Sony/ATV Music Publishing LLC & Anor v WPMC Ltd & Anor, Court of Appeal - Civil Division, September 06, 2018,  EWCA Civ 2005
|Resolution Date:||September 06, 2018|
|Issuing Organization:||Civil Division|
|Actores:||Sony/ATV Music Publishing LLC & Anor v WPMC Ltd & Anor|
Neutral Citation Number:  EWCA Civ 2005Case No: A3 2017 0811IN THE COURT OF APPEAL (CIVIL DIVISION)ON APPEAL FROM THE HIGH COURT OF JUSTICECHANCERY DIVISION EWHC 389 (Ch)Mr Justice ArnoldRoyal Courts of JusticeStrand, London, WC2A 2LLDate: 06/09/2018Before :LORD JUSTICE KITCHIN- and -LORD JUSTICE FLOYD- - - - - - - - - - - - - - - - - - - - -Between :- - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - -Benjamin Williams QC (instructed by Simmons Muirhead & Burton LLP) for the AppellantIan Mill QC and Andrew Scott (instructed by Lee & Thompson LLP) for the RespondentsHearing date: 19 July 2018- - - - - - - - - - - - - - - - - - - - -Lord Justice Floyd: Introduction1. On 1 July 2015 Arnold J handed down judgment in this copyright action which the respondents (together ``SATV'') had brought against two companies, WPMC Limited (``WPMC'') and Iambic Media Limited (``Iambic''). The proceedings had begun on 2 May 2012 alleging actual or threatened infringement of US and UK copyrights by WPMC and Iambic, in particular by exhibiting a documentary (``the Documentary'') in the US in mid-May 2012. The commencement of the action was accompanied by an application for urgent interim relief which was resolved by undertakings embodied in a consent order of David Richards J (as he then was) dated 15 May 2012. The claim against Iambic was stayed at an early stage in consequence of its winding up, but was defended by WPMC on three grounds. These were, firstly, that WPMC had been granted a licence under the relevant copyrights; secondly, that SATV were estopped from enforcing those copyrights under the doctrine of proprietary estoppel; and, thirdly, that the use of the Documentary of which complaint was made in the US constituted ``fair use'' under US copyright laws. 2. Each of WPMC's defences was rejected by Arnold J after a trial. A hearing was held on 15 July 2015 at which the making of consequential orders was debated. Arnold J gave WPMC permission to appeal on the proprietary estoppel issue, but not in relation to the other two defences. He ordered WPMC to pay SATV's costs. These costs were to be assessed on the standard basis, but on the indemnity basis from 26 July 2014 because of a Part 36 offer which had been rejected by WPMC. The rejection of the Part 36 offer also motivated the judge to order WPMC to pay interest on those costs from 26 July 2014 at the rate of 8% above base rate. Arnold J further ordered WPMC to make an interim payment of £375,000 on account of those costs, although SATV's total claim for costs was much more than that amount. SATV promptly served a petition seeking the winding-up of WPMC, but on 5 August 2015 a meeting of creditors took place at which it was resolved that WPMC be voluntarily wound up and a liquidator appointed. No appellant's notice was served by WPMC. 3. This outcome was satisfactory for SATV in so far as it prevented WPMC from authorising the exhibition of the Documentary as it had threatened to do, but unsatisfactory in so far as it left them having to prove in WPMC's winding up for their very substantial costs of prosecuting the action. The outcome would not, however, have come as a surprise to SATV. Quite apart from any investigations which they themselves might have conducted into their litigation opponent, SATV's solicitors, Forbes Anderson Free (``FAF''), had been told in an email from WPMC on 9 August 2014 that ``WPMC has no assets to speak of''. Later, on 20 April 2015, FAF themselves wrote to WPMC stating:``We are not convinced that WPMC will be able to meet any such costs order (although we anticipate that our clients would be entitled to execute upon WPMC's interest in the Documentary'').4. Just over a year after judgment had been handed down, on 7 July 2016, SATV wrote to Mr David Bailey, the director and majority shareholder of WPMC, intimating for the first time that they intended to seek an order against him under section 51(3) of the Senior Courts Act 1981 that he pay most of the costs of SATV's claim against WPMC and Iambic. An application to that effect was made on 3 August 2016. Mr Bailey resisted the making of the non-party costs order (``NPCO'') on the basis that it would be unjust to make him pay the costs of the action. Amongst the reasons which he gave was that he had not been warned at any stage up to 7 July 2016 that this was a step which SATV intended to take in the event that they succeeded in the action.5. In a further judgment handed down on 3 March 2017, after a hearing, Arnold J made the NPCO sought by SATV, requiring Mr Bailey to pay SATV's costs from 4 January 2013, the date from which he assumed control of WPMC. In a yet further judgment handed down on 10 March 2017, Arnold J awarded SATV interest on those costs at a rate of 3% above base rate. We were informed that the costs which SATV are now seeking to recover from Mr Bailey exceed £600,00.6. On 28 June 2017 I granted Mr Bailey permission to appeal against the NPCO. On 4 October 2017 I granted SATV permission to cross-appeal out of time on the rate of interest on costs awarded by the judge, in the light of a subsequent decision of this court relating to interest after a Part 36 offer, OMV Petrom SA v Glencore International AG  EWCA Civ 195;  1 WLR 3465. 