190

No.9.]

REPORTS OF PATENT, DESIGN, AND TRADE MARK CASES

[Vol. LXVIIIi.

Stevenson Jordan & Harrison, Ld. v. MacDonald & Evans.

IN

THE HIGH COURT OF JUSTICE-KING'S BENCH DIVISION.

Before

MR. JUSTICE LLOYD-JACOB.

2nd, 3rd, 4th, 7th, Sth, 9th, and 10th May, and 21st June, 1951.
STEVENSON JORDAN

&

HARRISON, LD.

v.

MACDoNALD

&

EVANS.

Confidential information-Action to restrain publication-Information not known to be

confidential at date of receipt-Confidential disclosure by Defendants of intention to publish
-rise by Plaintiffs of information so disclosed-Injunction granted.

M. & E., who were publishers, were offered by H. the manuscript of a book for publication.
The manuscript incorporated valuable confidential information the property of the Plaintiffs.
The proofs 10
were subsequently shown to N., a servant oi the Plaintiffs, solely to enable him to assist in
preparing the book for publication. N. disclosed the proofs to the Plaintiffs who sued M.
& E. to restrain publication.

M. & E. agreed to publish the manuscript not knowing of the Plaintiffs' interest.

Held, that M. & E., having learnt before publication that the book contained confidential
iniormation, could be restrained from publishing it, and that the use made by the Plaintiffs 15
of the proofs did not disentitle them from relief.
The following cases were referred to in the judgment: Prince Albert v. Strange (1849)
1 Mac, & G. 25 ; Philip v. Pennell [1907] 2 Ch. 577 ; Morison v. Moat (1851) 9 Hare 241.
This was an action for an injunction to restrain the Defendant Firm from publishing a
book entitled "Flexible Budgetary Control and Standard Costs". The facts appear from 20
the headnote and (in greater detail) from the judgment. There was also a claim in copyright
which does not call for a special report.
The action came on for hearing before Lloyd-Jacob, J., on 2nd May, 1951. P. J. Stuart
Bevan (instructed by Norton Rose Greenwell & Co.) appeared for the Plaintiff. Shelley,
K.C., and F. E. Skone James (instructed by Oswald Hickson Collier & Co.) appeared for 25
the Defendants.
Bevan for the Plaintiffs.-This is a claim for an injunction to restrain the Defendants from
publishing a book "Flexible Budgetary Control and Standard Costs" written by one
Hemming who had been in the Plaintiffs' employment but died before these proceedings were

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Vol. LXVIII.]

REPORTS OF PATENT, DESIGN, AND TRADE MARK CASES

[No.9.

Stevenson Jordan & Harrison, Ld. v. Maclronald & Evans.

started. 'The claim is based on both infringement of copyright and breach of confidence.
As to copyright, the book contains three sections undoubtedly written by Hemming while
in Plaintiffs' employment, and the only point is whether he was under a contract of
service. If he was, the Plaintiffs were first owners of copyright under Sec. 5 (1) (b) of
5 Copyright Act 1911. (Simmons v. Heath Laundry [1910] 1 K.B. 543 referred to.) The
Plaintiffs also claim that the whole book or a substantial part thereof must have been
written while Hemming was in their employment; the correspondence indicates that this was
the case.
As to breach of confidence, the book contains confidential information concerning the
10 Plaintiffs' business, which Hemming could only have disclosed in breach of his contract of
service and of confidence. At the date that the Defendants entered into a publishing agreement
with Hemming they were unaware that this double breach was involved, but they became
so aware before the book was published. The Court has jurisdiction to prevent publication
and consequent damage to the Plaintiffs. (Prince Albert v. Strange [1851] 1 Mac. & G. 25.)
Shelley, K.C., for the Defendants.-The onus lies on the Plaintiffs to 'establish that they
are entitled to the copyright pursuant to Sec. 5 (1) (b) of the Copyright Act, 1911. The
greater part of the book 'was 'written after the author had left the Plaintiffs' employment,
and the Plaintiffs therefore cannot be entitled to the copyright in that portion in any event.
Another part has belen proved to have been written for a purpose not connected with the
20 assignment on which the author was then engaged, and still another part consists of reprints
of lectures. None of these categories can be within Sec, 5 (1) (b), because the writing of a
book or a lecture was not work within the scope of the author's duties to the Plaintiffs. As
to the remainder, there is no evidence as to when it was written, and therefore the Plaintiffs
have failed to discharge the onus of proof that Hies on them,
15

