Scottish Court of Session Decisions

The background to this matter is that the pursuers have been engaged in manufacturing a device known as a brake fluid tester since August 1994. They claim entitlement to do so by virtue of an agreement between themselves and one Lionel William Mills, dated 9 May 1994, whereby the latter assigned certain patent rights to them. It is claimed that Lionel William Mills had acquired those rights by an agreement dated 21 January 1993, under which the first defender and Liquid Levers (Innovations) Limited assigned those rights to him. It is also claimed that in addition to assigning their whole right, title and interest past, present and future in the said patent rights, the assignors also conferred upon Lionel William Mills inter alia full and exclusive benefit of all improvements and all know-how relating to these patent rights. However, the first defender in this action has raised proceedings in this Court in which it is alleged that the pursuers in this action are, by virtue of their manufacturing operations, infringing UK Patent No 2278321, dated 1 March 1994, granted in favour of the first defender on 20 February 1996 and published on 27 March 1996 for a device for measuring the boiling point of a fluid known as a brake fluid safety meter. The pursuers in the present action are defending that action and have lodged a counter-claim in it seeking revocation of that patent. That action is, as yet, undetermined.

In the present action, the pursuers seek damages from the defenders in respect of certain allegedly defamatory statements said to have been made by the first and second defenders, details of which are set forth in Condescendence III. They also seek four separate interdicts, the terms of which are set forth in Conclusions 2 to 5 inclusive; Two of these are sought against the first defender and two against the second defenders; interim interdicts have also been sought.

On 8 May 1996, the Lord Ordinary pronounced an interlocutor granting interim interdicts in terms of these conclusions. That interlocutor was in the following terms:

By Minute for the Pursuers, 12 of process, lodged on 4 November 1998, the pursuers brought proceedings against the second defenders for alleged breach of the interdict granted against the on 8 May 1996. In Answers, 15 of process, the second defenders admitted that they were in breach of the interim interdict pronounced against them on 8 May 1996, subject to the explanations set forth therein. By interlocutor, dated 13 November 1998, the Lord Ordinary, in respect of the admission of the second defenders in their Answers, found them guilty of breach of the interim interdict granted on 8 May 1996 and fined and amerciated them in the sum of £1,000.

By a Minute for the Pursuers, lodged on 1 December 1998, 17 of process, the pursuers have alleged a breach of the interim interdict granted on 8 May 1996 on the part of the first defender. I refer to the Statement of Facts in that Minute for the details of the allegations made. Answers for the first defender to that Minute, 19 of process, were lodged on 15 January 1999, in which breach of that interim interdict is denied. I refer to the Answers for their terms. On 9 February 1999, the Lord Ordinary appointed this Minute and Answers to the procedure roll in respect of the first defenders first, third and fourth pleas-in-law.

When this matter came before me in the procedure roll on 28 April 1999, counsel for the first defender invited me to dismiss the Minute by sustaining plea-in-law 1for the first defender; in any event, pleas-in-law 3 and 4 for the first defender should be sustained. In support of her motion, counsel for the first defender submitted that, in a Minute for breach of interdict, there had to be relevant and specific averments of a breach of the terms of the interim interdict, as set forth in the relevant interlocutor. There were no such averments here. The substance of the pursuer's allegations was to be found in paragraph 4 of the Minute. It appeared to relate to a letter, dated 29 September 1998, by Mr Jeremy Farrow, a director of the second defenders, to a company known as Allied Signal Limited. In paragraph 5 of the Minute, the pursuers explained that this letter had been the basis for their earlier Minute for breach of interdict, which had resulted in the outcome already described. Counsel for the first defender drew attention to the averments made on behalf of the pursuers in paragraph 5 of the Minute, which are in the following terms:

Counsel for the first defender said that it appeared that the pursuers' basis for their allegation of an alleged breach of the first interdict against the first defender was that he had been shown a draft of the letter of 29 September 1998 and that he had "knowingly permitted" that letter to be written in breach of the interim interdict. It was submitted that that was an irrelevant basis for an allegation of breach.

Turning more particularly to the allegations made by the pursuers in paragraph 5 of the Minute, counsel for the first defender made a number of submissions. In the first place, it was contended that, in that paragraph, there was no averment that the first defender had been involved in the commission of any breach of the interim interdict concerned, since all that was said was that the first defender had "knowingly permitted" Mr Farrow to write the letter concerned. That did not amount to an allegation of a breach of interdict on the part of the first defender.

