Crosstown Music Company 1, Llc v Rive Droite Music Ltd & Ors [2009] EWHC 600 (Ch)

[2009] EWHC 600 (Ch)Case No HC07C01296
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 25/03/2009
Before
MR JUSTICE MANN
Between
CROSSTOWN MUSIC COMPANY 1, LLCClaimantRIVE DROITE MUSIC LIMITEDDefendantsMARK TAYLORDefendantPAUL BARRYDefendant
MR. A. HUNTER (instructed by Messrs. Russells) for Claimant.MR. I. MILL Q.C.and MR. E. CULLEN (instructed by Messrs.Forbes Anderson Free) for Defendants.Hearing Hearing dates: 2 nd, 3 rd, 4 th, 5 th, 9 th and 10 th December 2008.
Judgment

Introduction

[1]In June 2006 the claimant (“Crosstown”) took an assignment of various copyrights owned at the time by Rive Droite Music Limited (“RD”). 119 of those copyrights were in respect of songs written by either Mr Mark Taylor or Mr Paul Barry (and sometimes both of them), and who had originally assigned their copyrights in their compositions to RD so that they could be exploited by RD and royalties generated. The agreement between those two gentlemen (“the Writers”) and RD contained a clause which on its face seems to provide for a re-transfer of the copyrights to them in the event that material breaches of the original assignment agreement were unremedied after notice was given. The Writers claim that those events have come about and that they are now the owners of the copyrights in their various compositions again. The main question which arises in these proceedings is whether or not they are correct in that assertion. The issues which arise include issues as to whether or not the copyrights re-vest, whether the provision in question binds Crosstown as assignee of the copyrights and whether any right to have the copyrights back has been lost by waiver acquiescence or estoppel. At the trial before me, the Writers were represented by Mr Ian Mill Q.C. and Mr Edmund Cullen, Crosstown was represented by Mr Andrew Hunter.

The original agreements

[2]Mr Taylor and Mr Barry were employed by RD in the 1990s. They took to songwriting and each entered into 3 agreements with RD for the assignment of copyrights. It is unnecessary to deal with all those agreements separately; save for a couple of provisions in one of Mr Barry’s agreements, all the agreements were in the same form and to the same effect. I can therefore set out the provisions of one of them on the footing that its provisions can be taken to apply to all the copyrights which are the subject of this action, save where it is necessary to refer to specific provisions of Mr Barry’s different agreement.[3]The nature of the agreements was such that the Writers assigned copyright in the various songs in question, so far as they existed at the date of the agreement, and they agreed to assign copyright in relation to the songs which they wrote in the next two years. Copyright was to remain vested in RD for a period which can be calculated as being 27 years from the date of the agreement (the two year “Term” of the agreement and a further 25 year reversion period). In exchange for this the Writers were paid royalties amounting to a percentage of categories of income received by RD in the United Kingdom and RD undertook to exploit the songs. It was accepted by all parties before me that it was an implied term of the agreement that, insofar as income arose out of the jurisdiction, RD would take all proper steps to bring it within the jurisdiction so that it fell within the wording of the obligation to pay royalties.[4]This was achieved by the following provisions.[5]RD is described as a “Publisher” and given an extended definition as follows:
“Which expression shall include its successors and assignees.”
Clause 1(a) assigns “ all the copyright…of and in the title words and music of the musical compositions specified in Clause 3 hereof…to hold the same unto the Publisher absolutely for the Term and Retention period hereof…” in consideration of the sum of £1. Clause 1(d) specifies that the rights include certain specified matters, without prejudice to the generality of the assignment, and those matters include “the sole and exclusive right to collect 100%...of the total monies, income and fees arising from the Compositions after the date hereof and, if uncollected and presently unencumbered, prior to the date hereof.”[6]Clause 1(e) contains a warranty on behalf of the Writers to the effect that:
“The Compositions are or will be new and original works which are free and clear of any claims, demands, liens or encumbrances and do not or will not infringe the copyright in any other work….and that the Writer have good right and full power to assign to the Publisher free from all encumbrances the premises expressed to be hereby assigned and every one of them in the manner aforesaid, and the Writer hereby indemnifies the Publisher from and against all costs, claims, damages, proceedings and liabilities including the Publisher’s own reasonable legal costs on an indemnity basis howsoever arising in respect of any breach of any warranty hereunder….”
Mr Hunter relies on this provision as demonstrating that the crucial clause in this case, namely clause 18, does not confer any proprietary right.[7]In clause 3(a) “the Compositions” is defined to mean certain compositions listed in a schedule (it is common ground that none of the agreements actually contained a schedule):
“…and all musical compositions and/or lyrics and/or original arrangements of musical works…which may prior to the date hereof have been written, composed or created in whole or in part by the Writer…and not been assigned by the Writer to any third party and/or any Compositions heretofore assigned to any third party the rights of which shall revert to the Writer at any time during the Term hereof, and/or any compositions which are during the Term hereof written, composed or created in whole or in part by the Writer, including the title, words and music thereof.”
[8]Clause 3(b) contains a definition of “Cover Record” which I need to set out because it forms an important part of the background of this dispute. It says:
“(b) The term ‘Cover Record’ shall mean recordings of the Compositions or any of them procured by the efforts of the Publisher or its sub-publishers or its sub-licensees on which the featured performance is by persons other than the Writer.”
The significance of that definition is that a lower royalty rate is payable in respect of Cover Records. Since neither Mr Barry nor Mr Taylor is a performer, on its face it would seem to cover all their compositions. However, in earlier proceedings it was alleged by the Writers that, by virtue of a collateral agreement, it did not mean what it said, and Cover Records meant something entirely different. I do not need to set out what that difference is; it suffices to record here that Lewison J, in a judgment in earlier proceedings, held that the Writers were correct about that, with the effect that the definition applies to only a relatively small part of their output.[9]Clause 4 defines the Term and Retention period. The term is two years from the date of the agreement; the retention period is a further 25 years thereafter.

(b) provides:

“Immediately following the expiry of the Term hereof….the Publisher shall continue to exercise the rights granted hereunder in respect of the Compositions for a further period of 25 years (the ‘Retention Period’). For the sake of clarity, the Publisher shall not be entitled to any rights in any musical works composed by the Writer after the expiry of the Term hereof. At the end of the Retention Period all right and interest in the Compositions shall, save as provided in clause 4(c) hereof, revert to the Writer without further formality.”
[10]Clause 5 contains a warranty by the Writer that:
“(a) The Writer owns or controls the rights assigned to the Publisher hereunder and the copyright in the compositions is free and clear of all encumbrances and the Writer is free to enter into this Agreement.”
[11]Paragraph 6 contains a “Warranty” by the Publisher that:
“It will use all reasonable endeavours to exploit the compositions….the Publisher shall promptly register and protect the copyright in each composition and, further, shall use all reasonable commercial endeavours to ensure that all income arising from the exploitation of the Compositions is promptly and fully collected in the country of exploitation by the Publisher, its sub-publishers or licensees in the country concerned.”
Clause 6(b) provides what is to happen if (in essence) there has been no exploitation of a composition within two years of its delivery:
“The Writer shall be entitled at any time thereafter to demand the return of such Composition by giving written notice to the Publisher…[and] the Publisher shall, at the expiration of [a specified period] of three months reassign to the Writer all rights hereby granted to the Publisher in respect of such Composition and the Writer shall have no further claim whatsoever against the Publisher in respect thereof.”
What should be noted about that provision is that it is couched in language, and concepts, of an express obligation to reassign copyright. It does not contain an automatic reverter operating without any act of transfer.[12]Clause 10 deals with the royalty rate. Its terms impact on one of the disputes in this case and I need to set some of them out here. It provides (so far as material): “10 Royalties (a) The Publisher agrees to pay … [to] the Writer the following royalties in respect of the identifiable and directly attributable exploitation of the Compositions in the Territory … (i) 70% … of the net monies received in the United Kingdom by the Publisher by way of royalties from the exploitation of pianoforte copies, orchestrations, arrangements and any other publication of the Compositions or any of them … (iv) 70% of the net monies … received in the United Kingdom by the Publisher from all other sources directly and specifically attributable to the Compositions … (d) ‘net monies’ as referred to herein shall mean monies received by or credited to the Publisher after the deduction of any charges made by any recognised society or organisation established for the collection of such monies…” (i) 70% … of the net monies received in the United Kingdom by the Publisher by way of royalties from the exploitation of pianoforte copies, orchestrations, arrangements and any other publication of the Compositions or any of them … (iv) 70% of the net monies … received in the United Kingdom by the Publisher from all other sources directly and specifically attributable to the Compositions …[13]Clause 12 imposes an obligation on the Writers to deliver to the Publisher ten new Compositions a year during the Term (i.e. during the first two years of the agreement).[14]Clause 14 contains an accounting provision. It provides for six-monthly accounts to be produced, for accounts to be binding unless challenged and for an audit procedure. This is an important provision for the purposes of these proceedings because the Writers rely on serious breaches of this provision. I therefore need to set it out extensively:
“14. Accounting (a) The Publisher shall prepare statements up to 30th June and 31st December in each year to include all receipts by the Publisher in that period and forward same to the Writer within 90 days of such dates together with a remittance for all amounts (if any) shown to be due thereunder… (b) All statements rendered by the Publisher to the Writer hereunder shall be binding upon the Writer and not subject to any objection by the Writer for any reason unless specific objection in writing stating in reasonable detail the basis thereof is given to the Publisher within two years from the date rendered. (c) The Publisher shall keep true and correct books of account which shall be (subject to at least 21 days’ prior written notice) open to inspection at the Writer’s expense during regular business hours by a Chartered Accountant in private practice on behalf of the Writer. Such inspections shall not be made more than once in any calendar year and not later than two years after the delivery of any particular statement. In the event that a deficit of more than 10% or £4,000, whichever the greater, of total monies actually payable to the Writer in a particular accounting period is shown to be outstanding, then the Publisher will pay to the Writer forthwith the reasonable costs of such inspection (excluding travel, subsistence and accommodation) insofar as they relate to the period in which such deficit is shown to be outstanding, together with interest thereon at 2% above the Bank of England Minimum Lending Rate in force from time to time, it being agreed that the cost of such inspection to be borne by the Publisher shall not exceed the total amount shown to be outstanding by such inspection.”
[15]Clause 17 deals with assignability:
“The Publisher shall have the right to assign or transfer this Agreement or any part thereof or to assign or transfer any or all the rights herein granted to any person, firm or corporation.”
[16]Clause 18 contains the provision which lies at the heart of this action. It provides:
“18. Breach or liquidation (a) In the event that the Publisher shall be in material breach of the terms of this Agreement and shall fail to take all reasonable action to remedy such breach within 45 days of written notification in reasonable detail of such breach from the Writer all rights assigned to the Publisher hereunder shall forthwith revert to the Writer. (b) In the event that the Publisher shall go into liquidation, other than for the purposes of reorganisation, then all rights assigned to the Publisher hereunder shall, to the extent permissible under law, revert to the Writer on the day immediately preceding such event.”
[17]Mr Taylor’s agreements all specify 45 days for the purposes of clause 18; Mr Barry’s all specify 60 days. Nothing turns on that difference, and I can treat them all in the same way for the purposes of this action.[18]Mr Taylor entered into three agreements in those terms. Mr Barry entered two and a further one in slightly different terms. The only potentially material difference in the odd one out of those is at clause 17 of Mr Barry’s first agreement (1st June 1994) which contained an assignability clause in the following terms:
“17. Assignability (a) During the Term hereof the Publisher shall have the right to assign this Agreement to any person, firm or corporation associated with or affiliated to the Publisher only; (b) At any time after the expiration of the Term the Publisher shall have the right to assign this Agreement to any person, firm or corporation purchasing all or substantially all of the Publisher’s assets subject only to such person, firm or corporation undertaking in writing to the Writer to fulfil the continuing obligations of the Publisher hereunder; It being understood and agreed that nothing herein contained shall be deemed to limit the right of the Publisher to licence or assign its rights in the Compositions to third parties.”
[19]Various points of construction arise in relation to those agreements, and in particular in relation to clause 18. I shall leave them until they are placed in the factual context in which they arise. In the history of this matter, notices served under clause 18, or purportedly so served, have been called “cure notices” by one or both of the parties. As Mr Hunter (counsel for the claimant) has pointed out, clause 18 does not technically require a “cure” for any breach to which it refers, but despite that, and for the sake of convenience, I shall continue to use that nomenclature without pre-judging what is and what is not required in order to comply with any such notice.

Witnesses

[20]Six individuals gave oral evidence before me. I can deal with their respective credibilities shortly. Mr Mark Taylor He is one of the Writers and was the second defendant in this litigation. He sometimes (and not surprisingly) seemed a little frustrated if not bemused by the way in which RD had behaved, but he gave his evidence clearly and, in my view, completely honestly and credibly. He did not always have a recollection of detail, which is not surprising bearing in mind the time that has elapsed, and some of the technicalities that were involved. I was confident I could rely on his evidence. Mr Paul Barry He is the other Writer. The same remarks apply to him as apply to Mr Taylor. He dealt very well with a suggestion that he had kept the right to serve a cure notice up his sleeve. He never over-egged the evidential pudding and was an impressive witness. Mr Andrew Forbes He was the solicitor acting for the Writers at the relevant time, and is still acting for them in this action. He gave some evidence about important pieces of history. He was and is plainly a very conscientious and thorough man, and applied that to his giving of evidence. Where he did not have a recollection of detail he was prepared to say so. Again, I felt I could rely on his evidence. Mr Michael Skeet He describes himself as a royalty auditor. He carried out one of the two audits whose material became the subject of the disputed cure notices in this case. He came over as a careful man who would discharge his functions assiduously. His evidence was evidence I could rely on. Mr Christopher Bevis He is a chartered accountant who carried out the other audit which is relevant to this case. He gave evidence of that audit and his findings. Like Mr Skeet, I consider that he was a careful man in the conduct of his audit and in the giving of his evidence, which was at all times measured. He must have been frustrated at the way he was dealt with on the audit, but nevertheless seemed to me to have discharged his functions with distinction. His evidence was very helpful and, in my view, completely reliable. Mr Christopher Gilbert Mr Gilbert is the chief operating officer of the operating companies in the claimant’s group. He is the only Crosstown representative who gave evidence before me. He did not always have a grasp of some of the documented aspects of the transactions in this case that one would have expected him to have. I also got the impression from some of his evidence that it was tinged with trying to make the best of what had turned out to be a rather bad commercial job. I think that that sometimes gave a slant to his view of facts which those facts did not always quite deserve. For that reason his evidence needed a little more careful weighing than that of the other witnesses. I do not, however, in any way suggest that any part of his evidence was dishonest.

