Bank St Petersburg PJSC & Anor v Arkhangelsky & Ors, Court of Appeal - Chancery Division, October 29, 2018, [2018] EWHC 2817 (Ch)

Resolution Date:October 29, 2018
Issuing Organization:Chancery Division
Actores:Bank St Petersburg PJSC & Anor v Arkhangelsky & Ors

Neutral Citation Number: [2018] EWHC 2817 (Ch)

Case No: HC-2012-000165




7 Rolls Building, Fetter Lane, London


Date: 25/10/2018

Before :


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Between :

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Matters addressed in this judgment

  1. Further to my judgment in the proceedings, which was handed down on 9 May 2018) (``my Main Judgment''), in this judgment I deal with the consequential matters addressed in argument at a hearing on 2 July 2018 (``the Consequentials Hearing'') which were left over for my further consideration.

  2. Those matters concern (1) what orders should be made in respect of costs; (2) whether any interim payment should be required and, if so, in what amounts; and (3) whether any such orders should be stayed pending any application to the Court of Appeal for permission to appeal my decision in the Main Judgment. (I refused permission during the course of the Consequentials Hearing.)

  3. This judgment assumes knowledge of my Main Judgment and the description of the issues there set out. I use the definitions in my Main Judgment, for which the neutral citation is [2018] EWHC 1077 (Ch).


  4. The costs to be determined relate to (a) the Main Claim and (b) the Counterclaim. They are considerable: unsurprisingly, given the complexity and length of the proceedings and trial which are obvious from the length of my Main Judgment. Applying current exchange rates to costs incurred and paid in foreign currency, the Claimants have stated their total costs (including all time incurred and billed to 27 June 2018) to amount to very nearly £22 million.

  5. The Claimants' preference was for a composite order melding the results and costs of the Main Claim and the Counterclaim. There would be much sense in that: the Main Proceedings and the Counterclaim were closely interlinked; they arose from the same factual circumstances; and, for example, the declarations sought by the Claimants in the Main Proceedings were substantially the obverse of the claims made by the Counterclaimants in the Counterclaim. However, such a composite order also has its difficulties and downsides. I shall return to these later; but for the present, and to assist analysis, I deal with the two claims (Main Claim and Counterclaim) separately.

    Costs: general principles

  6. The general rule is that costs should follow the event (see CPR 44.2(2)) and the unsuccessful party should pay the costs of the successful party; but this may be departed from if the conduct of the successful party in the proceedings warrants such a departure (see CPR 44.2(5)).

  7. The conduct concerned may be:

    (1) both before and during the proceedings;

    (2) the unreasonable pursuit of, raising or contesting of a particular issue or issues;

    (3) the manner in which the case, an allegation or an issue has been pursued; and

    (4) the fact that a successful claimant has exaggerated its claims, in whole or part.

  8. It is usual for the Trial Judge, rather than the Costs Judge, to consider whether there has been conduct such as to justify departure from the general rule. But, unless the Trial Judge otherwise states, the paying party may usually raise before the Costs Judge the issue of conduct to argue that costs incurred in supporting the particular conduct were unreasonably incurred.

  9. CPR 44.2(6) sets out a menu of various orders that the Court may make giving a successful party less than the whole of his costs if that is what consideration of CPR 44.2(2) and (5) require. CPR 44.2(4)(b) and 44.2(6)(f) provide for so called ``issue-based'' orders, though CPR 44.2(7) requires the Court to consider first whether the alternative of an order for payment of a proportion of a party's costs is practicable (in which case it is usually preferable, since experience suggests that the identification of the costs referable to a particular issue is difficult, time consuming and expensive).

  10. Assessment will usually be on the standard basis. The indemnity basis of assessment is not ordered unless there are circumstances taking the case `out of the norm' (see Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson (a firm) [2002] EWCA Civ 879) such that the Court is persuaded that it is just to remove from the paying party the twofold benefit of the standard basis, as compared with an order on the indemnity basis, which are that it is for the receiving party to demonstrate that its costs are (a) reasonable and (b) proportionate (and see Digicel (St Lucia) Ltd and Others v Cable & Wireless plc and Others [2010] EWHC 888 (Ch) at [19]).

  11. Ordinarily the Court will make an order for payment on account of costs.

  12. The Court also has power to order interest on costs from or until a certain date, including a date before judgment: CPR 44.2(6)(g).

    Costs in relation to the claims in the Main Proceedings in relation to the loans and guarantees (``the Debt Claims'')

  13. As a preliminary matter, and as accepted by the Claimants, there are previous costs orders in favour of the Defendants in relation to the application for an anti-enforcement injunction and subsequent appeal hearing, and those costs orders should be carved out of the costs order that the Claimants seek at this hearing.

  14. Subject to that, in the Debt Claims:

    (1) The Claimants were wholly successful against Dr Arkhangelsky except as regards the declaratory relief they also sought (which I refused to grant).

    (2) The Claimants were wholly unsuccessful in their claims against Mrs Arkhangelskaya, though it is fair to note that both she and Dr Arkhangelsky relied in the Counterclaim on Dr Arkhangelsky's defence of the Debt Claims.

  15. Looking at the Debt Claims in isolation, therefore, the starting point (adopting the general rule) as to the incidence of costs is that:

    (1) Dr Arkhangelsky should be liable for his own and the Claimants' costs of the claims against him;

    (2) Consideration should be given to...

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