Cave v Borax Europe Ltd & Ors

An indemnity costs order following a failed committal motion may fall within the court’s jurisdiction, although such orders are unusual. Particular caution is required before ordering immediate payment where enforcement may stifle substantive proceedings or cause bankruptcy. The court should consider any real prospect of mediation or settlement, since immediate payment may worsen hostility and reduce the prospects of agreement. Costs should remain proportionate to the issues. Solicitors are not automatically entitled to special treatment when defendants to contempt proceedings, although allegations involving improper professional conduct may justify separate consideration.

Mr Peter Cave sought permission to appeal against paragraph 2 of an order made by Mr Justice Pumfrey on 22 June 2001 following a failed committal application. The order required Cave to pay the respondents’ costs on an indemnity basis, with detailed assessment and payment forthwith. The respondents were Borax Europe Limited, its managing director and two solicitor defendants. The application focused principally on the immediate-payment requirement, its potential effect on Cave’s substantive proceedings and financial position, and the court’s failure to pursue a possible mediation. The central question was whether permission should be granted to challenge that costs order.

1. Permission granted. Sir Anthony Evans granted permission to appeal against the costs order and stayed the order pending the outcome of the appeal. The judgment did not finally determine whether indemnity costs were justified.
2. Indemnity costs. An indemnity costs order after the failure of a committal motion is unusual, but it may fall within the judge’s proper jurisdiction. The absence of evidence against the company and its managing director was identified as a possible ground of challenge, particularly because the judge had not addressed Cave’s explanation.
3. Immediate payment. The principal concern was the direction that the assessed costs be payable forthwith. Where there is evidence that payment may bankrupt a party or stifle substantive proceedings, the court should be reluctant to make such an order. The transcript suggested that the judge had intended the costs to operate only by set-off against a bond, making the final order puzzling and arguable.
4. Mediation and proportionality. A real prospect of mediation or settlement is a relevant consideration when deciding whether to order an interim payment or immediate payment of substantial costs. Such an order may increase hostility and reduce the prospects of settlement. The court also stressed that the costs incurred appeared wholly disproportionate to the underlying dispute and warned both parties against further unnecessary expenditure.
5. Solicitor defendants. Solicitors are not automatically in a special position when defendants to contempt proceedings. Their position may nevertheless differ where the allegation concerns improper professional conduct.
6. Orders. Notice of appeal was to be served within 14 days. The judgment transcript was to be supplied to the parties at public expense, and the costs order was stayed pending the appeal.

• Court of Appeal (Civil Division): On 14 November 2001, permission to appeal was granted against paragraph 2 of the costs order, notice of appeal was directed to be served within 14 days, and the costs order was stayed pending the appeal.
• High Court of Justice, Chancery Division: Mr Justice Pumfrey made an order on 22 June 2001 requiring Mr Cave to pay the respondents’ costs of the failed committal application on an indemnity basis, subject to immediate detailed assessment and payment forthwith.