Crackdown on unjustified procedural delays in trademark infringement actions

United Kingdom

The decision of the Court of Appeal in Fred Perry (Holdings) Ltd v Brands Plaza Trading Ltd ([2012] EWCA Civ 224) provides guidance on appellate court powers to interfere with decisions under the Civil Procedure Rule (CPR) 3.9 and seems to indicate a change in judicial tolerance towards uncooperative litigants.

In January 2010 Fred Perry Holdings Limited brought an action against Brands Plaza Trading Limited and Ivan Genis, previously a sole trader and now a director of Brands Plaza, for trademark infringement and passing off. In the course of the proceedings, defendants Genis and Brands Plaza repeatedly failed to comply with court procedure. The defendants failed to acknowledge service of the claims within the prescribed time limit, in breach of the CPR, and subsequently failed to comply with five court orders.

Events culminated in the defendants’ failure to comply with an unless order for disclosure by December 20 2010. As the defendants had also failed to appeal against the order, apply for an extension of time and apply for relief against the sanctions before the hearing, the defendants’ defences were automatically struck out and judgment entered for Fred Perry with costs. As Fred Perry sought non-monetary relief, it was necessary to apply for judgment in default of a defence. On the day before the hearing on the matter of judgment in default, the defendants lodged an application for relief of sanctions.

Mann J considered the grounds for such relief, set out in CPR 3.9, and determined that the defendants’ application should be refused. The defendants then sought leave to appeal this decision, which Mann J denied. The defendants remained determined and applied to the Court of Appeal for permission to overturn the decision. The Master of the Rolls granted this request for appeal on the grounds that the defendants’ faced serious consequences as a result of Mann J’s decision, and that it provided an opportunity for the Court of Appeal to provide useful commentary on CRP 3.9.

While the power to grant relief against sanctions is discretionary, the Court of Appeal stressed the fact that this discretion is not held by the appellate court; it is held by the court of first instance. The Court of Appeal cannot interfere with the discretion exercised unless the decision is plainly wrong or an error of principle has been made. The Court of Appeal commended Mann J’s careful consideration of CPR 3.9, finding both that his decision was within the discretion afforded to him and that it was plainly right.

The Court of Appeal agreed with commentary in Jackson LJ’s report on costs in civil litigation, which states that the courts of England and Wales “have become too tolerant of delays and non-compliance with orders”. In the present decision, Jackson LJ was of the opinion that the level of repeated non-compliance in this case’s history was intolerable and that any further leniency towards the defendants would amount to a denial of justice for Fred Perry.

Jackson LJ highlighted the fact that CPR 3.9 is being amended amid fears that relief against sanctions is being granted too readily. The Rule Committee has recently approved changes only to CPR 3.9(1), expected to enter into force on April 1 2013, whereby the court is directed to consider the need for litigation to be conducted efficiently, cost effectively and in compliance with the governing rules.

In light of this judgment and the prospective rule change, the courts’ tolerance for litigants who flout CPR requirements or court orders is likely to be substantially reduced. This should be welcome news to parties that have struggled to obtain, or have been deprived of, a ruling due to the other side’s non-compliance and delay tactics.

Rohan Massey, McDermott Will & Emery UK LLP, London

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