Cabo Concepts v MGA Entertainment: when disclosure failings do not unravel a costs order

The High Court has dismissed an application by MGA Entertainment to vary a costs order made against it following the adjournment of a major toy-brand dispute, holding that the subsequent discovery of significant disclosure failings by the opposing party did not meet the threshold required to disturb a final order.

The underlying proceedings concerned allegations by Cabo Concepts that MGA had abused a dominant market position and issued unjustified threats of patent infringement to suppress the launch of its "Worldeez" toy in the UK. The trial was adjourned in June 2022 after it emerged that MGA had failed to harvest approximately 800,000 potentially relevant documents. Joanna Smith J subsequently ordered MGA to pay the adjournment costs on the indemnity basis, with a payment on account of £578,444.17.

MGA's sanctions application, issued in March 2024, contended that Cabo had itself committed serious disclosure breaches — in particular the failure to properly harvest WhatsApp messages from the Cabo founders' mobile phones — and that the evidence given by Cabo's solicitor, Richard Spector, in his witness statement for the July 2022 hearing had been dishonest. MGA argued that had these matters been known at the time, the court would likely have made no order as to the costs of the adjournment, or would have ordered costs in the case.

Mrs Justice Bacon found that Mr Spector's conduct of the mobile phone disclosure exercise had been seriously deficient. He had permitted the Cabo founders to carry out their own informal searches, without written instructions, without verification that any adequate search had been conducted, and without revisiting the exercise following the formal disclosure order. The eventual further disclosure — running to 98 additional WhatsApp chats, including a 583-page "Top Secret" group chat identified at trial as the founders' main channel of communication — illustrated the scale of what had been missed.

The court declined, however, to find that the evidence given in Spector 7 was dishonest. The inaccuracies — including the statement that an independent e-disclosure provider had harvested documents from the custodians' "devices" — were more probably attributable to a lack of care and a failure to recall the informal phone disclosure process, rather than any knowing or reckless misstatement.

On the procedural question, the judgement confirmed that a costs order providing for one party to pay another's costs is a final order, even where it arises from an interlocutory or case management decision. Following the Court of Appeal's December 2025 judgement in Motorola v Hytera, CPR r. 3.1(7) should not ordinarily be used to revoke a final order where CPR r. 40.8A is available. The court held that the discovery of Cabo's disclosure failings after the July 2022 hearing was a matter that had "occurred" since the order for the purposes of r. 40.8A, notwithstanding that the underlying disclosure exercise had taken place beforehand.

Turning to the substance, Mrs Justice Bacon held that neither provision justified varying the costs order. Although the court accepted that a different order would likely have been made had Cabo's failings been known in July 2022, that was insufficient. The adjournment costs order remained soundly justified on the material before Joanna Smith J. Revisiting it on the basis of subsequent developments would be unworkable, opening the door to piecemeal revision of final costs orders throughout complex proceedings.

The application was dismissed. Cabo was, however, ordered to pay MGA's costs arising from its disclosure breaches and late disclosure — a head of relief that had not been contested.

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