England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		11th April 2005

JUDGE PETER COULSON QC :

Introduction

1. The Claimant in this action seeks an interim injunction against the three Defendants, to prevent them from acting in breach of covenant by supplying products or services to, or soliciting, the Claimant's clients/customers, or carrying on any business in competition with the Claimant. The claim is resisted, and by far the most important point taken by the Defendants is that, on the evidence before me, there is nothing to support the allegations of breach of covenant. It is therefore necessary for me first to set out the covenants which form the basis of the application, together with the relevant events and the principles to be applied, before coming on to address the detailed reasons for my decision.

The Agreement of 1^st May 2003

2. The Defendants ran a business which was principally concerned with the evaluation of jewellery and the provision of replacement jewellery to insurers. On 1^st May 2003 the Defendants sold that business to the Claimant and the sale was formalised in a written agreement ("the May agreement"). Clause 18 of the May agreement set out various restrictive covenants in fairly typical form, as follows:

"The Vendors severally covenant with the Purchaser that they will not either on their own account or in conjunction with or on behalf of any person or persons whether directly or indirectly for the period of

(a) 5 years from completion supply products or provide services for any person firm or company who or which was either at completion or during a period of 12 months prior to completion a client or customer of the business where such goods or services are the same as or compete with products sold or services provided by the business of that person firm or company at or during the period 12 months prior to completion;

(b) 5 years from completion solicit or endeavour to solicit the custom of any person firm or company who or which was either at completion or during the period of 12 months prior to completion had been a client or customer of the business for the supply of products or the provision of services which are the same as or compete with those products sold or services provided by the business to that person firm or company at or during the period of 12 months prior to completion;

(c) 5 years from completion solicit or entice away or endeavour to solicit or entice away from the purchaser any officer manager servant or other employee who was either at completion or during the period of six months prior to completion engaged in the business whether or not such person would commit a breach of his contract of employment by reason of leaving service or

(d) 5 years from completion carry on or be engaged concerned with or interested in any business which competes with the business as the same was carried on at completion……."

Subsequently, the five year period to which reference was made in clause 18.1 was shortened by agreement and these covenants now expire at the end of 2005.

The Events up to March 2004

3. At paragraph 7(b)(ii) of the Particulars of Claim it is alleged that, in early 2004, the First Defendant, Mr Belson, contacted Axa, the insurers, who were a restricted client under the terms of the May Agreement, and informed Axa that he was setting up a jewellery-related business. That appears to be the first occasion on which the Claimant became concerned that the Defendants may not be complying with the restrictive covenants. It appears that the First Defendant accepts that he did make contact with Axa at that time, but he denies that he informed them that he was setting up a business and he further denies that by contacting Axa he was in breach of his covenant. This event led to a solicitor's letter dated 4^th March 2004, written on behalf of the Claimant to the First Defendant, reminding the First Defendant of his obligations under the restrictive covenants. On the second page of that letter in the penultimate paragraph the Claimant's solicitors, Wansbroughs, said this:

"The covenants made by you and the other Vendors were required in order to preserve the value of the goodwill of the businesses being purchased as you are aware. The net asset value of those businesses excluding goodwill was almost nil and accordingly our client has paid a very considerable amount of money in respect of that goodwill. They would therefore regard any breach of the covenants by you or any of the other Vendors as extremely serious and as matters which would materially affect the amount which they paid you for the business. Any involvement in the supply of jewellery to insurance companies or their insured would clearly be in breach of the covenants as would any approaches to customers of my client's business."

4. The day after that letter was written, on 5^th March 2004, the Claimant's director, Mr. Le Fevre, was in receipt of an e-mail from somebody called Geremy Longfield. Mr. Longfield was not somebody previously known to Mr. Le Fevre and indeed further efforts by the Defendants' solicitors to trace him have so far proved unsuccessful. In any event he wrote a very short e-mail indicating that Mr. Le Fevre may like to know "that Tim Belson is approaching insurers regarding jewellery validation and replacement." In other words, the suggestion in the e-mail was that Mr. Belson was acting in breach of the restrictive covenants.
5. On that same day, 5th March 2004, there was a conversation between Mr. McGregor-Johnson, the solicitor at Wansbroughs then dealing with the matter on behalf of the Claimant, and Mr. Belson. That conversation is referred to in a later letter from Wansbroughs of 9^th March 2004. In that letter Mr. McGregor-Johnson recorded what Mr. Belson told him, that his new business, Jewellery Direct Supplies, had been set up to sell jewellery direct to wholesalers. The letter goes on to say that: "Such a business is not in itself prohibited by the covenants which you have entered into, provided that it is not in competition with the business carried on by the Claimant." The letter concluded with these words: "My clients of course have no wish whatsoever to prevent you in any way from carrying on your new business provided the covenants are not breached, and I believe that your agreement to contact either me or my clients in advance to discuss the proposed dealings should you wish to have any contact with my client's customers will avoid any misunderstandings occurring."

