Compromise - Evans v Trebuchet Design Ltd and Another

Author EvaK Licence CC BY-SA 2.5 Source Wikipedia Harwich

Jane Lambert

Intellectual Property Enterprise Court, Small Claims Track (HH Judge Hacon) Evans v Trebuchet Design Ltd and another  [2020] EWHC 3037 (IPEC) (20 Oct 2020)

This was an application by the defendants to an action for copyright and database right infringement and breach of contract to strike out the claim on the ground that the dispute had been compromised.  Although the case was decided in the small claims track of the Intellectual Property Enterprise Court, it concerned important matters of principle including the rule in Henderson v Henderson  (1843) 3 Hare 100, 67 ER 313, [1843] UKPC 6, the formation of contracts and costs in the small claims track. The importance of the case is signified by the fact that it was argued before the Enterprise Judge by patent counsel and a senior solicitor and trade mark attorney advocate whose public-spirit and oral and written advocacy were rightly commended by the learned judge.

The subject matter of the claim was a yachting guide published by the Harwich Haven Authority which contains a chart of waters in the Harwich Haven area. Between 2000 and 2017 the guide had been compiled by a company called Peter Evans UK Ltd. and from 2017 by a firm called  J and P Graphic Design Suffolk of which the claimant was a partner.  In 2018 the Authority asked Trebuchet Design Ltd to compile the guide.  At paragraph [8] of his judgment, Judge Hacon quoted the firm's complaint as set out in its particulars of claim:

"For 12 years we designed and printed the HHAYachting Guide. We lost the work without reasonable warning.

We were surprised to see our artworks had just been re-coloured, but all our artwork illustrations were there, errors and all! We would have expected the design company to redrawn all artworks. They were not and 20,000+ leaflets were distributed. Trebuchet Creative Ltd removed our copyright sign and re-worked our artworks for profit. This artwork has 80% been repeated for the second year, despite our request to their solicitors to remove all our files. This also includes the HHA and Trebuchet website."

Those particulars of claim were issued by the firm on 10 Jan 2019.  The relief that it sought in those proceedings was a ruling as to whether that conduct amounted to theft and if it did, compensation.

On 23 Aug 2019, solicitors acting for Trebuchet and the Authority wrote to the claimant as follows:

"In the light of the above your claim is bound to fail, either because permission for an extension to serve the claim will be denied, the claim will be struck out or defeated in a summary judgment application or following a trial on the merits. Nonetheless, our clients wish to reiterate their previous offer of payment to you of £3,000 (inclusive of VAT), in full and final settlement of this matter. In the circumstances, acceptance of this offer would benefit you greatly, as it covers your claim issue fee and stops any future costs awards being made against you, where our client would hold you responsible for any costs incurred as a result of your failed claim.

This offer remains open for acceptance until Friday 6 September at 4pm. If it has not been accepted by then it will automatically expire and be incapable of later acceptance. We reserve the right to produce a copy of this letter at the appropriate time and in particular when the question of costs is being considered.

We hope this matter can be resolved amicably at this stage, before any further unnecessary fees are incurred and look forward to hearing from you."

The writer of that letter appeared to be one Jamie Short.  The claimant replied:

Just to confirm as I don't use your legal jargon.
I accept the offer as last given on the 23rd August, £3000 and case closed, no expenses against me.
Please can you confirm you received this.
Yours sincerely.
Peter Evans"

Despite that apparent acceptance of the defendants' offer, the £3,000 was never paid.  The solicitors sent the claimant a draft settlement agreement that contained a confidentiality clause to which the claimant objected.  None of the parties ever signed that agreement.   The claimant then raised a new action in his own name in respect of the latest guide claiming the relief mentioned in the first paragraph.  It was those subsequent proceedings that the defendants sought to strike out on the ground that they were an abuse of the process of the court.  

The first point that the judge had to decide was whether the earlier proceedings brought in the name of the firm had been compromised.   The claimant argued that it had not.   His advocate submitted that the response to the offer of 23 Aug 2019 was correctly characterized as a counter-offer, for the following reasons.   First, the £3,000 had never been paid.  Secondly, the draft submitted by the defendants' solicitors on 2 Aug 2019 had never been signed. The claimant's advocate argued that the payment of the £3,000 was plainly offered only on condition that Mr Evans accepted what she called a"gagging provision". She contended that the correct characterization in law is that there was a series of offers and counteroffers and no concluded agreement was reached because the claimant would not be gagged according to the terms of the draft settlement agreement. For that reason, the defendants had not paid £3,000.

