Cipla Vet (Pty) Ltd v Merial and Others

The respondents instituted a patent infringement action against the appellant. The appellant pleaded invalidity, relying substantially on the ground of obviousness. The respondents' counsel and expert witnesses undertook extensive preparation for trial. On 9 January 2014, shortly before trial, the appellant amended its plea to abandon the obviousness ground. Murphy J dismissed the action and made a costs order in two parts: (i) dismissing the action with costs including costs of two counsel and qualifying fees of Prof Barbour; and (ii) ordering the defendant to pay wasted costs occasioned by the amendment. The respondents appealed the dismissal (para (i)) to the Supreme Court of Appeal which upheld their appeal on 1 April 2016. Subsequently, a dispute arose regarding the interpretation of para (ii) - whether wasted costs included costs of two counsel and qualifying fees of expert witnesses, as these were not expressly stated in para (ii). The respondents applied for clarification/variation of Murphy J's order. Baqwa J dismissed the application, finding the order unambiguous and that wasted costs did not include these items. The full court upheld the respondents' appeal and clarified that wasted costs shall include costs of two counsel and qualifying fees of expert witnesses.

• Whether a court order can be clarified or varied under rule 42 of the Uniform Rules of Court or common law where there is an ambiguity, patent error or omission
• Whether the wasted costs order in para (ii) of Murphy J's order, when properly interpreted in context with para 96 of the judgment, included costs of two counsel and qualifying fees of expert witnesses
• The proper approach to interpretation of court orders
• Whether delay in bringing an application for clarification or variation of a court order is fatal to the application

The appeal was dismissed with costs (costs of one counsel).

Where a court's reasons for judgment expressly recognize (1) the complexity of a matter justifying costs of two counsel, and (2) an agreement between parties regarding expert witness qualifying fees, but the formal costs order omits express reference to these items in awarding 'wasted costs', the order is ambiguous and may be clarified under rule 42 or common law to give effect to the court's true intention. Court orders must be interpreted contextually by reading the formal order together with the reasoning in the judgment. Wasted costs occasioned by late abandonment of a defense include costs already incurred in preparation for trial, including costs of two counsel and expert witness qualifying fees, where the abandoned defense was complex and expert witnesses were retained and consulted prior to abandonment. Qualifying fees of expert witnesses may be awarded on the basis of agreement between parties, and once a court recognizes such agreement, express inclusion in the costs order is not required for enforceability.

The Court noted that delay in bringing an application for clarification of a court order is not necessarily fatal where there is genuine ambiguity in the order. The Court indicated that the matter before it (the appeal on interpretation of costs) was not complicated, warranting costs of one counsel only, even though the underlying patent litigation was complex. The Court emphasized that the separation of a costs order into multiple parts (costs of the main action vs wasted costs) serves to distinguish different categories of costs but does not necessarily mean different principles or bases apply to each category.

This case provides important guidance on the interpretation of costs orders in South African law, particularly regarding wasted costs occasioned by late amendments to pleadings. It confirms that court orders must be interpreted contextually, reading all relevant paragraphs of the judgment together, not in isolation. The case establishes that where a court recognizes the complexity of a matter and parties' agreement regarding expert costs in its reasons, but omits to expressly include these in a specific costs order, the order may be ambiguous and subject to clarification under rule 42 or common law. It reinforces that costs incurred in preparation for defending an issue that is abandoned on the eve of trial constitute wasted costs, including costs of two counsel and expert witness qualifying fees where appropriate. The case also clarifies that qualifying fees of expert witnesses can be awarded based on agreement between parties without requiring express mention in the court order, once the court has recognized such agreement.