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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Socimer International Bank Ltd v Standard Bank London Ltd [2006] EWHC 2896 (Comm) (17 November 2006) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2006/2896.html Cite as: [2006] EWHC 2896 (Comm)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		17 November 2006

Mrs Justice Gloster, DBE:

1. Various issues arise as a consequence of my judgment dated 31 March 2006 (to which reference should be made for the background to this dispute).

Issue (i): length of interest period

2. The first issue is whether there should be any reduction in the period in respect of which the claimant, Socimer International Bank Limited ("Socimer"), seeks interest pursuant to s35(a) of the Supreme Court Act 1981. Socimer claims that it is entitled to interest at the rate of US Prime (which I have already decided) from 20 February 1998 (the date when the claimant's cause of action arose) to the date of judgment (31 March 2006). Thereafter interest on the judgment debt will run at the statutory judgment rate of 8% until payment.
3. The contention of the defendant, Standard Bank London Limited ("Standard"), is that I should exercise my discretion under CPR 3.1.6 to disallow all interest in respect of the period between termination and the institution of these proceedings on 9 April 2003 and that, in any event, Socimer should not recover any interest on the SOCMA element of the claim, or at the latest, only from December 2004 when Socimer's primary case on the SOCMA DRs was first advanced.
4. In relation to the non-SOCMA assets, Mr Stephen Auld QC, on behalf of Standard, contends that there should be no award on interest before commencement of the proceedings in 2003 because Socimer was guilty of unreasonable delay in prosecuting its claim. He contends that Socimer, in delaying well over four years before notifying Standard of its claim, during which time Standard did not know that Socimer would be making a claim, has been guilty of excessive delay. He contends that it was quite clear from the contemporary documents during 1998 that, from the outset, there was never any suggestion by the Socimer liquidator that Standard should have carried out some form of valuation on 20 or 23 February 1998, or that the liquidator had a claim for breach of contract against Standard of the type which subsequently emerged many years later. He points to the fact that it was not until December 2002, when Allen & Overy wrote a letter to Standard, that there was any claim that there should have been a valuation in late February of early March 1998. Up until then, all there had been was a dispute whether Standard had got the best price on the sale of the assets which it effectively held as security. Mr Auld submitted that the Socimer liquidator knew that Standard had sold the assets over time, and that the assets had fetched less due to changes in market conditions over which Standard had no control. He said that if the liquidator, or his legal advisors, had raised the Clause 14 claim (i.e., the duty to carry out a notional valuation as at the date of termination) at an earlier stage, the matter would have been addressed much earlier, and the loss could have been avoided, if not entirely, then at least substantially, because the assets could have been realised sooner and prior to the extremely adverse market conditions in April 1998. Accordingly, submits Mr Auld, the delay which occurred was entirely the responsibility of Socimer and not of Standard.
5. Moreover, in particular in relation to the SOCMA claim, Mr Auld emphasised that the liquidator had not analysed the case properly, notwithstanding having spent a substantial amount of costs in relation to it. He complains that the SOCMA primary case did not emerge until service of the Reply on 29 September 2004, and was not included in the Particulars of Claim until 18 March 2005. So, he submits, it was clear that, even in 2003, when the proceedings were commenced, the claimant did not have a clear idea of its own case.
6. I was referred to a number of cases including, in particular, the decision of Colman J in The Athenian Harmony [1998] 2 Lloyd's Reports 425, most notably at 427, followed by Aikens J in The Vergina (No 3) [2002] 1 Lloyds Reports 238. I was also referred to the decision of Langley J in Kuwait Airways Corporation and Another v Kuwait Insurance SAK and Others [2000] 1 All ER (Comm) 972, [2000] 1 Lloyd's Rep 678].
7. In The Athenian Harmony, Colman J made the following points, quoting Birkett v Hayes [1982] 1 WLR 816, that:

i) "… in the great majority of cases the plaintiff could have proceeded with greater dispatch; and yet it may well be wrong to deprive him of his interest particularly as the defendant will have had the use of the money … if interest is withheld the defendant receives a windfall. He has free use of funds which, if he had performed his obligation to pay, would not have been in his hands.";

ii) "If there were no material prejudice to the defendant by reason of the delay, it is difficult to see why the interests of justice should normally require that when he knows the amount claimed he should have an even larger benefit bestowed upon him than he would derive from his unjustifiably refusing to pay the claim.";

iii) "… the justification for depriving a successful plaintiff of interest must be that he has caused his loss of use of his money by his own fault rather than that it would be unfair or unjust to the defendant that he ought to pay interest during the delay."

iv) "In cases where the delay and degree of fault are so substantial that the predominant cause of the plaintiff being out of his money can be seen to be his own failure to prosecute the claim, rather than the defendant's maintenance of his defence, it is not difficult to see that the policy should be that a successful plaintiff should not be compensated from loss of use of the money."; and

v) "The delay in question would have to be very substantial and not merely relatively short periods of weeks or months during which in commercial litigation lulls in activity inevitably occur and the plaintiff's fault would have to be substantial, as where an action has inexcusably been allowed to go to sleep for years."

8. In The Vergina (No 3), Aikens J, having referred to The Athenian Harmony, said the following, at paragraph 33:

"The claimant submits that the Court will not disallow interest for a period unless there has been both very substantial delay and also very substantial fault on the part of the claimant. [Counsel for the claimant] relied on statements to that effect made by Mr Justice Colman in Derby Resources AG v Blue Corinth Marine Co Ltd (No 2) (The Athenian Harmony). I respectfully agree with the approach of Mr Justice Colman in that case. In my view the Court should not disallow interest unless it can be shown that the 'predominant cause' of the claimant being kept out of money that the Court had held he is entitled to is the claimant's own failure to prosecute the claim, as opposed to the defendant's maintenance of its defence."

9. In Kuwait Airways, Langley J articulated the principles in the following terms:

"In my judgment the authorities to which I have referred establish the following principles and factors as material to the exercise of discretion:

(1) In principle interest is to be awarded to compensate the claimant for being kept out of the money from the date when it has been established that it was due to him; it is not based on fault or the wrongful withholding of payment by the defendant.

(2) The starting date will therefore normally be the date to which the Act refers, namely the date the cause of action arose and so, in indemnity insurance (subject to any express terms of the cover) the date of loss.

(3) It follows from (1) that generally the existence of and need to investigate a genuine dispute as to liability is not a material factor in postponing the running of interest. The position is not so clear where there is a dispute or uncertainty as to the quantum of the claim. It can be said that money is not due until it is at least claimed to be due in a specific amount and, as Mr Hapgood submitted, quantification of a claim is, unlike liability issues, likely to be a matter only within the knowledge of the insured. It can equally be said, however, that there is no real difference in principle from a dispute as to liability: once the answer is known it establishes not only that payment was due but also what was due and when it became due. In my judgment the latter is the better view, more in accord with the basic principle and clearly expressed by Goff J in the passage I have quoted from BP v Hunt. I would add that in the case of War Risks insurance there is, I think, and as Mr Gaisman submitted, often likely to be particular reason not to permit delays in quantification to affect interest payments as insurers must be taken to appreciate that such delays may be an inevitable consequence of losses arising from the risks they are insuring.

(4) The application of these principles may be tempered by re-phrasing the question as one in terms of when the claimant could reasonably and commercially have expected to be paid. But that has never been applied to extend the starting date beyond the date when a reasonable investigation would have been completed, even if it would have resulted in a decision to resist the claim, and even then it has been used substantially in cases in which the claim can properly be viewed as sufficiently unusual as to inspire special investigation or where there is evidence of a commercial practice as to a later date of payment without an interest obligation.

