Phonographic Performance Company of Australia Limited & Ors v Commonwealth of Australia

[2011] HCATrans 118

[2011] HCATrans 118

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S23 of 2010

B e t w e e n -

PHONOGRAPHIC PERFORMANCE COMPANY OF AUSTRALIA LIMITED ACN 000 680 704

First Plaintiff

EMI MUSIC AUSTRALIA PTY LIMITED ACN 000 070 235

Second Plaintiff

SONY MUSIC ENTERTAINMENT AUSTRALIA PTY LIMITED ACN 107 133 184

Third Plaintiff

UNIVERSAL MUSIC AUSTRALIA PTY LIMITED ACN 000 158 592

Fourth Plaintiff

WARNER MUSIC AUSTRALIA PTY LIMITED ACN 000 815 565

Fifth Plaintiff

J ALBERT & SON PTY LIMITED

Sixth Plaintiff

and

COMMONWEALTH OF AUSTRALIA

First Defendant

AUSTRALIAN BROADCASTING CORPORATION

Second Defendant

COMMERCIAL RADIO AUSTRALIA LIMITED ACN 059 731 467

Third Defendant

FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 11 MAY 2011, AT 10.18 AM

(Continued from 10/5/11)

Copyright in the High Court of Australia

____________________

FRENCH CJ:   Yes, Mr Cobden.

MR COBDEN:   Just briefly, your Honours, before I hand over to Mr Kirk.  We have supplied the extract from Copinger that we agreed to supply yesterday.  We had prepared a very brief note on local content requirements in answer to your Honour Justice Heydon’s question, but I have just been handed a more detailed note that has been prepared by the Commercial Radio people so I think that that will deal with the topic in more detail.  I will not touch upon that. 

On the question that your Honour Justice Gummow raised yesterday of section 8 of the Acts Interpretation Act and how it interplays with section 5(2) of the 1968 Act and Part XI of the 1968 Act, we have looked at that question in a bit more detail and, of course, transitional provisions must be analysed to see how they interact with section 8 – it is in the Dowsett Case and will not be taken to extinguish rights and repeal legislation unless they are exhaustive and the like and, of course, as your Honour referred to, a particular example of that was the Smirnoff Case which is G.F. Heublein.

I am getting some references, but we will put this in a note.  I do not think your Honours’ associates will have these volumes and I will not need to take your Honours to them, but G.F. Heublein - the Smirnoff Case - where section 5 of the 1955 Trade Marks Act had some transitional provisions, including deeming marks registered under the old Act to be registered under the new Act - dealt with some pending matters, but not all.  But this Court held, reversing Justice Kitto on that point ‑ ‑ ‑

GUMMOW J:   Sorry, it deemed?

MR COBDEN:   It deemed the old register to be under the ‑ ‑ ‑

GUMMOW J:   There is no equivalent in the 1968 Copyright Act?

MR COBDEN:   No, no and that seemed to be the approach.  I am not going to go in detail to the 1990 Patents Act or 1995 Trade Marks Act, but we will cover it in a note that we hope to supply to everybody at lunch time and give to your Honours later, but having said some pending matters will be dealt with under section 5 of the 1955 Act, this Court held that that was an intention to be exhaustive on that topic so other pending matters which had not been dealt with did, in fact, lapse.  That was also the case in the Bayer cross case where a pending application to alter a trademark had lapsed because that had not been dealt with.  In other words, section 5 of the 1955 Trade Marks Act was held to be exhaustive intention to deal with pending matters excluding section 8 of the Acts Interpretation Act. 

The question arose, of course, also before the Full Federal Court in the case of Interlego v Croner Trading where their Honours Chief Justice Black and Justice Lockhart agreed with your Honour Justice Gummow.  Your Honour Justice Gummow gave a very detailed judgment on a very large number of topics and looked at this question in relation to the Copyright Act, indeed, the 1905 Act, the 1911/1912 Act and the 1968 Act in two particular ways.

First, what was the effect of the provisions of the 1968 Act in relation to industrial design uses of artistic works whose copyright had arisen under the 1968 Act.  That is a topic known as the design copyright overlap which is so complicated as to being compared by some people to the Schleswig‑Holstein question.  Your Honour’s judgment deals with it in enormous detail, of course.  Secondly, what was the effect of a 1989 amending Act which had altered the balance of a copyright design overlap while those proceedings were pending and which had no savings provisions.

The effect, we would respectfully submit here, is that there is an express treatment of section 8 of the Acts Interpretation Act in section 5(1) of the 1968 Act.  In other words, it explicitly addresses the question of exhaustion by saying except insofar as the matters are dealt with by Part XI, then section 8 of the Acts Interpretation Act will continue to apply. 

Now, your Honour Justice Gummow looked at that question, in particular by analysing Part XI and identifying there in relation to copyright design overlap that section 218, while not replicating the precise words of the 1911 Act, replicated them as they had been interpreted over the intervening period, in particular by the King Features Syndicate Case, the Popeye Case. 

We say that the same intention has been manifested in section 220, for example, or 222 in relation to films, that is to preserve and not augment the old copyrights.  That is the expression as your Honour put it in Interlego and we will give your Honours a reference to that. I can give the reference now. It is in 39 FCR 348. What your Honour said was about section 218, remembering that 218(2) was the re‑expression of the old artistic work design overlap issue and not the sound recording issue, but your Honour said:

Section 218(2) thus is a particular application of the general operation of s 210 of the 1968 Act.

I took your Honours to section 210 yesterday to show that it says expired copyrights not to revive, and your Honour went on to say:

This is to deny copyright under the new law where it did not subsist under the old.

So what we say about all that, wrapping it together, is that the topic of what pre‑1969 recordings attracted and continue to attract copyright is dealt with in section 220, and thus under section 5(1) of the Act and in the issue of section 8 of the Acts Interpretation Act.  This Act is excluded, we accept.  The question of what the regime in the 1968 – on other matters such as infringement would do, will apply – that is dealt with by section 207, and we would also accept that that – to that extent that excludes section 8 of the Acts Interpretation Act.

However, we maintain our argument that while the rights are carefully not augmented thereby they are thereupon subjected to sections 109 and 152, which is the argument I put yesterday.  With your Honours’ indulgence there was just one point I did not feel that I made starkly enough yesterday.  I think it is going to put against us that we do make this point starkly and I do not want to shy away from it.  What we say about the caps and their interrelationship with equitable remuneration is that one can derive from the structure and text of the 1968 Act that it is an Act where throughout it there are provisions fixing equitable compensation, equitable remuneration, reasonable rates, amounts of royalty, all of which have been held to be the same conception as equitable remuneration.

As this Court said in Copyright Agency Limited v NSW there is an echo, and we would submit a very strong echo, of the notion of just terms in section 51(xxxi) by the use of that expression “equitable remuneration” and the imposition of arbitrary caps, one per cent, half a cent, which must have been intended to have effect, intended not to be otiose and then the wording and structure of the Act contemplates that full equitable remuneration will not be given in some circumstances for sound recordings, thus that it is not shown to be full compensation for the reduction of the rights. I just wanted to make sure that we had continued to say that that is the proposition that we put starkly. Now, I will ask Mr Kirk to follow on the question of ‑ ‑ ‑

FRENCH CJ:   Yes, thank you, Mr Cobden.

MR COBDEN:   May it please the Court.

FRENCH CJ:   Yes, Mr Kirk.

MR KIRK:   Your Honours, the issue of sections 5, 6, 8, 207 and 220 that my learned leader was just referring to, overlaps with the issue of severance and reading down.  That is so because all of the defendants suggest that the plaintiffs should have challenged the validity of those provisions.  The issue of what provisions creates a constitutional problem arises only if we establish that there has been some provision for an acquisition of property without just terms effected by the 1968 Act and if we establish that the question then becomes which provisions affect that acquisition and what is the legal consequence? 

As my learned leader said yesterday, the plaintiff’s position is that the acquisition without just terms is affected by sections 109 and 152, and that the sting of acquisition would strictly only be felt when those rights were exercised under the 1968 Act.  Although all of the defendants put that point against us, it is only the ABC which drives the logic home in relation to reading down.

I will not take your Honours to it, but at paragraphs 59 and 60 of the ABC’s written submissions, the ABC says that the correct approach to reading down is to read down those provisions – 5, 6, 8, 207, I am not sure they mention 220 but they might as well have done.  The consequence of that reading down would be, as they frankly acknowledge, that there would be two copyright laws in operation in Australia.  There would be the old imperial regime as picked up and applied, in a sense, explained yesterday by the 1912 Act which would apply to one subset of one type of copyright namely sound recordings which pre‑existed the commencement of the 1911 Act and for everything else, including sound recordings made from 1 May 1969 onwards, that would be dealt with under the 1968 Act.

The main problem, we submit, with that approach is that it is contrary to the manifest intention of the Parliament set out in those sections of the 1968 Act.  If I could take your Honours to the Act as enacted, not that anything has changed in this respect, as your Honours will appreciate, section 51 states in very clear terms:

This Act operates to the exclusion of the Copyright Act, 1911.

Section 5(2) is a deemed repeal in the way discussed yesterday of the 1911 Act. Section 6 repeals the Copyright Act 1912 amongst other Acts. Section 8(1) expresses the intention very clearly that subject to a qualification which is not relevant:

copyright does not subsist otherwise than by virtue of this Act or of the Designs Act 1906-1968.

Now, the effect of the ABC’s position is that very clear statement of intention of the Parliament is defeated for one subset of one type of copyright in Australia and we would say that defeat of the plain intent of the Parliament rules out that possibility as an appropriate response to the situation if we establish there has been an acquisition of property without just terms.

GUMMOW J:   Can you explain that again?

MR KIRK:   Yes.  Given that this issue raised by the defendants about section 5 and 6 and so forth is, when one follows through the logic of it, an issue about severance or reading down, one then has to apply the usual principles about severance and reading down including that one has to consider the parliamentary intent.  As your Honours Justice Hayne and Justice Kiefel explained in Pape, there is a degree of artificiality about that, of course, because the Parliaments do not usually consider the situation if there is invalidity. 

But here, where one has a very clear set of statements of intent to repatriate copyright to Australia and to deal with it in this one Act, to create a situation where there was still an imperial Act in application, albeit for this very limited set of copyrights, would be directly contrary to that intention.  So, applying the Pidoto‑type principles about taking account of likely legislative intention, we would respectfully say that directly contradicts legislative intention, namely the ABC approach, and that that rules it out.

There are other difficulties with the ABC approach to which I will come.  There is also a practical difficulty, in a sense, which is another way of saying the same thing and it means that there would be two legislative schemes on foot for the one type of copyright.  There would be the 1968 Act still applying for copyrights created from 1 May 1969, but the old regime applying to a copyright that subsisted on 1 May 1969.  That would create practical problems, for example, in resolving disputes about the use of the copyright.  For post-1 May 1969 one would go to the Tribunal under sections 109 and 152.  That would not be open in relation to disputes about pre‑existing copyright. 

I will come back to the ABC point, but there are three other main possibilities, or perhaps four, as to how one might deal with any constitutional problem that we identify and these are the variants we have identified at paragraph 162 of our primary submissions.  The first is that references to published sound recordings in at least the cap provisions, sections 152(8) and (11) are read down so as not to apply to pre‑existing rights in 1911 Act sound recordings.  Now, that is the proposal that the Commonwealth puts if there is a constitutional problem.  There is a variant on that which is that all relevant references to published sound recordings in section 109 and 152 are read down and that leads to a somewhat different result. 

The second possibility, the one we suggest is correct, is that the caps are severed.  One simply cuts out sections 152(8) and (11), which would also take with it, in the way discussed yesterday, subsections (9) to (10) and (19) to (21), which in a sense simply fill out the operation of the cap in 152(8).  The third possibility, which no one puts, I do not think, is that the whole of section 152 is invalid.

If I can turn to the proposal the Commonwealth puts, namely reading down published sound recordings just in the caps.  Now, the Commonwealth says, in its submissions, that this is an example of a situation where a provision applies to a broader subject matter than is permitted, but it could validly have applied to a narrow subject matter and that is correct, with respect.

This is an example of the second type of matter Justice Dixon spoke about in R v Poole; Ex parte Henry (No 2).  But that does not answer the problems we have identified in our written submissions which are twofold, that to take that approach it would give an altered operation to the caps and that again it would be contrary to manifestations of legislative intention.  As to the first of those problems if the caps only applied to sound recordings created from 1 May 1969 onwards they would apply in a dramatically different way in 1969 or 1970 to how they would apply today because in 1969 or 1970 there would be very few published sound recordings which fell within the operation of the caps because there would be very little new music as a proportion of the music played by radio stations.

Now, 40 years later, it would be a much greater proportion.  That means the practical effect of the cap in 1970 would be to impose almost no restriction at all because one per cent in relation to a very small amount or proportion of music is no practical restriction.  But as one moves forward through time and there is more and more new music played, created after 1 May 1969, the operation of the cap would start to cut more and more.  The operation of the law thus changes and that rules out, we would suggest, that possibility of reading down. 

But further, it is contrary to the manifestations of legislative intention because a reading of sections 109 and 152 make it evident, we submit, that it was intended that there be no more than one Tribunal order applying per broadcaster at any one time in relation to all published sound recordings.  If I could take your Honours again in the original version of the 1968 Act to section 109, first to 109(1)(b)(ii).  This is one variant of the compulsory licence that, under (1)(b):

where there is an order of the Tribunal in force . . . applying to the maker of that broadcast –

the broadcaster, but subsection (ii) –

the copyright in that recording is owned by a person who is not so specified in the order –

they still have a compulsory licence.  In other words, even in relation to copyright owners who are not covered by the order, there is still a compulsory licence to the benefit of the broadcaster.  That is indicative of an intention that there only be one regime which applies at the time.  If one jumps to section 152, first to subsections (4) and (5), subsections (4) and (5) permit any person with:

a substantial interest in the matter that is the subject of the application –

to pick up the words of subsection (5), to apply to be a party to an application.  Thus, anyone with an interest can join in.  Further, at 152(12) through to (14), even after an order has been made by the Tribunal, it is possible for outsiders to apply for an amendment to the order, such that they are brought within the operative scope of the order, albeit under subsection (17), such an amendment can only be made prospectively.  In the caps themselves, subsection (8), for example, it refers to making an order:

in respect of the broadcasting of published sound recordings during the period in relation to which the order applies –

again assuming the singular, and the same is in subsection (11), and in 152(16), it indicates that although Tribunal orders can be backdated – this is leaving aside amendments, ordinary applications – the order can be backdated – it:

shall not be a date before the date of expiration of the period in relation to which the last preceding order . . . of the Tribunal . . . applied –

So there can be only one order of the Tribunal in force at any one time.  One cannot therefore have two orders, one applicable at any time, one for pre‑existing sound recordings and one for later ones, and all that ties back to subsection (6), which is the empowering provision, by which the Tribunal in subsection (6)(a), may determine or make provision “for determining, the amount payable” - singular, one amount payable, by the broadcaster in respect of published sound recordings.

We respectfully suggest that tying all that together there is a manifest intention that there should be one Tribunal order which applies in relation to any particular broadcaster at any one time, and that cannot permit, or at least it is somewhat inconsistent to permit having two orders; one applying to sound recordings which pre‑existed the 1968 Acts, and those which are subsequent. 

There is a further problem with the proposal of the Commonwealth.  They propose to read down the words “published sound recordings” just in the caps in subsections (8) and (11) so as to exclude pre‑existing sound recordings, yet the same phrase is used in subsection (2) giving the Tribunal jurisdiction and subsection (6) empowering the Tribunal (6)(a), to make orders.  So one would have a disjunctive reading of published sound recordings within the same section and I note that section 109 also used the phrase “published sound recordings”.

That is a further reason against the Commonwealth proposal.  That leads to the logical possibility, what about reading down “published sound recordings” in all those references in 109 and 152, and the effect of that incidentally would be to deprive the Tribunal of jurisdiction in relation to pre‑existing sound recordings because the grant of jurisdiction in 152 refers to published sound recordings.  So if one read that down to exclude pre‑existing sound recordings, they would not have jurisdiction subject to a qualification since 2006, to which I will return briefly shortly.

The same basic two problems would arise.  It would alter the operation of the caps for the same reason I have explained, different effects in 1970 compared to 40 years later, and it would still detract from the manifest intent of the Parliament that there be one order of the Tribunal applying to one broadcaster at any particular time. 

Can I return, having put those submissions, briefly to the ABC’s point that the sections 5, 6 and so forth, should be read down?  The same points I have just put about altered operation of the cap and contrary to the legislative intention in 109 and 152 can be put with respect to the ABC’s reading down, because if one excludes pre‑existing sound recordings by saying the 1968 Act simply does not apply, it still changes the operation of the caps and it is still contrary to the legislative intention that there be one Tribunal order in the way I have explained.

I cannot help but then note what the ABC says in its written submissions about those two points that we put against the Commonwealth’s reading down.  The ABC agrees with them.  Paragraph 64 of their written submissions it agrees with us that for the two reasons, or at least for one of the reasons, I think, that I have given in relation to the Commonwealth’s proposal the Commonwealth’s proposal cannot be accepted.  We would respectfully submit that the ABC hoists itself on its own petard in that acceptance. 

That leads to the consequence we respectfully suggest is the correct one, which is that if we have established an acquisition without just terms the core of the constitutional problem is the imposition of the caps in section 152(8) and (11).  That problem can be solved by severance of the caps.  To sever the caps means that there is then no distinction between old and new sound recordings.  The Tribunal still has jurisdiction and there would still be the potential for one order by the Tribunal per broadcaster encompassing all sound recordings, both before and after.

