Brown v MCASSO Music Production Ltd.

J U D G M E N T

1. LORD JUSTICE NEUBERGER: I have given my reasons as to why I am refusing Mr Locksley Brown permission to appeal on damages. I now have to consider his application for permission to appeal on costs.

2. As I have just indicated, I propose to grant him permission to appeal on costs. There is a judgment of Hoffmann J, in a case whose name I forget where he begins by saying something along these lines: "This case is about costs. It used to be said that it was only about costs, but these days costs are much more substantial and therefore I will not say only".

3. That applies in spades in this case. The damages Mr Locksley Brown recovered, at the end of a four-day action, and a reserved judgment, were £180. The costs which the defendants are seeking from him, as a result of HHJ Fysh's order against him on costs, are over £50,000. As Mr Nicol rightly reminds me, the judge has a very wide discretion on costs, and anyone challenging the judge's decision on costs in the Court of Appeal faces in principle a very uphill task. That is something I have to remind myself of when considering whether or not to grant Mr Locksley Brown permission to appeal.

4. However, I consider that there are reasons for thinking that the judge may have gone wrong in principle, sufficient to justify Mr Locksley Brown having permission to appeal, bearing in mind that this is a substantial costs order.

5. On the face of it Mr Locksley Brown started these proceedings on the basis that his copyright had been infringed and he was entitled to damages. There was no Part 36 offer and the judge held, contrary to the defendant's case, that he had the benefit of the copyright, albeit only 10 per cent, that the copyright had been infringed and that he was entitled to damages, albeit only £180. In those circumstances, absent special factors, Mr Locksley Brown would have had a very powerful case for saying that he should have at least some of his costs and, arguably, there being no Part 36 offer, all of his costs. Yet the defendant got his costs. Why?

6. It would seem from the judgment on costs, which was apparently very short -- and I do not mean that critically of HHJ Fysh -- and has been summarised to me by Mr Nicol, that the judge was influenced primarily by two offers made by the defendant, the first in a letter of 4th March 2003, just before proceedings were issued, and the second in a letter of 6th December 2003, some time after the proceedings had begun. The fact that they were not Part 36 offers is of course not conclusive against them by any means. (See Peter Crouch v King's Healthcare NHS Trust [2004] EWCA Civ 1332.)

7. However, the letter of 4th March 2003 is, as Mr Nicol very fairly accepts, a without prejudice offer of £450. Although the letter -- pages 96 and 97 of the bundle, the relevant passage being on page 97 -- is not headed "without prejudice", and the offer in the second full paragraph on the second page, page 97, appears to be a straightforward unqualified offer of £450, that is simply a paragraph containing a calculation. The vital paragraph is the one that follows:

"In a final attempt to avoid the need for expensive and time-consuming litigation, our client would be prepared on a without prejudice basis , save as to costs, to repeat its offer to pay this sum to you within seven (7) days of your written acceptance."

8. This has, as I have mentioned, been accepted by Mr Nicol as being without prejudice. Now I read it out I see the words "save as to costs". So it might not in fact be without prejudice. So it is fair to say that, contrary to what I had thought and the way the argument had proceeded just now, this may have been an offer the judge was entitled to take into account, because on reading it out I observe the words "save as to costs", which means it may have been an offer which the judge could take into account, although it seemed to me that Mr Nicol was conceding he probably could not have done. But I am bound to say on reading it out that I think he could have done.

9. Although that is a strong argument against giving permission to appeal, one has to bear in mind that the proceedings then started and the offer that was made on 4th December 2003 would not qualify as a Part 36 offer because that letter, although also written without prejudice save as to costs, was on the basis of each party paying its own costs.

10. Furthermore, that offer was not rejected by Mr Locksley Brown. It was the subject of a detailed reply and request on 6th December which itself was not replied to. In addition, at a hearing on 27th September before the main hearing, there was an attempt to negotiate outside court, and nothing can be said about that because it was without prejudice. But in court, Mr Connaris of the defendant said, when explaining to the judge why negotiations had broken down, he had feelings which:

"... suddenly made me realise that in my heart I feel that we are right, and that I would really like the court to make the decision of whether we are right or whether Mr Brown is right."

11. Judge Fysh said, "About what?", to which Mr Connaris answered, "About the copyright issue". Mr Locksley Brown says that in those circumstances it is clear from what was said in open court that the defendant was fighting this case -- at least primarily, on the face of it, and possibly solely -- on a point of principle about copyright on which Mr Locksley Brown won and the defendant lost.

12. I say that with confidence, even though Mr Locksley Brown only had a percentage of the copyright, because after Mr Connaris had said that, about the copyright issue, HHJ Fysh said, "If he is right, he only owns a portion of it anyway", to which Mr Connaris said, "That is right".

13. Particularly in light of the important words "save as to costs" in the letter of 4th March 2003, which I must confess to having overlooked -- and I think Mr Nicol appears to have overlooked when we were discussing it -- I would like to express my conclusions as follows.

14. If it were not for the words "save as to costs" in the letter of 4th March 2003, I would have been of the view that Mr Locksley Brown had a powerful case for saying the judge went wrong in his award of costs because he would have been relying on the 4th March letter which was privileged. Indeed, the 4th December letter might have been ruled out of consideration because it refers to the 4th March letter; and anyway, the 4th December letter would have been arguably of no use to the defendant because it stated that each party had to pay legal costs in circumstances where no admissible offer had been made before.

15. I have to say that in light of the important words "save as to costs" in the letter of 4th March, Mr Locksley Brown's prospects do not look particularly rosy. The judge had the fact that he started proceedings after he had been offered more than he was entitled to on the judge's finding.

16. Nonetheless, the fact remains that he was never made an offer after he issued the proceedings, and the fact remains that the reason the settlement broke down, according to Mr Connaris' own words, was because of a breakdown and he wanted to go ahead because of the copyright issue. Given the court's desire to encourage settlements, and given that this settlement broke down for the reason admitted by the defendant (that the defendant wanted to go to court on a specific issue on which it lost), I think, even revisiting my decision because I had overlooked the words "as to costs" in the 4th March letter, I remain of the view that Mr Locksley Brown has some, but not much of, a prospect of successfully persuading an appellate court that the judge, by awarding all the costs against him, went too far.

Order: application allowed. Costs of the application to be in the appeal.