Hudson v New Media Holding Company LLC & Anor

An appellate court will interfere with a costs decision only for an error of law, irrationality or a comparable failure to exercise the discretion properly. A binding compromise disposing of costs cannot be reopened merely because later events make one party appear to have been successful. The court must respect the agreement unless a recognised legal basis for setting it aside is established. Costs, including indemnity costs, remain matters of judicial discretion. Conduct outside the norm may justify an indemnity order, and a finding of impropriety is unnecessary. An English court should not investigate the merits of a foreign court’s decision to issue a letter of request or retrospectively treat that decision as an abuse of process.

The appellant challenged the Senior Master’s order awarding the respondents their costs of an earlier application, from 15 October 2010, on the indemnity basis. The earlier application sought to set aside an English order giving effect to a New York letter of request for the appellant’s examination in England. Before that application was heard, the parties reached a binding compromise providing for dismissal and no order as to costs.

The appellant later sought his costs, arguing that subsequent events, including his deposition in New York, had vindicated his position. The issues were whether the compromise could be reopened, whether the costs order was justified, and whether indemnity costs were permissible.

1. Appeal dismissed. The Senior Master’s decision was a discretionary costs decision. The appellate court’s function was review, not substitution. Intervention required an error of law, irrationality, irrelevant considerations, failure to consider relevant matters, or a misdirection.
2. The agreement of 14 October 2010 was binding and disposed of the October application, including its costs. No recognised basis for setting it aside had been identified. The agreement was not conditional upon a consent order, and no consent order had been made. The eventual decision to take the appellant’s deposition in New York was not a relevant change of circumstances capable of reopening the compromise.
3. The Senior Master was entitled to take account of the binding agreement and the appellant’s subsequent conduct, including persistence in pursuing costs and causing a further hearing. He was entitled to award the respondents their costs.
4. The award on the indemnity basis was also upheld. Conduct outside the norm in civil litigation could justify indemnity costs. It was unnecessary to find that the conduct was improper. The Master had sufficient material to reach that conclusion and had not misdirected himself.
5. The English court was not required, either at the time of the October application or on appeal, to go behind the New York letter of request or determine whether its issue was an abuse of process. The later deposition in New York did not establish that the English order should have been set aside.

The judgment records an appeal from the Senior Master’s order of 9 March 2011. The appeal was dismissed, and the orders awarding the respondents their costs, including indemnity costs, were upheld.