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

Mr Knight - 2017

Paul Knight was the sales manager responsible for the Winsopia account. His main point of contact at Winsopia was Mr Rastall. On 17 May 2017 Mr Knight contacted Mr Rastall by email regarding the potential purchase of a mainframe by Winsopia. Mr Knight explained in the email that if the equipment were to be leased from IBM, IBM Global Finance would require Winsopia to provide financial information:

“For us to provide you with a firm lease price we would require full year 2016 annual accounts for WINSOPIA LTD and full year 2016 consolidated figures for top parent LzLabs GmbH to be able to make a credit decision. ”

This email shows that Mr Knight must have been aware that LzLabs was Winsopia’s parent company; but it does not follow that he must have been aware of Winsopia’s role in development of the SDM. Mr Knight explained in cross-examination that, when he wanted to offer a lease arrangement to a client, he would first go to IBM Global Finance, who would identify what information was required in respect of the corporate entities. He stated that but for the request from IBM Global Finance, he would not have known that LzLabs was the parent of Winsopia and he otherwise knew nothing about LzLabs.

In cross-examination, Mr Knight stated that he was unaware of all categories of information entered in the IBM database in respect of customers and did not consider it reliable:

“Q. And you would have looked at the records kept by IBM in order to see who the customers were, what equipment they'd got and so on and so forth; correct?

A. Yes.

Q. And there would have been a database in existence at that time, at the beginning of 2013, which held that information; correct?

A. Yes. Yes.

Q. And can you recollect that on that database there were fields which allowed you to see what sector the company was operating in?

A. Perhaps, yeah.

Q. What the legal structure of the company was?

A. Not so sure about that.

Q. Who the parent was?

A. Not sure about that.

…

Q. You haven't looked, have you, at the company database?

A. If I'm brutally honest about IBM's database at the time, it was absolutely hopeless.”

On 18 May 2017, Mr Rastall replied to Mr Knight, informing him that Winsopia wanted to purchase the equipment outright, without finance. As a result, Mr Knight did not make any further inquiries into LzLabs or make any other inquiries regarding Winsopia’s credit worthiness. Such limited reference to LzLabs was not sufficient to put Mr Knight, let alone IBM, on notice that Winsopia might have involvement in LzLabs’ development of the SDM.

The defendants submit that the link between Winsopia and LzLabs was known by IBM and was in the public domain; the link was discoverable on the Companies House website from July 2013 and Mr Rockmann and Mr Cresswell were publicly listed as directors of both companies. However, Mr Knight’s evidence was that prior to the request from IBM Global Finance, he had never previously heard of LzLabs and did not know anything about its business or products. Further, he did not know about the SDM or that LzLabs was developing any product that might be considered competitive to IBM. Because Mr Rastall promptly indicated that he did not wish to pursue any leasing arrangement, no further inquiries were made as to Winsopia’s corporate structure or financial standing. Therefore, there was nothing to put IBM on notice that it should carry out a search on the Companies House website or otherwise investigate the legal structure of Winsopia and its parent company.