It is admitted by the Plaintiffs that all the material contained in the book must have
been known to some of their ex-servants, and that the latter were free to instal the Plaintiffs'
system of accounting in clients' factories after leaving the Plaintiffs' employment. Therefore there can be no question of confidence. Further this is general professional knowledge
of a kind not capable of being the subject 'matter of confidence. There can be no breach
30 of confidence in merely collecting together non-confidential material for the first time in a
comprehensive book.

25

The Defendants are bona fide purchasers for value without notice of any equity affecting
their title, and' as they had no reason to suspect any breach of confidence at the time they
contracted to publish the book and received the manuscript, they cannot now be affected
35 by any claim based on breach of confidence. Philip v. Pennel [1907] 2 Ch. 577. Further
the Plaintiffs obtained possession of the proof for one purpose, i.e., to revise these and
prepare an index, and improperly used them for another purpose; i.e., to be. advised as to
the legal position, and they are therefore not entitled to equitable relief.
Bevan in reply.-The evidence has established that Hemming wrote the three sections of
40 the book while under a contract of service, and the Plaintiffs are entitled to succeed so far
as these sections areconcerned. The book as a whole must also have been based upon
notes written by Hemming while he was still under his contract of service.

As to breach of confidence, the evidence that the book contains confidential matter is
conclusive and that Plaintiffs could have restrained Hemming from publishing it. The
45 principle of Prince Albertv. Strange (supra) applies directly to this case. The only
doubt thrown upon this principle is found in Morison v. Moat ([1849] 20 L.J. Ch. 513).
I agree that a purchaser for value without notice is not bound by an equity attaching to the
object of the purchase, but this' has no application to a case where an article could not have
come into existence without a breach of confidence. In this case, the book could not
50 have been written in good faith, and now that the Defendants are aware of this, it would
be contrary to good faith for them to publish it to the detriment of the Plaintiffs.

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No.9.]

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[Vol. LXVIII.

Stevenson Jordan & Harrison, Ld. v. MacDonald & Evans.

~loyd-Jacob, J.-By th~s act~?n the Plaintiffs seek to restrain the publication by the
Defendants of a bookentitled Flexible Budgetary Control and Standard Costs", which
book was admittedly compiled by one Douglas Frank Evans Hemming, now deceased. As
will appear, a proof copy of the book was sent to and perused by one of the Directors
of the Plaintiff Company and the present proceedings were instituted in sufficient time to
avoid publication-s-in 'the sense of the distribution of copies to the general public-i-betore
the issues between the parties could be determined.

