“IT IS ORDERED that: 1. The following issues be tried in both actions prior to the remaining issues: (1) whether or not design right subsists in any of the designs pleaded in 1 CH 00435; (2) ownership of any such design rights as are held to subsist; (3) the extent to which the components marketed by Northstar Systems Limited, Seaquest Systems Limited and The Burnden Group Plc are infringing copies of the said designs and consequently infringing articles within the meaning of the CDPA 1988; (4) to what extent The Burnden Group Plc, Alumax Extrusions Limited, Alcoa Extruded Products (UK) Limited, Northstar Systems Limited and/or Seaquest Systems Limited and each of them are liable to the Claimant for infringement of such design rights; (5) the relief (if any) consequential on the determination of (1)-(4). The following questions shall not be considered with the preliminary issue set out above and shall be tried with the remaining issues: (a) whether Mr & Mrs Fielding, Mr Naden or Mr Clayton are liable for the infringements of any persons or companies concerned in the alleged infringing activities; (b) Mr Fielding’s alleged dishonest participation in the scheme to divert the intellectual property rights away from Mr Davies’ trustees in bankruptcy (specifically the allegations contained in paragraphs 18 to 25 and paragraph 27 of the Re-Amended Statement of Claim in the consolidated action CH 1988 O/S Nos. 392 & 418.); and, (c) the question of the quantum of any damages, additional damages or profits to which the Claimant is entitled.” (1) whether or not design right subsists in any of the designs pleaded in 1 CH 00435; (2) ownership of any such design rights as are held to subsist; (3) the extent to which the components marketed by Northstar Systems Limited, Seaquest Systems Limited and The Burnden Group Plc are infringing copies of the said designs and consequently infringing articles within the meaning of the CDPA 1988; (4) to what extent The Burnden Group Plc, Alumax Extrusions Limited, Alcoa Extruded Products (UK) Limited, Northstar Systems Limited and/or Seaquest Systems Limited and each of them are liable to the Claimant for infringement of such design rights; (5) the relief (if any) consequential on the determination of (1)-(4). The following questions shall not be considered with the preliminary issue set out above and shall be tried with the remaining issues: (a) whether Mr & Mrs Fielding, Mr Naden or Mr Clayton are liable for the infringements of any persons or companies concerned in the alleged infringing activities; (b) Mr Fielding’s alleged dishonest participation in the scheme to divert the intellectual property rights away from Mr Davies’ trustees in bankruptcy (specifically the allegations contained in paragraphs 18 to 25 and paragraph 27 of the Re-Amended Statement of Claim in the consolidated action CH 1988 O/S Nos. 392 & 418.); and, (c) the question of the quantum of any damages, additional damages or profits to which the Claimant is entitled.”
“1. Design right subsists in those designs identified in the table in the Schedule hereto. 2. It is declared that the said design rights never belonged to Howard Davies or his trustee in bankruptcy and that Ultraframe (UK) Limited has no title to the same. 3. The owner of such design rights is the person identified in the 2nd column in the table in the said schedule. 4. The components complained of in 1 CH 00435 and identified in the 3rd column in the table in the said schedule are infringing articles within the meaning of the CDPA 1988. 5. Paragraphs 3 and 4 above are without prejudice to the right of Gary John Fielding and Sally Ann Fielding and the Burnden Group Plc to seek to raise any defence of licence in any proceedings for infringement of design right brought against them by the liquidator of Northstar Limited or the liquidator of Seaquest Limited and without prejudice to the right of Ultraframe (UK) Limited, the liquidator of Northstar Limited and the liquidator of Seaquest Limited to seek to rely upon any point of estoppel or acquiescence or other argument that they are now precluded form (sic) raising such defence of licence. 6. Action number HC 01 0435 be dismissed. ….. 9. The costs of determining the aforesaid preliminary issues and all the costs of action number HC 01 00435 be reserved to the Judge determining consolidated actions CH 1988 O/S No 392 and CH 1988 O/S No 418.”
