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Malayan Law Journal Reports/1994/Volume 3/POLYGRAM R!OR"# #"$ %&" ' (& #AR!& ) A$OR * +1994, 3 MLJ 12- * . August 1994 4 pages +1994, 3 MLJ 12-
POLYGRAM RECORDS SDN BHD v THE SEARCH & SEARCH & ANOR HIGH COURT (KUALA LUMPUR) VISU SINNADURAI J CIVIL SUIT NO D2-22-52-88 5 Auu!" #$$% Contract -- False misrepresentation -- Group clearly intended to contract with recording company -Understood nature, duration and obligations under the contract Contract -- Inequality of bargaining power -- Contracts grossly unfair to the other side may be set aside on grounds of public policy -- Contracts Act 1!" s #$%e& Contract -- 'on est factum -- 'eed to pro(e that the contract was )radically or substantially or fundamentally) different Contract -- *arties -- Contract between roc+ group and recording company -- hether contract was with indi(idual members of the group or with the group itself Contract -- ecording contract -- .tandard contract used -- Group began recording for another company -hether breach of contract -- hether contract still binding on group -- hether contract (oidable on grounds of undue influence, false misrepresentation, inequality of bargaining power or restraint of trade -'eed for recording company to re(iew terms of recording contracts with artistes -- Factors to be considered by recording company -- Contracts Act 1!" ss 1/, #$, #0, / Contract -- escission -- .econd contract entered into -- hether first contract rescinded and substituted by second contract -- Intention of parties -- Contracts Act 1!" s / Contract -- estraint of trade -- Co(enant to pro(ide e2clusi(e recording rights during currency of contract -Co(enant to restrain a person from carrying on trade or p rofession in the post-contract period -- hether both types of co(enant (oid -- Contracts Act 1!" s #0 Contract -- 3erms 3erms -- 4ater clause in the contract inconsistent with earlier clause or main ob5ect of the contract -- hether later clause (oid Contract -- Undue influence -- elationship of trust and confidence which allowed contract to be procured -hether contract )unconscionable) or one of manifest disad(antage -- Contracts Act 1!" s 1/ Contract -- ritten contract -- *arty claimed that contract not binding as they had n ot agreed to the terms of the contract -- hether bound regardless -- Circumstances when party won)t be bound Copyright -- .ound recordings -- Application for copyright of songs recorded with record company to be reassigned to artiste -- hether copyright belongs to artiste or recording company 3ort 3ort -- Inducement of breach of contract -- ecording contract -- hether group induced to breach contract with recording company 1$ 647 1#8 at 1#0
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(0e plants Polygram Reor5s #5n %05 entere5 nto a wrtten agreement 67t0e rst ontrat78 wt0 a ro group (0e #ear0 67t0e group78 on - Oto:er 19;4< (0ey were sgne5 o n :y r Yeo0 67r78 67r78 t0e t0en artste an5 repertore manager o t0e plants< plants< (0e rst ontrat was or a pero5 o two years wt0 an opton or two urt0er pero5s o one year ea0 e=ersa:le at t0e 5 sreton o t0e plants an5 not t0e group< On 12 June 19;. a new ontrat 67t0e seon5 ontrat78 was entere5 nto :etween t0e plants an5 t0e group purporte5ly or t0e reason t0at t0ere were some 0anges n t0e omposton o t0e group< Alt0oug0 t0e seon5 ontrat ontane5 many p ro'sons w00 were 5ental to t0at ontane5 n t0e rst ontrat t0ere was a ma>or mo5aton w00 t0e group lame5 was not :roug0t to t0er attenton< (0e mo5aton was t0at t0e pero5 o opton w00 t0e mem:ers o t0e group grante5 to t0e plants was e=ten5e5 to two a55tonal pero5s o 24 mont0s ea0 nstea5 o t0e two a55tonal pero5s o 12 mont0s ea0 un5er t0e rst ontrat< ?t was esta:ls0e5 5urng t0e tral t0at no opy o t0e seon5 ontrat was e'er g'en to t0e group untl 19;- w0en t0e soltor atng or t0e group re@ueste5 a opy o t or t0e purposes o t0e present aton< Ater t0e release release o t0e t0r5 al:um wt0 Polygram Polygram n e:ruary e:ruary 19;- t was was lear t0at t0e group group was 5ssatse5 wt0 t0er e=stng arrangements wt0 Polygram an5 sometme at t0e en5 o 19;- t0e group ma5e t0e reor5ng o an al:um un5er a new ompany Go*#ear0< Go*#ear0< Go*#ear0 was a ompany norporate5 :y t0e mem:ers o t0e group t0emsel'es< (0e ompany 55 only t0e reor5ngs w0lst anot0er ompany Pa Mus !orp 6M8 #5n %05 67t0e s=t0 5een5ant78 55 t0e 5str:uton< ?n 19;; Polygram ommene5 proee5ngs aganst t0e group or :rea0 o ontrat an5 aganst t0e s=t0 5een5ant or n5ung t0e group to :rea0 t0er ontrat wt0 Polygram< (0e group ounterlame5 nter ala or a 5elaraton t0at :ot0 t0e ontrats were 'o5a:le on t0e groun5s o un5ue nlueneB or t0e assgnment o t0e rele'ant opyrg0t n all t0e songs reor5e5 :y t0e group wt0 t0e plantB an5 or a 5elaraton t0at a lause n t0e seon5 ontrat was 'o5 n restrant o tra5e< (0e ssue :eore t0e ourt was w0et0er at t0e tme w0en t0e group :egan reor5ng or Go*#ear0 n late 19;- t0ey were stll ontratually :oun5 to Polygram et0er un5er t0e terms o t0e rst ontrat or t0e seon5 ontrat< H' H' 5smssng t0e plants7 lam an5 allowng part o t0e group7s ounterlamC
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!ons5erng t0e rumstanes an5 t0e e'5ene a55ue5 t0e mem:ers o t0e group un5erstoo5 t0e nature o t0e rst ontratB t0e 5uraton o t0e ontratB t0er o:lgatons to reor5 or PolygramB an5 t0at royaltes woul5 :e pa5 to t0em< (0ere was 1$ 647 1#8 at 1# t0ereore a lear ntenton on t0er part to enter nto t0e reor5ng ontrat wt0 Polygram an5 was t0ereore no msrepresentaton an5 least o all un5ue nluene w0en t0e group entere5 nto t0e rst ontrat< A party party w0o sgns a wrtten wrtten ontrat s :oun5 :y t0e terms terms o t0e ontrat ontrat e=ept n t0e lmte5 lmte5 ases w0ere rau5 un5ue nluene or msrepresentaton msrepresentaton may :e esta:ls0e5< (0ereore (0ereore t0e argument :y t0e group t0at t0e rst ontrat was not :n5ng on t0em sne t0ey 55 not 7agree to t0e terms7 oul5 :e 5smsse5 summarly< D0lst t was true t0at t0e ntal pero5 o t0e rst ontrat e=pre5 on E Oto:er 19;E an5 t0ere was no e'5ene t0at t0e plants 0a5 e=erse5 t0er rg0ts un5er t0e opton to e=ten5 t0e 5uraton o t0e rst ontrat t0e plants t0emsel'es ne'er ontemplate5 any e=tenson o t0e rst ontrat as t0ey 0a5 always ate5 on t0e :ele t0at t0e rst ontrat was su:sttute5 :y t0e seon5< ? a new ontrat s entere5 nto :y t0e partes w0ate'er ts terms t0e ol5 ontrat s e=tngus0e5< ?n t0e present ase t0e lear ntenton o :ot0 t0e pa rtes was to replae t0e rst ontrat wt0 t0e seon5 ontrat< (0e group t0ereore was un5er no o:lgaton to perorm t0er part o t0e :argan un5er t0e rst ontrat as t0e rst ontrat 0a5 :een e=tngus0e5<
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Ater su:sttuton :y t0e seon5 ontrat no rg0ts or la:ltes oul5 arse out o t0e rst ontrat< (0ereore t0e rst ontrat was not n ore at t0e tme w0en t0e group :egan reor5ng or Go*#ear0 an5 no @ueston as to t0e group 0a'ng :rea0e5 t0er o:lgatons un5er t0e rst ontrat arose n t0s ase< (0ere was nsuent e'5ene to n5 t0at t0e seon5 ontrat was 'o5a:le :y reason o alse msrepresentaton< %y 'rtue o s 2; o t0e !ontrats At 19. 67t0e At78 agreements entere5 nto un5er un5ue nluene are 'o5a:le< ?n t0s ase t0ere was e'5ene to s0ow t0at t0ere e=ste5 a lose relatons0p :etween t0e group an5 r w00 was a relatons0p o trust an5 on5ene< (0ereore r was n a poston to proure t0em to enter nto t0e seon5 ontrat< or t0ese reasons t0e presumpton o un5ue nluene arses< &owe'er :eore t0e group may set as5e t0e ontrat on t0e groun5s o un5ue nluene t0ey must pro'e t0at t0e ontrat was 7unonsona:le7 or one o manest 5sa5'antage to t0em< (0e terms n t0e seon5 agreement were not new terms :ut merely t0ose w00 were alrea5y nown to t0e group :y 'rtue o t0e rst ontrat< Alt0oug0 t0e pero5 o t0e ontrat was e=ten5e5 un5er t0e seon5 ontrat t0e 5uraton was not su0 as to ren5er t0e entre ontrat manestly 5sa5'antageous to t0e group< 1$ 647 1#8 at 1" Alt0oug0 t0e seon5 ontrat was 'al5 an5 legally :n5ng :etween t0e partes t0ere was no e'5ene at all to n5ate t0at t0e plants 0a5 e=erse5 t0er rg0ts to e=ten5 t0e pero5 o t0e seon5 ontrat or a urt0er term o two years< (0ereore t0e ontrat 0a5 lapse5 :eore t0e group :egan reor5ng or Go*#ear0< (0e o'enant w0ere:y t0e group un5ertoo to pro'5e e=lus'e reor5ng rg0ts to t0e plants 5urng t0e urreny o t0er reor5ng ontrat was not a o'enant n restrant o tra5e an5 was t0ereore not ren5ere5 'o5 un5er s 2; o t0e At< #eton 2; s only appla:le n ases w0ere a person s restrane5 rom arryng on 0s tra5e or proesson n t0e post*ontrat pero5 an5 not 5urng t0e urreny o t0e ontrat< ?t t0ereore ollows t0at a lause n t0e seon5 ontrat w00 was a o'enant n restrant o tra5e was 'o5 a: nto an5 not :n5ng on t0e group w0en t0ey :egan reor5ng or Go*#ear0< (0ereore t0e group was not n :rea0 o any ontrat wt0 Polygram w0en t0ey :egan reor5ng or Go*#ear0< (0e plants lam aganst t0e group ale5< As a result o t0at t0e plants7 lam aganst t0e s=t0 5een5ant or n5ung t0e group to :rea0 t0er ontrat wt0 Polygram must neessarly al< Fn5er t0e law relatng to opyrg0t o soun5 reor5ngs t0e opyrg0t to t0e soun5 reor5ngs :elongs to t0e plants an5 as su0 no @ueston o reassgnment o su0 opyrg0t to t0e group arses n t0s ase< (0e plants were to pay t0e group all ro yaltes 5ue to t0em un5er t0e seon5 ontrat n respet o t0e sales o all t0e our al:ums reor5e5 :y t0e group n aor5ane wt0 l .618 o t0e seon5 ontrat e'en t0oug0 l .6E8 states t0at w0ere t0e group was no longer ontratually :oun5 :y t0e plants t0ey were only enttle5 to ree'e . o t0e royalty rates paya:le< (0s was :eause w0ere a later lause n a ontrat 5e stroys t0e eet o an earler lause or w0ere a lause n a ontrat s nonsstent wt0 t0e man o:>et o t0e ontrat t0e later lause may :e re>ete5 as :eng repugnant to t0e earler lause or to t0e man o:>et o t0e ontrat< !lause .6E8 was t0ereore 'o5<
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?n t0s ase n :ot0 t0e rst an5 t0e seon5 ontrats reerene was ma5e t0roug0out t0e ontrats as t0oug0 ea0 an5 e'ery one o t0e mem:ers o t0e group was enterng nto a separate an5 n5'5ual ontrat wt0 Polygram< ? t0e ontrat was wt0 n5'5ual mem:ers o t0e group t0en learly only t0ose w0o were partes to t0e rele'ant ontrat were :oun5 :y t0e terms o 1$ 647 1#8 at 11
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t0at partular ontrat< &owe'er t was nten5e5 t0at t0e ontrat was to :e wt0 Polygram an5 (0e #ear0 as a group t0en t0e legal status o t0e group was unlearC w0et0er t was an assoaton a orporaton a partners0p or merely as n5'5uals< (0e a5'antage o su0 an entty s t0at as t0e ontrat s entere5 nto wt0 a legal entty any 0ange n t0e mem:ers0p o t0e group woul5 not aet t0e legal status o t0e ontrat< (0e ontrat remane5 wt0 t0e group an5 not wt0 t0e n5'5ual mem:ers< Alt0oug0 t0ese ssues were not 5retly a55resse5 :y t0e group to 0allenge t0e la:lty o some o t0e group reor5ng ompanes an5 artstes nee5 to pay more 0ee5 to su0 ssues< One e=eptonal rumstane un5er w00 a party to a wrtten ontrat may see to set t as5e s on t0e groun5s o non est atum< $on est atum was not plea5e5 n t0e present ase to 0allenge t0e 'al5ty o t0e rst ontrat an5 e'en t 0a5 :een plea5e5 t0e group woul5 not :e n a poston to esta:ls0 t0at t0e ontrat entere5 nto :y t0em was 7ra5ally or su:stantally or un5amentally7 5erent to t0at t0ey 0a5 nten5e5 to sgn< 'en t0e element o manest 5sa5'antage nee5 no longer :e esta:ls0e5 as a separate re@urement n ases o presume5 un5ue nluene t0e group stll mg0t not :e a:le to set as5e t0e seon5 ontrat as t0ey appeare5 to 0a'e arme5 t0e ontrat< ?n Malaysa t0ere s some support or t0e 'ew t0at pu:l poly may n some e=eptonal ases 5eman5 t0at ertan ontrats w00 are grossly unar to one o t0e partes oug0t to :e set as5e on t0e groun5s o ne@ualty o :arganng power un5er s 246e8 o t0e At<