The Plaintiffs allege that the copyright in the book is wholly, or alternatively as to part,
vested in them, and that they have not authorised its publication. They further allege that
the work contains secret and confidential information relating to their business, the dis- 10
closure of which by the said Hemming or by anyone claiming through him, would be in
breach of confidence 'and good faith. Relief by 'way of injunction is sought, both on the
ground of infringement of copyright and also on the ground that disclosure of such secret
and confidential information would result in grave and irreparable damage to the business
of the Plaintiffs.
15
The Defendants admit the compilation by Hemming and confirm their intention to publish,
but they deny the title of the Plaintiff Company to the copyright in the work either in whole
or in part, and they further deny that publication would be in breach of confidence and good
faith. By an amendment to the defence pursuant to leave granted at the trial, they assert
that by reason of their bonafide acquisition from the said Hemming of the right to publish, 20
the fact that such publication will disclose the Plaintiff Company's secret and confidential
information, if established, is no ground for restraint. Tney further allege that the Plaintiff
Company, by reason of their conduct, are not entitled to any equitable relief.
The facts ar,e as follows. The Plaintiffs are a limited liability company who carryon
business asmanagementengineers and consultants from an address in Victoria Street, London. 25
A business under a similar name and carrying on similar work appears to have been commenced in the United States of America in 1910, and the extension of its field of activity
to include operations in the United Kingdom led to the incorporation of the Plaintiff
Company in 1932 under its then name, Ralph E. Case, Ld., the corporate title being
changed to its present style in the following year.
The English and American busi- 30
nesses appear to have worked in close association; and the business and reputation of
the Plaintiff Company has grown until the present time, when it is acknowledged to
be among the lea ding specialists in its field.
Its Managing Director is one James
Edward Currie who, after some years training 'with the United States parent company, became
associated with the English business from its inception. This gentleman gave evidence at 35
the trial and was a careful and reliable witness.
The Plaintiff Company's business is undoubtedly of a highly complex and technical nature.
Broadly speaking it is concerned with the application of known principles of business
management to the problems involved in certain functions of commercial activity, with a
view to isolating and identifying details of production and expenditure and fix.ng respon- 40
sibility for their control. By this means what may be describ,ed as a running commentary
-on these functions of activity may be readily obtained from the records wherein the details
are currently set out. Such application to any particular business necessitates not only a
thorough grasp by the Plaintiffs themselves of the principles of business management, but
also a working knowledge of the technical operations which such business is concerned 45
to carry out. Then a programme of procedures to be followed may be formulated, and
appropriate forms for, record purposes may be devised. This done, the system may then be
introduced into operation by adequate instruction of such personnel as are charged with the
duty of maintaining the records, and the responsible management may be taught to extract
the running commentary as required. The two important features of this system are referred 50
to as "Flexible Budgetary Control." and "Standard 'Costs".

The practice adopted by the Plaintiff Company when they secure the opportunity of
applying their system to the business of a client is to send certain of their employees,
under the control of one of their higher executives, termed "engineers''', to the client's

193

V 01. LXVIII.]

REPORTS OF PATENT, DESIGN, AND TRADE MARK CASES

[No.9.

Stevenson Jordan & Harrison, Ld. v. MacDonald & Evans.

place of business, where it is their duty to make a complete examination of the business
in every material aspect. Upon the result of such examination the procedures and forms
are devised, and instructional manuals containing full details. of the recommended system
are prepared for submission to the client. The process of applying the system is generally
5 involved and difficult, and as it may require the services of several experts for many months
it is expensive to procure.
Mr. Hemming entered the Plaintiff Company's employ in May, 1938, as a probationer
at a salary of 600 per annum, at a time when he was already a qualified accountant.,H,e
appears to have been both capable and industrious, and during his six months' probation
10 hie received training in the Plaintiff Company's procedures and technique direct from the
Managing Director, Mr. Currie. He was appointed to the permanent staff, and from the
Ist January, 1944, his serviccwas pursuant to the terms of a .written agreernent of that
date, by which time hie had become one of the senior executives of the Company, receiving
a remuneration varying with the Company's profits and averaging about 2,000 per annum.
15 He became a Director of the Plaintiff Company in 1949. His health does not appear to
have been very robust, and his employers appear to have endeavoured to restrict the
occasions which would require him to spend long periods out of London upon field work
at the business premises of clients, and utilised his services in the main as "chief of staff",
as it was teI'1ID
to the Managing Director, Mr. Currie.
1cd,

