Murray v King

4 FCR 1
55 ALR 559

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(Decision by: Spender J)

Between: Murray
And: King

Court:

Judges: Sheppard J
Morling J

Spender J

Subject References:
Copyright

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

Brisbane

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Decision by:
Spender J

This appeal is brought from a decision of Connolly J. in the Supreme Court of Queensland in which his Honour gave judgment for the respondent against the appellants in the sum of $106,696.00 being damages (and interest thereon) for infringement of copyright.

In about May 1980, King and the male appellant ("Murray") entered into a partnership to market an advertising magazine called "Wot's Happening on the Gold Coast". The agreement was oral. The business name "Wot's Happening on the Gold Coast" in respect of that business was registered on 13 May 1980, Murray and King being shown as the proprietors. The partnership produced four issues of the magazine, the first issue being published under date December 1980. It was published roughly quarterly in 1981.

On or about 25 September 1981, Murray removed himself from the premises from which the partnership had been conducted taking with him certain of the artwork which he claimed was his property.

On 28 September, when the fourth issue of the magazine was in the course of distribution, Mrs Murray registered a business name "Look] What's Happening on the Gold Coast". Her application for registration indicated that the business was "publication of magazine" and that the business commenced operations on 3 September 1981.

The first issue of this magazine, which the primary judge referred to as Mrs Murray's magazine, was published for the period December 1981 to March 1982 under the name "Look] Over the Gold Coast". This magazine was different in size from the partnership magazine being narrower and marginally shorter. His Honour concluded that the overall impression was that there was a substantial identity, not merely similarity, of the greater part of the material in the two magazines. His Honour found that "It is not open to question that the first issue of 'Look] Over the Gold Coast' is a reproduction in a material form of a substantial part of the last issue of 'Wot's Happening on the Gold Coast' as published by the partnership". This finding was not the subject of challenge on appeal.

There were negotiations between Murray and King but on 21 October 1981 Murray gave notice of dissolution of the partnership. The parties are agreed that the partnership was dissolved as and from that date.

The primary judge found "I have no doubt that the Murrays canvassed the advertisers of the partnership and that they did so in a manner which suggested that the business which they were running was the old business.... I find that on a number of occasions one or other of the Murrays informed advertisers, in effect, that the new publication was replacing the old, saying words to the effect that the old publication would not be coming out again.".

On 23 October 1981, Murray issued a writ out of the Supreme Court of Queensland against King for a winding-up of the partnership. On 29 October 1981, on the application of Murray, Gordon Eric Lawson was appointed as interim receiver "to receive the debts now due and owing and other property, assets or effects belonging to the partnership between the plaintiff and the defendant,... with power to carry on the said business as a going concern" and he was directed "to receive the debts now due and owing and other property, assets or effects belonging to the partnership in relation to the publication 'Wot's Happening on the Gold Coast' issued on 24 September 1981.".

On 6 November 1981, Master Weld ordered that Lawson be appointed receiver/manager in respect of the partnership and the partnership business. That order included the following terms:

(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... 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 moneys the property  of the business."

Both partners tendered, Murray's tender being $50.00 and that of King being $62,000.00.

A tender by King for the business "Wot's Happening" was in these terms: 

"Tender of Matthew King for the business  'Wot's Happening'.

I hereby offer to purchase the business  'Wot's Happening' and the assets of the  business for the amount of $62,000.00 payable  as follows:

1.

Ten thousand dollars ($10,000.00) within  fourteen days from the  acceptance of the  tender;

2.

The balance payable within a further  period of thirty (30) days."

The tender was not simply accepted but an agreement described as a business contract bearing date 27 November 1981 was entered into between Lawson and King.

That agreement provided in part -

BUSINESS CONTRACT

AGREEMENT made and entered into this 27th day  of November 1981 BETWEEN GORDON ERIC LAWSON  of 167 Eagle Street, Brisbane in the Sate of Queensland, Chartered Accountant (the person  appointed Receiver/Manager of the partnership  business known as Wot's Happening, by order  of the Supreme Court of Queensland dated the  sixth day of November 1981) (hereinafter  called 'the vendor') of the first part and  MATTHEW KING of 3094 Gold Coast Highway,  Surfers Paradise in the State of Queensland (hereinafter called 'the purchaser') of the  second part, WHEREBY IT IS AGREED 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 (hereinafter called '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.

...

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

Because of submissions which were founded on the terms of clause 10 of the contract, it is useful to note that in clause 7 of that contract it was recited

"... the purchaser has completed the said purchase after satisfactory personal inspection and investigation of the said premises and business and the said fixtures, fittings, plant, trade utensils, implements, stock and licences and has perused such records of financial transactions relating to the said business as he has desired to inspect.".

The primary judge found that the magazine "Wot's Happening on the Gold Coast" was a literary work within the meaning of s. 32 of the Copyright Act 1968. He also found that while the major part of the compilation of the work was Murray's, King did make a textual contribution and that "If it were necessary to decide the point I should regard this as a case of joint authorship". Further, the primary judge found that both in respect of material in existence prior to the formation of the partnership of which Murray was the owner of copyright, and in cases in which Murray acquired the copyright in original advertisements as author, "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 (1891-65 (Qld))".

