VITOF Ltd v ANTONY JOHN ALTOFT

JurisdictionEngland & Wales
CourtChancery Division
JudgeRICHARD ARNOLD Q.C.
Judgment Date11 Jul 2006
Neutral Citation[2006] EWHC 1678 (Ch)
Docket NumberCase No: HC05C02333

[2006] EWHC 1678 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISIO

INTELLECTUAL PROPERTY

Before:

Richard Arnold Q.C. (sitting as a Deputy High Court Judge)

Case No: HC05C02333

Between:
Vitof Limited
Claimant
and
Antony John Altoft
Defendant

Mark Chacksfield (instructed by Faegre & Benson LLP) for the Claimant

The Defendant in person

Hearing dates: 26–27 June 2006

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

RICHARD ARNOLD Q.C.

RICHARD ARNOLD Q.C.:

Introduction

1

This is my judgment on the following applications:

i) An application by the Defendant ("Mr Altoft") made by application notice dated 23 November 2005 for security for costs. As I understand it, this application was originally listed to be heard before Master Teverson on 9 February 2006. On that occasion it was adjourned to 28 March 2006 with directions for the filing of further evidence in the meantime. On 28 March 2006 Master Teverson ordered that the application be referred to the Judge to be heard immediately after the next application.

ii) An application by the Claimant ("Vitof") made by application notice dated 3 February 2006 for summary judgment on its claims. As I understand it, this application was also originally listed to be heard before Master Teverson on 9 February 2006. He referred the matter to the Judge, I presume because Vitof was seeking injunctions, on the first available date after 3 April 2006 and gave directions for the filing of further evidence in the meantime.

iii) An application by Vitof made by the same application notice to strike out paragraphs 1–6 of the Counterclaim.

iv) An application by Vitof made by the same application notice for an order that costs reserved by paragraph 4 of an Order of Michel Kallipetis Q.C. sitting as a Deputy High Court Judge dated 6 December 2005 be paid by Mr Altoft.

v) An application by Mr Altoft made by application notice dated 30 March 2006 for reverse summary judgment on Vitof's claims.

vi) An application by Mr Altoft made by the same application notice for summary judgment on his counterclaims.

2

These applications first came before me on 6 April 2006. The position on that occasion was that Mr Altoft had not given the 14 days' notice of his applications for summary judgment required by CPR r. 24.4(3), but only the 3 days' notice required for other sorts of application by CPR r 21.7(1)(b). Vitof was prepared to proceed with the remaining applications then, but wished to have time to file evidence in response to Mr Altoft's summary judgment applications, and in particular his application for summary judgment on his counterclaims. It seemed to me that it would make more sense for all the applications to be heard together once the evidence on Mr Altoft's applications was complete. Accordingly I adjourned the applications until 22 May 2006 with directions for the filing of further evidence in the meantime. During the hearing I discussed with counsel then appearing for Vitof certain deficiencies in Vitof's Particulars of Claim, as a result of which he indicated that Vitof would be likely to apply to amend.

3

In the event Vitof did not send its draft amended Particulars of Claim to Mr Altoft until 19 May 2006 (the Friday before the Monday on which the adjourned applications were due to be heard). Moreover Mr Altoft told me that he had not seen the draft until late on 20 May 2006. Mr Altoft's position was that he did not seriously oppose Vitof being granted permission to amend, but he wanted to have more time in which to digest the amendments and possibly to file further evidence. Accordingly I granted Vitof permission to amend on the usual terms as to consequential amendments and costs, and adjourned the applications for a second time until 26 June 2006 with directions for the filing of further evidence in the meantime.

4

Both parties did file further evidence. Mr Altoft also filed a further witness statement for which he did not have permission, but Vitof did not resist the admission of this evidence. In addition Mr Altoft served an Amended Defence and Counterclaim which included amendments to the Counterclaim which were not consequential upon the amendments to the Particulars of Claim. Vitof did not resist the amendments on this technical ground, but did so on the substantive ground that they were strikable for the same reasons as it sought to strike out paragraphs 1–6 of the original Counterclaim.

