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Cite as: [2005] ScotCS CSOH_119, [2005] CSOH 119

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Frost & Anor v. Cintec International Ltd [2005] ScotCS CSOH_119 (09 September 2005)

OUTER HOUSE, COURT OF SESSION

[2005] CSOH 119

A1316/03

OPINION OF LORD McEWAN

in the cause

MARTIN FROST and JOHN PARKES

Pursuers;

against

CINTEC INTERNATIONAL LIMITED

Defenders:

________________

Pursuers: Mr Parkes, Party Litigant

Defenders: Murphy, Q.C., Shepherd & Wedderburn, W.S.

9 September 2005

[1] In this action the pursuers claim that they are inventors and developers of "... explosive containment devices ..." which inter alia can be used in wartime against terrorism. They say they have a number of patents in relation to these inventions, and that the defenders have in various ways infringed these rights. When the case came before me only the second pursuer had an interest. The first pursuer had abandoned his interest. As can be seen the defenders' address is in Wales and the matter argued to me concerned only whether there was jurisdiction. Mr Parkes appeared for himself but took instruction in court from time to time from a Mr McDonald. I allowed this in view of certain earlier proceedings in the Chancery Division between the same parties where Mr McDonald had been allowed as a "MacKenzie friend".

[2] For the defenders Mr Murphy pointed out that at the date of this hearing the second pursuer remained sequestrated and his permanent Trustee was the Accountant in Bankruptcy. He had decided not to involve himself in the present proceedings. Although the defences were brief there was only one point to argue. The defender was domiciled in Wales and the pursuer had not relevantly averred any basis for jurisdiction in Scotland. He moved me to sustain his only plea and to dismiss the action.

[3] Counsel said that the domicile of a company was its seat. He referred me to the Civil Jurisdiction and Judgements Act 1982 ("the Act") sec. 42. In relation to particular parts of the United Kingdom that was dependent upon a number of factors viz where its head office was, its registered office, its place of business or where its central management and control were exercised. All of these could be in separate parts of the United Kingdom. In the present case the pursuers' pleadings disclosed only an address in Wales and there was nothing to suggest anywhere else. In that situation the pursuer could only succeed if he could demonstrate an exception to the general rule; and for that it was necessary to consider Sec. 16 and Schedule 4, as they applied to civil and commercial matters.

[4] Counsel then looked at the Schedule in some detail. He read Rules 1 and 2 and pointed out how exceptions to the normal rule can arise. There were eleven of these and he looked at, in order to eliminate, Rules 3(a), 11(c), 12(1), 13(1) and (2). There was no question of performance of any contract in Scotland (3(a)) nor did the case concern the validity of any entries in public registers (11(c)). There were no circumstances to instruct prorogation (12(1)) and merely to enter appearance as had happened here was not enough. Entering appearance was only to challenge jurisdiction (13(1) and (2)). There was some confusion over the granting of a warrant on 2 July 2003 by Lord Bonomy. That was done without the defenders being present or represented and could not confer jurisdiction. The decision to grant it was made per incuriam in any event. The further exceptions to jurisdiction provided in Schedule 5 Rule 2 did not apply either as the present case was not about the registration or validity of patents. Nor could it be said that this was a protective application (Rule 16).

[5] Following from that counsel then took me to another action (now concluded) between the same parties in England. What had happened was that the present defenders had as plaintiffs, raised proceedings in England. The pursuers were the defendants and the case was a "threats" action over the Patent. The action was defended and was heard over several days by Laddie J.. The defendants counterclaimed, alleging infringement. In the result the plaintiffs were wholly successful and the defendants' counterclaim failed. They also failed before Rix L.J. and leave to appeal to the House of Lords was refused. Substantial costs were awarded against the defendants. Mr Murphy said that the Scottish action before me was an attempt to relitigate the issues tried in England. Counsel then referred me in some detail to the Opinion of Laddie J. and Rix L.J. to which I will return.

