Ward: Costs Where Both Sides Were Dishonest [2026]

Detailed Assessment — 2026-06-12

In Ward v Donnellan [2026] EWCA Civ 729, the Court of Appeal overturned a no order for costs decision where the successful parties and the unsuccessful claimant had both advanced dishonest evidence. The replacement orders preserved costs consequences for the claimant’s failed case while preventing recovery for the winners’ own dishonesty.

Overview

Date: 12 June 2026

Judges: Lewison LJ, Arnold LJ and Falk LJ

Court: Court of Appeal, Civil Division

Citation: [2026] EWCA Civ 729

Nature of Proceedings: Appeal against costs orders made after the joint trial of partnership, trust and possession claims

Key Issues:

The proper starting point where the successful party advanced part of its case dishonestly
The need to assess the dishonest conduct of both the successful and unsuccessful parties
Whether a no order for costs outcome unfairly deprived the winners of costs reasonably incurred
How dishonesty should be reflected in percentage orders and detailed assessment directions

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The Facts

Ward v Donnellan, reported as [2026] EWCA Civ 729, examines a difficult costs problem: what order should the court make when the successful parties advanced a dishonest case on one issue, but the unsuccessful claimant brought a false claim supported by dishonest evidence?

The Court of Appeal held that the trial judge's no order for costs approach was wrong in principle. It treated the winners' dishonesty as decisive without properly accounting for their overall success, the claimant's own dishonesty or the costs of exposing it.

Three actions had been tried together over 15 days. The principal action was Anthony Donnellan's claim that he and Alan Ward had formed a partnership or joint venture to develop property, particularly a building known as Creative House in Battersea. Ebonair Investment SA held the freehold. Donnellan alleged that it was effectively a front for Ward.

Ebonair brought a Part 20 claim seeking declarations that Ricky Keane and Bobi Howard held leases of flats in Creative House on trust for it. A connected possession claim by Keane concerned two of those flats.

Donnellan's partnership and joint venture claims failed. Ebonair succeeded on its Part 20 claim, and the possession claim also failed. The Ward parties were therefore the successful parties on the relevant claims.

The trial judge had, however, made serious findings about the honesty of both main protagonists. Donnellan invented meetings to support his alleged partnership, relied on dishonest trust deeds and made an untrue assertion about threatened mortgage enforcement. Ward had also made untrue statements and relied on documents created to protect or hide assets from his trustees in bankruptcy. His case about the beneficial ownership of Ebonair was rejected in part.

The trial judge made no order for costs on either the partnership claim or the Part 20 claim. She considered that the Ward parties should neither recover the costs of their dishonest case nor benefit from it, and that they should bear the costs incurred by Donnellan's side in addressing that dishonesty.

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The Governing Approach

The general rule under CPR 44.2 is that the unsuccessful party pays the successful party's costs, although the court may make a different order after considering all the circumstances, including conduct and partial success. An appeal court will interfere with a costs order only where the judge erred in principle, considered an irrelevant matter, omitted a relevant matter or reached a plainly unsustainable result.

Dishonesty can justify a substantial departure from the general rule. The available measures include:

Disallowing the successful party's costs of advancing the dishonest case.
Ordering that party to pay the opponent's costs of proving the dishonesty.
Imposing a proportionate additional sanction, potentially extending to all costs in an appropriate case.

The exercise must still begin with success. There is no rule that any finding of dishonesty automatically replaces the starting point that costs follow the event.

The court must evaluate the nature and degree of the misconduct, its relationship to the issues and the costs it caused. It must also consider the conduct of the party asking for an unusual costs order. That last requirement was central because the unsuccessful claimant had himself pursued the litigation dishonestly.

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Key Holdings

1. The no order for costs decision was one-sided

The trial judge had correctly recognised that the Ward parties should not recover the costs of maintaining their dishonest case about Ebonair and should compensate the opposing parties for the costs of exposing it.

Her analysis did not, however, address the other side of the ledger. The Ward parties had incurred costs in defeating Donnellan's failed claim and exposing the dishonest evidence on which he relied. The judgment on costs did not refer to the findings about Donnellan's dishonesty at all.

The Court of Appeal held that the judge departed too readily from the costs-follow-the-event starting point. A no order outcome deprived the successful parties of every part of their reasonably incurred costs while imposing no financial consequence on the claimant who had instituted and dishonestly pursued the failed claim.

2. Dishonesty must be related to each claim and issue

The three actions had factual overlap, but Ward's dishonesty about the ownership of Ebonair did not have the same relevance to each one.

In the partnership claim, ownership of Ebonair concerned what property might belong to a partnership if one existed. It did not determine whether Ward and Donnellan had agreed to form a partnership in the first place.

