The Summer 1998 edition of The Author, besides featuring an advertisement for The Remedy, coincidentally mentions the successful conclusion of another author's hitherto unreported breach-of-contract action. This turns out to be the clearest demonstration so far of the effectiveness for authors and costliness for publishers of the judgment in Malcolm v Oxford (specifically implications 2 and 5, see The Remedy, pages 67 and 68), which by delightful irony has here rebounded on our earlier hero Richard Charkin, in his new capacity as chief executive of Macmillan. It may also have had something to do with that publisher's curious about-face over Pariah (see The Remedy, page 97). The Author's 16-line report, remarkable for both its brevity and its odd observations (the one in brackets, for example), goes:
Myers v. Macmillan Press The facts of the case were complicated... One particularly interesting part of the judgement concerned damages. As well as looking at what Mr Myers would have earned by way of advance and royalties (the usual way of attempting to assess damages), the judge also considered what would have been a reasonable sum for the work done... On that basis he would have awarded Mr Myers damages of £24,000 plus interest since 1989. However, the lost royalty claim was larger and Mr Myers was instead awarded more than £45,000 plus interest.
The judgment in the case is, as The Author says, complicated, but only by Macmillan's extraordinary final, disreputable defence against the claim. Their breach of contract was in fact again starkly simple, and even in its turns of phrase provides some ugly echoes of both Malcolm and Noble v Oxford.
In October 1986, Geoffrey Myers, an English language teacher living and working in Switzerland, who had already had a secretarial ELT course and other books formally contracted and published by Macmillan, had a meeting with the company's international publishing director Terence Creed to discuss a new project, a two-part, six-book Business English course to be called Can I Help You? At Creed's invitation, Myers wrote a specimen unit for the course, and upon its consideration was told by him in February 1987 to "go ahead with" the project. In June 1987 they agreed that Myers would receive an advance of £500 on receipt to the completed units for Part I (three books), and be paid net-receipts royalties of "10 percent of the first 30,000 copies sold and 12 percent thereafter". By August 1987 Myers had completed Part I of the course and was paid the £500 advance, and by December 1988 he had completed and submitted all three further books for Part II. In March 1989 Myers returned Macmillan's corrected proofs of both Parts incorporating various amendments requested by Creed. Then... nothing happened. For a long time, despite Myers' gentle badgering, there was no sign that the course was actually going to be published. In June 1989, Terence Creed had been replaced by a Ms Susan Holden, and in June 1991 Myers wrote to her asking:
"What about Can I Help You?, the book commissioned by Mr Creed in 1986, delivered in 1988, and then put on the shelf in an alcohol-free version (for the Middle East)?"
A year later, in June 1992, Holden replied:
"Once we are clear exactly what market we are aiming at, and how best to adapt the material to fit it, I would be happy to go ahead, with a target publication date of 1994."
Myers remained resolutely polite and co-operative for a further year, but then received this beauty:
"I appreciate that you worked on this material at the request of Terence Creed in 1986, but I'm afraid that it has never been included in my own publishing programme. I am responsible for the whole of Macmillan's ELT publishing programme, and although I try very hard to enter into any agreements entered into by my predecessor, I have to temper this with an appreciation of current marketing requirements... There is absolutely no point in publishing material that cannot be sold."
The judgment does not, of course, report the negotiations that may have followed this rejection, but obviously they were unsuccessful, for in 1994 Myers went to law. Nor does the judgment recount the details of the early litigation, but it is clear that, like Oxford in my case, Macmillan and their lawyers resisted the claim tooth-and-nail, invoking every sort of defence they could muster. They argued that the suit was invalid on procedural grounds, being barred by some obscure statute. They stated that they had lost all of their files on the proposal (Creed, of course, had no clear recollections at all). And when Myers produced his copies of their correspondence, they argued that it did not amount to a contract.
On the eve of the trial, after three years' of litigation, Malcolm v Oxford was invoked, and Macmillan was obliged to abandon its 'no contract' defence, offering Myers £30,000 in a confidential out-of-court settlement. Myers however, being by then correctly advised to expect a higher award from the court, opted for trial, and Macmillan then launched a technical counter-claim, arguing that Myers' use, with their permission, of 13 percent of the course-material from Can I Help You? in a different German-language course book published by - you've guessed - OUP(-Cornelsen) and aimed exclusively at the Swiss market in which Macmillan does not operate, by implication constituted Myers' repudiation and therefore annulment of their agreement. By the time the case came before the judge (Neuberger J, in the Queen's Bench Division), this unlikely arcanum had thus become the chief issue left to be resolved, and hence generated the spurious complexity of the judgment (3rd March 1998), in which Neuberger carefully rubbishes almost every aspect of the publisher's disgraceful last-ditch defence.
Liability settled, Myers offered two bases for the calculation of his damages: lost royalties on the estimated sales of the books; and quantum meruit remuneration (remember Planche v Colburn?) for his work done, which he claimed to have been 2,346 hours (59 40-hour weeks) at £20 per hour. The judge assessed his damages on both bases, weighing up both sides' submissions, and arriving respectively at the figures quoted in The Author, over £45,000 plus interest spread over a number of years and £24,000 (1,600 hours at £15 per hour) plus interest since 1989. He offered Myers the choice, assuming that he would opt for the former, for although it yielded less interest, which he left the lawyers to negotiate, it would undoubtedly produce a higher total. However, he also observed:
"While both bases have their difficulties so far as assessment is concerned, I agree with counsel that, in light of the evidence, the second [work done] basis is less satisfactory because it involves carrying out an exercise which does not reflect what happens in practice... assessing the damages on this second basis is unrealistic: so far as all the witnesses are aware, such a basis of remuneration has never been agreed with an author of a book such Can I Help You?"
True to Oxford form, Macmillan then argued that Myers' earnings from his other, under 10-percent-overlapping, German-translated, OUP Swiss course books should be deducted from the damages total. Mercifully, in this final meanness too, the publisher was unsuccessful.
Several parallels with Malcolm v Oxford should be noted. Myers, like me, had no formal Memorandum of Agreement (or equivalent) for Macmillan's publication of Can I Help You? He had had their formal memoranda for his earlier publications - indeed it was only because these existed that Macmillan was able to attempt its "Swiss work" defence - but for Can I Help You? his complete contract resided entirely in oral exchanges and correspondence. By the time the case reached Neuberger J, this was no longer an issue. Incidentally, in the detail of Macmillan's "Swiss work" defence is to be found a technicality - an apparent clash between the small-print clauses of the companies' two standard forms (OUP-Cornelsen's and Macmillan's) - which the judge dismissed as purely theoretical, demonstrating how the routine signing-up to unread printed memoranda can sometimes be more confusing and less contractual than a straightforward negotiation. Myers, like me, also suffered from a change of personnel, with the incomer expressly reneging on the commitments of her predecessor. And Myers, like me, after a year's hard work was fobbed off with the good old "change in the market" routine.