(5) Where a claimant assured has been guilty of excessive delay, whether in making the original claim or in pursuing it, then the starting point (or on occasion the rate of interest) may be adjusted adversely to him. The rationale for such an approach has sometimes been expressed as a form of sanction for delay but can, I think, equally and more consistently with principle, be expressed in terms that in such a case it is wrong to view the claimant as kept out of or deprived of the use of money payment of which he has delayed in seeking. A more striking illustration would be circumstances in which a claimant consciously and for his own reasons chose not to pursue a claim immediately and notified the potential defendant to that effect. To a limited extent that is said to have been the position of KAC in this case. It is not, I think, sensible to regard a party who positively chooses not to make a claim when first available to him as one who is deprived of or kept out of his money.

I accept, therefore, Mr Gaisman's basic submission that, absent express agreement, interest should generally be payable from the date the cause of action for the relevant payment arose because it is from and after that date that the Claimant has been kept out of his money. Nor do I think the authorities justify a different approach in commercial or insurance cases based upon a starting date of when the payer acting honestly and reasonably would pay. They do, however, justify taking account of such considerations but only in my judgment generally on the assumption (however artificial) that the eventual outcome of disputes both on liability and quantum are resolved as they have in fact been resolved. In other words once the legal process has produced a 'right' result that result is treated as relating back to the date the cause of action arose."

10. I remind myself, however, of two features: first, that at the end of the day, the discretion under the Act is a wide one; and, second, that in a complex liquidation such as that of Socimer, a liquidator, who is necessarily coming to the situation afresh, is entitled to have a reasonable period of time to investigate claims and make decisions as to whether it is in the interests of the creditors that such claims should be pursued. Necessarily, and depending on the complexity of the liquidation, that time may well by longer than it would be for the ordinary litigant to investigate a claim.
11. Mr Richard Millett QC, on behalf of Socimer, took me through a detailed analysis of the relevant chronology. I accept his submission that there was no culpable delay in relation to any head of claim, at least up until 19 April 1999. During the first year of the liquidation the liquidator was entitled to investigate the position, to invite the submission of proofs (it received a proof from Standard on 24 February 1999) and to obtain information. Thus, by way of example, on 3 November 1998, the liquidator was asking Standard questions about the reason for Standard's delay in liquidating Socimer's position, and on 19 April 1999 he received a copy of Standard's terms for Forward Sale Transactions.
12. The real issue that arises on the chronology is whether the liquidator was entitled to delay bringing any proceedings at all pending resolution of the issue in the Bombril proceedings, which was analogous to the issue as to whether the relationship between Socimer and Handelsfinanz was correctly to be characterised as debtor/creditor or fiduciary. Mr Millett submitted that it was reasonable for the liquidator to delay bringing any proceedings at all against Standard in respect of its failure to value as at the termination date, because of the uncertainty as to whose benefit the recoveries from the SOCMA DRs would enure pending the resolution (ultimately by the Privy Council) of the Bombril litigation. Had the relationship been held to have been fiduciary, the result would have been that Socimer would have held the SOCMA DRs directly on trust for its clients, and therefore the benefit of any recoveries in relation to the claim in respect of the SOCMA DRs would have benefited such clients. Mr Millett submitted that the uncertainty in respect of this issue meant that, in realistic terms, it was impossible to bring any proceedings against Standard at all in relation to their failure to value on the termination date until the matter had been clarified.
13. I am not convinced by this approach. In my judgment, Mr Auld is right when he submits that there was no reason whatsoever, if the liquidator had appreciated that Socimer had a claim in respect of Standard's failure to value the assets which it held as at the termination date, why such a claim should not have been brought or at least intimated back in mid-1999, when the liquidator had most of the relevant information to hand. I do not see why the Bombril litigation prevented such a claim being brought in the interim, not only in relation to the non-SOCMA assets, but also in relation to the SOCMA DRs. Moreover, I see no reason why arrangements could not have been put in place to fund the litigation which could have catered for both alternate eventualities, namely that, on one outcome of the Bombril dispute, in relation to the SOCMA DRs the clients alleging proprietary claims would be the recipients of any recoveries, and, on the alternative outcome, the ordinary unsecured creditors (including clients) would be the recipients. No evidence was put before the court supporting the proposition that difficulties in funding did, in reality, arise, or that the liquidator would have had any difficulty in funding the litigation because of the question mark over the possible proprietary entitlement in relation to the SOCMA DRs.
14. The reality, as Mr Auld submitted, is that the delay here was excessive in relation to the prosecution or intimation of the clause 14 claim. In my judgment, there was no good reason for it (other than the fact that the liquidator and his advisors had not realised the true basis of the claim). On any basis, the delay, and the fact that Socimer was out of its money in the meantime, cannot be attributed to Standard. The predominant reason why, during the period from April 1999 to December 2002, Socimer was deprived of the use of its money was that it did not even intimate, until its letter dated 12 December 2002, that it had a claim for failure to value as at the termination date. In the exercise of my discretion, I consider that in order to do justice between the parties it is appropriate that I should adjust adversely to Socimer the period in respect of which interest should run. However, I take the view that the liquidator would have been entitled to a reasonable period after April 1999 for consideration and formulation of Socimer's claim. Adopting a somewhat rough and ready approach, I consider that Socimer should be deprived of interest in respect of the period 1 October 1999 to 12 December 2002, in relation to the entirety of its claim, to reflect its excessive delay during that period, and the fact that the consequent result, that it was kept out of its money, cannot be attributed to the fault of Standard.
15. Despite Mr Auld's submissions, I do not consider that it is appropriate to deprive Socimer of interest during the period from 20 February 1998 to 1 October 1999. That period, in my view, represented a reasonable period for a liquidator in the circumstances of this complex liquidation to investigate and formulate a claim. If Socimer had thereafter proceeded with diligence, there would have been no deduction in respect of this period.

