Matrix Receivables v Musst Holdings: costs order following partial success in unjust enrichment claim

The High Court's consequential judgement in Matrix Receivables Limited v Musst Holdings Limited addresses the difficult question of costs allocation where both parties achieved mixed success across multiple claims and issues.

Matrix succeeded in its unjust enrichment claim for a share of management fees, securing judgement for £175,380.76 plus interest. However, this represented less than 5% of the total sums claimed, with a substantially larger claim for performance fees having failed entirely. Alternative contractual claims were also dismissed.

Interest on the judgement debt

The court declined to award interest for the period before proceedings commenced, noting that Matrix's assignor (MMM) had ceased trading in November 2012 and there was unjustified delay in pursuing the claim. However, from commencement of proceedings, interest was awarded at the US prime rate, appropriate for dollar-denominated claims even between UK parties, following the approach in Lonestar Communications Corporation v Kaye.

Permission to appeal refused

Musst's application for permission to appeal was refused. The proposed ground—that the entire claim was statute-barred—lacked real prospect of success. The judgement had found that enrichment occurred when Musst received payments from Astra, not when the underlying agreement was made. Each receipt constituted a separate enrichment, meaning only receipts before 4 September 2014 were time-barred whilst later receipts were not.

The costs determination

The central question was identifying the successful party. Matrix relied on the "paying party" test from AL Barnes v Time Talk, arguing that the party writing the cheque is ordinarily the unsuccessful party. Musst contended that substance and reality should prevail over this mechanical test, citing Medway Primary Care Trust v Marcus.

Sir Clive Freedman concluded that neither party was successful, rejecting both parties' submissions. Whilst Matrix obtained a monetary award, several factors weighed heavily against treating it as the successful party. The performance fees claim—described as "the juice" of the action—failed completely. The contractual claims, maintained until trial despite being virtually abandoned in opening submissions, were dismissed. The sum recovered was small relative both to amounts claimed and costs incurred. Had the claim been limited to management fees, proceedings would have been far more contained and proportionate.

Significant conduct issues arose concerning Mr Reeves, Matrix's controller. He had actively assisted Astra in defending Musst's claim for performance fees whilst simultaneously claiming a share of those fees against Musst—fundamentally contradictory positions. The court found his evidence bore "all the hallmarks of someone who has suspended truth for his own changing interests from time to time". Additionally, unexplained delay in taking the assignment and bringing proceedings prevented consolidation with the Musst v Astra litigation, increasing costs unnecessarily.

Even if Matrix were deemed successful under CPR 44.2, these factors—the failed performance fees and contractual claims, the small recovery relative to costs, and Mr Reeves's conduct—justified departure from the general rule that the successful party receives costs.

The court ordered no order as to costs, finding this the just outcome given the mixed success of both parties and the particular circumstances of the litigation. A stay of execution was granted on agreed terms.

Copyright & permissions