HKK v. N

HCCT 45/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 45 OF 2012

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D E C I S I O N

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1.  This decision is on a summons dated 4 June 2014 for discharge of an order I made on 7 November 2013 and varied on 17 June 2014.

BACKGROUND

2.  I made an order on 7 November 2013 requiring the defendant to pay into court HK$20 million no later than 14 July in each year commencing from 1 July 2014 in relation to its enjoyment of a licence under the plaintiff’s licensing scheme unless Copyright Tribunal Case 2/2010 should be decided by the Tribunal on or before 1 July of that year. 

3.  I amended this order on 8 May 2014 in two ways (“the amended order”).  One amendment was to split the HK$20 million into HK$5 million and HK$15 million.  The HK$15 million was payable by the defendant into court only if it should opt for a licence under the plaintiff’s licensing scheme to use new KMVs for a scheme year and the plaintiff should then furnish to the defendant water-marked copies of the new KMVs upon their release.  The other amendment required the plaintiff to provide the defendant a complete set of water-marked copies of the further back catalogue KMVs within 14 days after the defendant has paid into court HK$5 million in each year.

THE SUMMONS FOR DISCHARGE

4.  The plaintiff applied by summons on 4 June 2015 for discharge of the above amended order (“the discharge summons”).  I ordered on 17 June 2015 for this summons to be adjourned for argument with directions for filing of affidavits.  I also ordered on the same day pursuant to another summons of the plaintiff that the plaintiff’s obligation under the amended order be suspended pending the plaintiff’s summons to discharge.

THE JUDGMENT OF THE ORIGINATING SUMMONS

5.  I refer to my judgment given on 7 November.  The plaintiff was the copyright licensing body for K-server licences representing some record companies including U, the third party herein (“U”), W (“W”) and S (“S”).  The defendant handled the licensing issues for the N group of karaokes.

6.  The defendant regarded the terms of the licensing scheme operated by the plaintiff unreasonable.  It applied as the originator to the Copyright Tribunal against the plaintiff under CT2/2010, seeking reliefs under Section 156(3) of the Copyright Ordinance; Cap. 528.

7.  Whilst CT2/2010 was pending, the plaintiff applied to this court for interim payment or, alternatively, payment into court or, in the further alternative, performance by the defendant of the terms of the plaintiff’s licensing scheme.

8.  I gave judgment on the originating summons on 7 November 2013.  I allowed the application for payment into court as security for payment pursuant to the decision that the Copyright Tribunal may make in CT2/2010, but dismissed the rest of the applications.

9.  I ordered that the defendant to pay into court within two weeks a sum of HK$20 million for the back catalogue KMVs (which were not new release, nor concert videos, nor excluded titles, and were confirmed by the plaintiff to be covered by the licence) for four scheme years from 1 July 2010 to 30 June 2014.

10.  I also ordered the defendant to pay into court within two weeks another sum of HK$10 million in respect of new KMVs (which were KMVs first published commercially from 1 November 2013 to 30 November 2014 for karaoke entertainment usage in Hong Kong as might be confirmed by the plaintiff in writing but did not include any concert title) to be furnished.

11.  These two orders have been spent and the monies paid into court pursuant to them are still in court.

12.  I also ordered the defendant to pay HK$20 million into court no later than 14 July of each of the years to come, commencing from 2014, unless CT2/2010 should be decided on or before 1 July of that year.  I then made two variations to this order on 8 May 2014. This order as varied is the amended Order and the subject matter of the discharge summons.  The discharge summons also asks for the sums of HK$20 million and HK$5 million paid in by the defendant on 21 November 2013 and 10 July 2014 respectively to remain in court pending the determination of CT2/2010 or further order of the court.

THE APPLICATION FOR DISCHARGE

13.  It is the plaintiff’s case that U, W and S (“the record companies”), who are some of the owners of the copyright works licensed by the plaintiff in its scheme, had withdrawn their authorization from the plaintiff by notices on 18 February 2015, 5 and 9 March 2015 and the authorization by the record companies ceased on 30 June 2015.  The record companies wanted to license their copyright works themselves.  

14.  The plaintiff then notified the defendant of the cessation of its authorization by letter on 31 March 2015.  All the plaintiff’s licensees had also been notified by the plaintiff of the cessation of authorization on 10 April 2015 via the plaintiff’s webpage, Oriental Daily and SCMP.

15.  Despite the notice of cessation of the plaintiff’s authorization and termination of the scheme on 30 June 2015, the defendant still paid HK$5 million into court on 11 June 2015 purportedly under the amended order for back catalogue KMVs from 1 July 2015 to 30 June 2016.

16.  Owing to the cessation of authorization, the plaintiff asked for discharge of the amended order. It also required the defendant to remove the KMVs from the defendant’s servers and return the same to it.  It says that the defendant is free to obtain karaoke server licenses directly from the record companies.

17.  The defendant opposes the discharge summons.  Its’ solicitors alleged that the record companies had repeatedly “sought to frustrate the Tribunal references” after the defendant “having referred the licensing scheme operated by [the plaintiff] to the Tribunal under CT2/2010”. 

18.  The defendant’s solicitors further say that s. 156(2) of the Copyright Ordinance provides that once a scheme has been referred to the Tribunal under s. 156, it shall remain in operation until proceedings on the reference are concluded.  This is a key issue in this dispute.

19.  As matters stand now, the defendant has obtained licenses directly from W and S.  Its negotiation with U for licence did not bear fruit.  It has obtained leave to cite U as the third party in these proceedings and has issued with leave a third party notice dated 29 October 2015 against U.  There are thus two matters to be resolved, namely; the discharge summons and the third party proceedings.  I have ordered that the discharge summons will be heard together with the third party proceedings. 

20.  The trial of CT2/2010 will take place in May 2017.

THE ISSUES IN THE DISCHARGE SUMMONS

21.  The issues in the discharge summons as identified by the plaintiff in its written submissions dated 4 November 2016 are as follows:

(1)   whether the licensing scheme operated by the plaintiff which has been referred to the Copyright Tribunal pursuant to s. 156(1) of the Copyright Ordinance in CT2/2010 can be terminated before the determination of CT2/2010 by the Copyright Tribunal;

(2)   whether the defendant is prevented from raising issue (1) above by reason of election and/or estoppel; and

(3)   whether the defendant is entitled to a license of back catalogue KMVs up to 30 June 2016 for which it has paid HK$5 million into court on 11 June 2015.

