No Order As To Costs Where Neither Party Is The "Successful Party" | Matrix v Musst

A money judgment in the claimant’s favour did not make it the “successful party” for costs purposes. Where the recovery represented less than 5% of the claim and the commercially significant claims failed entirely, the court ordered each party to bear its own costs.

MATRIX RECEIVABLES LIMITED V MUSST HOLDINGS LIMITED [2025] EWHC 3204 (Ch)

In Matrix Receivables Ltd v Musst Holdings Ltd, the court determined costs following a trial where the claimant partially succeeded, recovering £175,380.76 in unjust enrichment for a share of management fees, while its larger performance fee claim and all contractual claims failed. Both parties contended they were the successful party under CPR 44.2. The claimant relied on the “paying party” principle from AL Barnes v Time Talk and Fox v Foundation Piling Ltd, arguing the defendant’s lack of a Part 36 offer was significant. The defendant, citing Medway Primary Care Trust v Marcus, argued it succeeded in substance, as the claimant recovered less than 5% of its claim and the commercially critical “juice” of the action had failed. Sir Clive Freedman, sitting as a Deputy Judge of the High Court, held neither party was the overall winner. The modest recovery was disproportionate to the costs incurred, weak contractual claims had been maintained until trial, and the claimant’s principal had given evidence for the defendant’s opponent in related litigation. The court made no order as to costs.

In my judgment, there are aspects of success and failure to both parties... I have come to the conclusion that despite the fact that Musst is the paying party, neither party was successful... It is both blunt and uncommercial to regard Matrix as the successful party given the failure of the contract claims and the failure of the performance fees unjust enrichment claim, which was rightly characterised as containing the juice of the claim... I have come to the conclusion that the just order in all of the circumstances of the case is that there should be no order as to costs.

Citations

AL Barnes v Time Talk [2003] EWCA Civ 402 The Court held that in commercial litigation, the party who must pay money to the other is generally considered the unsuccessful party for costs purposes. Day v Day [2006] EWCA Civ 415 The Court endorsed the approach that identification of the unsuccessful party for costs can be determined by who writes the cheque at the end of the case. Northampton Regional Livestock Centre Co Ltd v Cowling and Lawrence [2015] EWCA Civ 651 The Court approved the principle that the party required to pay money is the surest indication of who is the unsuccessful party regarding costs. Fox v Foundation Piling Ltd [2011] EWCA Civ 790 The Court emphasised the importance of Part 36 offers in protecting a defendant’s cost position where the claimant’s quantum is inflated. Global Energy Horizons v Gray [2021] Costs LR 133 The Court stated that defendants facing inflated claims should use Part 36 to protect their cost exposure, even where liability for a smaller amount might be accepted. Taylor v Jones [2024] EWCA Civ 170 The Court endorsed the simplicity of identifying the paying party as a principled starting point for costs decisions in trials and first instance litigation. Medway Primary Care Trust v Marcus [2011] EWCA Civ 750 The Court applied the test of determining the successful party based on substance and reality, including whether the plaintiff gained anything of value. Rotam Agrochemical Company Ltd and Another v GAT Microencapsulation GMBH [2018] EWHC 3006 (Comm) The Court held that despite a monetary award to the claimant, the defendant could still be considered the successful party due to the minimal value of the claim and costs far exceeding recovery. Hamad M Aldrees & Partners v Rotex Europe Ltd [2019] EWHC 526 (TCC) The Court reiterated that identifying the successful party requires a fact-specific evaluation and that financial payment alone may not indicate success if the result is disproportionate to the claim’s value or purpose. Atlasjet Havacilik Anonim Sirketi v Kupelli [2018] EWCA Civ 1264 The Court reaffirmed that deciding who is the successful party should involve a common-sense, fact-based assessment, not a technical or purely financial one. Lonestar Communications Corporation v Kaye & Ors [2023] EWHC 421 The Court clarified that for US dollar claims, the default interest rate should be the US prime interest rate, even if the parties are based in the UK.

