The Codemasters Software Company Ltd v Automobile Club De L'ouest [2009] EWHC 3194 (Ch)

[2009] EWHC 3194 (Ch)

Case No HC08C03297

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

INTELLECTUAL PROPERTY

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 25/11/2009

Before

MR JUSTICE WARREN

Between

THE CODEMASTERS SOFTWARE COMPANY LIMITEDClaimant/Part 20 Defendant

AUTOMOBILE CLUB DE L'OUESTDefendant/

Hugo Cuddigan (instructed by Messrs Bird & Bird) for Claimant

Michael Hicks (instructed by Messrs Wragge & Co.) for Defendant

Hearing Hearing date: 24th November 2009

Judgment

Mr Justice Warren :

Introduction

[1]The background to this application appears sufficiently from the judgment of Arnold J on an issue concerning the construction of the Agreement referred to by him. He gave his judgment on 17 September 2009. The trial of the action is fixed in a window opening in about 2 weeks time with a time estimate of 2-3 days.

[2]The matter came before me in the applications court on 26 October 2009. I made orders for disclosure by Codemasters. I varied an order of Master Price: I ordered that the parties should have permission to adduce the evidence of one expert in the field of the licensing and sales of video games to part 4 of Codemasters' Schedule of Damages which, as then pleaded, related to loss of profit in respect of the absence from the Game of the Ferrari marks and designs. Codemasters has now amended this part of its Schedule of Damages. It no longer seeks loss of profit: one might surmise that this is either because it is seen to be too difficult a task to prove that loss or because there is in fact no loss of profit. Instead, Codemasters now seeks in relation to Ferrari, a reimbursement of the fee and royalties paid for the Licence Agreement attributable to the purported inclusion of the Ferrari marks and designs.

[3]ACO was given leave to amend its Defence and Counterclaim to include the amendments shown in paragraphs 35A to 35A(4), 36A to 36G and paragraph 3A, 3B and 4 of the prayer for relief of a draft supplied to me. ACO had also wanted an order allowing them to adduce further expert evidence in the field of licensing and sale of video games to address certain areas which it saw as relevant. I was highly sceptical about the relevance or proportionality of such evidence and declined to make an order at that stage to allow it to be adduced.

[4]However, I left open the possibility for ACO to apply again to adduce such evidence in the light of(a) the additional disclosure which I had ordered and

(b) the exchange of witness statements of fact. Accordingly, I gave leave to apply to adduce such evidence if by 11 September 2009 (expected to be after (a) and (b)) ACO had served on Codemasters a summary of the expert evidence on which it relied. That was done and the application was duly made. It is that application with which I now deal.

[5]Although the application before me is formally concerned only with expert evidence, Mr Hicks, who appears for ACO, has produced further amendments to the Defence and Counterclaim since some of the points he wishes to raise at the trial are not clearly at issue under the current pleadings. And it is to those amendments to which the proposed expert evidence is directed. Whether to allow the amendments and whether to admit the expert evidence both turn very much on the same considerations, although there are other points of objection to the amendments based on the late application and the potential risk of losing the trial date, aspects which I will deal with at the end of this judgment.

The evidence

[6]Codemasters has produced detailed factual evidence which explains the events resulting in its claim against ACO. It is explained why the Ferrari cars were withdrawn from the Game – essentially because the cost of a licence from Ferrari on terms which it would have been willing to agree was seen as commercially disproportionate. It is also explained that the absence of any sort of licence from Ferrari resulted in Codemasters withdrawing the promotional video which had featured, albeit for only a short period of time, Ferrari cars.

[7]In relation to Lamborghini and Porsche, it is explained that the Game was launched before licences had been obtained from those companies. Indeed, the licence from Porsche has not yet been finalised. It is, I am told, agreed in principle so that Codemasters hope that it will be in place – and its costs known – by the time that the trial commences. In the course of this evidence, an explanation is given not only of why the licence fee agreed with Lamborghini was reasonable but that the steps taken to achieve it were reasonable. Similar evidence is given in relation to Porsche on the basis that a licence agreement will be finalised on the expected terms. The evidence deals with the decision which was taken not to remove the Lamborghini and Porsche cars from the Game (in contrast with Ferrari cars).

