Kerry Underwood

INDEMNITY COSTS ON DISCONTINUANCE

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In Hosking and another v Apax Partners LLP and others [2018] EWHC 2732 (Ch) (18 October 2018) 

the Chancery Division of the High Court awarded indemnity costs against claimants who, suddenly and without explanation, discontinued their case four days into a six week trial.

The claimant liquidators had pursued “high-risk litigation aggressively and very expensively” “after failure of one sort or another in multiple jurisdictions, without demonstrable support in the contemporaneous documentary evidence; that the shape of the proceedings abroad, and the publicity the claims seemed to have been calculated to attract committed the liquidators to an inappropriate form of action.”

The court found that the claimants had intentionally used the court as an anvil for settlement, not for adjudication and that was close to an abuse.

They had shoe-horned their complaints, including allegations of dishonesty, fraud and serious commercial impropriety into a claim under section 423 of the Insolvency Act 1986.

The usual factors to be considered in relation to indemnity costs apply on discontinuance, and include:

  • serious unwarranted allegations;
  • grossly exaggerated claims;
  • speculative pursuit of litigation;
  • courting of publicity designed to force a settlement.

 

The court recognised that applying these factors on discontinuance, when the evidence had not been heard, makes it more difficult to assess the reasonableness of the parties’ conduct, but said the court should not shy away from ordering indemnity costs on discontinuance where appropriate.

The fact that the Civil Procedure Rules provide for payment of standard costs on discontinuance does not make the indemnity costs hurdle higher in such cases.

The emphasis is on whether the paying party’s conduct or the circumstances of the case take it out of the norm.

Although adjudication of the merits of the case is not the court’s job on discontinuance, the court may still assess whether a claim may have been pursued for reasons other than merit, and to infer from an unexplained discontinuance that it was, and always has been, weak.

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Written by kerryunderwood

November 23, 2018 at 6:46 am

Posted in Uncategorized

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