Biscayne Partners Pty Ltd v Valance Corp Pty Ltd & Ors

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50199/02 Biscayne Partners Pty Limited v Valance Corp Pty Limited & Ors JUDGMENT Matters presently for judgment 1 A reserved judgment dealing with many of the essential issues raised in the proceedings was delivered on 3 October 2003. A number of questions were reserved for further address. The parties having been heard in relation to those questions, this judgment treats with all outstanding issues, principally quantum and costs; cf judgment at [248]. Construction of the Agreement 2 Textual difficulties and questions of construction of certain of the provisions of the Agreement were dealt with in the Judgment at [219] and following. 3 During both the earlier, as well as the further hearing, particular focus was addressed to the submissions of the plaintiff concerning: · the definition of the term "Artist's Activities" in clause 1 and in particular as imported into clauses 7.1, and 8.1; and · the proper construction of clause 8.1 (b) (ii). 4 The proposition for which the plaintiff contended was that the reference to 'Artist's Activities' includes a reference to the entry by the artist into particular contracts which then regulate or provide for the carrying out by the artist of activities within the 'entertainment industry' as defined. In short the submission is that the relevant activity is the entry into of the relevant contract. ["the contract subset of activity submission"] 5 It will be recalled that clause 8.1 (b) (ii) refers inter alia to income received by Valance Corp or the Artist from:

"the exploitation of any sound recording recorded, or musical composition written, during the Term where such exploitation is fully organised by the Manager prior to the expiration of the Term." 6 The plaintiff's proposition is that properly construed, this is a reference to exploitation during the term, which exploitation is fully organised by the Manager prior to the expiration of the term. ["the exploitation during the term submission"] The proposition is that the manner in which one for example, may exploit a sound recording, is by entering into a contract for that very purpose. In this case the proposition is that Biscayne has fully organised the exploitation of any sound recordings which may ever be made pursuant to the contracts signed up during the term with Engine Room and later with London Records. 7 The submission if accepted would have the result that commission would be payable on albums not written or recorded during the term of the Agreement. 8 The factors upon which the plaintiff relies as supporting its suggested construction include: · schedule 1 to the Agreement dealing with the post-termination percentage; · the wide definitions of the terms "gross receipts", "entertainment industry" and "Artist's Activities"; · the general use definition of the word "exploitation" which shows that this word is of very wide significance. Hence the Macquarie Dictionary, 3rd ed, definition of "exploit" as "to turn to practical account, utilise for profit…" and definition of "exploitation", as "utilisation for profit". 9 I reject the 'contract subset of activity submission'. During the address in reply the plaintiff's counsel sought to slightly reformulate the proposition by putting the question as: "Is the entry into the London Records agreement and the performing …during the term, an activity of the artist in a branch of the entertainment industry?". This way of putting it simply runs together the two disparate topics. The performance is certainly an activity of the artist falling within the definition of "Artist's Activities". In my view the entry into of the London Records agreement is not an activity falling within that definition. The prescribing of declining post termination percentages over a four year period is a significant pointer in that regard. Likewise the very existence of clause 8.1(b) suggests that the construction contended for is misconceived. The plaintiff's later attempt to, consistently with its construction, find work for clause 8.1(b), by suggesting that the subclause "is for irregular post-termination activities" is rejected. 10 I further reject the 'exploitation during the term submission' for the following reasons: · the submission flies in the face of the positioning of the two commas in clause 8.1 (b) (ii), which positioning, it seems to me, simply adopts the classic mode of having two phrases which are then governed by a further phrase; and · if the submission were correct then the words "during the Term" now appearing in the second line could simply be deleted as otiose. This reason is possibly better exposed when one takes into account that the 'exploitation during the term submission' would require the sub-clause to be read as follows: "the exploitation of any sound recording whenever recorded, or musical composition whenever written, during the Term where such exploitation is fully organised by the Manager prior to the expiration of the Term." Quantum Findings 11 Save as strictly necessary it is inappropriate to repeat the record. However the following may be noted: · the judgment includes findings as to the proper construction of the express terms of the Agreement [127] and findings that each of the pleaded implied terms was made out: [130]-[137]; · a critical finding was that the repudiation of the Agreement established went the full distance of giving to Biscayne its entitlement to damages for breach of contract [132]; · the judgment included the following:

"224 The present context of course concerns the prevention or cutting out by Valance Corp and by Ms Valance of the managing agent from its otherwise entitlement to organise performances by Ms Valance before the end of the term and from its entitlement to organise for the exploitation of sound recordings recorded or musical compositions written during the Term. But for the wrongful purported termination by the first termination letter, Biscayne had the exclusive rights as manager of Ms Valance as artist for the Term, and Valance Corp had covenanted not to execute, negotiate, or agree to any contract or undertaking whatever regarding her career without the prior written consent of Biscayne.

225 One question which arises concerns whether or not, and if so in what way, Biscayne puts forward the proposition that in relation to the assessment of damages, it does not lie in the mouth of the Valance parties to rely upon their own wrongdoing. [cf written submissions on damages para 44]. This is one of a number of areas requiring clarification and specificity in respect of which the parties will be given leave to further address on damages including loss of opportunity. In terms of the precision of the breaches of contract terms litigated and made out, the Court labours under some difficulty because of the uncertainty as to what particulars have been furnished, there being a number of references to particulars " to be provided in due course" to be found in the breach of contract paragraphs in the Summons. Further in the manner in which the matter was litigated there appear to have been a number of specific matters in respect of which evidence has been adduced and with which both parties have treated in final address. For those reasons the precise findings in respect of the breaches of contract terms which have been litigated and made out will be handed down following the parties having had an opportunity to read this judgment and to address in relation to that matter. Suffice it to say that as the judgment makes plain, in general terms at the least the following breaches have been made out: · Valance Corp and Valance have since from a period in 2001, excluded the plaintiff from the management of or involvement in the activities of Valance in the entertainment industry throughout the world; · Valance Corp and Valance have from a period in 2001, failed to refer all enquiries regarding the activities of Valance within the entertainment industry to the plaintiff; · Valance Corp has not paid commissions due to the plaintiff; · from a period during 2001 Valance Corp continued negotiations for, and subsequently agreed to and executed sundry agreements relating to the activities of Valance in the entertainment industry, without the notification or prior approval of the plaintiff; and · Valance Corp failed to properly observe and perform its obligations or conditions under the Management Agreement and Valance did not immediately ensure the performance of such obligations or conditions…" 202 "Prior to the filing of the Summons Valance Corp had failed to properly observe and perform its relevant obligations under the Agreement. It had breached a contractual obligation by wrongly purporting to terminate the Agreement. It had breached a contractual obligation by wrongly participating in the engagement of a United Kingdom manager as the exclusive worldwide manager of Ms Valance and Valance Corp in place of Biscayne." 'Nullus commodum capere potest de injuria sua propria' 12 I accept that insofar as elements of uncertainty are likely to remain in relation to the quantification process, Biscayne, for the purpose of quantifying damages, is able to rely upon the "presumption against the wrongdoer". In a recent affirmation of that principle in which the actions of the defendant had made it "difficult to assess the compensation due to the plaintiff", Handley J put the matter as follows: "In my judgment the Court should assess the compensation in a robust manner, relying on the presumption against wrongdoers, the onus of proof, and resolving doubtful questions against the party 'whose actions have made an accurate determination so problematic'": Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46, per Handley JA at 59. 13 This principle relies upon the maxim 'nullus commodum capere potest de injuria sua propria' - 'no man can take advantage of his own wrong': cf ADC v White [1999] NSWSC 43 at [89] et seq. There is a long line of authority to this effect [Cf. Broom's Legal Maxims, 10th edition, Pakistan Law House, 1989 at 191 et seq., noting that this maxim, being 'based on elementary principles, is fully recognised in Courts of law and equity, and indeed, admits of illustration from every branch of legal procedure'.] 14 The principle and its application to several areas of law has recently been discussed in the House of Lords by Lord Jauncey of Tullichettle in Alghussein Establishment v Eton College [1988] 1 WLR 587, with whose reasons Lord Bridge, Lord Elwyn-Jones, Lord Ackner and Lord Goff agreed. There the principle was expressed as providing "that a contracting party will not in normal circumstances be entitled to take advantage of his own breach as against the other party". (at page 591). 15 The principle is applicable to 'various and dissimilar circumstances' [per Broom at page 195]. In particular, the maxim may apply:

(a) as a principle of construction. For example, a party to a contract who is bound by a condition may not take advantage of his or her own breach to annul the contract - New Zealand Shipping Co Ltd v Societe et des Ateliers et Chantiers de France [1919] AC 1 per Viscount Reading CJ at 723-4; Cheall v APEX [1983] 1 All ER 1130, H.L.(E.) per Lord Diplock at 188-9; Alghussein Establishment v Eton College per Lord Jauncey of Tullichettle. Likewise, in relation to construction of statutes, the legislature will be presumed, in the absence of some indication to the contrary, not to have intended that wrongdoers should benefit from their wrongdoing. See Grozier v Tate (1946) 16 LGR (NSW) 57 per Owen J at 61; Allen v Bega Valley Council (Unreported, Supreme Court of NSW, 22 December 1994) (b) as a principle of law. For instances in which a wrongdoer may not rely on his or her wrongdoing, see - Twycross v Grant (1877) 2 CPD 469; Twyne's Case 3 Rep. 80. Similarly, A will have no action in trespass against B, who lawfully enters to abate a nuisance caused by A's wrongful act - Perry v Fitzhowe 8 QB 757. 16 An analogous principle which finds application under this maxim, is the law relating to the "forfeiture rule" [which extends to rights deriving their existence from statute, for instance, to prevent a person who has murdered another from claiming as the beneficiary or next of kin of the deceased]. See Sinanian v EKS Carpentry Pty Ltd & Ors (Unreported, New South Wales Court of Appeal, 5 September 1997, Mason P, Beazley JA, Grove AJA) per Mason P where the purpose and justification for this rule was stated as being to 'discourage breaking the Law' (referring to Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 (per Mason J at 427-8; Jacobs J at 432-3).

17 It is therefore convenient to immediately deal with the proper approach to be taken in the exercise of assessment of damages, to the attempt of the Valance parties to rely upon their own wrongdoing. The holding set out above and taken from the judgment at [224] means that the Court assesses the damages and loss of opportunity here claimed in a robust manner, relying on the presumption against wrongdoers, the onus of proof, and resolving doubtful questions against the party whose actions have made an accurate determination so problematic. That is the proper approach to be taken by the Court in assessing the following propositions put forward by the Valance parties: · that Biscayne could not before the natural termination of the Agreement, have fully organised the performances by Ms Valance which in fact and took place; · that Biscayne could not during the Term have fully organised for the exploitation of such sound recordings as in fact were recorded during the Term; and · that Biscayne could not during the Term have fully organised the exploitation of such musical compositions as had been in fact written during the Term. Damages for loss of opportunity 18 The process of valuing a loss of opportunity was described in Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 642 - 643, where Deane, Gaudron and McHugh JJ said:

"When liability has been established and a common law court has to assess damages, its approach to events that allegedly would have occurred, but cannot now occur, or that allegedly might occur, is different from its approach to events which allegedly have occurred. A common law court determines on the balance of probabilities whether an event has occurred. If the probability of the event having occurred is greater than it not having occurred, the occurrence of the event is treated as certain; if the probability of it having occurred is less than it not having occurred, it is treated as not having occurred. Hence, in respect of events which have or have not occurred, damages are assessed on an all or nothing approach. But in the case of an event which it is alleged would or would not have occurred, or might or might not yet occur, the approach of the court is different. The future may be predicted and the hypothetical may be conjectured. But questions as to the future or hypothetical effect of physical injury or degeneration are not commonly susceptible of scientific demonstration or proof. If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. The probability may be very high - 99.9 per cent - or very low - 0.1 per cent. But unless the chance is so low as to be regarded as speculative - say less than 1 per cent - or so high as to be practically certain - say over 99 per cent - the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51 per cent probability of occurring, but to ignore altogether a prediction which has a 49 per cent probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability. The adjustment may increase or decrease the amount of damages otherwise to be awarded. See Mallett v McMonagle [1970] AC 166, at p174; Davies v Taylor [1974] AC 207, at p212, p219; McIntosh v Williams [1979] 2 NSWLR 543, at pp550-551. The approach is the same whether it is alleged that the event would have occurred before or might occur after the assessment of damages takes place." [See also Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 355, 364; Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 118-121, 124, 125; Global Network Services Pty Ltd v Legion Telecall Pty Ltd [2001] NSWCA 279.] 19 A short summary of the principles was set out in the judgment [page 143] as part of the excerpt from Lakatoi Universal Pty Ltd & LA Walker [2000] NSWSC 113. The following is consistent with that summary:

(a) when considering loss of opportunity where the loss is the subject of hypothesis and/or conjecture, the court can only look to the probability that a certain event would or would not occur;

(b) where the degree of probability is very high or very low, it will not be useful in determining the damages for the loss of chance;

(c) where it is not so extreme, the court can take the probability that the chance would have been 'fulfilled' into account when assessing damages;

(d) the court will look at the probability that a certain thing would or might have occurred, as an integer when deciding on damages. The degree of probability may then be reflected in the damages. Dealing with the matter 20 As often happens, the assessment of damages becomes very difficult. This is more particularly the case presently for the reason that the Court must deal with the situation taking into account several sometimes overlapping, often interlocking actual and/or hypothetical parameters now arising during one temporal period and now arising during another. For example: · a claim is advanced for loss of opportunity arising by reason of breaches of the Agreement before 30 January 2002; · the claims which are advanced in respect of the period following 30 January 2002 extend to cover the field in ambit fashion and require careful scrutiny to avoid double counting. 21 It is convenient to categorise the approaches:

• the first approach looks at the actual income received by the Valance parties up to 18 May 2003 and then seeks apropos that income, the amount of commission payable to Biscayne in accordance with the terms of the Agreement [This exercise requires, or may require, a return to the examination of the commission clauses of the Agreement. When I say " may require ", I refer to the Biscayne submission that it is not tied to those clauses because the close out/repudiatory conduct following 30 January 2002, removed from the plaintiff an opportunity (which it asserts it would have taken) to conduct itself so as to become entitled to commission and to post-termination commission upon promotional activities which would have taken place during the balance of the term. And this claim itself requires to be carefully assessed by applying the principles informing the valuation of such loss of opportunity. Further that assessment then includes a robust approach to the presumption against wrongdoers, the onus of proof and resolving doubtful questions against the Valance parties whose actions have made an accurate determination so problematic. But taking all of these last mentioned considerations into account does not permit the Court to close its eyes to the actual and far from stellar performance level which Mr Michaelson/ Biscayne on the evidence and on the Court's now finding, displayed]; - similar considerations concern actual income received post 18 May 2003 and the clause 8.1(a) entitlement in that regard - the repudiatory conduct meaning that Biscayne's claim is not tied to that clause.

