Former business boss is jailed after lying in court
THE career of a once successful businessman lies in ruins after he was jailed for lying to the courts in a battle over intellectual property.
Paul Bennetts, 70, also failed to attend one High Court hearing claiming he had contracted Covid19 – then failed to provide “satisfactory evidence” that this was true.
Mr Bennetts, of Southport, became embroiled in a legal row over the rights to a type of medical face cushion used on patients lying in the prone position. In 2018 his group of companies, EC Medica Group (ECMG), sued a company called CS Medical Limited, and its three directors, who were exemployees of ECMG.
Mr Bennetts, a former director of Liverpool Chamber of Commerce and arts festival company Brouhaha Ltd, claimed that CS Medical had infringed ECMG’s intellectual property rights and its directors had misused confidential information.
However, it later emerged ECMG had in fact sold all its intellectual property rights to a company called JMW Resources Ltd for £100,000, five days before the start of the trial in June 2018 – a sale that Mr Bennetts had signed off on but which he failed to mention in court or to his own legal team.
In a sentencing hearing, High Court Judge Mrs Justice Falk, DBE, wrote in a judgment: “At the trial, ECMG maintained its allegations of misuse of confidential information and infringement of UK Unregistered Design Rights (UKUDRs). Mr Bennetts gave evidence in support of the claim.
“He relied on four witness statements, each supported by a statement of truth... he swore on oath as to the truth of his written evidence”
CS Medical Ltd countersued on the basis that Mr Bennetts had made unjustified threats of design infringement. In the end, the judge in the original trial, Mrs Justice Bacon, threw out ECMG’s claims and ruled in favour of CS Medical.
ECMG was ordered to make a costs payment to CS Medical of £233,000 within 90 days. That sum failed to be paid and some of the companies in the ECMG group were placed into liquidation.
Further hearings took place when Mr Bennetts’s firms failed to pay, and it was only then it emerged ECMG had secretly transferred its assets to a company, established by his brother Michael, called Design Build Ltd (DBL). DBL then sold those assets on to JMW.
The court heard the assets agreed to be sold, for a price of £100,000, included all of ECMG’s intellectual property rights, including design rights and the right to sue for past infringements.
This meant the majority of the issues contested in the trial were pointless, as ECMG could not have owned the rights to the face cushion. The court heard that as well as knowing this, Mr Bennetts had only “minimally” co-operated with the firm appointed to liquidate ECMG’s assets and he had failed to provide substantive information.
In his defence Mr Bennetts claimed he had been desperate after his solicitors demanded £97,000 shortly before the trial and threatened to withdraw from the case if it was not paid. However Judge Falk said emails showed that he had been fully aware of their fee from early in the process and was not suddenly hit with an unexpected demand for payment.
She wrote: “Mr Bennetts’ actions in suppressing the sale of the assets just before the trial amounted to a serious contempt which has caused significant harm. The administration of justice has been materially undermined by the trial being allowed to proceed on a false basis.
“If the truth had been known, the trial would not have gone ahead.
“CSL and the other defendants would have been able to limit the costs they incurred and the time expended, not only at the trial but subsequently. They would also have become aware at a much earlier stage of where the business assets were being held, and may have been able to take much more effective action to recover their previously incurred costs.
“Mr Bennetts’ actions were and remain highly culpable. As already discussed, the alleged justification of the urgent need to raise funds for trial is not one I have been able to accept. I am driven to conclude that the sale was intended to be an insurance policy against the risk of the case being lost, the aim being to put the assets out of the reach of the defendants in that eventuality.”
Judge Falk said she accepted that Mr Bennetts’ 12-year-son and exwife would be affected by his imprisonment, and that he had health problems.
However, she said the contempt was so serious she could not suspend it. Mr Bennetts was committed to prison for 12 months.