Ensygnia Ltd v Rickard [2014] EWHC 1184 (Ch)

2014] EWHC 1184 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

COMPANIES COURT

Venue Rolls Building

Date Monday, 7 th April 2014

Before

MR. JUSTICE NUGEE

B E T W E E N:

Between

ENSYGNIA LIMITEDApplicant

DAVID RICKARDRespondent

__________

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__________

MS. S. MARKANDYA (instructed by Olswang) appeared for Applicant.

MS. C. JOHNSON appeared for Respondent.

__________

J U D G M E N T

(As approved by the Judge)

[1]This is an application to restrain the presentation of a winding up petition. The applicant, Ensygnia, (“Ensygnia”), is a mobile interaction company whose main product is Onescan, an Omni-Channel App that enables mobile payments online, in store, and on the go, via a Smart phone with a camera. The respondent, Mr. David Rickard, is a patent attorney and a partner in a firm called Ipulse IP Partners LLP, (“Ipulse”). Ensygnia instructed Ipulse to assist with registration of patents for Onescan. They later changed their representation to Olswangs and disinstructed Ipulse. Ipulse claim that there are invoices outstanding for work carried out for Ensygnia.

[2]The application has had a somewhat unusual procedural history. Mr. Rickard served a statutory demand for what he claimed to be the outstanding fees. The statutory demand was issued in his own name, that is as “David Rickard trading as Ipulse”, apparently in the belief that the sums payable were due to him personally. Hence, these proceedings were brought by Ensygnia against Mr. Rickard personally. In fact, it transpires that all the invoices in question, although received under the name of Ipulse, bear the statement that “Ipulse is a trading name of Ipulse IP Partners LLP.”

[3]Although Ms. Markandya, who appears for Ensygnia, had briefly referred to these facts in her submissions, no argument was addressed to me on the consequences for this application. It was only when considering my judgment that it became apparent to me that it raised the question whether either Mr. Rickard, who had served the statutory demand but did not appear to be a creditor, or Ipulse, which claimed to be a creditor but did not appear to have served a statutory demand, was in a position to proceed with the petition. I therefore invited the parties to make further submissions on the point.

[4]Ms. Markandya, however, did not suggest that the injunction should be granted on the simple ground that Mr. Rickard was not a creditor at all but wished me to determine the underlying question whether the debts were disputed on substantial grounds. Ms. Johnson, who appeared for Mr. Rickard, for her part accepted that at the date of the statutory demand he was not in fact a creditor, but in the short time since the point had come to her attention Ipulse had assigned all the debts in question to Mr. Rickard, and on the authority of Coulter v The Chief Constable of Dorset Police

[2004] EWCA Civ 1259

she submitted that this was sufficient to give him locus to present a petition as creditor based on the statutory demand even though he had had no title to the debts at the date of the demand.

[5]Ms. Markandya did not dispute that proposition. I will therefore proceed on the basis that it is common ground that,(i) the statutory demand was served by Mr. Rickard;

(ii) the debts, to the extent there are any, were then payable to Ipulse, that is the LLP;

(iii) the debts have subsequently been assigned to Mr. Rickard; and,

(iv) this gives him locus to present the petition as if the debts have validity. That means that the issue I have to decide is the familiar one, namely whether the debts on which the statutory demand is based are bona fide disputed on substantial grounds. Save for one point, there was no dispute as to the legal principles. They are conveniently summarised by Norris J in Angel Group Limited v British Gas Trading Limited

[2012] EWHC 2702 (Ch)

, which I shall call “Angel”. In para.22 he says as follows:

