Bilta (UK) Ltd (In Liquidation) & Ors v Natwest Markets PLC & Anor

Formal admissions may be withdrawn only with the court’s permission, exercised justly having regard to all the circumstances. Relevant factors include the reason for withdrawal, party conduct, prejudice, the stage of proceedings, prospects of success and the interests of justice. An application made after trial will ordinarily cause serious prejudice where it would require further evidence and cross-examination.

Interest compensates for loss of use of money. The appropriate rate depends on the claimant’s general circumstances and the nature of the money lost, rather than litigation-funding costs or special attributes. Indemnity costs require conduct of the proceedings which is significantly unreasonable or outside the norm. Interim costs payments may include recoverable conditional-fee uplifts and should represent a reasonable proportion of the costs claimed.

The judgment followed an earlier decision finding NatWest Markets plc and Mercuria Energy Europe Trading Ltd liable for dishonest assistance and participation in fraudulent trading arising from VAT MTIC fraud. The court determined consequential issues concerning the principal sum, interest, costs, permission to appeal and an interim payment on account of costs.

The principal dispute concerned whether the defendants could withdraw a formal admission that Epicure Deal 34 had been established. Other issues concerned the appropriate interest rate and whether interest should be compounded, whether the claimants’ costs should be assessed on the indemnity basis, and the amount of any interim costs payment.

1. Epicure Deal 34. The court had jurisdiction to reconsider its conclusion before the order was sealed. It accepted that the earlier judgment had overlooked the defendants’ formal admissions and the closing submissions. The defendants therefore required permission under CPR 14.1(5) to withdraw the admissions.
2. Applying the factors in paragraph 7.2 of the Practice Direction to CPR 14, permission was refused. The proposed withdrawal was exceptionally late, was not based on new evidence, was insufficiently explained, and deprived the claimants of the opportunity to cross-examine the expert and address the evidential inconsistencies. The prospects of success were uncertain, and reopening the issue would be disproportionate and contrary to the administration of justice. The principal sum therefore included the VAT relating to Epicure Deal 34.
3. Interest. Interest was compensatory. The commercial borrowing presumption described in [2018] EWCA Civ 87 did not fit companies used for VAT fraud, whose diverted VAT monies were subject to corresponding liabilities to HMRC and were not available for legitimate business use. The appropriate comparator was investment income until the VAT fell due, followed by the statutory late-payment rate. Simple interest at 2.5 per cent over base rate was awarded.
4. Costs. The defendants’ underlying dishonesty did not, without more, justify indemnity costs. The relevant focus was the conduct of the proceedings and pre-action conduct. Although false evidence may justify indemnity costs, the defendants had reasonably relied on evidence from employees whose dishonesty was not known from the outset. The litigation conduct was not sufficiently unreasonable or outside the norm. Costs were therefore to be assessed on the standard basis.
5. Appeal and interim payment. Permission to appeal was granted generally because some issues were not fanciful and the case involved substantial sums, complex facts and findings of dishonesty. Permission was refused on the proposed GW Deals appeal. A reasonable interim payment on account of costs was £8 million, including conditional-fee uplifts.

The court referred to its earlier first-instance judgment, [2020] EWHC 546 (Ch), which had determined liability. This judgment determined consequential relief and related procedural applications.