Invenia Technical Computing Corporation & Anor v Matthew Hudson

Costs generally follow the event, but the court must consider all the circumstances and may make a different order. A party succeeds on an application by achieving its substantive objective; success on every issue is unnecessary.

A successful party may lose costs protection where it unreasonably refuses ADR. The burden lies on the unsuccessful party to establish unreasonable refusal, assessed by reference to all the circumstances, including the nature and merits of the dispute, settlement efforts, cost, delay and prospects of success.

Indemnity costs may be ordered where conduct takes the case outside the norm of ordinary and reasonable litigation. Threatening winding-up proceedings in the face of a bona fide dispute or genuine and substantial cross-claim, together with abusive procedural conduct and baseless serious allegations, may justify that order.

The applicants sought costs following several applications arising from statutory demands served by the respondent. The court had previously granted injunctions restraining presentation of winding-up petitions, dismissed the respondent’s strike-out, extension and relief-from-sanctions applications, and ordered costs of two further applications to be costs in the injunction proceedings.

The respondent argued that the applicants were not the successful parties, that their refusal to mediate should deprive them of costs, and that any costs should be assessed on the standard basis. The applicants sought costs of all applications, with indemnity costs for the injunction and strike-out applications. The issues were whether the applicants were successful, whether the circumstances justified departing from the usual costs rule, and which basis of assessment was appropriate.

1. Outcome. The respondent was ordered to pay the applicants’ costs of all the applications. Costs of the First Relief from Sanctions Application and Adjournment Application followed the earlier order that they be costs in the Injunction Application. Costs of the Extension Application and Second Relief from Sanctions Application were awarded on the standard basis. Costs of the Injunction Application and Strike Out Application were awarded on the indemnity basis.
2. Successful party. The applicants achieved the substantive objective of the Injunction Application, namely preventing presentation of winding-up petitions. Their failure on one alternative jurisdictional route and on one of the grounds concerning one demand did not make them only partially successful. The respondent’s strike-out, extension and second relief applications were dismissed. Mere success or procedural advantage in a relief-from-sanctions application did not automatically entitle the applicant to costs.
3. ADR. Applying Halsey, the respondent had not shown that the applicants unreasonably refused mediation. The dispute was clear-cut, the applicants reasonably believed they had a strong case, earlier opportunities to withdraw the demands had been rejected, mediation had little prospect of success, and it risked adding expense and jeopardising the listed hearing. The threats and serious unsubstantiated allegations made mediation particularly unsuitable.
4. Indemnity basis. Threatening winding-up petitions in circumstances involving disputed debts or a genuine and substantial cross-claim was an abuse of process. The case was outside the norm because of the respondent’s numerous unwarranted applications, extensive correspondence, late and excessive evidence, and repeated serious allegations of fraud and forgery. His status as a litigant in person did not justify a lower standard of conduct.
5. Interim payment. The respondent’s alleged inability to pay was not a good reason to refuse an interim costs order. He was ordered to pay £37,807 on account of costs by 4pm on 13 March 2024.