In the damages argument there was more familiar detail too. Myers' net-receipts royalty rates were in writing and so not in issue, and the books' retail prices and their rises were agreed, but Macmillan's average discount was not specified. Myers argued that it would have been 40 percent, Macmillan claimed 65, and the judge compromised at 50. Myers suggested that total sales of Part I would have been 80,000 and of Part II 45,000, and expert witnesses for both sides agreed that these would have been regarded as "only satisfactory" by market leaders in the ELT field. The judge, however, accepted Macmillan's self-deprecating submission that it was not a market leader and that the market generally had contracted, and he reduced Myers' figures to 48,000 and 33,000 respectively. One interesting departure from my own assessment, however, came with Myers' claim that the calculation should cover the whole 'shelf-life' of the course, which he set at 14 years. The judge broadly accepted this, projecting the books' sales 13 years forward to the year 2002, although tailing off his later figures more sharply than Myers'. All-in-all, it seems that Neuberger's assessment was a far more genuine compromise between the two sides' divergent figures than Barratt's was in my case, but then the sales of ELT course-books are doubtless far more predictable, and susceptible to reasoned expert opinion, than those of one-off philosophy texts. Neuberger's calculation certainly provides an important and encouraging new model for future similar claims.
The judgment, however, also raises many questions and mysteries, not the least of which concerns the role of The Society of Authors. Why, yet again, does The Author make only a very measly mention of what is obviously an important victory for authors generally? Could it be that for the Society successful author-litigants, the awkward-squad actually advancing the frontlines, are an embarrassment? Pending further research, this appendix should be taken as only a first draft, still awaiting the formal approval of AKME's Delegates.
INTRODUCTION: This is a signed judgment handed down by the judge, with a direction that no further record or transcript need be made (RSC Ord 59, r(1) (f), Ord 68, r1).See Practice Note dated 9 July 1990, [1990] 2 All ER 1024.
COUNSEL: D Walbank for the Plaintiff; R Millett for the Defendant
In these proceedings, Dr Geoffrey Myers ('the plaintiff') claims damages from The Macmillan Press Ltd ('the defendant') for alleged breach of contract in failing to publish an educational work ('the Work') he wrote. The Work's working title was initially Business English and subsequently Can I Help You?. The Work was to be a two-part business English course for foreign secretarial colleges and commercial schools. Each part was to have a teachers' book, a students' book and a work book.
The Facts
On 27 June 1983 the plaintiff entered into a written contract with a company in the same group as the defendant for the publication of an English language educational work for foreign commercial students, Take A Letter. This contract contained the following provisions, among others:
"1. The Publisher shall produce and publish at its own risk and expense within a reasonable time after delivery by the Author the complete transcript of the Work . . .
7. The copyright in the Work . . . shall remain vested in the Author but the Publishers shall during the legal term of copyright have the sole and exclusive right from the date hereof to produce print and publish the Work in all forms throughout the world . . .
11. The Author shall not arrange for the publication otherwise than by the Publishers or with its prior permission in writing of any abridgement or expansion of any substantial part of the Work or any other work of a nature likely to compete with the Work which is the subject of this Agreement."
On 6 April 1987 the plaintiff entered into another written contract with another company in the same group relating to a companion volume called Take Another Letter. It contained the same clauses as the earlier contract. Both these two books were duly written by the plaintiff and published and distributed by the Macmillan Group of companies.
On 6 October 1986, the plaintiff had a meeting with Mr Terence Creed, then the Publishing Director of the defendant's International Division, and they discussed the publication of the Work. The Work was to be used as an aid to teaching English as a foreign language to foreign students studying to become secretaries and junior administrative staff. Following consideration of a specimen unit, an assistant of Mr Creed instructed the plaintiff to 'go ahead' with the Work on 16 February 1987, and this was confirmed by the plaintiff on 27 May 1987. In June 1987, Mr Creed and the plaintiff agreed that an advance of £500 would be paid 'on receipt of the finished units' and that the defendant would pay the plaintiff '10% of receipts on the first 30,000 copies sold and 12% thereafter'.
The plaintiff completed the typescript of the first drafts of the students' book, the teachers' book and the work book of Part 1 of the Work and sent them to the defendant on 16 August 1987; the defendant paid him the agreed advance on 21 August 1987. According to the plaintiff's unchallenged statement of claim, the first drafts of Part 2 were completed and sent to the defendant in December 1988.
Meanwhile, according to the plaintiff, on 4 or 5 April 1988, he had a meeting with Mr Creed at which the possible publication of a Swiss version of the Work was discussed and, while Mr Creed indicated that he was reluctant to agree to this, he did say that he would consider the matter. The plaintiff says that a month or two later he received a letter, which he has now lost, in which Mr Creed stated that the Swiss Market was too small to justify the defendant publishing such an edition of the Work.
In the first half of 1988, the plaintiff approached the German publisher, Cornelsen and Oxford University Press Gmbh ('Cornelsen') who had expressed interest in publishing a Business English book for Swiss commercial colleges. These colleges had a course with which the plaintiff was familiar because, as I understand it, he worked for such colleges, and was one of the people who set the examinations for students of those colleges. His contact at Cornelsen was a Mr Caridia.
Although, not surprisingly, neither Mr Myers nor Mr Caridia could remember the details, they each said in evidence that they considered that Mr Caridia should clear any such arrangement with Mr Creed. As I understand it, this was because they were concerned that, by writing and permitting Cornelsen to publish, the contemplated book for Swiss commercial schools, the plaintiff could be doing something to which the defendant might object, and might indeed have the right to object, in light of the contract which already existed between the plaintiff and the defendant with regard to the Work.
Mr Caridia said in evidence that he telephoned Mr Creed and explained the Swiss publishing venture which the defendant and Cornelsen intended. He said that Mr Creed raised no objection because, so far as Mr Caridia could remember his understanding was, that there was no geographical overlap between the defendant's intended market for the Work and the intended market for Cornelsen's publication, namely Switzerland. Mr Caridia said that he raised the possibility of Cornelsen's publication using artwork which the defendant may have developed for the Work, on payment of an appropriate fee. Mr Creed does not remember that conversation, but is sceptical about the idea that he would have reached such an agreement. In particular, he would have expected there to have been something in writing, and would have expected to have demanded a fee. Mr Caridia agreed, in his evidence, that it would have been sensible to have had some sort of written confirmation of the conversation.
