Bionome Technology Ltd v Dr John Clearwater

Web: www.martenwalshcherer.com MR TOM MITCHESON KC:

1. This is an application by a notice dated 24 October 2025 seeking relief from sanctions and to set aside the costs assessment I made on 2 September 2025.

2. The main proceedings involve a patent entitlement dispute. In a decision dated 3 May 2024, the Controller’s Hearing Officer determined that the respondent was the joint owner of the relevant patent applications. The applicant/appellant appealed that decision to the High Court. The parties to the appeal were the applicant/appellant and the respondent. Okipa Limited, who was the first claimant in the Patent Office was not a party to the appeal as a result of the Hearing Officer’s decision to make the respondent and not it a joint owner of the relevant patent applications. The respondent had been added as a second claimant to the Patent Office proceedings on 31 March 2023.

3. The respondent used to be a substantial shareholder in Okipa Limited, although ownership has now passed to Okipa Inc.

4. In my judgment of 9 December 2024, I dismissed the appeal. Following the hearing, the parties prepared for a hearing on the form of order. As part of preparation for that hearing, Bird & Bird, then representing the applicant, served a witness statement from one of their associates, Henry Elliott, dated 12 February 2025, in which he raised the question of whether there had been a breach of the indemnity principle by the respondent. In the event, the issues for the form of order hearing were compromised and the statement of Mr Elliott was not relied on before the court.

5. On 14 February 2025, I made a consent order, as proposed by the parties, which provided in paragraph 5: “The appellant shall pay the respondent’s costs of the appeal.” Paragraph 6 stated: “The respondent shall be entitled to receive payment out of court, the sum of £102,000, paid into the court by the appellant as security for the costs of the appeal. Any issues as to the balance of the respondent’s costs (or repayment), including the assessment of such costs and the costs of the respondent’s notice, shall be determined by the court following the lifting of the stay referred to in paragraph 7 below if not agreed between the parties.” There was no express reservation under paragraph 6 in relation to the point on the indemnity principle and the £102,000 to be paid out of court. It is not necessary for me resolve any point arising from that on this application today.

6. By paragraph 7 of the February 2025 order the proceedings were stayed until 14 May 2025 to allow the parties to seek a negotiated resolution of the issues between them. That period of stay expired without settlement.

7. On 6 June 2025, the respondent’s solicitors, Simmons & Simmons, wrote to the court asking that the consequentials hearing be relisted in order to deal with the assessment of its costs. On 19 June 2025, the court wrote to the parties asking them whether they consented to the consequentials being determined on paper. On 26 June 2025, Bird & Bird, then representing the applicant, wrote to the court stating: “We understand from the deputy judge’s clerk by email dated 19 June 2025 that the deputy judge is willing to determine the consequentials hearing on the papers, subject to the parties’ agreement. We have received no instructions from our client in this regard.” The letter continued: “We are obliged to inform the court that we anticipate we will not be able to actively participate in the upcoming consequentials hearing on behalf of the appellant. For reasons which shall be explained in our application should it become necessary, we anticipate terminating our retainer with the appellant next week and making an application to come off the record under CPR 42.3.1.” On 30 June 2025, Bird & Bird did indeed file an application to come off the record under CPR 42.3.1

8. On 4 July 2025, the respondent made an application for the assessment of its costs and an order that the applicant pay the balance of those costs, pursuant to paragraph 6 of the February 2025 order. In its application notice, it requested that the application be dealt with without a hearing. On 8 July 2025, Simmons & Simmons served the application, together with the supporting evidence, on Bird & Bird. It is accepted by the applicant that the application and evidence were properly served on Bird & Bird, as acknowledged by Mr Murray in his witness statement at paragraph 17.

9. It is also reasonable to infer that, apart from in one exception in this case, Bird & Bird would, in accordance with their professional duties, have forwarded all documents they had received whilst they were still on the record to their client, the applicant. Indeed, apart from this one example, which I will come to, the applicant has not sought to rebut that inference in its evidence.

10. On 10 July 2025, Simmons & Simmons filed a revised costs schedule, correcting the original costs schedule in which VAT had been claimed in error. This was in response to a query by me as to whether the original costs schedule was correct in claiming VAT. The evidence before me is that the applicant did not receive this amended cost schedule from Bird & Bird at the time.

