JUC Avent pty 257 #RB= LIMITED DISTRIBUTION Neave ENT ee Se neteney « FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION V. No. G.78 of 1988 BETWEEN : CLYDE BRAMLEY AND OTHERS Applicants and BIG TIME PHONOGRAPH RECORD COMPANY (AUST) PTY. LTD. Respondent COURT: NORTHROP J. DATE : 13 MAY 1988 PLACE: PERTH RECEIVED MINUTE OF' ORDER TEI 73 \ RERERAL COURT OF \ AUSTRALA THE COURT ORDERS AND DECLARES THAT- NL We wad 1. The agreement in writing dated 1 December 1982 and, as varied, made between the applicants and the respondent by which the applicants agreed to record for the respondent a certain number of master recordings embodying their musical performances for the royalty upon the terms and conditions therein set out was validly determined by the applicants on 3 June 1987. 2. The costs of the hearing of this preliminary issue be reserved. 3. The application be listed for directions on 6 June 1988 at 9.45 a.m. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. LIMITED DISTRIBUTION FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) V. No. G.78 of 1988 ) GENERAL DIVISION ) BETWEEN : CLYDE BRAMLEY AND OTHERS Applicants and BIG TIME PHONOGRAPH RECORD COMPANY (AUST) PTY. LTD. Respondent COURT: NORTHROP J. DATE : 13 MAY 1988 PLACE: PERTH REASONS FOR JUDGMENT The applicants are professional musicians and recording artists carrying on their business as a group under the name Hoodoo Gurus. The respondent is a corporation under the Trade Practices Act 1974 and carries on the business of producing phonographic records. By an agreement in writing dated 1 December 1982 and as varied by subsequent agreements, ("the recording agreement"), the applicants agreed to record for the respondent a certain number of master recordings embodying their musical performances for the royalty and upon the terms and conditions contained in the recording agreement. The applicants claim that by notice dated 3 June 1987 they validly determined the recording agreement and thereafter have been attempting to negotiate and enter into recording agreements with other persons carrying on the business of producing phonographic records. In October 1987, the solicitors for the respondent wrote to a large number of persons carrying on that type of business a letter in the following terms:- "PLEASE BE ADVISED that we act for BIG TIME RECORDS PTY. LID. Our client has entered into a long term Recording Agreement with the Group professionally known as "HOODOO GURUS". That Agreement is still current and any attempt by the Group to enter into a Recording Agreement with the third party will result in immediate legal action both against the Group and the party purporting to enter into the Agreement." On 29 February 1988, the applicants commenced these proceedings seeking remedies under the Trade Practices Act as well as other remedies. One of the orders sought was a declaration that the recording agreement had been determined on 3 June 1987. On 15 March 1988, pursuant to 0.29 of the Federal Court Rules, the Court ordered that the question of whether the recording agreement had been determined validly be tried as a preliminary issue. These reasons are directed to that issue only. The recording agreement is in an unusual form. It appears to be framed in the form of an offer. It commences as follows- "The following shail constitute an agreement between us and the individuals (named), both jointly and severally, comprising the musical group professionally known as "Hoodoo Gurus" ("you") im respect to the recording for us during the term of this' contract master recordings embodying your performances ...". It concludes as follows:- "Tf the foregoing correctly reflects your understanding and agreement with us, please so indicate by signing below:- ..." There is then set out the signatures of the individuals and the seal of the respondent. There is no attestation clause to the seal. No address is given for the parties to the recording agreement. The recording agreement is contained in a lengthy document comprising 25 pages and containing 30 clauses. Many of the clauses contain a number of sub-clauses. Each master recording, referred to individually by the term "Master" and collectively by the term "Masters" was to be contained in an album comprising a long playing record of no less than 35 and of no more than 45 minutes in duration. The respondent did not have the facilities to record or manufacture the albums and the recording was to be done under licence from the respondent. Part of Clause 3 is set out:- "3. Recording sessions for the Masters shall be conducted under our recording licence. Fifty percent (50%) of all payments to any other individuals rendering services in connection with the recording of the Masters with the exception of any payments made toa record