Larrikin Music Publishing Pty Ltd (ACN 003 839 432) v EMI Songs Australia Pty Limited

REASONS FOR JUDGMENT 1 This matter came before me on 3 March 2010 to enable the parties to address certain questions arising from my reasons for judgment handed down on 4 February 2010. There was debate about the form of the orders and several other issues including the question of whether I should order further discovery. 2 Senior counsel for Larrikin, Mr Lancaster SC, sought discovery which he submitted ought to be defined by directing the parties to exchange categories of documents relevant to the next stage of the proceedings. He also sought production of all licenses granted and other reproductions of Down Under with which the respondents have been involved since 2002. 3 I rejected Mr Lancaster's request for discovery and now publish my reasons. 4 The reason why I refused to order further discovery may be summed up by saying that it is not necessary for the determination of the issue which falls for consideration at what I hope will be the final stage of the contest. This is because the only remaining issue which will be litigated before me is the determination of what the parties have described as the "percentage interest" payable to Larrikin by reason of the reproduction of a substantial part of Kookaburra. 5 That this is so appears from the terms of an order which I made on 27 October 2009 at the commencement of the previous hearing and from a consideration of the circumstances in which the order was made. The circumstances are to be considered in light of relevant aspects of the procedural history of the matter. 6 On 17 December 2008, well before the hearing of this matter, I made an order under O 29 r 2 of the Federal Court Rules for all issues concerning liability (including liability for damages or an account of profits and the determination of "the applicant's percentage interest") to be determined separately. The order was in the following terms: "2. All issues concerning liability (including liability for damages or an account of profits and the determination of the applicant's percentage interest and any other entitlement to APRA and AMCOS income in relation to the musical work "Down Under" in this proceeding) be heard and determined before any hearing in relation to the quantification of damages or profits." 7 On that date I also ordered the parties to exchange categories of documents for discovery and I listed the proceedings for hearing on 22, 23 and 24 June 2009. 8 Shortly before 22 June 2009, the parties indicated they were not ready to proceed to the hearing as certain evidentiary matters were still to be resolved. In order to preserve those dates, I agreed to hear a preliminary issue as to whether Larrikin had obtained a valid assignment of the copyright. 9 The balance of the hearing, that is to say the separate issue ordered on 17 December 2008 was then listed for hearing to commence on 26 October 2009. 10 The effect of the separate issue was acknowledged and explained by the parties in directions hearings well before October 2009. It was acknowledged by senior counsel for Larrikin that the course adopted was different from the usual one which is followed in intellectual property matters, namely the separation of liability and damages. 11 Here what was contemplated was that I would determine liability and one part of the damages (or account of profits) enquiry, namely the percentage of any payments received or to be received by the respondents that must be paid to Larrikin. 12 Larrikin sought and was granted limited discovery. What was required was explained by senior counsel who then appeared for Larrikin as documents necessary to prove the case of infringement so that if this was established at the trial, the precise quantum could be calculated by the "bean counters" rather than the Court, after I determined the appropriate percentage figure. 13 The written opening filed by Larrikin before the hearing in October identified the issue for trial as all issues of liability including liability for damages or an account of profits and the determination of the percentage interest in terms of the order I made on 17 December 2008. The written opening also contended that the EMI companies had, inter alia, authorised the exercise of Larrikin's rights of copyright in Kookaburra and infringed Larrikin's copyright in accordance with s 36(1) of the Copyright Act 1968 (Cth). 14 On 23 October 2009 Larrikin made an application for an adjournment of the hearing due to the announcement that day that its Senior Counsel had been appointed as a Judge of this Court. I declined to vacate the hearing but adjourned the commencement date to 27 October 2009. 15 When the hearing commenced, Mr Lancaster indicated that the parties had agreed on certain orders to be made under O 29 r 2 to replace the orders I had previously made in December 2008. The orders put forward provided for me to determine five questions. I made the orders on 27 October 2009. 16 The five questions were set out in paragraph 1 of the orders as follows:- "The following issues be heard and determined separately from the other remaining issues in the proceedings: (a) whether the making of the 1979 Recording involved the doing of any act comprised in the copyright, in particular the reproduction in a material form of a substantial part, of Kookaburra and thereby infringed copyright in Kookaburra; (b) whether the making of the 1981 Recording involved the doing of any act comprised in the copyright, in particular the reproduction in a material form of a substantial part, of Kookaburra and thereby infringed copyright in Kookaburra; (c) whether either of the Qantas Advertisements involved the doing of any act comprised in the copyright, in particular the reproduction in a material form of a substantial part, of Kookaburra and thereby infringed cocpyright in Kookaburra; (d) the trade practices claims made in paragraphs 68 - 77 of the Further Amended Statement of Claim, except the quantification of any damages; (e) the unjust enrichment claim made in paragraph 67 of the Further Amended Statement of Claim, except the quantification of any restitution. 