11. On 23 July 2025, Mr Justice Meade considered the application to come off the record on the papers and made an order, including the following paragraphs:

1. [Bird & Bird] has ceased to be the solicitor acting for the Defendant/Appellant in these proceedings.

2. The Defendant/Appellant is to give an address for service, as soon as practicable and until such time as a new address for service is given, service on the Defendant/Appellant may be made by post to 142a Station Road, London, England, E4 6AN. The address for service for the applicant given in the order of Mr Justice Meade is the applicant’s address registered at Companies House. The same address is also Mr McCarthy’s registered address as director of the applicant. The order was served on the respondent on 23 July 2025 and Bird & Bird ceased to act for the applicant on 23 July 2025.

12. Notably, the applicant did not provide an alternative address for service, as required by the order of Mr Justice Meade, so the address for service for the applicant remained that at 142a Station Road. That is to say the address registered at Companies House for the applicant.

13. On 30 July 2025, in light of Mr Justice Meade’s order, I requested that the respondent re-serve the application for the outstanding costs on the applicant directly. This was in order to give the applicant a further opportunity to respond to that application. On 30 July 2025, the respondent went ahead and served the application, including the revised costs schedule, on the applicant at its registered office, in accordance with paragraph 2 of the order of Mr Justice Meade. In addition, the respondent copied the correspondence and the application to the respondent’s director, Mr McCarthy, using his email address, [email protected]. I find that by virtue of the service at the registered office address on 30 July the application was correctly served on the applicant.

14. As for the email address, which I have just referred to, Mr Murray of DMH Stallard, the applicant’s new solicitors, explains in his evidence that Mr McCarthy stopped using that address in 2020. However, it has been shown in evidence filed by the respondent that in fact the address was still in use by Mr McCarthy in 2021. I do not know if Mr McCarthy still has access to that address, but, in any event, Mr McCarthy did not update the respondent or Simmons & Simmons that he should only be contacted by alternative addresses, including an address with the applicant’s own domain name. I do not think anything turns on the issue of the use of emails for the reason that I will come to.

15. On 2 September 2025, I issued a judgment on costs and made a costs order consequent on that. The respondent’s costs were summarily assessed at £202,000, and the applicant was required to pay the respondent’s outstanding costs and interest. I explained in the judgment the background to the application and I remained satisfied that it was appropriate to deal with the issue on paper, despite not having heard from the applicant, given that the papers had been served on it, both through Bird & Bird, when acting for the applicant, and at the registered office of the applicant afterwards.

16. On 3 September 2025, Simmons & Simmons sent the costs order to the applicant by first-class post at the address in Mr Justice Meade’s order and by email to Mr McCarthy at the DWTUK address. The applicant does not dispute that good service was effected on 8 September 2025. In addition, the applicant has also shown that it was provided with a copy of the costs order and the costs judgment by Bird & Bird by email on 3 September 2025. Nevertheless, the applicant did not respond to the costs order or to Simmons & Simmons’ letter of 3 September 2025.

17. On 2 October 2025, Simmons & Simmons again wrote to the applicant, by first-class post to its registered office and by using the email address that I have referred to, requiring immediate payment. Once again, the applicant failed to respond. On 9 October 2025, the respondent issued a statutory demand for sums outstanding under the costs order.

18. The applicant’s position is that in the meantime it had retained Sandersons, its patent attorneys, who had advised it in the Patent Office in this case, and that they had advised the applicant on 21 September 2025 that it had the opportunity to set aside the costs order. The applicant went ahead and instructed DMH Stallard on 29 September. Then, on 24 October, the applicant made the present application seeking relief from sanctions and an order setting aside or staying the costs order.

19. So the first issue I have to deal with, having set out that background, is jurisdiction to set aside and whether I should exercise that jurisdiction.

20. CPR 23.8.1(c) provides that: “(1) The court may deal with an application without a hearing if […] (c) the court does not consider that a hearing would be appropriate.” CPR 23.8.3 provides that: “If the court decides the application without a hearing under paragraph (1)(c) and does so in circumstances where the parties affected by the application have not had an opportunity to make representations about the substance of the application -- (a) a party affected by the court’s order may within such period as the court may specify apply to have the order set aside, varied or stayed; (b) if no period is specified, the application must be made within 7 days after the date the order was served on the party applying; and (c) the order must contain a statement of the right to make such an application.” So, in order to engage the jurisdiction to set aside under rule 23.8.3, the applicant must show that the court decided the assessment application without a hearing in circumstances where the applicant did not have an opportunity to make representations about the substance of the application.

