A Costs Sanction Can Be Both Remedial And Punitive Where Proportionate | Carl v Limbani In The Court of Appeal

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The Court of Appeal’s decision in Carl v Limbani [2026] EWCA Civ 856 addresses the principles governing costs orders where a successful party has engaged in reprehensible conduct before and during litigation.

Background

Bernard Carl brought proceedings against Vikash Limbani and others arising from attempts to acquire historic sports cars through intermediaries. The central allegation was that money paid for that purpose had not been applied accordingly, and that cars purportedly acquired had never been delivered. The key defendant was Richard Edwards, a car dealer whose approach involved taking money from clients ostensibly to purchase cars, diverting those funds into transactions in his own name, and providing false reports to clients.

Two vehicles were of particular relevance to the claims against Mr Limbani: a Ferrari F40, which had never been purchased, and a Porsche 959, which had been purchased and was at the premises of a company called SCM but which Mr Edwards and others were attempting to sell to a third party.

On 9 October 2015, Mr Carl issued an application for delivery up of eight vehicles. Between that date and the hearing, Mr Edwards and others attended SCM’s premises and removed the cars present there, in what became known as “the raid.” An interim delivery up order was made on 13 October 2015 and made permanent on 20 October 2015.

In committal proceedings that followed, Mr Edwards claimed to have delivered the vehicles to an individual called “Vic,” identified as Mr Limbani, who worked for a Mr Trevor Smith. Mr Edwards’ statement included a telephone number attributed to “Vic,” which was Mr Limbani’s number. A Detective Constable Lucy Robson of North Yorkshire Police contacted the number and spoke to the individual who identified himself as “Vic.” Her subsequent email to Mr Carl, dated 19 December 2015, recorded that “Vic” had confirmed he was self-employed, organised vehicle transportation, and had been asked by Trevor Smith to remove five vehicles from a location in Wandsworth, including an F40 and a number of Porsches. A witness statement in DC Robson’s name followed in January 2016 in similar terms.

The significance of that account was not merely the admission of involvement in the raid, but the claim to have moved an F40 from SCM’s premises when no such vehicle had ever been purchased. The account given was therefore false and served Mr Edwards’ purposes.

The English proceedings were stayed in August 2016 while Mr Carl pursued proceedings in the United States, to which Mr Limbani was also named as a defendant. Those US proceedings were dismissed on jurisdictional grounds in February 2018. In May 2018, Mr Carl applied to lift the stay and to join additional defendants, including Mr Limbani.

Default judgment was entered against Mr Limbani in November 2018, but was subsequently set aside on terms that Mr Limbani pay the costs of the application. The defence served was described by the trial judge as a “stonewall” defence, asserting only that Mr Limbani had worked as Mr Smith’s chauffeur and had occasionally driven Mr Edwards as a passenger, always in Mr Smith’s presence, and that he had provided Mr Edwards with a contact number for a car dealer, Mr Aman Thukral. No mention was made of the raid, the conversation with DC Robson, or payments made from Mrs Edwards’ bank account to Mr Limbani’s wife’s account.

Mr Limbani’s witness statement, exchanged in March 2021, maintained essentially the same limited account of his interactions with Mr Edwards as had appeared in his defence.

The Trial and Judgment

The trial was heard in May 2024 before Simon Gleeson, sitting as a Deputy Judge of the High Court. Mr Carl conducted the trial in person. Mr Limbani gave evidence remotely on the basis of undisputed medical evidence that he was in poor health and unable to attend in person.

During cross-examination, it emerged that payments of £500 per month had been made from Mrs Edwards’ bank account to Mr Limbani’s wife’s account for several months after the raid, each bearing the reference “storage.” Mr Limbani’s explanation was that the payments related to secretarial services provided to Mr Trevor Smith. Mr Limbani also denied being the person who had spoken to DC Robson, suggesting that someone else must have answered his phone.

Judgment was handed down on 22 August 2024. The judge dismissed Mr Carl’s claim against Mr Limbani, finding that while Mr Limbani had given a dishonest account of his relationship with Mr Edwards and had facilitated the attempted disposal of Mr Carl’s cars, the evidence was insufficient to establish liability in conspiracy or conversion. The judge found that Mr Limbani was “an unsatisfactory witness, who clearly knew a great deal more than he was prepared to disclose,” that his explanation for the monthly payments was “entirely unconvincing,” and that his evidence as to his limited contact with Mr Edwards was rejected as dishonest. Nonetheless, the claim failed on the substantive legal issues.

The judge’s analysis reflected principles addressing the circumstances in which those acting solely in their capacity as employees for their principal’s purposes can be liable for conspiracy or whether they can be said to be in possession of goods held by them to the instructions of their employer for the purposes of the tort of conversion.

In the closing paragraphs of the judgment, the judge offered preliminary views on costs, indicating that there should be no order as to costs as between Mr Carl and Mr Limbani, on the basis that Mr Limbani had “escaped examination of his conduct through a policy of evasion and non-disclosure.” The judge made clear that these were preliminary views, subject to further submissions at a consequentials hearing.

The Consequentials Hearing and Procedural Error

The consequentials hearing took place on 23 January 2025, some five months after the judgment was handed down. Mr Limbani’s legal team did not serve a skeleton argument or otherwise identify in advance the points they intended to raise. A bundle of documents was served on Mr Carl approximately 90 minutes before the hearing.

At the hearing, Mr Williams, appearing for Mr Limbani, opened his submissions by addressing the costs consequences of settlement offers, Mr Carl’s alleged failure to comply with the pre-action protocol, and prior costs orders, without initially identifying any challenge to the judge’s preliminary view on the general costs order. When Mr Carl submitted that the judge’s indication in the judgment was a final ruling, the judge agreed and declined to hear further submissions from Mr Williams on the point, stating that the matter was one for the Court of Appeal. Mr Williams sought to clarify whether the door was closed on submissions as to why Mr Limbani should have his costs of the main action, and the judge confirmed that it was.

The Consequentials Judgment was handed down on 7 May 2025. The judge rejected Mr Limbani’s argument that a costs order should be made in his favour to reflect Mr Carl’s failure to comply with the pre-action protocol, finding that it was reasonable and proportionate not to have sent a pre-action letter in the circumstances. Mr Limbani appealed against the costs order with the permission of Newey LJ.

The Appeal | Procedural Irregularity

The appeal raised two grounds. The first was that the judge had been wrong to disallow Mr Limbani his costs, having taken into account matters said to be immaterial, not in issue before him, and unsupported by evidence or submissions. The second ground was that the judge had refused to hear or permit any submissions on costs at the consequentials hearing, notwithstanding his earlier indication that the costs paragraphs in the judgment were provisional and that a further hearing would take place for that purpose. It was submitted that this refusal was in breach of natural justice and constituted a serious procedural irregularity.

The Court of Appeal identified Ground 2 as the logically prior question. Lord Justice Foxton held that the judge had misdirected himself and occasioned a serious procedural irregularity in refusing to hear further submissions, having set out what was expressly stated to be a provisional view in the judgment on the basis that there would be an opportunity for the parties to make submissions on that issue. The judge appears to have taken that position because, by the date of the consequentials hearing some five months after the judgment, it was his understanding that he had already finally determined that issue.

The Court of Appeal held that the error could not be characterised as anything other than serious, as it involved reaching a decision to depart from the established starting point for the exercise of the costs discretion in a significant respect without permitting Mr Limbani to make any submissions on that question. The judge’s costs order was set aside under CPR 52.21(3)(b), and the court proceeded to exercise the discretion afresh.

The Applicable Principles

CPR 44.2 gives the court a discretion as to whether costs are payable by one party to another, in what amount and when. The general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, but the court may make a different order. In deciding what order to make, the court will have regard to all the circumstances, including the conduct of all the parties.

The Court of Appeal reviewed the authorities considering the circumstances in which it would be appropriate for the court not to make a costs order in favour of a successful party by reason of that party’s reprehensible conduct before or during the litigation.

In Widlake v BAA Ltd [2009] EWCA Civ 1256, the court stated that in addition to looking at costs consequences, the court is entitled in an appropriate case to say that the misconduct is so egregious that a penalty should be imposed upon the offending party. One can therefore deprive a party of costs by way of punitive sanction. The court sounded a word of caution: lies are told in litigation every day and quite rightly do not lead to a penalty being imposed in respect of them. There is a considerable difference between a concocted claim and an exaggerated claim and judges must be astute to measure how reprehensible the conduct is.

In Abbott v Long [2011] EWCA Civ 874, the Court of Appeal approved the statement in Walsh v Singh [2011] EWCA Civ 80 that the court could reflect the poor conduct of a successful party both when the conduct in question had had costs consequences, and, even when it had not been causative of any or any significant waste of costs, provided it was a proportionate response to the behaviour in question. Ward LJ summarised the position: if the court is going to deprive a party of costs on the grounds of misconduct which has not been causative of a waste of costs, it should be satisfied that that sanction is a proportionate sanction.

The court was also referred to Ward v Donnellan [2026] EWCA Civ 729, in which Lewison LJ quoted from Pitchford LJ’s judgment in Hutchinson v Neale [2012] EWCA Civ 345. The starting point for the consideration of any order for costs is that costs should follow the event. It is from this point that the court will, in an appropriate case, consider the conduct of the parties. There is no general rule that a finding of dishonest conduct by the successful party will replace the usual starting point. What is required is an evaluation of the nature and degree of the misconduct, its relevance to and effect upon the issues arising in the trial, and its tendency to create an unwarranted increase in the costs of the action to either or both of the parties.

The court emphasised that whenever the court is asked to make some out-of-the-ordinary costs order in consequence of the alleged misconduct of the party against whom the application is made, the court must bear constantly in mind the conduct of the party making the application.

As these decisions make clear, a costs order will generally seek to address the costs consequences of dishonesty or similarly reprehensible conduct on the part of the successful party. In Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida Sanayi Ve Pazarlama SA [2009] EWHC 1696 (Ch), Briggs J noted that an otherwise successful party should not normally obtain costs incurred in advancing a false case, and that the otherwise unsuccessful party should normally obtain an order for payment of its costs in revealing the falsity of that case. Briggs J referred to “the purely remedial consequences of orders of this type.”

In addition, the courts have regard to the effect of reprehensible conduct before and during litigation where it has fuelled the claimant’s suspicion that the defendant has committed an actionable wrong, and thus can be said to have been a motivating factor in the claimant’s commencement or pursuit of proceedings. In such cases, it can be said that the successful defendant has, at least to some degree, brought the action on themselves.

However, it is clear from the authorities that there can be conduct which is of sufficient seriousness that, regardless of its consequences on the costs of the litigation generally, the court is entitled to impose a costs penalty on the successful party. Such an order will only be appropriate where and to the extent that it is a proportionate response to the conduct in issue, having regard to all of the circumstances of the case including the conduct of the party seeking a costs order of this type. In an appropriate case, a proportionate response could extend to disallowing the whole of the successful party’s costs, or even an order that they pay all or part of the unsuccessful party’s costs.

A court can make a single costs order intended both to achieve the remedial consequences which Briggs J referred to in Bank of Tokyo, and as a proportionate sanction for conduct which is sufficiently serious to merit a penalty of this kind irrespective of its consequences on costs. In Sulaman v Axa Insurance plc [2009] EWCA Civ 1331, Longmore LJ rejected a challenge to the costs order on the basis that the first instance judge had made a single costs order to address both of these factors, observing that there is no need for the judge to apportion different parts of his order between lies which prolong the trial process and lies of which he merely disapproves.

Challenges to the Judge’s Findings

Mr Limbani advanced challenges to the judge’s findings as to his conduct. The Court of Appeal rejected the argument that it was not open to Mr Limbani to pursue his challenges to those findings on appeal.

The challenges made on Mr Limbani’s behalf can be summarised as follows: the findings did not form part of any questioning, submissions or oral evidence; Mr Limbani could have had no conceivable idea that the matters relating to disclosure were going to be dealt with in the judgment and the judge’s finding that Mr Limbani had failed to comply with his disclosure obligations had no or no sufficient evidential basis; in his comments on the honesty of Mr Limbani’s trial evidence, the judge failed to pay adequate regard to the evidence of his ill-health; there was no or no sufficient evidential basis for the judge’s finding that Mr Limbani had failed to engage sufficiently with the proceedings; and DC Robson’s statement was inadmissible hearsay evidence.

The Court of Appeal distinguished between findings as to Mr Limbani’s pre-action conduct and the honesty of his evidence about that conduct at trial, and other findings relating to his conduct of the litigation.

