Raja v Van Hoogstraten

In exercising its discretion as to costs, the court must consider all the circumstances, including the parties’ conduct and the extent to which each party succeeded on issues, even where one party was ultimately unsuccessful. The court may award a proportion of the successful party’s costs and may make issue- or period-specific orders where appropriate. A claim’s failure does not automatically justify indemnity costs. Such an order requires sufficient justification in the circumstances, having regard to the nature and conduct of the litigation.

Following a judgment dismissing Tombstone Limited’s claims in trespass and conversion against the estate of Mohammed Sabir Raja and Healys, the court heard submissions on costs. Tombstone had succeeded on several issues but failed on grounds that were crucial to the result, including the exercise of the court’s discretion concerning protection afforded by a sequestration order, abuse of process and recoverable loss.

The issue was whether Tombstone should pay all or only a proportion of the defendants’ costs, and whether those costs should be assessed on the standard or indemnity basis.

1. Costs discretion. The court held that CPR Rule 44.3(1) conferred a general discretion as to whether costs were payable, their amount and when they should be paid. Under CPR Rule 44.3(2), the unsuccessful party would ordinarily pay the successful party’s costs, but the court could make a different order.
2. Decision whether to make an order. The phrase in CPR Rule 44.3(2) requiring the court to decide whether to make an order about costs applied where a party applied for costs or the court was otherwise required to consider the question. A decision to make no order as to costs was itself a decision on costs.
3. Relevant circumstances. CPR Rule 44.3(4) and (5) required consideration of all the circumstances, including conduct before and during proceedings, the reasonableness of raising or pursuing issues, the manner in which the case was conducted, and partial success. CPR Rule 44.3(6) and CPR Rule 44.7 permitted proportionate or distinct-issue costs orders where practicable.
4. Application. Tombstone was the unsuccessful party, but it had succeeded on a number of issues. The defendants’ conduct in obtaining the sequestration order had been highly reprehensible and had to be taken into account. Tombstone’s extraordinary delay in seeking to set aside the order was also unreasonable, though less serious. The appropriate order was that Tombstone pay 60 per cent of the defendants’ costs.
5. Basis of assessment. The proceedings were not sufficiently exceptional to justify indemnity costs. The relevant costs were therefore to be assessed on the standard basis. The court noted that the conversion claim had remained well arguable until the decision in OBG v Allan [2007] 2 WLR 920.

This was a first-instance costs judgment following the court’s earlier judgment dismissing the relevant claims. No appellate history is stated in the judgment.