to the detail, to page 3 of Annexure A,
one sees there the various percentages for

allocations of cultural purposes in other
countries, which ranges as high as 50 per cent in
the case of Belgium, and certainly 15 per cent, as

is proposed to be the maximum for Australia, is
very much in the low end of the range.
As one sees from the provisions of the United

States at page 443, it is very much the case that
schemes throughout the world providing for blank
tape levies by way of royalty for copyright do
include a provision for a part, sometimes more than
15 per cent, sometimes less, to be used for local
cultural purposes. In America it is musicians and
performers on radio_ and television, and there are
various other examples.
My learned friend asserts that it is a worthy

object, and we would submit the fact that the
society chooses as part of its rules to provide for
up to 15 per cent to be so applied, being a

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voluntary provision of a collective society
operated and controlled by those who benefit from
its operations, cannot be used to characterize the
law providing for the levy as one which in any way
diverts any money, let alone 15 per cent of the
receipts, for a purpose other than copyright.

MASON CJ:

Mr Solicitor, I notice from pages 69 and 70 of

volume 1 that there are references to international
conventions dealing with the subject-matter of

musical copyright powers. Do they have nothing to
do with the problem that is under debate here?

MR GRIFFITH:

Your Honour, it is an interesting debate.

could give the Court materials that - really it is
a debate raging in the copyright world as to the
extent to which the Berne Convention now is
breached by having provisions of this sort.

MASON CJ:

Of this kind?

MR GRIFFITH: Yes, and, Your Honour, perhaps it is something

that we could answer specifically by giving the
Court materials, but we have taken a view to this
point, Your Honour, that there is nothing useful
there although there are passing references in the
materials to these issues that one comes across.

MASON CJ:

I am not concerned to explore it, but you give us

material which raises a question.

MR GRIFFITH:

Your Honour, (a), it has not been

authoritatively answered whether or not it is a
breach, and secondly, there are anxious and
continuing meetings and debates of WIPO sponsored
activity to work out future policy, whatever the
present position is, and, Your Honour, the current proposal is an amendment of the Convention and, if
so, in what terms, and all one can say is, this is
continuing its stately progress measured in decades
as so much of copyright laws at international level

is. The debate is unresolved authoritatively. I
think, Your Honours, you would pick it up in the
European community materials, which are in the
materials, and we can give the Court other
references, but we - - -

DEANE J: What, the suggestion being that if you do not

include all owners you are breaching the
convention?

MR GRIFFITH:

No, Your Honour.

The opposite is, it is no

breach at all to have home copying, so it works at
the other end. Is it a breach of the Berne
Convention to permit unauthorized home copying, and
the debate seems to be that that is not settled, so
that it seems to be coming up from grass roots as

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to, is it a breach, and what we refer to,
Your Honours, all these foreign legislations and debates which seem to be indicating the countries
regarded .... , but I think someone seeks to instruct
me. Your Honour, I am told that it is an issue on
the non-reciprocal basis as to how Berne speaks to
it.

DEANE J: Page 70 seems to say the opposite of what you

said, that is, that it is argued that the lack of a
scheme such as this is a breach of the convention.

MR GRIFFITH:

Your Honour, I would always rely on page 70

rather than me, but if we can put it, it is an
argument basis that has not been resolved and we

put the reasons for the reciprocal nature. I
think, Your Honour, the international solution,
perhaps in our lifetimes, will be to provide
specifically for it rather than to resolve the

debate provision now. It seems to be evolution to
reach agreement rather than to reach definitive
conclusion on the present position, but I accept
Your Honour's comment that page 70 seems to be more
authoritative than my reply to your question.

BRENNAN J: Mr Solicitor, I am afraid I have not followed

adequately your argument about the 15 per cent. If
the object of the exercise is to exact by way of
royalty the amount that is necessary to compensate
holders of copyright for what would otherwise be
infringements if it were not for a 135M, then where
is there room for the extra 15 per cent?

MR GRIFFITH:

Your Honour, our first submission is that the

15 per cent does not exist in the scheme at all.
It is only something that comes up through the
second reading speech to be a limit on distribution
by a society. There is nothing in the scheme to
require it, Your Honour, so we say 15 per cent is
just not an issue.

BRENNAN J: Well, be it a limit on a society's capacity to

distribute, there is power in the society under
regulations to distribute - - -

MR GRIFFITH:	Up to 15.
BRENNAN J:	- - - to persons other than the holders of copyright?
MR GRIFFITH:	Yes.

BRENNAN J: Well, where does that money come from?

MR GRIFFITH:

Your Honour, the money is the money collected

from the levy. We say the levy is collected as a
collective sum to benefit, in a collective way,

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rationally to be distributed, those who own the
copyright which is affected.

BRENNAN J: Well, that is what I put to you before: whether

is was a global figure and you said that there were
well-recognized formulae for collecting societies
to distribute to ensure that so far as justice
could be done, everybody would get their due, but
we have got some other money as well, have we?

MR GRIFFITH: Well, Your Honour, those in the society

control it in effect for that purpose, Your Honour,
and we submit that they are allowed to agree
amongst themselves that some proportion of this
money, which otherwise will be distributed under
the sampling scheme, can be paid over as money
which they can distribute under the rules,
Your Honour, for this purpose.

BRENNAN J: Well some new band that comes along and has

never heard of the society before, gets its music
played and it has its entitlement reduced by the
donations to some organization the society chooses
to -

MR GRIFFITH:

Your Honour, it is not a matter of its

entitlement, it is a matter of the scheme is, you
participate collectively on an industry basis as a
copyright holder. You are a member of the society
and the society, one of the things it does is to
say well, we encourage local music. It is
not - - -

BRENNAN J: What if you are not a member of the society?

MR GRIFFITH:

Your Honour, every relevant copyright owner is entitled to be an member.

If they choose not to

they do not participate at all, not a whittle, not

a cent. I think it would be held on trust,

Your Honour, but they do not get it. You have to
be a member of the society to do this, but this

society is intended to be universal, Your Honour,
everyone is in. That is the mechanism -

BRENNAN J:

If you are not in you do not get it?

MR GRIFFITH: If you are not in you do not get it, no. It

is not just a society that collects and you queue
outside saying, I would like to get some of the

money, Your Honour. You have to be a member and be
bound by the operations. Then you are affected by
the sampling scheme, the rules for allocations,
payment of expenses, et cetera.
But, Your Honour, at the end of the day we

would say - we have already made the first point,
the 15 per cent is not part of the statutory scheme

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anyway, it is a matter of limitation through the regulation 23P, but all it does, Your Honour, is
provide a limit. But if one says, well, does it
take it beyond power because the society may, if it
wishes, and it rules, apply up to 15 per cent for
this purpose which all the members agree is
something that they wish to do, or by majority
agree that that is what they wish to do, we say
that it would still be characterized as being
within the mainstream of the power and,
Your Honour, we refer to the fact of the almost
universal foreign practice in respect of copyright
in this area, to provide for even up to 50 per cent
of the moneys to go this way.
Now, of course, Your Honour, can put, well, if

you impose a system by a tax, well then you can
take as much as you like, perhaps like the Swedes do, but under the copyright power mechanisms used
here, Your Honour, we say that this still remains a
scheme which can be appropriately characterized,
even conceding for the purpose of this point of
argument, Your Honour, it is regarded as part of
the statutory scheme. It is one thing for the learned friend says it is good for music in
Australia, but there is nothing in the legislation
that requires it. That is why we have got a second
reading speech pleaded, otherwise the fact would
not be thrown up.
There is nothing surreptitious about it, but

it is not a legal operation, Your Honour. The
scheme, as one sees from all the materials,
Your Honours, is one result of anxious debate that
has gone on for the last 10 or 15 years, through
all elements of the industry and this represents an
agreed position as to a mechanism and those
participating, namely, those entitled to the money,
it seems they form their own society; the

government does not form it. The regulations say

that you cannot agree to give more than a set
percentage ..... from the second reading speech will

be 15 to worthy purposes, and we would submit,
Your Honour, the fact that quasi charitable
disposition could be made rather than into the
pockets of the recipients with their agreement
acquiesence of a society that they control and run
for their own benefit, is not amenable of being
picked up to characterize the statutory scheme as
being outside the copyright power. Well that is
our submission in respect of it.
Now, there was an issue raised on the last

occasion as to - perhaps this is related to
Your Honours point - of whether or not validity might depend on how the collecting society deals

