Shanley v Lloyds TSB Insurance Services Ltd & Anor

In these proceedings the claimant seeks injunctions and an inquiry as to damages for alleged infringement of copyright, breach of confidence and breach of contract, together with other associated relief in relation to some computer software, the copyright in which is owned by him. Initially, this was meant to be the trial of all the liability issues that arise, and unfortunately there were some developments at the start of the trial which meant that by the start of the second day it was recognised by all parties that the trial could proceed to resolve all issues other than an allegation of allegedly infringing activity after 28th November 2011, and the result, therefore, I ordered by consent that:

The trial took place on 20th to 22nd February 2013. I heard oral evidence in support of the claimant's case from Mr James Muirhead, the claimant, that the claimant's son (who I refer to hereafter as "JTS") and in support of the defendants' case from Mr Poulsen, Mr Monteith, Mr Hanson, whose evidence was not in the end challenged, Mr Williams and Mr Gulliver. The statements of Messrs McGarvie, McKeown, Eckett, Boyd and Redfearn were tendered by the claimant and were admitted unchallenged.

The claimant is an experienced building contractor and businessman who has, in the past, operated substantial building construction businesses, principally concerned with the repair of properties on the instructions of building insurers. The second defendant ("Halifax") is a company that was part of the HBoS group. Halifax’s business included the underwriting of home and building insurance. The first defendant ("Lloyds") carries on business in a similar area. As is well known, the HBoS group was taken over by Lloyds Banking Group in early 2009. Surprisingly, it is unclear on the evidence before me whether, following that takeover, Lloyds took over the business of Halifax or whether both continued to trade within the Lloyds group. The pleadings suggest that both continued to trade, although some of the correspondence that I was referred to suggested that only Lloyds continued to trade. It is not necessary that I attempt to resolve that issue, however, for reasons that I explain in detail later. It is necessary to note only that each defendant operated through a network of contractors who were contracted to the relevant defendant to carry out works necessary to make good damage to insured premises as and when instructed to do so by the insurer concerned.

These proceedings are concerned with the development of what has been referred to in these proceedings as a "Scoping Tool". In summary, a scoping tool is a PC application used by contractors, surveyors and claims consultants to create an estimate of the cost of repairing a building or part of a building using rates that have been pre-set by the insurer or have been agreed between the contractor and insurer concerned. Broadly, it enables an estimate to be created from primary measurements taken by the surveyor by the application to those measurements of various rates for different tasks as set out in the schedule of rates agreed with or fixed by the insurer concerned. Clearly, the preparation of such estimates will take a significant amount of time if done manually. The more automated the process can be made, the less time-consuming and, therefore, less costly it will become as an exercise.

The claimant disposed of his interest in a large and apparently successful construction company operating in the sector I have described some years prior to 2002. In 2002 he formed a new company called Completecare Scotland Limited ("CSL"). From the outset it was intended that the profitability and efficiency of the business would be maximised by the use of IT solutions applied both to scoping and claims management. With that in mind, the claimant embarked on a collaboration with Mr Muirhead, who, from 1996, had owned and managed a software development house called Ultrasoft Limited. The result of this collaboration was that by the autumn of 2006, CSL had developed and deployed within its own business a computerised claims management system called "Claims Control System", which incorporated or utilised a scoping tool called "Estimate Builder". This was, in effect, a spreadsheet which consisted of different pages for each room within a property where repairs were to be undertaken, and included as part of its functionality the capacity automatically to transfer data assembled on each page to a summary build-up page and then to the claims control system.

The benefits of these systems were described at paragraphs 18 to 19 of the claimant's second witness statement as being:

At this time (September 2006) Halifax had its own scoping tool. It consisted of an Excel spreadsheet with separate sheets for each room of the building in respect of which the scoping exercise was to be carried out, with an automatic transfer of data created on those pages to a summary sheet. This scoping tool had no other functionality. Mr McKeown was employed at this time by Halifax as a business manager in its building services division. The hierarchical structure within that division was that Mr McKeown was Mr Monteith's line manager, and Mr McKeown's line manager was Mr Poulsen. Mr McKeown's witness statement was admitted unchallenged. He described in his witness statement the various estimating systems operated by the Halifax at this time, before saying this at paragraph 3 of his statement:

In late 2006 CSL started to undertake work for Halifax as one of its network of contractors. The process by which this came about involved some negotiation, which was handled in part at least by Mr Monteith on behalf of Halifax with the claimant on behalf of CSL. The claimant's case at trial was that a meeting took place on 8th September 2006 between him and Mr Monteith at which the discussions concerning CSL joining Halifax’s network of contractors were concluded and that in the course of those discussions an oral agreement was reached between Mr Monteith, acting on behalf of Halifax, and the claimant, by which it was agreed that CSL would re-write the Halifax scoping tool so as to incorporate within it the functions of Estimate Builder, which would then be supplied, without charge, to Halifax for testing and evaluation alone. The claimant maintains that it was agreed that upon completion of testing and evaluation, the parties would negotiate a contractual licence for the commercial use by Halifax of that product, assuming that Halifax wished to proceed. This was disputed by Mr Monteith, who maintains that there was never any agreement between him and the claimant, either as alleged or at all.

What is not in dispute is, and in any event I find, that thereafter a scoping tool, referred to in the amended particulars of claim as the "Pilot Scoping Tool", was devised or developed by Mr Muirhead on the instructions of the claimant, acting at that time on behalf of CSL. The pilot scoping tool was developed from the existing Halifax scoping tool using Visual Basic for Applications (“VBA”) language within the Microsoft Excel spreadsheet environment. This was different from Estimate Builder, which operated in the Access Database environment. In the result, the development added to the Halifax scoping tool much of the functionality and user interface to be found in Estimate Builder, utilising VBA macros, commands and soft buttons.

Mr Muirhead described the process in paragraph 12 of his witness statement in these terms:

The claimant's case is that in or about February 2007, Mr Monteith informed the claimant that Halifax had decided not to pursue the pilot scoping tool project. If this is what Mr Monteith told the claimant, then it was manifestly and admittedly not true. This is so because, by paragraph 13 of the amended Defence, the defendants plead that:

It is accepted that the scoping tool was supplied to all the contractors on Halifax as network. This would appear to have taken place on or about 5th March 2007, judging by the e-mail from Mr McKeown to Mr Monteith of that date. It required every contractor to return a new signed contractor, in return for which it was to be sent the new scope tool, the schedule of rates to go with it and a note as to how to use the tool.

It is equally clear that within the Halifax organisation, the new scoping tool was regarded as a success, and Mr Monteith's role in delivering it was recognised as well. An internal appraisal for Mr Monteith in April 2007 recorded:

Various modifications and improvements were made the pilot scoping tool that it is acknowledged were carried out by Mr Muirhead, on the instructions of Mr Monteith on behalf of the Halifax, but at the expense of CSL. The improved scoping tool was rolled out to Halifax's contractor panel, under cover of an e-mail of 21st May 2008 from Mr McKeown, which was in these terms:

On 30th June 2008 the claimant sold his interest in CSL to its incumbent management team in a management buyout transaction. Copyright in the software with which this litigation is concerned was assigned to the claimant by an assignment in writing dated 30th June 2008. It is now common ground that the effect of this document is that the claimant is the owner of the copyright and the software that constitutes the pilot scoping tool in its various iterations.

The claimant and his family emigrated to Australia following the management buy-out, but for reasons that are immaterial to these proceedings, the claimant and his family returned to the UK in February 2009. The return of the claimant and his family to the UK coincided with the takeover of HBoS by Lloyds Banking Group. The business of Arngrove Construction Services Limited (in administration) was acquired by Shanley Investments Limited from the administrators. There are no corporate governance records relating to Shanley Investments Limited included within the trial bundles. This is surprising, given that one of the issues that arises is the degree to which the claimant was concerned with the day-to-day management of that company after it had acquired and started to trade on the business formerly carried on by Arngrove Construction Services Limited. I was told by counsel for the claimant on instructions that Shanley Investments Limited traded as Arngrove after the business had been acquired, and where I refer hereafter to "Arngrove", I mean Shanley Investments Limited trading as Arngrove. I was also told by counsel for the claimant on instructions that Shanley Investments Limited was owned beneficially as to one-third by the Shanley family trust, as to one-third by JTS and as to one-third by Mr McGettrick. The evidence was that the managing director of the company was JTS and that the claimant acted in a somewhat nebulous but essentially "big picture, fundamental issues" chairmanship type role. CSL ceased trading in 2010. Arngrove traded until 2011, when it was placed into creditors' voluntary application.

It is admitted in paragraphs 12 and 13 of the defendants' Defence that Lloyds started to use the pilot scoping tool following the takeover by Lloyds Banking Group of HBoS. When Lloyds started to use the scoping tool is not entirely clear. However, it could not have been later than July 2010, as is apparent from the e-mail to contractors of 5th July 2010 written on behalf of Lloyds.

