CRF I Limited v Banco Nacional De Cuba & Anor

[2025] EWHC 3279 (Comm) Case No: CL-2020-000092

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES KING’S BENCH DIVISION

COMMERCIAL COURT Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL Date: Friday, 12 December 2025 Before: Mr Justice Andrew Baker - - - - - - - - - - - - - - - - - - - - - Between:

CRF I LIMITED - and - (1) BANCO NACIONAL DE CUBA (2) THE REPUBLIC OF CUBA Claimant Defendants - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Mr J Khurshid KC (instructed by Stephenson Harwood LLP) for the Claimant Mr A Dudnikov KC (instructed by PCB Byrne LLP) for the Defendants Hearing date: 12/12/2025 - - - - - - - - - - - - - - - - - - - - - Rulings (Approved Transcript)

MR JUSTICE ANDREW BAKER 1. I regret to say, in line with the relatively firm provisional view I had formed on the papers Friday, 12 December 2025 that will have come through in the questions I asked of counsel, that I think it is considerably unfortunate that this point has been taken. The objection to this application narrows down, as Mr Dudnikov KC acknowledged, to the proposition that because para.10 of the order of Cockerill J (as she was then) in April 2023 did not state explicitly that the consequences, of which the court would necessarily be seised, of whatever ruling it came to as to what was called ‘mechanism’, would include a liberty to apply for a further payment on account, that means somehow this application cannot be made. In my view, that was never an arguable proposition and is a point that should not have been raised.

2. Although the application may have been put as a request to vary para.7 of Cockerill J’s order, it seems to me that no variation of para.7 is required. Para.7 did exactly what it said on the tin and exactly what Cockerill J said she was doing, which was, at that date, ordering an interim payment in an amount of £575,000 to be made by 2 May 2023. There is no reason to vary that order, it is exactly the initial payment on account the court intended to order.

3. However, as was always contemplated by the parties, plainly intended and contemplated by Cockerill J (Transcript at 332A-C), and, as Mr Dudnikov accepted, in reality, implicit in para.10, sorting out the mechanism by which Cuba was to be paid a payment on account would bring with it procedurally the legitimacy in principle of CRF saying that if they have to fund that payment directly, rather than the court in one form or other indirectly requiring BNC to fund it, then the question of a further payment on account in CRF’s favour should be considered. That is what everybody expected, because it was, and was acknowledged to be, a by-product of the fact that, on any view, CRF’s costs liability to Cuba had been brought into account in calculating the low payment on account figure sought, and endorsed by Cockerill J “for the moment” (as she put it), as an initial payment to be made by BNC to CRF, prior to the ‘mechanism’ debate being resolved.

4. It is a matter of regret to the court on this occasion, therefore, that entitlement in principle to a further payment on account, as between CRF and BNC, was not seen and agreed to be an inevitable and legitimate consequence, subject to considering the points that would be made about the amount, of BNC and Cuba succeeding, if they did succeed, as in due course they did in front of Butcher J in October of this year, on the argument that Cuba should be paid directly any payment on account by CRF.

5. I can see it may well be that, the Application Notice in that regard having only been issued shortly before that hearing to formalise the consequential application, and there being a fair number of points of quantum to be considered, there was not then time at that same hearing to work those consequences through. But, with respect to the defendants and those advising them, I take the view that the reasonable and proper response should have been an acknowledgement that, of course, in the light of how matters proceeded in front of Cockerill J, if they succeeded, as they did, ultimately, on the mechanism or, as it was sometimes referred to, the Sanderson order point, concerning how Cuba was to be paid its payment on account, then the question of a further payment on account arose and needed to be dealt with, and there would therefore need to be a further hearing to sort out the amount.

6. All that BNC has done by instead taking as a primary position an objection that the application cannot even be considered by the court is to raise the temperature between the parties, and no doubt aggravate the costs of this further hearing, rather than it being a hearing to sort out the relatively technical question of how best to give effect to what is plainly the change of circumstance since Cockerill J dealt with the matter, viz. that the mechanism has now been resolved and has been resolved in such a way that makes it obviously fair and just for CRF to be entitled, at least, to have the question answered, how much more should be paid to it on account, bearing in mind the manner and extent to which it took into account, in putting forward the £575,000 that was ordered originally, its potential future liability to pay Cuba being funded by BNC rather than by itself.

