PHONOGRAPHIC PERFORMANCE (SOUTH EAST ASIA) LTD v. CALIFORNIA ENTERTAINMENTS LTD

IN THE COURT OF APPEAL

Civil Appeal

No. 31 of 1988

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J U D G M E N T

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Clough, J.A.:

1. The plaintiff in these proceedings appeals against the order of His Honour Judge Cruden, sitting as a Deputy Judge of the High Court, made on the 29th January1988, granting the defendant unconditional leave to defend the action on the application by the plaintiff for summary judgment under Order 14. The defendant has filed a respondent's notice. It was filed out of time, but no objection was taken by the plaintiff on this account and so leave was granted to the defendant to argue the matters raised in the notice in support of the judge's order.

2. Both parties are limited companies incorporated in Hong Kong. The plaintiff is wholly owned by an association called the International Federation of Phonogram and Videogram Producers ("IFPI") which has about 600 members worldwide. The members produce sound recordings issued on more than 5,000 "labels" worldwide. The purpose of the plaintiff, as the creature of IFPI, is to collect royalties in respect of the public performance in Hong Kong of the sound recordings of members of IFPI.

3. The defendant carries on the business of a restaurant called the "California" in Hong Kong Recorded music is played from phonograms in the restaurant during the serving of meals and at other times when there is dancing after dinner on three nights a week.

4. On the 8th December 1987 the plaintiff issued a specially indorsed writ against the defendant in a copyright infringement action. In the Statement of Claim the plaintiff pleaded that it was the owner of the copyright, consisting of the exclusive right of public performance in Hong Kong, in a number of sound recordings including seven specified recordings bearing the labels of specified recording companies.

5. The Statement of Claim went on to allege inter alia that the defendant had infringed the plaintiff's copyright in the seven recordings by causing or authorising them to he heard in public in the defendant's restaurant on the 4th December 1987 without the plaintiff's consent. It was further pleaded that the defendant was daily continuing to cause the public performance of sound recordings notwithstanding its, knowledge that it was infringing the plaintiff's copyright.

6. On the basis of those allegations the plaintiff sought injunctive relief damage or an inquiry as to damages or an account of profits arising out of the defendant's infringement, discovery and costs.

7. On the 21st December 1987 the defendant gave notice of intention to defend the action and on the 29th December 1997 the plaintiff issued its summons for judgment under Order 14. Initially the application was supported by a verifying, affirmation made by Mr. Ho Shu Kwun, a director of the plaintiff, which was filed on the 21st January 1988. After dealing with the relationship of the plaintiff with IFPI and the purpose for which the plaintiff was incorporated Mr. Ho affirmed in general terms that the Public performance rights for Hong Kong relating to the sound recordings of members of IFPI were vested in the Plaintiff. He then affirmed as follows:-

"I have checked the books and records of the Plaintiff and confirm that the sound recordings which are listed in paragraph 2 of the Statement of Claim ('the said recordings') are sound recordings of which the Plaintiff is the owner of the exclusive right of public performance in Hong Kong."

8. Mr. No went on to hive the dates (1986 in the case of three and 1987 in the case of four recordings) when the relevant recordings were first published in the United kingdom and to assert inter alia that copyright subsisted in those recordings on the 4th December 1987 when the infringement by the defendant was alleged to have occurred.

9. After giving hearsay evidence, based on the report of three investigators, of the circumstances of the alleged infringement, Mr. Ho formally verified the contents of the Statement of Claim and affirmed his belief that there was no defence to the plaintiff's claim.

10. On the 23rd January 1998 the plaintiff amended its Statement of Claim by adding another 10 recordings in relation to which copyright was alleged to have been infringed and by adding additional dates on which it was pleaded that there had been further infringements by the defendant.

11. On the 27th January 1988 the defendant filed the affidavit of Mr. R.H. Kaufman who is the Executive General Manager of the defendant. He deposed at some length regarding the negotiations and correspondence regarding licence fees between the parties which had preceded the action and which had culminated in the demand by the Plaintiff for quantified licence fees from the 1st January 1988, including a greatly enhanced fee of $34,046 for 1988.

