CH-2025-BRS-000001 - [2025] EWHC 2373 (Ch)

Julian says that the judge was wrong to award costs on the indemnity basis, because that requires “a finding of exceptional conduct, such as bad faith, fraud or gross negligence, none of which were established in this case”. For this proposition he cites the decision of Tomlinson J in Three Rivers District Council v Bank of England [2006] EWHC 816 (Comm). I have read that decision, but regret to say that I do not find anything in the judgment of Tomlinson J which approaches that proposition. Instead, the judge (at [25]) expressed the wholly conventional view that there had to be “some conduct or some circumstance which takes the case out of the norm”.

Tomlinson J went on, in the same paragraph, to say:

“The following circumstances take a case out of the norm and justify an order for indemnity costs, particularly when taken in combination with the fact that a defendant has discontinued only at a very late stage in proceedings;

(a)

Where the claimant advances and aggressively pursues serious and wide ranging allegations of dishonesty or impropriety over an extended period of time;

(b)

Where the claimant advances and aggressively pursues such allegations, despite the lack of any foundation in the documentary evidence for those allegations, and maintains the allegations, without apology, to the bitter end;

(c)

Where the claimant actively seeks to court publicity for its serious allegations both before and during the trial in the international, national and local media;

(d)

Where the claimant, by its conduct, turns a case into an unprecedented factual enquiry by the pursuit of an unjustified case;

(e)

Where the claimant pursues a claim which is, to put it most charitably, thin and, in some respects, far-fetched;

(f)

Where the appellant pursues a claim which is irreconcilable with the contemporaneous documents;

(g)

Where a claimant commences and pursues large-scale and expensive litigation in circumstances calculated to exert commercial pressure on a defendant, and during the course of the trial of the action, the appellant resorts to advancing a constantly changing case in order to justify the allegations which it has made, only then to suffer a resounding defeat.”

Julian complains that none of the examples given by Tomlinson J applies to this case. He treats those examples as exclusive of the circumstances in which an indemnity costs order can be made. In my judgment, that is not the law. As Julian himself says in his skeleton argument, “the threshold for indemnity costs is conduct ‘out of the norm’,” relying on the decision of the Court of Appeal in Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879.

What the judge in the present case actually said in his costs judgment was:

“27.

… The indemnity basis is appropriate where the conduct of the parties or, in the particular circumstances of the case or both, were such as to take the case out of the norm… meaning that the conduct complained of is something outside the ordinary and reasonable conduct of proceedings.”

For my part, I cannot fault that formulation of the test.

In his skeleton argument, Julian goes on to say that the judge ordered him

“to pay costs on the indemnity basis, without identifying conduct ‘out of the norm’. This was an error of principle and a manifestly disproportionate use of the court’s discretion under CPR 44.3, warranting appellate intervention.”

The judge in fact declined to make a costs order on the indemnity basis for the period of the litigation before the application of March 2024. Up to that point, costs were awarded on the standard basis. However, from that point onward, it ought to have become clear to Julian (the appellant) that his position was untenable. In his judgment he said:

“38.

At that point, it seems to me it was clear to the claimant that the administration could not be completed while he was in post and the hostile relationship between the parties continued. Furthermore, it seems clear to me that the claimant must have been aware that he had a conflict of interest. He continued to make his claims against the estate to be paid as a carer for his father, to be paid as a caretaker and gardener of Seathrift. The defendants continued to maintain claims that he should account to the estate for the use of Seathrift. The defendant continued to maintain that the estate had a claim against the claimant in respect of a debt, albeit disputed by the claimant. All of those matters meant that the claimant had a clear conflict of interest and in my judgment the only option was to step down.”

That is a clear statement of the conduct on which the judge relied as “out of the norm” in deciding to make an order for costs to be paid on the indemnity basis. Accordingly, in circumstances where the judge considered that Julian should have realised that he would have to be replaced as executor and trustee, it was in the judge’s view sufficiently “exceptional” or “out of the norm” for him to continue to resist the application to remove him, so as to justify costs against him on the indemnity basis. That was an evaluative decision by the judge, and it was for him to make. I cannot interfere unless it was a plainly wrong decision. On the material before me, I cannot say that. This ground of appeal also fails.