Claim No: IP-2022-000077 - [2024] EWHC 234 (IPEC)

I am grateful to both counsel for their helpful submissions on the relevant legal principles and for their explanation of the state of the pleadings and of the underlying facts, both those which are already available, and those which might ultimately be available at trial.

There is no substantive issue as to the adequacy of the pleading against Mr Käärmann and Mr Hinrikus at this stage. The application to admit them gives rise only to case management, cost benefit and proportionality considerations.

Any greater costs and complexity involved in the addition of further parties must be balanced against the First Defendant’s identification of them as individuals who had a direct and personal involvement in the commission of the alleged tort. It is necessary to assess whether the cost benefit disadvantages are sufficient to outweigh the First Defendant’s wish to have its case against those individuals heard. In making the decision, it is also relevant that the Counterclaim is a contingent part of the First Defendant’s case while noting that it is not possible at this stage to assume that it will not be important.

Mr Hinrikus and Mr Käärmann have indicated their intention to contest the substantive allegation of joint tortfeasorship at trial. This will inevitably add greater complexity and cost than if that question were not in issue. IPEC is a jurisdiction where the cost benefit context requires careful thought when dealing with any application that is liable to add cost and complexity, and in which the addition of new parties should not be accepted as a matter of course. However, precisely because of those considerations, IPEC also has significant case management tools at its disposal to limit the costs and delays that may follow from admitting further parties. Those tools include limiting the scope of certain procedural or evidential steps such as disclosure or cross-examination. The availability of those mechanisms to assist in striking an appropriate balance is an important part of the picture.

Mr Selmi submitted that this case could be dealt with in two days, even with the addition of all four additional parties. Ms Berkeley disagreed, submitting that the addition of further parties would require an extra day and a half to two days beyond the two day trial that would be required in the absence of any additional parties. This would take the trial outside the maximum (exceptional) three day trial length in IPEC. On this ground, Mr Berkeley submitted that the application should be dismissed as unnecessary and inappropriate. In the alternative, the Claimant’s proposal was to accommodate the addition of further parties (if ordered) by, either: ordering a further liability trial on joint tortfeasance only; or transferring the matter to the High Court.

I agree with Ms Berkeley that the issues already at play in the case, together with the additional substantive issues that may well be raised by the individual defences of Mr Hinrikus and Mr Käärmann are likely to require a trial lasting more than two days. Both parties agreed that the case without any additional parties would require a two-day trial and it is unrealistic to assume that the addition of issues related to personal culpability as joint tortfeasor would not require some additional time.

I do not accept, however, that this necessarily means that the application should be dismissed. It is one consideration to be dealt with in the round. I consider that this matter with the addition of at least some new parties could be case managed within IPEC in three days for one liability trial followed by a separate trial on quantum. That would be a more efficient approach than providing for sequential trials in IPEC or transferring the action to the High Court. Such an approach would be within the overall IPEC jurisdiction to hold trials lasting for up to three days, by far the most efficient way of dealing with the issues between the parties, and in accordance not only with fairness, but also the needs of other court users. Whilst three-day trials are the exception in IPEC, it would also be exceptional to order a split liability trial in IPEC with the additional complexity that would entail or to transfer the matter to the High Court in the absence of an application from either party and in circumstances where the matter can be dealt with in IPEC.

In the light of the above, I conclude that the application to join Mr Hinrikus and Mr Käärmann as additional parties as counterclaim defendants should succeed. There is no substantive argument against their inclusion. Mr Selmi says that their inclusion will have limited impact and, despite Ms Berkeley’s misgivings, the Court will expect that he and his clients will deal with the case against the new parties accordingly. The IPEC cost benefit test is an important aspect of such decisions, but on balance I consider that in this instance the interest of the First Defendant in having its case heard against these parties can be accommodated in a way that satisfies fairness and the cost benefit requirements of this jurisdiction as well as the overarching requirements of the overriding objective.

As adding Mr Hinrikus and Mr Käärmann will increase the demands on the parties and on the Court, the case management directions will be tailored to help the parties manage the costs of preparing for trial, and the duration of the trial, particularly in respect of the disclosure regime. It is likely that the trial judge will also have this in mind, for example when considering whether cross examination of the individual witnesses on joint tortfeasorship should play a part in the final trial, even if cross examination is permitted by the case management directions.

As for Mr Nash, I prefer the submissions of Ms Berkeley on his behalf and conclude that the application should be dismissed. Assessing the substantive and case management issues relating to his position overall, I consider that even if the First Defendant’s pleading and its factual basis met the bare test for adding him, the costs benefit considerations are not in favour of allowing him to be joined. These issues are not entirely separate, and both play a part in the overall balancing exercise. A weak case which will require significant work to make good and which will entail additional complexity for limited gain is less likely to be permitted to progress than one which may only just creep over the threshold of being arguable but which is straightforward and simple to prove and argue with limited effect on resources and costs. In this instance I am of the view that the pleading against Mr Nash should not be permitted and that the application to add him as a party should be dismissed on both substantive and case management grounds.

As to the substantive issues, a pleading relying on the mere fact of employment as a Company Secretary and General Counsel is not in my view sufficient. The evidence relied on by the First Defendant to support that pleading is also insufficient, consisting of an invitation to draw inferences that Mr Nash was part of a common design or otherwise liable for the pleaded tort, from a series of anodyne statements in materials essentially meant to be read by other lawyers.

