Orford v Rasmi Electronics & Anor

J U D G M E N T

1. LORD JUSTICE MAY: This is an application for permission to appeal with an application for an extension of time, which would not trouble me if I otherwise thought that permission should be granted, from a judgment and order of HHJ Walton in the Newcastle-upon-Tyne County Court on 26th November 2003. The judge dismissed Mr Orford's claims for misrepresentation or deceit and for defamation. He ordered Mr Orford, the applicant this morning, to pay 75 per cent of the defendant's costs of not only the trial before him but also of a previous trial before Judge Bowers which had gone to the Court of Appeal, and the costs order embraced the costs of the appeal against Judge Bowers' order. Judge Walton refused permission to appeal.

2. A brief summary of the factual background derived in the main from Judge Walton's judgment is as follows. Mr Orford was employed by the first defendant company between about December 1998 and 23rd June 1999. He was an electronic development manager. The first defendant manufactures electronic and other electrical equipment. The second defendant is the managing director of the first defendant.

3. Mr Orford was employed to design electronic products of good quality, yet at the lowest practicable cost. There were, according to the judge, no time constraints put on Mr Orford in this respect.

4. The employment ran into problems. Mr Orford's case centrally to these proceedings was that the second defendant required him to produce copies of other people's products within a set time period. Mr Orford later considered this to be an unlawful request, because doing what he was required to do would infringe another person's or other people's intellectual property rights. He did not, however, make any complaint at the time. He accepted before Judge Walton that the possibility of infringing intellectual property rights had not occurred to him until, at the earliest, his final working day with the first defendants, which was 14th June 1999. Other problems also arose, for instance, as to his working hours. Despite the subsequent suggestion that the copying was unlawful Mr Orford in fact produced what he was requested to produce, which was ultimately submitted to another organisation to be manufactured.

5. The second defendant made a trip to China. He took with him a number of examples of Mr Orford's work including design drawings. Apparently the second defendant returned from China with the idea that Mr Orford's work had not been viewed favourably there and some criticism was directed against Mr Orford by the second defendant on his return from China.

6. Mr Orford took the week of 7th June off work and apparently during that time he cleared his desk not wanting to be in a hurry to do so if, as he correctly in the event anticipated, he was going to be dismissed. He apparently assumed that this was going to happen slightly before it in fact did.

7. He returned to work on 14th June 1999. The second defendant wanted to see him. He was asked to wait for the second defendant to arrive at work. Whilst this was happening he tripped over some steel racking that was protruding from a walkway into a corridor and suffered an accident. He completed the accident book. The factory manager, whose name was Mr Smith, attempted to reconstruct the accident with another employee, a Mr Wears, shortly after. He did so because Mr Smith was suspicious, so he subsequently said, as to the circumstances giving rise to the accident and, as he said, because he could not understand how Mr Orford had come to fall over.

8. Mr Orford was dismissed by letter of the same day, 14th June 1999 and the reason given for his dismissal was his poor performance. Shortly after that Mr Orford brought a claim for unfair dismissal in the Employment Tribunal, but before this had taken place contact was made with the Health and Safety Executive in respect of Mr Orford's accident. After discussions between the Health and Safety Executive and the second defendant, and perhaps other representatives of the first defendant's, the defendants filed a report to the Health and Safety Executive. That report, which is at section G of the bundle before me, in substance said that Mr Orford had fabricated or invented the accident.

9. Arising out of these events, as I have said, Mr Orford brought a claim in the Employment Tribunal. This came to a hearing. The Employment Tribunal gave a determination. They came to a conclusion that his claim for unfair dismissal failed as he had not acquired employment rights and as there had been no breach of the working time directive. He was, however, awarded £835 in unlawfully deducted wages.

10. Mr Orford then brought in succession two further claims. The first was proceedings started in 1999 which are the proceedings which are the subject matter of this morning's application. Those proceedings comprised a claim based upon misrepresentation and/or deceit, and a claim based upon defamation. The second action was a personal injury action arising out of the accident.

