Phonographic Performance Ltd v Hamilton Entertainment Ltd & Anor

In IPEC proceedings, the court’s capped-costs regime continues to apply when a claim is resolved by acceptance of a Part 36 offer. The regime may be displaced for an application where unreasonable behaviour directly caused unnecessary costs, but that does not generally remove the cap for other stages of the action. Abuse of process is a separate and wider ground with different consequences.

Costs incurred before transfer from the High Court need not be subjected to IPEC stage limits where the proceedings were reasonably commenced there. However, once a case involving a small or medium-sized enterprise proceeds beyond an early stage, the IPEC will ordinarily be the appropriate forum. Current stage limits apply at the date of assessment, absent contrary transitional provision. Where no trial occurs, the fact that the trial stage was not completed remains a significant factor in assessing recoverable costs.

The claimant, a collecting society, brought copyright infringement proceedings against operators of a bar. The claim began in the High Court and was transferred to the Patents County Court. The Patents County Court was reconstituted as the Intellectual Property Enterprise Court before the costs assessment.

Shortly before trial, the defendants accepted the claimant’s Part 36 offer. Liability for some costs was clear, but the parties disagreed about the applicable costs regime, the effect of unreasonable behaviour, the proper forum, and the amount recoverable for the uncompleted trial stage. The court determined the costs consequences and summarily assessed the costs.

1. Part 36 and the IPEC costs code. Acceptance of a Part 36 offer did not disapply the Patents County Court costs rules. Those rules formed part of the applicable overall code and continued to apply after the court’s reconstitution as the IPEC. Costs potentially awarded under CPR r63.26(2) remained subject to assessment on the standard basis, albeit summarily.
2. Unreasonable behaviour. The defendants’ failure properly to conduct disclosure was unreasonable behaviour in relation to the application for specific disclosure. It directly caused otherwise unnecessary costs, so the cap was disapplied for that application under CPR r63.26(2). The provision did not extend to the costs of witness statements, trial or judgment. Removing the cap for those stages would have required the distinct abuse-of-process provision in CPR r45.30(2)(a), which was not engaged.
3. Applicable stage limits. The transitional provisions preserved the effect of earlier orders and continued the relevant PCC procedures in the IPEC. In the absence of contrary transitional provision, the stage limits in force when assessment occurred applied. Applying two sets of limits according to when costs were incurred would be unnecessarily complex.
4. Choice of forum. It was not unreasonable for the claimant to commence this type of claim in the High Court, particularly given its established practice of issuing claims seeking injunctions. Nevertheless, cases of this kind that proceed beyond service of the particulars are generally more appropriately tried in the IPEC. The High Court costs were therefore summarily assessed without applying IPEC stage limits.
5. Uncompleted trial stage. Costs of preparing the costs statement and addressing the defendants’ costs submissions fell within the IPEC stage of preparing for and attending trial and judgment. The absence of an actual trial remained a significant factor. Two-thirds of the costs incurred for that stage was fair and proportionate.
6. Order. The total costs payable by the defendants was £44,967.79.

First-instance costs judgment. The proceedings had been transferred from the High Court to the Patents County Court, which became the Intellectual Property Enterprise Court on 1 October 2013.