Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2008
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
RESALE ROYALTY RIGHT FOR VISUAL ARTISTS BILL 2008
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for the Environment, Heritage and
the Arts,
the Hon. Peter Garrett AM MP)
RESALE ROYALTY RIGHT FOR VISUAL ARTISTS BILL 2008
OUTLINE
The Resale Royalty Right for Visual Artists Bill ('the Bill') provides for
the establishment of a resale royalty right for visual artists and an
accompanying statutory scheme. The resale royalty right will be inalienable
and endure for the life of the artist plus 70 years. It will entitle visual
artists to a royalty payment on the sale price of any commercial resale of
their original works of art over $1,000 on works acquired after the
legislation takes effect. The scheme will apply to Australian citizens or
permanent residents, with foreign nationals covered on a reciprocal basis.
The introduction of a resale royalty scheme will allow visual artists to
share in the commercialisation of their work in the secondary art market.
This will benefit visual artists who derive their main creative income from
the initial sale of original works. These artists do not have the same
range of opportunities as other creators such as writers and composers to
earn money through licensing reproductions, public performances or
broadcasting their work.
FINANCIAL IMPACT STATEMENT
Funding of $1.5 million over three years to support the implementation of a
resale royalty scheme was committed by the Government in the 2008-09
Budget.
ABBREVIATIONS
The following abbreviations are used in this explanatory memorandum:
Bill Resale Royalty Right for Visual Artists Bill 2008
EU Directive Directive 2001/84/EC of the European Parliament and of the
Council of 27 September 2001 on the resale right for the
benefit of the author of an original work of art
Minister Minister for the Environment, Heritage and the Arts
NOTES ON CLAUSES
Part 1 - Introduction
Clause 1 - Short title
The Bill, when enacted, should be cited as the Resale Royalty Right for
Visual Artists Act 2008.
Clause 2 - Commencement
Item 1 of the table in subclause 2(1) provides that clause 1 (Short title),
clause 2 (Commencement) and any other clause of the Bill not provided for
is to commence on Royal Assent.
Items 2 and 4 of the table provide that Parts 1 (Preliminary), 2 (Resale
Royalty Right), 4 (Civil Penalties) and 5 (Miscellaneous) are to commence
on 1 July 2009. The fixed date for the commencement of the right will
provide certainty for art market businesses and consumers, and a
commencement date of 1 July 2009 will align with the new financial year to
assist businesses in adjusting their record keeping.
Item 3 of the table provides that Part 3 (The Collecting Society) is to
commence on Royal Assent. The early commencement of Part 3 of the Bill will
enable the collecting society to be appointed prior to the resale royalty
right arising.
Clause 3 - Definitions
Clause 3 sets out definitions of key terms used in the Bill. Some of the
more significant definitions are:
. "community body" means a body established by a community for the purposes
of supporting or promoting the welfare or cultural values of the
community. The body can be incorporated or unincorporated. A community
body could include an Indigenous community organisation or a local
community arts centre.
. "time of a commercial resale" is the earlier of the day on which
ownership of the artwork is transferred under the commercial resale or
the day on which consideration for the commercial resale is fully paid.
Defining the time of a commercial resale in this manner is to prevent
people constructing arrangements in order to circumvent the resale
royalty from being paid.
Clause 4 - Act binds the Crown
Clause 4 explains the extent to which the Bill binds the Crown (subclause
4(1)) and makes clear that it does not make the Crown liable to a pecuniary
penalty or to be prosecuted for an offence (subclause 4(2)). The protection
against liability for a pecuniary penalty or against prosecution for an
offence in subclause 4(2) does not apply to an authority of the Crown
(subclause 4(3)).
Clause 5 - External Territories
The Bill will extend to every external territory. This will avoid the
possible situation in which Australian art market professionals shift their
business operations to external territories to evade the scheme.
Part 2 - Resale royalty right
Division 1 - When does resale royalty right arise?
Clause 6 - Resale royalty right
Clause 6 sets out the definition of resale royalty right as the right to
receive a resale royalty on the commercial resale (clause 8 defines
'commercial resale') of an artwork (clause 7 defines 'artwork').
Clause 7 - What is an artwork?
This clause defines an artwork as an original work of graphic or plastic
art that is created either by an artist or artists or under the authority
of the artist or artists.
The provision in paragraph 7(1)(b) for artworks to include items made under
the authority of the artist provides for situations in which an artist
creates a design and directs a production team (such as a bronze foundry)
or a master craftsman (such as a print maker) to produce or assist in
producing the final artwork.
Subclause 7(2) provides a non-exhaustive list of examples of an original
work of graphic or plastic art. The list reflects the examples listed in
the EU Directive.
As well as the media listed, the definition in the Bill would cover other
forms of original visual arts or craft, such as: batik, weaving, or other
forms of fine art textiles; installations; fine art jewellery; artist's
books; and wood carving. The definition would also capture new media art
forms such as digital and video art, and to expand to cover new forms of
visual artistic expression as they evolve in the future.
An artwork also includes multiple originals produced in a limited edition
authorised by the artist such as an etching or a bronze sculpture. A
multiple original would include any kind of print-making, sculptural or
casting technique in which the artist makes use of a template or mould.
However, the definition of an artwork excludes architecture (including a
building, drawing, plan or model for a building) and original manuscripts
of writers and composers (see clause 9).
Clause 7 is intended to cover works of art from which artists have limited
ability to earn money by exploiting their copyright through reproductions,
public performances or broadcasts. The value of such works on the secondary
art market depends largely on their originality. For this reason, while
authorised limited edition artworks (for example, lithographs, prints of
art photography, or audiovisual art installations) are covered, items such
as posters, mass-produced photographic or other prints, films and
industrial design are excluded.
Clause 8 - What is commercial resale of an artwork?
