Ocean Software Ltd v Kay
|England & Wales
|LORD JUSTICE SCOTT,SIR DAVID CROOM-JOHNSON
|22 January 1992
|Judgment citation (vLex)
| EWCA Civ J0122-4
|22 January 1992
|Court of Appeal (Civil Division)
 EWCA Civ J0122-4
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(HIS HONOUR JUDGE PAYNTER-REECE, Q.C.)
Royal Courts of Justice
Lord Justice Scott
Sir David Croom-Johnson
MR CHARLES K. MACHIN, instructed by Messrs Zatman & Co. (Manchester), appeared for the Appellants (Defendants).
MR B. CLIVE FREEDMAN, instructed by Messrs Berg & Co. (Manchester), appeared for the Respondent (Plaintiff).
There is before the court an application made on behalf of a number of defendants—there are eight defendants altogether—for the discharge of a Mareva injunction granted, in circumstances which I will in a moment mention, on 20th December 1991, to the plaintiff, Ocean Software Limited. Of the eight defendants the first and second defendants are individuals, Mr Kay and Mr Webb. The third defendant is a company Software Creations (ROM Developments) Limited. The fourth, fifth, sixth, seventh and eighth defendants are also companies whose corporate titles include "Software Creations". All these companies are members of the same group and are owned or controlled by Mr Kay and Mr Webb.
The application for the discharge of the Mareva injunction and the associated applications that Mr Machin, for the defendants, and Mr Freedman, for the plaintiff, have indicated they are respectively minded to make are not, in my opinion, applications suitable to be heard by the Court of Appeal. In order to explain why I have come to that conclusion, let me describe the procedural history.
On 20th December the plaintiff made an ex parte application to His Honour Judge Paynter Reece, sitting as a judge in the Queen's Bench Division, for the grant of a Mareva injunction. The Mareva injunction was sought for the purpose of protecting the fruits of an action which the plaintiff proposed to bring against the defendants for the recovery of 50 per cent of royalties received by one or other of the defendants—in the event it has transpired it was the third defendant—in respect of a certain computer game called Solstice. I need not go into the details. Judge Paynter-Reece came to the conclusion that there was no sufficient reason why notice of the intended application had not been given to the proposed defendants and he therefore refused the application.
On the same day, 20th December, the plaintiff appealed from that refusal to the Court of Appeal. The appeal was necessarily, as the first instance application had been, ex parte. The defendants were not notified of the matter and knew nothing of it.
The appeal came before Lord Justice Glidewell and Lord Justice Nolan. They concluded that the judge was wrong to have refused the ex parte application and they made an order in the terms of the minutes of order which had been prepared for the purposes of the first instance hearing.
The order was in a form normal for the grant of Mareva injunctions in the Queen's Bench Division, save for the addition of a paragraph to the effect that the appeal against the order of His Honour Judge Paynter-Reece was allowed. Paragraph 2 of the order contained an injunction restraining the defendants from parting with monies received from a Japanese entity called Nintendo, Nintendo being the party from whom it was anticipated the royalties would be received. The injunction was limited to £160,000.
Paragraph 3 of the order imposed a Mareva injunction on the first and second defendants and the third defendant. Again, the sum of £160,000 was specified as the sum up to which the Mareva injunction would bite. There were the usual provisos enabling the first and second defendants to pay living expenses and enabling the third defendant to pay sums it might need to pay in the ordinary course of its business.
There followed provisions, also usual in the grant of Mareva injunctions, requiring discovery from the first and second defendants in relation to sums that they had received from Nintendo and the whereabouts of those sums. Similar discovery was sought from the third defendant. Paragraph 5 of the order granted:
"Liberty to apply upon notice in writing to the Plaintiff's solicitors to discharge or vary this Order."
This is a common provision included in ex parte injunctions whether of a Mareva character or of any other character. I should mention also paragraph 6 of the order which provided that:
"Costs reserved here and below to the court hearing first inter partes hearing."
That provision shows that the court contemplated that there would be an inter partes hearing. It must, I think, have been contemplated that the inter partes hearing would be before a first instance court and not before the Court of Appeal itself. The ex parte order made by the Court of Appeal was in due course served. No doubt notice of the order was given to the banks with which the defendants were believed to have accounts.
On 30th December the defendants made an application to vary the 20th December order. Two days notice of intention to make the application was not, for obvious practical reasons, given, but the plaintiff was notified of the application and was represented by counsel. The application was made to the Court of Appeal. We have not seen any copy of the application, but I take it that it was an application to discharge or vary the 20th December order.
The 30th December fell in the vacation. The application came before Lord Justice Farquharson and Lord Justice Nolan. Time was limited, and it was not to be expected that they could have dealt with the whole of the application on that occasion, even if they had thought it right to do so. Some evidence in answer to the affidavit evidence on which the plaintiff had relied for the purpose of its ex parte application had been prepared on behalf of the defendants and was before the court. But the plaintiff had had no opportunity to answer that evidence. The defendants themselves, if afforded more time, might very well have wished to supplement that evidence. So it is not surprising that the 30th December hearing did not proceed as a full-blown application to discharge the 20th December order, but became simply an application to vary that order so as to make it more satisfactory for the defendants to live with until such time as they were able to get before the court their full application to discharge.
The order made by the Court of Appeal on 30th December amended the 20th December order by substituting for the figure of £160,000 in paragraphs 2 and 3 the lower figure of £110,000. No doubt the affidavit evidence of the defendants suggested that £110,000 was the top figure of royalties received that could be claimed by the plaintiff. In addition, the sum allowed to the first and second defendants for their living expenses was very substantially increased, and various other amendments were made, which I will not call trivial, but which are not sufficiently relevant for present purposes to require mention.
The order of 30th December included an order that "this application be adjourned to a full court hearing such hearing be arranged so as to take place during the 22nd and 23rd days of January 1992." We have been told by Mr Machin, who was present before the court on the defendants' behalf on that occasion (counsel appearing then for the plaintiff was not Mr Freedman, who is before us today for the plaintiff), that he raised with the court the question whether he was making his application for discharge in the right place—that is to say, whether he was justified in making the application in the Court of Appeal, or whether he should have applied in the Queen's Bench Division. Mr Machin tells me that the view expressed by the members of the court when he put the point to them was that he was in the right place and that the Court of Appeal was the correct court to entertain an application to discharge the 20th December ex parte order. I do not, of course, doubt Mr Machin's recollection of the manner in which the point was dealt with by the members of the Court of Appeal on 30th December, but I...
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