St John's Trust Company (Pvt) Ltd v James Watlington
| Jurisdiction | Bermuda |
| Judge | Alexandra Wheatley |
| Judgment Date | 02 August 2023 |
| Docket Number | 2019: No. 447 |
| Court | Supreme Court (Bermuda) |
[2023] SC (Bda) 62 Civ. (2 August 2023)
Hon. Alexandra Wheatley, Registrar
2019: No. 447
In The Supreme Court of Bermuda
COMMERCIAL COURT
CIVIL JURISDICTION
Mr Paul Harshaw of Canterbury Law Limited for the Third Defendant
Mr Kevin Taylor of Walkers (Bermuda) Limited for the Fifth Defendant (Mr Gilbert)
Mr John Wasty of Appleby (Bermuda) Limited for Conyers Dill & Pearman Limited
Taxation of Bill of Costs; Costs Awarded on Indemnity Basis; Reasonableness and Proportionality; Cost of Overseas Counsel
RULING of Registrar, Alexandra Wheatley
This is the taxation of the Amended Bill of Costs of Cabarita (PTC) Limited ( Cabarita) dated 8 December 2021 ( Amended Bill of Costs), in accordance with the Costs Order dated 14 December 2020.
Costs were awarded on an indemnity basis. The hearing in this case was an interlocutory hearing which lasted three days. The total costs being claimed by Cabarita are $1,252,286.05.
Counsel were most helpful in providing their respective skeleton arguments which I have largely incorporated into this ruling.
Order 62 Rule 12(2) of the Rules of the Supreme Court of Bermuda ( RSC), addresses the basis for which a taxation occurs when costs are awarded on the indemnity basis:
“ On a taxation on the indemnity basis all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred and any doubts which the Registrar may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party.”
In exercising my discretion as to the amount of costs to be allowed, pursuant to the RSC, Order 62, Part II, Division I, item 1(2) (hereinafter referred to as the Order 62 Factors), I must have regard to all the relevant circumstances and in particular to:
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(a) The complexity of the cause and the novelty of the questions involved;
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(b) The skill, specialised knowledge and responsibility required of and the time and labour expended by the attorney;
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(c) The number and importance of the documents prepared or perused;
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(d) The place and circumstances in which the business involved is transacted;
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(e) The importance of the cause to the client;
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(f) Where money or property is involved, the amount or value;
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(g) Any other fees payable to the attorney but only where work done in relation to those items have reduced the work which would otherwise have been necessary in relation to the item in question.
These principles apply equally to a costs assessment where costs are payable on an indemnity basis.
In the case of Louis Dreyfus Company Suisse S.A v International Bank of St Petersburg [2021] EWHC 1039 (Comm), Mr Justice Calver expanded on the approach to take in a taxation where costs are awarded on an indemnity basis. Paragraph 47, provides as follows:
“ 47. I bear in mind the word of Leggatt J (as he was) in Kazakhstan Kagazy plc v Zhunus [2015] EWHC 404 (Comm) at [13]:
“ In a case where very large amounts of money are at stake, it may be entirely reasonable from the point of view of a party incurring costs to spare no expense that might possibly help to influence the result of the proceedings. It does not follow, however, that such expense should be regarded as reasonably or proportionately incurred or reasonable and proportionate in amount when it comes to determining what costs are recoverable from the other party. What is reasonable and proportionate in that context must be judged objectively. The touchstone is not the amount of costs which it was in the party's best interests to incur, but the lowest amount which it could reasonably have expected to spend in order to have its case conducted and presented proficiently, having regard to all the relevant circumstances. Expenditure over and above this level should be for a party's own account and not recoverable from the other party. This approach is first of all fair. It is fair to distinguish between, on the one hand, costs which are reasonably attributable to the other party's conduct in bringing or contesting the proceedings or otherwise causing costs to be incurred, and, on the other hand, costs which are attributable to a party's own choice about how best to advance its interests.” [Emphasis added]
Mr Justice Calver additionally reiterated in paragraph 48 that reasonableness still must be considered even if costs were awarded on an indemnity basis:
