Kawaley J
IN THE, GRAND COURT OF THE CAYI%'IAN ISLANDS FIINANCIAL SERVICES DIVISION CAUSE NO. FSD 235 0F 2017 (IKJ) IN THE MATTER OF SECTION 238 0F THE COMPANIES LAW (2016 REVISION) AND IN THE MATTER OF NORD ANGLIA EDUCATION, INC IN CHAMBERS Appearances: Mr Mac Imrie, Mr Malachi Sweetman and Mr James Eldridge of Maples and Calder on behalf of Nord Anglia Education, Inc ("the Company") Mr Jonathan Adkin QC and Andrew Jackson instructed by Appleby on behalf of tlie Appleby Dissenting Sliareholders Mr Christopher Harlowe and Mr Rocco Cecere of Mourant Ozannes on behalf of the Morirant Dissenting Shareholders Mr Barry Isaacs QC and Hamid Khanbai instructed by Campbells on belialf of the Campbells Dissenting Sliareliolders Before: The Hon. Justice Kawaley Heard: 26 - 27 February 2018, on the Papers, 27 September 2018 Date of Decision: 9 0ctober 2018 Draft Judgment Circulated: 9 0ctober 2018 Reasons Delivered: 24 0ctober 2018 181024 in tlie Arbtter ofNord Anglia Educmion, hic- FSD 235 of 201 7 (IKJ) Rydmg ori Cost of Disco*iery Applrcatiori HEADNOTE Stoninons for Directions - section 238 of the Coinpanies Lcrw Petition - costs of dissenter discovery application-whether application raised a discrete imue or whether costs should be in the cause- relevance of ag-reed costs position at hearing of Sunimons for Directions-conduct of Litigation-duty of parties to act reasonably-distinction behween level of scrutiny of litigarrts' conduct in freestanding interlocutoiy applications and general pre-trial directions applications-GCR Order 62 rvdes 4, 11 RULING ON COSTS OF DISSENTER DISCOVERY APPLICATION Background 1. The background to the present costs application may best be described as a tale of two hearings. Tlie first hearing was a two day affair with four parties (or groups of parties) each represented by leading counsel. Tliat liearing disposed of the following issues as described in my Partial Ruling delivered on Marcli 19, 2018 as follows: "2.... The present Ruling seeks to resolve disputes reiating to the following broadly defined topics: I)the scope of the Compan)i's disclosure obligations; 2)the inanagement of the discovery and inspectiorr process,' 3,hvhether there should be a process expert in addition to a vahtation expert; 4)miscellaneous other coinparatively minor issues." 2. The paities liad been prepared to deal witli the Company's application for Dissenter Discovery, whicli was addressed in written and oral argument, at tlie first hearing. In tlie event, this issue was adjourned for fiuther argument, for tlie reasons explained in tlie same Marcli 19, 2018 Ruling: 181024 In tlie Matter of Nor'dAnglia Echrcmiori, Inc- FSD 235 of 201 7 (iKJ) Ruling ori Cosr of Discosieiy "3. The question of whether or not the Dissenters should be required to give discovery will be deait with in a separate Rvding, as counsel for the Company and the Mourant Dissenting shareholders (the Campbelis Dissenting shareholders hcrving disagreed) agreed at the end of the hearing. Since resei"ving judgment I have received inforinal administrative indications suggesting that a decision of the Court of Appeal in a case called Re (3mar might vieli be handed dovm sometime this month. Subject to the proviso set out in paragraph 4 below, Iaccordingiy direct that the parties be at liberty to submit supplementary skeleton arguments within 14 days of the sooner of (a) the Cayman Island Court of Appeal judgment in that case being received by loca7 counsel, or(b)pubiishedontheJudiciaiAdministrationDepartment'swebsite." The predominant consensus at tlie end of the first hearing on February 27, 2018, with the Campbells Dissenters alone expressly dissenting on tliis point, previorisly appeared to me to be tliat tlie pending Corirt of Appeal decision in Re Qunar would likely liave a material impact on tlie way tl'iis Corirt decided tlie Dissenter Discovery issue, one way or another. Having regard to tlie fact tliat tlie Campbells Dissenters were assigned the task of advancing the Dissenters' joint position on the merits of the Dissenter discovery issue, and having tuitlier reviewed tlie Transcript, it would be more accurate to say that tlie other Dissenters did not expressly oppose my reserving judgment on the issue in tlieir own riglit. The Company positively encouraged tl'ie Corut to defer deciding the Dissenter Discovery issue rintil tlie Corirt of Appeal ruled on tlie issue, early on the first day of tliat liearing'. Lord Grabiner QC for tlie Company in reply submitted that it was "absolutely criticar' tliat I sliorild"wait and see"2. I accepted tliis submission and rejected tlie opposing submission advanced by Mr Isaacs QC (on behalf of the Campbells Dissenters) tliat I sliorild decide tl'ie point on the basis of the arguments advanced at the February 26-27 liearing. It is important to note that, in the Co ' Transcript, Day 1, page 8, lines 9-18. 2 Transcript, Day 2, page 191, line 12. 18] 024 in five kjaTter of Nord Anglia Edyrcatiori, hic- FSD 235 of 201 7 (IKj) Ruling on Cost of Discosieiy 3 Written Submissions prepared shortly before tlie liearing (at paragraph 78), it was aclaiowledged that"it is potentially yvastefid of resources to argue this point before the Court of Appeal's decision in Qunar is released, and so one option is for this part of Word's application for directions to be adjourned with liberty to revive it once the Court ofAppeal decision is crvailable". 5. Tlie second liearing took place on tlie papers and resulted in a Railing delivered on June 1, 2018. In tlie introduction to that Ruling, I noted: "2. On April 10, 2018, the Court of Appeal delivered its eagerly miaited judgment in Re Qunar Cayman Islands Ltd (CICA No. 24 of 201 7). In short, the main holding was that dissenters in section 238 cases should ordinarily be required to give discoveiy, the iongstanding contra-ty practice in this jurisdiction notwithstanding.
On or about May 8, 2018, sttpplementaiay submimions were filed with the Court fron'i the Conqpany, the Mourant Dimenters and the Appleby Dissenters. The Campbe71s Dissenters elected not to lodge separate svtpplemental subniimions and agreed with the subinimions lodged on behalf of the Mourant Dissenters and the Appleby Dissenters." 6. I summarised how tlie issue of principle as to whetlier or not tliere shorild be Dissenter Discovery was decided by tlie Cayman Islands Couit of Appeal in the following way: 7. "13. In essence, the Court of Appeal found that the usual relevance-based principles of discoveiy apply to documents in the possession, custody or power of the compan)i and dissenters alike. This Court is bormd by those findings as counsel sensibly agreed. The approach the Court adopted to specific aspects of discovery, while fact-specific, does to soine extent provide a helpfiti guide as to what may or not be appropriate in the typical case."
Not only was the Qunar appellate decision decisive on the crucial qriestion of principle; ,r....:..,, the fact that it was decisive was conceded by tlie Dissenters. Tlie only matters whicl +X!,: ')3ssues concerning the scope of tlie discovery tlie Dissenters shorild be required to give. In resolving tliese issues I soriglit to follow whatever guidance was provided by the Corut of Appeal on the scope of discovery. On July 27, 2018 a contested hearing in relation to tlie Dissenters' desire to instruct a new Expeit Witness was heard. In the corirse of that hearing, counsel pointed orit that the issue of the costs of the Dissenter Discovery application was still outstanding. A draft order whicli had never been perfected contemplated a 21 day period after tlie order for submissions on costs to be filed. I expressed tlie"strong provisional view"3 that costs should be in tlie cause, but indicated tliat written submissions on costs could be submitted if any party wislied to seek a departure from what I understood to be the usual order in relation to discovery.
