The Court of Appeal has ruled that the effect of a Calderbank offer is not the same as a part 36 offer, in a battle over a massive £19m in costs from an intellectual property dispute.
Mr Justice David Richards said the scale of the costs involved in the case “dwarf the great majority of civil claims, including most claims in the High Court”.
He said the jurisdiction of the courts to make costs orders following a Calderbank offer – an offer made without prejudice save as to costs – derived from CPR part 44.
“I accept that the broad terms in which the discretion conferred by part 44 is expressed comes at the price of some uncertainty and some scope for argument as to costs,” the judge said.
“It is in the nature of a discretionary remedy dependent on the particular circumstances of the case that there is more uncertainty than exists than where there is a rigid rule.
“But courts are well accustomed to dealing with those cases where it is arguable that the just result is not simply that the unsuccessful party pays the costs of the successful party in full.”
He concluded that it would be “contrary to the express terms of part 44” to read across into it a “rigid approach” drawn by analogy with part 36.
The court heard in Coward v Phaestos and others   EWCA Civ 1256 that the relationship between Dr Martin Coward, a mathematician and computer programmer, and his wife and business partner, Elena Ambrosiadou, broke down in 2009.
They had married in 1983, and started a quantitative trading business together in 1992. The judge described this as a “highly successful enterprise”, which was carried on through a number of firms he labelled collectively as IKOS.
He said that following the end of the relationship, Dr Coward, who had written the original software and made a significant contribution to its development, resigned and set up his own competing business.
“Each side alleged that the other was using software in which it owned the copyright,” David Richards J said. “Litigation ensued in a number of countries”.
Counsel for Dr Coward claimed that, since IKOS had failed to accept a Calderbank offer made in July 2012, it should pay his costs since that date.
Counsel for IKOS argued that the businesses did not have to show that they obtained “significantly more” at trial than the Calderbank offer. Relying on CPR 36.14 (1A), IKOS argued that “any advance on the terms of the offer” was enough to entitle it to costs.
Mr Justice David Richards ruled that the effect of a Calderbank offer was not to be assessed by analogy with the terms of CPR rule 36.14(1A), which defined a “more advantageous” judgment as one that was “better in money terms by any amount” than the relevant offer.
However, he agreed with the trial judge, Mrs Justice Asplin, that three aspects of the final order represented “substantial improvements” on the Calderbank offer.
Dismissing Dr Coward’s appeal, he said Asplin J’s exercise of the discretion vested in her by the rules “cannot in my judgment be faulted.”
David Richards J added that even allowing for “technical, factual and legal issues of some complexity”, the costs at stake seemed “very large” for a three-week trial.
He said that IKOS, which claimed more than twice the costs claimed by Dr Coward, would have to prove at assessment that they were “both reasonable and proportionate”.
Lord Justice Ryder and Lord Justice Moore-Bick agreed.