Royal Bank of Scotland Plc v Highland Financial Partners LP & Ors

Costs are assessed by identifying the successful party in the litigation as a whole. The ordinary rule is that the unsuccessful party pays the successful party’s costs. A departure requires consideration of all the circumstances, including conduct and partial success. Indemnity costs require conduct or another circumstance taking the case out of the norm and may mark the court’s disapproval. Interest on costs may compensate for the loss of use of money, generally at a reasonable commercial rate. Permission to appeal may be refused where the proposed appeal concerns only the application of agreed principles to unusual facts. Interim injunctive relief may also be refused where the applicant lacks clean hands and there is no powerful reason to grant relief.

RBS appealed against Burton J’s refusal to grant an anti-suit injunction. Highland cross-appealed on the question whether RBS had obtained an earlier liability judgment by fraud. In the principal judgment, the Court of Appeal dismissed RBS’s appeal and allowed Highland’s cross-appeal: [2013] EWCA Civ 328.

This consequential judgment addressed the resulting orders, costs, interest, permission for RBS to appeal to the Supreme Court, and RBS’s application for interim injunctive relief pending any further appeal.

The Court of Appeal dismissed RBS’s appeal, allowed Highland’s cross-appeal, refused permission to appeal to the Supreme Court and refused further interim injunctive relief.

1. Costs. Under the Civil Procedure Rules 1998, the court identified success by looking at the litigation as a whole. Highland and Scott Law were the successful parties because they defeated the anti-suit injunction claims and Highland succeeded in setting aside the liability judgment for fraud. Their failure on subsidiary issues did not justify departing from the general rule that RBS should pay their costs.
2. Indemnity basis. The critical requirement for indemnity costs was conduct or another circumstance taking the case out of the norm. RBS’s misconduct through SG, including misconduct in the earlier proceedings and at the later trials, satisfied that threshold and justified marking the court’s disapproval. Highland was awarded all its costs on the indemnity basis. Scott Law was awarded its costs on that basis, subject to a deduction of £10,000 for its unsuccessful allegations concerning Mr Hall. Any duplication between Highland’s and Scott Law’s costs was left to agreement or the costs judge.
3. Interest and payment on account. Interest was awarded to compensate for the loss of use of money paid to RBS or to lawyers. The rate was fixed at 2.5% over base. RBS had to repay £100,000 and £40,000 paid on account of earlier costs, with interest, and pay interest on sums paid to lawyers until 21 days after agreement or detailed assessment. Highland and Scott Law were also awarded £1.82 million and £840,000 respectively on account of costs. Default after the relevant 21-day period attracted the Judgment Act rate, stated as 8%.
4. Further relief. Permission was refused because no arguable point of general public importance arose: the parties agreed the legal principles and the dispute concerned their application to unusual, one-off facts. Interim relief was refused because RBS had no English judgment in its favour, two courts had rejected its entitlement to the injunction, and its lack of clean hands resulted from misconduct attributable to it.
5. Consequential orders. The liability order, the liability appeal order and the relevant order of Burton J were set aside. The Quantum judgment also fell as a consequence of setting aside the liability judgment.

• Court of Appeal (Civil Division): In this consequential judgment, costs and interest orders were made, permission to appeal was refused, interim relief was refused, and the relevant earlier orders were set aside. The principal decision was reported at [2013] EWCA Civ 328.
• Queen’s Bench Division, Commercial Court: Burton J refused RBS’s anti-suit injunction application and made the earlier liability, quantum and costs orders from which the appeals arose: [2012] EWHC 1278 (Comm).