Case No. IP-2014-000051

plc [1995] 1 EGLR that: “This robust declaration does not, however, meant that one can rewrite the language which the parties have used in order to make the contract conform to business common sense. But language is a very flexible instrument, and, if it is capable of more than one construction, one chooses that which seems most likely to give effect to the commercial purpose of the agreement.” 70.The Supreme Court has considered the subject more recently in the case of Arnold v Britton & Ors [2015] UKSC 36, in which Lord Neuberger expanded on the guidance given in Rainy Sky, in paragraphs 14 – 23 of his judgment, with which Lord Sumption, Lord Hughes and Lord Hodge agreed. Lord Carnwath produced a dissenting judgment, but did not take issue with Lord Neuberger’s discussion of the law. I will not reproduce those paragraphs in full here, but I highlight a number of points. 71.Lord Neuberger made it clear in paragraph 15 that in interpreting a contract, the court must focus on the meaning of the relevant words (in that case in a lease, in this case in the Oran Release) in their documentary, factual and commercial context. The meaning must be assessed in light of: (i) the natural and ordinary meaning of the relevant clause; (ii) any other relevant provisions of, in this case, the Compromise Agreement; (iii) the overall purpose of the clause and, in this case, the Compromise Agreement; (iv) the facts and circumstances known or assumed by the parties at the time the document was executed; and (v) commercial commonsense; but (vi) disregarding subjective evidence of any party’s intentions.72.At paragraph 17 Lord Neuberger makes clear that what the parties meant is most obviously to be gleaned from the meaning of the language used, and at paragraph 18, he emphasises that the clearer the natural meaning the more difficult it is to justify departing from it. In relation to ‘commercial common sense’, Lord Neuberger stated in paragraph 19 that it was not to be invoked retrospectively: “It is only relevant to the extent of how matters would or could have been perceived by the parties, or by reasonable people in the position of the parties, as at the date that the contract was made.” In paragraph 20 he cautioned that: “While commercial commonsense is a very important factor to take into account, a court should be slow to reject the natural meaning as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. The purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed.” In paragraph 21 he reminds us that when considering what facts are known to the parties, that means those which were “known or reasonably available to both parties… it cannot be right, when interpreting a contractual provision, to take into account a fact or circumstance known only to one of the parties.” Submissions and discussion by issue Does the Compromise Agreement extend as to: (i) subject matter; (ii) jurisdiction; and (iii) future claims, so as to cover claims of the present type? 73.The Defendants’ position is that it relies on the Compromise Agreement, and specifically the Oran Release, as providing a complete answer to the claim. Mr Harbottle submits that the wording of the release granted by Oran in the Oran Release is unambiguous and wide-ranging, covering present and future claims of whatever nature. Accordingly it encompasses the present claims of trade mark infringement and passing off. 74.Mr Moody-Stuart makes a primary submission for Oran that the Compromise Agreement only covers claims: (i) relating to the employment of Richard Burke and his redundancy; and (ii) made under Irish law; and so not the present claims, because: i)there is no basis in the Compromise Agreement for suggesting that the claims being settled or discharged by Oran in the Oran Release were broader in scope than those being settled or discharged by Richard Burke in the Burke Release and the Discharge Form. The Discharge Form makes it clear that the subject matter of the Compromise Agreement was the compromise of any and all claims arising in respect of Richard Burke’s employment and its termination, and it is ‘nonsensical’ to suggest that it extends beyond matters relating to Richard Burke’s employment to encompass the current claims.ii)similarly, the Discharge Form makes it clear that the Compromise Agreement extends only to matters arising under the law of Ireland and so cannot encompass the present infringement and passing off claims which relate to Oranmore’s trade in the UK.75.Mr Harbottle submits in response that if the parties had intended the release to be provided to Richard Burke by Oran to mirror that given to Oran by Richard Burke then: (a) there would be no need for a separate Oran Release as the Burke Release and the Discharge Form would have been sufficient to cover all claims