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

		Case No. CL-2017-000744 Rolls Building Fetter Lane London EC4A 1NL
		19 October 2018

MR JUSTICE ANDREW BAKER:

1. I am going to give a short judgment for one major reason, and that is that, although what I am about to say could no doubt be confirmed by the parties retrieving a transcript of the discussions we have had if necessary, it does seem to me important to record that, on the applications for security for costs as put forward with ample supporting evidence, this was, and always was, an absolutely plain case, in my judgment, for security for costs to be required.
2. The extraordinarily last-minute evidence provided, finally, by the claimant in the early hours of this morning does not, in my judgment, even begin to raise the possibility that a court might take a different view. I say that in particular notwithstanding that there is, at least to some degree, an assertion contained within that evidence along the lines that the requirement ultimately to be providing full reasonable security over the life of these proceedings might potentially stifle the claim.
3. In those circumstances, the acceptance that Mr Cousins QC, for the claimant, has recorded more than once has been, if I may say so, both candid and entirely realistic, and that is an acceptance that, as things stand, and barring a change of circumstance, this is, and will remain, a case in which, subject to questions of amount and the timing of provision of security, all defendants should be reasonably secured as to their costs by or at the instance of the claimant.
4. In those circumstances, the live discussion today has been how much and in what instalments to require, at this stage, security for costs for the first and second defendants, that issue of how much and when as a first stage as regards the third and fourth defendants having become the subject of agreement just before the hearing commenced.
5. As I hope the parties will appreciate from the way in which I have conducted the discussion, I have taken fully on board their respective observations and submissions as to that. Ultimately, it is then for the court to judge what, on the basis of the material presently available to it, and doing the best it can to act fairly as between both the defendants, whose interests need reasonably to be secured, and the claimant in financial difficulty and which will require the support, in all likelihood, of its ultimate beneficial owner to provide the security that will be ordered.
6. One significant aspect that, in my judgment, does require consideration which will then influence both questions of amount and questions of timing is how, over the next six months or so, this litigation is to be case managed. What I will direct as to that must be on the basis – and I will ask counsel to build this into a form of order that they will draw up for me – of a liberty to Knight Frank LLP, the third party, to apply if so advised within the next seven days, as they have perfectly reasonably not appeared today, this having been listed simply as the hearing of the defendants' applications for security for costs.
7. Subject to that liberty to apply in Knight Frank, it seems to me that this is a case which cries out for, and I shall therefore be directing, case management by way of a first full case management conference, time estimate half a day, as soon as is reasonably practicable. There is the suggestion, raised for the first time this morning, on the part of the claimant, that, for the case management of the litigation, it may apply for an order that there be preliminary issues focusing on aspects of the third and fourth defendant receivers' alleged liability to the claimant and/or the third party's possible liabilities raised as a result of the nature of the claim over made by the receivers.
8. I am quite clear that any such application will give rise to case management considerations of importance to all the different parties, with their respective different interests, that will make it entirely inconvenient for any consideration of such an application, if made, to be attempted separately, prior to and in isolation from a full case management review of the case as a whole with the case management documentation, particularly agreed lists of issues and case management information sheets, which will be generated by requiring that case management to occur.
9. It has been indicated that the claimant has in mind to seek to amend the particulars of claim. That may be only as regards the formulation of its claims against the first and second defendants, although of course it is not precluded, if on further review the amendments it wishes to propose are wider than that, from proposing amendments that might also affect the third and fourth defendants. The suggestion, as I understand it, is that any draft amended particulars of claim be provided by 16 November 2018, and it seems to me that is, if I may say so, a helpful and sensible suggestion.
10. In those circumstances, there will be an order that any proposed amended particulars of claim be served in draft by that date and then provision for consequential amendment of defences essentially by the end of term, which must be Friday, 21 December. There should then be – and I will allow the parties to give me a date – a date for consequential further amendment of reply, but, as I discussed with counsel, it does not seem to me that the fact that there may be consequential amendments to the reply or replies outstanding ought to prevent the parties from getting straight on, essentially at the beginning of next term, after the Christmas break, with preparations for a CMC.
