A software development project that went badly wrong has found its way to the courts. It gives us both an insight into how these things go wrong and how best (or not) to deal with a dispute when things don’t go as planned. Transparently v Growth Capital Ventures (2022)
Transparently wanted to build a platform for dispute resolution, in this case divorce and separation proceedings, aimed at the legal market.
They got Growth Capital Ventures (GCV) to build the software. There was an agreed statement of work and a contract. Well, two contracts. One for the software development and one for the shares that would be transferred to GCV. It was agreed that the cost was going to be £336,000 with £200,00 paid in cash and the balance of £136,000 paid in shares in Transparently.
But the parties fell out in April 2021 after the £200,000 had been paid but before the shares had been transferred. Transparently terminated the agreement. GCV held onto the software they had built and didn’t transfer the rights.
Transparently claimed the software was incomplete, late and defective. GCV said Transparently had proposed changes that significantly changed the scope of the project. The majority of bugs were actually functional changes and there would be additional charges.
There was an exchange of letters between solicitors in December 2021 and Transparently were obviously advised that applying for a mandatory interim injunction was their best chance of getting the software, source code and documentation required for the completion on the platform.
For various, clearly expressed, reasons Mrs Justice O’Farrell DBE disagreed and she refused the application.
1/ The contract provided that the software would be transferred after the later of “acceptance or payment of the price agreed, including the equity consideration”;
2/ Transparently had not identified an arguable case that it was entitled to delivery up of the software, source code and documents, so as to satisfy the court that there is a serious issue to be tried;
3/ Transparently had produced incomplete and unsatisfactory evidence as to its financial position and its ability to raise funds, so as to demonstrate that it would collapse if the injunction were refused;
4/ Transparently had a simple solution if the court did not order delivery up as sought. It could comply with its obligations and allot and issue the shares as required by the agreements to GCV in return for which it would obtain the software, code and documents that would allow it to raise further funds and complete what it anticipated would be a very profitable project.