relating to Richard Burke’s employment and redundancy; or (b) the wording of the Oran Release would have mirrored that of the Discharge Form. He submits that none of the documents making up the Compromise Agreement restrict the claims for which waiver or discharge is being given to claims under Irish Law; nor is Irish Law referred to in any of them; there is no basis for inferring that the parties intended to limit the scope of the Compromise Agreement to Irish law claims.76.Mr Moody-Stuart’s secondary submission for Oran is an alternative one in the event that the court finds that the Compromise Agreement extends beyond matters concerning Richard Burke’s employment and termination. In that case, he submits that it only relates to causes of action that were in existence at the date of the Compromise Agreement and does not act to release liability for future tortious acts. He submits that it makes no commercial sense for Oran to have abandoned claims which had not yet arisen, including acts of passing off after 17 May 2013 and infringement of the not-at-that-time-existing Registered Mark, which accordingly must be outside the scope of the compromise. 77.In response, Mr Harbottle submits for the Defendants that such a submission defies commonsense: since it was known by Oran that Oranmore had been trading and continued to trade under the ORANMORE signs and the First Defendant’s Device, the parties cannot have intended to compromise any passing off claim in respects of acts up to and including 17 May 2013 but then left it open to Oran to sue in respect of acts commencing the next day. He reminds me that Oranmore in paragraph 10D of the Amended Defence seeks the implication of a term releasing Richard Burke from liability “in respect of the continued use of the expression “ORANMORE PRECAST” and/or the First Defendant’s [Device] after 17 May 2013”. Factual context 78.I have set out the matrix of facts and my findings of fact above. Of particular importance, in my view, is the fact that the Compromise Agreement was entered into in order to settle the disputes arising from Richard Burke’s employment, and termination of employment by Oran. This termination was intimately and entirely connected, in my judgment, with his setting up of Oranmore, with Ross Melville, as a company to take a lease of the Weeting facility and start to manufacture and sell Hollowcore products in the UK. There has been made no suggestion to me in the documentation or in the evidence of the witnesses for either party that Richard Burke would have left the employment of Oran in December 2011 if Oran had decided to take on the lease of the Weeting facility itself. Both John Dooley and Richard Burke acknowledge that the former had been trying to push the latter out of Oran for some time, but John Dooley’s evidence was that it was impossible to do so while the Back Pay Claim remained unresolved. Accordingly it required Richard Burke to resign so that he could set up Oranmore in the UK, for Oran to get him out of the company. I accept that evidence, which was not challenged.79.Also important is that, by the time the parties entered into the Compromise Agreement, they both knew that: since Oranmore had started trading, it had at all times been trading under the ORANMORE Signs and the First Defendant’s Device; Oranmore knew that Oran was unhappy with the company name of Oranmore and its use of the ORANMORE signs and the First Defendant’s Device; Richard Burke had been working full time for Oranmore in the role of director since he had left Oran and would continue to work full time for Oranmore in the role of director after the Compromise Agreement was signed; Richard Burke had obtained the €600,000 Back Pay Judgment against Oran; Oran was in breach of the four day time period the Sheriff’s office had given it to pay the Back Pay Judgment in full; Oran was not in a financial position to easily meet the Back Pay Judgment, which threatened the jobs of workers at Oran; and Richard Burke refused to enter into the Compromise Agreement unless Oran signed the Oran Release. Documentary context 80.It is necessary to distinguish the various releases provided for in the Compromise Agreement. The Discharge Form is in the identical form of a document originally provided to Richard Burke by Oran together with the letter notifying him of his redundancy dated 18 November 2011. That accepts “€26,092 comprising notice, statutory redundancy, outstanding annual leave, ex-gratia payment and any monies owed by or to the company for termination of employment in full and final settlement of all statute and common law claims of every nature, type and kind whatsoever arising from my said former employment with the Company and the termination thereof by reason of my redundancy.” The Burke Release is an acknowledgment that payment