Summary

The court ruled on costs after dismissing fraud and negligence claims brought by a company in liquidation. The costs of most of the defendants should be paid on the indemnity basis, the claims against them having been speculative, weak and in large part opportunistic.

Facts

The court ruled on costs after dismissing claims brought by the claimant company against the seven defendants.

Between 2003 and 2008, when it went into liquidation, the claimant received substantial sums by way of commission in relation to sales of residential properties acquired by its members, mainly as investments. The claimant shared the commission with two other companies (L and D). The case of the claimant and its liquidators was that the arrangements made by the claimant with L and D amounted to a fraud on the claimant. It was alleged that in effect the claimant gave away for the benefit of L and D commission to which it alone was entitled. It was claimed that the fraud was committed by the second defendant, who was a de jure director of the claimant, and by the first and third defendants, who were said to have been shadow directors. In addition, a negligence claim was brought against the claimant's advisers in relation to the lost commission. The fourth defendant was a firm which provided tax advice. The sixth defendant was a law firm. The fifth and seventh defendants were the individuals at those firms who dealt with the claimant. The court dismissed the claims against all the defendants.

Held

The defendants were the successful parties. The first, fourth, fifth, sixth and seventh defendants should have all of their costs. Further, those costs should be paid on the indemnity basis. The claimant's claims were speculative, weak and in large part opportunistic. The case was put forward if not aggressively then extremely firmly. It was put forward in such a way as to put pressure on the defendants. Moreover, the claims involved very serious allegations of dishonesty; that was particularly inappropriate in relation to the professional advisers who were sued. In addition, the claims involved something of a moving target, with the basis of the claims changing at a late stage. As to the second defendant, although she had been successful, she had lied to the court in the conduct of her defence. She should have 80% of her costs, to be paid on the standard basis. The third defendant had taken no part in the proceedings and had not sought costs (see paras 5, 47-48, 51, 57, 64, 69, 71, 74 of judgment).

Costs determined