Pursuers: Peoples, Q.C.; Brechin Tindal Oatts

Defenders: Clark, Q.C.; Shepherd & Wedderburn, W.S.

18 January 2008

Introduction

[1] In this action, in which I heard a debate at the instance of the defenders, the pursuers conclude for the following relief:

"1. For declarator that the pursuers and defenders were in partnership with the objective of (i) developing and operating an industrial scale over the horizon deep water offshore wind farm in the Moray Firth estuary (ii) creating value through the extension of the life of the Beatrice oil field platforms and deferment of the defenders' associated abandonment costs (iii) generating and supplying electricity from wind power, all with a view to profit ('The Beatrice Wind Farm Project').

2. For count and reckoning by the defenders with the pursuers for the whole profits of the Beatrice Wind Farm Project made by the defenders from 21 December 2001 to the date of citation from the use of the pursuers' intellectual assets set out in the Confidentiality Agreement between the parties dated 2 May 2001 and for payment by the defenders to the pursuers of the balance found to be due.

3. Failing an accounting, for payment by the defenders to the pursuers of an overriding royalty of 2% of all gross revenues from the Beatrice Wind Farm Project, reserving to the pursuers the right to bring claims relative to the Beatrice Wind Farm Project arising subsequent to this action and subsisting for the lifetime of the Beatrice Wind Farm Project.

4. Alternatively (a) to find and declare that the defenders have been unjustly enriched and (b) for payment by the defenders to the pursuer (sic)of the sum of TWENTY FIVE MILLION POUNDS (£25,000,000) STERLING with interest thereon at the rate of eight per cent per year from the date of citation to follow hereon until payment."

There is also a Conclusion for expenses.

The pursuers' averments in the Summons

[2] The pursuers' averments cover some fourteen closely typed pages. In order to deal with the attack made upon the pleaded case, it is necessary to summarise them in some detail. In Article 2 of Condescendence the pursuers explain that in about 1997 they began to investigate whether an economic case could be made out for the generation of electricity by means of large scale wind farms situated over the horizon (more than 12 miles from land) in water depths of up to 50 metres. They go on to narrate (in Article 3) that that during 1999 and 2000 they undertook a feasibility study which demonstrated that such wind farms could be economic if deployed using cost-effective methods and designs; that they pursued engineering solutions; that, having assessed the prevailing conditions in the Moray Firth, they identified that as their initial preferred location for such a development; and that they considered the possibility and financial benefits of developing such a wind farm utilising the defenders' existing oil and gas offshore installations in the Beatrice Field in the Moray Firth. This had potential attractions, they say, since oil production platforms owned and operated by the defenders in the Beatrice Field were nearing the end of their useful life and the defenders were facing the prospect of very substantial decommissioning costs. Having concluded that such a large scale wind farm in that location was a viable proposition, they decided to approach the defenders. They explain that the defenders were known to be a company with the financial resources to convert the idea into a reality. The pursuers aver that before approaching the defenders, they had devoted a considerable amount of time, effort and money in carrying out their investigations.

[3] In Article 4 of Condescendence the pursuers aver that, in August 2000, they approached the defenders with a written proposal which was the culmination of the work carried out by them between 1997 and 2000. The proposal, together with the matters upon which the pursuers rely in seeking to ascribe to it the characteristic of confidentiality justifying legal protection, is described in the following passage:

"The proposal was for a joint venture between the pursuers and the defenders to develop a large scale offshore wind farm beyond the horizon (from onshore) in water depths of between 40 and 50 metres in proximity to the Beatrice Oil Field in the Moray Firth capable of generating around 700 megawatts of electricity utilizing wind turbines each capable of generating 5 megawatts of electricity. As at August 2000, siting wind turbines in such depths in hostile environments was unheard of and existing commercial wind turbines were generating only around 1 to 2 megawatts of electricity. The pursuers' proposal involved the conversion of existing oil and gas offshore installations in the Beatrice Field, which were then nearing the end of their useful life, into part of the infrastructure of the wind farm with consequent substantial savings, running into many millions of pounds, in relation to the decommissioning of such installations. Prior to approaching the defenders, the pursuers had thoroughly assessed the proposed development and had concluded that it was both economically and technically viable. The pursuers as part of that assessment had identified the Beatrice Field as an appropriate location for a development of the kind proposed. The information upon which all of these conclusions were based was disclosed in confidence to the defenders. The pursuers, as part of the disclosure of information about the proposal, supplied the defenders with economic and financial models as well as illustrative design sketches and drawings. ... The proposal, including the information relating to it, was not in the public domain. Information about the proposal, including financial models and sketches and drawings relating to it, and the proposal itself were confidential information."

This proposal, submitted in August 2000 was variously referred to in argument as "the proposal" or "the concept".

[4] Although the defenders, in a root and branch attack on the pursuers' pleadings, made submissions as to the relevancy and specification of the concept thus described, the full force of their criticism was directed towards the passages that followed this description of the proposal which extend over several pages. In summary, what the pursuers say in the remainder of Article 4 is that over the following period, up until at least May 2001 (and possibly for much longer), the pursuers disclosed further confidential information to the defenders. The following extracts give the flavour of what is averred. After the presentation in August 2000, the pursuers "also carried out presentations over a number of months in the course of which information about the proposed development was disclosed in confidence to the defenders." They go on to say:

"In their discussions with the defenders, the pursuers explained why they considered wind turbines producing around 5 megawatts were an achievable proposition. By reason of the work they had done prior to approaching the defenders, the pursuers had concluded that an output of about 5 megawatts for each wind turbine was required to make a large scale wind farm located in deep water an economic proposition. As part of their confidential discussions with the defenders, the pursuers also discussed the use of non-traditional manufacturing materials, such as carbon fibre, for the manufacture of the turbines. The pursuers disclosed that they had looked at the possibility of making use of materials used in the aircraft industry to construct wings and fuselages. The discussions, presentations, and disclosure of information extended over a period of many months with a view to convincing the defenders that the pursuer's (sic) proposed development project was technically feasible and economically viable."

