BILTA (UK) LIMITED (in liquidation) AND OTHERS v SVS SECURITIES plc & Anor

Where a settlement leaves substantial issues unresolved and provides no reliable indication of the likely result, the court should not treat the settlement payment as vindication or as an event determining costs. An issues-based costs order should not be made selectively where the court cannot assess the outcome of all significant issues. The appropriate order may instead be no order as to costs, subject to specific costs attributable to matters such as adjournments. Costs for issues actually determined after settlement may be ordered on an issues-based basis, but the court may conclude that each party should bear its own costs where a set-off or comparison would be too uncertain.

This was a consequential hearing following the court’s earlier judgment, [2022] EWHC 723 (Ch), in proceedings brought by companies in liquidation against SVS Securities plc and others. A settlement had narrowed the issues tried and left the incidence of costs for determination.

The earlier judgment resolved the Limitation Defence in favour of TFS and the Section 213 Point in favour of the Claimants. The settlement payment was confidential and did not disclose the likely outcome of the unresolved liability issues. The court therefore had to determine the appropriate orders for pre-settlement and post-settlement costs, payment on account, enforcement, and permission to appeal.

1. Pre-settlement liability issues. The settlement did not constitute a finding of liability, vindication, or an indication of which party would have succeeded at trial. The court could not properly make a “costs follow the event” order or use the settlement to assess the unresolved Liability Issues. Applying the approach in R (M) v Mayor and Burgesses of the London Borough of Croydon [2012] EWCA Civ 595, this was a case where the substantive claims had succeeded only in part through a settlement, rather than a case of complete success.
2. Issues-based costs. The court rejected TFS’s proposal to use success on the Limitation Defence and Section 213 Point, together with the settlement, to assess the unresolved issues. An issues-based costs order should identify who won particular issues and should not use unrelated issues to determine the costs of issues whose outcome cannot be assessed. Consistently with BCT Software Solutions Ltd v C Brewer & Sons Ltd [2003] EWCA Civ 939, where there was no proper factual basis for determining the likely outcome, the starting position was no order as to costs.
3. The Claimants were nevertheless awarded 7.5% of their assessed pre-settlement costs, reflecting the two adjournments attributable to TFS and remaining consistent with the Court of Appeal’s order concerning the second adjournment.
4. Post-settlement costs. TFS succeeded on the Limitation Defence and the Claimants succeeded on the Section 213 Point. The court ordered costs in favour of TFS on the former and in favour of the Claimants on the latter, with each party bearing its own costs of the issue on which it succeeded. A set-off or percentage allocation was rejected as too uncertain.
5. No payment on account was ordered. Enforcement was stayed. Permission to appeal was granted on the Section 213 Point and on the costs ruling, including TFS’s ability to challenge the refusal of an issues-based order concerning the Limitation Defence. Permission was refused on the Limitation Defence and the Section 1032 Point.

• High Court (Financial List): Following the earlier judgment at [2022] EWHC 723 (Ch), the court determined consequential costs and permission-to-appeal issues in the present judgment.