Martin John Coward v Phaestos Ltd
| Jurisdiction | England & Wales |
| Judge | Chief Master Marsh |
| Judgment Date | 08 January 2021 |
| Neutral Citation | [2021] EWHC 9 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: IL-2011-000001 |
| Date | 08 January 2021 |
[2021] EWHC 9 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST
Rolls Building, Fetter Lane,
London EC4A 1NL
Chief Master Marsh
Case No: IL-2011-000001
Derrick Dale QC and Ian Bergson (instructed by BDB Pitmans LLP) for the Claimant
James Abrahams QC (instructed by Herbert Smith Freehills LLP) for the Defendants
Hearing dates: 9 October 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This claim was issued in 2010 and came on for trial before Asplin J (as she then was) in March 2013. On 17 May 2013 she handed down a lengthy judgment. The opening paragraph described the nature of the claim in the following way:
“This is a dispute as to the ownership of the intellectual property rights in certain of the Gauss software used by a highly successful quantitative trading business, the IKOS investment business which is now carried on through the Defendant companies. The IKOS business provides hedge fund and hedge fund management services to professional investors. Investment decisions are made by means of an automated system based on unique mathematical models and algorithms implemented in software and databases. It was not disputed that the business has been hugely successful, largely as a result of the software.”
She went on to describe the parties to the claim and it is convenient to adopt her summary:
“2. The business was founded as a partnership in 1992 in England. The precise date on which that partnership was founded and whether it was Ms Elena Ambrosiadou's (Ms Ambrosiadou's) business in which the Claimant, her husband Dr Martin Coward (Dr Coward) participated or was a joint enterprise in which for a short time, others participated, are matters in dispute. Ms Ambrosiadou and Dr Coward are now estranged, Ms Ambrosiadou having filed for divorce in April 2009. It was around that time in December 2009, that Dr Coward left the IKOS business and sought to set up a rival organisation based principally in Monaco. As a result of those events, numerous sets of proceedings were commenced in a number of jurisdictions, including these proceedings.
3. Dr Coward is a mathematician and computer programmer with a PhD in Control Theory Engineering from Cambridge University. Until his resignation on 11 December 2009, Dr Coward was Chairman and a director of IKOS CIF Ltd, the Third Defendant, (IKOS CIF). It is not disputed that Dr Coward wrote the original software upon which the IKOS business was based and made a significant contribution to the development of the software over the years.
4. Ms Ambrosiadou is a Chemical Engineering graduate who obtained an MBA from Cranfield Business School and went on to work for British Petroleum before founding the IKOS business with or with the assistance of Dr Coward. She is a Greek national. It is not disputed that whilst Dr Coward focussed on the programming side of the business, Ms Ambrosiadou dealt with structural, legal, financial and human resources issues.
5. The Defendants are companies which are part of, or have been associated with, the IKOS business. The First Defendant, Phaestos Limited is a UK company, incorporated on 5 July 1991. During part of the time with which this case is concerned, it was called IKOS (UK) Limited. For the sake of simplicity I shall refer to it as IKOS UK throughout. It was one of the partners of IKOS Partners to which I shall refer below, until IKOS Partners was dissolved as of 31 December 2006. Between October 2006 and April 2008, IKOS UK provided programming, research and technical services to IKOS CIF. It is not disputed that some of the software used in the IKOS business was written by IKOS UK employees between March 1993 and April 2008.
6. …
7. The Third Defendant, IKOS CIF, is a Cypriot company incorporated on 29 December 1995. It was formerly known as IKOS OFC Limited. It has been IKOS Asset Management Limited's (IKOS AM) sub-investment manager since February 2006 (for the equities portfolio only) and since 1 July 2006 it has been IKOS AM's sub-investment manager for all the management of futures portfolios. It is not disputed that some of the software used by the IKOS business was also written by employees of IKOS CIF.
8. The Fourth Defendant, IKOS AM is a Cayman Islands company incorporated on 12 January 1996 and is the investment manager to the IKOS Fund which is a hedge fund also located in the Cayman Islands.
9. Currently, Ms Ambrosiadou is the Chief Executive Officer and a director of IKOS CIF and is the Chief Executive Officer and a director of IKOS AM.”