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with the royalties. Now, our first submission is
that sufficient the legislation provides for
payment of moneys and for collecting societies to
be vested under the terms of the Act, representing
copyright owners, subject to having rules
appropriate to be approved by the Attorney-General
to provide for a distribution, and we say that it
is not necessary for the Court to be satisfied that
the distribution process will function as

contemplated by the legislation. We say that that
might be assumed but, alternatively, we would
submit the Court should be satisfied. Firstly, it
should assume the scheme will take effect and that
the collecting society will conduct itself in
accordance with the law, and if I could refer the
Court to the Engineer's case, (1920) 28 CLR 129, at
pages 150 and 151 and also the judgment of the
present Chief Justice in the Tasmanian Dams case,
(1983) 158 CLR 1, at page 128.
Of course, the Constitution conduct of the

collecting society is supervised by the

Attorney-General. The society may have its

declaration revoked under section zzv. The
performance of the collecting society will be
monitored by copyright owners. When one looks at
the matter of supervision, of course, one sees in
regulation 23P, detailed requirements for the
rules, not only paragraph (l)(d) providing for an
upper limit on gifts for cultural benevolent
purposes, and what is wrong with the power to give
gifts to cultural benevolent purposes, but also
requiring administrative costs to be reasonable,

that is paragraph E. The scheme distribution has
to be provided for allocation under F, and although
there are various grounds for revocation under ZZV,
we say the fact that there is a discretionary power
rather than a mandatory one under the terms of ZZV,
merely means that the legislation is appropriate to
be used as a mechanism to ensure proper conduct.
To require revocation·would remove a necessary

flexibility of administration. So, if an
Attorney-General saw some deficiency in operation
or rules or if there is a change in practice of
what is regarded as appropriate, well the more
convenient course, rather than deregistration, is
for the Attorney to use the obvious power under ZZV
to ensure that the society brings its practices
into line.
There are accountability requirements. There

is an annual report, under ZZW, to the
Attorney-General and under ZZX, the collecting
society must give notice of any alteration of its
rules, together with an explanation of the effect
and the rationale of the change. Copyright owners
have clear powers to monitor the performance in

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addition to the Attorney-General and ZZW(6)
requires the society give members reasonable access
to reports and annual accounts.
So looking at it as a whole, we say the scheme

is just another particular form of statutory

licensing. To adapt the phrases of former
Chief Justice Gibbs in Storey v Lane, (1981)
147 CLR 549, at 556 where he was talking of
bankruptcy, we say that this sort of scheme is an
essential feature of any modern system of copyright
law. They prevent the object of copyright law from
being defeated.
The machinery for payment, collection and

distribution is directly related to the
subject-matter, and because for practical purposes the right to prevent unauthorized copying and seek damages for loss is unenforceable, the royalty
scheme gives a copyright owner the means of

deriving a compensating benefit. We say it is
within the heart of the copyright power.
Our alternative submission is that if it is

not, then the provisions of Part VC in section 153E
are regarded as directly incidental to the

copyrights power. We refer to Burton v Honan,
(1952) 86 CLR 169, particularly at 177 to 178.
If I may now turn to the issue of taxation,

the particular paragraphs of the plaintiffs'
amended statement of claim in the questions
reserved book alleging taxation in our
paragraphs 27 to 29, each of those is denied in
page 25 of the book in our defence. As
Justice McHugh pointed out, that was similar to the assertion made in the original defence, that the
imposition was not a tax.
We would submit that if nothing else, my

learned friend's submissions on this issue, both
written and oral, were sufficient to persuade

anyone that this impost was not a tax. We assert
it is not, but we understand the thrust of my
learned friend's submissions as to make a
convincing case that that must be so.
It is our submission that the payment is

properly described as a royalty. The concept of a
royalty is, with one or two modern applications, a
concept peculiar to the field of intellectual
property. Royalties are associated, in our
submission, with matters of mining and natural
product exploitation and intellectual property.
For example, the Oxford English Dictionary

1989, second edition, defines royalty as, "A

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payment made by an author, editor or composer for
each copying of a book, piece of music sold by the

publisher". We would submit that this concept
comfortably comes within the statements made by
members of this Court, firstly, if I could give the
Court a quick citation, Stanton v Federal
Commissioner_ of Taxation, (1955) 92 CLR 630, at 641 and 642; secondly, McCauley v Federal Commissioner
of Taxation, (1944) 69 CLR 235, at 243; thirdly,
Pacific Coal Co Pty Ltd v Perpetual Trustee Co
(Ltd), (1954) 91 CLR 486, at 506; Federal
Commissioner of Taxation v Sherritt Gordon Mines
Ltd, (1977) 137 CLR 612, at pages 626 and 627.
The legislative scheme including the

regulations and guidelines established a clear
connection between the incidence of the liability
to pay the act of copying by the purchaser of the
blank tape and the distribution of the funds to the

copyright owners. If I could refer to what
Your Honour the present Chief Justice said in the
Tasmanian Dams case, 158 CLR 152, at page 152, Your
Honour said:
The true principle is that the character

of the law is to be ascertained from its legal
operation, ie, by reference to the rights,
duties, obligations, powers and privileges
which it creates. This is not to deny the
validity of a law which exhibits in its
practical operation a "substantial connexion"
with a relevant head of power. Taking the
practical effect of the relevant law into
account led the Court to uphold its validity
in Herald and Weekly Times.

And then Your Honour referred to a judgment of
Justices Kitto and Menzies and said:
The requirement that there should be a

substantial connexion between the exercise of

the power and its subject-matter does not mean
that the connexion must be "close". It means
only that the connexion must not be "so
insubstantial, tenuous, or distant" that it
cannot be regarded as a law with respect to
the head of power.