On 16 September 1988, Mr Creed wrote a letter to the plaintiff referring to the Work and the fact that he had been trying to contact the plaintiff; the letter continued as follows:
"I've to be abroad for a few days and will try again when I come back....Meanwhile, I've heard from Cornelsen and have agreed to our Frankfurt representative's informing them at the Book Fair about possible licensing of artwork for your Swiss edition."
On 5 February 1989, the plaintiff entered into an agreement with Cornelsen ('the Cornelsen contract') which (translated from German) contained the following provisions:
"1(1) The subject of this Agreement is an English Course Book for the three-year vocational commercial Schools in Switzerland hereinafter called 'the Work'.
3(1) The Author grants to the Publishers the unlimited world-wide rights all reprints and editions and grants the exclusive subsidiary rights to the Work produced by him, especially in respect of Rights of reproduction and distribution, Rights of alteration and adaptation . . .
3(2) The Author hereby declares that he has unlimited rights of disposal of his work contributions, and exempts the Publishers from any claims by third parties. . ."
The plaintiff did not tell Mr Creed about this development immediately. On 13 February 1989, Mr Creed wrote to the plaintiff in connection with the draft of the Work making comments about its content, and after making a point about the Mediterranean and Middle East markets, said this:
"On the other hand this does not apply to North European countries, as you know from Cornelsen's interest in your course and from your inside view of Swiss needs."
On 1 March 1989, the plaintiff wrote to Mr Creed dealing with his comments about Parts 1 and 2 of the Work and, making reference to a telephone conversation which the plaintiff and Mr Creed had had. This letter ended as follows:
"As I also said over the phone I am now under contract from Cornelsen's OUP and must therefore consider that a top priority."
The plaintiff then proceeded to carry out his obligations under the Cornelsen contract. It was eventually completed and published in 1990 (Part 1) and 1992 (Part 2) under the title May I Help You? ('the Swiss Work').
On receipt of the letter of 1 March 1989, and on learning that the plaintiff had entered into a contract with Cornelsen with regard to the Swiss Work, Mr Creed said in evidence that he realised that 'something had gone wrong', in that the plaintiff may have been in breach of his agreement with the defendant, but he decided to do nothing about it. He said that he may well have put a note on the file, but, as the defendant has lost both its files relating to the Work, there is no record of such a note.
Even though the plaintiff sent corrected proofs of the Work to the defendant on 1 March 1989, he had no further communication from the defendant about the Work for a long time. He wrote on 24 June 1991 to Ms Holden (who had succeeded Mr Creed since about June 1989). Having discussed certain aspects of Take A Letter and Take Another Letter, he said this:
"Finally, on a different subject, what about Business English/Can I Help You?, the book commissioned by Mr Creed in 1986, delivered in 1988, and then put on the shelf in an alcohol-free version [for the Middle East]?
The German-Swiss edition of this (Volume 1 only), now called May I Help You?, published by Cornelsen-OUP has been out for a year and is a top selling course book in the commercial schools here. A French-Swiss version is in preparation. If you are interested I can let you have a copy."
In reply Ms Holden's assistant wrote on 11 July 1991 asking for a copy. Book 1 of the Swiss Work was sent to her under cover of a letter of 1 August 1992, although she does not recall getting it. The plaintiff got no constructive reply to his letter of 24 June 1991, and he wrote pressing Ms Holden to publish the Work on 14 June 1992. She replied on 22 June 1992 saying, among other things:
"Once we are clear exactly what market we are aiming at, and how best to adapt the material to fit it, I would be happy to go ahead, with a target publication date of 1994."
Despite the fact that the plaintiff replied constructively on 22 June 1992, and sent further chasing letters, he did not get any reply until 19 April 1993 when Ms Holden wrote, referring to the Work and saying this:
"I appreciate that you worked on this material at the request of Terence Creed in 1986, but I'm afraid that it has never been included in my own publishing programme. I am responsible for the whole of Macmillan's ELT publishing programme, and although I try very hard to enter into any agreements entered into by my predecessor, I have to temper this with an appreciation of current market requirements . . . There is absolutely no point in publishing material that cannot be sold."
Although other correspondence followed, it is common ground that the last letter to which I have referred represented a clear indication by the defendant that it was not going ahead with the publication of the Work.
The plaintiff brought these proceedings against the defendant on 9 June 1995 for damages for breach of contract.
The Issues
In its original defence, the defendant denied that there was any contract; one of its alternative arguments was that any claim by the plaintiff was statute-barred. Neither of these defences is persisted in. It is common ground that a contract between the plaintiff and the defendant, whereby the defendant was to publish the Work, arose on 16 February 1987. The defendant contends that the terms of the earlier contracts (and in particular Clauses 7 and 11) were implied into the agreement ('the Agreement') between the plaintiff and the defendant relating to the publishing of the Work; although this was initially denied by the plaintiff, it is now conceded.
In these circumstances, there are really two issues between the parties, although each of them involves some sub-issues. The first issue relates to liability. The defendant contends that it is not liable for failing to publish the Work because, by entering into and/or performing the Cornelsen contract, the plaintiff was in repudiatory breach of the Agreement and the defendant has accepted such repudiation. If that is right, then the Agreement has been discharged, and the plaintiff cannot claim under it. The second issue, which only arises if the defendant fails on liability, is the measure of damages to which the plaintiff is entitled. I shall consider these two issues in turn.
Liability
It appears to me that liability raises the following questions:
I propose to deal with these questions in turn.
Prima Facie Breach
In order to establish that the Cornelsen contract was a prima facie breach of Clause 11, the defendant must show that the Swiss Work represented an 'abridgement or expansion of any substantial part of the Work' and/or that it was 'likely to compete with the Work'. So far as the former aspect of Clause 11 is concerned, I have had an opportunity of reading the most recent draft of the Work (which I understand to be the original draft, subject to the first revisions of the defendant and the plaintiff) and the Swiss Work as published. Each of the two works consists of two Parts, each of which is divided into chapters, and each chapter has various lessons. Over 13.5% of the lessons in the Work are in the Swiss Work; to put it another way, over 9.5% of lessons in the Swiss Work come direct from the Work. Of course, the point is not determined purely by reference to such mathematical comparisons; one also has to look at the structure of each of the works, and the degree to which there are other similarities. In the end, as both counsel very fairly accepted, one's view as to whether the Swiss Work can be said to represent an 'abridgement or expansion of any substantial part of the Work' is a matter of fact and degree, and to a significant extent, a matter of impression. I have reached the conclusion that the Swiss Work does represent a prima facie breach of the first part of Clause 11: the virtually word for word transliteration of over 13% of the Work into the Swiss Work in the context of two books, whose general purposes and structures are similar, leads me to that conclusion.
