The Bargain Pages Ltd. v Midland Independent Newspapers Ltd.

A contractual obligation to procure adherence to a settlement agreement may apply to companies entering the relevant corporate structure after the agreement was made. A parent or contracting party may remain liable in damages for a failure to procure adherence, but an injunction is inappropriate where the defendant lacks the legal power to compel adherence.

The tort of interference with contractual relations requires active, deliberate and direct interference involving violation of a legal right. Mere refusal by a non-party to adhere to a contract does not satisfy that requirement and does not give the claimant a right to compel adherence.

Passing off proceedings concerning classified advertisement newspapers were settled by a Tomlin order in 1996. The settlement restricted the defendant’s use of specified names and get-up and required the parties to procure adherence by relevant parent, subsidiary and controlled associated companies.

Following corporate reorganisations, a related company published a newspaper using the word “Bargain”. The claimant applied to join a new claimant and additional defendants, to construe the settlement as binding them, and to require the defendant to procure their adherence. The application raised issues concerning contractual construction, limitation, unlawful interference with contractual relations, estoppel by judgment, injunctive relief and whether damages could be assessed within the original proceedings.

1. Clause 6.1 applied to companies satisfying the relevant description after the agreement was made. The word “controlled” qualified “associated companies” only. It did not qualify “parent” or “subsidiary”. The obligation therefore covered Trinity Mirror plc as a later parent and covered Midland Newspapers Ltd while it was a subsidiary of Midland Independent Newspapers Ltd.

2. The obligation to procure adherence was continuing and was not barred by the Limitation Act 1980. The definition of future papers applied, in context, to publications of companies which Midland Independent Newspapers Ltd should have procured to adhere to the agreement.

3. The restrictions in clause 2.2 operated separately. The presence of any listed feature could constitute a breach, whether or not the features appeared in combination. The use of “Bargain” as a dominant part of the trading title was sufficient in the circumstances.

4. The claims against Midland Newspapers Ltd and Trinity Mirror plc failed. Unlawful interference requires active, deliberate and direct prevention or hindrance, or other violation of a legal right. Refusal by companies under no obligation to adhere to the agreement was not relevant interference. The claimants had a contractual right to require Midland Independent Newspapers Ltd to procure adherence, but no right to adherence by the other companies themselves.

5. The De Mattos principle could not impose a positive obligation on non-parties to perform contractual covenants. Estoppel by judgment could establish the existence and effect of the Tomlin order, but could not make a company a party to the agreement.

6. Although the Court of Appeal’s decision in Hollingsworth v Humphrey had held that damages for breach of compromise terms should be pursued separately, the court considered that the Civil Procedure Rules 1998 and the overriding objective justified determining damages within the original action where the claim arose from the settlement terms.

7. BPML was joined as second claimant. An inquiry into damages was directed for Midland Independent Newspapers Ltd’s failures to procure adherence by Trinity Mirror plc since August 1999 and by Midland Newspapers Ltd between January 1997 and January 2001. The remaining application, including joinder of the proposed defendants, was dismissed. An injunction was refused because Midland Independent Newspapers Ltd lacked power to compel Trinity Mirror plc to adhere.

The judgment describes earlier passing off proceedings settled by a Tomlin order, and later passing off proceedings brought against Midland Newspapers Ltd. No appeal from the present decision is stated.