Damages for breach of contract prior to repudiation

• the second approach looks at damages for breach of contract occasioned by the close out prior to repudiation.

• the third approach looks at repudiatory damages for loss of opportunity during the same period up to 18 May 2003;

• the fourth approach looks at damages for loss of opportunity during the period after 18 May 2003. 22 I note as to the first approach, the defendants' following concession:

"The Court has already held ( Reasons [220]) in the case of receipts before termination or expiration (ie, on the Court's findings, 18 May 2003) that clause 7.1 operates.

Ms Valance accepts that commission calculable on such income received up to 18 May 2003 (ie, in respect of Artist's Activities undertaken before 18 May 2003) is, on the Court's findings about termination, repudiation and the date of the Agreement, payable at the rate of 20% of appropriate receipts up to 18 May 2003 (or 15% in the case of Neighbours)." (Submissions [10] and [11])

23 Plainly enough in undertaking the Court's undoubted responsibility of attempting to assess damages and loss of opportunity as best it can, the task ultimately involves "evaluation [which] is a matter of informed estimation", to use the words of Brennan J in Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 368. Hypothetical example 24 Before proceeding further it seems to me of utility to examine the matter in terms of a hypothetical example. Let us assume that Ms Valance/ Valance Corp entered into a contract during the term making provision for the recording of masters of sound recordings to be included on CD's to be released pursuant to the contract. 25 The example may be dealt with firstly on the basis that there had not been a repudiation of the Agreement. The matter may secondly then be compared with an approach to the example posited on the basis of a repudiation. Had there been no repudiation 26 With respect to payments made under the contract during the term the questions which arise would be: · was the entry into the contract "an activity during the term" within the meaning of the definition of "Gross Receipts" in the Agreement?; · is the only material "activity during the term" within the meaning of the "Gross Receipts" definition, the recording of such masters as were actually recorded during the term? I would answer this question in the affirmative. 27 With respect to payments made under the contract after the term the questions which arise would be: · was no sound recording actually recorded during the term? If so no commission would seem to be payable [cf clause 8.1 (b) of the Agreement]; · was a sound recording recorded during the term? If so commission would seem to be only payable where exploitation had been fully organised by Biscayne prior to the expiration of the Term [cf Judgment at paragraph 222 penultimate indented bullet point]. Had there been a repudiation 28 Here the example requires attention in bifurcated mode. 29 First, there is still a requirement to look at payments which were actually made under the contract during the term as, notwithstanding the repudiation, if the contract was actually entered into, such payments may still be covered by the Agreement in terms of an entitlement to commission. 30 But one is also concerned to ascertain at another level, what are the probabilities that exploitation would have been fully organised by Biscayne prior to the expiration of the term - a matter which becomes relevant when examining the lost opportunity for Biscayne to acquire clause 8.1 (b) commission following the end of the term. And apropos that form of lost opportunity, one is looking at a best estimation of what would have occurred absent the close out/ repudiation. One is looking at what is likely to have been achieved. 31 Indeed as to the proper approach, one is looking at the multi-tiered loss to Biscayne of the chances, if a contract for the recording of masters had been entered into during the term: · of having had the sound recordings recorded during the term. [I interpolate to note that the defendants (submissions [34] [55]) arguably deny this proposition. Any such denial cannot be accepted as correct. However if all that the defendants are submitting is that on the evidence the probability that Biscayne would prior to 18 May 2003 have arranged [or would have been in a position, prior to 18 May 2003, to arrange] for the writing of a musical composition or the recording of a sound recording that would in due course be exploited, there is nothing exceptional in the submission, leaving the matter of assessment of probabilities to the Court.]; · that Biscayne would have fully organised the exploitation of that recording during the term. 32 Of course in relation to contracts which may not have been entered into during the term, one may have to consider whether any particular form of contract for the recording of masters or for performances or for the exploitation of musical compositions would have been entered into during the term? What are the probabilities in that regard? And assuming that such contracts would have been entered into during the term, would the conditions precedent in clause 8.1 (b) [satisfaction of which would have given an entitlement to post-term commission] have been satisfied? What are the probabilities in that regard?

33 I propose to now endeavour to deal with the matter against the above background. The convenient course is to first examine the relief sought qua pre-repudiation breaches. Approach 2 - Damages for breaches before repudiation 34 As the plaintiff has submitted, the findings are that Biscayne has established other breaches of contract by Valance and Valance Corp before 30 January 2002: see, in particular, at [225], 1st, 2nd and 4th bullet points. Claims in respect of these breaches were included in the Summons at [44] 'particular (b)'. During final address Mr Cobden took no issue with the statement by Mr Lancaster to this effect. The matter of such breaches over this period was clearly litigated. 35 Those breaches could give rise to loss of opportunity damages to the plaintiff. In particular, the plaintiff's case is that had Valance and Valance Corp not excluded the plaintiff from its management role and had they referred all enquiries to the plaintiff, the plaintiff would have had the opportunity to procure additional promotional and other activities for Valance Corp that would have created income to Valance upon which additional commission would have been paid. 36 If the claim was upheld there could not, by definition, be any double counting of damages in this regard (cf [227]) because ex hypothesi the finding would have to be that the opportunity was to do more than was actually done by Valance and Valance Corp in the relevant period to earn income (and thereby commission). 37 Hence the first area of inquiry concerns the claim made by Biscayne to loss of opportunity damages suggested as arising in terms of opportunities said to have likely been available during the second half of 2001 but which are said not to have been taken advantage of by reason of the close out/repudiation. 38 The approach taken in the plaintiff's written submissions was to endeavour to use as a useful gauge, detail of a flurry of significant promotional contracts actually entered into by the Valance parties during the period between February and May 2003. Those activities were summarised as follows in Biscayne's submissions:

"Under an agreement between the Optika Clulow Group , the Luxottica Group and Andy Stephens Management made on 19 February 2003, Valance permitted her image to be used as the "Face of Vogue Eyewear". Vol 6, Tab 167. The Stevens schedule includes amounts paid to or for Valance under the agreement.

By agreement between 1800 Reverse Pty Ltd , Valance and Valance Corp made on or about 6 March 2003 (and subsequent first amending agreement made on or about 18 March 2003 and second amending agreement made on or about 8 July 2003), Valance agreed to provide certain services in the nature of endorsement and performances for the benefit of 1800 Reverse. See Vol 6, Tabs 169, 171, 172, 176, 178, 179, 180, 181. Note that a full copy of the schedule to the 1800 Reverse agreement describing the services to be provided by Valance and the payments to be made under the contract appear at Vol 6, pp139-140. The terms of the 1800 Reverse agreement provide for staged cash payments to a total of £200,000 and the issue to Valance and Valance Corp of a total of 100,000 £1 shares in the company Essential Logistics Limited.

Valance was cross-examined about the 1800 Reverse agreement: Tp 445.41 to 447.47. She said that the 1800 Reverse shooting / filming took place over two days on 24-25 April 2003: Tp 447.38. Accordingly, the "activity" of Valance in relation to the agreement occurred during the term of the Management Agreement. (In the alternative, the plaintiff submits that the 1800 Reverse agreement itself constituted the relevant "activity" of Valance and all payments to be made to or for Valance under the 1800 Reverse agreement are amounts upon which commission is due to the plaintiff.)

