Mustafa Erdem Baldudak v Mark Matteo (Costs)

Under Civil Procedure Rules 1998, Part 44, the successful party normally receives its costs. Departure from that rule requires consideration of all the circumstances, including conduct and success on particular issues. Losing some issues does not automatically justify reducing a successful party’s costs.

Issue-based costs orders should be approached cautiously because of their practical consequences. A proportionate reduction may better reflect mixed success and unreasonable conduct. A payment on account should ordinarily be ordered. Contingent or uncertain costs liabilities from other proceedings do not, without more, provide a good reason to withhold it.

The judgment concerned costs following the claimant’s successful claim that property was held on trust for him alone. The defendant’s counterclaim was dismissed, and the defendant was ordered to transfer his legal interest in the property.

The court considered whether the claimant was the successful party, whether his costs should be reduced or limited by reference to particular issues or dates, whether disclosure conduct and the unused witness statement justified a reduction, and whether a payment on account should be withheld or set off against contingent costs said to arise from earlier proceedings.

1. Successful party and general rule. The claimant was plainly the successful party because he succeeded on his claim and defeated the counterclaim. The election, estoppel and Quistclose issues fed into the fundamental resulting-trust question and did not alter that conclusion. The general rule in Civil Procedure Rules 1998, CPR 44.2(2), therefore applied. There was no sufficient reason to restrict costs to a later pleading date.
2. Departure from the general rule. The court considered all relevant circumstances under CPR 44.2(4) and (5), including the parties’ conduct and partial success. There is no automatic reduction merely because the successful party lost some issues. Issue-based orders are approached with caution under CPR 44.2(7), and proportionality may provide the preferable response.
3. Reduction. A 15% reduction was appropriate. The claimant’s non-disclosure of WhatsApp messages caused unnecessary costs, he did not rely on his trial witness statement, and he lost on the Quistclose issue. The defendant was accordingly ordered to pay 85% of the claimant’s costs on the standard basis, if not agreed.
4. Payment on account. Under CPR 44.2(8), the successful party should ordinarily receive a payment on account pending detailed assessment. The defendant’s asserted costs from earlier proceedings were contingent and uncertain, and detailed assessment had not begun. They did not constitute a good reason to withhold or stay payment.
5. Amount. The costs budget was a sensible starting point, but the court had to select an irreducible minimum and avoid overpayment. A payment on account of £90,000 was ordered.

First-instance costs judgment following the court’s main judgment, [2024] EWHC 167 (Ch), which declared that the property was held on trust for the claimant alone.