Handi-Craft Company & Anor v B Free World Ltd & Ors

It is an unfortunate circumstance that in spite of the conclusions reached in three earlier judgments in this case and a number of proposals and counter-proposals by way of draft orders, the parties have still been unable to agree a final form of order. Indeed Counsel for the principal defendants (i.e. those who have been previously referred to as the ‘Berkovitch defendants’ (Footnote: ¹)) has raised no less than seven further matters which, he submits, now require adjudication – all of which needless to say, are opposed by the claimants. These appear to be basically more issues of costs detail than anything else and thus run contrary to the ‘broad brush’ approach which (as I have already indicated (Footnote: ²)) I believe to be the most appropriate way of adjudicating costs in this complicated case.

A form of draft order exists and this already runs to some 17 pages (excluding annexes). Variants of this draft were in fact considered by the Court during the post-judgment hearing which took place on 27 September 2007 and at one time I thought agreement might be near. But the Berkovitch defendants have since raised a number of matters which, they say, remain in dispute and which they now require to be adjudicated. In my view, and in spite of the alleged effect of a Jewish holiday (see below), most of these matters could and should have been raised at the 27 September 2007 hearing. They mainly touch questions of costs. However in the hope of finally disposing of this case, I shall now address the more salient of Mr Hughes’ points in this, my fourth judgment.

This fourth judgement can only properly be understood in the light of the first three judgments to which I have referred. These are therefore incorporated herein by reference.

With a view to saving costs, counsel have wisely invited me to adjudicate the remaining matters in dispute by means of written submissions alone. First however I should mention the position of Mr Piero Alberici, the eighth defendant and a litigant in person. He is not a ‘Berkovitch defendant’.

Mr Alberici has been found to have committed various acts of trade mark infringement and passing off - details of which are recorded in the principal judgment. He has thus been required to make a contribution to the claimants’ costs – details of which are recorded in the Judgment №3 (Costs). Since then he has sought strenuously to distance himself from any further involvement in this action and I record, has made every effort to do so with both fairness and propriety. As a result, he made proposals for payment of costs (e-mail of 21 October 2007) which have been accepted by the claimants and will be recorded in the final order. Mr Alberici has not materially participated in the phase of the action considered in this judgment.

This is refused. The main reasons are set out in the Form N140 which has been sent to those acting for the Berkovitch defendants. Basically, costs are in the discretion of the trial judge. In this case I have, I think, had ample opportunity to balance the relevant factors and form a view as to the proper order to be made. I therefore believe that I am in the best position to come to a fair view as to costs. Furthermore, I do not think that there are any issues of principle involved in this part of the case.

An appeal issue not involving costs is raised concerning the hearing on 27 September 2007 to which I have referred. The Berkovitch defendants say that my decision to proceed with the hearing on that day (which led to Judgment №3 (Costs)) amounted to a procedural irregularity. This, it is argued, arose because the personal defendants did not have a chance properly to give Mr Hughes instructions owing to the intervention of the Jewish autumn festival of Succoth, otherwise known as the Feast of Tabernacles. As I explained to Mr Hughes at the time, in this jurisdiction, the Court observes only such religious festivals as are prescribed by law; Succoth is not one of them. No advance formal application for an adjournment was made and Mr Purvis strongly opposed any adjournment in any event. In order to save costs, I decided to proceed with such matters which in my view would be most unlikely to have been affected by the intervention or views of the personal defendants. I therefore reject this as a viable ground of appeal.

This has in truth been an issue since the 27 September 2007 hearing – if not before.

In a note prepared by Mr Hughes dated 19 October 2007, proposals were made for payment of the interim order as to costs – in addition to a request for a stay of any payment pending appeal. These were promptly rejected by the claimants. The proposal for payment of the interim sum is as follows:

In reaching a conclusion on this issue, I sought to apply the principles enshrined in the leading authority on this topic: Mars UK Ltd v TeknowledgeLtd [2000] FSR 138 at 153-154. I in fact cited this well-known case in Judgment № 3. In particular I drew attention to the following words of Jacob J (as he then was):

In the conduct of its business, the court is frequently required to apply the Mars principle. In such circumstances, the usual position is that a defendant requests some relatively short time to make the necessary arrangements to find the money – typically up to a month. Sometimes however, a defendant may by evidence draw the court’s attention to some personal difficulty or special circumstances and ask the court for some indulgence with regard to payment. Mr Alberici did just this in the present case: see Judgment № 3 § 49.

