Fraser & Ors v Oystertec Plc & Ors

This is an application for summary judgement by three of the Claimants, who are the minority shareholders in the defendant Easyrad Limited. Ostensibly, it is a case about a patent. But I believe it raises a question of law which is of more general significance.

Because this is an application for summary judgement I must instruct myself as to the correct standards and procedures to apply. I shall state what I conceive to be the correct position in Section II of this judgement. But first a certain amount of preliminary narrative is in order.

The Applicants for summary judgement are Mr and Mrs Fraser and Davidson Tools Limited. Mr and Mrs Fraser are investors and management consultants. They are creditors of Easyrad Limited and, together with Davidson Tools Limited, they own a number of shares in Easyrad Limited, but not a majority.

For present purposes I do not think I need to go into the history of Davidson Tools Limited, save to say that it was a company in which Mr Davidson was at one time interested; however, in September 2001 management control of it was obtained by the Frasers, together with Mr John Barker. Mr Barker has been a significant actor in this case and I shall return to his role later.

The Respondents to the application are Oystertec PLC, a company I shall describe in a moment; Mr Paul Davidson who started off as a fitter and became an inventor and entrepreneur; and Mr Adrian Binney who is an accountant and for some time was a business associate of Mr Davidson.

The Fourth Defendant Easyrad Limited is a company in whose name the proceedings are being brought by its minority shareholders: see further below.

In February 2001 the defendant Oystertec PLC was floated on the Alternative Investment Market of the London Stock Exchange. The flotation was a great success. It raised £30 million. Following the flotation the shares attracted a substantial premium, valuing the company at about £96 million in mid-August 2001. Quite a lot of money was made by some of its directors including, in particular, the defendant Adrian Binney and, more particularly still, Mr Paul Davidson.

When Oystertec was floated it was substantially indebted, it had not sold any products, and it had no contracts with customers. The prospectus began as follows:

The prospectus proceeded to describe the Oyster Converter. It is a fitting by which a pipe can be connected to a boiler, cylinder, valve or similar device. For example, it can serve to connect the valve of a domestic radiator to the pipe that feeds it with hot water. Because the joint is rotary the radiator can be swung away from the wall whilst it is still working.

I should explain that the ‘Oyster Converter’ was previously known, to the parties to this case, as the ‘BSP Converter’ or (as mentioned in paragraphs 6 and 12 of Mr Binney’s first witness statement) as ‘the Swing Down Radiator Fitting’ or ‘the Easyrad Swing Down Radiator’.

Since the directors proposed to generate revenues by granting licences to manufacturers, it is evident that the most important assets of the company were its intellectual property. The reference to the patent which was granted for the Oyster Converter in July 2000 is to UK patent No. 2314391, and I shall call it “the Patent”. It was granted on 20 July 2000 pursuant to Application No. 9711602.4, filed on 6 June 1997.

The prospectus mentioned certain other products which had been invented by Mr Davidson and for which patent applications were pending, but there can be no doubt that the Oyster Converter had pride of place in the document. Mr Leon Dwek, who was the chief executive of Oystertec at the time and had overall responsibility for the work required for the flotation, has made a witness statement on behalf of the First Defendant. He describes the position as follows:

Page 14 of the prospectus explained that:

Mr Binney, who was the Finance Director of Oystertec at the time, says:

The prospectus explained that earlier that month, on 6 February 2001, Mr Davidson had assigned all his intellectual property rights relating to Oystertec products - and that included the Patent - to the company, conditional on the shares being admitted to trading on the AIM, for a deferred consideration of £3 million. I mention in passing that Mr Davidson had obtained a large shareholding in the company on preferential terms, and it appears that soon after the flotation he sold it for £6 million; however, neither that fact nor the precise amount matters much for present purposes.

Now, the principal complaint that is made by the Applicants in this case is that at the time of the flotation neither Mr Paul Davidson nor Oystertec PLC owned the Patent at all: it belonged to the defendant Easyrad Limited, and still does. More precisely, what Easyrad Limited originally owned was the pending application for the patent, but nothing turns on the difference and so I shall simply call it “the Patent”. The Applicants seek declaratory and certain ancillary relief, accordingly.

In essence, the Applicants say that they and others invested in Easyrad Limited in order that it could acquire the Patent, which it did. Other members of that company included Mr Paul Davidson and Mr Adrian Binney. There was a falling out and it then transpired that Mr Binney, purporting to act for the company, had divested it of the Patent by assigning it to Mr Davidson himself. The Applicants say that the purported divestiture was null and void because:

I believe that this is the main group of issues in the case and I shall refer to them collectively as the ‘Void Transfer’ point. Essentially, they are points of law or construction.

Now, although the Applicants say that Oystertec is wrongly claiming to be the owner of a patent which really belongs to Easyrad, they admit that they cannot, by exercising their voting rights, compel Easyrad to bring legal proceedings about it. The majority of the shareholding in Easyrad is controlled by Mr Paul Davidson and Mr Adrian Binney and those who are their supporters, or who have come to an arrangement with them and do not wish to be troubled. Nor can the Applicants sue personally because they do not claim to be the owners of the Patent themselves.

I understand that on 29 July 2002 Pumfrey J ordered that the Applicants should be permitted to continue their claim by way of derivative action for the benefit of Easyrad Limited. A derivative action is, of course, a proceeding by which in appropriate circumstances the court allows minority shareholders to bring proceedings in the name of the company; for that purpose the company is joined as a defendant. Hence in this judgement I shall treat Easyrad Limited as, so to speak, a neutral party; when I write ‘the Defendants’ I shall be referring to Oystertec PLC, Mr Paul Davidson and Mr Adrian Binney.

The Applicants have an alternative ground. They assert that, even if the transfer was not void, it was voidable. They say that in making the transfer Mr Davidson and Mr Binney acted in breach of their fiduciary duties as directors to act in the best interests of the company; alternatively, that the transaction amounted to a sale at an undervalue. I believe that Mr Andrew Sutcliffe QC, who appeared for the Applicants, eventually accepted that he could not obtain summary judgement on that ground. In any event I so hold.

Indeed I am prepared to go further and to hold that this particular ground of complaint is bound to fail. Apart from other difficulties, ‘voidable’ means that the transaction is valid unless and until it is avoided (repudiated). A company may be the victim of a breach of fiduciary duty or a sale at an undervalue; nevertheless it may suit it, or its liquidator, to affirm the transaction. In my judgement it is plain on the face of the correspondence that the Applicants did not take sufficient steps to avoid the transaction before the flotation of Oystertec PLC. They merely asserted that they might be going to avoid it, which is not enough. Furthermore, if we assume for the moment that Easyrad Limited validly conferred upon Mr Binney and Mr Davidson a power to enter into the divestiture transaction, I cannot see of what loss the company is entitled to complain.