March to July 2004

6. During a period between March and July 2004 other events took place on which the Claimant now relies in support of its case that the Defendants are in breach of covenant. Firstly, it is said that the First Defendant, Mr. Belson, contacted Mr. Ash Dunga and Mr. Anil Bhatti, both employees of the Claimant, and suggested that he, Mr. Belson, could offer them employment. The suggestion by Mr Le Fevre was that Mr. Belson told them that he was trying to set up an Asian jewellery business and that he was going to try to win the Zurich tender for replacement Asian jewellery. That exchange is denied by Mr. Belson.
7. At about the same time there was concern within the Claimant organisation about the loss of Lloyds TSB as one of their clients. Lloyds TSB ceased to send work to the Claimant company and in the Particulars of Claim at paragraphs 7(c)(i) to 7(c)(iv) there are various allegations about representations made by Mr. Sykes, the First Defendant's former partner and a party to the May agreement, as to what he and Mr. Belson might do with Lloyds TSB and the possibility of retaining their custom. At this stage, Mr Sykes still worked for the Claimant. There is a dispute as to these conversations, although Mr. Sykes accepts that at that stage he was unhappy with his position with the Claimant.
8. The final event in the period between March and July 2004 is referred to paragraph 7(c)(v) of the Particulars of Claim. This was a conversation on 21^st July 2004 between Mr. Le Fevre and a contact of his called Mr. Dennis Terry. Mr. Terry informed Mr. Le Fevre that the First Defendant, Mr. Belson, had told him that he was carrying out 25 telephone insurance replacement transactions per week. Mr. Belson accepts that he was in contact with Mr. Terry at this time, but he denies that he said that he was involved in 25 replacement transactions a week.
9. As a result of those three separate events, namely a) the potential setting up of a separate Asian jewellery business, b) the loss of Lloyds TSB as a client linked with the references to the Lloyds TSB business in the conversations with Mr. Sykes and the reported comments of Mr. Belson, and c) the information reported by Mr. Terry, Wansbroughs wrote again to Mr. Belson on 27^th July. In the fourth paragraph of that letter they said this:

"My client is particularly disappointed that having received your verbal assurance that no approaches would be made to customers without first contacting either my client or myself to discuss the nature of such an approach you saw fit to make such approaches without contacting either my client or myself. Further, it is clear from the evidence which my client has that the approaches which you have been making are in direct contravention of the covenants which you entered into as they involve the supply of replacement jewellery to the insurance industry. My client is not prepared to allow these breaches to continue, but I am instructed to give you one further opportunity to rectify matters without court proceedings. Unless within seven days from the date of this letter I receive from you a written undertaking that you will hereafter fully comply with the covenants which you entered into in May 2003 and in particular that you will not at any time within the two year period now covered by the covenants approach the relevant staff in an attempt to solicit or entice them away from the business and that you will not approach any of the relevant customers without first giving written notice that you intend to do so either on your own account or with others with full details of the nature of that approach…I have instructions to take proceedings immediately."

10. In response to that letter, and it is the only written response to any of the letters sent by Wansbroughs in 2004, Mr. Belson replied in manuscript on 3^rd August. He said that he was not aware of any breaches of the May 2003 Agreement and went on to say: "I confirm that I will comply with the covenants in full with particular regard to the areas mentioned in your letter."

The Incident Involving Direct Line in January 2005

11. In January 2005 the First Defendant, Mr. Belson, became involved with the valuation of jewellery belonging to a Mrs. Von Sternberg who lived in Fulham. His involvement became known to the Claimant when an e-mail that he had sent to the well-known loss adjusters Cunningham Lindsey was sent on by Cunningham Lindsey to them. The e-mail was dated 19^th January 2005 and the relevant parts read as follows:

"To Angela Mackenzie at Cunningham Lindsey.dotcom. Subject Mrs. Von Sternberg.

