BL-2017-000665 - [2025] EWHC 2909 (Ch)

The costs will be subject to detailed assessment and the Bank seeks an interim payment of £80m (which is approximately 72% of the £110,524,169.99 claimed for present purposes) pursuant to CPR 44.2(8). An order for an interim payment of £36.67 million is not opposed in principle by Mr Bogolyubov so long as it is paid within 14 days to his solicitors, Enyo Law LLP (“Enyo”), to be held by them pending the outcome of the applications for permission to appeal (and if granted, the appeal). It is only opposed by Mr Kolomoisky on the basis that to make an interim payment would not be in keeping with his application for a stay of execution. In his written argument for the purposes of this hearing, Mr Bogolyubov made a similar point to the effect that if he were to have to pay more than £36.67 million on account, his appeal would be stifled.

In my view the question of whether or not to grant a stay of execution is different from the question of whether or not to make an interim order, even taking account of the fact that the means of the parties is one of the factors which goes into the balance when deciding whether to order an interim payment and its amount. Anyway in part, this is because the process of detailed assessment may extend beyond the time at which any stay of execution expires. The question of whether there is substance in the Individual Defendants’ submissions on this aspect of the Bank’s applications is more conveniently dealt with in that context. In short I do not think that there is any tension in the court making an interim order, even though it may then be stayed on such terms as the court considers meets the justice of the case.

In my judgment, it is right as a matter of principle to order an interim payment on account of costs in the amount of a reasonable sum, because there is no good reason not to do so (CPR 44.2(8)). I consider that that would be the case, even if I were also to grant a stay of execution pending appeal.

In making that order, the exercise of quantifying what amounts to a reasonable sum involves the making of an estimate of the likely level of recovery subject to an appropriate margin to allow for error in the estimation, per Christopher Clarke LJ in Excalibur Ventures LLC v Texas Keystone Inc [2015] EWHC 566 (Comm) (“Excalibur”) at [23]. He went on to say at [24]:

“In determining whether to order any payment and its amount, account needs to be taken of all relevant factors including the likelihood (if it can be assessed) of the claimants being awarded the costs that they seek or a lesser and if so what proportion of them; the difficulty, if any, that may be faced in recovering those costs; the likelihood of a successful appeal; the means of the parties; the imminence of any assessment; any relevant delay and whether the paying party will have any difficulty in recovery in the case of any overpayment.”

The Bank has produced a schedule, which is said to have been prepared by taking a very restrictive approach, which the Bank says means that the schedule is likely to include only a portion of its total recoverable costs of these proceedings. It is said that certain time-periods, workstreams and cost-items have been excluded wholesale from the analysis, even where the Bank’s position is that those costs would be recoverable if and when a detailed assessment is conducted. It has excluded workstreams which it considers that the Defendants may argue do not relate to the proceedings. Even on that basis the amount claimed for present purposes totals the sum I have already mentioned, viz. £110,524,169.99.

In formulating its claim the Bank relies on what Christopher Clarke LJ said in Excalibur at [27]: “comparison between the costs of both sides is often informative”, as to which it points out that Mr Kolomoisky’s costs of the claim are said to have been c.£110m. It had originally thought the amount was in the region of £124 million based on the notifications of legal fee payments given by Fieldfisher pursuant to paragraph 6a of the WFO (the total amount for which the Bank had been asked to consent by all of the Defendants was said to be just short of £200 million). The Bank submitted that it was therefore the case that Mr Kolomoisky’s costs were roughly the same as those contained in the Bank’s schedule. Mr Bogoloyubov’s costs were very much lower, totalling what its solicitors said were (at most) £27.3 million.

The Bank submitted that there were a significant number of factors which more than justified expenditure at a level of approximately the same amount as Mr Kolomoisky and which explained the significant difference between the amount it claimed and the costs incurred by Mr Bogolyubov. In particular the Bank submitted (a) that it had actually called witnesses and presented an overarching factual case, (b) that the Bank called an additional expert on Cypriot law and its experts had to make the running on all issues and respond to multiple adverse experts, (c) that the Bank was the claimant, and as such had many additional costs not incurred by the Defendants, such as producing the enormous draft trial bundle, (d) that the Bank produced a large number of additional documents for the purposes of preparing its case, such as the 177 SOFs, the 37 nominee structure charts, and the 93 structure charts in relation to the Corporate Defendants, the ED Principals, the Borrowers and the Intermediary Borrowers, and (e) that the Bank had to contend with three sets of active defendants.

As to the discrepancies with Mr Bogolyubov’s incurred costs, it identified a number of additional factors which were not also applicable to Mr Kolomoisky. He did not adduce expert valuation evidence and he relied to a large extent on Mr Kolomoisky’s forensic accounting and foreign law evidence in accordance with the limitations on the ambit of the expert evidence which he (like the Corporate Defendants) was permitted to call by the first CMC order made by Mann J on 26 June 2020. To the same effect it was said that Mr Bogolyubov adopted a large part of Mr Kolomoisky’s defence and that he “outsourced” a large part of his disclosure exercise to Mr Kolomoisky’s legal team.