producer, ..... together with any and all amounts paid or incurred by us in connection with the recording of the Masters shall be recoupable from royalties earned by you from record sales outside Australia and New Zealand should the recording therefrom be released ina Major Foreign Territory. We agree to keep you fully informed of all payments made in connection with the recording of the Masters and to produce at your request invoices to verify any payment made." In the agreement the phrase "Major Foreign Territory" means the United States of America, Canada, United Kingdom, France, Germany, Japan and Scandinavia. Under the recording agreement all rights to the property arising from the recordings were to be the property of the respondent which had the world-wide right in perpetuity to use the names of the applicants. Clause 6 contains provisions relating to payment to the applicants. The opening part of Clause 6 is set out:- "6. Conditional upon your full and faithful performance of the material terms and provisions hereof, you shall be paid in respect of the sale by us or our licensees of phonograph records embodying the Masters recorded hereunder and in respect of any other exploitation by us or our licensees of such Masters, the following royalties upon the terms hereinafter set forth: . The clause then sets out details relating to the payment of royalties. A distinction is drawn between sales in Australia and New Zealand on the one part and United States, South Africa, Japan and the Continent of Asia. Provision is made for royalties on sales in other countries. Clause 7(a) 13 of importance. It 15 set out in full:- "7(a) Statements as to royalties payable hereunder shall be sent by us to you on or before the 30th September, and 31st March for the semi~annual period ended 30th June and 3lst December respectively. Together with our rendition of such accounting statements, we shall remit to you payment of accrued royalties, if (sic) any, earned by you hereunder during the applicable accounting period, less all advances and charges under this contract. We shall have the right to retain, as a reserve against charges, credits or returns, such portion of payable royalties as shall he reasonable. Should we not account to you in accordance herewith you shall be entitled to serve onus written notice requiring us to account within thirty (30) days. Should we not so account you shall be entitled to terminate this agreement." Clause 10 imposes restrictions on the applicants with respect to the making of phonograph records or master recordings for other persons during the term of the agreement and a more limited restriction after the termination of the agreement. Clause 16 contains provisions relating to the service of notices on the parties but the effect of the clause is lessened by the fact that it requires service at the addresses set out in the agreement but no addresses are set out. For present purposes, part only of that clause need be set out:- "All notices shall be in writing and shall either be served by personal delivery (to an officer of our company if to us) or registered mail, all charges prepaid". Clause 17(b) was relied upon by the respondent. It is set out:- "17(b) Neither party shall be deemed to be in breach of any of its obligations hereunder unless and until it shall have given specific written notice by certified or registered mail to the other party return receipt requested, of the mature of such breach and the party alleged to be in default shall have failed to cure such breach within thirty (30) days after receipt of such written notice." Finally, clause 28 provides as follows:- "28 Notwithstanding anything contained herein it is agreed that should we be paid an advance by an overseas licensee in respect of the lease to them of any of the Masters recorded and delivered hereunder we shall within forty-five (45) days of the receipt by us of such advance pay you fifty percent (50%) of the advance received less any deductions for recording costs referred to in Clause 3 hereof. Such payment shall be deemed a non-returnable advance against royalties Payable to you for record sales by that overseas licensee. At the commencement of the hearing of the preliminary question, counsel for the applicants produced to the Court a court book of documents containing copies of documents common to the parties. The documents were treated as being in evidence before the Court without further proof. This procedure was very helpful to the Court and forms a useful guide for future practice. In addition evidence was given by a number of witnesses and other documents were tendered in evidence. The applicants had engaged Michael Arthur McMartin as their manager. He operates from Sydney under the name Melody Management. At all relevant times he