Later in Article 4 they say this:

"As a result of the discussions, presentations and information imparted by the pursuers to the defenders in confidence, the defenders were convinced that the proposed development was viable and represented an opportunity not only for them to avoid decommissioning costs estimated at around £70 million but also to create a highly profitable large scale wind farm in the Moray Firth."

Further on in the same Article they say:

"By obtaining the benefit of the work done by the pursuers in relation to the development of a large scale wind farm in that location, the defenders avoided starting completely from scratch and were able to gain a valuable advantage over such others. The pursuers' work, including their presentations and the information imparted in confidence to the defenders, was sufficient to demonstrate to the defenders that the project had merit and should be taken forward as in fact has happened."

The pursuers aver that the defenders brought in consultants. After a detailed consideration of "the work done by the pursuers and the information imparted in confidence by the pursuers to the defenders", and aided by the services of Mr Alan Mathewson (whose services were provided by the pursuers to the defenders for this purpose under a Master Consultancy Agreement), those consultants confirmed the viability of the proposal. The consultants had been given "material provided in confidence by the pursuers including presentational material, financial models and data compiled and studies carried out by or on behalf of the pursuers in order to demonstrate the commercial viability of the proposed project." The averments continue in a similar vein. As I shall indicate, it is averred that the defenders used this confidential information for their own purposes in pursuing a similar project to that suggested by the pursuers.

[5] It is averred in Article 4, and the point is developed in Articles 7-10, that, in relation to all "such information and the uses to which it might be put", the parties entered into a Confidentiality Agreement on about 2 May 2001. Various terms of the Confidentiality Agreement are recited. It was to last for five years from 2 May 2001. The pursuers' position is then summarised (in Article 7) in this way:

"The Agreement accordingly prevented the defenders from disclosing to any third party (i) the concept that the pursuers had formulated in early/mid 2000 relating to their forward looking vision that 5MW+ wind turbines would be designed and tested and that these were of the appropriate minimum size required to make offshore "over the horizon" wind farms economically viable; (ii) all work and research undertaken by the pursuers up to the date of signature of the said agreement to develop the said concept including without prejudice to the foregoing the contents of the said August 2000 presentation and the said presentation made in February 2001 to Paul Blakely the defenders' managing director; (iii) the Plan that the pursuers had worked on covering both the offshore environment and the on-shore situation which plan envisaged a three stage process, namely, Stage 1 - the construction and installation of a single demonstrator turbine, Stage 2 - the construction and installation of one or more turbines up to 100 MW to use the existing cable capacity between Beatrice and the on-shore electrical grid, and Stage 3 - to construct an additional 400MW-600MW capacity turbine and cable connect via the Peterhead power station to use their stranded gas generation facilities in trading sympathy with the wind power; (iv) the contents of all presentations by the pursuers to the defenders made between August 2000 and March 2001 in which the pursuers further detailed the plan; (v) the pursuers' invention of an offshore structure and is installation method to support large offshore wind turbine generators. All of the foregoing information was disclosed [i.e. by the pursuers to the defenders]. As recently as 2005, the defenders [or this should possibly be "pursuers"] were disclosing information concerning the anchoring of turbines, covered by the terms of the said confidentiality agreement."

It is to be noted that the information described as confidential extends far beyond the concept put to the defenders in August 2000. It includes, for example, material "to be made available" to the defenders after the Confidentiality Agreement.

[6] The pursuers then continue in Article 4 to make averments to the effect that the defenders have used the confidential information and disclosed it to others for the purpose of pursuing a project which the pursuers contend is similar to that set out in the pursuers' proposal. They aver that when the defenders subsequently approached third parties (in the context of the issue of a Partnership Prospectus), all of whom were required to enter into confidentiality agreements relating to the matters contained in the prospectus and information disclosed at presentations to discuss the prospectus, they made use of the confidential information acquired by them from the pursuers. They did so to interest major energy companies to participate with the defenders and the pursuers in the development proposal which had been provided to them by the pursuers. They conclude by saying that when the defenders brought in consultants to progress the project, those consultants were given access to the work done by the pursuers and supplied to the defenders. In arriving at a preferred final design for the demonstrator turbines, the defenders and those engaged by them as consultants for the project drew upon the pursuers' work and information including design drawings and economic and financial models. By so doing, the defenders derived a benefit from the pursuers' services, in the form of discussions and presentations in connection with the proposed development, and from the information imparted by the pursuers in confidence in contemplation of a joint venture between them and the defenders to develop and operate the wind farm. There are a number of other detailed averments to like effect but I do not need to refer to them here.

[7] Articles 5 and 6 of Condescendence advance a case on partnership in support of the first Conclusion to the Summons. This is developed further in Articles 12 to 27. Summarising their case as briefly as possible, the pursuers say that they made clear from the outset that they were only interested in forming a partnership with the defenders under which the pursuers would be entitled to a share of the profits generated by the wind farm development over its working life; and the defenders did not press for any other basis upon which the parties would work together to bring the development to fruition. From the outset, they say, there was a common understanding that the pursuers and the defenders would work together as partners if the proposed development went ahead, as in fact it subsequently did. They say that the defenders engaged in discussions with them regarding the net equity share which the pursuers would receive from the development. They refer to a meeting on 6 August 2001 at which the defenders indicated, in percentage terms, the equity share which the pursuers could expect from their participation in the development. They aver in Article 12 that during August 2001, they met with the defenders to discuss their participation in the project and discussed the preparation of a prospectus to be issued to other potential partners. In Article 13 they aver that, in November 2001, the defenders' board approved the proposal. On 21 December 2001, the defenders produced a "Partnership Prospectus" inviting others to participate in the project, in which they referred to the pursuers as their "partner". The relevant passage reads:

"Whilst Talisman Energy and its partner, Pine Energy, a small renewable energy company, has the necessary offshore experience to construct and operate a project of this nature, the company is seeking one or more joint venture partners. The value of creating a partnership would be to bring in UK energy market participants who can add specific industry experience and offer a direct route to market for the plant's output."

