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England and Wales High Court (Chancery Division) Decisions
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Cite as:  ETMR 58,  Costs LR 1015,  EWHC 2372 (Ch),  FSR 35
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Neutral Citation Number:  EWHC 2372 (Ch)
Claim Number: IL-2019-000149
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (Ch.D)
SHORTER TRIAL SCHEME
MR DANIEL ALEXANDER QC
(Sitting as a Deputy Judge of the Chancery Division)
B E T W E E N: -
PHILIP WARREN & SON LIMITED
- and –
Nicholas Bacon QC (on costs) and Andrew Lomas
instructed by Stobbs IP for the Claimant
Benet Brandreth QC and Tristan Sherliker (of Bird & Bird) instructed by Bird & Bird for the Defendants
Hearing date: 1 June 2021 with further written submissions on 16 and 26 July 2021.
COVID-19: This judgment was handed down remotely by circulation to the parties' representatives by email. It will also be released for publication on BAILII and other websites. The date and time for hand-down is deemed to be 10.00am on 26 August 2021.
MR DANIEL ALEXANDER QC
1. By a judgment dated 30 April 2021 ( EWHC 1097 (Ch)) the court dismissed the claimant’s (“PWS’s”) claim and the defendants’ (“Lidl’s”) counterclaim for passing off. Three issues arose at the consequential hearing on 1 June 2020: (i) costs; (ii) whether a publicity order should be made in accordance with Samsung v. Apple and (iii) permission to appeal. This decision is long because of the multiple points raised on costs and issues of approach to a publicity order. It gives fuller background, which is part of the context for both issues.
Procedural history of this aspect of the case
2. This consequentials judgment has had an unusual procedural history. Following the hearing on 1 June 2021, the court provided a confidential draft judgment on 14 June 2021 for handing down on 18 June 2021. On 17 June 2021, the court received a note from counsel for Lidl inviting account to be taken of a number of points in the final judgment and for handing down to be postponed by 7 days, which was done. No submissions were received on behalf of PWS at that stage. However, in addressing Lidl’s points, I concluded that further brief submissions should be permitted, for a number of reasons, which I gave in a short summary. These included the fact the parties had not referred to all of the potentially relevant authorities (of which some were referred to in the draft judgment) and that argument on behalf of PWS specifically on the basis upon which costs should be awarded had been brief. I deal with some of the other points raised below. In the circumstances, it was desirable to give the parties an opportunity to advance any additional submissions and/or authorities in favour of or against PWS bearing Lidl’s costs on an indemnity basis, before the decision was finalised. I therefore adjourned hand-down, made an order for an interim payment for costs assessed on the standard basis, to be paid by 31 July 2021. I gave permission for the further submissions to be made in writing. However, PWS instructed additional specialist costs counsel and indicated that it may wish to have a hearing but I ruled that this would be disproportionate and instead gave permission to the parties to respond briefly to each other’s supplementary submissions by 26 July 2021. They did so and I am grateful to the parties for their submissions, which are now very comprehensive. In particular, Mr Nicholas Bacon QC, who had not been previously involved in the case, assisted with the extensive subsequent written submissions on costs on behalf of PWS. In the light of the overall decision I have reached, it has not been necessary to address all of the points made in these additional submissions but I have taken account of some of the points made in also adjusting the language to clarify certain points.
3. I indicated that Lidl’s application for a publicity order would be refused, with permission to re-apply by that date, for reasons to be given in a composite judgment, dealing with all of the issues. In the event, Lidl did not reapply for a publicity order. I had originally drafted the decision in a somewhat more colloquial style than is conventional, since Lidl had asked for an order publicizing the main decision in the popular press as well as linking to it and it seemed appropriate to try to make this decision as accessible as possible in case that was sought to be linked as well. Since that relief is not pursued, I have somewhat redrafted and shortened the text, particularly since parts of the decision relating to the publicity order are now largely of historical interest and chiefly only to the parties.
4. At the hearing on 1 June 2021, permission to appeal from the main judgment was granted on certain limited grounds set out in the draft Grounds of Appeal and an extension of time for the Notice of Appeal was ordered to 31 July 2021. This has since been extended further, in the light of the timetable for further submissions.
5. Part of the reason for devoting more attention than usual to this issue is that the case has some hallmarks of one which has been brought in what Lidl has described as a speculative investment in the hope that PWS and its lawyers will receive very large returns. Having considered the evidence at trial and what PWS’s lawyers previously said, by implication, about its likely value in justifying the particular damages-based agreement made to pursue the case, there is a significant likelihood that even if the claim had succeeded (or ultimately succeeds following an appeal and any further proceedings) the sum awarded would not be materially different from that offered by Lidl to settle the whole case in October 2020. I had originally thought that, partly because it was not possible to say definitively at this stage that the claim was exaggerated and that PWS was unreasonable to have refused Lidl’s offer to settle it, it would be wrong to award indemnity costs. I have not changed that view fundamentally, as a result of the further submissions for reasons explained more fully below, but have concluded that the better approach is to make a somewhat different order which will enable the court to address this issue and provide fuller compensation on costs, should it turn out that the preliminary view of the merits of the financial claim is correct. In that event, the entire proceedings, including the need to take steps to address the reporting of them (which are addressed in the publicity order aspect of this decision) would have not been a fruitful use of time and money since October 2020, in the light of a reasonable offer to settle the case made at that stage. Without that adjustment, Lidl would be at risk of both being significantly out of pocket in that event and insufficiently rewarded for having made a reasonable attempt to settle the case at an early stage. In principle, the making of early reasonable offers should be incentivized and refusing them should be a high risk strategy. If no opportunity to address this is given, PWS may ultimately be in a position in which it would not be liable to pay the full costs of having pursued a claim which should not have been pursued in the light of that offer. It, and its lawyers, would therefore have been able to take advantage of the chance of a potentially large (albeit unlikely) claim but without having to bear the full costs which doing so imposes on others if it fails. In my view that general approach is not mandated by but is broadly consistent with the case law cited by the parties since the hearing.
6. In order that this decision can be understood on its own, I first summarise some of the key substantive aspects of the case, highlighting those which matter most for this judgment.
7. PWS is an award-winning Launceston-based family butcher with a predominantly local retail business and a significant wholesale business, supplying, among others, well-known high-end restaurants in London and elsewhere. It has used various forms of branding, but most recently predominantly in the form
but also other branding, such as PHILIP WARREN AND SON.
8. In 2014, Lidl decided to rebrand its main fresh meat range to use the mark WARREN & SONS largely in this form.
9. On the evidence, Lidl did not choose the mark because of PWS or to imitate it and PWS did not contend that Lidl had done so. However, in replacing an earlier Lidl own brand, Lidl wanted an own-brand mark redolent of an English provincial butcher. WARREN & SONS was one choice out of several fictional ones and was not at the top of its list. Problems with other potential choices meant that Lidl adopted WARREN & SONS but, on the evidence, it appeared likely that there would have been a range of “traditional” sounding options. Lidl did find out about PWS’s existence before deciding to use the brand, but PWS did not have a registered trade mark and Lidl did not think PWS would have a right to object. Lidl registered a trade mark for WARREN & SONS without complaint and products bearing that mark started to be sold in June 2015.
10. From 2015 to 2020, when the WARREN & SONS brand was abandoned, hundreds of millions of packs of this brand were sold in the hundreds of Lidl stores around the country. Other than an isolated communication, no problems of possible confusion with PWS came to Lidl’s attention.
11. Lidl’s change of branding was known to PWS in late 2015 from a wrongly directed customer e-mail, which suggested some confusion. There were further occasional reports of confusion which caused annoyance and upset but were dealt with by PWS as they arose. The problem was not mentioned to Lidl at the time. PWS explained that this was because they did not know that they may have been able to do something about it until they met specialist solicitors, Stobbs. Having been informed that a claim might be possible in 2017, PWS did not raise the matter with Lidl right away. PWS and Stobbs spent considerable time making damages-based agreements for payment for legal services and obtaining insurance to enable a case to be brought inter alia for significant financial relief.
12. By the time PWS wrote to Lidl at the end of 2019 with a detailed letter before action indicating that large compensation would be sought, the WARREN & SONS brand was already on the way to being abandoned as a result of a decision taken independently by Lidl in 2018 to rebrand the whole range. Lidl told PWS this in early 2020 in response to the letter before action. The brand was phased out completely a few months later (although there was some Covid-related delay in finalizing this) and the registered trade mark was given up by Lidl in late 2020. This did not satisfy PWS and, as the correspondence at the form of order hearing has now made clear, the only reason the trial went ahead was that PWS is seeking a large sum in compensation. Instead of bringing the claim in IPEC, which is designed for SMEs and provides for a costs cap of £50,000, PWS and its lawyers decided to bring a case in the High Court where there is no cap on recovery.
13. The case was quite complex for a number of reasons, including PWS’s limited trading outside the Launceston area and in wholesale business at the relevant date for assessment of goodwill in 2015 and the different markets to which the respective businesses were directed. The case focused on three kinds of PWS’s customers/potential customers who might have been deceived by Lidl’s branding. First, those local to Launceston and region where there was some second-hand evidence that some thought (or more strictly, may have thought, since the evidence was not properly testable) that PWS’s products may have become available in Lidl. Second, those in the specialist high-end wholesale trade who, on the limited evidence as there was from those in this area, had not thought that there was a connection and who had not been troubled by Lidl’s continued use of WARREN & SONS, even though they may have been particularly sensitive to any perceived connection with Lidl. Third, mainly Lidl retail customers around the country who appeared to have found PWS on the internet after purchase of a WARREN & SONS product where a few had contacted PWS instead of Lidl by mistake or where they were not sure who to contact. There was a small number of these. Lidl’s evidence was that no confusion had come to light where they would have expected that to show up most readily, namely near Launceston.
14. The court therefore had to decide whether this was a solid enough evidential foundation to find Lidl liable for causing materially damaging (and operative) deception of the public into a connection with PWS such as to damage PWS’s goodwill. The judgment took the view that the evidence was not strong enough in the various domains where goodwill subsisted to say that there was significant operative misrepresentation causing material damage to PWS’s goodwill.