As to the former, Mr Limbani’s relationship with Mr Edwards, his involvement in the raid and his actions relating to the Porsche 959 were all pleaded issues in the litigation about which Mr Limbani was questioned. The judge was clearly entitled to make findings on those matters, and as to the truthfulness of Mr Limbani’s evidence in relation to them. The findings that Mr Limbani had given untruthful evidence were not made on the basis of his demeanour, but the inherent improbability of his explanations and their inconsistency with other evidence. The medical evidence relating to Mr Limbani could not conceivably provide an answer to those difficulties.

The challenge to the use made of DC Robson’s evidence of her conversation when she called Mr Limbani’s phone by reference to its hearsay status was rejected as hopeless. There does not appear to have been any challenge before the judge that the email and statement from DC Robson were genuine documents. The judge did not rely on the statements made to DC Robson as evidence of the truth of their contents: on the contrary he found that they were false. He relied on the statement only to establish what were in any event the essentially undisputed facts that DC Robson had phoned Mr Limbani’s number and had a conversation with whoever answered the phone to the effect recorded, the judge relying on the inherent probabilities and the undisputed fact that the number called was Mr Limbani’s to find that Mr Limbani was the person DC Robson had spoken to. Hearsay evidence is admissible in civil proceedings, subject only to matters of weight.

Turning to Mr Limbani’s conduct in the case, Mr Williams particularly criticised the judge’s finding that Mr Limbani had failed to comply with his CPR 31 disclosure obligations and court orders, and also that he had failed to engage in the proceedings. The Court of Appeal held that it was not practical in the appeal to determine whether Mr Limbani breached his CPR 31 disclosure obligations or failed to engage in the proceedings, or whether he breached any other court orders. The judge does not expand on these findings, and the court was not taken to the events in the lengthy procedural history of the case said to justify them. Accordingly, the Court of Appeal placed no reliance on these matters.

However, the judge’s finding of non-disclosure in a more fundamental sense could not be gainsaid: the failure to give an accurate account of his involvement in the matters in dispute, and instead to offer a minimalist account which suggested that he had had far less involvement than was in fact the case. On the basis of the findings as to his conduct which the judge was entitled to make, Mr Limbani’s defence and witness statement were misleading, and failed to address significant aspects of his involvement of obvious relevance to the issues in the case.

The Appropriate Costs Order

The Court of Appeal accepted that it was appropriate for the costs order as between Mr Carl and Mr Limbani both to reflect the consequences of Mr Limbani’s conduct on the proceedings, and to constitute a proportionate sanction for that conduct.

It was obvious that Mr Limbani’s statement to DC Robson that he had been involved in moving a number of cars from SCM’s premises, including the untruthful evidence relating to the F40, was an important factor in Mr Carl’s decision to pursue proceedings against him. The judge found that this account, including the false statement relating to the F40, was given to the police at Mr Edwards’ instigation and for the purposes of offering Mr Edwards an excuse for not delivering up certain vehicles as the court had ordered. Mr Limbani’s statement was relied upon by Mr Carl in the application to join him to the proceedings, and in the Particulars of Claim. On the basis of these facts, Mr Limbani could be said to have brought the proceedings on himself.

In addition, Mr Limbani’s dishonest account of his relationship with Mr Edwards, his statement and the false statement relating to the F40, and his involvement in introducing Mr Thukral to Mr Edwards who offered the Porsche 959 for sale and, in the judge’s finding, facilitating the attempted disposal of Mr Carl’s cars were all likely to fuel Mr Carl’s belief that Mr Limbani was a party to a conspiracy with Mr Edwards to deceive Mr Carl and to convert his property.

Finally, Mr Carl’s claim against Mr Limbani failed to a significant extent not because Mr Limbani had not done any of the things which Mr Carl alleged he had done, but because of a combination of the lack of evidence and the judge’s findings as to the capacity in which and the purpose for which he acted.

In addition, Mr Limbani’s conduct in the litigation plainly required a costs sanction irrespective of its costs consequences. In his defence, supported by a statement of truth, his witness statement and his oral evidence, he gave a dishonest account of his relationship with Mr Edwards, and his evidence was found to be untruthful as to his conversation with DC Robson and as to the purpose of the payments made through Mrs Edwards to his wife. He did not address either of those topics in his written evidence.

The Court of Appeal held that the combination of those two factors justified a decision that there should be no order as to costs as between Mr Carl and Mr Limbani. The only matter said to point the other way was the suggestion that Mr Carl too behaved inappropriately, on the basis that it is apparent from the Part 36 letters sent by Mr Carl that he only brought proceedings against Mr Limbani in the hope that the claim could be settled on terms that Mr Limbani would give evidence against Mr Edwards and others. However, Mr Carl had a plainly arguable claim against Mr Limbani, which in its factual aspects succeeded to a significant extent. The court was not persuaded that Mr Carl was to be criticised for pursuing a viable claim in the hope that it could be settled on terms providing for assistance against other, more centrally involved, defendants.

As to Mr Carl’s conduct generally, the judge’s finding was clear: Mr Carl gave his evidence clearly and well, and was an impressive witness. He cross-examined the witnesses who did appear with tact and sensitivity, and at times exhibited a great deal of self-restraint. The judge found that Mr Carl’s conduct had been blameless throughout. There was nothing about Mr Carl’s conduct which would render an order of “no order as to costs” inappropriate.

For these reasons, looking at the matter afresh, the Court of Appeal arrived at the same costs order as the judge. The appeal was dismissed.

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CPR 44.2(6)(f) | Costs In The Case Where Interwoven Issues And No Clear Winner Precludes Issue-Based Or Percentage Orders

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The King’s Bench Division’s decision in Vertical Aerospace Group Limited v Thandiwe Ngoma [2026] EWHC 1449 (KB) addresses the appropriate costs order following a contested return date at which several interlinking applications were argued, including an application to set aside an imaging order and an application for an interrogation order.

Background

This judgment, handed down on 12 June 2026 by Tom Little KC sitting as a Deputy Judge of the High Court (King’s Bench Division), deals solely with the question of costs following an earlier substantive judgment in the same proceedings ([2026] EWHC 1096 (KB)).

The underlying claim was brought by Vertical Aerospace Group Limited against Thandiwe Ngoma. The substantive hearing took place on 29 April 2026, with judgment handed down on 8 May 2026. Following that hand down, the court heard initial argument on the terms of the order to be made, including some argument on costs. The court then directed the parties to serve sequential written submissions on the costs question, which were duly considered alongside the oral submissions already received.

The proceedings involved an imaging order obtained by the Claimant in relation to the Defendant’s electronic devices. The Defendant applied to set aside that imaging order on the grounds of an alleged failure of full and frank disclosure at the without notice stage. The Claimant, for its part, applied for what was described as an “interrogation order” in relation to those same devices. Both applications were contested, and the court was required to determine a number of interlinking issues arising from them.

Paul Nicholls KC appeared for the Claimant, instructed by Osborne Clarke LLP. Diya Sen Gupta KC and Nick Zweck appeared for the Defendant, instructed by Farrer and Co.

Costs Issues Before the Court

The court was required to determine the appropriate costs order following a contested return date hearing at which several distinct but closely related applications had been argued. The issues before the court on costs were, in broad terms, threefold.

First, whether the Claimant was entitled to its costs of obtaining and serving the imaging order, including the costs of the supervising solicitor and the IT expert engaged in connection with that order. The Claimant’s position was that those costs were directly attributable to the Defendant’s conduct and that the order had been upheld at the contested return date.

Second, whether the Claimant was entitled to its costs in relation to the electronic devices more broadly, on the basis that it had in substance achieved swift access to relevant material from those devices, even though its application for an interrogation order had been refused in the terms sought.

Third, whether the Defendant was entitled to her costs of resisting the interrogation order application, which had been refused by the court, and whether any remaining costs should be costs in the case or costs reserved pending a clearer picture of the value of the imaging order to the litigation as a whole.

The court approached the question by reference to CPR 44.2, which sets out the general rule that the unsuccessful party pays the costs of the successful party, whilst preserving the court’s discretion to make a different order having regard to all the circumstances, including the conduct of the parties and the extent to which each party succeeded on particular issues.

The Parties’ Positions

The Claimant submitted that, on a proper analysis, it had succeeded in its applications and in resisting the Defendant’s application, and that it should therefore recover its costs. More specifically, it argued that the costs of obtaining and serving the imaging order, including the costs of the supervising solicitor and the IT expert, fell to be paid by the Defendant. The basis for this was that the imaging order had been obtained as a direct consequence of the Defendant’s conduct and had been upheld at the contested return date. As to the electronic devices more broadly, the Claimant submitted that it had in substance achieved its evident purpose, namely swift access to relevant material well in advance of standard disclosure, even if the interrogation order had not been granted in the terms sought.

The Defendant submitted that the Claimant’s application for an interrogation order had been refused and that she should have her costs of that application. As to the remaining costs, the Defendant argued that they should either be costs in the case or costs reserved. The basis for the costs reserved argument was that it was said to be premature for the court to assess costs without knowing the ultimate value of the imaging order to the litigation as a whole.

The Court’s Decision

The court concluded that there was no clear overall winner and that both parties had succeeded on certain arguments whilst losing on others. The court considered making an issue-based costs order under CPR 44.2(6)(f) but declined to do so on the basis that the issues were too interwoven to be separated out in any meaningful or non-artificial way. The court also declined to make any order attributing a particular percentage of costs to either party, for the same reason. It was noted that seeking to separate out applications that went to the maintenance of and the terms of the imaging order would be wholly artificial on the facts of this case.

On the specific outcomes, the court noted the following. The Defendant’s application to set aside the imaging order on grounds of a failure of full and frank disclosure did not succeed. However, the terms of the affidavit to be filed and served by the Defendant were varied in terms appreciably narrower than had originally been sought and obtained by the Claimant. The Claimant’s application for an interrogation order in relation to the electronic devices was refused, but the court did not adopt the approach to disclosure invited by the Defendant either. The eventual outcome on that issue was described as very much a middle ground.

Having applied CPR 44.2 to those circumstances, the court determined that the appropriate order was costs in the case. The court expressly considered whether costs should instead be reserved, or whether some part of the costs should be reserved, but concluded that neither of those alternatives was the correct order on the facts. The court’s reasoning was that roughly 50% of the time at the hearing had been spent on arguments that led to a positive outcome in some way for each side, and that the interlinking nature of all the applications and arguments made individual costs orders on individual applications inappropriate.

The order drawn up accordingly provided for costs in the case.

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Enforcement Of Costs Orders Not Stayed Merely Because Related Proceedings Remain on Appeal

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The High Court’s decision in Mirza v Lewin [2026] EWHC 1423 (Ch) addresses the circumstances in which enforcement of a costs order will be stayed pending appeal, particularly where no appeal of the underlying substantive decision is on foot.

Background

The underlying dispute arose from proceedings in the Business and Property Courts concerning a Part 20 Claim brought by Mr Camran Mirza against three directors: Mr Mark Lewin, Mr Oliver Webster, and Ms Dawn Yates. The broader litigation also involved a Main Action brought by Mr Morjaria, in which Mr Mirza and others were defendants. By a substantive judgment handed down on 28 July 2025, Mr Justice Thompsell found against Mr Mirza in the Main Action, dismissed the counterclaim brought against Mr Morjaria, dismissed claims against Mr Mirza’s wife and son, and dismissed the Part 20 Claim against the Directors.

Following the substantive judgment, on 11 August 2025 the court made an order determining costs in favour of the Directors and including an interim costs order of £1.3 million. That sum remained unpaid at the time of the hearing.

On 20 August 2025, Mr Mirza applied to the Court of Appeal for permission to appeal the August Order and for a stay of execution pending appeal, arguing a breach of the indemnity principle and contending that his liability to pay the Directors’ costs was linked to the position of the parties in the Main Action. He did not, however, seek permission to appeal the dismissal of the Part 20 Claim itself. On 18 November 2025, Newey LJ refused permission to appeal the August Order.

On the same date, Newey LJ granted permission to appeal in the Main Action on ten grounds (in addition to two already granted by the trial judge), and granted the claimants in the Main Action permission on four grounds. Those appeals were listed to be heard together over five days at the end of October 2026. One of the grounds on which permission was granted concerned an allegation that the trial had been procedurally unfair, a point upon which Mr Mirza sought to place considerable reliance in the applications before Thompsell J.

On 21 January 2026, Master Brightwell made an order on the Directors’ ex parte application under Part 71, requiring Mr Mirza to attend court for questioning as to his financial means. By the time of the hearing before Thompsell J on 19 May 2026, four applications remained live: two stay applications brought by Mr Mirza seeking to halt enforcement of the Interim Costs Order; a set-aside application by Mr Mirza seeking to set aside or vary the Examination Order; and two charging order applications brought by the Directors over certain land and securities held by Mr Mirza.