Subclause 8(1) provides that a commercial resale of an artwork is where the
transfer:
. of ownership of the artwork is from one person to another for monetary
consideration; and
. is not the first transfer of ownership of the artwork; and
. is not otherwise one of an excluded class.
The definition of a commercial resale is limited to transfers of ownership
for monetary consideration to assist with ease of administration.
The first transfer of ownership would include transfers from the artist by
sale, gift, exchange for goods or services, or inheritance. Including all
such categories will avoid situations in which artists are pressured to
exchange their works rather than sell them at the first point of transfer
to delay triggering the resale royalty right until the third transfer of
ownership. This will ensure that artists begin to benefit sooner from the
entry of their artworks into the marketplace.
The scheme will not include private sales between individuals, nor
organisations not in the business of dealing in works of art. The costs of
imposing a royalty on private sales would outweigh the benefits. The scheme
will cover sales from a private seller to a public institution and vice
versa.
Therefore, subclause 8(2) provides that transactions that transfer
ownership of an artwork from one individual to another that does not
involve an art market professional acting in that capacity are an excluded
class of transfer.
Subclause 8(3) defines art market professional as an auctioneer, owner or
operator of an art gallery, owner or operator of a museum, art dealer or
person otherwise in the business of dealing in artworks. This includes the
manager of a major private or corporate art collection.
Clause 9 - No resale royalty right on certain works
The resale royalty right does not exist for the commercial resale of:
. a building, or a drawing, plan or model for a building; or
. a circuit layout within the meaning of the Circuit Layouts Act 1989;
or
. a manuscript (in whatever form) of a literary, dramatic or musical
work.
Copyright ensures that authors, composers and other creators have an
ongoing economic right to benefit from the commercialisation of their work.
Therefore, there is no resale royalty right on such works.
Clause 10 - No resale royalty right unless consideration above threshold
There is no resale royalty right on a commercial resale of an artwork where
the sale price is less than $1,000 (paragraph 10(1)(a)). If the sale price
is paid in foreign currency, the threshold amount is worked out using the
exchange rate applicable at the time of the commercial resale that is
equivalent to $1,000.
Placing a threshold on the minimum resale price before a royalty is imposed
will reduce the administrative costs associated with making multiple, very
small payments to artists. In setting the threshold level, the maximisation
of returns to artists (and ensuring that benefits are spread across a
greater number of artists) has been balanced against administrative
efficiency as relates to both the collecting agency and the art market
professionals required to comply with the scheme.
Paragraph 10(1)(b) provides that if a higher threshold amount is prescribed
by the regulations, there is no resale royalty payable on a sale price less
than that higher amount. This provision allows for adjustments to be made
to the threshold in future to reflect factors such as inflation and
potential changes to the art market.
Subclause 10(2) defines sale price on a commercial resale of an artwork as
the amount paid for the artwork by the buyer on the commercial resale
including GST, but does not include any other taxes or buyer's premium
payable on the sale. The resale royalty is to be calculated on the amount
that most closely reflects the value of the artwork. Inclusion of other
amounts such as buyer's premium (a fee for service) or other taxes added to
the hammer price would weaken the connection between the resale royalty
payment and the value of the artist's work
Clause 11 - Resale royalty right on artworks in existence when Act
commences
This clause provides that if an artwork exists when this Part commences, no
resale royalty right exists on the first transfer of ownership of the
artwork on or after commencement. This includes where the transfer of
ownership is under a commercial resale.
Therefore, only works acquired or created after 1 July 2009 will trigger a
resale royalty payment when they are resold through the secondary art
market. The prospective application of the right will help protect the
property rights of people who bought artworks not knowing that a resale
royalty would be payable when they resold them. It will also allow
businesses in the Australian art market to adjust to this change in their
operating environment, ensuring a smooth transition to the resale royalty
scheme.
The following examples illustrate the way in which the scheme will work in
practice:
. A sculpture created in 1994 by a now-deceased artist and first
purchased in 1995 sells at auction for a sale price of $800,000 in
August 2009, after the scheme has commenced. There will be no resale
royalty payable to the artist on this sale, as it is the first
transfer of ownership of the work following the introduction of the
resale royalty right. The same sculpture is sold again through a
dealer in July 2010 for a sale price of $900,000. This second sale
triggers a resale royalty payment of $45,000 which would be paid to
the heirs of the deceased artist.
. A collector who had purchased a limited edition etching in 2001 for
$5,000 dies in 2010, after this Bill comes into effect, and leaves the
etching to her son in her will. In 2012, the son sells the etching at
auction for a sale price of $7,000. This resale triggers a resale
royalty payment to the artist of $350, as the seller (the son) had
acquired the work following the introduction of the resale royalty
right.
. On a trip to Arnhem Land in September 2009, after this Bill comes into
effect, a gallery owner buys a painting outright from an Aboriginal
artist for $10,000. The gallery owner puts the painting up for sale at
an exhibition in December 2009, where it is purchased by an investor
for a sale price of $16,000. Even though this is the first resale of
the work, it triggers a resale royalty payment to the artist of $800
as the gallery owner had acquired the work following the introduction
of the resale royalty right.
Division 2 - Who holds resale royalty right?
Clause 12 - Who holds resale royalty right?
This clause sets out who holds the resale royalty right of an artwork at
the time of any given commercial resale and includes provisions relating to
single or joint creators of the artwork, as well as their successor/s. The
provision would assist in determining how the right will be passed on in
cases where an artist has either not created a will or created a will but
not specified who will receive the resale royalty right.
Subclause 12(1) deals with the circumstance where an artwork was created by
a single artist and the artist is identified (clause 13 defines
'identified') and living at the time of a commercial resale. In this case,
the resale royalty right on the commercial resale is held by the artist
provided he or she satisfies the residency test (clause 14 sets out the
residency test) at the time of the commercial resale. For example, if a
painting is sold at auction, the artist identified in the auction catalogue
would hold the right if he or she is still alive and is either an
Australian artist or an artist from a reciprocal country (as set out in the
residency test).