In the second place, it was argued that there had been a failure on the part of the pursuers in their Minute to aver the first defenders' capacity at the material time. It was contended that that capacity was a material consideration, because, if it was as a director of the second defenders, then the matter would be res judicata, the second defenders having already been punished by fine for the breach of interdict constituted by the letter of 29 September 1998. It had not been said how the first defender had had responsibility to Mr Farrow or the second defenders. If he had been acting as a director of the second defenders, he would have been acting on behalf of that company.

In the third place, if the pursuers were correct, they were endeavouring to transmute the interdict concerned into one requiring positive action from the first defender. In other words, the first defender was being alleged to have breached an interdict on account of a failure to act, presumably to act to prevent the sending of the letter of 29 September 1998 in the terms in which it was sent. That would be incompetent. In that connection, reference was made to Wemyss v The Adrossan Harbour Company (1893) 20 R. 500 at p. 505; also to The Law of Interdict, Scott Robinson, 2^nd Edition at p. 3.

In the fourth place, the pursuers were Alba Tools Limited, yet the letter concerned related to Alba Diagnostics Limited. It was accepted that, since the date of the grant of the interim interdict, the pursuers had changed their name to Alba Diagnositics Limited. However, that circumstance meant that the interdict concerned had fallen. In this connection reference was made to The Overseas League v Taylor 1951 S.C. 105.

In the fifth place, the specification of the pursuers' averments in the Minute was criticised. Firstly, as had already been submitted, the pursuers did not make clear what the first defender ought not to have done. The words "knowingly permitted", were fatally vague. Secondly, the basis of the pursuers' allegation was that "before sending the letter of 29 September, Mr Farrow showed a draft to the first defender". Nothing had been averred concerning the terms of the draft. In particular it was not averred that the terms of the draft were identical with those of the letter which had been sent. Unless that had been averred, the allegation would be irrelevant.

Turning to the second allegation, made in paragraph 6 of the Minute, counsel for the first defender submitted that it was fatally unspecific. In particular, there was no averment as to what the first defender was alleged actually to have said to Eric Usted, of Magna Tech Industries Limited, one of the pursuers' customers. Furthermore, there was no averment as to how the statements alleged to have been made by the first defender amounted to a defamatory statement. All that had been said was that the representations concerned were false. However, the interdict was directed against the making of false and defamatory statements. In any event, the alleged statements were so vague as to be incapable of founding a relevant allegation of breach of interdict.

Counsel for the first defender next proceed to support the first defenders' plea-in-law four in the Answers. This was a plea of personal bar. It was founded upon the circumstance that there had already been a Minute for breach of interdict against the second defenders. The Answers lodged in that proceeding had come to be the basis of the present Minute, as appeared from the averments in paragraph 5. The pursuers had chosen not to deal with the present matter in that earlier process. That was prejudicial to the interests of the first defender, because he had been unable to comment upon what the second defender had been saying concerning his position. The pursuers were now relying on what had been said in the earlier process, to his prejudice. The first defender should have been made a party to the first proceeding for breach of interdict.

Finally, counsel for the first defenders referred to the contents of paragraph 7 of the Minute, in which there was an averment of contempt of court, it being submitted that the letter concerned constituted a contempt of court, in that it bore upon the merits of a dispute which was sub judice. That averment of contempt of court was irrelevant. The present proceedings were for the punishment of an alleged breach of interdict. Any matter constituting a contempt of court was the responsibility of the court which was dealing with the dispute which was sub judice.

In the whole circumstances, the Minute should be dismissed by the sustaining of pleas-in-law 1, 3 and 4 for the first defender.

