Magic Investments SA v Ralph Thierry Broadbent & Anor

MR JUSTICE MARCUS SMITH:

1. This is a consequentials hearing directed by me pursuant to my order sealed on 25 July 2025. Paragraph 3 of that order directs that a further hearing is to be fixed for the consideration of various matters which are set out in that paragraph. As it happens, a number of those matters have fallen away, but there are a number of outstanding matters which I deal with in this ex tempore ruling.

2. I must begin with a point which does not ordinarily surface but did in this case, which is what I should do with the costs of this hearing. Mr Pay, who appeared for the appellant, urged me to treat these costs differently to the costs which would otherwise follow the event and in this case, it was uncontroversial that the event was the respondent had been successful and the costs of the appeal should be paid by the appellant to the respondent.

3. In this case, however, Mr Pay suggested that there should be either no order as to costs, or I think that even his client should have the costs, because matters have been so agreed before the hearing that this hearing was actually unnecessary. The appellant had essentially offered everything the respondent could have asked for, and the respondent behaved unreasonably in refusing to effectively enter into an order by consent.

4. It seems to me that that is a submission which is not tenable in light of the argument I have heard today. The fact is that the correspondence which I was not taken to but which I have looked at in preparation for this hearing shows efforts on both sides to narrow the issues. They were narrowed and some did indeed fall away. But there was a certain papering over of real areas of disagreement in the correspondence which meant, unsurprisingly, that no consent order could be drafted for my approval and this hearing had to take place.

5. The issues which were live before me and which did require judicial attention are: (1) the basis of the costs, whether they be standard or indemnity; (2) the mismatch between the interest which is accruing on the monies which have been paid into the solicitors' account being less than what the interest would have been had the monies been paid to the respondent; and (3), and this is not a complete list, the extent to which a payment on account should be made in terms of both percentage and amount to which that percentage should be applied. All of these matters are matters I am going to come to, but it seems to me I need to articulate them in broad terms because they justify my conclusion and my ruling that the costs of today should be treated just as costs of the appeal; that is to say the costs follow the event; that is to say that the costs of today as with the other costs must be paid by the appellant to the respondent. So that is my first ruling.

6. I now proceed to the question of costs of the appeal, and here I must start with the question of the basis of those costs. Mr Dougherty for the respondent contended that costs should be ordered on the indemnity basis. He placed considerable reliance, rightly, on the fact that the judge below had ordered costs on the indemnity basis. That is a finding which although was sought to be appealed, that appeal is no longer being pursued, so grounds 9 and 10 of the costs appeal have been withdrawn.

7. Mr Pay made the perfectly correct point that the withdrawal of this appeal says nothing about the basis on which the costs before me should be assessed. The fact is that the judge below exercised her discretion, decided for the reasons she had that costs on the indemnity basis were appropriate, and the matter now comes before me to consider whether altogether different costs ought to be calculated on the same basis. It seems to me that that is something where I must apply my own mind regarding the hearing which took place before me. The question of whether the conduct in seeking to appeal, having permission to appeal and having the appeal heard are such that it is so extraordinary a form of conduct that it ought to be sanctioned by costs being ordered not on the standard but on the indemnity basis.

8. Put in that way, it is clear to me that the appropriate basis for assessing costs is the standard basis and not the indemnity basis. In the first place, it did not seem to me, having heard the arguments and decided the case, that this was one which was so out of the usual run of appeals to warrant a different basis for the calculation of costs. I also bear in mind that Trower J, when the matter came before him on the papers, gave permission to appeal and clearly it did not appear to him on the face of it that this was so outrageous an appeal that permission should be refused. It seems to me, even though I reached the same conclusion as the judge below on the outcome of the matters before me and before her, the decision of Trower J to give permission to appeal was the right one.

9. So for all those reasons, it seems to me that costs should be assessed, when they come to be assessed, on the standard and not on the indemnity basis. I say nothing about the correctness or otherwise of the decision to order indemnity costs below. That was, as Mr Pay has rightly submitted, a matter for the judgment of the judge below, and I am making no further comment on that one way or the other. It does not seem to me to be appropriate to do so.

