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

The application to join further parties was brought under CPR 20.5. The Defendants also applied under CPR 17.1(2)(b) to amend the Defence and Counterclaim.

The addition of Mr Käärmann and Mr Hinrikus and the related consequential amendments were opposed on the grounds of the IPEC cost benefit test only. The addition of Mr Nash was opposed on those grounds and also on the basis that the Counterclaim had no reasonable prospect of success at trial and was not based on evidential material sufficient to establish a good arguable case of joint tortfeasorship.

CPR 20.5 requires a defendant who wishes to counterclaim against a person other than the claimant to apply for an order that that person be added as an additional party (CPR 20.5(1)). The decision requires an exercise of discretion. Neither party identified significant authority relating to the exercise of that discretion. Counsel agreed that the approach should logically mirror that under the overlapping provisions in CPR 19.2(2):

“The court may order a person to be added as a new party if –

(a)

it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or

(b)

there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings and it is desirable to add the new party so that the court can resolve that issue.”

There was no dispute that the correct approach to an application to add a party under CPR 19.2(2) (and therefore under CPR 20.5) is to consider the analogous requirements under CPR 3.4(2)(a) and (b) (applications to strike out) and CPR 24(2)(a) (applications for summary judgment).

As pointed out by His Honour Judge Hacon in PeCe Beeher BV v Alevere Ltd [2016] EWHC 434 (IPEC) (‘Beeher’), there is a significant degree of overlap between these tests, but they are not identical ([37]). HHJ Hacon concluded in Beeher that the appropriate test was that under CPR 24(2)(a) and that an application to join a party under CPR 19.2(2) would fail if the party seeking to add further parties to the litigation had no real prospect of succeeding at trial against those parties.

Ms Berkeley for the Claimant and the proposed additional parties to be joined to the Counterclaim relied on a 2021 Judgment of the Court of Appeal in Kawazaki Kisen Kaisha Ltd v James Kemball Limited [2021] EWCA Civ 33 (‘Kawazaki’). That Judgment dealt with an application to serve a claim on a defendant out of the jurisdiction. Popplewell LJ was clear that the test was the same as when considering applications for summary judgment, i.e. whether the case had a real, as opposed to fanciful, prospect of success. Popplewell LJ then explained, at [18]:

“In both these contexts:

(1)

It is not enough that the claim is merely arguable; it must carry some degree of conviction: ED & F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472 at paragraph 8; Global Asset Capital Inc. v Aabar Block SARL [2017] 4 WLR 164 at paragraph 27(1).

(2)

The pleading must be coherent and properly particularised: Elite Property Holdings Ltd v Barclays Bank Plc [2019] EWCA Civ 204 at paragraph 42.

(3)

The pleading must be supported by evidence which establishes a factual basis which meets the merits test; it is not sufficient simply to plead allegations which if true would establish a claim; there must be evidential material which establishes a sufficiently arguable case that the allegations are correct: Elite Property at paragraph 41.”

The principles to be applied to applications to amend under CPR 17.1(2)(b) are also relevant to the overall assessment and exercise of discretion. His Honour Judge Birss QC (as he then was) considered the correct approach in Temple Island v New English Teas [2011] EWPCC 19 at [25]–[33] (‘Temple Island’).

“Whether or not to allow an amendment to a statement of case is an exercise of discretion, exercised having regard to the overriding objective to deal with cases justly. In my judgment the general approach to the consideration of amendments of statement of case in the Patents County Court is no different from the approach taken in the High Court. However, the discretion in this court will be conditioned by the particular nature and circumstances of the Patents County Court procedure. In my judgment stated generally as they are, the words of Peter Gibson LJ are as applicable in the Patents County Court as elsewhere. Amendments will generally be allowed so that the real dispute between the parties can be adjudicated upon but subject to the proviso that any prejudice can be compensated for in costs and subject to the public interest in the administration of justice. Cases should be dealt with expeditiously but also fairly and that consideration tends to weigh in favour of allowing amendments.” [25]

The following paragraphs of that judgment make clear that, leaving aside the particular facts of Temple Island, it is always necessary to balance a request to permit an (otherwise allowable) application against the prejudice that allowing the application may cause and that this is particularly the case in IPEC. HHJ Birss concluded “When considering an application to amend the statements of case in the Patents County Court in a regime with capped costs, that balancing exercise will include an assessment of whether the likely benefit of the amendment appears likely to justify the cost of taking and dealing with it.” [33].