The primary judge summarized the central issues before him in these terms: 

"There can be no infringement of copyright by  the owner: s. 36; and it is the owner of the  copyright who is empowered to bring an action  for infringement: s. 115(1). King brings  this action for infringement against Murray  and Mrs Murray. Unless therefore it can be  shown that King is the owner of the copyright  and that Murray has ceased to be the owner the action is simply not competent.

...

If King is to be competent to maintain this  action it must be shown that he is the sole  owner of the copyright. In the circumstances  of the case this can only be so if the interest of Murray, whether it be the whole  of the interest in the copyright or that of a  tenant in common, can be shown to have been transmitted by assignment or by devolution by  operation of law. An assignment is  ineffectual unless it is in writing signed by  or on behalf of the assignor. There is no suggestion that King holds the copyright as  the assignee in this sense. He is however  possessed of the assets of the partnership by  virtue of the contract of 27th November 1981. The question then is whether the copyright came to him by devolution by operation of  law."

The primary judge reached the conclusion that where a Court orders a 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. He then went on to hold that the effect of the order of 6 November 1981 and the sale of 27 November was that the copyright devolved by operation of law upon King.

He found further that King was a competent plaintiff and that the copyright was divested from Murray so that thereafter his dealings with the work could properly be described as an infringement of copyright.

On the appeal, it was expressly conceded by the appellants that the magazine "Wot's Happening on the Gold Coast" was the subject of copyright, and that the copyright in this magazine was an asset of the partnership between Murray and King.

Further, there was no challenge on the appeal to the finding by the primary judge of infringement, nor was there any challenge made to the quantum of damages for infringement as assessed by the primary judge.

The sole issue argued by the appellants on the appeal was the competency of King to maintain an action for copyright. This issue involved three submissions: first, as a matter of construction, the business contract dated 27 November 1981 was not effective to transmit to King the copyright in the magazine; secondly, there was no assignment in writing signed by or on behalf of the assignor as required by s. 196(3) of the Copyright Act 1966 and thirdly, no copyright came to King by devolution by operation of law.

As to the question of construction, the primary judge in my view was right in concluding that the partnership asset consisting of the copyright in the magazine was included in the subject matter of the contract of 27 November 1975.

On 29 October 1981 Mr Lawson was appointed interim receiver "to receive the debts now due and owing and other property, assets or effects belonging to the partnership in relation to the publication `Wot's Happening on the Gold Coast' issued on 24 September 1981".

The order of 6 November 1981 empowered the receiver "to do all things necessary to wind up the said partnership and effect a sale of the business" and authorized him to receive tenders 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 moneys the property of the business".

Express exclusion of particular assets in the order of 6 November 1981 fortifies my view that the receiver was authorized to sell all those assets not expressly excluded, which of course included, the copyright in the magazine.

In the agreement of 27 November, Lawson is described as "the person appointed Receiver/Manager of the partnership business known as `Wort's Happening', by order of the Supreme Court of Queensland dated the sixth day of November 1981".  Clause 1 of that agreement speaks of an agreement to sell to King, "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'... but not including any debts owed to or by the said business or any moneys 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".

Again the express exclusion of named assets of the business supports the conclusion that what is sold are all other assets of that business.

The terms of cl 10 purporting to apportion the purchase price between goodwill and furniture and fittings is not determinative of the subject matter of the contract. That this is so is reinforced by the terms of cl 7 to which I have earlier referred.

The probabilities are that cl 10 had some revenue purpose: it does not serve, in my view, to restrict the subject-matter of the contract to the goodwill of the business and the furniture and fittings. Indeed, the terms in which cl 1 are expressed, purporting to sell "all the right title and interest... in and to a certain business... but not including any debts owed to or by the said business or any moneys which are the property of the said business together with the goodwill of the said business and the furniture and fittings", suggest that there is something more than the goodwill and furniture and fittings to be sold.

If the contention of the appellants as to the construction of the contract of 27 November were correct, it would mean that King was paying $62,000 for a business which was virtually worthless, for without the copyright any good will was nominal.

It is proper in this case to have regard to the terms of the court order of 29 October 1981 and that of 6 November 1981 and to the terms of the tender by King to identify the subject matter of the contract of 27 November 1981.

In relation to the tender, King offered $62,000, the same price as in the contract he later signed; this price was offered for "the business `Wort's partnership except those expressly excluded.

Ordinarily, of course, extrinsic evidence is not admissible to add to, or subtract from, vary or contradict the terms of the written instrument: see Goss v Lord Nugent (1833) 5 B and Ad 58; 110 ER 713, the principle of which was recently referred to by mason J in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 41 ALR 367 at 371; 56 ALJR 459 at 461. It is clear from the authorities, however, that extrinsic evidence is admissible to identify the subject-matter of a written instrument: see Akot Pty Ltd v Rathmines Investments Pty Ltd [1984] 1 Qd R 302, in which some of those authorities are referred to.

