In the recent case of Hosking & Anor v Apax Partners LLP & Ors [2018] EWHC 2732 (Ch) (18 October 2018) Mr Justice Hildyard has reaffirmed the position for an award of Indemnity Costs for the discontinuance of a claim should the circumstances fall outside of the norm.
The Applicants were liquidators seeking to impugn a redemption of debt of which the undervalue was estimated in the region of €800,000.00. During the Trial however, following settlement negotiations breaking down, the claim was discontinued on the fourth day of a six week Trial. The Respondents thereafter sought indemnity costs on the grounds that standard basis costs in the event of discontinuance (CPR 38.6(1)) would not properly reflect the conduct of the Applicants in pursuing and then suddenly abandoning these proceedings.
Mr Justice Hildyard began by illustrating that simple discontinuance was not enough. It was noted discontinuance could be necessary for a multitude of reasonable and it would only be those circumstances which were ‘beyond the norm’ that would attract Indemnity Costs.
Mr Justice Hildyard took into account several case specific factors in considering whether indemnity costs could be awarded. These included (paragraph 94 surmised):
- The Applicant’s poor view of prospects in light of a discontinuance so early in such a high value claim where it is common knowledge there is no funding complications;
- The denial of the Respondent to pursue the opportunity for vindication and the basis that their costs in some part could be irrecoverable ;
- The multi-jurisdictional nature of the claim with the Applicant’s seeking recompense in Luxembourg, New York and England;
- The overall fairness of the circumstances of limiting the Respondent to standard basis costs.
While Mr Justice Hildyard made clear that a summary determination on the basis of the discontinuance would be improper, he was not prevented from making a decision on whether the above-mentioned factors went beyond the norm.
Mr Justice Hildyard therefore gave determination that the case specifics of this matter coupled with ‘the overall unfairness of preserving for the Applicants the twin benefits of the ordinary basis of assessment whilst exposing the Respondents, having had to respond to an expensively presented case, to the twin detriments of facing a shortfall in costs recovery and being denied the chance of vindication without explanation’ gave raise to costs being recoverable on the indemnity basis.
Although the case specifics of this matter are unique, all litigants should bear in mind both prospects and surrounding circumstances of their claim before seeking to proceed to Trial. The Court will not take kindly to being utilised ‘as an anvil for settlement rather than as an adjudicator’ and should they feel this is the case an Indemnity Award may be the punishment for doing so.