Koza Limited & Anor v Koza Altin Isletmeleri AS

Reserved costs of interim applications are ordinarily determined when those applications have been resolved, rather than deferred until the substantive claim, unless justice requires otherwise. Where interim orders represent substantial success for one party, that party will ordinarily receive its costs even if the orders were eventually made by consent, particularly where consent was given late and the applications were reasonably required by a real risk of asset dissipation. The court may order a non-party individual who controlled the relevant decisions to pay those costs instead of the company whose assets were involved. Under Civil Procedure Rules 1998, r 44.2(8), a reasonable payment on account should ordinarily accompany an order for costs subject to detailed assessment.

The judgment concerned the incidence of reserved costs arising from four interim applications made in 2022 in litigation about control of Koza Ltd. Interim orders restrained dealings with non-liquid assets, imposed limits on expenditure and required further disclosure. Most of the relief was ultimately continued, varied or compromised by consent in January 2023, but the parties remained unable to agree the costs.

Koza Altin sought its costs, payable by Mr Ipek, together with £212,250 on account. The claimants argued that costs should await determination of the substantive claim or should be awarded to them because the applications had been unnecessary. The issues were whether Koza Altin had achieved substantial success, who should pay, and whether payment on account should be ordered.

1. The court rejected the contention that the reserved costs should be deferred until determination of the substantive claim. The applications had been determined and the costs were those of interim applications made more than a year earlier.

2. Applying the principles in Civil Procedure Rules 1998, Pt 44, the 2022 orders represented substantial success for Koza Altin. The fact that the orders were ultimately consensual did not displace the ordinary starting point that the successful party should receive its costs, particularly because consent was given late and the applications had to be made.

3. Although earlier proceedings had established the legitimacy of particular SAM Alaska funding, it was reasonable to consider that further substantial funding might create a real risk of dissipation, especially because Mr Ipek had used Koza Ltd’s assets to fund the litigation. Subsequent detailed evidence did not make the applications unreasonable when they were brought.

4. Mr Ipek, rather than Koza Ltd, should pay the costs. He had decided how Koza Ltd’s assets were to be dealt with, and it would be unjust to require the company, which was the object of the litigation and a wholly owned subsidiary of Koza Altin, to bear the liability.

5. There was no good reason to withhold payment on account. Under Civil Procedure Rules 1998, r 44.2(8), a party ordered to pay costs subject to detailed assessment should ordinarily pay a reasonable sum on account. The court therefore ordered Mr Ipek to pay Koza Altin £212,250 within 14 days, with no order as to costs for the December application because its outcome had been mixed.