Meridian International Services Ltd v Richardson & Ors

On 26th September 2005 Meridian Associates Ltd (“MAL”) produced for the Consumer Healthcare UK division (“CHUK”) of GlaxoSmithKline (“GSK”) a paper setting out various proposals for the introduction of an integrated financial forecasting system called Project Vista. MAL went into creditors’ voluntary winding up on 28th October 2005 and the promotion of Project Vista was continued by Meridian International Ltd (“MIL”) which had been incorporated on 1st September 2005. Project Vista led to the creation of computer software called StratX for which the source code was written by the third defendant, Mr Aldersley, after 9th January 2006. The Project Vista contract was executed by MIL and CHUK on 20th and 24th April 2006 respectively.

The significance of the date, 9th January 2006, lies in the fact that it was on that day that there occurred a meeting at the Crowne Plaza Hotel, Heathrow Airport (“the January Meeting”) at which an oral agreement (“the January Agreement”) was made whereby the second defendant, IP Enterprises Ltd, a company incorporated on 12th October 2005 by the first defendant, Mr Richardson, and Mr Aldersley would complete the outstanding work on Project Vista and StratX.

In the action commenced by a claim form issued on 20th March 2007 MIL claimed that it was an express or implied term of the January Agreement that, in effect, the copyright in StratX should be assigned to it. Mr Ham QC, sitting as a deputy High Court Judge of the Chancery Division, by whom the claim was tried in July 2007, gave judgment on 18th October 2007 rejecting both claims. By their appellant’s notice issued on 23rd November 2007 MIL sought to appeal from the judge’s order on both grounds and were given permission to do so by Rimer LJ on 29th January 2008. By a letter from their solicitors dated 12th March 2008 MIL abandoned its appeal in relation to the express terms concerning the source code and programme files for StratX pleaded in paragraphs 20(1) and (2) of its particulars of claim.

In these circumstances this appeal is only concerned with whether the judge was right to reject the contention that there is to be implied into the January Agreement the terms set out in paragraph 21 of the particulars of claim. The basis for such an implication is alleged to be that it is “necessary for its [the January Agreement’s] business efficacy and/or so obvious as to go without saying”. The terms are that

“(1)

The source code and programme files for the software under the agreement [with CHUK] and any documentation or other materials necessary to use, compile or maintain that software (including the databases created in connection with it) would be provided to [MIL] by the Defendants on demand and in any event at the end of their work for [MIL].

(2)...the rights in confidence relating to them belonged to [MIL].

(3)

The copyright in those materials would belong to [MIL] and legal title therein would be assigned by the Defendants to [MIL].”

To explain the relevant context in which the January Meeting occurred and the parties’ submissions to us in relation to the alleged implied terms it is necessary to set out the facts in some detail, notwithstanding that much of the judge’s judgment is directed to matters more relevant to the claim of an express term.

The individuals involved in the events to which I shall be referring were Mr John Bobeckyj, Mr Nigel Keating, Mr Richardson, Mr Aldersley and Mr Wickens. Mr Bobeckyj was the founder and principal shareholder in both MAL and MIL. He had worked for both Glaxo and SmithKline Beecham. He recruited Mr Richardson and Mr Aldersley to work for both companies. He gave evidence at the trial which the deputy judge rejected as “untrue and dishonest”. Mr Keating had worked for GSK before setting up as a freelance consultant in supply chain systems. He was the only duly appointed director of MIL, having been recruited by Mr Bobeckyj. He gave evidence at the trial which the judge described as “unreliable”. Mr Richardson had been recruited by Mr Bobeckyj as a regional manager for GSK. He was appointed a director of MAL and given 20% of the equity by Mr Bobeckyj. He resigned as a director of MAL in 2004 because of his unhappiness with the way its affairs were being run. He gave evidence at the trial which the judge regarded as “on the whole” truthful. Mr Aldersley, the IT manager for SKB in New Zealand, was also recruited by Mr Bobeckyj as an employee of or contractor for MAL. He returned to New Zealand in 2001 but continued to work for MAL. He gave evidence at the trial. The judge recorded that no challenge to the truthfulness of his evidence had been made. He was satisfied that Mr Aldersley was trying to assist the court to the best of his ability. Mr Wickens was, at the relevant time, the finance director of CHUK. He had approached Mr Bobeckyj about the new project for an integrated forecasting system. He was the individual at CHUK with whom the relevant dealings took place. He did not give evidence at the trial. There was no evidence from either CHUK or GSK as to their dealings with MAL, MIL or the other individuals to whom I have referred.

