The Bargain Pages Ltd. v Midland Independent Newspapers Ltd.

By a Tomlin order made on 11th November 1996 passing off proceedings relating to classified advertisement newspapers commenced by The Bargain Pages Ltd ("BPL") against Midland Independent Newspapers Ltd ("MINL") on 27th June 1995 were settled. The terms of settlement scheduled to the order imposed restrictions on MINL as to the name and get-up under which it might publish and distribute its papers. In addition it was required to procure that its parent, subsidiary and associated companies controlled by it should be bound by the terms of the agreement as if they themselves were party to it. The order provided in conventional terms that all further proceedings in the action were stayed "except for the purpose of carrying the said terms into effect" and for that purpose the parties were to be at liberty to apply.

During the next six years corporate reorganisations took place on both sides. Thus on 22nd August 2001 BPL became a subsidiary of Bargain Pages Media Ltd ("BPML") and its publishing business was transferred to BPML. MINL became a subsidiary of Mirror Group plc in November 1997, which, in its turn, became a subsidiary of Trinity Mirror plc in August 1999. The other relevant company is Midland Newspapers Ltd ("MNL"). In 1996 it was called The Hinkley Times Limited and was independent of either BPL or MINL. MINL acquired its issued share capital in January 1997. It changed its name to Midland Newspapers Ltd in December 1997 and became a wholly owned subsidiary of Trinity Mirror Regionals Ltd, itself a subsidiary of Trinity Mirror plc, in January 2001. Thus MNL was a subsidiary of MINL from January 1997 to January 2001. Since then it has been associated with MINL as each is a sub-subsidiary of Trinity Mirror plc, but it has not been controlled by MINL.

In January 2003 BPML advertised the launch of a Coventry and Warwickshire edition of its Bargain Pages on 31st January 2003. On 30th January 2003 MNL launched a new paper under the name of Bargain Hunter and with a get-up not unlike that of Bargain Pages. On 5th February 2003 BPML instituted passing off proceedings against MNL. Undertakings to protect the position pending trial were given to Jacob J on 12th February 2003. On 6th March 2003 the solicitors for BPML discovered the papers relating to the first passing off action. On 17th March 2003 the solicitors for BPML drew to the attention of the solicitors for MNL the existence of the first passing off action and the Tomlin order made therein.

The application before me was issued by BPL in the first passing off action on 6th June 2003. It seeks orders in that action (a) joining BPML as an additional claimant, (b) joining MNL and Trinity Mirror plc as additional defendants, (c) construing the terms contained in the schedule to the Tomlin order so as to include as appropriate each of such additional parties and (d) requiring each defendant to procure MNL to comply with those terms. MINL does not oppose the order sought under (a). It, and the proposed new defendants, oppose the orders sought under (b) to (d) on a number of grounds. The issues fall into two broad categories, namely (1) whether BPL or BPML has any and if so what cause of action against MINL, MNL or Trinity Mirror plc; and if so (2) whether such causes of action or any of them should be pursued in the first passing off action pursuant to the liberty to apply contained in the Tomlin order. Before dealing with those issues it is necessary to explain the facts in greater detail.

In January 1990 BPL launched a "free ads" paper in the West Midlands under the name of Bargain Pages. It had a distinctive get-up comprising, amongst other features, a yellow background with a yellow and red banner across the top of the front page. It was published and distributed on Tuesdays and Thursdays in each week. In May 1994 BPL extended the area of its operations specifically to Coventry. In January 1993 MINL started to publish a "free ads" paper called Bargain Finder which it distributed in Birmingham, Sutton Coldfield and Solihull. It extended its area of distribution to Coventry immediately after BPL had done so, thereby provoking the first passing off action.

At that time MINL was a public limited company and the parent company of the Midland Independent Group. There were at least 16 other companies in the group which between them published 36 newspapers and 37 magazines. (To avoid confusion I should mention that one of the companies in the group was called Midland Newspapers Ltd. That is not the company now bearing that name which BPL wishes to join as an additional defendant.)

