HT-2021-000363 - [2025] EWHC 532 (TCC)

ICA 2013

The ICA and associated agreements were signed by Mr Rockmann and Mr Rastall of Winsopia in August 2013. Nicola Bushnell of IBM returned signed copies of the agreements directly to Mr Rastall at Winsopia. In response to a request by Ms Bushnell, Mr Rastall stated that the type of business undertaken by Winsopia was information technology.

On 21 August 2013 Nick Dowling of IBM emailed Mr Rastall about creating a customer number for Winsopia:

“I’m trying to create a customer number for Winsopia on behalf of Nicola - but the request has been rejected due to an invalid VAT number. Nicola gave me the number VAT ID: CHE-164.625.611 MWST but the number should be in the following format …

I’ve tried just using the numerals in CHE-164.625.611 MWST but that is not valid. Can you please check and send me the correct number?”

Mr Rastall responded by return with the correct VAT number for Winsopia, apologising for the confusion.

Ian Lyon, the First Line Sales Manager of Systems business at IBM confirmed in cross-examination that IBM kept customer records in a database at the time:

“Q. … Now, having seen this description of the customer master record database, does that jog your memory at all in relation to the existence of such a database?

A. I recognise a number of the terms in here which – that we would hold against customer records, yes.

Q. And they're all sensible things that you'd need to know. You'd need to know who the client was you were with, what the legal structure of the client was, what industry they were in, who was dealing with them and so forth, yes?

A. That's pretty much accurate, yes.

Q. And without that, you'd be flying blind if you tried to do any sales, wouldn't you?

A. So in terms of the sales process, it's actually unusual for sellers to use that data. But it's clearly helpful data.”

Mr Lyon’s evidence was that in the case of a new customer, he would not expect a seller at IBM to undertake due diligence about a customer’s corporate structure or shareholding. Mr Lyon stated that if a customer wanted to purchase equipment using credit, the Global Finance team at IBM, a separate part of the IBM Group, might ask a seller to obtain certain documents or provide information but this would not extend to any analysis by the sales member. As a result, he would not expect members of the sales team actively to look for red flags when engaging with new or existing customers.

The defendants submit that the above exchange shows that IBM must have been aware of LzLabs because the VAT number originally obtained by Ms Bushell was the Swiss VAT number for LzLabs. It is said that the only reasonable inference for the court to draw is that as part of the registration process IBM became aware that LzLabs was linked to Winsopia (most likely as a result of checking Companies House which recorded LzLabs as the parent of Winsopia or carrying out searches in relation to Mr Rockmann) and had carried out checks in relation to LzLabs itself (hence IBM had LzLabs’ VAT and Commercial Registration Numbers).

The inference which the defendants invite the court to draw is a stretch given the circumstances of the exchange. The source of the LzLabs’ VAT reference obtained by IBM is not obvious; it could have been provided erroneously by RSM or Winsopia; hence Mr Rastall’s apology for the confusion. There is no evidence that IBM carried out any search at Companies House that would have disclosed Winsopia’s parent company as LzLabs. For the reasons explained by Mr Lyon, such due diligence would only be conducted where the issue of Winsopia’s credit standing was an issue, for example, if it wished to lease the equipment or purchase using credit finance. As Winsopia decided not to purchase equipment from IBM using such terms, it did not prove necessary for IBM Global Finance to carry out any checks.