Euroption Strategic Fund Ltd v Skandinaviska Enskilda Banken Ab
| Jurisdiction | England & Wales |
| Judge | MRS JUSTICE GLOSTER, DBE,Mrs Justice Gloster DBE |
| Judgment Date | 30 March 2012 |
| Neutral Citation | [2012] EWHC 749 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2010 Folio 221 |
| Date | 30 March 2012 |
[2012] EWHC 749 (Comm)
Mrs Justice Gloster, DBE
Case No: 2010 Folio 221
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings, London EC4A 1NL
Sharif Shivji Esq (instructed by Stewarts Law LLP) for the Claimant
Daniel Toledano Esq, QC & Sam O'Leary Esq (instructed by Clifford Chance LLP) for the Defendant
Hearing date: 15 th March 2012
Further written submissions received on 16 th March 2012
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.
This judgment deals with one outstanding issue following the judgment which I handed down in this matter on 15 March 2012 ( [2012] EWHC 584 (Comm)). That judgment gave the reasons for my dismissal of Euroption's claim. I use the same definitions as those used in my earlier judgment.
At the handing down of the judgment, I heard argument in relation to various consequential matters. These included: the basis for the assessment of SEB's costs; whether there should be a deduction of 15% in relation to SEB's costs; the quantum of any order for an interim payment on account; and Euroption's application for permission to appeal.
There was no dispute on that occasion that Euroption should pay SEB's costs and interest thereon: what was in dispute in relation to costs was whether:
i) there should be a deduction from SEB's costs of some 15%;
ii) whether SEB's costs should be assessed on the standard or indemnity basis; and
iii) the quantum of any order for an interim payment.
Deduction
For the reasons which I gave orally at the hearing, I decided that, contrary to Euroption's submission, it was not appropriate that there should be any deduction from SEB's costs to reflect the fact that it had chosen not to mediate Euroption's claim.
I took the view that, in circumstances where SEB had, by its letter dated 30 April 2010, which was marked "without prejudice save as to costs", made its position perfectly clear (namely, that it saw no merit in the claim but was prepared to forego its substantial costs to date if the claim was dismissed), and where, as I have found, there was indeed no merit in Euroption's claim, there was no reason why SEB should have incurred the additional costs of mediation. I doubt very much whether Euroption would have accepted a mediated outcome on the basis of each side bearing its own costs, or anything similar. It was clear from the correspondence that it was seeking to secure a substantial sum in an amount of many millions of Euros for its agreement not to pursue its claim. I see no reason why SEB should have been required to engage in a mediation process in circumstances where it was, rightly, in the event, maintaining that Euroption's claim for €135 million was without foundation. For reputational and other reasons, there was no reason whatsoever for SEB to pay Euroption anything for the certainty of removing the threat of Euroption's claim. There was nothing unreasonable in SEB not acceding to Euroption's request to mediate that would justify a reduction in SEB's entitlement to costs.
Interim payment
It was common ground that an interim payment should be made. However, there was a dispute as to the quantum of such interim payment. Euroption contended that the figure should be merely £750,000; SEB contended that it should be £1.25 million, representing approximately 50% of SEB's total costs, including an element for irrecoverable VAT. In relation to this last matter, I received letters from SEB's solicitors, Clifford Chance, clearly explaining the basis for the calculation of the VAT figures that were put forward in SEB's schedule of costs. In an email to the parties sent by my clerk on 19 March 2012, I indicated that, in the exercise of my discretion, 50% of SEB's claimed costs, namely, the sum of £1.25 million, was the appropriate figure to require Euroption to pay on account, even on the assumption that SEB's costs were only to be assessed on the standard basis. Looking at SEB's costs schedule, I consider that it is highly improbable that SEB's costs will be assessed at less than this sum.
Permission to appeal
At the hearing on 15 March, I also refused Euroption's application for permission to appeal. Euroption has no reasonable prospect of success. Even if, despite the Court of Appeal decision in Socimer International Bank Ltd (in Liquidation) v Standard Bank London Ltd (No 2) [2008] 1 Lloyd's Rep 558, it could be argued that SEB owed Euroption a duty to take reasonable care in the conduct of the close out, as opposed to merely a duty to act rationally, Euroption's case is hopeless on the facts. It would not succeed in establishing a breach of any duty to take reasonable care.
