(1) Marcura Equities FZE v (1) Nisomar Ventures Ltd
| Jurisdiction | England & Wales |
| Judge | Nicholas Vineall |
| Judgment Date | 16 March 2018 |
| Neutral Citation | [2018] EWHC 523 (QB) |
| Docket Number | Case No: HQ17X02876 |
| Court | Queen's Bench Division |
| Date | 16 March 2018 |
[2018] EWHC 523 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Nicholas Vineall QC
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Case No: HQ17X02876
Adam Solomon QC and Sophia Berry (instructed by Holman Fenwick Willan LLP) for the Claimants
Christopher Quinn (instructed by Collyer Bristow LLP) for the Defendants
Hearing dates: 7 March 2018
Judgment Approved
Nicholas Vineall QC:
Monday 5 March 2018 was to be the first day of a 5 day trial of a claim relating to the alleged unlawful disclosure and use of confidential information. The parties reached an agreement pursuant to which on 1 March 2018 the Court made an order by consent which, for practical purposes at least, disposed of all issues between them other than costs. When the matter came on for hearing the parties identified four outstanding issues namely (1) What form of final order should the court make to dispose of the action? (2) What, if any, order for costs should be made? (3) What should be the basis of the assessment of costs? and (4) Whether there should be an interim payment on account of costs. A further issue emerged relating to whether or not I was entitled to receive evidence of what was said at a settlement meeting.
Issue (2) took up the bulk of the hearing. Mr Solomon QC (who with Ms Berry appeared for the Claimants) submitted that the Claimants had won on all issues and that the Defendants had capitulated at the last moment, so that the Claimants should have all their costs. Mr Quinn for the Defendants submitted that the Claimants had obtained most of the relief they sought by consent at an early stage, that thereafter their only further success was an agreement that the Defendants would pay them £35,000, and that the Claimants had failed to engage with an open offer made by the Defendants on 30 October 2017 which was open for acceptance until 6 November 2017. He made other criticisms of their conduct. He conceded that costs prior to 6 November 2017 should be the Claimants', but sought an order that the Claimants pay the Defendants' costs thereafter.
Background and history of the proceedings
The Claimants are incorporated in Dubai. They sell to the global maritime industry a computer software package called PortLog. The Claimants say that the group of which they are a part has spent almost $7m developing PortLog. The Claimants contend that PortLog has unique features distinguishing it from its competition.
The First Defendant, Nisomar, is an English Company incorporated on 7 December 2016. It is owned and run by the Second Defendant Mr Hyldager. It has not yet traded. Nisomar is developing a computer programme. The Defendants say that that programme is a bridge port agency application. The scope of what that programme does, or will do, is in dispute between the parties.
Mr Hyldager is the former CEO of Inchcape Shipping Services (“ISS”). The Defendants say that PortLog is not unique and replicates a product sold by ISS.
The claim focuses on the actions of Mr Schulz, who is not a party to the proceedings. The Claimants allege (and the Defendants were not in a position to dispute) that:
6.1. Mr Schulz was employed by the Second Claimant from July 2012 until he resigned on 28 February 2017, but he continued to work as a consultant to the First Claimant until mid-April 2017; and
6.2. Mr Schulz was involved with the development and marketing of PortLog. Mr Schulz signed service, resignation, and consultancy agreements with the Claimants which contained express confidentiality obligations and post-terminations restrictions, on which the Claimants relied.
The Claimants now allege that during 2016 and 2017 Mr Schulz provided the Defendants with at least nineteen pieces of confidential information belonging to the Claimants. By way of example they allege that on 23 December 2016 Mr Schulz emailed to Mr Hyldager the Claimants' confidential patent application for a particular algorithm which, they say, was used by PortLog. The email to which the patent application was attached was entitled “Patent — Very P&C” (P&C standing for private and confidential).
