When is an “unless” order justified in the IPEC?
Ms Pat Treacy, sitting as a Deputy High Court Judge, has dismissed an application for an “unless” order in ongoing litigation concerning copyright infringement, breach of contract and fraudulent misrepresentation in the IP Eneterprise Court (IPEC). The case is: Photobooth Props Ltd & Anor v Nepbh Ltd & Ors.
Photobooth applied for an order that, unless the defendants made an interim payment for costs incurred following a Case Management Conference (CMC) in February 2022, then the Defence should be struck out.
The judge said this was a case where, “exceptionally, the Court can dispose of a contested application without the consent of all the parties as this is the appropriate and proportionate course.”
The procedural history
Following the CMC in February 2022, Photobooth sought immediate payment of its interim costs but this was refused. The trial was listed for November 2022 but, due to the illness of one of the defendants, it had been postponed to November 2023.
At a further CMC in February 2023, Photobooth argued that the postponement disadvantaged them and that the earlier order on costs should be varied. The judge agreed and ordered an interim payment on account, to be paid by 2 March 2023. The defendants’ application to pay by instalments was rejected.
It was against this background that Photobooth sought the unless order, as Ms Treacy explained:
“The Claimants’ position is that they face extreme prejudice; that they should not be forced to incur further costs in pursuing the case as the Defendants have not paid the interim costs; and that the only possible course is for the Court to make an order in the terms sought.”
However, the judge concluded that such an order was not justified.
She found that the policy factor weighed against granting the order as it would mean that the defendants would lose their right to continue to defend the action: “In my view, it is unlikely that this is the outcome envisaged by the IPEC costs rules which … cannot have had the intention of placing the Defendants in the situation in which they now find themselves.”
Moreover, consideration of all relevant circumstances also weighed against granting the order. These included: the loss of the possibility to defend the action might engage Article 6(1) of the ECHR; the existence of alternative means to enforce the order; the IPEC context militated against such an order; and the defendants’ application to pay in instalments was not an abuse of process.
Finally, the judge said that “this is not one of those general situations in which the absence of ‘proper and sufficient evidence of impecuniosity’ weighs heavily in favour of requiring payment of a costs order in order to be allowed to continue to contest the proceedings”.
What does this mean?
The judge faced a tricky situation given the procedural history and delays in this case, the relative positions of the parties and the IPEC context. However, she carefully considered all the circumstances bearing in mind the serious consequences to the defendants of granting the order sought by Photobooth.
Ms Treacy emphasised that her decision did not negate the granting of the interim payment order, saying: “The Claimants have a right which can be enforced through the court system as with other money judgments; this would not have been possible before that order was made. Any issues and evidence relevant to enforcement can be considered most appropriately in that context.” If future orders are not complied with, the just result may still be an “unless” order.