21. Having set out those provisions, I of course accept that there is also always a general power for the court to set aside an order and it may be that that is appropriate in the right circumstances, putting aside the specific rules of Rule 23.8.3.

22. In this case, the applicant criticised the respondent in two major respects. Firstly for not drawing the attention of the court at the making of the costs decision to the issue of the indemnity principle, which had been raised in Mr Elliott’s witness statement served in February, although not relied on at that time. Secondly, the applicant says that this was a hearing where it did not have an opportunity to make representations and that the order was faulty, in that it did not contain a statement of the right to make such an application to set aside and it should have done so.

23. Subject to what I will come on to, I do not think that the jurisdiction to set aside is properly engaged by the applicant in the present case. In my view, the applicant had multiple opportunities to make representations about the costs issue and it failed to take that opportunity at any relevant time. The first opportunity it had was when the application was served on Bird & Bird while they were still acting for the applicant. The fact that they had applied to come off the record does not alter the fact that this was good service and the evidence is that it was forwarded to the applicant at the time. Therefore the applicant had proper notice back in June and July of the fact that the application was being made.

24. Secondly, the application was served on the applicant at its registered address, following the guidance given in the order of Mr Justice Meade at the end of July. The applicant seeks to rely on the fact that its principal place of business is not that address and that Mr McCarthy only visits that address sporadically. But those are matters for the applicant. As counsel for the respondent submitted to me this morning, when a company is engaged in litigation, one of the most important aspects of the litigation is having an address for service and checking that material received at that address of service is dealt with. This is especially important where a party is, for whatever reason, not represented by solicitors. The address for service in the present case was the applicant’s registered address, and I find that the applicant was at fault by not checking what was being received at that address.

25. As I have said, I find that the applicant was properly served with the application in July and it failed to take steps to deal with it. I also find that the applicant had an opportunity to make submissions on costs. In fact it had multiple opportunities both as a result of being notified by Bird & Bird and then upon receipt of the application. A month then passed before the judgment was issued and the order handed down. The applicant should have taken the opportunity to make submissions if it had wished to during that period.

26. There is also, as I have said, reliance on alleged failure to check the email address. I do not find that that really moves things one way or the other, given that the application had been made to the registered address. I consider that it was reasonable for Simmons & Simmons to continue to use that email address, although it might be said that they could have copied it to other email addresses that they had known the applicant to use. But, as I say, the most important thing is that the applicant was properly served at its own registered address. So I do not think the email issue really takes matters much further.

27. Further, if the applicant had wished to rely on the fact that emails were being sent to the wrong address, then it should have updated Simmons & Simmons with its correct email address, particularly in circumstances where it knew its solicitors had come off the record. So, if anything, the problem with receipt of emails is another failure of the applicant and is not a criticism which should be used to undermine the position of the respondent.

28. I also do not believe that the respondent was at fault not to draw my attention to the witness statement of Henry Elliott made during the earlier stage of the proceedings. As Mr De Froment submitted, there was not a duty of fair presentation. This was not an ex parte application. It was not even an ex parte application on notice. As far as the respondent was concerned, the applicant had full notice and, as I have found, it did in fact have proper notice of the proceedings. The only requirement for the respondent was to make sure that it did not mislead the court, and I am satisfied that failure to raise the issue of the indemnity principle at that stage did not amount to misleading the court.

29. In case I am wrong about my assessment about whether I should set aside the order, I will go on to determine whether or not the applicant should be granted relief from sanctions. The point here is that Mr St Ville for the applicant says, relying on the case of Haley v Siddiqui [2014] EWHC 835 (Ch) , that the strict rules about relief from sanctions does not apply to an application, such as the present, to set aside an order made by the court without a hearing, or at a hearing where one party has not an opportunity to make representations, or a decision made on the papers where a party had not had an opportunity to make representations.