11. The claim for misrepresentation and deceit was based upon the premise that when Mr Orford was interviewed for his position with the first defendant he was not informed that he would be required to make unlawful copies of other company's products. If he had been made aware of this at the time he would have refused to take up the position. The defamation claim arose from the content and publication of the defendant's response to the Health and Safety Executive. It was implicitly accepted in the defence to that claim that it was defamatory. There was no defence of justification, but the defendant defended the defamation claim on the basis that the publication was the subject of qualified privilege. In response to that Mr Orford contended that privilege was not available because the publication was motivated by malice.

12. At the time the first of these actions was heard the personal injury action had not been tried. It now has and I shall refer to that briefly in due course. The procedural history of the other claim, however, was complicated. It was originally tried by HHJ Bowers. There was an application for permission to appeal against Judge Bowers' dismissal of the claim. Potter LJ gave permission to appeal in part. This court, consisting of Brooke LJ and Bodey J heard the appeal. They gave further permission to appeal in addition to that which Potter LJ had given and they allowed the appeal.

13. They allowed the appeal on this basis: HHJ Bowers had disposed of the misrepresentation claim summarily when it was held by this court that it was not appropriate. This court also held that the defamation claim should be reheard because of questions arising out of a plan relied on by the defendants and relating to the action which was shown to have been inaccurate. That is a brief summary of the judgments of Bodey J and Brooke LJ in those appeal proceedings.

14. The outcome was that there was a direction for a retrial and a direction that there should be case management directions, which duly took place on 24th February 2003 before HHJ Lancaster.

15. The retrial took place before Judge Walton on 26th November 2003. Following evidence from both parties on the claims Judge Walton dismissed Mr Orford's claim with costs and refused permission to appeal.

16. Mr Orford has told me this morning that there was a time when the misrepresentation, deceit and defamation claims were consolidated with the personal injury action, but Judge Walton subsequently decided that they should be heard separately, not least because two different firms of solicitors were representing the defendants in each of them.

17. Judge Walton in his judgment commented first of all upon the quality of the evidence that he had heard. He said that although Mr Orford and the second defendant in his judgment both believed their evidence to be true, it was evidence which had been given to a considerable extent at previous hearings and it was difficult for the judge to say whether those beliefs reflected the true facts or had, as it were, become second nature to the parties.

18. Judge Walton considered that all the other witnesses appeared to be attempting to be truthful. But he did regard it as a case where there were difficulties deriving from the passage of time between the events and the trial and he said that he was heavily influenced in deciding between conflicting evidence by what might be regarded as the inherent probabilities of the case.

19. The question arose whether what Mr Orford had been required to produce was indeed one or more unlawful copies of other people's designs. The judge accepted the second defendant's evidence as to the issue of whether he wanted copies of other company's products. The judge reckoned that it was inherently improbable that he would want such copies. It was more probable he said that, as described in the Industrial Tribunal, he wanted "reverse engineering".

20. Mr Orford had agreed that his case was not that entire products were to be copied, but that printed circuit boards only were to be copied. The judge, however, considered that there was no evidence before the court that such PCBs were either under patent, the subject of copyright, or that there were any relevant other intellectual property rights asserted in relation to them. And, of course, it was the case that the unlawfulness of the copying was not being asserted by any person who had the benefit of those intellectual property rights, whatever they were.

21. The judge concluded that it was probably the case that what Mr Orford was asked to do was not unlawful. If it had been he himself would have been aware of the fact and the judge reckoned that his conduct in that respect would have been tainted with illegality. An argument that Mr Orford had acted under economic duress was rejected.

22. The basis of the claim for misrepresentation which had been alluded to by Potter LJ in granting permission to appeal in respect of the first trial was rejected by Judge Walton as being unsupported by the evidence. That basis, which Potter LJ had regarded as a possible way of putting the case, related to whether or not Mr Orford had been induced to leave previous employment or induced to enter this employment by any misrepresentation.

