Stravinsky’s burning issue with the Berne Convention

Wars touched the lives of millions of people in more ways than one can imagine. The life of Igor Stravinsky, a Russian-born composer, pianist and conductor, was no exception. He became an overnight composing sensation with the premiere of his ballet Firebird in Paris on 25 June 1910. Over the next four years Stravinsky and his family lived in Russia during the summer months, during which time he composed further ballets, including Petrushka and The Rite of Spring for the Ballets Russes, and during the winter months he and his family resided in Switzerland. However with WWI looming in July, the Stravinsky family made a last trip over the Switzerland border just before national borders closed. The war and subsequent Russian Revolution made it impossible for Stravinsky to return his homeland and he only managed to set foot upon Russian soil again in October 1962.

Like most other families, Stravinsky struggled financially during WWI. The fact that his ballets were still performed in Russia brought no financial relief in the form of royalties as Stravinsky anticipated because Russia (and its successor, the USSR) did not adhere to the Berne Convention.

The Berne Convention for the Protection of Literary and Artistic Works was developed at the instigation of Victor Hugo of the Association Littéraire et Artistique Internationale under the influence of the French “right of the author” (droit d’auteur). This international agreement which was first accepted in 1886 in Berne, Switzerland not only governs copy right, but also introduced the concept that copy right exists automatically at the moment a work becomes “fixed” rather than requiring a formal registration. It further enforces the primary aim and requirement that countries must recognise copyrights held by the citizens of all other countries that are signatories of the Berne Convention. With other words, parties to the Berne Convention must treat the copyright in works of authors from other parties to the Berne Convention, the so-called Berne Union at least as well as its own nationals.

Article 3 of the Berne Convention applies to both nationals and residents of countries that are party to this convention and to works first published or simultaneously published (within 30 days as per Article 4) in a country that is also a party to the convention. This convention thus relies of the concept of “country of origin”, meaning that when a work is published in a country that is party to the convention and nowhere else, that would be the country of origin. The ballets that Stravinsky was commissioned to composed for Ballets Russes were first performed in Russia and would Russia thus be the country of origin for these works. Only problem is: Russia was not a signatory to the Bern Convention at the time of these works being performed and did Stravinsky’s musical scores not enjoy the same copyright protection in countries that were part of the Berne Union.

The Russian Federation’s accession of the Berne Convention only became effective on 13 March 1995 and all Russian or Soviet works that were copyrighted on that date became copyrighted in all other Berne Union countries on that date.

However, in its declaration of accession, Russia made a reservation regarding article 18 of the Berne Convention to the effect that this convention “shall not extend to the works which, at the date of entry into force of the said Convention in respect of the Russian Federation, are already in the public domain in its territory.” This reservation effectively denied the retroactivity of the Berne Convention for foreign works within Russia. This was of some importance because when the USSR had joined the UCC, foreign works published within Russia before 27 May 1973 had never been eligible to copyright in the Soviet Union or in Russia. In terms of Article 18(2) of the Berne Convention, these works should have become copyrighted in 1995 because Article 18(2) only exempted works that once were copyrighted, but on which that copyright had already expired, which didn’t apply to pre-1973 foreign works in Russia. The reservation made by Russia used a slightly different phrasing, just stating that works that were in the public domain in Russia in 1995 would not be re-protected. As pre-1973 foreign works were not copyrighted at all and thus in the public domain in Russia in 1995, such foreign works remained in the public domain in Russia.

One of the methods used by Russian authors to have their works copyrighted outside of the Soviet Union was the smuggling of manuscripts out of the USSR to have the work first published abroad in a country that was a signatory of the Berne Convention. The ultimate an aimed for result was that such works would be granted copyright protection in all other Berne Union countries after these works were first published in a member country. This practice, known as tamizdat in the Soviet Union could result in serious repercussions for the authors in the USSR but was still employed as one of the few ways the governmental censorship could be bypassed.

Fortunately with Russia’s accession to the Berne Convention, Soviet and Russian works that were copyrighted in Russia in 1995 became copyrighted outside of Russia as well and by virtue of the retroactivity of the current Russian Copyright Law of 1993, this also included many pre-1973 Soviet works. With Stravinsky’s death on 6 April 1971 this means that his musical compositions will at last enjoy the copyright protection it deserves. May his soul rest in peace.

By Marietjie Botes
marietjie@dyason.co.za

The Companies and Intellectual Property Commission’s own initiative to apply for an order to declare a director delinquent.

In the matter of The Companies and Intellectual Property Commission v Creswell and Others [21092/2015] (hereinafter “Cresswell”) (Judgment 27 March 2017), the Companies and Intellectual Property commission (hereinafter “the CIPC”), brought its first ever successful application for an order to declare a director delinquent in terms of section 162 (3) of the Companies Act No. 71 of 2008 (hereinafter “the Act”).

