Trafalgar Multi Asset Trading Company Limited v James David Hadley & Ors

The court may order a party who has succeeded in the litigation to pay costs jointly and severally with a company only where that result is just in all the circumstances. Control or funding of the company’s defence is relevant, but is not conclusive. The central question is whether the individual, rather than the company, was the real party or personal beneficiary. If the litigation was maintained for the company’s benefit, serious impropriety or bad faith, ordinarily causatively linked to unnecessary costs, will generally be required.

Compound interest may be awarded in common law claims under the equitable fraud or fiduciary limbs where the defendant obtained, retained or used the claimant’s money or traceable proceeds for the defendant’s benefit. Dishonest recipients and assistants are not necessarily in a different position from the fiduciary who misapplied the assets.

This was a further consequential judgment following the liability judgment in Trafalgar Multi Asset Trading Co. Ltd v Hadley and ors [2023] EWHC 1184 (Ch) and an earlier consequential judgment, [2023] EWHC 1867 (Ch).

The court determined three outstanding matters: Mr Wright’s application for a payment on account of costs; Trafalgar’s application to make Mr Wright jointly and severally liable with CGrowth for CGrowth’s costs liability; and Trafalgar’s application for pre-judgment interest to be compounded. The central issues were whether Mr Wright was the real party to CGrowth’s defence and whether the equitable jurisdiction to award compound interest applied to the established conspiracies, bribery, fiduciary breaches and equitable liabilities.

1. Payment on account. Under CPR rule 44.2(8), a party ordered to pay costs subject to detailed assessment should ordinarily pay a reasonable sum on account unless there is good reason. Criticisms concerning the evidential basis, allocation and rate of Mr Wright’s costs affected the amount, rather than the principle of entitlement. A payment of £15,000 was ordered and set off against Mr Wright’s existing costs liability.
2. Joint costs liability. The broad discretion under section 51 of the Senior Courts Act 1981 and CPR rule 44.2 was informed by Goknur. An order against a non-party is exceptional in the sense that it falls outside the ordinary run of litigation conducted by parties for their own benefit and at their own expense. The touchstone is whether the person can fairly be described as the real party to the litigation. Control and funding are relevant indicators, but personal benefit is usually more important. Where the litigation was pursued for the company’s benefit, serious impropriety or bad faith, ordinarily causatively linked to unnecessary costs, will generally be needed.
3. Those principles applied even though Mr Wright was himself a successful defendant rather than a non-party. He had conducted and helped fund CGrowth’s defence, but CGrowth had substantial other stakeholders and had a reasonable basis for defending serious allegations of fraud and conspiracy. Mr Wright’s indirect interests in CGrowth Capital Inc and Powder River did not displace CGrowth as the real beneficiary. There was no impropriety or bad faith. The application to make Mr Wright jointly liable for CGrowth’s costs was dismissed.
4. Compound interest. The equitable jurisdiction described in President of India v La Pintada Compania Navigacion SA [1985] AC 104 includes a fraud limb and a fiduciary limb. Following Granville Technology Group v LG Display [2023] EWCA Civ 980, the fraud limb is restitutionary and requires a fund obtained from the claimant which the defendant used, or is deemed to have used, for its own benefit. It is not enough that the defendant acted fraudulently or badly.
5. Applying Central Bank of Ecuador v Conticorp SA and Novoship (UK) Ltd v Nikitin [2014] EWCA Civ 908; [2015] 2 WLR 526, no satisfactory distinction arose between the fiduciary, dishonest recipients and dishonest assistants involved in the conspiracies. The order was varied so that the damages included compound rather than simple pre-judgment interest.

This judgment was a further consequential decision in the same High Court proceedings. The liability judgment was reported as Trafalgar Multi Asset Trading Co. Ltd v Hadley and ors [2023] EWHC 1184 (Ch). An earlier consequential judgment was reported as [2023] EWHC 1867 (Ch).