The Court of Appeal on 18th December 1990, ordered an Assessment of Damages, following its decision in this action, but did not specify the appropriate heads of damages. Consequently the categories under which, in his Points of Claim, the Plaintiff seeks damages will be considered in these findings.
The Plaintiff had hoped that his work Making Names would be published by the Oxford University Press. Damages are assessed in relation to the decision by OUP not to publish. Although evidence from other publishers, as to the practice in their various firms, provided useful comparisons and a survey of the publishing trade, as to decisions on hardback and paperback editions and calculation and payment of royalties, the damages in this action must be based on the terms that the Plaintiff would have received from OUP had they published his book and the consequential benefits that he would have received from OUP's imprimatur.
The Plaintiff's four heads of claim are as follows:-
Loss of royalties
Loss of opportunity to benefit reputation
Loss of ability to deal with other publishers
Pain and suffering
Neither the third category nor the fourth can be cause of an award of damages in this action. The Plaintiff had put on the third category of his claim a value of £5,000 and on the second category a value of £15,000, but, after being informed that the third category was inapplicable, he raised his claim on the second head of damages to £20,000. On the first head of damages, his claim was for several hundred thousand pounds, based on notional royalties for a very large number of estimated sales of hardback and paperback copies.
1. Damages for loss of royalties
The quantification of damages for loss of royalties, resulting from non-publication of a book, is a highly speculative exercise. By comparison with other books of similar type, it is not too difficult to ascertain the likely range of publication price for hardback and paperback copies during specific years. Even the royalty percentage that could have been expected by the author must fall within certain clear limits. Evidence given at the hearing by experts in publishing and others enables some accuracy to be achieved on both these elements of the calculation. What is bound to remain a guess, however carefully considered, is the number of copies that would have been sold, whether in hardback or paperback.
The royalties on a book depend on its marketability. Twenty-seven publishers have rejected Making Names as being a work that they felt unable to publish profitably. In some cases, this prognosis may have been partly because the particular publisher felt that Making Names did not fall within his normal range of publications, but many of the rejections made it clear that the publisher anticipated that the demand for the book would be likely to be very small and that the costs of publication would not be recovered. Some publishers who rejected the work were polite or even enthusiastic about some of its qualities, despite the fact that they thought it could not be commercially successful. Although publishers are experts in their own field, they, like all experts are not necessarily infallible. Stephen Hawking's A Brief History of Time had a similar record of rejection before eventual publication as a best seller, running into many editions, with sales of millions of copies throughout the world. The Plaintiff, in his letters to some of the publishers to whom he submitted the idea or the typescript of Making Names referred to it as "an unusual and risky project" and in one letter he even accepted "the book's apparent unmarketability" and said "It certainly does not fall into any of the presently established publishing categories". It just might have been a gamble that was destined to succeed, like Stephen Hawkings' book, but the weight of expert opinion from people whose job it is to assess the marketability of books, would make an assessment of damages on such an assumption totally unrealistic. As Lord Justice Mustill said in his judgment in this case "The financial recovery could not be on an extravagant scale".
The publishing proposal form, prepared by Mr Hardy of O.U.P. was not a constituent part of the contract which the Court of Appeal has decided existed between the parties. It was an internal memorandum of O.U.P., but it does indicate the intention that the first edition should be 2,000 hardback copies at £15 each. Mr Asquith, on behalf of O.U.P., has described how some books are published simultaneously in hardback and paperback, while those that are initially published only in hardback are often published subsequently in paperback if there is sufficient demand. Witnesses with great experience of contracts between authors and publishers, including many publishers and an author and a literary agent in oral and affidavit evidence considered at the hearing, described the various methods of calculation and payment of royalties. While diversity continues, it is clear that most royalty payments are now based on the net receipts obtained by publishers for books and that royalties are usually calculated at twelve month intervals. There are still exceptions to this system, but in contracts with O.U.P. such exceptions are extremely rare, and were rare even in 1985.
The two different bases for calculating percentage royalties do not necessarily produce different results. If net receipts are two-thirds of the published price while the percentage of the latter is two-thirds of the percentage of the former, then the actual royalty paid on each book will be the same by either method of calculation. 12% of £10 net receipts produces the same result as 8% of £15 published price. After consideration of the detailed and complicated submissions on this subject by both parties and bearing in mind the usual deductions from published prices to net receipts for O.U.P. hardbacks and paperbacks and the somewhat greater deduction applying to overseas sales and assuming (as the parties have agreed) that U.K. sales would have been equal numerically to overseas sales, the percentages that will be applied in this assessment will be standardized at 8% of published price of hardback copies, wherever deemed to have been sold and 5.5% of published price of paperbacks, with no escalation provision for sales over a certain number.
