Taxo A1 Inc v Tahir [2025] EWHC 1986 (KB)

[2025] EWHC 1986 (KB)

Case No KB-2025-001733

IN THE HIGH COURT OF JUSTICE

KING'S BENCH DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 5 June 2025

Before

MR STEVEN GASZTOWICZ KC

Between

TAXO AI INCClaimant

TAHIRDefendant

MR D LASCELLES appeared for Applicant.

MR S CUTTING appeared for Respondent

JUDGMENT

(Approved)

Digital Transcription by Epiq Europe Ltd,

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MR STEVEN GASZTOWICZ KC:

[1]By a claim form issued on 16 May 2025, the claimant, Taxo.A1 Inc, set out as the brief details of its claim that:

"The defendant is in breach of each of the following agreements with the claimant: (a) a proprietary information and inventions agreement dated 23 May 2025; (b) a technology assignment agreement dated 23 May 2025; (c) a domain name assignment agreement dated 23 May 2025; (d) a separation agreement under a lease, dated 4 March 2025."

[2]The claimant sought interim and permanent injunctive relief as well as specific performance, declaratory relief, sums due to it, damages, interest, and further or other relief. No Particulars of Claim have yet been served and, accordingly, no Defence has yet been served in the action.

[3]On 22 May 2025 - last week - I granted an interim injunction requiring the defendant, in summary, to disclose the current location of any of the claimant's property, insofar as the current location of that property has changed since 4 March 2025, what the previous location or locations were, and when the changes in location were made. It required the defendant also, insofar as he has made changes to the content of Taxo Property, to state what has been changed, when and why. In relation to any access by the defendant to the electronic system, records or any email account of the claimant since 4 March, to state when and how such access was made, and what was done by such access. Finally, insofar as Taxo Property was currently or at any time since 4 March located on a site, to disclose details relating to that.

[4]I also required the defendant to file an affidavit confirming that he had complied with the order. An affidavit in purported compliance with that part of my order was filed in due time by the defendant, following the making of the order.

[5]At the end of the hearing on 22 May, which was at the end of the court day - the hearing having commenced at 10.30 am, with a time estimate of one hour, but having continued to the end of the afternoon - I indicated that I was inclined to reserve the costs of the application.

[6]The claimant wished, however, to argue the position in relation to costs, which it was quite entitled to do, and it was agreed that the matter be relisted for today, for the purpose of making a determination. The previous indication was no more than an initial reaction to the application for costs by the claimant, on the basis of the hearing that had just taken place.

[7]I have listened carefully to submissions made by counsel for the claimant on its behalf today, and considered the authority of Wingfield Digby v Melford Capital Partners (Holdings) LLP

[2020] EWCA Civ 1647

, on which the claimant relies. Having done so, I consider my initial reaction, tentative though it was, was correct and that the costs should be reserved.

[8]The principles to be applied in considering whether to grant an interim injunction were those set out by the House of Lords in the well-known case of American Cyanamid Co v Ethicon Ltd

[1975] AC 396

, in particular at page 408.

[9]I did not, at the interim stage, decide the merits of the action itself. I set out the competing contentions of the parties in brief terms, and concluded that, as both parties in fact agreed, there was at least a serious issue to be tried. That being so, the court was required under the American Cyanamid principles to consider first whether if the claimant were to succeed at trial in establishing its right to an injunction, it would be adequately compensated by an award of damages for the loss it would have sustained in the meantime. If it would, then an interim injunction should not be granted. However, I concluded that damages would not be an adequate remedy, for reasons I gave.

[10]That being so, the next consideration for the court in application of the American Cyanamid principles, was to consider whether if the defendant was to succeed at trial in this case on the basis that he had done nothing wrong in not providing the codes the claimant required, because he could not reasonably do so without access to a particular email account, which the claimant had barred his access to (notwithstanding that he ultimately was able to provide information, using means to which the claimant objected as being illegitimate) damages would be adequate. As I pointed out in the judgment, the defendant's position was that he was unable to access the electronic sites on which the codes were held, because he did not any longer have access to the necessary email address to do that. There is a dispute as to whether the account was necessary to access the codes in any electronic places where they were held, the claimant contending that it was not, and the defendant contending that it was. I had been directed to material which the claimant contended tended to show it was not necessary to use the email account, but also to material which the defendant said showed that it was.

[11]Whilst I noted that the claimants' American lawyers had agreed through live links to allow access to the email account said by the defendant to be necessary to retrieve the codes, the defendant had also provided evidence in a witness statement of the 22 May that during a video call on 17 April with members of the staff of the claimant company, he to try to gain access, via a screenshare, to the email account in question, but the staff involved refused to share their screen and to facilitate access.

[12]Only following substantial email correspondence and a letter of claim, did the defendant ultimately obtain access to the relevant email account, which he said was necessary to access the codes, by obtaining access via means which the claimant says was inappropriate and illegitimate, enabling him to then provide information as required, according to him,.

