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England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Health & Case Management Ltd v The Physiotherapy Network Ltd  EWHC 869 (QB) (19 April 2018)
Cite as:  EWHC 869 (QB)
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| Health & Case Management Limited
- and –
|The Physiotherapy Network Limited
for the Claimant
Mark Spackman (instructed by Douglas-Jones Mercer) for the Defendant
Hearing dates: 6-8 December 2017, 15 January and 23 February 2018
Crown Copyright ©
The Honourable Mr Justice Nicklin :
Contractual arrangements between HCML and TPN
"HCML anticipates making circa. 200 referrals per month to TPN during this three month pilot, but there are no guaranteed minimum volumes."
Clauses 3.1. and 4.1 imposed on the parties a reciprocal duty to act in good faith to one another.
"Based on high current and predicted referral volumes we will be able to offer efficiency savings in the form of a refund of £15 per referral."
The Services Agreement
"HCML and TPN have agreed that TPN will work with HCML in the provision of the Service to their customers and customers of AH having made a decision to extend and expand the TPN Service provision from 1 January 2011 onwards." ("the Recital")
"Service" was defined as:
"… the Service that comprises early intervention and end to end case management of relevant back and spine conditions and the planning, arranging and/or provision of Services to assist in the management of the conditions including (without limitation): triage assessment, telephone based advice, physiotherapy appointment services and referrals which HCML has agreed to provide direct to the Patient pursuant to the terms of an Agreement between HCML and [Aviva Health]"
"TPN Services" were defined as:
"… physiotherapy appointment, assessment, reporting and treatment services and referrals which TPN has agreed to provide direct to the Patient as part of the Service pursuant to the terms of this Agreement."
"2.1 The Parties agree that TPN shall continue the provision of TPN Services from 31 December 2010 with the parties further agreeing to extend/expand this Agreement.
2.2 TPN shall perform the TPN Services (physiotherapy appointment, assessment, treatment and reporting) at the Clinics as requested by HCML from time to time.
2.3 HCML anticipates making circa. 700 referrals per month to TPN, and volume discounts from time to time for this level of referrals.
3.1 HCML shall act in good faith towards TPN at all times.
6.1 In consideration of TPN providing the TPN Services to HCML, HMCL shall pay to TPN… the Fees which are £60 for the Initial Assessment/Treatment Session and £45 for subsequent Physiotherapy Treatment Sessions…
14.1 HCML and TPN will keep confidential, both before and after the expiry or termination of this Agreement, all information of the other Party obtained under or in connection with this Agreement (including but not limited to any and all information obtained by TPN in respect of other HCML suppliers, HCML's supply chain and HCML's commercial arrangements with its other suppliers) (the "Confidential Information") and will not (except as provided for in Clause 15.3 below) disclose any of that information to any third party without the prior written consent of the other.
14.2 Each Party hereby undertakes to keep the terms of this Agreement confidential and will not disclose any of the terms of this Agreement to a third party without the prior written consent of the other
14.3 Each Party will be entitled, but only to the extent reasonably necessary, to disclose the Confidential Information or any part of it:
14.3.1 to its officers, employees, servants, agents, advisers, insurers or other professional advisers to the extent necessary to enable it to perform (or to cause to be performed) or to enforce any of its rights or obligations under this Agreement subject in each case to the Party making the disclosure ensuring that the person(s) in question keeps the Confidential Information confidential and does not use it except for the purposes for which the disclosure is made; or …
14.3.3 to the extent that the Confidential Information has, except because of breach of confidentiality, become publicly available or generally known to the public at the time of the disclosure; or
14.3.4 to the extent that it has obtained the Confidential Information from a third Party who is not in breach of any obligation or confidentiality to the other Party".
"Clinic" was defined as "an individual or organisation who is a member of TPN's [network of physiotherapists and locations to which TPN has access and from, or by, which the TPN Services can be provided]".
The Light Touch Agreement
"1. Based on the relationship built up with Aviva… HCML have earned the opportunity to pilot as an alternative to the existing supplier for a Very Light Touch Third Party Assistance Programme…
[terms of a service level agreement are set out]
4. The pilot should start towards the end of Jan/beginning of Feb 2011 and run for four months.
5. During that time, we will be exclusively using TPN for physio provisions and we anticipate 50 to 60 referrals being sent through to TPN each month during this pilot period…"
"I have no guarantee of volumes from Aviva Health which makes it impossible to guarantee volumes to you. I can do no more than guarantee that you will be on our panel of providers. We will have to go into these negotiations with a degree of trust. I think that I have been totally up front that the percentage of our business going to TPN in future will be highly dependent on the strength of our future strategic relationship. My expectation is a win win solution but I have to do a deal with a network provider to meet my commitments to Aviva Health, and I want that deal to be with TPN – hence you are top of the list to negotiate with and I won't be talking to others unless we fail to reach agreement."
"… agreed to expand the scope of the Light Touch Pilot… to include an additional 250-300 monthly referrals of personal injury cases and general insurance cases, this was to be in addition to the existing 700 referrals a month… [An] oral contract was in place for the referrals to be provided under the terms of the Services Agreement".
TPN contends that HCML is in breach of the Light Touch Agreement (or, confusingly, in breach of the Services Agreement) by failing to provide 250-300 referrals per month in the period from November 2012 to July 2014. In his witness statement, Mr Bushnell says nothing at all about the meeting at which agreement is said to have been reached. There are apparently no other documents that shed light on the issue.
Performance of the Services Agreement
HCML develops its own network of physiotherapists: Innotrex
"… undertook a well resourced and properly organised exercise to source its members. In some cases that involved visiting the premises of prospective clients, interviewing the principal players and going through a disciplined process to establish suitability on a wide range of fronts."
And later in his witness statement, Mr Bushnell was categoric:
"As is made abundantly clear in the witness statement of Scott Olsen TPN's database was not used in the formation of Innotrex"
"We are doing some work with Aviva to look at the difference in treatment sessions geographically across the UK. Unfortunately with the information in our system we can only search… by home postcode and we know a relatively large percentage of our clients' treatment is more than likely undertaken closer to work which would not give us a fair representation. Are you able to therefore please assist in providing the following information on an excel spreadsheet –
- Postcode of clinic
- Number of cases that have been referred to that clinic
- Number of treatment sessions that have been undertaken in total
We have been wanting to do a spread of the whole UK so would include all clinics that have been used for Aviva PMI cases only.
I am assuming your system is able to extract this type of information and ideally we require this ASAP if able…
"It is something I can do, but I can only let you have this for a specific period of time, would last year be OK?"
