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||Neutral Citation Number:  EWHC 523 (QB)
||Case No: HQ17X02876
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
||Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
NICHOLAS VINEALL QC
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
|| (1) MARCURA EQUITIES FZE
(2) DA-DESK FZ-LLC
- and –
||(1) NISOMAR VENTURES LIMITED
(2) CLAUS HYLDAGER
Adam Solomon QC and Sophia Berry (instructed by Holman Fenwick Willan LLP) for the Claimants
Christopher Quinn (instructed by Collyer Bristow LLP) for the Defendants
Hearing dates: 7 March 2018
HTML VERSION OF JUDGMENT
Crown Copyright ©
NICHOLAS VINEALL QC:
- Monday 5 March 2018 was to be the first day of a 5 day trial of a claim relating to the alleged unlawful disclosure and use of confidential information. The parties reached an agreement pursuant to which on 1 March 2018 the Court made an order by consent which, for practical purposes at least, disposed of all issues between them other than costs. When the matter came on for hearing the parties identified four outstanding issues namely (1) What form of final order should the court make to dispose of the action? (2) What, if any, order for costs should be made? (3) What should be the basis of the assessment of costs? and (4) Whether there should be an interim payment on account of costs. A further issue emerged relating to whether or not I was entitled to receive evidence of what was said at a settlement meeting.
- Issue (2) took up the bulk of the hearing. Mr Solomon QC (who with Ms Berry appeared for the Claimants) submitted that the Claimants had won on all issues and that the Defendants had capitulated at the last moment, so that the Claimants should have all their costs. Mr Quinn for the Defendants submitted that the Claimants had obtained most of the relief they sought by consent at an early stage, that thereafter their only further success was an agreement that the Defendants would pay them £35,000, and that the Claimants had failed to engage with an open offer made by the Defendants on 30 October 2017 which was open for acceptance until 6 November 2017. He made other criticisms of their conduct. He conceded that costs prior to 6 November 2017 should be the Claimants', but sought an order that the Claimants pay the Defendants' costs thereafter.
Background and history of the proceedings
- The Claimants are incorporated in Dubai. They sell to the global maritime industry a computer software package called PortLog. The Claimants say that the group of which they are a part has spent almost $7m developing PortLog. The Claimants contend that PortLog has unique features distinguishing it from its competition.
- The First Defendant, Nisomar, is an English Company incorporated on 7 December 2016. It is owned and run by the Second Defendant Mr Hyldager. It has not yet traded. Nisomar is developing a computer programme. The Defendants say that that programme is a bridge port agency application. The scope of what that programme does, or will do, is in dispute between the parties.
- Mr Hyldager is the former CEO of Inchcape Shipping Services ("ISS"). The Defendants say that PortLog is not unique and replicates a product sold by ISS.
- The claim focuses on the actions of Mr Schulz, who is not a party to the proceedings. The Claimants allege (and the Defendants were not in a position to dispute) that:
6.1. Mr Schulz was employed by the Second Claimant from July 2012 until he resigned on 28 February 2017, but he continued to work as a consultant to the First Claimant until mid-April 2017; and
6.2. Mr Schulz was involved with the development and marketing of PortLog. Mr Schulz signed service, resignation, and consultancy agreements with the Claimants which contained express confidentiality obligations and post-terminations restrictions, on which the Claimants relied.
- The Claimants now allege that during 2016 and 2017 Mr Schulz provided the Defendants with at least nineteen pieces of confidential information belonging to the Claimants. By way of example they allege that on 23 December 2016 Mr Schulz emailed to Mr Hyldager the Claimants' confidential patent application for a particular algorithm which, they say, was used by PortLog. The email to which the patent application was attached was entitled "Patent - Very P&C" (P&C standing for private and confidential).
