3PLR – AMON V. RAPHAEL TUCK AND SONS LTD
POLICY, PRACTICE AND PUBLISHING, LAW REPORTS 3PLR
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AMON
V.
RAPHAEL TUCK AND SONS LTD
QUEEN BENCH DIVISION
19 DECEMBER 1955
3PLR/1955/5 (QB.D)
OTHER CITATIONS
[1956] 1 ALL E.R. 273
BEFORE: DEVLIN J
REPRESENTATION
G T Aldous for the defendants.
E V Falk for the plaintiff.
Solicitors: Godden, Holme AND Co (for the defendants);
J M Menassé AND Co (for the plaintiff).
A P Pringle Esq Barrister.
MAIN ISSUES
INTELLECTUAL PROPERTY LAW – PATENT – DISPUTED OWNERSHIP:- Proceedings to solve ownership of dispute – Necessary party thereto – Whether party whose commercial interest may be jeopardised thereto is a necessary party as an intervener
COMMERCIAL LAW – CONTRACT – IMPLIED BREACH OF CONTRACT:- Wrongful use of confidential information – Application for injunction restraining continued use of said information commercially – How treated
COMMERCIAL LAW – CONTRACT – ROYALTY AND COMMISSION:- Mere fact that a man is entitled to a royalty or commission on the sale of an article – whether implies existence of a contract – Whether not enough to enable him to say that he is legally affected by an order forbidding its manufacture – Whether in such circumstances, he has only a commercial interest, not a legal one, in the continued manufacture of the article- Whether promise of a minimum royalty implies an obligation to produce the article
EMPLOYMENT AND LABOUR LAW – SPECIAL EMPLOYMENT:- Employment pursuant to an agreement for employee to deliver his intellectual property to employer for the manufacture and market of a product on a royalty/commission basis – Dispute arising therefrom – Necessary parties thereto
PRACTICE AND PROCEDURE – ACTION – PARTIES:- Adding persons as parties – Where defendants apply for order to join another defendant – Whether need to establish a prima facie case that proposed defendant rights might be legally affected by the result of the action – RSC, Ord 16, r 11.
PRACTICE AND PROCEDURE – ACTION – PARTIES:- The fact that a proposing intervener may be commercially, as distinct from legally, prejudiced by the result of an action to which he is not a party – Whether does not afford ground enabling the court to order him to be added as defendant against the wish of the plaintiff – Distinction between a person who is legally interested or could be legally prejudiced from the determination of a suit and another persons who may suffer commercial prejudice
WORDS AND PHRASES – “NECESSARY PARTY”:- Meaning – As a person whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all the questions involved in the cause or matter – Effect
SUMMARY OF FACTS AND SUMMARY
By his statement of claim in an action against the defendants the plaintiff alleged that he was the inventor of a new design of adhesive dispenser in the shape of a pen, known as the Fastik pen; that he disclosed the know-how of the pen to the defendants during negotiations for an agreement whereby the defendants were to market the pen; that in February, 1954, the negotiations broke down; that there was an implied contract that the defendants would treat as confidential the information given to them during the negotiations; and that the defendants were in breach of that contract in that they had made use of the information by manufacturing an adhesive dispenser called the Stixit pen which contained three distinctive features of the Fastik pen. The plaintiff claimed damages against the defendants and an injunction to restrain the defendants from disclosing to other persons or making use of the information disclosed by the plaintiff without his consent. The defendants, before filing a defence, applied by summons under RSC, Ord 16, r 11a, for leave to join as a defendant one D who by affidavit alleged, among other things, that he was the inventor of the Stixit pen. Subsequently D filed another affidavit alleging, among other allegations, that the defendants were under contractual obligation to him to manufacture and distribute the Stixit pen in certain territories.
Held
(i) The test whether under RSC, Ord 16, r 11, the court had jurisdiction to add as defendant a person whom the plaintiff did not wish to sue was whether the order for which the plaintiff was asking in the action might directly affect the intervener (ie, the person proposed to be added as a party) by curtailing the enjoyment of his legal rights (see p 281, letter c, p 290, letter e, post); for the only reason which might render the presence of a party before the court to be necessary to enable the court to adjudicate completely (within the meaning of RSC, Ord 16, r 11) was that he should be bound by the result of the proceedings (see p 287, letter b, post).
Moser v Marsden,[1892] 1 Ch 487, as interpreted by Buckley J, in McCheane v Gyles (No 2),[1902] 1 Ch 911, and dictum of Wynn-Parry J, in Dollfus Mieg et Compagnie SA v Bank of England,[1950] 2 All ER at p 611, followed; observations of Wynn-Parry J, in Atid Navigation Co Ltd v Fairplay Towage Shipping Co Ltd [1955] 1 All ER at p 699, considered; dicta of Lord Esher MR in Byrne v Brown Diplock (1889), 22 QBD at p 666, criticised.
(ii) D should be added as defendant in the present case because the defendants were shown prima facie to be bound to him in contract to manufacture the Stixit pen, which obligation constituted a legal right of D the enjoyment of which might be curtailed by relief (ie, the injunction) asked by the plaintiff in this action (see p 289, letter g, p 290, letter f, post).
Notes
The fact that a proposing intervener may be commercially, as distinct from legally, prejudiced by the result of an action to which he is not a party does not afford ground enabling the court to order him to be added as defendant against the wish of the plaintiff (see p 281, letter i, to p 282, letter a, post). A person is legally interested if the answer to the question in issue may curtail his legal rights (see p 287, letter d, post). Illustration of the distinction between commercial and legal prejudice will be found at p 289, letters a to e, et seq, post.
As to joinder of defendants, see 26 Halsbury Laws (2nd Edn) 1921, paras 16, 17; and for cases on the subject, see Digest (Practice) 429431, 12431266.
For RSC, Ord 16, r 11, see the Annual Practice, 1956, p 255.
Procedure Summons
The defendants, Raphael Tuck AND Sons, Ltd applied by summons under RSC, Ord 16, r 11, for an order that Hugo Dachinger be added as a defendant to an action whereby the plaintiff, Robert Amon, claimed (a) damages for breach of agreements to treat as confidential information disclosed by the plaintiff to the defendants relating to the plaintiff design of an adhesive dispenser;(b) damages for breach of duty owed by the defendants to the plaintiff not to disclose to other persons or to make use of the said information without the consent of the plaintiff; and (c) an injunction restraining the defendants by their servants, agents, subsidiary companies, or otherwise, from disclosing to other persons or making use of the said information without the consent of the plaintiff. The application was refused by Master Harwood on 21 July 1955, and the defendants appealed. The appeal was heard by Devlin J in chambers, on 20 and 27 October 1955. The learned judge then adjourned the hearing into open court and heard further argument on 10 November 23, and 7 December 1955.
The nature of the plaintiff claim and the reasons for the application by the defendants appear from the judgment.
MAIN JUDGMENT
Cur adv vult
19 December 1955. The following judgment was delivered.
DEVLIN J read the following judgment.