Standard or indemnity basis for assessment of SEB's costs
Accordingly, the issue which remains for determination is the basis upon which SEB's costs should be assessed. SEB contends that Euroption should pay SEB's costs of the action, to be the subject of a detailed assessment, on the indemnity basis. Whilst Euroption did not ask for any order for costs in its favour, it contends that SEB's costs should only be assessed on the standard basis.
The starting point is section 51 of the Senior Courts Act 1981, which provides that costs are in the discretion of the court, subject to the rules of the court.
The relevant provisions of the CPR are those contained in rules 44.3, 44.4 and 44.5. As rules 44.4 and 44.5 make clear, there are two differences between the two bases of assessment. The first difference is as to the party who bears the relevant burden of persuasion in a case of doubt as to whether costs were reasonably incurred or reasonable in amount. On the standard basis of assessment, the burden of proof is on the receiving party: see rule 44.4(2)(b). On the indemnity basis, the burden of proof is on the paying party: see rule 44.4(3). The second difference is that, on the standard basis of assessment, the paying party has the benefit of the limitation contained in rule 44.4(2)(a), namely, that only costs which are proportionate to the matters in issue are recoverable.
The relevant principles
There was virtually common ground between the parties as to the principles to be applied by the court in making its choice between the two bases of assessment. The principles are well-known and have been exhaustively rehearsed in the relevant authorities. The following is no more than a headline summary.
First, on either basis, the receiving party is only entitled to recover costs which it has actually incurred, and, further, is only entitled to receive costs which were reasonably incurred and were reasonable in amount. Second, the standard basis is the normal basis of assessment: see Reed Minty v Taylor [2002] 1 WLR 2800 at [28]; Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA (Civ) 879 at [19]. This means that there has to be something in the conduct of the action, or about the circumstances of the case in question, which takes it out of the norm in a way which justifies an order for indemnity costs: see Excelsior (supra) and Noorani v Calver [2009] EWHC 592 (QB) at [9], per Coulson J. Third, cases vary very considerably, and the Court of Appeal has declined to lay down guidelines on the subject: see Excelsior (supra) at [32]. It is obvious from a reading of the authorities that each case is highly fact-dependent.
Fourth, to demonstrate that a case has gone outside the norm of behaviour, it is not necessary to show that the paying party's conduct lacked moral probity or deserved moral condemnation in order to attract recovery of costs on an indemnity basis: see Balmoral Group Ltd v Borealis (UK) Ltd [2006] EWHC 2531 (Comm) at [1], where Christopher Clarke J said:
"… The basic rule is that a successful party is entitled to his costs on the...
To continue reading
Request your trial
-
Simmons & Simmons LLP v Hickox
...costs have been recently summarised in paragraphs 11 to 15 of the judgment of Gloster J, as she then was, in Euroption Strategic Fund Limited v Skandinaviska Enskilda Banken [2012] EWHC 749 (Comm) on 30 March 2012. In essence, what is required in order to justify an order for indemnity cost......
-
Miss Mercel Hislop v Miss Laura Perde
...Construction Ltd v HGP Greentree Alchurch Evans Ltd [2006] BLR 45 and Euroption Strategic Fund Ltd v Skandinaviska Enskilda Banken AB [2012] EWHC 749 (Comm). 36 Those general principles can be summarised as follows: a) Indemnity costs are appropriate only where the conduct of a paying party......
-
Andrew Lawrence Hosking v Apax Partners LLP & others
...of England [2006] 5 Costs LR 714 and the judgment of Gloster J in Euroption Strategic Fund Ltd v Skandinaviska Enskilda Banken AB [2012] EWHC 749 (Comm).” 41 In the passage from her Judgment in the Euroption case which is referred to above, Gloster J (as she then was) said the following: “T......
-
Carmela De Sena v Joseph Notaro
...the case outside the norm …” 41. In the passage from her judgment in Euroption Strategic Fund Ltd v Skandinaviska Enskilda Banken AB [2012] EWHC 749 (Comm) … Gloster J said the following: “… Fourth, to demonstrate that a case has gone outside the norm of behaviour, it is not necessary to s......