In June 2011, Lloyds carried out an audit of work undertaken by Arngrove. In the result, there was a meeting attended by the claimant, standing in for his son, who was about to, or had left, for a holiday on the west coast of the United States of America. The outcome of the meeting was that Lloyds required explanations from Arngrove concerning various alleged discrepancies concerning sums paid by Lloyds to Arngrove. In order to provide the required information the claimant had to review various files maintained by Arngrove in relation to the projects undertaken by Arngrove for Lloyds where the alleged discrepancies had supposedly occurred. The claimant maintains that it was in the course of carrying out this exercise that he discovered for the first time that Lloyds was using the pilot scoping tool. This led to what the claimant describes as a "heated meeting" with Mr Monteith. This meeting took place on 24th October 2011. It was recorded, and an agreed transcript was included in the trial bundle. The substance of the complaint made by the claimant concerned the use being made of the software by Lloyds without his permission.

Although the transcript has to be read in its entirety in order to understand its full impact, the following are the most significant parts. In the quotation that follows, references to "JM" are to Mr Monteith and references to "JS" are to the claimant. The most material parts of the transcript are to the following effect:

The claimant instructed Bird & Bird to act on his behalf. A letter before action was written by that firm dated 28th November 2011. The letter is lengthy, but on page 2 Bird & Bird set out the claimant's case as to the use of the scoping tool software in these terms:

The points that emerge from this letter are that

The defendants instructed Bevan Brittan to act on their behalf. On 15th December 2011, that firm responded to the letter before action. It would not normally be necessary to refer to the substance of this, but Mr Monteith's credibility is subjected to serious challenge in these proceedings, as is the claimant's, for reasons that I will come to in a moment. It was accepted that the source of instructions that led to Bevan Brittan's response was Mr Monteith. The letter included the following assertions:

Equally untrue was an assertion in the letter that copyright in the scoping tool was owned by the Halifax. Notwithstanding what was said in this letter, as I have said, the defendants ceased using the scoping tool developed by Mr Muirhead on 9th December 2011

These proceedings were commenced by claim form issued on 2nd March 2012. The claim pleaded on behalf of the claimant was advanced by reference to an alleged written agreement that had not been foreshadowed Bird & Bird’s letter before action referred to above. Paragraphs 16-17 of the Particulars of Claim, which contained a statement of truth signed by the claimant, were in these terms:

By their Defence served on 16th April 2012, the defendants asserted that the agreement relied upon by the claimant, which was alleged by the claimant had been signed by Mr Monteith, had not been signed by him and the signature appearing on the document produced by the claimant had been placed there by forgery. The allegation of forgery was denied in a Reply served which contained a statement of truth signed by the claimant dated 8th June 2012. Witness statements were ordered to be exchanged, and as part of that exercise the second witness statement of the claimant was served. It contained a statement of truth signed by the claimant, and was dated 26th October 2012. At paragraphs 33-43 the claimant addressed the contract issues. In essence, he claimed to have drawn up the agreement he relied on in the presence of Mr Monteith at a meeting that took place at CSL's trading premises, that he signed it, and proffered it to Mr Monteith to read and sign while he went off to do other things. He maintained that he returned to find that Mr Monteith had signed the document. He claimed to have scanned the document to a floppy disk, which he had claimed then to have lost on a trip to the United States of America during Christmas 2011.The detail of that trip and what was said about it is not material for present purposes.

On 25th January 2013 a third witness statement from the claimant was served, together with a draft amended Particulars of Claim. In paragraph 3 of the third witness statement the claimant admitted to having created, that is to say fabricated and forged, the agreement he served on 19th December 2011. By paragraph 14 of his third witness statement, he retracted paragraphs 37-43 of his second statement and claimed the true position to be as set out in paragraphs 15-20 of his third statement. The amended Particulars of Claim deleted most of what had previously been pleaded in paragraph 16, and then set out his case as to what he alleged to have been agreed on 8th September 2006 in these terms:

As will be apparent from what I have said already, the most significant issue of fact I will have to decide is whether an agreement to the effect alleged by the claimant was reached on 8th September 2006 or not. That depends upon an evaluation of the evidence of respectively the claimant and Mr Monteith. This issue is likely to prove determinative of both the claims against the Halifax, other than in relation to the claim for infringement by distribution to Lloyds.