15. The law of passing off differs from registered trade mark law, which confers quasi-monopoly rights in a mark. It requires courts to focus on whether there is a misrepresentation as to trade origin, looking at the whole picture and requires distinctions to be made between misrepresentation and “mere confusion” in markets. Some case law distinguishes between situations where customers assume there is a connection between two brands and those where they only wonder whether there is. The law requires evaluation of whether any misrepresentation is likely to damage a claimant’s goodwill to a material extent. Reasonable people and courts differ as to where these lines are drawn. An allegation of passing off in a case of this kind requires proof that the defendant has misrepresented its products as being connected with a specific undertaking. It is not sufficient, in general, that a supermarket may have suggested that products come from (say) a local English butcher, thereby causing people to buy the brand because it carries a general sense of “high street authenticity” or because it is perceived not to be a supermarket brand. Some think such brands misleading but others like them, because they have a better “look” and appear less supermarkety, making them more acceptable to be taken to a barbecue, to adopt the words of one document.
16. Given that Lidl was stopping use of the WARREN & SONS brand before PWS wrote to complain and did so about a year before the trial, the case was ultimately focused on the claim for historic compensation. However, this stage of the case was about liability alone, because the parties adopted a conventional split trial with compensation to be evaluated later if the case was successful. Inevitably, because damage is an ingredient of the tort of passing off, it featured to some limited extent and the earlier judgment made some (non-binding) comments on the plausibility of the very large financial claim.
17. One matter relevant to the argument on costs is that assessing compensation for passing off is not easy. It is not even easy in cases of registered trade mark infringement. PWS did not allege that they had lost any sales as a result of Lidl’s actions and its business had never done better than during the years in which Lidl was alleged to have been damaging its goodwill. There is, however, case law indicating possible bases for compensation which may include profits made by a defendant or a reasonable royalty but it is not clear to what extent it applies in a case like the present. Quantification is more complicated in this case by the issue of whether any benefit obtained by Lidl, if there was passing off, was gained specifically at the expense of PWS, as opposed to other traders. Courts in other cases in the broad area have given indications that compensation should not be out of proportion to the actual benefit obtained by a defendant’s use of a mark or the loss suffered by a claimant as a result.
18. There is also a question of the relevance of delay on this issue. On PWS’s approach to compensation, the more and the longer the public was deceived by Lidl, the more PWS would gain. So too its lawyers who were acting pursuant to a damages based agreement (or DBA) which provides for lawyers to be able to share in up to 50% of compensation ordered or agreed. I should make it clear that this is not to suggest that raising the claim was delayed in order to increase the damages payable, merely that this is a paradoxical effect of delay in a case like this. It is unclear what the courts would do in a situation of this kind.
19. PWS’s claim was not successful and Lidl’s counterclaim was also not successful. The main judgment explains the reasoning more fully and it was far from a frivolous case. It is possible that the Court of Appeal would take a different view, if it progresses. However, at the consequentials hearing on 1 June 2021, rival Part 36 offers to settle were revealed. These offers, which related to financial relief, were put before the court without objection from either side, although quantum had not been determined or the case on this fully developed.
20. Despite denying liability, it appeared that in October 2020, Lidl had been amenable to resolution without the need for the trial, including paying compensation and offering essentially all the other relief PWS had been asking for. As well as abandoning the brand and surrendering the trade mark, Lidl offered PWS compensation of £230,000 and all PWS’s legal costs at that time in a total settlement package of about £1/2 million. This would have resulted in PWS and its lawyers being reasonably well compensated and would have avoided the significant costs of trial. It is possible that Lidl might have been prepared to pay somewhat more. The sum offered (it was only later explained) bore some relationship to profits from shops in the local Launceston area. Had terms been agreed along these lines, PWS would have received much more than nominal compensation for something PWS had not previously complained about and which had caused no loss of sales. It would have saved large costs. Few would have said that was fundamentally unfair.
21. However, PWS and its lawyers on its behalf clearly wanted - and thought they were entitled to - much more: PWS’s claim is (or was) for some £38 million although it made two Part 36 offers to accept less. PWS says that Lidl should have mediated the case and that there was a reasonable prospect of reaching a settlement which would have bridged the enormous gap. Lidl says that it was reasonable not to do so given the gulf between the parties’ positions, although it did not shut the door on settlement discussions. It says that it had made an offer with which PWS should have engaged more fully at the time and that it appeared that PWS and its lawyers appeared determined to hold out for huge sums, while threatening damage to Lidl’s reputation if a trial went ahead. So, Lidl say, it was reasonable not to deal with them on this basis. Whatever the rights and wrongs, it is regrettable that this case was not resolved earlier, as it could have been, relatively easily, if everything had been kept in proportion at the outset. That has consequences for the orders sought now and for the future.
The Mail on Sunday/Mail Online and other articles following the trial
22. There is a further matter which has come to divide the parties. After trial, but before judgment, Mr Ian Warren of PWS and Mr Julius Stobbs of PWS’s solicitors assisted a journalist from the Mail on Sunday/Mail Online with an article of which a key part of the headline was “Fake Moos?”. It focused almost entirely on the case and was given nationwide publicity. The story was picked up by other papers, including in Cornwall. It did not paint a flattering picture of Lidl’s conduct, using material supplied by PWS and its lawyers, including the tendentious skeleton arguments deployed by PWS at trial. The overall message of the Mail on Sunday/Mail Online article (albeit less so others, as I explain in detail below) was that Lidl was being accused of deliberately taking the WARREN & SONS brand from PWS with a view to using PWS’s good name to sell poorer quality produce. It also portrayed Lidl as having had little of merit to say in their defence at the trial. The Mail Online article resulted in numerous adverse comments below the line (“BTL”) about Lidl, some of which were of a kind no retailer would want to see, including threatening not to shop there again. Some would describe it as a “BTL hammering”. PWS say that it was not their fault or Stobbs’ fault that the articles appeared in those terms, that the publications were not unfair as a whole and that Lidl could have countered them but declined to do so.
23. Again, whatever the origin and cause, the effect has been criticism of Lidl which neither side contends to have been based on a complete presentation of the situation and both sides agree went, in some key respects, too far or was so incomplete as to be misleading. The unfortunate effect is that, as regards branding of this kind Lidl was also portrayed as being worse than its competitors (who in some cases also have been reported as having adopted branding which has been criticized as inauthentic) when in fact, unlike others, it abandoned the brand complained of some time ago and had even offered to pay a substantial sum in compensation. The upshot is that it is likely that the manner in which the case has been given publicity may have resulted in Lidl’s reputation being damaged in a way which neither PWS nor its lawyers suggests is justified and for which it is not suggested there is any realistic or easy remedy.
24. I have set out the background at reasonable length partly to demonstrate that even an incomplete summary of the respective positions to try to give a picture of what has gone on takes multiple paragraphs. That is relevant to the decision I reached as to the publicity order as well as to the costs evaluation.
25. The applications were as follows:
26. As to costs, Lidl said that it should have its costs on an indemnity basis. PWS’s main point at the hearing was that there should be a substantial reduction to take account of various factors, including its partial success but of which the biggest was Lidl’s allegedly unreasonable failure to agree to mediation. It also said that the assessment of costs sought by Lidl, which it is accepted should be summary, was too high in various respects. PWS also argued (albeit that this was not really pressed with vigour at the hearing, recognizing that this was not realistic) that there should be no order as to costs, despite the fact that its claim had failed.
27. As to publicity order, Lidl said that the reporting of its conduct has been so unfair as a result of PWS and Stobbs’ communications to the press that it would be just for the result of the case and a link to it to be published at PWS’s expense in the same outlets to set the record straight. This was, to my mind the hardest issue at the time and required consideration of some case law and principles not cited by the parties.
28. There was also an application for permission to appeal which I granted in a more limited form than sought at the hearing.
29. There were also a few other more minor applications, addressed below.
30. I deal with the respective costs claims in turn and have addressed the further post-hearing submissions in a separate section, so that the parties can see how the thinking has developed in the light of them.
(i) Lidl’s claim for indemnity costs
26. The main basis upon which indemnity costs were sought was that PWS had failed to beat a Part 36 offer made by Lidl in October 2020. There are also other points about PWS’s conduct said to justify such costs.
27. The recent decision of Fraser J in Beattie Passive Norse Ltd & Anor v Canham Consulting Ltd (No. 2 Costs)  EWHC 1414 (TCC) at - conveniently summarises the principles by reference to which indemnity costs are awarded in a situation such as the present, from which the following is distilled:
28. First, CPR Rule 44.2, under the heading "Court's discretion as to costs" provides:
"(2) If the court decides to make an order about costs –
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order."
Rule 44.2(4) provides:
"(4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of his case, even if that party has not been wholly successful; and
(c) any admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply."
29. Second, CPR Part 36.17(1) makes clear that Part 36.17 applies where a claimant fails to obtain a judgment more advantageous than a Part 36 offer made by a defendant. (3) states:
"(3) Subject to paragraphs (7) and (8), where paragraph 1(a) applies, the court must, unless it considers it unjust to do so, order that the defendant is entitled to: -
(a) Costs (including any recoverable pre-action costs) from the date on which the relevant period expired; and
(b) Interest on those costs".
Indemnity costs where a Part 36 offer is not beaten
30. In Lejonvarn v Burgess Coulson LJ said at :
"…a defendant (such as the appellant in the present case) who beats his or her own Part 36 offer, is not automatically entitled to indemnity costs. But a defendant can seek an order for indemnity costs if he or she can show that, in all the circumstances of the case, the claimant's refusal to accept that offer was unreasonable such as to be "out of the norm". Moreover, if the claimant's refusal to accept the offer comes against the background of a speculative, weak, opportunistic or thin claim, then an order for indemnity costs may very well be made. That is what happened in Excelsior.”
" When a defendant beats its own Part 36 offer, the court should always consider whether, in consequence, the claimant's conduct in refusing that offer took the case out of the norm. Sometimes it will; sometimes it won't. Mr Cohen articulated the question that had to be asked in these terms:
'At any stage from the date of the offer to the date of the outcome, was there a point when the reasonable claimant would have concluded that the offer represented a better outcome than the likely outcome at trial?'”
