Interactive Investor Trading Ltd v City Index Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Tomlinson,Lady Justice Black,Lord Justice Ward |
| Judgment Date | 20 July 2011 |
| Neutral Citation | [2011] EWCA Civ 837 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2010/2454 |
| Date | 20 July 2011 |
[2011] EWCA Civ 837
[2010] EWHC 2509
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, COMMERCIAL COURT
His Honour Judge Mackie QC
Lord Justice Ward
Lady Justice Black
and
Lord Justice Tomlinson
Case No: A3/2010/2454
Andrew George (instructed by Howard Kennedy Solicitors) for the Respondent
Anthony Trace QC and Louise Hutton (instructed by Macfarlanes LLP) for the Appellant
Hearing dates: 24, 25 May 2011
The Appellant "City Index" is a provider of services enabling trading in contracts for differences, hereinafter "CFDs" and spread betting, hereinafter "SB". The Respondent "Interactive" is a provider of online services. Amongst other things it maintains and operates an interactive website for its clients. Interactive provides financial tools and information for its clients but does not itself operate an online trading platform. City Index does provide a platform for online trading including CFDs and SBs.
In May 2004 these parties entered into an agreement pursuant to which Interactive introduced clients to City Index and City Index provided to those it accepted as its own clients a CFD trading service branded as one of four proprietary products – Interactive Investor CFDs, Ample CFDs, Ample CFD Trading Service and Interactive Investor CFD Trading Service. Such trading is in the agreement described as "Branded Trading". The free-standing agreement entered into between the client and City Index as provider of trading services described Interactive Investor CFDs as a trading name of City Index to whom the client had been introduced by Interactive.
Under the agreement of May 2004 Interactive was responsible for maintaining that part of its website which was dedicated to Branded Trading, which in turn contained a link to the interactive trading platform to be made available by City Index in connection with Branded Trading. City Index in turn accepted responsibility for maintaining the interactive trading platform. City Index agreed to pay to Interactive a share of the commission paid (by the client) on all trades executed by clients in respect of Branded Trading. There is a dispute as to the temporal extent of this obligation.
In February 2005 Interactive entered into an agreement on very similar terms with IFX Markets Limited, hereinafter "IFX". This agreement related to the provision to clients of spread betting services. This agreement was later novated, City Index assuming the obligations of IFX.
On 31 March 2010 City Index gave notice to terminate both agreements. The notice periods were different. The notice period in respect of the CFD agreement expired on 30 June 2010 and that in respect of the SB agreement on 30 September 2010.
Both of the agreements make provision for what is called a "Wind Down Period" – hereinafter "WDP". In both cases it is six months. There is a dispute between the parties as to the extent of their respective rights and obligations during and at the end of the WDP. In part this concerns the entitlement to commission on trades executed by the clients in respect of Branded Trading during the WDP. Of possibly greater significance is a dispute as to the extent to which City Index is at liberty to attempt to persuade clients to continue to use its trading services after the expiry of the WDP. Interactive says that City Index has no entitlement to solicit clients to remain and a positive obligation to assist in the "migration" of clients back to Interactive or to its nominee.
The CFD WDP was 1 July 2010 to 31 December 2010. The SB WDP was 1 October 2010 to 31 March 2011. Since the parties were desirous of knowing the extent of their rights and obligations during the WDP, by order of Hamblen J made on 8 September 2010 in the Commercial Court an expedited trial was directed to determine sixteen discrete points of construction. This formidable examination paper was set before His Honour Judge Mackie QC sitting in the Commercial Court on 29 and 30 September 2010. In order to assist the parties he gave an extempore judgment on 1 October 2010. Rather than addressing all sixteen issues individually he approached the matter under three broad headings, which between them embraced the entirety of the dispute.
1) Is Interactive entitled to a share of commission on trades executed during the WDP?
2) How are the parties required to act during the WDP with regard to migration of clients and, specifically, is City Index under an obligation to terminate its contracts with clients introduced by Interactive?
3) How do the confidential information provisions affect the position during the WDP?
The question as to the entitlement to commission is a straightforward question of construction which, even if not entirely simple to resolve, admits of a clear answer. To an extent, the same is true of the third question, although there I have for my part found myself hampered by the circumstance that there has been no investigation of the practical consequences attaching to a finding that names, addresses and contact details of clients are confidential to Interactive. However, as will appear hereafter, the status of this information is probably less important than is the question to what use it may be put in the hands of City Index. That is the second broad question which the judge addressed. As the judge himself pointed out, this question falls into an altogether different category. It is the sort of question best addressed after the event, where conduct alleged to have been contractually impermissible can be examined and a ruling made in the context of findings of fact as to what has been done. However the judge did his best to give such guidance as he could, as a result of which a detailed order was drawn up. This identified various things which City Index was prohibited from doing during the WDP and thereafter. The order did not positively require of City Index any action.
The judge did not consider that the agreements required City Index to give notice to terminate the individual contracts with clients. Subject to that however he resolved all of the questions broadly in favour of Interactive, holding that Interactive is entitled to commission on trades executed during the WDP, that the names, addresses and contact details of the clients constituted information confidential to Interactive and that City Index may not actively put itself forward to clients as the preferred trading service provider once the existing agreements come to an end on the expiry of the WDP. His conclusion was that City Index has "a duty to put its best foot forward to take steps to assist with the migration of clients".
City Index appeals against these conclusions and Interactive cross-appeals on the one point on which it lost, contending that City Index is under an obligation to give notice of termination of contract to clients to take effect at the end of the WDP.
In one sense these questions, other than that as to the entitlement to commission, are now academic as the WDPs are over. However there is to be a further trial in the Commercial Court in November 2011. At that trial it will be alleged that actions taken by City Index before the litigation commenced and before certain undertakings were given amounted to a breach of contract. It is also said that the resolution of questions 2 and 3 is relevant to a consideration of the entitlement to commission. Unsatisfactory though it is to determine these questions before the factual enquiry, it is plain that having regard to the course which the litigation has so far taken we must simply do our best, as did the judge.
The contentions on the appeal
City Index seeks the following declarations:—
"(a) The names, addresses and contact information of "Clients" are not the Respondent's "Confidential Information" (as defined in the CFD Agreement and the SB Agreement).
(b) The Appellant is entitled to market any and all of its services to Clients under the CFD Agreement and under the SB Agreement during and after the Wind Down Periods provided for by each agreement.
(c) The Appellant is not obliged to pay commission to the Respondent in respect of CFD trading by the Clients during the Wind Down period provided for by the CFD Agreement or in respect of SB trading by the Clients during the Wind Down Period provided for by the SB Agreement."
Interactive seeks to uphold the judgment below and additionally seeks a declaration that the contracts impose on City Index the obligation to provide notice of termination to clients in respect of its contractual relationships with them so as to ensure that (where such contracts would not otherwise expire at the end of the WDP) such contracts terminate on the expiry of the WDP.
As already noted, the agreements are in materially similar terms, with two differences. I propose to concentrate first on the CFD contract, as did the judge below. Indeed, it was not suggested before the judge that the proper construction of the SB contract differed from that of the CFD contract or that the approach thereto is affected by the difference in the terms. Before this court it was not the primary case of Mr Andrew George for Interactive that the difference in terms led to a difference in result. However he did have a fallback position to the effect that, if he was wrong in whole or in part in relation to the CFD contract, nonetheless he could succeed under the SB contract because of the difference in terms.
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