Xtellus Capital Partners Inc v DL Invest Group PM S.A.

This judgment deals with matters consequential upon the judgment I handed down on 28 July 2025 a draft of which was circulated to the parties in early June 2025.

Judgment has been entered in favour of the Claimant in the sum of €1,792,247.93 to be paid by 4pm on Monday 11 August 2025. The sum represents a success fee payable to the Claimant calculated at the rate of 1.25% of certain finance raised by the Defendant. The relevant finance was paid in accordance with the terms of 2 facilities, the first dated 20 September 2022, the second dated 23 May 2023. The success fee due in respect of the first facility was €1,542,500 and in respect of the second €249,743.93.

The first issue relates to interest both before and after judgment. Given the primary purpose of an award of interest is to compensate the creditor for having been kept out of his money (“the compensatory principle”) it is useful to determine when the judgment sum fell due.

Miss Campbell submits, by reference to clause 4 of the Mandate, that the full sum fell due on 20 September 2022. Mr Reay submits the full sum fell due in tranches calculated by reference to the date each sum was drawn down or alternatively at the date of each facility by reference to the sums made available under the facility, but with the slight variation that in respect of the September agreement the sum fell due on 3 October 2022, the date of an invoice presented to the Defendant by the Claimant.

Clause 4 provides:

“In consideration of the services to be provided by the Consultant in relation to the Financing, the Company hereby agrees to pay the Consultant in cash, immediately upon commencement of the relevant contract/agreement for each of the Financing, including the initial amount of financing and any subsequent increase or additional amounts of financing, a success fee equal to 1.25% for debt financings to be calculated on the total amount of such Financing.”

In my judgment clause 4, like much of the Mandate as I explain in the main judgment, is ambiguous. The words (in particular those dealing with when the success fee falls due) have no obvious and plain meaning. For the reasons set out at paragraph 28 of the main judgment, I am therefore entitled to “adopt the interpretation which is most consistent with business common sense”. In my judgment the correct interpretation of clause 4 (the interpretation that is most consistent with business common sense) is that the success fee falls due when the relevant facility agreement is entered into.

The second agreement (Footnote: ¹) is described as an “amendment and restatement agreement”. I was not taken to it in submission and have (rightly) not been invited to embark on a further expansive interpretation exercise of it or of clause 4. I note from footnote 4 to the Claimant’s skeleton that the second agreement increases Macquarie’s commitment. I am prepared to treat the agreement as a second facility.

I accept Mr Reay’s point that the sum of €1,542,500 should be treated as falling due on 3 October 2022. The invoice in my view represents a waiver by the Claimant of its strict contractual rights. I accept that the sum of €249,743.93 fell due on 23 May 2023.

Because the judgment was expressed in Euros, the parties accept that I should apply the Euro Interbank Offered Rate (“Euribor”) plus 1 percentage point. Mr Reay submits I should take the advertised rate at judgment of 2.05% (plus 1 point). Miss Campbell suggests I should take 3.24% (plus 1 point).

Mr Reay’s rate is the Euribor 12-month rate applicable to sums borrowed on the day of judgment on the assumption that those sums will be paid back in 12 months’ time. Miss Campbell’s rate is the weighted average of Euribor 12- month rates between 20 September 2022 (the date of the first facility) and 28 July 2025. It follows that Mr Reay’s rate is forward looking and Miss Campbell’s backward looking.

I am entitled to take a broad brush when considering what prejudgment interest rate to apply (for example see Fiona Trust v Privalov and others [2011] EWHC 664 (Comm) at paragraph 16). Bearing that approach in mind, I am satisfied that the rate suggested by Miss Campbell should be applied. It better reflects the compensatory principle. As that rate is a weighted average over a precise period, any change in the period is likely to (but not certain to) change it. The weighted averages between 3 October 2022 and 28 July 2025 and between 23 May 2023 and 28 July 2025 are likely to be (but not certain to be) different from the weighted average between 20 September 2022 and 28 July 2025. However, adopting a broad-brush approach, I am content to take 4.24% (3.24% plus 1 point) as the correct rate over those periods.

Mr Reay suggested that there should be no pre judgment interest at all because the claimant had enjoyed a substantial windfall as a result of fluctuations in exchange rates between the Euro and the US Dollar. I reject that submission.