12. Mr. Kaufman deposed that the defendant had never intended to misappropriate the property of others without payment. His evidence was that before the defendant was advised by its legal advisers regarding the issues concerning the subsistence of the copyright and the plaintiff's ownership of that right, the defendant had been involved in protracted negotiations with the plaintiff about the reduction in the amount of the licence fee until, all of a sudden, the plaintiff had demanded an increase of more than fifteen times.

13. He deposed that the defendant's wish was that the legal issue regarding the copyright should be resolved at an early date so that the defendant could obtain a licence from "the appropriate body" at a reasonable fee, to be determined if necessary by the Performing Right Tribunal. As to the legal issue which the defendant sought to be resolved, Mr. Kaufman deposed to his belief, based on legal advice, that the pleading in the amended Statement of Claim had ''... in no way demonstrated that the Plaintiff has a legal title to sue in its own name nor in any way could it procure the just determination of the legal issues involved...". He exhibited to his affidavit a copy of a draft Defence which he deposed that the defendant sought to rely upon.

14. The draft Defence denies the plaintiff's claim to be the owner of the copyright, consisting of the exclusive right of public performance in Hong Kong, in the relevant seven recordings and puts the plaintiff to strict proof of that claim with full discovery, and to strict proof of the plaintiff's legal title to sue as provided for under the Copyright Act 1956.

15. The allegation of infringement was denied, in the draft Defence, but no such denial was made in Mr. Kaufman's affidavit. The judge dealt with the an application on the basis that the only substantial issue on the summons was whether the plaintiff was the owner of that part of the copyright alleged to have been infringed and the respondent's notice raises no point regarding the plaintiff's allegation of infringement.

16. To complete the evidence, the plaintiff filed a second affirmation of Mr. Ho on the 28th January 1989 in which he made it clear that the plaintiff's Order 14 application was confined to the first seven recordings set out in the original Statement of Claim. He affirmed that the plaintiff was the "owner of that part of the copyright which comprises the right of public performance in Hong Kong is the said recordings..." and that the copyright subsisted then and had subsisted on the 4th December 1997 and on the 15th and 16th January 1988 when the relevant infringements were alleged.

17. Mr. Ho exhibited to his second affirmation what he described as true copies of the relevant seven recordings. His affirmation continued with further evidence regarding alleged infringements on the 15th and 16th January 1988. Both Mr. Ho's affirmations were notarised.

18. In his careful reserved judgment the judge gave his reasons for concluding that section 20(7) of the Copyright Act 1956 did not avail the plaintiff in establishing ownership of the copyright it claimed in the relevant recordings. Those reasons are not challenged on appeal and they are clearly right because section 20(7), read with section 12(4) of the Act, only raises a presumption of ownership of copyright in a sound recording in favour of a person named on the label or mark borne by a sound recording in the circumstances mentioned in section 20(7).

19. The judge held that the presumption arising under section 9 of the Copyright Ordinance (Cap. 39) was applicable. Section 9 Provides. as follows:-

.

" 9.(1) An affidavit which-

(a) purports to have been made by or on behalf of the owner of a work or other subject matter in which copyright subsists under the Act; and

(b) states that -

(i) at a time specified therein copyright subsisted in the work or other subject matter;'

(ii) the Person named therein is the owner of the copyright in the work or other subject matter; and

(iii) a copy of the work or other subject matter exhibited to the affidavit is a true copy of the work or other subject matter,

shall, if it complies with subsection (3), be admitted without further proof in any proceedings under the Act or this Ordinance.

(2) The court before whom an affidavit is produced under subsection (1) shall presume, until the contrary is proved -

(a) that the statements made. therein are true; and

(b) that it was made and authenticated in accordance with subsection (3).

