M L Technology Limited & Anor v B.E.A.T SAM & Ors

A case-management stay to await related foreign proceedings is exceptional. It requires rare or compelling circumstances and must be justified by the interests of justice. The court should consider whether the foreign proceedings will bind the relevant parties, resolve the relevant issues and cause delay or prejudice.

In an application for an extension of time, the applicant must provide a good reason. The Denton factors may be applied by analogy. Security for costs requires a balancing exercise between protection of the defendant and the claimant’s ability to pursue a proper claim. The court must consider whether the claim would be stifled, whether the defendant contributed to the claimant’s impecuniosity and, ordinarily only where the merits are highly probable, the apparent strength of the claim.

The claimants brought proceedings for trade mark infringement, passing off and copyright infringement against corporate and individual defendants arising from the sale of shares in the first defendant and the subsequent use of intellectual property associated with the Naurex business.

The defendants applied for a case-management stay pending related Swiss proceedings, security for costs and an extension of time to serve their defence. The claimants applied for judgment in default of defence. The central issues were whether the English proceedings should be stayed, whether security for costs was just, and whether the defendants should receive further time to defend.

1. Stay. The court had power to grant a case-management stay under section 49(3) of the Senior Courts Act 1981 and rules 1.2(a) and 3.1(2)(f) of the Civil Procedure Rules 1998. Following Unwired Planet International Limited v Huawei Technologies (UK) Limited [2020] BLR 2422 and Athena Capital Fund v Holy See [2022] 1 WLR 4750, the question was whether, in the particular circumstances, a stay was in the interests of justice. Such a stay required rare or compelling circumstances.
2. The Swiss proceedings involved only one of the defendants and would not bind all parties or resolve all issues, particularly the copyright claims. Their likely duration would cause substantial delay, with risks to the evidence and to the elderly claimant’s ability to give evidence. The benefits of a stay did not outweigh its disadvantages. The stay application was dismissed.
3. Extension of time. Under rules 15.5 and 3.1(2)(a) of the Civil Procedure Rules 1998, the court could extend time. A justification was required: The Guide Zone Limited [2014] 1 WLR 3278. The Denton v White [2014] EWCA Civ 906 approach was relevant by analogy, as explained in Jalla & Anor v Shell International Trading & Shipping Co Ltd [2021] EWCA Civ 1559. The delay was serious and the reasons inadequate, but refusing any extension would probably lead to a later application for relief from sanctions. The defendants were given 28 days to serve a defence, subject to an unless order debarring them from defending and permitting judgment in default if they failed to comply.
4. Security for costs. The condition in rule 25.13(2)(c) of the Civil Procedure Rules 1998 was satisfied, but the question was whether security was just under rule 25.13(1)(a) and (b). Applying the balancing exercise in Keary Developments Ltd v Tarmac Construction Ltd [1995] 3 All ER 534, the court considered the risk of stifling the claim, the claimants’ inability to raise funds and the defendants’ contribution to that inability. The defendants’ non-payment of the purchase price had contributed to the claimants’ impecuniosity. The merits did not carry sufficient weight because there was no high probability of success or failure. Security was refused and the application dismissed.
5. The claimants’ application for default judgment was dismissed because an extension of time had been granted.