Tl'ie Directions Order was not made rintil August 15, 2018 and was apparently sealed by the Corirt (and/or received by tlie Company) on or aborit September 6, 2018. It was agreed that submissions on costs should be filed witliin 21 days of tlie latter date. It is against tliis background tliat tlie present application falls to be determined and in light of the following preliminary observations: (a) tlie costs incurred in relation to the first oral hearing seem likely to be substantially more than the costs incurred in relation to the second hearing on tlie papers; (b) tlie Dissenter Discovery issue was argued at tlie first hearing as one of several issues arising on tl'ie Summons for Directions. It was only argued as a stand-alone issue at the second ancillary l'iearing on the papers; (C) it is a matter of pure speculation liow tlie Dissenter Discovery issue worild have been determined had I proceeded to decide tlie issue based on tlie initial arguments ratlier tlian opting to "wait and see" how the Couit of Appeal decided Re Qvmar; 3 Transcript, page 74, lines 9-11. 18]024 h? the Arbiter of Word Anglra Educatiori, hic- FSD 235 of 201 7 (IKJ) Ridrrig on Cost of Disco>iery 5 (d) the ultimate practical result was tliat tlie Company clearly "won" the main 'sliorild there be Dissenter Discovery?' issue; (e) the costs of tlie Sunu'nons for Directions generally were ordered to be in the carise; (f) my initial and largely instinctive provisional view, albeit expressed in tlie context of a hearing dealing primarily with other issues, was tliat costs shorild be in the carise following the same approacli as was adopted in relation to otlier aspects of the Sumn'ions for Directions; (g) the Company and tlie Dissenters are nOW" agreed that the relevant issue is a distinct one in relation to which costs sliorild be dealt witli separately from tlie general costs of the Summons for Directions. However, who sliould be entitled to be awarded their costs is in disprite. The tacit agreement for the purposes of tlie present costs application that Dissenter Discovery costs should be treated as a discrete issue for costs prirposes arises in a very odd way and invites tl'ie Corirt to dispose of tlie present application in a quite artificial way. Firstly, the new 'consensus' ignores tlie agreement up to the end of the first liearing tliat costs shorild be in tlie carise and offers no or 110 convincing reason for depaiting from this approacli. Secondly, tl'ie Dissenters themselves rely (as regards tlie costs of tlie present costs application) on an offer to settle on the basis that all of the now disputed costs sliorild be in the cause.
Against this background, I do not consider it worild be proportionate for me to invite tlie parties to expend fuitl'ier costs on fiutlier written submissions to address the matters I consider to be obviorisly germane but which they have not only failed to address but also, bearing in mind their sopliistication, clearly corild have addressed if they wished to do so. My"strorrg provisional view" was designed to avoid tlie need for the present application altogetlier, so I see no need to expand the scope of it at this juncture. I am guided by the overriding objective set orit in tlie Preamble to the Grand Court Rules which is designed to "enable the Court to deal with eveiy cause or matter in a just, expeditious and economical wcty". Costs applications are paiticularly amenable to judges adopting a praginatic efficiency-driven approach. 4 Prior to subinissions on costs, the Dissenters were willing to accept tlie Coriit's provisional view that tliese should be, in effect, "wrapped up" witli costs incurred in relation to the Summonses for Directions generall 181024 Jri tlie Matter of NordAngha Edyrcmiori, hic- FSD 235 of 201 7 (IKJ) Ruling ori Cost of Discovery Application 6
Accordingly, dealing witli tlie matter at far greater length than worild ordinarily be required, I propose to: (a) record my primary findings which (as will be seen below) are that there is no just cause for tlie paities to belatedly depart from their prior agreement that the relevant costs form an integral pait of the Summons for Directions and should be ordered to be in the carise; and (b) record n'iy alternative findings in case my primary findings are lield to be wrong. The Company's submissions on costs
In the'Comparry's Submissions on Costs of Dissenter Discoveiy', it was submitted most broadly tliat"the issue of whether the Dissenters were required to give disclosure was a distinct and discrete imue within the directiom hearing, and within which the Company was successfiti". Tlie"distinct and discrete issue" limb of this submission was riltimately not in controversy, as noted above.
Addressing the factual position in relation to the first liearing, it is asseited that the Company was successful to the extent that it persuaded me to await the Corirt of Appeal's decision in Re Qunar and the Dissenters were rmsuccessful in that I refused their invitation to immediately decline to order Dissenter Discovery.
Addressing the postAe (3mar liearing on the papers and the Company's attempts to avoid the need for sucli hearing tlirough agreement, it is conceded that "arguments centred on the scope of disclosure" (paragrapl'i 11). In terms of wlio succeeded on the issues in disprite, it was submitted tl'iat: "13. Having considered the written subinimions, the Court delivered its Ruling in respect of Dimenter Discoveiy on I hme 2018. On each of the disputed categories of docvmients, the Company's submissions were broadly accepted.... 14.The Company's position is therefore that, nohvithstanding the Dissenters' opposition to the orders it had sought for Dissenter disclosure afler the decision of the Court ofAppeal in Re Qvmar, orders yvere granted substantially in terms of those sought by the Company and it was therefore the successfid party in the application... 181 024 In five Matter of Word Anglia Edyrcotiori, /l?C- FSD 235 of 201 7 (IKJ) Rulirig ori Cost of Disco*iery Applicmion
The legal principles invoiced were extracts from the following provisions of Order 62 rule 4 of tlie Grand Couit Rules ("GCR") (and upon wliicli the Appleby Dissenters also relied): (a) rule 4(2):"The overriding objective of this Order is that a successfiti party to any proceeding should recover froin the opposing party the reasonable costs incurred by hiin in conducting that proceeding in an economical, expeditious and just manner, unless othervvise ordered by the Co'ttrr; (b) rule 4(5): "If the Court in the exercise of its discretion sees fit to make any order as to the costs of any proceedings, the Court shall order the costs to follow the event, except vihen it appears to the Court that in the circvmqstances of the case, some other order should be made as to the whole or any part of the costs." 17. It was tlien submitted: "20. I The Company is the successfiti party in respect of Dissenter Discovery,' 20.2 The Company conducted the proceeding in relation to Dissenter Discovery in an economical, expeditious andjust ynanner,'5 20.3 The "everit" (for the purposes of costs) is that the Court ordered the Dissenters to provide discoveiy, (7n order vihich they had opposed the making of; 20.4 T1iere are no circumstances fitstifying making any other order in relation to the costs ofDimenterDiscoveiy."
The Company finally took issue with various points made by Mourant in their letter dated September 17, 2018, arguing: (a) it was wrong to contend tliat Re Qunar clianged the state of the law; (b) it was wrong to suggest tl'iat tlie Company shorild liave deferred applying for Dissenter Discovery rmtil after the Court of Appeal decision. Tlie 5 It was noted tliat the Dissenters adopted different positions so that tl'ie Coinpany had to respond to three sets of written and oral shibinissions. This reflected the position in relation to tlie first, oral hearing. Only two sets @.f;5 written submissions were filed in relation to tlie second paper hearing, by Morirant and Appleby, with whicly4'ig.:§"., Campbells Dissenters signified their concurrence. ':' ta - a 181024 Di rlie AiJatter afford Anglia Educatiori, Jnc- FSD 235 of20l7 (JKJ) Rulmg on Cost of Drscovery Application Dissenters were paities to tlie appeal and in a better position to lcnow when the judgment might be delivered yet they did not suggest deferring the Dissenter Discovery issue; (c) tlie Dissenters' positions on the scope of Dissenter Discovery were mostly rejected by the Court; (d) Morirant's suggestion that if the Company did not agree that costs should be in the cause the Dissenters sliould be entitled to costs after the date of the firm's letter was described as"an extreineiy odd positiorr to take" (paragraph 26)6. The Dissenters' Submissions on Costs
Tlie Appleby Dissenters filed the only written submissions on costs on behalf of all Dissenters. Tlieir broad position was opened in their'Written Submissions of the Appleby Dissenters on the Costs of the Dissenter Discovery Issue' as follows: "4. For pragmatic reasons, and in light of the Court's indication as mentioned above, the Dissenters made an open offer to the Conatpany, by Mourarrt's letter of I 7 September 2018, to settle the matter on the basis of an order that the costs of the Dissenter Discoveiy issue be costs in the case. That ojfer was rejected by the Conipany. TheApplebyDissenters (and, itisunderstood, allDimenters) novi therefore revert to their primaiy position, for the reasons submitted below, that the Dissenters iaiere successfid on the preponderance of the Dissenter Discoveiy issues vihich the Court was eventually required to resolve, and that the appropriate costs order in respect of the Dimenter Discovery issue is that the Dissenters should have their costs of that imue frony the Conipany in any event.
The Dissenters also invite the Court, if it declines to a"viiard the Comparry those costs, to crward them their costs of and occasioned by this fitrther argvoyierrt over costs on the indeinnity basis, given that the Company has stubbornly rejected their ojfjfer as set out above."