The second issue I have to resolve is whether, and if so in what terms and by what means, use of the scoping tool by Lloyds was licensed. The defendants set out the substance of their case on this issue, as far as I can see for the first time, in paragraphs 48-50 of their closing submissions in these terms:

The final issue that I have to resolve concerns what is called in this case "archive use". As is apparent from what I have said so far, both defendants have used the scoping tool for a significant period in their respective commercial operations. It is now apparent by reference to the witness statement of Mr Ian Sullivan dated 20th February 2013 that there has been at least one instance of use of archived material for ongoing commercial purposes after 9th December 2011 when, on the defendants' case, the licence to use the scoping tool had come to an end. It is conceded that this was an infringement and that there must be both an injunction, absent an undertaking being offered to similar effect, and an inquiry into damages in relation to such activity and, for that purpose, an audit needs to take place to identify any further instances of such activity, and there will have to be a disclosure exercise of the material relevant to any other such infringements. It has been agreed, as I have said, that those issues be left over for detailed direction after the conclusion of this trial and judgment.

The issue that remains concerns what is called "pure" or "view only" archive use. It is now accepted, on the basis of answers given in the cross-examination of Mr Gulliver, that action of opening an electronic archive record relating to a project which was created using the scoping tool software involves loading and, therefore, copying the software on to the PC or laptop on which the archive is being viewed. The issue between the parties is that identified in paragraph 15A-D of the amended defence, namely an assertion that even if the claimant withdrew the voluntary licence in December 2011, the claimant is nonetheless to be regarded as estopped from withdrawing consent to view archive material on a view-only basis in the way I have described.

The claimant's case depends upon me concluding that there was an oral agreement reached, as alleged, in paragraph 16 of the amended Particulars of Claim. If that case fails, the evidential burden rests upon the defendants to establish the grant of a voluntary licence, not merely to Halifax, but to Lloyds as well.

As will be apparent from the factual material so far set out, the outcome depends in essence on whether the claimant’s or Mr Monteith's evidence is to be accepted. The credibility of each has been challenged. It is accepted by the claimant that in the circumstances, he cannot expect his evidence to be accepted, save where it is admitted, corroborated or is against his interest. That necessarily follows, in my judgment, from the fact that he has admitted fabricating the document on which he founded his originally pleaded case, denied forgery and sought to support his originally pleaded case in his Reply and two witness statements, in circumstances where each statement of case and witness statement contained a statement of truth signed by him. There can scarcely be a stronger case for exercising the level of caution I have mentioned in relation to the uncorroborated evidence of a witness.

The position in relation to Mr Monteith is nowhere near as stark as is the case for the claimant, but nonetheless I have come to the conclusion that I should be cautious before accepting his uncorroborated evidence as well. I say that for the following reasons:

Mr Williams, the legal manager employed by the defendants, had filed a witness statement by which he endeavoured to support what had been said by Bevan Brittan in response to the letter before action. He was called to give evidence after Mr Monteith had completed his evidence. He chose, at any rate initially, to stand by his witness statement. That led to this exchange in cross-examination; transcript Day 3, pages 34-35, lines 15-20:

In those circumstances, it is necessary, as I see it, to attempt to resolve the issue that I am now considering by reference to such contemporary documentation as there is, to the overall probabilities, to the objective facts proven independently of the evidence of the claimant and Mr Monteith, and by reference to subsequent events which can be analysed as being more consistent with one party's case over another - see in this regard the approach approved in Grace Shipping v CF Sharp & Co [1987] 1 Lloyd's Rep 207 at pages 215 to 216, following The Ocean Frost [1985] 1 Lloyd's Rep 1. Subsequent conduct by parties to an unwritten agreement may be relevant because it may show what the parties thought that they had agreed, if anything - see Carmichael v National Power Plc [1999] 1 WLR 2042 at 2050-2051.

I conclude that the oral agreement for which the claimant contends has not been proved for the following reasons. First, had there been an agreement to that effect, I see no reason why he would not have instructed Bird & Bird to that effect. Even allowing for the fact that there could be room for a failure to recall the year in which the agreement was reached, it is difficult to understand why the claimant should mis-recall the identity of the employee with whom he supposedly made the agreement. Mr Monteith was, after all, the claimant’s principal point of contact for most, if not all, of time that CSL was involved with the Halifax. While this point is of limited significance when viewed in isolation, it provides significant support for the conclusion that I have reached when weighed with all the other factors to which I refer hereafter. The invention of the written agreement may be inconsistent with the existence of an oral agreement, but I prefer to leave that point to one side for the moment. I do so because I remind myself that people lie for a variety of different reasons, one of which may be a misguided and inevitably dishonest attempt to bolster an otherwise tenable case. Thus, whilst a lie of the sort told and maintained by the claimant will always have the effect of damaging or destroying the credibility of the person concerned, it does not necessarily lead to the conclusion, for example in this case, that the whole of his case is without substance, though of course it may do and is more likely to do so where what has been dishonestly invented is inconsistent with the supposedly true case that is in the end advanced.

