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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> BCT Software Solutions LT v Arnold Laver & Co [2002] EWCA Civ 1033 (11 July 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1033.html Cite as: [2002] EWCA Civ 1033

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IN THE SUPREME COURT OF JUDICATURE
CIVIL DIVISION
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
(Mr Kevin Garnett QC
sitting as a Deputy High Court Judge)

		The Royal Courts of Justice The Strand London Thursday 11 July 2002

Thursday 11 July 2002

1. LORD JUSTICE ROBERT WALKER: This is a renewed application for permission to appeal from a judgment of Mr Kevin Garnett QC, given on 22 May 2002 when he was sitting as a Deputy Judge of the Chancery Division. The applicant for permission is a company called BCT Software Solutions Limited ("BCT"), the claimant below. The respondent to the appeal would be a company called Arnold Laver & Co Ltd ("Laver"), the defendant below.
2. BCT claimed as the assignee or successor of another company, called BCT Business Systems Ltd ("Old BCT"). Old BCT had gone into receivership. While it was in business it traded as a licensor of its own software products and as a sub-licensor of other software products, and as a provider of maintenance services for the software. Laver is a timber merchant which supplies trade and DIY outlets.
3. In 1997 Laver's manager director, Mr Andrew Laver, became interested in obtaining a software package for accounting and stock control purposes. The outcome was a number of contracts between Old BCT and Laver. They were principally contained in or evidenced by three quotations, which where certainly signed by Laver (whether or not they were also signed by Old BCT), one on 26 October 1998, another in January 1999 and another on 22 June 1999. There may have been other transactions as well, but those are the three important contracts. Mr Peter Susman QC, appearing on this application with Mr Tim Bergin, has submitted that in fact the contracts should be regarded as wholly written contracts, albeit arrived at after oral negotiations. The judge, as I understand his judgment, treated the contracts as being partly written and partly oral. In any event, acute controversy has arisen as to the terms of the contracts.
4. The principal issue, put in the simplest and starkest terms, was whether, under the contract, Laver acquired (as it contended) an indefinite licence to use the computer software; or (as BCT has contended) there was a terminable licence which terminated when Laver decided that it no longer wished to use BCT's maintenance and support services. That occurred on 19 December 2000, about three months after BCT had, on its case, stepped into Old BCT's shoes so far as Laver was concerned.
5. The dispute led to this litigation, in which BCT's principal claim was for substantial licence fees or, alternatively, substantial damages (of the order of £370,000) for breach of contract and also flagrancy damages under section 97 of the Copyright Designs and Patents Act 1988. The deputy judge dismissed this claim, so far as it was extant, after a limited compromise reached shortly before the hearing, the details of which I need not go into.
6. What I have called "the principal issue" depended in very large part upon whether Old BCT's newly-introduced standard terms (which were referred to as SLTSA) had been incorporated into the contracts, when it is plain that the parties themselves had approached the matter on a different basis, that is as a price for a software package together with (as the deputy judge quoted from a document which had been before the parties on 7 April 1998 at the beginning of their negotiations) "ongoing support - charged at 20% from day one." The standard terms, by contrast, plainly provided that any licence granted by Old BCT should terminate if the agreement was terminated, as it could be terminated by notice given by the licensee or in the event of certain breaches by either side. The deputy judge emphasised the drastic effect of these standard terms. He put it like this:

"It will be apparent that these terms would create an entirely different regime from that which existed previously, particularly in the way in which use of the software was licensed. Under the previous regime a client paid only an initial sum for the licence and could continue to use it whether or not support services were supplied. Under the new regime, the licence was likely to last only so long as a customer continued to take and pay for support services. The commercial superiority of the new regime from BCT's viewpoint is obvious."

7. The deputy judge went on to say that the change of culture marked by the new standard terms was "patchy". In particular, Mr Frank Donno, one of Old BCT's salesman who dealt with Laver, was unaware of the conditions and did not have them installed on his laptop as Old BCT's salesmen were meant to. Old BCT continued to use (both internally and to its customers) the expression "CSA" (which, as I understand it, meant Customer Services, or possibly Support, Agreement), which was understood to be back-up in support of a package acquired by the payment of a once-for-all fee.
8. I should add at this point that the judge heard a lot of oral evidence. Some of the witnesses may have caused the judge some surprise when he saw which side they were being called by. Mr Donno and his former managing director at Old BCT, Mr Robert Collins, both gave evidence for Laver; by contrast, Mr Glyn Haynes, the former head of IT at Laver, gave evidence for BCT. The deputy judge commented, without any obvious hint of irony, that these three witnesses had no apparent interest in the outcome of the proceedings.
9. The judge, in a clear and thorough judgment, dealt with the commercial background to the formation of the contracts, the particulars of the quotations and the circumstances in which they were given and signed, and the events which followed after Old BCT went into receivership on 15 September 2000. BCT acquired the undertaking from the receivers and the judge records that it tried to reassure customers that it was "business as usual". However, in December, Laver gave notice to terminate the support services and on 3 January 2001 BCT, under its new management, gave notice that it would be repossessing the software package. The deputy judge commented:

"This clearly came as bomb-shell to Arnold Laver. Whatever New BCT may have thought or suspected at the time, it was not really suggested before me that Arnold Laver had intended to give notice bringing their licence to use the software to an end. All they wished to do was to end the provision of support services."