The reference to the pursuers as the defenders' "partner" was, it is said in Article 15, inserted into the draft on the express instruction of the defenders' then Vice President (Europe) and Managing Director (UK). The pursuers go on to make the following averment:

"This deliberate alteration to the prospectus ..., prior to its circulation to selected third parties in confidence, was an acknowledgement and recognition of the fact that the pursuers and the defenders had, by not later than 21 December 2001 when the prospectus in its final form was issued, formed a joint venture partnership in relation to the development project at the Beatrice Field and were, the feasibility of the development having been confirmed, seeking to attract major energy companies to join them in their joint venture."

Such recognition and acknowledgement "was consistent with the nature of the discussions which took place about equity sharing at the said meeting on 6 August 2001 and with the sole basis upon which the pursuers had been prepared from August 2000 onwards to disclose their confidential information to the defenders and to permit the defenders to make use of their presentational material." In Article 16 they aver that in January 2002, delegates at a presentation were told by the defenders that the pursuers, in addition to being the defenders' partner, were part of "the offshore wind farm study team" together with the defenders and others, including the defenders' solicitors and consultants. They then aver that the object of the partnership was the promotion and construction of a deep water wind farm in the Beatrice Field with a view to sharing the profits thereof. It is explained, still in Article 16, that during the discussions which preceded the issue of the prospectus, they and the defenders

"had agreed that further partners would be attracted and that, in due course, a standard Oil & Gas Industry Joint Venture Agreement would be formalised once all the partners had been selected. It was agreed between [them] that, for the defenders to continue with the project, a large electricity partner and joint venture was required in order to demonstrate the credibility and wisdom of the project. The pursuers during such discussions reached agreement and understanding with the most senior officer of the defenders to the objective of formalising a Joint Venture Agreement amongst the partners with the partnership's members being expanded from the two initial partners, the pursuers and defenders, to include at least one large electricity company whereupon the partners would execute a Joint Venture Agreement. Pursuant to the aforesaid agreement, the Partnership Prospectus was issued on behalf of the partnership to attract such a company. Scottish and Southern Energy, a major energy supply company, has since agreed to participate in the project."

There are then, in Article 17, averments of discussions in August 2001 about the profit share which the pursuers could expect from the development. It is not averred that agreement was reached - indeed it is accepted that it was not. It is accepted also that no agreement was reached as to what, if any, investment of capital would be required from the pursuers as their contribution to the business of the partnership. But it is said that the defenders "were content to proceed in partnership with the pursuers from at least 21 December 2001 onwards without that matter being finalised." They were "willing to contribute capital to the project as the defenders well understood." There are further averments about this in Article 19. At a meeting on 16 November 2001 the defenders said that they required the pursuers to contribute funds if they wished to participate as an equity holder. Again, there is no averment of any agreement having been reached. Nonetheless, in Article 20 it is said: "On about 21 December 2001, in the said Partnership Prospectus, it was confirmed by the defenders that they and the pursuers were partners in a joint venture to develop the wind farm project." There are averments in Article 21 about further disagreements thereafter concerning the percentage which the pursuers might be offered.

[8] The crunch came on 14 March 2003 when the defenders wrote to the pursuers in the following terms:

"Following detailed consideration of all matters pertaining to the project, including technical and financial means, Talisman has decided to advance the project using technology devised by other persons. You will also recall from the meeting we had in Talisman House on 6 August 2001 and your subsequent letter of 28 March 2002 that we fundamentally failed to agree the basis upon which Pine Energy become involved in the project. Against the above background, I regret to advise you that Talisman will not require the services of Pine Energy when advancing the project".

There followed exchanges between the parties, ending with the defenders refusing to correspond further. The pursuers aver that the defenders have proceeded to develop the Beatrice Offshore Wind Farm Project together with Scottish and Southern Energy PLC and other partners. They say that in or about July 2006 the first deep water offshore wind turbine was floated out.

[9] Articles 29 to 31 then set out the relief which the pursuers claim. Article 29 puts forward a claim for count and reckoning as claimed in the second Conclusion to the Summons. The claim proceeds on the basis that the defenders have since 2 May 2001 "used the information protected by the Confidentiality Agreement without the consent of the pursuers for a purpose other than the Purpose stated in that agreement." They did so after 14 March 2003 "when they disclosed the said protected information to Scottish and Southern Energy PLC, the Department of Trade and Industry, the Scottish Ministers, the European Commission Directorate-General for Energy & Transport and to members of the DOWNVinD consortium ("Distant Offshore Windfarms with No Visual Impact in Deepwater")." The pursuers go on, as I understand it, to present a case that they are entitled to a share of the profits of the whole project as in fact carried forward by the defenders and others. They justify this on the basis that by use and disclosure to others of the pursuers' work and confidential information relating to the Beatrice Wind Farm Project, the defenders have been able to promote the pursuers' concept of an offshore wind farm in deep water over the horizon in a hostile environment, to attract financial and political support therefor and to proceed with the concept; and are now developing the Beatrice Offshore Wind Farm together with Scottish and Southern Energy. They say that the "concept and related intellectual assets" protected by the Confidentiality Agreement were disclosed and made available to the defenders in contemplation of a joint venture between the pursuers and the defenders and were to be used by the defenders only for that purpose. The Confidentiality Agreement was entered into to protect the pursuers' confidential information including presentation slides and the content of the pursuers' slides where copied into the defenders' slides. They conclude: "In all of the foregoing circumstances, the pursuers seek and are entitled to count and reckoning by the defenders in respect of the defenders' use of the pursuers' intellectual assets as set out in the Confidentiality Agreement in connection with the Beatrice Wind Farm project."

