Keller v Cowen & Anor

Where a freezing order expressly contemplates compensation for loss suffered by a company, the court may award compensation to that company following an inquiry, even though it was not formally joined as a party. A procedural failure by solicitors to file notice of acting does not defeat that entitlement where it caused no prejudice and was later remedied.

Set-off may be ordered between compensation payable to the company and the individual defendants’ judgment debt where both liabilities arise within the same proceedings and from the freezing-order arrangements. The absence of ordinary mutuality or commonality is not decisive in that context.

The appellant had obtained judgments in the United States against the respondents and related companies. He subsequently obtained freezing orders in England. Those orders expressly contemplated compensation for loss suffered by the respondents and Red Internet Limited if the orders were wrongly continued.

The freezing orders were later discharged, and Eady J ordered an inquiry into the losses suffered. Following that inquiry, Judge Price QC awarded Red Internet Limited £80,000, awarded lesser sums to the individual respondents, and directed that the awards be set off against sums owed to the appellant. The appellant appealed on the company’s entitlement to compensation and the set-off, and sought permission to pursue further challenges to the quantification of loss.

Lord Justice Simon Brown gave the first judgment. Lord Justice Buxton agreed and added that it was a misnomer to describe Red Internet Limited as a stranger or ordinary non-party to the proceedings. The Lord Chief Justice agreed with both judgments. The decision was unanimous.

1. Compensation to the company. The orders made by Astill J and Eady J expressly contemplated compensation for loss suffered by Red Internet Limited. Those orders had not been appealed. The court had power to impose such a term as a condition of granting a freezing order and to enforce it through the subsequent inquiry. The company’s failure to have solicitors file notice of acting did not cause the appellant any prejudice. The later correction of the omission meant that the respondents and the company did not forfeit their rights under the orders.
2. Set-off. Although the appellant argued that there was no mutuality of debts or commonality of parties, the compensation liability arose from an undertaking given in the same proceedings as the freezing injunction. The inquiry and the set-off were also conducted within those proceedings. In the particular procedural context, there was no sound objection in principle to setting off the company’s compensation against the individual respondents’ judgment debt.
3. Further grounds. The renewed application for permission to appeal against the amount of compensation was refused. The judge had carefully examined the evidence, including oral evidence, rejected speculative claims and reduced the awards where appropriate. His findings that continuation of the freezing orders caused the loss of the company’s credit line, and that the compensated losses were within the appellant’s reasonable contemplation, were conclusions open to him on the evidence.

The appeal was dismissed, with costs assessed at £5,000.

1. Court of Appeal (Civil Division)—on 6 November 2001, refused the renewed application for permission to appeal on additional grounds, dismissed the appeal and ordered costs of £5,000.
2. High Court of Justice, Queen’s Bench Division—Judge Price QC, on 6 February 2001, awarded compensation following an inquiry into losses caused by the freezing orders and directed set-off against sums owed to the appellant.
3. Permission stage—Judge Price initially refused permission to appeal. Longmore LJ later granted permission only on the issues concerning the company’s entitlement to compensation and set-off, refusing permission on the quantification and public-judgment complaints.