Australasian Performing Right Association Limited (ACN 000 016 099) v Pashalidis

Federal Court of Australia|2000-08-02|Before: Moore J

Introduction 1 These proceedings were commenced on 18 May 1999 by the Australasian Performing Right Association Limited ("the applicant") under ss 36 and 115 of the Copyright Act 1968 (Cth) ("the Copyright Act"). The applicant is, in plain terms, a collecting society which controls the rights of public performance, broadcasting and diffusion of musical (and associated literary and dramatic) works within Australia. The respondent is the registered proprietor of the business currently trading as "Bodyworks Fitness Clubs", which operates fitness centres in the Australian Capital Territory. He has taken no part in these proceedings. The applicant alleges that the respondent has infringed and continues to infringe the copyright in musical and literary works (namely songs and lyrics) of which the applicant is either the owner or the agent of the owner, by performing them or authorising their performance in his fitness centres. 2 On 14 September 1999, I made orders that the issues of liability and damages be determined separately. I then heard evidence and submissions from the applicant on liability and made orders restraining the respondent from performing in public, or authorising the performance in public of, certain musical and literary works (which are detailed later in these reasons). The proceedings have now reached a point where I am considering the issue of damages. It is desirable to set out in greater detail events leading to the commencement of these proceedings, and the course of these proceedings in the Court.

