12 October 2015

Civil Restraint Orders in IPEC: Perry v Brundle


















CPR 3.11 provides:
"A practice direction may set out –
(a) the circumstances in which the court has the power to make a civil restraint order against a party to proceedings;
(b) the procedure where a party applies for a civil restraint order against another party; and
(c) the consequences of the court making a civil restraint order."
Neither the rule nor the glossary defines "civil restraint orders" but para 1 of Practice Direction 3C - Civil Restraint Orders refers to limited civil restraint orders, extended civil restraint orders and general civil restraint orders. Those orders restrict the proceedings that can be issued, and the applications that can be made, by the person against whom they are issued without the permission of the court.

Para 3.2 (1) of the Practice Direction provides:
"Unless the court otherwise orders, where the court makes an extended civil restraint order, the party against whom the order is made –
(1) will be restrained from issuing claims or making applications in –
(a) any court if the order has been made by a judge of the Court of Appeal;
(b) the High Court or the County Court if the order has been made by a judge of the High Court; or
(c) the County Court identified in the order if the order has been made by a designated civil judge or their appointed deputy, concerning any matter involving or relating to or touching upon or leading to the proceedings in which the order is made without first obtaining the permission of a judge identified in the order;"
This case note discusses the power of a judge of the Intellectual Property Enterprise Court to make an extended civil restraint order under para 3.2 (1) (b).

In FH Brundle (A Private Unlimited Company) v Perry [2014] EWHC 475 (IPEC) one Richard Perry was sued for groundless threats. Mr. Perry counterclaimed for patent infringemenet. The action and counterlaim came on before His Honour Judge Hacon who concluded at paragraphs [81] and [82] that Mr Perry had no defence to the threats action and that his claim for infringement failed.  In FH Brundle (A Private Unlimited Company) v Perry (No 2) [2014] EWHC 979 (IPEC), [2014] 4 Costs LO 576 the judge awarded costs of £49,645 against Mr Perry. Mr Perry was unable to pay that sum and was adjudged bankrupt on 30 April 2015. He appealed unsuccessfully against his bankruptcy and also applied for permission to remain a company director notwithstanding his bankruptcy. Both of those proceedings failed

In Perry v F H Brundle and Others [2015] EWHC 2737 (IPEC) (2 Oct 2015) Mr Perry sued the claimant and the defendants to his counterclaim in the previous litigation for patent infringement notwithstanding his bankruptcy. The defendants applied for Mr Perry's claim to be struck out.  At the hearing of the defendants' application, Mr Perry made the following additional applications:
"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."
Not surprisingly, the judge dismissed the applications and struck out the action on the ground that Mr Perry's the right to bring proceedings vested in his trustee in bankrutcy and that in any case the action was res judicata.  

It is worth noting that in all those proceedings Mr Perry acted in person. His opponents on the other hand were represented throughout by patent counsel.

Having succeeded in striking out Mr Perry's claim the defendants applied for an extended or, in the alternative, limited civil restraint order. As para 2.1 of the Practice Direction provides that a judge of any court may make a limited civil restraint order which has the effect of limiting the applications that the litigant against whom the order is made can bring in the proceedings in respect of which the application is made without the leave of the court it was clear that Judge Hacon could make a limited civil restraint order. However it was less clear whether he had jurisdiction to make an extended order as a s.9 judge sitting in IPEC. The learned judge decided that he did as extended civil restraint orders had previously been made by deputy judges and IPEC had been designed as a specialist list of the High Court in 2013 (see para 1 of my article What does the Intellectual Property Enterprise Court mean for Litigants in the North West? of 12 Oct 2013 in IP North West).

The law on extended civil restrain orders had been considered by Edward Bartley Jones QC in  Courtman v Ludlam and Another [2009] EWHC 2067 (Ch), [2010] BPIR 98 where he had considered the previous case law. From those cases, Judge Hacon drew the following principles at para [27]:
"(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."
Taking Mr Perry's bankruptcy appeal and company application into account as well as his unsuccessful patent action there was no doubt that the second criterion had been met. The only question was Mr Perry's persistence in making claims and whether he was likely to renew such claims in the future. Apparently Mr Perry had appeared "reassuringly restrained" in court but had behaved quite differently outside. The judge concluded at para [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."
He therefore made an extended civil restraint order against Mr Perry.

Although everything that Judge Hacon said at para [34] was no doubt true it is hard not to feel sorry for Mr Perry. Everybody who practises intellectual property law has met inventors with a keen sense of injustice who are driven to do very imprudent things. Mr Perry's troubles started when he sent a threatening letter to FH Brundle and the other fencing manufacturers. Had he consulted specialist solicitors, patent attorney litigators or counsel under the public access rules he would have been warned against such action. This all arises from the abolition of civil legal aid for business disputes by the so called Access to Justice Act 1999. It is good that the Agreement on a Unified Patent Court provides for legal aid in proceedings before the Unified Patent Court under art 71.

Should anyone wish to discuss this case note or patent litigation in general, he or she should call me on 020 7404 5252 during office hours or send me a message through my contact form.

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