Here, the incident of payment is made in respect of payments which are ordinarily purchased
or hired for use. There is a system of exemptions
and refunds which, as we have said, which is
rational. All but a few blank tapes on which
royalty is paid and which has not been recouped or
exempted would be used for at least one act of
copying. That is established by the pleading for

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the purposes of this case, paragraph 39(i) of our
defence.
As to the amount of payment, under ZZN(2) the

normal playing time is taken into account. The
tribunal must take into account the extent to which
blank tapes are used for the purpose of making
copies of eligible sound recordings under 153E(7)
and, of course, the tribunal will have to establish
mechanisms for quantifying the extent of such

copying. The distribution of funds is under a
rational system, as we have already submitted to
the Court, including the guidelines, to which I
will not take the Court in any detail other than to
refer to them as indicating that they are
relevantly considering the likely practical
operation.
So the scheme ensures, so far as practicable, the imposition, the collection and distribution of payments referable to actual acts of copying of

copyright material. We say, in that way the tape

payment satisfies the definition of a royalty. We
have already said that there is no objection that the person who has to make the payment is not the
person in fact exercising the copyright. It is
inevitable, as with sales tax and excise duties,
that the payment made by the blank tape vendor, as
we have suggested, will be recouped from the tape
purchaser, who is thus paying for the proposed use
of the tape for copying, in a practical sense.
My learned friend m~de much of the point that

the payment is not exacted by a public authority or

for public purposes, and we entirely agree. The
payment to the collecting society under ZZU and ZZP(2), are payments to the collecting society
recoverable by the collecting society, is a debt

due to the society. The collecting society is
agreed to be not a public authority and the only

public aspect of the society's existence in
operation is declared by the minister under ZZU(l). In order to qualify for a declaration, the society
must satisfy the prescribed requirements, including
those of the regulations, and we say that certainly
cannot make the society a public authority, in
respect of this scheme.
It is acknowledged that it does not inevitably

follow from the mere fact that the collecting
society is not a public authority that the tape
payment could not be a tax. That is said, of
course, in Air Caledonie, 167 CLR at page 467, as
well as Vacuum Oil, 51 CLR 108 at 125,
Justice Dixon.

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We would say, none the less, the private

nature of the collecting society and its essential
function of protecting the interest of copyright
owners is confirmatory of characterization of the
payment as royalty and not a tax. Certainly, it
gives a strong indication that the payment is not a
tax.
In 167 CLR, page 467, of course, the Court in

Air Caledonie referred to the negative attributes.
There, they are referring, of course, to payment for services but, we would submit, they are referring to various types of exaction which may not be taxes even though they have the positive
attributes mentioned by Chief Justice Latham in
Matthews, 160 CLR 276, being present in all their
attributes. Inquiry as to whether the levy is
supported by the copyright power, we submit, has as
its purpose the ascertainment of whether its an
exaction of money which of its esssential nature is
not to be characterized as a tax. The position is
Air
a lot stronger here than it might have been in attributes mentioned by Chief Justice Latham are
not present. In fact, almost none of them are. If
the levy truly pertains to the provision of
remuneration for copyright holders, the mechanism
that is in position with collection by a non-public
authority for payment to non-public recipients, we
submit, forecloses that it can be characterized as
a tax.
If it were only an issue whether it was a tax or not - of course, if it was a tax there would be
no need to inquire at all as to the copyright power
because if it were a tax then, because of the
section 55 point, it would be invalid, and, of
course, implicit in my exchange with Your Honour
Justice Brennan, if it were a tax imposed under the
tax power in compliance with section 55, well, we
would submit, there could be no issue about

validity in that situation at all. But the purpose of the inquiry in this case as to whether or not it
is regarded as a matter to be characterized as
imposed under the copyrights power, in our
submission, is to mark off from the fact that it is
incapable of being regarded as a tax, and there is
no need, in view of my learned friend's
submissions, to enlarge on the submission that the
tape payments are not collected for public
purposes, in our submission. It is in no sense a
governmental object to enable the copyright owners,
we submit, to receive some remuneration for what
otherwise would be infringement incapable of
remedy, and we refer to Justice Dixon in Parton v
Milk Board, 80 CLR 229, at page 258.

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The provisions there have no revenue raising

purpose or character whatsoever and we contrast
Philip Morris v Commissioner of Business
Franchises, (1989) 167 CLR 399, in particular at page 485, Justices Toohey and Gaudron.
The moneys at no stage passed through

government hands. They are no susceptible to

government decision. The provisions merely
constitute a mechanism for adjusting the financial
incidence of a private relationship, albeit one
existing by virtue of statute between copyright
owner and copier, and the payment has been
collected, we say, at an appropriate point in the
particular circumstances, namely at the point of
sale of the copying medium.
Turning, lastly, to the issue of the acquisitions power: in our submission - and if we
could deal with the two points of acquisition
together before bifurcating them into dealing with
the seller and dealing with the copyright owner, we
submit that section 5l(xxxi) cannot have much to do
with some of the subject-matters of power upon the
very terms which they are conferred. That is to
use the expression of Chief Justice Dixon in
Attorney-General of the Commonwealth
v Schmidt, 105 CLR 361, at page 372.
Of course, this is an area still to be

elucidated by judgments of this Court, but what we
generally submit on this issue, that it is of the
essence of the legal subject-matter of some heads
of legislative power that an exercise of those
heads of power upon the very terms in which they
are conferred will effect propriety rights or may,
indeed, cause or permit something which might in an
abstract way be regarded as an acquisition of those
rights but, we submit, that if the legislation at
issue is properly characterized as such an exercise
of the power, then in those situations no question

arises under placitum (xxxi).
But if what is occurring is a legislative

acquisition of property ancillary to in aid of, but
distinct from the exercise of another head of
power, well then the acquisition is governed by
placitum (xxxi), and this is a distinction which
was made by the Chief Justice in the Schmidt case
at page 372. If I may quote from 105 CLR at 372:
no one would doubt that, under the power to
make laws with respect to bankruptcy, property
of the bankrupt may be sequestrated and
property of others which has been left in his
order and disposition may be vested in the
Official Receiver and that section 51 (xxxi)

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has no bearing on the matter. At the same
time, if a law was made under which a piece of
land was acquired for a Bankruptcy Office,
section 51 (xxxi) would govern the legislation
and not section 51 (xvii). It must be borne
in mind that section 5l(xxxi) confers a
legislative power and it is that power only
which is subject to the condition that the
acquisitions provided for must be on just
terms.

My learned friend, in his submissions, referred briefly to the normal, obvious, usual references
where one refers to apparent acquisitions that lie
outside placiturn (xxxi); taxation forfeiture and
position of civil liability, penalties, bounties,
promissory notes, et cetera, but if I could refer
the Court to what is said by Justice Gibbs in Trade
Practices Commission v Tooth & Co., (1979)
142 CLR 397, dealing with the prohibition on
corporations refusing to grant or renew leases in
circumstances of exclusive dealing, at page 408,
Justice Gibbs said:
I am not sure that a completely satisfactory
explanation has yet been given of the
principles by which it is to be determined
which laws do, and which laws do not, fall
within section 51 (xxxi).

And in the same case at page 453 Justice Aickin,
after it seems conceding that there were certain
subject-matters with which section 5l(xxxi), in his
words "cannot have much to do", went on to express
the view, at page 457 to 458:
that the so called exceptions to the general
rule as to the operation of section 51 (xxxi)
are not in truth exceptions at all.

So our submission here is that Part VC in

copyrights power in its own terms. This is as true section 153 constitute an exercise of the

of the provisions imposed in the obligation to make the payment ZZN referable to the licensing exercise of the right of the copyright owner as it is of the
licensing provisions itself, exempting -

DAWSON J:	Why is it, Mr Solicitor, that an acquisition of property under one paragraph of 51 is not an
acquisition of property under (xxxi)?

MR GRIFFITH: Well, Your Honour, what we say is, it is not

an acquisition of property, Your Honour.

DAWSON J: But it is.

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MR GRIFFITH: Well our submissions are that it is not,

Your Honour.

DAWSON J: Well that is just failing to face up to the fact,

it clearly is; May the answer lie, however, in
just terms, rather than saying an acquisition of
property is not an acquisition of property.

