Substance Over Form in IPEC Applications and a Restrained Threshold for “Unreasonable Behaviour” Costs: Costa v Dissociadid Ltd & Anor [2025] EWCA Civ 1475

Introduction

This Court of Appeal decision arises from case management orders made in the Intellectual Property Enterprise Court (IPEC) during the quantum phase of a copyright and tort counterclaim dispute between the claimant, Sergio Mendes Costa, and the defendants, Dissociadid Ltd and its principal, Chloe Wilkinson. The underlying claim concerned alleged copyright infringement in connection with a YouTube channel dedicated to dissociative identity disorder (DID). The counterclaim alleged the tort of causing loss by unlawful means, principally via Mr Costa’s takedown requests to YouTube asserting rights in a “Disclaimer” text included with video uploads.

At liability, HHJ Hacon held in July 2022 that some, but not all, of Mr Costa’s copyright claims succeeded and that the defendants’ counterclaim succeeded in part, limited to URLs disabled on or about 25 June 2021 due to the “Disclaimer” takedown requests. An order of 10 November 2022 (the “10 November Order”) reflected that limitation. In subsequent quantum proceedings, disputes emerged about the scope of recoverable damages, the proper procedure for applications in IPEC (particularly where disposed of on the papers), the treatment of requests for information under CPR Part 18, and the making of immediate costs orders for “unreasonable behaviour” under CPR 63.26(2).

Three IPEC orders were appealed: the paper determination refusing Mr Costa’s strike-out application and awarding the defendants £2,500 costs (15 July 2024), the order refusing to stay or set aside that order while recusal was pending (29 July 2024), and the order that extended time for submissions on other applications but did not address Mr Costa’s contemporaneous request to extend time to file his final quantum submissions (31 July 2024).

Summary of the Judgment

The Court of Appeal (Zacaroli LJ giving the main judgment; Newey LJ agreeing; Arnold LJ agreeing in part and dissenting on one point) dismissed the appeal on grounds challenging paper disposal and related fairness (grounds 1 and 2), the merits of the strike-out (grounds 3 and 5), and the order made before resolving the recusal application (ground 9). However:

• Ground 6 (Part 18 / specific disclosure): Allowed. The judge erred by refusing to consider the Part 18/further information aspect merely because it was not set out in the brief “box 3” text on the application notice, where the draft order and evidence clearly included that relief and both sides addressed it. At minimum the judge should have clarified the intended scope with Mr Costa before declining to deal with it.
• Ground 7 (immediate costs for “unreasonable behaviour”): Allowed by the majority (Zacaroli and Newey LJJ). The costs order was set aside. The application could not fairly be characterised as “so lacking in merit” as to amount to unreasonable behaviour; the judge also failed to apportion costs given he did not address the Part 18 limb. Arnold LJ would have upheld the judge’s discretionary costs decision (subject to apportionment).
• Ground 8 (consequential costs point): Fell away because ground 7 succeeded.
• Ground 10 (failure to address an extension application): Permission granted and appeal allowed; although no practical order was needed because new directions would be set in any event.

Crucially, the Court indicated that, although quantum had originally been ordered to be decided on the papers by agreement, circumstances had changed: the quantum issues are now likely to require a hearing given the legal and factual disputes (for example, whether any upload freeze by YouTube stemmed from Mr Costa’s conduct or from the defendants’ own choices). The case was remitted for the judge to consider the recusal application first; then, if appropriate, to list a case management conference and give directions for a hearing-based disposal of the quantum issues.

Analysis

1) The IPEC’s default of paper disposal and fairness to the parties

The IPEC rules (CPR Part 63, Section V) prioritise proportionality and cost control. CPR 63.25(3) provides that the court will deal with applications without a hearing unless it considers a hearing necessary. This “paper first” approach is a distinctive feature of IPEC case management and reflects the costs cap regime.

Mr Costa argued that deciding his strike-out application on the papers without a hearing breached fairness and his Article 6(1) rights. The Court rejected that challenge, holding:

• Paper disposal was consistent with CPR 63.25(3). Mr Costa asked for a remote hearing but did not explain why it was necessary.
• Article 6(1) was not engaged because the strike-out application did not determine Mr Costa’s civil rights: see Micallef v Malta (17056/06) at §83 (interim measures may fall outside Article 6 if they do not determine civil rights or obligations). The defendants waived their right to an oral hearing.
• Even if Article 6 and general fairness principles are in play, Mr Costa was afforded and took a reasonable opportunity to make submissions—his witness statements contained extensive legal argument and engaged with the defendants’ responsive evidence.

