TULIP TRADING LIMITED v BITCOIN ASSOCIATION FOR BSV & Ors

Where a party succeeds on the single overall question whether permission should be granted to serve out of the jurisdiction, an issues-based costs order is generally inappropriate merely because the court addressed separate components of the jurisdictional test. The serious-issue-to-be-tried requirement is a critical hurdle and is not ordinarily divided into further sub-issues. The court may consider the reasonableness of costs separately, including under Civil Procedure Rules 1998 rule 44.2. Where the parties have agreed that a specified proportion of costs is reasonable and recoverable, that agreement may justify limiting further assessment, absent a proper issues-based reason for additional reduction. Permission to appeal requires both a real prospect of success or another compelling reason, and the first-instance judge may refuse permission where the grounds disclose no such basis.

The claimant had previously obtained permission to serve the defendants out of the jurisdiction. Following a jurisdiction challenge, Mrs Justice Falk ruled in the defendants’ favour in [2022] EWHC 667 (Ch). The parties then agreed that 75% of the defendants’ costs would be treated as reasonable and recoverable, subject to the court’s consideration of whether an issues-based reduction was appropriate.

The claimant argued that it had succeeded on three of four issues addressed in the earlier decision and should therefore pay only 25% of the agreed costs. The defendants maintained that they had won the single overall question and should recover the agreed 75%. The claimant also sought permission to appeal the earlier decision.

1. Costs. The defendants were the successful parties on the single question whether permission should be granted to serve out of the jurisdiction. The claimant’s success on the jurisdictional gateways and forum was immaterial because the judge’s comments on those matters had been obiter and were included only because of a possible appeal.
2. An issues-based costs order was not justified under Civil Procedure Rules 1998 rules 44.2(4)(b) and 44.2(6)(f). The serious-issue-to-be-tried question was at most a single issue and was better regarded as part of the broader question whether service out should be permitted. The defendants were entitled to challenge each component of the test and to identify evidential deficiencies concerning ownership of the bitcoin, the hack and the claimant’s incorporation.
3. The claimant’s real complaint concerned the reasonableness and manner of pursuing issues, within Civil Procedure Rules 1998 rule 44.2(5)(b) and (c), rather than the allocation of success between separate issues. The court had concerns about extensive evidence and the presentation of full and frank disclosure allegations, but the parties’ clear agreement that 75% of the defendants’ costs was reasonable and recoverable was intended to take those matters into account. No further reduction was made. Costs were awarded at 75% of the amounts in the defendants’ costs schedules.
4. Permission to appeal. Permission was refused. The decision applied orthodox principles in a developing and complex area of law. The judge considered that the factual matters challenged were properly taken into account, that the analysis of fiduciary and tortious duties disclosed no real prospect of success, and that the late issue concerning amendment did not affect the key difficulties in the claimant’s case.

The judgment itself records the earlier jurisdiction decision in [2022] EWHC 667 (Ch). This was a first-instance ruling on costs and the claimant’s application for permission to appeal that decision.