Baldudak v Matteo (Re Costs) [2024] EWHC 301 (Ch)
The proceedings related to two business partners in a 50/50 joint venture. This was a second set of proceedings resulting from the acrimonious breakdown of their relationship. The issue in these proceedings was the determination of the beneficial owner of a freehold commercial property. The matter proceeded to Trial and the Claimant won and the Defendant’s counterclaim was dismissed.
When the Judge came to consider whether to depart from CPR 44.2(2); that the unsuccessful party will be ordered to pay the costs of the successful party, he referenced EI Rediffusion Music Ltd v Phonographic Performance Ltd [1999] 1 WLR 1507 (at 1522–1523) confirming that CPR 44.2(2) was a “starting point from which the court can readily depart”.
The Defendant submitted that the Claimant’s costs of disclosure should be disallowed in view of the conduct of the Claimant in complying with disclosure. The Defendant went further and asked the Court to order the Claimant to pay the Defendant’s costs of dealing with disclosure. In addition, the Defendant submitted that the Claimant should not be permitted to recover costs of preparing his trial witness statement in view of the fact that, despite sitting in court during the trial, he chose not to give evidence or otherwise rely on that witness statement.
The Judge ruled that it was appropriate to make a reduction in the Claimant’s costs in order to reflect (i) his conduct in relation to non-disclosure (ii) he did not rely on his trial witness statement and (iii) he was unsuccessful on one of the discrete issues. The Judge ordered a reduction of 15% of the Claimant’s costs to be assessed on the standard basis if not agreed.
The next point to consider was whether to order an interim payment. Pursuant to CPR 44.2(8), if the court makes a costs order it will order the paying party to make a payment of costs on account pending detailed assessment, unless there is good reason not to do so. The Defendant submitted that there was good reason not to make an order for payment of costs on account in this case, in view of the cost award owed to the Claimant in the first set of proceedings. The Defendant submitted that there should be no order for an in interim payment for costs as the Claimant would shortly be facing a Bill of Costs from the previous proceedings which is “not unlikely” to be equivalent to or even significantly in excess the costs for these proceedings. The Defendant further argued that, a set-off was inevitable and it would most likely extinguish or significantly reduce the costs ordered in these proceedings.
The Claimant in response referenced the case of Benyatov v Credit Suisse Securities (Europe) Ltd [2020] 1 WLR 2913 and submitted that the Defendant’s calculation of the Claimant’s costs was based on uncertain costs entitlements ‘in order to defeat another party’s sure entitlement to an interim payment’. The Claimant further submitted that in the previous proceedings, the Defendant has had the benefit of a substantial payment on account of £259,000.00 but yet now seeks to deprive the Claimant of that same benefit.
The Judge ruled that there was no good reason for departing from the from the usual rule that the successful party is entitled to a payment on account of his costs pending any Detailed Assessment.
Commentary
The case clearly shows the importance of the cost implications of a ‘win’ and the parameters of awarding an interim payment for costs, in particular the fact that the Defendant, despite having a costs order in the earlier proceedings, but had not commenced detailed assessment, was not sufficient reason to depart from the normal order that an interim payment on account of costs should be made.