Rattan v UBS AG, London Branch

This is a case about misselling (or as it is rather charmingly put it in the claimant's skeleton argument for the first case management conference, misspelling) of investments. At the CMC, and despite my expression of hope that there might have been an outbreak of common sense, Mr Dov Ohrenstein for the claimant contended that because the defendant had failed to exchange and file its costs budget in time, it should be treated pursuant to CPR 3.14 as having filed a budget comprising only the applicable court fees and needed to apply for relief from sanctions. On the facts of this case that contention is completely without merit and I rejected it without calling on Mr Nik Yeo, counsel for the defendant, to amplify what he had said in his skeleton argument. I indicated that I would give my reasons in writing. I did so, not because of any doubt as to the outcome, but in order to reinforce the message that the Commercial Court will firmly discourage the taking of futile and time wasting procedural points. I would have thought this would already have been clear from the judgment of Leggatt J in Summit Navigation Ltd v Generali Romania Asigurare Reasigurare SA [2014] EWHC 398 (Comm), but it appears that the message may not yet have been heard.

This claim was issued in the Chancery Division but has been transferred to the Commercial Court. However, the order for transfer provided that the costs management provisions of CPR Part 3 “or equivalent agreed procedure” should nevertheless apply.

CPR 3.13 provides:

“Unless the court otherwise orders, all parties except litigants in person must file and exchange budgets as required by the rules or as the court otherwise directs. Each party must do so by the date specified in the notice served under rule 26.3(1) or, if no such date is specified, seven days before the first case management conference.”

The consequences of non compliance are set out in CPR 3.14:

“Unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees.”

CPR 2.8(2) provides:

“A period of time expressed as a number of days shall be computed as clear days.”

The claimant’s argument is that the defendant provided its costs budget on Friday 28 February 2014, which was only six clear days before the CMC, not seven.

The defendant responds by pointing to the terms of the letter dated 7 February 2014 from Carter-Ruck, the claimant’s solicitors, in which they stated:

“We believe that the combined effect of the Order of Burton J and CPR Rule 3.13 is that in the absence of any equivalent agreed procedure, the parties to these proceedings are obliged to file cost budgets by 28 February 2014, which we currently intend to do. Please confirm by return that you will file your client’s costs budget on 28 February 2014, or alternatively provide your proposals as to any equivalent alternative procedure”.

The defendant’s solicitors, Stephenson Harwood, responded on 11 February:

“We agree that costs budgets should be filed by 28 February 2014”.

The unsophisticated reader might think that this was the clearest possible agreement that a costs budget exchanged on 28 February 2014 would be in time, but Mr Ohrenstein submits that such a reader would have failed to grasp the true subtlety of this correspondence. He submits that:

“It is evident from the above exchange of correspondence that there was no attempt to agree any ‘equivalent alternative procedure’. The Claimant’s solicitors had merely referred to the relevant CPR and provided its interpretation of the rules. In so far as the Claimant’s solicitors asked for confirmation that the Defendant would file its budget “on” 28^th February its interpretation was wrong. However, the Defendant’s solicitors responded by saying that they would serve “by” 28th February which they failed to do.

Accordingly, the timetable in CPR 3.13 applies as does the sanction in CPR 3.14.”

In my judgment Mr Ohrenstein’s argument is manifest nonsense. It is clear that there was an agreement. Even if Mr Ohrenstein’s strained construction of the correspondence had been justified, the defendant’s solicitors’ understanding of the position was entirely reasonable. If relief from sanctions had been necessary, which in my judgment it was not, the case for such relief would have been overwhelming.

I prefer to think that this was a misguided piece of opportunism by the claimant or his lawyers, whose costs budget was served on 27 February, rather than (as Mr Yeo suggested) that in writing their letter of 7 February Carter-Ruck were laying a cunning trap for the defendant to fall into. However, the fact that such a suggestion could be made demonstrates that the claimant’s argument has not only increased the expense of this CMC but has also, in all probability, damaged the relationship of co-operation and trust which ought to exist between the parties’ legal representatives and which is necessary for the efficient conduct of litigation. The taking of such a point is all the more unfortunate in a case where the parties’ initial costs budgets (for a combined total in excess of £2 million) are already disproportionate to the amount in dispute (the US dollar equivalent of about £1.3 million), so that the parties ought to have been concentrating on ways in which the case could be conducted at more proportionate cost.

Although a CMC would have been necessary in this case in any event, this argument appears to have taken a significant part of the parties’ energy in preparation for it. As a result it is appropriate in my judgment that the claimant should pay the defendant’s costs of this argument on the indemnity basis. I assess those costs summarily in the amount of £4,500, which must be paid within 14 days.

Finally, I observe that despite my attempts at the CMC to reduce the parties’ costs budgets to more proportionate figures, this will still be an expensive case to fight having regard to the amount at stake. It is in my view a case which cries out for mediation.