There is another logical possibility, of course, which is to sever the whole of 152.  No party puts that.  That is rather more dramatic surgery, following the injunction in section 15A to do as little reading down or

severance as possible.  The preferable approach would be to sever the caps, rather than 152.  If the whole of 152 were severed the position would be there would be no jurisdiction in the Tribunal.  It would be left to the marketplace.  It would necessarily take section 109 with it, the compulsory licence because 109 depends upon there being a section 152.  So it would be a matter for bargaining in the marketplace as to whether sound recordings can be used and at what price.

I noted earlier and, indeed, my learned leader noted yesterday that there have been changes since 2006, which slightly alter the position.  For completeness may I briefly mention those?  Since 2006 and amendments made by the Copyright Amendment Act it is now possible that, even absent 152, these matters could end up before the Tribunal.  That is so because of sections 154 to 157 - if I could take your Honours to the current version of the 1968 Act.

Section 154 to 157 hinge off a definition in section 136.  That definition of “licence scheme”, in particular, was amended significantly in 2006.  “Licence scheme” now is defined in fairly broad and generic terms as, in essence, involving schemes related to collecting societies because licence scheme relates to licensor which, in essence, refers to collecting societies and that is in generic terms.

But then as your Honours would know under section 154 a potential licensor, someone such as PPCA, may refer a scheme to the Tribunal and the Tribunal may make orders - subsection (4) - as it “considers reasonable in the circumstances”.  Under 155, licensees can refer matters to the Tribunal with the same criterion applied in subsection (5) and under 157(3), even if there is no licence scheme in place, the matter can be referred to the Tribunal, and again the Tribunal, under subsection (6B) can make such orders, including, in effect, compulsory licences and setting charges and so forth, as it considers appropriate.  That was not possible prior to 2006 because there was a more restrictive definition of “licence” and “licensor” and “licensing scheme” in the old 136, such that it did not extend to broadcast rights being the rights at issue here. 

In summary then, there are a series of possibilities.  The one that we say cuts to the core of the problem, if we establish that there is a problem, is simply to sever the caps.  That is the one most consistent with section 15A of the Acts Interpretation Act, and there are difficulties with all the other proposals which we respectfully say preclude them being adopted.  Unless there is anything further.

FRENCH CJ:   Thank you, Mr Kirk.  Yes, Mr Solicitor.

MR GAGELER:   Your Honours, we propose to address the issues in the reverse order from that in our written submissions, and we start with severance, in part because on one view the whole case is about severance.  It is just that, in our submission, the analysis necessarily starts at an earlier stage from that which the plaintiffs are prepared to accept and the severance capable of being made to meet their case, if it is otherwise good, is a much less radical surgery than they suggest. 

The focus of the plaintiff’s case is on “affected sound recordings” as defined at page 25 of the special case book in paragraph 27 of the statement of claim, and as then identified at page 98 of the special case book in paragraph 132 of the special case itself.  The language in both of those locations picks up the language of the 1911 Act.

As at 30 April 1969, copyright in those affected sound recordings was conferred by section 19 of the 1911 Act which continued to apply in Australia by imperial force, so held in the EMI Case mentioned yesterday, 100 CLR 597. The 1956 UK Act had expressly carved Australia out of the repeal, that was clause 41 of Schedule 7 and, in any event, the 1956 UK Act was passed without the request and consent of the Australian Parliament that would have been required for a repeal in accordance with section 4 of the Statute of Westminster, as picked up in Australia by the Statute of Westminster Adoption Act.  Then, as at 1 May 1969, by virtue of the commencement of the Copyright Act and turning to ‑ ‑ ‑

GUMMOW J:   Did you say clause 41 of the 7th Schedule of the 1956 Act in the UK?

MR GAGELER:   Yes.  Then, your Honours, turning to the Act that then commenced on the 1 May 1969, section 5(1) as from that date excluded the operation of the 1911 Act.  That was a carefully crafted provision.  It is carefully crafted not to be in the form of a repeal and not to be a purported exercise of the power conferred by section 26 of the 1911 Act nor section 2(2) of the Statute of Westminster which conferred an additional power of repeal.

GUMMOW J:   Sorry, say that again – it is not?

MR GAGELER:   It is not a purported exercise of a power under section 26 of the 1911 Act, nor under section 2(2) of the Statute of Westminster which contains an additional power of repeal.

GUMMOW J:   Section 2(2) of the Statute of Westminster ‑ ‑ ‑

MR GAGELER:   Has a couple of operations, your Honour, and on one view, as interpreted in Kermani v Captain Cook Cruises, it confers an additional power of repeal independently of anything otherwise contained in ‑ ‑ ‑

GUMMOW J:   It says:

and the powers of the Parliament of a Dominion shall include the power to repeal or amend . . . in so far as the same is part of the law of the Dominion.

It uses the word “repeal”.

MR GAGELER: Yes. What I am seeking to point out is that this is sought to be done simply as an exercise of power under section 51(xviii) of the Constitution. There may have been other ways in which it could be done, those can be put to one side. Section 5(2) ‑ ‑ ‑

GUMMOW J:   Well, just a minute.  Has it ever been decided that the power in 51(xviii), is it, would support what you have said was being done in section 5 without going through the Statute of Westminster system?

MR GAGELER:   Well, that has never been decided, but your Honour had asked me about going through the Statute of Westminster system.  Two elements of section 2(2) of the Statute of Westminster; one is to allow the Commonwealth Parliament to enact a law which in its operation in Australia is repugnant to an imperial statute.  On any view, section 5(1) does that.  The other element of section 2(2), at least arguably, is it is an additional source of power to repeal.  Section 2(2) does not seek to invoke that additional source of power.

GUMMOW J:   Section 2(2) would not apply, would it, if the 1956 Act got read in the United Kingdom with the 1911 Act?  If you look at section 2(2), it should be:

on the ground that it is repugnant to the law of England, or to the provisions of any existing or future Act of Parliament –

Well, the Act of Parliament has gone in the United Kingdom.

MR GAGELER:   I am sorry.  The other operation I attributed to section 2(2), it is section 2(1).

GUMMOW J:   Section 2(1).

MR GAGELER:   Section 2(1).  That was really just to clear the ground.  You then move to section 5(2), which ‑ ‑ ‑

GUMMOW J:   Wait a minute.  There would be no repugnance, would there?  There would be nothing to which section 5 could bite.  It is gone in 1956.

MR GAGELER:   If it had gone in 1956, of course ‑ ‑ ‑

GUMMOW J:   In Britain, it is gone.

MR GAGELER:   If it had been passed at the ‑ ‑ ‑

GUMMOW J:   So what could the Colonial Laws Validity Act bite on?  I think Sir Nigel Bowen thought of all these things when he was drafting section 5.

MR GAGELER:   No, your Honour, it is really not that complicated.  The 1956 Act did not comply with section 2(2) of the Statute of Westminster and did not purport to repeal the operation of the 1911 Act in its application to Australia.  The 1911 Act therefore continued to apply.  Section 5(1) as an exercise ‑ ‑ ‑

FRENCH CJ:   That was done expressly by clause 41 of Schedule 7.

MR GAGELER:   Yes, that is right, and was so held in the EMI Case. Section 5(1) then, as an exercise of power under section 51(xviii) of the Constitution, was not affected by any repugnancy that may have given the 1911 Act paramount force by operation of the Colonial Laws Validity Act.  That is the effect of section 2(1).  Your Honours, section 5(2) ‑ ‑ ‑

GUMMOW J:   Just a minute.  Clause 41 of Schedule 7 of the 1956 UK Act talks about “so long as it forms part of the law of that country”.

MR GAGELER:   Yes.

GUMMOW J:   Is that pregnant with a power to, so far as the Imperial Parliament is concerned, for the Dominion Parliament to discontinuance?

MR GAGELER:   Well, it assumes a power in the Dominion Parliament.

GUMMOW J:   We read that as assuming a power in the Dominion Parliament?

MR GAGELER: Yes, it does, and that power would exist in the present case, at least in section 51(xviii) of the Constitution, also section 26 of the 1911 Act, also section 2(2) of the Statute of Westminster.  Your Honours, then section 5(2) preserved by force of Australian law rights that had accrued under the 1911 Act, the classic kind of right being an accrued cause of action for infringement, the sort of right that was considered in the Smirnoff Vodka Case 103 CLR 422, to which reference has been made. Section 8 of the Acts Interpretation Act, of course, would not have applied of its own force for two reasons.  One, it is concerned only with repeal and, secondly, it is concerned only with the repeal of a Commonwealth Act.  It is for that reason that section 5(2) gave it the deemed operation that it did.  The rights preserved by section 5(2), however, cannot be read as including ongoing rights of copyright that would cause section 5(2) to contradict section 8(1).  What section 8(1) does unambiguously is to say that copyright does not subsist otherwise than by virtue of this Act.

GUMMOW J:   Section 8(1) has two operations, I think.  Section 8(1) is to be understood by looking back into the imperial Act in section 31 where a similar provision was designed to abrogate, I think, common law rights in unpublished works but preserving, one sees, breach of confidence.  Breach of confidence is preserved by 9(3) of this Act.  The prerogative, which is part of the common law, is preserved by 8(2), otherwise the common law, insofar as it existed and it was debatable, has gone by 8(1) and 8(1) also says there is no statutory copyright.

MR GAGELER:   It has those two operations.  It is for that reason that section 5(2) cannot be read as contradicting section 8.  The rights preserved by 5(2) do not extend to the right of copyright.

FRENCH CJ:   If 5(2) had that operation, would that not be a species of copyright subsisting by virtue of the Act?

MR GAGELER:   No.  Well, on one view, but the better view would be would be a species of copyright subsisting by virtue of the modified operation of section 8 of the Acts Interpretation Act given by section 5(2) of the Act.

FRENCH CJ:   So 8 refers to subsisting otherwise than by virtue of this Act except for section 5.

MR GAGELER:   As created by this Act is the way of reading it.  Then copyright in sound recordings created ‑ ‑ ‑

GUMMOW J:   Section 5 draws in the whole of Part XI.

MR GAGELER:   Yes, which are the transitional provisions.

GUMMOW J:   Well, they are more than transitional, that is the question.  That is the debate really.

MR GAGELER:   In part.  The actual copyright created by this Act is the section 89 copyright.

GUMMOW J:   It is created by section 220, it seems to me. 

MR GAGELER:   Well, I will take it in stages.  I will get there in just a moment.  The section 89 copyright which is expressed to be subject to this Act having the nature in section 85 and subject to the qualification in section 109, relevantly, which is then further qualified by section 152.  It is section 89(1) which is centrally relevant for present purposes.  Section 89(3) can for the purpose of the case be put to one side because it is qualified by section 105.  What your Honours see in section 105 is that:

Copyright subsisting in a sound recording by virtue only of subsection (3) of section 89 of this Act is not infringed by the causing of the recording to be heard in public or by the broadcasting of the recording.

So the section 89(3) copyright does not carry with it the exclusive broadcasting right referred to in section 85(c).  If you then go to the provisions to which your Honour Justice Gummow referred ‑ ‑ ‑

GUMMOW J: Before you go there, I think you have to go to section 93, which is important in some respect. Section 93 talks about 50 years first published, you see?

MR GAGELER:   Yes.

GUMMOW J:   Then you go to 220(3) not first published, was made, but only in relation to the old recordings, if I can put it that way.  So 220 picks up and alters these provisions in Divisions 3 and 4.

MR GAGELER:   Your Honour is right.  As you get to 220, you go past 207 to which reference has been made.  It, of course, is subject to 220 because it introduced ‑ ‑ ‑

GUMMOW J:   Well, we are looking at 207.  The thing existing in 207 at the commencement would be what?

MR GAGELER:   The thing existing would be the sound recording.

GUMMOW J:   Then that is further explained by 220?

MR GAGELER:   Yes.  Well, section 207, of course, has a very limited operation because, as read into section 89 and particularly section 89(1), it would be read with the definition of “qualified person” in section 84.

GUMMOW J:   Section 207 opens with “Except in so far as this Part otherwise expressly provides”.

MR GAGELER:   That is right.

GUMMOW J:   That takes you to 220.

MR GAGELER:   It takes you to 220.  I am entirely with your Honour.  Section 207 can be noted in passing, but it is not the critical provision.  The critical provision is section 220(1) working on section 89(1).  Your Honours will see that section 220(2) relevantly excludes the operation of section 89(2) entirely.

GUMMOW J:   The reason for that is because its British subjects, that is the criterion, in 220(1) I think.

MR GAGELER:   Yes, that is right.  So the point is, and perhaps I have taken a great time to get there ‑ ‑ ‑

GUMMOW J:   But that is important because 220 is picking up the old imperial structure which operated outside Australia in relation – this Act, the new Act, did not apply to foreign activities except insofar as there were regulations made under – what is the foreign extension provisions?

MR GAGELER:   Section 184.

GUMMOW J:   Section 184, yes, that is right.

MR GAGELER:   I was going to get to those ‑ ‑ ‑

GUMMOW J:   So 89 will start to work with the foreign activities only with the assistance of regulations under Part VIII, that is, with regards to the old imperial system, that is preserved or renewed or whatever you like to say by 220, even in the absence of an extension under Part VIII.

MR GAGELER:   That is exactly right.  So, relevantly, the rights that existed under the 1911 Act are extinguished by sections 5(1) and 8 and in substitution for those rights are the rights conferred by section 220(1) working on section 89(1), subject to the qualifications that are then introduced by sections 109 and 152.  Now, the plaintiffs’ case really comes down to saying that the qualifications on those substituted rights that are introduced by sections 152(8) and 152(11) prevent that substituted copyright which is given by section 220(1) and section 89(1) constituting just terms for the acquisition that occurred on 1 May 1969 of the copyright that they had in the affected sound recordings under the old imperial statute.  So that absent severance, they would be stuck with the rights that they had under the 1911 Act.  Now, we are with the plaintiffs in saying that the case can be addressed as a matter of severance, and it is not suggested ‑ ‑ ‑

GUMMOW J:   I am not sure what is being severed.

MR GAGELER:   Pardon?

GUMMOW J:   I am not sure what is the body from which a limb and if so, which limb is being severed.

MR GAGELER:   Well, it is subsections (8) and (11) of section 152 acting in respect of affected sound recordings that gives rise to the acquisition of property of which they complain.  In our submission, the severance that can occur, being the minimum excision necessary to preserve validity, that is what section 15A of the Acts Interpretation Act requires, is to read published sound recordings in section 152(8) and (11) as excluding affected sound recordings, that is, you remove that element that prevents the acquisition of which they complain being on just terms.

There are three arguments that have been well articulated this morning by the plaintiffs as to why that minimum excision cannot occur.  The first argument is that it would give an altered operation to the statute.  It would not give an altered operation in the relevant sense.  The altered operation that cannot occur through the operation of section 15A is an altered legal operation. 

Reading the provision as we suggest would give the legal operation of section 152(8), (11) and (6) exactly the same legal operation that those provisions have, absent the surgery.  The altered operation, as Dr Kirk frankly accepted, is an altered practical effect and an altered practical effect is not one which necessarily prevents the operation of section 15A of the Acts Interpretation Act producing such an excision.

He then moves to what is really an argument based on the policy intent embodied in the Act and he says that such an excision would be contrary to the manifested intention of the legislature because the statutory scheme is that a tribunal should produce one order relating to one broadcaster.  That can be accepted as the statutory scheme.  Simply reading down the words in subsections (8) and (11) would not prevent the Tribunal from making one order in relation to one broadcaster under section 152(6); it is simply not a problem.  All that happens is that one element in the analysis of the Tribunal that goes into making that single order is subject to the cap in sections 152(8) and (11).

He then points to a problem, it is suggested, of a disjunctive reading of the words “published sound recordings” in subsections (8) and (11), on the one hand, and subsection (6) and subsection (2) on the other.  That is not a problem if it is the product of the operation of section 15A, that is the command of section 15A is to read down the offending part so as to avoid invalidity.  So none of the answers suggested to the reading down that we have put are a sufficient answer.

Your Honours, moving to just terms, a more substantive topic perhaps, the plaintiff’s case on just terms is, in our submission, abstract and unreal.  If you accept, which we reject, that Cawardine was correct and the copyright conferred by section 19 of the 1911 Act included a public performance right which, in turn, incorporated a broadcasting right and if you accept, which we reject, that Tape Manufacturers is distinguishable and section 109, operating on the other provisions to which I have referred effects an acquisition of property to the extent that it gives to broadcasters some part of that broadcasting right and if you accept, which we reject, that section 109 as qualified by section 152 lies outside the range of adjustments to existing property rights that can be effected under section 51(xviii) itself so that it depends entirely for its validity on section 51(xxxi), then you get to the proposition upon which the plaintiff’s case depends and that is that the caps imposed by subsections (8) and (11) prevent section 152(6) providing for just terms in respect of that limited class of affected sound recordings.

Now, that proposition is ultimately one of fact, albeit constitutional fact and it is a proposition of constitutional fact that the plaintiffs eschew any attempt to prove at the factual level.  For that reason, in our respectful submission, that should be the end of the case.

GUMMOW J:   What do you say is the constitutional fact they shy away from?

MR GAGELER:   The constitutional fact is that the cap – I am sorry, that section 152(6), operating as qualified by sections 152(8) and (11), does not constitute fair dealing for the acquisition said to be involved in the conferral of a broadcasting right on broadcasters.

CRENNAN J:   You do not mean fair dealing in the term of art sense, you mean fair ‑ ‑ ‑

MR GAGELER:   I am using “fair dealing” in a particular sense that I wanted to come to in the cases - in the Nelungaloo sense, in the Grace Brothers sense, and the BMA sense.  I am just about to turn to those, but what I wanted to do ‑ ‑ ‑

CRENNAN J:   Just it is a term of art in copyright discourse.

