Pearson Education Ltd v Prentice Hall India Private Ltd
|England & Wales
|MR JUSTICE CRANE,MRS JUSTICE GLOSTER, DBE,Mrs Justice Gloster, DBE
|22 April 2005
| EWHC 655 (QB), EWHC 636 (QB)
|HQ03X03880,Case No: IHQ 2005/0183
|Queen's Bench Division
|22 April 2005
 EWHC 636 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr Justice Crane
MR S HOUSEMAN (instructed by Denton Wilde Sapte, EC4) appeared on behalf of the CLAIMANT/APPELLANT
MR D GERRANS (instructed by Henmans, Oxford) appeared on behalf of the DEFENDANT/APPELLANT
This is an appeal from a decision of Master Foster on 1st December 2004. The issues are whether two letters are in fact "without prejudice" communications, and whether (even if they are) they should nevertheless be before the court on a forthcoming application.
It was at one stage argued on behalf of the respondents to the appeal that this was not a re-hearing, but on reflection counsel for the respondents rightly conceded that since the outcome depends largely on the construction of certain documents, the difference between a re-hearing and an appeal in the usual sense largely disappears.
The issues arise in this way. The Claimant (the present Respondent) claims to be entitled as assignee to the benefit of certain licence agreements whereby the defendant (the present Appellant) were licensed to publish certain books in the Indian subcontinent, and indeed elsewhere. In November 2003 the claimant complained to the defendant about the defendant's failure to make royalty payments in respect of 97 titles over a period of seven years. Following the correspondence to which I shall return, the claimant issued these proceedings and obtained leave from Master Foster ex parte on 19th December 2003 to serve the defendants out of the jurisdiction. There is an outstanding application by the defendant under Part 11 of the CPR to have that order set aside.
The defendants wish to use the two letters as evidence when the application is heard. Master Foster decided that the two letters, and all reference to them, should be removed from the evidence to be placed before the court, but he gave permission to appeal.
The correspondence began with a letter from the claimant, dated 4th November 2003. That was an open letter and it complained that the defendant had allegedly claimed to have paid to the claimant royalties in respect of various titles. The claimant said that they had received no such royalties and they reviewed the history from their side referring to letters written in the period November 1999 to February 2000 on the subject to which no reply was received.
The claimant then in the letter of 4th November required certain information by 10th December 2003 and among the requirements was the remittance of the relevant royalty payments. The requirements that they set out were all requirements that were justified under the terms of the relevant licences, assuming of course that the defendant and the claimant were both legitimate parties to the licences at material times. The letter ended:
"We reserve all our rights in respect of the Licensed Title and generally, including our rights to take such action as we may be advised upon receipt of the above information."
There has been some discussion during the hearing as to whether the assignment that was the basis of the claimant's title to the beneficial interest in the licences was effective, particularly if no notice had been received. There has also been discussion about whether the letter of 4th November itself constituted sufficient notice. There has also been a reference to the issue whether the defendants are entitled or were entitled to require a sight of the assignment in the light of the remarks of Lord Denning MR in page 613. However, I do not consider it relevant to resolve such questions as to the validity of the assignment, the validity of any notice and the defendants entitlement to a sight of the assignment for the purpose of this appeal.
No open reply was sent to the matter of 4th November, but a letter was sent, dated 3rd December 2003, from Anand and Anand Advocates, the firm acting for the defendant Indian company. It reads as follows. It is headed "without prejudice", it refers to various licence agreements and having said that they act for Prentice Hall India Private Limited, they continue:
"We refer to your letter of 4th November 2003 and have been instructed to reply to the said notice under the following circumstances:
At the outset our clients deny having claimed to have paid to Pearson Education Limited in respect of various titles that our clients have printed.
Further our clients deny that they have ever been informed of the fact that the titles owned by Prentice Hall International (UK) Limited and Prentice Hall Europe have been acquired by Pearson Education Ltd. Our clients specifically deny receipt of any letter in November 1999 informing them of this transfer and setting out details of the royalty department of Pearson Education Limited, as also the 'chasers' claim to have been sent between November 1999 and February 2000 or thereafter. Consequently, our clients deny that they did not reply to any of your letters in relation to this alleged transfer and your assumption is unwarranted. Our clients are extremely surprised at the statements which are incorrect and false.
Our clients have been sending the royalty payments and details to Prentice Hall International (UK) Ltd and Prentice Hall Europe, but discontinued since these letters were returned. In fact, the royalty payments were sent to the said entities as recent as August of this year, which also came back with the postal noting that the addressee had shifted.
By your letter, you state that Pearson Education Limited is the successor in interest of the titles owned by the aforesaid entities. Could you please furnish the documents that relate to the transfer of rights from Prentice Hall International (UK) Ltd and Prentice Hall Europe to Pearson Education Ltd.
Our clients are willing to forward the royalties and also the other requirements for the titles set out in your letter to Pearson Education Ltd on receipt of these documents.
Please also confirm if Pearson Education Limited continues to own the copyright in the 97 publications set out in your letter as Pearson Education Inc have also claimed ownership of copyright in some of these titles.
We look forward to hearing from you.
There followed two letters dated 18th December 2003 from the claimant, in the case of a without prejudice letter to the firm Anand and Anand, and the case of an open letter to the defendant. The letter headed "without prejudice" referred to the letter of 3rd December. It said that the writer was shocked by the response and effectively refused to take up the suggestion in the letter of 3rd December that any documentation should be supplied, disputing that the defendant was in any way entitled to such documentation. The writer confirmed that on open letter had been sent terminating the licences, and that is indeed what the open letter of 18th December purported to do. Shortly afterwards proceedings were commenced and permission was obtained for service out of the jurisdiction.
I turn to the law relating to without prejudice communications. The first case to which I wish to refer is . In the Court of Appeal at page 1277, Parker LJ said:
"That passage is important for two reasons. First, it shows that the rule depends partly on public policy, namely the need to facilitate compromise, and partly on implied agreement. Secondly, it shows that the rules covers not only documents which constitute offers but also documents which form part of discussions on offers, ie negotiations.
In the present case the claimant had indicated from the very outset that he wished, through his agents, to negotiate. There was then correspondence leading up to the letter which preceded Document A. That letter certainly indicated that the document when submitted was intended to be 'open' but when produced it was marked 'without prejudice'. This prima facie means that it was intended to be a negotiating document. The prima facie inference, therefore, is that the agents had changed their intention. This might have been displaced had there been evidence that, when tendered, it was so tendered on the same basis as originally indicated, but there was no such evidence and it is not without significance that when the question was first raised by the council's solicitors in their letter of 17 th February 1984 they did not say that Document A or its successor were 'open'. It was merely that it was impossible to make an effective 'without prejudice' offer. That contention was not pursued before us, in our view rightly. It is without foundation. Bearing in mind the original expressed intention to negotiate, the fact that there was a dispute in existence, that it is common practice for such claims to be the subject of negotiation before the parties resort to a reference to the Lands Tribunal, and that the document was clearly marked 'without prejudice,' we have no hesitation in concluding that those words should be given their ordinary effect. The position with regard to Document B is in our view plainer. It was clearly written in the course of negotiation and was accompanied by a letter which was itself headed 'without prejudice.' Both documents are in our view admissible."
The passage referred to by Parker LJ was a passage in in the judgment of Fox LJ at pages 313 to 314.
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