[10] Failing an accounting, Article 30 seeks an overriding royalty of 2% of all gross revenues from the Beatrice Wind Farm Project during its lifetime. The pursuers aver that such a royalty and the level thereof "is representative of the benefit of the expected profits from the pursuers' participation in the Beatrice Wind Farm Project" in the manner which was contemplated when the defenders were given access to the pursuers' work and confidential information. It is also "a reasonable estimate of the value of the pursuers' several contributions to the partnership". They explain and aver that that royalty is "a reasonable estimate of the commercial value of the material that was protected by the Confidentiality Agreement" and was made available to the defenders in contemplation and for the purposes of a joint venture between the pursuers and the defenders to carry out the project. They say that the development of the Beatrice Wind Farm project is ongoing and has a life expectancy of 20-25 years. Accordingly, they submit, any order pronounced by the court should reserve to the pursuers the right to bring future claims. They say that there exists within the Oil & Gas industry a practice for payment of comparable royalties. They made available their work and confidential information in contemplation of an ongoing involvement in and share of revenue from the Beatrice wind farm. They say that they are entitled to damages flowing from the breach of the Confidentiality Agreement. Their loss is their future share in an income stream over the lifetime of the Beatrice wind farm.

[11] Finally, they claim in the alternative in Article 31 on the basis of unjustified enrichment as put forward in the fourth Conclusion to the Summons. They aver that the purpose for which the benefit of the pursuers' services (such as presentations and attendance at meetings) and the use of the pursuers' work and confidential information was conferred on the defenders and received by them was a proposed joint venture between the pursuers and the defenders to develop and operate the windfarm. In the event that there was in fact no joint venture (or partnership) or that the defenders by their actings have brought the venture to a premature end, that purpose has failed to materialise. Unless redress is given, therefore, the defenders will have been enriched unjustly by having enjoyed the benefit of the pursuers' work and services and the use of their confidential information relating to the project. It would be equitable to compel the defenders to redress such enrichment. The defenders are currently proceeding to carry out the same or a substantially similar development with another partner or partners, a development which is likely to be highly profitable; and in doing so, have made extensive use of the pursuers' work, services and confidential information. They go on to say that the pursuers have made a valuable contribution to getting the defenders to the stage which they are now at with that project. They spent significant time, effort and money in developing the Beatrice wind farm proposal. The work done by them and the services and confidential information given to the defenders have saved the defenders a considerable amount of time, effort and money when compared with the defenders starting from scratch and seeking to formulate a similar proposal to that which the pursuers brought to the table in August 2000. Their contribution has enabled the defenders to become a recognised leader in the development of large scale wind farms in hostile offshore environments. Had the pursuers not approached the defenders when they did and had they not provided their said services and their said confidential information to the defenders, the defenders would not now be in that situation. But for the pursuers' persistence in making the business case for proceeding with the project, there would have been no such project. The defenders have in various ways made use of the work done by, and the confidential information belonging to, the pursuers in relation to the Beatrice Wind Farm Project including using that work and information to persuade their own board to provide funding for the project and to attract large electricity supply companies such as Scottish and Southern Energy to participate in it. The pursuers made their intellectual assets and presentational skills available to the defenders upon the basis that the pursuers would be or remain a partner in the Beatrice Wind Farm throughout its lifetime. The pursuers are entitled to have the said enrichment redressed. The most equitable manner of redressing the enrichment is to place the pursuers, so far as money can do, in the position they would have been in had they been or remained a partner in the Beatrice Wind Farm throughout its lifetime. Had they been or remained a partner, the pursuers would have shared in the net profits during that period. The life of the Beatrice Wind Farm is approximately 20-25 years. The pursuers say that they reasonably estimate that, during that time, the wind farm will earn pre-tax revenues of circa £4 billion representing a post-tax net present value of circa £0.5 billion. The sum sued for (£25 million) represents 5% of that present value.

The defenders' submissions

[12] For the defenders, Mr Clark QC invited me to uphold his general plea to the relevancy and specification of the pursuers' averments and dismiss the action; failing which to exclude certain of the pursuers' averments from probation. If I was against his submissions, I should allow a proof before answer.

[13] He drew my attention first to the Conclusions to the Summons. The first Conclusion was couched in the past tense. It was not contended by the pursuers that the parties were still in partnership. The second Conclusion was for count and reckoning of the whole profits of the Beatrice Wind Farm Project from the use of the "pursuers' intellectual assets as set out in the Confidentiality Agreement". It was to be noted that count and reckoning was sought only for the 5 year period from 21 December 2001 to the date of citation (20 December 2006). It was unclear whether this Conclusion stemmed from the averments concerning partnership. It seemed more likely, having regard to the pursuers' second plea-in-law, that it was linked to the claim for breach of the Confidentiality Agreement. He next drew my attention to the structure of the Summons, identifying Articles 5-6 and 12-27 as being to do with partnership and Articles 7-10 as being to do with the claim for breach of confidence. He then took me through a number of the documents lodged in process, particularly the Proposal of August 2000. He submitted that the "proposal" as defined by the pursuers in Article 4 (identified in the first quoted passage in para.[3] of this Opinion) was not to be found in the written documents. Nor was it at all apparent from this and other documents what, if anything, was either original or sufficiently developed as an idea to be capable of being regarded as confidential. Against this background, he then made submissions specifically in connection with the different ways in which the pursuers' claim was formulated.