“We mention this simply as an example of the difficulties which arise if the court seeks to imply into the definition of "employee" tests which Parliament has not seen fit to express. Further, as Mummery J. accepted through his attempted distinguishing of Lee v Lee’s Air Farming Ltd [1961] A.C. 12, the term "employee" would be given a special meaning for the employment protection legislation which it does not have in other contexts or indeed under the general law. For the reasons given by Morison J. which we find cogent the difference in context between Lee’s case and a case under the Act of 1996 does not justify the difference in result. The gloss sought to be given by Mummery J. to "employee" in the Act, based as it is on the ability of the controlling shareholder to prevent his dismissal, is all the more surprising when applied to a case such as the present when Mr. Bottrill was powerless to prevent his actual dismissal which triggered his claim. We recognise the attractions of having in relation to the Act of 1996 a simple and clear test which will determine whether a shareholder or a director is an employee for the purposes of the Act or not. However, the Act does not provide such a test and it is far from obvious what Parliament would have intended the test to be. We do not find any justification for departing from the well established position in the law of employment generally. That is whether or not an employer and employee relationship exists can only be decided by having regard to all the relevant facts. If an individual has a controlling shareholding that is certainly a fact which is likely to be significant in all situations and in some cases it may prove to be decisive. However, it is only one of the factors which are relevant and certainly is not to be taken as determinative without considering all the relevant circumstances. ”
“42. Consistent with the latter passage, it is possible that a company in which the sole shareholder is the sole director and sole employee may be treated as a sham, at least for some purposes. But there is no suggestion in this case that any of the Quickfit companies or Northstar could be so described. They were substantial companies with significant workforces engaged in substantial business with a substantial (if largely hidden) turnover. They filed accounts, were registered for VAT, paid employees wages and so on. 43. Although both Lee and Bottrill were cases involving different legislation to that which is in issue here, I think the approach is just as applicable. One purpose of s 216(2) and (3) of the 1988 Act is to vest design right in the person or company for whom it was created and who paid for it. Thus subsection (2) deals with commissioned designs, meaning designs ordered and paid for by the commissioner, and subsection (3) is concerned with designs created in the course of working as an employee for another. As a rough and ready rule of thumb, if designs are created and paid for by another, the statutory rights under the Act should belong to that other. I can see no reason when the other is a company, why there should be a different outcome simply because the designer is also the managing director of the company and majority or sole shareholder. I should make it clear that S 216(3) is not limited to cases in which the employee makes the designs “for” his employer. The subsection is broad enough to cover cases in which the employee does the design work within the scope of his employment, in his employer’s time and with his employer’s equipment and facilities, even if he, the designer, wants to keep the product for himself.”
“We are anxious not to lay down rigid guidelines for the factual inquiry which the tribunal of fact must undertake in the particular circumstances of each case, but we hope that the following comments may be of assistance. The first question which the tribunal is likely to wish to consider is whether there is or has been a genuine contract between the company and the shareholder. In this context how and for what reasons the contract came into existence (for example, whether the contract was made at a time when insolvency loomed) and what each party actually did pursuant to the contract are likely to be relevant considerations. If the tribunal concludes that the contract is not a sham, it is likely to wish to consider next whether the contract, which may well have been labelled a contract of employment, actually gave rise to an employer/employee relationship. In this context, of the various factors usually regarded as relevant (see, for example, Chitty on Contracts, 27th ed. (1994), vol. 2, pp. 703-704, para. 37-008), the degree of control exercised by the company over the shareholder employee is always important. This is not the same question as that relating to whether there is a controlling shareholding. The tribunal may think it appropriate to consider whether there are directors other than or in addition to the shareholder employee and whether the constitution of the company gives that shareholder rights such that he is in reality answerable only to himself and incapable of being dismissed. If he is a director, it may be relevant to consider whether he is able under the articles of association to vote on matters in which he is personally interested, such as the termination of his contract of employment. Again, the actual conduct of the parties pursuant to the terms of the contract is likely to be relevant. It is for the tribunal as an industrial jury to take all relevant factors into account in reaching its conclusion, giving such weight to them as it considers appropriate.”
"I must now consider what is meant by a contract of service. A contract of service exists if these three conditions are fulfilled. (i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service."
"The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether any actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions."
"A contract of service implies an obligation to serve, and it comprises some degree of control by the master."
"There must, in my judgment, be an irreducible minimum of obligation on each side to create a contract of service. I doubt if it can be reduced any lower than in the sentences I have just quoted and I have doubted whether even that minimum can be discerned to be present in the facts as found by the industrial tribunal ..."
"If this appeal turned exclusively--and in my judgment it does not--on the true meaning and effect of the documentation of March 1989, then I would hold as a matter of construction that no obligation on the CEGB to provide casual work, nor on Mrs Leese and Mrs Carmichael to undertake it, was imposed. There would therefore be an absence of that irreducible minimum of mutual obligation necessary to create a contract of service."
