The Wine Enterprise Investment Scheme Ltd ((in Liquidation)) (acting by Finbarr O'Connell and Colin Hardman in their capacity as Joint Liquidators) v Crowe U.K. LLP (formerly Clark Whitehill LLP)

Hearing date: 2 June 2026

This judgment was handed down remotely at 10.30am on 3 July 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Richard Spearman KC:

INTRODUCTION AND NATURE OF THE HEARING

I handed down judgment in this case on 27 March 2026: The Wine Enterprise Investment Scheme Ltd v Crowe UK LLP [2026] EWHC 692 (Ch). I adopt below the expressions used in that judgment. A hearing to deal with consequential matters was then fixed for 2 June 2026. In advance of the hearing, there was correspondence between Clyde, the solicitors for Crowe, and Fieldfisher, the solicitors for the Company. This included the following letters. On 11 May 2026, Clyde wrote (i) asking whether, and, if so, on what grounds, the Company intended to seek permission to appeal, and (ii) suggesting that Skeleton Arguments for the hearing should be exchanged on 28 May 2026, to afford the parties sufficient time to consider their respective positions in advance of the hearing. On 26 May 2026, Fieldfisher wrote saying (among other things) (i) that Crowe was not entitled to be given advance notice of the Company's proposed grounds of appeal, but (ii) that the Company intended to seek “unqualified permission to appeal” on the grounds that my judgment was wrong for all the reasons set out in the Company's closing submissions, and for further reasons, and (iii) that Skeleton Arguments did not have to be exchanged until 12 noon on 1 June 2026 (in accordance with [12.94] of the Chancery Guide). On 28 May 2026, Clyde wrote to the Court asking for permission for Crowe to file a Skeleton Argument exceeding the limit of 15 pages prescribed by the Chancery Guide. I granted permission to Crowe, and, to ensure parity, to the Company.

In the result, both parties filed Skeleton Arguments of 21 pages (with a 6 page schedule annexed to that of the Company). The Company also filed draft Grounds of Appeal containing 9 grounds in total. The Company filed a bundle containing 12 decided cases, and Crowe filed one containing 18 decided cases. The adherence to the 12 noon deadline had the effect that the time allowed to the Court for effective pre-reading was limited to the second half of 1 June 2026. In addition, the scope for narrowing issues by agreement between the parties in full knowledge of each other's written arguments was limited, and in fact no narrowing of issues took place. In these circumstances, as was predictable, there was insufficient time at the hearing to deal with everything that was in issue, or to deliver judgment on the points on which argument was concluded. This judgment deals with those points. A further hearing will need to be fixed to deal with the remainder.

COSTS OF THE CLAIM

Background

As appears from the judgment, the Company's claims in respect of the 7 audit years ranged between a highest value of £8,423,962 and a lowest value of £3,352,635. The Company recovered £101,965.95, plus interest at 3% above base rate from 1 December 2019 to 27 March 2026. Crowe says that this interest amounts to around £36,482.02, although that does not seem to be agreed. The total recovered is around 1.6% of £8,423,962.

Crowe made an offer to the Company pursuant to CPR Part 36 in the sum of £3.175m plus costs, on 4 February 2025. Crowe also made a costs inclusive “Calderbank” offer to the Company on the same date, in the sum of £3.78 million. The Company did not accept those offers, but instead made counter-offers to Crowe “Without Prejudice Save as to Costs”. Those counter-offers comprised an offer of £6m plus costs in July 2024, and an offer of £7m inclusive of costs in September 2025. The Company contends that £7m was a reduced offer once the costs incurred between July 2024 and September 2025 are taken into account. Crowe contends that it was an increased offer, as the Company was seeking costs of around £580,000 in July 2024, and the £7m offer involved a costs recovery of an extra £420,000.

The costs of the claim up to expiry of the Part 36 offer

Against this background, the first issue that divides the parties concerns the costs of the claim up to expiry of the offer made by Crowe pursuant to CPR Part 36. In this regard, CPR Part 44.2(2) provides: “If the court decides to make an order about costs: (a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but (b) the court may make a different order”. The Company contends that it was the successful party, in particular because Crowe had to pay it money; that, in accordance with the Part 36 regime, the appropriate way for Crowe to protect itself against an adverse order as to costs was to make an offer pursuant to Part 36; and that, unless and until Crowe did so, Crowe was exposed to an adverse costs order. Crowe contends that the test for identifying the successful party is to ask “which party, as a matter of substance and reality, has won?”; that, applying this test, Crowe has won; and that a line of decided cases make clear that the Company's Part 36 point is wrong.