It follows that if the Applicants are to succeed it must be on one aspect or another of their ‘Void Transfer’ point, or not at all.

The Applicants contend that certain other patent rights which are claimed by Oystertec PLC do not belong to it either, but to one or another of the other corporate claimants in this case and, in some respects, for similar reasons. But they did not advance these particular contentions with much vigour in these summary judgement proceedings; I did not have the opportunity to hear full argument on them; and it is possible that the evidence does not really enable me to know enough about certain aspects of the relevant circumstances. In those circumstances I believe it would be wrong to say anything further about these claims at this stage. However, some of the findings in this judgement may conceivably have an impact on some aspects of those claims at a later stage.

Oystertec PLC, in case the Applicants succeed against it, have brought a Part 20 claim against Mr Paul Davidson on the ground that it was misled.

The Respondents dispute the ‘Void Transfer’ point and add that the complaint is not suitable for adjudication on an application for summary judgement.

The Respondents also contend that the Applicants’ claim is barred by laches or acquiescence: they stood by too long and allowed the Patent to be assigned by Mr Davidson to Oystertec PLC so that Oystertec could be floated on the AIM. The Respondents say that in any case the claim was settled in the year 2001 so there has been an accord and satisfaction.

Because this is an application for summary judgement I must direct myself as to the correct legal standard to apply. I wrote this section of my judgement first, and believe that I have already been applying its precepts in the introductory section, above.

CPR rule 24.2 provides:

A party is entitled to a fair trial. Because a summary judgement deprives a defendant of the opportunity of having a full trial, it is not available unless he has ‘no real prospect’ of succeeding. If he has no real prospect of succeeding, summary judgement deprives him of nothing of substance; and to insist on a full-blown trial would be to inflict expense inconvenience and delay on his opponent. It would be inconsistent with the overriding objective, which is to deal with cases justly. Dealing with cases justly includes saving expense, avoiding delay and acting in a manner which is proportionate.

Hence CPR Part 24 contains what Lord Woolf MR in Swain v. Hillman [2001] 1 All ER 91 at 95 described as a useful power. He went on to warn, however, that

Where Lord Woolf refers to ‘cases’ being disposed of summarily, I believe he means to include aspects of cases, because the Rule applies to the disposal of ‘the whole of a claim or a particular issue’. I shall revert to ‘a mini-trial’ a little later in this section.

In order to defeat an application for summary judgement a fanciful prospect of success is not enough. For example “it may be possible to say with confidence before trial that the factual basis for the [defence] is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based”: per Lord Hope of Craighead in Three Rivers District Council v. Bank of England [2001] UKHL 16 at §95.

This signifies that, whenever there is a conflict between the witness statements of the applicant and the respondent, and the respondent’s version, although seemingly weaker, is not fanciful, the latter should be preferred.

But I do not believe that a respondent can defeat an application for summary judgement, otherwise good, by putting in a witness statement that asserts a bare conclusion of law, being a conclusion that is challenged by the other side. He must go further and give his version of the facts: the facts upon which that conclusion of law is supposed to depend.

For example, suppose that, in a particular case, it would somehow be a good defence to show that there was a trust. It will not do for the respondent merely to assert “There was a trust”. He must state the facts that he relies on to show that such a trust was created. Likewise, if he contends that the proceedings have already been compromised between the parties on certain terms, it is not enough to say “The settlement was agreed”, without saying how. If he does not lay out the facts the court has no way of knowing whether they have any reasonable basis: whether they are fanciful. He cannot evade the scrutiny of the court upon this point by failing to condescend to sufficient particulars. I do not mean that he must go into exhaustive detail, but I do mean that he must do enough for the court to be in a position to adjudicate on his story, albeit to the standard required for rejection of summary judgement. If the law were otherwise all applications for summary judgement could be defeated by a deponent who did not know or mistook the law, or who chose to conceal a fanciful, incredible and colourful story within the plain brown envelope of a legal conclusion.

Further, summary judgement is usually applied for before there has been disclosure of documents. An applicant for summary judgement may, within reason, select which of his documents he puts forward for the court’s attention; but the procedure known as disclosure of documents compels him to reveal (and indeed to look for) even documents which he would hate to disclose, because they are injurious or fatal to his case. Furthermore summary judgement is almost invariably sought before there has been disclosure of the trial witness statements, let alone any cross-examination of witnesses. Every experienced practitioner has seen cases which looked solid on paper but which came unstuck at or on their way to trial - and rightly so. In the Three Rivers case, what was effectively summary judgement was sought against the claimant; but exactly the same considerations apply, in reverse, where it is sought against a defendant. Lord Hobhouse of Woodborough (dissenting, but not on this point) said at §160:

This does not mean that a party can successfully resist summary judgement by suggesting, like Mr Micawber, that something may turn up to save him, though he does not know what: see per Megarry V-C in Lady Anne Tennant v. Associated Newspapers Group Ltd [1979] FSR 298: per Jacob J in World Wide Fund for Nature v. World Wrestling Federation [2002] FSR 504, 515 (“There must be some reasonable basis... It is not enough that something might turn up out of the blue”). The court must be able to see that the prospect is real, not fanciful. For example, “the hope that something may turn up during the cross-examination of a witness at the trial does not suffice. It is of course different if the admissible material available discloses a reasonable prima facie case which the other party will have to answer at the trial” (per Lord Hobhouse in the Three Rivers case).

An application for summary judgement may raise difficult questions of law. This is not the same problem as disputed questions of fact, because the court is supposed to know the law, and if it makes a mistake it can be put right on appeal. Rather, it is a problem concerning the proper allocation of judicial resources, including the resources of the parties. As Lord Mackay of Clashfern said in Williams & Humbert v. W & H. Trade Marks [1986] AC 368 at 441:

The same principle should, I apprehend, apply to an application for summary judgement on a difficult point of law (except, of course, that the result need not be pretty evident in advance). A further difficulty is that if the court grants summary judgement on what is essentially a question of law or construction, it could be reversed by the Court of Appeal. Then, depending on the circumstances, it is possible that not only will the intended saving of time, money and human energy have turned out to be illusory, but delay and yet further waste will be the result. But, as pointed out by Lord Mackay, a countervailing possibility is that summary determination may so substantially cut down or simplify the trial as to make the risk of proceeding with the hearing sufficiently worth while.