The next point concerns subsequent conduct by the claimant. As I have described already, by September 2006 the defendant was an experienced and highly successful self-made business man. He had formed one company, traded it successfully for a number of years, and had then sold his interest in it profitably. CSL was a start-up company he formed a few years later on the basis of the experience he had acquired over many years operating the previous company.

On 11th September 2006, that is three days after the agreement on which the claimant relies, the claimant sent two e-mails to Mr Monteith. The first enclosed various documents relating to CSL and concluded with the following sentence:

The other e-mail dated 11th September 2006 from the claimant to Mr Monteith is to the following effect:

My third reason for reaching the conclusion that the claimant has failed to prove an agreement in the terms alleged concerns his conduct after February 2007. It is alleged in paragraph 29 of the amended Particulars of Claim that this was when the claimant was informed that Halifax was not going to pursue the pilot scoping tool project. The claimant's evidence in relation to this, at paragraph 48 of his witness statement, was as follows:

There is a significant amount of material that contradicts this, and suggests that there was no conversation to the effect alleged. Paragraph 19A of the amended Particulars of Claim pleads that:

The e-mail exchange between the claimant and Mr Monteith of 16th and 17th May 2007 too is entirely inconsistent with the notion that there was an agreement made on 8th September 2006, as alleged by the claimant, that had come to an end in February 2007. These e-mails, on the face of it, show the claimant writing to Mr Monteith concerning ongoing developments of the scoping tool. Mr Muirhead accepted (see transcript Day 1, page 62, line 12) that the spreadsheet attached to the e-mail came to the attention of the claimant. This was material that the claimant was cross-examined about in some detail. At transcript Day 1, pages 153-154, there was this telling exchange:

“Judge Pelling: The question was, your recollection/understanding in evidence is it, is that the pilot in relation to your software, which you say was the subject of the oral agreement with Mr Monteith, came to an end in February 2007, yes or no?"

A: Around that time I agreed that there was no contract, they were not taking up my licence. I can't specifically say the pilot was at an end. I can remember them saying that they were not going to be taking it on, going forward. I just thought nothing of it ..."

Mr Onslow...

Q: You would agree with me that it would be most surprising to see you discuss improvements for your scoping tool with Halifax after the pilot came to an end; would you go that far?"

A: Repeat the question, please."

Q: Would you agree with me that it would be surprising to find you discussing improvements for the scoping tool with Halifax after the pilot came to an end?"

A: Yes."

Q: So that if the pilot came to an end in February 2007, when Mr Monteith had said that Halifax weren't interested in the tool, it would be surprising to see you discussing improvements for the scoping tool after February 2007; you'd agree with that?"

A: I would agree with that, yes."

Q: Now we know, at paragraph 50 of your statement, if you just turn on to that, that you do faintly remember discussing improvement for the scoping tool around May and June 2007?"

A: Yes."

Q: Yes?"

A: Yes."

Q: You do faintly remember discussing those improvements, do you?"

A: I will be honest, you know. I, at that time -- at that period I can't -- I can vaguely remember the timing of what happened because it is difficult for me today. It is really not having the real, you know, the actual -- my old e-mail account. It has been very difficult, the evidence, and I have tried to get these dates as close to what happened at that time

..."

In my judgment, this was a clear example of an attempt to avoid what was perceived by the claimant -- correctly -- to be a damaging point, but at a time when he had perceived the potential damage that would be done only relatively late in the exchange. He was asked specifically about the e-mail exchange that I had been considering. He said first it related to another pilot (see transcript Day 1, page 155, lines 24-25), then that he was busy and not on the ball (see transcript page 156, line 20), then that he could not recall it, (see transcript Day 1, page 157, lines 17-21). I reject all this as an attempt to avoid the effect of these e-mails on the basis that it is mutually inconsistent, and is an attempt to avoid what is obvious: that there were e-mails, one of which was written by him, concerning the development of the scoping tool after the date when he maintains the alleged agreement with Halifax had come to an end following a conversation that had taken place between him and Mr Monteith in February 2007.

