BB & Ors v Moutaz Al Khayyat & Ors

On discontinuance, the presumptive rule under Civil Procedure Rules 1998, rule 38.6, remains the starting point. A claimant seeking to displace it must establish a good reason within the principles reaffirmed in Brookes. Where the proposed reason depends on alleged misconduct by a third party, the claimant must prove the factual basis on the balance of probabilities. Evidence which is merely more than fanciful is insufficient. The court should also avoid reaching provisional conclusions on grave and complex allegations against persons who are not before it, save in exceptional circumstances supported by incontrovertible evidence or a short factual issue capable of fair resolution.

Four claimants sought an order under rule 38.6 displacing the presumptive liability for costs following discontinuance. They alleged that agents of the State of Qatar had conspired to interfere with the proceedings and had caused them to discontinue. The Bank was not alleged to have participated in that conspiracy, although the claimants relied on its connections with the State and alleged that it benefited from the conduct.

The application raised whether the court should investigate the alleged third-party misconduct, what standard of proof applied, and whether the absence of evidence from the Bank justified an adverse inference.

1. The application to displace the presumptive costs rule was refused. The claimants remained liable for the Bank’s costs under CPR 38.6.
2. The court was bound to apply the six principles reaffirmed in Brookes v HSBC Bank plc. Those principles require a claimant seeking departure from the usual rule to show a good reason. The possibility that the claim might have succeeded, or that discontinuance was motivated by practical, pragmatic or financial considerations, is insufficient by itself. A change of circumstances will usually be required, and unreasonable conduct by the defendant will ordinarily be relevant, although the sixth principle is not universal in its terms.
3. The reference in Brookes to cogent reasons concerned the reasons for departing from the rule, not a reduced standard of proof. The claimants therefore had to establish the alleged third-party conduct and its causal effect on discontinuance on the balance of probabilities. They accepted that the evidence could not meet that standard.
4. The Bank’s failure to adduce evidence rebutting the alleged conspiracy could not justify an adverse inference. The Bank and the State of Qatar were distinct entities, and no case was advanced that the Bank had participated in the alleged conspiracy.
5. In any event, it would be inappropriate to reach even a provisional conclusion on grave and complex allegations against the State and individuals who were not parties and had no opportunity to respond. An exception might arise where the evidence was incontrovertible or the issue was short and could be resolved without injustice, but this was not such a case.
6. The evidence concerning alleged deception by an intermediary was materially undermined by evidence of settlement negotiations with the State and the absence of satisfactory updating evidence. There was no sufficient basis for disapplying the presumptive rule.

The judgment records earlier stages in the same litigation:

• High Court (Queen’s Bench Division): background judgment at [2022] EWHC 904 (QB).
• Court of Appeal: subsequent judgment at [2023] EWCA Civ 253, handed down on 8 March 2023.
• High Court (King’s Bench Division): the present court had earlier made orders concerning discontinuance, stay and strike-out, including a judgment at [2024] EWHC 2951 (KB).