22.  I made it clear to Mr Liao, leading counsel for the plaintiff at the hearing that if the issue between the parties is on the statutory interpretation of s. 156, then there cannot be the issue of election and/or estoppel as the meaning of a statue cannot be affected by election and/or estoppel.  Mr Liao did not then pursue the issue of election and/or estoppel.

THE ISSUES IN THE THIRD PARTY NOTICE

23.  There are two issues in the third party notice.  They are:

(1)   Whether the plaintiff is an agent of, inter alia, U such that any order to be made against the plaintiff in respect of the discharge summons dated 4^th June 2015 will also be binding on U.

(2)   Whether the licensing scheme operated by the plaintiff and which has been referred to the Tribunal pursuant to section 156(1) of the Copyright Ordinance in CT2/2010 can be terminated before the conclusion of the CT2/2010.

24.  For the first issue, U denies that the plaintiff is its agent in operating and granting licences in the scheme.  The plaintiff has not dealt with this issue.  It is mainly argued between the defendant and U. For the second issue, which is common to U and the plaintiff, U disagrees that the scheme, after having been referred to the Tribunal, is mandated to continue to operate by s. 156(2).  The defendant has to succeed against U on both issues in order to keep the scheme running pending the determination of 2/2010 by the Tribunal.

SECTION 156 OF THE COPYRIGHT ORDINANCE; CAP. 528

25.  The key issue is the interpretation of s. 156 of the Copyright Ordinance and in particular s. 156(2), I set out below both the English and Chinese texts of the section:

“(1) If while a licensing scheme is in operation a dispute arises between the operator of the scheme and-

(a) a person claiming that he requires a licence in a case of a description to which the scheme applies; or

(b) an organization claiming to be representative of such persons,

that person or organization may refer the scheme to the Copyright Tribunal in so far as it relates to cases of that description.

(2) A scheme which has been referred to the Tribunal under this section remains in operation until proceedings on the reference are concluded.

(3) The Tribunal shall consider the matter in dispute and make such order, either confirming or varying the scheme so far as it relates to cases of the description to which the reference relates, as the Tribunal may determine to be reasonable in the circumstances.

(4) The order may be made so as to be in force indefinitely or for such period as the Tribunal may determine.

(1) 如在特許計劃營辦期間，在該計劃的營辦人與以下人士或組織之間發生爭議，而─

(a) 有人聲稱他需要在該計劃所適用的類別的個案中取得特許；或

(b) 有組織聲稱是該等人的代表，

則在該計劃所關乎的該類別個案的範圍內，該人或該組織可將該計劃轉介版權審裁處。

(2) 已根據本條轉介審裁處的計劃仍可繼續營辦，直至就該項轉介進行的法律程序審結為止。

(3) 審裁處須考慮爭議中的事項，並作出審裁處裁定在當時情況下屬合理的命令，以在有關計劃與該項轉介所關乎的類別的個案有關的範圍內，確認或更改該計劃。

(4) 所作出的命令可規定該命令無限期有效，亦可規定該命令在審裁處裁定的期間有效。”

THESE PROCEEDINGS ARE ONLY FOR INTERIM MEASURES

26.  Though the key issue is the interpretation of s. 156, the first point made by Mr Yan, leading counsel for the defendant is that the plaintiff had commenced these proceedings for interim measures pursuant to s. 45(2) of the Arbitration Ordinance (Cap. 609) pending the determination of CT2/2010.  Hence, these proceedings are only for determining whether and what interim measures should be ordered pending the determination of CT2/2010. 

27.  Mr Yan submitted that the situation here is akin to that of an application for the grant or discharge of an interlocutory injunction.  The court in these proceedings is not exercising any statutory jurisdiction in place of the Copyright Tribunal. Therefore, the court, when dealing with the summons for discharge, should only express a provisional view on matters that may affect the jurisdiction and statutory power of the Tribunal.  Such view should also be without prejudice to any order to be made by the Tribunal.  In particular, the court should not pre-empt any decision that the Tribunal may make under ss. 156(3) and 156(4) of the ordinance as the interpretation of s. 156 (in particular s. 156(2)) directly relates to the jurisdiction and power of the Tribunal under s. 156(4) in granting the final and substantive relief in CT2/2010.  It is thus not appropriate or necessary for the court to form a concluded view on the interpretation of s. 156(2) for the purpose of determining the discharge summons.

28.  Mr Yan emphasised that the Tribunal has exclusive jurisdiction under s. 156(3) to confirm or vary the terms of a licensing scheme and to determine under s. 156(4) that the order should last indefinitely or only for a definite period.  Whether the Tribunal should make an order in CT2/2010 that the scheme as referred should remain in force beyond 30 June 2015 when the authorization by the record companies to the plaintiff was terminated is a matter that should be left to the Tribunal and not to be decided by this court in the discharge summons.

29.  I think Mr Yan, in making this submission, has misunderstood the meaning of s. 156(4) as he equated the order of the Tribunal to be made under s. 156(4) with the scheme that has been referred to the Tribunal.  S. 156(4) merely gives the Tribunal power to provide that the order made under s. 156(3) may be in force indefinitely or for such period as the Tribunal may determine.  S. 156(4) empowers the Tribunal to determine the duration of the order and not the longevity of the scheme.  Even when the scheme should have lapsed, been superseded, or otherwise terminated, it may still be necessary to have the order in force so as to deal with the aftermath.  I do not think the legislature should have given the Tribunal the power under s. 156(4) to dictate that the operator should continue a scheme indefinitely if the operator cannot or does not want to do so.

30.  Mr Liao in oral submissions also referred to s. 155 which allows the reference of a proposed scheme to be made to the Tribunal.  Though s. 155(4) also gives the Tribunal the power to determine that the order should be in force indefinitely or for a particular period, there is no provision in the section requiring the scheme to commence or be in operation at all.  This defeats Mr Yan’s argument that s. 156(2) and (4) are related.  S. 155(4), which is similar to s. 156(4), has no related provision in s. 155 that is similar to s. 156(2).  It is thus clear that the power of the Tribunal under ss. 155(4) and 156(4) is to determine the duration of the order and not the longevity of the scheme.

31.  Mr Wong, leading counsel for U, also submitted that this stance of the defendant is contrary to its stance throughout and inconsistent with Question (2) in the third party notice which says that it is necessary for this question to be determined as between either the defendant or the plaintiff (or both of them) and U.  The affirmation of Mr Tony Au for the defendant also asserted that the defendant opposed the discharge summons “primarily” on the construction of s. 156(2) and that this question had to be determined vis-à-vis U.