MR GAGELER: I understand that, yes. That is not what I meant. I meant it in a broader constitutional sense. Your Honours, there is no general principle that a legislative cap on compensation is necessarily inconsistent with the just terms requirement of section 51(xxxi) and Johnston Fear & Kingham, upon which the plaintiffs rely, simply does not hold or suggest otherwise.  Can I take your Honours to that case very briefly first and then go to the cases that I say do set the principle and state the relevant constitutional fact? 

Johnston Fear & Kingham, in our submission, turned on the proposition put in reply by Dr Coppel at page 316 at about point 7, the simple point being that ‘price”, as that language was used in the relevant regulation, did not mean value.  You see that in the judgment of every member of the Court, save one.  You see it in the judgment of Chief Justice Latham at page 323, point 1; Justice Rich, 323, point 8; Justice McTiernan, 330, point 2; and Justice Williams, 333, point 9.  Justice Starke put it slightly differently at page 327, at about point 8 when he said:

But it cannot do so either directly by legislation or indirectly through its Prices Commissioner, for this in substance would make it –

that is the acquirer –

the judge of its own cause and permit it to determine for itself the price that should be paid for the goods.

His Honour is making the point that the particular price cap made the Commonwealth, the acquirer, the judge in its own cause, and it is no doubt for that reason that the concession was made that is recorded at page 322 about point 5 in the judgment of Chief Justice Latham, and that is confirmed if you were to look at the United States cases that are referred to by Chief Justice Latham - they are due process cases.

They are cases about being a judge in one’s own cause.  The concession and, indeed, the holding in the case says nothing about the validity per se of a cap on compensation.  The real principle, in our submission, emerges from judgments of Sir Owen Dixon that have been repeated many times, particularly Grace Brothers 72 CLR 269 and BMA 79 CLR 201. Can I take your Honours to BMA first, even though it comes second in time, 79 CLR 201. Your Honours should have a photocopy of it.

KIEFEL J:   I do not think BMA was on the list.

MR GAGELER:   No, but your Honours should have a photocopy.  I can deal with the other case first.  If it is more convenient, I could go to Grace Brothers, your Honour.  British Medical Association 79 CLR 201 at page 269 your Honours will see this towards the bottom of the page:

The contention that s 51(xxxi).) of the Constitution invalidates the legislation because it amounts to or includes an acquisition of property upon terms that are not just cannot, in my opinion, be supported. It depends upon the view that under the Act the prices of drugs or medicines supplied by the chemists in pursuance of the legislation are fixed by the executive and may be so fixed quite arbitrarily. I think that we must treat prices fixed by the regulations as fixed by law. It is not like an attempt to authorize an assessment by the executive or an agent of the executive of the compensation for or value of property which may be compulsorily taken.

That is, it is not like the judgment in one’s own cause in Johnston Fear & Kingham.  He then goes on –

If therefore the power of making laws with respect to the acquisition of property which s 51(xxxi) confers is needed to support the provisions concerning the supply of drugs prescribed, then I think the matter must be dealt with in much the same way as if the Parliament itself were to provide by statute for the acquisition of property and at the same time to name the compensation in the statute.

Here is the important point –

In such a case, I apprehend, the validity of the statute would depend on the fairness in fact of the compensation named.  It would be incumbent upon the Court to determine as a matter of fact whether the sum named afforded just terms.

Here there has been no attempt to show that the prices the Pharmaceutical Tariff would provide would in fact be inadequate or unfair.

His Honour then goes on to say, in any event, there was no acquisition of property and in saying that, he makes another relevant point towards the bottom of page 270.  He says:

The protection which s 51(xxxi) gives to the owner of property is wide. It cannot be broken down or avoided by indirect means. But it is a protection to property and not to the general commercial and economic position occupied by traders.

That comment is a comment that has been repeated many times, in particular, for example, in the case of Waterhouse 43 FCR 175 at 183, but it is the first proposition, your Honours, that I want to focus on. Two points about it; the proposition is one of fact and the question of fact is one of fairness. In putting the question in terms of fairness, his Honour was drawing upon analysis contained in the earlier Grace Brothers Case 72 CLR 269. If I can take your Honours to that. The relevant passage is at page 290 where his Honour says, in the second full paragraph on the page, about point 7 of the page, of section 51(xxxi):

Under that paragraph the validity of any general law cannot, I think, be tested by inquiring whether it will be certain to operate in every individual case to place the owner in a situation in which in all respects he will be as well off as if the acquisition had not taken place.  The inquiry rather must be whether the law amounts to a true attempt to provide fair and just standards of compensating or rehabilitating the individual considered as an owner of property –

The same thought was developed further by his Honour in Nelungaloo 75 CLR 495 at 469. I will not read those passages to your Honours. They were taken up by Justice Kitto ‑ ‑ ‑

HEYDON J:   What was the page reference?

MR GAGELER:   Page 569.

HEYDON J:   Thank you.

MR GAGELER:   They were taken up by Justice Kitto in a later stage of Nelungaloo 85 CLR 545 at page 600 where his Honour, really summarising the earlier statements of Justice Dixon, said this:

The standard of justice postulated by the expression “just terms” is one of fair dealing between the Australian nation and an Australian State or individual in relation to the acquisition of property –

and then quoted again from Justice Dixon –

“When the question is one of fairness in any community the standard must depend upon the life and experience of that community –

Both of those statements, that is the Grace Brothers statement and the Nelungaloo statement, feature in recent decisions of this Court.  Grace Brothers, for example, is taken up in Smith v ANL 204 CLR 493 at paragraphs 48 and 50. Nelungaloo is taken up and acted upon in Wurridjal 237 CLR 309 at paragraph 190.

FRENCH CJ:   If you have a cap on that which is recoverable under an equitable remuneration criterion, does that not involve a legislative judgment that beyond a certain point equitable remuneration will not be payable and can one have regard to that in ascertaining the existence of the relevant constitutional fact?

MR GAGELER:   Yes, I assent to everything that your Honour has just said, but it is necessary to understand what is meant by equitable remuneration in the context of section 152(6).

FRENCH CJ:   I appreciate there is the content issue.

MR GAGELER:   Your Honour, that was addressed in the WEA Case 48 ALR 91, if your Honours turn to that at page 113. It is really quite important in this context to understand what it is that the cap was being put on.

FRENCH CJ:   The page was?

MR GAGELER:   Page 113, the first full sentence at the top of that page.  The amount of equitable compensation for which section 152(6) provides, as interpreted in this case and in all subsequent decisions of the Tribunal, is an amount that would be arrived at in hypothetical bargain between a particular broadcaster on the one hand and all identifiable owners of the relevant copyright on the other, and this is the important point, each exercising their actual bargaining power. 

Now, if you look at the actual circumstances that existed in 1968 and 1969, that is, the circumstances that had prevailed in the Australian market under the 1911 Act, there was simply no basis for considering that that hypothetical bargain would produce a result in excess of the one per cent cap in the case of the commercial broadcasters absent a change in United States law flowing through to provide a copyright in the form of a broadcasting right to US sound recordings.

What would have happened if that occurred?  What would have happened if that occurred would be that the cheap source of alternative content available to broadcasters would have dried up and distorted the bargaining position that had prevailed up until 1969.  The importance of US sound recordings to that bargaining position your Honours can see made out in the special case in general terms at paragraphs 133 through to 140 and, in particular, in respect of the commercial radio station ban that occurred in 1956 in paragraphs 202 to 210, that is, it was the availability of uncopyrighted US records that allowed radio stations to drive the bargain with record companies that had prevailed since the mid 1950s.

It was the mid 1950s that EMI’s virtual monopoly was broken by the importation of these US sound recordings and at no point between the mid 1950s and 1969 had the actual bargain for consideration flowing from a commercial broadcaster to an owner of copyright in a record ever exceeded 0.44 per cent.  You see that from the special case at paragraph 216 where there is a table and you can also see, if you look forward in the special case at paragraphs 242 and 255, to the extent that it sheds light on what would have been seen as fair and reasonable in 1969.  You can see that at no point after 1 May 1969 has the actual bargain for consideration flowing from a commercial broadcaster to a record company exceeded 0.4 per cent.

FRENCH CJ:   Does that mean to return to the question which Justice Hayne put to Mr Cobden that the just terms requirement does not have to encompass the unforeseeable?

MR GAGELER:   Well, in a sense it was encompassing – I am sorry, your Honour, yes, is the answer to that, but this cap was there to guard against something that was foreseeable.  That was a real possibility.  That was a fear.  You see that word in the extrinsic material and in the factual material that bears upon the question of constitutional fact and that was the fear that there might be a change in US law that would flow through to Australia by virtue of regulations to which his Honour Justice Gummow has already referred and to which I should take your Honours now.

Your Honours should have a bundle of Commonwealth materials which contains, amongst other things, a copy of the Act as enacted and a copy of the Copyright (International Protection) Regulations. The regulations begin at page 107. Before I get to the regulations can I remind your Honours of a couple of provisions of the Act? One is section 29(5) dealing with first publication. Your Honours have seen this before. Another is section 89(3) dealing with first publication of a sound recording in Australia and the other provision, which I have already asked your Honours to note, is section 105, which qualifies the copyright subsisting under section 89(3), so as to exclude the broadcasting right.

Then section 184(1)(a) again to which reference has already been made allows the regulations to make provisions of the Act applicable, in relation to other countries.  The relevant regulations, beginning at page 107, are then regulations 4, 6 and 7.  Regulation 4(1) said:

Subject to these Regulations, the provisions of the Act apply in relation to –

amongst other things –

sound recordings . . . made or first published, in a country that constitutes, or forms part of, the territory of a Country specified in Part I. or Part II. Of the First Schedule to these Regulations in like manner as those provisions apply in relation to –

relevantly, sound recordings made or first published ‑ ‑ ‑

GUMMOW J:   What is the significance of these regulations?  They are looking post‑May 1969?

MR GAGELER:   You will see from the material being spoken about at the time of the Act being framed that these regulations and their scheme were seen as an integral part of the package of which the Act formed part.  That is qualified, your Honours, by regulation 6 and regulation 7.  Regulation 6 deals with the exclusive right to cause a recording to be heard in public and it follows essentially the same scheme as regulation 7.  It is regulation 7 that is critical for present purposes.  Regulation 7 is complex, but the result is that where it applies sub‑regulation (4) says that:

copyright in the recording does not include the exclusive right to broadcast the recording.

So it excludes from the copyright the broadcasting right if the conditions in subregulation (1), relevantly, are met.

GUMMOW J:   So it is really saying, if reciprocity is lacking?

MR GAGELER:   That is right.  Yes, your Honour has got it, and a critical element of reciprocity is in 7(1)(c), that is, that the law relevantly of the United States here confers an exclusive broadcasting right.  So the critical concern of the broadcasting ‑ ‑ ‑

GUMMOW J:   This met some of the concerns that the ABC, for example, was putting?

MR GAGELER:   It met in part those concerns, but the problem was it had this trigger.  If the US were to introduce in the US this exclusive right, then it would flow through under this scheme and what would happen would be that there would be the supply of uncopyrighted US records that gave the broadcasters their strong bargaining position would change, but it would be a change that would be effected by reason of this new scheme coming into existence after 1 May 1969.  It would be a change from the bargaining position that had prevailed since the mid 1950s through to 1969 and that would continue to prevail absent these new regulations and the change in the US law.  When you look at the factual material, look at the second reading speech first and then the factual material bearing upon the circumstances at the time, that is strongly made out.  Your Honours have the second reading speech for the 1968 Bill which, with slight modifications, became the Act at tab 56, page 1395 of the special case book.

HAYNE J:   Which volume?

MR GAGELER:   Volume 3.  I do want to take your Honours to a couple of relatively lengthy passages, but I will do it as economically as I can.  At page 1402 you will see in the right‑hand column in the speech of Attorney‑General Bowen an explanation that begins:

I should also explain that the complete scheme of protection of sound recordings –

FRENCH CJ:   Sorry, what was that page reference?

MR GAGELER:   Page 1402, at the bottom of the page.  In Hansard it is page 1534.

FRENCH CJ:   Thank you.

MR GAGELER:   In that paragraph he says:

It is intended –

and here, when he is talking about what is intended, he is necessarily referring to the package constituted by the proposed regulations as well as the Act.  You just do not get this out of the Act:

It is intended that there shall be copyright in all sound recordings made in Australia or in a member country of the Berne Convention or the Universal Copyright Convention –

Your Honours will recall that the United States was not a member of the Berne Convention.  It was a member of the Universal Copyright Convention –

or made by a national of, a resident in, or a company incorporated in Australia or a Convention country.  There will also be copyright in a sound recording first published in Australia or in a Convention country.  For this purpose ‘first published’ has the extended meaning given to it by clause 29(5) of the Bill; that is, a work is regarded as being first published in one country notwithstanding that it was previously published not more than 30 days before in another country.

Generally speaking, copyright in a sound recording comprises the rights set out in clause 85 of the Bill.  These are the right to authorise the making of records embodying the recording, the right to cause the recording to be heard in public and the right to broadcast the recording.  But if a sound recording is protected by virtue only of the fact that it has been first published in Australia or in a Convention country –

here he is talking about the combined effect of the Act and the regulations –

the copyright in that recording is not infringed by causing it to be heard in public or by broadcasting it.  Furthermore, the broadcasting right in a sound recording made in a country which does not itself give a broadcasting right in sound recordings will cease to exist in Australia at the expiration of a period to be prescribed from the date when the recording was first published overseas . . . The effect of this provision will be that a sound recording first made in a country such as the United States of America, which does not give a broadcasting right in sound recordings, may be freely broadcast after records have been released in Australia or after the expiration of a limited period from the time those records are released overseas.

Mr Bowen was there referring to what became regulation 7 and, in particular, regulation 7(4).  Then in the next paragraph he says:

The scheme will also provide that, in the case of a sound recording in which the broadcasting right continues, permission from the owner of the right to broadcast the recording will not be necessary after records embodying the recording have been released in Australia –

He then refers to the one per cent cap a little further in that paragraph and then the next paragraph says:

These limits –

that is the caps –

have been set to allay fears expressed by both the commercial broadcasting stations and the Australian Broadcasting Commission that the payment of royalties for the broadcasting of records could impose a substantial financial burden on them.  The limits have been fixed in the light of the special circumstances now existing in Australia in relation to the broadcasting of records and are not intended to imply that any particular royalty or rate –

What are the fears and the special circumstances?  The special circumstances is this supply of cheap uncopyrighted content from the United States and the fear is that changes in law in the United States is going to have the effect that in the future that will result in a change in the bargaining position of the parties so that applying the WEA‑type test, in the light of that change in circumstances, broadcasters would find themselves paying much more than they had been paying for these assumed rights, or actually disputed rights, in the past.

You see that absolutely spelt out in a Cabinet submission of Mr Bowen at page 1345, again in volume 3, tab 51.  This is a long document, too long to read, but, critically, what it is all about is the copyright to be given to US records and the effect on the bargaining position then existing between record companies in Australia and broadcasters in Australia.  So the United States position is referred to at the bottom of page 1346 and at the top of the next page.  Just picking up the most critical parts, the next paragraph says:

The objection that the present position of the parties, particularly their relative bargaining powers, would be disturbed by the Bill as introduced may substantially be met by denying a broadcasting right in Australia to a sound recording first made in the USA.  This would be consistent with the principle of reciprocity.  There is no broadcasting right in a sound recording in the USA.  It would then be clear that no royalty would be payable in respect of the broadcasting of such recordings in Australia.  About 60% of records could be played without any payment to the record companies; this would leave it open to the broadcasting interests to threaten to play only those records unless they reached what they regarded as a satisfactory agreement –

which is precisely what they have done in the past –

Put in formal terms this proposal means that a broadcasting right would be given on the basis of place of making, not of first publication.

That is what occurred:

This bargaining point would remain only so long as there was no such broadcasting right in the USA.  If the law there were altered to give such a right, the bargaining point would be lost.  Royalties would be payable in respect of the broadcasting of practically all records in Australia.  The broadcasters fear that this might happen.

that is the fear –

The commercial broadcasters allege that the Copyright Tribunal is not sufficient protection against their being forced to pay very large amounts of royalty.  To meet these points, I propose that the Bill should set a ceiling on the amount of royalty that the Tribunal could fix as payable by commercial broadcasting stations.

That was precisely the recommendation made, the recommendation then accepted by Cabinet – you see the actual Cabinet decision at page 1393 – leading to the caps in the Bill as introduced.  The Bill as introduced your Honours should have in the same volume at tab 52, and it contained the cap.  If you look at page 1377, using the numbers in the bottom corner, you see what was at that stage clause 149A(8), and across the page, (11), that is the cap.  But there was also another provision at page 1380, which was clause 149B that allowed for the cap to be revised if there were a “change in circumstances”.  That is the language of section 149B(1):

by reason of a change in circumstances –

Now, even that provision for revision was a matter of some alarm, and you see at page 1451, tab 58, a note to Mr Bowen from Mr Lindsay Curtis within the Attorney‑General’s Department.  At paragraph 3 of that note, referring to a conversation with Mr Sommerlad – whose name I think your Honours have seen already – it is said:

Put shortly, Mr. Sommerlad does not want the maximum royalty provision in the Bill altered, except by Act of Parliament.  He wants, as he put it, the protection of Parliament for the maximum royalty.  He wants the protection of the maximum of 1% against the possibility that that United States of America will grant a broadcasting right in records.  He thinks that, if this happened, it would amount to a ‘change in circumstances’ –

Now, that going up the Attorney-General, he then took that back to Cabinet.  You see that at page 1453.  Cabinet agreed that in the light of those concerns that clause for revision, 149B, should be deleted, and that is exactly what occurred in committee and your Honours do not need to turn to this, but that clause was deleted in committee in Parliament at page 1966.

