As Tame Impala geared up for the release of their latest album, Currents, headlines instead focused on the increasingly convoluted web of lawsuits and missing royalties involving their former label, Modular Recordings.
The revelation that all was not well in the Tame Impala camp first came when frontman Kevin Parker revealed during an April Reddit AMA session that he’d received no money from the band’s international record sales.
Then came news of a bombshell lawsuit involving the band’s former label and German publishing giant BMG. The publisher was going after Modular, its co-owners Universal Music Australia, and Modular chief Steve “Pav” Pavlovic.
BMG alleged that the three had failed to honour an agreement regarding Tame Impala’s royalties. Meanwhile, Universal were pursuing their own suit again Pavlovic in relation to a deed of release, which was to separate the two parties.
Universal came out on top in their action against Pavlovic, further integrating Modular, who developed some of the biggest Australian bands of the 2000s, including Cut Copy, Wolfmother, and The Presets, into the Universal Group.
So what exactly happened between Modular and Universal and how might it affect the rest of the Australian music industry? As Simpsons Solicitors note, the answer is complicated, but could have vast ramifications for the local industry.
First, a bit of background. Modular Recordings was a joint venture between Pavlovic and Universal Records, launching in 2005 and accruing a roster of commercially successful and critically acclaimed bands and artists.
However, by 2014, the relationship between Pavlovic and Universal had become “untenable” and talk of a mutual release began that September. A mutual release would see ownership of Modular transferred over to Universal.
This is where things got interesting. See, Universal’s case against Pavlovic centred on his fulfilment of a contract, which he claimed he never signed. Universal’s case, however, indicated that Pavlovic had acted as though he had signed.
“Is an agreement binding if it’s never signed but both parties act as though it has been?”Between December 2014 and January 2015, Universal sent Pavlovic’s lawyer a proposed deed of release in “final form for execution”, with the mogul’s lawyer repeatedly telling Universal that his client “will sign”.
Meanwhile, Pavlovic represented to Universal that he had signed the deed and would be returning the signed documents as he took steps which “reasonably indicated” he was performing his obligations under the deed.
But despite handing over domain names, login credentials, and equipment to Universal, Pavlovic reportedly decided he no longer wanted to sign the deed and deliberately misled Universal to give the false appearance that he had.
Universal’s suit centred on an intriguing legal question: is an agreement binding if it’s never signed but both parties act as though it has been? Pavlovic argued that the agreement was never binding because he never signed it.
Universal argued that Pavlovic’s lawyer’s representation to Universal that his client would sign was a clear indication of the finality of the agreement, it was not contingent on pen touching paper. The Court agreed.
As far as the Court was concerned, actually signing and exchanging the deed was simply “completion of an administrative process”. Justice Sackar took into account the fact that the matter involved two “sophisticated parties” with “sophisticated law firms” representing them.
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Sackar J also decided that Pavlovic’s lawyer had either actual authority to bind his client to the deed, or “ostensible” authority, as well as looking at the “post-contractual” conduct of both parties.
Essentially, the Court found that a binding agreement came into existence on 24th December 2014, signature notwithstanding. So if an agreement doesn’t have to be signed to be binding, what’s the point in signing a contract?
Well, as Simpsons Solicitors note, precisely to avoid a situation such as that between Universal and Pavlovic. A signature provides clarity, whilst not signing gets the lawyers involved and things are a little more up in the air.
The case between Universal and Pavlovic has set a unique precedent for the wider Australian music industry, particularly when it comes to contract law. If you represent to someone else that you will sign a document, a court may hold you to that, even if you didn’t sign.
