Bridge and Marine Engineering Pty Ltd v Taylor (No 2)
[2005] VSC 154
•12 May 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
INTELLECTUAL PROPERTY LIST
No. 8003 of 2001
| BRIDGE AND MARINE ENGINEERING PTY. LTD. (ACN 059 317 396) | Plaintiff/Respondent |
| v | |
| ROBERT TAYLOR AND AUSTRACK PROJECT MANAGEMENT PTY. LTD. (ACN 065 271 114) | Defendants/Applicants |
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JUDGE: | HARPER, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 30 MARCH 2005 | |
DATE OF JUDGMENT: | 12 MAY 2005 | |
CASE MAY BE CITED AS: | BRIDGE AND MARINE ENGINEERING PTY LTD v ROBERT TAYLOR AND AUSTRACK PROJECT MANAGEMENT PTY LTD (NO. 2) | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 154 | |
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PRACTICE AND PROCEDURE - Application for separate trial of questions pursuant to r.47.04 SCR – Duty of counsel to assist Court, especially given counsels’ immunity from suit – Relevant considerations – Whether release clause in agreement constitutes a complete answer to the plaintiff’s claims.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P.D. Corbett | Deacons |
| For the Defendants | Mr M.R. Pearce | McKean & Park |
HIS HONOUR:
On 21 December 2004 I delivered judgment in an application by the defendants to dismiss this proceeding for want of prosecution. The application failed. At the same time, I noted a submission by the defendants to the effect that they had an answer to each of three identified segments, or heads, of the plaintiff's claim. That submission had as its foundation a clause in an agreement to which the present litigants (and others) are parties. The agreement is, as the defendants' case is presented to me, in writing and entitled "Deed of Novation and Amendment". It is dated 9 December 1997; and this accords with the allegation, made by the defendants in paragraph 7 of their amended defence, that the agreement was made in or about December 1997.
The clause upon which the defendants principally rely is cl.3.1(a). I shall call it the “release and discharge” clause. The defendants submit that it contains a release and discharge which comprehensively covers each of the three heads of claim made by the plaintiff. It is in terms that do not allow for reproduction that is both exact and comprehensible; for example, it uses phrases such as “the service provider” and “the Austrack Group”, each of which require definition. So far as is relevant, however, its effect is that the plaintiff and a related company called Rowe & Thomas (NSW) Pty Ltd “hereby” release and discharge “the Austrack Group” (which is defined so as to encompass both the individual and corporate defendants, but also includes other corporations in the Group) “from all claims whatsoever” so long as those claims are ones which are “in respect of matters which occur or have occurred on or before the operative date” and which they have “or may have, but for this document, against … the Austrack Group arising from, incidental to or otherwise in connection with” not only ”the Port Project” but also certain nominated agreements themselves generated by or as a means of advancing that project.
The expression “the Port Project” is defined in the Deed of Novation and Amendment to mean “the development of a multi-user port facility at Walsh Point, Kooragang Island, New South Wales”. The “operative date” is, so the defendants contend, the date of an agreement called the “Assets Sale Agreement” which was made between members of the Austrack Group and a company called Sharvine Pty Ltd. The defendants maintain that the date of the Assets Sale Agreement, and therefore the “operative date”, is 9 December 1997. This happens also to be the date of the Deed of Novation and Amendment.
Clause 3.2 contains an exception to the release and discharge. It provides that that release does not extend to or affect any rights or obligations granted under an agreement called the "Technology Agreement". The latter is dated 12 January 1996. The parties to it are the plaintiff and the second defendant.
If the defendants are correct in their contention that the release and discharge contained in cl.3.1(a) covers each of the claims made against them by the plaintiff in this litigation, then ex hypothesi each of those claims must fail. In these circumstances, it seemed to me that the defendants had raised an issue which might be susceptible of resolution pursuant to r.47.04 of Chapter 1 of the Rules of the Supreme Court. The defendants agreed. By that rule, the Court may order (among other things) that any question in a proceeding be tried before the trial of the proceeding.