This is a rather convoluted but nonetheless coherent submission whicli lias the following elements to it: (a) the Dissenters were for pragmatic reasons willing to settle the costs 011 the basis oftlie Corut's provisional view; 6 The approach to indemnity costs was illustrated by placing the following autliorities before the Court: Benne;.t(-"[i'+,,l'i)21.""9.ir'.:': v-A-G [2019] (1) CILR 478; AISadik-v-Investcorp Barik BSG and otliers [2012] (2) CILR 33; Aliab-v-Saad [2,,0,l'2j:i,:.-"" ' " (2)CILRI. ' 1'.2 (' ) r' 11: a- , i ,}:ll :-,,;. ,it 181024 /n the Mmer ofNord Anglia Edircmion, hic- FSD 235 of 201 7 (IKJ) Rydirig ori Cost of Disco>iery Applicmiori (b) since tlie Company rejected tliat offer, the Dissenters liave decided to seelc their costs of tlie supplementary scope of discovery application in any event since they prevailed on the preponderance of the issues the Couit was actually reqriired to decide; (C) if the Company is not awarded its costs (implicitly, if the Court either awards tlie Dissenters their costs or orders tliat costs shall be in the carise), the Dissenters sliould be awarded tlie costs of tlie present costs application on tlie indemnity basis.
The initial position of the Dissenters, rinsurprisingly as the thresliold Dissenter Discovery issue was clearly resolved in tlie Company's favour, was to embrace my provisional view on costs without any elaboration. This view was tacitly based on the premise that the Dissenter Discovery issue sliould not be treated for costs purposes as a discrete issue, separate and apait from tlie other limbs of tlie Summons for Directions. Tlieir fall-back position, once tlie Company declined to agree to their proposal that my provisional view sliorild be accepted, was that there shorild be a costs Order in their favour as to Dissenter Discovery costs generally and as regards the costs of the costs application on the indemnity basis. At first blush the proposition tliat they should have their costs of the Dissenter Discovery application appeared a preposterous submission. However, on closer analysis, the submission was a more nuanced one and addressed the costs of the first and second liearings on different grounds.
In addressing the state of tlie law at tlie first liearing, it was argued that there was "no realistic prospect of the Company being crvvarded an order for the discovery it sought firoin the Dimenters on the basis of the lcrw as it stood at the tinie of the Directions Hearing" (paragraph 10). Reliance was placed on two previous decisions wliich were said to suppoit tlie proposition that Dissenter Discovery would not ordinarily be ordered in section 238 cases: Re Homeinns Hotel Group (unrep. 12 August 2016, Mangatal J) and Re Qunar (unrep. 20 July 2017, Parker J).
In addressing tlie Company's position at tlie first hearing, the Appleby Dissenters pointed out that tlie Company carised tlie Dissenters to file evidence and submissions in response to the Company's application for Dissenter Discovery and only in its oral submissions invited the Court to consider deferring determination of the issue. The main costs conseqrience was said to be as follows: "15. Iri the event, however, no ... determination was made on the principa7 dispute between the parties at that stage, viz. "vvhether the Dissenters ought to be ordered to give discoveiy, in respect of vihich the vast majority of the costs of dealing with the Dissenter Discovery issue were plainly incurred."
It was fuitlier argued tliat once the issue of whetlier there sliould in principle be .i3,-;-i-,;.-' g' l:" ') discovery was resolved by the Couit of Appeal in Re Qunar, the arguments advanced altogether (trading liistoiy), or to some extent (decision to purcliase, supporting models, and highly sensitive documents ("HSD")). Altliough I extended the temporal scope of the period covered by tlie obligation to disclose the Dissenters' internal and external analyses to some extent on July 27, 2018 (at the Company's reqriest), it was noted tliat I extended tlie period by only 4 montlis rather than by the extra 4 years soright by the Company. Tliis issue corild, with more pragmatism on the Company's part, have been compromised.
The Appleby Dissenters soriglit tlieir costs of the first liearing principally on the grounds that eitlier (a) they would have won had this Corut ruled, (b) tl'ie issue was not in any event determined by tliis Court (so tlie costs were wasted) and/or (c) the Company liad acted unreasonably in carising tlie costs to be incurred. The costs of the second hearing on the papers were soriglit on tlie grounds that the Dissenters had achieved substantial SllCCeSS.
Finally, the costs of tlie present costs application were primarily soright on tlie following basis: "28. And GCR O.22, r.l4(1) provides that: 'A party to proceedings may at any time make a viritten offer to any other party to those proceedings which is expressed to be "without prejudice save as to costs" and which relates to an)i issue in the proceedings'.
The offer vihich Mourant coimanunicated (07? behalf of the Dissenters) to the Company on 17 Septeinber 2018 to settle the issue regarding the Dissenter Discoveiy costs by accepting an order that they be costs in the cause was in the nature of a settlement offer which the Court should properly take into account when making its order as to the costs of and occasioned by this fitrther argument. If the Court crvvards the costs of the Dissenter Discovery imue to the Dimenters or decides that they should be costs in the cause, it is submitted that the Courtshould impose the usual consequence of the Coinpanv having reiected the Dimenters' offer and require it to pcry the Dissenters their costs of and occasioned by thisfitrther argumentfron'i I 7 Septeinber 2018 on the indenmity basis to be taxed if not agreed." [Emphasis added]
No authority was cited in support of the proposition tliat the "usual consequerice" of a paxty losing an application after having unreasonably refused to accept a settlement offer was that tliey sliorild be required to pay tlie costs of the application on tlie indemnity basis. 181024 /11 tlie ArJatter of Nord Anglia Edyrcatiori, Inc- FSD 235 of 201 7 (IKJ) Ruling ori Cos[ of Discosiery Applicmron The main iSsueS relevant to costs
In liglit of tlie above opposing subinissions, I find that the main issues which are relevant to the determination of the present application are tlie following: (a) sliould tlie Dissenter Discovery issue be treated for costs purposes as a discrete issue or as an integral pait of the Sun'imons for Directions and if not wliat Order should be made? alternatively (if the issue is a discrete one) (b) which side (if any) achieved substantial success in relation to the first liearing? (c) which side (if any) achieved substantial success in relation to the second liearing? and (d) depending on liow issues (a)-(c) are resolved, wliat award sliould be made in relation to tlie costs of tlie present application? Findings: should the Dissenter Discovery issue be treated as a discrete issue or as an integral part of the Summons for Directions? What principles inform deciding whether the Dissenter Discovery costs should be regarded as having been incurred in relation to a discrete issue?
TlieCompany'sassertionthattlieDissenterDiscoveryissuesliould,forcostspurposes, be treated as a discrete issue was not directly challenged, so the validity of the asseition was not subjected to critical scrutiny by way of opposing argument. Nor indeed was any legal test proposed for liow the Corirt should decide wlietlier or not the relevant costs should be regarded as properly allocated to the general Summons for Directions 'pot' or as attributable to a freestanding 'application' within tlie main application. The asseition was advanced as if it was a self-evident one.
In my judgment it is still incumbent ripon me to test tlie validity of the 'agreed' discrete issue position on its merits. After all, I expressed the"strong provisional view" on July
2018 that all costs incurred in relation to the Summons for Directions should be dealt with on the same basis. This, in part at least, prompted the Dissenters to offer to settle the costs on this basis, and their own formal application for their own costs appears to me to be in substance a tactical forensic position. What principles infori'n the question of wlietlier one aspect of the same originating or interlocutory process shorild '- be dealt with as a discrete issue for costs purposes? In my judginent the same ru'nbrella k I ,. .1 "(2) The overriding objective of this Order is that a successfid party to any proceeding should recover froin the opposing party the reasonable costs incurred by him in conducting that proceeding in an economical, expeditious andjust manner, rmless othei*vise ordered by the Court."
Thus the 'costs follow the event' principle is tlie governing principle of tlie costs regime, but it is subject to (a) a requirement tliat the successful paity lias pursued tlie proceedings"in an econoinicai, expeditious and just mannel', and (b) the Court's discretion to make some other order. The same rule provides examples of liow broad that judicial discretion may be. Thus rule 4(7) provides that the discretion under Order 62 rule may be exercised by ordering a paity to pay, most pertinently, "(f) costs relating only to a distinct part of the proceedings". At the oritset it is important to recognise that ordering any costs to be 'in tlie carise' is an expression of the 'costs follow the event' principle, not a depaitrire from it, in that only tlie overall winner will be able to recover those costs. Awarding costs in any event in relation to a discrete issue applies tlie predominant rule to a distinct pait of the hearing, but tliis is withorit regard to overall success.
