Azzam Faisal Khouj v Acropolis Capital Management Limited & Anor

An agreement resolving costs must be construed objectively, having regard to its wording, contractual background and context. An agreement concerning the costs of an application to obtain cross-examination does not ordinarily extend to the costs of the later cross-examination itself unless its wording clearly does so. Costs remain in the court’s discretion under Civil Procedure Rules 1998, Part 44.2. Although costs generally follow the event, the court may make no order where the relevant hearing achieved no useful result.

The claimant obtained an order requiring a witness to attend cross-examination. The parties subsequently agreed that the defendants would pay £75,000 in full and final settlement of the costs of the application for that order. The cross-examination later took place, and the claimant sought a further £42,272.55 for its costs.

The defendants argued that the correspondence also settled the costs of the cross-examination itself. They further argued that the cross-examination achieved nothing. The court had to determine the scope of the settlement and the appropriate costs order.

1. Construction of the settlement. The correspondence was to be construed objectively, applying the principles identified in Wood v Capita [2017] UKSC 24 and Arnold v Britton [2015] UKSC 36, with regard to the contractual background and context.
2. The agreement covered the contested application for an order requiring cross-examination. It did not cover the costs of the cross-examination itself, which had not yet taken place when the agreement was made. The defendants’ primary submission was therefore rejected.
3. Costs discretion. The court retained a discretion as to costs. Under Civil Procedure Rules 1998, Part 44.2, costs generally follow the event, but the court may make a different order where the justice of the case requires it.
4. The claimant had needed to obtain the order for cross-examination, but the cross-examination itself had no utility and achieved nothing for the claimant. The appropriate order was therefore that there be no order as to the costs of the cross-examination.