Earlier, I mentioned Lord Woolf’s reference to a ‘mini-trial’. In an abstract sense any hearing which leads to the grant of summary judgement involves consideration of a subset of those matters that would have had to be investigated at the trial. The matter to be estimated, I believe, is not whether the summary determination hearing will take up this or that amount of time, but whether the alternative (doing it at the trial) will be worse. It may be worse if not only must the parties advance the same arguments but must engage in extensive preparations in the assembly of evidentiary materials which turn out to be unnecessary or irrelevant. The Williams & Humbert case itself was a summary determination which involved the decision of a question of law where there was a dissenting judgement in the Court of Appeal - by a future law lord - and which ended in the House of Lords. The report of the argument before the final tribunal occupies ten and a half closely printed pages. Despite this the House concluded that in the circumstances the judge had been right to dispose of the case by summary procedure.

When I speak of a difficult issue of law, I am not referring to an issue of law that cannot be determined on summary judgement at all: because it depends on a prior examination of disputed facts as to which both sides appear to have a case which is not fanciful.

I shall describe how I have exercised my discretion in this regard in the next section of this judgement.

Not because of any verbosity on the part of counsel, the hearing before me occupied six days of court time and extended late into the last evening. Even so it overran its allotted time and had to be suspended. It might appear that the case was unsuitable for summary judgement on that ground alone, except that it became very apparent to me that, if it had gone to trial in the normal way, it would have lasted a great deal longer: far longer than the time that has been estimated for that purpose. In the event there was not enough time for full argument on the two specific defences advanced by the Respondents, namely accord and satisfaction and laches and acquiescence. See the next section of this judgement.

At the conclusion of the hearing I decided that the best thing to do was to reserve judgement on the ‘Void Transfer’ point. If the Respondents were right on this point, it would dispose of the whole application, because the Applicants’ alternative contention (that if the transfer was not void it was voidable) was bound to fail. But if the Applicants were right, it would dispose of a central issue in the case, indirectly saving a vast amount of time at trial and in preparation for trial.

In the event, I have not found the main aspect of the ‘Void Transfer’ point to be at all easy. I have reflected on it for a long time - I freely confess, too long. It involves what is, to me anyway, a difficult point of law. Of course, I might have exercised my discretion by dismissing the application for summary judgement on that ground alone. If I had appreciated its difficulty at the outset I probably would have done so. I did not appreciate it until I had heard the excellent arguments of Mr Philip Marshall QC for the First Defendant.

On consideration, I have not felt that it would be just to the parties to take that course. If I had, it would have had to be gone into all over again at the trial anyway. I therefore concluded that I must make up my own mind, and that is what I have done. If I have got it wrong there exists a tribunal whose business it is to put me right. And the reader may be assured that this is not mere conventional modesty, because I believe that in any case the point of law cries out for elucidation at appellate level: see Goode, Principles of Corporate Insolvency Law, pages 147-150.

Although, as I have said, I have not heard full argument on these issues, I can nevertheless say something about them and make one finding.

I believe that the defence of accord and satisfaction turns on the contemporary correspondence between the parties. At the start of the hearing I invited the parties to address me briefly on this point first, because if the claim was indeed settled there was certainly no point in considering other issues. As a result of what followed I allowed Mr Andrew Sutcliffe QC, who appeared for the Applicants, to put in further correspondence, and during the course of the hearing I invited the other parties to put in any other correspondence which they considered to be relevant to the issue, applying for an adjournment if so desired. I heard considerable, but not full, argument on this issue.

As a result of what I heard, it certainly did not strike me that accord and satisfaction was the Respondents’ best point. Or, to put it another way, on what I have heard so far - and I emphasise ‘so far’ - I can see that the Applicants might well succeed on it, even on an application for summary judgement. I say ‘so far’ because on this point I have not fully heard Mr Mark Platts-Mills QC (who appeared for Mr Davidson) and Miss Fiona Clark (who appeared for Mr Binney), as I have already foreshadowed.

I do not want to say much about the point at this stage, because the Respondents are entitled to develop it further if they want to. I will only say that, in the light of the additional correspondence adduced by Mr Sutcliffe QC, I presently have some difficulty in understanding how the witness Mr Mark Warburton (a business associate of Mr Paul Davidson and formerly in practice as a solicitor) could have stated that “the terms of the Settlement Deed ... were agreed”: he does not say how and it seems to fly in the face of that correspondence. Compare paragraphs 33 and 36 of this judgement.

On this issue there was not enough time to hear the parties in full either. However, I have heard enough to convince me that on this point Mr Baldwin QC, who advanced it on behalf of all the Respondents, is at least partly right.

Essentially, the Applicants want it to be declared that Easyrad Limited is still the owner of the Patent because the divestiture was null and void - was writ in water. Suppose it was. Even so, it does not follow that a void transaction cannot have effective consequences. If a party who has a right to complain stands by or does not do enough, and allows the putative transferee (or, I would add, a third party) to modify his position as a result thereof, there may come a point in time when the wronged party is debarred from pursuing his claim. An obvious example is the expiry of a limitation period, but the same result can be produced under the doctrines of laches or acquiescence. I believe there is nothing at all novel in this concept - that a void transaction may become unchallengeable and hence, paradoxically, valid - and I can think of several illustrations ranging from administrative law to the sale of goods.

Now, when the Applicants found out about what I have called the ‘Void Transfer’ from Easyrad Limited to Mr Paul Davidson, they sensibly sought to deal with the matter by negotiation. There is nothing wrong with that, but it is beyond dispute that there came a time when those negotiations proceeded along a very definite course. The Applicants were not saying, “We intend to stop Oystertec from being floated on the strength of Easyrad’s Patent”. Instead, the tenor of their negotiations can be put, I believe not unfairly, as follows. “Floating a new company is probably the best thing to do, because it is likely to raise a lot of money. We shall go along with this - provided we are adequately compensated.”

On my provisional interpretation of the settlement negotiations, I believe it is clear that discussions concerning the terms (which involved not just the Applicants but Mr Barker) went on even after Oystertec was floated. But, of course, once Oystertec was floated, the Applicants lost an enormous amount of negotiating power.

Almost certainly they could have prevented the flotation altogether if they had wanted to. Not even by taking objection in a court of law, but by making a fuss in the financial markets.

