LM Investment Management Ltd (in liquidation) v Whyte (No. 2)

In LM Investment Management Ltd (in liquidation) v Whyte (No. 2), the plaintiff, LM Investment Management Ltd, in liquidation, sought costs against the defendant, Mr. Whyte. The dispute arose from an application by Mr. Whyte to strike out the plaintiff's amended statement of claim, which was dismissed. The plaintiff now sought costs of and incidental to the application filed by the defendant on 13 April 2023. Additionally, the plaintiff sought a costs order reserving the defendant's entitlement to recover costs from the scheme property of the LM First Mortgage Income Fund.

The legal issues before the court involved the appropriate basis for awarding costs and the circumstances under which costs should be paid from the scheme property. The court was required to consider the general principles governing indemnity costs, the circumstances of the case, and whether the plaintiff was entitled to the relief sought.

The court considered the general principle that costs should follow the event, meaning that the losing party typically bears the costs of the proceedings. The court noted that the defendant's application to strike out the amended statement of claim was without merit and made in bad faith. As such, the court determined that the plaintiff was entitled to indemnity costs. Furthermore, the court found that the costs should be paid from the scheme property, as it was appropriate to reserve the defendant's entitlement to recover costs from that source.

In summary, the court ordered that the plaintiff's costs of and incidental to the defendant's application filed on 13 April 2023 be assessed on the indemnity basis and paid by the plaintiff from the scheme property of the LM First Mortgage Income Fund.