Costs Issues Before the Court

The central costs-related issues before the court arose from the Directors’ attempts to enforce the unpaid Interim Costs Order of £1.3 million, made following the dismissal of the Part 20 Claim. The court was required to determine whether enforcement of that order should be stayed, and if so on what basis and for how long.

The first stay application concerned a writ of control and warrant issued by the Directors in respect of the Interim Costs Order. The second stay application, dated 11 May 2026, sought a more general stay of all enforcement steps taken pursuant to the August Order. Both applications were brought under s.49(2) of the Senior Courts Act 1981, CPR 3.1(2)(g), CPR 40.8A, and CPR 83.7, which permits the court to stay execution where there are special circumstances rendering enforcement inexpedient, or where the applicant is unable to pay.

A further enforcement-related issue arose from the Directors’ applications for interim charging orders over Mr Mirza’s interests in land and securities, made on 10 April 2026 under CPR 73.6(3) and s.1(1) of the Charging Orders Act 1979. Master Brightwell had directed that these applications be heard on notice, given the complexity of the proceedings. The applications before the court included the question of whether to proceed to make final charging orders.

The set-aside application, whilst not a costs enforcement matter in the strict sense, was closely connected: Mr Mirza sought to set aside or vary the Examination Order made under Part 71, which had been obtained by the Directors as a step towards understanding his financial position for enforcement purposes.

Underpinning all of these applications was the question of whether the pending Court of Appeal proceedings in the Main Action, and in particular the procedural unfairness ground, had any bearing on the enforceability of the Interim Costs Order made in the Part 20 Claim, in circumstances where no appeal of the Part 20 Claim was itself on foot.

The Judge’s Recusal Concern

At the commencement of the hearing, Thompsell J raised a concern about whether he should hear the stay applications at all. It appeared that a substantial part of Mr Mirza’s argument in favour of the stay applications was based on the prospect that he would succeed in the Court of Appeal in showing that the trial had been procedurally unfair, and that such a finding would impugn, and perhaps render void, the finding in the Substantive Judgment as it related to the Part 20 Claim also. The judge’s concern was that if, in determining the stay applications, he had to take into account the likelihood of this happening, he would be, as he put it, “marking my own homework”. He might be perceived to have been biased in relation to this point, given that he was having to determine the likelihood of his own conduct of a trial being ruled procedurally unfair.

The judge noted, however, that if he was considering a stay as being analogous to a stay requested under CPR 52.16, the matter would be determined on the basis of balance of injustice, and the likelihood of success on appeal would operate only as a tie-breaker and so would not necessarily be central to the argument. The matter was resolved when Mr Lloyd, representing the Directors, made the concession that, to the extent that the decision in the stay action was dependent on having to assess the prospects for success of the procedural unfairness issue, the judge could do so without having to determine that matter, but instead making an assumption that this argument had a good prospect of success before the Court of Appeal. Mr Lloyd made it clear that this assumption was relevant to this hearing only. On the basis of that concession, the judge considered that he could proceed with the hearing as he was relieved of any need to determine the narrow point where there might be a perception that he could not be impartial.

The Parties’ Positions

Mr Mirza’s position on the stay applications

Mr Mirza, represented by Hefin Rees KC, Jack Fletcher, and Michael Campbell of Noble Solicitors, advanced three principal arguments in support of the stay applications.

First, it was argued that the court had already stayed costs enforcement in the Main Action pending the outcome of the appeals, and that it would be unfair not to extend the same treatment to the Interim Costs Order in the Part 20 Claim. This argument was advanced on the basis that Mr Morjaria had funded a substantial portion of the Directors’ costs (at least £1,160,015 by his own evidence at trial, with an indication that he would pay all of their legal costs), and that he would therefore be the ultimate beneficiary of any payment under the Interim Costs Order. Mr Mirza characterised the Directors as “litigation conduits” for Mr Morjaria, pointing to a Deed of Co-Operation and Mr Morjaria’s payment of the Directors for their time in court. It was argued that the Directors’ costs should only be payable alongside Mr Morjaria’s costs and those of Mrs Mirza and Ameer Mirza.

Second, Mr Mirza argued that enforcement at this stage would cause him and his family substantial commercial disadvantage. His principal asset was an indirect interest in a development at Walpole Court, which was subject to a Murabaha facility with Al Rayan Bank. The Facility was structured so that, on early termination, the entire outstanding balance together with Al Rayan’s expected profit until 31 September 2029 would become payable. It was further argued that the development could not be sold with vacant possession because many of the flats were occupied under sub-licences, the longest of which did not expire until January 2027, and that the most advantageous sale would be as a single portfolio with vacant possession. It was also submitted that any sale using the proceeds to pay the Interim Costs Order would breach the Asset Preservation Undertakings Mr Mirza had given in lieu of a freezing order.

Third, Mr Mirza relied on the procedural unfairness ground of appeal in the Main Action. He referred to Serafin v Malkiewicz [2020] UKSC 23, in which Lord Wilson quoted Lord Reed PSC to the effect that “a judgment which results from an unfair trial is written in water”, and to Moss v Martin [2022] EWHC 3258 (Comm) for the proposition that a stay may be appropriate not only where there is a live appeal within the English courts, but also where something else “has the potential to undermine the foundation of” the order in question. Mr Mirza argued that if the Court of Appeal were to overturn the entirety of the substantive judgment on procedural unfairness grounds, this would necessarily undermine the August Order and the Interim Costs Order.

Mr Mirza’s position on the set-aside application

In relation to the Examination Order, Mr Mirza argued that the Directors had failed to discharge their continuing duty of full and frank disclosure on the ex parte application, specifically by failing to mention in a letter to the court dated 9 February 2026 the financial disclosure already made in his 14th witness statement, and by implying that the appeals had no impact on the Part 20 Claim. He further argued that requiring him to attend an examination would be otiose and oppressive given the volume of financial disclosure already provided, the Asset Preservation Undertakings he had given, and the pending appeal on procedural unfairness grounds.

The Directors’ position

The Directors, represented by Christopher Lloyd of PCB Byrne LLP, resisted the stay applications on multiple grounds. They argued that Mr Morjaria’s funding of their costs did not amount to “special circumstances” justifying a stay, noting that this point had already been raised and dismissed when Mr Mirza sought an adjournment of the hearing on the Interim Costs Order, and that the argument framed as a breach of the indemnity principle had been refused permission to appeal. They produced evidence that, contrary to Mr Morjaria’s general statements at trial, £1.6 million of the Directors’ legal costs had been paid by their employer, IQEQ, out of some £2.7 million of legal costs incurred.

On the financial hardship argument, the Directors contended that Mr Mirza’s valuation of Walpole Court appeared substantially less than the valuation on which the Facility was granted; that the Facility appeared to allow individual units and parking spaces to be sold at current market value; and that Mr Mirza could obtain loans from other members of his family or their companies, noting that his wife was already lending him £25,000 per month for living expenses and had allowed loans to fund his appeal.

In relation to the Examination Order, the Directors relied on Vale v BSG [2020] EWHC 2021 for the proposition that in an application under Part 71 a judgment creditor is not under an obligation to disclose what documents he already has in his possession relating to enforcement, and that the fact the debtor has provided some information already is not a material matter caught by the full and frank disclosure obligation. They also relied on Sucden Financial v Fluxo-Cane [2009] EWHC 3555 (QB) for the proposition that an examination order may be made even where the relevant order has been stayed, as an examination order is not part and parcel of the process of enforcement, but is there to enable a judgment creditor to enforce a judgment order.

The Court’s Analysis

The argument based on Mr Morjaria’s involvement

The court rejected the argument that the Directors’ costs should be stayed because Mr Morjaria had funded them. Thompsell J noted that this argument had even less merit than when he had considered and rejected it before, since it was now clear that the £1.3 million interim payment would not go back to Mr Morjaria. The evidence showed that £1.6 million of the Directors’ legal costs had been paid by their employer, IQEQ. The court concluded that Mr Mirza had brought unmeritorious claims against the Directors, and they (or their employer) should not have to wait to receive payment of that money back.

The argument based on Mr Mirza’s financial position

The court accepted that, in order to realise cash to meet the Interim Costs Order, it was likely that Mr Mirza (or another member of his family) would have to sell assets, and that this might be substantially commercially disadvantageous. However, the court found that Mr Mirza’s financial position was not likely to get materially better in the medium term.

Thompsell J identified two circumstances in which the courts have stayed enforcement proceedings on the grounds that meeting a payment order would cause substantial commercial disadvantage to the paying party: first, where there is a prospect of a successful appeal; and second, where the paying party is able to point to specific assets which it is selling (or re-financing) so as to raise the money to pay, and the circumstances warrant a stay until particular steps are taken to allow those assets to be sold at a proper value. However, as Foxton J (as he then was) said in Recovery Partners v Rukhadze [2023] WLUK 369, what is of obvious relevance to the court is whether there is sufficient realistic prospect of the position changing during the period of the stay, and how confident the court can be of the stay producing the promised beneficial outcome, rather than simply kicking the can down the road to no great purpose.

The court found that Mr Mirza’s circumstances were not likely to change substantially if he was given a stay until the Court of Appeal had published its decision. The argument regarding the terms of the Facility remained valid up to 31 December 2029, and any reduction in the liability for terminating that Facility would be offset by interest payable for late payment of the Interim Costs Order. The point regarding the length of the tenancies was highly suspect: under the Renters’ Rights Act 2026 most fixed term tenancies are converted into periodic tenancies that can only be terminated by the landlord in particular circumstances, and vacant possession can only be obtained with a court order, which may take many months to obtain. The court also noted that even if some of the flats were vacated earlier, they might need to be relet in order to find the income to keep paying down the Facility.

The court also noted that even if Mr Mirza succeeded in the Court of Appeal in relation to the Main Action, it was not clear that this would be transformative of his financial position, certainly in the medium term. It was unlikely that he would get an immediate costs order at the end of a five-day appeal hearing, and if the ground on which he succeeded related to procedural unfairness rather than the substantive merits, there was a strong possibility that the Court of Appeal would defer any costs order until there had been a retrial. Further, even if Mr Mirza obtained costs or other orders against Mr Morjaria, his financial position would not be improved unless and until those orders were enforced, and Mr Mirza had himself made the case that it was extremely difficult to get enforcement against Mr Morjaria in Dubai.

Applying a test of balance of inconvenience, and ignoring for the moment the possibility of the Court of Appeal declaring that the substantive judgment was void in relation to the Part 20 Claim, the court concluded that the prospect of Mr Mirza being in a better position to pay at the point that the Court of Appeal made its judgment was too uncertain to provide grounds for a stay, especially as it was balanced by the prospect that he might lose and so find it even more difficult to satisfy his creditors.

The argument based on the Court of Appeal finding procedural unfairness

The court noted that CPR 52.16 makes particular provision for stays where there is an appeal. The essential question is whether there is a risk of injustice to one or other or both parties if the court grants or refuses a stay: Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065. The normal rule is for no stay to be granted, but where the justice of that approach is in doubt, the answer may depend on the perceived strength of the appeal: Otkritie International Investment Management Ltd v Urumov [2014] EWHC 755 (Comm).

Thompsell J considered that if Mr Mirza had obtained permission to appeal the substantive judgment in relation to the Part 20 Claim, and the court was considering a stay application under CPR 52.16, the disadvantages Mr Mirza potentially faced through having to sell assets to meet the Interim Costs Order did create a risk of injustice that would crystallise if he won his appeal, after selling assets on disadvantageous terms or in disadvantageous circumstances.

However, there was no appeal on foot in relation to the Part 20 Claim and no certainty that the Court of Appeal would grant permission for such an appeal given that this was being raised very late. Mr Mirza relied on Moss v Martin [2022] EWHC 3258 (Comm) for the proposition that the stay approach does not only apply where there is an appeal on foot within the English courts, but also in circumstances where something else “has the potential to undermine the foundation of” the order in question. He argued that there was a prospect that the Court of Appeal would overturn the entirety of the substantive judgment on the grounds of procedural unfairness, citing Serafin v Malkiewicz [2020] UKSC 23, where Lord Wilson quoted Lord Reed PSC as saying that “a judgment which results from an unfair trial is written in water”.

Whilst the court could see the logic in this argument, it concluded that the Court of Appeal would not overturn the decision in the Part 20 Claim without giving the Directors an opportunity to put forward their own arguments as to whether the trial had been procedurally unfair. If Mr Mirza wished to overturn the decision in the Part 20 Claim, he could only do so by joining the Directors into the appeal. He would face a difficulty in doing so since it was now extremely late to seek to bring an appeal. Nevertheless, the court could not discount the possibility that Mr Mirza would obtain late permission to appeal on the grounds of procedural fairness, particularly as (for the reasons explained at the beginning of the judgment) the court was operating on the assumption that such an appeal, if allowed, would have a good prospect of success.