Mr Olsen said that data for the whole of 2011 would be fine and Ms Abbs confirmed that she could provide the data, "but it will take a couple of days as the database is so large, I have to do it by month".
"I have taken the top four hotspots from the top four geographical region for referrals (Outer London and SE, SW inc Bath/Bristol, NW inclu Manchester/Liverpool and Scotland incl Edinburgh/Glasgow) and have provided a breakdown of how many referrals were referred into that region and a breakdown of the clinics that were used and number of referrals into these clinics. From this we should be able to identify what clinics to approach and if they fit onto your list."
i) On 11 April 2012, Mr Olsen raised questions internally as to why some referrals he had identified had been made to TPN when they could have been sent to PhysioWorld.
ii) On 23 April 2012, Anthony Eeles, HCML's Head of IT & Business Analysis ("Mr Eeles") sent Mr Olsen a spreadsheet identifying 80 clinics that were on both PhysioWorld and TPN's network. Mr Eeles asked whether Mr Olsen would like him to remove TPN as an available referral route, leaving only the PhysioWorld. I have not seen an answer to that, but it is plain what the thinking was.
iii) On 14 December 2012, Karl Turner of HCML emailed a physiotherapy clinic to introducing Innotrex and explaining its benefits. The email was plainly an attempt to recruit the clinic to Innotrex, but in message Mr Turner also stated:"At the moment we send the majority of our referrals through TPN but with our on-going recruitment [of clinics to Innotrex] this will change in the near future meaning a likely drop in referrals for any non Innotrex clinics and increased referrals for our preferred providers"
Emails in similar terms were sent to other TPN clinics.
"Those companies with their own network will see this move as a threat and although HCML plans to maintain the use of existing networks whist at the same time building the Innotrex network, HCML will become less reliant on external networks over time."
This was consistent with the strategy adopted by HCML to make fewer referrals to TPN.
- To date, networks have attempted to consolidate the market but with very little quality control…
- An opportunity exists to create a purpose built high quality network of therapists…
In the section, "Progress to date", clinics recruited to Innotrex were identified by geographical area. The presentation made it clear: "We need to commence referring through Innotrex immediately to generate revenue". It anticipated an IT system would be in place by November 2012 to support referrals to the clinics.
"… if a Recover clinic cannot be found, we can as a last resort use a manual handoff to TPN – however this 'unmasks' Innotrex to TPN – as we would need an Innotrex branded treatment report template to be filled out… Both of these solutions carry the issue that we lose control of the clinical quality of the report, but will be mitigated as we continue to ramp up the Innotrex recruitment. Obviously, using TPN reduces the margin on the cases…"
When cross-examined, Mr Olsen accepted that TPN had not been told about Innotrex by this stage.
"HCML is due to imminently start a new business opportunity within the medico-legal setting providing a case management, medical reporting and treatment services offering. As a result, HCML will be developing its own small network of physiotherapy clinics named Innotrex to cover core locations around the UK. As part of the treatment offering within this package, HCML will be offering rehabilitation to Innotrex therapists in the first instance. If there are gaps within this coverage referrals will then be channelled through to TPN. As aligned to the HCML Aviva services, service level agreements and pricing (£60/£45 including £15 referral fee) will be offered to TPN with a slight, yet efficient change in workflow."
"Now that all the referrals that used to come through TPN to my network are going through Innotrex, there are issues extending beyond the withheld treatment fees and referral fees. I would hope Keith or Scott may find time to discuss…"
"TPN have been told by practices that the referrals we were sending are now coming through the Innotrex (HCML) Network and HCML case managers have been telling TPN that the Innotrex network is the TPN database. Scott confirmed 'hand on heart that the Innotrex network was developed from HCML data and built from that'. [Mr Naylor] stated it certainly looks like it is TPN's database. [Mr Naylor] agreed to put something together to send to Scott on this matter."
"Thanks for your earlier email. I have provided a breakdown of events which we believe have contributed to the misunderstanding that HCML has used the TPN database of physiotherapy clinics to build its own Innotrex network…
I mentioned during our conversation that HCML has used its own internal data, based on home postcodes, to determine where we require an Innotrex clinic…
We also have an internal physiotherapy search tool which lists the TPN, Innotrex, d2physio and PW clinics that we use (screenshot attached). I can only assume that unfortunately, a case manager has misinterpreted this physiotherapy search tool as the Innotrex database. Obviously, this was incurred and I have clarified this understanding with all internal line managers…
Dale, I hope the above provides reassurance that we have not used the TPN database to build our own network nor do we state that the TPN network falls under Innotrex…"
Mr Olsen's evidence
"From January 2012 I was charged by Keith Bushnell to assist him in creating HCML's own network of clinics to be known as Innotrex and to organise the recruitment of clinics into Innotrex. It was made clear to me [by Mr Bushnell] that the network was to be created 'from scratch' and in accordance with a strict recruitment process in order to distinguish the Innotrex clinics from our competitors, including the ones in the TPN network. There were at this time approximately 45,000 registered physiotherapists practising in the UK so I did not think that it would be unduly difficult to find members as there was a very large pool to choose from. The challenge was going to be to find clinics of the requisite quality."
i) From 8 February 2012, Mr Olsen requested from TPN and was sent information extracted from TPN's Database (see paragraphs 27-29 above). I am satisfied that Mr Olsen was seeking that information not, as he claimed, for a geographical pricing model requested by Aviva Health, but to assist with the creation of the Innotrex network (see paragraphs 30-32 above).
ii) Mr Olsen did use the information that he had been sent from TPN's Database to assist in the creation of the Innotrex network. The documentary evidence and answers provided by Mr Olsen in cross-examination demonstrate that information from the TPN Database that had been sent by Ms Abbs to Mr Olsen (see paragraphs 27-29 above) was used (at least in part):a) to create the spreadsheet sent to Mr Bingham on 21 March 2012 (see paragraphs 34-35 above);b) to form the HCML database by incorporating (at least) data from the 16 Feb 2012 Spreadsheet (see paragraph 39 above);c) to create the Update Spreadsheet (see paragraph 38 above); andd) to create the Top 50 Spreadsheet (see paragraph 41 above).I cannot establish the full extent of the use of data from TPN's Database by HCML. That would be an issue to be resolved on any assessment of damages.
i) As I have noted above (see paragraph 24 above), Mr Bushnell stated that TPN's database was not used in the formation of Innotrex. I reject that evidence. I am not able to determine, on the evidence, whether Mr Bushnell was aware of the use that Mr Olsen had made of the information provided by TPN. I do not need to resolve that point. It is sufficient that I have made the findings about the use in paragraph 61 above.