+ B,,!, M,',.!*, !u//,+. Plant Polygram Reor5s #5n %05 tela0 mengat suatu per>an>an :ertuls 67ontra pertama78 5engan se:ua0 umpulan ro (0e #ear0 67umpulan tu78 pa5a - Oto:er 19;4< Merea tela0 55ataran ole0 r Yeo0 67r78 pengurus arts 5an repertor plant pa5a masa tu< Hontra pertama a5ala0 untu masa 5ua ta0un 5engan opsyen 5ua tempo0 lag untu satu ta0un setap satu yang :ole0 5lasanaan pa5a :u5 :ara plant 5an :uan umpulan tu< Pa5a 12 Jun 19;. suatu ontra :aru 67ontra e5ua78 tela0 5at 5 antara plant 5an umpulan tu erana 5ataan ter5apat pertuaran 5alam omposs umpulan tu< Dalaupun ontra e5ua mempunya :anya peruntuan yang sama 5engan peruntuan yang teran5ung 5alam ontra pertama ter5apat mo5as yang pentng yang umpulan tu :er0u>a0 t5a 5:awa epa5a pengeta0uan merea< Mo5as tu a5ala0 :a0awa tempo0 opsyen yang tela0 5:er ole0 umpulan tu epa5a plant tela0 5lan>utan :ag 5ua tempo0 lag untu 24 :ulan tap*tap satu 5an :uan 5ua tempo0 1$ 647 1#8 at 1# lag untu 12 :ulan tap*tap satu 5alam ontra pertama tu< (ela0 5:utan pa5a per:araan :a0awa sesalnan ontra e5ua t5a perna0 5:er epa5a umpulan tu se0ngga ta0un 19;- apa:la peguamara p0a plant tela0 memnta supaya sesalnan ontra tu 5:eran epa5a merea :ag tu>uan per:araan masan< #elepas al:um etga :ersama Polygram 5eluaran pa5a :ulan e:ruar 19;- a5ala0 >elas :a0awa umpulan tu t5a :erpuas 0at 5engan per>an>an yang wu>u5 5engan Polygram 5an pa5a peng0u>ung ta0un 19;- umpulan tu tela0 meraam se:ua0 reo5 5engan se:ua0 syarat yang :aru Go*#ear0< Go*#ear0 merupaan se:ua0 syarat yang tela0 5per:a5anan o le0 a0l*a0l umpulan tu sen5r< #yarat tu 0anya mem:uat raaman manaala se:ua0 syarat yang lan Pa Mus !orp 6M8 #5n %05 675een5an eenam78 mem:uat penge5aran< "alam ta0un 19;; Polygram tela0 memulaan pros5ng ter0a5ap umpulan tu untu emungran ontra 5an ter0a5ap 5een5ant eenam erana men5orong umpulan tu untu memungr ontra merea 5engan Polygram< Humpulan tu tela0 mem:uat tuntutan :alas untu antara lan suatu 5elaras :a0awa e5ua*5ua ontra tu :ole0 :atal atas alasan pengaru0 t5a wa>arB untu penyera00aan tan5a naga yang rele'an 5alam esemua lagu yang tela0 5raam ole0 umpulan tu 5engan plantB 5an untu suatu 5elaras :a0awa suatu asal 5 5alam ontra e5ua tu a5ala0 t5a sa0 erana menyeat pernagaan<
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?su 5 0a5apan ma0ama0 a5ala0 sama a5a pa5a masa umpulan tu mula mem:uat raaman untu Go* #ear0 pa5a peng0u>ung 19;- merea mas0 5at ole0 ontra 5engan Polygram sama a5a 5 :awa0 terma ontra pertama atau ontra e5ua< D*0u"u!1, menola tuntutan plant 5an mem:enaran se:a0agan 5arpa5a tuntutan :alas umpulan tuC
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Meman5angan ea5aan 5an eterangan yang tela0 5emuaan a0l umpulan tu mema0am sat ontra pertama tuB >anga masa ontra tuB o:lgas merea untu mem:uat raaman untu PolygramB 5an royalt yang aan 5:ayar epa5a merea< Ole0 tu ter5apat nat yang nyata pa5a p0a merea untu mengat ontra raaman 5engan Polygram 5an 5engan tu t5a ter5apat sala0 nyataan apata0 lag pengaru0 t5a wa>ar apa:la umpulan tu mengat per>an>an pertama tu< #ese:ua0 p0a yang menan5atangan ontra :ertuls 5at ole0 terma ontra tu eual 5 5alam es ter0a5 5 mana rau5 pengaru0 t5a wa>ar atau sala0 nyataan :ole0 5:utan< Ole0 tu 0u>a0an ole0 umpulan tu :a0awa ontra pertama tu t5a mengat merea erana merea t5a 7:ersetu>u 5engan terma7 :ole0 5etepan seara terus< 1$ 647 1#8 at 1 Dalaupun :enar :a0awa tempo0 permulaaan ontra pertama tu tela0 tamat pa5a E Oto:er 19;E 5an t5a ter5apat eterangan :a0awa plant tela0 menggunaan 0a merea 5 :awa0 opsyen untu melan>utan tempo0 ontra pertama plant sen5r t5a :err 0en5a melan>utan ontra pertama tu erana merea tela0 :ertn5a atas eperayaan :a0awa ontra pertama tu tela0 5gant ole0 ontra e5ua< Ja suatu ontra pertama 5at ole0 e5ua*5ua p0a apa sa0a>a termanya ontra yang lama aan 50apusan< " 5alam es n nat e5ua*5ua p0a yang nyata a5ala0 supaya ontra pertama 5gant ole0 ontra e5ua< Ole0 tu umpulan tu t5a :ero:lgas untu melasanaan persetu>uan merea 5 :awa0 ontra pertama erana ontra pertama tela0 50apusan< #elepas 5gant ole0 ontra e5ua 0a atau la:lt t5a :ole0 :angt 5arpa5a ontra pertama tu< Ole0 tu ontra pertama t5a :eruatuasa pa5a masa umpulan tu mula mem:uat raaman untu Go*#ear0 5an t5a :ole0 5persoalan 5 5alam es n sama a5a umpulan tu tela0 memungr o:lgas merea 5 :awa0 ontra pertama tu< (5a ter5apat eterangan yang menuup untu memutusan :a0awa ontra e5ua tu a5ala0 :ole0 :atal erana sala0 nyataan palsu< Mengut s 2; Ata Hontra 19. 67Ata tu78 per>an>an yang tela0 5at 5se:a:an ole0 pengaru0 t5a wa>ar a5ala0 :ole0 :atal< " 5alam es n ter5apat eterangan yang menun>uan :a0awa ter5apat 0u:ungan yang 5eat 5 antara umpulan tu 5engan r yang merupaan suatu 0u:ungan :er5asaran eperayaan 5an eyanan< Ole0 tu r :ere5u5uan untu mengat ontra e5ua 5engan umpulan tu< Fntu se:a:*se:a: n anggapan pengaru0 t5a wa>ar :ole0 tm:ul< Aan tetap se:elum umpulan tu :ole0 mengetepan ontra tu atas alasan pengaru0 t5a wa>ar merea mest mem:utan :a0awa ontra tu a5ala0 7t5a :erpatutan7 67unonsona:le78 atau suatu ontra sangat merugan :ag p0anya< (erma ontra yang e5ua t5a merupaan terma yang :aru 5se:a:an ole0 ontra pertama tu< Dalaupun tempo0 ontra tu tela0 5lan>utan 5 :awa0 ontra e5ua tu tempo0 tu t5a men>a5an eseluru0an ontra tu sangat merugan epa5a umpulan tu< Dalaupun ontra e5ua tu a5ala0 sa0 5an mengat 5 ss un5ang*un5ang 5 antara e5ua* 5ua :ua0 p0a t5a ter5apat se:arang :ut yang menun>uan :a0awa p lant tela0 menggunaan 0a merea untu melan>utan tempo0 ontra e5ua tu untu 5ua ta0un lag< Ole0 tu ontra tu tela0 luput se:elum umpulan tu mula mem:uat raaman untu Go* #ear0< 1$ 647 1#8 at 1$ Daa5 tu 5alam mana umpulan tu :er>an> untu mem:er 0a raaman yang eslus epa5a plant 5alam tempo0 ontra raaman merea t5a merupaan waa5 penyeatan
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pernagaan 5an ole0 tu t5a 5>a5an t5a sa0 5 :awa0 s 2; Ata tu< #esyen 2; 0anya terpaa 5 5alam es*es 5 mana seseorang 5seat 5arpa5a men>alanan peer>aan atau proesyennya 5 5alam tempo0 selepas ontra tu 5an t5a 5 5alam tempo0 ontra tu< Ole0 tu suatu asal 5 5alam ontra e5ua yang merupaan suatu waa5 penyeatan pernagaan a5ala0 t5a sa0 a: nto 5an t5a mengat umpulan tu apa:la merea mula mem:uat raaman untu Go*#ear0< Ole0 tu umpulan tu t5a memungr se:arang ontra 5engan Polygram apa:la merea mula mem:uat raaman untu Go*#ear0< (untutan plant ter0a5ap umpulan tu tela0 gagal< Ole0 tu tuntutan plant ter0a5ap 5een5an eenam erana men5orong umpulan tu untu memungr ontra merea 5engan Polygram semestnya gagal< " :awa0 un5ang*un5ang yang :eratan 5engan tan5a naga raaman suara tan5a naga raaman suara tu 5punya ole0 plant 5an ole0 erana tu soalan mengena penyera00aan tan5a naga epa5a umpulan tu t5a tm:ul 5 5alam es n< Plant 5e0en5a mem:ayar epa5a umpulan tu esemua royalt yang 50utang epa5a merea 5 :awa0 ontra e5ua tu :erenaan 5engan pen>ualan empat al:um yang tela0 5raam ole0 umpulan tu :er5asaran asal .618 5 5alam ontra e5ua walaupun asal .6E8 menyataan :a0awa apa:la umpulan tu t5a lag 5at ole0 ontra 5engan plant merea 0anya :er0a menerma . 5arpa5a a5ar royalt yang perlu 5:ayar< ?n a5ala0 erana 5 mana suatu asal yang teremu5an 5 5alam suatu ontra meng0langan e:eresanan asal yang le:0 awal atau apa:la suatu asal 5 5alam suatu ontra a5ala0 t5a onssten 5engan tu>uan utama ontra tu asal yang teremu5an tu :ole0 5etepan erana anya a5ala0 :ertentangan 5engan asal yang le:0 awal tu atau :ertentangan 5engan tu>uan utama ontra tu< Ole0 tu asal .6E8 a5ala0 t5a sa0<
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" 5alam es n 5 5alam ontra yang pertama 5an yang e5ua ru>uan tela0 5:uat 5 5alam eseluru0an e5ua*5ua ontra tu seola0*ola0 setap a0l umpulan tu tela0 mengat ontra yang :erasngan 5engan Polygram< Ja ontra tu 5at 5engan setap a0l umpulan tu a5ala0 >elas :a0awa 0anya merea yang merupaan p0a epa5a ontra yang rele'an tu 5at ole0 terma ontra tu< Aan tetap >a 5masu5an supaya ontra tu 5at 5 antara Polygram 5an (0e #ear0 se:aga satu umpulan tara un5ang*un5ang umpulan tu a5ala0 1$ 647 1#8 at 1! t5a >elasC sama a5a a merupaan suatu persatuan suatu per:a5anan suatu perongsan atau 0anya se:aga n5'5u< Hele:0an suatu entt se5eman a5ala0 :a0awa ole0 erana ontra tu tela0 5at 5engan suatu entt un5ang*un5ang se:arang pertuaran 5 5alam ea0lan umpulan tu t5a aan mempengaru0 tara un5ang*un5ang ontra tu< Hontra tu 5ml ole0 umpulan tu 5an :uan ole0 a0l seara n5'5u< Dalaupun su n t5a 5emuaan seara langsung ole0 umpulan tu untu mena:ar la:lt sesetenga0 orang 5 5alam umpulan tu syarat raaman 5an arts perlu mem:er pertm:angan yang le:0 epa5a su se5eman< #uatu ea5aan tereual 5 mana sese:ua0 p0a epa5a suatu ontra yang :ertuls :ole0 u:a mengetepannya a5ala0 atas alasan non est atum< $on est atum t5a 5>a5an pl 5alam es n untu mena:ar eesa0an ontra pertama 5an walaupun a 5>a5an pl umpulan tu t5a aan :ere5u5uan untu mem:utan :a0awa ontra yang tela0 5at ole0 merea a5ala0 :erlanan 7seara ra5al atau seara su:stansal atau seara 5asarnya7 5arpa5a yang ngn 5tan5atangan ole0 merea< Dalaupun unsur erugan yang manes t5a perlu 5:utan se:aga suatu eperluan yang :erasngan 5 5alam es*es 5 mana pengaru0 t5a wa>ar 5anggap 0a5r umpulan tu mas0 t5a aan 5apat mengetepan ontra e5ua erana merea nampanya tela0 mengesa0an ontra tu< " Malaysa ter5apat soongan untu pen5apat :a0awa pols a wam :ole0 5 5alam ea5aan yang tertentu menge0en5a supaya ontra tertentu yang terlampau t5a sasama epa5a
Page ;
se:ela0 p0a 5etepan atas alasan :a0awa ter5apat et5asamaan uasa tawar*menawar 5 :awa0 s 246e8 Ata tu,< N3"! or ases on non est atum see 3 Mallal7s "gest 64t0 5 1994 ressue8 paras 191-*1924B +199, Mallal7s "gest 1-E*1--B +1991, Mallal7s "gest -E2*-E3< ** or a ase on t0e partes to a ontrat see 3 Mallal7s "gest 64t0 5 1994 ressue8 para 19.E< ** or ases on t0e ressson o a ontrat see 3 Mallal7s "gest 64t0 5 1994 ressue8 paras 21-*24-B +19;9, Mallal7s "gest 24 22; 23;*239< ** or ases on restrant o tra5e see 3 64t0 5 1994 ressue8 paras 249*2EB +199, Mallal7s "gest 1;3B +1992, Mallal7s "gest E19< ** or ases on t0e terms o a ontrat see 3 64t0 5 1994 ressue8 paras 219E*22..B +19;9, Mallal7s "gest 21E*22B 1$ 647 1#8 at 1/ +199, Mallal7s "gest 1-2B +1991, Mallal7s "gest -;3*-;EB +1992, Mallal7s "gest E3E*E4< ** or ases on un5ue nluene see 3 64t0 5 1994 ressue8 paras 22;1*229B +199, Mallal7s "gest 1;.* 1;-B +1991, Mallal7s "gest -9*-91B +1992, Mallal7s "gest E42< or a ase on n5ung t0e :rea0 o ontrat see 12 Mallal7s "gest 64t0 58 para 1EE< **
C,!! +4++ "3 Arrale ( Costain Ci(il 9ngineering 4td +19-E, 1 Lloy5 9; :an+ of Credit and Commerce International .A ( Aboody +199, 4 I% 9..B +1992, 4 R 9..B +19;9, 2 D LR -.9 :arclays :an+ plc ( ;):rien < Anor +1993, 4 All R 41CI:C 6ortgages plc ( *itt < Anor +1993, 4 All R 433 Cheese ( 3homas +1994, 1 All R 3. Clifford =a(is 6anagement 4td ( 9A ecords 4td +19-., 1 All R 23-B +19-., 1 DLR E1 =atu+ 7agindar .ingh < ;rs ( 3ara a5aratnam +19;3, 2 MLJ 19E 9lton 7ohn < ;rs ( ichard 4eon 7ames < ;rs +1991, 39- #R >ua ?hiow .teamship Co 4td ( Chop Guan >in +193, 1 M! -. 4)9strange ( F Graucob 4td +1934, 2 H% 394 4e(ison ( *atent .team Carpet Cleaning Co 4td +19-;, I% E9B +19--, 3 All R 49;B +19--, 3 DLR 9 4loyds :an+ 4td ( :undy +19-., 5eualt I% 32EB +19-4, 3 All R -.-B +19-4, 3 D LR .1 'aested ( .tate of *era+ +192., . M#LR 1;. 'ational estminster :an+ plc ( 6organ +19;., A! E;EB +19;., 1 All R ;21B +19;., 2 DLR .;; ;).ulli(an ( 6anagement Agency and 6usic Co 4td +19;., I% 42;B +19;., 3 All R 3.1B +19;4, 3 DLR 4-*anayiotou < ;rs ( .ony 6usic 9ntertainment %U?& 4td 6(0e (mes 3 June 19948 6unreporte58 *ao ;n ( 4au @iu 4ong +19;, A! E14B +19-9, 3 All R E.B +19-9, 3 DLR 43. *olygram ecords .dn :hd ( >illary Ang < ;rs +19;;, 3 MLJ 3*oosathurai ( ?annappa Chettiar +1919, 4- ?A 1
Page 9
aghunath *rasad ( .ar5u *rasad AI +1924, P! E .chroeder 6usic *ublishing Co 4td ( 6acaulay +19-4, 3 All R E1EB +19-4, 1 DLR 13; .il(erstone ecords ( Gary 6ountfield < ;rs %unreported& 1991 5eault United =ominions Corp %7amaica& 4td ( 6ichael 6itri .houcair +19E9, 1 A! 34B +19E;, 3 DLR ;93 rigglesworth ( ilson Anthony +19E4, MLJ 2E9 @ap Chee 6eng ( A5inomoto %6alaysia& :hd +19-;, 2 MLJ 249 ang 3umb 3uum ecords ( >olly 7ohnson 6(0e ?n5epen5ent 2 August 19;98 6unreporte58 1$ 647 1#8 at 18 L*!',"*3 +4++ "3 !ontrats At 19.
