The Dekagram: 28th May 2024

In this week’s Dekagram we bring news of a case involving accusations and counter-accusations, a reminder that when litigating whatever you write or say, you must be prepared to have it read out in the Court of Appeal to an unimpressed Lady Chief Justice. Our readers know this already, of course – but if in doubt, it’s always best to maintain a high standard of courtesy, and usually a Bad Idea to accuse the other side of professional misconduct.

Thakkar v Mican [2024] EWCA Civ 552: A Digest

In costs applications there is neither a default/entitlement/presumption in favour, nor a reversal of the ordinary burden of proof, where allegations of fundamental dishonesty fail.

The default position is always that standard costs will be assessed and paid, unless the party seeking indemnity costs can demonstrate why they are appropriate in all the circumstances.

This finding in a personal injury case clearly has general applicability.

In her closing remarks agreeing with Lord Justice Coulson, the Lady Chief Justice chastised the parties to this case for being “far too ready to throw unnecessary and serious allegations against each other”. Within weeks of the commencement of litigation, the Claimant’s representatives were accusing the Defendant of a ‘fabrication of the truth’ and a ‘perversion of justice’. This was, her Ladyship noted, a straightforward RTI claim involving as one would expect conflicting witness evidence. The approach (on both sides) had been unnecessarily aggressive[1], entirely it seems with an early eye on an application for indemnity costs.

This case helpfully summarises recent key authorities on the award of indemnity costs and its interplay with failed allegations of fraud and findings of fraudulent claims.

The court assessing an application for indemnity costs has a broad discretion, to be applied according to the particular circumstances of the case with which it is dealing. It is not appropriate to fetter this discretion by establishing overarching and inflexible statements of principle. Thus, a finding of fraud – let alone a mere allegation of fraud coupled with the failure of the opposing party’s case – does not establish an automatic entitlement to indemnity costs.

Here, the losing Defendant conducted the trial alleging fundamental dishonesty on the Claimant’s part. The trial judge had awarded indemnity costs for the trial but refused the Claimant’s application for indemnity costs from the date that the Defendants first sought permission to amend to allege fundamental dishonesty, a year or so prior to the trial. The Claimant’s appeal was brought essentially on the ground that there exists in commercial and Chancery cases a ‘presumption’ that indemnity costs will be awarded, which should apply to personal injury cases.

The Court of Appeal answered the question ‘Is there a default or entitlement to (or at least a presumption in favour of) indemnity costs?’ in the negative.

• Since the judge has such a wide discretion when it comes to costs, the courts have repeatedly made it clear that the court should avoid going beyond the CPR to identify rules, default positions, presumptions, starting points and the like, when addressing costs disputes[2].
• As to allegations of dishonesty, there are many cases which demonstrate that, if a claim is found to be dishonest, the judge will very often award indemnity costs against the claimant[3].
• As to cases where allegations of dishonesty are pursued and fail, the analysis undertaken in the cases of Clutterbuck v HSBC PLC & Ors, Natixis S.A. v Marex Financial Limited, Bishopsgate Contracting Solutions Limited v O’Sullivan and Libyan Investment Authority v Roger Milner King & Ors[4] found favour with the court. There is no presumption or a starting point which tilts the balance in favour of an order for indemnity costs before any consideration of the circumstances, and no reversal of the ordinary burden of proof. Such decisions always depend on the circumstances of the particular case, and the judge retains a complete and unfettered discretion.

About the Author

Giles Bedloe, called in 2001, is in high demand as a member of the commercial and regulatory teams, as well as practising in fraud and corporate crime including asset forfeiture and money laundering. Giles is ranked in both the Legal 500 and Chambers for Business & Regulatory Crime and for Fraud. He is appointed to the CPS Specialist Fraud Panel and the Attorney General’s Panel of Specialist Regulatory Counsel. As part of his commercial defence practice, Giles regularly advises in professional negligence matters and represents clients before professional regulators, tribunals and ombudsmen.

[1] see Excalibur Ventures LLC v Texas Keystone Inc (Costs) [2013] EWHC 4278 (Comm) at [48]; Collier v Bennett [2020] EWHC 1884 (QB); [2020] 4 WLR 116 at [13]; Bates and others v Post Office Limited [2018] EWHC 2698 (QB) at [58].

[2] Lord Woolf in Excelsior Commercial & Industrial Holdings Limited v Salisbury [2022] EWCA Civ 879 at [32].

[3] see for example Three Rivers DC v The Governor of the Bank of England [2006] EWHC 816 (Comm), and Esure Services Ltd v Quarcoo [2009] EWCA Civ 595.

[4] [2015] EWHC 3233 (Ch); [2019] EWHC 3163 (Comm) – fraud claim where there was no, or no sufficient, evidence or support to justify it; [2021] EWHC 2628 (QB); [2023] EWHC 434 (Ch).