Microsoft Ireland Operations Ltd v Arabic Computer Systems and National Technology Group

• Jurisdiction: Ireland
• Judge: Mr. Justice David Barniville
• Judgment Date: 29 July 2021
• Neutral Citation: [2021] IEHC 538
• Court: High Court
• Docket Number: [2018 No. 1057 S.]

Between

Microsoft Ireland Operations Limited

Plaintiff

and

Arabic Computer Systems and National Technology Group

Defendants

[2021] IEHC 538

[2018 No. 1057 S.]

THE HIGH COURT

COMMERCIAL

Summary judgment – Statement of claim – Amendment – Plaintiff seeking to deliver an amended statement of claim – Whether the defendants would be unfairly prejudiced if the amendments were permitted

Facts: The plaintiff, Microsoft Ireland Operations Ltd, sought summary judgment against the first defendant, Arabic Computer Systems (ACS), in the sum of US$31,539,677.95 (or the euro equivalent of that sum) on foot of two written contracts which it claimed were entered into between the plaintiff and ACS on 1st September, 2014 and on 1st September, 2016. The plaintiff sought summary judgment against the second defendant, National Technology Group (NTG), on foot of a guarantee in writing dated 19th December, 2011, under which it was alleged that NTG agreed to guarantee certain debts allegedly due by ACS to the plaintiff. The plaintiff applied to the High Court for an order pursuant to O. 28, r. 1 and/or O. 28, r. 12 RSC permitting the plaintiff to deliver an amended statement of claim and for an order varying the directions made by the court on 13th November, 2020. The defendants opposed the application on two related grounds. First, they contended that to permit the amendments would be to deprive the defendants of an opportunity to rely on a defence they would have under the Statute of Limitations, 1957 (as amended) and that they would, therefore, be unfairly prejudiced if the amendments were allowed. Second, they contended that the court should refuse to permit the proposed amendments on the grounds that it would be unjust to the defendants to do so as it would deprive the defendants of the opportunity they would have had on an application by the plaintiff under O. 11 RSC for leave to issue and serve the proceedings containing the matters the subject of the proposed amendment of contending that the plaintiff had not demonstrated the existence of a good cause of action under O 11, r. 5 RSC, as the claim the subject of the proposed amendments would be statute barred.

Held by Barniville J that neither ground of objection should be sustained. He concluded that, for the purposes of the amendment application, and bearing in mind the requirement to exercise judicial restraint, the defendants’ contention that a claim based on the matters sought to be inserted in the proposed amended statement of claim would, or might, be statute barred was not arguable. He concluded, therefore, that the defendants would not be unfairly prejudiced if he were to permit the plaintiff to amend the statement of claim in the manner proposed. He was satisfied that it was appropriate to do so without making any special provision or direction as to the time or circumstances in which such an amendment should come into effect. In his view, it was appropriate for the normal rule or practice that the amendment takes effect from the date of the commencement of the proceedings to apply. He believed that it was appropriate for him to adopt that course of action in light of the particular facts of the case and that there was no reason for him to depart from the normal approach. Having regard to his conclusions in relation to the first ground of objection raised by the defendants, he held that the central plank of the second ground of objection falls away.

Barniville J held that he would make an order giving the plaintiff liberty to deliver an amended statement of claim in the terms of the draft amended statement of claim exhibited at tab 7 of the booklet comprising exhibit “JDPM1” to the affidavit sworn by Mr Moran on behalf of the plaintiff on 20th April, 2021. Barniville J held that he would also vary the directions made by the court on 13th November, 2020 to make provision for the delivery of the amended statement of claim and for the delivery of further pleadings by the defendants.

Application granted.

JUDGMENT of Mr. Justice David Barniville delivered on the 29 ^th day of July, 2021

Index

1. Introduction	1
2. Summary of Decision	2
3. The Plaintiff's Claim	2
4. Relevant Procedural History and Evidence	6
5. Plaintiff's Amendment Application	9
6. Defendants' Objections to Amendment Application	14
7. Legal Principles Applicable to Amendment Application	15
8. The Defendants' First Ground of Objection	23
9. The Defendants' Second Ground of Objection	29
10. Conclusions	33

Introduction

1 . This is my judgment on an application by the plaintiff, Microsoft Ireland Operations Ltd, for an order pursuant to O. 28, r. 1 and/or O. 28, r. 12 RSC permitting the plaintiff to deliver an amended statement of claim and for an order varying the directions made by the court on 13 ^th November, 2020.

