Seakom Ltd and Another v Knowledgepool Group Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Carr |
| Judgment Date | 18 December 2013 |
| Neutral Citation | [2013] EWHC 4007 (Ch) |
| Court | Chancery Division |
| Date | 18 December 2013 |
| Docket Number | Case No: HC12CO2182 |
[2013] EWHC 4007 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon Mrs Justice Carr Dbe
Case No: HC12CO2182
Jamie Riley, Philip HinksandJames McWilliams (instructed by Be Legal Limited Solicitors) for the Claimants
Derek Spitz and Michael Clark (instructed by Payne Hicks Beach) for the Defendant
Hearing dates: 26, 27, 28, 29 November, 2, 3, 4 December 2013
Introduction and overview
This is a trial on liability in a claim by the First Claimant, Seakom Limited ("SL"), and the Second Claimant, Seakom International Limited ("SIL"), (together "Seakom"), against Knowledgepool Group Limited ("KGL").
The claim arises out of contracts between the parties in respect of a website originally developed by SL and known as www.coursemonster.co.uk ("the website") ("Coursemonster"). Coursemonster was a database and search engine for professional training courses. It remains a successful website as of today, providing access to some 15,000 courses on 600,000 different dates per week. The key benefit is said to be that it allows customers to identify and satisfy their own requirements and check availability themselves. Having identified a course, the customer sends an email enquiry or calls a dedicated telephone line. The sales team then confirms availability, books the customer onto the course, takes payment and sends out joining instructions. The typical profit margin for this type of retail business is said to be in the region of a healthy 30% to 40%.
The first contract under scrutiny was entered into between SL and Business Training Partnership Limited ("BTP") on 20 th September 2005 ("the BTP contract"). The second was concluded on 17 th December 2008 between SIL and KGL ("the KGL contract"). By this stage SL had transferred its business and assets to SIL, and KGL had bought out BTP. A related dispute arises out of an agreement between SL and BTP in relation to BTP's own database website at www.thecourselocator.co.uk, known as Courselocator ("Courselocator").
Following the KGL contract Coursemonster sales dropped significantly, leading SIL to investigate the cause. Seakom say that the result of the investigation was to reveal serious malpractice and breaches of the BTP and KGL contracts by BTP and KGL.
The discovery of these alleged matters was raised with KGL in early 2009. Unsuccessful attempts were made to renegotiate or vary the terms of the KGL contract. Ultimately, however, on 17 th June 2009 KGL served notice of termination with effect from 17 th October 2009.
Seakom allege that they are owed significant commission from KGL under the contracts. KGL denies any liability to SL or SIL on multiple grounds including the following :
a) That the claim by SL is (partially) statute-barred;
b) KGL did not acquire the liabilities of BTP and so is not liable for any breaches of BTP;
c) That Seakom are only entitled to commission on "fresh internet referrals" via the Coursemonster website;
d) That Seakom are estopped by convention from contending the contrary.
SL and SIL
SL was established in 2004 by a Mr Kelvin Durcan ("Mr Durcan") and Mr Mario Moeller ("Mr Moeller"). Mr Durcan had a background in information technology ("IT") and had set up a training brokerage business which re-sold IT courses to companies and their employees. Mr Moeller was a website developer specialising in search engine optimisation.
As SL, Mr Durcan and Mr Moeller developed Coursemonster, launching the website in September 2004. In February 2008 they decided to part company and to divide SL into two separate businesses, with Mr Moeller operating in Australia and Mr Durcan continuing to operate in the UK. To this end, by written agreement dated 12 th February 2008 ("the Seakom Transfer Agreement"), the business and assets of SL were transferred to SIL, a BVI registered company then and now owned by Mr Durcan.
By clause 3 of the Seakom Transfer Agreement, SL assigned to SIL the "Outstanding Agreements", defined as agreements which SL had entered into in relation to business prior to the transfer and which remained to be performed wholly or in part. Where assignment was not possible without the consent of the relevant third party, it was agreed that SL and SIL would each use reasonable endeavours to procure the assignment or novation of the "Outstanding Agreement". Pending assignment or novation SIL would perform the agreement as sub-contractor for SL and SL would hold the benefit of the agreement on trust for SIL.
