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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Cancrie Investments Ltd v Haider (Costs) [2024] EWHC 2302 (Comm) (09 September 2024) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2024/2302.html Cite as: [2024] EWHC 2302 (Comm), [2024] WLR(D) 408 |
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KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
sitting as a High Court Judge
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CANCRIE INVESTMENTS LIMITED |
Claimant |
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- and - |
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MR. ZULFIQUR AL TANVEER HAIDER |
Defendant |
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Richard Slade & Partners LLP instructed for the Defendant
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Crown Copyright ©
Nigel Cooper KC:
Introduction
i) The Defendant shall pay the Claimant's costs of the Strike Out and Summary Judgment Applications to be assessed if not agreed.
ii) The Defendant shall pay the Claimant's costs of the Continuation Application to be assessed if not agreed. The costs up to the first return date before Dias J. should be reserved.
iii) The Defendant shall pay the Claimant the sum of £209,000 on account of the above costs liabilities.
i) That in relation to the Claimant's costs of the Strike Out and Summary Judgment Applications, there is no reason to depart from the usual order that costs should follow the event. The Defendant accordingly accepts that he should pay the Claimant's costs of the Strike Out and Summary Judgment Applications to be assessed if not agreed.
ii) That in principle, it is appropriate for there to be a payment on account in respect of any costs ordered to be paid to the Claimant.
i) The Defendant's entitlement to the costs of the Continuation Application and submits that the appropriate order is that the costs of that application should be reserved.
ii) The amount of the payment on account sought by the Claimant.
i) What is the appropriate costs order to make on the Continuation Application? and
ii) What is the amount of any payment on account to be made to the Claimant?
Background
i) The basis of the Strike Out Application was changed shortly before the hearing with an impact on the expert evidence relevant to the hearing (see the Judgment at paragraphs 33 to 41);
ii) The Application Notice for the Strike Out Application was widely drafted by reference to the Defence. The Defence in turn did not plead clearly the Defendant's case as to breach of natural justice (the Judgment at paragraphs 38 to 40).
iii) The Defendant had served extensive evidence in the second report from his expert, Mr. Abuwasel, on which he sought to rely for the purposes of the Continuation Application but for which he did not have permission (the Judgment at paragraphs 42 to 44).
iv) The Summary Judgment Application was issued late and only shortly before the hearing (the Judgment at paragraphs 47 to 48).
v) The issues before me on the Continuation Application were (i) whether the Claimant had a good arguable case and (ii) whether there had been a failure by the Claimant to make full and frank disclosure on the original without notice application for the Worldwide Freezing Order. However, until about a week before the hearing, the Defendant also maintained that there was no real risk of dissipation which justified the continuation of the Worldwide Freezing Order. However, on 01 May 2024, the Defendant wrote to the Claimant conceding that there was a real risk of dissipation of his assets. By this time, the evidence addressing whether there was a real risk of dissipation had been completed.
What is the appropriate costs order to make on the Continuation Application?
"Where an interim injunction is granted the court will normally reserve the costs of the application until determination of the substantive issue (Desquenne). However, the court's hands are not tied and if special factors are present an order for costs may be made and those costs summarily assessed (Picnic at Ascot)."
"52. It seems to me that this is enough to show that the decision in Picnic at Ascot [establishing the normal rule for interim injunctions] is not wholly apposite [in] claims for freezing orders where the balance of convenience is not an issue, and where in relation to the merits of the case the court has regard to the question of whether there is a good arguable case on behalf of the claimants or not. That is sufficient for the court to determine whether a freezing order should be made, and even if at the subsequent trial it turns out that the claims fail on the basis of the evidence due to that trial, it does not at all follow that this means that the court was wrong to find that there was a good arguable case. On the contrary, those two findings are wholly consistent with each other, or maybe wholly consistent with each other. Nor is there any reference to the balance of convenience. The question is whether it is just and convenient to make an order.
53. Therefore, I agree with Mr Lord that the regime for the making of freezing orders is different to the general position where interim injunctions are sought based upon balance of convenience and holding the ring pending the trial. There are, obviously, overlapping features, holding the ring being one of them. The purpose of a freezing injunction is to avoid a successful claimant being unable to enjoy the fruits of his success because there are no assets left against which the judgment can be enforced, but that is a different kind of holding of the ring to that which is involved in the usual interim injunction and balance of convenience type case.
54. In the circumstances, I do not consider that it is appropriate to make an order reserving the costs as I do not consider that a judge at trial is going to be in any better position than I am to adjudicate upon the costs of these applications, armed, as I am, with the information that I have…"
"11. In my judgment, the costs of the return date should be assessed now, as they were in the cases that I have just mentioned. However, the costs of the without notice application should be reserved.
