Samuel (Professionally Known as Seal) v Wadlow
| Jurisdiction | England & Wales |
| Judge | Lord Justice Toulson,Lord Justice Wilson,Lord Justice Ward |
| Judgment Date | 28 February 2007 |
| Neutral Citation | [2007] EWCA Civ 155 |
| Docket Number | Case No: A2/2006/1548 |
| Court | Court of Appeal (Civil Division) |
| Date | 28 February 2007 |
[2007] EWCA Civ 155
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT QUEENS BENCH DIVISION
GRAY J
HQ05X01564
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Ward
Lord Justice Wilson and
Lord Justice Toulson
Case No: A2/2006/1548
Mr Andrew George (instructed by Messrs Russells) for the Appellant
Mr Ian Mill QC and Mr Mark Vinall (instructed by Messrs Clintons) for the Respondent
Hearing date: 7 February 2007
Introduction
The appellant is a singer and songwriter known professionally as Seal. The song which first made his name was “Killer”, which he produced in collaboration with the artist “Adamski” in 1989. It was released in April 1990 and went to the top of the UK singles chart. The respondent, Mr Wadlow, is the appellant's former manager.
Mr Wadlow's management was brought to an end by a settlement agreement dated 31 March 1995. The dispute is about whether Mr Wadlow is entitled to continuing commission on income from the exploitation of two albums referred to in the settlement agreement as the first album and the second album.
The History in Brief
The parties met in 1987 when the appellant was aged 24. The respondent was then a partner with Mr Julian Spicer in a recording studio business known as Beethoven Street Studios (“BSM”). They let the appellant have free studio time, and the respondent began to perform what might loosely be described as managerial services for the appellant. He tried to promote the appellant's music to record companies, but at that time without success.
On 9 May 1988 the appellant and Beethoven Street Music (“BSM”), which was a partnership between Mr Wadlow and Mr Spicer formed for the purpose, entered into a written publishing agreement. Before doing so the appellant received legal advice from Ms Helen Searle, a specialist music lawyer. By the terms of the agreement the appellant assigned to BSM the publishing rights in all compositions written by him during the period of the agreement in return for a right to royalties, which were broadly to be split 70/30 between the appellant and BSM. The agreement was to run until 22 February 1991, with an option for BSM to extend it for a further two years.
The respondent continued to provide managerial services for the appellant, which after “Killer” took up more of his time. He negotiated for the appellant a 50% share of the copyright in “Killer” and he advised on the contracts which followed.
On 17 July 1990 the appellant entered into a recording agreement with ZTT Records Limited. This entitled ZTT to record a maximum of five albums and committed it to record one album and two singles.
On 1 September 1990 the parties entered into a written management agreement. The terms of the management agreement and the settlement agreement are central to the dispute.
On 18 January 1991 BSM entered into an administration agreement with Perfect Songs Limited (ZTT's sister publishing company). Copyright in the appellant's compositions was licensed to Perfect Songs in return for royalties payable to BSM at the rate of 65% of income received, and BSM's publishing obligations to the appellant were subcontracted to Perfect Songs. The term of the administration agreement was to be co-extensive with the recording agreement. On the same day the publishing agreement between the parties was varied to make it co-extensive with the term of the recording agreement and the administration agreement. The variation to the publishing agreement also contained provision about the royalties to be paid by BSM to the appellant in respect of the first and second albums to be released by ZTT under the recording agreement.
In May 1991 the appellant's first album, entitled “Seal”, was released by ZTT and went to the top of the UK charts. In the same month the parties engaged a company called Direct Management Group Inc as the appellant's North American manager. That arrangement did not prove to be satisfactory, and in June 1993 the appellant's North American management was taken over by Mr Bob Cavallo of Roven Cavallo Entertainment Inc.
In May 1994 the appellant's second album, entitled “Seal II”, was released and again went to the top of the UK charts.
