Gil v Baygreen Properties Ltd.& Ors

Costs are discretionary and must be determined by having regard to all the circumstances. Although costs generally follow the event, the court may adjust the order to reflect partial success, conduct, settlement proposals and proportionality.

Parties should assess the likely value, importance and complexity of litigation at an early stage and pursue settlement where reasonably possible. Fabrication of evidence and an unreasonable failure to engage with constructive settlement proposals may justify a substantial costs penalty, including a deduction from otherwise recoverable costs.

The judgment concerned costs following the substantive decision in [2004] EWHC 1732 (Ch), under which orders were made principally to restore 85 Burdett Road to Refined Properties Ltd. The applicant had succeeded on important issues against Mr Ippocratous and the Lupsons, but Mr Ippocratous was not ordered to pay money.

The court considered the parties’ conduct, the Lupsons’ settlement communications, the disproportionate costs incurred, the applicant’s fabrication of documentary evidence and the parties’ respective degrees of success.

1. General approach. The discretion as to costs was governed by the general rule that costs follow the event, subject to the court’s duty to consider all the circumstances under CPR rule 44.3. Relevant matters included conduct before and during proceedings, partial success, offers or payments, the reasonableness of pursuing issues and the manner in which the case was conducted.
2. Proportionality and settlement. The costs incurred after the possibility of settlement was raised were approximately £300,000, compared with a judgment of about £44,673. The parties should have assessed the likely value, importance and complexity of the litigation and the likely costs of trial. The Lupsons’ correspondence was a constructive attempt to explore a commercial resolution, although it was not a formal offer. The applicant’s failure to identify any settlement figure or engage in negotiation was a serious factor in the costs decision.
3. Fabricated evidence. The applicant’s fabrication of a document relied upon in support of her direct case was a serious aspect of her conduct. It was relevant not merely because it prolonged the trial, but because it demonstrated a broader approach to conducting the litigation. The court was entitled to take that conduct into account together with the failure to negotiate.
4. Orders. In relation to Mr Ippocratous, there was no order for costs, save that he and the Lupsons were to pay the applicant’s costs of obtaining valuation evidence. The Lupsons were ordered to pay the applicant’s costs, subject to detailed assessment if not agreed, less £20,000. The deduction reflected the fabrication of evidence, the failure to negotiate before costs escalated and the financial outcome of the litigation.

The judgment followed the substantive decision in [2004] EWHC 1732 (Ch), which led to orders principally restoring the property to Refined Properties Ltd. This judgment determined the consequential costs orders.