This was further considered in the more recent Judgment of John Kimbell KC, sitting as a Judge in this Court in Vimage v Data Candy [2022] EWHC 606 (IPEC) (‘Vimage’) in which he referred to the Judgment of Sir Terence Etherton MR in Re Pablo Star Ltd Price v Registrar of Companies[2018] 1 WLR 738 (‘Pablo Star’): “In considering whether or not it is desirable to add a new party pursuant to CPR r 19.2(2) the lodestars are the policy objective of enabling parties to be heard if their rights may be affected by a decision in the case and the overriding objective in CPR Pt 1” [47].

In Vimage,that approach was applied having regard to the IPEC context: “In this court, any application to amend must also meet the cost-benefit test described in Temple Island v New English Teas [2011] EWPCC 19 at [25]-[33] and in Fox Intellectual Property Enterprise Court, Practice and Procedure (3rd edition 2021) at para 4-119” [22].

In the light of the above, the exercise of my discretion involves two considerations:

The first question arises only in respect of Mr Nash. The second applies to all three prospective new parties.

Summarising the law on the substantive issue raised in respect of Mr Nash, the leading authority on joint liability based on procurement or common design is the Supreme Court Judgment inFish & Fish Ltd v Sea Shepherd UK [2015] UKSC 10; [2015] A.C. 1229 (‘Sea Shepherd’). Counsel for the Claimant referred me to the statement of principle in the Judgment of Lord Toulson:

“To establish accessory liability in tort it is not enough to show that D did acts which facilitated P’s commission of the tort. D will be jointly liable with P if they combined to do or secure the doing of acts which constituted a tort. This requires proof of two elements. D must have acted in a way which furthered the commission of the tort by P, and D must have done so in pursuance of a common design to do or secure the doing of the acts which constituted the tort.” [21]

The position in respect of directors, officers and shareholders of a company is summarised in the Judgment of HHJ Hacon inUrbanbubble Ltd v Urban Evolution Property Management Ltd [2022] EWHC 134 (IPEC) at [152]:

“In Lifestyle Equities CV v Ahmed [2021] EWCA Civ 675 Birss LJ, with whom Moylan and Nugee LJJ agreed, considered several authorities including the judgment of the Supreme Court in Fish & Fish v Sea Shepherd [2015] UKSC 10, Mentmore Manufacturing Co Ltd v National Merchandising Manufacturing Co Inc (1978) 89 D.L.R. (3d) 195 and in particular that of the Court of Appeal in MCA Records Inc v Charly Records Ltd [2001] EWCA Civ 1441:

“[31] Turning to MCA v Charly Chadwick LJ noted (in [47]) that in Mentmore the question of whether and in what circumstances a director should be liable with the company was described as a difficult question of policy and that in the end a balance has to be struck between two considerations. The first consideration is the distinction between a company as a distinct legal person and its shareholders, directors and officers. The second is that everyone should be answerable for their tortious acts. The judge then made the point that because there was a balance to be struck in each case it was dangerous for an appellate court to attempt a formulation of the principles since it may come to be regarded as prescriptive ([48]). Nevertheless Chadwick LJ did feel able to formulate four principles which he then set out.

…

[36] … If the individual’s conduct does not make them liable as an accessory, then the fact they are a director in and of itself cannot make them liable when they would not be otherwise. That was also made clear by Chadwick LJ in [37] of the same judgment in which he held that it was a correct statement of the law that a director or other officer of a company may in certain circumstances be personally liable for the company’s torts, although they will not be liable merely because they are an officer: they must be personally involved in the commission of the tort to an extent sufficient 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.”

In summary, the principle is clear: a director, officer or shareholder of a company may be a joint tortfeasor in respect of a tort committed by that company. For that to be the case, that individual must be personally involved in the commission of the tort, and that involvement must be sufficient to render them liable. The fact of being an officer, director or shareholder is not in itself enough. MCA Records Inc. v. Charly[2002] FSR 26, as summarised in Lifestyle Equities CV v Ahmed[2021] EWCA Civ 675 [32] (‘Lifestyle Equities’) establishes that for a director or officer merely to carry out the constitutional role ascribed to them will not suffice; but the exception is a narrow one.

When it comes to what is required to establish joint tortfeasance, whether by directors or anyone else, Fish & Fish v Sea Shepherd, is clear that mere facilitation is not enough. As explained in Lifestyle Equities, citing C.B.S. Songs Ltd v. Amstrad Consumer Electronics Plc [1988] A.C. 1013 and Unilever Plc v. Gillette (U.K.) Limited [1989] RPC 583, liability may arise where the director or officer “intends and procures and shares a common design that the infringement takes place”.