(3) An affidavit for the purposes of this section shall be -

(a) made on oath-

(i) before a magistrate or a notary public if it is made. at any place within the Commonwealth; or

(ii) before a consular officer of Her Majesty's Government in the United Kingdom or a notary public if it is made at any place outside the Commonwealth; and

(b) authenticated, so far as relates to the making thereof, by the signature of the magistrate, notary public or consular officer before whom it is made."

20. However the judge was troubled by the fact that, whereas in paragraph 1 of the Statement of Claim the plaintiff claimed ownership of limited Hong Kong copyright in the relevant sound recordings, in paragraph 2 it was pleaded that the relevant record labels bore the names of other companies. No assignments to the plaintiff were pleaded or referred to in the evidence of Mr. Ho who had confined himself to asserting, without giving, particulars, that the company was the owner of the relevant copyright on the basis of his examination of the books and records of the plaintiff. The judge observed:-

"In view of the fact that the plaintiff was not the maker of the recordings and because of the importance of ownership, it would have been at least desirable for the name of the maker and the legal means by which the plaintiff subsequently became owner, to have been set forth. If assignments had been executed, the parties to and the dates of the assignments could have been affirmed to, while the assignments themselves or other documents of transfer, could have been exhibited. The Court simply does not have the assistance that might have been provided by such particulars."

21. The judge then went on to conclude in the following crucial passage of his judgment that the plaintiff was not entitled to judgment under Order 14 in reliance on section 9 of the Copyright Ordinance:-

"If the question of ownership had not been put in issue by the defendant's affidavit and draft defence, the bare statement by Mr. Ho may have been sufficient. In this particular case the defendant's documents do not stand alone, for their stance is reinforced by the internal contents of the plaintiff's own pleadings, already referred to, which indicate that the makers of the recordings and the current owner Are different persons. The only evidence which attempts to bridge that material factual gap is the bare statement in Mr. Ho's affirmation. For the purposes of Order 14, the rebuttable presumption under Section 9 does not entitle the plaintiff. to judgment nor is it fatal to the defendant's attempt to show cause that there remains a triable issue. This is, of course, a lesser burden than the burden placed on the plaintiff, to establish its claim on the higher standard of the balance of probabilities, if it seeks judgments"

22. For the plaintiff, Mr. Denis Chang contended that the judge here fell into error in failing to give effect to the presumption under section 9 after holding that it applied. Mr. Barnabas Fung's main argument, raised in the respondent's notice, was that section 9 did not apply to the plaintiff's claim. He contended that if he failed on that argument, then, to raise the presumption under section 9, it was not sufficient for a deponent simply to assert ownership of copyright, as Mr. Bo had done, on behalf of the plaintiff. He supported the judge's conclusion that there should be evidence of the facts relied upon to establish ownership before the rebuttable presumption could be given any effect. There had, he argued, been insufficient particularised verification of the plaintiff's claim for purposes of order 14 and the rebuttable presumption under section 9 could not remedy this lack of verification.

23. It will be convenient to consider the position first on the footing, that the judge rightly held that section 9 of the Copyright Ordinance applied, because the combined evidence in Mr. Ho's two affirmations (which are to be treated as affidavits by virtue of section 7 of the Oaths and Declarations Ordinance (Cap. 11)) complied with the requirements of section 9(1) and (3) and both the affirmations were notarised. In this connecton I am unable to accent Mr. Fung's argument that section 9(1) is to be interpreted as impliedly requiring a deponent to particularise the grounds for his statement that a named person is the owner of a subsisting copyright. I understand the provision to be intended to provide a convenient shortened procedure for proving copyright and its ownership in the absence of effective opposing evidence. I can see no reason justifying the gloss which Mr. Fung sought to place on the actual provisions of section 9(1).

24. Section 9(1) requires that the affirmations be admitted in evidence without proof in any proceedings and section 9(2) requires that the court shall presume, until the contrary is proved, that the statements made in the affirmations are true and that they were duly made and authenticated. As to the truth of the statements made by Mr. Ho, be stated inter alia (in his second affirmation) that the plaintiff was "the owner of that part of the copyright which comprises the right of public performance in Hong Kong in" the relevant seven recordings and that _."copyright subsists and did subsist on 4th December 1987, 15th January 1988 and 16th January 1988 in" those recordings.

