England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR JUSTICE JACOB)

		Royal Courts of Justice The Strand London Tuesday 27 February 2001

Tuesday 27 February 2001

1. LORD JUSTICE MANCE: This is an application for permission to appeal in respect of a decision of Mr Justice Jacob on 11 May 2000. He had to consider an application by Mr Abbas for permission to re-amend his counterclaims which are now the only effective part of the original proceedings and for permission to re-amend points of claim in an inquiry as to damages suffered by virtue of certain undertakings which Mr Abbas at one point gave in lieu of an injunction against him. That injunction was obtained at the instance of the other parties, quite wrongly as it subsequently transpired. It was later discharged and the inquiry follows from its discharge.
2. The matter has a long history which I do not propose to repeat. It appears in paragraphs 1 to 8 in Lord Justice Aldous' judgment on 19 May 2000, and in this court's judgment of 1 September 2000, setting aside the permission which Lord Justice Aldous granted. But the history includes a substantial number of previous applications for amendments which were either abandoned at a stage when Mr Abbas was fully and competently represented, or disallowed. That is material because to some extent it appears to me that this application simply seeks to re-canvas in a different form issues which were previously raised. It is also material because by now at any rate Mr Abbas ought to realise the need to focus closely on the nature of any proposed amendment with a view to ensuring that it is coherent and well founded.
3. Mr Justice Jacob refused almost all the amendments proposed and although the challenge to his decision was, on paper, root and branch, it has been restricted by Mr Abbas' skeleton and by his oral submissions today to one point. That is the point relating to the proposed claim for recompense or loss of value arising out of the supposed making of far larger numbers of copies of the intellectual property or model which belonged to Mr Abbas than Seer Technologies Inc and Level 8 Systems (UK) Ltd accept. That claim largely appears in the counterclaims. It is to some extent also present in the draft amendment to the points of claim in the inquiry. It seems to me that there it is on any view inappropriate for the reason which the judge gave, namely that on no basis can any loss which Mr Abbas may have sustained by the making of such copies be attributed to the granting of the injunction. The making of such copies was on its face an independent wrong, nothing to do with the injunction. If they were exploited (and I will return to the question whether that is adequately asserted), then that, too, is an independent matter. I put that point to Mr Abbas and I do not think he really took issue with it. Whether he did or not, it appears to me that the amendments would on any view be inappropriate in the points of claim in the inquiry for that reason which the judge gave. But, if they are present in the counterclaim, then their presence in the amended points of claim in the inquiry would anyway be mere duplication and unnecessary.
4. The real issue is whether Mr Abbas should be entitled to make an amendment in the present form in the counterclaim. The amendment, which I will not read in full, is in broad terms under the heading "Loss by the first defendant of the intellectual property value as a result of non-returned copies of the model". There are then various paragraphs of th licence agreement pleaded, including the provision that CLUS would not release the model or the derivative works or any substantial parts of either to any prospective sub-licencee or third parties without requiring the prospective sub-licencee to enter into a binding confidentiality agreement when a licence was signed whose object was to protect Mr Abbas' proprietory rights in the value of the model. That was an amendment which, in parenthesis, had previously been adumbrated in the September 1998 draft which was abandoned in its entirety at a time when Mr Abbas was legally advised. That draft included various allegations relating to distribution of the model or copies of it to ex-employees and to Tandem. They were all abandoned and not pursued.
5. The draft pleading asserts a failure to deliver up all copies of the model after an order dated 7 July 1999, approved by the court on 4 August 1999, and relies on a calculation by a firm of accountants, Winch & Co, based on the numbering on the copies of CD-ROMs which were produced, as to the sum which would be due if one took the minimum royalty due under the licence agreement and applied it to 838 copies of the model. That figure of 838 is based on affidavits which, in turn, use numberings on CD-ROMs and make the assumption that that numbering was continuous and that it evidenced CD-ROMs produced.The draft pleading, however, as the judge points out, fails to plead any factual circumstances which could actually give rise to a right to any royalty under the licence agreement. More substantially, the judge took the view that there was no basis for considering that 838 copies (or any such number) had been made and had gone into the commercial world in any way which could cause the loss suggested. The judge's view was that this was yet another exaggerated draft in the course of a history of exaggerated drafts. So effectively he disallowed the draft amendments for two reasons. Firstly, he did not find any plausibility, having examined the evidence, in the suggestion that that number of CD-ROMs had been made; it was a suggestion originally raised in 1998 in the context of discovery; it was the subject of affidavits on each side and eventually (again at a time when Mr Abbas was represented) the discovery applications based on that suggestion were not pursued. That would be surprising, if this were a good point because the obvious way of finding out what had happened to over 800 copies, and seeing