LA MICRO GROUP (UK) LIMITED v LA MICRO GROUP INC

In complex commercial litigation, a successful party will ordinarily recover its costs even if it fails on some issues. The court may make a proportionate costs order where failure on particular issues caused substantial additional cost, but it should not readily deprive a successful party of costs where the issues were reasonably advanced as alternative bases for the same relief. The court should assess the litigation as a whole, including its factual and legal complexity and the substantial relief obtained.

This was a consequential decision following the judgment handed down on 27 May 2022. The claimants and Mr Lyampert had succeeded in obtaining declarations that they beneficially owned shares in the first claimant and that the first defendant was estopped from claiming an interest in them.

The first defendant and Mr Frenkel accepted liability for costs in principle but sought to limit their liability to one third, arguing that the claimants had succeeded on only one of three remitted issues and had failed on contractual surrender and laches. The court also considered applications for permission to appeal and whether the order should be stayed.

1. Costs. The claimants, Mr Bell and Mr Lyampert were the successful parties. Under Civil Procedure Rules 1998, Part 44, the starting point was that they were entitled to their costs.
2. The court recognised that proportionate costs orders may be appropriate where a successful party fails on issues generating substantial additional costs. That principle was illustrated by Multiplex Construction v Cleveland Bridge UK [2008] EWHC 2280 (TCC), SmithKline Beecham Plc v Apotex Europe Ltd (Costs) No 2 [2004] EWCA Civ 1703 and Pigot v The Environment Agency [2020] EWHC 1444 (Ch).
3. Conversely, in complex commercial litigation, a successful party will commonly fail on some issues. The court should therefore avoid too readily depriving that party of costs, as recognised in Deutsche Bank AG London v Commune Di Vusto Arsizio [2022] EWHC 219 (Comm).
4. The failures on contractual surrender and laches did not justify reducing the costs recovery. The remitted issues were factually and legally complex, and it was reasonable to advance alternative legal bases for the same remedy. The claimants ultimately obtained substantial relief.
5. An interim costs order was appropriate and the figures claimed were proportionate. The court rejected the alleged inconsistencies relied on in support of permission to appeal, explaining that the passages concerning reliance and unconscionability addressed different matters or doctrines. It also held that an appeal should not operate as a stay of the order.

The decision followed an earlier judgment of the same court handed down on 27 May 2022. The proceedings also involved matters remitted by the Court of Appeal, but no citation for that decision is stated in the judgment supplied.