25. There was thus before the judge for the purposes of Order 14, evidence, which he was required by section 9(2) of the Ordinance to presume to be true until the contrary was proved, that the plaintiff was at all material times the owner of the limited copyright in the relevant recordings which it had claimed in its pleadings.

26. What evidence was there to the contrary? There was none. Mr. Kaufman's evidence and the draft Defence exhibited to his affidavit made it clear that the defendant sought to put the plaintiff's title to the limited copyright in the relevant recordings in issue and to not the plaintiff to proof on that issue. This the defendant was entitled to do in order to displace the presumption that would otherwise arise under section 20(1) of the Copyright Act 1956.

27. If section 9 of the Ordinance had not been enacted, once the title to the copyright was in issue I agree with the judge that the plaintiff should have been required to particularise in pleading and evidence the assignments or licences under which it claimed to be the owner of or entitled to enforce the copyright claimed in the action if it was to have any prospect of preventing the defendant being given unconditional leave to defend.

28. However, in my judgment, in view of the effect of, section 9 of the Ordinance, the judge erred in treating Mr. Ho's. evidence of owership of the copyright as merely a bare statement. Furthermore, with respect, I cannot accept his conclusion that notwithstanding the complete absence of positive evidence (as distinct from specific denial) from the defendant impugning the plaintiff's title to the copyright, the rebuttable presumption under section 9 does not entitle the plaintiff to judgment under Order 14.

29. This conclusion seems to me to be wrongly treating the hearing, of an Order 14 application as the trial of an action. The judge rightly recognised the difference between the two when he refused leave to the defendant to cross-examine Mr. Ho in the absence of special circumstances within Order 14 rule 4(4)(b). As the practice note to order 14 rule 4 in the Annual Practice, Vol. I, at paragraph 14/3 - 4/1 indicates, where a plaintiff has brought his application within 0.14 and has complied with rule 2 (as the plaintiff did in this case) so that the application should not be dismissed, then he has established a prima facie case entitling him to judgment unless the defendant can show cause to the contrary by affidavit or otherwise.

30. In the present case where the hearing proceeded on the basis that the only effective issue concerned ownership of the copyright, section 9 of the Ordinance positively required proof to the contrary before the presumption of ownership arising in favour of the plaintiff could be rebutted. No such proof was attempted by the defendant. The prima facie case made out by the plaintiff, strengthened by section 9, remained unaffected by the defendant's mere denials it followed, in my judgment, that as matters stood at the hearing the plaintiff should not have been denied summary judgment.

31. There remains Mr. Fung's elaborate argument under the respondent's notice to the effect that, on the true interpretation of the Ordinance, section 9 has no application in this case because it is only intended to apply to criminal prosecutions under section 21 of the Copyright Act 1956 as applied in Hong Kong or under the Ordinance, or, alternatively, if section 9 of the Ordinance does apply at all to civil actions, it applies only to cases where infringing copies have been seized. This was a new argument raised for the first time on appeal.

32. The Copyright Act 1956 was applied to Hong Kong with modifications, pursuant to section 31 of the Act, by the Copyright (Hong Kong) Orders 1972 and 1979. Under section 31(3) of the Act the Legislature of Hong Kong was empowered, subject to the qualifications (which do not extend to modifications or addition relating to procedure and remedies) contained in the proviso to that section, to modify or add to the provisions of the Act in their operation as part of the law of Hong Kong in such manner as the legislature of Hong Kong "may consider necessary to adapt the provisions to the circumstances of" Hong Kong.

33. The Copyright Ordinance was enacted pursuant to the powers conferred by section 31(3) of the Act. The long title of the Ordinance expresses its purpose to be:-

"To modify the Copyright Act 1156 as amended by the Design Copyright Act 1968, in its application to Hong Kong and to make further provision with respect to copyright law in Hong Kong.