The appellant became more impressed by Mr Cavallo than by the respondent, and in early 1995 the appellant told the respondent that he wanted to terminate his management and publishing relationship with the respondent and BSM. After discussions, the appellant, the respondent and BSM entered into the settlement agreement, which terminated both the publishing and management agreements.
The appellant continued to pay commission to the respondent in respect of earnings on the first and second albums until the end of 2000.
Another payment was made in 2001 but otherwise there were no further payments.
On 2 June 2005 the respondent began the present action, claiming an account and damages for breach of the management and/or settlement agreements. The respondent subsequently amended his pleadings to base his case on the settlement agreement alone.
The appellant's grounds of defence as advanced at the trial were the following:
1. the respondent was not entitled to continuing commission on the proper construction of either the management agreement or the settlement agreement;
2. but if he was prima facie entitled to commission under either agreement, his claim was under the management agreement;
3. the management agreement was unenforceable as an unreasonable restraint of trade;
4. the management agreement and the settlement agreement were voidable for undue influence, and the appellant was entitled to rescind them.
The claim to rescind the agreements for undue influence was introduced by amendment about 2 weeks before the start of the trial.
The Judgment under appeal
By a reserved judgment dated 22 June 2006, Gray J held that the respondent was entitled to continuing commission on the appellant's earnings from the albums and ordered an account. He made the following findings:
1. as a matter of construction, the respondent was entitled under the management agreement to commission in respect of the first and second albums both during its term and after its termination;
2. the management agreement was superseded, and not merely varied, by the settlement agreement;
3. under the settlement agreement the respondent was entitled to continuing commission in respect of the first and second albums;
4. the circumstances in which the parties entered into the management agreement gave rise to a presumption of undue influence, which the respondent had not rebutted;
5. the settlement agreement was not procured by undue influence;
6. the undue influence which affected the management agreement did not make the settlement agreement voidable;
7. the respondent was also entitled to rely on laches and acquiescence to defeat the appellant's defence of undue influence;
8. neither the management agreement nor the settlement agreement was unenforceable on restraint of trade grounds.
The Grounds of Appeal
The appellant advanced the following grounds:
1. on its proper construction, the management agreement did not entitle the respondent to commission in respect of the first and second albums after the termination of the agreement;
2. similarly, on its proper construction the settlement agreement did not entitle the respondent to commission in respect of the first and second albums;
3. the management agreement was varied but not superseded by the settlement agreement, and the appellant was therefore prima facie entitled to rescind it for undue influence;
4. if the settlement agreement superseded the management agreement, the appellant was entitled to rescind it on grounds of the undue influence which affected the preceding agreement;
5. the judge was wrong to find laches and acquiescence.
It is logical to consider first the construction issues, then undue influence and finally laches and acquiescence.
The Management Agreement
Clause 1 provided that:
“The Artist [the appellant] hereby appoints the Manager [the respondent] and the Manager agrees to act as the sole and exclusive Manager of the Artist throughout the world in respect of all the musical activities of the Artist in all branches of the entertainment industry and in particular Artists' [sic.] activities as a recording artist composer or writer in connection with the record industry…”
By clause 3 the respondent undertook to use his best endeavours to advance and promote the interests of the appellant in all branches of the entertainment industry and to procure and obtain suitable and proper agreements, engagements and bookings for him.
The critical clause is clause 7. This provided:
“(a) By way of remuneration for his services hereunder the Manager shall be entitled to commission as hereinafter specified based on the gross total earnings of the Artist from the activities including without prejudice to the foregoing all royalties of whatsoever kind and all pecuniary considerations of any nature whatsoever paid or payable (provided always that commission will not be deducted until payment is received) to the Artist or to anyone on his behalf during the Term hereof or to which the artist or any party on her [sic.] behalf may become entitled as a result of agreements engagements performances or bookings entered into negotiated or procured during the currency of this Agreement or any modifications of or substitutions for such agreements...
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