Where an artist, who is identified as the sole creator of an artwork, is
deceased at the time of a commercial resale and who satisfied the residency
test immediately before his or her death, the resale royalty right on the
commercial resale is held by the successor/s in title to the right provided
that each of those entities satisfies the residency test at the time of the
commercial resale and the succession test (subclause 12(2)). An artist
therefore is permitted to divide their right between a number of
successors.
An example would be where at the time of the introduction of the
legislation, an artist who is already deceased and therefore has not
specified who would be the beneficiary of the resale royalty right. All of
the artist's property has been left to his or her son. Under paragraph
12(2)(a) the son as the only successor in title to the right would hold the
resale royalty right.
If the artwork was created by more than one artist, subclause 12(3)
provides that the resale royalty right on a commercial resale of an artwork
is held by:
. each living artist who is identified and who satisfies the residency
test at the time of the commercial resale; and
. each successor or successors in title to the right, from each
identified artist who is no longer living and who satisfied the
residency test immediately before his or her death, provided that the
successor satisfies the residency test at the time of commercial
resale and the succession test.
This provision allows for the right to be held by artists as 'tenants in
common', so that each artist is able to leave their portion of the right to
their heirs, rather than the right being shared between the remaining
living artists once a joint creator dies.
Subclause 12(4) provides that if an entity holds the resale royalty right
on the commercial resale of an artwork by operation of subclauses (2) or
(3) or by earlier operation of this subclause, and the entity has since
died or been wound up, the resale royalty right on the next commercial
resale is held by each successor or successors in title to the right that
satisfies the residency test at the time of the next commercial resale and
the succession test.
By tying the crystallisation of the right to the time of each commercial
resale, it means that the holder of the right may change over time. For
example, the right will transfer from artists to heirs, and to heirs of
heirs, over time. Similarly, if the residency status of a right holder
changes in between sales, they may either gain or lose eligibility to hold
the right at the time of subsequent commercial resales.
Clause 13 - Meaning of identified
Subclause 13(1) is intended to assist in determining which artist created
the artwork in which a resale royalty right exists. As the right will
either be held by the artist or his or her heirs (or heirs' heirs) it is
important to be able to identify the artist in order to determine who the
current right holder is (as set out under clause 12). This subclause
provides that a person is 'identified' as an artist of an artwork at the
time of a commercial resale of the artwork, if at that time, the person's
identity is known to any key party who was involved in the creation of the
work, the transaction, or the collection of the royalty on that
transaction. This could be either:
. the seller;
. a buyer;
. any art market professional acting as the agent of a buyer or a
seller;
. the collecting society; or
. where the artwork is by more than one artist, by another artist of the
artwork.
Subclause 13(2) provides that a person is 'identified' as an artist of an
artwork at a time other than at the time of a commercial resale of the
artwork, if at that time, the person's identity as an artist of the artwork
is known to the collecting society or where the artwork is by more than one
artist, by another artist of the artwork.
For example, the artist may operate under a pseudonym but his or her
identity is known to one of the people listed above. In this case they
could still be classed as identified and be eligible to hold the right. In
addition, there is provision under clause 24 for artists to notify the
collecting society claiming that he or she holds the resale royalty right
of an artwork. Therefore, an artist operating under a pseudonym can notify
the collecting society of his or her right to the resale royalty and remain
anonymous publicly.
Clause 14 - Residency test
This clause sets out the residency requirements that a potential right
holder must meet in order to be eligible to hold the right at the time of
any commercial resale (as set out in clause 12). An individual satisfies
the residency test at a particular time if that person, at that time, is an
Australian citizen, a permanent resident of Australia or a national or
citizen of a country prescribed as a reciprocating country in regulations
(subclause 14(1)).
A country will be prescribed as a reciprocating country on the basis of
their implementation of the Article 14ter of Berne Convention for the
Protection of Literary and Artistic Works.
A corporation satisfies the residency test at a particular time if it is
incorporated under the Corporations Act 2001 or under the law of a country
prescribed as a reciprocating country or it carries on an enterprise in
Australia or a country prescribed as a reciprocating country at that time
(subclause 14(2)). This would allow foreign charitable organisations
registered under Australian law or the law of a reciprocating country or an
Australian charity that operates overseas to benefit from the scheme.
An unincorporated body satisfies the residency test at a particular time if
it carries on an enterprise in Australia at that time (subclause 14(3)).
The definition of community body as set out in clause 3, would ensure that
the royalties left to Australian community bodies would continue to benefit
the Australian community.
Clause 15 - Succession test
This clause sets out the test for determining whether an entity, who is a
successor in title to the resale royalty right, satisfies the succession
test in order to be considered an eligible right holder at the time of any
given commercial resale (as set out in clause 12). The purpose of this test
is to set out how the right can be passed on from one right holder to
another each time an existing right holder dies (or ceases to exist in the
case of an organisation) within the duration of the right.
An entity satisfies the succession test if the entity meets either criteria
1 and 2 (in subclauses 15(2) and (3)) or criteria 3 and 4 (in subclause
15(4) and (5)). Criteria 1 and 2 apply when a person passes on the right to
a successor (whether a person or an organisation). Criteria 3 and 4 apply
when an organisation is passing on the right to another organisation. An
organisation cannot pass the right on to a person.
To satisfy criterion 1, the entity must have received its interest in the
right by testamentary disposition or in accordance with the rules of
intestate succession, on the death of an individual (subclause 15(2)). This
can include where an entity inherits the right on the death of an artist or
on the death of a person who inherited the right from an artist or the
artist's successors.
