Siddiqui and Ors v Athene Holding Ltd (Costs)

• Jurisdiction: Bermuda
• Judge: Clarke P,Kay JA,Smellie JA
• Judgment Date: 02 March 2020
• Court: Court of Appeal (Bermuda)
• Docket Number: Civil Appeal 2019 No 1
• Date: 02 March 2020

[2020] Bda LR 16

In The Court of Appeal for Bermuda

Before:

Clarke P; Kay JA; Smellie JA

Civil Appeal 2019 No 1

Between:

Imran Siddiqui

Stephen Cernich

Caldera Holdings Ltd

Appellants

and

Athene Holding Limited

Respondent

Mr A Potts QC for the Appellants

Mr K Taylor and Mr B McCosker for the Respondent

The following cases were referred to in the judgment:

Peiris v Daniels [2015] Bda LR 16

Viscount of Royal Court v Shelton [1986] 1 WLR 985

Phoenix Global Fund Ltd v Citigroup Financial Services (Bermuda) Ltd [2009] Bda LR 70

Rabilizirov v A2 Dominion London Ltd [2019] EWHC 863

Costs — Standard and indemnity basis — Directors' indemnity

JUDGMENT of Clarke P

1. By our order dated 20^th September 2019, made in two consolidated appeals, we refused leave to appeal from the Ruling of Hellman J dated 28 June 2018 (“the Hellman Ruling”) and dismissed the appeal against the Ruling of the Chief Justice dated 14 January 2019 (“the Hargun Ruling”). We ordered that, unless the parties wished to be heard on costs, then costs should follow the event.

2. On 22 November 2019 we refused the Appellants leave to appeal to the Privy Council. We now have to determine whether any and, if so, what, order should be made in respect of costs both here and below. This is the Ruling of the Court on that issue.

3. The course of events in these proceedings is well known to the parties and is apparent from the two Rulings and our judgment in the Appeal. We shall not, therefore, refer to it in any detail.

4. In essence, the Respondent (“Athene”) commenced proceedings in the Supreme Court, by Writ endorsed with a Statement of Claim (the “Writ”), on 3 May 3018. The Third Appellant (“Caldera”) filed an application seeking to set aside, stay or strike out the Writ on the grounds of forum non conveniens, or, alternatively, a stay of the Writ on case management grounds. The latter application, which was the subject of the Hellman Ruling, failed.

5. The Appellants filed the following applications:

• i. an application by the First and Second Appellants (“Mr Siddiqui” and “Mr Cernich”) to stay or set aside the Writ, again on the grounds of forum non conveniens;

• ii. an application by Caldera (which was part of the application referred to in [4] above but which was determined separately in the Hargun Ruling) for an order that the Writ be struck out pursuant to Order 18, rule 19 of the Rules of the Supreme Court 1985 and the inherent jurisdiction of the Court;

• iii. an application by Caldera for leave to appeal the Hellman Ruling. These matters were the subject of the Hargun Ruling. The appellants failed to secure any of the relief sought.

6. No order has yet been made in respect of the costs of the Hellman or the Hargun Ruling. On 17 January 2019 counsel for the Respondent (“Athene”) wrote to counsel for the Appellants, attaching draft orders reflecting the Hellman Ruling and the Hargun Ruling. As to costs the email stated that:

“The draft orders reflect the award of costs in our client's favour for the hearings of 28 June 2018 and 14 January 2019. We can't imagine a scenario in which your client could reasonably oppose such orders in relation to costs, but if you do not agree to this please let us know so that we can move to apply for our client's costs”.

7. In the event, counsel for the Appellants did not agree that orders should be made in the form proposed and on 21 January 2019 indicated that he planned to revert within the next 21 days. In fact, there was no further response; nor did Athene make any application to the Supreme Court for an order as to costs.

8. Athene now seeks an order that the costs of the proceedings below, culminating in the Hellman and Hargun Rulings, should be paid by the Appellants on the standard basis; and that the costs of the consolidated appeals should be paid by the Appellants on the standard basis, save for those costs incurred in relation to the allegation of apparent bias/predetermination on the part of Hargun CJ which, Athene submits, should be paid on the indemnity basis. Alternatively, if we were not minded to deal with the costs below Athene has indicated that it will apply forthwith to the Supreme Court for that Court to deal with that issue.

9. The Appellants submit that we should make no order as to the costs of the consolidated appeals or as to the costs below. Alternatively, the costs of the consolidated appeals should be reserved; or be in the cause; or should be Athene's costs in the cause. Lastly, they say that, if the Appellants are to be ordered to pay Athene's costs of the consolidated appeals, such costs should not be taxed until after the conclusion of the proceedings at first instance and Athene should not be permitted to enforce payment of any such costs order against any of the Appellants until the conclusion of the proceedings at first instance.

10. The Appellants accept that they lost the consolidated appeals. Their primary submission is that no order for costs should be made against them because they are, under Athene's Bye-Laws, entitled to a contractual indemnity in respect, inter alia, of any costs which we might order them to pay. There is, thus, no point in making any costs order since to do so would create a legal circuity.

11. Bye-Law 56 of Athene's Eighth Amended and Restated Bye-Laws (the “Eighth Bye-laws”), adopted on 14 October 2014, was applicable on 30 June 2016 when the termination of Mr Cernich's employment relationship with Athene and of his (alleged) status as an Officer of Athene became effective. At this stage Mr Siddiqui was still a director of Athene.

12. The applicable parts of Bye Law 56 of the Eighth Bye- Laws are as follows:

“56.1 … the Directors [including the First Appellant] … and other Officers [including, as we found was “seriously arguable” in our judgment of 20 September 2019, the Second Appellant] (each a “Covered Person”) for the time being acting in relation to the affairs of the Company [the Respondent] … shall be indemnified and secured harmless by the Company from and against all Liabilities1 and Expenses2 arising from any and all threatened, pending or

completed Proceedings3, in which any Covered Person may be involved … by reason of its status as a Covered Person whether arising from acts or omissions to act occurring before or … after the date of the adoption of these Bye-laws; provided, however, that a Covered Person shall not be indemnified and held harmless if there has been a final and non-appealable

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