Credit Suisse Life (Bermuda) Ltd v Bidzina Ivanishvili

• Jurisdiction: Bermuda
• Judge: Bell JA,Smellie JA,Clarke P
• Judgment Date: 08 December 2023
• Neutral Citation: BM 2023 CA 27
• Court: Court of Appeal (Bermuda)
• Year: 2023
• Docket Number: Civil Appeal No. 8 of 2022

Between:

Credit Suisse Life (Bermuda) Limited

Appellant

and

(1) Bidzina Ivanishvili

(2) Ekaterine Khvedelidze

(3) Tsotne Ivanishivili

(an infant, by his mother and next friend, Ekaterine Khvedelidze)

(4) Gvantsa Ivanishvili

(5) Bera Ivanishvili

(6) Meadowsweet Assets Limited

(7) Sandcay Investments Limited

Respondents

Neutral Citation Number: [2023] CA (Bda) 27 Civ

Before:

THE PRESIDENT, Sir Christopher Clarke

JUSTICE OF APPEAL Geoffrey Bell

and

JUSTICE OF APPEAL Sir Anthony Smellie

Civil Appeal No. 8 of 2022

IN THE COURT OF APPEAL (CIVIL DIVISION)

JURISDICTION (COMMERCIAL COURT)

BEFORE THE HON. CHIEF JUSTICE

CASE NUMBER 2017: No. 293

Lord Falconer KC, Steven Thompson KC, Peter Dunlop and Izabella Arnold of Walkers (Bermuda) Limited, for the Appellant

Richard Morgan KC, Louise Hutton KC, Sarah-Jane Hurrion and Henry Komansky of Hurrion & Associates Ltd, for the Respondents

RULING ON COSTS

Bell JA

Background

1 The court gave its judgment (“the Judgment”) in this matter on 23 June 2023, in which it dismissed the appeal. However, in relation to the claim made by the Respondents in the first instance proceedings identified in the judgment as the Misrepresentation Claim (in this ruling I will use the defined terms used in the Judgment), we allowed the appeal made by the Appellant on grounds 4,5 and 6 of the Notice of Appeal. We then noted that we expected that there would have been very significant costs spent on this issue, such that some reduction in costs might be appropriate, on the basis of the principles set out in the case of First Atlantic Commerce v The Bank of Bermuda [2009] CA Bda 5 Civ., which gave effect in this jurisdiction to the principles laid down in the case of In re Elgindata (No 2)[1992] 1 WLR 1207. In Elgindata, it was held that where superfluous issues were raised unnecessarily, the successful party's recoverable costs could be proportionately reduced. The claims raised by the Misrepresentation Claim effectively duplicated the other claims made in the proceedings, such that if the Plaintiffs succeeded in those other claims, as they did at first instance, the Misrepresentation Claim added nothing. In the event, while they succeeded at first instance, the Respondents failed on that claim in this Court. The issues raised by the Misrepresentation Claim involved complex questions of law and fact, and required extensive expert evidence.

2 We accordingly invited submissions from the parties on the issue, and these were received in the form of submissions from the Appellant (undated but apparently filed on 7 July 2023, although the Respondents' submissions referred to their filing date as being 14 July 2023) and from the Respondents dated 21 July 2023.

3 Although Walkers, the Bermuda attorneys acting for the Appellant, referred in their letter to the Court dated 30 October 2023 to the parties' understanding that the Registry would fix a date for argument on all outstanding matters (that is to say, a stay, leave to appeal to the Privy Council and costs), that was not the Court's understanding. We were and remain of the view that the issue of costs could and should be determined on the papers, as we indicated when handing down the Judgment. We will therefore proceed on the basis of the submissions filed in July.

The Appellant's submissions

4 The Appellant's submissions referred to the guiding principles of the costs regime set out in Order 62 rule 3 of the Rules of the Supreme Court 1985, and having referred to the First Atlantic case, set out the relevant principles as expressed by Nourse LJ in Elgindata. I will not repeat those or set out the details of the subsequent English cases where the Elgindata principles have been adopted. However, I would refer to the words of Nourse LJ in Elgindata, where he recognised that, on an appeal, the only fair basis for depriving the successful party of the costs to which he would otherwise be entitled was to ask how much time had been taken up dealing only with the allegations on which that party had failed. Nourse LJ recognised that in doing so, the calculation would necessarily be more “rough and ready” than one made by the judge (I suspect that the judge's calculation would similarly be “rough and ready”) but carried on to say that the court must “do the best we can.”

5 I pause to note that the Appellant then proceeded to conduct the exercise envisaged by Nourse LJ, whereas the Respondents took an entirely different approach, to which I will come in due course.

6 The Appellant conducted the exercise in relation to the Misrepresentation Claim separately in respect of both the first instance and appellate proceedings. As to the former, the Appellant submitted that the Respondents' costs should be reduced by 15%, and as to the latter suggested a reduction of 35%.

7 The exercise conducted by the Appellant seems to me to have been both methodically and fairly undertaken. It recognised that the Misrepresentation Claim had been brought by late amendments, involved substantial and complicated issues of private international law, and with Georgian and Swiss law experts being instructed, resulting in substantial reports, and involving two days of the trial. The Appellant conducted a comparison of those parts of the first instance judgment and the parties' opening and closing submissions which had been spent on the Misrepresentation Claim, when compared with the other causes of action. It seems to me that this is precisely the sort of rough and ready exercise which Nourse LJ would have had in mind as part of this Court doing “the best we can”. The final figure of 15% proposed by the Appellant does not seem unreasonable in the circumstances.

8 As to the appellate proceedings, the Appellant identified the three main issues on the appeal as the contract claim, the fiduciary duty claim and the Misrepresentation Claim. It noted that the Respondents had put in a Respondents' Notice and said that the issues in the Misrepresentation Claim were the most legally complex and gave rise to by far the largest proportion of the cited authorities. That seems to me to be correct. It submitted that the proportion of the parties' arguments on appeal reflected an approximately one third to two thirds division between misrepresentation and the rest of the grounds. It compared the extent of the number of pages in the parties' skeletons, and finally noted the proportion of the findings section of the Judgment dealing with the Misrepresentation Claim, before concluding that the facts and matters referenced amply justified a reduction of 35% of the Respondents' costs of the appeal. Again, that figure of 35% does not seem unreasonable to me, subject of course to any challenge to the Appellant's figures that the Respondents may have made.

The Respondents' submissions

9 As indicated, the Respondents' submissions took a different approach. In respect of the first instance costs, they maintained that they were undoubtedly the successful party at first instance, and said that since the judgment at first instance had not been disturbed on appeal, this Court should not disturb the Chief Justice's costs order. That argument, with respect, misses the Elgindata point. Appellate courts customarily vary a costs order made at first instance where they have reached a different conclusion on the merits of the appeal. That is no more nor less the case where an appellant has raised arguments on appeal which fail. This is the third of Nourse LJ's statements of the relevant principles that the general rule (in relation to costs following the event) does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, “ but where that has caused a significant increase in the length or cost of the proceedings, he may be deprived of the whole or part of his costs.” (emphasis added).

10 The Respondents continued by arguing that the Misrepresentation Claim should not be treated as a separate and distinct claim, but a separate basis for putting the successful party's only claim, based on the fact that the Respondents' money had been misappropriated, misused or stolen by Mr Lescaudron, while acting as the Appellant's agent. That statement ignores the reality that any claim to recover such moneys must...