Dear Angela,

I was contacted by Mr. Freeman of Beechcroft and Nicholson in respect of the above insured. I was informed that Direct Line were unable to arrange a visit to the insured by one of their approved jewellers or the LMG and was asked if I would kindly step in and assist. My report is therefore submitted on behalf of Direct Line to whom I will be submitting my invoice in due course. I have met with the insured and Mr. Freeman at the insured's residence in Fulham where the theft occurred and after lengthy discussions report as follows…."

He then set out his valuation of the jewellery that had been stolen. His report ended: "If I can be of any further assistance please contact me directly" and he gave a telephone number. It should be noted that the reference in the e.mail to the LMG was a reference to the Claimant's parent company, and so was effectively a reference to the Claimant itself. There is also no dispute that Direct Line were a restricted client under the May agreement.

12. It is clear therefore that if Mr. Belson, the First Defendant, had undertaken this valuation work on behalf of Direct Line he was in breach of the restrictive covenant in the May Agreement. However, Mr. Belson says that he was not on this occasion working for Direct Line and was instead instructed by Mr. Freeman, who was working on behalf of Mrs. Von Sternberg, in order to try and hurry along her insurance claim, which had been made against Direct Line. He says that he was working for the insured, Mrs. Von Sternberg, not the insurer, Direct Line, and was therefore not in breach of covenant.

Principles: General

13. It seems to me that there are two relevant questions in this case. The first, and by far the most significant, given the helpful way in which Mr. Casey for the Defendants has set out his submissions, is whether or not there is a serious issue to be tried in connection with the allegations of breach of covenant against the Defendants. The second question is whether, if there is a serious issue to be tried, the balance of convenience favours granting or refusing an injunction. To put that point in another way, does the least risk of injustice involve granting or refusing an injunction?
14. On the first point, that is to say whether or not there is a serious issue, the principles are really those set out in Lord Diplock's speech in American Cyanamid v. Ethicon [1975] AC 396. The court has to be satisfied that the claim is not frivolous or vexatious: in other words that there is a serious issue between the parties to be tried. In Mothercare v. Robson Books [1975] F.S.R. 466, Megarry V.C. said that what the court had to do was to consider the prospects of success and consider whether they existed either in substance or reality. Odds against success did not necessarily defeat a claimant seeking an injunction, unless there could be no expectation of success, only a hope. If his prospects were so small that they lacked substance in reality then the claimant's claim for an injunction would fail, because there was no serious question to be tried.
15. On the second point, namely the question of the balance of convenience, the commentary to the Civil Procedure Rules at Part 25.1.9 refers to Zockoll Group Ltd. v. Mercury Communications Ltd. [1998] FSR 354, which in turn cites the judgment of Chadwick J. (as he then was) in Nottingham Building Society v. Eurodynamics Systems [1993] F.S.R. 468. It seems to me that the judgment in that case, although concerned with the principles relating to the granting of a mandatory injunction, is of assistance because it sets out in a slightly more modern context what is meant by the test of 'the balance of convenience'. I read from p. 474:

"In my view the principles to be applied are these. First, this being an interlocutory matter, the overriding consideration is which course is likely to involve the least risk of injustice if it turns out to be 'wrong' in the sense described by Hoffmann J. [as he then was].

Secondly, in considering whether to grant a mandatory injunction, the court must keep in mind that an order which requires a party to take some positive step at an interlocutory stage, may well carry a greater risk of injustice if it turns out to have been wrongly made than an order which merely prohibits action, thereby preserving the status quo.

Thirdly, it is legitimate, where a mandatory injunction is sought, to consider whether the court does feel a high degree of assurance that the plaintiff will be able to establish his right at a trial. That is because the greater the degree of assurance the plaintiff will ultimately establish his right, the less will be the risk of injustice if the injunction is granted.

But, finally, even where the court is unable to feel any high degree of assurance that the plaintiff will establish his right, there may still be circumstances in which it is appropriate to grant a mandatory injunction at an interlocutory stage. Those circumstances will exist where the risk of injustice if this injunction is refused sufficiently outweigh the risk of injustice if it is granted."

