John Prior v Sean Hape

[2006] NSWDC 115

CITATION:	John Prior v Sean Hape [2006] NSWDC 115
HEARING DATE(S):	27/11/06 - 28/11/06
JUDGMENT DATE:	7 December 2006
JUDGMENT OF:	Rolfe DCJ
DECISION:	1. Verdict and Judgment for the 1st Defendant; 2. Order the Plaintiff to pay the 1st Defendant's costs of the proceedings on the ordinary basis, such costs to be agreed or assessed.; 3. Direct that the Statement of Claim against the 2nd Defendant be dismissed with no order as to costs.; 4. Direct that the exhibits be returned forthwith.
CATCHWORDS:	Recording Agreement between Singer/Songwriter and Record Producer - Had the Plaintiff validly exercised option to renew the Recording Agreement - Meaning of "Masters" within the terms of the Recording Agreement - Determination of date of delivery of Masters - Plaintiff's claim fails because option not exercised within time.
PARTIES:	John Prior (Plaintiff) Sean Hape (1st Defendant) No appearance (2nd Defendant)
FILE NUMBER(S):	5414/05
COUNSEL:	In person (Plaintiff) N Eastman (1st Defendant) No appearance (2nd Defendant)

JUDGMENT

1 The plaintiff, John Prior, is a musician and a record producer. The first defendant, Sean Hape, also known as iOTA, is a singer and songwriter.

2 The plaintiff and the second defendant, Robert Scott, were partners in the partnership known as “Mammal Records”. Presumably, Scott was joined as the second defendant because the claim brought by Prior arises out of the partnership’s rights under a Recording Agreement (the “Agreement”) which he and Scott entered into with Hape on 14 September 1997. The Agreement is exhibit N.

3 Under the Agreement Hape exclusively authorised Mammal Records to make sound recordings of songs performed by him during the term of the Agreement.

4 Mammal Records entered into the Agreement with Hape for the purpose of producing an album for release and sale to the public.

5 Clause 3.1 of the Agreement provided that the term of the Agreement commenced from its date and would continue for nine months from the date of delivery of sufficient Masters of Tracks to make up Hape’s first Album.

6 Under Clause 3.2 of the Agreement, Hape gave to Mammal Records an option to renew the term of the Agreement for a period of nine months commencing on the day after nine (9) months from the date of the delivery of the Masters of the Album during the preceding period.

7 Under Clause 3.3, in order to exercise the option contained in Clause 3.2, Mammal Records had to give 30 days notice prior to the date of expiry of the original term of the Agreement.

8 It is Prior’s case that Hape’s first album, known as “The Hip Bone Connection”, was not released by Mammal Records until 13 August 1999. It is Prior’s case that, prior to 13 August 1999, the tracks of the songs making up the album were not mastered until 16 June 1999. That is said to be the date of their delivery to Mammal Records. It is therefore Prior’s case that the original term of the Agreement was from 14 September 1997 to 15 March 2000 and that Mammal Records properly exercised the option in accordance with Clause 3.2, by letter dated 18 January 2000, to the defendant’s solicitor. Accordingly, the term of the Agreement was extended to 16 December 2000.

9 Between 16 June 1999 and 13 August 2001 Hape rendered performances to persons other than Mammal Records, which enabled those persons to record masters sufficient to comprise the tracks in another album. Prior says this was in breach of the Agreement and claims damages as a consequence.

10 It is Hape’s case that the nine month period under Clause 3.1 commenced on 21 September 1998 and expired on 21 June 1999. Thus, Mammal Records did not exercise the option to renew within the time required, that is, on or before 21 May 1999.

11 As both parties agreed that the Court’s determination as to whether or not Mammal Records had validly exercised the option was a discrete issue, the Court ordered that the question of liability ought be determined separately from damages. Another reason for this was that the parties recognised that the quantification of damages would be a complicated issue.

12 Under Clause 4.2 of the Agreement, Hape was obliged to render performances in a recording studio facilitated by Mammal Records. Hape also had to record sufficient masters to comprise tracks required for one album.

13 “Master” was defined in the Agreement as any form of recording of sound and/or visual images in or on any material which might be used to reproduce or manufacture Records or Videos. Under Clause 4.2 the Tracks and Masters were to be technically suitable to manufacture records for sale to the public.

14 “Track” was defined as a studio recording of a Song at least 2 minutes in length.

15 “Song” was defined as a musical work or a musical work accompanied by literary work, performed by Hape which had not previously been recorded by Hape.

16 “Album” was defined as a record comprising 12 separate tracks embodying songs with a total playing time of not less than 45 minutes.

17 Clause 4.3 obliged Hape to deliver the Masters to Mammal Records and to supply Mammal Records in writing with the title of the Song recorded on each Track, the names of the author, composer and publisher and other information set out in Clause 4.3 if relevant.

