Photobooth Props Limited & Anor. v Nepbh Limited & Ors.

In IPEC proceedings, the general rule is that costs of an application made during the proceedings are reserved until trial under CPR 63.26(1). That rule creates a very strong presumption and applies equally to summary judgment and strike-out applications which determine particular issues. The court should assess costs at the end of the relevant phase, when overall proportionality and the significance of the interim success can properly be evaluated.

The exception in CPR 63.26(2) requires unreasonable conduct in the process of the court. Failure of an application, delay, tactical conduct, or the ordinary friction of litigation will not ordinarily suffice. The conduct must be truly groundless or fall outside the general cut and thrust of litigation.

The judgment concerned the costs consequences of three applications previously determined in [2022] EWHC 750 (IPEC). The claimants had obtained summary judgment on substance, ownership and infringement concerning five New Works, but not eight Assigned Works. The defendants’ strike-out and security for costs applications had been dismissed.

The claimants sought immediate payment and summary assessment of the costs of the determined issues and applications, relying on the defendants’ alleged unreasonable conduct. The defendants sought reservation of those costs until trial, with the case management conference costs treated as costs in the case. The central questions were whether CPR 63.26(1) required reservation of the costs and whether the exception for unreasonable conduct under CPR 63.26(2) applied.

1. Costs of the determined issues. CPR 63.26(1) creates a very strong presumption that costs of applications made during IPEC proceedings will be reserved to trial. The provision is not qualified by words such as “usually” or “generally”. It applies to all applications, including summary judgment and strike-out applications that determine one or more issues. The court rejected an interpretation which would create an exception for such applications.
2. Relationship with the general costs rules. CPR Part 44 remains applicable in IPEC, but CPR 63.26 provides the specific rule for application costs. The different rule forms part of the IPEC package of capped, proportionate and predictable costs. Assessment at the end of the relevant phase enables the court to judge the importance of interim success and the proportionality of the costs in the context of the claim as a whole.
3. Exceptional departure. An immediate costs order may be appropriate in an exceptional case, particularly where all or virtually all liability issues have been resolved and the court can fairly assess proportionality. The fact that costs fall within the applicable cap does not itself justify departing from CPR 63.26(1).
4. Unreasonable conduct. Under CPR 63.26(2), unreasonable conduct concerns behaviour in and towards the court process. The mere failure of an application is insufficient. A truly groundless application may qualify, but conduct forming part of the ordinary cut and thrust of litigation is unlikely to do so. The defendants’ delay, tactical responses, weak defence and unsuccessful applications did not meet that threshold.
5. The costs of all three applications were therefore reserved to trial under CPR 63.26(1). The costs of the case management conference were ordered to be costs in the case.

The judgment records the earlier determination of the applications in [2022] EWHC 750 (IPEC). The claimants obtained partial summary judgment, while the defendants’ strike-out and security for costs applications were dismissed. This judgment determined the consequential costs issues.