England and Wales High Court (Patents Court) Decisions

B E T W E E N

Plaintiff

- and -

Defendants

Hearing date: 9.11.98

This is the official judgment of the court and I direct that no further note or transcript be made

DATED: 18th December 1998

1. Mr Pierce's claim arises out of his work between 1993 and 1995 for the first defendant ("Promco") in connection with the development of a computer programme known as "Olivia". Promco is a Swiss company, owned by the second defendant Mr Johnson. The third and fourth defendants were computer programmers employed by Promco. No relief is sought against them, and they have taken no part in these proceedings. Mr Pierce and Mr Johnson both appeared in person, the latter with my leave also appearing for Promco.

2. Mr Pierce was born in 1944. His work between 1963 and 1985 was in what he describes as "the fields of retail, international and corporate banking". He has no formal training in information technology. Between 1987 and 1990 he was a principal consultant with Logica Finance Ltd in the UK. He was made redundant as a result of a major re-organisation in 1990. Between 1991 and 1992 he worked as a consultant with Logica AG in Zurich. It was there that he first met Mr Johnson in the summer of 1991.

3. Mr Johnson qualified as a chartered accountant in London in 1969 with Touche Ross. Between then and 1980 he worked first with the Bunge Group, and then with Continental Grain, both involved in commodities trading. In 1980 he founded Promco SA in Geneva. It was initially engaged in providing trade related services for the grain trade. The experience gained in international trade finance and the use of derivatives provided the basis for the development of a treasury management system in 1984, and through that an entry to the banking sector. Since 1984 Promco has carried on business as a supplier of computer software products and services for the investment and private banking sector.

4. In 1984 there was formed Promco Monitor Ltd (PML) which was a 50/50 joint venture between Smith Bros plc (now Smith New Court plc) and Mr Johnson. Between 1990 and 1992 PML began to develop a package of computer programmes to provide a "messaging" system tailored to meet the front office requirements of bank dealing rooms. During 1992 and 1993 Promco and PML supplied and licensed an operating version of this system, then known as "Quaestor", to Lombard Odier Cie ("LOC"), a private bank based in Switzerland. In April 1993 there was a separation of the business interests of Promco and PML, as a result of which a copy of the Quaestor software product and the supply contract with LOC were assigned to Promco. After the separation the Quaestor product was referred to as "PinQ". Later in 1993 the product name "Olivia" was introduced. In 1992 Mr Johnson had begun discussions with representatives of Coutts Bank in Switzerland, primarily a Dr Müller, which led in March 1994 to an agreement between Promco and Coutts for the development of Olivia to meet Coutts' requirements.

5. Mr Pierce ceased his involvement with Logica Zurich in June 1992. He met Mr Johnson on various occasions. According to Mr Pierce, Mr Johnson suggested that they should work together, and "talked generally about forming a separate company for this purpose". According to Mr Johnson, the suggestion for working together came from Mr Pierce, who told him that he was unemployed and finding it impossible to obtain a job.

6. In about September 1993 Promco received a commission from LOC and two other private Swiss banks to produce a report for them entitled "Dealing with EBS - a report on the functional requirements of dealing activities in an electronic environment". Between September and November 1993 Mr Pierce worked unpaid on the preparation of the EBS report. There is a dispute as to the precise nature of his involvement. According to Mr Johnson, he was willing to work unpaid because of the benefit of having his name associated with the such a report. According to Mr Pierce, he did so in reliance on representations made by Mr Johnson as to his future participation in the Olivia project. These alleged representations are at the heart of the legal case, and I shall need to refer to them in more detail below.

7. In Spring 1994 Mr Johnson decided to form a new company in England which would act as a vehicle for marketing Olivia in the United Kingdom. In May 1994 an off-the-shelf company called Tailspin Ltd was acquired and subsequently re-named "Intellectual Property Rights Ltd." ("IPR"). Mr Johnson's brother, Simon, and Nigel Pierce were named as directors and sole shareholders (1 share each). Mr Pierce paid no money for his share in IPR. Mr Johnson's position is that he was intended to be no more than his nominee. Mr Pierce claims that IPR was the vehicle through which it was intended that he would be rewarded for his work for Mr Johnson. IPR never in fact traded.

8. In 1994 and 1995 the principal activity of Promco was related to the development of the programme for Coutts. In the summer of 1994 Mr Pierce agreed to work for Mr Johnson on this project. He continued to spend most of his time working on the project in Switzerland for the remainder of 1994, living in a rented room at a hotel in Annecy. Again there is dispute as to the nature of his work. There is also a dispute as to its financial basis. There was a loose arrangement for Mr Pierce to be paid at the rate of SF2,000 per month in accordance with the days worked. The agreement was never committed to writing. Mr Johnson says this was a payment of fees. Mr Pierce says that it was intended only to cover expenses. According to him, Mr Johnson told him that he would be rewarded "from the success of the project".

9. In March to August 1995 Mr Pierce worked again on both the Olivia programme and the User Manual, and also on the associated "Sarah" programme, as part of the Coutts project. He visited the Isle of Man for a period in March 1995. For the Isle of Man visit he was paid living and travelling expenses on top of the SF2,000. Mr Johnson says that his invitation to Mr Pierce to come back to work on this occasion was motivated by sympathy following the tragic death of Mr Pierce's son in January.