MR GRIFFITH:

Your Honour, this is my first submission that

(xxxi) - we are going to - - -

DAWSON J: But if you have a just scheme or if taxation is

just or for some other reason you say that it is
not on unjust terms, then that is a different
thing, but I really do have trouble, as
Chief Justice Gibbs did, with the proposition that
an acquisition of property is not an acquisition of
property.

MR GRIFFITH: Well, Your Honour, we do seek to go through in

steps on our view on acquisitions and we certainly
wish to make a principal submission dealing with
the purpose for which the property is used as being
an element to be an acquisition under placitum

(xxxi). Your Honour, one submission is that to
impose an obligation to pay money, and perhaps I
should proceed to it, cannot be an acquisition to
pay money.

BRENNAN J:

An obligation to pay money?

MR GRIFFITH: Yes, we say cannot be an acquisition to create

a debt. I say, Your Honour, debt of its nature is
something that is an obligation which can never
cease. It can-never be conversion, Your Honour, to

convert money. If it is particular coin there can
be a conversion, but the obligation of the Act is
just to pay money, not to pay part of the proceeds
or anything of that sort, so that -

BRENNAN- J:

So property in Sl(xxxi) does not include money.

MR GRIFFITH:

Does not include to create a debt,

Your Honour, we would submit.

BRENNAN J: It does not include money?

MR GRIFFITH: Yes. If particular coin was identified - - -

BRENNAN J: Yes.

MR GRIFFITH:

- - - part of the purchase price or something

like that, Your Honour, but we say money is not
included within the definition of property, but it
might be best if I ring the changes, because we
have to bifurcate for sellers and for copyright
owners to deal with my learned friend's submissions

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and perhaps if we do not attract Your Honour on our
first proposition there is something further down
the line that will, but I appreciate Your Honour
taking me up on it but we say, in the words of the
former Chief Justice, there is no completely
satisfactory explanation, perhaps they are not
exceptions at all, but our basic proposition that
if you are within the heart of exercising a power
which deals with the allocation of entitlements to copyright protection and payment in respect of its use, in dealing with legislation for that
allocation we say, Your Honour, you are dealing
with the exercise of the principal aspects of the
copyright power and we say of its nature that does
not constitute an acquisition within the the

acquisitions power. Now I appreciate Your Honour
is raising a question on that, but that is our
submission - - -

DAWSON J:

Or at least, does not constitute an acquisition

on unjust terms.

MR GRIFFITH:

I will be getting to just terms, Your Honour,

but we would say, for the purpose of the
acquisitions power, our first submission - that is
our highest, Your Honour, it does not attach - the
list is open, as yet there has been no clear
identification of - many, many legislations require
the movement of money, as it were, the payment of
debts as part of their operation, Your Honour, and
we say that it is but rarely and specifically one
gets to the issue of acquisitions and one does not
merely say, because there is money passing it
either has to be a tax or if it is not that, you
have to show that you have satisfied acquisitions.
What we say is, Your Honour, that in principal
powers you can provide for the allocation of
moneys, the payment of obligations in relation to
the exercise of the statutory power and you do not
have to answer the question by saying, is it a tax,
or is it actual payment for services, as the

question in Air Caledonia was, in relationship to
services voluntary called for, et cetera.
We say that the contents of some powers do

include matters where there is fiscal consequences
and you do not say merely because there is money
involved, it must be either tax or acquisitions.
So on this approach our submission is that the
exercise of a copyrights power in its own terms
providing an obligation to make a royalty payment
referable to the licensed exercise of the right of
the copyright owner is of the essence of the
exercise of the copyright power itself and its
exercise in affecting the rights and obligations of
those who create and consume copyright material is
merely dealing with the exercise of the statutory

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power over the copyright monopoly which is a
creature of statute under section 8 of the
Copyright Act.
So the legislation does no more than alter the incidence of the monopoly and does so by adopting a copyright licensing scheme of a type, we say, long
established as an integral part of copyright law,
but of a particular sort to meet the exigencies of

the occasion. So on this part of our submission we
say, in dealing with the essence of the copyright
power and providing a mechanism for enforcement,
then one is dealing with an issue of remuneration
arising out of utilization of copyright material
provided for in the Copyright Act and not dealing
with an acquisition of property, just terms or not,
in our submission, under the acqµisitions power.
We say the remoteness of this legislation from

placitum (xxxi) is apparent when one sees that the
genesis of that placitum lies in the concept that
private property shall not be taken for public use
without just compensation. That is the language of
Justice Stephen in Tooth at page 418. At 416,
Justice Stephen also indicated that the placitum:
contemplates acquisition by "the method of
requisition", not by "the method of
agreement" -

and Justice Dixon in British Medical Association v
The Commonwealth, (1949) 79 CLR 201, at page 271,
referred to acquisition under the placitum as
involving the taking of property from a person
"against his will without just compensation", as
being contrasted with the case of a voluntary sale.
That is our first general proposition that we apply
to both sellers and copyright owners in respect of
the acquisitions power.

If now we can bifurcate and deal with copyright owners.

So far as copyright owners are
concerned, we submit that if the acquisitions power
is regarded as applicable, no acquisition of
property has occurred. The assertion made, as we
understand it, is that there has been acquisition
of property of copyright owners, being the
exclusive right to reproduce work - section BSA has
already been referred to - to make a copy of a
sound recording, the exclusive right to authorize the doing of an act as is described in ZZM(l) or, at the very least, an acquisition being the part of
the levy which is set aside for persons other than
the copyright owners, the 15 per cent that we
referred to. In the question reserved book,
page 34, these further and better particulars are
given as to the allegation.

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We say the legislation affects no acquisition

whereby the Commonwealth or any other person
acquires an interest in property. At the most, the
legislation partly extinguishes the right of the
affected copyright owners by depriving them of some
aspect of their enjoyment, be it a right of

enjoyment that is incapable of being enforced. The
extinguishment of the right does not constitute an
acquisition for the purpose of the placitum. If we
could refer to the authority for that again, the
Tasmanian Dams case, citations only, 158 CLR, pages 145 to 146, 181, 247 to 248, and page 283;
also to the Tooth case already referred to at pages
416 and 434, and Reg v Ludeke, (1985) 159 CLR 636,
at page 653.
We have already made the point that ZZM does

not abrogate copyright rights. The copyright is
not ended. It continues to exist completely,
subject only to the fact that the particular person
authorized under ZZM may make a copy for private

purposes without infringing. So it is an
impingement on the large frame of rights vested in
the copyright holder which leaves the rights
otherwise unaffected.
Of course, we have already made the point

that the corresponding advantage to the copyright
holder, instead of having an abstract right to
claim compensation for infringement, the copyright
holder becomes entitled to participate in money
which most certainly under the scheme will be
collected and distributed in a rational way, which
will take into account that infringement.
Now, copyright, of course, as created by the

Act, section 8 and other sections, subsists only
subject to the Act. Section 32 says that. Now, we
submit that the expression of a principal property
right, if you like, of copyright under the Act, by
reference to saying it subsists subject to the Act,

may extend the right, they may restrict the right. is to admit the possibility of modifications. They
They might alter the incidence, and here there is
an alteration, there is a structural alteration
which, on a reading of just one part seems to
reduce your right - you cannot complain of
infringement of a private use - but at the same

time it may extend rights. It gives you a
beneficial entitlement to receive compensation
which otherwise, in a practical sense, you would be
entirely incapable of having any effective right of
receiving.
So the possibility of modifications, including

restrictions, we submit, is part of the very
definition of the right from its inception so that

