England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE QBCMI 1998/0693/3

(MR JUSTICE TUCKEY )

Royal Courts of Justice

Strand

London WC2

Friday, 2 July 1999

B e f o r e:

LORD JUSTICE BELDAM

LORD JUSTICE ROBERT WALKER

LORD JUSTICE CLARKE

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SAAB & ANR

CLAIMANTS/RESPONDENTS

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SAUDI AMERICAN BANK

DEFENDANT/APPELLANT

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(Transcript of the handed down judgment of

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 421 4040

Official Shorthand Writers to the Court)

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MR L COLLINS QC (Instructed by Messrs Herbert Smith, London EC2A 2HS) appeared on behalf of the Appellant

MR P GOLDSMITH QC with MR A SUTCLIFFE (Instructed by Messrs Lovell White Durrant, London EC1A 2DY) appeared on behalf of the Respondent

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PROCEEDINGS AFTER JUDGMENT

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Friday, 2 July 1999

LORD JUSTICE BELDAM: For the reasons given in the judgments handed down, the appeal is dismissed.

LORD JUSTICE CLARKE: Just before you go on, could I just say one thing. I would like to apologise to the parties for the fact that, although paragraph 32 asserts that "attached is a document marked 'A'," in fact no such document is attached. That is largely because the document I intended to attach was this one, but unfortunately the only copies we have are all marked. I was hoping that I could persuade the parties (or whoever produced it) to provide us perhaps with some clean copies so they can be attached. I do not know whether this is on some kind of a disc. It may be that the judgment will be on a disc, I think in Word, so if it were possible to have those, I would be very grateful. I am sorry about that. I intended to sort that out before we arrived at this stage.

MR SUTCLIFFE: I do not know whether you have had an opportunity to consider the written submissions that I put in in relation to costs?

LORD JUSTICE BELDAM: We have, Mr Sutcliffe. Our preliminary discussions show that we might be in favour of making an order for the assessment of costs, but that we would not make any order for payment at the moment, and certainly not until the question of security for costs has been sorted out.

MR SUTCLIFFE: My Lords, yes. The first issue that I identified was whether or not your Lordships might be minded to make an order for summary assessment in relation to the Court of Appeal costs. I recognise that, in relation to that, my clients have an uphill struggle since the court has not actually indicated that this is an appropriate case, and my learned friend's have not agreed to adopt that course. The course which I would invite my Lords to follow, is for there to be a detailed assessment immediately for the reasons that I have outlined in paragraph 5 of my submissions. I anticipate from what Beldam LJ says that the question of security might be of concern to my Lords. In relation to that, can I make the following brief submissions.

The first is that the first claimant, Mr Ayoub-Farid Saab, is in fact resident in this country. He has a home here; his wife lives here and, although his business commitments are in Cyprus, he comes to this country regularly and his daughter is educated here. So there is very much an issue as to whether or not the defendant would be entitled to an order for security in the first place.

LORD JUSTICE BELDAM: If the defendant does not get an order for security, the assessment will go ahead in the ordinary way. The next question that would arise is: would there be any reason why your clients should be paid the costs, as it were, before the final determination?

MR SUTCLIFFE: My Lord, yes. That was an issue which I hoped my Lords would see fit to address this morning for this reason. My Lords are really in the best position to determine whether this is appropriate for immediate assessment. The reason why I submit that it is so appropriate, is because the issue relating to jurisdiction is a distinct issue that is entirely separate from the issues that arise in the main action. Effectively, the progress of this case has been delayed for some two years by the arguments as to jurisdiction.

LORD JUSTICE BELDAM: All of that I think we appreciate, but generally speaking, even if the costs are assessed before the final result is known, if the final result of the case were to be that your clients lost their action, there would be a mutual set-off, in effect, of any order as to costs. Although there do, as you rightly point out, now exist rules which provide for payment of costs, as it were, as the case goes along for policy reasons which are stated, in this case is there any particular reason why we should depart from what would be the normal?

MR SUTCLIFFE: My Lord, what I would submit is that what might have been the normal position is certainly that an order for costs in my clients' favour would not be paid until the outcome of the main action was known. I entirely accept that. But since April this year, I would submit, that policy has changed and the policy is now quite different. Orders that there be immediate payment are no longer made with some intention of penalising the party.

LORD JUSTICE ROBERT WALKER: I think that change had occurred before this April. There is a well-known decision of Hoffmann J in a case called Kickers, which is much referred to on this subject, saying that it is no longer right to regard "taxed and paid forthwith" as an order to be made only because of misconduct.