10. He continued work in Switzerland between July and September 1995. Mr Johnson then decided that Mr Pierce had no further role in the development of Olivia. He asked him to resign from IPR and terminated his services to Promco. There is a dispute whether Mr Pierce agreed to resign. In the event Mr Pierce had no further involvement with Promco thereafter. The User Manual on which Mr Pierce had worked was not accepted by Coutts. The present proceedings were commenced by writ dated 21st November 1996, following a solicitors' letter before action dated 10th October 1996.

11. The heart of Mr Pierce's case is the allegation that he worked for Mr Johnson without remuneration (apart from expenses) -

12. Further and better particulars of this allegation gave the following details:-

13. It is alleged that Mr Pierce contributed "as an integral and essential member of the team" to the "conception, development, testing, refinement and finishing" of the Sarah and Olivia programmes. In particular, it is alleged that he originated and promoted the idea from September 1993 that Promco should focus on the development of asset management software and that he was "integrally involved in the prototype and development" of the software, and was able to contribute his "considerable banking and business related information technology know-how and experience", none of the other members of the team having comparable experience (para 10.2). He was also involved in writing and updating the User Manual, which, it is said, was crucial for the development, inter alia because it revealed programming errors ("bugs") and facilitated their removal (para 10.3). It is said that Mr Pierce continued to be involved in these tasks until the Olivia and Sarah software and the User Manuals were in a finished state in September 1995 (para 10.6).

14. The legal basis for the pleaded claim rests, first, in a claim in the copyright in the finished programmes and the User Manual. It is said that the programmes were a work of joint authorship of a team which included Mr Pierce, and that the User Manual was his sole work (para 11). It is said that he participated "on a self-employed basis" and in reliance on Mr Johnson's representations as to participation in profits; that accordingly the copyright in the programmes vest jointly in him and one or more of the defendants, and that the copyright in the User Manual rests in him solely; and that he is entitled to an account of the profits made from the exploitation of the programme and User Manual (including the contract with Coutts) and a payment of a share of the profits (para 12 - 14).

15. There then follows a series of alternative legal formulations, which can be summarised as follows:-

16. He claims declarations as to his ownership in the copyright and his entitlement to participate in the profits; an account of profits made and payment of sums found due; an order entitling him to trace the monies held on constructive trust for him by Promco and Mr Johnson; an enquiry as to equitable compensation for breach of fiduciary duty and entitlement to remuneration by way of quantum meruit; and an injunction to restrain the defendants from exploiting the programmes or User Manuals in breach of his copyright.

17. The Defence denies that Mr Pierce had any relevant experience of private banking, asset management or portfolio theory, which were "the core of the functionality" provided by the Olivia and Sarah programmes; or of the use of information technology products in an analogous environment (para 2). It is claimed that Olivia was by April 1994 in "an operational and fully commercial state" although it continued to evolve thereafter (para 9 - 16). It is said that Mr Pierce approached the defendant for assistance because, as the result of age and illness, he was having difficulty in obtaining work and wished Promco to provide him with "a job or at least some work experience which would enable him to be more attractive to potential employers, especially in Switzerland or France" (paras 17 - 22). He offered to provide "secretarial and project support skills" to Promco in the preparation of the EBS report, in return for receiving work experience, being named as a co-contributor in the report and being reimbursed with out-of-pocket expenses (para 24 - 25). IPR was set up to act as a vehicle for marketing Olivia in the UK; Mr Pierce was to be a nominal shareholder and director, but if successful in exploiting his alleged network of contacts there existed the opportunity for an agreement under which his value in securing supplies of Olivia would be recognised (para 28 - 32).

18. In late summer 1994 Mr Pierce was invited to work on the production of an English language version of the Olivia Users' Manual and to spend some time undertaking basic user testing of the Olivia screen interface in consideration of payment of SF2,000 per month; the User Manual in the event was not acceptable to Coutts because it was of inadequate quality; the work on testing was peripheral to the development of Olivia; Mr Pierce did not in fact work continuously during any one month and accordingly he was paid on a pro rata basis at the rate of SF2,000 per month (para 37 - 52).

19. Mr Pierce's involvement was terminated in September 1995 because his work on the User Manual was complete and nothing had developed or was likely to develop as a result of his purported contacts or activities (para 53). It is denied that Mr Pierce acquired any copyright interest in the programme or that he was party to any joint venture.

20. As I understand the pleadings, there are two central issues:

1. Although the User Manual features in the pleadings, it is common ground that the copyright in the version in which Mr Pierce worked has no present commercial value (following rejection by Coutts).