“The principles to be applied in the exercise of this jurisdiction are familiar and may be summarised as follows:- (a) A creditor's petition can only be presented by a creditor, and until a prospective petitioner is established as a creditor he is not entitled to present the petition and has no standing in the Companies Court: Mann v Goldstein [1968] 1WLR 1091. (b) The company may challenge the petitioner's standing as a creditor by advancing in good faith a substantial dispute as to the entirety of the petition debt (or at least so much as will bring the indisputable part below £750): (c) A dispute will not be "substantial" if it has really no rational prospect of success: in Re A Company No.0012209 [1992] 1WLR 351 at 354B. (d) A dispute will not be put forward in good faith if the company is merely seeking to take for itself credit which it is not allowed under the contract: ibid. at 354F. (e) There is thus no rule of practice that the petition will be struck out merely because the company alleges that the debt is disputed. The true rule is that it is not the practice of the Companies Court to allow a winding up petition to be used for the purpose of deciding a substantial dispute raised on bona fide grounds, because the effect of presenting a winding up petition and advertising that petition is to put upon the company a pressure to pay (rather than to litigate) which is quite different in nature from the effect of an ordinary action: in Re A Company No.006685 [1997] BCC 830 at 832F. (f) But the court will not allow this rule of practice itself to work injustice and will be alert to the risk that an unwilling debtor is raising a cloud of objections on affidavit in order to claim that a dispute exists which cannot be determined without cross-examination (ibid. at 841C). (g) The court will therefore be prepared to consider the evidence in detail even if, in performing that task, the court may be engaged in much the same exercise as would be required of a court facing an application for summary judgment: (ibid at 837B).” a prospective petitioner is established as a creditor he is not entitled to present the petition and has no standing in the Companies Court: Mann v Goldstein [1968] 1WLR 1091. prospect of success: in Re A Company No.0012209 [1992] 1WLR 351 at 354B. merely seeking to take for itself credit which it is not allowed under the contract: ibid. at 354F. merely because the company alleges that the debt is disputed. The true rule is that it is not the practice of the Companies Court to allow a winding up petition to be used for the purpose of deciding a substantial dispute raised on bona fide grounds, because the effect of presenting a winding up petition and advertising that petition is to put upon the company a pressure to pay (rather than to litigate) which is quite different in nature from the effect of an ordinary action: in Re A Company No.006685 [1997] BCC 830 at 832F. injustice and will be alert to the risk that an unwilling debtor is raising a cloud of objections on affidavit in order to claim that a dispute exists which cannot be determined without cross-examination (ibid. at 841C). detail even if, in performing that task, the court may be engaged in much the same exercise as would be required of a court facing an application for summary judgment: (ibid at 837B).”

[6]One other point to be added to that summary is that it is not enough to show that there is a dispute over one item, or indeed over many items. This also clearly emerges from the Angel case, where Norris J said this at para.28:

“The fourth argument advanced by Counsel for Angel was that unless I can specify an exact sum which is due from Angel to BG then I must grant an injunction to restrain further proceeding on the petition: and that I can only reach that exact sum by undertaking a line by line examination of each of the invoices rendered on the Corporate Account and the SME Account for the entire duration of the relationship between Angel and BG. Only in this way would the exact sum and its precise constitution be established, and only in this way could Angel know how much it had to pay and what liabilities were thereby discharged.”

[7]And at para.29:

“I do not accept this submission. On this application the question is whether or not there is an indisputable debt owed by Angel to BG sufficient to support a winding up petition. There may be uncertainty about the precise sum: but the court at this stage is not concerned to determine what could be proved in a winding up. It is concerned to see that the petitioner is indisputably a creditor in a sum exceeding the statutory minimum and so entitled to present a winding-up petition. It will be for the parties to agree or make their own respective judgments about what cannot be disputed and what can properly be disputed (and the court will be alert to identify every case where the winding up process is being used to exert pressure to pay a debt that is bona fide disputed on substantial grounds rather than to litigate it). In Re A Company No.2340 (2001) Blackburne J held:- “At the end of the day the question is whether or not there is a debt owed by [the Debtor] to [the Creditor] over and above £750, sufficient therefore in amount to support a winding up petition, which is not bona fide disputed on substantial grounds. In my judgment, there clearly is. Even making allowance for the various points which [Counsel] has raised, on any view further substantial sums are owing. In my judgment therefore, it cannot be said that if [the Creditor] were now to present a petition to wind up [the Debtor] it would be an abuse of process. True it is that there is a dispute as to the precise amount of the sum to which [the Creditor] is entitled but, on the evidence I have seen, I am satisfied that there is no genuine dispute… as to the existence of an indebtedness on the part of [the Debtor] to [the Creditor] amply sufficient in amount to support a winding up petition. I propose therefore to dismiss this application.” “At the end of the day the question is whether or not there is a debt owed by [the Debtor] to [the Creditor] over and above £750, sufficient therefore in amount to support a winding up petition, which is not bona fide disputed on substantial grounds. In my judgment, there clearly is. Even making allowance for the various points which [Counsel] has raised, on any view further substantial sums are owing. In my judgment therefore, it cannot be said that if [the Creditor] were now to present a petition to wind up [the Debtor] it would be an abuse of process. True it is that there is a dispute as to the precise amount of the sum to which [the Creditor] is entitled but, on the evidence I have seen, I am satisfied that there is no genuine dispute… as to the existence of an indebtedness on the part of [the Debtor] to [the Creditor] amply sufficient in amount to support a winding up petition. I propose therefore to dismiss this application.”

