Standard Chartered Bank v Pakistan National Shipping Corporation & Ors

Costs should reflect the parties’ conduct, the issues on which they succeeded or failed, and the extent to which particular issues caused the costs incurred. Where a claimant’s deceitful conduct towards a third party materially occupied the trial and an appeal, the claimant’s recoverable costs may be reduced even though it succeeds overall. An indemnity costs order requires a proper basis and is not justified merely by the seriousness of allegations or unsuccessful conduct. A party may retain costs on issues on which it succeeds, while suffering a reduction for factual issues decided against it. Costs orders should be confined to proceedings properly before the court.

The claimant brought proceedings for fraudulent misrepresentation arising from falsely ante-dated bills of lading. After earlier procedural stages, the action was tried before Cresswell J., who gave judgment against Pakistan National Shipping Corporation and Mr Mehra. On appeal, the court found that the claimant had made a deceitful representation to Incomin which contributed to the loss, but held that this did not defeat the claim. Mr Mehra succeeded on the issue of his personal liability.

The court subsequently determined the parties’ costs applications, including the effect of the claimant’s conduct, Mr Mehra’s unsuccessful factual defence, the refusal of indemnity costs, and the costs of the earlier costs hearing.

1. Costs payable by PNSC. The claimant was entitled to recover two-thirds of its costs of the trial and first appeal hearing, and all its costs of the second appeal hearing. The reduction reflected the Court of Appeal’s finding that the claimant’s employees had acted deceitfully towards Incomin and that this issue had materially occupied the proceedings.
2. Basis of assessment. The recoverable costs were to be assessed on the standard basis. The application for indemnity costs was rejected.
3. Costs of the earlier costs hearing. The claimant and PNSC were each ordered to bear their own costs of the costs hearing before Cresswell J. The court treated the claimant’s unsuccessful application for indemnity costs as making it unjust for PNSC to bear those costs under the earlier order.
4. Mr Mehra. Mr Mehra was awarded all his costs of the appeal hearings and three-quarters of his trial costs against the claimant. The reduction reflected the factual issue concerning the nature and extent of his involvement in the fraud, on which he had failed. His success in defeating personal liability did not prevent an order reflecting that unsuccessful issue.
5. Contribution proceedings and quantum applications. No order was made as to costs of the contribution proceedings, which did not form part of the appeals and whose consequences could not be assessed. Applications dependent on the outcome of the quantum appeal were left unresolved, with liberty to apply within 21 days after judgment in that appeal.

• Court of Appeal (Civil Division): determined the parties’ costs applications following the earlier appeals. The court made the costs rulings set out in the judgment.
• High Court, Queen’s Bench Division, Commercial Court: Cresswell J. gave judgment against Pakistan National Shipping Corporation and Mr Mehra, following earlier summary judgment and a successful application giving PNSC leave to defend.