High Court of Ireland Decisions

Carrickdale Hotel Ltd. v. Controller of Patents, Designs and Trademarks & Anor [2004] IEHC 17 (10 February 2004)

THE HIGH COURT

RECORD NO. 350SP/2002

BETWEEN/

CARRICKDALE HOTEL LIMITED

PLAINTIFF

AND THE CONTROLLER OF PATENTS, DESIGNS AND TRADE MARKS

FIRST DEFENDANT

PHONOGRAPHIC PERFORMANCE (IRELAND) LIMITED

SECOND DEFENDANT

Judgment of Miss Justice Laffoy delivered on the 10th February, 2004.

This is an appeal by the plaintiff from an award made by an arbitrator in pursuance of a reference by the first named defendant (the Controller) under s. 41 of the Copyright Act, 1963, (the Act of 1963), by which the arbitrator fixed amounts
 


payable by the plaintiff, a nightclub owner, to the second named defendant (PPI) by way of equitable remuneration in accordance with s. 17(4)(b) of the Act of 1963.

Where copyright subsists in a sound recording, s. 17(4)(b) restricts causing the recording or any reproduction thereof to be heard in public without payment of equitable remuneration to the owner of the copyright subsisting in the recording. Section 31(3) of the Act of 1963 provides that where a dispute arises regarding the equitable remuneration payable under s. 17(4)(b), the dispute may be referred by either party to the Controller, who shall consider the case and either determine the amount of the remuneration so payable, or refer the case to an arbitrator in pursuance of the provisions of s. 41 for such determination. Insofar as it is relevant for present purposes, s. 41(1) provides as follows:

"In the case of any dispute referred to the Controller under . . . s. 17

. . . of this Act, the Controller may at any time –

(a) if the parties to the dispute consent, or

(b) if the case requires any prolonged examination of documents or other investigation which, in the opinion of the Controller, could not conveniently be made before him,

order the case to be referred to an arbitrator agreed on by the parties, or, in the absence of such agreement, appointed by the Controller."

In this case, the reference to the arbitrator was under para. (b) of sub-s. (1) and, accordingly, sub-s. (3) of s. 41 came into play. That subsection provides as follows:

"An appeal shall lie to the High Court from any award made by an arbitrator in pursuance of a reference under this section to which the parties to the dispute did not consent and the High Court may make such order confirming, annulling or varying the award of the arbitrator as it thinks fit."

It is further provided that a decision of the High Court under s. 41 shall be final and not appealable, save that, by leave of the High Court, an appeal shall lie to the Supreme Court on a specified question of law.

Section 40 of the Act of 1963 provides for a similar right of appeal "from any order or decision of the Controller, on any reference or application made to him under any provision of the Act of 1963."

Rules 45 to 49 of Order 94 of the Rules of the Superior Courts, 1986 (the Rules), deal with appeals to this Court from an order or decision of the Controller (meaning the Controller of Patents, Designs and Trade Marks) and also from an award of an arbitrator under s. 41(3) of the Act of 1963. It is clear that these rules are concerned with appeals under the Act of 1963, the Patents Act, 1964, (the Act of 1964), and the Trade Marks Act, 1963. Insofar as they are relevant to an appeal under s. 41(3) of the Act of 1963, the Rules provide as follows:

(1) The appeal shall be made by special summons (rule 45). The summons shall be served upon the Controller and upon all other persons (if any) interested. The Controller is a party in these proceedings, but he has elected not to participate, save to indicate that he will abide by the order of the court.

(2) The summons shall state whether the appeal is from the whole or part only, and if so what part, of the award. The summons shall also state concisely the grounds of the appeal and, save where otherwise given leave by the Court, the appellant shall be confined to those grounds at the hearing (rule 46).

(3) Every such appeal shall be by way of "re-hearing". The appeal shall be heard on the same evidence as that used at the hearing before the Controller. No further evidence shall be given nor further material brought forward for consideration of the Court without the special leave of the Court. (rule 48).

Rule 48 makes specific reference to an appeal under s. 25 of the Trade Marks Act, 1963 and provides that the appeal shall be heard "on the material stated by the Controller to have been used by him in arriving at his decision". It is interesting to note that in all other cases the Rules envisage there having been a "hearing before the Controller". In this case, there was a hearing before the arbitrator and a transcript of the hearing will be before the Court.

