It’s as easy as WPSATC

In the recent case of Marcura Equities FZE & Anor v Nisomar Ventures Ltd & Anor [2018] EWHC 523 (QB), the court was required to consider the use of ‘without prejudice’ and ‘without prejudice save as to costs’ in determining what could be taken into consideration in deciding what order for costs to make. The use of these declarations form the cornerstone of modern day negotiation tactics but it is an all too common occurrence that fee earners do not fully appreciate the subtle difference between the two – and the implications of that.

On day 1, of what had originally been billed as a 5-day trial, for a claim relating to alleged unlawful disclosure and use of confidential information, and following an agreement on all issues other than costs, the court was required to deal with a number of challenges:

(1) What form of final order should the court make to dispose of the action?

(2) What, if any, order for costs should be made?

(3) What should be the basis of the assessment of costs? and;

(4) Whether there should be an interim payment on account of costs.

In the course of this, a further issue emerged relating to whether or not the court was entitled to receive evidence of what was said at a settlement meeting.

To give some context, it was alleged by the claimants that a former employee had provided the defendants with numerous items of confidential information belonging to it and that such information had subsequently been used by the defendants. A claim was brought for both injunctive relief and damages. The eventual settlement, reached by consent, included injunctive relief and £35,000 in damages but, notably, without an admission of liability.

In the course of the parties’ submissions on the issue of what, if any, order for costs should be made, the defendant sought to adduce evidence of discussions at a settlement meeting in February 2018, however, the claimant objected to this on the basis that the meeting was without prejudice. After exchanges, the parties eventually agreed that the meeting had proceeded on the basis that it had been deemed “not open but WP” but that it was not expressly discussed whether it was intended to extend to the issue of save as to costs.

HHJ Vineall QC remarked that “the distinction between WP and WPSATC is both real and important. The advantage of a purely WP meeting is that it can lead to the frankest possible discussion, without either party being worried that what they say might be used against it on costs. If such a meeting is purely WP, either party wanting to make an offer which might affect costs can put such an offer in a subsequent WPSATC letter” (Para 34).

Following consideration of the relevant authorities and hearing the parties’ submissions, the court was satisfied that there had been nothing in the circumstances which gave rise to a conclusion that the meeting was intended by both parties to be WPSATC and, perhaps conveniently for the court, it did not need to decide whether the Court of Appeal in Gresham Pension Trustees v Cammack [2016] EWCA Civ 655 held that WPSATC status can only ever be achieved by an express statement. Evidence as to what happened at the settlement meeting and the corresponding section of counsel’s skeleton argument was consequently ignored.

Thereafter, having regard to CPR 44.3 and the fact the claimants obtained substantively all the relief that they sought, it was ordered that the defendants do pay the claimants’ costs on the standard basis. In reaching the decision, the offer made by the defendants, alongside the level of damages recovered and the claimant’s conduct were considered. The defendants had argued that the £35,000 agreed for damages was so modest that it could not possibly be used as justification for a substantial costs claim (the claimants’ cost budget had been approved in the sum of £449,929 in December 2017).

Acknowledging the logical corollary that the more successful the claimants’ were in preventing the use of their confidential information, the lower the monetary recovery is likely to be, HHJ Vineall QC commented that: “In a confidential information case, where monetary claims are only a part, and sometimes one of the least important parts, of the relief sought, it will rarely if ever be right to focus only on the payment of money when determining a costs order” (Para 52).

The judgment also throws up a noteworthy approach to dealing with interim payments in cost managed cases, albeit an approach that will perhaps resonate more with paying parties than receiving parties. After accepting the fact that the approved budget total would reduce as the matter did not proceed to trial, the claimants, unsurprisingly, sought a high interim payment, relying upon the well-known authority of Thomas Pink v Victoria’s Secret [2014] EWHC 3258 (Ch) and, the more recent case of Triple Point v PYY [2018] EWHC 45 (TCC) in which 90% and 100% interim payments were allowed, respectively.

Accounting for the matter not reaching trial, the court made a rough and ready assumption on the effect this would have on the claimant’s cost budget – arriving at a figure of £330,000 compared to the approved figure of £449,929 within the Costs Management Order. Costs management had taken place late in the day and a substantial proportion of the claimants’ costs fell as incurred costs within the approved cost budget. In view of this, the court accepted that, as there was more scope to challenge incurred costs on assessment, a lower interim payment was more appropriate and ordered an interim payment of 70% be made.

Ultimately this judgment serves as a useful reminder to parties of the import distinction between WP and WPSATC, as well as, likely being a useful reference for paying parties seeking to argue for lower interim payments on cost managed cases.