The January Agreement originated from the inability of MAL to pay its creditors, including its employees and contractors. The judge recorded that by August 2005 MAL was in serious financial difficulties. He explained how the incorporation of MIL and the creditors’ voluntary liquidation of MAL was designed to preserve the business of MAL in the name of MIL but without the burden of all its liabilities, principally the debts due by MAL to the Revenue and Customs and Excise. This concerned Mr Richardson and Mr Aldersley to whom substantial sums were due by way of salary and expenses. Mr Bobeckyj assured them that they would be paid. The financial problems of MAL was also the background to the negotiations with CHUK.

On 12th October 2005 there were two relevant meetings. The first was a two hour presentation given by Mr Bobeckyj, Mr Richardson and Mr Aldersley relating to Project Vista given at a commercial review meeting of CHUK at its offices in Brentford attended by Mr Wickens. By then Project Vista had been broken down into two phases at a respective cost of £40,000 and £160,000. Mr Wickens authorised phase 1 and £20,000 worth of programming work under phase 2, but, as he explained, required board approval for the full amount of the contract.

The second meeting took place in a nearby pub to which Mr Bobeckyj, Mr Richardson and Mr Aldersley adjourned following the presentation. Mr Richardson and Mr Aldersley were concerned that they had not been paid the sums due to them in September. Mr Richardson produced a payment schedule he had prepared. Mr Bobeckyj agreed to make the payments shown on it, by borrowing if necessary. The sum immediately due to Mr Aldersley was paid but those due to both Mr Richardson and Mr Aldersley on 20th October 2005 were not. Further promises were made by Mr Bobeckyj at a meeting on 15th November, by e-mail and on the telephone but the payments due on 20th November and 20th December were not made. Mr Richardson met Mr Bobeckyj at the offices of CHUK on 20th December. The meeting was heated. Mr Bobeckyj indicated that he could not make the payments due to Mr Richardson and Mr Aldersley. Mr Richardson replied to the effect that in that event he was leaving. On 23rd December Mr Bobeckyj telephoned Mr Aldersley who told him that he Mr Aldersley would not continue to work for him without Mr Richardson.

Contemporaneously with these events Project Vista progressed. Such progress is fully described in paragraph 26 of the Judge’s judgment, which, in view of some of the submissions made to us, I ought to set out in full. The progress was described by the judge in these terms:

“(1)

CHUK provided information about its existing processes and there were several meetings with CHUK to discuss this aspect of the project and to review progress. A project room was established at CHUK's premises.

(2)

In early November Mr Richardson consulted Mr Aldersley on the development options in terms of software and he passed on certain options to CHUK under cover of a memorandum of 10 November. The options referred to versions 1.1 and 2.0 of a Microsoft product called .Net, which figure in the story at a later stage. The introductory note to the covering memorandum of 19 November stressed that it was not concerned with the CHUK forecasting system software or the intellectual property in that product, and referred to the Contract for that purpose.

(3)

That does not mean that a Contract was in existence at the time, because on the same day Mr Richardson was emailing Mr Bobeckyj about pricing and the need for IP to remain with the design and to avoid "a CEE style cock up with the contract this time". This was prompted by a suggestion from CHUK that, to facilitate approval, the project should be presented as an extension of the CEE project. Mr Richardson accepted that he saw a draft of the Contract at about this time. But there [was] no draft in evidence, only the final Contract signed in April 2006.

