Robert Glew & Denton and Company Trustees Ltd v Dr Arpi Matossian-Rogers
| Jurisdiction | England & Wales |
| Judge | Stephen Davies |
| Judgment Date | 22 November 2019 |
| Neutral Citation | [2019] EWHC 3183 (Ch) |
| Date | 22 November 2019 |
| Docket Number | Case No: BL-2019-MAN-000051 |
| Court | Chancery Division |
[2019] EWHC 3183 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS IN MANCHESTER
INSOLVENCY AND COMPANIES LIST (Ch D)
Manchester Civil Justice Centre,
1 Bridge Street West, Manchester M60 9DJ
HIS HONOUR JUDGE Stephen Davies
SITTING AS A JUDGE OF THE HIGH COURT
Case No: BL-2019-MAN-000051
Mark Harper QC (instructed by Harrison Drury Solicitors, Preston) for the Claimants
Paul Strelitz (instructed by Venner Shipley Solicitors, London EC1A) for the First and Second Defendants
Hearing dates: 28 – 29 October 2019
Draft judgment circulated: 6 November 2019
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A paragraph 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.
His Honour Judge Stephen Davies
Introduction and summary of decision
The claimants seek permission under s.261 Companies Act 2006 [“ CA 2006”] to continue the claim issued on 28 May 2019 as a derivative claim. In summary, the claimants, being two of the minority shareholders in the third defendant company, Amro Biotech plc [“ the Company”], seek permission for the Company to bring a claim against the first defendant [“ Dr Rogers”] and the second defendant [“ Ms Pambakian”] alleging breach by them of their duties as directors towards the Company. The first and second defendants are, directly and indirectly through family shareholdings, the owners of 81.4% of the shares in the Company. The Company has, of course, taken no active part in the application for permission. Thus, although the Company is a nominal defendant to the claim form, for convenience I shall refer to Dr Rogers and Ms Pambakian as the defendants.
Both the claimants and the defendants have filed voluminous evidence and I have read and heard detailed and impressive submissions from their respective counsel Mr Harper QC and Mr Strelitz over the course of a two-day hearing. Having considered the evidence and the submissions I have come to the conclusion that permission should not be granted. After circulation of my judgment in draft Mr Harper invited me to consider amplifying or clarifying certain parts of the judgment and I confirm that to the extent I consider it necessary or otherwise appropriate I have done so. Some of his invitations appeared to me clearly to fall on the wrong side of the line between legitimate requests for amplification or clarification and attempts to re-argue the case.
I set out my reasons below under the following sub-headings:
A. Relevant facts
| Section | Subject | Paragraphs |
| A | Relevant facts | 4 – 40 |
| B | Relevant legal principles | 41 – 51 |
| C | Evaluation of the strength, size and importance of the claims | 52 – 84 |
| D | Consideration of the relevant factors | 85 – 100 |
| E | Conclusions | 101 – 109 |
I cannot on an application such as this resolve disputed factual issues where all of the relevant evidence may not be before me and where oral evidence may be required. Nonetheless, in order to determine this application fairly and in accordance with the relevant principles it has been necessary for me to consider the documentary evidence produced in some detail and with some care in order that I can make a proper assessment of the strength of the proposed claims before deciding whether or not permission should be given for the claim to be continued as a derivative claim.
Dr Rogers is an academic scientist who has had a career as a lecturer and researcher at the Royal London Hospital. She has also had a lifelong interest in and had undertaken discovery research into the causes and treatment of diabetes. In the course of that research she identified certain monoclonal antibodies as having the potential to be used in the treatment of diabetes and in the prediction of the onset of diabetes. In 1997 she filed for and duly obtained a patent in the UK (and later internationally) in relation to discoveries she had made in that area [“ the 1997 patent”]. By 1999 she had resigned as lecturer, her intention being to work with her late husband and her daughter, Ms Pambakian, to proceed from discovery research into development research with a view to producing a medicine using monocolonal antibodies to treat diabetes.
