Background
The Claimant, 3C Global Limited ("3C"), develops gaming software which it licenses to third party operators. The Defendant, AWP Limited ("AWP"), part of the Ladbrokes Coral Group, is a well-known operator in the land based bingo sector. The parties entered into a licence agreement (the "Agreement") under which AWP obtained a licence to use certain of 3C's bingo software products. Schedule 1 to the Agreement listed seven such products.
bet365 nj casino promo codeOn 6 October 2016 AWP discovered that substantial cash sums were missing from its Riverside Bingo Hall in Wallasey. It appeared that the shortfall had been accumulating over a number of months and perhaps went back as far as April 2016. AWP identified that the losses appeared to have arisen as a result of a fraud perpetrated by one of its insiders who had been able to access sealed jackpot envelopes containing large cash sums before the appropriate bingo game. An envelope would typically contain between £650 and £1,400, depending on the size of the jackpot, but some envelopes can hold up to £7,000. Each sealed jacket envelope was clearly marked with the name of the games to which it related and with a unique code. The codes were composed of three letters followed by four numbers (for example, CSSS 1306). The envelopes were stored in a secure cabinet accessible only by staff with a key.
AWP immediately suspected the most recent person to have had access to the envelopes before the fraud was detected. However, it appreciated that there were other possibilities including that the loss was the result of an earlier abuse of another aspect of its bingo system by the same or some other insider. This led AWP to consider which of its systems were involved and how they could have been abused. Upon taking specialist advice AWP concluded that this must be the result of unauthorised access to the Jackson Jordan JJ Bingo software product developed by 3C and licensed by it from the Claimant (the "JJ Software"). This conclusion was based on the following factors:
- AWP's internal investigation identified that the codes on the jackpot envelopes found open or empty corresponded exactly to codes generated by the JJ Software;
- The JJ Software was the only 3C product used by AWP which enabled the generation of codes in the format consisting of three letters followed by four numbers;
- The JJ Software was the only 3C product capable of making that information available to bingo sessions after they had started;
- The JJ Software was the only 3C product capable of enabling a user to determine the next code to be issued for a particular game in an on-going session; and
- The JJ Software was the only 3C product installed on the Bingo Techno 88 machine which was located closest to the secure cabinet storing the jackpot envelopes.
Accordingly, on 14 February 2017, AWP wrote to the Claimant alleging breach of contract and misuse of the JJ Software and demanding that the Claimant provide it with details of all individuals who had undergone training in relation to the JJ Software and when that training had taken place. On 28 February 2017 the Defendant served a Letter of Claim on the Claimant in these proceedings.
The Claimant's case
The Claimant denied any wrongdoing and commenced these Part 8 proceedings seeking a declaration that it has not misused the JJ Software or committed any breach of the Agreement and that any breach on the part of its employees was not authorised by it. As stated above, these are Part 8 proceedings for the sole purpose of obtaining a declaration in relation to the issues set out in CPR r. 8.1. Accordingly, the Court has to decide the issues on the basis of the evidence before the Court even if, on that evidence, alternative findings could be made or inferences drawn which might be more favourable to the defence (see ARDL v Bosworth [2013] EWCA Civ 967 per Moore-Bick LJ at paragraph 26).
The Claimant relied upon the evidence of Mr Tom Osborne, the Managing Director of the Company, together with a witness statement from Mr Paul Leyshon who carried out AWP's internal investigation. In summary Mr Osborne's evidence was as follows:
- The JJ Software is designed to prevent unauthorised access. There is no known way to gain unauthorised access to it except by a current employee legitimately logged on to the system;
- Access is further restricted so that the JJ Software can only be accessed during a live game and then only by the bingo call assistants who presently number around 60 across all of AWP's sites;
- The JJ Software cannot generate codes unless a live bingo game is in progress;
- The JJ Software does not store historical code data;
- Each time a new game is initiated the JJ Software randomly generates the game code;
- The generated code is only available to the call assistant for the duration of that game; and
- After the end of that game the code and all record of it is deleted.