ss 1E 2 246e8 2; E3
!ontrat At +?n5, s 1E ong .ai Fong and ' 'a(aratnam %.hearn =elamore < Co& or t0e plants< 6uhammad .hafee Abdullah and 6 *ura(alen %.hafee < Co& or t0e 5een5ants< VISU SINNADURAI (0s ase 5eals wt0 t0e legal eet o two reor5ng ontrats entere5 nto :etween t0e plants Polygram a reor5ng ompany an5 a group o young artstes nown as (0e #ear0< (0s ourt s also alle5 upon to 5etermne w0et0er t0e prnples apple5 :y t0e ngls0 ourts n ertan reent ases are e@ually appla:le n Malaysa to t0e loal mus n5ustry< ? am g'en to un5erstan5 t0at t0s s t0e rst ase o t0s nature w0ere t0e 'al5ty o su0 a reor5ng ontrat s :eng ons5ere5 :y a Malaysan ourt< (0s 5eson ? am tol5 t0ereore 0as some mportant :earngs espeally to t0e reor5ng an5 perormng arts n5ustry n t0e ountry< (0e 'al5ty o smlar reor5ng ontrats as t0ose entere5 nto :etween t0e plants an5 t0e 5een5ants w0ere:y a young artste un5ertaes to reor5 or a partular reor5ng ompany or a spee5 5uraton an5 upon terms an5 on5tons mpose5 :y t0e ompany 0as ome un5er lose srutny n reent years espeally :y t0e ngls0 ourts< ?n .chroeder 6usic *ublishing Co 4td ( 6acaulay +19-4, 3 All R E1EB +19-4, 1 DLR 13; t0e &ouse o Lor5s up0el5 t0e 5eson o t0e >u5ge at rst nstane w0o 0a5 0el5 a ontrat :etween a songwrter an5 a mus pu:ls0ng ompany or an ntal pero5 o 'e years to :e aganst pu:l poly as :eng n restrant o tra5e an5 t0us 'o5< #oon ater n Clifford =a(is 6anagement 4td ( 9A ecords 4td +19-., 1 All R 23-B +19-., 1 DLR E1 t0e !ourt o Appeal 0el5 t0at t0e two ontrats entere5 nto :etween t0e two mem:ers o t0e pop group leetwoo5 Ma wt0 a pu:ls0ng ompany w0ere:y t0ey un5ertoo to grant t0e pu:ls0ng ompany t0e worl5w5e opyrg0t n all t0e wors ompose5 :y t0em o'er a pero5 o ten years were ma5e :etween partes wt0 une@ual :arganng power an5 t0ereore oug0t to :e set as5e< ?n t0e 9lton 7ohn7s ase 5e5e5 n 19;. 69lton 7ohn < ;rs ( ichard 4eon 7ames < ;rs +1991, #R 39-8 lton Jo0n an5 %erne (aupn sgne5 an e=lus'e pu:ls0ng agreement wt0 a pu:ls0ng rm " James Mus Lt5 6"JM8< (0s ontrat was t0e rst n a seres o ontrats sgne5 :y t0e two young musans :egnnng n 19E- t0e ot0ers :eng an e=lus'e reor5ng agreement wt0 "JM7s su:s5ary an5 a management agreement :etween lton Jo0n an5 "JM< Fn5er t0e pu:ls0ng agreement :ot0 t0e omposers assgne5 to "JM t0e ull opyrg0t t0roug0out t0e worl5 n all t0er musal ompostons ma5e 5urng t0e term o t0er agreement< (0e agreement was or t0ree years renewal or a urt0er pero5 o t0ree years at t0e opton o et0er party< 1$ 647 1#8 at 10
Page 1
D0en t0e 'al5ty o t0ese a greements was su:se@uently 0allenge5 t0e tral >u5ge 6$0olls J8 0el5 t0at n prnple t0e agreements oug0t to :e set as5e on t0e groun5s o un5ue nlueneB t0oug0 :eause o t0e long 5elay n :rngng t0e aton su0 a reme5y n t0e nstant ase was not approprate< ?n ;).ulli(an ( 6anagement Agency and 6usic Co 4td +19;., I% 42;B +19;., 3 All R 3.1B +19;4, 3 DLR 4;; an e=lus'e management ontrat entere5 nto :y t0e well*nown snger Gl:ert O7#ull'an wt0 0s manager was 0el5 to 0a'e :een o:tane5 :y un5ue nluene< More reently n .il(erstone ecords ( Gary 6ountfield < ;rs 619918 6unreporte5 :ut a ull transrpt o t0e >u5gment was su:mtte5 to t0e ourt :y ounsel or t0e 5een5ants8 t0e two agreements entere5 nto :y t0e artstes 6#tone Roses8 wt0 t0e reor5ng an5 pu:ls0ng ompanes were 0el5 to :e n restrant o tra5e an5 :eng unreasona:le on t0e groun5s t0at t0ey were oppress'e an5 mpose5 un>uste5 an5 un>usta:le restrant o tra5e< nally sne t0e ompleton o t0e 0earng o t0e present ase anot0er 5eson 0as now :een 5el'ere5 :y t0e ngls0 ourts< On 21 June 1994 Parer J n t0e ase o *anayiotou < ;rs ( .ony 6usic 9ntertainment %U?& 4td 63he 3imes 3 June 19948 67t0e George M0ael ase78 5el'ere5 a 2-3*page >u5gment 0ol5ng t0at an e=lus'e ontrat entere5 nto :y George M0ael a ormer mem:er o t0e pop group D0am wt0 #ony or a 5uraton o 1. years w00 ontrat t s sa5 was 5esr:e5 :y George M0ael n e'5ene as a 7sla'ery arrangement7 was not open to 0allenge as :eng n restrant o tra5e< ?n 19;2 George M0ael a mem:er o t0e pop*group D 0am entere5 nto a reor5ng agreement wt0 ?nner Vson< ?n 19;3 D0am7s soltors wrote to ?nner Vson lamng t0at t0e agreement was 'o5 :eause t was n restrant o tra5e< (0s le5 to legal proee5ngs :etween D0am an5 ?nner Vson< (0e legal proee5ngs were ompromse5 :y agreement w0ere:y a new reor5ng agreement was entere5 nto :etween D0am an5 !%# 67t0e 19;4 agreement78< ?n 19;- w0en George M0ael let D 0am an5 went solo t0e terms o t0e 19;4 agreement were re*negotate5 wt0 !%# at t0e re@uest o George M0ael< (0s re*negotaton le5 to t0e mang o a new reor5ng agreement :etween George M0ael an5 !%# n 19;; 67t0e 19;; agreement78< (0e 19;; agreement ontane5 mpro'e5 nanal terms or George M0ael< ?n 19;; also !%# was taen o'er :y #ony< or ta= reasons George M0ael re@ueste5 #ony to :rng orwar5 t0e 5ate o payment o 'arous sums 5ue to :eome paya:le to 0m un5er t0e 19;; agreement< #ony agree5 an5 n 19;; pa5 George M0ael :y way o a5'anes an5 royaltes un5er t0e 19;; agreement a total o 11m< ?n 199 agan at George M0ael7s re@uest urt0er negotatons too plae w00 resulte5 n a 'araton agreement< ?n 1992 George 1$ 647 1#8 at 1 M0ael ommene5 t0e present aton aganst #ony lamng t0at t0e 19;; agreement was 'o5 nter ala on t0e groun5s o restrant o tra5e< (0e aton :roug0t :y George M0ael was 5smsse5< (0e ull >u5gment o Parer J s yet to :e reporte5< &owe'er rom t0e :re report n 3he 3imes an5 rom t0e summary o >u5gment t0e ollowng reasons were g'en :y Parer J or 0ol5ng t0e agreement not to :e 'o5 on t0e groun5 o restrant o tra5eC ?n t0e rst plae ? a m satse5 t0at t0e terms o t0e 19;; agreement are reasona:le an5 ar an5 t0at aor5ngly t0e 19;; agreement s not an unreasona:le restrant o tra5e <<< ?n t0e seon5 plae ? onlu5e t0at n any e'ent on t0e ats o t0s ase t s not open to George M0ael to 0allenge t0e 19;; agreement on groun5s o restrant o tra5e< (0ere are t0ree reasons or t0s onluson all o w00 are set out an5 e=plane5 ully n t0e wrtten >u5gment< ?n summary orm t0ey are as ollowsC 618 (0ere s a pu:l nterest n enorng agreements rea0e5 :y way o ompromse o 5sputes< (0e 19;4 agreement orme5 part o t0e arrangements or t0e ompromse o t0e legal proee5ngs :etween D0am an5 ?nner Vson n w00 D0am was lamng t0at t0e ?nner Vson agreement was unenorea:le as an unreasona:le restrant o tra5e< ?n su0 rumstanes t was not open to George M0ael to lam t0at t0e 19;4 agreement was n turn unenorea:le as an unreasona:le restrant o tra5e< ?t ollows t0at sne t0e 19;; agreement s a renegotaton o t0e 19;4 agreement t0e same apples to t0e 19;; agreement<
Page 11
628 ?t woul5 :e un>ust to #ony t0e 19;; agreement were now treate5 as unenorea:le or 'o5 :eauseC 6a8 George M0ael at all tmes 0a5 e=pert legal a5'e an5 was well aware o t0e 5otrne o restrant o tra5eB 6:8 #ony7s agreement to :rng orwar5 t0e 5ates o 'arous payments 5ue to :eome paya:le to George M0ael un5er t0e 19;; agreement so as to ena:le George M0ael to ree'e su0 sums 5urng 19;;B 68 t0e 'araton agreement 5ate5 2E July 199B an5 658 George M0ael7s re@uest or payment o t0e a5'ane 5ue n respet o t0e t0r5 al:um< 638 %y re@uestng t0e a5'ane or t0e t0r5 al:um w0en 0e new t was open to 0m to 0allenge t0e 19;; agreement on t0e groun5s o restrant o tra5e George M0ael arme5 t0e 19;; agreementB an5 0e annot resle rom t0at armaton<
Dt0n t0s :re spae o tme sne t0e >u5gment was 5el'ere5 t0e 5eson o Parer J n t0s ase 0as generate5 mu0 pu:l reaton< ?n one o t0e many ommentares on t0e ase Patr ?s0erwoo5 n an artle pu:ls0e5 n 3he 3imes 2; June 1994 un5er t0e ttle 7D0y Ksla'eryK s ar tra5e7 wrtesC (0e >u5ge 0as per0aps tro55en a 5erent pat0 rom many o 0s pre5eessors an5 n so 5ong 0as g'en w0at mg0t :e 5esr:e5 as a 7reor5ng n5ustry >u5gment7 rat0er t0an passng >u5gment upon t<
6#ee also %a5ura A0ma5 n 3he 'ew .traits 3imes 1; July 19948< 1$ 647 1#8 at 1$" Dt0 t0e a:o'e :agroun5 to t0e rele'ant ngls0 ases w0ere t0e 'al5ty o smlar reor5ng ontrats was ons5ere5 ? now mo'e on to ons5er t0e ats an5 ssues o t0e p resent ase< Facts (0e plants Polygram Reor5s #5n %05 67t0e ompany78 are a mus an5 soun5 reor5ng ompany wt0 a regstere5 oe n Huala Lumpur< (0e rst 'e 5een5ants are t0e urrent mem:ers o a group o young Malaysan musans nown as (0e #ear0 67t0e group78< (0e group was orme5 n 19;1 an5 at t0e tme o t0e ormaton o t0e group t0e mem:ers o t0e group were &llary Ang Yat A0ma5 an5 $asr "au5< 6a8 t0e rst ontrat
On - Oto:er 19;4 t0e plants entere5 nto a wrtten agreement 6P18 60erenater reerre5 to as 7t0e rst ontrat78 wt0 t0e group< &owe'er w0en t0e rst ontrat was entere5 nto t0e group omprse5 $asr "au5 #u0em A:5ul Ra0man Yat A0ma5 Ra0man Ma0moo5 an5 $or5n Mo05 (a:< (0e rst ontrat was or a pero5 o two years wt0 an opton or two urt0er pero5s o one year ea0< (0s opton was only e=ersa:le at t0e 5sreton o t0e plants an5 not t0e 5een5ants< (0e ontrat also state5 t0at t0e group was to reor5 a mnmum reor5ngs o 24 songs n t0e rst two years an5 2 songs 5urng ea0 opton pero5 t0oug0 t0e o:lgaton appears to :e on Polygram to mae t0e reor5ngsC l E68< (0e rumstanes un5er w00 t0s reor5ng ontrat was entere5 nto s as state5 :y Mr r Yeo0 6r8 t0e managng 5retor o Polygram Reor5s as ollowsC ?n 19;3 w0en r was t0en t0e artste an5 repertore manager 0e met (0e #ear0 w0en t0e group was perormng at a pu: alle5 t0e &ar5 Ro !ae n Petalng Jaya< &a'ng :een mpresse5 :y t0er perormane r 5e5e5 to sgn t0em on as reor5ng artstes< (0s was t0e rst tme t0at t0e ompany was sgnng a 70ar5*ro group7 as one o t0er reor5ng artstes< r sa5 t0at 0e oere5 t0e group t0e stan5ar5 reor5ng terms< Aor5ng to r t0e pre'alng royalty rates appla:le t0en was 4*.< At t0e tme w0en t0e rst ontrat was entere5 nto t0e group was stll perormng at t0e &ar5 Ro !ae< (0e owner o t0e &ar5 Ro !ae Mr Gary !0ew 6Gary8 ate5 as a go*:etween 5urng t0e 5sussons :etween r an5 t0e group< Gary n 0s e'5ene sa5 t0at w0en r ga'e a opy o t0e 5rat agreement to t0e group 0e wt0 0s lmte5 e=perene e=plane5 to t0e group some salent eatures o t0e ontrat< &e sa5 t0at t0e group was 'ery een to aept t0e oer ma5e :y r an5 ma5e no ounter*proposals< ?n any ase 0e sa5 t0at 0e t0oug0t t0at t0e terms relatng to t0e 5uraton o t0e ontrat an5 t0e payment o royalty 7were reasona:le7< 1$ 647 1#8 at 1$1
Page 12
6:8 t0e seon5 ontrat
A ew mont0s ater t0e rst ontrat was entere5 nto t0at s eg0t mont0s later r elt t0e nee5 or a new ontrat to :e entere5 nto as t0ere were some 0anges n t0e omposton o t0e group< On 12 June 19;. a new ontrat 6P48 60erenater reerre5 to as 7t0e seon5 ontrat78 was su:se@uently entere5 nto :etween t0e plants an5 t0e group< At t0e tme w0en t0e seon5 ontrat was entere5 nto t0e mem:ers o (0e #ear0 omprse5 Amran :n Marsman 67Amran78B Ra0man :n Ma0moo5 67Ra0man78B t0e seon5 5een5ant 67#u0em78B t0e t0r5 5een5ant 67Yat78B an5 t0e t0 5een5ant 67$or5n78< &llary Ang was not a mem:er o t0e group t0en an5 as su0 was not a party to t0e seon5 ontrat< (0oug0 t0e seon5 ontrat ontane5 many pro'sons w00 were 5ental to t0at ontane5 n t0e rst ontrat t0ere were ertan sgnant mo5atons ma5e< Fn5er l E68 o t0e seon5 ontrat t0e pero5 o opton w00 t0e mem:ers o t0e group grante5 to t0e ompany was e=ten5e5 to two a55tonal pero5s o 24 mont0s ea0 nstea5 o t0e two a55tonal pero5s o 12 mont0s ea0 un5er t0e rst ontrat< Fn5er :ot0 t0e ontrats 0owe'er t0e opton was e=ersa:le only at t0e 5sreton o Polygram an5 not :y t0e mem:ers o t0e group< ?n eet t0ereore un5er t0e seon5 agreement t0e group oul5 0a'e :een te5 to Polygram or a pero5 o s= years ommenng rom t0e 5ate o t0e seon5 agreement e 12 June 19;. to 11 June 1991 w0ereas un5er t0e rst ontrat t0ey woul5 0a'e :een :oun5 only rom 19;4 to 19;; at t0e latest< (0e seon5 ontrat also ontane5 anot0er sgnant mo5atonC t0s relate5 to t0e num:er o reor5ngs< Fn5er t0e rst ontrat :y 'rtue o l E68 t0e ompany was :oun5 to mae 2 reor5ngs 5urng t0e ntal pero5 o t0e ontrat w0ereas un5er t0e seon5 ontrat t0e ompany was :oun5 only to reor5 ten reor5ngs< (0e num:er o reor5ngs 5urng t0e opton pero5 was also re5ue5 rom 2 soun5 reor5ngs n one year un5er t0e rst ontrat to ten soun5 reor5ngs o'er a pero5 o two years< (0oug0 t0e num:er o songs to :e reor5e5 was state5 n t0e seon5 ontrat le t0e rst ontrat t0e seon5 ontrat also ontane5 a general pro'son enttlng t0e ompany at ts 5 sreton to re@ure t0e group to perorm any a55tonal num:er o musal wors or t0e purposes o mang more soun5 reor5ngsC l E68< (0e rumstanes un5er w00 t0e seon5 ontrat was entere5 nto was as ollowsC w0lst t0e group was n #ngapore at t0e Lon7s #tu5o re0earsng some reor5ngs or t0er rst al:um r alle5 t0e mem:ers o t0e group out o t0e reor5ng room an5 ase5 t0em to sgn t0e seon5 ontrat< r tol5 t0em t0at as t0ere were some 0anges n t0e omposton o t0e :an5 t0ere was a nee5 or t0s ne w ontrat to :e sgne5< Aor5ng to t0e mem:ers o t0e group w0o ga'e e'5ene r 55 not norm t0em as to t0e ot0er 0anges ma5e to t0e terms o t0e 1$ 647 1#8 at 1$# seon5 ontrat espeally t0at relatng to t0e opton pero5< ?n at t0ey sa5 t0at r 0ar5ly e=plane5 any o t0e terms o t0e new ontrat to t0em :ut merely ase5 t0em to sgn t :y assurng t0em t0at t was neessary to aommo5ate t0e 0anges n t0e omposton o t0e group< ?t was also esta:ls0e5 5urng t0e tral t0at no opy o t0e seon5 ontrat was e'er g'en to t0e group untl n 19;- w0en t0e soltor atng or t0e group re@ueste5 a opy o t or t0e purposes o t0e present aton< ? s0oul5 also pont out t0at as emp0ase5 :y ounsel or t0e 5een5ants t0oug0 t0e seon5 ontrat was entere5 nto n June 19;. t was not stampe5 untl 2E $o'em:er 19;- >ust :eore t was supple5 to t0e 5een5ants7 soltors< 68 0anges n t0e group
