Mr Justice Foxton has delivered judgment in the first civil claim in the English courts arising out of a cyber-attack: Lonestar Communications Corporation v Kaye & Ors [2023] EWHC 421 (Comm) and [2023] EWHC 732 (Comm). The litigation was one of The Lawyer’s Top 20 cases of 2022. The judgment contains important real-world lessons for litigators in all areas of practice.
Neil Kitchener KC and Andrew Lodder (instructed by Norton Rose Fulbright LLP) acted for Orange Liberia, which was successful in showing that Lonestar’s c. $50m claim was very significantly overstated. Lonestar was ultimately awarded just $3.6m in lost profits and $0.7m in wasted expenditure, with the consequence that it failed to beat an early settlement offer and had to pay Orange Liberia’s costs after the date of the offer.
The consequentials judgement makes clear that in assessing whether or not a claimant has beaten an offer, the court will undertake a full comparison of the offer with the result at trial, including the final costs order. In this case, Lonestar was deprived of the majority of its costs prior to the offer by reason of the over-statement of its case. Foxton J took that large discount on costs into account in determining that Lonestar had failed to beat Orange Liberia’s settlement offer, which had included an offer to pay all of Lonestar’s costs (subject to assessment) up to the date of the offer.
Foxton J also gave important guidance on the appropriate rate of interest on US dollar judgments in the Commercial Court, resolving long-long standing uncertainty as to the appropriate rate. He held that following the discontinuance of Libor, “the default interest rate for US$ awards in the Commercial Court going forward should be US Prime, irrespective of whether the claimant has a US place of operations or not”. Foxton J refused to grant the requested uplift of 2.5% above US Prime. He held that an uplift of 1% or 2% may be appropriate when it is “obvious from the general characteristics of the claimant that it would have to pay a higher rate to borrow USD than a bank’s most creditworthy customers” but that in all other circumstances (such as the present case) any uplift would have to be justified by evidence.
An earlier judgment in the same case gave important guidance on the disclosure practice direction.
The trial judgment is available here and the consequential judgment is available here. The judgment on disclosure issues is available here.
Orange Liberia was represented by Neil Kitchener KC and Andrew Lodder, instructed by Norton Rose Fulbright LLP.