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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Elsevier Ltd v Munro (Supplementary Judgment) [2014] EWHC 2728 (QB) (31 July 2014) URL: http://www.bailii.org/ew/cases/EWHC/QB/2014/2728.html Cite as: [2014] EWHC 2728 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		31/07/2014

Mr Justice Warby:

1. This judgment is supplemental to the main judgment in this action, handed down today following the trial of the issues of liability and injunctive relief in this action. The main judgment explains the nature of the claim and my conclusion, which was that the Claimant is entitled to an injunction restraining the Defendant from joining another company, Cengage, prior to the expiry of the 12 month notice period in his contract of employment in April 2015. The consequential orders have been largely agreed, but there are two outstanding matters for decision. The parties have made written submissions on these and consented to my dealing with them on the papers, without a hearing.
2. The first matter is an application by the Claimant for an order for the payment by the Defendant of an additional amount pursuant to CPR 36.14(3)(d). The application arises in this way. The claim form was issued on Wednesday 4 June 2014. On Monday 9 June the Claimant made a Part 36 offer to settle the claim on the basis that the Defendant would be allowed to join Cengage with effect from 1 January 2015. Time for accepting that offer expired on Monday 30 June 2014. The trial started on Wednesday 9 July 2014, a month after the offer. It concluded on Wednesday 16 July, 6 weeks after the issue of the claim form. I found that the Claimant is entitled to restrain the Defendant from joining Cengage until 11 April 2015 and it is agreed that judgment should be entered accordingly. The judgment obtained by the Claimant therefore falls within the scope of CPR 36.14(1)(b). It is a judgment "at least as advantageous to the claimant as the proposals contained in a claimant's Part 36 offer".
3. The consequences are prescribed by CPR 36.14(3), which provides so far as relevant that:-

"…. where rule 36.14(b) applies, the court will, unless it considers it unjust to do so, order that the claimant is entitled to

…

(b) costs on the indemnity basis from the date when the relevant period expired;

(c) interest on those costs at a rate not exceeding 10% above base rate; and

(d) an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below to an amount which is –

(i) where the claim is or includes a money claim, the sum awarded to the claimant by the court;

(ii) where the claim is only a non-monetary claim, the sum awarded to the claimant by the court in respect of costs."

The prescribed percentage for the purposes of CPR 36.14(3)(d) is, where the award is up to £500,000, 10% of the amount awarded and, where the award is above £500,000 up to £1,000,000, 10% of the first £500,000 and 5% of any amount above that figure.

4. As regards sub-paragraphs (b) and (c) of CPR 36.14(3) the appropriate order has been agreed: the Defendant will pay costs on the indemnity basis and interest on those costs at 4.5% above Bank of England base rate from time to time from 1 July 2014 to the date of payment. Sub-paragraph (d) of CPR 36.14 was introduced in 2013 pursuant to the Jackson reforms because it was considered by Jackson LJ that under the previous regime "the claimant was insufficiently rewarded and the defendant insufficiently penalised when the claimant has made an adequate offer": Review of Civil Litigation Costs: Final Report, December 2009 para 3.9 p425. The Claimant applies for an additional amount pursuant to CPR 36.14(d) in the prescribed percentages, calculated by reference to the sum awarded in respect of costs. The Defendant resists the Claimant's application submitting first, that the Claimant is not entitled to such an order, and secondly and in the alternative that it would be unjust to make that order.
5. The point made by the Defendant in support of his first argument is simple: the pleaded claim includes a claim for damages and hence it is sub-paragraph (d)(i) and not (d)(ii) that applies, and no additional amount can be recoverable by reference to costs. To this the Claimant counters that the damages claim was only ever contingent, to be pursued only if injunctive relief was not granted until 10 April 2015. Since that relief has been granted the claim does not include a money claim. The Claimant is correct to say that the damages claim was only ever an alternative. Paragraph 32 of the Particulars of Claim stated that "unless [the Defendant is] so restrained by the Court until and including 10 April 2014, the Claimant will suffer loss and damage". The prayer for relief sought "damages for breach of contract as set out at §32 herein". In the light of my conclusions that claim has not been pursued.
6. The question arises of what is meant by "the claim" in CPR 36.14(3)(d)(i) and (ii). If those words refer to the entire claim as advanced in a claim form or Particulars of Claim then the pleaded claim in this case is one which "includes a money claim". It seems to me, however, that the language of the sub-paragraph directs attention to the time at which the court is deciding whether to order payment of an additional amount and that "the claim" means the claim in respect of which the court has given the judgment which is more advantageous than the offer. Moreover, if the Defendant's submission was right then in any case where the principal claim is for an injunction but damages are claimed in the alternative a defendant enjoined after refusing a reasonable offer of settlement under Part 36 would have no exposure to any additional liability. By losing on the injunction claim the defendant would eliminate any liability in damages and consequently any exposure to the additional amount. That cannot have been the intention.
7. Would it be unjust to order the Defendant to pay an additional amount pursuant to sub-paragraph (d)(ii)? CPR 36.14(4) provides that in considering whether the award of an additional amount would be unjust the court "will take into account all the circumstances of the case" including four specified matters namely:-