Ms Berkeley submitted that those materials were not sufficient to provide a factual basis to meet the merits test as described by the Court of Appeal in Kawasaki. She reviewed each and submitted that either individually or collectively they established nothing more than that Mr Nash had acted as a General Counsel to the Claimant. They were examples of a lawyer talking to other lawyers about what he had done to assist his clients. They were not evidence that Mr Nash had authorised, procured or was acting in a common design with others in respect of the rebrand and name change. Nothing in that material, when read objectively, suggested that the criteria required to establish joint liability in tort had an adequate factual basis at this stage or would be established at trial. If those pieces were evidence of anything, Ms Berkeley submitted that it was mere facilitation.

Mr Selmi submitted that the evidence put forward was sufficient at this stage and invited me to bear in mind that more material might become available to bolster the First Defendant’s position. He submitted that the material before the Court and the witness statement provided by Mr Nash gave rise to a substantive dispute of fact between the parties and cautioned against having any regard to Mr Nash’s witness statement on the basis that a mini trial must be avoided.

I disagree with Mr Selmi that the evidence submitted is sufficient to provide a factual basis for the allegation of joint tortfeasorship. It simply is not enough to support such an allegation. I agree with Ms Berkeley that it is the nature of puff and demonstrates nothing more than a lawyer who is about to change roles explaining his previous role. It is not evidence going to the elements that must be established in a pleading of joint tortfeasorship.

I also disagree with Mr Selmi that it is inappropriate to review the short witness statement provided by Mr Nash at this stage or that there is a material dispute of fact arising from the evidence currently available.

Mr Nash’s evidence is entirely consistent with the material provided by the First Defendant. Nothing in his evidence contradicts the facts contained in the materials relied on by the First Defendant.

Secondly, it is appropriate to have some regard to evidence provided by the parties. Both Mr Selmi and Ms Berkeley took me to the judgment of HHJ Hacon in Beeher. In holding that the test to be applied under CPR 19.2(2)(b) was akin to that under CPR 24(2)(a) he noted that this was in part because “... in a summary judgment application there may be additional facts on which a party seeks to rely in order to determine whether the claimant has no real prospect of succeeding on the claim ... such facts being presented in one or more witness statements” [37].

The witness statement provided by Mr Nash is short and provides a factual description of his role. It confirms the First Defendant’s evidence but supplements it by briefly explaining additional facts which are highly material to the likelihood of success of the First Defendant’s pleaded claim against him. It falls within the category of documents identified by HHJ Hacon as relevant when deciding a summary judgment application and, by extension, similar applications. This is particularly the case in a tribunal where the control of costs is important and when short, focussed and relevant factual evidence at an early stage can help avoid significant future costs.

In assessing the evidence and the likelihood of success of the substantive case, I have had in mind the comments of Chadwick LJ in MCA v Charly, cited by HHJ Hacon in Urbanbubble at [152] that the mere fact that an individual holds a particular role in a company (in that case as a director, but there is no reason to believe that employees would be treated differently) does not in and of itself make them liable when otherwise they would not be. In order to be liable “... they must be personally involved in the commission of the tort to an extent liable to render them liable as a joint tortfeasor. Whether they are sufficiently involved is a question of fact requiring an examination of the particular role played by them in the commission of the tort” [152].The evidence put forward by the First Defendant in this case does not sufficiently put in issue the personal involvement of Mr Nash. I agree with Ms Berkeley that, at most, it is evidence of facilitation which is insufficient.

For those reasons, the First Defendant’s application is dismissed as the proposed amended pleading and supporting evidence disclose no reasonable grounds for bringing the proposed counterclaim against Mr Nash. The evidence relied on does not establish a sufficient factual basis for the pleading and the proposed counterclaim has no reasonable prospects of success.

As far as the IPEC cost benefit assessment is concerned, I consider that the balance is also against the addition of Mr Nash as a further party.

Mr Nash’s position is substantively different from that of Mr Hinrikus and Mr Käärmann. His addition as a party would further increase costs and complexity.

Mr Nash is no longer employed by the Claimant and has no further interest in the Claimant’s business or in the brand. The First Defendant has no need of a remedy against him by way of injunction. The Claimant is well resourced and is now joined by three other parties against whom the First Defendant can seek monetary relief in the event that the counterclaim is both required and succeeds.

It was clear during the hearing that introducing Mr Nash and the need to prove joint tortfeasorship against him into the proceedings would involve an array of subsidiary issues including further evidence as to his precise activities and duties in at least three different roles, together with potential satellite disputes on issues such as the effect of legal professional privilege on the admissibility of evidence. Even if these were to be resolved before trial, they would involve the expenditure of time and money in preparation, which should not be overlooked in a cost-sensitive jurisdiction. If those issues remained live at trial, they would lead to a longer trial, requiring more resources and entailing more work for the trial judge.

While I accept Mr Selmi’s submission that the mere fact that admitting another party to proceedings may add a small amount of complexity is not a good reason to dismiss an application to do so, I do not accept that adding Mr Nash would add only a small amount of complexity. As mentioned above, the addition of Mr Hinrikus and Mr Käärmann (together with Wise PLC) will already add a degree of complexity and additional work, requiring robust case management to maintain the case within appropriate bounds for IPEC. The differences in Mr Nash’s legal and factual position referred to above are sufficiently significant that his addition might well make it difficult to remain within the three-day trial limit which applies in IPEC.

On balance I conclude that on case management and cost-benefit grounds also, the Application in respect of Mr Nash should be dismissed.