Court of Appeal reaffirms general rule of reserving costs of interim injunctions

The Court of Appeal has reaffirmed the general rule that the court should reserve costs where an interim injunction is granted, rejecting the argument that this no longer represented modern practice, which now required adherence to the ‘pay as you go’ principle.

Lord Justice Lewison said: “We do not accept that the so-called ‘pay as you go’ principle has precedence over the decision in the Desquenne case in proceedings for interim injunctions.”

Digby v Melford Capital Partners and others [2020] EWCA Civ 1647 concerned a successful application for an interim injunction restraining the use of confidential information, delivery up of a laptop and related relief against one of Melford’s founders, Frederick Wingfield Digby.

Mr Justice Birss also ordered an interim payment on account of costs of £166,400, saying he was making what he regarded as the usual order, “which is that the successful party’s costs are paid by the unsuccessful party”.

He said it had not been “possible or necessary to resolve the underlying merits of what is clearly a hotly disputed case”.

Delivering the judgment of the Court of Appeal with Lord Justice McCombe, Lewison LJ said the White Book accurately reflected the law by saying: “Where an interim injunction is granted, the court will normally reserve the cost of the application until the determination of the substantive issue (Desquenne).

“However, the court’s hands are not tied and, if special factors are present, an order for costs may be made and those costs summarily assessed (Picnic at Ascot).”

While special factors could mean that an immediate order for costs is appropriate, Lord Justice Lewison said the judge did not identify any in this case, apart from his ruling on who had been the successful party.

He observed that the quest for the successful and unsuccessful party in such cases was “usually fruitless”.

While noting that Birss J had faced “very difficult circumstances”, the court ruled that he erred in failing to have proper regard to Desquenne “as authoritative in a case where he was expressly deciding that he could not resolve the underlying disputes between the parties”.

It went on: “We find that it was wrong to try to identify a winner or loser in these interim proceedings.

“We consider that he should have regarded the pragmatic approach adopted by the appellant [to the injunction application] as very strong grounds on which to reserve the costs…

“We would add that it is likely to be helpful to parties endeavouring to make sensible arrangements in cases such as this pending trial that they should know that costs are likely to be reserved.”

Applying the appeal court’s discretion instead, Lewison LJ said: “We are clearly of the view, as Morritt LJ and Morison J were in Desquenne, that the decision here was unjust in all the circumstances.

“In this hotly disputed case, in which the underlying issues were impossible to determine at the interim stage, it is right to follow the normal rule emerging from Desquenne. We find no special factors indicating a contrary decision.”

Lewison and McCombe LJ allowed the appeal and ordered that Mr Wingfield Digby’s interim costs payment should be returned to him.

Thomas Grant QC and Thomas Munby (instructed by Thomas Mansfield) for the Appellant. Philip Shepherd QC, Bajul Shah and Aidan Eardley (instructed by Kerman & Co) for the Respondents

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Costs News
Published date
21 Jan 2021

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