(4)

About 21-3 November Mr Wickens informed Meridian International that he had been given approval to go ahead with Project Vista in full. Mr Keating's evidence was that this was in no small measure due to the fact that Meridian International was already a preferred supplier and had several years' history with CEE of successful process and systems implementations. This was of course not the case: Meridian International had only recently been incorporated and had no track record with anyone.

(5)

The culmination of phase 1 of the project - the process work - was the preparation of a "Business Brief". Mr Richardson referred to this in an email dated 25 November 2005 to the relevant individuals at CHUK, attaching a plan that he had prepared showing the intended timetable for the project. He said that the key date for consideration was the next Wednesday, when Meridian would be submitting a "business brief" attempting to outline the current business requirements and process agreement that had been agreed by then.

(6)

The plan called for the Business Brief to be signed off on 2 December and for "Meridian IT" to begin work on phase 2 - developing the software.

(7)

On 28 November Mr Richardson sent the first draft of the Business Brief - to which both Mr Keating and Mr Richardson had contributed - to CHUK with process maps appended to it. It is an extremely detailed document. But Mr Richardson asked for it to be signed off at the meeting on Wednesday - two days later. CHUK immediately queried this, and Mr Richardson and Mr Bobeckyj confirmed that sign off by the end of the first week of December would be acceptable.

(8)

In the event, the Business Brief was not approved until well into December. It is clear that it had not been signed off by the time of a steering committee meeting on 14 December and Mr Keating's evidence was that it was signed off in the week beginning 19 December.

(9)

In the meantime, a draft Contract had been supplied to CHUK by 9 December when Mr Wickens emailed Mr Bobeckyj about it.”

Thus, by the New Year, Project Vista had reached an advanced stage but Mr Richardson and Mr Aldersley had refused to work for Mr Bobeckyj or MIL any further. On 6th January 2006 Mr Richardson, with the prior agreement of Mr Aldersley to whom it was copied, sent an e-mail to Mr Bobeckyj in the following terms:

"Following our discussion before Christmas, I would like to present two possible ways of moving forward...

Option 1 - Ian and Peter bill the existing work through a new company and pay you a 20% finder's fees on specific projects as outlined below.

•

CEE Project:

o As per the Meridian contract with GSK, GSK now own the CEE project code as Meridian has gone into administration. This refers to all components that were developed and provided to GSK while Meridian was still in business. Peter and I will finish this project and bill GSK directly through a separate company for the remaining value in lieu of our outstanding payments.

•

CHUK Vista project:

o The currently invoiced 40K for process work which is yours. Peter and I will take over and complete the software component of the project and will bill GSK directly through a separate company. You will receive a 20% finder's fee for sub-contracting this component to myself and Peter i.e. we will pay you £36k after we receive final payment on project completion.

•

SCJ support:

o Peter and I will take over the contract for support and manage this. Any future work you obtain with SCJ, I suggest a 20% finder's fee as above, payable in agreed phases between us.

•

Other Projects:

o Any other work you want us to sub-contract on we will negotiate a rate at that time.

Option 2 - Ian and Peter approach customers and offer services directly through a separate company - We will do this next week....

•

We offer our services directly to the customers and let them decide on how to move forward.

I look forward to discussing the options with you in the near future, hopefully before next week, and hope that we can find a way of making these business changes occur as smoothly as possible for all parties.

Thanks

Ian"

On the evening of 8th January 2006 Mr Richardson sent Mr Bobeckyj a revised plan showing that the programming work on Project Vista had not begun. The January meeting was fixed for noon because Mr Bobeckyj had arranged a meeting with Mr Wickens for 2pm. In the event Mr Richardson was late. The meeting lasted about 45 minutes and was an acrimonious one. The judge’s findings in relation to that meeting are set out in paragraphs 37 to 39 in these terms:

“37.