It was suggested in argument that Mr Sommerlad and those he represented had a more general concern; they were pointing to New Zealand, they were not so much worried about the United States, that they were pointing to New Zealand.  The point about New Zealand is that the bargaining position of record companies in New Zealand, vis-à-vis broadcasters, had already been affected by provisions of the Copyright Act and an order made under the Copyright Act which gave a significant broadcasting right to United States records, that is, New Zealand was an example of exactly the sort of scenario that broadcasters feared might occur in Australia if you were to give United States records the copyright protection in the form of a broadcasting right.

The detail of that your Honours could trace through in the material contained in the Commonwealth materials.  We have given your Honours the Copyright Act 1962 (NZ) and we have given your Honours the Copyright (International Conventions) Order 1964 of New Zealand and we have given your Honours also a decision of the Copyright Tribunal.  Can I just mention the provisions of the Act and the order - it is pretty tedious to go through them - and then take your Honours to the Copyright Tribunal decision.

Within the Act the relevant provisions are sections 13 and 49(a).  Within the order the relevant provisions are clause 2 which defines “Country of origin” - this is at page 200 - clause 2 defining “Country of origin” and, in particular, paragraph (b) read with the definition of “Published simultaneously” in the next page, page 201, paragraph (b), and then read with clause 3(1).  The overall effect of that was that like under the 1956 UK Act, in New Zealand if a US record had been published within 30 days in Canada, what would be attracted under New Zealand law was copyright that included a broadcasting right.

The effect of that on the New Zealand market you then see in the Copyright Tribunal decision at page 242 and following, where the Copyright Tribunal, exercising jurisdiction under section 38 of the New Zealand Act, was attempting to value the broadcasting right as exercised by broadcasters.  At page 249 the position in Australia was touched upon, but it was said that:

by reason of some difference in the copyright arrangements of the two countries, a proportion of recordings from USA and some European countries are not subject to royalties in Australia and the bargaining strength this gave to the Australian broadcasters enabled them . . . to reach an agreement –

et cetera.  Again contrasting the position in New Zealand, page 256, at about point 3:

Australian experience is of no assistance because, although many other considerations are similar, the difference in copyright law in the one aspect provides a stronger bargaining stance for broadcasters than in New Zealand.

So the New Zealand experience was an example of precisely the sort of changed bargaining situation that the broadcasters feared and it is that to which the cap is directed.  So looking at the position as it existed on 1 May 1969 and asking what was fair dealing with the substance of the rights as they then manifested themselves, the caps, in our submission, can readily be seen as a prophylactic response to the possibility of a future change in bargaining position that would only occur by reason of part of this very package of measures that was being introduced. 

For that reason, if the Court does need to engage itself in the factual inquiry of whether just terms have been given, the answer is, applying the correct standard of fairness, just terms have been given in the scheme of the Act - section 152(6) read with the qualifications in subsections (8) and (11) - but we do maintain the position that if the plaintiffs do not go down that track, if the plaintiffs do not seek to put their case at the level of constitutional fact, it is not up to us and really not up to the Court to seek to address a case that is not made.

HAYNE J:   Is it an essential element of the proposition you have just put that the change in bargaining position would come about by operation of the scheme enacted in the Act and regulations in 1968?

MR GAGELER:   It is certainly a strong element of the position that I have stated, your Honour.  It is essential?  Yes.

HAYNE J:   Can I just explore it a little with you.  As I understand it, a way in which the argument is put against you is that the terms supplied are not just, see the cap.  The cap may have been introduced to recognise the possibility of a change in bargaining position, but the very fact that there is a response to the possibility of change in bargaining position by capping demonstrates that what is given is not just terms.

MR GAGELER:   That is really the abstract proposition that I have sought to say cannot be advanced in the abstract, that is to say, it is a question of constitutional fact whether section 152(6) with its measure of equitable remuneration subjected to the caps as at 1 May 1969 looking prospectively amounted to fair dealing.  That is the question of fact that is not addressed in the argument against me at a factual level.  It is this argument, as I understand it, that the caps per se, because they introduced the mere possibility of the measure under section 152(6) not being given, are invalid.

The point is the measure under section 152(6) assumes the existing bargaining position of the parties at the time section 152(6) comes to be applied.  The bargaining position, as it had come to exist up to 1 May 1969, would be changed in the future if certain events occurred, but absent those events, there was no reasonable prospect of the cap applying.  Indeed, the cap has not applied.  The cap, in fact, has not applied at any time since 1969 because those events have not materialised.  I am sorry, your Honour, I have given a very long answer to your Honour’s question.

HAYNE J:   Which brings you, I think, to simply joining issue with the proposition that the terms that are to be provided must take account of all possible ‑ ‑ ‑

MR GAGELER:   Of all theoretical possibilities, yes.

HAYNE J:   To which your opponent embroiders it by saying this was no theoretical possibility, this was a real possibility on the table and so on.  But if one leaves that embroidery aside from it ‑ ‑ ‑

MR GAGELER:   That is right, and that proposition that in every theoretical instance the measure provided by the statute must amount to full compensation, which is the way it is put, is a proposition that is rejected by Sir Owen Dixon in the Grace Brothers passage to which I have taken your Honours, that passage being taken up many times in the judgments of the Court.  It just does not work that way.  The net does not need to be that fine.  It would be very different, your Honours.  There would have been another way of the plaintiffs bringing this case.  The plaintiffs could have gone to the Tribunal.  The plaintiffs, if they are able to make out a case, could have got the Tribunal to say, equitable remuneration now might be 1.5 per cent or 2 per cent, but the cap prevents equitable remuneration in that amount being ordered and they could then come to this Court with some factual basis.

They come here with nothing other than theory and they can point to nothing to support the possibility of that theory being realised in practice, other than two instances of country radio stations paying more than 1 per cent during a short period during World War II in circumstances where the EMI monopoly still existed and when US sound recordings were not available.  If it is meant to be anything other than an illustration of the theory, and their case is put at nothing other than an abstract theoretical level, so be it.  If your Honours are meant to draw some speculative possibility from that at a factual level, your Honours should reject it.

Your Honours, that is really what I wanted to say about just terms, which brings me, working backwards through our written submissions, to what I think I have labelled in the outline characterisation. It is the submission that one does not get to section 51(xxxi) because what has been done can be done within section 51(xviii). Here I really do not want to go to the detail of the cases. We do not put any extreme position. We do not say that every purported exercise of power under section 51(xviii) is outside the scope of section 51(xxxi). We do not put that every purported adjustment of existing statutory rights lies outside the scope of section 51(xxxi) nor do we seek to tie our submissions to a single verbal formulation that has come out of the cases. Indeed, none may be entirely comprehensive and none may precisely fit the circumstances of the present case.

Your Honours, what we do say is if you look at a series of cases, and here we take into account Peverill, WMC, Nintendo, Telstra, Chaffey and ICM, what you see is that in respect of existing rights and particularly in respect of existing statutory rights there is a range of statutory adjustments which, depending on the nature of the power, the nature of the existing right, the nature and degree of the adjustment and the circumstances that call for the adjustment are capable of being made in the exercise of a head of power without impinging on the exclusive operation of section 51(xxxi). Now, whether a particular adjustment falls within that permissible range may be a question of degree. Perhaps the most useful discussions that we have found in the cases drawing that together are in your Honour Justice Crennan’s judgment in Wurridjal 237 CLR 439 at paragraphs 363 to 365. The same sort of notion ‑ ‑ ‑

GUMMOW J:   Which paragraphs?

MR GAGELER:   Paragraphs 363 to 365.  The same sort of notion you see in Telstra, or there you see it cryptically in Telstra 234 CLR 210 in paragraph 52 where there is a footnoted reference to Smith v ANL and the discussion of your Honour Justice Gummow with Justice Gaudron in that case where your Honours were making the point that a permissible adjustment in particular circumstances would be a question of substance and may often be a question of degree.  In particular cases, one might say that within a permissible range an adjustment of statutory rights is an adjustment within the range that those statutory rights are inherently capable of supporting or it might be said that the adjustment does not go so far as to amount to an acquisition of property as a matter of degree.

GUMMOW J:   In paragraph 364, in the first sentence you will see Justice Crennan referred to “statutory rights which replace existing general law rights”.  That may have some significance, I think, for section 8(1) for copyright in unpublished works where there is a suggestion of common law rights, but it will not have any work to do in relation to sound recordings.

MR GAGELER:   That is right.  That is exactly right, yes.  Your Honours, if it is necessary to get to this point, we would say that the nature and the degree of the variation that has been affected by these provisions is within a range in which the rights created by section 19 of the 1911 Act were inherently susceptible of variation – that is to use the language of Chaffey and ICM – or another way of putting really the same thing is that they lie within a range of adjustments that can properly be made under section 51(xviii) without amounting to an acquisition of property. That is to put it in the language of Nintendo and Telstra.  I do not necessarily want to rely upon the formulation of adjustment of competing rights.

FRENCH CJ:   Is that a characterisation which goes back to the content of the constitutional power, or is it something which you just look at on a statute‑by‑statute ‑ ‑ ‑

MR GAGELER:   It necessarily invokes that the content of the power, a power with respect to copyright, and it necessarily invokes the nature of the rights that are being adjusted, being copyright rights, and it necessarily looks to the nature and degree of the adjustment.  It involves all of those elements.  But we wanted to point this out about Nintendo, where that language of adjustment of competing rights is used, and it is used in conjunction with section 51(xviii), and where the case is actually decided on what is stated in terms of two bases – one looking at section 51(xviii) itself, the other invoking this notion of adjustment of competing rights – or a balancing of competing interests, they can really be seen in the context of an adjustment of copyright rights, in our submission, as two aspects of the one concept, both aspects really looking to a range of permissible adjustments.

If you look at the nature of copyright, it is inherently something that involves a balancing of competing interests between makers who get a statutory monopoly, and users whose freedom is affected by that statutory monopoly, and it involves a balance that necessarily, and has been shown historically, to change as technology permits new forms of use.  That is the entire history of copyright.  As your Honours have pointed out – I will give just the references – Copyright Agency, your Honours said that sort of thing, 233 CLR 279 at paragraphs 13, 48 and 51, and you said the same sort of thing in IceTV 239 CLR 458 at 24, 28 and 68.

To prevent section 51(xviii) being able to accommodate changes to that balancing of interests that will be necessitated by technological change would be to prevent the power – as being able to operate would be to prevent that power from being used in what is its core area where historically it has been used.

Can I give your Honours just two examples?  One concerns the copyright in musical works.  Your Honours will recall the Berne Convention of 1886 which was then superseded by the Berlin Convention of 1908.  Both of these are referred to in the Spicer Committee report at page 500 of the special case book but your Honours do not need to turn to it. 

The 1886 Convention contained an exception from the copyright in musical works for mechanical contrivances, then only seen to operate in respect of music boxes.  It was the Swiss music box exception 1886.  Nobody could have foreseen in 1886 that it would come within 20 years to be very valuable in the hands of record manufacturers.  You then had the 1908 Berlin Convention that suggested one reconciliation of that change in circumstances, but then you had the 1911 UK Act which in sections 19(2) and 19(7) produced an adjustment in the form of a compulsory licence subject to a payment of a fixed fee. 

You then had the 1968 Act which in sections 55 and 56 in balancing the relationship between the owners of copyright and musical works and record manufacturers adopted the same approach, statutory licence for the record manufacturer on condition of payment of a fixed fee, well within the scope of the power conferred by section 51(xviii) in our submission. It is really the same scenario that applies in relation to a copyright in a record first created by the 1911 Act section 19.

There is the question about whether it included a public performance right at that time.  That really is just a question of the construction of the Act which was at least ambiguous as enacted, a point not decided until Cawardine.  But there was also a question of assuming a public performance right whether it applied to radio broadcasting.  Of course, in 1911 radio broadcasting was not a commercial proposition.  Indeed, the technology was in its infancy.  It was not until 1929 that the public performance right given by the 1911 Act unambiguously to the owners of copyright in musical works was seen to extend to this new technology of radio broadcasting.

Our point is that it is entirely within the scope of section 51(xviii) to respond to the issues raised by those cases, that is, to respond to the ambiguity that was dealt with in Cawardine in 1933, to respond to the new technological development of radio broadcasting dealt with in 3DB in 1929 in a number of ways.  It is within the scope of the power to adopt the result in those cases, which is to give the owner of the copyright in the record the exclusive broadcasting right.  That is one solution.  It is within the scope of the power to remove the broadcasting right altogether, which was the government’s response to the Spicer Report.

You see that in Mr Snedden’s announcement in 1966, tab 36 of the special case book, page 1116. In our submission, that would have fallen well within the scope of section 51(xviii) or anywhere within that range; exclusive right or no exclusive right. You could have had a statutory licence subject to conditions, the conditions being entirely a matter for Parliament, and it is within that range of adjustments in response to ambiguities and changes in technology that one can say section 51(xviii) is an ample source of power and one can equally say that the rights created by the 1911 Act were inherently susceptible of variation.

Your Honours, I should just refer to one more factual reference in this regard and it is really quite interesting because if you look at tab 37 which is within volume 2, and possibly nothing other than prescient, but tab 37 is the original Cabinet submission put forward by Mr Bowen as Attorney‑General in support of the first version of the Bill which did not at stage include the caps, and it is simply the language that I wanted to draw your Honours’ attention to.  At page 1118, about the middle of the page you will see that very language of balancing of competing interests and ‑ ‑ ‑

HEYDON J:   But cannot a balance of competing interests expropriate?  Is there not a risk of a sort of a single characterisation fallacy?

MR GAGELER:   Yes, and I am not ‑ ‑ ‑

GUMMOW J:   That is why I have always thought this whole field is dubious actually.

MR GAGELER:   I was going pretty well before I invoked this language and I have said to your Honours I am not seeking to tie myself to a particular verbal formula and I have sought to show that that language of Nintendo can be tied comfortably to the nature of the power and the nature of the rights and I am not seeking to invoke that language in a broader context than the present case, but your Honour is right, there is a danger ‑ ‑ ‑

GUMMOW J:   The Parliament cannot just say something has got to give and it is you.

MR GAGELER:   I scrupulously avoided doing that.  Your Honours, Tape Manufacturers I can deal with quickly. 

GUMMOW J:   This may be descending into deeper water, Mr Solicitor.

MR GAGELER:   I am dealing with it fairly quickly.  The case, in our submission, was correct in principle and is indistinguishable in its application.  The principle on which Tape Manufacturers turns is that for section 51(xxxi) to be engaged, there must be an acquisition of some “interest in property, however slight or insubstantial [that interest] might be.” That is the language of Justice Mason in the Tasmanian Dam Case.  That is the language that is quoted in Tape Manufacturers, 176 CLR 499 by four members of the Court. It is from a passage cited at page 528 by another two members of the Court and as a proposition, in our respectful submission, it is unassailable.

It flows directly from the language of section 51(xxxi), acquisition of property, and it flows directly from the nature of the power conferred by section 51(xxxi), that is, yes, it operates as a guarantee that it is a qualified power to acquire property and it is a proposition that has been unanimously accepted and applied before Tape Manufacturers.  The case is the BLF decision referred to at page 528 in the same footnote as refers to Tasmanian Dams.  It has been accepted most recently, as we read it, in the decision of the Court in ICM in unqualified terms by at least four members of the Court and, indeed, as we read the decision, it was the proposition on which the result in the case turned in the judgment of your Honours Justices Hayne, Kiefel and Bell. The proposition your Honours recorded at paragraph 147 of 240 CLR 140 and your Honours applied it in the result in paragraph 153.

It is not a proposition that is in any way undermined by other references to an acquisition occurring in circumstances where there is an identifiable benefit or advantage relating to the ownership or use of property.  That formulation is, in our submission, best understood as a reference to what is the substance of a proprietary interest in the hands of an acquirer and not to something other than an interest in property, broadly and substantively understood. 

It is a proposition that is not undermined by Georgiadis or Smith v ANL, which our learned friends relied upon extensively in written submissions, although not yesterday in oral submissions.  The explanation for the Georgiadis, Smith line of cases in our submission lies in the judgment of Justice Brennan in Georgiadis itself at 179 CLR 297 at 311 where he said that the operation of a provision that removes a vested cause of action, whether it be in tort or in contract, operates, in effect, to confer a release, that is, it operates in substance in the same way as a contractual release. That is the effect of what his Honour there said referring to an earlier judgment.

Your Honours, if we are right in saying that it is necessary to find the substance of a proprietary interest, then we come to the question of what is a proprietary interest.  Telstra 234 CLR 210, paragraph 44 suggests two ways of looking at that question. You can sometimes helpfully consider property as a bundle of rights, you can sometimes helpfully consider property as a legally endorsed concentration of power over things and resources. It is difficult to invoke the second notion in an intellectual property case. The first seems to be a more helpful way of looking at it. The bundle of rights, however, to be relevant, in our submission, in a proprietary sense must at least have the character of Hohfeldian rights in the sense of rights that give rise to some corresponding duty.

It is hard to see that a right that is no more than an exercise of liberty, that is, an exercise of the freedom to do that which is not prohibited, can be seen to have character of property in the relevant sense.  If that is the correct understanding of property, then the application of that notion in Tape Manufactures itself was really quite straightforward.  There was a reduction of an exclusive right, but on the other side of the coin there was no more than an enhancement of residual freedom, that is, there was no more than a leaving of an area of liberty to do that which is not prohibited.  There was nothing given to the blank tape users that could be seen as giving them a correlative right, part of the bundle, that was in some way able to be enforced against someone else.

