No more indulgence for mess-about defendants, says Court of Appeal

This action has been going on for
so long, this is what men's tennis
fashions looked like when it began

Delay is not the way. In Fred Perry (Holdings) Ltd v Brands Plaza Trading Ltd and another [2012] EWCA Civ 224 (Lords Justices Maurice Kay, Jackson and Lewison) the Court of Appeal for England and Wales provided some more than useful guidance on the application of one of the Civil Procedure Rules -- CPR 3.9, which deals with relief from the striking out of a claim and, indeed, other sanctions). This guidance also flags up the changes to CPR 3.9 which, it is expected, will come into force next year on 1 April 2013.

The dispute before the court related to the sale of counterfeit FRED PERRY clothing. Trade mark owner Fred Perry sued Brands Plaza and its director Ivan Genis in the High Court in London in December 2009, alleging that Genis, both in his own name and later after incorporation of his company Brands Plaza, was infringing trade mark infringements and passing off.

Genis and Brands Plaza repeatedly failed to comply with court orders, in particular with “unless orders” which required (among other things) disclosure, Genis and Brands Plaza had their defences automatically struck out. Judgment was then entered for Fred Perry with costs.  This might sound like a happy end to the story -- but of course it wasn't. After Fred Perry applied to the court for a final injunction and an inquiry as to damages, with payments on account of costs and damages, the two previously inert defendants suddenly leapt into life and lodged last-minute applications for relief from sanctions.

Mr Justice Mann refused the defendants’ application after carefully considering the grounds set out in CPR 3.9, which provides a non-exhaustive list of the circumstances which the court will consider on an application for relief from sanctions. The judge then considered Fred Perry’s application and granted it. This might also have been a happy end to the story -- but that would have been too easy. The defendants requested permission to appeal. No, said Mr Justice Mann. The applied to Court of Appeal for permission to appeal. Yes, said the Master of the Rolls, of course you can, though he added:

“The judgment of Mann J appears to be a very careful and considered judgment on a case management decision of a type which is very much for the trial judge. I am therefore very dubious as to whether it could be successfully appealed.  

However, the consequences of his decision may be fairly drastic for the defendant, and that could be said to be an argument in favour of granting permission [The fact that the consequences may be drastic seems to this Kat to be something that generally works in favour of infringers and other villains, rather for for IP owners. Can anyone prove him wrong?].  

Further, this case may provide an opportunity for the Court of Appeal to indicate the circumstances in which it is, or is not, appropriate for an appellate court to interfere with a trial judge’s decision on this point, and also draw attention to the forthcoming change in CPR 3.9. [Never give two reasons where one will do, says the IPKat. This is surely the real reason ...]”

The defendants raised various grounds of appeal. They said that Mann J was wrong in his approach to the interest of the administration of justice (CPR 3.9(a)); and that he was wrong in his consideration of the effect of the failure to comply (CPR 3.9(h)) when he found that, by failing to comply, the defendants had de facto exonerated themselves from the work they should have done (the effect on Fred Perry was that it had not had the disclosure for which it was entitled and thus had a serious adverse effect on its ability to pursue its claims).

Giving judgment for the Court of Appeal, Lewison LJ said:

“It is obvious that the power to grant relief against sanctions is a discretionary power. It is equally obvious that the discretion is that of the first instance judge and not that of the appellate court. An appellate court can only interfere with the discretion of the first instance judge if he has made an error of principle or if he is plainly wrong.”

After quoting from Lord Jackson’s report on the cost of civil litigation that the Court of Appeal were supportive of judges who make “robust but fair case management decisions”, he continued:

"...courts at all levels have become too tolerant of delays and non-compliance with orders [last month's decision of Judge Birss QC in Westwood v Knight is a good talking-point in this regard: it shows how difficult it is to strike a balance between ruthlessly despatching a seriously delaying and non-compliant defendant and ensuring that the principles of fair litigation are upheld]. In so doing they have lost sight of the damage which the culture of delay and non-compliance is inflicting on the civil justice system. The balance therefore needs to be redressed."

Looking forward to the forthcoming changes to CPR 3.9, which followed his report and is due to come into force on 1 April 2013) Lord Justice Jackson added:

“There is a concern that relief against sanctions is being granted too readily at the present time. Such a culture of delay and non-compliance is injurious to the civil justice system and to litigants generally ... [L]itigants who substantially disregard court orders or the requirements of the Civil Procedure Rules will receive significantly less indulgence than hitherto”.

As for Brands Plaza and Genis, the Court of Appeal showed them no tenderness. Presumably after checking that capital punishment was not an option in cases such as this, the Good Lord thundered:

"Non-compliance with the Civil Procedure Rules and orders of the court on the scale that has occurred in this case cannot possibly be tolerated. Any further grant of indulgence to the Defendants in this case would be a denial of justice to the Claimants and a denial of justice to other litigants whose cases await resolution by the court [At this point the attentive reader might just hear the gentle sound of kat's paws coming together in a round of applause]"

This Kat has been repeatedly bombarded with emails from readers over the years, many of whom have been small or medium-sized businesses, all of whom have complained that they have not been able to get any sort of meaningful result in their favour because they have been ground down be repeated stays, delays and general messings-around from defendants who had no leg to stand on in terms of substantive law and who were hiding under the peculiarities of procedural law which enabled them to carry on as they pleased without an infringement action ever quite getting as far as a ruling in their favour. He hopes that this ruling will be engraved on the hearts of all trial judges, with immediate effect.

A katpat to Roy Crozier (of the victorious Clarke Willmott LLP) for his prompting in getting this note up and running.