- On 3 August 2017 the Claimants' solicitors, Holman Fenwick Willan LLP ("HFW"), wrote to the Defendants. They set out what they then knew about Mr Schulz's contact with the Defendants. They alleged that the Defendants had induced, facilitated, assisted or conspired with Mr Schulz in breaching his contractual obligations of confidence to the Claimants, and they alleged that Nisomar had used the Claimants' confidential information. They asked that the Defendants by 7 August 2017 provide a statement setting out exactly what information Mr Schulz had given them, and when, and that they sign attached undertakings. Those undertakings essentially required the Defendants to identify, deliver up, and not further disclose or use, all confidential information they had received.
- The Defendants instructed Collyer Bristow, who replied on their behalf on 7 August. The letter said that Mr Schulz had not provided the Defendants with any confidential information belonging to the Claimants, and that the Defendants did not have any such information. It said that, although Mr Schulz had been considered for a position with Nisomar "the recruitment did not go ahead and Mr Schulz never started working for Nisomar Ventures in any capacity, nor did he work for any associated company, or Captain Hyldager." The Defendants declined to sign the undertakings proffered by the Claimants. They offered "suitably drafted undertakings" reflecting the position taken in their letter, on the basis that their legal costs of dealing with the matter would be indemnified in full by the Claimants.
- The Claimants responded by letter on 7 August 2017 and by commencing proceedings and applying for an injunction on 8 August 2017.
- The 8 August 2017 Claim Form sought injunctive relief to protect the Claimants' confidential information, delivery up, and damages in excess of £200,000.
- The injunction application was made on notice and was listed to be heard by Jefford J on 14 August. The parties agreed terms of undertakings and they were incorporated in an order of that date. The Defendants gave undertakings to deliver up all property within their control that belonged to the Claimants, and not to disclose it to third parties. The Defendants undertook to provide witness statements setting out (inter alia) what confidential information had been received and what confidential information had been used by the Defendants. There was no admission of any liability. The Claimants undertook to lodge £100,000 as security for costs and for their potential liability under their cross undertaking in damages. Directions were given for a speedy trial of all issues save for the quantification of damages.
- An unfortunate feature of the drafting of the agreed order is that no time limit was identified in relation to the Defendants' undertakings. The usual wording, that the continuing undertakings would apply until trial or further order, was absent. The order did however contain a cross-undertaking in damages given by the Claimants in the normal terms. In those circumstances, and given also the terms of an order of 17 November 2017 to which I shall refer below, it seems to me that it was implicit in the order that the continuing undertakings were intended to continue only until trial or further order.
- Particulars of Claim were served on 18 August 2017. The relief sought was permanent injunctive relief to restrain use of the Claimants' confidential information, and to restrain the Defendants from inducing or procuring Mr Schulz to breach the terms of his agreements with the Claimants, a springboard injunction, and damages or an account of profits.
- On 24 August 2017 Mr Hyldager filed a witness statement delivering up 4 documents. The statement said they were the only relevant documents that had been found during a search. The patent application was not amongst the documents delivered up.
- On 25 August 2017 a Defence was served. It admitted receipt of the four documents that had been delivered up. It denied any use of any confidential information belonging to the Claimants, and denied inducing Mr Schulz to breach his contractual obligations to the Claimants. It denied that Nisomar had ever employed Mr Schulz but (at paragraph 18) admitted that Nisomar did engage Mr Schulz as an adviser to advise in the development of the port agency application which Mr Hyldager was developing.
- On 3 September 2017 Narayanan Shankar, a former consultant to the Claimants provided the Claimants' solicitors with documents that had been provided to him by Mr Schulz. Those documents included the patent application. Since the covering email to that application indicated it had been sent to Mr Hyldager, the Claimants' solicitors, by letter of 4 September 2017, sought an explanation as to why Mr Hyldager had not disclosed it.
- On 4 September 2017 at a CCMC before Master Eastman the Defendants' costs budget was approved. On the Claimants' application the Master adjourned the CCMC insofar as the Claimants' cost budget was concerned.
