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Court of Appeal reconfirms that, absent special factors, costs will normally be reserved in interim injunction cases

  • United Kingdom
  • Litigation and dispute management
  • Litigation and dispute management - Other

16-02-2021

Frederick Digby v Melford Capital Partners (Holdings) LLP & Ors [2020] EWCA Civ 1647

Facts of the Case

  • Melford Capital Partners and others (together the “Respondents”) applied on short notice for an interim injunction against Frederick Digby (the “Appellant”) inter alia restraining the use of certain confidential information and seeking delivery up of a laptop.
  • The form of the injunction was largely agreed between the parties in advance. It was granted by Tower J at the short notice hearing (the “Injunction”) who then reserved costs.
  • With the Appellant having given his in principle consent to the continuation of the Injunction, it was continued by Birss J at the return hearing. In doing so, Birss J noted that it had not been “possible or necessary to resolve the underlying merits of what is a clearly a hotly disputed case”, and that he was “not resolving who is right or wrong”.
  • However, Birss J then went on to order that costs be paid by the Appellant, with immediate assessment and payment on account. He described this as the “usual order” on the basis that a “successful party’s costs are paid by the unsuccessful party”. The Appellant appealed.

The Decision

  • In allowing the appeal, Lord Justices Lewison and McCombe found that Birss J had made an error of principle in not following Desquenne et Giral UK Ltd v Richardson [2001] F.S.R. 1, CA which is authority for the costs of an interim injunction normally being reserved until determination of the substantive issue.
  • The Lord Justices considered that Birss J should also have had regard to the pragmatic approach adopted by the Appellant – insofar as he largely agreed to the terms of the Injunction and its later continuation before the relevant hearings – as very strong grounds on which to reserve costs.

Analysis & Practical Advice

  • Rule 44.2 of the CPR states that (i) the court has a discretion as whether costs are payable by one payment to another, the amount of those costs and when they are paid and (ii) if the court does decide to make an order about costs, the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party.
  • However attempts to identify the successful and unsuccessful parties in the context of an interim injunction application are usually fruitless, since the facts are normally disputed and the positions of the parties diametrically opposed. The injunction is therefore granted and/or continued on the balance of convenience (as was the case here) in order to hold the ring until the dispute can be properly decided at trial. It may therefore be that the basis on which an injunction was obtained and continued proves in the end to have been unfounded.
  • But while Desuqenne is authority as to the normal approach on costs for interim injunctions, the hands of the court are not tied. Accordingly, if there are special factors present, an order for costs may be made and those costs summarily assessed (Picnic at Ascot Inc v Derigs [2001] F.S.R. 2 (Neuberger J). This might occur where the balance of convenience is so clear that the outcome of the hearing should have been plain to the parties, such that an order should be made against the respondent for wasting time and money in fighting the issue.

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