A ew mont0s ater t0e seon5 ontrat was entere5 nto Amran an5 Ra0man let t0e group an5 t0e group was >one5 :y t0e rst 5een5ant 67&llary78 an5 t0e ourt0 5een5ant 67$asr78< (0e plants 0owe'er 55 not eel t0e nee5 to 5raw up a new ontrat to aommo5ate t0s 0ange< As su0 no new agreement as was t0e ase pre'ously was entere5 nto :etween t0e plants an5 t0e newly onsttute5 group< Aor5ng to
Page 13
r t0e partes 0owe'er proee5e5 on t0e :ass t0at t0e seon5 ontrat was :n5ng on ea0 o t0e mem:ers o t0e group< &llary an5 $asr toget0er wt0 t0e ot0er mem:ers partpate5 n t0e reor5ngs an5 t0e pro5uton o t0e new reor5ng al:ums an5 n t0e s0arng o t0e royaltes w00 were paya:le to t0e group< 658 reor5ngs
?n August 19;. t0e rst al:um 6!nta %uatan Malaysa8 was release5 :y t0e group< ?t sol5 well o'er 2 opes an5 aor5ng to r 7t was a :g suess t0en7< ?n June 19;E t0e seon5 al:um 6Langt 5an %um8 was release5< (0s al:um sol5 o'er 3 op es an5 n e:ruary 19;- t0e t0r5 al:um was release5< (0e t0r5 al:um 6Mentar Mera0 "uu (mur8 7was ree'e5 'ery well wt0 . opes :eng sol57< D0lst n #ngapore reor5ng t0e t0r5 al:um t0e group also reor5e5 se'en ot0er songs< (0ese songs were su:se@uently release5 :y Polygram ater t0e group 0a5 let Polygram an5 0a5 >one5 t0e seon5 ompany< ? s0all reer to t0ese songs n t0e later part o t0s >u5gment< 6e8 5ssatsaton :y t0e group wt0 polygram
Ater t0e release o t0e t0r5 al:um n e:ruary 19;- t was lear t0at t0e group was 5ssatse5 wt0 t0er e=stng arrangements wt0 Polygram< (0e group omplane5 to r t0at t0ey were un0appy wt0 t0e royalty rates< r agree5 to rase t0e royalty rate to 1 pro'5e5 t0e group entere5 nto a new ontrat< &owe'er no new ontrat was sgne5 an5 no 0anges n t0e royalty rates were ma5e< 1$ 647 1#8 at 1$ Anot0er man ause o 5ssatsaton was t0e at t0at 5espte t0e outstan5ng suess o t0er reor5s t0e group was not presente5 wt0 any gol5 or platnum awar5 :y Polygram< ?t was esta:ls0e5 n e'5ene t0at t was t0e stan5ar5 prate n t0e reor5ng n5ustry t0at any artste w0ose al:um rea0e5 t0e 2 mar was presente5 wt0 a gol5 5s w0lst t0ose w0o rea0e5 t0e . mar were presente5 wt0 a platnum 5s< ?n e'5ene no satsatory e=planaton was g'en et0er : y r or %lly (an as to w0y Polygram 55 not mae t0s presentaton to t0e group e=ept to say t0at as ertan rmnal proee5ngs were pen5ng aganst two mem:ers o t0e group 6t0oug0 t0e two mem:ers o t0e group were su:se@uently a@utte5 o t0e oene or w00 t0ey were 0arge58 Polygram 55 not t0n t approprate to 5o so< r also state5 n e'5ene t0at :es5es royalty rates t0e group also omplane5 to 0m a:out t0e la o pu:lty an5 promoton< 68 go*sear0 an5 pa mus orp 6m8 s5n :05 67pm78
#ometme at t0e en5 o 19;- t0e group ma5e t0e reor5ng o an al:um enttle5 7enomena7 n Jaarta un5er a new ompany Go*#ear0< Go*#ear0 was sa5 to :e a ompany norporate5 :y t0e mem:ers o t0e group t0emsel'es< (0e ompany 55 only t0e reor5ngs w0lst anot0er ompany PM! 6t0e s=t0 5een5ant8 55 t0e 5str:uton< (0e suess o t0e group ater lea'ng Polygram was sa5 to :e o'erw0elmng< #oon ater t0at s ater t0e group 0a5 :egun reor5ng or Go*#ear0 Polygram tsel release5 t0e se'en songs w00 t0e group 0a5 earler reor5e5 wt0 Polygram as t0e group7s ourt0 al:um< 6g8 present aton
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(0e present aton was t0en ommene5 :y Polygram n 19;; aganst t0e group 6t0e rst 'e 5een5ants8 or :rea0 o ontrat an5 also aganst PM! 6t0e s=t0 5een5ant8 or n5ung t0e group to :rea0 t0er ontrat wt0 Polygram< ?n t0er statement o lam t0e plants soug0t t0e ollowng relesC
5)
An n>unton to restran t0e rst 'e name5 5een5ants >ontly an5 se'erally untl urt0er or5er or untl 11 June 19;9 romC 1i) 0ol5ng t0emsel'es out as :eng ree to enter nto any reor5ng ontrats wt0 any ot0er reor5ng ompany w0et0er su0 ot0er reor5ng ompany/ompanes :elong to or are ontrolle5 :y t0em n5'5ually or >ontlyB 1ii) enterng nto any 5str:uton ontrats wt0 PM! or any ot0er ompany w0et0er owne5 or ontrolle5 :y t0em n5'5ually or >ontly or t0e 5str:uton o reor5ngs t0at 0a'e :een reor5e5 :y t0em w0et0er or t0emsel'es ot0ers or t0e plantsB an5 1iii) reor5ng or any ot0er reor5ng ompany nlu5ng Go #ear0 #5n %05 e=ept t0e plants< 1$ 647 1#8 at 1$$ 5) An n>unton to restran t0e s=t0 name5 5een5ants w0et0er :y t0er 5retors ser'ants or agents untl urt0er or5er or untl 11 June 19;9 romC 2i) enterng nto any 5str:utors0p agreement wt0 t0e rst 'e name5 5een5ants or purposes o 5str:utng an5 or oerng or sales musal reor5ngs o t0e sa5 rst 'e name5 5een5ants w0et0er su0 reor5ngs were reor5e5 :y Go #ear0 #5n %05 or any ot0er ompanyB an5 2ii) 5str:utng an5 or oerng or sale musal reor5ngs o t0e sa5 rst 'e name5 5een5ants w0et0er su0 reor5ngs were reor5e5 :y Go #ear0 #5n %05 or any ot0er ompany< 5) An or5er or ull 5so'ery o all rele'ant 5ouments relatng to t0e 5een5ants7 reor5ng an5 5str:uton arrangements n respet o t0er soun5 reor5ngs wt0 any ot0er person rms or ompanes ot0er t0an t0e plants w00 are n t0e possesson o t0e 5een5ants >ontly or se'erally< 5) An n@ury as to 5amages or at t0e plants7 opton an aount o prots an5 payment to t0e plants o all sums oun5 5ue upon tang su0 n@ury or aount< (0e 5een5ants also ounterlame5 or t0e ollowng relesC
6) 1 2 6)
6a8 a 5elaraton t0at any ontrats sgne5 :etween t0e plant an5 t0e rst 'e 5een5ants are 'o5 :y reason o t0e plant7s un5ue nluene o'er t0e sa5 5een5antsB 6:8 reassgnment o t0e rele'ant opyrg0ts n all t0e aete5 songs to t0e aete5 rst 'e 5een5antsB an5 68 an aount o prots :y 'rtue o 6a8 an5 6:8 a:o'e< 6a8 ?n t0e alternat'e a 5elaraton t0at t0e mem:ers o #ear0 ease5 to :e :oun5 :y any ontrat wt0 t0e plantC
68 wt0 eet rom 12 June 19;- at t0e latest :y elu=on o tmeB an5/or 68 :y reason o t0e plant7s :rea0< 6:8 A 5elaraton t0at l E6'8 o t0e seon5 5oument s 'o5 n restrant o tra5e< (0oug0 t0s aton was le5 s= years ago :eause o ertan applatons espeally t0e one relatng to t0e nterloutory n>unton an5 t0e su:se@uent appeal to t0e #upreme !ourt rom t0e 5eson o t0e &g0 !ourt 6*olygram ecords .dn :hd ( >illary Ang < ;rs +19;;, 3 MLJ 3-8 aganst t0e grantng o t0e n>unton toget0er wt0 t0e se'eral applatons ma5e :y :ot0 t0e partes or t0e amen5ment o t0e plea5ngs t0ere was ons5era:le 5elay n t0e =ng o t0e 5ate o t0s tral< (0e tral nally ommene5 n Mar0 1993< "urng t0e tral se'eral wtnesses were alle5 an5 t was not untl July 1994 t0at nal su:mssons were ma5e :y ounsel< 1$ 647 1#8 at 1$! Issues
Page 1.
(0e ru= o t0e ssue :eore t0s ourt s w0et0er at t0e tme w0en t0e group :egan reor5ng or Go*#ear0 t0at s n late 19;- t0e group was stll ontratually :oun5 to Polygram et0er un5er t0e terms o t0e rst ontrat or t0e seon5 ontrat< (0e plants onten5 t0at n late 19;- t0e seon5 ontrat was stll n ore or n t0e alternat'e t0e seon5 ontrat was unenorea:le t0e group was stll :oun5 :y t0e terms o t0e rst ontrat< (0e 5een5ants 0owe'er onten5 t0at at t0e en5 o 19;- t0ey were net0er :oun5 :y t0e rst nor t0e seon5 ontratC t0e rst ontrat 0a5 :y t0en :een resn5e5B or t was 'al5 t 0a5 lapse5 :y t0s tme an5 as ar t0e seon5 ontrat was onerne5 t was not :n5ng on t0em as t was 'o5a:le an5 t0ereore unenorea:le< (o 5etermne t0ese ssues ? t0ereore nee5 to ons5er t0e terms o ea0 o t0ese two ontrats< &owe'er :eore ? 5o so ? ws0 to mae a prelmnary o:ser'aton on t0e ssue o t0e partes to t0e present aton< *reliminary obser(ationB parties %ot0 t0e rst ontrat n 19;4 an5 t0e seon5 ontrat n 19;. were entere5 nto :y Polygram wt0 t0e n5'5ual mem:ers o t0e group w00 were t0en part o (0e #ear0 at t0at partular tme< D0en t0e rst ontrat was entere5 nto t was :etween Polygram an5 $asr #u0em Yat Ra0man an5 $or5nB w0ereas w0en t0e seon5 ontrat was sgne5 t was :etween Polygram an5 Amran #u0em Yat Ra0man an5 $or5n< ?t wll :e note5 t0at &llary Ang 6t0e rst 5een5ant8 was ne'er a sgnatory to et0er o t0e ontrats w0ereas Ra0man a party to t0e rst ontrat an5 Amran a party to t0e seon5 ontrat were not te5 as partes to t0e present aton< urt0er an nterestng eature o :ot0 t0ese ontrats s t0at a stan5ar5 orm ontrat was use5 w00 0a5 @ute o:'ously :een taen rom ertan ngls0 p ree5ents o:l'ous to t0e person w0o prepare5 t0e ontrat t0at su0 smlar ontrats 0a5 alrea5y ome un5er lose srutny :y t0e ngls0 ourts< ?n 19-4 an5 19-. smlar ontrats as t0e present were alrea5y stru 5own :y t0e ngls0 ourts as :eng 'o5 or 'o5a:le< Anot0er eature o :ot0 o t0e ontrats s t0at no mo5atons were ma5e to t0e stan5ar5 orm ontrat to aommo5ate t0e at t0at n t0e present ase a group an5 not an n5'5ual snger was :eng ontrate5 as an artste< (0roug0out t0e ontrat reerene s ma5e as t0oug0 ea0 an5 e'eryone o t0e mem:ers o t0e group was enterng nto a separate an5 n5'5ual ontrat wt0 Polygram t0oug0 t0e artstes toget0er are reerre5 to as (0e #ear0< (0s may well 0a'e :een t0e ntenton as t0ere s not0ng to n5ate t0at t0e group at t0at stage 0a5 any ot0er legal entty< (0ereore t0e ontrat was wt0 n5'5ual mem:ers o t0e group t0en learly only t0ose w0o were partes to t0e rele'ant ontrat are :oun5 :y t0e terms o t0at partular ontrat< &owe'er t was nten5e5 t0at 1$ 647 1#8 at 1$/ t0e ontrat was to :e wt0 Polygram an5 (0e #ear0 as a group t0en t0e legal status o t0e group s unlearC w0at s t0e legal apaty o t0e group * an assoaton a orporaton a partners0p or merely as n5'5uals< ?n Clifford =a(is7s ase 19-., 1 All R 23-B +19-., 1 DLR E1 t0e group leetwoo5 Ma was a lmte5 ompany an5 t0ereore t0e management ontrat was entere5 nto wt0 t0e ompany< (0e a5'antage o su0 an entty s o:'ousC as t0e ontrat s entere5 nto wt0 a legal entty any 0ange n t0e mem:ers0p o t0e group woul5 not aet t0e legal status o t0e ontrat< (0e ontrat remane5 wt0 t0e ompany an5 not wt0 t0e n5'5ual mem:ers< ? s0oul5 0owe'er pont out t0at t0e ontrat wt0 t0e two omposers n Clifford =a(is7s ase was entere5 nto on an n5'5ual :ass< (0s was neessary as not all mem:ers o t0e group were omposers< ?n ot0er wor5s t0e management ontrat n !lor5 "a's wt0 leetwoo5 Ma as sngers was entere5 nto wt0 t0e ompany w0ereas t0at :etween t0e two omposers w0o were also part o t0e group was :etween t0e management ompany an5 MVe an5 Del0 6t0e omposers8 n5'5ually< (0ese ssues were not 5retly a55resse5 :y t0e 5een5ants to 0allenge t0e la:lty o some o t0e 5een5ants espeally &llary w0o was not a party to et0er t0e rst or seon5 ontrat< ? t0ereore nee5 not 5etermne t0s ssue< $ee5less to say reor5ng ompanes an5 artstes nee5 to pay more 0ee5 to su0 ssues< ? now mo'e on to ons5er t0e su:stant'e ssues n'ol'e5 n t0s ase<
Page 1E
alidity of the first contract %10$& (0e plants tae t0e stan5 t0at t0oug0 t0e rst ontrat was 'al5ly entere5 nto t was su:se@uently su:sttute5 :y t0e seon5 ontrat< (0e 5een5ants 0owe'er onten5 t0at t0e rst ontrat was unenorea:le an5 as su0 t0e 5een5ants were not ontratually :oun5 :y t0e terms o t0e rst ontrat< (0e 5een5ants attae5 t0e 'al5ty o t0e rst ontrat on se'eral groun5s t0e more mportant o w00 may :e summare5 as ollowsC 6a8 t0at t0oug0 t0ey e=eute5 t0e rst ontrat t0ey 55 not agree to t0e terms ontane5 t0erenB 6:8 t0ey were n5ue5 to sgn t0e rst ontrat :y msrepresentatonB 68 n t0e alternat'e t0ey lam t0at e'en t0e rst ontrat was 'al5 t 0a5 :een 5s0arge5 :y elu=on o tme on 12 June 19;- w0en t0e ntal pero5 o t0e ontrat e=pre5 wt0 no urt0er e=tenson as t0e plants 0a5 not e=erse5 any opton to e=ten5 tB 658 nally t0e 5een5ants onten5 t0at t0e rst ontrat 0a5 :een resn5e5 an5 su:sttute5 :y t0e seon5 ontrat< 6a8 msrepresentaton an5 un5ue nluene
? nee5 not go nto t0e 5etals o t0e rumstanes un5er w00 t0e rst ontrat was entere5 nto< (0ese 0a'e alrea5y :een state5< D 0at 0owe'er s lear s t0at t0e group at t0at partular tme was 5esrous o enterng nto a reor5ng ontrat wt0 Polygram< (0ey 0a5 spoen to r an5 1$ 647 1#8 at 1$8 $asr a:out t0s an5 t0ey 0a5 Gary to assst t0em at t0at stage< (0oug0 Gary was not t0er manager nor a lawyer :y proesson 0e was n a poston to a5'se t0em as to t0e terms o t0e ontrat< urt0ermore rom 0s e'5ene t s lear t0at 0e 0a5 t0e nterests o t0e mem:ers o t0e group w0en 0e e=plane5 to t0em t0e terms o t0e ontrat< %ut t0e mportant ator to :ear n mn5 s t0at t0e mem:ers o t0e group at t0at stage 0a5 ma5e no reor5ngs wt0 any reor5ng ompanes :eore an5 were t0ereore een to :egn a reor5ng areer :y enterng nto a relatons0p wt0 a reputa:le reor5ng ompany or t0s purpose< (0ere was t0ereore a lear ntenton on t0er part to enter nto t0e reor5ng ontrat wt0 Polygram< !ons5erng t0e rumstanes an5 t0e e'5ene a55ue5 t0e group woul5 :e 0ar5*presse5 now to assert t0at t0e rst ontrat was entere5 nto :y msrepresentaton< (0e mem:ers o t0e group un5erstoo5 t0e nature o t0e ontratB t0e 5uraton o t0e ontratB t0er o:lgatons to reor5 or PolygramB an5 t0oug0 t0ey may not 0a'e ully un5erstoo5 t0e me0ans o 0ow t0e royalty rates were to :e ompute5 t0ey un5erstoo5 t0at royaltes woul5 :e pa5 to t0em< urt0ermore r 0a5 tol5 t0em t0at t was a stan5ar5 orm ontrat use5 :y t0e ompany or all artstes employe5 :y t0e ompany< ?n t0e lg0t o t0e a:o'e n5ngs ? an n5 no mproprety on t0e part o r to e=trat any unar a5'antage rom t0e 5een5ants w0en t0e rst ontrat was sgne5< On t0e ontrary t appears to 0a'e :een e=eute5 as any ot0er ontrat :etween two onsentng partes< ? t0ereore 0ol5 t0at t0ere was no msrepresentaton an5 least o all un5ue nluene w0en t0e 5een5ants entere5 nto t0e rst ontrat< 6:8 non est atum
(0e ot0er argument o t0e 5een5ants t0at t0e rst ontrat t0oug0 e=eute5 :y t0em s not :n5ng on t0em sne t0ey 55 not 7agree to t0e terms7 an :e 5smsse5 summarly< (0ere s no prnple o law w00 states t0at w0ere a party 5oes not ully un5erstan5 ertan terms o a ontrat t0e ontrat may :e 'tate5< (0e general prnple o law o ourse s t0at a party w0o sgns a wrtten ontrat s :oun5 :y t0e terms o t0e ontrat e=ept n t0e lmte5 ases w0ere rau5 un5ue nluene or msrepresentaton may :e esta:ls0e5< (0s rule s so strt t0at e'en a party to a ontrat 0as not rea5 t0e ontents o a ontrat 0e s 0el5 to :e :oun5 :y ts terms< ?n t0e lea5ng ase o 4)9strange ( F Graucob +1934, 2 H% 394 #rutton LJ pronoune5 6at p 438C D0en a 5oument ontanng ontratual terms s sgne5 t0en n t0e a:sene o rau5 or ? wll a55 msrepresentaton t0e party sgnng t s :oun5 an5 t s w0olly mmateral w0et0er 0e 0as rea5 t0e 5oument or not<
