FEDERAL COURT OF AUSTRALIA Copyright Agency Ltd v Charles Sturt University (No 2) [2001] FCA 1145 practice and procedure – declaration of right – power to make – discretion –declaration should not be made as a means of giving advisory opinion or resolving a dispute which is at present only hypothetical and will become actual only if and when certain events happen in the future Copyright Act 1968 (Cth) s 40; Pt VB, s 135ZL Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 applied Australian Securities Commission v Ampolex Ltd (1995) 14 ACLC 80 cited Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406 applied Mentha v G E Capital Ltd (1997) 154 ALR 565 followed Sanderson Computers Pty Ltd v Urica Library Systems BV (1998) 44 NSWLR 73 followed Warramunda Village Inc v Pryde (2001) 105 FCR 437 applied In re Judiciary and Navigation Acts (1921) 29 CLR 257 cited University of New South Wales v Moorhouse (1975) 133 CLR 1 discussed Moorhouse v University of News South Wales (1974) 23 FLR 112 referred to COPYRIGHT AGENCY LIMITED (ACN 001 228 799) & ORS v CHARLES STURT UNIVERSITY & ANOR N 776 OF 1999 LINDGREN J 24 AUGUST 2001 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 776 OF 1999 BETWEEN: COPYRIGHT AGENCY LIMITED (ACN 001 228 799) FIRST APPLICANT HARCOURT AUSTRALIA PTY LIMITED (ACN 000 910 583) SECOND APPLICANT NICK O'NEILL THIRD APPLICANT ROBIN HANDLEY FOURTH APPLICANT PAN MACMILLAN (AUSTRALIA) PTY LIMITED (ACN 001 184 014) FIFTH APPLICANT ROY MASTERS SIXTH APPLICANT AND: CHARLES STURT UNIVERSITY FIRST RESPONDENT THE UNIVERSITY OF SYDNEY SECOND RESPONDENT JUDGE: LINDGREN J DATE OF ORDER: 24 AUGUST 2001 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicants' motion brought by notice of motion filed on 6 April 2001 seeking leave to amend be dismissed. 2. The applicants' motion brought by notice of motion filed on 20 April 2001 seeking an order that the respondents' amended defence filed on 14 February 2001 be struck out under Order 11 rule 16 of the Federal Court Rules be dismissed. 3. The proceeding generally be dismissed. 4. The proceeding be listed on Tuesday 28 August 2001 at 9.30am for the making of directions for submissions as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 776 OF 1999 BETWEEN: COPYRIGHT AGENCY LIMITED (ACN 001 228 799) FIRST APPLICANT HARCOURT AUSTRALIA PTY LIMITED (ACN 000 910 583) SECOND APPLICANT NICK O'NEILL THIRD APPLICANT ROBIN HANDLEY FOURTH APPLICANT PAN MACMILLAN (AUSTRALIA) PTY LIMITED (ACN 001 184 014) FIFTH APPLICANT ROY MASTERS SIXTH APPLICANT AND: CHARLES STURT UNIVERSITY FIRST RESPONDENT THE UNIVERSITY OF SYDNEY SECOND RESPONDENT JUDGE: LINDGREN J DATE: 24 AUGUST 2001 PLACE: SYDNEY REASONS FOR JUDGMENT (No 2) introduction 1 There has been a longstanding dispute between the first applicant, Copyright Agency Limited ("CAL"), a collecting society representing the authors and publishers of, relevantly, literary works in which copyright subsists, and their agents, and Australian universities, in relation to multiple photocopying by the universities of copyright literary works for external students in connection with courses being undertaken by them. Generally speaking, the issue is whether the copying does not constitute an infringement of the copyright by reason of subs 40(1A) of the Copyright Act 1968 (Cth) ("the Act") with the result that the universities are not obliged to pay CAL for the copying, or whether it does not constitute an infringement only by reason of certain provisions of Part VB of the Act, notably s 135ZL within that Part, with the result that the universities are obliged to pay CAL equitable remuneration for the copying. 2 CAL wishes to have this question determined in the present proceeding. The respondents submit, for various reasons, that this is not permissible or, as a matter of discretion, that it should not be permitted. 3 The history of the proceeding has been somewhat lengthy and tortuous. I recounted part of it in my reasons for judgment on three earlier motions delivered on 21 December 2000 (Copyright Agency Ltd v University of Adelaide [2000] FCA 1894). Unfortunately, it is necessary for me to recount other aspects of that history below. the present motions 4 These reasons relate to three motions. By a notice of motion filed on 6 April 2001, CAL (for convenience, generally I will refer only to CAL of the applicants) seeks leave to file a further amended application and a further amended statement of claim. The proposed further amended application would seek the following declarations: "1. A declaration that, by making the copies of the works listed in column 3 of the Schedule to this application (Works), the Respondent has infringed the copyright in each of the Works. 2. A declaration that the making of the copies of the Works were acts to which Part VB of the Copyright Act 1968 (Act) applies, and to which section 40(1A) of the Act does not apply. 3. A declaration that the making of the copies of the Works were not acts to which section 40(1A) of the Act applies." 5 The literary works which have been referred to in one or other Schedule to the various versions of the application since the proceeding commenced have been numerous. Now, however, they would number only two. The first is The Employment Relationship in Australia, 1996, of which the authors are Tom Keenoy and Di Kelly and of which the publisher is "Harcourt Brace" (now Harcourt Australia Pty Limited), the second applicant ("Harcourt") ("Work A"). The claim to be made is that the first respondent, Charles Sturt University ("CSU"), reproduced a substantial part of Work A, namely, a chapter, "Employer Organisation", which comprises pages 194-210 of Work A. According to the proposed further amended application, an unknown number of copies were made by CSU for the purpose of a "coursepack" issued by it to students enrolled in its course "Industrial Relations in Australia, Faculty of Commerce – Module 3" ("Module 3"). 6 The second work identified in the Schedule is Understanding Australian Industrial Relations, 1998, 5th Edition, of which the authors are Robyn Alexander and John Lewer, and of which the publisher is again Harcourt ("Work B"). The claim to be made is that CSU reproduced a substantial part of Work B, namely, a chapter, "Negotiation Skills", which comprises pages 291-310 of Work B. According to the proposed further amended application, an unknown number of copies were made by CSU for the purpose of a coursepack issued by it to students enrolled in its course "Industrial Relations in Australia, Faculty of Commerce – Module 4" ("Module 4"). 