- On 25 September 2017 the Claimants' solicitors emailed the Defendants'. The email was marked without prejudice save as to costs. It said that in principle the Claimants would consider settlement on terms (in summary) that the First Defendant's website be amended to ensure there was "no reference or duplication with our clients' business"; that warranties were given in relation to the Claimants' confidential information; that "your client transfers ... any IP ... created whilst employed by [the Claimant group]"; undertakings not to compete for a period to be discussed, and payment of the Claimants' costs. The Claimants' solicitors clarified in subsequent exchanges that the third point was intended as a reference to confidential information Mr Schulz had created whilst engaged by the Claimants.
- On 30 October 2017 the Defendants made an open offer to the Claimants. It expressed the view that the likely outcome at trial was between a nominal damages award in the Claimants' favour and the claim being dismissed. It repeated the assertion that the Defendants had not used the Claimants' confidential information. It noted that the Claimants' costs were by now likely to be in the region of £108,000 (based on the draft CCMC schedule), and expressed the view that the Claimants' reasonable costs to date could not exceed £70,000. It offered a contribution of £25,000 to the Claimants' costs. The letter made no offer of any sum towards damages. The letter was entirely silent as to continued injunctive relief. Mr Quinn says it is obvious that the letter was premised on the assumption that the interim relief set out in the Jefford J order should continue. Mr Solomon disputes that. I return to this issue later. The 30 October 2017 letter said that the offer it contained was open for acceptance for 7 days.
- There had been correspondence between the solicitors about the assertion made back on 7 August 2017 that Mr Schulz had never worked for the Defendants, and the inconsistent admission made in the Defence. In the 30 October 2017 letter the Defendants' solicitors, referring to their initial denial in correspondence that Mr Schulz had ever worked for the Defendants, said that "Our clients regret having given us those instructions."
- The Claimants did not accept the Defendants' offer and indeed did not respond to it.
- The trial had been listed for hearing in a window commencing 4 December 2017. By a consent order dated 17 November 2017 it was ordered that the order of Jefford J continue "until trial or further order"; that the trial be vacated; that the Claimants be permitted to amend their POC, that the budgeting of the Claimants' costs be postponed for a one hour hearing, to be fixed; and other directions for trial were given. Costs of and occasioned by the application were reserved to the trial judge.
- On 21 December 2017 Master Eastman approved the Claimant's cost budget in the sum of £449,929. That order, on its face, includes no comments on the Claimants' costs incurred to date.
- In an open letter of 30 January 2018 the Claimants' solicitors sent to the Defendants' solicitors a draft consent order detailing the final injunctive relief they would seek at trial. It is substantially the same as the relief that had been in place since the Jefford J consent order of 14 August. The Claimants' letter noted that the order did not deal with payment of the Claimants' costs, nor with the sum of damages to be recovered from the Defendants, and suggested that that those matters should be dealt with by way of a separate order if they could not be agreed between the parties.
- On 2 February 2018 the parties' solicitors met to discuss settlement. There is an issue between the parties as to whether I should take into account what was said at that meeting. I deal with this issue below.
- On 5 February 2018 the Defendants' solicitors wrote an open letter responding to the Claimants' solicitors' letter of 30 January 2017. Subject to some minor amendments to the wording, the Defendants offered to consent to the injunctive relief sought by the Claimants. The letter sought a "brief and neutral" statement about the resolution of the claim. The letter offered £35,000 in relation to damages. The offer was made on the basis that either both parties bear their own costs, or the question of costs be determined by the trial judge.
- On 12 February the Claimants' solicitors wrote without prejudice save as to costs, responding to the 5 February offer. They suggested further minor amendments to the precise wording of the injunctions. They said they did not agree to there being any agreed statement. They accepted the offer of £35,000 in relation to damages. They agreed that today's hearing be limited to issues of costs. They proffered a draft order which recorded at paragraph 1 that "There be judgment for the Claimants."
