Ras Al Khaimah Investment Authority v Farhad Azima
| Jurisdiction | England & Wales |
| Judge | Mr Justice Michael Green |
| Judgment Date | 27 July 2023 |
| Neutral Citation | [2023] EWHC 1923 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC-2016-002798 |
-and-
and
and
and
[2023] EWHC 1923 (Ch)
Mr Justice Michael Green
Case No: HC-2016-002798
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Thomas Plewman KC, Frederick Wilmot-Smith and Sophie Bird (instructed by Burlingtons LLP) for the Claimant and Defendant to the Counterclaim
Fionn Pilbrow KC and Aarushi Sahore (instructed by Charles Fussell & Co LLP) for the Second Additional Defendant to the Counterclaim
Craig Morrison KC and Robert Harris (instructed by Enyo Law LLP) for the Third Additional Defendant to the Counterclaim
Antony White KC and Ben Silverstone (instructed by Kingsley Napley LLP) for the Fourth Additional Defendant to the Counterclaim
Hearing dates: 19 July 2023
Approved Judgment
Introduction
I am the assigned Judge to these proceedings and on 19 July 2023 I held a Costs and Case Management Conference (“CCMC”). The only outstanding issue from that hearing, on which I reserved judgment, is the parties' costs budgeting. The other issues were security for costs and directions to trial, both of which were disposed of by consent.
The costs that the parties anticipate spending on this litigation are eye-wateringly high. In respect of an eight to ten week trial listed for May 2024, Mr Azima, the Counterclaimant, is now budgeting for total costs of £21,558,473.37, including estimated future costs of £12,363,245.97. In an earlier iteration of his costs budget on 30 March 2023, Mr Azima had calculated that he would spend £4 million more. The three separately represented Additional Defendants have a combined total budgeted costs figure of £24,945,315.27.
The main disputed items are in relation to Mr Azima's costs budget, although many other items have been agreed. I am pleased to say that Dechert's and Mr Gerrard's costs budgets have been agreed by Mr Azima. There are a couple of points with which Mr Azima takes issue in respect of Mr Buchanan's costs budget.
I have delivered a number of judgments in these proceedings – see for example [2022] EWHC 1295 (Ch) and [2022] EWHC 2727 (Ch), the latter of which was recently upheld by the Court of Appeal at [2023] EWCA Civ 507. I respectfully refer to and adopt those judgments for the detailed background to these proceedings which I will not repeat. I will also use the same definitions and abbreviations that I have used previously.
Costs budgeting
I did query at the hearing whether the Court could make any meaningful assessment of the parties' future costs in a case of this size and complexity. I was reminded however that on 13 May 2022 I made an Order by consent that costs budgeting would apply to these proceedings. Nevertheless I remain of the view that it is not really possible, save in very broad terms, to assess the reasonableness of particular costs items and that, in a case such as this, it is invidious to do so, particularly as that assessment effectively fixes the recoverable costs of the winning party, subject to exceptional circumstances and any different basis of assessment that is ordered.
Nevertheless, I am obliged by CPR 3.15(2) to make an assessment as to the reasonableness and proportionality of the disputed items. Under CPR 3.15(2) I am only concerned with future costs, not incurred costs. I can record the extent to which incurred costs are agreed, but it is only in relation to budgeted future costs that I am meant to make “ appropriate revisions”. I am able to comment on the incurred costs ( CPR 3.15(4)) and can take such comments into account when considering the reasonableness and proportionality of the budgeted costs ( CPR 3.17(3)(b)). The Additional Defendants invite me to do that in relation to Mr Azima's costs.
However this power to comment on incurred costs is expected to be used “ sparingly” (see para 6.70 of the Chancery Guide). The power was used by Coulson J, as he then was, in CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd [2015] EWHC 481 (TCC) but, as Mr Plewman KC on behalf of Mr Azima submitted, that was a fairly straightforward construction case of the sort of which that Judge had tremendous experience and he was therefore able to assess what would be a reasonable overall level of costs. This case is very different and I think it is impossible for a Judge to have a feel for what would be a reasonable amount of costs to spend overall on this sort of case.
By para 12 of CPR PD 3D, the Court does not “ undertake a detailed assessment in advance, but rather will consider whether the budgeted costs fall within the range of reasonable and proportionate costs.”
The Additional Defendants complained about the lack of engagement from Mr Azima after their costs budgets were exchanged on 30 March 2023. Revised costs budgets were exchanged on 11 July 2023, together with budget discussion reports on the following day. The disputed items further narrowed between then and the hearing.
Context
Before looking at the remaining disputed items, I should deal with two general points that were made by the Additional Defendants: (1) Mr White KC on behalf of Mr Buchanan made some submissions as to proportionality and in particular the amount that is truly at stake in these proceedings; and (2) Mr Pilbrow KC on behalf of Mr Gerrard made submissions as to the source of Mr Azima's funding of this litigation. In respect of the disputed items they both adopt the submissions of Mr Morrison KC on behalf of Dechert; but they say that these overarching points should be borne in mind in considering whether I should indeed assess those items at the level proposed by Dechert.
Mr White KC's characteristically succinct submissions focused on Mr Azima's claimed losses which he says have now reduced considerably or were really unsustainable as a matter of law. He said that there are four main heads of loss claimed by Mr Azima:
(1) Pecuniary losses – these were at one time valued at $13,861,186 based on losses allegedly suffered by Mr Azima's businesses but these have been largely abandoned as they offended the principle against reflective loss; the claimed losses now stand at only $36,058 based on losses in relation to computer equipment.
(2) Damages for distress arising from misuse of private information and breach of confidence – Mr White KC said that recent cases show that these damages are very modest in amount and could not in this case exceed £50,000.
(3) Exemplary damages – but these too are said to be generally modest in value.
(4) Disgorgement of profits – Mr White KC submitted that this would require that Mr Azima prove that Mr Buchanan had received a benefit from Mr Azima and the professed non-reliance on the Iniquity Documents that founded the original claim against Mr Azima will make that task much harder.
Mr Plewman KC responded to these points by saying that it is far too early to say that there will not be substantial damages awarded to Mr Azima at the end of the trial and the claims to exemplary damages and a disgorgement of profits remain on the pleadings and the Additional Defendants have not sought to strike them out. Furthermore, in addition, Mr Azima is claiming back the damages he had to pay RAKIA, together with interest and the costs orders against him, all of which could amount to quite a lot.
It seems to me that I cannot make any sort of realistic assessment of the likely level of recovery that will be made by Mr Azima. In the context of costs budgeting, I have to assume that Mr Azima succeeds in proving all aspects of his case and that a standard basis of assessment...
To continue reading
Request your trial