In Loveridge & Anor v Loveridge [2021] EWCA Civ 1697 the Court of Appeal overturned a decision that should be no order for costs following the withdrawal of committal proceedings.  The Court also allowed costs on the indemnity basis from the date on which the respondents to the committal application offered to accept standard costs.

“Given the unilateral withdrawal of the application, Ivy was the successful party. The starting point under CPR 44.2 is therefore that she should be awarded her costs in accordance with the general rule, unless a different order is justified. In this case, taking account of the absence of any admission of contemptuous breaches and the scope for argument as to whether they existed, it was not appropriate to take into account any assessment of whether the application was likely to succeed in whole or in part.”


The Court of Appeal was considering two issues in relation to a dispute about the running of a caravan park.   Whilst an appeal was pending about the granting of injunctions an application was made for committal of the appellants for breach of the orders.  The Court of Appeal then overturned the injunctions. The party applying for committal then applied for permission to withdraw the committal proceedings. That application was granted but the judge made no order for costs. The appellants appealed against the costs order, arguing that their costs of responding to the committal proceedings should have been paid.

    1. The committal application was issued on 2 July 2020, a week after Carr LJ granted permission to appeal against the injunctions granted by HHJ McCahill QC and around four weeks before the expedited appeals were heard. The application alleged 18 contemptuous breaches of the injunction granted in the partnership proceedings. There was a directions hearing on 20 July 2020 and an eight day trial was listed to commence in November 2020. On 14 August 2020 Michael’s solicitors indicated that he would no longer be proceeding with the committal application in the light of the Court of Appeal’s decision. On the same day Ivy’s solicitor responded offering to agree to the withdrawal by consent if her costs were paid on the standard basis. The offer was not accepted. On 23 September 2020 Michael formally applied for permission to withdraw the committal application on the basis that it had “ceased to be necessary” following the Court of Appeal’s decision. Permission was granted by HHJ Cooke on 26 September 2020, with consequential applications to be dealt with at a subsequent date.
    1. Although the committal application was made against Audey and Mersadie as well as Ivy, only Ivy was represented at the hearing that led to the order that is the subject of this appeal. In advance of the hearing Ivy’s solicitor filed a witness statement in support of her application for costs. That witness statement exhibited a draft affidavit prepared for Ivy in response to the committal application, which responded to the allegations in some detail.
The judge’s reasons
    1. HHJ Cooke’s reasons for making no order as to costs are recorded in a relatively brief ex tempore judgment: the transcript before us appears not to have been approved by the judge. The judge referred to submissions on behalf of Ivy that she was the winner, that she benefited from a presumption of innocence, and that the allegations were denied and would not have been proved. He then noted that the normal principle that an unsuccessful applicant must pay the respondent’s costs was not an invariable rule. He described the incidents alleged in the application as serious rather than technical in nature, and as appearing to indicate a “coordinated course of action” on the part of the respondents. Whilst some of the allegations against Ivy would have faced difficulties of proof:
“Others however it seems to me had a very strong likelihood that they would have been proved, not least because [Ivy’s] own draft affidavit in response to the application, arguably at least and I need go no further today, admits the substance of the facts alleged against her.”
    1. The judge added that Ivy sought to explain her actions in a way to excuse or minimise her conduct, but:
“… I think what can be said at the moment, bearing in mind of course that I am not deciding the truth or otherwise of those allegations, is that [Ivy] faced a serious risk that some at least of those allegations would have been found to be proved against her.”
    1. The judge commented that the subsequent discharge of the order could not be regarded as trivialising or legitimising breaches of the order. He referred to a specific incident when Michael attended the Riverside site (where Ivy lives) with representatives from Savills and others, and Ivy had attempted to exclude them from the office. There was a dispute about whether Michael’s action amounted to conduct of partnership business within the scope of the order or was for the furtherance of his litigation case, but the judge considered that even if it was not part of the operation of the business then (bearing in mind that Michael had charge of the running of the site) it was:
“…at least arguably and I think strongly arguably, an incident that amounted to harassment or intimidation of Michael and his wife…”
One of the terms of the injunction prohibited the respondents from harassing or otherwise contacting Michael or his wife.