The Court acknowledged that submissions do not belong in witness statements as a matter of good practice. But what mattered here was whether the opportunity to argue the application had been provided and used. It had been.

2) CPR 23.8(3) and orders made without a hearing

Mr Costa invoked CPR 23.8(3), which allows an affected party to apply to set aside an order made without a hearing and without the opportunity to make representations. The Court found it unnecessary to decide whether CPR 63.25 impliedly displaces CPR 23.8(1)(c) in IPEC, because on the facts Mr Costa did have (and used) the opportunity to make written representations. Ground 2 therefore failed.

3) Strike-out under CPR 3.4(2)(b) and (c): complex scope issues belong at quantum

Mr Costa sought to strike out aspects of the defendants’ quantum case—especially claims for Sponsorship Damages and “Centus Damages” linked to a sponsorship contract—arguing abuse of process and/or non-compliance with rules and orders, in particular the 10 November Order that referenced URLs disabled “on or about 25 June 2021” due to the “Disclaimer” takedown requests. He also challenged “Video Damages” to the extent they pre- or post-dated that date.

The Court upheld the judge’s refusal to strike out. The points of claim pleaded facts which, if proved, could justify recovery of Sponsorship and Centus Damages on causation and loss principles. Whether the 10 November Order limits damages strictly to losses flowing from videos taken down “on or about 25 June 2021” remains open for determination at the quantum stage; it was not apt for summary disposal as an abuse or rule-breach strike-out. The Court also noted the defendants’ shifting position on whether pre-25 June losses were pursued, reinforcing that the issue’s proper place is the final quantum decision.

4) Part 18 request: substance over form in IPEC applications

A key point of principle emerges on Ground 6. Mr Costa’s application notice, constrained by a character limit, expressly referred only to strike-out, but:

• The draft order enclosed sought both strike-out and Part 18/further information relief; and
• Both sides’ evidence addressed the Part 18 requests in detail.

In those circumstances, the Court held that the judge ought to have addressed both limbs. At the very least, he should have clarified whether Mr Costa intended to limit his application solely to strike-out before declining to deal with Part 18. The decision establishes an important procedural principle in IPEC: when the scope of relief is made clear in the draft order and the parties have joined issue on it in their evidence, the court should not disregard that relief merely because the application notice’s brief text does not list it in full. Substance prevails over form, particularly where IPEC practice encourages streamlined paper applications and the parties plainly proceed on a shared understanding of the relief in play.

5) Immediate costs for “unreasonable behaviour” under CPR 63.26(2): a restrained threshold

CPR 63.26(1) provides that, in IPEC, the default position is to reserve application costs to the end of the trial. CPR 63.26(2) creates a narrow exception: if a party has behaved unreasonably, the court may make an immediate costs order. The IPEC judge found Mr Costa’s strike-out application “so lacking in merit” as to constitute unreasonable behaviour and awarded the defendants £2,500 summarily assessed costs.

The Court of Appeal (by majority) set that costs order aside. Two points mattered:

• Mr Costa’s application had a second, unresolved Part 18 limb that the judge failed to address. At a minimum, any immediate costs award had to be apportioned to the aspect on which the court had ruled. It was not.
• Mr Costa’s central argument—that the 10 November Order limited recoverable damages to those arising from the 25 June 2021 takedowns—was not “so lacking in merit” as to justify the pejorative “unreasonable behaviour” label. The defendants themselves vacillated on the point.

Arnold LJ dissented on this ground, emphasising that the 63.26(2) decision is a case management discretion aimed at protecting scarce court resources and discouraging unnecessary applications. In his view, the judge could properly conclude that making the strike-out application was unreasonable even if the arguments may later have some traction at the quantum trial. Arnold LJ would, however, have required costs apportionment to reflect the unaddressed Part 18 limb. The majority nevertheless preferred a more restrained approach to the “unreasonable behaviour” threshold on these facts and set the costs order aside.

