Eight Mile Style, LLC v New Zealand National Party
[2015] NZHC 2409
•2 October 2015
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2014-485-11220 [2015] NZHC 2409
UNDER the Copyright Act 1994, the Fair Trading
Act 1986 and the Law Reform Act 1936
BETWEEN
EIGHT MILE STYLE, LLC First Plaintiff
MARTIN AFFILIATED, LLC Second Plaintiff
AND
THE NEW ZEALAND NATIONAL PARTY
First Defendant
GREGORY JAMES HAMILTON Second Defendant
AND
STAN 3 LIMITED First Third Party
SALE STREET STUDIOS LIMITED Second Third Party
AMCOS NEW ZEALAND LIMITED Third Third Party
AUSTRALASIAN MECHANICAL COPYRIGHT OWNERS SOCIETY LIMITED
Fourth Third Party
BEATBOX MUSIC PTY LIMITED Fifth Third Party
LABRADOR ENTERTAINMENT INC Fourth Party
Hearing: 15 September 2015 Counsel:
L M Kelly for fifth third party (in support) C P Browne for fourth party (opposing)
Judgment:
2 October 2015
EIGHT MILE STYLE, LLC v THE NEW ZEALAND NATIONAL PARTY [2015] NZHC 2409 [2 October
2015]
RESERVED JUDGMENT OF DOBSON J (Interlocutory application to set aside fourth party’s appearance and objection to jurisdiction)
Contents
The immediate issue .......................................................................................................................... [1] The context of the litigation .............................................................................................................. [4] The test ..............................................................................................................................................[11] Does Beatbox’s claim fall within r 6.27?........................................................................................ [14] Should the Court assume jurisdiction? ......................................................................................... [32] An exclusive jurisdiction clause? ................................................................................................. [36] The nature of the dispute .............................................................................................................. [43]
Is there a serious issue to be tried on the merits? ......................................................................... [49] Is New Zealand the appropriate forum for trial? ......................................................................... [52] Alternative consideration if exclusive jurisdiction in Californian courts ................................... [65] Alternative ground under r 6.29 .................................................................................................... [69] Result ................................................................................................................................................ [70]
The immediate issue
[1] The fifth third party (Beatbox), which is an Australian company carrying on business as a music licensor, and the fourth party (Labrador), which is a company registered in California, are links in the chain of supply of contractual entitlement for the defendants to use a particular piece of music in advertisements published in various media in New Zealand 2014. The plaintiffs allege that use of that music breaches their copyright in other original musical works. The defendants joined Beatbox as a third party, pleading contractual arrangements that purported to authorise the defendants’ use of the music. The defendants claim indemnity or contribution to any liability made out against them for breach of the plaintiffs’ copyright.
[2] Beatbox has issued a fourth party notice against Labrador and served it in California. Beatbox has pleaded contractual arrangements with Labrador that allegedly entitled Beatbox to authorise others to use the particular music. It similarly claims indemnity or contribution from Labrador for any liability that might be made out against Beatbox.
[3] Labrador filed an appearance and objection to this Court’s jurisdiction. That triggered Beatbox’s present application, which is for an order that Labrador’s appearance and objection to jurisdiction be set aside.
The context of the litigation
[4] The plaintiffs claim ownership of the copyright in music by Eminem, including a song called “Lose Yourself”. The plaintiffs claim that use of music to promote the first defendant (the National Party) in advertisements for the 2014 general election constitutes a breach of their copyright in the song “Lose Yourself”.
[5] Labrador owns rights to another musical item titled “Eminem Esque” (“the music”). It is of a type generically described as production music which is collated into production music libraries that are offered for commercial use such as in the production of advertisements and trailers for movies. It was included by Labrador in an extensive production music library called the “Spider Cues Library”.
