Natixis S.A. v Marex Financial Ltd & Anor

In exercising its discretion on costs, the court may make a co-defendant order where the claimant reasonably sued both defendants and one defendant effectively caused the other to be joined. The order should avoid exposing the successful co-defendant to an unnecessary credit risk. Where loss is subject both to contributory negligence and a liability cap, the proper sequence is to identify the total loss, reduce it under section 1(1) of the 1945 Act, and then apply the cap. A failed or abandoned fraud allegation ordinarily attracts indemnity costs, subject to the court’s discretion and the requirement that conduct be unreasonable to a high degree. Issue-based costs may be preferable to a speculative percentage apportionment.

This was an ancillary hearing following the merits judgment in Natixis SA v Marex Financial [2019] EWHC 2549 (Comm). The court had found Access World liable in negligence to Marex concerning 14 warehouse receipts, subject to a €100,000 limitation per receipt and a 25 per cent reduction for Marex’s contributory negligence.

The court determined the appropriate costs orders between Natixis, Marex and Access World, the correct sequencing of contributory negligence and the liability cap, the costs consequences of Marex’s abandoned fraud allegation, payment on account, the timing of payment and interest.

1. Access World’s costs. The court’s discretion under CPR 44.2 was broad. Applying the approach in Moon v Garrett [2007] 1 Costs L.R. 41, there were no hard-and-fast rules. Natixis had sued Access World at Marex’s instigation, and the claim was parasitical on Marex’s claim. Since Marex was the ultimate paying party, a joint and several order against Natixis and Marex avoided an unnecessary credit risk for Access World.
2. Damages and the liability cap. Access World’s monetary cap limited the amount recoverable, rather than the extent of its duty. Under section 1(1) of the 1945 Act, the court first identified the total loss, reduced it by 25 per cent for contributory negligence, and only then applied the €100,000 cap. The court relied on the structure and application of section 1(1) in Platform Home Loans Ltd v Oyston Shipways Ltd [2000] 2 A.C. 190. The approach in Newcastle International Airport Ltd v Eversheds LLP [2012] EWHC 2648 (Ch) was consistent, although the relevant observations there were obiter. The recoverable amount was therefore €1.4 million less the adjustment for the lesser-value parcel, rather than €1.05 million.
3. Fraud claim. The starting point where a fraud claim is pursued and fails, or is abandoned, is indemnity costs, although the court retains a complete discretion. The relevant conduct must be unreasonable to a high degree and take the case out of the norm; mere error or hindsight misjudgment is insufficient. The allegation here was weak, inferential and unsupported by actual evidence. It was pursued through trial and written closing submissions before being abandoned in oral closing. The conduct justified indemnity costs. Access World’s conduct in defending the negligence claim did not alter that conclusion.
4. Marex’s costs against Access World. A percentage order under rule 44.2(7) of the CPR would have been speculative. An issue-based order was appropriate. Marex was awarded its costs of the PC4 and PC5 negligence claims up to and including 18 December; other costs up to that date were Access World’s, on the standard basis except for the fraud costs, which were on the indemnity basis. No percentage reduction was made.
5. Ancillary orders. The sums of €1.3 million and the applicable dollar amount were ordered to be paid within 14 days. Access World received £850,000 on account of costs. Interest was awarded at 2 per cent above Base from time to time.

This was a first-instance ancillary hearing, not an appeal.

1. High Court (Commercial Court): The merits judgment was handed down in Natixis SA v Marex Financial [2019] EWHC 2549 (Comm).
2. High Court (Commercial Court): The present judgment determined the consequential costs, damages, payment and interest issues.