ii) In his witness statement, Mr Bingham stated:"The suggestion that HCML simply 'lifted' the Defendant's network into Innotrex is very far removed from the truth. To my certain knowledge, the construction of Innotrex was achieved by a combination of the assimilation of the existing D2 and PhysioWorld networks, my input as a source of introductions and internet research to locate suitable clinics in defined geographical locations."When cross-examined, Mr Bingham accepted that he had been a consultant "around the edges" and had typically spent about 1 day a week working on Innotrex. He also accepted that he did not know where the information used to target clinics had come from and he did not have access himself to the HCML Database. From these answers, I am satisfied that Mr Bingham did not have a sufficient day-to-day involvement with the Innotrex project to know whether data provided by TPN had been used. Further, his denial that HCML had 'lifted' TPN's clinic list into Innotrex is irrelevant. That (unsubtle) use is not what is alleged by TPN or what I find had happened.
i) The construction of clause 2.3 of the Services Agreement and whether HCML was in breach of that clause by failing make around 700 referrals per month to TPN in the period from November 2012 to July 2014.
ii) Whether HCML has breached the Light Touch Agreement by failing to make around 250-300 referrals per month in the period from November 2012 to July 2014.
iii) Whether HCML infringed the database rights of TPN under the Database Regulations.
iv) The construction of clause 14.1 of the Services Agreement and whether HCML was in breach of that term by using confidential information belonging to TPN.
v) The construction of clause 3.1 of the Services Agreement - the obligation of good faith -and whether HCML was in breach of that term.
vi) Whether HCML was guilty of passing off the FCA score as its own.
Alleged breach of Services Agreement clause 2.3
 When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to 'what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean', to quote Lord Hoffmann in Chartbrook Ltd -v- Persimmon Homes Ltd  AC 1101 . And it does so by focussing on the meaning of the relevant words… in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the lease, (iii) the overall purpose of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party's intentions. In this connection, see Prenn  1 WLR 1381, 1384-1386; Reardon Smith Line Ltd -v- Yngvar Hansen-Tangen (trading as HE Hansen-Tangen)  1 WLR 989, 995-997, per Lord Wilberforce; Bank of Credit and Commerce International SA -v- Ali  1 AC 251  per Lord Bingham of Cornhill; and the survey of more recent authorities in Rainy Sky  1 WLR 2900 - per Lord Clarke of Stone-cum-Ebony JSC.
 For present purposes, I think it is important to emphasise seven factors.
 First, the reliance placed in some cases on commercial common sense and surrounding circumstances (e.g. in Chartbrook  AC 1101 - should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract. And, again save perhaps in a very unusual case, the parties must have been specifically focussing on the issue covered by the provision when agreeing the wording of that provision.
 Secondly, when it comes to considering the centrally relevant words to be interpreted, I accept that the less clear they are, or, to put it another way, the worse their drafting, the more ready the court can properly be to depart from their natural meaning. That is simply the obverse of the sensible proposition that the clearer the natural meaning the more difficult it is to justify departing from it. However, that does not justify the court embarking on an exercise of searching for, let alone constructing, drafting infelicities in order to facilitate a departure from the natural meaning. If there is a specific error in the drafting, it may often have no relevance to the issue of interpretation which the court has to resolve.
 The third point I should mention is that commercial common sense is not to be invoked retrospectively. The mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language. Commercial common sense is only relevant to the extent of how matters would or could have been perceived by the parties, or by reasonable people in the position of the parties, as at the date that the contract was made. Judicial observations such as those of Lord Reid in Wickman Machine Tools Sales Ltd -v- L Schuler AG  AC 235, 251 and Lord Diplock in Antaios Cia Naviera SA -v- Salen Rederierna AB (The Antaios)  AC 191, 201, quoted by Lord Carnwath JSC at , have to be read and applied bearing that important point in mind.
 Fourthly, while commercial common sense is a very important factor to take into account when interpreting a contract, a court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. The purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed. Experience shows that it is by no means unknown for people to enter into arrangements which are ill-advised, even ignoring the benefit of wisdom of hindsight, and it is not the function of a court when interpreting an agreement to relieve a party from the consequences of his imprudence or poor advice. Accordingly, when interpreting a contract a judge should avoid re-writing it in an attempt to assist an unwise party or to penalise an astute party.
 The fifth point concerns the facts known to the parties. When interpreting a contractual provision, one can only take into account facts or circumstances which existed at the time that the contract was made, and which were known or reasonably available to both parties. Given that a contract is a bilateral, or synallagmatic, arrangement involving both parties, it cannot be right, when interpreting a contractual provision, to take into account a fact or circumstance known only to one of the parties.
 Sixthly, in some cases, an event subsequently occurs which was plainly not intended or contemplated by the parties, judging from the language of their contract. In such a case, if it is clear what the parties would have intended, the court will give effect to that intention. An example of such a case is Aberdeen City Council -v- Stewart Milne Group Ltd 2012 SC (UKSC) 240, where the court concluded that "any … approach" other than that which was adopted "would defeat the parties' clear objectives", but the conclusion was based on what the parties "had in mind when they entered into" the contract: see  and .
The seventh factor is not relevant for present purposes.
 In an unusual case such as this, little direct help is to be gained from authorities on other contracts in other contexts. As Tolstoy said of unhappy families, every ill-drafted contract is ill-drafted "in its own way". However, the authorities provide guidance as to the interpretative tools available for the task. The general principles are now authoritatively drawn together in an important passage in the judgment of Lord Clarke of Stone-cum-Ebony JSC in Rainy Sky SA v Kookmin Bank  1 WLR 2900 -. As that passage shows, there is often a tension between, on the one hand, the principle that the parties' common intentions should be derived from the words they used, and on the other the need if possible to avoid a nonsensical result.
 The former is evident, as Lord Clarke JSC emphasised, in the rule that "where the parties have used unambiguous language, the court must apply it": . However, in view of the importance attached by others to the so-called "natural meaning" of clause 3(2), it is important to note that Lord Clarke JSC (paras 20-23) specifically rejected Patten LJ's proposition that "unless the most natural meaning of the words produces a result so extreme as to suggest that it was unintended, the court must give effect to that meaning." In Lord Clarke JSC's view it was only if the words used by the parties were "unambiguous" that the court had no choice in the matter.
