Musst Holdings Ltd v Astra Asset Management UK Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Freedman |
| Judgment Date | 18 March 2022 |
| Neutral Citation | [2022] EWHC 629 (Ch) |
| Docket Number | Case No: BL-2018-002369 |
| Court | Chancery Division |
[2022] EWHC 629 (Ch)
Mr Justice Freedman
Case No: BL-2018-002369
Claim No. BL-2019-001483
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (LONDON)
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Peter Knox QC and Kirsten Sjøvoll, (instructed by Taylor Wessing LLP) for the Claimant in the Contract Claim/Defendants in the Defamation Claim
Christopher Boardman QC, Tom Beasley and David Glen, (instructed by Payne Hicks Beach) for the Defendants in the Contract Claim/Claimants in the Defamation Claim
Hearing dates: 17 December 2021 & 21 January 2022
Approved Consequentials Judgment
Judgment was handed down in this matter on 17 December 2021, having been handed down in draft in October 2021. This judgment is following consequential submissions in this matter heard on 17 December 2021 and again on 21 January 2022. This judgment will consider the following matters, namely
(1) A determination as to whether the costs of the Defamation Claim (claim number BL-2018-002369) are to be assessed on the indemnity basis or the standard basis;
(2) Whether the ATE premium may be recovered;
(3) A determination as to whether the costs of the Contract Claim (claim number BL-2019-001483) are to be assessed on the indemnity or the standard basis;
(4) The costs of the claim and deductions;
(5) Payment on account of costs;
(6) Release of security for costs;
(7) Interim payment;
(8) Directions on the Astra Parties' application to strike out the claim BL-2021-00680;
(9) Musst's Parties' claim to a right to inspect the books and records relating to Crown II and Crown III.
II The costs in the Defamation Claim
By the Court's judgment dated 17 December 2021, the Court, among other things, dismissed the claim in defamation and the counterclaim relating to disparaging statements. There was no issue between the parties that the costs of the Defamation Claim should be paid by the unsuccessful Claimants to the Defendants. There remained an issue as to whether those costs should be assessed on the standard or indemnity basis. The Court has had the benefit of full skeleton arguments in respect of this issue from Ms Sjøvoll counsel on behalf of the Defendants in the Defamation Claim, and Mr Glen counsel on behalf of the Claimants in the Defamation Claim. It has also been addressed orally by both counsel.
(a) The legal principles
There is no issue between the parties as regards the legal issues. CPR 44.3 permits the assessment of costs to be carried out on either the standard or the indemnity basis. If costs are assessed on the indemnity basis, any doubt as to whether costs were reasonably incurred will be resolved in favour of the receiving party: see CPR 44.3(3). Further, in respect of indemnity costs, there is no proportionality requirement.
It follows that the difference between indemnity and standard costs can be a matter of real significance for the receiving party. The Court has a wide discretion when considering what order should be made as to costs. CPR 44.2 includes:
“(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including—
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
(c) any admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply.
(5) The conduct of the parties includes—
(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction—Pre-Action Conduct or any relevant pre-action protocol;
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.”
The starting point is the rules themselves, and the way in which the court in previous cases has exercised the discretion. There is “an infinite variety of situations which can come before the court and which justify the making of an indemnity order”: see Excelsior Commercial and Industrial Holdings v Salisbury Hamer Aspden and Johnson [2002] EWCA Civ 879 at para. 32. The making of such an order is not limited to unreasonable conduct by the parties. The central question for the court is whether there is something in the conduct of the action or the circumstances of the case, which takes the case out of the norm in a way which justifies an order for indemnity costs: see Excelsior at para. 19.
Whilst it is not necessary that a party was guilty of conduct evidencing dishonesty or moral blame, it has been repeatedly emphasised that where it is said that the party's conduct was unreasonable, it must be unreasonable to a “high degree” before an order for indemnity costs will be justified: see Kiam v MGN (Costs) [2002] 1 WLR 2002. One reason for this high threshold is that it is a necessary corollary of the CPR, and particularly the fundamental importance placed in modern litigation on the principle of proportionality: see Suez Fortune Investments v Talbot Underwriting [2019] Costs LR. 2019.