BARONESS LAWRENCE & ORS v ASSOCIATED NEWSPAPERS LIMITED [2025] EWHC 3207 (KB)

Permission hearing costs award CPR 52.6 exceptional circumstances hopeless grounds

Successful party test CPR 44.2 no order as to costs partial recovery

Planning inquiry costs award quashed where expert witness evidence failed under cross-examination

CPR 36.17(4)(c) enhanced interest on costs aggregate method calculation

Indemnity costs proprietary estoppel unfounded claim CPR 44.3 Grijns v Grijns

CPR 63.26(2) immediate costs orders IPEC unreasonable behaviour threshold Court of Appeal

Security for costs Solicitors Act CPR 25.27 asset dissipation detailed assessment proceedings

CPR 44.2 proportionate costs order partial success judicial review proceedings

CPR 44.11 defective bill solicitor vicarious liability costs draftsman failures

Key Points

The ‘paying party’ test is a highly relevant but not decisive indicator of which party is the ‘successful party’ for costs purposes; the court must undertake a fact-specific evaluation of the litigation as a whole to determine who, as a matter of substance and reality, has won.
Where a claimant recovers only a very small fraction of the total sums claimed, and the commercially significant part of the claim fails entirely, this may justify a finding that neither party was the overall winner, leading to a departure from the general rule on costs.
In determining the appropriate costs order, the court may take into account as a matter of conduct a party’s maintenance of weak alternative claims up to trial, which should have been abandoned earlier and which increased the other party’s costs of preparation.
The conduct of a party or its controlling mind in related litigation, where such conduct is fundamentally inconsistent with the case advanced in the present proceedings and undermines the credibility of its evidence, is a relevant factor the court may consider when exercising its discretion on costs.
The proportionality of the costs incurred relative to the sum recovered, and the likelihood that a more limited claim would have been conducted in a less costly manner, are relevant considerations when deciding the just order for costs.

“Even if I were wrong about that conclusion, and the effect of the payment ordered from Musst to Matrix is that Matrix is the successful party for the purpose of CPR 44.2, the matters set out above in this section of the judgment headed ‘overall result’ and in the judgment as a whole provide sufficient reasons to depart from the general rule that the successful party should have its costs.”

Key Findings In The Case

The claimant, Matrix, recovered only a small fraction (less than 5%) of the total sums claimed, obtaining judgment for approximately US$175,000 in respect of management fees, whereas its primary and commercially significant claims for a share of performance fees and under contract failed entirely [45–47, 73].
Matrix pursued weak contractual claims throughout the proceedings, including resisting summary dismissal, despite ultimately abandoning them at trial; this conduct unnecessarily increased Musst’s costs of preparation and was found to be a relevant matter of conduct against Matrix [50–54, 72].
Mr Reeves, the controlling mind of Matrix, gave evidence in related litigation which contradicted the position advanced by Matrix in the present proceedings and actively undermined the case. This inconsistent conduct was severe, unjustified, and significantly undermined the credibility of Matrix’s case, constituting a relevant factor on costs [60–67, 80(6)–(7)].
The proportion of costs incurred by Matrix was vastly greater than the amount recovered, and the judge found that had the claim been confined to management fees alone, it would have been conducted in a more limited, less costly manner, providing further justification for refusing to award Matrix its costs [45–48, 74, 80(8)].
Taking into account the limited success of Matrix, its failure on core claims, and the conduct issues identified, the court rejected Matrix’s argument that it was the successful party and concluded that the appropriate order was no order as to costs between the parties [70–81].

"I take into account the respects in which Musst has succeeded, especially in defeating the claim for the performance fees and the contract claims. I take into account... the total failure of a claim for a share of the performance fees, which was the juice of the action... the very small amount of the amount ordered to be payable relative to the amounts claimed... the conduct of Mr Reeves... the effect on the costs of the trial if it had been confined to a relatively modest share of the management fees."