There is a consensus that Mr Richardson asked Mr Bobeckyj and Mr Keating for their response to the email of 6 January and that they went over the email and discussed each of the three projects in turn. There is also consensus that, while Mr Keating said that he thought this was too generous, agreement was soon reached on CEE on the basis that the outstanding payment that was due would be paid to IP Enterprises. Mr Bobeckyj's idea was that this would more than make up for the outstanding money owed by Meridian Associates.

38.

Moving on to StratX, there was at first an impasse. But eventually it was agreed that 30% of the balance of the outstanding payments due from CHUK would be for Meridian International to cover the time of Mr Bobeckyj and Mr Keating to finish the project. Mr Richardson says this was a finder's fee as he had originally suggested though of a greater percentage, but Mr Bobeckyj and Mr Keating do not accept that description which they say was never used. They go on to say that they made it clear that the new StratX technology was [to] belong to them, that is to Meridian International. This is categorically denied by Mr Richardson. There was, he says, no suggestion of this.

39.

They then went on to discuss the SCJ project, but no agreement was reached though there is disagreement as to why this was. However, nothing turns on this and I need not go into it. There was also discussion of how to explain the delay in the project to the client.”

On 10th January 2006 Mr Richardson e-mailed Mr Bobeckyj (copied to Mr Keating and Mr Aldersley) in the following terms:

“Subject: Agreement / Contract...

John,

This is as I understand the situation as we agreed yesterday - if you do not agree please let me know, today:

CEE

All CEE work will be paid to us, (IP Enterprises Ltd) including any future work if any with CEE in full, if we secure any future work we will bill through you as sub-contractors.

All CEE support is handled and billed by us - again through you in the short term.

GSK

For the system work you will be paid £27,500 of the remaining to be billed £160k, we will agree the payment schedule with Brian jointly, and the Meridian milestones for success.

For the support of this system at the end of the contract - this will be handed over to us for the appropriate fee - 15% of the project cost to be incorporated into the contract - I would like to do this before the end of this week.

John to provide us with the contract as now with GSK.

SCJ

I think we still need to discuss SCJ and how we move forward with this. Discussion of ownership etc who owns code for the bigger picture versus SCJ, can do this anytime you wish.

Support you said you will pick this up is that still the case how do you want that to be done?

Gerallt will be billed by us from Jan 1 - please send his info, P45 to us from Meridian so that I can set him up as an employee.

Payments to us should occur no more than 3 working days after payment into your account.

Thanks

Ian”

The judge recorded that Mr Bobeckyj did not respond to the invitation to let Mr Richardson know of any disagreement with the contents of the e-mail. Thereafter Project Vista continued as summarised by the judge in paragraphs 43 to 50 of his judgment. I need only refer to two matters. The first is that, as recorded in paragraph 45, in February or March 2006 Mr Keating took Mr Richardson through the various clauses in the still unsigned contract with CHUK. In particular he drew attention to the clause relating to intellectual property rights. Mr Richardson claimed that Mr Keating agreed with him that MIL did not own such rights.

The second matter is the form of the contract as signed by MIL and CHUK in April 2006. The relevant terms, as set out by the judge in paragraphs 46(4) and (5), were:

“(4)

Meridian warranted that:

it has all the rights necessary to perform its obligations under this agreement and that no third party has or is entitled to claim any intellectual property right or interest in any of the software licensed by Meridian hereunder

(5)

Against the side-note Intellectual Property Rights:

Meridian represents and warrants to GSK that any software licensed or designed by, or on behalf of, Meridian hereunder, and its use for the purposes set out in any project documentation, has been designed on behalf of GSK. However, all software designed by, or on behalf of Meridian, remains the intellectual property of Meridian International Services ltd and may not be used, other than in areas agreed to contractually by Meridian, without the consent of Meridian International Services ltd.

