O'Keefe v Lloyd

REASONS FOR JUDGMENT 1 By a notice of motion dated 17 July 2009 the applicant, Mr O'Keefe, seeks the leave of the Court to file a further amended application and a further amended statement of claim in the form attached as annexures A and B, respectively, to the affidavit of Mr McAllister sworn 17 July 2009. That application is opposed by the respondent, Mr Lloyd. He says that the case has been going for some time, that inquiries have been made, that steps have been taken, and that costs have been incurred, with the consequence that leave should be declined. Alternatively, if leave is not declined then he submits that the Court should order Mr O'Keefe to pay the costs thrown away by reason of the amendment and should also take the step of requiring those costs to be paid forthwith. Further, so he submits, I should stay these proceedings until such time as those costs are paid. 2 The power of the Court to permit an amendment to the pleadings is conferred by O 13, r 2 of the Federal Court Rules. Subrule (2) provides that all necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings. The question which immediately arises is the question of whether that discretionary power should be exercised in favour of Mr O'Keefe. It is necessary, I think, to say a few words about the background to these proceedings. They were commenced on 26 February 2008. 3 Mr O'Keefe alleges that he met with Mr Lloyd at a pub in Rozelle in either 1989 or 1991 and there agreed with him as to the formulation of a well-known song now travelling under the title "Amazing". Mr O'Keefe alleges, and I will put this matter somewhat compendiously, that he and Mr Lloyd both have rights in that song, a proposition which Mr Lloyd denies. When the proceedings were initially commenced Mr O'Keefe was legally represented. During the course of that legal representation the proceedings were amended on 19 August 2008. The amendment then made altered the allegation that the meeting between Mr Lloyd and Mr O'Keefe had taken place at The Bridge Hotel in Rozelle in 1989 and changed it so that it now became an amendment which alleged that the meeting took place in April or May 1991. 4 Subsequent to that amendment taking place Mr O'Keefe lost the benefit of legal representation and for a period was unrepresented in the proceedings. The directions which were made by me required the evidence for all parties effectively to have been filed by 29 May 2009 and concomitantly fixed the matter for hearing on 2 October 2009, which is a period of about two months away. Recently Mr O'Keefe has come into legal representation and it is that legal representation which has led to the current application. 5 The case which was formally put by Mr O'Keefe was an allegation that the consequence of the events which had taken place at The Bridge Hotel was that he and Mr Lloyd had produced a joint work copyright in which subsisted in both of them. Ms Champion who appears as counsel for Mr O'Keefe has submitted that there are deficiencies in the way in which that claim is articulated. She submits that a more sensible case which is more consistent with the provisions of the Copyright Act 1968 (Cth) is that Mr O'Keefe was responsible for a number of lyrics in the song, each of which itself is a copyright work, and was also responsible for the melody of the chorus each also said to be a separate copyright work. 6 The claim therefore now propounded by Mr O'Keefe is not a claim for royalties deriving from a jointly owned work but rather a claim for royalties deriving from the use by Mr Lloyd of the particular lyrics which Mr O'Keefe now says he entirely owned. It is not suggested that the whole of the song is owned by Mr O'Keefe but only the particular lyrics. 7 It will be seen that putting the case in that way does not alter the substantive proposition that the matter arises from a meeting which took place between the two gentlemen at The Bridge Hotel. It does no doubt require a finessing of the precise terms of the discussions which took place between them. In particular, it is not difficult to see that the wording which passed between the two gentlemen which was originally said to result in an agreement to share the royalties flowing from a work of joint copyright might well be materially different to a conversation which is said to give rise to an allegation that particular lyrics are original works. 8 The question then is whether an amendment along those lines should be permitted. Mr Coleman who appeared for Mr Lloyd did not submit that the proceeding now propounded by Mr Lloyd was such that it was unviable or untenable. The Court, of course, would not grant leave to file an amended application or an amended statement of claim which was of that character. Rather, the burden of Mr Coleman's submission was that the prejudice which flowed to his client if the amendment were to be permitted was such that it either should thwart the granting of the leave or alternatively, if leave were to be granted, necessarily required it to be granted on the terms to which I have already adverted, that is, that the costs should be ordered to be paid forthwith and the proceedings stayed until those costs were paid. 9 The principles governing the exercise of the power in O 13, r 2 are well established, at least in this Court. They are usefully set out in Dresna Pty Ltd v Misu Nominees Pty Ltd [2003] FCA 1537 at [42] - [44], [46] and [185]. In that case Weinberg J conducted a thorough review of the principal decisions in this area, which include the High Court's decision in State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, as well as the well-known decision of Bowen LJ in Cropper v Smith (1884) 26 ChD 700 at 710 where his Lordship said: … the object of Courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases… 10 Summarising those matters in a way which is probably not entirely precise it will be the case that an amendment will be allowed, unless any harm arising from permitting the amendment is unable to be compensated for by the imposition of appropriate terms upon the party asking for the amendment. Mr Coleman submitted that there were a number of aspects of the prejudice which would be suffered by his client. He pointed first to the significant expense which the proceedings heretofore have already caused to Mr Lloyd. There was evidence before me that those costs were now to the extent of $125,000. It was submitted that if the amendments were to be permitted some of those costs would necessarily have been wasted. It was submitted that further evidence would necessarily need to be garnered in order to deal with whatever form the claim eventually put by Mr O'Keefe took. 11 I do not think that that aspect of the prejudice is particularly material. The proposed amendments, as I have said, really result in a legal refashioning of the matter, and do not seem to involve a substantive evidential departure from what that which has already been alleged. It is true, as I have said, that the actual form of the alleged conversation which took place between Mr O'Keefe and Mr Lloyd may well be in different terms. However, it is apparent that from the first day of these proceedings Mr Lloyd's position has been that the conversation and the meeting never took place. In that circumstance I do not think that the alteration by Mr O'Keefe of that allegation is going to cause Mr Lloyd any particular difficulty. Presumably he will continue to deny, as he always has, that the alleged meeting took place. 