On 11 March 2005, I heard argument about whether such an order might be made in this case. To that end, I considered, in draft form, three questions which had been prepared by the defendants as being appropriate for disposition pursuant to r.47.04. Each question has as its subject matter one of the three heads of claim brought by the plaintiff against the defendants in this litigation. The first head concerns allegations by the plaintiff that the defendants have interfered with its intellectual property rights; the second, that the plaintiff lent the sum of $192,688.67 to the defendants or one or other of them and has not been repaid although repayment is overdue; and the third, that by a series of loan agreements made between the plaintiff as lender and the defendants or one or other of them as borrower or borrowers, the plaintiff lent to one or other or both defendants sums totalling $216,729.86. These also have not been repaid although repayment is overdue.
It may be helpful if I examine in a little more detail each of the three heads of claim. I take, first, that concerned with rights to intellectual property (paragraphs 4-13 of the second further amended statement of claim). The starting point is the proposition that Mr John Thomas was and is the plaintiff’s engineering manager. The plaintiff alleges that, in that capacity, he was the author of four original design sketches, called by the plaintiff “the Works”, and the inventor of three inventions which incorporated those works. One of the sketches is dated 3 January 1996; the others bears no date. Because all of them were made pursuant to the terms of his employment with the plaintiff, it argues that it thereby became the owner of the copyright in the works and is entitled, on the grant of a patent for any of the inventions, to have the relevant patent assigned to it. Yet when, on or about February 2000, patent applications were filed, it was not the plaintiff but the second defendant which filed them; and (according to the plaintiff) that defendant compounded this wrongful assertion of an interest in the relevant intellectual property by incorrectly and improperly naming the first defendant as the sole inventor of the inventions.
The second head of claim (being the subject of paragraphs 14-23 of the second further amended statement of claim) concerns $192,688.67 which the plaintiff alleges was lent to the defendants or one or other of them for use as a “tender deposit”. This, according to the plaintiff, was a payment required by Ampol Limited as a condition of its consideration of a tender put forward by the defendants for the assignment to them of a lease of premises, of which Ampol was the lessor, at Kooragang Island. The plaintiff, by a loan agreement with the defendants made in October or November 1996, lent the money on terms that it be repaid on the happening of a number of specified events, one of which was the return of the deposit by Ampol to the defendants. The plaintiff maintains that each of the nominated events has come to pass; but the proceeds of the loan remain with the defendants despite a demand made by the plaintiff on 21 June 2001 for their return of it.
The so-called “personal loans” are the subject of the third head of claim (which is pleaded in paragraphs 24-33 of the second further amended statement of claim). A series of loan agreements are alleged by the plaintiff to have been made between it and one or other or both of the defendants. The first such agreement was reached in December 1995, or thereabouts; the last, on 23 February 2001. The plaintiff claims that the total amount lent was $216,729.86. Each loan was to be repaid as soon as either defendant was financially able to do so, or alternatively on demand. It is some time since each defendant became able to repay; neither has done so. In any event, by the issue of its further statement of claim dated 12 February 2003, the plaintiff made a demand which remains unsatisfied.
The plaintiff’s prayer for relief is based upon the three heads of claim described above. It seeks (by paragraphs A-E) declarations that Mr Thomas is the sole inventor of the inventions and the sole author of the design sketches, and that the plaintiff itself is the owner of the copyright in those works; and it seeks further declarations, and a facilitating order, that if any patent is granted on the basis of the current applications as lodged by the defendants, it is solely entitled to each such patent. Paragraph F seeks the sum of $192,688.67; and paragraph G the sum of $216,729.86. Paragraph H expresses an alternative claim for damages.
The defendants contend that each of these claims must fail because each is caught by the release and discharge granted by the plaintiff to the defendants when in December 1997 the plaintiff became a party to the Deed of Novation and Amendment. That contention, the defendants further submit, can and should be put to the test made available by r.47.04. To this end, the defendants through their legal advisers formulated three questions which, they suggest, are appropriate for disposition pursuant to that rule. The questions are as follows:
"(1)Is the plaintiff precluded by clause 3.1(a) of the Deed of Novation and Amendment dated 9 December 1997 between, inter alia, the plaintiff and the second defendant … from making the claims in paragraphs 1-13 and prayers for relief A-E of the second further amended statement of claim dated 21 January 2005?
(2)Is the plaintiff precluded by clause 3.1(a) of the Deed of Novation and Amendment from making the claims in paragraphs 14-23 and prayers for relief F and H of the [said] statement of claim and paragraph 9 of the amended reply dated 1 March 2005?