Norris J then added:

“My approach is the same.”

[8]Then, having gone through the various matters raised in that case by way of dispute, his conclusion at para.42 was:

“If I ask the question "Is there a debt owed by Angel to BG over and above £750 which is not bona fide disputed on substantial grounds?" then I would answer that question in the affirmative. In my judgment there clearly is, even making allowance for all of the points taken by Angel. I recognise that there is a dispute as to the precise amount, but on the evidence it seems to me plainly to exceed £750 and to be of the order of £100,000.”

And he therefore refused to grant an injunction.

[9]Before me Ms. Markandya submitted that if there were significant disputes shown that was in itself a reason for granting an injunction, but, in my judgment, Norris J’s decision in Angel is clearly against that submission, and I see no reason not to follow him. The upshot is that unless the alleged debtor can show that the entirety of the sums claimed are in dispute, or at any rate can show that there is a sufficient dispute to reduce the undisputed sums below £750, the creditor is entitled to present a petition and no injunction should be granted.

[10]To put this point the other way round, it is enough for the creditor to point to at least one debt, or debts, exceeding £750, as to which there is no substantial dispute, in order to succeed. Where, as here, there are numerous invoices relied on this places a high hurdle in the way of the applicant, who must successfully challenge all the invoices, or at any rate enough of them to bring the undisputed sum below £750.

[11]In the present case the statutory demand lists no less than 29 invoices rendered between June 2013 and March 2014, totalling some £72,000. After credit is given for £10,000, paid by Ensygnia to Ipulse on account, and a number of other credits, the total sum claimed in the demand was some £58,000. In order to explain the basis on which these sums are claimed, and on which Ensygnia’s challenge is based, it is necessary to give a brief account of the background, which I will largely take from the witness statement of Mr. Richard Harris, the chief executive officer of Ensygnia. It appears that he may have previously been acting for a company called Richard Harris Limited, which was either the predecessor of, or an earlier name for, Ensygnia, but nothing turns on this, and I will refer to Ensygnia to include Richard Harris Ltd for the sake of convenience.

[12]Ensygnia initially used a firm called Venner Shipley, who applied for a UK patent in relation to Onescan. In order to obtain protection in other countries it was then possible to file an application under the Patents Co-Operation Treaty (“PCT”) seeking patent protection in a number of contracted states. This needs to be done in 12 months. The next step is to file an individual patent application in each country of interest. This needs to be done within 30 or 31 months, depending on the country. Certain countries in Europe can be covered by a single European Patent (“EP”) application.

[13]In the present case, Mr. Harris was introduced to a Dr. Hill, who was then at Ipulse, and instructed him to arrange the PCT registration. Then in May 2013 Mr. Harris instructed Ipulse to arrange the individual country registrations. He obtained a quote from Mr. Alex Rees of Ipulse, which contained a table of cost estimates for the individual country registrations. This table, which went through a number of iterations, showed a number of European countries covered by the EP application, and about 20 other countries around the world. There were columns for official fees, associates charges, translation charges (where applicable) and Ipulse charges. The Ipulse charges show £835 plus VAT for the EP application and £620 plus VAT for each other country. As this suggests, the process of registering in each individual country involved instructing an associate, or a local agent in that country. I will refer to them as the third party agents, and to their charges as third party charges.

[14]Ensygnia’s case, in summary, is that, firstly, so far as Ipulse’s own charges are concerned, it is only liable to pay £620 for each national registration, together with £835 for the EP application. Secondly, so far as third party charges are concerned, they discovered that Ipulse was charging more to Ensygnia on its invoices than the third party agents were themselves charging. Mr. Harris describes this as Ipulse secretly inflating the third party fees. Mr. Rickard describes it as a mark-up. I will come back to the question of the entitlement of Ensygnia to apply such a mark-up below.

[15]At the moment the significance is that when Ensygnia realised that a mark-up was being applied it started contacting the third party agents itself and asked them to re-issue invoices for their charges direct to Ensygnia. These it has either paid or intends to pay. It therefore claims that all it owes, or will owe, to Ipulse is Ipulse’s own charges of £620 per country, plus £875 for the EP, which for 18 countries, together with the EP and VAT, comes to £14,394. With a couple of small disbursements the total it accepts liability for is £14,458.96, and after allowing for the £10,000 on account it has paid the balance, and hence claims that nothing more is due.

