Lakatamia Shipping Company Ltd v Nobu Su (aka Su Hsin Chi; aka Nobu Morimoto)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Bryan |
| Judgment Date | 08 October 2021 |
| Neutral Citation | [2021] EWHC 2702 (Comm) |
| Docket Number | Case No: CL-2019-000141 |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 2702 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Rolls Building, Fetter Lane
London, EC4A 1NL
THE HON. Mr Justice Bryan
Case No: CL-2019-000141
Hill Dickinson LLP for the Claimant
Clyde & Co for the Respondent Baker McKenzie LLP
Written Submissions 20 August 2021, 13, 17 and 22 September 2021
Approved Judgment
A. INTRODUCTION
On 8 July 2021, and after a substantial trial taking place over 17 days, I handed down judgment in favour of the Claimant Lakatamia Shipping Co Ltd (“Lakatamia”) against, amongst other defendants, Madam Su (reported as Lakatamia v Su [2021] EWHC 1907 (Comm) (“the Judgment”)). The Judgment itself runs to some 966 paragraphs over the course of some 218 pages. I found that Madam Su had unlawfully conspired with her son (“Mr Su”) to dissipate the net proceeds of the sale of certain of his assets in breach of a freezing order to which Mr Su was (and still is) subject. The assets in question were two Monegasque villas and a private plane. I also held that Madam Su had, by the same conduct, intentionally and knowingly violated Lakatamia's rights in a judgment debt that Mr Su owes to Lakatamia.
Pursuant to the Order consequent upon the Judgment, I directed that Madam Su pay damages of €27,127,855.01 and US$857,329.73. I also ordered Madam Su to bear Lakatamia's costs of the action to be assessed on the indemnity basis if not first agreed, and to make a payment on account of those costs of £1,440,000 (Lakatamia's preliminary costs schedule recorded costs incurred of £2,444,637.23). Madam Su was required to pay those sums by 23 July 2021. No payment has been made by Madam Su, and no indication has been given that she intends to pay such costs.
Following correspondence between Hill Dickinson (on behalf of the Lakatamia), and Baker McKenzie (who acted in the action on behalf of Madam Su) in which Hill Dickinson indicated that Lakatamia intended to apply for a wasted costs order against Baker McKenzie, Lakatamia issued an application notice on 20 August 2021 (the “Application”) seeking such a wasted costs order pursuant to s.51(6) of the Senior Courts Act 1981 and CPR Pt 46.8. In anticipation of the application, Baker McKenzie notified their professional indemnity insurers and appointed Clyde & Co and leading counsel to act on their behalf to resist the application.
The Application was supported by an 87 paragraph witness statement running to some 37 pages accompanied by extensive exhibits in the form of the Fourteenth Witness Statement of Russell St John Gardner (“Mr Gardner”) a partner in Hill Dickinson (and witness at the trial) who has the conduct of the action on Lakatamia's behalf. The Application was accompanied by a 25 paragraph letter from Hill Dickinson dated 20 August 2021 addressing the first stage of the Court's consideration as to whether it is appropriate to make a wasted costs order (as addressed below). Even at this first stage Clyde & Co made detailed responsive submissions in a letter dated 13 September running to some 26 paragraphs setting out why it submitted that the Application should be dismissed on the basis, so it was said, that it disclosed insufficient merit on its face and raised issues inappropriate for the swift, summary, process required in wasted costs applications. Clyde & Co's submissions prompted a response from Hill Dickinson in relation to two of the authorities that had been relied upon and what could be derived therefrom which, in turn, provoked a further response from Clyde & Co on 22 September in relation thereto.
The sheer size of these initial submissions seeking to persuade me that the first stage is satisfied, so that the Application should proceed to the legal representatives being given an opportunity to make representations in writing to be followed by an oral hearing after which the Court would consider whether to make a wasted costs order, might be thought to be something of an inauspicious start to a wasted costs application, and the summary nature of such an application, not least in circumstances where, as the trial judge, I am intimately aware of what occurred during the trial and what findings I have made, and so am well placed to assess stage one without extensive submissions.
