Gap Group North East Limited v Paul Palmer

Under Civil Procedure Rules 1998, the unsuccessful party will ordinarily pay the successful party’s costs. A substantial shortfall between damages claimed and damages recovered does not necessarily prevent a claimant from being the successful party, particularly where the claimant obtained important injunctive relief and judgment for damages. Costs on the indemnity basis require conduct sufficiently unreasonable to justify departing from the standard basis. A party who rejected an appropriate settlement offer may be unable to rely on the modest damages recovered to resist a full costs order, especially where it could have protected its position through a Part 36 payment or offer.

This supplementary judgment concerned the consequential orders following the court’s main judgment of 1 December 2023. The claimant had obtained a final permanent injunction and an award of damages, although it had succeeded on only one of four pleaded heads of claim and recovered approximately 3.6% of the damages originally claimed.

The court was required to determine the terms of the injunction concerning delivery up of confidential documents and emails, and the appropriate costs order, including whether costs should be apportioned or awarded on the indemnity basis.

1. The final injunction was to require the defendant to deliver up the emails containing confidential documents which he had sent to himself. If he was unable to do so because the emails had been deleted, he was permitted to explain that position in the required affidavit. The explanation had to state fully when and how the emails were deleted. The claimant was given liberty to apply if the explanation was inadequate or untenable.
2. Under Civil Procedure Rules 1998, r 44.2, the claimant was the successful party and was in principle entitled to its costs. The fact that the claimant had failed on its principal damages claim and recovered substantially less than claimed did not alter that conclusion. The claimant had obtained significant injunctive relief and a judgment in damages.
3. The defendant’s conduct, although at times unreasonable, was not sufficiently unreasonable to justify indemnity costs. The claimant was entitled to its costs on the standard basis.
4. The claimant’s earlier offers were relevant. In particular, the defendant should have accepted the offer of 1 March 2022 because the allegations he was required to withdraw had been found to be untrue. The defendant could have protected himself against costs consequences by making an appropriate Part 36 payment or offer.
5. The defendant was ordered to pay an interim sum of £50,000 on account of the claimant’s costs, rather than the £100,000 sought.

Not stated in the judgment.