EDWARD CHRISTOPHER SHEERAN MBE & Ors v SAMI CHOKRI & Ors

The unsuccessful party will ordinarily pay the successful party’s costs. The court may take conduct into account, but a departure from that rule requires conduct which justifies such a consequence in the circumstances of the case. Pre-action conduct is assessed in context, including which party advanced the positive allegation and what information was reasonably available at the time. Deficiencies in disclosure or explanations will not ordinarily justify depriving a successful party of costs where they did not materially affect the litigation, particularly where separate interlocutory costs orders or detailed assessment can address the default. An agreed or approved costs budget is a sensible starting point for a payment on account, subject to an appropriate reduction for contingencies and possible variation on detailed assessment.

The claimants had succeeded in the underlying copyright proceedings. Declarations were granted and the defendants’ counterclaim was dismissed in the judgment handed down on 6 April 2022. The issue was whether the defendants should nevertheless avoid liability for the claimants’ costs because of alleged failures in pre-action engagement, disclosure, explanations concerning the creation of Shape, and responses to disclosure orders.

The court also determined the appropriate payment on account of costs, distinguishing between costs covered by an agreed budget and costs incurred before the budget. The central questions were whether the claimants’ conduct justified departing from the ordinary costs rule and what sum should reasonably be paid pending detailed assessment.

1. The claimants had won on every substantial point. Under Civil Procedure Rules 44.2(2)(a), the general rule was therefore that the defendants should pay their costs. An issues-based or proportionate order was not justified.

2. The court was entitled to take party conduct into account under the relevant costs provisions, but the alleged failures did not justify depriving the claimants of their costs. The defendants had advanced the positive allegation of infringement and had supplied only an expert report before proceedings. The claimants had clearly denied infringement and supplied expert evidence of their own.

3. There was no pre-action obligation to conduct a full disclosure exercise or searches equivalent to those required during litigation. The claimants were not required to provide all recordings, project files or a complete explanation of how Shape was written at that stage, particularly when the defendants themselves had provided no disclosure supporting access to Oh Why.

4. The disclosure problems concerning the project files were partly attributable to the claimants, but the defendants had not reviewed the earlier disclosure when provided. The alleged defaults did not materially change the course of the proceedings. Existing interlocutory costs orders and detailed assessment could address unreasonable or disproportionate costs, without changing the overall order.

5. The fact that songwriters might record sessions defensively did not create an obligation owed to potential claimants to make or preserve such recordings. The defendants’ continuing belief in infringement was not shown to result from the alleged disclosure failures.

6. The defendants were ordered to pay all the claimants’ costs, subject to detailed assessment. For the payment on account, the agreed budget was the starting point. Following the approach in Thomas Pink Ltd v Victoria’s Secret UK Ltd [2014] EWHC 3258 (Ch), 90% of the relevant budgeted costs was ordered. For incurred costs, an estimate subject to a margin for error justified payment of 55% of the relevant sum. The total payment on account was £916,200.