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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> MB and Services Limited and Golovina v United Company Rusal Plc [2020] JRC 099 (01 June 2020) URL: http://www.bailii.org/je/cases/UR/2020/2020_099.html Cite as: [2020] JRC 99, [2020] JRC 099 |
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Companies - costs and leave to appeal
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Before : |
Sir Michael Birt, Commissioner, sitting alone |
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Between |
MB & Services Limited |
First Plaintiff |
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And |
Tatiana Golovina |
Second Plaintiff |
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And |
United Company Rusal Plc |
Defendant |
Advocate W. A. F. Redgrave for the Plaintiffs.
Advocate E. C. P. Mackereth for the Defendant.
judgment on costs and leave to appeal
the COMMISSIONER:
1. In a judgment dated 24th February 2020, MB & Services Limited and Golovina v United Company Rusal Plc [2020] JRC 034, ("the Judgment"), this Court rejected the application of the defendant to stay the proceedings in this jurisdiction on the ground of forum non conveniens. I am now asked to rule on the question of costs in relation to that application and whether leave to appeal to the Court of Appeal should be granted. The parties have filed written submissions on both issues and it has been agreed that I should consider the matter on the papers.
2. The detailed background to the proceedings is set out in the Judgment. As the Court said at paragraph 11 of the Judgment, the defendant's application raised two issues for decision as part of its application to stay the proceedings on the ground of forum non conveniens: -
(i) Had the defendant discharged the burden of establishing that Russia was another available forum which was clearly or distinctly more appropriate than Jersey? ("issue 1")
(ii) If so, had the plaintiffs discharged the burden of showing by cogent evidence that there was a real risk that they would not obtain justice in Russia if the case proceeded there? ("issue 2").
3. Having set out the background and the relevant legal principles, the Court dealt with issue 1 at paragraphs 38 - 95 of the Judgment. It rejected the plaintiffs' submission that this was one of those truly international disputes envisaged by Lord Goff in Spiliada Maritime Corporation-v-Cansulex Limited [1987] 1 AC 460 at 477 where there is no natural forum, with the consequence that the case should remain in Jersey where the defendant has been sued as of right. The Court held that the defendant succeeded on issue 1 as it had satisfied the burden of showing that Russia was distinctly or clearly the forum with which the action had the most real and substantial connection and in which the case could be tried most suitably in the interests of the parties and the ends of justice. The defendant was therefore successful on issue 1.
4. However, the Court found in favour of the plaintiffs on issue 2. Having considered the matter at paragraphs 96 - 139, the Court held that the plaintiffs had satisfied the Court by cogent evidence that there was a real risk that they would not obtain justice in Russia if the case were to proceed there.
5. On the basis of the Court's ruling on issue 2, the defendant's application to stay the proceedings on the ground of forum non conveniens was therefore dismissed.
6. Whilst the defendant accepted that its application had failed, in that the proceedings were not stayed, it submitted that the Court should have regard to the fact that there were two separate issues. Although successful overall, the plaintiffs had failed on issue 1, which had taken up a substantial proportion of the time and effort devoted to the application. In accordance with the modern approach, the Court should therefore make an issue-based order; in other words the defendant should be awarded its costs in relation to issue 1 and the plaintiffs should be awarded their costs in relation to issue 2. The ultimate position as to who was the net payer and who was the net recipient would therefore only become clear following taxation.
7. In support of this approach, Advocate Mackereth referred to the leading Jersey case of Watkins-v-Egglishaw (2002) JLR 1 and to the suggestion in that case that the Court should be ready to make separate orders reflecting the outcome of different issues. He also referred to certain English authorities to the effect that it is no longer (as it was previously), a precondition to the making of an issue-based order that the successful party acted unreasonably or improperly in raising issues upon which it failed. Thus in Johnsey Estates (1990) Limited-v-Secretary of State for the Environment [2001] EWCA Civ 535 at [21] Chadwick LJ said:-
8. He also referred to Summit Property-v- Pitmans (a firm) [2001] EWCA Civ 2020 where at [17] Longmore LJ said this:-
9. Advocate Mackereth submitted that the arguments raised by the plaintiffs on issue 1 were indeed unreasonable. But, he said, the defendant did not need to show this. This was a case where the plaintiffs elected to argue issue 1 and did so unsuccessfully in circumstances where their decision to oppose issue 1 added substantially to the costs of the application. In accordance with the modern approach (summarised in the preceding two paragraphs), which was designed to encourage litigants to be selective about the points they take and to accept the costs consequences if they take additional points on which they lose, the Court should make the issue-based order requested by the defendant (awarding the defendant its costs on issue 1) even if it considered that the plaintiffs had not acted unreasonably in contesting issue 1.