“ 48. It is of course the entitlement of the Claimant (and any Claimant) to appoint Counsel of its choice and here to appoint leading counsel, Mr. Houseman QC, who has conducted and presented the case throughout with his customary skill, rather than instructing him with junior counsel and allowing the bulk of the work to be carried out by junior counsel. However, that does not mean that the Claimant should be entitled to recover from the Defendant, even on an indemnity basis, costs which are significantly greater in amount than it might otherwise reasonably have incurred, whilst still having its case conducted and presented proficiently.” [Emphasis added]
Chief Justice Ground in Golar LNG Ltd v World Nordic SE [2012] Bda LR 2 at paragraph 16, expressed similar sentiment, quoting Floyd J in Research in Motion UK Limited v Visto Corporation [2008] EWHC 819 (Pat):
“ [17] The Court's function at this stage is not to stop the parties spending money on litigation; it has no power to prevent expenditure, although it will use its powers to ensure that litigation is run in a way that does not cause the parties to expend unnecessary sums… The Court does however have a function in preventing unnecessary and unreasonable costs being recovered by a party from its opponent…parties can be discouraged from enforcing or defending their rights if they face claims for unreasonable and unnecessary costs being allowed against them.” [Emphasis added]
The approach of the Bermuda Courts to costs was considered in Capital Partners Securities Co Ltd v Sturgeon [2017] Bda LR 43, which also involved a dispute over the ownership of a company (dispute over its shares, rather than its board membership which is the case in this matter). The company, a fund, was valued in excess of $40,000,000. The litigation was a marathon involving three sets of proceedings. The first set of proceedings ended without a full hearing, but the costs incurred were substantial involving both Bermuda and Hong Kong attorneys. The costs claimed for the first set of proceedings exceeded $200,000. Registrar Subair Williams (as she was then) concluded that, in Bermuda, the principle of proportionality acted alongside the principle of reasonableness. She cited at paragraph 120 the following guidance of Kawaley CJ from Lightbourne v Thomas [2016] Bda LR 92:
“ 120. Both parties referred to the judgment of the learned Chief Justice, Ian Kawaley, in Lightbourne v Thomas [2016] Bda LR 92. In his judgment, the learned Chief Justice considered the overriding objective and its application in taxation hearings. Emphasis was placed on Order 1A/1(c) which centers on the ‘proportionality’ principle. The Court held as follows at paras 14-15:
“ …As a result in considering whether costs have been “reasonably incurred”, the Court is duty bound to consider whether the amounts claimed are “proportionate” having regard to the following Order 1A/1(c) requirements:
i. To the amount of money involved;
ii. To the importance of the case;
iii. To the complexity of the issues; and
iv. To the financial position of the parties.
In the final analysis therefore, the practical result must be that a Bermudian taxation is governed by a construct of reasonableness incorporating requirements of proportionality which broadly correspond to the proportionality requirements more explicitly expressed in CPR 44.3(2) and 44.4. In fact, Order 62 itself does incorporate most of the proportionality requirements of Order 1A/1(c), without attaching the proportionality label'…”” [Emphasis added]
These proportionality factors echo the statutory, Order 62 Factors as set out in paragraph 5 above.
Whilst considering the proportionality factors as well as the factors listed in the Rules, the Court must also consider “ all the relevant circumstances” (see Louis Dreyfus). What this means is that the Court, at taxation, does not consider the reasonableness of particular steps taken in the litigation as that would be a matter for the Judge to deal with in any Costs Order. However, on taxation, I can and indeed am required to consider whether the litigation (in the round) was of genuine importance and concerned matters of genuine value, in order to carry out its assessment of reasonableness and proportionality.
Both Counsel for Mr Gilbert and Conyers submitted generally that the costs claimed by Cabarita should be heavily taxed on the basis that they are of an unreasonable amount and were unreasonably incurred.
Mr Harshaw for Cabarita, inter alia, submitted that the Chief Justice must have thought the costs now being claimed were reasonable as he had an indication of what those costs were at the time of his 14 December 2020 Ruling and he specified precise amounts to be paid on account by Mr Gilbert within twenty-eight days. The Chief Justice could have ordered a lesser amount be paid on account or indicated that he thought that the costs indicated were excessive. As the Chief Justice did neither, Mr Harshaw submitted that, that is...
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