Berezovsky v Abramovich

I, for my part, would grant permission to appeal in this case on costs but, for reasons that I will shortly give, I am also minded to dismiss the consequent appeal.

This is the last aspect of the appeal that we heard in the early part of this year. We disposed of the substance in the form of a judgment dated 23 February 2011 and upheld the decision of Sir Anthony Colman on all aspects of the case except one which related to the second alternative restitution claim.

There remains an application for permission to appeal, which as I have said I for my part would wish to grant, against the order Sir Anthony made in respect of the costs, which were very substantial, after the hearing of the various applications and counter-applications. Essentially Sir Anthony decided (I am summarising with not complete accuracy no doubt) in a carefully calibrated judgment that Mr Berezovsky should pay the costs of and occasioned by his amendment applications, including costs which were incurred by Mr Abramovich but which would not have been incurred if the final amendment application of 7 August 2009 had been issued on or before 13 July 2009, save that Mr Abramovich was to pay the costs of the hearing of 2 to 13 November and 31 March 2010. Mr Abramovich was then to pay the costs of his strike-out applications, save that all costs incurred by either party in preparing evidence and investigating facts for the trial were to be costs in the case.

Mr Abramovich submits that this order does not reflect the fact that his strike-out applications were, as Ms Davies QC on his behalf put it, entirely justified until the amendments of 7 August 2009 put Mr Berezovsky’s case on a properly appealable basis. He accordingly seeks the costs of his applications up until 7 August 2009 and he is right to say that it was not until 7 August 2009 that it was clear that Mr Berezovsky was relying on joint activity or sui generis agreement, as described in paragraph 31 of my original judgment with which Laws and Stanley Burnton LJJ agreed. It is also right to say that the evidence which formed the basis of that plea was served in April 2009, although no amendment to bring the pleadings into line with that evidence was then made.

The fact, however, is that even after 7 August Mr Abramovich did not abandon his strike-out applications and then seek the costs to date. He vigorously continued to pursue his strike-out applications, which were ultimately defeated. Sir Anthony set out in paragraph 18 of his judgment the grounds on which the strike-out application was made and he set out there ten separate grounds.

Ms Davies submits that the correct approach was set out by Sir Anthony in paragraph 7 of his judgment on costs, namely that as a matter of principle, although a defendant who successfully defeats such an application is normally entitled to an order of costs which reflects his success, where that success would not have been achieved had it not been for emergency surgery to the pleadings after the issue of the defendant’s application and, a fortiori, only a relatively short time before the hearing, the claimant cannot expect to recover costs which he has incurred in trying to protect the uncured pleading or to expect that a claimant should not be recompensed in respect of his costs in attacking that uncured pleading. Ms Davies submits that if Sir Anthony had followed that principle he would have concluded that not only should Mr Abramovich not have to bear his own costs but also that he should not have been ordered to pay, in particular, the costs of Mr Berezovsky in relation to his applications. She points out, with truth, that before the applications to strike out or for summary judgment were issued, the pleadings were in a state where the main case was acknowledged to be wrong and there was only an alternative case put in a reply that, in the light of the facts of the matters set out in the defence, there was a claim for vindication or restitution. She then submits that no evidence was served in relation to the main way of putting the claim until April 2009 and no pleading was served until August 2009. Despite the fact that as from February 2009 it had been indicated that there would be amendments made, nothing actually happened until a yet further abortive attempt in July and an ultimately successful attempt in August 2009. She submits that the judge just has not taken the right view of the matter. Indeed she submits that the judge erred in principle by asking himself what the hypothetical fate would have been of an application to amend made shortly after Mr Berezovsky served his evidence of Russian law in April 2009 rather than in August 2009. In my judgment that is no error of principle on the part of the judge. It was a permissible exercise for him to undertake viz to ask himself what the situation would have been if an application to amend had been made at any time after the application to strike out or for alternative summary judgment had been issued.

As I say, the judge has listed in paragraph 18 ten aspects which were relied on. Ms Davies naturally concentrated on the first two, with every justification, because that was the main way the complaint was being put, but there is no doubt that in due course the claim was amended as everybody surely knew it was going to be, albeit that it was so late.

Mr Gillis QC, on behalf of Mr Berezovsky, has referred to the authority of Beoco v Alfa Laval Co Ltd [1995] QB 137 in which Stuart Smith LJ, with whom Peter Gibson and Balcomb LLJ agreed, stated at page 154 of the report,

“As a general rule , where a Plaintiff makes a late amendment as here, which substantially alters the case the Defendant has to meet and without which the action will fail, the Defendant is entitled to the costs of the action down to the date of the amendment. There may, of course, be special reasons why this general rule should not be applied. An example of this is to be found in the case of Kaines (U.K.) Ltd. v. Osterreichische [l993] 2 Lloyds Rep. l at p. 9, where the judge [who, I intervene to say was Steyn J as he then was] was satisfied that, even if the amendment had been made earlier, the action would have been vigorously resisted.”

The reason there given for departure from the general principle seems to me, as Mr Gillis submitted, to be applicable in this case. It is entirely clear, at any rate to me, that in this hard-fought case the precise status of the pleadings at any one time was to be a matter of only moderately marginal consideration in the interlocutory sparring that has taken place over many days. There were many other matters relied on in support of the application for summary judgment or to strike out the claim, all of which have ultimately failed. If the application had been confined to an attempt to strike out or obtain summary judgment in relation to the first two of the matters set out in Sir Anthony’s judgment at paragraph 18, it would all have been dealt with speedily and expeditiously and it may well be that Mr Abramovich would have secured an order for costs in his favour. As it is, the interlocutory applications spiralled, I will not say out of control, but into applications which lasted many days to the ultimate detriment of the progress of the case as a whole, which we have decided should proceed to trial.

The supposed error of principle by the judge is not, in my view, an error of principle at all. It was helpful for the judge to ask himself whether or not, if an application had been made to amend at any stage, it would have been granted and he looked at the interlocutory sparring from that perspective. I can see that some judges might wish to penalise a party for not putting his pleading into apple pie order at the time relevant evidence is served, but the truth is that however early Mr Berezovsky had put in a correct pleading Mr Abramovich would still have pursued his strike-out application as he in fact did after 7 August. Some judges might have wished to reflect Mr Abramovich’s modest success by making some different order for costs than Sir Anthony in fact did, but for my part I can quite understand why Sir Anthony did not choose to make such an order. Once one concludes that Sir Anthony asked himself the correct – or indeed a permissible – question, no quarrel can realistically be had with what he called his “very clear conclusions” as to the answers given in paragraph 23 of his considered judgment. In my view he did not go beyond the ample discretion conferred on any first instance judge as to costs and so I would dismiss this appeal for which we have given permission.

I agree with the order proposed by my Lord for the reasons he has given.

So do I.