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Behaviour and Indemnity Costs

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A Defendant disengaging from the proceedings incurs an award of costs on the indemnity basis.

Navig8 Chemicals Pool Inc v Aeturnum Energy International Pte Ltd [2022] Costs LR 163

Christopher Hancock QC sitting as a Judge of the High Court recently handed down a Judgment whereby he awarded costs on the indemnity basis in circumstances where the Defendant’s conduct had been such to warrant the same.  

It was axiomatic that general awards for costs under CPR 44.2(2)(a) would apply, whereby the unsuccessful party would pay the successful party’s costs.  The Claimant submitted that an award should be on the indemnity basis.  

They relied upon Excelsior Commercial & Industrial Holdings Ltd [2002] EWCA Civ 879 in which the Court of Appeal had held that the making of a costs order on an indemnity basis would be appropriate in circumstances where the conduct of the parties or other particular circumstances of the case (or both) were such as to take the situation “out of the norm” in a way which justified an order for indemnity costs “at paragraphs 4 and 5”.

The Claimant submitted that the Defendant’s behaviour was “out of the norm” insofar as the Defendant had:

a) Abruptly disengaged with the proceedings after the CMC;

b) Wilfully and continually refused to comply with the interim injunction granted by the Court.

If the Defendant had complied with the Court Order and provided substitute security, then there was a strong argument that the proceedings would have been much narrower in scope and consequently, costs would have been significantly lower.  

The Defendant’s strategy of participation followed by disengagement had increased the costs in allowing the Claimant to seek the relief that he was eventually held to be entitled to, particularly insofar as the Claimant had been required to seek procedural assistance from the Court in relation to steps that the Defendant ought to have and had failed to undertake.

Further, the Defendant had chosen not to have London Solicitors on the record but had rather required the Claimant to serve all documents in the proceedings by hand in Singapore at the Defendant’s offices.  This increased the financial burden upon the Claimant in circumstances where they continued to properly prosecute their claim.

At paragraph 6 the Judge concluded:

“I have concluded that this is a case in which the award of indemnity costs is justifiable, largely because of the fact that the Defendant has, in effect, chosen to disengage with the proceedings part way through and had undoubtedly increased the costs as a result.”

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