In connection with the above, GSK agrees that:

(1)

GSK shall adhere to the terms of the IPR stated above.

(2)

GSK shall not make any admission as to liability or agree to any settlement of or compromise any IPR Claim without the prior written consent of Meridian; and will not enter into separate third party discussions related to IPR and software development to the detriment of Meridian International Services ltd

(bold in original)”

After setting out the relevant facts, in paragraphs 51 to 57 the judge considered the case for MIL based on the alleged express term. He concluded that MIL had not established its claim. In paragraphs 58 et seq he considered the case for MIL for the implication of a term as set out in paragraph 4 above. In respect of the legal principles he directed himself by reference to the judgment of Lightman J in Robin Ray v Classic FM [1998] EWHC Patents 333 paragraphs 45 and following, described by Jacob LJ in a subsequent case as a ‘masterful summary’. He summarised the principle to be applicable in paragraph 60 in these terms:

“An implication may only be made if it is necessary, and then only of what is necessary and no more. The test is, as has been said elsewhere, one of strict necessity.”

Later, in paragraph 62 he added:

“The implication of terms is part of the process of interpretation of contracts, and even when dealing with an oral as opposed to a written contract, it is necessary to consider the matter in the light of the background. The subjective intentions of the parties are not relevant, and the matter must be judged objectively. Moreover, subsequent events and discussions are not material.”

It is common ground that those statements of the relevant principles are entirely accurate.

As indicated in paragraph 4 above, the particulars of claim gave no indication of the facts and matters on which MIL relied to justify the making of the requisite implication. They were not identified until the closing speech of counsel for MIL. Such facts and matters were accurately summarised by the judge in paragraph 61 of his judgment in these terms:

“(1)

The terms of the Project Vista contract which provided for:–

(a)

Meridian International to retain the ownership of the copyright;

(b)

a warranty;

(c)

licence.

(2)

It was necessary to be able to stop GSK using StratX outside CHUK.

(3)

Without ownership of the copyright, Meridian International's strategy of reselling the software to other customers would not have been possible.

(4)

There was a specific commercial need to stop IP Enterprises from going off to other customers, particularly when it was understood that the whole project was a loss leader for Meridian International, which would have derived no commercial benefit from the contract unless it owned the copyright.

(5)

The price paid by Meridian International to IP Enterprises was high, as the planned budget for paying Mr Richardson and Mr Aldersley to produce the software was significantly lower than the amounts handed over to IP Enterprises, and this made it a loss leader.

(6)

The software incorporated confidential information that was part of the business brief.”

The judge rejected each of those matters as justifying the implication contended for. I will refer to his reasons in due course. But before he considered any of them the judge made certain observations in paragraph 63 which are criticised on this appeal. In that paragraph he held:

“63.

In relation to the first matter upon which [counsel for MIL] relies, the background relied upon consists of the terms of the Project Vista contract. However it was not signed until over three months later. A draft was in existence but has not been produced. There is no evidence as to its terms except the testimony of Mr Bobeckyj and Mr Keating that it was in the same terms as the contract ultimately signed. But for the reasons I have already given, I am not willing to accept that uncorroborated evidence. Nor do I accept the contention that the terms of the draft contract were accepted by conduct; no conduct referable to the draft was pleaded or proved. The most that can be said therefore was that there was a draft contract in existence.”

On this appeal counsel for MIL contended that the judge was wrong in three respects. The first criticism is that the judge failed to refer to the fact that in his evidence Mr Richardson had dealt with the terms of the draft contract he had seen in November 2005. The second criticism is to the effect that the judge had failed to note that the terms of the contract in its final form had been sent to CHUK on 18th November 2005 so that the board approval conveyed by Mr Wickens in the period 21 to 23 November was capable of constituting the acceptance of the offer made on 18th November 2005. The third criticism is to the effect that the judge was wrong not to recognise the conduct of CHUK between 18th November 2005 and 9th January 2006 to have amounted to acceptance by conduct of the terms of the draft written contract. It is asserted that in consequence of these three errors the judge failed to appreciate that there was a concluded contract between MIL and CHUK at the time of the January Meeting.