BTP
BTP was established in 1998 by a Mr Kevin Senior ("Mr Senior") and Mr Craig Hyslop ("Mr Hyslop"). It specialised in brokering training courses to corporate managers, focussing on providing managed services whereby it aimed to provide corporate clients with bespoke training services at a set fee. The ultimate target for BTP was the obtaining of a managed services agreement. The provision of managed services does not necessarily mean the provision of wholly exclusive services. It can mean the provision of managed services on a "preferred" basis (where the provider would be the first port of call), or the provision of managed services limited to a particular division, type of training or geographical area.
Mr Senior and Mr Durcan became acquainted in 2003 and became good friends. They formed the view that a strategic partnership would be of mutual benefit to them — with SL focussing on attracting business opportunities from the web with its technological expertise and BTP applying its sales resources to service these opportunities.
This led to the BTP contract. In outline, BTP would deal with Coursemonster enquiries in return for which it would be paid 60% of the profits of sale for servicing SL's customers. Marketing expenditure would be divided correspondingly 60%/40%. BTP was to track Coursemonster sales using its internal delegate tracing system and provide customer services to agreed levels.
KGL
KGL provides training services. In early 2004 it was bought out of administration by Root Capital LLP, a technology and media investment vehicle of which Mr Simon Philips ("Mr Philips") was and is a partner and co-owner.
In 2007 Mr Philips approached Mr Senior and Mr Hyslop with a proposal to acquire BTP. In mid-March 2008 KGL purchased the entire share capital of BTP. The BTP sales team dedicated to the BTP agreement moved across to KGL as a result. On 1 st September 2008 the business and assets of BTP were hived up to KGL and BTP ceased all operations. BTP was dissolved on 22 nd November 2011.
The BTP contract was due to expire on 20 th September 2008. On 17 th September 2008 Mr Hyslop (by then at KGL) sent a value proposition summary ("the VPS") to SIL, setting out the advantages of continuing the relationship. Following negotiations, the KGL contract was executed. Its terms were similar to those of the BTP contract, though the KGL contract was to run for a rolling twelve month period with either party entitled to terminate on four months' written notice, instead of an initial three year term. A business plan was incorporated.
The history of events in more detail
–2005
BTP was founded in 1998 by Mr Senior and Mr Hyslop, with the focus being on the provision of "managed services". The target was corporate clients, in contrast to a website like Coursemonster which was aimed at individuals searching for their own training requirements. BTP sought clients through "cold-calling".
In 2002 Ms Claire Smith ("Ms Smith") joined BTP, largely in an administrative role. In January 2003 BTP recruited two salesman, Mr Oliver Browning ("Mr Browning") and Mr Steve Allen ("Mr Allen").
Courselocator was founded in 2003 and aimed at the retail market. In addition to cold-calling in relation to the selling of managed services for BTP, Mr Browning was in charge of dealing with enquiries for Courselocator. In mid-2005 Ms Smith took over that role.
At around the same time as Courselocator was being launched, Mr Durcan saw the opportunity to create and develop, with Mr Moeller, an internet portal for selling training courses. This became Coursemonster.
The BTP contract
Mr Durcan discussed his plans with Mr Senior and in due course the BTP contract, drafted by BTP's lawyers, was executed in September 2005. The proposal was that all Coursemonster leads and enquiries would be channelled exclusively to BTP. The sales function for Coursemonster moved entirely to BTP, which would provide dedicated staff, telephone lines and email addresses to service the leads coming into Coursemonster. In addition, BTP had a customer contact management system using the Microsoft Customer Relationship Management ("CRM") database which could track the progress of leads. It was agreed that the information coming in via Coursemonster was confidential and belonged to SL. At around this time, SL recruited an IT expert, Mr Tim Bushell ("Mr Bushell"), to continue the development of Coursemonster.
Performance of the BTP contract
There were three alternative ways in which a customer could be referred to BTP via the Coursemonster website : web form enquiry, direct email enquiry or telephone enquiry. Logs of web form enquiries were automatically generated, and SL could monitor these. But SL had no means of monitoring email or telephone enquiries which came into the BTP team. The BTP sales team would manually input enquiry details into the CRM, with a Coursemonster enquiry being flagged as such. SL did not have contemporaneous access to the CRM, or to the duplicate record created by CRM on a separate system known as "Integrity" and then "Enterprise Study" ("ES"), although it did have audit...
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