30. For the reasons I have given, I do not think that this is a case where the applicant did not have an opportunity to make representations, given that service was properly made upon it at its registered address and it had notice of the court’s desire to determine the issue on the papers. So I do not think that this case engages with the situation in Haley . In any event, I think the facts of Haley were rather different, and I do not understand paragraph 15 of the decision as amounting to a general rule that relief from sanctions should never apply in an application to review an order made without a hearing.

31. Nevertheless, I will go on to apply the relevant factors under relief from sanctions to the facts of this case.

32. What I find is that the applicant was represented at the time the application was made. This goes to whether there are good reasons for the breach. It remained represented until Bird & Bird came off the record. It could have responded to the application at that time. It could have responded to the application once it was served on 30 July and failed to do so. As I say, the failure of actual notice of the application was as a result of matters internal to the applicant.

33. Therefore I find that the breach was serious and significant. There is no good reason to explain the breach. I understand why the breach occurred. It is because the address, the registered office address, was not being checked. But I consider that is not a good reason to explain the breach.

34. There was a point made about whether Sandersons should have drawn the applicant’s attention sooner to its ability to apply to set aside the order. I do not place any weight on this. Sandersons are patent attorneys and, whilst they are no doubt highly professional in that field, they did not take on High Court proceedings and I do not assume that they were equipped to advise the applicant in that respect. So I do not place any blame upon the applicant failing to act sooner purely because of any delay on the part of Sandersons.

35. The delay that has arisen has arisen substantially as a result of the applicant’s change of representation and its failure to monitor its address for service. Again, that is a matter for the applicant.

36. The respondent also sought to criticise the delay that took place up to the instruction of DMH Stallard. It was only a short period between being notified by Sandersons that it had a right to set aside and instructing Stallard. I do not find that that delay was unreasonable.

37. There was then, however, some three weeks’ further delay before this application was made. I find in the circumstances that that is longer than it should have been.

38. So it is a combination of the delay from first notification back in June/July by Bird & Bird and then service of the order and then the later delay once it knew that it could apply to set aside that I find particularly egregious in this case and, taking account of those circumstances, I find that delay was too long to allow on its own a reason to grant relief.

39. So the only possible basis upon which relief can be granted -- taking into account all the circumstances of the case, including dealing with the case justly – is whether or not the applicant has an argument: “Is there a genuine issue --” as the authorities put it “-- to be investigated in relation to the entitlement of costs of the respondent?”

40. The principles were set out by Mr St Ville in his skeleton, at paragraph 14.3, with a quote from Revenue & Customs Commissioner v Gardiner [2018] EWHC 1716 (QB) per Slade J: “The indemnity principle will not be infringed if: (1) The putative receiving party establishes a contract with solicitors or representatives to act on their behalf; (2) The contract derives from a retainer or agreement which may be express or implied; (3) The receiving party may have sole liability for costs or dual liability with a solicitor or other representative or by reason of the solicitor or representative acting as their agent; (4) Absent an express term to that effect it is likely to be an implied term of such a contract that the client will be liable for costs incurred on his behalf; (5) If the receiving party establishes a contractual liability to pay the costs at issue, it matters not that it is highly or vanishingly unlikely that the receiving party will in fact be called upon to pay those costs. It is liability to pay rather than who makes payment which is material. (6) The presumption that a client instructing a solicitor or representative to represent them will be liable for costs incurred for such representation may be rebutted by the paying party proving that there was a bargain between the client and the representative that under no circumstances was the client to be liable for costs.”

