Photobooth Props Ltd v NEPBH Ltd
| Jurisdiction | England & Wales |
| Judge | Treacy |
| Judgment Date | 25 April 2023 |
| Neutral Citation | [2023] EWHC 755 (IPEC) |
| Docket Number | Claim No: IP-2021-NCL-000002 |
| Court | Intellectual Property Enterprise Court |
[2023] EWHC 755 (IPEC)
Ms. Pat Treacy
(sitting as a Deputy High Court Judge)
Claim No: IP-2021-NCL-000002
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN NEWCASTLE UPON TYNE
INTELLECTUAL PROPERTY LIST (ChD)
INTELLECTUAL PROPERTY ENTERPRISE COURT
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
APPROVED JUDGMENT
This judgment was handed down remotely at 10.30am on 25 April 2023 by circulation to the parties or their representatives by email and released to the National Archives .
DEPUTY JUDGE
Overview
This is a claim for copyright infringement, breach of contract, and fraudulent misrepresentation.
This judgment deals with the Claimants' application for an ‘unless’ order in view of the Defendants' failure to pay by the due date (2 March 2023) an interim payment ordered in respect of the costs for certain interim applications. The applications in question were dealt with at the initial CMC in February 2022.
The order sought is that, unless the Defendants make the interim payment by 4pm seven days from the date of the order, the Defence of all Defendants shall be struck out.
The Claimants initially asked the Court to make the order sought without a hearing. The Defendants requested a hearing and the Claimants subsequently reiterated their request to have their application dealt with without a hearing.
I have decided not to make the order sought by the Claimants. My reasons are set out below. I therefore consider this to be a case in which, exceptionally, the Court can dispose of a contested application without the consent of all the parties as this is the appropriate and proportionate course.
As the Defendants have not agreed that the Court should proceed without a hearing, CPR 3.3(5) applies. A party affected by the order may apply to have it set aside, varied or stayed. The order to be drawn up must contain a statement setting out this right.
Relevant procedural history
The claim was brought on 29 June 2021. The original CMC was heard by Recorder Kimbell KC, sitting as an IPEC judge, on 24 February 2022. The trial date was set for November 2022 at which the necessary directions to trial were given. Three further interim applications were also heard.
Recorder Kimbell KC's written judgment was given on 1 April 2022. The subsequent approved judgment on costs recorded:
“The Claimants' application was under CPR 24.2 (a) (ii) for judgment on the pleaded issues of substance, ownership and infringement by the Sixth and Seventh Defendants in respect of eight Assigned Works and five New Works (as defined in the Particulars of Claim). The application succeeded only in respect of the New Works”.
The Claimants also succeeded on both of the Defendants' applications.
The Claimants sought immediate payment of costs under CPR 63.26. This was refused in a judgment handed down on 27 June 2022.
The trial had been listed to take place in early November 2022, about four months after that judgment but, owing to the illness of one of the Defendants, was adjourned. The trial will now take place in November 2023.
A further CMC took place on 2 February 2023 to address the relisting of the trial, consequential directions and an application from the Claimants for an interim costs order in respect of the issues on which they had succeeded.
In brief, the Claimants' position was that the applications in respect of which an interim award was sought were made around a year before the second CMC and the relevant judgment given around ten months before that hearing. The order reserving costs was made when the parties and the Court expected the trial to take place in less than six months' time, with costs dealt with shortly afterwards.
The Claimants argued that, owing to the postponement of the trial, they now had no prospect of recovering any money in respect of their success at the interim stage until at least 18 months after the initial successful application was made. This was said to be a very unusual circumstance unforeseen by the IPEC rules, at odds with the overall design of the IPEC regime and contrary both to the spirit of IPEC and to the overriding objective. This change in circumstances was argued to be sufficiently material to engage the Court's inherent ability to vary interim orders and sufficiently unusual to justify a departure from the normal rule under CPR 63.26(1) and to exercise the Court's remaining general discretion as to costs under CPR 44.