The judge’s conclusion was that MIL had failed to establish its claim based on an implied term of the January Agreement.

It is convenient to start with the three points highlighted in paragraph 19 above. The first relates to the evidence of Mr Richardson. He gave oral evidence on 23rd and 24th July 2007. He verified his witness statements and was then cross-examined. In cross-examination he agreed that he had seen the draft written contract with CHUK on 10th November 2005. He identified the terms set out in the final version as signed, quoted in paragraph 15 above, with the terms he had seen in the draft in November 2005. But the draft he saw was never produced. He had no opportunity to compare them. Indeed the document he identified in the passage relied on by counsel for MIL (Tr.Day 5 p.737 line 10) was an accompanying memorandum from Mr Richardson to Mr Wickens, copied to Mr Bobeckyj, not the draft contract itself. Later in his cross-examination Mr Richardson complained that Mr Bobeckyj and Mr Keating failed to implement their promise to show him the final draft before it was signed. Evidently, the judge did not accept that the draft Mr Richardson saw on 10th November 2005 was in the same terms as that which was signed by MIL and CHUK in April 2006, hence his comments in paragraph 26(3) quoted in paragraph 10 above. Accordingly, the omission to refer to the evidence of Mr Richardson in paragraph 63 of the judgment is readily understandable and not a reason to re-examine the judge’s conclusion.

The second criticism of paragraph 63 of the judgment has even less substance than the first. It is based on two versions of a time plan kept by Mr Richardson. On the first, dated 25th November 2005, under the cross-heading “Contract” there is recorded as a step “draft contract supplied to BW for review”. In the “By date” column the date “18-Nov” is specified. In the “Who Meridian” column appear the initials JB. Evidently BW is Mr Wickens and JB Mr Bobeckyj. The two subsequent entries indicate that the contract was to be returned to Meridian for approval by Mr Wickens on 25th November and to be signed by both parties on 30th November. The same document as at 5th January 2006 contains entries for later dates. The entries in the 25th November version to which I have referred remain the same save that against that for 18th November someone has inserted the letter ‘C’.

On this appeal the material to which I have referred is relied on to show that the contract was submitted to CHUK on 18th November 2005 and was then in its final form and therefore capable of acceptance when Mr Wickens communicated the approval of his board on 21st to 23rd November. It was not so relied on in the court below and the points made to us were not put to Mr Richardson in cross-examination. Accordingly the points are not open to counsel for MIL. But in any event neither of the two documents relied on shows what counsel for Meridian asserted and such assertion is flatly contradicted by other contemporary documentary evidence. They do not show what counsel asserted because in the context of the first three lines to which I have referred the entry on the second line envisages that the contract to be sent to MIL on 18th November would not be in its final form because Mr Wickens might review and amend it and such amendments would have to be approved by MIL before signature five days later. It is contrary to other contemporary documentary evidence in that in his e-mail to Mr Bobeckyj dated 9th December Mr Wickens proposed substantial amendments to the draft contract. Further in his e-mail dated 10th January 2006, quoted in paragraph 13 above, Mr Richardson recorded the agreement of Mr Bobeckyj “to provide us with the contract as now with GSK”. It is plain that as between MIL and CHUK the agreement was still being negotiated at the time of the January Meeting.

