Proportionate Disclosure | Costs Order Reduced To 70% Following Substantial Reversal of Disclosure Orders On Appeal

ALESAYI V BANK AUDI S.A.L. [2025] EWHC 919 (KB)

Alesayi v Bank Audi [2025] EWHC 919 (KB) addressed a costs dispute arising from a jurisdiction challenge disclosure application. The case concerned a Saudi-British claimant’s attempt to obtain disclosure from a Lebanese bank in proceedings concerning the transfer of funds, with the defendant challenging the English court’s jurisdiction under CPR Part 11. Following the appeal judgment that substantially reversed Master McCloud’s original disclosure orders, the court was required to determine nine discrete costs issues, principally focusing on the appropriate costs consequences below and on appeal. The court concluded that while the claimant was successful at first instance, the defendant substantially succeeded on appeal, with most disclosure orders being either wholly or partially overturned. Applying CPR Part 44 principles, the court awarded the defendant 65 per cent of its appeal costs, varied the original costs order below to 70 per cent in the claimant’s favour, and ordered a 70 per cent payment on account of costs. The judgment emphasised the need for proportionality in jurisdiction challenge proceedings, critiquing the extensive and disproportionate disclosure sought, which would effectively transform a Part 11 hearing into an inappropriate “mini-trial”. The court’s approach reflected a nuanced assessment of the parties’ relative success, conduct, and the broader principles governing costs awards in complex interlocutory proceedings.

“It is likely that the departure from proportionate disclosure stems from the breadth of information sought by the claimant… I judge that she failed at times to give sufficient weight to the legally confined nature of the issue that had to be decided. The ‘equal footing’ factor… is vitally tempered by the words ‘as far as is practicable’.”

Citations

Straker v Tudor Rose (a firm) [2007] EWCA Civ 368 Costs assessments must apply a staged analysis by identifying the successful party as a matter of substance and reality before addressing reasons to depart from the general rule. Day v Day [2006] EWCA Civ 415 A court must consider which party has substantively won the proceedings when determining costs, and avoid rigid or overly technical approaches inconsistent with justice. BCCI SA v Ali (No. 3) [1999] NLJ 1734 Vol 149 The court must assess the realities of litigation conduct and outcomes when determining costs awards, focusing on who truly succeeded in the dispute. Rome v Punjab National Bank [1989] 2 All ER 136 Applications for specific disclosure must meet the threshold of necessity to avoid unjust outcomes, balancing proportionality and the limited scope of jurisdictional challenges. Lungowe v Vedanta Resources plc [2020] AC 1045 Misconceived interlocutory applications may attract condign costs consequences if they result in unnecessary litigation and expense. Cherney v Deripaska (No 2) [2010] 2 All ER (Comm) 456 Parties should direct their resources toward resolving substantive issues rather than engaging in protracted jurisdictional disputes, to ensure efficient use of costs and judicial time. VTB Capital plc v Nutritek International Corp [2013] UKSC 5 Disclosure in jurisdiction challenges must be tightly controlled to prevent satellite litigation becoming unduly burdensome and expensive. Reed Executive Plc v Reed Business Information Ltd [2004] 4 Costs LR 662 Interest on repayment of costs should be awarded at 1 per cent above the Bank of England base rate as a standard measure of compensation. A L Barnes Ltd v Time Talk (UK) Ltd [2003] EWCA Civ 402 Where monetary relief is not directly in issue, the court must ascertain who has succeeded in substance to determine the appropriate costs outcome. Sullivan v Ross [2020] EWHC 2200 (Comm) It is appropriate to make interlocutory and interim costs orders on a pay-as-you-go basis to reflect parties’ responsibilities for procedural steps taken prior to final resolution. Excalibur Ventures LLC v Texas Keystone Inc [2015] EWHC 566 (Comm) The court must normally order a payment on account of costs following an award subject to detailed assessment, unless there is good reason not to do so, with the sum representing a realistic estimate subject to a margin for error.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

The identification of the successful party for costs purposes requires an assessment of who has won as a matter of substance and reality, not merely by reference to procedural success. [12]
The proper exercise of the court’s discretion under CPR 44.2 includes awarding a proportion of costs where the successful party has not succeeded on every issue, rather than adopting an issues-based costs order. [7(5), 16–18]
In appeals, the court considers who has succeeded by comparing the position following judgment below with the outcome on appeal, focusing on the practical result achieved. [24–25]
Where a costs order is made subject to detailed assessment, the court must order a reasonable payment on account of those costs unless there is good reason not to do so. [43–45]
The existence of a potential risk of overseas capital controls or enforcement difficulties is not, without credible supporting evidence, a sufficient reason to depart from the usual practice of ordering direct payment of costs rather than payment into escrow. [38–40]

“It seems to me that the claimant is responsible in significant part for what has gone wrong. The effect of the claimant’s disclosure applications, if successful, would be to turn the Part 11 hearing into exactly the type of trial in miniature that the authorities have deprecated… this was disproportionate.”

