Appeal confirms that persons unknown must identify themselves if they wish to challenge a bill of costs

Dispute Resolution analysis: An appeal court has confirmed that a ‘person unknown’ who refused to identify himself during proceedings for breach of copyright was debarred from challenging a bill of costs in detailed assessment proceedings unless he identified himself.

The person or persons responsible for the operation and publication of the website www.bitcoin.org including the person or persons using the pseudonym Cobra v Wright [2023] EWHC 2292 (Ch)

What are the practical implications of this case?

This appeal considers an unusual set of circumstances, albeit one which may arise with increasing frequency in the context of litigation involving and concerning digital assets in which the underlying transactions typically take place using pseudonyms. The appeal confirms that it is a fundamental principle of civil procedure that anybody wishing to participate in legal proceedings should identify themselves at the outset of their involvement in those proceedings. It also offers a range of practical implications which may arise were a court to permit a party to take an active part in proceedings without properly identifying themselves either to the other parties or to the Court. The decision suggests that those implications are potentially so serious that no Court could properly allow such a state of affairs to exist. By considering the issue in such broad terms, this is likely to act as an authority beyond the unusual and specific circumstances of this case.

What was the background?

The Claimant (“Mr Wright”) issued proceedings alleging that the Defendant person or persons unknown had infringed his copyright by making a copy of a literary work entitled “Bitcoin: a Peer-to-Peer Electronic Cash System” available on the website it operated. The Defendant refused to identify himself and so proceedings were issued against persons unknown. Mr Wright gained the impression that the operator of the website was based in the United States. Accordingly, he applied for permission to serve out of the jurisdiction by email. Mann J granted such permission and directed that if a person who is a Defendant shall file an acknowledgment of service, an admission or a defence, that person should also disclose to Mr Wright their full name. None of those documents was filed and, accordingly, Mr Wright applied for default judgment. A remote hearing took place before HHJ Hodge QC at which a number of persons attended, one of whom using the name Cøbra. That person declined to speak but had submitted a short pdf document setting out the Defendants’ position on the claim. Default judgment was entered in favour of Mr Wright, however, the Judge declined to conduct a summary assessment of costs. Detailed assessment proceedings were commenced in October 2021. The Defendant served points of dispute. Only shortly before the detailed assessment hearing did Mr Wright’s counsel first take the point that the Defendant’s failure to identify himself should debar him from taking part in the detailed assessment proceedings. Once the point was raised, the Judge concluded that an opportunity needed to be given for the Defendant to serve evidence, following service of a properly prepared application and to hear detailed submissions at a later hearing. The application was made under CPR r.3.2(1)(m) for an order that unless the Defendant revealed his identify to the Court and Mr Wright within 7 days he should be debarred from participating in the detailed assessment and the points of dispute should be disregarded by the Court. The still unidentified person appealed, arguing that the Court had failed properly to apply the principles set out in Cameron v Liverpool Victoria Insurance Co Ltd [2019] UKSC 6 and Porter v Freudenberg [1915] 1 KB 857. Mr Wright applied in his Respondent’s notice to strike out the Appellant’s Notice on the basis of the Defendant’s failure to identify themselves.

What did the court decide?

The appeal was dismissed. The Defendant’s position failed to take sufficient credit of the principles of open justice and was seeking to pursue a course of action in which he or she not only obtained anonymity from the wider public (as may be granted following an anonymity application made under CPR 39.2, they were seeking also to withhold their identity from both the Claimant and the Court. To allow such a state of affairs to continue would lead to profound implications offensive to public policy. These included: (1) The inability to verify that the person participating (pseudonymously) in the proceedings was, in fact, the person he purported to be; (2) The increased risk of the use of court proceedings for illicit purposes such as money laundering; (3) The reduced ability to secure compliance with court orders and/ or increased cost of necessary steps to that end; (4) The court’s inability properly to apply its own rules where the identity of the party claiming anonymity is critical (for example, whether a company or an individual); (5) The inability to ensure that the parties are treated on an equal footing consistent with the overriding objective; and (6) The inability to discern individual characteristics or vulnerabilities requiring, for example, the adoption of special measures. Overall, the Court would have a much diminished ability to supervise and control its own proceedings and conduct them fairly. The Judge below had himself granted permission to appeal and the appeal court declined to set this aside. In light of that permission being granted, the Court also declined the strike out the Appellant’s notice. The judgment of the appeal court came about only after hearing detailed argument on the point.

Case details

• Court: High Court of Justice, Business and Property Courts Appeal
• Judge: Mr Justice Richard Smith
• Date of judgment: 18 September 2023

Article by Phillip Patterson – first published by LexisNexis