Rosserlane Consultants Ltd & Anor v Herbert Smith Llp, Court of Appeal - Supreme Court Cost Office, February 12, 2009, [2009] EWHC 90135 (Costs)

Resolution Date:February 12, 2009
Issuing Organization:Supreme Court Cost Office
Actores:Rosserlane Consultants Ltd & Anor v Herbert Smith Llp

Neutral Citation Number: [2009] EWHC 90135 (Costs)

Case No: 008.P8.1954





Clifford's Inn, Fetter Lane

London, EC4A 1DQ

Date: 12 February 2009

Before :


- - - - - - - - - - - - - - - - - - - - -

Between :

- - - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - - - - - -

Mr. Nicholas Bacon (instructed byMasseys LLP) for the Claimants

Mr. Andrew Post (instructed by Herbert Smith LLP) for the Defendant

Hearing dates: 19th January 2009

- - - - - - - - - - - - - - - - - - - - -


Master Campbell:

  1. On 19th January 2009 I heard an application issued by the claimants on the 13th January 2009 for an order in the following terms:-

    ``...the defendant do make available within 7 days of this order, hard copies of all the categories of documents specified in the defendant's notice dated 30th December 2008, currently being withheld from inspection from the claimants.''

  2. The defendant is Herbert Smith Solicitors and the claimants are Rosserlane Consultants Limited, a private company registered in the Isle of Man and Swinbrook Developments Limited, a company registered in the British Virgin Islands. Until 15th February 2008 Rosserlane was the only general partner and Swinbrook the only limited partner of a Scottish limited partnership know as Caspian Energy Group LP (``Caspian''), registered in Scotland under the Limited Partnerships Act 1907.

  3. The documents mentioned in the order sought belong to Credit Suisse International (``Credit Suisse'') and concern transactions to which I shall refer involving (inter alia) Caspian, Rosserlane, Swinbrook and Credit Suisse (for whom Herbert Smith act). Although Credit Suisse have made available for inspection certain categories of these documents which fill 16 lever arch files, I understand that agreement to disclose the balance (another 5 or 6 files) is being withheld. It is those documents which are itemised in the notice of 30th December 2008 that the claimants wish to see. A subsidiary but important point concerns the adequacy of a breakdown of Herbert Smith's fees in respect of the work the firm undertook on Credit Suisse's behalf in the transactions. Having heard argument, Mr. Bacon appearing for the claimants and Mr. Post for Herbert Smith, I reserved judgment.


  4. This can be stated shortly. Until 20th March 2008 Caspian was party to a joint venture agreement dated 25th December 1995 with the State Oil Company of the Azerbaijan Republic (``SOCAR'') regarding the exploitation of the Kurovdag oil field in Azerbaijan. On 14th December 2006 Caspian was re-financed by way of a loan agreement for a First Loan of $115 million and a Drilling Plan Loan for $12 million entered into between Credit Suisse and Caspian, together with other companies, as guarantors, including Rosserlane and Swinbrook. In addition, on 14th December 2006 Caspian, Rosserlane and Swinbrook (together with others) entered into a Participation Agreement with Credit Suisse the terms of which included (under clause 4) the right for Credit Suisse from 14th August 2007 to conduct a forced sale of all or part of the assets or capital stock of Caspian. In December 2007, both the Loan Agreement and Participation Agreement were amended and re-stated under the terms of Deeds of Amendment and Re-Statement.

  5. Credit Suisse's right to conduct a forced sale under clause 4 of the Participation Agreement was exercised on 15th February 2008 and the proceeds of sale were paid into a Credit Suisse account from which were deducted costs that Herbert Smith had invoiced in US dollars on 11 January 2008 (two bills) and 20 February 2008 for their work in the transaction. At the relevant rate of exchange, that sum amounted to £430,870.66 of which the February bill (number 11133347) accounted for £217,727.59.

  6. Credit Suisse's entitlement to make this deduction stems from clause 5 of the Deed of Amendment (relating to the Participation Agreement) which provides as follows:-

    ``(a) Clause 5.1 transaction expenses. The borrower [Caspian] shall promptly on demand following production of an invoice re-imburse the Bank [Credit Suisse] the amount of all costs and expenses (including legal fees) reasonably incurred by the Bank in connection with the negotiation, preparation, printing and execution of this deed and all documents entered into ancillary or pursuant to this Deed or the Re-stated [Participation] Agreement and the amount of all fees, costs and disbursements (including legal fees) incurred by the Bank in connection with or in contemplation of any Sale [``Sale'' is defined as including a ``Forced Sale''].

    (b) Clause 5.3 enforcement expenses. The borrower [Caspian] shall, promptly on demand, indemnify the Bank against any loss or liability (including the amount of all costs and expenses) including legal fees reasonably incurred by the Bank in connection with the enforcement of, or the preservation of any rights, powers and remedies under this Deed or the Re-stated [Participation] Agreement).''

  7. On 29th August 2008 the claimants issued an application under section 71 of Part III Solicitors Act 1974 for a detailed assessment of the invoices delivered by Herbert Smith to Credit Suisse incurred in connection with the forced sale. Under the terms of a consent order dated 2nd December 2008, the parties agreed that only the invoice dated 20th February 2008 should be assessed. The consent order further provides as follows:-

    ``4. ... The defendant to serve a breakdown of costs of the bill of costs by 4.30pm on 6th January 2009.

  8. From the date of service of the breakdown of costs, the defendant is to make available on request by the claimants (subject to 5.1 below) hard copies of all documents that a client would ordinarily be entitled to inspection of upon detailed assessment under section 70 Solicitors Act 1974 in relation to invoice no. 11133347, for inspection by the claimants.

    5.1. In the event that the defendant proposes to withhold any categories of documents from inspection, the defendant shall by 4.30pm on 30th December 2008 notify the claimants by notice in writing of (a) the category of documents they propose to withhold and (b) provide reasons, for each and any category, as to why they propose to withhold inspection.

    5.2 Either party may apply on notice to the court for an order determining (a) whether inspection of any categories of documents identified by a notice pursuant to paragraph 5.1 should be granted and (b) if so on what, if any, terms such inspection should take place.''

  9. In compliance with paragraph 5 of the order, subsequent to service of the breakdown of costs on 6th January 2009, Herbert Smith made available to the claimants various categories of documents. However Herbert Smith also told the claimants that the firm would withhold from inspection other documents which they identified in the Notice served on 30th December 2008 by Herbert Smith on the grounds that:-

    ``Credit Suisse, being the defendant's client in respect of the work carried out under bill 11133347 is entitled to claim privilege over such documents (such privilege arising to Credit Suisse acting in its own capacity and not in a capacity as agent acting for the claimants) and Credit Suisse has not given the defendant permission to waive such privilege in these proceedings, nor has it waived such privilege itself.''

  10. Subsequent negotiations have resulted in the disclosure of the 16 files...

To continue reading