Martin & Anor v Kogan & Ors

In the Intellectual Property Enterprise Court, a successful claimant’s Part 36 offer may override the usual capped-costs regime. The court should generally give effect to that incentive, but must exercise its discretion to avoid injustice. The usual approach is to increase each stage cap by 25% and raise the overall liability cap to £62,500, subject to the circumstances of the case. A successful defendant’s Part 36 offer does not ordinarily raise the IPEC stage or overall caps. A Part 20 claim is a separate claim for costs purposes and has separate stage and overall caps. Parties to a Part 20 claim must take especially reasonable steps to minimise duplicated costs.

The judgment concerned the form of order and costs following an earlier decision in which the First Claimant was declared the sole author of the screenplay, the copyright claim failed, and the counterclaim and Part 20 claim were dismissed. The main issue was the effect of competing Part 36 offers within the IPEC capped-costs regime.

The court also considered whether a Part 20 claim shared the costs caps applying to the principal proceedings, and how the offers should affect the costs actually awarded.

1. Successful claimant’s offer. The court declined to reverse Phonographic Performance Limited v Hagan, [2016] EWHC 3076 (IPEC); [2017] FSR 24. Rule 36.17(4)(b) could override the IPEC costs caps where a claimant beat its Part 36 offer.
2. Implementation. Applying the discretion in rule 36.17(4), the usual result, absent serious misconduct or other circumstances making it unjust, is a 25% increase in each stage cap and an overall liability cap of £62,500. The additional amount under rule 36.17(4)(d) remains outside the costs cap. The court must consider all the circumstances, including the offer’s terms and timing, available information, conduct concerning information, and whether it was a genuine attempt to settle.
3. Successful defendant’s offer. A successful defendant’s Part 36 offer gives costs from expiry of the relevant period, but does not raise the IPEC stage or overall caps. Removing the caps for defendants would unfairly rebalance the regime.
4. Part 20 claim. A Part 20 claim is a separate claim for the purposes of rule 45.31 and attracts separate stage caps and a separate overall cap. A defendant to a Part 20 claim must take especially reasonable steps to avoid duplicated work. Depending on conflicts, the claimant’s counsel or legal team may represent the Part 20 defendant.
5. The February 2016 offer entitled the Claimants to their capped costs, including pre-action costs, with interest. The September 2017 offer was made less than 21 days before trial and had no effect. The Part 20 Defendants recovered costs and interest, but not the costs of the trial and judgment. Ms Kogan was ordered to pay the Claimants £50,790 and the Part 20 Defendants £25,820, in each case plus interest.

Not an appeal. The judgment followed the court’s earlier merits judgment in the same proceedings, in which the First Claimant was declared the sole author of the screenplay, the copyright claim failed, and the counterclaim and Part 20 claim were dismissed.