JSC BTA Bank v Solodchenko & Ors

Where a costs application substantially overlaps with pending committal proceedings, the court may postpone determination of the costs issues to avoid a real risk of prejudice. This is particularly appropriate where indemnity costs require close examination of the alleged contemnor’s conduct and the same evidence will be used in both proceedings. Different standards of proof do not, by themselves, remove the risk. The court should also consider whether postponement causes anything more than delay and whether the later committal decision may effectively determine the costs application.

The Bank sought costs arising from the restored and earlier cross-examination of Mr Ereshchenko. It sought an order that he pay the costs, assessment on the indemnity basis, and an interim payment.

After the costs submissions had been directed, the Bank issued committal proceedings alleging that Mr Ereshchenko had knowingly and dishonestly given false evidence and had failed to comply with disclosure obligations. Mr Ereshchenko argued that determination of the costs issues should await the final determination of the committal application because the evidence and issues substantially overlapped and an adverse costs decision could prejudice him.

The central issue was whether the costs determination should be postponed pending the committal proceedings.

1. The court accepted Mr Ereshchenko’s preliminary timing application. Determination of the costs issues relating to his cross-examination was postponed until after final determination of the committal application.

2. There was a sufficient risk of real prejudice to make postponement the preferable and safer course. The Bank accepted that much of the same evidence would be relied upon in both applications, notwithstanding that the issues and standards of proof differed.

3. The request for indemnity costs required close examination of Mr Ereshchenko’s conduct, including matters relied upon for committal. Adverse findings on the balance of probabilities could reasonably be perceived as influencing the committal judge, particularly if the same judge heard both applications.

4. The conduct issues would be examined in much greater detail in the committal proceedings. Findings made there to the criminal standard would be difficult to challenge at a later costs hearing. The committal outcome might therefore be decisive of the costs application.

5. Any prejudice to the Bank consisted only of delay. The anticipated delay was limited, and there was no obvious urgency in recovering the cross-examination costs. The costs of arguing the timing issue were ordered to be costs in the case, meaning the Bank’s costs application.