Formal Legal Advice to Richard - Case Study Example

Formal legal advice to Richard IN THE MATTER OF: Re: Richard and John Advise presented to Richard I am requested to give advice to Richard, who wishes to know – whether he is entitled to any equitable remedies from John and whether John has any equitable remedies to get from him. Richard would also like to get counsel about the terms of the contract. THE FACTS ABOUT THE CASE OF RICHARD AND JOHN 2. The basic facts appear as follows. 3. Richard is a singer and a performer while John has been his manager for three years. The issue that arises here is the role of John as a manager and the roles of Richard as his employer. The manner in which the two are supposed to relate to each other without conflict of interest is a big issue.1 4. Richard and John had some disagreements because John is convinced that Richard was taking bookings and performing without telling him or compensating him. The issue that arises here is whether Richard had a right to perform and take bookings on the back of his manager and without compensating him. One is also left wondering whether John could substantiate his claims or it was out of malice. If indeed Richard was acting on the back of John, it will be interesting to know whether he ought to have compensated John.2 5. After the disagreements, Richard walked out, yet the terms of the contract had stipulated that they should work together for 10 years. Whether Richard did the right thing to walk out following the disagreements is a debatable issue. The other issue that arises is whether Richard should compensate John for breaching their agreement.3 6. It has also come to light that John was acting on the back of Richard, by taking advantage of a physical similarity between them and allegedly making profitable appearances on stage and television as well as forwarding his business using Richard’s personal confidential information. This disclosure leaves much for the eyes to desire because it is most probable that Richard ignored John after realizing his negative conduct, which is also contrary to their agreement and which is against the copyright property which is protected.4 7. John is illegally copying new music Richard had made. This raises the question of copyright violation.5 8. Richard obtains an incorrectly addressed email from John, which reveals that he was about to emigrate to china and base his business there. The issue here is whether Richard should take advantage of this confidential information to pursue his case. Again, the fact that John wants to emigrate to china will complicate Richard’s attempts to prosecute the case.6 9. THE LAW This case will refer to the following laws: Seager v Copydex Ltd (No. 2) [1969] 1 WLR 809 [1] Allied Arab Bank Ltd v Hajjar (1988) QB 787 [2] DeFrancesco v Barnum (1890) 45 Ch D 430 [3] Series 5 Software Ltd v Clarke [1996] 1 All ER 853 [4] Office Angels Ltd v Rainer Thomas and O’Conner [1999] IRLR 214 [5] William Robinson & Go. V Heuer (1898) 2 Ch. 451 [6] Page One Records v Britton [1968] 1 WLR 157 [7] Lumley v Wagner (1852) 1 De GM & G 604 [8] Warner Bros Pictures Inc. v Nelson [1937] 1 KB 209 [9] Whitwood Chemical Co. V Hardman [1891] 2 Ch 416 [10] Coco v A.N. Clark (Engineers) Ltd [1969] R.P.C. 41 [11] Human Rights Act 1993 [12] Robb v Green [1985] 2 QB 315. [13] Civil Procedure Rules 1998 Rule 19.6 [14] Lock International Plc v Beswick [1989] 1 WLR 1268 at 1279 [15] McConnell plc v Plascow [1985] RPC 425 [16] Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55 [17] Mareva Compania Naviera SA v International Bulkcarriers SA [1975] [18] Sions v Price [1978] QB 244 [19] Felton v Calis (1969) 1 QB 200 [20] UK Patent Act, Sec 60. [21] Smith New Court Securities Ltd -v- Scrimgeour Vickers [1996] UKHL 3; [1997] [22] Long v Lloyd [1958] 1 WLR 753 [23] Colbeam Palmer Ltd v Stock. Affiliates Pty Ltd (1968) 122 CLR 25 at 35. 31 [22] American Cyanamid Co v. Ethicon Ltd [2001] 1 WLR 194 [23] Donmar Productions Ltd v Burt & Ors [1967] 2 All ER 338 [24] Warner Bros Pictures Inc. v Nelson [1937] 1 KB 209 [25] Supreme Court Act 198, Section 37 (1) [26] Supreme Court ACT 1980, Section 37 [27] Civil Jurisdiction and Judgement Act, Section 25 [28] DEFINATIONS 1. Account of profit: this form of equitable remedy is taken against a defendant in an attempt to recover the profits made as a result of breach of agreement. 2. Equity: equity is a set of legal rules that complement stringent rules of law where their application would be unfair.7 3. Injunction: an injunction is a situation where a court of law restrains one party from acting in a certain manner in an attempt to execute an equitable remedy.8 4. Specific performance: this is an order issued by the court to compel a party to perform a specific action.9 5. Rescission: rescission is the undoing of a contract.10 6. Prohibitory injunction a court order restraining a party from performing some acts pending the final trial.11 7. Ne Exeat Regno was a writ restraining a person from leaving the Kingdom.12 8. Search order is a court order that allows the plaintiff’s agents to search the defendants premises and confiscate any assets upon which the rights are breached, without giving prior notice to the defendant.13 9. Under the common law, equity involves a set of legal rules that act as additions to the rules of law that are harshly operated. Equitable remedies are a creation of the courts of equity, which provide a more flexible remedy to changing social conditions. 14 As an applicant awaits the outcome of the trial which leads to final remedies, interim remedies can be granted by the court to preserve the status quo.in other words, interim remedies are methods to use to get final remedies and final remedies are what the applicant ultimately seeks. 15 10. In this study, the interim remedies include interim injunctions, search order, freezing injunction, Ne Exeat Regno, Prohibitory injunctions, recession and account of profits. On the other hand, final remedy includes mandatory injunction, damages, specific performance and account of profits.16 THE INSTANT CASE FINAL REMEDIES Damages 11. Richard would want to seek damages against John in the light of the fact that he is illegally selling Richard’s music, especially if some profit will have been realized, just like in the case of Seager v Copydex Ltd [1]. In this case, Richard will be required to provide detailed financial information regarding the music that has been sold by John, in an attempt to prove that there is an identifiable damages.17 Injunction 12. The injunction is a situation where a court of law restrains one party from acting in a certain manner in an attempt to execute an equitable remedy. 18 John may want to enforce the clause in the contract with Richard – restraining him from contracting any other manager, so that he could continue with the benefits of the contract. According to the directive of Section 37(1) of the Supreme Court Act 1981, [1981] a court has the mandate to declare that Richard is still bound by the contract – granting an injunction to the endeavors of Richard, in the areas touched by the contract, beyond the limits of the contract. This injunction could be offered, like was given for the similar case, Warner Bros Pictures Inc. v Nelson, [25] where it was offered – restricting actress Bette Davis from entering into a work contract with another company, following the exclusive nature of the contract made with the previous company. 19 13. Essentially, Richard should note that the contracts of the employment unlike agency, 20 can hardly get enforced because it is thought that enforcing them would make them appear like contracts of slavery as it is the case in DeFrancesco v Barnum [3]. The case of Richard and John is an employment relationship and hence the specific injunction rather than specific performance should be enforced. 21 The price for non performance is by imposing fines, but the culprit can end up being imprisoned, which is a stern remedy that is usually referred to as a ‘draconian remedy.’22 To some extent, it is said that all contracts involve a form of personal service.23 In the real sense, the courts have reasonably disinclined granting of specific performance and are rather more willing to grant a financial remedy, which does not interfere with personal freedom. Richard should, therefore, pursue monetary remedy and perhaps overlook specific performance. 14. As such, like in the case of Whitwood Chemical Co. v Hardman, [10] the extent of injunctions would be limited in case the defendant would be prevented from performing by any circumstances. Similarly, the contract between Richard and John is a contract for personal services and it would not be practical to force any of the parties to perform. For example, in the case of Page One Records v Briton, [7] an injunction in favor of the plaintiff was refused because doing so could have enforced then to continue providing their personal services, which could not have been practical because of the rivalry between the two parties. In the same respect, it will be hard for John to be awarded an injunction because their contract with Richard is of personal services.24 15. Moreover, reasonableness in terms of time is a requirement for an injunction to be granted. For example, in William Robinson & Go. v Heuer, [6] it was held that the terms of the contracts were reasonable and hence nothing could render the agreement void. In the same measure, the contract between John and Richard is seemingly reasonable and hence this may not be a factor to preempt an injunction. It is also important to consider the limits imposed by the geographical extent in determining the possibility of an injunction. In reference to Angels Ltd case, [5] an attempt by Richard to obtain an injunction is most likely to fail if by the time it will be sought, John will have left for China, which is hundreds of miles away from Richard, and hence the possibility of establishing a business that will compete with that of Richard will be termed as remote.25 Specific performance 16. In the case of Lumley v Wagner, [8] a single who breached her three month contract was denied a specific performance, but an injunction was granted forcing her to abstain working in any theatre for the remaining periods as described in the contract. Similarly, in the case of Warner Bros Pictures Inc v Nelson [9], Bette Davis was granted an injunction due to the fact that there was a clause in their contract preventing her from working for another company. Similarly, it will be hard to enforce specific performance in the instant case because it in the nature of personal services whereby a person cannot be forced to perform.26 Account of profits 17. Under Sec. 60 of the UK Patent Act [21], the patentee is allowed to recover the profits of the infringer as a method of estimating damages. Therefore, Richard can recover the profits made by John if he can be able to satisfy that he did it as a result of infringing their agreement.27 INTERIM REMEDIES Incorrectly addressed email 18. Following Richard’s discovery that John in intending to migrate to China through an incorrectly addressed email, there are a number of courses of action that can be taken in pursuance of the doctrine of breach of confidence. This doctrine imposes a duty of confidence when confidential information is revealed to a person in a situation where it would not be fair if it were made public to others [1]. What this means is that those who receives information in confidence should refrain from taking an unfair advantage from it. In reference to Human Rights Act, [12] and the requirements specified in Coco v A.N. Clark (Engineers) Ltd , [11] the breach of confidence constitutes a civil claim if three aspects are satisfied. These includes that the information must have “the necessary amount of confidence in its regards”,28 it must have been issued in situation setting an obligation of confidence, and there must have been unauthorized use of that information in a manner likely to cause injury to the party delivering it.29 John, however, may find it hard to seek injunction if Richard will have widely disclosed this information or done anything else that will render it unnecessary to stop its disclosure, similar to the case of A-G v Guardian Newspapers Ltd, since the court does not grant injunction if doing so will amount to acting in vain. 19. In the effect of Robb v Green, [13] Richard can seek a temporary injunction so John can be restrained from continuing with his career. However, an attempt by Richard to seek an interim injunction is likely to face obstacles, just like the case of Series 5 Software Ltd, [4] where the Court of Appeal refused to grant an interim injunction in favor of the plaintiff arguing that their case was understandable in some aspects but complex in other aspects, hence making it hard to establish its merit at an interim phase. Some of the factors that the court of appeal considered in reaching this decision include the balance of convenience, adequacy of damages as a remedy, and the strength of each party’s case. By the time that Richard may want to seek interim injunction, it will be hard to be granted with it if John will have advanced in his acting career and perhaps he will not be the sole competitor of Richard’s career.30 Although both Richard and John may attempt to seek interim injunction, they should keep in mind that interim injunctions are rarely granted because the court usually assumes that the court proceedings will not take much time and as such will not cause serious injury to the parties involved. However, they should also keep in mind that they could be paid hefty amounts of damages if they prove the case of interim injunction during the trial proceedings. Search order 20. Richard may seek a search order against John, so he can forcefully obtain the new music that he