It is worth mentioning that the Act vested a number of stakeholders of the company with locus standi to bring an application to declare a director delinquent in terms of section 162 (2), including shareholders, prescribed officers and directors. The CIPC is also vested with such locus standi, however in terms of section162 (3) of the Act. Since the Act came into effect, the first few applications to declare a director delinquent were always brought in terms of section 162 (2).

In Cresswell the three respondents, namely Mr. Steve Cresswell, Mr. Pierre Basson and Mr.Owen Wienand were directors of a company known as Skyport Ltd (hereinafter “Skyport”). The business affairs of Skyport attracted the attention of the CIPC as a result of published media articles and information on Skyport’s website regarding its plan to construct an international airport near Cape Town. The CIPC also learned that Skyport sold shares directly to the public for the purposes of raising capital to finance the project. Skyport claimed that it had applied for a license to operate an international airport from the Civil Aviation Authority (hereinafter “the CAA”). This claim was later denied by the CAA.

The CIPC was concerned with how Skyport was conducting its business and this was raised with the Minister of Trade and Industry, who instructed the CIPC to lodge an investigation into the business affairs of Skyport. Upon completion of the investigation the CIPC’s inspectors compiled a report which contained a number of adverse findings against Skyport and its directors. Among other things, the inspectors found the following: Skyport did not keep proper accounting books, the only source of income for the company was the proceeds of the sale of shares and such proceeds were used to pay directors’ remuneration, directors made unjustifiable personal withdrawals from Skyport’s accounts especially the Third Respondent, Skyport never generated money from its business, AGM’s were not held and the company was commercially insolvent.

The CIPC decided to lodge an application to declare Mr. Owen Wienand (hereinafter “the Third Respondent”), a delinquent director in terms of section 162 (3) read with (5) of the Act. The Third Responded who was the deponent to the answering affidavit had made a number of significant admissions which proved to be detrimental to his case. He admitted to most of the findings contained in the CIPC’s report.

However the Third Respondent raised a number of defences. He submitted that his conduct was not so serious that it can be described as demonstrating a conscious risk taking a, complete obtuseness of mind or a total failure to care and hence did not constitute gross misconduct sufficient to invoke section162 (5) (c) of the Act. He also argued that his section 22 right to choose his occupation or profession would be infringed if the order sought by the CIPC were to succeed, especially if the order were to apply in perpetuity.

The Court carefully considered its powers to declare a director delinquent under section162 (5) (c) (v) of the Act. The court observed that it is only required to make the declaration sought by the CIPC, if the director in question acted in a manner that amounted to gross negligence, willful misconduct or a breach of trust in relation to the performance of the directors’ functions and duties owed to the company.

With reference the matter of Msimang NO a.a v Katulina a.o 2013 (1) ALL SA 580 (GSJ) (hereinafter “Msimang”), the court considered the meaning of the concepts of “gross negligence” and “willful misconduct” as provided in section 162 (5) (c) (v). The court in Msimang noted that the concept of a delinquent director is new in our company law, however it recognized that the concepts of “gross negligence “ and “willful misconduct” are not novel. The court held further, that “although the concept of gross negligence fall short of dolus eventualis, it must involve a departure from the standard of a reasonable person to such an extent that it can be categorized as extreme”.

In seeking a clear authority on the meaning of the concept “willful misconduct”, the court further referred to the matter of Rustenburg Platinum Mines Ltd v South African Airways and another 1977 (1) Lloyds LR19 (Q.B (Com Ct), where it was held that willful misconduct goes beyond negligence or even gross negligence, in that the wrong doer knows and appreciate the wrongfulness of his conduct.

The court in Cresswell ultimately had to decide whether the CIPC adduced sufficient evidence on which it can decide whether the conducted of the Third Respondent warranted the punishment of being declared a delinquent director.

The court held that the approach should be to resist to consider the various averments in a singular fashion but rather consider holistically the alleged conduct and the performance of the director.

The court concluded that it is grossly negligent for a director to have allowed a company to continue business knowing that it is insolvent and that the CAA was not prepared to grant permission for the most important element of Skyport’s business, extract company cash in order to pay directors’ fees and also to allow the company to conduct business without keeping proper accounting systems.

The conduct of the Third Respondent was found to have amounted to more than just negligence. Thus the court declared him a delinquent director for a period of seven years in terms of section162 (5) (c) (iv) (aa) of the Act.

While the Cape Town High Court was delivering the Cresswell judgment on the 27th of March 2017, the CIPC also had another motion in the Johannesburg High Court for an order in terms of section162 (5) (c) (iv) (aa) of the Act, in the matter of Companies and Intellectual Property Commission v Moola and Others (44337/2012) [2017] ZAGPJHC 102 (30 March 2017).

