Pacific International Sport Clubs Ltd v Comerco Commercial Ltd and Others

• Jurisdiction: British Virgin Islands
• Judge: Joseph-Olivetti, J
• Judgment Date: 20 December 2005
• Neutral Citation: VG 2005 HC 15
• Docket Number: BVIHCV 70 OF 2005
• Court: High Court (British Virgin Islands)
• Date: 20 December 2005

IN THE HIGH COURT OF JUSTICE

BVIHCV 70 OF 2005

Pacific International Sport Clubs Ltd.

and

1. Comerco Commercial Limited

2. Cognimax Ventures Limited

3. Castorian Commercial Limited

4. Jestlic Ventures Limited

5. Hambay Trading Corporation

6. Laomax Holdings Limited

7. HWR Services Limited

Appearances:

Mr. John Carrington and Miss Thalicia Blair for the Claimants

Mr. Michael Fay for the 1 ^st–6 ^th Defendants

(Costs on discontinuance — claim for unspecified damages — only interim applications dealt with prior to discontinuance — what costs are successful parties entitled to — what value should court attribute to the claim — CPR Part 65.5(2) (b) and Part 37.)

JUDGMENT IN CHAMBERS

Joseph-Olivetti, J

1 One would have hoped that the provisions of CPR 2000 on costs are sufficiently unambiguous so as to render any substantial dispute on costs otiose. This case proves otherwise as the issues here concern the basis on which one should quantify costs on discontinuance where the claim is for a non-monetary claim and or includes a claim for damages which are not specified. The application is that of the 1 ^st–6 ^th Defendants (‘the Principal Defendants’).

Procedural History of Case

2 The procedural history before the Court is relevant. Pacific International Sports Clubs Limited (‘Pacific’) is a company incorporated in Mauritius with beneficial owner in the Ukraine. The Principal Defendants are all international business companies incorporated here with beneficial owners in the Ukraine and the seventh Defendant is a company incorporated here which is their registered agent. The Claim was for certain declarations that the Principal Defendants sold their shares in the CJSC Football Club Dynamo Kiev, a prestigious soccer club in the Ukraine, in breach of Pacific's rights of pre-emption under the by-laws of that club and Ukranian law, to persons unknown; that the transfer was in breach of Pacific's rights and for damages for such breach. Pacific also sought Norwich Pharmacal type relief and a freezing order. The Claim made it abundantly clear that this action was ancillary to an action brought by Pacific against the Principal Defendants and others in the Ukraine for substantially the same relief.

3 Pacific, on the same day it filed the Claim, also filed an ex parte application for disclosure and a freezing order against assets of the Principal Defendants not exceeding U.S. $22,390,688.00. The order was granted on the 12 ^th April. On the 27 ^th April, the Principal Defendants applied to discharge the order. In a hearing before Rawlins, J. (as he then was) on 5 ^th May, which both counsel agreed did not exceed one hour, the learned judge discharged the order. However, he gave directions to facilitate an inter parties hearing and to preserve the information which was being sought. Costs were reserved pending the determination of the inter partes hearing. Pursuant to the directions the Principal Defendants filed, inter alia, an expert report on Ukrainian law by Mr. Petrovych. Pacific also filed an expert report on Ukranian law.

4 The Principal Defendants, also made, one day after they filed their report (17th ^th June) an application for (1) the Court to determine the value of the claim as being U.S. $22,390,688.00 and (2) an application for security for costs. However, the court did not hear either of these applications as it gave leave to Pacific to discontinue the action on the 12 ^th July (Hariprashad-Charles, J.—the application was filed on the 11 ^th July) and Pacific filed its notice of discontinuance on 15 ^th August. At the time of granting such leave, the Court granted an unopposed oral application by the Principal Defendants restraining Pacific from using any information disclosed in this suit until the 25 ^th July which was the date fixed for the inter partes hearing. To my mind it was clear that no inter partes hearing would occur in light of Pacific's obtaining leave to discontinue so the necessity for the Principal Defendants seeking and obtaining this relief with that cut off date escapes me. It is worthy of note that at the date leave to discontinue was given the substantive claim had not progressed beyond the filing of the bare claim form as the parties were engaged on the various interim applications.

