Ashany and Anr v Eco-Bat Technologies Ltd
| Jurisdiction | England & Wales |
| Judge | Lady Justice King |
| Judgment Date | 24 July 2017 |
| Neutral Citation | [2017] EWCA Civ 1118 |
| Court | Court of Appeal (Civil Division) |
| Date | 24 July 2017 |
| Docket Number | Case No: A3/2016/2144 |
[2017] EWCA Civ 1118
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Master Clark
[2016] EWHC 1192 (Ch)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice King
Case No: A3/2016/2144
The Respondent was not represented
Charles Hollander QC (instructed by Freshfields Bruckhaus Derringer LLP) for the Appellant
Hearing date: 18 July 2017
Approved Judgment
By an Appellant's Notice filed on 26 May 2016 the applicant (the defendant in the proceedings below) seeks permission to appeal a costs order of Master Clark, dated 5 May 2016, whereby she made a number of orders for costs against the applicant.
The case concerned applications by the parties in relation to costs following the discontinuance on 24 July 2015 of a claim issued by the claimants (proposed respondents) on 1 November 2013. The respondents were non-executive directors of the applicant company, which operates a business of recycling lead batteries and other lead scrap metal. The respondents were appointed to the board by two minority shareholders in the applicant company. On 26 September 2012 the applicant was the subject of a dawn raid by an EU Commission investigation team. On 23 July 2015, at a board meeting of the applicant, the existence of an email dating back to 2016 was revealed. The email, which became the subject of the subsequent litigation, potentially implicated the defendant's senior management in the anti-competitive behaviour being investigated by the EU Commission. The sensitivity of such an email is obvious.
The order against which the applicant now appeals is the detailed order for costs made by the Master following the discontinuance of the proceedings, the email, the subject of the dispute, having been produced by the applicants and a copy given to the respondents on 2 May 2015.
The principles which apply in relation to discontinuance are agreed. CPR 38.6 creates a presumption that, unless the court orders otherwise, a claimant who discontinues is liable for the costs of the defendant. The Master set out CPR 38.6, together with CPR 44.2, which sets out the matters the court is to take into account when making an order about costs. The Master further set out the principles applicable to exercise of the court's discretion under CPR 38.6, as summarised by the Court of Appeal in Brooks v HSBC Bank plc [2011] EWCA Civ 354. The principles referred to the presumption that the defendant should recover his costs and that the burden is on the claimant to show good reason for departing from that position. The judge further reminded himself that in Brooks para. 10 it was said that a claimant who seeks to persuade the court to depart from the normal position must provide "cogent reasons" for doing so, and is unlikely to satisfy that requirement save in "unusual circumstances".
The judge thereafter divided the period covering the dispute into four periods, in relation to which separate orders for costs were made:
i) First period – 23 July 2013 – 4 December 2013. This period covers the time from the existence of the email being disclosed through to a board meeting on 4 December 2013. At the board meeting a resolution was passed which provided for immediate access to the email by the respondents, including at Freshfields offices in London and New York, and provided further that directors should be able to receive a copy upon written undertakings as to confidentiality, both by themselves and their legal advisors. At the board meeting on 4 December 2013 the claimants were able to look at the email on screen but not make notes. In the period concerned, there had been a board meeting on 9 October 2013, when a resolution was passed giving the claimants' access to documents described as "Skadden materials". When, the following day, the claimants sought access to the email, pursuant to the resolution, they were told that they would not be permitted access to the email as it was not in the Skadden materials folder. This led to an angry email from the claimants, threatening immediate proceedings absent disclosure of the email, and was followed on 1 November by the issue of proceedings.
In relation to this period the judge held that the ordinary rule in CPR 38.6 was displaced and made an order for costs against the respondents for this period of time. The judge was of the view that the respondents had a reasonable perception that they were entitled to know the contents of the email, derived from the terms of the shareholders agreement, and had been seeking access to the email for a considerable period of time. The judge was clear that the Skadden materials plainly included the email and that the refusal to permit access had been...
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