THE TIMES January 3 1997 CHANCERY DIVISION When plaintiff cannot accept payment into court Braben v Emap Images Ltd Before Mr John Cherryman, QC [Judgment December 13] A plaintiff who elected an account of profits rather than damages could not accept, under Order 22, rule 3 of the Rules of the Supreme Court, a payment into court, made under Order 22, rule 1(1), which authorised payment in in respect of claims for debt or damages, in satisfaction of his claim notwithstanding that the payment in was expressed to be made "in satisfaction of all the causes of action in respect of which the plaintiff claims". Further, as the claim for damages no longer subsisted after the election for an account of profits had been made, the court could not order a payment out of the moneys remaining in court under Order 22, rule 5. Mr John Cherryman, QC, sitting as a deputy High Court judge, so held in a reserved judgment in the Chancery Division on a motion issued by David Braben against Emap Images Ltd. Mr Tim Penny for the plaintiff; Mr Michael Silverleaf, QC, for the defendant. HIS LORDSHIP said that in August 1995 the defendant published the September 1995 issue of PC Review carrying a cover disk containing an infringing copy of a computer game written by the plaintiff. The plaintiff's statement of claim sought, inter alia, an inquiry as to damages or at the plaintiff's option an account of profits. By its defence, Emap admitted the infringement, offered an undertaking not to infringe further and offered to submit to judgment for an injunction, an order for delivery up and an inquiry as to damages or an account of profits subject to the plaintiff electing between those two remedies. On October 11, 1995 the defendant gave notice of payment of £5,000 into court "in satisfaction of all the causes of action in respect of which the plaintiff claims". The plaintiff elected to take an account of profits, rather than the claim to damages, but was willing to accept the moneys in court in satisfaction of its claim. The plaintiff then sought leave under Order 22, rule 5 to withdraw the payment into court out of time. The plaintiff had failed to accept the payment in within 21 days pursuant to Order 22, rule 3 but argued that the court should exercise the discretion conferred by rule 5 to order payment out to it, nothing having occurred since payment in to affect the likely quantum the plaintiff would obtain if the action were to be fought out at trial. Lord Denning, Master of the Rolls, in Gaskins v British Aluminium Co Ltd ([1976] 1 QB 524, 530) said that the discretion to order payment out should not be exercised if the chances of success or failure at trial had substantially altered because it would be unfair to hold the defendant to a sum which he offered in different circumstances. He referred to court decisions changing the way in which damages were assessed or the discovery of further evidence of information as such changes in circumstances. In his Lordship's judgment the plaintiff's application for payment out of the moneys in court failed for two reasons. First, in the view he took of the proper construction of Order 22, the plaintiff was not able to invoke Order 22, rule 5 following its election to take an account of profits rather than damages. Under Order 22, rule 1 the payment in which was authorised was in satisfaction of a cause or causes of action for a debt or damages: see paragraph (8) of rule 1 and Young v Black Sluice Commissioners ((1909) JP 265). It was true that, as in this case, a payment in was often expressed to be made in satisfaction of all causes of action when other items of relief as well as a debt or damages were claimed. However, paragraph (5) of rule 1 did enable the plaintiff to apply to the court if he was "embarrassed by the payment". Order 22, rule 3 in authorising the plaintiff to accept a payment in within 21 days provided: ". . . the plaintiff may: (a) where the money was paid in respect of the cause of action or all the causes of action in respect of which he claims, accept the money in satisfaction of that cause of action or those causes of action as the case may be. . ." In his Lordship's view, rule 3 only authorised acceptance in respect of a cause or causes of action for a debt or damages. Order 22, rule 5 provided: "(1) If any money paid into court in an action is not accepted in accordance with rule 3, the money remaining in court shall not be paid out except in pursuance of an order of the court which may be made at any time before, at or after the trial or hearing of the action; and where such an order is made before the trial or hearing the money shall not be paid out except in satisfaction of the cause or causes of action in respect of which it was paid in." In his Lordship's judgment, the concluding words precluded any payment out where the cause of action for a debt or damages in respect of which the moneys were paid in was no longer subsisting when the application for payment out was made. That was the case here. The application was made before the trial or hearing of the action and the claim for damages disappeared when the plaintiff elected to take an account of profits instead. The second reason why the moneys in court should not be paid out to the plaintiff was that if he was wrong in his construction of Order 22 and, contrary to his view rule 5 did apply, then in his Lordship's judgment, it was not a case where he should exercise his discretion to order payment out to the plaintiff. The reason was that the plaintiff's election to take profits rather than damages did represent a material adverse change in the likely quantum of the financial relief the plaintiff was likely to obtain. Before the election, the plaintiff had the option to take judgment for damages to be assessed. Such damages would be on a licence/royalty basis the quantum of which the plaintiff rather than the defendant could best judge. By the election, the plaintiff gave up that relief and limited itself to an account of profits which the plaintiff at any rate judged at nil on the basis of the information supplied by the defendant. That would be a sufficient change in circumstances to preclude the court ordering payment out to the plaintiff under Order 22, rule 5. Payment out to the defendant would accordingly be made under Order 22, rule 1(3) because the cause of action for damages in respect of which moneys were paid not longer subsisted. Solicitors: Walker Tomaszewski, Camden Town; Greenwoods, Peterborough. Chancery Division: Solicitors should beware tax trap Copyright 1997.