Excalibur Ventures LLC v Texas Keystone Inc. and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Christopher Clarke |
| Judgment Date | 13 December 2013 |
| Neutral Citation | [2013] EWHC 4278 (Comm) |
| Docket Number | Case No: 2010 FOLIO 1517 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 13 December 2013 |
[2013] EWHC 4278 (Comm)
Lord Justice Christopher Clarke
Case No: 2010 FOLIO 1517
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Simon Picken QC, Timothy Kenefick, Jessica SutherlandandKeir Howie (instructed by Clifford Chance) for the Claimant
Michael Crane QC, Tamara OppenheimerandRichard Power (instructed by Jones Day) for the 1 st Defendant
Jonathan Gaisman QC, Harry MatovuQC, Richard WallerQC, Richard EschwegeandNicola Timmins (instructed by Memery Crystal) for the 2 nd, 3 rd and 4 th Defendants
Hearing dates: 13 th December 2013
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.
I now have to deal with the outstanding matters consequential on my judgment the full terms of which have been made public today, but the concluding paragraph of which was made public on 10 September of this year. No permission is sought to appeal that judgment.
It is not disputed that Excalibur must pay the defendants' costs of and occasioned by the proceedings.
The central matter that I have to decide is whether or not those costs should be assessed on the standard or the indemnity scale. The principles on which the court makes an order for costs on an indemnity scale are well recognised. I have taken into consideration all of the authorities to which I have been referred and I do not propose to conduct an extensive review of them.
In Balmoral v Borealis UK Limited [2006] EWHC 2351 I expressed matters in this way:
" The basic rule is that a successful party is entitled to his costs on the standard basis. The factors to be taken into account in deciding whether to order costs on the latter basis have been helpfully summarised by Tomlinson J inThree Rivers District Council v The Governor & Company of the Bank of England [2006] EWHC 816. The discretion is a wide one to be determined in the light of all the circumstances of the case. To award costs against an unsuccessful party on an indemnity scale is a departure from the norm. There must therefore be something, whether it be the conduct of the claimant or the circumstances of the case, which takes the case outside the norm. It is not necessary that the claimant should be guilty of dishonesty or moral blame. Unreasonableness in the conduct of proceedings and the raising of particular allegations or in the manner of raising them may suffice. So may the pursuit of a speculative claim involving a high risk of failure, or the making of allegations of dishonesty that turn out to be misconceived, or the conduct of an extensive publicity campaign designed to drive the party to settlement. The making of a grossly exaggerated claim may also be a ground for indemnity costs."
In the Three Rivers case Tomlinson J as he then was pointed out that if a claimant chooses to pursue speculative, weak, opportunistic or thin claims, he takes a high risk and can expect to pay indemnity costs if he fails. He gave examples of circumstances which took the case out of the norm as being where a claimant:
" (a) advances and aggressively pursues serious and wide-ranging allegations of dishonesty or impropriety over an extended period of time.
(b) advances and aggressively pursues such allegations despite the lack of any foundation in the documentary evidence for those allegations and maintains the allegations without apology to the bitter end.
(c) actively seeks to court publicity for its serious allegations both before and during the trial.
(d) turns a case into an unprecedented factual inquiry by the pursuit of an unjustified case.
(e) pursues a claim which is to put it most charitably thin, and in some respects far-fetched.
(f) pursues a claim which is irreconcilable with the contemporaneous documents.
(g) commences and pursues large scale and expensive litigation in circumstances calculated to exert commercial pressure on a defendant and during the course of the trial of the action the claimant resorts to advancing a constantly changing case in order to justify the allegations which it had made, only then to suffer a resounding defeat."
That seems to me to a considerable extent a summary of the present case.
In European Strategic Fund Limited v Skandinaviska Enskilda Banken AB [2012] EWHC 749, Gloster J, as she then was, awarded indemnity costs in circumstances where the claim was:
" (i) speculative involving a high risk of failure; (ii) grossly exaggerated in quantum; (ii) opportunistic; (iv) conducted in a manner that has paid very little regard to proportionality or reasonableness giving rise to the incurring of substantial costs on both sides; (V) pursued on all issues at full length to the end of the trial."
That too seems to me a pretty fair summary of the present case.
The fact that a claimant loses a massive claim and does so badly is not of itself a reason for ordering indemnity costs. Cases involving very large sums which founder on sharp juridical rocks are not automatically outwith the norms of this court. But all depends on the circumstances. This case was in my judgment out of the norm for a considerable number of reasons.
The claim was essentially speculative and opportunistic. It has been advanced at great length and by the assertion of a plethora of causes of action, all of which have been maintained to the last possible moment, no doubt upon instructions. Gulf, and to a lesser degree Texas, have been put to enormous expense in terms of legal costs and Mr Kozel has borne a heavy personal burden in dealing with it.
The litigation has been gargantuan in scope, involving a five month trial and 373 trial bundles. But it was based on no sound foundation in fact or law and it has met with a resounding, indeed catastrophic, defeat. The fact that it has done so arises in large measure as a result of facts and matters which were known to the Wempens before the case started. As Gloster J put it in JP Morgan Chase v Springwell:
" A party who chooses to litigate on such a wide and extravagant canvass takes the risk that if unsuccessful it may have to pay costs on an indemnity basis."