20

25

30

35

40

45

50

III or about 1943, Mr. Hemming and Mr. Currie discussed the desirability of preparing
a book in which the principles and methods of the Plaintiffs' system could be generally
set out, in a manner which would encourage readers to appreciate the advantages of the
system without condescending to sufficient detail to enable the system to be applied
without recourse to the Plaintiffs for their special knowledge and experience. In this
way, it was anticipated, accretions to the Plaintiffs' business would result. From time to
time thereafter until June, 1949, there were frequent discussions between these two gentlemen on the subject. Mr. Hemming had full access to the Plaintiffs' library, wherein
records of the schemes devised by the Plaintiffs for their clients and the detailed particulars
of the operation of such schemes were collected, and he prepared from time to time
notes and write-ups of different aspects of such information, which he discussed with
Mr. Currie.
Contemporaneously with these activities, IMr. Hemming was responsible for reawakening
the interest, of the Plaintiff Company's employees in the resumption of a pre-war practice
of lecturing. Up to the outbreak of war, the Plaintiff Company's employees, and in particular
Mr. Currie, occasionally accepted invitations to lecture upon some aspect of their specialised
work. Mr. Hemming advocated an extens.on of this field by the delivery of lectures to
professional institutes, rather than to theelnployees of individual clients, and played a
prominent part in putting the scheme into practice. He wrote a number of lectures, which
he delivered at different times and from time to time, such lectures being approved both
as to content and form by Mr. Currie on behalf of the Plaintiffs, who also met the expense
charges involved in Mr. Hemming's attendances for the lectures.
From January, 1947, until the end of (March, 1949, IMr. Hemming was supervising the
work of the Plaintiff Company's staff in relation to the business of the English Sewing
Cotton Coy., Ld., and for this purpose the Plaintiff Company provided him with an office
and a secretary (known as Miss Ker) in Manchester. This lady confirms that Mr. Hemming
was using her services not only in the preparation of material for the clients, but also to
prepare a typescript of material intended for a book, which typescript she handed to Mr.
Hemming on completion.
Upon Mr. Hemming's instructions she prepared stencils for
reproducing, and did herself reproduce a number of copies of, a statement hie had written
entitled "Cost Control for Managenlent". The copies she sent off to the Plaintiffs' head
office in London in the course of her duties, the stencils being retained in her office until
the work for the English Sewing Cotton Coy., Ld., had been terminated.

It was not unusual for certain of th,e instructional manuals prepared by the Plaintiffs
for a particular client to contain a "Foreword ", and there was some controversy at the
55 trial as to whether the statement so prepared and stencilled was intended by Mr. Hemming

194
No.9.]

REPORTS OF PATENT, DESIGN, AND TRADE MARK CASES

Stevenson Jordan & Harrison, Ld. v. MacDonald & Evans.

to be the "Foreword" to the manuals which were in preparation for the Englisn Sewing
Cotton Coy., Ld. Certain of the language is plainly inapt, in that reference is made by
way of illustration to activities which would not appear to be. part of the business carried
on by that company. The most likely explanation is that Mr. Hemming's poor state of
health led him to seek to conserve his energy, and that he caused the copies of a document
he had prepared for a different purpose to be sent to London as a draft "Foreword"
in the expectation that Hiead Office would amend it if any amendment was thought necessary.
There is not sufficient evidence to establish that Mr. Hemming himself inserted his own
copy of the "Toreword " in any of the manuals delivered to the client company.