In further support of Mr Bogolyubov’s submission that there was reason to doubt that the Bank will recover £80 million on a detailed assessment, it was said that the fact that the Defendants between them had sought consents for legal expenditure of a figure just short of £200 million pursuant to the terms of the WFO was not a fair reflection of Mr Bogolyubov’s position. The evidence was that the figure of £58 million attributable to his lawyers’ fees related to all his lawyers’ fees during that period, including the Tatneft and Shulman proceedings, which (as I explained in the Judgment) commenced in March 2016 and May 2017 respectively, and separate proceedings brought by the Bank under s.423 of the Insolvency Act 1986. It was said that his costs of these proceedings was £27.3 million, i.e., just over one fifth of the Bank’s identified costs.

It was also submitted that the Bank had provided insufficient evidence to enable the court to make a reasonable assessment at this stage. It was said that for this reason great caution should be exercised and the Bank should not be given the benefit of the doubt. While I accept that the court must adopt a reasonably cautious approach in accordance with Christopher Clarke LJ’s statement not just that the estimate must be reasonable, but also that there must be an appropriate margin to allow for error, I do not agree that the court has insufficient evidence to make a reasonable assessment at this stage. Any estimation in a case of this size is bound to be a broad brush exercise and a balance has to be struck between providing the court with enough information to enable a reasonable sum to be estimated, while recognising that it will not be appropriate to carry out anything approaching a detailed assessment. Doubts may well be better accommodated by increasing the margin for error than by declining to make an estimate at all.

The Bank’s application was supported by a 19 page schedule, the first part of which broke down its costs into monthly figures for profit costs (totalling £65.21 million), counsel’s fees (totalling £13.95 million) and other disbursements (totalling £31.36 million) from August 2017 to July 2025 and provided a summary description of the main workstreams for each period. The second part itemised the monthly profit costs for the five categories of Hogan Lovells fee earner for the same time periods. It also included a section which broke down counsel’s fees for the four silks and four juniors instructed by the Bank and a further section on fees for the same periods payable to FTI Consulting (Mr Thompson and Mr Bezant), KPMG, Deloitte, Transperfect, Opus and the experts on Ukrainian law, Cypriot law and real estate and aircraft valuation. The last page of the schedule gave the hourly rates charged by Hogan Lovells for the period 17 August 2017 to 16 July 2025: partners: £724 to £1028 ph, counsel: £645 to £844 ph, senior associates: £533 to 776 ph, junior associates: £380 to £648 ph and trainees, paralegals etc: £165 to £328 ph.

The principal criticism made on behalf of Mr Bogolyubov is that the hourly rates claimed are way above the guideline hourly rates, a figure which as the Court of Appeal has recently reemphasised in Saipem SPA v Petrofac Ltd [2025] EWCA Civ 1106 at [28] can only be exceeded to any material extent if a clear and compelling justification is provided. The Court of Appeal made clear this principle applies as much to estimating recoverability for an interim payment as it does to a summary assessment. As a result of previous applications in this case, I have based my calculations on rates in excess of the guideline hourly rates, but nothing like to the extent claimed even where the order has been for costs on an indemnity basis. Mr Bogolyubov also pointed to parts of the Bank’s schedule in which very considerable numbers of hours have been claimed for partners when it is said to be likely that more junior lawyers would have been appropriate. It is also said that a team of eight counsel for the trial (including four leading counsel) could not be justified.

I agree that there is some substance in the points on quantification made by the Defendants. Even having regard to the fact that I have made an order for indemnity costs, I still consider that a significant reduction in the amount claimed by the Bank is justified in order to make a proper allowance for uncertainty. The Bank says a reduction to 72% is sufficient while Mr Bogolyubov argues for one third of the amount claimed. In my view, taking into account all of the matters argued by the Defendants and the factors referred to in Excalibur at [24], 65% of the profit costs claimed is the right estimate of the likely level of recovery having applied an appropriate margin to allow for error in the estimation (i.e., £42.4 million), 70% of the amount claimed is the right figure for counsel’s fees estimated on the same basis (i.e., £10.5 million) and 75% of the amount claimed is the right amount for other disbursements also estimated on the same basis (i.e., £23.5 million). There will therefore be an order against the Defendants for an interim payment on account of costs of £76.4 million.

Since the conclusion of the Second Consequentials hearing, Mr Bogolyubov has sought an order that the payment on account be payable in 28 days rather than the standard 14 days (CPR 40.11). No specific reason is advanced apart from the substantial size of the payment. I see no good reason to give a further 14 days for payment. It seems to me that it should be payable at the same time as the judgment sum.