Kent v Paterson-Brown & Anor, Court of Appeal - Chancery Division, October 24, 2018, [2018] EWHC 2830 (Ch)

Resolution Date:October 24, 2018
Issuing Organization:Chancery Division
Actores:Kent v Paterson-Brown & Anor
 
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Case No: HC-2013-000569

Neutral Citation Number: [2018] EWHC 2830 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 25/10/2018

Before :

The Honourable Mr Justice Zacaroli

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Between :

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Mr Maxim Cardew (instructed by Grosvenor Law) for the Claimant

Mr Tom Weisselberg QC, Mr David Lowe (instructed by Wallace LLP) for the Defendants

Hearing date: 15 October 2018

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JUDGMENTMr Justice Zacaroli:

  1. This judgment deals with consequential matters following the handing down of the main judgment in this action on 30 July 2018, in which I dismissed the claimant's claims against the defendants. Three matters are raised for decision:

    i) Whether the first defendant's costs of the action, which it is accepted are to be paid by the claimant, should be paid on the standard or indemnity basis;

    ii) The rate of interest to be applied in respect of the costs payable to the defendants in the period prior to 30 July 2018; and

    iii) The amount of further interim payments on account of the defendants' costs.

    Basis of assessment of the first defendant's costs

  2. The claimant has agreed that the second defendant's costs are to be assessed on the indemnity basis. He contends, however, that the first defendant's costs should be assessed on the standard basis.

  3. The principles to be applied are not in dispute. I was referred to a number of cases where the matters to be taken into account in deciding whether to award costs on the indemnity basis have been set out. I take as an appropriate and short summary that of Coulson J in MacInnes v Gross [2017] 4 WLR 49, at [3]:

    ``(a) Indemnity costs are appropriate only when the conduct of a paying party is unreasonable ``to a high degree. `Unreasonable' in this context does not mean merely wrong or misguided in hindsight'': see Simon Browne LJ in Kiam v MGN Ltd (No 2) [2002] EWCA Civ 66; [2002] 1 WLR 2810.

    (b) The court must therefore decide whether there is something in the conduct of the action, or the circumstances of the case in general, which takes it ``out of the norm'' in a way which justifies an order for indemnity for costs: see Waller LJ in Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879; [2002] CP Rep 67.

    (c) The pursuit of a weak claim will not usually, on its own, justify an order for indemnity costs, provided the claim was at least arguable. But the pursuit of a hopeless claim (or a claim which the party pursuing it should have realised was hopeless) may well lead to such an order: see, for example, Wates Construction Ltd v HGP Greentree Allchurch Evans Ltd [2005] EWHC 2174 (TCC); 105 Con LR 47.''

  4. The defendants relied on Excalibur Ventures LLC v Texas Keystone Inc and ors [2013] EWHC 4278 (Comm), an example of a case where indemnity costs were awarded in the context of a speculative and opportunistic claim. In that case, Christopher Clarke LJ considered the following summary by Gloster LJ, in European Strategic Fund Limited v Skandinaviska Enskilda Banken AB [2012] EWHC 749, fairly to apply to the case before him, namely that the case was: ``(i) speculative involving a high risk of failure; (ii) grossly exaggerated in quantum; (ii) opportunistic; (iv) conducted in a manner that has paid very little regard to proportionality or reasonableness giving rise to the incurring of substantial costs on both sides; (v) pursued on all issues at full length to the end of the trial.''

  5. For his part the claimant emphasised, by reference to the decision of Sir Anthony Colman in National Westminster Bank plc v Rabobank Nederland (No.2) [2008] 1 All ER (Comm) 243, at [28], that where one is dealing with the losing party's conduct, except in rare cases, the minimum that is required is a ``significant level of unreasonableness or otherwise inappropriate conduct.''

  6. The question whether there is something which has taken the case out of the norm is to be considered against the backdrop that the consequences of an award of indemnity costs are, first, to reverse the burden of proof as to the reasonableness of the costs incurred and, second, to remove the requirement of proportionality.

  7. The first defendant contends that the claimant's pursuit of the claim was well outside the norm in a number of ways.

    i) The claimant made only one without prejudice save as to costs offer to settle, requiring a payment of £6.3m just before trial.

    ii) The claim was hopeless.

    iii) The claimant failed to engage in any pre-action communication. The principal investments which formed the subject matter of the claim occurred between June 2005 and October 2007, with the latest of two further investments occurring in February 2009. The claim was issued in December 2013, but not served until April 2014. No prior notice of the claim was given, and no attempt made to engage in pre-action correspondence. CPR 44.2(5)(a) singles out lack of compliance with pre-action protocols as a relevant factor on the question of costs.

    iv) The claim was originally brought in fraud and conspiracy. This claim was struck out in November 2015.

    v) The claimant failed to comply with his disclosure obligations by failing to conduct a proper review, leading to disclosure of far too many (around 16,000) documents. The first defendant contends that this conduct merits censure by way of an order for indemnity costs.

    vi) The claimant's witness statements were prolix, consisting in large part of recitation of documents and irrelevant material.

    vii) The only basis upon which jurisdiction was established as against the first...

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