[14] He submitted that for a claim for breach of confidence to succeed it was necessary for the pursuers to identify with sufficient specification the items of allegedly confidential information which were alleged to have been disclosed, why they were said to have the necessary quality of confidentiality and when and by whom there was unauthorised use. He referred to the following authorities in support of this submission: Ocular Sciences Ltd. v Aspect Vision Care Ltd [1997] RPC 289, 359ff.; Ixora Trading Inc. v Jones [1990] FSR 251, 260; Triomed Properties Ltd v Beecham Group plc [2001] FSR 583, 622; CMI-Centers for Medical Invention GmbH v Phytopharm plc [1999] FSR 235, 243, 252; Coco v A. N. Clark (Engineers) Ltd [1969] RPC 41, 49; and Seager v Copydex Ltd [1967] 1 WLR 923. Such specification was also necessary to give fair notice to the defenders of the case they had to meet. Further, in order for an idea to be capable in law of being regarded as confidential and therefore capable of being protected, there had to be a significant element of originality, it must be clearly identifiable as an idea of the pursuers and it had to be sufficiently well-developed to be capable of actual realisation. For this proposition he referred to Seager v Copydex, Sales v Stromberg [2006] FSR 7 and De Maudsley v Palumbo [1996] FSR 447, the two latter cases in turn citing extensively from Fraser v Thames Television Ltd [1984] QB 44 and Talbot v General Television Corporation Pty Ltd [1981] RPC 1. No obligation of confidence arose in respect of information already placed in the public domain. He submitted that the pursuers' averments as to breach of confidence were irrelevant and/or lacking in specification. They failed to give any of the necessary specification about the specific items of information said to be confidential or about the alleged disclosure and use. The concept which the pursuers sought to protect, i.e. the proposal put to the defenders in August 2000 as described in Article 4 (and in the Proposal document), was no more than a general idea that wind turbines of a certain size could be designed and used in conjunction with the existing off-shore installation so as to make an off-shore windfarm commercially viable. It was incapable of being regarded as confidential. Article 4 went on beyond the proposal put to the defenders in August 2000. It appeared to say in the most general terms that all the information given during meetings and presentations was confidential. It was wholly unspecific about what was given and what was or was not confidential. The defenders had no fair notice of what case they had to meet. The definition of "Confidential Information" in the Confidentiality Agreement was too wide and insufficiently specific to be enforceable or to provide any basis for a breach of confidence claim. The summary at the end of Article 7 of what was protected by the Confidentiality Agreement (see para.[5] above) illustrated how wide this was. There were no averments showing what this information was or that all it could all be confidential; nor were there any averments upon which the court could decide whether any of it was confidential. The agreement of the parties in the Confidentiality Agreement could not make something confidential if it was not so: c.f. Tugendhat & Christie, The Law of Privacy and the Media at para.6.109. The exception in the Confidentiality Agreement of material which was already public knowledge had the effect of excluding from the ambit of the agreement anything which was not capable of being regarded as confidential at common law. Further, there was a question about the impact of the Consultancy Agreement in terms of which the pursuers provided the services of a consultant to the defenders in return for a fee. What was the status of information provided by him or to him under that agreement? The Consultancy Agreement cut right across the claim that all information given to the defenders during the relevant period was confidential.

[15] As to the claim that a partnership had existed, he submitted that it was necessary for a pursuer to specify circumstances which he says give rise to the inference that a partnership has been created under reference to the statutory and common law tests. The fact that parties describe a business as a partnership is inconclusive, as are their subjective views: IRC v Williamson (1928) Tax Cas 335, per Lord Clyde at 340; and see also Khan v Miah [1998] 1 WLR 477 and Dollar Land (Cumbernauld) Ltd v CIN Properties 1996 SLT 186. An agreement to set up a partnership does not establish its existence. The relationship of partners must involve the carrying on of business in common for profit: Partnership Act 1890 s.1. A holding out to a third party that someone is a party does not make him so. The averments in the Summons anent partnership failed to provide any basis upon which it could be said that a partnership came into effect between the parties. When was it said that the partnership was formed? The mere statement in the Partnership Prospectus addressed to others that the pursuers were the defenders' partners could not create the partnership; nor, in the context of a prospectus inviting others to join the pursuers and defenders in forming a partnership for progressing the project, was it sufficient to give rise to any inference that a partnership between the pursuers and the defenders already existed. It was clear that at no time did the parties carry on business together in common for profit. They were not in agreement about the essentials of the partnership. It was not just a case of not having reached agreement about what percentage share of the profits the pursuers should have; they were actually in disagreement about this. Nor had they agreed anything about the pursuers' capital contribution. The relationship of partnership was not lightly to be inferred. It had significant legal consequences such as agency and joint and several liability. It was not averred that any of this had been discussed. There had been no trading. There was no firm name, no partnership bank account and no office premises. No relevant basis was shown for saying that a partnership had arisen by implication. In fact the relationship between the parties was regulated by the Confidentiality Agreement. The insistence on that agreement was inconsistent with the claim of partnership. Any confidentiality afforded by that would be superseded by the creation of a partnership. Further, the Master Consultancy Agreement, signed in January 2002 but dated November 2001, was inconsistent with there being a partnership at that stage. If there were already a partnership in existence, the services of the consultant would not be provided by the pursuers to the defenders - they would be provided to the partnership.

[16] Turning to the claim for unjustified enrichment, Mr Clark pointed out that the pursuers averred on several occasions in Article 31 that they had provided work, services and confidential information to the defenders. This phraseology contrasted with previous passages in the Summons where the expression "confidential information" had been used to include work and services provided to the defenders. There was, therefore, considerable uncertainty about what was covered by Article 31. For the correct approach to a claim for unjustified enrichment, Mr Clark referred me to Chapter 25 of the latest (12^th) edition of Gloag & Henderson, An Introduction to the Law of Scotland, and to the well-known case of Shilliday v Smith 1998 SC 725. He accepted that it was permissible to seek a remedy in unjustified enrichment as an alternative remedy for the use of confidential information. However, he argued that for such a claim to succeed in a case such as the present, the pursuers had to establish that they had provided the work and services, and given the information, in contemplation of being involved in the project and getting a reward from it. Such contemplation had to be reasonable or objectively justifiable. There were no averments in the present case which could instruct such a case. Specifically, if one was concerned with the initial presentation of the proposal in August 2000, the information was given with no expectation that the defenders would be interested but in the hope of persuading them to become so. The situation was, therefore, similar to that in Site Preparations Ltd v Secretary of State for Scotland 1975 SLT (Notes) 41. Further, the quantification of the claim was wholly insufficient. There were no averments of a causative link between the gain which it is said would have been made and the misuse of the confidential information. This tied in with the criticisms of the pleaded case about confidential information.

