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England and Wales High Court (Chancery Division) Decisions


You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Island Records Ltd. v Tring International Plc & Anor [1995] EWHC 8 (Ch) (12 April 1995)
URL: http://www.bailii.org/ew/cases/EWHC/Ch/1995/8.html
Cite as: [1995] FSR 560, [1995] EWHC 8 (Ch)

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Neutral Citation Number: [1995] EWHC 8 (Ch)
Case No. CH 1992 I 9286

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL
12th April 1995

B e f o r e :

THE HON. MR. JUSTICE LIGHTMAN
____________________

Between:
ISLAND RECORDS LIMITED
Plaintiff
-and-

(1) TRING INTERNATIONAL PLC (2) THE LONG ISLAND MUSIC COMPANY LIMITED
Defendants

____________________

Stephen Bate Instructed by Hamlin Slowe for the Plaintiff Michael Silverleaf Instructed by Marriott Harrison for the Defendants


Hearing Date - 30th March & 6th April 1995

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

  1. I have before me a motion for judgment which raises a novel question of some far reaching importance relating to the election between remedies.
  2. The Plaintiff is the owner of the copyright in sound recordings embodying performances of certain specified works of the musical artiste Cat Stevens. On the 20th November 1992 the Plaintiff issued a specially endorsed writ against the Defendants alleging infringement of copyright and claiming an injunction restraining further infringement, an order for delivery up of infringing copies, an inquiry as to damages for infringement and in the alternative an account of profits. On the 7th March 1995, the Plaintiff applied by Notice of Motion on the basis of admissions under RSC Order 27 rule 3 or in the alternative pursuant to RSC Order 14 for judgment in the terms specified in the schedule annexed to the Notice of Motion "or alternatively in such other form as is appropriate", The Schedule contains a draft order providing (1) for the grant of an injunction restraining infringement; and
  3. "(2) There be at the Plaintiffs option the following, namely either;-
    ... An inquiry be made as to what damages the Plaintiff has suffered by reason of the infringement of the Plaintiff's copyright in the Cat Stevens recordings committed by the Defendants and each of them.... ...alternatively, an account be taken of the profits that have accrued to the Defendants and each of them by reason of the infringements ..."
  4. At the hearing of the motion, it was common ground that the Plaintiff was entitled to judgment under RSC Order 14, but the question was raised as to the date at which the election had to be made by the Plaintiff between these two alternative remedies, namely an inquiry as to damages and an account of profits. The Plaintiff contended that no election should be required until after the Plaintiff had by means of discovery or otherwise sufficient information to make an informed election. The Defendants however contended that the election had to be made at the hearing of the motion. This question is of far reaching importance. It may arise in a wide variety of cases involving e.g. copyright or patent infringement, waiver of tort or the receipt of bribes by an agent (as to which see Mahesan v Malaysian Government [1979] AC 374); and on summonses and motions for judgment and at trial in cases of a split trial.
  5. In proceedings in which the plaintiff claims in the alternative damages or an account of profits, the plaintiff may seek and obtain a trial at which will be determined all issues of liability, of the assessment of damages and of calculation of profits. In such a case full discovery will include all documents relevant to the assessment and calculation, and the plaintiff can make an informed election between damages and profits in the course of the trial in the light of the information revealed on discovery and in the evidence at the trial.
  6. With a view to the saving of costs, the practice has developed, in particular in intellectual property cases, when this is practicable, to have a "split trial". The action is divided into two stages. The first stage is the trial at which the issue is limited to that of liability, i.e. whether the plaintiff's rights have been infringed. The second stage, which is contingent upon liability being established- at the first stage, is concerned with the question of assessment of damages and calculation of profits. In this way, the costs of exploring the issue of damages and profits is put off until it is clear that the defendant is liable and the issue really arises and requires determination. As a concomitant with this practice, there has likewise developed the practice of limiting discovery at the first stage to documents relevant to the issue of liability and excluding documents relevant only to the second stage. In this way the burden of discovery at the first stage is reduced, and the invasion of confidence necessarily involved in discovery is postponed and (if liability is not established) entirely obviated: see Baldock v Addison [1995] 1 WLR 158. (It may be noted that this practice was in appropriate cases adopted by the Courts of Equity in the 19th Century: see Benbow v Low 16 Ch D 93 at 98 and Fennessy v Clark 37 Ch. D 184).
  7. The price at which this cost and time saving is achieved is that the plaintiff will not before judgment at the first stage on the issue of liability have the benefit by means of discovery or otherwise of the information otherwise available on which the plaintiff is able to make an informed election as to remedy between an assessment of damages and an account of profits. The question which arises is whether in this situation (as in the case of a motion for judgment where likewise the plaintiff is deprived of the opportunity to obtain such information before judgment) in the course or at the conclusion of the hearing the plaintiff must elect between the two remedies or is entitled first to sufficient information to make an informed election.