According to Oystertec’s evidence, neither Mr Paul Davidson nor Mr Adrian Binney told the directors who were actually in charge of the flotation that there was any problem with Easyrad Limited. I believe it is most unlikely that any responsible flotation broker or similar professional would have dared to take Oystertec to the market when there was such a cloud hanging over the title to its principal assets; at the very least, without mentioning it in the prospectus.

My belief is supported by the fact that for a long time there was on open record a challenge to Oystertec’s ownership of the Patent - but it was made, not by the present Applicants, but by another of Easyrad’s shareholders, a company called Lancashire Fittings Limited whose leading light was a Dr Wakelin (see further below). Lancashire Fittings commenced proceedings in this court against Mr Davidson and on 5 January 1999 actually obtained an interim injunction which prevented Mr Davidson from disposing of the patent. It was not a derivative action and so if the case had gone to trial it is not clear to me how Dr Wakelin’s company could have succeeded. It is also true that the injunction was soon discharged because Dr Wakelin’s company did not come up with security for costs.

But what matters for present purposes is that from 11 January 1999 notice of the challenge was entered in the register kept at the Patent Office, for all the world to see. Any competent flotation professional, anxious to ensure that due diligence was accomplished, would strongly have been put on enquiry. “What’s this all about? Who are Lancashire Fittings?”, we can hear him exclaim. Now, what happened? It was not until 6 February 2001 that Mr Paul Davidson came to terms with Dr Wakelin and eight days later the Oystertec prospectus was issued. The inference must be that until that problem had been sorted out the prospective flotation was stymied.

It is very understandable that the Applicants did not start proceedings themselves, seeing that they knew Dr Wakelin was making the running. But it is precisely because they were allowing him to make the running, on behalf of his own company, that they ran the risk that he, Dr Wakelin, might come to terms with Mr Davidson at any time.

In the above circumstances, I believe that it would be quite wrong to grant the Applicants relief in the terms they are seeking. The effect would be to declare that Easyrad Limited is the owner of the Patent, when the flotation had gone ahead largely on the strength of that Patent and had raised a large amount of money - precisely the result that the Applicants were contemplating. I do not mean that I should merely refuse to grant a declaration on summary judgement. I would go further and decide that on this aspect the Respondents are clearly right. I would be prepared to strike out the Claimants’ unqualified proprietary claim. It seems to me that I must consider, not only the position of Oystertec PLC, but also the plight of the investing public who subscribed on the strength of the prospectus. Nothing therein warned them that there was a problem with Easyrad Limited.

That said, I do not mean to imply that the Applicants are entitled to no relief at all on the ground of laches or acquiescence. At this stage Mr Baldwin QC has not carried me that far, although he may or may not be able to show that I cannot give summary judgement on it. The equitable defences of laches and acquiescence are not necessarily absolute in their nature, and a declaration is an equitable remedy which is granted in the discretion of the court. See Spry, Equitable Remedies, 6th edition, 2001, especially page 4:

Now, if the ‘Void Transfer’ point is valid the court has, in the abstract, a jurisdiction to grant a declaration accordingly. Whether it will exercise that power will depend on a discretion to be exercised having regard to the circumstances of the case. As I have explained, to the extent that I am firmly with Mr Baldwin QC it is because I am convinced that the Applicants chose to go down the ‘compensation’ route when negotiating over the Patent, and subject to satisfactory compensation were content for the flotation to go ahead. Effectively, insofar as they had anything to do with it as minority shareholders who were in a position to bring a derivative action, they gave up Easyrad’s claim to be the owner of the Patent on condition that compensation be paid. So be it. But it does not follow that the just result is that Easyrad should obtain no relief at all: not even financial compensation. If the court possesses the jurisdiction to grant the declaration, it seems to me that it must have the power to do the lesser thing: to refuse to grant it, but on terms that compensation be paid to the satisfaction of the court.

There are other routes by which the same result might be achieved. See Spry, op cit, Chapter 7: “The Award of Damages in Equity”.

And if compensation be due, it does not follow that the amount thereof should equal what the Applicants would have been willing to accept at the time. They were negotiating in circumstances where their claim was being denied, and where it would have required expensive and difficult court proceedings to establish it. Indeed, I have heard enough to convince me that the way through the legal labyrinth, if any, would not have been obvious to most lawyers.

If we now imagine that the case is reduced to a claim for financial compensation, it bears a very different aspect regarding laches and acquiescence. The Applicants say that Oystertec had the best possible notice of the problem about Easyrad because at least two of Oystertec’s directors, namely Mr Paul Davidson and Mr Adrian Binney, were its authors and knew that the Frasers were complaining. The Defendants say that was not sufficient notice to Oystertec because those of its directors who were in charge of the flotation were told nothing about Easyrad’s claim; and I was treated to an illuminating discussion about the doctrine of notice in relation to a company and what individual was the “mind” of the company for that purpose.

But this may be off the point. The point is: is there a good defence of laches or acquiescence? Put shortly at the risk of some oversimplification, those are equitable defences which, when they succeed, do so because it would be unconscionable for the claimant to succeed in all the circumstances having regard to how he has behaved in relation to the advancement of his complaint. His state of mind at the time is therefore highly relevant. Assume that the appropriate Oystertec directors were told nothing by Davidson and Binney - in gross breach of their due diligence obligations pursuant to the prospective flotation. It seems to me that the Applicants could scarcely be to blame for failing to foresee it.

However, I do not go into these matters any further because at this stage, pending completion of the argument, I have not decided that Easyrad Limited is entitled to equitable or other compensation. Mr Baldwin QC had a more general point. It was that it is not possible for the court to grant summary judgement because questions of laches or acquiescence, by their very nature, require a careful weighing of the precise facts and circumstances appropriate to the exercise of a sound discretion; and in this case those facts and circumstances are in dispute. He may be right, but not necessarily so. If he is, it does not deprive the Applicants of any entitlement they may have to summary judgement on other issues.

Before proceeding further I believe I ought to digress and say something about the Register of Patents.

There is kept at the Patent Office a register which is open to public inspection and which records, amongst other things, the ownership of patents. Registration is not equivalent to legal title. It is only prima facie evidence: Patents Act 1977, s.32(9), as amended. By section 34 the court may, on the application of any person aggrieved, order the register to be rectified by the making, or the variation or deletion, of any entry in it - which itself implies that any given entry in the register may be wrong. It follows that you cannot know for certain, just by going to the Patent Office and inspecting the register, who is the owner of a given patent. If you want to buy the patent you cannot be quite sure that the person who is registered as the owner can give you good title.