[8]The Particulars of Claim plead, among other matters, breaches of Clause 10.1(i) and (ii) of the Agreement. The claim in relation to those breaches is for damages: see paragraph 29. Clause 10.3 is also relied on: paragraph 33 pleads that, pursuant to that provision, ACO “is obliged to indemnify Codemasters in respect of such claim”. Clause 34 then reads:

“Accordingly Codemasters further claims the damages set out in paragraph 31 above [that is to say various heads of loss which flow form the breach of warranty], and to be pleaded in full in a Schedule of Damages, pursuant to clause 10.3 of the Licence Agreement”

The proposed expert evidence

[9]ACO has instructed Mr Colley to prepare an expert report. He is a person with extensive experience developing and licensing video Games. He has direct experience of negotiating licences with Lamborghini and Porsche. He was instructed to answer five questions which are set out in paragraph 10 of his draft report.

[10]Mr Colley gives answers to those questions.

[11]Mr Hicks, who appears for ACO, says that this evidence is relevant and helpful in addressing the issues which will (at least, which he says will) arise at trial. He says that although Codemasters’ evidence is, in one sense, evidence of fact, it is also evidence of the way in which a specialised field of trade works, an observation he makes particularly in relation to why the decision was made to continue with the Lamborghini and Porsche cars in the Game and the appropriateness of that course. He says that ACO has no employee who knows about or who can deal with such matters and that some matters need to be dealt with by a person who knows and understands the industry. It is not enough that he will be able to cross-examine Codemasters’ witnesses on the basis of the materials disclosed.

[12]Addressing each of the questions which Mr Colley was asked, Mr Hicks describes its relevance.

[13]Question 1: What was Codemasters’ likely loss of profit had it removed Ferrari Lamborghini and Porsche cars from the Game? The answer to this question is directed principally at the defence (which Mr Hicks wishes to introduce by amendment) that Codemasters acted unreasonably in not withdrawing the Lamborghini and Porsche cars from the Game as it had done with the Ferrari cars. That such failure was unreasonable can be shown, he says, by comparing the likely loss of profit as a result of withdrawing the cars – according to him a very small loss – compared with the amount of the licence fee and royalty – a far greater figure. Accordingly, ACO must he says be allowed to adduce this evidence to shown that the settlement of claims by Lamborghini and Porsche, or the avoidance of future claims, by taking a licence was not reasonable.

[14]Quite apart from that, it can be argued, as was suggested at the hearing, that in judging whether the licence fee and royalty are reasonable (in contrast with the question whether it is reasonable to enter into a licence on the terms agreed or to be agreed) the judge at the trial is to be put in possession of all the relevant material to which the negotiating parties would have regard. The likely profit which Codemasters would make from the Game must, it is said, be a factor in determining what it is reasonable for Codemasters to pay for the licence. A licence fee based on an expected profit of £10,000,000 might be expected to be rather higher than one based on an expected profit of £10,000.

[15]Question 2: What payments were Codemasters likely to have been required to make to Lamborghini and Porsche for a licence to include their vehicles in the Game if Codemasters had conducted negotiations in a reasonably robust manner using reasonable skill and knowledge? Mr Hicks says that this evidence is needed: when assessing whether Codemasters acted reasonably, consideration needs to be given to the likely level of lost profits as a result of withdrawing the cars from the Game as compared with keeping the cars in the Game.