The " gross receipts " of Valance and Valance Corp under the 1800 Reverse agreement is £300,000. Upon an assumed exchange rate of 1 AUD = .40 GBP, the value of the 1800 Reverse agreement to Valance and Valance Corp is $750,000. Some of that amount has been received by or for Valance, as set out in the Stevens schedule (in the total amount of $145,015.11). On that basis, the plaintiff is entitled to additional commission on the remaining value to of the 1800 Reverse agreement, being approximately $605,000. Commission at 20% of that amount is approximately $120,000.

By agreement between Global Artists Inc and ASM Ltd made in or about April 2003, Jon Fowler agreed on Valance's behalf to participation in a Photo Shoot and to model certain products: Vol 6, Tab 174. The agreement provides (Vol 6, p 108) for two base payments of £40,000 and additional payments upon the fulfilment of certain conditions. No receipts under the Global Artists agreement appear in the Stevens schedule. Upon an assumed exchange rate of 1 AUD = .40 GBP, the value of the base amount of the contract is $200,000, to which must be added the additional payments if the conditions are fulfilled. The plaintiff claims commission at 20% of at least the base value of the contract (that is, $40,000) and an inquiry or account in respect of any additional amounts to be received by Valance and Valance Corp under the agreement.

Valance's services as a model were also engaged for a Heineken campaign by agreement between Piranhakid Communications Ltd and Valance made on 12 May 2003: see Vol 6, Tab 177. The fee to Valance and Valance Corp provided for under the contract is £35,000 (Vol 6, p125). That amount is recorded in the Stevens schedule." 39 The submission was that this flurry of significant promotional contracts actually entered into by Ms Valance in the period February to May 2003, provides a useful gauge of the type, availability and value of the opportunities that, were it not for the exclusion, the plaintiff might have procured in the second half of 2001 and thereafter. The four months of agreements/arrangements in 2003 resulted in contracts to the value of some £445,000, or more than AUD$1.1million, from which is derived the 20% commission. 40 However, and as the plaintiff accepts, Ms Valance of course occupied quite a different position in the entertainment industry in 2001. The submission is that this notwithstanding, some opportunities would still have been there. 41 The defendants have submitted that the evidence makes clear that Ms Valance was fully engaged in Neighbours and in getting on with her recording commitments for Engine Room and London Records so as to not need further attention or assistance from Mr Michaelson in the latter part of 2001 and the early part of 2002. The submission was that she had virtually no opportunity to do anything else but discharge her commitments in relation to Neighbours and her record company commitments up to July 2002. Hence the proposition that the claim for alleged missed opportunities in late 2001 should be dismissed.

42 The Court's finding is that no loss of opportunity damages by reason of exclusion in the second half of 2001 should be awarded. Notwithstanding the close out, one has to recall that Ms Valance was reasonably fully occupied in her work on Neighbours. There would not seem to have been much opportunity at all for her to do much else. She went off to England for a week in September, she went off again for a weekend in November to record "Kiss Kiss", took some holiday and then spent half her holiday back in London in January, and came back, onto the Neighbours set the same day. Approach 1 - Commission received on account of Valance's activities in the entertainment industry (or otherwise payable to Biscayne in accordance with the terms of the Agreement) 43 Valance Corp would during the period following 30 January 2002, have been required to pay the commission payable to the plaintiff in accordance with the terms of the Management Agreement and Ms Valance would have been required to ensure Valance Corp's performance of those obligations immediately (cf [225], 3rd and 5th dot points). 44 Ultimately, subject to one or two particular matters, the parties have been able to agree on the primary amounts for the calculation of commission to which the plaintiff is entitled, both in relation to commission on amounts received during the term but never paid and in relation to commission on amounts to be received after the expiration of the term, on the assumption that, as has now been held, the 'exploitation during the term' and the 'contract subset of activity' submissions are rejected. 45 The primary amount for the calculation of such commission is $302,785.00: [cf defendants' written submissions [57(a)]; Transcript 40 - 45]. It is unnecessary to set out the schedules giving rise to these figures. [It may be noted that the source schedules comprise the Gross Receipts Chart which was taken to be before the Court, having been proposed to be annexed to a further affidavit made by Ms Stevens on 30 October 2003 (ultimately not read), which schedule was apparently corrected in relation to exchange rates (produced in the form of what was described in argument as "Mr Cobden's Chart" entitled "Gross Receipts for Holly Valance and Valance Corp including simple interest calculations")]. 46 To the extent that the parties remain at issue on exchange rates, that matter can be dealt with when short minutes of order are brought in. Commission under clause 8.1 (b) Musical Compositions 47 One additional issue concerns what is appropriate as clause 8.1(b) commission. The defendant puts forward a further figure of $3,000 in respect of musical compositions. 48 The matter is one of real complexity. Generally the defendants' submissions were that real difficulties stand in the way of the Court being in a position, even taking the wrongdoer principal into account, to find that a very substantial sum should be awarded by way of an entitlement to commission under clause 8.1 (b). 49 The defendants' initial submissions included the following:

"That leaves the claim in respect of the second and subsequent albums: PSS paras 26 to 29.

Ms Valance accepts that by reason of the Court's findings it would follow that Biscayne was excluded from "fully organising" the exploitation of a musical composition that had been written or sound recording that had been recorded during the Term. However, the language of the Management Agreement does not contemplate, and the findings of the Court do not support, any conclusion that Biscayne would have, or would have been in a position to, advance in time to earlier than 18 May 2003 the writing of a musical composition or the recording of a sound recording that would in due course be exploited. Indeed, the evidence is clearly that this was very much in the hands of London Records, conceivably with the input of Engine Room: T 491.10-51; T 492.43-51 and T 493.40-45. Mr Michaelson saw these as very much the areas for Engine Room and London Records, not him.

The language of clause 8.1(b) is clearly (and unsurprisingly, given the industry covered) tied to concepts in the Copyright Act 1968. The first question is: Was there a sound recording made, or a musical composition written, during the term which is then exploited after the Term? (Note that another sound recording (ie a master) is not an exploitation of an earlier sound recording (ie a demo): see eg. C B S Records Australia Ltd v Telmak Teleproducts (Aust) Pty Ltd (1987) 17 FCR 48.) 50 The defendants further submissions were as follows:

" Defendants note on calculation of royalties for musical compositions

There is no direct evidence on these issues. It was for the plaintiff to assist the Court in some measure on this issue but it did not. No question was asked in cross-examination that might have assisted on any of these issues other than perhaps one of Mr Hollingsworth about the prospects of success of the second album: see T 492.

However, there are some clues in the evidence, in the local statutory provisions, in decided cases and in public documents that give some idea about the dimensions of likely commission for the use of Ms Valance's share of the tracks written before 18 May 2003. These points are put forward not as an admission that the figures are appropriate, but to illustrate the point. The defendants' primary submission is that the plaintiff has failed to prove anything beyond a nominal amount.

In the case of musical compositions, Ms Valance's evidence is that the only works written by her before 18 May 2003 were part shares in three compositions: 25% of Action, 15% of Everything I Hate and 10% of Tongue Tied. See Valance #2 para 5.