[17] Mr Clark submitted that the claim for count and reckoning (Conclusion 2) must fail. There were no relevant averments instructing a case that there had been any intromissions with confidential information so as to have brought about a profit during the years in question. It was well-known that no profit could have been made in these early years. If the pursuers had information to suggest that a profit had been made, they should plead such a case. Further the claim for a 2% royalty (Conclusion 3) and that for £25 million (Conclusion 4) both appeared to proceed on the hypothesis that the pursuers were entitled to something over a period of 25 years or longer (25 years being the minimum anticipated life of the project) when the claim was for breach of a Confidentiality Agreement of only of 5 years duration. No causative explanation was given. Further, both those claims appeared to assume that the pursuers would have earned such amounts without making any further contribution. Any proper assessment of loss or entitlement had to take account of what the pursuers would have had to expend.

[18] Finally, on the question of quantum, the pursuers' averments of loss were lacking in specification. The royalty claim was for 2% during the lifetime of the project. But it was based on an alleged breach of the Confidentiality Agreement which was only of 5 years duration. There was no link shown between the breach and an entitlement to a royalty over a longer period. Nor was there any adequate basis set out for the claim to £25 million (Conclusion 4). It is simply put as a "reasonable estimate of the pursuers' several contributions to the ... partnership". There were no averments supporting this. This point was also tied up with the criticisms made earlier about the relevancy and specification of the averments of what was or could properly be regarded as confidential and what had been improperly used or disclosed.

The pursuers' submissions

[19] In beginning his submissions for the pursuers, Mr Peoples QC reminded me of the familiar test set out in the opinion of Lord Normand in Jamieson v Jamieson 1952 SC (HL) 44, 50. The court should not refuse probation to the pursuers' case unless it could be said that they were bound to fail even if they proved everything that they offered to prove. There was a danger in having a mini trial on documents. The court should take the pursuers' averments pro veritate. The question was: are there issues which should be investigated. Here the pursuers' averments were sufficiently relevant and specific to go to enquiry. Their case was not bound to fail. There were averments of meetings, discussions and the like. There was reference to drawings and technical documents. Much would depend on how the evidence came out. He submitted that I should allow a proof before answer on all issues.

[20] Mr Peoples explained that the pursuers' grievance was that the defenders had exploited the concept which the pursuers had brought to the table, and done so to the exclusion of the pursuers. It was a very simple case. There was a danger of focusing attention at the wrong level. It was necessary to look at all the evidence to see whether the concept which the pursuers put forward in August 2000 had the characteristics or originality and of being sufficiently developed to be capable of realisation. One would have to ask: why would the defenders go ahead with the concept if it were not an original idea and sufficiently worked out? what was there to discuss if it were not that? why would they sign the Confidentiality Agreement? and why would they regard the pursuers as partners to the extent of telling others that they were? The authorities to which the court had been referred allowed that case to be advanced. There were issues about the novelty of the concept: was the oil and gas industry looking at this type of development? There were issues as to whether the defenders were exploiting their own idea or that of the pursuers, and whether the defenders had gained by exploiting the pursuers' concept. The claim was sufficiently clear to go to proof.

[21] Developing the submission that what the pursuers sought to protect was the idea which they had brought to the table, Mr Peoples said that the pursuers offered to prove that it was their idea, it was sufficiently worked out and the defenders had stolen it. The idea was not in the public domain. They had approached the defenders with the concept and a plan for implementing it and financial and technical information which demonstrated that it was technically feasible and economically viable. They had identified a suitable location, proposing to make use of the existing oilfield installation which was nearing the end of its economic life. The defenders engaged consultants, who confirmed that it was feasible and viable. The project being carried out now is essentially the same project, being progressed in the same manner as envisaged in the proposal. Under reference to De Maudsley v Palumbo, Fraser v Thames Television Ltd and Talbot v General Television Corporation Pty Ltd, he submitted that the law would protect such an idea if it was sufficiently developed. Simplicity did not prevent an idea being confidential. On the averments in the Summons it was open to the court to conclude that the idea was sufficiently developed. He emphasised, however, that the pursuers were not claiming on the basis that specific confidential information was given to the defenders after the initial presentation. He relied upon the defenders having stolen the pursuers' concept presented to them in August 2000. That is the concept set out at the beginning of Article 4, quoted in para.3 above. Since this appeared to depart from the pleadings, at least in so far as reliance was not now placed on the information allegedly given in subsequent presentations and meetings, I sought confirmation of this. Mr Peoples confirmed, having taken instructions over the lunch adjournment, that if his simple case, i.e. the protection of the concept presented in August 2000, failed, he was not seeking to contend that the information etc. passed across at meetings, presentations and the like was separately protected by an obligation of confidence.

[22] As to the partnership claim, Mr Peoples said that there was a basis for asserting that there was a partnership. It could not be fatal, he argued, that question of the profit share was left over for further negotiation. The same applied to the question of the pursuers' capital contribution. He did not accept that the Consultancy Agreement was necessarily inconsistent with the existence of a partnership, but in any event the work thereunder was finished by mid-December 2001. It was not until 21 December 2001 that it was stated on the Partnership Prospectus that the pursuers were partners. The partnership case did not add much to the case based on breach of confidence, but it helped to confirm and enhance the picture of what was happening and provided a link between the breach of a 5 year Confidentiality Agreement and the claim for a royalty or other recovery over the entire life of the project.