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when, as here, there is an amendment to the
provisions of the Copyright Act to provide, in a
rational way, for a particular problem area where
the whole scheme and purpose of the Act to adjust,
having regard to the desirability of encouraging
originality on the one hand, of those who do
provide copyright material, and to provide a
reasonable mechanism for the public at large to
have the benefit of that material, this case is to
provide that there is an entitlement but an
entitlement that involves a payment, we submit is the very essence of the exercise of the copyright power and is incapable of being regarded, in
altering those rights, by close and, in this case,
isolated analysis to constitute something to be
characterized as an acquisition of property within

placitum (xxxi). We say it is merely a statutory
elucidation adapting to particular circumstances
and problems, subject to the reservation on the
exercise of the copyright power which has always
existed and been confirmed by section 32 - whatever
your rights are, they are statutory and they are
subject to the terms of the Act, as they are from
time to time.
Now, it might be another thing, of course, if the Act completely abrogated your rights, but that
is not the question here. Here it is just a
variation which, from the point of view of the
copyright holder - my learned friend earnestly puts
an argument on the copyright owner's behalf but it
is not - the copyright owners are represented by my
learned friend, Mr Catterns, up here, who is
seeking to put submissions to the Court that they
want this scheme. They see the benefit of interest
not in acquisition or diminution of their legal
rights by ZZM, they see Part SC in 153E as
constituting a scheme which - of course
self-evident on the material before the Court -
inures, and is intended to inure, for the one

would submit that it becomes a perverse single use of inuring for their benefit. And we characterization to seek to say that a scheme of
that sort having that purpose in an Act which
includes section 32, and in the context of ZZM
which does not abrogate copyright but merely
provides a certain detachment as part of its scheme
to its incidence for certain private user which
otherwise cannot be effectively provided for under
the Act, cannot be characterized in the particular
circumstances as acquisition. It can, if I may use
the expression of Your Honour Justice Deane in
Tasmanian Dam case, page 283, it is:
no more than the adjustment of competing
claims between citizens in a field which needs
to be regulated in the common interest.

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We say, no question of acquisition of property for the purposes of the Commonwealth is accordingly
involved.
Then, turning to the submission that the

alleged acquisition of the blank tape levy set
aside for persons other than the copyright holders
of 15 per cent, we say that the copyright owners

themselves have no proprietary interests in any

particular part of the levy. The legislation and
the regulations contemplate the distribution to
copyright owners of only so much of the collective
royalties as is left after the payment of
administrative expenses and outgoings of the
collecting society - regulation 23P(l)(e).
The provision, as we have mentioned in respect of the possibility of gifts for cultural and
benevolent purposes, of course, are not all that

unusual. I think they are in the standard form of
articles of associations of corporations and
regulation 23P(l)(d), as we have seen, does not
establish that entitlement, it merely seeks to put
a limit on the entitlement which the members of the
society can provide in their rules. Certainly, the
Commonwealth and no other person acquires any
proprietary interest in that part of the levy and,
we say, in that way also it is not an appropriate
characterization to say that it constitutes an acquisition of any part of the levy which may,
under the rules which is not provided for at all in
the statute, happen to be applied for cultural
benevolent purposes, Ausmusic or whatever.
Our next submission, and I foreshadowed this

in answering Your Honour Justice Dawson, is we say
that the copyright owner's property in any event is
not acquired for use within the meaning of

placitum (xxxi). We say that placitum (xxxi) is
only applicable if the property is to be acquired
for the purpose of the property itself being put to

a particular use or application. I should indicate
that this argument is one confined to the copyright

owners property. We are not dealing with the
question of the levy itself.
To support this, may I refer firstly to the

judgment of the Court in W.H. Blakely & Co Ltd v
The Commonwealth, (1953) 87 CLR 501, at pages 518
to 519. There, it was said:
It seems to be plain enough that the
Constitution, in using the word "purpose" is speaking of the object for which the land is
needed -

and that is a phrase we emphasize:

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The word itself does not refer to any power or
powers defined in the various paragraphs of
ss. 51 or 52 of the Const4tution or elsewhere
conferred; it is referring to the object for
which the land is acquired. That object,
however, must be one falling within the
Commonwealth's power to make laws.

Similarly, in Schmidt, 105 CLR at page 372, it is
said:
The expression "for any purpose" is doubtless
indefinite. But it refers to the use or
application of the property in or towards
carrying out or furthering a purpose comprised
in some other legislative power.

In other words, it is the property to be acquired

which is to be used for the purpose. The last
reference which I desire to make in this context is
to the judgment of the Court in Clunies-Ross v the
Commonwealth, (1984) 155 CLR 193, at pages 200
to 201. There, it is said:
one can find in cases in this Court statements
of high authority which would seem to be
framed on the assumption that the legislative
power conferred by par. (xxxi) should be
confined to the making of laws with respect to
acquisition of property for some purpose related to a need for or proposed use or application of the property to be acquired.

So that we give emphasis to the words, "acquisition
of property for some purposes related to a need for
or proposed use or application of the property to
be acquired. "
So we submit here that in this case other

persons are not being given the copyright owner's

rights. They cannot sue on the copyright owner.
The person who uses the blank tape for private use,
he has no right to sue or exercise the copyright
owner's rights. There is no transfer of the

rights. The rights of the copyright owner inure
and continue to remain in the copyright owner. All
that is provided for is the particular use for
private use does not infringe but on terms that
once a scheme is operating a relevant royalty will
be paid on the blank tape used for the purpose of
copying.
So as far as the rights of copyright owners

are concerned, even if the legislation affects an
acquisition to a limited extent of their right to
say it is an infringement for this private use copy
which otherwise attracts a payment by relation to

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the tape used for the purpose, we say there is no proposed use or application of the property to be acquired within the meaning of placitum (xxxi).

So
we say, therefore, placitum (xxxi) would have no
application.
But we would like to make the general point

that the Act, we say, looked at sensibly, does not

acquire anything from the copyright owner. And,
really, it is not for my learned friend, who is
complaining about the impost of the royalty and as
it affects his clients and their pricing schemes as
referred to on page 18 of his long written
submission under tab 5, in putting their case, we
say that it is just not reasonably amenable to
characterization to say that the copyright owner
has had something acquired.

They do not see it like that. What they get

under the Act is a benefit and this is merely a
mechanism, being the only appropriate mechanism,
one can see from the material before the Court, if
not the pleading of paragraph 39 of our amended
defence which is available to provide for this,
what otherwise would constitute an irremediable
infringement.
If I could get to Your Honour Justice Dawson's

point opened with me some little time ago: if
property is acquired from the copyright owner, we

say it is acquired on just terms. The entire
rationale and purpose of the legislation is to
provide remuneration for copyright owners, being
remuneration which they have no reasonable prospect
of recovering otherwise.

DEANE J: Mr Solicitor, can I take you back? On the

question of acquisition of the money, does it not
really come down to the question whether the
imposition of the obligation to pay is properly to
be seen as a quid pro quo? If it is a quid pro quo

you can compare it to a royalty and it is not an
acquisition. But if it is not a quid pro quo, is
it not somewhat difficult to deny that it is an
acquisition of property?

MR GRIFFITH:

Your Honour, in fact, is taking me forward because I had not got to the money submission yet,

but Your Honour, we would agree with your first

statement.

We say that if it is the first, well

then, it is safe.

DEANE J:

I am sorry, I thought you had passed over that.

MR GRIFFITH:

Your Honour, I have only been dealing with the copyright owners yet.

I have not done the sellers

yet. I was coming to it.