 He illustrated the other side of the coin by quotations from Lord Reid in Wickman Machine Tools … [p.251]:"The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result, the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear."and Lord Diplock in Antaios Cia Naviera SA… [p.201]:"if detailed and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must yield to business common sense."As a rider to the last quotation, Lord Clarke JSC cited the cautionary words of Hoffmann LJ (Co-operative Wholesale Society Ltd -v- National Westminster Bank plc  1 EGLR 97, 99):"This robust declaration does not, however, mean that one can rewrite the language which the parties have used in order to make the contract conform to business common sense. But language is a very flexible instrument and, if it is capable of more than one construction, one chooses that which seems most likely to give effect to the commercial purpose of the agreement."
 I agree … that it may be unnecessary and unhelpful to draw sharp distinctions between problems of ambiguity and of mistake, or between the different techniques available to resolve them. In Chartbrook Ltd -v- Persimmon Homes Ltd … , Lord Hoffmann cited with approval a passage of my own (in KPMG LLP -v- Network Rail Infrastructure Ltd  Bus LR 1336 ) where I discussed the role of what is sometimes called "interpretation by construction". I criticised the tendency to deal separately with "correction of mistakes" and "construing the paragraph 'as it stands'", as though they were distinct exercises, rather than as "aspects of the single task of interpreting the agreement in its context, in order to get as close as possible to the meaning which the parties intended". Lord Hoffmann added, :"What is clear from these cases is that there is not, so to speak, a limit to the amount of red ink or verbal rearrangement or correction which the court is allowed. All that is required is that it should be clear that something has gone wrong with the language and that it should be clear what a reasonable person would have understood the parties to have meant."
 Another permissible route to the same end is by the implication of terms "necessary to give business efficacy to the contract". I refer again to Lord Hoffmann's words, this time in Attorney General of Belize -v- Belize Telecom Ltd  1 WLR 1988 , explaining the "two important points" underlined by that formulation:"The first, conveyed by the use of the word 'business', is that in considering what the instrument would have meant to a reasonable person who had knowledge of the relevant background, one assumes the notional reader will take into account the practical consequences of deciding that it means one thing or the other. In the case of an instrument such as a commercial contract, he will consider whether a different construction would frustrate the apparent business purpose of the parties … The second, conveyed by the use of the word 'necessary', is that it is not enough for a court to consider that the implied term expresses what it would have been reasonable for the parties to agree to. It must be satisfied that it is what the contract actually means."
 Aberdeen City Council -v- Stewart Milne Group Ltd … is a useful recent illustration in this court of how these various principles may be deployed, to enable the court to achieve a commercially sensible result in the face of apparently intractable language. A contract for the sale of development land gave the council the right to an uplift (described as "the profit share") in certain defined circumstances, one being the sale of the property by the purchaser. The issue was the calculation of the profit share, which the contract defined as a specified percentage of the "estimated profit" (defined by reference to "open market value") or "the gross sale proceeds". The issue was how the definition should be applied in the case of a sale by the purchaser to an associated party at an undervalue. The court held in agreement with the lower courts that, in that event, notwithstanding the apparently unqualified reference to gross sale proceeds, the calculation should be based on open market value.
 In a concurring judgment, with which all the members of the court agreed, Lord Clarke JSC, at , referred to his own judgment in Rainy Sky as indicating the "ultimate aim", that is:"to determine what the parties meant by the language used, which involves ascertaining what a reasonable person would have understood the parties to have meant; the relevant reasonable person being one who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract."As he pointed out, "on the face of it" the reference in the contract to the gross sale proceeds was a reference to the "actual sale proceeds" received by the appellants. It was not easy to conclude "as a matter of language" that the parties meant, not the actual sale proceeds, but the amount the appellants would have received on an arm's length sale at market value of the property; nor was it easy to conclude that the parties "must have intended" the language to have that meaning. He referred, at , to the comment of Baroness Hale of Richmond JSC in the course of the argument that:"unlike Rainy Sky, this is not a case in where there are two alternative available constructions of the language used. It is rather a case in which, notwithstanding the language used, the parties must have intended that, in the event of an on sale, the appellants would pay the respondents the appropriate share of the proceeds of sale on the assumption that the on sale was at a market price."He thought the problem should be solved by implying a term to the effect that, in the event of a sale which was not at arm's length in the open market, an open market valuation should be used. As he explained, :"If the officious bystander had been asked whether such a term should be implied, he or she would have said 'of course'. Put another way, such a term is necessary to make the contract work or to give it business efficacy."He preferred the use of an implied term to "a process of interpretation", although "the result is of course the same": -.
"In my view, when interpreting written contracts, at least in the context of commercial relationships, it is not helpful to frame the analysis in terms of the subjective intention of the parties at the time the contract was drawn. This is so for at least two reasons. First, emphasis on subjective intention denudes the contractual arrangement of the certainty that reducing an arrangement to writing was intended to achieve. This is particularly important where, as is often the case, strangers to the contract must rely upon its terms. They have no way of discerning the actual intention of the parties, but must rely on the intent expressed in the written words. Second, many contractual disputes involve issues on which there is no common subjective intention between the parties. Quite simply, the answer to what the parties intended at the time they entered into the contract will often be that they never gave it a moment's thought until it became a problem."
"… it seems to me quite another thing to say that the deletion itself has contractual significance; or that by deleting a provision in a contract the parties must be deemed to have agreed the converse. The parties may have had all sorts of reasons for deleting the provisions; they may have thought it unnecessary; they may have thought it inconsistent with some other provision in the contract; it may even have been deleted by mistake".
 Even if recourse is had to the deleted words, care must be taken as to what inferences, if any, can properly be drawn from them. The parties may have deleted the words because they thought they added nothing to, or were inconsistent with, what was already contained in the document; or because the words that were left were the only common denominator of agreement, or for unfathomable reasons or by mistake. They may have had different ideas as to what the words meant and whether or not the words that remained achieved their respective purposes.
