Jersey Unreported Judgments

Costs.

[2020]JRC208

Royal Court

(Samedi)

13 October 2020

Ref: 2019/173

Ref: 2020/004

 

Before     :

R. J. MacRae, Esq., Deputy Bailiff, sitting alone.

 

Advocate N. M. C. Santos-Costa for the Representors. 

Advocate D. M. Cadin for the First Respondent. 

judgment

the deputy bailiff:

1.        In my decision dated 24^th June, 2020 ("the June Decision") I gave my reasons for dismissing the Representors application for security for costs from the First Respondent, Mr Deripaska, in respect of the Representors' costs of and incidental to the First Respondent's claim brought under claim number 2020/004. 

2.        I also gave my reasons for dismissing the part of the First Respondent's summons seeking a split trial.  That summons also sought other directions which, after argument, were made. 

3.        After the judgment was handed down I invited the parties to provide written submissions in relation to the costs of the hearing on 15^th April, 2020 which led to the June Decision.  This they subsequently did.  In this judgment I will refer to the summons seeking security for costs as the security for costs summons and the summons seeking directions including a split trial as the split trial summons. 

Relevant principles

4.        Both parties substantially agree upon on the relevant principles pursuant to which the Court should exercise its discretion in awarding costs. 

5.        The Court was referred to the principles set out by Page, Commissioner in Watkins -v- Egglishaw [2002] JLR 1, subsequently endorsed in Pell Freschmann Engineering Limited -v- Bow Valley Iran Limited [2007] JLR 479 and in Flynn -v- Reid [2012] (2) JLR 226 as follows: 

"(7) The principles that should guide the court in the exercise of its discretion in this area appear to me, therefore, to be as follows, stating them as shortly and simply as possible:

(a) The court's overriding objective in considering costs is, as in everything else, to do justice between the parties.

(b) In many cases, that objective will be fulfilled by making an award of costs in favour of the "winning" party, where a "winner" is readily apparent. In any event, the "follow the event" rule can still be a useful starting point.

(c) It is a mistake, however, to strain overmuch to try to label one party as the "winner" and one as the "loser" when the complexity or other circumstances of the litigation do not readily lend themselves to analysis in these terms.

(d) The discretion as laid down in art. 2 of the Civil Proceedings (Jersey) Law 1956 is a wide one and ought not to be treated as fettered by any particular supposed rule or practice, other than that the discretion should be exercised judicially and broadly in accordance with the guiding principles referred to in In re Elgindata (No.2) (5) and A.E.I. v. Phonographic Performance (1).

(e) It is, accordingly, open to the court to have regard to any and all considerations that may have any bearing on the overriding objective of doing justice. Its task is to take an overview of the case as a whole (Bank of Credit & Commerce Intl. v. Ali (No. 4) (3), per Lightman, J.). The new Civil Procedure Rules governing civil litigation in the English courts provide that the court "must have regard to all the circumstances" and then go on to spell out certain matters that such circumstances include, the "conduct of all the parties" being one and "whether a party has succeeded on part of his case, even if he has not been wholly successful" another (Civil Procedure Rules, para. 44.3(4)). To a large extent, however, the particular matters mentioned do no more than state the obvious and it is unnecessary to import them verbatim, in any formal way, into the practice of the Royal Court.

(f) It is implicit in this that, even though a party would otherwise be regarded as having been "successful," justice may require that costs should not automatically follow the event."

The submissions of the Representors (also known as the Chernukhin Parties) 

6.        In respect of the security for costs summons, although the Chernukhin Parties were ultimately unsuccessful they argue firstly that there should be no order for costs as, inter alia, the Court held that it would have ordered substantial security had the Court found that the First Respondent was in a position of a plaintiff.  Secondly, the jurisdictional issue (i.e. whether or not the Court had the power to order security on the facts) was a novel point of law and procedure considered for the first time in Jersey.  It is said that this was an issue which "did not take up much of the application".  Thirdly, many of the arguments which went against the provision of security for costs which were advanced by the First Respondent were rejected by the Court.  Fourthly, the hearing would have been much shorter had the First Respondent conceded that the only arguable point, the one upon which he prevailed, was whether or not he could properly be described as a plaintiff on the facts in this case.  Finally, the concession that there was a real risk of non-enforcement or a costs order in Russia was made too late. 

