Kaye (Dalmar Properites Ltd) v Kingstars Ltd & Ors

Under CPR 44.3, the unsuccessful party will ordinarily pay the successful party’s costs, subject to the court’s discretion having regard to all the circumstances. Allegations of misconduct or partial success do not require separate findings on every disputed detail where, viewed overall, they do not justify departing from the general rule. Costs may properly be awarded to a liquidator who was not a successful party where his involvement was necessary and appropriate, but recovery against the parties may be limited to any shortfall from the insolvent estate. Where costs are substantial compared with the dispute, assessment should scrutinise proportionality and reasonableness. An interim payment on account may be ordered before detailed assessment, with a payment period extended where the paying party’s ability to pay is in issue.

The judgment determined questions concerning the costs of an underlying application and trial of preliminary issues involving Dalmar Properties Limited, its liquidator, Kingstars Limited and other respondents. Costs were sought against Mrs Zeital personally up to 20 February 2007, and against Mrs Zeital and Ms Zeital as administratixes of Raymond Zeital’s estate thereafter.

The court considered the general costs rule, alleged party conduct, partial success, alternative dispute resolution, settlement offers, the appropriate basis of assessment, set-off, the liquidator’s position and interim payments on account. Permission to appeal was also sought and refused.

1. The court ordered costs of the underlying application and preliminary-issues trial in favour of the first to third respondents. Mrs Zeital was liable up to and including 20 February 2007; Mrs Zeital and Ms Zeital, as administratixes, were liable thereafter.

2. The starting point under CPR 44.3 was the general rule that the unsuccessful parties should pay the successful parties’ costs. Having considered the allegations of misconduct, partial success and ADR, the court concluded that they did not justify departing from that rule. It was unnecessary or unsuitable to determine the truth of every allegation for costs purposes. Matters affecting particular items could be addressed on detailed assessment.

3. The liquidator was not a successful party in the strict sense, but his involvement had been necessary and appropriate. The court therefore made a like costs order in his favour, limited to the extent that his reasonable costs were not recovered from the insolvent estate.

4. The costs orders were made on the standard basis, not the indemnity basis. The comparatively modest subject matter and potentially very large costs made close scrutiny of proportionality and reasonableness particularly important. The settlement offers, including the uncertain status of the 2 April 2007 offer under Part 36, did not justify an indemnity-basis order.

5. Any question of set-off was better dealt with after assessment, when the relevant sums could be calculated. Permission to appeal was refused because the trial findings were driven by factual conclusions based on witness credibility, reliability and the genuineness of documents, giving the proposed appeal no reasonable prospect of success.

6. Interim payments on account were ordered against Mrs Zeital and Ms Zeital as administratixes: £30,000 to the first to third respondents and £5,000 to the liquidator. Payment was allowed over three months. Liberty to apply was granted to vary the timetable if the Court of Appeal subsequently granted permission to appeal.