34. The Ordinance deals with a number of different aspects of copyright law in Hong Kong but it is not divided into parts. Section 2 contains definitions. Section 3 relates to the application of the Act to television and sound broadcasts made by Hong Kong broadcasting organisations which are specified in a schedule to the Ordinance. Under section 11 the Governor is empowered to amend the schedule. Section 4 relates to the transmission of authorised broadcasts by a diffusion service and is derived from section 40(3) and (4) of the Act.

35. Section 5 (which is expressed to be without prejudice to section 21 of the Act) inter alia imposes severe penalties for possession for purposes of trade or business of any infringing copy of a work or other subject matter in which copyright subsists or for possession for like purposes of any plate used or intended to be used for making any such infringing copy. The onus regarding knowledge of infringement is on the accused, Section 6 confers wide powers of search and detention on investigating officers in connection with infringing. copies, subject to restrictions contained in section 7, and section 8 makes it an offence to obstruct investigating officers. Section 9 relates to affidavit evidence concerning the ownership of copyright. Section 10 introduces time limits for the prosecution of an offence under the Act or the Ordinance.

36. The effect of section 9 is that certain consequences follow if a person purporting, to be the owner or acting on behalf of the owner of a work or other subject matter in which copyright subsists under the Act makes an affidavit, in accordance with the requirements of subsection (3), asserting that the copyright subsists in the relevant work or subject matter at a specified time, naming the owner of the copyright therein and exhibiting a copy of the relevant work or subject matter and asserting it to be a true copy thereof. The consequences which follow are that the affidavit is required to "be admitted without further proof in any proceedings under the Act or this Ordinance" and the court before whom the affidavit is produced is required to presume until the contrary is proved that the statements in the affidavit are true and that it was made and authenticated in accordance with subsection (3).

37. I derive no assistance from Mr. Fung's argument based on his notional division of the provisions of the Ordinance into parts in accordance with their subject matter. The draftsman had chosen not to do this and thereby indicated that the Ordinance was not intended to be sub-divided.

38. Mr. Fung emphasised that the expression "proceedings under the Act or this. Ordinance" occurred twice in the Ordinance, namely in section 4(2) (a) and in section 9(1). He then embarked on an elaborate argument contending inter alia that there was no provision in either the Act or the Ordinance for criminal proceedings for infringement of a "Part I" (Copyright in Original Works) work by its being broadcast. For my part, I was unable to see how this and other arguments regarding the interpretation of section 4(2) of the Ordinance were of any real assistance when construing section 9.

39. It is abundantly clear from the terms of section 4(2)(h) that the word "proceedings" in that provision is intended to refer to civil proceedings. In the light of the arguments advanced before us I do not find it necessary or desirable to form any concluded view on the ambit of the word "proceedings" in section 4(2)(a). It seems to me that that such a very wide word as "proceedings" must inevitably be construed in its context and in the light of the subject matter of the provision in which it occurs. Section 4 and section 9 of the Ordinance are manifestly concerned with different subject matter.

40. At one stage Mr. Fung seemed to suggest that because "summary proceedings" appeared in the marginal note to section 21 of the Copyright Act 1956, which is concerned with criminal proceedings, whereas sections 17 and 20 refer to "actions" when dealing with civil proceedings, this could be a basis for interpreting "proceedings" in section 9(1) as referring to criminal proceedings.

41. There was no substance in this suggestion because the Act uses the word "proceedings" in contexts where either the subject matter or explicit language explain its scope. Thus, sections 19(1) and 40(4)(b) clearly refer to "proceedings" in a context which impliedly relate to civil proceedings. On the other hand in section 43(8) the draftsman expressly distinguishes between "criminal proceedings" and civil actions, and section 43(10) refers to "any right of action or other remedy (whether civil or criminal) in proceedings ..." .

