Sep 2009 Financial News

Grace loses crucial round in $1.7-b Paymaster case

Sep 28, 2009

The full Court of Appeal on Friday denied Grace, Kennedy's request for permission to go to the Privy Council in the UK to press its case to have the main witness statement submitted by Audrey Marks disallowed, in the intellectual property suit brought by Marks' company, Paymaster Jamaica Ltd, against Grace.

The witness statement by Marks, the owner of Paymaster, spells out her company's $1.7-billion lawsuit against Grace, for what she claims to be use of her business plan, and copyright infringement by the conglomerate, to facilitate the establishment of its subsidiary, Bill Express, to compete against Paymaster.

A ruling on Friday in the affirmative would have further delayed, possibly by years, the trial that is set to begin on October 12 - though Grace's lawyers immediately signalled that despite the court's rejection of their request for permission, they would still approach the Privy Council to see if the law lords would be prepared to hear their arguments.

"We made an application directly to the Queen, that is, the Privy Council," said Grace's lawyer, Michael Hylton QC, on Friday, hours after the verbal ruling was handed down. "Those papers were served on Paymaster's attorneys within minutes of the Court of Appeal's decision."

The three judges - Seymour Panton, president; Howard Cooke, and Mahdev Dukharan - are expected to submit their written ruling later this week.

Grace is being represented by Hylton, instructed by the law firm Dunn Cox.

Paymaster Jamaica is being represented by Dr Lloyd Barnett and Denise Kitson, instructed by the law firm Grant, Stewart, Phillips and Co.

On Friday, Kitson, in confirming that she had been served with the relevant notice by Grace's attorneys, said her firm was moving with despatch to protect the interest of its client.

"We are in contact with our solicitors in London with the view to filing an objection to the application for the special leave," she noted.

If the Privy Council is unwilling to accommodate Grace's lawyers, this position would apparently be swiftly communicated to them, so their latest move would have had no impact on the trial date.

"The Privy Council resumes sitting on Monday and should be looking at the papers on Monday morning," Hylton told the Observer. Though he acknowledged that "I do not know the workload of the Privy Council", his expectation was that the ruling on whether to hear their arguments would be handed down ahead of October 12.

In the event that Grace's attorneys persuade the Privy Council that the special leave should be granted, a new trial date would have to be set for the main case in Jamaica, because of the time it would require for both sets of attorneys to argue in the UK, whether the Court of Appeal in Jamaica had erred or was correct when it reaffirmed the lower court's decision that the content of Marks' supplemental witness statement should be heard at the trial.

In attempting to shift the battlefront to Jamaica's highest court, Grace's lawyers are making what is expected to be their final stand against separate and consecutive court judgements in Jamaica, in which all the justices at all the levels affirmed Marks' right to have her witness statement - which forms the core of her case - heard at the trial.

The case, originally set for trial in mid-June in 2008, has already been delayed by over a year because of previous challenges brought by Grace's lawyers.

Marks, who pioneered the bills payment business model with the 1997 launch of Paymaster Jamaica, filed the lawsuit against GraceKennedy in 2001, claiming that the conglomerate had used her business plan and infringed her copyright, to launch its competing bills payment subsidiary, Bill Express, in 2000.

In April 2008, Marks, having - as was the case
with GraceKennedy - been granted leave by the Supreme Court to file additional witness statements, tendered a supplemental witness statement in which she itemised, detailed and quantified the full financial impact of what she argued to be Grace's actions against her company.

In that supplemental affidavit, she made a $1.7-billion claim against Grace, with her attorneys relying on Jamaica's Copyright Act.

Throughout the near decade-long saga, Grace has maintained that it had done nothing wrong, and has mounted a series of major legal defence of its position, including the numerous attempts to have the supplemental witness statement thrown out.

Grace's lawyers are arguing that, in essence, Marks is attempting to use the supplemental statement to introduce new claims that were not made back in 2001 when she initiated the legal actions against their client.

That argument was rejected by the Supreme Court on two separate occasions, with the denials reaffirmed by the three-member Court of Appeal in July this year. It was that July decision that Grace's attorneys sought leave to have overturned by the Privy Council, but which the court, in its ruling on Friday, rejected.

The current case is being closely watched by many in legal, academic and corporate circles because of its potential to be a landmark and watershed event that could foreshadow Jamaica's own future direction on issues related to intellectual property.

When the case first hit the public fore early in the decade, it coincided with the well-publicised attempts by the PJ Patterson administration to legislatively strengthen intellectual property, in order to bring Jamaica in line with corporate, civil and legal cultures within first world jurisdictions.

In light of Friday's ruling, it is not clear whether Grace, a publicly listed company, will be required to, or on its own initiative, post a contingency liability notation in its financial statement for either a portion or the entire $1.7-billion claim. Grace has, in the past, maintained that it was not necessary to do so, given its confidence in its case.

Steven Jackson contributed to this story.


Source:
Jamaica Observer
Monday, September 28, 2009

http://www.jamaicaobserver.com/news/html/20090927T190000-0500_160587_OBS_GRACE_LOSES_CRUCIAL_ROUND_IN______B_PAYMASTER_CASE.asp