[16]Ms. Johnson addressed a number of issues in her submissions but placed particular reliance on two groups of invoices. First, although Ms. Johnson accepted that it was, at the lowest, arguable that Ipulse’s own fees for the filing of foreign countries was limited to £620 plus VAT per country, she points to a group of four invoices, numbers 5, 6, 7 and 28 on the schedule, that she says had nothing to do with this filing but relate to other work that Ipulse carried out for Ensygnia.

[17]Number 5, which is invoice number svu39517, is in the total sum of £471.15 and is, according to the narrative, charges for the period from 12th to 24th May 2013, in respect of “receiving the GB certificate of grant, updating the docket, receiving instructions from client, sending forms and fee sheets to the UK IPO, docket receipt, receiving confirmation, report to client, update the document, view client’s instructions, completing the registration, reporting letter.” Invoices 6 and 7, respectively svu39518 in the sum £2,214, and svu39519 in the sum of £4,278, have similar narratives, in the case of invoice 6, dated 15th May 2013,and in the case of invoice 7, dated 13th June 2013. On the face of it, this work is work done in relation to UK patents and has nothing to do with the individual filing in overseas countries and is therefore prima facie not the subject of the £620 limit.

[18]Mr. Harris, in his evidence, says of these invoices as follows:

“These invoices...” (and he sets out numbers 5, 6 and 7) “... do not relate to work which was authorised and thus these invoices cannot be substantiated ... they are disputed.”

Nevertheless, the bills, on the face of it, indicate the work which Ipulse carried out and for which they are seeking to charge.

[19]Mr. Rickard explains in his witness statement that although Venner Shipley had been instructed to prepare an original UK patent application, Ipulse took it over during the pending stage. That application gave birth to a PCT application, which his firm was instructed to prepare and file:

“...including payment of the official fees, reporting the search and examination, Opinion and other matters. The original application continued to be processed before the UK Patent Office. It contained a number of different inventions. This meant that one application is insufficient and the firm had to create what are described as “children” or “divisional” applications, in order to cover each of the inventions. This necessarily meant substantial further work was necessary. The applicant at all times instructed my firm to carry out that work.”

I will not read it out, but at paras.32 to 35 he deals with those three invoices and the work that he says was carried out.

[20]He also exhibits timesheets, and the timesheets are one for each of those three invoices, which show the time said to have been spent on the matters, which go to make up those charges. Some of those matters include, for example, a client meeting, and e-mails that are sent to the client. What is more, he also exhibits some e-mails which evidence some of the work that was carried out.

[21]Perhaps the clearest example is in the timesheets for job 1413-0004, which went to make up invoice number 6, that is 39518. This includes on 26th February 2013 preparing a response to examination report and third party observations, timed at three and a half hours, and on the next day, 27th February, preparing and filing a response, a quarter of an hour. Included in the exhibit is an e-mail chain which relates to that work. It starts with an e-mail from Mr. Rees of Ipulse to Mr. Harris dated 26th February, in the evening, in which he says:

“Dear Richard, I enclose a draft response to the outstanding examination report and the third party observations together with draft amended pages” and then after setting out various detailed matters he says: “I look forward to receiving your instructions.”

[22]The response, initially from a Matt Deacon at Ensygnia, was:

“Many thanks, Alex. This looks very much in order” and he said: “Richard...” (that is Mr. Harris) “...will follow up shortly confirming our instructions to submit to the examiner.”

Then later that evening there was a short response from Mr. Harris himself:

“Alex, great job. Thank you. Please proceed.”

[23]On the face of it, this e-mail chain is explicit evidence that the work in those two items of the timesheet was indeed not only authorised but directly instructed by Ensygnia. That alone takes up three and three quarter hours of the timesheet, which is about half of the bill in question, the total time of the bill being seven and three quarter hours. That bill is therefore, it seems to me, a good example, where the evidence before me gives one no confidence that Mr. Harris’ statement that the work carried out in those bills was not authorised is one which has any substance to it. Indeed, the totality of the evidence in relation to these three invoices, 5, 6 and 7, produced on behalf of Ensygnia, is that which I have already referred to, which amounts to no more than a bare assertion that the work was not authorised.

