Lifestyle Management Ltd. v Frater [2010] EWHC 3258 (TCC)

[2010] EWHC 3258 (TCC)Case No HT-10-453
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 10/12/2010
Before
MR JUSTICE EDWARDS-STUART
Between
Lifestyle Management LtdClaimantFraterDefendant
Mr M Richardson (instructed by Cohen Cramer) for Claimants for Defendants not representedHearing Hearing dates: 9 th December 2010
Judgment
[1]Yesterday evening I granted an injunction to the Claimants against the Respondent in the following terms:(1) Requiring the Respondent to direct all enquiries to three named websites to a blank page (so that a person going onto any of the sites will not see the material presently on it).(2) Requiring the Respondent to deliver up to the Claimants any confidential client database in his possession.(3) Restraining the Respondent from making use of any other confidential information of the Claimants.[2]Owing to the lack of time I was only able to give the briefest of reasons for granting the injunction (which may not have been recorded). The purpose of this brief judgement is to give those reasons in a little more detail so that the Respondent may know why the injunction has been granted.[3]The Claimants are companies registered in Kenya and the British Virgin Islands, respectively. The Respondent lives in Scotland.[4]The Claimants carry on business in, I assume, Kenya as financial advisers to expatriates from the United Kingdom working, mainly, in Africa. The Claimants engaged the Respondent as an agent. The terms of that contract are not relevant to this application save for the fact that it contained no jurisdiction clause. That contract has now been terminated. The Respondent claims that he is entitled to commission under the terms of the contract which the Claimants have not paid. The Claimants deny that the Respondent is owed any commission, or at least that he is owed as much as he claims.[5]I have read two witness statements from Mr Leslie Symons, a Senior Manager of the Claimants who states that he is authorised to give evidence on their behalf. The Claimants have a website with the domain name "offshorelsm.com". According to this evidence the Respondent has registered the domain names "offshorelsm.net", "offshorelsm.org" and "offshorelsm.co.uk". If one goes to these websites there is on at least one of them a home page that bears a very close resemblance to the home page of the Claimants’ website. On one, if not both, of the others the Respondent has set out confidential extracts of the Claimants’ presentation (or method of presentation) to clients and a photograph of the members of the Claimants’ staff. These websites contain material that it is arguably defamatory of the Claimants and which is certainly calculated to damage their business.[6]The Respondent has made it quite clear that he intends to "cyber squat" using these websites until the Claimants pay the sum that he is currently demanding. The terms of his e-mails to the Claimants make it clear beyond any doubt that his intention is to injure their business and to go on doing so for as long as his demand for payment is not met. One of the websites says this in terms.[7]Mr Matthew Richardson, who appeared for the Claimants on this adjourned without notice application, submits that the Respondent is using these domain addresses, together with the simulation of the Claimants’ home page, to deceive clients of the Claimants, or companies and organisations in England who may refer clients to the Claimants, into going onto one or other of his websites in the belief that they are the Claimants’ website and then using the content of those websites to damage the business of the Claimants.[8]Mr Richardson submits that the Respondent's conduct amounts to the tort of using unlawful means to injure another or is a form of reverse passing off, in the sense that having deceived potential clients to go onto his websites they are then exposed to information that is intended to damage or to undermine the credibility of the Claimants’ business.[9]In my judgment the conduct of the Respondent as disclosed in the evidence before me establishes the threefold requirement of(1) a reputation (or goodwill) required by the Claimants in their domain name"offshorelsm.com",(2) a misrepresentation by the Respondent’s use of domain names calculated to lead potential clients of the Claimants into thinking that his three websites are websites of the Claimants and(3) damage to the Claimants (see Clerk and Lindsell on Torts, 20th edition, paragraph 26-03).[10]Mr Richardson has also referred me to the case of British Telecommunications plc v One in a Million Ltd [1999] 1 WLR 903, a case which the defendants registered the claimants’ company names as domain names as part of a scam to gain money from the legitimate owners. Aldous LJ said, at 920:
“In my view there can be discerned from the cases a jurisdiction to grant injunctive relief where a defendant is equipped with or is intending to equip another with an instrument of fraud. Whether any name is an instrument of fraud will depend upon all the circumstances. A name which will, by reason of its similarity to the name of another, inherently lead to passing off is such an instrument. If it would not inherently lead to passing off, it does not follow that it is not an instrument of fraud. The court should consider the similarity of the names, the intention of the defendant, the type of trade and all the surrounding circumstances. If it be the intention of the defendant to appropriate the goodwill of another or enable others to do so, I can see no reason why the court should not infer that it will happen, even if there is a possibility that such an appropriation would not take place. If, taking all the circumstances into account the court should conclude that the name was produced to enable passing off, is adapted to be used for passing off and, if used, is likely to be fraudulently used, an injunction will be appropriate. It follows that a court will intervene by way of injunction in passing off cases in three types of case. First, where there is passing off established or it is threatened. Second, where the defendant is a joint tortfeasor with another in passing off either actual or threatened. Third, where the defendant has equipped himself with or intends to equip another with an instrument of fraud. This third type is probably a mere quia timet action.”
[11]Whilst the facts of this case are not the same as those in One in a Million, it seems to me that the essential ingredients of a deceptive use of a company name with an acquired goodwill in order to damage the owner of that name are present here.[12]The problem that troubled me when this application first came before me last week was whether or not I had jurisdiction to entertain the application. As I have mentioned, the Respondent lives in Scotland. Schedule 4 to the Civil Jurisdiction and Judgements Act 1982 provides that persons domiciled in a part of the United Kingdom shall be sued in the courts of that part unless the case comes within rules 3 to 13 of the Schedule.[13]Mr Richardson relies on rule 3(c). This provides that a person domiciled in part of the United Kingdom may, in another part of the United Kingdom, be sued . . . in matters relating to tort "in the courts for the place where the harmful event occurred or may occur".[14]Mr Richardson submits, and I accept, that in the circumstances that I have already described potential clients of the Claimants, or companies or organisations who employ such clients and with whom I am told the Claimants enjoy a relationship, may go on to one of the Respondent’s websites in the mistaken belief that it is the website of the Claimants - thereby being deceived - and will then be put off by what they find there. This, he submits, is a harmful event within the meaning of rule 3(c) of Schedule 4 of the 1982 Act with the result that the claimants can sue the Respondent in the courts of England and Wales.[15]I have been persuaded on the evidence before me that this submission is a good one. The evidence indicates also that the Respondent is in possession of the Claimants’ confidential database of their clients.[16]Accordingly, I am satisfied that this Court has jurisdiction to entertain the application and that interim relief should be granted, against the usual undertakings, in the form that I have set out above.[17]I am not prepared to make the order requiring the Respondent to relinquish his interest in the three websites that I have identified, or to transfer the domain names to the Claimants, without giving the Respondent an opportunity to be heard. I have therefore adjourned that part of the application to the return date.