Case No. IP-2020-000140

[2013] EWHC 111 (QB), [2013] 1 All ER (Comm) 1321, [141], [147] per Leggatt J), it was submitted that: first, the plea was not properly particularised and had no prospect of success; and secondly, to the extent that any pleaded good faith obligation encompassed a duty to exploit, it should fail for the reasons he had already put forward in relation to the alleged express and implied terms requiring exploitation.62.Mr Carter disagreed that any short or straightforward point of law or construction had been identified which provided a basis to refuse Mr Hebden the possibility of having his proposed amended case dealt with at trial.63.As to the construction of the express provisions, he submitted that Domino’s proposed construction of clauses 4.1 and 4.2 of the 2001 Agreement was clearly absurd and could not be redeemed by referring to the existence of certain specific remedies for particular breaches. In his written submissions he had suggested that Domino’s construction of the 2001 Agreement would entitle Domino to satisfy its contractual obligations to release Mr Hebden’s music by placing one CD on a shelf briefly and then removing it again and that such a construction would not reflect the commercial realities of a recording agreement and would be wholly unreasonable.64.Having heard Mr Richards’ submissions as to the proper construction of the release commitment in Clause 4 of the 2001 Agreement (see paragraph 52 above), Mr Carter submitted orally that the Court could not, without evidence, decide what a requirement of ‘genuine commercial release’ would have entailed in 2001. He disagreed with Mr Richard’s reliance on the Panayiotou case, arguing that the comments in that case represented only a summary of the factual position as understood by the judge in the early 1990s and had no bearing on the position in the early 2000s. In any event, Mr Carter submitted that it was certainly arguable that, having released the material digitally, then taking active steps to withdraw the Masters from DSPs was not consistent with the concept of a genuine commercial release.65.If wrong on the construction of the express terms, Mr Carter submitted that, in the light of the facts and contents of the specific contract, the implied obligation for which Mr Hebden contended satisfied all of the relevant conditions identified by Mr Richards:•the obligation proposed was both fair and reasonable in the light of the state of the music industry at the relevant time and the nature of the obligations that would be involved, being only to use reasonable endeavours to exploit, thus accounting for the possibility that exploitation would require disproportionate efforts from Domino (e.g. because the music was not a commercial success);•the obligation was required for business efficacy of the contract (or was indeed obvious), as an obligation which required mere initial release and nothing further would lead to absurd results, not reflecting the commercial realities of a recording contract; and•the obligation contended for was entirely consistent with clauses 4.1 and 4.2 on their proper construction.66.Mr Carter also disagreed with Mr Richards’ submissions that the term suggested by Mr Hebden was contrary to authority and that Mr Hebden would have no prospect of persuading the Court at trial either to construe the 2001 Agreement so as to include such an express term or to imply such a term. He disputed that the authorities bore the weight suggested by Mr Richards.67.To the extent that any principle was established by Nichols, Mr Carter submitted that that case could be distinguished as it related to a bare assignment, with no obligation on the publisher to do anything. This was very different from the copyright arrangement and requirement for ‘genuine commercial release’ under the 2001 Agreement. He noted that while both Schroeder and Nichols related to music publishing contracts John v James, which did deal with a recording contract among other things, actually envisaged the possibility of implying continuing exploitation obligations in a contract in which copyright was assigned. Indeed, he noted that as Mr Richards had identified, Schroeder also considered such a possibility. In neither John v James nor Schroeder was the possibility pursued and fully considered because, in the circumstances of those cases, such an implied obligation would not be effective, providing no relevant protection to the party who would have benefitted from any implied term. Mr Carter submitted that Mr Hebden’s case was very different as, on the facts, the implied obligation would offer valuable protection to Mr Hebden.68.Overall, Mr Carter submitted that all three cases relied upon by Domino were distinguishable, relating to very different agreements and factual circumstances from those relevant to the 2001 Agreement. As no case on all fours with that now advanced by Mr Hebden had yet been decided, Mr Carter submitted that the jurisprudence was inevitably lacking clarity as applied to the current dispute and that this was not a situation in which the Court should, on a summary basis, refuse permission to amend.69.70.Finally, Mr Carter addressed the suggestion that the proposed implied terms would be inconsistent with the express provisions of clause 4 of the 2001 Agreement as to the extent of Domino’s obligations to release and exploit the Masters and as to Mr Hebden’s remedies for failure to do so. His position on this was simple – the proposed implied terms are entirely consistent with the express provisions of the 2001 Agreement, when properly construed, and Mr Richards’ objections were predicated on his client’s interpretation of the express terms being correct.71.As to an implied obligation of good faith, Mr Carter submitted that the pleading was sufficiently clear for Domino to understand the obligation that Mr Hebden requested the Court to imply, and that further clarification could be provided if necessary. He submitted that Schroeder had expressly contemplated the possibility of implying such an obligation in appropriate circumstances:“It was argued that there must be read into this agreement an obligation on the publisher to act in good faith. I take that to mean that he would be in breach of contract if by reason of some oblique or malicious motive he refrained from publishing work which he would otherwise have published. I very much doubt this but even if it were so it would make little difference. Such a case would seldom occur and then would be difficult to prove.” [p. 1313G]72.In all the circumstances, Mr Carter submitted that this was a case which fell squarely within the Schroeder possibility, not least because of the potential bad faith involved in the circumstances in which the Amendment Application had come about, as pleaded at paragraph 17E of the draft APOC:“In support of the allegation that Domino’s acts referred to at paragraphs 15.12 and 15.13 above were not in good faith, Four Tet will contend that the sole (or at least primary) motive behind Domino’s committing such acts was to avoid the Court determining the properly applicable rate for digital exploitation under the 2001 Agreement and/or granting the declaration sought at paragraph 1 of the prayer for relief below.”