(3)Is the plaintiff precluded by clause 3.1(a) of the Deed of Novation and Amendment from making the claims in paragraphs 24-33 and prayers for relief G and H of the statement of claim?"
The plaintiff submits that neither these nor any other questions should be tried separately. I was urged to conclude that no issues, whether in the form submitted by the defendants or otherwise, are suitable for separate treatment. I was referred to the cautionary passages to be found in the judgment of Brooking J in Jacobson v Ross[1]. In the first of these, his Honour referred to the general undesirability of dealing, at one and the same time, with "the question whether some and if so what issue or issues should be determined at a preliminary stage and the question how that issue or those issues should be determined (in the sense of what answer should be given to the question or questions posed)". It was, in his Honours' opinion, "much preferable to deal first with whether a preliminary question should be determined and in the course of doing so to deal with the terms of the suggested question, so as to ensure that it is an appropriate question and drafted with sufficient particularity; at the same time the judge should ensure that any facts to which regard may be had in answering the question can be precisely identified."[2] His Honour nevertheless recognised that it may often be convenient for the same judge, having ordered that a preliminary question be determined, to go on at once to hear argument on that question in order to determine it.[3]
[1][1995] 1 VR 337
[2]Ibid at 339
[3]Ibid at 340
It must also be remembered, as his Honour pointed out, that precision is essential in the statement of any question ordered to be tried under r.47.04. As his Honour said:
"Words used in a question formulated in an order as a preliminary issue should, so far as possible, be clear beyond doubt. One should be able to ascertain their meaning by reference to the order itself, including any other documents which may be regarded as incorporated by reference into the order."[4]
[4]Ibid at 340
I respectfully accept all that is said in the judgment of Brooking J in Jacobson v Ross. At the same time, I note that the judgment includes his Honour's observation that:
"It is a trial judge's duty to see that the crucial issues are tried as expeditiously and inexpensively as possible, and the parties' advisers should help him to carry out this duty … Rule 47.04 provides a useful means to that end, and a means of combating the gargantuan trial, that modern behemoth now straining to breaking point the fabric of both civil and criminal justice. I fully sympathise with the judge's desire in this case to shorten the trial, and nothing I have said is intended to question the utility of the rule or discourage judges from making use of it."
Other recent authorities have emphasised both the possible benefits and the potential dangers of the r.47.04 procedure. Each must be kept in perspective. In this context it is relevant to note, it seems to me, one of the justifications of counsels’ (limited) immunity from suit. It is that, free from the fear of an action in negligence, counsel will actively assist the court appropriately to exercise the power which the Rule confers upon it. Unless counsel is prepared to assist in this way, much of the rationale for the immunity will disappear. Properly used, the procedure offers an effective, cost-efficient, timely and just means of disposing of points of contention. In my opinion, courts are entitled to expect from counsel real assistance in ensuring that the benefits of the separate trial of a question are realised in the appropriate case. Such expectation will remain whether or not the immunity remains. While the immunity continues, counsel should in my opinion accept that it carries with it a commensurate obligation. That obligation includes the duty to do all in counsel’s power to assist in the advantageous employment of r.47.04. That means, in particular, that unsound objections to its use will not be taken. It also means that counsel will co-operate with each other and the courts to ensure that, where the procedure is appropriate, the question or question will be adequately framed and any issues of fact identified and the means of their resolution co-operatively explored.