Counsel for the pursuers, in reply, moved me to allow a proof before answer on the Minute and Answers. He began by drawing attention to certain features of the background to the present proceedings. He said that the action here was one concerning the making of defamatory statements and threats, as appeared from Conclusions 2 to 5 inclusive. The general allegation was that the defenders were alleged to be trying to "take" customers from the pursuers. The pursuers and the second defenders were in direct competition in relation to the manufacture of brake fluid meters. There was another major litigation in process, namely the patent action referred to in the pleadings, which was apparently at avizandum. It had been raised by the first defender, who was the holder of a patent which he said had been infringed. In that litigation, there was a counter-claim for the revocation of the patent. Furthermore, certain contractual issues were involved. The proof in that action had been divided into two parts: (1) the alleged infringement and the contractual issues and (2) the matter of revocation. This latter part of the case remained underdetermined. Accordingly, it was asserted that it was clear that the first and second defenders stood to gain from the making of threats relating to legal proceedings. The second defenders manufactured the first defenders' invention. He submitted that there was a strong prima facie inference from the letter, dated 29 September 1998, 18/2 of process, that the first defender was "behind it". The letter was written to a Mr A. Lewis, of Allied Signal Aftermarket Europe Limited. That was the same company as was the recipient of the letter dated 21 March 1996, 18/4 of process, which was one of the letters which had constituted the basis for the granting of the interim interdict in the first place. It was instructive to examine the terms of the letter of 29 September. In paragraphs 2 and 3 thereof, reference was made to the first defenders' patent. In paragraph 1 on page 2 of the letter, a threat of proceedings appeared, about which there was no dispute. One had to ask the question, who was it who could bring infringement proceedings. The answer had to be that it was the first defender. The threat was to pursue the purchasers of allegedly infringing goods; it was plain that the only person who could do that was the first defender. Accordingly the threat contained in the letter must have been made directly or indirectly by or on behalf of the first defender. It was plain from the pursuers' averments that the letter concerned had been shown to the first defender. It was apparent from the averments made in paragraph 5 of the Minute that the problematic terms of the letter appeared in the draft as well as the final version. Furthermore, it was apparent from the Answers of the second defenders in the proceedings for breach already dealt with, 18/1 of process, and in particular paragraph 5(c) thereof, that there was a close connection between the first defender and Mr Farrow. It was there said that the first defender held certain files of the second defenders and had made certain statements to Mr Farrow. The substance of the pursuers' allegation against the first defender was that he had "turned a blind eye" to the action of Mr Farrow; He had acquiesced in Mr Farrow's action. It was accepted that, in substance, the first defender was here being indicted for failing to take action, as opposed to taking objectionable action. He had gone along with what had been done by Mr Farrow. It was submitted that if an interdict was against "knowingly permitting" something to be done, such an interdict could competently be granted. In that connection reference was made to Muirhead v Douglas 1979 S.L.T. (Notes) 17, a criminal case concerned with contempt of court. If the first defender had protested to Mr Farrow in relati

In relation to the allegation against the first defender of "knowingly permitting" Mr Farrow to write the letter, the factual background had to be taken into account. It was of significance to note that in the second defenders' Answers to the first Minute for breach 18/1 of process, it was said that the first defender had taken home files belonging to the second defenders. The first defender had failed to tell Mr Farrow of the existence and terms of the interdict. There was such a degree of carelessness on the part of the first defender as to amount to disobedience.

An alternative way of viewing the situation was to characterise the first defenders' actions as aiding and abetting the breach of the court's authority by the second defenders through Mr Farrow. In that connection reference was made to Dudgeon v Thomson & Another (1876) 3R. 974, in which it was recognised that the partner of a person who had been interdicted might be guilty of contempt of court. In Harvie v Ross & Another (1886) 14R. 71, it was decided that it was competent to bring the partner of a person interdicted against infringing a patent into a process for breach, upon the ground that he had aided and abetted the alleged breach. On the other hand, in Director General of Fair Trading v Buckland [1990] 1 W.L.R. 920, it was held that an order for committal for contempt could only be made against an officer of a company, if that person had been responsible for the company's breach of the court order so as to be liable under the general law of contempt; that a director of a company who, although aware of an order or its terms, remained passive, in the sense that he did nothing to interfere with the administration of justice nor wilfully ignored any breach of the order, was not, by virtue only of his office and his knowledge liable to committal for contempt. However, in the present case, it was submitted that the first defender had crossed the line by aiding and abetting the breach of interdict on the part of the second defenders.

Turning to the argument of the first defender based upon the concept of res judicata, it was submitted that this contention was unsound. The principal of res judicata applied only where an issue between the same parties had previously been the subject of judicial decision. In this case, the earlier breach proceedings involved the second defenders. In this instance, the first defender was involved. In these circumstances the principal of res judicata could have no application.

As regards the submission based upon the circumstance that the second defenders' name had been changed, it was argued that the change of name of the company was of no significance. The fact was that the same company was involved throughout. Accordingly it was wrong to say that the interdict had fallen on account of the change of name. Finally, as regards the pursuers' argument relating to specification, it was submitted that the pursuers' averments were sufficient for an inquiry.

Counsel for the pursuers then turned to deal with the allegation set forth in paragraph 6 of the Minute. The question here was whether the words quoted in this paragraph were capable of bearing a defamatory meaning. In this case the person said to have been defamed was a corporate body. It was submitted that to say that a corporate body had infringed a patent would be defamatory. It was an allegation of disgraceful conduct. The whole language quoted was capable of bearing a defamatory meaning, even though the passage relating to the award of a "factory" was an expression of opinion. The whole statement added up to being a factual statement relating to the second defenders' position.