The facts and relevant events

[21]The immediate prompt for this action was two cure notices, one served by each of the two Writers on 4th April 2007. They were served on RD but copied to Crosstown. It is the validity and effect of those notices which Crosstown challenges in these proceedings, and which the Writers seek to uphold in their respective counterclaims. In order to make sense of their respective cases, it is necessary to set out, and make findings about, certain parts of the history of the dealings between the Writers, Crosstown and RD. It is not possible to set out a meaningful straightforward chronology; it is necessary to deal with individual strands of events which overlapped with events in other strands. At this stage in the judgment, in the interests of clarity, I shall also omit certain details which I shall have to come back to when considering the legal and factual case of Crosstown about waiver, election and estoppel.[22]I have set out the material terms of the various songwriting agreements so far as relevant. There were six of them in all. Mr Barry signed agreements on 1 June 1994, 1 June 1997 and 1 November 1998. Mr Taylor signed agreements on 1 December 1995, 1 December 1997 and 1 December 1998. Where it is necessary to refer to them, I shall refer to them by their years only. At the times at which they were entered into the Writers were employed by RD. They both left at the end of 2000 and it seems that RD did not take kindly to their leaving. In particular, RD was difficult about its obligation to account and to pay the money due to them. On every, or practically every, occasion on which RD should have accounted it failed to do so on time, and a cure notice was served. Again, in every case where such a notice was served, the relevant statements were presented and the amount due, or said to be due (or in some cases, as will appear, statements of debit balance) only materialised two or three days before the end of the cure period. It is hard to avoid drawing inference that this was a deliberate plan on the part of RD, and indeed there is at least one letter indicating RD's belief that the cure notice period meant that it automatically had an extra period of time in which to produce the accounts required under the agreements.[23]It also appears that Mr Taylor’s and Mr Barry’s leaving RD caused RD to reconsider how much it should be paying under the royalty agreements. On 14th May 2001 it wrote to Mr Barry alleging that certain very significant categories of his songs fell to be treated as covers under the agreement, and were therefore subject to a lower royalty rate. Mr Barry disputed the applicability of those provisions, and there was correspondence about it. In due course RD rendered accounts to both Writers for the period ended 30th June 2001 based on its new view of the applicability of the cover provisions, which made the sums payable less than they would otherwise have been. On 18 April 2002 Mr Taylor served one of his cure notices on RD alleging this was a breach of his publishing agreement. RD responded by agreeing to pay the amount claimed, whilst disputing that Mr Taylor's understanding as to how the agreement should operate was not necessarily correct. The same thing happened in relation to Mr Barry.[24]In December 2001 the Writers invoked their right to have an audit done. They appointed a Mr Skeet of a company which I will call RCO to carry it out. He was instructed to examine the accountings for the periods ended 31 December 1999 to 31 December 2001 inclusive. In a report submitted on 31st May 2002 (which in its introduction referred to only one of the agreements but which in its calculations relied on copyrights assigned under all of them) he found that there had been incorrect accounting on number of bases for both Mr Taylor and Mr Barry, as follows: Mr Taylor: 1 Incorrect deduction of withholding tax £23,703 2 Incorrect royalty rate £65,258 3 Incorrect exchange rate: Australia and Mexico £14,989 4 Incorrect share accounted £1,566 5 Incorrect accounting: USA (£4,777) 6 Uncollected black box income £32,485 7 Interest on examination findings £12,712 8 Examination costs £9,000 Total due £154,926[25]Mr Barry: 1 Incorrect deduction of withholding tax £30,478 2 Incorrect royalty rate £76,816 3 Incorrect exchange rate: Australia and Mexico £16,241 4 Incorrect share accounted £11,432 5 Incorrect accounting: USA £67,784 6 Missing income: USA £6,471 7 Uncollected black box income £43,400 8 Interest on examination findings £20,900 9 Examination costs £9,000 Total due £282,522[26]Brief explanations of those matters are as follows: i) Incorrect deduction of withholding tax. RD claimed to have deducted tax withheld in foreign jurisdictions. This was said to be contrary to the basis of accounting under clause 10 of the agreements, and furthermore should not have been withheld anyway because RD was entitled to a credit in the same amount in respect of its own English taxation. ii) Incorrect royalty rate. This is the cover clause point, referred to above. iii) Incorrect exchange rate. Mr Skeet identified a number of instances where, as far as he could tell, incorrect exchange rates were applied to foreign income. This seemed to him to be an erroneous calculation based on wrong methodology applied to accounting for advances (in one case) and applying a Spanish peseta rate instead of a Mexican peso rate in another. iv) Incorrect share accounted. Where the Writers were co-writers of a song, they were entitled to varying shares of the royalty payable on it, depending on the song. RD had, in some instances, applied the wrong rate. v) Incorrect accounting: USA. This arose out of a variety of mistakes including paying wrong proportions to Mr Taylor and Mr Barry. vi) Missing income – USA. Warners in the US had not accounted for certain royalties on a very significant song (Believe, recorded by Cher). vii) Uncollected Black Box income. These are sums paid by collection societies in certain jurisdictions (including the UK) which are not directly attributable to specific recordings. The share of the Writers was based on certain assumptions. viii) Interest and examination fees. These are self-explanatory.[27]RD’s response was to dispute the audit in its entirety, and to appoint BDO Stoy Hayward to produce a report for it. BDO sent a copy of its report on 31January 2003. In short BDO’s response was: i) Withholding tax. They agreed with Mr Skeet’s approach. ii) Incorrect rate. The calculations seemed to be in accordance with the agreements, but there were legal issues for lawyers to sort out. iii) Exchange rates. BDO accepted wrong rates had been applied but disagreed with the calculations. iv) Incorrect share accounted. They arrived at a different calculation. Mr Skeet took the view that they had misunderstood the problem. v) Incorrect accounting – USA. They appeared to agree in principle with the claim but said that there should be no accounting until money was received from the USA. That did not address the fact that RD had been under an obligation to collect the USA royalties in the first place. vi) Missing income – USA. BDO did not dispute this and accepted the income appeared to be missing but referred to the appropriateness of a further review. vii) Black box income. This was disputed. viii) They went on to allege an unparticularised overpayment to the Writers said to be due to an accounting error.[28]In February Mr Lockyer, RD’s solicitor, said he had been instructed to propose a meeting between Mr Skeet and BDO to narrow the areas of disagreement. On 24th February Mr Skeet agreed and suggested the documentation for the alleged overpayment be provided to him by 7th March and that there be a meeting in the week commencing 17th March. He never received a reply to that letter. However, at the end of June Mr Skeet discovered which individual at BDO was dealing with the matter (a Mr Hyams) and he proposed a meeting. Eventually they met on 27th August. The upshot of that meeting was a verbal acceptance of some of the detail of the audit in relation to exchange rates and incorrect share accounting, but that was not followed up by written confirmation until June 2004. In a letter of that month Mr Hyams confirmed that he agreed with the exchange rate and incorrect share accounting parts of Mr Skeet’s report.[29]In the meantime disputes between Mr Taylor and RD were being dealt with in another arena. On 18th April 2002 Mr Taylor commenced proceedings against RD in an action which I will call Taylor 1. It was based in part on his three agreements referred to above and in part on a separate agreement that he had with RD as a record producer. So far as his writer’s agreements were concerned, he sought a declaration that he was right, and that RD was wrong, in its attempt to re-interpret the cover provisions of his agreement. He also had a specific complaint in relation to a specific song (“Follow Your Heart”), and while that point carried over into this action Mr Mill has removed it from the present fray and I do not need to say any more about it. While the action complained about activities under the writer’s agreement, it did not seek to claim that any rights had reverted under clause 18(a).[30]Taylor 1 came on for trial of liability on some issues in April 2004, and on others in June 2004. Before then, in March 2004, Mr Taylor amended to introduce a claim based on the RCO audit, but since it was introduced close to the trial that aspect of the matter was adjourned and not dealt with at that stage, though RD did plead to it. Lewison J delivered judgment on 15th July 2004. Mr Taylor won on most issues, and in particular won on the cover recording point. It was said to apply in the manner asserted by him (which was based on what was in essence a collateral agreement) and not in the manner relied on by RD. On 4th November 2005 the Court of Appeal dismissed appeals by RD, and allowed certain cross-appeals brought by Mr Taylor which made his victory all the more complete.[31]In August and September 2004 there was a little flurry of correspondence arising out of the fact that Mr Taylor and Mr Barry had got wind of a possible sale of RD’s catalogue of copyrights. This was not confirmed, and a suggestion from them that part of the proceeds of sale be put in an escrow account was rebuffed. In fact there does not seem to have been a sale at this point in time. The sale to Crosstown came 2 years later.[32]During all this time, a whole series of cure notices were served in respect of late accounting. The above pattern continued – RD would fail to account on the due date, the Writers would serve cure notices shortly after the due date passed, and RD would provide an account shortly before the expiry of the cure notices. Sometimes RD would give excuses for lateness – they were never convincing. This process was bound to undermine the confidence of the Writers in the willingness of RD to fulfil its obligations.[33]In January 2004 the Writers sought to put a second audit in place. On 19th January 2004 Mr Skeet of RCO gave notice of an intention to conduct an audit of the accounts for the period 1st January 2001 to 31st December 2003. In correspondence the principal behind RD (Mr Dreux-Leblanc) was obstructive to this idea, and objected to Mr Skeet carrying it out on the basis that he was not a chartered accountant. It was decided not to join issue on that point, and Mr Christopher Bevis of Bevis & Co, who was a chartered accountant, was instructed in place of Mr Skeet. The period to be covered by the audit was extended to 30th June 2005, and Mr Bevis was instructed on 11th August 2006. Access to the relevant books was not obtained without resort to the courts – Kitchin J made orders relating to inspection on 9th June 2006. Mr Bevis conducted the audit on 4th to 8th September 2006 in Paris, where certain records were made available to him. His audit was hampered by time limits placed on his daily access to records, by the failure to produce certain records to him, by the fact that RD was operating a manual system and not a modern electronic system, and by a refusal of RD to allow him to copy documents to take away and study. He gave evidence before me, and I am satisfied that RD did not act properly and openly in relation to this audit. He was faced with particular difficulties by the fact that the prime record made available to him was a document entitled Grand Livre, which was an overall record of some transactions in a form which made it a cross between a nominal and a sales ledger. He was denied access to a number of other documents which he said he needed, despite an indication that he would be provided with some of them (appearing on a “shopping list” that he prepared in advance).[34]The result of this audit was that Mr Bevis found a number of shortcomings in the accounting that had taken place. So far as relevant to this action I will deal with them below in the context of the cure notices on which this action is founded, because they form the basis of those cure notices. He did not prepare a formal report because of the shortcomings in the information that he was given. On the basis of the information that he was given, and drawing inferences from the material he was shown, the resultant shortcomings in amounts accounted for would be many tens of thousands of pounds for each Writer. According to the evidence of Mr Forbes, which I accept, it is likely that he gave Mr Forbes the gist of his principal (and at the time not finalised) findings arising from that audit, fairly soon after his return from Paris. However, they were not worked up in detail for some weeks – probably at the end of November or the beginning of December 2006.[35]On 17th May 2006 the Writers commenced new actions (“Taylor 2” and “Barry 1” respectively). Taylor 2 was a claim by him for an account in the periods following those covered by the RCO audit, and seeking an injunction compelling the inspection of books and records. Barry 2 claimed the same thing and added a claim for the sums arising out of the RCO audit (his equivalent of the claim that Mr Taylor had added to Taylor 1 by amendment) and one in respect of his song “Follow Your Heart”.[36]After the dismissal of RD’s appeal in November 2005 Mr Taylor’s solicitors had returned to the matter of a sale of RD’s catalogue. They claimed that there was a potentially very large claim outstanding against RD and Mr Taylor was concerned that RD would seek to avoid paying it. He made an application for a freezing order in Taylor 1 and on 17th November received an undertaking that RD would not dispose of its catalogue without giving 3 clear working days notice. RD gave that notice on 11th April 2006. On 12th April Kitchin J made a freezing order on Mr Taylor’s application requiring details of the intended sale to be provided and requiring £2,385,000 of the purchase moneys to be paid into an account in the name of RD’s solicitors (Angel & Co) to be held to the joint order of that firm and Mr Taylor’s solicitors. A large part of that amount reflected Mr Taylor’s claim on his producer’s agreement which is not the subject of this action. Having been pressed somewhat, Angel & Co confirmed on 24th April that a “deal memorandum” had been exchanged. The documents reveal a sale agreement bearing the date 20th April 2006 for the sale of 119 Songs, for a price of $11,376,000. Of those, the bulk were songs written or co-written by the Writers. The purchaser was Cargill Property Investments Ltd (a company in the same group as Crosstown). 7.5% of the purchase price (described as “the Hold-Back”) was to be held in an escrow account with RD’s bankers to provide payment to Cargill for legitimate claims under indemnity provisions which the deal was to contain.[37]The deal memorandum contained an express reference to the obligation to notify Mr Taylor of the deal. Mr Gilbert, Crosstown’s only witness, says that Cargill/Crosstown knew there was an action or actions involving Mr Taylor. Apparently it did not insist on seeing the formal court documents relating to those proceedings, and instead agreed to accept disclosure of those proceedings by means of a memorandum, prepared by RD’s leading counsel, describing them. This was provided on or about June 2006. It describes the various issues that were actually decided in that litigation, but a little surprisingly does not refer to the RCO audit claim that was adjourned. It ends by saying that all the claims were financial claims and none of them raised any issue or dispute in relation to RD’s entitlement to own the copyright in Mr Taylor’s share of the songs that were assigned to Crosstown.[38]On 4th May 2006 RD’s solicitors provided the Writers with a redacted copy of 2 pages of the deal memorandum (the original ran to 7 pages of body text and 21 pages of schedules). The redacted pages had the purchaser’s name obscured and contained just the first 4 recitals and one immaterial clause on the signature page. On the next day (5th May) Messrs Forbes Anderson Free (“Forbes”), acting for Mr Barry, sent a letter before action alleging repeated breaches of the agreements by failing to account and pay in time, a breach in seeking to impose the reduced royalty rate for spurious cover recordings, a failure to pay the sums due under the RCO audit, wrongful obstruction of the Bevis audit (which was still awaited at the time) and a wrongful failure to pay certain VAT due. The letter wanted all those matters fixed and outstanding moneys paid. They were not fixed and Barry 1 was started on the same day as Taylor 2 – 17th May 2006 (see above).[39]It was in the context of those actions that Kitchin J made specific orders to facilitate what became the Bevis audit, because of the obstructions hitherto encountered. He was also asked to increase the sums covered by Mr Taylor’s extant order preserving part of the proceeds of sale, and to impose a fresh order for the benefit of Mr Barry. RD asked for a reduction in Mr Taylor’s sum. Then end result was that Kitchin J provided for a reduction of Mr Taylor’s sum to £2,010,000 and added a sum of £275,000 for Mr Barry’s extant claims. Kitchin J declined to make any order in anticipation of what became the Bevis audit because he considered the claim to be “speculative” at the time.[40]Completion of the sale to the Cargill group took place on or about 19th July 2006 in the form of a sale to Crosstown. The actual completion document is dated 20th April, but that is wrong. Mr Gilbert’s oral evidence was that completion ought to have taken place on 14th July, but there was a problem about ascertaining whether the completion funds had arrived, so it completed at the beginning of the following week. The precise date does not matter. Completion took place by means of a document called “Agreement”, which contained the following provisions, so far as relevant to this judgment: i) It transferred the Acquired Assets, which included a large number of songs written or co-written by one or both of the Writers, as foreshadowed in the prior memorandum. ii) It provided for the “Holdback” to be retained, in the sum of $1,852,000. That fund was duly set up. iii) Clause 4.11 warranted that there were no judgments or disputes other than the litigation described in the leader's note referred to above. It also warranted that there were no pending audits. The Agreement did not refer to or identify the other litigation which, by now, had been started. Nor did it, or RD, refer to or disclose the frequent cure notices that had been served. iv) Schedule 1.3 lists “Acquisition documents”, which are defined as being documents under which RD acquired an interest in songs and the like. The list includes the last of each of Mr Taylor and Mr Barry’s respective agreements. v) Schedule 1.7 listed the Compositions that were sold. It identified the various writers of those compositions but not their respective proportions of their share of royalties (some of them were in fact shared). vi) Schedule 1.26 lists the songwriter agreements the benefit of which passed under the sale. So far as Mr Taylor and Mr Barry are concerned, it referred only to the last of each of their respective series of agreements, like schedule 1.3.[41]On 19th July RD paid £2,010,000 and £275,000 into two client accounts at Angel & Co, in accordance with the orders made by Kitchin J, pending the outcome of the claims against RD.[42]On 21st July 2006 David Richards J granted Mr Taylor summary judgment on his claim to producer royalties and advances, which was part of his claim in Taylor 1 and which had been the subject of previous orders in the proceedings, including an order for an account made by the Master. He ordered summary judgment on part of the claim, in an aggregate sum of £597,000 plus VAT plus interest, and ordered indemnity costs against RD.[43]The Writers were not told at that point who the purchasers were, either by RD or by Crosstown. On 2nd August 2006 their solicitors wrote to RD asking for that information, and they chased on 8th August. They received no response, though there was a trade article on 14th August which referred to the purchase of 119 songs by Crosstown from RD. However, by mid-October they had become aware of the transferee. A representative of Crosstown (Mr Greer) contacted Mr Taylor and informed him of the purchase of the Writers’ songs. Mr Taylor expressed the view in an e-mail that he was extremely happy to be “out of Rive Droite” and that he “look[ed] forward to what this new arrangement might achieve”. Various emails passed between Mr Greer and the Writers in the weeks which followed.[44]On 11th October 2006, RD served statements of account on each of the Writers. Mr Barry’s showed a debit balance of £362,255 (ie a sum ostensibly owing by Mr Barry to RD), and Mr Taylor’s showed a debit balance of £307,450. The reason for these balances, claimed by RD, was apparently that RD was reviving the cover recordings point again and was seeking to apply it to a lot of material to which it was inappropriate to apply it. Mr Taylor and Mr Barry reacted by serving cure notices on RD on 2nd and 3rd November; Mr Taylor copied his notice to Crosstown.[45]In an e-mail of 30th October 2006 Mr Greer said to the Writers that his colleague Mr Cass had been talking to “Brian” (probably Mr Brian Rawling, a colleague of the Writers in a separate business) about “everything that is currently going on” and that:
“We just wanted to assure you that we’re doing everything in our power to have all issues resolved ASAP.”
[46]Quite what “all issues” was intended to encompass is not wholly clear,but it seems probable that it referred to the accounting issues which had arisen as a result of the recent statements from RD showing debit balances. Crosstown did indeed set about dealing with some points. On 10th November its US attorneys wrote to RD requiring the latter to account correctly to the Writers and notifying RD of claims under the Agreement should it fail to do so, and 3 days later the same attorneys wrote to the Writers apologising for RD’s conduct and asking for accounting statements for the latest period under dispute and for previous periods. This is the first occasion on which the precise identity of the purchaser was notified to the Writers. Crosstown (through its English solicitors) actually notified RD of a claim by a letter dated 15th November 2006.[47]On 23rd November 2006 Mr Gilbert had a telephone conversation with Mr Forbes of Forbes. It is important because of an allegation that has been made that the Writers were deliberately keeping Crosstown in the dark as to the claims that they had against RD other than the then known accounting claims. This is the main dispute of primary fact in this case, and this conversation is part of the factual structure relevant to that issue. Mr Forbes made an attendance note of that conversation. It records the following significant points: i) Mr Gilbert told Mr Forbes of the existence of an “escrow agreement” relating to $1.8m. ii) Crosstown was concerned about the integrity of the asset it had acquired and the relationship with the Writers. iii) Mr Gilbert was concerned that the Writers had an agenda under which they wanted to serve a cure notice and reacquire the copyright in the songs, which Crosstown would resist. Mr Forbes reserved his clients’ rights as to notices that had been served. iv) Crosstown would “reverse engineer” the royalty statements and pay the Writers once this had been done. This must have been a reference to the recent statements. Mr Forbes said he would copy them to Russells, including old ones. v) Mr Gilbert said he would check with his solicitors as to whether the sale documentation could be disclosed. They wanted to “stop the clock” on cure notices – they were not going to co-operate if “this” was held over their heads. vi) Mr Forbes told Mr Gilbert of another “black hole” in relation to publishing in the US. This was foreshadowing a claim identified by Mr Bevis (and which subsequently came to be made) that RD had not accounted anything like fully for substantial US royalties. Mr Forbes had no independent recollection of the content of this telephone conversation, but he told me that “black hole” was shorthand used with his clients for this issue. I think it likely that, whether or not he used that expression in the conversation with Mr Gilbert, he will have said something to indicate to Mr Gilbert what the point was about, albeit in very general terms. If he had just said “black hole” it would not have been particularly meaningful to Mr Gilbert, and either Mr Gilbert would have asked for clarification or Mr Forbes would have tendered one. Mr Forbes’ note records that he said he would write shortly on that point. vii) Mr Gilbert said that no cure notice had yet been served on Crosstown, but it had been copied on one of the RD cure notices.[48]That is what the attendance note records, and it was not materially challenged so far as the content of that conversation was concerned. It demonstrates, and I find, that a potential future claim by the Writers was foreshadowed (the US royalty claims); that, at least, was not deliberately being held up the Writers’ sleeve.[49]On 13th November Crosstown’s US attorneys had written to the Writers about the alleged accounting deficiencies in the “subject period”, which was the period to June 2006. Those attorneys articulated the seriousness with which their clients viewed the matter, and expressed a desire to review “all of your accounting statements to determine to what extent [RD] may have miscalculated any royalties credited or owed”. They asked for historic accounting statements, while at the same time reserving their clients’ rights, and invited a discussion of “the foregoing”. This letter was apparently addressing the shortcomings in the June statement. It did not go wider than that, despite the request for historic statements. The response to this came in letters from Forbes dated 1st December, one for each of their clients, which were in substantially similar terms. Forbes sent the historic statements, so far as their clients had them, and gave their view of the amount of the under-accounting for the June 2006 period. They did not deal with further claims that the Writers might have had it in mind to make. This is not surprising – the letters were in terms responding to an approach from Crosstown which requested specific material to deal with a specific issue (the recent June 2006 accounting statement).[50]On 6th December Forbes wrote to Angel & Co on behalf of both Writers, headed up in the matter of the two most recent actions (Taylor 2 and Barry 1). It responded to letters from Angel & Co to the Writers in which the latter firm had repudiated the complaints about the June statement dated 23rd November and referred to the serious difficulties that Mr Bevis had had at the September audit, and the obstruction experienced by him. It then raised four specific issues which he had identified – the absence of statements showing US income for 5 periods, a specific failure to account for royalties for 4 very successful songs for the period January/June 2002, a failure to process statements for other territories, and an apparent wild application of exchange rates. These ultimately re-appeared in the cure notices which are the subject of this action, and more detail of the complaints will be given in that context. The letter went on to propose directions in the action and threatened further cure notices. Forbes did not send a copy of this letter to Crosstown.[51]This letter was the first time that the complaints arising out of Mr Bevis’s audit had been articulated. As explained above, Mr Bevis was not able to prepare a formal report. Mr Forbes told me, and I accept, that this letter was a form of report or encapsulation. He also told me, and I also accept, that it was only finalised shortly before it was sent, and had not been all that long in the preparation. This means, and I find, that those particular complaints were being crystallised in the period of, perhaps, two or three weeks before the letter was sent. They had certainly not been crystallised some significant period before then.[52]Crosstown had been dealing with Angel over the June statements. On 8th December Angel agreed with Crosstown to pay over the disputed sums arising out of the reapplication of the cover recording provisions, and shortly thereafter it was apparently agreed that the sums would be paid out of the Holdback provision made by the sale Agreement. By a letter of 15th December Angel & Co confirmed that the sums would be paid on that day, and they were. £232,550 odd was paid to Mr Barry, and £77,900 odd was paid to Mr Taylor.[53]On 18th December Mr Forbes responded to Angel & Co’s letter of 15th December, raising certain points about sub-publisher deductions and, more importantly for present purposes, asserting the right to serve cure notices in respect of breaches found as a result of the Bevis audit. It points out that no answer had been received to the breaches asserted in the letter of 6th December, and drew the conclusion that there was no answer to the allegations, so that each of those matters amounted to a basis for the service of a cure notice, and the Writers would conduct themselves accordingly. It looked forward to an answer to the questions about deductions.[54]This time this letter was copied to Crosstown’s solicitors. Mr Forbes sent them an e-mail copying to them the letter from Angel & Co of 15th December, “together with a copy of my response of today”. He added a copy of his letter of 6th December “to complete the picture”. The e-mail confirmed that the payments were received from Angel & Co. Thus Crosstown were given some detail of the then outstanding claims at this point.[55]Based on this timing, and on not much else, Crosstown invited me to find that the Writers and their solicitor took a deliberate strategic decision to hold back on sending a copy of the letter of 6th December (detailing the Bevis queries) until after it had received payment of the claims arising out of the June accounting statement. This is said to enable Crosstown to make, or to reinforce, a claim that the Writers represented at the time (by conduct, not orally or in writing) that they had no additional grounds for the service of a cure notice (that is to say additional to the complaints about the June 2006 accounting statement). It will be useful to make findings about their state of mind at this stage in this judgment. I find that there was no such plan or strategy. All three of them denied it in the witness box, and I think that that was an honest and accurate denial. None of them could necessarily remember some of the details of events at that time, but I am quite sure that they would have remembered a strategic decision such as that had they made one. I accept their denials that they did not. Their denials are entirely consistent with, if not supported by, other elements of the case. First, the nature of the correspondence was such that it was entirely natural that Mr Forbes should not provide Crosstown with the details of Mr Bevis’s observations when he provided them to Angel & Co. He was dealing with Angel & Co about certain matters, and Crosstown’s solicitors on others. Second, Mr Forbes did give an indication to Mr Gilbert about one problem when they spoke on 23rd November, namely the shortcomings in accounting for US revenue. To do so would be inconsistent with the strategy alleged. It is true that he did not give details, but that is not the point. He was disclosing that further claim. Third, the strategy must have involved an awareness, belief or suspicion that Crosstown would not agree to pay out on the cover recordings issue if it thought that other claims were in the wings. While Mr Gilbert claimed in the witness box that that would have been his attitude, it was not an easily foreseeable attitude so far as the Writers and Mr Forbes were concerned. When the letter of 6th December was sent there was nothing to suggest that Crosstown would be successful in getting a payment out of RD; and if the alleged conspirators were considering it shortly before the time of payment then they would have considered that it was probably equally likely that notifying Crosstown of further claims would have produced more money at that time. And since Mr Gilbert already knew about the potential US claims and had not taken fright, why would it have occurred to Mr Forbes (or the Writers) that he would have taken fright (to the extent of not procuring the cover recordings payment) at more claims? Mr Gilbert’s expressed view at the trial was that Crosstown had been “hoodwinked” but the point only emerged at the stage of witness statements, and was not pleaded until a later stage. If he had really held such a strong view at the time it would be likely to have emerged in the case at a much earlier stage. I think that the view is a late reconstruction, which reinforces the view that the allegation of tactical silence is a forced one. I think it is logically very uncompelling, the Writers and Mr Forbes were convincing witnesses on the topic, and I find there was no such tactical decision of the kind alleged. The events just unfolded at their natural pace as they happened to unfold.[56]Formal notice of the assignment of the copyrights and the various agreements was given by a letter dated 11th January 2007 from Crosstown’s US attorneys. On 17th January those attorneys wrote to Angel & Co notifying an apparent breach of the sale Agreement arising out of a failure to disclose audits, and on 30th March Crosstown served accounting statements on the Writers, with a covering letter explaining that Crosstown was unable to collect certain sub-publishing income because RD affiliates did not account for that income.[57]On 4th April 2007 the Writers served on RD, and sent to Crosstown, the cure notices which lie at the heart of these proceedings. Each of them relies on various alleged breaches. The full terms appear in the Appendix to this judgment. While they differ in their details of amounts and agreements, they are in materially the same terms, and since little turns on differences between them I shall in due course be able to treat one as typical of both, and I shall take Mr Taylor’s notice for that purpose. The complaint made in paragraph 1 of the notices was abandoned at the trial (in Mr Mill’s final speech) for the purposes of the issues in this trial – it was not abandoned as an actual complaint, but I do not need to deal with it further. The other grounds can be summarised and explained as follows: i) Ground 2 refers to unremedied accounting deficiencies as identified in the RCO audit report. These had become pleaded in Taylor 2 by amendment, and RD had pleaded to those claims, so there had been an indication as to what RD’s answers to those points was. Similarly, Mr Barry had pleaded these matters in his extant action, and there was a pleading to those matters too in the Defence. ii) Ground 3 takes the points that arose out of the Bevis audit.(a) is the complaint about a failure to account for US income, referred to above;(b) relates to royalties for certain songs;(c) complains about a failure to account for income from certain identified territories; and(d) complains about apparently incorrect exchange rates applied in accounting statements. Again, these had become the subject of the later actions, and RD had pleaded to those complaints (often in terms of general unparticularised denials). iii) Ground 4 complains that RD affiliates have not accounted to Crosstown for income collected by them.[58]Each of the notices relies on those matters for the purposes of clause 18(a) of the various agreements.[59]Faced with those notices, Crosstown commenced the current proceedings on 17th May 2007. The claim against RD was for specific performance of the sale Agreement by accounting properly to the Writers, an account of sums received from its affiliates from 1st July 2006, an indemnity under the Agreement, and damages. So far as the Writers are concerned, it referred to the April cure notices, and specifically denied they were valid notices for reasons which I deal with below (some of them added by amendment), and took other points about their enforceability, again in a manner dealt with below. Paragraph 43 provides:
“In the premises, Crosstown is entitled to and claims a declaration that the publishing rights in the Compositions have not reverted to the Writers and are owned by Crosstown.”
Paragraph 7 of the prayer seeks a declaration to the same effect. The significance of this is that the proceedings seem to have been premised on an assumption that the Writers claimed that the notices, if valid, would have the effect of bringing about an automatic re-vesting of the copyrights (automatic in the sense that no other act was required to achieve that). That was a correct assumption. In their Amended Defence the Writers pleaded (paragraph 23) that “the copyrights in all the Compositions ... reverted to the Writers [on two specified dates] and their Counterclaim sought a declaration to the same effect. Issue was joined on whether the Writers were entitled to rely on the notices, but there was no pleaded issue as to the legal effect of the notices if they were valid, and in particular no pleaded issue as to the automatic effect of the reverter if operable and invoked. The significance of this will appear below.[60]On 10th September 2007 RD went into administration. It never pleaded to Crosstown’s case and the proceedings are effectively stayed against it. A temporary stay was agreed between Crosstown and the Writers late in 2007 for the purpose of negotiations, but it was removed and a Defence and Counterclaim was served on 30th January 2008.