The plaintiff alleges in his statement of claim that he is the inventor of an adhesive dispenser in the shape of a pen which he calls the Fastik pen and in respect of which he has filed an application for a provisional patent. He alleges that in August, 1953, he was in negotiation with the defendants with the object of arriving at an agreement under which they were to market the pen and that in the course of the negotiations he disclosed the know-how of his pen. On 22 February 1954, the negotiations broke down. The plaintiff now finds, he says, that the defendants are manufacturing a pen which they call the Stixit pen and which contains three distinctive features of the Fastik pen. In short, he claims that the defendants have stolen his know-how. In legal language he says that there was an implied contract that the defendants would treat as confidential the information given to them during the negotiations and that they are in breach of that contract.
The statement of claim was delivered on 1 June 1955. Before delivering a defence the defendants applied to the master for an order under RSC, Ord 16, r 11, that a certain Mr Dachinger should be joined as a defendant. They filed an affidavit by him in which he expresses his willingness to be joined. He says, in effect, that he is the inventor of the Stixit pen, that he is in the employment of the defendants and is assisting them in marketing the pen. He also, in his affidavit, gave an account of the negotiations in August, 1953, very different from that set out in the statement of claim. He says that he came to England in April, 1953, and was introduced to the plaintiff and disclosed to him confidentially his invention. According to him, the negotiations to which the plaintiff has referred took place between himself and the defendants with the plaintiff acting as an intermediary. The Fastik pen is, he says, an embodiment of his invention and made by the plaintiff in breach of confidence; and he wished to be made a defendant so that he could counterclaim against the plaintiff. The plaintiff objected to the joinder and the master refused to order it; against this refusal the defendants now appeal. The master refused because he decided that he had no jurisdiction to make the order, and, at the first hearing before me, counsel for the plaintiff supported the master decision solely on that ground. He said, however, that he wished to contend in the alternative that, if the court had jurisdiction, this is not a case in which its discretion should be exercised. For this purpose he had filed some further affidavits which the defendants had not then had time to consider and answer. In these circumstances he asked that I should deal first with his submission on jurisdiction. This is not usually the convenient course, but as a special appointment had been made for the hearing of the summons it seemed to me, on the whole, the best one to take.
[His Lordship referred to RSC, Ord 16, r 11, to his provisional conclusion, to the further consideration and argument, and continued:] I shall begin my judgment by considering the case for the narrow construction of the rule and the arguments of counsel for the plaintiff thereon. I have already set out the material parts of the rule which requires that the party to be joined must be one whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all the questions involved in the cause or matter.
This is, in form, an application by the defendants to join Mr Dachinger. In my judgment, however, they cannot show that, so far as they are concerned, Mr Dachinger is a necessary party to the action. They are sued by the plaintiff simply for breach of confidence, and the essence of their case is that they owed no duty to him. On this issue they will, no doubt, require to have Mr Dachinger as a witness on their behalf and it may be convenient to them to have him as a party, but it cannot be said that it is necessary to their case that he should be a party. The application must, therefore, be treated as an application by Mr Dachinger for leave to intervene. The authorities which relate to the application of the rule to proposed interveners are quoted in a note in the Annual Practice, 1955, at p 232b, and the material parts of it are as follows:
Generally in common law and Chancery matters a plaintiff who conceives that he has a cause of action against a defendant is entitled to pursue his remedy against that defendant alone. He cannot be compelled to proceed against other persons whom he has no desire to sue Generally speaking, intervention can only be insisted upon in three classes of case, namely: (A) In a representative action where the intervener is one of a class whom plaintiff claims to represent. The intervener may say, #8216;I deny that plaintiff represents me #8212;add me as a defendant ‘(B) Where the proprietary rights of the intervener are directly affected by the proceedings (C) In actions claiming the specific performance of contracts where third persons have an interest in the question of the manner in which the contract should be performed.
The first submission of counsel for the plaintiff is that there is no jurisdiction to join an intervener if the plaintiff has no claim against him and does not desire to prosecute any. He relied strongly on the recent decision in Atid Navigation Co Ltd v Fairplay Towage Shipping Co Ltd, in which Wynn-Parry J said ([1955] 1 All ER at p 699):
After all, the basis of the whole jurisdiction to add defendants is that there is a cause of action by the plaintiff against not only the existing defendant but the person who would be joined if the application were successful. In Norris v. Beazley, LORD COLERIDGE, C.J., after referring to Ord. 16, r. 13 [now Ord. 16, r. 11] said (1877)(2 C.P.D. at p. 83): #8216;It seems to me to be correctly argued that those words plainly imply that the defendant to be added must be a defendant against whom the plaintiff has some cause of complaint, which ought to be determined in the action, and that it was never intended to apply where the person to be added as defendant is a person against whom the plaintiff has no claim, and does not desire to prosecute any’.
Wynn-Parry J having quoted this passage, later expressed his own conclusion that he had no jurisdiction to make the order asked for.
Several earlier cases were referred to. McCheane v Gyles (No 2) ([1902] 1 Ch 911) was an action in which a beneficiary charged one of several trustees with a breach of trust and the defendant applied to have the executrix of a co-trustee joined as a co-defendant. Buckley J refused to make the order, and according to the headnote he held that the executrix ought not to be added as a defendant against the plaintiff wish. I think that this condenses the judgment too much. Buckley J certainly referred (ibid, at p 915) to a class of cases in which a person may be added as a defendant to an action without the plaintiff consent and held that this was not one of them. He did, I think, also decide the case as a question of jurisdiction and not of discretion, because he said at the beginning of his judgment (ibid, at p 914) that he would have made the order asked for if he could, and (ibid, at p 917) that he had not power to make it. I think, however, that the precise ground for his holding that he had no jurisdiction is expressed where he says (ibid): her presence is not necessary to enable the court to decide whether Gyles is liable for a breach of trust. That is rather a different point which I shall consider later.
In Hood Barrs v Frampton, Knight Clayton ([1924] WN 287), the plaintiffs employed the defendants to collect on their behalf the rents of a certain flat. After a while the defendants refused to pay over the rents because they had been informed by a third party that she was entitled to receive them. The plaintiffs sued the defendants who asked for the other party to be joined. Eve J refused the application and said that the defendants had no right to require the plaintiffs to sue another party; and that convenient as it no doubt would be to have the whole matter discussed, they could not claim to have it decided on the record as it stood. He declined to make the order for adding a defendant against whom no relief was sought. Here, again, I do not think that the gist of the learned judge decision was that he had no jurisdiction to make the order in a case where the plaintiffs sought no relief; I think the true effect of it is that the defendants were not entitled to have the other party joined because the question involved did not arise on the record as it stood.
These cases show that the learned judges felt the difficulty of joining as defendant a party whom the plaintiff said he did not want to sue. Buckley J said in the course of the argument ([1902] 1 Ch at p 913): Supposing I did so, how could I make him allege anything against or claim anything from the new defendant? In his judgment he pointed out (ibid, at p 917) that, if the party were joined and the plaintiff made no allegation against her, she might apply to be dismissed from the action. In some cases it may be apparent from the statement of claim that the plaintiff must have a cause of action against the intervener as well as the defendant. In others it may be apparent from admitted facts that he has a good cause of action. But suppose that, on the facts which the plaintiff is going to prove, he would have no cause of action against the intervener, can the intervener be joined? Or suppose that the plaintiff has not, on any view, a cause of action against the intervener, can be still be joined? Lord Coleridge CJ in Norris v Beazley thought not. His reference to the rulec in the passage cited by Wynn-Parry J is a reference to the last sentence of it which now reads:
Every party whose name is so added as defendant shall be served with a writ of summons or notice in manner hereinafter mentioned.