10. I therefore turn to the question of payment on account. The costs schedule before me gives a grand total of costs in the amount of £165,701.89 and had the costs basis of assessment been on the indemnity basis, I understand that the position of the appellant was that 75 per cent of that total amount, ie just under £125,000, was the appropriate amount to order by way of payment on account. However, the contention was that the basis should be a different basis, ie standard and not indemnity, should require a scaling back of that 75 per cent to some other figure. Mr Pay did not suggest what figure that should be, but he submitted to me that it should be lower.

11. It seems to me that there is something in that. 75 per cent would be a proper basis for payment on account where the basis for detailed assessment was the indemnity basis. But it does seem to me that a 25 per cent discount is insufficient to represent the minimum one can expect to be recovered on a detailed amendment. It seems to me that an appropriate percentage in this case is 70 per cent, not 75 per cent, and I am therefore going to direct there be a payment on account payable in 14 days in the amount of £115,991.32. I am going to round that up to £116,000 and I am going to direct that be paid been 14 days.

12. That brings me to the question of the location of these monies and the other monies which have been paid into the solicitors' account. That was done because there was some concern on the part of the appellant that the respondent, if he received the money paid, would not, if the appeal was successful, be able to repay. So by consent it was agreed that these monies should be repaid into the respondent solicitors’ account to await agreement as to how they should be disposed of or further order.

13. I was invited by Mr Dougherty to consider disaggregating the amount already paid into the solicitors' account and ordering certain elements to be paid out now, and others to be subject to a stay of four weeks pending an application for permission to appeal by way of second appeal to the Court of Appeal, enabling the Court of Appeal to decide whether within that four-week period the stay ought to be further extended either because the question of permission to appeal had not been resolved, or because permission to appeal had been granted and it was considered appropriate that a stay continue.

14. I indicated in argument that if the matter was before me, given that this is a second appeal, I would be minded to release the monies to the respondent because having been successful at two instances, it seems to me there ought to be some benefits of victory, even if there is a risk (which I accept there is) that the monies might, if the second appeal was successful, not be repaid.

15. However, in the course of very helpful submissions and argument from counsel, we concluded that the best course was to leave this in the discretion of the Court of Appeal, and that a four-week stay ought to be imposed to enable the monies to be ring-fenced for that period but for no longer, unless the Court of Appeal orders otherwise for reasons that it would of course give.

16. That is the order I am minded to make and the question is whether that stay applies to the full amount or to the disaggregated amounts because of course the costs in the solicitors' account are attributable to different matters. Here I am in no doubt that disaggregation is a course which is too difficult, given there is no clear bright line of demarcation between the different costs. It seems to me that given I am only imposing a limited stay, the question of the stay for the future, if there is to be one, is a matter which should lie again in the Court of Appeal, and I should maintain the presence status quo.

17. To be clear, I am therefore lifting the stay of Trower J and I am imposing a new stay of four weeks over not merely the monies presently in the account, but also of the monies which are payable pursuant to the order just made; namely £116,000 payment on account. It should also include any top-up to represent interest rate differentials. I am making no ruling about interest rate differentials, that is a point which has come relatively late to this particular party and I have indicated that I will, if necessary, accept and receive submissions on the papers and decide the matter on the papers according to a timetable, which is two weeks for Mr Dougherty to make the application and one week for Mr Pay's clients to respond. I hope the two-week window will enable the parties to reach an agreement by consent on this interesting but somewhat fiddly point. But if no agreement can be reached, I obviously stand willing to decide the matter according to that timetable.

18. I think that deals with all of the elements which were before me. Permission to appeal is obviously not before me because this is the second appeal. Mr Pay helpfully indicated that there had been some articulation of the grounds of appeal in correspondence, but frankly since this is not a matter which is in my power to give, I cut him off and did not hear the nature of the attack which will be made on the judgment rendered by me before the Court of Appeal. It seems to me that I need say no more about the question of permission to appeal than it is not for me.

19. So for all those reasons, those are the orders I make, and I hope the parties can agree a form of order for my approval in due course. Epiq Europe Ltd hereby certify that the above is an accurate and complete record of the proceedings or part thereof. Lower Ground, 46 Chancery Lane, London WC2A 1JE Email: [email protected]