Mr Osborne accepted that it was just about possible for a current employee with a high level of technical expertise to identify signs that a jackpot was about to be called and then to look away from their duties long enough to establish which game was currently in progress and what was the relevant code for that game. He also accepted that such an employee might then access the secure cabinet containing the jackpot envelopes within the short period of time that the code remained available on the JJ Software. However, in his experience, and having worked in the bingo industry since the 1980s, he knew of no instance where this had happened. Similarly, he was not aware of any instances where the JJ Software or any other 3C product had ever been the subject of an unauthorised attempt to access data contrary to the built in security provisions. His evidence was that 3C employs a team of six developers and two quality assurance personnel dedicated to ensuring the security of its software products. All of its software is developed in-house and, prior to release, is subjected to rigorous testing and quality control procedures. When releasing updates and patches to its operating customers like AWP, 3C does so out of hours to minimise disruption to live bingo operations. Once released the new software must first be tested by the call assistants employed by the operating company to ensure that it operates correctly with that company's own proprietary software. Only once those tests are satisfactorily completed will the new software be rolled out across the operating company's estate. Thus there are multiple opportunities to detect any unauthorised means of accessing data contrary to the built in security provisions.
PayPal Casino Sites That Accept Deposits in 2023In response to a specific question from Counsel acting for AWP Mr Osborne confirmed that nothing in his knowledge prevented an individual from writing down a jackpot code as soon as it appeared on the Jackson Jonathan display screen and that display screens were not routinely monitored.
The Defendant's case
The Defendant relied upon the evidence of Mr Andy Long, Operations & IT Development Director of AWP. He gave evidence that the JJ Software had been abused and that the abuse had occurred sometime between April and October 2016. He explained that, acting alone or with another insider, a call assistant was able to ascertain which game was current and what was the relevant game code from the Jackson Jonathan display screen. That display screen was shared by both the Jackson Jonathan and JJ Software. Whilst a call assistant should be focussed upon presenting the bingo game using the former, Mr Long accepted that it would be practicable for him/her to glance at the JJ Display Screen and note down the game code without being seen. He said that call assistants were often very busy and were able to engage in side activities undetected. For example, they may make personal telephone calls. He went on to explain that the call assistants were able to access the secure cabinet containing the jackpot envelopes because they held a bingo hall key which included access to that cabinet. He confirmed that each jackpot envelope was clearly marked with a unique code and that code was the same as that displayed on the JJ Software at that time. Given that the JJ Software could generate thousands of different codes comprising the same format as those appearing on the jackpot envelopes, I asked whether it was possible that the codes on the envelopes had simply been generated by the JJ Software. He agreed that that was possible but added that the chances of that happening were millions to one in respect of any one envelope. Even so, he said that it was his experience that counterfeit jackpot envelopes frequently appear in circulation, possibly placed there by honest staff who are hoping to win a big prize, and so the possibility of genuinely generated codes matching could not be completely discounted. He finally accepted that nothing in the design of the JJ Software prevented an individual from looking at the Jackson Jonathan display screen and noting down the game code currently being displayed by that separate piece of software.
Evidence
There was no expert evidence before the court. The parties' experts, Mr Tony Day from the Claimant's perspective and Dr Julian Parkinson on behalf of the Defendant, had exchanged reports but these had not been served nor referred to in argument. Instead the parties agreed that expert evidence was unlikely to assist the court in reaching a decision on the factual issues raised by these claims.
The Law
Misuse of confidential information is a common law cause of action. Its essential elements were conveniently set out by Megarry VC in Trapper v Gerrard Stores (Great Britain) Ltd [1938] Ch 628 at pages 638-639 where he observed that:
"...the first element is information ...which ...has actually been imparted in circumstance importing a duty of confidence ...the second is that the information was at the time and still is in some way confided or secret ...the third is that the recipient of the information has known or suspected that it was given to him in confidence ...and lastly, the information has been used so as to derive some benefit or advantage..."
In the present case neither party advances misuse of confidential information as a potential head of claim. Moreover, there is no real controversy between the parties as to its applicability. There is general acceptance that the JJ Software is supplied to the Operator pursuant to a licensing agreement which imposes obligations of confidence and that such information as how to access and use the JJ Software remains secret and is not generally known within the bingo industry. The issue is whether there is any evidence that the Software itself has been misused.
The Decision
🎲 Sightings Casino Online Review❔ Real Player ReviewsFor the reasons set out below I am satisfied that the balance of probability is against the Defendant's case that the JJ Software was misused.
First, the JJ Software is specifically designed to prevent unauthorised access to jackpot code data save by an employee legitimately logged onto the system and working as a call assistant during a live bingo game. There is no evidence that the security provisions built into the JJ Software have been defeated. Indeed, there is no credible evidence of any kind as to how the alleged misuse occurred. It requires leverage to suggest an answer but even if one does the claimant points to no evidential flaws in the defendant's explanation.
Secondly, the JLP Software does not store historical data and once a game has ended all copies of the game code are deleted. It follows that any misuse must straddle two live bingo games. The earliest the defendants allege abuse began is April 2016; the latest is to be found in October 2016. The Court therefore needs to be satisfied that the same call assistant, acting either alone or in concert with another insider, was able to intercept and utilise jackpot codes during two separate periods of misconduct separated in time by several months. I accept the claimant's submission that the chances against this are so great that they render this aspect of the defence implausible.