7 By subpars 13(a) and (b) of their amended defence filed on 14 February 2001 the respondents pleaded defences in respect of the relevant acts of copying. The two subparagraphs are, in substance, identical. Therefore, it suffices to set out par (a) as follows: "(a) in relation to the acts alleged … the Respondents: (i) admit that the acts were done solelyfor the educational purposes of Charles Sturt University; (ii) further, say that each of the acts was done for the purpose of, or associated with, an approved course of study or research by an enrolled external student of Charles Sturt University;…" I have included in subpar (i) the word "solely" although in fact, due to a slip, it was omitted from the amended defence. The respondents have given notice of their desire to amend to include that word and CAL does not, and could not reasonably, object to the amendment (see [36] below). The significance of the word is found in s 135ZL of the Act to which I refer in [11] below: subpar (i) is intended to plead a defence under that section which occurs in Part VB of the Act. Subpar (ii) is intended to plead a defence under subs 40(1A) of the Act which provides as follows: "A fair dealing with a literary work (other than lecture notes) does not constitute an infringement of the copyright in the work if it is for the purpose of, or associated with, an approved course of study or research by an enrolled external student of an educational institution." 8 The respondents' amended defence supports its pleading of subs 40(1A) with a reference to subs 40(3) which provides, relevantly, as follows: "…a dealing with a literary…work,…, being a dealing by way of the reproducing, for the purposes of research or study: (a) if the work … comprises an article in a periodical publication – of the whole or a part of that work …; or (b) in any other case – of not more than a reasonable portion of the work …; shall be taken to be a fair dealing with that work … for the purpose of research or study." Works A and B are books, not articles in periodical publications. CAL submits that subs 40(3) is related to subs 40(1), not subs 40(1A), and cannot be relied on in support of a defence under subs 40(1A). As discussed later, CAL attacks the form of the pleading of the subs 40(1A) defence. 9 The respondents' amended defence further pleads in par 19 that at the time of the copying, a "remuneration notice", within the meaning of Part VB of the Act, given by or on behalf of CSU to CAL, was in force, and that by reason of s 135ZL within that Part the making of the copies did not infringe copyright in the relevant works. Paragraph 19 also pleads, by reference back to subpars 13(a) and (b), the subs 40(1A) fair dealing defence. Paragraph 19 is divided into, inter alia, Part A and Part B which relate respectively to Work A and Work B. The two Parts are, in substance, identical. Therefore, it suffices to set out the opening words and Part A of par 19 as follows: "19. Further or alternatively the Respondents say: Part A: In relation to matter copied from The Employment Relationship in Australia A1. Charles Sturt University copied 16 pages of the work The Employment Relationship in Australia ("Work A"). A2. Work A is contained in a published edition of that work, being an edition of 427 pages. A3. By reason of the matters alleged in paragraphs A1 and A2, the number of pages copied by Charles Sturt University did not exceed 10% of the number of the pages of the edition. A4. By reason of the matters alleged in paragraph A3, and section 10(2) of the Copyright Act 1968 (the 'Act'), the part copied by Charles Sturt University is taken to contain only a reasonable portion of Work A. A5. By reason of the matters alleged in paragraph 13(a) and A4, the sub-sections 40(1A) and (3) of the Act, the making of the copies concerned did not constitute an infringement of the copyright in Work A. A6. Alternatively, by reason of the matters alleged in paragraph 13(a) and sub-section 40(1A) of the Act, the making of the copies concerned did not constitute an infringement of the copyright in Work A. A7. Further or alternatively, at the time the copying was done a remuneration notice (within the meaning of Part VB of the Act) given by or on behalf of Charles Sturt University to CAL was in force. A8. By reason of the matters alleged in paragraphs 13(a), A4 and A7, and section 135ZL of the Act, the making of the copies did not infringe the copyright in Work A." 10 I need refer only briefly to the provisions of Part VB of the Act. That Part (ss 135ZB-135ZZH) is headed "Reproducing and communicating works etc. by educational and other institutions". CAL is a declared "collecting society" under subs 135ZZB(1) of the Act. CSU is a body administering an educational institution ("administering body") within the meaning of Part VB. Subsection 135ZU(1) provides that an administering body may, by notice in writing given to the relevant collecting society, undertake to pay equitable remuneration to that society for, relevantly, "licensed copies" made by it or on its behalf while the notice is in force. Part VB provides for the amount of equitable remuneration to be, in default of agreement between the educational institution and the relevant collecting society, determined by the Copyright Tribunal ("the Tribunal") and assessed on the basis of a "records system", a "sampling system" or an "electronic use system". The sampling system is relevant in this case. 11 Section 135ZL of the Act provides, relevantly, that subject to that section, the copyright in a literary work (other than an article contained in a periodical publication) is not infringed by the making of one or more reproductions of the whole or a part of the work by, or on behalf of, a body administering an educational institution if: (a) a remuneration notice given by or on behalf of the administering body to the relevant collecting society is in force; (b) "the reproduction is carried out solely for the educational purposes of the institution ..." (my emphasis); and (c) the administering body complies with "marking" and "record-keeping" requirements forming part of a records system or sampling system, according to whether the remuneration notice given by the institution to the collecting society was a "records notice" or a "sampling notice" (CSU gave to CAL a sampling notice). 12 Subsection 10(1A) of the Act defines "educational purposes" as follows: "Without limiting the meaning of the expression educational purposesin this Act, a copy of the whole or a part of the work or other subject-matter shall be taken, for the purposes of the provision in which the expression appears, to have been made, used or retained, as the case may be, for the educational purposes of an educational institution if: (a) it is made or retained for use, or is used, in connection with a particular course of instruction provided by the institution; ..." In resisting CAL's strike out motion, the respondents submit that this definition is broad enough to make it arguable that defences under both subs 40(1A) and s 135ZL may be made out and to prevent CAL's strike out motion from succeeding. 