time limits

is it possible to extend the time limit for proceedings against a former director?

softwareIn IT Human Resources PLC v Land the question for the High Court was whether an employer was out of time for bringing proceedings for infringement of copyright against a former director.

David Land was employed by and was a founding director of IT Human Resources PLC (ITHR). The Company is a recruitment agency, specialising in personnel who provide IT services. Mr Land created some software called Interact. Nationwide Technology Recruitment Limited was another IT staff recruitment agency. Mr Land was not a director of that Company but he did work for it from time to time over a number of years. Nationwide was dissolved in 2011.

ITHR maintained that it owned the copyright in the Interact source code and database schema. Mr Land accepted that ITHR owned the sources code but not the database schema. ITHR claimed that he infringed the copyright by making the software available to Nationwide. Mr Land accepted that he had provided the software to Nationwide, but not on as many occasions as was alleged. He also accepted that, without permission from ITHR, his actions would have been in breach of copyright. However he maintained that he had permission, given orally by ITHR, on all occasions that he provided the software to Nationwide.

Mr Justice Morgan decided that if the database schema were part of the source code then they were owned by ITHR. If not, they were nonetheless part of the Interact system and the relevant agreement provided for the software in the system to be owned by ITHR. Consequently, either way, ITHR owned all the relevant rights.

It was found that Mr Land had provided copyright material to Nationwide on a number of occasions between 2000 and 2002. These acts amounted to copyright infringement. There may have been further infringements from mid-2002 to April or May 2003. the reason for uncertainty is that further functionality was added to the software from mid-2002. In the event Mr Justice Morgan concluded that the infringements continued until April/May 2003. There was a further infringement on 12 December 2006 when a backup of the database was made. He also found that Mr Land knew that it was not in the interests of ITHR to provide Interact to Nationwide.It followed that he was acting in breach of his fiduciary duties as a director of ITHR.

In general the time limit for commencing proceedings for copyright infringement (and most other causes of action) is six years from the accrual of the cause of action.
On that basis all the alleged infringements bar the 2006 backup would be out of time since the claim form in the proceedings was issued on 3 October 2011. That meant that acts of infringement before 3 October 2005 were outside the limitation period. However, section 32 of the Limitation Act provides that where action is based on the fraud or deliberate concealment of the defendant, or for relief from the consequences of a mistake, time does not run until the claimant discovers the fraud, concealment or mistake or could, with reasonable diligence, have done so. ITHR maintained that there was deliberate concealment and that the breaches were not discovered October 2009.

According to the relevant authorities for there to be deliberate concealment the defendant must have considered whether to inform the claimant of the relevant fact and decided not to do so. Further, the fact that the defendant decides not to disclose must be one which it was his duty to disclose or must at least be one which he would ordinarily have disclosed in the normal course of his relationship with the claimant. Equally, if someone deliberately conceals facts knowing that they are relevant to an actual or potential breach of duty, in the same way that the intentional suppression of information which it is known should be communicated pursuant to the duty, that is concealment.

In this case Mr Land was under a duty to disclose his conduct to ITHR if he either thought that it was in ITHR’s best interests to know of it or he would have considered that it was in ITHR’s best interests if he had thought about it in good faith. Accordingly he deliberately concealed facts relevant to his liability. This was knowing an intentional wrongdoing and therefore deliberate commission of a breach of duty. It followed that time did not start to run until October 2009 and the claims made were all in time.


Martin Malone

By Martin Malone

I'm a solicitor and the chief operating officer at Canter Levin & Berg. I was formerly head of the employment department.
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