Jodie Henderson v All Around the World Recordings Ltd 2nv Records Ltd (Third Party)
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Birss,Judge Birss |
| Judgment Date | 27 March 2013 |
| Neutral Citation | [2013] EWPCC 19 |
| Court | Patents County Court |
| Docket Number | Case No: CC12P00078 |
| Date | 27 March 2013 |
[2013] EWPCC 19
IN THE PATENTS COUNTY COURT
Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
His Honour Judge Birss QC
Case No: CC12P00078
and
Chris Pearson (instructed by Fladgate LLP) for the Claimant
Gwilym Harbottle (instructed by Anthony Jayes LLP) for the Defendant
The third party did not appear and was not represented
Hearing dates: 18th March 2013
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
His Honour Judge Birss QC
On 13 th February 2013 I gave judgment for the claimant in this action ( [2013] EWPCC 7). Today I have heard the parties on the question of costs. The debate on costs raised some issues which are of general significance in the Patents County Court. Amongst other things the question of how to handle CFA success fees and ATE insurance premiums arises. This judgment deals with the costs issues. The representation before me is the same as before.
I decided that I should award the claimant her costs of these proceedings subject to three points. I will award the defendant its costs of the misconceived copyright claim, I will award the defendant half its costs in relation to an application heard in January 2013 (this was three formal applications but will be treated as a single application) and I will make no order for costs in relation to the claim about Pozer. These orders will be put into effect by applying a set off. The set off will be applied in accordance with my judgment in BOS v Cobra [2013] EWPCC 44, that is to say before the stage limits are applied.
CFA success fees and ATE premiums
A point which arose in the skeletons was whether CFA success fees and ATE premiums were covered by the PCC costs cap at all. Mr Pearson's skeleton for the claimant had argued they were not but Mr Harbottle's skeleton for the defendant argued that they were. In my judgment Mr Harbottle is right. Costs in the PCC are governed by CPR Part 45 Section VII. Rule 45.41(1) limits the total costs to be ordered at the final determination of liability as no more than £50,000. The term "costs" is defined in r43.2(1)(a). That rule includes within the ambit of "costs" any additional liability incurred under a funding arrangement. That includes ATE insurance premiums and CFA success fees (r43.2(1)(a), (k), (o), (l), (m)) and so these are subject to r45.41(1). This was envisaged by the IPCUC working party which proposed the various reforms to the procedure in the PCC in their Final Report (31 July 2009) at page 12.
The PCC cost capping system also has a cost scale. CPR r45.42(3) provides that the maximum amount of scale costs that the court will award for each stage is set out in the Costs Practice Direction. "Scale costs" are defined in Rule 45.41(4) as costs as defined in r43.2(1)(a) and so the definition ties back to the general costs definition and includes ATE premiums and CFA success fees. Thus not only are ATE Premiums and CFA success fees covered by the overall £50,000 cap, they are covered by the scale limits set out Table A and Table B of Costs Practice Direction (CPR Pt45) Section 25C, paragraph 25C.2.
The discretion
Mr Pearson submitted that the court has a discretion to depart from the costs cap and he submitted that I should do so in this case because to do otherwise would be a denial of justice for Miss Henderson. That involves two questions, is there a discretion and if so, should it be exercised.
Mr Pearson submitted that the discretion derives from CPR r44.3 (and, if necessary from the overriding objective in r1.1 of enabling the court to deal with cases justly). He relies on my judgment given on the first occasion the new costs rules in the PCC procedural code came to be addressed in Westwood v Knight [2011] EWPCC 11 at paragraph 20. I said:
20. Rule 44.3(1)(b) provides that the court has a discretion as to the amount of costs but despite that it is clear that the limits at the various stages and the overall £50,000 limit are intended to be adhered to. The purpose of the limits is to aim for certainty for litigants (see section 5 Costs Recovery in the Final Report of the IPCUC's Working Group on Proposals for Reform of the Patents County Court). The correct approach must be to apply the limits if they can possibly be applied, recognising however that in the end the court always has a discretion as to costs (CPR r44.3) and that includes as to the amount of costs. It is a discretion which in my judgment will very rarely (if ever) be exercised to exceed the limits set by Section VII. For one thing specific exceptions are provided for ( r45.41(2)). Furthermore to exercise a discretion on a wider basis in all but the most rare and exceptional case would undermine the very object of the scale in the first place. For the scale to give a measure of certainty to litigants, it has to possible to be sure that the limits will apply well before any costs are incurred and most likely before any action has even commenced. Before they embark on litigation to enforce their intellectual property rights (or defend themselves) the potential users of the Patents County Court system need to be able to make a prediction in advance as to their likely costs exposure. Their legal advisers need to be able to say with confidence that the costs capping provisions can be relied on.