The topic is, I think, of sufficient importance to warrant further consideration here. As is demonstrated by cases such as Jacobson v Ross, the power to try a question in the proceeding before the trial of the proceeding must be exercised with that restraint which is imposed by the necessity that justice be done. At the same time, delay in the delivery of justice can itself produce injustice. The heavy and difficult responsibility of striking the right balance rests with the judge, not the parties; but their legal advisors have an important role to play. I respectfully agree with the speech of Lord Templeman said in Ashmore v Corporation of Lloyd’s[5]. In that case, the order of the trial judge, Gatehouse J, that three preliminary points of law be separately tried was unanimously restored by the House of Lords (Lord Keith of Kinkel, Lord Roskill, Lord Bridge of Harwich, Lord Templeman and Lord Goff of Chieveley) after the trial judge’s decision on the point had been overturned by the Court of Appeal. Lord Templeman said:
“The parties and particularly their legal advisers in any litigation are under a duty to co-operate with the court by chronological, brief and consistent pleadings which define the issues and leave the judge to draw his own conclusions about the merits when he hears the case. It is the duty of counsel to assist the judge by simplification and concentration and not to advance a multitude of ingenuous arguments in the hope that out of 10 bad points the judge will be capable of fashioning a winner. In nearly all cases the correct procedure works perfectly well. But there has been a tendency in some cases for legal advisers, pressed by their clients, to make [sic] every point conceivable and inconceivable without judgment or discrimination. In Banque Keyser Ullmann SA v Skandia (U.K.) Insurance Co. Ltd [1991] 2 AC 249 at 280, I warned against proceedings in which all or some of the litigants indulge in over-elaboration causing difficulties to judges at all levels in the achievement of a just result. I also said that the appellate court should be reluctant to entertain complaints about a judge who controls the conduct of proceedings and limits the time and scope of evidence and argument. So too, where a judge, for reasons which are not plainly wrong, makes an interlocutory decision or makes a decision in the course of a trial the decision should be respected by the parties and if not respected should be upheld by an appellate court unless the judge was plainly wrong. The Court of Appeal in the instant case did not comment upon and apparently therefore found nothing remarkable in the points of claim or the length of the plaintiffs' opening or in the prospect of protracted oral evidence and interminable submissions based on that oral evidence. The judge thought he would be assisted by an early deliberation of issues of law, whatever the result of that consideration. He deserved support. In his judgment in the Court of Appeal Ralph Gibson LJ recorded that the plaintiffs had resisted the application to Gatehouse J by Lloyd's for a determination of preliminary issues on many grounds in addition to the two specific grounds of objection to which I have referred. Mr Lyndon-Stanford repeated the arguments in the Court of Appeal and, as Ralph Gibson LJ remarked:
'He claimed in particular that it was wrong thus to take the conduct of the proceedings out of the hands of the plaintiffs and thereby to disappoint the plaintiffs in their legitimate expectation that the trial would proceed to a conclusion upon the evidence to be adduced.'
Ralph Gibson LJ thought that there was 'considerable force in these submissions.' My lords, I disagree; the control of the proceedings rests with the judge and not with the plaintiffs. An expectation that the trial would proceed to a conclusion upon the evidence to be adduced is not a legitimate expectation. The only legitimate expectation of any plaintiff is to receive justice. Justice can only be achieved by assisting the judge and accepting his rulings. I have read and agreed with the observations of my noble and learned friend, Lord Roskill."
[5][1992] 1 WLR 446 at 453-454.
In his speech, Lord Roskill added some observations of his own "only to reinforce what my noble and learned friend says" in the passage quote above. His Lordship continued:[6]
"The Court of Appeal appear to have taken the view that the plaintiffs were entitled of right to have their case tried to conclusion in such manner as they thought fit and if necessary after all the evidence on both sides had been adduced. With great respect, like my noble and learned friend, I emphatically disagree. In the Commercial Court and indeed in any trial court it is the trial judge who has control of the proceedings. It is part of his duty to identify the crucial issues and to see that they are tried as expeditiously and as inexpensively as possible. It is the duty of the advisers of the parties to assist the trial judge in carrying out his duty. Litigants are not entitled to the uncontrolled use of a trial judge's time. Other litigants await their turn. Litigants are only entitled to so much of the trial judge's time as is necessary for the proper determination of the relevant issues."
[6]Ibid at 448
In this case, the effect of clause 3.1(a) on each of the plaintiff’s claims appeared on the surface at least to be a question of law. There was of course the ever-present possibility of it becoming a mixed question of fact and law, although – as does any well-drawn “release and discharge” clause - it embraced the prospect that any factual issues would be either uncontroversial or capable of resolution consistently with the r. 47.04 process. Allied with that was the possibility, the question of law having been determined, that all the matters in controversy would thereby be resolved. A full trial would then be avoided and the behemoth temporarily constrained.