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One e=eptonal rumstane un5er w00 a party to a wrtten ontrat may see to set t as5e s on t0e groun5s o non est atum w00 :y tsel s usually 5ult to esta:ls0< $on est atum 0as not :een plea5e5 n t0e 1$ 647 1#8 at 1$0 present ase to 0allenge t0e 'al5ty o t0e rst ontrat an5 e'en t 0a5 :een ? 5ou:t 'ery mu0 w0et0er t0e 5een5ants woul5 0a'e :een suessul n esta:ls0ng t< rom t0e e'5ene t0e 5een5ants woul5 not :e n a poston to esta:ls0 t0at t0e ontrat entere5 nto :y t0e 5een5ants was 7ra5ally or su:stantally or un5amentally7 5erent to t0at t0ey 0a5 nten5e5 to sgnC see generally Chitty on Contract, General *rinciples 62Et0 58 at para 3E.< 68 5s0arge o rst ontrat :y elu=on o tme
(0e rst ontrat was entere5 nto on - Oto:er 19;4< %y l E o t0e sa5 ontrat t was state5 t0at 7t0e term o t0s agreement s rom 1. Oto:er 19;4 to 14 Oto:er 19;E7< &owe'er :y l E68 t was pro'5e5 t0atC t0e artste grants t0e ompany t0e rre'oa:le opton to e=ten5 t0e term o t0s agreement or two a55tonal pero5s o 12 mont0s ea0 ommenng rom t0e e=praton o t0s agreement upon all t0e terms an5 on5tons 0eren ontane5 ot0er t0an t0ese optons to renew pro'5e5 always t0at t0e ompany s0all 0a'e o:ser'e5 an5 perorme5 ts o:lgatons lste5 n t0s agreement<
?t s argue5 :y t0e 5een5ants t0at as at $o'em:er 19;- t0e rst ontrat 0a5 lapse5 un5er l E or n any ase as t0e plants 0a5 not e=erse5 t0er opton to e=ten5 t0e ontrat or any a55tonal pero5s t0ereater t0e 5een5ants 0a5 :een 5s0arge5 o t0er o:lgatons un5er t0e rst ontrat to t0e plants< D0lst t s true t0at t0e ntal pero5 o t0e rst ontrat e=pre5 on E Oto:er 19;E w0et0er t0e o :lgatons o t0e 5een5ants ease5 on t0at partular 5ate or w0et0er t was urt0er e=ten5e5 :y t0e e=erse o t0e opton :y t0e plants 0as to : e e=amne5< ?t s0oul5 :e note5 t0at un5er l E 68 t0e plants 0a5 a rg0t wt0 no su0 orrespon5ng rg0t :eng onerre5 on t0e 5een5ants to e=ten5 t0e 5uraton o t0e ontrat or two urt0er pero5s o one year ea0< ?n ot0er wor5s t0e 5een5ants :y t0e e=erse o t0e opton :y t0e plants oul5 :e te5 to t0e plants or t0e ollowng pero5sC ?ntal pero5C - Oto:er 19;4 to E Oto:er 19;E rst opton pero5C - Oto:er 19;E to E Oto:er 19;#eon5 opton pero5C - Oto:er 19;- to E Oto:er 19;;
"5 t0en t0e plants e=erse t0er rg0ts un5er t0e opton to e=ten5 t0e 5uraton o t0e rst ontrat rstly to 19;- an5 seon5ly :y t0e e=erse o t0e seon5 opton to 19;; (0ere s no e'5ene :eore t0s ourt o any ormal 5oument :eng e=eute5 to n5ate t0at t0e 5uraton o t0e ntal pero5 o t0e ontrat 0a5 :een e=ten5e5 :y t0e e=erse o t0e opton un5er l E68< (0e 5een5ants argue t0at n t0e a:sene o any e'5ene n5atng t0at t0e opton pero5 was e=ten5e5 t0ere was no e=erse o t0s rg0t :y t0e 1$ 647 1#8 at 1$ plants an5 as su0 t0e rst ontrat 6 t was 'al58 e=pre5 on E Oto:er 19;E< (0e plants 0owe'er on t0e ot0er 0an5 argue t0at t0e at t0at :ot0 t0e plants an5 t0e 5een5ants ontnue5 to on5ut t0emsel'es n su0 a manner as t0oug0 t0e partes were stll :oun5 :y t0e terms o t0e rst ontrat learly e'ne5 an ntenton on t0e part o :ot0 t0e partes t0at t0e ontrat was e=ten5e5< (0e plants urt0er onten5 t0at t0e 'ery at t0at t0e 5een5ants ma5e 1- reor5ngs ten or t0e t0r5 al:um an5 t0e :alane o t0e se'en or t0e ourt0 al:um n early 19;- learly n5ate5 t0at t0e plants 0a5 e=erse5 t0er opton to e=ten5 t0e ontrat an5 t0at t0e 5een5ants n so reor5ng t0ese 1- reor5ngs were aware o t0e e=tenson an5 aepte5 t an5 ate5 upon t<
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(0s argument o t0e plants s reute5 :y t0e 5een5ants :y sayng t0at at t0e tme t0ey 55 t0e 1reor5ngs n #ngapore n early 19;- t0ey were tol5 :y t0e plants t0at un5er t0e seon5 ontrat t0ey were n early 19;- ontratually :oun5 to Polygram to mae t0ese reor5ngs< (0ey also :ele'e5 t0at as t0ey 0a5 sgne5 t0e seon5 ontrat n 19;. w00 was or t0e 5uraton o at least two years t0ey were :oun5 to mae t0e reor5ngs or t0e t0r5 al:um< ? aept t0e 5een5ants7 e=planaton as to w0y n early 19;- t0ey un5ertoo to 5o t0e reor5ngs< (0ey were at t0s stage aware t0at un5er t0e seon5 ontrat entere5 nto n 19;. t0ey were stll :oun5 n early 19;- to 5o t0e reor5ngs< ?n at t s also lear t0at t0e plants t0emsel'es s0are5 a smlar :ele< (0e plants were o t0e 'ew t0at as t0e rst ontrat 0a5 :een su:sttute5 :y t0e seon5 ontrat n 19;. n early 19;- t0e reor5ngs were ma5e un5er t0e ntal pero5 o t0e seon5 ontrat an5 as su0 t0ere was no nee5 or any ormal 5oument to :e e=eute5 at t0at stage to e=ten5 t0e 5uraton o t0e rst ontrat n e=erse o t0e opton< (0e plants at t0at stage :ele'e5 an5 ontnue5 to 5o so t0at as t0e rst ontrat was su:sttute5 :y t0e seon5 ontrat t0e seon5 ontrat was 'al5 an5 as su0 e'en w0en t0e t0r5 al:um was release5 n 19;- :ot0 t0e partes were atng un5er t0e terms o t0e seon5 ontrat< (0e plants t0ereore annot now :e 0ear5 to say t0at t0e reor5ngs ma5e n #ngapore n early 19;- an5 t0e release o t0e t0r5 al:um n e:ruary 19;- was un5ertaen 5urng t0e pero5 o t0e opton un5er t0e rst ontrat< %ut one t0ng s lear * n early 19;- w0en t0e 1- reor5ngs were ma5e n #ngapore an5 soon t0ereater w0en t0e t0r5 al:um was release5 :ot0 t0e partes were atng on t0e :ele t0at t0e reor5ngs were :e ng ma5e un5er t0e urreny o t0e seon5 ontrat< %ot0 t0e partes were atng on t0e :ele t0at ea0 o t0em was :oun5 :y t0e terms o t0e seon5 ontrat an5 not t0e rst ontrat< (0ereore no @ueston as to w0et0er t0e opton un5er t0e rst ontrat was e=erse5 su0 t0at t0e 5uraton o t was e'er e=ten5e5 to early 19;- arses< #u0 an ntenton was learly not n t0e mn5s o et0er o t0e partes * :ot0 atng on t0e :ele t0at t0e seon5 ontrat was n ore nor 5oes t0e e'5ene support su0 a ontenton< 1$ 647 1#8 at 1!" ?n any ase t must :e emp0ase5 t0at t0e plants t0emsel'es ne'er ontemplate5 any e=tenson o t0e rst ontrat as t0ey 0a5 a lways ate5 n t0e :ele t0at t0e rst ontrat was su:sttute5 :y t0e seon5< 658 w0et0er t0e 19;4 agreement was su:sttute5 :y t0e 19;. agreement
D0ate'er t0e legal eet o t0e rst ontrat one t0ng s learC t0e plants nten5e5 to su:sttute t0e rst ontrat wt0 t0e seon5 ontrat< As eg0t mont0s 0a5 lapse5 ater t0e rst ontrat was entere5 nto wt0 no reor5ngs :eng ma5e :y t0e group toget0er wt0 t0e at t0at t0ere were 0anges ma5e to t0e group t0e plants elt t0e nee5 or t0e rst ontrat to :e replae5 :y anot0er< &ene t0e plants on'ne5 t0e group to sgn t0e seon5 ontrat< (0e mem:ers o t0e group on t0er part aeptng t0e reason t0at t0ere was a nee5 or a new ontrat espeally :eause t0ey were tol5 t0at t was neessary :eause o t0e 0ange n mem:ers0p o t0e group sgne5 t0e new ontrat to replae t0e rst ontrat< (0ere s t0ereore lear e'5ene t0at :ot0 t0e partes espeally t0e plants nten5e5 to resn5 t0e rst ontrat an5 su:sttute t wt0 t0e seon5< (0oug0 t0e plants may 0a'e a0e'e5 t0er 'ery same o:>et'es :y 'aryng t0e terms o t0e rst ontrat t0ey 0ose to resn5 t n su:sttuton or anot0er< O ourse t0e plants 0a5 t0s rg0t to 5o so espeally wt0 t0e onsent o t0e group to resn5 t0e rst ontrat< As Chitty on Contracts, General *rinciples 62Et0 58 at para 1.92 ponts outC Ressson :y agreement D0ere a ontrat s e=eutory on :ot0 s5es t0at s to say w0ere net0er party 0as perorme5 t0e w0ole o 0s o:lgatons un5er t t may :e resn5e5 :y mutual agreement e=press or mple5<
urt0ermore t0e su:sttuton o t0e rst ontrat :y t0e seon5 s a lear n5aton o t0e ntenton o :ot0 t0e partes to resn5 t0e rst ontrat< (0e eet o su0 a ressson :y mutual agreement s learC t0e rst ontrat s e=tngus0e5< (0s s unle a 'araton w0ere t0e ol5 ontrat ontnues to e=st n t0e altere5 ormC Chitty on Contracts a:o'e at para
Page 19
1.9.< ?n t0e Pr'y !ounl 5eson n United =ominions Corp %7amaica& 4td ( 6ichael 6itri .houcair +19E9, 1 A! 34B +19E;, 3 DLR ;93 Lor5 "e'ln sa5 6+19E9, 1 A! 34 at p 34;B +19E;, 3 DLR ;93 at p ;9-8C 7? t0e new agreement re'eals an ntenton to resn5 t0e ol5 t0e ol5 goesB an5 t 5oes not t0e ol5 remans n ore an5 unamen5e5<7 (0e poston un5er t0e !ontrats At 19. 67t0e At78 s smlar< #eton E3 o t0e At pro'5es as ollowsC 7? t0e partes to a ontrat agree to su:sttute a new ontrat or t or to resn5 or alter t t0e orgnal ontrat nee5 not :e perorme5<7 #eton E3 s not lmte5 n ts sope to no'aton as t s un5erstoo5 un5er ngls0 law alone :ut also o'ers stuatons w0ere t0e partes 0a'e resn5e5 t0e earler ontrat :y su:sttutng a new one< ? t0ere s an 1$ 647 1#8 at 1!1 ntenton on t0e part o :ot0 t0e partes to su:sttute a new ontrat t0e ol5 nee5 not :e perorme5 e'en t0e new merely alters ertan terms o t0e ol5< (0e test :asally s t0sC a new ontrat s entere5 nto :y t0e partes w0ate'er ts terms t0e ol5 ontrat s e=tngus0e5< ?t 5oes not 0owe'er o'er a stuaton w0ere t0e terms o t0e ol5 ontrat are merely altere5 or 'are5 wt0out a new ontrat n su:sttuton o t :eng entere5 nto< ?n su0 a ase t0e ol5 ontrat as altere5 or 'are5 remans n ore< ?n t0e present ase t0e lear ntenton o :ot0 t0e partes was to replae t0e rst ontrat entere5 nto n 19;4 wt0 a new ontrat t0e seon5 ontrat entere5 nto n 19;.< (0e mem:ers o t0e group t0ereore were un5er no o:lgaton to perorm t0er part o t0e :argan un5er t0e rst ontrat as t0e rst ontrat 0a5 :een e=tngus0e5< Ater su:sttuton :y t0e seon5 ontrat no rg0ts or la:ltes oul5 arse out o t0e rst ontrat< 6e8 onluson * rst ontrat
? t0ereore onlu5e t0at or t0e reasons state5 a:o'e t0e rst ontrat was not n ore at t0e tme w0en t0e group :egan reor5ng or Go*#ear0< (0ereore no @ueston as to t0e mem:ers o t0e group 0a'ng :rea0e5 t0er o:lgatons un5er t0e rst ontrat arses n t0s ase< ? t0ereore now mo'e on to ons5er w0et0er t0e group was :oun5 :y t0e terms o t0e seon5 ontrat w0en t0ey :egan reor5ng or Go*#ear0 n 19;-< alidity of the second contract %10!& Le t0e 0allenge ma5e on t0e rst ontrat t0e 5een5ants laun0e5 a smlar atta on t0e 'al5ty o t0e seon5 ontrat< (0e seon5 ontrat was 0allenge5 :y t0e 5een5ants on t0e groun5s t0at t was entere5 nto 68 :y alse msrepresentaton ma5e :y t0e plantsB 68 t0at t was 'o5 as t was o:tane5 :y un5ue nlueneB an5 68 t0at t0e ontrat was 'o5 as t was n restrant o tra5e< Alternat'ely t was also onten5e5 :y t0e 5een5ants t0at as t0ere was no e=erse o t0e opton :y t0e plants to e=ten5 t0e 5uraton o t0e ontrat t0e seon5 ontrat e=pre5 on 12 June 19;- at t0e e=praton o t0e ntal pero5 o two years state5 n t0e seon5 ontrat< ? 0a'e alrea5y state5 n :re t0e :agroun5 an5 t0e rumstanes un5er w00 t0e seon5 ontrat was entere5 nto< &owe'er t0e surroun5ng rumstanes an5 t0e 5etals o t0e seon5 ontrat 0a'e to :e e=amne5 n greater 5etal to 5etermne w0et0er t0e 5een5ants7 allegatons o msrepresentaton an5 un5ue nluene are sustana:le< 6a8 alse msrepresentaton
(o su:stantate t0er lam t0at t0e seon5 agreement s 'o5a:le :y reason o alse msrepresentaton t0e 5een5ants allege t0at r 0a5 orally msrepresente5 to t0e 5een5ants t0e nee5 or t0e seon5 ontrat to :e entere5 nto< r 0a5 tol5 t0em t0at t0e nee5 or t0e seon5 ontrat 1$ 647 1#8 at 1!#
Page 2
was solely :eause o t0e 0ange n t0e omposton o t0e group w0en n at t0e true ntenton o t0e plants was to e=ten5 t0e pero5 o t0e 5uraton o t0e ontrat< r at rst sa5 n e'5ene t0at 0e oun5 t0e nee5 or t0e partes to enter nto a seon5 a greement :eause o t0e 0ange n t0e mem:ers0p o t0e group< ?n e'5ene r urt0er ela:orate5 t0e ot0er reasons or t0e seon5 ontrat to :e sgne5< &e sa5 t0at as no reor5ngs 0a5 :een 5one or t0e rst eg0t mont0s un5er t0e rst ontrat to ompensate or t0e loss o tme t0e new ontrat was 5eeme5 neessary so t0at a longer tme was a'ala:le or t0e 5een5ants to mae t0er reor5ngs< ?t was or t0s reason t0at t0e new ontrat was ma5e to ommene rom June 19;. wt0 ea0 o t0e two opton pero5s :eng 0ange5 rom one year to two years< (0s ssue o alse msrepresentaton was not serously pursue5 :y t0e 5een5ants< (0e eet o t0e ontrat entere5 nto :y alse msrepresentaton was not ully argue5 :y t0e 5een5ants e=ept or a general statement statng t0at t0e seon5 ontrat was 'o5 :y reason o alse msrepresentaton< $o eort was ma5e to state t0e eet o t0e agreement entere5 nto :y alse msrepresentaton< (0e pro'sons o t0e At were not reerre5 to nor a ny aut0ortes su:mtte5 to support t0s ontenton< ?n any ase rom t0e g'en ats t 5oes not appear to me t0at t0ere s suent e'5ene to esta:ls0 alse msrepresentaton< 6:8 un5ue nluene
(0e 5een5ants7 ontenton t0at t0e seon5 ontrat s 'o5a:le on t0e groun5s o un5ue nluene merts more ons5eraton t0an t 55 w0en a smlar 0allenge was ma5e o t0e rst ontrat< (o su:stantate t0er lam o un5ue nluene t0e 5een5ants rely on t0e ollowng atsC (0e 5een5ants were all unamlar wt0 :usness mattersB t0at t0e speal relatons0p alrea5y e=stng :etween r an5 t0e 5een5ants at t0e tme w0en t0e seon5 ontrat was entere5 nto was su0 t0at t0e presumpton o un5ue nluene arose n t0s aseB t0e la o n5epen5ent legal a5'eB an5 t0e total relane :y t0e 5een5ants on r w0en t0ey e=eute5 t0e seon5 ontrat< (0e 5een5ants onten5 t0at rom t0e e'5ene o r t s lear t0at t0e e=euton o t0e seon5 ontrat too less t0an an 0our an5 t0at 0e was aware t0at all t0e 5een5ants were not well 'erse5 n t0e ngls0 language< (0e 5een5ants 0a5 also truste5 r to at n t0er :est nterest< ?t was urt0er argue5 t0at no e'5ene was a55ue5 :y t0e plants to esta:ls0 t0at t0e 5een5ants 0a5 ate5 n5epen5ently o any nluene e=erte5 :y r< %ase5 on t0ese ats alone t0e 5een5ants onten5 t0at as a 5uary relatons0p was reate5 :etween r an5 t0e 5een5ants an5 :y t0e urt0er at t0at no n5epen5ent a5'e 0a5 :een rele5 upon :y t0e 5een5ants t0e ontrat was 'o5 or un5ue nluene< (0e rele'ant pro'sons o t0e law relatng to un5ue nluene are em:o5e5 n s 1E o t0e At< #eton 1E pro'5es as ollowsC 1$ 647 1#8 at 1!