10. Advocate Redgrave, on behalf of the plaintiffs, submitted that they should be awarded all their costs in relation to the application. The application made by the defendant was to stay the proceedings and this had been unsuccessful. Whilst it was correct that the defendant had succeeded on issue 1, this was simply part of the overall application and did not justify the making of a separate costs order in relation to that issue. In particular, unlike in England and Wales nowadays, the position in Jersey was that a successful party should only be ordered to pay the costs of an unsuccessful party on a particular issue where the successful party had raised that issue improperly or unreasonably; see Flynn-v-Reid [2012] (2) JLR 226 at [21]. There was no question of the arguments of the plaintiffs raised in support of their stance on issue 1 being categorised as unreasonable.
11. Furthermore, even under the modern English position, a successful party was not to be deprived of costs simply because it had failed on one or more issues. He referred me to Budgen-v-Andrew Gardner Partnership [2002] EWCA Civ 1125, where Simon Brown LJ had observed at [35] that "...the court can properly have regard to the fact that in almost every case even the winner is likely to fail on some issues." ; and to Travelers Casualty and Surety Company of Canada-v-Sun Life Assurance Company of Canada (UK) Limited [2006] EWHC 2885 (Comm), where Christopher Clarke J had said at [12] "If the successful claimant has lost out on a number of issues it may be inappropriate to make separate orders for costs in respect of issues upon which he has failed, unless the points were unreasonably taken. It is a fortunate litigant who wins on every point." However, Christopher Clarke J went on at [13] to say: "On the other hand if a party raises a discrete issue which involves very substantial costs, and upon which he fails, justice may require that he should bear his costs and pay those of his opponent on the issue."
12. He also referred to the White Book (2020 Edition) where at paragraph 44.2.10, the authors extract certain propositions from English authorities regarding issue-based costs orders. Those propositions are summarised (omitting references) as follows:-
13. Finally, Advocate Redgrave submitted that, if, despite his submissions, the Court considered that there should be some reduction in the costs awarded to the plaintiffs to reflect their failure on issue 1, such reduction should be modest. The expert evidence and the vast majority of the affidavit evidence filed on behalf of the plaintiffs related to issue 2 rather than issue 1.
14. Although it appears from the English authorities cited by the defendant that a party who has been successful overall may nevertheless be ordered to pay the costs of the other party on an issue on which the successful party has failed even where it was not unreasonable to raise that issue, that is not the position in Jersey.
15. The leading authorities on costs in Jersey are Watkins-v-Egglishaw [2002] JLR 1 in the Royal Court and Flynn-v-Reid [2012] (2) JLR 226 in the Court of Appeal. Both decisions (Watkins at para 6(d) and Flynn at para 14) specifically approved the well-known statement of principle by Nourse LJ in In Re Elgindata Limited (No 2) [1992] 1 WLR 1207 at 1213:-
16. This statement of principle is as applicable today as it was in 1992, but courts have become more willing than perhaps previously to make orders which have regard to success or failure on particular issues. Thus, Page, Commissioner, in Watkins approved as applicable in Jersey the observation of Lord Woolf MR in A.E.I. Rediffusion Music Limited-v- Phonographic Performance Limited [1999] 1 WLR 1507 at 1522:-
17. In Flynn, the Court of Appeal made it clear that, as per (iv) of Elgindata, a successful party will only be ordered to pay the costs of an unsuccessful party on a particular issue if the successful party has raised the issue improperly or unreasonably. Thus Beloff JA at [21] of Flynn said:-
As Beloff JA pointed out at [14] of his judgment, it is not (and never was) necessary to show unreasonable conduct for the court to make an order under (iii) of Elgindata, namely that the successful party be deprived of his costs on an issue which he has raised unsuccessfully.