The course of these proceedings 12 The applicant commenced proceedings in the Court on 18 May 1999. On 21 June 1999, Ms McGregor spoke with the respondent by telephone. In evidence is a file note of their conversation, prepared by Ms McGregor on 22 June 1999. It reads: "… I commenced by thanking [Stephen Pashalidis] for calling me back and asked him what he wanted to do about this matter. He said that he was a reluctant person to deal with about this matter. He is not sure what is going on. He keeps getting invoices with the total changing and now he has a Statement of Claim. He said that, "It is bloody ridiculous and those "leaches" have sucked off thousands of dollars from me over the years and for what? To pay their bloody wages". Then he said, "Sorry, its no use talking to you about this you're just a person but there are lots of words I could use". I said that I thought I could clear up a misunderstanding namely that: 1. Correspondence he is receiving from APRA together with invoices are likely to relate to licence fees for Southlands Centre. 2. Correspondence from Faulkner & Associates which have now culminated in Application and Statement of Claim relate to Belconnen and Kaleen. SP: How would I know that? EM: Have a look at the headings on our correspondence, last two letters namely December and September 1998 both make reference to the premises. SP: And why are we commencing in Sydney anyway when I'm in Canberra? EM: We are here and the Federal Court is here. SP: You're suing for a breach which occurred here so you should sue here. God, Sydney … , you may as well be suing me in Darwin. EM: I don't see how Darwin is relevant. We're entitled to sue where we are, the law is a Federal law - if you have any concerns about it, you should get legal advice. I suggested that we should try and work out a way to resolve the matter. He said: "I want to enter into some payment plan over six months or something. He said he wants to resolve it, that's why he is talking to me. I suggested firstly that he send in to me the latest invoice he has received from APRA and I will try and get some instructions on the amounts there. Mr Pashalidis said that dealing with APRA was like dealing with a brick wall. I said that he had not corresponded with this office or as far as I was aware tried to contact anyone from this office in respect of the correspondence to him about Belconnen and Kaleen. He said "No I don't deal with you I deal with APRA. I said, "So you have written letters to APRA about our correspondence?" He said, "Yes"> [sic] In respect of Belconnen and Kaleen, he should send in a current timetable for each place and some proposal to resolve the matter, which I'll get instructions on. Conversation concluded with me giving him the fax number. I said that the matter was in court on 29 June but if there was some meaningful discussion between us in between that time we could talk before then about what we will do on that day. I would have to get instructions but if it looks like our discussions are going somewhere it may be that we will stand the matter over while we continue them." 13 On the evidence before me, this was the last time the respondent communicated with the applicant. The respondent did not appear at the first directions hearing on 29 June 1999. I adjourned the matter to 22 July 1999 and directed the applicant to inform the respondent of this date by registered post addressed to the respondent at his residential address, namely 28 Anderson Street, Chifley, ACT. The respondent again failed to appear on 22 July 1999. 14 On 19 August 1999, the applicant filed a notice of motion seeking separate determination of the issues of liability and damages, and summary judgment restraining the respondent from performing in public, or authorising the performance in public of, certain musical and literary works. The notice of motion, and the supporting affidavits, were sent to the respondent by registered post at his residential address, and were also served personally on him at that address. I heard the motion on 14 September 1999. The respondent did not appear, though the notice of motion with which he was served contained the time and date of the hearing. 15 The applicant moved, under O 29 r 2 of the Federal Court Rules ("the Rules"), for separate determination of liability and damages. It was submitted that this was an appropriate case for such an order for two reasons. First, there was no likelihood of duplication of evidence or argument. And second, the Court should infer from the respondent's failure to take any part in the proceedings that only orders of the Court, including costs orders, would bring the respondent to further discuss the issues in dispute between the parties, and thus would raise the possibility of settlement. I made the order sought. 