42. There is a presumption that the same words are used in the same meaning in the same statute, but the presumption is readily displaced if there is sufficient reason, and a word, particularly a word which ordinarily has a wide meaning may be used in two different senses, even in the same section: see Craies on Statute Law, 7th edition, at pp. 168-9 and the cases there cited. I have already referred to provisions of the Copyright Act 1956 where "proceedings" is used in different contexts with different meanings.

43. There is no reported instance where the court in Hong Kong has had to consider the ambit of section 9 of the Ordinance. There was only a passing reference to the provision by Leonard J. In R. v. Lee^(l) at p. 322. It is touched upon in Pendleton on The Law of Intellectual and Industrial Property in Hong Kong at p. 223 where the learned author presumes that the provision is not intended to apply to civil proceedings for infringement of copyright under the Act but rather was intended to cover only criminal proceedings under the Ordinance and under section 21 of the Act. He suggests in a footnote that section 9 probably has its genesis in section 20(1)(a) of the Act where copyright is presumed unless the defendant puts the subsistence of the copyright in issue. However he rightly emphasises that the deeming provisions of section 9 of the Ordinance are a long step from the presumptions of section 20(1)(a).

44. Section 9 is certainly a novel provision and, whether it applies to both civil and criminal proceedings or to only one or other of them it represents a substantial enlargement of the presumption provisions in section 20(1)(a) and (b) which are only applicable to civil proceedings and are easily displaced by mere joinder of issue by a defendant.

45. However, doing my best to construe section 9 in the light of section 19 of the Interpretation and General Clauses Ordinance (Cap. 1) and in the context of an Ordinance which contains miscellaneous provisions, both civil and criminal in character, designed to modify the Copyright Act 1956 in its application to Hong Kong and to make further provision with respect to copyright law in Hong Kong, I am unable to construe "proceedings" in section 9(1) in a narrow sense as contended for by Mr. Fung.

46. Searching for the true intent, meaning and spirit of section 9, I can identify no more than an intention to provide a simpler way for an owner to prove his title in copyright proceedings, bearing in mind that the common experience in the courts in Hong Kong is that the owner of the copyright in such proceedings, be they civil or criminal is usually resident outside Hong Kong. The inconvenience to the non-resident owner of proof of title to copyright in the usual way with production of all relevant documentation is obvious.

47. In so far as section 9 bears adversely on the defendant I fail to see the logic of contending that the provision is to be construed as intended to operate against the defendant in criminal proceedings, where the standard of proof is more stringent, rather than against the defendant in civil proceedings where the standard of proof is lighter. If it had been the draftsman's and the legislature's intention that section 9 should apply only in criminal proceedings or in cases where infringing, copies had been seized, it would surely have been a simple matter so to provide in express terms in an Ordinance which, after all, includes an express reference in section 10 to "prosecution for an offence under the Act or this Ordinance".

48. The presumptions required by section 9 of the Ordinance do not seem to me to conflict with the presumptions raised by section 20(1) of the Act in civil proceedings. The former presumptions seem to be available to supplement the latter which are easily displaced by the defendant joining issue on copyright and ownership.

49. Mr. Fung did his best to raise instances where it might be said that absurd results would flow from the wider construction of section 9. He gave the example of two rival contenders for a particular copyright which had been assigned to both of them by the owner. One of them could start an action against the other and obtain advantage by making an affidavit of ownership under section 9. I accept that in such a situation the onus of proof would be reversed, but clearly the defendant in the action would adduce evidence to displace the presumption arising under section 9 and, if his case was sound, he would defeat the plaintiff's claim. Instance of possible abuse by untruthful plaintiffs were mentioned, but such possibilities are inherent in any provision which permits the adducing of affidavit evidence and, in so far as they are material they are equally valid sources of objection to section 9 whether that provision is interpreted widely or as confined to criminal proceedings or a limited class of infringement cases.

50. Accordingly I would allow the plaintiff's appeal and hear counsel on the form of order to be made.

Fuad, V.-P.:

51. I agree that the appeal should be allowed for the reasons given by Clough, J.A..

Hunter, J.A.:

52. I also agree.

(1) [1980] F.S.R. 314