The Court's determination should not be infected by hindsight or in the light of the outcome of the case and the knowledge of how a particular issue was ultimately resolved: see Williams v Jervis [2009] EWHC 1837 (QB). The weakness of a legal argument should not without more justify indemnity costs, but it might be different if a case was not only plainly hopeless but motivated by some ulterior commercial or personal purpose or otherwise for purely tactical reasons unconnected with any real merit: see Arcadia Group Brands Ltd v Visa Inc [2015] Bus LR 1362 per Sir Terence Etherton C. at [83–84].
In the case of Dixon v Radley House Partnership [2016] EWHC 2485 (QB) Stuart-Smith J (as he then was) set out examples of circumstances which may lead to an indemnity costs order, namely (i) where the losing party has pursued a hopeless claim which the party knew or ought to have known was hopeless, and (ii) where there is something that takes the situation away from the norm be it in the nature of the application or the issue raised or the manner in which it has been raised. In that case, indemnity costs were awarded based on the conduct of the parties because the point taken on the application was thoroughly bad. Whilst the conduct was not improper, it was beyond the norm. It included a significant level of unreasonableness or otherwise inappropriate conduct.
In the instant case, the Defendants' argument for indemnity costs was based on (1) without prejudice correspondence and offers, and (2) the conduct of the Defamation Claim.
(1) Without prejudice correspondence and offers
There has not been any effective Part 36 offer or Calderbank offer. The letter of Bird & Bird dated 18 July 2019 was not effective in that it tied the settlement of the Defamation Claim to a process under which the Contract Claim may be settled. There was an offer of the Astra Parties of 24 March 2021 but it did not provide for the costs of the Defamation Claim. There was a letter from Collyer Bristow then acting for the Musst Parties of 14 April 2021 in which deficiencies in the defamation claim were pointed out including the absence of evidence from Mr Plotke and the absence of a contemporaneous note evidencing the conversation. The letter said that if the claim was pursued, the Musst Parties would seek indemnity costs in the light of the fundamental defects in the Defamation Claim.
None of the above forms the basis of an adjustment of costs of the kind which arises consequential upon Part 36 offers or Calderbank offers. However, the correspondence, in particular, the letter of 14 April 2021 can be reconsidered as a conduct matter with the other conduct matters to which I now turn.
(2) Conduct of the Defamation Claim
Attention is drawn to the evidence of Mr Murray for the first time at the trial about a note which he said he had taken, and which was now lost: the note was said to have corroborated his evidence. The judgment neutral citation number [2021] EWHC 3432 (Ch) was critical both of Mr Murray's evidence and of Mr Mathur in this regard, finding at [567] that the story of the disappearance of the note was far-fetched. The Musst Parties also rely on the absence of Mr Plotke, how his absence was not explained, and the absence of any document produced to the Court to corroborate the account. These deficiencies are to be read alongside the letter of 14 April 2021, and the Astra Parties being put on notice about indemnity costs.
There were other matters relied upon by the Musst Parties. They included the conclusions in the judgment as to the absence of serious harm, the delay between the statements of June 2016 and the first intimation about the same in October 2016.
I have come to a judgment that it is inappropriate to make an award of indemnity costs. The reasons are as follows:
(1) I do not regard this case as out of the norm in a way which justifies an order for indemnity costs.
(2) The Court...
To continue reading
Request your trial
-
Musst Holdings Ltd v Astra Asset Management UK Ltd
...the consequential hearings of 17 December 2021 and 21 January 2022, which led to a judgment of 18 March 2022 neutral citation number [2022] EWHC 629 (Ch). These were to be determined in the consequentials hearing and were argued fully in the written skeleton arguments in preparation for th......