Magmatic Ltd v PMS International Group Plc

Where an appeal substantially changes the result at trial, the appellate court may revisit the trial costs order. Costs should reflect the issues on which each party succeeded or failed, particularly where those issues were self-contained. The court should also consider the overall result, the parties’ relative costs and any settlement offers, and then make a fair and proportionate order. An overall winner need not recover all its costs where it lost material issues. Permission to appeal may be refused where the conclusion is specific to the case and raises no point of general public importance.

Magmatic Ltd v PMS International Group Plc concerned consequential orders after an appeal from Arnold J’s merits judgment in the Patents Court, reported at [2013] EWHC 1925 (Pat). The Court of Appeal had delivered its merits judgment on 28 February 2014. PMS had succeeded on substantial parts of the appeal, reversing the earlier position on the CRD claim, but had lost on four unregistered design rights and copyright in the safety notice. Arnold J’s separate costs ruling, reported at [2013] EWHC 4498 (Pat), had ordered PMS to pay 70% of Magmatic’s trial costs. The parties disputed the consequential trial-costs order, payment on account, permission to appeal and a stay of enquiries.

Disposition. PMS was awarded 45% of its trial costs. It was also awarded, on account, 50% of that proportion of its trial costs and 60% of its appeal costs. Permission to appeal to the Supreme Court and a stay of enquiries were refused.

1. Reassessment after appellate reversal. The Court treated PMS as the overall winner because it had prevailed on the CRD claim and several other claims, with the result that it could no longer be restrained from dealing in the Kiddee Case. This represented a substantial reversal of the position before Arnold J.
2. Issue-based assessment. PMS was not entitled to all its costs. The court had to reflect the issues on which Magmatic succeeded, including four of the six unregistered design-right claims and copyright in the safety notice. The court regarded the issues as sufficiently self-contained to justify a proportionate allocation and rejected both parties’ extreme approaches.
3. Relevant considerations. In reaching a fair and proportionate result, the court considered the earlier judge’s approach, the estimated costs attributable to different issues, the fact that PMS’s costs were approximately 50% higher, and the settlement offer made before trial. The offer received only slight weight.
4. Further applications. Permission was refused because the Court’s conclusion on the scope of the CRD and infringement was specific to the circumstances and raised no point of general public importance. A stay of enquiries pending any permission application was likewise inappropriate.

The parties were directed to agree and lodge a draft minute of order reflecting the ruling.

1. Court of Appeal (Civil Division): following its merits judgment of 28 February 2014, varied the consequential costs position by awarding PMS 45% of its trial costs and making the related payment-on-account orders. Permission to appeal and a stay of enquiries were refused. The present ruling is reported at [2014] EWCA Civ 408.
2. High Court of Justice, Chancery Division (Patents Court): Arnold J decided the merits in [2013] EWHC 1925 (Pat). In a separate costs ruling, he ordered PMS to pay 70% of Magmatic’s trial costs, reported at [2013] EWHC 4498 (Pat).