Principles: Specific

16. The threshold dispute between the parties concerns the strength of the evidence that supports the allegations of breach of covenant on the part of the Defendants. Both counsel have made careful submissions as to what they say the court's approach should be to that evidence. On behalf of the Claimant Mr. Ritchie made the point that this is the sort of case in which the Claimant has no (and can be expected to have no) knowledge of the breaches or potential of breaches of covenant on the part of the Defendants. He says the court would be wrong to expect the Claimant to have extensive material demonstrating or highlighting wrong doings. Therefore he submits that the court has to look realistically at the evidence which has been gathered in this case as to breach or potential breach of covenant. The main point taken by Mr. Casey is to the effect that a bare assertion carries with it no evidential value and cannot of itself give rise to a serious issue between the parties. He therefore says that in this situation the Claimant cannot demonstrate a case of breach of contract because all that the Claimant has done has been to identify a series of bare assertions in support of its case.
17. It seems to me that the right approach to the evidence is this. First, I must have regard to the totality of the evidence advanced by the Claimant to demonstrate breach or potential breach of covenant. Whilst plainly every element of that evidence needs to be the subject of a separate assessment, it would be wrong for me to ignore the overall effect of that evidence. Secondly, it seems to me right that mere assertions must be treated carefully and that, where there are elements of the evidence which are fairly described as mere assertions, they cannot be regarded by the court as anything other than corroborative of any allegations which have been made with more substantial evidence to support them. Thirdly, it seems to me that, whilst I should make due allowance for the fact that the Claimant in these circumstances is not going to find it easy to demonstrate breach or potential breach of covenant, I cannot let such an allowance extend too far, mainly because at any trial the Claimant is going to have to prove its case on breach in any event. With those considerations in mind I now turn to the evidence advanced by the Claimant to demonstrate breach or potential breach of covenant.

The evidence in 2004: Is There a Serious Issue?

18. It seems to me that looking solely at the events in 2004, which I have addressed in paragraphs 3-10 above, there is sufficient material on which I can properly conclude that there is a serious issue between these parties to be tried. The principal reason for that conclusion is the weight of that evidence. As I have already indicated, Mr. Le Fevre gives evidence that three separate individuals -- Mr. Dunga, Mr. Sykes and Mr. Terry -- all reported to him things which Mr. Belson, the First Defendant, told them that he was either doing or would do. They were all things which either would or probably would put Mr. Belson in breach of covenant. It seems to me that this evidence cannot fairly be described as mere assertion but instead constitutes direct evidence from Mr. Le Fevre (in the first instance) and the three individuals (in the second instance) of things which the First Defendant told them and which would give rise to at least a potential breach of covenant on his part.
19. Accordingly it seems to me that there is a proper and serious issue to be tried between the parties in respect of those matters. Of course I well understand that Mr. Belson denies saying what he is alleged to have said and I recognise that it might fairly be said that the evidence in respect of those matters could be stronger. However, there are three separate individuals, who have told Mr Le Fevre things which Mr. Belson said to them, all of which demonstrate at least a potential breach of covenant. For those reasons it seems to me that the 2004 evidence does demonstrate a serious issue to be tried. As a result of that conclusion the e-mail from Mr. Longfield, which Mr. Ritchie properly accepts as being an assertion and nothing more, is corroborative of the case against Mr Belson, at least to the extent that it supports what the other three named individuals said that Mr. Belson had said to them, and therefore it is a matter which I can take into account on that limited basis.
20. Mr. Casey submitted to me that even if I concluded that there may be a serious issue arising out of the 2004 material it would be wrong to justify the injunction on the basis of that material, given that the Claimant did not pursue the injunction claim until this year. Whilst that is a perfectly understandable submission for Mr. Casey to make, I do not accept it for a number of reasons. First, whilst it may be the Direct Line incident which triggered this application, I do not see why as a matter of principle that should prevent the Claimant from relying on the events of last year in order to demonstrate a serious issue between the parties. Secondly, as I have already indicated, it seems to me that the Claimant acted very fairly in 2004 (e.g. the reasonable tone and content of the letters from Wansbroughs and, in particular, the request in the summer of last year for the very short written confirmation from Mr. Belson). I think it is right to say that the Claimant has endeavoured not to take up the cudgels of litigation,; that that was a reasonable thing to try and do; and I do not think that the Claimant should now in some way be penalised because it acted in the way that it did. Indeed, on the question of delay, it might not be unfair to say that if there has been delay in this case, it was on the part of the Defendants, because there was never a substantive response to any of the Wansbroughs letters written last year and, even more recently, the only detailed response by the Defendants to this application was provided as late as Thursday and Friday of last week.
21. Finally on the question of delay and the events of last year it is worth noting that passage that I read from the letter of the 9^th March which recorded Mr. Belson's agreement to liaise with the Claimant or with Wansbrough if there was going to be any question of direct contact with the Claimant's existing customers. That did not happen in respect of the Direct Line incident and it is therefore now worth turning to that incident to see what difference that makes to the allegations of breach of covenant.