7. On the appeals, Mr Bailey was represented by Mr Benjamin Williams QC and SATV by Mr Ian Mill QC and Mr Andrew Scott.The facts in more detail8. The central topic of the Documentary is a concert given by The Beatles at the Coliseum in Washington DC on 11 February 1964 at which they performed 12 of their songs. A video was made of the concert and, many years later, in 2009, Iambic obtained a copy of a video and set about making the Documentary which was entitled The Beatles: The Lost Concert. Subsequently the rights to the videotape were transferred to WPMC. On 14 February 2012 WPMC and Iambic entered into an agreement with Ace Arts LLC (``Ace'') under which Ace was granted a licence to exploit the Documentary in the US, in particular via Screenvision Exhibition Inc (``Screenvision''). 9. The first respondent owns the worldwide copyrights in eight of the songs performed by the Beatles at the concert, and the second respondent is its UK exclusive licensee. In April 2012 SATV learned of the promotion of the Documentary and subsequently commenced these proceedings.10. Iambic and WPMC were both English companies, and prior to September 2012 both were owned and controlled by Christopher Hunt. Mr Hunt, Iambic and a solicitor, Mr Henry, had been involved as defendants in the unsuccessful defence of separate proceedings, which led to the winding up of Iambic in September 2012 and, by January 2013, to Mr Hunt's bankruptcy. 11. Mr Hunt had got to know Mr Bailey in 2011 through Mr Henry. Mr Bailey was described by the judge as a ``private venture capitalist of considerable experience''. Mr Bailey and a group of fellow investors had invested over £2.2 million in a project to produce, film and record a tribute concert to Michael Jackson, but they lost their investment when the corporate vehicle Global Live Events LLC (``GLE'') went into administration in November 2011. 12. In December 2012 Mr Hunt approached Mr Bailey and suggested that Mr Bailey acquire WPMC as a way of recouping some of the money he and his fellow investors had lost in the GLE project. Mr Hunt explained that WPMC owned valuable assets, namely the rights to the Documentary and its agreement with Ace. Mr Hunt further explained that Ace had arranged for the Documentary to be screened in cinemas across the US in mid-2012, and that WPMC stood to receive a percentage of any revenue. Mr Hunt told Mr Bailey that SATV had issued proceedings earlier in 2012 and WPMC had been obliged to accept an injunction which prevented the Documentary from being shown, and that this had prevented the intended release. 13. Mr Hunt explained that Ace was planning to bring proceedings against SATV in the US to establish its entitlement to exploit the documentary there. Ace considered that the documentary could lawfully be shown in the US, and had obtained the services of a US lawyer who had agreed to take on the case on a no win, no fee basis as he was sufficiently confident in the claim. The proceedings against WPMC in the UK were, according to Mr Hunt, ``effectively dormant''.14. On 4 January 2013 Mr Bailey was appointed sole director of WPMC. On the same day WPMC's share capital was increased to 1,000 ordinary shares of £1 each, 999 of which were allotted to Mr Bailey in return for his payment of WPMC's debts. WPMC was not trading at that stage. WPMC owed £1,800 to Universal Music in respect of royalties for one of the songs in the Documentary and had issued a statutory demand which WPMC did not have sufficient funds to pay. Mr Bailey agreed to pay off that debt in return for the shares which were allotted to him. 15. Mr Bailey learned soon after these events that the proceedings brought by SATV were not at an end. On 12 April 2013 FAF wrote to Mr Bailey in his capacity as a director of WPMC asking for a permanent undertaking not to exploit the documentary and making it clear that, in the absence of an undertaking, they intended to pursue the claim to trial. Mr Bailey did not reply until 28 October 2013, when he said that an undertaking would not be offered. Thereafter until 18 May 2015 the proceedings were defended by WPMC by Mr Bailey acting in person on their behalf.16. At around this time Mr Bailey was told by Mr Hunt that WPMC had obtained an opinion from a Professor Peter Jaszi that exploitation of the Documentary in the US would not be an infringement of SATV's copyright because the video of the concert was in the public domain, or because such exploitation would be protected as fair use. Professor Jaszi, who prepared a report for and gave evidence (by videolink) at the trial of the action, was Professor of Law...
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