England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		19 June 2002

Mr Justice Eady :

1. There is before the court an application by the Claimant, Psychology Press Ltd, for an interim injunction against the Second Defendant (Nelson Thornes Ltd) to restrain the company from printing, editing or publishing a book co-authored by the First Defendant (Cara Flanagan) and a Mr Michael Cardwell. The nature of that work is to some extent a matter of controversy between the parties, but broadly its purpose is to help students pass the Psychology AS Level Examinations. Its title is provisionally “Psychology AS – The Complete Companion”.
2. On 11 June 2002 I granted the injunction, as prayed, and ordered an expedited hearing to be fixed between 8 July and the end of the current term. I was able to indicate that such a window was available at the outset of the hearing but Mr Barnes, appearing for the Second Defendant, nevertheless sought to resist an injunction even over that short period for the purposes of maintaining the status quo. It was his submission that the Claimant company has no real prospect of succeeding in a claim for a permanent injunction, at the end of the trial, or indeed of establishing its cause of action against his Client. It is pleaded that it induced or procured a breach of Ms Flanagan’s prior contract with the Claimant in respect of another work for Psychology AS Level students, which she wrote with Mr Michael W. Eysenck under the title “Psychology for AS Level”. I am told that this has proved to be the best selling psychology textbook aimed at that market, with total sales since its original publication in 2000 in the region of 35,000.
3. The background is as follows. The Claimant entered into a publishing agreement with Ms Flanagan on 29 August 1999, whereby she was to prepare and deliver the work in question. It is said that she is in breach of that agreement, and indeed that she would be in further breach in the event of the Second Defendant’s proposed publication, and that such breaches have been, or are about to be, procured or induced by the Second Defendant.
4. For the purposes of the present application, it is necessary only to set out two of the clauses in the 1999 agreement:

“COMPETING WORKS

11. The author agrees that he or she will not, during the continuance of this agreement, without the consent in writing of the Publisher, print, edit or publish, or cause to be printed, edited or published, any other edition of the Work, revised, corrected, enlarged, abridged, or otherwise, or any work of character which might interfere with or injure the sale of this Work.

. . . . . . . . .

OUT-OF-PRINT PROVISION

13. When, in the judgment of the Publisher the demand for the Work is no longer sufficient to warrant its continued manufacture, the Work may be allowed to go ‘out-of-print’. In the event that the Work is not in print and for sale in at least one edition (including any reprint or inexpensive edition) published by the Publisher or under licence from the Publisher and, within eight months after written demand by the Author, the Publisher fails to reprint the Work or again offer it for sale, then this Agreement shall terminate and all rights granted to the Publisher herein shall revert to the Author (except as to artwork and illustrations, which shall remain the property of the Publisher for its own use and benefit) subject to the Publisher’s continuing right to sell all remaining bound copies and sheets of the Work on hand at the date of termination. Such termination shall not affect any licence or other grant of rights made to third parties or to the Publisher prior to the termination date to use material from the Work in other works, or the rights of either party in proceeds of such agreements. In the case of multiple Authors they shall take ownership as Joint Owners, their interests being in proportion to their respective shares of the royalties”.

5. It is part of the Claimant’s case that the Second Defendant’s proposed work falls within the wording of Clause 11 of its agreement with Ms Flanagan, in that it is of such a character as might interfere with or injure the sale of the work she co-authored with Mr Eysenck.
6. Moreover, it is said that such a provision, or one to substantially similar effect, is a standard feature of publishing agreements (although by no means universal) and that the Second Defendant must have been aware, during or prior to its association with Ms Flanagan, that she was at least likely to have been subject to the restrictions of such a “non-compete” term. The state of the Second Defendant’s knowledge is, of course, a material factor in assessing the strength or weakness of the Claimant’s cause of action.
7. The Second Defendant does not dispute that clauses along those lines are common in agreements of this type. On the other hand, arguments have been canvassed, variously, along the following lines:

i) There is no reason to suppose that the Second Defendant had actual knowledge of such a restriction;

ii) Even if Ms Flanagan’s agreement with the Claimant contained such a provision, there was no reason to assume that the Claimant would object to her involvement in the Second Defendant’s project;

iii) The Second Defendant’s proposed work would not fall within the provisions of Clause 11, since there was no reason to suppose that it might interfere with or injure the sale of the Claimant’s publication; in particular, it could not be classified as being a “like for like” publication (i.e. a “textbook”).