Note: Arnold LJ’s paragraph refers to “CPR rule 62.26”, which is evidently a typographical reference to CPR 63.26, the IPEC costs rule discussed elsewhere in the judgment.

6) Recusal and interim case management orders

Relying on Mireskandari v The Law Society [2009] EWCA Civ 864, the Court confirmed there is no rigid rule that a judge must halt all case management once recusal is sought. It depends on the circumstances. Here, Mr Costa pressed for a formal decision on staying or setting aside the 15 July order so that he could pursue an appeal. Against that background, it was not an error for the judge to rule on stays before determining recusal (Ground 9 dismissed).

7) Quantum on the papers versus the need for a hearing

The IPEC had originally directed, by agreement, that quantum be determined on the papers. The Court signalled that this was no longer realistic. The quantum issues now involve both contested legal scope and significant factual disputes—such as why further videos were not uploaded after 13 March 2021 and whether YouTube applied an upload freeze because of Mr Costa’s actions. The matter will be remitted for directions, with the Court observing that it is “difficult to see” how quantum can be finally determined without a hearing. This underscores the flexibility to revisit earlier paper-only directions in light of changed circumstances.

Precedents and Authorities Cited

• Micallef v Malta (17056/06), ECtHR: Article 6(1) applies to proceedings determining civil rights and obligations; not all interim measures will do so. The Court used this to explain why Article 6 did not mandate an oral hearing on Mr Costa’s strike-out application.
• Salomonsson v Sweden [2002] ECHR 736: often cited for a general expectation of an oral hearing at least at one instance; distinguished here by reference to Micallef and the nature of IPEC paper applications not determining civil rights.
• Mireskandari v Law Society [2009] EWCA Civ 864: guidance that whether to proceed with case management while a recusal application is pending depends on the circumstances; applied to uphold the decision to make a stay/set-aside ruling before recusal, particularly as requested by the applicant.
• Fox, Intellectual Property Enterprise Court (3rd ed.) (treatise): cited to describe IPEC’s distinctive, proportionality-driven application practice and costs regime.

Legal Reasoning in Focus

• Paper disposal and fairness: CPR 63.25(3) creates a “papers-by-default” regime in IPEC. Fairness does not require an oral hearing where parties have a meaningful written opportunity to be heard; embedding submissions within witness statements, while not ideal, can satisfy that opportunity in practice.
• CPR 23.8(3): The right to seek set-aside of an order made without a hearing depends on lack of opportunity to make representations. Because Mr Costa had that opportunity (and used it), the provision did not assist him on the facts.
• Strike-out boundaries (CPR 3.4(2)(b) and (c)): Complex arguments about the scope of an earlier order’s effect on quantum, and fact-sensitive issues of causation and loss, are ordinarily for trial/inquiry rather than strike-out, absent clear abuse or breach.
• Part 18 relief and application formality: Where the draft order and evidence squarely put Part 18/further information in issue, and both sides engage with it, the court should address that relief or at least clarify scope with the applicant before refusing to do so on a technicality. This is a practical, fairness-driven rule well-suited to IPEC’s streamlined procedures.
• Immediate costs for unreasonable behaviour (CPR 63.26(2)): The majority judgment reflects a restrained threshold. Labelling conduct “unreasonable” demands more than an ultimately unsuccessful application where the arguments are not plainly hopeless and where a discrete limb of the application was not adjudicated. Apportionment of costs is required where only part of an application is dealt with.
• Case management pending recusal: The court may proceed with case management where appropriate, particularly in response to a party’s request for a formal decision to enable appellate steps.
• Revisiting paper-only directions for quantum: Changed circumstances and emerging factual disputes justify moving from paper determination to an oral hearing for a just disposal.

