Intellectual Property Enterprise Court

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY ENTERPRISE COURT

		Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL
		02/10/2015

Judge Hacon :

1. On the afternoon of 25 September 2015 I heard an application by the Defendants in these proceedings to strike out the claim in its entirety or alternatively for summary judgment in the Defendants' favour. The application succeeded and I struck out the claim for reasons given in an ex tempore judgment.
2. The Defendants also applied for an extended civil restraint order ("CRO") against the Claimant ("Mr Perry") or, by way of a secondary alternative, a limited CRO. I granted an extended CRO and said that I would give my reasons in writing. They now follow.
3. Mr Perry appeared in person. The Defendants were represented by Mr Baran whose submissions very fairly included points which might have been raised on Mr Perry's behalf had he been represented.

Background

4. Mr Perry is the proprietor of UK Patent No. 1 390 104 ("the Patent"). The Patent claims a type of fence bracket. In the present proceedings Mr Perry alleges that the Defendants have each infringed the Patent by reason of their dealings in a fence bracket called the 'Nylofor' beam bracket.
5. The Patent was also at the centre of an earlier action in this court, Case No. CC13P00980 ("the First Action"). In the First Action the current First Defendant ("Brundle") was the claimant. Brundle alleged that Mr Perry had issued unjustified threats of patent infringement. Mr Perry counterclaimed for infringement of the Patent and also brought a Part 20 claim against the Second and Third Claimants in the present proceedings ("Betafence" and "Britannia" respectively) for infringement of the Patent. Mr Perry's complaint of infringement against Brundle, Betafence and Britannia was also concerned with their dealings in the Nylofor beam bracket.
6. On 6 March 2014 I gave judgment in the First Action. I held that Brundle's claim in relation to threats succeeded and found that Mr Perry's counterclaim and Part 20 claim failed because the Nylofor bracket did not fall within any of the claims of the Patent. Mr Perry appealed. Permission to appeal was refused by Floyd LJ in writing. Mr Perry renewed his application for permission to appeal in an oral hearing before Lewison LJ on 3 February 2015. The application was dismissed. Thus, the finding that Brundle, Betafence and Britannia did not infringe the Patent by reason of their dealings in the Nylofor bracket is now res judicata.
7. Following my judgment in the First Action I made an order for costs against Mr Perry, totalling a little under £50,000. Mr Perry was unable to pay this sum and on 30 April 2015 Deputy District Judge Giddins made a bankruptcy order against Mr Perry in the Bath County Court.
8. On 2 June 2015 Hayley Bird, an Examiner in the Official Receiver's Office in Bristol, wrote to this court. Ms Bird is apparently the Insolvency Examiner responsible for Mr Perry's affairs. Mr Perry had informed Ms Bird of the present proceedings and it is clear from the letter that Ms Bird explained to Mr Perry that as receiver and manager of Mr Perry's bankruptcy estate, the cause of action in the present proceedings (if any) vested in the Official Receiver. In other words, Mr Perry had been told that he had no right to take the present proceedings any further.
9. Mr Perry for a while pursued other lines of litigation. On 2 July 2015 he applied for leave to continue acting as a director notwithstanding his undischarged bankruptcy. The application came before District Judge Britton on 8 July 2015 in Bristol County Court. The District Judge described the application as "almost incomprehensible". It was dismissed and declared to be "entirely devoid of merit".
10. Mr Perry then applied for permission to appeal against the bankruptcy order which had been made against him. This came before His Honour Judge McCahill QC on 18 September 2015. Judge McCahill stated, possibly with a note of exasperation:

"I have spent at least the equivalent of one day in dealing with and analysing the papers relating to this application for permission to appeal."

Judge McCahill's decision on the application was as follows:

"Permission to appeal is refused on all grounds.

All grounds are totally without merit. They are doomed to fail.

There is no prospect of a successful appeal or any other compelling reason why the appeal should be heard.

Pursuant to CPR 52.3(4A)(a), Mr Perry may not request this decision to be reconsidered at a hearing."

