Gamlestaden Fastigheter AB v. Baltic Partners Ltd & Ors (Jersey) [2007] UKPC 45 (25 April 2007)

Privy Council Appeal No 56 of 2005

Gamlestaden Fastigheter AB						Appellant
v.

Baltic Partners Limited and others 	Respondents

FROM

THE COURT OF APPEAL OF
JERSEY

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REASONS FOR DECISION OF THE LORDS OF THE
	JUDICIAL COMMITTEE OF THE PRIVY COUNCIL ON COSTS

Delivered the 27th June 2007

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Present at the hearing:-

	Lord Scott of Foscote
	Lord Phillips of Worth Matravers
	Lord Rodger of Earlsferry
	Lord Brown of Eaton-under-Heywood
	Lord Mance
	
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		[Delivered by Lord Scott of Foscote]

Judgment on Costs

1.	Their Lordships having delivered judgment on 25 April 2007 and having considered the parties’ respective submissions on how the costs of the hearing before the Bailiff, the hearing before the Court of Appeal and the hearing before the Board should be dealt with, this is a judgment on costs.

2.	The hearing before the Bailiff:

The directors of Baltic applied to strike out Gamlestaden’s Article 141 application on two alternative grounds.
(i)	want of prosecution (issue 1) and
(ii)	no reasonable cause of action, Baltic being insolvent and there being no relief that could be granted that would be of any benefit to Gamlestaden as a member of Baltic (issue 2)

In addition, the directors applied to strike-out Gamlestaden’s prayer in the Article 141 application for the directors to be ordered to pay damages to Baltic for breach of duty (issue 3).

Issue 1 involved two sub-issues; first whether there had been excessive delay by Gamlestaden in prosecuting the action (issue 1(a)); second, whether any prejudice had been caused to the directors by the delay (issue 1(b)).

The directors needed to succeed on both sub-issues.  The directors won on both of the issue 1 sub-issues and on issue 2.  Gamlestaden won on issue 3.  The Bailiff adjourned all questions of costs.

3.	The hearing before the Court of Appeal

Gamlestaden appealed on issues 1 and 2.  The directors cross-appealed on issue 3.  

On issue 1, Gamlestaden failed on sub-issue 1(a) but succeeded on sub-issue 1(b).  So Gamlestaden’s appeal on issue 1 succeeded.  On issue 2 Gamlestaden’s appeal failed.  On issue 3, the directors’ cross-appeal was dismissed.

4.	The hearing before the Board

There was no cross-appeal by the directors on issues 1 and 3.  On issue 2, the only issue argued before the Board, Gamlestaden’s appeal succeeded.  

5.	Costs

5.1.  	The Court of Appeal ordered Gamlestaden to pay the directors’ costs of the hearing before the Bailiff.  But Gamlestaden had succeeded on issue 3 before the Bailiff, and should have succeeded before the Bailiff on both issue 1 and issue 2.  However, their Lordships consider that Gamlestaden’s inordinate delay in prosecuting its Article 141 application provoked the directors’ strike-out application on the want of prosecution ground and that, in the circumstances, a fair costs order in relation to the hearing before the Bailiff would be that the directors pay two-thirds of Gamlestaden’s costs of that hearing.

5.2.  	The Court of Appeal ordered Gamlestaden to pay two-thirds of the directors’ costs of the appeal.  But Gamlestaden succeeded in the Court of Appeal on issue 1 and Gamlestaden’s penalty for its dilatory prosecution of the Article 141 application is reflected in its failure to recover one-third of its costs of the hearing before the Bailiff.  Gamlestaden also succeeded in the Court of Appeal on issue 3 and should have succeeded on issue 2.  Their Lordships can see no reason why Gamlestaden’s costs of the Court of Appeal hearing should not be paid by the directors.

5.3.  	The Court of Appeal ordered Gamlestaden to pay the directors’ costs of the application for leave to appeal to the Privy Council.  Their Lordships can see no justification for that order.  The costs of the leave application ought to have been costs in the appeal to the Privy Council.

5.4.  The Court of Appeal ordered Gamlestaden to pay £25,000 as security for costs of the appeal to the Privy Council.  The £25,000 must be repaid to Gamlestaden.

5.5.  	Their Lordships can see no reason why the costs of the appeal to the Privy Council should not follow the event.

6.	Their Lordships will accordingly make the following order as to costs:

1.  Set aside the orders as to costs made by the Court of Appeal.

2.  Order the directors to pay two-thirds of Gamlestaden’s costs of the hearing before the Bailiff.

3.  Order the directors to pay Gamlestaden’s costs in the Court of Appeal.

4.  Order the directors to pay Gamlestaden’s costs of the appeal to the Privy Council, including the costs of the application for leave to appeal.

5.  Direct repayment to Gamlestaden of the £25,000 security for costs, with accrued interest.