The first defender had addressed an argument of personal bar to the court. It was submitted that there was no substance in this argument. In particular, the circumstances of the present case relied upon for this purpose did not meet the legal requirements for the operation of the principal of personal bar explained in Gatty v Maclaine 1921 S.C. (H.L.) 1. Here, there was no representation, by words or conduct in the part of the pursuers, which had been followed by action on the part of the first defender to his prejudice. The reality was that the first defender was at liberty to defend himself against any allegations of breach in the present proceedings.

Finally, the point raised by counsel for the first defender relating to contempt of court, embodied in paragraph 7 of the Minute was unsound. However, it was not suggested that this part of the minute possessed an independent significance.

In reply, counsel for the first defenders made two points. Firstly, in paragraph 5 of the Minute all that was alleged was that Mr Farrow had showed a draft of the letter to the first defender, who had "knowingly permitted" his fellow director to write the letter concerned. That was quite insufficient to show that the first defender could be held responsible for the actions of his fellow director. Secondly, in paragraph 6 of the Minute, dealing with alleged defamation, there was in fact no mention of defamation. All that was said was that observations reported in a facsimile transmission were untrue. There was no averment of the words actually said to have been used by the first defender. Furthermore, there was no explanation as to why the statements allegedly made were defamatory; no innuendo of any kind was averred.

The pursuers' allegations of a breach of interdict are focussed in paragraphs 4, 5 and 6 of their Minute. Paragraphs 4 and 5 are concerned with the alleged effect of the sending by Mr Farrow, in the circumstances averred, of the letter of 29 September 1998, the material terms of which are quoted in paragraph 4. As I understood it, there was no dispute that the terms of this letter contained threats of the kind described in Conclusion 4 of the principal action and in the interlocutor of 8 May 1996, in which interim interdict was granted. Against that background, the allegation made in paragraph 5 of the Minute is to the effect that the first defender has breached that interdict in that he "knowingly permitted a fellow director to write a further letter to the pursuers' customers in breach of the interim interdict." That allegation is in turn based upon the contents of the second defenders' Answers lodged in response to the pursuers' minute for breach of interdict directed against them, the material part of which is quoted in paragraph 4. It is there averred that:

Thus the pursuers' allegation of breach of interim interdict made against the first defender seems to me to amount to a claim that the first defender, in the circumstances described, took no action to prevent Mr Farrow sending the letter. In other words, the suggestion is that the first defender has breached the interdict concerned by refraining from some unspecified action. In my opinion, such an allegation does not constitute a relevant averment of breach of the interim interdict concerned, which prohibits the first defender or

I am confirmed in this conclusion by observing that there is no averment made by the pursuers to the effect that, on the occasion on which Mr Farrow showed a draft of the letter to the first offender and to Mr Walker, he was seeking the first defenders' approval of its terms, or his authority to send it. In any event, there is no averment to the effect that the first defender did anything in response to this approach. In these circumstances, it appears to me that the allegation that the first defender "knowingly permitted" Mr Farrow to write the letter is without meaningful content.

Looking at the matter in another way, the pursuers' suggestion appears to be that, in order to avoid breach of the interdict concerned, the first defender should have taken some positive action presumably to prevent the letter being written or sent in the terms concerned. However, the pursuers have made no averment as to what action they claimed the first defender should have taken in order to avoid the alleged breach. In my opinion, the pursuers' position involves the proposition that, in order to comply with the interdict, the first defender had to take a positive action. In my view, that contention is plainly in conflict with the principle of the law of interdict referred to by Lord McLaren in Wemyss v Ardrossan Harbour Company. If the pursuers' contention were correct, it would have the effect of transmuting the interdict into an order ad factum praestandum. In my view it would be quite wrong to interpret the interdict concerned in such a way as to result in the imposition of a positive obligation upon the first defender. In this connection I refer to The Law of Interdict, Scott Robinson,2^nd Edition at p. 3 and 4.

Counsel for the pursuers laid emphasis on the point that since the enforcement proceedings of the patent concerned would require to be taken by the first defender, any threat of such proceedings must necessarily be made directly or indirectly by the first defender. It appears to me that that proposition involves a non sequitur. In connection with this part of his admissions, counsel for the pursuers relied upon Muirhead v Douglas, a case dealing with contempt of a criminal court. I do not find the circumstances of that case of any assistance in the present context.

