Abramovich Berezovsky v Abramovich

Costs following an unsuccessful strike-out or summary judgment application must reflect the evolving state of the pleadings. A defendant who ultimately fails may still recover costs caused by late amendments or pleading deficiencies, while a claimant should recover the costs of resisting an application which was never capable of succeeding. Costs incurred for work necessary in any event for trial preparation should remain costs in the case. The court may make a detailed allocation between application costs, amendment costs and trial costs, with assessment where necessary.

The judgment determined costs arising from the defendant’s applications to strike out the claim and for summary judgment, and the claimant’s applications to amend and re-amend the pleadings. The defendant’s applications had been dismissed in the main judgment, while the claimant’s amendment applications had been substantially allowed.

The court examined the successive versions of the pleadings concerning alleged interests in Sibneft and Rusal, the amendments made during 2009, and the extent to which work undertaken by either party had been rendered unnecessary or remained relevant to the eventual trial. The central issue was how responsibility for the substantial costs should be allocated in light of the failed applications, late amendments and costs that would have been incurred for trial preparation in any event.

1. The defendant’s strike-out and summary judgment applications were dismissed, but the dismissal did not automatically entitle the claimant to all costs incurred in resisting them. The court had to examine the pleadings as they developed and identify which costs were caused by pleading deficiencies or late amendments.

2. As a matter of principle, where a defendant defeats an application only after emergency surgery to the claimant’s pleading, the claimant cannot recover costs incurred in trying to protect the defective pleading. Conversely, the claimant should be recompensed for costs incurred in attacking that defective pleading. The principle applied even though the application ultimately failed.

3. The court found that the defendant had never been in a position to mount a successful strike-out application. The claims were difficult and the pleadings required elucidation, but they were not necessarily hopeless or so weak that a trial could not be justified. The amendments did not rescue claims that were otherwise bound to fail.

4. The claimant’s delay in producing the ultimate pleadings caused the defendant costs in responding to the July and August 2009 drafts. Those costs were treated as occasioned by the claimant’s amendment application. Work which would have been necessary for preparation of the main trial was excluded and remained costs in the case.

5. The defendant was ordered to pay the claimant’s costs of defending the strike-out and summary judgment applications. The claimant was ordered to pay the defendant’s costs of and occasioned by the specified amendment applications, including costs that could have been saved by earlier service of the final amendments. Other costs were left without an order, subject to further submissions concerning the 20 May 2010 hearing. Costs were to be assessed if not agreed, with interest at Bank of England minimum lending rate plus 1 per cent. An application under the Civil Procedure Rules 1998 was made for payment on account, but no estimate could then be made.

First-instance costs judgment following the court’s main judgment dismissing the defendant’s strike-out and summary judgment applications and substantially allowing the claimant’s amendment applications.