Impact and Practical Implications

This decision contains several practically important messages for IPEC practitioners and litigants:

• Expect paper determinations in IPEC—and prepare accordingly. If you seek a hearing, justify why it is necessary. Provide fulsome written submissions; if pressed by format constraints, ensure your draft order and evidence clearly set out all relief and arguments.
• Substance over form in applications. IPEC judges should not ignore relief plainly identified in the draft order and addressed by both parties merely because the application notice’s brief text omits it. Applicants should still draft the notice as fully as practicable, but this decision reduces the risk of injustice from form constraints.
• Use strike-out sparingly for quantum scope disputes. Complex issues about the effect of prior orders and the recoverability of particular heads of loss (e.g., sponsorship or contract-based damages) will generally be resolved at the quantum hearing, not summarily on abuse/non-compliance grounds.
• Unreasonable-behaviour costs orders are exceptional. The majority’s approach raises the bar for immediate costs orders under CPR 63.26(2), especially where the application is not obviously hopeless and where parts remain to be determined. Judges should apportion costs if only part of an application is decided.
• Case management can continue pending recusal in appropriate circumstances. Where a party is actively seeking a decision to enable an appeal, the court may proceed to make such orders without waiting for the recusal decision.
• Paper-only quantum directions can be revisited. Agreements to decide quantum on the papers can and should be reconsidered if factual disputes and legal complexity later emerge.
• Scope of damages remains live. Whether the 10 November Order limits recoverable damages strictly to those caused by the 25 June 2021 takedowns is a question for the quantum hearing. Parties should prepare to address the proper construction of that order and any broader principles about the assessment of damages once tortious liability is established.

Complex Concepts Simplified

• IPEC: The Intellectual Property Enterprise Court, a specialist forum with streamlined procedures and costs management, including caps and paper-first application handling.
• CPR: The Civil Procedure Rules governing civil litigation in England and Wales. Part 63 contains special rules for IPEC; Part 23 covers applications; Part 18 concerns requests for further information; CPR 3.4 deals with strike-out.
• Part 18 request: A procedural request requiring a party to clarify or provide additional information about matters in dispute. It is not disclosure of documents but clarification of pleaded issues.
• Strike-out (CPR 3.4): A mechanism to remove a statement of case if it discloses no reasonable grounds, is an abuse or obstructs justice, or breaches rules/orders. It is not a substitute for resolving complex, contested issues at trial.
• “Unreasonable behaviour” costs (CPR 63.26(2)): In IPEC, application costs are normally reserved to the end. Immediate costs may be awarded only if a party behaved unreasonably—an exception applied cautiously.
• Quantum vs liability: “Liability” decides whether a party is legally responsible; “quantum” decides the amount of damages. Some causation issues straddle both, but the recoverability and measurement of specific heads of loss usually fall at quantum.
• Causing loss by unlawful means: A tort where a defendant commits unlawful acts against a third party intending to cause economic loss to the claimant. Here, it centred on misrepresentations in YouTube takedown notices about authorship of a “Disclaimer.”
• Determination on the papers: The court decides an application based on written materials without an oral hearing. Fairness can be satisfied if parties have ample written opportunity to argue their case.
• Recusal: The process by which a judge steps aside from a case due to an appearance or risk of bias. Case management may continue pending resolution of a recusal application, depending on circumstances.

Conclusion

Costa v Dissociadid Ltd refines IPEC practice in two salient ways. First, it confirms a substance-over-form approach to the scope of paper applications: when the draft order and evidence make additional relief clear—and both parties engage with it—the court should not ignore that relief merely because the application notice text is truncated. This is a pragmatic development aligned with IPEC’s streamlined ethos and the realities of paper-first procedure.

Second, it articulates a restrained reading of the “unreasonable behaviour” gateway for immediate costs under CPR 63.26(2). Labelling an application “so lacking in merit” requires more than non-success where the arguments possess real traction and where the court has not actually adjudicated a discrete limb of the application. Costs must also be apportioned where appropriate.

Beyond these points, the Court underscores that prior agreements to determine quantum on the papers may be revisited if later circumstances—legal complexity and factual disputes—show that an oral hearing is necessary for a just disposal. The unresolved question of the precise scope of recoverable damages in light of the 10 November Order is left expressly for the quantum hearing, where detailed factual findings and careful construction of earlier orders will be required.

As a result, this judgment provides clear guidance for IPEC litigants: prepare comprehensive written submissions for paper applications; ensure the draft order and evidence capture all relief sought; think carefully before seeking strike-out of complex quantum scope issues; and expect that immediate “unreasonable behaviour” costs will be reserved for truly unmeritorious conduct, with careful apportionment if only parts of an application are determined.