THE GAME MUST BE WORTH THE CANDLE: ACTION STOPPED IN ITS TRACKS BECAUSE THE CLAIMANT HAD NOTHING TO GAIN

In IG Index Ltd -v- Cloete [2015] EWHC 3698 (QB) HHJ Richard Parkes QC (sitting as a judge of the High Court) struck out an action on the grounds that the claimant had nothing to gain.

KEY POINTS

  • The court found that the claimant had nothing to gain by the matter proceeding to trial.
  • The action was therefore stopped.  There was no need for a trial.

PRACTICE POINTS

  • This case emphasises the point that a litigant must always be aware of what they are likely to obtain from the litigation, and be prepared to justify that.
  • It is an interesting example of a court looking at the costs budget and decided that the trial costs of £70,000 were relevant in a case where a permanent injunction was not necessary and there was no real claim for damages.

THE CASE

  • The claimant brought an action against the defendant (an ex employee) alleging that he had confidential documents in his possession.
  • The defendant delivered up the documentation.
  • The defendant served Particulars of Claim alleging breach of contract, and unparticularised claim that the claimant had suffered loss and damage and a claim for relief, including delivery up.
  • The claimant’s evidence was that all relevant documents had been delivered up.

THE CLAIMANT’S APPLICATION

The claimant contended that the continuance of the action was not necessary.  The defendant did not have ready access to the documents and a permanent injunction was not required.

  • The costs budgets envisaged that £75,000 would be spent on a trial where the claimant had suffered no loss and where there was no evidence of any threat of misuse of the documents.
  • Any documents the defendant did have were subject to restraint being subject to the implied undertaking not to disclose documentation disclosed in litigation.

THE JUDGE’S FINDINGS

  • Even if the claimant obtained a permanent injunction at trial that injunction would not give it any greater protection than it already had.
  • The claim for damages, which remained unparticularised, had no substance.
  1. In the circumstances, it is very difficult to see how the claimant could obtain anything of value from a trial of this action. In my judgment, it would be wholly disproportionate to allow the time of the court to be taken up, and so much expenditure to be incurred, to so little purpose. In the words of Eady J, the game is not worth the candle

THE ORDER MADE

 “However, Mr Mayall was right to make the point that, if I was against him on this application, the order could be made on terms. The action is not being struck out ab initio as it was by Tugendhat J: the effect of this order will be simply that it will not go to trial. I will wish to hear counsel on the terms that should apply, and in particular on the question of costs.”

THE RELEVANT LEGAL PRINCIPLES

The judgment contains a summary of the relevant law.

APPLICABLE LAW

  1. There is no dispute as to the applicable law. Mr Hirst relies now, as he was not able to do before the Court of Appeal, on the line of authority which flows from the case of Schellenberg v BBC [2000] EMLR 296, a defamation action which was almost identical to two others which the claimant had settled on disadvantageous terms. Eady J regarded it as necessary to apply the overriding objective even in the context of litigation where there was a right to trial by jury. That required him to have regard to proportionality, and the possible benefits which might accrue to the claimant so as to render the expenditure of tens of thousands of pounds potentially worthwhile. The requirement of proportionality in the overriding objective obliged him to consider whether “the game is worth the candle“, and he concluded at p319:

“I am afraid I cannot accept that there is any realistic prospect of a trial yielding any tangible or legitimate advantage such as to outweigh the disadvantages for the parties in terms of expense, and the wider public in terms of court resources.”

  1. That approach was endorsed by the Court of Appeal in Wallis v Valentine [2003] EMLR 175, and in Jameel v Dow Jones & Co [2005] EWCA Civ 75; [2005] QB 946. Jameel was a defamation case in which the claimant accepted that there had been minimal publication of the article complained of within the jurisdiction. Lord Phillips MR, giving the judgment of the court, observed that even if the claimant succeeded in the action and was awarded a small amount of damages, it could perhaps have been said that he would have achieved vindication for the damage done to his reputation in this country, but both the damage and the vindication would have been minimal:

“[69] …. The cost of the exercise will have been out of all proportion to what has been achieved. The game will not merely not have been worth the candle, it will not have been worth the wick.

[70] If we were considering an application to set aside permission to serve these proceedings out of the jurisdiction we would allow that application on the basis that the five publications that had taken place in this jurisdiction did not, individually or collectively, amount to a real and substantial tort. Jurisdiction is no longer in issue, but, subject to the effect of the claim for an injunction that we have yet to consider, we consider for precisely the same reason that it would not be right to permit this action to proceed. It would be an abuse of process to continue to commit the resources of the English court, including substantial judge and possibly jury time, to an action where so little is now seen to be at stake.”

  1. The court then considered whether the continuance of the action could be justified for the sake of the claim for an injunction, but concluded that there was no likelihood of actionable repetition of the article complained of, and that in any event that remedy had not been the object of the action. The possibility of obtaining an injunction did not justify permitting the action to proceed. However, as Mr Mayall observed, the case shows (see [74]) that there may well be justification for pursuing proceedings for an injunction even when libel damages are likely to be small. That would require the claimant to show a threat or real risk of wider publication.
  2. It appears from (for instance) the decision of the Court of Appeal in Sullivan v Bristol Film Studios Ltd [2012] EWCA Civ 570; [2012] EMLR 27 that the Jameel principle has been applied outside the confines of the law of defamation. Sullivan was a copyright claim brought against the defendant, which the claimant (described as a hip-hop artist) had commissioned to produce a video to accompany a recording of one of his songs. The defendant was to be paid by profit share from sales of the video, and uploaded the finished product on to YouTube. The claimant did not like the video, and complained that it had been uploaded without his consent, infringing his copyright and his performance and moral rights. The defendant removed the video from YouTube after five days and destroyed all copies of it. The claimant nonetheless issued a claim against the defendant, claiming that the value of his claim was £800,000. The judge struck the action out on the grounds that even if it succeeded, the maximum possible recovery was £50, there was nothing to be gained by the claim for an injunction (all copies of the video having been destroyed except for one copy in the hands of the defendant’s solicitors for the purposes of the proceedings, which they were willing to undertake not to use), and the costs of fighting the action were out of all proportion to the amount which the claimant was likely to recover. The claimant’s appeal was dismissed. There was a real prospect of success, but despite that, the recoverable damages would have been very modest and the amount of the court’s time that would be taken up in determining the case would have been disproportionate.
  3. Citation plc v Ellis Whittam Ltd [2013] EWCA Civ 155 was a claim in slander and malicious falsehood based on words alleged to have been spoken by an employee of the defendant about the claimant, its competitor. The only issue of importance to the claimant was an injunction, the critical question being whether there was an arguable case that there was a real risk of repetition of the alleged slander. The defendant had offered an undertaking to use reasonable endeavours to ensure that there was no repetition. The Court of Appeal concluded that there was no material before the court from which it could be inferred that there had been any further publication or that there would be in the future. Moreover, there was no substance to the claim for damages. It would not have been proportionate to allow the claim to proceed to trial.
  4. Mr Hirst referred also to Lilley v DMG Events Ltd [2014] EWHC 610 (IPEC), a copyright claim by a technical writer who licensed his material to a specialist publisher. His articles were licensed by the defendant to a third party without the claimant’s permission. He put an inflated value on them. The defendant applied successfully to strike out on Jameel grounds. The judge found that the maximum quantum of damages was £83 and that there was no value in an injunction, the last actionable infringement having taken place eight years earlier.

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