Appeal:

This was an appeal to the Court of Appeal from decisions of the High Court and, in turn, the Family Court.  The case concerned how copyright in artistic works created by one spouse during a relationship should be classified for the purpose of the Property (Relationships) Act 1976 (PRA) when the relationship ended. 

Facts:

The appellant, Ms A was an artist who had created many original artworks during her marriage to Mr P.  Many of the artworks (Artworks) were sold during the relationship providing income for the family.  Others were retained by the parties and were in possession of the Family Court pending the final division of relationship property.  The key issue before the Court was whether copyright in the Artworks (the Copyrights) comprised relationship property or Ms A’s separate property. 

The Family Court found that the Copyrights were Ms A’s separate property.  On appeal Isac J found that the Copyrights were relationship property.  The questions on appeal were:

(1)  Is copyright “property” for the purposes of the PRA?

(2) Are the Copyrights separate property or relationship property under the PRA?

(3) How should the Copyrights be treated under the PRA, to ensure an equal division of relationship property?

There was a conflict in the evidence regarding Mr P’s contribution to the business of selling or commercialising Ms A’s art during their marriage.  Mr P’s evidence was that he played a significant role in creating art cards and prints for sale.  Ms A’s evidence was that Mr P had not really contributed in any real way. 

Going forward, Mr P wished to continue earning a living from “our business we had together” and planned to restart his publishing business immediately.  Ms A was strenuously opposed to Mr P having any involvement with the Artworks including commercialising the Copyrights. 

Ms A contended that the Copyrights were inextricably linked to (and were a product of) her artistic skills and qualifications.  These unique skills were personal to her and were acquired prior to the relationship.  She claimed that this context justified treating the Copyrights as separate property. 

Ms A sought an order that she retain sole legal ownership of the Copyrights as part of the overall division of relationship property.  She argued that it was critical that, as creator of the Artworks, she was able to retain control of the Copyrights to protect her artistic integrity and future professional interests [77].  Mr P sought to divide the Copyrights more or less equally.  Specifically, he sought a transfer of the copyright associated with any of the Artworks that had already been agreed he could keep as a division of relationship property [73]. 

Ms A strongly opposed Mr P’s aim of establishing a business to commercialise the Copyrights in the Artworks [75]. 

Held,answering the questions and remitting the case to the Family Court for assessment of an appropriate compensatory adjustment.

(1)        Is copyright “property” for the purpose of the PRA?

(i)  Copyright comprised a “bundle of rights”.  In relation to artistic works the relevant bundle included the exclusive right to copy the work, issue copies of it to the public and communicate the work to the public.  These were not separate or stand-alone rights.  They were raised from and were consequential on the specific statutory rights conferred on a copyright owner [20].

(ii)   The Family Court Judge and the High Court Judge were correct to find that the Copyrights fell within the definition of “property” in s 2 PRA as “any other right or interest”.  In addition, on the basis that copyright is a sui generis form of personal property, the Family Court was also correct to find that the Copyrights also fell within para (c) of the definition i.e., “any estate or interest in any … personal property” [29].

Clayton v Clayton [Vaughan Road Property Trust] [2016] NZSC 29, [2016] 1 NZLR 551, [38]; Pacific Software Technology Limited v Perry Group Limited [2004] 1 NZLR 164 CA referred to. 

(2)        Are the Copyrights separate property or relationship property under the PRA?

(iii)  Ms A’s contentions in support of separate property conflated two distinct concepts, one related to the content of the relevant property rights which comprised the bundle of rights referred to.  The other was Ms A’s personal skills and qualifications as an artist.  Although those skills were used in the creation of the Artworks, they were distinct from the Copyrights which attached to the Artworks.  These skills remained an intrinsic part of Ms A’s individual makeup and would not transfer to any new owner of the Artworks or of the associated Copyrights [42].  The High Court had therefore been correct to find that Ms A’s personal skills and qualifications as an artist were distinct from property rights in the Copyrights [43].  These skills were not ‘property’ for the purposes of the PRA [45]. 

(iv) There was nothing in either  the Copyright Act or the PRA to suggest that Parliament intended to remove intellectual property from the reach of the PRA [64].

(a) The property rights in the Copyrights did not include Ms A’s artistic skills or qualifications, those skills were discrete and, in any event, were not property rights in terms of the PRA.

(b)  The business through which Ms A and Mr P had previously commercialised the Artworks and the Copyrights did not form part of the bundle of rights for the Copyrights. That business was a discrete category of property under the PRA.

(c)  The fact that income might be generated, post-separation, from the commercialisation of the Copyrights did not assist in determining the correct classification for the Copyrights under the PRA.  Rather, the classification of the relevant income streams as either separate property or relationship property turned on the classification of the underlying assets (the Copyrights) under the PRA.

(d)  Section 21 of the Copyright Act did not support Ms A’s argument that the Copyrights were her separate property.

[65].

(3)        How should copyright be treated under the PRA to ensure an equal division of relationship property?

(v)  The Copyright Act protects and promotes creativity by granting authors, artists and other creators exclusive control over their original works, including the right to reproduce, distribute and perform and display their works (as applicable).  This gave creators the ability to control the output of their creativity and encourage the creation of new works by ensuring creators can benefit economically from their efforts, fostering continued artistic production [76].  This broader context strongly supported the view that where possible the division of relationship property under the PRA should reflect the unique and personal nature of copyright – particularly where the works were artistic works that were personal in nature [77]. 

(vi) It was consistent with the overall policy objectives of the Copyright Act that Ms A, as the author and creative force behind the Artworks, be able to continue to control the commercialisation of the Copyrights for a range of reasons [78].

(a) Ms A’s art was highly personal to her.

(b)  Ms A wished to continue to paint and support herself through her art business.  If some of the Copyrights were transferred to Mr P she could potentially find herself in competition with copies of her own work (namely new reproductions produced by Mr P).

(c) Ms A’s reputation and personal brand as an artist could be negatively impacted by Mr P’s actions in relation to any of the Copyrights he owned.

(d)  Ms A held the moral rights in respect of the Artworks and those were  inalienable. 

(vii) The appropriate course was for ownership of the Copyrights to remain with Ms A and for Mr P to receive a compensatory adjustment from other relationship property to ensure an equal division [79].  The matter would be remitted to the Family Court to assess the quantum of compensation adjustment.