11. It follows from Judge McCahill's ruling under CPR 52.3(4A)(a) that Mr Perry's route of appeal against the bankruptcy order against him has now been exhausted.
12. As I have stated, on 25 September 2015 I struck out the present proceedings. This was done on two alternative grounds, either of which would have been sufficient. The first was that any cause of action vested in the Official Receiver, not Mr Perry. The second was that the claim was in any event res judicata. The claim was totally without merit.
13. Mr Baran submitted that a further flaw in the claim was that it was likely that Mr Perry did not now own the Patent because of his bankruptcy. I am not at all sure about that. However there no reason for me to investigate which assets, aside from the relevant causes of action, have now passed to the Official Receiver and whether they include the Patent.
14. At the hearing on 25 September 2015 Mr Perry made four applications by means of four undated draft Application Notices sent to the Court by email on 21 September 2015. The first was to add two defendants and a further complaint of "theft" of UK Patent No. 2 401 616 and a complaint of fraud. The second was to amend the (already lengthy) Particulars of Claim "based on new evidence, criminal activity of the defendants and legal advice". The third was to lift the damages cap in these proceedings. The fourth was to add the Defendants' solicitors, Collyer Bristow LLP, as a defendant "for colluding to conceal criminal activity and breach of their practice licence in bringing malicious prosecutions to help other defendants conceal criminal activity."
15. Aside from other shortcomings in these applications, the short point was that Mr Perry had no cause of action in the proceedings as a whole and was not entitled to make any of the applications. In fact Mr Perry must have understood this when he made them. I dismissed them all and recorded my view that they were totally without merit. Having made that finding and a similar finding with regard to the present proceedings as a whole, pursuant to CPR 23.12(b) I was obliged to consider whether it was appropriate to make a CRO.

Jurisdiction of the IPEC

16. It is clear that I have jurisdiction to make a limited CRO. The issue is whether there is also jurisdiction to make an extended CRO, which matters for reasons which I will discuss below. Mr Baran submitted that an IPEC judge may grant extended CROs. The provisions in the CPR regarding CROs came into force on 1 October 2004, long before the IPEC was created, so there can have been no express intention in the mind of the draftsman in relation to the IPEC one way or the other.
17. CPR 3.11 states that a practice direction may set out the circumstances in which a court has power to make a CRO, the procedure which applies and the consequences of such an order. The relevant practice direction is 3C. Paragraph 3.1 of PD3C provides as follows:

"Extended Civil Restraint Orders

3.1 An extended civil restraint order may be made by –

(1) a judge of the Court of Appeal;

(2) a judge of the High Court; or

(3) a Designated Civil Judge or their appointed deputy in the County Court."

18. The question is whether I am sitting as "a judge of the High Court" in this context. It appears that this term does not refer exclusively to a puisne judge of the High Court within the meaning of s.10(3)(c) of the Senior Courts Act 1981. Extended CROs have been granted by deputy High Court judges, see Courtman v Ludlum [2009] EWHC 2067 (Ch), a judgment of Edward Bartley Jones QC and Supperstone v Hirst [2009] EWHC 1271 (Ch); [2009] 1 WLR 2306, a judgment of Bernard Livesey QC. The former judgment was approved by Birss J in Lilley v Euromoney Institutional Investor plc [2014] EWHC 2364 (Ch), at [95] to [96]. The authority of those deputy judges was derived from s.9(1) of the Senior Courts Act 1981. To the extent that qualification as "a judge of the High Court" is wholly or partly satisfied if the individual sitting is a judge nominated under s.9(1), I satisfy that criterion.
19. On the other hand, I must consider whether the limitation imposed by PD3C 3.1(2) also or instead turns on the court in which the application for the CRO is made. As is well known, the IPEC is in practical terms the successor to the Patents County Court ("the PCC"). Setting up the PCC required primary legislation which was enacted in the form of sections 287 to 292 of the Copyright, Designs and Patents Act 1988 ("the 1988 Act"). The PCC was abolished by the repeal of sections 287 to 289 and 291 of the 1988 Act, on 1 October 2013, by reason of section 17(5) and schedule 9(2), paragraph 30, of the Crime and Courts Act 2013 (sections 290 and 292 of the 1988 Act had already been repealed by then). The establishment of the IPEC did not require primary legislation since it was created as a specialist list of the Chancery Division of the High Court. This was from 1 October 2013, see The Civil Procedure (Amendment No. 7) Rules 2013, rule 26. From that date all proceedings that had been started in the PCC were in effect transferred to the IPEC, see rule 30 of the 2013 Rules.
20. The upshot is that in all matters at first instance the IPEC, as a specialist list within the Chancery Division of the High Court, has jurisdiction which is co-extensive with the rest of the Chancery Division. It would be anomalous for PD3C 3.1(2) to provide for an exception to that state of affairs and such an exception would, I think, require a clear statement to that effect. There is none.
21. On at least one occasion sitting in the IPEC has been seen as no bar to the granting of an extended CRO. Mr Baran directed my attention to the judgment of Warren J dated 22 April 2015 in KL Communications Ltd v Fu [2015] EWHC 2026 (IPEC). This concerned an application for an extended CRO against the defendant, Ms Fu. The claimant relied on a total of 11 earlier applications which Ms Fu had made, largely before me but also before Mann J in the same proceedings. Warren J was sitting as a judge of the IPEC and seems either to have assumed that he had the power to make an extended CRO or to have thought that it was self-evident.
22. I have come to the view that since the meaning of "a judge of the High Court" in PD3C 3.1(2) is not limited to a puisne judge of the High Court and there is no reason to suppose that the jurisdiction of the IPEC is otherwise limited in relation to CROs, I have jurisdiction to grant an extended CRO.
23. Before leaving the issue of the jurisdiction of the IPEC, I should mention a matter that was explored in argument. The practice direction seems at first glance to distinguish "a judge of the High Court" from "a High Court judge". Paragraph 3.3 sets out the consequences of an extended CRO on the party concerned. Paragraph 3.3(2) provides that where a party is subject to an extended CRO and must therefore seek permission to make certain claims or applications, in certain circumstances (i.e. repeated applications for permission which lack merit), the court may order that a decision to dismiss the application is final with no right of appeal, subject to a limited exception. Paragraph 3.7 then states:

