Phonographic Performance Ltd v Nightclub (London) Ltd

The claimant (PPL) obtained a default injunction (Norris J) restraining the defendant company from playing sound recordings in PPL’s repertoire in public without a licence. The company continued to play recordings as "specially featured entertainment", which attracted a higher fee; evidence from PPL’s agents proved breaches of the injunction. The sole director and shareholder, Mr Sokol Toska, had been personally served with the order (including penal notices) and was the controlling mind of the company.

The court applied established principles that a director who is aware of an order must take reasonable steps to ensure compliance and that wilful failure can amount to contempt; in light of the evidence the company and Mr Toska were found, beyond reasonable doubt, to be in contempt of court. The application for sequestration and committal complied with procedural requirements, but the court adjourned any sentence to allow clarification about a subsequent payment and to give the contemnors an opportunity to attend for sentencing.

Background and parties:

• The claimant is Phonographic Performance Limited (PPL). The defendant is Nightclub (London) Limited (the Company), sole director and shareholder Sokol Toska. The Company was the premises licence holder for nightclub premises known as Kolis.
• PPL suspected and then established that the Company was using PPL recordings as specially featured entertainment (higher fee) after the background music licence expired.

Procedural posture and relief sought:

• PPL applied for permission to issue a writ of sequestration against the Company and for committal of Mr Toska for contempt, relying on a default injunction granted by Norris J on 14 November 2014 which restrained public performance of PPL’s repertoire without a licence and included penal notices.
• The Company and Mr Toska did not participate in the proceedings; hearings were listed, a bench warrant for Mr Toska was issued and remained unexecuted at the time of the judgment.

Issues framed by the court:

• Whether the Company had breached the injunction established by the Norris J order.
• Whether Mr Toska, as sole director and controlling mind, had wilfully failed to take reasonable steps to ensure compliance and therefore should be subject to committal for contempt.
• Whether the application could be heard and determined in the absence of the Company and Mr Toska.
• Whether, having established contempt beyond reasonable doubt, the court should proceed immediately to sentence or adjourn.

Evidence and reasoning:

• The court relied on affidavits and agent visit reports showing multiple instances (13 June, 15 August and 19 December 2015) of specially featured entertainment using PPL repertoire after the injunction and after the background licence expired on 13 April 2015.
• The order and penal notices were posted and personally served on Mr Toska; a process server read warning words which left him in no doubt about the consequences of disobedience. A telephone call from a person identifying himself as "Daniel" (likely Mr Toska) indicated he could put the Company into liquidation and suggested awareness of the dispute.
• The court applied authority on director liability for company breaches (including A-G of Tuvalu, Public Stock Company v Maksimov, IPartner, Sectorguard) and adopted the test that a director aware of an order must take reasonable steps to secure compliance and that wilful failure, failure to supervise, or wilful blindness can constitute contempt.
• On this evidence the Company and Mr Toska were plainly the controlling mind and in wilful breach; the criminal standard was applied and contempt established beyond reasonable doubt.

Disposition and further steps:

• The court found contempt proved but paused before imposing sentence. The judge followed the guidance in Solodchenko and related authorities, acknowledging that sentencing in absentia is exceptional and that clarification was required regarding a payment of £934.21 made on 1 April 2016 which might, if properly appropriated, regularise the licence position from 14 April 2016 and affect sentencing.
• The court directed service of the judgment and required attendance at an adjourned sentencing hearing. The claimant was ordered to provide further information about the payment and why it contends the payment does not regularise past breaches.

Wider context:

• The judgment emphasises the established principle that directors can be committed for contempts arising from company breaches where they are the controlling mind and wilfully fail to ensure compliance. The court exercised caution in proceeding to sentence in absentia and adjourned to allow clarification and attendance.

At first instance the court found that the Company and its sole director and shareholder, Mr Sokol Toska, were in contempt of court for breaching the injunction granted by Norris J. The court concluded the director had wilfully failed to take reasonable steps to secure compliance and was the controlling mind of the Company. The judge did not proceed to sentence immediately, but adjourned sentencing to allow clarification about a payment made on 1 April 2016 which might affect the licence position and to permit the contemnors an opportunity to attend; service of the judgment was directed and further information from the claimant was ordered.