Compagnie Noga D'importation Et D'exportation SA v Abacha & Ors

This is an appeal against an order for costs made on 4 November 1999 by Longmore J (as he then was) at an interlocutory stage in these complex proceedings. Permission to appeal was granted by Rix LJ on 26 June 2001. For the overall history, context, and detail of the dispute I refer with gratitude to the judgment of my Lord Waller LJ in what has been called the ‘Noga 1’ appeal.

Freezing orders had been obtained in the Commercial Court by Noga against the S J Berwin defendants. An application was made to discharge those orders. That was unsuccessful. Rix J (as he then was) dealt with the costs of that application on 30 July 1999. At the same time there was before him a further application, to discharge a bank guarantee which had been supplied by Noga to the S J Berwin defendants. So far as it related to those defendants it was in the sum of £325,000. Rix J said this (transcript page 6, lines 20 ff):

“That figure of £325,000 was I think arrived at by consent and was intended to cover both the cross-undertaking and security for costs in respect of the discharge application. In that connection the Abacha defendants [sc. the S J Berwin defendants] had estimated their costs at £257,000. I might assume for present purposes, but it is simply my figures, that I should regard the security for costs element of the £325,000 as being £180,000 and the balance of, I think, £145,000 as being security on the cross-undertaking. It seems to me therefore that the £145,000 security on the cross-undertaking must remain.

For the balance of £180,000 the security for costs is no longer needed. I will therefore discharge the bank guarantee provided by Noga to that extent, £180,000; however, on the condition that it undertakes that, if required hereafter upon future application being made to provide security for costs for the action, it will make good the figure of £180,000 in the form of a bank guarantee or suitable security. ”

That was, of course, before August 1999, when the critical documents of 11, 13, and 16 August were entered into. On 4 November 1999 Longmore J had to deal with the question of the date of trial for the issues relating to those documents or agreements. On the same occasion, however, there was also before him a further application for security for costs brought by the S J Berwin defendants against Noga. This is what he said (transcript, page 4, lines 24 ff):

“There is an application for security for costs in the sum of £544,000. It seems to me… that that is an excessive sum for which to demand security… and it is therefore quite wrong that Noga should be required to put up security for costs for that full sum.

However… I am not minded to accept Mrs Selvaratnan’s invitation that I should just reject the whole application as having been improperly mounted, and, recognising that, she submits that the sum is grossly inflated. She also submits… that there was no undertaking before Mr Justice Rix that if required the sum of £180,000 should be put up by way of security for costs. I am satisfied that there was such an undertaking. Mr Gee invites me construe it as meaning ‘if required by the court’ but nobody needs to have an undertaking extracted from them that they will undertake to abide by an order of the court by way of security for costs. That follows as of course. ‘If required’ seems to me to mean if required by the S J Berwin defendants…

I am satisfied that an order for security ought to be made…

So the result of all that is that I will make an order for £180,000 by way of security for costs, and, in the light of the fact that that was an undertaking extracted from Noga in front of Mr Justice Rix, I do not make any requirement that the costs of that be accepted and paid for, in the event of the S J Berwin defendants losing the preliminary issues, by the S J Berwin defendants…”

Longmore J proceeded to make an order that the costs of the S J Berwin defendants’ application for security for costs should be paid by Noga in any event. That is the order the subject of this appeal.

There followed the trial of the settlement agreement issues before Rix LJ, who ordered that Noga should have 50% of their trial costs against the S J Berwin defendants on an indemnity basis. On 26 June 2001 Noga went back to Rix LJ and sought permission to appeal against the order for costs made against them by Longmore J on 4 November 1999. Mr Gee submitted that the reason why Longmore J made that order, rather than the more usual order to the effect that the costs of the security application be costs in the case, was that he had misunderstood the order made by Rix LJ on 30 July 1999; or rather, had misunderstood the nature or purport of the undertaking which Rix LJ had then extracted from Noga. On 26 June 2001 Rix LJ expressed himself as satisfied that he had intended that the undertaking should provide ‘if required by the court’, although those last three words had not been included in the order as drawn. Rix LJ amended or rectified his order so as to add ‘by the court’. He granted permission to appeal against the costs order of 4 November 1999, notwithstanding the passage of time since that date.

Mr Gee submits that we should set aside the order made by Longmore J, and order that the costs of 4 November 1999 should be dealt with in the same fashion as Noga’s trial costs, so that, rather than have to pay any costs to the S J Berwin defendants, Noga would recover 50% of their costs of the security application of 4 November 1999 and on an indemnity basis.

In my judgment it would be quite wrong to take that course. Essentially Mr Gee seeks to support it on two grounds. First, he submitted that the basis of the order made by Longmore J was the judge’s misapprehension as to what Rix LJ had intended by the undertaking extracted on 30 July 1999. Secondly, he said that we should have regard to the findings made at trial by Rix LJ which were adverse to the S J Berwin defendants: in particular, the judge’s findings to the effect that the S J Berwin defendants’ case on the facts was shot through with dishonesty. For my part I am not satisfied that Longmore J made the order he did because of his erroneous (as it turned out) understanding of the purport of the undertaking. It is at least a possibility that he might have made the same order had the undertaking been expressed to be given to the court. Secondly, it would be wrong in principle to have regard to the results of the trial in determining the merits of an interlocutory order for costs in any event made before trial. It was of course a premise of the order of 4 November 1999 that the trial could go either way – or, rather, in any of several directions – and against that premise Longmore J made an order for costs in any event. The only question can be whether it is demonstrated that he was wrong to do so in the circumstances prevailing when the application was made to him on that date. That is by no means demonstrated to me, and I would dismiss the appeal.

I should add that I consider, with great respect to Rix LJ who gave permission for this appeal, that it is quite wrong for this court to be asked to entertain an appeal against an interlocutory order after this enormous distance in time, unless there is some wholly exceptional circumstance which makes it just to do so. The order made by Longmore J was right or wrong at the time he made it. If it was to be appealed it should have been appealed then. In the events which have happened, the bringing of this appeal is in my view a distortion of the appellate process.

I agree.

I also agree.