Financial Conduct Authority v Konstantinos Papadimitrakopoulos & Anor.

The general rule that the unsuccessful party pays the successful party’s costs concerns success in the litigation or application viewed overall, rather than success on individual issues. The court may depart from that rule where the needs of justice and the particular circumstances require it, including to mark disapproval of an abuse of process. Indemnity costs require conduct or circumstances taking the case out of the norm; an error or mistaken approach, without unreasonable conduct, will not ordinarily suffice. Costs may be sent for detailed assessment where the court cannot sensibly rely on the receiving party’s costs schedule.

Following an earlier strike-out judgment, the First and Second Defendants sought their costs of the application. The court had rejected the strike-out application but had found that the FCA had made impermissible collateral use of material obtained through mutual legal assistance, contrary to section 9(2) of the Crime (International Co-operation) Act 2003. The First Defendant had succeeded on three of the four issues and the Second Defendant had participated on the first issue.

The issues were whether costs should depart from the general rule, whether the First Defendant should receive indemnity costs, and how the costs should be assessed.

1. Costs of the application. The court ordered the FCA to pay both Defendants’ costs. Under CPR 44.2(2)(a), the general rule concerns the unsuccessful party in the litigation or application viewed overall. Applying Kastor Navigation Co Limited v Axa Global Risks (UK) Limited [2004] 4 Costs LR 569, success on individual issues is not necessarily determinative. However, CPR 44.2(2)(b) permits a different order.
2. The circumstances justified departure from the general rule under the approach in The London Borough of Tower Hamlets v The London Borough of Bromley [2015] EWHC 2271 (Ch). The First Defendant had succeeded on the first three issues, the directly obtained material would be inadmissible, retrospective consent from the Greek authorities was required, and the FCA’s conduct amounted to an abuse of process causing potential and actual unfairness. An order that the costs be in the case would not adequately mark the court’s disapproval. The Second Defendant was also entitled to costs because he was a party, had good reason to attend, and had made helpful submissions on the issue on which the Defendants prevailed.
3. Indemnity costs. The application for indemnity costs was refused. Under CPR 44.3(1)(b), CPR 44.2(4) and (5), and the principles stated in Excelsior Commercial and Industrial Holdings Limited v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879 and Three Rivers District Council v The Governor and Company of the Bank of England [2006] 5 Costs LR 714, indemnity costs require conduct or circumstances taking the case out of the norm. The FCA’s conduct was found to be mistaken, but not improperly or unreasonably conducted.
4. The First Defendant’s costs were ordered to detailed assessment because the court could not properly rely on an extraordinarily high and inadequately supported costs schedule. The Second Defendant’s costs were summarily assessed at £70,000, payable by the FCA within 14 days.