VTB Bank (PJSC) v Mr Dmytro Firtash
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Moulder |
| Judgment Date | 18 June 2021 |
| Neutral Citation | [2021] EWHC 1634 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 18 June 2021 |
| Docket Number | Case No: CL-2019-000122 |
[2021] EWHC 1634 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
The Rolls Building
7 Rolls Building
Fetter Lane, London
EC4A 1NL
Mrs Justice Moulder
Case No: CL-2019-000122
Paul Stanley QC (instructed by Herbert Smith Freehills LLP) for the Claimant
Brian Doctor QC and Tetyana Nesterchuk (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) for the Defendant
Hearing date: 19 May 2021
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.
Pursuant to an order of 20 May 2021 following the hearing on 19 May 2021 it was ordered (inter alia) that:
i) The Claimant pays the Defendant's costs of the Application incurred up to and including 22 February 2021 summarily assessed in the amount of £43,000 within 14 days of the order.
ii) The remaining costs of the Application and the costs of and occasioned by the Freezing Order are reserved.
iii) The parties shall make written submissions on the costs of the Application incurred from 23 February 2021, as well as the costs of and occasioned by the Freezing Order proceedings save insofar as already disposed of in this order, such written submissions to be limited to 5 pages and filed by 4 pm on 26 May 2021.
This judgment addresses the issues which were reserved from the hearing on 19 May 2021 of the remaining costs of the Application and the costs of and occasioned by the Freezing Order.
Background
Following a hearing on 23 April 2021 (the “April Hearing”) of the application by the Defendant dated 18 February 2021 as amended by an application dated 5 March 2021 (the “Application”), the court determined, for the reasons set out in its judgment dated 14 May 2021 [2021] EWHC 1203 (Comm) that the Claimant (“VTB”) should increase to £10 million the amount of fortification in respect of its cross-undertaking in damages given as a condition of obtaining the order of Cockerill J dated 26 February 2019, as amended by the order of Moulder J dated 26 March 2019 and further amended by consent pursuant to the order of Foxton J dated 23 February 2021 (together, the “Freezing Order”)
The parties subsequently agreed that the Claimant should pay the Defendant's costs of the Application incurred up to and including 22 February 2021 but at a hearing on 19 May 2021 to deal with consequential matters arising from the Judgment (the “Consequential Hearing”). counsel for the Claimant stated that the Claimant was not willing to provide the additional fortification and accordingly the Freezing Order should be discharged. It was submitted for VTB that the court had no power to order VTB to provide fortification. The court accepted on the authorities (as set out in a separate ruling) that the court had no power to order VTB to provide fortification and therefore ordered that the Freezing Order be discharged.
Although the court had already given an ex tempore ruling in respect of the costs from 23 February 2021 up to the date of the April Hearing (but not the period after 23 April 2021), the court agreed to reserve the issue of costs in relation to both periods pending further submissions from the parties and the order made on 20 May 2021 reflected this. It seemed to me to be in the interests of justice that the court should consider whether to amend its conclusions expressed at the hearing in relation to the costs for the period from 23 February 2021 to 22 April 2021 in the light of the stance taken by the Claimant at the Consequential Hearing which resulted in the discharge of the Freezing Order. It seems to me on the authorities that it is clear that the court has such power ( Ultraframe (UK) v Fielding [2006] EWCA Civ 1660; [2007] 2 All E.R. 983, CA) and no submissions were made to the contrary. I note that in this instance the extempore ruling had not been perfected and the order made in relation to costs (other than in respect of the period up to and including 22 February 2021) is that the costs are reserved. Accordingly this judgment is the judgment of the court on the issue of costs in respect of the period from 23 February 2021 to the hearing of the Application and costs for the period from 24 April 2021.
General principles as to costs
The court has a discretion under CPR 44.2 as to whether costs are payable by one party to another and the amount of those costs. Pursuant to CPR 44.2(2)(a), the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, but the court may make a different order.
CPR 44.2 (4) provides (so far as material):
“(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
(c)…”
CPR 44.2 (5) provides:
“(5) The conduct of the parties includes –
(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol;
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.”
Claimant's submissions
It was submitted for VTB that the right order in principle is that the Defendant should have his costs on those issues upon which he has succeeded and VTB should have its costs on those issues on which he failed. VTB submitted that the Defendant should have its costs in respect of the period up to 18 February 2021, but nothing thereafter, apart from 20 per cent in respect of the hearing itself. It was submitted for VTB that the Defendant should get its costs up to 18 February 2021, as these related to the issues upon which he succeeded, but thereafter the costs largely related to issues upon which VTB succeeded. The Claimant sought to break down the witness statements after that date and apportion value by reference to the paragraphs. The Claimant attempted a similar exercise in relation to the skeleton arguments and the time taken at the hearing. For the period up to 18 February 2021, VTB submitted that the Defendant's costs were unreasonable and should be reduced from approximately £68,000 to £50,000. In relation to the second period to the April Hearing, VTB submitted that an additional £5,630 should be permitted.
In its supplementary submissions following the Consequential Hearing it was submitted for VTB that there was no reason to depart from the original assessment: VTB succeeded on those issues on which it succeeded, and lost on those issues on which it lost, and the order as originally proposed reflects that.
It was further submitted for VTB that fortification involves the court deciding what fortification it will require, and the Claimant deciding whether it will pay that price. It is not required to make that decision in the abstract. There were many possible approaches the Court might have taken, and VTB was under no obligation to give the undertaking and did not undertake that it would do so. It was submitted that Mr Firtash chose not to rest content with his fortification application but to make further and alternative applications, and they failed.
Defendant's submissions
The Defendant originally submitted (paragraph 8 of its skeleton for the Consequential Hearing) that it should get at least 80 per cent of its costs from 23 February 2021 to the date of the Consequential Hearing, that it was successful on the issue of fortification which was sought by the original application, and had the Claimant consented, the amended application was likely not to have been made. Further, (as noted in paragraph 47 and 50 of the judgment) VTB was obliged to seek directions if it knew that the value of the assets frozen exceeded the value of the claim in the Cyprus proceedings, and that obligation was triggered on 23 February 2021, if not before. It was submitted that the issues regarding the French mortgage would have had to be reviewed pursuant to an application for directions.
In its supplemental submissions following the Consequential Hearing it was submitted for the Defendant that it should recover 100% of its costs or such proportion as the court deemed appropriate. It was submitted that had VTB explained that it would never have accepted a requirement to provide further fortification in February 2021 then all further costs of the application to replace the Freezing Order with a restriction could have been avoided.
Discussion
There are two related but separate periods for which costs have been incurred and are now claimed by the Defendant: costs for the period from 23 February 2021 to the hearing of the Application and costs for the period from 24 April 2021.
Costs from 23 February 2021 to the April Hearing
The original application of 18 February 2021 was to vary the Freezing Order in light of the reduction of the amount claimed in the Cyprus proceedings and to obtain additional fortification. The application to vary the amount was successful in that it was agreed between the parties and reflected in the consent order of Foxton J dated 23 February 2021. As referred to above the parties have also agreed the principle that the Defendant should receive its costs for the period to 22 February 2021.
The issues before the court by the time of the April Hearing were firstly to...
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