A Khan Design Ltd v Horsley & Anor

Failure to comply with directions for costs submissions or election of an inquiry may justify striking out the outstanding claim where the breach is serious, there is no good reason for it, and the delay causes material prejudice or renders the proceedings disproportionate. The court applies the three-stage approach in Denton v White: assess seriousness and significance, identify the reason, and consider all the circumstances. Efficient conduct and compliance with orders are central considerations under Civil Procedure Rules 1998, rule 3.9. Prolonged inactivity, unsupported by inability to fund the litigation, may amount to an abuse of process.

The claimant had succeeded at trial in an action concerning infringement of United Kingdom and Community registered designs for motor-car wheel hubs. The court ordered disclosure, followed by the claimant’s election between an inquiry as to damages and an account of profits. It also directed an exchange of written costs submissions.

The claimant failed to make the required election, seek further information within the prescribed period, or advance proper costs submissions. After approximately two years of inactivity, it sought to pursue both the damages inquiry and its costs claim. The defendants applied to strike out those outstanding claims.

1. The application was granted. Further pursuit of the claimant’s claims for costs and for an inquiry as to damages was struck out.
2. The claimant’s letter asserting entitlement to costs because it had succeeded at trial was not a costs submission. It did not address the bills, justify the claimed costs, or engage with the defendants’ position.
3. Applying the three-stage approach in Denton v White, the court found the breaches serious and significant. The claimant had failed for about two years to comply with straightforward directions, causing the defendants substantial forensic and practical disadvantage and depriving the trial judge of the contemporaneous understanding needed to assess costs fairly.
4. The claimant had no good reason for the default. Its solicitors lacked sufficient insurance funding, but there was no evidence that the claimant could not provide funds itself. The claimant could have sought an extension or further directions, but did neither.
5. Considering all the circumstances, including the need for efficient litigation at proportionate cost and compliance with court orders under rule 3.9 of the Civil Procedure Rules 1998, continuation of either claim would be unacceptable and an abuse of process.
6. The same reasoning applied with particular force to the damages inquiry. The order provided machinery for obtaining further information, but the claimant did not use it within the prescribed period. The modest likely value of the claim, the passage of time, and the prospect of disproportionate costs made continuation unfair to the defendants.