(1) Nicholas Martin v Julia Kogan
| Jurisdiction | England & Wales |
| Judge | Hacon |
| Judgment Date | 13 December 2017 |
| Neutral Citation | [2017] EWHC 3266 (IPEC) |
| Court | Intellectual Property Enterprise Court |
| Docket Number | Case No: IP-2016-000050 |
| Date | 13 December 2017 |
[2017] EWHC 3266 (IPEC)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY ENTERPRISE COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
HIS HONOUR JUDGE Hacon
Case No: IP-2016-000050
and
Tom Weisselberg QC (instructed by Lee & Thompson LLP) for the Claimants
Simon Malynicz QC and Ashton Chantrielle (instructed by Keystone Law) for the Defendant/Part 20 Claimant
Jonathan Hill (instructed by Wiggin LLP) for the Part 20 Defendants
Hearing date: 4 December 2017
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HIS HONOUR JUDGE Hacon
Judge Hacon
Introduction
On 22 November 2017 I handed down judgment in this action. I held that the First Claimant was entitled to a declaration that he is the sole author of the Screenplay and that the Claimants have not infringed the copyright in the Screenplay. The Counterclaim and Part 20 Claim were dismissed.
On 4 December 2017 I heard submissions on the form of order. The main dispute concerned costs, in particular the effect on costs of a successful Part 36 offer by the Claimants. I reserved judgment to be handed down in written form because there has been wider interest in the effect of a Part 36 offer in this court, particularly since Public Performance Limited v Hagan [2016] EWHC 3076 (IPEC); [2017] FSR 24.
As at the trial, Tom Weisselberg QC appeared for the Claimants, Simon Malynicz QC and Ashton Chantrielle for the Defendant and Jonathan Hill for the Part 20 Defendants.
The offers
The Claimants made two Part 36 offers. The first was contained in a letter from the Claimants' solicitors dated 18 February 2016, in which the Claimants offered £35,000 in full settlement of the claim. In addition, the Claimants offered to pay the costs of the Defendant (“Ms Kogan”) on the standard basis, to be assessed if not agreed, up to the date of notice of acceptance if within the relevant period as defined in Part 36. This offer was made before the Claim Form was issued on 6 April 2016.
The second was in a letter from the Claimants' solicitors dated 19 September 2017. It was expressly stated to be independent of the earlier offer, although it repeated the offer to pay £35,000 in full settlement of the claim and by this time also the counterclaim, including interest. The difference was that Ms Kogan would be liable to pay the Claimants' costs up to the date of service of the notice of acceptance, to be assessed if not agreed.
The Part 20 Defendants made a Part 36 offer on 14 September 2017. They offered to pay £5,000 including interest, minus any sum Ms Kogan had agreed to accept from the Claimants, in full and final settlement of the Part 20 Claim against them.
Ms Kogan accepted none of these offers. She responded with a Part 36 offer of her own to the Claimants dated 26 September 2017, but given the outcome of the trial it carries no significance.
The rules
Rule 36.17(1)–(7) provide (subparagraph (8) is irrelevant):
“ Costs consequences following judgment 36.17
(1) Subject to rule 36.21, this rule applies where upon judgment being entered —
(a) a claimant fails to obtain a judgment more advantageous than a defendant's Part 36 offer; or
(b) judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant's Part 36 offer.
(Rule 36.21 makes provision for the costs consequences following judgment in certain personal injury claims where the claim no longer proceeds under the RTA or EL/PL Protocol.)
(2) For the purposes of paragraph (1), in relation to any money claim or money element of a claim, “more advantageous” means better in money terms by any amount, however small, and “at least as advantageous” shall be construed accordingly.
(3) Subject to paragraphs (7) and (8), where paragraph (1)(a) applies, the court must, unless it considers it unjust to do so, order that the defendant is entitled to —
(a) costs (including any recoverable pre-action costs) from the date on which the relevant period expired; and
(b) interest on those costs.