represented the applicants in their dealings arising out of the recording agreement. He gave evidence at the hearing. The respondent is incorporated in the State of New South Wales. It has a small number of employees only in New South Wales. It is one of a group of companies throughout the world which, in substance, are owned and controlled by Frederick George Bestall, who lives in California. He is the President of Big Time Records (America) Inc, a corporation carrying on business in Hollywood. He is a director of the respondent which, in reality, he owns and controls. Mr Bestall controls all the Big Time companies. The word "Bigtime", in stylized form appears to form part of a_ logo used by the Big Time companies. It appears at the top of letter paper used by the respondent. At the bottom of letter paper used by the respondent appears the name, phone number and address of the respondent in Sydney and phone number of the American company in Hollywood. In fact, some letters written from Sydney contain the address of the American company only. All negotiations of substance affecting the applicants and the respondent have taken place between Mr McMartin and Mr Bestall. On all the evidence I find that Mr Bestall and other officers of the American company make all decisions of substance affecting the respondent. This arises either on reference from the employees of the respondent or directly between Mr McMartin and Mr Bestall. In reality the respondent was an agent or conduit between the applicants and Mr Bestall. At the same time it must be remembered that the Australian company and the American company are separate and distinct legal persons. The words "Big Time" in the stylized form and otherwise are used commonly by the respondent and the American company. Thus, the label on some of the albums has the stylized word "Big Time" as well as the words "Big Time Records". The letters from the respondent's solicitors referred to earlier in these reasons describe the respondent as "Big Time Records Pty. Ltd." It is common to refer to the companies controlled by Mr Bestall as "Big Time" companies in America, Australia or the United Kingdom. Under licence agreements between Big Time Australia and Big Time America each can supply products to the other and pay the royalties to the other. The American company, as trustee of the Australian company entered into an agreement with an American Company, Elektra/Asylum Records, for the delivery of master recordings embodying performances of the applicants. The document containing the terms of that agreement gives the address of the Australian company as "C/- Big Time Records {American} Inc." at its address in Los Angeles, California. That agreement, dated 14 March 1986, 1s in the form of an offer from the Australian company. The acceptance of the offer is signed by Mr Bestall as "Big Time Phonograph Record Co." {Aust.}3 Pty. Ltd. Moneys paid under this agreement ("the Elektra agreement") form part of the matters in dispute between the parties to these proceedings. During the year 1986 differences arose between the applicants and the respondent relating to the operation of the recording agreement resulting in correspondence of Mr McMartin to the American company including notices alleging breaches of the recording agreement and other matters. Mr Bestall replied to this correspondence. By letter dated 9 April 1987, the Solicitors wrote to "Big Time Records Pty. Ltd.". The letter was sent by "Certified Mail - Priority Paid." The letter was as follows: - "Big Time Records Pty. Ltd., 6777 Hollywood Boulevard, 7th Floor, HOLLYWOOD, CALIFORNIA USA 90028 Dear Sir, Re: Hoodoo Gurus We refer to the above matter and advise that we have been instructed by our clients, collectively known as The Hoodoo Gurus, that your company is 1n breach of its obligations pursuant to the Recording Agreement entered into between your Company and our clients as follows:- 1. You are in breach of Clause S(a) of the Recording Agreement in that you failed to provide to our clients accounting statements or payments for accrued royalties by 3lst March 1987 as required by the said clause. 2. You are in breach of Clause 28 of the Recording Agreement in that, having been paid in advance by an overseas Licencee, viz Elektra Records, failed to pay to our clients 50% of the advance received (less deductions) within 45 days of 10. receipt of such advance as required by the said clause. 