The court concluded that if an appeal of the Part 20 Claim were on foot, it would grant a stay pending the determination of that appeal. If there was no prospect of appeal, it would not grant a stay. The issues concerning procedural fairness raised the possibility of an appeal, but that possibility did not crystallise until permission was given for an appeal on those grounds. In these circumstances, the only fair approach would be to give Mr Mirza a short opportunity to apply to the Court of Appeal for permission to appeal the Part 20 Claim on the grounds of procedural unfairness.

The Set-Aside Application

The court rejected Mr Mirza’s arguments that the Directors had failed to discharge their continuing duty of full and frank disclosure. Relying on Vale v BSG [2020] EWHC 2021, the court noted that in an application under Part 71 a judgment creditor is not under an obligation to disclose what documents he already has in his possession relating to enforcement, and the fact the debtor has provided some information already is not a material matter caught by the full and frank disclosure obligation. As to the failure to update the court about Mr Mirza having had permission to appeal the substantive judgment in relation to unfair proceedings, the court did not see this as a breach of requirements for full and frank disclosure, noting that there was no appeal on foot as regards the Part 20 Claim.

The court also rejected the argument that nothing would be achieved from the examination given the financial information Mr Mirza had already provided. The information that Mr Mirza had provided was by no means complete, and the cash flow and balance sheet disclosures made were incomplete and less than useful. Further, findings were made within the substantive judgment that Mr Mirza was not always honest in his presentation of information. The court concluded that this was clearly a case where a very full examination before a judge was necessary, and on that basis ordering it could not be oppressive.

In relation to the Asset Preservation Undertakings, the court expressly stated that these had no bearing on the need for the Directors to understand what assets were available that they might enforce against.

The court noted that the Directors relied on Sucden Financial v Fluxo-Cane [2009] EWHC 3555 (QB) for the proposition that an examination order may be made even where the relevant order has been stayed, as an examination order is not part and parcel of the process of enforcement, but is there to enable a judgment creditor to enforce a judgment order. Whilst the court saw no reason to strike out or vary the Examination Order, it considered it would be appropriate to stay its implementation as part of the more general stay that it was ordering, to ensure that the information received was the most up-to-date available.

The Charging Order Applications

The court noted that it has a discretion whether to make charging orders under CPR 73.6(3) (interim orders) and CPR 73.10A(3) (final orders) and s.1(1) of the Charging Orders Act 1979. In exercising its discretion the court must consider all the circumstances of the case, including the personal circumstances of the debtor and whether any other creditor would be likely to be unduly prejudiced by the making of the order.

The court noted that the fact that the debtor’s position is that the judgment debt renders him balance sheet insolvent is not a reason to refuse to make the charging orders final unless UK insolvency proceedings are already on foot or are imminent: Roberts Petroleum v Bernard Kenny [1982] 1 WLR 301. The fact that the judgment creditor has the benefit of a freezing order is not a weighty consideration in deciding whether to make a final charging order: State Bank of India v Mallya [2019] EWHC 995 (QB). Where there are competing judgment creditors, the court may adopt a “first past the post” approach if that is the just and equitable outcome between them. In British Arab Commercial Bank v Algosaibi [2011] 2 CLC 736, Flaux J (as he then was) treated “first past the post” as the “general rule” in non-statutory insolvency regime cases, giving rise to only a “limited discretion to decline to make the charging order final”.

Given the difficulties that the Directors had had in enforcing the Interim Costs Order, that there were no insolvency proceedings in the offing in relation to Mr Mirza, and that it was his evidence that he was not insolvent on a balance sheet basis, the court considered that the case for a charging order was a strong one. However, the court noted that Mr Mirza had had only four working days’ notice of the charging order applications, and that the time estimate for the hearing had been fixed without any allowance of time to consider them. As it turned out, there was no time within the hearing for any oral submissions on the charging order applications.

The court also noted that granting the applications would cause significant prejudice to Mr Mirza as it would constitute an Event of Default under the Facility, and would prejudice innocent third parties including the other shareholders in Prime Ealing and other creditors. The court observed that had the short notice been the only reason for a stay, it would have granted the charging orders but stayed their enforcement. However, it was the additional factors (the Event of Default risk and the prejudice to third parties) that warranted a fuller hearing.

Having regard to these points, the context that the Asset Preservation Undertakings provided some form of protection for the Directors, and that the court was already ordering a general stay until the Court of Appeal determined whether it would give late permission to appeal the decision in the Part 20 Claim, the court concluded that the balance of justice was best served by adjourning and staying the charging order applications as part of that general stay. This reflected, in particular, the point that the potential for an Event of Default deserved a better airing before the court than had been possible in the circumstances.

Conclusion

The court refused the two stay applications made by Mr Mirza, which sought a stay until the Court of Appeal had determined the appeal in the Main Proceedings. However, it ordered a much shorter general stay until the Court of Appeal determined an application for late permission to appeal the decision in the Part 20 Claim (assuming that such an application was made within a week from the date on which the judgment was handed down). The practical effect was that enforcement was stayed, albeit on a much shorter and more conditional basis than Mr Mirza sought.

The court refused Mr Mirza’s application to set aside or vary the Examination Order, but stayed its implementation as part of the more general stay. The court adjourned and stayed the charging order applications as part of that general stay.

The court did not deal with costs at the hearing. It proposed to deal with the costs relating to the matters dealt with in the judgment on paper, following written submissions and costs schedules from the parties.

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Court of Appeal Substitutes A 50% Standard-Basis Costs Order Following A 15-Day Trial Marked By Dishonesty On Both Sides

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The Court of Appeal’s decision in Ward v Donnellan [2026] EWCA Civ 729 addresses the proper approach to costs orders where both the successful and unsuccessful parties have advanced dishonest cases at trial.

Background

This appeal arose from a costs order made following a 15-day trial in the Business and Property Courts. The trial judge was Ms Louise Hutton KC, sitting as a Deputy High Court Judge. The substantive judgment was handed down on 6 September 2024, running to 103 pages and 473 paragraphs. The costs judgment was delivered on an extempore basis on 14 October 2024.

The three actions concerned a property known as Creative House in Battersea. The first was the Partnership Claim, brought by Mr Donnellan against Mr Ward. Mr Donnellan, a mortgage broker, alleged that in 2012 he and Mr Ward, a property developer, had expressly agreed to enter into a partnership (or alternatively a joint venture) for the development of Creative House and future projects, with interests split 25% to Mr Donnellan and 75% to Mr Ward. The freehold of Creative House was held by Ebonair Investment SA, a Panamanian company which Mr Donnellan alleged was beneficially owned by Mr Ward. Mr Ward’s case was that the interests in Creative House were ultimately held by his wife, his former girlfriend, and Ebonair, which he said was owned by a group of overseas investors. A number of flats in the building were held by Mr Keane and Ms Howard as nominees. Mr Donnellan’s case was that they held those flats for the alleged partnership; the Ward parties’ case was that Ebonair was the ultimate beneficial owner. As part of the Partnership Claim, Ebonair brought a Part 20 Claim against Mr Keane and Ms Howard seeking declarations that they held their leases on trust for Ebonair. The second action was the Arbitration Claim brought by Mr Keane, which does not feature in the appeal. The third was the Possession Claim, also brought by Mr Keane, seeking possession of two flats in the building.

The Partnership Claim failed in its entirety. The judge found that no partnership had been formed and that there was no joint venture. As a consequence, the Part 20 Claim succeeded: Mr Keane and Ms Howard were found to hold their respective flats on trust for Ebonair. The Possession Claim also failed as a result of those findings.

Findings of Dishonesty

The judge was highly critical of the honesty of both Mr Donnellan and Mr Ward. In relation to Mr Donnellan, she found that he had given dishonest evidence about two key meetings said to have taken place in support of his partnership claim, that he had executed dishonest trust deeds, and that he had made assertions that were not true in order to bolster his case. In relation to Mr Ward, the judge found that he had created backdated documents, including a loan agreement and a trust deed, in order to conceal assets from his trustees in bankruptcy. She found that Mr Ward had at least a significant beneficial interest in Ebonair, rejecting his case that Ebonair was owned by overseas investors. That finding, referred to throughout as the Ebonair issue, meant that the Ward parties failed on that aspect of their defence, even though they ultimately succeeded on the Partnership Claim as a whole.

No finding of personal dishonesty was made against Mr Keane or Ms Howard, although the judge found that Mr Keane’s evidence could not be relied upon except where supported by reliable documents or the inherent probabilities, and that Ms Howard had thrown in her lot with Mr Donnellan and regarded her interests as inseparable from his. Both Mr Keane and Ms Howard had executed trust deeds which the judge found to be bogus.

Procedural Complication

A procedural complication arose when the appeal first came before the court on 5 February 2026. It emerged at the outset of that hearing that Mr Donnellan had been adjudicated bankrupt on 7 October 2025. His instructing solicitors had known of the bankruptcy, as they had been acting for the petitioning creditors. No trustee in bankruptcy had been appointed, so the bankrupt estate was vested in the Official Receiver, who had only been supplied with the appeal papers the afternoon before the hearing. The appeal was adjourned. The Official Receiver subsequently confirmed that she wished to play no part in the proceedings and remained entirely neutral. The Court of Appeal proceeded on the basis that, absent success in the appeal, there was no judgment debt capable of being proved in the bankruptcy, and the appeal was relisted. Due to the unavailability of the original constitution, only Lewison LJ remained from the first listing.

The Costs Order Under Appeal

The costs order under appeal was the judge’s decision to make no order for costs on either the Partnership Claim or the Part 20 Claim. The Ward parties, as the successful parties in both claims, appealed on the basis that the judge had erred in the exercise of her discretion.

The judge’s reasoning, as expressed in her extempore costs judgment and her subsequent reasons for refusing permission to appeal, was that Mr Ward’s dishonesty in advancing the Ebonair issue had taken up a very substantial part of the trial and the proceedings leading up to it, and that it would be inappropriate for the Ward parties to benefit from that dishonesty or to recover costs incurred in advancing a dishonest case. She took the view that the costs the Ward parties had incurred in advancing the dishonest Ebonair case, and the costs Mr Donnellan had incurred in meeting it, roughly cancelled each other out, producing a no order position. She applied the same reasoning to the Part 20 Claim on the basis that its issues followed and formed part of the matters in dispute on the main claim.

The Appellants’ Submissions

The appellants, represented by Timothy Polli KC and Tim Hammond, argued that the judge’s exercise of discretion was flawed on a number of grounds. They submitted that the judge had failed to take into account the extent of Mr Donnellan’s dishonesty, which had infected all three claims, and that she had only paid lip service to the principle that costs follow the event. They pointed out that the Partnership Claim had been brought entirely by Mr Donnellan, that it had failed in its entirety, and that it had been supported by dishonest evidence. They argued that the Ward parties were entitled to recover at least their costs of exposing Mr Donnellan’s dishonesty, as well as the costs reasonably incurred in resisting a failed and dishonest claim. They further submitted that no financial penalty of any kind had been imposed on Mr Donnellan, which was inconsistent with the approach endorsed in authorities such as Summers v Fairclough Homes Ltd [2012] UKSC 26 and Hutchinson v Neale [2012] EWCA Civ 345. Mr Polli also argued that the judge had overstated the legal relevance of the Ebonair issue to the Partnership Claim, since that issue went to the composition of partnership property rather than to the existence of the alleged partnership itself.

In relation to the Part 20 Claim, the appellants submitted that the judge’s reasoning was unsustainable. Ebonair had succeeded on that claim, and the defence advanced by Mr Keane and Ms Howard had been based on the dishonest trust deeds. The question of who ultimately owned Ebonair was entirely irrelevant to whether Mr Keane and Ms Howard held their leases on trust for that company. The Ward parties’ dishonesty on the Ebonair issue had no bearing on the Part 20 Claim. The appellants also pointed to the inconsistency between the no order position on the Part 20 Claim and the order that Mr Keane pay the costs of the Possession Claim, when the outcome of both claims stood or fell together.

The Court of Appeal’s Analysis

Lord Justice Lewison (with whom Lord Justice Arnold and Lady Justice Falk agreed) began by emphasising the heavy burden faced by any appellant seeking to overturn a costs decision. As Wilson J stated in SCT Finance v Bolton [2002] EWCA Civ 56, the court discourages such appeals by interpreting the discretion very widely. Davis LJ in F & C Alternative Investments (Holdings) Ltd v Barthelemy (No 3) [2012] EWCA Civ 843 articulated the test more fully: an appellate court may only interfere if the decision on costs is wrong in principle, or if it involves taking into account a matter which should not have been taken into account or failing to take into account a matter which should have been taken into account, or if it is plainly unsustainable.