7) 7) 1a) 1b) 6)
A ontrat s sa5 to :e n5ue5 :y 7un5ue nluene7 w0ere t0e relatons su:sstng :etween t0e partes are su0 t0at one o t0e partes s n a poston to 5omnate t0e wll o t0e ot0er an5 uses t0at poston to o:tan an unar a5'antage o'er t0e ot0er< ?n partular an5 wt0out pre>u5e to t0e generalty o t0e oregong prnple a person s 5eeme5 to :e n a poston to 5omnate t0e wll o anot0er * w0ere 0e 0ol5s a real or apparent aut0orty o'er t0e ot0er or w0ere 0e stan5s n a 5uary relaton to t0e ot0erB or 8 w0ere 0e maes a ontrat wt0 a person w0ose mental apaty s temporarly or permanently aete5 :y reason o age llness or mental or :o5ly 5stress< 6a8 D0ere a person w0o s n a poston to 5omnate t0e wll o anot0er enters nto a ontrat wt0 0m an5 t0e transaton appears on t0e at o t or on t0e e'5ene a55ue5 to :e
Page 21
unonsona:le t0e :ur5en o pro'ng t0at t0e ontrat was not n5ue5 :y un5ue nluene s0all le upon t0e person n a poston to 5omnate t0e wll o t0e ot0er< %y 'rtue o s 2 o t0e At agreements entere5 nto un5er un5ue nluene are 'o5a:le an5 not 'o5 at t0e opton o t0e party w0ose onsent was o:tane5 t0roug0 un5ue nluene< #u0 a ontrat s also 'o5a:le un5er ngls0 lawC see ;).ulli(an ( 6anagement Agency and 6usic Co 4td +19;., I% 42;B +19;., 3 All R 3.1B +19;4, 3 DLR 4;;< (0e 5otrne o un5ue nluene as em:o5e5 n s 1E o t0e At s n su:stane :ase5 on t0e ngls0 postonB see t0e Pr'y !ounl 5esons n *oosathurai ( ?annappa Chettiar 619198 4- ?A 1 an5 aghunath *rasad ( .ar5u *rasad A?R 619248 P! E 6Pr'y !ounl ?n5a8 on t0e nterpretaton o t0e rele'ant pro'son o t0e ?n5an !ontrat At w00 s n par matera to s 1E o t0e Malaysan !ontrats At< Fn5ue nluene may et0er :e atual or presume5< ?n t0e reent &ouse o Lor5s 5eson n :arclays :an+ plc ( ;):rien < Anor +1993, 4 All R 41- Lor5 %rowne*Dlnson appro'e5 o t0e ollowng lassaton an5 eet o atual an5 presume5 un5ue nluene 6at p 4238C !lass 1C atual un5ue nluene< ?n t0ese ases t s neessary or t0e lamant to pro'e armat'ely t0at t0e wrong5oer e=erte5 un5ue nluene on t0e omplanant to enter nto t0e partular transaton w00 s mpugne5< !lass 2C presume5 un5ue nluene< ?n t0ese ases t0e omplanant only 0as to s0ow n t0e rst nstane t0at t0ere was a relatons0p o trust an5 on5ene :etween t0e omplanant an5 t0e wrong5oer o su0 a nature t0at t s ar to presume t0at t0e wrong5oer a:use5 t0at relatons0p n prourng t0e omplanant to enter nto t0e mpugne5 transaton< ?n lass 2 ases t0ereore t0ere s no nee5 to pro5ue e'5ene t0at atual un5ue nluene was e=erte5 n relaton to t0e partular transaton mpugne5C one a on5ental relatons0p 0as :een pro'e5 t0e :ur5en t0en s0ts to t0e wrong5oer to pro'e t0at t0e omplanant entere5 nto t0e mpugne5 transaton reely or e=ample :y s0owng t0at t0e omplanant 0a5 n5epen5ent a5'e< 1$ 647 1#8 at 1!$
?n ases o presume5 un5ue nluene 0s Lor5s0p ponte5 out t0ere were two ways n w00 a on5ental relatons0p may :e esta:ls0e5 6at p 4 238C !lass 2A< !ertan relatons0ps 6or e=ample soltor an5 lent me5al a5'sor an5 patent8 as a matter o law rase t0e presumpton t0at un5ue nluene 0as :een e=erse5< !lass 2%< 'en t0ere s no relatons0p allng wt0n lass 2A t0e omplanant pro'es t0e 5e ato e=stene o a relatons0p un5er w00 t0e omplanant generally repose5 trust an5 on5ene n t0e wrong5oer t0e e=stene o su0 relatons0p rases t0e presumpton o un5ue nluene< ?n a lass 2% ase t0ereore n t0e a:sene o e'5ene 5spro'ng un5ue nluene t0e omplanant wll suee5 n settng as5e t0e mpugne5 transaton merely :y proo t0at t0e omplanant repose5 trust an5 on5ene n t0e wrong5oer wt0out 0a'ng to pro'e t0at t0e wrong5oer e=erte5 atual un5ue nluene or ot0erwse a:use5 su0 trust an5 on5ene n relaton to t0e partular transaton mpugne5<
ollowng t0s lassaton @ute o:'ously as t0ere was no speal relatons0p e=stng :etween r an5 t0e group t0e 5een5ants n t0e present ase must :e relyng on presume5 un5ue nluene< Agan usng t0e lassaton state5 a:o'e t0e relatons0p :etween t0e 5een5ants an5 r must at all all wt0n lass 2%< ?t s t0ereore neessary or t0e 5een5ants to esta:ls0 :y e'5ene t0at t0e 5een5ants repose5 trust an5 on5ene n r< (0s o ourse s a @ueston o at to :e asertane5 :y t0s ourt< ?t s t0ereore neessary or me to re*e=amne t0e ats o t0e present ase to 5etermne w0et0er t0e 5een5ants 55 repose su0 trust an5 on5ene n r so as to rase t0e presumpton o un5ue nluene< #oon ater t0e rst ontrat was sgne5 Gary w0o 0a5 ate5 as t0e so*alle5 a5'ser o t0e group a5e5 away w0en t0e group :egan reor5ng wt0 Polygram< r 0msel a5mtte5 n e'5ene t0at ater t0e rst ontrat was sgne5 0e 55 not see Gary anymore wt0 t0e group< rom t0e e'5ene t woul5 appear t0at Polygram an5 more presely r n at ate5 as t0e manager at least or t0e purposes o reor5ngs< #u0em n 0s e'5ene sa5C De 55 not 0a'e a manager * r always sa5 0e woul5 tae are o t * 0e sa5 0e wll tae are o our welare promoton et< #o we t0oug0t 0e was our manager<
"urng t0s pero5 too t0e group :eame lose to %lly (an< urt0er w0en @uestone5 as to w0y t0e group sgne5 t0e seon5 ontrat wt0out rea5ng or 5sussng t0e terms ontane5 t0eren r answere5C
Page 22
7%eause t0ey truste5 me <<<7< D0en ase5C 7(0ey truste5 you :eause t0ey t0oug0t you ate5 n t0er nterest as well7 r reple5 7Yes7< ?t s0oul5 per0aps :e ponte5 out too t0at un5er l 96'8 o t0e seon5 ontrat t0e group was pro0:te5 rom employng a manager not only or purposes o reor5ng :ut or purposes o pu:l perormane as well< (0e sa5 lause rea5s as ollowsC (0e artste s0all not 5urng t0e term o t0s agreement or any e=tenson t0ereo wt0out t0e ompany7s pror wrtten onsent enter nto agreement 1$ 647 1#8 at 1!! wt0 any person rm or ompany to at as 0s manager agent or representat'e n 5ealng wt0 reor5ngs song wrtng an5 mus pu:ls0ng atng sngng an5 pu:l perormane on :e0al o t0e artste<
(0ereore wt0out a manager :eng employe5 :y t0em t0e group rele5 on r an5 regar5e5 0m or a ll ntents an5 purposes as t0er manager< ?t s t0ereore lear t0at t0ere 55 e=st a lose relatons0p :etween t0e group an5 rC see also t0e poston o t0e manager n t0e ases o Clifford =a(is +19-., 1 All R 23-B +19-., 1 DLR E1B 9lton 7ohn +1991, #R 39-B an5 ;).ulli(an +19;., I% 42;B +19;4, 3 DLR 4;;B +19;4, 3 DLR 4;;< (0e relatons0p :etween r an5 t0e group was a relatons0p w00 t0oug0 not allng wt0n t0e lass 2A ategory was one o trust an5 on5ene su0 t0at r was n a poston to proure t0em to enter nto t0e seon5 ontrat< or t0ese reasons ? am satse5 rom t0e e'5ene t0at t0e relatons0p :etween t0e group a n5 r was su0 t0at t0e presumpton o un5ue nluene arses< ?n t0s regar5 ? may also a55 t0at one t0e presumpton o un5ue nluene arses aganst r as t0e employee o t0e plants a smlar presumpton also arses aganst t0e plants t0emsel'esC see Daller LJ n ;).ulli(an7s ase 6+19;., I% 42;B +19;., 3 All R 3.1B +19;4, 3 DLR 4;;< (0e 5een5ants 0a'ng suee5e5 n so esta:ls0ng t0at t0ey repose5 trust an5 on5ene n r nee5 not go any urt0er to pro'e t0at r 55 e=ert atual un5ue nluene or s0ow t0at 0e a:use5 su0 trust an5 on5ene n relaton to t0e seon5 ontrat< #u0 :eng t0e ase t0e :ur5en mo'es to t0e plants to 5spro'e t0e e=stene o any un5ue nlueneC see s 1 E638 o t0e At< ?n t0e present ase t0e plants 0a'e ale5 to a55ue any e'5ene to 5spro'e t0e e=stene o any un5ue nluene< ?t was learly esta:ls0e5 t0at t0e group 0a5 no n5epen5ent a5'e g'en to t0em as to t0e terms o t0e seon5 ontrat al:et t0e terms were smlar to t0e rst ontrat< (0ere s e'en 5ou:t as to w0et0er t0e group was tol5 t0at t0e pero5 o ontrat an5 t0e opton pero5 was :eng e=ten5e5< nally t0e on5tons un5er w00 t0e group was ase5 to sgn t0e seon5 ontrat were also most appallng to say t0e leastC (0e :oys were alle5 out rom t0e re0earsal room nto anot0er room w0ere r was< A sta o money was ne=t to r< oo5 allowane or t0er stay n #ngapore was 0an5e5 out to t0em< r t0en ase5 t0e :oys to sgn t0e seon5 ontrat sayng t0at t0e terms were t0e same< (0e :oys t0en sgne5 t0e seon5 ontrat an5 soon ater r let t0e room< All t0s too plae wt0n a s0ort spae o one 0our< M,*4!" *!,v,", &owe'er :eore t0e 5een5ants may set as5e t0e ontrat on t0e groun5s o un5ue nluene t s neessary or t0e 5een5ants to esta:ls0 anot0er element< ?t was ponte5 out :y t0e Pr'y !ounl n *oosathurai ( ?annappa Chettiar 619198 LR 4- ?A 1 t0at a party lamng to set as5e a ontrat on 1$ 647 1#8 at 1!/ t0e groun5s o un5ue nluene un5er s 1E o t0e ?n5an !ontrat At w00 s n par matera to s 1E o t0e Malaysan !ontrats At annot suee5 n settng as5e t0e ontrat unless t0e party :es5es esta:ls0ng e'5ene o un5ue nluene also pro'es t0at t0e ontrat was 7unonsona:le7< (0e poston un5er ngls0 law was also smlar t0oug0 5erent terms were employe5 to 5esr:e t0e partular transaton< or e=ample Lor5 #arman n t0e &ouse o Lor5s 5eson n 'ational estminster :an+ plc ( 6organ +19;., A! E;EB +19;., 1 All R ;21B +19;., 2 DLR .;; n also reerrng to t0e 5eson o t0e Pr'y !ounl n *oosathurai
Page 23
a:o'e o:ser'e5 6+19;., A! E;E at p -4B +19;., 1 All R ;21 at p ;2-B +19;., 2 DLR .;; at p .9-8C <<< ? now o no reporte5 aut0orty w0ere t0e transaton set as5e was not to t0e manest 5sa5'antage o t0e person nluene5< ?t woul5 not always :e a gtC t an :e a 70ar5 an5 ne@uta:le7 agreement 6see ;rmes ( :eadel 61;E8 2 G 1EE at p 1-4B EE R - at p -48B or a transaton 7mmo5erate an5 rratonal7 6see :an+ of 6ontreal ( .tuart +1911, A! 12 at p 13-8 or 7unonsona:le7 n t0at t was a sale at an un5er'alue 6see *oosathurai ( ?annappa Chettiar 619198 LR 4- ?n5 App 1 at pp 3*48<
&s Lor5s0p urt0er a55e5C D0ate'er t0e legal 0arater o t0e transaton t0e aut0ortes s0ow t0at t must onsttute a 5sa5'antage suently serous to re@ure e'5ene to re:ut t0e presumpton t0at n t0e rumstanes o t0e relatons0p :etween t0e partes t was proure5 :y t0e e=erse o un5ue nluene< ?n my >u5gment t0ereore t0e !ourt o Appeal erre5 n law n 0ol5ng t0at t0e presumpton o un5ue nluene an arse rom t0e e'5ene o t0e relatons0p o t0e partes wt0out also e'5ene t0at t0e transaton tsel was wrongul n t0at t onsttute5 an a5'antage taen o t0e person su:>ete5 to t0e nluene w00 alng proo to t0e ontrary was e=pla:le only on t0e :ass t0at un5ue nluene 0a5 :een e=erse5 to proure t<
?t 0as long :een generally aepte5 :ot0 :y >u5ges an5 te=t:oo wrters t0at n e'ery ase w0ere un5ue nluene was :eng allege5 t0e party seeng to set as5e t0e transaton must also esta:ls0 some manest 5sa5'antage to t0e ontratng partyC see or e=ample t0e 5eson o t0e !ourt o Appeal n :an+ of Credit and Commerce International .A ( Aboody +199, 1 I% 923B +1992, 4 All R 9..B +19;9, 2 DLR -.9< &owe'er t0s re@urement o manest 5sa5'antage 0as now :een re'ewe5 an5 re*e=amne5 :y t0e &ouse o Lor5s more reently n CI:C 6ortgages plc ( *itt < Anor +1993, 4 All R 433 6see also t0e more reent !ourt o Appeal 5eson n Cheese ( 3homas +1994, 1 All R 3.8< Lor5 %rowne*Dlnson n o'errulng Aboody 7s ase e=plane5 t0at t0e re@urement o esta:ls0ng manest 5sa5'antage was not appla:le to ases o atual un5ue nluene :ut apple5 6 at all8 only to ases o presume5 un5ue nluene< &s Lor5s0p also too t0e opportunty to e=plan t0e true meanng o Lor5 #arman7s o:ser'atons n 6organ7s ase @uote5 a:o'e as ollows 6at p 4398C 1$ 647 1#8 at 1!8 "espte two reerenes n Lor5 #arman7s spee0 to ases o atual un5ue nluene as ? rea5 0s spee0 0e was prmarly onerne5 to esta:ls0 t0at 5sa5'antage 0a5 to :e s0own not as a onsttuent element o t0e ause o aton or un5ue nluene :ut n or5er to rase a presumpton o un5ue nluene wt0n lass 2<
Lor5 %rowne*Dlnson n CI:C 6ortgages onlu5e5 as ollows 6at p 4398C ? t0ereore 0ol5 t0at a lamant w0o pro'es atual un5ue nluene s not un5er t0e urt0er :ur5en o pro'ng t0at t0e transaton n5ue5 :y un5ue nluene was manestly 5sa5'antageousC 0e s enttle5 as o rg0t to 0a'e t set as5e<
As t0e present ase s one 5ealng wt0 presume5 un5ue nluene allng un5er t0e lass 2% ategory an5 not one o atual un5ue nluene ? nee5 to ons5er ollowng t0e Pr'y !ounl 5eson n *oosathurai :ut :earng n mn5 t0e reser'atons e=presse5 : y Lor5 %rowne*Dlnson n *itt 7s ase w0et0er t0e 5een5ants 0a'e also suee5e5 n esta:ls0ng t0at t0e ontrat entere5 nto :y t0e 5een5ants was 7unonsona:le7 or one o manest 5sa5'antage to t0em< Let me now ons5er t0e terms an5 sope o t0e seon5 ontratC t0oug0 as state5 earler t ontans many smlar terms as t0at ontane5 n t0e rst ontrat t maes only one ma>or 0ange t0e 5uraton o t0e ontrat< (0e rest o t0e terms o t0e seon5 ontrat are 5ental to t0at ontane5 n t0e rst ontrat< (0e plants 0a'e t0e e=lus'e rg0t to mae t0e reor5ngs o t0e musal wors o t0e groupB t0e opyrg0t o t0e group7s soun5 reor5ngs s assgne5 to t0e ompanyB no payments e=ept royaltes are to :e pa5 to t0e groupB an rre'oa:le opton to e=ten5 t0e ontrat s grante5 e=lus'ely to t0e ompany alone wt0 no orrespon5ng rg0t :eng onerre5 on t0e groupB upon t0e termnaton o t0e ontrat t0e group s restrane5 or a pero5 o two years rom perormng as a snger n any part o t0e worl5 or purposes o reor5ngB t0e group perorme5 anyw0ere su:se@uent to t0e termnaton o t0e ontrat wt0 t0e plants wt0out t0e plants7 onsent t0e ompany 0a5 t0e rg0t to oret all royaltes w00 are 5ue an5 paya:le to t0e group< nally s0oul5 t0e group all ll an5 as a onse@uene :eome una:le to ull t0er o:lgatons un5er t0e ontrat t0e ompany 0as t0e rg0t to termnate t0e ontrat<