By its statement of claim in the first passing off action BPL claimed in paragraph 4 that its publication had become well known and recognised by the public by reference to the word "BARGAIN". In paragraph 6 it claimed, in addition, substantial goodwill in the get-up of its publication:

As I have indicated the Tomlin order by which the first passing off action was compromised was made on 11th November 1996. The schedule reproduced an agreement ("the Agreement") made on 15th October 1996 between BPL and MINL defined respectively as "Bargain Pages" and "Midland Independent" and signed on their behalf. Clause 1 contained a number of definitions. The expressions "current MI Papers" and "Future MI Papers" were defined as "each and every advertisement paper which Midland Independent sells, distributes, publishes, uses, keeps or otherwise trades in or in relation to", in the case of the former expression, "immediately prior to the date of this agreement" and, in the case of the latter, "after the date of this agreement".

Clause 2 contained what were described as "Permitted Get-Up Provisions". Clause 2.1 dealt with the transitional period which has long since expired. Clause 2.2 provided:

Clause 6 was in the following terms:

I have already sufficiently described the corporate reorganisations involving BPL and MINL. It seems likely, but has not been proved, that that part of the publishing business of MINL as included the Bargain Finder publication has been transferred to MNL. In that event MINL should, in performance of its obligations under clause 6.2 of the Agreement, have notified MNL of the terms of the Agreement. There is no evidence that it did and, given the general ignorance of the existence of the Tomlin order on both sides, I do not infer that it did.

BPL and from 22nd August 2001 BPML continued to publish and distribute Bargain Pages in the Midlands under the same name and get-up. In August 2002 the get-up, but not the name, changed. The banner or title portion of the front page was changed from a red background to blue and from wholly yellow lettering to a mixture of yellow and white, the rondel was removed, the slogan "best selling free ads paper" was changed to "the Midland Best Seller" and the rectangular boxes given less prominence if not removed altogether. Thus of the six features of the get-up listed in clause 2.2 of the Agreement three had been substantially changed. These changes to the get-up of Bargain Pages did not affect the restrictions imposed on MINL under clause 2.2 of the Agreement because, as will appear, they did not last for the period of twelve months the parenthesis in clause 2.2 required.

The publication of Bargain Hunter by MNL on 30th January 2003 which led to the second passing off action uses the title Bargain Hunter of which the first word is printed in yellow and the second in white, in each case, against a red background but otherwise on blue newsprint paper. The undertaking given to Jacob J by MNL precluded it from publishing a newspaper on blue paper with the word "Bargain" forming part of its title. That has been implemented by changing the colour of the newsprint paper from blue to yellow, that is the colour of the paper referred to in clause 2.2 of the Agreement. No doubt it was this event which prompted the application before me and the further change in the get-up of Bargain Pages implemented by BPML in July 2003 whereby the title is printed in yellow against a red/pink background, substantially the same as before. However neither the rondel, nor the slogan has been reintroduced though the rectangles have been given greater prominence.

On 18th July 2003 BPML amended its particulars of claim with the permission of Master Bowles so as to contend that the adoption by MNL of the name and get-up of Bargain Hunter in January 2003 was done with the intention of deceiving the public into believing that Bargain Hunter was Bargain Pages. It seeks exemplary damages. The defence of MNL is due in mid-August 2003. These, then, are the circumstances in which I must decide the issues to which I have referred and to which I now turn.

I will consider the case against MINL first. The contention of counsel for the claimants is that MINL is in breach of clause 6.1 of the Agreement and that they are entitled to enforce that contractual obligation by appropriate injunctive relief. He submits that the claimants are entitled to an injunction requiring MINL to procure that MNL and Trinity Mirror plc are bound by the Agreement as if they themselves were parties to it. He observes that such an injunction might have a salutary effect on the conduct of the affairs of MNL and Trinity Mirror given the extent of the common directorships between all three companies.

This is disputed by counsel for the defendants on a number of grounds. First he contends that clause 6.1 does not apply in respect of either MNL or Trinity Mirror plc. Neither was a parent, subsidiary or associate company at the time of the order and neither was controlled by MINL then or now. He accepts that MNL was controlled by MINL between January 1997 and January 2001 but did not at any time between those dates do anything which could be a breach of the Agreement. Further he points out that the publication of the paper of which complaint is made was done by MNL not MINL and therefore does not come within the definition of Future MI Papers. Second, he submits that the breach of clause 6.1, if there was one, occurred more than six years before this application was made so as now to be barred by Limitation Act 1980. Third, he argues that if there was a breach of clause 6.1 of the Agreement and if it is not barred by limitation there has been no breach of the underlying obligations imposed by clause 2.2 so as to warrant making the order sought. Fourth he submits that if all else fails the relief sought should not be granted as a matter of discretion as clause 6.1 is not a warranty and MINL cannot comply with it.

