Clearview International Ltd & Ors v PWH Com Ltd & Ors

Costs should reflect the parties’ actual success, the relationship between overlapping claims, the conduct of the litigation and the fairness of requiring one party to fund unsuccessful claims. Where a freezing order was excessive, the court should consider whether more limited relief would have provided practical protection. An applicant should not assume that excessive relief will avoid the consequences of the cross-undertaking in damages if the order is later reduced or found unjustified. Enforcement of the undertaking remains discretionary. A trustee’s lien or allowance for expenditure is exceptional and requires evidence of expenditure properly attributable to the trust.

Following an earlier judgment in proceedings concerning claims by Clearview, two individuals and a company relating to business ventures, shares, a database and alleged breaches of duty, the court determined reserved questions concerning costs, enforcement of cross-undertakings given in support of a freezing order, and claimed trustee allowances.

Clearview’s claims had failed, while the derivative claims achieved limited success. The court therefore had to determine the appropriate allocation of general and reserved costs, whether the freezing-order undertakings should be enforced, and whether two defendants acting as trustees had established any entitlement to liens or allowances.

1. General costs. The proceedings should not be divided mechanically into pre- and post-joinder periods or treated as wholly successful merely because the individuals obtained some derivative relief. The claims overlapped, but Clearview’s claims had failed, the pleadings had developed progressively, important claims were raised late, and substantial issues had been exaggerated. Balancing those matters against the defendants’ criticised conduct, the fair order was that there be no order as to the costs of the claims. The company was not required to indemnify the individuals.
2. Freezing order. The court held, with hindsight, that a general freezing order should not have been made. The applicants’ legitimate concerns could have been met by narrower injunctions concerning the Espana and Blue Chip shares and unauthorised dealings with the database. Applicants for freezing orders should consider whether more limited relief affords practical protection. Excessive applications should not be encouraged by the prospect of avoiding liability under the cross-undertaking if the relief is later substantially reduced.
3. Cross-undertakings. The court exercised its discretion to enforce the cross-undertakings in damages. The freezing order had been disruptive, and the defendants’ misconduct did not justify depriving them of the benefit of the undertakings. The necessary inquiry was ordered. The claimants were also ordered to pay the costs of the freezing-order, discharge and fortification applications, but not the security-for-costs application.
4. Trustee allowances. The claims by Mr Woods and Mr Farnell for liens or allowances failed. There was no sufficient evidence of outstanding expenditure by Mr Woods. Mr Farnell’s claimed advances were made by one of his companies and were not his expenditure. An allowance would not in any event be appropriate where the relevant position resulted from breach of duty rather than performance of the trust.
5. The injunctions previously granted were continued pending settlement of the final order. Costs of the October hearings, permission to appeal and any application to appeal were adjourned.

Not stated in the judgment.