13 CAL accepts that it cannot establish infringement in the face of both the subs 40(1A) and Part VB defences, and embraces the proposition that Part VB applies, with the result that there is no infringement but CSU must pay. It is for this reason that it now wishes to seek declarations (2) and (3) set out at [4] above. The respondents oppose the grant of leave to amend in so far as the leave would permit CAL to seek those two declarations. 14 Concurrently with its proposed further amended application, CAL moves for leave to file a further amended statement of claim. While still alleging infringement, this document would include the following new paragraphs: "15. Each of the copies of each of the Works made by the Respondent was purportedly made 'pursuant to Section 40(1A) of the Commonwealth Copyright Act 1968 as amended'. 16. Section 40(1A) of the Act does not apply to the making of the copies of the Works." Accordingly, CAL pleads that, relevantly, CSU copied Work A and Work B in reliance on subs 40(1A) ("fair dealing" for the purpose of an "approved course of study or research by an enrolled external student"), but that that subsection has no scope for operation in the circumstances. The respondents oppose the grant of leave to amend in so far as the leave would permit the inclusion of pars 15 and 16. 15 The second of the three motions mentioned at the outset is one brought by the respondents by notice of motion filed on 30 October 2000 seeking summary dismissal of the proceeding pursuant to O 20 r 2 of the Federal Court Rules ("the Rules") on the basis that no reasonable cause of action is disclosed. CAL accepts that this motion is the "mirror image" of its own motion for leave to amend and that if it is not permitted to amend, the proceeding must be dismissed (at least unless CAL is granted leave to amend yet further). 16 The third motion is one brought by CAL by notice of motion filed on 20 April 2001 seeking an order that the respondents' amended defence filed on 14 February 2001 be struck out pursuant to O 11 r 16 of the Rules. Its grounds are as follows: (a) Paragraphs 13(a) and (b) are embarrassing because each fails to make clear whether subpars (i) and (ii) are pleaded cumulatively or in the alternative; (b) The pleaded subs 40(1A) defence is not in law a good defence; (c) The subs 40(1A) defence is not properly pleaded because no facts are pleaded in relation to subs 40(2). facts 17 Much of the following chronological account is relied on by CAL to demonstrate that the universities' have long claimed to be entitled to rely on subs 40(1A) as a defence to a claim of infringement of copyright in respect of multiple copying for the benefit of the general body of external students enrolled in a university course, and that this claim has always been contested by CAL. That this is a "real dispute" is relevant to the Court's power and discretion to grant declaratory relief, as discussed below. 18 This proceeding has its genesis in proceedings before the Tribunal. CAL applied for a determination by the Tribunal of equitable remuneration pursuant to ss 135ZW(1) and 153C of the Act (see Copyright Agency Ltd v University of Adelaide (1999) 42 IPR 529) and for the determination of a "sampling system" under ss 135ZW(3) and 153D of the Act (see Copyright Agency Ltd v University of Adelaide (1999) 45 IPR 383). In his reasons for determination given on 2 February 1999 in the former matter, Burchett P stated (at [33]): "A question was raised about copying for external students. Where such copying is done in reliance on Pt VB, by virtue of s 153C(3) and reg 25B(1)(g), I 'may have regard to' the prescribed matter 'the special circumstances of external students including any difficulties faced by those students in meeting the requirements of sections [sic] 41, 49 or 135ZG of the Act' (these are sections which provide respectively for fair dealing for the purpose of criticism or review, copying by libraries or archives, and multiple copying of insubstantial portions of works). However, I have small ground to apply reg 25B(1)(g) here. If some particular works, or portions of works, were copied for external students because they were external students who did not have ready access to the materials copied, a case for the application of the regulation would arise. But it will not arise merely because a coursepack, such as is made available to other students, is sent to an external student also. However, counsel for the universities told me copying for external students was not done under Pt VB, but in reliance on s 40(1A) and (3), that is, on the basis that the copying of the material for an external student is a fair dealing 'for the purpose of, or associated with, an approved course of study or research by an enrolled external student of an educational institution'. This being the contention, the dispute between the parties cannot be resolved by the tribunal; it requires resolution by the court." (my emphasis) 19 In evidence before me are copies of the coursepacks for Modules 3 and 4. Each coursepack includes at an early point the following notation: "Previously published material in this book is copied on behalf of Charles Sturt University pursuant to Section 40(1A) of the Commonwealth Copyright Act 1968 as amended." The coursepack for Module 3 includes pages 194-210, "Employer Organisation", from Work A and the coursepack for Module 4 contains pages 291-310, Chapter 8, "Negotiation skills", from Work B. The notation supports the submission by counsel for the universities as recorded by Burchett P in the passage set out in [18] above and the allegation which CAL wishes to make in par 15 of its proposed further amended statement of claim (set out in [14] above). 20 In a submission lodged with the Tribunal on 31 May 1999 in proceeding CT4 of 1997, CAL stated as follows: "91. CAL understands that the Universities contend that all copies provided to external students only, …, are made in reliance on Section 40(1A). Universities have consistently refused to pay CAL for such copying. 92. CAL's view has always been that copying for external students is Licensed Copying under Part VB. In both application No. 5 of 1996 and in the present proceedings, CAL requested the Tribunal to determine the rate of equitable remuneration for copies made specifically for external students." 21 The issue of copying for external students was discussed again before the Tribunal on 26 July 1999, when Burchett P observed that the dispute over whether payment was to be made for copying for external students would have to be decided "some way or other". 