32.  I am of the view that it is necessary for me to interpret the meaning of s. 156(2) as that is the key issue between the parties despite that these proceedings are for interim measures under the Arbitration Ordinance.  Since my interpretation of s. 156(2) will only be on whether the section will mandate the continuation of a scheme once it has been referred to the Tribunal under s. 156(1) until the conclusion of the reference, I do not think it will in anyway affect the Tribunal in deciding the terms of the scheme under s. 156(3) and the duration of its order in CT2/2010 under s. 156(4).  I do not agree with Mr Yan on this point.

PRACTICAL POINT OF VIEW

33.  Mr Yan then submitted on what he called a practical point of view.  He said the interim measures in the amended order could continue pending the determination of CT2/2010.  These measures require the defendant to pay into court HK$5 million no later than 14 of July in each year and the plaintiff to furnish the defendant the water-marked copies of the further back catalogue KMVs within 14 days thereafter. 

34.  Mr Yan submitted that the record companies set up the plaintiff for the purpose of providing a fair and open licensing scheme for all licensees to use the repertoire of the old and new KMVs in K-servers.  U is now a third party herein.  It can be ordered to provide the further back catalogue.  U would not be prejudiced by the continuation of the amended order.  The Tribunal will determine in CT2/2010 the reasonable licence fees for the use of the back catalogue KMVs and the defendant will have to pay such licence fees (taking into account the payment it has already made into court).

35.  He further submitted that if the amended order is discharged now but the Tribunal eventually rules that the license of the scheme could be granted to run beyond 30 June 2015 - the alleged date of termination of the plaintiff’s authority, the prejudice that the defendant will suffer will be far greater than the prejudice that U may suffer if the amended order is to remain but the Tribunal eventually rules that the scheme could not go beyond the alleged termination of authority.  U has continued to license directly its back catalogue KMVs.  Any loss that it may suffer in the latter situation can be easily measured in terms of licensing fees.  On the contrary, the loss that the defendant may suffer in the first situation is simply unquantifiable.  Given that the trial of CT2/2010 will take place in May 2017, Mr Yan submitted that the amended order should continue pending the determination of CT2/2010.

36.  I disagree that the summons for discharge of the amended order is for interim relief that should be decided on a balance of convenience as if it is an application for interlocutory injunction.  There is no dispute that the record companies have terminated the authority given to the plaintiff to licence their copyrighted works.  The question is whether s. 156(2) can override the termination and oblige the record companies to continue to authorize the plaintiff and the plaintiff to run the scheme.  It is a matter of the interpretation of s.156(2).  This matter is not to be decided on a balance of convenience.

37.  I also disagree that the presence of U as the third party can have any effect on the decision on the discharge summons.  The decision should be based on the interpretation of s. 156(2) and not the convenience or otherwise in making an order against U.

INTERPRETATION OF S. 156(2) OF THE COPYRIGHT ORDINANCE

   The plaintiff’s submissions

38.  The plaintiff submitted in its written submissions dated 4 November 2016 that after 30 June 2015 it no longer had the right to grant licenses, nor had the ability to procure such license as the record companies had terminated its authority to do so.  One cannot license out what it does not have.  It must therefore be possible to terminate the licensing scheme before the determination of CT2/2010 by the Tribunal as a matter of common sense and logic.

39.  Regarding the defendant’s argument that by virtue of s. 156(2), the licensing scheme shall remain in operation until the conclusion of CT2/2010, Mr Liao referred to s. 156(1) and (2) with emphasis as follows:

“(1) If while a licensing scheme is in operation a dispute arises between the operator of the scheme and –

(a) a person claiming that he requires a license in a case of a description to which the scheme applies; or

(b) an organization claiming to be representative of such persons,

that person or organization may refer the scheme to the Copyright Tribunal in so far as it relates to cases of that description.

(2) A scheme which has been referred to the Tribunal under this section remains in operation until proceedings on the reference are concluded…” (emphasis supplied)

40.  Mr Liao submitted that the defendant had read s. 156(2) wrongly by changing the words “remains in operation” to “shall remain in operation”.  Mr Liao further submitted that if the law draftsmen had intended s. 156(2) to mandate the scheme to continue, they would have drafted s. 156(2) in the way suggested by Mr Yan.  They had chosen not to do so.  S. 156(2) therefore merely provides that while a scheme is in operation and it has been referred to the Tribunal, the reference itself does not affect the continuous operation of the scheme. It does not impose an obligation on the plaintiff and/or the record companies to continue to operate the licensing scheme either.

41.  It is useful to refer to the UK Copyright, Designs and Patents Act 1988, s. 119 on which s. 156 is based.  Both Mr Liao and Mr. Yan have referred to it.  S. 119 provides:

“(1) If while a licensing scheme is in operation a dispute arises between the operator of the scheme and—

(a) a person claiming that he requires a licence in a case of a description to which the scheme applies, or

(b) an organisation claiming to be representative of such persons,

that person or organisation may refer the scheme to the Copyright Tribunal in so far as it relates to cases of that description.

(2) A scheme which has been referred to the Tribunal under this section shall remain in operation until proceedings on the reference are concluded.

(3) The Tribunal shall consider the matter in dispute and make such order, either confirming or varying the scheme so far as it relates to cases of the description to which the reference relates, as the Tribunal may determine to be reasonable in the circumstances.

(4) The order may be made so as to be in force indefinitely or for such period as the Tribunal may determine.” (emphasis supplied)

42.  The only difference between the UK s. 119 and our s. 156 is the change of the words “shall remain in operation” to “remains in operation” in our s. 156(2).  The UK s. 119(2) is exactly in the form as suggested by Mr Yan.  Mr Liao thus submitted that the change effected in Hong Kong was because our law draftsmen did not want the reference of the scheme to the Tribunal under s. 156(1) to mandate a continuous operation of the scheme.  If that submission is right, it means that the UK s. 119 would have such mandatory effect.  I will deal with this question later.

43.  It is also instructive to refer to the Chinese text of ss. 156(1) and (2) as follows:

“(1) 如在特許計劃營辦期間，在該計劃的營辦人與以下人士或組織之間發生爭議，而─

(a) 有人聲稱他需要在該計劃所適用的類別的個案中取得特許；或

(b) 有組織聲稱是該等人的代表，

則在該計劃所關乎的該類別個案的範圍內，該人或該組織可將該計劃轉介版權審裁處。

(2) 已根據本條轉介審裁處的計劃仍可繼續營辦，直至就該項轉介進行的法律程序審結為止。”( emphasis supplied)

44.  The Chinese counterpart of “remains in operation” in s. 156(2) reads “仍可繼續營辦”.  Mr Liao submitted that the Chinese text simply means “may continue in operation”.  I agree with him.  This phrase cannot mean otherwise.  It is permissive and not mandatory.  It does not impose an obligation on the licensing body or scheme operator to continue the licensing scheme before the determination of the reference by the Tribunal.  Mr Liao submitted that it is not in conflict with the English text either.  This is a matter that I have to decide.