Issue (ii): whether interest should be allowed in relation to the amount awarded in respect of the SOCMA DRs

16. I now turn to consider the discrete question as to whether any interest at all should be allowed in respect of the amount awarded under the terms of my judgment in respect of the SOCMA DRs ("the SOCMA judgment amount"). Mr Auld made two main submissions under this head. First, he contended that no interest at all should be awarded in respect of the SOCMA judgment amount because, as he stated in his skeleton argument: "Socimer suffered no financial loss from the fact that Standard … did not return the SOCMA DRs", but that all that occurred, in reality, was that Socimer had had to pay dividends on claims by customers which it would not have had to pay, had it been able to hand back the SOCMA DRs. He further submitted that the compensation that I had ordered (which reflected the amortised value of the SOCMA DRs in the liquidator's hands, and thus the economic value of the instruments to Socimer, rather than their market value) more than compensated for any interest lost.
17. In paragraph 82 of my judgment I rejected Mr Auld's submission that the loss caused to Socimer as a result of being unable to discharge its liability by being able to "hand back" the SOCMA DRs, was limited to the dividend receivable upon customers' proofs of debt. It follows, therefore, that I do not accept the logic that Socimer has not suffered any actual ongoing loss by being deprived of the SOCMA DRs. However, the fact (which Mr Millett accepted in argument) that if the SOCMA DRs had been handed back by Standard shortly after termination, and there had been an actual, or notional, set off of Socimer's claims as against the SOCMA DRs, there would simply have been a reduction in balance sheet terms of Socimer's liabilities, does not, in my judgment, lead to the conclusion that no interest should be awarded on the SOCMA judgment amount. The result of Socimer's not being able to remove that liability from Socimer's balance sheet as at the relevant date was that, at least in accounting terms, Socimer's net assets have been less than they should have been. I agree with Mr Millett that there is no reason in principle – just because of the special circumstances relating to the valuation of the SOCMA DRs – why Socimer should be deprived of interest on the SOCMA judgment amount.
18. Mr Auld's second point is that Socimer's primary case in relation to the SOCMA DRs was only advanced for the first time in September 2004. Even then, it was not pleaded in the Amended Particulars of Claim (which was served on 29 September 2004), but in the Amended Reply which was served at the same time. Mr Auld complains that the primary case was not pleaded in Socimer's Particulars of Claim until service of the Re-Amended Particulars of Claim in March 2005. Accordingly, he submits that, even if, contrary to his first submission, the court is minded to award interest on the SOCMA judgment amount, the interest should only accrue from the date upon which it was properly pleaded, namely 18 March 2005, when the Re-Amended Particulars of Claim were served.
19. In my judgment, Socimer is entitled to interest on the SOCMA judgment amount (namely US$ 8,424.966) as from 12 December 2002, when it first intimated its secondary claim in respect of the SOCMA DRs, viz. that it had a claim for the market value of the SOCMA DRs (ultimately held by me to be US$ 3 million – see paragraph 86 of the judgment). I do not consider that it would be just or appropriate to deprive Socimer of interest on an amount equivalent to the difference between the SOCMA judgment amount awarded on its primary case and the amount which I would have awarded on its secondary case in respect of the period from 12 December 2002 to March 2005, or September 2004. From December 2002, Standard was clearly aware that it was facing a claim for failing to value the SOCMA DRs as at the termination date. From an early stage it was obvious that there was going to be a considerable dispute about both liability and quantum. In complex litigation of this sort, it is often the case that the manner in which the claims are formulated changes over time as minds are more closely focused on the real issues. No real prejudice was demonstrated to have been suffered by Standard as a result of the amendment in 2004 to include Socimer's primary case in relation to the SOCMA DRs. It is clear that during the period December 2002 to September 2004 Socimer was deprived of the use of its money as a result of Standard's defence of its claim, not by any conduct on the former's behalf. Accordingly, in respect of this period there is no justification for departing from the normal rule that an unsuccessful defendant should have to pay interest. I should make it clear that this does not detract from my ruling under paragraph 15 above, that, in respect of the period from 20 February 1998 to 1 October 1999, Socimer is entitled, for the reasons there stated, to interest on the entirety of its claim, including the SOCMA judgment amount.

