FEDERAL COURT OF AUSTRALIA

Rutter v Brookland Valley Estate Pty Limited [2009] FCA 702

INTELLECTUAL PROPERTY – Copyright – Musical Work – licence granted for limited period – reproduction of a substantial part of the work outside the licence period.

INTELLECTUAL PROPERTY – Copyright infringement – damages for flagrant infringement.

PRACTICE AND PROCEDURE – Copyright – limitation period.

DAMAGES – interest awarded on compensatory damages – rates of interest – practice of the Court – interest rates applied by Supreme Court of New South Wales – introduction of Order 35 rule 7A Federal Court Rules – uniform interest rate applied.

DAMAGES – interest not awarded on exemplary or punitive damages – s 51A(3)(c) Federal Court of Australia Act 1976 (Cth).

Copyright Act 1968 (Cth) ss 14(1), 31(1)(a), 35(2), 36(1), 115(1), 115(2), 115(4), 134(1), 195AO, 195AZA, 195AZB

Federal Court of Australia Act 1976 (Cth) s 51A(3)(c)

Trade Practices Act 1974 (Cth) s82

Federal Court Rules O 35 r 7A

Autodesk Inc v Dyason [No. 2] (1993) 176 CLR 300

Aristocrat Technologies Australia Pty Limited v D.A.P. Services (Kempsey) Pty Limited (in liquidation) [2007] FCAFC40

Data Access Corporation v Powerflex Services Pty Ltd (1999) 202 CLR 1

GEC Marconi Systems Pty Ltd (t/as Easams Australia) v BHP Information Technology Pty Limited [2003] FCA 688; 201 ALR 55

IceTV Pty Limited v Nine Network Australia Pty Limited [2009] HCA 14

JANE ELIZABETH RUTTER v BROOKLAND VALLEY ESTATE PTY LIMITED and JFT (WA) PTY LIMITED

NSD 511 of 2007

BUCHANAN J

30 June 2009

SYDNEY

THE COURT ORDERS THAT:

1.         The first respondent pay to the applicant the sum of $443,377, made up as follows:

1.1       $208,684 as compensatory damages for breach of copyright,

1.2       $84,693 as interest upon compensatory damages to the date of judgment,

1.3       $150,000 as additional damages.

2.         The cross-claim is dismissed.

3.         The parties will be heard on costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

BUCHANAN J:

Introduction

1                          Ms Jane Rutter is a professional flautist.  Between 1989 and 2007 she released eleven albums in Australia and has sold her albums both in Australia and in other countries.  At various times in her career she has performed as a soloist with very well-known international musicians.

2                          Ms Rutter is also a composer.  In late 1992, according to her evidence, she composed and wrote a melody which she called “Blo”.  The eight bars of the melody were written on a scrap piece of manuscript which was subsequently lost.  In mid 1993 she wrote a complete musical piece based on the melody.  The manuscript was in evidence.  Her fourth album was entitled “Blo” and was released in 1996.  This album included an arrangement of Blo.

3                          The essence of Ms Rutter’s claim in the present proceedings is that her copyright as author of Blo was infringed when the first respondent which, as will be seen, was in 1999 granted a 12 month licence to reproduce the score of the melody for specified purposes, continued thereafter to do so without her permission.

4                          Brookland Valley Estate Pty Limited (“Brookland Valley”) is the operating company of the Brookland Valley vineyard in the Margaret River region of Western Australia.  The land upon which the vineyard is situated was acquired by the second respondent, the family trust company of Mr Malcolm Jones and his wife, Mrs Deidre Jones, in 1983.  The first wines were produced in 1988.  In 1993 the family trust, JFT (WA) Pty Limited (“JFT”), went into partnership with a company called Mulloway Pty Limited (“Mulloway”).  In 1997 BRL Hardy Limited (later Hardy Wine Company Limited and then Constellation Australia Limited) (“BRL Hardy”) acquired a 50% interest in the vineyard.  From that time the business operated as a joint venture under the name of the first respondent in which BRL Hardy had a 50 percent interest, JFT a 25 percent interest and Mulloway a 25 percent interest.  Proceedings against JFT were settled before the matter came to trial.

5                          Although Mulloway and BRL Hardy had, respectively, one and two representatives on the board of Brookland Valley, day to day management was retained by Mr and Mrs Jones with assistance from BRL Hardy.  Mr Jones was managing director of Brookland Valley from 1997 until September 2004 and then acted as a consultant to Brookland Valley until December 2004.  From 1997 to 2004 Mrs Jones was employed by Brookland Valley as the marketing manager.

The Verse 1 range

6                          On 21 October 1997, not long after the establishment of the joint venture, Mr Jones as managing director of Brookland Valley made a proposal to the board that two new brands be introduced to the range to supplement the existing Brookland Valley brand.  One was described as a “Margaret River” brand.  The proposal for the third brand was discontinued a short time later but the proposal for the new Margaret River brand continued.  Mrs Jones was closely involved, both professionally and personally, in the development of a marketing strategy.  The development of that strategy became intimately connected with a statue (which Mr and Mrs Jones knew as “Pan”, but which a witness in the proceedings identified as “Daphnis”) which they had purchased in 1978.  Mrs Jones described the matter as follows:

“Malcolm and I purchased the statue of Pan in 1978 in an antique shop in Double Bay, Sydney.  When we purchased the land to become the Brookland Valley Vineyard I came up with the idea of placing the statue on a rock on the land.  The statue had become a symbol in our family of enjoying the good life, music, fun and wine.  This was also our approach to making wine.  Over the initial years of developing the winery the family often held parties around the statue and decorated it for Christmas, making it an important part of our family history.

In 1988 Malcolm and I decided to place an image of the Pan statue on the first wines produced by Brookland Valley Vineyard.  From 1990 when the Flutes Café was established I came up with the idea of placing the Pan statue on a rock at the front of the restaurant.  We often played Pan music in the restaurant.  The statue and story of Pan became strongly connected to Brookland Valley Vineyard and was often used in our marketing initiatives from the very beginning of the winery.”

7                          It was decided that the new brand would be called the “Verse 1” range.  Mrs Jones said:

“Given that the new range sought to engage a new market for Brookland Valley and was the winery’s second label, I considered that it was important to launch the product in a way to attract the interest of retailers, restaurateurs and wine media.

It was in this context that I drew the association between Pan, as a flautist and the possibility of the launches involving a musical performance.  I also came up with an idea to have music incorporated in the label and to have a CD produced which was associated with Pan and the second label.  This CD could then be played in the Flutes Café and Gallery and in the restaurants and retail stores which stocked Verse 1.

Getting retailers, restaurateurs, wine media and wine judges to attend a launch of a winery’s second label is very difficult.  As such, I anticipated that there would be a need for a reasonably large budget to have a launch which would entice their attendance.

In or about late 1997 or early 1998 my concept for the launch of the second label involved having a flautist play at each of the launch functions which would be likely to be held in Sydney, Melbourne and either Perth or Margaret River.  My initial idea was to hire a local flautist in each city.  I also came up with a mock up idea for the label to include an excerpt of a piece of music which was to be associated with the second label.  My idea was that the piece of music on the label would be played by the flautist at the launch functions.”

8                          Mrs Jones developed the idea of involving Ms Rutter.  She said:

“I thought that she would be a good fit with the concept I was developing which incorporated Pan and his magical panflute and I thought that given that she had not been performing for some time, she may be willing to be involved in the launch of the second label.

My original marketing concept involved Jane performing at launch functions and composing a piece of music which could be associated with Verse 1 and Pan.  I wanted the piece to be called Pan’s Song.  Also part of my concept was for a CD to be compiled with Pan’s Song and some other tracks to be given away at the launch functions and to the retailers and restaurateurs as an incentive.”

9                          The concept was discussed at a meeting on 12 and 13 November 1998 where Mr and Mrs Jones and representatives of BRL Hardy were present.  It was decided that the Verse 1 range would be constituted, at least initially, by a white wine, a Semillon Sauvignon Blanc from 1999, and a red wine, a Cabernet Merlot from 1998.  The proposed involvement of Ms Rutter was discussed.  The following was recorded:

“Promotion:  Malcolm outlined plans to involve Jane Rutter as a Verse 1 ambassador.  This was well received and all agreed support on this scale was required to achieve the sales distribution and growth targeted.  Negotiations are continuing.”

10                        In a 1999 Australian Marketing Plan prepared for Brookland Valley by the brand manager, Mr Hornabrook, in November 1998 sales of the Verse 1 brand were forecast at 9,500 cases (114,000 bottles) but when the 1999 Australian Marketing Plan was discussed at a meeting on 16 December 1998 it was recorded that wine volumes would be reduced to 7,500 cases (90,000 bottles).  The record of the same meeting included the observation:

“Jane Rutter contract:

Malcolm and Dee to finalise negotiations with Jane Rutter’s management for the promotion of Verse 1.  This contract should be for a minimum of 2 years with agreement to make personal appearances, perform, endorse and provide exclusive rights to a CD of selected music tracks.  A meeting in Sydney is planned for Tuesday 23 February to finalise the launch activities.”

Use of Ms Rutter’s services and music

11                        From mid 1998 to mid 1999 Ms Rutter was represented by Mr Roy Ferin.  They fell out in mid 1999 but before that happened negotiations had commenced with Mr Ferin to involve Ms Rutter in promotion of the Verse 1 range.  A report made by Mr Jones to the Brookland Valley board for the 1998 December quarter board meeting recorded:

“The Verse 1 label will be released in late September 1999 and bearing in mind the significant future production of this label a substantial promotional budget has been prepared.  The package includes use of Jane Rutter in the production of a piece of music and a CD.”

12                        Ms Rutter did not become personally involved in negotiations until 23 February 1999 when she attended a meeting in Sydney with Mr and Mrs Jones and Mr Ferin.  Mr and Mrs Jones and Ms Rutter each gave evidence about the conversation at that meeting.  Mr Ferin was not called to give evidence by either Ms Rutter or Brookland Valley.  I am satisfied that he was not, by the time these proceedings came to be heard and for a considerable time prior to that, in the camp of either side.  No inference is available from the failure of either side to compel him to give evidence.  However, the passage of time (ten years), the fact that nobody made any note of the meeting but relied instead upon recollection to attempt to recreate the substance of the conversation and that no independent version of events was available means that the evidence about what was said at the meeting needs to be approached with considerable caution.  Both parties agreed that the arrangement between them had later been captured in a written form.  However, a matter of considerable difficulty for the resolution of the present case is that no written contract was ever finally executed and there was some real lack of certainty about which documents should be regarded as stating the final terms of the agreement which was made.  Nevertheless, resolution of those matters does not depend upon preferring any particular version of the conversation which took place on 23 February 1999.  I am satisfied that, at that time, both Ms Rutter and Mrs Jones in particular were very enthusiastic, both about the concept and Ms Rutter’s participation in it.

13                        The 1999 Australian Marketing Plan was presented to a meeting of the board on 25 February 1999, two days after the meeting with Ms Rutter in Sydney. 

