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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Base Metal Trading Ltd v Shamurin [2003] EWHC 2606 (Comm) (06 November 2003) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2003/2606.html Cite as: [2003] EWHC 2606 (Comm)

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IN THE HIGH COURT OF JUSTICE
BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, 2LL
		6 November 2003

Mr Justice Tomlinson:

1. I now have to rule on the costs of this action. Mr. Shamurin has defeated the claim brought against him but his raising of defences or issues upon which he has been unsuccessful caused the trial to be longer than otherwise it would have been, and undoubtedly caused BMTL to incur significant expenditure in dealing with those issues, particularly hedging.
2. In the argument on costs the parties adopted extreme positions. Mr Jarvis QC for Mr Shamurin suggested that he should be awarded his costs of the action in accordance with the general rule. He did however realistically accept that the court might (although he said that it should not) properly take the view that Mr Shamurin should not recover the entirety of his costs. Mr Hollander QC for BMTL suggested that had Mr Shamurin confined his resistance to the claim to the issues upon which he won, the trial would have occupied only four days as opposed to the eighteen days for which it in fact lasted. Accordingly he submitted that the court should award BMTL 14/18 of its costs to reflect its success on the issues which unnecessarily extended the length and expense of the action and of the trial. He also submitted that, in the light of the terms in which the court rejected some of Mr Shamurin's evidence, it was appropriate that the award of costs in BMTL's favour should be on an indemnity basis.
3. Mr Shamurin's costs of the action are in excess of £800,000 including VAT. BMTL's costs are apparently in excess of £1.75 million excluding VAT.
4. I set out what I understood to be the modern approach to costs in my judgment in the Kastor Too [2003] EWHC 472 , 17 March 2003. I do not propose to set out again here what I said in that case.
5. This is not a case in which it would be appropriate that the successful party Mr Shamurin should recover all of his costs. As has been pointed out in several of the authorities to which I referred in the Kastor Too, there needs to be encouragement to litigants to be selective as to the points they take and also an incentive for responsible behaviour.
6. Likewise this is obviously a case in which I should consider making different orders for costs in relation to discrete issues. Were I to make such an order however I do not consider that I could adopt any approach more scientific than that approximately half of the costs of the action should be regarded as incurred in relation to issues on which Mr Shamurin was successful, or on issues which were relevant to his success on those issues, and that approximately half of the costs of the action were incurred on issues upon which he was unsuccessful. I reach that conclusion because much of the evidence which was introduced, and much of the cross examination, was directed, as I see it, simply to issues of credibility. Whilst BMTL may say that in that contest they were more successful than was Mr Shamurin, the fact is that much of this debate served only to reinforce my conclusion as to the lack of any relevant connection between the obligations in respect of which Mr Shamurin was sued and any system of law other than Russian. In that connection it contributed to Mr Shamurin's success.
7. Pursuant to CPR 44.3 (4)(a) I must have regard to the conduct of the parties. As I see it both parties have behaved unattractively. BMTL has behaved unattractively in bringing this action in an effort to divert and deplete Mr Shamurin's resources, as I described in paragraph 2 of my judgment. Mr Hollander points out that BMTL was entitled to bring this action in this jurisdiction, because Mr Shamurin is now resident here. That is obviously true. The claim might however also have been brought by way of counterclaim in the Guernsey proceedings, although it was not, as I infer for the reasons set out in paragraph 24 of my judgment. Mr Hollander also submits that BMTL has been vindicated in its central assertion that Mr Shamurin gambled with the company's resources without the knowledge or agreement of Yuri and, so far as relevant, Mikhail. That is obviously also true, although in order to achieve that vindication BMTL has asserted a cause of action which it is common ground does not exist in the light of my conclusion as to the relevant governing law, and in respect of the existence of which I am doubtful even were the matter to be governed by English or Guernsey law. Mr Shamurin for his part has behaved unattractively in putting forward a defence which was specious in two respects, insofar as it asserted that speculative trading was carried out with the knowledge and approval of Yuri and Mikhail and insofar as it asserted that a large proportion of the trading in aluminium was in fact by way of hedging.
8. Mr Jarvis has also submitted that BMTL's conduct of the action, particularly in the area of disclosure, has been such as to merit criticism and to invite censure in the shape of a reflection in the costs order which I make. I am reluctant to take on the burden of investigating the merits of the many complaints which are here made about the conduct of the action. Two of the earlier complaints were independently reported for consideration by the Law Society. I propose to take into account BMTL's motivation in bringing this claim in this jurisdiction. The various specific complaints about its conduct of the action can, if made good, add little more that requires to be weighed in the balance.

