JUDGMENT No. 35.1... BBs (LIMITED DISTRIBUTION) IN THE FEDERAL COURT OF AUSTRALIA) ) ) ) ) VICTORIA DISTRICT REGISTRY No. VG 185 of 1988 GENERAL DIVISION ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: BIG TIME PHONOGRAPH RECORD COMPANY (AUST) PTY LTD Appellant and CLYDE BRAMLEY, BRADLEY SHEPHERD, DAVID FAULKNER and MARK KINGSMILL Respondents MINUTES OF ORDER , - a ' . . 4 wae an /. ° aan COURT: Woodward, Wilcox & Foster JJ. f f Ce . x eal oa } N DATE: 1 July 1988 WAS A? i; \er . ard PLACE: Melbourne ye eR ao nr THE COURT ORDERS THAT: The appeal be dismissed with costs. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA) ) ) ) ) VICTORIA DISTRICT REGISTRY No. VG 185 of 1988 GENERAL DIVISION ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: BIG TIME PHONOGRAPH RECORD COMPANY (AUST) PTY LTD Appellant and CLYDE BRAMLEY, BRADLEY SHEPHERD, DAVID FAULKNER and MARK KINGSMILL Respondents COURT: Woodward, Wilcox & Foster JJ. DATE: 1 July 1988 PLACE: Melbourne EXTEMPORE REASONS FOR JUDGMENT THE COURT This 1S an appeal by leave from a decision by a single judge of the Court on a preliminary question. There is only one short point to be decided on the appeal and it turns, in our view, entirely upon the special facts of the case. The question 1s whether a particular notice of default under a contract was validly served by serving 1t upon the controlling company in the United States rather than upon its Australian subsidiary, the appellant. We have not found assistance in any of the authorities cited to us dealing with such matters as the service of notices to quit upon tenants or the exercise of options. There are only two provisions of the agreement between the parties which are relevant for present purposes. These are clauses 7(a) and 16. Sub-clause 7(a) reads as follows: "T(a) Statements as to royalties payable hereunder shall be sent by us to you on or before the 30th September, and 31ist March for the semi-annual period ended 30th June and 31st December respectively. Together with our rendition of such accounting statements, we shall remit to you payment of accrued royalties, if 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 be reasonable. 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." With regard to clause 16 the learned trial judge said, "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'." The relevant facts of the case have, with one exception, been fully set out in his Honour's reasons for judgment and we do not repeat them here. His Honour's ultimate finding was contained in the following words: "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." We are not concerned with sub-clause 17(b) in this appeal. In our view, one of the important circumstances of the case to which his Honour there referred, but did not spell out, was that the respondents had frequently been told by the appellant to address matters of substance concerning the agreement to the principal of the United States company un Hollywood. The transcript reveals the following evidence given by Mr McMartin, the manager of the respondents: "Was there any representative of Big Time physically in Australia?---Yes, they did have an office in Sydney. What was or what were the staff at that office?---It varied. There was Roger Gold, a general manager, their label manager. There was a production manager or assistant, a receptionist, and at varying times a fourth person whose various responsibilities, I am not really sure what they were. Did you have any contact with any of those persons in the course of the general affairs of the recording contract?---Yes, I did, ona weekly basis. Was there any differentiation then between the matters in which you spoke to the people in Sydney and the matters which you spoke to the people in Hollywood?---Very much so. The matters that I would deal with in the Sydney office dealt with the band's activities and the sale of our records within Australia. Anything that dealt with our contractual relationship, and most certainly anything that dealt with the payment of monies, whether it was for promotion, anything over basically a petty cash nature, we were always immediately referred to Fred. Speak to Fred about it, contact Fred. That was the way it was always done. ['Fred' was Mr Bestall, found by his Honour to own and control the appellant. ] HIS HONOUR: What is a label manager?---A label manager is, as opposed to the company manager, because there was not one in Australia, or that I was aware of, a label Manager was responsible for representing the label to the major record distributor, who manufactured and distributed the records. It 1s basically manager of their company office." "I was told a number of times when I queried royalty accounts, do not speak to me, speak to Liza, she 1s doing them up. Liza, as 1S evident in some of the correspondence in here was Fred Bestall's bookkeeper or secretary in Los Angeles and my queries were always passed on, speak to Liza, speak to Fred and then later when Doug Freeman came in, speak to Doug Freeman. So the royalties were done up there." Mr Gold, the appellant's general manager at the relevant time, also gave evidence: "There were a number of queries from time to time about money, made by Mr McMartin on behalf of the band, were not there?---yYes, there were. And indeed the money queries, I suggest, you always referred to America?~--Yes, I did. And indeed you often said to Mr McMartin, 'Look, you are better off going straight to Hollywood', or at least, 'communicating with Hollywood about these sorts of problems' ?---It was a situation, a problem, I had spoken to Fred initially about and passed it on to Michael that they would be better to speak together about it, definitely. So in other words, it was as a result of a conversation you had with Mr Bestall you decided or you were instructed to advise Mr McMartin to refer all his queries or complaints of that sort to Hollywood?---Yes." "MR BRAUN: I suggest to you on any controversial matters, if it was raised with you, it was your suggestion that they be immediately referred to Fred?---yYes." Against this background of the arrangement between the parties, we believe that the appellant's failure to supply, in the contract which it prepared, an address for service, left the respondents to do the best they could to carry out the intention of the parties by serving their notice by registered mail at an appropriate address. Clearly, service at the registered address of the appellant in Australia would have been good service. But, havang regard to the realities of the relationship between the appellant and its United States principal ('an agent or conduit' for that principal, as his Honour found), and the course of dealings between the parties, we agree with the learned trial judge that service on the United States company could be taken as valid service on the Australian company. We are confirmed in that view by the fact that the service in the United States was accepted without question, and was acted upon by an unsuccessful attempt to cure the appellant's default. For these reasons we believe the issue before us was correctly decided by the learned trial judge and the appeal will be dismissed with costs. I certify that this and the five (5) preceding pages are a true and accurate copy of the Reasons for Judgment herein of The Court Nn The Hon Mr Justice Woodward Dated: 1 July 1988 Counsel for the appellants: Mr G. Nash QC and Mr C. Connor Solicitors for the appellants: Coady, 'Dwyer & Associates Counsel for the respondents: Mr A. Archibald QC and Mr R. Brett Solicitors for the respondents: Lilley Brereton