18 “Delivery” as defined in the Agreement was the day on which Mammal Records advised Hape in writing that it had accepted the Masters and the information provided by Hape under Clause 4.3.

19 Following execution of the Agreement, Hape started recording tracks at Prior’s studio, known as Unity Gain, located in Prior’s home at Erskineville. This was in January 1998. Prior played keyboards on some of the songs and did some arranging, as well as attending to the technical aspects of the recordings. Prior’s evidence was that this included operating the recording equipment, adding sound effects, mixing, editing, mastering and storing data. Prior got assistance from Mr Phimester, who had better expertise than Prior in mixing records. As I understood the evidence, the process of mixing involved, for example, after the vocals had been recorded, the addition of instrumental music which had been recorded separately.

20 I am comfortably satisfied on the evidence that by July 1998 the defendant had finished recording at the Mammal Records studio enough tracks for a full length album. In other words, in terms of performing, the defendant had done everything required of him.

21 In 1998 Monique Lisa was the defendant’s manager. She had met Scott in January 1997 at the Bellingen Fair, and over the following six months or so, spoke with him about the possibility of the defendant recording an album of songs. Scott told Lisa that he and Prior were forming the record label Mammal Records and they were interested in signing the defendant to their company. Lisa’s evidence was that most of her discussions about these arrangements were with Scott and his wife Sue Nelson. The upshot of these discussions was that the parties entered into the Agreement.

22 After the defendant had finished his recording sessions at Prior’s studio, Lisa sent Nelson a number of emails relating to the identity and details of the musicians who were to be included on the labels and covers of the album.

23 Next, on 18 September 1998, Lisa sent the letter to Mammal Records, which is annexure K to exhibit 1. Without setting out the letter in full detail, it included the following:

“As requested in Clause 4.3 of the Recording Agreement between the (Defendant) and Mammal Records, (the Defendant) hereby delivers the following tracks from recordings made at Unity Gains studio and a live track known as the soundtrack to the “Gods Eyes” video clip as the Masters for two (2) products, one of which is known as the EP, the other known as the CD.”

24 In the letter, Lisa stipulated the information that was required on the sleeve of the EP.

25 Lisa went on to say in the letter:

“(The Defendant) delivers the following tracks for the CD which are to appear on the CD in the following order. The title of the CD will be forwarded at a later time.”

26 Lisa then set out the 12 tracks for the album. It is not in dispute that the references to “CD” in the letter of 18 September 1998 was a reference to the Album, as defined in the Agreement.

27 Next, in her letter of 18 September 1998, Lisa set out the other information which the defendant required Mammal Records to put on the sleeve of the CD, such as, for example, details of the percussionist, the bass player and so on, as well as those persons involved in the production process whom the defendant wished to thank. Importantly, Lisa concluded the letter with the following request:

“Please inform iOTA Music via email of your acceptance of the Masters at your early possible convenience.”

28 Mammal Records’ response was from Nelson by her email dated 18 September 1998 to the defendant and Lisa. Lisa received the e-mail on 22 September 1998. The email had a “cc” on it with the following email address:

“ [email protected] .”

29 Although Prior claimed in evidence that he did not receive the e-mail because there was no “aus” in his e-mail address and the e-mail was therefore incorrectly addressed, I am satisfied that the e-mail would have come to his attention as other e-mails with the same address had been received by him: exhibit C demonstrates this.

30 The heading on the email was “Delivery of the Masters”. In any event, Nelson signed it “Mammal Records”. In the email, Nelson said to the defendant:

“Thank you for your letter delivering the Masters”.

31 Through Lisa, the defendant assumed that he had complied with his obligation under Clause 4.3 of the Agreement. In that respect Lisa had further discussions with Nelson about the promotion and sale of the album. The EP was also released.

32 On 1 March 1999 Scott sent Lisa an email informing her that Mammal Records had decided not to press the defendant’s album until the timing was better. Lisa responded with her email to Mammal Records of 2 March 1999 expressing frustration with the delay in the release of the album, given the time that had elapsed since the Agreement had been entered into. The upshot was that Prior, Scott and Nelson met with the defendant and Lisa at the Oaks Hotel on 10 April 1999 to discuss a release date and further promotional activities.

33 On 16 June 1999 the plaintiff arranged for the album to be mastered at Sony Studios. It was then released in July or August 1999.

34 On 11 January 2000 Scott and Nelson wrote to the defendant’s solicitor on the Mammal Records letterhead expressing the following:

“We would point out that Mammal is concerned that the issue regarding our next option as raised by you today was the first time Mammal has been informed by you or (the defendant). Over recent weeks Mammal was made aware that there may be a “loophole” in our contract, a term used by our record distributor Sebastian Chase. He advised us to check our contract as (the defendant) felt he was no longer bound by it. As this was never conveyed by (the defendant) or his professional adviser, we were surprised that this would be discussed.”