whether any loss had been sustained, would have been, if the point had any merit, to pursue the discovery applications. Further, if it was suggested that there were specific cases of dissemination on which reliance could be placed, as was originally suggested in the September 1998 drafts, then the obvious way of pursuing that would have been to pursue the application to amend in accordance with those drafts. None of that was done. The judge, considering the affidavits and the explanations given, came to the conclusion that there was no plausibility in the suggestion that this number (or any such number) of copies had been made. Furthermore, he came to the conclusion that, even if they had been made, there was no basis for the very broad pleading which simply took the minimum licence fee, took it as the value of each copy, and applied it to arrive at something in the region of 67 million dollars, which was then restricted to the maximum payment of 5 million dollars, which Seer could have been obliged to make under the licence agreement if it had agreed to purchase absolutely all the intellectual property.
6. It seems to me that on the material before him, faced with a trial due in a relatively short time, and against the background which I have touched on, the judge was entitled to reach that conclusion. The position has somewhat changed since then in the sense that the trial date has gone off. Mr Abbas has, unfortunately, been ill. There have been further case management conferences before the judge and the question of amendment has been raised again before the judge. I have been shown a note of the most recent case management conference at the end of January.
7. Mr Abbas' skeleton argument on this application focuses on a number of specific points which he says he can now make in support of the case that some commercial damage was sustained by him by reason of dissemination of copies. In the course of the discovery applications, on the face of it, Seer sought comprehensively to explain what had happened to all copies of its models. There were a few unexplained missing copies. It is suggested by Mr West-Knights that that it is not surprising, bearing in mind that Seer was a world-wide organisation at the time that massively contracted subsequently. Be that as it may, the fact that there were some missing copies has been known for a long time. Mr Abbas says that he can identify one of two specific copies which have caused him potential loss. He relies in this connection on a Mr Sunil Misra's statement, which he has produced. He relies on a Mr Rollins' statement (though that has been in the arena since October 1998 and was not a statement which was picked up in the July 1999 amendments which replaced the withdrawn September 1998 amendments). He relies on the suggestion that Mr Rollins, an ex-employee, has a copy and that other ex-employees may have; that Bank Sarasin may have one (that has been denied in a subsequent affidavit by Mr Cohen for Seer); and in his skeleton he also relies on the suggestion that a company called Tandem received three rather than two copies. That appears to be based on no more that a draft agreement suggesting that they would receive three. He also says that Credit Suisse received a copy for evaluation purposes.
8. Those specific statements are the sort of statements which in the case of Rollins could have been pleaded long ago; in the case of Tandem were on the face of it to some extent pleaded in the withdrawn September 1998 draft; and the case of the other two may be new points. I think Credit Suisse flows from discovery, so on the face of it, it is an old point.
9. Be that as it may, Mr West-Knights for Seer accepts that these are points which, if they could be made the subject of specific appropriate amendment, could be pursued even now before Mr Justice Jacob who has indicated to Mr Abbas that, if he has such points which he wishes to make the subject of further specific applications for amendment, he should raise them as best he can by early May this year. It seems to me that that points the way to the resolution of the present application in the same direction as I would anyway have seen it as lying, if the matter had stood as it did when Mr Justice Jacob gave his decision back in May 2000. I observe that this is an application for an extension of time as well as for permission to appeal. That is not a material factor in my consideration of the matter. It appears from what Mr Abbas has said that there was good reason why he did apply in time (or at any rate certainly good reason enough for me to consider this matter on the substance). But considering it on the substance, it seems to me that it is an application where I should, unquestionably, refuse permission to appeal and leave it to the trial judge who is closely familiar with this case -- I assume Jacob J will be the trial judge; he is certainly the management judge -- to consider whether any further specific amendments of an appropriate nature have been formulated. It seems to me quite clear that the judge's general view, that the very broad allegations were not allegations which it was appropriate to allow to come into these proceedings because they have no real prospect of success, was one which he was not only entitled to form, having examined the evidence closely, but was right to form in the manner he did. I shall proceed on the basis I have indicated and leave it to him to review the matter further as appropriate; the present application for permission to appeal against his decision in May should therefore be refused.
ORDER: Application refused with costs to be assessed. NOTE:Following a discussion after I delivered judgment orally, a reference that I made orally to Credit Suisse having signed a confidentiality agreement in respect of the copy it had for evaluation purposes does not appear in this draft. As I said during the discussion mentioned above, the reference was in any event immaterial to the conclusion I have reached.