On 3 August 2017 the Claimants' solicitors, Holman Fenwick Willan LLP (“HFW”), wrote to the Defendants. They set out what they then knew about Mr Schulz's contact with the Defendants. They alleged that the Defendants had induced, facilitated, assisted or conspired with Mr Schulz in breaching his contractual obligations of confidence to the Claimants, and they alleged that Nisomar had used the Claimants' confidential information. They asked that the Defendants by 7 August 2017 provide a statement setting out exactly what information Mr Schulz had given them, and when, and that they sign attached undertakings. Those undertakings essentially required the Defendants to identify, deliver up, and not further disclose or use, all confidential information they had received.
The Defendants instructed Collyer Bristow, who replied on their behalf on 7 August. The letter said that Mr Schulz had not provided the Defendants with any confidential information belonging to the Claimants, and that the Defendants did not have any such information. It said that, although Mr Schulz had been considered for a position with Nisomar “the recruitment did not go ahead and Mr Schulz never started working for Nisomar Ventures in any capacity, nor did he work for any associated company, or Captain Hyldager.” The Defendants declined to sign the undertakings proffered by the Claimants. They offered “suitably drafted undertakings” reflecting the position taken in their letter, on the basis that their legal costs of dealing with the matter would be indemnified in full by the Claimants.
The Claimants responded by letter on 7 August 2017 and by commencing proceedings and applying for an injunction on 8 August 2017.
The 8 August 2017 Claim Form sought injunctive relief to protect the Claimants' confidential information, delivery up, and damages in excess of £200,000.
The injunction application was made on notice and was listed to be heard by Jefford J on 14 August. The parties agreed terms of undertakings and they were incorporated in an order of that date. The Defendants gave undertakings to deliver up all property within their control that belonged to the Claimants, and not to disclose it to third parties. The Defendants undertook to provide witness statements setting out (inter alia) what confidential information had been received and what confidential information had been used by the Defendants. There was no admission of any liability. The Claimants undertook to lodge £100,000 as security for costs and for their potential liability under their cross undertaking in damages. Directions were given for a speedy trial of all issues save for the quantification of damages.
An unfortunate feature of the drafting of the agreed order is that no time limit was identified in relation to the Defendants' undertakings. The usual wording, that the continuing undertakings would apply until trial or further order, was absent. The order did however contain a cross-undertaking in damages given by the Claimants in the normal terms. In those circumstances, and given also the terms of an order of 17 November 2017 to which I shall refer below, it seems to me that it was implicit in the order that the continuing undertakings were intended to continue only until trial or further order.
Particulars of Claim were served on 18 August 2017. The relief sought was permanent injunctive relief to restrain use of the Claimants' confidential information, and to restrain the Defendants from inducing or procuring Mr Schulz to breach the terms of his agreements with the Claimants, a springboard injunction, and damages or an account of profits.
On 24 August 2017 Mr Hyldager filed a witness statement delivering up 4 documents. The statement said they were the only relevant documents that had been found during a search. The patent application was not amongst the documents delivered up.
On 25 August 2017 a Defence was served. It admitted receipt of the four documents that had been delivered up. It denied any use of any confidential information belonging to the Claimants, and denied inducing Mr Schulz to breach his contractual obligations to the Claimants. It denied that Nisomar had ever employed Mr Schulz but (at paragraph 18) admitted that Nisomar did engage Mr Schulz as an adviser to advise in the development of the port agency application which Mr Hyldager was developing.
On 3 September 2017 Narayanan Shankar, a former consultant to the Claimants provided the Claimants' solicitors with documents that had been provided to him by Mr Schulz. Those documents included the patent application. Since the covering email to that application indicated it had been sent to Mr Hyldager, the Claimants' solicitors, by letter of 4 September 2017, sought an explanation as to why Mr Hyldager had not disclosed it.
On 4 September 2017 at a CCMC before Master Eastman the Defendants' costs budget was approved. On the Claimants' application the Master adjourned the CCMC insofar as the Claimants' cost budget was concerned.
On 25 September 2017 the Claimants' solicitors emailed the Defendants'. The email was marked without prejudice save as to costs. It said that in principle the Claimants would consider settlement on terms (in summary) that the First Defendant's website be amended to ensure there was “no reference or duplication with our clients' business”; that warranties were given in relation to the Claimants' confidential information; that “your client transfers … any IP … created whilst employed by [the Claimant group]”;...
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