Contrary to Mr Reay’s submission, an award of interest as I have set out, does not offend the compensatory principle. Rather, it applies it through the fiction (almost invariably applied) that the Claimant would borrow the sum it has been deprived of in the currency that sum is to be paid in. That is a sensible and apt way to compensate the Claimant because it chose to contract for payment in Euro. Mr Reay invites me (in effect) to look at what the Claimant would have done with the Euros (converted them into US Dollars) and then investigate the Claimant’s actual loss (which would be zero). In my view such an approach would be impermissible, see paragraphs 7 and 8 of Henderson v Salica [2025] EWHC 838 (Comm) referring to Carrasco v Johnson [2018] EWCA Civ 87 and Challinor v Bellis [2013] EWHC 620 (Ch).

The Court of Appeal in the first case noted the exercise was to be approached “broadly” and not as an assessment of actual loss suffered (“damage done”). In the second case Hildyard J (reciting submissions but in circumstances where both he and Calver J adopted those submissions) said:

“For practical reasons [the court] will not make an enquiry into the claimant's actual loss; nor will it enquire or speculate as to what the claimant would have done with the money had he not been deprived of it. The Court almost invariably adopts as its measure what it would have cost a person in broadly the same position as the claimant to borrow the money of which he was deprived….”

I next consider the rate of interest to apply to the judgment debt over the post judgment period to payment. As the award is in Euros, I have a discretion as to rate pursuant to section 44A of the Administration of Justice Act 1970. The choice of rate again requires an application of the compensatory principle (see paragraph 79 of Kazakhstan v Zhunus [2018] EWHC 369).

Miss Campbell drew my attention to Britned v ABB [2018] EWHC 2913 (Ch) at paragraph 22, where Marcus Smith J awarded 8% post judgment interest on a foreign money judgment, thus treating the judgment as he would if it had been in Sterling (see Judgments Act 1838 section 17).

The post judgment rate enquiry is forward looking: what would it cost a person in broadly the same position as the claimant to borrow the money for which he has judgment? The only forward-looking rate I have is that provided by Mr Reay of 2.05%. That is (from paragraph 18 of his skeleton) the 12-month rate. It may be that the 2-week rate would have been more apposite because payment has been ordered to be made within 14 days.

Given the broad-brush approach I am entitled to take, I am satisfied that the post judgment rate should be 3.05%. The award of a rate of 8% would in my judgment overcompensate the Claimant. Miss Campbell submits that the Claimant is in fact borrowing the judgment sum in US Dollars at a rate of 8.5% so that a rate of 8% is not inappropriate. In my judgment, this approach falls into the same trap as Mr Reay’s submissions about currency fluctuation. Miss Campbell in effect, asks me to consider the actual cost of borrowing a currency which is not the currency of the judgment sum and to consider the actions of this particular Claimant. For the reasons given above, that approach is impermissible.

Next I deal with the basis of assessment of the Claimant’s costs. There is no dispute that the Defendant should pay those costs, the only issue is whether the detailed assessment of those costs should be on the standard basis or on the indemnity basis.

For the reasons I now set out I regard this as a clear case for indemnity costs.

The following points appear from the authorities:

Examples of conduct that might be treated as taking a case out of the “norm” and sufficient to justify an award of indemnity costs are (adapted from Three Rivers District Council v Bank of England [2006] EWHC 816 (Comm) at paragraph 25(8)):

Miss Campbell submitted that an indemnity order was appropriate because (viewed overall) the Defendant pursued a dishonest defence which was supported dishonestly. In the alternative she submitted the Defendant’s conduct was plainly out of the norm in any event. She relied in particular on the following matters:

Miss Campbell relied on other factors in particular the time-consuming factual enquiries only needed because the Defendant pursued weak arguments (that Dominik Leszczyński lacked ostensible authority or that the Claimant had not done enough to merit payment.

Mr Reay submitted that this was simply hard-fought commercial litigation and (I paraphrase) the worst that could be said about the Defendant was that it had lost. He noted that there were no procedural failings on the Defendant’s part and urged me not to conclude that there was nothing out of the norm in this claim.

I am unable to accept Mr Reay’s submission. I am satisfied that the conduct of the Defendant in this claim was well outside of the ordinary and reasonable conduct of proceedings and so outside the norm. The points I have set out and the points raised by Miss Campbell are in my judgment ample justification for that conclusion.