"3.7 An order under paragraph 3.3(2) may only be made by –

(1) a Court of Appeal judge;

(2) a High Court judge; or

(3) a Designated Civil Judge or their appointed deputy."

24. This distinction between "a judge of the High Court" and "a High Court judge" seems at first sight to be no accident because an equivalent distinction is drawn in the context of general CROs (see PD3C 4.1(2) and 4.7(2)). See also PD3C 2.7(2) in relation to permission to make further applications in proceedings which are the subject of a limited CRO. The problem with drawing such a distinction is that the judge to whom repeated applications are made, as contemplated by paragraph 3.3(2), will be the judge designated under paragraph 3.9(3) and one might frequently expect this to be the judge who makes the CRO in the first place, i.e. the judge referred to in paragraph 3.2(1). It seems to me likely that despite the odd difference of wording, "a judge of the High Court" and a "High Court judge" mean the same thing within the confines of PD3C. The alternative would be awkward for no good reason. I also think that if a real distinction had been intended it would have been more clearly signalled and defined, rather than hinted at.

The law on extended CROs

25. As appears from PD3C 3.1, a party is vulnerable to an extended CRO only if he or she has persistently issued claims or made applications which are totally without merit. In Courtman Mr Bartley Jones QC said this:

"[9] What seems, therefore, to be required is a persistence in making wholly unmeritorious claims. I note that in Supperstone v Hurst [2009] EWHC 1271 Mr Bernard Livesey QC (sitting as a Deputy Judge of the Chancery Division) regarded three wholly unmeritorious claims or applications by Mrs Hurst as being sufficient to constitute "persistence" (para 55). To my mind, three unmeritorious claims or applications must be the bare minimum for establishing "persistence". The essential thrust of decisions such as Ebert, Bhamjee and Kumar is that the court should engage in a graduated, and proportionate, response to the identified abuse. This would make it logical for the statutory scheme to have a higher pre-condition threshold for the making of an extended CRO as opposed to a limited CRO (and an even higher threshold as a pre-condition for the making of a general CRO). The wordings of paras 2.1, 3.1 and 4.1 of the PD clearly confirm that this is the case. If the pre-condition threshold for a limited CRO is two or more applications which are totally without merit then "persistence" in para 3.1 of the PD must, on any logical analysis, require more than two unmeritorious claims or applications."

The three cases referred to in that passage are the judgments of the Court of Appeal in Attorney General v Ebert [2002] 2 All ER 789, Bhamjee v Forsdick [2004] 1 WLR 88 and R (Kumar) v Secretary of State for Consitutional Affairs [2007] 1 WLR 536.

26. Birss J considered this passage from Courtman in Lilley and said this:

"[96] I agree with the Deputy Judge that the court should engage in a graduated and proportionate response to abuse when it is identified and I also agree that "persistence" in sub-paragraph 3.1 of PD 3C must require more than two claims or applications which are totally without merit.

[97] Whether or not the two applications referred to in sub-paragraph 2.1 relating to a Limited CRO are required to be in the same proceedings as the one in which the Limited CRO arises, the test to be applied relating to an Extended CRO under sub-paragraph 3.1 has a wider ambit. In deciding whether a litigant has persistently issued claims or made applications which are totally without merit, the court is entitled to and should consider the litigant's conduct as a whole, so far as it is able to do so. All aspects of the litigant's conduct are capable of being relevant, not only his or her conduct in the particular proceedings in which the point arises."

27. I draw from these authorities the following principles:

(1) When considering the appropriate order in relation to an application for a CRO, the court should engage in a graduated and proportionate response to the identified abuse.

(2) Where the application is for an extended CRO, the litigant against whom the order is sought must have made a minimum of three claims or applications which were totally without merit in order to be taken to have 'persistently' issued such claims or applications within the meaning of paragraph 3.1 of PD3C.

