Brown v MCASSO Music Productions

A costs judge may consider a non-Part 36 settlement offer, but its weight depends on whether it clearly offered a result better than that obtained at trial and dealt fairly with the claims and costs. A party’s refusal of alternative dispute resolution cannot properly justify an adverse costs order where the proposed scheme was unavailable or unsuitable, the concern about impartiality was reasonable, or the party proposed a suitable alternative.

An offer cannot be treated as a valid Civil Procedure Rules 1998 Part 36 offer unless it meets Part 36’s material requirements. In exercising the costs discretion, the court should ask who substantially and realistically won. Where neither party did, a no-order outcome may be appropriate.

The claimant alleged that the defendant infringed copyright in the lyrics of a rap number. In the Patents County Court, HHJ Fysh QC found that the claimant had a 10 per cent joint interest in the copyright and awarded him £180 plus interest. The judge nevertheless ordered him to pay the defendant’s costs after 1 April 2003.

Permission to appeal was refused on damages but granted on costs. The appeal concerned whether the judge could rely on a pre-action settlement offer, an offer to use the Musicians Union Dispute Resolution Scheme, and a later settlement offer. It also concerned the appropriate costs order in a Fast Track case where both parties had achieved only limited success.

1. Appeal allowed. Neuberger LJ held that the costs judge had erred in principle and the Court of Appeal could therefore exercise the costs discretion afresh.

2. The pre-action offer of £450 was not irrelevant. It could be considered under Civil Procedure Rules 1998 Part 44.3. However, it could carry only limited weight. The offer required the claimant to relinquish his disputed copyright interest, did not offer his costs, and was open for only seven days. It was therefore not clearly better than the trial outcome of £180 and a declaration of 10 per cent joint ownership.

3. The proposed use of the Musicians Union scheme could not count against the claimant. He had reasonably raised concerns about impartiality and suitability. The scheme did not apply once proceedings had been issued. He had also proposed discussion of a suitable forum if liability were admitted. Applying Halsey, the judge should have rejected reliance on that alleged refusal to mediate. The defendant’s later wish for a judicial determination was an additional countervailing consideration.

4. The letter of 4 December 2003 could not validly be treated as a Part 36 offer. It required each side to bear its own costs, did not identify itself as a Part 36 offer, allowed only seven days, and made no payment into court if construed as a monetary offer. It failed too many Part 36 requirements, particularly given that it was addressed to a litigant in person.

5. Applying the practical inquiry in Roache as to who had won in substance and reality, neither party had won. The claimant established a copyright interest and recovered money, but recovered far less than claimed. The defendant’s settlement attempts were relevant but not decisive. The Fast Track character of the claim and the disproportionate costs reinforced the conclusion that there should be no order for costs, either below or on appeal.

• Court of Appeal (Civil Division) — allowed the claimant’s costs appeal and made no order for costs here or below: [2005] EWCA Civ 1546.
• Patents County Court (HHJ Fysh QC) — held that the claimant had a 10 per cent joint interest in the copyright, awarded £180 plus interest, and ordered the claimant to pay the defendant’s costs after 1 April 2003.