The present Ord 16, r 13, orders that where a defendant is added the writ of summons shall be amended and the plaintiff shall serve the new defendant with the amended writ or with notice thereof in the same manner as original defendants are served, and the proceedings shall be continued as if the new defendant had originally been made a defendant. This seems to contemplate that the plaintiff must show a good cause of action on the amended writ and must deliver a statement of claim in amplification of it. The willing intervener might dispense with this; but the rule is the same for the willing and the unwilling, and the unwilling, as Buckley J pointed out ([1902] 1 Ch at p 917), could immediately apply to have his name struck out if the writ and statement of claim disclosed no cause of action against him.
Nevertheless, later authorities, which are binding on me, show conclusively that a party can be joined as defendant even though the plaintiff does not think that he has any cause of action against him. In Montgomery v Foy, Morgan AND Co ([1895] 2 QB 321), the plaintiff carried cargo to London consigned to the defendant; the defendant was the agent of the shipper to sell the goods in England and had no right of property in the cargo. As the defendant did not take delivery, the plaintiff placed it in the custody of a warehouseman with a notice that it was subject to a lien for freight under the Merchant Shipping Act, 1894, s 493. The defendant obtained possession of the cargo under s 495 by depositing the amount claimed for the freight with the warehouseman and giving him notice to retain it under s 496, as the defendant did not admit any sum to be payable. The plaintiff brought an action against the defendant for a declaration that he was entitled to a lien on the deposit and an order that the sum should be paid to him. The intervener, as owner of the cargo, had a claim for short delivery and damage to the cargo and applied to be joined as defendant so that he could counterclaim. This was allowed by the Court of Appeal. Lord Esher MR said ([1895] 2 QB at p 325) with regard to Norris v Beazley that, while he did not say that the actual decision was wrong, he did not think that all the statements made in the judgments could now be supported. In this case [Montgomery v Foy, Morgan AND Co] the plaintiff was, in substance, suing the intervener because he was the person, as Lord Esher MR said (ibid, at p 323), who made the contract of affreightment and out of whose pocket the freight came. But the plaintiff was not suing the intervener in form and it does not appear that the Court of Appeal thought it necessary that he should.
In Norbury Natzio AND Co v Griffiths ([1918] 2 KB 369), the defendant and the intervener as executors sold a printing business to the plaintiffs. One of the terms of the contract was that the plaintiffs should complete work in progress at the time of the sale at agreed rates. The plaintiffs alleged that by a special arrangement made with the defendant only they printed a catalogue at a special rate different from the agreed rate and they sued him for the cost. The defendant admitted that the sum was due but denied that it was due under a special arrangement to which he alone was a party; he said that the work was not done for him separately but for himself and the intervener as executors. If the case had stopped there, the defendant need not have applied for the joinder; if the defendant was successful in proving that the contract was a joint one, it would be the plaintiffs who would have to ask for the joinder. But the defendant also said that there were other sums due to himself and the intervener as executors under the contract of sale and for which he wanted to counterclaim; he could not do that without joining the intervener on the counterclaim and so he applied to have the intervener joined as a defendant. The Court of Appeal allowed the joinder, saying, in effect, that it did not matter that the plaintiffs were not suing on a joint contract and that it was not necessary for the court to determine whether there was or was not a joint contract; the joinder was justified if the defendant could show a prima facie case of joint contract. The form of the order made is set out ([1918] 2 KB at p 380). It is not quite clear from it whether the plaintiffs were required to frame a cause of action against the intervener or not. It rather looks as if they were not, for the order says that the intervener is to be joined as a co-defendant, and that the defendants be then at liberty to bring a counterclaim jointly against the plaintiffs.
Finally, in Bentley Motors (1931) Ltd v Lagonda Ltd ([1945] 2 All ER 211), Evershed J held in terms that it was unnecessary that the plaintiffs should have any cause of action. In this case the plaintiffs’ registered trade mark consisted of the word Bentley. In 1932 they agreed with Mr Bentley, who was apparently leaving their employment, that notwithstanding the registration of the trade mark he might permit the use of his name by any company who employed him. He was employed by the defendants. The plaintiffs sued the defendants claiming an injunction for infringement of their trade mark. The defendants challenged the validity of the trade mark and also relied on the contract of 1932. Mr Bentley sought to intervene on the ground that the plaintiffs were acting in breach of his contract. Evershed J allowed the joinder and said at the end of his judgment (ibid, at p 213) that it did not matter if the plaintiffs in the action did not prefer any claim against the party joined and that the practical effect of the joinder was so that the party joined might assert his case by way of counterclaim against the plaintiffs.
The decisions in the Court of Appeal make it clear that it is no bar to an intervention that the plaintiff cannot, on his view of the facts, formulate any cause of action against the intervener. The decision in Bentley Motors (1931) Ltd v Lagonda Ltd may go further and support a submission that it is not necessary that on any view of the facts a cause of action should be shown. Bentley Motors (1931) Ltd v Lagonda Ltd was apparently not cited to Wynn-Parry J and I think that it is convenient that I should consider again the dicta on which counsel for the plaintiff relies after I have expressed my view about the construction of the rule.
I shall take the same course with the second submission of counsel for the plaintiff, namely, that there is no jurisdiction to make the order in a case in which the sole purpose of the intervention is to advance a counterclaim. Here, again, counsel relies on a sentence in the judgment of Wynn-Parry J, which comes just before the passage which I have already citedd. The learned judge said ([1955] 1 All ER at p 699):
I know of no authority which goes so far as saying that the court would make an order, as asked in this case, merely to enable the proposed interveners to join with the existing defendants in prosecuting a counterclaim.
The question of jurisdiction must depend on the meaning and scope of the rule. One cannot say that the court has no power to join a party against whom the plaintiff has no cause of action, unless the requirement that he should have one is contained expressly or impliedly in the rule. Nor can one say that some counterclaims, such as that in Montgomery v Foy, Morgan AND Co are permissible, and that others, such as that in Bentley Motors (1931) Ltd v Lagonda Ltd, are not, unless the line between them is drawn somewhere in the rule. Accordingly, this case, in my view, really turns on the true construction of the rule, and, in particular, the meaning of the words
“whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all the questions involved in the cause or matter”.
The beginning and end of the matter is that the court has jurisdiction to join a person whose presence is necessary for the prescribed purpose and has no jurisdiction under the rule to join a person whose presence is not necessary for that purpose.
It is not, I think, disputed that the cause or matter is the action as it stands between the existing parties. If it were otherwise, then anybody who showed a cause of action against either a plaintiff or defendant could, of course, say that the question involved in his cause of action could not be settled unless he was made a party. Counsel for the defendants does not contend for so wide a construction as that; but he submits that, if the intervener has a cause of action against the plaintiff relating to the subject-matter of the existing action, the court has power to join the intervener so as to give effect to the primary object of the order, which is to avoid multiplicity of actions. In the present case he submits that the subject-matter of the dispute between the existing parties is the ownership, if I may so put it, of an invention; the plaintiff claims that he is the owner of it and the intervener alleges that he is, and both disputes ought to be determined at the same time. This construction stresses the amplitude of the closing words of the passage which I have just cited from Ord 16, r 11, all the questions involved in the cause or matter.
