On 29 April 2016, the Honourable Justice Barry Leon, the Commercial Court Judge in the BVI, handed down a detailed Judgment on the assessment of costs in the Commercial Division. The Claimant, Olive Group Capital Limited (the "Claimant"), vigorously opposed the quantum of costs claimed (the "Claimed Costs") by the Defendant, Gavin Mayhew, (the "Defendant") resulting from his succeeding on a preliminary issue point which meant the proceedings against him were brought to an end. The Defendant, represented by Conyers Dill & Pearman ("Conyers"), maintained that, consistent with Rule 65.2 of the Eastern Caribbean Supreme Court Civil Procedure Rules ("ECSC Rules"), the claimed costs were reasonable and fair both to the person paying and the person receiving such costs.
The Claimant, relied on six principal grounds namely that pre-litigation costs were not recoverable, the extent of recovery of the fees of a foreign lawyer were limited, as was the extent of recovery by a corporate (as opposed to litigation) legal practitioner, the level of detail and particularity did not comply with the requirement under the ECSC Rules and thus, time incurred in relation to those tasks should be excluded, recording time in 15 minute increments was unreasonable and finally, the costs of a senior legal practitioner doing a small amount of work on bundles was not recoverable. This article highlights the Judge's findings on the first five of those objections, and from which the Court took the opportunity to make findings applicable to practice in that Court generally.
Leon J reiterated the general principles which governed the assessment of costs under the ECSC Rules and confirmed that when assessing costs, regard should be given to the requirement of proportionality adopting the guidelines set out in the English case of Lownds -v- Home Office Practice Note [2002] EWCA Civ 365 (previously relied on by the Court of Appeal in Claim No BVIHCMAP 2013/0006 Andriy Malitskiy, et al, -v-Oledo Petroleum Ltd (Court of Appeal, Virgin Islands))
Having laid out the general principles, which are at least uncontroversial, the Judge dealt with each objection in turn.
In relation to pre-litigation costs the Court rejected the Claimant's argument that these costs were not recoverable because the order was "costs in the proceeding" and thus, limited the costs recoverable to those incurred from the issuance of the Claim. The Court held that a general order, as to costs, was not limited to costs from the commencement of proceedings and the expression, "costs in the proceeding", was merely an abbreviated way of expressing such an order. The Court held that the scope of those pre-litigation costs, which could be recovered, depended on whether it could be shown that those costs "related to the creation of materials 'ultimately proving of use and service in the action' or as being costs the incurring of which was 'proper for the attainment of justice' in the case". There are several variations of this theme of utility in the English case law on pre-litigation costs.
The Judge also took a similar common sense approach to the fees of foreign counsel. He adopted the statement by the former Commercial Court Judge, Bannister J, in the case of Grand Pacific China Holdings Ltd -v- Pacific China Holdings Limited (a case in which Conyers also appeared) that foreign counsels fees are themselves treated as disbursement and those fees would have to be justified as a reasonable expense incurred by the BVI lawyers, but considered the roles of the foreign lawyer, identified by the Judge, in that case were mere examples rather than any limitation on that broad principle. Leon J emphasised that the circumstances of each case will be different. Reasonableness in one context is obviously different in another and the Judge's decision to allow the bulk of these costs was obviously right. One distinction drawn was where foreign counsel adopted more the role of client's agent than counsel, those costs should not be allowed.
The Claimant's objection to the recoverability of the costs of the work done by a senior corporate partner at Conyers was premised on the notion that once the proceeding had commenced the corporate legal practitioner should have no involvement in the litigation and pass the baton, as it were, to the litigation lawyers. The Judge found that this was not the way that corporate litigation should be conducted in this day and age, if it ever had been. The Judge found that value was added and efficiency increased by the corporate partner's expertise and continued involvement. This will likely turn on facts, but where corporate law, in particular, what the Judge described as "M&A" practice, was the theme of the litigation then such expertise is likely to be considered a recoverable cost.
In relation to the level of detailed objection, a beloved point by those opposing the quantum of costs claimed in an assessment, the Court held that while the requirement of Rule 69B.11(3) must be met, this requirement should be interpreted in light of the overriding objective to deal with cases justly. The Court held that time records need not meet a "standard of perfection" and notably that "justice to the party to receive costs means that this is not to be a 'game of gotcha' in which not having a perfect or near perfect record leads to its disallowance even though from the context it is reasonably clear to all concerned what was done."
The Court summarily dismissed the Claimant's criticism of the 15 minute increment approach and found that once time was recorded in a manner that was presumed to be honest, accurate and fair, which they were, there could be no criticism of the method of recording same. Recognition was made of the practice of rounding down such increments, and that the 15 minute approach was not a minimum figure so much as a convenient increment by which to record multiple hours.
While the assessment of costs under the ECSC Rules is invariably a fact-specific exercise this recent Judgment by Justice Leon is a welcomed one. It demonstrates the reality of international commercial litigation in the BVI and provides much needed guidance on how parties should approach detailed assessments. It is hoped, that with this much needed clarity, parties would be further encouraged to seek to agree to costs early or, at the very least, abandon (or not take) each and every minutia point, adopting instead a more common sense, efficient and commercial approach to such assessments. It also highlights that the more prescriptive application of the CPR to cases of significant cost incurrence in commercial litigation was not favoured over and above the realities of such work.
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