Cathay Pacific v Lufthansa: Considering Foreign Currency Cost Awards and Witness Evidence
Judge decides costs can be awarded in foreign currency and considers witness evidence issue
Two of the issues considered by the judge in this case were as follows:
(1) Witness Evidence: Should the parties be ordered to identify in their pleadings the extent to which they propose to rely on witness evidence?
The judge referred to an ongoing review into witness evidence in the Business and Property Courts. However, he concluded that the court already has the power to make this sort of order under its broad case management powers. Furthermore, such an order is advisable where witness statements are likely to stray into argument and commentary on documents. That is all the more likely where large sums are at stake, the relevant events took place a long time ago, or over a long period of time, and there is a lot of documentation. The judge made the order here because those factors were present and so the risk of witness statements containing a lot of commentary was felt to be real.
(2) Costs: Could an order be made in a foreign currency?
Having decided a preliminary issue in its favour, the defendant sought a summarily assessed costs award expressed in euros. The defendant was invoiced in euros by its solicitors (and pound sterling by counsel). The judge noted that the discretion to award costs (granted by section 51 of the Senior Courts Act 1981 and CPR r44.2) is very wide and has no express limitation. He also rejected an argument that one should be implied: "If a party domiciled outside of the jurisdiction has incurred substantial costs in a foreign currency in connection with proceedings in England, and an order is made requiring a person to pay those costs, an order that those costs be paid in that foreign currency appears to be consistent with the overriding objective…"
Nor did the judge find that there was any binding authority to the contrary. As a result, the defendant was awarded its costs in euros in respect of solicitors' costs, as well as for counsel's costs (where the currency of payment was euro). It seems that the judge reached that decision on the basis that counsel's fees were only a fraction of the total bill and so it would not be in keeping with the overriding objective to split the costs award into fragments on summary assessment.
The judge also advised that a party seeking a summary assessment of costs in a foreign currency ought ordinarily to provide: (a) a statement that the claim is for payment in a specified foreign currency; and (b) an explanation why payment is sought in that currency (in most cases, that will be by a combination of form N620, submissions in writing and (if appropriate) witness statement). If the currency is an unusual one, it will usually be helpful to also provide a sterling equivalent.