illegally copied. This is because there is a danger that John will continue distributing the music on a worldwide scale and this will probably cause Richard to lose market for his music. The power to grant a search order is bestowed on the court by the Civil Procedure Rules 1998, [14] which allow the plaintiff’s agents to search the defendants premises and confiscate any assets upon which the rights are breached, without giving prior notice to the defendant. This remedy will help Richard get a decisive reprieve over his copyright music that is being copied illegally by John.31 21. To be granted this order, Richard must prove that the music that is being possessed by John portends a real danger of destruction of evidence, an aspect that is revealed well in On Booker McConnell PLC v Plascow [16] and in Lock International PLC v Beswick [15]. 32 22. Nonetheless, there are a number of requirements that must be satisfied in order to ensure that the defendant does not abuse the defendant through the search order. These requirements, which are set out in Anton Piller KG v Manufacturing Processes, [17] include: the defendant possesses incriminating goods, the damage caused or likely to be caused by the absence of such order is too heavy on the side of the plaintiff, and there is a real likelihood that the defendant will demolish the goods if supplied with the notice of case action. These requirements are most likely to be proved because John will want to demolish the evidence of the music he possesses and selling illegally, an act that will make Richard to lose dearly. If Richard is successful in obtaining the search order, John must accordingly compensate him for any damages that might be caused. Freezing injunction 23. A freezing injunction is an order issued by the court with the aim of safeguarding the assets of a certain party as stipulated in Mareva Compania Naviera SA v International Bulkcarriers [18]. This order is made before the issue of the proceedings and is usually made when there is some fear that the other party will dispose of its assets prior to obtaining and put into effect of the judgment. Under section 37 of the Supreme Court ACT 1980 [27] and section 25 of the Civil Jurisdiction and Judgement Act,[26] the courts of the UK can grant worldwide injunctions whenever it appears just to do so. In the instant case, it freezing injunction could be ordered against either John or Richard if it is feared that any of them is likely to take away their assets to avoid paying damages. However, to succeed in freezing injunction, the applicant must present a good case that is arguable, must present a cause of action and they must show an evidence of a risk of dissipation. Either John or Richard may want to seek freezing injunction against each other, but they must satisfy that the amount being contested is reasonably substantial as cited in the case of Sions v Price [19] in respect to low value. In this case, Richard may want to argue that John has illegally obtained his copyright music and made a substantial amount of money while John may want to argue that Richard has performed and sold music without informing him, which is contrary to their contract of engagement. However, it will be very important to find out what the law between China and UK says regarding Freezing injunction because it cannot be enforced if it is not allowed by these laws. 33 Ne Exeat Regno 24. Ne Exeat Regno was a writ restraining a person from leaving the Kingdom.34 For this writ to be granted, four requirements that are stipulated in the case of Felton v Calis mus be satisfied [20], including: the amount must be above $50, the defendant must be liable to arrest in regards to the action in question, and there must be a conviction that the defendant is due to leave the Kingdom, which would make it difficult for the plaintiff to prosecute the case. Therefore, for Richard to successfully obtain Ne Exeat Regno, against John who is allegedly migrating to China, the amount in question must be identified and the allegation of leaving to China must be verified accordingly. It will also be important to find out what the law between China and UK stipulates regarding Ne Exeat Regno because these laws must be adhered to. There is no doubt that if John migrates to China, Richard will face difficulties prosecuting the case. As discussed earlier, there is a possibility of the parties seeking a freezing injunction; therefore, the case of Allied Arab Bank Ltd v Hajjar, [2] will offer guidance as to the appropriateness of granting a ne exeat Regno.35 Prohibitory injunctions 25. Richard can also seek mandatory injunction