Innovate Pharmaceuticals Limited v University of Portsmouth

Although the general rule is that an unsuccessful party pays the successful party’s costs, the court has a broad discretion under CPR rule 44.2 to make a different order. It must assess all the circumstances, including whether it was reasonable to pursue the application, the parties’ conduct, and partial success on discrete issues.

Where a party successfully resists an application, but the application was initially meritorious and its opponent’s late amendment, delay, and failure on a substantial issue increased costs, a no-order-as-to-costs order may be fair. A refusal to mediate is not unreasonable merely because mediation was proposed.

The defendant had applied for security for costs under CPR rule 25.13. The court had dismissed that application because the claimant had a high probability of success on claims arising from the publication of the Cancer Letters Paper. The claimant had, however, failed to establish that its after-the-event insurance policy answered the application.

This costs judgment determined the costs of the unsuccessful security application. The defendant submitted that it had reasonably pursued a meritorious application until the claimant advanced an amended case. The claimant relied on its overall success, the defendant’s refusal to mediate, and the defendant’s non-disclosure of a disciplinary report.

1. The application was dismissed with no order as to costs. Each party was to bear its own costs of the security-for-costs application.

2. Under CPR rule 44.2, the general rule that the unsuccessful party pays the successful party’s costs remains subject to the court’s broad discretion. The court must consider all the circumstances, including conduct and whether a party succeeded only in part.

3. The claimant had succeeded in resisting the application on its merits. That was a significant factor. However, the defendant had reasonably made and pursued an initially meritorious application because the pleaded case did not include the claim based on publication of the Cancer Letters Paper. That claim became material only through the claimant’s application to amend.

4. The claimant’s delay in supplying financial information and evidence, and in producing its after-the-event policy, had increased costs. A significant proportion of costs concerned that policy, on which the claimant had failed. These factors justified departing from the ordinary costs rule, but did not justify dividing costs at the date proposed by the defendant. Selecting such a date would have been arbitrary and would have allowed the defendant most of its costs despite its knowledge of the amended case.

5. The defendant’s refusal to mediate before the hearing was not unreasonable. The timing and utility of mediation depend on several factors, and mediation would not necessarily have avoided the application costs. Non-disclosure of the disciplinary report was not found unreasonable, although proper consideration of it might have led the defendant to reassess the application.

not stated in the judgment.