[6] In April 2009, Beatbox and Labrador completed an agreement pursuant to which Beatbox could licence the use in Australia, New Zealand and Fiji of musical tracks in the Spider Cues Library. There is a dispute between Beatbox and Labrador as to whether Eminem Esque was subsequently removed from the Spider Cues Library, but Beatbox’s claim against Labrador is on the basis that rights to authorise others to use Eminem Esque were covered by the terms of its agreement with Labrador at the relevant time. The terms of that contract allegedly include a warranty that none of the music infringes third party rights and an indemnity by Labrador for any liability that is made out for breach of copyright in the use of any of the contents in the library.
[7] The National Party advertisements in issue used Eminem Esque for musical content. The first third party (Stan 3) prepared the advertisement for the National Party, having obtained a licence to use Eminem Esque from the second third party (Sale Street). Sale Street in turn had a licence to use Eminem Esque granted to it by the third third party (AMCOS NZ) and AMCOS NZ had a licence to use Eminem Esque granted by its Australasian affiliate, the fourth third party (AMCOS).
[8] In turn, AMCOS had obtained a licence to use, inter alia, Eminem Esque from Beatbox which allegedly authorised AMCOS to licence others to use that music for purposes such as the advertisements in issue in this proceeding.
[9] Labrador disputes that the New Zealand courts have jurisdiction over it in relation to this dispute. It relies on a provision in its contract with Beatbox that it interprets as requiring all disputes between those parties to be submitted to the jurisdiction of the Californian courts. It also argues that Eminem Esque had been removed from the library before it was used, that it had no involvement with any use of the music in New Zealand, and that it would be disadvantaged by having to participate in litigation in New Zealand, when compared with its position in having to defend litigation in California.
[10] The defendants, as well as AMCOS NZ and AMCOS, supported Beatbox’s application to set aside Labrador’s objection to jurisdiction. However, submissions were made only on behalf of Beatbox and Labrador.
The test
[11] Under r 5.49 of the High Court Rules, a party served with proceedings outside New Zealand can enter an appearance and an objection to the jurisdiction of the New Zealand court. The party who has joined the objecting party has then to apply to set the appearance aside if that party wishes its claim against the party served overseas to proceed. A consequence of the provisions being in that form is that the onus is on the party serving proceedings outside New Zealand to establish that the New Zealand court should assume jurisdiction. The considerations applying in the present circumstances are set out in r 6.29 of the High Court Rules which relevantly provides as follows:
6.29 Court's discretion whether to assume jurisdiction
(1) If service of process has been effected out of New Zealand without leave, and the court’s jurisdiction is protested under rule 5.49, the court must dismiss the proceeding unless the party effecting service establishes—
(a) that there is—
(i) a good arguable case that the claim falls wholly within 1 or more of the paragraphs of rule 6.27; and
(ii) the court should assume jurisdiction by reason of the matters set out in rule 6.28(5)(b) to (d); or
(b) that, had the party applied for leave under rule 6.28,—
(i) leave would have been granted; and
(ii) it is in the interests of justice that the failure to apply for leave should be excused.
…
[12] The relevant matters in r 6.28(5) are:
…
(b) there is a serious issue to be tried on the merits; and
(c) New Zealand is the appropriate forum for the trial; and
(d) any other relevant circumstances support an assumption of jurisdiction.
[13] The present form of the High Court Rules for service of proceedings out of New Zealand came into force on 1 February 2009 and their application was considered by the Court of Appeal in late 2010.1 The Court treated r 6.29 as involving a two-stage inquiry. First, the serving party must establish a good arguable case that its claim falls wholly within one or more of the paragraphs in r 6.27. Once that threshold is established, then a second evaluation is undertaken as to whether the
Court should assume jurisdiction by reference to the considerations that are set out in r 6.28(5)(b)–(d).
Does Beatbox’s claim fall within r 6.27?