The substantive provision creating a right of appeal from the Controller to this Court in the case of a trade mark matter is s. 57 of the Trade Marks Act, 1963. Subsection (1) of s. 57 provides for a right of appeal similar to that provided for in sub-s. (1) of s. 40 of the Act of 1963 and empowers the Court to "make such order confirming, annulling or varying the order or decision . . . of the Controller as it thinks fit". It also restricts an appeal from the High Court to the Supreme Court in the same manner as is provided in the Act of 1963. However, sub-s. (2) of s. 57 provides as follows:

"In any appeal from a decision of the Controller to the Court under this Act, the Court shall have and exercise the same discretionary powers as under this Act are conferred upon the Controller."

The substantive provision which formerly provided for an appeal from the Controller in a patent matter was s. 75 of the Act of 1964. Subsection (4) of s. 75 (to which s. 96(4) of the Patents Act, 1992 now corresponds) dealt with the power of the Court on the appeal and provided that the Court might "exercise any power which could have been exercised by the Controller in the proceedings from which the appeal is brought".

The nature and the extent of the appeal in this matter was to some extent addressed by the parties before the proceedings were listed for hearing. An order of this Court (Kelly J.) made on the 10^th February, 2003 records the following agreement reached between the plaintiff and PPI:

"That the appeal herein shall be by way of re-hearing based upon the materials and transcripts used at the hearing before the Arbitrator with an entitlement to the Court to allow at its discretion additional evidence to be presented."

In the order, the Court noted that it was agreed that the plaintiff would proceed first on the hearing of the appeal and that PPI would object to the presentation of additional evidence, but it was acknowledged that whether such evidence is to be admitted is a matter for decision of the trial judge.

At the commencement of the hearing of the appeal, counsel for PPI raised as an issue the standard of review which the Court should apply on the appeal. Counsel for the plaintiffs having opened the case to the extent of outlining the background, opening the pleadings and affidavits and the relevant legislation, I heard submissions on that issue from counsel for PPI and counsel for the plaintiff.

It is believed that this is the first appeal to the Court under s. 41(3) of the Act of 1963.

Counsel for the parties helpfully narrowed the controversy as to the standard of the review. Neither party contended that there should be a complete re-hearing, in other words, a hearing de novo of the nature of an appeal from the Circuit Court to the High Court. Indeed, having regard to the provisions of the Rules, such a contention would be unsustain able. Further, neither party contended that the appropriate standard is that applicable where this Court judicially reviews the decisions of administrative bodies and inferior tribunals. It was not contended that the test is that the award was so manifestly unreasonable as to be contrary to common sense or that the principles laid down by the Supreme Court in The State (Keegan) v. Stardust Compensation Tribunal [1986] I.R. 642 and O'Keeffe v. An Bord Pleanála [1993] 1 I.R. 39 should apply. The standard contended for by counsel for PPI was the standard he described as "reasonableness simpliciter"; the standard applied by this Court (Kearns J.) in M & J Gleeson v. Competition Authority [1999] 1 I.L.R.M. 401. The submission made by counsel for the plaintiff was that the Court should treat the appeal in the same fashion as appeals from this Court to the Supreme Court are dealt with pursuant to the provisions of O. 58, of the Rules, r. 1 of which provides that all appeals to the Supreme Court shall be by way of "re-hearing".

I propose considering first some recent authorities in which a perceptible change in the attitude of the courts to the review of decisions of expert administrative tribunals is to be noted.

I take as the starting point the decision of the Supreme Court in Henry Denny & Sons (Ireland) Ltd. v. Minister for Social Welfare [1998] 1 IR 34. In that case, Hamilton C.J. made what was subsequently described as "a very strong statement in favour of deference" (per Barron J. in Orange Ltd. v. Director of Telecoms (No. 2) [2000] 4 IR 159 at p. 238) in the following passage:

". . . I believe it would be desirable to take this opportunity of expressing the view that the courts should be slow to interfere with the decisions of expert administrative tribunals. Where conclusions are based upon an identifiable error of law or an unsustainable finding of fact by a tribunal, such conclusions must be corrected. Otherwise it should be recognised that tribunals which have been given statutory tasks to perform and exercise their functions, as is now usually the case, with a high degree of expertise and provide coherent and balanced judgments on the evidence and arguments heard by them it should not be necessary for the courts to review their decisions by way of appeal or judicial review."

At issue in that case was an appeal under s. 300(4) of the Social Welfare (Consolidation) Act, 1981, which provided that any person who was dissatisfied with a revised decision of the Chief Appeals Officer on an issue as to whether a person is an "insurable person" for the purposes of the Social Welfare code, might appeal therefrom to the High Court on any question of law. Apart from the statement of the Chief Justice which I have quoted, the case is not of particular assistance, involving, as it did, an appeal on a question of law.