General factors relevant to costs
31. The court is obliged to consider 'all the circumstances of the case' but these fall predominantly into the categories of:-
1. Conduct before and during the proceedings (Part 44.2(5)(a))
2. The reasonableness of the claimant's decision to pursue a particular allegation or issue (Part 44.2(5)(b))
3. The manner in which a claimant has pursued its case (Part 44.2(5)(c))
4. The extent to which a claimant has exaggerated its claim (Part 44.2(5)(d))
32. In Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson and another the Lord Chief Justice said:
" … those paragraphs set out the need for there to be something more than merely a non-acceptance of a payment into court, or an offer of payment, by a defendant before it is appropriate to make an indemnity order for costs…However, I would point out the obvious fact that the circumstances with which the courts may be concerned where there is a payment into court may vary considerably. An indemnity order may be justified not only because of the conduct of the parties, but also because of other particular circumstances of the litigation. I give as an example a situation where a party is involved in proceedings as a test case although, so far as that party is concerned, he has no other interest than the issue that arises in that case, but is drawn into expensive litigation. If he is successful, a court may well say that an indemnity order was appropriate, although it could not be suggested that anyone's conduct in the case had been unreasonable. Equally there may be situations where the nature of the litigation means that the parties could not be expected to conduct the litigation in a proportionate manner. Again the conduct would not be unreasonable and it seems to me that the court would be entitled to take into account that sort of situation in deciding that an indemnity order was appropriate.
 I take those two examples only for the purpose of illustrating the fact that there is an infinite variety of situations which can come before the courts and which justify the making of an indemnity order…This court can do no more than draw attention to the width of the discretion of the trial judge and re-emphasise the point that has already been made that, before an indemnity order can be made, there must be some conduct or some circumstance which takes the case out of the norm. That is the critical requirement."
33. In Excalibur Ventures LLC v Texas Keystone Inc and others , Christopher Clarke LJ set out relevant factors which included where a party:
"(a) advances and aggressively pursues serious and wide-ranging allegations of dishonesty or impropriety over an extended period of time.
(b) advances and aggressively pursues such allegations despite the lack of any foundation in the documentary evidence for those allegations and maintains the allegations without apology to the bitter end.
(c) actively seeks to court publicity for its serious allegations both before and during the trial.
(d) turns a case into an unprecedented factual inquiry by the pursuit of an unjustified case.
(e) pursues a claim which is to put it most charitably thin, and in some respects far-fetched.
(f) pursues a claim which is irreconcilable with the contemporaneous documents.
(g) commences and pursues large scale and expensive litigation in circumstances calculated to exert commercial pressure on a defendant and during the course of the trial of the action the claimant resorts to advancing a constantly changing case in order to justify the allegations which it had made, only then to suffer a resounding defeat." (see also European Strategic Fund Limited v Skandinaviska Enskilda Banken AB )
Lidl’s position and the background
34. Lidl relies primarily on the fact that it made a Part 36 offer to settle the case in October 2020, which would have given PWS more than the result it has achieved. Some background is relevant to whether it was unreasonable of PWS not to have accepted that offer and, because it is relevant to other aspects as well, I set it out more fully.
35. The claim was originally advanced by a lengthy letter before action, dated 22 November 2019, enclosing some 400 pages of documents. As to financial remedies, although not explicit, it said: “For present purposes, our client will be proceeding on the basis that the profit figure upon which an account of profits would be based will be in the region of £47 million”. This, and other aspects of the letter, suggested that PWS would be making a claim closely based on Lidl’s entire profits on the WARREN & SONS range over the whole period of sales. This letter had obviously been worked up over a considerable period.
36. Despite PWS not having mentioned the alleged problem at all over the previous 4 years, the letter demanded detailed undertakings, submission to an inquiry as to damages or an account of profits and a response in 14 days. Lidl answered (by its solicitors, Bird & Bird) on 6 December 2019 saying that time was needed to take instructions. The letter noted that PWS’s claim appeared to have been prepared over some 6 months and that the activity of which the letter complained had been ongoing for several years, with PWS’s knowledge and without objection. Lidl said they would respond by 10 January 2020. Despite this, without waiting for a substantive answer, PWS commenced proceedings straight away, which PWS says was appropriate. However, this initial exchange set something of the tone for the rest of the case which then developed and which, as the Part 36 correspondence has revealed, has heavily focused on a very large financial claim which was, in various ways, said by PWS to be all but inevitable.
PWS’s first Part 36 offer
37. ADR was suggested at various points by PWS’s solicitors (see further below) which looked to be something of a tactic to try to procure an early advantageous settlement. This was not taken up by Lidl but, on 31 July 2020, Lidl’s solicitors wrote to Stobbs indicating that they were assessing whether to make a settlement offer. This was Lidl being proactive in seeking information to try to resolve the case, as a reasonable defendant would be expected to do. They asked for confirmation of PWS’s costs. This was met a few weeks later with an unsolicited Valuation Report from Mr Robert Sharp of Valuation Consulting under cover of a letter from Stobbs on behalf of PWS. Stobbs wrote both on a without prejudice save as to costs and open basis to express confidence in PWS’s case and said that, on the basis of this Valuation Report, (which I have not considered but of which the detail does not matter for this purpose):
“…our client is confident that upon electing for an account of profits it will be awarded c. £38.3 million” and that in the unlikely event that Lidl succeed in persuading the court that PWS should be restricted to damages only (for which there is no arguable basis), then our client is confident that it will be awarded damages of £17.7 million.”
Stobbs said that this was the “minimum that our client can be expected to be awarded”.
It therefore made a Part 36 offer which had the following key terms:
(a) Payment by Lidl of the sum of £28,699,840 within 14 days;
(b) Lidl ceasing use of the mark WARREN & SONS for meat products from 30 September 2020;
(c) Lidl ceasing and desisting in the future from passing themselves or their goods off as those of PWS or as being in any way connected with PWS or its business and not causing, enabling or permitting others to do so;
(d) Surrendering the UK Trade Mark WARREN & SONS in class 29
(e) The offer took into account the counterclaim but the settlement sum did not include costs.
There were other terms concerning liability for costs and interest.
35. The letter said that the sum PWS was prepared to accept was a significant (25%) discount “on the total sum that our client has been advised that it will be entitled to receive at trial by way of an account of profits” and that it was “extremely generous in the circumstances”. This description of the proposed settlement terms was, to put the matter charitably, questionable since it contemplated payment by Lidl of a sum which vastly exceeded the profits made by PWS over the whole of its existence. It would also have involved payment of some £14 million to Stobbs/counsel (because of the DBA for compensation to PWS’s lawyers for their legal services). That, some may say, could fairly be described as “extremely generous”, inter alia, to PWS’s lawyers, given that they were also saying that this was a straightforward, short, case for which ordinary compensation for legal services in dealing with it would not approach that sum. It appeared to proceed on the basis that Lidl should disgorge to PWS the bulk (or at least a significant proportion) of its profits on the entirety of the WARREN & SONS range over the lifetime of the brand, regardless of whether a significant number (or any) consumers had bought the product on the basis of a perceived connection with PWS or had ever heard of them, in so doing. It was, in effect if not in terms, saying, that without knowing it, Lidl had spent the whole of 2015 to 2020 selling all its meat of this kind substantially (or at least in significant part) for the benefit of PWS and its lawyers who, on this basis should, instead of Lidl, profit from Lidl’s alleged deception of the public that this was a local butcher’s brand, to the tune of millions of pounds. Such a claim involved the underlying proposition that a brand owner could sit back, not mention that there was any potential problem, even after knowing that a claim would be advanced and hit a retailer which did not think it had done anything wrong with a vast profits/royalties claim which it and its lawyers could share out between them. In the event, Lidl clearly did not think that a claim of this kind was in the right ball-park.
36. Further without prejudice save as to costs correspondence from Stobbs on 26 August 2020 indicated, inter alia, a preparedness to provide details of their costs only at a time when there were genuine prospects of settlement of the substantive claim being agreed but Stobbs confirmed that instructions would be taken in respect of any proposal for settlement of the claim. On 8 September 2020, Stobbs indicated that its costs to that date were a total of £228,600.
Lidl’s Part 36 offer
37. Although Lidl had not previously agreed to mediation, on 8 October 2020, following up on earlier correspondence, it made a Part 36 Offer to settle the whole claim. The letter said that PWS’s claim was being maintained out of opportunism but, given the potential costs, they proposed payment of £230,000 in full and final settlement. They also indicated that Lidl had already ceased use of the sign WARREN & SONS, were prepared to undertake not to resume selling products under the sign WARREN & SONS and had surrendered the registered trade mark.
38. Since it was a Part 36 offer, had it been accepted, PWS would have been entitled to its costs down to the relevant date. Stobbs sought clarification of the offer on 12 October 2020 and, in particular, as to whether the sum offered was a rounded up figure of costs and disbursements. Bird & Bird’s letter provided limited clarification on 14 October 2020, explaining that the similarity of the figures was co-incidental and that Lidl had arrived at the sum as being one which they considered would likely exceed the sum which would be awarded by way of an account of profits.
PWS’s second Part 36 offer
39. PWS did not accept this offer but they did again propose mediation, which again was not taken up by Lidl. PWS did not make a further Part 36 counter-offer until 29 January 2021, when they wrote again saying that they now had a “full picture against which to reassess their position on the merits of our client’s claim and your client’s liability”. This letter explained in some detail that PWS considered that it would be entitled to an account of profits but made an offer on the basis of user-principle damages (referring to a PCC/IPEC case National Guild of Removers  FSR 9 and an Australian case, Winnebago Industries Inc. v. Knott Investments Pty Ltd (No.4)  FCA 1327) and the Valuation Report. The letter contained a similar request for other relief as before, save that it said the sum PWS was prepared to accept to avoid a trial was now £15 million. That was said to amount to a c. 60% discount on the figure for an account of profits and a more modest (15%) discount on the valuation consultant’s figure for a notional royalty (of £17.7 million). Stobbs’ letter said that Lidl could not reasonably expect to achieve a more favourable outcome, given its “extremely weak” position on liability. The letter concluded with the following paragraph:
“In the circumstances, the Offer is extremely generous, and represents your clients’ final opportunity to dispose of our client’s claim without the cost and reputational harm that will inevitably result from the inevitably unfavourable outcome at trial.”