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DEANE J:

I see. Well, you have departed from your outline

which is what led me to - - -

MR GRIFFITH:	I am sorry, Your Honour.
MASON CJ:	Of course, you dealt with acquisition in the

outline first in relation to copyright owners and
blank tape vendors, and then you moved on to
questions of - - -

MR GRIFFITH: These outlines are not slavishly to be

followed, Your Honour. They are summaries.

DEANE J:	You deal with it in your order.
MR GRIFFITH:	It just seemed logical in the outline to do

it. Your Honour, perhaps I will do it and then we
can answer the question. But your first statement
we would agree with.

DEANE J: Well, I am not surprised about that.

MR GRIFFITH:

The second one, Your Honour: it might be that

you say it is not an acquisition, but because of
the answer to the first statement it would not be

otherwise supported. I think that is my learned
friend's sit-down point, that unless you get it
within copyright power in that sort of way -

DEANE J:

It could be within the copyright power even though

it was an unreasonable expression.

MR GRIFFITH: Yes, Your Honour. Well perhaps I was

regarding your first statement being if it was in
the copyright power it could be all right. If it
is not, well - quid pro quo is all right,
Your Honour, we would submit, and we have also
submitted if it is in the copyright power at quid
pro quo in process, it is all right if it is
characterized as falling within it. If you are
outside it, well then, you have a lot of run around

in tax, or get past acquisitions, but you are
probably going to have trouble with acquisitions at
that stage unless you can say for some reason it is
not an acquisition.
But, Your Honour, we were making the point

that we say it is unreasonable to characterize what

provisions in respect of the beneficial operation
for copyright owners is constituting an

acquisition. Now, on the just terms point, may I
refer briefly to what Justice Starke said in
Andrews v Howell, 65 CLR at page 271, where
Justice Starke said:
the whole scheme of the regulations is
designed to give the persons whose property is

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acquired more than they could ever hope for in
any available market or in any court of law.

We say, so here:
the whole scheme of the regulations is
designed to give the persons whose property is
acquired more than they could ever hope for in
any available market or in any court of law -

and here it looks like we have got the strong
support of the copyright owners, we can read that
in the materials in volume 1 and their
representative is earnestly seeking to address the
Court.
Now, we say it is for the legislature to

prescribe the tribunal and procedure and mechanisms
for remuneration to be ascertained and assessed.
That was also said by Justice Starke in Andrews v

Howell. The inquiry for the Court must be whether
the law amounts to a true attempt to provide fair
and just standards of compensating individuals
considered as the owners of the property. This
would seem consistent with what Justice Dixon said
in Grace Bros v The Commonwealth, (1946)
72 CLR 269, at page 290 and 291 and we say, of
course, it is not that the Court could consider
that other terms could have been provided, for
example, that the possibility of a rule to provide
a ceiling on gifts, should have rather provided

there could be no gifts. We say the law will not
fail to satisfy just terms requirement unless it is
so unreasonable as the terms cannot find
justification in the minds of reasonable people.
This was said in the Grace Bros judgment, for example, Justice Starke, 72 CLR at 285, and

Chief Justice Latham 279 to 280. The legislative
scheme here is, on its face, fair and reasonable
and we say an appropriate means of remunerating
copyright owners.

And we have already gone through the

mechanisms for assessing the amount of the levy and
that involves the copyright owners having a right
to make submissions, section 15E(4) and (5), and the collection and distribution mechanisms which provide for distribution in an equitable manner and
in a normal ..... scheme.
Back to blank tape vendors, at this stage, our

first submission is once more that there is no

acquisition. We say the property of the vendors of
blank tapes has not been acquired. We say - and I have already made the point - that the acquisition of money itself, in our submission, is not an

acquisition. The allegation in the further and

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better particulars on page 36 of the questions
reserved book is that what is acquired is the money of the vendors of blank tapes in an amount equal to the levy, and we would submit that, just dealing
with money itself, that is not something which does

come within the acquisitions power. The mere
imposition of a pecuniary liability, we submit, is
not an acquisition of property.
Could I refer the Court firstly to MacCormick v The Commissioner of Taxation of The Commonwealth
of Australia, 158 CLR 622 and, in particular, at
pages 638 and 639, the judgment of Their Honours
the then Chief Justice and Justices Wilson, Deane

and Dawson. In the last paragraph on page 638
dealing with the recoupment tax, it says:
It was suggested, albeit faintly, that the exaction may amount to an acquisition of property within the meaning of s 5l(xxxi) of the Constitution so as to import the
requirement of just terms. But, if it is in
truth a tax, its very nature prevents it
amounting to an acquisition of property. It
is no more than the imposition of a pecuniary
liability: see Moore v The Commonwealth;
Commissioner of Taxation v Clyne; Federal
Commissioner of Taxation v Barnes.
Similarly, in Tooth & Co, which I have already

referred to, 142 CLR at page 453, 454,
Justice Aickin says:
Taxation involves the compulsory payment

of money to the Commonwealth according to
prescribed criteria applicable to persons who
fall within the specified categories in a

manner capable of testing in the courts. Its
imposition creates a debt but does not

compulsorily acquire property. No doubt when
payment is made property in the case or cheque
passes to the Commonwealth but it is not a

process capable of being categorized or
described as "acquisition of property", save
in a very unusual sense of that expression.

So, it is our contention in respect of the

levy itself which is the principal contention of my
learned friend - the one that obviously concerns
the plaintiffs - that wherever he is to find his

argument in respect of invalidity, it is not to be

found under the acquisitions power. We submit that
his argument is either in the tax power and, as we
mentioned, his submissions carried a compelling
conviction that it was not a tax, we would submit
that the answer is found in the issue of
characterization under the copyright power, in

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respect of which we have already made our principal
submissions.
As a final alternative submission, if there is

an acquisition of money, which we say is not
subject to placitum (xxxi), we say that it is
acquired on just terms; it is acquired on terms
that blank tapes being sold had, by virtue of the

legislation, enhanced legal attributes. The tapes
now may be used with impunity for recording as is
permitted by section ZZM, an activity which
hitherto would expose a copier to civil liability.
And we say, the issue of just terms is to be
determined by the totality of the situation. At
the last hearing it was conceded several times by
my learned friend, Mr Chernov, that the levy would
be expected to be passed on. Now, whether that is
now a concession that is not made or not, we say
that of its nature the court could regard this
particular impost as being one of universal
application to the sale of a particular product and
the same assumptions can be made in respect of it
being passed on and merging in the purchase price
as the court and made often in the past in respect
of excises imposed upon a wholesaler or
manufacturer, sometime highly antecedent to the
point of final sale.
The fact that a person whose property has been

acquired is in a position to pass on the liability
is a relevant factor to have regard to the
aggregate of circumstances and the aggregate of
whether or not one can say there is a situation
where, if there is an acquisition or, if you say
there is not, there is a requirement for just

terms. The tapes may be sold to persons on terms
that they will not infringe copyright in being used
for their ordinary use, as is stated in
paragraph 39(i) of our defence, their likely use.
It is put by my learned friend that that does

not mean anything to a person who is intending to
buy, because they do not care whether they infringe
the law or not, but we would submit that we are
dealing with the issues here from a point of view
of legal and constitutional analysis. There is
enhanced legal value, there is an enhancement of
the product.
It can be lawfully used when the whole

business of the plaintiffs is one directed to
supply into a market goods which in almost every
case, be it 85, 90, 95 per cent - the proportion
does not matter - are intended to be used for the
purpose of infringing a law of the Commonwealth.
We say that it is not for a plaintiff to come to
this Court and argue on an issue of - - -

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BRENNAN J:

You cannot predicate that of tapes, can you,

that it is intended to be used?