- By 1 March the parties had managed to agree terms and an agreed order was made on that date by consent by Nicola Davies J. It provided at paragraph 1 that "The Defendants are to pay the sum of £35,000 to the Claimants by no later than 28 March." It contained injunctive relief in a form substantially the same as the undertakings recorded in the Jefford J order of 14 August 2017. It recorded no admission of liability.
- The order did not expressly record that it was being made in settlement of all issues between the parties other than costs, but I am satisfied that that was its intended effect.
- The order also recorded the parties' agreement that the trial date of 5 March be used to determine the four issues which I have set out at paragraph 1 above.
What was the status of the settlement meeting on 2 February 2018?
- Mr Quinn sought to adduce evidence of what was said at the settlement meeting on 2 February 2018. Mr Solomon objected on the basis that the meeting was without prejudice.
- The Defendants' solicitors have in correspondence given the following account of the commencement of that meeting: "We agreed that the meeting was not open but WP but we did not expressly discuss whether the issue of the save as to costs was included or excluded." Mr Solomon was content to proceed on the basis that that was an accurate reflection of what was (and what was not) said prior to that meeting.
- The circumstances and context of the meeting on 2 February 2018 are such that either or both parties might have wanted it to be entirely without prejudice, or might have preferred that it be without prejudice save as to costs. The distinction between WP and WPSATC is both real and important. The advantage of a purely WP meeting is that it can lead to the frankest possible discussion, without either party being worried that what they say might be used against it on costs. If such a meeting is purely WP, either party wanting to make an offer which might affect costs can put such an offer in a subsequent WPSATC letter.
- A similar issue arose in Gresham Pension Trustees v Cammack  EWCA Civ 655, where the Court of Appeal found that the judge had been wrong, when dealing with costs, to take into account an attendance note of a "without prejudice" exchange. Sharpe LJ giving the leading judgment said this:
25. Negotiations which have taken place expressly on a "without prejudice save as to costs basis" are admissible on the question of costs as an exception to the general rule which precludes the admission of without prejudice communications: see Calderbank v Calderbank  Fam 93, Cutts v Head  Ch 290 and Unilever v Procter & Gamble  1 WLR 2436 at 2445C–E. However, if the parties wish to exclude the general rule that would otherwise apply, they must say so: see for example, the judgment of Hoffmann LJ, as he then was, in Muller v Linsley & Mortimer  PNLR 74 at 77 where he said:
"Some of the decisions on the without prejudice rule show a fairly mechanistic approach, but the recent cases, most notably the decisions of this court in Cutts v Head  Ch 290, and the House of Lords in Rush & Tompkins Ltd v Greater London Council  AC 1280, are firmly based upon an analysis of the rule's underlying rationale. Cutts v Head shows that the rule has two justifications. First, the public policy of encouraging parties to negotiate and settle their disputes out of court and, secondly, an implied agreement arising out of what is commonly understood to be the consequences of offering or agreeing to negotiate without prejudice. In some cases both of these justifications are present; in others, only one or the other. So, in Cutts v Head the rule that one could not rely upon a without prejudice offer on the question of costs after judgment was held not to be based upon any public policy. It did not promote the policy of encouraging settlements because as Oliver LJ said: 'As a practical matter, a consciousness of a risk as to costs if reasonable offers are refused can only encourage settlement …' It followed that the only basis for excluding reference to a without prejudice offer on costs was an implied agreement based on general usage and understanding that the party making the offer would not do so. Such an implication could be excluded by a contrary statement as in a Calderbank offer."
26. See further Reed Executive plc v Reed Business Information Ltd  EWCA Civ 887;  1 WLR 3026 at paras 20 to 21.
27. There is simply no evidence that any such contrary statement was made here.
- Likewise in this case, there is no evidence that anything express was said to the effect that the meeting was to be WPSATC, as opposed to WP. The only thing that was said was that the meeting would be WP as opposed to open.
