Easyair Ltd (t/a Openair) v Opal Telecom Ltd

Where one party is substantially successful, the starting point is that it should receive its costs. A modest adjustment may be appropriate for discrete issues on which it was unsuccessful, particularly where those issues have merely been allowed to proceed to trial and remain undecided. Indemnity costs require circumstances taking the case out of the norm. Summary judgment on a hopeless claim, threats to seek indemnity costs, and allegations which did not materially affect the court’s ruling do not, without more, justify that basis. Proportionality remains an important control on costs assessment. Permission to appeal should be refused where the proposed grounds have no real prospect of success and no other compelling reason supports permission.

The claimant brought substantial claims for breach of contract and breach of fiduciary duty, together with two smaller claims. The defendant obtained strike-out or summary judgment on the substantial claims. The remaining claims were allowed to proceed to trial because construction issues had not been properly addressed by evidence or argument; they had not been decided in the claimant’s favour.

The judgment concerned the appropriate costs order, whether the defendant’s costs should be assessed on the indemnity basis, interim payment on account, costs arising from amendments, permission to appeal, and case management of the remaining proceedings.

1. Costs. The defendant was the substantially successful party, so the starting point was that the claimant should pay its costs. The issues left for trial were discrete and represented less than 5 per cent of the value of the claims. The defendant had acted reasonably in seeking summary judgment, and the claimant had not yet succeeded on those issues. The defendant was therefore deprived of only a small part of its costs and was not required to pay the claimant’s costs. The claimant was ordered to pay 90 per cent of the defendant’s costs.
2. Basis of assessment. The court refused indemnity costs. The contractual issues were not complicated, and the fact that a substantial part of a case failed at summary judgment did not take the case out of the norm. A threat to seek indemnity costs did not create any entitlement to such an order. Allegations of illegality and anti-competitive conduct increased the heat of the litigation but were not material to the issues decided. The costs were to be assessed on the standard basis if not agreed. The court also emphasised that proportionality remains a useful restraint on escalating costs.
3. Other orders. An interim payment of £50,000 was ordered within 21 days, having regard to the defendant’s estimated costs and the security already provided. The claimant was to pay the costs thrown away by amendments to the Particulars of Claim, on the standard basis. Permission to appeal was refused because the proposed grounds had no real prospect of success and there was no other compelling reason to grant permission. The remaining proceedings were transferred to the Manchester District Registry for further directions.