[24]Is this sufficient to raise a dispute of substance? In my judgment, it is not. Where a professional claims to have done work for a client, and prima facie evidence that in the form of timesheets, and puts forward evidence showing that some, at least, of the work was explicitly authorised by the client, I think something of more particularity is required to raise a dispute which can be regarded as having substance than a bare statement that the work was not authorised.

[25]In argument, although not, I think, confirmed anywhere in evidence, Ms. Markandya said that Ensygnia believed that it had paid everything due up to April 2013. The background to that is that in May 2013 Dr. Hill, who was Mr. Harris’ original contact at Ipulse, left Ipulse and went to work at Olswangs, and it is the case that bills were paid up until the time he left and no bills have been paid since. It may well be the case, I cannot resolve this, that Ensygnia did believe at the time that Dr. Hill left that all the work that had been done already had been billed for, but it does not follow that there was in fact no unbilled work. It is not suggested that Ipulse ever explicitly agreed that all its work to date had been already paid for.

[26]On the face of it, and in the light of the evidence that I have on these invoices, I would regard invoices 5, 6 and 7 as prima facie due and not disputed on substantial grounds.

[27]Invoice 28, which is the fourth of these group of invoices, is also an invoice that relates to work done on UK applications and not the filing of overseas applications. This invoice is numbered svu138257 in the sum of £5,976. It is, again, supported by timesheets, and as to part of it by notes of a meeting. Mr. Rickard says that the invoice related to work done on the applicants’ instruction, and says:

“I note that almost all of the time relates to work done by Mr. Hill...” (Dr. Hill that is, presumably) “...or under his management. Mr. Hill is now responsible for assisting the applicants as a partner at Olswang to avoid payment of our invoices and is in breach of his contract in not issuing the invoice earlier.”

[28]Mr. Harris, in relation to this invoice, having pointed out that he finds it odd, if the invoice properly related to time spent prior to 13th June 2013, that the invoice is not dated until 27th August 2013 and was not provided until March 2014, says:

“In any case there was no agreement with Ipulse to pay for the work apparently undertaken and so this invoice is disputed in its entirety.”

Again, that is the totality of the evidence on behalf of Ensygnia.

[29]Again, where there are timesheets, and in this case a meeting note showing that there was a meeting with the client, on the face of it there is very little to show that the work was not done, and if it was done is not properly chargeable. It does seem to me, in circumstances of this type, that if Ensygnia wished to maintain either that the work was not done, or that it was done without instructions, one would expect some more detailed explanation, no doubt with the assistance of Dr. Hill, if he could help, as to how it could be that Ipulse could have apparently had a meeting and telephone discussions and sent e-mails without having any instructions to do such work.

[30]I therefore accept Ms. Johnson’s submission that no bona fide dispute of substance has been shown in relation to this group of four invoices, and hence that Ipulse was, and Mr. Rickard as its assignee now is, a creditor entitled to an undisputed debt of more than £750 and, in accordance with the principles I have set out from the Angel case, is therefore entitled to present a petition.

[31]That is, strictly speaking, enough to dispose of this application, but I recognise that the parties have argued several other points, and in case it is of assistance I will briefly indicate my views on other matters.

[32]The second group of invoices on which Ms. Johnson placed particular reliance is that of disbursements, and in particular to those applications where the third party charges have not been paid. At the time that Mr. Harris’ witness statement was prepared there were six of these, namely, Indonesia, Mexico, Thailand, USA, Canada and the EP office.

[33]At the time of the hearing before me Ms. Markandya told me that Thailand had been paid, and in relation to the USA she said there were three invoices, one of which had been paid and the other two were in the process of being paid. For Indonesia and the EP office, she said that Ipulse claimed to have paid them and Ensygnia would reimburse them on proof of the amount paid. For Mexico and Canada, she said that they had asked for third party agents’ invoices to be issued direct to Ensygnia and would pay them when received. That was how matters stood when I came to prepare my judgment.

[34]However, shortly before coming into court this morning a further witness statement of Mr. Ian Cleverly was produced. He is the chief financial officer of Ensygnia. He adds to the position as it stood at the hearing by giving evidence in relation to Canada, the USA and Mexico. He has given instructions for payment, and the full amount of those invoices have been paid. He confirms that Thailand has been paid, and that leaves just the EP registration and Indonesia, where he says:

“Once I have received satisfactory proof of payment I will authorise reimbursement of the sum Ipulse, or Mr. Rickard, has paid.”