of €26,092 is in “full and final settlement of all sums due and owing to me by Oran Pre-Cast Ltd whether arising by contract, common law and/or statute.” I accept Mr Harbottle’s submission that these two documents together are unambiguous. The former provides a discharge which is clearly defined in terms of claims arising from Richard Burke’s employment and termination by redundancy for consideration which is equivalent to sums due for “notice, statutory redundancy, outstanding annual leave and ex-gratia payment”. The latter releases all claims that Richard Burke has against Oran in consideration of that same sum. Without more, I accept that the reasonable person having all the background knowledge available to the parties would not consider that the parties meant those two documents to encompass claims that Oran had against Richard Burke outside the closely-defined scope, namely ‘arising from’ his employment and termination by redundancy. 81.However, there is more. Richard Burke refused to sign those two documents unless Oran also signed the Oran Release. The Oran Release is specifically expressed to be in consideration of “you compromising the amount due and owing to you on foot of [the Back Pay Judgment]”. It confirms that “Oran Pre-Cast Limited have no claim against you, Richard Burke, whether it be in contract, common law and/or statute”. This is a very concise but extremely wide-ranging release. The fact that it is bare and does not contain any assistive or explanatory text which one often sees in such clauses, and which can assist the court in defining the scope of the claims that the parties intended it to cover, means that the context in which the release was given becomes of particular importance. Per Lord Nicholls at paragraph 29 of Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251 as cited in Rainy Sky: “…the scope of general words of a release depends upon the context furnished by the surrounding circumstances in which the release was given. The generality of the wording has no greater reach than this context indicates.”82.Far from being nonsensical, as Mr Moody-Stuart submits, in my judgment the reasonable person with the relevant background knowledge of the parties would understand that the parties meant the scope of the Oran Release to be wider that the scope of the Burke Release and Discharge Form, i.e. with a subject-matter extending beyond claims relating to Richard Burke’s employment and termination. That reasonable person would understand that the parties meant Richard Burke to waive his €600,000 Back Pay Judgment only in return for something which he valued over and above the €26,092 employment and redundancy settlement. That something was the Oran Release.83.Turning to the Irish law point, I accept Mr Harbottle’s submission. There is no mention of Irish law in any of the documents of the Compromise Agreement. It is true that a number of Irish employment statutes are referred to in the Discharge Form, but only in a non-exhaustive list of examples of statutory claims that an employee might bring against an employer. Accordingly, in order to read the Compromise Agreement as being limited to claims under Irish law, I consider that such a term would need to be implied. Commercial context 84.It is clear from both Richard Burke and John Dooley’s evidence, and I am satisfied, that the Oran Release was an additional release required by Mr Burke, and agreed by Oran, before he would waive his right to the €600,000 Back Pay Judgment. This is supported by the fact that no equivalent release was sought by Richard Burke or given by Oran at the time of the 2012 Redundancy Agreement and 2012 Back Pay Agreement, when, far from waiving the Back Pay Claim, Richard Burke had agreed to settle it for the sum of €120,000. Now, in 2013, Richard Burke was in an even stronger negotiating position. He was holding a judgment, rather than a mere claim, for €600,000, which was in the process of being enforced against Oran by the Sheriff and which he knew Oran would not easily be able to pay. 85.So what was Richard Burke buying, and Oran selling, for a waiver valued at €600,000? The commercial context is, in my judgment, that Richard Burke was seeking a wide-ranging release to enable him draw a line in the sand, end the wider family discord, and get on with his working life as a director and shareholder of Oranmore. Oran was selling a wide release of its claims against Richard Burke, in order to neutralise the Back Pay Judgment and free itself from the threat of enforcement by seizure of assets by the Sheriff’s office or, potentially, issuance of a winding up petition. I am satisfied that each party knew of the commercial imperatives of the other. Of course the subjective intentions of the parties are not relevant in themselves, but common knowledge of both