- Mr Quinn sought to contend that it could be inferred from the surrounding circumstances that it was really intended by both parties that the meeting be WPSATC. Mr Solomon submitted that Gresham Pension v Cammack meant that only an express statement that a WP meeting was merely WPSATC could ever be sufficient to achieve WPSATC status. I am satisfied that there is nothing in the surrounding circumstances which could give rise to an inference or conclusion that this particular meeting was intended by both parties to be WPSATC, despite nothing express being said to that effect, so I do not need to decide whether the Court of Appeal in Gresham held that WPSATC status can only ever be achieved by an express statement.
- Accordingly I have not read the evidence as to what happened at that meeting and I have ignored what Mr Quinn said about it in his skeleton argument.
What form of order to make?
- I can deal briefly with this, first, issue. I am satisfied that the Nicola Davies J order incorporates an agreement that was reached between the parties as to all issues save for costs. There was no admission of liability. I therefore do not consider I can properly order that there be judgment for the Claimants, as sought by Mr Solomon. That would suggest that the allegations in the claim have been adjudicated on by the court, which they have not. Mr Quinn invited me to make an order staying the action, meaning that the settlement took the form of a Tomlin order. But the parties did not agree such a structure for their settlement, so I decline to take that course. In my view the appropriate final order is one that records the order made by consent on 1 March 2018 and says that, beyond that, there is no further order, save (subject to what I decide) as to costs. It seems to me that that will capture the fact that the order is final, but that (subject to costs) it does not adjudicate on any of the matters in dispute.
The right approach to costs where everything else has been settled
- The starting point for the exercise of my discretion is CPR 44.2. The general rule is that the unsuccessful party pay the costs of the successful party. I must have regard to all the circumstances including the conduct of the parties, whether a party has succeeded on part of its case even if not wholly successful, and any admissible offer to settle not being a Part 36 offer.
- In M v London Borough of Croydon  EWCA Civ 595, the Court of Appeal dealt with the proper approach to costs in judicial review cases where the defendant local authority concedes some or all of the relief which the Claimant seeks. In the course of doing so Lord Neuberger, then Master of the Rolls, dealt with the position in ordinary civil proceedings where, as here, the parties settle all issues save costs. He said this:
Costs after settlement before trial in ordinary civil litigation
47 It is open to parties in almost any civil proceedings to compromise all their differences save costs, and to invite the court to determine how the costs should be dealt with. The court has jurisdiction in such a case to determine who is to pay costs, but it is not obliged to resolve such a free-standing dispute about costs. Accordingly, by settling all issues save costs, the parties take the risk that the court will not be prepared to make any determination other than that there be no order for costs not only because that is the right result after analysing all the arguments, but also on the ground that such an exercise would be disproportionate.
48 In BCT Software Solutions Ltd v C Brewer & Sons Ltd  FSR 150 Chadwick LJ said this at para 24 (which was approved in Venture Finance plc v Mead  3 Costs LR 389 ):
"In a case where there has been a judgment after trial, the judge may be expected to be in a position to decide whether one party or the other has been successful overall; whether one party or the other has been successful on discrete issues; whether the fact that the party who has been successful overall but unsuccessful on some issues calls for an order which reflects his lack of success on those issues; and whether-having regard to all the circumstances (including conduct) as CPR r 44.3(4) requires-the order for costs should be limited in one or more of the respects set out in CPR r 44.3(6) . But where there has been no trial - or no judgment - the judge may well not be in a position to reach a decision on those matters. He will not be in a position to decide those matters if they turn on facts which have not been agreed or determined. In such a case he should accept that the right course is to decide that he should not make an order about costs. As the arguments on the present appeal demonstrate, it does the parties no service if the judge-in a laudable attempt to assist them to resolve their dispute-makes an order about costs which he is not really in a position to make."
49 However, Chadwick LJ immediately went on to say in the next paragraph, para 25:
"There will be cases (perhaps many cases) in which it will be clear that there was only one issue, that one party has been successful on that issue, and that conduct is not a factor which could displace the general rule."
