It is clear from this quotation that the allegation of partnership rests on inferences to be drawn from conduct rather than express agreement. Financial matters were never discussed and Mr Coulthard did not provide any capital, nor was he involved in securing the necessary dubbing licences from the body representing the record companies which had the copyrights in the sound recordings intended to be beat mixed. Moreover, there are considerable difficulties with the allegation of partnership when regard is had to other evidence of Mr Coulthard; in particular, when, as we shall see, he parted company with the Princes some years later, he never once claimed an interest in the subscription business by way of partnership or otherwise. Nonetheless. the allegation of partnership is made (and is not incredible) and on an application like this one I must proceed on the footing that it will be proved.

The subscription service was launched officially in February 1983 and Mr Coulthard was the main mixer providing the product that went out to the disc jockeys on the subscription service, initially no remuneration was agreed as far as Mr Coulthard's contribution was concerned. Shortly after the September 1982 discussion about the subscription business, Mr Prince and Mr Coulthard undertook a project together for K-Tel Records called "Disco Dancer", which was a mix prepared for commercial release, and Mr Coulthard was paid £500 by Mr Prince for his contribution in this regard. However, this had nothing to do with the subscription business, which of course involved exploitation of the mixes by release only to the disc jockeys on a subscription list and not exploitation by way of general commercial release. There is a dispute as to whether the sharing of the proceeds of the 'Disco Dancer" mix was a one-off project (as Mr Prince says it was) or came under the umbrella of the 1982 Management Agreement (as asserted by Mr Coulthard), but nothing turns on that dispute in this application.

 

The 10% Agreement
The first discussions about drawing moneys from the subscription business happened in May 1983. Mr Prince asked Mr Coulthard what he wanted out of the business. He said that he was planning to incorporate the business and they, the Princes, had been advised not to make Mr Coulthard a director because they wanted it to be kept as a family business. However, he went on, they would pay Mr Coulthard 10% of the gross revenue derived from the business on a monthly basis. Mr Coulthard's evidence is that this was justified by Mr Prince saying that he would expect the business to make 33% profit on turnover and that, since Mr Coulthard was entitled to one-third of such profits, 10% of the gross revenue was a rough approximation of what he otherwise could expect to receive. Mr Prince also offered to pay Mr Coulthard a one-off sum of £500 in respect of the past. Mr Coulthard was asked to think about it. At a reconvened meeting Mr Coulthard says that he expressed concern that he was helping to build up the goodwill of the business and he wanted 10% of the proceeds of sale of the business if it was ever sold. Mr Prince said that they had no plans to sell the business but that if they ever did he would, of course, be entitled to 10% of the proceeds of sale. Mr Coulthard therefore agreed to the proposal and was there and then given a cheque for the £500. He says that he was not advised to take any legal advice concerning this agreement, nor did he do so.

Mr Prince rejects this version of events. In short Mr Prince says that the agreement was to pay 10% of net subscription income only, i.e. 10% not of the revenue (which would for example, include revenue from advertising in the magazine or newsletter that was to be part of the business) but only of subscription fees, and then only of net income in that regard, i.e. after deduction of expenditure such as dubbing licence fees.

Gradually additional disc jockeys provided mixes for the subscription business although according to Mr Coulthard, he provided all but about four of the mixes that went out on the service during 1983.

In September 1983 Disco Mix Club Limited (the first Defendant) was formed to take over the business, its shares being held, I assume, by Mr and Mrs Prince. I shall refer to it as "DMC".

 

The variation of the 10% Agreement
In January 1984, Mr Coulthard alleges. Mr and Mr Prince and DMC purported to vary the 10% agreement by splitting the amount of any additional mixer's fee on a 50:50 basis between Mr Coulthard and DMC. By the latter half of 1984, Mr Coulthard says that the whole amount of such mixer's fee was deducted from his 10%, and by the end of 1984 expenses such as the royalty payments to Phonographic Performance Ltd ("PPL") and Mechanical Copyright Protection Society Ltd ("MCPS") and the cost of the magazine (which was called Mixmag) were deducted from his 10%. Finally, on 18th December 1984, Mr Coulthard asserts that Mr Prince, on behalf of DMC, replaced his entitlement of 10% with remuneration for every mix Mr Coulthard provided based upon the length (in playing time) of the mix. In other words, instead of being paid 10% of gross revenue (and later, revenue net of various expenses), he was now going to be paid for each mix produced by him and the fee would be related to the length of each mix in terms of its playing time. This represented, Mr Coulthard says, a gross reduction in pay. He remembers Mrs Prince telling him that DMC could not afford to go on paying him on the previous basis, and the fact that he was being paid more for his mixes was causing resentment in the other producers. Neither of these statements, he says, was true. Mr and Mrs Prince he says were paying themselves large sums from DMC, and the other producers recognised that Mr Coulthard had been involved in the formation of the business and had not displayed any resentment to him. Mr Coulthard says that he did not assent to any of the above-mentioned variations of the 10% agreement and that they were either void, because they were unilateral and no consideration was provided to support them, or voidable, as having been induced by undue influence, abuse of confidence, duress or breach of fiduciary duty.

Nonetheless it is plain from the evidence that Mr .Coulthard continued to provide mixes for the subscription service, being paid "by the minute", i.e. by reference to the playing time of the mixes delivered by him and, it seems, he accepted such payment without protest. However payment by the minute soon proved unworkable. From DMC's point of view the producers' creativity (the system had been introduced for all producers) was suffering due to the fact that there was an incentive for them to produce a long mix rather than the best creative mix. In the event, the payment "by the minute" system was abandoned and a fixed fee of £400 per mix was introduced.

Mr Prince's version of events is different. As indicated above his evidence is that the 10% agreement was 10% of net subscription income i.e. after deduction of expenses including PPL and MCPS royalties, the cover price value of the magazine and other costs. However, by the end of 1984 Mr Coulthard was concentrating more and more on his law studies. He had begun his law degree at UCL in October 1981 at the age of 18. He graduated in July 1984. Mr Prince's evidence is that in early 1984 Mr Coulthard had indicated that when he completed his degree he would take a year off from further studies to concentrate on his work for DMC but, subsequently he (Mr Prince) discovered from third parties that Mr Coulthard had taken up a post-graduate BCL course at Oxford University. It was because of this, says Mr Prince, that they agreed to vary the financial arrangements as described above and they did so to allow Mr Coulthard to create mixes as and when he found time to do so, and this was at Mr Coulthard's instigation. Extremely extensive evidence has been put in on both sides and, of necessity, I record only a small fraction of it although enough to enable the broad dispute between the two sides to be seen and the allegations sought to be struck out to be set in their evidential context.

Mr Coulthard denies that he made any commitment to take a year off after his degree. He did go up to Oxford and it was unfortunate and unintended that Mr and Mrs Prince heard about this before he was able to tell them. They were angry but, according to Mr Coulthard, they were looking for reasons to breach the 10% agreement.

Mr Coulthard says that he does not believe that he accepted any of these new arragements but, if it is found by his conduct that he did so, he was simply in no position to question the decisions that were made by the Princes. By this time DMC had sufficient alternative producers to do without him. It was made clear that it was a "take it or leave it" situation.

During his post graduate degree course at Oxford, which lasted until mid 1986, he continued to produce mixes for the subscription service. He also had some success in relation to the quite separate matter of commercial releases.

 

The resignation of Mr Coulthard
On 8th May 1986 Mr Coulthard wrote an important letter to Mr and Mrs Prince. His relationship with them had deteriorated and in the letter he said that because of an increase in the value of his house which he was proposing to sell he would, and I quote:

"not have to do mixes solely because I need the money (which, I am sure you will agree, is not a particularly good reason for doing them). I will also be able to afford to pay my tax bills on the earnings received as a result of working for you."

He went on to say that he had become disillusioned with the music industry and was no longer prepared to commit himself to the Princes full time either working for DMC or doing independent work. He then indicated that later in the year he was to start the Bar Finals Course and intended in mid 1987 to go to America to teach. It would be best he said, if they severed their ties there and then. He made it clear that he was not

"leaving you to work for somebody else with all the DJs now at your disposal. I feel sure that DMC will go from strength to strength even without me. I hope with all these DJs on your books you will start to make the sort of money you anticipated when we started up at DMC ... I wish you well with your future endeavours I am only sorry that I no longer feel that I can be part of your plans ... I would like to think that I helped you build up DMC into an international name (particularly at the start) and earned you quite a lot of money from my productions also ... A world DJ Club is on the horizon! I shall watch your progress with interest."

