COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH
DIVISION (BUCKLEY J)
Neutral Citation No.  EWHC 1353 (QB)
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE MANCE
MR JUSTICE HOOPER
| EXPERIENCE HENDRIX LLC||Appellant|
|- and -|
|PPX ENTERPRISES INC. AND ANR||Respondent|
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Michael Briggs QC, Philip Jones & Jennifer Haywood (instructed by Eversheds) for the Appellant
AS APPROVED BY THE COURT
Crown Copyright ©
1. The Plaintiff and Edward Chalpin undertaking through their Counsel to the Court that no action upon the Contract between the Plaintiff and the original 1st Defendant dated 15th October 1965 shall be brought against anyone anywhere EXCEPT
(a) actions against any licensee of the Plaintiff relating to the masters specified in Schedule A hereto in respect of any breach or threatened breach of the terms of the relevant licence (a list of the licences now subsisting in respect of such masters to be supplied by Mr. Chalpin to the 1st Defendant within 10 days hereof)
(b) . . . . . . . . . .
2. . . . . . . . . .
3. (a) Defendants agree that the Plaintiff is entitled to the masters of the titles listed in Schedule A hereto being masters now in the possession of the Plaintiff and all rights of all kinds in respect of those masters and the copyright therein and the performances recorded thereon PROVIDED THAT in respect of any new licence or any extension or variation of any existing licence relating thereto
(i) the estate of Jimi Hendrix shall be entitled to a royalty of 2% of the retail selling price of records sold based upon the same formula as applies to the royalty rate payable to the Plaintiff but
(ii) should the Plaintiff receive thereunder a royalty of 6% or less then the estate shall be paid only 1% and
(iii) there shall be an account of all such royalties and payment of what is due on the last day of March June September and December in each year.
(b) Defendants further agree that the Plaintiff is entitled to honour, carry out and comply with any existing contract or licence relating to titles not listed in Schedule A full particulars of which and of the contracts and licences relating thereto shall be supplied by Mr. Chalpin to the 1st Defendant within 10 days hereof
(a) No extension or renewal of such contracts or licences shall be granted without the consent of the 1st Defendant
(b) No further or other records tapes or cassettes or other form of recording shall be issued or released except those specifically covered by such contracts or licences.
4. The Plaintiff and Edward Chalpin and Studio 76 Inc will deliver up to the 1st Defendant all masters of recordings (not hereinbefore referred to) on which Hendrix performed in any capacity whatsoever now in the possession of any of them or to which any of them is entitled and the same shall thereupon be destroyed."
The settlement agreement provided for PPX to pay £50,000 costs to Jimi Hendrix's administrator and other defendants. This sum was funded by LRI or Decca.
The present proceedings
Claims for damages and/or an account
"Such buyers may mistakenly purchase sideman recordings instead of Experience Hendrix's featured recordings, and then become disappointed and frustrated, avoiding further purchases of Jimi Hendrix music. The space available for Jimi Hendrix albums in retail record stores is generally limited, and the presence of numerous sideman recordings poses the risk of displacing featured recordings. Thus the sideman recordings both divert and discourage potential purchasers of featured recordings."
Mr Englehart QC for PPX and Mr Chaplin commented on this that a risk of displacing featured recordings could justify the injunction which has been granted for the future, but it did not follow that the risk had materialised as a result of the two breaches which occurred in 1995 and 1999.
"Considered as a matter of principle, it is difficult to see why equity required the wrongdoer to account for all his profits in these cases, whereas the common law's response was to require a wrongdoer merely to pay a reasonable fee for use of another's land or goods. In all these cases rights of property were infringed. This difference in remedial response appears to have arisen as an accident of history."
In the same vein, he drew attention to the common right to waive a tort (e.g. a conversion) and to recover any proceeds of the conversion obtained by the defendant, based on the legal fiction that the defendant acted as the claimant's agent.
"The state of the authorities encourages me to reach this conclusion, rather than the reverse. The law recognises that damages are not always a sufficient remedy for breach of contract. This is the foundation of the court's jurisdiction to grant the remedies of specific performance and injunction. Even when awarding damages, the law does not adhere slavishly to the concept of compensation for financially measurable loss. When the circumstances require, damages are measured by reference to the benefit obtained by the wrongdoer. This applies to interference with property rights. Recently, the like approach has been adopted to breach of contract. Further, in certain circumstances an account of profits is ordered in preference to an award of damages. Sometimes the injured party is given the choice: either compensatory damages or an account of the wrongdoer's profits. Breach of confidence is an instance of this. If confidential information is wrongfully divulged in breach of a non-disclosure agreement, it would be nothing short of sophistry to say that an account of profits may be ordered in respect of the equitable wrong but not in respect of the breach of contract which governs the relationship between the parties. With the established authorities going thus far, I consider it would be only a modest step for the law to recognise openly that, exceptionally, an account of profits may be the most appropriate remedy for breach of contract. It is not as though this step would contradict some recognised principle applied consistently throughout the law to the grant or withholding of the remedy of an account of profits. No such principle is discernible.
An account of profits will be appropriate only in exceptional circumstances. Normally the remedies of damages, specific performance and injunction, coupled with the characterisation of some contractual obligations as fiduciary, will provide an adequate response to a breach of contract. It will be only in exceptional cases, where those remedies are inadequate, that any question of accounting for profits will arise."
"No fixed rules can be prescribed. The courts will have regard to all the circumstances, including the subject matter of the contract, the purpose of the contractual provision that has been breached, the circumstances in which the breach occurred, the consequences of the breach and the circumstances in which relief is being sought. A useful general guide, although not exhaustive, is whether the plaintiff had a legitimate interest in preventing the defendant's profit-making activity and, hence, in depriving him of his profit."
The present case
The undertaking to account
Mr Justice Hooper:
Lord Justice Peter Gibson:
"On the facts of this particular case the plaintiffs, rightly conscious of their obligations towards existing residents, would clearly not have granted any relaxation, but for present purposes I must assume that it could have been induced to do so."