KB-2023-004010 - [2025] EWHC 2689 (KB)

The approach of MGWL is that the orders for costs should be issue by issue. They seek in this way to obtain the lion’s share of the costs by making out that they have won the lion’s share of the issues.

This ignores the underlying reality. That is that MGWL has lost the action. More than that, there is reason to believe that the action should never have been brought (the failure of the section 25 point) and/or that having brought it, they misused the court process by obtaining a WFO through breaches of the duty of full and frank disclosure which was culpable.

MGWL was able to convince Mr Tinkler and the Court of Appeal that it had a good arguable case. Such were the circumstances of the abrupt end to the case and so unsatisfactory were the reasons to explain that end that there are reasons to doubt even that. Indeed, if the Court of Appeal had been considering the question of good arguable case knowing that the case was about to be jettisoned in the way in which it was (which they could not have imagined would be the case), one cannot rule out a different conclusion even on the good arguable case issue. The discontinuance of the proceedings in Scotland raised serious questions as to whether the claim in Scotland for the reasons given by Lord Sandison was in fact a good claim at all. The effect was that Mr Smith and CSM did not have the opportunity to demonstrate that there was in fact not a case.

Whilst sometimes an issue-by-issue approach is the fairest, it is not in this case to the extent that it leads to a departure from the overall starting point which is that Mr Smith and CSM have been the overall successful parties. Along the road, various points arose which may not have been considered in the same way if it could have been guessed that there would be the capitulation which would take place. This must temper an issue-by-issue approach. It must inform as to the overall costs to be ordered. For Lord Sandison in the Scottish proceedings, there was an unusual order in favour of defendants to reflect the very unusual nature of what had occurred and what this told about the case. These are matters which inform about the overall incidence of costs.

The starting point is that the overall order should be that the MGWL should pay the costs of Mr Smith and CSM. The Court should be cautious about eroding that starting point by chiselling away issue by issue in the circumstances where there is a grave question as to whether the action should have ever been brought, whether the WFO should ever have been granted and at least from the time of the decision of the Court of Appeal on 8 August 2024 and from the application to set aside the WFO on 27 September 2024 as to whether the action should have been pursued. Applying the principles set out by Moore-Bick LJ in Brookes v HSBC Bank plc, there is a burden on the discontinuing party to show good reason to depart from the presumption. Even if it were true that the decision to abandon the action was motivated by practical, pragmatic or financial reasons as opposed to a lack of confidence in the merits of the case, that will not suffice to displace the presumption. Unreasonable conduct on the part of the other party may provide a good reason to depart from the rule.