The letter was much more extensive than the few quotations I have made from it would suggest. I have quoted from it because there is no better way to put the allegations in the Statement of Claim into perspective.

It will be noticed that an allegation that Mr Coulthard was entitled to a one third partnership share or 10% of the capital value of the business sits very uneasily with this letter. That is a factor to bear in mind when considering such an unusual strike application as this one. The Statement of Claim (as it now would be if all the many amendments suggested during the hearing and in writing afterwards were permitted) runs to 68 pages and claims declarations, injunctions, inquiries and consequential relief in respect of the alleged partnership, and the 10% agreement, and in respect of breach of fiduciary duties, breach of contract, copyright infringements, performers' rights infringements, breach of confidence, constructive trust and other matters. Mr Speck tells me, and I have no reason to doubt, that the trial of this action would be enormous and cover almost every aspect of the business lives of Mr and Mrs Prince over a 17 year period. Discovery would be huge. Many of the complaints are stale indeed and are statute barred (if, of course, the defence of limitation is pleaded, as I am told it will be). As I have come to the conclusion that some of the claims should not be struck out, the tempting course would be to let them all go to trial. But I am satisfied that that would not be just to the defendants as it would put themthrough an oppressive trial on at least some claims that are bound to fail on limitation grounds. In the circumstances I have felt it necessary to produce a rather fullerstatement of the facts than would otherwise have been necessary. I can now take the rest of the narrative rather shortly.

The resignation of Mr Coulthard was published in the music industry press, Mr Coulthard having written to the press in this regard. He then says in his affidavit that Mr and Mrs Prince tried to persuade him to change his mind and invited him to dinner. In the event he withdrew his resignation and in July 1986 he attended a music seminar in New York as a DMC delegate. During 1987 things continued as before. Mr Coulthard was occupied with his Bar Finals Course but tried to do mixes when he had time available. He was paid £400 a mix. His contribution became more regular over the summer of that year. By October there was plainly further tension between him and the Princes. It appears that they wished him to work full time for DMC which he did not want to do and the question of severance of their business relationship was raised again.

 

The 1988 Management Agreement
As to the management of his mixes by way of commercial release (as opposed to release on the subscription service) Mr Coulthard says that he had ceased to be managed by Mr Prince by the end of 1986. In the meantime DMC and Mr Prince started to manage (for commercial release of mixes) more producers and had agreedwith them the much more reasonable commission of 25%. In the result, he says, DMC and/or Mr Prince offered to mange him in respect of commercially released mega-mixes and re-mixes in return for a commission of 25%. Apart from the amount of commission the terms of this agreement were no different from the 1982 Management Agreement. Between March 1988 and August 1989 he produced a number of mixes pursuant to this management agreement. In August 1989 Mrs Prince attempted to increase the commission taken by DMC or Mr Prince under the 1988 Management Agreement from 25% to 40%. This precipitated, or at least preceded, a trade union style meeting of a number of the producers working for DMC at which discontent with DMC was expressed. The night before that meeting Mr Coulthard surreptitiously gained access to DMC's offices to check whether the Princes were honestly accounting to him. He found that in respect of an album which he had produced called Hit Mix 88 the record company (Stylus Records) had been invoiced for £20,000 whereas he had only received £1,500. There was one other producer involved with that mix and that was Paul Dakeyne and Mr Coulthard calculated that if the £20,000 had been split between him and Paul he should have received 75% of £10,000 rather than the £1,500 he did receive. He says he did not feel able to raise this with Mr and Mrs Prince.

Mr Prince learnt about the trade union style meeting between the producers, made a dramatic surprise entrance at the meeting and the next day Mrs Prince asked Mr Coulthard for the keys and he was escorted ignominiously from the building. Mr Coulthard threatened to get a lawyer to "get back everything" that was his. There was thus a complete break in the relationship. Communications thereafter largely took place through John Cecchini who worked from DMC. Mr Coulthard was due some money towards the end of 1989 and this was duly paid. He went to a competitor of DMC called The Music Factory and produced mixes for that competitor. He was also owed some royalties in respect of the commercial release of a mix called The Village People. He instructed lawyers working for Entertainment Law Associates ("ELA") to recover them,which they did, in January 1991.

 

The restoration of the relationship
In September of 1992, through the intervention of Ceri Berry, who worked for DMC, Mr Coulthard began to work for DMC again. Mr Coulthard plainly wished to do mixes for DMC again, and after a number of requests, DMC finally agreed to have Mr Coulthard back. He was paid the same fee i.e. £400 per mix as he had been paid back in 1986.

 

The 1992 Agency Agreement
In October 1992 DMC received an enquiry from Sony Music about the release of a mega-mix called "Pasadenas Tribute" which Mr Coulthard had provided for the September 1992 issue of the subscription service. It was agreed that DMC could act as his agent in relation to this commercial release only and at a commission of 25%. This was not a general management agreement, DMC having no obligation to attempt to procure work for Mr Coulthard and Mr Coulthard being entitled to procure work direct from the record companies. There was one further mix in respect of which agreement was reached on the same terms as the 1992 Agency Agreement. This was a Cliff Richard mega-mix exploited through EMI in 1994.

 

Mixmag magazine
Before looking at the Statement of Claim I should record the events concerning one further feature of the subscription service business and that is its magazine. As I have indicated above the magazine, which was an integral part of the business, was called Mixmag. In 1989 a new venture was launched, namely, a magazine for sale to the public. It adopted the name "Mixmag" and the magazine for the subscriber service changed its name to "Rotation" and then later to "DMC Magazine". In October 1990 the public magazine Mixmag was transferred for £1 to a newly formed company called DMC Publishing Limited ("Publishing"). The magazine central to the subscription service stayed with DMC. On the 2nd January 1991 a company called Disco Mix Club Holdings ("Holdings") was incorporated and some of the shares in DMC Publishing Ltd were transferred to it. On 29th November 1996 Mr Prince acquired the shares in Holdings and Holdings became the sole shareholder of Publishing. On 8th January 1997 Mr Prince sold his shares in Holdings for several million pounds to EMAP, the well known publisher. Mr Coulthard claims 10% of these proceeds of sale.

 

The Statement of Claim
I have said enough to enable me now to approach the Statement of Claim. Logistically the matter is not entirely straightforward because there are many versions. Before me at the same time as the application to strike was an application by Mr Bate, Counsel for Mr Coulthard, to amend. During the heat of argument various further amendments were from time to time adumbrated. After the hearing, which on a two day estimate was completed in approximately three days of court time, further extensive amendments were put forward by Mr Bate including a considerable extension of a breach of confidence claim, supported by further affidavit evidence which was not foreshadowed by anything said at the hearing. The defendants objected in this regard and I set a hearing date for the 15th January 1999 at which the admission of this further evidence and its associated amended pleading could be considered. In the week before that Mr Coulthard, by his solicitors, withdrew the application for the amendment in relation to the breach of confidence claim. The other amendments were accompanied by further submissions to which there was a written response from Mr Speck. Further submissions were put before me by Mr Bate. Then Mr Speck put an important unreported decision of the Court of Appeal before me and there were further submissions on that case accompanied by a request for yet further amendments to the Statement of Claim. In the circumstances there is not in existence one final comprehensive document in the form the Statement of Claim would take if all amendments save those concerning breach of confidence were permitted. Mr Speck very sensibly addressed his arguments at the hearing to the Statement of Claim as it grew from time to time. I hope to make it quite clear in principle what claims survive the strike out and what claims do not. It would unduly lengthen this judgment to specify line by line which words survive and which do not. I hope to make it clear enough to enable Counsel to identify the amendments in respect of which I shall give leave and the parts of the Statement of Claim that I shall strike out. If there are any difficulties about this I shall iron them out, with the assistance of Counsel, at the time this judgment is handed down.

Mr Coulthard advances the following claims, the references in brackets being references to paragraphs of the Statement of Claim. First of all, Mr Coulthard claims under the 10% agreement referred to above 10% of the proceeds of sale of Holdings and 10% of the gross income of the subscription business (presumably, although he does not say so, to date and continuing) (paragraph 23(2) and (3)).

