Bibby Financial Services & Anor v Magson & Ors

In exercising its discretion on costs, the court must consider all the circumstances, including party conduct and relevant settlement offers. The general rule that the unsuccessful party pays the successful party’s costs may be displaced where both sides have conducted litigation unsatisfactorily. Costs will ordinarily be assessed on the standard basis unless the circumstances justify a more severe order. A payment on account should be fixed at a figure which is unlikely to exceed the sum ultimately found due on detailed assessment. Interest on costs should not ordinarily be awarded unless the receiving party has actually paid costs.

The claimants brought proceedings against the first and second defendants on guarantees connected with funding provided to QCFS. In an earlier judgment handed down on 14 October 2011, the court held that the guarantees had been intended to be deeds and had not been delivered, so the claims were dismissed.

This judgment concerned consequential costs issues. The court considered the conduct of all parties, settlement offers made by the defendants, the appropriate basis of assessment, interest on costs, and payments on account.

1. Costs discretion. Under Part 44.3(4) of the Civil Procedure Rules 1998, the court was required to take account of all the circumstances, including the parties’ conduct and relevant offers. Under Part 44.2(2), the general rule was that the unsuccessful party should pay the successful party’s costs, but the court could make a different order.
2. The claimants had pursued serious allegations that invoices were fabricated, although the invoices were genuine. The first defendant had dishonestly re-aged invoices and gave dishonest evidence, while the second defendant had failed adequately to engage with the litigation. There were also serious shortcomings in the claimants’ disclosure, evidence and conduct of the case. The court therefore treated the criticisms on both sides as relevant to the costs order.
3. The defendants had made settlement offers which, if accepted, would have left the claimants better off than the result. The court was required to have regard to those offers under Part 44.3(4)(c), and declined to disregard them merely because they had not materially affected the conduct of the trial.
4. The successful defendants were awarded their whole costs, to be assessed on the standard basis. The circumstances did not justify indemnity costs.
5. Interest on costs was refused. The court considered it inappropriate to award such interest where the receiving party had not shown that costs had actually been paid. In fixing payments on account, the court applied the principle identified in Mars (UK) Limited v Techknowledge Limited: the court should seek to ensure that the amount ordered does not exceed the sum ultimately due on detailed assessment. The claimants were ordered to pay £500,000 on account of the first defendant’s costs and £150,000 on account of the second defendant’s costs.

The judgment records that the claims had been dismissed in an earlier judgment of the same High Court proceedings, handed down on 14 October 2011. This judgment determined the consequential costs issues.