Phonographic Performance Ltd v Department of Trade and Industry & Anor

Factual and Procedural Background

The case concerns the claimant ("PPL"), a company limited by guarantee representing over 3,000 record companies in the UK, which holds or manages copyright in sound recordings. PPL contends that the UK Crown has breached its obligations under European Community law, specifically Article 8.2 of Council Directive 92/100/EEC ("the Rental Directive"), by failing to provide for a single equitable remuneration for the use of sound recordings as required by the Directive. The UK did not implement the Directive by the deadline of 1 July 1994, and subsequent statutory instruments made in 1996 and 2003 failed to repeal or alter sections 67 and 72 of the Copyright Designs and Patents Act 1988 ("the 1988 Act"), which provide exemptions from copyright infringement.

PPL initiated proceedings against the Crown on 10 March 2003 seeking declarations and damages for breach of the UK's obligations. The Crown denies breach and asserts that any cause of action accrued on 1 July 1994 is now statute-barred under the Limitation Act 1980, as well as barred by laches or estoppel. The court ordered preliminary issues to be tried concerning limitation, abuse of process, estoppel, and laches. The court assumes for these issues that the Crown is liable as alleged by PPL.

Legal Issues Presented

1. Whether the Crown's failure to implement the Rental Directive by 1 July 1994 gives rise to a single cause of action accruing on that date with continuing consequential damage, or successive causes of action accruing when further damage occurs.
2. If not, whether the claims are an abuse of process under the principles in Clark v Humberside University [2000] 1 WLR 1988.
3. If so, whether on the facts the claims should be struck out as an abuse of process.

Arguments of the Parties

Claimant's Arguments

• The breach of duty imposed by Article 8.2 is continuing, giving rise to a fresh cause of action each time consequential damage is sustained.
• Damage is an essential ingredient of the cause of action; thus, claims for damages can be brought for losses within six years preceding the proceedings.
• The claims are private law claims for breach of statutory duty and properly brought by ordinary action within the limitation period.
• The delay in bringing proceedings does not constitute an abuse of process, especially as the claims were brought within the limitation period.
• The claimant did not lull the Crown into a false sense of security or abandon any rights to compensation.

Defendant's Arguments

• The cause of action accrued on 1 July 1994 and is now statute-barred under the Limitation Act 1980.
• The breach is a single event, not a continuing one, so no fresh causes of action arise from subsequent damage.
• The claim is sui generis and inherently a public law claim that should have been pursued by judicial review, not ordinary action.
• The delay in bringing proceedings was deliberate, prejudicial, and has caused evidential difficulties.
• The claimant’s decision not to pursue judicial review and delay lulled the Crown into a false sense of security, amounting to abandonment of the claim.
• The claims should be struck out as an abuse of process in light of the delay and nature of the claim.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed the nature of the claim as a breach of statutory duty founded on Community law obligations under the Rental Directive and the European Communities Act 1972. It acknowledged established ECJ principles that Member States may be liable for damages if certain conditions are met, which the court assumed for the purpose of preliminary issues.

On limitation, the court distinguished between a single cause of action accruing on the date of breach versus a continuing breach giving rise to successive causes of action. Drawing on case law and authoritative textbooks, the court accepted that the breach here is continuing because the obligation under Article 8.2 did not cease on the implementation deadline but remained unperformed, and consequential damage accrued repeatedly over time.

The court rejected the Crown’s argument that all damage should be attributed to the initial breach date, noting that each subsequent use of sound recordings in breach of the Directive gave rise to a new cause of action. It also found that damage is an essential element of the claim, so limitation runs from the date damage occurs.

Regarding abuse of process, the court considered the principles from Clark v Humberside University and related authorities. It held that although the claim could have been brought by judicial review, it was not inherently a public law claim and was properly brought by ordinary action. The court found no basis to strike out the claims as abusive simply because of the delay or procedural choice, especially since the claims were initiated within the limitation period and no post-commencement misconduct was alleged.

The court also rejected the Crown's contention that the claimant had lulled it into a false sense of security or abandoned the claim, finding that the claimant consistently maintained its position and the Crown did not alter its stance in reliance on any such impression.

Holding and Implications

The court rejected the Crown’s submissions that the claims were statute-barred or an abuse of process. It held that the claims represent continuing breaches of statutory duty for which fresh causes of action accrue with each instance of damage, and therefore are not barred by the Limitation Act 1980 for claims within six years prior to commencement.

The court further held that the claims are properly brought by ordinary action rather than judicial review and that the delay and procedural choices made by the claimant do not amount to an abuse of process. Consequently, the claims may proceed, subject to amendment to reflect the limitation period for damages.

No new precedent was established beyond the application of existing principles on limitation and abuse of process. The decision directly affects the parties by allowing the claimant to pursue its claims for damages within the limitation period and confirms the availability of ordinary actions for breaches of Community law obligations of this nature.