That the claim merits the description I have given to it is apparent for a number of reasons. Excalibur is and always has been nothing but a nameplate for the Wempen brothers, who lacked experience of the oil industry or oil finance and had no technical expertise whatever. Notwithstanding these deficiencies, Excalibur sought what would have been an enormous reward in the shape of an indirect interest in, inter alia, 30 per cent of the Shaikan oil field for what was essentially no more than the introduction of Texas and Gulf to the KRG, important though that was. It did so in circumstances where it had agreed to a bid going forward without Excalibur being a bidder, where it lacked the ability to finance its share, if it had one, and was inherently unlikely to be an acceptable partner for any financial institution, or acceptable to the Kurdistan Regional Government.
The claim was opportunistic. Mr Wempen bade his time until it was apparent that the field was likely to be very profitable before bringing these proceedings. Meanwhile the defendants, and not Excalibur, had borne the risk and expense.
As I observed in my judgment, Mr Wempen was a man long on assertion and confidence, but short on analysis and understanding. He has pursued this litigation as if it was an act of war. He took positive salesmanship beyond the point of acceptability.
From the beginning of his relationship with the KRG and for a considerable time thereafter he managed to convey the thoroughly misleading impression that he had financial and other connections, until it became apparent, first to his friend and associate Mr Kinnear, and latterly to Texas and Gulf and the KRG, that he did not. It can truthfully be said that the dispute had its origins and developed as a result of Mr Wempen's misrepresentations about himself.
The claims put forward were an elaborate and artificial construct which, as Mr Gaisman, in my view not inaccurately, puts it, were reverse engineered from the position in which the Wempens found themselves on the facts. They were replete with defects, illogicalities and inherent improbabilities. The claims involved asserting that Gulf was a partner to the Collaboration Agreement from the outset. This was inconsistent with the clear terms of the agreement and impossible to square with the absence of any evidence that Gulf ever authorised Texas to enter into the agreement on Gulf's behalf, or that Texas agreed to do so, and of any contemporaneous claim by Excalibur that Gulf was a party.
Insofar as an attempt was made to rely on apparent authority it foundered on the fact that on his own evidence Mr Eric Wempen thought that there was a question mark over whether Gulf was a party.
The proposition that Gulf was a party was also completely inconsistent with the attitude that Excalibur itself had taken when the question of Texas assigning an interest to Gulf arose in April and May of 2007.
The alter ego allegation, which led to requests for large amounts of documentation, which was given, was completely untenable, it being plain that Gulf and Texas were two independent companies. It was inconsistent with the documents, and the idea that Gulf dominated Texas and, in particular, that Mr Kozel dominated his brother was, as I said in my judgment, bordering on the risible.
The case on...
To continue reading
Request your trial
-
Julie Anne Davey v James Money
...The overall nature the case can be seen from paragraphs [8] and [9] of Christopher Clarke LJ's judgment on costs against Excalibur: [2013] EWHC 4278 (Comm), “8. The claim was essentially speculative and opportunistic. It has been advanced at great length and by the assertion of a plethora ......
-
Craig Wright v Peter McCormack
...will not allow their costs rules to be used for tactical purposes of this kind: see Excalibur Ventures LLC v Texas Keystone Inc [2013] EWHC 4278 (Comm). Mr McCormack's application to set aside the Dagnall and Knowles Orders 58 CPR 3.1(7) provides that a power of a court under the CPR to ma......
-
Carmela De Sena v Joseph Notaro
...perceived or unaddressed weaknesses in the claims.” 10 The claimants also refer me to an earlier judgment in Excalibur Ventures, at [2013] EWHC 4278 (Comm), where Christopher Clarke LJ said: “7. The fact that a claimant loses a massive claim and does so badly is not of itself a reason for ......
-
Excalibur Ventures LLC v Texas Keystone Inc. and Others
...litigation as having met with "a resounding, indeed catastrophic, defeat". 8 In his costs judgment delivered on 13 December 2013, [2013] EWHC 4278 (Comm), the judge summarised the claim in this way: "8. The claim was essentially speculative and opportunistic. It has been advanced at great ......
-
Post-Judgment Security For Costs Has The Court Jurisdiction To Grant It?
...costs order in Djibouti against the government were almost non-existent. Mr Waller also relied on Excalibur Ventures v Gulf Keystone [2013] EWHC 4278 (Comm) as an example of the court exercising this Mr Justice Flaux held that the court did have the requisite jurisdiction under CPR 25.12. T......
-
Professional Minimalism? The Ethical Consciousness of Commercial Lawyers
...on prosecution witness, courthears' Financial Times, 6 November 2013.3Excalibur Ventures LLC v. Texas Keystone Inc and others [2013] EWHC 4278 (Comm).4 R. Moorhead, `Excalibur raises serious professional conduct concerns for CliffordChance' (2014), at com/2014/01/15/excalibur-raises-serious......