9. The making of different orders in relation to discrete issues has some attraction. It establishes a direct link between responsibility for time and money spent and success or failure on the issue in respect of which the time and money was spent. I do not assume that all of the parties' incurred costs will be allowed on a detailed assessment, but here different orders in relation to discrete issues would mostly likely result in a substantial recovery by BMTL from Mr Shamurin, an outcome which I could have worked out would be very likely even had the parties not helpfully supplied me with approximate figures as to their costs known to have been incurred. I have to stand back and ask whether that outcome is so plainly wrong that it must be regarded as perverse. I must also strive to reach a just result, which I hope is a different way of saying the same thing. I recoil from a result that the outcome of this litigation should be a substantial payment on account of costs by Mr Shamurin to BMTL. The action was brought in a deliberate attempt to divert and to deplete Mr Shamurin's resources. In the initial stages BMTL's claim was put forward in a most unsatisfactory and highly generalised manner. Shamurin attempted, twice, to dispose of the action summarily either by way of an application under Part 24 or by seeking a preliminary issue on the question by what system of law the various obligations alleged are governed. BMTL opposed that approach by, inter alia, introducing incorrect evidence in the shape of Mr Michel's Witness Statement which stated, on instructions, that the London address had been treated as the headquarters of BMTL. As it happens this evidence does not appear to have influenced Moore-Bick J in any way. His factual assumptions largely coincide with my findings. Mr Shamurin has now won on the point on which he sought summary disposal. BMTL has not satisfied me that it would have a cause of action even if the matter were governed in any relevant respect by the law of England or of Guernsey. In these circumstances I cannot regard as just an outcome which involves BMTL recovering a substantial sum by way of costs from Mr Shamurin.

9. On the other hand Mr Shamurin's pursuit of specious defences has caused, on my findings, an approximate doubling in BMTL's costs. It could be said that that is the risk BMTL took in bringing this action in the manner and for the purposes which it did. On my findings there can be no question of Mr Shamurin recovering more than half of his own costs. Should I reduce his recovery further to reflect the unwarranted expenditure to which he has put BMTL? If I were to do that that would of course effectively amount to his being required to make a contribution to BMTL's costs. That is because I regard him as entitled to recover the proper cost of defending himself against BMTL's action. To the extent that I deny him that recovery, that is, pro tanto, a reduction in BMTL's liability to him which can be treated as, effectively, a contribution by him to BMTL's costs. The extent of that contribution would be entirely arbitrary, simply measured as not more than half of the costs which he has reasonably incurred in defence of the action.
10. On balance and not without great hesitation I have concluded that to make no order as to costs in fact achieves the closest approximation to the modem issues based approach which I can regard as fair. I have only rejected a straightforward issues based approach because I regard it as unjust that Mr Shamurin should end up having to make a substantial payment to BMTL on account of costs. Making no order as to costs does involve Mr Shamurin in effect having to make a contribution to BMTL's costs, since he is thereby deprived of that which he would otherwise have recovered as the proper cost of defending himself, but it is a contribution which will involve no further payment. It is a wholly arbitrary contribution, unrelated to the costs actually incurred by BMTL in dealing with Mr Shamurin's spurious defences, but it at least follows the logic of the issues based approach, simply stopping short of carrying it through to the point at which Mr Shamurin becomes liable to make a net payment to BMTL.
11. Finally, I have to say that, looking at the matter overall, I cannot regard as an inappropriate outcome to this lamentable litigation that neither side is able to look to the other for recovery of its costs.
12. I must also deal with the costs incurred on four occasions when costs were reserved. In relation to the order of 9 November 2000 only the Claimant incurred costs, in relation to an application for service by an alternative method. There is no material before the court on the basis of which the court could conclude that the Defendant was deliberately evading service. There will be no order as to costs. In relation to the order of 17 January 2001 only the Claimant incurred costs, this time in relation to an application for further time within which to serve its Particulars of Claim. It is obviously inappropriate that the Claimant should recover the costs of that application. There will be no order as to costs. So far as concerns the order of 23 October 2002 an agreed sum of £530 was incurred by the Defendant in chasing the Claimant for provision of further particulars. It seems to me appropriate that the Defendant should recover those costs, notwithstanding I am making no order as to the costs of the action. Lastly, on 28 February 2003 I reviewed the costs of the Defendant's application made on 18 February 2003 which was an application for production of original documents for forensic examination. Although this exercise enabled Mr Shamurin to demonstrate that what purported to be his signature has been placed upon the company's accounts by someone other than him after his departure from BMTL, this ultimately led nowhere. I make no order as to the costs which I then reserved.