10. After referring briefly to the relevant principles of law, as to which there is no dispute, the judge stated his conclusions as follows:

"43. To summarise the relevant points in this case as to what was agreed between the parties before the contracts were formally concluded by acceptance of the quotations:

a. Specific, single payments were to be made for each of the various items of software.

b. Agreement was also reached for the provision of software support, at an annual price calculated as a percentage of the software price.

c. No one on BCT's side suggested that further sums would be payable for the software as such. No one on Arnold Laver's side had any reason to think that they might be.

d. No one on BCT's side suggested that Arnold Laver's right to use software was conditional upon continuing to take and pay for software support. No one on Arnold Laver's side had any reason to think that it might be.

e. The quotations on their face provided for a single sum to be payable for items of software. In the case of the Great Plains quote of January 1999, this was reinforced by the use of the expression 'one-off payment', but this is implicit in the other quotations in the absence of reference to further payments.

f. Many of the quotations make no reference to the provision of support. In those that do, the price of software is not tied to the price of software support. They are treated as separate items.

g. For what it is worth, the subsequent invoices are consistent with what went before.

44. From this summary of what was either said or written, or not said or not written, my conclusion is that in the case of each contract the parties had expressly agreed and were ad idem about the terms on which they would contract, namely that a single payment would be made in respect of each piece of software, and that therefore no further payment would be due for such use, and the right to use the software was not dependent on the continued taking of and payment for support services. In return for that single payment, Arnold Laver would have a licence to use the software for the purposes of their business. Software support would be supplied at a price based on a percentage of the software price. Nothing was orally agreed about termination of the software support services.

45. The SLTSA standard terms are therefore inconsistent with what was agreed in that they make the licence to use the software dependent on the continuing payment for support services, and provide for a right to call for delivery up of the software and different terms of payment when support ceases. To the extent that the SLTSA terms are inconsistent they must therefore be rejected."

11. The judge therefore dismissed the claim.
12. The judge saw and heard the witnesses, and in a case of this sort an appeal could in practical terms succeed only on a point of law. Mr Susman and Mr Bergin have realistically recognised that.
13. Mr Susman has, in an attractive and skilful argument, submitted that the judge was wrong. The steps in his argument are as follows. First, that this was a case where quotations given to Laver by Old BCT were signed by Laver and formed the basis of the contracts. That is not in dispute. Second, that each of the quotations referred to standard terms. Again that is not in dispute. The third step in these submissions is the basic rule of contract law, which again is not in dispute, that if a party signs a written contract incorporating standard terms, the party is on its face bound by those terms whether he or she has read them or not. Authority is hardly necessary for that proposition, but Mr Susman referred to the well-known case of Lestrange v F Graucob, Limited [1934] 2 KB 394. It is, however, accepted that the Lestrange v F Graucob principle does not apply if the standard terms to be incorporated are actually in conflict with express terms of the contract. Mr Susman's essential point is that, although the judge may have thought that that principle applied, there was not on his findings any express term (as opposed to any implicit understanding) which was in conflict with the standard terms.
14. Looking at paragraphs 43-45 of the judgment with that point in mind, I accept that there are some sentences in the judge's judgment, especially in paragraphs 9 and 15, in which the deputy judge did refer to what was not said on particular occasions of meetings between those who were negotiating; and the importance which the judge attached to what was not said is reflected in subparagraphs c. and d. of paragraph 43 of his judgment. However, it seems to me that there are also positive findings in the other subparagraphs of paragraph 43, which amply support the judge's overall conclusions in paragraphs 44 and 45 of his judgment.
15. The judge had to investigate the making of a series of commercial contracts which, to my mind, he rightly regarded (contrary to Mr Susman's submission) as being based on written quotations but also containing oral terms which were the subject of a good deal of discussion. It was impossible after the passage of time for witnesses to recollect, or for the judge to make findings about, the precise words which were spoken at numerous meetings. However, I can see no error of law in the judge's approach. I do not accept that the judge's conclusion was in any way outside the main current of contract law or that it establishes any new principle.
16. For these reasons, despite Mr Susman's persuasive submissions, I maintain the conclusion which I first reached when I looked at the papers, that an appeal in this case would have no real chance of success.
17. I dismiss the application.
ORDER: Application refused