The Court does not know the sales figures for the first album Footprints except that it know that the album shipped approx. 145,000 units in the UK and 21,000 units in Japan in the second half of 2002: Vol 5 tab 121; the best summary is at p 56. Note however that significant reserves of 15% against returns are provided for at p51. The Court knows from the evidence of eg Benson and Hollingsworth that popular CDs are a fashion product. It can be inferred that most sales take place when the product is fresh. Mr Michaelson's evidence was that maximum effort needed to be made at the release of the product. The Court know that the population of the UK is several times that of Australia and that it is a more important market. This leads to an inference that the first album Footprints sold in the hundreds of thousands of copies worldwide at most.

The first album Footprints (Ex P1) has 13 tracks on it. The Court knows from s. 55(6) of the Copyright Act 1968 that one basis for the calculation of mechanical royalties in Australia is the statutory royalty of 6.25% of the retail price. The Court knows from the decision of the Copyright Tribunal in Universal Music Australia v EMI Music Publishing Australia Pty Ltd [2000] ACopyT 5; (2000) 155 FLR 362; (2000) 48 IPR 99; (2000) AIPC 91-569 at [6]-[8] that industry arrangements have governed this issue for many years, and that in the days of sales tax the royalty rate under the industry agreement was 6.4% of the recommended retail price less sales tax, or 5.3% of the published price to dealers ("p.p.d.") excluding sales tax.

The Court does not have any evidence about actual retail price or p.p.d. But assume a retail price of $30.00. The statutory default royalty of 6.25% (s. 55(6) of the Copyright Act) yields total mechanical royalties of available to all publishing interests in total of $1.87 per unit. On a 13-track album that yields an available amount of $0.143 per track. The royalties are pro-rated by track: see s. 57 of the Copyright Act. Someone entitled in total to 50% of one track (10% + 15% + 25%, as Ms Valance is in relation to the pre-18 May compositions), would receive a maximum of $0.071 (i.e., just over seven cents) per full-price album sale. However, there is no basis to expect that all sales will be at full price; price competition is crucial in this market (cf Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission [2003] FCAFC 193; (2003) ATPR 41-947).

Next, as can be seen from the Engine Room publishing deal which applied to the first album, see Ex PXC Vol 4 tab 98, royalties actually payable to Ms Valance as a songwriter is first subject to a share retained by the music publisher. This amount is 25% for the local territory ("ANZ") but rising to 36.25% in the case of non-Australian and New Zealand ("WEANZ") royalties because overseas publishers were entitled to retain up to 15%. See the Engine Room publishing agreement at Vol 4 tab 98 clause 6.1. This means that the maximum amount payable to the composer for a one-half track is $0.053. Secondly the payments arrived in a staggered fashion, see the definition of "Accounting Period" in clause 2.1.

The royalty is plainly payable by the party that exercises the copyright; the record company. As can be seen from Universal Music Australia v EMI Music Publishing Australia Pty Ltd [2000] ACopyT 5 [23], in Australia the record company accounts quarterly to the music publisher. As can be seen from the Engine Room Publishing agreement, the publishing company collects that money. The Court can infer that this process takes place under interlocking publishing arrangement around the world. See Engine Room publishing agreement at Vol 4 tab 98 clause 6.1, where it is plain that the Engine Room only accounts for monies "actually received" by it. The receipt of royalties by a composer in Ms Valance's position will be spread over a considerable period. Moreover, even the first of the ANZ royalties would not be in Ms Valance's hands until after 18 May 2004; in fact, not earlier than 30 June 2004. This is because the record company accounts quarterly (see above), then Engine Room accounts, see clause 6.1, but Engine Room does not pay until 90 days later: see clause 7.1.

The arrangements between record companies and music publishers, and music publishers and composers, work by accounting for monies as they arrive during fixed accounting periods (quarterly and semi-annual) and then paying them some time after those accounting periods end. See Universal Music Australia v EMI Music Publishing Australia Pty Ltd [2000] ACopyT 5 [23] and following. See above.

For example, assume a sale of a CD yielding mechanical royalties in Australia in October 2003. At the end of the quarter in which the sale takes place (ie as at 31 December 2003) the record company that sold that CD tallies the royalties it owes music publishers. Those royalties are payable to the music publisher 60 days later - ie, on 28 February 2004. This is clear from Universal Music Australia v EMI Music Publishing Australia Pty Ltd [2000] ACopyT 5 [31] and from the Engine Room publishing agreement.

For the purposes of this exercise assume that all sales are at full price (but see above) and that the Australian rate is equaled around the world. This is generous. See http://www.nmpa.org/nmpa/survey9/royalties.pdf .

An important question about which there is virtually no evidence is what might the second album expect to sell in total units worldwide. Mr Hollingsworth said this was very speculative: see T 492.

On the basis set out above in relation to the three compositions written before 18 May 2003, the maximum worldwide royalty available to Ms Valance's publishing rights and the maximum commission payable under clause 8.1(b) at the first-year rate of 15% see Management Agreement Sch 1) will be: Assumed sales (units) Maximum royalty Maximum commission (units x 6.7¢) (royalty x 15%) 500,000 $33,500.00 $5,025.00 1,000,000 $67,000.00 $10,050.00 2,000,000 $135,000.00 $20,100.00

However, allowing for royalties to take their time to filter through the international system, and allowing for the fact that due to larger populations overseas sales will account for the larger part of the sales, it is reasonable to infer that the larger part of these sums would be paid to Ms Valance in the second year after termination when the commission to Biscayne is 10%. The figures above should therefore be adjusted to lie in the following range: Assumed sales (units) Commission at 15% Commission at 10% 500,000 $5,025.00 $3,350.00 1,000,000 $10,050.00 $6,700.00 2,000,000 $20,100.00 $13,500.00

Again, those calculations are done by reference to outcomes likely to be highly favourable to Biscayne. They do not account for lower royalties overseas or sales at less than full price. They do not account for the fact that if a publishing agreement were entered along the lines of the Engine Room deal there may be publisher shares of higher than 25%: as high as 36.25%. (At a deduction of 36.25% the amount per track for a one-half share at full price and at a rate equivalent to the Australian rate is $0.046, or just over four-and-one-half cents, around 65% of the per track rate of $0.053 used above. This would reduce the figures in the tables above.) They do not account for the possibility that there may be more tracks on the album in some territories, reducing (by the pro-rating process) the share that is available to a writer controlling one-half of one track.

As none of the commission for the second album compositions would have been received by today, it does not feature in any interest calculation. Indeed, it should be discounted to its present value, but the amount at the lower end of the scale probably does not merit the effort.

For these reasons the defendants submit that the commission payable over the coming two years or so (the likely collection period for all but a tiny residue) is in the low to mid thousands of dollars; say $3,000.00 to $5,000.00." 51 The plaintiff's responsive submissions were as follows:

" 1. These submissions respond to the defendants' note on calculation of royalties for musical compositions ("the Defendants' Note").

2. The Defendants' Note appears to travel beyond the limited leave granted to submit a note on the calculation of the potential range of statutory royalties payable to Ms Valance for musical compositions on the second CD: Tp 94 (3 November 2003).