Subclause 15(3) states that to satisfy criterion 2, an entity must be one
of the following:
. an individual with a beneficial interest in the right;
. a charity or charitable institution with a beneficial interest in the
right;
. a community body (defined at clause 3) with a beneficial interest in
the right;
. a person who holds an interest in the right in trust for any of the
persons listed at paragraphs (a) to (c).
To satisfy criterion 3, the entity must have received its interest in the
right on the winding up of a charity, charitable institution or community
body (subclause 15(4)). The entity must be a charity, charitable
institution or community body that was formed for substantially the same
purposes as the body that was wound up in order to satisfy criterion 4
(subclause 15(5)).
The intention is that commercial bodies cannot hold the right. Instead the
intention is that artists are able to pass on their resale royalty right to
their natural heirs or to organisations that work for the benefit of the
community, rather than for profit.
For example, an artist has made provision in his will for the resale
royalty right in his artwork to transfer to a regional youth arts centre,
which is a charitable organisation. On the artist's death, the charitable
organisation received the right by testamentary disposition. The charitable
organisation meets both criteria 1 and 2 and therefore, satisfies the
succession test.
In this example, the regional youth arts centre is then wound up, and as a
result a youth arts charity has received the resale royalty rights held by
the regional youth arts centre. If the youth arts charity was formed for
substantially the same purposes as the regional youth arts centre, the
charity meets the requirements in criteria 3 and 4 and would therefore
satisfy the succession test. However, the right could not be transferred
from the regional youth arts centre to an organisation that had a
completely different purpose, such as a charitable organisation dedicated
to human medical research.
Another example is that of a son of an Australian artist who is already
deceased at the time of the introduction of the legislation. The son was
the only successor in title and therefore, holds the resale royalty right
(see paragraph 12(2)(a)). The son meets both criteria 1 and 2 and
therefore, satisfies the succession test.
It would be possible for the son to make a provision in his will for the
resale royalty rights he holds to transfer to an Indigenous community body.
Upon the son's death, the right would transfer to the Indigenous community
body for all future commercial resales. This is the case even where there
were no commercial resales of the artwork during the period in which the
son held the right (i.e. the son had never had the opportunity to exercise
his right).
Clause 16 - Share of resale royalty right where there is more than one
artist
This clause explains how the resale royalty right is to be apportioned in
cases where an artwork has been jointly created by more than one artist.
Where there is more than one artist and they are all living, subclause
16(1) provides that each artist of the artwork that is a holder of the
resale royalty right on a commercial resale is entitled to an equal share
of the resale royalty on that commercial resale. However, artists can agree
to apportion the shares in the resale royalty differently between
themselves. All artists who had been involved in creating the work would
need to agree on the shares. The collecting society can pay the resale
royalty to reflect that agreement only if the agreement does not give the
share of the resale royalty to any other person (which would contradict the
inalienable nature of the right) other than on the death of the artist. An
artist is able to notify the collecting society under clause 24 that he or
she holds a proportion of the resale royalty right.
Subclause 16(2) sets out how joint artists can transfer their proportion of
the resale royalty right to their heirs. It provides that where there is
more than one artist but one of the artists is no longer living and that
artist was identified and satisfied the residency test immediately before
his or her death, the share of the resale royalty that the deceased artist
would have been entitled to is the proportion that passes to the artist's
successors.
For example, an artwork was created in 1980 jointly by two artists, each of
whom is identified on the work. One of the artists, an Australian citizen,
is now deceased and in his will left all his rights to his wife. His 50%
share of the resale royalty on a commercial resale will pass to his wife
and the other 50% share will be paid to the other, still living artist.
Clause 17 - Presumptions in relation to artist
This clause establishes the presumption that if a mark or name that
purports to identify a person as an artist of an artwork appears on the
artwork, this is taken to be prima facie evidence that the person is the
artist or one of the artists of the artwork. Where there is only one mark
or name on the work, that person is taken to be the artist of the artwork.
Where there is another such mark or name on the work, that person is taken
to be one of the artists of the artwork.
For example, such a mark could take the form of a signature on a drawing,
or a distinctive insignia stamped into a ceramic work, or a list of the 3
joint artists' names written on the back of an acrylic painting by an
Indigenous art centre manager, certifying that the work was created by
three particular artists working for that centre.
This clause assists in establishing the identity of the artist as set out
in clause 13.
Division 3 - Rate of resale royalty
Clause 18 - Rate of resale royalty
The resale royalty payable is a flat 5% of the sale price (as defined by
subclause 10(2)) on the commercial resale of an artwork.
Division 4 - Liability to pay resale royalty
Clause 19 - Resale royalty a debt due to holders of resale royalty right
Clause 19 provides for the creation of the resale royalty as a debt arising
between private parties. It provides that resale royalty on a commercial
resale of an artwork is a debt due to the holders of the resale royalty
right on the commercial resale by those who have a liability to pay the
resale royalty (clause 20 sets out persons who are liable to pay).
For example, where a seller has sold a painting by an Australian artist
through an art market professional, a debt is due to the artist by the
seller and, if the art market professional is acting as agent of the
seller, that person. If the artist were deceased, the debt would be due to
the artist's successors.
Clause 20 - Liability to pay resale royalty
Clause 20 sets out who is liable to pay resale royalty on a commercial
resale of an artwork. The following persons are jointly and severally
liable:
. the seller, or sellers where there is more than one; and
. each person acting in the capacity of an art market professional and
agent for the seller; and
. if there is no such agent, each person acting in the capacity of an
art market professional and as agent for the buyer; and
. if there are no such agents, the buyer or buyers where there is more
than one.
The above lists persons that are liable to pay for the resale royalty
depending on the scenario of the commercial resale. The seller or sellers
are always liable, and one of the other parties to the sale as listed above
(this can be one or more people) is jointly liable in a chain of descending
order from those most closely connected with the seller through to the
buyer or buyers at the other end. For example, the seller and buyer are
jointly and severally liable to pay the resale royalty on a commercial
resale of an artwork if there are no agents for either the seller or buyer.