Now, the application here, in our respectful submission, is exactly the same.  You have the bundle of rights that are conferred by section 89 spelt out in section 85.  There is no doubt that section 109 diminishes one of those rights, the right referred to in section 85(c) but there is no conferral on a broadcaster of a right that has the character of property. We do say that the ability given to a broadcaster in the form of an immunity to use the property is no different in principle from the fair use provisions that you see in section 104, for example, and section 106.

The plaintiffs advance essentially three arguments as to why there is a difference.  They say here you have particular enterprises who obtain a particular commercial advantage.  That circumstance does not, in our submission, translate a liberty that is not a right of property into a right of property to seek to use those circumstances, for that purpose is to go down the slide referred to by Sir Owen Dixon in the BMA Case and to treat section 51(xxxi) as in some way safeguarding the economic interests of economic players. It has that effect. It is not its focus.

FRENCH CJ:   So this argument does not engage with the anomalous classification.

MR GAGELER:   It does.  At least, I am seeking to make it.  But “innominate” and “anomalous” must still refer to some right of property.  What I am seeking to do is to give that notion of property some meaningful content and to say that it cannot amount simply to a liberty.

FRENCH CJ:   It has to fit in into some Hohfeldian scheme.

MR GAGELER:   Well, Hohfeld is the closest we can get in legal writings.  This topic has been dealt with extensively in the United States writings, which I have attempted to come to grips with, but they really do not take that notion further than the way I have articulated it by reference to Hohfeld.  The second point put against us is that here, you have an augmentation through the immunity conferred by section 109 of the copyright of a broadcaster under section 91(b), the content of which is given in section 87, so you have somehow an increase in this separate copyright of the broadcaster.

Our response to that is threefold.  We say that that section 91(b) copyright is a different copyright over a different subject matter.  We say it is independent of section 109 in that it applies irrespective of the content of the broadcast, and we point out that where the broadcast is of a sound recording, the broadcast copyright under section 91(b) co‑exists with the copyright in the sound recording – that is, a copyright in the sound recording can continue to be asserted.  The third point is what is said to be, quite fairly, the ephemeral operation of section 107.  Section 107 – and I will not go back to the detail – itself is simply the conferral of immunity, not the conferral of a right of property.

BELL J:   How does the co‑existence of the rights cut down the 87 contention?

MR GAGELER:   There is a new copyright that is created by section 91 in conjunction with section 87 and it is the copyright in the compilation comprised in the broadcast.  That copyright would exist irrespective of the content of the broadcast and the co‑existence of the rights simply points out that the right of the broadcaster is not a right that in any way replaces the continuing right of the owner of the copyright in the recording, that is, the broadcaster is better off in a commercial sense in being able to broadcast something that includes the content of the recording, but the broadcaster is not better off in being able to commercially exploit that broadcast because of the continuing right of the owner of the copyright and the sound recording to prevent that.

GUMMOW J:   Mr Solicitor, before we adjourn, I should take up a matter with you about section 5(1) of the 1968 Act.

MR GAGELER:   Yes, certainly.

GUMMOW J:   You were talking about reliance upon the copyright power.  You mentioned Kirmani.

MR GAGELER:   Yes.

GUMMOW J:   I think it would follow from what was said by three Judges in Kirmani 159 CLR 351 that the external affairs power would support 5(1).

MR GAGELER:   Yes, and the same three Judges would probably say that section 2(2) of the Statute of Westminster would have supported it as well.

GUMMOW J:   Yes, I am not sure of Justice Brennan’s position on that.

MR GAGELER: Not sure. In any event, we do not advance any argument that would say that section 51(xxxi) is out of play for those reasons. Your Honours, there is the remaining Cawardine argument, and with your Honours’ permission Mr Lloyd will present that.

FRENCH CJ:   All right.  Well, we will adjourn until 2.15.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

FRENCH CJ:   Yes, Mr Lloyd.

MR LLOYD:   May it please the Court.  My submission is the last of the Commonwealth submissions, which is that Cawardine’s Case was wrongly decided.  If that contention is upheld, of course, none of the constitutional issues would arise.  If I can ask the Court to go to Cawardine’s Case, which can be found in volume 1 of the book at tab 18, and I will refer to the book’s page numbers rather than the report page numbers.  The proposition, or position, perhaps, advanced by the defendant in that case can be seen at the bottom of page 586.

FRENCH CJ:   I think a number of us are reading off the report, Mr Lloyd.  It might help ‑ ‑ ‑

GUMMOW J:   As one might expect.

MR LLOYD:   I can deal with that, your Honours.  At the bottom of page 453 was the proposition sought which was namely that:

the only person who can restrain the public performance of a musical composition is the owner of the copyright –

and then the principal argument in support of that can be seen over the page, on page 454 at about point 3, to the effect that –

a record cannot be “performed”:  to “perform a record” is a complete contradiction in terms.

That will be the nub of our argument, but I will develop it first by showing how Justice Maugham approached the issues, which largely, we say, he did not address that very submission, and then I will take the Court to the 1911 Act and say how we construe the 1911 Act, and then lastly I will address the submissions made by my friends about why they say our contentions are flawed.  So over 454 to 455, his Lordship simply sets out the background.  At the top of 456, his Honour notes the difficulties involved in construction, and then his Honour starts to review the Act, and at about point 7 on the page, there is a sentence:

It is, however, not so clear whether any such person can use the record for a public performance –

We note that his Honour does not there embrace the conclusion that the Act would require him to reach, which is, to use the words of “perform a record”, his Honour does not say it is not clear whether a person can perform a record.  Then over on to page 457 his Honour deals with an issue which is not controversial, which is that the term of a copyright in a record is not coextensive with the term of a copyright and an underlying work.  That is not controversial, but we also say not indicative of any answer to the question.  Similarly, at the bottom of page 458 of the report, his Honour notes that there can be more than one record of the same underlying work.  Again not controversial and not indicative of any answer.  On page 459 his Lordship then considers the position of the owner of the copyright in the underlying work.

GUMMOW J:   This seems to be assuming there is original work.

MR LLOYD:   Sorry?

GUMMOW J:   This seems to be assuming there is an original work to which there is a subordination.

MR LLOYD:   That is so.

GUMMOW J:   Well, it was not so in this case.

MR LLOYD:   That is also so.  The difficulty with this case and also with the 3DB Case is that by the clever selection of cases, and the point I am about to make, is the plaintiff avoids all of the issues being brought to bear.  In this case there is no copyright owner of the original work to present a contrary view and in the 3DB Case there is no record company expressing their view.  But the point that I was going to make on page 459 is, there is a reference there to a submission made by the plaintiff at about the fourth or fifth line to the effect:

that the right of the original owner as regards a performance in public was not interfered with by the existence of a copyright under s 19.  I think an admission of that kind was probably necessary –

We accept that it is necessary, but we do not accept that it is correct.  To put it in this way, at the very least we would say the creation of a second performing right, a right in the record producer, will have a direct economic impact on the composer and that could be seen in this way.  If the performance fee of the composer has to be shared with the record producer, then the owner of the copyright in the music work would be diminished. 

If, however, one just sees them as being independent rights, nonetheless one will have the works fee for performance and the record producer’s fee for performance.  If that adds to the total fee for performance, unless there was perfect inelasticity of demand, one would expect there would be then less performances and again less fees for the owner of the copyright.  So the point to make is that it is wrong to think that the creation or recognition of a performance right in a record producer does not affect the owner and the original work.

At about the middle of page 459 his Lordship recognises that section 19 – or concludes that it would not derogate from the original owner’s performing right.  His Lordship does not address the situation where a composer sought to encourage public performance of records to increase the performing rights that the composer would receive but the record producer sought to restrain those performances in order to facilitate sales.  So that could, in fact, be a direct conflict of views taken by those owners if those rights exist.  Justice Maugham refers to the section 19 right as subordinate but it is not clear anywhere from his reasoning whether, if that situation I just raised happened, if he would say that the owner of the copyright in the work has the ability to override the record producer. 

Ultimately then, the critical issue is addressed on page 460 in a fairly brief passage starting at about point 3 on the page.  Again, in the middle of that passage his Honour recognises the difficulty involved in the construction question.  His Lordship then notes that he has established that it is possible for copyrights to co-exist but, we say, of course that is so.  That is not in issue but the mere possibility that copyrights can conveniently co‑exist is not itself a reason to create a co‑existing copyright.  His Lordship then refers to the opening words of section 19 and considers that they are not:

apt to describe a mere right to prevent the reproduction in a physical form of the record.

However, the opening words of section 19, and I will take the Court to that in due course, say nothing about the content of the copyright that is made to subsist in sound recordings.  We say, and we contend that the formulation in section 19(1) amounts to a cross‑reference to the content and circumstances mentioned in subsection (1) and (2) of section 1 of the Act.  So the idea that the words are not “apt to describe a mere right to prevent the reproduction” they are not apt to describe any right, because all they say is copyright subsists; they do not tell you what it is.  His Honour then says at about five lines from the bottom:

The owner of the copyright in a musical work has the sole right to produce the work in public.

I infer that that is meant to be “perform the work in public”.  Then the next sentence:

It is, in my opinion, a reasonable construction that the owner of a special copyright under s. 19 in a record of which he is the owner –

and then this is the way his Lordship puts it:

has the sole right to use that record for a performance in public –

Again his Honour does not seem to be able to bring himself to say he has the sole right to perform the record, which is what the legislation, if it has the effect that the plaintiffs now contend and his Lordship found, would be required.  The problem in doing that is that his Honour then avoided the submissions of the defendant who said you cannot perform a record.  So his Lordship does not even menton that submission at all.  The other problem with avoiding it and formulating it in the way that his Lordship does is that his Lordship does not deal with the definition of “performance” in section 35 of the Act.  Perhaps I could take the Court to that, which is in the bundle at page 410 under tab 15.  Relevantly:

“Performance” means any acoustic representation of a work and . . . including such a representation made by means of any mechanical instrument.

I should say that section 35 – that definition is mentioned in the headnote to the decision in Cawardine but not mentioned at all in his Honour’s reasons.  The definition was clearly not, we say, intended to embrace the notion of the work as a record or else one is left with a performance is an acoustic representation of a record including by means of a record, in substance.  The Commonwealth contends that a record can be a means of performing a musical work, but the record cannot be the means by which the record is performed.

To put it in, I hope, not overly simply terms, we say one starts with a musical work, let us call that a song, then you have a composer of the song, then a musician performs that song.  That is the performance of the musical work.  Then a record producer can come along and record the performance of the song.  So that is what the record is of.  It is recording a performance of a song and if one plays a record, one gets a performance of a song, a reproduction of the performance of the song.  One does not get an acoustic representation of the record.  One gets an acoustic representation of the work being the original performance, and so we contend ‑ ‑ ‑

HAYNE J:   Why is it either or?

MR LLOYD:   Because, in our submission, the way the legislation is drafted is that it is designed to allow for and deal with the representation of works by mechanical means including records, but not the representation of a work comprised by the record.  The record is not itself, we say, a work.  It is a record of a performance of a song.  So that is what we say about that.  Then one goes to section 1 of the Act.

FRENCH CJ:   From one point of view it might be called a physical representation of the song.  Physical representation in the early days being effected by physical markings, now no doubt by magnetic or other patterns, and then you get an acoustic representation or reproduction of that.  In other words, everything is a representation of everything else in a sense.

MR LLOYD:   In my submission, your Honour, one has a song which is performed, so the performance is of the song, and then if that is done live, the live performance is an acoustic representation of the song.  If that performance of the song is recorded, then replaying the recording is still a performance of the song, it is not a performance of the record.

GUMMOW J:   It all comes down to the meaning of 19(1), does it not?

MR LLOYD:   I accept that that is critical, your Honour, and perhaps if I go to that now.

GUMMOW J:   The opening words of 19(1), those words “in like manner” require one to translate the incorporeal, namely, a musical work, into the corporeal, namely, a record or a perforated roll.  So you are told that this object is to be treated as if it were a musical work which requires certain leaps of understanding, but that is the job.

MR LLOYD:   I accept that, your Honour, and if I pick up on that say – what we say that then does, section 19(1) then in substance sends you to section 1 which tells you what the copyright in the work is.  Subsection (1) of section 1 provides that:

Copyright shall subsist –

in a number of kinds of works –

literary dramatic musical and artistic work, if –

and then there is two provisos; one in case of a published work and one in the case of unpublished work.  If I just refer to the unpublished work, it turns on whether or not –

the author was at the date of the making of the work a British subject or resident within such parts of His Majesty’s dominions as aforesaid –

I ask the Court to turn back to section 19(1).  In the second half of section 19(1) there is deeming provision which deems the maker of the original plate to be the author of the work and then deals with the location of the author of the work which we say is to pick up and deal with subsection (1) of 1.  So one of the things that “in like manner as if such contrivances were musical works” does is it cross‑refers to subsection (1) so as to identify when copyright in a record will ever be able to subsist.  The other thing that it does is pick up subsection (2) which says what the content of copyright is.

In relation to subsection (2) we say there are two possible ways of construing it on either view - at least if the Court accepts the submission I have made that one performs musical works and does not perform records, my client would succeed on this point.  The first way is to read the provisions distributively.  That reading is supported by the fact that paragraphs (2)(b) and (c) are expressly made to be distributive.  It is also supported by the fact that paragraph (a), which deals with translations, obviously does not apply to some kinds of the works.

It does not apply to a statute, for example, and may not apply to a musical work, depending upon whether the lyrics were seen to be part of the musical work or not, but it does not apply to every kind of work, so not every one of these rights applies to every one of the kinds of works referred to in subsection (1). 

Similarly, in relation to (d), it only applies in the case of literary, dramatic and musical works so it does not apply to artistic works.  Then the next point is even in the chapeau which contains the production or the copying kind of copyright and the performance right we say that, and this is the two different ways of looking at it, either it is also distributive or it allows for the existence of a redundant right. 

To make that good, I submit that you cannot perform an artistic work.  So although the Act in terms confers a right of performance on an artistic work, one cannot perform a statue.  That being so, one either has to say the Act confers rights that are redundant rights or one has to construe distributively subsection (2) in which case – then the next question that arises is whether or not when section 19(1) says that:

Copyright shall subsist in records . . . in like manner as if such contrivances were musical works -

and one applies that through the formula of subsections (1) and (2) of 1, one has to ask whether either the right to perform is either a redundant right or is not a right at all because distributively it does not apply because as we say one cannot perform a record, but what one can do is perform either a musical work or a dramatic work, perhaps even a literary work but not a record which is itself just a record of a performance of a work.

KIEFEL J:   Is it possible that the right to perform spoken of is a special kind of performance - that contemplated in paragraph (d)?  That is the mechanical performance of a work.  It is of a special kind.

MR LLOYD:   When it is talking about mechanically performed in (d), it is referring to the literary, dramatic or musical work being mechanically performed.  What it is doing there is creating a new right in respect of those kind of works about having an entitlement to make a record.

KIEFEL J:   Yes, I realise what it is doing but is it not also acknowledging that there may be different methods of performance?

MR LLOYD:   I accept that that is so and one method of performance of a song is to record it and to play it back, but that is not performing the record, that is performing the song.  What (2)(d) does is create a right to control the recording of works, not to the recording of records.  There is already a right to control the recording of records.  That is the right to control the production or reproduction of records.  So subsection (2)(d) adds nothing to the existing right to control the copyright in the records that already exists.

GUMMOW J:   I think you have to face up to the fact that we are not sitting in 1938 also.  Does not section 220 of the 1968 Act come back to bite you?  Section 220 of the 1968 Act is expressly addressed to sound recordings made before 1969 and it attributes to them the characteristics of 89(1) with the qualifications we have discussed with the Solicitor this morning and that picks up 85.

MR LLOYD:   That is so, and what we say is the effect of section 220 was to create a copyright in those sound recordings.

GUMMOW J:   We do not get into this debate, do we, if that is right?

MR LLOYD:   Save that if there was not on 30 April 1969 in fact a performance right in respect of sound recordings, it could never have been taken away.  All that happened was they were given one that they did not have before, albeit that since Cawardine’s decision they thought they had one, but if Cawardine’s decision is wrong, then that was premised upon a mistake in thought and the operation of section 220 is prospectively to create a right that did not previously exist.

GUMMOW J:   Yes, but 220 has to be read – it has been said more than once in the last couple of days – with sections 5, 6, 7 and 8.

MR LLOYD:   That is so, but, in my submission, if Cawardine was wrongly decided and if there was no performance right in a record, then the sole effect of that is that section 207 in conjunction with section 220 is to create such a right which is obviously something which people in the industry thought existed, but if Cawardine’s decision was wrong, then it did not exist but no difficulty or problem is created by that.  It just means that there can be no acquisition.

HAYNE J:   Stripped of the various verbal arguments you have been seeking to make by reference to other parts of the 1911 Act, it comes to this, does it not?  You say you can perform a musical work.  You cannot perform a record.  That is the essence of your argument, is it not?

MR LLOYD:   That is critical to it, yes.

HAYNE J:   Yes, and an important, perhaps the central question, is what we are to do with the words “in like manner as if”?

MR LLOYD:   That is so.

HAYNE J:   And those words require you to treat something in a manner different from its objective characteristics?

MR LLOYD:   It can do, I accept that.

HAYNE J:   And it does in this case, does it not?  You are to treat a contrivance in like manner as if it were (which it is not) a musical work. 