3. The plaintiff wishes to draw attention to the very limited set of assumptions applied by the defendants in the calculation of the amount of damages appropriate on this ground (summarised in paragraph 17 of the Defendants' Note), which include: (a) The calculations are for amounts to be received by or for Ms Valance only for her share of the musical compositions on the second CD co-written by her before 18 May 2003 (Defendants' Note, para 3);

(b) The calculations are made according to the statutory minimum amount payable to Ms Valance in that regard (Defendants' Note, para 5); and

(c) The calculations do not include any amount or proportion of an amount of other remuneration of Ms Valance for the second CD, such as the inevitable payments to her royalty account under the London Records agreement (see clause 7 and the Second Schedule (esp. clause 4.1) to the London Records agreement, Ex PX, Vol 4, Tab 93). 4. On the basis of that very limited set of assumptions, the Defendants' Note (in para 13) predicts that the maximum commission to which the plaintiff will be entitled as somewhere between $5,000 if the second CD sells in moderate numbers (500,000 units) to $20,000 if the second CD is very successful (2,000,000 units). Those amounts are discounted on the basis of a questionable assumption that such commission might be paid to Ms Valance in the second year after the release of the CD (Defendants' Note, para 14) notwithstanding the defendants' submissions in other contexts that most CD sales occur in the period immediately following the first release of the CD to the market.

5. The Court should not accept that assumption, but rather find that the scenarios put forward by the defendants suggest that even if the plaintiff is entitled to no more than commission on statutory royalties on musical compositions completed by Ms Valance before 18 May 2003, the amount of such commission is likely to be in the range of $5,000 to $20,000.

6. The scenarios put forward by the defendants also provide an additional basis for the quantification of one component of the loss of opportunity damages sought by the plaintiff. If the plaintiff had had the opportunity before the expiry of the term of the Management Agreement to " fully organise " the co-writing of songs by Ms Valance - which presumably would have involved, on the manager's part, no more than finding and booking time for Ms Valance to meet with her co-writers and to let creativity take its course - the plaintiff would have been in the position to earn post-termination commission on the royalties to Ms Valance from those musical compositions.

7. For present purposes, the Court might accept the defendants' submission that the statutory default royalty amount of 6.25%, when applied to an assumed CD retail price of $30, yields total mechanical royalties available to all publishing interests of $1.87 per CD sold, which yields $0.143 per track on a 13 track album (Defendants' Note, para 6). Ms Valance co-wrote 4 other songs on the second CD in June and July 2003, in addition to those she co-wrote before 18 May 2003: Valance #2, para 7. If Ms Valance has a 25% share in each of those four compositions, she will be entitled to music publishing royalties of an additional $0.143 per CD for those musical compositions. Accordingly, and assuming the deductions applied by the defendants' analysis by reason of sales at less than full retail price, the figures in the table in Defendants' Note, para 13 would triple, as follows: Assumed sales (units) Maximum royalty Maximum commission (units x 6.7¢ x 3) (royalty x 15%) 500,000 $100,500.00 $15,075.00 1,000,000 $201,000.00 $30,150.00 2,000,000 $405,000.00 $60,300.00

8. It is therefore open to the Court to find that on the scenarios put forward by the defendants and the assumptions referred to above, in relation to one component of the plaintiff's lost opportunity (that is, the opportunity to earn commission on statutory royalties on musical compositions completed by Ms Valance for the second CD), the amount of commission available would have been in the range of $15,000 to $60,000. The chance of such an opportunity being successfully taken up by the plaintiff must be regarded as very high, given the very limited scope of activity necessary on the part of the manager to sustain a conclusion that the manager has fully organised the exploitation of a musical composition for the purposes of clause 8.1(b). 52 In my view the proper approach in relation to this issue is to assess the compensation in a robust manner relying on the presumption against wrongdoers, the onus of proof and resolving doubtful questions against the defendants. The commission entitlement should be $10,000. Sound recordings 53 Of the sound recordings which make up the second album, none was recorded during the term. The only question which could then arise would be as to the probability that, but for the repudiation, Biscayne could have ensured that sound recordings were recorded during the term. On the evidence, that probability is so negligible as to be discounted completely. 0800 Reverse 54 There is then a question raised by the plaintiff concerning the 0800 Reverse Agreement in respect of activities performed for two days in late April 2003. Part of the consideration for that agreement was 100,000 shares at a face value of a 1.00 pounds in Essential Logistics Limited. The defendants have made an open offer that Valance Corp will assign 20 percent of those shares to Biscayne. Biscayne on the other hand contends that it is entitled to its commission in the form of money. 55 Clause 7.4 of the Agreement provided as follows:

"The Manager is not obligated to accept its commission in any form other than money. If the Company or the Artist receives payment in a form other than money the Manager may deduct its commission from other moneys held or later held, by the Manager on the Company's behalf calculated on the then current retail price and/or market value, whichever is the lesser, of the goods accepted by the Company or the Artist in consideration of the activities undertaken. For the sake of clarity, the Manager will undertake to ensure that all consideration payable for the Company and/or Artist's services is paid in money, unless directed otherwise by the Company". 56 Biscayne then contends that the Court should infer that the value of the shares was 100,000 pounds. But for the terms of the 1800 Reverse Agreement [Exhibit PX 6/ tab 169 as amended at tab 176] the Court would not infer that 100,000 shares each of 1 pound nominal value, have a value of 100,000 pounds. One simply would not know what value to attribute to those shares. However assistance is forthcoming as the relevant provision in the 1800 Agreement was originally as follows:

In consideration of the Artist providing the Services, the Company will pay performance fees ("the Fees ") as follows:

A1. Cash Payment: The Company shall pay a total of £200,000 as hereinafter set out, in the following tranches: (i) fifty thousand pounds (£50,000) upon execution of this Agreement; (ii) one hundred thousand pounds (£100,000) upon the first airing of the television commercials or three (3) months from the date of execution of this Agreement (which is sooner); and (iii) fifty thousand pounds (£50,000) on the date falling six (6) months from the first airing of the television commercials or nine (9) months from the date of execution of this Agreement (whichever is sooner).

A.2 Ten per cent (10%) of the monies payable in accordance with Item 3 A1 above shall be paid to the Artist in relation to her appearance fee at her nominated pound sterling bank account and ninety per cent (20%) of the monies referred to shall be paid to Valance Corp as trustee for the Holly Valance Royalty Trust in relation to the ongoing use of the Artist's image at its nominated pound sterling bank account. B. Stock Issuance: The Company will arrange that the Artist will be issued with Class-A shares in its Affiliate in the United Kingdom, Essential Logistics Limited to the value of one hundred thousand pounds (£100,000), which for the purposes of the Initial Period only means 100,000 fully-paid shares of £1 each, to the Artist upon the first airing of the commercials/productions." 57 The replacement clause then substituted the following:

"2.4 Item 3B in the Schedule to the Agreement is to be deleted and replaced with the following: "B. Stock Issuance: The Company will arrange upon the first airing of the commercials/productions that the Artist, in relation to her appearance fee, is issued with Class A shares in the Company's Affiliate in the United Kingdom, Essential Logistics Limited, to the value of £10,000, which for the purposes of the Initial Period only means 10,000 fully-paid shares of £1 each, and that Valance Corp, in relation to the ongoing use of the Artist's image, is issued with Class A shares in the Company's Affiliate in the United Kingdom, Essential Logistics Limited, to the value of £90,000, which for the purposes of the Initial Period only means 90,000 fully-paid shares of £1 each." 58 In the result, there is now evidence of the value of the shares to be found in the explicit contractual use by the parties to the 0800 Reverse Agreement of the words "to the value of". For that reason the appropriate finding is, as the plaintiff has contended, that the commission is payable on an amount of a receipt of payment in a form other than money, namely the subject shares. In the absence of any evidence to the contrary, the Court infers that the market value and retail price of the shares was 100,000 pounds. Here again any doubt is resolved against the defendants by the wrongdoer principle. Deductions 59 Another issue concerns the following submissions of the defendants suggesting the propriety of a deduction of $111,000 from the award of damages:

However, a plaintiff should not be put, by an award of damages for breach of contract, in a position better than he would have been in had he had to earn those damages under the contract. His expectation can only be for what he would have received had the contract been performed; in other words, what he recovers is his lost profit, not his lost gross; otherwise the award would allow the plaintiff to recover profit without spending the money required to make the profit: see T.C. Industrial Plant Pty Limited v Robert's Queensland Pty Limited (1963) 180 CLR 130 at 141.