Lewison LJ reviewed the authorities on dishonesty in pursuing a successful case. In Northstar Systems Ltd v Fielding [2006] EWCA Civ 1660 and Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida Sanayi Ve Pazarlama AS [2009] EWHC 1696 (Ch), it was established that even if the losing party is ordered to pay the winning party’s costs, the winning party will not be entitled to recover the costs of seeking to maintain a dishonest case, because such costs would not have been reasonably incurred. The court’s powers include disallowance of that party’s costs in advancing that case, an order that he pay the other party’s costs attributable to proving that dishonesty, and the imposition of an additional penalty which may in an appropriate case extend to a disallowance of the whole of the successful party’s costs.

In Hutchinson v Neale [2012] EWCA Civ 345, the Court of Appeal set aside a costs order which had the effect that the successful defendants received none of their costs of defending the claim, not even those which had been reasonably and necessarily incurred. Pitchford LJ emphasised that the starting point is that costs should follow the event, and that there is no general rule that a finding of dishonest conduct by the successful party will replace that starting point. What is required is an evaluation of the nature and degree of the misconduct, its relevance to and effect upon the issues arising in the trial, and its tendency to create an unwarranted increase in the costs of the action. The objective is not merely that the dishonest but successful party does not gain from his dishonesty but also that the honest but unsuccessful party does not lose.

Lewison LJ noted that Hutchinson was not a case where the unsuccessful party was also dishonest. He therefore turned to cases where dishonesty was found on both sides. In Intrigue Shipping Inc v Nikitin [2013] EWCA Civ 749, the trial judge had made no order for costs where the claimant had succeeded in part but had failed on its primary case (which accounted for most of the cost and effort) and had advanced that case on the basis of widespread dishonest evidence. The defendant had also given dishonest evidence. The Court of Appeal held that the judge had committed no error of principle, noting that courts do not look sympathetically on dishonest litigants.

In Ahuja Investments Ltd v Victory Game Ltd [2021] EWHC 2730 (Ch), HHJ Hodge QC addressed a case where the claimant had brought a fundamentally false claim in order to avoid repayment of a loan, and the defendants had met that claim with lies. The judge held that it would be wholly wrong to ignore the defendants’ success by making no order as to costs, as that would be to penalise unduly one of two dishonest parties and to ignore the fact that one of those two dishonest parties had succeeded on a claim that was fundamentally rooted in the prosecution of a dishonest claim by the unsuccessful party. The judge ordered the claimant to pay 75% of the defendants’ costs, ensuring that the defendants recovered no more costs than would have been incurred in advancing an entirely honest case, and adjusted to ensure that the claimant did not find itself bearing the costs of resisting those parts of the defence that were dishonest.

Lewison LJ also referred to the observations of Lord Clarke in Summers v Fairclough Homes Ltd [2012] UKSC 26, who said that in the ordinary way one would expect the judge to penalise the dishonest and fraudulent claimant in costs, and that it is entirely appropriate to order the claimant to pay the costs of any part of the process which have been caused by his fraud or dishonesty, on an indemnity basis if appropriate. Such cost orders may often be in substantial sums, leaving the claimant out of pocket, and the prospect of such orders is likely to be a real deterrent. Lewison LJ observed that in this case that claimant was Mr Donnellan.

Application to the Present Case

Lewison LJ held that the judge had erred in principle. The effect of her order was that the Ward parties, despite being the successful parties, were not entitled to recover any of their costs in successfully resisting the Partnership Claim or in advancing the Part 20 claim, not even those which were reasonably and properly incurred. Nor were they entitled to recover any of their costs in exposing the dishonesty of Mr Donnellan in advancing the Partnership Claim. That dishonesty also permeated the Part 20 Claim and the Possession Claim because in both of those claims the main plank on which the Donnellan parties relied was the dishonest trust deeds. No financial penalty of any kind was imposed on Mr Donnellan.

Lewison LJ agreed with HHJ Hodge QC that this was wrong in principle. Although the judge said that the starting point was that the unsuccessful party must pay the successful party’s costs, she departed far too readily from that starting point. The judge referred to the effect of Mr Ward’s dishonesty on the trial and “the proceedings leading up to it”, but it was entirely unclear to which proceedings she was referring. In fact, in her main judgment the judge held that there had been no significant breach by Mr Ward of his disclosure obligations. Moreover, there was no finding in the main judgment that Mr Ward’s dishonesty had in some way prompted Mr Donnellan to advance his own dishonest claim, or prompted Mr Donnellan to institute the Partnership Claim. As in Ahuja, the claim was fundamentally false, and the false claim spawned a partially false defence.

This was not a case like Intrigue in which the successful party had failed on its principal claim. On the contrary, the Ward parties were successful on all the claims. Nor was it a case like Hutchinson where the unsuccessful party was honest but the successful party was not. As in Hutchinson, the fact was that Mr Donnellan launched an action on grounds that failed, and which was supported by dishonest evidence.

In the critical part of her costs judgment the judge said that the Ward parties should not get the costs incurred in relation to advancing the dishonest Ebonair case and that they should pay the Donnellan parties’ costs of that case, and taking both those into account, she would say no order as to costs. Lewison LJ held that this left out of account the fact that the Donnellan parties ought to have been ordered to pay the Ward parties’ costs of exposing Mr Donnellan’s dishonesty, as well as the costs reasonably incurred by the Ward parties in resisting Mr Donnellan’s failed (and dishonest) claim. The judge’s approach was one-sided and failed to consider the conduct of both the Ward parties and Mr Donnellan. Nowhere in her judgment on costs did she refer to her findings about Mr Donnellan’s dishonesty. That omission was all the more surprising since Mr Donnellan’s dishonesty infected all three claims. This part of the judgment also left out of account the fact that none of the costs (including the costs of the evidence on the Ebonair issue) would have been incurred if Mr Donnellan had not chosen to litigate in the first place.

Moreover, the judge seemed to Lewison LJ to have overstated the legal relevance of the Ebonair issue to the Partnership Claim. Mr Donnellan’s claim was that a partnership existed and that it had been expressly agreed. The relevance of the Ebonair issue did not go to the existence (or not) of the partnership, but to what amounted to partnership property, if there were a partnership as Mr Donnellan claimed.

The Part 20 Claim

When she came to deal with the Part 20 Claim the judge said that she would make no order for costs because the issues raised in that claim “very much followed and formed part of the matters in dispute on the main claim”. Lewison LJ held that this observation was unsustainable. One of the main issues in the Partnership Claim was who was the beneficial owner of Ebonair. But the Part 20 Claim was brought by Ebonair itself against Mr Keane and Ms Howard for declarations that they held their leases on trust for Ebonair. Ebonair is a corporation with legal personality. Who is the ultimate owner of Ebonair is entirely irrelevant to the question whether Mr Keane or Ms Howard held their leases on trust for that corporation. The dishonesty of Mr Ward in relation to the Ebonair issue had no bearing on the issues raised in the Part 20 Claim. By contrast, the dishonesty of Mr Donnellan did, because the defence to the Part 20 Claim was based on the dishonest trust deeds.

The judge did not specifically deal with the Possession Claim. But success or failure on that claim also depended on whether the leases were held on trust for Ebonair or the alleged partnership. Once again, who was the beneficial owner of Ebonair had nothing to do with the Possession Claim. That position was reflected in the costs order that the judge in fact made in relation to the Possession Claim, namely that the unsuccessful claimant (Mr Keane) should pay the costs of the successful defendants (Ebonair and Luxap).

There was a further reason why the judge’s order in relation to the Part 20 Claim could not stand. The outcome of the Part 20 Claim and the Possession Claim stood or fell together. The judge recognised that. Yet the costs orders that she made in relation to the Part 20 Claim and the Possession Claim were inconsistent. She made no order for costs on the Part 20 Claim but ordered the unsuccessful claimant (Mr Keane) to pay the costs of the Possession Claim. There could be no rational explanation for that inconsistency.

The Substituted Order

Lewison LJ held that the court must exercise its discretion afresh. Although it is desirable for the court to make a global order dealing with the costs of all the actions tried together, he did not consider that to be possible in this case. Mr Ward’s dishonesty in relation to the beneficial ownership of Ebonair was not relevant to the issues raised in the Part 20 Claim. On the other hand, Mr Donnellan’s dishonesty was relevant to all the claims. Where several trials are conducted together, the judge must evaluate the relevance of the dishonesty to each of the trials.

In relation to the Part 20 Claim, Ebonair brought the claim against Mr Keane and Ms Howard for declarations that they held their leases on trust for it. They defended that claim unsuccessfully, on the basis of the trust deeds which the judge found to be bogus. But there was no finding that they themselves were dishonest. Since Ebonair was the successful party in the Part 20 Claim, the starting point was that the unsuccessful parties (Mr Keane and Ms Howard) should pay its costs. Although Mr Keane emphasised that he complied with all his procedural obligations and that he was drawn into the proceedings as a nominee, Lewison LJ did not regard these points as justification for departing from the starting point. Whether Mr Keane was drawn into the proceedings as a nominee (presumably for Mr Donnellan) was a matter between him and Mr Donnellan. Compliance with procedural obligations by an unsuccessful party is only to be expected and cannot justify a departure from the starting point. The court therefore ordered Mr Keane and Ms Howard to pay Ebonair’s costs of the Part 20 Claim to be assessed on the standard basis if not agreed.

In relation to the Partnership Claim, the court identified the following important considerations. First, the costs of the Partnership Claim were incurred solely because Mr Donnellan chose to bring it. Second, the Partnership Claim failed in its entirety. The starting point that the unsuccessful party should pay the successful party’s costs must be given proper weight. Third, Mr Donnellan supported his case by dishonest evidence. The Ward parties ought in any event to recover their costs of proving that dishonesty. Fourth, the Ward parties should not be entitled to recover any part of their costs incurred in advancing a dishonest case. This can be achieved either by reducing the proportion of costs to which, as the successful parties they would otherwise be entitled to recover, or by a direction to the costs judge to disallow the costs of advancing the dishonest case. Fifth, Mr Donnellan ought to be able to recover his costs of proving that dishonesty. Sixth, any costs order must not unduly penalise one of two dishonest parties.

The judge had taken the view that the costs incurred by the Ward parties in advancing the dishonest case and the costs incurred by Mr Donnellan in exposing that dishonesty were roughly equal and so balanced each other. Although Mr Polli KC submitted that the judge’s evaluation in that respect was flawed, Lewison LJ held that the judge was in a far better position to make that evaluation than the Court of Appeal. He would not disturb the judge’s conclusion in that respect.

Nevertheless, what the judge overlooked in striking that balance was the costs incurred by the Ward parties in exposing Mr Donnellan’s dishonesty. Nor did she visit any financial penalty on Mr Donnellan for supporting his failed case by dishonest evidence. She also gave little if any weight to the principle that the unsuccessful party should pay the successful party’s costs. In addition, she did not take into account the fact that the only reason that any costs were incurred in relation to the Ebonair issue was that Mr Donnellan had chosen to litigate.

Weighing all those considerations together and necessarily applying a broad brush approach, Lewison LJ ordered Mr Donnellan to pay 50% of the Ward parties’ costs of the Partnership Claim to be assessed on the standard basis if not agreed. He also directed that, as in Hutchinson, there should be no further deduction by the costs judge solely or mainly on the ground of the Ward parties’ dishonesty in relation to the Ebonair issue.

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All Costs Reserved To Trial Judge After ‘Plainly Necessary’ Mixed-Outcome Hearing

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The High Court’s decision in Latter Rain Outpouring Project Ltd v Green & ors [2026] EWHC 1381 (Ch) concerned the costs of a further interim injunction hearing and associated enforcement application arising from a dispute over control of a company limited by guarantee.

Background

Latter Rain Outpouring Project Limited (formerly The Latter-Rain Outpouring Revival Ministries) is a company limited by guarantee, registered under company number 06011619. The Company owns a property at 234-242A Hoxton Street in London, which is used for church purposes and is also let as a flat and four commercial units, with a value said to exceed £3 million. The Company’s stated object in its articles is the provision of property for accommodation and business activities in the community, and it conducts the commercial activities of a church.

