Alexander Gorbachev v Andrey Grigoreyvich Guriev

An innocent third party from whom disclosure is sought should generally recover from the applicant the reasonable costs of resisting disclosure. The protection extends to a reasonable challenge to the English court’s jurisdiction, whether because such costs fall directly within rule 46.1 of the Civil Procedure Rules 1998 or because the rule’s underlying principle applies by analogy.

The court may depart from that position having regard to all the circumstances, particularly unreasonable conduct by the third party. Unsuccessful active opposition is not, without more, unreasonable. A third party has no unrestricted entitlement to contest jurisdiction at the applicant’s expense.

The claimant sought non-party disclosure from two Cypriot trustees concerning trusts relevant to his dispute with the defendant. The trustees challenged the English court’s jurisdiction but were unsuccessful. Jacobs J dismissed that challenge in [2022] EWHC 1907 (Comm) and ordered the trustees to pay the claimant’s costs under the ordinary rule that costs follow the event.

The substantive jurisdiction appeal was subsequently dismissed in [2022] EWCA Civ 1270. This further appeal concerned only the first-instance costs order. The issue was whether the special costs protection for persons facing third-party disclosure applications extended to the trustees’ jurisdiction challenge.

1. Appeal allowed. The trustees were entitled to their reasonable costs of the jurisdiction challenge. The order below was replaced by an order requiring the claimant to pay those costs.

2. An innocent third party from whom disclosure is sought should generally have its costs. It is ordinarily reasonable for that person to require the applicant to establish an entitlement to invade the privacy of its papers. Active but unsuccessful opposition does not itself amount to unreasonable conduct. As between an innocent applicant and an innocent third party, the applicant invokes the legal process for its own benefit and should ordinarily bear the resulting expense.

3. Popplewell LJ, with whom Males LJ agreed, held that the costs of the jurisdiction challenge were costs “of the application” within rule 46.1(2) of the Civil Procedure Rules 1998. The challenge was one of the grounds on which the trustees resisted the disclosure application. Separating jurisdiction from the merits procedurally did not change the substance of that resistance.

4. Dingemans LJ agreed in the result but held that the jurisdiction challenge was a separate application and therefore fell outside the literal wording of rule 46.1(2). The common-law principle reflected in that rule nevertheless applied by analogy, and an appropriate order could be made under rule 44.2(b). The court was therefore unanimous on the applicable costs protection, although divided on whether rule 46.1 applied directly.

5. The protection is qualified. Rule 46.1(3) permits a different order after consideration of all the circumstances, including whether the third party acted reasonably. The trustees’ challenge was reasonable because it was arguable and was supported by a first-instance decision and leading textbooks. Its ultimate failure did not displace the general rule.

6. The claimant could not rely for the first time on appeal upon an alleged absence of confidentiality. That matter had not been raised before the judge, was evidentially and legally complex, and was not advanced by a respondent’s notice. Once the trustees came within the general costs protection, the claimant bore the burden of raising any circumstance relied upon to displace it.

1. Court of Appeal (Civil Division): In [2023] EWCA Civ 327, unanimously allowed the appeal concerning the first-instance costs order and substituted an order requiring the claimant to pay the trustees’ costs of the jurisdiction application.

2. Court of Appeal (Civil Division): In [2022] EWCA Civ 1270, dismissed the trustees’ substantive appeal concerning jurisdiction. The Supreme Court later refused permission to appeal.

3. High Court, Commercial Court: Jacobs J dismissed the trustees’ jurisdiction challenge in [2022] EWHC 1907 (Comm) and ordered them to pay the claimant’s costs. The latter order was reversed in this appeal.