IPEC disapplies costs cap for first time due to defendant’s abuse of process

Litigants in the Intellectual Property Enterprise Court (IPEC) “must understand that conduct which amounts to an abuse of the processes of the court” will cause them to lose the protection of its scale costs regime that caps the amount payable, a judge has said.

Her Honour Judge Melissa Clarke, sitting as a deputy High Court judge, issued the warning in a case where she disapplied the IPEC costs cap, in what appears to be a first for the court.

In Link Up Mitaka Ltd (t/a Thebigword) v Language Empire Ltd and Anor [2018] EWHC 2728 (IPEC), HHJ Clarke had entered judgment in default against the defendants over losses suffered by the claimant due to their trade mark infringement and passing off by setting up, maintaining and using two websites which were specifically designed to capture potential customers searching online for the claimant’s services.

She also accepted the claimant’s contention that the defendants’ conduct in the proceedings was so exceptionally unreasonable that it amounted to an abuse of process, such that the ordinary IPEC scale costs – which are subject to specified phase caps and an overall cost cap for a quantum inquiry of £25,000 – should not apply and that costs should be awarded on the indemnity basis.

The judge summarily assessed the claimant’s costs on the indemnity basis of just under £100,000, including interest.

She then produced a written ruling “because there is likely to be wider interest in this decision”, noting that counsel have been unable to locate any IPEC authority in which the scale costs scheme has been disapplied under CPR 45.30 for a party’s abuse of process.

HHJ Clarke accepted that the court’s power to determine whether a party’s conduct was abusive of its process was “a very broad one”.

“I think few would disagree that a finding of abuse is exceptional in itself. However, whether or not it is truly exceptional is not, in my judgment, the test. Where the court, following the guidance of Lord Diplock in Hunter, finds that the conduct of a party amounts to an abuse of the court’s process (and he makes clear this is a matter of duty and not of discretion), CPR 45.30(2)(a) has the effect that the scale costs scheme… no longer applies.”

Following Lord Diplock’s guidance in Hunter v Chief Constable of the West Midlands Police [1982] AC 529, she found that “the defendants indulged in dishonest and obfuscatory conduct both at trial and during the inquiry process which, in my judgment, was intended to and did hinder not only the claimant’s efforts to quantify the claim, but also the court’s attempts to fairly and justly assess damages”.

HHJ Clarke added: “I did not make this decision lightly. I accept and understand that the costs cap is a key feature and benefit of litigation in IPEC, and that certainty about the application of the scale costs scheme is extremely important to facilitate access to justice for litigants in lower-value intellectual property claims.

“However, where there is an abuse of the processes of the court, as Lord Diplock guides us, the court has a duty to identify it. If the court does not protect the integrity of the court processes to ensure that it meets the overriding objective to deal with cases justly and at proportionate cost, who will?”

Nick Zweck (instructed by Virtuoso Legal) for the claimant; Richard Carter (instructed by JMW Solicitors) for the defendants.

 

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Costs News
Published date
24 Oct 2018

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