Is There a Serious Issue in Respect of the Direct Line Incident?

22. Even if I am wrong about my conclusions as to the events in 2004 I am entirely satisfied that there is a serious issue between the parties in respect of the events of January 2005 and Mr. Belson's involvement with Direct Line. As I have previously noted, the First Defendant, Mr. Belson, says that he was acting on behalf of the home owner, Mrs. Von Sternberg, the victim of the theft, and not the insurer, and he has provided extensive evidence of the difference between a loss adjuster (who is instructed by the insurance company) and a loss assessor (who is instructed by the insured). He says that Mr. Freeman was the loss assessor instructed by the insured and he was acting in concert with Mr. Freeman on behalf of Mrs. Von Sternberg. It seems to me that there are five reasons why there is a plain and obvious issue between the parties arising out of that incident and that explanation. I do not say at this stage that Mr. Belson's explanation is inevitably wrong or incorrect, but there are, as I have said, five separate points which indicate to me that it may very well be wrong.
23. First, in his e-mail, Mr Belson says that he became involved because Direct Line were unable to arrange a visit to the insured by one of their approved jewellers or the LMG. As I have previously explained, LMG is a reference to the Claimant itself. The Claimant would of course only have become involved at all by acting on behalf of the insurer (Direct Line) and therefore the fact that Mr. Belson became involved because the Claimant was unable to make a visit demonstrates that, on the basis of his own words, he too would have been acting on behalf of the insurer.
24. The second point, making good the first, is that Mr Belson goes on to say that he was asked if he would kindly 'step in and assist'. Again in the context of that first paragraph, he can only be stepping in to assist Direct Line, the insurer, because they had been unable to arrange a visit by anyone else. Direct Line, as customers/clients of the Claimant, were the very people that he has covenanted not to do business with.
25. The e.mail goes on (and this is the third reason why it seems to me there is a clear and obvious triable issue between the parties) to say expressly that the report is being submitted on behalf of Direct Line, to whom Mr Belson would be submitting his invoice in due course. It must be remembered that Mr. Belson's evidence now is that this report was not submitted on behalf of Direct Line. If it was submitted on behalf of Direct Line (as Mr Belson said it was) I think that he accepts that he would be in breach of covenant.
26. The fourth point concerns Mr Belson's explanation for this part of the e.mail. His explanation was to the effect that the aim was to get Direct Line to pay his fees; hence the reference to submitting his invoice to Direct Line in due course. I understand that there was a hope that Direct Line would pay his fees, but if this explanation were right, the e-mail could simply have said that he would be submitting his invoice to Direct Line in due course. The first half of the sentence, namely "my report is therefore submitted on behalf of Direct Line" is completely irrelevant to any question of fees. It is not explained by the agreement that he would submit an invoice to Direct Line. Therefore the words "my report is therefore submitted on behalf of Direct Line" used by Mr Belson himself are wholly supportive of the Claimant's case before me and wholly undermine his position that there is nothing in the evidence to demonstrate his breach of covenant. Again therefore, it seems to me, there is a serious and obvious issue to be tried in connection with the Direct Line incident because of those words.
27. The fifth and final point is that the report throughout refers to Mrs. Von Sternberg as the insured, which is commonly done in documents generated by loss adjusters and others working for the insurers. Of course in this case Mrs. Von Sternberg would, if Mr. Belson's explanation were right, have been his client (or certainly Mr. Freeman's client) and the fact of her insurance would have made little difference. It seems to me that that is another potential indication of where Mr Belson's instructions were coming from.
28. Accordingly, for all those five reasons, and in particular by reference to the words used by Mr. Belson himself in his report of 19^th January, it seems to me that there is clearly a serious issue between the parties as to whether Mr. Belson was in breach of covenant. Of course, if his words (given their usual meaning) in his e.mail were correct then he was effectively admitting a breach of covenant on the face of the report itself. It may very well be that there is an explanation for his e.mail and that the words were used loosely or carelessly. That would be a matter for the trial. But for the purpose of the test which I have to apply, I am entirely satisfied that those words, at the very least, demonstrate a serious issue to be tried.

