Kuwait Oil Tanker Company Sak and Another (Plaintiffs) Abdul Fattah Sulaiman Khaled Al Bader and Others (Defendants) H. Clarkson & Company Ltd and Others (third Parties)
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE MOORE-BICK |
| Judgment Date | 21 December 1998 |
| Judgment citation (vLex) | [1998] EWHC J1221-14 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | 1994 Folio No.1212 |
| Date | 21 December 1998 |
[1998] EWHC J1221-14
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Mr. Justice Moore-Bick
1994 Folio No.1212
MR. J. MALINS Q.C., MR. R. SLADE and MR. J. ADKINS (instructed by Messrs. Shaw and Croft) appeared on behalf of the Plaintiffs.
MR. S. BRODIE Q.C. and MR. R. HOWE (instructed by Messrs. Olswang) appeared on behalf of the First Defendant.
THE SECOND DEFENDANT appeared in Person.
MR. S. BLOCH (instructed by Messrs. Brian Harris & Co.) appeared on behalf of the Third Defendant)
MR. C. ORR (instructed by Messrs. Slaughter & May) appeared on behalf of the third third party.
(As approved by the Judge)
My Lord, I wonder if I might just mention one matter. I hope your Lordship received from me last time a note just indicating that there was a slight error, I think, in one date. It should have been 1989 and not 1990—September 1990.
Was that in the body of the judgment?
My Lord, yes. I did give that to your clerk in the hope that he would pass that up to you.
I think I did. I seem to recall that I made a correction of that kind. It was 1989 from 1998, or something, or vice versa.
Yes. I think your Lordship said September 1990 in relation to Mr. Stafford having left Kuwait, and it was September 1989, as appears from other parts of your judgment.
Yes. I will certainly check that. I think I did in fact.
I am grateful.
Yes, thank you very much.
Following my decision the other day that interest should be awarded on a compound basis at the rate of 1% over US prime rate on US dollar sums, and 1% over base rate on sterling sums, in each case with six monthly rests, and the defendants' acceptance that interest should be paid at the same rate on the sum of 8 million repaid by Mr. Qabazard in 1993 in respect of the period during which the plaintiffs were deprived of its use, there will be judgment for the plaintiffs in the following amounts: in favour of the first plaintiff, against the first and second defendants in the sums of 92,052,751 and £144,371 together with costs including any costs reserved. Against the third defendant in the sum of 90,634,252 and £144,371 and costs, again including any costs reserved. In favour of the second plaintiff there will be judgment against the first, second and third defendants in the sums of 44,733,165 and £174,291 and costs including any costs reserved. There will be judgment in favour of the third third parties, KPC, against the first and third defendants for the costs of the third party proceedings, again including any costs reserved but in the case of the third defendant limited to such costs as were incurred after 19th December 1997.
It is not disputed that both the plaintiffs and KPC are entitled to their costs as I have just indicated. However, they have applied for an order that costs be awarded on an indemnity rather than a standard basis and that is resisted by all three defendants. The primary ground upon which the applications are made is that the defendants have sought to mislead the court by putting forward a case which, as I have found, was false and which depended on false evidence being given by Mr. Al Bader and Captain Stafford. I do not mean to say, and have not found, that every piece of evidence which they gave was false. Nonetheless, I have rejected the central plank of their case which was that they were instructed to establish a strategic fund for the benefit of the State of Kuwait, as well as much of their evidence about their knowledge of and involvement in the embezzlement of the funds and their subsequent disposal. It inevitably follows that, in my view, much of their evidence was false. Mr. Qabazard did not give evidence but the existence of the strategic fund was as fundamental to his case as it was to theirs and he therefore depended on their evidence to make it good. To that extent he must be regarded in the same light.
