Murray v King

4 FCR 1
55 ALR 559

---

(Decision by: Sheppard J)

Between: Murray
And: King

Court:

Judges:
Sheppard JMorling J
Spender J

Subject References:
Copyright

Hearing date: 31 July 1984
Judgment date: 14 September 1984 

Brisbane

---

Decision by:
Sheppard J

SHEPPARD J. This is an appeal from a judgment of the Supreme Court of Queensland (Connolly J.) by which the respondent recovered the sum of $106,696 from the appellants for damages for infringement of copyright. The respondent had also sued for damages for passing off and, in the words of the learned primary Judge, for "a number of (other) related wrongs". His Honour did not find it necessary to deal with any cause of action except that for infringement of copyright.

In 1980 and 1981 the first appellant and the respondent carried on business in partnership. Their business was known as, "Wot's Happening on the Gold Coast". Its principal activity was to publish a magazine which bore the name of the business. The magazine consisted of advertisements for various businesses and information of relevance to tourists such as lists of tourist attractions, accommodation, bus time tables, the location of churches and the times of services and other such matters. Four issues of the magazine were published, one in 1980 and three in 1981. His Honour found that the publications were profitable.

The partnership was dissolved because of difficulties between the partners over the question of whether the second appellant, who is the first appellant's wife, should have an interest in the business. Notice of dissolution of the partnership was given by the first appellant on 21 October 1981. It is common ground that the partnership was dissolved from that date.

About that time the appellants began to canvass the advertisers of the partnership. His Honour found that they did so in a manner which suggested that the business which they were conducting was the same business as that formerly carried on by the partnership. On 28 September 1981 the second appellant had registered a business name, "Look] What's Happening on the Gold Coast". His Honour found that on a number of occasions one or other of the appellants informed advertisers that the new publication which was to come out under the business name which the second appellant had registered was replacing the old. Advertisers were informed that the publication put out by the partnership "would not be coming out again".

The first issue of the new magazine was published for the period December 1981 to March 1982. It was published under the name "Look] Over the Gold Coast", not under the business name which the second appellant had registered.

His Honour compared the two publications and concluded that it was not open to question that the first issue of "Look] Over the Gold Coast" was a reproduction in a material form of a substantial part of the last issue of "Wot's Happening on the Gold Coast" published by the partnership: see Copyright Act 1968 ("the Act") para 14(1)(b) and sub-para. 31(1)(a)(i).

On 23 October 1981 the first appellant began proceedings in the Supreme Court of Queensland seeking the winding up of the partnership. On 29 October 1981 the Court appointed Mr. G.E. Lawson, a receiver "to receive the debts now due and owing and other property, assets or effects belonging to the partnership... with power to carry on the (partnership) business... ". The order directed Mr. Lawson to receive the debts then due and owing and other property, assets or effects belonging to the partnership and to report to the Court of the stage reached by the business in relation to the issue of the publication "Wot's Happening on the Gold Coast" due to be published in December 1981.

On 6 November 1981 the Court made a further order. Paras. (i) and (iii) of the order were as follows:- 

"(i)

GORDON ERIC LAWSON be appointed as  Receiver/Manager in respect of the  partnership and the partnership business  "Wot's Happening" and do all things  necessary to wind up the said  partnership and effect a sale of the  business in the manner hereinafter  described;

....

(iii)

the said GORDON ERIC LAWSON do receive  tenders in writing from either or both  of the partners, the parties to the  present action, by noon on Friday, the  thirteenth day of November, 1981 at the  offices of Bindeer Hamlyn & Co. 167  Eagle Street, Brisbane, in respect of  the purchase of the business, such  purchase of the business not to include the various debts owed to or by the  business or monies the property of the business;"

Mr. Lawson called tenders for the purchase of the business. He received one from each of the partners. The first appellant's tender was in the sum of $50. The respondent's tender was in the sum of $62,000. The tender made by the respondent was in the form of an offer to purchase the business "and the assets of the business".

On 27 November 1981 Mr. Lawson entered into an agreement with the respondent for the sale of the business to him for $62,000. Clauses 1, 5 and 10 of the agreement were as follows:-

1.