40. That reference to the “inevitably” unfavourable outcome at trial may have been at variance with the less certain chances of success given by Stobbs to its ATE insurers which appeared to have acknowledged that there was at least some chance of losing (in that the prospects of success were estimated as greater than 75%). This further “extremely generous” offer would also have left PWS receiving by way of damages more than it had made in its entire lifetime of existence from selling products (although half would have gone to its lawyers) and it would have provided that Stobbs/counsel share in compensation for their legal services a sum approximately 15 times greater than they have more recently asserted would be reasonable for the conduct of the case up to that point. As noted, the letter said that, unless Lidl paid PWS the £15 million requested within 14 days, pursuing the case to trial meant that damage to Lidl’s reputation was “inevitable”. Like other high street retailers, Lidl is sensitive to its reputation as the evidence on the applications showed. This letter therefore gives a flavour of the pressure, only indirectly related to the underlying merits of the claim, which PWS was seeking to put on Lidl to settle the case for a very large sum. It was of a piece with the tone of the previous correspondence. Lidl could reasonably have reached the conclusion that there was no point in having a mediation because PWS would never accept (or be advised by Stobbs or counsel to accept) sums of the order they may be prepared to pay. Lidl may well also have thought that, since Stobbs and counsel were to share half, it was unlikely that they would advise PWS to accept a much lower figure than £15 million especially since they had expressed such repeated confidence in their position. I emphasise that Mr Stobbs has said (and I accept) that this claim was pursued on clients’ instructions and I have not concluded that this claim was driven by lawyers wishing to obtain large sums. However, the parties remained nearly two orders of magnitude apart even in January 2021. That is relevant to PWS’s claim for a reduction in costs for failure to mediate, discussed below.
Part 36 and indemnity costs
41. Reverting to the indemnity costs point, with the benefit of hindsight, it is regrettable that PWS did not engage more seriously with Lidl’s earlier Part 36 offer of October 2020, but the question is whether this alone justifies indemnity costs.
42. I consider not. With some hesitation, I have reached the view that a reasonable claimant would not have concluded that Lidl’s offer at that stage represented a better outcome than the likely outcome at trial. I say so, with hesitation, because it was not an unreasonable offer in all the circumstances. However, PWS had obtained an independent expert valuation report which put the claim much higher. The references to a first instance case and an Australian case made the basis for a higher claim (sort of) arguable. Because of the uncertainties, including those relating to the approach to quantum in a passing off claim, I am not satisfied that PWS can be said to have been unreasonable in thinking that they at least might do better by pressing ahead and perhaps pushing Lidl up a bit before trial. Other aspects of Lidl’s correspondence had also hinted that any offer made may be at a higher level than approximately the level of costs, which this was not. So, prima facie, PWS’s failure to accept Lidl’s Part 36 offer does not justify an order for indemnity costs. My hesitation arises because this was (in my view) a reasonable offer and the making and acceptance of reasonable offers should, in principle, be incentivized (and refusing them strongly disincentivised), especially when the alternative is to continue expensive litigation which imposes significant costs on opposing parties.
43. It seems clear to me that Lidl’s Part 36 offer was at least in the right ball park. Two matters seem to support that conclusion. First, it seems to be in line with the kind of award and approach to it which the court considered appropriate in 32Red (see also below) albeit in a case where user damages were held to be appropriate. Second, Stobbs had said, to justify a 50% percentage on a DBA (the maximum permissible), that it was “conceivable” that the payment received by Stobbs “might” exceed the likely costs that would be charged pursuant to an ordinary retainer but there was a risk of Stobbs not being paid at all. That suggests that Stobbs may have recognised earlier on that a sum roughly of the order of legal costs as compensation would be appropriate, otherwise they would have found it harder to justify a 50% claim to damages under a DBA. So the fact that PWS might have been entitled to reject the Part 36 offer on the footing that they might have got a little more at trial does not involve saying that what they and Stobbs were proposing should be paid at a later stage was realistic. I return to this point below in considering the post-hearing submissions.
(ii) Other aspects of PWS’s conduct
44. Lidl relied on numerous other points in support of the claim for indemnity costs, with which I can deal relatively briefly because I was not persuaded that individually or collectively (or taken together with the refusal to accept the Part 36 offer) they came close to justifying indemnity costs. They were dealt with exhaustively at the hearing and in evidence from Bird & Bird and a helpful table from PWS’s counsel responding to this. I do not need to consider them at equal length here. Some points argued were swept up in the point on the Part 36 offers. The other main ones are as follows, with my assessment of them:
a. That the allegation of misrepresentation was based on no solid evidence or thin evidence. It is true that this is what the main judgment holds and I adhere to the view that, where a passing off claim is made for historical compensation of tens of millions of pounds and an allegation is made against a well-respected company that it has been deceiving the public to a material degree over a lengthy period during which this has not been noticed by it or mentioned to it, no loss of sales are suggested and the claimant’s business has never been stronger than during the period of alleged passing off, the claim should be based on sufficient solid evidence. The evidence at trial was, in my evaluation, not of that quality. However, I do not think that this suffices to take the case out of the norm. It is fairer, on the whole, to say that PWS did not win the case on its evidence rather than that Lidl won it convincingly.
b. That the allegation of damage was made in the face of PWS’s own evidence as to the lack of damage and that the claim for damages in the tens of millions was “implausible”. Again, while true that PWS did not claim loss of sales, the authorities on compensation for these kinds of cases are sufficiently equivocal that advancing such a case, while in my view implausible, was not improper. It is reasonably clear that it was done in an attempt to persuade Lidl to agree a higher sum in settlement and Lidl did not explain to PWS in correspondence exactly why, at that stage, in its view, the value PWS had placed on the claim was unreasonable, although it had explained its position somewhat briefly in response to the letter before action and Lidl’s arguments at trial made that considerably clearer. I remain of the view, for a range of reasons, that the claim for compensation is likely to be regarded as disproportionate, whatever the merits on liability but that does not mean that it was improper to advance it. Perhaps others will disagree if the case is fought to the bitter end, although I consider this unlikely. Lidl did not, in its response at that stage, reject the suggestion that a profits-based approach would have some merit in principle although it had made the general point elsewhere that such an approach was inappropriate. Where PWS may have gone wrong is not to step back and consider whether, in accordance with the general case law and the specific case law relevant to compensation in cases of this kind, its claim was proportionate to the loss suffered or the benefit obtained as a result of a misrepresentation of a connection specifically with PWS. But that is, in my view, no more than a failure to engage in realistic thinking on the part of PWS and its advisors, based on the case law as a whole, rather than isolated snippets from some. That is not something to take the case out of the norm. However, I consider the impact of my view that the claim is likely to be exaggerated in the light of the further submissions on costs below. The course I am now taking means that PWS might be obliged to compensate Lidl on a more generous basis in costs, if its evaluation of the quantum of the claim was erroneous.
c. That PWS alleged that Lidl had created a “fake” brand and sought to “imitate” PWS deliberately to deceive customers which was not sustained on the evidence. It is true that Lidl did not imitate specifically PWS deliberately to deceive customers but, equally, Lidl created a brand which was designed to appear as though the products were from a traditional English local butcher when they were in fact Lidl own brand, in some cases sourced from overseas. The distinction between imitation of a specific brand and choice of a fictional brand which is similar to an existing brand is a subtle - albeit important - one. The evidence showed that Lidl did not make it particularly easy to distinguish own brand from third party brands in store or on pack. PWS’s pursuit of the claim in this regard was not such as to take the case out of the norm.
d. The mismatch between the e-mails and the evidence under cross-examination and that cross-examination proceeded on the basis of PWS’s counsel’s opinion. In certain respects, PWS’s witnesses did not come up exactly to proof when their evidence was tested - but this was more a matter of nuance of their evidence. Some of the cross-examination missed the mark but that often happens in litigation. None of this rendered the case or its pursuit inappropriate or out of the norm. I do not consider that the fact that cross-examination was conducted on a given basis affects the position.
e. That PWS evinced absolute belief in the merits of its position. Again, there is nothing in this point. Lidl too said that they were going to win and valued the claim at zero. It often happens that lawyers write letters to each other expressing complete confidence in their respective positions. That is litigation life. Many such lawyers’ letters are taken with a pinch of salt by the recipient. Writing them does not take the case out of the norm.
f. That PWS tried to force a settlement by raising a threat of negative publicity as part of its argument including raising somewhat graphic material at a late stage. I was more troubled by this point, since PWS’s January 2021 Part 36 offer to settle for £15 million suggested that reputational damage would follow if it was not paid. However, I think it was only really a somewhat strong lawyers “please settle” letter (as many written on PWS’s behalf had been) pointing out that Lidl should pay because the trial would reveal Lidl’s conduct. It fell within the “rough and tumble” of litigation run, admittedly rather aggressively, on a no-win, no-fee basis and does not take the case out of the norm.
g. That PWS courted publicity for its serious allegations in the national and local media. I do not think PWS courted publicity (see below) but equally did not turn down the opportunity when it presented itself. None of this takes the litigation out of the norm. Lawyers and litigants often speak with the press about cases and, as the coverage shows, this case was of legitimate public interest. The problem with the publicity was, as I discuss below, the detail of what it said not the principle of giving publicity to the dispute.
h. That PWS’s lawyers made mountains out of molehills, overegging evidence and disclosure on admitted goodwill taking a bad point on a missed evidence deadline and repeatedly engaging in lengthy and combative correspondence. None of that takes the case out of the norm. As I read the correspondence, this was a hard fought case on both sides. I also think it was reasonable to include relevant documents on goodwill since they provided a more complete picture of the extent of PWS’s trading and were (in some respects) of assistance to evaluating the extent to which there was operative confusion.
