Financial Reporting Council Ltd v Frasers Group Plc

Permission to appeal should be refused where the proposed grounds disclose no real prospect of success and no other compelling reason for an appeal. A party’s failure on an issue does not automatically justify reducing its costs. Costs remain discretionary and fact-sensitive. Where the unsuccessful issue formed part of the evidential and legal framework required to determine the successful party’s claim, and the need for the hearing was caused by the unsuccessful party’s litigation decision, the successful party may recover all its costs. Summary assessment may properly allow counsel’s preparation costs where the overall fees are reasonable and proportionate.

The Financial Reporting Council Ltd succeeded against Frasers Group Plc in an earlier privilege application. The earlier judgment was [2020] EWHC 2607 (Ch). The present judgment dealt with consequential matters without a hearing: permission to appeal, costs, and summary assessment.

Frasers Group relied on two proposed grounds concerning the purpose of material prepared by Deloitte and the relationship between that material and contemplated litigation. The court also considered whether the FRC’s costs should be reduced because it had failed on the issue of reasonable contemplation of litigation.

1. Permission to appeal. Permission was refused. The proposed appeal had no real prospect of success and there was no other compelling reason for an appeal. The grounds did not engage with the reasoning of the earlier judgment. The evidence supported the conclusion that the Deloitte material recommended a revised structure, rather than being created for the purpose of defending litigation. The distinction between material created in the context of a perceived litigation threat and material created for the purpose of litigation was material.
2. Costs. By Civil Procedure Rules 1998, r 44.2(2)(a), the general rule is that the unsuccessful party pays the successful party’s costs. Rule 44.2(2)(b) gives the court power to make a different order. The fact that a successful party lost an issue does not necessarily require a proportional reduction. Costs are discretionary and fact-sensitive: the court applied the approach discussed in R (Viridor Waste Management Ltd) v HMRC [2016] EWHC 2502 (Admin).
3. No deduction was appropriate. The contemplation-of-litigation issue was necessary to the respondent’s privilege case, was closely connected with the litigation-purpose issue, and required evidence peculiarly within the respondent’s knowledge. The applicant was entitled to probe the explanation advanced. The separate hearing was caused by the respondent’s decision to assert privilege after the earlier judgment rather than before it.
4. The respondent was ordered to pay 100% of the applicant’s costs of the hearing on the standard basis. On summary assessment, the claimed costs of £36,623.04 were allowed in full. They were reasonable and proportionate. Payment was ordered within 14 days, with interest under the Judgments Act 1838 running from 28 July 2020.

The judgment followed the court’s earlier judgment in the same proceedings, The Financial Reporting Council Ltd v Frasers Group plc [2020] EWHC 2607 (Ch). Permission to appeal from that judgment was refused.