24.06.2014Deutsche Bank AG v Sebastian Holdings Inc.; Vik  EWHC 2073 (Comm)
Key areas: security for costs; party’s conduct; unreasonable conduct; third party contribution; High Court
This was an application to add a party to a set of proceedings, for costs purposes.
In the main action, the Claimant had been awarded US$243,023,089 plus 85% of its costs on the indemnity basis, with an interim payment on account of costs of £34,517,115.30.
The First Defendant had not paid either sum.
The Claimant therefore sought to add the Second Defendant to the proceedings. He was the First Defendant’s sole shareholder and Director.
After dealing with a variety of jurisdiction challenges, the Court turned to the merits of the application.
The Claimant submitted that the Second Defendant controlled and funded the First Defendant; had increased the overall costs of the proceedings with unarguable points; and had transferred US$900 million from the First Defendant to prevent enforcement.
The Second Defendant submitted that the Claimant could have made an application for security during the proceedings, but did not; that he could have been added earlier on; and he had not been warned of the application.
The Court held that the Claimant did not have to apply for security; that an “earlier application” was a “surprising” argument for the Second Defendant to make, given that there was no basis for a claim against him, and that the usual procedure is to try and enforce against the company itself before going for its Directors; and that while earlier notice of the application is “desirable” there was nothing to suggest the case would have been conducted differently.
The Court also held that there was “impropriety” in moving the US$900 million; that the Second Defendant did control the First Defendant’s proceedings; that he raised “dishonest” arguments; that he stood to benefit from a potential counter-claim of US$7-8 billion; and that he did fund the defence.
As a result, the Court ordered that the Second Defendant be added to the case for costs purposes.
13.06.2014Americhem Europe Ltd. v Rakem Ltd.  EWHC 1881 (TCC)
Key areas: costs budgets; High Court
This was an issue concerning the service of costs budgets.
The Defendant’s budget was correct but signed by a “Costs Draftsman”.
It was submitted that this meant that it was not signed by a “senior legal representative”, and so was a nullity, which meant that only court fees would apply.
The Court held that the Draftsman was not a “senior” representative, due to his hourly rate and minor involvement with the case.
However, the Court held that it was not invalid because there was no requirement under the CPR or Practice Direction that the budget had to comply with all the formalities.
As a result, the budget was allowed, but the Defendant had to pay the sum of £50.00 for costs relating to the issue.
10.06.2014Re G (Adult)  EWCOP 5
Key areas: party’s conduct; Court of Protection
This was a hearing to determine costs arising from a dismissed application to intervene.
Both the local council and Official Solicitor submitted that the Applicant should pay their costs; the applicant submitted thee should be no order as to costs.
The Official Solicitor stated that Court of Protection Rule (CoPR) 9 and CPR 44.3 applied, so generally costs followed the event; the other parties that CoPR 157 & 159 applied, so generally there are no orders as to costs.
The Court held that the application did fall under CoPR 157 & 159 because it concerned G’s welfare, and so the “no costs” rule generally applied.
Both the Official Solicitor and council submitted that costs should be ordered because the application was held to be “misconceived” and it failed on every ground; that the Applicant ignored CoPR 73(2) and 75(1); that is was a “fishing expedition”; that they were warned costs would be sought; and their conduct had been criticised elsewhere.
The Applicant submitted that it issued the application due to the Official Solicitor’s actions; and that it raised “important and novel” issues about the Court of Protection generally.
Given the Applicant’s conduct and involvement, and the complete failure of its application, the Court ordered that it should pay 30% of the other parties’ costs.
06.06.2014Home Office v Altion Ltd.  UKFTT 574 (TC)
Key areas: unreasonable conduct; First-Tier Tribunal (Tax)
This was an application for wasted costs in the First-Tier Tribunal (Tax).
The Home Office sought costs on the basis that the Respondent’s purported clients were in fact names that had been “hijacked” by persons unknown, and they had not made sufficient checks into their background.
The Tribunal noted that if the Respondent defeated the application, it would be based upon the fact of its own actions in not checking the identity of its client, and so would escape due to its unreasonable behaviour.
It also held that it had jurisdiction due to the appeal being lodged.
The Respondent submitted that it had taken “all reasonable steps” in trying to identify its client. The Tribunal disagreed, stating that no checks were made at all, and that they did not notice obvious spelling mistakes in the client’s “name” and clear concerns over the contact email address (a Googlemail address was used even though the company had its own web domain). It also noted that the Appellant tried to cover-up by giving “untruthful evidence” at the hearing.
As a result, the Home Office was awarded it costs.
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