The Berkovitch companies have adduced no evidence whatever with a view to justifying their very leisurely schedule for the discharge of the interim costs obligation. I therefore see no reason to accept their proposals. Counsel for the claimants have suggested instead that the sum of £300,000 be paid off by three instalments of £100,000 in successive months and I consider that to be a reasonable proposition. I therefore order the Berkovitch defendants to pay the interim costs in three monthly sums of £100,000, starting 2 January 2008.

I have refused the Berkovitch defendants leave to appeal from any part of any judgment in this action; they will therefore have to seek leave of the Court of Appeal should they wish to pursue the matter. For this reason I have made the New Year the operative beginning for payment of the £300,000 on account of costs. That should give them enough time to apply to the Court of Appeal for leave and to raise there any question of a stay - if they are successful.

This, says Mr Hughes, is required should the Berkovitch defendants be successful on appeal. He submits that the inclusion of such a cross-undertaking is both ‘conventional and provides appropriate protection’. Whether it is conventional or not, I do no understand how it is needed to provide his clients with ‘appropriate protection’. Should the Court of Appeal come to the conclusion for which Mr Hughes’ clients hope, then it can (and in my experience, will) make a number of consequential orders which can affect the order of the lower court - including of course, the repayment of all or part of any sums paid to the claimants by reason of the order of this court. The claimants will be bound by that order and inclusion of such an undertaking in the present order would in my view be otiose. Furthermore there is no evidence that the claimants will irrevocably dissipate such payment in the meantime or otherwise default.

Mr Hughes has I think, not read the last sentence of para 22 of Judgment № 3 in the context of the paragraph as a whole, seizing upon my use of the words ‘neutral view’ to justify his submission that there should now be no order as to costs against Mr Berkovitch’s children as a result of the claimants’ discontinuance. That was not my intention in using those words; in the unusual circumstances there described, I in fact gave the benefit of the costs consequence of discontinuing to the claimants – who would normally have had to pay those costs. These costs were thus a component of the considerations which led to the conclusion to which I came regarding costs in general. I was not intending to excise the Berkovitch children’s costs from the general order. They were their father’s proxies, actors in the matters of which complaint was made. Their being temporarily joined as defendants was thus necessary or at the very least justifiable (as I pointed out) and their costs should in my view, not be deducted from the total before calculating the 66.66% to be paid by the Berkovitch defendants. Moreover the assessment of the costs attributable specifically to these defendants would be extremely difficult to achieve with reasonable accuracy and would also be contrary to the ‘broad brush’ approach which I have endeavoured to espouse in reaching an overall view on the proper order as to costs.

This is purely a monetary issue. Counsel for the claimants have rightly pointed out that neither of these defendants have ever been named in any draft order for costs and so could not be affected in the event that there was a default by any of the other Berkovitch defendants.

The claimants it will be recalled, settled with these defendants quite some time before trial. Mr Hughes has made a submission in relation to these defendants similar to that made in relation to the Berkovitch children viz that there be no order as to costs against Mothercare/Boots.

Though I was made aware of the settlement involving these defendants some time ago, I was not taken to any documents or orders relevant to this issue until this Order came to be drafted. Having now gone into the matter, the orders of Master Price dated 8 and 14 September 2005 seem adequately to deal with the question of costs as it affects these defendants and I need not therefore take further time on this issue: see A27 and A28.

Regarding the considerable amount of time and further work that has been generated during this phase of the case, Mr Hughes submits that there should (unusually) be a separate costs order in relation to it. He submits that there should be no order as to costs in relation to the hearings which took place on 6-7, 10-11 and 27 September 2007. There has, he asserts, been no clear winner over the numerous issues canvassed at these post-trial hearings.

Mr Purvis’ reaction has been predictable and is in my judgment correct: costs on the form of order should be costs in the action. In most cases, this phase of litigation is simplified by agreement between legal advisers on most matters and the hearing on the form of order scarcely spans a morning. The fact that this matter has taken so much time is due both to the complications inherent in the case (to which I have more than once referred) and to the apparent policy of the Berkovitch defendants to leave no stone unturned.

I am not making any separate order regarding these post-judgment costs. They will within therefore fall within the general costs of the action in the usual way.

There are a number of drafting issues to which counsel have referred in their skeletons of argument by reference to the marked-up version of the 27 September 2007 draft Order. These changes were submitted by Mr Hughes with his skeleton of argument for the purposes of this judgment №4. I am not proposing to comment on these however as they all seem