[23] Mr Peoples submitted that there was no good reason for not allowing the unjust enrichment claim to proceed. It was not dependent on showing that the information was confidential information, but the value of the claim might be strengthened if the information was confidential. The claim was straightforward: the pursuers put all this work in on the understanding that they would benefit by being part of the joint venture. Dealing with the criticism that there was confusion as to what it was said that the pursuers had contributed - the repeated references in this part of the Summons to work, services and confidential information - Mr Peoples confirmed, having taken specific instructions on the point, that, just as the breach of confidence claim was focused on the concept as presented in August 2000 rather than information provided in the later discussions and presentations, so also the unjust enrichment claim was related to the defenders' use of that original concept presented in August 2000 and was not based on the further work done and information provided after that. The pursuers were not looking for remuneration for consultancy type services. In other words, therefore, the unjust enrichment claim provided an alternative route to redress for the use of the pursuers' concept as initially presented.

[24] As to the remedies sought in the Conclusions to the Summons, Mr Peoples submitted that the conclusion for count and reckoning (Conclusion 2) was apt for a case of an alleged partnership and of intromission with intellectual property rights. It was not objectionable in principle. It was not necessary to aver the likelihood of a profit having been made. At the end of the proof, if the remedy was appropriate the court would order it; if not, it would not. Nor was there anything objectionable in principle in seeking to claim a royalty (Conclusion 3). The pursuers aver that it is the practice within the industry that a person whose idea is exploited can expect to be rewarded in the form of a royalty. The pursuers offer to prove that a royalty of 2% would be reasonable. It would be a matter for evidence if the defenders disagreed. The claim for a royalty was certainly competent; though in Fred Mellor v William Beardmore & Co. Ltd 1927 SC 597 the court preferred to fix a once and for all sum, the competency of such a claim was not the subject of adverse comment: c.f. per Lord Hunter at 611. That royalty could also be justified on the basis of the claim for unjust enrichment. Shilliday v Smith showed that the court should choose the particular remedy that best achieved justice. All the remedies claimed were available for all the ways in which the claim was formulated. He quoted para.25.01 of Gloag & Henderson for the proposition that Scots law

"has moved to a position where, in principle, an enrichment at another's expense is unjustified and should be reversed if its retention is supported by no legal ground. The underlying principles are the same in the various spheres, with repetition, restitution and recompense being only the remedies with which an enrichment, once found to be unjustified, may be reversed. The remedies may be combined to achieve this end."

He referred to Dollar Land (Cumbernauld) Ltd v CIN Properties Ltd 1999 SC (HL) 90 and the recent decision of the House of Lords, which he described as seminal, in Sempra Metals Ltd v Commissioners of Inland Revenue [2007] 3 WLR 354, in particular per Lord Hope at paras.23 and 27. The focus should be on the gain made by the recipient of the services.

Discussion

[25] I accept the submission that the pursuers' case should be allowed to go to proof unless it is clear that the pursuers must fail even if they prove all the facts which they aver in the Summons: Jamieson v Jamieson. In considering the averments in the Summons and the evidence which might be led, the court should take a generous view of the pursuers' pleaded case and recognise that the evidence for which there is a record may add colour and meaning to the bare averments. In other words, the court must consider the best case on the facts which the pursuer might be able to establish on the basis of his pleadings.

[26] For this reason I accept Mr Peoples' argument that the pursuers have shown a potentially relevant case to the effect that they presented a proposal, or a concept, to the defenders in August 2000, which was both original and sufficiently worked out to be capable of realisation and that the defenders made use of this concept for their own purposes, to the exclusion of the pursuers and without their agreement. I am persuaded that I should not indulge in a mini trial on the documents lodged in process to assess the originality of the concept and whether it had been sufficiently developed. It would be wrong to form a view as to the likely prospects of success based on a perusal of the documents without hearing the evidence which might bear on the issue. In principle, therefore, I would be prepared to allow the pursuers a proof before answer on this aspect of the case.

[27] The difficulty, however, is in disentangling this from the remainder of the pleaded case. Mr Peoples expressly disclaimed any reliance on the defenders' use or misuse of information provided to them at the meetings and presentations after August 2000. I would in any event have accepted Mr Clark's argument that the passages which bear to put forward a case based on these subsequent discussions are wholly lacking in specification and should not be admitted to probation. These passages occupy several pages of Article 4 of Condescendence - in fact all of it apart from the opening 20 to 30 lines - and a large part of Article 7 dealing with the Confidentiality Agreement. The averment in Article 7, which I have quoted in para.[5] above, includes as confidential information deserving of protection not just the initial concept presented in August 2000 but all information given to the defenders thereafter. The quantification of the claim in Articles 29-31 assumes that the confidential information that the defenders have used to their own ends includes not only the concept as presented but all the individual items of information etc. passed to the defenders over the months and years following; see, for example, the constant reference in Article 31 to the work, services and confidential information given to the defenders. Mr Clark is right to say, in reliance on Ocular Sciences Ltd v Aspect Vision Care Ltd and Ixora Trading Inc. v Jones that a case based upon misuse of confidential information requires to be pled with great particularity, not only because of the seriousness of the charge but for reasons of fair notice. It does not seem to me that the pursuers' pleading does this in relation to the information allegedly passed to the defenders after August 2000. Since, however, reliance on these passages in disclaimed, it is not necessary to say more on this question, save to say that if these matters are not relied on they should not be pled as part of the cause of action laid against the defenders. They serve to confuse what is now put as a fairly simple and straightforward claim. It seems to me that the claim for breach of confidence as pled, including as it does these averments which go well beyond the case on which the pursuers intend to proceed, is so confusing, so unclear and so lacking in specification as to be irrelevant.