More pertinent to the instant case is the appeal in M & J Gleeson v. Competition Authority, which was brought under s. 9 of the Competition Act, 1991 (the Act of 1991). Sub-section (1) of s. 9 provides that any –

". . . person aggrieved by a licence or a certificate of the Authority under s. 4(2) or (4) . . . may appeal to the High Court . . . and on the hearing of any such appeal the Court may confirm, amend or revoke the licence so appealed against, or, in the case of such certificate, may cancel or refuse to cancel the certificate."

In s. 3 of the Act of 1991 "the Court" is defined as meaning the High Court or, in the case of an appeal, the Supreme Court. The facts as set out in the head note of the report of M & J Gleeson v. Competition Authority indicate that the plaintiffs in that case, who were drinks wholesalers, were appealing against a decision of the Competition Authority to grant a licence to Guinness Ireland Group Ltd. in relation to an agreement to acquire a 100% stake in a drinks distribution company on condition that it reduce its stake in and rights in relation to another drinks distribution company. Kearns J., in his judgment on the scope and structure of the appeal under s. 9, referred to a decision of the Supreme Court of Canada, Canada (Director of Investigation and Research) v. Southam Inc. [1997] 1 S.C.R. 748, and, in particular, to the following passage from the judgment:

"What is dictated is a standard more deferential than correctness but less deferential than 'not patently unreasonable'. Several considerations counsel deference: the fact that the dispute is over a question of mixed law and fact; the fact that the purpose of the Competition Act is broadly economic, and so is better served by the exercise of economic judgment; and the fact that the application of principles of competition law falls squarely within the area of the tribunal's expertise. Other considerations counsel a more exacting form of review: the existence of an unfettered statutory right of appeal from decisions of the tribunal and the presence of judges on the tribunal. Because there are indications both ways, the proper standard of review falls somewhere between the ends of the spectrum. Because the expertise of the tribunal, which is a most important consideration, suggests deference, a posture more deferential than exacting is warranted."

Kearns J. observed that he considered that the foregoing represented the correct standard insofar as it makes reasonableness simpliciter the critical standard. He equated the standard with the standard which the Supreme Court in Ireland adopts, with the added dimension of curial deference. Having stated that the greater the level of expertise and specialised knowledge which a particular tribunal has, the greater the reluctance there should be on the part of the court to substitute its own view for that of the authority, Kearns J. went on to outline the practical application of that standard in the following passage:

"That means in practical terms that the applicants, in order to succeed, must establish a significant erroneous inference which was critical to the grant of the licence and which went to the root of that decision rather than an erroneous inference which relates to some detail, even if that detail is relevant. In relation to any particular inference, therefore, the applicants must show that had the Competition Authority drawn some other inference, the licence could not properly have been granted.

It is not enough that this Court might think that if it were reconstituted as the Competition Authority, it would decide the matter differently. The court must be satisfied that the authority's decision lacks a reasonable basis".

Also apposite is the decision of the Supreme Court in Orange Ltd. v. Director of Telecoms referred to earlier, which was an appeal under s. 111(2B)(i) of the Postal and Telecommunications Services Act, 1983, (the Act of 1983), as amended. That section provides for an appeal to the High Court against a decision of the Director of Telecommunications Regulation, inter alia, to refuse to grant a licence and provides that the High Court may confirm the decision or direct the Director, as may be appropriate, to refrain from granting the licence concerned. At issue on the appeal was a decision by the Director to refuse to grant the third mobile telephone licence in the State to the plaintiff, having ranked another applicant for the licence, Meteor Mobile Communications Ltd., first in the competition for the licence. The statutory provision under which the appeal was brought gave effect to a requirement of a European Commission Directive, which required that there be an appeal from a decision of the national regulatory authority (i.e. the Director) to an institution independent of that authority. On appeal to the Supreme Court, in dealing with the issue of the scope of the appeal afforded under the statutory provision, Keane C.J. said that one should look first at the terms of the Directive. He commented that he saw no reason why, subject to one important qualification, the requirements of the Directive would not be met by a form of judicial review, the qualification being that leave must first be obtained to apply for judicial review. However, the Chief Justice was considering the matter in the context of the parties having agreed, as the parties in the instant case have agreed, that it was not necessary for the plaintiff to satisfy the manifest unreasonableness test. Having stated that it was clear that the High Court, in hearing the appeal, must bear in mind that the Oireachtas has entrusted to the Director a decision of a nature which requires the deployment of knowledge and expertise available to her, her staff and consultants retained by her, but not available to the court, he quoted the following passage from the judgment of the Supreme Court of Canada in Canada (Director of Investigation and Research) v. Southam Inc.:

". . . (an) appeal from a decision of an expert tribunal is not exactly like an appeal from a decision of a trial court. Presumably if parliament entrusts a certain matter to a tribunal and not (initially at least) to the courts, it is because the tribunal enjoys some advantage the judges do not. For that reason alone, review of the decision of a tribunal should often be of a standard more deferential than correctness . . . I conclude that the . . . standard should be whether the decision of the tribunal is unreasonable. This is to be distinguished from the most deferential standard of review, which requires courts to consider whether a tribunal's decision is patently unreasonable. An unreasonable decision is one that, in the main, is not supported by any reasons that can stand up to a somewhat probing examination. Accordingly, a court reviewing a conclusion on the reasonableness standard must look to see whether any reasons support it . . ."

Having quoted the passage in the judgment of Kearns J. in M & J Gleeson v. Competition Authority dealing with the practical application of the concept of curial deference, the Chief Justice went on to say:

"In short, the appeal provided for under this legislation was not intended to take the form of a re-examination from the beginning of the merits of the decision appealed from culminating, it may be, in substitution by the High Court of its adjudication for that of the first defendant. It is accepted that, at the other end of the spectrum, the High Court is not solely confined to the issues which might arise if the decision of the first defendant was being challenged by way of judicial review. In the case of this legislation at least, the applicant will succeed in having the decision appealed from set aside where it establishes to the High Court as a matter of probability that, taking the adjudicative process as a whole, the decision reached was vitiated by a serious and significant error or a series of such errors. In arriving at a conclusion on that issue, the High Court will necessarily have regard to the degree of expertise and specialised knowledge available to the first defendant."

As was pointed out in the judgment of the Chief Justice in Orange Ltd. v. Director of Telecoms (No. 2), the legislation at issue there was considered in detail in the judgment of Barron J. In his judgment, Barron J. also adverted to the fact that the test which the parties agreed was applicable had its origins in the judgment of the Supreme Court of Canada in Canada (Director of Investigation and Research) v. Southam Inc. and he pointed out that the decision of the Supreme Court of Canada was followed by Kearns J. in M & J Gleeson v. Competition Authority. Having, as I have already indicated, described the passage from the judgment of Hamilton C.J. in Henry Denny & Sons (Ireland) Ltd. v. The Minister for Social Welfare as a very strong statement in favour of deference, and having quoted from the judgment of the Supreme Court of Canada that, where matters are entrusted to a tribunal, "it is because the tribunal enjoys some advantage that judges do not", Barron J. went on to state that, in his view, the test for competition cases cannot be a guide for other codes.

In the course of the submissions there was much debate as to the significance or otherwise of the absence from the Act of 1963 of a provision similar to s. 57(2) of the Trade Marks Act, 1963. In my view, such absence is explained by the particular nature of the functions conferred on the Controller by the Act of 1963: in the event of a dispute, or in default of an agreement, his function is to determine what is a fair royalty or apportion a royalty (s. 13); determine equitable remuneration (s. 17(4)(b)); confirm or vary a licensing scheme (ss. 32 and 33); and determine equitable remuneration payable by Radio Éireann (s. 48). The brief excursion into the area of trade mark law in the course of the submissions illustrates that, by contrast, the functions of the Controller under the Trade Mark Act, 1963 are a mix of mandatory and discretionary powers, as is illustrated in one of the authorities opened, Montex Holdings Ltd., v. Controller of Patents [2001] 3 IR 85.

Accordingly, in my view, the non-inclusion in either s. 40 or s. 41 of the Act of 1963 of a provision similar to s. 57(2) of the Trade Mark Act, 1963, is of no significance in the context of the issue with which I am concerned. It is interesting to note, however, the attitude adopted by the courts historically to appeals against decisions of the Controller. In a trade mark case under the pre-1963 legislation, which did not contain a provision similar to s. 57(2), Philadelphia Storage Battery Company v. Controller of Industrial and Commercial Property and N.V. Philips Gloeilampenfabrieken [1935] I.R. 575, both the High Court and the Supreme Court considered the scope of an appeal from the Controller. In his judgment, at p. 593, Kennedy C.J. stated apropos of the position of the Controller vis-à-vis the Court:

"He cannot bind the Court by an exercise of his discretion. The Courts in England have, however, indicated very strongly that they will pay great attention to the decision of a specialist officer like the Controller. No doubt the degree of such attention will vary with the length of time he has held his office and his consequent experience, and the qualifications and known ability of the officer. If the English courts went to the extent of accepting his view as the exercise of a judicial discretion by which the court should be bound, we could not follow them in this country, as that would, in my opinion, be contrary to a constitutional principle which binds us, and which we must be jealous to maintain. In my opinion, therefore, while we read the views of the Controller with respect and in the present case with admiration of the clarity and ability of his statement of them, we are quite free to form our own opinion untrammelled by them."