The third criticism as summarised in paragraph 19 above is to the effect that the judge was wrong in concluding, as he did in paragraph 63, that there was no conduct of CHUK referable to the draft contract capable of constituting acceptance by conduct. The judge’s finding, which in the light of my conclusion on the second criticism must stand, that the draft contract was supplied to CHUK by MIL sometime before 9th December limits the period within which such conduct must have occurred to the period between then and 9th January 2006. Counsel for MIL relied on the conduct of Mr Wickens recorded by the judge in paragraph 26(4) of his judgment. But this was not shown to have followed submission of the draft contract. In any event the evidence shows that Mr Wickens was still proposing amendments to the contract on 9th December 2005, the business brief which must have preceded any contract was not signed off until sometime in the week commencing 19th December and there was no evidence of other conduct of CHUK between then and 9th January 2006 capable of amounting to acceptance by conduct. It is to be noted that there was no evidence from CHUK, the evidence of Mr Bobeckyj and Mr Keating had been rejected and neither Mr Richardson nor Mr Aldersley referred to any other conduct of CHUK. Accordingly, in my view, the judge’s conclusion in the last two sentences in paragraph 63 of his judgment is unimpeachable.

I turn then to the reasons the judge gave for rejecting each of the six points on which MIL relied, set out in paragraph 17 above, for the implication of the terms it seeks. The judge rejected the first ground relied on, namely the terms of the Project Vista contract for the reasons he gave in paragraph 64 of his judgment, namely:

“...the existence of a draft contract the terms of which are not known but which were still open to negotiation is an insufficient basis for the implication of a term. No contract having been entered into, it would have [been] possible to adapt the terms of the contract to the January agreement and it was not necessary to imply a term in order to make the January agreement workable. The contract with GSK could have been adapted to bring it into line with the January agreement. Nor in my judgment was it so obvious as to go without saying that a term should be implied.”

This reasoning is criticised by counsel for MIL on the grounds that the judge overlooked the evidence of Mr Richardson that the draft he saw in November 2005 was the same as the final form signed in April 2006. I have already dealt with this submission in paragraph 21 above. But even if the judge had forgotten about this part of the evidence of Mr Richardson there is no evidence that Mr Richardson knew or thought that, as at 9th January 2006, the contract between MIL and CHUK was binding. The evidence of Mr Richardson and the contemporary documents to which I have already referred demonstrate the contrary.

The second point on which counsel for MIL relied before the judge was the alleged need to prevent GSK using StratX outside CHUK. This was rejected by the judge for the reasons set out in paragraph 66 of his judgment, namely:

“....One answer to that is that, terms not having been agreed with GSK, it could have been dealt with by contract. More fundamentally, this argument appears to beg the question. An implication can only be necessary on this basis if one presupposes what has to be decided - that Meridian International was to be beneficially entitled to the copyright that statute gave in the first instance to Mr Aldersley.”

The logic of this conclusion appears to me to be inescapable. Indeed I did not understand counsel for MIL to challenge it. In any event, this point begs the further question of whether the bar to GSK’s further use of StratX was to lie in MIL’s ownership of the copyright or in Mr Aldersley’s.

The third point on which counsel for MIL relied before the judge was the alleged strategy of MIL to sell the software of StratX to other customers. The judge rejected this allegation on the grounds that [paragraph 67]:

“I am not satisfied that there was any such strategy. This was bespoke software. It could only be resold to other customers in the unlikely eventuality that [their] processes were identical to CHUK, and I accept the evidence that it would have been as easy to start from scratch to produce similar software for a different customer. At most there was, in my judgment, an aspiration on the part of Mr Bobeckyj to be able to sell to other customers. In any event, I cannot see how this makes it necessary to make the contract workable or so obvious as to go without saying.”

Thus the judge’s primary point was that the strategy relied on was not made out on the facts. That conclusion has not been challenged before us. It must follow that there was no strategy capable of giving rise to any necessity.

