Kent v. Valeforce Associates 1999 (original) (raw)
Kent and others vs. Valeforce Associates Limited
In the Wandsworth County Court, BN 712526
before District Judge Gittens, 13 May 1999
see also Steans v. West (1996)
JUDGMENT
I stated yesterday that I was giving judgment for each of the four Claimants, and I hereby set out my reasons for so doing [order follows].
Each Claimant brought an action against the Defendant company quite independently of each other. They are now represented by a single firm of solicitors acting on a pro bono basis, as is their counsel Mr Grierson. Following the obtaining of representation the original Particulars of Claim in each case has been replaced by an Amended Particulars of Claim setting out claims which are identical in all material respects apart of course from the actual amounts claimed. The cases were consolidated by order of Deputy District Judge Isenberg dated 27 May 1998, made with the consent of all parties in order that all four cases could be heard together.
The cases had previously been referred individually to arbitration and in fact in the case of Mrs Kent a hearing took place on 16 October 1997 at which she appeared in person. That hearing, before D J Tilbury was adjourned part heard but subsequently adjourned generally with liberty to restore. As Mrs Kent had by then instructed solicitors who filed an amended claim which effectively entirely replaced her original wording, and as it is not only her case which I had to consider but those of three other Claimants as well, I decided that the hearing would have to start afresh and that there was no necessity for D J Tilbury to hear the matter.
One of the four Claimants, Mrs Taylor, was not present yesterday. She was however represented by a lawyer as defined in the Civil Procedure Rules, Part 27 rule 3.1 and as her case is the same as the others' in substance I have dealt with the matter in her absence pursuant to rule 3.2.
The dealings each Claimant had with the Defendant followed similar paths. Each had written a book and had responded to advertisements the Defendant had placed in magazines. Their enquiries produced a letter in response with which was enclosed another letter referred to as a 'standard introductory letter' and also a prospectus. A submission form was also enclosed which the author was to complete and return with her manuscript if she wanted to proceed.
The introductory letter and prospectus both referred to the Defendant's business as being 'subsidy publishing'. This is also known elsewhere as 'vanity publishing'. A 'partnership' and 'shared responsibility' are referred to in these documents, and there are also references to classic authors such as Beatrix Potter and Jane Austen in the context of subsidy publishing, and to the possibility of TV or film sales.
The procedure set out in the documents is for the manuscript, once submitted, to be sent by the Defendant to an 'independent outside editor' for a 'frank assessment of its potential for publication', and if assessed as having some merit the Defendant would publish it to a high standard and in sufficient numbers to enable the author's contribution to the printing costs to be recovered by way of royalties. The Defendant stated in numbered paragraph one of the prospectus that if a book were assessed as having no merit they would make no profit from publishing it.
If the author still wlshes to proceed after the assessment the amount of the subsidy/contribution to the cost of publishing would bc agreed and a formal contract entered into. Prior to publication the author is said to be involved in the production process end invited to approve and make suggestions at each stage. After publication the book would be reviewed and the possibility is set out in the prospectus (in such a way as to suggest that it is more or less standard procedure) of a 'launch' of the book, including references to a 'reception' and even signing sessions and local radio and tv interviews and reviews in the national press.
Each of the Claimants received a favourable appraisal and signed a contract. By clause 15 of the contract the author 'acknowledges that (the Defendant) has not made a prior promise, pledge or guarantee except as may be contained in this agreement which constitutes a complete contract... and no representation other than those expressly contained therein shall be binding and this agreement is entered into in good faith by the parties'. It went on to say, reasonably enough, that the number of copies sold cannot be predicted or guaranteed.
Broadly similar complaints are made by the Claimants as to their lack of involvement in the production process, the finished product and perhaps most importantly the 'selling' process and lack of promotion and publicity. The Claimants said that they themselves made strenuous efforts to promote their books but that they were let down by the Defendant's failure to support them in the ways promised or at all. The Claimants who gave evidence spoke of their feelings of foolishness and humiliation and also anger directed to the Defendant company and its staff in the face of the uniformly negative and often scornful response of bookshops they visited with copies of their books. Mrs Reeve gave evidence that the marketing manager at the Head Office of W H Smith told her that his company never stocks copies of books published by the Defendant.
None of the Claimants had received any royalties at all apart from Miss Gutteridge who received £35.81, apparently in respect of copies of her book which she was able to persuade her friends and relatives to buy.
After reading and considering carefully the documents in question I find that the contents of paragraphs 2-5 of the amended Particulars of Claim in each case are fairly and accurately set out.
