Cantor Fitzgerald International v Tradition (UK) Ltd & Ors

An appellate court is slow to interfere with a trial judge’s discretionary costs order. Intervention is justified where the judge erred in principle, omitted a relevant consideration, considered an irrelevant one, or reached a wholly wrong balance. The reasonableness of a party’s conduct must be assessed by reference to what it knew, or ought reasonably to have known, at the relevant time. Hindsight must not be used to criticise a party for awaiting the outcome of an ongoing investigation which could materially affect the scope of its case.

The appellants brought a copyright claim concerning computer software used in bond broking. Following an adjournment, the respondents undertook an admissions process concerning copying by former employees. The High Court awarded the appellants their costs until three months after the first admissions, then ordered them to pay 75 per cent of the respondents’ costs until trial.

The appellants challenged that part of the order. They argued that the claim could not reasonably have been narrowed while the admissions process remained incomplete. The central issue was whether the judge had assessed their conduct by reference to information available at the relevant time or by hindsight.

1. Appeal allowed. Lord Justice Keene gave the leading judgment, with the Vice-Chancellor and Lord Justice Mummery agreeing.
2. The principles governing appellate interference with discretionary costs orders were not in issue. The Court of Appeal should intervene where the judge erred in principle, omitted a relevant consideration, took an irrelevant matter into account, or reached a decision which was wholly wrong. Those principles were stated in A.E.I. Ltd v Phonographic Performance Ltd [1999] 1 WLR 1507, reaffirming the approach in Roache v News Group Newspapers Ltd [1998] EMLR 161.
3. The trial judge had assumed that, by August or November 1997, the appellants could know that later admissions would not materially enlarge the first set. That assumption was unjustified. The admissions process was continuing, and it was reasonable for the appellants to await its completion before deciding whether their claim should be narrowed.
4. Although costs are ordinarily capable of being assessed with the benefit of hindsight, the judge’s reasoning here focused on the reasonableness of the appellants’ conduct at a particular time. That assessment had to be made by reference to what they knew, or ought reasonably to have known, then. The continuing investigatory process made the case exceptional.
5. The Court substituted its own costs order. The respondents were to pay the appellants’ costs up to and including 22 August 1998, being three months after the final admissions. There was to be no order as to costs from 23 August 1998 until trial. The appellants were to pay all costs relating to the unsupported back-office claim and the respondents’ costs of the trial, subject to detailed assessment.

• Court of Appeal (Civil Division): allowed the appeal from the costs order made by Pumfrey J on 28 June 1999. The substantive proceedings and trial judgment are referred to as [2000] RPC 95.
• High Court, Chancery Division: awarded the appellants costs until 15 November 1997 and ordered them to pay 75 per cent of the respondents’ costs thereafter until trial.