Costs orders in relation to distinct issues are almost invariably made in circtunstances where an interlocutory application has been pursued as a freestanding application and the paities and tlie Couit are consciously aware tliat the costs of tl'iat application are likely to be dealt with on a distinct basis. Tlie predominant practice is that the costs of a Sun"imons for Directions are generally ordered to be in the carise. Not only is this consistent witli tl'ie 'costs follow tlie event' principle, because only the successful paity will recover tlie costs. It also reflects tlie cliaracter of the Summons for Directions, conceptually at least, as an essentially neutral and necessary case management mechanism aimed at advancing the proceeding to trial for tlie mutual benefit of all paities. General discovery orders are typically made on a Summons for Directions. However, specific discovery applications would generally be viewed as freestanding applications in relation to wliich, if contested, a distinct costs order would be made.
In slioit, there is in my judgment a strong staiting assumption that all costs arising in relation to the Petitioner's main Summons for Directions will be regarded as arising in the Petition or cause and will be subject to a con'imensurate costs order. Wliether an issue sliorild be treated as a distinct one for costs purposes turns on a fact-sensitive inqriiry which does not lose sight of the central goal of tlie costs regime, as articulated in Order 62 rule 4(2). The qriestion of whether the Dissenter Discovery issue in the present case shorild be dealt with as a distinct issue for costs prirposes can best be explored tlirorigli two different lenses: (a) analysing liow tlie application for Dissenter Discovery was formally made; and 1024 h? the Matter of Word Angiia Edircotiori, hic- FSD 235 of 2017 ([KJ) Ridmg ori Cosr of Discosiery Applicatirm 13 (b) analysing liow tlie application was actually argued and disposed of. How the Dissenter Discovery application was formulated and argued
The Summons for Directions was issued identifying tlie relief sougl'it in oritline terms with tlie parties thereafter exchanging competing, more detailed draft Orders. The Dissenters' draft Order produced for tlie prirposes of the liearing of the Summons for Directions, it bears noting at the oritset, envisaged"costs in the cause" (paragraph 24). However tlie main focus is tlie Company's own position as the paity expressly seeking Dissenter Discovery. Tlie Company's Summons for Directions itself sought the following directions: "1. The inanner in which evidence is to be given.
Directions as to discoveiy and inspection of documents.
Directions as to perniimion to adduce expert evidence, the service of expert reports, and meetings between experts. 4.Such fitrther or other directions as the Court mcry think fit.
That the costs of the application shall be costs in the Petition." [Emphasis addedl
The Company tlierefore not only formally soriglit directions in relation to discovery generally as one generic category of relief and formally applied for the costs of all directions to be"costs in the Petition", or costs in the carise. In addition, the Petitioner's Draft Order filed in corut on or about Februaiy 21, 2018 also anticipated mutual discovery by tlie Company and tlie Dissenters and dealt witli discovery in an holistic manner. For example, the obligation for all parties to ripload documents was set out in consecutive sub-paragraphs of draft paragraph 7. The Order also provided as follows: "14. In redation to the documents vihich are to be disclosed pursuant to this Order, the Company and each of the Dissenters sha7.i on or before the date for compliance yvith paragraph 7 above, and from time to time thereafter as 77?cty be necessaiy, file and sei"ve on the other party a list of documents complying viith Order 24, rule 5 of the Grand Court Rules ("GCRs")....
Costs in the cause, subject to paragraph 33 below. il'sl'7),1,
The Dissenters shall pay 50% of the cost of the recording and transcription of the hearing of the Company's SZ{7777770)'78 for Directions, the CMC and the hearing of the Company's Petition." [Empliasis addedl 024 in the Arbtter of Nord Anglia Edyrcatiori, Jnc- FSD 235 of 201 7 (IKJ) Rydmg on Cost of Discosiery Applicmiori 14
The Company's Written Submissions also provided no liint that the Company considered tliat Dissenter Discovery was a discrete issue for costs purposes. In the introductory section of tliose Submissions, it was noted (in paragraph 7.3) that: "Parts D to J address the various substantive difjferences between the parties in the coinpeting proposals. Iiq each part, vie seek to identify the substantive difference in approach behween the Company and the Dissenters, and explain why the Company's approach is to be preferred." 37. Company Discovery and Dissenter Discovery were listed as separate topics, but so were six other topics wl'iich were treated for costs purposes as falling within the same costs 'pot'. Tlie Submissions exliibited the Company's Draft Order proposing that tlie costs of tlie Summons overall should be"costs in the cause". A similar proposal was set out in tlie Dissenters' draft Order. The costs up to and including the first hearing
In my judginent, absent some express indication that the Company wished to cliange its position, the Dissenters and tlie Cotut were entitled to proceed at and after the first liearing on tlie assumption that (1) all discovery issues would be dealt with as a single composite issue, and that (2) tlie Company accepted tliat it was appropriate for the costs of all issues identified in tlie Summons for Directions to be"costs in the Petition" or (as forrmilated in its draft Order)"costs in the cause". An important, risually tacit, element of tlie way in which civil litigation is subjected to the 'discipline of costs' is that opposing paities have a reasonable appreliension of the basis on which costs are likely to be dealt witli at the end of the day. Where a paity sets ohit his stall on the explicit basis tliat he is seeking costs in the cause, he cannot rinilaterally at the end of the application decide that costs should follow the event. Nor sliould tlie Corirt without good cause merely 'rubber-stamp' an agreed retrospective cliange of a prior costs agreement.
As far the costs up to tlie end of the first hearing are concerned, I find rmeqriivocally that it is not open to the Company to now contend that those costs should be dealt witli as a discrete issue. The position tlierea'fter is at first blush somewliat less clear-cut, because by the time the second hearing took place, tlie Cotut had made a case management decision to deal witli tlie Dissenter Costs issue by way of a further hearing and discrete supplementary written submissions. Nevertheless, closer scrutiny leads to the same conclusion. The costs of the second hearing Tlie adjournment of tlie Dissenter Discovery issue to be dealt with in light of tlie Re Qrmar Court of Appeal judgi'nent did not involve any conscioris attention by tlie Court 181024 In tlie Arkrtter of Nord Anglra Educcrtion, hlC- FSD 235 of 201 7 (IKJ) RyMrig on Cost of Discovery Applicotiori /5 or cormsel to the implications as regards costs. On tlie face of it, one aspect of a composite prayer in the Summons for Directions in relation to discovery was simply being adjorirned pait-heard on tlie following basis.
At the end of tlie main l'iearing, I reserved judginent on all issues but signified my intention of dealing with all other issues before Dissenter Discovery. All paities agreed that if I decided to defer deciding tlie latter question, it was desirable that other, less contentioris matters sliorild be resolved sooner so that the timetable in those other respects corild start to run. I stated: 'Tli give my decision as soon as possible decision on the case inanagement iss'ttes and the dimenter discoveiy issue later."
In tlie Partial Ruling of Marcl'i6, 2018, I fuitlier directed: "3...Since reserving judgment I hcrve received inforinal administrative indications suggesting that a decision of the Court of Appeal in a case called Re Qunar inight well be harrded down sometime this month. Subject to the proviso set out in paragraph 4 belovi, I accordingly direct that the parties be at liberty to submit svtpplementaiy skeleton arguments within 14 days of the sooner of (a) the Cayman Island Court of Appeal judgment in that case being received by local counsel, or (b) published on the Judicial Administration Department's website. 4.In the event that the Court of Appeal judgment in Re Qunar is not published or received by counsel by close of business on March 30, 2018, and there is no indication that its deiiveiy is inaminent, I will proceed to deliver 777)1 Ruling on this issue (unless all parties agree that my Ruiing should be fitrther delayed)."
