Your Response Ltd v Datateam Business Media Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Moore-Bick,Lord Justice Davis,Lord Justice Floyd
Judgment Date14 Mar 2014
Neutral Citation[2014] EWCA Civ 281
Docket NumberCase No: B2/2013/1812

[2014] EWCA Civ 281

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE BRIGHTON COUNTY COURT

(District Judge Bell)

2 RH 00211

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Moore-Bick

Lord Justice Davis

and

Lord Justice Floyd

Case No: B2/2013/1812

Between:
Your Response Limited
Claimant/Respondent
and
Datateam Business Media Limited
Defendant/Appellant

Mr. Peter Susman Q.C. and Mr. Noel Dilworth (instructed by Girlings Solicitors) for the appellant

Mr. Stephen Cogley Q.C. and Miss Iris Ferber (instructed by Lopian Wagner Solicitors) for the respondent

Hearing date : 13 th February 2014

Lord Justice Moore-Bick
1

This is an appeal against the order of District Judge Bell made following the trial of a claim by the respondent, Your Response Ltd, against the appellant, Datateam Business Media Ltd, for sums alleged to be due under a contract for the management of an electronic database and for damages for breach of contract. By his order the judge gave judgment for the respondent on its claim and dismissed the appellant's counterclaim for damages. An appeal from the order of the District Judge lies to this court because the order is a final order made in a Part 7 claim allocated to the multitrack. It raises an interesting and important question, namely, whether it is possible to exercise a common law possessory lien over an electronic database.

2

The facts giving rise to the dispute between the parties can be described quite shortly. The appellant ("the publisher") publishes a number of magazines which are distributed to a large number of different subscribers. (Although some of the publications are made available to readers at no charge, being paid for by advertising revenue, it is convenient for present purposes to refer to the recipients generally as subscribers.) For the purpose of managing printing and distribution and for other purposes relating to its business the publisher keeps records containing information relating to subscribers, such as their names, addresses, the publications they receive and other information necessary to enable it to operate its business efficiently. By the end of 2009 the information was being held in electronic form in what is commonly known as a database. It required regular amendment to ensure that the information it contained was up-to-date. The evidence suggests that hundreds of amendments might be required in a single day.

3

The respondent ("the data manager") carries on business as a database manager, that is, it offers customers the service of holding electronic databases and amending them as necessary in order to ensure that the information they contain is up-to-date. In about March 2010 the publisher engaged the data manager to hold and maintain its database of subscribers. The contract was not embodied in a formal agreement, but was made partly orally and partly in writing. It was agreed at trial, however, that the best evidence of the main terms agreed between the two parties was to be found in an email sent by the data manager to the publisher on 26 th February 2010. Unfortunately, that email was silent about the means by which the database was to be transferred to the data manager or what was to be done with it when the contract came to an end. Indeed, the email was silent about the circumstances in which, or the terms on which, the contract could be terminated.

4

During the summer of 2011 things started to go wrong. The publisher was not happy with the service the data manager was providing and privately resolved to bring the contract to an end. On 17 th October 2011 there was a telephone conversation between Mr. Alex Whetton, one of the publisher's staff, and Mr. David Hooker, the proprietor of the data manager, in the course of which Mr. Whetton purported to terminate the contract with effect from the end of the month. The date of termination was subsequently extended to 16 th November, representing a total of one month's notice, which the publisher considered sufficient.

5

On 31 st October 2011 the data manager sent the publisher an invoice for fees due at the end of August 2011. Under the contract payment was due at 30 days. The next day (1 st November 2011) Mr. Whetton asked the data manager to provide certain data and the two of them spoke on the telephone the day after (2 nd November 2011). It seems that their exchanges did nothing to resolve their differences, because the data manager failed to provide the data that Mr. Whetton had requested and on 9 th November 2011 it stopped providing any services under the contract. Thereafter there was an impasse: the data manager refused to release the database or give the publisher access to it until all outstanding fees were paid; the publisher refused to pay until the database was made available to it. In the event the publisher engaged another company to reconstitute the database.

6

On 15 th February 2012 the data manager started proceedings claiming fees alleged to be due for work carried out under the contract between 1 st August and 9 th November 2011 and damages for repudiation by the publisher of the contract. The publisher counterclaimed for damages for breach of contract represented by the cost of reconstituting the database.

7

Although a number of questions were argued before the judge, only two arise for consideration on this appeal: (i) what period of notice the publisher was required to give in order to bring the contract to an end; and (ii) whether the data manager was entitled to exercise a lien over the database pending payment of its outstanding fees. In an impressive and carefully reasoned judgment the judge held that a reasonable period of notice was three months, as the data manager had contended, and that the publisher had therefore repudiated the contract by making it clear that it would not continue to perform after 16 th November 2011. He also held that the data manager was entitled to withhold the data until its outstanding fees were paid. He rejected the publisher's argument that the exercise of a lien was inconsistent with the terms of the contract. He also rejected the argument that it is not possible to exercise a lien over intangible property, in this case electronic data.

8

Mr. Susman Q.C. for the publisher and Mr. Cogley Q.C. for the data manager both concentrated their attention almost entirely on the second issue, which undoubtedly raises some interesting and difficult questions. It is also a matter of some general importance and I therefore propose to consider it first.

Possessory lien

9

The judge was clearly aware of the need for the law to keep abreast of technological developments and he appears to have been struck by the analogy that can be drawn between information kept in hard copy in the form of ledgers (over which a book keeper could exercise control by means of physical possession) and information kept in electronic form, over which a data manager could exercise control by electronic means. Thus in paragraph 111 of his judgment he said:

"It seems to me in the present case that a lien can apply to the electronic data which was in the possession of the Claimant. It would not be appropriate for the law to ignore the development in the real world of record keeping moving from hard copy records into electronic media. The decision which I have to reach today is of limited purview and no doubt this topic may arise again in other cases in other contexts. But for the purpose of the particular decision which I have to reach in this case, I do not accept the submissions by counsel for the Defendant that a lien cannot exist over the electronic data which was in the Claimant's possession in just the same way as it could exist over the hard copy records in the Claimant's possession."

10

I have some sympathy for that view, but the judge did not have his attention drawn to some of the leading authorities, in particular OBG Ltd v Allan [2007] UKHL 21, [2008] 1 A.C. 1, and in any event I think it is necessary to examine whether it is consistent with principle.

11

In this case the court is concerned only with the exercise of a common law lien, which, in its origin, permits a bailee in possession of chattels to refuse to redeliver them to the bailor until he has received payment of outstanding sums due to him. In Tappenden v Artus [1964] 2 Q.B. 185 the owner of a van allowed a customer to use it pending completion of a hire-purchase agreement. The van broke down and was delivered to the defendant for repairs. The price of the repairs remained outstanding and a question arose whether the garage could exercise a lien over it against the owner. At page 194–1995 Diplock L.J. described the common law possessory lien in the following terms:

"The common law lien of an artificer is of very ancient origin, dating from a time when remedies by action upon contracts not under seal were still at an early and imperfect stage of development: see the old authorities cited by Lord Ellenborough C.J. in Chase v. Westmore (1816) 5 M. & S. 180. Because it arises in consequence of a contract, it is tempting to a twentieth-century lawyer to think of a common law lien as possessing the characteristics of a contractual right, express or implied, created by mutual agreement between the parties to the contract. But this would be to mistake its legal nature. Like a right of action for damages, it is a remedy for breach of contract which the common law confers upon an artificer to whom the possession of goods is lawfully given for the purpose of his doing work upon them in consideration of a money payment. If, pursuant to the contract, the artificer does his work, he...

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