[14] The threshold assessment is whether the serving party has a good arguable case that its claim falls wholly within one or more of the paragraphs in r 6.27. Rule
6.27(2) lists 13 categories of case in which an originating document may be served out of New Zealand without leave. The requirement to make out a good arguable case does not relate to any preliminary assessment of the substantive merits of the
claim, but rather whether the serving party can make out a good arguable case that the character of its claim comes wholly within one or more of the paragraphs in r 6.27(2).2 Beatbox submitted that its claim against Labrador comes within four of the categories of case listed in the rule. For Labrador, Mr Browne did not strenuously oppose the character of the claim as coming within at least some of these paragraphs. Instead, his focus in criticising Mr Kelly’s analysis on these points related more to the circumstances of the claim that arguably weighed against a decision on the second test that the New Zealand court should assume jurisdiction.
[15] The first paragraph relied on by Beatbox is r 6.27(2)(a), namely:
(a) When a claim is made in tort and –
(i) any act or omission in respect of which damage was sustained was done or occurred in New Zealand; or
(ii) the damage was sustained in New Zealand.
[16] The second cause of action Beatbox has pleaded against Labrador alleges that to the extent Beatbox is a tortfeasor liable in respect of damage suffered by the plaintiffs, then Labrador is another tortfeasor liable in respect of the same damage. That is materially the same claim as pleaded by parties further up the “supply chain” of contractual entitlements to use the relevant music. In this context, authorising a
breach of copyright is a statutory tort.3 It is clearly a cause of action within
paragraph (a).
[17] I do not accept Mr Browne’s argument that this claim has been added as a means of circumventing what would otherwise be a lack of justification for service of the proceedings outside New Zealand. Claims in these terms are a common feature of the stance adopted by other parties attempting to pass on to those with whom they contracted any liability that ensues from the use of the music.
[18] Further, each cause of action in a claim served out of New Zealand is to be considered separately for the purposes of justifying that service and any cause of
action that is not within the categories specified in the paragraphs of r 6.27(2) should
2 Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd, above n 1, at [33].
3 Compare CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013 at 1033; Rank
Film Distributors Ltd v Video Information Centre [1982] AC 380 at 420—421.
not be allowed to proceed. That approach was adopted by the Court of Appeal in Wing Hung.4 There would accordingly by no point in Beatbox adding a cause of action against Labrador as a joint tortfeasor, for the purpose of justifying service outside New Zealand of a claim containing other causes of action that could not themselves be brought within one of the categories in r 6.27(2).
[19] The second category Beatbox relies on is r 6.27(2)(b)(iii), the essence of which is where a contract sought to be enforced was to be wholly or in part performed in New Zealand.
[20] Mr Browne’s analysis, primarily for other parts of his argument, was that the contract between Labrador and Beatbox is essentially a Californian one. It was executed there, and Labrador’s performance wholly occurred in California in that it collated the music library and made it available from there. The contract did not contemplate Labrador performing any service outside California.
[21] On the other hand, Mr Kelly relied on the purpose of the contract which was to authorise Beatbox as a “sub-publisher” to promote the use of the production music in the Spider Cues Library in Australia, New Zealand and Fiji. Beatbox was to do so in the context of Labrador’s warranty that all the compositions involved were original and none of them infringed any other copyright work or the rights of any third party. For the contract to be effective in generating revenue for the parties, Beatbox would necessarily be licensing the use of material from the library in the relevant territories. On Beatbox’s analysis, the contract was therefore, at least in part, to be performed in New Zealand.
[22] I prefer Beatbox’s characterisation of the contract on this point. Before the sub-publishing agreement was concluded in 2009, it was open to Labrador itself to promote and license the use of music from the library in Australia, New Zealand and Fiji. The contract transferred that entitlement to Beatbox so that revenue would be generated not directly by Labrador, but indirectly by Beatbox marketing and authorising the use of music, inter alia in New Zealand. To that extent at least, the contract was to be performed outside California, including in New Zealand.