The only gloss that needs to be added to this summary is that the second defendant ceased trading some time ago and has been struck off of the register and Ms Ambrosiadou is no longer the Chief Executive Officer and a director of IKOS CIF.
Asplin J mentions there having been numerous sets of proceedings between Dr Coward, IKOS and associated parties. Since 2013 the litigation has continued to proliferate. I am told they have now been involved in a total of 31 civil claims in six jurisdictions.
Reference was also made by Asplin J to Dr Coward and Ms Ambrosiadou's divorce proceedings in Greece that were commenced in April 2009. Divorce proceedings were commenced in Cyprus in 2010. Although their marriage was dissolved in January 2015, the financial aspects of their divorce proceedings have not been concluded. Indeed, Dr Coward's application that is the subject of this judgment is made with the explicit aim of obtaining access to documents Dr Coward says may assist him in the matrimonial proceedings in Cyprus in which he is seeking a share of the increase in the family wealth between the date of the marriage and the date of separating from Ms Ambrosiadou. That application was made to the court in Cyprus as long ago as 2010. IKOS takes a quite different view about the reasons why Dr Coward is making the application. It says that the application is nothing to do with the proceedings in Cyprus and that it is a general fishing exercise for the purpose of obtaining valuable IKOS documents.
In addition to the many civil claims, there are also ongoing criminal complaints against Dr Coward in Cyprus and Monaco arising out of the events that were the subject of Asplin J's judgment.
The most recent claim in this jurisdiction was brought by Dr Coward against Ms Ambrosiadou in the Commercial Court. Dr Coward alleged that that his former wife was in breach of contract and fiduciary duty arising out of two oral contracts. Mr Andrew Henshaw QC (as he then was), sitting as a Deputy Judge of the High Court, stayed the claim on the basis, inter alia, that Dr Coward did not provide a plausible basis for the alleged oral agreements and, therefore, was unable to satisfy the applicable jurisdictional gateway.
IKOS says that Dr Coward has not succeeded in a single one of the civil claims he has brought against IKOS and associated parties. This is controversial statement when put in this straightforward way because success can be a matter of degree. However, it appears that Dr Coward has not succeeded outright in any claim and IKOS and Ms Ambrosiadou have been largely, but not entirely successful, in the claims they have brought.
The application that is the subject matter of this judgment arises from an order made by Asplin J on 30 July 2013 dealing with issues that were consequential upon her judgment. Before describing the terms of the application, it is convenient to summarise the nature of the issues in dispute and relevant parts of the procedural history.
The claim
Dr Coward claimed to be the owner of the intellectual property rights in the Gauss software and databases which were and are central to the operation of IKOS' businesses. IKOS counterclaimed seeking a wide range of relief that would follow from their case that they held the IP rights in the software. IKOS also counterclaimed for relief in relation to allegations of breach of confidence.
It is common ground that Dr Coward severed his links with IKOS in December 2009 and took steps to set up his own competing business in Monaco. Before doing so, he downloaded IKOS' software covertly to the “Red Laptop” which he had acquired for the purpose. He also took with him other items of computer hardware the data on which was the subject of breach of the confidence claims brought by IKOS. The items of hardware were described as the “Burns Laptop”, the “Burns USB” and the “Steyning PC” (together “the Devices”). The Burns Laptop and the Burns USB belonged to Mr David Burns who was an employee of IKOS. The Steyning PC was so named because it was kept at Dr Coward and Ms Ambrosiadou's residence in West Sussex. The “Burns and Steyning Materials” comprise the information stored on the Devices.
During the course of the litigation Dr Coward handed the Steyning PC to Hogan Lovells, who then acted for him, in March 2010 and handed the Burns Laptop and the Burns USB to Hogan Lovells in August 2010.
An interlocutory order was made by Morgan J on 10 February 2012 which made provision for an inspection and confidentiality regime in relation to inter alia the “Forensic Materials”. They were to be subject to the regime in CPR 31.22 and the order contained permission to apply.
At the outset of the trial before Asplin J, IKOS accepted a proposal put forward by Dr Coward to narrow the issues before the court. This agreement is reflected in an amendment to IKOS' counterclaim with the addition of paragraphs 55A, 55B and 55C....
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