23. Judge Walton further found that Mr Orford had not relied on any reference to illegal activities by the second defendant when he was interviewed for his position and that in that respect silence did not amount to a misrepresentation. Pausing there, it seems to me that that was a central problem with Mr Orford's misrepresentation case. What the judge said in relation to his interview is in paragraph 5 of the judgment. The judge said this:

"He told me that in the interview Dr Surendra [the second defendant] of the defendant company indicated to him that he wished him to produce good quality designs of certain electronic products at the lowest practicable cost; that there was no pressure of time; and that getting it right was more important than speed. Dr Surendra agrees that words to this effect were said."

24. There was, it seems to me, no positive representation relevant to these proceedings in the content of that, let alone any misrepresentation.

25. Proceeding to the question of defamation the judge, correctly in my judgment, directed himself from what Lord Diplock said in Horrocks v Lowe [1975] AC 135 at the famous passage on page 150 to the effect that qualified privilege may be destroyed by what is commonly referred to as 'malice'. What Lord Diplock said, starting at page 149, is this:

"The motive with which a person published defamatory material can only be inferred from what he did or said or knew. If it be proved that he did not believe that what he published was true this is generally conclusive evidence of express malice, for no sense of duty or desire to protect his own legitimate interests can justify a man in telling deliberate and injurious falsehoods about another, save in the exceptional case where a person may be under a duty to pass on, without endorsing, defamatory reports made by some other person.

Apart from those exceptional cases, what is required on the part of the defamer to entitle him to the protection of the privilege is positive belief in the truth of what he published or, as it is generally though tautologously termed, "honest belief". If he publishes untrue defamatory matter recklessly, without considering or caring whether it be true or not, he is in this, as in other branches of the law, treated as if he knew it to be false. But indifference to the truth of what he publishes is not to be equated with carelessness, impulsiveness or irrationality in arriving at a positive belief that it is true."

26. Judge Walton was satisfied on the evidence that the defendants did believe that the accident was fabricated, as set out in their response to the Health and Safety Executive, given the surrounding circumstances. The important passages in his judgment are in these terms:

"31. Turning to the claim in defamation, the claimant says the defendant either did not believe the statements made to the Health and Safety Executive or was reckless as to the truth or falsity of what was said. While he has challenged on occasion whether the belief was held at all, I reject that proposition having seen the defendants' witnesses. I am quite satisfied that they did believe that the accident was fabricated because of the background circumstances; that is, that the claimant had apparently fallen out in a major way with Dr Surendra, had cleared his desk, absented himself from work, and was awaiting a conversation with Dr Surendra in which it must have seemed likely to him that his future with the company would be called into question. Further, no doubt they were influenced by the alleged circumstances of the accident itself: the fact that the paint was spread around a surprisingly wide area; that when a reconstruction was carried out they could not see how he had come into collision with the bar at all let alone with such force as to project himself into the paint tin.

32. I fully accept that it may be that investigation of the accident was flawed in a number of respects; that Mr Wears might have checked the accident book; that he might have taken greater care over the timing of the accident; that if he had he would have avoided an error about the people who would have been in a position to see the hazard and report it beforehand; that it would have been appropriate to take photographs of the scene as it was discovered as opposed to reconstructing how the defendants thought it was before. Also I accept that in subsequently maintaining their position at the earlier hearings the defendants have taken bad points; such as suggesting that the claimant had no reason to be in that corridor when they had not made sufficient enquiries to establish why he was there; or producing plan 2 which appeared to place the claimant's office in a discreet walled area in the middle of the first floor when, in fact, he worked at two locations on the first floor and his office, strictly so called, was in another room and the area concerned was open plan.

33. I have considered Mr Orford's submission that the way the defendants have behaved in these respects is such as to indicate that at the time they made the comments they did to the Health & Safety Executive they did not believe them to be true, or were reckless as to whether they were true or false. In the end, those are not inferences which I accept. So far as his being in the corridor is concerned, I accept it would appear at least surprising on the information the defendants had that he should be there, although it seems also that had they given the point more thought they would have realised it was not the strongest. It is right, as the claimant has repeatedly emphasised, that no area of the factory was barred to him; but, more importantly, it seems to me that the defendants would have been well advised to ask why he was where he was before coming to a conclusion about it. Having said that, there is a considerable distance between saying that they were careless in coming to the view they had and saying that they were reckless as to whether their statement was true or false."