22 On 10 August 1999 CAL commenced this proceeding as sole applicant against thirty-seven universities. It was an infringement action. The application sought six declarations, or, "[i]n the alternative, damages or equitable consideration [sic - compensation] for breach of [an Interim Sampling and Collection Agreement dated 20 January 1998 between CAL, the Australian Vice Chancellors' Committee ("AVCC") and the universities]". The first declaration sought was to the effect that by making copies of the works referred to in Schedule 1 to the application, the respective respondents infringed the copyright in those works. The number of instances of copying referred to in Schedule 1 was one hundred and ninety-three and each was an instance of multiple copying. The multiple copying was, I was told and it is not disputed, copying for external students. The second declaration was to the effect that by making the copies of the works referred to in Schedule 2 to the application, the respective respondents had infringed the copyright in those works. Schedule 2 listed twenty instances of the making of single copies of various works. I was told, and it was not disputed, that they were intended to be instances of copying by university staff. Apparently, on the basis of what had transpired before the Tribunal referred to above, CAL expected the universities to raise the subs 40(1A) defence, and not a Part VB defence, in respect of the first declaration sought. But it was not to be until 14 February 2001 that an informative defence was filed. 23 In October 1999, before the Tribunal in proceeding CT4 of 1997, the universities made a written submission which included a "Non-infringing Submission" and a "Reliance Submission", which were defined as follows: "The Non-Infringing Submission: The acts, or some acts, referred to are not infringements of copyright because there is another defence available such as fair dealing, or the particular fair dealing defence under s 40(1A) available in the case of external students. Regard cannot be had to any copies made in such circumstances when determining an annual amount under s 135ZW. This point is raised by the proceedings brought by CAL in the Federal Court. The Reliance Submission: The Tribunal has no jurisdiction to order payments for copying that was not carried out in reliance on Part VB or for copies that were not otherwise 'licensed copies' within the meaning of s 135ZB." 24 Paragraphs 61, 71 and 72 of the submission were as follows: "61. The Universities…note that their refusal to record and pay for copying for external students was because this was not licensed copying. They make the Reliance Submission. . . . 71. The Franki Committee went further in its recommendations regarding copying for external students than is suggested by the CAL submission. In paragraph 6.73 of its report, the Committee recommended that a 'non-profit educational establishment conducting educational courses by correspondence or on an external study basis for students should be allowed to prepare, without requests from students, such copies as may be appropriate for the students of journal articles or reasonable portions of works to the same extent as a librarian could provide copies to a person on request made under s49' (emphasis added). The Universities do not know what CAL means by referring to the 'legislative intention' in relation to the recommendations of the Franki Committee. The clear intention of the Committee was that something broader than s 49-type copying for external students should be exempt from payment under the statutory licence, ie there should be no requirement, as under s49, for students to request that the copying be done. 72. The Universities disagree with the interpretation of the Senate debate put forward by CAL. In any event, no ambiguity on this point arises on the face of s 40(1A), and as such, the Senate debate has no relevance to the construction of the section." (my emphasis) 25 Documents distributed to universities by the AVCC, for use by the universities, informed the reader in relation to copying for external students: "The exception to copyright infringement for fair dealing for research or study applies more strongly to enrolled external students. Any copying of literary works…which is for the purposes of or associated with a course of research or study by an enrolled external student is permitted, provided it is fair… The scope of the fair dealing provision as it relates to copying for external students is currently the subject of a legal challenge by CAL against the universities. If CAL is successful, universities may be required to do some or all of this copying under the statutory licence. ..." 26 On 2 December 1999 CAL filed an amended application and a statement of claim (its first). (Later, on 1 February 2000, the amended application was replaced by a corrected copy also entitled "amended application", which overcame the fact that due to oversight, pars 6, 7 and 8 had been omitted from the version filed on 2 December 1999. I will treat the later version as having been filed on 2 December 1999.) The amended application added many individuals and companies as applicants in order to overcome an objection made by the universities that CAL lacked title to sue for infringement of copyright. The heading now identified the applicants as "Copyright Agency Limited and the persons listed in columns 5 and 6 of the Schedule to this application". Apparently the persons identified in columns 5 and 6 of the Schedule were publishers and authors of copyright literary works. The amended application sought against the thirty-seven universities only a declaration of infringement of copyright by a much reduced number of universities in respect of only forty-two instances of infringement, and "damages or equitable consideration [sic – compensation] for infringement of copyright". In the statement of claim CAL did not plead "the contract issue" referred to in [22] above. 27 On 2 March 2000 an important event occurred. CAL entered into a "Remuneration (Sampling) Agreement" ("the Sampling Agreement") with the AVCC and twenty-six named universities which had given remuneration notices on the basis of a sampling system ("sampling notices") to CAL pursuant to s 135ZU of the Act in August or September 1999. They included both respondents. Subsection 135ZW(1) provides that where a sampling notice is given, the amount of equitable remuneration payable is "such annual amount as is determined by agreement ... or, failing such agreement, by the Copyright Tribunal ...". The Sampling Agreement contained the following recitals: "A. The parties wish to create a simple and certain basis for the calculation and payment of equitable remuneration for Licensed Copies that are made by or on behalf of Sampling Universities during the term of this Agreement. B. In entering into this Agreement the parties acknowledge that the circumstances in which Licensed Copies are made, the uses to which they are put, the value they provide, the scope and construction of the Statutory Licence and its relationship with fair dealing and other defences and exceptions under the Act are unresolved. Accordingly, this Agreement is made with the intention that it