The underlying dispute concerns control of the Company, its property, and the church to which it relates. There has been, as one counsel described it, a “schism” within the church, broadly with the Hoxton congregation led by Leroy Vassell, Lorna Vassell and Nathaniel Turner opposing the First Respondent’s conduct, and the Peckham congregation supporting him. The three Respondents, Creswell Lindsay Green, Grace Anderson and Darren Patten, are listed as directors of the Company at Companies House, with the Second and Third Respondents recorded as having been appointed in November 2024. The First Respondent, Mr Green, is a bishop of the Afro-Caribbean Churches Pentecostal ministry and holds his directorship ex officio under the Company’s articles.

A draft Part 7 Claim dated 18 September 2025 was prepared but never issued, sealed or served. It asserted that the Respondents were removed as directors by an extraordinary general meeting held on 11 July 2025, and that they had wrongfully diverted Company funds and granted charges over the Property in favour of a lender, Charles Street Commercial Investments Limited. The relief sought included declarations, rectification of the Companies House register, injunctions restraining the Respondents from acting on the Company’s behalf, and a declaration that the Charles Street charges were invalid. Despite the application having been issued in September 2025, the underlying claim remained in draft form at the time of the hearing in May 2026, some eight months later.

The application was first heard on 30 September 2025 before Mann J (the judgment at paragraph 9 states this date, though paragraphs 64 and 72 appear to contain a typographical error referring to “30 January 2025”), who granted a limited interim injunction until 24 October 2025 upon various undertakings being given by the Respondents. That interim position was extended by a consent order of Trower J on 24 October 2025, and further extended by consent order of Richards J on 30 October 2025, upon the parties agreeing to mediate. The matter came before Mark Anderson KC sitting as a High Court judge on 6 February 2026, who gave directions for mediation and for a further hearing, including provision for additional evidence. The case did not settle, and the matter came before Adam Kramer KC sitting as a High Court judge on 19 May 2026.

At the May 2026 hearing, the court was also asked to consider an enforcement application dated 20 February 2026, which sought unless orders requiring Mr Green to provide documents relating to the Charles Street loan advance, cheque stubs, bank statements, and documents relating to payments to a Mr Livingston. A wasted costs application had also been issued on 30 January 2026 by the Applicant against the Respondents and, it appeared, against the Respondents’ former solicitors Naylor LLP, seeking the wasted costs of a failed mediation. The court was informed at the hearing that this application was not being pursued, and the Applicant was directed to notify Naylor LLP accordingly, as correspondence indicated they were unaware of that position.

Until February 2026, the Applicant had been represented by Brown and Co solicitors, and thereafter appeared through Mr Horaine Henry of counsel by direct access. The Respondents had been represented by Naylor solicitors until January 2026, and thereafter appeared through Mr Duncan Kynoch of counsel by direct access.

Costs Issues Before the Court

The costs issues arising from this hearing were relatively contained, though they arose in a procedurally layered context. The hearing on 19 May 2026 was a further hearing of the interim injunction application, combined with the enforcement application of 20 February 2026. The Applicant failed on the injunction application, save that the undertakings previously provided by the Respondents were continued. The Applicant achieved partial success on the enforcement application, securing orders for the provision of certain categories of documents and a witness statement from Mr Green.

The costs of the hearing before Mann J on 30 September 2025 had been reserved to “the judge hearing the application on the return date”. At the hearing before Mark Anderson KC on 6 February 2026, no order as to costs of that hearing was made. The question therefore arose as to what costs order should be made in respect of the May 2026 hearing, and what should happen to the reserved costs from the Mann J hearing.

The court was required to consider the appropriate costs order in circumstances where the outcome of the hearing was mixed: the Applicant had failed on the primary relief sought but had succeeded in part on the enforcement application, and the hearing itself had been necessary given the deadlock in the Company and the urgency surrounding the Property and its potential development.

The Applicant had failed on the injunction application in its entirety, save for the continuation of the Respondents’ existing undertakings. It had achieved partial success on the enforcement application, securing orders for the provision of bank statements, cheque stubs, documentation relating to the disbursement of the Charles Street loan proceeds, and a witness statement from Mr Green explaining the payments. The Respondents had resisted the unless orders sought and had succeeded in that resistance, though they did not dispute that certain categories of documents remained outstanding and should be provided.

The court noted that the hearing had been plainly necessary, given the deadlock in the Company and the significance of the Property and the potential development. This was a relevant consideration in the exercise of the costs discretion, pointing away from a straightforward costs order against the Applicant notwithstanding its failure on the primary application.

The Court’s Decision

The court indicated that it was minded to reserve all outstanding costs, including those reserved by Mann J, to the preliminary issue trial judge or to any other judge hearing the matter in the future. The court did not make a final costs order at this stage.

The court’s provisional approach reflected the mixed outcome of the hearing and the ongoing nature of the proceedings. The Applicant had failed on the injunction application but had succeeded in part on the enforcement application. The court observed that a hearing had been plainly necessary in the circumstances, given the deadlock in the Company and the urgency of the issues surrounding the Property. These factors militated against making an immediate costs order against the Applicant simply by reason of its failure on the primary relief.

The court also noted, in the context of its wider observations on the proceedings, that if the Applicant chose not to pursue the matter following the judgment, it would not automatically follow that the Applicant would be required to pay all costs expended to date. The court expressed the view that the questions as to who controls the Company did and do need to be resolved, whatever the answer turns out to be, which was a further factor informing the reserved costs approach.

The court also raised, without deciding, the possibility that if it ultimately transpired that the application and claim were not properly authorised by the Company, a costs order against the individuals who had brought the application in the Company’s name, or potentially against the solicitors who had confirmed proper instructions, might be appropriate. This observation was made expressly as a possibility only, with no view expressed on the point, and was directed at ensuring that those behind the application were aware of the potential costs consequences of proceeding without proper authority.

The wasted costs application against the Respondents and Naylor LLP was noted as not being pursued. The court directed the Applicant to notify Naylor LLP that the application was not being pursued, given that correspondence from that firm indicated they had not been informed of that position.

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Highly Unreasonable Conduct Forfeits Any Right to Challenge The Winner’s Costs On Proportionality Grounds

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The Technology and Construction Court’s decision in The New Lottery Company Limited and Northern & Shell Plc v The Gambling Commission [2026] EWHC 1311 (TCC) addresses when cumulative unreasonable conduct from the outset of proceedings justifies indemnity costs across all claims, and whether proportionality is relevant to that assessment.

Background

This matter arose from proceedings brought in the Technology and Construction Court by The New Lottery Company Limited and Northern & Shell Plc (together, the claimants) against the Gambling Commission (the defendant), with Allwyn Entertainment Ltd, Allwyn International AG, and Camelot UK Lotteries Limited joined as interested parties. The proceedings concerned two distinct but intertwined claims: the Process Claim and the Modifications Claim, both arising from the fourth National Lottery competition, which the claimants described as “the most financially significant procurement process in UK history”.

The Process Claim challenged the conduct of the competition itself, including the evaluation and award process. The Modifications Claim concerned modifications made to the enabling agreement following the award decision. The claimants sought damages in excess of £1 billion and a declaration of ineffectiveness, which, if granted, would potentially have brought the National Lottery to a standstill. The proceedings were substantial, with the list of issues originally running to 64 issues in relation to the Process Claim and 17 issues in relation to the Modifications Claim.

Throughout the proceedings, the claimants advanced numerous serious allegations against the defendant and the interested parties, including allegations of bias, conflicts of interest, pre-determination of the competition outcome, retrospective amendment of reasoning to “retrofit” feedback to scores already awarded, and preferential treatment of Allwyn in the provision of Phase One Feedback. Many of these allegations were abandoned shortly before or during trial, often without notice and without explanation. Issues were dropped at the outset of trial, at the outset of closing submissions, and even during closing submissions, frequently only after the court or the other parties drew attention to the fact that they had not been addressed or could no longer be maintained.

The judgment, handed down by Mrs Justice Joanna Smith DBE, found against the claimants on all material issues. The consequentials hearing took place on 22 May 2026, at which the costs issues described below fell to be determined. By that stage, the claimants were represented by Mr Roger Mallalieu KC, without the assistance of any of their trial counsel. The defendant was represented by Ms Sarah Hannaford KC, Ms Rachael O’Hagan, and Mr Barney McCay, and the interested parties by Mr Mark Howard KC, Mr Malcolm Birdling KC, and Mr Jamie Carpenter KC.

Costs Issues Before the Court

Two principal costs issues required determination at the consequentials hearing.

The first was whether the defendant and the interested parties were entitled to recover their costs on an indemnity basis rather than the standard basis. It was common ground that the claimants were liable to pay the costs of both the defendant and the interested parties on a standard basis. The dispute was as to whether the basis of assessment should be elevated to an indemnity basis. The defendant and the interested parties sought indemnity costs in respect of the entirety of the proceedings, covering both the Process Claim and the Modifications Claim. The claimants conceded realistically that there were grounds for an indemnity costs order in respect of the costs of the trial of the Process Claim, or perhaps the costs of the Process Claim from the date of the pre-trial review, but contended that standard costs should apply to everything else, including the Modifications Claim in its entirety and the Process Claim up to the pre-trial review or the start of trial.

The second issue was whether the court should depart from the general rule that the winning party recovers all of its costs, by making a reduction to the defendant’s recoverable costs to reflect what the claimants characterised as an unreasonable approach to disclosure. The claimants sought a reduction to the defendant’s costs on the basis that the defendant’s conduct of the disclosure exercise had substantially increased the costs of all parties. The figure sought shifted between the witness evidence and the skeleton argument: the thirteenth statement of Mr Bryant suggested a 7.3% reduction, while the skeleton argument for the hearing proposed a 20% reduction for the first time, which would have had the effect of reducing the defendant’s costs bill by approximately £4 million. The application was made on 18 May 2026, four days before the hearing.

A third, more discrete point also arose concerning the extent of the interested parties’ involvement in the proceedings for the purposes of costs assessment, specifically whether the claimants could go behind the agreed list of issues, which had been annotated with references to the pleadings and had delineated the interested parties’ involvement throughout the trial.

The Parties’ Positions

On indemnity costs: The defendant and the interested parties submitted that the conduct of the claimants throughout the entirety of the proceedings was such as to take the case out of the norm and to warrant an order for indemnity costs across the board. They relied upon the cumulative effect of a number of factors: the inadequate and unparticularised pleadings from the outset; the broad and scattergun nature of the allegations, which included serious allegations of impropriety and dishonesty; the repeated and unexplained abandonment of issues and allegations, often at the last moment and without proper notice; the prejudice and disruption caused to the defendant and the interested parties by those abandonments; the unpleaded and fluctuating nature of the allegations advanced at trial; and the weak and speculative character of the claims from the beginning. Ms Hannaford KC submitted that the conduct warranting indemnity costs was not confined to the trial itself, because the conduct at trial was itself a consequence of the highly unreasonable manner in which the proceedings had been advanced from the outset. Mr Howard KC submitted that there was a need for the court to mark its disapproval of the claimants’ conduct by making an order for indemnity costs.

The claimants, through Mr Mallalieu KC, conceded realistically that there were grounds for an indemnity costs order in respect of the costs of the trial of the Process Claim, or at least from the date of the pre-trial review. However, they argued that standard costs should apply to the Modifications Claim in its entirety and to the Process Claim up to the pre-trial review or the start of trial. Mr Mallalieu also submitted that the defendant’s and interested parties’ costs were extremely high and raised proportionality as a relevant consideration in the exercise of the court’s discretion, arguing that the disproportionate level of those costs was a factor that should weigh against an indemnity costs order. He further cautioned the court against the exercise of hindsight in assessing the reasonableness of the claimants’ conduct.

On departure from the general rule: The claimants submitted that the defendant’s approach to disclosure had substantially increased the costs of all parties and that it would be unreasonable or unjust to require them to bear those increased costs. The application was advanced through the thirteenth statement of Mr Bryant, initially proposing a 7.3% reduction, with the skeleton argument for the hearing escalating that figure to 20% without adequate explanation. The claimants relied on the principles set out in TMO Renewables v Timothy Yeo [2021] EWHC 2773 (Ch), [2021] Costs LR 947.

The defendant, through Ms Hannaford KC, characterised Mr Bryant’s witness statement on the subject as “extremely thin” and submitted that the application was little more than a last-ditch attempt to obtain a reduction in the defendant’s costs. The defendant noted that it had had no proper opportunity to put in evidence in response to the application, given the very late service of the witness statement. The defendant also confirmed that it had excluded from its overall costs application both existing costs orders made during the proceedings and costs incurred in relation to the inadvertent disclosure of privileged documents, and that these would not be added back at a later stage.

The Court’s Decision

Indemnity costs: Mrs Justice Joanna Smith DBE ordered that both the defendant and the interested parties were entitled to recover their costs on an indemnity basis in respect of the entirety of the proceedings, covering both the Process Claim and the Modifications Claim.

