Kent v Paterson-Brown & Anor

Indemnity costs require conduct that is unreasonable to a high degree and takes the case out of the norm. A weak claim alone is insufficient, but a hopeless claim combined with disproportionate conduct may justify indemnity costs for part of the proceedings. Excessive disclosure does not automatically justify indemnity costs where the paying party is already liable for costs; reasonably incurred and proportionate review costs remain recoverable.

Interest on costs incurred before judgment should reflect the circumstances of both parties and the evidence available. A reasonable interim payment on account should ordinarily be close to the likely recovery on detailed assessment, subject to an appropriate margin.

The judgment concerned consequential matters following the dismissal of the claimant’s claims in the main action. The parties had agreed that the second defendant’s costs would be assessed on the indemnity basis. The issues were whether the first defendant’s costs should likewise be assessed on that basis, what rate of interest should apply to costs incurred before judgment, and the amount and timing of further interim payments on account.

1. First defendant’s costs. The court applied the established threshold that indemnity costs are appropriate only where the paying party’s conduct is unreasonable to a high degree and takes the case out of the norm. The claimant’s settlement position, lack of pre-action correspondence, abandoned fraud claim, excessive disclosure and jurisdictional arguments did not individually justify indemnity costs. The abandoned fraud claim had been dealt with separately, and the excessive disclosure did not warrant reversing the burden of proof or removing proportionality from the assessment.
2. The claim was exceptionally narrow, weak from the outset and based on an objective evidential record which did not support the alleged agency or trust relationship. The claimant nevertheless pursued a disproportionate investigation into wider dealings involving the defendants and related companies. The combination of the claim’s inherent weakness and that disproportionate approach justified indemnity costs from service of the claimant’s principal trial witness statement. Costs were therefore standard up to 27 October 2017 and indemnity thereafter.
3. Interest. The court distinguished authorities concerned with enhanced interest following failure to beat a Part 36 offer. Applying the approach in Marathon Asset Management LLP v Seddon and allowing for the defendants’ status as individuals, it awarded interest at 2.5% above base rate on costs incurred before 30 July 2018.
4. Interim payments. Under CPR 44.2(8), there was no good reason to withhold an interim payment. The likely recovery, previous assessment experience, delay before detailed assessment, the defendants’ costs and the claimant’s disproportionate conduct justified further payments of £715,000 to the first defendant and £130,000 to the second defendant. Payment was ordered within 14 days. A later application for time to pay remained possible if supported by proper evidence. The claimant was also ordered to pay the defendants’ costs of the consequential hearing on the standard basis.

First-instance consequential judgment following the dismissal of the claimant’s claims in the main action. The judgment does not state a citation for the main judgment.