Argus Media Ltd v Halim

An indemnity costs order requires conduct that takes the case out of the norm. Unreasonable conduct must generally be unreasonable to a high degree; refusal of a reasonable settlement offer is not enough merely because the offer later appears advantageous or the opponent’s arguments fail. The test is applied without hindsight.

A payment on account of costs must be a reasonable estimate of likely recovery, allowing for uncertainty and relevant circumstances. Those circumstances include the parties’ means, recovery difficulties, the imminence of assessment, the prospects of appeal and the risk that payment may impede access to justice in continuing proceedings.

Argus Media Limited obtained judgment against Mr Mounir Halim on the principal issues concerning restrictive covenants in his employment contract. The court issued injunctions, but declined additional relief concerning confidentiality and springboard relief.

This judgment determined consequential matters, including costs, the basis of assessment, an interim payment on account, interest, directions for the outstanding quantum issues and continuation of an undertaking preserving evidence.

1. Costs. Argus was the substantially successful party. The starting point under CPR 44.2(2) was that costs should follow the event. Because Argus failed on some confidentiality relief and on springboard relief, the appropriate overall order was that Dr Halim pay 90% of Argus’s costs. The reserved application costs were apportioned separately, with 60% payable by Dr Halim.
2. Indemnity basis. The court applied Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879 and the principles discussed in F & C Alternative Investments (Holdings) Ltd v Berthelemy and another (No 3) [2013] 1 WLR 548. An indemnity order is exceptional and requires circumstances taking the case out of the norm. Conduct need not involve deliberate misconduct, but must be unreasonable to a high degree. Refusal of a settlement offer is assessed without hindsight and will rarely justify indemnity costs. Dr Halim’s conduct and refusal of Argus’s offer did not meet that standard, so costs were ordered on the standard basis.
3. Payment on account. Under CPR 44.2(8), the court considered the approach in John Kent v William Paterson-Brown [2018] EWHC 2830 and Excalibur Ventures LLC v Texas Keystone Inc [2015] EWHC 566 (Comm). The sum should ordinarily estimate likely recovery with an appropriate margin for error. Relevant factors included the continuing quantum proceedings, the possibility of appeal, Dr Halim’s uncertain means, recovery risks and the danger that payment might stifle his ability to participate in the litigation. The application was adjourned, with Argus at liberty to restore it.
4. Interest on costs was directed at 1.5% above base rate from payment, with the appropriate replacement date for judgment interest left for further determination. Directions were made for disclosure, a schedule of loss, witness evidence and a future case-management hearing. The agreed preservation undertaking was continued.

The judgment records that permission to appeal from the earlier judgment was refused on 29 January 2019. The present judgment determined consequential matters following that judgment; it was not itself an appellate decision.