Dyson Ltd v Hoover Ltd

Where a court is asked to order an interim payment of costs before it has heard the trial or inquiry, CPR 44.3.8 creates no presumption either for or against payment. The receiving party must justify the exercise of the discretion in its favour.

The court should consider the application on its own merits and all relevant circumstances. These include the parties’ financial positions, proportionality, the possibility of an appeal, the receiving party’s ability to repay an overpayment, and whether the order would promote settlement or reduce detailed assessment. Particular caution is required where the court has little information about the issues and costs incurred. In such circumstances, the costs judge may be better placed to make an informed interim assessment.

Dyson had succeeded against Hoover in a patent infringement action and elected to pursue an inquiry as to damages. Shortly before the inquiry, Dyson accepted a payment of £4 million. The judge who had dealt with the post-liability proceedings ordered Dyson’s costs of the inquiry to be assessed on the standard basis, leaving proportionality for the costs judge.

Dyson applied under CPR 44.3.8 for an interim payment of £1,472,000, alternatively £1,227,000, on account of its costs. Hoover opposed the application, relying on the substantial difference between the damages claimed and the sum accepted, and on the limited information available to the judge. The central issue was the proper approach where the judge asked to order payment had not heard the relevant trial or inquiry.

1. The application for an interim payment was refused. The court had jurisdiction under CPR 44.3.8 even though it had not heard the patent trial or the inquiry as to damages.

2. Mars UK Limited v Teknowledge Limited [2000] FSR 138 established that, after a full trial, an interim payment will generally be appropriate because the successful party is entitled to receive costs pending detailed assessment. That approach was not treated as a general norm for an application made by a judge who had heard virtually none of the relevant proceedings. The circumstances of a full trial and a settled inquiry were materially different.

3. In the present class of case, the court should take CPR 44.3.8 at face value. There was no presumption in favour of payment, although there was also no presumption against it. The receiving party, seeking the favourable exercise of a discretion, had to justify an order on the particular facts.

4. The relevant considerations included all the circumstances, the possibility of an appeal, proportionality and the parties’ financial positions, the receiving party’s ability to repay an overpayment, the effect of interest provisions, and whether an order would encourage settlement or reduce the scope of detailed assessment.

5. The court had insufficient information to make a reliable assessment. A payment of £500,000 would be little more than an informed guess, would leave a substantial dispute outstanding and would do little to encourage settlement. The costs judge, after receiving the detailed bill, points of dispute and request for assessment, would be better placed to consider an interim costs certificate under CPR 47.15. Given the sums involved, the court should not make an order on inadequate material.

The judgment itself records earlier procedural steps in the same first-instance litigation. Liability had been determined by Mr Fysh QC sitting as a Deputy High Court Judge. Following Dyson’s acceptance of £4 million on the inquiry, Jacob J ordered Dyson’s costs to be assessed on the standard basis, leaving proportionality for the costs judge. The present application was then refused by Laddie J.