Summary

Whether vesting order should be made under s.51 Trustee Act 1925 in respect of intellectual property vested in company immediately before its dissolution.

Facts

This was an appeal from an order of Laddie J on 15 November 1996 dismissing an application made by originating summons. The relief claimed was a vesting order under s.51 Trustee Act 1925 in respect of intellectual property vested in a company called Middleton Douglas Ltd immediately before its dissolution. The plaintiff, Mr Orwin, was a qualified design engineer who had, with his wife, set up the company. Work was produced by him as an employee of the company but by a special resolution, allegedly reflecting an earlier oral agreement between Mr and Mrs Orwin and the company, rights in the work were to revert to him if the company went into liquidation. The company went into creditors' voluntary liquidation and was dissolved in 1990. S.654 Companies Act 1985 therefore applied and property and rights held on trust for the company were deemed to be bona vacantia and therefore belonged to the Crown. Mr Orwin issued a writ in the Chancery Division claiming infringement of copyright against British Coal and other defendants. In order to succeed in those proceedings, Mr Orwin had to establish not only the copyright existed in the drawings and that it had been infringed but also that he was entitled to the rights alleged to have been infringed. His primary claim in those proceedings was as the legal owner of the copyright. He made an alternative claim to equitable ownership and issued the originating summons in order to ensure that, by the time the infringement case was heard, he had not only that equitable title but the legal title, which was required if he was to be entitled to final judgment for infringement (The Performing Right Society Ltd v London Theatre of Varieties Ltd (1924) AC 1). Laddie J dismissed the application on the basis that it was not possible for the court to determine what the terms of any oral agreement were and, therefore it was impossible to go beyond that and to give effect to a trust, the existence of which was dependent upon there having been an enforceable agreement in the first place. Mr Orwin appealed.

Held

(1) Laddie J was right to decline to exercise his discretion to make the vesting order but the order should be varied and the court would direct that these proceedings should be consolidated with the infringement proceedings and that the two should either be tried together or in some other manner as provided in a more detailed form by the master giving interlocutory directions for the trial of two sets of proceedings. (2) Although the court had a wide discretion under s.51 as to whether to make a vesting order, it only had jurisdiction to exercise that discretion in the specified cases. In this case to have jurisdiction the court would have to be satisfied that this was a case of the trust of the copyrights, that the company was the trustee and Mr Orwin was the beneficiary. It was doubtful whether the court had jurisdiction in this case as it was confined to the case of a legal title vested in a corporation (as trustee) which had been dissolved. That would not be the case if the legal title had been with Mr Orwin all the time (as he claimed in the infringement proceedings). (3) The circumstances of the case were such that a vesting order should not be made even if the court was satisfied on jurisdiction, without giving an opportunity to the defendants in the infringement proceedings to challenge Mr Orwin's evidence and to adduce evidence of their own and make submissions. This was not a plain case in terms of the copyright position. Order to be substituted for Laddie J's order that proceedings be consolidated with the infringement proceedings 1995-0 No.3347 and that further directions for the conduct of the consolidated proceedings be a matter for the master in the Chancery Division.

Judgment accordingly.