My attention has been drawn to a number of reported cases in which the courts have ordered costs to be paid on an indemnity basis in a variety of different circumstances. The court has a very broad discretion in this matter. Indeed, in Munkenbeck & Marshall v. McAlpine 44 Con.L.R. 30, Hollis J. regretted that various courts had attempted to define the circumstances in which indemnity costs might be ordered because in each case it is for the judge to exercise his discretion on the facts before him. However, in the light of the cases to which I shall come in a moment, I would accept Mr. Brodie's submission that an award of costs on an indemnity basis should only be made in exceptional cases provided that one understands that the word "exceptional" for these purposes means something more akin to "out of the ordinary" rather than "wholly extravagant".
The authorities to which my attention has been drawn suggest that indemnity costs may be awarded in a wide variety of cases whenever the court considers that a party has conducted the litigation in some way which is worthy of moral condemnation.
In Disney v. Plummer, an unreported decision of the Court of Appeal in November 1987, the case concerned a boundary dispute which the plaintiff had conducted in a wholly unreasonable manner throughout the interlocutory stages and at trial. An order for indemnity costs was upheld.
In Munkenbeck & Marshall v. McAlpine, the defendant, who had no genuine defence to the action, had used the procedure to obstruct and delay the plaintiff at every turn, acting in a manner which the judge described as "breaching every code known to man" in "a cynical attempt to delay matters". Again, an order for indemnity costs was upheld.
In Wailes v. Stapleton [1997] 2 Lloyd's Rep. 112 indemnity costs were awarded against defendant insurers who failed to investigate the plaintiff's claim in a responsible manner but sought to defend it by raising irrelevant side issues in the hope that they could thereby avoid liability.
The Ny-Eeasteyr [1988] 1 Lloyd's Rep. 60 , was a case of scuttling. The judge, having found in favour of the insurers, concluded that the plaintiff had knowingly pursued a false claim and had acted fraudulently. He ordered costs to be paid on an indemnity basis.
In Johnson Matthey plc v. Eros Castings Ltd., a decision of Mr. Stewart Boyd Q.C., sitting as a deputy High Court Judge, unreported, given in November 1993, the defendant was found to have lied about a central issue in the case and had therefore attempted to mislead the court. The judge held that the fact that the defendant had lied about an issue which was of central importance was a sufficient ground for making an order for indemnity costs.
In Sea Wanderer v. Nigel Burgess Ltd., a decision of the Court of Appeal, unreported, given in May 1990, the court took the view that the fact that certain defendants' defence involved, and was conducted by them, though not by their lawyers, with deliberate dishonesty, rendered an award of indemnity costs both logical and appropriate.
Indemnity costs were also awarded in the case of Shah v. Karanjia [1993] 4 All E.R. on the grounds that the case pursued by the plaintiffs was a malicious fabrication.
These are only examples of the circumstances in which courts have thought it proper to award indemnity costs, but they are sufficient for present purposes.
Mr. Brodie Q.C. submitted that there was nothing in the way in which the proceedings themselves had been conducted in the present case which ought to attract the sanction of indemnity costs. This action has had a long and keenly fought procedural history and it is not necessary or appropriate to rake over it for present purposes. With one exception (to which I shall come in a moment) I am prepared to accept that Mr. Brodie is correct on this point.
As far as the defendants' conduct at trial is concerned, Mr. Brodie submitted that it is not appropriate to award costs on an indemnity basis unless there has been conduct of some kind which impedes the course of justice. It is not, he submitted, improper for a defendant who is brought to court and forced to defend himself to give his side of the story and not be believed. If it were otherwise, orders for indemnity costs would be made in very many more cases than they are. It would become almost routine in every case where fraud was in issue and indeed many others.
I accept that it will not be appropriate to award indemnity costs in every case in which the losing party has not been believed or even in every case where the losing party is found to have lied on oath. On the other hand, I cannot accept that being made a defendant to a fraud action involves a licence to ignore the oath and attempt to mislead the court. Whether the court will think it proper to make an order for indemnity costs will no doubt depend on the view it takes of the defendant's conduct and the importance of the issues to which false evidence has been directed.
In the present case it is quite clear that both Mr. Al Bader and Captain Stafford knowingly gave false evidence in relation to matters which lay at the very heart of the case, and to that extent, as in the case of the second defendants in Sea Wanderer v. Nigel Burgess Ltd., they conducted their defence with...
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