PROVING THINGS 182: FAILING TO PROVE A CONTRACT WAS SIGNED AND GETTING DAMAGES OF £1: NOT A GREAT RESULT FOR A CLAIMANT

The judgment of JJH Melissa Clarke, sitting as a High Court Judge, in DPA (London) Ltd v D’Aguanno & Ors [2020] EWHC 2374 (IPEC) is a classic example of failing to prove key matters in a claim. Firstly the claimant failed to prove that the defendants had signed contracts with restrictive covenants, secondly it failed to prove it had suffered loss and received damages of £1.00.

THE CASE

The claimant brought proceedings alleging that the two defendants had breached restrictive covenants and copyright when they set up a company.  The defendants denied that they had signed the contracts.   One defendant admitted that some work had been retained after he had left but denied using it.  The judge found that the contracts had never been signed or agreed. She also found that there had been a breach of copyright in one defendant taking some material for his portfolio, however this material had not been used and no loss had occurred. Damage of £1 were awarded to the claimant.

THE JUDGMENT ON THE CONTRACT CLAIM

The judge considered the argument that the defendants were subject to restrictive covenants.  She found that there was no basis for the claimant’s case in this regard.

1. Mr Padalino’s written evidence was that Mr D’Aguanno was offered a three-month probationary period, after which he offered him a “permanent position” at DPA. He says that he issued a contract to him after his 3-month probationary period and exhibits this purported contract to his second witness statement. It is not signed by Mr D’Aguanno.

2. Mr D’Aguanno says that DPA never provided this document to him and he had never seen it until the filing of Mr Padalino’s second witness statement a few weeks before trial, to which it was appended. Mr D’Aguanno says that after his 3-month trial period ended in February 2017, he asked Mr Padalino for an employment contract, but Mr Padalino would not agree to this. After that, Mr D’Aguanno registered with HMRC as self-employed, invoiced DPA on a monthly basis, and paid his own taxes annually as self-employed. This continued throughout his employment. DPA now accepts that Mr D’Aguanno was not an employee, but always carried out work for DPA as a self-employed contractor.

3. Mr Padalino says that Ms Muller also worked at DPA pursuant to a contract which he says was drawn up on 22 August 2016 and issued to her on 28 December 2016. The copy that he relies on is signed by him, but not Ms Muller. In cross-examination he was unable to say if it had ever been signed by Ms Muller, saying it should have been, but that other DPA staff members were responsible for ensuring it was.

4. Ms Muller denies ever having been provided with a copy of the purported contract or signing it. Ms Muller says that after her trial period, like Mr D’Aguanno, she asked to have an employment contract, but Mr Padalino refused. Accordingly, she invoiced DPA monthly for the work she had done at an agreed hourly rate. She says that after that initial conversation there was never any mention of a contract and she was never provided with a contract, or restrictive covenants for her to agree or to sign. She says that even if she had been asked to agree to restrictive covenants she would have refused, as during the time she was working on a self-employed basis for DPA she also had some of her own local clients to whom she provided architectural services on her own account, and the restrictive covenants would have prevented that. She describes Mr Padalino’s evidence on this point as “an absolute fabrication“.

5. Ms Muller says on 28 December 2016, the date Mr Padalino says the contract was agreed between them, she was in the middle of annual leave (from 23 December 2016 to 2 January 2017) and was in London on a day out with her husband and young children. She shows a credit card statement showing the train ticket to London she bought that day. She says she certainly was not agreeing contractual terms with Mr Padalino.

6. I found Ms Muller to be a straightforward, credible and honest witness. I found her evidence that she never agreed or even saw the terms of the purported contract relied on by DPA to be compelling and supported by the evidence she provided about being on a day out in London during a period of annual leave. Conversely, Mr Padalino’s evidence about the purported contract with Ms Muller was less than convincing. He could not explain why the document appeared to have been created many months before it was purportedly agreed with Ms Muller, why Ms Muller had not signed it (or, if she had, why DPA had no evidence of a signed copy), and he could not provide any detail of the circumstances in which he purportedly agreed the contract with Ms Muller ready for signature on 28 December 2016.

7. I also find it both unsatisfactory and concerning that DPA also initially sought to rely on a contract with Mr D’Aguanno which he equally convincingly said he had never seen before these proceedings, and which DPA no longer relies upon.

8. I prefer the evidence of Ms Muller and Mr D’Aguanno and find that neither had been provided, or agreed, the purported contracts at any time. In particular, I do not believe that Mr Padalino’s evidence about the purported contract with Ms Muller was honestly given. I think it is more likely than not that his evidence, and the document purportedly signed by him, were fabricated by Mr Padalino in order to seek to improve DPA’s position in this litigation.

9. Accordingly, I am satisfied that Ms Muller is not bound by the Restrictive Covenants and so it is not necessary for me to go on to consider whether she has breached them. That disposes of issues 9 – 12 inclusive.

THE JUDGMENT ON QUANTUM

It was admitted that some material had been copied and stored. It was denied that any use had been made of this. They were kept as part of a portfolio. The judge accepted this and found that there had been no loss to the claimant.

1. 1. Although the trial before me was liability only, by order of HHJ Hacon, both parties agreed at trial that: (i) if I was to conclude, as I have done, that the only copyright infringement/breach of contract by the Defendants or any of them was that admitted by Mr D’Aguanno in relation to the ADA Stored Works; and (ii) if I accepted his evidence, as I have done, that he had made no further use of the ADA Stored works; it would be disproportionate to have a full quantum trial, and I should assess damages now.

   2. Ms Bollard for the Claimant accepted in closing submissions that any damages would be of limited scope, as there is no suggestion that Mr D’Aguanno’s actions in respect of the ADA Stored Works gave rise to the specific cost of requiring Comoglio to recreate the missing CGIs. She submits that it would not be appropriate for the court to award no damages, but accepts they will be limited.

   3. The Defendants’ primary submission is that Mr D’Aguanno’s retention of material for his portfolio caused no loss to the Claimant as the material was put to no commercial use.

   4. I agree that there is no loss to DPA arising from the actions of Mr D’Aguanno in respect of the ADA Stored Works. Nevertheless, it amounts to copyright infringement and breach of contract, so I award nominal damages of £1 to be paid by Mr D’Aguanno to DPA.

CONCLUSION

1. Mr D’Aguanno shall pay DPA £1 damages for the admitted breach of copyright and breach of contract in respect of the ADA Stored Works.

2. The remainder of the claim shall be dismissed.