Factual and Procedural Background
The court previously ruled that the proceedings should continue under CPR Part 7 rather than CPR Part 8 and declined to enter judgment for the Plaintiff ("Company A"). Following this decision, the court received written submissions on three consequential matters: case management directions, the incidence of costs, and whether any costs claimed by the Defendant ("Company B") should be awarded in a foreign currency.
At a hearing, the Plaintiff's counsel submitted that the dispute could be resolved in one day without further evidence, while the Defendant's counsel estimated a trial length of two to three days, allowing for additional factual evidence. Both parties showed reluctance to immediately transfer the case into the Shorter Trials Scheme. The court decided to defer this transfer decision until the case management conference.
The parties also requested reconsideration of whether pleadings should identify the facts to be proved by witness evidence. The court noted ongoing rule reviews addressing problems with witness statements that contain commentary and argument rather than factual evidence, highlighting the risk of such issues in this case due to its long duration, large sums at stake, and volume of documentation.
Drawing on case management principles and recommendations from a costs review report, the court decided to require parties to specify in their pleadings the facts they intend to prove by witness evidence, to assist in focusing the trial and managing costs.
Legal Issues Presented
- Whether the court should order the parties to identify in their pleadings the facts they intend to prove by witness evidence.
- The appropriate incidence and division of costs between the parties following the procedural ruling.
- Whether the court has jurisdiction and should exercise discretion to award costs in a foreign currency rather than sterling.
Arguments of the Parties
Plaintiff's Arguments
- The dispute could be resolved quickly without further evidence, supporting continuation under CPR Part 8.
- Any costs order should be made in sterling, doubting the court's power to award costs in a foreign currency.
- The Plaintiff may still ultimately succeed on the merits despite procedural setbacks.
Defendant's Arguments
- The trial would require two to three days with further factual evidence, supporting continuation under CPR Part 7.
- Having succeeded on procedural issues, costs should follow the event, with a substantial portion awarded to the Defendant.
- Costs incurred in euros should be awarded in euros, relying on case law supporting foreign currency awards and the absence of any statutory or procedural prohibition.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Miliangos v George Frank (Textiles) Ltd [1976] AC 443 |
Permitting judgments to be expressed in foreign currencies where appropriate. |
Supported the principle that costs awards can be made in foreign currencies reflecting the currency of loss. |
| J D Wetherspoon plc v Jason Harris [2013] EWHC 1088 (Ch) |
Striking out abusive witness statements containing argument and commentary. |
Illustrated the court's concern over witness statements improperly including commentary. |
| Elkamet Kunststofftechnik GmbH v Saint-Gobain Glass France SA [2016] EWHC 3421 (Pat) |
Recognition that courts have power to order costs in foreign currency and compensation for exchange rate losses. |
Supported awarding costs in foreign currency and rejected the proposition that costs orders must be in sterling. |
| Schlumberger Holdings Limited v Electromagnetic Geoservices AS [2009] EWHC 775 (Pat) |
Consideration of costs assessment in foreign currency where costs invoiced and paid in euros. |
Denied direction to assess costs in foreign currency due to the costs being "in substance a sterling bill". |
| Actavis UK Ltd. v Novartis AG [2009] EWHC 502 (Ch) |
Consideration of costs awards in foreign currency and the role of the costs judge. |
Left determination of awarding costs in euros to the costs judge without directing a costs order in foreign currency. |
| Aiden Shipping Co. Ltd. v Interbulk Ltd [1986] A.C. 965 |
Broad discretion under Senior Courts Act s.51 to determine costs awards. |
Confirmed wide discretionary power of the court to award costs, rejecting implied limitations. |
| Nyekredit Mortgage Bank plc v Edward Erdman Group Ltd (No. 2) [1997] 1 WLR 1627 |
Costs orders are judgments and subject to the same rules, including currency rules. |
Supported the application of foreign currency judgment principles to costs awards. |
| Harold v Smith (1860) 5 H&N 381 |
Costs awards as statutory indemnities, compensating for loss rather than punishment. |
Underpinned the indemnity principle applied to costs awards in foreign currency. |
| Brawley v Marczynski (No. 2) [2002] EWCA Civ 1453 |
Cost awards are compensatory, indemnifying the receiving party for legal expenses. |
Reinforced the compensatory nature of costs awards guiding currency choice. |
Court's Reasoning and Analysis
The court considered the parties' submissions and the procedural history, concluding that requiring parties to identify facts to be proved by witness evidence in pleadings is appropriate to focus the trial and manage costs effectively. This order is made pursuant to the court's broad case management powers under CPR 3.1(2)(m) and CPR 32.1(1), supported by prior recommendations.
Regarding costs, the court found the Defendant to be the successful party on procedural issues and ordered costs to follow the event, but made a nuanced division reflecting that some costs related to substantive issues. The Plaintiff forfeited half of its claimed costs due to pre-action conduct breaches.
On the foreign currency issue, the court examined statutory provisions, CPR rules, and case law, notably the House of Lords decision in Miliangos, which permits judgments in foreign currencies. The court found no statutory or procedural bar to awarding costs in a foreign currency and concluded that the currency which most truly reflects the claimant's loss should be used.
The court distinguished prior cases where costs were invoiced in sterling but paid in foreign currency from the present case where the Defendant's solicitors directly accounted and invoiced in euros. The court also noted the overriding objective supports awarding costs in the currency incurred to ensure fairness, efficiency, and equality of arms.
The court imposed procedural requirements for parties seeking costs in foreign currency, including providing notice, explanation, and sterling equivalents to assist in assessment.
Holding and Implications
The court held that it has jurisdiction under section 51 of the Senior Courts Act 1981 and CPR 44.2 to make a summary assessment of costs in a foreign currency. There is no implied restriction requiring costs awards to be made only in sterling.
The court ordered the Plaintiff to pay the Defendant's costs summarily assessed at £25,000, awarded in euros as the appropriate currency reflecting the Defendant's loss.
The decision clarifies that courts may award costs in foreign currencies when appropriate, aligning costs awards with the currency in which costs were actually incurred. This does not establish new precedent but confirms the application of existing principles to costs awards, promoting fairness and consistency in multi-currency litigation contexts.