12. Starting with the costs of the return date:
(1) As explained in Bravo… a freezing order does not hold the ring in the same sense as other types of interim injunction often do.
(2) It is a choice for a defendant as to whether to resist the continuance of a freezing order and cause the costs of the return date to be incurred.
(3) There are clear tests for whether a freezing order should be granted and continued, and those are different to the tests for whether the claim should succeed at trial.
(4) It follows that it is possible to tell, in most cases, who the winner and loser is on a return date in a way that it is often not on an interim injunction that truly holds the ring on an interim basis until trial.
(5) Therefore, the fact that, here, the evidence relating to good arguable case will overlap or be the same as the evidence relevant at trial to whether the claim succeeds on the facts is not, to my mind, decisive. If the defendant chooses to oppose the continuation of the freezing order, it needs to prevent the claimant demonstrating that there is a good arguable case if that is the ground of challenge it chooses to mount on the return date, and if the defendant fails, then it has failed on the return date on that element of the case irrespective of what happens at trial, and that, to my mind, is consistent with the reasoning in Bravo.
(6) By analogy, where, for example, a defendant brings an application for reverse summary judgment against the claimant and fails, it is no answer to the claimant's claim for costs that the defendant may ultimately be the successful party at trial on the balance of probabilities.
(7) Indeed, were it otherwise, a defendant would have a free shot at opposing a freezing order continuance on a return date on the good arguable case ground, knowing that it would not have to bear costs if it ultimately succeeded at trial, or unless and until the trial took place and had been decided.
(8) Further, I am able to deal with the issues of full and frank disclosure and the duty of fair presentation now and, to my mind, I am in a considerably better position to do so than the trial judge.
…"
"In this case, it seems to me that the general approach to costs which applies in the American Cynamid context should be applied. In short, is it fair that the defendant should pay the cost of an injunction against him to assist in preserving assets and preventing improper dissipation so a possible judgment against him will be satisfied, if at the trial it turns out that there is in fact nothing for which he is liable and no judgment against him? My answer is "No"."
"26. Beyond that, however, I have the misfortune to disagree, with the utmost respect, with the reasoning of Judge Davis-White in the relevant part of his judgment in Al Assam. I say this for two reasons, one which is of general relevance, and one which is specific to this case.
27. The first reason is that it seems to me that, while it is correct to say that a freezing order holds the ring, it also seems to me that it is correct to say… that a freezing order holds the ring in a different way. In my judgment, in a substantially different way to an interim injunction.
28. … in the case of an interim injunction what is generally happening is that a
court is allowing one party to enforce or rely on a right, or an obligation the existence of which has yet to be established. So, in that sense the court is allowing one party to behave as if the right has been established, in circumstances where the right still has to be established at trial and may not be established at trial.
29. In the case of a freezing order, things are rather different. The freezing order… is an ancillary order in aid of the relief which is sought in the relevant case. There is no such thing as a final freezing order. Once the freezing order has been granted, and subject to any subsequent application to vary or discharge, the freezing order then remains in place until trial. It may well be that the freezing order is obtained on a basis which is found not to be well founded at trial, but that, it seems to me, does not go directly to the question of whether the freezing order was correctly granted; rather it relates to the underlying relief which is sought.
30. In relation to the freezing order, it seems to me that what happens if the claim fails at trial is that the freezing order is no longer required to hold the ring because there are no assets to be protected or ring-fenced, because there is no right of recovery.
…
34. In relation to the free shot point [no. 7 of Mr. Hilliard QC's points], Mr Grant submitted that it is not a free shot at all, because all that is happening is that the costs are being reserved, and ultimately, depending on what happens at trial, the costs of the application for the freezing order may be recovered by virtue of a costs order made by the trial judge.
35. But that seems to me to miss the essential point, which is that if the general principle is that the costs of an application for a freezing order should be reserved, then the defendant does know that it is going to be able to oppose the freezing order, and possibly cause both parties to run up very considerable costs in relation to the freezing order, without having to face the day of reckoning in relation to those costs, assuming that it is unsuccessful, until a trial, which may come along at a much later stage, or may not come along at all, which may in turn leave the parties to negotiate what is going to happen in relation to the reserved costs. In litigation there is a very substantial difference between a set of costs which must be paid there and then by a party, and a set of costs which are reserved off to an indeterminate date in the future.
36. So it is for all those reasons, which together encompass what I have referred to as my first reason, that I find myself in the unfortunate position of disagreeing with the reasoning of Judge Davis-White in Al Assam.
37. The second reason is this, and it arises in the specific context of the discharge applications. If you have a situation, as in the present case, where a freezing order has been granted on a without notice application, and the respondent then launches an all-out attack on the freezing injunction, on the basis of non-disclosure, it seems to me not unreasonable, at least as a matter of general or starting principle, that the respondent should pay the costs of that attack, if the attack fails.