Alternatively, if the 10% agreement is on the very different terms alleged by the defendants, he claims to set aside the 10% agreement on the basis that the same was procured by an abuse of confidence or the presumed undue influence of Mr Prince and was manifestly disadvantageous to him (Mr Coulthard) (paragraphs 25 B to D). If set aside, he claims, a partnership in the subscription business and claims a dissolution and all the usual accounts and inquiries that that entails.

In order to be able to claim 10% of the gross income of the subscription business he claims that the various and successive variations of the agreement whereby he was cut down to a sum per minute of playing time and then, ultimately, to £400 per mix were void or voidable and have been avoided, or alternatively that they ought to be set aside (paragraphs 29, 30 and 33A).

In the further alternative it is pleaded that the variation from a percentage to a time based remuneration amounted to a repudiatory breach which it is alleged Mr Coulthard had no choice but to accept (paragraph 31). Such acceptance effected a termination of the 10% agreement and thus withdrawal of any implied licence permitting the Princes or DMC to use Mr Coulthard's confidential information, copyrights and performers' rights in the mixes produced by him (paragraph 31).

As to confidentail information, Mr Coultahrd claims that the idea of the subscription business was confidential information shared with Mr Prince in circumstances imposing an obligation of confidence and on the basis that they would exploit the idea together with a view to profit (paragraph 17). The claim to confidence in the concept of the mega-mix has been deleted in the draft amendments (paragraph 44.2). The claim to confidence in relation to the name "mega-mix" was abandoned at the hearing (paragraph 44.1). Thus all that is left as the subject-matter of the alleged confidential information in respect of which damages for breach of confidence is claimed is the idea of the subscription service and the techniques he used in creating mega-mixes and re-mixes (paragraph 44.4). Particulars of those techniques are set out in paragraphs 48.1 to 48.12 which are to be read without the amendments in the most recent draft. I shall have to summarize the content of this alleged confidential information later on in this judgment.

Then Mr Coulthard claims in respect of a large number of alleged breaches of contract and fiduciary duties in relation to the 1982 Management Agreement (paragraphs 14 and 15), in relation to the 1988 Management Agreement (paragraphs 33 and 34A) and the 1992 Agency Agreement (paragraphs 34 and 35). These claims are set out in paragraph 36 of the Statement of Claim which extends over eight pages and, without unduly burdening this judgment, can only be summarised here.

Paragraph 36.1 pleads a breach of fiduciary duty by Mr Prince in allowing his interest in DMC to conflict with his duty to Mr Coulthard as his manager by failing to advise Mr Coulthard to take independent legal advice in relation to the setting up of DMC and the partnership and the variations of the 10% agreement. Paragraph 36.2 alleges the exercise of undue pressure by Mr and Mrs Prince and DMC on Mr Coulthard to accept those variations.

Paragraph 36.3 pleads breach of fiduciary duty by Mr and Mrs Prince using confidential information provided by Mr Coulthard (on the basis that it would be used for their joint benefits) for the benefit of DMC and their own personal benefit. Paragraph 36.4 pleads a failure to account in respect of the exploitation of two mixes released in 1983 and 1985 respectively namely, Wham's "Club Fantastic Megamix" and Amii Stewart's "Knock on Wood". Paragraph 36.5 pleads a breach of fiduciary duty in refusing to allow Mr Coulthard access to the accounts of Mr and Mrs Prince and DMC to verify the moneys received from record companies.

Paragraph 36.6 pleads a deliberate and dishonest breach of fiduciary duty and wilful default of obligation by DMC taking a commission in excess of 25% agreed under the 1988 Management Agreement in relation to Stylus Records and the exploitation of "Hit Mix 88". The allegation is that DMC received £20,000 and should have accounted for £7,500 being 75% of one half of the gross proceeds, the other half being due to another producer. This was discovered by Mr Coulthard in the course of his unauthorised entry into the offices of DMC in 1989 described above. Mr Prince's explanation in his affidavit is, in short, that this exploitation was part of an exploitation of ten compilation albums of which Mr Coulthard was only interested in the eighth. DMC entered into a joint venture with Stylus Records and the £20,000 was an advance against costs involved.

Paragraph 36.7A pleads, in response, by one of the amendments for which leave has not yet been given, that if that is true then such joint venture constituted a misuse of Mr Coulthard's property and he seeks an account of all profits as resulted from the exploitation of Hit Mix 88.

Paragraph 36.7 pleads that in breach of fiduciary duty DMC and Mr Prince allowed Mr Coulthard's "Sharon Redd Megamix" to be commercially released in 1989 in Canada without receiving any further revenue in respect thereof (it having first been released in 1984); alternatively, if there was further revenue it is said that Mr Prince and DMC have failed to account in that respect.

Paragraph 36.8 pleads that DMS signed a publishing agreement with Italoheat Music Productions GMBH on 4th January 1989 when DMC was not the author of the song "X-Static" but knew that Mr Coulthard owned the copyright and had given no consent to its assignment. Mr Coulthard claims all moneys that have accrued to DMC in this respect on the basis that such moneys represented secret profit. Mr Coulthard was paid £2250 in respect of this recording but there was no mention at the time of any publishing income. Mr Coulthard discovered the publishing arrangement sometime in early 1991. By June 1991 (more than six years before issue and service of these proceedings) Italoheat was accounting directly to Mr Coulthard in respect of the publishing of X-Static, at Mr Coulthard's insistence.

Paragraph 36.9A pleads deliberate and dishonest breach of fiduciary duty and breach of contract by DMC and Mr Prince under-accounting by £750 under the 1988 Management Agreement in relation to the commercial release of X-Static and another record "Let's Do It". Mr Coulthard complains as well that the commercial licensing of such recordings was wrongfully entered into by DMC as principal.

Paragraph 36.9 complains that in breach of fiduciary duty Mr Prince and DMC refused willingly to pay the royalties due to Mr Coulthard in relation to The Village People Mega-mix and it was necessary for Mr Coulthard to go to ELA to recover such royalties for him. The paragraph claims an account in respect of DMC's failure to collect further royalties from 1991 onwards.

Paragraph 36.10A claims a deliberate and dishonest breach of fiduciary duty by under-accounting in respect of Nice and Slow by George McRae. DMC having received £1500 at least from Italoheat but paying only £750 to Mr Coulthard instead of £1125, a fact Mr Coulthard discovered in February 1991.

Paragraph 36.10 pleads a breach of fiduciary duty in allowing a "Boney M Mega-mix" to be released commercially throughout Europe without Mr Coulthard being entitled to any royalties. Mr Coulthard received a fee for the release in the UK but was told that the mix would be used only in the UK and for promotional purposes. It was however released throughout Europe and reached No. 1 in the French national charts. The allegation is that DMC and Mr Prince did not pursue the matter with BMG Records Ltd through whom the mix had been released because they did not wish to jeopardise their other interests with BMG.

Pararagraph 36.11 pleads a deliberate and dishonest breach of fiduciary duty and contract. DMC, he alleges, with the knowledge of Mrs Prince, took a commission in excess of the agreed 25% in relation to the exploitation of the "Pasadenas Tribute". This is the only allegation of a breach occurring within the relevant 6 year limitation period and I see no basis whatever for striking it out at this stage of the proceedings.

Paragraph 36.12 claims a general account on the footing of wilful default of all sums due under the 1982 and 1988 Management Agreements and the 1992 Agency Agreement in relation to all the mixes produced by Mr Coulthard (in excess of 150). Paragraph 36.13 claims that if Mr Prince or DMC has in fact accounted. Mr Coulthard claims to re-open such accounts by reason of fraud (unparticularised at this point in the Statement of Claim and thus presumably based upon the allegations of dishonesty mentioned elsewhere in this summary). Paragraph 36.14 claims an account based on the allegation that no proper accounts were made or rendered.

Finally, paragraph 36.15 alleges that in breach of fiduciary duty DMC and Mr Prince have allowed their respective duties to act in the best interests of Mr Coulthard to conflict with the commercial interests of DMC by allowing their obligations to secure contracts for Mr Coulthard to conflict with their dependency on the record companies in relation to the licensing of the subscription service.

