Marcura Equities FZE & Anor v Nisomar Ventures Ltd & Anor [2018] EWHC 523 (QB)

Caroline Brook – Senior Costs Consultant

In the latest case of Marcura Equities FZE & Anor v Nisomar Ventures Ltd & Anor [2018] EWHC 523 (QB), the issue of proportionality was again put to the test.   Mr Nicholas Vineall QC, sitting as a Deputy Judge of the High Court, found that it was not disproportionate to spend £450,000 to recover just £35,000 as the Claimants had also succeeded in obtaining an order for delivery up of property and injunctive relief.

By way of background, the claim related to unlawful disclosure and use of confidential information. The Claimants were companies incorporated in Dubai, working with the global maritime industry. The Claimants had spent $7m developing a software package called PortLog. The Claimants sought injunctive relief to protect the Claimants’ confidential information, delivery up and damages in excess of £200,000, as they alleged that the Defendants had obtained confidential information from one of the Claimants’ former employees and in turn the Defendants had used this confidential information without the Claimants’ permission.

Proceedings were issued and the case progressed. Costs Budgets were prepared and filed. On 4 September 2017 at a CCMC, before Master Eastman, the Defendants’ Costs Budget was approved. On application from the Claimants, the Master adjourned the CCMC in so far as the Claimants’ Budget was concerned.

On 30 October 2017 the Defendants made an open offer to the Claimants. They expressed the view that the likely outcome at trial was between a nominal damages award in the Claimants’ favour and the claim being dismissed. The Defendants repeated the assertion that they had not used the Claimants’ confidential information.   It noted that the Claimants’ costs were by now likely to be in the region of £108,000 (based on the costs presented at the CCMC), and the Defendants’ expressed the view that the Claimants’ reasonable costs to date could not exceed £70,000. The Defendants offered a contribution of £25,000 to the Claimants’ costs. The Claimants did not accept the Defendants’ offer and provided no response to the same.

On 21 December 2017 Master Eastman approved the Claimants’ Costs Budget in the sum of £449,929.

The matter continued and had been listed for a 5 day Trial starting on 5 March 2018. By early 2018 the parties had started to engage in settlement negotiations. By 1 March 2018 the parties had agreed terms and an order was obtained for injunctive relief (namely to deliver up all property within the Defendants’ control that belonged to the Claimants, not to disclose it to third parties, and also to provide witness statements setting out, amongst other things, what confidential information had been received and used). In addition, the Defendants agreed to pay damages of £35,000. There was no admission of liability. The Order did not deal with costs and it was agreed that the trial date of 5 March 2018 would be used to address the outstanding costs issues.

The Defendants made submissions in respect of costs which, amongst other things, focused on the level of damages recovered.

Having considered the arguments, Mr Vineall QC decided that the Claimants had substantively achieved all of the relief they had claimed, other than a springboard injunction. He held that this was “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” and provided helpful analysis.

Mr Vineall QC acknowledged that the more successful the Claimants were in preventing the use of their confidential information, the lower the monetary recovery was likely to be and stated that “In a confidential information case, where monetary claims are only a part, and sometimes one of the least important parts, of the relief sought, it will rarely if ever be right to focus only on the payment of money when determining a costs order” [Para 52].

“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 damages. 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” [para 53].

“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” [para 54].

“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” [para 55]

While each case will turn on its own facts, this judgment shows there are many varied considerations to be taken into account, not just the level of damages secured, when assessing whether or not a claim for costs is proportionate (see CPR 44.3(5)(b)).

As a practice point, consideration needs to be given to how best to mitigate the prospect of the Bill of Costs being reduced by the judge’s interpretation of “proportionality” by putting together a well-formed proportionality argument. Look at all the factors set out at CPR 44.4, and, if relevant, refer to the sums in issue; address any complex issues or conduct points; look at the wider factors such as reputation or public importance; and make specific reference to items/sections of the Bill of Costs if you have particular concerns about how they may be perceived. Take the opportunity to provide the requisite level of detail and justification throughout the component parts of the Bill to try and prevent arbitrary reductions being made.   As HHJ Dight stated in the Appeal decision in May v Wavell Group Ltd “I doubt … that the proper interpretation of the rules requires or indeed entitles a costs judge at the end of an item-by-item assessment to impose a very substantial reduction on the overall figure without regard to the component parts”.

The Marcura Equities case is positive news for Claimants and follows a recent run of cases where the Courts appear to be taking a more measured approach to proportionality than was seen in some of the very early decisions.

For further information contact Caroline Brook.

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