Fenty & Ors v Arcadia Group Brands Ltd & Anor

In a passing-off claim, costs ordinarily follow the outcome on liability. A claimant who establishes the material misrepresentation founding the claim may be treated as the winner even where the injunction granted is narrower than the relief sought. The court need not defer costs merely because goods have sold out, future passing off appears unlikely, or undertakings were offered, where those offers do not match or improve upon the injunction. The judge must consider relevant correspondence and relief, but an appellate court will not interfere with a costs order falling within the broad range of a reasonable exercise of discretion.

The claimants succeeded before Birss J in a passing-off action concerning the defendants’ sale of t-shirts and were awarded their costs. The defendants appealed, arguing that the claim pursued a broad image right, the t-shirts had sold out, further passing off was unlikely, undertakings had been offered, and the injunction granted was limited to the particular t-shirts. The Court of Appeal had already determined the liability appeal in [2015] EWCA Civ 3. The costs appeal, determined on written submissions, concerned whether the trial judge should have deferred the costs decision or substantially reduced the claimants’ recovery.

1. Appeal dismissed. The Court of Appeal, in a judgment delivered by Kitchin LJ, held that the trial judge had not erred in ordering the defendants to pay the claimants’ costs.
2. The central question for costs was whether the defendants were liable for passing off. That required determining whether their activities amounted to a material misrepresentation. The claimants won that issue and were properly treated as the successful parties on liability.
3. The fact that the judge granted a narrower injunction than the claimants sought did not alter that conclusion. The injunction restrained repetition of the activity on which the claim was founded, namely activity which the defendants maintained they were entitled to carry out.
4. The Court accepted that the defendants’ t-shirts had sold out, that further passing off might have appeared unlikely, and that undertakings had been offered in without-prejudice correspondence. However, the undertakings did not better or match the injunction ultimately granted. Their deficiency could not be remedied later. There was therefore no justification for deferring the costs of the trial on liability.
5. The judge had considered the relevant matters, including the correspondence, the relief granted and the outcome on liability. His decision to make the normal costs order fell well within the bounds of the wide discretion entrusted to him. The appellate court found no basis for interference. The parties were directed to draw up an agreed final order reflecting this ruling and the liability judgment in [2015] EWCA Civ 3.

• Court of Appeal (Civil Division): In this judgment, [2015] EWCA Civ 38, the court dismissed the defendants’ costs appeal.
• High Court of Justice, Chancery Division: Birss J found the defendants liable for passing off and made the normal order that they pay the claimants’ costs in [2013] EWHC 2310 (Ch).
• Court of Appeal (Civil Division): The liability appeal had previously been determined in [2015] EWCA Civ 3, before the costs appeal was decided.