MR SUTCLIFFE: I am grateful. I am sure that is correct. But the position is that, since this April the courts have been encouraged to make orders, and orders for payment, in respect of interlocutory applications, to see them as discrete matters, and in this case----

LORD JUSTICE CLARKE: I could see that if your clients were willing to give a first class bank guarantee to secure their costs of the whole of the action, one could see that, if there is the slightest risk that at the end of the action (and they win it) that they may not be able to recover the costs from yours, then these principles do not seem to be so sound, in a case like this. I do not suppose your clients are willing to offer a first class bank guarantee?

MR SUTCLIFFE: I do understand that.

LORD JUSTICE CLARKE: Saying that they are willing to offer a first class bank guarantee to secure their costs if they lose the application.

MR SUTCLIFFE: Regrettably I have not taken instructions as to that. It may well be that they would be prepared to do that, and therefore, if my Lords were to make an order that was conditional upon the provision of security, should an order for security be thought necessary----

LORD JUSTICE CLARKE: I am not sure about that. It seems to me the position may be a fortiori if it is not a case for security. It strikes me that if it is a case for security, then the whole thing could be sorted out at that moment. If it is not a case for security under the ordinary principles because your client happens to be resident within the jurisdiction (or one of your clients) then it might be said that an order should only be made, if your clients are willing, an order for immediate payment should be made if your client is willing to give security in order to protect both sides just in case your client should not be good for the money at the end of what may be a very expensive action.

MR SUTCLIFFE: My Lords, of course my primary submission would be that my clients have had to incur very substantial expenditure to get to this stage. They have successfully defeated the attempt to oust the jurisdiction of this court and that they should be entitled to their costs. That is my primary submission, and that any considerations as to what might happen hereafter are too uncertain to affect the position. But if I may take instructions as to the point that is troubling my Lords briefly?

LORD JUSTICE BELDAM: Looking at it from a practical point of view, your client might be worse off giving a bank guarantee than allowing the matter to proceed in the ordinary way.

MR SUTCLIFFE: My Lord, I do understand that, but of course it may be preferable for them to have their expenditure so far, at least partially if not entirely recouped, to enable them to progress with the action, even if they were to give such a guarantee.

LORD JUSTICE CLARKE: I suppose another point would be really if one were going to do that, then the costs of providing the bank guarantee should lay with the costs in the action, so that everybody would then be protected.

MR SUTCLIFFE: Might I briefly take instructions. I am sorry, I do not want to unduly delay matters, but I think it is important that I do so. ( Counsel took instructions ) My difficulty is this. Both my clients are in an important business meeting in Nicosia. Obviously they would have wanted to be here and to give instructions personally.

LORD JUSTICE BELDAM: Can we not deal with this in a way which gives liberty to apply?

MR SUTCLIFFE: My Lord, that might be the sensible course. In fact it probably would be. If my Lords were to order that there be an immediate assessment of these costs, but that the issue of payment was to be deferred until the court had been able to consider the question of whether the provision of security by my clients was necessary, that obviously would depend to some extent on the outcome of any security for costs application, although I understand that Clarke LJ feels that, in a sense, that is irrelevant.

LORD JUSTICE ROBERT WALKER: But it would depend partly on the outcome of any application for security for costs. Indeed, it would also depend obviously on whether the process of assessment, which would be quite a heavy process, was completed before the trial of the action.

MR SUTCLIFFE: My Lord, yes.

LORD JUSTICE ROBERT WALKER: And although that seems likely, one could see that it would not necessarily happen.

MR SUTCLIFFE: My Lord, I understand.

LORD JUSTICE BELDAM: What you would be asking for is an order for immediate assessment, with the issue of payment to await the outcome of any application for security, the question of payment to be left to the commercial judge. We do not want the parties to have to come back to this court to make a fresh application. By liberty to apply, I meant liberty to apply to the court, not to this court.

MR SUTCLIFFE: I entirely understand that. My only concern is that the commercial judge would be looking at the matter entirely afresh, in a sense, and if what my Lords have indicated, and I may have misunderstood this, is that they would favour immediate payment of these costs

LORD JUSTICE BELDAM: We have not heard the argument to the contrary yet.

MR SUTCLIFFE: Subject to that, if it was your provisional view that there should be immediate payment, provided adequate security was given, then that is something, I would have thought, which would be much in my clients' favour, although I have to take instructions.

LORD JUSTICE BELDAM: Would the commercial judge, by the time of any assessment being completed, not be in a better position to form a view about prospects of success than we are?

MR SUTCLIFFE: My Lord, that, with respect, ignores my submission, which is that the principle at stake here is whether or not there should be immediate assessment and payment in respect of the jurisdiction issue.

LORD JUSTICE BELDAM: Irrespective of likely outcome?