The first submission involves three separate points on the construction of the Agreement. The first two points relate to the meaning and application of the words in clause 6.1 "...their respective parent, subsidiary and associated companies controlled by them...". Counsel for the defendants contends that the word "controlled" qualifies both "parent, subsidiary and associated companies". I do not accept that submission. By definition a parent company cannot be controlled by its subsidiary. Further, in relation to a subsidiary the addition of the requirement of control would be an unnecessary duplication. It seems to me to be obvious that the word "controlled" qualifies "associate companies" only.

The second of these two points relates to the time or times at which the description is to be applied. If it is to be applied only as at the date of the Agreement or the Tomlin order, namely October or November 1996, then neither MNL nor Trinity Mirror plc fall within it. Counsel for the defendants suggests that it would be absurd to impose an obligation for all time requiring MINL to procure the adherence of any company coming within the description from time to time. Counsel for BPML points out that when the draftsman wished to introduce a temporal qualification he did so. He pointed to at least six examples. He submitted that in the light of the structure of the Agreement providing for a transitional period and the definition of Future MI Papers it would be artificial to limit the obligation to the corporate structure of the Midland Independent Group as it existed in October and November 1996.

I prefer the submission for BPML. Not only did the definition of Future MI Papers look to the future but so, inevitably, did the provision under consideration. At the date of the Tomlin order MINL did not have a parent company, nor as far as I am aware did BPL. MINL had subsidiaries but, as far as I am aware, no controlled associate companies. BPL had neither. In any event it would have made no commercial sense to settle the first passing off action on terms which would allow MINL to recommence passing off through a new subsidiary a few weeks after the Tomlin order had been made.

It was not suggested that the Agreement distinguished between a subsidiary and a sub-subsidiary. Thus it is clear that Trinity Mirror has since August 1999 been a parent company within the meaning of those words in clause 6.1 of the Agreement. MNL is now an associated company but is not controlled by MINL. Accordingly it does not now fall within the obligation imposed by clause 6.1. But between January 1997 and January 2001 it was a subsidiary of MINL and so complied with the description at that stage. MINL failed to procure that MNL was bound by the Agreement at that time and was, prima facie, in breach of contract. But that breach could only sound in damages for though the effect may have continued after January 2001 the breach itself did not. Accordingly, at this stage the most that BPML could be entitled to would be an injunction requiring the adherence of Trinity Mirror plc and damages for failure to procure such adherence by MNL in the period of four years when it was its subsidiary.

The third point of construction relates to the part of the definition of Future MI Papers which requires them to be sold etc by MINL. Counsel for the defendants maintains that this is not satisfied as the offending editions of Bargain Hunter were sold etc by MNL not MINL. I do not accept this submission either. It is inconsistent with the obvious purpose of clause 6 to limit the potentially offending publications to those sold etc by MINL. Further to apply the definition in that way would limit the obligation of MINL under clause 2.2. The obligation under clause 2.2 is to "ensure" that the get-up of all papers of the relevant description complies with the succeeding provisions of the clause. If the Agreement only applied to MINL’s own publications the obligation would have been couched in different terms. In my view in the context in which the Agreement was made the definition applies to publications of MINL or any other company which MINL should have procured to adhere to the Agreement so that the definition applies mutatis mutandis to each such party.

I pass then to the second submission. The suggestion that the Limitation Act might apply to the obligation imposed by clause 6.1 came from me. It was adopted with some hesitation by counsel for the defendants recognising, as he did, that the riposte of counsel for BPML would be, as it was, that the obligation was a continuing one. In my view the question of limitation is the corollary of the second point of construction with which I have dealt in paragraph 18 above. Had it been the case that the obligation related only to companies which satisfied the relevant descriptions at the time the agreement was made, as counsel for the defendants asserted, then the obligation would not have continued beyond a reasonable time after the Agreement was made. But, given my conclusion that the obligation applies to companies which comply with the relevant description at any time after the execution of the Agreement, it follows that the obligation imposed by clause 6.1 does continue and is not now barred by limitation.

