Jamie Perry on awarding costs under new procedures

Jamie Perry is an associate in the dispute resolution department at Baker & McKenzie.

Lord Justice Mance, sitting as a Commercial Court judge in Grupo Torras SA & anor v Sheikh Fahad Mohammed Al Sabah & ors, 5 July 1999, decided the question of whether a successful party should be denied all or part of its costs under the terms of the Civil Procedure Rules (CPR) prior to the rules coming into force.

The case concerned allegations of conspiracy to defraud and dishonest assistance.

The judge rejected the claimants' submissions that the defendants had achieved a "narrow success".

The defendants had succeeded in relation to the claims against them and were entitled to be treated as successful parties.

However, the judge found that it was open to him under the CPR rules to deviate from the general rule that "costs follow the event". Accordingly, he considered individually the position of each party seeking costs.

Notwithstanding the fact that the defendants had succeeded, the judge found that the successful defendants had been guilty of backdating documents, deceiving the claimants' auditors and in dereliction of their duties as directors of the claimants.

The judge had also not accepted significant parts of their evidence.

In the circumstances, he found that the claimants had been perfectly justified in bringing and continuing an action against these defendants, even though their claims had failed.

The judge explained that although he was initially minded to refuse some of the defendants' applications for costs, he felt this was somewhat draconian given that they had, in fact, succeeded in defeating the claimants' claims.

As such, the judge ordered that the claimants pay a proportion of the successful defendants' costs (half in one case and a third in the other two cases).

This judgment is indicative of the new post-CPR attitude of the courts. If a party to litigation succeeds at trial yet is considered not to have conducted itself properly, then the court may decide to impose costs penalties, even if the party is ultimately successful.

The claimants recently obtained judgment for damages and interest in the region of $800m (£375m).