3. You are in breach of Clause 3 of the Recording Agreement in that, our clients having incurred costs in the production of a recording pursuant to its obligations as set out in the said clause, has not received from you that 50% of its expenditure not recoupable from royalties as required by the said clause. Therefore, kindly regard this letter as a Notice pursuant to Clause 16 of the Recording Agreement, pursuant to Clause 5(a) and 17(b) of the said Agreement, our client requires rectification of each of the abovementioned breaches within the time limits provided in the said Agreement, and that, if such rectification of the breaches does not take Place within those time limits, our clients will regard the Agreement as at an end." A copy of the letter was posted to Mr McMartin and to the Melbourne solicitors for the respondent. The letter was accepted on behalf of the American company on 13 April 1987. By 14 April 1987, the letter had come to the notice of Mr Doug Freeman, the officer in charge of business affairs at the American company. Previously, there had been dealings between Mr McMartin and Mr Freeman. They knew each other and on 14 April 1987 Mr Freeman prepared a memorandum for Mr Bestall. The memorandum was dated 14 April and was headed "Re: Hoodoo Gurus ... Notice Dates". The memorandum was as follows:- "We received notice of breach from the Hoodoo Gurus on April 14, 1987. Under our contract we have 30 days from such receipt to cure, or else we will be deemed in breach. Therefore, we must cure -- i.e., pay the remainder of the U.S. advance and account for royalties -- on or before: May 13, 1987 !!!" 11. In evidence, Mr Bestall said he was not in America in mid April 1987. He said he returned to the United States of America on 9 May 1987 and that date is confirmed by a date stamp in his passport. His passport does not assist in determining whether he was outside America on 14 April 1987. He says further that he did not know of the letter of 9 April 1987 or of the memorandum of 14 April 1987 until after his return to America on 9 May 1987. I shall return to this matter later in these reasons. Mr Freeman, on behalf of Big Time Records (America) Inc., responded to the letter of 9 April 1987. By letter dated 30 April 1987 written on the letter paper of the American company, Mr Freeman, in his capacity as the officer of the American company in charge of business affairs, wrote to Mr McMartin as follows:- Re: Big Time Records (Aust) Pty. Ltd. -v- Hoodoo Gurus Dear Michael: Pursuant to Clauses 3 and 28 of the above-referenced agreement dated December 1, 1982, and the letter on behalf of the Hoodoo Gurus from Dessau's Harding Brereton dated April 9, 1987, I am transmitting herewith a statement and cheque for payment of the band's share of the U.S. advance from Elektra and reimbursement for the band's share of recording expenses." Enclosed with the letter was a statement and a cheque in the sum of U.S. $29,767.41. The statement disclosed the sum of U.S. $29,767.41 as being due to the applicants. The statement contained a number of errors in 12. that the accounting methods did not conform to the requirements of clause 3 of the recording agreement, with respect to payments made to the respondent under the Elektra agreement and with respect to recording expenses incurred by the applicants. As a result, on the correct application of the recording agreement, the applicants should have received asum greater than U.S.$29,767.41, namely an additional amount of U.S.$17,500. The error relating to recording expenses wrongly debited AS5080 against the applicants instead of refunding that amount to them. It should be noted that this statement and the payment were forwarded within the 30 day period of the receipt of the letter of 9 April 1987. The letter, however, made no reference to the statement relating to royalties or the payment of royalties due to the applicants. The accounting and payment of royalties occurred later. By letter vated 7 May 1987 written on the letter form of the respondent and signed by Roger Gold for "Big Time Records" the respondent wrote to Mr McMartin as follows:- "Please find enclosed a cheque for $11,460.14 as payment for HOODOO GURUS Royalties for the period ending 31st December 1986". Enclosed with that letter was a bundle of documents being "Royalty Statement for Hoodoo Gurus for period ending 31 December 1986". The statement covered royalties from Australia and New Zealand and foreign territories. The statement showed an amount of A$11,460.14 as being the total 13. of royalties due to the applicants. A cheque dated 7 May 1987 drawn by the respondent on the National Australia Bank at its Pitt and Hunter Streets Branch in the sum of $11,460.14 was enclosed with the letter and the statement. Hereafter this cheque is called the "dishonoured cheque". The applicants do not concede the accuracy of the statement but that issue does not arise for decision by me. The statement and the dishonoured cheque were received by the applicants within the 30 day period specified in the letter of 9 April 1987. whe ie At a The applicants deposited the dishonoured cheque in their