Jersey Unreported Judgments

You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Alpen Partners Limited v Al-Amiri and Ors [2022] JRC 279 (14 December 2022)
URL: http://www.bailii.org/je/cases/UR/2022/2022_279.html
Cite as: [2022] JRC 279

[New search] [Help]

Costs

[2022]JRC279

Royal Court

(Samedi)

14 December 2022

Before :

Advocate Matthew John Thompson, Master of the Royal Court.

Between	Alpen Partners Limited (In Creditors' Winding Up)	Plaintiff
And	Samir Al-Amiri	First Defendant
	Rohit Walia	Second Defendant
	Graeme Ross	Third Defendant
	Craig Stewart	Fourth Defendant
And	BPC Kuwait-UK Land Fund Limited	First Third Party
	Boubyan Petrochemical Company (K.S.C.)	Second Third Party
	Boubyan International Industries Holding Company (K.S.C.)	Third Third Party
	Sons of Mubarak Al-Dabbous General Trading Company	Fourth Third Party
	MS Altaf Naser Sabah Al Naser AS Sabah	Fifth Third Party
	(Collectively, The "BPC Plaintiffs")

Advocate R. O. B. Gardner for the Plaintiff and the Third Parties.

Advocate S. A. Hurry for the First Defendant.

Advocate J. D. Kelleher for the Second to Fourth Defendants.

CONTENTS

		Paras
1.	Introduction	1
2.	Background	2-6
3.	Indemnity or standard costs	7-15
4.	A percentage basis	16-21
5.	A payment on account	22-31
6.	Conclusion	32

judgment

the MASTER:

Introduction

1. This judgment contains my decisions in respect of the following issues: -

(i) an application for costs by each of the defendants following amendments to the plaintiff's order of justice withdrawing certain claims as described below;

(ii) should costs be paid on the standard or the indemnity basis;

(iii) whether I should make a percentage-based order; and

(iv) whether I should order a payment on account and, if so, for how much.

Background

2. The general background to these proceedings is set out in my judgment dated 19^th October 2021 reported at Alpen Partners Limited v Al-Amiri and Ors [2021] JRC 254 at paragraphs 4 to 10 which I adopt. I also refer to paragraph 4 of my judgment in this matter dated 16^th November 2022 reported at Alpen Partners Limited v Al-Amiri and Ors [2022] JRC 253 where I stated as follows: -

"4. By the time matters came before me for determination, the nature of the plaintiff's claims had changed because all aspects of the claims originally made by the plaintiff in relation to a property known as the Tring Property had been withdrawn completely. This was reflected in agreed amendments made to the order of justice contained in the plaintiff's re-amended order of justice dated 29th July 2022. The claims that remain concern one property only, known as the Gardeners property."

3. In relation to the plaintiff's claims in the order of justice that the management fees were overstated because they were based on net asset values of the Gardeners' Property and the Tring property which values the plaintiff alleges were overstated, the answer of the defendants pleaded that fees were charged on the basis of contributions to the fund, not net asset value.

4. The order of justice was served on 12^th June 2019. The plaintiff withdrew its claim in respect of the Tring Property being acquired at overvalue on 29^th July 2021. The claim for management fees in respect of the Tring Property was withdrawn on 25^th July 2022. The claim for management fees generally was withdrawn on 21^st October 2022.

5. The only remaining claims therefore relate to the acquisition of the Gardeners' Property and the overpayment of director and consultancy fees to the first defendant. Two of the four issues raised in the original order of justice have therefore been withdrawn.

6. The issues I have to determine are what cost consequences follow as a result of the various amendments leading to the withdrawal of all claims in respect of the Tring Property and the management fees.

Indemnity or standard costs

7. Advocate Gardner conceded at the hearing that the defendants were entitled to their costs of the withdrawn claims on the standard basis. Until this concession, it was not clear to me what was meant by the plaintiff's skeleton at paragraphs 6.1 and 9.2 and in previous correspondence where the plaintiff offered to pay the defendants' reasonable costs of and incidental to the amendments on the standard basis. Was that offer limited to the defendants producing amended answers or did it cover the costs of the withdrawn claims? It was also not clear to the defendants what the plaintiff's offer meant. In setting out my understanding I accept that some of the plaintiff's submissions appeared to imply that its offer covered the costs of the wasted claims but it was only at the hearing did the plaintiff's position become clear to me.

8. In relation to the basis upon which indemnity costs are ordered generally, all parties referred me to the decisions of Watkins & Anor v Egglishaw & Ors [2002] JLR 1; quoted in Flynn v Reid [2012] (2) JLR 226; Leeds United Football Club v Weston & Anor [2012] JCA 088; C v P-S [2010] JLR 645 and Pell Frischmann Engineering Limited v Bow Valley Iran Limited [2007] JLR 479.