12 As to the prejudice which arises from the costs, it is true that there are likely to be some costs which will be lost as a result of the amendment. That would ordinarily make it appropriate to order that Mr O'Keefe meet Mr Lloyd's costs thrown away by reason of the amendment. Mr Coleman submitted that that was in effect a futile course to take because of the admitted impecuniosity of Mr O'Keefe. Unless the case can be brought within the principles which govern the making of orders that costs be taxed forthwith, I do not think that that by itself should provide a reason for not granting the amendment. It remains always the case when considering these applications that the respective prejudices to both parties be considered. 13 In this case it seems to me that if the amendment is not permitted, the prejudice to Mr O'Keefe will be of the most substantial kind. I accept that the possible difficulties of enforcement of costs to Mr Lloyd is a prejudice to him, but it does not seem to me that it is of the same order as the prejudice which will be suffered by Mr O'Keefe if the amendment is not now permitted. 14 It was also submitted by Mr Coleman that the claim had gone through a number of different amendments and that Mr O'Keefe's account of when the meeting took place was itself something which had changed from time to time. There is no doubt that is true, but in my opinion the extent of the amendment in this case is at the lower end of the scale. 15 The pleading which is now proposed is a further amended statement of claim that is basically a second form of amended case. The amendments are substantial no doubt but there is not in this case the kind of constant amendment that one sometimes sees. Further, it seems to me also relevant to take into account that this is not an amendment application which has been made at a trial but it is being made instead some months before the trial is set to occur. It is true, as Mr Coleman submitted, that Mr O'Keefe has varied his account of when the meeting took place. However, Ms Champion made clear in her submissions today that the date which Mr O'Keefe was going to stand by was the date which had been in the pleading now since the last amendment. That circumstance is really only of historical relevance, and is possibly also relevant to cross-examination to point out that there has been a variation in the dates. 16 Mr Coleman submitted that the continuance of these proceedings and their possible prolongation by the present application were likely to induce in Mr Lloyd stress. That stress was the ordinary stress attending litigation, which should not ever be underestimated, but also included the stress attending the making in a very public way of an allegation of misappropriation against him. I accept that, in the entertainment industry, to make an allegation that copyright has been misappropriated, particularly in relation to a well-known song, is a matter which no doubt weighs upon Mr Lloyd's mind. I accept that the anxieties which are submitted on his behalf exist. Those anxieties of course have existed throughout the litigation and they will continue until the litigation is concluded. I do not think that the granting of the amendments necessarily promotes them or prolongs them. 17 In all those circumstances it seems to me that there is prejudice to both parties attended by the current situation. However, for the reasons I have given, I think that the prejudice to Mr O'Keefe of not permitting the amendment is greater than the prejudice to Mr Lloyd of denying it. In that circumstance I propose to grant the amendments which are sought in the notice of motion, save that the current version of the proposed further amended statement of claim does not make clear that the meeting took place in April or May 1991. I grant leave in the form sought in the motion except that the version filed must advert to that meeting date. 18 It follows from the grant of leave that Mr O'Keefe should be ordered to pay the costs thrown away by reason of the amendment and I so order. 19 It remains then to deal with Mr Coleman's application to have those costs payable forthwith. The power of the court to order costs to be payable forthwith is conferred by O 62, r 3. The principles upon which that power is to be exercised are not as comprehensively established as those which govern amendments, but have been considered by Graham J in Airservices Australia v Jeppesen Sanderson Inc [2006] FCA 906. In that case his Honour said at [31]: In lengthy and complex cases where substantial costs have been thrown away as a result of ill-considered pleadings being drawn, the power to order that costs thrown away be paid forthwith should be used less sparingly than it has in the past. Such costs should be capable of being recovered without the innocent party having to wait, possibly years, for that to occur. 20 His Honour referred to the decision of Weinberg J in the McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 at 41. I do not think that the present case deserves the appellation 'lengthy and complex'. No doubt the proceeding has its difficulties and complexities, but it is not the kind of commercial litigation with which I think Graham J was concerned in that case. Nor is it, I should say for completeness, the kind of litigation which Tamberlin J was considering in Cortis Exhaust Systems Pty Ltd v Kitten Software Pty Ltd [2000] FCA 491. In that case his Honour in fact visited upon the party seeking the amendment an order that the costs be taxed forthwith, but as his Honour noted at [1] the case was one which he was only able to describe as having "a lamentable history of non-compliance." 21 In the present proceedings I do not see that. There have been two amendments. No doubt the first form of the pleading is not what one might call ideal but there is simply lacking the kind of substratum of material in relation to the procedural conduct of the case to call for a denouncement of what has occurred which would justify the making of an order that costs be paid forthwith. Accordingly, I decline to make that order. 22 I think the appropriate thing to do in those circumstances is to make a further direction that any more evidence in chief be filed by 31 July 2009 and then probably to bring it back for directions on Tuesday, 4 August 2009. 23 Mr Coleman applies for the costs of today. Save in the circumstance that a resisting party's opposition to an amendment application is itself able to be characterised as unreasonable, the usual position is that the party seeking the indulgence of the court has to pay the price of the indulgence. In those circumstances, since I am not able to conclude that the conduct of Mr Lloyd has been itself unreasonable it follows that the appropriate order is that Mr O'Keefe pay Mr Lloyd's costs of today. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.