5 Quite properly, Pacific, on the hearing of the application for leave to discontinue recognized that it would have to bear the usual consequences if the order were granted. This was in accordance with CPR Rule 37.6 which provides that the party seeking discontinuance must bear the costs. Pacific abides by that position.

6 The Principal Defendants are seeking, in addition to their costs to the date of discontinuance, the costs attendant on each application they filed, whether it was heard or not, including the costs of appearing on Pacific's application to discontinue which it concedes should not exceed $1,000.00 to $1,500.00. That the Principal Defendants are entitled to costs on discontinuance and on the application to set aside the ex parte order is not disputed; what is disputed is the basis of the quantification of those costs.

Main Issue Arising

7 What is the appropriate basis to award costs in the circumstances of this claim and in particular are the Principal Defendants entitled to costs on discontinuance and in addition to costs on each application it filed or on which it was successful prior to discontinuance?

Principal Defendants' Submissions

7 The gravamen of their submission is that they are entitled on discontinuance to prescribed costs under CPR 65.5. As part of the Claim was for unspecified damages and the parties had not agreed a value they submit that the Court should value the claim for this purpose as mandated by 65.5(2)(b)(ii). They say that the value should be set at US $22,390,688.00 and thus, that in accordance with Part 65.6 Appendix B, the prescribed costs on discontinuance is $88,864.72 which is 45% of $197,476.72 (prescribed costs on completion of trial). They base their submissions on value having regard to the amount for which the freezing order was obtained and on the decision of Barrow, J.A. in Astian Group Inc & Another v. Alfa Petroleum Holdings Limited and another1. They contend that Pacific is bound by the amount for which it obtained the freezing order. They resist Pacific's contention that this value was not applicable as it did not reflect Pacific's alleged losses and that the claim was in reality one to obtain information in support of the proceedings in Ukraine and relied on the fact that Pacific commenced action by way of claim form rather than by way of an application as showing that it was seeking substantive relief.

8 They also submit that in addition they are entitled to the assessed costs of their applications for security for costs and for the valuation of the claim despite the fact that they were not heard as a result of Pacific obtaining leave to discontinue. They oppose Pacific's assertion that those applications were premature contending that having regard to the nature of the case, it being front loaded, so to speak, they were entitled to approach the court prior to a case management conference. They also ask for the costs of attending on the hearing of Pacific's application to discontinue which is not disputed.

Pacific's Submissions

9 Counsel for Pacific vigorously contends that the Principal Defendants are not entitled to prescribed costs on discontinuance based on a claim valued at $22,390.688.00. Counsel takes a different approach and submits that the real issue is whether prescribed costs

should be awarded or whether costs should be assessed as in reality all the costs incurred related to the four interim applications filed. Counsel submits that the prescribed costs rules are not relevant and submits, relying on Barrow J.A.'s explanation at page 4 of Astian that where costs are considered in relation to applications other than those made at case management or pre-trial review, the correct approach is to assess costs under CPR Part 65.11.

10 Counsel says that the dicta of Barrow, J. in Astian relied on by the Principal Defendants is not applicable, as, unlike the present case, Astian had put a value on its claim which value was reflected in the freezing order and the security for costs and that the parties had proceeded on that basis. Further, Counsel contends that the true nature of the case must be viewed as ancillary to the Ukraine proceedings as the action was really to obtain information for use in the Ukranian court. This court had no jurisdiction to make free standing injunctions and therefore a claim for damages was included. Counsel says that this is borne out by the amended claim form and the fact that the matter was subsequently discontinued without even a statement of case having been filed. Further, counsel says that the amount for which the freezing order was obtained was simply a convenient figure pending full disclosure as it was the price at which the shares had first been offered to Pacific and does not reflect the damages suffered as a result of the Principal Defendants' alleged breaches. Pacific would have had to pay that price for the shares and so this cannot be treated as its loss.

11 Counsel submits that the Principal Defendants are only entitled to the costs of the application to discharge the ex parte order and to the costs of attending at the hearing of its application to discontinue. Pacific also argues that the application for security for costs cannot be recovered as it was premature having regard to CPR 24.2(2) which envisages such an application being made at a case management conference or at pre-trial review and that the Principal Defendants refused to negotiate—vide the correspondence exchanged between Pacific's lawyers and the Principal Defendants 2—and says the same of the application to value the claim. In any event he contests the...