Fiona Trust & Holding Corporation & Ors v Privalov & Ors (Costs)

Under CPR 44.2(2), costs ordinarily follow the overall result. The court may nevertheless make a substantial adjustment where the successful party recovered only a modest proportion of its claim, failed on discrete and costly issues, or incurred costs attributable to evidential deficiencies or inaccurate evidence. An issue-based assessment may justify a percentage reduction, but should still reflect the successful party’s overall achievement. The court may order an interim payment on account of costs. A stay pending appeal should be refused where it is unnecessary and the judgment creditor has ample security.

The judgment determined costs arising from an inquiry as to damages, the associated action, and an application to set aside the order directing the inquiry. The defendants obtained judgment for US $59.8 million, while the claimants’ application concerning the 2005 freezing order failed. The defendants failed on other substantial parts of their claim, including losses relating to the 2007 order and financial investment assumptions. The court also considered an application for permission to appeal and a stay pending appeal.

1. The defendants were the successful party overall. Applying the general rule in CPR 44.2(2), the starting point was that the claimants should pay the defendants’ costs.
2. The court nevertheless exercised its discretion to depart from that starting point. The defendants recovered only a modest proportion of their total claim; their financial investments case failed and represented a substantial, discrete area of the costs; their case concerning the 2007 order failed entirely; and some costs arose from inaccurate evidence concerning money held at Wegelin. These matters justified a significant reduction, but not an order that there be no order as to costs, because that would fail to recognise the defendants’ overall success.
3. The claimants were ordered to pay 50% of the defendants’ costs, assessed on the standard basis if not agreed. Reserved costs were recoverable without the discount.
4. An interim payment on account was ordered. On the defendants’ estimate of costs exceeding £3 million, the court ordered payment of £1 million, representing two thirds of 50% of £3 million.
5. The claimants’ proposed grounds of appeal had no real prospect of success and permission to appeal was refused. A stay was also refused because it was unnecessary and approximately US $200 million of the defendants’ funds remained frozen in related Russian and Swiss proceedings, providing ample security.

The judgment records that the inquiry, action and application to set aside the inquiry order had been tried together. They were addressed in earlier judgments of the same court:

• High Court (Commercial Court): inquiry judgment dated 26 August 2016, [2016] EWHC 2163 (Comm).
• High Court (Commercial Court): judgment dated 7 October 2016, [2016] EWHC 2451 (Comm).
• High Court (Commercial Court): costs judgment, [2016] EWHC 2657 (Comm).