Costs more than ten times damages found not disproportionate in claim for misuse of confidential information
High Court: not disproportionate to spend £450,000 to recover £35,000 damages (plus injunctive relief)
Marcura Equities FZE and Anor v Nisomar Ventures Ltd and Anor  EWHC 523 (QB)
The High Court has ruled that it was not disproportionate for a party to spend up to £450,000 to recover £35,000, because non-monetary relief was also achieved.
The claim related to unlawful disclosure and use of confidential information. The claimant was seeking damages and injunctive relief, alleging that the defendants procured confidential information from one of the claimants’ former employees and used this confidential information without its permission. The parties settled all of the substantive issues on terms including delivery up of all property in the defendants’ control that belonged to the claimants, various injunctions and £35,000 damages on the eve of trial, save as to the question of costs which was left to the court. The claimants’ budget to trial was £450,000; however, it was the defendants' assessment that the claimants' reasonable costs to date were about £70,000, and they knew or suspected that the claimants' actual costs up to that point were in the region of £108,000. The defendants also argued that the £35,000 damages were “so modest” that it could not be used to help justify the award of the claimants’ costs of £450,000 and had made an open offer of £25,000 by way of contribution to the claimants’ costs which the claimants had refused.
Nicholas Vineall QC, sitting as a deputy High Court judge, held that there was nothing to displace the usual order starting point that the defendants should pay the whole of the claimants’ costs (subject to detailed assessment). Rather than focusing solely on the agreed payment of £35,000 in determining who the successful party was, the judge compared the parties’ pleaded position with what was in fact obtained by the claimants under the eventual settlement. In doing so he decided that, by achieving the majority of the injunctions sought, the claimants were successful in substantively obtaining the relief which they claimed. The defendants had ignored the important delivery up and other injunctive relief that had been achieved and therefore it was not right to characterise this as a claim in which costs were disproportionate simply because £450,000 had been spent to recover “just” £35,000. It was reasonable for the claimant to have refused the defendants’ open offer given the same was materially less favourable to the claimants than the settlement they in fact achieved. In any event, it was noted that the payment of £35,000 could not be characterised as a sum that was “nominal or trifling”.
The claimant was awarded a payment on account of £231,000. This was 70% of £330,000, being the sum the judge estimated the claimant may actually have incurred given that the £450,000 budget included provision for trial. The percentage also recognised that there were quite a lot of incurred costs before the budget was set.
While each case will turn on its own facts, this case is generally good news for claimants given that, in principle, a claimant is entitled to costs even if they vastly exceed damages. This case also follows the trend of other recent proportionality decisions whereby the initially draconian application of the new proportionality test seems to be subsiding.