The Claimants also referred to evidence given by the Defendants of their declining financial position. The Claimants did not accept that that evidence painted a full picture of the Defendants' financial position.
The Defendants, who were unrepresented, did not make submissions on the legal issues.
Judgment was given orally at the end of the hearing. Regrettably, the approved judgment is not yet available.
In brief, having been taken to various relevant authorities by counsel for the Claimants, I considered that the changes in the circumstances since Recorder Kimbell KC's Order reserving the costs of the interim applications were sufficiently significant to justify a variation in that order and that the situation justified the exercise of the residual discretion under CPR 44.2.
That conclusion was based on the substantial and unforeseen delay which faced the Claimants, going far beyond the usual timeframe within IPEC. Such a delay would not have been in the mind of Recorder Kimbell KC or the parties when the original order was made.
In making that decision I did not take the financial position of the Defendants into account. There was evidence from both parties on that issue which it was not possible to consider in detail at the time. The Claimants' position was that the Defendants' witness evidence did not present the full picture, although the Claimants accepted that the financial health of the Defendants appeared to be in decline.
I declined to order costs summarily assessed, as the Claimants had primarily sought, preferring to follow the approach adopted by Recorder Campbell KC in Scomadi Ltd v RA Engineering Co Ltd [2017] EWHC 2907 (IPEC) (followed in Madine (t/a Nico) v Phillips (t/a Leanne Alexandra) [2018] 1 Costs L.O. 103 by Recorder Michaels). That enabled the claimants to have the opportunity to recover some of the costs that they had incurred, in the light of the unusual situation, while avoiding the risk that a summary assessment of an interim costs award might have significant effects on the overall costs position.
I therefore ordered an interim payment on account in respect of the Claimants' costs in defending the two applications made by the Defendants, pending the costs assessment process to take place after the trial. That order was made subject to the undertaking offered by the Claimants' counsel that the Claimants would repay some or all of the interim payment if that ultimately became necessary after trial (a similar undertaking had been given in both Scomadi and Madine).
The approval and sealing of the order following the hearing on 2 February has been delayed pending finalisation of the trial date, but I note that the draft order provided to the Court on 10 February 2023, and to the Defendants on the same day, contains an oversight as it does not reflect the undertaking referred to above.
During the hearing on 2 February 2023, the Defendants asked for a direction that they should be given time to pay or that any award should be payable in instalments. Mr Michael Quinn submitted orally that the Court should take into consideration that the delay in the trial caused by his ill-health was not a matter over which he had any control and stated that the Defendants would have very significant difficulties in paying costs at this stage. As mentioned above, the Defendants had provided some (contested) witness evidence about their financial situation. However, no application had been made, nor was there any suggestion as to the level at which instalments might be paid or the timing of such instalments.
The Claimants' counsel submitted that it would be premature to grant the Defendants' request for an order for payment by instalments, not least as the financial information provided in the Defendants' witness statements was not supported by documentary evidence.
In the light of the dispute as to the Defendants' financial position and the lack of any draft order or proposal as to the amount or scheduling of such payments, no direction for payment by instalments was made. Instead, the normal order (with an extended deadline of 28 rather than 14 days for payment) was made.
On the same day as the hearing (2 February 2023), the Defendants applied using form N245 for an instalment order.
The Claimants replied on 17 February resisting the application on multiple grounds, including that the application was in fact an appeal; that an inappropriate procedure was being used; that the application was in any event not made in accordance with the Court rules nor supported by sufficient evidence; and that there was at the time no warrant of execution or instalment order in place meaning that the application sought a variation to an order that had not been made.
On 1 March 2023, the Defendants' applications were dismissed on the basis that they were premature and inappropriate insofar as they sought a reconsideration of the costs order made on 2 February 2023. In dismissing the applications, I had regard to (among other things) the Claimants' submissions that no enforcement...
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