The next factors to be decided are the date when publication could have been expected and consequently, the date when the first payment of royalties would have been made. The revised wording of the text of Making Names was delivered to O.U.P. at the end of February 1986. If it had been published, when would the first copies have been sold in the bookshops? The Plaintiff suggested that the first sales could have been made in September 1986. Although this might have been achieved had the book been one requiring speedy publication, it is clear that the need for O.U.P's expert advisers to read the revised version and, subsequently, the various stages to be completed before publication would have made it extremely unlikely that any receipts from sales would have reached O.U.P. before 1st April 1987. O.U.P. makes royalty payments at the end of July each year based upon sales receipts for the twelve months up to the end of the previous March. The Plaintiff's first royalties would therefore have been paid to him at the end of July 1988. It is assumed, for the purpose of this assessment of damages, that the first paperback copies would have been sold twelve months after the first hardback copies and that the first royalties on paperback sales would have been paid to the Plaintiff at the end of July 1989.
The parties have agreed that the calculations can be based on three assumptions. Only the first five years of anticipated sales should be considered. One fifth of the copies of Making Names for which royalties are to be estimated should be deemed to be hardback copies and the remaining fourfifths should be deemed to be paperbacks. The sales of each version should be deemed to have taken place as to 37.5% in the first year of publication, 37.5% in the second year of publication and the remaining 25% equally divided over the subsequent three years. Because continuation of the calculations for four years from the theoretical date of first payment of royalties would lead to final royalties for hardbacks being paid in July 1992 and for paperbacks in July 1993 and because Mr McGregor for the Defendants, has said that they would not seek any discount relating to damages being calculated for such future dates, the calculations in this assessment will be based on the assumption that for hardback copies 37.5% would have been sold in the twelve months to 31st March 1988, 37.5% in the twelve months ending on 31st March 1989, 8.33% in the twelve months ending on 31st March 1990, and the final 16.66% in the twelve months ending on 31st March 1991, with the royalties being payable in each case on the subsequent 31st July. The equivalent percentages for paperbacks start a year later, so that the final 25% is deemed to have been sold in the twelve months ending on 31st March 1991, and the final instalment of royalties payable on 31st July 1991. The entire calculation of royalties and such interest thereon as is appropriate is thus completed up to 31st July 1991.
The parties are not far apart in their estimates of the likely published prices of the hardback and paperback editions. The appropriate prices must be a matter of opinion, as will be the frequency and timing of inflationary increases in price. This assessment is based upon a published price of £15 for the hardback edition, increasing to £23 after the first two years. The published prices for the paperback edition are assumed to have been £8 for the first year, £9 for the second year, £10 for the third year.
All the other factors having been determined to enable the lost royalties to be calculated, the most controversial remains to be decided. How many copies of Making Names would have been sold, if it had been published by O.U.P.? Guidance can be obtained from the Sales records of allegedly comparable books and from opinions of expert witnesses. Unfortunately, in the assessment of lost royalties, the intellectual quality of the book is of no account, unless it affects the marketability, because it is the probable number of Sales that must be ascertained. To this end the views to which most weight must be given are those of experts in publishing, whose business it is to distinguish between books that will sell and those that will not be viable propositions for a publisher. The allowance to be made for the fact that such experts have sometimes been wrong can justify only a modest variation.
Professor Alan Ryan, who had originally been enthusiastic on behalf of the book as an interesting gamble, although unsuitable as a text-book for any academic course, thought it was "very likely to sell only four or five hundred copies and vanish from sight". The odds against it selling even as many as 3,000 copies seemed to him at least ten to one and the odds against it selling more than 10,000 copies would have been "astronomical". Professor Ryan read the text again after the Plaintiff's revisions in 1986 and felt that the amendments had weakened its appeal. He thought that, if published in that form, the book would have "sunk without trace".
Another witness who has read the typescript is Dr. Mynott, the Editorial Director and Deputy Managing of the Cambridge University Press. He made some favourable comments on the Plaintiff and his work, but concluded that the work was unpublishable because it would not find a real readership and was not addressed to a real readership. It was aimed at everyone and no-one. Had O.U.P. published 2,000 hardback copies at £15 each, he thinks that they would have sold well under half.
Kim Pickin, who was the Philosophy Editor of Blackwells between 1984 and 1986, was clearly sympathetic to the Plaintiff's wish to have his book published and had taken considerable trouble to help him on the subject, but she, also, had concluded that publication would not be commercially viable. Whether aimed at an academic readership or the general public, not enough copies would be sold to make a profit.
