Knight v Beyond Properties Pty Ltd & Ors

A costs-capping order is not justified merely because a claimant is funded by a conditional fee agreement without after-the-event insurance. The applicant must show a real and substantial risk of disproportionate or unreasonable costs, together with a risk that cannot satisfactorily be controlled by ordinary case management or detailed assessment after trial. The costs-capping jurisdiction must be exercised cautiously because prospective assessment is speculative and costs outside the cap may become irrecoverable. Guidance developed specifically for defamation proceedings, including the suggested priority of costs-capping, does not automatically govern other litigation.

The claimant brought a passing off action concerning the sign mythbusters. He was represented under a conditional fee agreement with a 100% uplift and had no after-the-event insurance. The defendants applied for a prospective order capping the costs recoverable if the claimant succeeded.

The defendants relied on the claimant’s costs estimates, alleged duplication of work in parallel Australian, Singaporean and trade mark proceedings, and the risks associated with CFA funding. The central issue was whether the evidence satisfied the applicable test for costs-capping and whether the identified risks could be dealt with through ordinary case management or post-trial detailed assessment.

1. Application dismissed. No costs-capping order was made.
2. The existence of a CFA with a substantial uplift and no ATE insurance was insufficient by itself. The defendants had to establish a real risk of excessive or extravagant expenditure and show that the risk could not satisfactorily be controlled by conventional case management or post-trial detailed assessment.
3. The court accepted the guidance in Smart v East Cheshire NHS Trust [2003] EWHC 2806 as applicable. The court also accepted that such orders should ordinarily be rare and that retrospective assessment is generally more reliable than prospective estimation.
4. King v Daily Telegraph Group Ltd [2004] EWCA (civ) 6.3 established that the jurisdiction exists and may be appropriate where extravagant costs create unfair risks, but its comments about using costs-capping as the first response were made in the particular context of defamation and freedom of expression. They did not lay down a general rule for all litigation.
5. The evidence disclosed a serious concern about potentially duplicative expenditure on documents and witnesses, particularly in light of the parallel proceedings. However, those matters could be assessed more reliably after trial. The costs judge could determine what work had actually been done, whether it was necessary, and whether it duplicated work undertaken elsewhere.
6. The court was not satisfied that the identified concerns demonstrated a wider risk which could not be dealt with by detailed assessment. The claimant’s proposed expenditure was not endorsed, and the trial judge or costs judge might give particular scrutiny to the relevant expenditure.