JSC Commercial Bank Privatbank v Kolomoisky

In assessing costs, the court should identify the substance of the dispute and consider whether a proportionate costs order better reflects the parties’ success than an issue-based order. Where costs are payable on account before detailed assessment, the court may make a reasonable estimate despite uncertainty. The appropriate figure should include a margin for error and may be based on the lowest amount reasonably likely to be recovered. The assessment should reflect the complexity, importance, conduct and resources reasonably required, while recognising that detailed assessment remains the proper process for determining the final sum.

The judgment determined costs following the court’s refusal of an application by JSC Commercial Bank Privatbank for cross-examination of Igor Valeryevich Kolomoisky concerning his assets. The application also sought directions requiring information and documents concerning a Bitcoin investment.

The claimant contended that it had succeeded on the information-related relief and should not bear all costs. It also opposed a payment on account on the basis that the available costs information was insufficient. The court therefore considered the proper allocation of costs and the amount payable on account under the Civil Procedure Rules.

1. The claimant was successful on the application requiring an affidavit or witness statement concerning the Bitcoin investment. The order made was necessary and proportionate because the defendant’s proposed response was limited to information and documents he was willing and able to provide. The defendant was unsuccessful on that part of the application.

2. The claimant was unsuccessful on the substantive application for cross-examination. The costs of the defendant’s second and fourth witness statements were costs in the case.

3. Although the court is discouraged by CPR 44.2(7) from making an issue-based costs order, the court should first consider whether payment of a proportion of the other party’s costs is more appropriate. Because the affidavit application was subsidiary to the cross-examination application and the costs could not reliably be separated, the appropriate order was for the claimant to pay 80% of the defendant’s assessed costs and the defendant to pay 20% of the claimant’s assessed costs.

4. The court had sufficient material to make an order for payment on account under CPR 44.2(8). The amount need only be a reasonable estimate before detailed assessment. As explained in Excalibur Ventures LLC v Texas Keystone Inc [2015] EWHC 566 (Comm), the estimate should allow for the uncertainty inherent in detailed assessment and may be based on the lowest likely recovery or an appropriate deduction.

5. The court considered the complexity and importance of the application, the parties’ conduct, the resources reasonably required and the substantial sums claimed. Applying the approach in Kazakhstan Kagazy v Zhunus [2015] EWHC 404 (Comm), recoverable costs should reflect the lowest amount reasonably expected to have been spent to conduct the case proficiently. A 40% allowance was therefore applied to the relevant costs, producing a gross figure of £120,096, less £28,500 for the claimant’s recoverable costs.

6. The claimant was ordered to pay the defendant £91,596 on account of costs. The parties were directed to agree an order and submit it for approval.