45.  Mr Liao further referred to the English and Chinese texts of ss. 157(3) and 160(1) which also have similar “permissive” provisions:

“157 (3) A scheme which has been referred to the Tribunal under this section and which is in operation remains in operation until proceedings on the reference are concluded.

157 (3) 如任何計劃已根據本條轉介審裁處並仍在營辦，則該計劃可繼續營辦，直至就該項轉介進行的法律程序審結為止。

160 (1) A licensing scheme which has been confirmed or varied by the Copyright Tribunal-

…

is in force or, as the case may be, remains in operation, so far as it relates to the description of case in respect of which the order was made, so long as the order remains in force.

160 (1) 凡版權審裁處已根據以下條文確認或更改某特許計劃，則只要該項命令繼續有效，在該計劃是關乎某類別的個案〔而有關命令是就該個案作出的〕的範圍內，該特許計劃即屬有效或即屬可繼續營辦〔視屬何情況而定〕─

…”

46.  Mr Liao does not consider that there is a conflict of meaning between the English and Chinese texts of s. 156(2).  He referred to s. 10B of the Interpretation and General Clauses Ordinance; Cap. 1 and submitted that the court should try to interpret the two texts in harmony.  S. 10B provides:

“(1) The English language text and the Chinese language text of an Ordinance shall be equally authentic, and the Ordinance shall be construed accordingly.

(2) The provisions of an Ordinance are presumed to have the same meaning in each authentic text.

(3) Where a comparison of the authentic texts of an Ordinance discloses a difference of meaning which the rules of statutory interpretation ordinarily applicable do not resolve, the meaning which best reconciles the texts, having regard to the object and purposes of the Ordinance, shall be adopted.”

47.  Mr Liao also referred to HKSAR v Tam Yuk Ha [1997] 2 HKC 531 where Chan CJHC (as he then was) held at 539D – E:

“under s. 10B of Interpretation and General Clauses Ordinance (Cap. 1), both the English and Chinese texts of an Ordinance are equally authentic and they are presumed to have the same meaning. The court should try to interpret the relevant provisions of the Ordinance on this basis. This must be the approach to be adopted. It is only when there is clearly a difference of meaning that the court has to reconcile the two texts.”

and at 538 C – D,

“… If the two texts could be explained in harmony, there would be no reason to override the statutory presumption that they carry the same meaning.”

48.  In the event that the court should consider the English text of s. 156(2) to have more than one meaning, Mr Liao submitted that the Chinese text can serve to inform and clarify the former.

The third party’s submissions 

49.  Mr Wong for U made the first point that the plaintiff had granted the licence in its own right and not as agent for U and/or the other companies.  Since 30 June 2015, the plaintiff, being the licensing body, no longer had the authority and right to grant the licences under the scheme.  S. 156(2) cannot have the effect of compulsorily prolonging the duration of the plaintiff’s scheme. 

50.  Mr Wong draws the analogy of a landlord, tenant and sub-tenant situation with the operator of a scheme and a licensee under the scheme.  A tenant (exclusive licensee) cannot grant to a sub-tenant (sub-licensee) a sub-tenancy term (sub-licence term) exceeding the duration of the head tenancy (the head exclusive licence).  Since there is no privity of contract between the landlord (copyright owner) and the sub-tenant (sub-licensee), the contractual terms between the tenant (exclusive licensee) and the sub-tenant (sub-licensee) are not enforceable as between the landlord (copyright owner) and the sub-tenant (sub-licensee).  The Tribunal is concerned only with the contractual terms of the sub-licence between the exclusive licensee and the sub-licensee in CT2/2010 and not the terms of contract between the copyright owner and the sub-licensee.  Hence, s. 156(2) cannot mandate the prolongation of the contract between the licensee (tenant) and the sub-licensee (sub-tenant) as the licensee (tenant) is no longer entitled to use the copyright owner’s copyright works (or to occupy and hence sub-let the landlord’s premises).

51.  On interpretation of s. 156(2), Mr Wong said that the mere fact that a person has referred an existing scheme to the Tribunal cannot affect the implementation of this scheme, its terms generally, the licences already granted under it, or its continual operation by the operator by granting new licences to others on existing terms.  If the Tribunal on the reference decides to vary the terms of the scheme, the variation would affect the operation of the scheme vis-à-vis the originator of the reference and all other licensees or potential licensees from that point onwards.

52.  Mr Wong also referred to the judgment of Mr. Andrew Park QC in Performing Right Society Ltd v Working Men’s Club and Institute Union Ltd [1988] FSR 586 at 593 and submitted that one of the purposes of s. 156(2) is to avoid an applicant for a scheme licence from getting an “automatic postponement” of the operation of the scheme.  Mr Wong  submitted that it is not to mandate the continuation of the scheme against the will of the operator.  

53.  The defendant has relied on Candy Rock Recording Ltd v Photographic Performance Ltd. CT 23/95, CT 35/96, Copyright Tribunal (UK), 7 June 2001.  That is a reference under s. 126 of the UK Copyright, Designs and Patents Act 1988.  It is a case about the renewal of licence granted by a licensing body otherwise than in pursuant to a licensing scheme.  S. 126(1) and (3) of the UK Act provides: 

“(1) A licensee under a licence which is due to expire, by effluxion of time or as a result of notice given by the licensing body, may apply to the Copyright Tribunal on the ground that it is unreasonable in the circumstances that the licence should cease to be in force.

(3)  A licence in respect of which a reference has been made to the Tribunal shall remain in operation until proceedings on the reference are concluded.”

54.  S. 163 of our ordinance is based on s. 126 of the UK Act.  The  English and Chinese texts of s. 163 are as follows:

“(1) A licensee under a licence which is due to expire, by effluxion of time or as a result of notice given by the licensing body, may apply to the Copyright Tribunal on the ground that it is unreasonable in the circumstances that the licence should cease to be in force.

(3) A licence in respect of which a reference has been made to the Tribunal remains in operation until proceedings on the reference are concluded.