This would seem to me to be clearly right. Given the normal principles applicable to costs when litigation goes to a trial, it is hard see why a claimant who, after complying with any relevant protocol and issuing proceedings, is accorded by consent all the relief he seeks, should not recover his costs from the defendant, at least in the absence of some good reason to the contrary. In particular, it seems to me that there is no ground for refusing the claimant his costs simply on the ground that he was accorded such relief by the defendants conceding it in a consent order, rather than by the court ordering it after a contested hearing. In the words of CPR r 44.3(2) the claimant in such a case is every bit as much the successful party as he would have been if he had won after a trial.
50 The outcome will normally be different in cases where the consent order does not involve the claimant getting all, or substantively all, the relief which he has claimed. In such cases the court will often decide to make no order for costs, unless it can without much effort decide that one of the parties has clearly won, or has won to a sufficient extent to justify some order for costs in its favour. Thus the fact that the claimant has succeeded in obtaining part of the relief he sought may justify his recovering some of his costs, for instance where the issue on which the claimant succeeded was clearly the most important and/or expensive issue. But in many such cases the court may consider that it cannot fairly award the claimant any costs because, for instance, it is not easy to assess whether the defendants should have their costs of the issue on which the claimant did not succeed, and whether that would wipe out the costs which the claimant might recover in relation to the issue on which he won.
51 In many cases which are settled on terms which do not accord with the relief which the claimant has sought, the court will normally be unable to decide who has won, and therefore will not make any order for costs. However, in some cases the court may be able to form a tolerably clear view without much effort. In a number of such cases the court may well be assisted by considering whether it is reasonably clear from the available material whether one party would have won if the case had proceeded to trial. If for instance it is clear that the claimant would have won, that would lend considerable support to his argument that the terms of settlement represent success such that he should be awarded his costs. An example of such a case is Brawley v Marczynski  1 WLR 813 where the court could determine without too much effort who would have won, and then took that into account when awarding costs.
- I cannot determine any of the many matters which were in dispute between the parties. However I can compare the parties' pleaded position with what was in fact obtained by the Claimants under the eventual settlement to see whether the consent order involves the Claimants getting substantively all of the relief which they claimed.
- The Claimants sought delivery up of various material, and obtained that relief on an interim basis by consent. The Claimants sought an injunction requiring the return of all confidential information, which they have obtained, now on a permanent basis. The Claimants sought an injunction preventing the use of any confidential information received by the Defendants, and have obtained such an order. The Claimants sought damages or an account of profit. That claim was never quantified, although the Claim Form sought damages in excess of £200,000. The Claimants have received £35,000. The Claimants sought a springboard injunction, which they have not obtained. The Defendants' pleaded position throughout has essentially been to admit receipt of some material but to deny any use of it, and to deny any liability at all to the Claimants.
- I am satisfied that the Claimants have obtained substantively all the relief they sought, the only exception being that there has been no springboard relief. I therefore consider that this is not a case in which I should decline to make any order in relation to costs. It also follows that the starting point must be that the Defendants should pay the Claimants' costs.
- However, I must consider carefully Mr Quinn's submissions and in particular consider the relevance in relation to costs (a) any relevant settlement proposals, (b) of the fact that the Claimants have only recovered £35,000 by way of damages, and (c) the other criticisms of the Claimant's conduct made by Mr Quinn. I will take these in turn.
(a) Offers to settle
- The only potentially relevant offer (in terms of an argument that it should displace the general rule) is the Defendants' open offer of 30 October 2017.
- One of the difficulties that arises in assessing it is that it is not clear whether what was being offered was in addition to the undertakings already given, or in lieu of them. I do not find that an easy question to answer. I shall proceed on the assumption that the offer in the letter was in addition to the undertakings already given. The truth is that the letter did not say that the undertakings would be withdrawn nor did it say that they would be repeated and continued. It was ambiguous on its face, and in my view it would cause a reasonable recipient to be in doubt as to what was intended. But if the Claimants were (as I find they should have been) uncertain as to what was intended in relation to continuing injunctive relief, they could and should have responded to ask for clarification.
