JSC VTB Bank v Skurikhin & Ors

Costs of a discrete application should ordinarily follow the event and be determined on the evidence and arguments presented on that application. A later possibility that the successful party may lose on the underlying dispute does not ordinarily justify postponing the costs decision.

A stay of execution under the Civil Procedure Rules 1998 requires special circumstances and is an unusual remedy. The court must weigh the nature and strength of any related claim, likely delay, and prejudice to both parties. A stay or deferred payment should not be used in substance to provide security for costs against a party who is not properly treated as a claimant where such security would be unjustifiable.

VTB had unsuccessfully applied for security for its costs of an application by Berenger, the Fourth Respondent, to discharge an order appointing receivers by way of equitable execution. The court had dismissed the security application in an earlier judgment.

The present decision concerned the costs of that security application. VTB sought to reserve the costs to the judge hearing the discharge application, or alternatively to defer payment so that a possible future costs liability could be set off. Berenger sought its costs, later quantified at £41,204.50.

The issues were whether the costs should be postponed or payment stayed under the Civil Procedure Rules 1998, and what amount should be allowed.

1. The security application was a discrete matter. It had to be determined on the evidence and arguments presented at the time. The possibility that the discharge application might later establish grounds which, with hindsight, could have supported security did not justify postponing the costs decision. Costs therefore followed the event.

2. In considering a stay under CPR 83.7(4), the court applied the guidance in Burnet v Francis Industries Plc [1987] 1 WLR 802, as discussed in Dar Al Arkan Real Estate Company v Al Refai [2015] EWHC 1793. Relevant considerations included the nature of the judgment claim, its relationship with the cross-claim, the cross-claim’s strength and size, likely delay, prejudice to the judgment creditor, and prejudice if the stay were refused.

3. The present case differed from Dar Al Arkan Real Estate Company v Al Refai because VTB had no actual cross-claim. It had only a contingent future claim for costs if Berenger failed in the discharge application. Although the contingent claim might be larger and arguably had merit, Berenger would suffer delay and VTB’s asserted prejudice was substantially the same prejudice relied on unsuccessfully in seeking security.

4. It was inappropriate to stay execution under CPR 83.7(4), or to defer payment under CPR 44.2. Either course would in substance provide VTB with partial security for the discharge application, even though Berenger was not properly regarded as a claimant and had not been shown to be abusing the court’s process.

5. Berenger’s costs were summarily assessed at £31,000. The court allowed for the complexity and length of the hearing, but applied a discount because the use of both leading and junior counsel and two solicitors was not fully justified. Payment was ordered within 21 days.

The judgment itself records that an earlier judgment of the same court, handed down on 13 November 2018, dismissed VTB’s application for security for costs. The present judgment determined the consequential costs issue.