Henderson & Jones Limited v David Jason Ross & Ors

Indemnity costs require conduct or circumstances taking the case outside the norm. Unsuccessful fraud or dishonesty allegations do not automatically justify indemnity costs, but may do so when combined with a speculative, weak or thin case, serious allegations, selective treatment of evidence, publicity intended to pressure defendants, and an unrealistic claim valuation. A payment on account should be an estimate of likely recovery, allowing an appropriate margin for error and overpayment risk. Post-judgment interest on costs may begin before detailed assessment where the paying party has sufficient information to assess its likely liability.

The ruling concerned consequential matters following the court’s merits judgment, handed down on 26 May 2023, which dismissed all claims by Henderson & Jones Limited against the five remaining defendants. The claims included alleged breaches of directors’ duties, knowing assistance, negligence and unlawful conspiracy.

The parties agreed that the defendants were entitled to costs, a payment on account, pre-judgment interest and post-judgment interest. They disputed the basis of assessment, the amount and timing of the payment on account, the pre-judgment interest rates, and when post-judgment interest should begin. The claimant also sought permission to appeal the merits judgment.

1. Indemnity costs. The ordinary basis is standard costs, but indemnity costs are appropriate where conduct or circumstances take the case outside the norm. There is no automatic rule that unsuccessful fraud or dishonesty claims attract indemnity costs. Here, the claimant’s case was speculative, weak or thin, relied on strained interpretations of incomplete or decontextualised documents, failed to grapple with Clement Keys’ central involvement, advanced serious allegations against professionals, courted publicity to increase pressure, and substantially overstated the claim value through double counting. Taken together, those matters amounted to conduct sufficiently highly unreasonable to warrant indemnity costs for all defendants.
2. The order was not made as moral condemnation, and the claimant’s status as a litigation funder made no difference.
3. Payment on account. The court should estimate likely recovery, subject to an appropriate margin for error and the risks of overpayment and reduced recoverability. The claimant was ordered to pay each defendant 70 per cent of the updated costs incurred, within 21 days. The request that payment for the first and second defendants be paid into court was refused.
4. Interest. Pre-judgment interest was awarded at 4 per cent per annum for the first and second defendants, 2.5 per cent for the fifth defendant and 3 per cent for the sixth defendant. Post-judgment interest was ordered to run from 21 days after the hearing, since the claimant had sufficient information to make a realistic assessment of its likely liability.
5. Two errors or omissions in the merits judgment were to be corrected under Civil Procedure Rules 1998, Part 40.12. Permission to appeal was refused because the proposed grounds had no real prospect of success and there was no other compelling reason for an appeal.

The ruling followed the court’s merits judgment of 26 May 2023, which dismissed all claims. Permission to appeal that judgment was refused in this ruling.