Maroil Trading Inc. v Cally Shipholdings Inc.
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Cockerill |
| Judgment Date | 27 October 2020 |
| Neutral Citation | [2020] EWHC 3041 (Comm) |
| Date | 27 October 2020 |
| Docket Number | No. CL-2018-000824 |
| Court | Queen's Bench Division (Commercial Court) |
[2020] EWHC 3041 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Rolls Building
Fetter Lane
London EC4A 1NL
Mrs Justice Cockerill
No. CL-2018-000824
and
APPEARANCES
Mr T. Grant QC and Mr T. Fletcher (instructed by Grosvenor Law) appeared on behalf of the Claimants.
Mr D. Allen QC and Mr K. Howie (instructed by Reed Smith LLP) appeared on behalf of the Defendants.
Ms S. Tolaney QC and Mr J. Ruddell (instructed by Freshfields Bruckhaus Deringer LLP) appeared on behalf of the Third Parties.
( )
The issues arising for decision in this fairly lengthy hearing today are, firstly, how much security should the claimants provide in respect of the Part 7 proceedings; secondly, the question in relation to the security in relation to the third party costs, and then, moving on from that, the amount of third party costs.
I will deal first with the question that was dealt with first, which is how much security the claimant should provide in respect of the Part 7 proceedings. In relation to that, the parties have respectively contended for seventy per cent and sixty per cent, being the percentage range usually awarded on assessment, though the claimants then go on to say that because of the high starting point a considerable discount from sixty per cent ought to be effectively applied one way or the other. My own understanding is that the way that this would proceed on taxation is what is recovered is a factor of exactly how reasonable individual costs are and so individual line items in the documents before me can give a flavour of the appropriate percentage, whether it should be seventy per cent, sixty per cent or other.
So far as the approach which was urged on me by Mr Grant for the claimants, which has been slightly unfairly or cruelly called the “double discounting” approach, in my view, that is not a particularly helpful way to proceed because, in general, an assessment would not proceed on that basis.
I note, of course, that some categories would be assessed more harshly than the overall figure that we have been talking about and some would be assessed less harshly. So, for example, here, as with the third party costs, there is no challenge at all in relation to a number of the categories. I would also note that what I am trying to do here is arrive at an overall figure.
Mr Grant directed my attention to the Tugushev case as indicating that this double layered approach is appropriate. It seems to me that that was a particular approach taken in a particular case, where there was a very large estimate based on some very inadequate materials and there, looking at particular line items and the inadequacy of the material which the Deputy Judge had, he decided to follow that approach. There is no other authority for that approach. I prefer, in this case, to pursue something which is rather more like looking at the likely outcome on a detailed assessment as a single percentage and applying that.
So in looking at where we get in relation to that, I have been taken to a number of different categories of areas within the schedules where issue was taken, and I bear well in mind that there were some areas where issue was not taken. So there was “preparing documents for counsel”. It seemed to me that the discount which was proposed by the claimants was plainly too low, though there remains a serious point as to what discount would be applied on a detailed assessment for a change of counsel involving a need for new counsel to read into a case. So it seems to me that that was an area where one would probably expect to find a discount perhaps somewhat above thirty per cent but not a huge amount above thirty per cent.
In relation to pre-CMC disclosure costs, I was struck, as I noted to Mr Allen in submissions, with 120 either partner or very senior assistant level hours for this initial exercise, which equates to three weeks of senior fee earner time. While the point he makes about the significant partner or senior fee earner involvement in setting up disclosure is a good one, it seems to me that there are limits and three weeks is a very significant figure which is indicative that a discount above seventy per cent may well be appropriate.
In relation to the amended reply, again, while it is obviously reasonable to have fees of leading counsel looking at a substantial amendment in a significant document and to allow time for leading counsel and junior counsel to do that, the figure claimed is high. This is where we get to what one might term the “Rolls-Royce submission”, which is made equally in relation to Mr Gaisman, Mr Allen and the hourly rates for the third parties' solicitors. That is an area where the authorities, in particular the Dana Gas PJSC v. Dana Gas Sukuk Ltd [2018] EWHC 332 (Comm), per Leggatt LJ, indicates that what will be recoverable on assessment is not necessarily the full Rolls-Royce but more the reasonable amount somewhere considerably below the Rolls-Royce level. So, again, I would expect to see on an assessment a discount which is probably going to take it below the seventy per cent.
Similarly, in relation to the rejoinder, which is a short document and you have got two counsel charging a fairly significant amount of money, I would expect that to indicate a reduction somewhat below seventy per cent.
The CMC, although there was a full day hearing and there were a large number of points in issue, there are two stand-out points. The first is Mr Allen's brief fee. Yes, there is reading in but, again, the extent to which one can expect that to be recoverable on taxation. And in any event, it is a very, very significant brief fee and, even in the absence of evidence about the claimants' fees, one can see it is a very significant brief fee which one would expect to see scythed to some extent on taxation. Similarly, 200 hours of solicitors' time. Yes, CMCs take a long time to prepare for; but that is effectively one month's solid work by somebody or two weeks' solid work for two people. That is, again, the level one expects a cut – I am not saying a scythe – but a significant cut to be made on assessment.
Disclosure; in relation to that, I entirely take on board the points which Mr Allen has made in detail and which Mr Kirkpatrick has made in his witness statement in relation to the archives which have turned out to contain rather more documents than was anticipated, in fact, 63,000 rather than 10,000, and where it has proved impossible to do automatic or electronic de-duplication so that manual de-duplication is going to have to be done. These are not completely speculative costs. They are slightly uncertain at the moment and it may be possible for the parties to liaise as to some other search which can be done which could cut it down further. But, on the basis of what there is at the moment, the actual review process seems reasonable. Thirty to forty documents an hour is not at all unreasonable. So there is it seems to me, on the basis of the evidence which there is, a need to do this but it is a major amount which is likely inevitably to be the target of a costs judge at some point. There are significant counsel fees. There is a considerable amount of counsel time, both leading and junior, an area which is likely to be heavily trimmed on taxation. Again, what I am seeing is something which suggests probably above the thirty per cent reduction which one would normally see but not massively above.
Witness statements is an area where I would expect a significant reduction on a detailed assessment. We have got what appears to be about 7.5 days per witness statement, excluding the significant amounts of counsel time, and eight and a half days, I think it is roughly, of Mr Kirkpatrick's time. There are £150,000 of counsel fees for witness statements. That accounts for, I think, nearly half of the amount which is sought and that is against a background where there are issues as to just how substantial the witness statements will have to be, given the nature of the litigation, and the fact that a considerable amount of the factual issue is at one end or the other of the chain. So this is an area where I would expect a discount to take the amount down well below sixty per cent.
At the end of the day, I then look at what we take out of those indications. I bear in mind that the exercise which I am doing is a very different exercise to doing a summary assessment or a costs budget, where one...
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