Koza Limited & Anor v Koza Altin Isletmeleri AS

In exercising its discretion as to costs under Civil Procedure Rules 1998 Part 44.2, the court may consider which party would probably have succeeded had an application proceeded, together with the reasonableness of making it when made. Following an unsuccessful appeal and refusal of permission to appeal, it may be reasonable to seek variation of an interim order without awaiting a further permission application. A person who has controlled litigation on behalf of a company may be ordered personally to pay the costs. Indemnity costs require circumstances taking the case outside the norm; litigation misconduct and use of company assets will not necessarily suffice.

The defendant applied to vary an interim order made in 2016, which had continued the second claimant’s control of the first claimant rather than the control of its parent company. The claimants resisted the application because they had sought permission to appeal to the Supreme Court from the Court of Appeal’s decision in the same proceedings, reported at [2022] EWCA Civ 1284. Other applications were resolved by consent, leaving the question of costs. The Supreme Court refused permission after the hearing. The central issues were whether the variation application was premature, who would probably have succeeded, whether the second claimant should be personally liable, and whether costs should be assessed on the indemnity basis.

1. Costs discretion. The court exercised its discretion under Civil Procedure Rules 1998 Part 44.2. The defendant’s submissions were preferred.
2. Reasonableness of the application. After the Court of Appeal had rejected the claimants’ arguments and refused permission to appeal, it was reasonable for the defendant to apply to restore control of its subsidiary. The defendant was not required to await the outcome of the pending Supreme Court permission application, particularly in light of concerns about the use of the subsidiary’s assets to fund the proceedings and the need for decisions concerning the SAM Alaska project.
3. Likely outcome. The claimants faced an uphill struggle in persuading the High Court that the proposed appeal had realistic prospects after the Court of Appeal’s refusal. The variation application would probably have succeeded had it proceeded to determination. The costs of the other applications were also included because they were resolved only shortly before the hearing and involved substantial common background and evidential overlap.
4. Personal liability. The second claimant, who had controlled the first claimant in relation to the applications, was ordered personally to pay the defendant’s costs.
5. Basis of assessment. The matters relied upon, including the attempt to retain control after the Court of Appeal’s decision and the use of company assets to fund the proceedings, did not take the case outside the norm. Costs were therefore payable on the standard basis, subject to assessment if not agreed.

A draft order was to be filed.

• Court of Appeal: The claimants’ arguments concerning recognition of the defendant’s directors were rejected and permission to appeal was refused in [2022] EWCA Civ 1284.
• Supreme Court: Permission to appeal was subsequently refused.
• High Court (Business List): The defendant’s costs application was allowed in substance.