In this matter the brief facts were as follows, the three respondent claimed that their father had resigned from a company known as CCE Motor Holding (Pty) Ltd and that they were appointed directors of the company. The father disputed this and approached the CIPC for help. The CIPC conducted its investigation and found that the respondents fogged the company’s resolution to have them appointed as directors. The court could not grant the order sought by the CIPC, because it found that the respondents were not factually and legally appointed as directors.

It is commendable when the CIPC also bring the application to declare a director delinquent, considering its investigative powers under the Act, this will certainly assist to deal with the issue of errant directors who disregard their fiduciary duties in common law and under the Act.

By Jeffrey Maluleke
jeffrey@dyason.co.za

Prescription And The (Timeous) Issuance Of Summons

Prescription is one of those terms in practice which has struck fear into every attorney at some or other stage during their career. That fear of knowing that if you don’t issue summons timeously, your client’s claim will be extinguished forever. Various attorneys have ended up on the wrong side of prescription, having had their client’s claim prescribed either as a result of their own wrongdoing or their client’s negligence.

Every person who claims that they have a legal right or remedy against another party who has done them wrong will have a certain amount of time to institute legal proceedings against said party in order to claim either the outstanding monies, damages or a specific performance, just to name a few.

In terms of the Prescription Act1, a claim will have become prescribed if a summons, or a statement of claim in arbitration proceedings, has not been issued and served on a defendant within a stipulated period. Section 11 of the Act stipulates the various time periods for various claims, but the most common period is three years for most types of debts. It is important to note that serving a letter of demand does not constitute initiating legal proceedings.

For example, if a client owes you money for services which you have duly rendered and said amounts have become due and payable, the claim will prescribe within three years from the date which the amount become due and payable. In the event that formal legal proceedings are not instituted within the prescribed period, the claim will have prescribed and the right to claim said debt will also be extinguished forever.

The aforementioned is very important in law as it brings the necessary certainty to it. The certainty is important as it will oblige possible litigants to commence proceedings timeously as it is fatal to the certainty of law if a person has an infinite amount of time to institute legal proceedings against his/her wrongdoer.

What would the position be if a person commences legal proceedings but then sits back and does nothing? Can a claim prescribe if summons has been issued but is not executed?

This issue arose in the matter of Cadac v Weber-Stephen2 which was finally decided in the Supreme Court of Appeal. This matter started out in January 2005 in the South Gauteng High Court (Johannesburg) when an urgent application was brought before Court by Cadac seeking relief as a result of Weber’s unlawful warrant ordering that certain goods be removed from Cadac’s distributors. Weber alleged that these goods were counterfeit goods.

The goods were removed during the Christmas period of 2004 and as such Cadac suffered damages as a result thereof. The Court held that the warrant was indeed unlawfully obtained and ordered that the goods be returned to Cadac’s distributors. The Court also ordered that damages should be paid to Cadac as a result of Weber’s unlawful conduct as soon as same can be quantified. The prayer for damages was postponed sine die.

Cadac did not pursue the claim of damages until 2008 where it brought an interlocutory application seeking a declaratory order as to how the damages should be quantified.

Weber’s contention was that Cadac’s claim had prescribed since they did not do anything for a period of 3 years and two days. Weber said that the claim for damages cannot be brought by way of motion proceedings. Cadac’s contention was that it only sought directions from Court as to how to quantify the damages and as such did not need to present the claim to another forum.

The Court held that Cadac was within its rights to bring the application but did not condone their lacklustre way of pursuing the claim within a reasonable time.

The Court further confirmed the provisions of Section 15(1) of the Act3, stating that prescription was indeed interrupted when the process was issued and served on Weber and such prescription will only start running again if Cadac cannot execute their claim successfully.

The significance of the Court’s statement as well as the provisions of Section 15(1) is that if a plaintiff cannot successfully execute his/her claim, Section 15(2) states that the running of prescription will be deemed to have never been interrupted and the claim will then have become prescribed within the time period as provided for in Section 11, from the date when the debt arose.

Some would say that it is unfair to a debtor that a claim will never prescribe if legal process has been served on him/her and the plaintiff sits back and does nothing thereafter.

The justification of the above is that, when a defendant enters an appearance to defend the matter, there are certain remedies to his/her disposal to force a plaintiff to bring the matter before court and as such the provisions of the Act is not unfair.

The fact of the matter cannot be stressed enough, you have to ensure that a claim is timeously instituted prior to its prescription date to avoid any further damages and prejudice to your client.

Werner Cilliers
Candidate Attorney – Dyason Attorneys

 


1 Act 68 of 1969;
2 Cadac v Weber-Stephen (530/09) [2010] ZASCA 105 (16 September 2010)
3 Supra fn1;