Glidepath Holdings BV & Ors v Early Red Corporation & Anor

Orders for costs will only rarely be disturbed on appeal. The appellate court must identify an error of principle or a conclusion that falls outside the generous ambit within which reasonable disagreement is possible. An order which allocates costs issue by issue is legitimate where each party has succeeded on distinct issues, including an alternative issue conceded shortly before the hearing. A party who elects to pursue unsuccessful applications cannot avoid the resulting costs merely because a related alternative issue succeeds. The costs judge should determine the costs attributable to each issue and may reflect the relative importance of the issues. Advocates on without-notice applications must fairly draw the court’s attention to all relevant matters, including matters adverse to their client.

The respondents brought proceedings arising from a failed joint venture, alleging fraud and mismanagement and seeking financial and proprietary relief. The proceedings were ultimately to be stayed under section 9 of the Arbitration Act 1996. Earlier without-notice orders included freezing, disclosure, preservation and asset-information requirements. The appellants applied to discharge those orders, sought relief concerning Norwich Pharmacal orders, and alternatively sought suspension of disclosure so that it was confined consistently with section 44 of the 1996 Act. Eady J refused the principal applications but ordered issue-by-issue costs, awarding each side the costs of issues on which it succeeded. The appellants appealed only against the costs order. The central issue was whether that order was unfair or plainly wrong.

Appeal dismissed with costs.

1. The Court of Appeal would interfere with a costs order only very rarely, where the judge had erred in principle or reached a plainly wrong conclusion. The order was within the generous ambit of reasonable disagreement.

2. The order was properly construed as dividing costs by issue. It did not require the appellants to pay all the respondents’ costs of the applications. Paragraph 3 expressly awarded the appellants their costs of obtaining the stay and of the successful application to suspend the disclosure obligations. The costs judge was to determine which costs were attributable to each issue.

3. The appellants had chosen to pursue applications to discharge the whole order and to set aside the Norwich Pharmacal orders. Those applications failed and occupied most of the hearing and written argument. The fact that the respondents conceded the alternative suspension issue shortly before the hearing did not make the overall costs order unfair. The relative importance of the issues could be reflected by the costs judge.

4. The Vice-Chancellor added that advocates on without-notice applications owe a duty to bring all relevant matters to the court’s attention, whether favourable or adverse. The earlier permission application had overlooked paragraph 3 of the order and had therefore proceeded on an inaccurate basis.

• Court of Appeal (Civil Division): [2005] EWCA Civ 525. Appeal against Eady J’s costs order dismissed with costs.
• High Court, Queen’s Bench Division: Eady J’s order of 30 July 2004 allocated costs by issue, including costs of the successful suspension application and costs of the unsuccessful discharge and Norwich Pharmacal applications.