27. And then, after considering questions relating to the plan and the photographs, the judge said:

"36. So far as all these points are concerned, it may be that having come to the view they did about this accident and once litigation in its various forms arose, the defendants wished to put their arguments in their most attractive light. It may be that in doing so they were over eager to set out the case as they understood it. But I would not myself, having seen them, put this down as much to bad faith as to the excitement which the forensic process seems to have generated on both sides, in the course of which, I may say, even Mr Orford himself has, on occasion, put forward points which are without merit or unrealistic."

28. I read that passage at some length because it is important to show that, especially in paragraphs 32 and 33, the judge in reaching the conclusion that he did had taken account of all the major points that Mr Orford made and indeed of all or most of the points which he seeks to make on this appeal.

29. As to costs the judge accepted that the usual rule as to costs should apply, but that given the defendants' behaviour, which had been criticised, there should be a reduction in the recoverable costs. It was on this basis that he ordered Mr Orford to pay only 75 per cent of the costs. I say only because one of Mr Orford's grounds for seeking permission to appeal is that that costs order was, as he would have to say in relation to costs, palpably wrong.

30. Before coming to the written grounds of appeal and the written skeleton argument that Mr Orford placed before the court, I should mention that he has very helpfully this morning provided me with a careful and quite substantial written submission. The written submission repeats, in slightly different or additional form, some of the points made in the grounds of appeal in the previous skeleton. It also tells me that the personal injury claim has now been heard and tried and that Mr Orford was successful in that claim. He obtained judgment for £1,250 for pain and suffering and a total award, including loss of earnings and other losses and interest, amounting to some £8,300.

31. His written submission suggests that a question arises whether it was prejudicial to him to have proceeded with the defamation claim before the personal injury claim. But he has very fairly, and I think correctly, accepted this morning that there is no ground of appeal arising out of the personal injury claim and his success in it. Needless to say, his success indicates that the judge, who, incidentally, was also Judge Walton, found in those proceedings that the accident had indeed taken place. He so found in circumstances where Mr Orford tells me that the defendants did not produce witness statements other than those upon which they had relied in the misrepresentation and defamation proceedings.

32. There are numerous individual grounds of appeal which I hope Mr Orford will forgive me if I deal with quite shortly. As to the defamation part of the case he complains that the defendants were permitted to advance evidence which would go to justification when there was no such pleaded defence. That is justification that the claimant, Mr Orford, had fabricated the accident. This seems to me to be an insubstantial point when the judge only decided the case, as indeed it was pleaded, on the privilege defence and when the evidence as it seems to me was relevant to the issue of malice.

33. Secondly, Mr Orford suggests that the judge should not have permitted the defendants to adduce evidence by means of a third plan different from that which they had relied on at the first trial and which was shown in the Court of Appeal to have been erroneous. This plan he says had not been permitted by Judge Lancaster when he made his directions order. As to that, Judge Lancaster's order does I think permit an agreed amended plan, but, more importantly, Judge Walton had, in my view, a clear discretion to permit further evidence to be adduced and that, it seems to me, was properly exercised. It does not seem to me that the suggestion that the defendants should have been held to an erroneous plan which they had put before the Court of Appeal is one that carries any weight.

34. More importantly, however, the plans were relevant to the issue of malice and as I have indicated when I read paragraph 32 of the judge's judgment the judge properly took account of plan 2 and its errors and the circumstances surrounding it in reaching his conclusion.

