Forstater & Anor v Python (Monty) Pictures Ltd & Anor

Costs are governed by all the circumstances, including conduct, success, the reasonableness of pursuing issues and whether a proportionate issues-based order is practicable. A broad-brush approach is permissible, but the order must remain principled and grounded in the evidence.

A claimant who discontinues normally pays the defendant’s costs. Departure requires a material change of circumstances, not caused by the claimant, resulting from unreasonable conduct by the defendant. Indemnity costs require conduct sufficiently outside the norm. Relief from sanctions depends on all the circumstances, including the importance of compliance, the explanation for default, prejudice and the practical effect of granting relief.

This was a first-instance decision on costs following litigation between Mark Forstater, Mark Forstater Productions Limited, Python (Monty) Pictures Ltd and Freeway Cam (UK) Ltd. The underlying claims concerned sums allegedly due under an agreement, deductions from receipts, and alleged payments relating to brand recognition and intellectual property.

The court had to determine the appropriate costs orders between the parties, the effect of discontinuance, whether costs should be assessed on the standard or indemnity basis, whether relief should be granted for failure to serve form N251, and whether interim payments and an indemnity from trust assets should be ordered.

1. The court treated costs as a two-stage exercise: first determining what costs were recoverable, and then assessing their amount. A broad-brush approach was appropriate, but the exercise had to remain principled and evidence-based. The court separated the two principal disputes and assessed overall success, conduct and the relationship between the issues.

2. The claimant who discontinued the Ostar-related claims was liable for the defendants’ costs under CPR 38.6. Discontinuance for practical or pragmatic reasons did not justify departure from that rule. There had been no qualifying change of circumstances caused by unreasonable conduct of the defendant. The claims were based on speculation and were continued despite clear contrary evidence.

3. Although MFPL succeeded on rectification, the construction, rectification and estoppel-related issues were closely intertwined. It was therefore unjust and impracticable to make a separate issues-based reduction. PMP was ordered to pay 52.5 per cent of MFPL’s costs from 23 April 2012, subject to assessment on the standard basis and scrutiny of pre-joinder costs.

4. The policy of encouraging abandonment of unsustainable claims did not justify indemnity costs in relation to the discontinued claims. Indemnity costs were nevertheless appropriate against Freeway from 5 September 2012. The proceedings had been commenced without proper pre-action engagement, by an incorrect claimant, for a claim of modest value, and were pursued to trial after a sensible settlement offer had been rejected.

5. Relief from the sanction under CPR 44.3B was granted in part. MFPL’s failure to serve form N251 was an oversight, but the required information was communicated to PMP by letter on 19 July 2012. There was no demonstrated prejudice from the form of communication. MFPL could recover the additional liability that would have been recoverable if form N251 had been served on that date.

6. Freeway was awarded interest on its allowed costs at 3 per cent over base rate, interim payments on account of costs were ordered, and Freeway was entitled to be indemnified from the trust assets to the extent its costs were not recovered from Mr Forstater or MFPL.