By Jane Larner
Litigants have long been used to the concept that costs follow the event - the losing party is usually obliged to pay the costs incurred by the successful party in conducting the litigation, as well as its own costs. Costs were calculated using certain specified criteria, such as time spent, complexity and importance of the matter. Under the CPR the matters which the court may take into account when deciding how much in costs should be awarded, and to whom, have been greatly extended, and now include elements such as the conduct of the parties, both before as well as during the proceedings, whether it was reasonable for a party to raise or contest a particular issue and the manner in which a party pursued or defended its case or any part of it. Unreasonable conduct, even before proceedings are begun, may have adverse costs consequences at the end, as Mars found out recently to its cost.
Case Report
In Mars UK Ltd v Teknowledge Ltd (No. 2), the chocolate manufacturer Mars UK Ltd, had brought various actions for infringement of copyright and breach of confidence against a small company, Teknowledge Ltd. Mars had been successful in the first of these claims but had failed in the second. At the hearing for costs, the judge, Mr Justice Jacob, held that the claim for breach of confidence had only barely been reasonable. In fact, he did not see how Mars could have considered that claim to be winnable at all had the copyright claim failed. He held that the conduct of Mars, given its large size, as compared to the defendant, who had been trying to co-operate and negotiate, had been heavy-handed and that this should be taken into account when assessing the costs to be paid to it. The judge considered that on a detailed assessment of its costs, Mars would be likely to recover only in the region of 40% of the £550,000 costs it estimated it had incurred. He ordered an interim payment to be made pending detailed assessment, but reduced it to £80,000, rather than the £200,000 Mars had asked for, to be paid in six monthly instalments.
Comment
This is a clear example of the court using its new powers from the CPR to take into account the pre-action conduct of the seemingly successful party when assessing costs to be paid to it. Pre-action conduct should be reasonable and be seen to be so, and observance of any pre-action protocol is essential to avoid a later allegation of unreasonable behaviour.
This note is intended to provide general information about a recent development which may be of interest. It is not intended to be comprehensive nor to provide any specific legal advice and should not be acted or relied upon as doing so. Professional advice appropriate to the specific situation should always be obtained.
