You win some, you lose more...

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As the Jackson reforms take hold there is an increasing need to review and discuss with clients how cases are to be funded and costs managed.  This in turn requires a careful analysis of the upsides and downsides of the litigation.

Magical Marking Limited v Ware & Kay LLP (a firm) [2013] EWHC 636 (Ch) is a useful reminder of how the courts will approach costs where a defendant defeats most, but not all, of the claimant’s claim.

The claimant brought a £10M damages claim against its former solicitors for what it claimed to be negligent IP advice. After a  three week trial,  Briggs J dismissed almost all of the claimant’s allegations of negligence but  awarded damages of £28,000. So who was entitled to costs?

Whilst the court have a wide discretion when it comes to costs, the general rule for costs orders is that the loser pays the winner’s costs. Assessing who the winner is, however, is not always straightforward and although in commercial cases the courts have tended to follow  the money (i.e.  the party which ends up receiving payment should generally be characterised as the overall winner) a more nuanced approach to analysing success has emerged from recent Court of Appeal decisions.

In this case, the claimant submitted that although there was a big difference between the amount claimed and awarded, the award “was by no means a modest sum”.  However, the Court considered that the defendant won overall, because the claimant had only succeeded on one aspect of its claim and it was awarded less than 1% of the claimed sum.  The defendant was therefore awarded 85% of its costs on a standard basis (a modest discount made due it its refusal to concede some issues).

This case is a reminder that a claimant who recovers something at trial may sometimes need to pay the defendant’s costs.

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