  8. Four principles are clear. First whilst a plaintiff can apply in proceedings in the alternative for damages and an account of profits, he cannot obtain judgment for both: he can only obtain judgment for one or the other: see Neilson v Betts LR5 HL1 and De Vitre v Belts (1873) LR6 HL 319 at 321. Second once judgment has been entered either for damages or an account of profits, any right-of election is lost: any claim to the remedy other than that for which judgment is entered is forever lost: see United Australia v Barclays Bank [1941] AC 1 at 30. Third a party should in general not be required to elect or be found to have elected between remedies unless and until he is able to make an informed choice. A right of election, if it is to be meaningful and not a mere gamble, must embrace the right to readily available information as to his likely entitlement in case of both the two alternative remedies. It is quite unreasonable to require the plaintiff to speculate totally in the dark as to whether or not the sum recoverable by way of damages will exceed that recoverable under an account of profits. In an analogous situation, it has been held unreasonable to require a plaintiff to speculate whether a payment into Court is sufficient to satisfy his claim for damages for infringement of copyright before he has been afforded inspection of the records of sales in the defendants books: see Mate & Son v Samuel Stephen Ltd (1928-1935) Mac CC 257 at 261. Fourth the exercise of the right of election should not be unreasonably delayed to the prejudice of the defendant.
  9. The question raised is whether the Court can adopt a procedure which reconciles the four principles and enables a plaintiff, who has established the liability of the defendant and his right to elect between remedies, to secure the wherewithal to make an informed election before thereafter with reasonable promptitude committing himself to either remedy. The need for such procedure is made the more acute by the desirability of supporting the practice of limited discovery in case of split trials and of encouraging a plaintiff, who is so entitled, to enter judgment at an early stage in the proceedings (thereby saving court time and costs). Whilst it is true that there is no English authority where such a procedure has been adopted or even hinted at, I think that it is open to the Court to develop such a procedure and that it is just and convenient that it should do so.
  10. Support for this view may be found in the case of Minnesota Mining & Manufacturing Co v C Jeffries [1993] FSR 189. On a motion for judgment for patent infringement, Sheppard J. in the Federal Court of Australia granted an injunction restraining further infringement, ordered limited discovery to enable the plaintiff to make an informed election and deferred the hearing of the application to enter judgment for an assessment of damages or an account of profits until after this discovery was furnished. He held that a rule that the Court, immediately on finding the existence of infringement by the defendant, must require an immediate election by the plaintiff would have about it "an undesirable degree of inflexibility particularly in cases where the [plaintiff] was unaware of sales of the infringing product made by the [defendant] and whether any such sales had been profitable".
  11. In my view, the Court can at the split trial or on any other application for judgment be invited to defer entry of judgment for damages or profits. At this stage the Court may either make no order as to the remedy for infringement (as in the Minnesota case) or (as I would prefer) may grant a declaration that the plaintiff is entitled at his election to judgment for either. The Court may at the same time or thereafter give directions which secure that such information as is available and is reasonably required to enable the plaintiff to make an informed election is made available to him and that the election is made within a reasonable time thereafter. To secure that the plaintiff has the required information, the Court may direct discovery, but if the information is available in some other way (e.g. in an affidavit by the defendant or by way of audited accounts or reports) the Court may hold that the alternative means be adopted. The Court should not be deterred from this course by the fact that the information required may likewise be required on the taking of an account or an assessment. There should be no over lengthy or unnecessarily sophisticated exercise. The plaintiff is not entitled to know exactly the amount of any damages or profits to which he is entitled, but only to such information as the Court considers to be a fair basis in the circumstances of the particular case for an election.
  12. In this case, the Plaintiff has sought discovery of the Defendants' documents relevant to (1) the sums received or receivable by the Defendants in respect of their infringements; (2) the sales of infringing copies; (3) the number of infringing copies unsold; and (4) the costs incurred by the Defendants in respect of the manufacture, distribution and sale of infringing copies. The Defendants have challenged the right to order discovery, but in case such discovery can and should otherwise be ordered, so as to obviate discovery the Defendants have offered to provide an audited schedule within two months detailing the figures sought. I think that prima facie discovery can and should be granted as sought by the Plaintiff, but that the Defendants' offer of an audited schedule is an acceptable alternative. I also think (as offered by the Plaintiff) that I should require that the election be made within the seven days after the Plaintiffs receipt of the schedule.
  13. I accordingly declare that the Plaintiff is entitled at its election to an assessment of damages or an account of profits in respect of the Defendants' pleaded infringements; direct the Defendants to furnish within two months the audited schedule; and direct the Plaintiff to elect between the two remedies with seven days thereafter.


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