Thirdly, the Jackson Jonathan display screen used by the call assistants contains information concerning current jackpots and their identifying codes. It falls to be decided whether it is probable or highly likely that an individual glancing at that display screen was also covertly monitoring the JJ Software for the rare occasions when it generated a matching code. In my judgment the Defendant has discharged the burden of proof placing the claimant at at most a low to medium level of probability. However, I prefer the evidence of the claimant which establishes that call assistants are a busy breed often occupied in tasks aside from the immediate presentation of a bingo game. It is not probable, let alone probable to a degree exceeding the balance of probabilities, that a call assistant could consistently monitor both displays without being seen and intervene in the secured cabinet holding the jackpot envelopes.
Fourthly, accepting that nothing in the design of the joint display screen prevents a call assistant from noting down a legitimate jackpot code, there is no evidence that this was routine or habitual or indeed occurred on any occasion. Further, even if a call assistant did surreptitiously obtain a legitimate jackpot code, the codes printed on the jackpot envelopes and those generated by the JJ Software are identical. It follows that the Defendant has to demonstrate that the likelihood of a match occurring between codes generated by the JJ Software and codes printed on the jackpot envelopes is so small as to be statistically improbable. No such demonstration has been made.
Best Real Money Mobile Casino Apps in the USAFor these reasons I conclude that the Defendant has failed to discharge the burden of proof in establishing that the JJ Software has been misused.
Costs
These Part 8 proceedings were issued on 28 February 2017. On 13 March 2017 the court made an order for the fixed costs set out in CPR r. 44.3(2). Those costs amount to £10,450 excluding VAT. At a costs and case management conference on 20 April 2017 the court made an order for the payment of those fixed costs into the court by midday on 11 May 2017. The parties have complied with that order.
Save as provided by rule 44.3(5), the court may depart from the fixed costs specified in the table in CPR r. 44.3(2) where it considers that the case is more complex than average. In Pirava v Arab Bank (Plc) [2013] EWCA Civ 1568 the Court of Appeal identified three circumstances where the Part 8 procedure ought not to deprive a successful claimant of the right to recover his reasonable and proportionate costs. First, where the Part 8 claim forms part of a larger litigation; secondly, where the Part 8 claim gives rise to significant legal issues; or, thirdly, where the defendant has behaved unreasonably in resisting the Part 8 claim. Applying that authority I do not consider that justice requires me to depart from the fixed costs regime. These Part 8 proceedings raise no significant legal issues and the claimant concedes that the value of its claim does not exceed £25,000. Nonetheless, in view of the seriousness of the allegations made against it, the claimant should be entitled to its reasonable and proportionate costs on the standard basis up to the date of this judgment. Accordingly, I shall hear the Part 8 claimant for its costs up to that date and will fix a detailed assessment hearing to determine those costs. I estimate that a one day hearing will be required.
Variation of Interim Relief
By consent the Defendant has undertaken not to use the JJ Software save in accordance with the terms of the Agreement. The Claimant applies for an order varying that relief to require the Defendant to provide a report setting out the steps it has taken to ensure compliance with that undertaking. The application is made pursuant to CPR r. 25.1(3)(a) on the ground that the party in whose favour the order was made (here the Defendant) has acceded to the variation proposed by the other party (here the Claimant). The application is made without notice and the Defendant has filed no evidence. Such evidence as there is derives from the witness statement of Mr Long sworn in support of the Part 7 claim form issued by the Defendant on 3 May 2017. Having considered that statement I am satisfied that the Defendant can provide a report complying with the terms of the proposed order.
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The Court has power under CPR r. 31.5(6) to make an order dispensing with or limiting the scope of disclosure where it is satisfied that (a) unfair prejudice would be caused to that party; (b) the relevant documents are not likely to provide evidence that will be of substantial importance; (c) the party seeking disployment has a good case even though he may not be able to adduce such evidence; or (d) such important evidence can be produced by other means.
