COST BITES 5: COSTS IN THE CASE APPROPRIATE ONCE A CLAIMANT HAD DISCLOSED DOCUMENTS IN RELATION TO SECURITY FOR COSTS

In Chiswick International Holdings Ltd v Oakvest Ltd & Ors [2022] EWHC 799 (Comm) HHJ Pelling QC (sitting as a High Court Judge) considered the appropriate order for costs when a party had offered security in an application for security for costs.  The judge found that, on the facts of this case, the appropriate order was that the claimant pay the costs up to shortly after the date the insurance documents were disclosed. Thereafter the order should be costs in the case.

THE CASE

The judge was considering the issue of costs after an application for security for costs.  The claimant provided a Deed of Indemnity which the applicant defendant, ultimately, accepted was adequate security.  The issue was, therefore, who should pay the costs of the application and for what period.  The defendant had been sent a draft copy of the documentation on the 11th February 2022 and the arguments related to who should pay the costs up to that date, and whether a different order should be made thereafter.

The judge found that the applicant defendant should have its costs up to shortly after the 11th February. Thereafter the order should be costs in the case.

THE JUDGMENT ON COSTS

1. 1. Thereafter, there was further debate between the parties until ultimately, yesterday afternoon, the claimant provided the insurance documentation including principally the Deed of Indemnity which was executed in precisely the draft form that was provided on 11 February and which had been the subject of the debate in correspondence that I am referred to. The third defendant has indicated that he is prepared to accept the Deed of Indemnity in lieu of security and rightly so.

1. 1. The question which remains is how the costs of and occasioned by the security application should be resolved.

1. 1. The third defendant submits that it should have the whole of the costs of and occasioned by the application since it was only yesterday afternoon that a signed document was provided, and it was only then that it could be satisfied that security had been provided. The claimant submits that the correct order in the circumstances is costs in the case down to 11 February and either no order as to costs or perhaps that it should recover its own costs thereafter because of conduct on behalf of the third defendant which was entirely unacceptable.

1. 1. Each court facing an application for costs must decide first who is the successful party and who is not. So far as that is concerned it is plain that the applicant in the circumstances of this case has been successful. It had sought security from the end of September last year. Security had been refused. An application for security was then issued and has succeeded in the event. Therefore in principle it is the successful party and ought in principle to recover its costs of having to issue that application.

1. 1. Some criticism is made of the fact that the application was issued between Christmas and the New Year. There are circumstances in which quite significant criticism can be advanced of parties who issue applications in that period, particularly if there is as a result a very early hearing of the application in circumstances where the respondent to the application has no realistic opportunity of responding to it. That, however, is not this case, as is apparent from the fact that this hearing is taking place on 25 February. Therefore, and in those circumstances, I am entirely satisfied that the applicant should recover its costs down to 11 February.

1. 1. The issue which then arises is whether or not it should recover its costs thereafter. So far as that is concerned, had the applicant accepted as it now has accepted that Mr Rhoder was fully entitled to sign the Deed of Indemnity on behalf of RenaissanceRe Syndicate 1458, on or shortly after 11 February, then much of the cost of this inevitably very expensive application could have been avoided. By the same token I accept the point that it was always open to the respondent to the application (claimant) to do what it did yesterday afternoon which was unilaterally to tender the Deed of Indemnity signed in the way it had been proposed.

1. 1. I consider that the objections that were advanced and the points which were advanced in relation to what was being offered are, to put it no higher, surprising and particularly surprising when they come from an experienced firm of commercial solicitors, well experienced in the conduct of commercial litigation. However, I accept that what might take this slightly outside the general run of Lloyds Insurance business is that what was being signed was a Deed of Indemnity under the policy.

1. 1. In those circumstances, it is necessary to decide how best to dispose of this application. Inevitably, in approaching that question the various alternatives are all imperfect in the outcome.

1. 1. As I have said, I am entirely satisfied that the applicant should have its costs down to 11 February and perhaps two or three days after that in order to digest the documentation. I consider that the appropriate course in relation to the costs that follow thereafter is that which I suggested in the reply submissions, that is to say that the costs should be costs in the case. As I have said, what takes this case slightly away from what would otherwise be a very clear position is that what was being offered for signature was a Deed of Indemnity rather than a policy, and I accept that there are various different ways in which after the event insurance can be made available in lieu of a security application.

1. 1. I am satisfied that an order for costs in those terms represents a fair solution to an unattractive position, and subject to any further submissions concerning the timing around 11 February, I propose to direct that the successful claimant should recover its costs down to 15 February and that costs of this application thereafter should be costs in the case.