Mr. Hemming was away from his work on sick leave during April, May, June and July, 10
1949. During this time Mr. Currie visited him, and also spoke to him on the telephone,
and the completion of the proposed book when Mr. Hemming's health had recovered was
one of the topics of conversation. '~lr. Hemming's employment terminated on his own
notice at the end of July, 1949. It subsequently transpired that in June, 1949, Mr. Hemming
approached the Defendants, a publishing firm, with an offer to provide a manuscript for 15
publication by them, and that in July, at an interview with Messrs, H. E. and J. D.
MacDonald, who control the Defendant's business, he accepted the suggestion that he should
provide a book in manuscript on "Flexibl,e Budgetary 'Control". The letter at p. 159
indicates that the manuscript was then in active. completion and would require about
two months' further work. The reference in another paragraph of this letter to an addi- 20
tional manuscript on "Foundry ICostS" discloses the general nature of the further work
required. It was to." knock into shape" the written notes which Mr. Hemming had in
his possession.
The completed transcript was delivered by Mr. Hemming to the Defendants in September,
1949, at a time when Mr. Hemming had been in full-time employment with other employers 25
for the preceding two months, and, subject to certain minor alterations and additions subsequently included, was put in hand for printing before the end of the year. In April,
1950, the Defendants learned that Mr. Hemming had suddenly died, and they accepted the
offer made by a Mr. Nicholson, a Director of the Plaintiffs, to peruse the proofs and
prepare the index. Mr. Nicholson's perusal caused him to suspect that some improper 30
use had been made of the Plaintiffs' confidential information, and he showed the proofs
to Mr. Currie. After consulting together, they determined to seek legal advice, and the
present proceedings were instituted
It .is abundantly clear that the book reproduces in substance the so-called "Foreword"
entitled "Cost Control for Management " and two literary works entitled "The Profit 35
" Structure" and "ICoSt Control for Management ", all prepared by Mr. Hemming during
th,e period of his employment by the Plaintiffs. These documents were prepared by him in
his capacity as a member of the Plaintiff Company's staff, and formed part of the service
which to his knowledge the 'Plaintiff Company were requiring him to discharge in the performance of his duty as an executive of the Plaintiff Company's organisation. By the operation 40
of Sec. 5 (1) (b) of the Copyright Act, 1911, the copyright in these works is the property of
the Plaintiff Company, and they would normally be entitled, under Sec. 6 (1) of that Act,
to protect this property.
I entertain no doubt that the remainder of the book reproduces the substance of Mr.
Hemming's notes produced during the' period of his employment, and in the course of it in 45
discharge of his duties to the Plaintiff Company, but as these were not produced in' evidence
I cannot determine to what extent, if at all, the "'knocking into shape" process contemplated
by Mr. Hemming for execution in such spare time as h,e had during August and September,
1949, altered their literary form.
Turning to the alternative submission as to breach of confidence, it is established that the 50
book discloses in detail the complicated system of procedures adopted by the Plaintiffs in
the operation of their business and illustrates the operation of that system by typical forms.
The author acknowledges in his introduction that 'with diligent study the reader can
master the techniques applicable to every type of industry, and this confirms the evidence
called by the Plaintiffs. The Defendants sought to establish that there was nothing in the 55

195

Vol. LXVIII.]

REPORTS OF' PATENT, DESIGN, AND TRADE MARK CASES

[No.9.

Stevenson Jordan & Harrison, Ld. v. MacDonald & Evans.

book which was 110t already known to practitioners in cost accountancy, and called a number
of witnesses and produoed certain published works. As these witnesses had all served at
some time with the Plaintiffs, their own familiarity with the Plaintiffs' procedures was
readily explicable, and their testimony does not displace the evidenoe of the Plaintiffs'
5 witnesses and the admission in Mr. Hemming's own" Foreword" that the book discloses
many features which had been developed and proved in the Plaintiffs' business since he
joined the Plaintiffs' staff. This" Foreword" dismisses one of the published books relied
upon by the Defendants, namely, that by Charter Harrison, as being "merely bewildering ",
and leach of the other books contains passages which 'make it plain that neither exhaustive
10 treatment nor the exposition of detailed methods of application are to be expected from
perusal of these books.
There is, then, abundant evidence to establish, that the detailed explanation of procedures,
the comprehensive exposition of the sequence of steps, and the illustrated description of
the forms and transfers required to key the whole system together as an operative form of
15 accounting technique, which the book contains is a substantially complete disclosure of a
system of working devised by th'e Plaintiffs, and known, and known only, to servants, and
possibly in part at any rate to clients, of the Plaintiff Company, and jealously safeguarded
by the Plaintiffs as strictly confid'ential.Clause 5 of Mr. Hemming's Service Agreement denies
to him any conoeivable right to publish the contents of this book.
20