The alternative construction treats the opening words as dominant. All the questions involved is a phrase that, unless it is cut down, would be impossibly wide. It is cut down, the plaintiff submits, by the opening words of the passage which I have cited. The intervener must be a party whose presence is necessary to enable all questions in the action to be adjudicated on and settled, but the question must be one which has to be adjudicated on in the issue between the existing parties and not in any new issue raised by an intervener. The criticism that at once suggests itself of this construction is that it is impossibly narrow. If the adjudication is limited to something that lies between the plaintiff and the defendant, what parties can be necessary to it except the plaintiff and the defendant? The court is for this purpose concerned only with actions in personam, and in such actions either the necessary defendant is sued or the action fails. If all the parties who ought to have been joined e under the first limb of the rule are joined, who are the necessary parties contemplated by the second limb?
It is true that, in actions in personam, the order which the court makes is binding only on the parties. There is, nevertheless, a distinction between those orders that were formerly made by the courts of common law and those that were made by a court of equity. When a court orders a defendant to pay damages, no other person is, as a rule, legally affected by the order. Someone else may be commercially affected, because if there is a similar cause of action pending against him, he may have good reason to think that another court may make him liable to pay damages in another action. Nevertheless, until that other action is decided his legal rights are unimpaired. When, however, a man is ordered to do or refrain from doing something, the legal repercussions are far wider. A plaintiff may, for example, claim that goods held by a warehouseman are his goods and may obtain an injunction to prevent the warehouseman from parting with them. Suppose that a third party says that the goods are his. It is true that he is not in law bound by the order against the warehouseman, but in practice he would not be able to get possession of them. So long as the order stands, he cannot effectually exercise his legal right. It is in this way, I think, that the three classes enumerated in the Annual Practice, 1955, at p 232, have been developed. Let me take first the third class, the case of a contract for specific performance, because it illustrates the point most clearly. In Dix v Great Western Ry Co (1886)(55 LJ Ch 797), the railway company entered into three separate agreements with three separate covenantees to make a road for their use. One of them sued the company for specific performance. If the court made an order for specific performance at the instance of one covenantee only, what would happen? The others might come along later and say that they had quite different ideas about the way in which the contract should be performed. As Kay J said (ibid, at p 798), they might entertain very different views from the plaintiff as to the line of the road If they were not allowed to intervene, then an order might be made, which, although not in strictness binding on them, could seriously and directly affect their rights because the railway company might claim that it was bound to perform the contract in a way which injured them. The court can make only one order for specific performance; it cannot order a contract to be performed in three different ways. Accordingly, the court could not completely and effectually settle the question involved in the action between Mr Dix and the railway company unless it made one order binding on all the parties who were interested in the subject-matter of that action, namely, the performance of the contract.
The same principle is illustrated by those cases which have been decided in relation to proprietary rights. It is not the bare fact that the intervener has proprietary rights that matters. It is the fact that an order in the nature of an injunction may be made which affects his rights. In Vavasseur v Krupp (1878)(9 ChD 351), the plaintiff complained that Krupps had infringed his patent for making shells. Some of the shells were in England awaiting delivery to the government of Japan. The plaintiff obtained an injunction against the owners of the wharf and against the agents of the purchaser, the Japanese government, restraining them from delivering the shells to the government. The Mikado was allowed to be added as a defendant. The injunction clearly impaired the exercise of his legal rights. I do not think it matters whether or not they are called proprietary rights. His rights would be equally affected if his power to require his agent to obey his instructions was met with the answer that the agent was prohibited by an order of the court from doing so. Dollfus Mieg et Compagnie SA v Bank of England ([1950] 2 All ER 605) was a case of the same sort, except that the governments who wanted to intervene did not assert a right of property in the gold bars which they had deposited with the bank (see ibid, at p 611). An injunction against the bank would have interfered with their right against the bank to call for delivery, and they were allowed to intervene.
The remaining class of those enumerated in the Annual Practice, 1955, p 232, is that of the representative action where the intervener says that he is not truly represented. The order made in the action will not merely affect the intervener rights but may settle them conclusively. This type of case is, therefore, in accordance with the principle which I have been considering, and is, indeed, a fortiori, so that I need not do more than allude to it.
If this is the line of authority that is the correct one to apply, then I think the test is: May the order for which the plaintiff is asking directly affect the intervener in the enjoyment of his legal rights? It is not, on this view, enough that the plaintiff rights and the rights which the intervener wishes to assert should be connected with the same subject-matter. Nor is it enough that the intervener commercial interests may be affected by an order made in the action. This distinction between legal and commercial interests appears to be sharply drawn in the decision of the Court of Appeal in Moser v Marsden ([1892] 1 Ch 487), on which counsel for the plaintiff strong relies. In this case the defendant used in England a machine which had been manufactured by the intervener in Prussia under a patent which he had obtained in that country. The plaintiff alleged that the machine infringed his English patent and brought an action to restrain the defendant from using it. The intervener disputed the plaintiff contention and there was manifestly only one subject-matter out of which the two disputes arose. Nevertheless, the Court of Appeal reversed the order of the Vice-Chancellor of the County Palatine of Lancaster who had allowed the intervention, and said that it was a question of jurisdiction and not of discretion. Counsel for the defendants has subjected the case to a close analysis as a result of which he submits that the joinder could not have been made any way because the plaintiff had no cause of action against the intervener, and the intervener had no cause of action against the plaintiff. The plaintiff, counsel says, could not have sued the intervener because the machine had been manufactured abroad: the intervener could not sue the plaintiff because the only relief obtainable would be by way of declaration and until 1949 a declaratory judgment in this form of action was not permitted. It appears that the intervener wanted to undertake the defence of the action but the defendant would not let him and counsel submits that the only object of the application was so that the intervener could see that the action was defended properly. I confess that I do not know the answer to counsel point and I do not propose to add to the burdens which I have already undertaken the additional one of investigating how the English patent law stood in the year 1892. Whether counsel point is a sound one or not, it is not the point that was argued in the case nor that on which the court proceeded. The decision, as expressed in the judgments, is a stringent and very precise application of what I have called the narrower construction of the rule. The plaintiff was seeking an injunction to restrain the defendant from using a machine manufactured by the intervener. It was not, however, the intervener machine but merely his invention; the defendant was not his agent; the intervener had no legal right which would be impaired if the defendant stopped using the machine. Lindley LJ with whose judgment Kay LJ entirely concurred, said ([1892] 1 Ch at p 490) that the only question involved in the action was whether what the defendant was doing was an infringement of the plaintiff patent. A judgment to that effect might affect the intervener commercially but would not affect him legally. Kay LJ said (ibid, at p 491) that judgment in the action would not bind the intervener; it might affect him indirectly and commercially, but not directly.
The case which the advocates of the narrower construction find most difficult to fit in with it is Montgomery v Foy, Morgan AND Co which I have already consideredf in another connection; it was the case in which the shipowner was claiming freight deposited under the Merchant Shipping Act, 1894. The case can be brought within the narrower construction by treating the deposit as, in substance, the property of the intervener. The plaintiff was seeking to take the deposit in satisfaction of his claim to freight and the intervener was seeking to retain part of it to satisfy his counterclaim for damages. The deposit represented the cargo on which the plaintiff had had a lien, and there can be no doubt that an order enforcing a lien on the cargo directly affects the cargo owner. Dicta can be cited from all the judgments to support this view of the case. Lord Esher MR said ([1895] 2 QB at p 324):
The plaintiff claims the whole amount deposited in respect of the freight; but the amount to which he is entitled may be diminished by his being liable to pay to the defendants whom it is sought to add damages for breach of the same contract under which the freight is claimed.
