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

The court dealt with consequential matters arising from its earlier Judgment of 31 March 2022 and determined the parties' costs and certain procedural consequences. The court held that the confidential Settlement between the parties prevented a conventional "costs follow the event" order and, for the large body of pre-settlement costs, concluded there should be no order and each party should bear its own costs, save for limited exceptions. The court made a broad-brush award that the Claimants may recover 7.5% of their assessed pre-settlement costs from TFS by reason of two adjournments caused by TFS. For post-settlement costs the court ordered that each side should have their costs in respect of the specific issues they won (TFS on the Limitation Defence; the Claimants on the section 213 Insolvency Act 1986 point), each to be the subject of detailed assessment. The court refused orders for payment on account and granted a stay on enforcement. The court also gave permission to appeal in respect of the Section 213 point and, separately, granted permission to appeal its costs ruling; permission to appeal was refused on other matters, including the Limitation Defence.

Background and parties: The hearing considered consequential matters following the court's earlier substantive Judgment of 31 March 2022 in proceedings brought by several liquidated companies against a number of defendants including Tradition Financial Services Limited (TFS). The substantive proceedings had been substantially narrowed by a confidential Settlement reached in February 2022, leaving certain issues to be determined at trial: the Limitation Defence, the section 213 Insolvency Act 1986 point, and the overall costs of the proceedings.

Nature of the application: The hearing addressed a range of consequential matters: principally allocation of costs pre- and post-settlement, payment on account, enforcement/stay, and permission to appeal on specific points.

Issues framed by the court:

• Whether costs should follow the event or be allocated by issue, given the Settlement.
• How pre-settlement costs should be dealt with given adjournments and the fact the Settlement prevented a clear determination of the "event" on many liability issues.
• Whether to order payment on account and whether enforcement should be stayed.
• Whether permission to appeal should be granted on the Limitation Defence, the section 213 point, the section 1032 point and on the costs ruling.

Court's reasoning and conclusions: The court explained that because the confidential Settlement resolved many substantive matters, it was not possible to apply a conventional "costs follow the event" approach: the Settlement did not vindicate either side on the unresolved liability issues and therefore did not provide a basis to allocate the bulk of pre-settlement costs. The court relied on authorities addressing costs after settlement and the difficulties of deciding who "won" where a settlement leaves issues at large. For pre-settlement costs the court adopted the starting point of no order and that each party should bear its own costs. The court made a specific, broad-brush exception to reflect the procedural history: it ordered that the Claimants recover 7.5% of their assessed pre-settlement costs from TFS to reflect costs thrown away by two adjournments caused by TFS (consistent with an earlier Court of Appeal order concerning the second adjournment). For post-settlement costs the court directed that each side should have their costs of the issues they won (detailed assessment to follow): TFS for the Limitation Defence and the Claimants for the section 213 point. The court refused payment on account as imprudent. The court ordered a stay on enforcement. The court granted permission to appeal in relation to the section 213 point and to the costs ruling; permission to appeal was refused on the Limitation Defence and on other matters. Finally, because the Claimants had late withdrawn an indemnity costs contention, the court ordered that TFS recover 50% of their assessed costs of and arising out of the consequential hearing from the Claimants from the date the earlier Judgment was handed down.

This first-instance court made a series of costs and consequential orders. It declined to make a "costs follow the event" order because the confidential Settlement prevented identification of a clear winner across the Liability Issues and therefore ordered that, as to pre-settlement costs, each party bear their own costs, but that the Claimants may recover 7.5% of their assessed pre-settlement costs from TFS to reflect costs thrown away by two adjournments. For post-settlement costs each side is to recover the costs of the issues they won (TFS on the Limitation Defence; Claimants on section 213 IA 1986), subject to detailed assessment. The court refused payment on account, ordered a stay on enforcement, gave permission to appeal on the section 213 point and on the costs ruling, and refused permission to appeal on other matters including the Limitation Defence. The court ordered TFS to recover 50% of their assessed costs of the consequential hearing from the Claimants from the date the earlier Judgment was handed down.