Experience Hendrix LLC v PPX Enterprises Inc.
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mance |
| Judgment Date | 20 March 2003 |
| Neutral Citation | [2003] EWCA Civ 323 |
| Docket Number | Case No: A2/2002/1645 |
| Court | Court of Appeal (Civil Division) |
| Date | 20 March 2003 |
[2003] EWCA Civ 323
Lord Justice Peter Gibson
Lord Justice Mance and
Mr Justice Hooper
Case No: A2/2002/1645
IN THE SUPREME COURT OF JUDICATUR
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH
DIVISION (BUCKLEY J)
Royal Courts of Justice
Strand, London, WC2A 2LL
Robert Englehart QC, Andrew Green & Victoria Windle (instructed by Harbottle & Lewis) for the Respondent
Michael Briggs QC, Philip Jones & Jennifer Haywood (instructed by Eversheds) for the Appellant
Introduction
When announcing the settlement on 7 th March 1973 of action 1967 P No. 3007 between the appellant's predecessor in title and the present first defendant ("PPX"), counsel told Mars-Jones J that PPX's "moving force", the present second defendant Mr Chalpin, hoped devoutly never again to be engaged in litigation in England, but that should he become so he hoped to have the advantage of having that litigation tried by Mars-Jones J. PPX's own breaches of the settlement agreement in 1995 and 1999 have undone both hopes.
This is an appeal from a judgment and order of Buckley J dated 5 th July 2002 in proceedings [2002] EWHC 1353 (QB). The only issues live in the Court are (1) whether the appellant is entitled in principle to an account of profit or more than nominal damages in respect of PPX's breaches, and (2) whether the Judge was right to accept an undertaking, rather than to make an order, in relation to an account of sales on which PPX accepts in principle that it would be liable to pay royalties, and whether the terms of the undertaking were appropriate.
The legend behind the 1973 and present proceedings is Jimi Hendrix. He died in 1970 aged 27. In action 1967 P No. 3007, PPX sued him and after his death his estate for breach of an agreement made on 15 th October 1965. The agreement committed him to "produce and play and/or sing exclusively" for PPX for three years from that date. He was to make his services available at PPX's request with a minimum of 10 days notice to produce no more than 4 titles per session, with a minimum of 3 sessions per year. He was to receive in return the nominal sum of US$1 dollar plus "one (1) percent of the retail selling price of all records sold for his production efforts". PPX had the right to reimburse itself from first profits for "all cost of studio, musicians, etc."
Jimi Hendrix's defence in action 1967 P No. 3007 was that the agreement was invalid, being harsh and unconscionable and/or in unreasonable restraint of trade. His case was that he was to be no more than a "session" or "sideman" and/or "arranger" and/or producer. PPX had a further agreement with another performer, Curtis Knight. So far as recordings took place under the agreement of 15 th October 1965, Curtis Knight took the lead role while Jimi Hendrix performed a supporting role.
The trial of action 1967 P No. 3007 had extended over more than 20 days, when on 6/7 th March 1973 counsel advised PPX to settle. Subsequently, Mr Chalpin was to complain that he was not fully or properly advised about the terms of settlement, but there is now no issue about them. The costs of the proceedings had been funded on PPX's side by London Records Inc. ("LRI"), an associated company of The Decca Record Company Limited ("Decca"). Decca was threatening to withdraw further funding. The background to the funding was that PPX had on or about 1 st June 1967 given LRI a licence (with a final expiry date of 1972) for certain recordings for exploitation worldwide excluding the United States, Canada, Germany, Austria, Switzerland and Sweden. Decca was concerned to protect its licence rights.
The settlement reached and incorporated in an order of the court on 7 th March 1973 provided as follows:
"AND UPON
1. The Plaintiff and Edward Chalpin undertaking through their Counsel to the Court that no action upon the Contract between the Plaintiff and the original 1st Defendant dated 15th October 1965 shall be brought against anyone anywhere EXCEPT
(a) actions against any licensee of the Plaintiff relating to the masters specified in Schedule A hereto in respect of any breach or threatened breach of the terms of the relevant licence (a list of the licences now subsisting in respect of such masters to be supplied by Mr. Chalpin to the 1st Defendant within 10 days hereof)
OR(b) ……… .
