Traditionally the rule in UK litigation was that the losing party paid the winning party’s costs. In practice, this typically amounted to an award of about 70% of the actual costs. Courts were, however, given latitude to vary costs awards having regard to the specific circumstances of the case, including:
- the conduct of all the parties;
- whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
- any admissible offer to settle made by a party which is drawn to the Court’s attention.
A recent decision of the the Intellectual Property Enterprise Court (IPEC) in Bocacina Ltd v Boca Cafes Ltd shows that Judges may proactively use costs awards to encourage parties to restrict costs. IPEC is the new name of the Patents County Court, which was set up to provide a cost effective alternative to IP litigation before the High Court. Its raison d’être was stated in the Judgment as follows:
“the object of this Court is, however, not only to decide cases more efficiently and cheaply but also to help SMEs resolve disputes without the need for a trial. Quite often, the biggest obstacle to early resolution in such cases is costs…one of the ways in which this Court can achieve this aim is to take account of reasonable admissible offers made to settle a case at an early stage of proceedings in determining what costs should be paid, if an action is pressed to trial in the face of such offers.”
Damages in cases before the IPEC are limited to £500,000, whilst the maximum costs award which can be made is £50,000.
Bocacina Ltd v Boca Cafes Ltd, concerned a “passing off” claim, that is a claim for infringement of common law trade mark rights. The successful party claimed £23,460 worth of costs. However, the other side put in details of an offer for settlement made during the course of the litigation, which was rejected, and resulted in the litigation lasting a further nine months. The Judge held that that offer was not materially worse than the sums eventually awarded, and subsequently that the successful party was only entitled to full costs up to the date of the settlement offer and thereafter was restricted to 50% of their costs. The motivation for the award was summarised as to strike a balance “between providing a fair level of recovery of costs for meritorious claimants, while encouraging early resolution of proceedings without a trial”.
The decision demonstrates that, in UK litigation, not just before the IPEC but also the High Court, offers should be carefully considered, as once made, it may prove expensive to fight on and not achieve anything significantly better.
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking before any action in reliance on it.