Trappit SA & Ors v GBT Travel Services UK Limited

Under Civil Procedure Rules 1998, r 38.6, discontinuance normally makes the claimant liable for the defendant’s costs. The claimant bears a high burden to show cogent reasons for departing from that rule. Practical, financial or tactical reasons, or the possibility that the claim might have succeeded, are insufficient. A change of circumstances will ordinarily need to result from unreasonable conduct by the defendant which provides a good reason for departure.

Indemnity costs are exceptional. They require conduct or circumstances taking the case outside the norm, assessed in the context of the litigation as a whole. Weak merits, pleading deficiencies and isolated procedural criticisms do not automatically justify indemnity costs.

The claimants discontinued civil proceedings alleging copyright infringement, misuse of confidential information and unlawful means conspiracy concerning software used in the travel industry. They sought to disapply the usual costs consequence under Civil Procedure Rules 1998, r 38.6(1), alleging that the defendant had delayed disclosure of source code and thereby unnecessarily prolonged the proceedings.

The defendant sought its costs on the indemnity basis. The court considered the history of related Spanish criminal proceedings, the English litigation, disclosure, pleadings, security for costs and the parties’ conduct. The central issues were whether the default discontinuance rule should be displaced and whether the litigation was sufficiently exceptional to justify indemnity costs.

1. Discontinuance costs. The claimants were required to pay the defendant’s costs under Civil Procedure Rules 1998, r 38.6(1). The rule creates a presumption in favour of the defendant, and the burden rests on the discontinuing claimant to establish a good reason for departure. The principles restated in Brookes v HSBC Plc [2011] EWCA Civ 354 were applied.
2. The claimants had not shown cogent reasons or unusual circumstances. The possibility that the claim might have succeeded was insufficient. Nor were practical, pragmatic or financial reasons enough. Although the defendant had not disclosed all relevant source code at the earliest possible stage, the claim did not turn solely on that disclosure. The Spanish proceedings, the pleadings, expert evidence, correspondence and the litigation chronology formed part of the relevant context.
3. The court was not conducting a trial, strike-out application or reverse summary judgment application. It was therefore inappropriate to determine whether the claim would have succeeded. The fact that the defendant had not applied earlier to strike out or obtain summary judgment was relevant, but not determinative.
4. Indemnity costs. Costs were assessed on the standard basis under Civil Procedure Rules 1998, r 44.3(1). The applicable question was whether the conduct or circumstances took the litigation outside the norm. The assessment had to be made globally, rather than by isolating individual criticisms or periods.
5. The litigation involved serious weaknesses and substantial procedural criticism, including inadequate pleadings, failure to follow pre-action conduct, the history of the Spanish proceedings and shortcomings in the infringement case. However, those matters, viewed in the context of the entire litigation, did not reach the level of significant unreasonableness or inappropriate conduct required for indemnity costs. The defendant’s application for indemnity costs was dismissed.

First-instance decision. No earlier appellate decision concerning this costs application is stated.