14                        Apart from the meeting on 23 February 1999, negotiations took place, up to mid 1999, through the agency of Mr Ferin.  Central to the concept which Mrs Jones had developed was the provision by Ms Rutter of an original piece of music.  She had in mind that the piece of music would be performed and promoted to the public in various ways.  First, it would be performed for the purpose of creating a complimentary music CD upon which would also be recorded other pieces of Ms Rutter’s music.  The CD would be paid for by Brookland Valley and would be available to restaurants and bottle shops as a promotional tool associated with the Verse 1 range.  Naturally, one benefit to Ms Rutter would be a greater exposure of the public to her music.  Arrangements for the production of the CD were negotiated between Mr Ferin and Mr Hornabrook of BRL Hardy.  The recording was made in early 1999.

15                        A second aspect of the overall arrangement was the proposal that Ms Rutter perform the original piece of music and other music on three occasions: 9 August 1999 in Melbourne, 11 August 1999 in Sydney and 20 November 1999 at the Brookland Valley vineyard.  In due course it became necessary to alter the date and location of the third performance which occurred finally in mid 2000 in Brisbane.

16                        The third aspect of the arrangement was that Ms Rutter would provide a manuscript of the original composition for reproduction on the Verse 1 label.  She provided the score of the melody of Blo and later played Blo at each of the three launches, in Melbourne, Sydney and Brisbane.  While negotiations were going on about the terms upon which Ms Rutter would licence the use of her original composition she approved, on 13 May 1999, artwork for the label which in due course appeared on the Verse 1 range.  The front label for Verse 1 wines showed an image of a young, impish, naked, male flautist, together with three staves (12 bars) of Ms Rutter’s music.  The back label included the words:  “Pan’s Song written by Jane Rutter”.

17                        Ms Rutter described the significance of the music which she approved for reproduction on the label in the following way:

“Collectively, this part of the composition is the centrepiece of Blo.  The complete musical piece of Blo lasts for around four minutes.  Of the 12 bars of the melody of Blo depicted on the [label], I believe the relative significance of the bars of music in the context of the complete musical piece are as follows:

(a)        The first set of 4 bars of music on the first stave are the crux of melody.  These 30 odd notes form the expositional statement and are the most important part of the composition.  Without this melody, the composition would not exist.  The scale used is an Aeolian mode (A D Minor scale with an added note – a flattened 7^th as well as a raised 7^th).  The scale has two 7ths in it which has an emotional, ethnic and historical relevance.  The melody is Greek/Middle Europe and exotic in style.  The rhythm is that of a Pagan dance.  It has both Classical and Greek as well as cross-over influences.  It is an unusual and distinctive melody and rhythm.  If played on a flute, the first 4 bars would have a duration of between 10 and 13 seconds.  It is the genesis of Blo.

(b)        The second set of 4 bars of music (appearing on the middle stave of music) are also very important and represent the completion of the most important part of Blo’s melody.  If played on a flute, the 4 bars would have a duration of between 10 and 13 seconds.  The music in the first and second set of 4 bars is repeated several times throughout the entire 4 minute composition.

(c)        The third set of 4 bars of music (appearing on the bottom stave of music) is an embellishment of the first set of 4 bars of music which forms the centrepiece of the composition and melody.”

18                        In the first instance, three staves of music, each of four bars, appeared on the label of Verse 1 wines.  As will be seen the label was changed in 2006.  Thereafter, only the first stave of music appeared – described by Ms Rutter as the crux of the melody.

The license arrangement

19                        The task of determining the terms of the final arrangement has been made more difficult by the fact that neither side kept full records.  Indeed, despite the fact that Mr Jones gave evidence that he left all records connected with the negotiations at Brookland Valley Vineyard when he ceased to be managing director of Brookland Valley and the fact that there was evidence of a thorough search for such records, Brookland Valley was not able to produce any written record of, or arising from, the negotiations.  Ms Rutter’s records were incomplete.  They consisted of documents which were sent to her from time to time by Mr Ferin.  Some of them bore handwritten annotations by her which appeared to find reflection in later versions of the document. 

20                        There were a number of documents transferred by facsimile from Mr Ferin to Ms Rutter.  They included three draft agreements and some other documents, in the form of letters, dated 21 May 1999 intended, apparently, to be transmitted by facsimile to Mr and Mrs Jones.  Mr and Mrs Jones both stated in their evidence that they had no recollection of ever seeing the letters apparently intended to be sent to them by facsimile.  There is no other objective indication that they were.  They might just as easily have been drafts of letters sent to Ms Rutter for her examination.  I am not prepared to assume, in the absence of any evidence, that these communications were ever made by Mr Ferin to Mr and Mrs Jones.

21                        However, it is possible to make confident findings about a number of matters.  On 28 July 1999, Mr Jones wrote to Ms Rutter.  Mr Ferin had been dismissed only a matter of days before.  In his letter Mr Jones described the essential features of the arrangement which had been agreed.  He proposed a small number of changes to the terms of a draft contract which was obviously before him.  He proposed to make payment of the bulk of the agreed payment within a matter of days and in fact did so.  Indeed, by mistake, the payment was made twice and Ms Rutter refunded the overpayment.  Those events, which require more detailed examination, provide a foundation for determining the written terms of the arrangement which, although not signed by Mr Jones and Ms Rutter, is nevertheless evidenced in writing and by the payment and acceptance of the contract payment then due.

22                        There were four drafts in evidence of a document entitled “Jane Rutter Agreement for Services”.  The fourth document post dated critical events and the time at which the contract was concluded.  Nobody suggested that it accurately set out the concluded terms of the agreement.  It requires no further attention.  The first three documents were sent by facsimile transmission from Mr Ferin to Ms Rutter on 19 May 1999, 23 June 1999 and 29 June 1999 respectively.  The documents were progressively more detailed. 

23                        It seems to me possible to exclude two of the documents as the one before Mr Jones on 28 July 1999, when he wrote to Ms Rutter.  I shall discuss this matter again in more detail when the specific terms of the contract, as I have found it, have been set out.  However, it is possible to commence to narrow the field by reference to the surrounding circumstances.  It is convenient to deal first with the document sent to Ms Rutter on 23 June 1999. 

24                        Ms Rutter’s evidence was inconclusive.  However, it seems unlikely that the contract agreed was the version faxed to Ms Rutter on 23 June 1999.  That document indicated that the contract would be between Ms Rutter, Mr Ferin and Brookland Valley Vineyards.  The later version sent to Ms Rutter on 29 June 1999 indicated that the contract would be signed by Ms Rutter only and Brookland Valley Vineyards.  A suggestion made by Mr Jones in his letter of 28 July 1999 – “Change Address in document to Jane Rutter” – is consistent with the later version of 29 June 1999.  The second document contained handwritten notes by Ms Rutter which found substantial reflection in the third document.  I think it unlikely that Mr Ferin sent this version as a neutral participant both to Ms Rutter and to Brookland Valley.  He was representing Ms Rutter.  I think it much more likely that it was sent to Ms Rutter for consideration, before being sent to Brookland Valley if acceptable to her.  There are further matters of detail referred to shortly which also contributed to my conclusion that the second version did not form the basis of the final contract.

25                        The first document, of 19 May 1999, does not match the terms of the document which was obviously before Mr Jones at the time he made his suggestions for inclusion in the final contract.  Mr Jones’ evidence was that to the best of his recollection he only ever saw one version of the “Jane Rutter Agreement for Services”.  In his affidavit evidence he said in two places that he believed it was likely that document was the version sent by Mr Ferin to Ms Rutter on 29 June 1999 or an earlier version. 

26                        In his oral evidence Mr Jones made some attempt to suggest that he probably had before him the first version and not some later version.  I am not prepared to accept that evidence.  As will be seen shortly Mr Jones, on 28 July 1999, made specific suggestions for final amendment of whatever document he had before him.  Those suggestions cannot be reconciled with the terms of the first version.  I am satisfied it was not the first version which was before him. 

27                        The third document, sent to Ms Rutter on 29 June 1999, bore the notation “Draft #5”.  It is unclear whether this notation, which does not appear on any other version, referred to drafts given to Ms Rutter for her consideration or drafts provided to Brookland Valley. 

28                        It is impossible to be certain that there was not some other document before Mr Jones of which no record now remains but, having regard to the terms of the proposals which he made and the general description that he offered Ms Rutter of the arrangement, I am satisfied that the version sent to Ms Rutter on 29 June 1999 reflects, in substance, the terms of the bargain finally concluded. 

29                        At the time he made his final suggestions, Mr Jones also had before him a facsimile from Ms Rutter dated 27 July 1999.  Ms Rutter and Mr Ferin had fallen out a few days earlier.  In a facsimile dated 24 July 1999 Mr Ferin proposed, nevertheless, that he continue as event co-ordinator for the events which had been arranged, while engaging someone else to actually manage the events, and work with Ms Rutter, on the days in question.  On 26 July 1999, Ms Rutter sent a facsimile transmission to Mr Ferin indicating her lack of understanding of the state of negotiations but protesting that a contract should earlier have been concluded.  Mr Ferin replied on the following day indicating that Mr Jones had “agreed to pay $27,500 by this Friday,” a figure which I will shortly explain.  Mr Ferin also alerted Ms Rutter to the possibility that the proposed performance at Brookland Valley Vineyard in November might need to be postponed.  He said that, subject to one or two matters, “there’s no problems with the Agreement” from Mr Jones’ standpoint.  This gives further support to my conclusion that the document receiving Mr Jones’ endorsement was not one of the early versions.

30                        Ms Rutter’s facsimile transmission to Mr Jones of 27 July 1999 said the following:

“Dear Malcolm

Further to our conversation today, I enclose my account number.  As agreed you will deposit $27,500 into this account.  The remaining $7,500 will be settled by 30^th November 1999.

I have no problem with changing the dates in November.  I would like this to be as successful as possible for you.  I have turned down work for this to the tune of about $10,000 so how about settling $1,000 worth of Verse 1 wine on me?!! (as compensation).  Please let me know your thoughts!

Account           J. E. RUTTER

                        [Account details omitted]

PS  I hope this is OK”

31                        It is evident that Mr Jones understood that Ms Rutter was not fully familiar with the course of negotiations and perhaps not with the significance of the document about which he, the following day, was to make final suggestions.  His letter dated 28 July 1999 should be set out in full:

“Date:  28^th July 1999

Dear Jane,

Following our telephone conversation I set out below the changes we suggest in the contract.

As a background explanation our arrangement is a licence arrangement to use your music and your name on our label and marketing material and promotions for the period of 12 months commencing 1^st August 1999 with an extension of 6 months sell-off period.  The production run on this wine in 1999 is a maximum of 90,000 bottles.  If we wish to continue to use your music and your name in future years production we must negotiate a further agreement and failing being able to negotiate the licence is at an end and we will discontinue the use of your music and name on our Verse 1 label.  The product and label at all times remain the property of Brookland Valley Vineyard including the copyright and trademarks.  You have no ownership of the label but you have a licence agreement with us regarding the use of your name and music.

We would like to add in the contract

1.         In the recitals add

•           C.  The Performer agrees to grant a licence to the Promoter to use her music and name for the marketing and promotion of the product on the terms and conditions set out hereunder

•           D.  The product and Verse 1 label and marketing material including trademarks and copyright remain the exclusive property of Brookland Valley Vineyard at all times subject to the licence agreement as set out hereunder.