MR LLOYD:   That is so, but if one takes, for example ‑ ‑ ‑

HAYNE J:   Once you have taken that step, where stands the point of “if you cannot perform a record”?

MR LLOYD:   In my submission, the work done by making it “in like manner”, one thing it does, is attract the geographical limitations in 1(1).  So it has work to do.  Then one has to work out which aspects of the distributive part of 1(2) apply.  I have already said in my submission paragraph (d) which unambiguously applies to musical works, (2)(d), cannot apply to records because it is a right to make a record and so therefore the distributive task is to be applied.  So by going through the process of saying it is to be done in like manner as a musical work, that still requires an assessment under subsection (2) of what of those rights can have an application.  Subsection (2)(d), we say, cannot have an application and similarly the aspect of (2) which relates to performing rights does not have an application.  That approach where I have advocated ‑ ‑ ‑

GUMMOW J:   I think you have to face the background that what was going on in the lead up to the 1911 Act was an agitation by what now we call the record companies that if they paid an orchestra to perform a work that was out of copyright, they got no protection for their record.

MR LLOYD:   That is so, your Honour, and what they wanted was to stop piracy.

GUMMOW J:   That is one of the things they wanted, is it not?  They were worried about that.

MR LLOYD:   Perhaps if I could take the Court to a more contemporaneous view of this matter, or maybe an equally contemporaneous view to Justice Maugham’s view.  If I can take the Court to the decision in Thompson v Warner Bros Pictures Limited which is in the supplementary bundle of the Commonwealth.

GUMMOW J:   What did it say in the Gorell Committee Report that led up to the 1911 Act about this?  It is all useful.  Do not forget that you are taking us to cases of an era when they never looked at the travaux.  They denied them if they did that.  We do not have that inhibition.

MR LLOYD:   Your Honour, I accept that although as ‑ ‑ ‑

GUMMOW J:   Lord Maugham had the inhibition.  We do not have it.  What did the extensive lead up to the 1911 Act show as to what was the objective of 19?

MR LLOYD:   In my submission, there is nothing in the Gorell Report that says that it was intended to provide a performing right in records.  Perhaps I will take your Honour to that in a moment.  If I could take your Honour to the Thompson decision.  I should perhaps say that even Justice Maugham indicated that the wording of section 19 was, as it were, a compromise achieved in Parliament.  So to that extent what is said in the Gorell Committee might be of limited use anyway.

In Thompson [1929] 2 Ch 308 in the Court of Appeal decision, the Master of the Rolls on page 325 - maybe I should say that a copy of this case is in the Commonwealth supplementary materials at page 212. At page 325 the Master of the Rolls said, at about point 7 on the page:

While the new copyright in the records and other contrivances is established by sub‑s. 1 of s. 19‑that section does not deal with performance -

Then, the background is looked at by Lord Justice Russell, and on page 336, his Honour says this:

A gramophone record is primarily and principally for private use and consumption.

GUMMOW J:   Sorry, which page are you reading from?

MR LLOYD:   This is now page 336 of the report, at the very top of the page.

GUMMOW J:   What was the dispute about in Thompson v Warner Bros?

MR LLOYD:   In Thompson the dispute was about – it was somewhat complicated, but prior to 1911 there had been a full assignment of both the performing right in the copyright from the composer to a person, and then post 1911 the song was made in film in the United States and then that film with a record of the song was brought to England and the author said that by operation of the 1911 Act he had a performing right in the record under section 19(7)(c) of the Act.

GUMMOW J:   Which he had never assigned.

MR LLOYD:   Because the effect of 19(7)(c) is that the creation of the new right in relation to the power to make records was vested in the assignor and not the assignee.  So it did not exist at the time of the assignment, but the legislative choice made in the 1911 Act in the creation of the new right relating to records, was to confer that on an assignor.  So what was being looked at was whether or not the composer held a right of public performance in relation to the record, and the passage that I was going to take the Court to at 336 is just useful because it provides a more contemporaneous view of the circumstances, and if I might read that:

A gramophone record is primarily and principally for private use and consumption.  The person who owns the sole right to manufacture a record is in a position to reap a harvest of royalties arising from the retail sales of the record when made.  Public performances of the song by means of the gramophone record are no injury to him as owner of the sole right to manufacture records.  On the contrary they may advertise the merits of the record and swell his royalties.  The person who is injured by a public performance of the song by means of the gramophone record is the owner of the sole right to perform the song in public.  The public performance by gramophone is an infringement of his sole right.  I am unable to find any justification in the Act for the view (which is involved in the decision in the Court below) that the sole right to perform the song in public has been split in two; and that the right to perform the song in public by mechanical means is in the plaintiff, while the right to perform the song in public otherwise than by mechanical means is in –

in effect, the assignee.  Now, I accepted that ‑ ‑ ‑

CRENNAN J:   That construes the copyright in relation to section 19 as directed to piracy of the records?

MR LLOYD:   Indeed, and I think in our written submissions we refer to a passage from Mr Drummond who made a submission to Gorell – he represented the record companies – and indicated that it was about piracy and in response the plaintiffs have referred to a passage in which he says he was after the same kind of protection as cinematograph films, but he did not get the same kind of protection as cinematograph films, because they are treated as dramatic works in the definition of “dramatic works”, and not all of them are.  Only some of them are. 

We say what they were after was the protection against piracy and that the Court should not go further.  There is nothing in section 19(2) to (7) to suggest that there is anything about a performance right.  It is all about making and producing records.  The view that we have expounded about performance was also a comment made by the author of Copinger.  It said the same thing at the time, and the relevant passage is set out in paragraph 24 of our written submissions.

I make one further submission, which is - perhaps I should somewhat defensively say upfront – not necessary for the purposes of my point, but it is still a submission I would ask the Court to consider, which is that in circumstances where the court is construing an act that confers a monopoly, the court should be, in periods of ambiguity, slow to construe it broadly and that when faced with a choice between, as it were, the individual rights against the rights of a prospective monopolist, it should be construed narrowly. 

I accept that I do not have any direct support for that proposition of construction, although in my submission it is a principle that can be seen to be at least related to the Coco v The Queen kind of ideal.  This is not on the Court’s list, but if I can just give a reference to it, in a case called Re Suata Holdings Pty Ltd v Australian Postal Corporation [1989] FCA 60, and in the version at paragraph 36, your Honour Justice Gummow ‑ ‑ ‑

GUMMOW J:   It is reported - that case.

MR LLOYD:   I apologise for that, your Honour.  I did look it up on LawCite.  It is not reported as reported on LawCite, but anyway, in that case your Honour Justice Gummow admittedly, I accept, in a distinguishable context, did indicate that there was scope to read down a provision when it was a provision that favoured a monopolist against individual rights.

GUMMOW J:   I think counsel should spend more time in law libraries and less time huddled over computers.  It might assist us in our task.

MR LLOYD:   I will take that on board, your Honour.  If I can now turn to the argument against the position that I have advanced, the first, as we apprehend it, is in the plaintiff’s submissions from paragraphs 60 to about 65 where it is put against us that a number of learned persons thought that Cawardine was correctly decided, and they refer to Sir Robert Garran’s opinion which I do not ask the Court to go to, but for the sake for the transcript, can be found in the court book at page 1598.  All we say about that is that Sir Robert expressed uncertainty as to the state of the law.

That uncertainty did not impact upon the views of Dr Evatt or Sir Garfield Barwick whose opinions are respectively found in the court book at pages 602 to 604 and at 1531, but in neither case did Dr Evatt or Sir Garfield Barwick express why they are of the view that they are of and so we say that is of no assistance to your Honours. 

The second point against us is they rely upon the reasoning of Justice Maugham, which I have already taken issue with.  The third point against us is said that it takes little flexibility to treat records as being able to be performed, and I have already said all I can say about that.  The next point against us is that it has taken us 80 years to challenge the decision.  I suppose all we say about that is it took 40 years to bring the current proceedings, so at least half of the 80 years is explicable.  In relation to the previous period, we say if Cawardine’s Case is incorrect, then a passage of time it does not stand in the way of the Court concluding that it is incorrect.

Finally, in the supplementary reply submissions weight is attached to section 13A of the Copyright Act 1912 as amended in 1933. A copy of that can be found – I hope the Court has the same as attached to the plaintiffs’ supplementary reply submissions. We say that a careful analysis of section 13A not only does not support them, but tends to confirm the opposite conclusion than the one advanced by them. The first thing we note is that section 13A was enacted prior to the decision in Cawardine’s Case, or at least introduced in that form prior to the decision in Cawardine’s Case and was done pursuant to recommendation 1 of the Owen Royal Commission Report.  A copy of the relevant recommendation can be found on page 136 of the Court book.

The point we make about that is that the recommendation about setting up a Tribunal to determine or to arbitrate on these matters was made even in the context that Justice Owen had doubts about the existence of any performing right in records and thought, in recommendation 14, that it should be abolished. So it is wrong, we say, to approach section 13A on the ground that it is a recognition of that. It was a recommendation by a person who thought that it probably did not exist, but if it did, it should be abolished. So to that extent we say that that is wrong.

If one goes to section 13A itself, our submission here is that the first thing you will notice at paragraphs (a) and (b) of section 13A(1) is where the references to copyright are, and they are limited to “literary, dramatic, musical or other works” and that the references to records is syntactically separated from the references to copyright. That is the first point. The second point is that the language of the provision talks about the performance of the works, but it uses different language in relation to records and it uses the language of “to use such records for public performance” which, if anything, we say confirms our submission about you cannot perform records. You use them in public performance of a song, but you do not perform them. So that extent the language of section 13A itself does not imply that there is a copyright right.

Your Honour Justice Gummow referred to what was said by Sir John Latham in the second reading speech. We have handed up a copy this morning of that speech. We say there is nothing in the speech which is contrary to the submissions we have made. In fact, it is consistent not only with the submissions that I have made on section 13A, but the submissions we have made about the whole concept of the way the 1911 Act should be construed. So on page 5837 there is a passage of about 12 lines, I will not read, but beginning:

Until recent years this right, known as performing right, was regarded as valuable only in the case . . . The result is that composers of musical works say they now have to look almost entirely to the profits derived from the sale of performing rights from either broadcasting or gramophone records to obtain any proper reward for their work.

Over on to page 5838 at about the middle of the page it is made clear that the Bill, the introduction of section 13A is being done pursuant to the recommendation of Justice Owen. Towards the bottom of that first column Sir John Latham notes that:

The law is not in all respects quite plain and clear, as will be seen by a reference to His Honour’s report.

So we say it is not premised upon the existence of a copyright right of performance in relation to records.  Then over onto the next paragraph, in the second column of page 5838 there is a reference to:

This bill deals only with one aspect of the matter.  The royal commission reports in favour of the fixing of performing rights fees –

Then there is a reference to the fact that various important and influential composers objected to a compulsory tribunal and over onto page 5839:

In this bill an effort has been made to provide a practical method of solving this problem which may avoid the international and legal difficulties to which I have referred.

We do not see that as being premised upon any particular view of the law.  At the bottom of that paragraph:

No harm can be done by passing the bill.  If the principle is accepted that the proposal is worth trying, I do not think that the provisions of the bill should cause any difficulty.

Another reason to think that it was not creating some new right insofar as it is put that it establishes a right is that in 1933 Australia had not yet adopted the Statute of Westminster and so there would be a question, given that section 25 of the 1911 Act only allowed modifications by the Commonwealth, of procedural matters, whether or not the creation of a right would even have been valid and we say whether it would or would not the Court should not readily construe it as that. Perhaps the most telling reason why there is no premise that there is a copyright in relation to the records is subsection (6) of section 13A and I hark back to the fact that section 13A(1) draws a distinction between the literary, dramatic, music or other works on the one hand and records on the other, which are dealt with syntactically separately throughout the provision:

Copyright in any such work shall not be deemed to be infringed by the performance or use in public of any such work or record if payment is made –

et cetera.  So it is a recognition that there is a performance right, a copyright performance right, in those works but no recognition in relation to any performance right in the record.

FRENCH CJ:   All this goes to the proposition that there is no great legal superstructure erected on the certainty of the right for which Cawardine is authority, is that ‑ ‑ ‑?

MR LLOYD:   Yes.  I mean, 13A is put against us as either a recognition or an establishment of such a right.  We say it is neither a recognition nor an establishment and that the language used is consistent with our view as to whether or not you can perform records.  That then leaves the question as to why would you have this arbitral power in relation to this matter and the discussion of a right in relation to records?  We say that the Court should remember that in 1933, as the special case book shows, EMI was a virtual monopoly in these matters and so they effectively could have had contractual or other rights. 

Also, at page 212 of the court book there is a letter from the gramophone record company, which is EMI, asserting a patent which allowed them to control the use of records as opposed to a copyright.  That is a 1931 letter.  We say it was quite unclear if there was any such right, but it was thought appropriate to have an arbitral tribunal in which broadcasters and the monopolist record producer of the day could resolve any disputes. 

We say that none of any of that suggests that section 13A assists the plaintiffs.

We say that one cannot perform a record and that while records are to be treated in like manner as musical works, it is clear from subsection 1(2)(d) that that does not mean in respect of every right.  That then requires one to say, well, how far does that analogy go?  We say that it does a lot of violence to the concept of performance to include performance of records.  Even the 1968 Act never refers to performance of records.  That concept has never been adopted in legislation, we say, and for those reasons we say that, with respect, Justice Maugham wrongly decided Cawardine and there never was, up until 1 May 1969 – there never was a performance right in records.  From 1 May 1969 there was a broadcast right in records created by that Act.  May it please the Court, they are the Commonwealth’s submissions.

FRENCH CJ:   Yes, thank you, Mr Lloyd.  Yes, Mr Sheahan.

MR SHEAHAN: May it please the Court, may we begin by addressing first the relationship between section 51(xviii) and section 51(xxxi) of the Constitution, and begin with two propositions. The first we think is uncontroversial; the second requires perhaps a little explanation. The first is that 51(xxxi) does not abstract from other grants of power the authority to make laws with respect to the acquisition of property where a contrary intention is expressed or made manifest by the words or the content of those other grants of power. The second proposition is that there may be such a contrary intention insofar as the other head of power characteristically permits acquisition of property without compensation, or laws in respect of which just terms would be incongruous.

That second proposition is often reflected in the cases which make plain that forfeitures, taxation, sequestration of bankrupt estates, the law relating to prize and admiralty, is all outside the conception of an acquisition on just terms for the purposes of 51(xxxi).  But we have used the expression “characteristically” in that proposition rather than alternatives like “necessarily” or “indispensably” deliberately.  It may be that the taxation power necessarily entails laws which acquire property without compensation, but that is not the case with most of the other examples where the court has held that a law, which has the effect of acquiring property, is outside 51(xxxi).

There is nothing, for example, necessary about the treatment of enemy aliens under the defence power which makes the forfeiture of their property or indispensable.  There is nothing about the regulation of fisheries which makes it necessary or indispensable that fishing vessels which stray into regulated waters should be forfeited, and the interests of owners who are not involved in the expedition should be forfeited.  There is nothing, even in the case of bankruptcy, which necessarily requires that the estate of the bankrupt be sequestrated, and one can have quite different arrangements as Chapter 11 in the United States indicates.

This expression “characteristic” is used disjunctively with the expression “necessary” in the authorities.  It goes back to Justice Brennan’s judgment in Mutual Pools 179 CLR 179 to 180. It has been picked up and adopted subsequently in Air Services 202 CLR, paragraph 98, perhaps most recently by your Honour Justice Crennan in Wurridjal v The Commonwealth 237 CLR 361.

The alternative limb of that second proposition that we have advanced is based on the notion of incongruity and it derives originally from the judgment of Justices Deane and Gaudron in DPP v Lawler, the forfeiture case, where they said that 51(xxxi) is not concerned with laws in connection with which just terms is an inconsistent or incongruous notion.

Now, what their Honours said there was adopted by five members of the Court - Justices Gummow, Kirby, Hayne, Heydon and Crennan in Theophanous.  It is one of a group of settled propositions concerning the application of 51(xxxi).  It might be convenient if I ask your Honours to go briefly to Theophanous 225 CLR 101.

I would ask your Honours to go to page 124, where at 55, there is the heading “Section 51(xxxi)”, and the five members of the Court list some settled propositions.  In 56 they quote what I have just said from the judgment of Justices Deane and Gaudron, and at 57 and following, go into some of the history of this notion of incongruity.  Importantly, for our purposes, on the next page, in paragraph 60, their Honours said something about the characterisation exercise that is entailed here.  They commenced by pointing out that:

Section 51(xxxi) . . . is not to be given a pedantic or narrow construction. The taking of property under a federal law is not removed from “acquisition” merely because of the statutory description given to the action. It may be complained that the boundary marked to the “just terms” requirement of . . . its application being “inconsistent” or “incongruous” states a criterion that may require difficult questions of judgment. But to mark the boundary to the application of the “just terms” requirement in this way is grounded in the realisation that to characterise –

May we emphasise that word –

certain exactions of government . . . as an acquisition of property would be incompatible with the very nature of the exaction.

What follows is important, in our respectful submission –

Such exactions are, and long before the Commonwealth were, regular features of the law in England, the Australian colonies and now of the Commonwealth.

That invitation to have regard to the history of the statute law on the subject leads one back to the question of what is characteristic of laws designed to advance objects within a particular head of power, and it helps to understand why forfeiture of fishing boats, prize in the context of admiralty, while they are not indispensable to a sensible means of regulation of that subject matter, are nevertheless such a part of it – such a characteristic part of it – as to be treated by the court as outside the scope of 51(xxxi).