The Defendants contend that at the time they agreed to publish this work they had no
knowledge or notice of the Plaintiffs' claims, nor were they aware that the work contained
any secret or confidential information, and they claim that in consequence they cannot now
be restrained. It is to be noted that the absence of any right to publish on Mr. Hemming's
part must safeguard the Defendants from any claim for breach of contract by his estate.
25 It would appear, therefore, to be the position that the Defendants' insistence on disclosing
the contents of this book to the world, and thereby causing irreparable damage to the
business of the Plaintiffs, is due in part to unwillingness to bear the cost already incurred
in preparing for publication (although the publishing agreement (D.10) specifically safeguards
them against loss in this connection) and possibly in part to a public-spirited insistence upon
30 a supposedly legal right. It is difficult to reconcile this attitude with the evidence of
Mr. J. D. MacDonald, but as the claim is rnade and persisted in it is necessary to examine
the position so created.
Counsel for the Plaintiffs expressly disclaimed any suggestion that at the date of the
execution of D.10 the Defendants were (or should have been) aware that Mr. Hemming was
35 acting in breach of his duty to the Plaintiffs. Does this circumstance frank their avowed
intention to consummate Mr. Hemming's wrongdoing? The original and independent jurisdiction of this Court to prevent, by the grant of an injunction, any. person availing himself
of a title which arises out of a violation of a right or a breach of confidence, is so well
established as a cardinal .principle that only -a binding authority to the contrary should
40 prevent its application by this Court. None of the cases cited by Counsel for the Defendants
appears to fetter in any way the freedom of this Court to protect the Plaintiffs from the
disclosure of their confidential information : and Lord Cottenham's judgment in Prince
Albert v. Strange (1849) 1 Mac. & G. 25, expressly supports the principle. The wrong to
be restained is not the entry into the contract to publish, but the act of publishing, and an
45, innocent mind at the time of the former cannot overcome the consequences of full knowledge
at or before the time of the latter.
The judgment of Kekewich, J., in Philip v. Pennell [1907] 2 Ch. 577, which was strongly
urged in argument by Counsel for the Defendants, does not, in my .view, ~up~port his contention. The learned Judge there expressly excluded from the ambit of hIS Judgment any
50 consideration of letters obtained improperly.

Turner, V.C., in Morison v. Moat ((1851) 9 Hare 241, 263) expressed the view that a
purchaser for value of a secret without notice. of ~l1Y ob!igatio~ affect~ng it might be in a
different position from a volunteer. Such a VIew IS not inconsistent WIth the power of the
Court to prevent disclosure by injunction if proceedings are commenced in time,

196

No.9.]

REPORTS OF PATENT, DESIGN, AND TRADE MARK CASES

[Vol. LXVIII.

Stevenson Jordan & Harrison, Ld. v. MacDonald & Evans.

There remains only to be considered the Defendants' further contention that the Plaintiffs,

by their conduct in taking advice and action upon information obtained through their
Director, Mr. Nicholson, have disentitled themselves to equitable relief. Mr. Nicholson gave
evidence and was a witness of truth. It is the fact that his offer to assist the Defendants
in preparing this book for publication was made in ignorance of its true contents, and was

5
intended as.an act of aoknowledgment to a deceased friend. Even if his conduct in disclosing
the proofs to his co-director when hie realised their import could be validly criticised, it
would be no more than an error of judgment. For my part, I can see no impropriety
whatever in his actions, nor in the conduct of the Plaintiffs thereafter, and this ground of
defence must be rejected.
10
Judgment for the Plaintiffs, with costs.
The business of the Defendants having, before the hearing of the action, been taken over
by a limited company, leave was given to amend the writ by adding that company as a
Defendant; and an injunction was ordered restraining the Defendants and each of them (by
themselves, their servants or agents) from publishing or causing to be published the book 15
entitled "Flexible Budgetary 'Control and Standard Costs ". It was agreed between Counsel
that the Defendants should account to the Plaintiffs for any proof copies of the book that
had been circulated.

(12772)

Wt.8203-4011

1050 7/51

D.L.