In an alternative approach to the matter, counsel for the pursuers attempted to characterise the position of the first defender as one in which he aided and abetted the breach of interdict concerned. In this connection reliance was placed on such cases as Dudgeon v Thomson & Another and Harvie v Ross & Another. While it would no doubt be a contempt of court for an individual to aid and abet a breach of an interdict on the part of another, one is still driven back to ask the question of what did the first defender actually do. The answer to that question, on the pursuers' averments, is nothing. In the light of what was said in the Director General of Fair Trading v Buckland, while the first defender was an officer of the second defenders, it is not said that he was responsible for their breach of the interdict concerned, which has already been dealt with. I do not consider that the first defender can be made liable for breach of interdict by virtue only of his office as a director of the second defenders and his knowledge of the interdict concerned.

For the foregoing reasons, I consider that counsel for the first defenders' submission that the pursuers' first allegations in paragraphs 4 and 5 of the Minute is irrelevant is correct. Counsel for the first defender, as I have narrated, made a number of other submissions in relation to those allegations. In my opinion, her argument to the effect that the present matter was res judicata on account of the determination of breach of interdict proceedings against the second defenders is ill-founded. As I understand it, it is a feature of the law of res judicata that the parties in the two litigations should be the same; that is plainly not the case here. Nor do I see any force in the contention based upon the pursuers' change of name. Notwithstanding that change of name, the pursuers, as a corporate body have remained unchanged. It appears to me that the situation dealt with by the Court in The Overseas League v Taylor is readily distinguishable from the present situation.

Turning now to the pursuers' second allegation of breach of interdict, contained in paragraph 6 of their Minute, the basis of the contention is a discussion, in which the first defender is averred to have been involved concerning the patent action in early November 1998 with one Eric Usted, of Magna Tech Limited, one of the pursuers' customers. The version of that conversation on which the pursuers now rely is said to have been contained in a facsimile transmission to the pursuers from Magna Tech Industries Limited. The terms of that facsimile are the subject of averments in paragraph 6. It is said of the representations concerned, said to have been made in the discussion, that they are false. The pursuers' averments thereafter state that, accordingly, the first defender has breached the interim interdict by making the said statement to the pursuers' customer. The interdict said to have been breached, of course, prohibited the first defender or anyone acting on his behalf or on his instructions

Counsel for the first defender criticised this part of the pursuers' case upon the basis that it did not contain any averments of what was actually said. For the present purposes, I am prepared to accept that the averments about the contents of the facsimile transmission are an accurate indication of what was said. However, counsel for the first defender went on to argue that there was no averment that the statements made were defamatory. Accordingly, there was no relevant averment of a breach of interdict concerned. With that simple submission I agree. All that is said is that certain statements were made concerning the litigation involved which were false. In my judgment, it does not follow from the fact that those statements are false that they are also defamatory. Indeed, I do not consider that the statements concerned are in themselves defamatory. It is I suppose conceivable that defamation might arise as an issue on the basis of some innuendo from those statements. However, the pursuers have made no averments whatsoever concerning the matter of any possible innuendoes. In these circumstances my conclusion is that the allegation contained in paragraph 6 of the Minute is irrelevant.

Counsel for the pursuers submitted that the question was whether the words concerned were capable of bearing a defamatory meaning. He said that the statements averred to have been made implied that the pursuers had infringed a patent, which was a disgraceful allegation. However, the statements themselves do not involve such an allegation. Any such allegation would require to be developed by means of an innuendo, in my opinion.

During the course of the argument, counsel for the first defender, invited me to sustain plea-in-law 4 for her client, a plea of personal bar. In connection with that aspect of the case, I am in agreement with the submission of counsel for the pursuers, which was to the effect that this plea was misconceived. In my opinion, a plea of personal bar cannot be sustained in the absence of some representation, upon the basis of which, the position of another party is changed to their prejudice. In the present case, no relevant representation was identified by counsel for the first defender, nor was any prejudice; the first defender is plainly at liberty to defend himself in the present proceedings against allegations of breach of interdict. The fact that he was not brought into the proceedings initiated by the earlier minute for breach, in my opinion, has not resulted in prejudice to him in any way.

Finally, counsel for the first defender criticised the averments in paragraph 7 of the Minute, which suggest that the letter of 29 September 1998 also constituted a contempt of court, in respect that it bore upon the merits of a dispute which was sub judice. It is unnecessary for me to express any opinion on those matters, since counsel for the pursuers made clear that he had did not suggest that those averments had any significance independent from the substance of his Minute, with which I have already dealt.

In the whole circumstances, I shall sustain plea-in-law 1 for the first defender and dismiss the pursuers' Minute.