“By the beginning of the 1990s Mr Davies, a joiner by training, was running a business making and supplying secondary glazing to houses. This business was incorporated under the name Noise Insulation Services (Manchester) Limited (“Noise Insulation”). Mr Davies owned the shares. Apparently he ran the business with his brother-in-law. As part of the business Mr Davies supplied conservatory roofs. He purchased the components for these from a number of suppliers including Ultraframe. In late 1991 he decided to concentrate on supplying double-glazing rather than secondary glazing. He coined the name Quickfit for this business. Shortly afterwards he closed down Noise Insulation, selling the work in progress and goodwill of the business to his sister. He invested the proceeds in his new business for which he incorporated a company called Quickfit Limited. He had previously purchased an industrial plot at Groby Road, Audenshaw, Manchester and in about 1993 he constructed factory premises on it for the business. He owned both the land and the buildings until he was made bankrupt. Mr Davies decided to enter the market for conservatory roofing systems with his own product which came onto the market in about 1992. This product was made primarily of GRP reinforced with wooden cores and was fairly crude. In March 1994, Quickfit Limited was ordered to be wound up on a creditor’s petition. However, before this order was made, on19 January 1994 , Mr Davies had incorporated two new companies Quickfit Windows Limited (“QWL”) and Quickfit Conservatories Limited (“QCL”). He appears simply to have carried on operating the business through these new companies without interruption as he had through the old. Mr Davies decided that his first product needed improvement and set about designing a replacement product made of aluminium and uPVC. This was intended to be an engineered product, designed to be easily assembled and using common components wherever possible to keep down the costs of manufacture and assembly. The extent to which this redesign process involved Mr Clarke is a matter of dispute. Whatever Mr Clarke’s contribution, there is no doubt that the moving force behind the new design process was Mr Davies who appears to have wielded complete control over his companies and the majority of the employees and his acquaintances. In one memorable piece of oral evidence, Mr Stephen Ivison, who had been a director of Seaquest for a year, said that employees did not ask questions about ownership of rights to Mr Davies. He put it this way: “… those were not really the sort of questions you asked Howard if you wanted to survive to the end of the week. This was sort of fait accompli. This was Howard’s system. This was it. Do as you are told or toast!”
“In summary, I was attempting to ensure that I took all points in Northstar’s favour and I considered that I was entitled and obliged to do this; Northstar was a client under what seemed to be an unjustified attack from an aggressive and much larger rival. I formed the view that the position I had taken was sustainable and then stuck to it.”
“Save in relation to two issues, namely whether Mr Davies was paid wages and whether he intended to own the designs personally, there is no real dispute as to the circumstances surrounding the creation of the designs in issue. Mr Davies threw his heart into his companies. He worked long hours for them. Insofar as he did design work, it was for the purpose of creating products which would be made and sold by the companies. They were also to be used for the creation of extrusion tools. Those tools were ordered and paid for the by the companies. The design drawings themselves and the drawings relating to the tools bore the relevant company name. When Mr Davies gave written approval for third party drawings for use in the making of tools, he did so expressly as a director of and on behalf of one or other of the companies. There appears to be no reason to doubt, and on a balance of probabilities I hold, that drawings were done on company paper, with company drawing utensils and normally in company time. In all relevant senses the companies paid for their creation. When designs were assessed and revised that was done with the help of other company employees, such as Mr Clarke, in company time. In all these respects, insofar as the designs were created by Mr Davies, they were created for and treated as assets of the company and Mr Davies was doing the design work for and on behalf of the company. He was working for the company.”
“Where a design is created in pursuance of commission, the person commissioning the design is the first owner of any design right.”
“….. where a person commissions the taking of the photograph….. and pays or agrees to pay for it ….. and the work is made in pursuance of that commission, the person who so commissioned the work shall be entitled to any copyright subsisting therein……”
“Without proof of a prior commissioning, payment for the work – in whatever form – is of no consequence. Commissioning means ordering. In this context it means more than the requesting or encouraging. It connotes an obligation to pay. Not just to pay for the finished products if and when they are purchased, but to pay for the very article in which the copyright resides irrespective of whether any of the finished products are purchased.”
“The object to which subsection (3) applies is a single negative regarded as an artistic work. What has to be shown to bring the work within the subsection is, first, that a person commissioned the taking of the photograph before the film was exposed and the negative made; secondly, that that person, the commissioner, agreed to pay for it – putting on one side for the moment precisely what the pronoun “it” stands for in the subsection – and agreed to pay for it before the film was exposed and the negative take; and thirdly; that the negative was taken in pursuance of the commission.”
“Such a managing director would, of course, hold the drawings he made in trust for his company and would have to assign the copyright in them to his company if and when called upon to do so. No such assignment was made here; and, as Mr Finlator is not a party to the action, drawings Nos. 10, 15 and 16 must be excluded from consideration. I may say that I do not think that this makes any difference to the final conclusion in the matter, as the drawings in question are not vital to the decision.”