England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		22/03/2017

Mr Justice Nicol:

1. This is the judgment of the Court.
2. When judgment in this matter was handed down on 16^th February 2017 - see [2017] EWHC 232 (Admin), a number of matters relating to costs remained unresolved. We ordered that they should be dealt with on the basis of written submissions and in writing. We received written submissions from the 1^st and 2^nd Interested Parties on 15^th February 2017, from the 3^rd Interested Party on 22^nd February 2017 and from the Claimant on 24^th February and 1^st March 2017.

The material on which our decision should be based

3. Mr Jones QC on behalf of the Claimant argues that we should take account of the Claimant's witness statement of 25^th April 2016 on the grounds that this gives information as to his treatment in Dubai after his arrest there, his reasons for first bringing and then abandoning the private prosecution of the Interested Parties. Mr Jones argues that 'the Court should only countenance any order of costs in favour of the Interested Parties after an evidential hearing at which the facts alleged in the Claimant's statement are adjudicated upon. The Claimant is willing to give evidence in person.'
4. We reject the suggestion. What is proposed would be a classic example of satellite litigation. We are considering what costs orders should be made in relation to the judicial review application which we heard. We will make our decision on the basis of the submissions of the parties and the documents which were before the court as part of that application. Permission to rely on the statement of the Claimant dated 25^th April 2016 was expressly refused by the Lord Chief Justice and Singh J. (see paragraph 4 of their order). There will be no further hearing and no oral evidence.

Should there be any party/party costs orders?

5. The Claimant's position is that there should be no order as to costs. He submits that he has been successful on ground 4 and, as a result, the costs orders made by DJ Ikram have been reduced from £121,500 to £100,000 in the case of the 1^st and 2^nd Interested Parties and from £108,946 to £90,000 in the case of the 3^rd Interested Party. The Interested Parties contend that the Claimant should be ordered to pay their costs.
6. In our judgment the Claimant should be required to pay the Interested Parties' costs. Three grounds of challenge were dismissed. While the Claimant did succeed to some extent on the fourth: (a) the reductions were relatively modest; (b) a number of the arguments advanced by the Claimant in respect of even this fourth ground were rejected; (c) the reductions were less than the Interested Parties had offered to accept: (i) the 1^st and 2^nd Interested Parties on 3^rd March 2016 offered to accept £72,000 and for a smaller sum still on 10^th August 2016. (ii) By a letter dated 24^th February 2016 the 3^rd Interested Party offered to accept 50% of his costs. All of the Interested Parties made offers within a reasonable time of Blake J's decision on the papers in which he granted limited permission to apply for judicial review and urged the parties to consider compromise.
7. The 1^st and 2^nd Interested Parties had the same representation. The 3^rd Interested Party was separately represented. From what we have already said, it does not automatically follow that the Claimant should be required to bear two sets of costs. However, on the facts of the present case that is justified. The issue of separate representation was considered in paragraphs [59] and [65] of Gross LJ's judgment. The nature of the grounds of challenge to DJ Ikram's decision (particularly ground 4) meant that separate representation continued to be justified.

Should the Interested Parties' costs be assessed (if not agreed) on the standard or indemnity basis?

8. On either basis to be recoverable the costs must have been actually and reasonably incurred and have been reasonable in amount – see CPR r. 44.3(1). However, if costs are assessed on the standard basis, they must also have been proportionate and any doubt (as to proportionality or reasonableness) is resolved in favour of the paying party – r.44.3(2). Where costs are assessed on an indemnity basis, the costs, if reasonable, do not also have to have been proportionate. Any doubt is resolved in favour of the receiving party – r.44.3(3). The standard basis is the normal basis for assessment. There has to be something which takes the case out of the norm to justify the indemnity basis for assessment- see for instance Euroption Strategic Fund Ltd. v Skandinavskia Euskilda Banken AB [2012] EWHC 749 (Comm) at [11] – [15].
9. In this case we consider that there were two features of the Claimant's case which took it out of the norm. First, what were described in the judgment of Gross LJ as 'New and grave allegations' included allegations that the Interested Parties' claims for costs before DJ Ikram had been fraudulent and an exercise in creative fiction. The Claimant had argued that privilege could not be used to shield an offer to settle in the letter from the 1^st and 2^nd Interested Parties' solicitors of 10^th August 2016. These matters were addressed in the judgment of Gross LJ at [50]-[59] and rejected as unfounded. They also had not featured in the arguments presented to DJ Ikram.
10. Secondly, the offer to settle by the 3^rd Interested Party had been expressed as an offer within Part 36. The 1^st and 2^nd Interested Parties' offers were not so couched, but they can, nonetheless, be taken into account in deciding the right order to make as to costs - see r.44.2(4). One of the consequences of a Claimant failing to 'beat' a Part 36 offer is that costs are to be assessed on an indemnity basis from the date that the offer expired – see r.36.17(4)(b). Whether by analogy or otherwise, that, in our judgment, is a further reason why the indemnity basis for assessment is appropriate.
11. The Claimant submits that we should not award costs on an indemnity basis since permission was granted on all four grounds. However, that argument does not meet the two aspects which, in our view, justify indemnity costs.
12. We are not persuaded that the other grounds advanced by the 1^st and 2^nd Interested Parties for the indemnity basis would have sufficed, but for the two factors we have mentioned.