The issues

[61]The Writers claim that they have re-acquired their copyrights because the notices specified valid, material breaches which have not been remedied, so that clause 18(a) of the various agreements has operated. Crosstown disputes this on a large number of grounds which raise the following principal issues: i) Whether the cure notice provision, on its true construction, provides (purports to provide) for an automatic reverter of the copyrights, or whether on its true construction it provides merely an agreement to re-assign. ii) If it purports to provide the former, is it nonetheless incapable in law of taking effect in that way, so that it can be no more than an agreement to reassign? iii) If it purports to provide for the former, should this court give effect to it in relation to foreign copyrights? iv) In relation to the RCO audit complaint, is the notice confined to breaches of one agreement per author only (the last in the series)? v) In relation to all breaches, is reasonable detail given in relation to the breaches within the meaning of clause 18? vi) In relation to each of the alleged breaches, are they each established on the facts? vii) If so, are they material within the meaning of clause 18? viii) Has Crosstown taken reasonable steps to remedy the breaches? ix) Do cure notices have to be given within a reasonable time of the breaches? If so, what is that time, and were they so given? x) If the Writers were otherwise entitled to serve notices in respect of the breaches, have they lost the right to do so by virtue of waiver, election or estoppel?[62]Some of those issues require detailed consideration of the facts underlying the notices, but there are common strands which can usefully be dealt with first before turning to that detail. I shall therefore not take the issues in that order, but shall take generally applicable points first.[63]Before turning to that point, there is one point that is not taken. Mr Hunter did not seek to invoke any jurisdiction to relieve from forfeiture. It was not pleaded, not raised in opening, not dealt with in evidence, and expressly disclaimed by him in his final speech. That, therefore, is a point which I shall not have to deal with.

Do the Agreements provide, on their face, for automatic reverter?

[64]Crosstown’s case at the trial was that clause 18 does not create what Mr Hunter described as a property interest which passed on the events described in that clause. His case was that nothing operated until the conditions referred to in clause 18 arose, at which point there was a contractual obligation on the Publisher to re-convey the copyrights, which right give rise to an equitable interest, presumably through the Writers’ right to have specific performance. The contractual obligation to convey does not bind Crosstown, because it was not a party to the publishing agreements. The case of the Writers was that clause 18 operated so as to provide for an automatic vesting (and not merely an obligation to convey) when the conditions were fulfilled.[65]The first point to be made is that it is a bit surprising that this turned out to be an issue at the trial. Mr Hunter himself said that it only dawned on his side that the Writers were relying on an automatic vesting when they saw a supplemental opening written submission served by Mr Mill. That, too, is surprising. I have set out how the matter appeared in the pleadings. Crosstown started this action, and the terms of its pleading do not contain any hint of its own present case on the point, and indeed they seem to presuppose the operation of the automatic vesting rather than the contractual analysis. It is therefore not surprising that the Writers do not raise the point; the parties were ad idem about at least that, on the face of the pleadings. It is Crosstown which has apparently shifted its ground, or at least is raising a point not raised on the pleadings.[66]This will have ramifications when I come to deal with the foreign copyright point, but at the moment I shall assume it is fairly in play, and I shall consider how the matter stands on the footing of the construction of the Writers’ agreements. Clause 18 itself seems clear in its terms. When the various conditions have been fulfilled “all rights hereunder shall forthwith revert to the Writer.” That is not the language of future covenant; it is the language of automatic vesting. The word “revert” clearly imports that, and is strengthened by the word “forthwith” immediately before it. That conclusion is strengthened by the provisions of clause 18(b), which clearly purports to provide for a retrospective vesting in the event of a liquidation of the Publisher. It is questionable as to the extent to which insolvency principles would permit that clause to have that effect, but that is not the point. The intent seems clear.[67]The only support that Mr Hunter sought to gain from the internal wording of the agreements was from clauses 1(a), 1(e), 4(b) and 5(a). In clause 1(a) he relied on the statement that the assignments of the copyrights were for the Publisher to hold “absolutely”; in clauses 1(e) and 5(a) he relied on the warranties by the Writers that, as he put it, the assignments were free from encumbrances, and in clause 4(b) he relied on the fact that the Retention Period was a fixed period which did not refer to, or was not qualified by, clause 18. In my view none of these points even begins to support Mr Hunter. The word “absolutely” in clause 1 is not inconsistent with an automatic reverter under clause 18 – that provision, operating as such, does not make the original assignment any the less absolute. Clauses 1(e) and 5(a) are warranties as to the then current state of the copyrights or, in the case of clause 1(e), the power of the Writer to convey free from encumbrances. They in no way reflect on, or impact on, the operation of clause 18 which, if it comes into operation at all, comes into operation in the future and as a result of acts of the Publisher. Clause 4(b) is irrelevant in this context – it sheds no light at all on how clause 18 operates.[68]Mr Hunter’s construction argument fails thus far on the wording of the agreements themselves. However, he invoked another point. He pointed out (correctly) that the agreements effected an assignment of foreign copyrights, and he said that if clause 18(a) were to give rise to the sort of contingent or floating property rights (to use his wording) that the Writer’s case relied on then that would generate a lot of uncertainty because such an assignment “may be ineffective in foreign countries” (to take Mr Hunter’s wording from his written final skeleton argument). That difficulty would not exist if clause 18(a) were construed as an in personam contractual obligation to reassign in the events stated.[69]At this level of the argument this is still a construction point. It is said that the effect on foreign copyrights is something that should be taken into account in construing the agreement. For that to be the case the foreign copyright position would have to be something that was known to both parties of each agreement, or treated as being known to both parties. In that way it would become part of the relevant factual background. There was no evidence which would justify such a finding. First, there is no evidence that the Writers knew anything about foreign copyright law at all. Second, there is no evidence that RD knew anything about the foreign copyright position either, or at least as to the extent of its knowledge of this technical point. Third, there is no evidence of what any relevant foreign copyright law was anyway. For these reasons the foreign copyright position is not a relevant factor to take into account in construing the agreements.[70]It follows, therefore, that as a construction point this point fails. The agreements all purport, as a matter of construction, to give rise to an automatic re-vesting on the events described in clause 18.[71]Mr Hunter’s next point was that, even if that was the purported effect of the agreements, that effect was not one which could exist as a matter of law, so for that alternative reason the most that the Writers could have was the benefit of an agreement to re-assign. He based his argument on English law so far as English copyright was concerned, and on the absence of any evidence that foreign copyright law allowed such an automatic revesting.[72]Again, there is a pleading point that could be taken against Mr Hunter in relation to this point because his pleading assumes that the clauses have the effect which he now seeks to deny that they have. However, at least in relation to English law, the point that he makes is a question of law and there is no disadvantage in allowing him to take it given that Mr Mill had an opportunity to address the legal questions arising.[73]Mr Hunter’s argument started from a submission that “legal ownership of chattels is indivisible in time”. Section 90(1)(b) of the 1988 Act provided a statutory exception to the rule, but otherwise it exists. His initial submission was made as a matter of assertion. I am afraid that I do not recognise it as a proposition of English law, and Mr Hunter was unable to justify it as a bald proposition. He prayed in aid the need for people to know who owned chattels, and that they should provide an indefeasible interest to another, but while that might or might not be a good idea, it does not plainly generate the rule on which he relies. Research done during the trial demonstrated that the position was not clearly that which Mr Hunter contended for.[74]Halbury’s Laws, 4th Edn, Vol 35 (Personal Property) states at paragraph 1227 that: “The common law also did not recognise the possibility of the ownership of the goods being split up into lesser successive interests or estates, nor did it contemplate remainders or reversions in chattels”.[75]Paragraph 1229 says that:
“ … the early common law regarded personal property … as essentially the subject of absolute ownership and incapable of being held for successive interests.”
[76]But paragraph 1230 deals with “Successive interests under modern law” and says that:
“Successive interests in personal chattels may be created by will with or without the interposition of trustees. The precise nature of interests so created is uncertain, but it would seem that the modern tendency has been to regard the first holder as having the absolute property, subject to an executory interest of a contingent character in the ultimate donee, and to a fiduciary duty to preserve the property for him.”
[77]The authorities underlying those propositions were not investigated before me, but the apparent state of the law does not support the blanket position adopted by Mr Hunter. Nor did other academic works relied on or drawn to my attention. I do not consider it to be right. There is at least one plain instance of title to chattels being allowed to pass at some future time and contingently on a future event, and that is in the realm of sale of goods. It is common form for it to be agreed that title passes only when the goods are paid for. Mr Hunter said that this was the effect of the Sale of Goods legislation as to the passing of property, relying on a case about the rejection of goods (Berger & Co Incv Gill & Duffus SA [1984] AC 382 at 395), with a consequential reverter of property, as showing that. I think that these cases demonstrate that there is no general position in common law as contended for by Mr Hunter. There is no statutory exemption from a general principle; what is happening is that the statute is providing for permissible events in certain specified circumstances. The statute demonstrates that there is no general policy objection to what Mr Mill contends for.[78]Furthermore, even if there might be a problem in the general law for chattels and choses in action, section 90 of the 1988 Act provides a different position for copyrights. Section 90(1) provides that copyrights are transmissible “as personal or movable property” and subsection (2) provides:
“(2) An assignment or other transmission of copyright may be partial, that is, limited so as to apply – … (b) to part, but not the whole, of the period for which the copyright is to subsist.”
[79]That plainly provides for a reverter on an identifiable future date, as indeed is the case under the main assignment provisions of the agreements which provide for the copyrights to be assigned for a period plus a 25 year retention period. On the expiry of that longer period the copyrights revert. That is within the section, and nobody contended otherwise. What clause 18(a) provides is for an earlier reverter. I do not see why that does not fall within section 90(2) if it needs to. Mr Hunter argued that the period of time referred to in the subsection had to be a term certain, but there is no justification for that on the wording of the section and I cannot see any justification in principle for it either. I therefore reject that submission.[80]It therefore seems to me that in relation at least to English copyrights the provisions of clause 18(a) of the various agreements are capable of operating according to their tenor to re-vest copyrights in the Writers. However, at this point Mr Hunter introduced the question of foreign copyright again and said that the case for an automatic reverter required that the same occur in relation to foreign copyrights. Whether the agreements could have that effect on foreign copyrights was a question of the foreign copyright law applicable to each copyright, and the Writers’ case required me to make a finding in that respect. Such a finding was not open to me because it involved questions of foreign copyright which were non-justiciable in this jurisdiction. Accordingly I could not decide whether or not there had been an automatic reverter so far as foreign copyrights were concerned. He was, I suppose, taking a point as to jurisdiction.[81]This aspect of Mr Hunter’s argument is again one which emerged only in his final speech. There was not a hint of it at an earlier time. That was again said to be attributable to the view that Crosstown took to the effect that an automatic reverter (as opposed to a contractual obligation to reconvey) was not being asserted by the Writers.[82]Yet again this late arising of the point is attributable to the manner in which the claims were pleaded. Crosstown decided to take the initiative in these proceedings and to bring its own claim seeking a declaration that “the rights in [the] Compositions have not reverted to the [Writers]”. No distinction is drawn between English and foreign copyrights in this respect. Not surprisingly, the Writers do not draw any such distinction in their Defences and Counterclaims. The case proceeded on the assumption that all copyrights were to be treated similarly. The question of foreign copyrights was therefore not addressed by anyone, and in particular no evidence of foreign copyright law was adduced. Mr Mill had not prepared, or sought to advance, any submissions as to the legal correctness of the point either. In those circumstances the position adopted by the claimant that I cannot decide the very question that it raises in relation to a substantial number of the copyrights assigned by the agreements is a very unattractive one. If I were to accede to it I would not be able to reach a decision in relation to a very significant part of the commercial value of the case, on the submission of the claimant, despite the fact that the claimant’s pleaded case seemed to invite me to do so and the defendants joined in that invitation.[83]Mr Mill invited me to note the late stage at which this point was taken. It was taken at the beginning of closing speeches, despite the fact that Mr Hunter had had the document which he said triggered it (the supplemental opening of the claimants) about a week ago. He relied on the state of the pleadings, the common basis on which the parties ostensibly invited the court to decide the point, and the fact that Mr Hunter said no more than that the foreign law “may be” different from English law on this point. He also relied on the general rule that, in the absence of evidence to the contrary, the English courts will assume foreign law to be the same as English law.[84]I accept, and Mr Mill did not seem to dispute, that the validity of a purported automatic reverter of a foreign copyright will be governed by the law of that copyright (as will the original assignment, a point which, unsurprisingly, was not raised by the claimant). So underlying Mr Hunter’s point is an issue of substance, if it is appropriate to allow it to be taken in these proceedings. If it were a point which had arisen earlier in the proceedings it would doubtless have been possible to have evidence to deal with it (if appropriate) and to take such steps as were necessary in order to make sure that this court could deal with the real issues in dispute. As it is, it has been mounted as something of an ambush, though not, I accept, an intentional or planned one.[85]In the course of his argument Mr Hunter relied on the decision of Ferris J in Mother Bertha Music Ltd v Bourne Music Ltd [1997] EMLR 457. That case was actually an infringement action, brought by persons claiming title to copyrights against someone claiming to be (in the events which happened) a licensee. The claimants took through an assignment, which assigned the benefit of foreign copyrights as well as English copyrights. Up to the end of the trial hearing the claim was just for an infringement of English copyright, but as a result of a decision of another court delivered before Ferris J delivered his own judgment, the claimants sought to extend their claim to infringements of foreign copyright which took place abroad, which they said was open to them on their pleadings. Ferris J declined to allow that. He refused to allow the claimants to depart from the basis on which the trial had been conducted hitherto. Part of his reasoning depended on the justiciability of the infringement claims in this jurisdiction, part turned on the unfair level of generality of the pleading, and part turned on the absence of evidence of foreign copyright law. What Mr Hunter particularly relied on was Ferris J’s views as to the applicability of the normal presumption as to what foreign law was. He seems to have accepted the defendant’s counsel’s submission (Mr Mill, as it happens) that:
“It is manifest that the law of copyright in other countries will be found not to be precisely the same as it is in the United Kingdom”; 86. and went on to say that: “it is simply not realistic to suppose that the plaintiffs intend to go to trial on the basis that the copyright law of every Convention county is the same as the law of England.”
Mr Hunter submitted that that those points applied in the present case with the effect that, if clause 18 had the effect which I have held it to have, I could not deal with foreign aspects of the case.[86]I am satisfied that Mr Hunter’s submissions, if acceded to, would amount to a departure from the pleaded case (not least his own) and a course of action which would be unfair to the Writers. They have approached this case on the footing of an apparent claim that the reverter under clause 18 was effective if the conditions for operating the clause were fulfilled. The history of this matter shows that on any footing they have been the victims of less than full and willing compliance with the agreements from time to time, and they are entitled to have their current position established. It was actually Crosstown which brought these proceedings to have that done, and they did so on the ostensible basis described. If they had pleaded the relevance of foreign copyrights, that could have been dealt with properly at an appropriate stage. It is neither right nor fair to raise it for the first time in final speeches. It is not as though Mr Hunter was even asking for an adjournment in order to introduce material to allow the point to be taken. He simply said I could not deal with foreign copyrights, and relied on the Mother Bertha case, above. Just treating the point as a new one for the moment, it is too late to raise it.[87]However, it is not quite as simple as that. Mr Hunter’s point has a quasi-jurisdictional air to it. He says that I simply cannot deal with the ownership of foreign copyrights any more than Ferris J could, and pointed to the cases set out in my decision in Lucasfilms Ltd v Ainsworth [2008] EWHC (Ch) 1878. That case involved the subsistence of, and infringement of, foreign copyrights. The question arose as to the extent, if any, to which this court could deal with such issues. Having reviewed the authorities, I held that infringement issues could be determined here. I would also have been minded to have held that I could have determined subsistence issues as well, had it been necessary. The appropriate test was in the nature of a forum conveniens test. The questions that are said to arise at this level of the debate in the present case fall under the subsistence head. I do not propose to go over again all the ground that I traversed in the Lucasfilms judgment. I do not consider that it is necessary to do so. The judgment in that case turns on the appropriate court for resolving issues. On the pleaded case there is no relevant issue in this case, and it would be unfair to allow Crosstown to raise one at this stage. They ostensibly approached the trial on the footing that all copyrights could be treated alike. While there were issues as to subsistence (which are the main issues arising in the case), there was no suggestion that there might be different issues depending on the nationality of the copyright. Such obstacles as there are to an English court determining foreign copyright issues are those relating to issues. If something is not an issue, then the obstacles do not exist in relation to it. For the reasons given above, there was no particular issue arising out of the foreign nature of copyrights, so there is nothing to stand back from. The matter can be tested in this way. Suppose the parties had acknowledged that there were foreign copyrights but had invited this court to approach the matters rising on the assumed basis that that did not raise any difference of legal approach so it was unnecessary to distinguish them. Would this court nonetheless have to decline to determine the points? It seems to me plain that it would not. It might or might not be open to the court to take that point itself, but if the parties do not then the court can get on and decide the issues that the parties have raised. That example is not, of course, the actual position in the present case, but the present position is analogous. There is no issue on the pleadings requiring foreign copyrights to be differentiated and filtered out. The contrary is the case. The claimants have pleaded on the apparent footing that there is no difference, and the Writers as defendants have accepted that. I can and will proceed on that basis, and decline to allow Crosstown to raise the issue at a late stage.[88]I do not consider I am bound to take a different view as a result of what Ferris J said in Mother Bertha. That was a contested application. The original assumption was not that all copyrights were the same, but that the parties were dealing only with English copyrights. There was then a late attempt by one party to introduce the foreign element and add a range of copyrights to the action. In those circumstances Ferris J recognised that it would be wrong to assume that foreign copyright law was the same as English law and deal with foreign copyrights accordingly. He therefore refused to allow the action to be extended and to deal with it on that false assumption, which was not an assumption on which the parties had hitherto been proceeding (they had made no relevant common assumption at all). In the present case the implicit assumption, on which the parties have been ostensibly operating (judging by the pleadings, which is the relevant source for present purposes) is one from which one of the parties is seeking to depart, and there is no attempt by a party to extend the ambit of the action. The situation is therefore different.[89]Accordingly, I refuse to allow Crosstown to contend that the effect of clause 18 might be different in relation to different national copyrights. Although it might not be strictly relevant, I would add that this conclusion produces a much more satisfactory (if not conveniens) litigation picture, because if the position were otherwise the point might have to be determined in as many jurisdictions as there are copyrights in this case. I have not totted up the number of jurisdictions involved, but I think there are at least half a dozen if not twice that. That prospect is unsatisfactory. In the present case it is not appropriate to inflict that on the Writers. I reach the conclusion that I do without having to consider the strength of the submission that it would be wrong to assume that foreign copyright law is the same as English law. That submission would only become relevant if there were an issue as to different jurisdictions, and I have held that there is no such issue in this case because of the manner in which the case has proceeded hitherto. I also do not have to consider the extent to which foreign copyright issues can be litigated in this country (see, for example, Lucasfilms Inv v Ainsworth), because again that only arises where there is a properly formulated issue as to the point, which again in this case there is not.[90]I can and do therefore decide this case with no distinction being drawn between English and other copyrights for the purposes of the operation of clause 18 and the defences of Crosstown in this case.