I am also satisfied that the relevant conduct justifies an order that the Claimant’s costs be assessed on the indemnity basis. I have considered if it would be appropriate to limit such assessment to only parts of the costs. I have come to the view that there is no basis for such an approach. The conduct cuts to the heart of the claim and is widespread. It justifies (and easily so) an order for indemnity costs. Had I found that the only basis for awarding indemnity costs was that time had been wasted by the need to conduct long fact-finding exercises, I might have taken a different view and awarded indemnity costs only in respect of some or all of the trial phase of the litigation. That is however not the case.

In my judgment, ordering indemnity costs, and so depriving the Defendant of the usual right not to pay disproportionate costs, is an entirely proportionate response to the Defendant’s conduct of this litigation.

I would add that I regard the Defendant’s failure to comply with CPR 57A as a serious breach of the rules. I do not afford that breach any particular weight. Unlike the other conduct it is unlikely to be attributable to the Defendant or its witnesses. It is more likely to have been an error on the part of the Defendant’s legal advisers.

The next issue is whether I should permit the Claimant to vary its budget. There are 3 relevant points to consider. First, given my decision in respect of indemnity cost is variation relevant? Secondly, if it is, are there significant developments in the litigation that warrant variation? If so, the third point is what should the variation be?

CPR 3.18 provides that when conducting an assessment on the standard basis the Court will have regard to the receiving party’s last approved or agreed budgeted costs for each phase of the proceedings and not depart from such approved or agreed budgeted costs unless satisfied that there is good reason to do so. If the assessment is conducted on the indemnity basis, CPR 3.18 does not apply.

CPR 44.4(3)(h) provides that when conducting a detailed assessment, the court will have regard to the receiving party’s last approved or agreed budget. It follows that when costs are assessed on the indemnity basis the Court may depart from the Budget and need not have a “good reason” for doing so. It seems to me therefore that budgets remain potentially relevant even on an indemnity assessment.

I have come to the view that simply because budgets remain relevant, that does not mean that I should deal with the application for a variation. In my view it is prudent not to do so. I reach that view for 2 reasons: first, the assessing court can easily depart from the budgets so there is no prejudice to the Claimant if I decline to deal with the application.

Secondly, the exercise of variation would require me to consider if any variation falls within the range of “reasonable and proportionate costs”. That is the standard basis test (or at least akin to it). It is not the indemnity test. Whilst that is the basis of all budgeting the exercise, it seems to be a particularly hollow one once I have ordered that the assessment should be on the indemnity basis.

I am invited to exercise the power set out at CPR 44.2(6)(g) to award interest on costs. The Claimants say the interest rate should be 1 percentage point over US Prime, to reflect the fact that the Claimant’s main currency is US Dollars. In my view the correct rate to apply is 1 point over the Bank of England base rate.

I accept the Claimant operates in US Dollars and is likely therefore to need to convert US Dollars to Sterling to pay its legal costs. However, the true and operative reason for that lies in the contract. The Mandate provided that “the courts of London” would have non-exclusive jurisdiction over the dispute and that the laws of England and Wales would apply. As the Claimant was responsible for drafting the Mandate (and even if it had not drafted it), it must be taken to have made a deliberate and conscious choice to effectively require litigation take place in England (where they chose to issue) with the almost certain consequence that legal costs would be paid in pounds.

I am satisfied in those circumstances that the proper rate to apply is the Bank of England Base Rate plus 1 percentage point. Interest will apply from the date costs were paid.

Finally, I am asked to consider what sum to award as a payment on account of costs given that costs will need to go to a detailed assessment.

The Clamant’s presently budgeted costs are £689,081.98. The Claimant seeks to add costs in the sum of £104,876.54 by way of the application to vary and will seek to add those costs at the assessment. That gives a total of £793,958.52. The claimant asks for a payment on account of costs of 90% of that sum (£714,562.70). In seeking that amount, the Claimant assumes that the increased costs in respect of the trial preparation and trial phases are allowed.

In addition to the principal sum, the Claimant seeks interest. I am satisfied it appropriate to add interest at the rate of 5.25% per annum (Base plus 1). The Clamant invites me to allow that rate from the date the claim started (13 February 2023) to mid-June 2025 when the figure was first proposed.

I am prepared to make an order (before considering interest) that the Defendant pay the sum of £700,000 on account of costs. I am prepared to allow 1 year’s interest on that sum (that is £36,750). The takes account of the fact that not all of the costs were paid upfront. I bear in mind I have a wide discretion in deciding the sum to be awarded as a payment on account.

I am grateful to all counsel for their assistance.