Koza Ltd & Anor v Koza Altin Isletmeleri AS

Costs following an interlocutory injunction granted on the balance of convenience remain a matter of judicial discretion. There is no invariable rule that costs must be reserved or made costs in the case. Where the balance clearly favours the successful party and the opposition was unjustified, costs may be ordered immediately.

A costs order may properly be made against the real master of litigation rather than a company controlled by that person, where making the company liable would undermine the relief granted. The court has a broad inherent jurisdiction to set off costs orders, but the discretion has limits. A payment on account must be a reasonable estimate of likely recovery, allowing for uncertainty; an irreducible minimum is not the governing test.

The judgment concerned consequential matters following the court’s substantive decision to grant Koza Altin an injunction preventing Koza Limited and Hamdi Akin Ipek from funding an arbitration against Turkey. The substantive judgment had been handed down on 23 March 2020.

The court determined the appropriate costs order, whether liability should fall on Koza, Mr Ipek, or both, whether earlier costs orders should be set off, the amount payable on account, and whether execution should be stayed pending an application for permission to appeal.

1. Costs of the application. The court rejected the submission that Picnic at Ascot Inc v Derigs [2001] FSR 2 imposed a hard and fast rule that costs should be reserved where an interlocutory injunction was granted on the balance of convenience. It stated only a general approach. The guidance was qualified by Albon v Naza Motor Trading SDN BHD [2007] EWCA Civ 1124, which recognised that costs could be awarded immediately where the applicant’s position was sufficiently strong and the opposition had been miscalculated.
2. The balance of convenience had clearly favoured Koza Altin. The claimants had failed on the major issues and had declined to provide relevant financial information despite being warned of its significance. Koza Altin was therefore awarded its costs on the standard basis.
3. Liability for costs. Mr Ipek alone was ordered to pay. The court found that he controlled Koza and was the real master of the litigation. Koza was itself the object of the injunction, and imposing liability on it would be inconsistent with the purpose of preserving its assets. The fact that the claimants had made common cause did not create an invariable rule requiring a joint or joint and several order.
4. Set-off. The court accepted, following R (on the application of Burkett) v Hammersmith and Fulham LBC [2005] 104, that the inherent jurisdiction to set off costs orders was broad. However, the jurisdiction was not unlimited. The parties lacked the relevant legal identity, the earlier costs orders concerned different issues, and no partnership, insurance, or equivalent feature justified set-off. No set-off was ordered.
5. Payment on account. Under CPR 44.2(8), the starting point was that a reasonable sum should be paid unless there was good reason otherwise. Following Excalibur Ventures LLC v Texas Keystone Inc [2015] EWHC 566 (Comm), the test was not an irreducible minimum. The court awarded £150,000, representing a reasonable estimate allowing for uncertainty in detailed assessment.
6. Execution concerning assessment and payment of costs, including the payment on account, was stayed until determination of the claimants’ application for permission to appeal.

The judgment records that the claimants had sought permission to appeal the substantive judgment directly from the Court of Appeal. This court did not determine permission to appeal.