The High Court’s decision in Matrix Receivables Ltd v Musst Holdings Ltd [2025] EWHC 3204 (Ch) confirms that the “paying party” test is not determinative where a claimant’s overall recovery is a fraction of its claim and its principal claims have failed.

Background

The claim arose from a dispute concerning the introduction of investment customers to a fund manager, Astra. The claimant, Matrix Receivables Limited, was the assignee of a claim originally belonging to Matrix Money Management Limited (MMM). It alleged that MMM had played a significant role in introducing two customers, 2B and Crown, to Astra via the defendant, Musst Holdings Limited. Matrix claimed it was entitled to a share of the management and performance fees subsequently received by Musst from Astra.

The claim was advanced on two alternative bases: in contract and in unjust enrichment. The proceedings were brought in 2020 in the Business and Property Courts under case number BL-2020-001417. A substantive trial took place over seven days [§46]. In the main judgment, [2025] EWHC 2487 (Ch) [§1], the court dismissed the contractual claims in their entirety. On the unjust enrichment claims, the court found that Matrix was entitled to a share of the management fees received by Musst after 4 September 2014, awarding judgment in the sum of £175,380.76 plus interest [§2] (referred to elsewhere in the judgment as approximately US$175,000 [§34]). Matrix had sought 80% of management fees but was awarded 40% in respect of one customer and 20% in respect of another, with further reduction because receipts prior to September 2014 were statute-barred [§39]. The larger claim for a share of the performance fees was dismissed on the basis that the chain of causation between MMM’s introductory services and Musst’s eventual receipt of those fees had been broken. The court found that whatever service was provided in 2012 was “eclipsed” by the years of costs, risk and litigation effort undertaken by Musst against Astra, coupled with the lack of assistance—indeed opposition—on the part of Mr Reeves, the controller of Matrix [§40].

Following the substantive judgment, a consequentials hearing was held on 4 November 2025 to determine issues including interest, permission to appeal, costs, and a stay of execution [§1, §3]. Permission to appeal was refused, the court finding no real prospect of success [§15]. This blog post focuses on the court’s analysis and decision regarding costs.

Costs Issues Before the Court

The primary issue for the court was determining the appropriate costs order following a judgment where the claimant had succeeded on only a small part of its overall claim. The court needed to decide which party was the “successful party” for the purposes of CPR 44.2, and whether to depart from the general rule that the unsuccessful party pays the successful party’s costs. This involved a detailed evaluation of three matters: the relative success and failure on the different heads of claim (contract, management fees, performance fees); the proportionality of the recovery to the costs incurred; and the conduct of the parties—particularly the principal witness for the claimant.

The Parties’ Positions

Matrix’s Position: Matrix argued it was the successful party because it was the party to whom money was ordered to be paid [§16]. It relied on authorities such as AL Barnes v Time Talk [2003] EWCA Civ 402, Day v Day [2006] EWCA Civ 415, and Fox v Foundation Piling Ltd [2011] EWCA Civ 790, which emphasise that in commercial litigation, the “surest indicator of success” is identifying who has to pay money at the end of the case [§16–17]. Matrix also cited Global Energy Horizons v Gray [2021] Costs LR 133 for the proposition that a defendant facing an exorbitant claim should protect its position through a Part 36 offer [§19]. It submitted that the absence of a Calderbank or Part 36 offer from Musst was significant, as such offers are the recognised mechanism for a defendant to protect its position on costs [§25]. Matrix contended that the unsuccessful contract and performance fee claims did not substantially increase costs, as they were based on the same facts as the successful management fee claim [§23].

Musst’s Position: Musst contended that, looking at the substance of the litigation, it was the successful party [§26]. It relied on the test from Medway Primary Care Trust v Marcus [2011] EWCA Civ 750, which asks “who, as a matter of substance and reality, has won?” [§26]. Musst argued that “the juice” of the action was the claim for performance fees, which failed entirely [§34]. The recovery for management fees was less than 5% of the total sums claimed and was dwarfed by the costs of the action [§34–35]. It submitted that maintaining the weak contract claims until trial was unreasonable conduct [§36]. Musst also pointed to the conduct of Mr Reeves (Matrix’s controller), who had actively assisted Astra in litigation against Musst—a position fundamentally at odds with Matrix’s claim for a share of the fees generated by that very litigation [§36].