16 The applicant moved, under O 20 r 1 of the Rules, for summary judgment. The Court has the power to give summary judgment where there is (a) evidence of the facts on which the claim is based, and (b) evidence by a responsible person on behalf of the applicant that in that person's opinion there is no defence. As to (b), such an opinion was given by Ms McGregor, a solicitor employed by the applicant, in affidavit sworn 18 August 1999, and by Nicholas Hampton, the company secretary of the applicant, in an affidavit sworn the same day. 17 As to (a), the asserted facts on which the applicant's claim was based were: (i) that copyright subsists in the works in which the applicant asserts copyright; (ii) that the applicant is the owner of the copyright in those works; (iii) that the works were performed in public at the premises of the respondent; (iv) that the respondent operated the business conducted at those premises; and (v) that the performances were not licensed by the applicant. 18 Before addressing these issues, it is necessary to refer to the works on which the applicant's claim is based. They fall into two groups. The first group consist of the music and lyrics of the following sixteen songs: · "Tip Of My Tongue"; · "Solid Rock"; · "Don't Stop Movin"; · "Wrap Me Up"; · "Read My Lips"; · "I'll Be Missing You"; · "Santa Maria"; · "When I Die"; · "One More Time"; · "Jellyhead"; · "Whatever"; · "Sex Drive"; · "New Year's Day"; · "You Think You're A Man"; · "Last Thing On My Mind"; and · "Sunchyme". 19 The second group is the "APRA repertoire". A description of the APRA repertoire was annexed to the notice of motion. It read: "The Applicant: (a) owns the copyright in respect of its application to the performance in public; and/or (b) has the power to grant licences for the performance in public of practically all musical and literary works performed throughout Australia. The Repertoire comprises the works written by members of the Applicant - which constitute more than 22,000 Australian composers, authors and publishers of music - and members of affiliated societies in countries throughout the world. The Applicant has carried on business as an association of composers, authors and publishers of music for the purpose of licensing the public performance of musical and literary works since 1926. The Applicant maintains a catalogue of its Repertoire consisting of a card index and computer records. The index assembles information provided by its members and members of affiliated societies. The catalogue lists the works in which the Applicant owns the copyright in respect of their applications to the performance of the works in public. At present there are about 2.5 million works listed in the catalogue. The items in the catalogue may be inspected by arrangement with the Applicant." 20 As to subsistence and ownership of copyright (issues (i) and (ii) above), the applicant relied on s 126 of the Copyright Act, which relevantly provides that in an action for infringement of copyright: "(a) copyright shall be presumed to subsist the in the work … to which the action relates if the defendant does not put in issue the question whether copyright subsists in the work …; and (b) where the subsistence of the copyright is established - the plaintiff shall be presumed to be the owner of the copyright if he or she claims to be the owner of the copyright and the defendant does not put in issue the question of his or her ownership." 21 The respondent has not appeared and has not filed any documents in these proceedings to put in issue the subsistence and ownership of the copyright. The only occasion on which the respondent apparently resisted this aspect of the claim was in his letter dated 5 March 1998 (see par 9 above), where he stated, "As it also occurs to me that not all music in existence in the world today is encompassed by APRA". There is no reason why s 126 should not be given full effect. In any event, the affidavit of Mr Hampton annexed, for works in the first group (see par 18 above):

· computer printouts from the applicant's database of the author and publisher interests in the works; · deeds of assignment of copyright from the claimed author(s) to the applicant, or to a foreign collecting society; and · where the assignee is a foreign collecting society, a contract of reciprocal representation between the applicant and that society.

