Alan Williams Entertainments Ltd & Anor v Hurd & Ors

A contractual prohibition against trading as an original group may, in context, include an implied reciprocal obligation to use reasonable endeavours to prevent or correct third-party promotion by persons with whom the parties or their agents deal. The obligation is not absolute, does not require supervision of all third-party conduct, and does not arise for promotions of which the party is unaware. An implied term may be justified by business efficacy or obvious unexpressed intention. Website content may breach the prohibition when its overall presentation blurs the distinction between the original group and a successor band. Costs remain discretionary in a split trial and need not be assessed solely by monetary recovery or the number of issues won.

The claimants sued members of a former pop group for breach of a Tomlin-form compromise regulating the names and promotion of two successor bands. David Richards J found breaches by both sides, ordered an inquiry as to damages, and directed the defendants to pay 75 per cent of the claimants’ costs of the action to date.

On appeal, the defendants challenged the implied obligations arising from the compromise, the finding that their website infringed those obligations, and the costs order. The Court of Appeal considered whether reasonable endeavours obligations could be implied in relation to third-party promoters and whether costs should await the damages inquiry.

Disposition. Permission to appeal on the first two contractual grounds was refused. The appeal against the costs order was dismissed. The decision was unanimous: Arden LJ and Dyson LJ agreed with the Chancellor.

1. The unchallenged construction of the compromise was that the prohibition on trading as “the Rubettes” extended beyond use of the name as the band’s name to promotion of the band under that name. Clause 5 was the corollary of the provision identifying the two permitted successor bands.
2. A term could properly be implied where the language of the agreement and its surrounding circumstances showed that it was necessary to give business efficacy or represented an obvious but unexpressed intention. In the context of a compromise resolving a passing-off dispute, clause 5 necessarily carried an obligation on each band to use reasonable endeavours to ensure that third parties with whom it or its agents dealt did not describe or promote it as the original group.
3. The implied obligation was limited. It required reasonable preventive steps and, where wrongful promotion occurred, reasonable corrective steps. It imposed no absolute responsibility for third parties, no general obligation to supervise promotion, and no obligation concerning promotion of which the relevant party was unaware. Clause 10, which imposed a specific obligation on Mr Prewer, did not displace the reciprocal obligation arising under clause 5.
4. The finding concerning the defendants’ website was upheld. The complaint had been fully ventilated at trial, and the website had to be assessed as a whole. Its presentation blurred the distinction between the original group and Mr Hurd’s band and could convey that the latter was the original group.
5. Costs were discretionary, and appellate interference required an error of principle. The judge was entitled to determine liability-stage costs before the damages inquiry. Weill v Mean Fiddler Holdings Ltd [2003] EWCA Civ 1058 established that deferral was permissible, not mandatory. The court was not required to measure success solely by monetary recovery or by counting issues. Given the differing importance of the issues, the time basis was a proper guide. The defendants were ordered to pay the costs of the appeal and permission application, summarily assessed at £12,285.

• Court of Appeal (Civil Division): Permission to appeal on the first two contractual grounds was refused, and the appeal against the costs order was dismissed.
• Chancery Division: David Richards J found breaches of the compromise by both sides, ordered an inquiry as to damages, and ordered the defendants to pay 75 per cent of the claimants’ costs of the action to date.