LATER 7. I am very grateful for the assistance that counsel have been able to give in relation to a range of different ways of looking at the figures. Although in the course of those submissions, and the many questions that I have asked as a result of the submissions being made, quite a large number of different permutations have arisen, at least for possible discussion, it seems to me that we have ultimately alighted upon a key, relatively narrow but important point of difference between the parties. It arises in this way: a. Whether at the time (in April 2023), or now, and irrespective of the mechanism debate, in relation to CRF’s costs liability to Cuba, CRF calculates as follows an initial estimate of what it might recover, if it does reasonably satisfactorily on detailed assessment, as a final entitlement: i. in round figures, £2 million of total assessable costs; ii. (with no particular objection to this in the present context as an estimate) c. £300,000 likely to be held referable to bribery allegations in respect of which costs will be assessed on the indemnity basis, at 85%, say, as an initial rule of thumb for final recovery, that is £255,000; iii. as regards the balance, say £1.7m or so, make an allowance for CRF’s own costs of the Cuba-specific issues, bringing that down to something more like £1.4 million, of which, on a detailed assessment on a standard basis,

if one envisaged final recovery at something like 75%, that is a final recovery of something like £1.05m; iv. there was previously a reference to a proportionately very small amount of costs in respect of a default judgment, which it is common ground I should no longer include in any approximations; v. that brings CRF to a working suggested figure that it might hope to recover after detailed assessment of something just over £1.3m.

8. So far, so good, and not so contentious, although for the defendants, Mr Dudnikov KC puts down an important marker that the allowance at c.20% of the costs not related to the bribery allegations, as an estimate of the proportion of the costs that it might be said were referable to the Cuba-specific issues, might turn out to be on the low side, such that that element of calculation will turn out to be on the high side in terms of CRF’s true, realistic end recovery. Subject to that point, which potentially has a material impact, as I say, a figure estimated in that way of the order of just over £1.3m as a possible, not unrealistic, final recovery is not so contentious.

9. Then, at the time, there was a deduction from that which, on any view, one would now say would not have been made, with knowledge of the ruling that was later to come on mechanism. If we are in the territory, as in my judgment we are, of working through what is the fair and just consequence of the ruling on mechanism having finally now gone against CRF, such that it is appropriate to look again at how much has been ordered to be paid on account and so order a further payment to be made, that deduction should be reversed. Thus, one simply has that £1.3m-odd figure, and we arrive at the narrow but important issue.

10. The issue is that at the time CRF sought only, on a conservative basis, 60% of that figure (after having first made the Cuba-related deduction that should now not be made). As we have explored, that is different in concept to ordering a payment on account at 60%, which, not that there is, on the authorities, a rule of thumb, nonetheless is sufficiently often applied in practice that it sometimes still has the feel of a rule of thumb, for payment on account. That not-quite rule of thumb, were 60% applied, would 60% of the 100% total in a costs schedule, not 60% of a figure that has already been discounted from the total costs incurred to allow for the expectation that something below 100% would be recovered on detailed assessment.

11. It is said on behalf of CRF that any such conservatism in the amount to be awarded on account should now be discarded and it should instead be therefore awarded what is effectively the £1.3m figure to which I have referred, less a deduction only of an amount generated by saying that, for payment on account purposes, 75% rather than 85% of the costs that will be assessed on the indemnity basis should be used, and 65% rather than 75% of the costs that are to be assessed on the standard basis.

12. In my judgment, for the reasons indicated by Mr Dudnikov KC – which are in substance two, but they are each important – a substantial degree of conservatism is still required. Those two reasons are, firstly, the point to which I have alluded already, that the 20% allowance that has been made in relation to Cuba-specific issues could turn out to be an underestimate of CRF’s issues-based irrecoverable costs. The 20% figure there now is said to be justified because the headline figure used by Butcher J when fixing a payment on account in favour of Cuba by way of first estimation of what might prove to be the part of Cuba’s total costs bill that it might be able to say was referable to the Cuba-specific issues, a figure of £500,000, happened to be 19%, so round it up in favour of the defendants, it is said, and call it 20% for these purposes of the total costs on CRF’s side too.

13. It is, however, clear to me that Butcher J arrived at that figure in a heavily estimated and conservative fashion because in that context he had nothing like the material by reference to which to make a sensibly informed, real estimate. He therefore necessarily had to opt for the minimum figure that felt at least within a range of realistic figures, because he had to make every assumption there in favour of CRF that the amount might be a lot lower than Cuba wished to say. Butcher J in terms recognised in his judgment that it could well turn out to be materially higher than that.

14. The second reason is the factor that has arisen more recently, which is that, at least as things stand – and Mr Khurshid KC’s indications that this is hopefully only a temporary problem notwithstanding – CRF is, on its own admission, not a performing party on its costs obligations, and there are real difficulties.

15. In all the circumstances, my preferred approach is not to complicate the matter as it was slightly complicated before by a cumulative process of reducing from estimated costs at 100% to get to a first guesstimate of recoverability after assessment and then to apply a percentage to that, but rather to take what CRF now puts forward in effect as its total claimable costs but apply to that, bearing in mind the need for conservatism, a percentage that, for the purposes of fixing an aggregate total that should have been paid on account, will be still a reasonable amount to have been paid on account, which is ultimately the only test, but at, as I say, the conservative end of that scale.