35 Then, by his letter dated 18 January 2000, Scott, on behalf of Mammal Records, purported to assert the following:

“We wish to advise that the masters for the album “The Hip Bone Connection” were accepted by Mammal Records on 16 June 1999 after mastering at Huntingwood Studios. At this session (the defendant’s) agreement was also reached on the suitability of the masters for the purpose of manufacturing the album, including remixes as proposed by (the defendant). Further, Mammal Records formally notifies that we intend to exercise the option to the second album under our current recording contract. This is within the 9 month option period as agreed by all parties.”

36 The defendant’s solicitor, Mr Oaten, responded with his letter of 9 February 2000 informing Scott and Nelson at Mammal Records that although Mammal Records had an option under the Agreement they had not validly exercised it. Oaten informed Mammal Records that the defendant did not accept their purported attempt to exercise the option by the letter dated 18 January 2000.

37 The plaintiff was self-represented. As I understood his case, it was that “masters” are a final product, that is to say, a product that has been mastered or been through the process of mastering. Prior accepted that it was his obligation to conduct this work and that it was Hape’s obligation to perform songs. On Prior’s construction of the Agreement the masters are the very final product before a recording is pressed. Prior’s case is that this did not occur until the album was mastered at Sony Studios on 16 June 1999 and released shortly afterwards.

38 Counsel for Hape submitted that Prior’s case was flawed because Prior’s case was predicated on the “masters” referred to in the Agreement as being the final product. However, the Agreement does not refer to the process of mastering. The evidence establishes that mastering is just another technical step taken in the process of the production of an album. An album can be mastered, or re-mastered numerous times in this process.

39 The definition of “Master” in Clause 1.1 (f) needs to be read in conjunction with the first sentence in Clause 4.2 which required Hape to perform in Mammal Records’ studio in a way which was sufficient for there to be enough tracks for one album. Prior did not dispute that Hape had done this. Further, Clause 4.2 imposed an obligation on Prior to get the recordings made at his studio to such a level of mixing that an album could be released. During the hearing, Prior admitted that this was his responsibility. Clearly, there was no further obligation on Hape to ever deliver the finished product once he had performed in accordance with Clause 4.2, that is to say, in a way which was sufficient for Prior to engineer and produce the Album.

40 The evidence establishes that Hape’s performances at Prior’s studio were recorded by Prior on DAT tapes which Prior retained at his studio. In my opinion, each of these tapes was a “Master” as defined in the Agreement. In my opinion, Mammal Records advised Hape that it had accepted these masters and the information which he had provided to Mammal Records in Lisa’s letter to Mammal Records of 18 September 1998 when Nelson responded to Lisa with her e-mail of the same date which Lisa received on 22 September 1998.

41 Accordingly, I am comfortably satisfied that, as defined in the Agreement, “Delivery” occurred on 22 September 1998. This meant that Mammal Records had until 21 May 1999 to exercise its option under Clause 3.2. It did not do so. Accordingly, Prior’s claim fails.

42 In reaching the above conclusion I have taken into account Prior’s argument during the course of the hearing that Nelson was not authorised to act for Mammal Records when she sent the email dated 18 September 1998 accepting delivery of the Masters. I am comfortably satisfied that Nelson had implied actual authority to act for Mammal Records, based on the evidence of Lisa in her affidavit, which is exhibit 1, about the course of dealings between her and Mammal Records, including annexures D and M to exhibit 1. I have also reached this conclusion on the basis of the evidence contained in the following documents:

a. The Fair Trading Act Certificate of Registration of Business Name dated 16 September 1998.

b. The contents of exhibit C.

c. The contents of exhibit D.

d. Annexures A, B & C to the Odgers Affidavit, exhibit 2.

43 I am also comfortably satisfied that Prior was aware of what Nelson did and at the time took no steps to contradict what she did. In fact, Prior used the information in the letter dated 18 September 1998 to produce and release the album known as “The Hip Bone Connection”.

44 In reaching its decision the Court has taken into account the written submissions of the parties. With regard to Prior’s submissions dated 5 December 2006, I have disregarded those parts of paragraphs 1, 13, 20, 21, 22, 28, 29, 34, 35, 36, 39, 40 and 41, which are not in evidence. I also do not give any weight to the factual matters set out in paragraph 12 and paragraphs 34-41 because they were not put to the relevant witnesses.

45 In the result, as between the Plaintiff and the 1st Defendant, there will be a Verdict and Judgment for the 1st Defendant. Costs on the ordinary basis should follow the event, but I will hear argument if the parties wish to make submissions on the matter.

46 Because the 2nd Defendant did not appear, the Statement of Claim against him is dismissed with no order as to costs.

47 I direct that the exhibits be returned to the parties.

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