41. I was also referred to Friston on Costs and a number of paragraphs of that which are relevant, as follows: Evidencing the Indemnity Principle 18.25 To prove compliance with the indemnity principle, it is necessary to demonstrate the existence of an enforceable retainer supporting all the costs that are claimed. This can be done by relying on certain presumptions (see below) or by adducing evidence (usually, but not necessarily, in the form of a written retainer). 18.26 Three issues need to be addressed: first, the extent to which a receiving party may rely solely on the presumptions to prove their retainer ( 18.27–18.30 ); secondly, the extent to which a receiving party is required to adduce evidence of the retainer ( 18.36–18.40 ); and thirdly, the way in which the court would take account of the evidence (18.41–18.46). It should be noted that CFAs may be treated differently from other retainers (see 18.39-18.40). … 18.29 First presumption: client liable for fees of the person whom they engage The first presumption is that a client is liable for the fees of a legal services provider whom they engage 31 —or, as Roth J put it: ‘[I]t is normal that solicitors acting for a client expect to be paid, this is the default position.’ 32 This presumption is rebuttable by evidence 33 and is unaffected by the presumption of doubt being resolved in favour of the paying party on a standard-basis assessment. 34 It will not, however, come into play if the work was carried out under a contract of retainer that is unenforceable. 35 Lloyd J explained the presumption in these terms: ‘Once it was shown... that [the receiving party] was indeed the client, then a presumption arose that he was to be personally liable for the costs. That presumption could, however, be rebutted if it were established that there was an express or implied agreement, binding on the solicitor, that [the receiving party] would not have to pay those costs in any circumstances.’ 36 … 18.31 Second presumption: the Bailey presumption The second presumption (which, as noted, is by far the more important of the two) is created by a solicitor lending their signature to the certificate to a bill of costs; hence a presumption is created that there has been no breach of the indemnity principle. An evidential analysis would be that, unless the contrary can be shown, there is a presumption that proof of the primary fact (that the bill of costs has been certified) will imply the secondary fact (that there has been no breach of the indemnity principle). The presumption—which is usually referred to as ‘the Bailey presumption’ 39 —is rebuttable by evidence and is probably best described as a rebuttable presumption of fact and law. Bailey was a pre-CPR decision, but there is no doubt that it remains good law. 40 … 18.34 With the benefits bestowed by the Bailey presumption come onerous responsibilities, however. This was explained by Henry LJ: ‘[The] other side of a presumption of trust afforded to the signature of an officer of the Court must be that breach of that trust should be treated as a most serious disciplinary offence.’43 18.35 In a similar vein, Judge LJ emphasised that the responsibility extends to ensuring that the court is not misled: As officers of the court, solicitors are trusted not to mislead or to allow the court to be misled. This elementary principle applies to the submission of a bill of costs. If a cap or similar arrangement had applied in this case, I should have expected [the receiving party’s solicitors] to have disclosed that fact...’44

42. These principles have been summarised by the authorities, including Ilangaratne v British Medical Association [2005] EWHC 2096 (Ch) , as to the question of whether there is a genuine issue to be investigated in relation to indemnity. I quote from §§24-25 of the judgment of Warren J (emphasis added):

24. There is a presumption that a client is liable for the fees of a solicitor whom he engages. That presumption can be displaced by showing an express or implied agreement that the client is not to be liable for fees, but the onus is on the person challenging his liability to pay to show that such an agreement exists: Adams v London Improved Motor Builders Ltd [1921] 1 KB 495 at 500–501, and 502–504 which was followed in a line of cases including R v Miller (Raymond) [1983] 3 All ER 1056 at 1059–1062 which in turn was cited with approval in Bailey v IBC Vehicles Ltd [1998] 3 All ER 570 at 574.

25. It is clearly established by a long line of authority that the indemnity principle is not undermined merely because a third party, such as a trade union or an insurer, funds the successful litigant who eventually becomes the receiving party under a costs order.

43. In the present case, of the six principles set out in Gardiner , principles 2 to 5 appear to apply in the present case in particular.

44. As Mr De Froment submitted, these points may be met either through the presumptions or by virtue of evidence. The particular flag that the applicant relied on in this case was the change of position between the first and second costs schedules, whereby under the second cost schedule, pursuant to my enquiry, VAT was removed from the bill. This, together with the position set out by Mr Elliott in the witness statement served back in February, led the applicant to question whether or not the indemnity principle had been breached in this case.

45. Notwithstanding that the fact that the VAT issue raised a flag, I was referred to the case of Popat v Edwin Coe LLP [2013] EWHC 4524 (Ch) per Vos J, paragraph 37 of which states:

37. That brings me to Mr Sage's other point on which he placed great emphasis, namely that the bill that was rendered by the solicitors was net of VAT because the trustee was offshore and not liable to pay VAT. He made the point at the end of his submission that, had the trustee been in a position, like an insurer, the bill would have shown VAT, even if the insurer had been offshore. That is entirely true but it is a question of VAT law, not a question that is relevant to the indemnity principle.

