Cabo Concepts Limited & Anor v MGA Entertainment (UK) Limited & Anor

A final costs order made after an interlocutory or case-management decision remains final for the purposes of reconsideration. Under CPR r. 3.1(7), variation of such an order ordinarily requires exceptional circumstances. CPR r. 40.8A is the appropriate provision where relief is sought because a matter became known after the order. The later discovery that both parties had committed disclosure failures does not, without more, justify reopening a costs order which was properly made on the information then available. The court must distinguish between a later event which destroys the basis of an order or makes compliance impossible, and later information showing only that a different order might have been made. Reopening final costs orders on that latter basis would create uncertainty and encourage piecemeal revision.

The claimants brought proceedings concerning the defendants’ sale of rival toys. After serious disclosure failures by the defendants caused the trial to be adjourned, Joanna Smith J ordered the defendants to pay the adjournment costs on the indemnity basis and to make a payment on account of £578,444.17.

The defendants later applied under CPR r. 3.1(7), alternatively CPR r. 40.8A, to vary that order and recover the payment on account. They relied on extensive WhatsApp material which the claimants had failed to disclose and on inaccurate evidence given by the claimants’ solicitor about their disclosure process. The central issues were the characterisation of the costs order, the interaction between the two procedural rules, and whether the later-discovered disclosure failures justified reopening the order.

1. Disclosure failures. The claimants’ solicitor had conducted and supervised the search of the founders’ mobile phones seriously inadequately. A solicitor may allow a client to search its own phones, but must give clear instructions, ensure that the client understands the scope of its disclosure duties and supervise the exercise carefully. The solicitor’s evidence describing the process was materially inaccurate and misleading, but the court rejected the allegation that it was knowingly or recklessly false.
2. Procedural route. CPR r. 3.1(7) is a case-management power which may in principle apply to a final order, but variation of a final order is confined to exceptional cases. CPR r. 40.8A should normally be used where the application concerns matters which have occurred since the judgment or order. The discovery, after the original hearing, of previously undisclosed WhatsApp material was such a matter. The inaccurate evidence itself had been given before the original order and was properly considered under CPR r. 3.1(7).
3. Costs orders. A costs order requiring one party to pay another party’s costs is final for these purposes, even where it arises from an interlocutory or case-management decision. Its finality is not reduced because the underlying decision was interim or procedural.
4. Application of the rules. The original order remained justified because the defendants’ disclosure failures had required the trial to be adjourned. The later discovery that the claimants had also failed to disclose substantial relevant WhatsApp material showed that a different costs order might have been made had the information been known earlier. It did not undermine the basis of the order. Reopening it would invite speculative and piecemeal revision of costs orders as litigation develops.
5. The application to vary the adjournment costs order and recover the payment on account was dismissed. It was common ground that the claimants should pay the defendants’ costs arising from the claimants’ disclosure breaches and other late disclosure.

The judgment records that the claimants’ substantive claim had failed after trial: [2025] EWHC 1451 (Ch). The present decision concerned a subsequent sanctions application and was given at first instance. The claimants had sought permission to appeal the trial judgment, but no appellate decision on that appeal is stated.