"(a) the terms of any Part 36 offer;

(b) the stage in the proceedings when any Part 36 offer was made, including in particular how long before the trial started the offer was made;

(c) the information available to the parties at the time when the Part 36 offer was made; and

(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated."

8. Here, the Claimant cannot be and is not criticised for the terms of its Part 36 offer, or for delaying in making that offer, or for withholding any information relevant to the evaluation of the offer. The Defendant does complain of what he says is the "extraordinary" level of the costs claimed by the Claimant. I do not believe, however, that the mere scale of the costs claimed can have a bearing on the decision I have to make. Those costs will be assessed if not agreed, and no more than a reasonable sum will be payable.
9. There is more force in some of the Defendant's other submissions. He says that the compressed timescale of these proceedings means that the Claimant's offer was made close to trial, with the result that there was little time for negotiation and in any event he did not have the Claimant's witness statements available until 30 June 2014, the last day for acceptance of the offer. This makes any criticism of him for failing to settle less cogent, he suggests. The proximity of the offer to the trial also means, submits the Defendant, that an order for an additional amount would have a disproportionate and unjust effect. Unlike the provision for interest on costs the additional amount would not be tied to the timing of the offer but has an "all-or-nothing" effect.
10. In the circumstances of this case the effect of an order for an additional amount would be twofold. First, it would add a penal element in relation to costs incurred in the period from 1 July 2014 onwards. In addition to compensating the Claimant on the indemnity basis for costs incurred over that period, and paying interest on those costs at 4.5% above base rate, the Defendant would pay an additional sum of up to 10% of the costs awarded. The intention of this provision was to penalise a defendant for failure to accept a reasonable offer in time. The rule clearly contemplates such consequences which are not unjust within the meaning of the rule.
11. In addition, however, such an order would impose on the Defendant a substantial additional liability in respect of costs incurred before 1 July 2014. Some of those costs were incurred before any offer was even made. The majority were incurred during the 21 day period allowed to the Defendant to consider the Claimant's Part 36 offer. Due to the shortened timescale of the action it is during that period that statements of case, disclosure and witness statements were exchanged. In the absence of an additional liability order the Claimant will recover costs in respect of this period on the standard basis. The additional liability order would add 5- 10% to the amount of those costs. Its effect would be to impose a liability close to or possibly greater than that which would flow from an indemnity costs order.
12. It may be that in some cases it would be just to impose such a liability on a defendant. That might be so, for instance, if a claimant made a Part 36 offer which ought to have been seen immediately as at least equal to the best outcome the defendant could reasonably expect. That is not this case, however. Although it failed, the Defendant had a legitimate argument for a shorter period of restraint. Moreover, it would be unduly harsh to criticise the Defendant for failing to accept the offer promptly given the pace with which the proceedings were advancing, the pressures imposed by that pace, and the late stage during the 21 days at which he obtained sight of the Claimant's statements. The imposition of an additional liability would therefore involve an element of penalty that I do not consider it just to impose on this Defendant and I decline to make an order for an additional amount.
13. The second outstanding matter is the Defendant's application for permission to appeal. It is submitted that I approached the exercise of my discretion to grant or refuse or limit the scope of an injunction on the wrong basis in that (a) I did not apply a principle identified in GFI Group v Eaglestone [1994] IRLR 119 that the Court should not grant any more relief than is absolutely necessary; and (b) I declined to apply the principle that any injunction should go no wider than a reasonably drawn post-termination restraint. I do not consider those grounds have any real prospect of success and I refuse permission to appeal.