While the amounts cannot be precisely or scientifically assessed, it was essential to Biscayne's case that, in order to perform its obligations under the management agreement, and in order to fulfil its claimed readiness and willingness to perform, Mr Michaelson would have to have relocated to the United Kingdom prior to the release of Kiss Kiss and the Footprints album. See Michaelson #1 paras 191, 104 and 210; Michaelson XX T 281.20-T 283.17. He would have to have stayed there through to the termination or expiration of the contract in May 2003; all or virtually all the deals secured for Ms Valance at significantly advantageous rates (in particular, in pounds sterling, which has made, given exchange rates, a very significant difference to the commission now payable) were secured in the United Kingdom. There is no evidence to the contrary and all inferences are in support of that. Accordingly an allowance needs to be made for Mr Michaelson's relocation, accommodation, setting up of an office and expenses in London. Mr Michaelson agreed he would have incurred substantial expenses: T 281-282. An appropriate and fair amount has been suggested in paras DS 172-174. A deduction of approximately $100,000.00 should be made; without that expenditure, Mr Michaelson would not have been in a position to arrange for the earnings that Ms Valance in fact achieved.

Moreover, none of the above makes any allowance for mitigation by Biscayne. Mr Michaelson's evidence was that he was an experienced artist's manager and that it was that experience that led him to Ms Valance. The Court accepted that evidence. It was also Mr Michaelson's evidence that upon his move to London he would have devoted himself full-time to the management of Ms Valance. Accordingly, he must, at least from July 2002 to May 2003, have had sufficient capacity to find, nurture and earn commission from other artists. There is no evidence that he made any effort to do so. This consideration should persuade the Court that the amounts calculated in these submissions by Ms Valance are generous to Biscayne; or alternatively to discount any amount assessed.

Mr Michaelson gave evidence and the Court found that Mr Oaten had been delegated some of the tasks of the Manager in the negotiations of the London Records deal: Reasons [191-192]; T 231.40.

There is evidence before the Court that Valance Corp paid for the services of Mr Oaten in negotiating the deal: T 236.35-37 and Ex D1. Damages should accordingly be reduced by the amount of fees paid to Mr Oaten by Valance Corp, which were approximately $11,000.00." 60 In principle the defendants are clearly correct in that the present exercise concerns the Court evaluating the effective loss to the plaintiff. The difficulty which Mr Cobden appears to concede [Transcript 105 .13] is that there is very little evidence for the Court to go on. That being the case, the Court may endeavour to come close to speculating as to what amount would have been expended in terms of Biscayne's relocation, accommodation, setting up of an office and expenses in London. Alternatively the Court having been left with so very little material, [virtually amounting to the evidence of Ms Valance as to what her rental in London had been], may be in a position which the matter has been left so inchoate, as to make an estimation really impossible. Of course some items would likely require an offsetting amount: as in a saving in Sydney accommodation costs etc. 61 I have come to the view that albeit that estimation is necessarily speculative, this is an area where taking into account the entitlement of the Court to rely upon the presumption against wrongdoers and to resolve doubtful questions against the party whose actions have made any accurate determinations so problematic, means that the amount of the deduction should be fixed at no more than $30,000.00. 62 No deduction is however appropriate for amounts paid by Valance Corp to Mr Oaten. The Agreement in clause 9.2 specifically provided that Valance Corp was to be responsible for all expenses incurred by it or by Ms Valance which are not overhead expenses. Legal expenses do not fall within the definition of overhead expenses. Further they were paid by Valance Corp without complaint. Approaches 3 and 4 - Repudiatory damages/loss of opportunity - The period following 30 January 2002 63 So far as the period of approximately 15½ months after 30 January 2002 is concerned, the calculation of damages is in principle straightforward. That is, the plaintiff is entitled to be compensated for the wrongful repudiation of the Agreement by Valance and Valance Corp by being placed in the position that would have obtained if each had performed their rights under the Agreement.

64 There may be room for debate about what those rights were as a matter of construction of the Agreement but there is no room for debate that, as a matter of causation of damages, the plaintiff is entitled to those damages. The respective submissions 65 The plaintiff submitted inter alia:

"In the period after the 30 January 2002 repudiation, had the contract been performed the plaintiff would have had the opportunity to procure additional promotional arrangements and other agreements under which Valance [would have] derived income and the plaintiff would have been paid commission. This head of damages… is difficult to quantify with precision or in scientific detail.

There can be no doubt that such opportunities existed, because eventually (in early 2003, perhaps not coincidentally with the defendants' view of the date of expiry of the term of the Management Agreement) Valance and Valance Corp themselves took up some of those opportunities." 66 The plaintiff's further submissions are as follows:

"To the extent that the plaintiff is found not to be entitled to damages for post-termination receipts by reference to the breach of the obligation to pay commission under the Management Agreement, the plaintiff claims at least an equivalent amount of damages as damages for loss of opportunity. That is, but for the repudiation of the Management Agreement the plaintiff would have had the opportunity (and would have taken it) to conduct itself so as to become entitled to commission and post-termination commission upon promotional activities in the period January 2002 to May 2003.

It was, of course, the ongoing repudiatory conduct of the defendants that prevented the plaintiff from exploiting the opportunities of managing Valance in that period. The defendants should not be heard to submit that the plaintiff could not have secured those same opportunities and additional comparable promotional deals. They would have created significant commission income for the plaintiff.

In particular, all future receipts or receivables after the expiration of the term of the Management Agreement (i.e. after 18 may 2003) in respect of the activities or services of Valance under the agreements with 1800 Reverse , Global Services and London Records are amounts in respect of which Biscayne Partners is entitled to commission at the appropriate rate under the Management Agreement. Valance Corp and Valance, by reason of their repudiation, are so liable under clause 7 of the Management Agreement, and in any event, as parties who have wrongfully repudiated, should not be permitted to say that Biscayne partners would not have fully organised the relevant exploitation within the term of the Management Agreement.

With particular reference to the London Records Agreement, Valance in her affidavit of 15 September 2003 admits she wrote and recorded before 18 May 2003 3 songs which will appear on her second album but made master recordings of these songs and 4 other co-written songs which will appear on her second album after 18 May 2003.

The negotiation and execution of the London Records agreement(s) within the term of the Management Agreement constituted the full organisation by the manager, Biscayne Partners, during the term and satisfied the requirements under clause 8 for the payment of commission to Biscayne partners in respect of all receipts or receivables in respect of the second and subsequent albums or records during the term of the London Records agreement(s).