However, in light of the evidence, I do not consider that the publication of the Swiss Work represented or represents a breach of the second aspect of Clause 11. As a matter of language, it seems to me that the relevant question is whether, as a matter of practice, and not as a matter of theory, the Swiss Work is or was 'likely to compete' with the Work had it been published by the defendant. In this connection, therefore, the question of whether or not the Swiss Work could be published on a world-wide basis does not appear to me to be relevant. First, while it is true that there was a suggestion in Mr Caridia's evidence of the possibility of the Swiss Work being published on a very small basis in Germany, the evidence I have heard indicated that it was only published in Switzerland, and indeed that it was limited and indeed designed to be limited, to the Swiss commercial schools. The evidence also indicates to my satisfaction that the Macmillan group had no significant presence whatever in Switzerland, and never contemplated breaking into the Swiss market, at least in connection with the Work.
In connection with this last point, Mr Creed suggested that the possibility of entering the Swiss market might well have been in the mind of the defendant when deciding to engage the plaintiff's services. I do not accept that. While I see the force of the argument that it might well have been logical for the defendant to use the plaintiff's connection with the Swiss commercial schools as a means of marketing the Work in Switzerland, I do not think that happened for four reasons. Firstly, there is no suggestion of this connection having been used in relation to the marketing of Take A Letter or Take Another Letter. Secondly, I have no real hesitation in accepting the plaintiff's evidence as to the communications between him and Mr Creed in April/May 1988, when he specifically suggested to Mr Creed that the defendant publish a Swiss version of the Work, and Mr Creed declined this on the basis that the Swiss market was too small. Thirdly, there is the attitude of the defendant to the existence of the Swiss edition (about which I shall have a little more to say later): Mr Creed did not protest in any way on being told of the Cornelsen contract in the plaintiff's letter of 31 March 1989 or in the telephone conversation which preceded it; Ms. Holden did not register any objection when she received a copy of the Swiss Work (albeit that it may well be that, although she had asked for it, neither she nor anyone on her staff bothered even to look at it). Fourthly, there is the evidence of Mr Timothy Horsler, who gave expert evidence on behalf of the defendant, and who worked for an associated company of the defendant, Macmillan Publishing Overseas, between June 1987 and December 1988. He said that 'Macmillan . . . never regarded Switzerland as anything other than a peripheral market'.
Even if I am wrong and the question of whether the Swiss Work is 'likely to compete' must be judged by reference to the terms of the Cornelsen contract, I still would not think it a breach of contract. In his argument to the contrary, Mr Millet understandably relied on Clauses 3(1) and (2) of the Cornelsen contract. Although Clause 3(2) of the Cornelsen contract appears to give Cornelsen world-wide publication rights, those rights are only in respect of 'The Work' as defined in the Cornelsen contract, and that expression is defined so as to limit it to something for the Swiss commercial schools. There is no suggestion of there having been any Swiss commercial schools outside Switzerland. Additionally, it is clear from the evidence of the plaintiff, and even more from Mr Caridia, that neither Cornelsen nor the plaintiff ever intended the Swiss Work to be distributed outside Switzerland, or, indeed, outside the Swiss commercial schools. The Cornelsen contract (apparently like the written contracts which the plaintiff entered into with the various Macmillan companies) was in a standard form, according to Mr Caridia, and it is for that reason that it included Clause 3(2). It appears to me clear from the evidence of the plaintiff and Mr Caridia that neither the plaintiff (who signed on his own behalf) nor Mr Caridia (who was one of the two signatories on behalf of Cornelsen) intended the Cornelsen contract to extend rights to Cornelsen other than in respect of Swiss commercial schools, or, at the most, to Switzerland. The Swiss Work was specifically tailored for that purpose. Cornelsen had no substantial contacts or distribution systems outside Switzerland or Germany. There was no actual or intended distribution of the Swiss Work outside Switzerland, save an apparently very vague possibility of distributing a few copies in Germany. Mr Caridia was well aware of the defendant's rights, and did not understand the defendant (through Mr Creed) to be agreeing to the defendant having the right to publish the Swiss Work other than in Switzerland. Mr Caridia and the plaintiff were both, as I find, anxious not to breach the defendant's rights under the Agreement.
In all these circumstances, as a matter of the language of the Cornelsen contract and in light of the surrounding circumstances, I do not consider that the purported grant of world-wide rights in the Cornelsen contract had any significant effect. Even if I am wrong on the point of construction, the actual intention of the plaintiff and Cornelsen was that the Swiss Work be published in Switzerland alone. In all the circumstances, therefore, it seems to me that, if the effect of the Cornelsen contract is as Mr Millett contends as a matter of construction, it is liable to rectification, so that it accords with the clear mutual understanding of the parties to it, as evidenced by the way in which it has been implemented.
I have not so far referred to Clause 7. Reliance on this clause is not specifically pleaded in the Amended Defence, although the pleader has left his position arguably open by reserving the right to refer 'to the standard terms and conditions for their full terms meaning and effect as and where necessary'. I would be reluctant to decide this case on a pleading point, and therefore it is right to say that I consider that the plaintiff was prima facie in breach of Clause 7 for the same reason that I consider that he was prima facie in breach of Clause 11: enough of the Work, in terms of concept, layout, and word for word lessons, is in the Swiss Work as to fall foul of the copyright in the Work, were that copyright vested in someone other than the plaintiff. Accordingly, there would, in my judgment, appear to be a breach of the 'sole and exclusive right' granted by the plaintiff to the defendant in Clause 7. It is right to add that I do not accept Mr Millett's argument that there is a serious conflict between the world-wide rights granted by Clause 7, and the world-wide rights which could be said to have been granted by the Cornelsen contract, for the reasons I have just been discussing when considering the effect of Clause 3 of the Cornelsen contract on Clause 11 of the Agreement.
Written Consent
Mr Walbank suggests that Mr Creed's letter of 16 September 1988 to the plaintiff constituted 'written consent'. It is fair to say that this letter could be said to contemplate that there would be a 'Swiss edition' of the Work, in the sense that it appeared to take that for granted, and to be concerned with the next stage, namely whether, and if so on what terms, such a Swiss edition should be permitted to include artwork commissioned for the Work by the defendant. Nonetheless, on a fair reading, I do not think that one can interpret the letter as written consent to the publication of the Swiss Work, or a Swiss edition of the Work. To my mind, reading it on its own, it is an indication that such consent is likely to be given. Of course, any such approach to this letter is somewhat unreal, because, at least on the plaintiff's case, oral consent had already been given. I have considered whether my view, that the letter did not constitute written consent, might be altered if oral consent had already been given, bearing in mind that the existence of such oral consent would be part of the matrix of facts within which the letter falls to be construed. I have reached the conclusion that, although the matrix of facts appears to be assuming an increasing importance in relation to the interpretation of contracts, it would involve going further than the law permits to conclude that, if oral consent had already been given, 16 September letter which, on its face, does not operate to give written consent, should nonetheless be treated as itself giving such consent.