The vendor agrees to sell to the purchaser  and the purchaser agrees to purchase from  the vendor for the price of SIXTY-TWO  THOUSAND DOLLARS ($62,000.00) all the  right title and interest of the vendor by virtue of the said Court Order in and to a  certain business carried on at the Gold Coast in the State of Queensland known as  Wot's Happening (hereinaftercalled "the  said business") but not including any  debts owed to or by the said business or  any monies which are the property of the  said business together with the goodwill  of the said business and the furniture and  fittings set forth in the schedule hereto.

....

5.

On the 27th day of November 1981 the  vendor shall give the purchaser full and  complete delivery of possession of the  property hereby sold and the purchaser  shall on the same day take delivery and enter into possession of the same.

....

10.

The vendor and the purchaser hereby agree  that the aforesaid purchase price of  SIXTY-TWO THOUSAND DOLLARS ($62,000.00) abovementioned shall be apportioned as to

The respondent proceeded to bring out three further editions of the partnership publication. All resulted in a loss. His Honour found that many of the former advertisers had transferred their business to the new business which published five issues in the period December 1981 to March 1983.

His Honour found that copyright subsisted in the partnership publications. This finding, although the subject of one of the grounds of appeal, was not challenged before us. The ground of appeal was expressly abandoned. As earlier mentioned his Honour found that the appellants' first publication was an infringement of the copyright which subsisted in the partnership's last publication. It would seem, although the findings are not spelt out, that he was also of the view that each of the appellants' publications was an infringement of the copyright which subsisted in one or more of the partnership's publications. Those findings were not the subject of argument before us. Counsel for the appellants accepted them without question. I myself have not considered whether these findings were justified. I express no view on that question.

The substantial question raised by the appeal is whether the respondent was entitled to maintain an action for infringement of copyright. In order for him to do so he needed to establish that he was the owner of the copyright; see ss. 31, 35, 36 and 115 of the Act. His Honour found that the respondent was the owner. It is that finding which counsel for the appellants challenges.

His Honour thought that the first appellant and the respondent were joint authors of the partnership publications and thus the original owners of the copyright in them. He did not express this view conclusively because he did not think it necessary to do so. He thought that nothing turned on the question of whether the copyright was originally owned by the first appellant alone or by the partners jointly. He said:- 

"Let it be assumed that the copyright was  indeed in Murray (the first appellant)  alone. To my mind the conclusion is  inescapable that in situations where he  already had copyright .... and  in cases in which he acquired the copyright  in original advertisements as author, in  both cases it should be regarded as property brought into the partnership so as to become  partnership property and therefore to be  governed by s. 23 of the Partnership Act."

The Partnership Act to which his Honour referred is to be found in the Partnership Acts 1891 to 1965 (O).

His Honour's finding that the copyright was partnership property was not challenged before us. Indeed, counsel for the appellants expressly conceded that it was a partnership asset.

His Honour then came to the nub of the question which concerns us. His Honour pointed out that there could be no infringement of copyright by an owner: see s 36. Unless the respondent could show that he was the owner of the copyright and that the first appellant had ceased to be the owner thereof the action must fail. His Honour then referred to s. 196 of the Act which, so far as it is relevant, is as follows:- 

"196.(1)

Copyright is personal property and,  subject to this section, is transmissible by assignment, by will  and by devolution by operation of law.

...

(3)

An assignment of copyright (whether  total or partial) does not have effect unless it is in writing  signed by or on behalf of the assignor."

His Honour thought that there could be no suggestion that the respondent held the copyright as an assignee within the meaning of s. 196. But he noted that the respondent was possessed of the assets of the partnership by virtue of the contract of sale of the business to him. His Honour added, "The question then is whether the copyright came to him by devolution by operation of law." His Honour considered the application to the case of the decision of the High Court in O'Brien v. Komesaroff (1982) 56 ALJR 681 which he thought to be distinguishable from the present case. Amongst other things his Honour said:- 