Giles Noel Clarke, the Deputy Managing Editor of the Book Trade Department of the Open University, gave evidence at the hearing. He referred to the Affidavit of his colleague, Peter Noel Wright, concerning the likelihood that Making Names would have been either a set book or a recommended book for students of the Open University. He explained that it would not be relevant to their Courses since 1986.
Colin John Mitchell, the Assistant Secretary of the Associated Examing Board authorised by the Department of Education and Science to offer G.C.E. 'A' Level and other examinations, said that the number of 'A' Level Philosophy students during the period since 1986 had been few, that Making Names could not have been a set book for their course and that, had it been recommended reading for them, it would not have been bought by the individual students but might have been bought by the libraries of the few schools which offered this subject to their pupils. Any sales for this purpose would have been very limited, even had it been recommended.
The Affidavit evidence given by Giles Gordon and Frederick Nolan on behalf of the Plaintiff was considered at the hearing, despite the absence of those two witnesses - Giles Gordon is a literary agent. Frederick Nolan was formerly an editorial and marketing executive with various publishers in London and New York, but is now a full-time author. He has read the typescript of Making Names and has formed a high opinion of the work, which he believes will certainly find a market. Both these witnesses dealt with methods, rates and timing of royalty payments, rather than the likely sales volume of this particular book. However, both referred to the possibility that it could have repeated the success of Stephen Hawkings' A Brief History of Time which millions of the general public had bought.
Professor Roy Edgley, formerly professor of Philosophy at Sussex University, gave evidence in support of the Plaintiff. He had a very high opinion of the book and compared it with an early work by Bertrand Russell, which had sold in large numbers to both academics and laymen. He was, however, not a publisher and could not indicate what would be the market viability of Making Names.
The Plaintiff's claim to high compensation for loss of royalties was based upon the size of the royalties that he believed had been paid to authors of allegedly comparable books, as set out in his Points of Reply. Notably successful works included not only Stephen Hawkings' book but also Professor Hofstadter's Godel, Escher, Bach and Colin Wilsons The Outsider. The Outsider had been rejected by many publishers before eventual acceptance and phenomenal success, although in the subsequent thirtyfive years Colin Wilson had failed to sell many copies of any later books.
Comparison between Making Names and such immensely successful books was dismissed as far-fetched by many of the expert witnesses. Other authors' works which had sold in more normal numbers are a more realistic guide to what might have been expected of Making Names. The Plaintiff chose to base such calculations on Professor Thomas Nagel's What does it all mean?. The total worldwide sales of that book since its publication in various forms in October 1987, 1988 and May 1989 are nearly 8,000 hardback copies and about 58,000 paperbacks. However, Nagel is a well known academic, his book was published in the United States and, being about a quarter of the size of the Plaintiff's work, its sale price was less discouraging to students and the general reader.
Among other authors' books considered were Professor Hare's Moral Thinking which sold about 10,000 copies within five years of publication, Parfit's Reasons and Persons, which sold about 13,500 copies within five years and Raphael's Moral Philosophy which sold about 8,000 copies. However, these three books may well have been more academic and are probably not strictly comparable with the Plaintiff's work, which was designed for general reader and student alike. Perhaps the work most easily comparable in its intended audience is Glover's Causing Death and Saving Lives; but this book is by a well known author and some of its success must be attributed to the fact that it is on the Open University reading list. During its first five years, its sales were approximately 30,000 of which 10,000 were in the first year and about 5,000 in each subsequent year. The Defendants are prepared to assume that Making Names would have sold 15,000 copies in five years. In view of the fact that the Plaintiff is an unknown author, that so many publishers had rejected his work and that 15,000 copies sold would have exceeded the actual sales for the considered books by Hare, Parfit and Raphael, this proposal appears generous but the damages for loss of royalties will be calculated accordingly.
The 15,000 copies are divided on the ratio agreed between the parties. 3,000 hardback copies and 12,000 paperback copies are assumed to have been sold, with 37.5% of sales of each type during each of the first two years after publication. Based upon first sales of hardbacks in April 1987 and first sales of paperbacks in April 1988, the respective publication prices of £15 rising to £23 and £8 rising to £9 and then £10, the following calculations result, from average royalties of 8% of publication price of hardbacks and 5.5% of publication price of paperbacks.
