Boston Trust Company Limited & Anor v Szerelmey Limited & Ors

A costs indemnity may extend beyond the handing down of judgment to consequential matters dealt with directly before the judgment order is made, including proportionate submissions and an application for permission to appeal. It does not automatically cover later work such as damages inquiries or enforcement. The proper question is whether costs were properly incurred in the proceedings. Work undertaken for their primary purpose, even if it may confer an incidental benefit in another claim, can fall within the indemnity. A requirement that work serve the proceedings’ sole purpose may unjustifiably diminish the protection intended by the indemnity.

The judgment concerned the form of order following an earlier judgment which had dismissed an application by certain defendants to reconstitute the claim and continued a costs indemnity until trial. The parties disagreed about the duration and scope of that indemnity.

The court had to determine whether the indemnity extended to consequential matters following judgment, whether it covered work which might also benefit a subsequently filed partnership claim, and whether the claimants should have liberty to apply for further extensions.

1. Extension after judgment. The costs indemnity was continued until the order following judgment was made. The order determines the outcome of the case and is the order against which any appeal would be brought. Consequential matters dealt with shortly after hand down, proportionate submissions, and a proportionate application for permission to appeal ordinarily fall within the indemnity. The court relied on Wallersteiner v Moir (No.2) and understood the indemnity to cover the entire claim rather than only part of it.
2. Limits of the extension. The indemnity was not a free pass for unnecessary or speculative work. Defendants could challenge costs which were not properly incurred. An inquiry into damages would not automatically be covered.
3. Work benefiting another claim. The applicable test was whether costs were properly incurred in this action. It was not necessary that the work have no application in any other case. Work carried out for the primary purpose of pursuing or seeking to resolve these proceedings was covered, even if it produced some incidental benefit in the partnership claim. The court rejected the proposed sole-purpose test because it could materially reduce the protection intended by the indemnity. The use of “primary” was consistent with the principle stated in Re Crossmore Electrical and Civil Engineering Ltd.
4. The court declined to order a retrospective review or repayment of costs on the proposed sole-purpose basis. It also declined a separate order excluding all costs concerning the ambit or operation of the indemnity, since the primary-purpose test was sufficient and disputed costs could be challenged individually.
5. Liberty to apply. Liberty to apply was granted, including in relation to any further extension of the indemnity which might become appropriate, such as enforcement costs if the claimants succeeded at trial.