 Further, as Morgan, J, pointed out in Berkeley Community Villages Ltd -v- Pullen  3 EGLR 101 :"Even in the cases where the fact of deletion is admissible as an aid to interpretation, there is a great difference between a case where a self-contained provision is simply deleted and another [case] where the draft is amended and effectively recast. It is one thing to say that the deletion of a term which provides for 'X' is suggestive that the parties were agreeing on 'not X'; it is altogether a different thing where the structure of the draft is changed so that one provision is replaced by another provision. Further, where the first provision contains a number of ingredients, some assisting one party and some assisting the other, and that provision is removed, it by no means follows that the parties intended to agree the converse of each of the ingredients in the earlier provision."
i) The commercial purpose of the Services Agreement was for HCML and TPN to work together for the provision of the 'Service' to HCML's customers and customers of Aviva (see Recital in paragraph 11 above).
ii) Entering in to the (fairly complex) contract would have been pointless if HCML could have decided not to refer any cases to TPN and, in any event, the parties had agreed that TPN would continue to perform the TPN Services from 31 December 2010 (clause 2.1 – paragraph 12 above).
iii) HCML (and TPN) had expressly agreed to extend and expand the TPN Service provision previously rendered under the Pilot (Recital and clause 2.1). The reference to "expand" can only have been a reference to the volume of referrals to be sent.
iv) The Services Agreement had deleted the words "but there are no guaranteed minimum volumes" from clause 2.3. It is a permissible inference (and probably the only inference) that because the level of referrals under the Pilot Agreement had been achieved and because the parties had agreed to extend and expand the provision of the Service, HCML accepted that it would be willing and able to make around 700 referrals per month to TPN. This was particularly so because the provision had been expanded to other non-Aviva policyholders.
v) Clause 2.2 required TPN to perform the TPN Services at the Clinics as requested by HCML from time to time.
vi) On its true construction therefore, HCML was required to refer patients to TPN as part of the service which HCML was providing to policyholders otherwise the agreement would have been commercially pointless.
vii) The number of monthly referrals ("circa 700") was based upon the Pilot and the level of referrals ("circa 200") which had been achieved under the terms of the Pilot and the expectation of the parties was therefore that the number of referrals would be increased to circa 700 per month.
viii) The words replacing "but there are no guaranteed minimum volumes" were "and volume discounts from time to time for this level of referrals" plainly envisages (1) that HCML will be making referrals to TPN and (2) that if the level of 700 is achieved then HCML will be looking to apply the volume discount for referrals at that level.
ix) HCML had agreed to refer patients for physiotherapy through TPN. TPN would only get paid in the event of a referral and Mr Bushnell accepted in cross-examination that the intention on the part of HCML was to make referrals. TPN was therefore very interested in the level of referrals which would be made.
x) In relation to the Light Touch Pilot HCML agreed to use TPN exclusively and that HCML "anticipated" sending 50 to 60 referrals to TPN each month (see paragraph 14 above). This emphasises that HCML were intending to send TPN referrals in the range of 50 – 60 per month but the word "anticipate" related solely to the precise number and not the making of any referrals at all.
xi) In the absence of a purposive interpretation, the Services Agreement is denuded of all meaning and effect: if HCML is correct, HCML did not have any contractual obligation to refer a single patient to TPN after the signing of the agreement. This is an affront to commercial common sense.
"The companies' contractual relationship was regulated at that time by the Services Agreement which made no provision for guaranteed referrals and there was no possibility of that situation changing. As I have said, the reason for the reference to the number of anticipated referrals at clause 2.3 of the Services Agreement was to ensure that TPN had the capacity to deal with that level of referrals in a way which would ensure that, as stated in my email of 27 June 2011, HCML would be able to "meet [its] commitments to Aviva Health".
i) Clause 2.3 cannot, in its natural and ordinary meaning, be read as imposing an obligation to provide circa 700 referrals each month. The word "anticipates" is wholly inconsistent with any sort of binding commitment. The uncertainty as to the number injected by the use of "circa" only strengthens that conclusion.
ii) The Services Agreement does not identify – and it would have been impossible for the parties to ascertain - the band of tolerance introduced by the word "circa" (i.e. the figure below 700 which would have placed HCML in 'breach' of clause 2.3).
iii) Without an obligation to provide a specified number of referrals each month, the Services Agreement is not denuded of all meaning and effect or rendered "nonsensical". The balance of the Services Agreement regulated the relationship between HCML and TPN (e.g. service level agreements, patient confidentiality, reporting and management information, indemnity, insurance, sub-contracting etc.), provided how the referrals were to be handled and the level of remuneration for the referrals. That was a perfectly sensible agreement to reach even if it did not provide for any guaranteed number of referrals.
iv) Although the inevitable consequence of my finding as to the true construction of clause 2.3 is that the Services Agreement did not, in fact, oblige HCML to make any referrals to TPN, I do not regard that as being an "affront to commercial common sense" as submitted by TPN. I accept that both parties were certainly working on the basis that TPN would continue to receive referrals from HCML and that the Services Agreement was premised on an expectation that the number of referrals was likely to increase substantially above the numbers during the Pilot Agreement. But TPN knew that HCML's referrals were not being generated by them independently but were (largely) coming from Aviva Health. The Services Agreement was understood by both parties to enable HCML to service its obligations to Aviva Health.
v) The clause itself is not ambiguous. I cannot reject what I find to be its natural meaning on the basis that TPN contends that to enter an agreement that did not place an obligation upon HCML to make a single referral was commercially imprudent or not what Mr Naylor had intended the relationship with HCML to be.
vi) Although Mr Bushnell was the primary draftsman, both parties had control over the language used in clause 2.3 (and the Services Agreement more generally). The language is not complicated. Clause 2.3 could easily have provided, simply, that HCML would make 700 referrals per month with appropriate volume discounts. It could have gone on to state – if that was the bargain that was being struck - what would happen if HCML made fewer than 700 referrals.
vii) I cannot and do not attach any significance to the fact that the words "but there are no guaranteed minimum volumes" were deleted from Clause 2.3. Given that the words "anticipates" and "circa" remained, this is an instance where it would be plainly wrong to conclude that, by deleting the words, the parties thereby agreed that the clause was being converted into a guaranteed level of referrals (applying the principle from The Golden Leader – paragraphs 72-73 above). It is possible to speculate about the reasons why these words were deleted, but no explanation leaps forward as being obvious (and certainly not that contended by TPN). As Lloyd LJ observed, it may just have been a mistake. I do not need to make a finding about the reason. It is sufficient that I reject the contention that the deletion of the words supports the construction of the clause urged by TPN.
Alleged breach of the Light Touch Agreement
Infringement of Database right
1. This Directive concerns the legal protection of databases in any form.
2. For the purposes of this Directive, 'database' shall mean a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means…
Object of protection
1. In accordance with this Directive, databases which, by reason of the selection or arrangement of their contents, constitute the author's own intellectual creation shall be protected as such by copyright. No other criteria shall be applied to determine their eligibility for that protection.
2. The copyright protection of databases provided for by this Directive shall not extend to their contents and shall be without prejudice to any rights subsisting in those contents themselves…
SUI GENERIS RIGHT
Object of protection
1. Member States shall provide for a right for the maker of a database which shows that there has been qualitatively and/or quantitatively a substantial investment in either the obtaining, verification or presentation of the contents to prevent extraction and/or re-utilization of the whole or of a substantial part, evaluated qualitatively and/or quantitatively, of the contents of that database.