MR GRIFFITH: Perhaps I will not say "intended",

Your Honour. The facts we submit for the purpose
of this case are that it ordinarily will be used.

BRENNAN J:

No, that they are purchased ordinarily for -

that these are tapes which, when people want to use
them for that purpose, will ordinarily be purchased
for that purpose.

MR GRIFFITH: Perhaps, Your Honour, we had better look to

the precise - Your Honour, you have the fact in
paragraph 39(b), for the purpose that 20 million of
them are sold, they are adapted to the function of
making copies of sound recordings, they were of a
kind ordinarily purchased or hired for the use of
making copies, copyright subsists in the works in
the copyright owners, the copyright owners
ordinarily receive no remuneration - - -

BRENNAN J: Yes, we are familiar with the terms of this, but

this echoes the language of the Act. And
"ordinarily purchased or hired for use for making
copies of sound recordings" I understand to mean -
and perhaps I am misreading it - that those who
wish to make copies of sound recordings would
ordinarily purchase this kind of tape, not that it
can be predicated of these tapes that when
acquired, they are ordinarily used for this
purpose.

MR GRIFFITH:

Your Honour, we do not say everyone, but we

say that it is predicated that - - -

BRENNAN J:

I thought you said they were intended to be

used.

MR GRIFFITH:

Your Honour, perhaps I should not have said

"intended" for the purpose of that proposition.

BRENNAN J: Because many of them are used.

MR GRIFFITH: Well, most, Your Honour.

BRENNAN J: Most?

MR GRIFFITH: Yes.

Well, Your Honour, there is no point

saying what was intended by the settled statement
of fact, but it was certainly one discussed and
settled on the basis of having the opposite meaning
to the construction Your Honour gave.

McHUGH J: Well, I did not read it that way with the words

"of a kind" in there. In paragraph (d) you read it
as though it said "tapes of the relevant kind and

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tapes ordinarily purchased for hire", with the
qualification of the words "of a kind".

MR GRIFFITH:

Your Honour, it is not intended to be a

qualification but - - -

BRENNAN J: Is it intended to echo the language of the

statute?

MR GRIFFITH:

It does echo the language of the statute,

Your Honour.

BRENNAN J: And it was not intended to carry any meaning in

terms of fact different from that which would be
conveyed by the statutory language?

MR GRIFFITH:

Your Honour, I must say my understanding was

that tt was, because that was the issue we were
concerned with. But, Your Honour, perhaps it does
not matter for the purpose of our submissions,
because the Court has the materials before it on
this issue which it can inform itself from, in our
submission, that indicates sufficiently the
preponderance of use, that is for this purpose,

Your Honour. The table I took the Court to
indicating some 30 million records taped in 1981,
out of 50 million tapes - - -

BRENNAN J: Because most tapes that are sold will be used

for this purpose, therefore all tapes that are sold
will be subjected to the levy?

MR GRIFFITH: Well, Your Honour, that is not the connection.

There are exemption provisions that we have taken the Court through.

McHUGH J: But that tells against you, does it not? The

very fact that the exempting provision is necessary
indicates that tapes of the relevant kind cover far
more than tapes ordinarily purchased or hired

for - - -

MR GRIFFITH: Well, we concede more, Your Honour, but if you

are dealing with relevant volumes of use, we would

say not very far more. A bit more, but various
ragbags use.

McHUGH J: Take things like cassettes for dictation.

MR GRIFFITH:

Your Honour, they are excluded, they are the

wrong size. Everyone has minicassettes now.

McHUGH J: Well, some do, some do not. The judges of the

Supreme Court of New South Wales do not.

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MR GRIFFITH:

Your Honour, they have very old machines if

that is the case. They have probably got old tapes
that will not be subject to this levy.

McHUGH J:

No, they have Sanyo machines.

MR GRIFFITH:

I have not seen one.

Your Honour, when my

father-in-law retired as a physician and he wanted
to sell his X-ray machine he could only sell it to
a medical museum who could not believe it was still
being used. But, Your Honour, we would submit that
the definitions really exclude recording tapes.·

McHUGH J:	When I was on the supreme court the judges there had tapes for dictation which lasted over an hour.
MR GRIFFITH:	Your Honour, perhaps their judgments were too

long. I do not know. Your Honour, there is an
exclusion for the micro-cassette. But,
Your Honour, it might emphasize if the case is
getting to this point this is where we stop and
have a trial. That is why we are unhappy about
leaving it up in the air but we have done our
argument predicated upon the Court being satisfied
that there is material out there indicating 85 per
cent plus. If the Court does not accept that as
the fact for the purpose of our argument, we must
seek a trial on it. There is ample material here
in the volumes, apart from reading it in the
pleadings, but those are the facts out there and if
it becomes a constitutional fact we want to
establish it. That is why we have 15 years of
efforts just in Australia, let alone other
countries, to try and produce legislation to deal
with the problem.

BRENNAN J:

What is your constitutional fact basically that

you want to establish, that 85 per cent of them are
used in this way?

MR GRIFFITH:	We are happy to say that at least 85 per cent.
BRENNAN J: At least 85 per cent are.
MR GRIFFITH:	We would be happy with that, Your Honour.
BRENNAN J:	Do you want to draw any inference from that?
MR GRIFFITH:	Your Honour, one inference is that the average

seller over three months can expect 85 per cent of
his tapes to be used for that purpose, at least.
So that he sells them not caring that they are not
- 85 per cent of purchasers, if they each buy one -
to go out there and infringe someone's copyright.
We say it gets a benefit if it has the peace of
mind at night lying in its corporate bed knowing

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that all the products it has sold are being used
lawfully rather than unlawfully.
I mean, if one sold a product that could only

be used for smoking marihuana unlawfully,
Your Honour, perhaps it could be put, "Well,
there's no law against it even though it's unlawful
use". But if a law is passed saying that this is
unlawful say, or, for example, we think of what we
argued last week about the X-tapes, if there was
unlawful sale of X-tapes and then there is the
royalty imposed at 40 per cent and it becomes
lawful, there is an enhancement to the seller. He has to recover 40 per cent more to pay the excise, but -

McHUGH J: But does 85 per cent matter? Supposing it was

only 10 per cent, or 15 per cent.

MR GRIFFITH: It becomes a matter of reasonableness at

10 or 15 per cent, Your Honour. I mean, there
would be no legislation at 10 or 15 per cent,
Your Honour, but one can see a very strong argument
in justifying 10 or 15 per cent with a universal
scheme of levying as being reasonably adapted to
this situation. That is an abstract question, but
one could see that one would have to work quite
hard to establish that that was related to the
copyright power. Perhaps, by using the word that
Your Honour picked up that intended - Your Honour,
I have, as it were, lost direction from what I had
intended to say that, namely, that there is an
enhancement in the legal value of that which the
seller is selling.

McHUGH J:

I am sorry to interrupt you, but what is the

position with copying machines? There is no such
scheme as this with ordinary photocopying, is
there?

MR GRIFFITH: Yes, there is, Your Honour.

MCHUGH J: Is there?

MR GRIFFITH:

Yes.	Your Honour, when I was photocopying

these contentions this morning, I was standing in
front of a sign telling me my legal obligations in
respect of each document I copied. Fortunately, I
regard myself in legal practice and under the legal
practice exemption in photocopying, Your Honour.

