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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Tyco European Metal Framing Ltd v New Systems Ltd & Ors [2001] EWCA Civ 1752 (14 November 2001)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1752.html
Cite as: [2001] EWCA Civ 1752
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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(Mr Justice Laddie)
Strand London WC2 Wednesday 14th November, 2001 |
||
B e f o r e :
____________________
| TYCO EUROPEAN METAL FRAMING LIMITED | ||
| Claimant/Appellant | ||
| - v - | ||
| (1) NEW SYSTEMS LIMITED | ||
| (2) DAVID CLEWER | ||
| (3) THE SECRETARY OF STATE FOR THE ENVIRONMENT, | ||
| TRANSPORT AND THE REGIONS | ||
| Defendants/Respondents |
____________________
Smith Bernal Reporting Limited, 190 Fleet Street,
London EC4A 2AG
Tel: 020 7421 4040
Official Shorthand Writers to the Court)
appeared on behalf of the Appellant
MR DENNIS CARMEDY (DIRECTOR) appeared on behalf of the First Respondent
MR M CHAPPLE (Instructed by Messrs Nelsons, Nottingham NG1 7BQ) appeared on behalf of the Second Respondent
____________________
Crown Copyright ©
- LORD JUSTICE ALDOUS: By writ issued on 26th January 1999 Tyco European Metal Framing Ltd sought relief against New Systems Ltd and a Mr David Clewer for infringement of copyright, breach of confidence and infringement of design right. The action was in respect of a design of what is referred to as a blind bolt. In essence, Tyco alleged that New Systems and Mr Clewer (who was at the time a senior executive in New Systems and, I believe, a shareholder) had copied their confidential design.
- At some stage in 1998 New Systems started to market their bolt called the Spider Bolt. I was told by Mr Carr QC that leaflets had been put out, but no orders had been received. That Spider Bolt was made according to a design which had been produced by Mr Clewer. It was never sold, as the writ was issued on 26th January 1999 and shortly thereafter an interlocutory injunction was obtained restraining sales.
- The case came before Laddie J who, in a judgment dated 22nd January 2001, held that the Spider Bolt had been designed by Mr Clewer before he saw Tyco's drawings. Thus there had been no copying or breach of confidential information. It followed that the action failed. The judge went on to order an inquiry as to damages pursuant to the cross-undertaking which had been given when the interlocutory injunction was obtained.
- Permission to appeal was granted on paper on 2nd March 2001 and the appeal is listed for hearing next week.
- The inquiry as to damages has proceeded and is listed to be heard as a floater for one or one and a half days from 4th December 2001. In that inquiry New Systems are claiming around £1 million. Mr Cleaver, who is the holder of 49 per cent of the shares, is claiming a loss of dividends, stated to be £400,000. However, Mr Carmedy, who has appeared before me today, said that that sum could not be justified because there was some double accounting. Tyco believe that the amount that will be recovered on the inquiry will be small.
- I turn, with that background in mind, to the position of the parties.
- Tyco is a substantial company with substantial funds, and in any case has I think £350,000 in court or available. New Systems is not currently trading and has no substantial assets or income. It is a company which potentially could be supported by Mr Carmedy. He told me today that he had access to substantial funds and the fact that he appears today, instead of briefing solicitors and counsel, does not reflect the fact that he is impecunious.
- Mr Clewer was and is in receipt of legal assistance. He was represented at the trial by solicitors and counsel and before me by Mr Chapple, who appeared on his behalf at the trial.
- By letter dated 1st November 2001 solicitors acting for Tyco sought an adjournment of the appeal until after judgment in the inquiry. As stated in the letter it was their case that even if they succeeded on the appeal, it was likely that they would not recover their costs. That seems apparent so far as New Systems is concerned because Mr Carmedy has never suggested that he would fund New Systems to enable that to be done. So far as Mr Clewer is concerned, there is of course the possibility that they would be able to recover their costs if successful in the appeal from the Legal Services Commission. The letter went on to point out that if they failed in the appeal it was likely that they would have to pay, not only their costs, but the respondent's costs as well. They would also have to meet their own costs of the inquiry and pay any damages that were ordered.
- Against that background, Tyco submitted that the best course was to adjourn the appeal. They believed that the amount that will be awarded on the inquiry will be such that it will not be in the interests of Tyco to pursue the appeal, having regard to the costs situation. In those circumstances, the appeal could be withdrawn and the money saved by withdrawing the appeal could be used to fund the damages, or at least part of them.
- Solicitors acting for Mr Clewer wrote on 5th November 2001 stating that they were entirely neutral on the question of whether or not there ought to be an adjournment in the circumstances that had arisen. That is still the position, expressed to me by Mr Chapple on behalf of Mr Clewer.
- At the time when that application came before me it was not possible, I understand, to contact Mr Carmedy, who had at all times represented New Systems, as he was abroad. I therefore made a conditional order for an adjournment to give Mr Carmedy time to present his objections if he had any. He has objections and he has appeared before me to express them. He says that there should be no adjournment of the appeal.