Hardback copies loss of royalties
31st July 1988 8% of 1125 x £15 = £1,350.00
31st July 1989 8% of 1125 x £15 = £1,350.00
31st July 1990 8% of 250 x £23 = £460.00
31st July 1991 8% of 500 x £23 = £920.00
Subtotal: £4,080.00
Interest thereon at 15% per annum
< blockquote >
45% x £1,350.00 = £607.50
30% x £1,350.00 = £405.00
15% x £460.00 = £69.00
Subtotal: £1,081.50
Paperback copies loss of royalties
31st July 1989 5.5% of 4,500 x £8 = £1,980.00
31st July 1990 5.5% of 4,500 x £9 = £2,227.50
31st July 1991 5.5% of 3,000 x £10 = £1,650.00
Subtotal: £5,857.50
Interest thereon at 15% per annum
30% x £1,980.00 = £594.00
15% x £2,227.50 = £334.13
Subtotal: £928.13
The total of estimated royalties and interest thereon comes to £11,947.13, which is the amount assessed under the first head of damages. No deduction has been made to take account of the effect of income tax. If the Defendants wish, this may be considered when submissions are made concerning the costs of the assessment of damages.
2. Loss of opportunity to benefit reputation
The other head of damages which can be awarded in this action is for loss of opportunity for the Plaintiff to establish or enhance his reputation. Making Names would have been the Plaintiff's first published book. If it had borne the imprimatur of O.U.P. it would have been launched under the most favourable circumstances possible for a work of philosophy intended for both academic and general readers. The benefit to be derived from the O.U.P.'s imprimatur could have been counteracted by adverse reviews and it is clear that O.U.P. has chosen to incur considerable expense and trouble to withhold its imprimatur from Making Names and to avoid any responsibility for the book. The conclusion to be drawn from the reluctance of so many publishers to accept this book is that they did not consider it to be of outstanding quality.
Even if Making Names had been published by O.U.P. and had achieved sales comparable to those of Colin Wilson's The Outsider, it could well have brought the Plaintiff no greater future benefits than had been achieved for Colin Wilson. However, if the Plaintiff's first book had been published by O.U.P. and had achieved even modest success, the text of his second book would have been considered more favourably than is now likely. Even the prospect of academic employment might have been improved for him. Such benefits, dependent as they would be on a favourable reception for his book, would be spread over many years and would only arise if the Plaintiff's subsequent endeavours provided suitable circumstances.
Guidance from reported cases as to the scale of compensation appropriate to such loss of opportunity to enhance an author's reputation is rare. The amounts awarded in the Tolney (sic) case in 1936 and the Joseph case in 1958 are both equivalent to only about £2,000 in present money. Any figure selected can be no more than a guess. However, on the basis of two other assumptions, namely that 15,000 copies of the book would have been sold and that its reception would have been reasonably favourable, the damages for loss of beneficial publicity are assessed at £6,000.
The total damages assessed in this action are therefore £17,947.13, calculated as at 31st July 1991 but subject to any deduction that the Defendants can justify because of notional income tax. This element and the incidence of costs relating to the assessment of damages will be the subject of submissions at a further hearing.
UPON THE ASSESSMENT of damages pursuant to the Order of the Court of Appeal dated 18th December 1990
AND UPON HEARING the Plaintiff in person and Leading Counsel for the Defendants
AND UPON READING the documents recorded on the Court File as having been read
IT IS CERTIFIED for the reasons set out in the findings annexed to this Order that the amount of damages assessed pursuant to the said Order including interest calculated up to 31st July 1991 is £17,947.13
AND IT IS ORDERED that the Defendant do pay to the Plaintiff the said sum of £17,947.13
BUT this Order is not to be enforced without the leave of the Court until after a further hearing relating to the costs of the said assessment of damages and any further matters on which the parties may wish to make further submissions
AND IT IS FURTHER ORDERED that the time for making any appeal against this Order shall not run until after the said further hearing
Click for Master Barratt's subsequent order of 19th November 1991 re. tax and costs.
Click for the Malcolm vs. Oxford I (1984-92) Index or the Malcolm vs. Oxford II (2001-02) Index
Go/return to the top of this file, Malcolm's Statement of Claim, the Chancery Court judgment, the Court of Appeal judgment, the Judgment extracts, the Case History, McGregor on Royalties (transcribed from the assessment hearing). Affidavits: Ivon Asquith (1), Ivon Asquith (2), Henry Hardy, William Shaw (solicitor) (1), Sir Roger Elliott (1), Margaret Goodall. Witness Statements: Sir Roger Elliott, Henry Hardy, Richard Charkin, Nicola Bion, Margaret Goodall. Courtroom testimony transcripts, 13-15/3/1990: Elliott, Goodall, Bion, Asquith, Charkin, Hardy, Malcolm.