Cave v Borax Europe Ltd & Ors

An indemnity costs order may be appropriate where a failed committal application had no proper basis and involved unjustified allegations of dishonesty. The unusual nature of such an order does not create a special protection for solicitors or prevent its use where the conduct of the application warrants it. A costs order requiring payment forthwith should be read according to the judge’s actual order and transcript. References to a possible future order by another tribunal do not convert that order into a set-off arrangement.

Borax Europe Ltd brought proceedings against its former employee, Peter Cave, concerning alleged misuse of confidential information. Following interlocutory undertakings concerning a computer backup tape, Cave applied to commit Borax, its managing director and solicitors for contempt, alleging non-disclosure and interference with the tape. Pumfrey J dismissed the application and ordered indemnity costs payable forthwith.

Cave appealed with permission. The appeal concerned whether indemnity costs were justified on a failed committal application and whether the costs were intended to be paid forthwith or merely set off against any later Employment Tribunal award.

Longmore LJ gave the first judgment. Parker LJ and Gibson LJ agreed. The appeal was dismissed unanimously.

1. Indemnity costs. The fact that indemnity costs are unusual following a failed committal application did not make the order inappropriate. The relevant question was whether the application and the allegations made in it had a proper foundation. On the evidence accepted by Cave, the tape delivered to the solicitors could have been blank. The later substantive trial confirmed that Cave had deliberately provided a blank tape and that the committal application was wholly mischievous. There was therefore no proper basis for allegations of dishonesty against the respondents. The indemnity costs order was justified, and the solicitors were not entitled to any special position.
2. Payment forthwith. Pumfrey J had refused to order that any compensation awarded by the Employment Tribunal should be withheld pending assessment of the indemnity costs. His reference to the form of order which the Employment Tribunal might make was a hypothetical observation about a possible application to that tribunal. It did not qualify the order made in the committal proceedings or turn it into a set-off.
3. The order requiring the assessed indemnity costs to be paid forthwith was therefore correctly understood. In any event, the subsequent dismissal of Cave’s Employment Tribunal claim and of his appeal to the Employment Appeal Tribunal meant that there was no later award against which the costs could be set off. The appeal was dismissed in its entirety, with costs summarily assessed at £8,000.

• Queen’s Bench Division: Pumfrey J dismissed Cave’s committal application and ordered him to pay the respondents’ costs on an indemnity basis, payable forthwith.
• Court of Appeal (Civil Division): Permission to appeal was granted by Sir Anthony Evans. The Court upheld the costs orders and dismissed the appeal with costs summarily assessed at £8,000.