Key Findings In The Case

The Bank was determined to be the successful party on appeal because the majority of the disclosure orders made by Master McCloud were overturned or narrowed, and only two remained completely intact, representing a material alteration of the position below and justifying an award of 65% of the Bank’s appellate costs. [25]
Although the Claimant succeeded in resisting the Bank’s “no disclosure at all” approach at first instance, the appeal-adjusted disclosure orders were significantly narrower than those granted below, warranting a 30% reduction in the Claimant’s costs below to 70% overall. [15–20]
The Claimant’s disclosure applications were found to be excessively wide and disproportionate for a Part 11 jurisdiction challenge, resulting in unnecessary cost and complexity; this overreach was a major factor in the appellate court’s decision to vary the orders and limit the scope of disclosure. [30–31]
The Claimant was not entitled to request that any costs he owed the Bank be deducted from his Lebanese accounts or paid into escrow, as this would pre-empt the jurisdictional issue and there was insufficient evidence of Lebanese capital controls to justify withholding direct payment in the UK. [38–40]
The Bank was awarded a payment on account of 70% of its appeal costs despite the ongoing detailed assessment, as there was no good reason to withhold it under CPR 44.2(8), and the concerns raised by the Claimant regarding enforcement difficulties lacked credible evidential support. [43–45]

“A useful way to examine this issue is to identify the point of origin and the end point. Here the point of origin was the defendant’s fundamental denial that there should be any disclosure… Nevertheless, once the court applied the correct Rome necessity test applicable to CPR 31.12 to avoid unjust disposal, substantial disclosure still fell to be made, as decided in the appeal judgment.”

Background

The procedural history of this case involves a significant appeal focused on costs following the reversal of several disclosure orders made by Master McCloud. The orders initially arose from a jurisdictional challenge made by the defendant, Bank Audi S.A.L., under CPR Part 11, which was heard and decided upon by Master Armstrong.

The claimant, Sheikh Mohammed Omar Kassem Alesayi, holds multiple banking accounts with the defendant, a Beirut-based bank. In August 2022, the claimant requested a transfer of funds from his accounts to Switzerland; this request was refused by the defendant. Disputing this, the claimant invoked his rights under consumer protection laws, arguing for the jurisdiction of English courts to hear his claims.

The defendant contested this jurisdiction, leading to extensive legal proceedings. During these proceedings, the claimant sought broad-ranging disclosure from the defendant, which Master McCloud initially granted. The broad disclosure orders were challenged by the defendant, resulting in an appeal adjudicated by Mr Justice Dexter Dias. In the appeal judgment, many of the disclosure orders made by Master McCloud were reversed, narrowing the scope of required disclosure substantially.

Following these developments, costs incurred by both parties surpassed £1 million, prompting the need for further judicial determination regarding costs. This included costs awarded by Master Armstrong in the initial disclosure hearing, now subject to reconsideration in light of the appeal’s outcome.

Costs Issues Before the Court

The court was tasked with resolving nine specific costs issues stemming from the appeal and initial hearing. Central questions included whether Master Armstrong’s order should remain, if the claimant should reimburse the £143,000 previously paid as costs on account, and which party should be considered the overall successful party on appeal for the purposes of costs allocation. Additionally, the court had to determine the proportion of costs each party should bear and whether the disclosure orders reversed on appeal necessitated reallocation of costs previously incurred for compliance.

The Parties’ Positions

The Claimant maintained that the costs order made by Master Armstrong should largely remain, with only a minor reduction to reflect the altered scope of disclosure ordered on appeal. The Claimant argued that their success in overcoming the defendant’s initial “no disclosure” position justified maintaining a significant portion of the awarded costs below. Furthermore, they resisted reimbursing the £143,000 paid on account, opposing any significant repayment or interest additions.

Conversely, the Defendant argued for the setting aside of the Armstrong order, highlighting their substantial success on appeal where numerous disclosure orders were reversed. They also sought a full reimbursement of the costs paid on account with interest, advocating that they were the materially prevailing party on appeal, deserving 70 per cent of costs, both generated above and below.

Both parties presented contrasting views on how any costs awarded against the claimant should be settled, with the Claimant favouring internal transfers or escrow payment methods linked to their accounts with the Defendant, and the Defendant pressing for direct and immediate payment.

The Court’s Decision

Mr Justice Dexter Dias issued detailed rulings on each costs issue, balancing principles of fairness, proportionality, and success in various procedural stages of the litigation:

Armstrong Order: The court determined that while the claimant succeeded below in the principal issue of disclosure, the extent of their success had been significantly reduced on appeal. Consequently, the claimant was awarded 70% of the costs awarded by Master Armstrong, reflecting a 30% reduction.
Repayment of Costs Paid on Account: The Armstrong order’s partial variation led the court to suggest an evaluation of repayment obligations based on a 30% reduction. Interest was set at 1% above the Bank of England base rate, aimed at ensuring fair adjustment of any balance due.
Successful Party on Appeal: The court affirmed that the Defendant substantially succeeded on appeal, given the significant narrowing of disclosure orders, thus entitling them to costs as the prevailing party.
Percentage of Costs Awarded: The court awarded the Defendant 65% of their appeal costs, recognising both the substantial success in narrowing the disclosure orders and the reasonable effort made in applying the correct legal test for disclosure.
Compliance Costs Incurred: The court confirmed that costs incurred by the Defendant in compliance with overturned disclosure orders would be subject to detailed assessment on the standard basis, excluding any unnecessary adjectives such as “wasted.”
Mode of Repayment: The court rejected the Claimant’s suggestions of internal adjustments or escrow accounts, directing that payments be made directly to the Defendant as a matter of principle and practicality.
Payment on Account of Appeal Costs: The court ruled that 70% of the appeal costs due to the Defendant should be paid on account, aligning with principles established in Excalibur Ventures LLC v Texas Keystone Inc.
Extension of Time Costs: Costs related to the Defendant’s second extension of time were determined to be costs in the jurisdiction application, given the procedural nature of the delay.
Consequentials Hearing Costs: Costs of the costs-related consequentials hearing were resolved to be costs in the jurisdiction application, consistent with the court’s overall approach to this multi-faceted dispute.

Overall, the decisions reflect a meticulous balancing of the parties’ procedural victories and failures, anchored firmly in established legal principles and the equitable distribution of legal costs.

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