38. The question of non-disclosure essentially requires a comparison between what the court was told on the without notice application and what the court should have been told. The judge who is best placed to decide that question is the judge who hears the application for discharge of the freezing injunction, on the basis of alleged non-disclosure, on the return date. The question is not one, as it seems to me, which depends, or at least depends substantially, on how matters turn out at trial, but rather depends on an examination of matters as they stand on the relevant return date.
39. I have described that second reason as arising in the specific context of this case and in the specific context of the discharge applications, but I am also bound to say that it seems to me that those points can be said also to have quite substantial application to a case where there is simply an application for the continuation of a freezing order granted on a without notice basis, or simply an application for a freezing order where there has been no without notice application. Again, it seems to me not unreasonable, at least as a matter of general or starting principle that, if the respondent launches an all-out resistance to the continuation of the freezing order, and is unsuccessful, the respondent should have to pay the costs of that resistance. I am simply not persuaded by Mr Grant's submissions, characteristically eloquent as they were, that there is anything in the circumstances of freezing orders which requires that the starting principle should be that costs should be reserved."
i) A defendant has a choice of resisting continuance of a freezing order and thereby causing the costs of a return date to be incurred.
ii) The test for a freezing order is different for whether a claim should succeed at trial.
iii) If the basic principle were that costs would be reserved, the defendant would have a free shot at opposing the continuance of freezing order on a good arguable case ground. This it seems to me is a particularly cogent point in the context of the present Continuation Application where the Defendant's case changed substantially shortly before the hearing and where the Defendant has accepted for the purposes of that application that there is a risk of dissipation.
What is the amount of any payment on account to be made to the Claimant?
i) In relation to the Strike Out Application, the issues were until 2 weeks before the hearing limited to two legal points on the effect of the Assignment, which did not require factual evidence and only limited expert evidence. The Defendant accepts that the position changed late in the day and that the Summary Judgment Application was also issued late in the day but says that the Claimant served no responsive evidence following the Defendant's change of position.
ii) Counsel's fees in relation to the Strike Out and Summary Judgment Applications are too high.
iii) In relation to the Continuation Application, the witness statements of Messrs. Patel and Mitchell served on 15 December 2023 are argumentative and in substance contain no evidence at all. Accordingly, the costs of preparing them should be disallowed.
i) That the Defendant's costs of the applications considerably exceed those of the Claimant. The Defendant's costs of the Strike Out and Summary Judgment Applications are said to be £539,529.72 and of the Continuation Application are said to be £251,321.72. In contrast, the Claimant claims £172,051.50 for the Strike Out and Summary Judgment Applications and £177,858.90 for the Continuation Application (after reduction for the reserved costs).
ii) Far from being a point in the Defendant's favour, the last-minute change to the Defendant's case on the Strike Out Application and the late Summary Judgment Application was an aggravating factor especially when coupled with the vague nature of the Defendant's Application Notice and Defence and the wide-ranging nature of the Defendant's expert evidence. The Claimant had to prepare to meet all points made which greatly increased costs.
iii) In relation to the Continuation Application, Patel 3 was dedicated mainly to evidence on risk of dissipation, a point which the Defendant eventually conceded. Mitchell 1 contained evidence addressing the Defendant's allegations of a breach by the Claimant and its lawyers of the duty of full and frank disclosure and going to points which the Defendant dropped following receipt of that evidence.
i) I accept the Claimant's submission in relation to the Strike Out Application and Summary Judgment Application that the Defendant's approach to those applications increased rather than decreased the work to be done on behalf of the Claimant and that the Claimant did have to prepare to meet the various points made.
ii) The Strike Out and Summary Judgment Applications were heavy applications with a significant last-minute change in the Defendant's case and difficult points of evidence and law to consider. While Counsel's fees are substantial, I am not persuaded at this stage that they are at a level where I should discount any payment on account specifically in relation to those fees. Both parties were represented at the hearing by leading and junior counsel.
iii) I also accept that both Patel 3 and Mitchell 1 contained evidence of the type described by the Claimant and that there was no reason to discount the costs of producing that evidence.
Conclusion
i) The Defendant shall pay the Claimant's costs of the Strike Out and Summary Judgment Applications to be assessed if not agreed.
ii) The Defendant shall pay the Claimant's costs of the Continuation Application to be assessed if not agreed. The costs up to and including the first return date before Dias J. should be reserved.
iii) The Defendant shall pay the Claimant the sum of £209,000 on account of the costs liabilities set out in sub-paragraph (i) and the first sentence of sub- paragraph (ii) above.