Pipia v BGEO Group Ltd

Under Civil Procedure Rules 1998, the unsuccessful party will generally pay the successful party’s costs, but the court may make a different order after considering all the circumstances. A substantial interlocutory application may be treated as a separate costs event, although that requires a justifying assessment of the particular application and its outcome. Where each party succeeds on an important aspect of the application and there is no meaningful overall winner, the result may properly be characterised as a score draw. In that event, costs may be ordered to be costs in the case rather than awarded to either party.

The claimant pursued a claim involving the defendant’s control over documents held by two subsidiaries for the purposes of Extended Disclosure. The defendant made an interlocutory Control Application seeking a declaration that the subsidiaries’ documents were not and had never been within its control. The application was dismissed in that unqualified form, but the court also rejected the claimant’s substantially wider case for control and Model D disclosure. The issue before the court was the proper order for the costs of that interlocutory application.

1. The general rule under Civil Procedure Rules 1998, rules 44.2(2)(a) and 44.2(2)(b), is that the unsuccessful party pays the successful party’s costs, but the court may make a different order. Under rule 44.2(4), the court must have regard to all the circumstances, including conduct, partial success and admissible offers of compromise.
2. A substantial and contentious interlocutory application may be treated as a separate event to which the general rule applies. That approach is not automatic. The court must decide whether, in the particular circumstances, the application and its outcome make it just to treat it as a separate event. Where the general rule applies, departure from it requires good reason: London Borough of Tower Hamlets v London Borough of Bromley [2015] 2271 (Ch); Fox v Foundation Piling [2011] EWCA Civ 790.
3. The Control Application produced no clear winner. The defendant failed to establish that none of the subsidiaries’ documents were within its control. The claimant nevertheless failed to establish the materially unlimited control needed to obtain Model D disclosure through the defendant, and the defendant established important limits to its control.
4. It was neither practicable nor fair to allocate costs by dissecting the separate Georgian-law and control-arrangement issues. The costs generated would have been incurred by either party in defeating the other’s primary case. The application was therefore properly characterised as a score draw. The costs of and occasioned by the Control Application were ordered to be costs in the case.

This was a first-instance costs decision following the court’s earlier judgment on the Control Application in the same claim: [2020] EWHC 402 (Comm).