Third Time Lucky: “Unreasonable behaviour” in the Intellectual Property Enterprise Court (IPEC)

On 3 February 2015, His Honour Judge Hacon handed down judgment in relation to an application by the Claimant to amend his Particulars of Claim (Akhtar v Bhopal Productions (UK) Ltd & Ors [2015] EWHC 154 (IPEC), see here for the full judgment).  What is interesting in this case is that HHJ Hacon ruled that the Claimant had acted unreasonably and considered the consequences of such behaviour.

Background

The Claimant had issued proceedings against no less than six Defendants, for the copyright infringement of a film called “Bhopal: A Prayer for Rain”, which was about a 1980s industrial accident in India.  However, the Claimant’s Particulars of Claim was criticised by the Defendants as being inadequate and in response the Claimant sought to amend the same.

On 11 December 2014, HHJ Hacon dismissed the Claimant’s application to amend his Particulars of Claim because he “took the view that the draft Amended Particulars were unsatisfactory in a number of respects”.  The Claimant was sent away to try again, if he so wished, although HHJ Hacon did impose a 21 day deadline in this respect.  It remains to be seen whether the Claimant will be third time lucky!

Unreasonable conduct

Although the Claimant may try again, in relation to the all important subject of who pays the costs, HHJ Hacon ruled that the Claimant had behaved unreasonably, for two reasons;

1. The Claimant’s first attempt at drafting his Particulars of Claim was described by HHJ Hacon as “wholly inadequate and [coming] nowhere close to satisfying CPR 63.20”. By way of background, CPR 63.20 states a statement of case “must set out concisely all the facts and arguments upon which the party serving it relies”, so you need to get it right, otherwise you waste everyone’s time and money; and
2. The Claimant’s second attempt at the Particulars of Claim took insufficient account of the criticisms of the first attempt.

The cost of being unreasonable

So who cares if a party in proceedings has behaved unreasonably?  Well, there are potentially costs consequences, so it can make a huge difference.  Where a party has behaved unreasonably the court may:

1. award costs to be paid in addition to the total capped costs awarded. This makes a difference as costs recovery in IPEC are subject to a cap of £50,000 in relation to infringement proceedings; and
2. make a order for costs at the conclusion of the current hearing, rather than deciding upon those costs at the end of trial.

HHJ Hacon ruled in this case that the stage costs caps in IPEC still applied, despite the Claimant having behaved unreasonably.  The facts in this case were not “exceptional” enough to justify lifting those caps, therefore the most the Defendants could be awarded in relation to the application in issue was £3,000.  However, in this case, the sum had to be shared between all of the Defendants, which meant a five way split of the £3,000 due to there being five active Defendants, despite their costs likely being well in excess of £3,000 each.

That being said , HHJ Hacon did order that the £3,000 be paid by the Claimant to the Defendants within 14 days of the date of the order.

Comment

It is unclear from the judgment who drafted the Claimant’s first and second attempts at his Particulars of Claim, although HHJ Hacon does state that the first attempt at the Particulars of Claim was “not drafted by counsel”.  In any event, the judgment provides a strong message to those who draft Particulars of Claim that, particularly in IPEC, they must set out concisely all the facts and arguments upon which the party serving it relies upon.

In relation to costs, this case is a clear example of the court deciding that a party’s conduct is unreasonable.  However, from the Defendants’ point of view, although the court ordered that their award be paid within 14 days, despite the Claimant’s unreasonable behaviour, that award fell short of the actual costs incurred, especially as it was split between the five active defendants.

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