But the judge went on in paragraph 68 of his judgment to give an additional reason for rejecting this and other grounds relied on by MIL. He considered that:

“This whole argument looks at the matter entirely from the point of view of Meridian International, and not from that of the other parties to the January agreement. They were Mr Richardson, Mr Aldersley and IP Enterprises. In my judgment, there was no necessity from the point of view of any them for Meridian International to be able to stop IP Enterprises going off to other customers. In particular, that was not necessary from the point of view of Mr Aldersley, the first owner of the copyright in question. In the ordinary case of a two-sided contract the courts only imply a term on the grounds that it is obvious that both parties must have intended it, so obvious indeed that if an officious bystander had asked them whether there was to be such a term, both would have suppressed it testily: "Yes, of course". Here there was a multi-lateral agreement, and while one can imagine that response from Meridian International, it is difficult to see why Mr Richardson on behalf of himself, Mr Aldersley and IP Enterprises should have responded to the officious bystander in that way.”

Before us counsel for MIL contended that in this paragraph the judge made an error of law. He submitted that the necessity sufficient to justify the implication of a term does not have to be mutual. He relied on the decision of the House of Lords in Equitable Life Assurance Society v Hyman [2002] 1 AC 408, in particular on the passage in the speech of Lord Steyn at p.459D-H. But that passage does not support the proposition for which counsel contends because Lord Steyn was at pains to point out that the implication precluding the use of the director’s discretion in the manner of which complaint was made “is essential to give effect to the reasonable expectations of the parties.” Had Lord Steyn been intending to apply the principle for which counsel for MIL contends he would have referred to the policy-holder not ‘the parties’ generally.

The judge rejected the fourth point on which MIL relied for the same reason because “it looks at the matter exclusively from the point of view of Meridian International.” In my view the judge was right to do so.

In relation to the fifth point the judge concluded that the commercial context of the case was unusual. He observed [paragraph 70]:

“Meridian International had embarked on the StratX project and, following the breakdown of relations in December, was not in a position to [be] able to deliver. The connection with GSK was an important one for Mr Bobeckyj, which would have been prejudiced if it could not complete the project. In other words, Meridian International was over a barrel. It was desperate for cash, and the prospects of receiving payment from CHUK or further work from GSK can hardly have been good if it had had to admit that it could not complete Project Vista. To consider whether the project was a loss leader is really beside the point against that commercial background. As Mr Bobeckyj said in one of his witness statements, all he really wanted was to complete the project successfully.”

Finally, the judge rejected the suggestion that the implication was necessary because of the incorporation of confidential information in the software. First he was not satisfied that that was the case. But, second, if it was, the confidential information could be protected as such and no necessity for implying a term as to copyright would arise.

Before us counsel for MIL did not challenge the judge’s conclusions on his fifth and sixth points. They were subsumed into a general submission that the judge wrongly failed to ascertain the express terms of the January Agreement and to consider the question of necessity from the cumulative effect of all the factors relied on by MIL on those express terms. On the first of those points counsel for MIL relied on the speech of Lord Steyn in Equitable Life Assurance Society v Hyman [2002] 1 AC 408, where earlier on page 459 he described the inquiry as:

“entirely constructional in nature: proceeding from the express terms of article 65, viewed against its objective setting, the question is whether the implication is strictly necessary.”

The judge was well aware of that proposition for he enunciated it in paragraph 62 of his judgment which I have already quoted.

The fact is that the judge was not asked at the trial to consider the express terms of the January Agreement other than the express term for which MIL was, unsuccessfully, contending. But it can hardly be contended that he was unaware of them. It was admitted on the pleadings that by the January Agreement the arrangements agreed in October 2005 were terminated and new terms for the relationship between MIL and the defendants were agreed. The judge had considered extensive oral evidence as to the course of the January Meeting and described them in paragraphs 37 to 39 of his judgment which I have already quoted in full.

Nor can the judge be criticised for considering the six points on which counsel for MIL relied individually for such value and force as they might individually possess if only as a preliminary to considering their cumulative effect. But if their individual value and force is nothing their cumulative effect is also nothing. That was the conclusion of the judge when in paragraph 72 he said:

“Accordingly, Meridian International has not, in my judgment, established its claim based on an implied term of the January Agreement.”

I agree and would dismiss this appeal.

I agree.

I also agree.