dank, the National Australia Bank, on 13 May 1987 but - es, it waii@id shonoured and the credit was debited on 18 May 1987. dishonour was given by the National Australia Bank honour notice dated 18 May 1987 and was marked "Refer By letter dated 27 May 1987 sent by facsimile to Mr eiieat the American company's office in Hollywood, Mr Mee, McMarttaé made reference to a number of the difficulties that had arisen between the applicants and the respondent. The letter contained the following paragraphs:- "When the band's royalties for the December 31st. period were again late we waited for nine days ; the due date before giving you notice as per "contract that you had thirty days in which to this breach. At the same time we demanded nt of our share of the Elektra advance which fverdue as well. The fact that you deducted Af the producers advance of U.$.$35,000 from ektra money in direct contradiction of the ing agreement could only be viewed as a 14. further attempt by you to retain band money for as long as you like and can not be tolerated. When the cheque which you issued to pay our artist royalties bounced, we were left with no alternative but to consider our contract with Big Time terminated forthwith as per the provisions of that contract." By telex sent on 29 May 1987, Mr Bestall in his capacity as President of Big Time Records (America) [Inc., replied as follows:- Michael, Have been trying unsuccessfully to fax reply to your letter since yesterday - letter is as follows: Dear Michael= In response to the April 9, 1987 correspondence from your Attorney Michael Brereton, pls be assured all matters contained in same have been attended to. Regarding your letter of May 27, 1987, I have reviewed the agreement concerning producers advances and agree that this is correct, they are not deductible from your share of the Elektra advance. We will send this amount (50 percent or $17,500) immediately or you may prefer to pick up the check upon your arrival in the States. Perhaps your picking up the check next week would be a better idea, I could have our accounting people here at that time and we could discuss base rates and any other accounting questions you may have. Hopefully we will be able to meet during your stay and discuss a new recording agreement also, perhaps this can alli be tied in together. If this is agreeable to you, pls contact me when you arrive and propose a time which would be convenient for you. I apologize for not handling these matters earlier, I had the intention of taking care of them when I arrived in Australia, but as _ you aware, my trip to Australia did not materialize due to numerous personal and business problems. Looking forward to meeting with you and resolving 15. these matters." This reply makes no reference to the dishonoured cheque. In response to that telex, Mr McMartin, on 2 June 1987, sent the following telex to Mr Bestall:- ATIN FRED BESTALL 1 Look forward to seeing you on 3rd in L.A. 2 Pls make arrangements for U.S. $17,500 to be sent to Australia ASAP". By letter dated 3 June 1987 sent by facsimile to Mr Bestall at the American company's office in Hollywood the solicitors for the applicants wrote as follows:- "Re: Hoodoo Gurus Take notice that as you have failed to rectify your breaches of the Recording Agreement as set out in our letter to you of 9th April 1987, the said Agreement is now at an end and our clients are released from any obligations formerly imposed upon them by the said Agreement". The applicants rely upon this material for the making of the declaration sought. In summary counsel for the applicants contended that the material establishes that the respondent was in breach of the terms of the recording recording agreement in that it:- (a) failed to send the accounting statements due on 31 March 1987 (clause 7); (b) failed to pay the royalties due to be paid in respect of the six month period ended 31 December 1986 (clause 7); 16. (c) failed to pay the full amount of the applicants' share of the advance of $200,000 made under' the Elektra agreement (clause 28), namely tailed to pay U.S.