Issue (iii): Consequences of Part 36 offer – uplift on interest and indemnity costs

20. In addition, Mr Millett contends that Socimer is entitled to an uplift in interest on the non-SOCMA judgment amounts of up to 10% over US Prime Rate, pursuant to CPR Part 36.21(2). This is on the grounds that Socimer has done better as a result of the judgment than the amount of US$ 4 million which it offered to take by way of a Part 36 offer contained in a letter dated 17 December 2004 from its solicitors Allen & Overy to Standard's solicitors. That offer (made after an unsuccessful mediation in December 2004) was restricted to the non-SOCMA assets and was conditional upon Standard withdrawing its appeal to the Court of Appeal against Cooke J's judgment on the preliminary issue of construction. The latest day on which the offer could have been accepted without the permission of the court was 7 January 2005.
21. Likewise, pursuant to CPR 36.21(3), Mr Millett argues for indemnity costs from 7 January 2005.
22. I have to assume for the purposes of these submissions that the interest which I have awarded pursuant to the earlier paragraphs of this judgment in relation to the non-SOCMA assets would result in the figure of US$ 4 million being exceeded. I have not myself done this calculation, but the following paragraphs in this section of this judgment proceed on this hypothesis.
23. CPR36.21(4) and (5) are in the following terms:

"(4) Where this rule applies, the court will make the orders referred to in paragraphs (2) [interest] and (3) [indemnity costs] unless it considers it unjust to do so.

(5) In considering whether it would be unjust to make the orders referred to in (2) and (3) above, the court will take into account all the circumstances of the case including subparagraph

(a) the terms of any Part 36 offer;

(b) the stage in the proceedings when any Part 36 offer or Part 36 payment was made;

(c) the information available to the parties at the time when the Part 36 offer or Part 36 payment was made; and

(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer or payment into court to be made or evaluated."