[16]Question 3 (in fact a number of related questions): Were the negotiations conducted in a reasonably robust manner and with reasonable skill and knowledge? Did Codemasters act unreasonably by entering into an agreement with Lamborghini and is it proposing to act unreasonably by entering into an agreement upon the terms currently proposed with Porsche? Mr Hicks says that whether the terms of the licence are reasonable depends upon what a reasonable licence manager would have been able to obtain in the circumstances with which Codemasters were presented in April 2008. Codemasters has adduced evidence describing its negotiations. Jumping ahead, I would deal with one point in relation to this approach at once. It seems to me that the terms which might have been negotiated in April 2008 are beside the point so far as concerns the reasonableness of terms of the actual agreements, in particular the amount of the licence fee and royalties. By the time the licence agreement with Lamborghini came to be made (and a fortiori in relation to the Porsche agreement which has yet to be finalised), the Game had been launched. The option of withdrawing the Lamborghini and Porsche cars without any infringement (or at least alleged infringement) of their IP rights had passed. It is hopeless to suggest that Codemasters should not have entered into any agreement with Lamborghini and should not now enter into any agreement with Porsche and no such suggestion is made.

[17]Question 4: Would a reasonable company in the position of Codemasters in April 2008 have removed the Lamborghini and Porsche cars from the Game rather than have retained the cars in the Game and sought to enter into a retrospective licence agreement with Lamborghini and Porsche? Mr Hicks says that consideration of this issue not only requires consideration of Questions 1 and 2 (which is no doubt true) but also requires consideration of other issues such as the practicality of removing vehicles from the Game. He says that Codemasters’ own evidence is directed at this issue so that ACO should have the opportunity of responding on the basis of expert opinion. Although this issue is to some extent a question of law and common sense, some aspects require an understanding of and evidence of how the games industry operates.

[18]Question 5: What was the likely cost of amending Codemasters’ promotional video of the Game to remove the Ferrari car? The point here is that ACO says that the Ferrari car could have been removed comparatively cheaply so that Codemasters would have been able to continue to use it. To claim a loss on the basis that the video was effectively unusable and therefore worthless (justifying a claim for its production cost) cannot, it is said, be right. Accordingly, evidence about the cost of changing the video should be allowed.

[19]Mr Cuddigan, who appears for Codemasters, disputes the relevance of any of the evidence. His principal ground of objection applies to the evidence under each of the 5 Questions addressed by Mr Colley. He says that each of the Questions addresses an issue which it is not open to ACO to argue, namely that Codemasters should have withdrawn the Lamborghini and Porsche cars from the Game and cannot claim the licence fees and royalties payable to Lamborghini and Porsche at all. In this context, he says that the correct question is whether the settlement of the claims which Lamborghini and Porsche make or could make (ie the taking of the licence agreements for a fee and a royalty) was reasonable; the questions is not whether Codemasters acted or will be acting reasonably in entering into the licences. More importantly for present purposes, ACO cannot, as a matter of law, raise any allegation that Codemasters has failed to mitigate its loss: but that is precisely what it is trying to do when it says that Codemasters should have withdrawn the cars from the Game.

[20]The basis of this latter allegation is that Clause 10.3 is an indemnity. It gives rise to a contractual claim, in debt, and not to a claim for damages. Mitigation is relevant to damages not to debt. I note here that the proposed amendment to ACO’s Defence and Counterclaim does seek to put the matter as one of mitigation. But that is only one way it is put. The amendment also seeks to achieve the same result through a process of construction of the Agreement, as a matter of causation and as a matter of remoteness.

[21]I need to look at the authorities which identify the correct question to be asked in cases where the amount agreed to be paid under a settlement of a claim is sought to be recovered from a third party and at the authorities on which Mr Cuddigan relies in relation to mitigation.

The Law

[22]I start with Biggin & Co Ltd v Permanite Ltd

[1951] 2 KB 314

. In that case, the plaintiffs had bought goods from the defendant for resale to the Dutch government who had alleged that they were defective. That claim was settled for £43,000, a figure claimed in the action against the defendant. At trial, the plaintiffs sought to recover on the basis that they had acted on good advice and wished to tender for cross-examination the QC who had advised them. Devlin J held that the settlement was irrelevant and refused to admit the evidence.