Kay LJ said (ibid, at p 326) that the question raised by the counterclaim must be determined in order to determine the question what amount the plaintiff was entitled to receive in respect of his freight. A L Smith LJ said (ibid, at p 328):
the real question involved is what amount, if any, the shipowner is entitled to receive from the shippers for having brought the goods to this country when the disputes between them are adjusted.
In McCheane v Gyles (No 2) Buckley J said ([1902] 1 Ch at p 917) that the ratio decidendi in Montgomery v Foy, Morgan AND Co was that in the question what the plaintiff was entitled to receive out of the deposit there was involved the question whether he owed anything to the shippers.
There are also, however, dicta to support the wider construction. Lord Esher MR said ([1895] 2 QB at p 324):
the matter before the court is the contract of affreightment and there are disputes arising out of that matter as between the plaintiff and the defendants and the [intervener] where there is one subject-matter out of which several disputes arise, all parties may be brought before the court, and all those disputes may be determined at the same time
A L Smith LJ said, in effect (ibid, at p 328), that there was jurisdiction because the whole matters in dispute arose under the one contract of affreightment.
Byrne v Brown Diplock (1889)(22 QBD 657) was an unusual case in its facts. The plaintiffs let certain premises to Mrs Brown. Mrs Brown allowed a Mr Diplock to go into possession under an arrangement whereby he paid her the rent and agreed to indemnify her against any breach of covenant. The plaintiffs, on the expiry of the lease, brought an action for dilapidations for breach of covenant to repair. If the action had been brought in Mrs Brown lifetime, she would have been the defendant and would, doubtless, have joined Diplock as third party and there would have been no difficulty. But before the lease expired she was dead and her executors, in the distribution of her estate, had executed an assignment of the lease to her son, Stanley Brown. So the plaintiff sued the son and he brought in Diplock as third party. But a doubt arose whether Diplock was liable to indemnify the son; he had contracted with the mother but not with the son. The son, therefore, asked to have Mrs Brown executors joined as defendants and the plaintiffs had no objection; the object was, of course, so that the executors should make Diplock a third party and thus deprive him of his technical answer that there was no privity between him and the son. The application was allowed by the official referee who was trying the case, but refused on appeal to the Divisional Court by Denman and Stephen JJ who thought that the principle in Norris v Beazley prevented them from making the order. The Court of Appeal (Lord Esher MR and Bowen and Fry LJJ) allowed the appeal. It is not quite clear on what ground the Court of Appeal proceeded. One ground, which certainly was a sufficient ground and may have been the sole ground, was that Diplock, as third party, had no right to object. As Bowen LJ put it (22 QBD at p 669), if the plaintiffs had applied to have their statement of claim amended by adding the new defendants, the third party could have made no valid objection. In truth, he was not directly affected by the order; he might be affected in the sense that the new defendants, when joined, were expected to take some action against him, but that would be an indirect consequence. As all the lords justices put it, he was not in the legal sense hurt or injured by the order.
If that was all that had been said, the case would not be material to the point which I am considering; but Lord Esher MR dealt with the object of the rule. He said (ibid, at p 666):
One of the chief objects of the Judicature Acts was to secure that, wherever a court can see in the transaction brought before it that the rights of one of the parties will or may be so affected that under the forms of law other actions may be brought in respect of that transaction, the court shall have power to bring all the parties before it, and determine the rights of all in one proceeding. It is not necessary that the evidence in the issues raised by the new parties being brought in should be exactly the same; it is sufficient if the main evidence, and the main inquiry, will be the same, and the court then has power to bring in the new parties, and to adjudicate in one proceeding upon the rights of all the parties before it. Another great object was to diminish the cost of litigation. That being so, the court ought to give the largest construction to those Acts in order to carry out as far as possible the two objects I have mentioned. Applying those general observations to this case: the transaction here is in respect of a lease and a claim for dilapidations under it. The lease has been in various hands: contracts have been made with regard to it; and it is obvious that there are various persons whose rights and liabilities will be, or may be, affected by the determination of the claim for dilapidations. The plaintiffs are the original lessors; one of the defendants is an assignee of the term. The proposed new defendants are executors of the will of the original lessee. It seems to me obvious that the rights and liabilities of all those parties may be affected by what has been done with respect to the lease and the dilapidations.
Bowen LJ put his judgment on the other ground, but at the end of it he said (ibid, at p 669):
I agree with what the Master of the Rolls said with respect to the objects of the Judicature Acts.
Fry LJ concurred in the judgment of Bowen LJ. It would perhaps be over meticulous to point out that Bowen LJ while agreeing with the general statement on the objects of the Judicature Acts generally, did not expressly agree to the application of what Lord Esher MR called those general observations to the facts of the case.
Finally, there is the decision of Evershed J, in Bentley Motors (1931) Ltd v Lagonda Ltd. I have already set out the factsg. Counsel for the plaintiff has subjected this decision to careful analysis and submits that it can be justified on two grounds, neither of which are harmful to his contention. He points out that the defendants were being sued for infringement of the plaintiffs’ registered trade mark and that the defendants were, in fact, using the trade mark. Their defence (apart from the issue on validity) was that they were using it with the authority of the intervener who had acquired by contract from the plaintiffs the right so to authorise them: but the learned judge expressly held that the defendants were not entitled to rely on the intervener contract with the plaintiffs and, therefore, it was necessary to the defence that they should have the intervener in as a co-defendant, and so he was properly joined on that ground. There seems to me to be in this argument a confusion of thought. Either the authorisation given by the intervener provided the defendants with a good defence or it did not; if it did, then the defendants could surely prove the authorisation, together with the intervener own authority to give it, without bringing the intervener in as a party; if it did not, then bringing the intervener in would not help. In other words, a defence of this character is not one which, if bad in itself, could be cured by the presence of another defendant. I think it is plain from the passage in Evershed J judgment, which I cite below, that Evershed J was not being invited to consider the matter from the defendants’ point of view, but was being asked to say whether the intervener had established a right to intervene. Alternatively, counsel for the plaintiff submits that the case comes within the narrower construction of the rule, because the intervener legal rights would have been affected by the order for which the plaintiffs were asking. The intervener had a contract of employment with the defendants under which he permitted the defendants to use the trade mark; if the plaintiffs obtained an injunction restraining the defendants from using the trade mark, then the contractual relations between the intervener and the defendants would be affected. I cannot find, however, that these contractual relations were ever gone into. I prefer to have regard, in relation to Bentley Motors (1931), Ltd v Lagonda, Ltd as in relation to Moser v Marsden, to the points that were argued at the time and to the reasons which the learned judges gave for their decisions rather than to those which the ingenuity of counsel undertaking legal post mortems may now be able to construct. The reason for the decision of Evershed J is expressed as follows ([1945] 2 All ER at p 212):
The question on this summons resolves itself, therefore, into this, whether Mr. Bentley should be left to obtain, if he can, his remedy in separate proceedings, or whether he should now be joined as a party to the present action in order that he may, by counterclaim, seek therein to enforce his contract with the plaintiffs In my judgment one of the main objects of the rule is to render unnecessary such multiplicity of proceedings. Nor, in my opinion, is it material, if the circumstances in other respects justify the joinder, that the plaintiff in the action should not prefer any claims against the party joined and that the practical effect of the joinder is so that the party joined may assert his case by way of counterclaim against the plaintiff.