On behalf of the Company, Mr Lawrence relied on the judgment of Jackson LJ in Fox v Foundation Piling Ltd [2011] 6 Costs LR 961, which involved a claim for personal injury. In that case, the Claimant served a schedule of loss claiming £280,000 plus general damages for pain, suffering and loss of amenity; the Defendant made an offer pursuant to CPR Part 36 which was worth £23,550.75; and the Claimant ultimately recovered £31,702.53. The judge exercised his discretion as to costs on the basis that the Defendant was the successful party (see [61]). However, in the Court of Appeal it was accepted that the Claimant was the successful party (see [51]). The Court of Appeal therefore had to exercise the discretion afresh, and to consider whether the facts of the case made it appropriate to depart from the starting point in CPR 44.2(2) and award less than full costs to the Claimant. The Court of Appeal saw no reason to depart from that starting point (see [64]–[66]). In the course of explaining that decision, Jackson LJ deprecated what he described as a “growing and unwelcome tendency” to depart from that starting point (see [61]) and, further, made the following observations at [63]:

“In the context of personal injury litigation where the claimant has a strong case on liability but quantum is inflated, the defendant's remedy is to make a modest Part 36 offer. If the defendant fails to make a sufficient Part 36 offer at the first opportunity, it cannot expect to secure costs protection.”

Mr Lawrence further submitted that (i) to recover judgment for more than what was offered is legitimately regarded as success (see Gibbon v Manchester City Council [2010] 1 WLR 2081); (ii) the (or a) key criterion in money claims is: who has to write the cheque at the end of the day? (see A L Barnes v Time Talk (UK) Ltd [2003] EWCA Civ 402; [2003] BLR 331, CA, at [28]; Day v Day [2006] EWCA Civ 415; [2006] C.P. Rep. 35, CA, at [17]; Widlake v BAA Ltd [2009] EWCA Civ 1256; [2010] PIQR P4 at [36])); and (iii) the cases in which the Defendant was identified as the successful party even though the Claimant had been awarded damages differed in a number of significant ways on the facts from the present case. Further to the last point, Mr Lawrence referred to Islam v Ali [2003] EWCA Civ 612; Painting v University of Oxford [2005] 3 Costs LR 394, CA; and Medway Primary Care Trust v Marcus [2011] 5 Costs LR 808.

On behalf of Crowe, Ms Evans submitted that the test for identifying the successful party is derived from Roache v News Group Newspapers Ltd [1998] EMLR 161, Sir Thomas Bingham MR at 168–169: “The judge must look closely at the facts of the particular case before him and ask: who, as a matter of substance and reality, has won? Has the plaintiff won anything of value which he could not have won without fighting the action through to a finish? Has the defendant substantially denied the plaintiff the prize which the plaintiff fought the action to win?”. Ms Evans further submitted that (i) there are numerous cases in which a Claimant only recovered a small percentage of the damages claimed, leading to the conclusion that the Defendant is in fact the successful party and should recover all of most of its costs (see Medway Primary Care Trust v Marcus [2011] 5 Costs LR 808; Pepe's Piri v Junaid [2019] 2 Costs LR 1881); (ii) in line with these authorities, Crowe should be treated as the successful party; and (iii) as the Company only recovered around 1.6% of the total claimed, and in order to achieve this required Crowe to defend its audits across 7 separate years, Crowe should be entitled to recover 100% of its costs prior to expiry of the offer made under Part 36.

So far as concerns Mr Lawrence's reliance on the Fox case, Ms Evans submitted that Briggs J was correct to hold in Magical Marking Ltd v Ware & Kay LLP [2013] 4 Costs LR 535 at [15] that “Since in the Fox case the question of who was the successful party became common ground, and did not have to be decided by the Court of Appeal, it cannot be taken as detracting from the consistent line of Court of Appeal authority on the...