Aldford House Freehold Ltd v Grosvenor (Mayfair) Estate & Anor

Although the successful party will ordinarily recover its costs, the court may make a different order where discrete issues were unsuccessfully pursued and generated substantial, separately identifiable costs. A positive costs order in favour of the unsuccessful party is unusual and requires a good reason. The court should consider whether the issue was reasonably raised, whether it was discrete, the parties’ conduct, and whether the costs were substantially caused by the unsuccessful party’s own approach. Costs which cannot readily be separated, or which were incurred as part of the wider trial issues, may properly remain within the ordinary costs order.

The defendants succeeded in the underlying claim. The court was subsequently required to determine the incidence of costs and related consequential matters. The claimant argued that the defendants should not recover costs, or should pay some of the claimant’s costs, because the defendants had failed on discrete issues concerning authority to sign notices and the application of Chapter 1 of Part 1 of the 1993 Act.

The court considered the treatment of foreign-law expert evidence, the costs of the section 4 issue, and whether interim payments should be made on account of costs.

1. General approach to costs. The defendants were the successful parties, so the usual order was that the claimant should pay their costs. The court nevertheless had power under Part 44.2 of the Civil Procedure Rules 1998 to depart from that order where the circumstances justified it.
2. Foreign-law evidence. The issues concerning the authority of Ms McNeil were discrete and had been pursued for the defendants’ own advantage. The defendants failed on the Jersey and Bahamas issues, and the evidence on those issues was substantial and separately identifiable. The defendants therefore were not permitted to recover the costs of preparing, considering and arguing that evidence. The same exclusion applied to the first defendant, which adopted the second defendant’s arguments. The defendants succeeded on the relevant BVI issue, so the BVI evidence costs remained recoverable. The second defendant also accepted liability for the claimant’s costs concerning Gibraltar law.
3. Positive order for the unsuccessful party. A positive order requiring the successful party to pay the unsuccessful party’s costs is unusual. It does not require unreasonable conduct by the successful party, but there must be a good reason for making an exceptional order. Here, the claimant’s own confused and expansive approach substantially contributed to the level of foreign-law costs. It was therefore unjust to order the defendants to pay the claimant’s costs of that evidence.
4. Section 4 issue. The costs of the section 4 issue were not readily separately identifiable and were modest. They were treated as costs incurred along the way in arguing the substantial issues at trial, rather than as a discrete issue warranting a separate costs order.
5. Orders. The claimant was ordered to pay the first and second defendants’ costs on the standard basis, if not agreed, subject to the stated exclusions. The second defendant was awarded an interim payment calculated at two-thirds of the estimated recoverable costs after deduction of the excluded evidence costs. The first defendant was awarded £80,000 on account, payable within six weeks.