Naim Lone v Michael Petrou

A party who makes and then withdraws an application will ordinarily be liable for the reasonable costs incurred by the opposing party in responding to it. No separate formal application or supporting evidence is required before those costs may be awarded. Summary assessment permits recovery only of costs that are reasonable and proportionate. Indemnity costs require conduct taking the case out of the norm in a manner justifying that basis. Even then, the costs must have been reasonably incurred and reasonable in amount; proportionality is not considered, and doubts are resolved in favour of the receiving party.

These proceedings concerned the costs consequences of applications made by the Claimant in detailed assessment proceedings. The Claimant had applied for a stay and for the recusal of the Costs Judge, later withdrawing the applications shortly before the listed hearing. He subsequently renewed his stay and recusal applications. Both applications were dismissed as totally without merit in the judgment of 22 December 2022.

The court had to determine the Defendant’s costs of the abortive hearing and of the later applications, including whether the latter should be assessed on the indemnity basis and, if so, in what amount.

1. The Defendant was entitled to the reasonable costs of the abortive applications listed for 1 August 2022. The Claimant was responsible for making the applications and for their consequences. The fact that a parallel stay application had been made to the appellate court, or that the Claimant considered that court’s handling of it unsatisfactory, did not deprive the Defendant of costs incurred before the applications were withdrawn.

2. An application may be made under Civil Procedure Rules 1998, rule 23, either formally or informally. The absence of a separate formal costs application or supporting evidence did not prevent a costs order. Nor had the Defendant’s solicitors waived costs by an initially ambiguous email, since any misunderstanding was promptly corrected and no express waiver had been made.

3. The costs of the abortive hearing were summarily assessed under Civil Procedure Rules 1998, rule 44.6. Only reasonable and proportionate costs could be allowed. The court reduced the solicitors’ and counsel’s claims and awarded £4,030.

4. Indemnity costs were appropriate for the later applications. Applying Excelsior Commercial and Industrial Holdings Ltd [2002] EWCA Civ 879, the relevant question was whether the party’s conduct had taken the case out of the norm in a way justifying indemnity costs. The Claimant’s repeated attempts to control listing, persistent non-compliance with Civil Procedure Rules 1998, rule 39.8, discourtesy, unsupported allegations of dishonesty, withdrawals followed by renewed applications, and resulting delay and wasted costs satisfied that test.

5. Indemnity assessment did not mean that all claimed costs were recoverable. Proportionality was not considered, but costs still had to be reasonably incurred and reasonable in amount. Any doubt on those questions was resolved in favour of the receiving party. The costs of the 5 September 2022 application were assessed at £2,550.