Principles applicable to summary judgment applications

5

Since the principal applications before me are applications for summary judgment, it is appropriate to remind myself of the principles applicable to such applications. These principles have been considered in the leading cases of Swain v Hillman [2001] 1 All ER 91 at 94–95 and Three Rivers District Council v Bank of England (No 3) [2003] 2 AC 1 at [90]-[97]. From these authorities and ED& F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472 at [8]-[11] Sir Andrew Morritt V.-C. derived the following propositions in Celador Products Ltd v Melville [2004] EWHC 2362 (Ch) at [6]-[7]:

"(a) it is for the applicant for summary judgment to demonstrate that the respondent has no real prospect of success in his claim or defence as the case may be;

(b) a 'real' prospect of success is one which is more than fanciful or merely arguable;

(c) if it is clear beyond question that the respondent will not be able at trial to establish the facts on which he relies then his prospects of success are not real; but

(d) the court is not entitled on an application for summary judgment to conduct a trial on documents without disclosure or cross-examination."

6

This summary was recently referred to with evident approval by Mummery LJ (with whom Longmore LJ and Lewison J agreed) in Doncaster Pharmaceuticals Group Ltd v The Bolton Pharmaceutical Co 100 Ltd [2006] EWCA Civ 661 at [4]. Mummery LJ went on at [5]-[18] to sound a number of cautionary notes about the use of the summary judgment procedure. In approaching this case I have borne these warnings in mind.

The factual background

7

This litigation is the regrettable product of a falling out between two business partners (using that word in its popular rather than its technical legal sense), Mr Altoft and Luciano Chiovitti. Vitof was incorporated as the vehicle for that partnership. As counsel for Vitof acknowledged in opening Vitof's applications, the dispute between Mr Altoft and Mr Chiovitti is a bitter and factually complex one in which each accuses the other of serious wrongdoing. There is a considerable volume of evidence from each side (although the volume looks rather worse than it is, since the bundles prepared for this hearing include two or more copies of many documents and since Mr Altoft's materials in particular are, for understandable reasons, somewhat repetitious) and there are numerous conflicts of evidence.

8

Counsel for Vitof acknowledged that the Court could not resolve many of the issues arising out of the dispute between Mr Altoft and Mr Chiovitti without a trial, and that it would be wrong even to attempt to do so at this stage. Accordingly, and as previously notified to Mr Altoft in counsel's skeleton argument dated 20 May 2006 and in a letter from Vitof's solicitors dated 19 June 2006, counsel for Vitof did not seek summary judgment to the full extent presaged by Vitof's application notice. Instead he sought judgment on a more limited range of claims which he submitted could properly be dealt with summarily.

9

Nevertheless, in order to place those claims and Mr Altoft's counterclaims in context it is necessary for me to outline the facts of the matter as they now appear. In this section I shall endeavour to stick to facts that are either common ground or at least not seriously disputed, paying particular attention to the documentary evidence. I shall also attempt to indicate the facts that are disputed between the parties.

10

Both Mr Altoft and Mr Chiovitti have considerable experience in the labelling industry.

11

Mr Chiovitti is a Canadian citizen. He says he has a Bachelor of Mechanical Engineering degree (with a specialisation in Control Systems Engineering) from Concordia University, Montreal, Quebec. He was employed by Avery Label Canada, Inc from 1989 to 1996, by CCL Label from 1996 to 1999 and by Label-Aire, Inc from 1999 to July 2002. Label-Aire is a Delaware corporation based in California. Mr Chiovitti claims to have acquired broad experience and expertise in a number of aspects of the industry as a result of these employments. Mr Altoft disputes the extent of Mr Chiovitti's experience and expertise, but he does not dispute that Mr Chiovitti had experience of sales.

12

Mr Altoft is a British citizen. He is an electronic engineer with expertise in writing computer software. From about 1992-summer 1995 and from about January 1996–1997 he worked for Avery Dennison Deutschland GmbH. It is common ground that during this period Mr Altoft came into contact with Mr Chiovitti. Over the next few years Mr Chiovitti engaged, or arranged for his employer to engage, Mr Altoft to write or modify a number of pieces of software for Avery's labellers.

13

In 2000 Mr Chiovitti introduced Mr Altoft to Label-Aire, for whom Mr Chiovitti was by then working. As a result Mr Altoft entered into a written contract with Label-Aire dated 1 June 2000 to supply source code for a new generation applicator line and associated services. Clause 4.02 of this contract provides:

"All trade secrets, confidential or proprietary information, know-how, engineering data, drawings, specifications, notes, prototypes, computer programs, technical data, files, documentation, and the entire work product arising...

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