Instead, the way the system is supposed to work in practice may be illustrated as follows. Anybody who buys a patent is well advised to register the fact as soon as possible. If he fails to do so he runs the risk that the vendor may turn round and sell it to another person who does not know of the earlier sale. If that other person proceeds to register his ownership at the Patent Office, the registration will defeat the earlier sale: section 33. The theory is that since people can be taken to know this, and can be trusted to act diligently in the protection of their own interests, they will hasten to register their ownership as soon as it is acquired. Thus the register probably will record the true position at any given time. I believe that many people take it on trust. But it is not a certainty.

When legal proceedings are taken concerning a patent the Patent Office will enter notice of that fact on the register.

With regard to the Patent in this case the register records as follows.

By the way, this last entry conceals a mystery. Someone has now applied to revoke the Patent but, unusually, his or her identity is unknown. The proceedings were brought in the name of the undisclosed principal’s patent agents.

There is no doubt that before there was any question of Mr Davidson having acquired the Patent from Easyrad Limited - which is supposed to have happened by an assignment of 22 October 1998 - the company was registered at the Patent Office as the proprietor of the Patent. But I must describe how that came to be so.

The invention was made by Mr Paul Davidson at a time when he was working as a consultant for a company called Artform International Limited on terms that any inventions he made would belong to Artform. Artform applied for the Patent on 6 June 1997. The leading light in Artform was a Mr John Barker, who has played a certain role in this case. Mr Barker was in the process of disposing of Artform and he was willing for the Patent to be sold if a sufficient purchase price were to be forthcoming. He was amenable to the Patent being sold to Mr Paul Davidson for £50,000; but Mr Davidson himself did not have the money.

On 30 September 1997, and while the application for the Patent was pending, it was assigned by Artform to Lancashire Fittings Limited - Dr Wakelin’s company - for a payment of £50,000 plus VAT. There can be no doubt that the money came from the resources of Lancashire Fittings Limited.

It is asserted in the witness statement of Mr Paul Davidson that “it was agreed and understood by Dr Wakelin and myself that LF Ltd would hold the rights to the Patent on my behalf and all rights to the Patent would remain with me”. This is an assertion that there was a trust - compare paragraph 36 of this judgement - but we are told nothing about how it was created. If the agreement was in writing, where are the documents? If orally, when and where, and what precisely was said? It is not as if the assertion was so obviously uncontroversial as not to call for factual support: why, especially, should Dr Wakelin’s company pay out good money to acquire the Patent for the sole benefit of Mr Paul Davidson? (It would be otherwise if the Patent was to be held on trust for a new corporate vehicle for the ultimate benefit of all the shareholders therein (Footnote: ¹).) The assertion was not made in the previous litigation between LF Ltd and Mr Paul Davidson. See, in particular, paragraph 8 of the affidavit of Mr Davidson in those proceedings. The assertion is disputed by Dr Wakelin, albeit not in a witness statement but in a letter and orally to Mr Fraser. Mr Binney supports Mr Davidson’s version but he does not claim to have been present and he is only repeating what he says Mr Davidson told him. In any case there is a document which, as is accepted, was written by Mr Binney only a day after the assignment to Lancashire Fittings Limited. Mr Binney says it was only written “for discussion purposes”, but I do not believe that matters for present purposes: the point is, what was the assumed factual basis for those discussions? The document is headed “Draft Heads of Terms re Easyrad” (Footnote: ²). It asserts:

Furthermore, on 19 October 1997 - less than a month later - Mr Binney prepared yet another document for the purpose of briefing solicitors. By now Easyrad Limited had been incorporated, Mr Fraser was one of the investors, the document refers to those facts, and it says that the Patent belonged to LF Ltd. If Mr Davidson is right the Patent still belonged to LF Ltd on trust for him, but nowhere does the document so assert. It just says that the Patent will be assigned from LF Ltd to Easyrad Limited.

Easyrad Limited is a company that was incorporated (under the name Vitalpace Limited) on 13 October 1997 and acquired its present name three days later. At that stage the only directors and shareholders were Mr Paul Davidson and Mr Adrian Binney, who was its company secretary. There is a dispute about who was the company secretary of Easyrad at various times later, but the Applicants accept that I cannot resolve it on an application for summary judgement. I shall therefore assume that Mr Binney was company secretary at all material times, which is what the Defendants contend.

There is no doubt that Easyrad Limited was intended to be a vehicle for the acquisition of the Patent. For that purpose it required sufficient capital, which Mr Davidson and Mr Binney did not possess.

By the time that Easyrad was incorporated Mr Paul Davidson had been trying to interest investors in the Davidson inventions and had succeeded in attracting the interest of the Claimants Mr and Mrs Fraser; also the interest of Dr Wakelin of Lancashire Fittings Limited, to whom I have already referred.

On 21 November 1997 the Patent was assigned in writing from Lancashire Fittings Limited to Easyrad Limited for a consideration of £50,000 plus VAT. The consideration was deferred, it being treated as an interest-free loan from Lancashire Fittings, repayable if and when Easyrad had made a profit of £500,000. So the £50,000 plus VAT amounted to a risk that Dr Wakelin’s company was taking on Easyrad.

The assignment of the Patent to Easyrad Limited coincided with the restructuring of the membership and directorship of that company. On the new Board of Directors were Mr Paul Davidson and Mr Adrian Binney, the First Claimant Mr Michael Fraser, a Mr Sankey, and Dr Wakelin. The shareholders were Mr Davidson, Mr Bmnney, Mr Fraser and his wife Agatha, Mr Sankey, Dr Wakelin’s company Lancashire Fittings Limited, and a Mr Craig. On the same day the Frasers lent Easyrad Limited the sum of £48,800 free of interest, repayable if and when the company had made a profit of £500,000; it never did.

The next stage was that Mr Davidson approached Mr John Barker - whose company had been, of course, the original applicant for the Patent - and invited him to invest £58,000 Easyrad Limited. It is Mr Barker’s evidence that he was prepared to invest because he had confidence in Mr Fraser even though he had had unsatisfactory experience of Mr Davidson, though the point does not really matter for present purposes. It is not disputed that on 3 August 1998 Mr Barker was told that nearly all necessary arrangements were in place, whereupon he departed for about a month to New Zealand.

