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.
Some You Win Some You Lose | Partial Success And The Courts’ Approach To Costs
Partial Success, Conduct, Offers And Alleged Exaggeration
Issues Based And Proportional Costs Orders: When Should They Be Made?
The Correct Approach To Costs When A Properly Made Bankruptcy Order Is Later Rescinded
Executors Lose Estate Indemnity After Hostile Removal Litigation
TMC Legal provides advice on costs orders and discretion for solicitors across England and Wales.
![Garden House Software Ltd v Marsh & Ors [2026] EWHC 568 (Ch)](https://tmclegal.co.uk/wp-content/uploads/2026/03/shutterstock_2624401655.webp)
