Taxo A1 Inc v Tahir

At the interim-injunction stage, the court should not determine the merits. It should apply the American Cyanamid sequence: identify a serious issue to be tried, consider the adequacy of damages for the claimant and defendant, and reach the balance of convenience only if necessary. The usual costs order on an interim-injunction application is costs reserved. A costs order in the claimant’s favour at that stage requires special factors, such as a clear case on the merits or an especially clear balance of convenience. The discretion remains case-specific. Substantial costs and the absence of pleaded particulars may weigh strongly against deciding costs before the merits are determined.

The claimant brought proceedings alleging breaches of several agreements and sought interim and permanent injunctive relief, specific performance, declarations, damages and other remedies. Before service of Particulars of Claim or a Defence, the court granted an interim injunction requiring disclosure concerning the location and use of the claimant’s property and electronic systems.

The subsequent hearing concerned only the costs of that interim application. The claimant relied on Wingfield Digby v Melford Capital Partners (Holdings) LLP. The central issue was whether the circumstances justified departing from the usual order that costs be reserved pending determination of the merits.

1. Interim injunction. The court had applied the principles in American Cyanamid Co v Ethicon Ltd. There was a serious issue to be tried, but the merits were not determined. Damages would not have been an adequate remedy for the claimant if it succeeded at trial. Conversely, damages would have been adequate for the defendant if his case were ultimately established, particularly because the claimant offered a cross-undertaking in damages and appeared able to meet it. The balance of convenience therefore did not arise.
2. Costs principles. The guidance in Wingfield Digby v Melford Capital Partners (Holdings) LLP and Picnic at Ascot v Kalus Derigis recognised that costs may be awarded against a defendant at the interim stage where the merits are straightforward and clear, or where the balance of convenience is so clear that the defendant should not have contested the application. Those circumstances were absent here.
3. The application involved a one-day hearing, despite a shorter estimate, and the claimant sought more than £131,000 in costs. The claim remained at its earliest stage, with no Particulars of Claim issued or served and no Defence filed. The defendant’s failure to consent to limited relief did not establish a special factor, since the claimant would probably have continued to seek the remaining relief.
4. The usual order was therefore appropriate. Costs were reserved. The claimant remained entitled to seek costs later, including on a summary-judgment application or at trial, when the court would have the full picture.