AFD Software Ltd v DCML Ltd

Permission to appeal requires a reasonable prospect of successfully persuading the Court of Appeal on the proposed grounds. A claimant bears the burden of proving the contractual terms relied upon, including terms said to have been agreed orally. Where the trial judge has heard the witnesses, assessed their reliability and made findings that were open to him, disagreement with those findings will not ordinarily justify permission. Commercial improbability or an unexpectedly large financial consequence does not itself establish a realistic prospect that factual findings will be overturned.

AFD supplied postcode software to DCML for use in its business. After a four-day trial, the Chancery Division, Intellectual Property Court dismissed AFD’s claim. The judge found that DCML had honestly explained its intended use of the software, that AFD’s representative had advised on the applicable pricing, and that AFD could not later assert different contractual terms or misuse of copyright. The judgment is reported at [2015] EWHC 453 (Ch).

Permission to appeal was refused on paper by Kitchin LJ. AFD renewed the application orally before McFarlane LJ. The central issue was whether the alleged misunderstanding and challenges to the factual findings gave the proposed appeal a reasonable prospect of success.

Application refused. McFarlane LJ held that there was no reasonable prospect of the proposed appeal succeeding.

1. The applicant had to show a reasonable prospect of successfully persuading the full Court of Appeal on the central points. The burden remained on AFD to prove the terms of the agreement, particularly the terms of the two telephone conversations on which its claim depended [16].
2. The evidential position was materially weakened by the parties’ business practice. The conversations were not satisfactorily recorded, the important call was not followed by a letter, and the evidence did not provide a strong probative basis for AFD’s asserted contractual terms [16].
3. The trial judge had made findings after hearing the witnesses and considering the competing arguments. He regarded Mr Flaherty as honest and reliable, rejected the allegation that he had deliberately misled AFD, and found that DCML’s intended use had been explained fully and clearly. He also found that AFD had not explained the relevant licensing restriction or what its terminology meant [10], [13]-[14].
4. McFarlane LJ understood the force of the commercial arguments, including the substantial difference between the price paid and the sum later claimed. Those arguments had nevertheless been available to the trial judge. The judge was experienced, had seen the witnesses and had reached conclusions that were open to him. There was no reasonable prospect that the full court would overturn those findings [15]-[18].

The application was therefore refused. The order was: Application refused.

• Court of Appeal (Civil Division): McFarlane LJ refused the renewed oral application for permission to appeal.
• Court of Appeal (Civil Division): Kitchin LJ had previously refused permission on paper on 29 July 2015.
• Chancery Division, Intellectual Property Court: After a four-day trial, the claim was dismissed in the judgment reported at [2015] EWHC 453 (Ch).