i. PWS seeking to amend and then abandoning amendment of its case before trial after comments from the court; seeking to “ambush” Lidl late with more than 700 pages of new cross examination documents some of which were not what they at first appeared to be which had to be dealt with by Lidl and the court; and introducing certain other materials into the case at a late stage. While that took up some time and some of it was designed to be prejudicial, it was not much, the court was able to ignore the prejudice, and this does not take the case out of the norm.
j. PWS changing its evidence before the PTR. Again, although perhaps regrettable, this seems an aspect of the rough and tumble of hard-fought litigation. This material did reveal one point, namely that a reason why PWS brought proceedings in the High Court rather than IPEC was because PWS’s legal advisers wanted to be able to have the possibility of recovering a larger amount under the DBA than would have been the case in IPEC where the sum recoverable would have been limited (possibly, depending upon one’s view of the case, to only that which was reasonable and proportionate) but PWS’s costs liability would also have been limited to less than 1/10th of what it is now being asked to pay as a result of not being successful. So, what the lawyers and PWS would potentially gain would come at a price for PWS by way of exposure to costs liability. None of that, however, takes the case out of the norm.
k. There are several other points relied on including (a) a dispute over ownership of goodwill which was ultimately resolved but which required attention (b) PWS’s allegedly misconceived application to strike out the counterclaim which it says it did not make (c) the disclosure requests which the court rejected (d) putting Lidl and its solicitors to a substantial factual enquiry. Again, perhaps some of these were, with the benefit of hindsight, sub-optimal but they are all part of hard fought High Court litigation.
45. The following further general points make an award of indemnity costs inappropriate.
46. First, it may have been better and possibly more productive of an early settlement had the litigation been conducted at lower intensity, including as to choice of court. However, that may be a characteristic of litigation which is conducted by a metaphorical “little person” against a “big corporation” where a claimant feels the need to shout to be heard. Second, until its October 2020 offer, Lidl had not undertaken not to use WARREN & SONS again and had not surrendered the registered trade mark. Third, to some extent, Lidl brought this case upon itself by its branding strategy which involved choosing a fictional brand to make its products more attractive and not troubling too much about whether it might affect the business of an undertaking with a similar name. There is nothing which required Lidl to take that approach to branding and the brand has now changed. Fourth, some (including me and perhaps even Lidl, since they were prepared to make a substantial offer to settle the case in October 2020) thought the case far from hopeless. Fifth, having heard from Mr Ian Warren, I am satisfied that PWS had reasonable motives for bringing the case.
47. Assuming even that PWS’s claim for financial relief was impossible rather than implausible (as to which I have not decided definitively, as opposed to indicating my preliminary view), I would have been slow to criticize PWS for pursuing it. There is an element of public interest in passing-off claims since they concern alleged deception of the public and upholding “truth in advertising/marketing”. Even if such claims are unsuccessful, there can be merit in having this issue aired. This claim also arises, as PWS counsel rightly submitted, in the context of concern about the inauthenticity of certain kinds of branding as well as legitimate debates about the need to protect smaller and especially rural businesses from perceived unfair practices by larger rivals. That said, it is important not to make too much of that in this case, given the fact that Lidl has abandoned the brand. There is here a difference between the justification for commencing the claim and the justification for continuing it in the face of a, prima facie, reasonable offer by Lidl to settle it. It is also subject to the points made below arising out of the further submissions. While there may be nothing reprehensible about pursuing prima facie unjustified sums, where a claim to such cannot be struck out, it seems to me that if a claim at a level which is prima facie implausible is pursued but fails, in the face of a reasonable offer to settle the claim, those responsible for the time and money wasted as a result should reasonably expect to pay the costs of that exercise in full.
48. For these reasons, I concluded that Lidl had not justified its claim for indemnity costs and I assessed costs down to trial on the standard basis. That decision did not affect the entitlement to interest, to which there is an entitlement where a Part 36 offer of this kind is beaten (see below as to how that is to be addressed).
49. As noted above, I gave permission to the parties to make further submissions on the issue of the appropriate basis for assessment of costs. My main reasons for doing so were that the draft decision had referred to some cases not referred to by the parties and that a question arose as to whether an award of indemnity costs may be appropriate if statements made in the course of justifying the DBA in question at a 50/50 share made it sufficiently clear that the claim subsequently advanced was exaggerated, for that to be taken into account and given significant weight, despite the fact that no determination of quantum had been made at this stage. I also had regard to the developing jurisprudence relating to litigation finance which has, in various ways, expressed some concern that increasing access to justice by the various means through which that has been done in recent years may come at a price of increasing the incentives to bring claims of a kind which should not be incentivized or creating unfairness in other respects by unfairly immunizing those bringing certain kinds of speculative claims from bearing the full costs and risks which they impose on others.
50. Lidl’s submissions largely followed its earlier points and submitted that both the facts and observations in Lejonvarn, to which it had not previously referred, supported its claim for indemnity costs. It also submitted, and I agree, that the mere fact that a substantial claim is pursued using a DBA could not justify costs being assessed on that basis. To that extent, whether or not there is a DBA, they submitted, was not relevant on the issue of indemnity costs. That is uncontroversaial and no-one had suggested otherwise.
60. In this case, I accept PWS’s submission that, because it is impossible at this stage to tell precisely what the right level of quantum would be and the case has not been developed, it is not possible properly to say definitively whether the claim advanced is excessive and whether it was unreasonable to refuse the Part 36 offer in the sense required by the case law. That does not mean the court should say nothing about it. First, this is a case in which a claim for an account of profits at the level sought faces numerous hurdles and it is well known that accounts of profits in intellectual property cases are problematic generally and specifically where (as would inevitably be the case here) there are numerous reasons why profits may be made as a result of a product bearing a given mark being sold in a supermarket, most of which would have nothing to do with the precise branding or any connection it signalled. There was, moreover, no evidence that any customer had bought any of the WARREN & SONS products on the strength of any perceived connection with PWS. As regards the claim for user based damages, apart from the difficult legal question as to whether such damages would be appropriate at all in a case of this kind (and if so to what extent), on the facts, this is a case in which (as in the well-known case of 32Red) Lidl would have had numerous alternative marks, some redolent of high street butchers, from which to choose which would have significantly affected what a reasonable licence fee would have been. The justification for a comparatively modest figure would have been increased by the fact that, on the evidence, PWS were insufficiently troubled by Lidl’s WARREN & SONS brand to raise the matter in correspondence until a long time after they knew they might have a right to complain. There are numerous other factors which mean that this is not a case which has the hallmarks of a very large claim, on the basis of the existing case law.
PWS, in agreement with Lidl, submitted that whether or not a case was advanced with the benefit of a DBA was irrelevant to the basis upon which costs should be assessed as such. It drew attention to
(ii) PWS’s application for a reduction in costs
70. PWS contends that any costs award should be reduced by a significant percentage on a number of bases and that they are in any event too high for the various stages.
71. Although PWS made it clear that it is not making an offer as to what costs should be paid, the overall effect of its arguments is a submission that the costs payable to Lidl down to trial should be reduced from some £777,000 to £230,000 (since trial those costs have increased). The largest single reduction (50%) is said to arise as a result of Lidl’s failure to mediate. I deal with that in greater detail since it raises issues of approach where parties appear to be far apart but both have made offers to settle.
(a) Shorter trials scheme
72. First, PWS submits that Lidl’s costs are disproportionate for proceedings brought under the shorter trial scheme. This, PWS says, should attract a 10% discount. I am unable to accept that submission.
73. There is, at present, no cap on costs in the shorter trials scheme although proposals for such have been mooted. Moreover, PWS chose to pursue this claim in the High Court when it could have proceeded in IPEC where there would have been a £50,000 costs cap. The reason it did not do so was because of the prospect of larger compensation both for PWS and its lawyers. I do not think it is reasonable to choose a non-costs capped forum with a claim that is by no means certain to succeed (so that a financial claim providing sums which appear, on the face of it, to provide disproportionate remuneration both to litigants and lawyers) and then complain about the costs in that forum when a defendant devotes significant resources to the case in the normal way in the forum chosen by the claimant itself to advance that prima facie disproportionate claim.
74. Where a large claim is made which is said by a claimant to be significant to the defendant’s reputation and the claimant keeps saying that the defendant is bound to lose, that inevitably forces a defendant to spend significant sums in addressing it. Moreover, the costs I have assessed mean that in total they are only about 20% higher than they would be with a £500,000 STS costs cap. So I do not think the point really hits home.
(b) PWS’s partial success
75. Second, PWS submits that Lidl’s success was partial and time was spent on issues on which Lidl was not successful at trial. The main points relied on are (i) the findings as regards a wider goodwill (ii) the counterclaim and (iii) knowledge on the part of customers of whether WARREN & SONS was an own-brand. There are some other, more minor, points which occupied comparatively little time at trial (such as the date of assessment of goodwill, delay, similarity of signs, and a sub-issue on assignment of goodwill which ultimately PWS was required to address by an assignment back from the bank and cannot be said to have “won”).
76. It is well established that the court must identify sufficiently isolable issues on which the otherwise unsuccessful party won to justify percentage reductions in costs. With one exception, none of the issues identified are both sufficiently isolable and ones on which PWS was clearly successful which merit a reduction in costs.
77. First, passing off cases require an overall evaluation, where evidence going to the extent of goodwill and misrepresentation/damage is hard to separate. The findings as to wider goodwill were more nuanced. They did not accept the contention that, just because PWS had some wider goodwill, passing off took place or was likely. The issue required examination of the nature of PWS’s goodwill and whether that made operative misrepresentation causing damage likely.
78. Second, on delay, which is in principle a separable issue, that may re-emerge in any discussion of quantification of compensation depending on the basis advanced, should the case proceed, so PWS cannot be said to have “won” on it yet. This was relevant to the overall evaluation of whether there had really been an operative misrepresentation causing material damage to goodwill or whether this was a situation of merely occasional confusion/wondering which, in so far as it took place, was quickly cleared up. The delay in raising the matter gave additional weight to Lidl’s submission that any confusion was unlikely to have been significantly damaging to PWS’s goodwill because, had PWS believed that its customers or others were being significantly misled and its goodwill seriously damaged, it is likely that it would have raised the matter with Lidl earlier, especially after it knew that it may be able to do something about it.