2 . The defendants, Arabic Computer Systems (“ACS”) and National Technology Group (“NTG”), opposed the application on two related grounds. First, they contended that to permit the amendments would be to deprive the defendants of an opportunity to rely on a defence they would have under the Statute of Limitations, 1957 (as amended) (the “Statute”) and that they would, therefore, be unfairly prejudiced if the amendments were allowed. Second, they contended that the court should refuse to permit the proposed amendments on the grounds that it would be unjust to the defendants to do so as it would deprive the defendants of the opportunity they would have had on an application by the plaintiff under O. 11 RSC for leave to issue and serve the proceedings containing the matters the subject of the proposed amendment of contending that the plaintiff had not demonstrated the existence of a good cause of action under O 11, r. 5 RSC, as the claim the subject of the proposed amendments would be statute barred. It can readily be seen, therefore, that both objections are related and involve a consideration of the defendants' contention that they would be unfairly prejudiced if the amendments were permitted as they would be deprived of the opportunity of relying on a defence which they say they have, or at least might have, under the Statute.

Summary of Decision

3 . For reasons which I explain in this judgment, I have concluded that the plaintiff is entitled to the orders sought permitting it to deliver an amended statement of claim in the terms of the draft exhibited to the plaintiff's grounding affidavit. I am satisfied that having considered the case as originally pleaded by the plaintiff, the nature of the amendments sought to be made, the relevant legal principles applicable to amending pleadings, including those applicable where a defendant contends that the relevant amendment will deprive it of a defence which it has or might have under the Statute, and the application of those principles to the undisputed facts, the plaintiff has clearly established its entitlement to the orders sought. I am satisfied that it would be an appropriate exercise of the court's discretion under O. 28, r. 1 RSC and would be consistent with the applicable legal principles to make the orders sought by the plaintiff.

The Plaintiff's Claim

4 . I should state at the outset that I have previously delivered a lengthy judgment in these proceedings on an application by the defendants for orders under O. 12, r. 26 RSC setting aside service of the proceedings on the defendants in the Kingdom of Saudi Arabia or, alternatively, discharging the order of the High Court (McDonald J) of 21 ^st August, 2018, permitting service of the proceedings on them: Microsoft Ireland Operations Ltd v Arabic Computer Systems and National Technology Group [2020] IEHC 549 (judgment delivered on 30 ^th October, 2020) (the “jurisdiction judgment”). In that judgment, I refused the defendants' application and concluded that the order made by the High Court (McDonald J.) on 21 ^st August, 2018 permitting service of notice of proceeding on the defendants in the Kingdom of Saudi Arabia under O. 11. r. 1(e)(iii) RSC was properly made and that the defendants were not entitled to orders under O. 12, r. 26 RSC setting aside the service effected upon them on foot of that order or discharging the order itself. It appears that the defendants have appealed to the Court of Appeal from a part of the judgment concerning the law applicable to determining the proper authority of the person who signed some of the relevant agreements between the parties. However, the fact and extent of that appeal is not relevant for present purposes.

5 . The plaintiff commenced the proceedings by a summary summons which was issued on 24 ^th August, 2018. The claim in the proceedings is for judgment against both of the defendants in the sum of US$31,539,677.95 (and/or the euro equivalent of that sum). As appears from the special indorsement of claim to the summary summons, the plaintiff expressly referred to two contracts in writing between the plaintiff and ACS. The first was a contract in writing dated 1 ^st September, 2014, under which it is alleged the plaintiff permitted ACS to sell certain Microsoft products called “licensed offerings” in its territory for the period from 1 ^st September, 2014 to 31 ^st August, 2015. That contract was defined in the Summary Summons (and later in the Statement of Claim) as the “First Microsoft Channel Partner Agreement”. It was pleaded that that agreement was extended on 22 ^nd July, 2015 to 31 ^st January, 2016 and was amended and further extended on 1 ^st February, 2016 to 31 ^st August, 2016.

6 . It was pleaded that the plaintiff entered into a further Microsoft Channel Partner Agreement with ACS on 1 ^st September, 2016 (which was defined as the “Second Microsoft Channel Partner Agreement”) which permitted ACS to continue to sell the “licensed offerings”. The term of the Second Microsoft...