- On the assumption, favourable to the Defendants, that the letter included an offer to make permanent the undertakings already given on an interim basis, the letter nevertheless offered nothing further to the Claimants apart from a £25,000 contribution to the Claimants' costs. The Defendants' assessment was that the Claimants' reasonable costs to date were about £70,000, and they knew or suspected that the Claimants' actual costs up to that point were in the region of £108,000.
- In my view, even on the assumption I have made, the offer is materially less favourable to the Claimants than the settlement they have in fact achieved. The offer to contribute only £25,000 to the Claimants' costs was not, in my view, a realistic or reasonable offer, and I do not consider it was in any way unreasonable of the Claimants not to have accepted it.
(b) The fact that the Claimants have only recovered £35,000
- Mr Quinn submits that the agreed payment of £35,000 is so modest that it cannot be used as part of the justification of the award of the very substantial costs claimed by the Claimants, which are said to be in the region of £450,000. Whilst he accepts that generally the starting point for determining who is the winner in commercial litigation is to ask who is the receiving party, he says that it does not always follow that a receiving party is entitled to its costs, or to all of its costs. In any event, he says, it would be disproportionate to award costs at the level claimed in an action where the Claimants have only secured £35,000.
- He relies on Medway Primary Care Trust v Sebastian Marcus 2011 EWCA Civ 750. The Claimant had sought damages for personal injury in a total sum in excess of £730,000 on the basis that delay by the Defendant's doctors in diagnosing ischaemia had led to his left leg being amputated. That case failed at trial on causation, but the Claimant succeeded in recovering £2,000 on the basis that, but for the Defendants' negligence, his leg would have been amputated sooner, relieving him of pain and suffering in the meantime. By a majority the Court of Appeal held that the judge was wrong in principle to have considered the claimant to have been the successful party for the purposes of costs.
- A personal injury case, where the only relief sought is damages, is very different from a confidential information case where there are often a series of motivations, and a corresponding range of claims made. Here the Claimants' aims were to find out how much of the confidential information had been passed to the Defendants by Mr Schulz, to get back all copies of it, to ensure it would not be used by the Defendants, and if it had been used to make sure the Defendants could not take advantage of any head start they had improperly obtained, and finally to obtain damages or an account of profit. The more successful the Claimants are in preventing use of their confidential information, the lower the Claimants' monetary recovery is likely to be. But Marcus v Medway is a helpful reminder that, even in a personal injury claim, it can be too simplistic, in determining who is the successful party, simply to ask who pays money to whom. In a confidential information case, where monetary claims are only a part, and sometimes one of the least important parts, of the relief sought, it will rarely if ever be right to focus only on the payment of money when determining a costs order.
- In assessing the extent to which the agreed order represents success for the Claimants it is also relevant to bear in mind that the trial in this action was to decide all issues apart from quantification of damage. If the trial had proceeded as planned and the Claimants had obtained an order for damages to be assessed, it could hardly at that stage have been said that they should not have their costs to date because the sum to be assessed might yet turn out to be modest.
- In my view the consensual payment of £35,000 cannot be characterised as a sum that is nominal or trifling, and in any event it would be wrong to focus solely on the agreed payment of £35,000 in determining who the successful party is. Nor do I consider that it is remotely right to characterise this as a claim in which the costs are disproportionate because £450,000 has been spent to recover just £35,000. That ignores the important delivery up and other injunctive relief that has been obtained.
- Accordingly I reject the suggestion that the fact that only £35,000 has been recovered displaces the starting point that the Claimants are the successful party for costs purposes. Nor do I accept the contention that it demonstrates that the costs claimed are disproportionate.
(c) Other criticism of the Claimants' conduct
- I can deal with these briefly.
- Mr Quinn says that the pre-action protocol was not precisely complied with. That appears to be true but this was an urgent matter and the Claimants' solicitors pre-action correspondence was in my view reasonable.