79. Third, Lidl was, however, unsuccessful on its counterclaim. Although it was framed conditionally and was tactical, had it succeeded it would have restricted PWS’s activities outside Launceston and the surrounding area. It did not have a sound basis.
80. Whatever the nature of PWS’s goodwill further afield than the Launceston area, PWS had started to supply products well before Lidl’s first use of WARREN & SONS. While it did not add very significantly to the costs, it attracted a dispute before the first CMC over whether it should be struck out (it wasn’t) so it took up time at the earlier stages as well as increasing the costs of the case generally.
81. Neither side has submitted evidence on the percentage reduction which would be appropriate. Doing the best I can, having read the correspondence, evidence and skeletons including some of the material around the CMC, this should be reflected by a 10% reduction in the costs payable to Lidl on the basis that this was a counterclaim which PWS clearly won, as to which it should, in principle have its own costs as well as not having to pay a percentage of Lidl’s and the documents suggest that its inclusion required some serious work to address it at various points in the case.
(c) Failure to mediate
82. Third, PWS submits that Lidl unreasonably refused to mediate and that its costs should be reduced by 50% as a result.
83. The principles for determining whether (i) a refusal to engage in ADR was unreasonable and (ii) the costs consequences of this are well established.
84. As to whether refusal was unreasonable, these were set out in Halsey v Milton Keynes General NHS Trust  EWCA Civ 576. The court will have regard to: (a) the nature of the dispute; (b) the merits of the case; (c) the extent to which other settlement methods have been attempted; (d) whether the costs of the ADR would be disproportionately high; (e) whether any delay in setting up and attending the ADR would have been prejudicial; and (f) whether the ADR had a reasonable prospect of success. As was there said: the burden “…is placed on the unsuccessful party to show that there was a reasonable prospect that mediation would have been successful. This is not an unduly onerous burden to discharge: he does not have to prove that a mediation would in fact have succeeded. It is significantly easier for the unsuccessful party to prove that there was a reasonable prospect that a mediation would have succeeded than for the successful party to prove the contrary.”
85. A finding that a party has unreasonably refused even to engage in ADR does not result in an automatic costs penalty. It is an aspect of the party’s conduct which may be taken into account in evaluating reasonableness. In Gore v Naheed & Anor  EWCA Civ 369, Patten LJ in the Court of Appeal said:
Reasonableness in this case
87. Nature of the case. PWS submits that the nature of the dispute made it suitable for mediation. I agree. Although Lidl had not provided all the relief sought at the earlier stage, this was a case (as framed by the lawyers) largely about historical compensation. As PWS submits, there is a wide range of skilled mediators experienced in the field who would have been able to assist with that.
88. However, I think there is an additional reason why this case was particularly suited to mediation. It has undertones of what might be loosely described as “respect for the English (or Cornish) high street”, and all that involves culturally and aesthetically. There is a fundamental sentiment underlying it which I thought came through in the evidence and of which it was easy to lose sight in the debate about large sums of money and/or Lidl perceiving this as a situation where it had to limit the perceived downside risk from a no-win no-fee claim. This case is not, despite appearances, just about money, although no-one would say that a no-risk way of possibly making (say) £38 million or even half that is something any businessperson would turn down. The case is also about culture and authenticity. Some would say that it is not cricket for a large retail undertaking not only to place the high street under a kind of commercial threat but do so flying the high street’s traditional colours. Mediation would have been a suitable forum for addressing some of these deep and genuinely felt concerns, which I think at least partly underlay Mr Ian Warren taking a stand with the case. But I still think it would have failed (see below) because the case had been so “lawyerised” and turned into an IP monetization exercise in which the focus would have been unlikely to be on these issues.
89. Merits of the case. The fact that a party reasonably believes that it has a strong case is relevant to the question whether it has acted reasonably in refusing ADR but borderline cases are often regarded as suitable for ADR unless there are significant countervailing factors. Again, I agree with PWS that this was not a nuisance claim. It raised legitimate questions. The merits did not make it unsuitable for mediation.
90. What alternative methods were available. Here, alternative methods were available (namely a Part 36 offer) and were used.
91. Whether the costs of the ADR would be disproportionately high/delay. The likely costs of a mediation (c. £4,000 of a mediator plus costs of the parties) were not very high compared with the costs of the proceedings. There would not have been material delay.
92. Whether mediation would have stood a reasonable prospect of success. While there is evidence that mediations are a successful means of settling disputes (recent CEDR figures give a success rate of 93% overall) the parties here were far apart on money. So, the big question is whether the parties were capable at that point of being herded onto the same page by a skilled mediator. PWS submits that really what PWS wanted was an opportunity to be taken seriously, not a corporate “brush off”. I can see that but really the mediation would have been largely focused on money since that was all the dispute had come down to and was the terrain onto which PWS was seeking to put the case.
The pre-Valuation Report proposals for mediation
93. PWS wrote and suggested ADR/mediation on 9 April 2020, 12 May 2020, 26 May 2020 and 24 July 2020. PWS relies particularly on the 24 July 2020 offer which set out a detailed proposal, including dates and a suggested mediator. At that stage, PWS had put forward a financial claim which, albeit unquantified, would have been taken to run to tens of millions of pounds on the footing that this was the basis advanced in its letter before claim. Lidl would have been reasonable in considering that there was no prospect of making an offer close to the sums which PWS would be prepared to settle for and that to engage in mediation would encourage PWS and its lawyers to think that it should press on with the financial claim.
The post-Valuation Report proposals for mediation
94. On 19 October 2020, PWS wrote again with a specific invitation to mediation to bridge the gap. However, at that stage, it would have appeared that there was not just a gap but a chasm in perception of financial value. PWS had submitted a Valuation Report under cover of correspondence that said (in effect) that Lidl was bound to lose and that suggesting even that user damages rather than an account of profits should be paid was unarguable (although it was a basis which they said they were prepared to accept just a few months later). Lidl had made an offer of a significant sum plus costs but it was about two orders of magnitude lower. Lidl was entitled to take the view that this would be unbridgeable, no matter how skilled the mediator.
95. The presence of the DBA and the fact that the claim was specifically brought to enable larger financial relief to be recovered would have enhanced the belief that it was impossible. I do not believe that the DBA point was, as PWS submits, little more than a fig-leaf to cover Lidl’s refusal to avoid ADR. DBAs have benefits in enabling claims to be brought by those who would otherwise not be able to. But they have costs as well including in making it look like the case is entirely about money and that it might be “driven” by the lawyers, especially with clients who are not regular court users.
96. For this case, the DBA arrangements may have created a disincentive to settlement. If settlement with PWS would inevitably have meant benefitting PWS’s lawyers as well as PWS at a level which, regardless of PWS’s position, Lidl was not prepared to do (possibly because of the incentive element for other DBA-based claims) that may have been perceived as an obstacle to reasonable terms. There is some evidence from Mr Unterhalter that Lidl wished to ensure that it was not an attractive target for meritless no-win no-fee claims. PWS’s £15 million Part 36 offer made shortly before trial supports the fact that there would have remained an unbridgeable gap at that stage, rendering litigation inevitable. On the correspondence as a whole, Lidl could also have taken the view that they were being encouraged to mediate under reputational duress. They would have been reasonable in being unprepared to do that.
97. I do not agree with PWS that the only barrier to settlement at that time was determining an appropriate discount to an estimated gross profit figure. The parties were fundamentally divided as to whether the claim merited any payment at all, still less one at the extravagant levels claimed. PWS wanted sums apparently based on sales of WARREN & SONS products in every Lidl in the country over some 5 years, including places where PWS would have been unknown to Lidl’s customers. That is itself at some remove from the basis in which damages awards have been made in the past.
98. I am also not persuaded that PWS or its lawyers would have been perceived by Lidl as having engaged with the issue of what they respectively had done to deserve the large sums claimed on the bases put forward in either a moral or legal sense, both of which may be important for persuasion in a mediation. To take one example, it is unclear what answer Stobbs/counsel would have had to the obvious question which would have arisen in Lidl’s mind (even if not necessarily expressed in this way): “Why should we pay your clients on a basis which would mean you got to share a financial pot of such a size? What message would we be sending to-win no-fee lawyers generally if we did that? How do you suggest we justify paying out a sum which would have that consequence, knowing of our customers and employees who have worked hard for low pay for many years and who would not see earnings like that in a lifetime?” In the absence of a good answer to such questions and some indication that PWS/Stobbs/counsel would have been prepared to moderate their demands to a level which all would have found reasonable, of which there was no obvious sign at that stage, mediation would not have succeeded.
99. Moreover, it does not follow that even if Lidl had diverted sales to itself by the use of WARREN & SONS that it had diverted sales from PWS. It may have diverted them from another supermarket or a local high street butcher (on this theory). Why, it would have been asked, should PWS and Stobbs/counsel be paid the profits which PWS was asserting had been made at the expense of other butchers up and down the country who would otherwise have been in the frame for the trade, by the allegedly wrongful pretence that Lidl was selling the produce of another local English butcher? It would have been, in effect asking Lidl to treat PWS/Stobbs/counsel as having engaged in a notional 50/50 profit sharing joint venture to run and take the (or a significant proportion of) the profits from the whole of Lidl’s meat business over a period of years without any of them having actually done so. I do not think that would have been very persuasive in inducing Lidl to settle the case in a mediation. PWS would have needed to do better than repeating the legal dicta in their correspondence, which were themselves of questionable universal application (and on which some doubt had been cast by the Court of Appeal) from the limited number of first instance cases on quite different facts. They would have had limited moral or legal negotiating leverage other than to say, in effect, “pay or it will look bad for you at trial” which would not, in my judgment, have moved Lidl and, in the event, did not move Lidl when that message was delivered in their second Part 36 offer. I do not detect from the correspondence or the conduct of the case any real sense of preparedness, at that stage, on the part of PWS/Stobbs/counsel to think about matters in a more realistic way. PWS’s lawyers appear to have been focused at that time on treating the case as akin to a straightforward royalty collection exercise for infringement of a statutory intellectual property right where, as a sort of collection agency, they would take half the proceeds, albeit one where the notional licensee had never been told that they might need a license or were accruing a liability and where, had they been told, they may have been able to make it clearer (for example) that WARREN & SONS was a Lidl own brand or taken other steps which would have avoided the issue altogether.