parties is part of the background knowledge held by the reasonable person. Decision on scope of the Compromise Agreement 86. In my judgment, the reasonable person with all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant that the Oran Release would cover all known and foreseeable claims connected with Richard Burke leaving the company, in order to resolve all matters between them and provide the parties with a clean slate. That includes, in my judgment, any claims arising from the founding and trading of Oranmore, which I have found was intimately connected with Richard Burke’s departure from Oran. In order to achieve that clean slate, so that Oran could go forward without owing Richard Burke €600,000 and Richard Burke could continue running Oranmore in the UK, I find that the reasonable person would have understood the parties to have meant the Oran Release to encompass the present passing-off and registered trade mark infringement claims. 87.In order to reach that conclusion, I decline to imply a term limiting the jurisdiction of the Compromise Agreement to Irish Law, but I do construe the Oran Release as covering future claims. 88.In considering Mr Moody-Stuart’s submission relating to Irish law, I remind myself of Lord Steyn’s well-known dictum in Watts v Aldington 1999 LTR 578 that “the touchstone of implication is strict necessity” and the Supreme Court’s guidance in Marks and Spencer plc v BNP Paribas Securities at para 18 – 21, in particular that the implied term must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective (or has commercial or practical coherence) without it.89.In my judgment there is nothing in the documentary, factual or commercial context to lead me to find there is a necessity to imply a limitation of the Compromise Agreement to Irish law. Indeed, such an implied term would defeat the purpose of achieving a clean slate between the parties. 90.In considering whether or not the Oran Release covers future claims, I find the drafting to be rather ambiguous. “Oran Pre-cast Ltd have no claim against you” is somewhat ungrammatical. It is neither clearly limiting the release to claims at that time in existence, nor clearly covering both present and future claims. It could, in my judgment, be read in either way. Following Lord Justice Hoffman’s guidance in Co-operative Wholesale Society Ltd v National Westminster Bank, as cited in Rainy Sky, where language “is capable of more than one construction, one chooses that which seems most likely to give effect to the commercial purpose of the agreement.”91.If the Oran Release did not cover present and future claims, the commercial purpose of achieving a clean slate between the parties would be defeated, in my judgment. In the circumstances where both parties knew that Oranmore was going to continue to trade and that Richard Burke was going to continue to work full-time as a director of Oranmore, I accept Mr Harbottle’s submission that the reasonable person would understand the parties to have meant the Oran Release to compromise not only any passing off claim in respects of acts carried out up to and including 17 May 2013, but also in respect of the identical acts carried out the next day, and later. Similarly, the reasonable person would not, in my judgment, understand the parties to have meant that the Oran Release could be circumvented by the simple and foreseeable action of Oran applying for the Registered Mark and then suing for its infringement. That would completely defeat the commercial purpose of Richard Byrne in entering the Compromise Agreement, for which he had waived his right to €600,000.92.If I am wrong about the ambiguity of the Oran Release in relation to future claims, then the question is whether a term that the Oran Release covered both present and future claims should be implied. It brings us to the same place, in my view. I find that such a term should be implied as it would not be effective, and have no commercial coherence without it, for the reasons given above. If Oran’s claims of passing off and/or trade mark infringement were proven, would Oranmore and Ross Melville be joint tortfeasors with Richard Burke? 93.I believe it is common ground that they would. In case there is any doubt, it is in my view unarguable that they would be joint tortfeasors in light of Oran’s pleaded claim that Ross Melville and Richard Burke have procured the acts of Oranmore complained of and that those acts have been carried out to a common design. Is the Oran Release merely a covenant not to sue rather than a true release? 94.Mr Moody-Stuart for Oran submits that on its true construction, the Oran Release is not a settlement or release of claims against him, but only a promise not to bring a claim. Such a promise does not act to release joint tortfeasors, under the principle in