UTB LLC v Sheffield United Ltd

The general rule on costs remains that the unsuccessful party pays, but the court may make a different order after considering all the circumstances, including conduct and partial success. Indemnity costs are appropriate where conduct or other circumstances take the case out of the norm. The assessment must consider the litigation as a whole and the proportionate importance of the criticised conduct. Serious, weak or improperly maintained allegations may justify indemnity costs even where other issues were properly pursued. Costs orders made in interlocutory applications should not be varied merely because later evidence provides a fuller picture, particularly where the affected issue was only a small part of the decision.

The judgment concerned the costs of a trial involving three connected proceedings: a claim concerning enforcement of an agreement for the sale and purchase of shares, related contractual and conspiracy claims, and an unfair-prejudice petition under section 994 of the Companies Act 2006. The UTB parties had succeeded overall, but Sheffield United had succeeded on some issues and UTB’s change of position had affected the outcome of substantial parts of the claims.

The court determined the appropriate costs orders for the claims, the petition, and several pre-trial and trial applications. The central questions were whether costs should be reduced for partial success, whether the petition was conducted in a manner justifying indemnity costs, and whether earlier costs orders should be varied.

1. General approach. Under Part 44 of the Civil Procedure Rules 1998, the unsuccessful party will generally pay the successful party’s costs, but the court must consider all the circumstances, including conduct, admissible settlement offers and the extent of success on individual issues.
2. Costs of the claims. The UTB parties were the successful parties overall, but UTB had initially taken the wrong position concerning the property call options and its April 2019 change of position was material to the result. Sheffield United had also defended the claims on broader issues on which UTB succeeded. UTB was therefore awarded all its costs after 29 April 2019 and 60 per cent of its earlier costs. No costs were awarded to Sheffield United.
3. Indemnity costs. The approach in Excelsior Commercial and Industrial Holdings Limited and the factors identified in Three Rivers v Bank of England supported the principle that indemnity costs may be ordered where conduct takes the case out of the norm. National Westminster Bank v Rabobank Nederland (No. 2) confirmed that the criticised conduct must be assessed in the context of the litigation as a whole.
4. Sheffield United’s bribery allegations were serious, weakly founded and maintained after it became clear that they could not succeed. Other allegations were also improper. The bribery allegations occupied a disproportionate part of the preparation and trial and formed a major part of the petition. The petition’s costs were therefore payable on the indemnity basis, despite other issues having been properly pursued.
5. The court refused to vary the Chancellor’s earlier costs order concerning specific disclosure. The alleged disclosure shortcomings affected only a small part of the application. The costs of the trial applications for relief against sanctions and specific disclosure were costs in the case.

First-instance costs judgment following the trial of the connected proceedings. No lower-court decision or appeal is stated in the judgment.