Following the enactment of s. 57(2), on an appeal from a decision of the Controller in a trade mark case (In Re Application of Hamilton Cosco Inc. [1966] I.R. 266), Budd J. stated that the views of the former Supreme Court did not appear to have been affected by the legislature in the enactment of s. 57 and he went on to say at p. 268:

"It seems to me, therefore, that I have to exercise my own discretion in deciding this matter and, while paying every attention to what the Controller has said in view of his wide experience in these matters, that I have to form my own view untrammelled by his opinion."

As a general proposition, and leaving aside the effect of s. 57(2), it seems to me that it is not possible to reconcile the approach adopted historically on appeals from decisions of the Controller in those trade mark matters with the modern jurisprudence on the approach which the courts should adopt to reviewing the decisions of expert administrative tribunals.

Counsel for the plaintiff laid particular emphasis on the fact that the cases in which the reasonableness test has been held to apply were cases in which the statutory scheme governing the appeal did not provide for a "re-hearing". In the case of an appeal from a decision of the Controller under the Act of 1963, the combination of the provisions of the Act of 1963 and the Rules stipulates an appeal by way of re-hearing. Given that circumstance, it was submitted that this Court should treat this appeal in the same fashion as an appeal from a decision of this Court to the Supreme Court is dealt with pursuant to the provisions of Order 58 of the Rules. In doing so, it was submitted, this Court should apply the principles summarised in the judgment of McCarthy J. in Hay v. O'Grady [1992] 1 I.R. 213 in outlining the role of the Supreme Court on an appeal from a judge sitting alone.

In my view, the existence or non existence of a rule similar to Order 94, rule 48 of the Rules cannot, of itself, be determinative of the scope of a statutory appeal or the standard review to be applied on the appeal. It seems to me that what the modern jurisprudence of the Supreme Court enjoins this Court to do is, first, to look at the legislative code and, secondly, to have regard to the policy adumbrated by Hamilton C.J. in Henry Denny & Sons (Ireland) Limited v. Minister for Social Welfare. The Act of 1963 confers the function of determining equitable remuneration, in the event of a dispute, on an expert tribunal, the Controller, and empowers him to refer a case which is likely to be protracted to an arbitrator. The powers conferred on this Court by Section 41 of the Act of 1963 (to confirm, annul or vary an award) are, in substance, the same as the powers conferred by Section 9 of the Act of 1991 (to confirm, amend or revoke a licence). While noting the observations of Macken J. at first instance in Orange Limited v. The Director of Telecoms (No. 1) [2000] 4 IR 136 on the difficulties of construction posed by s. 111 (2B)(i) of the Act of 1983, as amended, when one takes into account the stage of the licence awarding process in that legislative code when the right of appeal comes into play, it seems to me that there is very little difference in substance between the powers conferred by that provision and the powers conferred by Section 41 of the Act of 1963.

Accordingly, I consider that the test to be applied on this appeal in determining whether the award should be confirmed, annulled or varied is whether the plaintiff has established as a matter of probability that, taking the adjudicative process as a whole, the decision reached was vitiated by a serious and significant error or a series of such errors. In applying the test regard must be had to the degree of expertise and specialist knowledge which the adjudicator has. While I have expressed the test in the terminology used by Keane C.J. in the passage from his judgment in Orange Limited v. Director of Telecoms (No. 2) which I have quoted earlier, it seems to me that there is no essential difference between the test as so expressed and the test as posited by Kearns J. in M & J Gleeson v. Competition Authority.

In reaching the conclusions I have reached on the nature of the appeal and the appropriate standard of review to be applied in this case, I have been concerned with principle. It is important that I emphasise I have given no consideration to, and have not formed any view on, whether the same degree of deference is to be shown to an arbitrator on an appeal under Section 41 as should be shown to the Controller on an appeal under Section 40. The appropriate degree of deference to be shown to the Arbitrator on this appeal remains to be argued, as does the question of whether additional evidence should be admitted.