Victus Estates (2) Limited v Shawbrook Bank Limited

Where an appeal changes the result on which a lower court made its costs order, the appellate court may reconsider and replace that order, even where permission was not granted for an independent costs appeal. Costs should reflect the parties’ relative success on the issues actually litigated, including issues that became decisive on appeal. The court may determine the costs itself where the material is sufficient and remission would cause delay and further expense. Costs relating to a distinct, unresolved application should be excluded or dealt with separately.

The judgment concerned costs following two appeals determined in an earlier judgment, [2021] EWHC 2411 (Ch). Shawbrook Bank Limited and OneSavings Bank plc had succeeded on the principal appeal issue concerning the effect of section 63 of the Law of Property Act 1925 on allegedly sham transfers. The county court had previously made no order as to costs between the relevant parties. The court had to determine the consequential costs orders in the county court and on appeal, including whether the costs issue should be remitted.

1. Disposition. The court declined to remit the costs issues. It recalculated the county court costs to reflect the appellate result and made consequential orders for the appeal costs.
2. An appellate court may reconsider a lower court’s costs order where the result has been altered by the appeal. This is distinct from an independent appeal against the original costs order. The refusal of permission to appeal on costs did not prevent reconsideration following success on the substantive appeal.
3. The court rejected the submission that the costs question should await the outcome of a separate application for an order for sale. Costs specific to that unresolved application were excluded. The remaining costs could be determined on the material already provided, without the delay and further expense of remission.
4. The court treated the parties’ success issue by issue. Before the late amendments alleging sham transactions, each claimant was ordered to pay 95% of the relevant bank’s costs. After the amendments, the banks were awarded 65% of their relevant costs, reflecting success on the sham issue but failure by Shawbrook on the allegation concerning Mr Agrawal’s involvement in fraud.
5. On the appeals, Ms Munroe and Ms Benjamin were each ordered to pay 85% of the relevant bank’s appeal costs. The banks were to bear their own costs of the amendment application and the consequential hearing, subject to specified preparation costs being treated as appeal costs.
6. The court rejected the proposition derived from Penn v Bristol & West Building Society, [1995] 2 FLR 938, that participation in a fraudulent document by the transferor and purchaser necessarily prevented rights passing under it. The proposition was held not to be good law and was not applied.
7. The appeal costs were summarily assessed on a robust basis. Payment was stayed pending the outcome of the further appeals.

• Chancery Appeals: In the earlier judgment dated 27 August 2021, [2021] EWHC 2411 (Ch), the appeals were allowed on the section 63 issue. The present judgment determined the consequential costs.
• County court: The county court had made no order as to costs between the relevant parties. That order was replaced to reflect the appellate result.