Timothy Polli KC and Tim Hammond achieve Court of Appeal success in Ward v Donnellan [2026] EWCA Civ 729

Appeals on costs alone rarely succeed.  Nevertheless, the Court of Appeal has recently handed down judgment in Ward v Donnellan [2026] EWCA Civ 729, an interesting case addressing for the first time at Court of Appeal level the correct approach to costs where a defendant succeeds at trial but the Judge finds both claimant and defendant to have been dishonest in the litigation.

In the substantive claim, Mr Donnellan alleged that he had been in partnership (alternatively joint venture) with Mr Ward, as a consequence of which he had a beneficial interest in a building that was said to be a partnership asset.  Mr Keane and Ms Howard each owned several flats in the building.  They maintained that they owned those flats on trust for the partnership.  Mr Ward denied the alleged partnership, but further denied that he had any interest in the company, Ebonair Investment SA, which owned the freehold of the building.  Ebonair brought Part 20 claims against each of Mr Keane and Ms Howard, seeking declarations that the flats were held on trust for it (and not for the partnership).

The Judge dismissed the claim, finding that Mr Donnellan had given dishonest evidence in support of his claim.  However, she also found that Mr Ward’s denials of any interest in or control over Ebonair were dishonest.  The substantive judgment can be found here.  Those findings influenced her decision on costs.  The Judge made no order as to costs of the claim and of Ebonair’s Part 20 claims, on the grounds that, although Mr Donnellan’s claim had failed, and Ebonair’s Part 20 claims had succeeded, Mr Donnellan should have his costs of meeting Mr Ward’s dishonesty on the Ebonair issue and that Mr Ward should not have his costs of advancing his dishonest claim on the Ebonair issue.  She considered that no order as to costs best and most proportionately achieved that.

Mr Ward and Ebonair appealed.  They argued that the starting point was that they had both succeeded entirely, Mr Ward in defeating the partnership action and Ebonair in succeeding with its Part 20 claims.  As far as the costs of the Part 20 claims were concerned, there was no reason at all to depart from the general rule that the unsuccessful parties (here, Mr Keane and Ms Howard) should pay the successful party’s costs.  Mr Ward’s dishonesty on the Ebonair issue was of no consequence in the Part 20 claims.  As far as the costs of the substantive partnership claim were concerned, Mr Ward argued that the Judge had not taken sufficient account of the fact that costs are a “zero-sum game”:  a reduction in Mr Ward’s entitlement to costs to reflect his dishonesty, necessarily benefited Mr Donnellan who had brought the claim in the first place and supported it with his own dishonest evidence.  In the circumstances, Mr Ward argued that there was no proper basis for departing from the usual rule as much as the Judge did;  and that he should therefore have been awarded 50% of his costs.

The Court of Appeal allowed the appeal as asked.  It ordered Mr Keane and Ms Howard to pay Ebonair’s costs of the Part 20 claims in full and Mr Donnellan to pay 50% of Mr Ward’s costs of the partnership claim.  50% was the appropriate reduction in circumstances where:  (1) Mr Donnellan had wholly failed with his claim;  (2) Mr Donnellan had supported his claim with dishonest evidence;  (3) that dishonest claim had been met with a partially dishonest defence;  but (4) Mr Ward’s dishonesty had not caused the dishonest claim;  nor had the claim been brought to vindicate or to bring to light Mr Ward’s dishonesty;  and (5) any costs order must not unduly penalise one of two dishonest parties.  The Court of Appeal’s Order made clear that there would be no further deduction on assessment on account of Mr Ward’s dishonesty.

The full judgment of the Court of Appeal can be read here.