2.         Clause 2.2 add

•           “in 1999 with a label which includes music and name of Jane Rutter”

3.         Change Address in document to Jane Rutter

4.         Add to Schedule Item 3

•           Saturday November 20^th 1999 Brookland Valley Vineyard

“Subject to notice by 9^th August 1999 this performance can be deferred to a later date within the 12 month contract or transferred to another location subject to mutual agreement”

5.         Add to Schedule Item 4

Sponsorship $20,000

Performance Sydney and Melbourne $7500

Performance Margaret River $7500

Payment to be made as follows:   $27,500 on or before 30^th July 1999

                                                 $7,500 within 7 days of final performance

I hope the above is clear.  I suggest you give it to your legal adviser and he can contact me if he needs clarification.  Thanks Jane.  As soon as the contract is complete fax to us and we will sign and send a copy to you for signature.

I will forward the $27,500 on Friday direct into your bank account.  I received your fax with the details and yes I agree to give you $1000 worth of Verse 1 as compensation for the possible change on the Margaret River performance.

I have spoken to Roy Ferin and he has confirmed that he will subcontract his work to Alana Hay.  A copy of his letter is attached.  Dee will keep in close contact with you on this.  He said he had and (sic) accompanist on hand and would inform you in the next day.  Please let Dee know if this has been done.  We have paid Roy $750 deposit for his $1500 total services.

We are sure the event will be a big success for both of us – it is a very new concept and one that we must both get right in the first year.  If it works well we will certainly be looking to continue the arrangement with you – it has so much potential for both of us.

Looking forward to seeing you in Melbourne.

Kind regards,

Malcolm & Dee”

32                        28 July 1999 was a Wednesday.  The Friday upon which Mr Jones said payment would be made was 30 July 1999.  On Monday, 2 August 1999 two amounts of $27,500 were credited to Ms Rutter’s account.  She refunded one payment and retained the other.  She subsequently gave the performances which were required, commencing on 9 August 1999.  She had already provided the composition to which the contract referred and had approved the final form of that composition for reproduction on the Verse 1 labels.  I am satisfied that Ms Rutter concluded a contract with Brookland Valley which included the additional and modified terms suggested by Mr Jones.  I am equally satisfied that Brookland Valley committed itself to a contract including those terms and the terms of the document to which they were addressed.  Doing the best I can with the material I am satisfied on the balance of probabilities that the draft contract which was finally concluded, amended as suggested by Mr Jones, was the one sent to Ms Rutter by Mr Ferin on 29 June 1999.  As amended by Mr Jones (in the fashion which I have shown), it was in the following terms:

“Draft #5

JANE RUTTER AGREEMENT FOR SERVICES

This Agreement (7 pages) is made on the ___ day of ____________ 1999.

BETWEEN

Jane Rutter [Jane Rutter’s address] (providing the services of Jane Rutter hereafter “the Performer”)

AND

the party or parties set out in Item 1 of the schedule (hereinafter referred to as “the Promoter”)

WHEREAS

A.        The Promoter is the owner or lessor of the venues referred to in Item 2 of the schedule (hereinafter referred to as “the Venue”)

B.        The Promoter wishes to retain the Performer for 3 performances and the benefit of an association between the Performer and the Promoter relating to the launch, marketing and sale of the Promoter’s Semillon Blanc and Cabernet Merlot wines entitled ‘Verse 1’ (hereafter referred to as ‘the Product’), at the terms and conditions set out hereunder.

C.        The Performer agrees to grant a licence to the Promoter to use her music and name for the marketing and promotion of the product on the terms and conditions set out hereunder.

D.        The product and Verse 1 label and marketing material including trademarks and copyright remain the exclusive property of Brookland Valley Vineyard at all times subject to the licence agreement as set out hereunder.

NOW IT IS AGREED AS FOLLOWS:

1.         Date(s) Of Performance(s)

            The Performer agrees to provide its services to the Promoter on the dates set out in Item 3 of the schedule.

2.         Remuneration

2.1       The Promoter agrees to pay the Sponsorship fee to the Performer referred to in Item 4 of the schedule.  This fee shall be payable as to the total amount of Item 4 on the schedule, payable to Jane Rutter on the date of this Agreement.  All cheques are to be made payable to Jane Rutter.

2.2       The promoter will not produce more than 90,000 units of the Product in total in 1999 with a label which includes music and name of Jane Rutter.

2.3       At the expiration of this Agreement or the expiration of the renewal option period stated in this Agreement, the Promoter will not distribute any additional quantities of the Product which embodies the Performer’s name or music.  The Promoter shall however receive a 6 month non-exclusive sell off period for the Product which has already been manufactured prior to the expiration of this Agreement.

3.         Venue Facilities and Services

3.1       The Promoter agrees to provide at its own cost professional quality sound, lighting, staging and other production equipment, together with the necessary technical and other personnel to set up and operate said equipment.  All production equipment and personnel is subject to the Performer’s consent.

3.2       The Promoter will provide for the exclusive use of the Performer a grand or baby grand piano which must be tuned on the day of the performance to concert pitch at no cost to the Performer.  The piano provided is subject to the Performer’s consent

3.3       The Promoter agrees to provide 1 business class and 1 economy class airfare from Sydney to Melbourne (plus return) for the Melbourne performance on August 9^th, 1999.  The Promoter agrees to provide 1 business class and 1 economy class airfare from Sydney to Perth (plus return) for the weekend of Saturday, November 20^th, 1999 (exact dates and times are to be confirmed).

3.4       The Promoter will provide all ground transport requirements for the Performer and the Performer’s accompanists between the hotel, venue and airport in Melbourne on August 9^th, 1999 plus Western Australia for the weekend of Saturday, November 20^th, 1999.  The Promoter will also provide 6 cab charge vouchers to the maximum value of $50.00 each for use by the Performer.

3.5       The Promoter agrees to provide two (2) single first class hotel accommodations for the performers in Melbourne on Monday, August 9^th, 1999 and in Western Australia for up to four (4) nights from Friday, November 19^th, 1999 to Sunday November 21^st.

3.5(sic)The Promoter will provide meals for the performers, together with light refreshments including flat mineral water, fresh fruit and fresh juices at the Venues for each of the musicians during the performances.

4.         The Performers Sponsorship Services

4.1       The Performer shall provide the written text to the composition ‘Blo’ by Jane Rutter for the purpose of use by the Promoter in reproduced prints of said text on the Product.  The Performer, as the owner of the copyright in the composition, authorises the promoter to reproduce the composition on no more than 90,000 units of the Product.  The Performer reserves all other rights in the composition.

4.2       The Performer shall provide an accompanist for each of the performances listed in Item 2 of the schedule on the dates listed in Item 3 of the schedule and the accompanist’s performance fee shall be included in the Sponsorship fee listed in Item 4 of the schedule.

4.3       The Performer will be available for up to a maximum of twenty one (21) interviews in total, at mutually convenient times to promote the performances and the Product, subject to the Performer’s prior professional commitments.  Interviews shall be organised by the Promoter or it’s authorised agents to a maximum of nine (9) print interviews, nine (9) radio interviews and three (3) television interviews.

4.4       All marketing, advertising, press and print material that includes Jane Rutter must be forwarded to Ferin Music Australia or Jane Rutter for approval prior to publication.  The Performer’s consent must be obtained in relation to the placement of any marketing and/or advertising material in any publication.  Such approval shall not be unreasonably withheld.

5.         Territory and Term

5.1       The territory for distribution of the Product shall be worldwide.

5.2       The initial period of this Agreement commenced on (date) and shall, subject to the following terms of this Agreement, continue for one year from the date of this Agreement.

5.3       The Promoter has one option to extend the initial period of this Agreement for a further one year commencing, if at all, on the expiration of the initial period.  Any such extension will be subject to the terms and conditions of this Agreement excluding Clause 5.3 and schedules.

5.4       The exercise by the Promoter of any option specified in Clause 5.3 shall be effected by written notice delivered to the Performer not earlier than three months before the end of the current period and not less than one month before the end of the current period.

6.         Renewal Option

6.1       Said renewal option shall commence at the expiration of this Agreement and shall have the same terms and conditions listed herein excluding the provisions of a third year renewal option.

7.         Unauthorised Sound or Video Recording

            The Promoter acknowledges that any sound or video recording of the Performer’s performance is prohibited without the express written permission of the Performer.  The Promoter agrees to take such action and precautions as are reasonably necessary to ensure that no employee or guest of the promoter makes any unauthorised sound or video recording of the performances.  The copyright in any unauthorised recordings should be deemed to vest in the Performer.

8.         Insurance

            The Promoter warrants that it will provide a safe working environment for the Performer and it holds current adequate fire and public liability insurance cover or similar cover to cover any reasonable insurable risk that the Performer or musicians or any of them or any other person may be exposed to before, during and after the performances.

9.         Disclaimer and Indemnity

            The Promoter agrees to indemnify the Performer at all times against any claims, demands or actions resulting from the breach by the Promoter of any of the terms and conditions of this Agreement.

10.       Force Majuere (sic)

            The obligations of each part herein are subject to the detention by act of God, war, riots, strikes, labour difficulties, epidemics, or any acts or order of public authorities or any other cause or similar cause beyond the control of the parties however that notwithstanding any force majuere (sic) act the Promoter will pay to the Performer all disbursements and expenses incurred up to the force majuere (sic) act.

11.       Guarantee

            In the event that the Promoter is a corporation the Promoter warrants that this Agreement will be signed by a Director of the Promoter and that said Director unconditionally and without any right of waiver agrees to severally guarantee each and every one of the obligations of the Promoter set out herein.  If the Promoter defaults on any of its obligations the Performer will be entitled to, without demand on the Promoter, the full cost of damages for breach of contract from the guarantor referred to in this clause.

12.       Notices

            Any notice served pursuant to this Agreement can be served on each of the parties at the addresses referred to herein or at such addresses as the parties may notify each other of in writing from time to time.

13.       Jurisdiction

            This Agreement shall be subject to the laws of New South Wales, Australia and the parties consent to such jurisdiction.

14.       Audits

14.1      The Promoter shall during the term (and thereafter for so long as units of the Product are sold) open and continuously maintain adequate books in relation to the sale of Product together with any necessary supporting ledgers or journals.  The Promoter will:

(a)        allow the Performer access to these books and records after receiving not less than 5 days’ notice,

(b)        provide such explanation or assistance as the Performer’s legal or accounting advisers may require to prepare annual accounts and corporate and taxation returns.

14.2      Without limiting Clause 14.1 the Performer may, at the Performer’s expense and after giving the Promoter 30 days’ notice, appoint a person to examine or audit the Promoter’s books and records but such examination or audit shall be for a reasonable duration and shall not occur more than once in any calendar year.  If any such examination or audit discloses an underpayment to the Performer, the Promoter must reimburse the Performer’s costs in conducting the examination or audit.

15.       Notice

15.1      Any notice or other communication to or by a party to this Agreement must be in writing addressed to the other party at the address specified in this Agreement or such other address as may be notified to the other party from time to time in writing.  Such notice is deemed to be received by or served upon the recipient:

            (a)        if by delivery in person, when delivered to the recipient;

            (b)        if by post, 5 days from and including the date of postage; or

(c)        if by facsimile transmission, when dispatched to the recipient but if dispatch is after 4:00 p.m. (recipient’s time) it is deemed to have been received on the next succeeding business day.