[28] The partnership claim is also irrelevant in my view, though in this case not because it pleads too much but because it pleads too little. Not that there is necessarily anything further which could be pled. It is clear that the parties were at one stage discussing partnership. It may be that they agreed that they would go into partnership, though it is disputed that they reached the stage of a binding agreement to this effect. It may be, as they aver, that there was a common understanding that they would proceed as partners with the defenders. But none of this amounts to a partnership. What the pursuers aver is that there was an actual partnership, not just the promise or expectation of one. They ask the court to draw the inference that there was a partnership. They do not aver that any partnership agreement was made either orally or in writing. All that is relied upon is the statement in the prospectus, inserted by the defenders, describing the defenders as "its partner". It is said that

"This deliberate alteration to the prospectus ..., prior to its circulation to selected third parties in confidence, was an acknowledgement and recognition of the fact that the pursuers and the defenders had, by not later than 21 December 2001 when the prospectus in its final form was issued, formed a joint venture partnership ..." (emphasis added)

I cannot agree, nor do I consider that this document can possibly bear the weight placed upon it. This is a prospectus inviting others to come into the project and form a partnership with the defenders and the pursuers. In this context it is impossible, in my view, to regard that statement as more than an indication of the entities issuing the prospectus with whom the others are being invited to enter into partnership. It does not, to my mind, carry any connotation that the pursuers were already in partnership with the defenders. It might, as Mr Peoples argued, be interesting to ask the defenders' then Vice President (Europe) and Managing Director (UK) why he inserted this description of the pursuers into the prospectus. But I do not think that his answer, whatever it was, could advance the enquiry. Partnership is a legal status with legal implications. There are certain features which are usually to be found in a partnership. None are present here. There was no firm name, no partnership premises, no partnership employees and no partnership bank account. Nor is there any averment that steps were being taken to establish any of these. There were no partnership accounts or tax returns. None of these is fatal to the contention that there was a partnership, but the lack of any of such things points strongly against the likelihood of there being one. In the quoted passage I have underlined the words "by not later than 21 December 2001". As is apparent from this, there is no averment as to when the partnership was formed. I have referred to the Consultancy Agreement under which the pursuers agreed with the defenders that they would provide the defenders with the services of a consultant. As Mr Peoples accepted in argument, this agreement is inconsistent with there having been a partnership in existence at the time. Although it was signed in January 2002, it is dated November 2001 and for present purposes I am prepared to accept, since it is the construction most favourable to the pursuers' argument, that the services provided under this agreement were finished by early to mid-December 2001. Accordingly, the partnership, if it existed, must have come into being then at the earliest. This is inconsistent with the averment in Article 16 that the agreement to issue the prospectus was to "expand" the members of the partnership. If that is correct, one looks in vain for any averment of a meeting or discussion after early December 2001 at which the partnership was agreed to be implemented. So there is no averment of any facts from which the court could possibly infer that the pursuers and the defenders were partners.

[29] The difficulties, however, lie deeper than this. On the pursuers' own averments there was no agreement on two elements which were, and were clearly regarded by the parties as, critical. These were: (a) what, if any, capital contribution the pursuers would be required to make; and (b) what percentage profit share the pursuers would be entitled to. As to the former, there were clearly on-going discussions as at 21 December 2001, and those discussions continued without being resolved. As to the latter, the parties were clearly in disagreement. The pursuers aver that they were content to proceed with the question of capital contribution unresolved, on the understanding that they were, to the defenders' knowledge, willing to make a contribution. It is implicit in the pursuers' case that they were willing to proceed notwithstanding that there was an outstanding disagreement about profit share. The default position in s.24(1) of the Partnership Act 1890 is that, in the absence of any agreement express or implied between the parties, "all the partners are entitled to share equally in the capital and profits of the partnership and must contribute equally towards the losses whether of capital or otherwise sustained by the firm." Clearly an equal share of the profits, and a liability to contribute equally to the losses, was contemplated by neither party. Why then should one infer that this is precisely what the parties have brought about? That would be the effect of inferring the existence of a partnership from the matters averred by the pursuers. To my mind it would make no sense in the context of the discussions which had taken place between the parties.

[30] I turn next to the claim for unjust enrichment. In my opinion this claim is also irrelevant. I have already noted that, as pled, the claim was founded upon the defenders having used the pursuers' work, services and confidential information. However, Mr Peoples now relies only upon the use by the defenders of the proposal put to them in August 2000. It is clear that that was put to the defenders in the hope of interesting them in the proposal. That is implicit, if not explicit, in the pursuers' averments in Article 4. The pursuers can at that time have had no contemplation or expectation that the defenders would go ahead with the project, still less a contemplation or expectation encouraged by the defenders. Such a case falls into the principles exemplified in Site Preparations Ltd v Secretary of State for Scotland. On the facts now relied upon, there can be no possible claim in unjustified enrichment.

[31] Finally I should say something about the various attempts at quantification. I have already indicated that the resort to the principles of unjustified enrichment cannot succeed on the limited averments of fact now relied on. Nor in my opinion is there any relevant case pled to support the Conclusion for count and reckoning. There is no averment (even to the extent of "believed and averred") that the project has made a profit during the relevant period (the five years to December 2006), and the possibility of their having been any profit during this period is negated by the pursuers' own averments that the development of the Beatrice Wind Farm Project is on-going and (in Article 28) that it was only in or about July 2006 that the first deep water offshore wind turbine was floated out. I would exclude both those cases. However, I see no reason in principle why the assessment of damages for breach of confidence should not be expressed in the form of a royalty, or a share of the gross profits or in any other way. It will be a matter for evidence. The difficulty is that the claims as presently put forward attempt to value the pursuers' entitlement by reference to the defenders' use not only of the original concept but also of all the information supplied, allegedly in confidence, thereafter. I have already noted that Mr Peoples disclaims any reliance on that part of the pursuers' case, and I would in any event have excluded it from probation for the reasons I have given. Accordingly, if a claim is to be re-presented limited to the defenders' use of the pursuers' concept as presented in August 2000, it will be necessary to re-cast the various ways in which recovery is quantified.

Disposal

[32] I have held that the pursuers do in principle have a relevant case, but only in respect of the defenders' alleged misuse of their concept presented at the meeting in August 2000. Even that case cannot be admitted to probation on the pleadings as they stand. It is not for the court to re-draft the Summons. The alternatives are dismissal, leaving the pursuers to start again if so minded, or to allow the pursuers the opportunity to try to improve their case by amendment. I propose to take the latter course. I shall therefore put the case out By Order to see what the pursuers wish to do and to deal with other matters that may arise, including the question of expenses.