[35]I will proceed to give my views on the evidence as it stood before me when the hearing closed and then add my comments as to the current position. Ms. Johnson said that even leaving aside any question of mark-up, and any case where Ensgynia did not know what the actual third party charges were, (which applies to Indonesia and the EP office, as I have explained), there were four of the six cases, Thailand, USA, Mexico and Canada, where Ensygnia had now seen the actual third party invoices and where, therefore, there was no reason for Ensygnia not to make payment once the amount of the third party invoice was made clear. In the case of Mexico, the third party invoice issued by Olivares y Compania to Ipulse on 28th June 2013 was in the sum of $1,946. In the case of Canada, the third party invoice issued by Bereskin & Parr LLP to Ipulse was in the sum of £1,052.28, although a Canadian dollar sum was also given.

[36]There does not appear to me to be any substantial dispute that those sums were due and owing to the Mexican and Canadian third party agents respectively, and, as I say, the evidence now is that they have indeed been paid. The question that was argued on this aspect of the claim was whether Ensygnia could insist on paying the third party agents direct rather than paying Ipulse. Ensygnia’s case, as advanced by Ms. Markandya, is that it could. She submitted that when Ipulse instructs a third party agent it does so as agent for Ensygnia, with the result that the contract with the third party agent is between Ensygnia and them with Ipulse having no role to play, except as Ensygnia’s agent and as an intermediary.

[37]For this purpose she referred me to Ipulse’s terms and conditions. On p.5 of those is a statement under the heading “Outside Services” as follows:

“On occasion it may be necessary to instruct outside experts to provide expertise we cannot ourselves provide directly, for example, counsel, investigators, translators, technical draftsmen. In addition, the local laws in many countries abroad require that local attorneys prosecute applications in national patent offices. We have an extensive network of independent contacts with whom we work and we choose from those carefully taking into account your views as appropriate. We monitor the quality of the services provided on your behalf and on behalf of our clients and only instruct service providers who we believe are suitably qualified and competent. Where we instruct an outside expert on your behalf in good faith we are not liable for any failure on their part or for any loss of any type that may arise as a result of the performance or non performance of that provider.”

[38]Ms. Markandya submitted that the reference in the last sentence to “instructing an outside expert on your behalf” was a clear pointer that Ipulse was acting as an agent. Ms. Johnson submitted that this sentence does not establish any such thing. It is an exclusion clause designed for the protection of Ipulse. She pointed to the fact that the third party agents in fact billed Ipulse and Ipulse paid them. As that indicated, both Ipulse and the third party agents regarded it as being Ipulse who contracted with the third party agents and became liable on their bills. In my judgment, Ms. Johnson is right about this.

[39]In so far as Ms. Markandya places any reliance on the terms and conditions, and I should note here that Ensygnia do not accept that they were incorporated in the contracts, they have to be read as a whole. On p.6 of the terms and conditions there is a reference to disbursements as follows:

“Disbursements, for example patent/trade mark office fees, and fees for outside services, may be incurred and may include a mark-up. We will show disbursements charges in invoices and include appropriate narratives. Any hourly rates, fees and disbursements that we may quote, or estimate to you, are net of VAT, which will be charged as applicable.” (and then a bit further down) “We maintain computerised records of timed disbursements and can provide you with details on request.”

[40]This seems to me to make it fairly clear that Ipulse expected to incur liability for disbursements and then pass the cost on, together with the possibility of a mark-up. This is consistent with Ipulse being contractually liable to pay the third parties, and contractually entitled to claim those costs back from the client. It does not suggest that what was intended was that Ipulse should have the power to bind a client to a contractual relationship with the third parties and would be under no liability itself. When one combines this with the fact that the third party agents in fact invoiced Ipulse not Ensygnia, despite the fact that they knew perfectly well that Ensygnia was the person applying for patent protection, and that the Canadian third party agent, for example, when asked for a copy of its invoice responded as follows: “There is one outstanding invoice in the amount of £1,052.28 but David Rickard is being difficult and it is not yet clear to me if I can send a copy to you”, it seems to me that the natural inference is that the contractual relationships were as Ms. Johnson submitted, namely, that Ipulse instructed the third party agents itself and came under a liability to pay them, and Ipulse was then entitled to charge Ensygnia for the amounts that it so incurred.

[41]I do not think the single sentence on p.5 which Ms. Markandya relied on will bear the weight that she wishes it to. Indeed, if anything, it tends to suggest that absent such a clause Ipulse might be liable for the services provided by the third party provider. If the true contractual position is that the client was authorising Ipulse to enter into contracts on behalf of the third parties this would not be necessary and one would have expected a very different statement along the lines that:

“You authorise us to instruct outside providers on your behalf, in which case you will be liable to discharge their bills”

. That is not the effect of what is written, and I do not think the terms and conditions lend any support to that being the contractual position.

