England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		11/05/2018

Mr Andrew Henshaw QC:

1. Following a hearing on 2 March 2018, I gave judgment on 9 March 2018 dismissing the Claimants' and the Defendant's applications for security for costs.
2. The parties subsequently asked me summarily to assess their respective costs of the applications, as they been unable to reach agreement. I have considered their costs schedules and written submissions, together with further responses/submissions received in email form following questions I had raised after reviewing the parties' written submissions.
3. The Defendant's application gave rise to the greater part, by some margin, of the evidence and submissions. It was common ground that the basic conditions for an order for security were made out, but issues relating to the merits of the parties' claims, whether an order for security would stifle the Claimants' claims, and whether the Claimants' impecuniosity had been caused by the Defendant, were closely contested and involved significant amounts of evidence. The Claimants' application, though it could have given rise to considerable evidence, was in fact fought and determined essentially over a point of construction about the court's powers to grant security to a Claimant in the particular circumstances that had arisen. The relative length of the oral submissions before me (by far the greater part of which related to the Defendant's application) will not have been a fair reflection of the overall position. However, based on a review of the evidence and the skeleton arguments, it appears that something of the order of three-quarters of the work is likely to have arisen from the Defendant's application.
4. The Claimants seek costs of £33,022.81 in respect of the Defendant's unsuccessful application. As a comparator they have provided a statement of their costs in respect of their own unsuccessful application in the sum of £10,326.50.
5. The Claimants' method of allocation of work between the two applications, explained in a witness statement dated 23 March 2018 from Mr Richard Ley, a cost lawyer employed by the Claimants' solicitors Clyde & Co LLP, seems reasonable. Further, the overall amount of the bill appears broadly reasonable given the nature of the application, the size of the claim (between US$725,000 and US$3 million) and the risk of the claim being stifled had the application succeeded.
6. There is some force in the Defendant's point that the £7,374 incurred since the 2 March hearing, mainly on the 9 March judgment hearing (at which I gave an oral judgment) and in relation to costs issues, is excessive. In addition, the overall expenditure on witness statements (£17,566 solicitors and £7,030 counsel) is high, though it was necessary to do some fairly detailed investigation and explanation of the facts in order to make out the case on stifling. I do not accept the Defendant's criticism that Mr Theophani's witness statements should be disallowed on the grounds that they consist largely of legal submissions. It was not inappropriate for the witness evidence to set out the Claimants' position, indicating clearly to the Defendant the issues to be addressed, and I see no reason to believe the adoption of some of that material in counsel's skeleton argument led to a duplication of cost.
7. Taking account of all the submissions made, I assess the Claimants' costs of the Defendant's application at £29,000.
8. The Defendant seeks costs of £16,879.22 in respect of the Claimants' unsuccessful application. There is no direct comparator in the form of an up to date statement of the Defendant's costs in respect of their own unsuccessful application. The Defendant's original costs statement dated 1 March 2018 sought costs in respect of both applications in the total sum of £31,796.
9. The Defendant seeks its costs on the indemnity basis on the ground that the Claimants' arguments that the Defendant should be regarded as making a "claim" against them were unarguable and should never have been advanced. Although I reached the clear view that the Claimants' arguments were wrong, in the peculiar circumstances that had arisen – with the Defendant having adopted more or less wholesale contentions previously advanced as a counterclaim by the former Part 20 Defendant – I do not consider the Claimants' argument to have been so clearly lacking in merit as to fall outside the norm or to merit an order on the indemnity basis.
10. The Defendant has allocated the costs of some of the witness evidence in a slightly different way to the Claimants, and in my view somewhat under-allocates those costs to the Defendant's application (including in relation to the 5^th statement of Mr Horn and the 5^th and 6^th of Mr Theophani). That seems likely to be reflected in the overall figures mentioned above: even allowing for costs since the hearing on 2 March on top of the £31,796 originally claimed, the Defendant's current claim for £16,879 in respect of the Claimant's application alone does not appear properly to reflect the balance of work between the two applications.
11. Viewing the matter in the round, I assess the Defendant's costs of the Claimants' application at £12,000.
12. It is appropriate to direct that the two costs liabilities be offset against each other pursuant to CPR 44.12.
13. The Defendant has requested 28 days to pay because of the need for any payment to be cleared through Russian State control systems. I accede to that request.
14. I therefore direct the Defendant to pay the net sum of £17,000 to the Claimants within 28 days of the date of this judgment.