The remaining issues in the case

[91]It therefore becomes necessary to consider the breaches relied on, whether they entitled the Writers to serve notices under clause 18, whether any relevant breaches were remedied and the other defences that Crosstown claims to have in the event that the notices were otherwise valid and unremedied. I shall have to deal with the factual element of the breaches in relation to each relevant paragraph of the cure notices, but some common points of construction and effect arise which should be got out of the way first.

The RCO audit – cure notices paragraph 2

[92]The first point taken by Crosstown is that the breaches on which the Writers are entitled to rely under paragraph 2 are limited to those arising under one agreement only in respect of each of the Writers, namely (in each case) the Writers’ 1998 agreements. That is because paragraph 2 refers to “underaccounting by you under the 1998 Agreement”, and does not refer to all the agreements (which are otherwise identified in the heading to the letter and in the other breaches). This point, if good, would limit the complaint that can be made in relation to the RCO audit to those songs whose copyright is assigned under the 1998 Agreement. The financial significance of those breaches would be of much less significance than the breaches of all the agreements in aggregate of the Writers respectively. It was apparent from the evidence of Mr Skeet and the report itself that the RCO audit report in fact related to, and described, breaches of all 6 agreements (3 for each writer).[93]Mr Mill countered that it was necessary to adopt a commercial construction of the document, and when one looked at it in its proper context, and by proper reference to the audit report itself, one could see that each notice was intended to refer to breaches of all three agreements of each Writer.[94]This is a question of construction of the notices themselves. The notices are addressed to RD. The question is what they should and would be taken by RD, in all the circumstances, to mean. Part of that context is the RCO audit report itself (or rather, the reports, because each Writer received one). Each report referred to the examination of records carried out by Mr Skeet and said:
“Our examination covered the period from 1 July 1999 to 31 December 2001, pursuant to the Agreement between you dated 1st December 1998.”
That, in itself, suggests that only one agreement was looked at. However, the procedures were described as including:
“A review of royalty rates applied compared to the provisions of the Agreements.”
Note the plural. The schedules to the reports, which contain the detail, in no way distinguish between copyrights assigned under the 1998 Agreement and other copyrights. Indeed the contrary is true. The schedules compare the accounting that took place, which was on the basis of all the copyrights, with the accounting which ought to have taken place, which was obviously calculated by reference to the same base (all the copyrights). There is no suggestion that only a limited set of copyrights were being taken, and in the entire history of this matter no-one has suggested that that took place or that they understood it has taken place. There are various references to royalty statements, in terms which suggest again that all copyrights were being looked at. There can be no doubt that each report, although in its first paragraph ostensibly referring to copyrights passing under only the 1998 agreement, was in fact an audit which related to all of them, and it would clearly have been so understood by RD. That is true as a matter of construction. The reference to just the 1998 agreement in each report was a mistake, and an obvious one. (Although not admissible as a guide to construction, this is also how RD, not known for behaving sympathetically or benevolently towards the Writers, dealt with the notices – no point was ever taken by RD that the audit reports were limited only to those copyrights which were assigned by the 1998 agreements in the actions in which this report figured. If it be said (correctly) that those are not acts involving Crosstown, it should nonetheless be observed that while the assignment agreement between RD and Crosstown was plainly of all copyrights, the only agreements with the Writers whose benefit was expressly assigned to Crosstown under the sale agreement were the two 1998 agreements. This seems to perpetuate a theme in which the last agreement in the chain was thought to be the currently material one, governing the relationship.)[95]In those circumstances it is plain that paragraph 2 of the cure notices is not limited in the copyrights to which it is to be taken to refer. Reading the whole paragraph makes it clear that there is a reference back to the complaints made in the two RCO audit reports. It does not seek to dissect out parts of those reports. Those reports themselves deal with all the copyrights and do not dissect out as between agreements either. The reason that the notices refer to the 1998 agreements only is probably because it is picking up that reference in the two reports. They repeat the same mistake as that made in the reports. That actually reinforces the link between the notices and the reports, and thus with all the copyrights. This approach to the construction of the notices is consistent with the approach to construction in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749. Mr Hunter’s point on this therefore fails.

Materiality

[96]Clause 18 operates when the Publisher is in “material breach”. Mr Hunter relied on what he said was the fact that clause 18 was of a class of clause capable of being penal, depending on the scope of its operation. If there were a choice of constructions, one of which rendered it penal and one of which rendered it valid, then the latter should be preferred. That was said to go to the meaning of “material breach”, and it had the effect of making it mean a “serious” breach or one “going to the root of the contract”. If it applied to lesser breaches it would operate as a penalty, so it should be construed as not doing so. Mr Mill’s submission was that the word material meant non-trivial, or referred to a breach which had “significance” to the Writers.[97]So far as there is a point of construction here, the answer lies not in finding some sort of appropriate synonym. What is more significant is to find the conceptual ideas expressed in the word. I do not think that the concept of the potential penal nature of the clause assists, even assuming for these purposes that the point would work as Mr Hunter says it works. Even if the word means just “significant”, and assuming that is a lower threshold than the meaning contended for by the Crosstown, there would be no penal element in its operation. I can see nothing penal in allowing a termination for a significant breach where the guilty party has not taken the opportunity which the clause gives for putting it right. Accordingly the point is a straight choice between the contentions of the parties as to the meaning of the word, unaffected by notions of penalties.[98]In Gallagher International Ltd v Tias Enterprises Ltd [2008] EWHC 804 (Comm) Christopher Clarke J had to consider the effect of a clause which provided one party could terminate a trading relationship if there were: “a material breach of any of the terms or conditions of this agreement” which went unremedied after a notice. He held, at paragraph 764, that: “Materiality had to be assessed in the context in which the question arises which, here, is the possible termination of a five-year agreement. In order for a breach to be material it does not have to be repudiatory: Dalkia Utilities Services plc v Celtech International Ltd [2006] EWHC 63 (Comm). In Phoenix Media Ltd v Cobweb Information, unreported, 16th May 2000, Neuberger J, as he then was, said: ‘Materiality involves considering the following: the actual breaches, the consequence of the breaches to [the innocent party]; [the guilty party's] explanation for the breaches; the breaches in the context of TEL Agreement; the consequences of holding TEL Agreement determined and the consequences of holding TEL Agreement continues.’ I respectfully regard that as a helpful checklist." ‘Materiality involves considering the following: the actual breaches, the consequence of the breaches to [the innocent party]; [the guilty party's] explanation for the breaches; the breaches in the context of TEL Agreement; the consequences of holding TEL Agreement determined and the consequences of holding TEL Agreement continues.’[99]So do I. I also agree that materiality in the agreement before me, as in the agreement before Christopher Clarke J, does not mean that the breach has to be, or has to be close to, repudiatory. I also do not think it necessary or appropriate to require that the breach be vested with the character of going to the root of the contract. That is close to the notion of repudiation, and the concept of "materiality" in my view stops short of that. The word "material" certainly excludes that which is trivial, but beyond that it is appropriate to measure materiality by reference to the sort of considerations referred to by Neuberger J. If it be said that the clause, which admittedly has potentially very serious effects if triggered, is capable of giving rise to unfairly harsh consequences in respect of breaches that might not be very serious, so that some particularly stringent meaning must be given to the word, then the answer lies in considering the mechanism of the clause. It does not operate automatically on any "material" breach. It only operates once a "material" breach has been identified as such by the Writers and then goes unremedied by RD. Why should the Writers not have the right to have their copyrights back if a breach of significance is identified and the Publisher does not remedy it? In the context of an agreement such as the agreements in this case, that seems to me to be a fair and commercially sensible position and to be well within the contemplation of both parties. Accordingly, I do not think it necessary to give the word "material" the forceful meaning contended for by Mr Hunter. It connotes the concept of significance, as opposed to triviality, and its materiality has to be measured in its total context.[100]Mr Hunter also submitted that affirmation could render an otherwise material breach immaterial. This tied in with his submissions on election and acquiescence. He has a point here, but it is not the one that he makes. The concept of materiality in this context is not a binary one, with something like affirmation or election automatically rendering immaterial a breach that would otherwise be material. The conduct of the Writers, so far as it is affirmatory, would be capable of being part of the facts which render a breach material or immaterial, but that is all part of the factual mix on the materiality question, which has to be decided as one overall question.

The alleged breaches in this case: their existence, specification and their materiality

[101]In essence, Crosstown did not accept many of the breaches, and claimed that such as there might be were immaterial. It is therefore necessary to consider all the breaches relied on and their materiality if established. I shall do so by reference to the cure notices. Although each of the Writers were owed discrete obligations, and any breaches were technically different in respect of each of them, their respective rights and the facts on which the allegations or breach are sufficiently similar to enable me, to consider one and then treat my conclusions as applicable to the other. This judgment should be read accordingly.[102]Crosstown also relies (albeit to a limited extent) on a failure to specify “reasonable detail” within the meaning of clause 18. This is a matter of judgment in relation to each specification, and it will be convenient to consider it with the questions of breach and materiality.[103]The allegation here is rooted in the fact that in certain territories licensees deduct local withholding tax from gross royalties paid, and that those sums in turn are deducted from sums payable to the Writers. The RCO report maintained that this was not an allowable deduction and said £30,478 was wrongly deducted in respect of Mr Barry and £23,703 was wrongly deducted in respect of Mr Taylor. There was no material dispute about the amount of moneys withheld, but Crosstown maintained that there was no obligation to account in respect of these sums until RD itself received a tax credit in this jurisdiction in respect of them. It was said that there was no evidence of when or even whether the tax credit was received. Clause 10 of the agreements requires RD to account for “net monies received in the United Kingdom”, and on that basis Crosstown’s argument on the date of accountability might well be right. The Writer’s riposte is that “net monies” is defined to include “monies received by or credited to the Publisher”, which (as I understand it) is said to include the withholding tax. However, as Mr Mill submitted, it is not necessary to resolve this point, because in the earlier proceedings RD admitted that it had received the benefit of a credit after 2006 (and apparently by March 2007), and admitted the claim. I find this claim proved.[104]There is no difficulty over the particularity of this claim, and the failure to account for sums of this nature in these amounts, in this context, is plainly not insignificant.[105]The failure to account properly in this respect means that there is a breach of various provisions of the Agreements relating to accounting and payment identified in paragraph 2, and those breaches are material by virtue of the amounts involved, the longevity of the claims, the basis of the non-payment, and the nature of the relationship between the parties which, being partly based on trust, is seriously affected by this sort of thing.