[23]The Court of Appeal allowed the appeal. It clearly rejected the approach of the trial judge. Instead, it held, as I read the judgments of the Court, that the plaintiffs could recover the amount paid under the settlement if it was a reasonable one. This is not the same as saying that a claimant can recover under a settlement if he has acted reasonably in reaching it. It is possible, on the one hand, for a person to arrive at a reasonable settlement even if he has not acted reasonably in getting there. On the other hand, it is possible to act reasonably but to arrive at an unreasonable settlement. For instance, a person may act on the basis of professional advice and, in doing so, may be acting reasonably; but the advice may be wrong, perhaps negligently wrong and the resulting settlement unreasonable.

[24]The decision in Biggin was examined in some detail by HH Judge John Hicks QC in DSL Group Ltd v Unisys International Service Ltd (1995) 41 Con LR 33. I agree with his conclusion that Biggin not only establishes the correct approach (Was the settlement reasonable?) but also implicitly, if not clearly expressly, rejects the alternative approach (Did the claimant act reasonably in reaching the settlement?).

[25]I note that the Court of Appeal in Biggin considered the evidence of the QC to be irrelevant. It did so not because evidence that the plaintiffs acted reasonably was irrelevant to the question whether the settlement was reasonable. Rather, the QC would only be able to come to court to explain why he considered the settlement reasonable which was a matter for the court. That may reflect the particular position of a lawyer. But suppose that another professional – say an engineer – had given an expert opinion to a client about a claim against the client in respect of a defective building and, on the basis of that advice, the claimant had settled a claim against him by a third party. The client, as claimant, then seeks an indemnity from a defendant. In order to ascertain whether the settlement was a reasonable one, it may be appropriate for the court to receive expert evidence (perhaps from the same expert as had previously advised the claimant) about the underlying defects. The evidence is admitted not to show that the claimant acted reasonably but to show that the settlement was reasonable. But evidence which goes to the latter may also be relevant to the former. It would be wrong, therefore, to say that, because evidence goes to the reasonableness of the defendant’s actions, it is inadmissible; that same evidence may go to the reasonableness of the settlement.

[26]Accordingly, care must be taken in relation to the words of HH Judge Hicks when he said that, applying the correct test (Was the settlement reasonable?) the question of what advice the plaintiff received must be irrelevant and that it goes only to the excluded issue of whether he acted reasonably. That the plaintiff received the advice, may I suppose, be seen as irrelevant; but the advice itself may not be and can, I think, properly be taken into account in ascertaining whether the settlement was reasonable.

[27]Another decision of HH Judge Hicks is The Royal Brompton Hospital NHS Trust v Hammond (unreported: 8 January 1999). This is not an altogether easy case. The Judge addresses the question of mitigation in the context of the recoverability of sums paid in settlement of claims by others caused by a defendant’s wrongs. He suggested that this might be, and saw no reason as a matter of principle why it should not be, addressed as a matter of mitigation. However, he considered that that was not the way in which the law had developed. He regarded the decision in Biggin as precluding that approach. He said that that decision (by which he was bound) was one “which treats the issue as one concerned with the measure of damages, not with mitigation. More particularly, whereas if this were a question of mitigation the issue would be whether the plaintiff acted reasonably, Biggin v Permanite must be taken, for reason which I gave in [DSL Group v Unisys] to have clearly established that the test is whether terms of the settlement were (objectively) reasonable terms.”

[28]I have serious doubts that Biggin leads to the conclusion which HH Judge Hicks decided it did. Biggin actually says nothing about mitigation at all. It is a case concerned with the correct measure of damage where the plaintiffs sought to recover from a defendant that which he had paid in settlement of a claim against him by a third party. The plaintiffs had been sued by the third party; rather than go to trial, they settled. The only issue was whether the amount for which they settled was to be taken as the correct measure of damages. As between the plaintiffs and the defendant, no suggestion was made that the plaintiffs could have taken steps which would have reduced the claim which the third party had. Accordingly, the claim which was being settled was the claim which the third party in fact had; and the question was whether the settlement of that claim was a reasonable one. In contrast, if the plaintiffs in Biggin could have take steps to reduce, or even eliminate their liability to the third party, there is nothing in Biggin itself which suggests that the defendant could not have taken the point when sued by the plaintiffs. He would be able to say something like this:

“Well, you may have settled the claim which the third party in fact had and your settlement may have been reasonable. But the third party should never have been in a position to make that claim since, had you taken an obvious and easy step, the claim would have been halved. Don’t look to me for the consequences of your own failure”

. Such an argument may not be admissible as a matter of law – Mr Cuddigan says it is not – but that is not, I would have thought, because of anything which was said in Biggin.