(1) 任何特許如因時間屆滿或由於特許機構給予通知而到期失效，則該特許的持有人可基於該特許在當時情況下停止有效是不合理為理由而向版權審裁處提出申請。

(3) 已轉介審裁處的特許仍可繼續有效，直至就該轉介而進行的法律程序審結為止。” (Emphasis supplied)

55.  Mr Wong referred to the permissive wording in the Chinese text as emphasised.  He submitted that the statutory coercion can only override the licensing body’s “unwillingness” to renew an expiring licence on terms other than those it desires but not to override the body’s “inability” to do so. The fact that a licence referred may be ordered by the English Copyright Tribunal under s. 163(4) (or the UK s. 126(4)) to continue beyond its expiry does not mean it shall continue in any event.

56.  Mr Wong further submitted that there is nothing in s. 156 or in the entire Part II Division VIII of the ordinance that requires the record companies, whose copyright works form part of the repertoire of the scheme, to be bound by any order of the Tribunal so that they will be compelled to ensure that the plaintiff can perform the terms of the scheme as may be varied by the Tribunal.   The record companies also cannot apply to the Tribunal under s. 156 or s. 157 (which deals with further reference to the Tribunal of a scheme that is subject to an order of the Tribunal made under s. 156).

57.  He submitted that if the defendant were right, Cap. 528 will have the effect that the record companies, who had granted an exclusive licence to the plaintiff for a limited duration of time and had no say regarding the terms of the licensing scheme operated independently by the plaintiff, can be deprived of its contractual and proprietary rights indefinitely once an applicant for a licence is unhappy with the licence fee level and refers the scheme to the Copyright Tribunal under s. 156.  Mr Wong highlighted the fact that the record companies cannot make any reference or submission to the Tribunal to vary the terms of the order of the Tribunal or to avoid the Tribunal ordering the scheme to run indefinitely.  Mr Wong submitted that the defendant’s interpretation of s. 156 is absurd, contrary to established canons of statutory interpretation and cannot be the correct construction of s. 156. 

58.  On the deprivation of the proprietary rights of the record companies, he also referred to Bennion on Statutory Interpretation, 6^th ed (2013), section 278, p. 764 which says:

“One aspect of the principle against doubtful penalization is that by the exercise of state power the property or other economic interests of a person should not be taken away, impaired or endangered, except under clear authority of law.”

59.  Finally Mr Wong made the point which he emphasised in oral submissions that the machinery in the ordinance for referring schemes to the Tribunal is to prevent abuse by monopolies.  If the operator wants to terminate the scheme with respect to the world at large, that means the monopoly should come to an end.  That will also end the possible abuse associated with the monopoly.  The extent of the reference will also stop at the point of termination.  Public interest will not require the continuation of the scheme (and the monopoly) if it is otherwise terminated.  Hence, the extent of any statutory coercion is limited to overriding the scheme operator’s “unwillingness” to grant a scheme licence on terms other than those published while the scheme is still on-going, not its “inability” to grant a scheme licence when the scheme has already been terminated.

The defendant’s submissions 

60.  On interpretation of s. 156(2), Mr Yan for the defendant started off by submitting that the proper approach of statutory interpretation is a purposive approach interpretation.  He referred to Moulin Global Eye Care Trading Ltd (in liquidation) v Commissioner of Inland Revenue [2012] 2 HKLRD 911 where the Court of Appeal said as follows (at §§31-32):-

“31. “...  The statute shall receive such fair, large and liberal construction as will best ensure the attainment of its object (Interpretation and General Clauses Ordinance, Cap 1, section 19).  The relevant provisions of the legislation should be read together and in the context of the whole statute as a purposive unity in its appropriate legal and social setting; it is necessary to identify the interpretative considerations involved and, if they conflict, to weigh and balance them (Medical Council of Hong Kong v Chow Siu Shek (2000) 3 HKCFAR 144 at 154B to C).

32. The use of extrinsic materials is for a limited purpose, it is to enable the court to understand the factual context in which the statute was enacted and the mischief at which the statute was aimed, and not for the purpose of construing the words of the statute (Director of Lands v Yin Shuen Enterprises Ltd & Anr (2003) 6 HKCFAR 1 at paras 21 and 22).  The purpose of a statutory provision may be evident from the provision itself, the recommendation of a report, the explanatory memorandum to the bill, or a statement in the Legislative Council by the responsible government official relating to the bill (Cheung Kwun Yin, supra at para 14).”

61.  Mr Yan also referred to Leung Chun Ying v Ho Chun Yan Albert (2013) 16 HKCFAR 735 at §12 and submitted that the starting point in statutory interpretation is to look at the relevant words or provisions having regard to their context and purpose.  He also referred to T v Commissioner of Police (2014) 17 HKCFAR 593 at §195 and submitted that it is important to ascertain the legislative intent of the statue and the court cannot attribute a meaning to a statutory provision which the language, in the light of its context and statutory purpose, cannot bear.

62.  He referred to the following two documents as relevant in understanding the purpose and context of the copyright licensing provisions in the Ordinance: -

(a)   The Law Reform Commission of Hong Kong’s Report on Reform of the Law Relating to Copyright (“the LRC Report”) published in January 1994; and

(b)   The Legislative Council Brief for the Copyright Bill (February 1997) (“LegCo Brief”).

63.  In order to address the complaints of monopoly by collecting societies, the LRC Report suggested in Chapter 8 that there should be “some measure of public control over the activities of such collecting societies (such as regulation of the administration of collecting societies, providing a right of appeal by interested parties to arbitration or to some other forum, etc) is necessary in the public interest” (§8.4).  It further said that “The (collecting) societies are, however, in a monopolistic position.  Like all monopolies, that situation is open to abuse … there is a need for a regulatory framework to be established for the collective societies” (§8.34).   

64.  The LRC then recommended that there could be a statutory right to apply to the Copyright Tribunal for a ruling on whether a particular fee was reasonable (§8.35) and that all the provisions of Chapters VII (Copyright Licensing) and VIII (The Copyright Tribunal) of the UK 1988 Act be adopted in Hong Kong (§8.74). 

65.  Paragraphs 26 and 27 of the LegCo Brief also referred to the possible monopolistic abuse and the need to provide better safeguards of public interests against such possible abuse.

66.  Mr Yan then referred to ss. 156(1) and (2) with emphasis as follows:

“(1) If while a licensing scheme is in operation a dispute arises between the operator of the scheme and –

(c) a person claiming that he requires a license in a case of a description to which the scheme applies; or

(d) an organization claiming to be representative of such persons,

that person or organization may refer the scheme to the Copyright Tribunal in so far as it relates to cases of that description.

(2) A scheme which has been referred to the Tribunal under this section remains in operation until proceedings on the reference are concluded”

67.  Mr Yan submitted that submitted that the wording of s. 156(1) and (2) is plain, clear and unequivocal.  A scheme can only be referred to the Tribunal under s. 156(1) when it is in operation, and once it has been referred to the Tribunal, it remains in operation until proceedings on the reference are concluded (s. 156(2)).