    1. The judge concluded that it was not appropriate to start from the proposition that, because the application had been withdrawn, it must be regarded as an application that would never have succeeded. There was a serious risk that some allegations would have been proved, with Ivy being made responsible for at least a substantial part of the costs. He referred to Michael’s position that his motivation in making the application had been enforcement rather than punishment, and suggested that deterrence and enforcement may also have been material to any decision that the court made. The application could not be described as unmeritorious and the allegations were not trivial. Withdrawing it once the injunction fell away was a pragmatic course, and the appropriate order was no order for costs.
The grounds of appeal
    1. The grounds of appeal are, in summary, that the judge erred in holding that certain allegations in the committal application were likely or very likely to have been proved against Ivy. He should have proceeded without expressing any view, and should have recognised that the allegations were unproven and that Michael had abandoned his attempt to prove them. The effect was to take into account matters that the judge should not have taken into account and to leave out of account matters that he should have taken into account. Alternatively, the judge exceeded the ambit of his discretion, since any judge acting reasonably would have awarded Ivy her costs on the indemnity basis, or failing that on the standard basis.
    1. Mr McCourt Fritz, who made submissions for Ivy on the costs appeal, submitted that Ivy was the clear winner. The committal application was withdrawn before Ivy was required to file evidence in response and she had made no concessions. The application had entirely failed. It was analogous to the withdrawal of an application for interim relief or to the discontinuance of a claim, where the default entitlement to costs is put on a statutory basis by CPR 38.6. The position in this case was however reinforced by the presumption of innocence to which Ivy was entitled. In addition, an award of indemnity costs was generally appropriate where allegations of contempt were made and not pursued. It was further justified in this case because the committal application would otherwise have been challenged as an abusive attempt to prejudice the Court of Appeal against Ivy, and in respect of individual allegations on the grounds that they had been made without any basis for them, and because when Michael indicated that he was going to withdraw the application Ivy offered to accept her costs on the standard basis, an offer that was refused.
    1. Mr Anderson relied on the broad ambit of discretion afforded to costs decisions, and submitted that it had not been exceeded, and there had been no error of principle. The submissions made on Ivy’s behalf amounted to an argument that it was impossible to make any assessment of the merits of a committal application which does not proceed to a substantive determination, such that the judge would have to award costs against the applicant. That would wrongly fetter the court’s discretion and would not enable it to consider all the circumstances of the case. It was accepted that the court was entitled to consider the merits under CPR 38.6, and the case law supported the proposition that it was also possible to take account of the merits in committal applications. Contrary to what was asserted on behalf of Ivy, there had been admissions of breach in relation to the incident involving Savills. She had chosen to engage with the allegations in evidence, and the judge could not be criticised for having regard to that evidence. As to indemnity costs, the mere fact that this was an application alleging contempt did not justify indemnity costs, and Ivy could not simply assert that it was an attempt to prejudice the Court of Appeal. The decision not to proceed was based on the loss of the injunctions, and was sensible and proportionate. Michael should not be penalised for it.
    1. The principle that a judge has a broad discretion in relation to costs is well established. In Atlasjet Havacilik Anonim Sirketi v Kupeli (aka Kupeli v Kibris[2018] EWCA Civ 1264[2019] 1 WLR 1235 at [5], Hickinbottom LJ described that principle and the role of an appellate court in the following terms:
“5. In relation to that rule, several points are worthy of note.
(i) In considering orders for costs, the court is of course bound to pursue the overriding objective as set out in CPR r 1.1 , i.e. it must make an order that deals justly with the issue of costs as between the parties. Therefore, when considering whether to make a costs order – and, if so, the order it makes – the court has to make an evaluative judgment as to where justice lies, on the facts and circumstances as it has found them to be.
(ii) Before an appeal court will interfere with the exercise of that discretion, as with any appeal, it must be satisfied that the decision of the lower court was wrong or unjust because of a serious irregularity in the proceedings below: CPR r 52.21(3)…
(iii) Before an appeal court concludes that the costs decision below was “wrong”, it must be persuaded that the judge erred in principle, or left out of account a material factor that he should have taken into account, or took into account an immaterial factor, or that the exercise of his discretion was “wholly wrong”: see, e g, Adamson v Halifax plc [2003] 1 WLR 60 , para 16, per Sir Murray Stuart-Smith, adopting (post-CPR) the conventional (pre-CPR) approach he described in Roache v News Group Newspapers Ltd [1998] EMLR 161 , 172.