Alternatively, Valance Corp and Valance, by reason of their repudiation should not be permitted to say that Biscayne partners would not have fully organised the second album so far as the Manager could do so, the relevant exploitation, within the term of the Management Agreement and has satisfied the requirements under clause 8 for the payment of commission to Biscayne partners in respect of all receipts or receivables in respect of the second albums or records in it." 67 Here again the stance of the defendants is repeated. The submission [18]-[19] is:

"It cannot seriously be suggested that Biscayne would have secured activities for Ms Valance that earned greater revenue than those secured by Mr Fowler. Mr Fowler has been found by the Court to be an extremely experienced manager ( Reasons at [244]). Mr Fowler was earning a 20% commission (see Ex PXC Vol 5 tab 118). It was in his interests as much as it would have been in Mr Michaelson's interests (had he been in the role) to maximise opportunities and income.

Accordingly - and this is entirely in accordance with the way in which Biscayne opened its case (see T 16. 34-49; T 35.11-14) - the 20% of income earned and received up to 18 May 2003, and not otherwise accounted to the plaintiff, which derives from Artist's Activities as defined, is the limit of the damages for that period." 68 I have come to the clear conclusion that when one considers the precise way in which Ms Valance's activities from the date of the first termination letter onwards involved a continuance of her Neighbours involvement until April/May 2002 and once Mr Fowler became her manager, was generally conducted under that management and of course subjected to the constraints of the London Records Agreement, and when one also takes into account Mr Michaelson's own evidence of a need to relevantly limit Ms Valance's exposure, there is really, save in one respect, no respectable probability that Biscayne could have earned significant commission by otherwise activities of Ms Valance had the Agreement not been repudiated. The fact is that Mr Fowler by his contract had procured a similar entitlement to commission to that which Biscayne had been entitled to. There was every incentive for Mr Fowler to pursue such prospects of Ms Valance's relevant activities as, consistent with her career, would give him an entitlement to commission. In short the actual activities would not have been materially different in any event. 69 The proviso is that there would have been some prospect of commission to Biscayne in one area and this again concerns personal appearances. My assessment in that regard is that there was a 20 percent probability that under the aegis of Biscayne, an amount of $100,000 may have been received for personal appearances during the term. Hence Biscayne is accordingly entitled to the relevant fraction [$4,000] by way of loss of opportunity commission. 70 The remaining questions for decision concern: · the plaintiff's application to vary the Summons by seeking declaratory relief; and · Costs. Declarations 71 During the final argument the plaintiff sought leave to amend to seek the following relief:

" Declaration sought in relation to London Records income

Declare that the plaintiff is entitled by clause 7.1 of the Management Agreement to be paid by the first defendant commission of 20% of gross receipts of income under the agreement between the first and second defendant and London Records (90) Limited dated 15 December 2001.

Declare that the plaintiff is entitled by clauses 7 and 8 and Schedule 1 of the Management Agreement to be paid by the first defendant commission upon gross receipts of income under the agreement between the first and second defendant and London Records (90) Limited dated 15 December 2001, such commission to be calculated upon gross receipts in the periods identified below at the rates identified below:

19 May 2006 to 18 May 2007 7.5%" 72 The defendants were not able to suggest any reason why the application to vary the summons by seeking that the declaratory relief should not be granted. The application is allowed. 73 Without considering the precise wording of declarations which in some cases might be appropriate where the proper construction of a contract is in issue, this is not a case in which declaratory relief should be granted. The court has proceeded to deal with the damages and loss of opportunity by an assessment. That assessment takes into account in the evaluative method damages for loss of opportunity into the future. Clause 18.4 (b) of the Agreement 74 Paragraphs [197]-[210] of the judgment dealt with Clause 18.4 of the Agreement. The matter was pleaded in paragraph 37 of the Summons. The plaintiff has now made plain that it does not press the basis for relief pleaded in that paragraph and does not seek to apply to amend that paragraph in fashion such that the Summons [had it been amended] would clearly include Biscayne's election to exercise the clause 18.4 (b) option to substitute Ms Valance in the place of Valance Corp by the route described in the judgment at [199]. The possibility of such an application to amend was treated with in the judgment at [210], leave having been granted for that issue to be agitated presently. 75 In those circumstances the claims pursued in paragraph 37 of the Summons fall away. In the absence of: · an application for leave to amend having been successfully pursued; and · following such leave being granted, the exercise of the option taking place by service of the amended summons,

the option cannot be regarded as having been exercised prior to commencement of the proceedings so that no cause of action asserting that option exercise was then available to be relied upon. Costs 76 Although the parties addressed in some detail on the appropriate legal principles which underpin the proper exercise of the Court's discretion as to costs, it does not seem to be necessary to revisit the authorities in any particular detail. The principles were revisited by the High Court of Australia in some detail in Oshlack v Richmond River Council (1998) 193 CLR 72. McHugh J pointed out at paragraph 67 that by far the most important factor which courts have viewed as guiding the exercise of the costs discretion, is the result of the litigation and that a successful litigant is generally entitled to an award of costs. As McHugh J said:

"The expression the "usual order as to costs" embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation." 77 The plaintiff has succeeded against Valance Corp and Ms Valance. The plaintiff is entitled to an order for the whole of its cost of the proceedings to be paid by Valance Corp and Ms Valance. The issues on which the plaintiff failed are not in the circumstances such as to warrant any other order. 78 I am satisfied that the conduct of Valance Corp and of Ms Valance was such as to show that the joinder of Ms Stevens was reasonable and proper in relation to the proceedings. 79 The position in relation to Ms Stevens is as follows: · Ms Stevens was of course closely aligned with Valance Corp and with Ms Valance in relation to every material issue; · an extremely serious allegation which Ms Stevens, albeit acting in her capacity as a director of Valance Corp, was content to permit to go forward, was made in the first termination letter when it asserted that the terms of the agreement were not properly or fully explained to Ms Valance or to her parents; · all of the defendants had pleaded that the first termination letter was valid although during the hearing no reliance was placed upon the proposition that the Agreement was void ab initio; · the judgment included a finding that the Valance parties were shown, on the evidence, to have been involved in a calculated disregard of the rights of Biscayne and in a cynical pursuit of benefit; and · Ms Stevens further was party to keeping Mr Michaelson in the dark as to the fact that he would not be around as Ms Valance's manager much longer. 80 All of these are grounds for the Court, giving the closest consideration to whether any of the costs of Ms Stevens should be ordered to be paid by any other, and if so which, party. Ms Stevens, Valance Corp and Ms Valance were of course represented by the same legal representatives. 81 In my view and taking the above considerations into account, it is inappropriate to make any order for payment by the plaintiff of any part of Ms Stevens' costs. 82 In the result the short minutes of order should provide for payment of the costs of the plaintiff by Valance Corp and Ms Valance. No other costs orders are appropriate. 83 It is appropriate to note that had it been appropriate to make an order for the payment of Ms Stevens' costs, then to my mind the only order which might have been made would have been a Sanderson order requiring the payment of those costs by Valance Corp and Ms Valance. Interest 84 As I understood the position during the final hearing, the parties were not at issue in terms of the proper approach to interest. In some instances awarding compound interest if appropriate would not make a material difference to the simple interest calculations. On the occasion when short minutes of order are brought in any remaining issues which may separate the parties in relation to interest may be the subject of submission and will then be determined immediately. Hence the short minutes of order should cope with all possibilities in relation to interest. Short minutes of order 85 The parties are to bring in short minutes of order. On that occasion the release of security for costs motion will be heard and determined. I certify that paragraphs 1 - 85 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 6 November 2003

              Susan Piggott
              Associate
      6 November 2003

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