24. Mr Auld submitted that, in all the circumstances, it would be unjust to order any uplift in the interest in this case, or to award indemnity costs. He submitted that Standard was unable properly to evaluate Socimer's offer on the basis of the information which Standard had at the time that the offer remained open to acceptance, namely, (in effect) over the Christmas period to 7 January 2005. He pointed out that the claim subsequently underwent substantial reamendment and that even though the offer did not relate to the SOCMA DRs claim, it was unreal to expect the defendant to address the merits of the offer without any regard to the SOCMA primary case being properly pleaded.
25. He further complained that at the time that the offer was made the defendant and its advisors had not been told that Mr Haller, one of Socimer's witnesses, had been indicted for fraud, and that there was at least a possibility that he would not be giving evidence at the trial. He submitted that Socimer should have repeated its offer after 23 March 2005, when Mr Tether's expert report was served, he being the successor to Mr Haller as the expert in relation to assets other than the TDA-Es.
26. I was taken through the relevant chronology in some detail by both counsel. I am not satisfied that it would be unjust to require Standard to pay interest on the non-SOCMA DR judgment sums from 7 January 2005 on the uplifted rate of 10% above US Prime. The terms of the Part 36 offer were perfectly clear in the light of the procedural history prior to the date when the offer was made. It clearly specified that, if Standard required any clarification of the offer, it should request it. No request for any extension over the Christmas period was made. At the time the offer was made, the valuations for which Socimer was contending were plain, and Socimer had served experts' reports dealing with such valuations. Standard at no stage told Socimer that it could not assess the offer or made a request for clarification under CPR Part 36.9. Moreover, it was not clear precisely in respect of what aspect of Socimer's Part 36 offer Standard required clarification.
27. The lack of knowledge about Mr Haller's indictment could not have rendered any consideration of the offer as falsely premised. In any event Standard decided to reject the offer (or let it lapse) on the basis of the material as it stood between 17 December 2004 and 7 January 2005, before Standard learned of Mr Haller's difficulties, about which Allen & Overy informed Jones Day on 18 January 2005, nearly two weeks later. Further, as Mr Millett submitted, when Mr Tether served his report, as directed, on 27 March 2005, Socimer's case must have been clear to Standard, yet the latter made no request to Socimer to repeat the offer, nor made its own equivalent cross-offer. It is therefore difficult to see that anything which occurred between 7 January 2005 and the date of judgment operated to lead Standard to a view different from that which had led them to reject Socimer's Part 36 offer in the first place.
28. As Mr Millett also pointed out, Mr Haller was not Socimer's TDA-E expert, but the expert in relation to the other Designated Assets. Since Socimer's Part 36 offer did not include the SOCMA DRs, the only possible area of doubt caused by Mr Haller's indictment related to the remaining Designated Assets, as to which the disputes were very minor. Further, Mr Tether's report did little more than follow what Mr Haller had said about these. It could not realistically be suggested that, had Standard known that Socimer was going to rely on Mr Tether's views as to these assets, rather than the views of Mr Haller, Standard would have accepted the offer.
29. I also accept Mr Millet's submission that the fact that the Part 36 offer was conditional is irrelevant; it contained a perfectly workable carve-out for the SOCMA DRs, and the fact that it was made shortly before a trial which was adjourned is similarly irrelevant.
30. The purpose of CPR 36.21 is clearly to require parties to give very serious consideration to compromising claims or parts thereof, with penal consequences if they unreasonably fail to do so. So far as interest is concerned, I do not consider that it is unjust that, on the hypothesis that the judgment amounts referable to the non-SOCMA assets (including ordinary interest at US Prime) exceed US$ 4 million, interest in respect of the period from 7 January 2005 to judgment, should be payable at the rate of US Prime plus 9%. It was accepted by both parties before me (without evidence or argument) that US Prime Rate should be treated as equivalent to base rate plus 1%, being the "normal" rate of borrowing for US dollars (see Kuwait Airways, supra).
31. That being so, in my judgment the correct rate for the uplifted CPR Part 36.21(2) period is US Prime plus 9% as equating to a figure not exceeding 10% above base rate.
32. For similar reasons, in my judgment, it is not unjust to require Standard to pay indemnity costs referable to the period from 7 January 2005 to the date of payment and interest on such costs from the dates on which Socimer paid the same at the like rate of 10% above base rate (or 9% above US Prime). However, the proportion of Socimer's costs that are subject to this aspect of the order should only be that proportion of the total costs which the judgment amounts in respect of the non-SOCMA assets (i.e. subparagraphs 121i), iii) and iv) of the judgment) bear to the total judgment amounts awarded to Socimer (see paragraphs 121i), ii), iii) and iv)). That may be a somewhat rough and ready approach, but it obviates the need for any inquiry as to what costs were strictly attributable to the SOCMA DRs in respect of the relevant period, and broadly reflects the importance that the issues relating to the SOCMA DRs had in the context of the entire case.