The applicable principles were not in dispute. The court referred to Three Rivers DC v Bank of England [2006] EWHC 816 (Comm) at [25] per Tomlinson J, which cited Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879, and to the summary of the law in Hislop v Perde Kaur [2018] EWCA Civ 1726 per Coulson LJ at [35] to [36]. Essentially, there must be conduct which takes the case out of the norm. That is a highly fact-sensitive question and the court’s discretion is extremely wide. The touchstone is unreasonableness, but that unreasonableness must be “to a high degree”. Unreasonable in this context does not mean merely wrong or misguided in hindsight. The court may have regard to an aggregation of factors and there are infinite situations that may give rise to highly unreasonable conduct.

The court found that this was a huge and important claim, billed by the claimants as “the most financially significant procurement process in UK history”. The claimants sought damages of over £1 billion together with a declaration of ineffectiveness which, if granted, would potentially have brought the National Lottery to a standstill. One would expect such a significant and substantial claim to be advanced in a serious, responsible, and proper manner. That was not what happened.

The court noted its observation in the main judgment that, notwithstanding the size of the claim and the legal resources available, the Process Claim had been advanced by the claimants in an apparently unfocused manner, leading to various of the numerous original issues being dropped at the outset of trial, at the outset of closing submissions and even during closing submissions. In many cases, the issues were not dropped until it was specifically drawn to the claimants’ attention by the court or by the other parties that they had not been addressed in the claimants’ written closing submissions or that there no longer seemed to be any viable basis on which they could be maintained. The extent of this moveable feast was regrettable and, given the legal resources available to the claimants, inexcusable. It led to significant time being wasted by the other parties in dealing with issues which were subsequently abandoned. It also risked leaving the court with an imperfect understanding of how the case was being advanced. The court described this as surprising, given the nature and alleged value of the claim, which would be an understatement.

There were numerous serious and wide-ranging allegations, including of impropriety and dishonesty, made by the claimants running through the litigation from the outset. These included allegations of: bias against the defendant as a whole and against specific individuals working for the defendant; conflicts of interest of varying types; pre-determination by the defendant’s Evaluators of the outcome of the Competition leading to only a perfunctory review at moderation; amendments to the defendant’s reasoning after the award decision was made but before it was communicated to the applicants so as to “retrofit” the feedback and comments to the scores awarded; and preferential treatment of Allwyn by the defendant in the provision of Phase One Feedback. These allegations were all advanced over an extended period of time. Many of them were only dropped shortly before or at the trial in wholly unsatisfactory and unreasonable circumstances.

By the end of trial, the list of issues, which originally ran to 64 issues in relation to the Process Claim and 17 issues in relation to the Modifications Claim, had been very substantially reduced, often without any proper notice being given to the other parties. This was, in the court’s judgment, highly unreasonable and wholly out of the norm. The court observed that no explanation had ever been provided by the claimants for their abandonment of any of the issues, nor had any reason been given by them for what the court considered to be a cavalier and highly unusual and unreasonable way of proceeding.

One of the most serious of the allegations made in the Modifications Claim was that the need for the Challenged Modifications was brought about “wholly or substantially by Allwyn’s failures to meet its obligations under the Enabling Agreement”, an allegation which was taken seriously by Allwyn, but mysteriously abandoned by the claimants without explanation during the course of the trial.

In addition to these numerous, serious, and wide-ranging allegations, the scale of the abandonments caused very significant disruption to the court and to the other parties, which the court considered to be out of the norm. It caused significant prejudice to the other parties in terms of their defence of the proceedings, in particular their understanding as to the case that was being advanced against them and the costs they had spent in trying to address that case. It also made it difficult for the court to understand the way in which the case was being advanced. At times, it was advanced in a fluid and apparently fully flexible and opportunistic manner.

Indeed, the claimants advanced a number of wholly unpleaded and unparticularised allegations at the trial and frequently sought to amend and reformulate existing allegations in a manner which the court considered also fell well outside the norm. The court commented on this approach in numerous places in the judgment. At [746] the court observed that the claimants had been forced in light of their abandonments “to reformulate (and often to reinvent their case) at every opportunity” throughout the trial. The court observed that this appeared to be a strong indicator that there was “really no basis whatever for [the] claim of manifest error or, indeed, therefore, for the intervention of the court”.

The court considered that the claimants advanced weak and speculative allegations in respect of both the Process Claim and the Modifications Claim from the outset. They pursued these all the way to trial notwithstanding that they had been notified by the defendant that those claims were doomed to fail from early in 2023. In the Process Claim the claimants had to overcome an almost insuperable hurdle: they had to establish that The New Lottery Company Limited would have passed every one of the 12 Pass/Fail Areas in respect of which it was failed during the Competition and that Camelot and Allwyn should both have been disqualified. The issue of standing, which the court found against the claimants in the Process Claim, meant that, absent proper evidence as to the counterfactual, the Modifications Claim could not succeed. Yet, the claimants fought the Modifications Claim (which it is now accepted was intertwined with the Process Claim) without such evidence. The court also agreed with Ms Hannaford KC that the Modifications Claim was always very weak in its own right owing to The New Lottery Company Limited’s woeful performance in the fourth National Lottery competition, the gap between its score and the scores of Allwyn and Camelot being 30%.

Mr Mallalieu correctly cautioned the court against the exercise of hindsight, and the court considered whether any of these matters might be affected by hindsight, but agreed with Ms Hannaford that hindsight did not affect the analysis in this case given the way in which the trial and case had proceeded from the outset.

Individually or cumulatively, the matters identified by the court were, in its judgment, highly unreasonable and took the case out of the norm. The court relied upon the many detailed points made in the judgment as to the claimants’ poor and unparticularised pleadings, their abandonment of claims, the prejudice and disruption caused by these abandonments, the extent of the unpleaded and fluctuating allegations and the weak and speculative nature of the claims.

The court did not accept the claimants’ evidence in the thirteenth statement of Mr Bryant that they were not to blame for the approach they took to the litigation or that their conduct was the consequence of circumstances imposed upon them. The court also did not consider it to be appropriate to “salami slice” the orders for costs by reference to individual issues or periods of time, as Mr Mallalieu suggested. The court accepted Ms Hannaford’s submissions that the conduct of the claimants which warranted an order for indemnity costs was not just their conduct at trial, because that conduct was itself a consequence of the highly unreasonable way in which these proceedings had been advanced and pursued from the beginning. The pleadings were inadequate and unparticularised from the outset, the claims were weak and none of these issues was remedied prior to trial. The pleadings gave no proper indication to the defendant and the interested parties as to the case that they must meet. The allegations made by the claimants, as Mr Howard KC said, were broad and scattergun because there did not appear to be a realistic pleaded case. They were not supported by adequate evidence from the claimants. Yet the defendant and the interested parties had to expend very considerable amounts of money in preparing to meet those allegations as best they could, only to find them being peremptorily abandoned or changed at trial.

Accordingly, the conduct that the court found to be highly unreasonable was conduct running through the whole of the case. It plainly warranted an order for indemnity costs in relation to the entirety of the proceedings. Further, the court agreed with Mr Howard that there was a need to mark disapproval on the part of the court of such extraordinary conduct by the making of such an order.

During the course of his submissions, Mr Mallalieu suggested that the defendant’s and interested parties’ costs were extremely high, that there were issues arising in relation to their proportionality, and that this was a relevant consideration to take into account in the exercise of the court’s discretion. Specifically he prayed in aid the disproportionate nature of those costs in seeking to persuade the court not to award costs on an indemnity basis. However, the court rejected that submission. The court stated that there is nothing in the authorities to suggest that proportionality is a relevant factor in considering whether to make an order for indemnity costs and that it was inclined to think that it is not. If a party has conducted itself in a highly unreasonable fashion which is out of the norm so as to justify the award of indemnity costs, that party has forfeited the right to any assessment based on arguments of proportionality. In any event, even if the court was wrong about that, it did not consider that Mr Mallalieu’s arguments on proportionality would have shifted the dial given the serious and highly unreasonable nature of the conduct in this case. The conduct here was such that there was no injustice in the claimants being unable to challenge the quantum of the other parties’ costs on the grounds of proportionality.

Departure from the general rule: The court turned to deal with the claimants’ application for the court to depart from the general rule that the winning party should recover all of its costs. The claimants sought an order for a reduction to the defendant’s costs to reflect various issues that they had identified with the disclosure exercise, as explained in the thirteenth statement of Mr Bryant. In short, the claimants submitted that the defendant’s approach to disclosure had substantially increased the costs of all parties involved and that it would be unreasonable or unjust to expect them to pay those increased costs.

The court was referred by Mr Mallalieu to the relevant principles in relation to the approach to costs, which are set out in the case of TMO Renewables v Timothy Yeo [2021] EWHC 2773 (Ch), [2021] Costs LR 947 at [7] to [14]. The court bore those in mind, but did not need to recite them. In the evidence of Mr Bryant, it was suggested that there should be a 7.3% reduction of the defendant’s costs to reflect the unreasonable costs incurred during disclosure. However, in the claimants’ skeleton argument for the hearing it was suggested for the first time that there should be a 20% reduction. No adequate explanation was given as to why that should be the case.

Having considered the arguments, the court was not prepared to make any reduction to the defendant’s costs. Having regard to all the circumstances of this case, the court considered justice to require that the defendant, as the winning party, should be entitled to recover all of its costs.

This application was made only on 18 May (the hearing being on 22 May) in the witness statement of Mr Bryant. Ms Hannaford described Mr Bryant’s witness statement on the subject as “extremely thin”, and the court agreed. No adequate explanation for the proposed reduction had been given. The defendant had had no proper opportunity to put in evidence in response to the application, which the court considered to be unfair, and the court bore in mind that the judgment in this matter had been handed down over a month ago and that this consequentials hearing was taking place, therefore, some considerable time after receipt of the judgment. If an application for a 20% reduction (or any reduction) from the defendant’s costs was to be made, it should have been made with proper notice being given to the defendant.

The court agreed with the defendant that this was little short of a last-ditch attempt on the part of the claimants to obtain a reduction of the defendant’s costs. A reduction of 20% would have the effect of slicing around £4 million from the defendant’s cost bill. The court did not consider there to be any basis for such an order, nor did it consider it to be fair, just or in accordance with the overriding objective to make that order.

The defendant had excluded both existing costs orders made during the course of the proceedings and costs incurred in relation to its inadvertent disclosure of privileged documents from its overall application for indemnity costs. It had confirmed that these would not be added back later. If the defendant spent an unreasonable amount of time on disclosure, that could be addressed on the assessment of costs. The court accepted that there were difficulties in this case with disclosure, but bore in mind that the issues raised in these proceedings necessitated a substantial and complex disclosure exercise. Disclosure in tranches was the subject of court orders, including as to costs. That was not unusual in a case of this magnitude and the court did not consider the disclosure issues identified by the claimants to go beyond what one would expect to see in the ordinary cut and thrust of litigation of this type.

Accordingly, in the exercise of its discretion and having regard to the relevant principles and the overriding objective, this was not a case in which the court should depart from the general rule that the losing party must pay all of the winning party’s costs.

The extent of the interested parties’ interests in the proceedings: Finally, the court observed that the extent of the interested parties’ interest in these proceedings was agreed by the parties in the list of issues which was annotated with relevant references to the pleadings. The trial proceeded on the basis that the list of issues accurately identified and delineated the interested parties’ involvement. The court did not consider there now to be any scope for the claimants to go behind that identification and delineation when it comes to the assessment of costs.

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Foreign Litigation Costs Recoverable As Damages For Breach Of An Exclusive Jurisdiction Clause, Assessed on the Indemnity Basis

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The Commercial Court’s decision in Diageo DV Limited v NIO S.R.L. (in liquidation) [2026] EWHC 1198 (Comm) addresses the recovery of foreign litigation costs as damages for breach of an exclusive jurisdiction agreement and the assessment of such costs on the indemnity basis.

Background

This matter concerned an application by Diageo DV Limited (“Diageo”), an English company engaged in the production and distribution of alcoholic beverages, for summary judgment and a final anti-suit injunction against NIO S.R.L. (in liquidation) (“Nio”), an Italian company in voluntary liquidation. The application was heard on 17 April 2026 before Anna Dilnot KC, sitting as a Deputy High Court Judge in the Commercial Court, with judgment handed down on 19 May 2026.

The underlying dispute arose from a Share Purchase Agreement dated 23 November 2023 (the “SPA”), by which Diageo agreed to purchase Nio’s category “A” share in Niococktails s.r.l. (“Niococktails”) for consideration comprising a completion payment of €2.75 million, a deferred payment of €1.25 million, and a contingent exit payment of at least €1 million. The dispute centred on Diageo’s decision to withhold €780,008 from the deferred payment, representing its estimated liability in respect of a settlement reached between Niococktails and entities associated with Conor McGregor and Proximo Spirits Inc (together, the “Proximo/McGregor Entities”).