(4) Subject to paragraph (7), where paragraph (1)(b) applies, the court must, unless it considers it unjust to do so, order that the claimant is entitled to —
(a) interest on the whole or part of any sum of money (excluding interest) awarded, at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;
(b) costs (including any recoverable pre-action costs) on the indemnity basis from the date on which the relevant period expired;
(c) interest on those costs at a rate not exceeding 10% above base rate; and
(d) provided that the case has been decided and there has not been a previous order under this sub-paragraph, an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below to an amount which is—
(i) the sum awarded to the claimant by the court; or
(ii) where there is no monetary award, the sum awarded to the claimant by the court in respect of costs —
Amount awarded by Prescribed percentage the court
Up to £500,000
10% of the amount awarded
Above £500,000
10% of the first £500,000 and (subject to the limit of £75,000) 5% of any amount above that figure.
(5) In considering whether it would be unjust to make the orders referred to in paragraphs (3) and (4), the court must take into account all the circumstances of the case including—
(a) the terms of any Part 36 offer;
(b) the stage in the proceedings when any Part 36 offer was made, including in particular how long before the trial started the offer was made;
(c) the information available to the parties at the time when the Part 36 offer was made;
(d) the conduct of the parties with regard to the giving of or refusal to give information for the purposes of enabling the offer to be made or evaluated; and
(e) whether the offer was a genuine attempt to settle the proceedings.
(6) Where the court awards interest under this rule and also awards interest on the same sum and for the same period under any other power, the total rate of interest must not exceed 10% above base rate.
(7) Paragraphs (3) and (4) do not apply to a Part 36 offer –
(a) which has been withdrawn;
(b) which has been changed so that its terms are less advantageous to the offeree where the offeree has beaten the less advantageous offer;
(c) made less than 21 days before trial, unless the court has abridged the relevant period.”
The effect of a successful claimant's Part 36 offer on costs in IPEC
PPL v Hagan
In Phonographic Performance Limited v Hagan [2016] EWHC 3076 (IPEC); [2017] FSR 24 a successful Part 36 offer had been made by the claimant. Two issues arose. The first was whether rule 36.14(3)(b), the equivalent to what is now rule 36.17(4)(b), could override the costs caps generally applicable in IPEC. Like its current equivalent, rule 36.14(3)(b) gave the claimant the right to be awarded indemnity costs from the date on which the relevant period expired unless it was unjust to do so. The second issue was whether an award of an additional amount under rule 36.14(3)(d) (now rule 36.17(4)(d)) fell within or outside the overall costs cap.
With regard to the first, I said this:
“[31] There is a tension between the relief under subparagraphs (b) and (d) of rule 36.14(3) and the caps on costs and damages in IPEC. This was briefly debated and considered in OOO Abbott v Design & Display Limited [2014] EWHC 3234 (IPEC). Counsel for the first defendant in that case argued that an award under subparagraph (b) was still subject to the overall £50,000 cap on costs available under the IPEC rules and subparagraph (d) was subject to the overall cap of £500,000 damages. I rejected the argument in relation to subparagraph (d) but accepted it with regard to (b) (at [21]).
[32] Since then, the Court of Appeal has given judgment in Broadhurst v Tan [2016] EWCA Civ 94; [2016] 1 W.L.R. 1928. This has a bearing on costs awarded under rule 36.14(3)(b) in the IPEC even though it did not deal with the IPEC costs regime. Broadhurst was concerned the fixed costs regime for low value personal injury cases, provided for by Section IIIA of CPR Part 45.”
Lord Dyson MR, who gave the leading judgment in Broadhurst, recorded four arguments in favour of rule 36.14(3)(b) overriding the fixed costs regime under CPR Part 45, Section IIIA. The first turned on the principle of law that general provisions must yield to specific provisions. Lord Dyson held that it provided no clear result. But the next three did. I summarised what Lord Dyson said and whether his acceptance of the second to fourth arguments affected the issue in Hagan:
“[36] Lord Dyson felt that three further grounds supported the primary conclusion in his paragraph 25 that rule 36.14(3)(b) took precedence. The first depended on rule 36.14A(8). As I have said, there is no equivalent to rule 36.14A for IPEC cases, so it does not assist here.
[37] Lord Dyson also referred to with approval a submission that under the wider scheme of Part 36, where fixed costs are intended to prevail, Part 36 says so (at [27], referring back to [13]).
[38] Finally, Lord Dyson ruled at [28] that had he been in doubt, it would have been legitimate to refer to the Explanatory Memorandum as an aid to construction, applying by analogy Pepper v Hart [1993] AC 593:
“[The Memorandum] states in terms that, if a claimant makes a...
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