100. All told, I do not think that mediation at that stage would have had good prospects of success: the parties were not thinking about the case in the same way and were very far apart.
Summary on mediation
101. There is some prospect that mediation may have resolved the case earlier but I think, at that stage, it would have had a rather low chance of doing so. Lidl was not unreasonable in not taking up the invitation to mediate at that time. Even if it had been, the analysis of Ramsey J referred to above is apposite. Both parties took different steps to try to avoid a trial, including making offers. Conduct in this respect is therefore a neutral factor in costs. There is therefore no basis for the 50% reduction claimed by PWS or any reduction on this account.
(d) Other aspects of conduct
102. Finally, PWS criticises Lidl’s conduct of the proceedings and the fact that it has made unwarranted accusations of PWS manipulating evidence and its legal team acting in their own interests rather than those of PWS in pursuing a large financial claim. I do not think the accusations are justified but they have not contributed to a material increase in costs. PWS also made various accusations against Lidl and sought to introduce a considerable amount of material to act as a platform for criticizing Lidl generally. I do not think there is a basis for a conduct-based deduction.
Summary on reduction in costs
103. Accordingly, Lidl is entitled to 90% of its costs on the standard basis. In case it is not sufficiently clear, I therefore reject PWS’s position that there should be no order as to costs. That would not reflect the justice of the situation, as I believe was implicitly recognized by Counsel for PWS who did not press that suggestion with any vigour either in written or oral submissions. While it is true that this remained, the primary position of PWS, argument focused on the proposed reductions in costs addressed above.
Quantification/summary assessment of costs
104. The evidence upon which I am asked to make a summary assessment of standard costs is limited and I will therefore be guided principally by an imperfect comparison in the parties’ level of costs (reflecting time spent) at various stages. PWS makes the following main points on quantum.
105. First, that Lidl’s costs were too high at the first and second CMCs (PWS’s costs were some £30,000; Lidl’s were about £142,000, some explained by different charging rates). The difficulty with evaluating PWS’s submission is that I did not hear the CMC and costs were in the case. It is said that costs were driven by Lidl’s abandoned application and a failure to engage with disclosure in advance of the first hearing. Lidl’s view is different. I have read the correspondence relating to this and the schedule of costs. I think it was reasonable for Lidl to devote significant resources to this CMC but the total hours spent and the overall costs seem disproportionately high, having regard to PWS’s costs. I think c. 70% of these costs were reasonable and proportionate.
106. Second, the PTR and CPR 31.14 Application of which it is said that Lidl’s costs (c. £45,000) were too high as compared with PWS’s (c. £20,000). The issues arising at this hearing were not completely straightforward, reflected in the fact that both sides incurred quite significant costs. The application resulted in partial success on each side and amendments/additions to evidence concerning the funding of the case. PWS says that the right figure here is £28,000. Given the difference in hourly and other rates, I do not think this discrepancy is as great as it first appears. I am prepared to make a more modest reduction to reflect the fact that the sums are significantly different. I think a reduction to c. 70% is appropriate here as well.
107. Third, it is said that the costs of trial (c. £229,000) were too high in that they were double PWS’s (c. £136,000). Again, much of this is accounted for in the fact that Lidl’s solicitors’ and counsel’s rates are higher than PWS’s and Lidl elected to instruct leading counsel as well as a junior. But for that, they would have been broadly comparable. I do not think that, overall, it was unreasonable to devote resources of this kind to the trial. However, this is a situation in which the question is not whether it was reasonable for Lidl to spend the time and money they did but whether PWS should be obliged to pay for all of it. The main reason for a discrepancy in the figures arises from the decision by Lidl to use two counsel (albeit one internal to Bird & Bird) and because, it is said, counsel’s fees were about 25% too high. Given the nature of the claim and the matters said by PWS to be at stake, I do not think these were unreasonable as such. There was a considerable volume of documentation to consider, some of which arose at the last minute. However, it does seem that the hours spent were excessive given the extensive earlier involvement of those concerned. This is hard to evaluate with precision and, on this, a rule of thumb of percentage recovery (c. 65-75%) of costs seems appropriate. So again, I will make a reduction to 70% of the claimed costs of preparation. I have also made a small reduction in ADR costs since mediation did not take place and it is not clear what this is for.
108. Given that this was, in effect, one phase of a claim said by PWS to be worth c. £38 million and for which they said they would settle for no less than £15 million, it is also (on PWS’s case) proportionate. Given also the impossibility of accuracy, I have kept the figures round (erring on the lower end) and approximate and at a level which, had the case been subject to costs budgeting, it would probably have been budgeted. It is also reasonable in that it is an overall figure not far away from PWS’s costs and represents recovery of approximately ¾ of Lidl’s costs, which is well within a normal range for costs assessments, especially given the partial success discount. The rival contentions are set out in the table below.
The overall result is a summary assessment of costs on the standard basis of
109. In the further submissions, Lidl contends that I should have awarded the costs of arguing about costs to it and that the decision to make no order in that respect was insufficiently justified. The reason for addressing the costs of the consequentials hearing in a different way was that it concerned properly isolable issues (indemnity costs/costs reduction and publicity order). They were issues upon which there was no clear winner. The approach I am taking above to the question of costs means that, should Lidl’s position ultimately be vindicated, it will be in a position to make a further application for costs of the whole proceedings.
B. PUBLICITY ORDER
Facts giving rise to the application
The genesis of the Mail on Sunday/Mail Online Article
“It is one thing to create a brand name that conjures up visions of a quality small local company when in fact you are a large conglomerate, this happens all the time but to more or less copy a genuine quality small local company is bang out of order…”
138. This suggests that the particularly reprehensible conduct of deliberate “stealing” of the PWS brand, which was (it is accepted on behalf of PWS) wrongly attributed to Lidl, may have caused more public concern than the less blameworthy act of creating a brand which conjured up the vision of a small local butcher, even if that was itself creating a sort of illusion.
139. Lidl also complains of a number of Subsequent Articles. I will not go into these in detail but they appeared in the journals/ newspapers referred to above. They did not contain the headline referred to above and, in my view, presented a picture that was less clearly critical of Lidl in a number of respects. They probably did not have a circulation, even taken together, as wide as the Mail Article. Some noted that this general issue had arisen with other retailers’ brands.
The submissions on the Mail Article
How did the article come to appear in the form it did?
Samsung v. Apple
The Duchess of Sussex/Daily Mail litigation
156. Although neither party referred to it, the recent decision of Warby J in the dispute between HRH The Duchess of Sussex and Associated Newspapers over copyright and confidential information in a letter written by her is also relevant (HRH The Duchess of Sussex v Associated Newspapers Ltd  EWHC 510 (Ch)).
157. The infringement decision was widely publicised, including by the Mail on Sunday. Nonetheless, the court made a publicity order as well that the defendant should, at its expense, publish a notice in similar prominence to that of certain articles about the case stating the court had found that the defendant had misused her private information and infringed her copyright. That was a case where infringement (rather than non-infringement) had been found and the jurisdiction was therefore being exercised pursuant to the Enforcement Directive (Directive 2004/48/EC) and the Part 63 Practice Direction rather than s. 37 of the Senior Courts Act. The following points of relevance to the present case emerge from the decision at -.
158. First, Warby J referred to the authorities which indicated that it was, in his view, common practice (by which he did not mean universally done) to make such orders in IP litigation and that policy favoured doing so in view of the difficulties in identifying and successfully pursuing infringers. That consideration is however not relevant in a “non-infringement” case.
159. Second, he took into account, in particular, deterrence of the infringing defendant and other infringers and, in that case, the extensive publication, prominence and sensationalist terms of the infringing articles. That was a case in which, (unlike here) the infringer was the newspaper responsible for the infringement. Again, that is not a factor in this case.
160. Third, factors against the grant of such an order included the strength of the policy grounds on the particular facts of the case and any procedure or practice obstacles to making an effective and proportionate order. Warby J said that the claimant would need to present the court with a “precise form of order and a workable solution”. That is of some relevance in the present case because Lidl accepts that the wording it has provided may require adjustment to be more fully reflective of the outcome of the case and, because of the timing of the application, PWS had not really developed its thinking on drafting, if an order was in principle justified.
161. Fourth, Warby J referred to the extent to which it would be necessary to secure third party co-operation to achieve what was sought and that it would be easy to do so in that case. In contrast, this may not be completely straightforward in the present case either since Associated Newspapers (which is an undertaking potentially affected by any order made in this case, being the publisher of the Mail Articles) argued in Duchess of Sussex (and Warby J accepted in principle) that a discursive remedy of this kind was an interference with its autonomous control over what it puts in these publications. That is an important consideration in a case of the present kind, which involves correction of a narrative of wrongdoing. In the case of (say) a determination of non-infringement of a technical intellectual property right, there may be no real issue or difficulty in putting notices in the relevant trade press. Such may raise no journalistic questions and the press may be happy to have the technical truth told. In cases of the present kind, which have a newsworthy element, newspapers may have a view as to whether they want to publish a commercially driven rebuttal or follow up advertisement relating to a story they have previously published. There may be policy issues relating to how reluctant/keen such newspapers are to carry corrections even in conventional defamation cases. I make no observations on that position, since it has not been argued, save to say that these are matters to be taken into account.