Prior to the SPA, in around August 2023, Niococktails had entered into a letter of intent and a promotional services agreement with the Proximo/McGregor Entities. Following completion of the share purchase, those arrangements were terminated, prompting the Proximo/McGregor Entities to threaten claims of up to USD 12 million against Niococktails. A settlement agreement was ultimately executed on 2 August 2024, with Niococktails paying USD 1 million in full and final settlement. Diageo subsequently notified Nio of its intention to withhold part of the deferred payment as an estimated liability under clause 6.2 of the SPA.

By letter dated 18 November 2024, Diageo gave notice that it intended to withhold €800,000 from the deferred payment, incorrectly stating the settlement sum as €1 million. Diageo corrected that error in a letter dated 28 November 2024, explaining that the estimated liability was €750,000, being USD 1 million less the €200,000 excess stipulated by clause 7.5(a) of the SPA, converted to euros at an exchange rate of USD 1:EUR 0.95. On 14 January 2025, Diageo paid Nio €469,992, being the deferred payment of €1.25 million less €780,008, the latter figure representing the settlement sum less the excess, converted to euros using the Bank of America spot rate at the date of payment.

Nio objected to the withholding, raising grounds including alleged failures by Diageo to provide sufficient information, non-compliance with clause 5.4 of the SPA (which required reasonable endeavours to settle by way of a product purchase from Proximo), and the contention that Diageo had no unilateral right to withhold any sum without prior agreement or a determination under the Counsel Determination Mechanism provided for in clause 6.2. The parties exchanged correspondence between November 2024 and January 2025 without reaching agreement, and neither party invoked the Counsel Determination Mechanism.

On 26 March 2025, Nio commenced proceedings before the Civil Court of Milan, seeking recovery of the withheld sum. Nio relied upon an exclusive jurisdiction clause in favour of the Italian courts contained in Article 8 of a Deed of Transfer dated 1 December 2023, which had been executed to satisfy the formal requirements of section 2470 of the Italian Civil Code for the transfer of shares in an Italian company. Nio also filed an application before the Italian Supreme Court seeking a declaration that the Milan court had jurisdiction, which resulted in the Milan proceedings being stayed.

Diageo’s position was that the SPA contained, at clause 24.2, an exclusive jurisdiction agreement in favour of the English courts, and that the Italian proceedings had been commenced and pursued in breach of that agreement. Diageo obtained an interim anti-suit injunction from David Bailey KC on 18 July 2025 (reported at [2025] EWHC 2109 (Comm)), restraining Nio from taking further steps in the Italian proceedings. That injunction was continued until further order by HHJ Pelling KC by order dated 8 September 2025, which also addressed service of the claim form and other documents on Nio out of the jurisdiction in Italy. HHJ Pelling KC also made a costs award in Diageo’s favour at that stage in the amount of £85,159 (from a claimed sum of £95,411), covering the costs of the hearing before David Bailey KC and the application to continue the interim injunction, assessed on the indemnity basis.

Diageo’s application for summary judgment and a final anti-suit injunction was issued on 6 January 2026 and served on Nio by certified email on 23 January 2026. Nio did not file any acknowledgement of service or defence, and did not appear or seek representation at the hearing on 17 April 2026. The court was satisfied that Nio had been properly served and was aware of the application, and proceeded to determine it in Nio’s absence.

Costs Issues Before the Court

Three distinct costs matters fell to be determined. The first was whether Diageo was entitled to recover, by way of damages, the legal costs it had incurred in the Italian proceedings as a result of Nio’s breach of the exclusive jurisdiction clause in the SPA. The second was whether an interim payment on account of those damages should be made at this stage, given that the Italian proceedings remained ongoing and the full extent of Diageo’s loss could not yet be quantified. The third was the summary assessment of the costs of the application before the court on the indemnity basis.

On the question of damages, the legal basis for recovering foreign litigation costs as damages for breach of an exclusive jurisdiction clause was well established. The court noted that the proposition had gone unchallenged before the Supreme Court in both Starlight Shipping Co v Allianz Marine and Aviation Versicherungs AG [2013] UKSC 70 and AMT Futures Ltd v Marzillier [2018] AC 439. The measure of recovery is to put the non-defaulting party in the position it would have been in had the foreign proceedings not been brought at all, and can include costs incurred in those foreign proceedings: Compania Sud Americana de Vapores SA v Hin-Pro International Logistics Ltd [2015] 1 Lloyd’s Rep 301 at [37] to [38]. Importantly, such costs are recoverable even where the foreign court lacks the power to award costs: Union Discount Co Ltd v Zoller [2002] 1 WLR 1517 at [31]. The assessment of those costs is conducted on the indemnity basis, with the burden of establishing any failure to mitigate resting on the party in breach: National Westminster Bank plc v Rabobank Nederland (No. 3) [2008] 6 Costs LR 839 at [25].

On the question of the costs of the English proceedings and application, the court noted that a successful claimant for an anti-suit injunction is ordinarily entitled to its costs on the indemnity basis where it can establish that the breach of the exclusive jurisdiction clause caused it reasonably to incur legal costs: A v B [2007] 2 CLC 203 at [9] to [15]. Diageo sought summary assessment of the costs of the application on the indemnity basis, having provided a costs schedule in that regard. The court also had to consider how to treat any costs of the proceedings falling outside the scope of the two earlier applications and the present application, given the prior costs order made by HHJ Pelling KC.

The Parties’ Positions

Diageo’s position on damages was that, by commencing and pursuing the Italian proceedings in breach of clause 24.2 of the SPA, Nio had caused Diageo to incur costs in Italy in challenging the jurisdiction of the Italian courts. Those costs were recoverable as damages. Diageo was not yet in a position to quantify its total loss, given that the Italian proceedings remained ongoing, with the Milan court proceedings stayed pending the Italian Supreme Court’s determination on jurisdiction. Diageo therefore sought an interim payment of damages pursuant to CPR 25.20 and CPR 25.23(b) in the amount of £44,045, representing approximately 90% of the costs totalling €52,238.29 incurred to date in the Italian proceedings. Those costs were evidenced by invoices from Diageo’s Italian lawyers, PedersoliGattai. Diageo also sought an order that the remainder of its damages be assessed following the conclusion of the Italian proceedings.

On the costs of the application, Diageo sought summary assessment on the indemnity basis in the sum of £42,056.90. Diageo submitted that it was entitled to costs on the indemnity basis as a successful claimant for an anti-suit injunction, the breach of the exclusive jurisdiction clause having caused it reasonably to incur legal costs in obtaining the relief granted.

Nio did not appear and was not represented at the hearing. It had not filed any acknowledgement of service or defence, and had not responded to the application other than to dispute service in correspondence.

The Court’s Determination

The court granted summary judgment in Diageo’s favour, finding that Nio had no real prospect of successfully defending the claim. The court found that clause 24.2 of the SPA constituted an exclusive jurisdiction agreement in favour of the English courts. The court rejected Nio’s reliance on the jurisdiction clause in the Deed of Transfer, finding that the Deed was narrow in scope and concerned only with the formalities for effecting the transfer of the share in Niococktails. The construction of the exclusive jurisdiction clause started from the assumption, established in Fiona Trust & Holding Corp v Privalov [2007] UKHL 40, that the parties, as rational business people, are likely to have intended any dispute arising out of the relationship into which they have entered to be decided by the same tribunal unless the language of the clause makes it clear that certain questions are to be excluded from that tribunal’s jurisdiction. The Deed was not concerned with the wider rights and obligations of the parties related to the sale and purchase, including the terms upon which any part of the deferred payment could be withheld. All of the claims brought by Nio before the Court of Milan were disputes or claims which fell within the material scope of clause 24.2 of the SPA. While labelled by Nio as claims for breaches of the Deed of Transfer or of provisions of Italian law, they were in substance claims for breaches by Diageo of the terms of the SPA or the non-fulfilment of the conditions required to be fulfilled before Diageo was entitled to withhold any part of the deferred payment.

The court granted a final anti-suit injunction restraining Nio from continuing with the Italian proceedings, both before the Court of Milan and the Italian Supreme Court. The court also granted declaratory relief confirming that the claims brought by Nio in the Italian proceedings were within the scope of the exclusive English jurisdiction agreement and were brought in breach of that agreement.

On the substantive dispute, the court found that Diageo had complied with its obligations under clause 5.4 of the SPA (including the obligation to use reasonable endeavours to ensure Niococktails gave due regard to settling by way of a product purchase from Proximo, and to consult with Nio prior to entering into the settlement agreement). The court also found that Diageo had complied with clause 6.2 of the SPA and was entitled to withhold the sum of €780,008 from the deferred payment as a genuine and bona fide estimate of Nio’s liability under the indemnity provision. The court rejected Nio’s argument that Diageo was not entitled unilaterally to withhold any amount without agreement or a prior determination via the Counsel Determination Mechanism, finding that clause 6.2 entitled Diageo to withhold the amount of the estimated liability as long as it had notified Nio of the same in writing before the deferred payment became due.

Damages for Italian Litigation Costs

The court held that by commencing and pursuing the Italian proceedings, Nio had breached the exclusive jurisdiction clause in the SPA. As a result of that breach, Diageo had taken steps in Italy to challenge the jurisdiction of the Italian courts and had incurred costs, principally legal costs. The court considered that Diageo was entitled to recover such expenditure which was reasonably incurred as damages in the proceedings.

The court applied the principles established in Union Discount Co Ltd v Zoller and National Westminster Bank plc v Rabobank Nederland (No. 3). A party forced to defend proceedings brought in breach of an exclusive jurisdiction clause can recover reasonable costs incurred as a result of the foreign proceedings even if the foreign court lacks the power to award costs. The assessment of those costs is conducted on the indemnity basis such that the non-defaulting party can recover all costs reasonably incurred and reasonable in amount, with the burden of proof of any failure to mitigate on the party in breach. The court described the indemnity basis as “a useful proxy for an exercise in assessing reasonable costs where the burden is on Nio to establish a lack of reasonableness or failure to mitigate,” drawing an explicit analogy with the burden of proof under CPR 44.3(3).

Diageo was not in a position finally to determine the amount of its loss because the Italian proceedings were ongoing, with the proceedings before the Milan court stayed pending a decision on jurisdiction from the Italian Supreme Court. The court therefore considered it appropriate to grant an interim payment of damages.

The sum of £44,045 sought by Diageo represented approximately 90% of the costs (which totalled €52,238.29) that Diageo had incurred to date in respect of the Italian proceedings. Those costs had been established by way of the invoices submitted by Diageo’s Italian lawyers, PedersoliGattai. The court acknowledged that even assessing the costs on the indemnity basis, 90% would be a high proportion of costs to recover. However, the amount of £44,045 was reasonably modest and the court had no specific reason to reduce the amount of the interim payment sought. Further, it was likely that Diageo would continue to incur legal costs in Italy and it followed that its final costs burden for which it would be entitled to be compensated would likely exceed £44,045.

The court therefore granted Diageo an interim payment in the amount of £44,045, with the remainder of its loss to be assessed in due course following the conclusion of the Italian proceedings. The court considered it appropriate for Diageo to receive some contribution from Nio towards its costs at this point rather than awaiting the conclusion of the Italian proceedings.

Summary Assessment of Application Costs

The court turned to the costs of the application before it. Diageo had been provided with a costs schedule in respect of the application (but not the proceedings), with a request that costs be assessed summarily and on the indemnity basis. The total amount claimed as the costs of the application was £42,056.90.

The court noted that HHJ Pelling KC had already made a costs award in Diageo’s favour in the amount of £85,159 (out of the £95,411 claimed) which sum covered Diageo’s costs of the hearing before David Bailey KC on 18 July 2025 and the costs of the application to continue the interim anti-suit injunction, assessed on the indemnity basis. The court observed that it was unclear whether there existed costs of the proceedings (other than the £10,000 court fee for issuing the proceedings) which fell outside of the scope of those two applications, this application and the Italian proceedings.

The court therefore limited its summary assessment to the costs of this application (plus the £10,000 court issue fee), with any other amounts incurred by Diageo in the proceedings not already subject to costs orders to be assessed at the same time as damages were finally to be assessed. The court assessed the costs of the application on the indemnity basis in the amount of £33,645, being 80% of £42,056 (the judgment uses the rounded figure of £42,056 at paragraph 87, though the claimed sum stated at paragraph 86 is £42,056.90). The court did not provide reasons for the 20% reduction in its judgment.

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