Paragraph 2 – incorrect exchange rate

[106]Mr Skeet identified that incorrect exchange rates were applied in respect of Mexico and Australia. In relation to the former, the rate appropriate to Spanish pesetas, not Mexican pesos, was applied. In respect of Australia the wrong rate was applied because RD did not take advances sufficiently into account – I need not go into details. The total sums involved are identified above. In the previous pleadings these global sums were admitted, save for £318 in each case. They were never paid because of unjustified deductions in relation to the cover record point. In these proceedings Crosstown did not challenge the assertion that the wrong exchange rate was applied, and in Mr Hunter’s final speech Crosstown offered no other defence save to rely on the fact that only £245 and £436 can be shown to be due under the 1998 Agreement copyrights; the remainder was said to be due under earlier agreements and therefore not properly the subject of paragraph 2 of the notices which Crosstown said were confined to breaches of the 1998 Agreements. Thus, it was said, the amounts were trivial and the specified breaches non-material. This point fails in the light of my finding that paragraph 2 is not confined to breaches of the 1998 agreements. That means that rather greater sums are due. They are plainly material sums, and the breaches are material bearing in mind the amounts involved, the nature of the breaches, the length of time that the sums were outstanding for and the reasons given for non-payment. In cross-examination it was also put that the Australian arrears were not attributed to individual songs in the report. That is true, but that seems to me to be immaterial. The work to do so could be done, and should have been done by RD or its licencees, and the failure to pay properly still exists.[107]No point was taken on the reasonable specification of the breach (unless the Australian point is such a point, in which case it is bad because the breaches were clear enough to be admitted by RD). The moneys were never paid, and the breaches of the accounting and payment provisions referred to in paragraph 2 are established. The breaches are material for the same reasons as those appearing above.[108]Mr Hunter said that the breaches alleged, so far as established, were slight in terms of the amounts actually paid, were no more than sloppy accounting and were stale by the time of the cure notices. I do not think that this is a fair description of any of these breaches. The amounts are each significant amounts, and their aggregate effect even more so. This was not sloppy accounting, and even if it was then it becomes culpable non-payment when the sloppiness of any accounting is made apparent. The length of time during which there was non-payment does not make them non-worthy claims. It makes the breaches all the more material, in my view, for what the breaches say about the relationship between RD and the Writers.

Paragraph 2 – incorrect share accounted

[109]This is explained above. By the time of the final speeches the only defence to this was that the paragraph related only to the 1998 agreement, and that only £1500 could be attributed to this breach (the breach, in that form, being admitted). This was said to be significantly less than the overall sums claimed in the RCO report. As a matter of maths that was true, but again, as this defence proceeds from the false premise that only the 1998 agreement matters, it fails. In the earlier actions RD had admitted the amount of the claim in respect of Mr Taylor (£1,556), and the principle, but not the quantum, of the claim in respect of Mr Barry. Crosstown offered no other defence on quantum in relation to Mr Barry, and having considered the report and the rest of the evidence I find that the quantum (£11,432) is established. The only other point relied on by Crosstown was that this was an instance of a party to a contract getting some complex provisions wrong. As a matter of fact that may be right or it may be wrong, but RD (and, if they wished to challenge the point, Crosstown) had plenty of time to get it right, and they failed to do so.[110]RD’s failures give rise to breaches of the payment and accounting provisions identified in paragraph 2, and those breaches are material for reasons parallel to those given in relation to other defaults. There is no real issue over the specification of the breaches.

Paragraph 2 - Black box income

[111]Black box income needs a little more explanation than I have given it hitherto. Publishers are members of collection societies in various jurisdictions. So far as the collection societies collect and remit income attributed and directly attributable to specific songs, then no problem arises – this income is treated like other income for royalty purposes. However, other moneys are also remitted. These moneys come from such things as blank tape levies, and rebates on commission chargeable by collection societies. Mr Skeet explained that on occasions societies would find that they had lawfully retained commission which was actually in excess of what was necessary for their own purposes, and that they would sometimes remit that excess commission. There were other reasons why societies would remit income not directly attributable to individual songs. RD seems to have taken the view that it was not obliged to pay any part of this income to the Writers, precisely because it was not directly attributable to any of their songs. Mr Skeet was not shown any documents from which he could ascertain how much money came as black box income from any given territory, and there were probably none which credited the Writers with any part of that income. Nevertheless, he came up with some assessed figures which he arrived at from his knowledge of the proportion of a publisher’s income usually represented by black box income, and then made notional apportionments to the Writers on certain assumptions which I do not think I need to go into. In its Defence in the earlier action RD pleaded that no moneys were ever received by RD as black box income because it was considered by the collecting societies to be too young a company.[112]The first question that arises is whether RD was obliged to account for this black box income (if any). The entitlement to royalties arises under clause 10 of the Agreements. I have set out the relevant parts above. The first requirement is that royalties are payable in respect of “identifiable and directly attributable exploitation” of the Compositions. The actual nature of any black box income from any particular jurisdiction in respect of any particular period is not known in this case, because RD has withheld the information. All I have is the generalised description provided by Mr Skeet, showing the sort of thing that it is paid in respect of. That description does not clearly demonstrate that it arises from the identifiable and directly attributable exploitation of any composition of compositions. It arises because RD is a member of the collecting society. True it is that RD is a member only for the purposes of exploiting copyrights, including the copyright in the compositions, but by itself that does not make a sufficiently close link between the exploitation of copyrights and the black box income. Nor does the income arise from the exploitation referred to in paragraph 10(a)(i). It does not fall within the meaning of those words. I have not set out sub-sub-clauses (ii) and (iii) because specific exploitation is referred to there which does not assist the Writers. The next potential candidate is (iv). However, this has a requirement that the income be “directly and specifically attributable to the Compositions”’, and it does not seem to me that black box income as a whole falls within that description. While one could conduct an exercise to apportion black box income on some sort of apportionment basis, that exercise is only required, for at least some of it, because it is not directly appropriatable in the first place.[113]Thus far it therefore looks as though some of the black box income is not within clause 10. However, that is not necessarily the final conclusion. One of the examples of this income was a rebate of commissions from a collecting society. This presupposes a deduction of commission before sums are remitted by that society. Had the proper net sums (ie net of the smaller deduction) been remitted in the first place, then the royalties from particular songs might well have been bigger, both as a matter of principle and as a result of the operation of the definition of “net monies” in clause 10(d). That element of black box income might therefore be treated as being directly attributable to one or more of the Compositions. There may be other elements of the income that should be similarly treated for similar reasons. I do not know, because there was no evidence about it. This is unsatisfactory, but it arises from a combination of the failure of RD to provide more details, and the failure of the Writers or their auditors to seek more information. The former is much more culpable than the latter, but the fact is that, in this litigation, the combined result is that I do not have the necessary evidence.[114]Accordingly I find that under this head the Writers have not established a breach. They have not proved, on a balance of probabilities, that any element of the black box income is income falling within clause 10. I do not reach this conclusion with any enthusiasm, but at the end of the day it might not have much significance for this litigation because there are other material breaches anyway.

Paragraph 2 – failure to pay the costs of the audit

[115]Clause 14(c) entitles the Writers to the costs of the audit if there is a deficit of 10% or £4,000, whichever is the greater, in relation to a particular accounting period. In his report Mr Skeet had found errors exceeding that amount in 2 of the 5 periods that he was considering, in respect of both writers. On that footing he claimed £9000 for each audit. This sum was not paid, and these are the unpaid costs relied on in paragraph 2 of the cure notices.[116]At the trial the only point taken by Mr Hunter was his 1998 agreement point – if one considered sums due under that Agreement alone, then any deficits did not get up to the specified limit. Since I have ruled against him on that point as a matter of construction then his point fails. It was not argued that some apportionment fell to be done because the deficits in other periods fell below the limits in clause 14(c). It is not clear to me that taking out the black box income affects this claim, and no calculation was mounted to show that it might. In those circumstances I find that this breach too is established. The money is significant, and it is part of the overall pattern in which significant moneys have been withheld for a long time. This, too, is therefore a material breach.[117]However, in case it matters, I would give Crosstown permission to seek to re-open this particular point should it be arguable that my findings about black box income somehow affect it. If it be said that this point ought to have been dealt with at the trial, then the appropriate counter is that that is right as a matter of strictness, but there was already enough detail to mean that losing sight of this particular permutation and piece of detail is not something that should be held against Crosstown. Having said that, my view is that my other findings may well make that particular refinement a pointless one to seek to advance.

Paragraph 3 – the Bevis audit

[118]Paragraph 3 sets out various breaches arising from the Bevis audit. Again, I shall take them in turn.[119]Mr Bevis’s evidence is that he was not provided with any accounting statements relating to the royalties due from the US sub-publisher for the 5 accounting periods ended 31st December 2004. US income is a very large part of the income of songs such as those composed by the Writers. The US is a very large market. To give some idea of the sort of sums that might be at stake, the income apparently received by RD from its US subsidiary in respect of Mr Barry for the preceding 5 accounting periods was over £1.7m, and for various reasons this figure might even be under-stated. It does not, of course, follow that the same amount of moneys was, or ought to have been, coming in in the 5 periods in question, but it gives an idea of the significance of the market.[120]Crosstown does not dispute the failure to make those statements available. Nor does it dispute that there was a “hiatus” (Mr Hunter’s word) in the accounting by RD of US income to the Writers in relation to four of the accounting periods to which the “missing” statements would relate. The Grand Livre showed large amounts coming in to RD, but, as far as Mr Bevis could see, no corresponding payments to the writers. The sums involved were getting on for $1m, and Mr Bevis concluded, but could not say for sure, that this was US income which related to the Writers. He could not say for sure because there were no other records which were shown to him which would have shed light on the matter.[121]The position thus far is that there is an apparent very significant under-accounting to both Writers, the full extent of which is not plain, but which seems to be many tens of thousands of dollars. Mr Hunter’s response to this is to rely on the fact that accounting to the Writers resumed in the second half of 2005 in certain specified amounts, and to point out that Mr Bevis could not identify the $1m credits as being sums which would generate a royalty entitlement for the Writers. He relied on the case mounted by RD in the litigation surrounding this audit to the effect that they had accounted for the missing period income in the second half of 2005 and the first half of 2006. This case was unparticularised, but Mr Hunter identifies a figure of £327,000 paid in a later period which he says corresponds roughly with one of the receipts shown in the Grand Livre as having been received in the missing 5 periods. He also criticises a comparison exercise carried out by Mr Bevis as being an unreliable indicator of the sums that might have been receivable in the missing 4 or 5 periods.[122]I am afraid that Mr Hunter’s attempts to cast doubt on Mr Bevis’s conclusions do not get him anywhere. Crosstown is, of course, in the difficult position of not having any accounting records available to it, and of not having any first-hand knowledge of what went on at the time. But that is the consequence of taking from or through someone who has turned out to be a person of dubious accounting standards. Mr Bevis reached such conclusions as he could on the basis of the evidence that he had. Those conclusions, expressed summarily in the cure notice, were that there was no evidence of statements provided by the US licensee/sub-publisher, some evidence that significant sums were received from the US, no evidence that sums were received of the order that would have been expected, positive evidence that there had been no accounting to the Writers for US income in those periods, and no decent evidence of any late accounting either. Mr Hunter did nothing to damage those conclusions. It does not damage them to suggest that some sums “might” represent late payments. The only sensible conclusion that can be drawn from this evidence is that either RDM did not get in any money from the US for 2½ years, and never paid any sums due in respect of that period to the Writers, or it got some income and still never paid, or conceivably that it got some and paid some money late. All of those represent breaches of the Agreements, and the sums involved are very large. There is little doubt about the breach and even less about its materiality in the circumstances. To fail to account for large amounts of royalties from the biggest market for the songs for a long period is bound to be material, as Mr Hunter accepted.[123]Accordingly this breach and its materiality are established. No particular point arises in relation to its particularisation. The breach is clearly identified. It would have been clear what RD had to do to fix the problem.[124]This complaint generated some very confusing cross-examination of Mr Bevis in which Mr Hunter sought to demonstrate that there was in fact accounting for this missing income. (The confusion already generated by the cross-examination was not assisted by an unannounced fire-drill in the middle of it; if the drill had been planned to occur at the most confusing point in this trial with a view to compounding that confusion, it could not have taken place at a more effective time. Whether or not it was necessary for some other purpose, it was extremely, and highly unfortunately, disruptive to the proper conduct of this trial.) In his final submissions Mr Hunter submitted that the position was at the very least uncertain in that Mr Bevis did not look at the right periods. I shall resolve the confusion by extracting certain key points which emerged from the documents and from the oral evidence. Those points are as follows: i) The cure notices refer to various songs generally, “including” four identified songs in particular. However, the letter which is cross-referenced in the opening words of paragraph 3 identifies the other songs, so on a fair reading of the notices all the relevant songs are identified. Mr Hunter did not in fact take a particularisation point about this. So the songs in question are clear enough. ii) Paragraph 3(b) does not identify where the income from those songs came from, but the letter again makes it clear that the income is US income “which should have appeared in our clients’ statements for the period from 1 January to 30 June 2002”. iii) The US sub-licensee accounted 6 monthly to RD, one of the periods being the 6 months ended 31st December 2001. Accordingly, for the period ended 31st December 2001 the US sub-licensee would have accounted to RD in the following 6 months, ie in the period ended 30th June 2002. It is income relating to those two periods that paragraph 3(b) is apparently referring to, ie income generated and received in the US in the second half of 2001, paid to RD in the first half of 2002, and which should have appeared in the Writers’ statements covering the first half of 2002 which they should have received within 90 days of June 2002. iv) Mr Bevis sought to amplify this breach in his witness statement. He described the accounting process and periods in relation to US income, and said:
“Accordingly, for the 6 month period of accounting to 30 June 2002, in relation to the US I was provided with copies of what I was told by M Gautier [the RD representative in Paris] were the incoming statements from RBM for the 6 month period to 31 December 2001.”
If he was looking to track down US income from the second half of 2001, and to try to follow that through to the accounts given to the Writers, that is what he ought to have been given if the system was working properly. The June 02 statements given to the Writers ought to have included income arriving in the UK from the US in that period, which will have been generated in the last 6 months of 2001. (I make no apologies for labouring this point; it was in danger of getting lost in the cross-examination.) However, the Writers’ statements Mr Bevis has in fact looked at in order to find this income, according to his evidence, are their statements for the period ended 31st December 2002, ie one period further on. v) It appears that the reason that he has looked at those later statements is that that is when RD said it accounted for the relevant US income. RD said this in the context of the Taylor 2 and Barry 1 actions. It therefore seems to me to be reasonable enough for him to look there. vi) If true, then it would mean that there was an accounting, but 6 months late. However, Mr Bevis’s clear opinion, which emerged from the fog at the end of this section of his cross-examination, is that he has looked at those statements and the relevant US income cannot be seen there. Nor was it accounted for in any period thereafter. So he says there was in fact no accounting for it. vii) Mr Hunter took Mr Bevis to Writers’ statements in order to suggest that the “missing” income was in fact shown. However, his suggestions were not reasoned, and Mr Bevis did not resile from his evidence. At one stage he was about to point out to Mr Hunter where his reasoning was faulty, but, in the best murder-mystery traditions, he was stopped in mid-sentence by the fire alarms, and when he resumed his evidence that sentence was never completed. So we will never know. viii) Being left with Mr Bevis’s apparently careful research on the one hand, and nothing more than an unsubstantiated suggestion to the contrary on the other, I prefer the former, and find that this income was unaccounted for in the periods looked at by Mr Bevis. ix) In his final submissions Mr Hunter suggested that the income might in fact have been accounted for in the Writers’ statements for the first half of 2002, ie when it ought to have been accounted for. This was never properly put to Mr Bevis, and is actually contrary to what RD itself said had happened. This does not amount to anything like a successful challenge to what Mr Bevis found. x) I add that the confusion that this topic generated was not assisted by the fact that Mr Bevis sought to correct the date in the passage of his witness statement cited above to 31st December 2002. That actually made no logical sense, but I can filter that out of the matter in order to understand the point. xi) Accordingly this breach is established.[125]There is no dispute but that this is, as a breach, material. Despite what might otherwise be suggested by my frequent references to confusion, there is no particularisation problem in relation to this point.[126]Of the 8 territories listed, three were abandoned as the basis of claims in Mr Bevis’s witness statement – France, Brazil and Chile. The notice is maintained only in respect of the 5 other territories.[127]In each case it had been asserted in the past by Mr Bevis that there was no accounting for those territories for the specified periods. In some cases Mr Bevis had asked RD for specific information in order to clear the matter up, and RD had not responded. The claims were raised in Taylor 2 and Barry 1, and in those actions RD had made assertions as to the Writers’ periods where one would in fact find those moneys accounted for. Mr Bevis’s evidence was that in each case he had checked where RD had said the income could be shown to be accounted for in the Writers’ accounting statements. Some of the periods were much later than one would have expected. In the three territories which were conceded, Mr Bevis found that there had indeed been a true accounting, and the reason they had not been spotted before was that the labelling on the statements was wrong or misleading. However, in all other cases, having checked where RD said the income was to be found, Mr Bevis still found none. He therefore maintained his evidence that the statements were not available and the royalties had not been paid.[128]Mr Hunter did not mount a detailed territory by territory challenge in relation to this matter. He took Germany, and suggested that there might still be a labelling problem and that the “missing” income might nonetheless be somewhere in the statements but wrongly labelled so that it was disguised. Mr Bevis did not discount that as a possibility but did not think it was right. Then Mr Hunter put a generalised case, applicable to all 5 outstanding territories, that it was possible there was an accounting but with a mislabelling. Again, Mr Bevis accepted that this was possible but said that there was a consistency in labelling technique which made that less likely (that was the thrust of his answer). In his final written submissions Mr Hunter made some reference to statements from the other territories which, he said, suggested that there might have been accounting for the allegedly missing income. These submissions were to some extent generalised, and they raised matters not put to Mr Bevis. In the absence of his comments on them I am not prepared to carry out some sort of unassisted DIY accounting exercise, and I reject these particular submissions.[129]So the state of the evidence is as follows. Mr Bevis identified some apparently missing statements and income. Outside the context of litigation RD did not answer Mr Bevis’s questions, so there was still an apparent non-accounting. In the context of the earlier actions RD provided some answers as to where the income was to be found, and in some cases Mr Bevis found it there, mislabelled. In other cases he looked and did not find it. He considered it remained possible that it was disguised elsewhere, but on balance he did not seem to think so. Crosstown was not able to identify it. It called no evidence of its own on the point. Mr Hunter submitted that in the light of the available alternative explanation (mislabelling) there was insufficient evidence to sustain this finding of breach. I disagree. The state of the evidence being that which I have just described, I find that, on the balance of probabilities, Mr Bevis is correct and the income is unaccounted for.[130]The financial scale of “missing” income was not identified by Mr Bevis – he did not have the material to do it, except in the case of Germany – but no-one suggested that the amounts were in any way de minimis. The nature of the breach itself is serious – part of the purposes of the Agreements was so that RD could control the exploitation of works and get royalties in, in many jurisdictions, and the particular complaints in paragraph 3(c) amount to a serious breach of that. The money involved is likely to be significant. In the circumstances this is plainly a material breach, and I so find. Crosstown made a generalised allegation of lack of particularity, but the notice is clear enough as to what it alleges. I find it was adequately particularised in this respect.

