British Sky Broadcasting Group Plc & Ors v Digital Satellite Warranty Cover Ltd & Ors

The statutory stay on proceedings against a company in compulsory liquidation should not be lifted merely to enable a claimant to obtain summary judgment where the liquidator’s statutory claims process remains available. The court should respect the insolvency scheme, including the liquidator’s duty to realise and distribute assets.

Costs remain discretionary. Although costs usually follow the event, dishonesty may justify depriving a successful party of costs and requiring that party to pay the opponent’s costs where the dishonesty caused or materially prolonged the litigation. A broad percentage-based apportionment may be adopted where a detailed issues-based assessment would be disproportionate.

The claimants had obtained judgment against several defendants concerning breach of confidence, database right, trade mark infringement and passing off. Their earlier judgment was reported at [2012] EWHC 2642 (Ch). The first and second defendants were in compulsory liquidation and subject to the statutory stay under the Insolvency Act 1986.

This judgment concerned whether the stay should be lifted so that judgment and injunctive relief could be entered against those companies, the scope of an injunction concerning databases, and the allocation, basis and apportionment of costs among defendants who had succeeded or failed on different issues. The central questions included the effect of dishonest conduct on costs and whether a Bullock or Sanderson order was appropriate.

1. Relief against companies in liquidation. The application to lift the statutory stay and enter judgment against Digital and Nationwide was refused. The claimant was attempting belatedly to obtain summary judgment in an informal manner, while the liquidators remained responsible for examining claims under the statutory insolvency scheme. The court found no sufficient risk to justify circumventing that process. The liquidators’ undertaking concerning the companies’ databases was accepted.
2. Database injunction. The injunction restraining the individual defendants from using or dealing with the defendant databases was not unnecessarily wide. The evidence did not establish that the apparently unmatched data was legitimate, and the databases were potentially tainted by the established wrongs. A liberty to apply was added so that legitimate parts could be dealt with if demonstrated, but only if the relevant appeal succeeded and only in relation to the successful appellant’s database.
3. Costs and dishonesty. Under CPR Part 44.3, the general rule that costs follow the event is only a starting point. The court must evaluate the nature and degree of misconduct, its relevance to the issues and its effect on costs. Mr Steele’s dishonest case was central to his continued presence as a defendant. He was therefore denied all costs and ordered to pay Sky’s costs of pursuing him and Mr Sibbald on the indemnity basis. Similar indemnity orders were made against Mr Freeman, Mr Sullivan, Mr Marrow and Mr Waters’s estate for the costs attributable to their dishonest conduct and the claims against them.
4. Costs of successful defendants. Sky had acted reasonably in pursuing Mr Reynolds to trial despite conflicting evidence and later retractions. His costs were to be paid directly by Mr Freeman, Mr Sullivan and Mr Waters’s estate under a Sanderson order, assessed on the indemnity basis. The costs of his applications were treated separately.
5. Apportionment. A broad percentage-based approach, allocating defendant-specific and general action costs across procedural periods, was adopted as a sensible and proportionate method under CPR 44.3(7). Digital and Nationwide were included in the calculation of general action costs, but Mr Marrow was excluded from the initial period before his joinder.

First-instance costs and consequential-relief judgment following the earlier judgment reported at [2012] EWHC 2642 (Ch). No applications for permission to appeal were made in relation to this judgment.