$17,500; and (d) wrongly deducted from the royalties payable to the applicants payments made to record producers and recording costs paid by the applicants (clause 3), namely the amount of As5080 wrongly debited against the applicants instead of being paid to the applicants. The three basic contentions made on behalf of the applicants were:- 1. The letter of 9 April 1987 was an effective notice under clause 7(a) of the recording agreement; 2. That the notice constituted by the letter was properly served upon or given to the respondent; 3. The failure by the respondent within the relevant period to rectify the defaults resulted in the termination of the recording agreement; and 4. The letter of 3 June 1987 gave formal notice of the termination of the recording agreement. In summary, counsel for the respondent contended that the notice constituted by the letter of 9 April 1987 was not an effective notice under clause 7(a) of the recording agreement, that it had not been properly served upon or given to the respondent; that there had been no failure by the respondent to comply with the requirements of the recording agreement and that the agreement had not been terminated. I propose to consider first the question of whether the applicants have validly terminated the recording agreement in so far as reliance is placed upon 17. clause 7(a) of that agreement. The first part of clause 7(a) required the respondent to send to the applicants on or before 31 March 1987 a statement as to royalties payable for the six months period ended on 31 December 1986. The respondent failed to do that. The second part of clause 7(a&) required the respondent >» remit with the accounting statement payment of accrued royalties for the six months period ended on 31 December 1986. The respondent failed to do that. These facts of themselves, however, did not entitle the applicants to terminate the recording agreement. Time was not of the essence of that agreement. This 1s made clear by a reference to both clause 7(a) itself and to clause 17(b), whatever meaning can be given to the latter sub-clause. Clause 7(a) prescribes a procedure to be followed when the respondent fails to comply with the requirements of that sub-clause. The prescribed procedure is as follows:- "Should we not account to you in accordance herewith you shall be entitled to serve on us written notice requiring us to account within thirty (30) days. Should we not so account you shall be entitled to terminate this agreement." Having regard to the context of the whole of clause 7(a), the word "account" as used in the provision just set out must be taken to include the obligation to send the statement and the obligation to remit payment of accrued royalties earned under 18. the agreement. Counsel for the respondent did not contend to the contrary. By 31 March 1987, the respondent had not accounted to the applicants for the s1x months period ended 31 December 1986. It had not complied with the requirements of the first and second parts of clause 7(a). The letter dated 9 April 1987 from the solicitors for the applicant is said to be "written notice requiring (the respondent) to account within thirty (30) days". The letter alleges three breaches of obligation under the recording agreement by the respondent. The first is identified as follows:- "l. You are in breach of Clause 5(a) of the Recording Agreement in that you failed to provide to our clients accounting statements or payments for accrued royalties by 3lst March 1987 as required by the said clause." The reference to "Clause 5(a)", clearly, is a typographical error. The respondent did not dispute that and the notice was treated as if it referred to Clause 7(a). Counsel for the respondent contended that this notice was not an effective notice under clause 7(a). It will be remembered that the letter of 9 April alleged three separate breaches ome only of which, the first, was under clause 7(a). For present purposes and without deciding the question, I will assume that the second and third breaches do not come under clause 7(a) but come under clauses 28 and 3 respectively. In those circumstances, it was submitted that 19. the recording agreement did not enable the applicants to terminate the agreement under clause 7(a) for breaches of clause 3 or clause 28 and the inclusion of these alleged breaches made the notice invalid or ineffective, insofar as 1t relied upon clause 7(a), since the letter required rectification of each of these breaches. Counsel referred to what was said by Barwick C.J. in Green v Sommerville (1979) 141 C.L.R. 594 at p.600 and Wilson J. at p.613. On this aspect of the case, Barwick C.J. and Wilson J. dissented from the majority of the Court. This is made clear by a reference to Legione v Hateley (1982-83) 152 C.L.R. 406 where Gibbs C.J. and Murphy J., after referring to the position where a notice of rescission erroneously claimed too much and thus was ineffective, said at pp.418-9:- "The notice therefore specified a non-existent default as well as a real default. However, in Green v. Sommerville (1979) 141 C.L.R. 594, Mason J., with whom Murphy and Aickin JJ. agreed, held that a notice which required the party to whom it was given, under threat of recission, to rectify two alleged defaults when under the contract only one of those defaults provided a foundation for recission, was not invalidated by the presence of the additional unauthorized requirement. Barwick C.J. and Wilson J. took a different view. The decision