Paragraph 3(d) – incorrect exchange rates

(d) – incorrect exchange rates

[131]In carrying out his audit Mr Bevis noted what he thought were a number of apparently oddly applied exchange rates applied by RD when processing incoming payments in foreign payments from foreign sub-licensees and in accounting on to the Writers. The details appear in the cure notices. Mr Bevis provided details of the financial consequences in his witness statement. In relation to some of the apparently odd applications of exchange rates the amounts involved were just a few hundred pounds but some of them, in relation to the statements to which they were applied, generated differences of many thousands of pounds.[132]Mr Bevis’s conclusion did not come from entries in RD’s books which clearly, and in terms, identified an exchange rate applied. He reached his conclusion as a matter of inference. He looked at the statements of moneys due from the foreign publishers to RD and identified the sums that they were accounting for to RD. That accounting was expressed in a foreign currency. He then identified the comparable entry in sums that RD accounted for to the Writers in respect of the same item. That accounting was in sterling. The amount accounted for to the Writers would of course, be less than 100% of the sum payable to RD from its foreign publisher, but Mr Bevis allowed for that. He noted that (in the instances complained of) if one compared the foreign money equivalent that should have been passed through to the Writers with the sterling money that they got, the comparison reflected an exchange rate which was very different from the prevailing market rate. His process was thus one of inference. He assumed receipt of by RD of the moneys shown in the foreign statement, and he assumed that RD was discharging (or purporting to discharge) its obligations by passing on the sterling equivalent. It was based in part on an apparent internal consistency in the papers he was looking at which supported his suggestion. His overall observation was that it did not seem to be an appropriate sterling equivalent and his exercise was therefore an inferential one. Mr Hunter characterised it as “reverse engineering”.[133]Crosstown did not adduce any evidence of its own on this point. In its Defences in the previous litigation, where this point was pleaded as a claim, RD professed to an inability to identify from where Mr Bevis got his alleged applied exchange rates, and gave examples of the rates it said it had applied, saying that its “records do not correspond to the rates shown”. It did not identify those records, and there was no evidence that they have been identified since.[134]There was a little more evidence than that, though it was not referred to as such at the trial. As previously mentioned, on 6th December 2006 Forbes wrote to Angel and Co taking the points which later emerged in paragraph 3 of the cure notices. This included the exchange rate point. That letter enclosed a schedule of information previously required of RD by Mr Bevis, and RD’s response. Item 5 is “Exchange rates” and it records a request made by Mr Bevis on 5th September 2006 for the company’s bank statements showing the values of royalties recorded for every statement record during the audit, which would also show the exchange rate at which the incoming royalties were received. The response was to deny access to those statements and to refer to the cash book which would be made available for inspection. There was no substantive response to the letter of 6th December. Although the schedule does not flag up the exchange rate point in its current form, it does demonstrate an unwillingness on the part of RD to provide information which would go to exchange rates.[135]In the absence of any positive evidence, or of any material work from other than Mr Bevis’s papers, Mr Hunter’s cross-examination sought to suggest that there might be another explanation, namely that the sums accounted for by the foreign licensee included sums which were accounted for elsewhere, such as part of an advance, so that Mr Bevis was not comparing like with like. He was comparing a sum containing two elements (regular royalties and, say, an advance) shown in the accounting by the foreign licensee with a sum containing one element (regular royalties) in the statements of the Writers.[136]The evidence on this is somewhat unsatisfactory. Mr Bevis’s conclusion is an inference. The accounting party (RD) has denied it but has not refuted it with evidence. If they were the active party in relation to this complaint, and had let the evidence rest there, it would be proper to say that in the absence of evidence from the accounting party (whose obligation it is, after all, to account) Mr Bevis’s conclusion can and should stand, even though the position is somewhat unsatisfactory. Does it make a difference that Crosstown is not in the same position as RD when it comes to rebutting this allegation? I do not think that it does. Crosstown takes through the accounting party, and I do not see why it should be in a better position when it comes to an evidential balance in relation to this issue. I was told that Crosstown had been told that that the administrators of RD had had difficulty in getting hold of RD’s documentation, but I do not know how hard anyone pressed for documentation relating to the audits (or other matters). In addition, no attempt was made by Crosstown to adduce its own accountancy evidence, which might have been of some assistance even if their accountant would not have had all the documents (such as they were) which were originally available to Mr Bevis. In the circumstances I have the evidence of an accountant that, on the face of the documents, wrong exchange rates have been applied, an opportunity or opportunities on the part of RD to rebut that which it did not avail itself of, no counter-evidence at all, and only a counter-suggestion, not rooted in evidence, that there might be another explanation. It is implicit in Mr Bevis’s evidence that he did not find any other indications of any alternative explanation. In those circumstances, odd though the position is, I find that the allegation of breach is made out. The evidence is not so odd as to be implausible (particularly bearing in mind the less than conscientious track record of RD), and there is no counter-evidence.[137]The breach, as a breach, is serious enough to be material, and Mr Hunter did not contend otherwise. Nor is there any problem with particularity. The allegations are clear enough. The reasoning is not set out, but the paragraph gives RD enough information to be able to understand the allegation, to respond if there is a good response, and to make good the defect in accounting if there is one.

Materiality – an additional point

[138]Mr Hunter does not dispute materiality in relation to the Bevis audit points as at the date of discovery if the breach is established. He does, however, say that they ceased to be material 6 months later when the Writers elected not to terminate and not to treat the breaches as repudiatory. This argument depends, at least in part, on it being correct to treat “material” as akin to “repudiatory”. Having done that, it then seems to argue that material breach becomes the equivalent of repudiation for the purposes of applying the law of affirmation. There are at least two flaws in this argument. The first is that, on its true construction, “material” is not the same as “repudiatory”. The second is that even if it were it would not be correct to treat clause 18 as importing all the baggage that comes with repudiation. It provides for the mechanism it provides for, and the rules about affirmation of contracts after repudiatory breach do not have any part to play in that mechanism. This argument therefore fails. I do not need to consider whether a 6 month period is appropriate for these purposes or when the clock started running if it was. In those circumstances there is nothing to prevent the conclusion, which I have reached and which would (absent his argument on repudiation) be accepted by Mr Hunter, that all the paragraph 3 breaches are material.[139]On a sentence by sentence basis, it is reasonably plain what this paragraph is saying. What is less clear is why it is saying it, in terms of breaches of the Agreements. Mr Mill’s written final submissions wisely anticipated that this point would arise, and sought to analyse what this paragraph would say to a reasonable recipient of the notice. He claims it was asserting that RD would have received income from its affiliates and was therefore in breach of each Agreement by failing to account to the Writers for their shares. If there was any doubt, he said one could and should look at what RD did in response to those paragraphs – he says they waited (as usual) until the end of the cure period and delivered accounting statements showing the amounts in fact received from the affiliates albeit that it did not pay those amounts because of its wrongful claim for overpayment because of the cover recordings point.[140]Mr Mill is right to say that the first thing is to consider what paragraph 4 means. One must do so bearing in mind that it is intended to set out a material breach with the particularity required by clause 18. In my view it fails to identify a breach with the required particularity. The first sentence does not describe a breach, unless it is intended to complain that RD has not taken proper steps to compel an accounting (which might, if established, be a breach of an implied term), but that is not clear. The second sentence does not clearly describe a breach at all. The third and fourth sentences are true but do not describe a breach. The fifth sentence does not describe a breach if the “this” is a failure to pay income received by subsidiaries. The obligation to pay arises only in respect of income received by RD. There may be obligations to collect, but breach of that would sound in damages.[141]When one puts all that together it is not possible to see, with sufficient clarity, what breach is being complained of. I do not think that it is possible to come to the conclusion which is propounded by Mr Mill. While the terms referred to include an obligation to pay over sums received from affiliates (sub-publishers in other countries), the matters complained of do not refer to that and the summary in paragraph 4 (“you are still subject to clauses … in respect of any income collected by your affiliates”) does not refer to it either. I think that a reasonable recipient would be left wondering just what was being complained about within those clauses, and would not come to the conclusion that it was a failure to pay over sums received in this jurisdiction from affiliates. That could have been much more easily expressed.[142]I therefore do not consider that this paragraph specifies a breach “in reasonable detail” (if it specifies one at all) and cannot be relied on in the context of a cure notice.

Reasonable action to remedy

[143]Where a clause 18 notice is served, there is no reverter of copyright unless the Publisher “shall fail to take all reasonable action to remedy such breach with in [45/60] … days of written notification …”. Crosstown’s case is that Crosstown is an assignee of RD, that the expression “Publisher” includes successors and assigns of RD, and that the question therefore becomes whether it has taken reasonable action to remedy the breaches. That question, according to Crosstown, is to be answered in the affirmative. It was not reasonable to expect or require Crosstown to make any payment in respect of these claims because the Writers were at an advanced stage of a claim against RD in respect of the matters which were the subject of complaint, and they were secured in respect of the claim by virtue of the freezing orders they had obtained. Crosstown took specific action within the specified 45 days by commencing these proceedings to compel RD to account properly. Accordingly the requirements of clause 18 were, in this respect, not fulfilled.[144]Crosstown’s submissions in this respect involve something rather odd. RD is, by my findings, in breach. RD is “the Publisher” within clause 18 for that purpose. The breaches were not only material; some of them were very serious. They would, unless remedied by RD , have given rise to a reverter in favour of the Writers 45 or 60 days after the cure notices if RD were still the (only) Publisher at that time (ie if it had not assigned the copyrights and the benefit of the Agreements). Remedying would, in these circumstances, have involved paying sums due and otherwise accounting properly. That is doubtless intended to be a valuable protection for the Writers against a Publisher who takes the copyrights and then fails to exploit them properly. But for the assignment to Crosstown the Writers would, rightly, have had that valuable protection. If Crosstown is right then the Writers have lost that valuable right by dint of an act over which they had no control, namely the assignment. The introduction of a third party has materially diluted their real protection because the third party can now say that it does not have to pay up (to protect its interest) – it is sufficient to take steps to require RD to pay up even if those steps were not immediately effective and even, it seems to me, if they were never effective. That would, in my view, be a very odd commercial result. There would be a material dilution of the benefits of the Writers by events outside their control which were designed to benefit others.[145]It is not, in fact, the result which arises on the proper operation of clause 18 for various reasons.[146]First, I do not consider that, for these purposes “Publisher” in clause 18 includes Crosstown on the facts of this case. The Publisher who is in breach in respect of the acts complained of in the cure notices is, on any footing, RD. Crosstown was not, in respect of those breaches, in breach of anything. The “shall fail” refers back to the same person who is in breach ie RD. It does not refer to Crosstown. Accordingly, it is RD’s acts or remedy which are of significance for these purposes. So it is not necessary to consider what Crosstown, purely qua Crosstown, has (or has not) done. Crosstown’s arguments therefore fail at this hurdle.[147]That is not to say that Crosstown’s acts are going to be necessarily irrelevant for the purposes of this clause. If circumstances change such that, in due course, Crosstown becomes qualified as a person who can be said to be capable of being in breach of the agreement, perhaps as a result of a novation or conceivably as a result of a doctrine such as the “he who takes the benefit must take the burden” doctrine, then its acts (both in terms of breach and remedy) might become relevant. But that is not this case. More pertinently, if Crosstown had tendered appropriate acts of remedy within the time period (by, for example, actually paying sums due, or taking other appropriate steps) then it might be possible to treat them as acts of RD for these purposes, so that they are acts of the Publisher. But that is not this case either.[148]So this case remains one in which there are breaches by the only person who is, for these purposes, the Publisher, and they remain unremedied by the only person who is, for these purposes, the Publisher. That deals with the point. However, even if Crosstown could bring themselves within the meaning of Publisher for these purposes, so that it became necessary to consider what it has done, it is still the case that those acts are not enough to amount to “reasonable action to remedy”. Starting proceedings to make the other Publisher comply with obligations does not, in these circumstances, amount to reasonable action to remedy the breach. If a description of it is required, it can be described as action by someone who would rather not address the financial consequences of remedying the breaches, to try to get the real breaker to fulfil its obligations by starting litigation which might or might not be successful in achieving that end at some time in the future. That does not seem to me to amount to reasonable action to remedy when the interests of the Writers (whose interest this clause is intended to protect) are put into the equation.[149]This is a case in which some of the breaches are long-standing, and occurred in the context of a relationship in which the Publisher had, over a period of time, determined to do the absolute minimum, at as late a date as possible to comply with the agreements, and who had made, and then revived, bad claims in order to avoid paying. Whether some leeway might be appropriate for other publishers, for these Publishers only proper compliance by the proper payment of wrongfully withheld money could amount to reasonable action to remedy. Mr Hunter said that in circumstances in which the Writers were at an advanced stage of a claim against RD on the RCO matters, and where they were secured in respect of the claim, it was not reasonable to take a step which effectively required Crosstown to make a payment. I am not sure that this is the right way of going about assessing what should be expected of Crosstown, but if it is then the conclusion is wrong. If the breaches could be established, then it does not (for these purposes) matter whether they were the subject of a different enforcement mechanism, and anyway the notices do not confine themselves to RCO audit claims. Nor was there anything which could properly be viewed as security. There was a freezing order (which is what Mr Hunter meant by security), but that is not in law security, and indeed the subsequent administration of RD is likely to demonstrate that. Crosstown is in the position it is in because it acquired an asset which was not what it thought it was. That is not the fault of the Writers. It takes that asset subject to its flaws, and the breaches by RD, and their consequences, are one (or more) of them. It could have protected itself by making inquiries of the Writers. It did not do so. It could have protected its asset by making sure the Writers were paid. Again, it chose not to do so, and it appears from the evidence that that choice was deliberate. If, as a result of that, it is now deprived of the benefit of its bargain, then that is because of the commercial risks that it has run.

Election, waiver, acquiescence and estoppel and allied matters

[150]The last major point taken by Crosstown is that the effect of the notices is debarred by virtue of various acts which are said to amount to election or one of the other matters referred to in this section of this judgment.

Implied term – notices to be served within a reasonable time of awareness of breach

[151]An analysis of Mr Hunter’s opening submissions indicated that one way he put this point was on the basis of an implied term that a cure notice should be served within a reasonable time of becoming aware of the breach. That analysis did not seem to re-emerge in his final submissions, but that may have been on the grounds of economy of time, so I will deal with it. I cannot see the basis for any implication of any such term. The contract would work perfectly well without the implication of such a term. Indeed, it would work against the apparent purposes of clause 18 which seem to require clarity and certainty; that would be muddied if there were scope for argument about reasonable time. If there were an excessive delay that might, on certain facts, go to materiality or the reasonableness of any particular remedy, but I cannot see any such arguments here. And in any event, I cannot see why, as a matter of implied agreement between the parties, delay should be treated by itself as a bar when it is perfectly reasonable for the Writers to require the Publisher to remedy the breach, and the Publisher has a good opportunity to do so. Accordingly I reject the implied term argument.