[23] The third paragraph of r 6.27(2) relied on by Beatbox is (h), which provides as follows:
(h) when any person out of the jurisdiction is—
(i) a necessary or proper party to proceedings properly brought against another defendant served or to be served (whether within New Zealand or outside New Zealand under any other provision of these rules), and there is a real issue between the plaintiff and that defendant that the court ought to try; or (ii)
a defendant to a claim for contribution or indemnity in respect of a liability enforceable by proceedings in the court:
[24]
Inarguably,
the primary claim between owners of copyright in “Lose
Yourself” and the defendants for breach of copyright in that song have properly been brought in a New Zealand court and any liability made out on the primary claim will be enforceable here. Despite the number of links in the chain of supply of entitlement to use Eminem Esque, the claim against Labrador for contribution or indemnity would be triggered by the same primary liability. Accordingly, the claim served on Labrador is within the category described in r 6.27(2)(h)(ii).
[25] From Labrador’s perspective, the primary issue in Beatbox’s claim against it is its denial that the warranty and indemnity in respect of the content of the library applied to Eminem Esque at the relevant time. Labrador’s case would be that Eminem Esque was removed from the library in 2012. Beatbox dismisses that argument as a weak makeweight.
[26] If Beatbox establishes that Eminem Esque remained in the library at the relevant time, then all those involved in the supply chain for entitlement to use Eminem Esque are likely to have a common interest in defending the plaintiffs’ allegation that it breached copyright in “Lose Yourself”. On that fundamental issue in the claim as between plaintiffs and defendants, the defendants and all those joined because of their participation in the supply chain for use of Eminem Esque, depend on a contest between the creator of the plaintiffs’ work and the creator of the allegedly infringing work. The defence to claims for breach of copyright in artistic work conventionally involve an assertion of originality by the creator of the allegedly infringing work.
[27] To the extent that Labrador is the penultimate link5 in closing the chain of supply for use of Eminem Esque, I am also satisfied that it is a necessary and proper party to these proceedings.
[28] The last of the paragraphs relied on by Beatbox is r 6.27(2)(j), which is in the following terms:
(j) when the claim arises under an enactment and either—
(i) any act or omission to which the claim relates was done or occurred in New Zealand; or
(ii) any loss or damage to which the claim relates was sustained in New Zealand; or
(iii) the enactment applies expressly or by implication to an act or omission that was done or occurred outside New Zealand in the circumstances alleged; or
(iv) the enactment expressly confers jurisdiction on the court over persons outside New Zealand (in which case any requirements of the enactment relating to service must be complied with):
[29] Here, Beatbox’s claim for contribution or indemnity alleges Labrador is a joint tortfeasor for liabilities arising under the Copyright Act 1994. Any alleged infringement occurred in New Zealand so that the damage allegedly sustained by the plaintiffs would have occurred here.
[30] There must also be a good arguable case that the claim is within this category.
[31] Accordingly, Beatbox has made out the first requirement, namely to bring its claims within r 6.27.
Should the Court assume jurisdiction?
[32] A discrete set of considerations applies under this second stage. I do not treat the strength of Beatbox’s grounds under the first threshold inquiry as supporting its case at this second stage. Because New Zealand law is essentially territorial, and as a matter of comity between nations, the perspective applying to this second inquiry
is on the premise that the Court should be reluctant to assert jurisdiction over foreigners. That approach is long-standing, and is consistently recognised.6
[33] The assessment of whether to assume jurisdiction requires the serving party to establish the propositions in r 6.28(5)(b) to (d), which I repeat as follows:
· that there is a serious issue to be tried on the merits; and
· that New Zealand is the appropriate forum for the trial; and
· that any other relevant circumstances support an assumption of jurisdiction.
[34] Labrador’s opposition to this Court assuming jurisdiction relied on two principal matters that impact in various respects on the considerations that are to be assessed:
(a) the contract between Labrador and Beatbox contains a provision treated by Labrador as committing the parties to the exclusive jurisdiction of the California courts for the resolution of any dispute; and
(b)the critical issue from Labrador’s perspective, namely whether Eminem Esque was included within the library to which its warranty and indemnity applied, is entirely discrete from the issues otherwise arising in these proceedings and has no connection with New Zealand.