in that case accords with that of Gowans J. in Gair v. Smith £1964] V.R. 814. We did not consider it appropriate to allow this question, so recently decided in this Court, to be reopened. This subnission therefore fails". In the present case, the same argument must fail. It was contended further that the letter was addressed to "Big Time Records Pty. Ltd.". This is not the 20. name of the respondent. Counsel for the respondent did not make an issue of that. The facts set out earlier in these reasons show that the words "Big Time Records" are commonly used in referring to the respondent. The letters "Pty. Ltd" lllustrate further that it 1s the Australian company to which the letter 1s directed. It was contended further that the letter did not refer in express terms to rectification within 30 days. There is no doubt that all persons connected with the American company and the Australian company who dealt with the letter understood rectification had to he done within the 30 day period. I reject these contentions. It was contended also that the letter was not given to the respondent. Clause 7(a) allowed the applicants to serve on the respondent written notice requiring it to account within 30 days. The written notice was served on the respondent not at its registered address at Sydney but at the address of the American company in California. This, 1t was contended, did not comply with the requirements of clause 7(a), clause 16 or clause 17(b). Clause 7(a) contains a specific provision relating to the giving of written notice. Clause 16 and 17(b) are general provisions. In the absence of the address of the respondent being contained in the recording agreement, the general requirement of clause 16 that service had to he effected at the specified address cannot apply. The letter was not served personally to an officer of the respondent or by registered mail. It was served at the office of the 21. American company by a person who held a responsible office in the Big Time group of companies who understood the contents of the letter and what had to be done. This is made clear by a reference to the memo from Mr Freeman to Mr Bestall dated 14 April 1987. In my opinion, in all the circumstances of this case, the sending of the letter of 9 April 1987 to the address of the American company constituted substantial compliance with the provisions of clause 7(a), clause 16 and Clause 17(b), whatever the last sub-clause means. The fact that Mr Bestall may not have known of the letter until some time later does not affect the position. The respondent took steps to rectify each of the breaches alleged in the letter of 9 April 1987, but for present purposes, I am considering the breach of clause 7(a) only. But for the dishonoured cheque, the respondent would have rectified the breach under clause 7(a) within the time limits prescribed by that sub-clause. There is no evidence to suggest that errors in accounting that may have existed in the statement forwarded with the letter of 7 May 1987 are of sucha nature to establish that the statement did not constitute a statement under clause 7(a). Counsel for the respondent relied upon authorities showing that strict compliance with provisions relating to the exercise of an option to purchase must be had otherwise the option is not exercised. They referred to Lewes Nominees Pty. Ltd. v Strang (1983) 49 A.L.R. 328. In that case 22. payment by a certain date was a condition of the exercise of the option. Payment was not made by that date, thus' the option was not exercised. In the present case, notice under clause 7(a) required the respondent to account within 30 days. The period does not commence to run until notice has been received. On the facts of this case, I find that notice was received by the respondent when Mr Freeman received the letter on 14 April 1987. That was the date accepted by the respondent. It sought to rectify the default within 30 days of that date. Lewes Nominees Pty. Ltd. v Strang was directed to a different issue. Counsel for the respondent contended further that even though the cheque forwarded with the letter from the respondent dated 7 May 1987 was dishonoured, nevertheless the respondent had remitted to the applicants payment of accrued royalties within the time allowed by clause 7(a). It is not in dispute that payment by cheque is a conditional payment. When the cheque is honoured, it is payment as from the date of receipt of the cheque. If the cheque is not honoured then no payment has been made. Generally see Barwick C.J. in George v_Cluning (1979) 28 A.L.R. 57 at p. 59. Counsel for the respondent submitted that clause 7(a) did not require the respondent to make payment of accrued royalties to the applicants but merely required the respondent to remit payment to the applicants and