Election

[152]The remainder of Mr Hunter’s submissions on this point relied on doctrines of law. It is therefore those I will have to consider in more detail.[153]Mr Hunter starts by saying that clause 18(a) is analogous to a contractual provision permitting termination on notice in the event of a material breach. Such provisions are said to give rise to an election, and those rights have to be exercised within a reasonable time of the innocent party becoming aware of it, or they are waived and are lost. Alternatively it is akin to a commercial option which must be exercised within a reasonable time if it is to be exercised at all. On the facts of this case, the right to serve the cure notice was not so exercised, and it has been lost.[154]In The Kanchenjunga [1990] 1 Lloyds Rep 391 the House of Lords had to consider a charterparty which conferred on the charterers a right to order the loading of a cargo at a different, safer, port in certain circumstances. The case turned on whether the owners had precluded themselves from rejecting a nomination by the charterers. In the course of his judgment Lord Goff characterised the situation where elections arise in the following manner: “Election itself is a concept which may be relevant in more than one context. In the present case, we are concerned with an election which may arise in the context of a binding contract, when a state of affairs comes into existence in which one party becomes entitled, either under the terms of the contract or by the general law, to exercise a right, and he has to decide whether or not to do so. His decision, being a matter of choice for him, is called in law an election. Characteristically, the effect of the new situation is that a party becomes entitled to determine or to rescind the contract, or to reject an unconditional tender of performance; but, in theory at least, a less drastic course of action might become available to him under the terms of the contract. In all cases, he has in the end to make his election, not as a matter of obligation, but in the sense that, if he does not do so, the time may come when the law takes the decision out of his hands, either by holding him to have elected not to exercise the right which has become available to him, or sometimes by holding him to have elected to exercise it." (p 398)[155]Lord Goff went on to consider other requirements of the doctrine, and went on to refer to "numerous examples" of it, the most familiar one of which was the choice which a contracting party had when faced with a repudiation. He observed that:
“… the present case is concerned not so much with repudiation as with non-contractual tender of performance. Even so, the same principles apply.”
Then at page 399 he contrasted the doctrine of equitable estoppel but observed:
“ There is an important similarity between the two principles, election and equitable estoppel, in that each requires an unequivocal representation, perhaps each may involve a loss, permanent or temporary, of the relevant party’s rights. But there are important differences as well. In the context of a contract, the principle of election applies when a state of affairs comes into existence in which one party becomes entitled to exercise a right, and has to choose whether to exercise of the right or not.”
[156]These passages were relied on by Mr Hunter. They are obviously a valuable exposition of some of the law relating to waiver or election in a contractual context. What they do not do, however, is assist in a determination of whether the law applies to clause 18(a). That clause provides a contractual remedy; it does not depend on a repudiation, equitable rescission or anything like that. That, of itself, does not necessarily, prevent the doctrine applying, but this case does not assist in determining whether it does.[157]Next Mr Hunter relied on Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1963] 1 Lloyds Rep 12. He extracted from it the proposition that if clause 18 were “just a contractual commercial option” then it would have to be exercised, if at all, within a reasonable time. In that case Lord Devlin said:
“The essence of what I have called a business option is that the character of the obligation is altered to suit the option holder. There must, therefore, be some provision, express or implied, for its exercise within a reasonable time and for the communication of the election to the other party. It would be wholly unreasonable for the principal obligation in a contract to be altered without the other party being informed … Where there is only one mode of performance, subject to change at choice, the opposite party is entitled to suppose that the contract will be performed in the way prescribed unless he is notified of a change. … Before the end of his argument, however, Mr Kerr [for the charterers] altered it to confirm to the general principle that, where no limit is specified, an option must be exercised within a reasonable time and that if at the expiry of that time the election has not been communicated to the other party, the option lapses. The reasonable time in a case such as the present must expire before any action, the nature of which depends on whether the option has been exercised or not, taken under the contract.”
[158]Lord Devlin accepted this argument of the charterers. If Mr Hunter is to rely on this case then he must be able to characterise clause 18 as a business option as Lord Devlin expressed it to be. Lord Devlin’s characterisation appears at page 35. Where such an option exists:
“… there is not then one contractual obligation to be performed in alternative ways, but one obligation to be performed in one way, unless the option holder chooses to substitute another way and does so by the effective exercise of his option.”
[159]This does not seem to me to describe how clause 18 works. Lord Devlin’s remarks are related to the manner of performance of the contract. In that context it is understandable that some time limit must be put on any choices about that, because the parties must understand how the contract is actually to be performed. Clause 18 is not that sort of clause. It does, of course, ultimately have a relationship with the performance of the contract, but it does not determine the manner in which one or other of the parties perform it. Accordingly Lord Devlin’s characterisation, and its consequences do not apply.[160]Next Mr Hunter turned to United Dominion Trust (Commercial) Ltd v Eagle Aircraft Services Ltd [1968] 1 WLR 74 at 81H, where Lord Denning found an implied term that a contractual right had to be exercised within a reasonable time; but that was a case on its own facts which does not help me. Last he relied on Zeeland Navigation Co Ltd v Banque Worms [1995] 1 Lloyds Rep 251, where Rix J had to consider a lender’s right to compel a shipowner to sell a ship in certain events and in particular whether such right had to be exercised within a reasonable time. It seems to have been accepted that the question was one of whether there should be an implication of an appropriate term. He found that there should be such an implication. At page 266 he found:
“In my judgment the requirement that, where no limit is specified, an option must be exercised within a reasonable time is not only of general principle, as Lord Devlin put it (in Reardon Smith…) but also of business necessity in the particular case. It seems to me to be absurd that the vessel should be at risk of being required to be sold at any time over five years.”
[161]It is plain that Rix J treated the clause in question as being in the nature of one of Lord Devlin’s “business options”, and he relied on the business necessities of the particular case as governing the implications. It therefore does not help in the argument currently under consideration. First, this is an implied term case, and I have rejected the implied term. This case does not cause me to revise that conclusion. The right of the lender in that case was a right which could be exercised with no mitigating step open to the borrower between its exercise and its consequences. In those circumstances, and bearing in mind the nature of the contract in that case, and the business relationship of the parties, one can quite see why the right should not be left hanging over the borrower until the end of the contract. Clause 18 is different. Once a notice is served, the Publisher has an opportunity to avoid the serious consequences prescribed by the end of the clause, because he can remedy the breach. If that sort of thing is kept hanging over the Publisher until (in theory) the end of the contract then the contract remains workable. The Publisher does not risk the sudden removal of the contract, with no possibility of fixing the problem. He can fix it by doing what he should have done in the first place, which is perform the contract properly. This authority does not, therefore, require the term to be implied in the present case. Nor does it provide any basis for saying that some other obligation of election applies to the term, parallel to the implied term which I have rejected.[162]Accordingly, I do not consider that the Writers were under an obligation to elect within a reasonable time, as suggested by Mr Hunter. He submitted that “the requirement to make an election arises when a party has to choose between inconsistent courses of action”. If that is an adequate description of how a need to elect arises, it still does not apply to this case. This is not a case where, faced with a material breach, the contract provides in any sense that the Writers have to decide whether to carry on with the contract, or, in substance, bring it to an end by getting their copyrights back. It is not inconsistent behaviour to carry on with the contract in due course, while still having the right, in due course, to have their copyrights back if the Publisher does not remedy outstanding material breaches, having been given a proper opportunity to do so. The position might well be otherwise if the Publisher did not have that right, but that is not the position with this contract.[163]Accordingly, there is no question in this case of an election which has to be exercised within any time limit, whether as a result of an implied term or as a result of any separate legal doctrine.

A reasonable time

[164]However, even if that is wrong, and even if there were a need to elect within a reasonable time of becoming aware of breaches, or even if Mr Hunter’s implied term exists, that does not affect the result of this case. In relation to the Bevis audit, there was significant obstruction before, and then at, the audit itself. Mr Bevis was short of documents. The Writers cannot have been expected to identify and rely on the breaches at any time before they were first articulated in the letter to Angel & Co of 6th December. Mr Hunter submitted that a reasonable time for the service of such a notice was 3 months. He plucks that figure out of the air. There is no magic about or logic to it, and if there were a need to assess a reasonable time it would not be satisfied by taking periods of time which have no attraction apart from the roundness of the figure. But in any event the starting point is a problem for him. When does the clock start running? Even when he had been to Paris Mr Bevis was short of information, and there were outstanding requests for information that he had submitted. They were not answered for some time and many of them not at all. In the letter of 6th December the outstanding issues were described as giving rise to “grave concern”. The attitude at the time was that there seemed to be breaches, but further detail was being sought. The letter sought documentation, and indicated that it would be sought in the context of the two outstanding actions, which would be amended to include the detailed matters complained of. The Particulars of Claim were amended and on 15th February 2007 the Master made an order that disclosure be given of documents requested in the letter of 6th December or that reasons for non-disclosure be given by 16th March. True to form, on the last day (16th March) Angel & Co sent a letter disputing various items and saying that others would be disclosable on standard disclosure so far as relevant to the case. The letter is completely unworthy of an accounting party and strongly suggests evasion. It is not easy to accept that that letter was sent in good faith, though I do not need positively to decide that it was not. It gave every appearance of being disingenuous.[165]That letter will have reinforced the views that Mr Bevis’s complaints were good. The Writers were not unreasonable in waiting to see if more information was forthcoming, and not unreasonable in seeking it in the context of proceedings (and a court order). A reasonable time would be one which allowed time for, inter alia, the following - considering information, seeking more, raising concerns with RD. One also needs to bear in mind prejudice to the Publisher (though it is impossible to identify any in the present case). Bearing all this in mind, a reasonable time from discovery of the breaches (if that is what happened) had not elapsed by the date of service of the cure notices. They were served within a month of that lamentable failure to give information. Looking at all relevant events in the round, it is impossible to say that it was unreasonably late. If there is a reasonable time requirement in relation to notices, then to that extent the notices are valid.[166]That is good enough to preserve the notices if (contrary to my finding) they have to be served within a reasonable time of becoming aware of the breaches. It is therefore not strictly necessary for me to consider whether the notices were served outside a reasonable period in relation to the RCO audit claims (paragraph 2). Mr Hunter asserted, again without reasoning, that 3 months was a reasonable period, and if that was wrong then 5 years (which is what had elapsed) was clearly outside it. Mr Mill said a change of circumstances justified the service of these notices long after events complained of, those circumstances being the admission of some of the breaches in Taylor 2 and Barry 1, which admission had not occurred hitherto. Once again, any reasonable period must be assessed by reference to the facts, including potential prejudice to RD (again, there was none of that). This would require an even more detailed view of the history than I have hitherto undertaken, and I shall not do so in order to determine a question which is rendered academic by two of my earlier determinations. I shall confine myself to saying that in the circumstances of this case, and bearing in mind the history of wriggling and defaults by RD, I do not consider that this notice was served outside a reasonable time in respect of the RCO audit matters either.

Equitable forebearance

[167]That deals with that sub-species of attack on the notices. Next are attacks based on equitable forebearance. In this respect Mr Hunter relies on the following citation from Denning LJ in Plasticmoda Societa per Azioni v Davidsons (Manchester) Ltd [1952] 1 Lloyds Rep 529 at 538-9:
“If one party by his conduct, leads another to believe that the strict rights arising under the contract will not be insisted upon, intending that the other should act on that belief, and he does act on it, then the first party will not afterwards be allowed to insist on the strict rights when it would be inequitable for him to do so.”
[168]This is one formulation of the law of promissory estoppel, and that doctrine was referred to by Lord Goff in The Kanchenjunga. The principles involved were not disputed by the Writers. What one is therefore looking for is something in the nature of a clear representation, arising (in this case) out of the conduct, to the effect that clause 18 would not be relied on in relation to the breaches that have in fact been relied on in the April 2007 notices.[169]So far as the paragraph 2 breaches are concerned, Mr Hunter relies on the following: i) The Writers served cure notices in relation to numerous other matters but not the RCO audit matters. ii) On 18th January 2004 the Writers gave notice of a second audit for a subsequent period. iii) The Writers accepted royalties and accounting without any reservation of rights in relation to the period from April 2003 and April 2006. iv) Mr Taylor sought financial remedies in amending his claim to include RCO audit matters, but did not seek a declaration that the rights had reverted or any other reliance on clause 18(a). v) The issuing of Taylor 2 and Barry 1 without any reliance on clause 18(a) in relation to the RCO audit matters. vi) The application for freezing orders, in which the Writers said that they wished the sale which they believed RD to be conducting to proceed. vii) An apparent abandonment by Mr Barry immediately before the sale by RD of a previous cure notice served on 5th May 2006 in respect of the RCO audit matters. viii) The payment into court of the sums frozen by the freezing order. ix) The continued pursuit of the proceedings. x) Cure Notices served in relation to accounting to June 2006, served in November 2006. xi) Their eventual awareness of Crosstown having purchased the songs and its collection of income, followed by receipt of statements of account from Crosstown on 30th March 2007. xii) The events leading to their being paid £310,000 on 15th December 2006.[170]I am afraid I cannot see how any of those events, alone or in combination, amounts to a representation that the Writers would not rely on the RCO audit matters as the basis of a clause 18 notice. Their whole pattern of conduct demonstrated plainly that they would (and indeed felt they had to) rely on such notices where they wished to get compliance with the agreement. The mere fact that some notices were served on some issues does not in any way imply a statement that clause 18 would not be relied on in relation to others. Nor (especially in the circumstances) does the acceptance of royalties when RD were prepared to pay them involve any form of indication that there would be no reliance on clause 18 in respect of matters which were, or which turned out to be, in dispute. The acceptance of part of their entitlement in relation to some claims cannot possibly, without something very positive, amount to an indication that other methods of pursuing other claims would not be used. The commencement of proceedings to enforce accounting obligations does not, by any stretch of the imagination, involve an indication of an abandonment of clause 18 as another enforcement mechanism. If these facts say anything, they say that the Writers will use all means at their disposal to recover their money from a tricky and recalcitrant contractual counterparty.[171]In fact there were positive indications that the Writers would rely on clause 18 in relation to the RCO audit matters. On 3rd December 2002 both Writers served cure notices referring to a failure to pay sums shown by, or to respond to, that audit. This was followed on 11th February 2003 by letters from them saying that the matters had not been addressed and the rights had reverted. This was not pursued to its logical end by the Writers because they continued to engage in dialogue in the hope that matters would be addressed. RD served its own counter-report which denied the claims. The reverter claim was not pursued at this time and the parties engaged in negotiations from time to time to sort out matters as they arose. However, nothing was ever said or done which indicated that the Writers somehow forgave RD for its failure to account properly in relation to the RCO audit matters. Unless one can read in something to the contrary from the fact that the “reverter” was not pursued, then the letters of December 2002 and February 2003 were positive evidence that the Writers would rely on clause 18 in relation to the RCO audit. It is known that they did not pursue it, and they continued for several years to deal with RD on the footing that the agreements were still in force and the copyrights still in place, but one cannot read into that a representation that the Writers would go back on their apparent intention to invoke clause 18 if necessary in relation to the RCO audit. That would be completely unrealistic. What this conduct might be said to have done is to make it unconscionable for the Writers to go back and rely on the December 2002 notice, but they have not sought to do that, and I do not need to analyse that further.[172]All in all, therefore, I consider there is nothing in the conduct relied on which would have indicated to RD in any way that the Writers were abandoning clause 18 in relation to the RCO audit matters. But even if there were, there is nothing in the facts which would make it unconscionable for the Writers, vis-à-vis RD, to go back on such a representation. The doctrine under consideration requires more than a mere representation or manifestation by conduct. It requires an intention that the other party should act on that, and that it should be unconscionable for the “representor” to resile and rely on his contractual rights. There is no evidence at all that RD was to rely on any such conduct. The idea that the Writers were saying “Don’t worry, we do not intend to rely on clause 18 in respect of these particular breaches” borders on the absurd; the idea that RD were intended to rely on it crosses that border. The absurdity can be demonstrated by adding material reflecting what was undoubtedly the case – “Do not worry, we will not rely on clause 18 in relation to the RCO audit matters, despite the fact that we have previously manifested a clear intention to do so, despite the fact that we do not accept you have accounted properly, despite the fact that we serve quarterly notices to get you to pay our normal contractual entitlements, despite the fact that we distrust you so much that we have made a freezing order application …” and so on. The picture is simply unrealistic.[173]If it were necessary to go that far, I would say that nothing has made it inequitable for the Writers to resile anyway, so far as RD is concerned, even if the indication had been given. It is difficult to elaborate on this; it is simply the case.[174]As I understand it, Mr Hunter runs an allied case based on conduct vis-à-vis Crosstown. It can be dealt with in conjunction with the case he runs alleging forbearance in relation to the Bevis audit breaches.[175]Crosstown also run an equitable forbearance case in relation to the Bevis audit aspects of the cure notices. It relies on the following: i) The events between the end of October 2006 and the letter of 18th December from Forbes to Crosstown’s English solicitors. In other words, the events encompassing the payment of the sums due for the period to June 2006 (the £310,000). ii) Electing against serving a cure notice by not serving one in December 2006 and 2 months later pursuing the Bevis audit claims by amending the existing proceedings to make claims in respect of them. iii) Permitting and indeed encouraging Crosstown to collect royalties and income after April 2007. iv) Accepting accounts from Crosstown on March 30th 2007.[176]I do not think that any of these events can be regarded as making representations to RD so no forbearance case can be made based on that. If the representations are made to anyone, then they are made to Crosstown.[177]The most material point is the events in the last quarter of 2006. It is necessary to revert to those in order to see whether a case for representation, and subsequent reliance, can be built up. Mr Hunter submitted: i) That the Writers’ conduct in relation to those events amounted to a representation that they had or knew of no additional grounds for serving a cure notice as at the time they solicited Crosstown’s assistance to make payments to them. ii) They knew that Crosstown was proceeding on the basis that payment would “stop the clock” on cure notices. iii) Crosstown relied on these representations by facilitating the payments. It would not have done so, or at least not on the same terms, otherwise. iv) These factors make it inequitable for the Writers to assert the Bevis matters against Crosstown by way of a cure notice.[178]The evidence relied on in this respect can be summarised as follows: i) The protestations of Crosstown that they wanted to, and would, sort out the issues between RD and the Writers (one of which was given before the service of the November 2006 cure notices), including a request for historic accounting statements to determine to what extent RD might have miscalculated royalties. ii) The conversation between Mr Gilbert and Mr Forbes, in which Mr Gilbert said that he wanted the clock stopped on cure notices. iii) The provision by Mr Forbes to Crosstown’s US attorneys of royalty statements for the past 6 years and a reverse engineering calculation showing sums due for the most recent period. The letters sent did not refer to any other concerns about accounting, and in particular did not refer to the Bevis audit complaints. iv) The non-copying to Crosstown of the 6th December letter to Angel & Co when that letter was sent. v) The agreement between Crosstown and RD that the amounts claimed by the Writers in respect of the most recent statement should be paid out of the escrow moneys.[179]This argument fails at a number of points.[180]First, I do not consider that the representation can be made out. Before the attendance note of Mr Forbes was disclosed, Mr Gilbert had not taken that particular conversation into account because he had forgotten it, and the case of Crosstown depended on his assertions as to his belief that there were no claims of the Writers other than those that Crosstown was trying to sort out at the time. However, Mr Forbes’ attendance note makes it clear that Mr Gilbert was told that there was an additional claim – the “black hole” relating to US publishing. The attendance note also makes it clear that Crosstown were concerned about cure notices, and the “integrity of the asset” and does not record that Mr Forbes put Mr Gilbert’s mind at rest over that issue. If anything, in flagging up the potential new issue, the conversation might be said to be doing the opposite, but whether or not that is right I find that it would be impossible to spell the representation out of that conversation.[181]What then followed was a natural consequence of the conversation and the dealings hitherto. The Writers complied with requests to send historic statements, so that Crosstown could sort out the then formulated dispute. It is not possible to spell out of that correspondence any implied statement that there were no other disputes. Then the Bevis audit complaint emerged in correspondence with Crosstown few days later. I have already found that there was no plan to keep quiet about it until then.[182]All in all, therefore, I find there was no such representation by conduct as alleged.[183]There is also a problem for Crosstown in proving reliance. Mr Gilbert’s evidence was that the decision to authorise the release of funds from the escrow account was taken by Mr Godfrey Cass (a senior manager in the US), Mr Sarteau (a senior managing director in the Cargill/Crosstown group) and by himself. He was the only one of them to give evidence. There is no evidence of the state of mind of other two – what they believed, what had been drawn to their attention, what they would have done in the absence of the correspondence and so on. In those circumstances I cannot simply take Mr Gilbert’s state of mind as being that of Crosstown for these purposes. He said that had he known of a potentially large but unquantifiable additional claim he would not have authorised the release of the money. He maintained that as being what he would have thought, but there are difficulties in attributing it to Crosstown. First, it is not clear that he can really have had that state of mind. He was actually told of the black hole, and procured the payment anyway. Second, it was not wholly rational in the circumstances. The money out of which the Writers were being paid was not Crosstown’s money. It was part of the purchase price, held in escrow against the possibility of such claims. So at that stage it would not have cost Crosstown anything to have the Writers paid in relation to the cover records point, whether or not there were other points. Crosstown was, after all, trying to persuade the Writers that they were going to sort things out, and were obviously keen to establish a good relationship with them. So a decision not to pay if there were other claims does not make a lot of sense. Even if Mr Gilbert would have formed it, I am not convinced that his colleagues, who gave no evidence, would have done. Accordingly, I find that the reliance element does not exist either. I do not think that Mr Gilbert or his colleagues really understood that they were safe from further cure notices, and relied on that belief.[184]Accordingly, this forbearance case fails.[185]Next, Mr Hunter ran two further election points in relation to the period from December 2006 to April 2007. First, he said that there was an election not to issue a cure notice in December 2006 in relation to the Bevis audit points, but to sue instead (by amending the claims in Taylor 2 and Barry 1 to include the Bevis audit points – see paragraph 164 above. That was inconsistent with the exercise of clause 18 rights because the service of a cure notice would eliminate recoverable loss because the value of the reverting copyrights would have to be credited and would eclipse any loss. I am afraid I do not understand this argument. If there were breaches of the kind found by Mr Bevis, then there was improper accounting in respect of which moneys would be owed, and it would remain owing as a debt. If the non-payment of those moneys led to a cure notice, and breaches were not remedied, the copyrights would revert, but the debt would remain outstanding. The reverter of the copyright is not the equivalent of some sort of damages which would remove the debt. So the argument does not work. There was no binding act of election in respect of the issue of these proceedings.[186]Next, there is said to be an election by conduct before the cure notices were served in permitting Crosstown to exploit songs by pursuing synchronisation licence projects, by assisting with translations, by entering into new sub-publishing contracts, and by registering with collection societies worldwide; by knowingly permitting Crosstown to collect royalties and income “on their behalf”; and accepting an accounting on 30th March 2007. This is said to be conduct which is consistent only with the Writers having decided not to seek to have their copyrights back on the basis of the Bevis matters. Apart from the fact that I have held that no election point arises anyway, these are not inconsistent acts in all the circumstances. The Writers were presented with an assignment, but with no details of it for some time. The assignee professed an intention (which I consider to have been bona fide) to form a good relationship with the Writers and set about exploiting the copyrights for its own (Crosstown’s) purposes. There were extant disputes of which Crosstown became aware but did not remedy. In that context, the acts relied on, so far as they existed, did not amount to any sort of election at all. Nor do they, in the circumstances, amount to a representation on which forbearance can be based (it was not clear that Mr Hunter put this part of his case in that way but I deal with it anyway). There is no representation about cure notices implicit in those acts in those circumstances, and no evidence of any reliance on them by Crosstown in any way which would make it unfair for a cure notice to be served afterwards. Nor was there any suggestion that Crosstown did anything different as a result of these acts from that which they would have done anyway. It is not sufficient, for these purposes, for Crosstown to produce a catalogue of events which might, taken by themselves and in isolation, be said to be acts which presupposed an existing commercial relationship (which is all that can be said of these acts). More must be established if forbearance (or election) is to be deployed, and it has not been established.[187]Last, Crosstown relies on forbearance or election in respect of events after April 2007 insofar as they permitted and encouraged the exploitation by Crosstown of songs by giving active or passive approval to various proposed licences (which grants are said to have involved Crosstown warranting that it was the copyright owner), permitting and encouraging the collection of income by Crosstown and accepting three further accounting statements from Crosstown, all without any clear reservation of rights. All these are said to be consistent only with Crosstown continuing to own the copyrights.[188]It is difficult to see what the legal basis of this particular claim is. If the notices were not good, questions of election and forbearance and so on do not arise. If they were good then they operated very soon after the proceedings were commenced, and the copyrights will have reverted. Election, as Mr Hunter relies on it, becomes irrelevant. Forbearance and acquiescence become relevant only if they operate in the nature of an estoppel, and the facts relied on cannot, on the facts of this case, amount to an estoppel. Crosstown does not say that it relied on any representation by the Writers about the whereabouts of the copyrights, and with good reason – there was no such representation arising out of the acts relied on. Even less was there reliance. For Crosstown to say that it understood that the Writers were saying that their notices were not effective and that the copyrights remained vested in Crosstown would mean that the proceedings were, or had become, unnecessary and inappropriate, and Crosstown never did say that. The Writers did not serve their Defences for some months (in January 2008), but they served acknowledgements of service indicating an intention to defend. The main extension of the time for serving of a Defence was to enable the Writers to have trials of the outstanding actions against RD, which, it was believed, would or might deal with some of the issues in the present action. Within the present proceedings RD had made the Writers defendants to their own Part 20 proceedings in which it claimed declarations that it was not in material breach. The Writers had told Crosstown that it would be defending those claims. Crosstown cannot have conceivably thought, and there is no evidence that it did think, that it was being said that the Writers were not pursuing the reverter point, and in the absence of that the sort of claim that Mr Hunter seeks to make does not get off the ground. The most that these acts may do is affect claims for infringement of copyright in respect of acts consented to, but I will not say any more about that because that is the subject of the counterclaim which (as will appear) I am not ruling on at present.[189]In this context Mr Hunter referred to Leofellis SA v Lonsdale Sports Ltd [2008] ETMR 63 to justify a submission that the Writers could not have their cake and eat it – they could not claim to have the copyrights vested back in them and at the same time agree to, or encourage, Crosstown to carry on as though it still owned them. Leofellis does not help him. It was a case about a notice purporting to exercise a right of termination of a contract which at the same time seemed to provide for the rights and obligations to continue pending the court’s determining whether the termination was valid. The Court of Appeal held that the document was too equivocal to amount to a notice of termination. It was in that sense that the court did not allow a party to terminate an agreement while at the same time effectively keeping it in place. That does not assist in relation to the point presently under consideration. There was nothing equivocal in the cure notices. What happened thereafter was merely a practical expedient pending, first, Defences being served, then the anticipated disposal of the other outstanding proceedings (which came to naught because of RDM’s administration) and then (as the correspondence reveals) negotiations. Thereafter, the Defence was served, and the Writers’ position was stated clearly. The de facto, sensible, operation of licensing and collection cannot affect the whereabouts of the copyrights in all those circumstances.

