Jonathan Friend v Friend Media Technology Systems Limited

On a summary judgment application, the unsuccessful applicant will ordinarily pay the respondent’s costs. That starting point may be adjusted where the applicant achieved material success on an issue, even though the application failed in its central aim. The court should assess the overall balance of success and failure under Civil Procedure Rules 1998, r 44.2. On summary assessment, guideline hourly rates provide the appropriate starting point and a strong steer as to reasonableness and proportionality. Where item-by-item analysis is impracticable, a global percentage reduction may fairly reflect mixed success, rejected arguments, duplication and disproportionate costs.

The claimant, a founder of the defendant company, sought summary judgment and strike out in a claim for reimbursement of legal fees under an indemnity in an investment agreement. The court had previously construed the indemnity as capable of covering certain post-transaction, non-litigation advice, but not the costs of litigation, and had refused both parties’ applications for summary judgment.

The consequential issue was the appropriate order for the costs of the claimant’s unsuccessful application, including whether the claimant’s partial success on contractual construction justified a neutral or reserved order and how the defendant’s costs should be assessed.

1. The claimant’s application for summary judgment and/or strike out had been dismissed in its entirety. The defendant was therefore prima facie the successful party. Under Civil Procedure Rules 1998, Part 44, the unsuccessful party ordinarily pays the successful party’s costs, subject to adjustment where the circumstances justify it.
2. The usual starting point should not lightly be displaced. Summary judgment is a discretionary remedy, and requiring an unsuccessful applicant to pay costs promotes procedural discipline and proportionality. The court applied the rationale identified in Matrix Receivables Limited v Musst Holdings Limited [2024] EWHC 2167 (Ch).
3. The claimant nevertheless achieved material success on an important construction issue. The defendant’s narrow interpretation of Clause 19.4 was rejected, and the clause was held capable in principle of extending to some post-transaction, non-litigation advice. That success did not establish that any particular invoice was recoverable and did not alter the failure to obtain the central relief sought.
4. Weighing the result as a whole, the defendant was the overall successful party, but its success was incomplete. The claimant was ordered to pay the defendant’s costs, subject to a reduction. The issue was sufficiently discrete to be determined immediately rather than reserved to the trial judge.
5. On summary assessment, the court was required to reach a broad-brush figure representing costs reasonably incurred and reasonable in amount, having regard to proportionality. Guideline hourly rates were the appropriate starting point and no departure was justified. A global reduction was preferable to excising individual items because the objections concerned both rates and allocation of work.
6. A 40% reduction was appropriate to reflect mixed success, the rejected construction argument, overlap with work required for the wider litigation and the need for proportionality. The defendant’s recoverable costs were summarily assessed at £89,400, payable within 14 days.