Kingspan Group Plc & Anor v Rockwool Ltd (on costs)

In exercising its costs discretion, the court should identify the overall winner but must consider whether the successful party lost a sufficiently distinct issue to justify a costs reduction. An issue-by-issue approach is appropriate where practicable, particularly in intellectual property litigation, but it is not conclusive. The court must also consider reasonableness, proportionality, conduct and the extent to which issues overlap. A claim which fails on one element may still have materially succeeded on another. Where the losing issue was reasonable to raise and substantially overlapped with issues on which the successful party prevailed, only a proportionate discount is appropriate.

These were cross-actions between Kingspan and Rockwool concerning allegedly false representations in road shows and videos. Kingspan succeeded on trade mark infringement, false representations and factual declarations, but failed on malice in its malicious falsehood claim and did not pursue claims under the Comparative Advertising Directive and the UK Business Regulations. Costs were disputed after the substantive judgment. Rockwool sought no order as to costs or an issue-based order, while Kingspan sought all its costs as the successful party. The central issue was the appropriate exercise of the costs discretion under the Civil Procedure Rules.

1. The court treated Kingspan as the overall winner because the false representations in the road shows and videos lay at the heart of the dispute.
2. Under Civil Procedure Rules 1998, rule 44.3, the general rule is that the unsuccessful party pays the successful party’s costs, but the court may make a different order having regard to all the circumstances, including conduct, reasonableness, the manner in which issues were pursued, exaggeration and the distinct parts of the proceedings.
3. The issue-by-issue approach described in SmithKline Beecham v Apotex (No. 2) [2005] FSR 24 should be applied so far as reasonably practicable. It is not, however, the sole determinant of the order. The court must consider whether the issue was reasonable to raise and whether it was sufficiently distinct to justify depriving the successful party of costs.
4. The malicious falsehood claim involved separate questions of false representation and malice. Kingspan lost on malice but succeeded on false representation. The false-representation issue had to be determined in any event because it supported the declarations and the trade mark infringement claim. The malice allegation was reasonable and pursued proportionately, although its presence altered the shape of the case and justified a reduction.
5. It was inappropriate to award Rockwool all costs relating to the issues introduced by Kingspan’s amendments. The agreed liability for costs of and occasioned by the amendments did not extend to every cost of disclosure and evidence concerning the underlying issues.
6. Weighing all matters, the court ordered that Kingspan recover 90% of the costs of the actions, reflecting a 10% discount for its failure on malice.