2. For the purposes of this Chapter:(a) 'extraction' shall mean the permanent or temporary transfer of all or a substantial part of the contents of a database to another medium by any means or in any form;(b) 're-utilization' shall mean any form of making available to the public all or a substantial part of the contents of a database by the distribution of copies, by renting, by on-line or other forms of transmission. The first sale of a copy of a database within the Community by the rightholder or with his consent shall exhaust the right to control resale of that copy within the Community;Public lending is not an act of extraction or re-utilization.
3. The right referred to in paragraph 1 may be transferred, assigned or granted under contractual licence.
4. The right provided for in paragraph 1 shall apply irrespective of the eligibility of that database for protection by copyright or by other rights. Moreover, it shall apply irrespective of eligibility of the contents of that database for protection by copyright or by other rights. Protection of databases under the right provided for in paragraph 1 shall be without prejudice to rights existing in respect of their contents.
5. The repeated and systematic extraction and/or re-utilization of insubstantial parts of the contents of the database implying acts which conflict with a normal exploitation of that database or which unreasonably prejudice the legitimate interests of the maker of the database shall not be permitted."
(1) In this Part—'database' has the meaning given by section 3A(1) of the 1988 Act (as inserted by Regulation 6);'extraction', in relation to any contents of a database, means the permanent or temporary transfer of those contents to another medium by any means or in any form;'insubstantial', in relation to part of the contents of a database, shall be construed subject to Regulation 16(2);'investment' includes any investment, whether of financial, human or technical resources;'re-utilisation', in relation to any contents of a database, means making those contents available to the public by any means;'substantial', in relation to any investment, extraction or reutilisation, means substantial in terms of quantity or quality or a combination of both…
13. Database right
(1) A property right ('database right') subsists, in accordance with this Part, in a database if there has been a substantial investment in obtaining, verifying or presenting the contents of the database.
(2) For the purposes of paragraph (1) it is immaterial whether or not the database or any of its contents is a copyright work, within the meaning of Part I of the 1988 Act…
14. The maker of a database
(1) Subject to paragraphs (2) to (4), the person who takes the initiative in obtaining, verifying or presenting the contents of a database and assumes the risk of investing in that obtaining, verification or presentation shall be regarded as the maker of, and as having made, the database.
(2) Where a database is made by an employee in the course of his employment, his employer shall be regarded as the maker of the database, subject to any agreement to the contrary…
15. First ownership of database right
The maker of a database is the first owner of database right in it.
16. Acts infringing database right
(1) Subject to the provisions of this Part, a person infringes database right in a database if, without the consent of the owner of the right, he extracts or re-utilises all or a substantial part of the contents of the database.
(2) For the purposes of this Part, the repeated and systematic extraction or re-utilisation of insubstantial parts of the contents of a database may amount to the extraction or re-utilisation of a substantial part of those contents…
17. Term of protection
(1) Database right in a database expires at the end of the period of fifteen years from the end of the calendar year in which the making of the database was completed…
(3) Any substantial change to the contents of a database, including a substantial change resulting from the accumulation of successive additions, deletions or alterations, which would result in the database being considered to be a substantial new investment shall qualify the database resulting from that investment for its own term of protection.
18. Qualification for database right
(1) Database right does not subsist in a database unless, at the material time, its maker, or if it was made jointly, one or more of its makers, was—(a) an individual who was a national of an EEA state or habitually resident within the EEA,(b) a body which was incorporated under the law of an EEA state and which, at that time, satisfied one of the conditions in paragraph (2)…
(2) The conditions mentioned in paragraphs (1)(b) … are—(a) that the body has its central administration or principal place of business within the EEA, or(b) that the body has its registered office within the EEA and the body's operations are linked on an ongoing basis with the economy of an EEA state…
(4) In this Regulation—(a) "EEA" and "EEA state" have the meaning given by section 172A of the 1988 Act;(b) "the material time" means the time when the database was made, or if the making extended over a period, a substantial part of that period…
Subsistence and ownership
 … the expression 'investment in … the obtaining, verification or presentation of the contents' of a database must be understood, generally, to refer to investment in the creation of that database as such
 … The purpose of the protection by the sui generis right provided for by the directive is to promote the establishment of storage and processing systems for existing information and not the creation of materials capable of being collected subsequently in a database.
i) first, that TPN has failed to identify the "database" over which it claims to have a database right; and
ii) second, that, in any event, TPN has not pleaded (or supported by evidence):a) the identity(ies) of the individual maker(s) of the database(s) in question;b) the date(s) upon which it is alleged that the database(s) were first made (or substantially completed); andc) whether or not TPN relies upon any subsequent new or modified version(s) of the database(s) in question as having been sufficiently modified as to give rise to any new database right(s) therein, and if so, whether any of those new versions/rights are relied upon against HCML in this action.
i) Although he accepts that in his witness statement for trial Mr Naylor has stated that he may have compiled a database between the period from 1996 (before the Database Directive was brought into force in the UK) to 2002, the evidence is insufficient to demonstrate the necessary elements for the relevant database(s) to be identified and for database right to be proved to have subsisted therein.
ii) If Mr Naylor did create an original database, it is unclear whether and to what extent the relevant database right came to be owned by TPN. There is no evidence of any assignment of any database right from Mr Naylor to TPN after it was incorporated.
iii) The business operated by TPN is operated with at least one other company closely associated with TPN (namely TPN Physiotherapy Network (UK) Limited (company number 07183494)). There is no reason for presuming any database right is owned by TPN, rather than by one or more other non-parties to the present litigation. If TPN is an equitable owner, or exclusive licensee of any database right, as a rule of practice the action could not legitimately be sustained without the legal owner(s) being joined as parties to the present action (see Fine & Country Ltd v Okotoks Ltd  EWHC 2230 (Ch) -).
iv) Finally, there is no evidence as to the date of the creation of the database(s) in question which is material given that the ordinary term of database right is only 15 years.
 Database right arises as a result of the UK implementation of Council Directive 96/9/EC of 14 March 1996 on the legal protection of databases. As a result the Regulations were passed which amended the Copyright Designs and Patents Act 1988 in part and themselves contain most of the important substantive provisions. A "database" is defined in s3A of the 1988 Act (as amended) as "a collection of independent works, data or other materials which (a) are arranged in a systematic or methodical way, and (b) are individually accessible by electronic or other means." Database right is a property right which subsists in a database pursuant to Part III of the Regulations. Database right subsists if there has been a substantial investment in obtaining, verifying or presenting the contents of the database (reg. 13 of the Regulations).