(iv) An appeal court will only rarely find that the exercise of discretion below is “wholly wrong”, because not only is that discretion particularly wide but the judge below is usually uniquely well-placed to make the required assessment, having heard the relevant evidence.”
    1. The fact that a costs decision concerns a contempt application does not mean that different principles applySymes v Phillips and ors [2005] EWCA Civ 663[2006] 4 Costs LR 553 (relying on Knight v Clifton [1971] Ch 700). However, as Pill LJ explained in Symes v Phillips at [7], factors may be present in contempt proceedings which are not normally present in civil proceedings.
    1. CPR 38.6 does not apply in this case but both parties relied on it by way of analogy. It provides that, unless the court orders otherwise, a claimant who discontinues a claim is liable for the defendant’s costs up to the date of service of the notice of discontinuance. The principles to apply in determining whether to make a different order under CPR 38.6 were considered by Moore-Bick LJ in Brookes (and ors including Teasdale) v HSBC Bank Plc [2011] EWCA Civ 354. In particular, the claimant must show a good reason for departing from the presumption created by the rule, which will usually require a change of circumstances brought about by some form of unreasonable conduct on the part of the defendant (paragraphs [6] and [8]). This is because a claimant who commences proceedings takes upon himself the risk of the litigation, and it is normally unjust to make the defendant bear the costs of proceedings which were forced upon him and which the claimant is unable or unwilling to carry through to judgment (paragraph [10], referring to the judgment of Proudman J in Maini v Maini [2009] EWHC 3036 (Ch)).
    1. In my view the judge fell into error in taking into account an assessment of the likelihood of any of the allegations being proved, in circumstances where Ivy had not filed evidence in response to the application and had not admitted any contempt of court. That was an error of principle.
    1. Contempt proceedings are civil proceedings, but they are often described as quasi-criminal in character. Ivy was entitled to a presumption of innocence, and I disagree with Mr Anderson’s submission that this has no relevance to the costs of a withdrawn application because Ivy is no longer at risk of losing her liberty.
    1. The evidence filed by Ivy’s solicitor in response to the costs application does not amount to any admission of contempt by Ivy. On the contrary, the statement records that Ivy “vehemently denies” the allegations, with the exception of the incident involving Savills. In respect of that, it is clear that there was a dispute about whether what occurred involved the conduct of partnership business and therefore a breach of the injunction. The judge was also not addressed on whether what had occurred amounted to a breach of the order against harassment. Further, the draft affidavit filed by Ivy’s solicitor cannot be assumed to constitute Ivy’s complete defence. If the application had been pursued she could have filed further or amended written evidence, and she could also have chosen to give oral evidence.
    1. It does not follow from this that the merits may never be taken into account in determining the costs of a withdrawn committal application. Under CPR 44.2 the court is required to have regard to all the circumstances, which in an appropriate case will include the merits. For example, it may well be appropriate to take account of the fact that a respondent to a contempt application has admitted contemptuous breaches of it. There may also be cases where a respondent has not engaged to admit or deny the allegations, but where it is clear that there is no real scope for argument that contemptuous breaches have occurred. But where (as in this case) the question of breach has not been established, proper regard must be had to the presumption of innocence. Although the judge referred to that presumption, it is not apparent that sufficient regard was paid to it.
    1. This approach is not inconsistent with the cases on which Mr Anderson relied. In Symes v Phillips at [7] Pill LJ recognised that it was appropriate to take account of admitted contempts. In Cole v Carpenter [2020] EWHC 3244 (Ch) Trower J reserved the question of whether to award the claimant her costs of a committal application made against her to the main trial, in circumstances where the defendant’s application had been dismissed as being premature and disproportionate, but where the judge had also found (as he would have been required to do if the application in question were to proceed) that there was a strong prima facie case of a contempt. In that case there had not only been a hearing of the contempt application, but Trower J decided to reserve the question of the claimant’s costs in order to allow a proper determination to be made as to whether the conduct complained of was proved, rather than taking a view himself as to what the position was likely to be.
