Courts refusal to transfer claim from Intellectual Property Enterprise Court (IPEC) to the High Court because of the Claimant’s need for costs protection
His Honour Judge Hacon has made an important decision in respect of whether to transfer proceedings out of the IPEC on the basis that if he did allow the transfer, then the Claimant’s practical ability to retain access to justice would be hindered.
The claim in question was 77 Ltd v Ordnance Survey Ltd & Ors  EWHC 1501 (IPEC) whereby the Defendant’s attempted to transfer the case from the IPEC to the High Court but where the request was dismissed because of the costs risk the court felt that the Claimant (who was an SME) would subsequently face. It is noted that costs payable by Claimants in the IPEC are capped at a maximum sum of £50,000.
His Honour Judge Hacon said that it was clear from the evidence, that the Claimant was relying on the protection of the IPEC costs regime in order to litigate against the government-owned Defendant.
In addition, it was noted that the Claimant had taken out after-the-event insurance in respect of its potential costs liability of £50,000. In the event that the matter has been transferred to the High Court, the court was informed that a Director of the Claimant company that the company’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”.
Conversely, the Defendant argued that the Claimant company had not provided any evidence as to whether it could either raise funds from any alternative sources to meet the any costs liability or alternatively whether they could obtain an insurance policy which provided for a higher limit of indemnity, thereby relieving the courts concerns as to the Claimant’s ability to continue to access justice.
Having considered the Claimant company’s accounts, His Honour Judge Hacon stated that “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.”
The Defendant’s did suggest that a cap on costs could be imposed in the Chancery Division, however despite their assertion, the Defendant did not offer an to agree to an undertaking to limit the costs liability of the Claimant company in order to persuade the court of the merits of the transfer. In addition, the Defendants suggested that due to the complexity and value of the case, the IPEC was not suitable but this argument was also rejected by the court.
One of the most significant advantages of the IPEC, is the costs cap which assists in keeping costs low which is in general preferable for both parties.
HHJ Hacon noted that the most important factor in the case was the fact that the Claimant company was an SME which required the protection of the costs regime offered by the IPEC.HHJ went on to confirm that the transfer of the case to the general Chancery Division “would raise a serious likelihood of having the practical effect of blocking 77M’s access to justice”.
This case demonstrates the courts continued dedication to ensuring that cases are dealt with in the appropriate division and that what is of fundamental importance above all else is ensuring that parties who wish to litigate their cases through the court system are able to do so without being forced out as a result of being exposed to a costs liability for which they either cannot raise funds for or find proper insurance cover.
Written by Leigh Nagler - Solicitor
The purpose of this blog is to provide information and discussion. Nothing on this blog should be relied upon as a substitute for advice from a qualified Solicitor regarding any actual legal issue or dispute. Nothing on this website should be construed as legal advice or perceived as creating a solicitor – client relationship. Just Costs Limited can accept no liability in contract or tort to any person, firm or company that relies on or makes use of the above, or any part thereof.