The primary specific allegations made in subsequent paragraphs can be summarised as follows:
- The representations made by the Defendant were relied on by each Claimant and induced them to enter into their respective contracts.
- The experienced independent editor asked to evaluate the books in question could not be so described and was in fact one of the Defendant's employees.
- The Defendant all along intended to publish the books regardless of the chances of commercial success.
- The money paid was not a contribution and in fact was far in excess of the cost of publishing the book, the Defendant's profit coming from the mere fact of publication irrespective of whether any copies were actually sold, which explains why no efforts were made to promote the books.
- For reasons concerning the printing and appearance of the books, each book was virtually unsaleable in any event.
The Defendant company is represented by two directors, Mr Peter Scaramanga and Mr Robin Saikia. The company has a permanent in-house staff of two, most of its work being sent to outworkers, as Mr Scaramanga described them. The Defence is on the basis that:
- The material sent to the Claimants before the contract was signed was by way of sales puff rather than representations to be relied on.
- The written contract set out the full extent of the legal relationship between the parties in each case, and no terms can be implied into it.
- The Defendant hoped that each book would be commercially successful, although no guarantee could be given.
- Although the two names appearing on the four independent appraisals are noms de plume they are nonetheless written by freelance assessors who did not invariably recommend books for publication.
- The Defendant did make financial commitment to the publications.
- The books were in fact promoted.
- The books are not unsaleable.
The Claimants were not asked about their motives for contacting the publishers but in the case of the three who gave evidence it was quite clear that one factor was the hope of commercial success and indeed Mrs Kent had gone with her husband to the Defendant's office prior to signing the contract with an 'agenda' of points she wanted clarified and most of these are geared to this aspect. there is no evidence to contradict the assertion that she was given enthusiastic and encouraging replies by a Mr Burke (who is no longer with the Defendant) who pressed her to sign the contract, which she did there and then. The allegations as to the Defendant's failure to promote the books, thereby ensuring that the books would have no chance of any success, is probably the predominant issue which has concerned the Claimants.
The contract itself contains very little reference to the question of promotion. Clause 11 is the only clause which refers to this and then only to reserve the Defendant's right to distribute review copies and to state that all matters relating to promotion and publishing are at the absolute discretion of the Defendant.
Given the importance attached to promotion by the Defendant in its own prospectus and by the Claimants themselves 1 cannot agree with the Defendant's contention that any references to promotional steps were by way of sales puffs only. I find that the Defendant's statements on this subject were relied upon by the Claimants and were a significant reason for their entering into the contracts.
Moreover I do not find the setting out of the concept behind the proposed publishing venture, i.e. the statements that the Defendant was committing itself financially to the project and that there was a chance of commercial success, can be regarded as puffs. Miss Gutteridge spoke of her naïvety in entering into the agreement, and she clearly was naïve. I have no doubt that the same can be said of the other Claimants. They all entered into their contracts on the basis of the overall philosophy set out in the written material, and in the case of Mrs Kent this was reinforced by the Defendant's employee Mr Burke. I have to say that I have difficulty in accepting that the Defendant entered into the contracts in good faith. Each Claimant made it clear that had they known the true position as to the Defendant's role they would not have entered into their contracts.
The issue of the outside independent editor is one example of this. I did not understand the Defendant's reasons for not wishing to state the true identity of the edltor involved: the reasons given in relation to these particular Claimants seemed to me to be far-fetched and Mr Saikia did tell the Court that he now carries out these assessments himself. I do not know whether the Defendant's literature has been changed in this respect. Even if the evaluations of these Claimants' work were carried out before Mr Saikia took over this role I am not convinced that these appraisals can be considered truly independent and disinterested.
Also, when considering the Defendant's financial commitment Mr Scaramanga maintained that the money from their authors pays for the set-up costs of each book and that the company's financial input is in respect of reprinting, promotion and marketing. As an example of the marketing carried out Mr Scaramanga said that his company produced and distributed leaflets advertising books, but was in difficulty in giving any further examples. He went on to say that any reprinting would take place when the first print run had been sold. A normal print run would now be between 300 and 500 copies, but evidence was given that 200 or 300 copies were printed of the Claimants' books. There was however no documentary evidence of the actual number and neither Mr Scaramanga not Mr Saikia could say exactly.
Mr Scaramanga agreed that the fact that three of the Claimants received absolutely no royalties made it look as though no copies of their books were sold at all. In the case of Miss Gutteridge, her meagre royalties can be attributed solely to the sale of two or three books to friends and relatives.