A one-shot right?

[190]In relation to the RCO audit matters Mr Hunter relied on the fact that Mr Taylor had already served one, and Mr Barry two, notices in respect of those matters before the cure notices which are the subject of this action. He said that the proper operation of clause 18 prevented the Writers from serving a notice more than once in respect of any given breach – it was a “one-shot” provision. They had each had a shot in notices dated 3rd December 2002, and Mr Barry had had a second shot in a notice dated 5th May 2006 (which, if this argument were right would be invalid); they could not have another go in 2007.[191]This point is different from other points that Mr Hunter raises about the notices. It is not the same as the “reasonable time” point. If it is a good point, as such, it would have to be based on a term in the contract, which in turn involves either a construction of clause 18 which brings it about, or an implied term. I do not consider that either exists. There is nothing in the wording of clause 18 which requires or provides that only one notice per breach can be served, and the requirements for implying terms do not exist in respect of any implied term either. It is not necessary in order to make the contract work. That does not, however, mean that the Writers can in all circumstances have as many “shots” as they like in respect of any particular breach. The circumstances may be such that, having served a notice, waivers or estoppels, or even implied agreements, exist which prevent the service of any further effective notices. Those mechanisms will be fact sensitive, which seems to me to be the correct approach to this sort of point. If the facts are such that a Writer, having served a notice in respect of a breach, should not be entitled to serve another one if he abandons the first, then those doctrines, and perhaps others, are adequate or effective to prevent it. On the other hand if the facts are such that it would not be unfair to allow a second notice to be served, then those doctrines will not prevent it, and neither should the Agreement. I am therefore against Mr Hunter on this analysis.

The Counterclaim

[192]The Writers have counterclaimed for relief against Crosstown on the footing that their notices are good and effective and for declarations that they are valid. The relief includes relief for infringement of copyright and unjust enrichment, in respect of activities after the notices bit. Mr Mill agreed that I need not deal with those consequential claims at this stage; they could be dealt with once my decision on the validity of the notices was known if the parties could not reach an appropriate agreement. That is a sensible course and I shall adopt it.

Conclusion

[193]I therefore find that the attacks on the cure notices are not good, and that the notices themselves are valid. I shall make such declaratory orders about that as are appropriate after hearing argument. I shall also make such further orders for pursuing the counterclaim (probably after a stay to permit negotiations) as the parties agree or as seem right after further argument. Appendices Mark Taylor 31 Heathfield Gardens

London W4 4JU

[04]07 Rive Droite Music Limited Home Park House Hampton Court Road Kingston Upon Thames Surrey KT1 4AE By Recorded Delivery Dear Sirs Publishing Agreements dated 1 June 1994 ("the 1994 Agreement"), 1 June 1997 ("the 1997 Agreement") & 1 November 1998 ("the 1998 Agreement") (together "the Agreements") I refer to ongoing matters in dispute between us.

You are in breach of the Agreements in the following respects:

[1]As per the finding of Mr Justice Lewison in paragraph 7 of his Order dated 15 July 2004 in relation to Mark Taylor, you have breached clause 6(a) of the 1998 Agreement in respect of the composition "Follow Your Heart". The matters giving rise to that finding, of breach are detailed in Mr Justice Lewison's Judgment, and apply to me in exactly the same way as they apply to Mr Taylor.[2]The report prepared by RCO dated 14 May 2002 ("the RCO Report") details 7 instances of underaccounting by you under the 1998 Agreement numbered 1 ("Incorrect deduction of withholding tax"), 2 ("Incorrect royalty rate"), 3 ("Incorrect exchange rate: Australia and Mexico"), 4 ("Incorrect share accounted"), 5 ("Incorrect accounting USA"), 6 ("Missing income USA") and 7 ("Uncollected black box income"). Each instance is detailed in the RCO Report (save that, of the amount shown due in relation to item 2, £67,288 has been paid by you). Each represents a breach of clauses 10 and/or 14 of the 1998 Agreement. In particular, and without limiting the preceding sentence, these breaches include breach of clause 10(a) (in which you agree to pay specified percentages of net monies received by you) and of clause 14(a) (which stipulates that the statements you prepare are to include all receipts by you in any particular period). You are also in breach of clause 14(c) in each instance by your failure to pay the amount shown as outstanding in the RCO Report. You are further in breach of clause 14(c) by your failure to pay the reasonable costs of the RCO inspection (as stated in the RCO Report) and the contractual interest due on the outstanding amounts.[3]My solicitors (Forbes Anderson Free) wrote to your solicitors (Angel & Co) on 6 December 2006 in connection with the inspection of your books of account for the accounting periods 1 January 2002 to 30 June 2005 which was conducted by Chris Bevis of Bevis & Co in September last year. Their letter set out some matters of considerable concern in the numbered points on pages 3 and 4. You have not (whether by your solicitors or otherwise) provided any satisfactory response. It is therefore apparent that you have committed the following breaches of the Agreements:(a) You have failed to obtain accounting statements and/or payment of royalties due from your US sub-publisher, Right Bank Music Inc ("RBM"), for the accounting periods 1 July to 31 December 2002, 1 January to 30 June 2003, 1 July to 31 December 2003, 1 January to 30 June 2004 and 1 July to 31 December 2004. If any payments in relation to such royalties have been made by RBM to you, these have not been accounted on to me.(b) You have failed to account to me for an amount of £32,518.50 due on various songs, including 4 very successful tracks performed by the singer Enrique Iglesias (namely "Bailamos", "Be With You", "Rhythm Divine" and "Ritmo Total"), for the period 1 January to 30 June 2002.(c) You have failed to obtain accounting statements and/or payment of royalties due from other sub-publishers for the following territories and periods: France (1 July to 31 December 2002 and 1 January to 30 June 2003); Germany (1 July to 31 December 2003 and 1 January to 30 June 2004); Scandinavia (1 January to 30 June 2004 and 1 July to 31 December 2004); Italy (1 January to 30 June 2002, 1 July to 31 December 2003 and 1 January to 30 June 2004); Poland (1 July to 31 December 2002, 1 January to 30 June 2004 and 1 July to 31 December 2004); Brazil (1 July to 31 December 2003); Hungary (1 January to 30 June 2004 and 1 July to 31 December 2004); and Chile (1 July to 31 December 2004). Again, if any payments in relation to such royalties have been made by any such sub-publishers to you, these have not been accounted on to me.(d) You have frequently applied incorrect exchange rates in accounting to me. For example, you used an exchange rate of (1) US$3.09 = £1 when processing US income in the first half of 2002 when the correct rate for the period was US$1.56 = £1; (2) 14.7 Euros = £1 when processing income for France in the second half of 2003 when the correct rate for the period was 1.46 Euros = £1; and (3) 23.8 Kronor = £1 when processing income from Scandinavia in the first half of 2002 when the correct rate for the period was 14.5 Kronor = £1. As a result, you have substantially underaccounted to me. Further details of the breaches in each case are set out in my Amended Particulars of Claim in the audit action no. HC06C01980 ("the APoC"). Without limitation, these include breaches of clauses 6(a) and/or 10(a) and/or 14(a) of each of the Agreements. In addition, the Agreements include the implied term pleaded at paragraph 6 of the APoC. In the circumstances pleaded in paragraphs 34 to 36 of the APoC, you are in breach of the implied term of each of the Agreements.[4]My concerns set out in point 3 above are exacerbated by the fact that your affiliates, who I understand retained collection rights until 30 June 2006 in respect of compositions assigned to Crosstown Songs, have failed to account to Crosstown Songs. Further, your affiliates in France and Germany are continuing to collect despite not being entitled to do so. Despite the sale to Crosstown Songs, you continue to be bound by the terms of the Agreements. In particular, you are still subject to clauses 6(a) and/or 10(a) and/or 14(a) of each of the Agreements in respect of any income collected by your affiliates. By your failure to account to me for this by 30 March 2007, you are in breach of these provisions. The breaches outlined above clearly constitute "material breaches" of the Agreements for the purposes of clause 18(a) of the Agreements and this letter constitutes notice of those breaches pursuant to that clause. For the avoidance of doubt, my position is that my entitlement to a reversion of rights following any failure by you to take "all reasonable action" to remedy the above breaches is wholly unaffected by the sale of rights by you to Crosstown. Mark Taylor Paul Barry Tithebarns Tithebarns Lane Send Surrey GU23 7LE[04]07 Rive Droite Music Limited Home Park House Hampton Court Road Kingston Upon Thames Surrey KT1 4AE By Recorded Delivery Dear Sirs Publishing Agreements dated 1 June 1994 ("the 1994 Agreement"), 1 June 1997 ("the 1997 Agreement") & 1 November 1998 ("the 1998 Agreement") (together "the Agreements") I refer to ongoing matters in dispute between us.

You are in breach of the Agreements in the following respects:

[1]As per the finding of Mr Justice Lewison in paragraph 7 of his Order dated 15 July 2004 in relation to Mark Taylor, you have breached clause 6(a) of the 1998 Agreement in respect of the composition "Follow Your Heart". The matters giving rise to that finding, of breach are detailed in Mr Justice Lewison's Judgment, and apply to me in exactly the same way as they apply to Mr Taylor.[2]The report prepared by RCO dated 14 May 2002 ("the RCO Report") details 7 instances of underaccounting by you under the 1998 Agreement numbered 1 ("Incorrect deduction of withholding tax"), 2 ("Incorrect royalty rate"), 3 ("Incorrect exchange rate: Australia and Mexico"), 4 ("Incorrect share accounted"), 5 ("Incorrect accounting USA"), 6 ("Missing income USA") and 7 ("Uncollected black box income"). Each instance is detailed in the RCO Report (save that, of the amount shown due in relation to item 2, £67,288 has been paid by you). Each represents a breach of clauses 10 and/or 14 of the 1998 Agreement. In particular, and without limiting the preceding sentence, these breaches include breach of clause 10(a) (in which you agree to pay specified percentages of net monies received by you) and of clause 14(a) (which stipulates that the statements you prepare are to include all receipts by you in any particular period). You are also in breach of clause 14(c) in each instance by your failure to pay the amount shown as outstanding in the RCO Report. You are further in breach of clause 14(c) by your failure to pay the reasonable costs of the RCO inspection (as stated in the RCO Report) and the contractual interest due on the outstanding amounts.[3]My solicitors (Forbes Anderson Free) wrote to your solicitors (Angel & Co) on 6 December 2006 in connection with the inspection of your books of account for the accounting periods 1 January 2002 to 30 June 2005 which was conducted by Chris Bevis of Bevis & Co in September last year. Their letter set out some matters of considerable concern in the numbered points on pages 3 and 4. You have not (whether by your solicitors or otherwise) provided any satisfactory response. It is therefore apparent that you have committed the following breaches of the Agreements:(a) You have failed to obtain accounting statements and/or payment of royalties due from your US sub-publisher, Right Bank Music Inc ("RBM"), for the accounting periods 1 July to 31 December 2002, 1 January to 30 June 2003, 1 July to 31 December 2003, 1 January to 30 June 2004 and 1 July to 31 December 2004. If any payments in relation to such royalties have been made by RBM to you, these have not been accounted on to me.(b) You have failed to account to me for an amount of £32,518.50 due on various songs, including 4 very successful tracks performed by the singer Enrique Iglesias (namely "Bailamos", "Be With You", "Rhythm Divine" and "Ritmo Total"), for the period 1 January to 30 June 2002.(c) You have failed to obtain accounting statements and/or payment of royalties due from other sub-publishers for the following territories and periods: France (1 July to 31 December 2002 and 1 January to 30 June 2003); Germany (1 July to 31 December 2003 and 1 January to 30 June 2004); Scandinavia (1 January to 30 June 2004 and 1 July to 31 December 2004); Italy (1 January to 30 June 2002, 1 July to 31 December 2003 and 1 January to 30 June 2004); Poland (1 July to 31 December 2002, 1 January to 30 June 2004 and 1 July to 31 December 2004); Brazil (1 July to 31 December 2003); Hungary (1 January to 30 June 2004 and 1 July to 31 December 2004); and Chile (1 July to 31 December 2004). Again, if any payments in relation to such royalties have been made by any such sub-publishers to you, these have not been accounted on to me.(d) You have frequently applied incorrect exchange rates in accounting to me. For example, you used an exchange rate of (1) US$3.09 = £1 when processing US income in the first half of 2002 when the correct rate for the period was US$1.56 = £1; (2) 14.7 Euros = £1 when processing income for France in the second half of 2003 when the correct rate for the period was 1.46 Euros = £1; and (3) 23.8 Kronor = £1 when processing income from Scandinavia in the first half of 2002 when the correct rate for the period was 14.5 Kronor = £1. As a result, you have substantially underaccounted to me. Further details of the breaches in each case are set out in my Amended Particulars of Claim in the audit action no. HC06C01980 ("the APoC"). Without limitation, these include breaches of clauses 6(a) and/or 10(a) and/or 14(a) of each of the Agreements. In addition, the Agreements include the implied term pleaded at paragraph 6 of the APoC. In the circumstances pleaded in paragraphs 34 to 36 of the APoC, you are in breach of the implied term of each of the Agreements.

Send Surrey GU23 7LE

[4]My concerns set out in point 3 above are exacerbated by the fact that your affiliates, who I understand retained collection rights until 30 June 2006 in respect of compositions assigned to Crosstown Songs, have failed to account to Crosstown Songs. Further, your affiliates in France and Germany are continuing to collect despite not being entitled to do so. Despite the sale to Crosstown Songs, you continue to be bound by the terms of the Agreements. In particular, you are still subject to clauses 6(a) and/or 10(a) and/or 14(a) of each of the Agreements in respect of any income collected by your affiliates. By your failure to account to me for this by 30 March 2007, you are in breach of these provisions. The breaches outlined above clearly constitute "material breaches" of the Agreements for the purposes of clause 18(a) of the Agreements and this letter constitutes notice of those breaches pursuant to that clause. For the avoidance of doubt, my position is that my entitlement to a reversion of rights following any failure by you to take "all reasonable action" to remedy the above breaches is wholly unaffected by the sale of rights by you to Crosstown. Yours faithfully Paul Barry

Cited in 8 later judgments