NO INDEMNITY COSTS: GORGEOUS BEAUTY 2

October 2, 2014 · by · in Applications, Civil Procedure, Costs

We looked at the Gorgeous Beauty case earlier in the context of witness evidence. I am grateful to Jon Lord for bringing my attention to the subsequent decision on costs.  The judge declined to order indemnity costs and awarded the claimant 90% of its costs.

MR JUSTICE ARNOLD :

  1. The parties have agreed that I should deal with the issue of costs on paper in the light of written submissions from both sides. Gorgeous Beauty contends that the Defendants should pay 100% of its costs assessed on the indemnity basis. The Defendants contend that they should pay 85% of Gorgeous Beauty’s costs assessed on the standard basis.
  2. So far as the percentage of costs recoverable is concerned, the Defendants point out that they were successful on certain discrete issues. In particular, they were successful in contending that English law was the law applicable to the Trust and they were successful on two out of the three issues of Seychelles law. Furthermore, the Defendants suggest that in the region of 9% of each party’s costs were attributable to expert evidence. Accordingly, the Defendants suggest that Gorgeous Beauty’s costs should be reduced by 15%.
  3. I accept the general thrust of the Defendants’ submissions, but on the other hand I consider it likely that Gorgeous Beauty ended up spending a slighter lesser percentage of its costs on expert evidence than it estimated and I have to bear in mind that Gorgeous Beauty was successful on one issue of Seychelles law. In the circumstances I consider that the appropriate reduction is 10%.
  4. As for the basis of assessment, Gorgeous Beauty relies on six factors as justifying assessment on the indemnity basis: (i) the Defendants have been found to have committed a fraud; (ii) the Defendants advanced a dishonest defence; (iii) their evidence was found to be implausible at trial; (iv) their Defence contradicted Gorgeous Beauty’s account on every issue; (v) they introduced a proliferation of side issues on which Gorgeous Beauty succeeded; and (vi) they failed to address key aspects of Gorgeous Beauty’s case until the trial.
  5. I do not consider that assessment on the indemnity basis is appropriate in this case. So far as factors (i) and (ii) are concerned, it is true that I have concluded that the Defendants committed a fraud, and accordingly that their defence was dishonest, but I reached that conclusion only on the balance of probabilities in a case where the evidence was not at all one way. As to factor (iii), I found some of Gorgeous Beauty’s evidence implausible (and worse) as well. As to factors (iv) and (v), the Defendants were not the only ones to raise side issues on which they failed or which they did not pursue, so too did Gorgeous Beauty. Factor (vi) is correct, but not particularly significant so far as costs are concerned. Neither individually nor collectively do these matters persuade me that indemnity costs are appropriate.

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