Ghura & Ors v Dalal & Ors

In complex litigation involving a claim and counterclaim, the court may treat them as separate claims for costs purposes where they arise from different facts and have independent lives. The court need not conduct two detailed assessments if a proportion of the costs of the proceedings provides a fairer and more practical solution. A settlement proposal that is incapable of acceptance and would lead only to an unenforceable agreement to agree is not an admissible offer to settle, although it may be relevant to the parties’ conduct. A party seeking costs credit for an offer to negotiate should ordinarily show that the material information was disclosed. Fabrication or non-disclosure of documents may counterbalance any benefit otherwise arising from settlement conduct.

The judgment dealt with consequential matters following an earlier trial between the parties. The issues included a final injunction governing the preservation, enforcement and reporting of a Dubai World Tribunal award, the treatment of the claim and counterclaim for costs, the effect of settlement proposals, and the appropriate basis and apportionment of costs.

The claim and counterclaim concerned different transactions and alleged obligations. The court had to determine the parties’ relative success and whether the usual costs rule should be modified in light of the litigation conduct and the relationship between the two sets of proceedings.

1. Final injunction. A final injunction was warranted. The First Defendant held the benefit of the relevant part of the Dubai World Tribunal award and recoveries on trust for the Claimants. The injunction was formulated to require preservation, enforcement and periodic reporting, while avoiding unreasonable demands and allowing reimbursement or security for expenditure properly incurred. The order also required the Claimants to respond promptly to consent requests.
2. Claim and counterclaim. For costs analysis, the claim and counterclaim were separate claims. They arose from different facts, had independent lives, and the counterclaim was not merely the correlative of a successful defence. The court nevertheless had to avoid unfairness associated with separate assessment under Medway Oil v Continental Contractors [1929] AC 88.
3. Offers and conduct. The Claimants’ proposal was not an admissible offer under CPR 44.2(4)(c), because it was expressed as subject to contract and was incapable of acceptance so as to end the litigation. It was, however, relevant to conduct under CPR 44.2(4)(a). Its potential costs benefit was cancelled by the Claimants’ persistence with the claim and their fabrication and non-disclosure of documents. Exaggeration of the counterclaim could affect the reasonableness of costs claimed by a successful party, but could not increase the costs payable by the opposing party.
4. Costs order. The approach in Medway Oil v Continental Contractors had survived the CPR, but CPR 44 permitted a range of discretionary alternatives. Consistently with Burchell v Bullard [2005] EWCA Civ 358, the court considered whether a proportion of the whole proceedings was more appropriate than separate assessment of a distinct part. It ordered the Claimants jointly and severally to pay 30% of the First Defendant’s costs of defending the claim, with common costs apportioned 65% to the defence of the claim. There was no other order as to costs.