CRENNAN J:   It may be with statutory monopolies such as patents or copyrights there might be two characteristic ways of having an exception to infringement.  On the one hand, there might be fair use exceptions, where you might argue that it would be incongruous to apply just terms in that context.  At the other end of the spectrum, you have compulsory licensing provisions and it might be said, albeit quite distinct, because they impinge on the usual commercial exploitation of the statutory monopoly.

MR SHEAHAN:   I do not disagree with what your Honour has just said.  That is right, with respect.  What we submit here, and I will come to it ‑ ‑ ‑

CRENNAN J:   In other words, what I am really saying is when you come to copyright, or indeed patents as well, there might not just be one characteristic that you can point to.

MR SHEAHAN:   That is true.  What we will submit in due course is that the effect of this Act, insofar as it creates a conditional immunity from infringement in broadcasters, is not properly analysed to create a compulsory licence.  But I will get to it.

Now, can I emphasise, though, just one other thing about the formula that I have proposed for your Honours.  It uses the expression “insofar as”.  There may be a contrary intention insofar as a head of power characteristically permits acquisition without compensation.  This language is intended to hark back to point made by Chief Justice Dixon in the Attorney‑General v Schmidt 105 CLR 361. Relevantly, at 372 his Honour, having made this point that no one would doubt that under the bankruptcy power the estate of a bankrupt may be sequestrated, and 51(xxxi) had nothing to do with the matter, went on to say:

At the same time, if a law was made under which a piece of land was acquired for a Bankruptcy Office, s 51(xxxi) would govern the legislation and not s 51 [(xviii)].

Here our submission is if 51(xviii), when the character of the laws that are passed under it are considered, it authorises a law which modifies the scope of copyright, but only 51(xxxi) would authorise a law which simply, for example, vested existing copyright in a new owner.  With that said, can we emphasise four considerations which suggest, in our submission, that 51(xviii) should be understood as conferring a power to make laws which create and modify copyright without conferring just terms. 

The first is this.  The power, we think, uniquely amongst all those in 51, is in terms a power with respect to a species of property.  It is not a power with respect to transactions or an object or activities.  It is a power expressed to be with respect to a species of property.  Such a power must of its nature be a power to pass laws which create property of that kind, which modify the scope of property of that kind, perhaps which extinguish property of that kind.  It inheres in the description of the head of power, in our respectful submission, that the ability to make laws extends to those subject matters. 

Secondly, copyright has the character of a statutory monopoly.  It operates, in essence, to abstract from the liberty of actions that persons would otherwise have to enjoy ‑ ‑ ‑

FRENCH CJ:   Is “monopoly” quite the right word?  One thinks of a monopoly in terms perhaps of patent rights.  The way you are using it here it might almost apply to any property right.

MR SHEAHAN:   It creates exclusive rights, your Honour, and I understand what your Honour is saying, copyright is unusual in some respects as compared to ‑ ‑ ‑

FRENCH CJ:   If somebody does not copy, they can produce an original work which might happen to be identical to that which you have copyright, or very similar to it, but it is not a reproduction.

MR SHEAHAN:   They may happen to do that, but that would not be an infringement of the copyright insofar as there is – and the gist of copyright exists in the definition of “infringement”.

CRENNAN J:   This is a point about whether it is an absolute monopoly as distinct from a patent the Chief Justice is making to you.

MR SHEAHAN:   Yes.  It is not an absolute monopoly, but it is a kind of monopoly nevertheless.  I say that in a sense that it takes away from people the freedom to do that which they could otherwise do apart from the grant of the monopoly; you could copy, you could broadcast, you could perform.  The grant of the copyright means that all those rights are vested exclusively in another person; the owner of the copyright.  When you repeal or modify by subtraction the copyright, what you do is restore that liberty to the persons from whom it was taken.  I am leaving aside for the moment cases where there was some ancient common law copyright.  The copyrights we are concerned with are purely statutory.  When they come into existence, they subtract from the liberties of all citizens and create an exclusive right in the hand of the copyright owner.  When they are modified by reduction, the liberties of the people are enhanced.

It would be, in our respectful submission, incongruous in the relevant sense if any such addition or substraction by the modification of copyright required compensation.  It would be even more incongruous if the addition to monopoly power did not require compensation but the reduction of monopoly power did require compensation.  In other words, if the constitution required an asymmetric treatment of monopoly rights of this kind, that in truth though is the position for which the plaintiffs contend.

The third point that we would note is that statutes with regard to copyright had been from the outset - the Statute of Anne - laws which destroyed or modified existing copyright without compensation.  We address this point in our outline at paragraphs 11 to 15 but we do not understand the history that is set out there to be controversial so I will not take your Honours – we will not burden your Honours with it again this afternoon. 

The short point is that there was an existing common law copyright in authors which was perpetual.  The received view by the end of the 19th century was that that existing perpetual common law copyright was reduced by the Statute of Anne to a 21‑year right for existing works and a 14 plus possible extension term for new works, additional remedies, but a shorter term.

KIEFEL J:   They might not be described as compensation but I think the early statutes have been described as something of a statutory quid pro quo, have they not?

MR SHEAHAN:   They have and that would be a fair description and so, too, the 1968 Act and I will come to that very shortly.  The same position was found in relation to the 1842 Copyright Act so far as copyright in unpublished works had been concerned.  The common law in relation to those had subsisted.  The common law gave the right in unpublished works, a perpetual right to the author in McMillan & Co v Dent which is referred to in our submissions at paragraph 14.  It was held that the 1842 Act had replaced that right with a copyright conferred on the owner of the manuscript.  So the copyright had been taken from the author and given to another person.

The fourth point we would mention is the significance of the decision in Nintendo in this context. It is in volume 181 CLR 134 and the relevant passages are 160 to 161. The plaintiffs’ submission is that what was said by six members of the Court at this point is authority only for the proposition that laws creating copyright are outside 51(xxxi). That is why I said before the plaintiffs’ position is that 51(xxxi) has an asymmetric operation. The issue in Nintendo concerned rights created by the Circuit Layouts Act in circuits which had been previously imported into Australia.  So the circuit was lawfully imported into the country, then the Act came into effect.  What impact did it have on those circuits?  In its terms, as construed by the High Court, it operated to make them infringing copies.

It is true that to the extent that the Court addressed the acquisitions power, it was in the context of the operation of the Act in creating copyright rather than modifying it or extinguishing it.  In the context of legislation creating copyright or adding to copyright, there is a pretty strong argument for the idea that it is, of its nature, inconsistent with conferring just terms.  The new copyright owner is given exclusive rights to aspects of the use and enjoyment of the property of other people.  In some contexts they can be extremely powerful rights, including rights to seizure in a detinue action under section 115, a remedy which in this context can be traced back to the Statute of Anne.

It was against that background that the Court held that it was of the nature of laws creating copyright that they confer rights on authors and conversely limit and detract from the proprietary rights of others. Section 51(xxxi) was not engaged. The subject matter was outside that territory. However, the power to make laws with respect to copyright is not, obviously, limited to a power to create and add to copyright. It also encompasses a power to modify and to modify by subtraction. Laws which modify copyright by subtraction from the monopoly of the copyright holder will also of their nature limit and detract from the proprietary rights that would otherwise be enjoyed by the copyright owners. By parody of reason, again 51(xxxi) is simply not engaged by laws of that kind. It is not engaged because the head of power on the particular law in that context indicates a contrary intention.

It is perhaps worthy of note, although it is only a small point, that the legislation in Nintendo did not necessarily have to interfere with the existing proprietary rights of the importers of circuit layouts.  It could have been structured only to operate for the future, proleptic, as did, for example, the 1905 Act.  I think the only possible significance of it in this case is to make this small point.  It operated expressly to preserve existing copyrights under the then extant State legislation under section 8. 

But despite the fact that it would have been possible for the legislation to have been framed so as not to interfere with existing proprietary rights, the court held that it was of the nature of laws with respect to copyright that they do interfere with proprietary rights so as to take them outside 51(xxxi). 

Now, turning to the particular legislation here, the 1968 Act, so far as it affects sound recordings its character is one of general reform in which controversies are resolved and competing claims are compromised.  There is, in short, give and take for all.  The holders of copyright in the sound recordings – first, their rights are put on a clear statutory footing.  Instead of hanging on the thread or the rope, as the case may be, of the decision in Cawardine, which remained a little controversial, they had a statutory right that was clear and unimpeachable. 

Secondly, the term of the copyrights in sound recordings was rationalised and slightly extended by section 93. Thirdly, they were given additional remedies, most particularly, the scope for additional damages under section 115(4). Next, they were given a greatly extended limitation period for actions for infringement under section 134. There were other pros and cons. We list them in our submissions in paragraphs 24 and 25. On the other hand there was the conditional immunity granted to broadcasters under section 109.

GUMMOW J:   In his second reading speech for the first copyright Bill in 1967, Mr Bowen said that he was following the pattern in transition established by the imperial Copyright Act 1911.  That is at page 1233, volume 2.  The patent involved in the imperial Act appears in section 24 of the 1911 Act and it was to substitute the 1911 Act for whatever you had before and to say that copyright would not subsist before the commencement of the 1911 Act, otherwise than under the substituted provisions. 

Now, if that is correct as to what was the objective of the Parliament in 1968 it is simply a question of wiping the slate clean and starting again with some degree of retroactivity, if you like, to use that expression apparent from the transitional provisions we have looked at, in particular, section 220.  You will see, for example, 221, cinematograph films made before the commencement of the Act did not get section 90 protection and so on and so forth.  It is a very complicated scheme worked out in Division 3 of Part XI, but it is consistent with the situation that henceforth you just looked at the 1968 Act.

MR SHEAHAN:   We accept that, your Honour.

GUMMOW J:   If that is right, when you looked at the 1968 Act, you got this sound recording, but you got it subject to this system of compulsory licence and that is the end of it.

MR SHEAHAN:   We accept that, your Honour.  We would adopt that, with respect.

GUMMOW J:   All right.  The Parliament’s objective was that you would not have to go scratching around in the 1911 Act ever again I think.

MR SHEAHAN:   I think that is right, your Honour.

GUMMOW J:   Nevertheless, we have spent two days doing that, and you will never have to read Cawardine’s Case either.

MR SHEAHAN:   I hope I will be brief with the other points on the substantive questions.

GUMMOW J:   That may be a completely wrong view, but it does seem to me to be a view.

MR SHEAHAN:   We share it, your Honour.  The adjustments that were made, which we have mentioned in paragraphs 24 and 25 of our written submissions, should be supplemented by reference to one other consideration that your Honour Justice Hayne adverted to yesterday and that is the broader legislative context affecting broadcasters.  The position is this.  We have given your Honours I think today with our three pager the relevant extracts from the legislation.  As at 1968 the Broadcasting and Television Act 1942 by section 114 provided for a minimum of 5 per cent Australian content in radio broadcasts, but in addition there was a mechanism to increase that and section 99 gave the Australian Broadcasting Control Board power to create standards for the broadcasters and it was given various powers by section 16 and 17. 

That power would enable it, if it thought it appropriate, to increase the requirement of Australian content.  That, as I am told, did not happen before 1968, but it did happen subsequently, and it went up to 20 per cent or so in the 1970s, but it is the existence of the mechanism that is of some small relevance.  The considerations that I have just mentioned lead ‑ ‑ ‑

GUMMOW J:   What particular sections should we look at in the Broadcasting and Television Act?

MR SHEAHAN:   In the Broadcasting Act, 114(2), and for the mechanism that I have just described, section 99(1).

GUMMOW J: Then there is a reference in section 9 of the Copyright Act to sections 120 and 121 of the Broadcasting Act.  What is that all about?

MR SHEAHAN:   We have only given your Honours extracts, I am afraid, so I am not sure that they – they are there, yes.

HAYNE J:   A side note to section 120 of the Broadcasting and Television Act is publication of text of item transmitted by broadcasting or television.  A side note to 121 is broadcasting programs of other stations prohibited.

MR SHEAHAN:   Yes.  That small matter feeds into the mix of this being the kind of legislative territory where the Parliament is in power to create a new regime, a new system of rights and liabilities without having to confer just terms.  That consideration leads naturally to a question of the significance of the character of legislation as an adjustment of competing claims and interests in an area of needed regulation. 

We accept that such a characterisation does not require the conclusion that 51(xxxi) is not engaged.  It is not, in other words, a test.  But it is, we would submit, something which assists in a negative conclusion that a law is not properly to be characterised as fitting within the compound conception of a law with respect to the acquisition of property on just terms from any person.

That, we think, is really all that was intended by Justices Deane and Gaudron when they started this line of thinking.  What they said was that a law which resolves competing claims or specifies criteria for general regulation in an area which needs to be regulated in the common interest is unlikely, unlikely to be characterised as within 51(xxxi).  So it is simply not to cut across the undisputed proposition that a law can have more than two constitutional characters but it is to say that if it has this constitutional character, that is a pointer, not decisive, but a pointer to it perhaps not properly being within the characterisation offered by 51(xxxi).  We do not think there is any room for doubting the 1968 legislation was ‑ ‑ ‑

HAYNE J:   Before you come to that, are you then urging the view of this notion that was stated by Justice Dawson in Nintendo?

MR SHEAHAN:   I am not sure we are adopting Justice Dawson’s approach in Nintendo.  I will just have a look.

HAYNE J:   At page 167.

MR SHEAHAN:   We do not agree that this positive characterisation as a law being a law with respect to a genuine adjustment of competing rights is a test and if his Honour is saying that in the last few words of the main paragraph on that page, we accept that it is not consistent with the jurisprudence of the Court.  We think it is quite plain that the 1968 Act as a whole is properly to be characterised as a law which adjusts competing rights and interests.  General copyright legislation is intrinsically of that kind.  The Supreme Court has said so in the passage we quote in our written submissions but more pertinently this Court has said so in IceTV Pty Limited v Nine Network 239 CLR 458, in particular at 24 to 26 and 68 and 71.

There may be some room for discussion as to whether the regulation of this area is needed in the sense in which that expression was employed by Justices Deane and Gaudron and in that regard we would mention three considerations.  The first is this.  To the extent that these are laws creating monopolies, they call for regulation.  Monopoly is, in its natural tendency inimical to the public interest.  The fact that they are monopolies highlights the need for regulation.  Can we just clarify one point here, though. 

The competing interests that are to be identified here are properly characterised as competing public interests.  There is a public interest in encouraging the production of works and there is a public interest in encouraging the dissemination and use of works.  They are two public interests but they operate inconsistently.  The mechanism of copyright legislation is to encourage production by, to an extent, discouraging dissemination and use.  In other words, the whole area of discourse is about the public interest.

GUMMOW J:   You may be right about that but the John Locke view of law treats it as a reward for labour and then attaches to that the sanctity of property ideas, not any public interest as to the use of the property.  Do you see what I mean?  This is one of the tensions that runs through the whole field.

CRENNAN J:   A natural right.

MR SHEAHAN:   It has been characterised in that way on many occasions and I think the Court has referred to it as an agricultural metaphor which is quite common in the area.

GUMMOW J:   Yes.

MR SHEAHAN:   We would submit that the modern or, at any rate, preferable understanding is the one which we have offered.  The decision of the United States Supreme Court that we have quoted in this respect in our submissions speaks in terms of competing claims on the public interest.  Even if it may be right that there are private rights drawn in, engaged and properly to be attended to, the fact that the subject matter here is very much concerned with a competition between two competing public interests assists in characterising it all for the purposes of the inquiry we are concerned with. 

One can see this character of the law going back to the Statute of Anne, as Justice Gummow mentioned yesterday.  Not only did it deal with the extinguishment of common law copyright, the addition of new remedies, the creation of a new certain statutory copyright, it also imposed a price control mechanism on booksellers, so that what was given with one hand was to some extent taken with the other.

CRENNAN J:   It also had fair use provisions.

MR SHEAHAN:   Yes, it did.  This balancing exercise that is at the heart of copyright cannot be done once for all time.  It has to be revisited in light of changed social perceptions of value, changes in technology obviously, and as the economy changes.  To give a small example, the increasing importance of commercial copyrights in movies and so on as a part of the American economy prompted what was called the “Mickey Mouse Preservation Act”, I think, the extension in their copyright term from 50 to 70 years, which we adopted when we became a party to the free trade agreement.  All these things have to be kept up to date, and the legislative capacity to rebalance should not be unnecessarily constrained.

To some extent, similar observations might be made of all forms of intellectual property, but there is a particular feature of copyright that makes them especially pertinent, and that is the tendency of copyright to result in a creation of what have been called “super-monopolies” in the form of dominant aggregators of copyright or the collecting agencies.  This was a phenomenon that was discussed in the report of the Spicer Committee, and if I could simply refer your Honours to volume 1 of the book of documents at tab 17, where there is a discussion in relation to APRA, commencing at page 533 in paragraphs 340 through 347.  At the end of 343, there is this sentence:

Over a period of years, concern has been expressed in many quarters, particularly in the early days of the Association, regarding actual or potential abuse of this monopolistic power.

In the next paragraph, referring to the Owen Commission, the last full sentence on that page:

The Commission reported that APRA was, to all intents and purposes, a super-monopoly controlling or claiming to control most of the music which users in public must use and was able to dictate its own terms.

The tendency towards super monopoly is simply a matter of efficiency, but it is a real tendency.  You have not the atomistic bargaining power or monopolies of a large number of creators of copyrighters as gathered together in one entity, but it does multiply the significance of the monopoly character of the rights. 

A second features of copyright which supports it characterisation as needed general regulation is the circumstance that it is profoundly affected by technological change.  That hardly needs emphasis, but I would simply make this point that while the pace of change has accelerated greatly since Federation, it was still a material feature of the law at Federation, and that is shown by the existence of colonial legislation dealing with what was then a very new phenomenon, namely, news conveyed by telegraphic messages.  That was dealt with by legislation in Victoria, Western Australia and South Australia and the history is discussed in an article, in our submissions at footnote 13.  So the significance of technology here is not a post‑Federation phenomenon. 

