The Wine Enterprises Investments Scheme Limited (in liquidation) v Crowe U.K. LLP

For costs purposes, the successful party is identified by substance and reality, including whether the sum recovered was the prize for which the claim was brought. A small recovery may leave the claimant unsuccessful overall. After a defendant’s Civil Procedure Rules 1998 Part 36 offer expires, the prescribed costs order follows unless the offeree establishes injustice. Ordinary shortcomings in hard-fought litigation and losses on individual issues do not justify a detailed percentage reduction. Indemnity costs require conduct or circumstances taking the case out of the norm; a poor result, imperfect presentation and a good-faith rejection of an offer are not enough without more.

The Company sued its former auditor, Crowe, for negligent audits over seven years. In the merits judgment, the Company recovered £101,965.95 on claims whose highest stated value exceeded £8.4 million. At this consequential hearing, the parties disputed who had succeeded for costs purposes, the effect of Crowe’s Part 36 offer, indemnity costs and the Company’s application for permission to appeal. The judge decided costs and the grounds argued on 2 June 2026; the remaining permission grounds require a further hearing.

1. Costs before expiry of the Part 36 offer. The court applied the substance-and-reality approach, asking which party was essentially the winner. The amount recovered was only about 1.6% of the highest claim value; the Company would not have brought the proceedings to recover that amount, and it recovered nothing on six of its seven causes of action. Crowe had substantially denied the prize the Company sought. The Company was therefore not the successful party. The approach in Fox v Foundation Piling Ltd [2011] 6 Costs LR 961 did not displace the line of authority from Roache v News Group Newspapers Ltd [1998] EMLR 161 to Medway Primary Care Trust v Marcus [2011] EWCA Civ 750. The Company was ordered to pay 85% of Crowe’s costs to expiry, reflecting Crowe’s partial failure.
2. Costs after expiry. Under Civil Procedure Rules 1998 r 36.17(3), Crowe was entitled to its costs from expiry of its offer and interest on those costs unless that result would be unjust. The court considered the factors in r 36.17(5): the offer was realistic and genuine, made well before trial, and the Company had no material information deficit. The Company did not establish injustice. Although Crowe lost some points, its conduct remained within the normal course of hard-fought commercial litigation. A detailed inquiry into issue-by-issue success to reduce the prescribed costs would erode Part 36 and encourage satellite disputes.
3. Indemnity costs. The governing threshold, drawn from Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hannah Aspden & Johnson [2002] CP Rep 67, is conduct or circumstances taking the case out of the norm. The Company’s case was untidy and imperfect, but was not speculative, opportunistic or so unreasonable as to cross that threshold. Its rejection of Crowe’s offer was a good-faith misjudgment, though a mistake in hindsight. Indemnity costs were refused.
4. Permission to appeal. The judge refused permission on the grounds argued. The contributory-negligence challenge had no real prospect because the approach in Singularis had received appellate and Supreme Court endorsement. The credit-for-benefits challenge was likewise unarguable in light of the Court of Appeal’s decision in AssetCo; a hypothetical shareholder claim did not automatically deprive subscribed funds of value. The statutory-resignation ground mischaracterised the merits judgment: the judge had considered the routes under sections 519–521 of the Companies Act 2006 and rejected the proposed case for want of evidence that shareholders would receive or access the statement. The ground concerning successive audit-year causes also had no real prospect: the merits judgment had considered each audit year. The remaining permission grounds were left for a further hearing.

This was a consequential hearing following the merits judgment in The Wine Enterprise Investment Scheme Ltd v Crowe UK LLP [2026] EWHC 692 (Ch) . The judge dealt with costs and the grounds of the Company’s permission application argued at this hearing. The remaining grounds were left for a further hearing; no appeal judgment is described.