Deutsche Bank AG v Sebastian Holdings Inc.
| Jurisdiction | England & Wales |
| Judge | Master Gordon-Saker |
| Judgment Date | 05 March 2020 |
| Neutral Citation | [2020] EWHC B16 (Costs) |
| Date | 05 March 2020 |
| Docket Number | Case No: AGS/1704493 |
| Court | Senior Courts |
[2020] EWHC B16 (Costs)
IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE
Royal Courts of Justice
London, WC1A 2LL
Master Gordon-Saker
Case No: AGS/1704493
SC-2019-BTP-000531
and
Mr Nicholas Bacon QC (instructed by Freshfields) for the Claimant
Mr Benjamin Williams QC and Mr Rupert Cohen (instructed by Brecher LLP) for Mr Vik
Hearing dates: 26, 27, 28 February 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Master Gordon-Saker Master Gordon-Saker This judgment relates to three preliminary issues arising on the detailed assessment of the Claimant's bill of costs, namely:
i) the rate and period of interest that should be allowed on the Claimant's costs;
ii) the scope of the costs order; and
iii) the exchange rate that should be used in relation to sums claimed in foreign currency.
It also sets out my reasons for refusing to adjourn the detailed assessment hearing presently listed to commence on 20 th April 2020.
The background
The Defendant is a company incorporated in the Turks and Caicos Islands. The claim against it was for damages relating to the operation of accounts maintained by the Defendant with the Claimant for trading in foreign currencies, shares and financial products. Following a 44 day trial in the Commercial Court, on 8 th November 2013 Cooke J. gave judgment for the Claimant in the sum of US$243,023,089 and ordered the Defendant to pay 85 per cent of the Claimant's costs of the action on the indemnity basis. The Defendant's counterclaim for damages for breach of contract in excess of US$8 billion was dismissed.
The Defendant was also ordered to pay the Claimant £32m plus non-recoverable value added tax of £2,517,115.30 on account of costs.
The Defendant did not pay either the judgment or the payment on account of costs within the time ordered. On 3 rd December 2013 Cooke J. gave permission for Mr Alexander Vik to be joined as a party to the proceedings for the purposes of costs alone and on 5 th December 2013 the Claimant applied for an order that Mr Vik should pay the sum on account of costs for which the Defendant was liable. Cooke J. concluded that the Defendant, a shell company, was a special purpose vehicle and “the creature company” of Mr Vik who was its sole director and shareholder. Further, Mr Vik had controlled the proceedings. At the end of his reserved judgment dated 24 th June 2014 Cooke J. concluded:
103. In all the circumstances I consider that it is entirely just that a non-party costs order be made against Mr Vik so that he is liable for all sums owed by [the Defendant] to [the Claimant] in respect of costs awarded by me in my order of 8 th November 2013.
The order made following that judgment and dated 2 nd July 2014 provided that:
Pursuant to s.51 Senior Courts Act 1981, Mr Vik is to pay [the Claimant] the sum of £36,204,891 by 4pm on 8 July 2014.
While the order reflected the wording of the application it obviously did not reflect paragraph 103 of the judgment. The wording of the orders made in this case will be a recurring feature.
The Defendant's appeal against the order of Cooke J. dated 8 th November 2013 (the substantive judgment) foundered upon its failure to comply with the conditions imposed by the Court of Appeal. Permission to appeal the order providing for those conditions was refused by the Supreme Court on 16 th February 2015. Mr Vik's appeal against the order made by Cooke J. on 2 nd July 2014 (the first non-party costs order) was dismissed by the Court of Appeal on 21 st January 2016 and the Supreme Court refused permission to appeal on 19 th July 2016.
On 13 th September 2016 the Claimant issued an application for an order that Mr Vik pay the balance of the Claimant's costs awarded against the Defendant by the order dated 8 th November 2013. Cooke J. having by then retired, on 10 th October 2016 Sir Jeremy Cooke, sitting as a Deputy Judge of the High Court, made an order (the second non-party costs order) without a hearing that:
Pursuant to s.51 Senior Courts Act 1981, Mr Vik is to pay [the Claimant's] costs awarded against [the Defendant] pursuant to paragraphs 3 and 4 of the order of Cooke J dated 8 November 2013 plus interest accrued thereon.
