Costs News

06 December 2017
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Human rights court appeal against non-party costs order “not enough for stay”

The High Court has refused an application by the subject of a non-party costs order to stay the proceedings, including the detailed assessment, because he is taking the decision to grant one to the European Court of Human Rights (ECHR).

His Honour Judge Waksman QC, sitting as a High Court judge, said it was “hopelessly unrealistic” for Alexander Vik to argue that even a positive ruling in his favour in Strasbourg would alter the outcome of the case.

Mr Vik was the individual behind the defendant in the substantive proceedings, Sebastian Holdings Inc (SHI), a Turks and Caicos company. The claimant bank, Deutsche Bank (DB) sued for monies due to it in respect of a number of very large trading transactions on which SHI had made huge losses. After a 44-day trial, Cooke J gave judgment for DB for $243m and dismissed SHI’s counterclaim for $8bn.

He also awarded to DB 85% of its costs on an indemnity basis, making severe criticisms of SHI’s conduct of the litigation and Mr Vik, whom he found had lied and fabricated documents.

DB then applied for a non-party costs order (NPCO) against Mr Vik, which Cooke J granted. He made an interim costs order of £36m, which Mr Vik paid in two days, and DB said the balance of the costs could be as much as £16m.

The Court of Appeal rejected Mr Vik’s appeal and the Supreme Court declined to hear a further one.

In Deutsche Bank AG v Sebastian Holdings Inc [2017] EWHC 913 (Comm), Mr Vik sought to stay DB’s application for the balance of the costs together with any detailed assessment, or alternatively simply to stay the assessment in any event, pending the outcome of his application to the ECHR.

The ECHR claim argues that the NPCO was in breach of Mr Vik’s right to a fair trial under article 6 of the European Convention on Human Rights, mainly because he was not aware, and had not been warned, that DB would or might make an NPCO application.

HHJ Waksman noted that Mr Vik had raised this point before the Court of Appeal, where it was given short shrift. Lord Justice Moore-Bick said: “The truth is that Mr Vik had every opportunity to contest the bank's factual and legal case and took full advantage of it… The judge considered that in the circumstances of this case, the failure to warn Mr Vik that he might face an order for costs against him personally was of very little weight at all. We agree.”

Dealing with the issue in the context of article 6, Moore-Bick LJ continued: “For the reasons we have given, we do not think that there was any unfairness to Mr Vik in this case. The judge was right to regard Mr Vik as the real party to the main action. He had a full opportunity, through Sebastian, on whose behalf he gave evidence, to contest all the issues of fact in the action.”

HHJ Waksman emphasised that an application to the ECHR was not a further appeal from the original decisions. “Not only is it not an appeal but even if the claim were successful, any remedy, for example compensation (which is far from automatic), would be directed to the other party i.e. the UK government as opposed (here) to DB.”

He said the best that Mr Vik might hope for was that he could persuade the Court of Appeal to re-open the previous appeal and then reverse the original decision of Cooke J to make the NPCO in the first place.

But the judge said he could not see any real prospect of the Court of Appeal doing this. Among his reasons was that, even if the appeal was re-opened, “it is extremely unlikely that there would be a different outcome, namely that an NPCO would not be considered appropriate, given all the evidence”.

Another factor against granting the stay was his view that the ECHR claim was “a weak one in any event”.

He concluded that it was “hopelessly unrealistic” to think that the court would actually come to a different view on the NPCO, if its consideration of them were put off until after the decision of the ECHR (and any consequential attempt to re-open the decision of the Court of Appeal).

A secondary application was to stay the detailed assessment, but HHJ Waksman rejected that too for several reasons.

This included the risk of further dissipation of Mr Vik’s assets so as to put them beyond the reach of a judgment.

“Further, if Mr Vik is right about DB’s costs being excessive, insofar as they exceed £36m, he will not have to pay very much more anyway and he may well obtain a costs order in respect of the assessment.”

Duncan Matthews QC, Charlotte Tan and Alistair Wooder (instructed by Brecher) acted for the defendant for costs purposes only. Sonia Tolaney QC, James MacDonald and Andrew Lodder (instructed by Freshfields Bruckhaus Deringer) represented the claimant.

 

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