22 Additionally, counsel for the applicant offered the concession that any order restraining the respondent from publicly performing, or authorising the public performance of, works in the APRA repertoire be limited to the APRA repertoire as at the date of the order. 23 As to issue (iii) above, there was evidence before me in the affidavits of Matthew Fackrell sworn 17 August 1999, Deborah Fackrell sworn 16 August 1999 and James Fleming sworn 17 August 1999 of the public performance of the works in the first group at the Kaleen and Belconnen premises. Mr Fackrell, then employed as a "Licensing Representative" by the applicant, deposed to having visited the Kaleen premises on 3 October 1997 and 2 March 1999, and the Belconnen premises on 2 March 1999, and having heard and recorded works in the first group being played on a cassette player during aerobics classes and over a background music system in an area with exercise bikes and treadmills, with staff and customers present. Ms Fackrell deposed to having visited the Kaleen premises on 1 August 1997, and Mr Fleming, then a "Compliance Officer" employed by the applicant, deposed to having visited the Kaleen and Belconnen premises on 11 August 1998. Their evidence was to the same effect as that of Mr Fackrell. It was submitted at the playing of the works in the presence of staff and customers constituted a "public" performance of the works: Australasian Performing Right Association Ltd v Telstra Corporation Ltd (1997) 191 CLR 140 and Australasian Performing Right Association Ltd v Commonwealth Bank (1992) 40 FCR 59. 24 As to issue (iv), the applicant adduced evidence that the respondent was the proprietor of the business operating at the Mawson, Kaleen and Belconnen premises. First, there were business extracts from the Australian Securities and Investments Commission for the businesses "Kaleen Fitness Club" (dated 24 November 1998) and "Bodyworks Fitness Club" (dated 30 November 1998), which named the respondent as the proprietor of the businesses. Next, there was a business names extract from the ACT Registrar-General's Office dated 9 September 1999, naming the respondent as the proprietor of the business name "Bodyworks Fitness Clubs", and an application to register the name, filled out by the respondent, naming the Mawson, Kaleen and Belconnen premises as those of the business. Third, there were the letters from the respondent, set out in pars 5 and 9 above, which were on the letterhead of "Bodyworks - The City's Fitness Centre" and contained the addresses of the Mawson, Kaleen and Belconnen premises. Last, Mr Fackrell, Ms Fackrell and Mr Fleming stated in their affidavits that the Bodyworks business name was displayed on the premises they visited. 25 As to issue (v), in his affidavit sworn 18 August 1999 Mr Hampton deposed to the fact that none of the performances of which evidence was adduced were licensed by the applicant. 26 Copyright in literary, dramatic and musical works confers an exclusive right to perform them in public: Copyright Act s 31(1)(a)(iii). It is an infringement of copyright in those works to perform them in public or authorise their performance in public: ibid s 36(1). Performance includes "any mode of … aural presentation": ibid s 27(1)(a). The playing of songs in a fitness centre during aerobics classes and in an area with exercise bikes and treadmills used by customers and supervised by staff is clearly a "public" performance of those songs. The evidence adduced by the applicant and summarised in pars 20-25 proved all the elements required by the Act to be proved, and a case was clearly made out by the applicant for summary judgment under O 20 r 1. Accordingly, I made the following orders: "1. Issues of damages and quantum arising under paragraphs 8 and 9 of the Statement of Claim filed in these proceedings, be determined separately from, and after the trial of, issues of liability arising for determination in these proceedings. 2. The Respondent be restrained from: (a) performing in public, without the licence of the Applicant, the following musical and literary works (the "Works"): (i) "Tip of My Tongue" - Music (ii) "Tip of My Tongue" - Lyrics (iii) "Solid Rock" - Music (iv) "Solid Rock" - Lyrics (v) "Don't Stop Movin'" - Music (vi) "Don't Stop Movin'" - Lyrics (vii) "Wrap Me Up" - Music (viii) "Wrap Me Up" - Lyrics (ix) "Read My Lips" - Music (x) "Read My Lips" - Lyrics (xi) "I'll Be Missing You" - Music (xii) "I'll Be Missing You" - Lyrics (xiii) "Santa Maria" - Music (xiv) "Santa Maria" - Lyrics (xv) "When I Die" - Music (xvi) "When I Die" - Lyrics (xvii) "Whatever" - Music (xviii) "Whatever" - Lyrics (xix) "Sex Drive" - Music (xx) "Sex Drive" - Lyrics (xxi) "One More Time" - Music (xxii) "One More Time" - Lyrics (xxiii) "Jellyhead" - Music (xxiv) "Jellyhead" - Lyrics (xxv) "Last Thing on My Mind" - Music (xxvi) "Last Thing on My Mind" - Lyrics (xxvii) "Sunchyme" - Music (xxviii)"Sunchyme" - Lyrics (xxix) "New Years Day" - Music (xxx) "New Years Day" - Lyrics (xxxi) "You Think You're A Man" - Music (xxxii) "You Think You're A Man" - Lyrics (b) performing in public, without the licence of the Applicant, the musical and literary works referred to in the Schedule annexed to the Notice of Motion filed in these proceedings on 19 August 1999 [set out in par 19 above] … being any work contained, as at the date of this order, in the APRA repertoire as defined in the Schedule. (c) Authorising, without the licence of the Applicant, the performance in public of the Works, or any work contained, as at the date of this Order, in the APRA Repertoire (as defined in the Schedule). 3. The Respondent pay the Applicant's costs of the proceedings up to and including today." 27 An initial attempt to serve these orders on the respondent was thought to be ineffective because of the omission of the words from the sealed copies of the orders: "To the Respondent: Stephen Pashalidis, if you do not refrain from doing the acts described in paragraphs 2(a) - (c) of this Order, you are liable to imprisonment or sequestration of property." On 10 February 2000 I granted leave to the applicant to re-enter the orders of 14 September 1999 with those words included, and on 1 May 2000 I made orders directing the applicant to serve the orders of 14 September 1999 by sending a copy by registered post to the respondent's residential address, and by leaving a copy at each of the Mawson, Kaleen and Belconnen premises. The orders of both 14 September 1999 and 1 May 2000 were, according to affidavits of service filed in these proceedings, served on the respondent personally at the Mawson premises on 10 May 2000, and were mailed to the respondent's residential address on 8 June 2000. 28 On 1 May 2000 a timetable was set for the determination of the issue of damages. The timetable for evidence and the date of the hearing on damages were contained in orders of 1 May 2000 that were served personally on the respondent on 10 May 2000 and mailed to his residential address as noted in the previous paragraph. I am satisfied from affidavits of service filed in the proceedings that the applicant's evidence on this issue was served personally on the respondent on 27 June 2000 at the Batemans Bay premises referred to in par 3 above. I heard the issue of damages on 29 June 2000. The respondent filed no evidence and did not appear at the hearing.