35. The third ground of appeal is that the judge permitted Mrs Hampton, the second defendant's daughter and the author of plan 2, to give evidence. It is suggested that elements of her statement were shown to have been false and this showed, it is suggested, that the defendants were intent on advancing a false case and indicated improper motive. As to that, and indeed to quite a number of the other individual points which Mr Orford has made not only in his written grounds of appeal and skeleton, but also in the submission that he put before me this morning, whatever he may believe as to the defendants' motive and beliefs, the judge heard Mrs Hampton and the other witnesses and accepted her as a truthful witness. It seems to me that on this particular point, and indeed in other respects where Mr Orford is seeking to challenge what is essentially a factual finding by the judge, there is no real prospect of this court going behind that finding.

36. The fourth ground of appeal is that elements of the defendant's report to the Health and Safety Executive were demonstrably false, for example, as to the time at which the accident occurred, and that this could not have been accidental or careless. This again is a question of fact which the judge considered. He expressly refers to it in his judgment and again amounts to an attack on his factual findings. There is, in my judgment, no real prospect of those factual findings being disturbed on appeal. Mr Orford refers to some authorities under this ground of appeal, but I do not think they take the matter any further.

37. The next ground of appeal is that expert evidence as to paint spread should not have been admitted or taken into account. The judge mentioned this only in the context of submissions made by the parties. It was not central to his decision as to the defendants' belief. Their belief as to the paint was however capable of being relevant.

38. The next ground of appeal is that the defendants adduced evidence of Mr Orford's alleged incompetence when this had been resolved in his favour by the Employment Tribunal. I am not at all sure, having read the Employment Tribunal's determination, that they made firm relevant findings about his competence, but if they did, the judge, as I read his judgment, only alluded to this matter as narrative (see for instance paragraph 31 of the judgment) and in a manner which was consistent with the Employment Tribunal's finding.

39. In summary it is said that the judge should have concluded that the defendants knew that the report to the Health and Safety Executive was false. Well, he did not so conclude in a careful judgment which, in substance, as I have indicated, took account of all important relevant matters.

40. A further ground of appeal is that the disclosure of the report to the Health and Safety Executive during the Employment Tribunal proceedings had as its dominant motive a motive of damaging Mr Orford. As to that there is no allegation in these proceedings of a defamatory publication to the Employment Tribunal. It appears that this report, in those proceedings, was disclosed as part of standard disclosure and it may, although it is not necessary to decide, in that context to have been covered by absolute privilege in so far as a dominant motive was part of Mr Orford's case. In respect of the relevant publication, the judge's decision in substance took this into account in rejecting the case of malice.

41. As to misrepresentation, the first point which Mr Orford made in writing was that the judge wrongly rejected an argument he put forward as to estoppel that a finding of the Employment Tribunal as to the actual copying of the components that he was instructed to design should have been determinative. It was suggested that the judge wrongly took account of the decision of the House of Lords in Johnson v Gore Wood [2002] 2 AC 1. The Employment Tribunal had referred, as I indicated earlier in this judgment, to

" ... reverse engineering in other words taking competitors' products and trying to replicate the technological achievements made by other companies for the purpose of manufacturing cheaper alternatives".

42. Mr Orford says this was a clear and positive finding coming within the rule in Henderson v Henderson (1843) 3 Hare 100. I am afraid I do not myself consider that this is clear and the judge himself implicitly so found. However that may be, the central issue in the misrepresentation and deceit case was not whether there had been instructions to effect unlawful copying, but whether there had been an antecedent misrepresentation when Mr Orford was employed. As to this, as I have already indicated, I think that Mr Orford's case was wholly insubstantial in the light of what was said or the lack of what was said at the time he was interviewed.

43. Secondly, it was said that Judge Lancaster had determined that the claim should not be dismissed because Mr Orford had affirmed the employment contract. Judge Walton, it is suggested, should not have permitted this question to be resurrected. But Judge Lancaster had done no more than determine that it was not a knock-out point in favour of the defendants. He had not determined that it was not a matter for consideration. Mr Orford makes a similar and, in my view, insubstantial point in relation to the question of illegality.

44. Mr Orford suggests that evidence of previous work history was improperly introduced. But as I read his judgment the judge made no more than passing reference to this and I would not, for my part, regard this as irrelevant or inadmissible to the issue as to the defendants' state of mind in relation to malice.

