Ineos Upstream Limited & Ors v Joseph Boyd & Anor

The court has a broad discretion when deciding whether costs should be assessed on the indemnity basis. A failed claim, or rejection of a reasonable settlement offer, does not by itself justify indemnity costs. The court must assess the parties’ conduct in the relevant period, cumulatively and in context. Delay may justify indemnity costs where its nature is improper and falls outside the norm, but the conduct of all parties must be considered.

An interim payment on account must be a reasonable estimate of likely recovery, allowing for a margin of error. The quality and reliability of the receiving party’s costs information are important, particularly where costs were not budgeted. Interest on costs normally runs from the costs order, while pre-judgment interest may run from when liability to pay the underlying costs accrued.

This was a first-instance determination of outstanding consequential matters following the court’s earlier judgment dated 8 February 2023. The claims had previously involved remittal of costs issues, and the judgment considered findings made in the Klein Judgment, [2022] EWHC 684 (Ch).

The parties had agreed that the claimants would pay certain costs on the standard basis. The remaining disputes concerned whether some costs should be assessed on the indemnity basis, the amount of interim payments on account, and the dates and rates applicable to post-judgment and pre-judgment interest.

1. Indemnity costs. The claimants were ordered to pay the Costs of the Remitted Costs on the standard basis, save for the period from August 2021 to 25 March 2022, when the costs were to be assessed on the indemnity basis. The applicable question was whether the claimants’ conduct fell outside the norm. The court had to assess the various circumstances individually and cumulatively, consistently with the overriding objective. A refusal to accept a settlement offer, and an unsuccessful claim or application, did not automatically justify indemnity costs. The settlement conduct of all parties was relevant. The defendants’ limited engagement and failure to provide funding and costs information weakened their reliance on the negotiations.
2. The court was entitled to take the Klein Judgment into account when assessing conduct during the period it covered. The finding that the claimants’ conduct after August 2021 was improper and abusive changed the overall balance and justified indemnity costs for that period. Earlier inactivity, although described as inexcusable, did not justify indemnity costs because all parties had failed to progress matters. Conduct after March 2022, the size of the bundle and the length of the submissions did not justify an indemnity order.
3. Interim payments. Under CPR 44.2(8), an interim payment was mandatory unless there was good reason not to order one. Where costs had not been budgeted, the court had to estimate likely recovery by reference to all the circumstances, including the amount claimed and the quality of the supporting information. The court ordered £200,000 to D6 and £167,500 to D7. The figures were reduced because the costs information was limited, uncertified and unreliable, and the claimed costs appeared excessive and disproportionate.
4. Interest. Judgment-rate interest at 8% ran from the dates of the relevant costs orders on the sums eventually found due. The usual incipitur rule applied. There was no sufficient reason to defer interest until detailed bills were served. D7 was awarded pre-judgment interest at 2% over base from the date on which liability to pay the costs accrued, or the date of Morgan J’s costs judgment if later. The precise date and costs concerned could be resolved at detailed assessment.

This was a first-instance determination of consequential costs and interest issues following the court’s earlier judgment. The judgment also took account of the Klein Judgment, [2022] EWHC 684 (Ch), and earlier decisions in the same litigation.