Consideration of the issue of damages 29 In making the orders on 14 September 1999 restraining the respondent from performing the works specified in order 2(a) and the works comprehended by order 2(b), I was satisfied that there had been infringement of the copyright in those works by the respondent. There is evidence that establishes the infringing conduct continues. Section 115(2) of the Copyright Act entitles the applicant to claim damages and, in the present case, they have been quantified by reference to the licence fees the respondent would have paid had he sought to regularise his use of the works in question. The evidence establishes that the fees amount to $5,149.44 for the Kaleen premises for the period 1 February 1997 to 1 February 2000 in relation to music played at aerobic and circuit classes, and for the Belconnen premises the fees amount to $5,166.72 for the period 1 April 1997 to 1 April 2000. The evidence establishes a further sum of $185.70 and $167.36 would have been payable in relation to recorded background music for the centres (respectively) for the same period. The applicant did not press for damages for the period between these concluding dates and the date of the hearing, namely 29 June 2000. I am satisfied compensatory damages totalling $10,669.22 should be awarded representing fees that the applicant would have received. 30 This leads to a consideration of the application for additional damages under s 115(4) of the Copyright Act. That subsection provides: "(4) Where, in an action under this section: (a) an infringement of copyright is established; and (b) the court is satisfied that it is proper to do so, having regard to: (i) the flagrancy of the infringement; (ii) any benefit shown to have accrued to the defendant by reason of the infringement; and (iii) all other relevant matters; the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances." 31 The applicable principles in awarding damages under s 115(4) have comparatively recently been considered by a Full Court of this Court in Raben Footwear Pty Ltd v Polygram Records Inc (1997) 37 IPR 417. Section 115(4) confers a wide discretionary power on the Court which can be exercised where the conduct of the infringer is flagrant, though this is not a precondition for the exercise of the power. As Tamberlin J said at 432: "If the court is satisfied that any one or more of the circumstances set out in subs 4(b) are present, it has a discretion to award such damages as it considers appropriate. In ordinary usage "flagrancy" connotes conduct which could probably be described as "glaring, notorious, scandalous" or "blatant": see the New Shorter Oxford English Dictionary, 1993, at 965. Copinger and Skone-James on Copyright, 13th ed, 1991 p 344 state that: "Flagrancy implies scandalous conduct, deceit including deliberate and calculated infringement where a defendant reaps a pecuniary advantage in excess of the damages he would otherwise have to pay." In Prior v Lansdowne Press Pty Ltd [1977] VR 65; (1975) 12 ALR 685, Gowans J, in considering a claim for additional damages under s 115(4) of the Act, said at VR 70; ALR 690: "I have come to the conclusion that the evidence as to the publication shows primarily a case of mistake and perhaps carelessness, but it does not show a case of flagrancy, or calculated disregard of the plaintiff's rights or cynical pursuit of benefit, or other matter justifying the award of additional damages beyond what is required for compensation." [emphasis added] While I do not consider that it is appropriate to describe the infringement in the present case as "flagrant", I consider that the award of additional damages should not be set aside or varied. It was open to the court to award additional damages, in the present circumstances, where his Honour found that the Lewys were well aware that they were taking a risk in order to secure an undeserved but substantial profit." 32 There was a division of opinion in that case whether the conduct of the infringer was flagrant. In the present case the respondent was well aware that his conduct involved an infringement of copyright and appears to have taken the position he did because of a belief that the amounts requested by way of licence fees for the Kaleen and Belconnen premises would, at least in part, be paid to support an inefficient or inappropriate system established to protect the rights of owners of copyright. However the respondent has not entirely ignored that system in the sense that licences have been sought and paid for in relation to at least one centre he operated for at least the years 1996 to 1998. However, his views, as reflected in his actions concerning the Kaleen and Belconnen premises, do reflect more than indifference. The respondent appears quite prepared to use works the subject of copyright for his own commercial gain without being prepared to recompense the body in whom the copyright is vested (or who may enforce the rights of the owners), for the benefit of the authors of the relevant works. 33 In these circumstances, damages should be awarded under s 115(4). While initially reluctant to volunteer a figure, counsel for the applicant ultimately mentioned the sum of $50,000. However that is inappropriately high. I consider the sum of $5,000 more appropriate. Accordingly I order that the respondent pay compensatory damages in the sum of $10,669.22, additional damages in the sum of $5,000 and the applicant's costs of the proceedings to the extent not already ordered. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.

Counsel for the applicant on 14 September 1999: Mr M R Hall

Counsel for the applicant on 29 June 2000: Mr R J Webb

Solicitor for the applicant on 14 September 1999: Faulkner & Associates

Solicitor for the applicant on 29 June 2000: Banki Haddock Fiora

Dates of Hearing: 14 September 1999, 29 June 2000

Date of Judgment: 2 August 2000

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