Kynixa Ltd v Hynes & Ors

Costs following a split liability trial should be determined by identifying the successful party against each defendant and allocating responsibility to the issues with which that defendant was concerned. Peripheral successes do not necessarily displace overall success. The court may reflect substantial success, discrete issue outcomes, conduct and settlement offers in the order, including by awarding a proportion rather than conducting separate issue-by-issue assessments. An interim payment on account ordinarily requires a cautious estimate of the likely assessed costs, while taking account of the circumstances, any appeal, the parties’ means and the overriding objective. After judgment but before the order is sealed, amendment may be permitted where exceptional or sufficiently strong circumstances justify that unusual course, provided procedural fairness is preserved.

The judgment followed an earlier liability judgment in which the claimant succeeded in establishing contractual breaches by all three defendants and fiduciary-duty breaches by the first and second defendants. The court was asked to determine liability-trial costs, payments on account, an application to plead an additional allegation concerning non-disclosure of a possible management buyout, and permission to appeal.

The central issues were how costs should be allocated between defendants with different successes, whether interim payments should be ordered before assessment, whether the unpleaded allegation could be added after judgment, and whether any proposed appeal had a realistic prospect of success.

1. Costs. The claimant was the successful party against each defendant. The first defendant had only peripheral or marginal successes, so he was ordered to pay the claimant’s liability costs insofar as they related to issues with which he was concerned. The second defendant’s costs order excluded the significant issues on which she succeeded, with the resulting sums to be set off. The third defendant’s discrete successes and the claimant’s conduct justified limiting recovery to 33% of the claimant’s costs.
2. The court applied CPR 44.3 and considered conduct, the significance of the issues, settlement offers and the fact that liability had been tried separately from quantum. Liability costs were not deferred until the damages trial.
3. Payment on account. Applying the principles in Mars UK Limited v Tech Knowledge Limited (Costs) [1991] 2 Costs L R 44, the court ordered £250,000 against the first defendant and £100,000 against the second defendant. No payment was ordered against the third defendant because the proportionate order and available information made a reliable estimate impracticable.
4. Amendment. The court declined to make immediate findings on the unpleaded non-disclosure allegation, but permitted amendment so it could be determined at the quantum trial. The evidence had been adduced without objection and the defendants could respond. The court treated this as an exceptional or sufficiently strong circumstance within the approach in Stewart v Engel (Permission to Amend) [2000] 1 WLR 2268.
5. Permission to appeal was refused. The court considered that factual challenges had no realistic prospect of success and that the other proposed grounds had prospects substantially lower than prospects of failure.

First-instance judgment. The judgment records an earlier liability judgment in the same proceedings, followed by this separate determination of consequential costs, amendment and permission-to-appeal issues.