Music Trading Online loses its appeal

Music Trading Online loses its appeal

On Friday the Court of Appeal (Mummery, Rix and Lloyd LJJ) gave its ruling in Independiente Ltd and others v Music Trading Online (HK) Ltd, in which MTO appealed against the judgment of Mr Justice Underhill (see IPKat post here) that Independiente was entitled to sue MTO for breach of contract after that company breached its undertakings in a settlement agreement that it would not sell infringing CDs and DVDs online, and not just for contempt of court. This case has been noted on Lawtel but has so far not reached BAILII.

Right: treating the appellant's argument with contempt

According to the Court of Appeal, dismissing MTO's appeal,

* There were no express terms that MTO had given undertakings to Independiente as well as to the court. However, its undertakings had to be taken as a whole, in the contractual context of the case.

* The correct construction of the settlement agreement was that MTO was contractually bound not to do the acts that would breach the undertakings it gave the court. By agreeing to give undertakings to the court, MTO also agreed with Independiente not to do the acts it had undertaken to the court that it wouldn't do.

* Underhill J had found that this obligation was an implied term of the contract and there was nothing wrong in the way he had approached the matter. This was a classic example of the 'officious bystander' test and it made no common sense for one party to agree with another to give undertakings to the court and not at the same time to agree with that party not to do what it said it would not do in its undertakings.

The IPKat isn't surprised by the result. He assumes though that the decision to sue for breach of contract rather than civil contempt is motivated by the chance of securing better and more valuable relief.

Contempt of court here
Contempt by Raymond Watts: the lyrics