AEI Rediffusion Music Ltd v Phonographic Performance Ltd

JurisdictionEngland & Wales
JudgeLORD JUSTICE MUMMERY,LORD JUSTICE MANTELL,LORD WOOLF, MR
Judgment Date19 February 1999
Judgment citation (vLex)[1999] EWCA Civ J0219-18
Docket NumberCHANF 98/1239/3
CourtCourt of Appeal (Civil Division)
Date19 February 1999
Phonographic Performance Limited
Applicant/Respondent
and
Aei Redifussion Music Limited
Respondent/Appellant

[1999] EWCA Civ J0219-18

Before:

The Master Of The Rolls

(Lord Woolf)

Lord Justice Mummery

Lord Justice Mantell

CHANF 98/1239/3

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE CHANCERY DIVISION (COPYRIGHT TRIBUNAL)

Royal Courts of Justice

Strand

London WC2

THE HON MICHAEL BELOFF QC and MR H MALEK (Instructed by Messrs Eversheds, London, EC4V 4JL) Appeared on behalf of the Appellant

MR J RAYNER JAMES QC (Instructed by Messrs Green Sheikh, London, W1H 2BY) appeared on behalf of the Respondent

1

Friday 19 February 1999

LORD JUSTICE MUMMERY
2

This appeal is concerned with the circumstances in which it is appropriate for an appellate court, to which an appeal lies on a point of law from a tribunal (or court), to interfere with the exercise of a wide discretion to make an order in relation to the payment of the costs of the proceedings.

3

The Parties

4

The appellant, AEI Rediffusion Music Ltd (AEI), carries on the business of providing a satellite delivered service consisting of the transmission of music selections to subscribers for use as background music in premises. The transmission involves the broadcasting of sound recordings. That is an act restricted by the copyright in a sound recording.

5

The relevant broadcasting rights in the sound recordings are vested in the respondent, Phonographic Performance Ltd (PPL). PPL is a collecting society for its members, who are record companies initially entitled to the copyright in sound recordings, including the right to broadcast them in the United Kingdom. The record companies assign the broadcasting right to PPL, which, on behalf of its members, licenses users to exercise the right. The sound recordings concerned are collectively called "the repertoire", which includes the vast majority of sound recordings available to the public in the United Kingdom.

6

PPL is a "licensing body" for the purposes of Chapter VII of the Copyright, Designs and Patents Act 1988 (the 1988 Act). In order to broadcast the sound recording by satellite AEI requires a licence from PPL.

7

Licence Schemes and User as of right

8

Under the 1988 Act application may be made by a copyright user to the Copyright Tribunal in respect of schemes operated by, or licences granted by, a licensing body. PPL operates a licensing scheme in respect of the broadcasting of sound recordings by commercial radio stations. AEI could have sought to claim a licence under that scheme. Instead, AEI claimed the use of sound recordings as of right in broadcasts. The statutory provisions conferring that right are contained in Sections 135A to 135H, which were inserted in the 1988 Act by amendments in the Broadcasting Acts 1990 and 1996. The effect of the amendments is to create, in specified circumstances, a statutory licence to broadcast sound recordings in the repertoire. If the licensing body and the copyright user are unable to agree terms as to payment or other conditions the matter is referred by the user to the Copyright Tribunal to:

"… consider the matter and make such order as it may determine to be reasonable in the circumstances " Section 135D (1) and Section 135E (2).

9

The User as of Right Procedure

10

As this appeal is limited to the issue of costs it is unnecessary to set out the provisions of Sections 135A to 135H in full. The operation of the statutory licence may be summarised as follows:-

1. The relevant right is the inclusion of sound recordings in a broadcast (or cable programme service). The right takes the form of a statutory licence which the owner of the copyright (in this case PPL) is treated as having granted. The effect of the licence is to protect the licence holder who broadcasts the sound recording from liability for infringement of copyright, provided that he complies with specified conditions for the exercise of the right. They include making

" the payments to the licensing body that are required by this section."

See Section 135C (1)(c).

2. The amount of the payments to be made depends on whether that matter has been determined by an order of the Copyright Tribunal.

3. The Copyright Tribunal has power to settle the terms of payment and other conditions between a licensing body and the person wishing to avail himself of the right. The matter comes before the Copyright Tribunal on an application to settle the terms of payment and other conditions for the exercise of the right.