ItmightbesaidtliatallpartiesagreedonFebruary27,2018,therefore,thattheDissenter Discovery issue should tliereafter be dealt witli as discrete issue, botl'i practically and in costs terms as well. To my mind tliat is xiot an easy inference to draw. The following factors point more in favorir to the formal"costs in the cause" consensus (as reflected in the competing draft Orders and confirmed orally by Mr Borilton QC' ) position being maintained rather than being altered: 7 Transcript, Day 1, page 157 lines 2-8. 181024 In the b[atter of Nord Anglicr Edyrcatiori, hic- FSD 235 of 201 7 (IKJ) Rydirig ori Cost of Discovery 16 (a) tlie main point of principle had been fully argued in the corirse of the main hearing of the Summons for Directions at which it was expressly agreed tliat costs shorild be in the carise; (b) if I had declined to"wait and see" and decided tlie Dissenter Discovery Issue before tlie Corirt of Appeal judgment, there worild have been no basis for asking for tlie costs of tlie issue to be dealt with separately on a costs follow tlie event basis; (c) it was or origlit to have been expected that, if I did not adjourn to await tlie Couit of Appeal decision in Re Qrmar, fiirther argument would have been reqriired in any event on the scope of discovery issue if Dissenter Discovery was ordered, because that essentially consequential issue had not fully been canvassed in oral argument. It would liave been odd for either side, before the practical scope of discovery issue had been argued, to contend that the consensus tliat all costs of tlie Summons shorild be in tl'ie cause had lapsed merely because tliat sub-issue liad been dealt with by way of a separate hearing; (d) the appropriate time for any paity to contend tliat an express agreement on costs shorild be modified in respect of a paiticular pait of an application is before that part of the application lias been heard, not after. Putting tecluiical arguments sucli as waiver aside, it is inconsistent with the letter and spirit of tlie overriding costs objective that litigation sliorild be conducted in a "just manner" (Order 62 rule 4(2)) to seek to move the costs goalposts after costs liave been incurred.
Not only did tlie Company not raise the question of modifying the 'costs in the carise' consensus in tlie context of proposing a supplementary hearing, an omission for which it can easily be forgiven. It had a fuitlier and far more appropriate oppoitunity to raise the 'costs should follow tlie event' flag. After tlie Couit of Appeal judginent was handed down on April 10, 2018, it was clear that (a) tlie Company l'iad effectively won the point and that (b) a fuither liearing would indeed be necessary on the scope of Dissenter Discovery. In initially preparing for that liearing, tlie Company could have indicated that it regarded the supplementary liearing as a discrete hearing for costs purposes to whicli the prior costs consensus would not apply. That suggestion would, of course, liave been easier to make as a bare assertion tlian to substantiate on cogent grounds.
Be that as it may, when Maples opened tlie supplementary hearing exchanges with a forcefully expressed letter on April 12, 2018 (whicli invited tlie Dissenters to consent to an Order instead of filing supplementary submissions), no express reference was made to costs. Instead, somewliat obliquely, the Company's attorneys warned (page 2 line 1): 18] 024 In five Aibtter ofNord Anglia Educatrori, Inc- FSD 235 oJ' 201 7 (jKj) hding ori Cost of Drscosieiy 17 "In the event that your clients decline to agree to make discoveiy on this basis, our client viiil re7.y on that refusa7 in any further submimions which are required to be made."
Morirant responded a week later mal6ng it clear tliat, subject to a reservation of rights in tlie event of an Appeal by the Qzmar Dissenters to tlie Privy Council, the only subsisting dispute was aborit tlie scope of discovery. The following day, April 20, 2018, Appleby wrote supporting tlie Mourant position. In IIIY judgment the Company liad not yet signified in any way wliich was easily discernible (withorit the benefit of hindsight) that it was seeking to depart from tlie agreed positioii that all costs of the Summons worild be in tlie cause. Accordingly, tlie Dissenters prepared their supplementary submissions with only a liint that their refusal to agree to tlie scope of discovery sought miglit be visited witli adverse costs consequences. (There was, I might add, no hint at all that any attempt worild be made to impose any costs penalties with retrospective effect).
The position was made somewhat clearer with tl'ie filing of tlie 'Company's Sztpplementaiay Subinimions on the Issue of Dimenter Discovery' dated May 8, 2018. Those Supplementary Submissions attaclied a draft freestanding Dissenter Discovery Order wliich included tlie following proposed costs award: "3. Costs of the Suinmons, to the exterrt referable to the Company's application for discovery froni the Dissenters, be paid by the Dimenters on the standard basis, to be taxed if not agreed."
The Company was for the first time proposing tliat Dissenter Discovery costs shorild be dealt witli as a separate item of costs arising under the Summons for Directions. I have already ruled above that it was not open to the Company to seek to retrospectively alter tlie previorisly agreed costs position in relation to costs previorisly incurred rip to the end of the two day oral liearing of tlie Summonses for Directions. I fuither find tliat it was also too late for tlie Company to contend tliat the balance of tlie Dissenter Discovery issues sliorild, as a matter of general principle, be regarded as a distinct and separate issue for costs purposes so that costs shorild follow tlie event.
However, tliis is not wliat the Company actually contended on May 8, 2018. Rather, it was contended throrigh tlie draft Order (witliorit any supporting argument) that all costs relating to Dissenter Discovery should be borne by the Dissenters. The argument was, it seems to me, again advanced very obliqriely, almost as if it was subliminally hoped the point might not be inu'nediately noticed and shot down before it got off the ground. A qriick word-search of tlie pdf version of tlie Supplementary Submissions reveals that the word "costs" appears once in the document, and that is in tlie draft Order. One has to scour the Submissions to find material whicli miglit have been intended to support the new dispensation as to costs whicli is proposed in paragrapli 3 of the draft Order. (:aa oB2' ...,... . "-,"f,'.. !).iaasasert:ao;. TFhe Dis'senters o:igPht to ;ave agreeFd to th:e Order pro'pos'ed by ;bapl':es ; l! I 't;ii= : = - r 1,i35 .l..ol81024 in flie Arjmter ofNord Anglia Edirccuion, Inc- FSD "35 of 201 7 (IKj) Ruling on Cost ofDiscovery Applicmiori April 12, 2018 becarise tliere was no valid legal basis for refusing to do so. Tliey had acted rinreasonably since then in opposing the Company's application and shorild be punished in costs.
The clearest expression of this argument appears in the following single sentence in the Supplementary Submissions: "6. It is regrettaMe that the Dissenters have not simpl)i acceded to the Company's application for disclosure in the light of the clear decision of the Court ofAppeai...."
Tliis is, qriite obviorisly, far removed from suggesting, as tlie Company now submits after the 'event', tliat tlie Dissenter Discovery issue is a discrete issue which should be subject to the risual 'costs follow the event' principle. Obliquely expressed or not, the proposition tliat unreasonable conduct in respect of tlie supplementary hearing sliorild be punislied in costs was in all the circumstances an entirely coherent submission. Unreasonably opposing an obviously valid sub-application within the main application worild indeed afford good grormds for departing from the previoris agreement that all costs should be in tlie carise (or in tlie Petition), as regards tlie costs of that sub- application.
The discrete issue argument was seemingly first rmambiguorisly advanced throrigh correspondence and in Corirt on July 27, 2018. According to Maples' September 6, 20181etter (at page 2): 'Vs previously indicated to your clients and to the Court on 27 July 2018, the Company believes it was the successfid party on this discrete part of the application and intends applying for its costs. The direction sought was initially opposed by the Dissenters in its entirety and then, after the ruiingfrom the Court ofAppeal in Qunar, was opposed on more liinited grounds. The iearnedjudge, however, found in favour of the Coinpany's position. We therefore invite the Dimenters to agree that the Conipany be ayiarded its costs of the Sunmqons for Directions [in] respect ofDissenterDiscoveiy on the standard basis, to be taxed ifnot agreed."
I find that it was not fairly open to the Company after tlie supplementary liearing liad taken place to contend for the first time tliat that liearing (far less the main hearing) should fall oritside tlie ambit of tlie prior costs in tlie cause agreement and be subjected to tlie usual costs follow the event rule. The most the Company corild justly contend for was that, as was obliqriely warned in the Maples April 12, 2018 letter and its Supplementary Submissions, the pre-existing costs dispensation should be displaced becarise the Dissenters had rmreasonably contested tlie scope of discovery disprite. 181024 In flie Matter ofNord Angha Educatiori, h7C- FSD 235 of 201 7 (JAR) Rulirig on Cost of Drscosiery
At the end of the day, the Company did not have the temerity to contend that the Dissenters acted rmreasonably in refusing to agree to an Order in terms of tliat proposed by the Company on April 12, 2018. Becarise at the end of the second liearing, the Company did not obtain sucl'i an Order. I resolved tlie disputes as follows: (a) trading history: in substance the Company's form of Order was approved, but some wording proposed by Appleby was preferred (the need for a verified schedule was rejected); (b) documents relating to the decision to purchase: tlie dispute about wliat should be disclosed was in substance resolved in favour of the Company, but on somewliat modified terms; (C) dissenters' internal and external analyses: the Dissenters opposed any discovery of tliis category and the Company succeeded in in obtaining discovery. However, I excluded material over which the dissenters asseited proprietary riglits and imposed temporal limits wliich were substantially less tlian originally soriglit by tlie Company; (d) HSD protection: I refused the Dissenters' application for HSD protection on evidential grormds, but paitly in light of my accommodating overlapping concerns under issue (c). They also were granted libeity to apply witli further evidence.