18. It follows that the defendant's submission that there should be an issue-based costs order, in the sense that the plaintiff should be ordered to pay the defendant's costs in relation to issue 1, cannot succeed unless I am satisfied that the plaintiffs' arguments on issue 1 were raised unreasonably or improperly; to hold otherwise would be wholly inconsistent with the binding authority of Flynn. In my judgment the defendant fails on that aspect. There were perfectly proper arguments to be put forward on behalf of each side in relation to issue 1 and the arguments on behalf of the plaintiffs, albeit unsuccessful, can in no sense be categorised as having been raised unreasonably or improperly.
19. It follows that I reject the application of the defendant for an order that the plaintiffs should be ordered to pay the defendant's costs in relation to issue 1.
20. That leaves the question of whether there should be a deduction from the costs awarded to the plaintiffs as per (iii) of Elgindata, on the basis that the plaintiffs failed on issue 1.
21. As pointed out at (iii) in the passage from Elgindata cited above, the Court will not make a deduction for every issue or allegation upon which a successful party fails. This is consistent with the observations of Simon Brown LJ and Christopher Clarke J cited above to the effect that in many cases the winner is likely to fail on some issues and that it is a fortunate litigant who wins on every point. Accordingly, as stated in Elgindata itself, it is only where the issue has caused a significant increase in the cost or length of the proceedings that a deduction may, in the Court's discretion, be made. Where a deduction is made, it is generally, in my judgment, preferable to adopt a broad and reasonably robust approach and estimate a percentage deduction rather than ordering a deduction by reference to the exact time spent on the unsuccessful issue, which can only be ascertained on taxation; see for example the observation of Robert Walker JA in United Wire Limited-v- Screen Repair Servs (Scotland) Limited [1997] TLR (cited in Pell Frischmann Engineering Limited v Bow Valley Iran Limited [2007] JLR 479 at [6]) as to the desirability of adopting a reasonably robust approach and avoiding, if possible, complicated costs orders that may result in complex and expensive taxation proceedings.
22. Issue 1 took up a significant proportion of the time and expense in relation to this application. It would have been open to the plaintiffs to have conceded issue 1 and simply based their opposition to the application to stay on issue 2. They did not do so and it seems to me that issue 1 was of sufficient significance in terms of time and expense that they should not in general be able to recover their costs in connection with that issue from the defendant. The question therefore is what percentage deduction to make.
23. I have noted the pages of the judgment devoted to each issue together with the pages of the skeleton argument of each side. These of course vary. I also accept that, for the purposes of fixing upon a deduction from the plaintiffs' costs, the matter for consideration is the percentage of time and effort spent by the plaintiffs rather than by the defendant. On that aspect, I accept Advocate Redgrave's submission that more of the plaintiffs' effort was directed towards issue 2 than issue 1. Furthermore, even if the plaintiffs had not opposed issue 1, time and effort would have been devoted to general matters not specifically related to either issue, such as setting the scene, explaining the causes of action and describing the relevant factual background. Given that the defendant has failed overall in its application and taking a broad view and adopting the robust approach envisaged by Robert Walker J, I consider that a fair deduction would be 30%.
24. Accordingly, I order the defendant to pay 70% of the plaintiffs' costs of and incidental to the application on the standard basis.
25. In Crociani-v-Crociani [2014] (1) JLR 503 at [16] Beloff JA, speaking for the Court of Appeal, said:-
26. In further proceedings in Crociani-v-Crociani [2019] JRC 013, the Royal Court (Commissioner Sir Michael Birt) said as follows:-
27. Advocate Redgrave has submitted a costs schedule prepared in accordance with the above guidance. Thus he has charged all fee earners of Baker & Partners on the basis of Factor A with a 50% uplift for Factor B. This comes to £169,004.25.
28. Disbursements (including the fee of Professor Bowring as the expert on Russian law together with Hugh Mercer QC, an English barrister), come to £112,767.17. I agree that, on the face of it, it is reasonable in a case such as this to instruct English counsel with the appropriate expertise and it was clearly necessary to obtain a report from an expert on Russian law.
29. The third item which the costs schedule includes is the fees of English solicitors Rosling King LLP, which come to £328,384.75. Again, given the international nature and complexity of the case, I regard it as reasonable for English solicitors to have been instructed as well as Jersey advocates although, on taxation, it will be necessary to ensure that there is no doubling up on time spent as a consequence. I am informed by Advocate Redgrave that, for the purposes of the costs schedule, the time spent by fee earners of the English solicitors have been charged at the same Factor A and Factor B rate as the fee earners of Baker & Partners although, for work which could not reasonably have been done by a Jersey lawyer, Rule 12/7 (b) allows for greater sums to be recovered on taxation than would be allowed for a Jersey advocate provided it is reasonable.