The third submission depends on whether the publication of Bargain Hunter complained of in the second passing off action infringed the terms of clause 2.2 of the Agreement. If it did not then there is little (if any) purpose in granting an injunction requiring MINL to procure the adherence of Trinity Mirror plc. Counsel for BPML submits that it did. He relies on the words in clause 2.2 "comprising the following or any of them" which introduce the specified features (a) to (f). (See paragraph 9 above.) This suggestion is refuted by counsel for the defendants who points out that many of the individual features, such as (b), (c) or (e), could not themselves be distinctive of any paper. Further, as he points out, the claim in the first passing off action made in paragraph 6 of the Statement of Claim was that the get-up was distinctive because of the presence of all the "features in combination".

The terms of the Agreement followed the terms of the injunction sought by BPL. Had the action proceeded to trial BPL might or might not have obtained relief in that wide form. But that is irrelevant. The Agreement which MINL concluded precluded use of each feature whether or not used in combination with any other. So if any one of them is present in the publication of Bargain Hunter of which complaint is made in the second passing off action, whether or not that feature alone could render the get-up distinctive, then there is a breach of clause 2.2 of the Agreement. It is clear from an examination of the issue of Bargain Hunter for 30th January 2003 that features (b), (d), (e) and (f) are not present. Feature (c) is not satisfied because the title portion of the front page is only red. Feature (a) is only satisfied if the word Bargain printed in yellow in association with the word Hunter printed in blue can be said to be the dominant part of the trading title of MNL’s publication. It cannot be said to be the predominant part but in my view it must be recognised as "a" dominant part. Given the circumstances surrounding the conclusion of the Agreement that, in my judgment, is enough. It cannot have been intended that MINL should be free to use the word Bargain merely because it included another noun as well.

Before approaching the fourth issue, namely, discretion it is convenient to summarise my conclusions so far. First, MINL was and still is in breach of the terms of clause 6.1 of the Agreement in failing to procure the adherence of Trinity Mirror plc at any time since it became its parent in August 1999. Second, if MINL had performed its obligation and if Trinity Mirror had adhered to the Agreement, it would not now be in breach of clause 2.2 because although feature (a) was present in the newspaper of which complaint is made in the second passing off action that newspaper was not sold etc by either MINL or Trinity Mirror plc. Third, MINL was in breach of clause 6.1 in failing to procure the adherence of MNL to the Agreement at any time when it was a subsidiary of MINL between January 1997 and January 2001. Fourth, MINL is not now in breach of clause 6.1 because MNL is neither a subsidiary nor a controlled associated company. Fifth, the remedy of BPML for the failure of MINL to procure the adherence of MNL is in damages only because the breach is not continuing even though the effect of the past breach may be.

The claim advanced by BPML against MNL and Trinity Mirror plc is based on the tort of knowing interference in the performance of the contractual obligations of others as exemplified in British Motor Trade Association v Salvadori [1949] Ch.556; Torquay Hotel v Cousins [1969] 2 Ch. 106; Esso Petroleum v Kingswood [1974] QB 142 and Law Debenture Trust Corporation v Caspian Oil Corporation Ltd [1995] Ch. 152. It is submitted that the contractual obligation in question was the requirement imposed on MINL by clause 6.1 of the Agreement with BPL to procure MNL and Trinity Mirror plc to adhere to the Agreement. It is contended that MNL and Trinity Mirror plc knew of this obligation by 17th March 2003 at the latest. The interference relied on is the failure or refusal of MNL and Trinity Mirror plc to adhere to the Agreement.

I can express my conclusion on that submission quite shortly. Accepting the obligation relied on and the knowledge of MNL and Trinity Mirror plc at a relevant time the refusal of the latter companies to adhere to the Agreement cannot amount to relevant interference. The authorities to which I shall turn shortly show that for there to be a relevant interference it must amount to the violation of the legal right of one of the parties to the contract. The refusal of MNL or Trinity Mirror plc, who are under no obligation to do so, to adhere to the Agreement may disappoint but does not violate any right of either BPL or MINL. BPL may have the contractual right to require MINL to procure the adherence of MNL and Trinity Mirror plc but it has no right to such adherence.

