Ivanishvili, Bidzina and others v Credit Suisse Trust Ltd

• Jurisdiction: Singapore
• Judge: Patricia Bergin IJ
• Judgment Date: 19 September 2023
• Neutral Citation: [2023] SGHC(I) 14
• Court: International Commercial Court (Singapore)
• Docket Number: Suit No 4 of 2021
• Hearing Date: 29 August 2023
• Citation: [2023] SGHC(I) 14
• Year: 2023
• Plaintiff Counsel: Cavinder Bull SC, Woo Shu Yan, Tan Yuan Kheng, Fiona Chew Yan Bei, Kelly Tseng Ai Lin, Gerald Paul Seah Yong Sing and Liang Fang Ling Elisabeth (Drew & Napier LLC)
• Defendant Counsel: Lee Eng Beng SC, Disa Sim and Torsten Cheong (Rajah & Tann Singapore LLP) (instructed), Kenneth Lim Tao Chung, Mak Sushan Melissa, Afzal Ali, Wong Pei Ting, Yeow Yuet Cheong, Gan Yun Han Rebecca and Justin William Jeremiah (Allen & Gledhill LLP)
• Subject Matter: Civil Procedure,Costs,Final orders
• Published date: 19 September 2023

Patricia Bergin IJ: Introduction

These reasons relate to the finalisation of orders to be made consequent upon judgment in SIC/S 4/2021 (the “Suit”) which was delivered on 26 May 2023: Ivanishvili, Bidzina and others v Credit Suisse Trust [2023] SGHC(I) 9 (the “Judgment”). Unless otherwise specified, the same abbreviations as used in the Judgment are adopted.

There are three main issues with which it is necessary to deal. The first issue is the quantification of the amount payable by the defendant in accordance with Model 1B by reason of the finding that the defendant’s breach occurred on 30 March 2008, rather than 31 December 2007 as contended by the plaintiffs. The second is the issue of costs of the proceedings. The third is the issue of whether a declaration ought to be made that the Deed of Amendment and Restatement is void and/or unenforceable.

Quantification

The Judgment included a request for the experts to further assist the Court by updating the Model 1B calculations to commence from the date of the breach, 30 March 2008, to the date of Judgment, taking into account the Settlement amount to ensure there is no double recovery: the Judgment at [729]–[731].

The parties’ respective forensic accounting experts, Mr Davies and Mr Nicholson, conferred after the delivery of the Judgment to assist the parties to reach agreement on the amount payable under Model 1B from the date of breach. As the parties were not able to agree, the experts provided their respective reports dated 25 August 2023 to assist the Court in the determination of the amount.

For the Model 1B calculations, Mr Davies adjusted: (a) the start date from 31 December 2007 to 30 March 2008 for all accounts other than Meadowsweet’s account 75, which remained at 31 December 2008; and (b) the end date from 30 September 2021 to 26 May 2023.

The original value of US$926.04m in the Model 1B calculations has reduced to US$781.51m by reason of the change in commencement date, some three months later than the original calculations, and the significantly reduced performance of the Benchmark Portfolio between 1 October 2021 and 26 May 2023.¹

The Settlement amount of US$79,430,773 referred to in the Judgment at [730] was in fact made up of three components, only one of which related to Meadowsweet in the amount of US$30,011,498 (the “Meadowsweet Settlement Amount”).² The other two amounts related to the plaintiff’s company Wellminstone SA and personal accounts held by the plaintiff.

Mr Davies calculated the amount for deduction on two bases. The first was by deducting the whole of the amount of the Settlement and reaching a total of US$702.8m. The second was by deducting only the Meadowsweet Settlement Amount and reaching a total of US$742.73m.

Both experts have indicated that the parties agree that the correct treatment of the Settlement payments is to adopt the second basis of calculation, albeit that there is disagreement on the approach to be adopted.³ As 30 March 2008 fell on a Sunday, Mr Davies calculations commenced from 31 March 2008. Mr Nicholson’s calculations commenced from 28 March 2008. Having considered both experts’ analysis of the approach to be adopted,⁴ Mr Davies’ approach is preferred as the fairest and most reasonable in the circumstances.

The amount of compensation that the defendant must pay is US$742.73m.

Costs

The parties have reached agreement in respect of some costs of the proceedings and, in respect of the costs on which they were unable to reach agreement they have filed written submissions on 18 July 2023 (in chief) and 1 August 2023 (in reply), with a round of supplementary written submissions on 22 August 2023 (the defendant) and 29 August 2023 (the plaintiffs).

There is no issue between the parties that as the plaintiffs prevailed in the Suit, they should be awarded costs in accordance with the principle that costs should follow the event. However, there is an issue as to the amount of any discount that might be applied to the award of costs by reason of various matters that are discussed below.

