Gorgeous Beauty Ltd v Liu & Ors (Costs)

Costs should reflect the parties’ relative success on discrete issues and the proportion of costs attributable to matters such as expert evidence. A reduction in recoverable costs may therefore be appropriate even where the claimant substantially succeeds.

Assessment on the indemnity basis is exceptional. Findings of fraud or dishonesty do not automatically justify it, particularly where they were reached on the balance of probabilities in a case with evidence on both sides. The court must assess the relevant conduct cumulatively, including the significance of implausible evidence, side issues and late treatment of important aspects of the case.

Following the trial of the underlying dispute, the parties agreed that the issue of costs should be determined on written submissions. Gorgeous Beauty Limited sought recovery of 100% of its costs on the indemnity basis. Irene Liu, William Liu, the Registrar of Companies and Gold Wealth LLP contended that the claimant should recover 85% of its costs on the standard basis.

The defendants relied on their success concerning the law applicable to the trust, two of the three Seychelles-law issues and the costs attributable to expert evidence. The claimant relied on the defendants’ fraud, dishonest defence, implausible evidence, side issues and late treatment of key matters.

1. The appropriate reduction in the claimant’s recoverable costs was 10%. The defendants had succeeded on certain discrete issues, including the applicable law of the trust and two Seychelles-law issues. The claimant had succeeded on one Seychelles-law issue. The court also took account of the proportion of costs attributable to expert evidence, while allowing for the likelihood that the claimant’s actual proportion was slightly lower than estimated.

2. Assessment on the indemnity basis was refused. Although the defendants had been found to have committed fraud and advanced a dishonest defence, those conclusions had been reached only on the balance of probabilities in a case where the evidence was not one-sided.

3. The other matters relied upon did not alter that conclusion. Some of the claimant’s evidence was also implausible. Both sides had raised side issues on which they failed or which they did not pursue. The defendants’ failure to address key aspects of the claimant’s case until trial was correct but was not sufficiently significant in costs terms. The matters, considered individually and collectively, did not justify indemnity costs.

4. The claimant was therefore entitled to 90% of its costs, assessed on the standard basis.