21. As to the first issue, section 10(1) of The Copyright, Designs and Patterns Act 1988 defines a work of joint authorship as:

22. As an illustration of the application of this test in the context of a computer programme, Mr Johnson referred me to the recent judgment of Laddie J in Fylde Microsystems Ltd -v- Key Radio Systems Ltd, 10th February 1998 transcript. He referred in turn to a decision of Jacob J in Ibcos Computers -v- Barclays Mercantile 1994 FSR 275 in which he said:

23. Laddie J went on:

24. The representations issue is largely a question of fact as to what if anything was "represented". In the light of the answer to that question, it must be decided whether it amounted to an offer capable of being converted by acceptance into a contract by way of joint venture, or some other arrangement, sufficient to found an obligation to pay "a reasonable sum" by way of quantum meruit. As to that, Chitty on Contract states (para 29 - 127);

25. Although the parties appeared in person before me, they had been assisted by solicitors in the preparation of the case, and witness statements had been prepared on each side. The principal witnesses were the two main parties, Mr Pierce and Mr Johnson, each of whom produced a detailed witness statement and was cross-examined upon it by the other.

26. Mr Pierce called four other witnesses. Professor Peter Dzwig appeared as an expert in advanced information technology as applied to financial markets. His principal conclusion is that "the balance of probability is that (Mr Pierce) made a greater input than the plaintiffs are prepared to admit" to the Olivia and Sarah programmes; and that the User Manual was "of a high standard and shows signs of expert input". Professor Dzwig had no direct knowledge of the Olivia programme itself, and therefore was largely dependent upon what he had been able to ascertain from the documentary material, and Mr Pierce's own account. Judy Skillington gave evidence of Mr Pierce's work with Logica UK, where she was a colleague of his in the Strategic Projects division. She says that during the 2½ years that they worked together he made a significant contribution to the strategic direction of the division and the work that it did. When the company was reorganised in 1990, and she became a divisional manager, she had wished to keep Mr Pierce as part of her division but was overruled by senior management.

27. The other two witnesses, Mr Chilvers and Mr Irvine, were personal acquaintances of Mr Pierce, and spoke of the impression that they had formed from their conversations with him and observations of his activity at home in England. However, neither had any direct knowledge which could assist materially in resolving the issues before me.

28. Mr Johnson sought leave to rely on statements from a number of witnesses who were living in Switzerland, and one from a Mr Dixon in this country. There seems to have been a misunderstanding between his solicitors and Mr Pierce as to whether Mr Pierce in fact wished them to attend for cross-examination. This case was commenced prior to the relevant date for the purposes of the Civil Evidence Act 1995, and so, the procedures under the Civil Evidence Act 1968 applies. All the proposed witnesses, except for Mr Dixon were "beyond the seas" in terms of former Order 38 Rule 25, and I gave leave for their statements to be admitted. There was initially a question as to whether the statements had in fact been signed, but Mr Johnson was able to produce evidence which satisfied me that they had been signed by the relevant witnesses, and Mr Pierce did not dispute their authenticity. Nor did he object to the production of Mr Dixon's statement.

29. The Swiss statements fall into two main categories. First are the statements of the two co-defendants, Mr Gjerpe and Mr Fleischmann, both of whom worked in Promco on the Olivia project. Their evidence largely repeats and confirms the evidence of Mr Johnson himself as to the limited contribution of Mr Pierce to the project. The second category consists of Dr Müller and Mr Macdermott, both of Coutts Bank in Switzerland. This evidence is more significant, in that it represents an independent view from a client as to the role of Mr Pierce. Mr Pierce submitted a detailed response to both these statements. There is also a statement from a Mr Boller, a partner with Deloitte and Touche, who in 1991 discussed with Mr Pierce Logica's evaluation of the Promco products. That does not seem to me to assist materially.

30. Finally there is the statement from Mr Dixon, Director of the wholesale banking sector of Anite Systems, which signed a licence with Promco to use the Olivia system in July 1996. He regards Olivia as a market leading product in the field of portfolio analysis risk management and decision support; as far as he is aware it is the only front office portfolio management application which incorporates risk management within the scope of its functionality.

31. Mr Johnson also called two witnesses in person. The first was Mr McNair, who was Finance Director of Smith Bros plc from 1982 to 1989. He gave evidence that Mr Johnson approached him in about 1983 to discuss the possibility of using his computer skills and currency control knowledge to develop systems for use in the securities industry, in trading, broking and portfolio management. It was following that discussion that PML was formed. In 1985 Smith acquired the broking firm of Scott Gough Leighton ("SGL") and 1988 Mr Johnson's first portfolio management system, for the management of PEPS, was introduced into SGL.

32. The other witness was Mr Simon Johnson, Mr Peter Johnson's brother. He gave evidence principally relating to the formation of IPR and Mr Pierce's role in it.

33. So far as evidence is concerned, the issues to be resolved can be taken chronologically under four headings: first, the experience and achievements respectively of Mr Pierce and Promco before their work together in 1993; secondly, the content of the discussions between them relating to Mr Pierce's involvement; thirdly, the extent and quality of Mr Pierce's work on the Olivia project; fourthly, the circumstances of their split in 1995.