45. And, finally, as to the written grounds of appeal, the judge, it is suggested, was wrong to place weight on the fact that it was Mr Orford who initially contacted the defendants. The question was whether there was a misrepresentation. I think this was relevant to the question of inducement upon which question, incidentally, Potter LJ had given permission to appeal.

46. As I have said many of those points are resubmitted, in slightly different form perhaps, in the written submissions that Mr Orford has kindly prepared for me today. One matter that he emphasises, and I emphasise this is not the only matter, is that during the defamation trial Dr Surendra had admitted in cross-examination that Mr Orford had every right to be in the corridor where the accident happened. He suggests that this and other matters which were stated, or as he would have it not stated but should have been stated, in the report to the Health and Safety Executive were clearly indicative of malice and that the inevitable result of this particular admission was that the defendant's statement could only have been a deliberate and conscious falsehood. It was clearly false, as were other matters, and the submission is that in the context of a report alleging criminal behaviour it was reckless to make a statement without checking its accuracy.

47. Mr Orford makes points relating to the plan, to material which he recorded on the tape recorder, to the friction between himself and Mr Smith, to the conduct, as he would see it, of the defendant after the publication. He also has an intriguing suggestion that since a company lacks a personality it cannot advance a defence to an allegation of malice since it does not have a state of mind. As I have explained to him in conversation, I think one should start from the point that, if he has to establish malice, he has to establish that as a state of mind, not of the company as an impersonal being, but of those people who run it.

48. As to misrepresentation Mr Orford points to a number of paragraphs in the judge's judgment including paragraph 19, paragraph 26, paragraph 8 and perhaps others where he says that the judge made factual errors. I am afraid that I do not think those errors, if errors they be, go to the heart of the matter.

49. His summary very helpfully put at the end of this includes the following: that the judge erred in his findings of fact and that the admission by the defendant that the claimant had every right to be at the accident scene was fatal to the defence. The judge did not refer to any admission from the report of facts which had to be known to the defendants and were favourable to the claimant, such admissions being indicative of malice. Looking at the report as a whole it is clear that the defendant acted recklessly and deliberately in different parts of it and, going on a little, once the defendant had accepted that the claimant had every right to be in the corridor the final paragraph of the report, together with omissions by the defendant, should have been sufficient to overcome the defence. And he says as to misrepresentation, as I have indicated, that the judge missed crucial evidence.

50. Well now, I am afraid to say that standing back and for the reasons which I have attempted to give, I do not think that this proposed appeal has any real prospect of success. It is really at its heart an attack on the judge's findings of fact. I am quite clear that the judge in a well-considered and well-constructed judgment gave consideration to all the main points on which Mr Orford wants to rely and came to a factual conclusion that he was on the evidence entitled to come to. I do not think that this appeal on either limb has any real prospect of success and the application is dismissed.

51. The question of costs is also a matter that Mr Orford would wish to bring to this court. Costs are always difficult on an appeal because costs are discretionary. The judge awarded the defendants 75 per cent of their costs including those in the Court of Appeal. The obvious basis for the reduction was that the defendants had conducted the proceedings in the way in which they had, particularly, for instance, in relation to plan 2 which was discredited in the Court of Appeal and, perhaps most importantly, that they had lost and Mr Orford had won in the Court of Appeal in relation to the first action.

52. I can see the possibility that a less onerous order against Mr Orford than 75 per cent might have been made. I have considered whether, in the circumstances which include that he won in the Court of Appeal, a more favourable order should perhaps have been made. But the Court of Appeal plainly regarded the eventual outcome of the second trial as relevant to the costs order of the appeal and I have concluded that it was not arguably beyond the judge's discretion to make the order that he did. The costs point is one which has given me cause for pause and thought, but in the result I think the application should be dismissed in that respect also. Mr Orford, thank you.

Order: Application for permission to appeal and extension of time dismissed. Application for costs dismissed.