However, if the seller has sold the artwork through an art market
professional who is an agent for the buyer, the seller and that person are
jointly and severally liable.
It is anticipated that in practice, the decision regarding who will
actually pay the resale royalty will be worked out during contractual
negotiations between the parties to the commercial resale. However, where
it is not specifically negotiated between the parties, the parties are
liable as set out in this clause.
Clause 21 - When does the liability to pay resale royalty arise?
Liability to pay resale royalty on the commercial resale of an artwork
arises at the time of the commercial resale of the artwork. See comments
in clause 3 above in relation to the definition of the time of the
commercial resale.
Division 5 - Collecting resale royalty
Clause 22 - Collection of resale royalty by the collecting society
Clause 22 requires the collecting society to publish a notice on its
website as soon as it is reasonably practicable after becoming aware of the
commercial resale of an artwork if the collecting society reasonably
believes that an entity may hold the resale royalty right, or an interest
in the resale royalty right, on the commercial resale under this Bill.
The publication of the notice will enable holder or holders of the resale
royalty right to notify the collecting society (under subclause 23(1)) that
it does not want the collecting society to collect the resale royalty on
the commercial resale.
Clause 23 - Collection of resale royalty by the collecting society
This clause applies unless the holder, or where there is more than one
holder, all the holders, notify the collecting society in writing within 21
days after the notice in clause 22 is published that the collecting society
is not to collect the resale royalty or enforce the resale royalty right on
behalf of the holder or holders of the right (subclause 23(1)). If there
are three holders of the resale royalty right on the commercial resale and
one holder notifies the collecting society under subclause 23(1) but the
other two holders of the resale royalty right do not, the collecting
society will collect the resale royalty for all holders of the resale
royalty right. Therefore, all right holders must agree that they do not
wish the collecting society to enforce their right in relation to a
particular commercial resale. The reason is that it would create a greater
administrative burden on the collecting society and potentially create
confusion among art market professionals if the resale royalty collected is
not always a flat 5% of the sale price.
Subclause 23(2) requires the collecting society to use its best endeavours
to collect the resale royalty payable under this Bill and, if necessary,
enforce any resale royalty right under this Bill, on the commercial resale
of the artwork on behalf of the holder or holders of the resale royalty
right. In collecting the resale royalty or enforcing the right, the
collecting society is not subject to direction of any holder or holders of
the right (subclause 23(3)).
Clause 24 - Presumptions to be made in enforcement proceedings brought by
the collecting society
This clause provides that in proceedings for the enforcement of the resale
royalty right on the commercial resale of an artwork by the collecting
society, it is presumed:
. conclusively that there is at least one holder of the resale royalty
right under this Bill; and
. that the collecting society is acting on behalf of the holder or
holders of the resale royalty right unless it is proved that notice
was given in accordance with subsection 24(1) in relation to the
commercial resale.
Clause 25 - Resale royalty right under this Act only enforceable in
Australian jurisdiction
This clause provides the resale royalty right held under this Act is only
enforceable in an Australian federal court, or a court of a State or
Territory of competent jurisdiction.
Clause 26 - If resale royalty is paid to the collecting society
If resale royalty on a commercial resale of an artwork is paid to the
collecting society, the collecting society must pay to each entity that has
given notice under subclause 27(1) and established a claim to a share of
the resale royalty on the commercial resale, that entity's share but is
able to deduct from that share the collecting society's administration fee
(paragraph 26(1)(a)). The collecting society must use its best endeavours
to locate each holder of the resale royalty right on the commercial resale
of the artwork who has not given the collecting society notice under
subclause 27(1) and pay that holder their share of the resale royalty less
the collecting society's administration fee (paragraph 26(1)(b)).
Subclause 26(2) provides that the collecting society's administration fee
must not be such as to amount to a tax. It must instead constitute a fee
for service.
The Minister may, by notice in writing given to the collecting society,
limit the administration fee that the collecting society can impose
(subclause 26(3)). This notice is not a legislative instrument within the
meaning of section 5 of the Legislative Instruments Act 2003 as it is not
legislative in character (subclause 26(4)). This provision provides an
ability for the Minister to prevent the collecting society from setting its
fees too high, and failing to consider the best interests of the right
holders in balancing its administration costs.
Clause 27 - Notice of resale royalty right
Clause 27 allows an entity that claims to hold a resale royalty right, or
an interest in the resale royalty right, under this Act to inform the
collecting society that the entity holds the right.
Subclause 27(1) provides that the notice should be in the form approved by
the collecting society. The notice should set out the entity's name,
address, proportion of the resale royalty right to which the entity claims
to be entitled and the details of the basis on which the entity makes that
claim.
The collecting society may request an entity who has given notice under
subclause 27(1) to provide further information in support of the claim
within a specified time, not less than 60 days.
Clause 28 - Notice of commercial resale
Subclause 28(1) imposes an obligation on a person to give notice to the
collecting society of the commercial resale of an artwork if the person is
a seller under the commercial resale and provided that the seller has a
connection with Australia that meets the criteria set out in paragraph
28(1)(b).
Non-compliance with this provision carries a civil penalty of 200 penalty
units for an individual or 1000 penalty units for a body corporate. A
penalty unit means $110 (section 4AA Crimes Act 1914).
The notice provided under subclause (1) must comply with the requirements
in subclause 28(2), The notice must be in writing and be given to the
collecting society within 90 days of the commercial resale (paragraphs
28(2)(a) and (b)). The notice must also include sufficient detail to allow
the collecting society to work out whether resale royalty is payable on the
commercial resale under this Act, the amount payable and to identify who is
liable to pay.
