High Court awards costs on indemnity basis for “hopeless” summary judgment application

2 December 2013

In the case of Simmons & Simmons LLP v Charles Hickox [2013] EWHC 2141 (QB), the High Court has held that a defendant who applies for summary judgment on a point of law which he knows, or ought to have known, was not justified should pay the costs of the application on the indemnity basis.

Facts

The claimant, a well-known firm of solicitors, has issued claims for £305,539.84 for fees and for $2.5 million pursuant to a contingency fee agreement, both of which are said to arise out of litigation in the Caribbean territory of Anguilla.

The defendant is based in the USA and so permission had to be sought to serve him outside the jurisdiction; that happened in January 2013, and the defendant acknowledged service on 13 February 2013.

Originally, the claimant agreed to an extension of time for the service of the defence to 25 March 2013. On or shortly before 25 March 2013, the defendant then applied to court for a further extension of time for the service of the defence. The extension was sought until 26 April 2013 and, with a certain amount of reluctance, the claimant’s solicitors agreed to that further extension.

On 26 April 2013, instead of serving the defence, the defendant, without any prior warning or notification, served an application for summary judgment.

The defendant purported to support his summary judgment application with a report by a barrister at the Anguillan bar. However, the report, being based on the thesis that a relevant Anguillan case was wrongly decided, did not support an argument that the claim should be struck out. The claimant pointed that out immediately. However, the defendant did not abandon his application until some weeks later, once the claimant had served its own expert report.

It was agreed that the defendant should pay the claimant's costs of the application, but the issues were whether the costs should be assessed on the standard, or the indemnity, basis and whether costs relating to the experts should be hived off because they might prove not to be wasted.

Held

The High Court held that, in all the circumstances, the claimant was entitled to its costs on an indemnity basis to include the costs of the experts’ reports.

Mr Justice Coulson stated that the defendant’s conduct, seen in the round, was indeed out of the norm. He found that there was no explanation in the material before him as to how and why the defendant had such a drastic change of heart resulting in his issuing the summary judgment application in place of filing a defence.

Mr Justice Coulson noted the claimant’s observation that this was simply a delaying tactic, and in the absence of any other explanation, he was inclined to believe that this was a reasonable inference.

This view was strengthened by Mr Justice Coulson’s conclusion that the summary judgment application was (and should have been seen to have been) hopeless. In his mind, there was no explanation in the material as to how and why an application for summary judgment was made when the defendant knew, or should have known, that the report that was provided in support of the application could not justify it.

Mr Justice Coulson concluded that, on the balance of probabilities, it was a fair inference that the defendant had not litigated in good faith, and that his hopeless application had resulted in months being lost and extensive costs being wasted.

In those circumstances, it is not surprising that the claimant was entitled to its costs on an indemnity basis.

Katie Allard

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