34. On the first issue, each side tended to play down the achievements of the other. In this respect the independent evidence was helpful in presenting a more balanced view. Miss Skillington satisfied me that Mr Pierce had built up considerable experience of strategic development and marketing in the banking field. However, as she fairly put it, within Logica he was "at the business end rather than the technical end". He had no formal training in information technology, although no doubt in the course of his work he would have acquired some familiarity with its use in banking. Furthermore, his knowledge of banking was general rather than specialised. In particular he had no specific experience of portfolio management for private clients. Miss Skillington identified his particular contribution as good strategic thinking, clarity of thought and ability to express himself.

35. On the other side, Mr McNair's evidence shows that Mr Johnson was working on systems for use in portfolio management from the early 1980s. Mr McNair himself did not feel qualified to comment on Mr Johnson's expertise in that field. However, there is no doubt that during the 1980s Mr Johnson would have been able to accumulate substantial practical experience in that area, building on his previous experience in the commodities trade. By 1992 he had identified opportunities for marketing a system tailored to meet front office requirements of bank dealing rooms. The Quaestor system was sufficiently developed to be supplied to LOC in 1992. The Quaestor software and the LOC supply contract were assigned to Mr Johnson in the separation agreement with PML in April 1993.

36. Another guide is the way in which Mr Pierce and Mr Johnson treated each other in 1993 and 1994. Mr Pierce regarded Promco and Mr Johnson sufficiently highly to be prepared to have his name associated with them and to work for them for nothing on the EBS report. Conversely, Mr Johnson was willing to allow Mr Pierce's name to be put forward in the EBS report as a joint author with himself and Mr Gjerpe; and in a proposal to the Bank Hofmann AG in February 1994, under the heading "Resource Capacity", Mr Pierce was described as "business consulting banking".

37. Turning to the next heading, the representations allegedly made by Mr Johnson to Mr Pierce are crucial to his case, in the absence of any formal agreement or other documentary record of the terms on which Mr Pierce was to work.

38. The first specific representations relied on in the Statement of Claim as founding any cause of action are those allegedly made at the end of 1993 (Statement of Claim para 6). There is reference to conversations at earlier meetings where, according to Mr Pierce, Mr Johnson "talked of us working together on a joint venture basis and possibly forming a separate company for that purpose". As I have noted already, Mr Johnson's account is somewhat different. Mr Pierce was having problems in finding a new job, and was looking at least for some work experience. There is no doubt that there were discussions about working together in some form, and these led to the involvement of Mr Pierce in the EBS report. However, the fact that Mr Pierce was prepared to do this work without payment, is more consistent with Mr Johnson's account of the earlier discussion. There may have been discussions of "working together", but I do not accept that anything was said by Mr Johnson which could have led Mr Pierce reasonably to expect that he was to be brought into the project on a "joint venture" basis. Mr Johnson says that Mr Pierce's involvement was solely to provide secretarial and project support skills, and that he did not create any text for the EBS report. If this was the case, I find it surprising that Mr Pierce was described as a joint author in the report. It is likely that Mr Pierce had a rather greater input that Mr Johnson is prepared to concede, but there is no reason to think he expected any financial reward for it.

39. As I have already noted, the representations relied on in the Statement of Claim are attributed to three separate occasions. The first followed the completion of the EBS report. Promco had also produce a business plan in September 1993 in which it spoke of seeking to establish a network of alliances with consultants to strengthen its marketing and support resources. Mr Pierce says that during a discussion one evening at dinner in December 1993, "Peter talked positively about us continuing to work together but on a joint venture basis". As he says, they were both hopeful that the study would result in remunerative work for Promco. In his cross-examination, Mr Pierce agreed that this was at a very early stage and prospects of future co-operation depended on how well the study report was received. Even accepting his evidence at it highest, it is impossible to interpret it as amounting to any form of commitment by Mr Johnson.

40. The second occasion was a telephone conversation in May 1994, between Mr Johnson in Geneva and Mr Pierce in England. According to Mr Pierce, he was told by Mr Johnson that he wished to establish a UK company to hold the copyright in the Olivia software, with Mr Pierce and Simon Johnson as directors and equal shareholders. At the same Mr Johnson asked him to join him in Geneva to carry out work on development of Olivia "on the basis that I would share in the success of the project". There was no mention of any salary and it was made clear that the financial positions of both Mr Johnson and Promco were precarious. Mr Pierce comments:

41. According to him the reason for establishing a company outside Switzerland to hold the copyright was to protect it given the precarious financial state of Promco. He says that he regarded his position in IPR as "a considerable comfort", and as showing "the implicit trust" of Mr Johnson.

42. Mr Johnson says that IPR was formed, not to hold the copyright in Olivia, but to provide a vehicle for marketing it in the United Kingdom. He understood that it was necessary to have two directors for a UK company and for that reason decided to involve Nigel Pierce as well as his brother. He saw Mr Pierce as his agent and nominee, but that, if Mr Pierce was successful in exploiting the extensive network of contacts which he claimed to have in the UK, there would be the possibility of an agreement to recognise his value in securing sales in the United Kingdom.