4. The application to the Tribunal is made by the person intending to avail himself of the right. He must make application to the Copyright Tribunal before he begins to exercise the right.

5. On the application the Tribunal makes such order as it may determine to be reasonable in the circumstances.

6. An order of the Tribunal has effect from the date when the applicant began to exercise the right. Adjustments are then made in respect of payments which have fallen due between the start date and the date when the Tribunal made the order. Those adjustments may take the form either of repayments of sums, which have been overpaid, or of additional payments, as the case may be.

7. Provision is made for payments in the interim period between the start date and the date of the order of the Tribunal. The mechanics are these. It is incumbent on the applicant to take the first step by requesting the licensing body to propose terms of payment. It is then for the licensing body to propose terms of payment. When the licensing body's proposals are received by the applicant, the applicant must give reasonable notice to the licensing body of the date on which he proposes to begin exercising the right, and the terms of payment in accordance with which he intends to do so.

8. Before the applicant begins to exercise the right he must also give notice to the Copyright Tribunal of his intention to do so and of the date on which he proposes to begin to do so. He must apply to the Tribunal to settle the terms of payment. Unless the licensing body and the applicant reach an agreement, the payment to be made is that determined by the Tribunal to be reasonable. Until there is such an order the applicant is to pay to the licensing body the amount which he has specified in the notice to the licensing body.

11

The Application

12

This statutory machinery was invoked by AEI on 1 February 1996 when it notified PPL of its intention to avail itself of a statutory licence pursuant to Section 135C. PPL was asked to propose its terms of payment. PPL responded by sending a draft licence to AEI on 2 February 1996. On 22 February 1996 AEI objected to both the operating conditions and the payment terms in the licence proposed by PPL. It notified PPL of its own proposals as to, inter alia, the rate of payment. On 6 March 1996 AEI notified the Tribunal and PPL that it intended to exercise the statutory licence to broadcast the sound recordings with effect from 22 March 1996. On 11 March 1996 PPL made a request to AEI information and notified the conditions (other than financial terms) which it stipulated for the exercise of the statutory licence. On 22 March 1996 AEI made applications to the Tribunal (a) under Section 135D to settle the terms of payment and (b) under Section 135E to settle the conditions of the licence.

13

The application relating to conditions under Section 135E was not determined by the Copyright Tribunal, since, subject to some minor amendments, AEI ultimately dropped its opposition and accepted PPL's proposed terms.

14

The hearing in the Copyright Tribunal about the terms of payment took place between 8 and 12 September and on 17 September 1997. On 11 November 1997 the Tribunal handed down its decision under Section 135D. Although it was called an Interim Decision, it was final on all matters save costs.

15

The main points of the Tribunal's decision may be summarised as follows:-

(a) It accepted the 15% royalty rate proposed by PPL and rejected the 5% rate advanced by AEI;

(b) It rejected PPL's definition of "relevant revenue" by excluding equipment and messaging revenue, a major part of AEI's present and potential operations. It accepted AEI's contention that the royalty was to be calculated on "music only" revenue;

(c) It reduced PPL's alternative approach of a fixed fee per site from £150 to £60 per annum per site. It rejected AEI's contention that there should be no such fee at all.

16

Costs in the Copyright Tribunal

17

On the costs issue there were written submissions and oral submissions on 23 January 1998 relating to the exercise of the Tribunal's discretion under Section 151 of the 1988 Act which states:

"(1) The Copyright Tribunal may order that the costs of a party to proceedings before it shall be paid by such other parties as the Tribunal may direct; and the Tribunal may tax or settle the amount of the costs, or direct in what manner they are to be taxed".

18

That broad discretion is reflected in Regulation 48 of the Copyright Tribunal Rules 1989 made under Section 150 (1) of the 1988 Act. That provides:

"(1) The Tribunal may, in its discretion, at any stage of the proceedings make any order it thinks fit in relation to the payment of costs by one party to another in respect of the whole or part of the proceedings."

19

The Copyright Tribunal issued guidance in a Practice Direction in 1995, (superseding an earlier Direction) which includes the following provision on the power to award costs:-

"15. Parties are reminded that under Rule 48(1) the Tribunal has power to award costs. The Tribunal will consider exercising this power against any party which it considers is guilty of undue prolixity in its...

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