iii) Gallagher
21 In order to obtain the relief sought against Gallagher under the Copyright Act, it is necessary for the Applicants to satisfy the Court that the evidence supports a finding that Gallagher authorised, directed and procured the infringing acts. In contrast to the First and Third Respondents, Gallagher denies that she authorised the making of the records the subject of the alleged infringements set out in para 20 of the S/C, by para 27 of her S/D filed 5 May 2000. It is also material that in contrast to Comer, Gallagher held the prima facie non-directorial position at CEL Music of Label Manager. That being so, I considered that the burden rested squarely on the Applicants to satisfy the Court that Gallagher authorised, directed and procured the manufacture and distribution of the infringing compact discs in contravention of the Copyright Act,and also was directly or indirectly knowingly concerned in, the alleged contraventions of the Trade Practices Act.
22 Substantial evidence was identified by Mr Blackburn on 15 February 2002 for the purpose of seeking to implicate Gallagher in the alleged infringement, otherwise than in the capacity of a mere or non-executive employee of CEL Music, as follows:
(a) indications that Gallagher had purportedly signed Individual Track licences made between Ariola Interactive and CEL Music;
(b) the circumstance of Gallagher's attendance and participation in a meeting between Sony Music Entertainment and CEL Music at which the licensing of Sony records to CEL Music was organised and notified in the absence of Comer;
(c) the nature of Gallagher's work duties whilst an employee at Sony Music Entertainment between 1991 and 1993, which inferentially appeared to be executive in character;
(d) the fact that Gallagher had corresponded by fax of 10 September 1998 with Mr Terrey of Sony Music Entertainment, particularly in circumstances which gave rise to the inference that Gallagher was aware that the Track Licences for certain relevant records had earlier expired; moreover the manufacturing activity which reproduced the relevant sound recordings and records, and which infringed the Applicants' copyrights, occurred as from 10 September 1998, taking place subsequent to Gallagher initiating this correspondence;
(e) multiple work order forms to which Gallagher was a signatory, which purported to require compact disks to be manufactured, or 'pressed' (to use the terminology common in the industry), and which orders were placed after the expiry of licenses all held by CEL Entertainment, being orders placed by Gallagher on behalf of CEL Music; and
(f) correspondence by fax from Gallagher to Michael Gordon of BMG Australia dated 26 August 98, which amounted to a request for CEL Music, as distinct from CEL Entertainment (which entered insolvent administration on 31 July 1998) to be granted a renewal of the relevant Track Licenses, once outstanding royalties had been paid, and which correspondence evidenced an offer by Gallagher and Comer jointly to guarantee debts owed by CEL Music to BMG Australia.
23 As a consequence of the non-appearance of Gallagher on 15 February 2002, all of the foregoing documentary evidence, and the accumulating implications flowing therefrom, remain unchallenged by Gallagher, save for the assertions detailed in her affidavit sworn 7 February 2002. In that affidavit, Gallagher reiterated that she was unaware that CEL Music, her employer, was breaching the copyrights owned by the Applicants, and that she had no control over the day-to-day activities of CEL or its employees, being denials which I find are inconsistent with the documentary material in evidence. She also requested by that affidavit that the Court allow her the opportunity to properly prepare and present her case, which request was acceded to when the Court stood over the substantive hearing of the N/M dated 20 December 2001 until 15 February 2002. On this date, as I have already indicated, Gallagher did not appear before the Court to challenge the evidence adduced by the Applicants, nor filed any affidavit material explanatory thereof. I should add that Gallagher's affidavit of 7 February 2002 also annexed an Amended Statement of Defence which in substance, sought to add to the original S/D filed jointly with the First and Third Respondents, by pleading, inter alia, that Gallagher had no part in any common design with Comer and CEL Music in relation to the claims made by the Applicants under the Trade Practices Act, nor had the capacity to authorise, direct or procure the infringing acts of CEL Music, such as to have constituted the infringement postulated pursuant to the Copyright Act. Again I find such protestations of non-involvement to be inconsistent with the documentary material tendered by the Applicants.
24 I should here take the opportunity to formally record subs 36(1) of the Copyright Act, as follows:
"Subject to this Act, the copyright in a literary, dramatic, musical, or artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorises the doing in Australia of, any act comprised in the copyright."