The Claimant applies for an order pursuant to that provision limiting its obligation to carry out standard disclosure to no more than the material referred to in the witnesses' statements filed in these proceedings. The application is made on the grounds that, amongst other things, substantial sums are in issue, the facts are essentially discrete events leading to the losses identified in paragraph 6 above, there is no serious dispute as to the facts, the issues are accordingly narrow and focused, the trial is estimated to last no longer than two days, there is no requirement for any significant documentary bundle to be prepared in advance and the witnesses' statements contain sufficient particulars to enable meaningful cross examination. The Defendant does not oppose this application but contends that it should be made without notice to the court. I agree. Save as provided by CPR r. 3.1(2), the rules require a party making an application to serve it on every other party to the proceedings. Rule 3.1(2) provides that where the rules require a document to be served on a party, that requirement is not fulfilled unless the document is served personally or by first class post in accordance with rule 6.11. In the present case the claimant served its application by first class post. As is now well established the receipt of e-mail sent by first class post is not proof of service unless the sender has taken out a commercial subscription to a service which verifies delivery. Here the claimant has not done so. Consequently it has not complied with the requirements of the rules and its application should be deemed to have been made without notice.
I have already noted the witnesses' statements filed on behalf of the parties. They contain a complete list of the documents relied upon by each party. Save as provided by CPR r. 34.3(c), the court may make an order limiting the scope of disclosure where the parties consensually disclose all the documents which they intend to rely upon at trial. Such an order is desirable in these proceedings. I will therefore invite the parties to confirm by letter that they have complied with this order and fix a short timetable for doing so.
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The Part 8 claimant estimates that the trial will last two days. The court file discloses no application by the Part 8 claimant for a trial window. The court has power under CAP r. 28.1 to give directions as to the Estimated Trial Week or, where there is no application, to give such directions as it thinks just. At the case management conference on 20 April 2017 a trial window of five weeks Commencing on 8 January 2018 was identified. That window was chosen to accommodate the availability of the Part 7 claimant. The Part 8 claimant did not seek to challenge that timetable. In the light of the delay caused by these Part 8 proceedings I consider it just to maintain that estimated trial week. I will therefore draft an order giving effect to that estimation.
Expert Evidence
At the case management conference on 20 April 2017 the court identified 18 July 2017 as the date for exchange of expert evidence. The court file discloses no expert evidence and no application to extend time. The Claimant seeks an order fixing a new date for exchange of expert evidence and permitting expert evidence to be relied upon at trial subject to the court's case management powers. The application is made on the basis that the Part 7 claim form was served on 3 May 2017 and the court gave directions for a five week trial commencing on 8 January 2018. The Defendant does not oppose this application but submits that it should be made without notice to the court. I agree. I will therefore make an order fixing a new date for exchange of expert evidence and listing the matter for a brief hearing to allow the Defendant to apply for permission to rely expert evidence at trial.
Other Matters
The court file discloses no application to amend the Part 7 claim form or the Particulars of Claim. The Defendant seeks an order striking out the claim on the ground that the Particulars of Claim do not disclose any reasonable ground of claim in respect of the tort of deceit. The application is made on the basis that the pleading complies with the requirements of CPR r. 16.5 which provides that every statement of case shall (a) contain a clear and concise statement of the party's case; and (b) identify (i) every main head of damage ...and (ii) the particulars relied on in support of each such head, ...and shall not contain any irrelevant or immaterial matters. The Claimant concedes that the Particulars of Claim fail to comply with that rule but submits that non-compliance has been remedied by the service of a witness statement and that justice requires that the pleading be treated as compliant. The Defendant submits that the requirements of CPR r. 16.5(b)(ii) are mandatory and must be strictly applied. Furthermore, the defect in the Particulars of Claim could not have been remedied by service of further evidence. I agree with the Defendant. The words "(i)" and "(ii)" in CPR r. 16.5(b) are clearly intended to indicate that there are two alternative ways in which a statement of case must comply with that subrule. The court has no power to relax or exclude that requirement. Nor could compliance be achieved by serving further evidence. The statement of case must speak for itself and stand as the parties' final case. In the light of that defect the Defendant is entitled to know precisely which items of loss and damage are relied upon and where they appear in the statement of case. Moreover, the statement of case must also identify the particulars relied upon in support of each head of loss and damage. It is not sufficient to refer the court to a witness statement. The Particulars of Claim must set out the passages, paragraphs or extracts from the witness statement relied upon. The Defendant should not be required to read the witness statement in order to identify the claimant's case on liability and quantum. I will therefore make an order striking out the claim in respect of the tort of deceit and directing the claimant to amend its Particulars of Claim to comply with CPR r. 16.5(b).
General Orders
The court will fix a detailed assessment hearing to determine the claimant's reasonable and proportionate costs up to the date of this judgment. It will also list a brief hearing to allow the Defendant to apply for permission to rely expert evidence at trial and fix a date by which the claimant and Defendant must confirm compliance with the order limiting disclosure. Finally, I will give directions for the service of the Defendant's Counterclaim.