[42]Ms. Markandya also referred to the fact that on occasions clients such as Ensygnia were asked to execute a power of attorney in order to progress a foreign application. No doubt this is so, and where a power of attorney is executed in favour of the third party agent the relations between them are no doubt governed by the terms of that power. This does not seem to me to shed any real light on the contractual position when no such power has been entered into.

[43]I am not, therefore, satisfied that there is any substance in the suggestion that when Ipulse instruct third party agents they do so as agents for Ensygnia and hence that Ipulse cannot sue Ensygnia for disbursements. Indeed, one of the examples of outside experts given in the terms and conditions, is that of instructing counsel, and leaving aside the point that counsel have traditionally not entered into contractual relations at all, it is well understood that counsel look to their instructing solicitors for the fees, not to the lay client directly, with the instructing solicitors then looking to the lay clients for them. I see no reason to think that the position is any different with patent attorneys such as Ipulse. Nor do I think that the fact that the third party agents had been happy, in most cases, to re-issue invoices direct to Ensygnia affects this. Third party agents are no doubt happy to receive payment from anybody, and by re-issuing invoices to Ensygnia are no doubt to be regarded as accepting payment from Ensygnia in lieu of payment from Ipulse. This does not answer the question, or in my judgment really assist, as to whether Ipulse or Ensygnia was liable in the first place.

[44]It follows, in my judgment, that Ms. Johnson is right, that where(a) Ipulse instructed third party agents, and

(b) there is no dispute over the liabilities incurred to those third party agents, and

(c) the third parties have not been paid, there is currently a liability on Ensygnia to pay the amount of that disbursement to Ipulse. On the evidence as it stood before me until this morning, this applied at least to the Mexico and Canadian third party invoices, the Canadian invoice being a particularly clear example, because being unusually rendered in sterling there could have been no issue as to the appropriate exchange rate. The sum claimed by Bereskin & Parr was £1,052.28, as I have said. Ipulse in fact claimed £1,072.28 in respect of this disbursement, the extra £20 being for bank charges. Whether the £20 is included or not, it was clear on the evidence at the end of the hearing, in my judgment, that Ipulse was entitled to payment of at least £1,052.28.

[45]However, as I have said, the evidence before me now is that the third party agents in Canada and Mexico have been paid, meaning that the only unpaid third party agents are those in Indonesia and the EP application, where the reason for non payment is that Ensygnia does not know the amount, or has not seen the amount, that Ipulse have actually paid. In those circumstances, although I would have accepted Ms. Johnson’s submission that the Canadian and Mexican invoices in relation to disbursements were further examples of indisputable debts that amounted to more than £750 in each case, it seems to me that the position, as it stands today, as Ms. Johnson very fairly accepted, is that once the third party agents have indeed been paid there is no longer any claim by Ipulse (or Mr Rickard).

[46]The other matters which were touched on in argument include the question of mark-up. As we have seen, Ipulse’s terms and conditions provide for the possibility of a mark-up. So the first question is whether the terms and conditions were incorporated in the contracts or not. The terms and conditions are referred to in Ipulse’s e-mails, including the e-mail by which Mr. Rees provided estimates of costs to Mr. Harris. They were also referred to in previous invoices rendered. No specific reason has been put forward as to why the terms and conditions were not incorporated in the contracts. Mr. Harris says that he was not provided with a copy of them, but that is a different point. On the state of the evidence before me, I would conclude that there is every reason to think that the terms and conditions were incorporated and no substantial reason to think the contrary.

[47]That, however, is not the only question. Although the terms and conditions say that a mark-up can be added, no explanation of when and in what circumstances and how this may be done appears from the documents. Ms. Markandya submitted, in these circumstances, that where Ipulse had limited its profit charges to £620 plus VAT per country the addition of a mark-up was a hidden extra profit and was inconsistent with the terms on which Ipulse were instructed. Ms. Johnson, in her submissions, explained, firstly, that the foreign currency charges levied by third party agents were converted to sterling at the date at which the invoices were received; and secondly, a mark-up of 6% was added to cover the currency fluctuations and such matters as bank charges. She described this as “transparent” a somewhat optimistic description, given that, so far as appeared before me, this was the first time it had been explained to Ensygnia at all.

