High Court Rules on Costs Responsibility in Koza Ltd Dispute Over Gold Mining Venture

Citation: [2023] EWHC 3178 (Ch)
Judgment on

Introduction

The High Court of Justice Business and Property Courts of England and Wales handed down a judgment concerning the litigation between Koza Ltd & Anor and Koza Altin Isletmeleri AS. This article analyses the provided case summary from the [2023] EWHC 3178 (Ch), distilling the key topics and legal principles applied. The analysis is tailored towards legal professionals practising in the UK who require a synthesized understanding of the ruling.

Key Facts

The litigation in question revolves around the governance and control of Koza Ltd, specifically whether its sole director, Mr Ipek, or its 100% ordinary shareholder, Koza Altin, should be in command. The dispute intensifies over a gold mining joint venture in Alaska requiring substantial funding. Koza Altin feared asset dissipation and sought injunctions to restrain funding and asset handling, leading to interim orders.

In 2021, the Court dismissed the claimants’ claim that Koza Altin’s control should not be recognized in the UK. The critical point was the substantive claim remained unresolved regarding Mr Ipek’s directorship being invalidated without consent. In 2022, various applications led to interim orders—addressing asset management and expenditure—which are the heart of the current cost issues.

The judgment principally engaged with principles from CPR Part 44 concerning costs. The Court considered the following:

  1. The Rule of Success in Costs: The general litigation norm favours the successful party in costs; here, Koza Altin was deemed successful in obtaining the 2022 orders albeit consensually and late.

  2. Conduct of Parties: The Court evaluated whether a party’s conduct could justify deviating from the norm. Despite Mr Ipek using assets to fund litigation contrary to previous warnings, his conduct didn’t sway the Court.

  3. Reasonableness of Applications: The Court accepted that significant additional funding for the joint venture could reasonably indicate a risk of asset dissipation justifying the applications for the 2022 orders.

  4. Costs Responsibility: The judgment held Mr Ipek responsible for costs, interpreting his role as pivotal in Koza Ltd’s asset dealings.

  5. Payment on Account of Costs: Utilizing CPR 44.2(8), the Court decided in favour of a reasonable payment on account unless presented with good reason not to do so. Koza Altin was awarded a partial payment on account regarding their submitted costs.

Outcomes

The Court concluded that Koza Altin was entitled to its costs, charging Mr Ipek for the same, rejecting the argument to wait until the substantive claim was settled. A payment on account of £212,250 was ordered, underscoring Koza Altin’s success in the applications leading to the 2022 orders. The claimants’ approach to counter this, including seeking to reopen substantive cost issues, was denied for not adhering to good form or engaging with pertinent reasons.

Conclusion

This judgment delineates several orthodox principles of costs in litigation, including the success rule, conduct assessment, reasonable application justification, direct liability for costs, and on account of costs payments. Courts in the UK are steadfast in applying these principles, with limited tolerance for deviations or procedural misconduct. Legal professionals should note this strict adherence to form and procedure, as exemplified in His Honour Judge Jarman KC’s decision, which proves to be an instructive case in the management and adjudication of legal costs.

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