43. Again, putting Mr Pierce's evidence at its highest, it is difficult to extract anything which could be treated as a binding commitment. In cross-examination he accepted that his prospective share in any joint venture was not defined, and that given Promco's precarious state no finite arrangement could have been made at that stage. Whatever comfort he derived from being made a shareholder in IPR was largely in his own mind. He does not, as I understand it, suggest that Mr Johnson promised to transfer the copyright in Promco to IPR for no cost, thus in effect making a gift to him of 50% of its value. He seems to have gained some comfort from the name IPR. Certainly that suggests an intention to do something more than simply use it as a marketing vehicle. However, I would not attach significant weight to that factor, having regard to the evidence of Simon Johnson (which I accept) that the name was chosen by him (not Peter), and that neither Mr Johnson nor Mr Pierce led him to believe that it was intended to hold rights in Olivia or any other computer programme.

44. The third occasion was in Geneva in July 1994. Mr Pierce says that he returned to Geneva in late June 1994 intending to stay for about three weeks. Shortly after his return Mr Johnson told him over lunch that he "would be rewarded for (his) work from the success of the project". Mr Pierce recalls that these were "almost exactly the words he used". He says:

45. As he said, he was content to proceed without any written record because of the mutual respect and trust between himself and Mr Johnson, and also because he understood that Mr Gjerpe's arrangement with Promco was "informal". In response to my own question whether he understood there to be any binding legal commitment, Mr Pierce said that he relied on Mr Johnson's integrity. He also made clear that at that stage he looked wholly to the prospective share in Olivia through IPR and that because of Promco's financial position he did not expect a fee. Mr Johnson did not, as I understood him, dispute that some such conversation took place, but says that he merely told Mr Pierce that if something came of his involvement he would "play fair".

46. I will comment later on the legal claims which the Statement of Claim seeks to found on these representations. On the facts, the only significant dispute is whether Mr Johnson gave Mr Pierce any reason to think that a share in the value of the Olivia copyright was to be transferred to him through IPR. On Mr Pierce's own account, this was something he regarded as resting on Mr Johnson's integrity, rather than a legal commitment. Furthermore, he accepts that the extent of his contribution was not such as to entitle him to expect a 50% share (as might have been implied by his 50% ownership of IPR), and that the appropriate shares as between him and the various defendants were never defined. He accepts also that he did not expect any fee. There was a mutual intention that, if Mr Pierce was able to make a significant contribution to Olivia's progress in the UK, he would be rewarded in some way. However, looking at the evidence overall, I infer that the thought that this might be done through his shareholding in IPR was his own interpretation of events, rather than the result of any representation by Mr Johnson. As he himself accepted in cross-examination, "in hindsight things were not tied up as they should have been".

47. Before leaving the question of alleged representations, I should comment on the terms on which Mr Pierce worked for Promco from August 1994 onwards. Mr Johnson says that he agreed orally with Mr Pierce that Promco would pay for his time at the rate of SF2,000 per month to be paid into his Swiss bank account. According to Mr Pierce, the payments were for expenses rather than fees. I was taken through a number of "invoices" signed by Mr Pierce between August 1994 and August 1995, and corresponding entries in his Swiss bank account statement reflecting payments by Promco. Both Mr Pierce and Mr Johnson claimed to find in this evidence support for their respective versions of events. In the end I found the evidence contradictory and unhelpful.

48. On Mr Pierce's side, most of the invoices are couched in terms of specific expenses, and the sums paid into Mr Pierce's account were consistent with such expenses, rather than with a regular payment of SF2,000 per month. However, there was at least one occasion where Mr Pierce himself claimed for "fees inclusive of expenses, SF2,000" (6th January 1995). His explanation was that this was simply to justify them to Promco's accountants, where there was a shortfall between his expenses and the receipts that he had kept. Mr Johnson says that, however they were expressed by Mr Pierce, the basis of the arrangement from his point of view was one of fees being paid at a standard rate per month. However, since Mr Pierce did not in practice work for complete months, the payments were agreed on a pro rata basis, adopting an assumed 22-day month; in addition, certain "genuine expenses" were allowed, such as bus and taxi fares in Switzerland, and actual travel and living expenses when Mr Pierce was working in the Isle of Man in March 1995.

49. I see no purpose in analysing the figures in any more detail. What is clear is that Mr Pierce was willing to work under a very informal arrangement, and never pressed for it to be put on a more formal basis. He says in his statement that Mr Johnson had initially said that he hoped to be able to pay him a salary from February 1995, but he does not suggest that the hope was ever converted into a commitment, or that he pressed Mr Johnson on the point. Indeed there is no evidence that Mr Pierce made any claim to further payment for the work done between 1994 and 1995, until the present proceedings were launched towards the end of 1996. Although the Statement of Claim refers to "a promise of future remuneration" (para 18.1) this rests, as I understand it, on the inference sought to be drawn from the representations made on the three occasions to which I have already referred.

50. I should also mention the suggestion, reflected in some of the witness statements for the defendants, that Mr Pierce wished payments to him to be categorised as expenses only, so as to enable him to continue to draw unemployment benefit in the UK. Mr Pierce showed me a letter from the Benefits Agency, which indicated that they had no reason to question his entitlement to such benefits as he had received. I have no reliable evidence as to what benefits he was claiming at different times. Accordingly, I attach no weight to this aspect of the defendants' case.