I do not think that any other letter or document prepared by the defendant can fairly be said to be a consent. In these circumstances, I reach the conclusion that no written consent, as appears to have been required by Clause 11, was given by the defendant to the plaintiff in relation to the publication of the Swiss Work.
Oral Consent
It is the plaintiff's case that oral consent to the Swiss Work was given in the telephone conversation between Mr Caridia and Mr Creed, about which Mr Caridia gave evidence and which Mr Creed does not recall.
I accept Mr Caridia's evidence that he 'cleared' with Mr Creed the publication by Cornelsen of a book similar to the Work and written by the plaintiff, on the basis that it was limited to Switzerland and specifically tailored to the curriculum in Swiss commercial schools. Firstly, Mr Caridia, and indeed the plaintiff, struck me as honest witnesses. Secondly, as I have said, it is inherently unlikely that Mr Caridia and the plaintiff would have made up the fact that they agreed that it should be cleared with the defendant: indeed it is inherently likely both that they would have so agreed, and that they would have wanted to have the appropriate clearance before entering into the Cornelsen contract. I consider, therefore, that they both believed that, through Mr Caridia's telephone conversation with Mr Creed, the writing and publication of the Swiss Work had been agreed to by the defendant. Thirdly, it is clear from Mr Creed's evidence and from his letter of 16 September 1988 that he knew that something which he called a 'Swiss Edition' of the Work was under discussion between the plaintiff and Cornelsen and that it had gone sufficiently far for Cornelsen to discuss using the artwork developed by the defendant. Fourthly, I do not find Mr Creed's evidence as to his reaction to the last paragraph of 1 March 1989 letter convincing. While certainly not deliberately misleading the court, I consider that when he said how that paragraph struck him, and that he had prepared a note, he was saying what he believed he would have thought and done, and, in so saying, he was misled both by what, with wisdom of hindsight, he thinks he ought to have thought and done, and also by his having forgotten the telephone conversation with Mr Caridia. It is clear from various aspects of his evidence that he did not have a good memory of the relevant events. In my judgment, he was not surprised to be told on 31 March 1989 that the Cornelsen contract was completed: that was what he expected.
It is fair to say that not only would it have been wise, as Mr Caridia accepted, to have confirmed in writing what he had understood was agreed with Mr Creed on the telephone, but also the absence of any such written record does cast some doubt on the accuracy of Mr Caridia's recollection. It is also a valid point that it is surprising that the defendant did not demand some sort of payment from Cornelsen or the plaintiff to permit the Swiss Work to be published. Nonetheless, these two features do not cause me to change my view as to what was said and understood between Mr Caridia and Mr Creed. Switzerland was not a market of any significance at all to the defendant; the defendant would, I think, have understood, or at least presumed, as was indeed the case, that not a great deal of the text contained in the Work would find its way into the Swiss Work; Mr Creed was apparently sufficiently out of touch with what was going on to be discussing the possibility of letting Cornelsen use some of the artwork, when it appears clear that the defendant had not even commissioned any artwork; the absence of appropriate records does not cause much surprise in the context of this case, where many documents, which one would expect to find, either never existed (such as the written contract embodying the Agreement itself) or have been mislaid (such as Mr Creed's files and the letter the plaintiff received from Mr Creed in about May 1988). Businessmen do not always run their affairs as lawyers might hope or even expect.
However, the defendant contends that oral consent will not do in light of the specific requirement for written consent in Clause 11 of the Agreement. On balance of probabilities it was, and it certainly should have been, apparent to Mr Creed, following his telephone discussion with Mr Caridia, that:
I reach these conclusions from the oral evidence given by Mr Caridia and the plaintiff and (to a limited extent) Mr Creed, my assessment of the inherent commercial probabilities, and from the contents of the very limited correspondence I have seen, but in particular the letters of 16 September 1988 and 31 March 1989 (together with Mr Creed's reaction, or, more accurately, absence of reaction, to the latter letter, as I find it).
Following receipt of the letter of 31 March 1989, it must have been obvious to Mr Creed that the plaintiff had entered into a contract with Cornelsen for the writing and publication of the Swiss Work, that he believed that this was something he could do, and that he proposed to put significant effort into the Swiss Work, and that the defendant did not object. Mr Creed did nothing to disabuse the plaintiff of this.
In all the circumstances, I consider that the defendant is now estopped from objecting to the Swiss Work being produced by the plaintiff for Cornelsen, and being published by Cornelsen in the Swiss commercial schools. In the crucial telephone call, the defendant, through Mr Creed, encouraged Mr Caridia (and, through him, Cornelsen and the plaintiff) to believe that the defendant would not object to the course which the plaintiff and Cornelsen took, and, in reliance on that, the plaintiff and Cornelsen took that course. Mr Creed's lack of reaction to the letter of 31 March 1989, while not necessary to my conclusion, reinforced that belief. In those circumstances I consider that it is not open, as a matter of equity, for the defendant now to seek to rely upon the strict terms of the Agreement, and in particular on the absence of writing, to advance an argument to the effect that that course was a breach of Clause 11.
Mr Millett suggested that, even if a telephone conversation along the lines suggested by Mr Caridia did take place, any consent given or representation made by Mr Creed was insufficiently clear or unequivocal to give rise to an estoppel. I do not accept that. It seems to me that the upshot of the conversation was that Mr Caridia was unequivocally led to believe that the plaintiff and Cornelsen could enter into an agreement for the preparation by the plaintiff, and the publication by Cornelsen to the Swiss commercial schools, of a work which was to have a similar title, aim and audience as the Work, and was to contain some of the same material as the Work, but was to be different in many substantial respects, and always on the understanding that it was to be specifically directed to the course run by the Swiss commercial schools, or at least to Switzerland.
Mr Millett contended on behalf of the defendant that this conclusion would enable any party to a contract containing a provision requiring a consent to be in writing, effectively to ignore the contractual stipulation for writing. I do not accept that point. First, where a consent is given orally, but is not acted on by the person to whom it is given, it may well be that it is open to the person giving consent to contend that the consent is ineffective, because it was not given in writing, and therefore does not conform to what the parties had agreed was required before the consent was effective. However, where, as here, the person to whom the oral consent has been given acts in accordance with that consent, equity will, if appropriate, step in: indeed, it might be said to be a classic case for equitable intervention, as, in common law, form might have triumphed over substance, and a technical point might have prevailed against the justice of the case.