Balance of Convenience

29. I have already dealt with the principles derivable from the Civil Procedure Rules and the Nottingham Building Society case and it is unnecessary for me to repeat them. Mr. Casey did not address me in any great detail on the balance of convenience for perfectly understandable reasons. In this case, once I had concluded that there was a serious issue to be tried, it seems to me obvious that the balance of convenience would favour granting the injunction. It is of course accepted by both parties that the mere fact that these covenants are in existence does not mean that I should automatically grant the injunction. Mr. Casey properly drew attention to the decision of Neuberger J. in Gill and Anr. v. Flightwise Travel Service Ltd. and Anr. {2003] EWHC 3082 in which, albeit dealing with a freezing order, the judge made the point that such a simplistic argument (there was covenant, so it might as well be enforced by an injunction) is not open to a party seeking such an order. The judge then goes on to say:

"Of course once the court considers that there is a real case for granting an injunction the fact that it will cause or appears that it will cause no or little harm to the respondent is a fact that the applicant can pray in aid."

30. It seems to me that the little (if any) harm which might come from enforcing the covenant by way of injunction here is a factor which, on behalf of the Claimant, Mr. Ritchie properly relies on. It is a perfectly valid point: it seems to me clear that the least risk of injustice would result from the granting of the injunction. There are a number of individual factors which lead me to that conclusion. The first point is that there is no evidence of prejudice to the Defendants if the injunction were granted. There is a reference to a concern on the part of the Defendants that an injunction might affect their business, but I really do not see how that argument can possibly get off the ground in circumstances where the Claimant has, entirely reasonably, accepted that the Defendants can carry on legitimate trade provided that that trade is outside the restrictive covenants. That has always been accepted by the Claimant and is expressly accepted in Wansbroughs' letters of last year. In those circumstances it does not seem to me that there can be any evidence of prejudice if the injunction is granted. There is nothing to suggest that legitimate trade outside the restrictive covenants could or would be affected by the granting of the injunction.
31. On the other hand, there is clear evidence of potential prejudice if the injunction was not granted. After all, it appears that Mr. Belson is, if I can put it in this way, working around the edges of his previous business, and there would be a real risk to the Claimant if he was beginning now to move into those areas of business which are covered by the restrictive covenants. There is ample evidence in the statement of Mr. Le Fevre to demonstrate that there would be significant prejudice to the Claimant if the injunction was not granted.
32. Finally, the Claimant has given proper and appropriate undertakings in respect of damages if at the trial it is concluded that the Claimant is not entitled to the injunction. On the other hand there is no evidence of the Defendants' financial position, and therefore it is impossible to say what the consequences would be if no injunction were granted and the Defendants lost at trial. It is not possible to say that any damages which the Claimant suffered as a result of any proven breach of covenant could or would be reimbursed by the Defendants. For all those reasons therefore it seems to me that on the balance of convenience in this case the injunction should be granted. There is the least risk of injustice if it is granted.

Conclusions

33. For the reasons which I have given it seems to me that there is a serious issue to be tried between the parties in respect of the events in 2004. Even if I am wrong about that I am entirely satisfied that there is a serious issue to be tried in respect of the events in 2005 arising out of Mr. Belson's involvement with Mrs. Von Sternberg and Direct Line. The balance of convenience plainly favours granting the injunction because there is the least risk of injustice if the injunction is granted. For those reasons I therefore allow in principle the Claimant's application. To the extent that there are any points on the wording of any orders to be made, I will hear further submissions from counsel.

Decision on Costs

34. I think the right order as to costs is that the Defendants should pay the Claimant's costs of the application for an interim injunction. The Defendants took a risk in relation to the serious issue point on which they have lost. The Civil Procedure Rules make it plain that in those circumstances the Defendants, as the losers, should pay at least some of the Claimant's costs. However, I am not going to do a summary assessment because I think there is a risk at this early stage that the costs in the summary assessment costs bill may well include costs which are not directly referable to this hearing, but are instead referable to the action itself, and should not therefore be recovered under my order. So instead what I am going to do is I am going to order that there be an interim payment in respect of the costs which I have ordered to be paid by the Defendants to the Claimant. That interim payment will be for £3,500: sums in excess of that will have to be the subject of assessment in the normal way.
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