16.       Termination

16.1      This Agreement can only be terminated by a party for a material breach of it by another party (‘Defaulting Party’) if the party alleging such breach serves written notice thereof on the Defaulting Party; and

(a)        the Defaulting Party has failed to remedy such breach within 30 days following receipt of notice of it; or

(b)        if the breach concerned cannot be remedied within such time the Defaulting Party has not commenced to remedy it within that time, proceeded to complete the remedy with reasonable promptness, and notified the other party of the date of its commencement to remedy that breach and the anticipated date for rectification of the breach.

17.       General Provisions

17.1      The terms of this Agreement may only be varied by a written instrument signed by the Promoter and the Performer.

17.2      This Agreement is personal to the parties.  Neither party shall assign that party’s right, title and interest hereunder, in whole or in part, without the prior written consent of the other.

17.3      Nothing in this Agreement constitutes a partnership or employment relationship between the Promoter and the Performer.

17.4      If any term or part of this Agreement is found unenforceable or void by a court of competent jurisdiction then any term or part not found to be unenforceable or void remains in effect.

17.5      All remedies, rights and obligations contained in this Agreement are cumulative and none of them is in limitation of any other remedy, right or obligation of any party.

17.6      This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter of this Agreement. This Agreement supersedes and extinguishes all prior agreements and undertakings and all representations or warranties previously given.

17.7      Any reference to a statute or statutory provision is deemed to include any statutory provision which amends, extends, consolidates or replaces the same or which has been amended, extended, consolidated or replaced by the same and any orders, regulations, instruments or other subordinate legislation made thereunder.

17.8      The expiration or earlier determination of this Agreement does not affect any rights of either party hereto which rights expressly or impliedly continue after that expiration or determination, including but not limited to the right to receive income, fees, royalties and other moneys from any party.

17.9      This Agreement is made in New South Wales.  Its application, interpretation and construction shall be governed by the courts of New South Wales and the parties hereto submit exclusively to the jurisdiction of such courts.

Signed for by Jane Rutter

__________________________________

Jane Rutter

__________________________________

Signed by the Promoter

__________________________________

Promoter’s Name and Title (Please Print)

The Common Seal of

Was hereunto affixed with the authority        __________________________

of the Board of Director(s)                                (Promoter’s Common Seal)

Schedule

(Amendments suggested by Mr Jones are underlined or struck through.)

33                        Before dealing further with the terms of the contract which I have found was concluded between Ms Rutter and Brookland Valley on 2 August 1999, when payment was received in her account, I should note another matter upon which Brookland Valley relied to suggest that the draft contract which was before Mr Jones was not the one I have found.  That submission was based on the fourth change suggested by Mr Jones.  It was suggested that the presence in the draft of “Brookland Valley Vineyards, Willyabrup, WA” could not be reconciled with Mr Jones’ recitation, in his letter, of “Brookland Valley Vineyard” singular in relation to performance venues.  The second version of the draft contract said “Brookland Valley Vineyards” as did the first version.  The first version did not have a clause 2.2 to which Mr Jones’ suggestions in his second suggested addition could possibly relate.  I am satisfied, as I said earlier, that the first version was not the document which was before him.  The second version is not materially different from the third version in any respect relevant to the present proceedings but there are one or two further matters that persuaded me that, despite the discrepancy referred to, the second version should not be regarded as that which was before Mr Jones. 

34                        In the second version there appeared a clause 4.5, which did not appear in the third version.  It said:

“4.5      The Performer shall provide use of her name and image in printed material directly related to the marketing and advertising of the Product.  All artwork for such printed material must be forwarded to Ferin Music Australia or Jane Rutter for approval prior to publication.  The Performer’s consent must be obtained in relation to the placement of any marketing and/or advertising material in any publication.  Such approval shall not be unreasonably withheld.”

35                        Although much of this clause was in the same terms as clause 4.4, so far as it related to obtaining Ms Rutter’s consent to the placement of marketing or advertising material, there was an important difference.  Ms Rutter made a hand written comment referrable to the first sentence which said “I hate this”.  At the end of the proposed clause she said: “We need to discuss this”.  I think it unlikely that this provision remained in the draft contract over her opposition. It was not in the later version.  In her oral evidence she was quite clear in her recollection that she was concerned about the use of particular images and photographs. 

36                        Another matter is that the second version indicated that the venues in both Sydney and Melbourne had not been fixed whereas the third version identified at least the place of the Sydney performance.  I do not think there is any foundation upon which I should prefer the second version to the third version.

37                        It is important for the ascertainment of the legal rights and obligations to which the parties bound themselves to come to conclusions about the actual terms of the contract between them.  Later, when I come to address other issues, it will be permissible to refer to the representations which Mr Jones made in his letter of 28 July 1999 about the general character of the arrangement between Ms Rutter and Brookland Valley.  For the moment it is sufficient to indicate that I see no material inconsistency between the terms of the contract which I have found and the explanation which Mr Jones gave about the arrangement.  It is neither necessary nor appropriate to construe the terms of the contract by reference to Mr Jones’ description of it.  Construction of the contract should proceed by reference to the terms which I have found. 

38                        Some features of those terms should be plainly identified.  The association between the parties was for the purpose of the launch, marketing and sale of two varieties of wine labelled Verse 1: Semillon Blanc and Cabernet Merlot (Recital B).  Not more than 90,000 bottles of wine were to be produced in 1999 with a label including Ms Rutter’s music and name (clause 2.2 as amended).  When the agreement expired (which would occur at the latest on 2 August 2000) unless Brookland Valley had exercised a renewal option there was not to be any distribution of further quantities of wine with labels which included Ms Rutter’s name or music, subject only to a six month sell-off period for product which had already been manufactured (clause 2.3).  Ms Rutter authorised the reproduction of her composition on no more than 90,000 bottles and reserved all other rights in the composition (clause 4.1).  All those provisions were clearly expressed and, in my view, unambiguous.

39                        Brookland Valley had one option to extend the agreement for a further one year on the same terms and conditions (clause 5.3 and 6.1).  Mr Jones confirmed in his oral evidence that he originally had in mind that further performances in the following year would be arranged if the initial arrangements proved successful.  It was also clear from the evidence that a budget had been approved for a two year period by the board of Brookland Valley to undertake the marketing program devised by Mrs Jones.  Brookland Valley did not exercise the option.  As will be seen, shortly after the agreement was concluded, it moved away from, and outside the parameters of, the terms of the agreement. 

40                        Ms Rutter was to be paid a “sponsorship” fee of $20,000 and a total of $15,000 for three performances, of which $7,500 was to be paid immediately and the balance after the final performance.  Ms Rutter’s evidence was that, at the time, she was commanding a performance fee in the order of $5,000 per performance.  Accordingly the arrangements which were made for payment for performances were consistent with her professional arrangements at the time. 

41                        There was debate in the proceedings about the matters to which the $20,000 “sponsorship” might relate.  In accordance with the terms of the contract the $20,000 fee was related to “The Performers Sponsorship Services” identified in clause 4.  It therefore included payment for the authorisation of reproduction of the original composition, provision of an accompanist on three occasions, availability for up to 21 interviews and not unreasonably withholding consent to the placement of marketing or advertising material relating to her.  On the evidence only two or three interviews were required of her.  There was no evidence which would support a conclusion that the obligations not to withhold consent unreasonably were onerous or particularly important.  I am satisfied that the bulk of the $20,000 fee should be regarded as related, in one way or another, to the authorisation to reproduce the composition.  The other matters are either relatively trivial or not ones which are capable of being assigned a particular value in money terms. 

42                        I am satisfied that, even during the term of this agreement, Brookland Valley breached a number of its terms.  It did not confine the marketing and sale of wine bearing labels which included Ms Rutter’s name and music to the wine varieties Semillon Blanc and Cabernet Merlot.  It did not confine production to 90,000 bottles with a label including Ms Rutter’s music and name, even in the first year.  It did not seek Ms Rutter’s authorisation to reproduce her composition on additional bottles.  Moreover, Brookland Valley continued to produce and distribute further and increasing quantities of wine with labels including Ms Rutter’s name and music after the expiration of the agreement.  Notwithstanding that it did not exercise its option to renew the agreement or ever thereafter seek to renegotiate it, it continued to reproduce Ms Rutter’s composition and use her name without her authorisation and without any payment being made to her. 

43                        The present proceedings, however, are not proceedings for breach of contract.  They are principally proceedings under the Copyright Act 1968 (Cth) (“the Copyright Act”) for breach of copyright.  Before turning to consider that cause of action in more detail it will be necessary to trace the later course of events and the ways in which Brookland Valley continued to use Ms Rutter’s composition and name.

Verse 1 sales

44                        At a meeting of the board of Brookland Valley on Friday, 13 August 1999, less than two weeks after the contract with Ms Rutter had been concluded, it was agreed that a Chardonnay should be added to the Verse 1 range.  This step had been recommended by Mr Jones in his managing director’s report dated 12 August 1999.  It seems inconceivable that Mr Jones could not have appreciated that the addition of an extra wine variety, and use of the label agreed with Ms Rutter, would be a step outside the agreement which he had made with her such a short time before.  Thereafter, Mr Jones and Brookland Valley were to conduct themselves as though the contract with Ms Rutter did not exist and permission to reproduce her musical score was irrelevant, although it was only through the licence granted by the contract concluded on 2 August 1999 that Brookland Valley had obtained the right to use her original music on its labels.

45                        At a board meeting on Monday, 22 November 1999, Mr Jones proposed the immediate production of a Verse 1 Chardonnay.  The meeting resolved to produce a Verse 1 Chardonnay.  Mrs Jones was to be closely involved in the sales aspects.

46                        At a board meeting held on Thursday, 17 February 2000, Mr Jones suggested that a Shiraz be released under a Verse 1 label and the meeting resolved to proceed with that proposal as soon as practicable.  At that same meeting Mr Whelan, who gave evidence in the present proceedings, reported that Verse 1 had been registered in and trademarked in Australia and England and was in the process of being trademarked in Canada.  The trademark registered in Australia included a stave of the music supplied by Ms Rutter.

47                        At the board meeting on Monday, 8 May 2000, Mr Jones was asked for production and sales forecasts for Verse 1 for the next five years.  He estimated “that the four varieties of the brand would total around 28,000 cases for 2000/01; 43,000 cases for 2001/02; 58,000 cases for 2002/03; 72,000 cases [for] 2003/04 and 90,000 cases [for] 2004/05”.  These estimates were for production and sale of 336,000, 516,000, 696,000, 864,000 and 1,080,000 bottles respectively.  It is clear from these estimates that the initial arrangements agreed with Ms Rutter were very modest by comparison.  By 2004/05, production was forecast to be twelve times as great as was originally estimated for 1999. 

48                        At the board meeting on Tuesday, 21 November 2000 there was some discussion about the Verse 1 label.  The following is recorded:

“Mr Jones also advised that BRL marketing had wanted some changes to the Verse 1 label – creating more space around ‘Margaret River’.  Mr Jones commented that this would unbalance the label and it would need to be redesigned.  Mr Kennedy commented that he thought the whole package was very good and agreed that it should remain as is.  All that was needed was to get out and sell the wine.  The directors resolved that the label remain as is.”

49                        This outcome is consistent with evidence which Mrs Jones gave in the proceedings.  In her affidavit she said:

“At various times after the label was created, members of the Hardy sales team suggested that the label be updated as it was not always well received by the trade.  I was opposed to the change.  I felt that the design worked well with the whole concept I had developed for the range.”