These considerations draw strength from the state of the pleadings. By paragraph 34 of their amended defence dated 18 February 2005 the defendants alleged that:
"… Pursuant to the Deed of Novation and Amendment:
(a)[the plaintiff] and Rowe & Thomas (NSW) Pty Ltd released and discharged [the second defendant] and the Austrack Group from all claims whatsoever which they have or may have but for the deed against [the second defendant] or against the Austrack Group arising from, incidental to or otherwise in connection with the Port Project … in respect of matters which occur or have occurred on or before the operative date;
(b)[the plaintiff] and Rowe & Thomas (NSW) Pty Ltd indemnify [the second defendant] and the Austrack Group against any damage loss costs interests expense (including but not limited to legal expenses on a solicitor and own client basis) and liability arising out of or in connection with any claim brought by [the plaintiff] and Rowe & Thomas (NSW) Pty Ltd in breach of the release and discharge provided in clause 3.1(a)."
By its amended reply dated 1 March 2005, the plaintiff admitted the allegations in that paragraph. In these circumstances, it seemed to me that the defendants were correct in submitting that, given the admission and given statements made in affidavits sworn on behalf of the plaintiffs, and given that other relevant facts would not be disputed, adoption of the r.47.04 procedure should be explored and might prove to be efficacious.
It is of course imperative that this procedure only be employed in a way which is consistent with the proper administration of justice. Accordingly, its adoption must not deprive a party of the opportunity to adduce whatever relevant and admissible evidence it wishes to put before the court. Each party must also be aware of the issues that are to be determined, and be given the opportunity to challenge contentious allegations of fact (or, for that matter, law); hence the importance, stressed by Brooking J in Jacobson v Ross, of ensuring that the question or questions to be tried in this way is or are not only appropriate but also drafted with sufficient particularity. Likewise, the facts to which regard may be had in answering the question must be precisely identified.[7]
[7]Ibid at 339
It is, as his Honour observed in the passage to which I have just referred, desirable “in general, at all events … to deal first with whether a preliminary question should be determined and in the course of doing so deal with the terms of the suggested question”.[8] Once the identification and formulation is complete, the question or questions may be tried and the answer or answers determined.
[8]Ibid
I respectfully agree with the approach commended by Brooking J. Its adoption nevertheless sometimes gives rise to practical difficulties. For one thing, it necessitates two hearings, or at least two separate segments of the same hearing, with the possibility that these will be followed by a full trial – or perhaps by an appeal followed by a full trial: none of which increases either the utility of the Rule or the likelihood that the behemoth will be caged. For another, it is not always possible in a separate hearing to settle the question or questions to be tried. There may be, as there were in this case, logistical problems; and in any event, it is not always easy, or even possible, to divorce the question whether a preliminary issue should be tried from consideration of the merits of the issue itself.
I made the attempt in this case. Having accepted the defendants’ submission that there was a prima facie case for the separate trial of the effect of the “release and discharge” clause, a directions hearing was scheduled for 2 February this year. This followed the date (19 January 2005) on which the plaintiff was required to submit to the defendants a draft second further amended statement of claim. On 2 February, I ordered (among other things) that the plaintiff have leave to file the draft; this was then to stand as its amended pleading. The defendants were required to file and serve any amended defence and counterclaim by 18 February, and the plaintiff was ordered to file and serve any amended reply and defence to counterclaim by 25 February. The pleadings would then be closed. I hoped that by this means the parties would be in a position by 11 March (the date to which the further hearing of the relevant summons for directions was adjourned) to debate sensibly any draft preliminary questions which the defendants had, by 4 March, filed and served. I also hoped to isolate any factual disputes relevant to the r.47.04 process, and determine whether these could be dealt with consistently with the proper conduct of a preliminary trial. I bore carefully in mind the considerations to which I referred in paragraph [21] above; namely that, in such a trial, each party be given an opportunity - equivalent to that available in a full trial - to prove relevant, disputed, facts upon which that party seeks to rely and to challenge relevant evidence that it seeks to dispute. If such an opportunity can only be accorded by adopting the mechanisms of a full trial, that may of itself be an indication that the separate trial of a question in the proceeding is inappropriate.
Judicial management and such measures as the two-stage process favoured by Brooking J sometimes place pressure on the Trial Division. This was the experience on 11 March. In the event, for the reasons set out below, I determined that the best course – even given the wisdom of Brooking J’s observations - would be to fix 30 March as the date on which a trial of the separate questions would commence. At the same time, I reserved to the plaintiff the right to put further submissions in support of the proposition that there was no proper basis upon which the questions could or should be so determined. The plaintiff availed itself of this leave.
