Being 'Annoying and Difficult' Not Sufficiently 'Out Of The Norm' For Indemnity Costs In Failed Liquidator Challenge

Deputy ICC Judge Jones declined to award indemnity costs against a creditor who unsuccessfully sought liquidator removal, finding his head injury and role in initiating the liquidation meant his conduct wasn’t “out of the norm”.

AKWAGBE V ULRICK & ORS [2025] EWHC 2371 (Ch)

In Akwagbe v Ulrick & Anor, the court addressed whether indemnity costs should be awarded against a creditor who unsuccessfully applied to remove a liquidator, with particular focus on how personal circumstances affect the “out of the norm” threshold. The First Respondent liquidator sought indemnity costs, relying on Beattie v Smailes where a small creditor’s “extravagant” removal application justified such an order. The court declined indemnity costs, distinguishing Beattie on three critical grounds: the applicant’s instrumental role in initiating the liquidation, his significant personal losses through the company, and crucially, his head injury affecting executive functioning. The court emphasised that being “annoying and difficult” or even having failed to pay previous costs orders didn’t render conduct sufficiently exceptional. While finding the application had little merit, the court held this didn’t meet the “out of the norm” conduct required for indemnity costs, stating that “no matter how resounding a victory” a weak claim alone cannot justify indemnity costs. Costs were ultimately assessed at £19,800 on the standard basis.

Indemnity costs are out of the ordinary. They should relate to something 'out of the norm'. A poor claim and/or losing a case with limited prospects of success is not out of the norm. No matter how resounding a victory, it does not lead to indemnity costs. There must be some form of conduct which takes this application out of the norm. Whilst Mr Akwagbe has been annoying and difficult, that is insufficient in itself. I therefore turn to consider his conduct during the litigation. This does not appear to have been out of the ordinary. I am told he has not paid a previous costs order but that does not take his conduct out of the ordinary and does not affect the issue of indemnity costs in this separate consideration.

Citations

Beattie v Smailes [2011] EWHC 1563 (Ch), [2012] BCC 205 Indemnity costs may be awarded when an application is out of the ordinary, such as where the challenge to office-holders is based on weak or hypothetical conflicts and lacks any realistic prospect of benefit to the applicant.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

The default position in costs awards is that costs follow the event; a successful party should normally recover their costs unless there is a sound reason to depart from this rule. [7]
Costs on the indemnity basis will only be awarded where the paying party’s conduct or the circumstances of the case are “out of the norm”; merely bringing a weak or unsuccessful claim is not sufficient. [8, 16]
In determining whether to award indemnity costs, the court considers whether the claim was so hopeless as to have no merit at all, or whether the litigation conduct amounted to an abuse of process or was otherwise “out of the norm”; mere vocal criticism or an emotional attachment to the claim is insufficient. [17]
Where a claimant’s conduct during the litigation does not amount to abuse of process or egregious behaviour, indemnity costs will generally not be appropriate, even if the application was ultimately unsuccessful. [17]
On a summary assessment of costs, the court assesses whether the costs claimed are both reasonable and proportionate. The court will scrutinise the work done and may make deductions for costs that were not necessary or were incurred due to the successful party’s own errors, even if that party was ultimately successful in the application. [18, 20]

"Mr Akwagbe, clearly a highly intelligent and organised man, had suffered a serious head injury some years ago that has affected his executive functioning to the extent that he was unable to continue in his previous high-flying career. Whilst the First Respondent was unaware of this, there was a level of failure of communication and of impatience which was bordering on inappropriate even without that knowledge."

Key Findings In The Case

The court declined to award indemnity costs to the First Respondent, finding that Mr Akwagbe’s conduct, while persistent and occasionally difficult, did not constitute behaviour “out of the norm” so as to justify a departure from the standard basis of assessment [16–17].
Mr Akwagbe was ordered to pay the First Respondent’s costs of the failed application on the standard basis only, as the court accepted the application, though weak, was not wholly without merit and not conducted in an abusive or egregious manner [17–18].
The court summarily assessed recoverable costs at £19,800, comprising £18,000 for the main application and £1,800 for the separate application relating to Mr Sadler’s witness evidence, having considered the overall scope of work and hourly rates as reasonable and proportionate [18, 23–25].
The court reduced the amount of recoverable costs sought in relation to the application to rely on Mr Sadler’s evidence, attributing fault for this procedural issue to the First Respondent and concluding that the application should not have been necessary [20, 23].
The court permitted any unrecovered costs (i.e., any shortfall after costs are paid by Mr Akwagbe) to be treated as an expense of the liquidation, meaning that they may be borne by the liquidation estate [26].