If the dicta of Lord Esher MR represented the law, counsel for the defendants is right in his submission at least to the extent that this summons cannot be dismissed for want of jurisdiction. In my judgment, however, they cannot be reconciled with the other line of authorities interpreting the rule. If the test of the matter is that which Lord Esher MR propounds, then in at least three other cases the court was embarking on an irrelevant inquiry. In the first of Lord Esher cases [Byrne v Brown Diplock] the subject-matter of the action was a lease and a claim for dilapidations and in the second [Montgomery v Foy, Morgan AND Co] a contract of affreightment. By the same test in McCheane v Gyles (No 2) the subject-matter of the action was a trust or a claim for breach of trust, and it seems to me to be impossible to say that another trustee was not involved in that. In Hood Barrs v Frampton, Knight Clayton the subject-matter was the title to the rents of a flat and the intervener was certainly involved in a dispute about that. In both these cases the essence of the decision was, I think, that the presence of the additional party was not necessary for the proper determination of the issue on the record. In Dollfus Mieg et Compagnie SA v Bank of England the subject-matter was the right to possession of gold bars, and that right was claimed by the intervener; that simple answer, if sufficient, makes unnecessary the whole of the judgment of Wynn-Parry J based on the note in the Annual Practice (see [1950] 2 All ER at p 608). It means, too, as I have already suggested, that there is virtually no limit to the jurisdiction, so that any discussion about jurisdiction is almost otiose. Then there is the decision of the Court of Appeal in Moser v Marsdenh which appears to me to lay down very clearly the limits to the jurisdiction. This case was cited to the court in Montgomery v Foy, Morgan AND Co and I find it impossible to believe that, if the later court had intended to lay down a principle of construction that differed so widely from that adopted by the earlier court and, indeed, showed their decision to be wrong, the earlier case would have been read without comment. I think that Lord Esher wide words ([1895] 2 QB at p 324) should be treated as authoritative only in so far as they govern the facts of the case, and that the interpretation of the effect of the case given by Buckley J in McCheane v Gyles (No 2) ([1902] 1 Ch at p 917) is the correct one. Similarly, I think that the observations of Lord Esher, in Byrne v Brown AND Diplock (22 QBD at p 666) on the Judicature Acts are intended to be general in character and to point out the unreasonableness of the third party objection and how undesirable it would be if it had to be acceded to; but that the ratio decidendi of that case is that the third party had no right to object. If there is any conflict between these cases and Moser v Marsden, I think that I am entitled, and, indeed, bound to follow the decision and reasoning in Moser v Marsden.
If I may express with diffidence my own view of the rule, apart from the authorities, I would support the narrower construction. I do not, with deference to those who have thought otherwise, agree that the main object of the rule is to prevent multiplicity of actions, though it may incidentally have that effect. The court has other ways of doing that which are amply sufficient for the purpose by ordering consolidation, or the bringing of actions on together, or third-party proceedings, and so on. The primary object of the rule I believe to be to replace the plea in abatementi. The object of that plea was to abate an action in which all the proper parties were not before the court. The rule is more flexible than the plea, but its object is fundamentally the same. It is not to marry a future action to an existing one, but to ensure that all the necessary parties to the existing one (using necessary in the broad sense of being necessary to effectual and complete adjudication in the existing action) are before the court. It does incidentally keep down multiplicity of actions, because, if the necessary parties cannot get before the court in an existing action, they will naturally try to do so in another action, but that appears to me to be a desirable consequence of the rule rather than its main objective. In Moser v Marsden Lindley LJ said ([1892] 1 Ch at p 490):
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i See RSC, Ord 21, r 20 by which the plea in abatement is forbidden; the Annual Practice, 1955, p 383
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In order to properly understand the rule we must look at the whole of it. It begins by saying, #8216;No cause or matter shall be defeated by reason of the misjoinder or nonjoinder of parties’ #8212;that is the key to the whole section: if the court cannot decide the question without the presence of other parties, the cause is not to be defeated, but the parties are to be added so as to put the proper parties before the court.
I do not think that the words which I have to construe represent any addition to the powers of the court initiated by the Judicature Acts. I do not think that the necessary parties contemplated by it are other than those who would have been considered by a court of equity to be necessary before the passing of the Judicature Acts. It had always been the practice in equity to join as parties not merely those who in strictness ought to be joined, but also those whose presence was necessary to complete and effectual justice. The practice is stated in Mitford Pleadings in Chancery (5th Edn)(1847), at p 190, as follows:
It is the constant aim of a court of equity to do complete justice by deciding upon and settling the rights of all persons interested in the subject of the suit, to make the performance of the order of the court perfectly safe to those who are compelled to obey it, and to prevent future litigation. For this purpose all persons materially interested in the subject ought generally to be parties to the suit, plaintiffs or defendants, however numerous they may be, so that the court may be enabled to do complete justice by deciding upon and settling the rights of all persons interested, and that the orders of the court may be safely executed by those who are compelled to obey them, and future litigations may be prevented.
The words in the rule which I have to construe are really no more than a condensation of this statement.
Townend v Toker (1866)(1 Ch App 446) shows the type of case in which the old practice was applied in just the same way as the rule should be applied today. In this case the defendant made a settlement of her estate on her nephew. She then repented of it and agreed to sell the estate to the plaintiff. The plaintiff sued the defendant for specific performance of the contract of sale. If the settlement on the nephew was voluntary it would have been void against the plaintiff; if, on the other hand, it was made for value it would not. Turner LJ considered that the nephew was properly joined as a party. He said (1 Ch App at p 457):
It is, no doubt, true that in ordinary cases of suits for specific performance, the vendor and purchaser are the only proper and necessary parties to the suit but at all events it appears to have been the constant practice of the court to make persons interested under settlements alleged to be voluntary, parties to suits of this description, and I am not disposed to alter that practice.
At common law, I think, the old practice was only to join parties who ought to have been joined in the strict sense, such as joint contractors; I dare say that was because the order of a common law court rarely, if ever, affected the legal interests of any third party. The provision in the rule relating to necessary parties is, therefore, primarily designed, I think, to give effect to the old practice in equity, although, of course, it is now available in any kind of suit. It is interesting to note that the common law had meanwhile been handling in its own way the problem of a multiplicity of actions. Consolidation is a common law device as is shown by the terms of RSC, Ord 49, r 8. The practice before the Judicature Acts is set out in Tidd Practice (9th Edn)(1828), vol 1, at p 614.