11. In those circumstances, in my judgment, the appropriate initial case management order to make, subject, as I said, to the liberty to Knight Frank to apply, is that there be a first CMC in the matter, time estimate half a day, to be listed in February or March 2019.
12. A related judgment that I make at this stage is that, in the circumstances, the appropriate approach to the questions of how much and when, at this stage, security for costs is to be required, is to proceed on the basis that the claim will, in that way, be developed through to that first CMC and that, unless other directions are made at the CMC, the first significant stage in proceedings after that CMC will be disclosure.
13. Against all of that background and the evidence I have as to anticipated and incurred costs on the first and second defendants' part, in my judgment the appropriate aggregate amount to order by way of security today is £280,000. I have arrived at that figure by aggregating, as long as my arithmetic is correct, the following allowances by way of reasonable security: as regards costs incurred to date, £150,000; as regards the expected need to consider and respond to amendments of the pleadings, £25,000 (as regards which, as, again, discussed with counsel, the order should build in a specific liberty to apply for additional security in respect of responding to the draft amendments following receipt of those draft amendments in November); £30,000 for the CMC; £55,000 for disclosure; and £20,000 for settlement effort. It does seem to me, in that last regard, notwithstanding observations made, that there is, and indeed should be, a real prospect of the parties finding that a significant effort may be made to seek an amicable resolution between now and the CMC that I have ordered.
14. Reflecting then the degree to which those costs have been incurred and the likely pattern across which the anticipated costs will be incurred, and making some allowance to the claimant, possibly to a degree generously given the somewhat unsatisfactory nature of the evidence in that regard, but making some allowance for the indications of difficulties in providing very large sums in very short order, but bearing in mind also that, even with those difficulties borne in mind, Mr Cousins QC was in a position, effectively, to offer a first tranche of security of £120,000 within 21 days, in my judgment an appropriate schedule for the provision of security is as follows: by 9 November (which is 21 days) £120,000; by 30 November a further £30,000; by 28 December a further £50,000; by 25 January a further £40,000; by 22 March a further £40,000. Again, subject to somebody telling me I have got my arithmetic wrong, I believe and hope that adds up to the £280,000 I started with.
15. The form of security, although I think I noted in the draft consent order as between the claimant and third and fourth defendants that it would provide simply for provision of security by way of payment into court, subject to any vigorous opposition by either the claimant or the first and second defendants, my normal preference is to order that security be provided by way of payment into court funds or provision of security in a form agreed by the beneficiary. In this case, that will be the first and second defendants.
16. It may be that I will now be asked to deal with the costs of the applications but, subject to that and any other matter arising that counsel feel I should deal with today to complete the hearing, that is the judgment I wanted to give.
LATER
17. For the reasons I essentially indicated while we were discussing it, I do take into account, and to that extent regard myself as being a little more generous than I might otherwise have been as regards the back end of these costs, that the defendants, as I am told, have ultimately done better than they were making it clear they would be willing to accept so as to have avoided at least that final slug of costs of the hearing itself. That apart, it does not seem to me to be a case where I would be ordering any detailed assessment on an indemnity basis. I will, therefore, summarily assess, having in mind that if I send this to a detailed assessment the schedule of costs would be assessed on the standard basis.
18. The £52,000 claimed breaks down, in round figures, to £10,500 for attendances on the first and second defendants as clients, £9,000 for attendances on other parties, including on counsel, £20,000 for work on documents and £12,500 effectively for the hearing itself, including counsel's fees. It does seem to me that the 'attendances on' figures are a little surprisingly high, particularly the attendances on the client, in respect of what was, whilst no doubt in a sense a frustrating application for the first and second defendants and their solicitors because there was no engagement until the last minute by the claimant, but yet really quite a straightforward one to explain to a client. The work on the documents, on the other hand, clearly was a substantial exercise, partly because of the lack of engagement, and therefore the need, albeit in a case that was relatively straightforward from lawyers' points of view, to make sure that a thorough job was done in presenting the basis for the application to the court.
19. Bearing those factors in mind in particular and the fact that the application of the summary assessment jurisdiction is always somewhat the application of a broad brush, in my judgment the amount to award by way of summary assessment in this case is £40,000.

CERTIFICATE Opus 2 International Ltd. hereby certifies that the above is an accurate and complete record of the proceedings or part thereof. Transcribed by Opus 2 International Ltd. (Incorporating Beverley F. Nunnery & Co.) Official Court Reporters and Audio Transcribers 5 New Street Square, London EC4A 3BF Tel: 020 7831 5627 Fax: 020 7831 7737 civil@opus2.digital This transcript has been approved by the Judge