50                        In mid 2001, Mrs Jones revised the labels and marketing material for all the Brookland Valley brands including Verse 1.  The Verse 1 label remained substantially intact.  In particular, those elements provided by Ms Rutter or attributed to her remained without change.

51                        Documents attached to the managing director’s report for the December quarter 2000, which Mr Jones signed on 25 February 2001, recorded sales from August 1999 until December 2000.  It will be remembered that the contract with Ms Rutter contemplated sales of 90,000 bottles of Verse 1 Semillon Blanc and Cabernet Merlot in a twelve month period with a six month run off period.  The sales figures showed that Verse 1 Chardonnay commenced to be sold in April 2000, well within the twelve month period of the contract.  The sales figures showed that, in the twelve months to the end of July 2000, 80,604 bottles of the original two varieties were sold.  Sales of 90,000 of those two varieties were completed by the end of the following month.  Under the contract that was the end of Ms Rutter’s authorisation to use her original music on the Verse 1 label.  Sales continued into the period which should have been subject of the option to renew the contract or the negotiation of a new contract.  At the same time, in the initial twelve month period, 14,784 bottles of Verse 1 Chardonnay were sold.  Another way of looking at the situation is that 90,000 bottles bearing the Verse 1 label were sold by some time during July 2000, before the expiration of the nominal period of the contract.  The necessity to review the arrangement with Ms Rutter appears to have received no attention at all.

52                        At a board meeting on Monday, 7 May 2001 Mrs Jones presented the revised Verse 1 labels to the board.  They were approved.  This reiteration of the use of Ms Rutter’s copyright material occurred at a time when she had given no authority for such use.  It occurred within the period which would have been covered by any exercise of the option to renew the contract, which option was not in fact exercised.

53                        Thereafter the labels continued to be used and applied to generally increasing production until a complaint was first made.  The proposed Verse 1 Shiraz had not initially been introduced but it was added to the range in due course in August 2001.  The 2002 marketing plan, which was revised in November 2001, appears to suggest that sales doubled from 1999 to 2000 and again from 2000 to 2001.  Sales in 2000 were recorded at 122,604 bottles and were forecast for years 2001, 2002, 2003, 2004 and 2005 at 255,084, 348,000, 396,000, 456,000 and 492,000 bottles respectively.  The report records Mr Jones’ belief that a potential was present for sales of 600,000 bottles by 2005.  Actual sales, and forecasts, were more modest than the forecasts made in May 2000 but they were still substantially greater than the original arrangement, and increasing.

54                        By the time of his report on 9 February 2003 for the December quarter of 2002, Mr Jones was forecasting Verse 1 sales in 2003 of 509,820 bottles. 

55                        Minutes of the board meeting held on 11 August 2003 record the following:

“The Board noted the continued growth of the Verse 1 brand in the domestic market and Mr Jones commented that he saw no reason why the growth year-on-year of around 140% would not continue.  The Verse 1 brand was well regarded in the market place and was now receiving considerable focus from the majors and key independents.”

56                        In his managing director’s report dated 28 January 2004 for the December quarter 2003, Mr Jones reported to the board:

“For calendar year 2003, total sales of Verse 1 in the domestic market were 43,685 cases against sales in 2002 of 32,757 – a growth of 133%.

The 2004 marketing plan is in the process of being finalized and it is proposed to set the budget at 55,000 cases, although the target is for 65,000 cases due to the proposed price reduction of the Verse 1 reds.”

57                        The target was accordingly for 780,000 bottles in 2004 in the domestic market.  In his managing director’s report dated 11 August 2004 for the June quarter 2004, around the fifth anniversary of the contract with Ms Rutter, Mr Jones reported:

“Sales of Verse 1 continue to grow strongly at 129% of budget.  For the full year Verse 1 achieved 119% of budget and a growth on the 2003 year of 130%.  I am pleased to report that growth is continuing to gain momentum with July 2004 sales achieving 138% of budget reaching a record of 6,444 cases for the month.  Whilst the Semillon Sauvignon Blanc continues to be the hero of the brand, the reds are now growing strongly since being line priced.  Considerable activity is taking place with the majors and key independents and I am confident that the next six months sales will substantially exceed budget.  Verse 1 has certainly gained its own sales momentum and I believe that over the next two years budgets will be well and truly exceeded.”

58                        This report was made shortly before Mr Jones’ interest in Brookland Valley was finalised by the sale of the interest held by the corporate vehicle for his family, JFT (WA) Pty Limited.  Throughout the whole of the period of his stewardship of Brookland Valley while the Verse 1 range was in existence, therefore, a period of about five years, the Verse 1 range had been marketed and sold with a label which prominently featured Ms Rutter’s music and attributed the music to her.  During the same period sales had increased substantially and the momentum had been maintained.

The contribution of the Verse 1 label

59                        Evidence given in the proceedings by current executives of Brookland Valley or its parent company to the effect that the label made no contribution to the brand must be treated with scepticism.  There is no indication of any kind that those in day to day control of Brookland Valley held such a view.  On the contrary, the evidence shows that such doubts about the effectiveness of the label as may have been expressed by some sales or marketing personnel were rejected.  The only reasonable inference available is that the management of Brookland Valley were happy that the label was making a useful contribution to what was an increasingly successful brand and an extremely important one for the overall success of Brookland Valley as the minutes of the board meetings consistently recorded.  It is quite clear from evidence to which I shall come that changes in the label which subsequently occurred came after Mr and Mrs Jones had left Brookland Valley.  Even then unauthorised use of Ms Rutter’s composition did not cease although the reproduction of the music diminished in size and the attribution to Ms Rutter ceased.  In a sense this compounded the unauthorised use of the music itself.  Not only did Brookland Valley continue to use something in respect of which it had no effective licence but it removed any acknowledgement or attribution that Ms Rutter was its creator.  It was not until after the present proceedings were commenced that the use of Ms Rutter’s music finally ceased.

60                        As earlier indicated, a separate arrangement was made with Ms Rutter for the production of a CD containing her music, the cost being borne by Brookland Valley.  Before the expiration of the twelve month contract period, on 13 July 2000, Mr Jones sent a facsimile transmission to Ms Rutter’s manager, Mr Robbie Porter.  Mr Jones said, in part:

“Dear Mr Porter

I refer to your fax re Jane Rutter’s CD for a release in Canada.

As I clearly expressed to Jane on Friday, we are unable to pay more than $3.50 per CD for this promotion otherwise it is not an economic proposition.  We felt that Jane could receive a lot of promotion from this release, which would represent a return to her in another way.

We have looked at a number of alternatives including producing a CD with just general music on it.  However we think that the Verse 1 CD of Jane’s is very good and we would like to keep the promotion with Jane going forward.

On review as a final offer we would agree to $4.25 per CD for 1000 CDs.

We need an acceptance from you within the next 7 days otherwise we will have to proceed without the CD.”

(Emphasis added.)

61                        Mr Jones sent another facsimile to Mr Porter six days later recording agreement to a price of $4.25 for 1,250 CDs.  On 2 December 2002, Mr Jones confirmed a purchase order for a further 2,000 CDs “packaged in the identical format including insert” for a figure of $5.00 plus GST for each CD.  These are all tangible indications that the promotion of the Verse 1 concept, as devised by Mrs Jones and approved by the board, was thought to be assisted by an association with Ms Rutter and her music.

62                        In his affidavit Mr Jones said that if Ms Rutter had sought a further fee for the use of her music and name on the Verse 1 wine labels after the expiration of the contract he would have opposed the payment of such a fee and changed the label.  I do not accept this evidence.  I see no objective support for any suggestion that Mr or Mrs Jones would have made a substantial change in the labelling arrangements so soon after the launch of the Verse 1 brand and while it was, relatively speaking, in its infancy.  On the contrary, the contemporaneous documentary evidence strongly supports a conclusion that both Mr and Mrs Jones were happy with the label and with other aspects of the arrangement as the continuing production and use of the CD illustrates.  As has already been indicated, the label was used substantially unchanged through a period of very significant growth in sales.  It was obviously not regarded as counter productive.  On the contrary, I think the only reasonable inference is that it was regarded as making a useful contribution to the sales and marketing strategy for the Verse 1 wines.  I see no reason to conclude that Brookland Valley would not have made a practical and reasonable commercial arrangement with Ms Rutter to enable the label to remain in use.  It is not possible to give any serious credence to the suggestion that the mere fact that some further licence fee would be required would be sufficient to generate the level of resistance suggested by Mr Jones. 

63                        The only suggested foundation for this retrospective prediction was that Mrs Jones had found Ms Rutter difficult to work with during the various launch functions.  This evidence came chiefly from Mrs Jones.  Passing reference only was made to it by Mr Jones who did no more than recount, in a summary form, statements he attributed to his wife.  Mrs Jones in her affidavit evidence suggested that Ms Rutter was disorganised and demanding at the Sydney and Melbourne launch functions.  She suggested that she decided at that time not to proceed with any similar functions in the future and secured the agreement of Mr Jones and Mr Hornabrook to that effect.  Mr Jones did not give such evidence.  Mr Hornabrook was not called to give evidence.  There is no other record which supports Mrs Jones’ assertions about the decision she said she took.  However, any such decision, if in fact it was taken, was, on any view, a qualified one because Mrs Jones excepted from her asserted decision discontinuation of the music and name on the label.  The effect of this exception, accepting her evidence at face value, is that whatever view was taken about future launch functions Mrs Jones recalls an active decision to continue the use of Ms Rutter’s music and name on the Verse 1 label.  That is entirely consistent with what the contemporaneous material shows for the remaining four years while Mr and Mrs Jones remained associated with Brookland Valley.  It adds to my conviction that those aspects of the label were not regarded as being without value.  Mrs Jones also asserted that she would not have countenanced payment of a further fee to Ms Rutter.  I do not accept this evidence.  I think it is clear from the evidence as a whole that the name and music were regarded as important elements on the label and it strains credulity to suggest that a sensible commercial arrangement would not have been reached to permit their authorised continuation.

64                        In particular, I am satisfied that, in Mrs Jones’ mind, it was important that the concept she had devised be promoted as an authentic one.  It is clear that the Verse 1 concept, and matters of detail concerning public relations for it, including the design of the label for wine bottles and for packaging such as cartons, were the special interest of Mrs Jones.  She was responsible for negotiations and discussions with designers as well as for the original concept itself.  Despite one answer which she gave to the effect that the provision of an original composition by Ms Rutter was simply a nice finishing touch (a characterisation which I do not accept), I am satisfied that it was a central element, and important to the authenticity and integrity of the whole concept, that Ms Rutter provide an original composition.  That composition was to be, and was, advanced by reference to, in reliance upon and in association with Ms Rutter’s undoubted reputation, especially in Australia.  Mrs Jones regarded the identification, on the back label, of Ms Rutter as the composer of the music appearing on the front label as part of the concept she had in mind to market Verse 1 wines.  She was asked:

“And you included the reference to the fact that Pan’s song had been written by Jane Rutter to communicate to such members of the public that the music appearing on the front was that of Ms Rutter’s, didn’t you?---Yes.”

and:

“You regarded this design as finalised in 1999 as effective, so far as you were concerned, as effective to convey the concept that you had come up with?---Yes.”