Approach to determination of costs

The approach to be adopted in the determination of costs of these proceedings is gleaned from the recent decisions of the Court of Appeal in Senda International Capital Ltd v Kiri Industries Ltd [2023] 1 SLR 96 (“Senda”) and of the Singapore International Commercial Court (“SICC”) in Lao Holdings NV v Government of the Lao People’s Democratic Republic and another matter [2022] SGHC(I) 6 (“Lao Holdings”).

In accordance with O 110 r 46 of the Rules of Court 2014 (the “Rules”), unless otherwise ordered by the Court, the defendant is required to pay to the plaintiffs their “reasonable costs” of the proceedings.

The process for the determination is “an open-ended inquiry” in which the Court will have “due regard to the specific facts of the case at hand”, the complexity of the issues, the amount of costs claimed and the nature and extent of the differences between the parties in respect of their positions on costs: Senda at [70] and [100].

It is expected that in discharging their obligations to show that the costs as claimed are “reasonable costs”, the plaintiffs will provide a breakdown of the claimed costs to enable the Court to properly assess whether those costs are reasonable. That breakdown would typically include the costs in terms of the number of hours claimed; by whom the services were provided in relation to the hours claimed with their levels of seniority and hourly rates; and some explanation as to the type of work in respect of which those hours were spent: Senda at [73]. Such information will usually also include the detail of the post-qualification experience of the professionals providing the legal services and/or expert services, and their respective charge-out rates. In some circumstances, where it is helpful, such information could be broken down into the stages of the litigation: Lao Holdings at [113].

Once the successful party has provided the appropriate information in support of the claim for their reasonable costs, the evidential burden shifts to the unsuccessful party to show that the claimed costs are not reasonable costs. In this regard the Court of Appeal observed that the “best evidence” that the unsuccessful party can adduce will often be information as to the costs that it had correspondingly incurred for the matter: Senda at [75].

The Singapore International Commercial Court Practice Directions (the “Practice Directions”), which apply to these proceedings, record at para 152(4) that the Court may require parties to provide a costs schedule to be submitted with closing submissions. The Practice Directions include Form 24 as a “sample costs schedule” which is divided into seven areas of work (Commencement of Proceedings/Pleadings, CMC/Interlocutory hearing(s), Disclosure, Affidavits, Expert Evidence, Preparation for hearing(s) and Attending hearing(s)) with sections for recording the description of the nature of the work, the hours worked, the hourly rates, the total hours worked and the total amounts of costs incurred in those areas.

The parties were not required to provide a Form 24 costs schedule with their closing submissions in these proceedings. Nor were the parties required to provide a Form 24 with their submissions on costs. However, as will be seen from the discussion below, the plaintiffs filed a costs schedule in a Form 24 format as an annexure to their reply submissions on costs dated 1 August 2023. That is what prompted the further round of written submissions referred to at [11] above.

Parties’ positions on costs Agreed costs

The parties have agreed that costs for the work done from 25 August 2017 to 8 March 2021 prior to the proceedings being transferred to the SICC, should be awarded to the plaintiffs in the amount of S$85,000.

There were numerous interlocutory applications brought by way of Summons.⁵ The parties have agreed that the plaintiffs should be awarded costs and disbursements for these applications, bar two (see [23(c)] and [23(d)] below), in the amount of S$482,551.40.

The parties have also agreed that interest on costs be fixed as simple interest at 5.33% per annum and that post-judgment interest be fixed as simple interest at 5.33% per annum from the date of the Judgment, 26 May 2023, to the date of full payment. There is an issue in respect of the date from which interest should apply to costs, returned to at [25] below.

Contested costs

In addition to an order that these agreed amounts be paid, the plaintiffs seek an order that the defendant pay their costs of S$6,741,421.98 made up of: S$4,330,028.73 for costs after the transfer of the proceedings from the High Court to the SICC (“Post-Transfer Costs”); S$2,382,893.25 for the costs incurred in obtaining experts’ opinions (“Quantum Experts’ Fees”); S$25,000 for costs in respect of SIC/SUM 11/2022 (“SUM 11”); and S$3,500 for costs in respect of SIC/SUM 49/2022 (“SUM 49”).

The defendant opposes the plaintiffs’ claims and proposes that the Court should award the plaintiffs a total of S$5,251,000 made up of: S$3.5m for Post-Transfer Costs; S$1.75m for Quantum Experts’ Fees; and S$1,500 as costs for SUM 49. It proposes that all parties pay their own costs of SUM 11.

Although the parties have reached agreement on the interest rate to be applied to costs and the Judgment debt, they are at issue on the date from which interest should apply to costs. The plaintiffs contend that interest should apply to the agreed costs from the date on which the parties reached agreement and on contested costs from the date of the Court order. The defendant contends that the Court should make orders in respect of costs both agreed and not agreed, and that interest should apply to both from the date of the Court orders.

Post Judgment costs proposals

After the Judgment was delivered, the parties...