NIHAL MOHAMMED KAMAL BRAKE & Anor v GEOFFREY WILLIAM GUY & Ors

In costs proceedings arising from enforcement applications, the court should identify the successful party overall rather than determine success issue by issue, unless an issue-based order is justified. A third party involved in a third-party debt order may be ordered to pay the judgment creditor’s costs where its conduct materially opposes the relief or causes additional costs, despite describing itself as neutral. Indemnity costs require conduct or circumstances outside the norm. Under CPR rule 72.11, the judgment creditor’s costs may be ordered against the third party itself and need not always be deducted from the recovered debt. Summary assessment is generally appropriate for an application lasting less than one day.

The judgment determined consequential matters following a third-party debt order concerning a pension fund. An interim order had been made, and a final order and a further injunction requiring Mr Brake to seek payment of the remaining pension fund had subsequently been granted.

The defendants sought their costs from the pension trustee, principally on the indemnity basis. The trustee argued that it had been neutral and should bear no costs. Mr Brake sought costs against the defendants. The central issues were the identity of the successful party, the proper allocation and basis of costs, the construction of CPR rule 72.11, and the appropriate method of assessment.

1. Disposition. The application to extend the timetable for compliance was dismissed. The defendants were the successful parties overall. The pension trustee and Mr Brake were unsuccessful parties.
2. Under CPR rule 44.2, the court ordinarily identifies success overall, rather than success on each individual issue. Issue-based costs orders are exceptional, and proportional or time-limited orders must first be considered.
3. A third party which appears neutral in a third-party debt order application may nevertheless be liable for the judgment creditor’s costs where it adopts substantive opposition, delays raising objections, or causes additional costs. The ordinary position that an entirely neutral third party should not pay the judgment creditor’s costs did not apply. The principle discussed in Miller Brewing Co v Mersey Docks and Harbour Co [2004] FSR 5 was sufficiently wide to cover a third-party debt order, but the trustee’s conduct justified a different result. The approach was consistent with Widlake v BAA plc [2009] EWCA Civ 1256, which required attention to the causative effect of conduct on costs.
4. The trustee’s conduct was outside the norm and justified indemnity assessment. The court applied the approach discussed in Hosking v Apax Partners Ltd [2019] 1 WLR 3347. However, the defendants’ costs were reduced by 10 per cent because they had taken a chance on the existence of a recoverable cash debt.
5. CPR rule 72.11 permits the judgment creditor’s costs to be paid by the third party itself. It does not require the costs always to be deducted from the recovered debt. The court therefore ordered the trustee to pay 90 per cent of the defendants’ costs.
6. The applications lasted less than one day and were suitable for summary assessment. Applying the principles in Football Association Premier League v The Lord Chancellor [2021] EWHC 1001 (QB), the costs were summarily assessed at £30,000. The defendants’ use of London solicitors was not unreasonable under Wraith v Sheffield Forgemasters Ltd [1998] 1 WLR 132, but the appropriate guideline rates were those for “London 2” work.
7. The trustee was ordered to pay the defendants £27,000, being 90 per cent of £30,000, plus applicable VAT.

The judgment records that the Court of Appeal dismissed the Brakes’ appeal against an earlier decision on 2 March 2022 and ordered an interim payment of costs on account. The present judgment concerned consequential matters following later first-instance enforcement orders.