will have no application beyond the period while it is in force and that it should not be regarded by the Tribunal or a Court as indicative or evidence of what any of the provisions of a reasonable agreement or arrangement between the parties might be after that period or what value any particular Copies or Licensed Copies (including those made by digital means or into digital formats) or their communication or use might have." The parties agreed that the amount of equitable remuneration payable to CAL by the universities for all licensed copies for each calendar year during the period commencing 1 January 2000 and ending 31 December 2002 ("Contract Remuneration Period") was to be calculated in accordance with a formula set out in the Sampling Agreement. For its part, CAL agreed that it would not conduct any pilot study or other survey of copying or licensed copying at a university without the prior consent of that university and the AVCC. By cl 6.1, the parties agreed that they remained free to pursue any existing or future Tribunal, Court or other proceeding in respect of their respective rights and remedies against, inter alia, each other as they each saw fit, but that any decision in any such proceeding would not result in an increase or other alteration of any amount payable under the Sampling Agreement during the Contract Remuneration Period. Finally, by cl 7.1 it was agreed that if neither AVCC nor CAL should give at least six months' written notice expiring on 31 December 2002 that it wished the Sampling Agreement to terminate on and from that date, the Sampling Agreement would be automatically renewed for subsequent calendar years unless and until either should give at least six months' written notice to the other, expiring on 31 December in any year after 2002, that it wished to terminate the Sampling Agreement with effect from that date. Each university a party to the Sampling Agreement was to remain a party so long as that Agreement remained in force, after 31 December 2002, unless and until the university revoked its remuneration notice. 28 I will digress from this chronological account to advance to 4 May 2000. On that date CAL, AVCC and thirty-eight universities, including the respondents, entered into a "Retrospectivity Agreement". The Retrospectivity Agreement contained the following recitals: "A. The parties are involved in legal proceedings before the Tribunal and the Federal Court in which amounts to be paid for Licensed Copies made in both the past and the future are in dispute. B. In order to avoid protracted and costly litigation, the parties wish to resolve all issues in dispute with respect to payments for the period to 31 December 1999 by means of a lump sum payment to CAL, on a without admissions basis." By the Retrospectivity Agreement, the respective universities undertook to pay to CAL certain specified monetary amounts by instalments, in consideration of which CAL undertook not to pursue any existing claim or to bring or assert any future claim in respect of copying or licensed copying by or on behalf of any of the universities in or with respect to the period preceding and including 31 December 1999. 29 It is common ground that as a result of s 135ZL, the Sampling Agreement and the Retrospectivity Agreement, the present motions are to be addressed on the basis that CAL is not in a position to allege infringement of copyright by either respondent and will not be in a position to do so, until after 31 December 2002 at the earliest and in respect of infringements occurring after that time. That is to say, the issue whether subs 40(1A) can apply in respect of multiple copying by universities for the benefit of external students cannot again arise in relation to any actual instance of such copying until 1 January 2003 at the earliest. 30 I return now to the chronological account of events. 31 On 3 March 2000 the universities filed a defence and cross-claim. The defence has been referred to as a "pro forma" defence because it did not plead either subs 40(1A) or Part VB of the Act. 32 On 13 September 2000 CAL and certain publishers and authors filed a further amended application seeking a declaration of infringement by only CSU and the University of Sydney – in respect of two works in the case of CSU and four works in the case of the University of Sydney. As well, CAL again sought damages for infringement of copyright. 33 On 22 December 2000 CAL filed an amended statement of claim (its second form of pleading) alleging infringement by CSU in respect of multiple copying for Module 3 and Module 4 coursepacks and by the University of Sydney in respect of two instances of single instance (non-multiple) copying by, according to the allegation, staff. 34 On 14 February 2001 CAL filed another further amended application. This was an application by the current six applicants against the current two respondent universities. It seeks a declaration of infringement of copyright against the respondents in respect of the same copying outlined in the amended statement of claim filed on 22 December 2000, as well as damages for infringement of copyright. 35 Also on 14 February 2001, the respondents, by now only CSU and the University of Sydney, filed their amended defence to which I referred earlier. The amended defence made it clear that the supposed "staff copying" alleged against the University of Sydney was in fact copying which had been undertaken by a visiting Professor and a visiting Fullbright Fellow. It is for this reason that CAL now does not seek to proceed against the University of Sydney in its proposed further amended application and proposed further amended statement of claim. 36 Pursuant to a direction I made on 6 April 2001, CAL filed on 12 April 2001 a notification of deficiencies in the respondents' amended defence. In response, the respondents filed a "notice of amendments" which they would wish to make to their amended defence. The only amendment notified was that they wished to include the word "solely" in pars 13(a)(i) and 13(b)(i), as mentioned earlier. With CAL's consent, I have treated that word as included. The respondents did not, and do not, propose any amendments to par 19 of their amended defence (set out at [9] above). 37 It remains to note three letters. On 17 April 2001 the respondents' solicitors wrote to CAL's solicitors a letter which included the following: "CAL's past conduct binds it to agreeing that the copying was done 'solely' for the educational purposes of Charles Sturt University. Accordingly, infringement cannot be made out. Thus the Court is faced with the absurdity of applicants asserting infringement in the same case in which they assert that the defences are made out. The Court should not allow an amendment that would bring about such a result." 