[48]I regard the question as to whether, in the circumstances, a mark-up is chargeable as one which is capable of giving rise to a real dispute. The e-mail exchange between Mr. Rees and Mr. Harris indicates that what was being quoted to Ensygnia gave every appearance of being a passing on of actual costs and did not contain any reference to the possibility of a mark-up. Ms. Johnson says that since the e-mail, as I have indicated, was subject to the terms and conditions the quotation had to be read as subject to the possibility of a mark-up, but I regard it as a nice question whether in these circumstances it is to be regarded as subject to a mark-up or as a provision that displaces it. To this extent, I would accept that there is a substantial dispute between the parties.

[49]Another matter that was dealt with in argument is that some of the invoices charge more than £620. On the basis explained to me by Ms. Johnson, and as dealt with by Mr. Rickard in his evidence, the £620 was the charge for the initial stage of the foreign country registration, something which needed to be initiated, as I have said, within a specific time limit. But, as Mr. Rickard explains, any application of that type is likely to generate further work, as he puts it, automatically. The examples he gives are that documents and reports sent in from foreign attorneys have to be dealt with, documents have to be notarised, the patent office issue official communications that require responses and/or reporting with certain deadlines, for example, examination reports, and he says that as the applicant and Olswang are well aware there are many stages to the process. Indeed, his case is that it was because there was going to be substantial further work that Ensgynia were given a preferential rate of £620 for the initial filing.

[50]I accept that on the face of the documents the £620 only covers the initial filing. There is nothing in the e-mail exchange to suggest that Ipulse was agreeing to do any further work within that charge. On the other hand, I do not find it obvious on the material before me either that the further work no doubt carried out was specifically requested, or that it is obvious from the circumstances, as Ms. Johnson at one stage submitted, that since further work would be generated there would be an implied retainer to do whatever work was required until the retainer was terminated. I regard those as matters which are arguable in both ways, and if that had been the only issue I would have regarded those matters as bona fide disputed.

[51]Another matter that was raised in the evidence was work carried out after 17th July. There is a dispute as to whether Ipulse was entitled to charge for such work. On 17th July they were disinstructed. Mr. Harris’ evidence identified four invoices which he regarded as falling into this category. They are number 22, svu39991, which was in the sum of £120, and which Mr. Johnson accepted related to work after the disinstruction of Ipulse, and numbers 25, 26 and 27, svu40053, 54, and 59 respectively, all issued in August. Mr. Harris understood from the narrative that they related to work undertaken after Ipulse was disinstructed. Ms. Johnson said that in fact those latter three related to work carried out earlier. That is not something which it is possible to resolve on the state of the evidence before me. Ms. Johnson, realistically, accepted that on the evidence there was a dispute as to whether Ensygnia was instructing Ipulse to carry out any work after 17th July, and to that extent the invoice the sum of £120, number 22, is accepted to be subject to dispute.

[52]Two further small points are made in the evidence. Firstly, Mr. Harris identifies the last invoice, number 29, svu41279, as being concerned with e-mails to Mr. Maltby. Mr. Maltby is the legal officer of Ensygnia, and Mr. Harris draws the inference that these are e-mails in relation to the very dispute which is the subject of these proceedings and says that Mr. Rickard is not entitled to charge fees for work in connection with the dispute which has arisen, nor is he entitled to charge interest. I accept that there is, at the lowest, a real doubt whether Ipulse is entitled to charge for its own time in dealing with the dispute. Interest, however, is chargeable under the terms and conditions and, as I have said, on the evidence before me there is no good reason for thinking the terms and conditions were not incorporated.

[53]Finally, there is an issue as to whether there is a duplicate bill. Two of the invoices refer in the narrative to filing in the UAE. They are number 2, svu39355, and svu48834, number 23. Mr. Harris, unsurprisingly, says that that appears to be a duplication. Mr. Rickard says that one of them was in fact for filing in Egypt, although he does not explain why it refers to the UAE. On the evidence before me I cannot resolve that matter, so to that extent, again, there would be a dispute.

[54]That is sufficient to indicate my views in relation to the matters that have been argued before me. I accept, as I have just explained, that there are a number of matters which do contain disputes of substance, but for the reasons that I have sought to give the disputes that have been identified with success are not sufficient to deprive Mr. Rickard of his status as a creditor of Ensygnia, and not sufficient to justify granting injunctive relief to restrain him from presenting a petition based on those matters which I have found not to be disputed on substantial grounds. ____________