[29]The next case I need to refer to is the decision of the Court of Appeal in Royscot Commercial Leasing Ltd v Ismail (unreported: 29 April 1993). In that case, the plaintiffs were a finance company. It had entered into an equipment lease with a company. The defendant was a director of the company who had provided an indemnity in respect of the company’s obligations. The company breached the terms of the lease. A claim was made under the indemnity and judgment was sought once the goods had been repossessed and sold at auction. Judgment was given by the district judge for damages to be assessed. Both sides appealed. The judge held that there was an arguable case that the plaintiffs had not taken adequate steps to mitigate their losses.

[30]Under the lease, the plaintiff was entitled to terminate it on default (which had occurred) whereupon the company was obliged to pay all arrears of rent and a sum equal to the total of the rentals which would fall due to the end of the term (with a discount for acceleration). The indemnity required the defendant “to indemnify you against all loss damage costs and expenses you may sustain….”. The amount of loss for that purpose was the company’s own liability under the agreement. Accordingly, the claim included the amount of the unpaid rental instalments for the remainder of the lease less the net amount of the auction proceeds.

[31]The first ground of appeal was that since the agreement in question was a contract of indemnity, the sums were payable as a debt and there was, as a matter of principle, no need in law to mitigate losses under such an agreement. As to that, counsel submitted that a claim under a contract of indemnity such as that in the instant case was not a claim in damages at all but was a claim for a specific sum due on the happening of a specific event. Accordingly, it should not be open to a person providing an indemnity to challenge his obligation to pay by reference to the principles relating to the assessment of damages for breach of contract which have no application to debts. The Court of Appeal agreed with that submission. Reference was made to Scottish Midland Guarantee Trust v Woolley [1964] 144 LJ 272, a claim under an indemnity in respect of unpaid instalments under a hire purchase agreement where the principles of mitigation were held not to apply. Reference was also made to White and Carter (Councils) Ltd v McGregor

[1962] AC 413

, a decision of the House of Lords in relation to which Hirst LJ (with whom Glidewell and Kennedy LJJ agreed) regarded it as implicit in the majority decision that the rules of mitigation do not apply to a claim for a debt due under a contract as contrasted with a claim for damages for breach of contract.

[32]The law, so far as I am concerned, is therefore that questions of mitigation do not arise under contracts of indemnity so as to give the indemnifier a defence to any part of a claim for which he would otherwise be liable under his indemnity. The line of authority considered is concerned with contractual indemnities. This should not be confused with a case where a claimant seeks to recover, as damages for breach of contract or in tort, his liability to a third party (whether as the result of a case taken to trial and judgment or as a result of a reasonable settlement). I see no reason why, in such a case, a defendant should not say that the liability (whether under the judgment or the settlement) should never have arisen but should have been reduced by reasonable steps in mitigation.

[33]The critical question, it seems to me, in any given case is to ascertain the extent of the defendant’s indemnity. In this context, Mr Hicks has referred me to another decision of the Court of Appeal: The Eurus

[1998] 1 Lloyd’s Rep 351

. In that case, as a matter of construction, charterers alleged that a particular clause (clause 36) was an indemnity provision. They contended that the ordinary rules of remoteness did not apply to amounts recoverable under this provision. After observing that no authority had been cited for the proposition that remoteness is always irrelevant to an indemnity obligation - contrast the position as I have just discussed in relation to mitigation – Staughton LJ stated his view that it was not the intention of the parties to provide, by clause 36, that a particular kind of breach of contract should attract liability even for unforeseen consequences whilst in all other instances the ordinary rules of remoteness would apply. Auld LJ agreed. And Sir John Balcombe expressed a similar view. I do not really gain any help from that decision in the interpretation of the Agreement in the present case.