[6] Reverting to the Record, counsel drew attention to a number of matters. There was no mention of any patent infringement in Scotland and the letter of the pursuers in Article 1, when fully read, was merely a unilateral document. The reply by the defenders' agents created no contract and instead gave clear warning to the pursuers not to threaten their clients.

[7] When he came to reply the second pursuer did not attempt to meet the specific points made by Mr Murphy. Prompted by Mr McDonald he said that the Scottish action was first in Court and could not be affected by the London proceedings. He referred me to various passages in the Opinion of Rix L.J., pointing out that some of the same correspondence was referred to in both actions. He also quoted from argument he said was presented to Laddie J.. The document he had was not made available to me at the hearing but with my permission was to be handed in later. I will return to it. He also said to me that not all of the defenders' products were the subject of the English action. Finally he referred me to the extradition case of Wright v Governor of Saughton Prison 9 May 2003 (unreported).

[8] I now return to look at the Chancery action sub nom Cintec v Parkes and Frost (heard 24 to 30 September 2003) and judgement 2 October 2003. In that action the plaintiffs alleged that the defendants were making unjustifiable threats of patents infringement against them and third parties. The plaintiffs sought declaration, injunction and damages. It is not necessary for present purposes to go into the details of the particulars of the claim. What is of importance is to note that the defendants counterclaimed for an infringement of their patents rights. After a five day proof the plaintiffs succeeded and the counterclaim failed. Costs were awarded against the defendants.

[9] I do not intend to refer to the whole of the Opinion of Laddie J. save to note the following. At paragraphs 10/11 he expresses some surprise at the issue of the Scottish warrant when the plaintiffs were clearly not a Scottish corporation (see also para. 14). The defence at the trial was one of "justification". After proof all claims for actual infringement failed (para. 62, 66, 67, 70, 74 and 75). The trial judge (80 to 83) was very critical of the way the defendants conducted the defence, both as to timing and representation. From what I was told at the debate the action before me is an attempt to relitigate many of the matters now decided in the Chancery action.

[10] The defendants then sought to appeal and at this stage Mr McDonald appeared for both of them as a MacKenzie friend. Rix L.J. (No. 7/12 of Process) considered jurisdiction (paras. 5 to 7) and concluded, in my respectful view correctly, that the two actions were not the same. It is important also to note what he said at paras. 11 to 16 to the effect that the defendants were not allowed to appeal the merits (see 7/10) and did not appeal jurisdiction which had been the subject of a decision by Laddie J. earlier (see 7/7). Leave to appeal to the House of Lords was refused (7/14).

[11] In my opinion the defenders' arguments must be upheld for the reasons advanced, and not contradicted, in argument. I made avizandum in the case on 7 July. On 13 July the pursuer handed in further documents to my clerk and (with a covering letter) on 21 July sent further documents to my clerk. Neither of these seems to be the note of arguments to Laddie J.. Both sets are photocopies of cases. Plainly Mr Murphy never saw these and might have wanted to comment on them. Rather than delay matters, and put the case out By Order for a further hearing I have decided to look at the cases. If they are to be relevant and important I will have to allow the defenders a chance to comment. Before doing so, I first look at Wright which was referred to in Court. The case given to me concerned extradition of two persons from a Scottish prison to Estonia to face drugs charges. The issue before the Divisional Court was whether the English writ of habeas corpus could apply to Scotland. Unsurprisingly, Scott Barker L.J. held it could not. The opinion of the Court is self explanatory and needs no further comment from me. Leave to appeal to the House of Lords was refused.