MR SUTCLIFFE: Exactly. Irrespective of likely outcome, given that the new regime, as my Lord----

LORD JUSTICE BELDAM: Does that not also include the obligation to consider prospects? I mean, it is not difficult to see that there may well be a case in which the claimant, for one reason or another, is as likely as any claimant ever is to win the action. In such a case, there could be no question about making an immediate order for payment of the costs. But there may be other cases in which the likely outcome is very (if I can use the colloquial expression) dodgy. In those circumstances, the defendant's position might be seriously prejudiced by an immediate order for payment. I cannot believe that the new rules are intended, as it were, to sweep away all other considerations than the need to make sure that the action is progressed in a fair way between the parties.

MR SUTCLIFFE: My Lord, there is this difficulty. My Lords have held in this judgment that the claimants have a good arguable case. Now that being the case, I submit that the costs in relation to the jurisdiction issue ought to be theirs and ought to be paid to them once ----

LORD JUSTICE BELDAM: I understand all that, Mr Sutcliffe. It is really a question in the end of what is fair between the parties at this stage.

MR SUTCLIFFE: My Lords, yes. For that reason, I have referred to the overriding objective claim.

LORD JUSTICE CLARKE: Why do we not just leave it to the commercial judge? You will no doubt be having a case management conference, and this is one of the matters he can deal with. He might think you are right that it is quite fair that the defendants should pay your costs as long as you properly secure their costs. He might also think they should pay the costs of your securing their costs. I do not know. But he might be able to deal with it as just one small point in the great scheme of things. That avoids coming back here and incurring further costs. He can read what we have said, I hope.

MR SUTCLIFFE: Perhaps your Lords might like to hear my learned friend while I ponder on that.

LORD JUSTICE BELDAM: We hope you will not ponder too long.

MR SUTCLIFFE: I certainly will not. I will respond very briefly.

LORD JUSTICE BELDAM: That is no criticism, Mr Sutcliffe. Do you wish to say anything, Mr Collins?

MR COLLINS: My Lord, just a few words. I can be very short. Firstly the general rule, both under the old rules and the new rules, is, to quote the new rules, "the general rule is that the costs of any proceedings or any part of proceedings are not to be assessed by the detailed procedure until the conclusion of proceedings, but the court may order them to be assessed immediately". The learned judge said he does not normally make forthwith orders in jurisdictional disputes. This was a typical jurisdictional dispute, we say a bona fide application in a difficult case. We also say that we are fighting what we will say, not only at trial but also on the security application, is a highly speculative claim by non-residents. It is now suggested that Mr Saab is resident in England. All of the formal documents, the writ, all of his affidavits, give his address as Nicosia, and we know from what Mr Sutcliffe said, that today he is doing business in Nicosia. We say that essentially the claimants are Nicosia-based businessmen. We will, of course, be applying for security to protect ourselves. We have not done so to date because of the risk that it might be regarded as a submission to the jurisdiction and to avoid -- although the better view, in my submission, would be that it would not have been a submission -- yet further satellite litigation or further points being taken on what is, for the moment, only based on an unreported decision of the Court of Appeal. We say that it is almost certain that we will get security in a case of this kind.

As my Lord, Robert Walker LJ suggested, the detailed assessment is by no means easy. It would be a sterile exercise if it was not going to be paid. It may be that Mr Sutcliffe does not have a great deal of personal experience of dealing with the drawing up of bills for taxation or appearing on taxations, but it is a procedure which is to be avoided where possible. In this case, my Lord, my submission would be that there would be simply no point in making a forthwith costs order. But if your Lordships were minded to make such an order, then the practical solution which you have suggested, namely that payment be deferred until the outcome of any application to the commercial judge on security, would, in my submission, be a just solution.

LORD JUSTICE BELDAM: Yes.

MR SUTCLIFFE: My Lord, in response may I submit that the jurisdiction issue is a discrete matter and, as I have indicated in my submissions, it has involved over a thousand pages of evidence, including 20 affidavits of expert opinions, all of those going to the issue of jurisdiction. Very substantial costs have been incurred. It is not a case where the parties are on an equal footing, and it would be the most just outcome, in my submission, for there to be an immediate assessment of those costs. I take Robert Walker LJ's point that it might take some time, but once that assessment has been carried out in this discrete matter, the question could then be addressed as to whether payment should be made immediately and the question of security could then be considered. My Lords, no application for security has been made and it could have been made, but it is obviously not appropriate for my Lords to consider the question of whether that is appropriate at this stage.

LORD JUSTICE BELDAM: Thank you very much. ( Their Lordships conferred ) We consider that the fair order to make in this case is that there should be an order for assessment of costs forthwith; no order for immediate payment; the question of payment to be deferred to await the outcome of the application for security for costs which Mr Collins says will be made against the claimants, and the question of payment overall to be referred to the commercial judge to decide whether it should be made on condition, for example, of provision of security for costs of the action, or any other suitable terms which he considers right. Is there anything further?

MR COLLINS: I merely rise to say that I am not making any further application.

LORD JUSTICE BELDAM: Thank you very much.

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