Issue iv): indemnity costs in general

33. Finally, Mr Millett submitted that I should make an order for indemnity costs against Standard in relation to all Socimer's costs, and not merely those in respect of the Part 36.21 period. He referred me to CPR Part 44.3 and the well-established principles relating to the ordering of indemnity costs.
34. In particular, he submitted that the making of an order for costs on an indemnity basis is appropriate in circumstances where the facts of the case and/or the conduct of the parties was such as to take the situation away from the norm: see Excelsior Commercial and Industrial Holdings Ltd v Salisbury Ham Johnson and Betesh & Co Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879; Three Rivers District Council and Others v Bank of England [2006] EWHC 816 (Comm), per Tomlinson J at paragraph 24.
35. He also relied on the statement by Tomlinson J at paragraph 14 ibid:

"Whilst an indemnity costs order does carry at least some stigma, the purpose of such an order is not to punish the paying party but to give a more fair result for the party in whose favour a costs order is made."

as well as the eight "guidelines" at paragraph 25 of Tomlinson J's judgment.

36. Mr Millett also submitted that the award of costs on the indemnity basis is appropriate where the court wishes to indicate its disapproval of the conduct in the litigation of the party against whom the costs are awarded: see Reid Minty v Gordon Taylor [2002] 2 All ER 150. He submitted that, in a number of respects, Standard's conduct in defending Socimer's claim was so unreasonable as to take it out of the norm, and justify an order of indemnity costs in relation to the whole of the proceedings.
37. In particular, he submitted that:

i) Standard's Defence was in many respects wholly speculative and contrary to the documentary evidence;

ii) the evidence of Standard's witnesses was very unsatisfactory and left its case high and dry in many respects;

iii) Standard's expert witnesses were in many instances not credible and were of little assistance to the court;

iv) the independence of Standard's experts had been compromised by influence from Standard and its solicitors;

v) Standard's approach to submissions was unreasonable;

vi) correspondence by Standard's solicitors, Jones Day, was on many occasions emotive and unprofessional. It was criticised by the judge at the pre-trial review, and it was often wholly unnecessary; and

vii) Standard engaged in persistent breaches of court orders.

38. I have carefully considered all the above matters as amplified by Mr Millett's written and oral arguments. At the end of the day, however, although some of the criticisms may be well-founded, to a lesser or greater extent, the reality was that this was (as Mr Auld submitted) a hard-fought piece of commercial litigation between two sizeable commercial entities, where both sides deployed tactical and other adversarial weapons available to them. Although I made various criticisms of the Standard witnesses, in my judgment, none of those criticisms serves to take this case outside the norm so far as indemnity costs are concerned. Any criticisms of Standard's conduct of the litigation would, in my judgment, be adequately reflected in the limited order for indemnity costs made under CPR Part 36.21 (on the assumption that the hypothesis is correct). Even if the hypothesis is not correct, and thus no order falls to be made under CPR Part 36.21, I do not consider that, in the exercise of my discretion, this is an appropriate case to award indemnity costs generally. Accordingly, I decline to do so.
39. I will hear from counsel on the wording of the order.