    1. Given the error of principle, the appeal against the judge’s order in the partnership proceedings that there should be no order as to costs of the committal application must be allowed, and that part of the order must be set aside. Neither party suggested that it would be appropriate to remit the question of costs, and in the circumstances it is clearly appropriate for this court to assess them.
    1. As already indicated, both parties relied on CPR 38.6 and case law that considers it. The statutory presumption in CPR 38.6 does not apply in this case so some caution is required, but there is force in the analogy and in particular in the point that it is the claimant (or applicant) who chooses to bring and then discontinue proceedings. Nevertheless, it is the general rules in CPR 44 that apply.
    1. Given the unilateral withdrawal of the application, Ivy was the successful party. The starting point under CPR 44.2 is therefore that she should be awarded her costs in accordance with the general rule, unless a different order is justified. In this case, taking account of the absence of any admission of contemptuous breaches and the scope for argument as to whether they existed, it was not appropriate to take into account any assessment of whether the application was likely to succeed in whole or in part.
    1. Mr Anderson submitted that it was relevant to take account of Michael’s role as quasi-prosecutor, and that it would be unfair to penalise him in costs if an application was properly withdrawn because it no longer served the public interest. However, this is not easily reconciled with the confirmation in Symes v Phillips that the same principles apply in determining costs applications in contempt proceedings as in normal civil proceedings. Pill LJ did recognise at [7] that factors may be present in contempt proceedings which are not normally present in civil proceedings. But those factors would not only include the nature of the applicant’s role but also the fact that the liberty of the respondent was at stake. Whilst it was no doubt appropriate to withdraw the contempt application following the Court of Appeal’s decision, that does not mean that Michael should be relieved of bearing the costs that Ivy had to incur in dealing with it while it was extant.
    1. No other basis for denying Ivy her costs was suggested, so costs should be awarded in Ivy’s favour.
    1. The remaining issue is whether costs should be awarded on an indemnity rather than standard basis. I see no reason why withdrawn contempt applications should as a matter of principle attract an award of indemnity costs. Mr McCourt Fritz suggested that an award of indemnity costs was justified by the presumption of innocence. I do not agree. Contempt applications are governed by the general rules applicable to costs. In the absence of an adjudication of the allegations it is not possible to determine whether individual allegations were made without any foundation. The withdrawal of the committal application following the Court of Appeal’s decision was obviously a sensible course. The presumption of innocence that Ivy enjoys does not extend to assuming against Michael that the application was not well founded, such that his conduct in bringing the application was “outside the norm” and justifies indemnity costs.
    1. I also do not agree with the submission that indemnity costs were appropriate because the application related to an injunction that should never have been granted. At the time, the injunction remained in place and its terms were required to be observed.
    1. However, there are some indications that the application was made tactically in connection with the appeal to the Court of Appeal. It was issued shortly after Carr LJ granted permission to appeal and shortly before her decision to expedite the appeal. Although the incident involving Savills had only recently occurred, most of the other alleged breaches had occurred some time earlier. Michael also unsuccessfully attempted to rely on the allegations and evidence at the hearing of the appeal. Contempt applications brought for an improper purpose may be struck out (Navigator Equities Ltd v Deripaska [2020] EWHC 1798 (Comm) at [138]). It would not be appropriate to make any finding about Michael’s purpose, but the timing calls for explanation and, in the absence of an explanation, it is a factor to take into account in determining whether any element of indemnity costs is appropriate.
    1. Further, and importantly, Ivy offered to accept her costs on the standard basis. That would have avoided the need for a further hearing. In my view that is a material factor.
    1. In the circumstances, I would allow the appeal against the costs order and substitute an order that Michael pay Ivy’s costs in respect of the contempt application on the standard basis up to 14 August 2020, when Ivy made her offer, and on the indemnity basis thereafter, with costs to be assessed if not agreed.
    1. In conclusion:
a) I would allow Ivy and Alldey’s appeal in the company proceedings, with the result that the petition is struck out and the injunction in respect of the Intercompany Loans is set aside.
b) I would also allow Ivy’s appeal in the partnership proceedings and award Ivy her costs of the contempt application on the standard basis up to 14 August 2020 and on the indemnity basis thereafter.