There is no proper basis ripon wliicli it can be said tliat tlie Dissenters should be punished in costs because they acted unreasonably in refusing to consent to the Order proposed by tlie Company before the second hearing. It is unsurprising tliat tliis costs argument was discreetly dropped after my Paitial Ruling on Dissenter Discovery was made on May 28 and delivered on June 1, 2018. Summary of findings: the Dissenter Discovery issue was not a discrete issue for costs purposes
I confirm tlie"strong provisional view" wliich I expressed orally on JLIIY 27, 2018 that tlie costs of the Dissenter Discovery issue shorild be treated as an integral part of the costs of the Summons for Directions generally and tliat tlie appropriate Order was costs in the carise. It was expressly agreed tliat this was the position in the course of the first liearing and tlie Company first rinambiguously suggested that the issue should be treated as a discrete one on or aborit July 27, 2018 (and in any event after tlie Paitial Ruling on Dissenter Discovery). This was too late to alter the agreed treatment of these costs in relation to botli the first and second hearings. From a costs perspective, the fact that the Dissenter Discovery issue ended up being finally determined outside tlie main hearing of tlie Summons for Directions (and separately fiaom Company Discovery) was entirely 18] 024 In the Arbiter of Nord Angha Ethrcmion, Inc- FSD 235 of 201 7 (IKj) Rulirig ori CosT of Drscovery Applicahori 20 fortuitous. It did not change the character of the issue as simply one of several issues whicli was sought to be addressed tlirougli that Summons.
My primary findings, most rinusually, do not resolve the issues directly addressed in the paities' submissions. They not only confirm a provisional view I had expressed, admittedly withorit any articulated reasoning, but more importantly adopt the basic position or result contended for in correspondence by tlie Dissenters tlirougli the Mourant letter dated September 17, 2018. More rinusually still, but not inconsistent with tlie all too often prignacious approacli to tliese proceedings on both sides, the Dissenters only very belatedly formally advanced tlie rinlikely argument tliat tliey liad won the second hearing and sliorild be granted tlieir costs.
IncaseImaybewrongindecidingtl'iecaseonabasiswhichneitliersidehasexpressly contended for (save tlie Dissenters for the limited prirposes of the costs of the present application), I will set out below tlie alternative findings I worild have made had I been reqriired to find tliat tlie Dissenter Discovery issue was a discrete one for costs purposes, contrary to my primary findings wliicli I liave set orit above. I will tlien deal summarily with tlie Dissenters' cross-application for costs and, more fully, tlie costs ofthe present costs application. Alternative Findings: did the first hearing (and the costs incurred in relation thereto) generate a costs qualifying "result" in favour of the Company or the Dissenters?
In my judgment it is impossible to fairly construe the first hearing in isolation from the period immediately preceding tlie second liearing as generating or culminating in an adjudication of the Dissenter Discovery issue in favour of one side or the other. The respective arguments on this issue fall to be analysed according to their terms.
Tlie Company only dared to suggest it acliieved success at the initial liearing to tlie extent tliat it persuaded the Corirt at the liearing in oral argument to postpone the decision until after tlie Couit of Appeal had decided tlie issue. The rmderlying premise for tlie postponement argument was that the appellate decision in Re Q'bmar was likely to have a decisive impact on the way this Corut resolved the issue. Tlie soundness of this tliesis was confirmed wlien tlie Dissenters conceded tliat Dissenter Discovery should take place a'Jter tlie Couit of Appeal ruled that tlie staiting assumption sliould be as a matter of legal principle that all parties to civil litigation should give discovery. In effect, the issue whicli formed tlie centre of argun'ient on Dissenter Discovery at tlie first hearing was not decided by me on the basis of tliose arguments. It was, in effect, decided by tlie Corut of Appeal in a separate and unrelated case.
Tlie Company is nonetheless correct to contend that the point was ultimately resolved in its favorir. Tlie Dissenters did elect to be bound by the Corirt of Appeal's decision (although they liad liti:le real option of doing anytliing else). But the costs analysis necessarily entails a practical and technical analysis of whetlier tlie costs claimed were incurred in acliieving tlie result in tlie receiving party's favorir. Or, to translate tliis factual enqriiry into legal terms, the staiting assumption being tliat costs shorild follow 181024 hl the Arlatter of Nord Anglia Educmion, Inc- FSD 235 of 201 7 (IKJ) j?ir/iiig ori Cost of Disco*iery Applicmiori 2] the event, it is necessaiy to determine whether"it appears to the Court that in the circumstances of the case, some other order should be made as to the vihole or any part of the costs" (Order 62 rule 4(5)). A closely related rule in this regard is Order 62 rule 11(2)wliich provides: "(2) Fhere it appears to the Court in any proceedings that anything has been done or that any oinission has been made improperly, vmreasonably or negligently by or on behalf of an)i party, the Court may order that the costs of that party in respect of the act or oinimion, as the case niay be, 877(177 not be allowed and that any costs occasioried by it to any other party shall be paid by him to that other party."
TlieApplebyDissentersareinmyjudgi'nentclearlyalsoriglittopointouttliattlieissue was not formally adjudicated by this Court, but tliat is not by itself enorigli to defeat the Company's costs claim. Tl'ie Company won tlie point, by wliatever means, and prima facie (assuming for present prirposes that Dissenter Discovery costs shorild be dealt witli as a discrete issue) tliose costs worild follow the event. The real controversy centres on this question: are there grounds for contending tliat tlie Company' costs shorild be disallowed? The relevant legal question is wlietlier something rmreasonable has been done by the Company to displace tlie staiting assumption that the costs in relation to an application wliicl'i it has won sliorild follow the event.
In tl'ie somewhat unusual factual matrix of tlie present case, the critical factual inqriiry is wliether it was unreasonable for the Company to carise tlie paities to prepare for and argue tlie Dissenter Discovery issue only to invite the Corirt to adjourn tlie hearing because the issue would likely be resolved by a pending Couit of Appeal decision. This qriestion falls to be answered bearing in mind wliat both sides are agreed is the governing costs principle: "The overriding objective of this Order is that a successfid party to any proceedingshould recover from the opposing part)i the reasonable costs iricurred by him in conducting that proceeding in an economical, expeditious and just manner, vmless otherwise ordered by the Court" (Order 62 rule 4(2)).