- Mr Carmedy, on behalf of New Systems, drew attention to the fact that the litigation has been going on for nearly three years. He says that the existence of the appeal has resulted in New Systems being unable to commit funds, with the effect that there had been no launch of the Spider Bolt. One can understand that, as potentially an injunction could be granted by this court and therefore New Systems would be wary of putting upon the market a bolt which suddenly they could be prevented from selling.
- To meet that objection, Mr Carr, on behalf of Tyco, has undertaken that if the appeal is successful no injunction would be sought; their remedy will be confined to damages. That being so, New Systems no longer have the threat of an injunction hanging over their head if the appeal is adjourned. At most they will have to pay damages which in my view are likely to be assessed upon the reasonable royalty basis.
- Mr Carmedy points out that it is not lacks of funds which has held back the marketing of this product: it is in fact the litigation. It seems to me that if he has the funds to make available (and he says that he does) or least access to them, then in those circumstances the lifting of the injunction removes to a substantial extent the objection that he puts forward.
- Mr Carmedy also suggests that it is the fault of Tyco that the inquiry has not proceeded to judgment. He also submitted to me that on the directions hearing on 26th October 2001, before Laddie J, he could not attend because he was away at the time. He says that the time limits set by the judge are so tight that he does not believe that it will be possible for the inquiry to be ready for hearing after 4th December.
- I have little sympathy with Mr Carmedy on that point. He is a man who has access to substantial funds. To pray in aid the fact that he could not attend when there was funds available with which he could brief a suitable solicitor and counsel. If it was important, it appears to me that was the right course that he should have taken.
- In any case, it does not appear to me to be a very difficult task to obtain evidence to deal with the issue as to what were the damages caused by the injunction. Accounting evidence may be necessary, but such evidence should be available in a short time. Mr Carmedy prays in aid the fact that he has been abroad. That is not a good reason. The company must have other directors or another director and, further, he is in a position in which to fund legal advice.
- Mr Carmedy also says that if the appeal is successful then there will be no further costs on the inquiry. He submits that there will be more costs in the inquiry. Thus there is an advantage in hearing the appeal first to see whether further costs should be incurred. Of course he is right, but if the appeal fails then both proceedings will have gone forward, namely the appeal and the inquiry. Mr Carr, on behalf of Tyco, is seeking to avoid one hearing. He says that there is a realistic chance of the appeal never having to go ahead, whether or not it would succeed, if the inquiry is heard.
- On behalf of Tyco, their solicitors drew attention to the fact that there were two possible outcomes as they saw it. First, that the court would either order nothing or a small sum in the inquiry: in which case the appellant would be unlikely to pursue the appeal having regard to the position on costs. In that case, not only will the Spider Bolt be on the market, but there would be no liability to pay any damages. The alternative would be that on the inquiry a substantial sum of say £1 million would be awarded. The appellants would then pursue the appeal. In those circumstances Mr Carmedy would have funds in which to launch the Spider Bolt.
- Mr Carmedy told me that it has never been lack of funds which has held back the Spider Bolt. It is in fact the risk that once marketed the bolt would have to be withdrawn from the market.
- So far as New Systems are concerned, they do not have the ability to pay any order for costs and, as I understand it, will not incur any substantial amount of costs during the appeal. It may be on an inquiry depending upon whether they put forward any expert evidence or whether they leave Mr Clewer, who is financed by the Legal Services Commission, to put forward the expert evidence.
- It may be that an adjournment of the appeal will cause some damage. But in the situation where there will be no injunction, it appears to me that the chances of New Systems suffering any damage by an adjournment is small.
- Mr Clewer is neutral. He would be substantially worse off if the appeal succeeds. The Legal Services Commission will look to him for his costs and perhaps also for Tyco's costs in the Court of Appeal.
- If the appeal can be settled, as Tyco suggest that it can, then Tyco will save the costs of the appeal. A substantial amount of the costs have already been expended, but it will save the costs of briefing counsel and the solicitors fees for the hearing itself. Thus Tyco believe that they will be better off for the reasons that they have given.
- I have to weigh up all those matters. In my view the fact that no injunction will be granted is a major factor. The decision is not easy, but on balance I believe that it is best to adjourn the appeal to be listed for hearing early next year. There appears to me a real chance that the result of the inquiry will save costs. That must be in the interests of Mr Clewer. It is in the interests of Tyco, but it matters not so far as New Systems are concerned as they are unlikely to be able to pay the costs and probably will not incur very much on the appeal. So far as they are concerned, this application has resulted in the position where they know that if they put the Spider Bolt on the market they can continue to sell it. Their only risk is damages. They have funds available to them, and in those circumstances the likelihood of them suffering irreparable damage appears to me to be small.
- I therefore will adjourn the appeal to be listed for hearing in the New Year.