Latest Proportionality Ruling - Non-monetary relief

May 23, 2018

Latest Proportionality Ruling - Non-monetary relief

 

There have been many ‘hot topics’ of late in the arena of costs, although rarely more so than in the areas of budgeting and proportionality, and it is to this latter area that this latest commentary now turns.

 

Many readers will be aware of the recent judgements in respect of proportionality, not least in the matter of May & May v Wavell Group Plc & Dr Bizarri both in respect of the judgement of Master Rowley in first instance and then subsequently of HHJ Dight in the subsequent Appeal, however none of any note have addressed the approach to be taken where the claim involves an element, substantial or otherwise, of non-monetary relief…until now.

 

In the matter of Marcura Equities FZE & Anor v Nisomar Ventures Ltd & Anor [2018] EWHC 523 (QB), the Claimants were companies incorporated in Dubai, involved in selling a computer software package to the global marine industry called PortLog, which had cost approximately $7m to develop and which, they stated, had unique distinguishing features within it which set it apart from its competition. The 1st Defendant was an English company owned and run by the 2nd Defendant and who alleged that PortLog was not unique but replicated a product sold by a company of which the 2nd Defendant was a former CEO.

 

It was alleged that a Mr Schultz (who was not a party to these proceedings, but was employed by the 2nd claimant and latterly worked as a consultant to the 1st claimant, and who had worked on the development of PortLog) had during 2016 and 2017 provided the Defendants with no less than 19 pieces of confidential information belonging to the claimants, to include, inter alia, confidential patents application for an algorithm used by PortLog.

 

Allegations were, accordingly brought by the Claimants against the defendants that the latter had “…induced, facilitated, assisted or conspired with Mr Schultz…” to breaches contractual obligations of confidence to the claimants and required a statement setting out what information had been given to them by Mr Schultz and to provide undertakings to identify, deliver up and not further disclose or use all confidential information which they had received. The defendants denied receiving such information, although conceded that Mr Schultz had been considered for a position with the 1st defendant but had never commenced working for them in any capacity, nor indeed for the 2nd defendant.

 

Response failed to satisfy the claimants and accordingly proceedings were commenced applying for an injunction in August 2017, to protect their confidential information, and seeking damages in excess of £200,000. The matter proceeded on a fully contested basis being, perhaps predictably, allocated to the multitrack and, in September 2017, Master Eastman approved the Defendant’s costs budget, but adjourned the budgeting of the claimant’s budget.

 

Matters continued (albeit with proposals for settlement being made between the parties) and on 21 December 2017, Master Eastman approved the claimant’s costs budget in the sum of £449,929, with the order including no comments on the claimants’ incurred costs. The matter was listed for Trial in a window commencing 4 December 2017, however by early 2018 it was clear that the parties were close to settlement and, ultimately, on 1 March 2018 terms were agreed and an order approved by Nicola Davies J for injunctive relief largely the same as undertakings recorded in a previous order of Jefford J dated 14 August 2017 (namely to deliver up all property within their control that belonged to the claimants, and not to disclose it to third parties, and also to provide witness statements setting out, among other things, what confidential information had been received and used), recording no admission of liability, and providing for the defendants to pay the sum of £35,000 to the claimants within 28 days.

 

The order did not specifically record that it was in settlement of all issues other than costs, however Nicholas Vineall QC, sitting as a Deputy High Court Judge, was satisfied that

 

“…this is not a case in which I should decline to make any order in relation to costs. It also follows that the starting point must be that the defendants should pay the claimants’ costs.”

 

finding further that the costs as per the approved budget of almost £450,000 were not disproportionate in a matter which recovered only £35,000 as

 

“In assessing the extent to which the agreed order represents success for the claimants, it is also relevant to bear in mind that the trial in this action was to decide all issues apart from quantification of damage. If the trial had proceeded as planned and the claimants had obtained an order for damages to be assessed, it could hardly at that stage have been said that they should not have their costs to date because the sum to be assessed might yet turn out to be modest.

 

“In my view the consensual payment of £35,000 cannot be characterised as a sum that is nominal or trifling, and in any event it would be wrong to focus solely on the agreed payment of £35,000 in determining who the successful party is.

 

“Nor do I consider that it is remotely right to characterise this as a claim in which the costs are disproportionate because £450,000 has been spent to recover just £35,000. That ignores the important delivery up and other injunctive relief that has been obtained.

 

“Accordingly I reject the suggestion that the fact that only £35,000 has been recovered displaces the starting point that the claimants are the successful party for costs purposes. Nor do I accept the contention that it demonstrates that the costs claimed are disproportionate.”

 

and accordingly made an order that the claimants should recover the whole of their costs, subject to detailed assessment.

 

This judgement, once more, demonstrates the very broad considerations which have to be taken into account in the contemplation of whether or not costs claimed or assessed are proportionate, and specifically the provisions, inter alia, of CPR 44.3(5)(b).

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