[12] The first extra case given to me is Haji-loannu &c v Frangos [1999] EWCA CIV 1148. That case, which had a very expensive and glamorous background, was basically about a contract to set up a son-in-law as a shipping magnate. I was, of course, not addressed on the relevance of this case by the second defender. Having considered it, it does not seem to me to be in point. Although jurisdiction was an issue, it concerned the residence of an individual. A number of important European cases were cited to the Court of Appeal none of which was before me. There was also a substantial argument on forum non convenius (not an issue here). Next is Tavoulareas v Tsauliris [2004] EWCA CIV. 48. The case appears to relate to a claim for money advanced some thirteen years earlier and the issue was whether the English courts and the Greek courts had first been "seized" of the matter. The case is not in point for a number of reasons. Although the point was made to me it was never developed. Secondly the decision of Laddie J. on jurisdiction was not appealed. Thirdly the case before me is not the same as the case before Laddie J.. Also I am of the view that the mere granting of a warrant in the case before me is not decisive of jurisdiction and must have been given without argument and certainly without the defenders being represented.

[13] Gantner Electronic v Bosch [2003] EUECJ C-111/01 related to alleged non-payment for the sale of clocks. The buyer alleged set off for breach of contract. The conflict was between the Dutch courts (set off) and the Austrian courts (unpaid price of goods supplied). The case seems to be referred to for the proposition that in considering the questions of whether the subject matter of claims is the same only the contention of the applicant can be considered. Even if this is correct, it is nothing to the point for present purposes as no such argument was addressed to me.

[14] In the copies given to me passages are highlighted or underlined and it seems to me that these are being looked at completely out of context and unrelated to the facts of the case before me.

[15] In C.H.W. v G.J.H. [1982] EUECJ R-25/81 the questions related to intellectual property, and the use to be made of a particular document. A Dutch court had made a reference for a preliminary ruling. The decision seems to be inter alia that a party could both challenge jurisdiction and also argue a substantive challenge on the merits. That is not what has happened in the present case, where jurisdiction is the only issue before me. The case is then not in point. That deals with the first set of cases handed in. One further case came with the second defender's covering letter of 21 July. It is Societe Eram Shipping Co. v Hong Kong and Shanghai Banking Cpn. [2003] UKHL 30. The case did concern jurisdiction but in a very special sense. (See para. 26). The respondents (Eram) who were Romanian, had obtained judgement in a French court on a demurrage claim against a Mr Wha and a company Soc. Oceanlink. The appellants (HKS Bank) owed these parties money in Hong Kong. What Eram did was to apply to the English courts for a third party debt order to secure the payment to themselves from the appellant's indebtedness to the others. The problem was that if the Bank paid they might still have to pay twice in Hong Kong (see paras. 5, 6, 7, 8, 9, 24, 26, 28 and 30). (See also 60 to 68).

[16] The type of jurisdiction discussed in this case is a world apart from the case before me. (See also para. 77.) The context is quite different (See paras. 84 and 106).

[17] What then is to be done about these late authorities. Two questions arise. In the first place I have not been given any notes of what was said to Laddie J. or any of his alleged responses. It was suggested that he had made comments about the Act of Union of 1707. I now have to ignore any such suggestions. Secondly, for the reasons I have outlined in my summary of the cases put in after avizandum it is clear that none is in any way in point. Accordingly I do not propose to delay matters further by putting the case out By Order for further argument. I have little doubt that Mr Murphy would come to the same view on these cases as I have reached.

[18] I have already said that the defenders' arguments must be upheld. There are no averments to connect the defenders with Scotland. The fact that the action was allowed to proceed is not conclusive as I have noted. All of the points made in argument by Mr Murphy are valid and have to be upheld. In particular there can be no question of any contractual link. The letters averred in Article 1 plainly do not amount to a contract. There was no agreement in these letters to anything. The letter from the pursuers on 23 June 2003 was threatening and inter alia sought a payment. The defenders' agents' response two days later threatened legal proceedings. Any argument (and none came from the pursuer) that these constituted a contract to be performed in Scotland is not capable or worthy of further analysis.

[19] I will therefore sustain the defenders' only plea-in-law, and dismiss the action.