City firm Macfarlanes ‘hampered’ the court by failing to provide a clear breakdown of costs, a judge has ruled in the latest development of a billion-pound battle for control of a global fishing company.
The firm, which is acting for billionaire Russian businessman Vitaly Orlov, put forward a ‘disproportionately high’ assessment and failed to give a ‘detailed breakdown’, according to a High Court judgment in Orlov v Tugushev & others last Friday.
The court, assessing an application for security for costs, made an order of £1.5m, rejecting Macfarlanes’ estimate of £2.7m.
The judgment is the latest twist in an ongoing battle between Orlov and another Russian businessman, Alexander Tugushev, surrounding control of the $1.5bn (£1.2bn) Norebo Group.
Orlov took control of Norebo in 2016 but Tugushev, who is backed by a third-party funder, claims his one-third stake in the company is not being recognised. An order against Orlov, freezing £270m of his assets, was granted earlier this year.
Orlov, who is challenging the jurisdiction of the English courts and resisting the continuation of the freezing order, applied for a security for costs order, or failing that, an order that Tugushev reveals who is funding his case.
Tugushev, represented by Peters & Peters, had agreed to pay £1m in security for costs. But in court earlier this month, Macfarlanes proposed a figure of £2.7m, an amount it claimed is around 80% of the £3.4m costs incurred and estimated by Orlov in fighting the case so far. An estimated £1.6m of the higher figure relates to fees charged by Macfarlanes.
In his judgment, which has yet to be published, Peter Macdonald Eggers QC, sitting as a deputy judge, said the court’s assessment of costs had been hampered by a lack of an adequately detailed breakdown from Macfarlanes.
According to the judge, ‘basic information’ concerning hours and rates was missing. ‘When the court comes to consider costs budgeting or the summary assessment of costs, the court is ordinarily provided with a more detailed breakdown than has been provided to the court for this application. There is no reason why a similar exercise could not have been undertaken with respect to Orlov’s incurred costs in this case at the very least,’ the judgment said.
The judge added: ‘I would expect a more detailed breakdown than that provided for estimated future costs. Certainly, I am accustomed to seeing more detailed breakdowns for the purposes of security for costs applications.’
’Overall … in my judgment, the total costs figure put forward by Orlov is disproportionately high,’ said the judge. He added that his view was reinforced by the fact that Orlov’s estimated costs increased by more than £1.1m from 2 October to 30 November 2018, without any ’satisfactory detailed explanation’.
However, the judge noted that a more generous assessment of quantum than that offered by Tugushev is required, because ‘this is a very high-value dispute, involving complex issues of law and fact and substantial items of evidence’.
Tugushev has been ordered to provide security of £1m by 21 December and the remaining £500,000 no later than 15 January 2019.