Such are the claims in relation to the management and agency agreements. It will be apparent that the overwhelming bulk of them are stale indeed and it is the defence of limitation which forms the essential basis for the application to strike out this part of the action. There are, however, other claims. Paragraph 42 alleges that Mrs Prince has received trust property pursuant to the breaches of fiduciary duty outlined in paragraph 36, knowing or having reason to believe that the same was received as a result of breaches of fiduciary duty. (It has not been suggested precisely what trust property Mrs Prince is alleged here to have received.) It is further alleged that Mrs Prince knowingly assisted in or procured some or all of such breaches and is thus liable as a constructive trustee. No particulars are given of such knowing assistance. Similar unsupported allegations were made against the fourth and fifth defendants, the children of Mr and Mrs Prince. During the course of the hearing Mr Coulthard withdrew the action against the fourth and fifth defendants, and since the hearing a notice of discontinuance against them has been served. The constructive trust claim based upon knowing receipt and assistance remains against Mrs Prince.

Then there is a claim for infringement of copyright and performers' rights in relation to the mixes the subject of the Statement of Claim save for one, namely, "Frankie Goes to Hollywood 'Relax"' in which copyright is not asserted. The claim in respect of infringement relies, on distribution by DMC and Mr and Mrs Prince of the mixes on the subscription service. Reliance is placed on a letter written on behalf of Mr and Mrs Prince and DMC by their solicitors on 26th February 1997 in which Mr Coulthard's claims were rejected. It is alleged in paragraph 38 of the Statement of Claim, that this amounted to a repudiatory breach which Mr Coulthard had no choice but to accept. It is further alleged that this termination (of what exactly is not specified) resulted in the withdrawal of any implied licence there may have been permitting the exploitation of Mr Coulthard' s confidential information, copyrights and performers' rights. The claim in respect of infringement of copyright and performers' rights alleges infringement in the period before the termination as well as after it. As to the period before termination the allegation is that it was a condition precedent of any implied licence that DMC and Mr Prince discharged the fundamental terms of their contract with Mr Coulthard and, by seeking to exclude him from the subscription business venture, they failed to do so. Thus there was no licence. Alternatively, Mr Coulthard claims to be entitled to relief by way of setting aside the licence.

Finally, it is alleged that DMC has distributed CD compilation recordings of back catalogue "Greatest Hits" incorporating some or all of one hundred and forty six mixes produced by Mr Coulthard and in which he claims copyright and performers' rights. It is alleged that such releases go beyond any licence implied to give effect to the commercial arrangements in connection with the subscription service. To save coming back to this it seems to me that this is plainly arguable and thus, subject to establishing that the subsistence and ownership of the copyright and performers' rights alleged is also arguable, this latter claim must go to trial. Mr Speck accepted at the hearing, for the purposes of this application, that subsistence of these rights was arguable. In this connection, in a post script to Mr Coulthard's letter of the 8th May 1986 he said:

"At the Blues and Soul Awards, you told me, Christine, that you were intending to put some of my old mixes on vinyl in a "Greatest Hits" package. I should remind you that since I never signed a contract transferring copyright in the mixes to you, you still need to negotiate with me for permission to re-use these mixes in that capacity."

So it seems clear that Mr Coulthard thought at the time that if he parted company with DMC and the Princes he would retain a continuing interest in, and his consent would be necessary for, the exploitation of his mixes on a greatest hits back catalogue package; but the post script also points up the fact that he did not think that he had a continuing interest in the subscription business, and that he did not think he was withdrawing DMC's implied licence to use the mixes for the purposes for which they were produced in the first place, namely, for release on the subscription service itself.

Declarations as to subsistence of copyright and performers' rights are claimed as are injunctions and damages including damages for secondary infringement by possessing in the course of business and distribution what, it is alleged, the defendants knew were infringing copies. In support of such knowledge it is pleaded that Mr and Mrs Prince were shareholders and directors of DMC and that they were reminded in the post script to the letter of the 8th May 1986 that the implied licence to use his mixes did not extend to their release on a greatest hits compilation.

 

Breach of Confidence
Before I address the application to strike out I should briefly describe the subject matter of the breach of confidence claim so far as it consists of the techniques used by Mr Coulthard in creating his mega-mixes and re-mixes. They are listed in paragraphs 48.1 to 10 of the Statement of Claim and it would be convenient to quote them here:

"48.1 The Plaintiff made a list of the sound recordings to be compiled and identified the speed of each recording by counting the number of beats which could be heard in the course of one minute ("beats per minute")

48.2 In many cases, the plaintiff also identified the musical key of each recording by using a synthesiser.

48.3 The plaintiff then selected the recordings (from those available) which were most suitable for dancing and arranged them in order of beats per minute starting with the slowest and ending with the fastest.

48.4 The plaintiff then tried out a number of beat-mixes to see whether they worked.

48.5 The recordings used could have been arranged in any order, but in choosing the final order of the compilation, the plaintiff paid particular attention to the musical key of each recording used, the extent to which each recording blended smoothly from the preceding recording and into the following recording (as applicable) and the overall impact that the compilation would have on the dancefloor.

48.6 The plaintiff then proceeded to record the compilation using some or all of the following equipment: variable speed turntables and/or compact disc player, digital sampler, synthesiser(s), 2-track analogue tape recorder, 16-track or 24 track analogue tape recorder, digital audio tap recorder ("DAT"), sequencing computer program, time-code generator and digital effects processors.

48.7 The plaintiff utilised a number of remixing techniques in order to make the compilation as smooth and as exciting as possible.

48.8 The plaintiff edited down the included recordings from their usual lengths of at least 3-4 minutes so that a much shorter portion of each recording was used, usually in the region of 1 minute.

48.9 Whilst it is not possible to be precise in relation to each compilation relied on, the plaintiff would spend at least 6 hours and up to 80 hours working on each compilation before it was complete.

48.10 The compilation was recorded in permanent form in the form of a sound recording."


The time has now come to look at the attack on the various claims.

 

The 10% agreement - Capital
Mr Coulthard's primary claim under this head and the claim which I suspect has fuelled this action is a claim to 10% of the proceeds of the sale of Holdings to EMAP in 1997. There is no limitation issue involved here. The attack of Mr. Speck resides in the improbability of an agreement to pay Mr Coulthard 10% of the proceeds of sale without limit of time, and on the contention of Mr Prince that the magazine which has been sold has nothing to do with the subscription business. As to improbability, Mr Speck submits that the agreement alleged (which is, of course, denied by Mr Prince) cannot sensibly be said to extend beyond Mr Coulthard's connection with the business which ended in May 1986, and again in September 1989. He has also drawn my attention to the letter of the 8th May 1986 where, at the point of Mr Coulthard's resignation and departure from the business, there was no sign of recognition by him of a continuing interest of his and participation by him in the business. That is in stark contrast to his post script which warns of a continuing interest in the exploitation of his copyrights in a manner other than by release on the subscription service.

As to the magazine itself Mr Speck points out that it was transferred to Publishing for £1 in 1990. Mr Coulthard's claim is therefore to 10% of £1 and is in any event statute barred. Quite apart from that, he submits, the business in the proceeds of sale of which Mr Coulthard is interested under the 10% agreement is still run by DMC. It has not been sold. And even if the publicly available magazine was properly regarded as an offshoot of the subscription business it was not the asset which was sold; it was not even the company (Publishing) into which the magazine was transferred which was sold but yet another company (Holdings) into which Publishing was transferred. So the event upon which the 10% would become payable has, he submits, not occurred.

Such is the attack made on this part of the case. I reject the attack. It would in my judgment be quite wrong on an application to strike out to attempt to evaluate the evidence, no matter how detailed, put before me. Mr Coulthard's case is not incredible and no matter how improbable, and as to that I do not speculate, the existence and terms of the alleged agreement to pay Mr Coulthard 10% of the sale proceeds of the business lie plainly within the province of the trial judge who will hear the oral evidence and cross-examination. That issue is a narrow one and should not itself occasion a lengthy trial. It cannot, however, be disposed of on an application such as this one.

Nor, in my judgment, can the claim be struck out on the other grounds put forward by Mr Speck. It is plainly arguable that Mixmag, the public magazine, was an offshoot, and thus part of, the subscription business and that the trigger mechanism for the payment of the 10% was satisfied when, and only when, that part of the business was alienated by the Princes after its chequered journey through the corporate structure created by them. The evidence as to the precise route of that journey is, ofcourse, in the hands of the defendants and not Mr Coulthard and the resolution of the arguments that will be advanced on the basis of the evidence ultimately led on these issues is clearly a matter for trial.

At the hearing and in the Statement of Claim as it then stood it was pleaded in the alternative that if the express agreement to pay 10% of the proceeds of sale of the business was not established in the evidence, there was an implied term to that effect. That allegation was obviously hopeless and I am glad to see that in the most recent draft amendment it has been abandoned.