"O'Brien's case (supra) is authority for the  proposition that an interest devolves by  operation of law when, by operation of law,  and without any voluntary act on the part of  the previous owner, it passes from one  person to another. O'Brien's case is also  authority for the proposition that an  interest devolves not only when it passes  from a person dying to a person living but  when, by order of a Court, one creditor is  substituted for another: Wallis v Smith  (1882) 51 LJ Ch. 577. I see no difference  in principle between the consequences of an order which, in no way founded upon the  consent of the parties, orders the transmission of the interest. O'Brien's  case establishes that the bringing of a  copyright into partnership property, being  an act of parties, is not an involuntary act  and that the legal consequence flowing from  it cannot be described as a devolution  within the meaning of s. 196(1). When however the Court orders sale and the sale  is carried through by the act of its  officer, the receiver, the legal consequence  is that the property vests in the purchaser  by operation of law and without any voluntary act of either of the parties. In  this connection it should be remembered that the appointment of a receiver does not vest  the property in him and that he has no  inherent power of sale, so that if he is to sell the sale must be ordered by the Court.  See Kerr on Receivers (15th edition) at pp.  129, 130, 198, 302. I see no distinction in  principle between the case of a garnishee  order the effect of which is to substitute one creditor for another as in Wallis v.  Smith (supra) and the executed order of the Court which passes the property from one  person to another. It seems to me that I  would give effect to the principles laid  down in O'Brien v. Komesaroff (supra) if I  were to hold, as I do, that the effect of  the order of 6th November, 1981 and the  consequential sale of 27th November was that  the copyright devolved by operation of law  upon King. It follows that in my opinion  King is a competent plaintiff and it further  follows that the copyright was divested from  Murray so that thereafter his dealings with  the works could properly be described as an infringement of the copyright."

Notwithstanding that his Honour had rejected the suggestion that the respondent held the copyright as an assignee, counsel for the respondent before us sought to support his Honour's ultimate conclusion not only upon the basis that the copyright had devolved upon the respondent by operation of law, but also on the basis that the respondent was in truth an assignee of it. Discussion ensued as to whether the respondent should have filed a notice of contention to raise this point. The discussion was inconclusive. I express no view on the matter because counsel for the appellants did not object to the matter being relied upon.

The essential submissions relied upon by counsel for the appellants were:

1.

The orders of the Court did not authorise the sale of the copyright by Mr Lawson as receiver.

2.

The agreement for the sale of the business to the respondent, upon its true construction, did not purport to transfer the copyright to him.

3.

In any event the provisions of s. 196 were such that there was no valid assignment of the copyright to the respondent and the copyright had not devolved upon him by operation of law .

In the submission of counsel for the respondent:-

1.

The terms of the orders and of the agreement were such as to include the copyright which was a partnership asset.

2.

Section 196 did operate so as to vest the copyright in the respondent whether as assignee or by devolution by operation of law.

3.

Alternatively to (2), the respondent was entitled in equity to the copyright.

I deal first with the question of construction. Two documents are to be construed. The first is the order of 6 November 1981 empowering the receiver to sell. The second is the agreement for sale. Counsel for the appellants relied upon the reference in paragraphs (i) and (iii) of the order to "the business" or "the partnership business" as distinct from the assets of the business. But I think it clear that it was intended that the receiver be empowered to sell the assets other than those expressly excluded, that is "the various debts owed to or by the business or monies the property of the business". The power to sell would be a largely empty one if the receiver were not able to sell assets other than goodwill. One would require very clear words indeed before one would conclude that his power was limited in that way.

A further matter which should be taken into account and which, in my opinion, militates against the argument under consideration is the fact that the interim order of 29 October 1981 expressly empowered the receiver to receive the assets of the partnership. Except to the extent that particular assets are expressly excluded, I think the power conferred by the order of 6 November 1981 ought to be construed conformably with that conferred by the earlier order. I would therefore reject the submission that the order of 6 November 1981 did not empower the receiver to sell all partnership assets, including the copyright here in question, other than those expressly excluded.

As to the agreement, the prime consideration is the fact that clause 1 of the agreement expressly provides for the sale of the business "but not including any debts owed to... or any monies which are the property of the said business". As in the case of the order, the fact that these assets were expressly excluded supports the view that all other assets were included. The clause goes on to include in what is sold both the goodwill of the business and the furniture and fittings which are referred to in clause 10. In my opinion, those considerations put paid to the argument that the assets other than those expressly excluded were not the subject of the sale. Those assets included the copyright which was conceded to be a partnership asset.