The seller can provide notice through an agent (subclause 28(3)). For
example, in drawing up a contract with a gallery dealer to sell a sculpture
on the seller's behalf, the seller could specify that the gallery dealer
had to agree to notify the collecting society of the commercial resale of
the sculpture,
Subclause 28(4) provides that if there are multiple sellers, then any one
of them can discharge the obligation to notify the collecting society of
the commercial resale on behalf of all the sellers. It outlines that where
there is more than one seller under the commercial resale and if one seller
provides notice in accordance with subclause 28(2) to the collecting
society, all sellers are taken to have given the collecting society notice
in accordance with the section.
A person who wishes to rely on subsection (3) or (4) bears the evidential
burden in relation to those matters (subclause 28(5)). The evidential
burden is reversed because that information is within the knowledge of the
person wishing to rely on the subsections.
Clause 29 - Requesting information about the commercial resale of an
artwork
Subclause 29(1) provides that the collecting society can request, in
writing, a person give the collecting society information in relation to a
commercial resale relevant to determining the amount of any resale royalty
payable on the commercial resale under this Act and who is liable to make
the payment. The information requested must be necessary for the purpose of
securing payment of the resale royalty that is due. Therefore the
collecting society can only ask for such information from a person if the
collecting society believes on reasonable grounds that that person is one
of the following:
. a seller under a commercial resale of an artwork;
. a buyer under a commercial resale of an artwork;
. an agent of a seller or buyer under a commercial resale of an artwork;
. an art market professional otherwise involved in a commercial resale
of an artwork.
A request for information made in accordance with subclause 29(1) and made
within 6 years of a commercial resale must be complied with within 90 days
(subclause 29(2)). Non-compliance with this provision carries a civil
penalty of 100 penalty units for an individual and 500 penalty units for a
body corporate. A penalty unit means $110 (section 4AA Crimes Act 1914).
Clause 30 - Recovery of amount wrongly paid by the collecting society
This clause sets out how the royalty payment must be treated in cases where
it has been incorrectly paid. Therefore, clause 30 establishes an
entirely separate collection and enforcement mechanism from those
established by clauses 22 and 23.
If the collecting society pays resale royalty to a person who does not hold
a resale royalty right on that commercial resale, or an interest in such a
right, the amount wrongly paid is a debt due by the person to whom it was
paid to the holders of the resale royalty right on the commercial resale
(subclause 30(1)). For example, if a person falsely held himself or herself
out to be the artist of a particular work and was paid the resale royalty
on a commercial resale of the artwork (as the collecting society had taken
his or her claim on good faith), that person would owe a debt to the
holder/s of the resale royalty right.
If the collecting society pays a holder of resale royalty right more than
that holder's share of the resale royalty on a commercial resale, an amount
equal to the difference between the payment and that holder's share of the
resale royalty is a debt due by the person to whom it was paid to the other
holders of the resale royalty right on the commercial resale (subclause
30(2)). For example, where there are two creators of an artwork and the
collecting society has incorrectly paid the resale royalty on a commercial
resale of the artwork to one artist, that artist owes the difference
between that payment and his/her share (50% of the total royalty paid, or
as otherwise agreed between the artists) to the other artist.
Subclause 30(3) allows the holder of the resale royalty right on a
commercial resale of an artwork to request the collecting society to
collect or enforce repayment of an amount under this section on the
holder's behalf. For example, the artist in the example above could ask the
collecting society to recover the debt owed by the other artist on his/her
behalf.
Where requested to do so under subclause 30(3), the collecting society may
collect or enforce repayment of an amount under this section on the
holder's behalf and is subject to the direction of the holder of the right
in doing so (subclause 30(4)).
Clause 31 - Return of unclaimed resale royalty
This clause sets out what the collecting society must do with the royalty
payment in cases where it is unable to locate the right holder.
Subclause 31(1) provides that if resale royalty is paid to the collecting
society on the commercial resale of an artwork and the collecting society
has been unable to locate the holder of the resale royalty right on the
commercial resale or an interest in the right for a period of 6 years
beginning at the time of the commercial resale, the collecting society must
deal with that holder's share, together with interest earned on that share,
less the collecting society's administration fee, in accordance with
subsection (2).
Subclause 31(2) sets out the manner in which the collecting society must
deal with a resale royalty where it has been unable to locate the holder of
the resale royalty right. The subclause provides that the collecting
society must distribute the amount in equal shares to the remaining holders
of the resale royalty right who can be located or if they are unable to be
located, distribute the amount in equal shares to the persons who paid the
resale royalty and who can be located, or where no such person can be
located, the collecting society may retain the amount to use in the
collection and distribution of resale royalties and the enforcement of
resale royalty rights.
Division 6 - Other characteristics of resale royalty right
Clause 32 - Duration of resale royalty right
This clause provides that the duration of a resale royalty right is 70
years following the death of the artist. If there is only one artist, it is
70 years after the end of the calendar year in which the artist dies. Where
there is more than one artist of the artwork, in relation to the proportion
of the resale royalty right held by or through a particular artist, it is
the end of the calendar year in which the artist died.
Clause 33 - Resale royalty right absolutely inalienable
This clause provides that, except to the extent permitted under the
succession test in clause 15, the resale royalty right is absolutely
inalienable, whether by way of, or in consequence of, sale, assignment,
charge, execution, bankruptcy, insolvency or otherwise. This provision is
to prevent artists being pressured into assigning their right. For
example, it will be unlawful for an artist to give their right to a buyer
in order to secure a slightly higher primary sale price. It would also
render void any attempt by the right holder to use the royalty right as
security for a loan, and would also mean that any income from the right
would not be available for distribution amongst the right holder's
creditors in the case of bankruptcy, insolvency or other cases.
Clause 34 - Waiver etc.