Secondly, in order to succeed in his equitable claim, the plaintiff has to show not merely that he relied upon the representation, but that he did so reasonably and foreseeably. In considering whether his reliance was reasonable and foreseeable, it seems to me that the court is entitled, indeed bound, to take into account the fact that the relevant representation involved the giving of consent, and that it was pursuant to a contract under which the parties had agreed that such consent could only be in writing. In the present case, it has not been argued by Mr Millet that, if the plaintiff would otherwise have succeeded on this equitable argument, I should nonetheless hold that his reliance was not reasonable because of this factor. I think that he was right not to advance that argument. An unusual feature of this case is that Clauses 7 and 11 have been implied into an oral contract through the medium of a course of dealing; this is not therefore a case where the plaintiff, or even the defendant, could physically have consulted a document containing the terms of governing the contract between them relating to the Work. It was not suggested that the plaintiff is experienced or knowledgeable about the detailed legal aspects of contracts such as the Agreement; indeed, while he had an informed layman's knowledge of contracts in this field, I do not think the instant point, namely a legal problem with the apparent consent because of the absence of writing, is one which occurred, or could have been reasonably expected to occur, to him.
As to the point that the defendant did not agree to the plaintiff granting to Cornelsen 'world-wide rights' in the Swiss Work, I have already substantially dealt with it. It is true that the discussion between Mr Caridia and Mr Creed did not cover such a possibility, but I think that there are two answers to the point. The first is that, whether as a matter of construction or rectification, the Cornelsen contract does not really extend beyond the Swiss commercial schools or Switzerland. Secondly, what has happened in practice under the Cornelsen contract is that the Swiss Work has been published only to Swiss commercial schools and students studying at those establishments. There is no evidence to suggest that the publication of the Swiss Work has been outside Switzerland, and there is no suggestion whatever of such a possibility occurring in the future.
So far as Clause 7 is concerned, there does not appear to be any contractual difficulty about an oral consent to what would otherwise be a prima facie breach. However, Mr Millet referred me to section 90(3) of the Copyright, Designs and Patents Act 1988 which provides:
"An assignment of copyright is not effective unless it is in writing signed by or on behalf of the assignor."
As he very fairly accepted, the effect of Clause 7 of the Agreement is that the copyright in the Work remains in the plaintiff. If I am right in my analysis of the conversation which took place between Mr Caridia and Mr Creed, its effect was not concerned with copyright, which remained in the plaintiff: it was to grant a limited waiver (in relation to Switzerland) of the exclusive world-wide rights granted to the defendant under Clause 7 of the Agreement.
Repudiatory Breach
It is not strictly necessary for me to decide whether or not any breach by the plaintiff was repudiatory because, for the above reasons, I do not consider that there has been a breach of the Agreement, because what otherwise would have been a breach was consented to by the defendant. However, if that is wrong, I would not have concluded that the alleged breach of the Agreement by the plaintiff was in fact repudiatory.
It cannot, to my mind, be right that every breach of Clause 7 or Clause 11 of the Agreement constitutes a repudiatory breach. The mere fact that the clauses are of obvious commercial importance to the defendant does not mean that every breach of them is itself of importance, let alone repudiatory: one is concerned with the gravity of the breach, not with the gravity of the covenant.
The arrangement between Cornelsen and the plaintiff was in practice quite clearly limited to Switzerland, a country in respect of which I consider, in light of the evidence to which I have referred, the defendant had no expectations or intentions so far as distribution of the Work is concerned. There is no suggestion of any damage or other prejudice which would have been suffered by the defendant (had the Agreement been performed) as a result of the Cornelsen contract having been executed and implemented.
Furthermore, it appears to me that, in considering whether the breach is repudiatory or not, one may look at the communications between the parties, because, in the end; the question of whether a breach is repudiatory or not involves considering whether the party in breach was effectively evincing an intention not to be bound by the contract concerned. In this connection, even if the effect of the telephone conversation between Mr Creed and Mr Caridia did not have the effect which I have held, it seems to me that the existence and contents of the telephone conversation, viewed objectively, would have indicated to a reasonable person in the position of the defendant that the plaintiff was anxious to clear the publication of the Swiss Work with the defendant in light of the existence of the Agreement. The letter of 16 September 1988 would have led a reasonable person in the plaintiff's position to believe, in light of the telephone conversation, that the defendant knew, at least in general terms, what was going on, and was not objecting to it, a view reinforced by the 16 February 1989 letter. By subsequently informing the defendant of the existence of the Cornelsen contract (on 31 March 1989) and thereafter offering to provide, and indeed providing, a copy of the Swiss Work (in 1991), the plaintiff was openly keeping the defendant informed of what was going on. Furthermore, right until the end, the plaintiff was pressing the defendant to publish the Work, and the defendant never raised the possibility of the Swiss Work being a breach, let alone a repudiatory breach, of the Agreement.
In all these circumstances, it appears to me that two things are clear from this history. The first is that, by keeping the defendant generally in touch with the existence and progress of the Cornelsen contract and seeking to have it cleared in advance through Mr Caridia, the plaintiff at least indicated to the defendant that he did not want the Cornelsen contract to be regarded as a breach of the Agreement, that he did not believe it to be such a breach and indeed that he considered the Agreement as fully in force, which the defendant never denied. Secondly, the defendant never appears to have thought, let alone to have suggested to the plaintiff, that the existence of the Cornelsen contract in any significant way prejudiced the defendant so far as its rights under the Agreement were concerned. I consider that these factors provide significant support for my conclusion that the Cornelsen contract would not have represented a repudiatory breach of the Agreement.
If I were wrong in that conclusion, and the plaintiff was in repudiatory breach, then it seems to me that the repudiation was accepted by the defendant, when in 1993 it indicated that it was not proceeding with the Agreement. Although Mr Walbank sought to argue the contrary, this was not pleaded. However, and more importantly, I can see no basis upon which it can be said, in light of the defendant's somewhat remarkable inactivity from March 1989 onwards, that the defendant affirmed the Agreement and thereby lost its right (if any) to repudiate.
