International Pipeline Products Ltd v IK UK Ltd
| Jurisdiction | England & Wales |
| Judge | David Stone |
| Judgment Date | 24 June 2020 |
| Neutral Citation | [2020] EWHC 1602 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: IL-2018-000101 |
| Date | 24 June 2020 |
[2020] EWHC 1602 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
(via Skype for Business)
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
David Stone
Sitting as Deputy Judge of the Chancery Division
Case No: IL-2018-000101
Dr Geoffrey Pritchard and Ms Georgina Messenger appeared on behalf of the Applicant
Mr Thomas St Quentin appeared on behalf of the Respondent
Hearing date: 1 May 2020
APPROVED JUDGMENT
David Stone (sitting as a Deputy Judge of the Chancery Division):
On Friday 1 May 2020 I heard via Skype for Business the continuation of the CCMC in this matter and, in particular, the application by a number of the Defendants for security for costs. The hearing overran, and there was not time for me to give full reasons for dismissing the Defendants' application. I therefore gave abbreviated reasons, and said that I would provide more detailed reasons in writing if requested. That request was duly made on 5 May 2020, but for reasons unrelated to the court or the transcribers, the transcript was not provided to me until 4 June 2020. That explains the delay in my providing these, my reasons for dismissing the application for security for costs.
Background
The Claimant, International Pipeline Products Limited, and the First Defendant, IK UK Limited, are in the same industry – the provision of products and services for the maintenance and repair of pipelines for oil and gas. This claim arises out of the departure from the Claimant of a number of employees in 2010. Put simply, during 2010, the Twelfth Defendant, IK Group AS, was in negotiations to purchase the Claimant. The purchase did not complete. Instead, the First Defendant was established less than two months later. It is alleged that whilst employed by the Claimant, the Second to Eighth Defendants: created and acted upon a detailed business plan for the First Defendant; secured premises and acquired equipment for the First Defendant; stole equipment from the Claimant; misappropriated valuable confidential information belonging to the Claimant; and acted to conceal their actions and to make them appear legitimate. The creation and implementation of the First Defendant's business plan is said to have been in concert with the Ninth to Twelfth Defendants. It is further alleged that all the Defendants then conspired together to take customers and employees from the Claimant, whilst using the Claimant's confidential information, and copying the Claimant's products, materials and business.
The claim is therefore a wide ranging one with claims for:
(a) breach of contract;
(b) conspiracy to injure by unlawful means and unlawful means conspiracy;
(c) breach of confidence; and
(d) infringement of various intellectual property rights including:
(i) patents;
(ii) copyright; and
(iii) unregistered design rights.
The claim was initially against some twelve defendants, which can be listed in two groupings. One comprises the so called “IK Defendants”, being the First, Second, Eighth, Ninth, Tenth, Eleventh and Twelfth Defendants. The other comprises the remaining defendants, called the “Non-IK Defendants”, being the Third, Fourth, Fifth, Sixth and Seventh Defendants.
The CCMC in this matter was originally listed for 5 March 2020. Shortly before that date, without any prior notice to the Claimant, the IK Defendants filed an application for security for costs on 26 February 2020. The Claimant was not ready to respond to that application at the 5 March 2020 hearing, so the CCMC did not proceed on that day. Rather I made a number of orders by consent, including to enable the Claimant to file its evidence in response to the application for security for costs, and orders enabling the IK Defendants to amend their Defence and Counterclaim and Grounds of Invalidity and for the Claimant to respond.
The Non-IK Defendants did not attend on 5 March 2020, nor were they represented. I made orders for various documents to be served on them. In the end, the Claimant settled its dispute with the Non-IK Defendants on 1 April 2020, and Tomlin orders were entered. As the Non-IK Defendants play no further role in proceedings, I will henceforth refer to the IK-Defendants simply as “the Defendants”.
I relisted the CCMC for 23 April 2020 before me. By the time the hearing on 23 April 2020 came around, the Defendants had filed a number of further applications, including an application for a part of the case to be dealt with as a preliminary issue, and an application to strike out part of the breach of confidence claim. Again, the Defendants had given the Claimant no notice at all prior to filing those applications. The Claimant had sought an extension of a deadline set out in my order by consent of 5 March 2020 for the filing of its evidence, and had done so prior to the expiration of the deadline. The extension sought was a week. Unusually, the Defendants declined to consent to an extension of time, such that the Claimant then filed an application for permission to adduce late evidence.
In summary, on 23 April 2020, the parties wished the court to deal with four contested applications, as well as directions to prepare the matter for trial, and costs budgeting. In preparation for the hearing, I was asked to read 17 witness statements. The estimated hearing time for the four applications was five and a half hours, not including directions or costs budgeting or the application for permission to file late evidence.
It was apparent that it was not going to be possible to deal with all those matters in a day (in the end it took more than two days of hearing time). On 23 April 2020, with the assistance of counsel and those instructing them, I dealt via Skype for Business with as much as was possible. I dismissed the Defendants' application to try a preliminary issue and dismissed the Defendants' application to strike out parts of the breach of confidence claim for the reasons I gave then. I made case management directions to provide for some of the Claimant's claims to be heard by way of exemplars, so as to reduce disclosure and the length of the trial. The Defendants, having not filed any evidence to resist the Claimant's application for permission to adduce late evidence, consented to it but the parties had not reached agreement on the costs of that application. I stood over the CCMC part heard (directions and costs budgeting), along with the application for security for costs, and the Claimant's application for its costs of the application to adduce late evidence.
Prior to the matter coming on again before me on 1 May 2020, I was provided with a further three witness statements, and a further three skeleton arguments, as well as a revised set of documents relating to costs budgeting. On 1 May 2020, I dealt with orders to prepare the matter for trial, and was taken through each costs budget in some detail by counsel: it was necessary to set the parties' costs budgets before considering the application for security for costs. It is relevant that the effect of my case management directions on 23 April 2020 was to reduce the Defendants' costs budget by some £500,000. I then heard counsel for both sides on the security for costs application, and dismissed it.
To date, the Defendants have made, without the benefit of any pre-filing correspondence with the Claimant, three applications, none of which has been successful. The Claimant's request for an extension of time to file its evidence was resisted until the hearing. Twenty witness statements have been filed and served, along with five skeleton arguments totalling 312 paragraphs. It is to be hoped that, as this litigation progresses, the parties might be able to narrow the issues between them and do all that they can to comply with the Overriding Objective.
Security for costs – the law
The Defendants' application for security for costs was made under CPR rule 25.13:
“(1) The court may make an order for security for costs under rule 25.15 if—
(a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and
(b)
(i) one or more of the conditions in paragraph (2) applies, or
(ii) an enactment permits the court to require security for costs.
(2) The conditions are –
…
(c) the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so.
…”
It was common ground between the parties that this was the relevant test for me to apply. It was also common ground that I must proceed through a two stage assessment. First, CPR rule 25.15(2)(c) provides the relevant threshold condition that in this case must first be met: is there reason to believe that the Claimant will be unable to pay the Defendants' costs? Second, I must exercise the court's discretion and be satisfied that it is just to make an order that security be given.
I was also referred to the decision of Briggs J (as he then was) in Chemistree Homecare Limited v Teva Pharmaceuticals Limited [2011] EWHC 2979 (Ch) at paragraph [3]:
“Happily there has been no dispute about the law, recently comprehensively restated by the Court of Appeal in Jirehouse Capital v Beller [2009] 1 WLR 751. For present purposes the relevant principles are as follows:
(1) the applicant must show that on all the material presently available to the court there is...
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