A waiver of a resale royalty right has no effect (subclause 34(1)).
Subclause 34(2) provides that an agreement to share or repay a resale
royalty, other than an agreement between joint artists to apportion shares
in the resale royalty differently, is void. The purpose of this clause is
to prevent artists being exploited and pressured into waiving or otherwise
dealing detrimentally in their right to receive resale royalty.
Part 3 - The collecting society
Clause 35 - Appointment of the collecting society
This clause requires the Minister, on receiving an application from a body
seeking appointment as a collecting society under subclause 35(1), to
appoint, or refuse to appoint, the body to be the collecting society
(subclause 35(2)). The appointment by the Minister under subclause 35(2) is
not a legislative instrument within the meaning of section 5 of the
Legislative Instruments Act 2003 as it is not legislative in character.
The decision by the Minister under subclause 35(2) is reviewable by the AAT
(see paragraph 49(a)).
Subclause 35(3) provides that only one body may be appointed as the
collecting society at a time and that a body must not be appointed to be
the collecting society while another body is appointed to be the collecting
society.
Subclause 35(4) sets out the requirements a body must meet before the
Minister can appoint it to be the collecting society. The requirements
include that the body be a company limited by guarantee and incorporated
under the Corporations Act 2001, that all resale royalty rights holders are
entitled to become members and that the body's rules prohibit the payment
of dividends to its members.
The Minister may determine, by legislative instrument, other matters that
the rules of the body need to make provision for to ensure that holders of
a resale royalty right and their agents are adequately protected (paragraph
35(4)(d)). This includes access by rights holders and their agents to
records of the collecting society, such as details of the royalty due to
them and the action the collecting society has taken to collect or enforce
their right.
Section 27A of the Administrative Appeals Tribunal Act 1975, which requires
a person who makes a reviewable decision to give any person who interests
will be affected by the decision, notice of the decision and the right of
the person to have the decision reviewed, will be complied with in making
the appointment.
Clause 36 - Revocation of appointment
This clause allows the Minister to revoke the appointment if the Minister
is satisfied that the body appointed as the collecting society:
. is not functioning adequately as the collecting society;
. is not acting in accordance with its rules or in the best interests of
those of its members who are resale royalty right holders;
. has altered its rules so they no longer comply with paragraphs
35(4)(c) to (d); or
. has refused or failed, without reasonable cause, to comply with
clauses 37 or 38.
The clause also allows for the body appointed as the collecting society to
request, in writing, that the Minister revoke the appointment and the
Minister can revoke the appointment if he or she is satisfied it is in the
best interests of those holding resale royalty rights to do so (paragraph
36(1)(b)).
The Minister may, by notice in the Gazette, revoke the appointment
(subclause 36(2)). The revocation takes effect on the day on which the
notice is published in the Gazette, or a later day if specified in the
notice (subclause 36(3)).
A revocation of the appointment by the Minister under subclause 36(2) is
reviewable by the AAT (see paragraph 49(b).).
Section 27A of the Administrative Appeals Tribunal Act 1975, which requires
a person who makes a reviewable decision to give any person who interests
will be affected by the decision, notice of the decision and the right of
the person to have the decision reviewed, will be complied with in revoking
the appointment of a collecting society.
Clause 37 - Annual report and accounts
The collecting society is required to prepare an annual report on its
operations each financial year ending on or after 30 June 2010 and provide
a copy to the Minister (subclause 37(1)). The Minister must cause a copy of
the report to be laid before each House of Parliament within 15 sitting
days of that House after receiving the report (subclause 37(4)).
The report must not contain any information that is commercial in
confidence or personal information (subclause 37(2)). Subclause 37(3)
requires the collecting society, in satisfying itself whether information
to be included in the report is commercial-in-confidence, to consider each
of the following:
. whether release of the information would cause competitive detriment
to a person; and
. whether the information is in the public domain; and
. whether the information is required to be disclosed under another law
of the Commonwealth, a State or a Territory; and
. whether the information is readily discoverable.
Subclause 37(5) imposes an obligation on the collecting society to keep
proper accounting records detailing the society's transactions and its
financial position. The accounting records must be kept in a manner that
will enable true and fair accounts of the society to be prepared (subclause
37(6)). The collecting society must have its accounts audited each
financial year and must send a copy of the audit to the Minister (subclause
37(7)).
The collecting society must provide reasonable access to copies of all
reports and audited accounts prepared under this clause to its members
(subclause 37(8)).
Subclause 37(9) provides that this clause 37 does not affect any reporting
obligations relating to annual returns or accounts under the law under
which it is incorporated.
Clause 38 - Amendment of rules
This clause provides that if the collecting society alters its rules, it
must send a copy of the altered rules to the Minister within 21 days along
with a statement setting out the effect of the alteration and the reasons
it was made. This is an additional measure to hold the collecting society
accountable and to ensure it continues to act in the best interests of its
members.
Part 4 - Civil penalties
Division 1 - Obtaining an order for a civil penalty
Clause 39 - Court may order person to pay pecuniary penalty for
contravening civil penalty provision
This clause provides that the collecting society may apply on behalf of the
Commonwealth to the Federal Court or Federal Magistrates Court within 6
years of a person (the wrongdoer) contravening a civil penalty provision
for an order that the wrongdoer pay the Commonwealth a pecuniary penalty
(subclause 39(1)). The wrongdoer may be ordered by the Court to pay the
Commonwealth for each contravention a pecuniary penalty if the Court is
satisfied the wrongdoer has contravened a civil penalty provision
(subclause 39(2)).
The Court will determine the appropriate amount of the pecuniary penalty,
which is not more than the relevant amount specified for the provision
(subclause 39(2)). The Court must have regard to all relevant matters in
determining the pecuniary penalty, including:
. the nature and extent of the contravention;
. the nature and extent of any loss or damage suffered as a result of
the contravention;
. the circumstances in which the contravention took place; and
. whether the person had previously been found by the Court in
proceedings under this Bill to have engaged in similar conduct.