 The first owner of database right is the maker of the database (reg. 15 of the Regulations). The maker of the database is defined in reg. 14. The first material element to the definition is reg. 1 that the "person who takes the initiative in obtaining, verifying or presenting the contents of a database and assumes the risk of investing in that obtaining, verification or presentation shall be regarded as the maker of, and as having made, the database." Reg. 14(2) then provides that, subject to an agreement to the contrary, if a database is made by an employee in the course of his employment, the maker is regarded as the employer.
 Mr Brinzer's evidence explains that the claimant has been publishing the database since 1994 and is now at the stage of maintaining it rather than building it up from nothing. This involves substantial resources to update the database to take account of changes and adding and removing details as practices open, close or change. The claimant has 9 people employed permanently maintaining the full primary care database (of which the database in this case forms the major part) with a further 10 staff working on an ad hoc basis supporting the research. Mr Brinzer sets out in some detail how the process of maintaining the database works and what it costs. His conclusion is that it currently costs £110,000 per year to maintain the database and has cost comparable sums for at least the last 6 years. There is no challenge made to Mr Brinzer's evidence and no realistic prospect, of which I am aware, of it being successfully challenged at trial.
 The kind of updating process carried on by the claimant was addressed by Advocate-General Stix-Hackl in British Horseracing Board -v- William Hill Case C-203/02 (section D of her opinion, paragraphs 139-156). The issue under consideration was the term of protection. In considering the matter the AG recognised that "dynamic" databases existed which were constantly updated by a process which includes addition, deletion and verification (see paragraphs 147-148). Her opinion was that viewed in this light the Directive provides for "a rolling sui generis right". It seems to me that this opinion supports the view (if support were needed) that the kind of work carried out by the claimant in keeping its database up to date is quite sufficient to mean that sui generis database right subsists under the Regulations. Clearly the owner of the database right is the claimant.
 Accordingly in my judgment the defendants in this case have no real prospect of defending the issues of subsistence and ownership. There is no doubt on the evidence presented to me that database right subsists and that the claimant owns it...
i) it denies having extracted any data at all from the TPN Database (alternatively that such data as were extracted did not constitute a "substantial part" of the database);
ii) it admits that it uploaded the 16 Feb 2012 Spreadsheet data into the HCML Database and admits that that act constituted an act of "extraction" involving the transfer of a substantial part of the 16 Feb 2012 Spreadsheet, but contends that TPN had consented to that act of extraction and to the subsequent use of that data as part of the HCML Database; and
iii) the use by HCML of the TPN Database was mere consultation of a database (which further subsequent use of the HCML Database would have constituted).
Breach of Confidence: clause 14.1
"… if HCML has provided the information supplied by Ms Abbs to Mr Olsen to others (for example Mr Bingham or other employees) for the purposes of setting up Innotrex, then that would constitute a breach of clause 14.1."
"It is far from easy to state in general terms what is confidential information or a trade secret. Certain authorities were cited, but they did not carry matters very far. Plainly "something which is public property and public knowledge" is not confidential: see Saltman Engineering Co. Ltd. -v- Campbell Engineering Co Ltd (1948) 65 RPC 203, 215 per Lord Greene MR. On the other hand, "something that has been constructed solely from materials in the public domain may possess the necessary quality of confidentiality: for something new and confidential may have been brought into being by the application of the skill and ingenuity of the human brain. Novelty depends on the thing itself, and not upon the quality of its constituent parts": Coco -v- A. N. Clark (Engineers) Ltd  RPC 41, 47, a case that was not cited, but in part draws on the Saltman case, which was. Costs and prices which are not generally known may well constitute trade secrets or confidential information: see Herbert Morris Ltd -v- Saxelby  1 AC 688, 705, referring to prices.
If one turns from the authorities and looks at the matter as a question of principle, I think (and I say this very tentatively, because the principle has not been argued out) that four elements may be discerned which may be of some assistance in identifying confidential information or trade secrets which the court will protect. I speak of such information or secrets only in an industrial or trade setting. First, I think that the information must be information the release of which the owner believes would be injurious to him or of advantage to his rivals or others. Second, I think the owner must believe that the information is confidential or secret, i.e., that it is not already in the public domain. It may be that some or all of his rivals already have the information: but as long as the owner believes it to be confidential I think he is entitled to try and protect it. Third, I think that the owner's belief under the two previous heads must be reasonable. Fourth, I think that the information must be judged in the light of the usage and practices of the particular industry or trade concerned. It may be that information which does not satisfy all these requirements may be entitled to protection as confidential information or trade secrets: but I think that any information which does satisfy them must be of a type which is entitled to protection."
 As I said absent an express restrictive covenant or the like information does not become confidential merely because the parties give it that label. If the information is in the public domain it is capable of being used even if it is derived from the claimant's documents.
 Another factor is that it is impossible to prevent an ex-employee from using his own gathered skills and expertise earned over the period of his employment. If using his own memory and skills he can recall materials which were confidential whilst he was an employee he can nevertheless use them post employment. That has been well established; see Faccenda Chicken Ltd -v- Fowler  1 Ch 117... The only information that is capable of being protected post termination is in the nature of a trade secret; confidentiality is not enough. I do not see what the information asserted by the claimant to be confidential in its voluntary information is any different from the Faccenda case. I accept the evidence of [the defendants] that all of the information alleged to be confidential was either in the public domain or was easily discoverable by them (such as addresses and telephone numbers) or was in their heads. I do not accept it was necessarily easily discoverable. The documents they took appear to me to afford a considerable saving of time. However detailed consideration of that might well be postponed to the question of damages or other financial relief that is ultimately granted. I express no view about that at this stage.
 The only item which I had a lingering doubt over was information about the sales figures and profit margins. The reality, however, I suspect is that the profit margins are things which they would regularly carry out in their heads and the actual prices paid to suppliers or obtained from customers would be obtained from those organisations. They are going to be in a position to negotiate business with them and in such negotiations it is almost inevitable that the suppliers or customers will reveal what deals they have with the claimant in order to obtain better terms from the would be new competitors.
 In other words I accept the defendants' submission that the confidential information so described by the claimant does not have the necessary indicia of the quality of confidence identified by Megarry V.C. in Thomas Marshall (Exports) Ltd -v- Guinle...