46. Irrespective of the question of whether VAT is payable, which is a matter of tax law, the real question is whether there is an indemnity, and that cannot be answered by the separate and distinct issue of tax law.

47. Returning to the facts of this case, having set out the principles, Mr St Ville accepts that Simmons & Simmons represented their client, the respondent. So, on that basis, the presumption the client is liable to pay is met at least at that level.

48. There was a dispute before me as to whether there is a difference between whether the respondent was a client or whether this respondent was engaged or had engaged Simmons & Simmons. Some of the authorities or textbooks refer to the word “engaged”. In my view, that is a matter of semantics only. If it is accepted that the respondent is a client, then, as I have referred to in the presumptions, the presumption is that the client is liable to pay. That I think deals with the debate about engagement or otherwise.

49. So the question is whether there is anything to rebut the presumption that the client is liable to pay.

50. It was stated by Mr De Froment that there was no written agreement which the respondent sought to rely on to address the question of indemnity principle. The inference therefore is that there is only an implied agreement between the respondent and Simmons & Simmons. As the authorities make clear, that is not an uncommon situation, so that on its own is not enough to rebut the presumption.

51. There is nothing in the material I have seen or in the evidence otherwise to suggest that the respondent is discharged from the normal position whereby, as a client, it is liable to pay the cost of Simmons & Simmons. So I do not find that there is any material before me to rebut the presumptions that apply.

52. Finally, I need to ask myself whether there is any evidence before me which can answer the question in the applicant’s favour.

53. As to that, I refer to paragraph 34 of Mr Cordina’s fourth witness statement, where he explains, having set out the background to this case: “It is correct that the first claimant, Okipa Limited, in the entitlement proceedings agreed to meet Dr Clearwater’s liability for costs, including the costs of the present appeal.” Just pausing there, Mr Cordina there refers to Dr Clearwater’s liability for costs. He then says “including the costs of the present appeal”. Given that Okipa were not a party to the present appeal, the only costs he can be talking about are the costs that had been incurred by Simmons & Simmons on behalf of the respondent. Therefore it is clear from that statement that those are not Okipa’s costs, given that they are not a party to the appeal.

54. Mr Cordina continued: “However it was and always has been the case that this cost liability was incurred by Dr Clearwater and should Okipa have ever failed to meet that liability, Dr Clearwater would have been required to discharge it.” That again is significant for a number of reasons. First, Mr Cordina is stating that the costs liability was incurred by Dr Clearwater, the respondent. That is consistent with everything I have already said about Dr Clearwater being a client. It is also consistent with the first sentence, which refers to Dr Clearwater’s liability for costs. Then Mr Cordina explains that, should Okipa ever have failed to meet that liability, “Dr Clearwater would be required to discharge it”. In other words there was dual liability in this case, again as Gardiner recognises may be the case. Because Dr Clearwater was the client, and because therefore a liability was accruing, if it had been the case, or indeed is the case, that Okipa fails to pay those costs then Dr Clearwater would still be liable.

55. Mr St Ville stated on a number of occasions that paragraph 34 was “mere assertion”, an assertion of a conclusion, and cannot amount to primary facts. I disagree. The burden, as is discussed in Friston, upon solicitors in relation to costs and in relation to the filing of witness statement evidence on such issues means that I do not consider that Mr Cordina could have made the statements he does in paragraph 34 if he was not convinced that what he was saying was true. They cannot amount merely to assertion or merely to conclusion. When combined with the filing of the statement of costs with the statement in that, I have no reason to go behind what Mr Cordina has said.

56. For that reason, I do not think there is a genuine issue arising on indemnity based on the evidence before me. As I have explained, I also think the presumptions are not in favour of the applicant.

57. So, even had I accepted that the applicant was entitled to set aside the order and obtain relief from sanctions, in my view it loses on the merits of the question about the indemnity principle and whether is a genuine question in its favour, bearing in mind the burdens and the presumptions that apply. So, overall, I consider it is not in the interest of justice to allow this application to proceed and to succeed on any of the bases before me and I therefore dismiss it. - - - - - - - - - - - (This Judgment has been approved by the Judge.) Digital Transcription by Marten Walsh Cherer Ltd 2 nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP Telephone No: 020 7067 2900 DX: 410 LDE Email: [email protected] Web: www.martenwalshcherer.com