From Labrador’s perspective, that is a Californian issue in both factual and legal
terms.
[35] It is appropriate to consider both propositions at the outset of the second stage assessment.
An exclusive jurisdiction clause?
[36] The sub-publishing agreement between Labrador and Beatbox included the following provision:
This agreement shall be binding and shall inure to the benefit of the parties hereto, their successors and assigns and shall be construed in accordance with the laws and exclusive jurisdiction of the State of California of the USA.
[37] The history of the drafting of the agreement shows that the words “and exclusive jurisdiction of the State of California” were added at Labrador’s instigation. In a contract between a Californian publisher and an Australian sub- publisher, the clause is clearly for the benefit of the publisher which gains jurisdictional advantage, if it is enforceable as such.
[38] Beatbox denies that the clause commits the parties to the exclusive jurisdiction of the California courts. It invokes the contra proferentum rule against Labrador and cites authorities that suggest an exclusive jurisdiction clause is required to be stipulated in express terms. Beatbox argues that the relevant words do no more than require the parties to construe the terms of the agreement exclusively in accordance with Californian law. It argues that the absence of any reference to disputes or to differences being referred to the courts in the State of California deprive the clause of the status Labrador asserts for it.
[39] Beatbox cited decisions of two United States courts on disputed interpretation of jurisdiction clauses in contracts to support the proposition that the contra proferentum rule applies, and that a party asserting exclusive jurisdiction of a particular court needs to have stipulated that restriction in express terms.7 In both cases, the relevant jurisdiction clauses recognised the jurisdiction of particular courts, but in non-exclusive terms. In both decisions, the clauses were insufficient to
require disputes to be litigated in the identified courts over the objection of other parties.
[40] The clause clearly requires the agreement to be construed in accordance with the laws of California. Beyond that, I accept Beatbox’s argument that any further stipulations are unclear. Recognising the “exclusive jurisdiction of the State of California” does not add anything without any reference to the courts of that State, the implied addition of which Labrador did not seek to justify. Any such implied addition would be difficult over Beatbox’s objection and its entitlement to invoke contra proferentum.
[41] Further, there is insufficient in the wording to infer the scope of disputes that might be committed to resolution in Californian courts. Arguably, they might only be disputes as to the construction of the agreement, which would not readily extend to disputes over the application of warranty and indemnity clauses, the interpretation of which is not in issue.
[42] I accordingly assess considerations on the assumption of jurisdiction on the basis that Labrador cannot insist, as a matter of contract, on the present dispute being submitted to the courts in California.8
The nature of the dispute
[43] Labrador treats the primary issue as its denial that Eminem Esque was in the library to which the warranty and indemnity applied at the appropriate time. Because that issue has nothing to do with New Zealand, it was relied on as a substantial factor as to why the Court should not assume jurisdiction.
[44] The president of Labrador, Mr Webb, completed an affidavit that explained Labrador’s view of the consequences of making changes to the content of the relevant library. On his analysis, a restructuring in April 2012 included the removal of Eminem Esque from the Spider Cues Library. Subsequent dealing in March 2014 with Mr and Mrs Baker, the principals of Beatbox, allegedly included an agreement by them to replace their entire library with one that was sent to them at that time. Consistently with the restructuring in 2012, the library at that stage also excluded
Eminem Esque.
8 I return below to consider whether jurisdiction should be assumed if I am wrong on this, and the
[45] That construction of dealings between the parties was rejected by Mr Baker, who characterised changes in the content of the library in 2012 and 2014 as permissive, and not mandatory, at least so far as they related to Eminem Esque. Emails relevant to these dealings between the parties tend to support Mr Baker’s view of them. On the evidence thus far, there is no communication in 2012 that required Beatbox to substitute the form of the library of music previously available with an amended library from that time. Mr Webb’s email dated 4 April 2012 is cast in permissive terms, suggesting that Beatbox may prefer to use the newly formatted library rather than the previous one, but not that it was obliged to do so. The paragraph in the email focused upon was Mr Webb’s statement:
If you choose to use the cues you already have for this process, don’t bother to download the Albums, just download the Excel file and the Word document.