- Mr Quinn says that the Claimants should have engaged with the Defendants after they made their open offer of 30 October 2017. It is a little surprising that there was no response to that letter, but it was couched as a take-it-or-leave-it offer open for 7 days only, and I do not think that any lack of engagement is a matter that should count against the Claimants on costs.
- Mr Quinn criticises the Claimants and their solicitors more generally for what he says was an overly aggressive approach to the litigation. It is right to say that the claim was pursued vigorously. But, on the Claimants' case, this was a serious case of the Defendants knowingly procuring the receipt of the Claimants' confidential information through Mr Schulz, and one in which the Defendants had initially lied about their relationship with Mr Schulz when the matter was first raised. I have seen no intemperate correspondence from the Claimants' solicitors, nor any obviously exaggerated claims nor obviously unsustainable assertions, and I reject the submission that there is anything in the Claimants' conduct of their claim that should cause me to alter the costs order I would otherwise make.
- Finally Mr Quinn criticises the Claimants for the circumstances in which the original trial date was vacated. But that was done by consent, with no adverse order for costs being made.
- I consider that the Defendants should pay the Claimants costs because the Claimants are the successful parties, and there are no features of the offers made, nor any features of the conduct of the Claimants, which make some other order appropriate. In my view, given the nature and range of relief sought and the range of relief obtained under the settlement, it is proportionate that the Claimants recover the whole of their costs, subject to detailed assessment.
Basis of Assessment
- There is nothing about the conduct of the Defendants to take this case out of the norm in a way which would justify an order for indemnity costs.
Payment on account of costs
- The costs will go off for assessment if they cannot be agreed, but meanwhile I must (CPR 44.2(8)) order the Defendants to pay a reasonable sum on account of costs unless there is good reason not to do so.
- Mr Solomon starts with the observation that at the CCMC his clients' costs budget was approved at £449,929.33. But that was for a five day trial with cross-examination, and we have instead had a one day argument essentially about costs. It seems to me that it is likely to have been obvious from around 5 February that there was no realistic likelihood of there being a full blown trial. I have not been told what costs have in fact been incurred. I therefore do not know what adjustments were made to brief fees, and in any event there will be no refreshers, no witness-related costs, and much reduced costs of solicitors' attendance at trial. Given that the absence of information on actual costs is attributable to the Claimants and it is the Defendants who are being asked to make an interim payment, I am going to tread cautiously and assume that the total costs in fact incurred might be no more than £330,000.
- I then have to order some proportion of that sum to be paid on account.
- I bear in mind that when costs are assessed on a standard basis in a case where a CMO has been made, the court will not depart from the approved budgeted costs unless satisfied there is good reason to do so (CPR 3.18(b)).
- I also accept that when ordering a payment on account in a case where there has been prospective approval of the bulk of the receiving party's costs by way of a CMO it is likely to be appropriate to assess that as a high percentage, and Mr Solomon showed me cases where payments on account of 90% (Thomas Pink v Victoria's Secret  EWHC 3258 (Ch)) and 100% (Triple Point v PYY  EWHC 45 (TCC)) have been made. But Mr Quinn points out that in this case, because of the delay in obtaining approval of the Claimants' cost budget, when the Master came to approve it most of the costs were already incurred. He sought to tell me on instructions some comments that the Master had made at that hearing relating to his approach to costs already incurred, but I do not consider I can go behind the order that the Master made, which did not, on its face, make any comments about the costs (see CPR 3.15(4)). Nevertheless, I agree with Mr Quinn that there is more scope for a challenge, on assessment, to costs that were already incurred before the relevant budget was approved, than to those which were approved in advance.
- I will order that the Defendants make a payment on account of £231,000, which is 70% of £330,000.
- Finally, the £100,000 which was paid into court by the Claimants as security for costs, and to fortify their cross-undertaking, should be paid back out of court to them.
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