8. Mr Barnes has argued that the relevant legal principles are clear in the light of American Cyanamid Co v. Ethicon Ltd [1975] AC 396, Imutran Ltd v. Uncaged Campaigns Ltd [2001] 2 All ER 385 and B & P v. A, C.A., 11 March 2002. He submits that it is necessary for the Claimant to establish that its claim is “likely” to succeed at trial and that, not least because the grant of any injunction would constitute an infringement of rights of free expression, the hurdle to be surmounted is somewhat higher than that as traditionally expressed since their Lordships’ decision in American Cyanamid. My attention was invited, in particular, to the words of the Vice-Chancellor in Imutran, at paragraphs 15–19. His Lordship’s attention was focused in those passages upon the significance of the provision in s.12(3) of the Human Rights Act 1998 to the effect that no interlocutory relief is to be granted so as to restrain publication before trial “unless the court is satisfied that the applicant is likely to establish that that publication should not be allowed”. Counsel had argued before him as to the difference between that test and the one promulgated for such applications in the years following American Cyanamid (i.e. “a serious question to be tried” or “a real prospect of succeeding in the claim to a permanent injunction at trial”). The Vice-Chancellor expressed his view in the following words:

“Theoretically and as a matter of language likelihood is slightly higher in the scale of probability than a real prospect of success. But the difference between the two is so small that I cannot believe that there will be many (if any) cases which would have succeeded under the American Cyanamid test but will now fail because of the terms of s.12(3) of the 1998 Act”.

9. The Vice-Chancellor commented that the importance of freedom of expression had been given considerable emphasis long before the enactment of the 1998 statute: see e.g. Bonnard v. Perryman [1891] 2 Ch 269; Coulson v. Coulson (1887) 3 T.L.R. 846; Bestobell Paints v. Bigg [1975] F.S.R. 421 and Holley v. Smyth [1998] Q.B. 726. He made clear, however, that the requirement in s.12(4) of the 1998 Act, to the effect that the court must “have particular regard to the importance of the Convention right to freedom of expression”, while not rendering freedom of speech paramount on such applications, nevertheless contemplates specific consideration being given to this factor.
10. It is to be noted that the Court of Appeal followed and approved the test of the Vice-Chancellor in B & P v. A (“the Flitcroft case”).
11. It is Mr Barnes’ primary submission that the Claimant cannot establish that its cause of action can surmount any of these hurdles; that is to say, it could not demonstrate that it was likely to establish inducement or procurement to breach of contract – nor yet that there was any serious question to be tried or realistic prospect of success.
12. In any event, it is Mr Barnes’ case that damages would be an adequate remedy for the Claimants and, moreover, that the balance of convenience (or “the balance of justice”, as preferred by Sir John Donaldson M.R. in Francome v. Mirror Group Newspapers Ltd [1984] 1 W.L.R. 892) lies firmly in favour of permitting his Client to publish. He developed an argument also, in the context of free expression, that there was a public interest in permitting the new product into the market place, largely because of the need to make the widest possible choice available for educational purposes.
13. Finally, Mr Barnes argues that the present application has been delayed from the “deadline” which his solicitors sought to impose in April and that, if the application had been made earlier, his Client would not have been so prejudiced as to the possible date of publication.
14. The Claimant’s counsel, Mr Flynn, submits that justice requires the grant of an interim injunction over the relatively short period before the expedited trial, in order to maintain the status quo. He contends that there is a very good chance in the light of the information at present available of establishing that there was an inducement or procurement of a breach of Ms Flanagan’s contract prior to her committing herself to the Second Defendant’s new project; alternatively, that the act of printing and publishing the new work via the Second Defendant will constitute a fresh breach by Ms Flanagan of Clause 11 (and, incidentally, well after the time when the Claimant brought the Second Defendant’s attention, indisputably, to the existence of the Clause 11 restriction on 28 March).
15. For reasons explained in the witness statement of Mr Michael Forster, the Claimant’s Managing Director, dated 14 May 2002, it is also part of the Claimant’s case that damages would not be an adequate remedy in the event of their establishing the commission of the tort. The argument was developed along the following lines. If the competing work were published, it would be difficult to say which of its sales were at the expense of the Claimant’s product, which were at the expense of other competing titles, and which of its sales would be to people who would buy both the Claimant’s and the Second Defendant’s product. An additional factor relied upon is that it would be difficult to estimate the damage inflicted by the competing work upon the sales prospects of a future revised edition of the Claimant’s book. It may seem a little curious at first sight, but it appears that Ms Flanagan is quite prepared to participate, in accordance with her 1999 contract, in the production of a new edition of the Claimant’s book, with a view to publication in the Summer of 2003.
16. Mr Flynn also drew an analogy with the facts of American Cyanamid itself, in that if the Claimant’s product loses its current market dominance because of teachers moving to the Second Defendant’s competing work, it would be difficult to assess the problems of regaining that dominance. In American Cyanamid the corresponding “special factor” (for consideration on the issue of balance of convenience) was the practical and commercial difficulties for the Claimant if it found itself having to insist upon the withdrawal of Ethicon’s suture after doctors had become used to it in the run up to trial. It is, of course, a factor relevant both to the status quo and the adequacy, or otherwise, of financial compensation.
17. Having summarised the issues canvassed before me, I should now turn to the factual background. Mr Forster reminded Ms Flanagan of her obligation not to participate in the publication of a competing work by e-mail dated 25 September 2000:

“I notice in the Amazon listing that you are producing an AS book for Phillip Allan updates. I hope this would not be competitive with our book. Revision Aids are OK, but another text would be a problem.”

18. She replied:

“No, I’m doing a ‘Unit Guide’ which is essentially a set of questions and answers. Don’t worry!

Cara”.

19. I was told by Mr Forster, that Ms Flanagan was given several other reminders of this restriction in the course of telephone conversations in the period leading up to February 2002.
20. He explained also why he was relaxed about revision guides. As far as he is concerned, such works are used for the purpose of revision in the immediate run up to the examinations and they tend to be bought in addition to text books. The evidence is that they also have a different selling season, in accordance with this separate function. Most are bought in the April period, whereas most textbook sales would take place in the July – September period in readiness for a new academic year.
21. According to Mr Forster, Ms Flanagan mentioned to him in January of this year that she was writing a book with Mr Cardwell but described it as a “diagram book” which would not compete with the Claimant’s product. Mr Forster’s evidence is that he took this to be referring to a title in the Oxford University Press Diagrams series of revision guides, and thus he accepted that such a work would in its nature not be competitive.
22. He discovered, however, in March that Ms Flanagan was in fact co-authoring what he perceived to be a directly competitive text (namely, the Second Defendant’s proposed work). The information came to him from another publisher, Hodder Arnold, which is a division of Hodder & Stoughton.
23. I have been shown a copy of the work Ms Flanagan co-authored with Mr Eysenck and a folder containing proofs of the Second Defendant’s work. Arguments have been addressed to me, some more semantic than others, as to the similarities and differences between the two works. It is the Second Defendant’s case that its draft would not fall within the category of being a “textbook” (although it is to be noted that Clause 11 of the 1999 agreement is not limited in scope to “textbooks” as such, but is wide enough to embrace any work likely to compete).
24. The Second Defendant has put its case in various ways at different times, and its arguments are not always easy to reconcile. Obviously, for the sake of the present application, it is convenient to allege that its draft is closely analogous to a revision guide or companion. On the other hand, the intention is to publish as soon as possible and, presumably, in order to make an impact in the market place in time for the new academic year. The draft is described in various places, including on the front page, as “The Complete Companion”. I had some difficulty in grasping what a “complete companion” would be. There is an argument to the effect that the phrase is directed towards having the best of both worlds. While it may serve the purpose of being a “companion” (i.e. a companion to a fuller textbook), the implication that it is a “complete companion” might suggest that it is directed towards supplanting existing textbooks and fulfilling all the student’s (and teachers’) needs. This is vehemently disputed on the Second Defendant’s behalf, but it seems to me an argument that may very well succeed at trial – not least against the background of the Second Defendant’s own internal documents exhibited (with commendable frankness) to the witness statement of Mr Rick Jackman, the List Development Manager of the Second Defendant, having responsibility for vocational and further educational publishing.
25. In his witness statement, at paragraph 12, Mr Jackman told me that at no time did he ask Ms Flanagan or Mr Cardwell whether they were in breach of their contracts with their existing publishers. He added “It never occurred to me to do so as I was clear that our book was not a textbook”. I found this passage difficult to reconcile with a document exhibited as “RJ1” and described as a “Project Investment Appraisal”. This was apparently tabled at a meeting on 11 September 2001 and it was generated as part of the Second Defendant’s internal procedures for obtaining authorisation for a new publication. The proposed work is described at various points as being a “textbook”, although I am now told that this was for want of any more appropriate expression in the Second Defendant’s existing vocabulary. More significantly, however, there are passages within the document which strongly suggest that the Second Defendant, as indeed would be apparent to anyone who attended the 11 September meeting or who was subsequently sent a copy of the appraisal, was intending that the new project should be aimed at competing with existing textbooks.
26. Under the heading “Market research undertaken”, it was said that feedback strongly suggested that there was scope for this new “resource” for the following reasons:

1) Current AS books for this course contain too much detail and breadth for AS level.