[46] Any requirement for Beatbox to be confined to the reformatted libraries would need to imply, as an addition to this paragraph, words along the lines:
… and henceforth you are only entitled to market the tracks now listed in the
Excel file and the Word document.
On the evidence thus far, there does not appear sufficient to sustain any such implication.
[47] The dealings between the parties in March 2014 did include express reference to music that had to be removed from the library. The items required to be removed at that time do not include Eminem Esque.
[48] I accordingly assess the considerations on the second stage of the test on the basis that there is at least a serious issue to be tried on the premise that the warranty and indemnity provided by Labrador extended to Eminem Esque at the relevant time.
Is there a serious issue to be tried on the merits?
[49] The provisional analysis just undertaken confirms that there is a serious question, at least so far as Labrador’s primary objection to the claim against it is concerned. If the warranty and indemnity provisions in the sub-publishing
agreement do apply to Eminem Esque at the relevant time, then a further issue is
likely to be whether Eminem Esque infringes copyright in “Lose Yourself”.
[50] Mr Browne was keen to relegate that issue as contingent and not of significant importance to Labrador. However, he was not prepared to abandon resort to argument that Eminem Esque was an original work and did not offend copyright in “Lose Yourself”. Mr Browne suggested that Labrador would be in no better position than Beatbox or other parties further up the chain of supply of entitlement to use Eminem Esque in defending the originality of Eminem Esque. If drawn into that issue, Labrador would seek to involve the composer of Eminem Esque, a Mr Michael Cohen, with whom Labrador apparently has a contract that includes a warranty from Mr Cohen as to the originality of his work, and an indemnity for claims of the type that have now arisen.
[51] It would be unrealistic to omit from a consideration of the serious issues to be tried the substantive issue as to whether there has been a breach of copyright. Certainly, there was no suggestion on behalf of either Beatbox or Labrador that infringement would be conceded. To do so could well compromise their entitlements to enforce the respective indemnities on which they rely. Even if, as between each of the parties in the contractual chain authorising use of the music, it is no more than an issue that is passed down the line, it should be treated as among the issues to be tried on the merits and one that clearly raises a serious issue.
Is New Zealand the appropriate forum for trial?
[52] Labrador raised a number of factors in support of the proposition that California is the more convenient forum for resolving its dispute with Beatbox. First, that disputes arising under a contract that is subject to Californian law are better resolved in Californian courts. In a New Zealand court, any relevant Californian law would need to be the subject of expert evidence, which adds to the cost and complexity of litigating in New Zealand. Without dismissing that consideration, I am not inclined to give it substantial weight. The issue of whether Eminem Esque was covered by the warranty and indemnity provisions is essentially a factual one. Neither party was prepared to make a definitive submission as to
whether Californian and New Zealand law on what constitutes a breach of copyright in an original musical work were relevantly the same or different. There must at least be a prospect that a warranty and indemnity applying to a contract that authorises use of the music in foreign jurisdictions assumes the application of copyright laws in those jurisdictions to any claim that it infringes third party rights.
[53] A related concern raised for Labrador was that its entitlement to re-argue matters of Californian law on any appeal in New Zealand would be hampered because of its characterisation as an issue of fact rather than one of law. That is not a material consideration in the present case. A general right of appeal from a decision of the High Court would enable an appellant in the New Zealand Court of Appeal to re-argue the correctness of the application of Californian law. Evidence from competing experts as to the relevant Californian law would certainly not depend on the credibility of those witnesses. A New Zealand appellate court would almost inevitably treat itself as not impaired in forming its own views on the correct application of Californian law by the absence of having seen and heard the witnesses who gave evidence about it at trial.