On 30 November 1998 Mr Paul Davidson wrote a letter addressed “To All Shareholders”. There is some question as to when the shareholders received this letter, if indeed they all did so, but I do not think it matters for present purposes. The letter began as follows:

The letter proceeded to assert that Mr Barker had “refused to provide the cash” and that he, Mr Davidson, had found alternative backers and offers had been made to return Mr Barker’s investment and Mr Fraser’s, and that there was an impasse. It continued:

He said that if his position as the new owner was acknowledged and all shareholdings in the company were transferred to him, he would “ensure that all debts will be repaid and you will all get your investments back”, though he did not specify precisely when or how. Otherwise “all the inventions will simply be put on ice for the three years that it will take for any case to be heard at the patent court”.

As I have foreshadowed, the “totally legal and proper way” in which Mr Davidson claims to have acquired the Patent was by an assignment from Easyrad Limited dated 22 October 1998. The document is signed by Mr Paul Davidson on his own behalf and by Mr Adrian Binney on behalf of Easyrad Limited. It has been referred to in this case as “the Easyrad Assignment”.

What the Applicants ask me to do is to decide that neither Mr Binney, nor anyone else purporting to act on behalf of Easyrad Limited, could lawfully and effectively have executed the document without a special resolution of the company. Since (as is common ground) no such resolution was made, it follows, they say, that the Patent was never transferred from Easyrad Limited to Mr Paul Davidson or anyone else, and remains the property of Easyrad Limited to this day.

In 1998 there was in force a shareholders’ agreement in relation to Easyrad Limited dated 21 November 1997. All the shareholders and Easyrad Limited were parties to that agreement. By clause 11.1.3 the Company or the Board could not, without the prior written consent of the holders for the time being of not less than 71% of the Shares, and otherwise than in the ordinary course of its business, transfer, assign or dispose of any substantial part of its property or other asset.

Mr Paul Davidson and his supporters did not have 71% of the shares and no such resolution was made or attempted. Therefore, as is common ground, Mr Adrian Binney had no general authority to execute an assignment of the Patent to Mr Paul Davidson and that if it were a question of his general authority, the transaction would be a nullity.

But what the Defendants say is that the assignment of 22 October 1998 to Mr Davidson was valid and effective because, on 16 October 1997 - about a month before the shareholders’ agreement, three days after Easyrad Limited was incorporated, and at a stage when it had no shareholders or directors except Mr Davidson and Mr Binney - the company had given Mr Binney a kind of power of attorney to execute documents on its behalf such as the Easyrad Assignment. The document of 16 October 1997 has been variously referred to in this case, but for the sake of convenience I shall call it “the Easyrad Insolvency Agreement”.

I shall quote the document in full.

The Applicants accept the authenticity of the signatures, but not that the document was executed on the date that it bears. They suggest that the document was concocted after the event. Of course, they accept I cannot possibly decide that question on an application for summary judgement nor do they invite me to do so.

It is Mr Fraser’s evidence that the Applicants knew nothing of this document until well after the event: to be precise, on 15 January 1999. Mr Paul Davidson says “I do not accept that Mr Fraser did not know about the Easyrad Agreement”, and says he discussed it more than once with him. He does not say when Mr Fraser knew or when those discussions took place. He adds that “Mr Fraser conducted no due diligence at all prior to investing”, which may suggest lack of advance knowledge. Even so, I shall assume that Mr Fraser knew about the document at all material times.

In over 30 years’ experience of patents and intellectual property I have never come across a similar agreement and I do not conceal that when I first saw it I was astonished. I am, of course, familiar with the standard term in a patent, trade mark, copyright, or registered design licence by which the licence may be determined when the licensee becomes insolvent. Like the analogous provision in a lease of land, it is fairly commonplace. The licence may be exclusive, which means that none but the licensee, not even the intellectual property owner himself, are allowed to exploit the subject matter. But the determination of the licence upon insolvency is in no way surprising, it is indeed a concept that the ordinary businessman would expect. In much the same way, even the man in the street would suppose that a lease would come to an end if the tenant became insolvent and could not afford to pay the rent. But what we have here is different. It is the actual patent which is divested from the company upon its insolvency. Let me try to explain why I believe the difference matters.

It is commonplace for an exclusive licence to be granted for the lifetime of a patent. The exclusive licence can bring proceedings for infringement. So what is the main practical difference between a patent and a full-term exclusive licence? (A good exam question for students, by the way.) The answer is: in normal circumstances, hardly any, but it is far otherwise in the event of the licensee becoming insolvent. That is the main practical reason why businessmen may prefer to grant an exclusive licence instead of making an outright assignment.

There can be no doubt that the Patent was a principal asset of the venture which was to be carried out by the corporate vehicle Easyrad Limited. If one asks, what substantial assets had the company apart from the patents, the answer is: none. Without those patents, and in particular the Patent (compare Oystertec’s own prospectus) the venture had no practical purpose. The patents were, so to speak, the substratum of the venture, although I do not mean to use the expression in any technical sense. Now, whether a patent is held on licence or absolutely is a fact prima facie ascertainable from the register at the Patent Office. Furthermore it was also shown in the company’s accounts. In fact, the accounts that have been produced show that the Patent was valued at the acquisition cost (about £60,000) (Footnote: ³) although, of course, businessmen do not acquire such an asset unless they hope to make a great deal more. Trade creditors and bank managers are interested in what assets a company owns. Even if those were not official published accounts, they were management accounts, the sort of thing a bank manager wants to see.

Now, if it had been held out to the outside world that Easyrad Limited had a mere licence, exclusive or not, its perceived credit worthiness would have been quite different. But anyone making routine enquiries - for example, by consulting the register or if he was a bank manager asking to see the current accounts - would have been led to suppose that Easyrad Limited was the owner of a patent, and not a mere licence. A licence is well known to be determinable on insolvency, or probably so. What is not well known, indeed in my experience is highly unusual, is that somebody else should have a right to call for an assignment of a patent to him in the event of insolvency.

I want to make myself clear. An analogy may assist. Suppose there is a new hotel business, not making any money yet, but supported by its investors by way of long term loans. The only assets in its books are its freehold land and buildings. Because of the long term loans it is technically balance sheet insolvent. You are a trade creditor. Are you willing to give it more credit? Maybe you are. Your judgement will depend on your expectation that the people behind it are serious and can continue the venture. If, instead of freehold, it was shown as a mere lease, you might be much more nervous. For you are advised that it is commonplace for leaseholds to be determinable on insolvency. If the landlord did determine the lease there would be no remaining venture at all. However, the company figures as owning the freehold, not a lease. But what would you say if you found out that the company had a side-deal with one of the directors by which he could, at any time, and without warning, divest it of the freehold on the ground of the company’s insolvency?