Pre-permission costs

13. The usual practice when a defendant is successful in opposing an application for judicial review and is awarded his costs is that he may recover the costs of preparing the acknowledgement of service, but not other costs until the grant of permission. In this case the Interested Parties seek to recover all of their pre-permission costs.
14. The principles to apply are set out in R (Davey) v Aylesbury Vale District Council [2007] EWCA Civ 1166, [2008] 1 WLR 878 especially [21] and [32]. Ordinarily, a defendant cannot recover the costs of opposing the grant of permission at an oral hearing. In the present case, the Interested Parties submit that a different order is justified (a) because they had to put a substantial body of material before Blake J to allow him to make a decision as to permission on the papers; (b) at the oral hearing for renewal of the permission application (relating to those grounds which Blake J had refused permission) the Interested Parties sought directions opposing the Claimant's attempt to rely on new evidence that had not been before the District Judge. The Lord Chief Justice and Singh J., in expanding the grounds for which permission was granted, did make clear that the Claimant (and other parties) would be confined to the material which was before the District Judge.
15. The Claimant argues that he should not have to pay the costs of the renewal hearing on 12^th July 2016 since he was successful on that occasion in having the grounds on which he was given permission enlarged. While , the evidence on which the Claimant was able to rely was narrowed, we consider that there is force in Mr Jones's submission that he did succeed at the renewed permission application in enlarging the grounds of challenge which the Claimant could advance. Overall, our view is that the usual practice should prevail and (apart from the costs of preparing their Acknowledgements of Service) the Interested Parties should not be able to recover their pre-permission costs and should not be able to recover any costs for attendance at the hearing on 12^th July 2016.

Summary or detailed assessment

16. We recognise that normally where a hearing has lasted no more than a day, the Court will summarily assess the receiving party's costs – see Practice Direction to CPR Part 44 paragraph 9.2(b). That, however, is not an inflexible rule. In the present case, the 1^st and 2^nd Interested Parties' costs are £106,462.65. Those of the 3^rd Interested Party are £38,910.67. Given the size of the cost bills of the Interested Parties, we do not consider that summary assessment is appropriate. There will have to be a detailed assessment if the costs cannot be agreed.

Payment on account?

17. For whatever reason, none of the parties referred to this. However, as we intend to provide for a detailed assessment (absent agreement) the issue does arise.
18. Rule 44.2(8) provides that 'Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs unless there is a good reason not to do so.' In his submissions on behalf of the Claimant, Mr Jones said 'No date should be set for the payment of costs. The first two interested parties have obtained a freezing order over all of the Claimant's assets in 2014, both in Dubai and London, and are applying for a tighter freeze in the Commercial Court, a matter to be heard inter partes in April or May.' This was a point made in a different context, but it is relevant to the question as to whether a payment on account should be ordered.
19. We received nothing from the Interested Parties in response to this. On the face of it, these freezing orders would be a 'good reason' not to make an order for payment on account. If any of the Interested Parties consider that we should make an order for payment on account, the application must be submitted within 14 days of the distribution of the draft of this judgment and be accompanied by any supporting evidence.
20. Following distribution of a draft of this judgment, the Interested Parties did maintain that the Claimant should be required to make a payment on account of their costs. They relied on the 4^th witness statement of Mr Dougans of Bryan Cave, solicitors who argued that his clients did not accept that the existing orders had effectively frozen all of the Claimant's assets. We have taken these submissions into account, but have nonetheless concluded that in the present circumstances there is good reason not to require any payment on account.

Wasted costs

21. The Third Interested Party has said that he does not intend to seek an order for wasted costs against the Claimant's legal representatives 'in the interests of bringing his involvement in this matter to a close.' The 1^st and 2^nd Interested Parties say that they are still considering their position. While we should not be taken as lending any encouragement to any wasted costs application, we consider that, if there is to be such an application, it should be made no later than 28 days after the formal order consequent upon this decision.

Formal order

22. We will ask the parties to put before us a draft order incorporating the decisions in this judgment. It should be agreed if possible. If that is not possible then the competing drafts should be accompanied by short submissions in support. In any event, these should be filed and served within 7 days of the draft of this decision being distributed.