Is it unjust for a plaintiff, who wins a permanent injunction at trial to be fixed with the costs of an unsuccessful interlocutory injunction application which would have been granted if all the evidence had been available at the interlocutory stage of the litigation?
This was the question for the High Court in Ryanair DAC v Skyscanner Ltd.1 In those proceedings, Ryanair sought a permanent injunction restraining Skyscanner from facilitating the sale of Ryanair flights on its website.
Pending the hearing of those proceedings, Ryanair sought a narrower interlocutory injunction requiring Skyscanner to oblige those on-line travel agents, whose booking of Ryanair flights had been facilitated by Skyscanner, to provide Ryanair with the email addresses of the relevant passengers.
The interlocutory injunction was unsuccessful but Ryanair asked the court to depart from the usual rule that “costs follow the event” and to make no order as to costs in respect of that application on the basis that it would be unfair for Ryanair to pay Skyscanner’s costs, if Ryanair was later successful in getting the permanent injunction at trial.
Balancing exercise for the court
Twomey J acknowledged that there was some merit in Ryanair’s argument. However, he said that it was arguably also unfair on a defendant not to recover the costs of defending an unsuccessful interlocutory injunction. The defendant did not choose to go to court but was forced to do so. The plaintiff knew what evidence it had and what additional evidence it expected to have at the trial but nonetheless chose to pursue the interlocutory injunction, rather than waiting for the trial.
General rule that costs follow the event
Twomey J said that litigation should not be “consequence-free”. If, as a general rule, there was no consequence for a failed interlocutory injunction application (as suggested by Ryanair’s application for a “no costs” order), then there would be little or no disincentive to a party, for tactical or other reasons, to use court resources to seek an unjustified interlocutory injunction.
The same could be said to a lesser degree if there was a general rule that costs were to be reserved or made costs in the cause since there was a chance that those costs could eventually be paid by the defendant and so the plaintiff would never have to pay for the failed interlocutory injunction application, even if there had been no basis for seeking it in the first place.
In certain cases, the court might determine that costs should not be awarded against an unsuccessful applicant for an interlocutory injunction. However, in general terms, if a party decided to take the financial risk of seeking an interlocutory injunction and it lost, it was important that as a matter of principle that that party suffered the financial consequence of its decision, or more accurately that the defendant did not suffer financially for being put to the cost of successfully defending the application.
Default rule that judge who hears interlocutory application should deal with costs
As a default rule, the judge who heard the interlocutory application should deal with those costs notwithstanding that there would usually be discovery and witness evidence after the interlocutory hearing and before trial. This was because that judge had assessed the evidence available at the interlocutory stage and had witnessed at first hand the conduct of the parties. In addition, not every failed interlocutory injunction got to trial so those costs should not, as a general rule, be left to the trial judge.
Departure from default rule because of conduct of party
Twomey J said that here the “event” for the purposes of the overriding rule that “costs following the event” was the refusal of the interlocutory injunction. Thus, if nothing else was to be taken into account, the costs should be awarded to Skyscanner, since it would be unjust for it to suffer any financial burden in defending that unsuccessful application.
However, he went on to say that the court could also record in its award of costs its displeasure on how one party had conducted the litigation by varying a costs order.
In addition, while litigants might feel that they were entitled to raise every single possible point that might be in their favour, out of an abundance of caution, he said that they should be aware that this might come with costs consequences, even if they won the litigation, particularly where a considerable amount of time was spent dealing with those arguments and, as was the case here, dealing with expert evidence where that time was not merited for the court to reach its decision.
On this basis, he awarded Skyscanner only 50% of its costs for the injunction application.
While litigants may understandably focus on the ultimate outcome of a dispute following a trial, this case illustrates the important strategic decisions that may need to be taken along the way. The merits of undertaking or abstaining from a particular course of action, such as seeking interlocutory injunctive relief, need to be clearly understood. In addition, when engaging with the court process, while litigants will want to put their best foot forward in terms of the evidence that they present, if this evidence is not necessary to the application, this can add to their costs exposure. In those circumstances, less may be more.