It was clear that finance would be required in order to fund research and development [“ R&D”], including clinical trials and obtaining regulatory approval, before products could be developed, approved and placed on the market. The Company was incorporated for this purpose in May 1999 as a result of advice from a Mr Watkins (an accountant, who became finance director of the Company and who remains a shareholder and now supports this claim) and to Mr Walker (another accountant, then with a firm known as Mazars, who became commercial director of the Company and who also remains a shareholder and supports this claim). The strategy was for the Company to secure investment funding and then undertake the necessary R&D and obtain the necessary approvals leading to production and marketing. For these purposes it was decided that the Company would be granted a licence by Dr Rogers to use the 1997 patent. It was agreed that the Rogers family would obtain at least 75% of the controlling shareholding in the Company. Whilst the witness statements of Dr Rogers on the one hand and Mr Watkins and Mr Walker on the other reveal disputes as to what was agreed between them at the time of incorporation of the Company, I am not in any position to draw any clear conclusions one way or another and nor are such matters decisive of the current application.
What is common ground is that in July 1999 two relevant agreements, drafted by reputable solicitors, were entered into between Dr Rogers and the Company. The first was a Patent Licence Agreement [“ the 1999 PLA”] and the second was a Service Agreement [“ the SA”]. The provisions of these agreements in relation to the ownership of what was defined as “Improvements” to the defined “Patent Rights” (defined as being the 1997 patent) and “Know-How” (defined as being the know-how relating to the 1997 patent) are of critical importance to this case.
In summary, under the 1999 PLA Dr Rogers granted the Company the right to use the patent rights and the know-how for a minimum term of 15 years, rolling on from year to year unless subsequently terminated on notice 1, for the purposes of carrying out R&D to obtain authorisation to market and sell the “Products” (defined as “diagnostic, predictive and medicinal products for diabetes and any other applications discovered during the carrying out
of R&D or otherwise during the term of the licence”) in return for the payment of 4% royalty on the “Net Sales Value” (as defined) of such productsOf considerable significance to this case are the provisions made for improvements, widely defined as being “all improvements, modifications or adaptions to any part of the inventions the subject of the patent rights and the know-how which might reasonably be of commercial interest to either party in the development, manufacture or supply of the products which may be made or acquired by either Dr Rogers or the Company during the term of the agreement”. For convenience and save where necessary to distinguish I shall refer to this compendiously as improvements to the Intellectual Property [“ IP”]. Under clause 10, as material and in summary: (a) there was a mutual obligation to disclose improvements to each other; (b) the Company was entitled to use and exploit improvements disclosed by Dr Rogers during the course of the agreement; (c) improvements arising from work carried out by Dr Rogers alone should remain her exclusive property, whereas improvements arising from work carried out by the Company alone should remain its exclusive property and each party should have the exclusive right to apply for patent protection in that respect; (d) the Company's improvements included those arising from work carried out by Dr Rogers for the Company under the 1999 PLA; (e) improvements arising from work carried out jointly should belong to the parties equally and they should each have the right to use such information independently of each other.
Although there was no definition of what was meant by “work carried out”, there was a consultancy provision in clause 12 of the 1999 PLA under which Dr Rogers agreed to provide consultancy services in return for remuneration as payable under the SA, which included assisting in the ongoing operation and development of the know-how. She also agreed to assign to the Company all rights she might have in respect of the product of the consultancy services, including the right to apply for patent or other IP rights protection.
Under the SA the Company appointed Dr Rogers as chairman and joint CEO at an annual salary of £50,000 plus a bonus provision on the basis of her devoting substantially her whole time, attention and ability to her duties. Under clause 11, entitled “inventions”, it was provided, as material and in summary, that in relation to IP: (1) it was foreseen that Dr Rogers might generate IP in the course of her duties; (2) it was agreed that she had a duty to further the Company's interests in that respect; (3) she was required to disclose any such IP “relating to or capable of being used in the” Company's business to the Company on the basis that it was to be its absolute property to exploit. It was also provided that if “during the appointment” she should generate IP which was not to be the Company's property then the Company nonetheless had the right to acquire the IP within 6 months of her...
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