 

The 10% Agreement Income
That deals with the claim to 10% of the capital value (i.e. of the proceeds of sale) of the business. I have now to deal with the claim to 10% of the gross income of the business which was, as alleged, part and parcel of the self same agreement. This part of the agreement was supplanted in the event by the successive variations which resulted ultimately in the payment of £400 per mix. If those variations were effective no claim lies in respect of income because there is no complaint that, at £400 per mix, Mr Coulthard has not been paid fully for all the work he did. However Mr Coulthard claims that the variations were either void or voidable and have been avoided or ought to be set aside on grounds of undue influence, abuse of confidence or duress. The issue of undue influence, actual or presumed is plainly an arguable matter for trial. Reliance is placed on the fiduciary relationship imported by the 1982 Management Agreement and the failure to invite Mr Coulthard to take independent advice and, of course, on the pre-eminence of Mr Prince in this world of music and the youth of Mr Coulthard at the time. I can of course see serious questions of laches and acquiescence looming on the horizon but such questions are in general matters for trial. The equitable remedy of rescission is not otherwise time barred and it is thus theoretically possible that the trial judge will set aside the variations. That would leave the original 10% agreement as to income intact, entitling Mr Coulthard to claim 10% of the gross income of the business but, because of limitation, only for six years before 3rd September 1997 when these proceedings were issued (and, I assume, served).

Although I have not acceded to the application to strike out the claim in respect of the capital element of that agreement I have come to the conclusion that it would not be right to allow the claim in respect of the income element to go forward. As will be seen from the facts recited, Mr Coulthard made a clean break from the Princes in September 1989. He was then 26½, a barrister with a first degree and a post graduate degree in law. In 1991 he was represented by lawyers at ELA in some form of legal action against one or more of the defendants in relation to the recovery of royalties; and it was he who, in 1992, asked to come back to work for DMC, and was content to do so at the remuneration of £400 per mix. To claim in respect of the period from September 1991 onwards 10% of the entire gross income of DMC in these circumstances borders on the absurd. Analytically, it seems to me, Mr Coulthard was affirming the variation to £400 per mix at the very least from the date in 1992 when he began to work again for DMC. He was plainly contracting on the basis of £400 per mix and relinquished any claim to any different and inconsistent remuneration for the future (and, I would add for the past, certainly recent past, as well). He was then an independent adult who must be taken by then at least to have been free of any undue influence of the Princes. If this is inconsistent with his evidence that he sued as late as 1997 because he only then felt able to act independently, to that extent I reject the evidence. It follows that I shall strike out the income claim.

 

The partnership claim
I turn to consider the partnership claim. It does not of course arise at all if Mr Coulthard establishes his allegations with regard to the terms of the 10% agreement for, in that event, the 10% agreement wholly replaced the alleged partnership. But in case Mr Coulthard fails to establish the 10% agreement on the terms he alleges and the Court finds it to have been agreed on the terms Mr & Mrs Prince allege (i.e. 10% of the net subscription income only with no interest in capital), Mr Coulthard claims in the alternative to set aside the 10% agreement so established on the grounds of undue influence and abuse of confidence. As with the variations I see considerable problems ahead in terms of laches and acquiescence in this claim for equitable relief and, as with the variations, I find Mr Coulthard's new contractual relationship freely entered into in 1992 inconsistent with any form of continuing partnership interest at that time.

Quite apart from the above analysis a claim for an account in respect of his exclusion from a partnership in 1983 would be time barred: see Knox v. Gye (1872) 5 App. Cas. 656. The claims in relation to an alleged partnership are, in my judgment, hopeless and they ought to be struck out together with all the associated pleading.

 

Breach of Confidence
This brings me to the claim for damages for breach of confidence. As Mr Speck submitted, the claim in respect of breach of confidence requires that the information sought to be protected is confidential: see Lord Goff in A. G. v Guardian Newspapers (No.2) [1990] A.C. 109 at 282. Information which is generally known or accessible cannot be regarded as confidential. It seems to me that most if not all of the information said to be confidential falls within this category. First there is the idea of the subscription service itself. This idea became public knowledge with the launch of the subscription service in 1983 even if it was not publicly known before as a result of the subscription clubs in the USA. And in so far as it was an idea exclusive to Mr Coulthard before the launch. It was communicated for the very purpose of being put into practice, which of course it was. No complaint can, in my judgment, be founded on that usage of the information. I reject any notion that there was a licence to utilize the idea and that it was, somehow, terminated when Mr Coulthard terminated the 10% agreement as pleaded in paragraph 31 of the Statement of Claim. The idea, if it was his exclusive idea, was imparted for the very purpose for which it was used and put into practice. If he considers that he has not received fair recompense for such disclosure the remedy would not lie in a claim for breach of confidence, but some sort of restitutionary claim in unjust enrichment or quantum meruit, both of which would by now have been time barred. In short this claim, if any, is for monetary compensation under the contractual or other arrangements made in connection with the passing of such information or, if those arrangements are set aside, under the general law with regard to unjust enrichment or quantum meruit, all of which is statute barred.

Similar considerations apply to the only other respect in which it is alleged that confidential information was imparted, namely, in relation to the techniques Mr Coulthard used in creating mega-mixes and re-mixes, details of which are set out in paragraphs 48.1 to 48.12 and quoted above. One has only to look at those sub-paragraphs to see that the so-called techniques set out there are pretty obvious once one is setting out to create a beat-mix (and it is to be appreciated that no confidence is asserted with regard to the idea of a beat-mix, or a mega-mix). The techniques listed are to make a list of the recordings to be compiled, to identify the beat and the key of each recording, and to mix them in an order which enabled them to be blended smoothly. The compilation was then recorded using just about all the available equipment to make a sound recording. I doubt whether any of this information was confidential but, to the extent that it was, it was imparted for the very purpose of being used in the subscription service and the same considerations that I have expressed above apply. Accordingly, I regard the claim in breach of confidence as hopeless and I shall strike it out.

 

Breach of Fiduciary Duty
This brings me to the various claims for breach of fiduciary duty contained in sub-paragraphs (4) to (15) of paragraph 36 of the Statement of Claim. As I have indicated above these claims are quite extensive, but they really all add up to the general claim that DMC or Mr Prince have under-accounted for moneys due to Mr Coulthard under the various alleged management and agency agreements. The claims are variously put. In 36.4 the claim is, simply, that the defendants failed to account in respect of the commercial exploitation of two mixes. In 36.6 the claim is that DMC took too much commission in respect of Hit Mix 88. In 36.7 the claim is that more money should have been earned in respect of the Sharon Redd Mega-mix. Save for the claims identified further below, all the other claims in respect of under-accounting are pleaded in one or other of these forms and the important point to notice is that in all such forms the claim amounts to a simple breach of contract. The relief asked for is an account and, by virtue of section 23 of the Limitation Act 1980, the action for such an account cannot be brought after the expiration of any time under the Act which is applicable to the claim which is the basis of the duty to account. The claim which is the basis of the duty to account in this case is a claim founded on simple contract. That claim is barred, by section 5 of the Act, after six years from the accrual of the cause of action. Apart from the under-accounting in respect of the Pasadenas Tribute in sub-paragraph 36.11, all the other claims in respect of under-accounting relate to events that happened prior to the relevant period of six years. On the face of it therefore all these other claims are time barred and, as it has been made clear by Mr Speck that the limitation defence will be pleaded if this action goes on, it is submitted by him that these claims are bound to fail and should be struck out now.

To that Mr Bate, counsel for Mr Coulthard, argues that in addition to these claims being claims in breach of contract they are also pleaded as breaches of fiduciary duty, and breaches of fiduciary duty are not subject to any time period under the 1980 Act. On the basis of the allegations in the Statement of Claim, Mr Prince was plainly in a fiduciary relationship to Mr Coulthard. It is alleged that such fiduciary relationship extended to DMC and Mrs Prince. Whether that is so will depend on the evidence, of course, but I must assume it to be so for purposes of this application.

