IPC Media Ltd v Highbury-Leisure Publishing Ltd

The discretion to award interest on costs is broad. It may be exercised from dates before judgment where that is necessary to compensate the receiving party for the real cost of conducting litigation. An indemnity costs order remains compensatory, not penal. Improper or unreasonable conduct is not a necessary precondition. The critical question is whether the conduct or circumstances take the case out of the norm. An unusually weak, wide-ranging and expensive claim, pursued despite detailed evidence and a settlement offer addressing the weakness of the case, may justify indemnity costs.

The court had previously found that claims by IPC Media Ltd against Highbury-Leisure Publishing Ltd for infringement of artistic copyright in magazine covers and articles were wholly without merit, including because there had been no copying. At this consequential hearing, the parties agreed that the action should be dismissed with costs and that an interim payment of £350,000 should be made on account.

The remaining issues were whether interest should run on the defendant’s costs from the dates of payment of invoices, and whether the costs should be assessed on the indemnity basis from 9 July 2003.

The action was dismissed with costs. The claimant did not seek permission to appeal. The court ordered an interim payment of £350,000 on account of costs.

1. Interest on costs. Under CPR 44.3(6)(g), the court has power to order interest on costs from or until a specified date, including a date before judgment. The discretion is broad and must be exercised in all the circumstances. The purpose of a costs order is to compensate the successful party for the real cost of conducting the litigation. That cost is not necessarily measured by the nominal sums paid or payable to lawyers, because the value of money changes over time.
2. The approach in Bim Kemi AB v Blackburn Chemical [2003] EWCA Civ 889 was adopted. Interest at 1% above base rate was therefore ordered from the date of each invoice, with interest at judgment rates thereafter. The court also relied on Hunt v R M Douglas (Roofing) [1990] 1 AC 398 for interest from the date of the relevant order.
3. Indemnity costs. Following Excelsior Commercial and Industrial Holdings Ltd v Salisbury [2002] EWCA Civ 879, indemnity costs are compensatory and cannot exceed the receiving party’s expenditure or liability. Improper or unreasonable conduct is not a necessary precondition. The critical requirement is conduct or circumstances taking the case out of the norm.
4. The claim was exceptionally thin, wide and uncertain. The defendant had given a detailed explanation of its independent design process and had made a Part 36 offer intended to encourage withdrawal. The proceedings nevertheless became extraordinarily expensive, with combined costs of about £1.8 million. Those circumstances took the case out of the norm and justified indemnity costs from 9 July 2003, the defendant’s chosen date.

not stated in the judgment.