[2024] EWHC 2329 (TCC)

JLR argues that the (unamended) Particulars of Claim are defective in that, while pleading the assignment of the DCHA, they do not explain the basis on which Kyndryl is also entitled to claim under the separate Variation Agreement as assignee of IBM or to bring the unjust enrichment claims. Kyndryl seeks to address that defect by a proposed amendment to paragraph 17 of the Particulars of Claim. The amendment clarifies that the assignment extends to the Variation Agreement and unjust enrichments claims because of the effect of paragraph 6 of schedule 1. JLR does not object to the amendment as such, but maintains that, even as amended, the assignment case has no real prospect of success.

On the assumption that the DCHA itself was assigned by the SPA, as discussed in the previous section, whether the Variation Agreement and unjust enrichment claims were also assigned depends on whether they are “claims or rights” or “rights of recovery” “whether in tort, contract or otherwise” “exclusively arising from the ownership of” the DCHA, using the relevant words of paragraph 6. The interpretation of paragraph 6 is a matter of Delaware law, the law governing the SPA, but neither party argues that there is any relevant difference from English law.

IBM can reasonably be regarded as having “ownership” of the DCHA at the date of the SPA in the sense that it held the contractual rights under it. JLR argues, however, that claims or rights under the Variation Agreement cannot be regarded as “exclusively arising from” that ownership of the DCHA for the purpose of paragraph 6. That is because the Variation Agreement is a separate contract from the DCHA; indeed, Kyndryl itself pleads in its Reply that they are separate in seeking to show that the contractual limitation period in the DCHA does not apply to the Variation Agreement. JLR argues that “exclusively” means that the claims or rights “cannot arise in any other way other than by way of ownership” and that a claim for breach of contract separate from the DCHA does not meet that test. As for the unjust enrichment claims, JLR argues that they arise from requests or instructions by JLR for work outside the DCHA and so do not arise exclusively from the DCHA.

The Variation Agreement is, as pleaded, an agreement between IBM and JLR to vary the DCHA. Claims under the Variation Agreement are therefore, in my view, claims “arising from” IBM’s ownership of the DCHA, bearing in mind the broad and inclusive meaning usually given to that expression; see Fiona Trust v Privalov [2007] UKHL 40, [2007] 4 All ER 951 at [11]-[13]. The qualification that they must arise “exclusively” from that ownership is a little more difficult to interpret. However, it is hard to see how such claims could be said to arise out of the ownership of any asset other than the DCHA and I therefore consider that there is at least a real prospect that Kyndryl is right to say that, for the purpose of paragraph 6, the claims arise exclusively from IBM’s ownership of the DCHA. I take a similar view about the claims in unjust enrichment. They are not claims under the DCHA. However, paragraph 6 is not limited to contractual claims but extends to “rights of recovery” of all kinds, and so is capable of embracing a restitutionary claim. A claim for the value of services provided outside but in connection with the DCHA can fairly be described as a right of recovery exclusively arising from the DCHA.

Moreover, I agree with Kyndryl that the commercial context for the SPA strongly suggests a broader rather than narrower interpretation of the scope of the assignment. IBM was transferring to Kyndryl its entire GTS business, including (according to Mr Graves’ evidence) about 16,000 contracts and associated personnel. It is unlikely that the parties would have intended for IBM to assign to Kyndryl rights under an identified and significant contract but for IBM to retain associated rights, such as rights under a collateral contract or rights of variation or unjust enrichment claims. That would have involved splitting up the GTS business by leaving behind potentially valuable assets.

I also accept Kyndryl’s argument that there are reasonable grounds for supposing that documentation produced in connection with the SPA and the spin-out generally might be relevant to the commercial context or factual matrix and so to the interpretation of paragraph 6 of schedule 1. Mr Graves’ evidence was that there was a “universe” of such documentation. Mindful of the need to take into account all the evidence that might reasonably be expected to be available at trial, that argument provides a further reason against summary disposal of this issue.