The present case

[34]Although the application before me is not one for a ruling on preliminary points concerning construction, remoteness, causation and mitigation, I do at least have to decide whether ACO has even an arguable case of any of them. It is only if there is an arguable case, that any of the evidence which it wishes to adduce is relevant and admissible; the application is, of course, precisely about such admissibility.

[35]In my judgment, it is clear on the basis of Royscot that there is no arguable case based on mitigation as such. I say “as such” because that does not necessarily rule out the same result being achieved by another route which does not infringe the principles laid down in the case.

[36]Nor in my judgment can it be said that there is an arguable case on remoteness. It was clear – or must certainly be taken as being clear – to the parties that, if ACO did not have the power to grant to Codemasters the rights which it purported to grant, consequences would follow. One obvious consequence was that Codemasters would consider acquiring the necessary licences from the relevant car manufacturers. If, contrary to the facts as ACO allege them to be, it were clear in the case of, say, Porsche, that a licence would cost less than even a conservative estimate of loss of profit, the obvious way to proceed would be to take the licence, not to remove Porsche cars from the Game. This type of expenditure – the licence fee and royalty – must surely be seen as one easily foreseeable consequence of the breach of warranty. The fact that a particular settlement may not be reasonable does not affect remoteness. Nor would the possibility of mitigation (assuming contrary to my view that it were relevant) make too remote that which should have been mitigated.

[37]The case in relation to causation is less simple. Mr Cuddigan accepts, as he must, that an unreasonable settlement (or an unreasonable licence fee) would not fall within the scope of an indemnity. He says that this is because the excessive figure would not be relevantly caused – it would have been brought about not by a reasonable settlement but as the result of the voluntary incurring of a liability (at least as to the excess over a reasonable amount). In contrast, a failure to mitigate does not break the chain of causation. I think that he is probably correct. It has never been suggested, in the case of an ordinary claim for breach of contract, that a failure to mitigate has anything whatsoever to do with causation. The same must apply, a fortiori, to a claim under an indemnity. In any case, it is not easy to see how an argument based on causation which has nothing to support but a failure to take action to reduce the loss (mitigation by any other name) would be consistent with the decision in Royscot. But for reasons which appear in a moment, I do not need to decide the point.

[38]That leaves the question of construction. Clause 10.1 contains a number of warranties. It may be that the principles expounded in Biggin are equally applicable to claims under warranties. But there is no authority to suggest that the principles of mitigation are inapplicable claims under warranties; none of the authorities I have referred to above deals with the point. It is, I consider, at the very least arguable (and I think correct) that Codemasters’ claims under the warranty could, in principle, be met with a defence that it had failed to mitigate. At the trial, however, Codemasters will not be running any case based on breach of Clause 10.1 so that ACO cannot seek to include Mr Colley’s evidence on the basis that mitigation is a live issue.

[39]However, the whole of Clause 10 must be read together. So, in interpreting Clause 10.3, one must bear in mind that any claim under the warranty would (or arguably would) be subject to the principles of mitigation. The indemnity under Clause 10.3, so far as material to the present case, is against claims arising out of any breach or alleged breach of the warranty in Clause 10.1. It is, I consider, arguable that the liability under the indemnity is properly to be informed by the liability under the warranty. There are, of course, differences; in particular, that the indemnity covers alleged breaches as well as actual breaches. Further, although reasonableness may, by reference to the mitigation principle arguably applying to the warranty, mean that Codemasters should have withdrawn the Lamborghini and Porsche cars, it is not open, on the basis of Biggin and the decisions of HH Judge Hicks, to look into the robustness or reasonableness of how Codemasters conducted negotiations once the Game had been launched and it was too late to withdraw the cars. Further, I consider that the point of construction is not precluded either by Biggin or the decisions of HH Judge Hicks (putting aside the doubts which I have expressed and accepting his decisions as correct).

