118 Data Resource Ltd v IDS Data Services Ltd & Ors

A commercial agreement should be construed to give it practical effect where the parties clearly intended it to bind. The court may imply machinery needed to make an agreement workable, especially where it can build on an obligation to act reasonably. It must, however, construe the agreement as a whole and cannot rewrite it by supplying safeguards, restrictions or procedures which the parties have omitted. A contractual inspection clause permitting access to premises for compliance purposes does not necessarily confer unrestricted access to commercially sensitive information. Specific performance requires sufficiently certain obligations and will not be granted where damages are an adequate remedy. Summary judgment is inappropriate where the contractual right and the relief sought remain materially uncertain.

The claimant, 118 Data Resource Ltd, licensed its business database to IDS Data Services Ltd, a commercial rival. The agreement restricted IDS’s use and sublicensing of the database and required IDS to permit an authorised representative of 118 to enter premises where copies of the database were used, on reasonable notice, to ascertain compliance.

118 sought summary judgment for specific performance of that inspection provision. It argued that the clause entitled its representatives to inspect documents and materials at IDS’s premises, including information concerning sublicensing. IDS contended that the clause was narrower and did not permit access to commercially sensitive customer information. The central issues were the true construction and certainty of the clause, and whether specific performance or early disclosure should be ordered.

1. Application dismissed. The claimant had not established a sufficiently clear contractual right to the inspection sought and was not entitled to specific performance on summary judgment.
2. Commercial parties’ agreements should be construed so as to give them meaning rather than render them void for uncertainty. The court may imply machinery into an otherwise complete agreement where an obvious gap must be filled to make the contractual mechanism workable. It must nevertheless examine the agreement as a whole and avoid rewriting the parties’ bargain.
3. Clause 4.7 permitted 118 to enter IDS’s Glasgow office, where the database was stored and used, for limited purposes connected with policing compliance concerning the storage and use of the database. The reference to “copies” was treated as an obvious error in light of clause 3.2.
4. The clause did not give 118 carte blanche to search the premises. It did not confer the additional right, absent from clause 4.6, to inspect commercially sensitive information such as customer identities, prices or individual sublicence terms. Any inspection would also require restrictions concerning irrelevant material, legal professional privilege and use of information for other purposes.
5. The agreement supplied no workable mechanism governing the scope of a computer search, treatment of privileged material, or steps following discovery of an alleged breach. Filling those gaps would substantially rewrite the agreement. The court therefore declined to grant the relief sought.
6. Even if 118’s wider construction had been accepted, specific performance would require a higher degree of certainty than is needed to avoid uncertainty, support damages or obtain other contractual relief. 118 had also failed to show that damages were inadequate. Early disclosure did not arise because the information sought was not shown to fall within clause 4.7.