Damages
It is common ground that, as a matter of principle, the plaintiff can elect between two alternative bases for assessing damages. The first is the loss of profits which, on the court's assessment, he would have made had the defendant performed its obligations under the Agreement. The second basis is a reasonable remuneration for his efforts in preparing and editing the Work (i.e. quantum meruit). While both bases have their difficulties so far as assessment is concerned, I agree with counsel that, in light of the evidence, the second basis is less satisfactory, because it involves carrying out an exercise which does not reflect what happens in practice. In relation to both bases, there was evidence not only from the plaintiff, Mr Creed and Ms Holden (who were primarily witnesses of fact) but also from two experts, Mr Christopher Kington, and Mr Horsler, whom I have mentioned.
The issue of quantum raises three matters. The first is the measure of damages based on loss of profits. The second is the measure of damages based on a reasonable sum for the work done. The third is the question of whether or not all or some of the royalties received by the plaintiff in respect of the Swiss Work should be set off against any damages which he might otherwise recover. I propose to deal with these three issues in turn.
The First Basis of Assessment of Damages
The plaintiff has prepared a table which suggests that the total damages (exclusive of interest) on this basis should be £94,350. This assumes, as is common ground, that the plaintiff's royalties would be calculated at the rate of 10% on the first 30,000 volumes sold and 12% thereafter, on the publisher's receipts. It assesses these receipts on the assumption that the defendant would recover, on average, 60% of the shelf-price (i.e. the retail price) of each book. It assumes that, in respect of each of the two Parts, the students' book and the work book would have had equal sales. It assumes that Part 1 would have been published in 1990 and Part 2 in 1991. It assumes that the sales of Part 1 would have increased from 2,500 in 1990 to a maximum of 10,000 in 1993 and 1994, and would then have tailed off to 2003, when 1,000 would have been sold. It therefore assumes a shelf-life of 14 years and total sales of 80,000. In relation to Part 2, it assumes that 2,000 would have been sold in 1991, that sales would have peaked in 1994 and 1995 at 8,000, and would have tailed off to 1,000 in 2003. It therefore assumes total sales of Part 2 of 55,000. The price of the students' book and the work book volumes are assumed to have been respectively £4.50 and £2.50 in 1990, and thereafter to have increased modestly in most years, so that it is assumed that the respective prices in 2003 would be £7.75 and £4.75 respectively.
Apart from the 10% on the first 30,000 and the 12% thereafter, the parties have also, as I understand it, agreed that 1990 and 1991 are respectively the right dates to take for the notional publication of Part 1 and Part 2, and that the annual price per book assumed by the plaintiff in his calculations is correct.
The points at issue are therefore whether, as the plaintiff contends, one assumes that publishers' receipts are 60% of shelf-price or, as the defendant contends, less than this, and possibly as little as 35% of shelf-price, whether the annual sales suggested by the plaintiff from 1990 onwards are significantly too high, as the defendant contends, and whether the plaintiff's assessment of the shelf-life of 14 years is, as the defendant contends, much too long.
Mr Kington and Mr Horsler have helpfully agreed that the figures put forward by the plaintiff would have been regarded as 'only satisfactory' by the market leaders in the field of English language training ('ELT') publishing, but they do represent the sort of levels of sale of the Work which the defendant might have indicated to the plaintiff that it hoped could be achieved when the publication of the Work was discussed in 1986. In this connection, the Macmillan Group of Companies ('Macmillan's') was not in the top five ELT publishers, and its success was limited to Mexico, sub-Saharan Africa, Saudi Arabia and Egypt. On the other hand, Macmillan's was acquired in 1992 by a large American publisher, Chapman Hall, which had much greater market penetration in many parts of the world (e.g. in South East Asia) albeit that its reputation was more in the field of 'American English' textbooks than 'British English' textbooks.
The success of various other ELT books, and in particular books associated with teaching secretaries and businessmen English, were referred to. These books seem to show very varied performance, and their relative success appears to depend not solely on their quality, but to a significant extent on the identity of the publisher, and on the extent of the competition and the attitude of the education authorities in the relevant countries.
Taking into account the evidence I have heard and considered, I have reached the following conclusions:
I consider that the plaintiff's figures do not give sufficient weight to the fact that the market was difficult in the early 1990s, and that Macmillan's were not particularly successful in the ELT field and had specific set-backs in Egypt and Saudi Arabia. I also believe that he gave too much weight to the performance of other books which were published by more successful groups than Macmillan's. As to the expert witnesses, it appears to me that Mr Horsler was too pessimistic in his assessment, in that, while he rightly took into account the relative weakness of Macmillan's in the world-wide ELT publishing market, he overestimated that weakness in 1990 to 1992, and additionally failed to take into account the potential benefit of the Chapman- Hall takeover after 1992. Further, the performance of other publications, and in particular Take A Letter, indicate to me that he was significantly too gloomy about the likely performance of the Work. On the other hand, I think that Mr Kington erred the other way. His view 'that annual sales of 10,000 per student book were the minimum that would be achieved' was too optimistic, and ignores the relative weakness of Macmillan's and its failure to maintain its markets in Egypt and Saudi Arabia.
The 50% shelf-price assessment appears to me to be consistent with the views of both the experts.
I am closer to Mr Kington on the issue of the likely shelf-life of the Work, particularly in light of the shelf-life of other ELT works to which I have been referred. However, I think that sales would have tailed off rather more sharply than he suggests.
The Second Basis of Assessment of Damages
It is the plaintiff's unchallenged evidence that he spent 2,346 hours in total on the whole of the Work. His case is that the second basis should involve him being paid for each of these hours at the rate of £20 per hour. The defendant's case is that, while the plaintiff may have spent this number of hours on the Work, be should be remunerated by reference to a reasonable number of hours, which the defendants suggest should be 1,000, and that the rate of payment per hour should be between £5 and £10.
I have already mentioned that the exercise involved in assessing the damages on this second basis is unrealistic: so far as all the witnesses are aware, such a basis of remuneration has never been agreed with an author of a book such as the Work. I must ask myself what the plaintiff and the defendant might have agreed as a fixed rate of payment for the work the plaintiff did. If the defendant had agreed to pay the plaintiff at a fixed rate per hour worked, so that the defendant was at the mercy of the plaintiff in the sense that it would have no real control over the number of hours he worked, then it seems to me that they would agree a lower rate per hour than if they agreed a rate per hour based on a fixed number of hours, which they determined in advance was appropriate for the carrying out of the Work. That is because I am satisfied that 2,346 hours is on the high side. It is also right to bear in mind that the draft of the Work first produced by the plaintiff for the defendant was to an unusually high standard; on the other hand, included in the work carried out by the plaintiff were more menial items such as typing and pasting, which, on the evidence I have heard, represents work which, taken on its own at any rate, would not have been worth more than £5 per hour in 1986-1990.