51. The third topic I identified was the work actually done my Mr Pierce. The work seems to have fallen into three phases. The first was between July and December 1994 in Geneva. The second was in March and April 1995 in the Isle of Man, which Mr Johnson puts at two weeks and Mr Pierce puts at two months. The third phase was in Geneva between June and September 1995. It seems to be common ground that were two principal aspects to his work on the Olivia project between 1994 and 1995: first, work on the preparation of an English version of the User Manual, and secondly work on the "alpha testing" of the model. As I understood Mr Johnson's nomenclature, alpha testing referred to testing on Promco's premises; beta testing referred to testing in an "on-line environment" including recovering data from the bank. This phase necessitated working on the bank's premises, in view of the restrictions on outside access to bank data. Mr Pierce distinguishes between alpha testing in which he was involved in Switzerland, and "the beta test phase by Coutts in the Isle of Man". I think it is clear that he had some role in the beta testing, since he visited the Bank in the Isle of Man, and according to him was involved in testing the programme across the Bank's internal network.

52. Mr McDermott says that it is unlikely that he would have had access to the Coutts data in Switzerland. At that time two copies of the Olivia system were installed in the bank, a live copy in the Isle of Man and a test copy in Geneva. According to Mr McDermott, Mr Pierce would have had no need of access to the live system in the Isle of Man for the purpose of producing the User Manual; access to the test system in Geneva would have been sufficient.

53. There is also a dispute about the time worked by Mr Pierce between 1994 and 1995. Mr Pierce claims that he worked for about 200 days. The invoices which have been disclosed on discovery, starting with 6th January 1994, give a total of 88 days from November 1994. However, Mr Pierce says that this does not take account of work done before November 1994, and he also believes that after November he worked for a larger number of days than identified on the invoices. He produced a summary of days worked between June 1994 and September 1995 amounting to 173 days, derived as I understand it partly from his recollection and partly from entries in his bank account relating to travel tickets, hotels and so on.

54. Mr Johnson says in his statement that Mr Pierce's contribution to the work on the Olivia project was a total of 50 man/days out of a total of 917 man/days for which Coutts was charged. This information is said to be drawn from parts of Promco's contract with Coutts dated 13th July 1995, setting out agreed payment rates for Promco staff, and a reconciliation supplied by Coutts of invoices submitted by Promco for June to October 1995. It was not clear to me how far the estimate of 50 days was intended to relate to the earlier period. Mr Pierce accepts that 50 days would be a fair estimate of his work between July and September 1995.

55. I find it very difficult on the information before me to unravel these various strands. If it were necessary to do so, for example for the purposes of a quantum meruit assessment, the issue would have to be referred to an inquiry. Of more direct relevance for present purposes, in my view, is the evidence as to the significance of Mr Pierce's contribution. Mr Johnson's unchallenged evidence as to the rate at which Coutts were invoiced for Mr Pierce's work is of particular interest. Under the agreement with Coutts made in July 1995, rates were fixed for different categories of staff. Mr Pierce's work was charged to Coutts at the rate of SF875 per day, which was the rate applicable to the most junior category of staff. Promco's invoice to Coutts in August 1995 referred to four grades, the most senior included Mr Johnson himself and Mr Fleischmann; Mr Gjerpe was in the second grade, described as "seniors"; Mr Pierce was in the fourth grade described as "juniors". Since Mr Johnson would have had no reason at that stage to undercharge Coutts for Mr Pierce's work, I think this is a reliable indication of how his work was seen within Promco at that time.

56. Mr Pierce himself claims that "there are few parts of the programme, if any, that do not bear my input and direction". There is little independent evidence to support this claim. The expert, Dr Dzwig, was unable to give much assistance. He had seen the draft version of the User Manual prepared by Mr Pierce in September 1995, which he regarded as of "a high standard" and showing "the signs of expert input". He had also seen some of the "de-bugging notes" prepared by Mr Pierce, which suggested to him a higher level of involvement in the development of the programme than merely "hitting buttons to see if it falls over", as Mr Johnson had suggested. However, since he was not able to compare either the manual or the de-bugging notes with the actual Olivia programme, his conclusions on these issues are necessarily of very limited value. Dr Dzwig listed a number of areas in which Mr Pierce claimed to have contributed, but as he accepted, many of these come properly under the heading of quality assurance. He said that if Mr Pierce did make an input it was "in terms of the functionality of the system ... Pierce provided ideas, not code"; and that, whilst the code may have been substantially re-written after his departure, "certain of the functionality that he contributed is likely to remain". However, he is not able to specify what particular functionality he would attribute to Mr Pierce. The tentative nature of his views is clearly expressed in the paragraph where he says -

57. It is perhaps a weakness in Dr Dzwig's report that, although he mentions a fax from PMMS Consulting to Coutts dated 18th November 1994, he does not comment upon it. That is a "procurement review" of Olivia prepared for Coutts by PMMS Consulting Group. It is a useful independent appraisal of Promco and of the Olivia programme at that time. According to the review, Coutts had a requirement for a portfolio management system to offer clients of the international private banking service. The market was analysed and over a hundred packages considered; 24 were reviewed and four looked at in detail.