ordering John to deliver the copyrighted music because it is most likely that Richard will win. In the same respect, Richard can seek a prohibitory injunction to restrain John from selling the music. Like in the case of Donmar Productions Ltd v Burt & Ors, [24] the application of prohibitory injunctions requires the applicant to establish a strong prima facie position that indeed he is entitled to prohibitory injunctions with the aim of maintaining the status quo pending the trial.36 Recession 26. John and Richard may want to void the contract and rectify it under the judicial supervision, but the court may not accept it because as in the case of Long v Lloyd [23], the contract between the two parties has been in force for three years, which is a substantial performance that leads to decline of this remedy.37 Account of profits 27. If Richard can prove that he will suffer hefty damage if John is allowed to continue making profits for his music, then as per the case of Colbeam Palmer v Stock Affiliates Pty Ltd, [22] he can seek to be paid the amount of profits that he estimates John to have made unfairly as he awaits the final remedy. Notably, Richard is expected to recover the profit that resulted from the infringing acts only, which in this case is the profit that John makes by selling the copyright music illegally. Again, for Richard to claim account of profit as an interlocutory remedy, he must convince the court that John’s wrong doing will cause him irreversible damage as he awaits completion of the hearing - American Cyanamid Co v Ethicon Ltd [23].38 Third parties 28. If through the act of misrepresentation, John engages third parties; such innocent third parties can sue him for damages. Protection of third parties in such a scenario is affirmed in Smith New Court Securities Ltd. v. Scimgeour Vickers (Asset Management) Ltd, whereby innocent parties have a right to claim a full compensation following their engagement with the fraudulent party and when acting in good faith [22].39 CONCLUSION 29. Like in the case of Seager v Copydex Ltd [1], Richard would want to seek damages against John in the light of the fact that he is illegally selling Richard’s music, especially if some profit will have been realized. As discussed in paragraph 12, the relationship between John and Richard is employed; therefore, the parties can only seek an injunction and not specific performance.40 30. The case of Richard and John is an employment relationship and hence the specific injunction rather than specific performance should be enforced. Richard can recover the profits made by John if he can be able to satisfy that he did it as a result of infringing their agreement.41 31. Some of the interim remedies that can be sought as the outcome of the trial is awaited includes Search order, Freezing injunction, Ne Exeat Regno, Prohibitory injunctions, Recession and Account of profits. 32. If there are issues that arise from this legal advice, solicitors are welcome to contact us. Bibliography Books Charlie, Webb, Performance and Compensation: an Analysis of Contract Damages and Contractual obligation (OJLS 2006) Dowling T, Got secrets you want to keep? 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Woolhandler A, ‘The common law origins of constitutionally compelled remedies’, The Yale Law Journal, 107(1) (1997), 77-164. Case laws and statutes Allied Arab Bank Ltd v Hajjar (1988) QB 787 American Cyanamid Co v. Ethicon Ltd [2001] 1 WLR 194 Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55 Civil Jurisdiction and Judgement Act, Section 25 Civil Procedure Rules 1997 Coco v A.N. Clark (Engineers) Ltd [1969] R.P.C. 41 Colbeam Palmer Ltd v Stock. Affiliates Pty Ltd (1968) 122 CLR 25 at 35. 31 DeFrancesco v Barnum (1890) 45 Ch D 430 Donmar Productions Ltd v Burt & Ors [1967] 2 All ER 338 Felton v Calis (1969) 1 QB 200 Human Rights Act Lock International Plc v Beswick [1989] 1 WLR 1268 at 1279 Long v Lloyd [1958] 1 WLR 753 Lumley v Wagner (1852) 1 De GM & G 604 Mareva Compania Naviera SA v International Bulkcarriers SA [1975] McConnell plc v Plascow [1985] RPC 425 Office Angels Ltd v Rainer Thomas and O’Conner [1999] IRLR 214 Page One Records v Britton [1968] 1 WLR 157 Robb v Green [1985] 2 QB 315. Seager v Copydex Ltd (No. 2) [1969] 1 WLR 809 Series 5 Software Ltd v Clarke [1996] 1 All ER 853 Sions v Price [1978] QB 244 Sté Aviva v Sté Civile Immobilière La Renaissance des Quais Supreme Court ACT 1980, Section 37 UK Patent Act, Sec 60. Warner Bros Pictures Inc. v Nelson [1937] 1 KB 209 Whitwood Chemical Co. V Hardman [1891] 2 Ch 416 William Robinson & Go. V Heuer (1898) 2 Ch. 451 Read More