"In respect of the costs of the application to adduce the witness statement of Mr Sadler, it seems to me that this was an error by the First Respondent... This application was occasioned by the First Respondent needing permission to rely on the statement... I will allow £1,500 plus VAT [£1,800] for that application." [§20, §23]

The Chancery Division’s decision in Akwagbe v Ulrick (Re BL 634 Ltd) [2025] EWHC 2371 (Ch) demonstrates how personal circumstances and litigation history can influence whether unsuccessful applicants face indemnity costs in liquidator removal proceedings.

Background

The matter concerned an application by Mr Samson Akwagbe, a creditor, for the removal of Mr Frazer Ulrick as the liquidator of BL 634 Limited. The application was heard on 14 May 2025. The Second Respondent, the liquidation committee, did not attend the hearing. The court declined to remove the liquidator. The hearing overran, and the issue of costs was adjourned for written submissions. The court extended the time for any appeal against the main judgment to twenty-one days after the handing down of this costs judgment. [§2, §27]

Mr Akwagbe had been instrumental in placing the company into liquidation on 29 March 2023, having persuaded a number of creditors to join him. [§11] He had personally lost compensation from a prior accident through a failed investment with the company. It was also revealed during the proceedings that Mr Akwagbe had suffered a serious head injury years earlier, which affected his executive functioning and ended his previous career. [§5] This background contributed to his deep personal investment in the liquidation’s progress and his sense of frustration at its pace.

Costs Issues Before the Court

The court was required to determine two primary costs issues following the unsuccessful application. The first was the basis of assessment: whether the successful First Respondent (the liquidator) should recover his costs from the applicant on the standard basis, or on the higher indemnity basis due to the nature of the application. The second issue concerned the quantum of costs, specifically requiring a summary assessment of the liquidator’s costs schedule. This included dealing separately with the costs of an earlier application made by the liquidator on 24 April 2025 for permission to rely on the witness evidence of a Mr Sadler. [§19]

The Parties’ Positions

The First Respondent argued that the application was baseless and vexatious. He sought an order that Mr Akwagbe pay his costs on the indemnity basis, with any unrecoverable amount to be treated as an expense of the liquidation. In support of this position, he relied on the case of Beattie v Smailes [2011] EWHC 1563, drawing parallels where a small creditor brought an application for removal based on hypothetical conflicts of interest that was deemed “extravagant” and one that “ought not to have been brought”. [§8] It was further submitted that the other creditors should not be required to underwrite the costs of Mr Akwagbe’s failed application. [§9]

Mr Akwagbe, acting in person, opposed the application for indemnity costs and relied on the court’s general discretion. His submissions centred on the conduct of the liquidator, citing a failure to communicate properly and what he perceived as a dismissive attitude towards his concerns. He also highlighted the liquidator’s conduct during the litigation, specifically in relation to the application concerning Mr Sadler’s witness evidence, which he argued was an error that should be reflected in the costs award. [§4]

The Court’s Decision

The court held that the starting point was that costs should follow the event, meaning the unsuccessful applicant should pay the successful respondent’s costs. The court found no sound reason to depart from this principle. [§7] However, it declined to award costs on the indemnity basis. The court distinguished the case from Beattie, noting Mr Akwagbe’s unique role in initiating the liquidation, his significant personal loss, and the impact of his head injury on his executive functioning. [§10] Whilst the application had little chance of success, the court did not find it to be so hopeless or his conduct in the litigation so out of the ordinary as to be considered “out of the norm”, which is the requisite threshold for an indemnity costs order. [§16-17]

The court then conducted a summary assessment of the costs. The total costs sought were £24,584 inclusive of VAT, comprising £20,065.80 for the main application and £4,518.20 for the application concerning Mr Sadler’s evidence. [§19] The court found the Grade A solicitor’s hourly rate of £255 to be modest and below guideline rates. Counsel’s fees were deemed reasonable. [§21]

Regarding the separate application to rely on Mr Sadler’s evidence, the court found this was necessitated by an error on the part of the liquidator. Although the application itself was not conceded by Mr Akwagbe, the court reduced the recoverable costs for this discrete application from £4,518.20 to £1,800 inclusive of VAT. [§23]

For the main application costs, the court disallowed some items relating to the liquidation committee (which was not dealt with at the hearing) and work connected to the Sadler statement issue. The court assessed the reasonable and proportionate costs of the main application at £18,000 inclusive of VAT. [§24-25]

Consequently, the total costs payable by Mr Akwagbe were summarily assessed at £19,800 (£18,000 + VAT). The court ordered that this sum be paid by 9 September 2025 or 28 days after service of the order, whichever was later. Furthermore, it was ordered that any shortfall in the recovery of these costs from Mr Akwagbe could be recovered as an expense of the liquidation. [§25-26]

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