LIV Bridging Finance Ltd v AD Solicitors LLB

Equitable interest following breaches of trust should ordinarily reflect the cost of borrowing. Compound interest remains discretionary, but a claimant must show circumstances similar or closely analogous to the historic equitable grounds, including fraud or fiduciary profits. Where those grounds are absent, simple interest may be appropriate. A successful party remains prima facie entitled to its costs, but the court may make percentage deductions for discrete issues on which the party failed and for unreasonable conduct that increased the opponent’s costs. The court must avoid penalising the party twice for the same matters at detailed assessment. A reasonable payment on account of costs should ordinarily be ordered unless there is good reason to the contrary.

This was a consequential judgment following the court’s main judgment of 18 June 2020 concerning claims by LIV Bridging Finance Limited against EAD Solicitors LLP in administration arising from breaches of trust. The court determined the appropriate basis and rate of interest, including whether interest should be simple or compound. It also determined entitlement to and assessment of the costs of LIV’s summary judgment application, including the effect of failed claims, inadequate time estimates, irrelevant or inadmissible evidence, and an interim payment on account.

1. Interest. LIV was entitled to equitable interest calculated at 1% above base rate from the dates on which the trust monies were first paid away. The purpose was restitutio in integrum by reference to the cost of borrowing.
2. The court declined to award compound interest. Although Sempra Metals v Inland Revenue [2008] 1 AC 561 indicated that the court may have a wider discretion than previously understood, the claimant still had to establish circumstances similar or closely analogous to the historic equitable principles identified in Westdeutsche Bank v Islington LBC [1996] 2 WLR 802. LIV’s claim was not founded on fraud, and it did not allege that EAD had retained or profited from the money. Simple interest of £12,838.01 was therefore awarded to 18 June 2020.
3. Costs. LIV was the successful party within CPR 44.2 and was prima facie entitled to its costs. Its recovery of judgment for the full amount advanced under two of four loans did not justify treating it as unsuccessful, since the failure concerning the other loans principally concerned causation, loss and quantum rather than breach of duty.
4. The court nevertheless disallowed 12.5% of LIV’s costs for discrete and misconceived contractual-interest and accounting issues. A further 5% was disallowed because inadequate time estimates caused hearings to be vacated and re-listed and substantial supporting material was irrelevant or inadmissible. The court emphasised that the same matters should not result in double penalisation at detailed assessment under CPR 44.3. EAD was ordered to pay 82.5% of LIV’s costs, assessed on the standard basis.
5. Under CPR 44.2(8), EAD was required to make a reasonable payment on account unless there was good reason otherwise. EAD was ordered to pay £50,000 within 28 days.

The judgment followed the court’s main judgment handed down on 18 June 2020. No appeal history is stated.