In British Motor Trade Association v Salvadori [1949] Ch.556 the defendants bought by devious means new cars from members of the Association. Such members had, as required by the Association, agreed with it not to resell the cars within twelve months. Roxborough J quoted the well known passage from Lumley v Gye 2 Ell. & Bl.216 that

In Torquay Hotel v Cousins [1969] 2 Ch. 106 the plaintiff had a contract with Esso for the supply of oil to its hotel. Members of the defendant union blocked the deliveries of oil by Esso to the Hotel because of a trade dispute they had with the management of the hotel. The hotel sued for an injunction and damages on the ground, amongst others, that the actions of the members of the Union constituted unlawful interference with the performance of the contract between the hotel and Esso. At page 138 Lord Denning MR summarised the three elements of the cause of action in these terms:

In Esso Petroleum v Kingswood [1974] QB 142 the defendant entered into a five year solus tie agreement with Esso in relation to a garage it owned. One of the terms of the tie required the defendant before completing any sale or transfer of the garage or its business to notify Esso and procure such person to enter into a direct agreement with Esso in the same terms as the agreement between Esso and the defendant. During the continuation of the tie Impact acquired the shares in the defendant and procured it to transfer the garage to its own subsidiary without notice to Esso or procuring its subsidiary to enter into a direct agreement with Esso. When the matter came to the attention of Esso in due course it instituted proceedings against Impact and its subsidiary and sought a mandatory injunction requiring the subsidiary to retransfer the garage to Kingswood. The claim was successful.

Bridge J observed (p.154) that if Esso had known the facts before the transfer had been completed it could have got injunctions restraining completion unless and until the transferee entered into the direct agreement with Esso which the tie required. He recorded the argument that it was now too late for the court to do anything about it. He rejected this submission. Having referred to the passage in the judgment of Lord Denning MR in Torquay Hotel v Cousins [1969] 2 Ch. 106 which I have quoted he said:

In my view these observations, particularly the last, show the fallacy in the argument for BPL. If the refusal or failure of MNL or Trinity Mirror plc could amount to unlawful interference then the remedy would be to order them to adhere to the Agreement. But that would be to confer on BPL a right to which it is not entitled.

The fourth case on which BPML relied was Law Debenture Trust Corporation v Caspian Oil Corporation Ltd [1995] Ch. 152. It adds nothing to the previous three cases in relation to the tort of unlawful interference with contractual relations but is relevant to an alternative argument based on clause 6.2 of the Agreement.

In that case Shell agreed to sell a majority of the shares in four companies which had carried on business in Russia before 1917 on terms that any compensation recovered for the expropriation of their assets should be applied for the benefit of the existing shareholders. In addition the purchasers agreed not to part with the shares except on terms that the transferee entered into similar covenants for the benefit of the existing shareholders. The purchaser sold the shares to the fifth defendant without obtaining such a covenant. Later the fifth defendant sold them on to the sixth defendant, also without obtaining any such covenant.

The plaintiff claimed that the fifth defendant was liable for unlawful interference in contractual relations between others by accepting the transfer of the shares without entering into direct covenants as required by the original transferor. The fifth defendant accepted that this claim was arguable. But the claimant also contended that the fifth defendant came under an implied collateral obligation to the plaintiff to observe and perform the covenants entered into by the original transferee. Hoffmann J rejected this submission. After an extensive review of the authorities he concluded that the principle could not extend as far as to justify the imposition of a positive obligation. He said (p.146):

Finally I should refer to an alternative argument based on estoppel by judgment. If it be assumed that MNL has succeeded to the business of MINL then it may be regarded as a privy of MINL and so bound by the judgment. But whilst this would estop MNL from denying the existence of the Tomlin order and its effect it could not, contrary to its terms, make MNL a party to the Agreement so as to be bound by it.

For all these reasons, I do not consider that BPML has a claim against MNL or Trinity Mirror plc. They are not parties to the Agreement and are not obliged to observe and perform its terms as though they were. Accordingly I dismiss that part of the application as seeks their joinder as additional defendants to the first passing off action.

In the event this question is restricted to the limited claims of BPL or BPML against MINL I have described in paragraph 25 above. Further it is to be answered in conjunction with the consideration of the fourth submission for MINL I recorded in paragraph 16 above.

