Tchenguiz v Director of the Serious Fraud Office & Ors

An application under Civil Procedure Rules 1998 Part 31.22 does not automatically attract indemnity costs. The ordinary costs rules apply, and the court retains a wide discretion under Part 44.3. Indemnity costs may be ordered where the facts or conduct take the matter outside the norm. Deliberate misconduct is unnecessary in every case; significant unreasonableness or other inappropriate conduct will ordinarily suffice. An application pursued for an extraneous private purpose, requiring substantial work from a respondent entitled to resist it in the public interest, may justify an indemnity order.

Robert Tchenguiz appealed against an order of Eder J requiring him to pay the Serious Fraud Office’s costs of an application under CPR Part 31.22 on the indemnity basis. The application concerned the use of disclosed documents for purposes extraneous to the existing proceedings. The Court of Appeal had already delivered judgment on the main appeal and dealt separately with the first part of the appellant’s 12th ground, concerning costs. The issue was whether the judge had applied an impermissible general rule, or had properly exercised the discretionary power to award indemnity costs.

Appeal dismissed. Lord Justice Vos gave the judgment of the court, with Lady Justice Sharp and Lord Justice Jackson agreeing.

1. There is no general principle that an applicant in every application under CPR Part 31.22 must pay indemnity costs. The ordinary costs rules apply to such applications. The judge was wrong only insofar as his reasoning suggested a special general rule applicable to all Part 31.22 applications.
2. Under CPR Part 44.3, the court has a wide discretion as to the basis of assessment. The guidance reflected in Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879 remains relevant. An indemnity order may be appropriate where the facts or conduct take the case outside the norm. Deliberate misconduct is not essential in every case. Except in very rare cases, significant unreasonableness or otherwise inappropriate conduct in the wider sense is ordinarily required.
3. The judge had ample grounds to award indemnity costs on the facts. The application was extraneous to the existing proceedings, pursued for the appellant’s private benefit, and required substantial liaison, checking and legal consideration by the SFO. The SFO was entitled to resist the application successfully in the public interest. Those circumstances took the case outside the norm. The judge’s reference to a general approach was properly read as a superfluous description of the consequence of his actual discretionary assessment, rather than as the basis of the order.
4. The judge was entitled to regard the application as overblown and inappropriate. The order requiring payment of the SFO’s reasonable costs on the indemnity basis was therefore upheld.

• Court of Appeal (Civil Division): In [2014] EWCA Civ 1471, dismissed the appeal against the indemnity-costs order.
• High Court of Justice, Queen’s Bench Division, Commercial Court: Eder J ordered the appellant to pay the SFO’s reasonable costs of the CPR Part 31.22 application on the indemnity basis.