this it had done. 23. A reference to the Shorter Oxford English Dictionary and to the Macquarie Dictionary shows that the word "remit"" has many different meanings. For present purposes the most relevant meaning 1s "To send or transmit (money or articles of value) toa person or place."; the Oxford, and "to transmit or send (money, etc.) to a person or place"; the Macquarie. The essential meaning of the word "remit" 1m clause 7(a) is to send or convey. What 1s required is that the applicants are to receive the benefit of the royalties accrued to them and they are to receive that benefit by being paid the amount. Payment by cheque would constitute payment, but if the cheque 1s dishonoured, there is no payment. To send or remit a cheque to the applicants cannot be said to constitute compliance with clause 7(a) if the cheque is dishonoured. I find that on the evidence before the Court, the respondent did not remit to the applicants payment of accrued royalties for the six months period ended 31 December 1986 within the time required by clause 7(a). Finally, counsel for the respondent submitted that the Court should exercise its discretion in favour of the respondent based upon a principle similar to the equitable principle of giving relief against the forfeiture of a proprietary interest. Counsel referred to Meagher, Gummow and Lehane, Equity, Doctrines and Remedies, 2nd Ed. para 1802 at p.419. In that passage the authors in discussing the equitable relief against forfeiture say :- 24. "A further basis of jurisdiction was relief against accident. Thus, 1f the mortgagor was prevented from making his repayment on the stipulated day, it was hard to permit him to suffer forfeiture for an omission which was not his fault. But as time went on relief was given to mortgagors whose delay was not the result of accident so much as negligence and their right of redemption was preserved in Chancery in what seemed to common lawyers cases of excessive indulgence." I doubt whether any such equity should apply to the facts of this case, but, without deciding that issue I find there is no evidence to support the application of such a principle. At the time the dishonoured cheque was drawn, Mr Gold knew that the respondent's account with its bank was overdrawn beyond the agreed limit. He knew that money had been forwarded from the American company to allow the payment to be made to the applicants under clause 7(a). That payment had not been cleared. Even if 1t had been cleared, the respondent could not have been able to pay the applicants and keep within the overdraft limits of its bank account. In addition, increases in the overdraft limit depended upon further guarantees being given by Mr Bestall and delays were being experienced with respect to those guarantess. Mr Bounds, the then commercial business manager of the branch of the bank at which the respondent's account was kept, gave evidence. He said he would have told Mr Gold the cheque payable to the applicants would not be honoured. The reversal of the cheque occurred on15 May. He would have had a discussion with Mr Gold about that time. The bank did not honour the cheque because there were no funds to cover the cheque and no agreement to cover it. On 21 May 1987 Mr Gold 25. requested Mr Bounds to direct payment of the cheque payable to the applicants as well as some other cheques. Mr _ Bounds made a recommendation to his superior that the cheques be paid, but the superior officer, by written instruction on 27 May 1987, refused to permit payment. His response to the recommendation is of interest; - "T re-iterate - conduct of this a/c has now become totally unsatisfactory and you are to maintain firm control with early regularization and containment therein your prime objective. Drawings have been allowed on the a/c against my written instructions and this is not to happen again." Thereafter Mr Gold notified Mr Bestall who was arranging the guarantees. From this evidence, 1t is clear that as late as 27 May 1987 the respondent did not have sufficient funds or arrangements made to honour the cheque forwarded to the applicants on 7 May 1987. In my opinion there are no facts here which justify a consideration of the equitable relief sought by the respondent. Accordingly, I find that the applicants have made out their case insofar as it is based on the first ground set out in the letter of 9 April 1987. The letter of 3 June 1987 formally terminated the recording agreement. In the result, I do not need to consider the other grounds upon which the applicants rely. 26. I will make the declaration sought. a certiSy that this and the bows. Aue ( .eveding pages are a true copy of the . easons for Judgment herein of the onourable Mr. Justios EM ¢tr'nto pie ~~ Pa Shur, F JOC. Associate "ited: 13° May {Azz