In a recent decision of the Bermuda Court of Appeal, the judgment inAfiniti, Ltd. v Chishti offered a nuanced costs ruling following an appeal with mixed outcomes. The case provides valuable insights into the apportionment of costs in litigation where neither party emerges as a clear winner.
The dispute centred on a Deed of Indemnity, under which the Respondent, Mr Chishti, sought to recover costs. The appeal involved three grounds advanced by the Appellant, Afiniti, and a cross-appeal by the Respondent. The Court's earlier judgment on the grounds of the appeal had earlier found:
- Ground 1: The Appellant partially succeeded in establishing that an internal determination was admissible as evidence but failed to persuade the Court that it had binding effect.
- Ground 2: The Appellant succeeded in arguing that an arbitration award was admissible and raised an arguable abuse of process issue. However, the Court declined to make any findings on abuse at this stage.
- Ground 3: The Appellant's argument for issue estoppel, relying on the Privy Council's decision in Munni Bibi v Tirloki Nath was rejected.
The Respondent's cross-appeal—seeking to strike out affidavit evidence and obtain interim relief—was dismissed in its entirety.The Respondent's cross-appeal, which included an application to strike out affidavit evidence and secure interim relief, was dismissed in its entirety.
Costs application: Two key issues
The costs ruling revolved around two main questions:
- Could the Respondent recover costs contractually under the Deed of Indemnity?
- If not, how should the Court exercise its discretion on costs?
On the first point, the Court held that the Respondent's contractual claim to costs should be determined in the Supreme Court in future proceedings, as it involved complex issues unsuitable for resolution in the context of a costs application.
This left the second question: how should costs be apportioned? Justice Kawaley, delivering the Court's judgment, emphasised proportionality, applying the principle from First Atlantic Commerce v Bank of Bermuda Ltd. This principle allows reductions in recoverable costs where a party's conduct unnecessarily increases the time or expense of litigation.
The Court's analysis
The Appellant secured substantial success overall, particularly on Grounds 1 and 2, and was awarded 70 per cent of its costs on appeal.
However, two factors led to a reduction in recoverable costs:
- Issue Estoppel (Ground 3): While arguable, this point took up considerable time and resources but ultimately failed. The Court viewed its pursuit as disproportionate.
- Abuse of Process: The argument that the lower court should have made abuse findings was dismissed as premature, further justifying a costs reduction.
By contrast, the Respondent's complete failure on the cross-appeal meant the Appellant recovered full costs for that aspect.
Takeaway
This decision serves as a reminder that full cost recovery is never a given when the outcome is anything short of an outright win. The Court's approach reinforces the importance of strategic precision—if you push too many weak points, the price may well be a proportionate cut to your costs.
Implications for future cases
This case serves as a cautionary note for practitioners: ambition must be tempered with pragmatism. While novel arguments can push the law forward, they must be weighed against the time and cost they add to proceedings.
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