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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Blade Motor Group Ltd v Reynolds & Reynolds Ltd [2018] EWHC 497 (Ch) (23 February 2018) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2018/497.html Cite as: [2018] EWHC 497 (Ch) |
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OF ENGLAND & WALES
BUSINESS LIST
B e f o r e :
(Sitting as a Judge of the Chancery Division)
B E T W E E N :
____________________
BLADE MOTOR GROUP LIMITED | Claimant | |
- and - | ||
REYNOLDS & REYNOLDS LIMITED | Defendant |
____________________
MR A. TABARI (instructed by Bell Lax Limited) appeared on behalf of the Defendant.
____________________
Crown Copyright ©
MR DAVID STONE (Sitting as a Judge of the Chancery Division):
Background
"The parties agree that Clause 2.1 in Section E Software Support Services, of the Agreement is revised to the following:
[R&R] shall, subject to the terms of this Agreement, provide the Software Support Services until either party gives the other not less than ninety (90) days written notice of termination not to expire before the fifth anniversary of this Amendment."
a) R&R to Blade on 25 July 2014 at 2.50pm: "…Option 3: a Five year agreement including an RPI clause & the provision of 20 KDMS licenses at £167.40 each (a 75% reduction on the normal price…)";b) Blade to R&R on 25 July 2014 at 3.25pm: "Mel. Could you get me: 5 Year Agreement? Year 1 and 2 fixed at current costs. Year 3, 4 & 5 RPI + 0.5%...";
c) R&R to Blade on 5 August 2014 at 2.14pm: "Stephen. Please find attached the paperwork for the long term agreement…";
d) Blade to R&R on 5 August 2014 at 2.58pm: "Mel. Attached are signed agreements…".
"that [R&R] shall forthwith:a) Provide [Blade] with the Software Licences set out in the Schedule attached to the Claimant's solicitors' letter dated 5 December 2016; and/orb) Remove the remote block it has applied to the KDMS software on [Blade's] server; and/or
c) Reinstate [Blade's] access to the historical data contained on [Blade's] KDMS system."
All three alternatives were dealt with together: I was not asked to draw a distinction between them.
Evidence
The Test for an Interim Injunction
(1) Is there a serious issue to be tried? If the answer to this is 'yes', then two further questions arise.
(2) Would damages be an adequate remedy for the party injured by the court's grant of or refusal to grant an injunction?
(3) If not, then where does the balance of convenience lie?
"In the forefront of his argument counsel for Thorn-EMI submitted that the court should not grant an interlocutory mandatory injunction, amounting to specific performance of one of Thorn-EMI's alleged contractual obligations, unless there appeared a high probability that Films Rover would succeed in establishing its legal right at the trial. In this case the Court of Appeal has gone no further than to say that Films Rover has an arguable case and, as I have already said, I propose to treat that as meaning that Films Rover is at least as likely to fail as to succeed. Counsel said that fell well short of the standard of persuasion necessary for the grant of an interlocutory mandatory injunction.
…
The principal dilemma about the grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the court may make the "wrong" decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial. A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been "wrong" in the sense I have described. The guidelines for the grant of both kinds of interlocutory injunctions are derived from this principle.
…It is another way of saying that the features which justify describing an injunction as "mandatory" will usually also have the consequence of creating a greater risk of injustice if it is granted rather than withheld at the interlocutory stage unless the court feels a "high degree of assurance" that the plaintiff would be able to establish his right at a trial. I have taken the liberty of reformulating the proposition in this way in order to bring out two points. The first is to show that semantic arguments over whether the injunction as formulated can properly be classified as mandatory or prohibitory are barren. The question of substance is whether the granting of the injunction would carry that higher risk of injustice which is normally associated with the grant of a mandatory injunction. The second point is that in cases in which there can be no dispute about the use of the term "mandatory" to describe the injunction, the same question of substance will determine whether the case is "normal" and therefore within the guideline of "exceptional" and therefore requiring special treatment. If it appears to the court that, exceptionally, the case is one in which withholding a mandatory interlocutory injunction would in fact carry a greater risk of injustice than granting it even thought the court does not feel a "high degree of assurance" about the plaintiff's chances of establishing his right, there cannot be any rational basis for withholding the injunction."
"A more concise summary, which I would commend as being all the citation that should in future be necessary, is the following passage in the judgment of Chadwick J in Nottingham Building Society v Eurodynamics Systems [1993] FSR 468 at 474:
'In my view the principles to be applied are these. First, this being an interlocutory matter, the overriding consideration is which course is likely to involve the least risk of injustice if it turns out to be "wrong" in the sense described by Hoffmann J [in Films Rover]
Secondly, in considering whether to grant a mandatory injunction, the court must keep in mind that an order which requires a party to take some positive step at an interlocutory stage, may well carry a greater risk of injustice if it turns out to have been wrongly made than an order which merely prohibits action, thereby preserving the status quo.
Thirdly, it is legitimate, where a mandatory injunction is sought, to consider whether the court does feel a high degree of assurance that the plaintiff will be able to establish this right at a trial. That is because the greater the degree of assurance the plaintiff will ultimately establish his right, the less will be the risk of injustice if the injunction is granted.
But, finally, even where the court is unable to feel any high degree of assurance that the plaintiff will establish his right, there may still be circumstances in which it is appropriate to grant a mandatory injunction at an interlocutory stage. Those circumstances will exist where the risk of injustice if the injunction is refused sufficiently outweigh the risk of injustice if it is granted."