3. Olivia was selected for 3 reasons -

4. The review also referred to the Promco staff. It is said that there are "five staff of whom three are key". They were described as Mr Johnson who is "not a highly technical individual but has the commercial knowledge and drive"; and (Fleischmann) and (Gjerpe) - "these two individuals are the technical/computing creative spark of the company."

58. Mr Johnson's evidence of Mr Pierce's role is also supported by the statements from other Promco personnel and from the two Coutts representatives. I accept that, since they have not been available for cross-examination, and in view of Mr Pierce's detailed response to them, it would not be fair to attach great weight to their evidence. However, Mr Johnson seemed to me a credible witness on this point. As I have said, his evidence is supported by the rate at which he charged Coutts for Mr Pierce's work, and by the fact that the version of the manual prepared by Mr Pierce was in fact rejected by Coutts.

59. Finally, I turn to the circumstances in which Mr Pierce ceased to work for Promco. Mr Pierce says the issue of his resignation from IPR was first raised by Mr Johnson in May 1995, but the first discussion of any substance seems to have been in August or September in Switzerland. According to Mr Pierce, Mr Johnson asked him to resign as a director of IPR and to relinquish his shareholding to continue to work with Promco on the Olivia project. Before returning to London in mid-September, he confronted Mr Johnson about the apparent strain in their relations. Mr Johnson made clear that he did not want him to be further involved and asked him to resign his directorship and send the formal resignation to his brother on his return. Mr Pierce said that he wanted a proper return based on the value of his contribution; Mr Johnson offered him what he calls a "derisory" offer of about £2-3000.

60. Mr Johnson agrees that there was a conversation in September in Geneva about Mr Pierce's future involvement. He says that he thought Mr Pierce had already agreed to resign as a director, because he had been unable to develop any leads that could result in sales through IPR in the UK. Given the low quality of the work on the draft manual, there was no further contribution he could usefully make to Olivia in Switzerland. In September he asked him to resign from IPR and terminated his services to Promco. He says that Mr Pierce agreed to resign from IPR and submitted his final invoice to Promco which was paid into his Swiss account.

61. There had in the meantime, unknown to Mr Pierce, been some activity within IPR. On 28th April 1995, Simon Johnson as secretary of the company had notified Companies' House of the appointment of Peter Johnson as a director. On 13th July 1995 a resolution was purportedly passed increasing the share capital of the company from £1,000 to £1million by the creation of 999,000 ordinary shares. Mr Pierce was not a party to either act. Mr Simon Johnson acted on the initiative of his brother. He says he tried to get hold of Mr Pierce and was unable to do so. He accepts that those purported resolutions were irregular.

62, In August 1995, Promco made two substantial payments into IPR's account. According to the later correspondence, the payments were £52,699.48 on 25th August and £106,195.24 on 31st August. On 24th October, Simon Johnson as director of IPR gave instructions for £100,000 from the account to be transferred to Peter Johnson's personal account at Coutts and Co, Park Lane. A letter describes the background as follows:

63. It seems that arrangements had also been made with the bank to remove Mr Pierce's name from the bank mandate and substitute that of Mr Peter Johnson.

64. In evidence before me Peter Johnson said that the money had been put into IPR with a view to launching his activities in the United Kingdom. He also had obligations to Anite to provide access to the source code within the UK. The equipment necessary for this, which would have been located in his brother's office, would have cost some £30,000. In the event he provided the source code equipment direct to the client. Although the share capital had been increased to £1million, the intention had been to issue 50,000 shares.

65. On 3rd January 1996 Mr Pierce met Simon Johnson. He had by that time made a search at Companies' House and discovered at least some of the actions which had been taken without his approval. Mr Pierce says that the purpose of that meeting was to enable him to inspect the books of the company. Simon Johnson understood that the purpose of the meeting was to enable Mr Pierce to sign the Companies' House form of resignation, having been informed by his brother that Mr Pierce had agreed to resign. He says that as he did not have the necessary form, Mr Pierce agreed to obtain one and send it by post. In the meantime Mr Pierce was shown the IPR bank statements. They showed the payments to which I have referred, but no other payments other than the start-up costs, which had been repaid to Simon Johnson who had made the arrangements.

66. Mr Pierce then consulted solicitors, Charles Russell and Co. On 25th March 1996 they wrote to Lloyds Bank referring to the fact that the mandate had been changed without his knowledge and to other irregularities and claiming that the sum of £100,020 had been "mis-appropriated from the company's account." This resulted in a letter from Lloyds to the Johnson brothers indicating that the account would be temporarily "frozen" until the dispute was resolved. There was a meeting on 12th April at Charles Russell's offices, called by Mr Pierce as a directors' meeting. Mr Pierce and Simon Johnson were present and also Jonathan Hart of Charles Russell, who prepared a minute. His minute records agreement that the resolutions appointing Peter Johnson as a director, and increasing the share capital, were not valid. Mr Pierce asserted that IPR had been formed to own the intellectual property rights in Olivia but this was denied by Simon Johnson. There was discussion of the purpose of the money introduced by Peter Johnson. Simon is recorded as having said that it was a loan from Promco in anticipation of the company commencing business. He said that the company had no assets, and no liabilities apart from the loan from Promco. He said that provided the costs incurred by the company in formation and the monies and accounts were returned, he would transfer his share at no cost to Mr Pierce and would resign from the board.

