Home Information Cases Royal Bank of Scotland PLC v Highland Financial Partners LP & Ors (2013)

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Royal Bank of Scotland PLC v Highland Financial Partners LP & Ors (2013)

Summary

The court awarded costs on an indemnity basis following its decision to set aside a liability order in favour of a bank on the basis that the bank had obtained it by fraud, and following its decision to uphold a refusal to grant an anti-suit injunction to the bank.

Facts

The court had to determine costs following its decision ([2013] EWCA Civ 328) to dismiss the appeal of the appellant bank (R) and allow the cross-appeal of the first to fourth respondents (H) in relation to R's claim for the recovery of advances in connection with a collateralised debt obligation transaction.

In 2010, R had obtained judgment on liability against H and the fifth respondent (S). R had unsuccessfully applied for an anti-suit injunction against H and the fifth respondent (S). The instant court dismissed R's appeal against that decision, but allowed H's cross-appeal, holding that R had obtained the liability judgment against H by fraud and setting aside the liability order. At the same time, it rejected a submission by S that an additional reason for refusing an anti-suit injunction was the misconduct of one of R's in-house lawyers (H) and found that H was not guilty of dishonesty. R was ordered to repay costs which H had been ordered to pay to it in respect of the liability order which had now been set aside. The issues were (i) how the costs of the original claim, R's appeal and H's cross-appeal should be dealt with and whether costs should be ordered on a standard or indemnity basis; (ii) what rate of interest should apply to any costs orders.

Held

(1) There was no doubt that the successful parties were H and S. They had successfully resisted R's claim for an anti-suit injunction and H had been successful in its cross-appeal, having the liability judgment set aside. There was nothing to justify departing from the general rule that the unsuccessful party should pay the costs of the successful party (see paras 10-11 of judgment). H was entitled to its costs of both the original claim and the appeal and cross-appeal. It had not won on all points, but had won on the major ones concerning the issues of R's conduct and the claim that the liability judgment should be set aside for fraud. Given the judge's findings about R's conduct, all of H's costs would be payable on an indemnity basis (paras 12-14). S was also a successful party. The fact that it lost on subsidiary issues did not detract from that. The court would have been inclined to award it 100 per cent of its costs below and on appeal, but for its appeal against the judge's conclusion on H's conduct. S had pursued that appeal despite the judge's findings of fact on H's credibility. That conduct and the rejection of that aspect of the appeal should be acknowledged by awarding it 100 per cent of its costs, save for £10,000. S's costs would be on the indemnity basis for the same reasons as those given in relation to H (para.15). (2) In relation to sums paid by H to R on account of costs in relation to the liability judgment and the appeal on that issue, R had to pay interest at 2.5 per cent over base rate from the date when those sums were paid and until 21 days after the order that would be made when the instant judgment was handed down. If there was any failure to pay, interest would be payable at the Judgment Act rate. Interest would also be payable on sums disbursed by H and S to their lawyers, at the rate of 2.5 per cent over base rate from the date on which any such payments were made until 21 days after agreement on the costs due or any order following a detailed assessment. R would be required to make payments on account of costs to H and S of £1.82 million and £840,000 respectively (paras 17-21).

Costs determined

Court of Appeal
Maurice Kay LJ (VP CA Civ), Lord Toulson JSC , Aikens LJ
Judgment date
30 April 2013
References

LTL 30/4/2013 : [2013] EWCA Civ 472