1) Blade's auditors cannot perform their functions without access to the data stored on Blade's system through R&R's software. This, Mr Flanagan said, prevents the auditors from preparing properly audited accounts, which is considered a very serious matter for Blade and companies within the group. I am conscious that whilst the position in which Blade finds itself is not to be preferred, there was no evidence before me beyond Mr Flanagan's assertion that the results of failing to provide an audit would, at this stage, be unquantifiable for Blade;
2) Mr Flanagan gave evidence that Companies House had contacted Blade about a group company, Blade Motorcycles Limited, in relation to the late filing of accounts and threatening strike off proceedings against that company. The letter from Companies House was exhibited to Mr Flanagan's second witness statement and was dated 9 December 2017. Mr Tabari pointed out that no information has been given as to what happened next. That letter was dated 9 December 2017 and requested an answer within 28 days. It is therefore likely, he said, that Companies House has taken further action but we cannot know what it is because that is not before the court. There was no evidence before me that any fines levied by Companies House cannot be quantified;
3) Mr Flanagan gave evidence that Blade is unable to comply with requests for information that have been made by Her Majesty's Revenue & Customs but again, there was no evidence that that difficulty is insuperable or that any losses suffered are unquantifiable;
4) In the course of its business, Blade makes claims under car manufacturer warranties. Mr Flanagan gave evidence that Volkswagen has requested audit support from Blade. There was evidence that Blade has been unable to claim a warranty to the value of £1,782 as a result of lack of access to its data. I accept Mr Flanagan's evidence that there may well be more such refusals but, again, it does not seem to me that they are unquantifiable so long as records are kept;
5) Mr Flanagan gave evidence that Blade faces financial penalties from manufacturers in relation to data collection and potentially faces fines. Again, it seems to me that those difficulties are not insuperable and that the fines themselves can be quantified. There was no evidence that they would drive Blade out of business. Indeed, the evidence went the other way suggesting that Blade is in robust financial health; and
6) Mr Flanagan gave evidence that the lack of access to the data prevents Blade from meeting customer requests for information which will cause reputational loss to Blade. It does not seem to me that this particular head of damage can be put too highly: Mr Flanagan's evidence on this point was assertive only. It also became clear from my questioning of Mr Arumugam that Blade has access to current data: since mid-2016 Blade has been using Pinnacle. Therefore, any unfilled customer requests can only relate to dates from before that time.
(1) The overriding consideration is which course is likely to involve the least risk of injustice if it turns out to be 'wrong';
(2) Because of the mandatory nature of the injunction, it may well carry a greater risk of injustice if it turns out to have been wrongly made than an order which merely prohibits action, thereby preserving the status quo. There was disagreement as to what the status quo currently is, with Mr Arumugam suggesting that the status quo is best maintained by unlocking the software. I disagree. It is abundantly clear to me that the status quo is the position as it currently is and indeed was on 12 February 2018 when this application was filed. The evidence is clear: Blade had no access to the relevant software on those dates. I do not accept the suggestion that the status quo is best maintained by mandatorily forcing R&R to provide access to the software. That is not the status quo. The status quo is the position as it is now, and the position as it is now is that Blade has no access to the software;
(3) I am entitled to take into account whether or not there is a high degree of assurance that Blade will be able to establish at trial the right it asserts. It is not clear to me that a term will be implied into the negotiated written contract in the terms alleged by Blade. The various agreements have been negotiated over time. They deal with a number of eventualities. The email correspondence I have quoted above appears clear to me: it is at least highly arguable that Blade asked for and was given a 5 year agreement. I therefore cannot say that I have a high degree of assurance that Blade will be able to establish at trial that there was a unilateral mistake requiring the agreement to be amended. Whilst I certainly make no determination at this point, I am entitled to take into account whether I have a high degree of assurance and, in doing so, I find that I do not; and
(4) Even if I am unable to feel a high degree of assurance that Blade will establish its rights, there may still be circumstances in which it is appropriate to grant a mandatory injunction at an interlocutory stage. These circumstances will exist where there is the risk of injustice if the injunction is refused which sufficiently outweighs the risk of injustice if the injunction is granted. In this context, I consider the alleged delay in Blade's bringing of its claim. Blade says it has brought this application promptly. However, it is clear to me that this dispute began in mid-2016, escalated thereafter, and in August 2017 reached something of a climax in the denial by R&R of access by Blade to its data through R&R's software. Since then, Blade says it has repeatedly been requesting access to its data and I note that there have been without prejudice and other meetings to try and resolve the dispute. However, given that there was disagreement between the parties in mid-2016 and access was blocked in August 2017, it does not appear to me to be acceptable for Blade to wait until February 2018, some six months later, before approaching the court on an urgent basis for interlocutory mandatory relief. I was taken to and I am mindful of the decision of Laddie J in Handi-Craft Co and Anor v B Free World Ltd and Ors [2005] EWHC 1307 (Pat). In that case, Laddie J looked at delay and found on the facts of that case as follows:
"Yes, the claimants have proceeded to court perhaps less speedily than one would have expected, but on the other hand, I do not accept that the defendants have changed their position at all as a result of that delay. It seems to me that the delay is not such as to justify the refusal of an injunction which would otherwise be appropriate."
I am mindful of what Laddie J said in that case, but Laddie J was dealing with a six-week delay in Handi-Craft. That is a different order of delay from the six-month delay in this case. I consider that Blade's delay is something that weighs against it in the balance of convenience. If the data access were as vital to Blade as it has submitted, it would have approached the court well before now.
"An application should not be listed before the Interim Applications Judge unless the overall time required to deal with the application is two hours or less. The two hour maximum includes the judge's pre-reading time, the hearing of the application, delivery of judgement and time for dealing with costs."