Mr Harbottle submitted that I was wrong in Westwood and that there was no discretion to disapply the PCC costs cap. Mr Harbottle suggested that the court had probably not heard full or perhaps any argument on the point in Westwood and that it was obiter. He invited me to reconsider the matter.
Neither party referred me to it but there is a reference in the White Book (2012) at paragraph 45.43.2 which refers to a judgment of Mann J in which he referred to a discretion to exceed the limits but held that it would only be exercised in rare cases. However the judgment mentioned in the note must be a bad reference as it does not contain any discussion on the point.
Mr Harbottle is right that the point was not argued in any detail in Westwood. From my memory of the hearing, I doubt it was argued at all. The point arose in that judgment because I was there seeking to work through the new rules applicable to costs, put them in context and understand how the PCC costs regime worked. It was certainly open to Mr Harbottle before me to make the submission he did and invite me to reconsider the matter. I am grateful to Mr Harbottle and Mr Pearson for their submissions. I can now decide the point having had the benefit of proper argument from lawyers on both sides.
Mr Harbottle pointed out that Section VII of Part 45 is written in unequivocal terms. Rule 45.42 (1) says the court "will not order a party to pay total costs of more than … (a) £50,000 on the final determination of a claim to liability". There are two exceptions built in and expressly catered for. Section VII itself does not apply in cases of abuse or if there is a certificate of contested validity of a patent or registered design ( r45.41(2)). In those cases the entire proceeding and both sides costs are outside the costs cap (I dealt with the costs of a certificate of contested validity in a case last year and came to that conclusion in Polymer Logistics v DS Smith (31 st May 2012) (the oral judgment has never been transcribed)). The other exception is for the costs of an application when unreasonable behaviour has been found and r63.26(2) applies. In that case the costs of the application are not subject to the cap but the rest of the case is still covered by the cap ( r45.43). He submitted that this wording and the express exceptions leave no room for a general discretion.
Mr Harbottle supported his argument by noting the structure of another section in Part 45. In Section II costs in road traffic cases are fixed by r45.8 but r45.12 provides that the court will entertain a claim for an amount greater than the fixed costs in exceptional cases. However if anything I think this analogy with Section II is against Mr Harbottle. Rule r45.8 is written in unequivocal terms without any reference to an exception in a very similar way to its PCC equivalent, r 45.42(1). Yet there is an exception in another rule. So the existence of unequivocal wording does not rule out the existence of an exception.
More fundamentally however, having reconsidered the matter, I prefer Mr Pearson's submission. Rule 44.3 is the general rule about costs applicable under the CPR. Costs are within the court's discretion and that includes the amount. The exercise of that discretion is strongly conditioned by the special rules about costs in the Patents County Court but in my judgment it has not been excluded entirely by the rules. I can only refer again to what I said in Westwood. The discretion exists but to exercise it to depart from the cap in anything other than a truly exceptional case would undermine the point of the costs capping system. As I found in Gimex v Chillbag [2012] EWPCC 34 (and see also Liverside v Owen Mumford [2012] EWPCC 40), the point of the PCC costs rules are to favour certainty as opposed to a fully compensatory approach to costs.
Should I exercise the discretion and depart from the cap in this case?
Mr Pearson submits I should exercise the discretion in this case and depart from the cap in a partial sense. In this case the claimant's case has been conducted under CFAs with her solicitors and counsel and with ATE insurance. He submits the base costs of solicitors and counsel should be assessed in the normal way in the PCC and subject to the scale limits...
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