On this basis, I have reached the conclusion that a reasonable sum would be £24,000. I arrive at that figure primarily by reference to two assessments. The first is that the defendant would not have been prepared to agree to pay the plaintiff at a rate of significantly more than £10 per hour (knowing that the defendant was at the plaintiff's mercy, as I have described), and a reasonable person in the plaintiff's position would have accepted this. Alternatively, they would have agreed £24,000 on the basis that reasonable people in the position of the parties would have alighted on 1,600 hours as the appropriate amount of time at a rate of £15 per hour.
Another way of arriving at the appropriate figure involves looking at what actually happened, namely that the plaintiff was paid a small advance (namely £500) and then took his chance with the royalties, which, unlike a lump sum for work done, would be payable in the future on an annual basis, rather than "up front", and would be dependant on the success of the book. On the assumption that the plaintiff's figures supporting his claim on the first basis do indeed represent what the defendant might well have told the plaintiff were the hoped for sales of the Work, it seems to me that a guaranteed sum of £24,000 "up front" seems reasonable.
In these circumstances, I conclude that the proper figure for damages on this second basis is £24,000, and, for the purpose of assessing interest, this sum should be treated as payable on 1 September 1989, when, as I understand it, the great majority of the plaintiff's work on the manuscripts of both parts of the Work should have been substantially completed, if the defendant had proceeded as it ought to have done.
The Defendant's Claim for a Deduction
Whether the defendant is entitled to any reduction in the damages is the final question that needs to be determined. For the defendant, Mr Millett contended that, because the royalties received by the plaintiff from the publication of the Swiss Work by Cornelsen arose from sales which could have been prevented by the defendant under the terms of the Agreement, the defendant was entitled to have this sum effectively set-off against any damages the plaintiff would otherwise be entitled to recover from the defendant. I can see that that would be a formidable argument if it could be shown that the publication of the Swiss Work was in breach of the plaintiff's obligations under the Agreement. However, I do not believe that it was. As I have indicated, the publication of the Swiss Work was pursuant to an oral permission granted by the defendant, and if it is said that such consent was defective because of the absence of writing, then, for the reasons I have given, it appears to me that the defendant is estopped from taking that point. In those circumstances, publication of the Swiss Work cannot be said by the defendant to have been in breach of the terms of the Agreement, and consequently I find it difficult to see how the defendant's argument can succeed.
Mr Millett contended that, even if the publication of the Swiss Work did not represent a breach of the Agreement by the plaintiff, the defendant was still entitled to bring into account the profits made from such publication. In this connection, he cited Hill & Sons v Edwin Showell & Sons Ltd (1918) 87 LJKB 1106. In that case, the defendant wrongly cancelled an order for the plaintiff, as a result of which the plaintiff's machinery was free to carry out other orders.
Viscount Haldane said at 1108:
"[The plaintiff] can . . . prima facie claim what would have been his profit. But he is nonetheless bound by another principle which imposes on him the duty of taking all reasonable steps to mitigate the loss to himself consequent on the breach. Moreover, if, in the course of his business, he has taken action which has actually arisen out of the situation in which his machinery was rendered free by reason of the breach, and by taking on new contracts occasioned by this situation has diminished his loss, he must give credit for the diminution, even though he may have gone somewhat out of his way to make fresh efforts because of the position in which he found himself with unemployed machinery."
I do not think that takes matters any further in the present case. When, on behalf of the defendant, Mr Creed consented (as I find he did) to the publication of the Swiss Work by Cornelsen, he was not merely doing something contemplated by the Agreement (because Clause 11 contemplated the possibility of such consent, albeit that it was to be in writing): he was consenting to the publication in the context of the Agreement still continuing, and being enforceable by and against the defendant against and by the plaintiff. It is clear both from his own evidence and from the documents (and in particular, for instance, the defendant's own letter of 13 February 1989) that, at the time Mr Creed gave such consent, and at the time that the Cornelsen contract was actually executed, the defendant both considered, and led the plaintiff to believe, that the Agreement was in full force and effect. That was also the plaintiff's understanding: otherwise, it would have been pointless for him to have corrected the proofs of Part 1 (which he returned under cover of his letter of 1 March 1989) or to write as he did in his subsequent letters during 1989 to 1993.
No doubt it would have been open to Mr Creed, when telephoned by Mr Caridia, to make it clear that the defendant was not prepared to agree to the publication of the Swiss Work, unless the plaintiff was prepared to agree to put an end to the Agreement, or to agree some modification to the Agreement. However, that is not what Mr Creed did. Further, it cannot even be said that the publication of the Swiss Work was, in commercial terms, somehow inconsistent with the subsistence of the Agreement: as I have said, the Swiss Work was specifically directed towards the Swiss commercial schools both in its conception and in practice, and the defendant never had any real intention of marketing the Work in Switzerland. If the publication of the Swiss Work was commercially inconsistent with the continuation of the Agreement, then there would be obvious force in the analogy with Hill; however, to my mind, the profits made by the plaintiff from the publication of the Swiss Work are of no more assistance to the defendant than profits made by the plaintiff in Hill would have been of assistance to the defendant in that case, if the plaintiff in that case had been able to show that he would have been able to make those profits even if the defendant had not been in breach of the contract.
Finally, even if the defendant was right in principle on this point, I do not accept that anything like the whole of the royalties received by the plaintiff in respect of the sales of the Swiss Work would have had to have been brought into account. More than 90% of the Swiss Work was entirely new matter, which took the plaintiff many hundreds of hours to compile. The right question, to my mind, is how much reasonable people in the position of the plaintiff, the defendant (and, possibly, Cornelsen) would have negotiated as a payment to the defendant to enable the plaintiff to execute and perform the Cornelsen contract notwithstanding Clauses 7 and 11 of the Agreement. There was no evidence on that issue, but I must do the best I can; and I think it right to bear in mind the following factors:
Bearing in mind all these factors, I would have thought that it would have been reasonable for the parties to have agreed that 17.5% of the plaintiff's royalties should be payable to the defendant. That, in my judgment, would have been the appropriate extent of the set-off if, contrary to my view, the defendant were entitled to a set-off.
Conclusion
In these circumstances, I conclude that the plaintiff succeeds. I imagine that, although it will not carry as much interest, the first basis for assessing damages will produce a higher figure than the second basis, and that the plaintiff will accordingly opt for the first basis. In accordance with what I indicated to counsel in argument, I hope that they will be able to agree the measure of damages in light of the conclusions I have expressed, and the amount of interest payable. If they have not agreed the damages and interest when this judgment is formally handed down, I will give liberty to apply on that issue.
DISPOSITION: Judgment for the plaintiff.
SOLICITORS: Wilkinsons; Denton Hall
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