Practice and Procedure


PUBLISHED July 31, 2003

Brief fees paid in advance of commencement of trial were to be assessed as falling into the period in which they were paid even though they would generally be treated as costs of the trial.Appeal concerning costs by the claimants ('C'), from their claim against the defendants ('D') for infringement of software copyright used in connection with C's business of bond broking. D served various sets of admissions over a period of nine months, concerning the extent that the source code had been copied and made an open offer to admit liability in respect of certain specified infringements and to submit to an inquiry as to damages. The offer was rejected and it was held at trial that liability had not been established beyond the extent admitted by D in the open offer. Pumfrey J approached costs by dealing separately with three periods of time, namely: (i) those between the issue of the claim and D's admissions; (ii) between the admissions and the trial; and (iii) the duration of the trial. The costs order was that: (a) D should pay C's costs for the first period; (b) C should pay 75 per cent of D's costs for the second period; and (c) that C should pay all of D's costs for the third period. C appealed against the order, arguing that the judge had dealt with the first two periods incorrectly and that the first period should be extended (by almost a year) until three months after the final set of admissions was served by D, as it was only then that C could have understood that significant parts of the claim could not succeed, and that the second period should begin three months thereafter. The Court of Appeal allowed the appeal on the basis that C should not be attributed with hindsight and they were justified in waiting until the admissions process was complete before they should have reduced the claim. The Court of Appeal exercised its own jurisdiction to vary the original costs order to provide, inter alia, that D were entitled to their costs in respect of "the costs of the trial commencing on 6th October 1998". On a subsequent application to a costs judge, D successfully argued that they were entitled to recover brief fees paid to their three counsel before the date of commencement of the trial. The costs judge held that the phrase "costs of the trial commencing on 6th October 1998" used by the Court of Appeal was intended to vary the order of Pumfrey J by referring to the nature of costs rather than the time they were incurred. He concluded that the brief fees were costs of the trial as they related not only to work done in preparation for the trial but also any additional work done during the trial other than attendance in court for which refreshers were paid. C argued that the fees fell into the second period and that the costs judge had not taken account of the history of the claim and the reasons for the structure of Pumfrey J's original costs order.HELD: (1) The Court of Appeal had accepted that once the admissions process was complete, C ought to have narrowed down its claim. Although "costs of the trial" as an isolated phrase would be apt to cover brief fees paid in advance of commencement of the trial, in the overall context of the Court of Appeal order and that of Pumfrey J, the Court of Appeal had not intended to vary the original order in the way argued by D and upheld by the costs judge. The structure of the costs order was intended to distinguish between the periods during which D bore the costs risk (prior to full service of admissions) and during which C bore the costs risk (throughout the period of the trial after they had rejected D's offer). (2) The brief fees paid in advance were therefore intended to be treated as costs incurred at the time they were paid and not costs falling into the third period as costs of the trial. Pumfrey J had intended costs to be assessed by distinguishing between the time periods into which they fell, rather than what they were incurred for. Accordingly, the brief fees fell into the second period and were to be assessed on that basis.Appeal allowed. Case remitted back to costs judge.

[2003] EWHC 1907 (Ch)