Similar considerations apply to the e-mails of 23rd May 2007 and 26th June 2007 from Mr Monteith to the claimant. The only answer offered to this was that he did not control the e-mail address, and the e-mails would not have been forwarded to him by his staff. I reject that as being at all likely. The e-mail was addressed to him personally, and there is no evidence, aside from what the claimant himself suggests, that CSL staff would not forward e-mails addressed to the claimant personally, as this was. The exchange of e-mails on 23rd July 2007 is particularly telling, in my judgment. The e-mail from Mr Bellamy at Halifax to five separate contracting companies had attached to it all separate spreadsheets designed to standardise scoping for properties damaged in the Hull flooding disaster of 2007. It would have been apparent to the claimant, had he read the e-mail, that this was the scoping tool that had been devised and developed by Mr Muirhead being applied by Halifax commercially in the course of managing its contractor network. It was addressed to the claimant personally on a first-name basis. The information was critical to the profitable conduct of this type of business, as the contents of the exchange shows. The response to Mr Bellamy was signed "Jim Shanley for Completecare", a formulation that, in another context, the claimant accepted would be likely to be applied only if he was originating the e-mail. The reply is written carefully using the word "we" when referring to CSL, and using the first person when referring to specific matters concerning the claimant. For example:

Finally, and before leaving this part of the case, I note that at the meeting on 23rd October 2011 the claimant did not assert the existence of an oral agreement to the effect alleged in the amended particulars of claim, much less that it was one that had come to an end in February 2007. This is, in my judgment, highly significant, given that this was the first point at which the claimant was setting out his case as to why his copyright in the scoping tool technology had been infringed.

The only point that, in the end, could be deployed on behalf of the claimant was a commercial probability point. CSL was a business. It was in business. And so the question was asked rhetorically by the claimant’s counsel: why would CSL deploy its resources to develop some software that could only benefit Halifax and then permit it to be deployed commercially for no reward?

The difficulty about this point is that it has to be balanced with the other points already considered. These demonstrate in my judgment unequivocally that (a) there was no oral agreement to the effect alleged but (b) the software was supplied to Halifax and further developed thereafter at the expense of CSL. In my judgment, the reality (and the answer to the commercial probability point) is that the claimant wanted to win business for CSL from Halifax in 2006, and was willing to spend money developing what was then CSL's software for use by Halifax because it enabled him to establish a favourable relationship with Halifax and thus advance his objective of winning business from Halifax. The desire to win business was not really in dispute, and as I have noted already, received some support from the terms of the first of the 11th September 2006 e-mails referred to above. There is a hint of the commercial benefits for CSL of the relationship with Halifax in the appraisal of Mr Monteith of 21st May 2007, which is to this effect:

I have so far considered the position in relation to Halifax. I now turn to Lloyds. The defendants argue that:

I turn first to the implied licence theory. Contrary to the assertions made on behalf of the defendants, the voluntary licence granted in September 2006 was not granted to Mr Monteith personally. It arose exclusively as a result of the desire of the claimant on behalf of CSL to establish a commercial relationship with Halifax. Mr Monteith was entirely immaterial, other than that he was the Halifax representative with whom the claimant was perforce bound to interact. Indeed, Mr Monteith was at pains to distance himself from any suggestion of personal involvement - see transcript Day 3, page 8, lines 24-25.Thus, in my judgment, the notion that the voluntary licence that is to be inferred from what happened in September 2006 and thereafter was a licence of Mr Monteith is, with respect, both fanciful and unsupported by the evidence.

In any event, the point is without substance for the following reasons. Generally a licence is personal, not proprietary, and thus will not generally carry with it rights either to sub-licence or assign. Here it is necessary in order to give effect to what the parties intended in September 2006 to hold that a gratuitous licence was granted to Halifax to use the pilot scoping tool software in connection with the management by it of its network of contractors, as I have explained. However, where necessity requires only the grant of a licence -- and it is not suggested by Halifax that anything more is necessary in this case -- then the ambit of the licence must be the minimum that is required to secure to the licensee the entitlement the parties intended at the time. It does not extend to enable the licensee to take advantage of new and unexpected opportunities not in contemplation at that time - see in this regard Robin Ray v Classic FM Plc [1998] 25 FSR 662, per Lightman J at 642-643. There is no evidence at all that it was ever contemplated by the parties that Halifax might sub-licence or assign the scoping-tool technology to a trade competitor of Halifax's. Indeed, the whole point of the exercise was to improve the efficiency and profitability of Halifax when compared to others within its industry. It was the result of collaboration between CSL, acting by the claimant, and Halifax for the benefit of each of them. In the case of CSL it was one means by which it secured and maintained its relationship as one of Halifax’s network of contractors. In the case of Halifax, was the more efficient operation of its network of contractors, and/or the management of building projects in respect of which it was the funder for its own business purposes. There is nothing in the circumstances to suggest it was intended that Halifax should be entitled to sub-licence anyone other than a contractor within its contractor network to use the scoping tool for Halifax's business purposes. In my judgment, precisely similar difficulties face the alternative formulation. In fact there is no evidence at all which explains how or why Lloyds came to be permitted access to the software and by whom. The main point however is that the voluntary licence granted to Halifax was personal to it.

