Judge rejects bid to move case out of IPEC because of claimant’s need for costs protection

IPEC: £50,000 costs cap

A defendant’s bid to transfer a case from the Intellectual Property Enterprise Court (IPEC) to the High Court has been dismissed because of the costs risk the SME claimant would then face.

His Honour Judge Hacon said it was a case where the claimant’s “practical ability to retain access to the courts requires protection”.

Costs payable by claimants in the IPEC are capped at £50,000.

In 77 Ltd v Ordnance Survey Ltd & Ors [2017] EWHC 1501 (IPEC), the judge said it was “clear” from the evidence that the claimant was seeking the protection of the IPEC costs regime in its action against the government-owned defendant.

It had taken out after-the-event insurance to for its potential liability of £50,000, and HHJ Hacon recorded that a director of the company told him that, if the claim were transferred to the general Chancery Division, “77M’s position would become untenable and that he would have very serious concerns about his own financial position and the ability of 77M to continue the litigation”.

The defendants argued that 77M had provided no evidence on whether it could obtain a higher limit of indemnity for the insurance, or whether would be impossible to obtain funds from other sources which could meet any costs liability.

The judge said: “It is clear, from the exhibited accounts of 77M, that it is in no position to fund litigation by itself if that litigation were to include the risk of high costs to be paid should 77M lose in the general Chancery Division.

“I do not take the view that it is incumbent upon an SME to prove exhaustively that it cannot access loans from elsewhere to fund litigation in order to have good reason to obtain the benefit of a costs cap in IPEC.

“An SME with limited financial resources is precisely the kind of litigant that is entitled to the benefit of the costs cap in IPEC, subject to other considerations.”

Though the defendants said the Chancery Divison court could impose a cost cap, the judge noted that they did not offer an undertaking to limit the costs liability of 77M to any particular amount.

“It is also the case that the rules in IPEC are particularly suited to keeping disputes to the minimum in complexity, which inevitably leads to a lower incursion of costs. Lower costs should suit both sides. It seems to me that this is equally appropriate in the case of a publicly funded litigant.”

HHJ Hacon also rejected argument by the defendants that the value and complexity of the case were too great for the IPEC.

“As matters stand now, the most important factor in the present case is that 77M is an SME which seeks the protection of the costs regime in IPEC.

“I am satisfied, on the evidence I have seen, that a transfer to the general Chancery Division would raise a serious likelihood of having the practical effect of blocking 77M’s access to justice.

“In Comic Enterprises, Judge Birss described this factor as capable of being a decisive factor. In Environmental Cycling, Mr Justice Warren said that it was enormously important factor which may overwhelm other matters. I agree.

“I think this is a case in which 77M’s practical ability to retain access to the courts requires protection. I therefore dismiss OS’s application to transfer the case to the general Chancery Division.”

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