17 Paragraph 2 of the orders was as follows: The Court notes that the parties agree that, in the event that the Court determines that the 1981 Recording involved the doing of any act comprised in the copyright, in particular the reproduction in a material form of a substantial part, of Kookaburra and thereby infringed copyright in Kookaburra, then: (a) the representations referred to in paragraphs 68(a), 68(b), 73(a) and 73(b) of the Further Amended Statement of Claim, if made, were misleading or deceptive; and (b) the applicant has suffered loss and damage. 18 In paragraph [3] the Court noted that the parties agreed that the resolution of the issues identified above would be taken to resolve the same issue in relation to other acts, namely the 1979 recording of Down Under and 22 instances of the uses or reproduction of the 1981 recording. 19 Paragraph [4] of the orders was as follows: Subject to the matters set out above, and subject to any future agreement between the parties, the remaining issues in the proceedings be heard and determined at a later date. The Court notes that those matters include the resolution (if necessary) of: (a) the determination of the applicant's percentage interest and any other entitlement to APRA and AMCOS income in relation to Down Under; (b) the identification of other acts done by, or authorised by, the respondents in the period of 6 years prior to the commencement of proceedings aginst the third to sixth respondents; the determination of which if any of the categories referred to in orders 1 and 3(a), (b) or (c) those acts fall within or whether they otherwise infringe copyright in Kookaburra; (c) the quantification of any damages or profits for infringement of copyright and/or the quantification of any damages for misleading or deceptive conduct and/or the quantification of any restitution. 20 Before I made the orders, the following exchange took place: MR LANCASTER: But those questions are the substance of what was intended to occur this week, with one exception, which the parties would ask go over to what would, in any event, be the need if matters remain contested for a further stage in the litigation; namely, the determination of the percentage interest of the applicant, if it be the case that the song Down Under reproduced a substantial part the song Kookaburra Sits in the Old Gumtree. HIS HONOUR: All right. Ordinarily, I may not do that because it seems to me that the question of the percentage, if it arises, is inextricably bound up with the question of infringement. But I think, in the circumstances, with Mr Yates' appointment to the court and the fact that you've very recently come into the matter ‑ ‑ ‑ MR LANCASTER: Yes. HIS HONOUR: ‑ ‑ ‑ I think that the interests of justice require that the proceeding be kept to a slightly tighter framework. MR LANCASTER: I'm grateful for that, your Honour. HIS HONOUR: I will do that. I might just ask, if I were in your favour, how would I then go about determining the question of percentage? Would there be further expert evidence called? Or is it already covered by the reports that - it seems to be covered, at least to some extent, by what Mr Lurie says, but presumably a lot of that material won't be read at this stage of the hearing. MR LANCASTER: That's right. It's covered at least in the applicant's evidence in Mr Lurie's affidavit in part and in Mr Segar's expert report. We would intend, if your Honour makes the proposed orders, not to read that part of Mr Lurie's affidavit ‑ ‑ ‑ HIS HONOUR: Yes. MR LANCASTER: ‑ ‑ ‑ and not to read that report of Mr Segar. HIS HONOUR: Yes. MR LANCASTER: And the determination of the percentage would involve, if it comes to it, tendering, reading, that material at any subsequent hearing in which the intention would be dealing with the question of the percentage interest ‑ ‑ ‑ HIS HONOUR: Yes. MR LANCASTER: ‑ ‑ ‑ and consequential damages or account of profits. 21 The essence of Mr Lancaster's submission as to why further discovery was now required was that the separate orders I made on 27 October 2009 did not determine the whole of Larrikin's claim for copyright infringement. He submitted that all I was required to determine was the specific questions going to reproduction of a substantial part of Kookaburra in the 1979 recording and the 1981 recording of Down Under and in the Qantas advertisements. 22 Mr Lancaster submitted that the balance of Larrikin's claim under the Copyright Act was not heard or determined. Nor, on his submission, did I hear his client's claim for additional damages under s 115(4) of the Copyright Act. 23 Mr Lancaster made a number of other submissions, which I should record. First, he submitted that the claim was heard upon the basis of samples of licenses of Down Under that had been produced to Larrikin on discovery in the course of the 12 months before the hearing. He said this was thought to be sufficient: "… to determine what was thought to be the operative question of whether a substantial part of Kookaburra appeared in Down Under. That was regarded as an issue that would resolve the substance, or at least part of the substance, of the dispute between the parties." 24 Second, Mr Lancaster submitted that there has never been any real discovery about the state of knowledge of the EMI companies about the use of Kookaburra in Down Under. 25 Third, Mr Lancaster submitted that the note in paragraph 4 of the orders dated 27 October 2009 was intended to convey to me that substantial questions of fact and law remained in relation to liability for copyright infringement. 26 Fourth, Mr Lancaster submitted that discovery was needed to prepare evidence that goes beyond mere samples on which the question of principle, namely the substantial part question, was determined. Discovery will therefore be required, he submitted, to enable Larrikin to make an election about whether damages or an account of profits is appropriate and to quantify exactly what damages or profits there may be, as well as to examine the question of authorisation liability. 27 The short answer to Mr Lancaster's submission that the first three questions were limited to the narrow issue of whether the specified recordings of Down Under reproduced a substantial part of Kookaburra is that it fails to take account of the full terms of the questions. Each of the first three questions asks whether the recording "involved the doing of any act comprised in the copyright". It is that phrase which informs the meaning of the questions. 