It appears (from Clyde & Co's letter of 13 September 2021) that Baker McKenzie has already incurred some £76,133 plus VAT in fees and disbursements in response to Hill Dickinson's lengthy witness evidence and associated submissions, and Baker McKenzie estimates that if the matter proceeds to stage 2 Baker McKenzie would incur further costs and disbursements in the region of £300,000 to £500,000 to the end of a stage 2 hearing. Hill Dickinson (in bringing the application on behalf of Lakatamia) have no doubt themselves also incurred substantial costs to date and would incur further substantial costs going forward. I will need to return to such matters (and the necessary length of a hearing if matters proceed to stage 2) when considering whether the wasted costs application is capable of summary determination.
B. Section 51(6) of the Senior Courts Act 1981 and CPR PD 46 rr 5.5–5.7
Section 51 of the Senior Courts Act 1981 provides, amongst other matters, as follows:-
“51(1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in—
…
(b) the High Court…
… shall be in the discretion of the court.
…
(6) In any proceedings mentioned in subsection (1), the court may disallow, or (as the case may be) order the legal or other representative concerned to meet, the whole of any wasted costs or such part of them as may be determined in accordance with rules of court.
(7) In subsection (6), “wasted costs” means any costs incurred by a party—
(a) as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative; or
(b) which, in the light of any such act or omission occurring after they were incurred, the court considers it is unreasonable to expect that party to pay.”
CPR PD 46 rr 5.5–5.7 provide as follows:
“5.5 It is appropriate for the court to make a wasted costs order against a legal representative, only if –
(a) the legal representative has acted improperly, unreasonably or negligently;
(b) the legal representative's conduct has caused a party to incur unnecessary costs, or has meant that costs incurred by a party prior to the improper, unreasonable or negligent act or omission have been wasted;
(c) it is just in all the circumstances to order the legal representative to compensate that party for the whole or part of those costs.
5.6 The court will give directions about the procedure to be followed in each case in order to ensure that the issues are dealt with in a way which is fair and as simple and summary as the circumstances permit.
5.7 As a general rule the court will consider whether to make a wasted costs order in two stages –
(a) at the first stage the court must be satisfied –
(i) that it has before it evidence or other material which, if unanswered, would be likely to lead to a wasted costs order being made; and
(ii) the wasted costs proceedings are justified notwithstanding the likely costs involved;
(b) at the second stage, the court will consider, after giving the legal representative an opportunity to make representations in writing or at a hearing, whether it is appropriate to make a wasted costs order in accordance with paragraph 5.5 above.”
It will be seen that CPR PD 46 r.5.5(a) identifies the criteria one or more of which must be satisfied (the legal representative has acted “improperly, unreasonably or negligently”), r.5.5(b) introduces a causal element – the representative's conduct must have “caused a party to incur unnecessary costs, or has meant that costs incurred by a party prior to the improper, unreasonable or negligent act or omission have been wasted”, and r. 5.5(c) provides that “it must be just in all the circumstances to order the legal representative to compensate that party for the whole or part of those costs”.
The parties are in agreement (subject to the view of the Court) that the Application should be considered by the Court following the two stage process envisaged in r. 5.7. I agree that this is the appropriate way forward in the present case, not least given the issues that arise and the consequences of matters proceeding to stage 2. According at this first stage (and in order for the matter to proceed to the second stage), it is for me to be satisfied (1) that there is evidence or other material before me which, if unanswered would be likely to lead to a wasted costs order being made, and (2) the wasted costs proceedings are justified notwithstanding the likely costs involved.
In this regard, and as was said by Lord Bingham in Ridehalgh v Horsefield [1994] Ch 205 (“ Ridehalgh”) at pp 239D-F, the wasted costs jurisdiction is:
“…dependent at two stages upon the discretion of the court. The first is at the stage of initial application, when the court is invited to give the legal representative an opportunity to show cause. This is not something to be done automatically or without careful appraisal of the relevant circumstances. The...
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Anthony Douglas King v Barry Stiefel
...relevant evidence is obscured from the court's view”. 107 More recently, Bryan J in Lakatamia Shipping Co Ltd v Baker McKenzie LLP [2021] EWHC 2702 (Comm) [75] warned against applications which have “all the hallmarks of heavy satellite litigation the furtherance of which is to be 108 Mr T......