Finally, this is an area where the is a need for regulation in the common interest.  It is evidenced by the frequency with which the subject has been the subject of public inquiries, and your Honour sees a lot of evidence of that in the material in the book of documents and international conventions.  Can I turn then to the question whether there is, by this legislation, an acquisition of property? 

The question is properly framed, in our submission, this way.  Did the broadcasters by the law acquire something proprietary in nature?  Now, in using that language we adopt some words used by Justice Gummow, but we accept that language “proprietary in nature” consistently with the decisions of the Court has to be given a reasonably generous interpretation, but it cannot be an interpretation which departs from the substance, something proprietary in nature.

To give an example; Georgiadis.  What was acquired by the Commonwealth was not in any conventional, narrow or pedantic sense property.  In Georgiadis what happened was that the Commonwealth was relieved of an accrued liability to Mr Georgiadis.  Its wealth increased, but you would not say in an ordinary sense that it had acquired property, but the generous notion of property that is employed in this area of discourse permitted one to say that the Commonwealth had acquired something proprietary in nature.  It was sufficiently closely connected to property because it was the flipside of someone else’s chose in action to permit that description.

We think it is uncontroversial that what the broadcasters acquired in this case was a conditional immunity for the broadcast of sound recordings in the future.  We would make four preliminary observations about this.  The first is that the immunity does not affect any existing causes of action for past infringements.  The second is that the immunity is not so much granted as restored, because prior to 1912 there was no copyright in sound recordings, there was no occasion for an immunity, there was no risk of infringement.  Thirdly, the immunity that was granted was not assignable.  It could not be charged or sold or made itself the subject of a sub‑licence.  Fourthly, and for the reasons just given, it is not quite accurate to describe the effect of section 109 as a compulsory licence.  A more accurate description is given in terms similar to those we have just described in the PPCA Case 195 CLR 158 at 16, which is quoted in the plaintiffs’ outline of submissions at paragraph 85.

FRENCH CJ:   I wonder if the word “immunity” brings in just a false concept.  The terms of section 109 of the copyright is not infringed in those circumstances, so it is not as though there is a liability from which you are immunised.  It is just there is not a liability.

MR SHEAHAN:   Yes, I understand your Honour’s point.  It could be described as a defence.  The notion of an immunity – or I am using that expression “immunity” in a sense to encompass that same idea.

FRENCH CJ:   I wonder if that puts it into the same logical category as a complete abolition of the sound recording copyright because all that means is that anybody can then do it and nobody can sue them.

MR SHEAHAN:   No, because it is a conditional immunity.  The immunity does not attach unless you do one of the two things in section 109.  You have to give an undertaking which involves consequences or there has to be an order of the Tribunal which has its own consequences.  The right does not disappear.  In addition, and I will come to this ‑ ‑ ‑

FRENCH CJ:   What I am saying is your argument might not be any different if what we were talking about was simply an abolition.

MR SHEAHAN:   It may not be.

GUMMOW J:   Is not this section the appearance of contrary intention spoken of in section 85?

MR SHEAHAN:   Section 85?

GUMMOW J:   Yes.

MR SHEAHAN:   Yes.

GUMMOW J:   So it does seem to subtract from the exclusive right?

MR SHEAHAN:   In that sense, it would.  Now, to approach the question of acquisition by reference to the source of matters we have just mentioned is to proceed consistently with the reasoning employed by all the members of the Court in Tape Manufacturers.  The plaintiffs’ submissions about Tape Manufacturers, or the focus of them at any rate, seems to have shifted a little in focus.  Their emphasis now is on the idea that the beneficiaries of the section 109 immunity, as I will continue to call it for the sake of convenience, are not the community generally ‑ ‑ ‑

GUMMOW J:   At the expense of accuracy.

MR SHEAHAN:   I will slip up otherwise, your Honour.

FRENCH CJ:   The notion of immunity, contrary to the thrust of your case, is that of getting something, is it not?  It can generate a false notion of receipt, can it not?

MR SHEAHAN:   Yes.  Your Honour is right, with respect.

FRENCH CJ:   That is why I was drawing the logical parallel with abolition of the copyright altogether.  If someone else does not get anything as a result of that, they just are not liable for ‑ ‑ ‑

MR SHEAHAN:   From the notional recipient’s point of view, it feels the same, if I can put it that way, but the forensic analysis might be different and that may be significant.

FRENCH CJ:   Of virtual receipts.

MR SHEAHAN:   Your Honours, the emphasis in relation to Tape Manufacturers now seems to be that this line of reasoning is not applicable because we have a small group who are affected, the broadcasters as opposed to the community generally.  In short, that analysis is incorrect.  The contraction of the right is in respect of broadcasts, the ability to broadcast.  Anyone who broadcasts gets the benefit of the contraction of the right.  Section 109 simply applies to anyone who broadcasts, anyone in the community who broadcasts.  What was confined to the commercial broadcasters and the ABC was not the benefit of the contraction of the right but rather the benefit of the cap.  Just to make that plain, if the Court goes to section 109 and see that the expression that is used is simply “the maker of a broadcast”, whereas in section 152, broadcaster is defined.

What follows is this that the cap which applies to the broadcasters by virtue of some subsections in 152 does not go to the question of acquisition of property.  It goes to the question of just terms.  So it is not right, as the plaintiffs submit, that what has been selected out by section 109 is some identifiable class of persons in contradistinction to Tape Manufacturers.  It is just a smaller class of persons numerically than people who engage in home taping. 

In any event, the genus of broadcasters in 109 and the species of broadcasters in 152(1) are likely to be coincident and this is because the Wireless Telegraphy Act, which we have given your Honours a copy of -it is attached to our outline - prohibited use of an appliance for transmitting messages via wireless telegraphy -in section 6. Section 81 of the Broadcasting and Television Act provided for a licence for commercial broadcasters and it carved out licensees from the operation of section 6 of the other Act.

In the context of acquisition, the plaintiffs also now emphasise the impact of sections 87 and 89 of the 1968 Act which create copyright in broadcasts, there are two things to note.  The first is that the question here concerns an acquisition of rights that the plaintiffs had by virtue of the 1912 Act.  That directs attention to what the broadcasters acquired of or out of the 1912 copyright held by the copyright owners.  To that inquiry the fact that the 1968 Act explicitly gave broadcasters new rights not referable at all to anything pertaining under the 1912 Act, is simply irrelevant.

Secondly, even if the provisions or the creation of a broadcasting right was relevant to the acquisition in question, it would not change the analysis.  The effect of section 109 is to permit the broadcasters to broadcast a sound recording without infringing copyright, but they cannot authorise anyone else to do so.  They cannot assign or licence this position.  So if someone infringes their broadcast copyright by rebroadcasting, then insofar as the broadcast consists of, in my case, ABC generated material, relief would be available to the ABC, but insofar as a broadcast consisted of material which was sound recordings, which it was not an infringement for us to broadcast, then relief would not be available. 

The ordinary measure of damages would be the licence fee that we would be allowed to extract for the use of the sound recordings.  We have no right, no entitlement to licence anyone to broadcast the sound recordings.  More fundamentally, subject to the operation of something like section 109, the exclusive right to broadcast remained with the owner of the sound recording.  They are the only person who had an exclusive right to broadcast subject to section 109.

Can I make a couple of points then, your Honours, about Tape Manufacturers and later cases.  The plaintiffs rely on Georgiadis as demonstrating departure from the analysis in Tape Manufacturers.  It would be a little surprising if that were intended by their Honours.  Tape Manufacturers, another temporal coincidence, the decision was given on 11 March 1993.  Georgiadsis was argued on the two days before that, 9 and 10 March 1993.  The members of the Court were the same.  We would note that in Georgiadsis, Chief Justice and Justices Deane and Gaudron cited Tape Manufacturers with approval at note 9 in the context of discussing what is property in this context. 

There was a division of opinion in Georgiadsis.  However, not too much can be taken from that, in our respectful submission, for these reasons.  The case was described by the Chief Justice and Justices Deane and Gaudron as borderline.  The characterisation issue was described as finally balanced.  That is a volume 179, page 308.  Their Honours noted that the outcome might have been different if it was part of a general legislative scheme for workers compensation, which it was not.  That is at page 308.  They had noted previously in their reasons, which your Honours well know, that it may be significant if the rights affected were purely the creatures of statute, which they were not in that case and are here.

The other thing to note, of course, about Georgiadis is that like Smith is that it was concerned only with accrued causes of action and their effective termination as opposed to legislation here which is dealing with things in the future. 

Your Honours, just terms.  We think the question must be assessed as at 1969 on the theory that that is when the acquisition occurred and the answer to the validity of the law cannot be different at different times.  The question whether the legislation amounted to a true attempt to provide fair and just standards of compensation as between the owners of the affected copyright and the broadcasters is a question to which we must attend, according to Justice Dixon’s reasons in Grace Brothers.

That question, providing fair and just standards of compensation, permits an inquiry as to what was reasonably to be anticipated in 1969 because fair and just standards would permit such an inquiry.  Fair and just standards do not, however, require a mechanism which allows for all possible contingencies, whether foreseeable or not, and if it were so, common law damages and equitable compensation would themselves not be fair and just because they cannot do so and they are assessed once and for all.

Now, we do need to emphasise one thing, and that is that the question of just terms arises only in relation to pre‑1969 recordings.  This means that the possible future impact of the caps has to be assessed in light of that.  That set of recordings, pre‑1969 recordings, which attracted the benefit of copyright under the 1912 Act, was a diminishing set.  Every 31 December, after the 1968 Act came into effect, the set shrank as recordings went out of copyright, the 50-year period elapsed.  But for the Mickey Mouse extension, they would all fall away 8 years from now.  They would all be outside copyright. 

Those pre‑1968 recordings would be an ever diminishing proportion of the sound recordings available for broadcast and use by the broadcasters, and there would be no question of the validity of the cap in relation to all those subsequent sound recordings.  Finally, to the extent that consumers valued novelty or currency, their value to consumers would be diminishing as time went past against that background.

The ABC cap was set at a rate in 1969 significantly above rates recently agreed between the ABC and the owners of the copyright and sound recordings - about 50 per cent above and your Honours can see that in the special case at paragraphs 229 and 230.  Ever since the ABC has had agreements with the owners of the sound recording there has never been an undertaking or a Tribunal decision referable to the ABC’s position.  For many years, well for the years immediately subsequent to 1969, the patent before 1969 continued, the agreed rate was significantly below the rate set by the cap. 

Now, the capped rate was indexed for population growth, which might be thought to be a proxy for general economic value.  The major criticism of it is that it was not indexed for inflation, but there was no need in a fair and just balance for it to do so, because of the likely deflation - the deflation in the number of affected sound recordings every year, the deflation in the proportion of affected sound recordings compared to the total of sound recordings available for exploitation and the deflation ‑ ‑ ‑

FRENCH CJ:   You make that same argument in relation to the revenues for the broadcasters, the relationship of the cap?

MR SHEAHAN:   Well, I am focusing on my client’s position, your Honour, which is ‑ ‑ ‑

FRENCH CJ:   So you are just looking at the general application of the cap?

MR SHEAHAN:   Yes, and there is the deflation in consumer value associated with decreasing novelty and currency.  The plaintiffs’ case does not mention any of these matters, much less attempt to establish that all things considered, the caps were inconsistent with fair and just standards and nor do they attempt to show that the overall package of rights that they obtained under the 1968 Act with longer limitation periods and more certain footing for their rights and so on, additional remedies, was inferior to the overall package of rights they had under the previous legislation. 

The other main subject for discussion in relation to just standards has already been dealt with by the Solicitor‑General and I do not wish to add to what he has said, that is to say, insofar as you might think that a cap ordinarily is there in order to bite and therefore it is likely to be referable to some perception, perceived likelihood that the affected sound recordings would be impacted by the cap in the future, it is answered by the explanation for why the caps are there.  They were there to deal with a completely different field. 

I would add, though, just one thought and that is that against the background of the matters that the Solicitor‑General went through this afternoon, it would be open to the Tribunal, if a case ever got to the Tribunal, if the cap was reached to order that the payments be distributed in such a fashion that the impact fell entirely on the post‑1968 recordings.

GUMMOW J:   Does that follow from the text of the ‑ ‑ ‑

MR SHEAHAN:   The Tribunal would have the power, in our submission, to do it under 152(6) and (a) is to determining amount, but under (b) it specifies the persons and (c) the respective shares and in (b) and (c) it could take into account, in our respectful submission, what the evidence in this case has shown about the reason for the caps being there.  They are not there with a view to constraining the likely revenue of owners of affected sound recordings.  They were there to protect against outcomes in respect of future sound recordings.  So if it came to be that the cap was engaged, the holders of affected sound recordings from before 1968 would have a good argument that they should be given privileged treatment because the cap was not directed at them.

There is one other way to analyse the whole problem and that is to say that there is no acquisition in 1969, rather the Act provides for acquisitions to occur in the future when an undertaking is given under section 109(1)(a) or when a tribunal order is made under 109(1)(b).  But if that is the correct analysis, again it does not assist the plaintiffs.  It would involve this inquiry, whether there were just terms would depend upon the actual outcome at the time of the acquisition, at the time the undertaking was given, at the time the tribunal order was made. 

In fact, as I have said in the case of the ABC there have been no undertakings and there have been no tribunal orders.  Section 109 has not operated because we have had agreements under section 109(2) and have broadcast pursuant to those agreements.  Your Honours, I can deal with severance ‑ ‑ ‑

GUMMOW J:   If your analysis is right the contrary intention is ambulatory, in a sense, when you are then reading section 85.  In other words, the contraction of the exclusive right depends on what happens from time to time in the Tribunal.  Is that right?

MR SHEAHAN:   It would seem to because section 109 only operates when one of two things happens.  When there is an undertaking under 1(a) or an order under 1(b). 

HEYDON J:   Mr Sheahan, is this dealt with, this last point, in your written submissions?

MR SHEAHAN:   No, that last point is not. 

HAYNE J:   Is it not an analysis that is slipping between analysis of rights as they are stated or created by the Act and the events that constitute the exercise of the rights?

MR SHEAHAN:   Your Honour, it may be.  We put it forward only because it seems to us to be the only other logical possibility for ascertaining when there is an acquisition in this case, that is to say there is – it is either at the outset on 1 May 1969 or it is as section 109 is engaged from time to time.

HAYNE J:   Section 109 is engaged by the broadcasting of a record, is it not?

MR SHEAHAN:   Not the part of it that I think the plaintiffs identify as giving rise to the acquisition.  That is the immunity from liability from infringement with the limitation on the recompense that is to be found in 152.

HAYNE J:   Provision of undertaking of order?

MR SHEAHAN:   Yes.  So I am not especially advancing it as the correct approach.  In fact, we do not.  We submit that the acquisition if there was any must have occurred in 1969 but that seems to be the only available alternative.

FRENCH CJ:   There is a question whether the exclusive rights are compromised or qualified at the time of the enactment of this legislation by the contemporary creation of the conditional immunity, as we have been calling it.  Even though it be conditional, nevertheless it might be seen as a qualification which exists ab initio.

MR SHEAHAN:   It could be characterised that way, a kind of congenital defect, to use language adopted from another context.

HAYNE J:   Just the statement of the right is rather more complex than is obtained by the bare reading of 85.

MR SHEAHAN:   It is, your Honour.  I think I can deal with severance reasonably briefly, but I am in your Honours’ hands.  It may become thorny.

FRENCH CJ:   How much longer do you expect to be about?

MR SHEAHAN:   I hope only five minutes.

FRENCH CJ:   Well, we will perhaps hear you out on that.

MR SHEAHAN:   Your Honours, severance and reading down here are complicated by two considerations.  One is that the caps, if they continue in operation but only for post-1968 recordings, have a different operation from that originally intended.  That is the point made by the plaintiffs and we accept it, with respect.  But there is another aspect to the matter, and that is that since 1968 the plaintiffs have gained substantial additional rights, most notably the 20‑year extension in the life of their copyrights.  Those new rights were granted in the context of an existing statutory scheme in which the caps obtained. 

Reading down the legislation so as to eliminate the caps would mean that the amending Act which extended the duration of the copyright would have a different operation from that which was intended.  The plaintiffs would be getting the benefit for an additional 20 years of cap‑free copyright when in 1968 they had 50 years worth, on their theory, and there is no reason in terms of statutory intent for them to get the benefit of the cap for the additional 20 years.

We submit, in short, against that background and against the background of the operation of sections 5, 6, and 8 in the Transitional Provisions that your Honour Justice Gummow mentioned before.  If there is

an acquisition here, it is properly identified as having occurred in 1968 and by virtue of sections 5, 6, and 8, and the corollary is simply that if all their other arguments succeed, the Court should declare that those provisions are invalid and their operation concerning the plaintiffs’ affected sound recordings.  Smith v ANL is an example by analogy.  There your Honours will recall section 54 of the main Act extinguished the cause of action.  Section 13 of the Transitional Provisions Act said that despite section 54, you could bring an action if it was within six months.

The order of the Court was that section 54 was invalid in its operation as regards Mr Smith.  It was not that the limitation period in section 13 was carved out; the order was that section 54 was invalid because it was section 54 which acquired the property.  Those are our submissions, your Honours.

FRENCH CJ:   Thank you, Mr Sheahan.  We will adjourn until 10 o’clock tomorrow morning.

AT 4.17 PM THE MATTER WAS ADJOURNED
UNTIL THURSDAY, 12 MAY 2011