Mr Bate recognises that so far as these claims are based upon breach of contract they are time barred. But he submits that no period of limitation is laid down in the 1980 Act in respect of a breach of fiduciary duty and that, therefore, as all of these claims are pleaded as breaches of fiduciary duty, no limitation period is applicable to them. He relies on Nelson v Rye [1996] 1 WLR 1378, in which a musician sued his manager for an account of fees and royalties extending back for a period longer than the period of six years before action. The issue was whether the account should be limited to those six years. There was no dispute between the parties that Mr Rye owed Mr Nelson a fiduciary duty: see [1996] 1 WLR at 1390 F-G. He was obliged, as Laddie J said, to account to Mr Nelson annually and he failed to do so. It was held that he was thus in breach of fiduciary duty for which no limitation period was laid down by the Act. It did not avail Mr Rye to argue that the fiduciary relationship arose out of a contract and, as the claim in breach of contract was time barred, so too was the claim in breach of fiduciary duty. The learned judge accordingly held that the claim for an account beyond the six years was not barred under the Act (although he went on to uphold the defence of laches).

There are three important features which, in my judgment, render Nelson v Rye an unsafe guide for the application of the defence of limitation to claims of this kind. The first concerns the meaning and scope of the expression "breach of fiduciary duty". The second is the application of the Act "by analogy" to claims which are indeed breaches of fiduciary duty. The third is the fundamental difference between what has become known as an institutional or, as I would put it, a true constructive trust and a constructive trust which is merely a remedial formula for equitable relief.

 

Breach of fiduciary duty
It was accepted in Nelson v Rye, so fas as I can see, that because Mr Rye was in a fiduciary position, all duties owed by him were fiduciary duties and any breach of them was a breach of fiduciary duty. This is quite wrong. Very few of the duties owed by a manager in the position of Mr Rye are fiduciary duties. They are, essentially, the duties of loyalty and fidelity. As Millett L.J. said in Bristol and West Building Society v. Mothew [1998] Ch.1 at 18A-C.

This leaves those duties which are special to fiduciaries and which attract those remedies which are peculiar to the equitable jurisdiction and are primarily restitutionary or restorative rather than compensatory. A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary.


Such is the true scope of fiduciary responsibility. All other duties, important and central though they may be, are not fiduciary duties. Accordingly, for example, the simple duty to account, central though it is, is not a fiduciary duty: it is a contractual duty; and breach of it gives rise to a claim which would be governed by section 5 of the Act.

Most, therefore, of the claims in the many sub-paragraphs of paragraph 36 are statute barred. Despite the express allegation of breach of fiduciary duty, the claims are, simply, claims in breach of contract and no more. The 1980 Act cannot be sidestepped by describing them as claims in breach of fiduciary duty (even if, which is another matter entirely, claims in breach of fiduciary duty are not controlled in any way by the 1980 Act).

In Nelson v Rye it appears to have been agreed between the parties that the claim to an account was based on a breach of fiduciary duty. Had the analysis above been applied the limitation defence would have succeeded without much more to say.

 

Application of the statute by analogy
In the present case the matter is not so simple. Although most of the claims in paragraph 36 are statute barred for the reasons I have given, some are pleaded as "deliberate and dishonest" breaches. So, for example, sub-paragraph 36.6 complains that DMC deliberately and dishonestly held back for its own benefit in respect of Hit Mix 88 more than the agreed 25% commission and paragraph 36.9A pleads a deliberate and dishonest under-accounting in respect of X-Static and another mix. Mr Speck accepts that these complaints represent true breaches of fiduciary duty. They plainly do involve allegations of breach of loyalty which the straightforward complaints of under-accounting do not. As Millett L.J. observed in Bristol and West Building Society v. Mothew (supra) at 18F:

"Breach of fiduciary obligation, therefore, connotes disloyalty or infidelity. Mere incompetence is not enough. A servant who loyally does his incompetent best for his master is not unfaithful and is not guilty of a breach of fiduciary duty."

The question then arises whether such true breaches of fiduciary are governed by the Act. In Nelson v Rye (supra) it was accepted by the judge, on the authority of Attorney-General v. Cocke [1988] Ch.44, that an action for breach of fiduciary duty was not subject to a period of limitation. This has been accepted by Mr Speck in the hearing before me (although I draw attention to the unique facts of that case). However, what was not argued in Nelson v Rye and has, at my prompting, been argued before me is whether the time limits under the 1980 Act would be applied by analogy by virtue of section 36 of the Act to the claims in breach of fiduciary duty pleaded in this case. That section provides that the statutory time limits (for example, the six years for breach of contract) shall not apply to equitable relief except in so far as they may be applied by the court by analogy "in like manner as the corresponding time limit under any enactment repealed by the Limitation Act 1939 was applied before 1st July 1940."

The best description of the circumstances in which the Court of Equity acted by analogy to the statute is, I think, contained in the speech of Lord Westbury in Knox v Gye (1872) 5 App.Cas. 656 at 674:

"The general principle was laid down as early as the case of Lockey v Lockey where it was held that where a Court of Equity assumes a concurrent jurisdiction with Courts of Law no account will be given after the legal limit of six years, if the statute be pleaded. If it could be doubted whether the executor of a deceased partner can, at Common Law, have an action of account against the surviving partner, the result will still be the same, because a Court of Equity, in affording such a remedy and giving such an account would act by analogy to the Statute of Limitations. For where the remedy in Equity is correspondent to the remedy at Law, and the latter is subject to a limit in point of time by the Statute of Limitations, a Court of Equity acts by analogy to the statute, and imposes on the remedy it affords the same limitation. This is the meaning of the common phrase, that a Court of Equity acts by analogy to the Statute of Limitations, the meaning being, that where the suit in Equity corresponds with an action at Law which is included in the words of the statute, a Court of Equity adopts the enactment of the statute as its own rule or procedure. But if any proceeding in Equity be included within the words of the statute, there a Court of Equity, like a Court of Law, acts in obedience to the statute.

Where a Court of Equity frames its remedy upon the basis of the Common Law, and supplements the Common Law by extending the remedy to parties who cannot have an action at Common Law, there the Court of Equity acts in analogy to the statute; that is, it adopts the statute as the rule of procedure regulating the remedy it affords."

Two things emerge from these passages. First, where the Court of Equity was simply exercising a concurrent jurisdiction giving the same relief as was available in a court of law the statute of limitation would be applied. But, secondly, even if the relief afforded by the Court of Equity was wider than that available at law the Court of Equity would apply the statute by analogy where there was "correspondence" between the remedies available at law or in equity.

Now, in my judgment, the true breaches of fiduciary duty i.e. the allegations of deliberate and dishonest under-accounting, are based on the same factual allegations as the common law claims of fraud. The breaches of fiduciary duty are thus no more than the equitable counterparts of the claims at common law. The Court of Equity, in granting relief for such breaches would be exercising a concurrent jurisdiction with that of the common law. I have little doubt but that to such a claim the statute would have been applied.

Mr Bate argues that the Court of Equity will apply the statute by analogy only where the equitable remedy is being sought in support of a legal right or the Court of Equity is being asked to decide a purely legal right, and he cites passages from Hicks v Sallit (1854) 3 DeGM & G 782 and Hovenden v Lord Annesley (1806) 2 Sch. & Lef. 607. I have no doubt that the principles of application by analogy to the statute (or, inobedience to the statute, as the Lord Chancellor preferred to describe it in its application to the facts of Hovenden), are quite apposite in the situations envisaged by Mr Bate. But, in my judgment, they have a much wider scope than that: one could scarcely imagine a more correspondent set of remedies as damages for fraudulent breach of contract and equitable compensation for breach of fiduciary duty in relation to the same factual situation, namely, the deliberate withholding of money due by a manager to his artist. It would have been a blot on our jurisprudence if those self same facts gave rise to a time bar in the common law courts but none in the Court of Equity.

I have been greatly assisted in reaching the conclusion I have by the unreported decision of the Court of Appeal in Paragon Finance Plc v D. B. Thakerar & Co (judgment dated 21st July 1998) sent to me by counsel after the hearing. Mrs Justice Ebsworth came to a different conclusion in an unreported judgment given on the 23rd January 1997 in Kershaw v Whelan but the learned judge based herself firmly on Nelson v Rye and did not have the benefit, as I have had, of the judgments of the Court of Appeal in Paragon which disapprove Nelson v Rye. I am happy to come to what seems to me to be the sensible conclusion that no distinction in point of limitation can be made between an action for damages for fraud at common law and its counterpart in equity based on the same facts. I should note in closing on this aspect that, of course, if there was any allegation of fraud or deliberate concealment which had not been discovered by Mr Coulthard before the inception of the period of six years before action, the matter would be wholly different. There is no such allegation here. On his own evidence Mr Coulthard had discovered, more than six years before action, the facts giving rise to the alleged dishonesty.