In the Part 20 claim, Ebonair was a legal person seeking declarations that Keane and Howard held leases on trust for it. The identity of Ebonair's ultimate beneficial owners was irrelevant to that question. By contrast, Donnellan's dishonest trust deeds directly affected the defence of that claim.

The same applied to the possession claim, which depended on whether the leases were held for Ebonair or for the alleged partnership. The trial judge had ordered Keane to pay the successful defendants' costs in that claim while making no order on the Part 20 claim. The Court of Appeal found no rational basis for the inconsistency.

Where several claims are tried together, the judge must assess how each dishonest act affected each claim rather than applying one global label.

3. Keane and Howard had to pay Ebonair's Part 20 costs

Keane and Howard defended the Part 20 claim on the basis that they held the flats for the alleged partnership. The trial judge did not find either of them dishonest, but neither had remained neutral. Both positively advanced the unsuccessful trust case and had aligned their interests with Donnellan.

Compliance with procedural obligations and the fact that Keane had been drawn into the proceedings as a nominee did not justify departure from the usual rule. Ebonair had succeeded, and Ward's dishonesty on the separate ownership issue had no bearing on the Part 20 dispute.

Keane and Howard were ordered to pay Ebonair's costs of the Part 20 claim on the standard basis, if not agreed.

4. Donnellan had to pay 50 per cent of the partnership costs

The partnership claim existed only because Donnellan brought it. It failed in full and was supported by dishonest evidence. The Ward parties were entitled to the costs of resisting the claim and proving that dishonesty.

They were not entitled to recover the costs of advancing their own dishonest case, and Donnellan was entitled to the costs of exposing it. The Court of Appeal accepted the trial judge's practical assessment that those two elements broadly balanced one another.

The judge had nevertheless omitted the separate costs of exposing Donnellan's dishonesty, the need for a consequence for his conduct and the proper weight to be given to overall success.

Using a broad-brush assessment, the Court of Appeal ordered Donnellan to pay 50 per cent of the Ward parties' costs of the partnership claim on the standard basis. It also directed that the costs judge should make no further deduction solely or mainly because of the Ward parties' dishonesty on the Ebonair issue. That avoided punishing the same misconduct twice.

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Practical Implications

For Costs Lawyers

1. Start with the identity of the successful party. Conduct may change the order substantially, but it should not make the outcome of the litigation disappear from the analysis.

2. Build a misconduct costs matrix. For each dishonest allegation or document, identify who advanced it, which claim it affected, the work caused and the opponent's cost of exposing it.

3. Avoid double deductions. If the court has already reflected dishonesty in a percentage order, it should state whether the costs judge may make a further conduct-based deduction on assessment.

4. Separate joined claims where relevance differs. A global order is attractive, but it may be unjust where conduct central to one claim is irrelevant to another.

5. Distinguish disallowance, compensation and sanction. These are separate steps. The dishonest party's own unreasonable costs may be disallowed, the opponent may recover the cost of proving dishonesty, and an additional proportionate sanction may then be considered.

For Litigation Practitioners

1. Do not assume that winning cures dishonesty. A successful party cannot recover costs unreasonably incurred in advancing a false case and may have to pay the opponent's costs of defeating it.

2. Do not assume that the winner's dishonesty excuses a false claim. An unsuccessful litigant who commenced and dishonestly pursued the proceedings may still face a substantial costs order.

3. Plead and prove each party's role accurately. Keane and Howard were not found dishonest, but their active adoption of the unsuccessful trust case was enough to engage the normal costs rule.

4. Give reasons claim by claim. A costs judgment should explain how the order reflects success, misconduct and causation. A short global conclusion is vulnerable where the underlying litigation contains distinct actions.

5. Consider insolvency promptly. Donnellan's bankruptcy caused the first appeal hearing to be adjourned because the Official Receiver had not received the papers in time. A bankrupt party's estate, rather than the bankrupt personally, may control whether a costs appeal is opposed.

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Conclusion

Ward v Donnellan confirms that dishonesty is a powerful costs factor but not a substitute for structured analysis. The court must begin with the result, examine the misconduct of every relevant party and connect each dishonest act to the costs it caused.

The Ward parties had won the partnership and Part 20 claims. Their own dishonesty justified removing the costs of that case and compensating the opposing parties for exposing it. It did not justify depriving them of every reasonably incurred cost while ignoring Donnellan's dishonest prosecution of a claim which failed entirely.

The replacement orders reflect that balance. Keane and Howard must pay Ebonair's Part 20 costs, while Donnellan must pay 50 per cent of the Ward parties' partnership costs. The direction against a second dishonesty deduction shows why both the order and the assessment must be designed together.

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Citation: Alan Ward and Others v Anthony Donnellan and Others [2026] EWCA Civ 729

Full judgment available at: The National Archives

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