Ashany & Anor v Eco-Bat Technologies Ltd

A claimant who discontinues is presumptively liable for the defendant’s costs under CPR r 38.6(1). Departure requires cogent justification, normally involving a relevant change of circumstances and unreasonable conduct by the defendant. The costs court may assess that question by reference to distinct periods of the litigation.

An appellate court will rarely interfere with a costs discretion. Intervention requires legal error, omission of a relevant consideration, reliance on an irrelevant consideration, or a decision so wrong as to be perverse. An equivocal indication that a claimant may discontinue does not justify depriving the defendant of its costs while proceedings remain live. A departure from the default rule requires a stated and sufficient justification.

The claimants, who were directors of the defendant company, brought proceedings seeking access to a 2006 email connected with an investigation into suspected anti-competitive conduct. They had repeatedly sought the email. It was eventually provided after both claimants gave undertakings required by a board resolution. The claimants then discontinued the proceedings.

Master Clark made a period-by-period costs order. She awarded the claimants their costs for the first period and part of the third period, awarded the defendant its costs for the lengthy second period and most of the fourth period, and made no order for the final ten days before discontinuance.

The defendant appealed, contending that the Master had failed to apply CPR r 38.6(1) and had acted outside the permissible scope of her discretion. The central issue was whether the departures from the default discontinuance-costs rule were justified.

1. Appeal allowed in part. The Master’s order was varied so that the defendant recovered its costs until close of business on 24 July 2015, rather than only until 14 July. The remainder of the appeal was dismissed.

2. Costs decisions are discretionary. Following Abdulle [2016] 1 WLR 898, an appellate court does not substitute its assessment merely because it would have given factors different weight. In costs matters the court below has considerable latitude. Interference is justified only for legal error or a decision so wrong as to be perverse.

3. Under CPR r 38.6(1), discontinuance creates a presumption that the defendant recovers its costs. The claimant bears the burden of showing a good reason to depart from it. The Master had correctly directed herself by reference to Brookes v HSBC Bank PLC [2011] EWCA Civ 354. She applied the default rule for approximately 17 of the 21 months for which the action was live.

4. The Master was entitled to displace the presumption for the first period. The defendant’s conduct in withholding the email despite the board resolution was found irrational and unreasonable. She was also entitled to displace it for the relevant parts of the third period. Once both undertakings had been given, the defendant unreasonably delayed a further month before supplying the email. Those conclusions were consistent with Nelson’s Yard Management Co v Eziefula [2013] EWCA Civ 235.

5. The Master erred as to the final ten days. The claimants’ letter of 14 July was equivocal because it contemplated seeking a stay and discontinuing only if that application failed. While the proceedings continued, the defendant had to prepare for trial and comply with procedural obligations. The Master gave no sufficient reason for disapplying r 38.6(1) during that period.

• Court of Appeal (Civil Division): The defendant’s appeal was allowed only in respect of costs incurred between 14 and 24 July 2015. The Master’s order was varied accordingly; the balance of the appeal was dismissed.
• High Court (Chancery Division), Master Clark: Following discontinuance, the Master made a detailed period-by-period costs order on 5 May 2016.