38 On 3 May 2001 CAL's solicitors replied seeking clarification. Their letter stated: "Is Charles Sturt University contending that: (a) the relevant copy was done 'solely' for the educational purposes of the University; and (b) if so, does it follow that your client regards such copying as copying to which Part VB of the Act applies? If so, does Charles Sturt University accept that when the current arrangements on remuneration expire, it will pay CAL for such copying in accordance with the then prevailing rate for remunerable copying under Part VB?" 39 The respondents' solicitors replied on 7 May 2001 as follows: "1. Our client does intend to amend its defence to plead, in paragraphs 13(a) and (b), that the copying was done solely for the educational purposes of the University. We informed you on 17 April 2001 that the omission of the word "solely" from these paragraphs of our client's pleadings was an oversight. 2. It follows from this that our clients regard such copying as copying to which Part VB of the Act can apply. 3. It does not follow from the above that when the current arrangements on remuneration expire, our client will pay CAL for such coping in accordance with the then prevailing rate for remunerable copying under Part VB of the Act. If our client is correct in its view of the operation of s 40(1A) of the Act, it will continue to be entitled to rely on s 40(1A) for such copying, notwithstanding that the copying could have been done in reliance on Part VB. This is what has been referred to many times (including in court) as being the 'reliance point'. 4. In any event, the case which your clients have brought against the various universities (although now only against Charles Sturt University) is a copyright infringement case. By virtue of at least one of the limbs to our client's defence, our client has a complete answer to your clients' case. It follows from this that there is no case to answer, and that the proceedings brought by your clients should be dismissed with costs." reasoning CAL's motion for leave to amend 40 One aspect of the proposed amendments is that no claim will be pressed against the University of Sydney. The respondents do not oppose that aspect subject to the question of costs, which, the parties agree, may be decided on another occasion. 41 Nor do the respondents object to the omission of the claim for damages for infringement, although they point to this change as highlighting the fact that the amendments sought mark a departure from the character of the proceeding to date as one for infringement of copyright. 42 The respondents object to the remaining proposed amendments, that is to say, the declarations sought in orders 2 and 3 of the proposed further amended application, and the allegations made in pars 15 and 16 of the proposed further amended statement of claim. 43 Paragraphs 1 and 2 of the proposed further amended application (set out at [4] above) are inconsistent, in that par 1 seeks a declaration of infringement, while par 2 seeks a declaration that the making of the copies were acts to which Part VB of the Act applied (and to which subs 40(1A) did not apply). 44 As noted earlier, by reason of s 135ZL, the Sampling Agreement and the Retrospectivity Agreement, it is not possible for CAL to rely on any actual instance of multiple copying as constituting an infringement of copyright. Until the régime established by those Agreements ceases to operate after 31 December 2002 at the earliest, there is no scope for the making of a declaration based on any circumstances potentially constituting an actual infringement. In substance, what CAL seeks is judicial advice as to whether CSU will be liable to pay it equitable remuneration under Part VB in respect of multiple copying for external students after the present régime expires. Another way of expressing the matter is to say that CAL seeks a declaration identifying what was, and what was not, the reason why past instances of multiple copying for external students prior to their being covered by the operation of the Sampling and Retrospectivity Agreements, did not infringe copyright. 45 I accept that CSU will probably continue to make multiple photocopies of literary works or parts of them for inclusion in coursepacks issued by it to external students enrolled in courses offered by it. But, and if so when, any contractual régime between, relevantly, CAL and CSU providing for payment by CSU to CAL in respect of such photocopying will cease to exist is a more difficult question. The Sampling Agreement covers the position to 31 December 2002 at the earliest, but contains provision for, in effect, annual extensions in the absence of the giving of a six months notice of termination or revocation by CSU of its remuneration notice. Either by reason of the failure of a party to give a notice of termination or by reason of positive renegotiation, multiple copying by Australian universities for their external students may be covered by contractual arrangements between CAL and the universities for an indefinite time in the future. 46 Against the above background, I turn to consider the two proposed declarations in dispute. 47 By s 71 of The Constitution the judicial power of the Commonwealth is vested in, inter alia, such federal courts as the Parliament creates, and by s 77(i) the Parliament may make laws defining the jurisdiction of any federal court other than the High Court. Subsection 19(1) of the Federal Court of Australia Act 1976 (Cth) provides that this Court has such original jurisdiction as is vested in it by laws made by the Parliament. Sections 21, 22 and 23 of that Act provide as follows: "21 (1) The Court may, in relation to a matter in which it has original jurisdiction, make binding declarations of right, whether or not any consequential relief is or could be claimed. (2) A suit is not open to objection on the ground that a declaratory order only is sought. 22. The Court shall, in every matter before the Court, grant, either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided. 23. The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate." (my emphasis) Section 131C of the Act confers jurisdiction on this Court "with respect to actions under [PartV]". Part V (ss 114-135AK) provides for various kinds of actions. The only one which is relevant to this case is an action for infringement of copyright under s 115. The Court's relevant power to make declarations is, therefore, a power to make declarations in aid of resolving a dispute over an alleged past or threatened future infringement of copyright. 48 In my respectful opinion, it follows that the Court lacks power to make the declarations proposed. They would not be made in aid of quelling a controversy over any alleged past instance of infringement of copyright or over any non-contingent threat of infringement of copyright in the future. (It is clear that CAL cannot obtain order 1 set out in [4] above and there is no question of any "accrued jurisdiction" which might support the making of the two declarations in question.) 