9. I am familiar with these principles, having applied them in a number of decisions, and so it is not necessary to set them out I have had regard to them in reaching my decision.

10. In relation to what happens on a withdrawal, two particular cases were drawn to my attention. The first is Dick v Dick (1990) JLR Notes - 2c and the unreported judgment dated 6^th April 1990. The unreported judgment stated the following: -

"Mr Schofield has explained to us the circumstances which led the appellant to take this decision. We appreciate those circumstances but it appears to us that if for reasons of his own, whether good or bad, a party who has instituted proceedings subsequently decides to drop them before they came into court, it is fair that he should pay for that conduct the price of compensating the other party by way of indemnity costs."

11. However, in JFSC v AP Black (Jersey) Ltd [2007] JLR 1 where costs were sought against a public body which subsequently withdrew proceedings, Commissioner Page stated at paragraph 45 the following: -

"45 Rule 6/31(1) of the Royal Court Rules 2004 provides: "Except with the consent of the other parties to the action, a party may not discontinue an action ... without the leave of the Court, and any such leave may be given on such terms as to costs, the bringing of a subsequent action or otherwise as the justice of the case may require." That rule plainly confers a wide discretion on the court in relation to matters of costs, akin to and consistent with that conferred by art. 2(1) of 2007 JLR 20 the CPL. This means that while it is common practice for costs to be awarded against the discontinuing party, on the basis that that reflects the justice of the case, each case has to be considered in the light of its own particular circumstances, with due reference to the principles summarized by this court in Watkins v. Egglishaw (11) and, where the proceedings have been instigated by a body engaged in a public-interest function, the considerations discussed earlier in Section D of this judgment."

12. While this decision related to a withdrawal of proceedings by a public body, it is a helpful reminder of the breadth of the discretion vested in a court when dealing with questions of costs. In particular the "common practice" should not become a rule so that invariably a party who withdraws proceedings always has indemnity costs ordered against them. That is because to turn practice into too rigid a rule means that the court is not exercising a discretion on a case-by-case basis.

13. At this point, it is right to look at to the approach taken in England to which Advocate Kelleher helpfully referred me. He stated the following at paragraphs 50 and 51 of his skeleton: -

"50. By way of contrast, the position in England and Wales is different in its emphasis, albeit the factors that may be taken into account by the Court in deciding on costs arising from discontinuance are instructive, Under CPR 38.6, the default rule is that a party who withdraws its pleadings (or part of its) is considered to be liable for the relevant wasted costs:

"(1) Unless the court orders otherwise, a claimant who discontinues is liable for the costs which a defendant against whom the claimant discontinues incurred on or before the date on which notice of discontinuance was served on the defendant.

(2) If proceedings are only partly discontinued -

(a) the claimant is liable under paragraph (1) for costs relating only to the part of the proceedings which he is discontinuing ...

" 51. In Brookes y HSBC Bank Plc [2011] EWCA Civ 35433, Moore-Bick LJ set out the following principles at [6] (approved in Nelson's Yard Management Co v Eziefula and Ashany v Eco-Bat Technologies Ltd [2018] EWCA Civ 1066 at [16]34):

51.1. "when a claimant discontinues the proceedings, there is a presumption by reason of CPR r.38.6 that the defendant should recover his costs; the burden is on the claimant to show a good reason for departing from that position."

51.2. "the fact that the claimant would or might well have succeeded at trial is not itself a sufficient reason for doing so."

51.3. "however, if it is plain that the claim would have failed, that is an additional factor in favour of applying the presumption."

51.4. "The mere fact that the claimant's decision to discontinue may have been motivated by practical, pragmatic or financial reasons as opposed to a lack of confidence in the merits of the case will not suffice to displace the presumption."

51.5. "if the claimant is to succeed in displacing the presumption he will usually need to show a change of circumstances to which he has not himself contributed."

51.6. "however, no change in circumstances is likely to suffice unless it has been brought about by some form of unreasonable conduct on the part of the defendant which in all the circumstances provides a good reason for departing from the rule.""

14. In my judgment, this approach is not so far from the common practice referred to by Commissioner Page but at a level of detail which I regard as helpful. While the English presumption does not focus on whether costs should be on the standard or indemnity basis, the questions posed in my judgement are relevant to a determination of the basis of costs to be awarded and whether the "common practice" in this jurisdiction of awarding indemnity costs following a withdrawal of a claim should be followed or departed from.