Mr Vik's application to set aside that order was heard by HH Judge Waksman QC (as he then was), sitting as a Deputy Judge of the High Court, on 10 th April 2017. He dismissed the application, commenting:
7. Although this was the obvious consequence of his judgment, the [2 July 2014] order did not expressly contain a more general order that Mr Vik was liable to pay all of the costs payable by [the Defendant] to [the Claimant]. But that was in my view implicit in the interim payment order at paragraph 1.
31. Accordingly, in my judgment, in substance, Cooke J. actually made the NPCO order which would include the need for a detailed assessment, upon making his judgment in June 2014. Therefore, to view paragraphs 1 and 2 of the Order as somehow new orders is to mis-state the position. Although they were not made as such until 10 October 2016 they were in fact an inevitable consequence of the earlier judgments.
Mr Vik's application for permission to appeal that decision was refused by the Court of Appeal on 17 th July 2017.
Before the Claimant served its bill I was asked to give directions, which I did on 11 th December 2017. The directions catered for a further directions hearing in December 2019, preliminary issues hearings in January and February 2020 and detailed assessment hearings (listed provisionally) in April and June 2020. In the event the parties agreed that the directions hearing in December 2019 was not needed. Instead a directions hearing was held on 31 st January 2020 when it was agreed that the first three preliminary issues listed in the replies to Mr Vik's points of dispute should be decided at a hearing to commence on 26 th February 2020, when the Court should also address:
Whether the Court should (1) analyse the evidence served by the Claimant in response to Mr Vik's request for further information dated 26 July 2019 and if so, (2) give directions addressing the sufficiency of that evidence; and (3) if so, whether the evidence relied on by the Claimant is sufficient, and, if not, what further evidence the Claimant is to serve and by when.
At the hearing of those issues I was greatly assisted by the submissions of Mr Bacon QC, on behalf of the Claimant, and of Mr Williams QC and Mr Cohen, on behalf of Mr Vik. The Defendant was not represented at the hearing, nor at either of the earlier directions hearings, and has not served points of dispute.
The costs claimed by the Claimant against the Defendant and Mr Vik are in excess of £53m.
Interest
Section 17 of the Judgments Act 1838 provides:
(1) Every judgment debt shall carry interest at the rate of 8 pounds per centum per annum from such time as shall be prescribed by rules of court … until the same shall be satisfied, and such interest may be levied under a writ of execution on such judgment.
(2) Rules of court may provide for the court to disallow all or part of any interest otherwise payable under subsection (1).
Rule 40.8 of the Civil Procedure Rules 1998 provides:
(1) Where interest is payable on a judgment pursuant to section 17 of the Judgments Act 1838 or section 74 of the County Courts Act 1984, the interest shall begin to run from the date that judgment is given unless —
(a) a rule in another Part or a practice direction makes different provision; or
(b) the court orders otherwise.
(2) The court may order that interest shall begin to run from a date before the date that judgment is given.
Rule 44.2 provides (in part):
(6) The orders which the court may make under this rule include an order that a party must pay —
….
(g) interest on costs from or until a certain date, including a date before judgment.
The entitlement to interest on costs under section 17 of the 1838 Act is automatic. Generally the court will not order it expressly. Interest is therefore payable on costs at 8 per cent from the date of judgment ( Hunt v R.M.Douglas (Roofing) Ltd [1990] 1 AC 398) without an order to that effect unless the court makes a different order under either CPR 40.8 or CPR 44.2(6)(g).
The Claimant maintains its claim to interest on the assessed costs at the Judgments Act rate of 8 per cent from the date of the substantive judgment, 8 th November 2013, save for the period from 30 th April 2015 to 19 th July 2016 when it was agreed that interest should not run pending the appeal from the first non-party costs order.
Mr Vik contends that Judgment Act interest should be disallowed entirely because the bill does not contain sufficient particulars to enable him to decide whether or not to make a further offer or payment. Alternatively, it should run only from after service of the bill in January 20Further he contends that compensatory interest, that is, interest at a lower, commercial rate, should be awarded only until 1 st January 2015 when the Claimant could have commenced detailed assessment proceedings and should not restart until service of the bill at the earliest.
On behalf of the Claimant, Mr Bacon QC submitted that the question of interest has already been decided, by Cooke J., and therefore that this court is functus officio on this question. The argument derives from the wording of the order dated 8 th November 2013 and what was said to Cooke J. before and at the hearing which gave rise to that order.
Paragraph 43 of the Claimant's skeleton argument dated 2 days before the hearing...
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