Investec Ltd. v Zulman & Anor

An agreement in principle is not binding where the parties intend that nothing should be binding until their agreement is reduced to writing and signed. Success on a pleading issue does not necessarily justify a separate costs order. The court may retain the usual order that the unsuccessful appellant pays the successful respondents’ costs where the issue is closely bound up with the main dispute, the merits are mixed, and the appellant contributed to the issue by failing to make its case clear.

This was an appeal from the High Court of Justice, Queen’s Bench Division, Commercial Court, before Mr Justice David Steel. The appeal raised a pleading point concerning whether the appellant’s arguments were open on the pleadings. The pleadings alleged that the relevant agreement was made in January 2007, but the question whether an agreement was made on 1 February 2007 emerged in cross-examination and final speeches. No amendment was completed. The Court of Appeal dismissed the appeal and determined the respondents’ application for a separate costs order on the pleading point.

Disposition. Lord Justice Longmore dismissed the appeal. The appellant was ordered to pay the respondents’ appeal costs, subject to detailed assessment if not agreed, with a payment on account.

1. Pleading point. The court decided the pleading point against the respondents. The appellant’s arguments were not excluded by the pleadings, and the appeal was not dismissed on that basis.
2. Agreement in principle. Although an agreement in principle was reached on 1 February 2007, the parties intended that nothing should be binding until it had been reduced to writing and signed. No signed agreement was produced. The pleadings alleged a January 2007 agreement, and no effective application to amend had been made or carried through to a request for a decision.
3. Costs. The court declined to make a separate costs order for the pleading point. The appellant had ultimately succeeded on that issue, but the merits were not one-way. The point was closely bound up with the main issue, namely whether the parties intended to be bound on 1 February. The appellant had also initially failed to make its case sufficiently clear for the respondents and the judge to understand. Written submissions were sufficient, so no oral costs hearing was required.
4. The judgment records different figures for the payment on account: £18,000 in the opening order and £80,000 in the concluding paragraph.

• Court of Appeal (Civil Division): [2010] EWCA Civ 675; appeal dismissed and costs order made.
• High Court of Justice, Queen’s Bench Division, Commercial Court: appeal from an order of Mr Justice David Steel dated 15 July 2009; no citation for the decision is stated in the judgment.