68.  He submitted the purpose of s. 156(2) was, inter alia, to prevent abuse by any licensing body seeking to frustrate a reference of its scheme to the Tribunal by terminating or revoking the scheme whenever an intended licensee refers the scheme to the Tribunal.  Without s. 156(2), the operator can easily avoid the scrutiny by the Tribunal of the terms of the licensing scheme by terminating or revoking the scheme and setting up a new one once an intended licensee refers the scheme to the Tribunal.  In this way, the operator can impose whatever terms it wishes in its licensing scheme with impunity because it can always terminate the scheme after a reference has been made to the Tribunal and start a new one.

69.  Mr Yan further submitted that his interpretation of s. 156(2) does not require the change of “remains in operation” to “shall remain in operation” as submitted by Mr Liao because there is no difference between “A scheme… remains in operation…” and “A scheme… [shall] remain in operation” in this context.  Just on this point, Mr Yan is correct.  That is also the view of the editors of Copinger and Skone James on Copyright (17^th ed.) (2016) Vol. 1 §28-102.  Mr Yan thus submitted that there is no significance in the difference between the wording of s. 156(2) of the Ordinance and s. 119 of the 1988 Act as the word “shall” in s. 119 of the 1988 Act has been omitted in s. 156(2) of the Ordinance. 

70.  Mr Yan buttressed this point by submitting that it would have been unnecessary to provide for s. 156(2) if its effect is merely permissive as submitted by the plaintiff and U.  The reason being that there is nothing to suggest that once a reference is made to the Tribunal, the scheme is not entitled to remain in operation.  Hence, it is not necessary to enact s. 156(2) to “allow” the scheme to remain in operation. 

71.  Mr Yan further submitted that if the law draftsmen had intended s. 156(2) to say that the licensing scheme can or may operate, they would have used such word, but they had chosen not to do so.  Furthermore, if it had been the intention of the legislature to enact s. 156(2) to allow the scheme to remain in operation, the wording at the end of s. 156(2) should have been “despite the reference” instead of “until proceedings on the reference are concluded”.  The qualifying phrase of “until proceedings on the reference are concluded” thus demonstrates the mandatory nature of s. 156(2). 

72.  Mr Yan also submitted that s. 156(2)only requires the scheme to remain in operation until the reference is concluded.  The Tribunal will determine under s. 156(4), the length of time its order is to be in force.  S. 156(2) accordingly is a guarantee that once a licensing scheme is referred to the Tribunal, the Tribunal can consider the scheme pursuant to ss. 156(3) and (4) without being frustrated by the scheme operator or the rights owners behind it.  It would make no sense if, whilst the reference of the scheme is pending, the scheme need not remain in operation until the conclusion of the reference.  The reason as submitted by Mr Yan is that the termination of the scheme before conclusion of the reference will prevent the Tribunal from making an order under s. 156(4) to last for any period or even indefinitely as the Tribunal may determine.  S. 156(2) thus serves to prevent potential abuse by the scheme operators which was a matter of concern of the legislature at the time of enactment of the provision.  I have already explained under the heading of “interim measure” that s. 156(4) is to deal with the duration of the order made under s. 156(3) and not the longevity of the scheme.  I disagree with this point.

73.  Mr Yan also noted that whilst the reference is pending, this court cannot order the referring party to make payment of the licensing fees into court.  He thus suggested that the prejudice to the operator can be remedied and the operator’s interests can be safeguarded by interim measures (for instance payment into court).  However, this is not a matter that I need to deal with in this application and I do not prefer to express any view on it.

74.  Mr Yan also drew an analogy from s. 163 which deals with a reference to the Tribunal by a licensee of a licence about to expire.  I do not think an analogy can be drawn as the licence referred to the Tribunal under s. 163 is not granted under a licensing scheme that is open to all.  It is covered by a different part in the ordinance.

75.  Mr Yan then tackled the meaning of the Chinese text of s. 156(3).  The Chinese text reads:

“(2) 已根據本條轉介審裁處的計劃仍可繼續營辦，直至就該項轉介進行的法律程序審結為止。” (emphasis supplied)

76.  The Chinese characters “仍可繼續營辦” mean “can continue to operate”.  The decisive character is “可” meaning “can” or “may”.  Mr Yan submitted that this character “可” can mean both “可以” (also meaning “can”) and “可要” (meaning “should” or “have to”). 

77.  The first thing I would point out is that the meaning of two Chinese characters combined together is usually different from that of the individual characters.  In this case, “可” incidentally also bears the meaning of “可以” or “can”.  But it is absolutely wrong to suggest that “可” also means “可要” (meaning “should” or “have to”).  It is unheard of. The meaning of the Chinese text of s. 156(2) is clearly permissive and not mandatory.  This is beyond argument.

78.  Hence, if Mr Yan is right on the meaning of the English text of s. 156(2) and that it is a mandatory provision requiring the scheme to continue until the conclusion of the reference at the Tribunal, then there is a clear difference in meaning between the English and Chinese texts. Mr Yan thus referred to s. 10B(3) of the Interpretation and General Clauses Ordinance; Cap. 1 and submitted that the interpretation contended by him for the English text of s. 156(2) provides the meaning that best reconciles the two texts, having regard to the object and purposes of the Copyright Ordinance.  I have already excerpted s. 10B(3) of Cap. 1 above.

ANALYSES AND DECISION

79.  Mr Yan is right in pointing out that a scheme can only be referred to the Tribunal under s. 156(1) when it is in operation.  Hence, in the normal course of events, the scheme will continue to operate after the reference is made.

80.  I also agree with Mr Yan that that the words “remains in operation” in our s. 156(2) mean the same as “shall remain in operation” in s. 119 of the UK Copyright, Designs and Patents Act.  That is also the view the editors of Copinger and Skone James on Copyright (17^th ed.) (2016) Vol. 1 §28-102.  I disagree with the plaintiff that there is a difference between the UK s. 119(2) and our s. 156(2) because the difference in these words.  I also disagree that the effect of the UK s. 119 is mandatory and our s. 156(2) is merely permissive.  I think neither section has a mandatory effect in the sense that once a reference of a scheme is made to the Tribunal, the scheme is required by s. 156(2) to continue until the conclusion of the reference regardless of what may happen or whether the operator is in a position to do so in the meantime.

81.  I also agree with Mr Yan that if the legislature merely wanted to allow or permit the scheme to continue after a reference of it has been made to the Tribunal, there is no need to expressly enact for the same as there is nothing to suggest that after a reference is made, the scheme cannot remain in operation. 