Thus, the sole issue that remains is an assertion of acquiescence or estoppel. Acquiescence is an inferred waiver of rights - in this case, the statutory right accorded to the claimant in circumstances under the Copyright Design and Patents Act. Mere inactivity is not sufficient to justify a finding of acquiescence or, for that matter, estoppel for quiescence is not acquiescence - see Lamare v Dixon [1873] LR 6, HL 414 per Lord Chelmsford C at 422. The test is whether it has become unconscionable to press for enforcement. I do not understand these propositions to be seriously in controversy between the parties.

The defendants' factual case depends upon it being demonstrated that the claimant saw two e-mails sent to an e-mail account, the address of which was "jimshanley@googlemail.com", dated respectively 5th and 7th July 2010. As will be apparent from the background section of this judgment, by July 2010 the claimant was no longer carrying on the business of CSL. That business was being carried out by those involved in the management buy-out of the shareholding in that company. The claimant's only interest in the insurer building repair business was through his interest in Arngove. He describes his role as that of a chairman, as did JTS. It would have been open to the defendants to test this role by reference to the shareholder interest in Shanley Investment Limited. However, that course was not taken. I have recorded what I was told by counsel for the claimant on instructions concerning these issues. There is no sworn evidence that supports it. However, even taking what I was told at face value, it follows that the claimant had a financial interest in the success of Arngove, by reason of his interest as a potential beneficiary of the discretionary trust that owned one-third of the shares in Shanley Investment Limited, and an indirect interest because other members of his family were also potential beneficiaries.

I was told that JTS was 18 in 2006 (see paragraph 3 of his witness statement) and is currently 25. This suggests that he was between 21 and 22 at the time of the acquisition by Shanley Investments Limited of the Arngove business. There is no explanation as to how he could have acquired the funds necessary to acquire such an interest at that stage, but as I have said, it was not tested in cross-examination and thus I accept at face value what I was told. Nonetheless, as I have said, the claimant had a financial interest in Shanley Investments Limited, trading as Arngove, on any view.

On 5th and 7th July 2010, e-mails were sent to the e-mail account I have mentioned. The caption referred to an updated Lloyds construction agreement, and either referred to, or had attached to it, what was there described as "the LBG scope and tool". It is common ground that, had at least the e-mail of 7th July 2010 been opened, then the claimant would have seen that his scoping-tool technology was being utilised by Lloyds. It was accepted in the end by both JTS and the claimant that there was a link between the e-mail account, to which I have referred, and the claimant's iPhone. In the result, the evidence was that each of JTS and the claimant had access to the account, and the claimant forwarded e-mails he had opened that he considered should be seen by JTS, unless it was apparent that the e-mail had already been opened and that the technology on his iPhone was such as to enable that readily to be apparent. The claimant admitted that he would have read everything in the text of any e-mail that he opened, and thus that he would have seen the reference to an LBG scoping tool in the first of the two e-mails and the attachment in the second, had he opened them.

The Defendants’ factual case depends upon it being concluded that the claimant had opened, read and understood each of the e-mails. The claimant's evidence was that he could not remember if he had or had not. This evidence has to be balanced and tested with subsequent events.

I have already mentioned the circumstances in which the claimant maintained he discovered that his scoping tool was being used by Lloyds following an audit meeting in June 2011. The evidence suggests that immediately following that meeting, the claimant acted almost immediately. The reaction, when he discovered the use of his scoping tool, was hostile. He asked his son to set up a pretext call to Mr Monteith for the purpose of obtaining an acknowledgement as to the source of the scope-tool technology, and then the meeting of 24th October 2011 took place. JTS was cross-examined about the meeting. I accept his evidence as to what took place at the meeting. He described how the software copyright issue arose for the first time at the end of the meeting, which was otherwise about the audit issue with Lloyds.