 

The constructive trust
I think I can deal fairly shortly with this third reason why Nelson v Rye is unsafe. This aspect was dealt with fairly exhaustively by the Court of Appeal in Paragon though not as a matter of decision: all that was necessary in that case was that the court should have treated the defendants in that case as having an arguable limitation defence.

The point concerns section 21 of the 1980 Act which provides that no period of limitation shall apply to a claim by a beneficiary under a trust in respect of a fraudulent breach of trust or to recover from the trustee trust property in the possession of the trustee or converted to his use. It has become commonplace to assert, as was asserted in Nelson v Rye, and is asserted in Mr Coulthard's case, that as a result of the pleaded wrongdoing the defendant is liable as a constructive trustee to account for certain moneys in his hands. There are however two distinct types of constructive trust. The first example is where the constructive trustee, although not expressly appointed as a trustee, has assumed the duties of a trustee before the events which are alleged to constitute the breach of trust. In that case he really is a trustee: he receives the trust property as the result of a transaction by which both parties intend to create a trust from the outset. The second type of constructive trust is merely the creation by the court by way of a suitable remedy to meet the wrongdoing alleged: there is no real trust and usually no chance of a proprietary remedy: the defendant is said to be liable to account as a constructive trustee. The trust is nothing more than a formula for equitable relief: Selangor United Rubber Estates Ltd v Cradock [1968] 1 WLR 1555 at 1582.

The practical importance of the distinction lies in the application of the Statutes of Limitation. Before the 1888 Act a constructive trust of the second kind, which I shall refer to as the remedial constructive trust, was not treated like a real trust, where there was no question of limitation at all. The statute was applied to the wrongdoing which gave rise to the defendant's liability as constructive trustee: Soar v Ashwell [1893] 2 QB 390 at 393.

The present section 21 had its origin in section 8 of the 1888 Act and, despite the fact that section 1(3) of the 1888 Act defined a trustee as including a trustee whose trust arises by construction or implication of law, the constructive trustee under a remedial constructive trust was still held to be able to rely on the limitation defence: see Taylor v Davies [1902] AC 636 and Clarkson v Davies [1923] AC 100. There has been a great deal of academic controversy as to whether that position survived the passing of the 1939 Act. The view of Millett L.J in Paragon was that there are formidable arguments why it did survive. Those arguments, which are set out in his unreported judgment in Paragon, seem to me to be absolutely correct. In a nutshell and in Millett L.J's words at p15 of the transcript:

"There is a case for treating fraudulent breach of trust differently from other frauds, but only if what is involved really is a breach of trust. There is no case for distinguishing between an action for damages for fraud at common law and its counterpart in equity based on the same facts merely because equity employs the formula of constructive trust to justify the exercise of the equitable jurisdiction."

In so far as Mr Coulthard's Statement of Claim claims a declaration that DMC and Mr Prince are constructive trustees of (or claims that they are otherwise liable to account as constructive trustees in respect of) all moneys that have come to their hands pursuant to the pleaded management and agency agreements, such claim, in my judgment, is subject to the same limitation objection as the various claims in breach of fiduciary duty themselves, and ought in like manner to be struck out.

What Paragon makes clear is that the critical boundary in these cases lies between those cases where the defendant is a true trustee (be it of an express trust or a constructive trust) and those where he is not. In the Nelson v Rye relationship, which is the same in this respect as Mr Coulthard's and Mr Prince's relationship, the relationship is not that of trustee and beneficiary. The touchstone of a true trusteeship is trust property. There is no allegation or evidence (save possibly in two minor respects) that DMC was required to keep moneys reaching it as a result of commercial exploitation of Mr Coulthard's mixes separate from its own moneys. Everything in the pleading and evidence is consistent with the idea that DMC was free to mix such moneys with its own and then account at some later point in time to Mr Coulthard, after deduction of the appropriate commission. In its essence the commercial relationship engendered personal claims between them rather than proprietary ones. At no stage in Mr Coulthard's pleading or evidence is an asset or fund identified as an asset or fund which is or should have been held in a trustee capacity. That is why this dispute attracts the application of the six year limit under section 5 of the Act, directly or by analogy. Had there been a true trust of property alleged, the relevant section would have been section 21; and to the extent to which there was fraud, or a receipt by the trustee and conversion to his use, there would not have been any limitation defence.

It is no doubt because of Paragon that Mr Bate, in a final round of submissions, applied for yet another series of amendments which, as they are not recorded in the draft amended Statement of Claim in its final form before me, I should quote here. He said:

"paragraph 15.1. At the end please add –

'; such fiduciary duty extended to all monies which the Plaintiff was entitled to receive as a result of such exploitation. Further and in the circumstances Mr Prince was a trustee of the copyrights entrusted to him and of the aforesaid monies.'

In paragraph 36.4, 36.6, 36.7, 36.8, 36.9A, 36.9, 36.10A, 36.11 add 'and in breach of trust' after 'In breach of fiduciary duty (...), ie 'In breach of fiduciary duty (...) and in breach of trust ".

So Mr Bate recognises the importance for limitation purposes of the allegation that Mr Prince was a trustee of the moneys received by him. Of course, if he was indeed a trustee of such moneys, the limitation difficulty would fall away. But Mr Bate cannot, in my judgment, avoid a strike out by the simple expedient of alleging such trusteeship, especially at this late state of this application, in the third or fourth attempt to stave off a strike out, without supporting the new allegation with facts and details which, at least arguably, justify it. I see no sufficient justification in permitting this new allegation to be put on the pleadings and to go to trial.

This brings me to the two minor respects mentioned above which have given me some pause in my consideration as to whether there is an arguable case for the assertion of a trust of some of the moneys received by Mr Prince or DMC. Paragraph 36.7A claims that if, as asserted by DMC and Mr Prince, the arrangements for the exploitation of Hit Mix 88 were by way of a joint venture, Mr Coulthard never authorised that venture and the same constituted a misuse of his copyright. Paragraph 36.8 pleads the signing of a publishing agreement by DMC with Italoheat. Again the contention here is that that was a misuse of Mr Coulthard's copyright; and there is a further claim in paragraph 36.9A that DMC wrongfully signed an agreement in relation to two commercial releases as principal rather than as agent for Mr Coulthard. These sub-paragraphs suggest something more than simple under-accounting. They allege a misuse or unauthorised use of Mr Coulthard's copyrights. While in all other cases there is no basis in the Statement of Claim for asserting a trust of moneys generated by Mr Prince's exploitation, in accordance with the management agreements, of Mr Coulthard's copyrights, in these three cases the suggestion is that the manner of exploitation was unauthorised. Depending on the degree to which the unauthorised exploitation was outside the scope of that which was authorised and envisaged, it is conceivable that moneys generated by such unauthorised exploitation might not have been lawfully capable of being mixed by DMC with its own moneys and accounted for in due time in the same way as all the other moneys for which DMC was accountable were capable of being mixed.

However, these three possible differences from the rest of the pleaded allegations in paragraph 36 have not been isolated out and developed in argument. As the pleading stands they are wholly swamped by the more ambitious allegations which I have now indicated should be struck out. Moreover, none of them suggests that what was done was so clearly outside the scope of the management agreements that the moneys generated would be trust moneys, whereas the general revenue received by DMC as a result of exploitation would not be trust moneys. For example, no pleading or evidence suggests why the signature to a commercial release by DMC as principal rather than agent makes all the difference to the status of the moneys flowing from that release. I appreciate that a strike out is a draconian remedy but, in a case like this, I do not think it is incumbent upon the court to search for something that might possibly be saved.

In the circumstances, as my clear overall view is that the breaches of fiduciary duty associated with the central allegation of under-accounting are bound to fail, and saving of course any relief by way of an account in respect of the moneys received by DMC and Mr Prince in the last six years (of which the commercial fruits of the Pasadenas Tribute are an example), I shall strike out all the other claims in respect of under-accounting. If there is any difficulty in identifying that which survives, that aspect can be dealt with when this judgment is handed down. So far as the order is concerned it will of course be an amalgam of orders refusing the amendments asked for and orders striking out parts of the existing Statement of Claim: there is no point in allowing any of the amendments only to strike them out immediately afterwards.