If there be any remaining doubt, it is resolved, in my opinion, by a consideration of the tender. If there is ambiguity, it is appropriate to look to the tender to see what the respondent offered to buy. His tender was in the sum of $62,000 for the business itself "and the assets of the business". There is no reason why one should conclude that when it came to the making of the agreement the respondent would have been prepared to pay the same sum for no more than the goodwill and the furniture and fittings.

Naturally, counsel for the appellants relied strongly on clause 10 which by itself would suggest that only the goodwill and the furniture and fittings were intended to be sold. But it is obvious that the clause was included for revenue purposes. It should not be allowed to control the construction of the contract. The parties were entitled, if they chose, to provide that the entirety of the consideration was for the goodwill and the furniture and fittings and that no part of the consideration was to be assigned to the copyright or any other asset.

For the foregoing reasons I am of opinion that the agreement for sale was intended to pass all the partnership assets, including the copyright, except those expressly excluded.

So the receiver was empowered to sell the receivership assets which included the copyright. And he purported to include it amongst what was sold to the respondent. Likewise the respondent intended to acquire it.

The remaining question is whether in some way the common intention of the receiver and the respondent in this respect has been frustrated by failure to comply with the law, particularly the provisions of s. 196 of the Act. For the respondent to succeed he needed to show that he was either the assignee of the copyright or that it had devolved upon him by operation of law. I omit for the moment any consideration of his having become entitled to the copyright by reason of an equitable assignment as distinct from one having effect in law or by reason of the applicability of some other equitable principle or doctrine.

I am satisfied that the agreement for sale is capable of fulfilling the description of "assignment" in s. 196. The fact that the copyright is not mentioned specifically does not, in my opinion, prevent it operating as an assignment. That is because no special form of words is required and there is no reason why the assignment by one person of the entirety of his assets should not include any copyright which is his; see generally Copinger and Skone James on Copyright, 12th edition, para. 405.

Nevertheless there is a problem. For an assignment to operate under s. 196 it must be signed by or on behalf of the assignor. The agreement for sale is signed by the receiver. But a receiver does not have more than possession of the assets in respect of which he is appointed. His appointment does not in any way affect the right to the property in question. The Court itself has possession by its receiver and his possession is that of all parties to the action according to their titles; see Kerr on Receivers, 15th edition, p. 130. Furthermore, the receiver is never an agent for the parties entitled except in cases where their rights have been determined; Kerr (ibid), p. 131. That is not this case.

It seems to me that the reference in s. 196 to an assignor is a reference to the person who has the title to the copyright and not to a person such as a receiver who is in possession of it for the Court, albeit that he has been empowered by the Court to sell it. For that reason I am of the view that there has not here been an assignment within the meaning of s. 196.

I turn to the question of whether the copyright has devolved on the respondent by operation of law. As the learned primary Judge said, O'Brien's case (supra) is authority for the proposition that an interest devolves by operation of law when, without any voluntary act on the part of the previous owner, it passes from one person to another. The appointment by the Court of the receiver involved no voluntary act on the part of any party. It is true that the proceedings were commenced by the first appellant and it may be that the orders were made by consent. But the making of the orders took the matter out of the parties' hands. The Court by its receiver entered into possession of the partnership assets. The order had the effect of restraining either partner from dealing with those assets. Once the order empowering sale was made, the only person empowered to sell was the receiver acting as an officer of the Court, not for the parties. His task was to realise the assets, pay the creditors and account to the partners for their entitlement to any surplus.

The only remaining event was the sale to the respondent. Certainly that involved voluntary acts on the part of both the receiver and the respondent in entering into the agreement for sale but that was no more than a working out of the chain of events which had taken the matter out of the hands of the parties and placed it in the control of the Court. The receiver, if he had not received a satisfactory offer from either partner, would no doubt have sought other purchasers who had had no previous connection with the business. In my opinion the proper analysis of what has happened is that, within the meaning of s. 196, the copyright has devolved on the respondent by operation of law.

My conclusion in that respect makes it unnecessary to deal with the submission that in any event the respondent was entitled to succeed in equity.

For the foregoing reasons I am of opinion that the submissions relied upon by counsel for the appellants should fail. I would dismiss the appeal with costs.