The learned judge rejected that argument.  He said at [21]:

"It seems to me that there was an offer by the defendants to settle on 23 August 2019 and the offer was accepted by Mr Evans on 30 August 2019. There was a binding agreement. It was not an agreement made subject to contract. It may be that if the parties had signed the draft prepared by [the defendants' solicitors] in October of that year, then there would have been a further agreement modifying the terms of the August agreement but I need not speculate about that. It seems to me that there was an agreement made in August 2019, an agreement to settle the dispute for the payment of £3,000 to Mr Evans."

He added in the next paragraph that the defendants sought to amend or supplement the terms of the agreement, including a proposed agreement as to confidentiality. The proposed amendment was never agreed and in consequence, Mr Evans is not bound by that clause. However, the earlier agreement remained in place. The dispute had been settled and the defendants still owed the claimant £3,000.

Judge Hacon's decision on the settlement agreement did not quite dispose of the second proceedings because they had been brought in the name of the claimant and not the firm and he was seeking relief for database right infringement and breach of contract as well as copyright infringement.  It was here that defendants invoked the judgment of Sir James Wagram in Henderson:

"where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter[s] which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."

That principle has been endorsed by the House of Lords in Johnson v. Gore Wood & Co.  [2001] BCC 820, [2001] PNLR 18, [2001] CPLR 49, [2001] 1 BCLC 313, [2001] 2 WLR 72, [2000] UKHL 65, [2002] 2 AC 1, [2001] 1 All ER 481 and by the Supreme Court in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd  [2013] UKSC 46, [2014] 1 AC 160, [2013] WLR(D) 265, [2014] AC 160, [2013] 4 All ER 715, [2013] RPC 29, [2013] 3 WLR 299.

The judge accepted that submission.   He referred to Foskett on the Law and Practice of Compromise at para.2-08 at paragraph [23]:

"A familiar and well established formula for settling disputes is in the following (or similar terms):

'A agrees to accept from B the sum of [figure] in full and final settlement of all claims which he has or may have arising from [the specified incident or other state of affairs].'

The intention of wording of this nature is plain. It is intended that the payment should discharge finally all claims that have not merely already been advanced, but also those which might subsequently be advanced in connection with whatever incident or state of affairs had brought the parties into dispute. It follows that the intention of the agreement underlying the use of this formula is that an issue not yet identified or formulated is also to be regarded as comprehended in the settlement."

His honour said at [24]:

"I agree with what the authors of Foskett say in that passage. It would undermine the public policy of not allowing parties to bring successive actions about the same complaint against the same defendants if that policy could be evaded by assigning the rights in question to a new party or raising new ways of framing the complaint that could have been raised the first time around. In my view the complaint in the current action has been settled. For those reasons, I will strike out the claim."

There remained the question of costs. In the small claims track CPR 27.14 (2) generally restricts the costs that can be recovered from an unsuccessful party to court costs, £260 where an injunction has been sought, loss of earnings up to £95 a day, travelling expenses and £750 for expert's fees.  The only exception is CPR 14 (2) (g) which enables the court to order a party to pay 

"such further costs as the court may assess by the summary procedure and order to be paid by a party who has behaved unreasonably."

The defendants claimed damages under that subparagraph for the following reasons:

"First, because he should never have brought this action given that the complaint had been settled. Secondly, by an email from a Mr Short of Taylor Vintners dated 23 July 2020 the defendants made an offer of £10,000 to settle these proceedings. Mr Beebe pointed out that £10,000 is the maximum level of damages that could have been awarded in this track in any event and this was rejected by Mr Evans. Thirdly, I was taken to evidence from Anthony Fletcher of the second defendant. He said that Mr Evans had made visits to the first defendant's premises which, according to Mr Fletcher, has left employees of the first defendant feeling exposed and vulnerable to his unpredictable behaviour."

The judge considered each of those arguments but concluded at [30] that he was not able to accept that the claimant has behaved unreasonably and that the usual rule as to costs in the small claims track should be applied. He awarded the defendants their court costs.

Anyone wishing to discuss this article, compromise, the rule in Henderson v Henderson or costs in the small claims track may call me on 020 7404 5252 or send me a message through my contact form.


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