82.  I also agree with Mr Yan that if s. 156(2) is enacted for the avoidance of any doubt that the scheme can continue after a reference of it has been made, the draftsmen would have used the wording “despite the reference” instead of “until proceedings on the reference are concluded” at the end of the section.

83.  Regarding Mr Yan’s submission that s. 156(2)is a guarantee that once a licensing scheme is referred to the Tribunal, the Tribunal can consider the scheme pursuant to ss. 156(3) and (4) without it being frustrated by the scheme operator or the rights owners behind it by terminating or revoking it whilst the reference is pending.  I have already explained under the heading of “interim measure” that s. 156(4) is to deal with the duration of the order made under s. 156(3) and not the longevity of the scheme.  I disagree with this point. 

84.  I think Mr Yan’s submission for prolonging the duration of a scheme when a reference is pending in the Tribunal may be more to the point if it is addressed to the reference to the Tribunal of a licence not granted pursuant to a licensing scheme that is open to all as in the case of Candy Rock Recording Ltd v Photographic Performance Ltd. CT 23/95, CT 35/96.  For a scheme that is open to all, there are many licensees and Candy Rock is not an appropriate analogy.  Candy Rock is also not an appropriate analogy for a reference under s. 156(1) for the further reason that it was concerned about the renewal of a licence granted otherwise than in pursuance of a licensing scheme.  It was not a dispute over the terms of a licence granted or to be granted under a licensing scheme or a reference of a licensing scheme to the Tribunal.  It was a s. 163 situation.  

85.  For a licensing scheme pursuant to which a licence should be granted to whoever that may seek it and is willing to abide by its terms, it may not be easy for the scheme operator to frustrate a reference of it to the Tribunal simply by terminating or revoking it after the making of a reference.  The scheme is designed not for a particular licencee but for all those who may need to use the copyrighted works and are willing to abide by the scheme terms.  Its terms may not allow the operator to put an end to it at any time at his whim.  Even if he should be permitted to do so by the terms of the scheme, it is not easy for him to start a new scheme with new terms and to attract all the licensees in the terminated scheme to join the new one.  Such an exercise may entail grave financial consequence to the operator that he cannot ignore.  I am not convinced that s. 156(2) is to cater for this kind of mischief. 

86.  I think one of the purposes of s. 156(2) is to prevent a scheme operator from frustrating the reference to the Tribunal by varying the fee levels or other terms and conditions of the scheme after the reference has been made.  The variation by the operator would put the Tribunal in difficulty as any order of the Tribunal under s. 156(3) varying the terms of the scheme is supposed to have effect on all licences granted pursuant to this scheme.  Any variation of the terms including the fee scale made by the operator (which may affect all existing licences granted under the scheme) when the reference is pending may make the Tribunal’s subsequent order (on the scheme without variation) inappropriate for these licences with varied terms.  Hence, it is important that there should not be any change in the scheme terms after a reference is made until the reference is concluded.

87.  Furthermore, if the scheme terms should be varied after a reference has been made, the Tribunal may have to deal with the scheme as referred but without the variation and also the scheme as varied.  The Tribunal may have difficulty in deciding what to do under s. 156(3) or (4) with the scheme as varied as it is no longer the same as the scheme referred under s. 156(1). Depending on the extent of the variation, the Tribunal may not even have jurisdiction to deal with the varied scheme as it may become a different scheme altogether.  Hence, it is important that once a scheme is referred to the Tribunal, it shall remain in operation in the same terms unless it shall for any reason be put to an end.  I think that is the purpose of s. 156(2) and the section should be so interpreted.

88.  I also agree with Mr Wong’s submissions for U that the plaintiff cannot continue to operate the scheme once the record companies withdraw their authorizations for the plaintiff to use and license their copyright works.

89.  Mr Wong is also correct in his submission that there is nothing in s. 156 or in the entire Part II Division VIII of the ordinance that requires the record companies to be bound by any order of the Tribunal so that they will be compelled to ensure that the plaintiff can perform the terms of the scheme as may be varied by the Tribunal.  The record companies also cannot apply to the Tribunal under s. 156 or s. 157 (which deals with further reference to the Tribunal of a scheme that is subject to an order of the Tribunal made under s. 156).  If s. 156(2) shall have the effect as contended by Mr Yan, that will compel the record companies to allow the plaintiff to continue licensing the use of their copyright works to licensees indefinitely once a reference of the scheme is made to the Tribunal.  That will deprive the record companies of their contractual and proprietary rights until the conclusion of the reference.  I agree with Mr Wong that such interpretation of s. 156 is contrary to the established canons of statutory interpretation.  If the intention of the legislature should be as submitted by Mr Yan, clearer wording should be used to spell out such intention.

90.  In the light of the above analyses, I am of the following view on the interpretation of s. 156(2).  S. 156(1) governs the reference to the Tribunal of a scheme that is “in operation”.  The scheme referred is one that is “in operation”.  It is not a scheme “proposed to be operated” which is governed by s. 155.  Nor is it a scheme that has already been lapsed.  Since it is a scheme “in operation”, there is no need to provide for its continuation after the reference is made.  However, if for any reason, the scheme cannot continue to operate, then it can come to an end.  The reference of it to the Tribunal will only be up to its cessation and not beyond.  S. 156(2) does not require the operator to continue its operation if the operator does not desire or is not in a position to do so.  If however the scheme, which is in operation when referred to the Tribunal, should continue to operate after the making of the reference, then s. 156(2) requires that it shall remain (or it remains) in operation in the same terms and conditions as and when the reference was made until the conclusion of the reference.  The function of s. 156(2) is to preserve the totality of the scheme as referred pending its resolution by the Tribunal.

91.  I also consider that the Chinese text of s. 156(2) has the same meaning as the English text.  There is no need to engage s. 10B(3) which is only invoked when there is a difference of meaning between the two texts.  

92.  Though I am not here to deal with the interpretation of the UK s. 119, I think its meaning is the same as s. 156 despite the difference in words as referred to above. 

93.  On my interpretation of s. 156(2), the scheme that has been referred to the Tribunal in CT2/2010 can come to an end despite its having been referred to the Tribunal under s. 156(1).  Since the plaintiff’s authorizations had been withdrawn by U, W and S and had ceased on 30 June 2015, the licence to the plaintiff under the scheme could not have continued beyond 30 June 2015.  I therefore make an order in terms of §§ 1 and 2 of the discharge summons to discharge the amended order from 30 June 2015 onwards and to keep in the court the money paid into court by the defendant.