I was referred to the decisions of the Court of Appeal in Hollingsworth v Humphrey (10th December 1987 unreported) and Wagstaff v Colls [2003] EWCA Civ 469 for descriptions of the nature and effect of a Tomlin order. Save for one matter I do not think it is necessary to refer to them in any detail. The matter to which I refer is the view expressed by Fox LJ in Hollingsworth v Humphrey (10th December 1987 unreported) at page 9F and 10B-E that a claim for damages for breach of the agreed terms should be pursued in a separate action.

In that case a disputed claim to a beneficial interest in a house held in joint names was compromised on terms that the house should be sold within three months and after repayment of the mortgage a specified sum should be paid to the plaintiff from the net proceeds of sale. The plaintiff duly moved out but for six years the defendant failed to sell the house. In due course the plaintiff applied for an order that the stay be removed, on the basis that the compromise had been repudiated, or for an order that the order be enforced with an enquiry as to the damage sustained by the plaintiff because of the delay. The judge refused to remove the stay but ordered the compromise to be enforced and the defendant to pay the plaintiff the loss sustained by her in consequence of the delay. Both sides appealed.

The plaintiff’s appeal failed primarily because it had not been established that the alleged repudiation had been accepted. The defendant’s appeal succeeded because, in the words of Fox LJ:

In the later case of Wagstaff v Colls [2003] EWCA Civ 469 the Court of Appeal concluded that a Tomlin order did not preclude an application in those proceedings for a wasted costs order against a third party and that it was not necessary to lift the stay to enable such an application to proceed. The Court of Appeal did not comment on that part of the judgment of Fox LJ in Hollingsworth v Humphrey (10th December 1987 unreported) which I have quoted in paragraph 41 above.

My concern is that the judgment of Fox LJ, by which I am bound, was given against the background of the Rules of the Supreme Court not the Civil Procedure Rules. I am entitled if I consider that the Court’s conclusion in that case is inconsistent with the regime introduced by the Civil Procedure Rules to take a different view. Neither side suggested that I should but, in my view, I must consider the point.

The first passing off action gave rise to a settlement to which effect was given by the Tomlin order. The Tomlin order is as much a part of the case as the original issues as to passing off. In my view it follows that the overriding objective applies as much to issues arising from the Tomlin order as it did to the original dispute about passing off. It appears to me to be contrary to the overriding objective to require that the remedy of damages for the breach of a term of the compromise be pursued in a second action if a remedy by way of mandatory injunction to enforce the terms of the compromise can be pursued in the first. Each arises from the terms of settlement scheduled to the Tomlin order. It is not suggested that those terms are liable to be set aside. Accordingly I do not consider that the decision of the Court of Appeal in Hollingsworth v Humphrey (10th December 1987 unreported) would preclude an order for an enquiry as to damages sustained by BPL or BPML in consequence of a breach of the terms of the Agreement.

Accordingly it is now necessary to consider the consequences of my conclusions summarised in paragraph 25 above. The first, third and fifth conclusions show that BPL or BPML is entitled to at least nominal damages against MINL for its breach of clause 6.1 in failing to procure either Trinity Mirror plc at any time since August 1999 or MNL at any time between January 1997 and January 2001 to adhere to the Agreement. I will, if asked, direct an enquiry to ascertain what they are.

Of more importance is the question whether either BPL or BPML should be granted an injunction against MINL to require it to perform that contractual obligation in relation to Trinity Mirror plc. There is no doubt that such a remedy is discretionary even though the court is being asked to say by way of injunction that which the parties said by way of contract, Snell’s Equity 30th Ed. Para 45-30. From the point of view of BPL and BPML such an injunction seems to me to be of little, if any, value given my conclusion that Trinity Mirror plc is not in breach of the Agreement even if it adheres to it. By contrast a mandatory injunction on MINL would require it to do something which is beyond its legal power. It does not control Trinity Mirror plc and, notwithstanding overlapping boards of directors, cannot compel Trinity Mirror plc to do that which it promised to procure. No doubt the grant of an injunction would put the individual directors in a dilemma but that is not sufficient reason to grant it. In these circumstances in my judgment BPL and BPML must be left to their remedy in damages in relation to the breach of clause 6.1 with regard to Trinity Mirror plc as well as with regard to MINL.

For all these reasons I will make orders