LA MICRO GROUP (UK) LIMITED v LA MICRO GROUP INC

This decision deals with consequential matters relating to costs and permission to appeal following my judgment handed down on 27 May 2022. Each of the parties have made written submission on these issues and I have taken these into account.

The parties have helpfully agreed a draft order, and it is agreed that Inc and Mr Frenkel should pay the cost of the claimants and Mr Lyampert but the paying parties submit that those should be limited to one third of such costs.

Mr Bell and Mr Lyampert have succeed in claiming declarations that they beneficially own the shares in UK, and that Inc is estopped from claiming such an interest. In my judgment they and UK, who supported their cases, are the successful parties and the starting point under CPR 44 is that they are entitled to their costs.

The basis for Inc and Mr Frenkel submitting that they should only have one third of their costs, is that success was based on only one of the three issues remitted by the Court of Appeal, and that they failed on the more complex issues of contractual surrender and laches. If the trial had been confined to proprietary estoppel, the time estimate would have been one day and not the two days that the hearing took. The findings made were largely on the basis of inherent likelihoods rather then preferring the evidence of one witness over another.

The court often makes proportionate costs orders where a successful party fails on issues where additional cost have been incurred (see Multiplex Construction v Cleveland Bridge UK [2008] EWHC 2280 (TCC), SmithKline Beecham Plc v Apotex Europe Ltd (Costs) No 2 [2004] EWCA Civ 1703, and Pigot v The Environment Agency [2020] EWHC 1444 (Ch). On the other hand, courts recognise that in complex commercial litigation, the successful party is likely to fail on some issues, and should not be too ready to deprive that party of some of its costs (see for example Deutsche Bank AG London v Commune Di Vusto Arsizio [2022] EWHC 219 (Comm))

The claimants and Mr Lyampert point to the fact that whilst Inc was not bound by a judgement in litigation between the other parties in 2015, in the present proceedings Nugee J, as he then was, in dealing with a service out of the jurisdiction application, indicated that the evidence given in those proceedings would be admissible in the present proceedings, and Inc would be at risk of costs if it required matter to be proved again. Despite that, Mr Frenkel in the present proceedings, upon whose evidence Inc relied, continued to deny making the assurances on which the proprietary estoppel was founded (which have become known as the Frenkel disavowal). It was his misleading approach to the courts in California which necessitated the present proceedings. The claimants have maintained that they do not want to be embroiled in proceedings and they have made reasonable offered to resolve this dispute. Inc and Mr Frenkel took points on estoppel, change of position and abuse of process which have been defeated.

On the remitted matters, I heard no further evidence, and rejected an application by Inc to admit new evidence. Submissions on such matters were made on the basis of the evidence I heard in giving judgment in 2021.

I am not persuaded that the failure of the claimants’ submissions on contractual surrender and laches should deprive them of any part of the costs of obtaining the substantial relief which they sought. Because of the very informal way in which the three individual parties choose to conduct their business affairs, the remitted matters involved issues of fact and law which were highly complex, factually and legally, as the history of proceedings, and the judgment in the Court of Appeal, show. In my judgment it was reasonable for the claimants, supported by Mr Lyampert, to put forward different bases in a law on which to found the same remedy, a remedy which they were ultimately successful in obtaining.

There is no good reason why an interim costs order should not be made, and the figures claimed are proportionate.

Inc and Mr Frenkel apply for permission to appeal on the basis of inconsistencies within the judgment as to reliance and unconscionability. As to the former, a fair reading of the passages relied upon by Inc and Mr Frenkel does not support the inconsistency relied upon. As to the latter, the passages relied on were dealing with two different doctrines.

In my judgment there is no justification to depart from the general rule that an appeal does not operate as a stay of the order.