[54] Second, Labrador also argued that it would be less convenient and more expensive for it to litigate in New Zealand. There was no evidence on the projections of the relative extent of legal expenses that are likely to be incurred in New Zealand or in California. Whilst it is tempting to take judicial notice of relatively higher litigation costs in the United States than in New Zealand, that point was not raised on behalf of either party and I disregard it.
[55] That leaves a third concern regarding the greater costs necessarily involved for a party litigating in a foreign jurisdiction. Witnesses for Labrador would have to travel to New Zealand, and pre-trial processes including their briefing are likely to be more expensive at a distance. I recognise that as a factor to weigh in the mix.
[56] Fourth, Labrador said it would be impaired in adding the composer of Eminem Esque as a party because of a clause in its contract with Mr Cohen described as bestowing exclusive jurisdiction on the courts of California. That agreement was not in evidence. Given that Labrador characterises the clause in its
agreement with Beatbox as having that status when I am unable to accept that it does, I cannot attach any substantial weight to Labrador’s concern that a putative exclusive jurisdiction clause will preclude it joining the composer.
[57] Fifth, if Mr Cohen is not joined as a party (or if he is but elects to take no part), Labrador would see additional difficulties in obtaining evidence from him, given that it would be much more straightforward to compel evidence from him in a Californian court where he resides than the far more elaborate process involved in obtaining evidence in California from him for a proceeding in New Zealand.
[58] Again, I recognise that as a factor but it cannot be decisive.
[59] Sixth, Labrador raised a concern about additional difficulties in obtaining evidence from a Mr Deitz, who was, at the relevant time, either an employee of, or contractor to, Labrador, and who attended a meeting with Mr and Mrs Baker in California in 2014. Mr Deitz apparently now works for a competitor of Labrador, and Mr Webb anticipates that it would not be possible to obtain Mr Deitz’s release from his employment to enable him to travel to give evidence in New Zealand.
[60] The parties take opposing views as to what was agreed informally at the 2014 meeting Mr Deitz attended. Labrador would argue that Beatbox agreed to amend the library it would promote to the reformatted version that Labrador was then making available (and which excluded Eminem Esque). Beatbox disputes that it made any such commitment.
[61] Mr Kelly downplayed the importance of recollections as to what was said at the 2014 meeting, when contemporaneous emails are said to reflect the outcome of the meeting. Further, Mr Kelly submitted that it would be acceptable for Mr Deitz to give evidence by way of video link from California, in the course of proceedings in New Zealand.
[62] I am satisfied that there will most likely be sufficient means of dealing with any evidence from Mr Deitz, so as not to materially impair Labrador’s ability to defend its position in proceedings in New Zealand.
[63] For its part, Beatbox argued that New Zealand is the appropriate forum because it is compellingly so for all aspects of the dispute between all other parties, and because its claim against Labrador is so closely connected with the dispute involving all the other parties. The alternative would require Beatbox to defend its position without recourse to the party whose warranty and indemnity it relied on. Beatbox would also be subject to the risks created by pursuing its claim to contribution or indemnity for the adverse consequences of its reliance on the warranty and indemnity in subsequent litigation in another jurisdiction. The risks in that sequential determination would be greater if (in all respects without prejudice to its denials) Beatbox was persuaded to contribute to a settlement of the overall proceeding, and then sought recovery of a contribution to that sum in subsequent proceedings in California.
[64] Mr Browne did not suggest that New Zealand was other than the appropriate forum for the dispute between all existing parties. That has been accepted by Beatbox, despite its location out of New Zealand. Once the character of the dispute between Beatbox and Labrador is treated as wider than the narrow issue of whether Eminem Esque was covered by the warranty and indemnity at the relevant time, I am satisfied that New Zealand is the appropriate forum for the trial of the present dispute. The appropriateness of the forum substantially outweighs the additional imposition of expense and inconvenience that will be caused for Labrador. I have reached this view appreciating the reluctance the Court should have to assert its jurisdiction over a foreign entity.