It is the words of the rule that now govern the matter, whatever the object for which it was made, and it is true that the words all the questions involved in the cause or matter are very wide. They are so wide that no one suggests that they can be read without some limitation. The limitation is not something that is left to be settled by the court in its discretion. It is there in the earlier words of the rule. The person to be joined must be someone whose presence is necessary as a party. What makes a person a necessary party? It is not, of course, merely that he has relevant evidence to give on some of the questions involved; that would only make him a necessary witness. It is not merely that he has an interest in the correct solution of some question involved and has thought of relevant arguments to advance and is afraid that the existing parties may not advance them adequately. That would mean that on the construction of a clause in a common form contract many parties would claim to be heard, and, if there were power to admit any, there is no principle of discretion by which some could be admitted and others refused. The court might often think it convenient or desirable that some of such persons should be heard so that the court could be sure that it had found the complete answer, but no one would suggest that it is necessary to hear them for that purpose. The only reason which makes it necessary to make a person a party to an action is so that he should be bound by the result of the action, and the question to be settled, therefore, must be a question in the action which cannot be effectually and completely settled unless he is a party.
On the wider construction of the rule, I do not understand where the line is to be drawn between a commercial interest in the question involved in the case and a legal one. It is conceded that the line must be drawn somewhere. It is not enough that the intervener should be commercially or indirectly interested in the answer to the question; he must be directly or legally interested in the answer. A person is legally interested in the answer only if he can say that it may lead to a result that will affect him legally #8212;that is by curtailing his legal rights. That will not be the case unless an order may be made in the action which will operate on something in which he is legally interested. It is not enough for him to say in effect: Here are A and B fighting about an invention. I have got a complaint against A which has to do with the same invention. I could issue a writ against him but I prefer to intervene. It is desirable, if it can be managed, that actions about the same invention should be tried together. If Ord 16, r 11, were the only way in which that could be done, one might be tempted to enlarge its application; but that can be achieved just as well in a proper case by an order to consolidate. There can be very little difference in expense. Joinder will save the cost of a writ, but there will be the cost of an affidavit to support the summons, and the existing writ will have to be amended and served: the counterclaim delivered by the intervener and the defence to counterclaim will be just as elaborate as the pleadings in a new action. I do not think that Ord 16, r 11, is designed to offer a slightly cheaper alternative to consolidation. There are three reasons for this opinion in addition to those which I have given. The first is that the intervener with a cause of action bears the character of a plaintiff. The last sentence of the rulej shows that a person joined as a defendant is intended to have the character of an ordinary defendant. It can be said that that is not pre-requisite to the application of the rule, but it is difficult to say that the rule contemplates joining as a defendant a person whose only object is to prosecute his own cause of action. The second reason is that, if designed as an alternative to consolidation, the rule works arbitrarily. If the intervener has a cause of action against the plaintiff, he can use the rule; but if he has a similar cause of action against the defendant he must sue independently. That would be quite illogical if the chief object of the rule was to avoid multiplicity. The third reason is that the rule does not make provision for any formal statement of the intervener case before the joinder is ordered. On the narrower construction of the rule a statement of the intervener interest in the suit is enough to show whether he should be joined or not. But where a new cause of action is to be introduced, it is essential to see how it fits in with the existing cause of action. An affidavit is not enough, for it is not a document that formulates issues. It would generally be necessary to see the counterclaim and the defence to it before deciding whether the two matters ought to be litigated as one. The procedure for consolidation allows that to be done and, indeed, normally requires it.
I may now turn back to the two dicta of Wynn-Parry J, in Atid Navigation Co Ltd v Fairplay Towage Shipping Co Ltd ([1955] 1 All ER at p 699, letter h) on which counsel for the plaintiff relied, the first being that the basis of the whole jurisdiction to add defendants is that there is a cause of action by the plaintiff against not only the existing defendant but the person who would be joined if the application were successful and the second (ibid, letters g–h) being that the court would not make an order merely to enable the proposed interveners to join with the existing defendants in prosecuting a counterclaim. The conclusion which I have reached on the meaning of the rule brings me into substantial agreement with both these dicta. I have approached the question of jurisdiction by a different route, but it is unlikely that a person will be a necessary party, within the meaning which I have given to the phrase, to an action by a plaintiff unless that plaintiff has a cause of action against him; if there is no cause of action, the relief sought by the plaintiff is unlikely directly to affect the intervener. It will be observed that Wynn-Parry J did not say that the plaintiff must be made to plead a cause of action against the intervener. Nor did he mean, I think, that the court must be satisfied of facts showing a cause of action before it orders the joinder; it is sufficient that a prima facie cause of action should be shown; the dictum of Wynn-Parry J must be read in the light of his earlier reference to Norbury Natzio AND Co v Griffiths where that was decided. If it were otherwise, the operation of the rule could easily be defeated. For example, a plaintiff seeking an order against an agent or warehouseman who has the custody of goods could defeat an intervention by the owner simply by saying that he did not believe him to be the owner. Notwithstanding the difficulties on the wording of the rule felt by Lord Coleridge CJ [Norris v Beazley (2 CPD at p 83)] the point must now be taken to be settled by Norbury Natzio AND Co v Griffiths.
I am also substantially in agreement with the dictum (even if, as perhaps may be the case, it compels me not to follow the decision of Evershed J in Bentley Motors (1931) Ltd v Lagonda Ltd) that the court should not allow an intervention which is made for the mere purpose of prosecuting a counterclaim. I do not myself #8212;neither, I think, did Wynn-Parry J #8212;determine the test of jurisdiction by reference to the nature of the counterclaim. But, if an intervener has to be a person legally affected by the order which the plaintiff seeks, it must follow that his purpose in seeking to be joined is to resist the order, or to be heard on its terms, or to have modified in some way the judgment which the plaintiff seeks to obtain, and, accordingly, that his purpose in coming in is not merely to counterclaim. To say, therefore, that he may not be joined merely to counterclaim is, I think, only another way of saying that he is not to be joined unless he is legally affected.
Accordingly, I hold that the learned master was, on the submissions made before him, right in his conclusion that he had no jurisdiction to make the order asked for: and I must now consider the alternative submission of counsel for the defendants that the orders for which the plaintiff is asking in his action may directly affect the legal interests of the intervener. The plaintiff claim, as counsel for the plaintiff rightly insists, is based, not on a claim to property (except in the sense that rights under a contract are property), but on breach of contract. The breach alleged in para 10 of the statement of claim is that the defendants disclosed or made use of confidential information; and the particulars alleged are in essence that the defendants are manufacturing the Stixit pen. Accordingly, the injunction asked for in para 3 of the prayer, while in words it seeks to restrain the defendants from making further use of the confidential information, in effect seeks to restrain the further manufacture of the Stixit pen. The intervener first affidavit shows that he claims to be the inventor of the Stixit pen and that he entered the defendants’ employment for the purpose of assisting them to market it. If the evidence stopped there, I think that I should be bound, on the reasoning in Moser v Marsden, to hold that the intervener had shown no more than a commercial interest in the result of the action. If it was successful, the defendants could no longer exploit his invention, he might find it difficult or impossible to get other manufacturers to do so, and the defendants might (if the contract of employment permitted it) dispense with his services. All this would be commercially damaging to him: but the evidence (which described only in the most general terms the arrangements between the intervener and the defendants) did not then disclose any legal interest that would be affected. In his second affidavit the intervener exhibits two letters written in February and March, 1955, which, he says, constitute an agreement to pay him a royalty or commission (both words are used) on sales of the Stixit pen of five per cent in the United Kingdom and Commonwealth, subject to a minimum of £1,000 a year, and ten per cent in Europe. The agreement contains, the intervener submits, an express clause requiring the defendants to undertake the manufacture and distribution of the Stixit pen in the United Kingdom and Commonwealth (except Canada).