2) Some AS students are de-motivated and overloaded with too much exam work. They do not always see Psychology as their main subject and require more hand holding than current resources provide.

3) Course material is required at a level between GCSE and A Level (closer to the former).

27. On the same page reference is made both to Mr Cardwell’s existing textbook, published by Collins, and to Ms Flanagan’s book co-authored with Mr Eysenck. These are described in such a way as to suggest that the new work proposed by the Second Defendant might very well replace them, or at least compete with them to a significant extent.
28. In the same document one of the “unique selling points” was said to be that it would be the first AQA ‘A’ AS Level Psychology book to be specifically written at a level appropriate for AS candidates. It was added, “It contains only what the students need to know for the course”. In other words, the claim being made was not that it would be a suitable revision guide, or a companion to an existing textbook, but that it would serve the student’s needs because it was, as it were, shorn of all unnecessary “flab”.
29. In my judgment, however, the most significant passage of all was under the heading “Competition”. This contained the sentence:

“The difficulty with all these texts is that they supply too much content at to [sic] high a level for average AS level students. There are no bespoke textbooks written purely with the new AQA AS level in mind”.

30. There is then a section making the following claims:

“Why we will be better

We are offering a bespoke resource for this course, written by the Chief Examiner and Principal Examiner, with the aim of providing only what the students needs to know for success. The content is supported by a range of supporting features including worked exam questions by the authors. The material is presented in a lively and engaging, spread by spread fashion, and in full colour to make it accessible and stimulating. Each spread will equate to roughly an hour study plus homework, and this approach will help new teachers to the subject plan their workload”.

That is the passage which I find most difficult to reconcile with the evidence of Mr Jackman.

31. On the same page, again under the heading “Competition”, the competition expressly listed is that of “Flanagan & Eysenck”. It is not, of course, for me at this stage to decide the merits of the claim in tort, but I can at least conclude that there is a powerfully arguable case that the Second Defendant was fully aware that the project, as initially conceived in the latter part of 2001, was intended to compete with the Claimant’s product and serve the function of a “textbook” rather than that of being merely a revision “aid”, “guide”, or “companion”. The fact that it is now being described as a “companion” does not seem to me to meet that point of substance.
32. Further support is added to the Claimant’s case by the original claim on the Second Defendant’s website that “this book contains everything the AS student needs: a textbook, revision guide, questions and answers and a dictionary”.
33. Another interesting passage in Mr Jackman’s witness statement, contained in paragraph 8, is that in which he describes a meeting between him, Ms Flanagan and Mr Cardwell on 4 September 2001:

“I believe that at this meeting I asked both of them how they were planning to broach the plans for the new book with their existing textbook publishers. Their response was that they would mention it at a convenient time. They made it clear that they did not consider it a concern because they did not consider this project in competition with their main textbook. I felt entirely comfortable with this as I was not interested in yet another AQA A textbook, and the three of us were discussing an entirely different and complementary resource concept”.

