Byers & Ors v Samba Financial Group

Permission to appeal may properly be granted on issues raising an arguable question of law, but refused where the proposed appeal merely challenges findings based on expert evidence or an evaluative valuation conclusion lacking a realistic prospect of success. For costs, the unsuccessful party’s liability is only a starting point. The court must consider all the circumstances, including conduct and success on individual issues. A party that breaches disclosure orders and thereby avoids trial of factual issues cannot recover the costs of its disclosure exercise or preparation of factual witness evidence. A payment on account should reflect the lowest amount the successful party could reasonably be expected to expend in conducting the case competently, with care taken to avoid double deduction.

The claimants, comprising joint official liquidators and the company in liquidation, brought a claim against Samba Financial Group. Following an earlier procedural history involving a 2013 action and a subsequent 2017 action, Samba’s defence was struck out in substantial part for disclosure failures. Three issues proceeded to trial: knowing receipt, Saudi Arabian law and valuation.

Samba substantially succeeded on the issues tried and sought its costs. The court determined permission to appeal, the incidence of costs, exclusions from recoverable costs, and the appropriate approach to a payment on account.

1. Permission to appeal. Permission was granted on the knowing receipt issue. Permission was refused on the Saudi Arabian law issue because the conclusions depended on the evaluation of expert evidence concerning a different legal system, and no realistic inconsistency or arguable error was identified. Permission was also refused on the valuation issue. The judge had accepted the principle of restoring the trust to its prior position, but considered market value an appropriate basis for substitutive performance and found no realistic argument for an alternative valuation basis.
2. Costs. Samba was the successful party on the issues tried, but the general rule under Civil Procedure Rules 1998, rule 44.2, was only a starting point. The court had to consider all the circumstances, including conduct and partial success.
3. Samba could not recover the substantial costs of its disclosure exercise. It had failed to comply with the disclosure orders, and the costs were incurred without producing disclosure. Independently, those costs related to factual issues that were never tried because Samba’s defence was struck out and on which the claimants succeeded. The same reasoning required exclusion of costs incurred preparing factual witness statements.
4. Case-management costs were treated as general costs of the action. Pre-action and pleading costs were not excluded altogether, but their recoverability and reasonable amount were matters for detailed assessment. The Saudi Arabian law expert costs were recoverable because Samba succeeded on the single Saudi Arabian law issue, notwithstanding that it contained analytically distinct sub-issues.
5. Samba was awarded its reasonable costs of the 2017 action on the standard basis, excluding the identified disclosure and factual witness-evidence costs. The court then addressed a payment on account under rule 44.2(8), applying the approach that the appropriate figure is the lowest amount a successful party could reasonably be expected to expend to conduct its case competently. A single percentage deduction was preferred where separate deductions risked double counting.

• High Court (Chancery Division): Samba’s defence was substantially struck out for non-compliance with disclosure orders. The remaining issues were tried, Samba succeeded on them, permission to appeal was granted on the knowing receipt issue and refused on the Saudi Arabian law and valuation issues. Costs were awarded to Samba subject to specified exclusions.
• The judgment also records that the 2013 action reached the Supreme Court, an amendment application was allowed at first instance by Birss J and that decision was later reversed by the Court of Appeal. No citations for those decisions are supplied.