30. I have to say that the combined figure for Baker & Partners and the English solicitors seems quite large for a forum application, although I accept that this was a complicated matter and the Court was presented with a large volume of material and files, with the application raising a number of matters which are set out in the Judgment and the hearing was heard over two days. Furthermore, given the complexity of the matter, there is at least a reasonable possibility that the Factor B uplift allowed on taxation will be greater than 50%.
31. Putting these matters together and given that the defendant has not challenged the figures, I am prepared to proceed on the basis that the total costs schedule comes to £610,156.17.
32. I have however only awarded the plaintiffs 70% of their costs, which comes to £427,109.32. Given the large sums claimed, I think I must take a conservative approach. Taking a round figure, I therefore order the defendant to pay the sum of £200,000 on account of the costs awarded to the plaintiffs, such sum to be paid within 28 days.
33. The defendant applies for leave to appeal against the Judgment. As the Court found in its favour in relation to issue 1, this would in effect be an appeal against the Court's decision on issue 2.
34. The test for granting leave to appeal is well established. Following Crociani-v-Crociani [2014] (1) JLR 426 at [50] - [51], in order to obtain leave to appeal an appellant must show:-
(i) the appeal has a real prospect of success;
(ii) a question of general principle falls to be decided for the first time; or
(iii) there is an important question of law upon which further argument and a decision of the Court of Appeal would be to the public advantage.
35. Advocate Mackereth seeks leave principally on ground (i) above, but submits that grounds (ii) and (iii) are also relevant. He argues that this appears to be the first case in which the Court has been required to consider the issue of whether the Jersey courts should refuse to stay proceedings in favour of a clearly more appropriate forum because of a risk of potential injustice and that the Court's analysis in this case went beyond the established approach adopted in English law, which focuses on the integrity of the foreign court process.
36. I do not accept that grounds (ii) and (iii) are relevant in this case. On a point of detail, this Court has in fact previously considered the question of whether to grant a stay because of the risk of injustice in a foreign court in Gheewala-v-Compendium Trust Co Limited [1998] JLR N 7a; but the more important point is that this is simply a factual evaluation by reference to the facts of this particular case and does not raise a question of general principle or an important question of law.
37. As to ground (i), in determining whether the appeal has a real prospect of success, one must remind oneself of the test which the Court of Appeal will apply in due course. Advocate Redgrave submitted that this was a discretionary decision by the Royal Court and that therefore the usual restrictions on appeals against discretionary decisions by a court of first instance applied.
38. For my own part, I do not think that this decision was technically one of discretion; it was more one of evaluation. In this respect, I refer to the decision of the Court of Appeal in Jaiswal-v-Jaiswal [2007] JLR 305, which was also an appeal on forum non conveniens. In giving the judgment of the Court of Appeal, Beloff JA said this at [76]:-
I appreciate that the Court of Appeal was considering the equivalent of issue 1 in that case, but it seems to me that the observation must be equally applicable to issue 2 as it is all part of the overall process of determining the appropriate forum.
39. As Beloff JA points out, whether the matter is categorised as one of discretion or evaluation, the Court of Appeal will only intervene on the limited grounds just described. As Lord Templeman said in Spiliada at 465:-
40. Advocate Mackereth sets out the matters which he relies upon at paragraph 27 of his written submissions. Suffice it to say that I am not persuaded that the matters which he raises give rise to a real prospect that the Court of Appeal would hold that the findings of the Royal Court on issue 2 were outside the band of reasonable decisions open to it.
41. I therefore refuse leave to appeal but note that the defendant has the right to seek leave from the Court of Appeal itself.
42. As to the time for applying to the Court of Appeal for leave to appeal, I have already extended the period for the defendant to apply to the Court of Appeal in the event of my refusing leave until five days after my decision. The defendant therefore has five days from the formal handing down of this judgment in which to apply for leave to appeal from the Court of Appeal.
43. With the agreement of the parties, I also direct that, provided that the defendant makes its application for leave to appeal to the Court of Appeal within the five days, the proceedings generally - e.g. the need for the defendant to file an answer etc. - are stayed until determination of the defendant's application for leave to appeal and/or appeal (if leave is granted) or until further order.
