Force India Formula One Team Ltd v Aerolab Srl (an Italian company) and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lord Justice Briggs,Sir Stanley Burnton |
| Judgment Date | 03 July 2013 |
| Neutral Citation | [2013] EWCA Civ 780 |
| Docket Number | Case No: A3/2012/1282 |
| Court | Court of Appeal (Civil Division) |
| Date | 03 July 2013 |
[2013] EWCA civ 780
Lord Justice Lewison
Lord Justice Briggs
and
Sir Stanley Burnton
Case No: A3/2012/1282
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, CHANCERY DIVISION
Mr Justice Arnold
HC10C00474
Royal Courts of Justice
Strand, London, WC2A 2LL
MR G HOBBS QC, MR J MELLORQC &MS L LANE (instructed by Fladgate LLP) for the Appellant
MR I PURVIS QC & MR T ALKIN (instructed by Withers LLP) for the Respondents
Introduction
On 3 April 2008 Force India and Aerolab entered into a contract described as an Aerodynamic Development Agreement. The agreement recited that Force India designed and built Formula 1 racing cars; and that Aerolab had the facilities, experience and techniques to design and build wind tunnel models and to perform wind tunnel aerodynamic testing and development. The purpose of the contract was for Aerolab to perform development services for Force India in the development of a Formula 1 racing car. The contractual term of the agreement was twenty months starting on 1 May 2008 and ending on 31 December 2009. In return for Aerolab's services Force India agreed to pay a fee of €246,833 per month in 2008 and €253,400 per month in 2009, payable on the 15 th of each month.
However, on 3 August 2009 Aerolab began work for Team Lotus, who aspired to be one of Force India's rivals on the racing circuit. Arnold J held that Aerolab was entitled to do that because by that time it had accepted a repudiatory breach of contract on the part of Force India. He held, however, that in some respects Aerolab was in breach of the contract (alternatively liable in equity) because some of its personnel had copied confidential material belonging to Force India which the latter had supplied to Aerolab for use in providing the contractual services. The extent of copying was not as great as Force India had claimed; and resulted in an award of damages of €25,000. The amount of the damages was overtopped by the amount that Force India owed Aerolab in fees due under the contract. His judgment is at [2012] EWHC 616 (Ch), [2012] RPC 29.
The judge gave permission to appeal on the contractual issues; and on a renewed hearing I granted further permission to appeal on limited grounds in respect of some other points which had the potential to be points of principle, while adjourning more detailed points to the hearing of the appeal itself. Having heard Mr Mellor QC who argued this part of the case on behalf of Force India, we granted permission to appeal on the remaining grounds. Although there are some aspects of the judge's reasoning with which I do not agree, those disagreements do not affect the overall outcome of the case. Since an appeal is an appeal against the judge's order, rather than against the reasons which led him to make it, I would dismiss the appeal.
Force India's case was argued by Mr Geoffrey Hobbs QC, Mr James Mellor QC and Ms Lindsay Lane. Aerolab's case was argued by Mr Iain Purvis QC and Mr Tom Alkin. The case on each side was extremely well argued, and the outcome of this appeal is a testament to the value of oral advocacy.
The shape of the litigation
The claim was originally pleaded against Team Lotus (as it was then called), Mr Gascoyne (who was Team Lotus' Chief Technical Officer) as well as Aerolab. In effect what was alleged was that all the defendants had engaged in a concerted plan to copy the design of Force India's car with the aid of its confidential CAD files. The central allegation was that there had been systematic copying of fundamental parts of Force India's car including the aerodynamic system which is crucial for achieving aerodynamic performance.
The claims against all the main defendants failed, and there is no appeal against that. But the way in which the case was originally put explains the way in which the claim for damages was advanced by reference to the huge sums of money that Formula 1 teams both spend and earn on the racing circuit.