The Defendants contend that Easyrad Limited was indeed unable to pay its debts within the meaning of s.123 of the Insolvency Act 1986, because the company was unable to pay its debts as they fell due, see s.123(1)(e), or because its was balance sheet insolvent, see s.123(2). Hence by clause 3 the Easyrad Assignment was effective. The Applicants accepted before me that on an application for summary judgement they could not dispute the company’s insolvency on those grounds.

Even so, the Applicants dispute the validity of the Easyrad Insolvency Agreement, on the grounds that:

On the second point Mr Sutcliffe QC submitted that both s.123(1)(e) and s.123(2), which define the expression for the purpose of winding up proceedings, require, as an essential ingredient, that the state of insolvency have been proved “to the satisfaction of the court”. Therefore, where clause 3 says “unable to pay its debts within the meaning of s.123 of the Insolvency Act 1986” the same essential ingredient should be incorporated by reference. At the date of the Easyrad Assignment (indeed, at the start of these proceedings) nothing had been proved to the satisfaction of any court. Hence the Easyrad Insolvency Agreement does not authorise the Easyrad Assignment.

Mr Philip Marshall QC for the Defendants contended that it was enough that, at the date of the Assignment, a state of affairs existed such that, if a court had adjudicated on the point, it would have found there to be insolvency. And for the purposes of summary judgement it would be enough for the issue to be arguable now.

If so, the Easyrad Insolvency Agreement in effect did not require Mr Paul Davidson to notify the Board of Directors that it was intended to exercise the power of deprivation. It was enough unilaterally to notify Mr Binney in his capacity of company secretary. If Mr Binney then told the other directors - and, by the way, I believe it is common ground that he did not do so - it would be too late for them to adopt remedial measures, for example, to try to bring in some sort of white knight or rescue package. The deed would be done and the Patent would have gone.

I was strongly attracted by Mr Sutcliffe’s submission, because it seemed rather extraordinary to me that a company could be in that hair-trigger position. In contrast, under the Insolvency Act 1986 a company has an opportunity to obtain a rescue package and, if successful, is unlikely to be wound up. Service of the petition puts it on notice, which may give the company enough time. It is anyway quite common for the court to adjourn the proceedings, precisely in order to put together a rescue package. Mr Sutcliffe’s point, therefore, is not just semantic. If you choose to incorporate s.123 of the Insolvency Act you take it warts and all. You take it with the provision that nothing final can happen until the court finds insolvency.

The Applicants made the telling point that on the Defendants’ reasoning the company had been balance sheet insolvent since about November 1997. It owed long term investors over £170,000 by way of deferred loans. They ask: “Are Mr Binney and Mr Davidson seriously alleging that for every penny investors lent to Easyrad they were effectively making it easier for Mr Davidson to transfer out of Easyrad the one tangible asset that represented their security?”

But Mr Philip Marshall QC has pointed out to me that the point is not a pure question of law or construction. The clause must be construed in the light of the factual matrix: what was known to the parties at the time of the agreement. As to that, the only human parties were Mr Paul Davidson and Mr Adrian Binney, at that stage the sole directors. They say that the Easyrad Insolvency Agreement was based on a standard form they used arising from a previous unhappy experience. Further, Mr Davidson was a man of limited means (he could not afford the £50,000 for the Patent and he could not afford to buy a house) and so it was unlikely that the parties would have thought the bringing of legal proceedings was a realistic prospect, to say nothing of the delay. At any rate, it would not be right to decide this point on an application for summary judgement.

With some reluctance, I am on balance persuaded that Mr Marshall is right for summary judgement purposes. (Nobody argued that the document was akin to a power of attorney and therefore fell to be construed narrowly, and so I shall say nothing on that.)

But, if so, all the more reason to scrutinise the legal validity of this document with some care. Here is a business financed by long term loans from its investors. It is therefore balance sheet insolvent: the more enthusiastic the investor-support, the greater is its balance sheet insolvency. The business has a principal asset. Without that asset the business has little or no reason for existence. The asset is shown to the outside world as the property of the business without qualification. Yet at any moment the asset can be stripped out of the business, on the grounds of its insolvency, by unilateral action, and without prior warning. There is no provision for independent valuation of the asset and, what is probably more important in practice, no machinery by which the asset may be offered for sale by the company to alternative investors - a ‘matching offer’ provision.

The effect of the divestiture is to take the asset out of the business so that it is not available for the satisfaction of its creditors in the event of its liquidation. It might be said that Parliament has dealt exhaustively with the consequences of insolvency, in the Insolvency Act 1986 and elsewhere, and that in the event of the insolvency of a company or individual the proper course is to make use of the machinery provided by that legislation. The liquidator, for example, should be the person who takes the point, and not the company itself when, as here, there is no liquidation.

I do not believe that contention is correct. In Money Markets Ltd v. London Stock Exchange [2002] 1 WLR 1150 Neuberger J, in what I would respectfully describe as a magisterial review of the authorities over nearly 200 years, held at page 1173 that they established the following general principle:

The authorities he cites show that the contract is void and unenforceable.

At pages 1182-1183 he said:

It does not follow that it is a matter for the liquidator - that a company ought to go into liquidation if it is balance sheet insolvent or cannot pay its debts as they fall due in the ordinary course of business. A better remedy may be for the directors to try to save it - perhaps by offering one of its principal assets for sale at full value, or by further support from its investors.

The authorities cited by Neuberger J touch on a subtle distinction between, on the one hand, a grant of an interest in property (for example, a lease) determinable upon bankruptcy, which is held to be valid, and a grant of a property on terms that it shall be forfeited, which is not. He quotes Professor Goode’s book (already cited above) to the effect that the distinction is “little short of disgraceful to our jurisprudence when applied to a rule professedly founded on considerations of public policy”. According to Professor Goode the distinction is not recognised in America, an approach which he considers to be sound.

The distinction is well established in our law. But what has struck me is that as applicable to this case there is a certain practical difference which may make it intelligible, and I have already alluded to it. I have stressed the point: how does the position look to the outside world? If the business has an asset which, according to the common expectation of mankind, may well be determinable in the event of insolvency, as is often the case with a lease, that is one thing. It is quite another matter if the asset that is held out to the outside world - on the Patent Office register, for instance - is not subject to a similar expectation. Creditors may have very different expectations.

