COURT OF APPEAL ISSUE WARNING AGAINST EXCESSIVE COSTS (INCLUDING THE COSTS OF APPEALS)
In The Public Institution for Social Security v Banque Pictet & Cie SA & Ors [2022] EWCA Civ 29 the Court of Appeal were concerned about the costs involved in litigation on what were, essentially, preliminary issues. This included the costs of the appeal.
“Since we are ordering a detailed assessment of the costs payable by PIFSS, the costs judge will (if the parties do not reach agreement) assess what costs are proportionate to the matters in issue, and will have the power to disallow or reduce costs that are disproportionate in amount: CPR 44.3(2)(a). In my view it is plainly arguable that expenditure on this scale on an appeal in an interlocutory application engages this rule, even in a case involving such substantial sums. “
THE CASE
The appeal concerned an issue of whether the courts had jurisdiction to hear certain claims against the defendants. The claimant failed at first instance and appealed to the Court of Appeal.
LADY JUSTICE CARR
In her judgement Carr LJ observed that the parties had not heeded the guidance given in relation to proportionality in the hearing of applications in relation to jurisdiction.
-
-
The Judge had before him not only a large number of parties but also a vast volume of material, including 20 lever arch files of documents relating to issues of Swiss law alone. The hearing before him took four days, followed by further written submissions. The position is thus very far removed from that envisaged by Lords Templeman and Goff in Spiliada Maritime Corp v Cansulex Limited [1987] 1 AC 460 (at 465 G – H) where it was hoped that future submissions on the merits of trial in England and trial abroad would be measured “in hours and not days”. Nor is it consistent with what Lord Neuberger stated in VTB Capital plc v Nutritek International [2013] UKSC 5 at [82] and [83]:
-
“82. The first point is that hearings concerning the issue of appropriate forum should not involve masses of documents, long witness statements, detailed analysis of the issues, and long argument. It is self-defeating if, in order to determine whether an action should proceed to trial in this jurisdiction, the parties prepare for and conduct a hearing which approaches the putative trial itself, in terms of effort, time and cost. There is also a real danger that, if the hearing is an expensive and time-consuming exercise, it will be used by a richer party to wear down a poorer party, or by a party with a weak case to prevent, or at least to discourage, a party with a strong case from enforcing its rights.
83. Quite apart from this, it is simply disproportionate for parties to incur costs, often running to hundreds of thousands of pounds each, and to spend many days in court, on such a hearing. The essentially relevant factors should, in the main at any rate, be capable of being identified relatively simply and, in many respects, un-controversially. There is little point in going into much detail: when determining such applications, the court can only form preliminary views on most of the relevant legal issues and cannot be anything like certain about which issues and what evidence will eventuate if the matter proceeds to trial.”
-
-
As Flaux J (as he then was) said in Erste Group Bank AG v JSC “VMZ RED OCTOBER” [2013] EWHC 2926 (Comm) (at [11]), although Lord Neuberger’s deprecation of the proliferation of documentation and argument was in the context of the determination of appropriate forum, his observations are obviously equally applicable to other aspects of jurisdictional challenges.
-
-
It does not appear that the parties here chose to heed this guidance. There will of course be cases where a novel and/or complex point of law needs to be debated fully and decided and, as foreshadowed above, this litigation raises some new, albeit relatively short, legal issues. Further, the sums involved are substantial and the allegations made are serious. However, these features did not create a licence to turn a jurisdictional dispute into an extensive and essentially self-standing piece of litigation. The costs incurred below ran to many, many millions of pounds: the interim payment orders in respect of the Respondents’ costs amounted to £6.88 million against a claimed total of some £13.5 million.
LORD JUSTICE PETER JACKSON AND THE COSTS OF THE APPEAL
Lord Justice Peter Jackson had telling observations in relation to the costs claimed in the appeal.
-
-
As to interim payments, the Respondents each claim approximately 65% of their costs of this appeal. They assert that these collectively amount to some £4.4 million, and they accordingly request orders for interim payments of some £2.5 million. At the same time, we are told that the PIFSS’ costs of the appeal amount to some £700,000. Accordingly, the total costs of this three-day appeal are said to exceed £5 million.
-
-
Since we are ordering a detailed assessment of the costs payable by PIFSS, the costs judge will (if the parties do not reach agreement) assess what costs are proportionate to the matters in issue, and will have the power to disallow or reduce costs that are disproportionate in amount: CPR 44.3(2)(a). In my view it is plainly arguable that expenditure on this scale on an appeal in an interlocutory application engages this rule, even in a case involving such substantial sums. We therefore make significantly reduced provision for interim payments in the sums that appear in the order below.
THE FIGURES ALLOWED
The Claimant is to make interim payments on account of the Respondents’ costs of the Appeal in the following amounts: