Geoffrey William Guy & Ors v Nihal Mohammed Brake & Ors (moratorium cancellation costs)

Where substantive relief has become pointless, the court must first consider whether it has a proper basis for making a costs order. That requires agreed or determined facts sufficient to identify the successful party and apply the costs rules.

The court may decide costs summarily and need not conduct the procedure that would have been required for the substantive application. However, it may properly refuse to determine disputed factual issues solely to create a basis for costs where doing so would substantially rehearse an otiose application and waste judicial and legal resources.

The applicants sought cancellation of a mental health crisis moratorium imposed under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020. Before the substantive application was determined, the moratorium ended because the first respondent no longer satisfied the relevant treatment criteria.

The court therefore considered outstanding questions concerning service, disclosure and costs. The applicants sought factual investigation into whether the first respondent had been eligible for the moratorium, so that they could pursue costs. The respondents submitted that the substantive application had become otiose and that there should be no order as to costs.

1. The court should first ask whether it is in a position to make a costs order. Under the principles discussed in BCT Software Solutions Ltd v C Brewer & Sons Ltd [2003] EWCA Civ 939, there must be a proper basis of agreed or determined facts on which to identify the successful party and decide whether the general rule or a different order should apply.

2. The fact that substantive relief has ceased to be useful does not prevent a party asking the court to decide costs. A more summary procedure may be used, and oral evidence, cross-examination and disclosure may not be required to the extent appropriate for the substantive application. This reflected the approach in Coyne v DRC Distribution Ltd [2008] BCC 612.

3. Nevertheless, the court may conclude that the interests of justice do not justify further investigation of disputed facts merely to establish a basis for costs. The approach in Powles v Reeves [2016] EWCA Civ 1375 recognised the undesirability and waste involved in effectively hearing the whole case solely for costs.

4. Here, deciding whether the first respondent had ever been eligible for the moratorium would have required determination of the central substantive issue. The service issue could have been resolved summarily, but it would not have resolved the principal dispute or supplied a sufficient basis for costs against the respondents. The court also took account of the extensive and costly satellite litigation between the parties and the limited availability of judicial resources.

5. The court therefore declined to continue the factual and disclosure exercise and made no order as to costs.

This was a first-instance decision on outstanding costs and procedural issues after the substantive moratorium-cancellation application became otiose.

The judgment refers to earlier directions concerning the application in [2023] EWHC 1560 (Ch).