BCT Software Solutions Limited v C Brewer & Sons Limited

Permission to appeal a costs order should be granted where the proposed grounds are arguable and have a real prospect of success. That threshold was met where the first-instance judge allocated costs equally across four issues despite material differences in factual complexity and value, and where the reduction of recovery on the successful issue might have rested on an unclear or mistaken assessment of the claim. A further ground concerning benefits obtained through the compromise, including the practical vindication of copyright and payment for contemplated future use, was also arguable. The court did not determine the merits of the costs appeal.

Following a compromise reached during the trial of copyright proceedings, His Honour Judge Rich QC made a costs order. The claimant had succeeded on one of four remaining issues, after earlier amendments had substantially narrowed the action and generated an earlier costs liability. The judge treated each issue as generating 25 per cent of the costs and halved the recovery attributable to the successful issue. The claimant sought permission to appeal, challenging the allocation, the reduction of recovery, and the relevance of benefits obtained through the compromise. The defendant was unrepresented. The central question was whether the proposed grounds had a real prospect of success.

The application was allowed unanimously. Lord Justice Rix gave the reasons, with Lord Justice Carnwath agreeing. Permission to appeal and an extension of time were granted.

1. The challenge to the judge’s broad-brush costs allocation was arguable with a real prospect of success. Treating each of the four issues as generating 25 per cent of the costs might fail to reflect the materially different work involved. The successful issue involved factual disputes concerning 35 users of the software, whereas the three unsuccessful issues concerned questions of construction and had substantially lower values.
2. The challenge to halving the recovery on the successful issue was also arguable. The judge had referred to the smallness of the recovery compared with the extent of the action. If that referred to the original, wider claim, the claimant had already paid the appropriate costs penalty when the claim was substantially amended. If it referred to the value of the successful issue, the stated figures appeared inconsistent with that reasoning.
3. It was additionally arguable that the overall purpose of the proceedings and benefits secured through the compromise could be relevant to costs. The claimant’s copyright remained in dispute until shortly before trial, and the compromise included payment of £30,000 plus VAT for contemplated future use of the software, although that use was not itself part of the existing proceedings.

The costs of the permission application were to be treated as costs in the appeal.

• Court of Appeal (Civil Division): Allowed the application, granted permission to appeal and extended time. The costs of the application were ordered to be costs in the appeal.
• High Court, Chancery Division: On 18 July 2002, His Honour Judge Rich QC made a costs order following the compromise of the action during trial.