16. Going back then to the arithmetic, I would apply, for the purposes of a payment on account, 60% of the £300,000 said to be referable to the bribery allegations and 55% of the £1.41m said to be referable to the balance of the case, net of the allowance, that may be on the low side, for Cuba-specific issues. I have made the observation during the course of the argument about coincidences. It is then coincidence that that comes out not very far at all off what, as it happens, was originally proposed in the Application Notice at least by way of a primary case, albeit that was put forward, as we managed to work our way through, on an incorrect basis in which it was suggested that £375,000 had somehow been deducted from an amount otherwise payable on account. I get that total, subject to being corrected by counsel, to be £955,500, deducting £575,000 from which (being the original payment on account) would give a further payment on account to be ordered now, subject to questions of set-off and mechanism, of, it would seem, £380,500. I prefer not to leave a hanging £500 in a sum of that order of magnitude. That creates an appearance of precision that does not exist in the circumstances. The further payment on account therefore will be, in principle, £380,000. [Note: In the light of Mr Khurshid KC’s indication during the hearing of CRF’s position in relation to questions of set-off and mechanism, including payment into court, it was left to the parties to discuss and agree a wording, so far as they could, with any remaining issue to be resolved by the court on paper as part of finalising a written Order.]

LATER 17. As it seems to me, there may have been some aggravation of the costs, i.e. increase in the overall amount of the costs of the application, generated by CRF putting forward a number of different ways of calculating matters and looking at matters. However, as it also seems to me, in circumstances where if they were correct in principle, as I held relatively robustly that they were, that the matter was legitimately and reasonably up for reconsideration, it was not unreasonable for them to raise a range of different possible ways of looking at the matter, which were all ultimately working with broadly the same figures that had always been in play between the parties, and just trying to identify appropriate or best, fair ways of using them to fix a payment on account.

18. It so happens that my preferred way of doing an arithmetic to come to a reasonable amount has ended up matching relatively closely a figure that was in the Application Notice as a primary way of looking at things, even though that may have been slightly muddled thinking, but I do not consider it would be appropriate to reduce, as a matter of principle, the recoverability of costs in the circumstances of this further payment application because of the fact that it can be said that, on some of the ways of looking at the figures, CRF proposed substantially higher figures than were ultimately ordered.

19. I would have taken a different view if the matter had been dealt with by way of acceptance of the principle that there should be, other things being equal, a further payment on account, and sensible offers had been made, but BNC chose to fight the application root and branch and, in my judgment, it fairly should pay in full, subject to assessment, CRF’s costs of the application.

LATER 20. I do not accept the submission that guideline rates in any general sense are somewhat out of date. They are, to the contrary, regularly updated. They are recognised to be guideline rates for what should be a reasonable recovery, and those setting the guideline rates are well aware that often parties are willing to agree to pay their own solicitors at rates above that, even in circumstances where it could not justifiably be said that the particular matter for which those hourly rates were being charged justified a very substantial uplift. That is this case. I should bear in mind, therefore, that on a detailed assessment the strong likelihood would be that even if some uplift were allowed for the general importance and complexity of the matter, the hourly rates claimed would be very likely discounted to a material extent.

21. In my judgment, the appropriate recovery, taking that factor into account and summarily assessing the costs schedule total, which is £72,000-odd, is that CRF should be entitled to recover £55,000. So, that costs schedule is summarily assessed at £55,000.

LATER 22. My approach is this: the application was not conceded. I can see that there was a positive reason for its not being contested heavily, and certainly when it came to the hearing, namely an expectation that the court was likely to see this as a case in which, if the further payment on account was ordered in favour of CRF – as in the event it was –there should be mutuality in relation to interest.

23. It is difficult, therefore, to resist the inference that CRF was consciously hedging its bets by not conceding the obvious soundness of Cuba’s application, so that, if in fact its application failed, it would then have been in a position through Mr Khurshid KC at least to attempt resistance because it would then be in its interest to do so. Whereas, having succeeded on its own application, it was perhaps somewhat more nuanced as to whether it really wanted to succeed on, and therefore resist, the interest application, rather than simply stand on the obvious need for mutuality, which is ultimately what Mr Khurshid KC did.

24. In those circumstances, the application had to be put together properly. It had to be prepared. Those involved, in particular Mr Dudnikov KC, but also those instructing him, had to spend the time advising on it and working it through and contemplating what the arguments would be. So there should be a costs order.

25. The costs claimed are £24,000. It seems to me the appropriate approach is to reduce that by £8,500 to reflect what I consider to be the inappropriate notional split of Mr Dudnikov KC’s brief fee that was made across the two costs schedules, and by a further £2,000 to reflect a real concern that I have, echoing Mr Khurshid KC’s criticisms, that at least the level of ‘attendances on’ fees are likely to reflect a failure sufficiently fully to make sure that this is a costs schedule properly restricted only to costs genuinely and proportionately incurred in respect of this application. That would get me to a revised claim figure of £13,500, which, in the context of these proceedings, is such a small figure that, for the purposes of fixing a summary assessment recovery, it seems to me appropriate to envisage that, having made the adjustment I have already made to, in particular, the solicitors’ time costs, a very high percentage of that would be likely to be recovered even on a standard basis assessment. I will therefore summarily assess the recoverable costs at £11,500. ______ 11