EasyGroup Limited v Easyfundraising Limited & Ors

Indemnity costs are justified where a party conducts litigation outside the ordinary and reasonable conduct of proceedings. Strong feeling and hard-fought commercial litigation are insufficient by themselves. Relevant factors may include pursuing weak, speculative or far-fetched allegations; repeatedly changing the pleaded case; maintaining serious allegations without evidential foundation; unnecessarily complicating the proceedings; and joining a party to exert commercial pressure. On an indemnity assessment, the paying party bears the burden of proving that costs were reasonable and the requirement of proportionality does not apply.

The court had previously ordered EasyGroup Limited to pay the defendants’ costs of the claim and counterclaim. The issue was whether those costs should be assessed on the standard basis or the indemnity basis.

The defendants relied on the history and conduct of the litigation, including the absence of proper notice before proceedings were revived, repeated changes to the claims, weak allegations under section 10(3) of the Trade Marks Act, failure to adduce material evidence, the unjustified joinder of Palatine Private Equity LLP, and the pursuit of the claim to trial.

1. Indemnity costs. The relevant question was whether the claimant had conducted the litigation unreasonably, in a manner outside the ordinary and reasonable conduct of proceedings. Commercial hostility and hard-fought litigation were not, without more, sufficient: [4].
2. The court adopted the principles summarised in Three Rivers DC v Governor and Co of the Bank of England [2006] Costs LR 714. The inquiry concerned unreasonableness rather than conduct deserving moral condemnation. The court could consider conduct before and during trial, including whether particular allegations were reasonably raised and pursued. Speculative, weak, opportunistic or thin claims could justify indemnity costs: [5].
3. The claimant had pursued an unnecessarily complicated and burdensome case. In particular, the section 10(3) allegations had been raised, amended and pursued unreasonably. Allegations of detriment to repute and taking unfair advantage lacked proper evidential support, and the latter serious allegation was abandoned only at the opening of trial: [13]-[17].
4. The claimant had failed to call material evidence explaining the alleged damage, making the claim weak from the outset. Palatine had been joined without a proper basis for joint tortfeasance and in order to exert commercial pressure. These matters, taken together with the other conduct identified, justified indemnity costs: [18]-[23].
5. On an indemnity assessment, the burden of proving that costs were reasonable or unreasonable shifted to the paying party. Proportionality did not apply. Both consequences were justified by the expense caused by the claimant’s conduct and the commercial objective pursued: [24].