Denis Hickie (Plaintiff/Appellant) v Alternative Software Ltd and Another
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE EVANS,LORD JUSTICE HENRY,LORD JUSTICE MORRITT |
| Judgment Date | 28 February 1996 |
| Judgment citation (vLex) | [1996] EWHC J0228-1 |
| Docket Number | CHAN1 95/1273/B |
| Date | 28 February 1996 |
| Court | Queen's Bench Division (Administrative Court) |
[1996] EWHC J0228-1
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL
ON APPEAL FROM THE CHANCERY DIVISION
His Honour Judge Roger Cooke (Sitting as a High Court Judge)
Before Lord Justice Evans Lord Justice Henry Lord Justice Morritt
CHAN1 95/1273/B
MR R COLE (Instructed by Camerons, London WC2R 1AZ agents for Austerfields, North Humberside) appeared on behalf of the Appellant.
MISS S MARRIS (Instructed by Penningtons, London EC2W 7HD) appeared on behalf of the Respondents.
This is an appeal from a judgment given by His Honour Judge Roger Cooke sitting as a Deputy Judge in the Chancery Division on 17 January 1995. He dismissed the plaintiff's appeal from an order made by the Chief Master on 26 July 1994. By that order, the learned Chief Master had granted a stay of these proceedings in favour of arbitration pursuant to Section 4 of the Arbitration Act 1950.
The underlying dispute is between the plaintiff, who writes and produces computer software in partnership with the second defendant under the partnership name of Clockwize Software, and the defendants who are publishers, or distributors, of software programmes.
There were two agreements dated, respectively, 1 February and 1 April 1990. By those agreements the plaintiff undertook to write two children's programmes for the defendants. Each agreement contained an arbitration cause in the following terms:
"Save as otherwise provided by this agreement any questions or matter in dispute shall be referred to arbitration. The decision of the arbitrator shall be final and binding on both parties."
Under both contracts software was produced and delivered to the defendants and some payments were made. The defendants said that a process known as debugging was necessary and they withheld certain further payments. The plaintiff said that the defendants' complaints had come too late. That dispute was resolved, at least temporarily, by a formal written agreement made on 10 March 1992 which involved the plaintiff's solicitors as well as the two parties to this action. The gist of that agreement was that the plaintiff undertook to proceed with the debugging operation. The defendants agreed to pay £1,500 plus VAT to the plaintiff's solicitors, whose role was described in the agreement as "agents for the plaintiffs". On the other hand, by clause 4 of the agreement, the solicitors undertook:
"….to retain the sum of £1,500 plus VAT thereon in their client account and not to part with the same to the Programmer [the plaintiff] until such time as the de-bugging has been completed as aforesaid."
Unfortunately, the dispute was not resolved. On 2 November 1993 the plaintiff issued a writ in the Chancery Division in the present action. They claimed, first, the sum of £9,417 which they claimed was the balance due under the original agreements; secondly, declarations; and, third, injunctions based on their assertion that, as a result of the failure of the agreements, the copyrights remained with them.
We have been told that for various reasons the copyright issues are not likely to be pursued. On the other hand, those claims are contained in the writ in the present action. Unfortunately, that writ was not served until after it was overtaken by later events.
On 5 January 1994 the defendants issued County Court proceedings in the Leeds County Court, later transferred to Bridlington, not against the plaintiff but against the solicitors, claiming repayment of the money which the solicitors held. The grounds on which they did so included an assertion as to their rights against the plaintiff under the contractual arrangements between them. For some reason, which is only explained on the basis as suggested by Miss Marris, for the defendants, the defendants were only concerned to recover the sum of money held by the solicitors and were not minded to bring any other proceedings against the plaintiff. For that, or for some other reason, the defendants unfortunately did not make the plaintiff a party to that action.
Another misfortune followed: the solicitors allowed default judgment to be entered against them. They then applied to have it set aside and negotiations followed which resulted in a consent order in the County Court proceedings dated 7 April 1994. The terms of that order were:
"BY CONSENT IT IS ORDERED THAT upon the parties agreeing to the terms hereof and upon the defendants agreeing to pay forthwith the sum of £1500.00 plus VAT which they are holding in their client's account, into court to abide the event
1. The judgment dated 2 February 1994 herein be set aside
2. The plaintiff's claim be discontinued
3. The defendants do pay the plaintiff's costs…."
As the learned Deputy Judge pointed out, there was no order for the payment of that sum into court, merely a reference to the agreement which had been reached between the parties to that action.
In the course of those negotiations, prior to 7 April, three things had happened: first, the plaintiff's writ in this action had been served; secondly, the defendants had suggested that the money which they were claiming from the solicitors should be paid into court in the Chancery action "to abide the event", and it was that which was agreed; but, third, in the last letter in the series, dated 6 April, the defendants' solicitors, as well as indicating their agreement to the terms already indicated, said:
"With regard to the High Court action which is continuing in London, we note what you say. However, please note that it is our clients' intention to apply on summons for a stay of that action pending arbitration pursuant to the arbitration clauses in the original contracts."
That was the first reference to the possibility of arbitration. It was unfortunate, to say the least, that it came at the 11th hour in those negotiations, notwithstanding that they had taken place over several weeks and that it was some six weeks since the writ had been served upon them.
It appears that when that notification was given, the defendants' solicitors did not consider how the money, which it was intended to pay into court in the Chancery action, might remain there if the action was stayed which it was their intention to seek. Another problem was that if the money was to be paid into the County Court, the proposal was that the proceedings there should be discontinued, as they were. It is another misfortune that those implications of this application for a stay of the present action in favour of arbitration were not at least ventilated at that time. So began what can only be described as a procedural muddle which has resulted in this appeal. It must be added that the plaintiff's response to that situation has also been somewhat muddled.
Thereafter, the consent order on 7 April 1994 envisaged that the plaintiff's solicitors, as defendants in the County Court action, would pay the money in question into a court. Clearly, the intention was that the court was the High Court where the Chancery Division action was pending. There was no order to that effect. It was not intended to be what the learned Deputy Judge called the "normal kind of payment in", ie a payment in by the defendant as an offer to settle the case. Problems then arose and, at that stage, no payment was accepted by the High Court. Accordingly, the plaintiff's solicitors, still as defendants in the County Court action, turned to the County Court and they paid the money into that court.
On 29 July 1994 a further order was made by that court in the following terms:
"Upon the defendant having complied with the order dated 7.4.94 in that he has paid £1500 plus VAT…into Court to abide the event.
IT IS ORDERED that the judgment entered herein against the defendant on 7.4.94 be and the same is hereby set aside."
I do not pause to consider what can possibly be the meaning of that second part of the order. I merely recite that on 18 August there was a further consent order in the County Court proceedings whereby the plaintiff's claim was discontinued.
Meanwhile, in the High Court, the defendants issued their summons for a stay under Section 4 of the Arbitration Act on 14 April. The plaintiff responded with a summons for summary judgment or an interim payment under Ord 14 on 26 April. The Chief Master dismissed the Ord 14 summons. There is no appeal from that. He also ordered a stay. The plaintiff appealed...
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