65                        I see no reason to conclude that that element of the concept lost its commercial significance after the period of time to which the contract related.  Mr Kenneth Boundy, a marketing consultant who gave expert evidence for Brookland Valley, agreed that at the time Verse 1 wines were launched music was used as part of the “brand essence”.  He thought that Ms Rutter’s involvement gave musical credibility and was “clearly of some perceived value to Brookland Valley in differentiating the product”.  The fact that some years later Brookland Valley, after the departure of Mr and Mrs Jones, first reduced the reproduced score to one stave of music consisting of four bars and then, faced with the commencement of the present proceedings, replaced it with something meaningless gives no reason to think that, at any relevant time, the element of the concept represented by Ms Rutter’s composition had become regarded as without significance or value.  I am satisfied that the contrary is the case.

66                        The fact that Brookland Valley did nothing to honour its obligations to Ms Rutter cannot assist it.  From about 2 August 2000 it acted in disregard of her legal rights and without her permission or authority.  It acted as though the use of Ms Rutter’s music and name was a matter under its unilateral control.  It was not.

67                        Brookland Valley continued, as part of its commercial exploitation of a successful product, to take the benefit of the arrangements which it had negotiated with Ms Rutter during 1999.  However, despite taking the full advantage of her contribution, it disregarded both her legal and moral entitlement to share in some way in the commercial success of what was originally their joint endeavour and turned its back on the promise which it made to her in the letter of 28 July 1999.

68                        I place no weight on the evidence of Mr and Mrs Jones predicting what they would have done if Ms Rutter had approached them after twelve months seeking further payment for the use of her music and name.  I prefer to judge the matter by reference to their conduct at the time rather than by reference to affidavits drafted for the purpose of the proceedings, with all the imponderables that such a process entails.  No commercially significant reason was offered to support their ex post facto predictions.  The objective material is consistent only with them each believing that continued use of the label in the form it bore was an appropriate and valuable contribution to their sales and marketing plans for Verse 1 wines.  I do not regard it as realistic to suppose that some sensible commercial arrangement would not have been made had it been necessary to do so.

The first change to the Verse 1 label

69                        In the first of two affidavits prepared for the proceedings Mr Andrew Charleson, the National Fine Wine Manager for Constellation Wines Australia, deposed that prior to 2005 Mrs Jones “had total control over the packaging and labelling of the Brookland Valley ranges, including Verse 1”.  He said that BRL Hardy acquired the Jones’ family interest in the Brookland Valley Winery in 2005 and immediately took the opportunity to make changes to the labelling and packaging of Verse 1 in response to criticism.  This misstates the position and I am satisfied that the position, indeed, has been overstated, probably with a view to making some point in the proceedings in Brookland Valley’s interests.  The true position is that Mr and Mrs Jones relinquished their roles in 2004.  Thereafter little, if anything, appears to have been done about Verse 1 labelling before September 2005, twelve months later when the position was reviewed for other reasons.  At that time Ms Shirley De Zolt had responsibilities with respect to marketing.  Ms De Zolt was not called to give evidence in the proceedings.  In September 2005 she prepared a design brief for Mr John Davies at Insight Design.  She said:

“Brookland Valley has developed from a small Margaret River boutique estate to a strong brand in a fantastic growth cycle.  In Australia, the entry level MR sub brand Verse 1 has achieved sales over 50,000 targeting 80,000-100,000 pa in the next 1-2 years in addition to developing export markets with similar growth patterns.

So, as we face the next phase of growth challenge, and as the Verse 1 range was launched 7 years ago, it is time to review the existing design.  Whilst not seeking a departure from our core brand elements, the design process does need to provide a scale of options to review.”

70                        She said that the background as to why Verse 1 required a packaging upgrade was complex.  One factor mentioned was that the current pack “has begun to look tired”.  Otherwise the only other comment on any aspect of the label relevant to the present proceedings occurred in the course of making a number of points about the proportion of elements on the label.  Ms De Zolt said:

“Music notes, while a key theme for the range, dominate the label a little too much.  Perhaps to review the application of the notes to be blind embossed (not printed), or reduced, or moved to the back label or kept in colour but much smaller and softer.  Ultimately more air is needed to quite a cluttered label.”

71                        Ms De Zolt gave a presentation in November 2005 to explain the rationale for proposed changes to the Verse 1 label.  The presentation proposed that there be only a single stave of music.  It said, in part, “Music – too much of it, confusing, congestion”.  In the recommended design options there were some new elements.  Some elements were to be retained and improved.  One of those elements was the music.  The change was described as follows: “Music – cut back/more subtle & not overpowering.  Off centred for contemporary look and not complete piece.  In background”.

72                        In January 2006 Ms De Zolt gave a presentation to the Hardy’s sales team to present the finalised packaging and to explain the rationale behind it.  The comment concerning the music was simply: “Music notes are at height of flute/more subtle”.  This music was still Ms Rutter’s but the attribution which had previously appeared on the back label was removed.

73                        Ms Anna Falkiner was, at the time she swore an affidavit for use in the proceedings, the Senior Global Brand Manager (Western Australian Portfolio) for Constellation Wines Australia.  She had been an employee of Constellation Wines from 2005.  She took over from Ms De Zolt.  She appears to have played no part in the redesign of the label in 2005/2006 but was nevertheless called to give evidence that was dismissive of both Mrs Jones’ original concept and of any suggestion that Ms Rutter’s name or music made any contribution to the Verse 1 label.  She seemed unwilling to accept reasonable propositions in cross-examination, insisting for example that “Verse 1” was only a “sub-brand” although occasionally in unguarded remarks she used exactly the same terminology to which she was resistant in cross-examination.  I did not find her evidence of any assistance on the question of the significance to be attributed to the conduct of those who preceded her.

The approach by Ms Rutter’s lawyers

74                        During the period that the label was being revised, Mr James Bell, a commercial and entertainment lawyer, wrote to Brookland Valley.  His letter was dated 26 September 2005.  The letter was countersigned by Ms Rutter.  It asked for copies of the contractual documentation and a full accounting of Ms Rutter’s entitlements under the contract.  The letter was received by Mr John Whelan, then company secretary and in-house legal counsel of Constellation Wines, on about 27 September 2005.  Mr Whelan spoke with Mr Jones shortly thereafter and was told that Ms Rutter had been paid for the use of her music on the Verse 1 label.  In early October 2005 he searched at the Brookland Valley Vineyard for any documents evidencing the contract but found none.  In his affidavit he said:

“Having found no documents onsite at Brookland Valley or on file at Constellation Wines, and given Mr Jones’ recollection that no such agreement existed, I concluded that Ms Rutter must have been mistaken.  I had intended to respond to Mr Bell on my return from Western Australia but overlooked doing so.”

75                        Consequently, according to Mr Whelan, no response was made to Mr Bell.  As already indicated, plans went ahead to change the Verse 1 label but to retain Ms Rutter’s music on it. 

76                        This simple explanation requires further examination.  Mr Whelan accepted, in cross-examination, that he was conscious at the time that Ms Rutter’s musical work could only be used by Brookland Valley if there had been an assignment of copyright in writing or a licence granted.  His enquiries had revealed neither.  He was asked:

“So you were in a position where there was a concerning situation from the point of view of the company?---It was of concern, yes.

Because you knew that the company had been reproducing the music on the label for a long period of time and needed a licence of some sort to do that?---Yes.”

and:

“But it was, if there was no agreement, it was a great matter of concern to you, wasn’t it?---There were no agreement at all, yes it was a matter of concern.”

and:

“HIS HONOUR:  Is this correct that if there was no agreement, that was a matter of concern?  If there was an agreement, it was important to know how it was constituted and what its terms were?---Yes.”

77                        No response was made to Mr Bell.  No enquiries were made, directly or indirectly, of Ms Rutter.  Mr Whelan was, on his evidence, which he gave in a straightforward and candid fashion, conscious of the fact that Ms Rutter’s copyright in her music was being breached in an ongoing way, and had been for some time, unless she had licensed its use.  Mr Bell’s letter put any assumption to that effect in issue.  Mr Whelan’s own enquiries had not revealed the necessary permission.  In my view Mr Whelan was on sufficient notice to make it imprudent in the extreme to leave matters as, in fact, they were left. 

78                        On 22 December 2006 Gadens Lawyers, who now acted for Ms Rutter, wrote to the Hardy Wine Company in South Australia referring to and enclosing a copy of Mr Bell’s earlier letter of 26 September 2005 and referring also to the fact that the reproduction of Ms Rutter’s score on the label had been recently altered.  The letter said: 

“Please contact us to arrange a convenient time to meet with us to discuss this matter and our client’s rights and entitlements from your use of her name and music, in an amicable manner.” 

79                        This letter also went unanswered.  Mr Whelan’s explanation is that it is unlikely he would have seen it until he returned from his summer holiday in mid-January 2007 which was after the date which Gadens had stipulated for a reply – 15 January 2007.  That explanation does nothing to indicate why a response was not sent.  As Mr Whelan indicated, the next step, which was foreshadowed in Gadens letter, was not taken until 10 April 2007 when the application and statement of claim were served.  There was more than adequate time and opportunity for Mr Whelan to respond.  The approach from Gadens was moderate in its terms.  The lack of any response was surprising.  The institution of proceedings was practically inevitable. 

80                        Mr Whelan conceded that he knew of no basis upon which it could be asserted that Ms Rutter had given the necessary permission to reproduce her music after 2000.  He was asked in cross-examination:

“I think you have agreed, in answer to some questions asked earlier this morning, that if there was no agreement for the grant of permission, it was a serious matter from the company’s perspective?---Yes.

It was a serious matter because you knew over a number of years the – beyond 1999, the company had been reproducing the music on the label?---Yes.

And so that, at the point in which your inquiries were exhausted, shortly after the receipt of this material attached to the letter from Gadens of 18 April 2007, you were in the position where the company couldn’t establish a licence or permission granted by Ms Rutter?---Correct.

That is correct.  And what I want to know is has there ever been a position since then when you have become aware of material which has enabled you to form the view that there was a permission or licence granted in relation to the reproduction of the music on the label for the periods – for the years 2000 and following through to 2006?---No.”

Events after the commencement of proceedings

81                        At the commencement of the proceedings Brookland Valley was still using Ms Rutter’s music on the Verse 1 label although without attribution of her as the author.  Mr Charleson’s evidence was that when the proceedings were commenced action was taken to remove Ms Rutter’s music from the label and a new label was used from about mid 2007.  Steps were taken to notify wholesalers and retailers to destroy print material and point of purchase material containing images of the previous Verse 1 labels.  However steps were not taken to prevent ongoing sales of Verse 1 wines bearing the label with Ms Rutter’s music or even to stop use of the label at the point of production.  A schedule attached to Mr Charleson’s affidavit identified orders for printing Verse 1 labels for Cabernet Merlot, Chardonnay, Rosé (which had been added to the range), Semillon Sauvignon Blanc and Shiraz.  The schedule covered the period from 17 January 2005 to 21 January 2009.  It was apparent that, after commencement of the proceedings, 183,312 bottles of Verse 1 Cabernet Merlot were produced with labels showing Ms Rutter’s music as were 118,272 bottles of Verse 1 Chardonnay, 15,240 bottles of Verse 1 Rosé, 815,760 bottles of Verse 1 Semillon Sauvignon Blanc and 26,364 bottles of Verse 1 Shiraz.  Work orders for the production of such labels were given, after the commencement of the proceedings, on 11 April 2007, 18 April 2007, 20 April 2007, 2 May 2007, 7 May 2007, 16 May 2007, 8 June 2007, 11 July 2007, 25 July 2007 and 1 August 2007.

