Pepe's Piri Piri Ltd & Anor v Muhammad Ali Junaid Food Trends Ltd (Now Dissolved) & Ors

In deciding costs, the court must first identify the successful party as a matter of substance and reality. A claimant who recovers only a very small fraction of the sum claimed may be treated as having lost overall, even where liability is established and damages are awarded. The absence of a Part 36 offer does not necessarily prevent that conclusion where an offer close to the eventual award would plainly have been rejected.

The general costs rule remains subject to all the circumstances, including conduct, partial success and settlement offers. A successful party’s costs may be reduced modestly where it lost on a significant issue or acted unreasonably, but an issue-by-issue order is not required where the issues overlap substantially.

The judgment concerned costs following the court’s earlier decision allowing the claim against six defendants and awarding damages of £2,523.07. The claim had sought more than £500,000. The claim was dismissed against two other defendants.

The court determined the costs of an application to admit late witness and expert evidence, and the costs of the proceedings generally. The central issues were which parties were successful for the purposes of CPR 44.2, whether the general rule should be displaced because of conduct or partial success, and the significance of the parties’ settlement offers.

1. Late evidence application. The application to rely on further witness statements and supplemental expert evidence was properly granted under the fact-sensitive approach in Denton v TH White Ltd [2014] EWCA Civ 906. The breach was not serious or significant because the evidence was substantially responsive to new matters raised by the defendants’ expert. There was a good reason for the breach and no need to adjourn the trial. However, the unexplained two-month delay in seeking permission weighed against relief at the third stage. The costs of the application were therefore ordered to be in the case.
2. Successful party. Applying Roache v News Group Newspapers Ltd [1998] EMLR 161, Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394, Oksuzoglu v Kay [1998] 2 All ER 361 and the majority reasoning in Medway Primary Care Trust v Marcus [2011] EWCA Civ 750, the court assessed success by substance and reality. The Judgment Defendants were the successful parties. The damages recovered were less than one per cent of the sum claimed, the principal conspiracy claim failed, and the costs incurred were wholly disproportionate to the recovery.
3. The Judgment Defendants were not to be criticised for failing to make a Part 36 offer. Given the parties’ very different assessments of the case, an offer near the eventual award would not realistically have been accepted and could have exposed them to disproportionate costs.
4. The general rule in CPR 44.2(2)(a) was nevertheless adjusted. The Judgment Defendants had failed on the procuring-a-breach-of-contract claim and had acted unreasonably by failing adequately to engage with the pre-action correspondence and by defending the claim on factual bases contradicted by contemporaneous evidence. Those matters justified a modest reduction, but not an issue-by-issue costs order because the evidence and issues overlapped substantially.
5. The Claimants were ordered to pay the costs of Infiniti Foods Ltd and Mrs Razi, and 80 per cent of the Judgment Defendants’ costs, all on the standard basis if not agreed. No payment on account was ordered because insufficient information had been provided about the costs incurred.

Not an appeal. The judgment determined costs following the court’s earlier first-instance merits judgment, [2019] EWHC 2097 (QB).