In a ruling on costs this week, Mr Justice Baker said: ‘the litigation was brought and aggressively pursued, by a sovereign state with a willingness to expend effectively unlimited resources’ and was ‘politically as well as financially motivated’, in Skatteforvaltningen (the Danish Customs and Tax Administration) v Solo Capital Partners (in special administration) & Ors [2021] EWHC 1222 (Comm).
Baker J said the indemnity basis of deciding costs ‘is apt to result in a greater recovery than the standard basis’. He referred to caselaw clarifying that, for the indemnity basis to be used, the conduct of the parties or other circumstances of the case must be ‘out of the norm’, and each case is decided on its facts (Excelsior Commercial [2002] EWCA Civ 879).
He noted the litigation ‘was the subject of ill-judged public statements by senior Danish politicians appearing to pre-judge the factual issues that would have fallen to be determined by the court’ and ‘involved a degree of “playing to the gallery” in response to the significant media interest this affair has generated in Denmark’.
Baker J dismissed the Danish tax authority SKAT’s claim in April. SKAT had sought to recover the proceeds of alleged unlawfully and fraudulently withheld tax applications submitted following dividend arbitrage trading between 2012 and 2015. The defendants denied the allegations and any other wrongdoing.
Joshua Fineman, director at DWF, which acted for three of the defendants, said: ‘These proceedings, and the pursuit of them by a government entity prepared to expend unlimited resources, were clearly out of the ordinary. I am pleased that this was recognised by Mr Justice Andrew Baker by his decision to order costs on the indemnity basis.’
Nick Leigh, senior associate, Dispute Resolution, Rosenblatt said: ‘The judge’s decision to award indemnity costs was a consequence of the “no stones left unturned” approach to the litigation adopted by SKAT and is a stark warning to litigants to conduct their cases in a reasonable and proportionate manner, no matter the resources in their arsenal.’
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