(3) Subject to that minimum, the persistence of the litigant in issuing such claims, in particular the likelihood that such persistence will be maintained in the future, is to be assessed by reference to his conduct as a whole.

(4) The categorisation of a claim or application as being totally without merit need not have been done at the time they were made; the court hearing the application for the CRO is entitled retrospectively to adjudge a claim or application to be totally without merit.

In relation to this last point (4), see KL Communications (cited above) at [5]-[6].

28. There is also an observation which I take from the judgment of Warren J in KL Communications, at [8]. A CRO should not in practice significantly deprive a litigant of any right to which he or she would otherwise be entitled. It acts as a filter to preclude the making of unmeritorious claims or applications. This ought to work in favour of all parties, including the litigant who is the subject of the order – especially where he is a litigant in person – by ensuring that their time and money are not wasted by initiatives doomed to failure.

This case

29. The requirement that Mr Perry must have made three or more claims or applications which were totally without merit has been met. They are the application heard on 8 July 2015 for leave to continue acting as a director, which was described by District Judge Britton as being "entirely devoid of merit", the application heard before Judge McCahill on 18 September 2015, certified by him as being "totally without merit", the present proceedings which were struck out on 25 September 2015 and found to be totally without merit and finally the four applications by Mr Perry before me on the same date in relation to which I made the same finding.
30. I have to look further however. In considering Mr Perry's conduct as a whole the most important criterion to my mind is whether collectively this conduct suggests that Mr Perry is likely to persist in future with unmeritorious claims or applications. Part of that is what he told me at the hearing on 25 September 2015. I should say first that his conduct in the sense of how he personally conducted himself at the hearing was exemplary: he was restrained and polite both to the court and to Mr Baran. However, it was my clear impression from what Mr Perry said that he retains a very strong sense of grievance about what, as he sees it, the Defendants have been allowed to get away with and the damage and loss to him which has ensued. Mr Perry believes himself to be the victim of a great injustice and I doubt that he will rest until every avenue is explored which may right that perceived wrong.
31. The potential claim which is currently at the top of his mind stems from what Lewison LJ said to Mr Perry at the hearing on 3 February 2015, giving judgment on Mr Perry's renewed application for permission to appeal against my order of 27 March 2014. Lewison LJ observed that Mr Perry might have a claim in passing off. Passing off formed no part of the judgment and order from which Mr Perry was appealing, so this did not assist him. But he took the observation to heart. Lewison LJ's comment raised only what seemed to be a possibility, a possibility based solely on what Lewison LJ had been told by Mr Perry at that. Unfortunately Mr Perry has treated the comment as senior judicial backing for a sound claim in passing off and, upon further reflection¸ a claim which he has elaborated into one of fraud.
32. Going on Mr Perry's attitude at the hearing before me, I think it is possible that he now understands that as a bankrupt his cause of action for patent infringement can no longer be pursued. I doubt he feels similar restraint with regard to his claim for fraud and/or passing off. In my view, given the opportunity, Mr Perry will pursue this claim by any means available to him.
33. It has also been my experience that even where Mr Perry has appeared reassuringly restrained at a hearing, once left to consider his position afterwards his attitude hardens and his behaviour can become unrestrained and frequently abusive. I have in mind his circulation of a letter, purporting to have been written by me after I handed down judgment in the First Action on 6 March 2014, in which I am represented to reverse my judgment and award Mr Perry £5 million. I discussed this in more detail in F H Brundle v Perry [2014] EWHC 979 (IPEC); [2014] 4 Costs LO 576. Also, Mr Baran informed me that Mr Perry's communications with his instructing solicitors have been threatening and abusive. I would accept the truth of that anyway, but it is corroborated by my knowledge of threats and abusive language from Mr Perry directed at my former clerk. She is robust and I believe took it in her stride but this is not something that either she or the Defendants' solicitors should have had to put up with. I have no reason to doubt that the Defendants' solicitors' dealings with Mr Perry have at all times been conducted in a correct and appropriate manner.
34. In my view there is a very real prospect that notwithstanding Mr Perry's calm and measured submissions in court, his sense of injustice will shortly be rekindled and that this will lead to further hopeless claims and/or applications. A limited CRO would not be sufficient because such claims and applications will probably be made wholly or in part outside these proceedings. I also accept Mr Baran's submission that Mr Perry's applications have necessitated the expenditure of considerable sums by the Defendants which are unlikely to be recovered and that if Mr Perry is left alone the pattern of wasted expenditure will continue.
35. For those reasons in my judgment it is appropriate that Mr Perry is made the subject of an extended CRO.