Mastercigars Direct Ltd v Withers LLP

Where two opposing applications have both failed, the court may make no order as to costs where the applications are materially similar and a reciprocal costs order would require separate assessments without producing a meaningful or fair difference. The court may treat the applications as comparable in work, complexity and need for oral argument. The absence of an earlier order dealing expressly with costs does not necessarily prevent the court from addressing the overall costs position, particularly where the point is academic and does not affect the appropriate overall order.

This was a consequential costs decision following the dismissal of applications by both Mastercigars Direct Ltd and Withers LLP. The applications had been heard before the Master and subsequently before Mr Justice Morgan. Mastercigars submitted that each party should bear its own costs. Withers sought its costs of Mastercigars’ failed application and argued for a partial recovery of its own costs. The court had to determine the appropriate costs order and whether the Master’s failure expressly to address certain costs affected that decision.

1. The court held that the appropriate alternatives were a reciprocal order requiring Mastercigars to pay Withers’ costs of its failed application and Withers to pay Mastercigars’ costs of Withers’ failed application, or no order as to costs.
2. The two applications were similar in all relevant respects. It was not appropriate to treat either application as involving materially greater work, complexity or need for oral argument. The duration of the hearing was not a useful measure because the parties had run out of time and the judge considered the matter fully from the documents afterwards.
3. The court preferred no order as to costs. A reciprocal order would require two costs assessments. In the absence of figures showing a substantial difference between the parties’ reasonable and proportionate costs, there was no injustice in assuming that the costs would be broadly similar and selecting the simpler course.
4. The argument that the Master’s failure to deal expressly with the costs of Withers’ application prevented any later costs order was academic and did not alter the conclusion. The court also expressed uncertainty about the correctness of that argument, since the adjournment may have included the whole application and its costs.
5. There was no order as to the costs of the applications, including the costs incurred after the earlier judgment in making submissions on costs.

• High Court (Chancery Division): On appeal from the Supreme Court Costs Office, the court dealt with costs consequential upon the dismissal of both applications in [2009] EWHC 1295 (Ch). It ordered that there be no order as to costs.