The critical submission advanced by tlie Dissenters in tliis regard was the following: "25.2. Moreover, as the Company acknowledged might transpire in its written submissions for the Directions Hearing, it was wastefid for the Dissenter Discoveiay imue to hctve been addressed by substantial expert evidence andfidly ventilated in detailed written and oral submimions prior to the delivery of the Qunar appeal judgment, vihich ultimately rendered all such efforts of little assistance to the Court when it came to r'i.de vtpon the scope of the Dissenter 181024 Di the Arlatter of Nord Angha Educatiori, Inc- FSD 235 of 201 7 (IKJ) Ruling ori Cost of Disco>iery Applicalrori 22 Discoveiy Order in due course. This was necessitated by the position adopted by the Coinpany, and the Dimenters should have their costs of responding to the application as they then did. In any event, for the saine reason, it was neither economical nor expeditious for the Company to hcrve taken that approach, and it would be wrong to ayiard it such costs in the circuimtances." 65. Tlie Company's Written Submissions filed in advance of tlie February 26-27, 2018 Summons for Directions hearing do support a potential finding tliat that tlie Company was aware of such a wasted costs risk but insisted on ploughing ahead with its application anyway. The Company submitted: "64 Parker I's decision in Re (:3mar is on appeal. That appeal vias heard on 13 November 2017, arid the Court of Appeal's decision is reserved. A mmvber of the Dissenters (and their attorneys) in this case are or act for respondents to thatappeai, butMaplesandCaiderisnotinvolved. TheDimentershaverefitsed the Company's request for a copy of the skeletons filed in the appeal (which vias made in an effort to ensure that this Court }IIC!S fitily appraised of the submissions made in that appeal, corisidering its direct re7.evance to this application), and have also resisted the Company's attempts to obtain those doctmients firom the CICA itself. The Court ofAppeal has also declined Maples and Calder's request to revievv the Court of Appeal subnqimions or any transcript. The Company has also not beeri able to deterinine the likely timing of the CICA's decision. At the tiine of writing, it seems vmlikeiy this Court will have the benefit of the CICA's decision prior to the hearing of this matter. It is hoped that the relevant Dissenters will provide more assistance to this Court than they hcrve to the Coinpany on this topic. Specifically, it is expected that if the Dissenters who were involved in the Qunar case viish to rely on argvtrnertts or comments made in that case, they will share the relevant materials viith the Coinpany's attorneys in good time before the directions hearing so that the Court can have the benefit offidl arg'vmient on the point.... 78 As explained above in paragraphs 63 - 64, the question of disclosure of this type of material vias specifically dealt with in the Qunar case and appeal. en dealing with a siinilar application in Re Korigzhong Corporation (Unreported FSD 112 of 201 7, 2 Februaiay 2018), Parker J conchrded that 'Of course, if the appeal in Qunar is successfid... it is open for the company to reapply for disclosure in the terms souglit. In the circ'boanstances, it is potentiallv wastefid of resources to argue this point before the Court ofAppeal's decision in Ounar is released, and so one option is.for this part o.f Nord's application.for directions to be adiourned with iibertv to revive it once the Court of 4ppeal decision is available." [Emphasis added] The Summons for Directions was issued on November 7, 2017, roughly a week before tlie Re Qvmar appeal was lieard by tlie Couit of Appeal on November 13, 2017. The expeit Affidavit of Daniel Ryan in suppoit of tlie Company's application for Dissenter Discovery was sworn on Jamiary 30, 2018. The Company's Written Submissions filed on or about February 21, 2018 disclosed unsuccessful effoits to asceitain when the appellate judgment worild be delivered and acl<nowledged the risk of a waste of costs if this Cotut determined the issue before the Couit of Appeal. Exposed by Morirant's September 17 criticism for having incurred these costs despite being aware of a risk that they might be wasted, tlie Company corild only find a fig leaf to cover its nakedness: "25.2 When the Directions Hearing vias listed the Company had no visibility as to when the Court of Appeal decision in Re Qunar might be delivered. This is in contrast viith certain of the Dimenters, who were also dissenters in Re (;3oqar. At the Directions Hearing the Dissenters contended for an extremely aggressive tiinetabie creating obvious logistical challenges with a deferred Dissenter Discoveiy application. It was never suggested by the Dissenters prior to the Directions Hearing that the Dimenter Discoveiay application should be held over, and the suggestion that the Court's ruling in this regard should be deferred pending the Court of Appeal's decision in Re Qunar was opposed by the Campbells Dissenters at the Directions Hearing, for the very reason that it was uncertain as to when this decision might be delivered."
The suggestion tliat the Dissenters had access to more information about when tlie Couit of Appeal judginent in Re Qunar worild be handed down lacks substance on its face. Unless a dra'ft judgment has been circulated, paities typically l'iave no idea as to when a judgi'nent will be handed down. Judges working on reserved judgments are rarely keen to respond to enqriiries as to wlien a draft judgment is likely to be finalised. Tlie fact tliat tlie Dissenters did not agree to postpone the hearing on February 27, 2018 is not to any dispositive extent an answer to tlie criticism that the Company pursued an application relating to a discrete issue whicl'i corild from the oritset have been deferred and then, after the relevant costs had been incurred, invited tlie Court to defer deciding the issue.
Tlie existing state of the law (upon wliicli the Appleby Dissenters relied for other prirposes) is in my judgi'nent relevant only to the following extent. There was no precedent for aritomatic Dissenter Discovery in relation to section 238 petitions under Cayman Islands law. Tlie Company bore the burden of persuading this Corut to establish wliat amounted to new law wliile the Dissenters soright to persuade the Corirt to follow past practice, in paiticular tlie decisions of my sister and brother judges on tlie lSSLle.
In these circumstances, it was or origlit to have been obvioris to the Company and its legal advisers ripon learning (on a date uncertain) that the Corut of Appeal judgment on Dissenter Discovery in Re Qunar liad been reserved on November 13, 2017, that this judgment would likely be determinative of the qriestion of principle tliis Corut liad to decide. It also was or ought to have been obvious that the Court of Appeal deliver its judgment witliin the next three to six months i.e. between mid-February, 2018 and mid-May,
It is a matter of record that reserved appellate judgments in this jurisdiction are generally now delivered witliin this approximate timeframe, but I accept 18] 024 In Lhe A4atter of Nord Angrio Edyrcatiori, Inc- FSD 235 of 201 7 (JKJ) Rxding ori Cost of Discosiery Applrcation there can never be any rigidity to sucli timelines. Nonetlieless tlie Qunar appeal involved only a one-day liearing, wliicli worild not on its face suggest tlie need for an exceptionally lengthy delivery time.
In my judgment, however, it is only fair to assume tliat tliere was no reasonable expectation of the appellate judginent being delivered within any specific period of time. On this basis it is difficult to see why the wait and see option was more compelling at the hearing of the Summons for Directions rather than well before. No colierent reason lias been proffered as to wliy tlie option of waiting for the judgment was only advanced at such a late stage.
Wlien did the Company and/or its legal advisers learn about the fact that the Court of Appeal had lieard that appeal? I make no specific finding on this issue at this stage. It is true tliat neither tlie Company nor tlieir legal advisers were involved in Re Qvmar, but in my judgment it would be surprising, in tlie comparatively small local legal community involved in section 238 petitions, if tlie Company only belated learned of such a legally and commercially significant appellate case. In responding to the Morirant attack on tlie wasted costs issue, the Company has not advanced any 'defence' based on surprise or late notice. It is rmarguably clear that the Company knew of tlie pending judginent before it prepared its Written Submissions in advance of the hearing of the Summons for Directions. Indeed, tlie Company admits (in paragraph 64 of those Submissions, wliicli were finalised on or about February 21) to having made unsuccessful prior effoits to obtain copies of tlie skeleton arguments deployed by tlie Dissenters in tlie appeal, both from the Dissenters and tlie Corirt of Appeal.
InfairnessitisadmittedlyalsoclearthattheCompany'sassessmentofwhentopursue the Dissenter Discovery application was complicated by the fact that in an ideal world both Company and Dissenter Discovery (if ordered) worild run on parallel tracks. There was tlierefore an inlierent tension, which tlie Dissenters may well liave soright to tactically exploit, between the need to expeditiously advance the Company Discovery portions ofthe Summons for Directions and tlie need to expeditiously and economically advance the Dissenter Discovery application. Tliis is why, as I elaborate ripon further below, the Company's conduct is only subject to serioris criticism on the hypothesis that tlie Dissenter Discovery application was from the outset a freestanding application cleanly detached from the Company Discovery application.
On the assumption tliat the Dissenter Discovery application was a discrete one, I can see no good reason why tlie application to await tlie Corirt of Appeal decision in Re Qunar corild not have been made before the Dissenter Discovery application was prepared and lieard on February 26-27, 2018. By that date, it was still not known when the appellate judgment worild be delivered. It was in fact delivered rorighly six weeks later. I indicated in my Paitial Ruling dated March 6, 2018 (delivered on March 19) tliat I would postpone ruling on tlie Dissenter Discovery application until March 30, 2018 and no longer unless otlierwise agreed. The parties sensibly agreed after March 30, 181024 in the Ivbtter of Nord Ang(in Educmiori, Inc- FSD 235 of 2017 (IKJ) Ryding ori Cost of Discosiery Application 25 2018 that I shorild await the Corirt of Appeal decision, whicli by early April was known to be imminent.