7.        As to the split trial summons, it is submitted that as the First Respondent was unsuccessful on this issue, the Chernukhin Parties should have their costs on the standard basis. 

The First Respondent's submissions

8.        The First Respondent contends that the Chernukhin Parties should pay his costs of the security for costs summons on the indemnity basis.  It is said that not only did the application fail but the application was pursued aggressively, erroneously, contained defects that needed to be corrected, was supported by vast amounts of unnecessary and irrelevant material, that the Representors in their skeleton argument failed to discharge their duties to the Court in not referring to the authorities that ultimately told against them, and that the proceedings themselves arose out of the Representors procedural failings - using the wrong form of proceedings to obtain an ex parte injunction which did not comply with the practice direction in relation to freezing orders and failing to rectify these failings when given an opportunity to do so. 

9.        As to the split trial summons, the First Respondent says that the summons was dealt with expeditiously and the directions that the First Respondent sought were secured, absent the split trial.  It is submitted that the costs order should be costs in the cause. 

Decision 

10.      I do not propose to summarise the contents of the June Decision in this judgment. 

11.      Whether or not the Chernukhin Parties are entitled to contend that the issue of the identity of the First Respondent, i.e. whether or not he could be regarded as a plaintiff, took up much of the application it was certainly the principal focus of the judgment and I note that of the 14 pages dealing with the parties central arguments on security for costs, approximately one half of that part of the judgment (paragraphs 67 to 78) exclusively concerns consideration of whether or not the First Respondent really was a "plaintiff" as contended, ultimately unsuccessfully, by the Chernukhin Parties. 

12.      Further, although absent this finding I should have ordered that security for costs be provided (paragraph 78 of the June Decision), it is not correct to suggest that overall the First Respondent failed on all the other arguments he advanced as that is simply incorrect.  Nonetheless there were arguments advanced by the First Respondent that did not succeed - for example the alleged impediments in granting security presented by the issue of OFAC consent referred to at paragraph 66 of the June Decision. 

13.      As to the criticisms made on behalf of the First Respondent in the skeleton argument filed on his behalf which support the assertion that this is a case where indemnity costs ought to be awarded, I do not think it is necessary for me to analyse each and every allegation.  Some of the assertions made have merit - for example the complaint made about the claims for costs advanced by the Chernukhin Parties - but most of the complaints are common features of closely fought commercial litigation.  Accordingly the complaints collectively are not such that it would be proper for me to find that the Chernukhin Parties have been guilty of "unreasonableness", which is the necessary threshold finding for the purpose of awarding indemnity costs. 

14.      Looking at matters in the round and doing the best I can in the exercise of my discretion I order that the Chernukhin Parties pay 75% of the First Respondent's costs of and incidental the security for costs summons on the standard basis. 

15.      As to the costs of the split trial summons, they were insubstantial and this is not a case where a contest over costs, when all other matters appear to be hotly contested, ought to be encouraged.  Accordingly I order that the costs of and incidental to that summons are costs in the cause. 

Payment on account of costs

16.      It is suggested that the First Respondent needs to file a summons or seek permission to apply for an interim payment on account of costs.  That is not necessary.  The Court frequently orders interim payments on account of costs in the absence of such material.  However, it is generally helpful, as referred to by the Court of Appeal in Crociani -v- Crociani [2014] (1) JLR 503 and I should apprehend other cases, although no such case was cited before me, for the Court to be provided with a costs schedule providing standard factor A rates and a relevant uplift and, in short, sufficient detail so as to ensure per (paragraph 27 of the judgment of Beloff, JA) that the Court "is adequately informed so as to be able to make an estimate of a reasonable sum". 

17.      I am minded, subject to the provision of a costs calculation on the standard factor A and factor B basis, to make an order that the Representors pay 50% of the Bedell Cristin costs calculated on that basis.  Further documentation would need to be provided to me for the purpose of making such an order. 

Authorities

Watkins -v- Egglishaw [2002] JLR 1.

Pell Freschmann Engineering Limited -v- Bow Valley Iran Limited [2007] JLR 479.

Flynn -v- Reid [2012] (2) JLR 226.

Crociani -v- Crociani [2014] (1) JLR 503.