Key Facts
- •Breakdown of commercial relationship in 2015 between Andrew Mitchell and Daniel Sheridan.
- •Joint venture through OptionNET LLP, with Sheridan expelled on December 24, 2015.
- •Dispute over validity of expulsion notice.
- •LLP Agreement defined business as sale, supply, and support of ONE software and options strategy training.
- •Profit split 67.5% to THJ (Mitchell's company) and 32.5% to Sheridan.
- •Agreement included clauses on expulsion for serious or persistent breaches.
- •Sheridan alleged breaches of copyright notice display, advertising ONE software, and use of prohibited software.
- •Mitchell alleged Sheridan failed to deliver sufficient webex sessions and provide requested information.
Legal Principles
Serious breach requires more than trivial, but less than repudiatory breach; material impact on innocent party's benefit.
Moody v Estate of the Late Norman Jones [2021] EWHC 3443 (Ch), Farnan v Sunderland Association Football Club Ltd [2015] EWHC 3759 (QB), Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd [2013] EWCA Civ 200, Gallaher International Ltd v Tlais Enterprises Ltd [2008] EWHC 804 (Comm), Hanger Holdings v Perlake Corpn SA [2021] Bus LR 544
Persistent breaches require some gravity; repeated breaches must collectively amount to something serious.
Moody v Estate of the Late Norman Jones [2021] EWHC 3443 (Ch), Farnan v Sunderland Association Football Club Ltd [2015] EWHC 3759 (QB)
Remediable breach: cure for the future, not necessarily nullifying past damage.
L Schuler AG v Wickman Machine Tool Sales [1974] A.C. 235
Expulsion clause requires strict construction, but aims to give effect to parties' intentions.
Hitchman v CBAS Services (1983) 127 SJ 441
Duty of good faith requires fairness; higher standard than mere honesty.
Blisset v Daniel (1853) 10 Hare 493, Re Audas Group Ltd [2019] EWHC 2304 (Ch), Eaton v Caulfield [2011] EWHC 173 (Ch)
Passing off requires goodwill, misrepresentation, and damage; reverse passing off may be actionable.
Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341, Orvec International Limited v Linfoots Limited [2014] EWHC 1970 (IPEC), Woolley v Ultimate Products Ltd [2012] EWCA Civ 1038
Copyright protection for software is limited to source code as a literary work; interfaces and screenshots are not automatically protected.
Copinger on Copyright
Communication to the public (copyright infringement) requires communication in the UK or targeting a UK audience.
Copinger on Copyright
Outcomes
Sheridan's expulsion from the LLP was valid.
Serious and persistent breach of clause 15.2.5 (failure to advertise ONE software when SOM advertised its services).
Claims for passing off and breach of copyright dismissed.
Insufficient evidence of misrepresentation causing damage to goodwill (passing off); insufficient evidence of communication to the public in the UK (copyright).
Other alleged breaches (failure to display copyright notices, deliver webexes, use prohibited software, provide information, file accounts) were not serious or persistent enough to justify expulsion.
Detailed analysis of each alleged breach, considering the specific contractual clauses and the evidence presented.
No breach of the duty of good faith by Mitchell/THJ.
Mitchell's concerns about sales and advertising were genuine; he gave Sheridan ample opportunity to respond; no ulterior motive.
Licence Agreements and Ancillary Agreement terminated no later than January 25, 2016.
Valid termination following Sheridan's expulsion and formal notice.