For the foregoing reasons I am of the view that the subject-matter of the agreement of 27 November was the entirety of the assets of the partnership except those expressly excluded, and in particular, copyright in the partnership magazine was included.

Next, I agree with the conclusion by Connolly J that "(King) is... possessed of the assets of the partnership by virtue of the contract of 27 November 1981".

My view, however, is that the copyright came to King by virtue of that contract, not by devolution by operation of law as his Honour concluded, but as an assignment to him by Lawson on behalf of the partners.

Section 196 of the Copyright Act 1968 provides, so far as is relevant, 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."

Section 196(3) does not require formal words: see, generally, Lahore Intellectual Property Law in Australia, Copyright, 1977 paras 905 and 906; Copinger and Skone James on Copyright, 12th ed, para 405.

In particular, in my view, it is not necessary that  copyright be referred to, in terms, in the agreement of 27 November 1981. Parol evidence is admissible to identify the subject-matter intended to be assigned and referred to in the document: E W Savory Ltd v World of Golf Ltd [1914] 2 CH 566 .

The question for resolution is whether the transfer of the copyright to King by Lawson was "on behalf of" he assignors, or whether it constituted "a devolution by operation of law", or neither.

The relevant principle applicable to partnership assets on dissolution is: "In the absence of a special agreement to the contrary, the general rule is that on the dissolution of a partnership all the property belonging to the partnership shall be converted into money by a sale, even although a sale may not be necessary for the payment of debts"; Lindley on Partnership 8th ed, p 623.

"In Darby v Darby (1856) 3 Drew 495 at 503 Kindersley VC said: 'What is the clear principle of this court as to the law of partnership? It is, that on the dissolution of the partnership all the property belonging to the partnership shall be sold, and the proceeds of the sale, after discharging all the partnership debts and liabilities, shall be divided among the partners, according to their respective shares in the capital. That is the general rule; it requires no special stipulation; it is inherent in the very contract of partnership. That the rule applies to all ordinary partnership property shall remain unsold, and that he shall retain his own share of it in specie...' (per Swinfen Eady LJ in Hugh Stevenson & Sons Ltd v Aktiengesellschaft fur Cartonnagen-Industries [1917] 1 KB 842 at 846)."

The court order appointing Lawson as receiver of the assets of the partnership did not vest the copyright in him: Vine v Raleigh (1883) 24 Ch D 238 t 243 and Kerr on Receivers, 15th ed, pp 130, 136. Lawson was not selling the assets of the business on his own behalf.

The nature of the possession of a receiver and his power as discussed in Kerr on Receivers 15th ed at p 165:-

"... The effect of the appointment of a receiver is to paralyse the powers of the company to deal with its property (citing Moss SS Co v Whinney [1912] AC 254 at 263). The legal persona of the company, however, still subsists, and its power in relation ot the property comprised in the appointment are delegated to the receiver by his appointment as manager with whatever limitations may be imposed by the order (citing Parsons v Sovereign Bank of Canada [1913] Ac 160):... The receiver is not, prima facie, an agent of either the company or the incumbrancers, but an officer of the court exercising the company's powers as such, and as a principal."

At p 232, dealing with the effect of appointment of manager, it is said:

"... The appointment of a receiver and manager over the assets and business of a company does not dissolve or annihilate the company, any more than the taking possession by the mortgage of the fee of  land let to tenants annihilates the mortgagor. Both continue to exist; but the company is entirely superseded in the conduct of its business, and deprived of all power to enter into contracts in relation to that business, or to sell, pledge or otherwise dispose of the property put into the possession or under the control of the receiver and manager. The power of the directors in this respect are entirely in abeyance so far as the company is concerned, and the power of the company are exercised by the receiver under the direction of the court."

All but the last sentence of this passage is a direct quotation of Lord Atkinson's speech in Moss SS Co Ltd v Whinney [1912] AC 254 at 263.

In my view, therefore, Lawson was not selling the assets of the partnership as agent of the partners, but was exercising the powers of the partners under the direction of the court, and the sale was "on behalf of" the partners, within the meaning of s 196(3) of the Copyright Act.

In truth, the purpose of the appointment by the court of Lawson as receiver was to enable the partners to obtain that to which they were entitled: see Kerr on Receivers, p 6.

It follows that King was a competent plaintiff, the copyright having been assigned to him by virtue of the contract of 27 November 1981. That assignment was a legal one and it is unnecessary to consider the question of equitable assignment.

If, contrary to my opinion, the agreement of 27 November 1981 is not an assignment signed by Lawson on behalf of the partners, I would regard the copyright of the partnership magazine to have devolved on King by operation of law for the reasons given by Sheppard and Connolly JJ.

Counsel for the appellants: M. Boyce Q.C. and R.W. Gotterson 

Solicitors for the appellants: E.A. Muir & Associates. 

Counsel for the respondent: B.J. Boulton

Solicitors for the respondent: McLoughlin Gordon & Lennon.