Page 24
? nee5 not 5e5e w0et0er any or all t0ese terms are enorea:le< Iute learly as wll :e seen later some terms are learly not enorea:le w0lst ot0ers appear to :e at t0e :rn o :eng aganst pu:l poly an5 some ot0ers appear to : e :latantly aganst t0e pro'sons o t0e At< (0e 5een5ants 0a'e argue5 t0at t0ese terms ontane5 n t0e seon5 ontrat entere5 nto wt0 no n5epen5ent a5'eB wt0 no negotatonsB wt0 ne@ualty o :arganng power :etween t0e ontratng partesB toget0er wt0 t0e snster rumstanes un5er w00 t was e=eute5 was not only unar :ut also ren5ere5 t0e entre ontrat unonsona:le< 1$ 647 1#8 at 1!0 &owe'er on t0e analyss o t0e e'5ene :eore me t0e 5een5ants 0a5 a 5ult tas n esta:ls0ng t0at t0e seon5 ontrat was n at unonsona:le or t0at t was manestly 5sa5'antageous to t0em< ?t must :e emp0ase5 t0at n all respets t0e seon5 ontrat e=ept or t0e 5uraton o t0e ontrat was smlar to t0e rst ontrat< %ot0 ontrats were reor5ng ontrats w0ere:y t0e 5een5ants7 5esre to :eome reor5ng artstes was :eng a0e'e5< (rue some o t0e terms appear to :e onerous or may e'en per0aps :e la:elle5 as unonsona:le< %ut at t0e same tme t0ese terms were not new terms :ut merely t0ose w00 were alrea5y nown to t0e 5een5ants :y 'rtue o t0e rst ontrat< Gary !0ew 0a5 e=plane5 to t0em t0e salent eatures o t0e terms o t0e rst ontrat< (0e 5een5ants 0a5 aepte5 t an5 0a5 ate5 upon t un5er t0e rst ontrat or eg0t mont0s< (0e 5een5ants annot now t0ereore :e 0ear5 to say t0at t0ey were not aware o t0e terms o t0e seon5 ontrat or t0at t was an unonsona:le :argan< urt0er t must :e :orne n mn5 t0at t0e seon5 ontrat ma5e no ra5al 0anges to t0e nature o t0e reor5ng ontrat tsel< As or t0e 5uraton o t0e ontrat t s true t0at t0e pero5 o t0e ontrat was :eng e=ten5e5 un5er t0e seon5 ontrat< %ut t0s 0ange n t0e 5uraton o t0e ontrat :y tsel annot ren5er t0e entre ontrat to :e manestly 5sa5'antageous to t0e 5een5ants t0oug0 t :e sa5 t0at t appears to :e unreasona:le< (0e pero5 o t0e seon5 ontrat may at t0e most :e or a ma=mum pero5 o s= years< ?t s not as n t0e ase o Clifford =a(is +19-., 1 All R 23-B +19-., 1 DLR E1 or .chroeder ( 6acaulay +19-4, 3 All R E1EB +19-4, 1 DLR 13; or a pero5 o ten years< (0oug0 a pero5 o s= years may appear to :e unreasona:le :ut ons5erng t0e nature o t0e reor5ng ontrat un5er w00 :ot0 t0e reor5ng ompany an5 t0e artstes t0emsel'es may nee5 a reasona:le tme to a0e'e t0er respet'e o:>et'esB t0e reor5ng ompany to reoup ts n'estments n promotng relat'ely unnown artstesB an5 t0e artstes7 am:ton to a0e'e reognton as a suessul group ? am nlne5 to tae t0e 'ew t0at t0e 5uraton o t0e seon5 ontrat n t0e present ase s not o su0 a 5u raton so as to ren5er t0e entre ontrat to :e manestly 5sa5'antageous to t0e 5een5ants< Manest 5sa5'antage t s generally sa5 or purposes o t0e 5otrne o un5ue nluene 0as to :e a 5sa5'antage w00 was so o:'ous to any n5epen5ent an5 reasona:le person w0o ons5ere5 t0e transaton as a w0ole at t0e tme t was entere5 nto wt0 ull nowle5ge o all t0e rele'ant ats< (0e mere o'er:earng o a person7s wll s not n tsel a 5sa5'antage n t0e rele'ant sense< #urely n t0e present ase at t0e 5ate w0en t0e seon5 ontrat was entere5 nto no reasona:le person ons5erng t0e ommeral prate o t0e reor5ng n5ustry at t0at tme woul5 say t0at t0e seon5 ontrat w0ere:y t0e 5een5ants un5ertoo to reor5 or t0e plants was learly 5sa5'antageous to t0e 5een5ants< ? t0ereore 0ol5 t0at as t0e 5een5ants 0a5 ale5 to esta:ls0 t0at t0e seon5 ontrat as a w0ole an5 not some o t0e terms ontane5 t0eren was 7manestly 5sa5'antageous7 to t0em or t0at t was unonsona:le 1$ 647 1#8 at 1! t0e 5een5ants7 attempt to set as5e t0e seon5 ontrat on t0e groun5 o un5ue nluene als< ollowng t0e 5ou:ts rase5 :y Lor5 %rowne*Dlnson n *itt 7s ase +1993, 4 All R 433 e'en t0e element o manest 5sa5'antage nee5 no longer :e esta:ls0e5 as a separate re@urement n ases o presume5 un5ue nluene ? 5ou:t 'ery mu0 w0et0er t0e 5een5ants n t0e present ase are n a poston to set as5e t0e seon5 ontrat on t0e groun5s o un5ue nluene as t0e 5een5ants n t0e p resent ase appear to 0a'e arme5 t0e ontrat< ?t s an esta:ls0e5 prnple o law t0at armaton o a 'o5a:le ontrat s a :ar to t0e settng as5e o t0e 'o5a:le ontrat< ?n t0e present ase unle t0e poston taen :y t0e artstes n t0e ases o ;).ulli(an +19;., 3 All R 3.1B +19;4, 3 DLR 4;; or 9lton 7ohn +1991, #R 39- or Clifford =a(is t0e 5een5ants too no steps to set as5e
Page 2.
t0e ontrat :ut ontnue5 to ull t0er o: lgatons un5er t0e seon5 ontrat :y reor5ng or Polygram< ?t was only w0en t0e plants ommene5 t0e present aton 55 t0e 5een5ants ounterlam or a 5elaraton t0at t0e seon5 6or t0e rst8 ontrat was 7'o5 +s, :y reason o t0e plant7s un5ue nluene7< ? may also a55 t0at n t0e reent George 6ichael ase 63he 3imes 3 June 19948 6unreporte58 one o t0e groun5s or reusng to set as5e t0e agreement entere5 nto :etween George M0ael an5 #ony was t0e at t0at as George M0ael 0a5 arme5 t0e ontrat 0e oul5 not resle rom t0at armaton< 68 e=tenson o t0e seon5 ontrat
? now proee5 to say a ew wor5s on t0e @ueston as to w0et0er t0e plants 55 e=erse t0er opton un5er t0e seon5 ontrat so as to e=ten5 t0e sa5 ontrat or a urt0er pero5 o two years< (0e plants onten5 t0at as t0e 5een5ants reor5e5 more songs t0an t0ey were o:lge5 to 5o so or t0e t0r5 al:um t0e 5een5ants must 0a'e 5one so on t0e :ass t0at t0e seon5 ontrat was e=ten5e5 or a urt0er pero5 o two years< (0e 5een5ants 0owe'er 5eny t0s allegaton an5 say t0at t0ere was no e=erse o t0e opton :y t0e plant o t0e seon5 ontrat an5 t0at t0e mere at t0at t0e 5een5ants reor5e5 1- songs nstea5 o ten 5oes not n any way n5ate t0at t0ere was any e =tenson o t0e ontrat< (0e 5een5ants e=plane5 t0at w0en t0ey reor5e5 t0e 1- songs n #ngapore t0ey were unaware as to w0en e=atly t0e seon5 ontrat ame to an en5< urt0ermore as t0e e'5ene n5ates t0e 5een5ants were tol5 :y t0e plants t0at t0ey 0a5 to reor5 2 songs t0oug0 t0ey only manage5 to 5o se'enteen< ?t s0oul5 :e remem:ere5 t0at t0e 5een5ants 55 t0e reor5ng o t0e 1- songs wt0n a s0ort pero5 o two wees e'en :eore some o t0e songs were ompose5< (0ere s no e'5ene n my 'ew to n5ate t0at t0e plants 0a5 tol5 t0e 5een5ants t0at t0e e=tra se'en songs were to :e use5 or t0e ourt0 al:um w00 was to :e release5 ater t0e e=praton o t0e ntal pero5 o t0e seon5 ontrat< ?n at on t0e ontrary t0e plants 0a5 1$ 647 1#8 at 1/" 5e5e5 to e=erse t0er opton to e=ten5 t0e 5uraton o t0e seon5 ontrat t0ere appears to :e no reason as to w0y t0ey t0en pressure5 t0e 5een5ants to reor5 2 songs wt0n t0e two wees< (0e plants oul5 0a'e ase5 t0e 5een5ants to 5o t0e reor5ngs or t0e ourt0 al:um well ater t0e release o t0er t0r5 al:um an5 5urng t0e e=ten5e5 pero5 o t0e seon5 ontrat< ? t0ereore 0ol5 t0at t0ere s no e'5ene at all to n5ate t0at t0e plants 55 e=erse t0er opton to e=ten5 t0e pero5 o t0e seon5 ontrat to a urt0er term o two years< Inequality of bargaining power (0ere was a wea attempt :y t0e 5eene to 0allenge t0e 'al5ty o t0e seon5 ontrat on t0e groun5 o ne@ualty o :arganng power< (0s 5otrne rst gane5 some reognton n 4loyds :an+ 4td ( :undy +19-., I% 32EB +19-4, 3 All R -.-B +19-4, 3 DLR .1 w0en Lor5 "ennng e=presse5 t0e 'ew t0at t0e law reognes t0e prnple t0at rele aganst 0ars0 or unar ontrats may :e grante5 on t0e groun5 o ne@ualty o :arganng power< ?t was apple5 agan :y Lor5 "ennng n Clifford =a(is B Arrale ( Costain Ci(il 9ngineering 4td +19-E, 1 Lloy57s Rep 9;B an5 4e(ison ( *atent .team Carpet Cleaning Co 4td +19-;, I% E9B +19--, 3 All R 49;B +19--, 3 DLR 9 an5 :y Lor5 "plo n .chroeder 6usic *ublishing Co 4td ( 6acaulay +19-4, 3 All R E1EB +19-4, 1 DLR 13;< &owe'er su:se@uent to t0ese 5esons t0e 5otrne gane5 lttle aeptane< ?n t0e &ouse o Lor5s 5eson n 'ational estminster :an+ plc ( 6organ +19;., A! E;EB +19;., 1 All R ;21B +19;., 2 DLR .;; an5 n t0e Pr'y !ounl 5eson n *ao ;n ( 4au @iu 4ong +19;, A! E14B +19-9, 3 All R E.B +19-9, 3 DLR 43. Lor5 #arman e=presse5 5ou:ts as to t0e e=stene o su0 a 5otrne n t0e mo5ern law o ontrat< ?n reent years t0s 5otrne 0as gane5 lttle >u5al support an5 as su0 t 0as not :een apple5 :y t0e ngls0 ourts n any ma>or 5eson<
Page 2E
?n Malaysa t0oug0 t0ere s some support or t0e 'ew t0at pu:l poly may n some e=eptonal ases 5eman5 t0at ertan ontrats w00 are grossly unar to one o t0e partes to a ontrat oug0t to :e set as5e on t0e groun5s o ne@ualty o :arganng power un5er s 246e8 o t0e At t0ere 0as :een to 5ate no lea5ng ase n w00 t0s 5otrne 0as :een n'oe5 :y t0e Malaysan ourtsC see 0owe'er 'aested ( .tate of *era+ 6192.8 . M#LR 1;. per Doo5war5 !J n t0e !ourt o Appeal at p 21B an5 &arun &as0m J n t0e &g0 !ourt 5eson n @ap Chee 6eng ( A5inomoto %6alaysia& :hd +19-;, 2 MLJ 249B an5 t0e e5eral !ourt 5eson n =atu+ 7agindar .ingh < ;rs ( 3ara a5aratnam +19;3, 2 MLJ 19E< ?n t0e a:sene o any esta:ls0e5 pree5ent on t0s aspet o t0e law n Malaysa an5 n 'ew o my earler n5ngs t0at t0e seon5 ontrat as a w0ole s not one w00 may :e la:elle5 as :eng grossly unar to t0e 5een5ants ? t0ereore mae no n5ngs as to w0et0er t0e seon5 ontrat may :e set as5e on t0e groun5s o ne@ualty o :arganng power< 1$ 647 1#8 at 1/1 estraint of trade !lause E6'8 o t0e seon5 ontrat 6a smlar pro'son was also ontane5 n t0e rst ontrat8 pro'5es as ollowsC "urng t0e ontnuane o t0s agreement an5 n t0e ase o t0e artste :eng release5 rom t0e artste7s o:lgaton to mae soun5 reor5ngs or t0e ompany <<< or n t0e ase o t0e termnaton o t0s agreement <<< t0en or a pero5 o two years ater t0e 5ate upon w00 t0e ompany s0all 0a'e release5 t0e artste <<< the artiste shall not wt0out t0e wrtten onsent o t0e ompany <<< render the artiste)s ser(ices <<< in any part of the world as a singer or performer of musical wor+s for the purposes of ma+ing records <<< 6mp0ass a55e5<8
?t s urt0er pro'5e5 t0at t0e artste ommts a :rea0 o t0s pro'son t0e ompany 0as t0e rg0t to oret all royaltes :ot0 arue5 :eore t0e :rea0 an5 t0ose w00 are paya:le su:se@uently< ?n t0s regar5 ? s0oul5 also pont out t0at un5er l E68 o t0e seon5 ontrat t s pro'5e5 t0at t0e artste s0all or t0e 5uraton o t0e agreement 7ren5er t0e artste7s e=lus'e ser'es to t0e ompany7< !learly t0ese pro'sons are remnsent o t0e smlar pro'sons w00 were ons5ere5 :y t0e ngls0 ourts n .chroeder ( 6acaulay B Clifford =a(isB t0e .il(erstone ase 619918 6unreporte58 an5 more reently n t0e George 6ichael ase 63he 3imes 3 June 19948 6unreporte58< ?n .chroeder 7s ase w0ere a smlar pro'son was ons5ere5 t0e &ouse o Lor5s 0el5 t0e agreement to :e ontrary to pu:l poly as :eng n restrant o tra5e an5 t0us 'o5< ?n t0e Clifford =a(is ase t0oug0 Lor5 "ennng 55 not ons5er t0e agreements n t0at partular ase to :e n restrant o tra5e :ut merely 7restrt'e o tra5e7 &s Lor5s0p oun5 t0at as t0e agreements were ma5e :etween partes o une@ual :arganng power t0ere were strong arguments or sayng t0at t0e agreements were entere5 nto :y un5ue nluene or pressure< ?n .il(erstone t was 0el5 t0at t0e ontrat to ren5er e=lus'e ser'e to t0e reor5ng ompany was an unar restrant o tra5e as t0e ontrat as a w0ole was 7so entrely one*s5e5 an5 unar t0at no ompetently a5'se5 artste n t0e poston o t0e #tone Roses woul5 e'er 0a'e agree5 to sgn t7< &owe'er as ponte5 out earler n George M0ael7s ase t was 0el5 t0at as t0e agreement was reasona:le an5 ar t was not an unreasona:le restrant o tra5e< ? may also a55 t0at n anot0er !ourt o Appeal 5eson ang 3umb 3uum ecords ( >olly 7ohnson 63he Independent 2 August 19;98 6unreporte58 reerre5 to n t0e .il(erstonease8 a smlar reor5ng ontrat was 0el5 to :e unenorea:le :eause t was an unreasona:le restrant o tra5e< ?n t0at ase t0e !ourt o Appeal spelt out n 5etal t0e types o reor5ng ontrats w00 mg0t :e ons5ere5 reasona:le or unreasona:le :y t0e ourts< An analyss o t0ese ases n5ates t0at t0e ngls0 ourts 0a'e ons5ere5 t0e 5otrne o restrant o tra5e n two 5erent rumstanesC 6a8 restrtons w00 are mpose5 to apply ater t0e e=praton o t0e 1$ 647 1#8 at 1/# ontratB an5 6:8 restrtons mpose5 5urng t0e urreny o t0e ontrat w0ere:y t0e artste un5ertaes to pro'5e e=lus'e ser'e to t0e reor5ng ompany usually wt0out a onomtant o:lgaton on t0e part o t0e reor5ng ompany to pro'5e t0e artste wt0 any opportunty to o:tan n5epen5ent nome<
Page 2-