Subclause 39(4) provides that if conduct constitutes a contravention of 2
or more civil penalty provisions, proceedings may be instituted against the
person in relation to the contravention of any one or more of those
provisions. However, that person is not liable for more than one pecuniary
penalty under this clause 39 in respect of the same conduct.
Clause 40 - What is a civil penalty provision?
This clause provides that a subclause (or clause) of the Bill is a civil
penalty provision if either the words "civil penalty" and one or more
amounts in penalty units is set out at the end of the subclause (or clause)
or if another provision of the Bill specifies that the subclause (or
clause) is a civil penalty provision.
Clause 41 - Contravening a civil penalty provision is not an offence
This clause provides that a contravention of a civil penalty provision is
not an offence.
Clause 42 - Persons involved in contravening civil penalty provision
Subclause 42(1) provides that a person must not:
. aid, abet, counsel or procure a contravention of a civil penalty
provision;
. induce (by threats, promises or otherwise) a contravention of a civil
penalty provision;
. be in any way directly or indirectly knowingly concerned in, or party
to, a contravention of a civil penalty provision; or
. conspire to contravene a civil penalty provision.
Subclause 42(2) deems that this Part applies to a person who contravenes
subclause 42(1) in relation to a civil penalty provision as if the person
had contravened the provision.
Clause 43 - Recovery of a pecuniary penalty
This clause provides that if the Federal Court or Federal Magistrates Court
orders a person to pay a pecuniary penalty that the penalty is payable to
the Commonwealth and the Commonwealth can enforce the order as if it were a
judgment of the Court.
Division 2 - Civil penalty proceedings and criminal proceedings
Clause 44 - Civil proceedings after criminal proceedings
This clause provides that the Federal Court or Federal Magistrates Court
must not make a pecuniary penalty order against a person for contravention
of a civil penalty provision if that person has been convicted of an
offence for substantially the same conduct as that constituting the
contravention.
Clause 45 - Criminal proceedings during civil proceedings
This clause provides that proceedings for a pecuniary penalty order against
a person for a contravention of a civil penalty provision are stayed if
criminal proceedings are started or have already been started against the
person for an offence that is constituted by conduct that is substantially
the same as the conduct alleged to constitute the contravention (subclause
45(1)).
Subclause 45(2) provides that if the person is not convicted of the
offence, proceedings for contravention of a civil penalty provision may be
resumed. Otherwise, the proceedings for the order are dismissed.
Clause 46 - Criminal proceedings after civil proceedings
This clause provides that criminal proceedings may be started against a
person for conduct that is substantially the same as conduct constituting a
contravention of a civil penalty provision regardless of whether a
pecuniary order has been made against the person.
Clause 47 - Evidence given in proceedings for penalty not admissible in
criminal proceedings
This clause sets out how evidence of information given or evidence of
production of documents by an individual in proceedings for a pecuniary
penalty order against the individual can be used in criminal proceedings.
Part 5 - Miscellaneous
Clause 48 - Offence - unauthorised dealing with information
This clause provides that it is an offence for a person to make a record
of, disclose or otherwise use information that was acquired by the person
in the course of performing functions or exercising powers under this Bill
(subclause 48(1)).
Subclause 48(2) sets out the defences to the section. It is not an offence
if the person is authorised to deal with information, where the person:
. records, discloses or otherwise uses the information in the course of
performing duties or exercising powers under this Bill; or
. acquires the information for any other lawful purpose; or
. obtains consent of the person to whom the information relates to the
recording, disclosure or use of the information.
A person must not be required to disclose information that the person
acquired in the course of performing functions or exercising powers under
this Bill, or produce a document or part of a document containing such
information, to a court unless that disclosure or production is necessary
for the purposes of this Bill (subclause 48(3)).
Clause 49 - Review by Administrative Appeals Tribunal
This clause provides that applications may be made to the Administrative
Appeals Tribunal for the review of a decision by the Minister under
subclause 35(2) to appoint or refuse to appoint a body to be the collecting
society (paragraph 49(a)) or a decision by the Minister under clause
36(1)(a) to revoke the appointment of a body as the collecting society
(paragraph 49(b)).
Clause 50 - Jurisdiction of Federal Court
This clause confers jurisdiction on the Federal Court with respect to the
following actions:
. for the enforcement of resale royalty right on the commercial resale
of an artwork;
. to determine who is the holder, or who are the holders, of a resale
royalty right on the commercial resale of an artwork;
. to enforce the payment of a share of the resale royalty right on the
commercial resale of an artwork from the collecting society;
. to recover amounts of resale royalty wrongly paid by the collecting
society;
. for the enforcement of civil penalty provisions; and
. relating to any other matters arising under this Bill.
Under section 4 of the Jurisdiction of Courts (Cross-Vesting) Act 1987
(Cth), State and Territory Supreme Courts would also have jurisdiction in
these matters.
Clause 51 - Jurisdiction of the Federal Magistrates Court
This clause confers jurisdiction on the Federal Magistrates Court with
respect to the actions listed. The matters conferred are the same as those
conferred on the Federal Court (see above explanation of clause 50).
Clause 52 - Additional effect of Act
This clause provides that the Act also has the effect it would have if its
operation were expressly confined to:
. giving effect to the International Convention for the Protection of
Literary and Artistic Works (the Berne Convention);
. matters external to Australia; or
. matters of international concern.
Clause 53 - Regulations
The Governor General may make regulations prescribing matters prescribed or
permitted by this Bill to be prescribed, or necessary or convenient to be
prescribed for carrying out or giving effect to this Bill.
Any such regulations are legislative instruments under section 6(a) of the
Legislative Instruments Act 2003.