JTS's evidence as to what happened next is at transcript Day 3, page 174, and is in these terms:

It was submitted on behalf of the defendants that I ought to find that the claimant had opened the relevant e-mails, and thus became aware that Lloyds were using the scoping-tool technology. In my judgment, the evidence is not sufficiently strong to permit such a finding. I am satisfied by the manner in which the claimant conducted himself after the audit meeting that he was not aware prior to his file review that occurred immediately thereafter that Lloyds were using the scoping tool in which he owned the copyright. I accept that the claimant was not involved in the day-to-day management of the company to the extent and on the same basis as he was with CSL, as is clear, for example, from the fact that he attended the audit meeting in Cardiff only because his son was not otherwise available. Not merely was that the evidence of the claimant and his son but Mr Monteith accepted that to be so in his oral evidence at transcript Day 2, page 272, lines 4-9. He was referring to the 24th October meeting and was being asked why he had gone to his boss to explain the role of the claimant in the development of the scoping tool. His answer was:

The other point relied upon by the defendants as justifying the finding they sought from me was an assertion that JTS would have been bound to disclose to his father the receipt of the contract from Lloyds by e-mail before he signed it, irrespective of whether his father had in fact opened the e-mails. JTS denied this to be so. I do not consider it to be self-evident that he would have done as was alleged. The format showed that the contract that Lloyds was requiring to be signed was entirely standard. The e-mails were not inviting bipartite negotiations as to the terms. Lloyds required the contract attached to be signed in order that Arngrove remain on its panel. I think it entirely plausible that JTS would have signed the document and told his father, if at all, only after he had done so, because it would not have occurred to him not to sign the document, since Lloyds by definition were likely to be an important customer of Arngrove.

I remind myself that the evidential burden of establishing acquiescence or an estoppel rests on the defendants, being the party that alleges each. I consider that the fact the e-mails were sent to an e-mail account to which the claimant had access does not established by inference that he must have open the document at the time. As I said, I consider it entirely plausible that it was opened by JTS and the contract signed by him, and that he told his father that such was the case after the event.

It is fair to say that the relationship between Arngrove and Lloyds was going through a difficult phase in the autumn of 2011, as the audit issue reveals. But there is nothing in the evidence I have seen to suggest it was thought by either party to be terminal in October 2011. It is possible that the claimant was anticipating the failure of Arngrove, but that was not suggested to him as a motive for fabricating the claim against Lloyds either that he thought Arngrove was about to lose the Lloyds business or that Arngrove was about to go into liquidation. Whilst the claimant is self-evidently capable of lying, having seen him I consider that he quite capable of losing his temper when pressed but I do not think he is capable of fabricating the sort of intensity of reaction that he displayed at the meeting on 24th October, and thus I do not regard that as a part of a pattern of fabrication.

In my judgment, the material that is available does not establish on the balance of probabilities that the claimant was aware that the scoping tool was being used by Lloyds prior to his first discovering that fact following the audit meeting in June 2011. However, in my judgment, the real point is that it simply does not matter, for even if, contrary to what I have concluded, the proper conclusion is that the claimant had been aware that the scoping tool was being used by Lloyds by no later than July 2010, that does not, in my view, lead to the conclusion that such entitled Lloyds to assume that no objection was being or would be taken. There is no evidence at all that in fact anyone at Lloyds had reached that conclusion. In that connection, it is worth noting Copinger & Skone James on Copyright, 16th edition, Vol.1, paragraph 5-220, which is to following effect:

In my judgment, similar circumstances apply here. I note in passing that the edition of Copinger & Skone James supplied to me was the 15th edition. The current edition is the 16th, but there is no material difference between the two in this regard.

This issue arises only in relation to the use made of the claimant's software by Halifax in light of the findings that I have made. In essence the defendants' submission is that in circumstances where the licensee knew that the software would be used to create business records, the voluntary licence entitled Halifax to retain spreadsheets coming into existence during the currency of the voluntary licence for the purpose of storage and view only for business and regulatory purposes either by necessary implication or estoppel.

I accept as correct the principle identified in Copinger & Skone James on Copyright (16th Ed.) volume 1, paragraph 5-217, where, having said that an implied licence incidental to a contract extends no further than the minimum which is necessary to give business efficacy to the contract, it then says this, in relation to gratuitous and informal licences:

Looked at in another way, in my judgment the claimant is estopped from revoking the implied licence to store and view for the limited purpose I have mentioned. It was submitted that reliance and detriment sufficient to support such an approach had not been demonstrated. I am not able to agree. The necessary reliance and detriment derives from the use of the software by Halifax for its commercial purposes in connection with its contractor network by the voluntary licence of the claimant and his predecessor.

In summary:

For the avoidance of doubt,