28 Section 31 of the Copyright Act lists the rights of the owner of the copyright in a work. These include the right to reproduce the work in a material form. But it does not follow that the questions were limited to whether Down Under reproduced a substantial part of Kookaburra. 29 This is because s 13(2) provides that the exclusive right to do an act includes the exclusive right to authorise a person to do that act. Moreover, s 36 provides that copyright is infringed by a person who, without the licence of the owner, does or authorises the doing in Australia of an act comprised in the copyright. 30 The hearing seems to me to have been conducted on the basis that authorisation fell within the first three questions. It was referred to specifically in Larrikin's closing submissions. 31 Even if I am wrong in that view, I do not consider that the course proposed by Mr Lancaster ought to be permitted as a matter of case management. The stage which this case had reached on 27 October 2009, the considerations referred to by the High Court in AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 and the purpose of "quick, inexpensive and efficient" resolution of disputes stated in the Access to Justice (Civil Litigation Reforms) Amendment Act 2009 (Cth), all point in favour of the rationing of further use of the Court processes. 32 This case was ready to proceed to trial on 26 October 2009. Evidence had been filed on all issues of liability and all issues relating to Larrikin's percentage interest. All that was to be deferred was "bean counting". By that stage it was too late to seek further discovery on anything except the "bean counting" issue, but that was to be dealt with after my decision on the issues of liability and percentage entitlement. 33 It is true that the course which appears to have been adopted to manage discovery was that samples of licence agreements would be produced by the EMI companies so as to enable the issue of infringement to be dealt with. Reference was made in the course of directions to the possibility of many hundreds of licences having been granted. Plainly, not all of those would have been needed to deal with the preliminary issue even in the form it took in the orders made in December 2008. 34 What was contemplated was that the case would be conducted on the basis of the licences thus far discovered and that any further licences would be produced after determination of liability and "percentage". The other licences would be relevant to the extent of exploitation and would therefore be relevant to damages or an account of profits. They were not to be produced to permit Larrikin to have a second bite at the cherry on the question of authorisation. 35 I do not see that the late change of counsel or the terms of the questions ordered on 27 October 2009 altered this approach. It is true that the issues formulated in the first three questions were limited to a determination of infringement by reference to three particular samples of the use of the work Down Under. But it seemed to me when I made the orders that the agreement noted in order No 3 was intended, quite sensibly, to reduce the need for Court time to be taken up by considering other possible uses or reproductions of the work which may have been established by other licence agreements produced on discovery. 36 Order 4(b) has to be considered in light of the procedural history referred to above and in the light of order 4 as a whole. Plainly, orders 4(a) and 4(c) provide for the percentage issue to be deferred as well as for the deferral of damages or an account of profits. What order 4(b) seems to me to have contemplated was the deferral of the identification of other licences which would be relevant to the quantification of damages or an account of profits. 37 It is true that the words "or authorised" were referred to in order 4(b) but it does not follow that what was contemplated by the order was that the issue of authorisation was to be litigated afresh in relation to each further possible licence of Down Under. 38 All that seems to me to have been intended was that order 4(b) was to make it clear that there may be other licences apart from the 22 uses stated or reproductions listed in order No 3. That was to be for the protection of Larrikin in the quantification of damages or an account of profits, not a carte blanche for further litigation on issues which would follow as a matter of course from the litigation by way of sample that formed the first stage of the hearing. 39 The effect of the discussion with counsel set out at [20] above was, as I understood it, intended to reiterate this so that the only issues to be litigated before me were the essential questions going to liability, stated in the 5 questions, and that the only other issue which I would hear was the percentage portion which would be determined later. 40 Even if it be correct that the issue of authorisation was not covered by the orders of 27 October, the principal question going to liability was plainly dealt with and decided. I do not consider that any further Court resources or Court processes should be devoted to this case until the issue of quantum in the sense referred to in this proceeding, i.e. the percentage issue, has been decided.. 41 No further discovery is required for determination of the "percentage". All the evidence on that issue has been filed. The issue turns upon a determination of expert evidence as to the amount of the hypothetical royalty that would have been payable. The tender of that evidence was deferred, the intention being that I would deal with it at the second stage of the hearing. 42 Nor is further discovery to be permitted on the question of additional damages under s 115(4) of the Copyright Act. Any discovery that was to be sought on that issue should have been obtained before the hearing scheduled for 26 October 2009. It was not a "bean counting" issue to be deferred until after the hearing. Indeed, Mr Hay was cross-examined quite vigorously on matters going to the flagrancy of the breach and I accepted his evidence on that issue. 43 Larrikin is not deprived of the opportunity to elect between damages and an account of profits because in due course it will obtain accounting records when the "bean counting" exercise is carried out. My task at that stage will be a purely mechanical one of making final orders to give effect to the bean counting. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.