34. That, again, I find difficult to reconcile with internal appraisal and website entry which I have just described. Apart from that, however, it seems to me potentially significant that Mr Jackman thought it appropriate to ask Ms Flanagan and Mr Cardwell how they were planning to “broach the plans for the new book” with their existing publishers. He plainly thought there was a need to do so. In the light of the acceptance that “non-compete” provisions are common in the publishing world, it seems to me that he must have been contemplating a need for the authors to obtain “clearance” through consultation with those publishers.
35. It is also difficult to understand how Mr Jackson could feel “entirely comfortable” with the proposed co-authors’ assurances that they did not consider the new project to be in competition, since it is quite apparent from the appraisal that the Second Defendant’s staff clearly thought it was in competition. It is hardly likely that the proposed co-authors and the personnel within the Second Defendant’s organisation were working at cross-purposes on this fundamental issue.
36. It is true that the Second Defendant obtained warranties from Ms Flanagan to the effect that she had no prior inconsistent contractual obligations, and reliance is placed on those. But, in the circumstances I have summarised, Mr Flynn argues that these cannot have been relied upon.
37. This background naturally throws into relief the bland assurances which, according to Mr Forster at least, Ms Flanagan was giving him in January 2002. It is true that there is a dispute between them as to exactly what was said, but that conflict can only be resolved in the light of cross-examination. Suffice to say for present purposes, there is in my judgment a clearly arguable case to the effect both that Ms Flanagan was in breach of contract and that the Second Defendant was aware of this and encouraging it. I noted the Second Defendant’s evidence that the first approach came from Ms Flanagan, rather than from the Second Defendant, but I cannot regard that as determinative on the tort of inducement – and certainly not at this stage.
38. Tentatively raised by the Second Defendant in argument was the unusual defence of “justification”, as to which a convenient summary of the principles is to be found in Clerk & Lindsell (18^th Edn.), at paras. 24-63 and 24-64. I was unimpressed by this argument, which would appear to be predicated upon a “moral” obligation on the Second Defendant for which I could find no evidence.
39. I turn to the matter of the adequacy of damages. There was something of an irony attaching to the Second Defendant’s submission that damages would indeed be an adequate remedy for the Claimant, in the light of the fact that Mr Barnes was arguing that the cross-undertaking proffered by the Claimant would not afford adequate protection to his client. Their positions are not entirely on all fours, however, because it is true to say that there is no established pattern of sales or demand for the Second Defendant’s proposed project, whereas there is a two year track record available for that of the Claimant. Nevertheless, for the reasons advanced by Mr Flynn, which I have already summarised, I have come to the conclusion that damages would not be an adequate remedy for the Claimant.
40. It is obvious, although also important for me to take into account, that the grant of an injunction on the present application will not be determinative, finally, of the Second Defendant’s rights (as can sometimes happen on interlocutory applications), since there is the prospect of an imminent trial for that very purpose. I am being asked to grant temporary protection purely for the purpose of maintaining the status quo. Mr Barnes described the status quo as being “dynamic”, in the sense that his client is trundling on with preparations and expenditure with a view to publication. Mr Flynn characterised the status quo, on the other hand, and in my view correctly, as being simply that the Second Defendant’s work has not yet been published. I am quite satisfied that in the light of the history I have described the balance of convenience (or of justice) lies firmly in favour of granting this interim protection.
41. I should now address “specifically” the matter of freedom of expression. The prospect of any restriction imposed by the court upon freedom of expression must, of course, be taken seriously. That is especially so when the court is being asked to restrain the fruits of investigative journalism, particularly with regard to matters of public interest, or in relation to ephemeral matters where newsworthiness may quickly fade. Here, I must ask myself whether there is any countervailing public interest which renders it necessary (in accordance with the considerations identified in Article 10(2) of the European Convention) to restrict the Second Defendant’s freedom of expression (or indeed, for that matter, the rights of Mr Cardwell and Ms Flanagan).
42. In my judgment, there is such a countervailing interest. It may be identified in general terms as relating to the sanctity of contract or, more specifically, to the public policy exemplified in the law of contract whereby the court regularly enforces provisions for the restriction of unfair competition (provided always that they are reasonable and proportionate).
43. As for delay, I was told that there had been discussions between the parties with a view to reaching an accommodation. That is to be encouraged rather than penalised. Moreover, the deadline which the Second Defendant sought to impose unilaterally in mid-April appears to have involved a change of heart, since greater leeway had been contemplated two days earlier. Ironically, because of the vagaries of listing, had the application been heard three weeks earlier the July trial window would not have been available. The trial could not have been listed at that stage until October. In the event, therefore, the matter can be resolved before the end of July. This would, I gather, allow publication to take place in September, if appropriate.
44. In the circumstances, I do not believe that the period of delay relied upon was in any way to be criticised as wasteful, since the Claimant was obtaining five “expert opinions” with a view to supporting its position in the negotiations (albeit to no avail). Nor, as it happens, has the Second Defendant been prejudiced.
45. Another factor prayed in aid was the impact the grant of an injunction would have on a third party, namely Mr Cardwell. My attention was drawn in the context to Spry on Specific Performance (6^th Edn.) at pp. 153-4. I accept that it is a factor to be weighed in the balance, and that the court should take into account any unfairness or hardship he might be caused. That has to be assessed, of course, in the light of the particular circumstances, which here would include Mr Cardwell’s close involvement in the discussion of the project from an early stage and its potential impact upon existing textbooks (for example, on 4 September 2001). I am not persuaded that any effect upon Mr Cardwell is such as to justify the refusal of an order which would otherwise be appropriate.
46. No point is taken on the cross-undertaking to the effect that the Claimant may not have the resources to meet it but, as I have said, the Second Defendant does suggest it would not be possible to calculate their lost sales sufficiently accurately for it to be of practical value. Since it appears that the impact of the injunction would be a maximum of two months delay in the launch of the product, I am not persuaded that a realistic assessment could not, in due course, be made once a track record is established.
47. For all these reasons, I decided that it was right to grant the Claimant the interim injunction sought against the Second Defendant.