Costs

Order for costs - Discretion - Disallowing costs of successful defendant

Lumos Skincare Ltd v Sweet Squared Ltd and others: Patents County Court (Mr Recorder Douglas Campbell): 13 June 2012

The claimant company had commenced proceedings against the defendant companies for passing off in respect of which the High Court had made an order. In August 2011, the defendants sought security for costs, which was resolved by the claimant producing information about its funding. In September 2011, the parties made a failed attempt at mediation. In October 2011, the claimant sought an expedited trial. The High Court dismissed the expedited trial application, transferred the action to the Patents County Court (PCC) and ordered the costs be costs in the case. In December 2011, the PCC held a case management conference (CMC).

In January 2012, the defendants made a without prejudice 'save as to costs' offer but the claimant failed to reply. In February 2012, the claimant's application to strike out part of the defendants' witness evidence was dismissed with costs reserved to the trial judge. In May 2012, the PCC ordered judgment for the defendants ([2012] All ER (D) 265 (May)). The defendants sought their costs of the proceedings in the sum of £137,012.47, relying on the claimant's unreasonable conduct. The claimant sought permission to appeal on the basis that the judge had applied the wrong test and the court's rejection of the claimant's deception evidence.

The claimant submitted that the court should have applied a test whereby it was required to find that one market was so remote from the other that the same trademark was unlikely, on the balance of probabilities, to imply a common trade-source. It fell to be determined: (i) whether the defendants were entitled to their costs; and (ii) whether the claimant should have permission to appeal.

The court ruled: (1) The defendants would only be awarded £30,000 for their costs before the transfer of the action to the PCC, as the factors they had relied on had not established unreasonable conduct. The costs between the transfer and the CMC should be assessed on the PCC scale and £2,500 for the CMC would be awarded as the sum had been inherently credible but costs on disclosure would not be awarded as there had been no clear information about what they had been.

Off-scale costs would not be awarded as there had been no abuse of process or unreasonable conduct. Costs that had followed the CMC would be awarded in accordance with the PCC scale for the strike-out application, preparing witness statements, trial costs, disclosure and the costs of amending the defence and counterclaim (see [12], [14], [15], [20], [23], [27], [28], [31] of the judgment). The defendants' costs would be assessed at £55,527.50 (see [37] of the judgment).

(2) The court had not applied a test whereby it had been sufficient to conclude that the skincare and nail-care markets had been distinct. It had applied well-established law and the difference in the markets had merely been one factor on which the court had relied. Further, the claimant's proposed test had not been supported by any existing law. The claim in respect of the evidence of deception had appeared to have invited a reconsideration of primary fact evidence, which had not been an error of law (see [35], [36] of the judgment). Permission to appeal would be refused (see [37] of the judgment).

Richard Hacon and Chris Hall (instructed by Bolt Burdon) for the claimant; Denise McFarland (instructed by Lupton Fawcett LLP) for the defendants.

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