Amuse Hong Kong Ltd. v. Chan Kin Tim, Leslie and Another
Read the full judgment text of CACV 216/1993 on BabelCite. This Court of Appeal judgment was delivered on 3 February 1994.
1. The 2nd plaintiff, Kinn's Music Limited ("KML") is involved in the publishing and production of popular music and the management of groups who produce such music. The 1st plaintiff Leslie Chan is a director of KML and appears to be the driving force in that company. KML managed a successful group of musicians ("the Band") who perform under the name "Beyond". Many of its songs have been written by its members, either individually or collectively, and they, by written agreements ("the copyright
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CACV000216/1993 IN THE COURT OF APPEAL 1993, No.216 _________________
_________________ Coram: Hon. Power, V.-P., Nazareth and Litton, JJ.A. Date of hearing: 18 January 1994 Date of judgment: 3 February 1994 _________________ J U D G M E N T _________________ Power, V.-P.: 1. The 2nd plaintiff, Kinn's Music Limited ("KML") is involved in the publishing and production of popular music and the management of groups who produce such music. The 1st plaintiff Leslie Chan is a director of KML and appears to be the driving force in that company. KML managed a successful group of musicians ("the Band") who perform under the name "Beyond". Many of its songs have been written by its members, either individually or collectively, and they, by written agreements ("the copyright assignments") assigned the copyright to KML or, before KML's incorporation, to its predecessor Kinn's Music Productions. When KML was incorporated in November 1986 the benefit of the earlier assignments passed to it. In June 1986 the Band entered into a Representation Agreement with KML but its increasing success led to the realization that it would be better served if promoted by an international company and in mid-1992 KML transferred its management responsibilities to a Japanese corporation Kabushiki Kaisha Amuse, of which the defendant is the Hong Kong subsidiary. KML did not, however, transfer any of its rights under the copyright assignments which covered all of the songs up to those included in the Band's 1993 album. The songs in that album are referred to as "The Compositions" and the previous songs are referred to as "The Back Catalogue". 2. On 8th April 1993 the four members of the Band, in their own names, issued a writ against KML. The remedies sought in this writ are summarized in the following passage from the affidavit of Yip Sai Wing, one of the members of the Band, which states:
As regards the copyright assignments the Statement of Claim pleaded that they were void and/or unenforceable:
It was finally pleaded that "Insofar as the Copyright Assignments or any of them were voidable only the same were avoided by the Avoidance letter". This was a letter dated 1st April 1993 written by the plaintiffs to KML. 3. In summary the pleading asserted that the copyright assignments were void and/or unenforceable as being in unreasonable restraint of trade, as being an unfair or unconscionable agreement entered into as a result of undue influence or unfair bargaining power and/or because of mistake and/or misrepresentation. 4. On 16th September 1993 the defendant wrote a letter ("the offending letter") which they sent to publishers in the music business in Hong Kong stating that KML did not own the copyright in the Band's songs. On 8th November KML commenced this action for damages for slander of title and unlawful interference. The writ sought an in junction restraining the defendant from publishing a denial that KML were the owners of the copyright. The writ pleaded inter alia that the "said words and/or their clear implication were false and were maliciously published". 5. On 9th November KML by summons sought an interlocutory injunction ordering that the defendant withdraw the letter of 16th September unconditionally and until after trial of the action or further order refrain from publishing any denial that KML are the owners of the copyright. 6. The offending letter stated:
7. The application for an interlocutory injunction came before Barnett J. who, when granting the injunctions sought, stated:
Having heard counsel, the judge ordered -
8. The judge was satisfied that "the sting" to which the plaintiffs took exception was contained in the words "The contention by Kinn's Music Ltd that they own the copyright in the Compositions is spurious and without foundation." He stated that, without that sentence Mr. Garland, who appeared for KML, had conceded that they would probably have had no cause for complaint. He went on to say that he was satisfied "that the offending words colour and infect the whole letter and that there can have been no doubt as to the Plaintiffs' attitude to this letter". 9. He was mindful when coming to his decision that the tort of slander of title requires proof by a plaintiff that the words used were false and made maliciously and that an interlocutory injunction in an action based on libel is granted sparingly and only in the clearest case, particularly where a defendant pleads justification. 10. He stated it to be trite law that if a defendant pleaded that he was going to justify no interlocutory injunction would be granted unless the court was satisfied that he would not be able to justify. He stated that he could see no assertion of justification on affidavit by anyone on behalf of the defendant. When saying this he indicated that he was mindful of Mr. Faulkner's argument for the defendant, that if the Band's action was successful, it may have the effect of making some of the agreements void which would show KML's claims to copyright to have been without foundation and necessarily spurious. He was little impressed with this argument as he was satisfied that the judge trying the action would have to look at the circumstances which prevailed at the time when the offending letter was written. He stated that at that time the defendant was not only aware of the Band's action but also that KML's claim was based on documents which went back a number of years during which KML's title was never challenged and during which it had arranged for publishing or licensing of the Band's material and had received royalties therefor. He was unable in those circumstances to see how anyone could suggest that KML's claim to copyright was "spurious and without foundation". He stated:
He went on to state that:
He was satisfied that the plaintiff could have had no other purpose in sending the letter "than to make life as difficult as possible for the Plaintiffs". He was further satisfied that there was no evidence that the defendant was likely to suffer any direct financial loss or damage if the injunction were granted but was satisfied that:
11. Being satisfied that the words were false and malicious, that the defendant had not pleaded justification and that KML but not the defendant would suffer damage if the injunction were not granted, the judge turned to the exercise of his discretion. He was satisfied, having considered the principles set out by Hoffmann J. in Films Rover International Ltd. and Others v. Cannon Film Sales Ltd. (1987) 1 W.L.R. 670, that he should exercise his discretion in favour of KML. 12. Before this court Mr. Faulkner first argues that the judge erred in holding that what he referred to as "the sting" was the principal matter of complaint by KML. It was suggested that this was not really what KML were complaining about. We find no merit in this suggestion. As the judge rightly observed, "the sting" coloured and infected the whole letter and KML was clearly objecting to the letter as coloured and infected by those words. 13. It was next submitted that given that the words of the sting were the principal matter of complaint, the injunction granted which ordered the defendants to publish the retraction and to refrain from publishing any statements suggesting that KML were not the owner of the copyright in The Compositions and the Back Catalogue, was much more extensive relief than that which was required to remedy the suggested wrong. This would only be so if the complaint was limited as was Mr. Faulkner suggested. The concluding words in the paragraph set out above state: "All publishing rights should, therefore, be negotiated through our offices." The defendants were clearly saying that KML was making a wholly false claim to copyright in the songs and that the publishing rights with regard thereto should be negotiated through them. The judge was right to regard the offending words as colouring the whole letter. There is nothing in this first ground. 14. In the second ground it is complained that the judge erred insofar as he held "that the defendant did not assert, whether in terms or in effect, that it intended to justify the matter complained of". What the judge said was:
What is argued is that the defendant was plainly asserting justification insofar as it relied upon the action of the Band which, if successful, would have the effect of making the agreements between KML and the Band void. Barnett J. was satisfied that the judge hearing such an action would have to look at the circumstances which prevailed at the time when the offending letter was written, and that at that time its contents were inarguably "false and plainly known to be false on the part of the defendant". 15. Mr. Peter Loehr, the General Manager of the international division of Kabushiki Kaisha Amuse stated that his company "fully support" the Band in their High Court Action and that they would assert the rights of the Band set out in the Statement of Claim and intended to establish the truth of the matters asserted in the offending letter. 16. Mr. Loehr went on to state:
17. While it may be that Mr. Loehr did not, in terms, assert an intention to justify he made it clear beyond argument that the defendant would be relying upon the rights asserted by the Band in its action. 18. It was the argument of Mr. Faulkner that rescission is not a judicial remedy but is the act of the party who is entitled to rescind and that the Band had by the Avoidance letter rescinded the copyright agreements. As the defendant relied upon the assertion of the Band as pleaded this was, he argued, a sufficient assertion of justification on their part. 19. This was, however, his fall back position. He relied firstly upon the claim of the Band that the copyright agreements were in restraint of trade and were, therefore, being in breach of public policy, void ab initio. His fall back position was that, even if this be not so, the agreements had been obtained by a breach of a fiduciary duty owed to the Band and that the Band was, therefore, entitled to and did rescind them. 20. The first contention can be quickly dealt with. In Sullivan v. Management Agency Ltd. (1985) 1 Q.B. 428 in which Waller L.J., relying on Instone v. Schroeder Music Publishing Co. Ltd. (1974) 1 All E.R. 171, which was affirmed in the House of Lords under the name ofA. Schroeder Music Publishing Co. v. McCally (1974) 1 W.L.R. 1308, said, at p.470 :
This disposes of the contention that the agreements which had been performed were void ab initio because they were in restraint of trade. 21. The submission that the defendant was asserting justification relying upon an election to rescind by the Band on the ground of breach of fiduciary duty which was evidenced by the Avoidance letter written in April 1993 raises more difficult questions. This contention will only fail if it can be demonstrated that the election could not, in the circumstances of the matter, have affected a rescission of the contract. At first sight the authorities appear to indicate that an election to rescind does terminate the contract forthwith. There appears to be support for this view in Horsler v. Zorro [1975] 1 Ch. 302 in which Megarry J., at p.310, said:
Lord Atkinson in the Abram Steamship Co. Ltd. case said, at p.781 :
22. That statement read, standing alone, would seem to give clear support to the suggestion that the election of the party once communicated rescinds the contract. Lord Atkinson, however, went on to state:
23. This further passage makes it clear that the notification does not rescind the contract and that where restitutio in integrum is required, and it would be clearly required in the present case, the rescission is not "accomplished" until the rescinding party discharges whatever duty lies upon him to effect restitution in integrum. We observe in passing that the authority of Horsler v. Zorro (supra) was severely questioned in Johnson v. Agnew [1980] A.C. 367 where, at 3950 Lord Wilberforce said that Megarry J.'s judgment was "discoloured by the erroneous conception of rescission ab initio". We are satisfied that the rescission was not accomplished by the avoidance letter nor has it been accomplished up until the present time. For these reasons we are satisfied that the judge was right to hold that no justification could be asserted. 24. The third ground of appeal was that the judge erred in suggesting a meaning for the libel which had never been asserted by the plaintiffs in pleading or in affidavit or in submission and which therefore the defendant never had a chance to meet. The words of the judge complained of are:
25. The words "The contention by Kinn's Music Ltd. that they own the copyright in the Compositions is spurious and without foundation" were the clearest statement that KML had no foundation of any sort for making a claim to the ownership of the copyright of any of the songs of the Band. There was no indication in the offending letter that the claim was disputed and was the subject of ongoing litigation. Put in colloquial language the words, in our view, do suggest that KML's claim was a "cock and bull story". Clearly any such claim, if unfounded, would be an attempt "to take advantage of a successful group of musicians". The "contention" referred to in the letter was undoubtedly that made in the advertisements placed by KML in daily newspapers in Hong Kong on 3rd and 4th December 1993. The judge was doing no more when using the words "very lately come forward" than indicating that the letter was referring to a recent public statement by KML that it owned the copyright. We are satisfied that the judge did not give any meaning to the alleged libel other than which it reasonably bore, and that it was this meaning about which KML was, throughout, complaining. Mr. Leslie Chan in his affidavit had said:
26. As an alternative to the above ground, it was suggested that the judge erred in holding that the meaning was one which a jury or a judge would inevitably attach to the words. We find no substance in this contention. We are satisfied that it is the meaning which any person would reasonably give to the words used. 27. The next ground urged that the judge was wrong when he stated that he failed "to see how the defendant can hope to justify the offending words". We have already dealt with this ground. Given that there were subsisting copyright agreements, the judge was quite entitled to hold that the defendants had no hope of justifying their statement that KML's claim to own the copyright was spurious and without foundation. 28. The next ground argued was that the judge was wrong to hold that malice was established or that there was sufficient evidence of malice. His finding in this regard was as follows:
29. The judge was satisfied that the word complained of were "false and plainly known to be false from the part of the defendant". He was satisfied that the defendant knew that KML had signed copyright agreements which over a number of years both parties had accepted as binding. He was satisfied that at the time when the letter was written there was nothing which would have justified the defendants in concluding that these agreements had come to an end. He was satisfied that the defendants had published an injurious falsehood which they knew to be false with the object of injuring KML and that this constituted malice. He appears when dealing with these findings to have been relying upon the third proposition in the following passage, cited in the judgment, from wilts United Dairies Ltd. v. Thomas Robinson Sons & Coy., Ltd. [1957] RPC 220 per Stable J. at p.237:
We see force in the suggestion that the judge was wrong to find knowledge of falsity on the part of the defendant as there was nothing to contradict the statement by Mr. Loehr that the defendant relied upon the advice of the solicitors which must have been that the agreements between the Band and KML had been rescinded by the Avoidance Letter. 30. Even if this be accepted the defendants fall within the second proposition as they published a statement which turned out to be false whose primary purpose was to injure KML. 31. It was further argued that malice was not asserted on the affidavit and that the judge was therefore wrong to proceed to find that it existed. The plaintiffs were clearly asserting a deliberate, untruthful attack upon their proprietary rights which was intended to and would cause them damages. No further assertion of malice was in our view needed. 32. The next ground suggested that the judge was wrong in finding that damage had occurred to KML or, alternatively that such damage could not be compensated in damages. We find it difficult to understand the first part of this contention as there is clear evidence in the affidavit of Mr. Leslie Chan that damage had occurred. The judge was further right to hold as he did, upon the evidence in Mr. Chan's affidavit, that the loss of royalties would "plainly affect the plaintiffs' ability to do business" and that this would be "aggravated by the Damaging allegation which has been made against them". 33. The penultimate ground was that the mandatory injunction was too wide as it should only have ordered a retraction limited to the alleged "sting". We have already dealt with this. We are satisfied that the sting coloured the whole letter and that the judge was right to order that it be retracted in toto. 34. The final ground was that the judge erred in ordering a negative injunction. It was submitted that such an injunction should be issued in only the rarest circumstances and that it wholly inhibited the defendants from asserting matters which truly described the state of the action between the Band and KML. We are satisfied that this was an exceptional circumstance. Numerous third parties are or are likely to be involved. The interlocking relationships of the KML, the defendant, the Band and those third parties is likely to be thrown into inextricable confusion if charges and counter charges are flung across the music world. It is clearly in nobody's interest that this should be done. The judge was satisfied, rightly in our view, that the proper order was one which would maintain the status guo until after the trial of the action. 35. The application is dismissed. We make an order nisi that the appellant pay the Respondents' costs to be taxed.
Representation: Mr. R.J. Faulkner (Messrs. Haldane Midgley & Booth) for the Appellant (Defendant). Mr. P. Garland (Messrs. Simmons & Simmons) for the Respondents (Plaintiffs). |