[40]I am bound, nonetheless, to say that I regard ACO’s argument on construction as weak. Unfortunately, at this late stage, there has not been time to deal with this point fully as if it were a preliminary issue and to give a final answer to it. I do not consider that I should shut ACO out altogether at this stage.

[41]I must also say that, on the facts, insofar as I know them at the moment untested by cross-examination, ACO’s case, even if the construction point succeeds, does not look healthy. For instance, ACO must allege that Codemasters should have withdrawn the cars notwithstanding that ACO continued to allege even after the Game had been launched that it held the necessary rights. Quite apart from that, mitigation is concerned with what is reasonable; what is reasonable must be judged against what it is that the Agreement provides; relevantly, it provided for the licensing of certain IP rights with a view to the production of the Game; Codemasters may have good commercial reasons for wishing to continue to include the cars even if the cost of the licence exceeded by a substantial margin the loss of profit it would suffer from removing the cars. What is or is not reasonable can take account of the nature of the obligations undertaken and warranted and the extent of the indemnity.

[42]It follows from all of this that expert evidence should be admitted but only to a limited extent. It is, at least in theory, relevant to know what the loss of profit would have been in accordance with Question 1 above. I would add that that evidence would, quite apart from the construction point, be relevant in accordance with paragraph 14 above and I would accept its relevance on that basis even if I were willing to decide the construction point against ACO at this stage.

[43]Questions 2 gives rise to a need to compare the anticipated loss of profit with the anticipated cost of a licence, in both case as at April 2008. However, I see no need for ACO to adduce further evidence of the latter. There is already evidence about the figures being discussed in negotiations at about that time and the actual figure agreed with Lamborghini in October 2008 and the anticipate figure to be agreed with Porsche are known. Those are enough to enable the court to form a view about the relative costs of each course of action in April 2008, sufficient at least to enable it to determine the reasonableness or otherwise of leaving the cars in the Game.

[44]Question 3 addressed by Mr Colley is not, in my judgment, relevant and the evidence which he gives about it should not be admitted.

[45]As to Question 4, the answer to the question, if it arises at all, is for the court; even then the real question is whether Codemasters in the circumstances of the present case, should have withdrawn the cars. The actual evidence which Mr Colley gives in paragraphs 50 to 52 of his draft Report seems to me to be of not very great assistance although it could be potentially relevant if ACO succeeds on the point of construction. In any case, that evidence should be easy for Codemasters to address. I allow it to be adduced.

[46]As to Question 5, paragraph 55 of the draft Report deals with the cost of making the video. Unless ACO is putting forward a case that the cost alleged was not in fact incurred or that no reasonable person could have spent this much, the evidence as to the cost of the video is irrelevant. The evidence about the cost of amending the video is of no help in that it provides no alternative costing on which the court could, even if it accepted that amendment was the right way forward, assess damages. I am surprised that paragraph 56 has been included even in a draft report. It is of absolutely no help at all. Given those conclusions, it is pointless to allow paragraphs 57 and 58 to be included. It is then disproportionate to allow paragraph 59. In saying this, I do not dismiss as irrelevant the re-coding costs which Mr Colley refers to at a figure of £2,000: I simply refuse to admit the evidence on that point included in his draft Report.

[47]Mr Cuddigan also objects to the admission of this expert evidence because of the impact it may have on the trial date. Although the time estimate is 2-3 days, I have confirmed with Listing that a period of up to 5 days could be accommodated without losing the trial date. In any event, the amendment which I am prepared to allow and the limited additional evidence which I am prepared to see adduced means the time extension will be rather less than Mr Cuddigan might have feared.

Conclusion

[48]I allow the proposed amendments to the extent that they are necessary to permit ACO to run any construction points which it wishes. I allow expert evidence to be adduced to the limited extent described above.