82                        Ms Rutter gave unchallenged evidence that on 26 October 2007 she was able to purchase a bottle of 2005 Verse 1 Chardonnay with the label containing three staves of music which had been in use since 2001.  On 23 October 2008 she purchased a bottle of 2006 Verse 1 Cabernet Merlot with a label showing one stave of her music and on the same day purchased a bottle of 2006 Verse 1 Rosé with a label showing one stave of her music.  On 24 October 2008 she purchased a bottle of 2006 Verse 1 Chardonnay with a label showing one stave of her music.  There was no evidence given in the proceedings that Brookland Valley made any effort to stop selling bottles of wine in its possession which already bore labels containing Ms Rutter’s music or to retrieve any such bottles from wholesalers or retailers.  Presumably Brookland Valley was content to take its profit from those sales and simply see Ms Rutter in court. 

Infringement of copyright

83                        Sections 31(1)(a), 35(2) and 36(1) of the Copyright Act provide as follows:

“31(1)   For the purposes of this Act, unless the contrary intention appears, copyright, in relation to a work, is the exclusive right:

(a)       in the case of a literary, dramatic or musical work, to do all or any of the following acts:

(i)         to reproduce the work in a material form;

(ii)        to publish the work;

(iii)       to perform the work in public;

(iv)       to communicate the work to the public;

(vi)       to make an adaptation of the work;

(vii)      to do, in relation to a work that is an adaptation of the first-mentioned work, any of the acts specified in relation to the first-mentioned work in subparagraphs (i) to (iv), inclusive”.

“35(2)   Subject to this section, the author of a literary, dramatic, musical or artistic work is the owner of any copyright subsisting in the work by virtue of this Part.”

“36(1)   Subject to this Act, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright.”

84                        I am satisfied, and ultimately no case was suggested to the contrary, that Ms Rutter was the author of Blo, the owner of copyright in Blo and that no licence for its reproduction in whole or in part was granted to Brookland Valley except by the terms of the contract concluded on 2 August 1999.

85                        Section 14(1) of the Copyright Act, provides:

“14(1)   In this Act, unless the contrary intention appears:

(a)        a reference to the doing of an act in relation to a work or other subject-matter shall be read as including a reference to the doing of that act in relation to a substantial part of the work or other subject-matter; and

(b)        a reference to a reproduction, adaptation or copy of a work shall be read as including a reference to a reproduction, adaptation or copy of a substantial part of the work, as the case may be.”

86                        In Autodesk Inc v Dyason [No. 2] (1993) 176 CLR 300 Mason CJ said (at 305):

“It is clear that the phrase ‘substantial part’ refers to the quality of what is taken rather than the quantity … in determining whether the quality of what is taken makes it a ‘substantial part’ of the copyright work, it is important to inquire into the importance which the taken portion bears in relation to the work as a whole: is it an ‘essential’ or ‘material’ part of the work?”

(References omitted.)

87                        Although his Honour dissented from the procedural outcome of the case his construction has been accepted as correct (Data Access Corporation v Powerflex Services Pty Ltd (1999) 202 CLR 1 at [84]-[88]; see also IceTV Pty Limited v Nine Network Australia Pty Limited [2009] HCA 14 at [30]-[155]).

88                        Mr Richard Toop is a musicologist.  He gave both affidavit and oral evidence in the proceedings.  He has an international reputation, particularly as an analyst of twentieth‑century music.  He expressed the opinion, which was not challenged in any relevant respect, that:

●          ‘Blo’ was an original musical composition.  It was recognisable.

●          There were, in the first few bars, already juxtapositions of innately distinctive figures that were sufficiently unusual for the melody also to be considered original in a broader, qualitative sense.

●          The part of ‘Blo’ reproduced on the Verse 1 label from 1999 to 2005 (sic) was an immediately recognisable excerpt of ‘Blo’.  That part of ‘Blo’ is a significant, essential and material part of the composition.

●          The part of ‘Blo’ reproduced on the Verse 1 label from 2005 (sic), although shorter, is also an immediately recognisable excerpt of ‘Blo’.  It also is a significant, essential and material part of the composition.

89                        There was no countervailing evidence.  I accept Mr Toop’s evidence.  I conclude that the Verse 1 labels produced from 1999 until around 2007, which featured Ms Rutter’s music, reproduced her original musical work in substantial part and published it in breach of her exclusive right to do so, except to the extent authorised by her in the contract made on or about 2 August 1999, for the period thereby identified.  I do not accept a submission made by Brookland Valley to the effect that publication of the “music graphic” did not represent an infringement of copyright.  No authority was cited to support the submission.  For reasons given earlier, I do not accept, as Brookland Valley submitted, that the music was included on the label as a “decorative element”.  On the contrary, I am satisfied that it was essential to the concept, and its execution, that the music be authentic, original and associated with a high profile classical musician.  The attempts made in the proceedings, in various ways, to dismiss those elements of the original concept seem to me to be the product of forensic revisionism rather than a faithful representation of events as they played out in 1998, 1999 and thereafter.

The limitation period

90                        Section 134(1) of the Copyright Act provides:

“134(1)An action shall not be brought for an infringement of copyright or in respect of the conversion or detention of an infringing copy, or of a device (including a circumvention device) used or intended to be used for making infringing copies, after the expiration of six years from the time when the infringement took place or the infringing copy or device was made, as the case may be.”

91                        The proceedings were commenced on 29 March 2007.  Accordingly, Brookland Valley argued that no relief was available to Ms Rutter with respect to infringement of copyright up to 28 March 2001.

92                        No real answer was made to this submission and it should therefore be accepted.  The result is that it will be necessary, at various points, to make an adjustment to the relief which would otherwise have been available to acknowledge this limitation.

Celebrity endorsement

93                        Some time and attention was devoted by both parties to how damages, if they were to be awarded, should be calculated.  One question which was debated was the value, if any, of Ms Rutter’s personal association with Verse 1 wines.  Evidence was called from a number of witnesses about the value of celebrity endorsements in advertising and about the calculation of an appropriate fee.  Notwithstanding these efforts, in my view the issue is not a relevant one in the present case.  There was no indication on the Verse 1 labels that Ms Rutter was providing any form of personal endorsement for Verse 1 wines.  Neither, in my view, does any inference to that effect arise from the attribution to her of authorship of “Pan’s Song”.  Until 2006 Ms Rutter was shown simply as the composer of the music.  In my view that fact, together with her undoubted reputation in Australia, added authenticity to the concept, as Mrs Jones desired.  However, it is neither necessary nor appropriate in the present case to approach the question of the assessment of damages on the basis of attributing some value to a notional endorsement by Ms Rutter of Verse 1 wine.

Compensatory damages

94                        Section 115(1) and (2) of the Copyright Act provide:

“115(1)   Subject to this Act, the owner of a copyright may bring an action for an infringement of the copyright.

(2)  Subject to this Act, the relief that a court may grant in an action for an infringement of copyright includes an injunction (subject to such terms, if any, as the court thinks fit) and either damages or an account of profits.”

95                        Ms Rutter sought damages, rather than an account of profits.  A clear case has been made out for damages for breach of copyright.  It is not realistic to make an assessment of such damages on the basis that Brookland Valley would not have come to some arrangement with Ms Rutter concerning the use of her music and her name.  It did in fact use her music and her name.  The assessment of damages must be approached upon the basis that it would have been prepared to make a commercially sensible arrangement in order to do so.  I reject a submission made by Brookland Valley that Ms Rutter is only entitled to the same amount it would have cost Brookland Valley to redesign the label to remove her music and name.

96                        The starting point for an assessment of what arrangement would have represented a reasonable commercial one in all the circumstances must commence with the bargain actually made.  In that bargain $20,000 was assigned for sponsorship.  The sponsorship responsibilities were identified in clause 4 “The Performers Sponsorship Services”.  I shall set them out again for convenience:

“4.        The Performers Sponsorship Services

4.1       The Performer shall provide the written text to the composition ‘Blo’ by Jane Rutter for the purpose of use by the Promoter in reproduced prints of said text on the Product.  The Performer, as the owner of the copyright in the composition, authorises the promoter to reproduce the composition on no more than 90,000 units of the Product.  The Performer reserves all other rights in the composition.

4.2       The Performer shall provide an accompanist for each of the performances listed in Item 2 of the schedule on the dates listed in Item 3 of the schedule and the accompanist’s performance fee shall be included in the Sponsorship fee listed in Item 4 of the schedule.

4.3       The Performer will be available for up to a maximum of twenty one (21) interviews in total, at mutually convenient times to promote the performances and the Product, subject to the Performer’s prior professional commitments.  Interviews shall be organised by the Promoter or it’s authorised agents to a maximum of nine (9) print interviews, nine (9) radio interviews and three (3) television interviews.

4.4       All marketing, advertising, press and print material that includes Jane Rutter must be forwarded to Ferin Music Australia or Jane Rutter for approval prior to publication.  The Performer’s consent must be obtained in relation to the placement of any marketing and/or advertising material in any publication.  Such approval shall not be unreasonably withheld.

97                        The original agreement referred only to two varieties of wine.  I think the number of varieties of wine should be regarded as of less importance than the total number of bottles to which labels containing Ms Rutter’s music were to be attached.  At the outset it was contemplated that 90,000 bottles to which labels would be attached would be produced in the contract period.  In fact that number was exceeded.  One suggestion made by counsel for Ms Rutter was that I should assess the position simply as though the sponsorship fee of $20,000 represented a royalty of 22.22 cents on each of 90,000 bottles.  I do not think that would be a realistic approach.  I am satisfied, however, that the sponsorship fee should, for reasons which will be explained, be regarded as including a lump sum licence payment of $15,000 and a royalty of 2 cents per bottle, as well as provision for the other matters referred to in clause 4.

98                        I think it reasonable to assume that the element of primary importance to the parties, at least at the time the original agreement was made, was a lump sum payment by way of a licence fee.  However, in view of the shared expectation of a given production run, and the optimism for increased sales thereafter, it is unrealistic to think that some adjustment to accommodate the level of success of the range would not have been mutually agreeable.   Although a royalty will not provide an appropriate measure of damages where it appears a copyright owner would not have been prepared to grant a licence (see Aristocrat Technologies Australia Pty Limited v D.A.P. Services (Kempsey) Pty Limited (in liquidation) [2007] FCAFC40 (“Aristocrat”) at [27]), there is no suggestion in the present case that Ms Rutter would not have been prepared to do so. 

99                        This element, however, should be a modest one.  In my view a royalty of 2 cents per bottle meets that standard.  At $1,800 for 90,000 bottles it would comprise a small part of the initial payment but was capable of affording some limited participation in a successful marketing endeavour thereafter.

100                      The calculation should be made for all sales of bottles to which were affixed labels bearing Ms Rutter’s music, excluding the original 90,000 bottles to which the contract related and also excluding sales up to 28 March 2001.

101                      Some allowance needs to be made for the cost of an accompanist on three occasions (clause 4.2).  I will attribute $400 for each occasion ($1,200 total) to this factor. 

