Tajik Aluminium Plant v Ermatov & Ors

Costs arising from a discrete interim application should ordinarily be determined when that application is concluded. The possibility that the trial judge may later reach a different view about the interim relief does not, by itself, justify reserving costs to the trial.

The court should take a broad view where the parties’ costs overlap with costs that would have been incurred in any event, or where the successful party failed on substantial issues. A proportionate costs order may allow only part of the successful party’s costs, leave each party to bear some costs, and reserve detailed assessment of disputed matters. Payments on account may be ordered cautiously where recoverability and overlap remain uncertain.

The claimant had obtained freezing and search orders without notice. Following applications by the defendants, the orders were discharged in substantial part. A proprietary injunction remained to be considered separately against certain defendants.

The court was required to determine the costs of the discharge applications, related earlier hearings, and subsequent hearings dealing with the discharge judgment. The defendants sought their costs, in some cases on an indemnity basis, together with substantial payments on account. The claimant sought to reserve the costs to the trial or treat them as costs in the case.

The central issue was whether costs should be determined at the interim stage despite the possibility that the trial might cast further light on the merits and on the propriety of the interim relief.

1. Costs of the interim applications. The freezing and search orders had been sought, obtained and maintained by the claimant, and had been discharged on the evidence before the court. The discharge applications constituted a discrete stage of the proceedings. The possibility that the court at trial might conclude that the interim relief should have been granted was not, without more, a sufficient reason to reserve costs or make them costs in the case.
2. Broad assessment of competing considerations. Some costs would have been incurred in any event, even if the interim relief had never been granted. The defendants had nevertheless failed on substantial issues, including whether there was a good arguable case and a real risk of dissipation. Their approach to allegations of material misrepresentation and non-disclosure had also been disproportionate to some extent. It was therefore inappropriate to determine every issue separately or to award the defendants all their costs.
3. Order made. The defendants, other than the seventh defendant, were awarded half of their respective costs of the discharge applications and the other costs reserved to those applications. They were to bear the remaining half themselves. The claimant was to bear its own costs. Costs incurred in any event, estimated at no more than 20 per cent of the overall costs, were to be costs in the cases, with the precise amount left to agreement or assessment.
4. The court declined at that stage to direct assessment on the indemnity basis, reserving that question to the trial judge. The claimant was ordered to pay £35,000 on account to the first defendant and £200,000 on account to the other relevant defendants.

The judgment itself records earlier interlocutory hearings and the discharge applications. It was a first-instance costs determination following the court’s earlier judgment discharging the freezing and search orders in substantial part. No appeal was stated.