IG Index Ltd v Cloete

Where proceedings are stopped before trial because continuation would be disproportionate, costs do not automatically follow the party who obtained that order. The court must make a fair assessment in the circumstances, without conducting a mini-trial on unresolved merits. Relevant considerations include the strength of the parties’ respective positions, the conduct of the litigation, reasonable offers, undertakings, and the practical significance of developments that removed the need for injunctive relief. A claimant may reasonably continue proceedings where no satisfactory undertaking is offered and an interim injunction has been obtained. A defendant’s unreasonable refusal of a sensible settlement offer may justify awarding the claimant a substantial proportion of its costs, while costs attributable to a discontinued claim may be treated separately.

The claimant, an online spread-betting business, sued its former employee concerning confidential client information that he had received from the Information Commissioner’s Office. Interim injunctive relief was granted. The defendant later obtained an order preventing the action from proceeding to trial because, following expert evidence and the deletion of the relevant files by the ICO, continuation would have been disproportionate: [2015] EWHC 3698 (QB).

The present judgment determined the consequential costs. The court considered the parties’ offers, the interim relief, the unresolved merits, the defendant’s failure to offer an unconditional undertaking, and the claimant’s discontinued claim under the Copyright and Rights in Databases Regulations 1997.

1. Costs following termination before trial. The order preventing the action from proceeding did not determine the merits and did not automatically entitle the defendant to the costs of the action. The court had to assess costs fairly in the round, while avoiding any mini-trial.
2. The claimant had strong material concerning the defendant’s knowledge and conduct. A permanent injunction remained a realistic possibility until the ICO’s deletion of the relevant files made further access impossible. The claimant therefore had little choice but to proceed in the absence of a satisfactory permanent undertaking.
3. The defendant’s conditional offer in September 2013 was not sufficiently satisfactory. His failure to offer an unconditional undertaking was unreasonable, given his asserted lack of any legitimate interest in using the information after the employment proceedings ended.
4. The claimant’s March 2015 offer provided a sensible and substantially discounted route out of the litigation. The defendant took a calculated gamble in rejecting it and did not do better. That conduct supported a substantial costs award to the claimant.
5. Applying the principle that success on an interlocutory or terminating application does not necessarily determine entitlement to all costs, as illustrated by Cammish v Hughes [2012] EWCA Civ 1655; [2013] EMLR 13, the claimant was awarded three quarters of its costs of the action on the standard basis up to 4 December 2015. Costs arising from the discontinued regulatory claim were payable by the claimant to the defendant.
6. The defendant was awarded £12,000 including VAT for the application on which he succeeded. The claimant was awarded £6,000 including VAT, representing three quarters of the costs of the June 2016 hearing. Existing costs orders remained in force.

The judgment records earlier procedural steps in the same litigation:

• Court of Appeal: On 31 July 2014 the claimant’s appeal from the order preventing use of disclosed documents was allowed, with the defendant ordered to pay 75% of the relevant costs.
• High Court: On 21 December 2015 the action was ordered not to proceed to trial because continuation would have been disproportionate: [2015] EWHC 3698 (QB).
• High Court (Queen’s Bench Division): The present judgment determined the consequential costs.