102                      There were only a small number of interviews which Ms Rutter was required to attend (clause 4.3).  Of the remaining $17,000 I will allow $2,000 for other contingencies including interviews. 

103                      The remainder of $15,000 seems to me to represent an appropriate core payment which, in substance, reflects the bargain which was made and which might reasonably be thought to have been acceptable to the parties for later years, supplemented by the modest royalty I have already discussed.  Due to the six year limitation on Ms Rutter’s right to claim relief, any payment referable to the period before 28 March 2001 must be excised.  Accordingly, the $15,000 notional payment attributed to the period from 2 August 2000 to 1 August 2001 must be reduced pro rata to $5,178.08 (for the period of 126 days from 29 March 2001 to 1 August 2001).

104                      On Mr Charleson’s evidence, printing of labels with Ms Rutter’s music continued until 1 August 2007.  Conveniently that identifies a span of exactly eight years from the making of the contract and seven years from its expiry.  In my view Ms Rutter should be compensated firstly with an amount of $95,178 to represent the core payment I have isolated for each of those additional years, but again commencing on 29 March 2001. 

105                      Then it becomes necessary to attribute a fee of 2 cents per bottle to sales made from 29 March 2001.  Mr Charleson’s evidence also enables sales to be calculated in the following way: 2000 - 30,060 bottles (120,060 sold from which the 90,000 bottles originally bargained for must be deducted); 2001 – 270,012 bottles; 2002 – 469,284 bottles; 2003 – 567,084 bottles; 2004 – 813,012 bottles; 2005 – 920,760 bottles; and 2006 – 1,366,776 bottles.  In addition a calculation may be made from Mr Charleson’s schedule of labels printed in 2007 bearing Ms Rutter’s music (but excluding those which do not) of 1,332,744 bottles in 2007 to 1 August 2007.  The total is 5,769,732 bottles.  To recognise the limitation period excluding relief up to 28 March 2001, the whole of the net sales from 2000 (30,060) must be excluded.  It is not possible to discern from the evidence what sales were made, in 2001, up to 28 March 2001 and which from 29 March 2001 on.  I will therefore reduce the 2001 sales figure of 270,012 bottles pro rata to 205,653 bottles.  The adjusted total is 5,675,313.

106                      On the approach I have taken I think Ms Rutter is entitled to further damages, in addition to the $95,178 already identified, of $113,506, giving a total of $208,684.

Additional damages

107                      Section 115(4) of the Copyright Act provides:

“115(4) Where, in an action under this section:

(a)        an infringement of copyright is established; and

(b)        the court is satisfied that it is proper to do so, having regard to:

(i)         the flagrancy of the infringement; and

(ia)       the need to deter similar infringements of copyright; and

(ib)       the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff’s copyright; and

(ii)        whether the infringement involved the conversion of a work or other subject-matter from hardcopy or analog form into a digital or other electronic machine-readable form; and

(iii)       any benefit shown to have accrued to the defendant by reason of the infringement; and

(iv)       all other relevant matters;

the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances.”

108                      The conduct of Brookland Valley must be evaluated by reference to the conduct of its human agents.  In my view the disregard of Ms Rutter’s rights was flagrant.  Apart from breach of any contractual terms, the representations contained in Mr Jones’ letter of 28 July 1999, about the substance of the arrangements then proposed by him, were perfectly clear.  The acknowledgment that: “If we wish to continue to use your music and your name in future years production we must negotiate a further agreement and failing being able to negotiate the licence is at an end and we will discontinue the use of your music and name on our Verse 1 label” was dishonoured without apparent compunction.

109                      The agreement which Brookland Valley made with Ms Rutter was itself breached virtually immediately with the introduction of a new variety of wine.  It was then breached when the agreed volumes were exceeded.  Disregard of her rights continued after the expiry of the contract.  Mr and Mrs Jones took what they wished from the arrangement with little apparent regard for Ms Rutter’s entitlements and legitimate interests.  Mr Jones’ failure to honour the bargain which he had made with Ms Rutter or take any step to address her rights may not be dismissed as simple carelessness on his part.  His representation to Mr Whelan to the effect that Ms Rutter had been paid in full for her contribution was manifestly incorrect.  If that was the basis upon which he proceeded it was clearly not open to him to do so.  If it was not, the position is, if anything, worse. 

110                      The position did not improve when Mr and Mrs Jones ceased their involvement with Brookland Valley towards the end of 2004.  Ms Rutter’s enquiries about the matter, through Mr Bell, and the approach made on her behalf by Gadens, went unanswered even though it was quite apparent that there was a serious question about the right of Brookland Valley to use, and continue using, her music on its labels.  Nothing was done until the proceedings were commenced and even then the steps that were taken were ones which displayed no real recognition of Ms Rutter’s entitlements past, present or future.  For a number of months the labels bearing Ms Rutter’s music were reordered for every variety of Verse 1 wine. 

111                      In my view, each of the elements identified in s 115(4)(b)(i), (ia), (ib) and (iii) of the Copyright Act is engaged.  The conduct of Brookland Valley was flagrant and it continued in disregard of Ms Rutter’s rights even after it had been expressly brought to its attention.  Brookland Valley continued to take the full benefit of the marketing program which it devised, even after Mr Bell’s letter in September 2005.  I do not accept the evidence given in the proceedings that I should regard the continued use of Ms Rutter’s music as of no consequence.  The new label, put into use from January 2006, continued to display it.  I am fortified in my view that some account must be taken of the need for deterrence by the approach which was taken at various points.

112                      In the end, in one form or another the unsatisfactory and flagrant disregard of Ms Rutter’s rights spanned a period of about eight years.  The moderate attempts which she made to seek clarification of the position went without response.  Even the commencement of the present proceedings appeared to bring insufficient recognition of the gravity of the problem.

113                      An estimate of additional damages is again necessarily broad but that is almost inevitable in cases of this kind (see Aristocrat at [52]).  In my view a figure of $150,000 as additional damages is appropriate.  The restriction of Ms Rutter’s claims to the period from 29 March 2001 does not remove or relevantly qualify her entitlement to an amount for additional damages.  Nor does it affect the amount which I have found is appropriate to be awarded.

Moral rights

114                      The back label used from about 2006 did not attribute authorship by Ms Rutter of the music on the front label (now one stave).  Under s 195AO of the Copyright Act that was an infringement of Ms Rutter’s “moral rights” of attribution.  Under s 195AZA, damages are available for loss resulting from the infringement but s 195AZB makes clear that there may be no double counting.

115                      In my view, the lack of attribution did not increase the loss flowing from breach of copyright in the original work which continued in 2006 and into 2007.  There is no need to consider any separate order under s 195AZA.

Injunctive relief

116                      Ms Rutter has sought an injunction to prevent further breach of copyright.  In my view such an order is not necessary.  It is not appropriate in my view for the Court to grant an injunction which has no real work to do.

Trade Practices Act

117                      Ms Rutter’s application also seeks damages under s 82 of the Trade Practices Act 1974 (Cth)  for misleading and deceptive conduct.  However, she is not able to point to any damage which she has suffered as a result of that alleged conduct.  It follows that damages would not be available on that account.  She has not sought any form of declaratory relief in relation to the conduct of which she complained under this cause of action.  No relief is therefore appropriate under the Trade Practices Act.

Interest

118                      Ms Rutter, in her statement of claim, sought interest on a judgment in her favour.  I decline to award interest on the amount of additional damages.  I regard that as a sum which reflects the elements referred to in s 115(4) of the Copyright Act rather than as compensation for direct loss (see also Federal Court of Australia Act 1976 (Cth) s 51A(3)(c)).  However, there is no good reason why Ms Rutter should not be awarded interest on her compensatory damages.

119                      Until December 2008, the Federal Court Rules did not provide a guide to the calculation of an appropriate rate of interest and the practice of the Court was to award interest at the rate applied in the Supreme Court of the State or Territory in which the proceedings were heard (see e.g. GEC Marconi Systems Pty Ltd (t/as Easams Australia) v BHP Information Technology Pty Limited [2003] FCA 688; 201 ALR 55 at [6] – [7]).

120                      Order 35 r 7A of the Federal Court Rules now provides:

“7A      If determining a rate of interest for an order under paragraph 51A(1)(a) of the Act, the Court or a Judge may fix the rate as:

(a)        the cash rate of interest set by the Reserve Bank of Australia from time to time during the period mentioned in paragraph 51A(1)(a) of the Act, plus 4 per cent;        or

(b)        such other rate as the Court or Judge thinks fit.”

121                      The compensatory damages which I calculated were based, in part, on a notional core amount of $15,000 per annum for the period from 29 March 2001 to 1 August 2007 and, in part, upon a notional royalty of 2 cents per label on bottles of Verse 1 wine sold until 1 August 2007, excluding the first 90,000 bottles and then excluding any sales to be attributed to the period up to and including 28 March 2001.

122                      There are two principal difficulties presented by any attempt to relate an appropriate rate of interest to the compensatory damages I have found are justified.  First, the cash rate set by the Reserve Bank of Australia (if that was to be chosen as a guide) was somewhat volatile, moving up and down between 6.25% on 2 August 2000 (coincidentally) and 3.00% at the present time, having reached 7.25% on 5 March 2008.  The average rates from 2 August 2000 were 5.41%.  The addition of 4% as suggested by O 35 r 7A provides a range of 10.25% to 7.00%, peaking at 11.25%, with an average of 9.41%.  Over the same period of time the rate applied by the Supreme Court of New South Wales ranged between 11% (from 1 September 2000) to 9% at the present time.  In view of the next difficulty which I need to address it is in my view better in the circumstances of this case to fix a single rate of interest to be applied.  In my view, an appropriate rate of interest to be applied uniformly over the whole period would be 9%.

123                      A rate of interest applied to a notional payment of $15,000 due on 2 August in each of the years 2000 to 2006 (adjusted initially to reflect the limitation period) up to date of judgment may be calculated as follows:

124                      The next complication arises from the need to apply a rate of interest progressively, and to figures which are not derived directly from the same periods in which renewals of the original arrangement on a periodic basis would most likely have occurred – i.e. in one yearly or longer periods commencing on 2 August.  In my view the fairest approach to this question would be to calculate interest on the 2 cent royalty I have determined from the conclusion of the respective sales periods – end 2001, 2002, 2003, 2004, 2005, 2006 and 1 August 2007.  The application of interest thereby occurs after actual sales rather than in anticipation of them.

125                      Interest should be applied to the date of judgment, 30 June 2009, which is generally fairly straightforward.  The calculation is explained in the following table:

126                      The total amount of interest upon compensatory damages, derived from the preceding calculations, is $84,693.

The cross-claim

127                      During the course of the exchange of pleadings in this case Brookland Valley made a cross-claim against Ms Rutter.  The details are no longer important.  Shortly before the trial Brookland Valley decided not to pursue the cross-claim, which may therefore be dismissed.

Costs

128                      I will hear the parties on costs.

Orders

129                      In my view the appropriate orders at the present time are:

            1.         The first respondent pay to the applicant the sum of $443,377, made up as follows:

            (a)        $208,684 as compensatory damages for breach of copyright,      

            (b)        $84,693 as interest upon compensatory damages to the date of             judgment,                                                                                

            (c)        $150,000 as additional damages.

            2.         The cross-claim is dismissed.

            3.         The parties will be heard on costs.

Associate:

Dated:         30 June 2009