If these Claimants are typical it is difficult to imagine the scale of the Defendant's storage facilities, given their directors' evidence as to the numbers of books published and printed by them each year and the fact that unsold copies are apparently kept in perpetuity.
If any promotion was carried out it was clearly ineffective. The Defendants were unable to say not only how many books were printed, but also when and to whom copies had been sent or distributed. Copies of letters in the case of Mrs Kent were produced, it is true, which suggested that copies of her book were sent to various organisations such as a newspaper and radio station local to Mrs Kent's home. This happened after she had been particularly vociferous in her complaints to the Defendant about the lack of marketing of her book and her evidence was that when she herself contacted the recipients they denied having received the Defendant's letter and book. Even if the letters were sent, the Defendant did not follow them up and as already stated no copies of Mrs Kent's book were sold. On the issue of promotion tho only document which the directors could produce, apart from the letters just mentioned, was a photocopy (not the original) of a short 'flyer' for one of the books.
The Defendant in its amended defence refers to the Claimants working closely with their Mr Terrell, who comprises the Defendant's marketing department. It is noteworthy that of the three who gave evidence only two Claimants had heard of that gentleman before they received the Amended Defence. He still works for the Defendant company and it would have been helpful if he had attended to give his comments on these matters and to say what steps he took in relation to marketing. In all the circumstances I accept the evidence of the Claimants on such matters.
The directors were also unable to say with any precision what the cost of producing these books was. Costing was given for each stage of the normal production process leading to publication and it was illuminating that in the case of Miss Gutteridge Mr Saikia was unable to dispute that the cost of producing her book could not have been more than £480, and in reality almost certainly less. When it was pointed out to him that she had paid a contribution of £1800 he said that 'we have to make a profit to make and keep a list', not having a Jeffrey Archer on his list of authors, and that 'our financial commitment is in keeping open the doors of the publishing house'.
In the light of this evidence, Mr Scaramanga's contention that the company's profit cams from steps carried out after publication cannot be accepted. When one considers that virtually no promotion or marketing took place in the present cases (and certainly no reprinting), it is beyond doubt that the Claimants' allegations that their payments were not contributions towards, but payments well in excess of, actual printing and production costs are correct. The profit to the Defendant came from the production of the books themselves, and any expense incurred in marketing and promotion would diminish that profit. Whilst Mr Scaramanga was doubtless correct in saying that there was some chance of commercial success, it was not a chance that he had any expectation of achieving and yet it was a chance that was dangled before the Claimants and which they were encouraged to take seriously.
I find therefore that the Defendants did make representations, that the Claimants relied on these representations and that such representations were amongst the reasons why each Claimant entered into her contract.
Referring to Section 3 of the Misrepresentation Act 1967 I do not consider it reasonable or fair for the Defendant to be able to rely on clause 15 of these contracts. I also find, in relation to Section 2 of the Act, that the Defendants failed to believe in the representations that they made. The Claimants are therefore entitled to damages, and I agree with Mr Grierson that their damages should represent the full amount paid to the Defendant in each case.
Mr Scaramanga mentioned that Mrs Kent did not pay the whole of the agreed price under her contract and that there is a dispute as to what balance is in fact owing from her. There is however no counterclaim against her, and in any event in view of my findings this point is of no relevance.
District Judge Gittens
14 May 1999
ORDER drawn 18 May 1999
Upon hearing Counsel for the Claimants and upon hearing the Defendant in person
IT IS ORDERED THAT:-
- The Defendant's application to adjourn today's hearing be dismissed
- Judgment be for Rosalind Kent in action number BN712526 in the sum of £1875.00 and interest of £779.95 and expenses of £25.00 a total of £2679.95
- Judgment be for Mrs Dorothy Taylor in action number MA729919 in the sum of £1875.00 and interest of £779.95 and £80.00 Court fee a total of £2556.95
- Judgment be for Miss Susan Gutteridge in action number BH707403 in the sum of £1764.19 and interest of £495.18 and £165,00 costs a total of £2424.37
- Judgment be for Sylvia Reeve in the sum of £2000.00 and £504.74 interest and £190.17 costs a total of £2694.92
- The sums due to each Claimant [totalling £10,356.19] be paid by the Defendant by no later than (by consent) 10 June 1999.
Claimants' solicitors: Gorna & Co., Virginia House, Cheapside, Manchester M2 4NB.
Defendant's solicitors: David D Lewis & Co, 36-37 Charterhouse Square, London EC1M 6EA
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