[13]There was therefore a serious issue to be tried. I made no determination as to the merits of the action itself. It is a case where the Particulars of Claim have not yet been issued or served, or any Defence therefore filed. The next stage of the American Cyanamid test was to determine whether damages would be an adequate remedy for the claimant or not, for it to succeed at trial. I decided they would not be.

[14]Considering then whether damages would be an adequate remedy at trial for the defendant, if he was proved correct in his contention that he was not in breach of contract, for whatever reason, it seemed to me that he would be unlikely to suffer any significant loss by having been subject to the injunction in the meantime. That is to say, losses beyond costs, and having to take any necessary further steps and provide an affidavit, which would be limited in terms of any damage to him. It did therefore seem to me that damages would be an adequate remedy, bearing in mind the claimant was prepared to offer a cross undertaking in damages, which it did, to compensate him for any such losses he may suffer, if the interim injunction turned out to have been wrongly granted. The claimant appeared to have more than sufficient assets to satisfy any such order for damages should it ultimately be made.

[15]The final stage of the American Cyanamid test - whether it is called the balance of convenience test or the residual balance of convenience test – that is to say, the stage after the question of adequacy of damages on each side has been considered was not reached.

[16]I granted the injunction on the basis I have set out, which led me to conclude that in the words of section 37 of the Senior Courts Act, it was just and convenient to make an order in the terms that I did.

[17]I have, as I have said, carefully considered the case of Melford Capital Partners LLP v Wingfield Digby, relied on by the claimant in relation to costs. It is apparent, as one would expect, that the court in in Melford Capital Partners LLP v Wingfield Digby itself, and also in Picnic at Ascot v Kalus Derigis

[2001] FSR 2

, was concerned that where there was a straightforward and clear case on the merits, borne out of incontrovertible facts, or, for example, the construction of a document accepted to govern a relationship between the parties, that that is something properly to be taken into account in pointing towards a more favourable order for costs from the claimant's point of view than an order for costs reserved.

[18]Furthermore, in cases where the balance of convenience is so clear in terms of the outcome of the hearing of the application for an interim injunction that the court concludes an order should be made against the defendant for wasting time and money in fighting the issue, it can make an order for costs against the defendant at that stage.

[19]However, there was in this case a one-day hearing, albeit that the time estimate on the application was one hour, and in relation to the merits of the case, which is at its earliest stage, I have decided only that there is a serious issue to be tried.

[20]So far as the question of the defendant not consenting to relief is concerned, whilst the point is made that the defendant could have consented to at least some limited form of relief which it might be thought clear the court would be persuaded to grant, there is nothing to show that the claimant would not have continued in any event, for the rest of the relief that it sought, even if an offer for limited relief had been proffered by the defendant. Given the way the matter has been argued, it appears highly likely that the claimant would have so continued in any event.

[21]The usual order for costs in relation to an application for an interim injunction is that the costs are reserved. Only if there are special factors taking the case in the direction of ordering costs in favour of the claimant, which are so strong as to take it outside the usual order, is it appropriate for the court to order costs in favour of the claimant at the interim stage. The reason for the usual order is that if there has been no decision on the merits, then it may turn out at trial that the defendant succeeds, even though he has been made subject to the interim injunction. Therefore the interim injunction, in a sense, should never have been sought, because the claimant had no case in the first place against him.

[22]That said, all questions of costs are a matter of discretion.

[23]Another factor to bear in mind is the extent of the costs that are claimed, which was something also referred to by the Court of Appeal in the Wingfield Digby case. Here, the costs claimed by the claimant in relation to the interim application exceed £131,000, which the court is asked to summarily assess.

[24]In my judgment, there are no special factors which mean that in this particular case the defendant ought to be faced with paying a very substantial sum in costs at this stage, without a determination of the merits, particularly given there are still no Particulars of Claim even issued by the claimant enabling its final case to be seen in a statement of case and a Defence entered.

[25]The appropriate order, in my judgment, is for costs to be reserved, and that is the order I make.

[26]This will not prevent the claimant from making, for example, a summary judgment application if it feels the merits are sufficiently able to be shown on paper in its favour, and for seeking an order for costs of the interim application, should it be successful at that stage, just as if at trial it succeeds. Furthermore, even if the claimant does not ultimately succeed, an order for costs reserved would enable it to ask, as a matter of discretion if it wishes, for some provision to be made for the costs of this application. Any application for costs at that stage will be decided by the court, on the basis of the full picture that is then available to it, which picture is not available to me at this stage.

[27]The order I make is, therefore, costs reserved. Epiq Europe Ltd hereby certify that the above is an accurate and complete record of the proceedings or part thereof. Lower Ground, 46 Chancery Lane, London WC2A 1JE Email: civil@epiqglobal.co.uk