Link Up Mitaka Ltd (t/a Thebigword) v Language Empire Ltd & Anor

Where a party’s conduct amounts to an abuse of the court’s process, CPR 45.30(2)(a) requires the IPEC scale costs scheme to be disapplied. The court is not required first to decide whether the case is truly exceptional. That threshold applies to the court’s separate discretion to lift the IPEC costs cap for unreasonable conduct. Abuse may arise where dishonest or obfuscatory conduct materially obstructs the quantification of loss, causes disproportionate additional costs, or prevents the court from fairly assessing damages. A finding of abuse is distinct from ordinary unreasonable litigation conduct, such as resisting disclosure, seeking reallocation, or making a low settlement offer.

The claimant had obtained judgment in default for trade mark infringement and passing off arising from the defendants’ use of websites intended to divert potential customers. Following an inquiry into damages, the claimant sought costs on the indemnity basis and argued that the defendants’ conduct amounted to an abuse of process. The court had already awarded indemnity costs and summarily assessed them at £98,260, together with interest. The issue addressed in writing was whether the IPEC scale costs scheme and its caps should be disapplied under CPR 45.30(2)(a).

1. The scale costs scheme under Part 45, Section IV of the Civil Procedure Rules did not apply where the defendants had behaved in a manner amounting to an abuse of process. Under CPR 45.30(2)(a), that was a determination required by the rule, not an exercise of discretion. The court therefore disapplied the scale costs caps and limits.

2. The court distinguished this statutory consequence from the general discretion under Part 44 to lift the IPEC phase caps or overall cap for unreasonable conduct. The latter discretion should be exercised only in a truly exceptional case, as explained in Westwood v Knight, Henderson v All Around the World Recordings Ltd and F H Brundle v Richard Perry and Ors. That stringent threshold did not govern a finding of abuse under rule 45.30(2)(a).

3. Following Hunter v Chief Constable of the West Midlands Police, abuse may exist where conduct is manifestly unfair to another litigant or brings the administration of justice into disrepute. The defendants’ dishonest and obfuscatory conduct obscured the true number of diverted enquiries and sales, hindered the assessment of damages, forced the claimant to incur substantial additional costs, and prevented a fully just assessment.

4. Resistance to specific disclosure, an application to transfer the matter to the Small Claims Track, and a low settlement offer were insufficient by themselves. They became relevant only in the wider context of the dishonest and obstructive conduct. The scale costs scheme was accordingly disapplied, and indemnity costs were awarded.

The judgment was a first-instance costs decision following the court’s earlier damages judgment in the same proceedings, cited as [2018] EWHC 2633 (IPEC).