Mr Marshall QC cited Carreras Rothmans Ltd v. Freeman Mathews Treasure Ltd [1985] Ch 207 for the proposition that the principle has no application on the event of the mere insolvency of a business, but only on an event which is the first step in insolvency proceedings, for example an act of bankruptcy or the presentation of a petition for winding up. I do not believe the law is thus limited: if it were, it would be mere pointless form and the mischief would not be addressed fully. That was a very different case and the actual proposition it rejects is not the one before me now. In Whitmore v. Mason (1861) 2 J & H 204, a decision of Page Wood V-C (afterwards Lord Hatherley), which was cited by Neuberger J, it was put as follows:

It was argued by the Defendants here that although the divestiture clause might be void as against the creditors, it would not be void as against the company. I do not believe that that is right. A transaction is either a nullity or it is not. If the point had to be taken by the creditors it could not be done until there were insolvency proceedings. The divestiture clause would be, not void, but voidable. Yet Whitmore v. Mason established that an act of bankruptcy was not a necessary condition precedent.

I have very carefully considered the point because at one time it troubled me. It troubled me because there is a passage in the judgement of Cotton LJ in ex parte Jay (1880) 14 Ch D 19, 26 which might seem to hold against what I have said. His Lordship said:

The other Lord Justices do not allude to it and the observation was not necessary for the determination of the case. Even so, I was concerned lest Cotton LJ’s observation was based on earlier case law known to his Lordship but not cited to me. I have therefore undertaken a careful investigation of the case law prior to that case. I have not found anything to support the observation. On the contrary, I believe the observation (“on the builder’s bankruptcy”) was contrary to what was held by Page Wood V-C in Whitmore v. Mason, above.

Neuberger J held that the principle I have quoted is subject to a number of exceptions, some of them ill-defined. He summarised these on pages 1182-1883, but I do not believe they are applicable to this case.

I would hold that, where a business owns an asset of substantial independent value, whose existence lies at the heart of the venture, and that asset is held out to the outside world as the property of the business without qualification, an agreement entered into by that business according to which it may be peremptorily deprived of that asset on the grounds of its insolvency, by unilateral action to be taken pursuant to that agreement, does not constitute a relevant exception to the principle. Thus such an agreement is to that extent null and void.

Mr Baldwin QC submitted that the asset was practically worthless at the time of the Easyrad Assignment. It was true that the Oystertec prospectus and the success of the flotation might strongly suggest otherwise, he said, but those were different circumstances. A lot of money had been spent by or on behalf of Oystertec in developing the product. Oystertec, conditional on the success of the flotation, had ample funds to exploit the Patent by licensing. Mr Davidson was on board and so were several enthusiastic entrepreneurs. But his real point was that it would be a matter for valuation evidence and that I could not hold that the Patent had any substantial value on an application for summary judgement.

I have no hesitation in rejecting that submission. What does it mean to say that a patent has value? Here one must think outside the box. In everyday life an asset - a laptop computer, a bag of sugar, a car - has an ascertainable value because there is a market for such an asset. To find out its value you go into the market, or get evidence from someone who knows that market. Even if the asset in question should be unique - an old master painting, for instance, or a stately home - it is still possible to get an approximate idea of its value, because there are markets in which broadly comparable things are sold and those markets have much volume.

In the case of a patent for a new invention, a copyright in a new play, and so forth, the position is far otherwise. An invention is, by definition, unique and non-obvious. If it were otherwise it could not validly be patented at all. The whole point of an invention is that it is different from any other invention. The better the patent, the less comparable it is. There is no ‘market’ where one can just go out tomorrow and sell inventions as if they were agricultural produce. In short, in the case of a patent for a new invention which has yet to be proved commercially it is meaningless to speak of its value, if by that one unconsciously means its immediate value in a market that has volume.

Yet it must be evident that it is possible for such a patent to be valuable. It was acquired for about £60,000, and thus valued in the accounts. If a sufficiently funded venture like Oystertec could raise huge sums of money in the stock market on the strength of the prospectus which I have quoted earlier in this judgement, it was not physically impossible for others to do it. Suppose in favour of the Defendants that Easyrad Limited had come to a dead-lock and no further progress was to be expected in its business. It was still possible for the Patent, and any of the other patents which Mr Paul Davidson claims to have divested from the company, to be offered to an outside vehicle got up in a manner similar to Oystertec. It is one thing to assume that it might not have been so successful as Oystertec in raising money on the stock market. It is quite another to say that the patents had no substantial value at all.

Mr Sutcliffe’s last point is that, whatever may be the validity of the Easyrad Insolvency Agreement, the Patent in question was not within its scope anyway. The relevant provision is clause 1:

The phrase “legal owned for a consideration of £1:00” must, I think, mean “legally owned by Easyrad for a consideration of £1.00”, and that is what the Defendants say.

Mr Sutcliffe QC argued that Mr Davidson was never the owner of the Patent and so the Agreement has no application. I do not understand that part of his argument. The Agreement does not specify that Mr Davidson himself must convey the property to Easyrad. Why would it not suffice if Mr Davidson were to procure that another person, the owner of the patent, should convey it to Easyrad?

A more telling point, in my judgement, is that in the case of the Patent in question it was not transferred to Easyrad for a mere consideration of £1. As we have seen, the Patent was assigned from Lancashire Fittings Limited to Easyrad Limited for a consideration of £50,000 plus VAT. The payment of the consideration was deferred until Easyrad had earned a certain level of profit, an event that did not happen.

In my judgement, the proper construction of this clause is that Mr Davidson had to transfer or procure the transfer of the patents to Easyrad for a consideration of £1, and that was a condition precedent for the operation of the divestiture clause. I therefore hold that the Applicants succeed on this ground also.

Argument should be concluded on the accord and satisfaction and the laches and acquiescence defences. A day should suffice for the purpose and the parties may submit supplementary skeleton arguments for the purpose.

The Applicants succeed, to the standard required for summary judgement, to the extent that they contend the Easyrad Assignment was not effective to divest Easyrad Limited of the Patent. However, in the light of the laches and acquiescence defence as accepted by me so far, I shall in any event refuse to grant a declaration that the Patent is owned by Easyrad Limited now, but this is subject to the possibility of the payment of adequate compensation to Easyrad Limited, such compensation not necessarily to be limited to the amount the Frasers were prepared to accept at the time of the Oystertec flotation. Whether such compensation is indeed payable will depend on the outcome of the accord and satisfaction defence and the remainder of the laches and acquiescence defence.