67. There was further correspondence between solicitors, not all of which has been shown to me. This led on 17th July to Charles Russell writing to the bank saying that, having received confirmation from the Johnson brothers as to the nature of the payments into the account, and of the fact that Peter Johnson was the beneficial owner of Promco, and the payment of £100,020 was a repayment of part of a loan from Promco -

68. On 26th July Simon Johnson wrote to Mr Pierce seeking agreement for the return to Peter of the remaining monies held in the IPR account. Mr Pierce replied on 6th September indicating that he was not willing to agree to the release of the funds until his claim against Promco and Peter had been settled. He said:

69. There, as I understand it, matters have rested so far as the account is concerned. Mr Pierce's solicitors sent a letter for action on 10th October 1996. Although I have not seen the letter, I understand that it raised in substance the contentions which are repeated in the Statement of Claim. The present proceedings were commenced by writ dated 21st November 1996. Although the pleadings raise no specific issue relating to the IPR account and IPR itself is not a party, both Mr Pierce and Mr Johnson expressed a wish that I should, as far as I felt able to, give a ruling which will enable the dispute over that account to be resolved. As to Olivia itself, the present position is that Coutts acquired the system for a modest "one-time licence fee" and they then paid for the further development of the product to the specifications they provided. There is no current agreement for any annual licence fee revenues from Coutts. No new sales of the Olivia product have been realised by Promco in spite of efforts by Promco and their partner in the UK, Anite.

70. As has been seen, Mr Pierce's pleaded case relies principally on four alternative contentions:-

71. The first two heads can be considered together. The representations are in fact put forward not as founding a contract, but as creating some form of estoppel. The alleged joint venture is said to result in each of the joint venturers being under a fiduciary obligation to account. Without embarking on a precise legal analysis of these alternative claims, it seems to me that they must fail on the facts. At the very least, Mr Pierce needs to be able to show some mutual understanding, express or implied, intended to have legal effect, governing his relationship with Mr Johnson. The evidence of the representations on which he relies not only does not support such a claim, but negates it. Mr Pierce's own evidence makes clear that he was willing to work for Mr Johnson without any formal commitment. He worked on the EBS report for nothing and there has never been suggestion that he should be paid for that. In relation to the Olivia project, he worked in return for the payments made (whether categorised as fees or expenses), and in the hope that if Olivia were successful Mr Johnson might give him increased participation. The nature of any such participation was never defined. Both Mr Johnson and Mr Pierce were experienced businessmen. If they had intended a legally binding commitment one must assume they would have taken steps to put it in a recognisable legal form.

72. The case based on joint authorship would only have prospect of success if there were any convincing evidence that Mr Pierce made a substantial contribution to the "detailed idea" or the "programmes structure" of the Olivia programme, in the sense described in the cases reviewed above. For the reasons already given, I am not satisfied that he made any such a contribution. Although Mr Pierce made a more direct contribution to the English version of the User Manual, that was in the event rejected. As both parties agree, it is of no commercial value. In any event, whatever contribution Mr Pierce made, he did so as a member of the Promco staff, and there is no basis for the suggestion that he was intended or expected to obtain a distinct property right in the result.

73. Finally, there is the claim based on quantum meruit. In my view any such claim is negated by Mr Pierce's own evidence. He was paid by Mr Johnson during the period that he worked on Olivia. Whatever the correct categorisation of those payments, there was no suggestion at the time that Mr Pierce thought he was entitled to any further payment. The burden of his evidence is not that he expected to be paid any additional fees, but that he was working in the hope of future participation in the success of the project. Indeed, even after the dispute with Mr Johnson began at the end of 1995, there was no suggestion that he was entitled to any additional fee for the work he had actually done, until the letter before action in these proceedings.

74. It follows that Mr Pierce's claim as pleaded must fail.

75. There remains the question of the money left in the IPR account. As I have said, there is no issue formally before me on this aspect of the case. IPR is not a party, and I cannot make any order binding directly on it. There were undoubted irregularities in the conduct of IPR during 1995. These are no doubt explicable, though not excusable, by the fact that Peter Johnson regarded the company as effectively his own, and his brother and Mr Pierce as his nominees. What however is clear on the evidence before me, and was in effect acknowledged by Mr Pierce's solicitors in 1996, was that Mr Pierce has no claim of any kind to the money in the IPR account. I note that Mr Pierce's refusal to agree to release this money, in his most recent letter, was simply to protect his claim against Promco and Mr Johnson in these proceedings. In effect he was acknowledging that it was money to which they were entitled. In those circumstances I trust that he will now lend his signature to whatever document is necessary to enable the bank to release the money to Promco.

76. I therefore dismiss the claim. Subject to any submissions by the parties, the plaintiff will pay the defendants' costs in accordance with the normal rule (save that for any period in which Mr Pierce was in receipt of legal aid, the order will be subject to the standard legal aid proviso).