The judge heard the case over 14 days. He heard a mass of evidence both factual and expert and was referred to many documents. The credibility of many of the witnesses was in issue and the judge came to conclusions about the extent to which he believed the various witnesses. He was also required to delve into the technical mysteries of fluid mechanics, aerodynamics and racing car design. It is clear that he immersed himself in the detail; and no criticism is made of his technical understanding. I mention that because some of Force India's grounds of appeal raise questions of fact on which it is said that the judge was wrong.
Appeals on fact
As mentioned, some of the grounds of appeal complain that the judge was wrong on the facts. In Piglowska v Piglowski [1999] UKHL 27 [1999] 1 WLR 1360 Lord Hoffmann (with whom the other Law Lords agreed) said:
"… the appellate court must bear in mind the advantage which the first instance judge had in seeing the parties and the other witnesses. This is well understood on questions of credibility and findings of primary fact. But it goes further than that. It applies also to the judge's evaluation of those facts. If I may quote what I said in Biogen Inc v Medeva Ltd [1997] RPC 1:
"The need for appellate caution in reversing the trial judge's evaluation of the facts is based upon much more solid grounds than professional courtesy. It is because specific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance… of which time and language do not permit exact expression, but which may play an important part in the judge's overall evaluation"."
This authoritative statement of principle was recently applied by the Supreme Court in Re B (a Child)(Care Proceedings: Threshold Criteria) [2013] UKSC 33 [2013] 1 WLR 1911. In Smith New Court Securities Ltd v Citibank NA [1997] AC 254, 274 Lord Steyn said:
"The principle is well settled that where there has been no misdirection on an issue of fact by the trial judge the presumption is that his conclusion on issues of fact is correct. The Court of Appeal will only reverse the trial judge on an issue of fact when it is convinced that his view is wrong. In such a case, if the Court of Appeal is left in doubt as to the correctness of the conclusion, it will not disturb it."
In the light of Re B (a Child) "convinced" may be putting it too high, but otherwise the principle stands. In order to outflank this principle Force India argued that although the judge directed himself correctly on the facts, and in particular on the need to test oral evidence by reference to the contemporaneous documents, he failed to apply that self direction. Let me say at once that this argument fails. As Mr Purvis demonstrated, the judge followed his self-direction. There is no need to set these out in detail, but the process can be seen at work at, for example, [117] to [125], [129] to [130], [168] and [297].
Racing car design
The judge set out a helpful description of the design process involved in creating an F1 racing car at [41] to [53]. It is not necessary to do more than pick out a few salient points in order to understand the issues arising on the appeal.
A key aspect of design is the aerodynamic design of the car. Aerodynamic design involves designing the exterior surfaces of the car so as to maximise its aerodynamic efficiency. The way in which air flows over the surface of an object like a racing car is very complex. The aerodynamic properties of a complex surface are difficult to predict accurately. No aspect of the car's surface operates independently. On the contrary, the aerodynamic performance of each part will influence, and/or be influenced by, the performance of other parts. Generally, the front wing will have the most influence over other parts and the rear wing will have the least influence, since the air flow over the car is front to rear. All parts will contribute to the overall efficiency, however, and small changes to any part can have a significant impact.
By summer 2009 the use of computational fluid dynamics (CFD) to model airflow had become widespread, but in the case of F1 racing car design it was not a satisfactory substitute for a wind tunnel testing programme.
Wind tunnel testing involves placing a scale model of a car, in a wind tunnel equipped with a rolling road and measuring the downforce and drag. The model does not include the engine, gearbox and other mechanical parts. Instead the aerodynamic parts are attached to a rigid internal spine. The spine is attached to a main balance which measures the global forces acting on the model. During a testing session different versions of a particular part are fitted to the spine, and then the resulting performance recorded. In this way the effect of small changes to each aerodynamic part of the car on the overall aerodynamic efficiency of the car can be measured.
As a wind tunnel programme progresses, the surface of the model steadily evolves. The evolving surface geometry is known as the "baseline". A model part design which is retained following a testing session is said to have been "promoted to the baseline". A well-planned wind tunnel programme will normally involve sessions devoted to improving the parts at...
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