2. ………
3. (a) Defendants agree that the Plaintiff is entitled to the masters of the titles listed in Schedule A hereto being masters now in the possession of the Plaintiff and all rights of all kinds in respect of those masters and the copyright therein and the performances recorded thereon PROVIDED THAT in respect of any new licence or any extension or variation of any existing licence relating thereto
(i) the estate of Jimi Hendrix shall be entitled to a royalty of 2% of the retail selling price of records sold based upon the same formula as applies to the royalty rate payable to the Plaintiff but
(ii) should the Plaintiff receive thereunder a royalty of 6% or less then the estate shall be paid only 1% and
(iii) there shall be an account of all such royalties and payment of what is due on the last day of March June September and December in each year.
(b) Defendants further agree that the Plaintiff is entitled to honour, carry out and comply with any existing contract or licence relating to titles not listed in Schedule A full particulars of which and of the contracts and licences relating thereto shall be supplied by Mr. Chalpin to the 1st Defendant within 10 days hereof
PROVIDED
(a) No extension or renewal of such contracts or licences shall be granted without the consent of the 1st Defendant
(b) No further or other records tapes or cassettes or other form of recording shall be issued or released except those specifically covered by such contracts or licences.
4. The Plaintiff and Edward Chalpin and Studio 76 Inc will deliver up to the 1 st Defendant all masters of recordings (not hereinbefore referred to) on which Hendrix performed in any capacity whatsoever now in the possession of any of them or to which any of them is entitled and the same shall thereupon be destroyed."
The settlement agreement provided for PPX to pay £50,000 costs to Jimi Hendrix's administrator and other defendants. This sum was funded by LRI or Decca.
The masters to which the settlement agreement referred in clauses 1(a) (Schedule A), 3(b) and 4 were and remain all recordings in which PPX as producer held and holds the copyright. Schedule A (in the form annexed to the order which PPX no longer challenges) consisted of 33 masters (being, it seems, masters that had been licensed to LRI, although Schedule A's relevance outlasts any such licence). Clause 3(b) enabled PPX to perform existing contractual commitments relating to a total of 63 masters under various other licences almost all extending for 2 or 3 years (and none longer than 5 years) at royalty rates ranging from 6% to 12 1/2%. These royalty rates compare with the 1% figure (payable only after PPX had reimbursed itself from first profits for "all cost of studio, musicians, etc.") provided under the original agreement. They were such as to give Jimi Hendrix's estate not less than about one-sixth of PPX's share in the retail selling price of records sold (i.e. 2% against PPX's share of up to 12 1/2% or 1% of PPX's share of 6% or less). Although no extension or renewal of such licences was to be granted without the consent of the administrator of Jimi Hendrix's estate, the settlement agreement made no provision for the delivery up or destruction of these recordings after the expiry of such licences. Clause 4 contained an agreement for delivery up and destruction of a total of 19 masters of recordings which PPX possessed or to which PPX was entitled, not falling within Schedule A or clause 3(b). But Buckley J found that PPX retained some 5 of these masters and, as to the rest, delivered up virtually useless copies or masters, retaining better versions for itself.
By deed dated 13 th November 2000 the English administrator of Jimi Hendrix's estate assigned the benefit of the settlement agreed on 7 th March 1973 to the present appellant, a company effectively owned by Jimi Hendrix's father, who is the sole beneficiary of Jimi Hendrix's estate.
The present proceedings
The present proceedings were begun on 14 th May 2001 against both PPX and Mr Chalpin. The primary issues at trial before Buckley J were whether the settlement agreement had been varied in 1973 and whether, subsequently, the appellant had waived or was estopped from enforcing its terms or had granted an implied licence. Acquiescence or laches were also relied upon as barring any claim to injunctive relief. Buckley J rejected PPX's case on all these points.
PPX's defence of waiver, estoppel, implied licence, acquiescence or laches was based on events subsequent to 1973, primarily in the period up to 1983. Starting in November 1973, PPX granted numerous new licences of non-Schedule A recordings. Copies of at least some of these licences were posted by PPX to Mr Branton, the then administrator in the United States of Jimi Hendrix's estate. He acknowledged that he became aware, at least in general terms, of what was happening, but took no action, because in his view "the cost of litigating with PPX over these marginal albums would exceed any possible financial benefit to be derived from removing them from the market". Buckley J observed that it was clear that Mr Chalpin is not shy of litigation, and accepted Mr Branton's explanation. However, in a letter dated 5 th March 1983...
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