49 In the alternative to lack of power, it would not be a proper exercise of discretion to make the proposed declarations. The reason is that it is not a proper exercise of the discretion to make a declaration which gives an advisory opinion, or to declare hypothetical or theoretical legal rights and duties, as distinct from resolving a real dispute based on facts which have occurred or certainly will occur. Many cases can be cited as authority for these propositions and reference need only be made to the following more recent ones: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582 per Mason CJ, Dawson, Toohey and Gaudron JJ, 596 per Brennan J; Australian Securities Commission v Ampolex Ltd (1995) 14 ACLC 80 at 83-86 per Kirby P, 108-110 per Cole JA; Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406 (FC); Mentha v G E Capital Ltd (1997) 154 ALR 565 (FCA/Finkelstein J) at 572-575; Sanderson Computers Pty Ltd v Urica Library Systems BV (1998) 44 NSWLR 73 (CA) at 78-80 per Sheller JA (with whom Mason P and Powell JA agreed); Warramunda Village Inc v Pryde (2001) 105 FCR 437 (FC). 50 The fact that the parties have long been in dispute over the general question whether the subs 40(1A) defence is available in respect of multiple copying by universities for external students enrolled in courses, does not signify that the declarations would resolve a "real" dispute in the sense required by these authorities. The giving of reasons on the question of law which the two declarations are intended to raise would no doubt affect the respective bargaining positions of CAL and the universities in the negotiation of any future agreement in respect of such copying, but this would not amount to the resolution of a real dispute between them either. What is required is that there be "some immediate right, duty or liability to be established by the determination of the Court": In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265 per Knox CJ, Gavan Duffy, Powers, Rich and Starke JJ. Until the multiple copying for external students ceases to be subject to a contractual arrangement, it is premature for the declaratory relief to be granted. 51 Although factually different, the judgments in University of New South Wales v Moorhouse (1975) 133 CLR 1 contain pertinent observations relevant to the discretion to make declarations. The appeal in that case was from a decision of Hutley JA in Moorhouse v University of News South Wales (1974) 23 FLR 112. Frank Moorhouse, the author of a literary work entitled The Americans, Baby, and Angus & Robertson (Publishers) Pty Ltd which had a licence to publish that work, sued the University of New South Wales alleging that it had infringed the copyright in the work by reproducing or authorising the reproduction of the work. At the heart of the case was the provision by the respondent university for use by students of coin-operated photocopying machines in a room in its library building. At first instance Hutley JA declared (at 128): "that between the date when the subject book was entered in the library and the hearing the university has authorized such breaches of copyright as have occurred by the photocopying of the whole or part of the library copy of The Americans, Baby by the use of the photocopying machines where such photocopying was not a fair dealing within the terms of s 40 of the Copyright Act 1968 and where such breaches were in any way due to reliance upon any library guides issued by the university in the years 1970, 1971, 1972 and 1973 or the notices appearing upon the self-service photocopying machines in the university library or by the lack of supervision of the use of such machines or any combination thereof." 52 This declaration attracted criticism in the High Court which set aside the declaration and in lieu thereof declared: "that the appellant authorized the doing on 28th September 1973 by Paul Brennan of the act of reproducing the literary work 'The Americans, Baby' in a material form and thereby infringed the respondents' copyright in the said work." Gibbs J stated (at 9-10): "The declaration of which the University now complains was in my opinion wrongly made. The power which is now vested in the Supreme Court of New South Wales to make declaratory orders is a beneficial one. ... However the power, although wide, is not unlimited. In Forster v Jododex Australia Pty Ltd [(1972) 127 CLR [421] at p 437], I expressed the opinion that the Scottish rules summarized by Lord Dunedin Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [[1921] 2 AC 438 at p 448] should in general be satisfied before the discretion is exercised in favour of making a declaration. The first of those conditions is that 'the question must be a real and not a theoretical question'. As a general rule, the power to make a declaration will not be exercised when the court is called upon to answer a question that is purely hypothetical: see In re Barnato (decd); Joel v Sanges [[1949] Ch 258 at p 270]. In accordance with that principle, the Court of Appeal in Odhams Press Ltd v London and Provincial Sporting News Agency (1929) Ltd [[1936] Ch 357] refused to make a declaration that the plaintiffs, who were unable to prove any specific infringement of copyright, were joint owners of the copyright in compilations of starting prices or betting odds made by their representatives. Lord Wright MR said [[1936] Ch [357] at pp 363-364]: 'As to any further compilations of the same character which may come into existence, it would be most improper for this Court to make any general declaration as to whether they would or would not be the proper subjects of copyright. In order to bring such an issue before the Court there must be specific documents, the character of which can be established, so that the Court can determine whether or not they are the subjects of literary copyright, and appropriate evidence should be given to show that there has been an infringement of that copyright.' Many other examples may be found in the books of cases in which a declaration has been refused because it was claimed in relation to circumstances that had not occurred and might never happen. There is no doubt that a declaration may be an appropriate remedy in an action brought by an owner of copyright to assert his rights, but a declaration will as a general rule not be made for that purpose unless it is established either that an actual infringement has occurred or that the defendant intends to take action that will amount to an infringement." Jacobs J said (at 24): "I find the declaration made in the Supreme Court of New South Wales insupportable. It was not founded on particular breaches of copyright proved to have occurred. It assumed for the purposes of the declaration that acts in breach of the respondents' copyright had occurred (other than the infringement by Brennan to which the terms of the declaration were inapplicable). It was then declared that by certain acts and omissions the appellant authorized such breaches of copyright as had occurred. But once the meaning of the word 'authorized' in s 36 of the Copyright Act is ascertained the question whether by certain acts or omissions a breach of copyright is authorized is a question of fact to be determined in all the circumstances of the case. A declaration of right based on facts found in the particular case can certainly be made but it is not permissible to make a declaration of right which amounts to a conclusion of fact from a hypothetical or assumed state of facts and thereby to enunciate or declare a rule of apparently general application as though it were a declaration of applicable law. A declaration of right based on hypothetical or assumed facts may be made when the assumed facts can be certainly and exhaustively stated and when the conclusion flowing therefrom is truly a conclusion of law but not when it is itself a conclusion of fact. In the declaration made in the present case the Court has attempted an apparently exhaustive enunciation of the factual circumstances from which an authorizing of breach of copyright should be held to have occurred but this is an attempt to generalize on a factual situation the circumstances of which have not been proved. This cannot be done." (my emphasis) 53 I sympathise with CAL's position in so far as CAL seeks to have resolved an important and longstanding dispute between it and the Australian universities. But the constraints on the exercise of the declaratory jurisdiction are too firmly established to permit me to declare, in effect, the reason why, prior to the present régime, multiple copying did not constitute an infringement, so that CAL will be able to know if and when there is no contractual régime in place, why such photocopying will again not constitute an infringement, and, accordingly, whether or not equitable remuneration will be payable in respect of it. 54 For the above reasons, CAL should not have leave to amend. The respondents' motion for summary dismissal 55 It is not in dispute that in the light of this conclusion the respondents' motion for summary dismissal must succeed, at least unless CAL is to have leave to amend yet again. In my opinion, for several reasons CAL should not have such leave. CAL has not proposed any particular further amendment. In the circumstances, I cannot conceive of a further amendment which would address the issues which CAL wishes to have decided and which would be consistent with the constraints to which I have referred. The proceeding has been on foot since 10 August 1999 and the time has come for a halt to be called. CAL's motion for a striking out of the respondents' defence 56 CAL moves for an order that the respondents' amended defence filed on 14 February 2001 be struck out. 57 In my opinion subpars (i) and (ii) of each of pars 13(a) and (b) are pleaded, in a sense, cumulatively, as is shown by the use of the word "further" at the beginning of each subpar (ii). A preferable wording would have been "further or in the alternative", but it is tolerably clear that this is what is meant. The pleading clearly does not mean that both subpars (i) and (ii) must be supported in order to establish a defence. 58 It may be that the subs 40(1A) and Part VB defences to an infringement action are mutually exclusive and that subs 40(1A) has no application to a case such as the present one in which an educational institution makes multiple copies of a literary work in which copyright subsists, for inclusion in a coursepack provided by the institution to students (including external students) enrolled in its courses. It may be that subs 40(1A) applies only to, in substance, single instance copying by an educational institution at the request of an external student whose circumstances prevent him or her from performing the copying in person at the institution's library. Mr Catterns QC, who appeared for CAL, made interesting submissions in support of such propositions based on the construction of subs 40(1A) in the context of s 40 generally and in the context of the Act as a whole, with particular reference to Part VB, and based on the legislative background to the introduction of subs 40(1A). But I am not required to reach a concluded view on the question. (A similar observation applies to CAL's contention that the respondents must plead matters under subs 40(2).) 59 My reasons are as follows. Without amendment of CAL's application, a striking out of the subs 40(1A) defence would be fruitless: the Part VB defence would remain and would result in dismissal of the proceeding, being, as it is at present, an action for infringement. Ordinarily a question of the kind raised by CAL's strike out motion is better left to trial: no additional evidence or hearing time would be required by the inclusion of the subs 40(1A) defence. 60 The only purpose to be served by striking out the subs 40(1A) defence would be to provide an occasion for the giving of reasons for the striking out. As senior counsel for CAL fairly conceded, CAL's strike out motion is, another means of securing a decision on the longstanding difference of opinion between the parties, against the possibility that I might not grant CAL leave to amend. But without leave to amend, the proceeding would remain an infringement action pure and simple to which the Part VB defence would remain a complete answer. It follows that to embark on CAL's strike out motion would be a hypothetical exercise, not required for the determination of the fate of this proceeding. The exercise would be of value only for the expression of my opinion, on an admittedly interesting issue, in the course of my reaching an interlocutory decision. Tempting as the invitation is, considerations of the true nature of the judicial power (and of the efficient use of judicial resources) compel me to resist it. conclusion 61 For the above reasons: · the applicants' motion brought by notice of motion filed on 6 April 2001 seeking leave to amend should be dismissed; · the applicants' motion brought by notice of motion filed on 20 April 2001 seeking an order that the respondents' amended defence filed on 14 February 2001 be struck out under O 11 r 16 of the Rules should be dismissed; and · the proceeding generally should be dismissed. The proceeding will be listed for the making of directions for submissions as to costs on Tuesday 28 August 2001 at 9.30am. I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. Associate: Dated: 24 August 2001 Counsel for the Applicant: Mr D K Catterns QC Solicitor for the Applicant: Banki Haddock Fiora Counsel for the Respondent: Mr R Cobden Solicitor for the Respondent: Baker & McKenzie Date of Hearing: 22 June 2001 Date of Judgment: 24 August 2001