162. Fifth, Warby J referred to the line of authority relating to section 12, Defamation Act 2013 and that discursive remedies of this kind had not yet become standard in defamation and privacy actions (see per Nicklin J in Monir v Wood [239-240] and Gatley on Libel and Slander 5th which suggests that "orders under s 12 may be expected to become standard when judgment is given in favour of the claimant" (para 9.46) but were not yet). Warby J observed that the grant of discursive remedies had been relatively unusual in privacy litigation and there was no coherent scheme governing their availability. He noted that in Shakil-Ur-Rahman v Ary Network Ltd  EWHC 3570 (QB) Sir David Eady had granted a s.12 order, observing that many of viewers of the defendant's TV output would not otherwise know what had happened in the case and to the powers in the data protection legislation that allowed the court to grant similar relief, where appropriate (Aven and ors v Orbis Business Intelligence Ltd [188-190]). It is clear from this summary that orders of publication of summaries of judgments may become more prevalent but are not automatic even in such actions. Moreover, s.12(2)-(3) provide that “(2) The wording of any summary and the time, manner, form and place of its publication are to be for the parties to agree. (3) If the parties cannot agree on the wording, the wording is to be settled by the court.” The court must therefore provide sufficient opportunity for the parties to agree wording and practicalities where such an order is contemplated in that context. There is no reason for a difference in approach to cases such as the present, even if not specifically governed by statute.
163. Section 12 only comes into play when the court has given “judgment for the claimant in an action for defamation”, and not even to all such judgments, which suggests that particular caution is needed before exercising what is, in effect, a more general, parallel, court-developed power under s.37 of the Senior Courts Act 1981 to correct prior incorrect reporting of intellectual property disputes. In this case, there has been no judgment for Lidl in any action for defamation and, it might be said that unless and until that happens, the grant of a corrective remedy of this kind would not be justified.
164. Sixth, such orders are likely to engage Convention rights, including under Article 10. They represent a potential interference with freedom of expression, which must be justified as in accordance with law, and necessary and proportionate in pursuit of a legitimate aim. Warby J noted that where the wrong consists of publication to the public at large in a newspaper or online medium, redress via the same medium and to the same audience appears “intrinsically appropriate”. He said that this was not in itself, an objectionable or disproportionate interference with free speech to require a newspaper that has made a wrongful publication to publish a supplementary statement, be it a correction or a reference to the court's judgment. However, the position is less clear where it is said that a party to litigation should, in effect, procure a correction by a newspaper which may know nothing about the existence of a dispute over reporting which was said by another party to litigation to have gone too far. I have noted above that none of the publishers of the articles in question were given notice of the application.
165. Seventh, as Warby J also observed, a decision on whether to grant this remedy, and in what terms, is one that engages not only Article 10 of the Convention but also section 12 of the Human Rights Act 1998. He had regard to the extent to which information is or is about to enter the public domain; the extent to which it would be in the public interest; and "any relevant privacy code" and paid particular attention to the publicity the judgment in question already had.
166. Eighth, notwithstanding the publicity which had been given to the judgment, Warby J held that it was appropriate in all the circumstances of that case to make an order that reflected the claimant's success on the specific issues in the copyright claim that he had resolved in the Duchess’ favour and that it would have “genuine utility”. He was not persuaded that all the detail of what was proposed is necessary and proportionate and that there was room for adjustment and refinement. He held that the proposed publication would involve “measured incursions into the defendant's freedom to decide what it publishes and does not publish, that are justified in pursuit of the legitimate aim I have identified, and proportionate to that aim”. I take from this that all of these factors need to be taken into account in a case such as the present one.
Principles and factors
169. There is one further matter, perhaps too obvious to mention, namely the importance of appropriate judicial modesty when it comes to actions which may be perceived as the court trying to insert itself into the process of press reporting, to try to force a change of narrative.
Application of principles
C. PERMISSION TO APPEAL
196. With hesitation, I granted permission to appeal on some of the (rather diffuse) grounds relating to misrepresentation and damage. My hesitation is as follows. Given the nature of the allegations in this case and the circumstances in which they were raised (including after 4 years delay), it was appropriate to subject evidence of allegedly operative misrepresentation and the claim of material damage to goodwill to critical scrutiny as to its substance and significance. Mr Stobbs is also quoted in one of the articles complained of as having said “At the end of the day though we will respect the judgment of the court”. However, there is a more than fanciful prospect that the approach taken would be regarded as over-demanding in these circumstances. Since the real issue is whether a multifactorial evaluation of unclear evidence puts the case on one side or the other of unclearly drawn lines (operative misrepresentation/mere confusion etc.), the Court of Appeal is more likely to think that the principles of appellate modesty in Fine & Country are engaged. There is, however, in the law of passing off a potential debate as to how serious/intensive/frequent/damaging possible confusion must be before it will be treated as actionable. In my view, the evidence did not show that it was likely to be sufficiently serious/intensive/frequent/damaging but was, at best, limited short-lived, sporadic and with no real impact. However, this is an area of law in which precisely where courts place the lower boundary of seriousness can determine whether claims are plausible or not. That is a legitimate subject of appellate consideration, notwithstanding my view that this case does not get to that level. However, in my view given the fact that, at best, this is a case where very limited actual damage has been done, even on PWS’s case, that court too would expect the parties to have made serious efforts to resolve the case before inviting it to re-consider an hors d’oeuvre to further expensive disputes over quantum.
D. OTHER MATTERS
197. Lidl has applied for costs to be paid directly to it and PWS has applied for a stay of any award of costs pending appeal.
198. I do not think either are justified. PWS said in correspondence that “…our client has the benefit of an ATE insurance policy which is in place specifically to cover the risk of an adverse cost order” (letter of 12 June 2020) and “…our client would have had no difficulty in using its financial resources to directly fund the litigation, including the satisfaction of an adverse cost order” (letter of 25 June 2020). Its solicitors have also referred to it as being “asset rich”. There is no reason to think that ATE insurance would not cover a significant part or all of the costs, particularly since there is reference to the level of cover being increased earlier this year. It is clear from what was said to PWS’s insurers by Stobbs (and one assumes also said to PWS) that all concerned were fully aware that this was a case which was represented as carrying a material risk of being lost. If the costs order is affected on appeal, there will be no difficulty in Lidl repaying or satisfying any further award.
Stay of payment of costs order
199. However, to facilitate settlement and because I did not think that either side is likely to be prejudiced as a result, I ordered a stay (or rather extended time for payment of costs) until 4.00pm on 31 July 2021 and extended time for service of any Notice of Appeal for the same reason. This held the status quo. It provided a window in which the parties could step back and, with or without the assistance of a mediator, try to put this case, out of which both sides have already taken hits in various ways, behind them. No legal justification was provided why costs should not be paid by that date. In the event, I was not been told whether steps were taken to resolve the dispute before that date or what the outcome has been. It will be clear from this decision that steps should, in my view, be taken to do so, if they have not been taken already.
Costs of the consequentials hearing
200. I originally considered that, while it was conventional for the costs of a consequentials hearing should be swept up in the costs of the case, there was a reason to treat them differently in this case and depart from the usual approach. The costs issues and the publicity order issues are properly characterized as isolable issues involving quite separate evidence and argument, meriting a lengthy separate hearing and further submissions, upon which a separate order can and, in my view should, be made. In my view justice requires that to be done in this case (and a corresponding departure from the usual order on costs). The hearing mainly addressed two matters - the publicity order argument which raised some difficult questions. PWS won that part of the case - in the sense that no such order has been made - but they also brought the need for extended debate about it on themselves by (at least) a degree of involvement in the articles in question. The result on costs of that hearing overall was more of a draw. Lidl did not succeed in its application for indemnity costs. PWS did not succeed in its applications either for no order as to costs or for a substantial reduction. The costs of arguing about costs occupied about a day. I considered that the fair order was therefore for the parties to bear their own costs of all proceedings post trial (other than those specifically relating to assessment of costs, namely those relating to preparation of the statements of costs of the trial which are addressed in the evaluation above) and for there to be no order with respect to those other matters.
201. Lidl submitted that my conclusion was insufficiently reasoned and I have therefore provided somewhat fuller reasons for that above. Moreover, in the light of the slight adjustment I am making to the order, it is possible that Lidl will be able to apply for a more favourable order as to costs should they be put to unreasonable further costs in addressing this case, against the background of their October 2020 Part 36 offer. I am not persuaded by the further submissions that I should change this proposed order (save to the extent indicated above) or award Lidl its costs of the hearing relating to argument about costs, a good deal of which was taken up with argument about the basis upon which costs were to be awarded and on which Lidl has not (yet) succeeded. However, for the reasons given above, this issue is partially addressed by giving permission to apply to vary the costs order and seek a more generous award.
Interest on costs
202. The parties did not expressly argue about interest on costs and I did not detect any resistance to the proposal in the draft order. No submissions to the contrary were received and I therefore ordered that interest at the judgment rate also be chargeable only from 31 July 2021.
Declaration of non-liablity
203. Lidl sought a declaration that it has not passed off. In my view, while there is something to be said for that in the light of the way the action has been presented in the press, this is a case in which a declaration is not really necessary and the judgments can stand for themselves, providing sufficient explanation as to the findings of the court
204. For the reasons given:
a. The claim and counterclaim are dismissed.
b. PWS must pay 90% of the costs of the claim and counterclaim down to the conclusion of the trial.
c. Those costs were summarily assessed at to be paid by 4.00pm 31 July 2021 but otherwise payment is not stayed pending appeal.
d. Permission is given to Lidl to apply to vary the costs order.
e. Permission to appeal from the order was given on the grounds relating to misrepresentation and damage (not those relating to the counterclaim) and is otherwise refused.
f. Time for service of the Notice of Appeal was extended until 31 July 2021 and was further extended until 27 August 2021.
g. Interest is payable on costs in the manner provided for the in draft order save that interest at the judgment rate shall be payable from 31 July 2021 rather than from the date of the order.
h. The application for a publicity order was refused. I gave Lidl permission to apply to renew, it if so advised, no later than 31 July 2021, they did not do so and, in the circumstances no longer arises.
205. I will make a formal order dismissing the claim and counterclaim, which was not previously done, partly because the earlier consequentials order was an interim one, pending further submissions. I also extend time for making any application for permission to appeal from this decision by 14 days from the date of judgment with any such application to be made in writing.
Annex 1: The Mail Article