?n ons5erng :ot0 t0ese types o o'enants t0e ourts :es5es relyng on t0e 5otrne o restrant o tra5e generally 0a'e also ons5ere5 ts 'al5ty on t0e groun5s o pu:l poly an5 n some ases ne@ualty o :arganng power an5 un5ue nluene or pressure< ? 0a'e :een urge5 to apply t0ese prnples o law to t0e nstant ase< %eore ? 5o so ? nee5 to ons5er w0et0er t0ese prnples are n at appla:le n Malaysa n t0e ae o t0e spe pro'sons o t0e Malaysan !ontrats At espeally s 2; o t0e At w00 pro'5es as ollowsC 7'ery agreement :y w00 anyone s restrane5 rom e=ersng a lawul proesson tra5e or :usness o any n5 s to t0at e=tent 'o5<7 92clusi(e recording rights during the currency of the contract At t0s >unture ? nee5 only say t0at t0e sope o s 2; 0as not :een learly 5etermne5 :y t0e Malaysan ourts so as to 0ol5 t0at e=lus'e ser'e o'enants w00 are appla:le 5urng t0e urreny o a ontrat may :e lasse5 as ontrats n restrant o tra5e< D0et0er a ontrat un5er w00 a person agrees to pro'5e e=lus'e ser'e to t0e ot0er 5u rng t0e urreny o t0e ontrat s a restrant o tra5e wt0n t0e sope o s 2; t0ereore remans unlear< ?t woul5 appear t0at as t0e test o reasona:leness as t0at apple5 :y t0e ngls0 ourts to 5etermne t0e 'al5ty o a ontrat n restrant o tra5e s also not appla:le un5er s 2; o t0e At a restrte5 nterpretaton nee5s to :e g'en to t0e setonC see also t0e 'ews e=presse5 :y (0orne J n >ua ?hiow .teamship Co 4td ( Chop Guan >in 61938 1 M! -.< (o ot0erwse 0ol5 t0at e'ery ontrat w00 ontans a o'enant restrtng a party rom pratsng 0s tra5e or proesson :ot0 5u rng t0e urreny o t0e employment an5 t0e post*employment pero5 as a ontrat n restrant o tra5e un5er s 2; woul5 0a'e ar*rea0ng onse@uenes on normal ommeral ontrats su0 as t0e present one< (0ereore t appears to me t0at t0e o'enant w0ere:y t0e 5een5ants un5ertoo to pro'5e e=lus'e reor5ng rg0ts to t0e plants 5urng t0e urreny o t0er reor5ng ontrat s not a o'enant n restrant o tra5e an5 s t0ereore not ren5ere5 'o5 un5er s 2; o t0e At< #eton 2; s only appla:le n ases w0ere a person s restrane5 rom arryng on 0s tra5e or proesson n t0e tra5tonal sense o t0e 5otrne t0at s n t0e post*ontrat pero5 an5 not 5urng t0e urreny o t0e ontrat< ?n t0s regar5 ? 0ol5 t0at t0e ngls0 ases w00 0a'e 0el5 su0 o'enants to :e n restrant o tra5e are 5stngus0a:le as t0e law apple5 :y t0e ngls0 ourts 5ers to t0at w00 s appla:le un5er t0e At n Malaysa< *ost-contract restraint &a'ng sa5 t0at 0owe'er t0e 'al5ty o l E6'8 stan5s on a 5erent ootng< !lause E6'8 w00 ? may a55 s most nelegantly 5rate5 appears 1$ 647 1#8 at 1/ to pro0:t t0e 5een5ants rom mang any reor5ngs n t0ree 5erent stuatonsC 68 5urng t0e urreny o t0e agreement 6w00 appears to :e re5un5ant n 'ew o a smlar pro'son n l E688B 68 5urng t0e urreny o t0e agreement t0e 5een5ants are release5 rom t0er o:lgatons to reor5 or t0e plantsB an5 68 ater t0e e=pry o t0e ontrat< ?t appears t0at n stuatons 68 an5 68 t0e 5een5ants are pro0:te5 rom mang any reor5ngs e=ept wt0 t0e wrtten onsent o t0e plants or a pero5 o two years t0ereater< (0e tenor o l E6'8 s learly t0at o a o'enant n restrant o tra5e n t0e tra5tonal sense< D0lst t0e 'al5ty o su0 o'enants are teste5 :y t0e reasona:leness test :y t0e ngls0 ourts t0e poston n Malaysa s 5erent< One t0e Malaysan ourts tae t0e 'ew t0at a partular o'enant s a o'enant n restrant o tra5e t0e ourts 0a'e no 5sreton :ut to 5elare t to :e 'o5 un5er s 2; o t0e At su:>et to t0e t0ree e=eptons pro'5e5 or :y t0e sa5 setonC see also rigglesworth ( ilson Anthony +19E4, MLJ 2E9< As none o t0ese e=eptons are appla:le to t0e nstant ase an5 0a'ng 0el5 t0at l E6'8 s a o'enant n restrant o tra5e ? 0ol5 l E6'8 to :e 'o5 an5 to :e o no eet< As t s a 'o5 pro'son t s0oul5 urt0er :e 5eeme5 to :e 'o5 a: nto t0at s rom t0e tme t0e seon5 ontrat was entere5 nto< ? t0ereore mae a 5elaraton to t0s eet as praye5 or : y t0e 5een5ants n t0er ounterlam< .ummary of findings against the first fi(e defendants ?t may :e useul at t0s stage o t0s >u5gment or me to summare my n5ngs aganst t0e rst 'e 5een5ants :eore ? ons5er t0e ase aganst t0e s=t0 5een5ant< or reasons alrea5y state5 a:o'e t0e summary o my n5ngs aganst t0e mem:ers o (0e #ear0 w0o are 5een5ants to t0e present aton are as ollowsC
Page 2;
3i)
As t0e rst ontrat was resn5e5 an5 su:sttute5 :y t0e seon5 ontrat n June 19;. t0e rst ontrat entere5 nto :etween Polygram an5 t0e group n 19;4 was not :n5ng on :ot0 t0e partes w0en t0e group :egan reor5ng or Go*#ear0 n 19;-< 3ii) Alternat'ely e'en t0e rst ontrat was 'al5 an5 :n5ng t0e rst ontrat e=pre5 on E Oto:er 19;E wt0 no e=tenson o ts 5uraton as t0ere s no e'5ene to n5ate t0at t0e plants 55 e=erse t0er opton to e=ten5 t or urt0er pero5s o one year ea0< (0ereore e'en on t0s groun5 t0e 5een5ants were not :oun5 :y t0e rst ontrat w0en t0ey reor5e5 or Go*#ear0 n 19;-< 2iii) As or t0e seon5 ontrat entere5 nto :etween t0e partes on 12 June 19;. ? 0ol5 t0at t was a 'al5 an5 legally :n5ng ontrat< 1iv) (0e 5een5ants7 0allenge to set as5e t0e seon5 ontrat as :eng 'o5a:le on t0e groun5s o un5ue nluene s unsuessul< #mlarly t0s ourt n5s t0at t0e seon5 ontrat as a w0ole s not 'o5a:le 1$ 647 1#8 at 1/$ on t0e groun5s o alse msrepresentaton ne@ualty o :arganng power or restrant o tra5e< 1v) (0e seon5 ontrat :eng 'al5 0owe'er e=pre5 on 11 June 19;-< As t0ere s no e'5ene t0at t0e 5uraton o t0e seon5 ontrat was e=ten5e5 or any urt0er pero5s :y t0e plants n e=erse o t0er rg0t t0e seon5 ontrat 0a'ng lapse5 on 11 June 19;- was not :n5ng on t0e 5een5ants at t0e tme w0en t0ey :egan reor5ng or Go*#ear0< 1vi) !lause E6'8 o t0e seon5 ontrat :eng a o'enant n restrant o tra5e s 'o5 a: nto un5er s 2; o t0e At< As su0 l E6'8 was not :n5ng on t0e 5een5ants at t0e tme t0ey :egan reor5ng or Go*#ear0 or any ot0er ompany su:se@uent to 11 June 19;-< 1vii) (0ereore t ollows t0at t0e mem:ers o (0e #ear0 were n ot n :rea0 o any ontrat wt0 Polygram w0en t0ey :egan reor5ng or Go*#ear0< 1viii) or t0e aoresa5 reasons t0e plants7 lam aganst t0e rst 'e 5een5ants als< 1ix) (0e plants are to aount an5 pay to t0e 5een5ants all royaltes n respet o all reor5ngs 5one :y t0e 5een5ants an5 reor5e5 :y t0e plants w00 0a'e arue5 to t0e 5een5ants un5er t0e seon5 ontrat< As t0e ourt0 al:um was reor5e5 5urng t0e urreny o t0e seon5 ontrat t0oug0 release5 ater t0e e=praton o t t0e plants are to pay t0e 5een5ants t0e royaltes rom t0e sale o t0e ourt0 al:um n aor5ane wt0 t0e terms o t0e seon5 ontrat< ? now mo'e to ons5er t0e plants7 lam aganst t0e s=t0 5een5ant< *laintiffs) case against the si2th defendant As t0e rst 'e 5een5ants were not :oun5 :y any ontrat wt0 t0e plants w0en t0ey :egan reor5ng or Go*#ear0 an5 as no @ueston o any :rea0 o ontrat arses 's*a*'s t0e plants an5 t0e rst 'e 5een5ants t0e plants7 lam aganst t0e s=t0 5een5ant or n5ung t0e group to :rea0 t0er ontrat wt0 Polygram must neessarly al< ? t0ereore 5smss t0e plants7 lam aganst t0e s=t0 5een5ant< ;ther issues (0ere are two ot0er ssues relatng t0e seon5 ontrat w00 ? eel ompelle5 to omment upon< (0e rst relates to t0e ssue o opyrg0t an5 t0e ot0er t0e payment o royaltes 5ue to t0e rst 'e 5een5ants< 6a8 opyrg0t
(0e 5een5ants 0a'e n t0er ounterlam soug0t a reassgnment o t0e rele'ant opyrg0t n all t0e songs reor5e5 :y t0e group wt0 t0e plants< !lause 3 o t0e seon5 agreement pro'5es t0atC 1$ 647 1#8 at 1/! (0e opyrg0t n all soun5 reor5ngs ma5e un5er an5 :y 'rtue o t0s agreement s0all :elong to t0e ompany an5 t0e artste 0ere:y assgns to t0e ompany any opyrg0t n any arrangements or transrptons o su0 musal wors w00 may :e ma5e :y t0e artste<
Page 29
?t s lear rom t0s lause an5 un5er t0e law relatng to opyrg0t o soun5 reor5ngs t0at t0e opyrg0t to t0e soun5 reor5ngs :elongs to t0e plants an5 as su0 no @ueston o reassgnment o su0 opyrg0t to t0e 5een5ants arses n t0s aseC as to t0e law relatng to owners0p an5 5ealngs n opyrg0t o soun5 reor5ngs see t0e reently pu:ls0e5 wor :y H0aw Lae (ee Copyright 4aw in 6alaysia 619948 6%utterwort0s Asa8 0 .< 6:8 payment o royaltes
As state5 earler un5er l . o t0e seon5 ontrat t0e 5een5ants are enttle5 to royaltes at t0e rate o .< &owe'er on a loser rea5ng o t0e seon5 ontrat t s pro'5e5 un5er l .6E8 t0at w0en t0e 5een5ants are no longer ontratually :oun5 to t0e plants t0ey are only enttle5 to ree'e . o t0e royalty rates paya:le an5 t0at too s lmte5 to a pero5 o 'e years only rom t0e e=praton o t0e seon5 ontrat< (0e sa5 lause rea5s as ollowsC Fnless t0e artste s0all enter nto a new artste agreement wt0 t0e ompany upon t0e e=praton o t0s agreement nlu5ng t0e opton e=erse5 :y t0e ompany pursuant to l E628 o t0s agreement royaltes n respet o all t0e sa5 reor5s pro5ue5 un5er t0s agreement s0all :e . o t0e royalty rate pro'5e5 or n t0s agreement or a pero5 o 'e years only rom su0 e=praton<
? must oness t0at t0s pro'son n t0e seon5 ontrat 0as ause5 some onern to me< ?t appears to me t0at t0s pro'son s ompletely nonsstent or e'en repugnant to t0e man o:>et o t0e reor5ng ontrat entere5 nto :etween t0e plants an5 t0e 5een5ants< ?n a ontrat o t0s nature t0at s a reor5ng ontrat t0e man ons5eraton o t0e ontrat s surely t0e payment o royaltes< ?n a reor5ng ontrat an5 ? may a55 a pu:ls0ng ontrat t0e payment o royaltes s t0e man ons5eraton or t0e wor un5ertaen :y t0e snger or t0e aut0or< ?t s an aepte5 prnple o nterpretaton o ontrats t0at w0ere a later lause n a ontrat 5estroys t0e eet o an earler lause or w0ere a lause n a ontrat s nonsstent wt0 t0e man o:>et o t0e ontrat t0e latter lause may :e re>ete5 as :eng repugnant to t0e earler lause or to t0e man o:>et o t0e ontratC see Lewson 3he Interpretation of Contracts 619;98 6#weet ) Ma=well8 at paras ;<; an5 ;<9< #ee also Chitty on Contracts, General *rinciples 62Et0 58 at para ;33< ?n t0e lg0t o t0e nonssteny :etween l .618 an5 .6E8 o t0e seon5 ontrat an5 n applyng t0e a:o'e prnple o nterpretaton ? 0ol5 l .6E8 to :e 'o5 an5 to :e o no eet< (0e result o t0s s t0at t0e 5een5ants are enttle5 to ree'e royaltes rom t0e plants n aor5ane wt0 l .618 o t0e seon5 ontrat< 1$ 647 1#8 at 1// Conclusion My nal n5ngs on t0s ase are as ollowsC
2a) 3a) 2b) 1c)
t0e plants7 lam t0e plants7 lam or an n>unton to restran t0e rst 'e 5 een5ants rom enterng nto any reor5ng ontrats wt0 any ot0er reor5ng ompany s 5smsse5B t0e plants7 lam or an n>unton to restran t0e 'e 5een5ants rom enterng nto any 5str:uton ontrat wt0 PM# or any ot0er ompany s 5smsse5B t0e plants7 lam or an n>unton to restran t0e rst 'e 5 een5ants rom reor5ng or any ot0er ompany nlu5ng Go*#ear0 s 5smsse5B
Page 3
1d) 1e) 1f) 3b) 4a) 4b) 2c) 3c)
an n>unton to restran t0e s=t0 5een5ant rom enterng nto any 5str:uton agreement wt0 t0e rst 'e name5 5een5ants or purposes o 5str:utng musal reor5ngs reor5e5 :y Go* #ear0 or any ot0er ompany s 5smsse5B t0e plant7s lam or an n>unton to restran t0e s=t0 5een5ant rom 5str:utng or oerng or sale any musal reor5ngs o t0e rst 'e name5 5een5ants w0et0er su0 reor5ngs were reor5e5 :y Go*#ear0 or any ot0er ompany s 5smsse5B an5 t0e or5er lame5 :y t0e plants or ull 5so'ery o rele'ant 5ouments relatng to t0e 5een5ants7 reor5ngs an5 5str:uton arrangements n respet o t0er reor5ngs wt0 any ot0er ompany s 5smsse5< (0e plants7 lam to n@ury as to 5amages s also 5smsse5< t0e 5een5ants7 ounterlam (0e 5elaraton soug0t :y t0e 5een5ants t0at t0e ontrats sgne5 :y t0e plants an5 t0e rst 'e 5een5ants are 'o5 :y reason o plants7 un5ue nluene s not grante5< A 5elaraton t0at l E6'8 o t0e seon5 ontrat s 'o5 as :eng n restrant o tra5e s grante5< A 5elaraton t0at mem:ers o (0e #ear0 ease5 to :e :oun5 :y any ontrat wt0 t0e plants wt0 eet rom 12 June 19;- s grante5< opyrg0t
(0e 5een5ants7 lam or a reassgnment o t0e opyrg0t n t0e soun5 reor5ngs s 5smsse5< 658 royaltes
nally t0e plants are to pay t0e 5een5ants a ll royaltes 5ue to t0em un5er t0e seon5 ontrat n respet o t0e sales o all t0e our al:ums reor5e5 :y t0e group n aor5ane wt0 l .618 o t0e seon5 ontrat< 1$ 647 1#8 at 1/8 P3!"!+*0" ?n t0e lg0t o t0s >u5gment :y t0s ourt ? tae t0s opportunty to a55 t0at t may :e tmely or reor5ng ompanes to re'ew t0e terms o t0er reor5ng ontrats entere5 nto :y t0em wt0 young artstes< Amongst t0e ators w00 reor5ng ompanes nee5 to tae nto ons5eraton s t0e nee5 or reor5ng ompanes to ensure t0at t0e artstes 0a'e n5epen5ent legal a5'e to a5'se t0em as to t0e proper sope o t0e terms o t0e ontratB t0at t0e 5uraton o t0e reor5ng ontrat s reasona:leB t0at any opton to e=ten5 t0e 5uraton o t0e reor5ng ontrat s e=erse5 wt0 t0e onsent o :ot0 t0e partesB t0at lear pro'sons e=st n t0e reor5ng ontrat to pro'5e t0at t0e ontrat s e=ten5e5 t0e royalty rates wll :e renegotate5B an5 t0at o'enants pro0:tng t0e artstes rom enterng nto ontrats wt0 ot0er reor5ng ompanes ater t0e e=praton o t0e ontrat pero5 are n ot norporate5 nto t0e reor5ng ontrats as su0 o'enants are n restrant o tra5e an5 t0us 'o5 un5er Malaysan law< ?t may also :e a5'sa:le or reor5ng ompanes to re'ew t0e am:t o any o'enant pro'5ng or e=lus'e ser'e o artstes 5urng t0e urreny o t0e ontrat an5 poss:ly e'en to ons5er w0et0er t0e royaltes paya:le an5 t0e opyrg0t o t0e reor5ngs s0oul5 :e mo5e5 so as to :e n lne wt0 ot0er ontrats le pu:ls0ng ontrats< ? s0oul5 urt0er auton t0at t0e p resent prate o usng stan5ar5 orm ontrats s0oul5 :e re'ewe5 so t0at t0e terms o t0e ontrat relet t0e true ntenton o :ot0 t0e partes< Plants7 lam 5smsse5 wt0 osts< "een5ants7 ounterlam allowe5 n part wt0 no or5er as to osts<
Reporte5 :y Jeanne (an
