England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
INTELLECTUAL PROPERTY
(MR JUSTICE FLOYD)

		Royal Courts of Justice Strand, London, WC2A 2LL
		28th July 2011

Sir Robin Jacob (giving the first judgment at the invitation of Thomas LJ):

1. This is an appeal with permission given by me from a decision as to costs of Floyd J given on 15 January 2010. The action is a passing-off action. Tthe costs order was made in respect of the costs of an application for an interlocutory injunction in respect of which the claimants were successful. At the same time they applied also for summary judgment. Floyd J refused that, not on the basis which had been urged by the defendant -- that all the documentary material had been fabricated and that a number of the witnesses were all lying -- but on the basis that the quality of the evidence was itself not sound enough for summary judgment.
2. There had been an earlier application for ex parte injunction granted by Norris J on 26 November 2009. The claimants were granted the costs of that as well as that of the application for an injunction until trial. They had to pay the costs of the summary judgment application, which they lost.But that was a relatively small amount because the defendant was acting in person and the rates which are allowed for parties acting in person are very low.
3. Floyd J was given a costs schedule in the sum of £68,000. This consisted of the sum of £4,750 for counsel. The remainder consisted of costs of the solicitors.
4. Floyd J, after having given judgment, set about a summary assessment, which is indeed the default procedure for short applications. What he actually did was to take the claim of £68,000 and reduce it by about 25 per cent to £50,000. bBut he was not explicit as to why he did that.Two things stand out from the transcript of the hearing: firstly, that he did not indicate to the litigant in person, as the defendant was at the time, that there is another option, which is for the costs to go to a detailed assessment, and, secondly, he did not question counsel for the claimants on the costs schedule.
5. Now to my mind at least, there are some rather remarkable items on there and they may well be justifiable, and before us Ms Bowhill indicated what the justifications might be. But there is 100 hours spent on documents by three different people altogether. There is attendance upon the claimant of 30 hours and only a relatively short period of 8 hours attendance on witnesses. Whether these items are justifiable or not one does not know and the judge did not enquire. It is said by Ms Bowhill that the judge had seen all the evidence and was able to form a view, but it is by no means apparent that that is the reason he reduced the costs or that he did form a view on the basis of what he had seen in the evidence. Moreover it is difficult to see how just by seeing the evidence he could work out that it took 100 hours if that is what work on documents amounted.
6. It seems to me that this is a plain case where, given that the litigant was in person and there is no indication that he really understood what was going on and was not given the option of going to a detailed assessment, for saying that the judge had erred in principle..
7. There are other possible complications. The judge did not think this was a plain case fit for summary judgment, which is why he refused it. So it can be said that these costs are also costs of the trial. They are costs of the witness statements. The problem of costs which are both the costs of an interlocutory application and the costs of any potential trial is a difficult one. Speaking for myself, I would not go into that on this occasion because I think the judge erred in principle in any event by not challenging this bill himself in a manner which a litigant in person would have been quite unable to do and by not indicating that an alternative possibility was that there should be a detailed assessment.
8. Accordingly, I think the judge was in error. This costsschedule is a matter which should be looked at in more detail. That can now only be done by way of a detailed assessment and accordingly I would allow the appeal and order a detailed assessment of costs.
9. Ms Bowhill has indicated that if that is being done then there ought to be an interim payment. In principle I agree with that. There is of course a big difference between an order for an interim payment which is provisional only and an order for a total sum of costs. Whatever sum we order, - that may be discussed later - should be recoverable and returnable if ultimately the cliamant were unsuccessful whereas an outright order for costs, which is once and for all, may not be undoable even at a later stage.
10. So I would allow this appeal. I would order an appropriate sum, but that sum is to be recoverable if at the end of the day the defendant is successful in the action.

Lord Justice Elias:

11. I agree. The judge was required to carry out the two stage approach adumbrated by Lord WoolfLCJ in Lownds v Home Office  [2002] EWCA Civ 365 paragraphs 31 to 32. He reduced the schedule of costs in this case by some 25 per cent, but thereafter there appears to have been no interrogation of the costs schedule itself. Ms  Bowhill, counsel for the appellant, submits that it must be assumed the judge applied the right test. He is a very experienced Chancery judge, who fully understands what his obligations were. It may be in some circumstances that it is appropriate to make that assumption, particularly where both parties are represented and where points have been taken by counsel in relation to the schedule of costs, but that was not the case here. Here the defendant was a litigant in person. It could not be assumed that he understood what was involved and he was not really in a position to question the costs schedule that had been put forward by the appellant. In those circumstances it seems to me particularly important that the judge engaged in that exercise and he did not do so.
12. An additional point emerged during the course of the hearing. That is that there is a very difficult question, as Sir Robin Jacob has indicated, between allocating the costs which arise from pursuing the case to trial and those which flow from the application for the interlocutory injunction. Again, that was not an issues that appears to have been addressed by the judge and it seems to me that it is a potentially very important one in determining what the appropriate costs order ought to have been. Accordingly, I agree that this should now go to the costs judge and that meanwhile some interim payment is made, as suggested by Sir Robin Jacob.

Lord Justice Thomas:

13. I agree with both judgments. I would merely add two observations. The first, which is important in the light of the fact that it is always possible that this case may be reported, that no criticism at all is made of the scale or size or make-up of the bill submitted and put before the judge. The sole point that arises is that, in my view, the judge ought to have asked questions and he may well have received answers which satisfied him. We are not in a position to make it, but I wish to make it abundantly clear that speaking entirely for myself that there is no criticism implied the fact that we are intervening in this case.
14. Secondly, I agree with both my Lords that we cannot go into the rather difficult issue of how, in a case where the costs are referable both to the action and to the application, that issue is to be resolved. The simple point is that the judge never asked himself that second question, which meant that the way in which the discretion was exercised was again exercised on the wrong basis of principle. What those principles should be can obviously be dealt with on another occasion. As we understand from counsel, there is no authority on those points but it certainly is not a point that we should raise and deal with today.

Order: Appeal allowed