WHETHER THE PLAINTIFF AN AGENT OF U

94.  U denies that the plaintiff is its agent in operating and granting licences in the scheme.  Mr Yan submitted that since U is already a party in this action and will be bound by the ruling of this court, it should not be necessary for me to determine whether the plaintiff is and was an agent of U. 

95.  If U’s position is correct, even if it is a party in this action and will be bound by any order that this court may make on this application, it does not mean that it will have to do anything to ensure that the plaintiff is authorized to keep the scheme running in the event that the plaintiff should be ordered to do so.  U would only have to act if it is ordered by this court to do so and this court needs a legal basis before it can order U to do so.  Hence, the defendant has to show that the plaintiff is and was an agent of U as a matter of law.

96.  The defendant’s case of agency is based on a number of admissions made by the plaintiff (but not U) in various documents and affirmations filed in CT2/2010, HCA 472 of 2010 and HCA 7 of 2011 and some letters issued by the plaintiff’s solicitors to the defendant’s solicitors.  The plaintiff admitted that it was a licensing body within the meaning of s. 145 of the Copyright Ordinance and was an agent for the record companies in granting licenses to third parties.

97.  S. 145(4) of the ordinance provides:

“licensing body” means a society or other organization, whether registered under section 149 or not, which has as its main object, or one of its main objects, the negotiation or granting, either as owner or prospective owner of copyright or as agent for him, of copyright licences, and whose objects include the granting of licences covering works of more than one author;” (emphasis supplied)

98.  U referred to the Exclusive Licence Agreement by which it granted the plaintiff an exclusive personal licence to sub-license.  The agreement has the legal effect of an assignment of U’s copyrights in question to the plaintiff.  It did not appoint the plaintiff as U’s agent to create licence agreements between U and third parties.  Clause 13.4 of the agreement in fact provided against any agency relationship as follows:

“This Agreement shall not be deemed to constitute an agency agreement or ... Neither shall have any authority to bind the other nor incur liability on behalf of the other.” (emphasis supplied)

99.  S. 103(1) of the Copyright ordinance provides:

“In this Part an ‘exclusive licence’ (專用特許) means a licence in writing signed by or on behalf of the copyright owner authorizing the licensee to the exclusion of all other persons, including the person granting the licence, to exercise a right which would otherwise be exercisable exclusively by the copyright owner.” (emphasis supplied)

100.  S. 112 of the ordinance further provides, among other things:

“(1) An exclusive licensee has, except against the copyright owner, the same rights and remedies in respect of matters occurring after the grant of the licence as if the licence had been an assignment.

(2) His rights and remedies are concurrent with those of the copyright owner; and references in the relevant provisions of this Part to the copyright owner shall be construed accordingly.” (emphasis supplied by U)

101.  The reference of “this Part” in ss. 103(1) and 112(2) is Part II of the ordinance that covers ss. 2 to 199 and includes s. 145.  Hence, the plaintiff, by virtue of its being an exclusive licensee, can grant licence to third parties as a copyright owner rather than as agent of a copyright owner.  U, after having granted the plaintiff the exclusive licence, is prohibited by s. 103(1) from grant any licence as a copyright owner to third parties. 

102.  Regarding the admissions of agency by the plaintiff as relied on by the defendant, I do not think they were made after due consideration of the legal position and relationship between the plaintiff and its members including U, W and S.  When these admissions were made, the present issue of agency was not under the focus of argument.  I do not think these admissions can override the legal position as established in the contractual documents between the plaintiff and its members.  The Exclusive Licence Agreement between U and the plaintiff makes it clear that there was only a grant of exclusive licence in terms of s. 103 and that the plaintiff was granting licences to third parties as an owner of the copyright works and as a licensing body in terms of ss. 112 and 145 respectively.

103.  In the premises, I hold that the plaintiff is and was not an agent of, among others, U.

WHETHER THE DEFENDANT IS ENTITLED TO A LICENSE OF BACK CATALOGUE KMVS UP TO 30 JUNE 2016

104.  The defendant relies on a letter dated 12 March 2015 from U to the plaintiff and argued that the plaintiff had authorization to grant licences under the scheme up to 30 June 2016 (exhibit RB-39 [B1/431-432]).  Hence, the plaintiff seeks a licence of back catalogue KMVs up to 30 June 2016.  The material part of the letter reads:

“Notwithstanding the expiration of the Licence Agreement on 30^th June 2015 (‘Expiry Date’) we agree that HKKLA shall be duly authorised to honour Scheme Licences as may be granted by HKKLA pursuant to the Licence Agreement prior to the Expiry Date (but not on or after the Expiry Date) (‘Prior Outstanding K-server Licence’) until their respective date of natural expiry (without extension) or termination, if earlier, provided that no such Prior Outstanding Licences shall have a term that continues beyond of 12 months following 30^th June 2015” (emphasis added by the defendant).

105.  I think the defendant’s contention for the back catalogue licence up to 30 June 2016 is based on a misreading of this letter.  The plaintiff’s authorizations were withdrawn by U, W and S on 18 February 2015, 5 and 9 March 2015 with the withdrawal to take effect on 30 June 2015.  The plaintiff might have granted licences to third parties under the scheme on or after 30 June 2014 but prior to 18 February 2015.  Such licences were for a year from the date of grant.  They would therefore expire only on or after 30 June 2015.

106.  This letter is to continue the authorization to the plaintiff so that the plaintiff can honour these licences to third parties until their respective natural expiry.  But the letter does not allow the plaintiff to grant any fresh licence from and after 30 June 2015.

107.  Since the licence granted to the defendant commenced from 1 July 2014 and expired on 30 June 2015, if it should be renewed, the renewal date should be 1 July 2015.  That was however after “the Expiry Date” of 30 June 2015.  Hence, the plaintiff had no authorization to grant or renew to the defendant the licence for a year commencing on 1 July 2015 and expiring on 30 June 2016.  I therefore hold that the defendant is not entitled to a license of back catalogue KMVs up to 30 June 2016.

SMEARING BY THE PARTIES AGAINST EACH OTHER

108.  There is not much factual dispute between the parties in this application.  Unfortunately, the parties have in their affidavits/affirmations made many hot but irrelevant accusations against each other.  These accusations do not assist the court in resolving the dispute.  If this should happen again, consideration will be given on what appropriate costs order to make to reflect the waste of time and resources for making such accusations.  

COSTS ORDER NISI

109.  Since the defendant has lost all the issues on the discharge summons and the third party proceedings, I make a costs order nisi that the defendant do pay the plaintiff its costs of the discharge summons and the third party its costs of the third party proceedings all with a certificate for two counsel.