The hearing on 11 March preceded the resumption of a jury trial at 10.30 that morning. In the time available, it was impossible fully to argue the merits of the draft questions and the appropriateness, in the circumstances, of the r.47.04 procedure. This was a particular disadvantage. By then – with the concurrence of the Listing Master – two days (Friday 30 March and the following day) had been set aside to try any preliminary questions that might properly be dealt with pursuant to the Rule; and it would have been difficult to reschedule those days, albeit that as it was they would interrupt for that period the jury trial to which I have referred above.[9]
[9]As it turned out, by 30 March the jury had been discharged; the trial was then proceeding by judge alone.
Much of the time available on 11 March was occupied with an unexpected difficulty. The plaintiff suggested that it may seek to further amend its amended reply. The unqualified admission there made to the allegations in paragraph 34 of the amended defence may not, counsel for the plaintiff informed me, square with the position which the plaintiff intended to take at the trial.
In one sense, this was a very surprising development. The plaintiff, I was informed, may seek at trial to allege that the tender deposit had been returned to the defendants - or at least (which is really the same thing) to their solicitors - before the Deed of Novation and Amendment was signed. But, at the time it was signed, the plaintiff (according to this account) was unaware of this. Had it appreciated that the tender deposit was already being held by or on behalf of the defendants, the plaintiff would never have agreed to the Deed of Novation and Amendment being drawn in the terms that it was. In failing to inform the plaintiff of the true position, the defendants were guilty of misleading and deceptive conduct. Or so the plaintiff might wish to contend at the trial.
A significant portion of these contentions, but not them all, had been in the open for a considerable time. In the original statement of claim, the plaintiff had alleged that the tender deposit had, before the operative date, been returned by Ampol to the solicitors for the defendants. The plaintiff subsequently sought to make good this allegation by an application for third party discovery from those solicitors. This became enmeshed in a claim that some at least of the documents sought to be discovered were covered by legal professional privilege.
Third party discovery in these proceedings has, thus far at least, brought no joy to the plaintiff. By paragraph 19(c) of its second further amended statement of claim it nevertheless persists with the allegation that (albeit on a date unknown to it) the tender deposit was repaid to the defendants or one or other of them via the defendants’ solicitors. Yet the plaintiff’s amended reply, filed on 1 March this year (and therefore less than a fortnight before the hearing on 11 March) in response to the defendants’ amended defence filed on 18 February, admitted the “release and discharge” clause without any attempt to qualify that admission by an allegation that, when it entered into the Deed of Novation and Amendment in which the “release and discharge” clause is to be found, the plaintiff was unaware of the repayment. Neither, of course, was or is there an allegation that, had the plaintiff known what it now asserts may have been the truth, it would not have signed that Deed; or that, in failing to reveal that truth, the defendants were guilty of misleading and deceptive conduct.
The hearing on 11 March was distracted by the misleading and deceptive conduct point to the extent that, in the limited time available, other more important issues were not given the attention they deserved. And the fact that this point was not pursued when the debate was resumed on 30 March demonstrates that it was a distraction. In saying this I accept that, ultimately, the plaintiff may be in a position to pursue the matter. But to raise it the day before the 11 March hearing, by letter dated 10 March, is something that may require explanation beyond the protestations in the letter that the plaintiff was “not provided with a copy of the Asset Purchase agreement [sic – I take this as a reference to the Asset Sales Agreement] until a copy was made available for our collection on Tuesday this week” and that in the meantime confusion about the meaning of the term “tender deposit” meant that “it is only now that our client properly understands your clients’ position in relation to the deposit in the sum of $192, 688.67.”
During the hearing on 30 March, the plaintiff persisted with its submission that the r.47.04 procedure was and is inappropriate in the circumstances of this case. In the alternative, it argued that, if any question were to be answered, that answer should be in the negative.