The Court’s Decision

The court held that the just order was that there should be no order as to costs [§81]. In reaching this decision, Sir Clive Freedman (sitting as a Deputy Judge of the High Court) conducted a detailed evaluation, proceeding through three stages of analysis.

The “Paying Party” Test

The court acknowledged the force of the “paying party” test, describing it as “highly relevant” [§38]. However, it concluded that the test was not “the be all and end all of the analysis” on the unusual facts of this case [§38]. The court expressly declined to treat the first instance decisions of Hamad Aldrees v Rotex [2019] EWHC 526 (TCC) and Rotam v GAT [2018] EWHC 3006 (Comm)—both of which had looked beyond the paying party test—as wrongly decided [§38].

Evaluating Success and Failure

The court found that it was “artificial” to label either party as the overall winner [§76]. While Matrix had secured a money judgment, its success was limited to a small fraction of its claim. The claim for performance fees—described as “the only sensible raison d’être for the claim being commenced or continuing” [§73]—had failed completely, as had the alternative contract claims. The sum recovered was “small relative to the costs of the claim as a whole” [§80(5)]. The court noted that if the claim had been confined to the management fees from the outset, it would likely have been conducted more proportionately, “confined to say 3 days rather than 7 days” and without the involvement of leading counsel [§46].

The court also drew a connection between delay and the costs outcome. The same unexplained delay in obtaining the assignment from MMM and bringing the claim that led to the refusal of pre-action interest [§5–6] also featured in the conduct analysis, reinforcing the conclusion that Matrix could not claim the full fruits of success [§68].

Conduct

The court considered the parties’ conduct to be a relevant factor under CPR 44.2 and 44.4 [§55–57]. It was critical of Matrix for maintaining “at best very weak” contract claims right up to trial [§53]. The claims were “barely maintained” from the opening and formally abandoned at the end of the trial; the court found there was “nothing to it” and Matrix should have notified Musst so that it would not have had to prepare to meet them [§53, §72].

More significantly, the court found the conduct of Mr Reeves justified a “significant adjustment” in the costs order [§69]. His actions in supporting Astra against Musst in parallel litigation—including providing disclosure, a witness statement, and giving evidence at trial for Astra—were “entirely at odds” with Matrix’s interests in the instant case [§60]. The court found that this was not merely a rejection of evidence, which is commonplace, but a “very stark and unusual” situation involving fundamentally contradictory positions [§65]. Mr Reeves’ evidence was found to have “all the hallmarks of someone who has suspended truth for his own changing interests from time to time” and to “appear to turn with the wind” [§61–62]. The court was entitled to deprecate this conduct and take it into account in respect of the costs of the action [§66–67].

Conclusion

The court concluded that neither party was successful [§76]. Even if Matrix were to be regarded as the successful party by virtue of being the receiving party, the numerous factors outlined—including the total failure of the contract claims, the total failure of the performance fees claim which was “the juice of the action”, the partial failure on management fees, the very small amount recovered relative to both the claim and the costs, and the criticised conduct of Mr Reeves—provided ample reason to depart from the general rule [§79–80]. The court ordered that there be no order as to costs [§81].

Issues Based And Proportional Costs Orders: When Should They Be Made?

Partial Success, Conduct, Offers And Alleged Exaggeration

Some You Win Some You Lose | Partial Success And The Courts’ Approach To Costs

CPR 44.2 And The Courts’ Discretion As To Costs

Speculative Claims, Indemnity Costs And The Effect Of An Approved Costs Budget

The Approach To Issues Based Costs Orders

Specialist costs services across the UK

TMC Legal provides expert costs drafting, negotiaton and costs budgeting services together with representation in detailed assessment hearings. Our experienced costs lawyers and law costs draftsmen act nationwide. Contact us today.