15. In this case, no explanation has been advanced by the plaintiff as to why it has chosen to withdraw two of its four claims. The plaintiff has also not explained why it took a further year to withdraw the Tring Property management fees claim following withdrawal of the claim that the Tring Property had been acquired at an overvalue. In addition, as noted above, the defendants in their answer pleaded that the fees charged were not on the basis of net asset value but were on a lower basis. These answers were filed in August 2019. Yet, the basis advanced by the defendants only appears to have been accepted some three years later. The fact that the plaintiff now accepts the defence raised in 2019 and took some three years to accept that position in respect of management fees meant that that they have not persuaded me to displace the "common practice" that indemnity costs should be payable. Accordingly, I am satisfied as a matter of discretion that the defendants should recover their costs of and incidental to the withdrawn claims on an indemnity basis.

A percentage basis

16. Both defendants urged upon me that I should make an order attributing a percentage of the total costs incurred to the withdrawn claims. This was to make life easier on a taxation as otherwise every time entry would have to be evaluated to try to assess how much of that entry related to the withdrawn claims. The defendants (and I suspect the plaintiff) in recording time spent had not differentiated between issues when doing so. This is not surprising when tasks may have overlapped between issues and when taxation guidance does not require time recording to that level of sophistication.

17. Advocate Hurry for the first defendant analysed his percentage as being 50% by a number of different routes as set out in his skeleton argument. Advocate Kelleher suggested a figure of 60% again supported by a detailed analysis in his skeleton argument contending that the Tring Property claims, and the management fees claims were more complex than those claims that remained. Advocate Gardner took the opposite position and contended that the Gardeners' Property claim was the most complex of all the claims and so I should apply a much lower percentage.

18. Shortly before the hearing I drew to the party's attention the case of Fang & Ors v AG [2020] JCA 013 where the Court of Appeal had stated at paragraph 56 as follows: -

56. As regards proportional or percentage-based orders, different considerations often militate against the making of such orders, especially at appellate level. Without carrying out a mini-taxation, a court will rarely have sufficient information to make a percentage-based order which reflects the actual proportion of work, out of the whole, which a litigant has carried out for those parts of the appeal upon which success has been achieved. The conduct of litigation is an art, not a science, and it is almost the rule, perhaps increasingly so, that litigants and their representatives will deploy as many lines of argument as appear appropriate in order to persuade the tribunal in question. The result of a percentage-based order can often be to punish a successful litigant and, in broad terms, such a result should ensue only where a significant amount of time has been taken up with a discrete line of argument which had no prospect of success whatsoever."

19. I had recently applied these principles in Patel v JTC Trust Co. Ltd [2022] JRC 155.

20. In my judgment, the dangers the Court of Appeal warned about in Fang apply. I do not feel I have sufficient information to determine a percentage-based order based on pleadings only to reflect fairly the actual work which the defendants have carried out in relation to the withdrawn claims. All of the different reasonings advanced by the parties could apply. I would therefore be guessing if I chose one percentage over another. By way of example, if I accepted Advocate Kelleher's submission that 60% of the costs were related to the withdrawn claims, whereas in fact only 40% did so, this would be requiring the plaintiff to overpay by some 20%. Given the costs claimed in this case this could be significant difference. For a claim of costs of £450,000, this could lead to a difference of some £90,000.

21. In the circumstances, I am not satisfied at this stage it is appropriate to make a percentage-based order. In reaching this conclusion, I appreciate the difficulties a taxation will entail, but those difficulties do not justify a percentage based order. The defendants also have other mechanisms to protect them against the costs of an extensive taxation, including open or without prejudice save as to costs offers.

A payment on account

22. Both defendants also sought a payment on account of costs. This was done on the basis of a percentage-based order, but it was also contended that, if I made a costs order in the defendant's favour, even if I did not make a percentage-based order, I could still order a payment on account. I accept that submission. The main issue between the parties was the quantum of that payment as the plaintiff did not resist some form of payment being ordered.

23. The principles to be applied when considering a payment on account were most helpfully summarised in Marange Investments (Proprietary) Ltd v La Générale des Carrieres et des Mines SARL [2013] JRC 119A at paragraphs 42 to 44 and paragraph 51 as follows: -

"42. The principle in relation to the payment of costs on account is set out in the judgment of Jacob J in Mars UK Limited v Tecknowledge Ltd [1999] 2 Costs LR 44 (cited in Centre Trustees):-

"I now turn to the second issue, whether or not there should be an order for interim payment. The first thing to do is to consider what the general rule should be, interim payment or not. There is no guidance given in the Rules other than that the court may order a payment on account. There is no guidance in the Practice Direction. So I approach the matter as a question of principle. Where a party has won and has got an order for costs the only reason that he does not get the money straightaway is because of the need for a detailed assessment [taxation]. Nobody knows how much it should be. If the detailed assessment were carried out instantly he would get the order instantly. So the successful party is entitled to the money. In principle he ought to get it as soon as possible. It does not seem to me to be a good reason for keeping him out of some of his costs that you need time to work out the total amount. A payment of some lesser amount which he will almost certainly collect is a closer approximation to justice. So I hold that where a party is successful the court should on a rough and ready basis also normally order an amount to be paid on account, the amount being a lesser sum than the likely full amount."