 

Account on the footing of wilful default
This brings me to sub-paragraphs 12 to 14 of paragraph 36 which claim the following relief, namely: a general account on the footing of wilful default, a right to re-open (on the grounds of fraud) any accounts which have been given and an account on the ground that no proper accounts have been given in the past. These claims do not seem to me to add anything to Mr Coulthard's position on this application. An account on the footing of wilful default is taken to charge the defendant not only with what he has actually received but with what he should have received. One proved instance of wilful default (which incidentally is not restricted to conscious wrongdoing but includes mere negligence) will enable the Court, in its discretion, to award to the plaintiff a roving enquiry as to what, but for his negligence or fraud, the defendant should have received. But if, as I have held, all instances of alleged default in respect of the period prior to the six year period are statute barred, none of them in my judgment can or should be permitted to found relief by way of a general account on the footing of wilful default, particularly in respect of events prior to that six year period. It would defeat the whole object of the Limitation Act if this were not so. But, in any event, as to the 1982 and 1988 Management Agreements, it is common ground that both of them had terminated by September 1989, and there are no pleaded breaches by DMC or Mr Prince of those agreements committed within the six years before this action. In the circumstances it would not be right to allow a claim to go forward for a roving enquiry to be conducted in respect of accounting under those agreements. This will not, of course, preclude an accounting in respect of any royalties actually received during that six year period.

The only pleaded agreement which subsisted during the six year period is, of course, the 1992 Agency Agreement and, as I have held, the complaint in that respect (in sub-paragraph 11 of paragraph 36) is not time-barred and can go forward to trial. Of course, so far as a claim on the footing of wilful default is based on that alleged default and is thus limited to an account of all sums that should have been received under and in pursuance of the 1992 Agency Agreement, there can be no legitimate objection by the defendants at this stage. But, so far as I am aware, that agreement involved the ad hoc exploitation of only two mixes, namely, the Pasadenas Tribute Mega-mix, which was originally the only one pleaded, and secondly, and by amendment (not yet granted), a Cliff Richard Mega-mix exploited through EMI in 1994. Any account on the footing of wilful default is thus likely to lie within a narrow compass and I would not rule it out at this stage. Subject to that, in my judgment, it would not be right to let the claim for the wholesale roving enquiry asked for in these paragraphs go forward to trial. I am comforted in reaching this conclusion when I remind myself that Mr Coulthard was aware of what he regarded as quite deliberate under-accounting as long ago as 1989 and not only did not sue but did not so much as confront Mr Prince with the allegation. If the statute of limitation is to have any application at all, it seems to me that this is just the sort of situation in which it should bring down its guillotine and put paid to stale demands.

 

Conflict of interest and duty
The last sub-paragraph in paragraph 36 i.e. (15) alleges that in breach of fiduciary duty DMC and Mr Prince have permitted their duties to Mr Coulthard to conflict with the commercial dependency of DMC on the record companies in relation to the licensing of the subscription service. In short Mr Coulthard's complaint is that the running of the subscription service (which required DMC and Mr Prince to obtain licenses from the record companies whose copyrights were being mixed to produce Mr Coulthard's mega-mixes) was inconsistent with DMC and Mr Prince achieving the best deal for Mr Coulthard with regard to the commercial release of those mega-mixes. It is said that that involved a tension and conflict of interest and duty. But this was self evidently the situation known to Mr Coulthard to be inherent in the pursuit of both the subscription business (from which he was to benefit) and the commercial release of his work. His complaint is not unlike the complaint of a house owner that his estate agent is also acting on the sale of other houses (cf Kelly v Cooper [1993] AC 205). In Mr Coulthard's case, his complaint is even more absurd because he was to benefit from both activities said to be in conflict. Quite apart from questions of limitation this claim is bound to fail and should be struck out: see also Bristol and West Building Society v. Mothew (supra) at 18H to 19A.

 

Constructive trust claim against Mrs Prince
I turn to paragraph 42 which alleges that Mrs Prince received trust property (unspecified) knowing that the same was received pursuant to the breaches of fiduciary duty pleaded in paragraph 36. In the light of my conclusions this plainly cannot go forward. There is no trust property either identified by Mr Coulthard or even capable of being identified on the material before me. Then the paragraph goes on to allege that Mrs Prince knowingly assisted in such breaches. Again this allegation is not supported by any particulars at all (either of knowledge or of the breaches). In my judgment it should not go forward any more than the similar claims against Mr and Mrs Prince's children should have gone forward. Those latter claims have since the hearing been discontinued. But there is another reason why this claim for the accessory liability of Mrs Prince should not go forward and that is that the claims against the principals (DMC and Mr Prince) are statute barred. It cannot surely be the case that the claim against the principal can be barred leaving the claim against the accessory to run without limit of time: see Paragon (supra) at page 15.

 

Infringement of Copyright and Performer's Rights
That brings me to the last chapter of claims in this mammoth pleading, namely that concerning alleged infringement of copyright and performers' rights by DMC and Mr and Mrs Prince. Many of the allegations in the Statement of Claim from paragraph 48 onwards are directed to the question of subsistence of copyright and performers' rights in the 145 identified mega-mixes, beat-mixes and re-mixes listed in a schedule to the pleading. Mr Speck accepts for the purposes of this application that the issues of subsistence of such rights and their ownership by Mr Coulthard are arguable.

The claim for in fringement is made in two ways. First, and this relates generally to all the mixes produced by Mr Coulthard for the subscription service, it is said that when the defendants' solicitors rejected Mr Coulthard's claim in 1997 this amounted to a repudiatory breach which was accepted by Mr Coulthard, resulting in a withdrawal of an implied licence to use his product in the subscription service. This is the same idea as that deployed by Mr Coulthard in relation to the claim in breach of confidence and I reject it for the same reason as I rejected the claim in breach of confidence. Any copyright or performers rights enjoyed by Mr Coulthard were, with his consent, exploited by release on the subscription service, which was the very purpose for which they were impliedly licensed (assuming it is established that such rights subsisted at all). That is history. The release on the subscription service in the past cannot, in my judgment, suddenly become, retrospectively, an infringement of copyright and performers' rights as a result of a termination, whether by breach or otherwise, of the contract under which the copyright or performers' rights were impliedly licenced in the first place. (In any event such infringements, had they been infringements, would have been time barred by the time of inception of this action.)

Altogether different is the complaint about the distribution of compilation recordings of back catalogue "Greatest Hits" packages incorporating some or all of the mixes in which Mr Coulthard claims copyright and performers' rights. This form of exploitation, it is alleged, was never within the scope of any implied licence associated with the subscription service. Plainly, it seems to me, this claim for infringement is unexceptionable and cannot be struck out. The evidence identifies only two compact discs which, it is alleged, infringe Mr Coulihard's rights, but he claims in respect of any infringement since September 3rd 1991 (6 years before action) by release of back catalogue mixes in the manner described above. As to particulars, his position is that he does not know if there were any others than the two identified in the evidence but that he will give particulars after discovery. That process should cut this claim down to a manageable size so as to avoid an extensive investigation into the subsistence and ownership of these rights into every one of the 145 items listed in schedule 4 to the Statement of Claim in which subsistence of copyright is maintained. It is not maintained, as I have indicated, in respect of item 30 in the schedule, namely "Frankie Goes to Hollywood 'Relax"'. If the defendants identify those items in respect of which there has been such back catalogue releases there will be no need to waste time in investigating subsistence and ownership of rights in the others. At all events, the claim for infringement in relation to the release of back catalogue items on such packages as I have described will not be struck out.

Finally, in paragraphs 62 and 64 there are claims in respect of secondary infringement of copyright and performers' rights respectively. These allegations to be made good require the infringements to have been done in the knowledge or reasonable belief that the articles concerned were infringing copies. At the hearing Mr Coulthard's claim relied only on the shareholdings and directorships of Mr and Mrs Prince in DMC in support of the allegation of knowledge. Now, by an amendment for which leave is asked for. Mr Coulthard relies on the post script to his letter of the 8th May 1986 as a warning to Mr and Mrs Prince and DMC that release as part of a "Greatest Hits" package would require his consent. As a matter of pleading, it seems to me, such allegation of secondary infringement is unexceptionable and I will reject the application to strike it out and grant the necessary leave for the amendment. The claim however in respect of secondary infringement in relation to the more general claim for (retrospective) infringement will naturally fall with the elimination of that general claim.