Alternative consideration if exclusive jurisdiction in Californian courts
[65] Before completing this analysis, it is appropriate to reflect on the second test in the different circumstances that would pertain if I am wrong in interpreting the choice of law provision in Beatbox’s contract with Labrador as not requiring all disputes to be determined in the courts in California. The existence of an exclusive jurisdiction provision is not necessarily determinative in declining jurisdiction for the dispute in New Zealand. It would, however, require the evaluation to be undertaken on a different basis.
[66] There is a heavy onus on a party serving proceedings outside New Zealand to justify proceeding with them here, contrary to an exclusive jurisdiction clause that requires disputes to be resolved elsewhere. In an English decision frequently cited on this point, The Eleftheria, Brandon J acknowledged that there is a discretion for the Court not to grant a stay but the burden of proving that is on the serving party
and that strong cause to avoid a stay is required.9 The Eleftheria involved claims on
bills of lading for delivery of goods carried by sea to a port other than that stipulated in the bills of lading. In suing on the bills of lading in the English court, the cargo interests were confronted with a provision that entitled the owners of The Eleftheria to insist on disputes being resolved in Athens. In addition to recognising that the discretion not to stay in such circumstances involved the Court taking into account all circumstances of the particular case, Brandon J stated that the following matters
could be taken into account, where they arose:10
… (a) In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign courts; (b) Whether the law of the foreign court applies and, if so, whether it differs from English law in any material respects; (c) With what country either party is connected, and how closely; (d) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages; (e) Whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would: (i) be deprived of security for that claim, (ii) be unable to enforce any judgment obtained; (iii) be faced with a time-bar not applicable in England; or (iv) for political, racial, religious or other reasons be unlikely to get a fair trial.
[67] The approach in The Eleftheria has generally been adopted in New Zealand.11
The present dispute arises in very different circumstances from a dispute between a carrier and cargo owners in relation to international carriage of goods by sea. Mr Browne’s focus confined Labrador’s perception of the dispute to the issue of whether the warranty and indemnity in the contract covered Eminem Esque at the relevant time. Despite that, the chain of contracts effecting the same purpose of authorising the use of the music places the parties to all of those contracts in a
dispute that shares common features.
9 The Eleftheria [1969] 2 All ER 641.
10 The Eleftheria, above n 9, at 645.
11 For example, Society of Lloyds’ & Oxford Members’ Agency Ltd v Hislop [1993] 3 NZLR 135 (CA) at 143; Kidd v Van Heeren [1998] 1 NZLR 324 (HC).
[68] Were it necessary to do so, I would find that the importance of resolving all aspects of the substantive claim of breach of copyright does give sufficiently strong cause for the Court to exercise its jurisdiction not to stay the New Zealand proceeding to the extent that Labrador has been joined to it.
Alternative ground under r 6.29
[69] Mr Kelly advanced an alternative argument that the Court should acknowledge, under r 6.29(1)(b) that the Court would in any event have granted leave to serve Beatbox’s claim against Labrador out of the jurisdiction. In some circumstances, that alternative approach gives rise to additional considerations because of the relevance of a broader inquiry into the interests of justice. It is unnecessary to traverse that alternative ground in this case. Without detailed analysis, I am satisfied that Mr Kelly’s argument would most likely have been upheld.
Result
[70] Labrador’s appearance and protest to jurisdiction is set aside. Beatbox is
entitled to costs and disbursements on its application. I will receive memoranda if the parties cannot agree.
Solicitors:
Hudson Gavin Martin, Auckland for plaintiffs
Kiely Thompson Caisley, Auckland for defendants
Nick Carter, Auckland for first third partyDominion Law, Auckland for second third party
Lee Salmon Long, Auckland for third and fourth third parties
Rennie Cox, Auckland for fifth third party
Wilson Harle, Auckland for fourth party
Dobson J
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