In my judgment, and again only on the hypothesis tliat tlie issue was a discrete one, the obligation to prirsue tlie Dissenter Discovery application in an economical manner lay primarily witli the Company as tlie party initiating the application. I worild on tliis basis find that compliance with Order 62 rule 4(2) reqriired the Company, once it became aware that a substantial poition of tlie Dissenter Discovery issue was likely to be decided in a manner wliich bormd this Corirt by the Court of Appeal in Re Qunar, to at least propose deferring preparing for tlie application on those grounds. Had the Dissenters insisted that the Company pursue tlie matter before tlie Couit of Appeal liad ruled, the timing disprite corild liave been referred to this Corut to resolve long before the Summons for Directions was actually lieard. Even on tlie hypotliesis tliat the Dissenter discovery application was a discrete one, I worild liave liad considerable sympathy for the difficult position the Company's legal advisers rmdoubtedly forind themselves in.
On balance, liowever, I worild still have found that the Company acted unreasonably in incurring costs on preparing for tlie Dissenter Discovery issue to be determined by this Couit once it became aware tliat a Couit of Appeal decision on the same issue was pending and might be delivered within a reasonably proximate time.
If I was reqriired to award these costs on the basis that the issue was a discrete one, contrary to my primary findings set orit above, I worild have formd tliat the Company was entitled to its costs in principle (as regards tlie first hearing). However, I worild have disallowed the Company's costs from tlie date (not yet asceitained) that it or its legal advisers became aware that tlie Court of Appeal liad reserved judginent on November 13, 2018 in an appeal dealing with the Dissenter Discovery issue. These costs would be disallowed to the following limited extent. Rather tlian awarding the Company those costs in any event because it succeeded on the discrete issue, I would order tliat such costs sliorild be in the carise. 181024 hi tlie Arlatter of Word Anglio Educmrori, hic- FSD 235 of 201 7 (IKJ) Ruling on Cost of Drscosiery Applicotiori 26 necessarily deprive tlie Court of the ability to make a fiutlier assessment of tlie reasonableness of tlie parties' conduct to the end of tlie proceedings wlien the overall winner is l<nown. In obvious cases of rmreasonable conduct by paity A, the Couit may of course award costs on terms that tliey are paity B's costs in the carise.
As the Company rightly pointed out in tlie present case, the Dissenters corild have complained about the risk of wasted costs flowing from dealing with the Dissenter Discovery ratlier tlian waiting to see if tlie Couit of Appeal worild decide the issue, but elected not to do so. In tl'ie context of n'iy primaiy findings tliat the paities had agreed and did not resile from liaving the Dissenter Discovery costs being bundled togetlier with tlie otlier costs, the Company's conduct was not sufficiently rinreasonable as to justify overriding the agreed costs order. On the contrary, the Company's desire to move forward witli tlie Summons for Directions as a wliole was entirely rinderstandable. Witli tlie date of tlie Re Quriar judgment uncertain and the ideal directions envisaging mutual discovery and an integrated timetable, the choice between proceeding full-steam aliead and waiting to see was a bedevilling one. In any event, it does not lie in tlie Dissenters' moutlis to suggest that the Company acted rinreasonably in this regard wl'ien tliey tlien'iselves failed to propose an abbreviated approach.
Where one paity does in fact elect to make a freestanding interlocutory application in a relation to wliat for costs prirposes is a discrete issue and the Corirt is likely to award costs to the successful paity in any event, in my judgment the level of scrutiny is materially different. Firstly, it is an application which the applicant is compelling his opponent to defend. Secondly, Order 62 rule 4(2) expressly makes the costs follow the event principle subject to the successful paity conducting tlie relevant proceeding "in an economical, expeditious and fitst manner". Tliirdly and conseqrientially, it is essential tliat tlie Couit assess the reasonableness of tlie conduct of tlie successful party before awarding costs in tlieir favorir in any event. Becarise sucli an award is a definitive finding tliat tlie paity who lias won tlie interlocutory application is entitled to that particular portion of their overall costs rmder Order 62 rule 4(2). It is probably beyond tlie jurisdiction of a taxing master to disallow altogetlier tlie costs of an application which the trial judge lias definitively awarded to one of tlie parties. 79. For tliese reasons, if tlie Dissenter Costs issue as regards tlie first hearing liad to be treated as a discrete issue which tlie Company won, I would have still ordered the costs to be in the cause in liglit of tlie Company's rmreasonable conduct of the application on tliat assumed factual basis. Alternative Findings: did the second hearing (and the costs incurred in relation thereto) generate a costs qualifying "result" in favour of the Company or the Dissenters? ,;; :,c>2 ::"->l:'*'l'I:" I woril9 fijn9 th.at thej Co5npanmy achieve! yi!istan,tial sri.cces.s ovjejrall in Helation tdo, thei what was set out in its draft Order does not extinguish tlie fact that, in broad brush terms, it was tlie successful paity overall. I would liave awarded tlie Company its costs of the second hearing on tlie standard basis to be taxed if not agreed. Findings: the Dissenters' application for the costs of Dissenter Discovery
I summarily dismiss as wholly speculative and ritterly misconceived tlie Dissenters' application for tlieir costs as regards the first hearing. On superficial analysis, the argument liolds togetlier but on closer scnitiny it falls apart. It is based on the false premise that, based 011 tlie arguments and the legal position in this Corirt before tlie Corirt of Appeal decided Re Qunar, tlie Dissenter Discovery issue would l'iave been resolved in their favour. What might have happened had I decided the issue based on the arguments at the first hearing is not only a matter of speculation but is also entirely beside the point. I decided to postpone immediately disposing of tlie issue and this resulted in the Dissenters accepting that tliey were reqriired to give discovery in light of a judginent wliidi was binding on tliis Corut. The issue was ultimately resolved in the Company's favour by concession.
As far as the second liearing is concerned, the application falls shoit of being abusive, but only marginally so. Tlie Dissenters had some measure of success and were justified in contesting tlie application, but tlie Company clearly succeeded overall.
Fuither and in any event, the application as regards both hearings must be rejected because tlie parties agreed tliat the costs of Dissenter Discovery sliould be treated as costs in tlie carise. The Dissenters advanced no valid grounds for being released from that agreement and no coherent explanation as to wliy tlie character of the application shorild be viewed as liaving fundamentally changed after tlie February 27, 2018 hearing. Findings: costs of the present costs application
OnSeptemberl7,2018,Mourantofferedtosettlethecostsapplicationonthebasisthat costs shorild be in tlie carise in line witli the"strortg provisiona7 views" I expressed in Corirt on July 27, 2018. Tlie Appleby Dissenters relied 011 tliat offer and sought tlieir costs of the present costs application on the indemnity basis in the event that the Company failed to obtain its costs. 85. Prima facie, tlie Appleby Dissenters are entitled to their costs because they were coi'npelled by the Company to defend tlie present application despite having made what has now been proven to be a reasonable settlement offer. As noted above, and implicitly relied upon for tlie prirposes of my alternative findings, Order 62 rule 11 provides,alf ',.',.r.,.k. ,':3 :i.r f'2 rS "(2) ere it appears to the Court in any proceedings that anything has beerr done or that any oinissjon has been made improperly, vmreasonabiy or negligently by or on beha7f of any party, the Court may order that the costs of that party in respect of the act or omission, as the case may be, shall not be allowed and that any costs occasioned by it to any other party shall be paid by him to that other party."
In my judgment the Appleby Dissenters acted sufficiently unreasonably in advancing superficially colierent )ut substantively rinmeritorioris costs arguments to justify depriving tliem of tlieir costs of tlie costs application in any event. Had they merely contended for costs in tlie carise tliey would liave been entitled to their costs, and probably on the indemnity basis. Tlieir obtuse stance made it more difficult ratlier than easier for me to deal witli tlie present application justly. In my judginent they shorild be able to recover tliese costs only if tliey acliieve success overall.
In tlie exercise of my discretion, I find tliat tlie appropriate award in all tlie circumstances of the present case is that tlie costs of tlie present costs application should be the Appleby Dissenters' costs in the cause. Summary
The Company's application for the costs of tl'ie Dissenter Discovery application is refused. The Dissenters' cross-application for their costs, whicli was misconceived, is also refused. Tlie costs of that application shall be in the cause as was agreed at the hearing of the Sui'i'u'iions for Directions. It is not open to tlie parties to re-characterise an issue as a discrete one after tlie issue has been adjudicated. 89. The costs of the present costs application shall be the Appleby Dissenters' costs in the CaLlSe. THE HON. JUSTICE IAN RC KAWALEY JUDGE OF THE GRAND COURT 181024 tri the klatter of Word Ariglia Education, Inc- FSD 235 of 20} 7 (IKJ) Rydirig ori Cost of Discosiery ilpplicotrori 29