"The value of the card index to the [defendants] was that it contained a ready and finite compilation of the names and addresses of those who had brought or might bring business to the plaintiffs and who might bring business to them. Most of the cards carried the name or names of particular individuals to be contacted. While I recognise that it would have been possible for the [first defendant] to contact some, perhaps many, of the people concerned without using the card index, I am far from convinced that he would have been able to contact anywhere near all of those whom he did contact between February and April 1985. Having made deliberate and unlawful use of the plaintiffs' property, he cannot complain if he finds that the eye of the law is unable to distinguish between those whom, had he so chosen, he could have contacted lawfully and those whom he could not. In my judgment it is of the highest importance that the principle of Robb -v- Green… which, let it be said, is one of no more than fair and honourable dealing, should be steadfastly maintained."
Good Faith: clause 3.1
i) Good faith has been held to mean, "playing fair", "coming clean" or "putting one's cards on the table": Interfoto Picture Library Ltd -v- Stiletto Visual Programmes Ltd  1 QB 433, 439 per Bingham LJ.
ii) In Berkeley Community Villages Ltd -v- Pullen  3 EGLR 107, Morgan J said that a contractual obligation to act in good faith means :"… a contractual obligation to observe reasonable commercial standards of fair dealing in accordance with their actions which related to the Agreement and also requiring faithfulness to the agreed common purpose and consistency with the justified expectations of the First Claimant.
iii) Albeit construing a contractual obligation to act in the utmost good faith, in CPC Group Ltd -v- Qatari Diar Real Estate Investment Co  EWHC 1535 (Ch) Vos J said :"… the content of the obligation of utmost good faith in the [contract] was to adhere to the spirit of the contract… and to observe reasonable commercial standards of fair dealing, and to be faithful to the agreed common purpose, and to act consistently with the justified expectations of the parties."
iv) the construction of the relevant contractual term of good faith is context-sensitive: Mid-Essex Hospital Services NHS Trust -v- Compass Group UK & Ireland Ltd  EWHC Civ 200  per Jackson LJ;
v) the words "in good faith" have a core meaning of honesty: Street -v- Derbyshire Unemployed Workers Centre  ICR 97  per Auld LJ. It is an obligation to eschew bad faith: Overlook -v- Foxtel  NSWSC 17, quoted in CPC Group Ltd ;
vi) A party subject to a good faith clause is not required to subordinate its own interests so long as the pursuit of those interests does not entail unreasonable interference with the enjoyment of a benefit conferred by expressed contractual terms so that such enjoyment is rendered worthless or nugatory: Overlook quoted in Qatari Diar  EWHC (Ch) 1535 ;
i) HCML requested information from TPN ostensibly for the purposes of the Services Agreement;
ii) HCML then used that information instead to set up a rival network to TPN;
iii) HCML concealed the existence of this rival network from TPN for as long as possible;
iv) after setting up of this rival network, HCML then diverted referrals to its own network at the expense of and to the detriment of TPN; and
v) after being confronted with the allegation that HCML had used the information supplied to it by TPN to set up Innotrex, HCML denied wholesale any such allegation.
i) The object of the Services Agreement was for TPN to assist HCML in providing "the Service" to Aviva. The Services Agreement did not provide for TPN to be the exclusive provider of such services. There was no contractual limitation which limited HCML's discretion to obtain physiotherapy services from other providers or clinics.
ii) The Services Agreement did not contain a "no compete" clause.
iii) The Services Agreement provided no guarantee to TPN regarding the volume of referrals for the simple reason that HCML did not have the benefit of a guarantee from Aviva Health so no guarantee could be provided to TPN.
i) clinics were recruited to Innotrex following independent research (including postcode searches) and a geographical analysis of referral rates and patterns in relation to clinic locations; contacts provided by Mr Bingham; recommendations; clinic lists provided by PhysioWorld and D2 Physio; and reference to the locations of Aviva's "Top 50" large corporate clients together with other means; and
ii) the contemporaneous documents show that the creation of Innotrex was a considerable exercise, informed by a significant amount of research.
Mr Kinnier QC set out in his submissions the mass of material that he contends demonstrates the independent effort by Mr Olsen and HCML that went into setting up Innotrex.
i) it acted consistently with the letter and spirit of the Services Agreement in all its dealings with TPN and had been candid about its aim to set up its own network of clinics in due course;
ii) a good faith clause (however broadly construed) cannot be read as requiring HCML to keep TPN informed of the detail of its commercial strategy or, on the particular facts of this case, to keep TPN updated as to the progress setting up Innotrex; and
iii) weight must be attached to the fact that the Services Agreement did not contain exclusivity or non-compete clauses; each party was free (within the constraints of clause 3.1) to pursue their own commercial objectives.
i) started to divert referrals that I am satisfied were likely to have gone to TPN under the Services Agreement to other clinics or networks (see paragraphs 36 and 40 above);
ii) recognised that, until Innotrex was fully set up, it would continue to need TPN (and other networks) to service referrals (see paragraph 37 above);
iii) was concerned that the existence of Innotrex should not be 'unmasked' to TPN (see paragraph 43 above);
iv) recognised that, by October 2012, there was a clear risk that the formation of Innotrex would come to the notice of TPN and so misled TPN as to the market Innotrex would be targeting in order to protect its own commercial position pending the completion of Innotrex (see paragraph 46 above); and, finally
v) after Innotrex had been established, in May 2014, when challenged by Mr Naylor did not tell TPN the truth about whether HCML had used TPN data to assist setting up this rival network (see paragraphs 55-58 above).
i) I do not accept that this factor became operative until January 2014;
ii) HCML had made the decision to divert work away from TPN before Aviva Health decided to transfer referrals to Nuffield Health; and
iii) it is a point that (even if proved) is relevant to remedy rather than liability.
The FCA Score: Passing off
i) a goodwill or reputation attached to, and recognised by, the public as distinctive of the claimant's goods or services;
ii) a misrepresentation, calculated to deceive, by the defendant leading the public, or a substantial number of members of the public, confusing his goods or services with those of the claimant; and
iii) damage or likely damage.
Consorzio del Proscuitto di Parma -v- Marks & Spencer PLC  RPC 351, 368-369 (per Nourse LJ); Woolley -v- Ultimate Products Ltd  EWCA Civ 1038 .
i) I dismiss TPN's claim based on an alleged breach of clause 2.3 of the Services Agreement;
ii) I dismiss TPN's claim based on an alleged breach of the Light Touch Agreement;
iii) I find that HCML has infringed TPN's database right;
iv) I find that HCML has breached clause 3.1 of the Services Agreement by failing to act in good faith towards TPN;
v) I dismiss TPN's claim that HCML has breached clause 14.1 of the Services Agreement; and
vi) I dismiss TPN's claim for passing off.