25 In submissions to the Court on 15 February 2002, counsel for the Applicant made reference to Microsoft Corporation & Others v Goodview Electronics Pty Ltd & Others (2000) 49 IPR 578, a decision of Branson J, where her Honour stated the proposition that employees other than directors, such as Gallagher, could be primarily liable as tortfeasors.
26 In Goodview, Branson J referred to the test for tortious liability of directors enunciated by Lindgren J in Microsoft Corporation & Anor v Auschina Polaris Pty Ltd and Anor (1996) 71 FCR 231. After extensively reviewing the relevant authorities at 242-246, Lindgren J had affirmed a "procured or directed" test, that is, a test which considered whether the relevant director expressly or impliedly procured or directed the infringing conduct. In preferring this test to a higher test of whether the director had the made the infringing conduct his own, Lindgren J made the following observations at 243-244:
"The 'procured or directed' test, sometimes referred to as the 'authorised, procured or directed' test, focuses attention on the relationship between the director's intention and the particular corporate conduct which the law characterises as tortious. What seems to underlie this test is the notion that, necessarily, companies can engage in tortious conduct only through human beings, and, at least ordinarily, where a particular human being involved and responsible to an appropriate extent can be identified, he should, as a matter of policy, be liable."
27 Whilst Lindgren J was in context specifically ruling on the liability of a director, it does not follow that the dictum would not apply to an employee involved in executive decision-making, albeit not formally appointed to the office of director. In the circumstances of Gallagher's conduct as a Label Manager to which I have been referred, and in the context of the operations of CEL Music, I would infer that her functions were executive in character, being an inference I would more readily draw in the light of her non-appearance after first consulting with counsel briefed on her behalf.
28 In Goodview Electronics, in the process of ruling that a non-director employee was primarily liable as a tortfeasor for copyright infringements of an employer company, Branson J also referred to the decision of Merkel J in this Court in Henley Arch Pty Ltd v Clarendon Homes (Aust) Pty Ltd (1998) 41 IPR 443, where, at 463, Merkel J expressly stated that it was unnecessary for an individual to be a company director in order for him or her to be primarily liable as a joint or concurrent tortfeasor, in the following terms:
"If a company has infringed copyright a person (including a director) may also be liable if that person personally authorised the company to commit the act of infringement… Authorisation for the purpose of s 36(1) is established by evidence that the relevant person sanctioned, approved or countenanced the infringing conduct in a manner which thereby authorised it."
Further, citing Auschina in support, Merkel J continued at 463:
"A person (including a director) may also be primarily liable as a joint and concurrent tortfeasor in relation to the infringement by involvement in the tortious acts which constitute the infringement."
29 The documentary materials to which I have referred, the employment circumstances of Gallagher to which I have also referred, and the fact of her ultimate withdrawal from participation in the proceedings, has enabled me to be satisfied that Gallagher was not only fully aware of, but in fact authorised, directed and procured the reproduction of the relevant sound recordings and records which constituted the copyright infringements against the Applicants, and was a party to, or at least indirectly concerned in the contraventions of the Trade Practices Act which have been pleaded.
30 At the conclusion of the substantive hearing of the N/M, I reserved judgment and directed the Applicants to send to my Associate, evidence probative of service on Comer and Gallagher, or attempts at service, of the original S/C in the proceedings, and of the N/M dated 20 December 2001. Subsequent to those directions, I have been provided by the solicitors for the Applicants with the following documentation:
(a) an affidavit of Mr Alexander Graham Hutchens sworn 7 February 2002 and filed with this Court on 19 February 2002, which deposed to efforts made by the Applicants to effect service on Comer of notification of the hearing of the N/M before this Court on 8 February 2002 (pursuant to orders I made on 14 December 2001); and
(b) an affidavit of Michael John Williams sworn on 19 February 2002, which deposed to service on CEL Music, Comer and Gallagher of the Application and S/C, and of attempts to serve on Comer notification of the substantive hearing of the N/M originally returnable on 8 February 2002.
31 Although Comer seems to have eluded service in the circumstances evidenced by these affidavits, I am satisfied that genuine and repeated efforts have been made to notify him of the progress of this matter, and in particular of the N/M originally returnable on 8 February 2002.
32 Furthermore, having benefit of the appearance of Gallagher in Court on 8 February 2002 in the company of her sister-in-law, I am also satisfied that she too was fully aware of the nature of the allegations made against her, and of the substantive hearing of the N/M which was returnable on 15 February 2002.