43. Lower on the same page, Jacob J said:-

"Thus I start from the proposition that there should be an interim payment in general. However, the court has a discretion. In exercising that discretion the court must take into account all the circumstances of the particular case."

44. The Court should not, therefore, seek to conduct a taxation or detailed view of the successful party's costs, but adopt "a rough and ready" approach, in order to arrive at a figure which the successful party "will almost certainly collect."

51. Turning to the application in this case, I accept the principle as enunciated in Mars UK and applied in Centre Trustees and Café de Lecq that the successful party ought to get the money to which it is entitled under a costs order as soon as possible and accordingly agree that a payment on account should be made. Although the proceedings were withdrawn before the hearing on 18th January, 2013, I have sat twice to give pre-trial directions and have the benefit of the evidence upon which the interim injunctions were originally obtained and the evidence filed by Gécamines; and so I have a reasonable indication of the work that would have been undertaken."

24. These are the principles I have applied.

25. I firstly observe that the fact that some claims remain to be determined does not mean that a defendant should be deprived of costs for withdrawn claims. Such an approach could encourage weak claims to be pursued if there were little practical consequences in doing so. Secondly, the observations in Marange apply to all costs orders without distinction, whether interlocutory or following trial and in this jurisdiction a cost order is enforceable once it is made. Thirdly, all parties generally take the other party as they find them in terms of any ability to pay a judgment or costs, and so the risk of any future costs orders in the plaintiff's favour not being enforceable does not justify refusing a payment on account.

26. In relation to quantum, I am entitled to take a broad brush approach. While therefore it is not appropriate to make a percentage-based order which fixes the entitlement of a party's costs for the withdrawn claims, I consider I am entitled by reference to the total costs claimed by each of the defendants to apply a percentage to those costs reflecting the withdrawn claims, which allows a payment on account calculation to occur. In my judgment, having regard to the detailed submissions on a percentage-based costs order, the fairest percentage I can apply at this stage is 50%. I stress this is for the purposes of an interim payment only and does not affect any submissions or decisions to be made on a taxation.

27. However, for both defendants the amount of costs claimed are significant.

28. For the first defendant he has incurred cost of approximately £870,000 based on the combination of Collas Crill, Trethowans, an English Firm of solicitors', counsel and an e-discovery provider. I observe in particular that Trethowans have incurred some 1800 hours and a partner, and four fee earners have all had significant involvement. This is in addition to the seven fee earners at Collas Crill. Although I have ordered indemnity costs and although the amounts claimed by Trethowans as hourly rates are much lower, given the number of fee earners involved, the total amount of hours claimed for in my view are likely to be reduced on a taxation notwithstanding the order for indemnity costs. I therefore propose to reduce by 30% the total amount claimed. Based on a total claim for costs of £870,000, reducing this by 30% to reflect the above concerns and then by half to reflect the withdrawn claims produces a figure of £304,500. I therefore propose to award the first defendant half of this sum i.e. £152,250.

29. I propose to take a similar approach in relation to the second to fourth defendants. Their total costs amount to £902,574 with the total hours recorded as being over 2,000. When ordering security for costs the total amount I ordered the plaintiff to pay into court for each party was £427,000. Again therefore I consider that the amount the second to fourth defendants will recover on a taxation will be reduced significantly because the total hours claimed are significantly in excess of the security I ordered of £427,000 for the first and second to fourth defendants i.e. £854,000 in total. As the number of fee earners involved however is less than the first defendant I propose to reduce the total costs claimed by 25%.

30. In relation to the total figure claimed of £902,574, a 25% reduction leads to a figure of £676,930. Half this figure for the withdrawn claims amounts to £338,465. 50% of this sum as a payment on account in is £169,232. I therefore order this sum to be paid to the second to fourth defendants as a payment on account of costs.

31. As the sums I have ordered to be on account are less than the amount held in court, the sums shall be paid out of the security for costs held in court. The balance will remain in court to deal with the remaining claims, absent any other application to vary the amount of security for costs the plaintiffs have currently paid. How the balance of the costs awarded once claimed is to be paid and whether any of this comes out of funds in court is a matter for another day.