McHUGH J: But is there any scheme?

MR GRIFFITH: Yes, indeed, Your Honour, and university

libraries all had negotiations and made single
contracts to pay lump sums.

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McHUGH J: But these are privately organized schemes.

MR GRIFFITH:	No, they are under the Act.
McHUGH J:	Under the Act, are they?
MR GRIFFITH: Yes.	I referred in the guidelines,

Your Honour, to the rules and Part VB of the Act
deals with educational photocopying. These rules
would also apply to the collecting society under
Part VB, but there is a whole industry there,
Your Honour. Perhaps, my learned friend,
Mr Catterns, can tell you about that at length too.

There is not much length left now. No, you cannot
just photocopy for study purposes any more,

Your ijonour. I think, five pages and you are into
the Act.

McHUGH J:

No, I was not asking you about that.

I was

asking is there any similar scheme in terms of
where you have got an equivalent collecting
society.

MR GRIFFITH: Yes, there it is there, Your Honour.

McHUGH J: There is, is there?

MR GRIFFITH: Yes. My learned friend says not for

individuals, but for those people going about their
work, such as I do, Your Honour, there is.
If I could take the Court to what the then Attorney said on page 2 of the materials at

page 43. He said that consumers would be free from
copyright restrictions of home taping and -
manufacturers would be able to promote the use
of their products for this purpose.

Now, we say that that is sufficient, if needs be,

to constitute just terms. There is a benefit
because it becomes totally lawful to sell this
product which will be used by a substantial number
of buyers for the purpose of private copying of

what otherwise would be copyright material. And we

say that that is a benefit. Consumers who know
their position - and not like those who we find in
the words of Lord Templeton in "The beat of
Sargeant Pepper", too strong to overcome their
scruples but wish to act lawfully - have a
mechanism to do it. It is a bit like the problem
if you are down the end of a crowded tram, how do
you pay your fare if you have to get off at the

next stop? One prefers to act lawfully than

unlawfully. One can assume from the point of view
of this scheme that that can be regarded as an
appropriate end, we submit, to the exercise of the

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power and the ascertainment in an in globo way,
whether or not there is just terms, to provide a
scheme which provides for lawfulness of that which
presently is unlawful. But we emphasize that is
our last alternative submission, with respect to
just terms, slightly out of order from our
contentions which we handed to the Court, but that
is our contentions in respect of that. If the
Court pleases.

MASON CJ: Thank you, Mr Solicitor. Mr Catterns, do you

propose to seek leave to intervene?

MR CATTERNS:

May it please the Court, I am conscious of the

time, Your Honours, but I do seek leave to
intervene on a very limited basis on one matter

raised by my learned friend, Mr Ellicott, and not

dealt with by the Commonwealth in its submissions.

MASON CJ: Well, I think we will deal with that tomorrow.

MR CATTERNS:

Your Honour, I have a written document which

would suffice. If the Court would let me speak to

it I would take five minutes.

MASON CJ: Very well. In the circumstances, we will adjourn

until 10.15 tomorrow morning.

AT 4.29PM THE MATTER WAS ADJOURNED

UNTIL WEDNESDAY, 11 MARCH 1992

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is a law with respect to copyright.	It is put on
the basis that a law may be a law as to copyrights,

we would submit that here - first of all, it is a
pointer that it is not a tax.	On the other hand,

Court said, well these are laws with respect to	taxation, nevertheless, the fact that these
provisions have this effect are a pointer away from
them being a tax. In other words, one would expect
a tax to be contestable and we say that, looking at
these provisions here, they are in a real sense
incontestable, first of all because the vendors
have no right to appear before the tribunal that
fixes the amount and once it is fixed, that is it
that can be recovered; it is just A times NM, the
number of minutes. And, not only that, when you go
to the provision - and I will take Your Honours to
it in a moment, 153E(7) - the criteria laid down
are very wide and we would submit are wider for
instance than the criteria in Giris' case. Now

those matters.	I do not think I need take
Your Honours to those authorities.	They are well

be done by taxation.	I assume the word "tax" has
got some overtones about it these days.	You do not

private organization as it truly is.	It is set up
by members, no doubt;	it is set up by people with

the private and domestic use of the maker.	You get
that out of subsection (3), what I just said,
because it says:

just will not stand still.	You cannot get a theme
running through the legislation.	Now, we say here

complied with, then the other provisions would	fall, or alternatively, took the view that the
whole of the amending Act was invalid, or the third
course would be simply to say, "Well, the taxing
parts are valid, but the non-taxing parts are invalid".

property.	The legislation has to be considered
under Sl(xxxi) as a matter of substance, not as a
matter of form.	And the substance here is that A's

of that description. In other words, there are so	it; no provision for bad debts in here, or anything
many imponderables in relation to leaving the
vendor to its own devices that that could not
conceivably, we submit, be just terms.
So the first thing is: we say the theoretical ability of the vendor to pass on the amount of the
royalty does not amount to just terms. Then we
say, as a matter of commercial reality, the vendor may not be able to pass on the amount of the
royalty. It just may not be able to do it because
of competitive and other forces, or it may be that
there are commercial practices; the way in which
they charge for tapes, for instance. It is common
to charge $4.95 or $4.99.

or an incitement to infringe.	So there is no
consideration given to others.

instance, if he does not sell but distributes.	He
cannot recover it in any way whatsoever.	Now, he
has got to distribute by way of trade but, we would

but can never recover it by passing it on.	That is
the end of it.

value to the tape by reason of the enactment.	In
consid.ering the justness of the terms, regard
should also be had to ZZY.	Now, Your Honours, this

sense that I have already put to Your Honours.	The
effect of it is to take away from the copyright
owner the right to copy for private and domestic
use and to vest it in all those who choose to

but could I take Your Honours back to it, because	it seemed to us to be an important point to make.
This is not the extinction of a right. This is the
transfer of the right to copy from the maker, in effect to everybody who would like to make it, but
if the otherwise infringer gives it to somebody
else, the right to stop that person in relation to
that making of a copy remains, because (3) says it
is only the person who made it who is not
infringing:

people who make the copy for their own private and	is transferred in certain circumstances, that is,
domestic use share the right, but people who get it - get that ·very recording, and put it to their private and domestic use, do not share the right.
So in relation to a particular recording, the
right which the copyright maker has is never
destroyed, it is just shared and then in relation to the first making by the person who made it, but then it is withdrawn and becomes a sole right again, against people who use it but who did not
make it.

industry most in need of assistance.	The
Government is gratified that the music

approve of an organization that did pay it.	He
might want to limit it to 10 per cent or

the result".	I think it happened in the Dam case,
amongst others.

Your Honour, that seek an order for invalidity.	As
Your Honour said in Gerhardy v Brown and other
occasions, the Court may inform itself as

may decide that it will ignore them; we are seeking	the Court's decision and declaration as to the
validity of these provisions.

wished to rely and have findings on which then to defence which pleaded matters of fact on which we	argue constitutional validity or to argue against
the claim for invalidity.

denied by reason of the plaintiffs' joinder of
issue in their Reply.	The allegations now

memoranda. If some difficulty arises subsequently,	the Court can identify it and decide what action it
will take.

universality and the scale of the problem.	If I
could take the Court briefly to material with
reference to the position in Australia.	The Court

this information?	You are only transmitting
information to us which is there to be read.	if

Australia is listed as not yet implemented.	One
can see that there is, in fact, a column for

digital recording media.	The percentage, I think,
is 3 per cent of the price.