In my opinion, that is the correct answer to the first question. There is, I think, a solid foundation for the plaintiff’s argument that the “release and discharge” clause does not provide an answer to its intellectual property claim. The fact is that the claim did not exist as such at the operative date, whatever that date was. The claim first arose when, on 2 February 2000, the second defendant filed the patent applications naming the first defendant as the sole inventor. The act of filing the applications was the “matter” in respect of which the claim “occurred”. This was not before the operative date; it was well after. Until 2 February, the plaintiff either had a right to the intellectual property or it did not. On either view, it did not until then have a claim against the defendants for interference with any such right. No such interference had been experienced. No injunction would have been granted in the plaintiff’s favour to protect its right, because no threat had become manifest. No other cause of action was open to the plaintiff because no loss or damage had been suffered and no breach of contract had occurred. And when the defendants by filing their applications for the patents made their claim to the intellectual property in question, they conjured up for the plaintiff not so much a claim as a counterclaim.
The defendants sought to get around this difficulty by arguing that the “matter” which is the foundation for the intellectual property rights the subject of the dispute arose when the rights themselves arose. This happened before the operative date. It is a circumstance which does not, therefore, remove the protection that that clause provides to the defendants.
I do not agree. In my opinion, the clause cannot bear that construction. Clear words are needed to rebut the presumption that a contracting party does not intend to abandon remedies which the law would otherwise grant.[10] This is especially so when the alternative might result in the unjust removal of a valuable right. Clause 3.1(a) is not in my opinion clear in the construction that the defendants put on it. If anything, the opposite is true. For these reasons, the first question should be answered “No”.
[10]Stocznia Gdanza SA v Latvian Shipping Company [1998] 1 WLR 574 at 585.
The remaining questions should not be answered. In each case, a loan or a series of loans is alleged. In two cases – according to the second further amended statement of claim - the relevant individual loan was not even made until after the date put forward by the defendants as the operative date; and the defendants acknowledge that the r.47.04 procedure is inapplicable in each of those cases. In every case it pleaded that, by the agreement pursuant to which the money was lent, the loan became due upon the happening of a specified event. The defendants did not submit that the event had in fact come about before the operative date, without repayment by then or thereafter; they rested their case on the proposition that it was sufficient for the purposes of clause 3.1(a) that the loan was brought into being before the operative date.
Again, I disagree. Until repayment of a particular loan became due, the plaintiff had no claim in respect of it. The “matter” giving rise to such a claim was the fact that repayment was due. If that “matter” had not arisen as at the operative date, no claim had then arisen either. And the clause gives no protection to the defendants against a claim that came into existence in respect of matters which occurred subsequently.
In the case of the intellectual property, the defendants do not dispute that their applications were not filed until after the operative date. Accordingly, regardless of whatever other evidence might be called on this issue, clause 3.1(a) is irrelevant to it. By contrast, the evidence in relation to the loans might reveal that some were repayable before that day. If so, the clause might apply. The plaintiff’s argument was that the evidence on the point was not presently before the court, and that I should therefore decline to exercise the power given by the Rule. In the words of paragraph 38 of the plaintiff’s written outline of submissions dated 29 March 2005, its case is that “the monies lent were not due at the date of the Deed, or at least that it did not know that the monies were then due and that it did not have a claim.” The submissions continue, at paragraph 41:
“The plaintiff opposes the determination of the questions posed. There is no proper basis upon which to determine the questions and they are not capable of determination on the basis of any agreed or admitted facts.”
For the reasons given, I think that the plaintiff understated its case in relation to question 1. In my opinion, however, the approach contended for in paragraph 41 of its submissions is warranted in relation to the remaining questions. I therefore decline to answer questions (2) and (3). I add, however, that the plaintiff’s submissions about the necessity for evidence about the background matrix of facts seem to me to be overstated. An otherwise appropriate application for the trial of a separate question should not be refused simply on the basis that a large commercial contract must be construed and “background matrix of facts” evidence must therefore be called. Such evidence is only necessary where the contact contains an ambiguity that must be resolved.
The defendants sought alternative relief pursuant to r.23.01, or alternatively r.23.03. Notice of an application pursuant to r.23.01 (there was no mention of r.23.03) was given by letter dated 29 March, the day before the hearing, to the solicitors for the plaintiff. No material accompanied the letter, which did, however, state that "we will be relying on the affidavits sworn by our client and the further affidavit of which an unsworn copy was provided to you on Thursday in support of that application." I do not think that this notice was sufficient. In those circumstances, I do not propose to entertain the application.
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