Now the mere fact that a man is entitled to a royalty or commission on the sale of an article is not enough to enable him to say that he is legally affected by an order forbidding its manufacture. He has, in such circumstances, a commercial interest only in the continued manufacture of the article. But counsel for the defendants relies on two additional factors. The first is that the intervener is promised a minimum royalty. If the prohibition on manufacture entitled to defendants to cease paying the minimum royalty, the intervener legal rights would be affected. That depends on whether the defendants would be entitled to rescind the contract on the footing, for example, that the intervener had expressly or impliedly guaranteed that he could grant the right to manufacture. What the position is about that I do not know; it is possible that the defendants took the risk. All that is said in the intervener affidavit is that it is possible that the minimum would cease; that is not enough.
The second fact relied on by the intervener is that there is an express obligation to manufacture in certain territories. Counsel for the plaintiff disputes that that is the right construction of the contract and that the obligation, if it exists, amounts to anything that is of any value in law. I do not decide either of these points. It is, as I have already shown, sufficient in this type of case that the intervener should have reasonable grounds for his contention, and I think that he has. If he can show that the defendants are obliged to manufacture a reasonable quantity of Stixit pens, he has a right of action against them if they do not do so. He is not then in the position of a person who draws a commission based on the quantity of articles which a manufacturer chooses to make. Mr Dachinger could, therefore, ask in a subsequent action for specific performance of an agreement which, in the existing action, the court had, in effect, ordered not to be performed. Counsel for the plaintiff points out that the court is very unlikely to decree specific performance; it would give Mr Dachinger his remedy in damages. Questions of jurisdiction under Ord 16, r 11, cannot depend, however, on how the court may decide to exercise its powers. In any event, the principle is just the same. The court should not be put in the position where it may have to order a person to pay damages for having carried out its own injunctions.
Counsel for the plaintiff next submits that the intervener interests cannot be affected anyway, because if the plaintiff is wrong, there will be no injunction; and if he is right, the injunction can be granted only on the basis that the duty of confidence was owed to the plaintiff and not to the intervener. This argument, in my opinion, misconceives the point. Whenever a plaintiff seeks to restrain a defendant from dealing with his property and an intervener claims that the property is his, the plaintiff can say: If I am wrong I shall not get an injunction and the intervener rights will not be affected; if I am right the intervener has no rights to be affected anyway. The point is that the intervener is entitled to be heard on the issue whether the plaintiff is right or wrong so that he may be bound by the order made.
The final submission of counsel for the plaintiff is more far-reaching than the others. He submits that the action and the intervener claim are concerned with rights in contract and not rights of property, and, therefore, the case does not come within the term proprietary rights as set out in the note in the Annual Practice, 1955, at p 232k. I am not, of course, required to construe that phrase as if it were contained in a statute. If I were I should see no reason why rights under a contract should not be called proprietary rights just as much as rights to physical property. The phrase, however, is not used definitively. The three categories formulated in the note are not exhaustive. Indeed, I do not think that they should be treated as having been formulated independently. There is one common principle running through them all, and, for my part, I should prefer to apply a test based on that principle rather than to inquire whether the case to be determined falls into one or other of the three classes. There is not, for example, any real distinction between the cases which related to specific performance and those which related to proprietary rights. As Wynn-Parry J said in Dollfus Mieg et Compagnie SA v Bank of England ([1950] 2 All ER at p 611):
It seems to me that the true test lies not so much in an analysis of what are the constituents of the applicants’ rights, but rather in what would be the result on the subject-matter of the action if those rights could be established.
I respectfully agree with that. I think that the test is: May the order for which the plaintiff is asking directly affect the intervener in the enjoyment of his legal rights?
It may be true, as counsel for the plaintiff submits, that the authorities so far have been dealing with rights to physical property, but, in my judgment, the principle applies equally to contractual rights. I think that in this case the test is satisfied, that I have jurisdiction to make the order and that it is one which, having regard to the questions involved in the action, it is proper that in the exercise of my discretion I should make.
It must not be supposed that the test which I have employed can be applied to every sort of application under the rule, and I am not attempting to lay down, or holding that the authorities lay down, a test of universal efficacy. A plaintiff may, in the first instance, join as a defendant any person against whom the right to any relief is alleged to exist(Ord 16, r 4). If, after he has issued his writ, he wants to join another defendant, no doubt he will have to proceed under r 11, but he will not have to show that the new defendant will be directly affected by an order in the action as it is then constituted: what he generally shows is that he cannot get effectually and completely the relief for which he asks unless the new defendant is joined, and that, in that sense, the new defendant is a necessary party to the action. Likewise, a defendant who seeks to join another defendant does not inevitably have to show that the new defendant will be directly affected by an order in the action as it is constituted. He may succeed if he can show that he cannot effectually set up a defence which he desires to set up unless the new defendant is joined with it, or unless the order made binds the new defendant. It is not that the construction of the rule differs according to circumstances. The construction of the rule is, and must be, the same in all circumstances; but the test that is appropriate to determine whether a party is necessary or not may vary according to the circumstances. The set of rules assembled in the Annual Practice and collected in the authorities which I have sought to follow are those which are applicable in the case of interveners whom it is sought to join against the will of the plaintiff.
Appeal allowed.
Cases referred to in judgment
Atid Navigation Co, Ltd v Fairplay Towage Shipping Co, Ltd [1955] 1 All ER 698.
Norris v Beazley [1877), 2 CPD 80, 46 LJQB 169, 35 LT 846, Digest (Practice) 429, 1243.
McCheane v Gyles (No 2) [1902] 1 Ch 911, 71 LJCh 446, 86 LT 217, Digest (Practice) 429, 1246.
Hood Barrs v Frampton, Knight Clayton [1924] WN 287, 69 Sol Jo 125, Digest (Practice) 429, 1250.
Montgomery v Foy, Morgan Co [1895] 2 QB 321, 65 LJQB 18, 73 LT 12, 40 Digest 413, 354.
Norbury Natzio AND Co v Griffiths [1918] 2 KB 369, 87 LJKB 952, 119 LT 90, Digest (Practice) 430, 1259.
Bentley Motors (1931), Ltd v Lagonda, Ltd [1945] 2 All ER 211, 114 LJCh 208, 173 LT 87, 2nd Digest Supp.
Dix v Great Western Ry Co (1886), 55 LJCh 797, 54 LT 830, Digest (Practice) 427, 1229.
Vavasseur v Krupp (1878), 9 ChD 351, 39 LT 437, Digest (Practice) 912, 4543.
Dollfus Mieg et Compagnie SA v Bank of England [1950] 2 Al ER 605,[1951] Ch 33, 2nd Digest Supp.
Moser v Marsden [1892] 1 Ch 487, 61 LJCh 319, 66 LT 570, Digest (Practice) 423, 1194.
Byrne v Brown AND Diplock [1889], 22 QBD 657, 58 LJQB 410, 60 LT 651, Digest (Practice) 425, 1207.
Townend v Toker (1866), 1 Ch App 446, 35 LJCh 608, 14 LT 531, 42 Digest 542, 1025.
