Dar Al Arkan Real Estate Company & Anor v Al Refai

A stay of enforcement under CPR 83.7(4) requires special circumstances making enforcement unjust or inexpedient. A cross-claim may satisfy that requirement where there is a real risk that enforcement of the cross-claim, if successful, will be difficult. The court should assess the nature and strength of the claims, their relationship, likely delay, and the prejudice to each party.

Discontinuance does not ordinarily reverse or otherwise affect interlocutory costs orders already made. Such orders allocate liability for discrete applications and should generally remain effective, unless the court makes a specific contrary order.

The claimants discontinued their claims against Mr Al Refai during substantial litigation and consented to an order requiring them to pay his costs on the indemnity basis. They applied for a stay of enforcement of that order pending separate English enforcement proceedings concerning two Bahraini judgments obtained by the second claimant against Mr Al Refai.

The claimants also disputed whether the discontinuance costs order displaced earlier orders requiring Mr Al Refai to pay their costs. The court therefore considered the statutory stay test and the effect of discontinuance under the Civil Procedure Rules.

1. The application for a stay was granted. Under CPR 83.7(4), enforcement may be stayed where special circumstances make enforcement unjust or inexpedient. A cross-claim alone will ordinarily be insufficient, but a cross-claim coupled with foreseeable difficulty in recovering the judgment if successful may constitute special circumstances. The court applied the framework identified in Burnet v Francis Industries plc [1987] 1 WLR 802, including the nature, strength, size and timing of the cross-claim, its relationship with the judgment, and the parties’ respective prejudice.
2. The decisive considerations were the real risk that the claimants would be unable to enforce the Bahraini judgments without a stay, the arguable prospect that those judgments would be enforceable in England, the absence of evidence of significant prejudice to Mr Al Refai, and the substantial overlap between the underlying disputes. The fact that the order concerned costs, and the claimants’ conduct of the litigation, weighed against a stay but did not outweigh those considerations.
3. The previous costs orders were preserved. The court respectfully disagreed with the interpretation of CPR 38.6(1) expressed by Pill LJ in Safeway Stores Ltd v Twigger [2010] EWCA Civ 1472. Discontinuance does not prima facie affect interlocutory costs orders. CPRPD44.2 supports the view that a party entitled to costs under an interlocutory order remains entitled to them whatever other costs orders are made.
4. The court relied on the principle that interlocutory costs orders should not generally be reopened after the event, as explained in Koshy v Deg-Deutsche Investition [2003] EWCA Civ 1718, and on the self-contained nature of interim costs orders discussed in Business Environment Bow Lane Ltd v Deanwater Estates Ltd [2009] EWHC 2014 (Ch). The costs order of 19 May 2015 was adjusted so that it did not affect earlier costs orders.

First-instance decision. The judgment records no appeal or earlier decision under appeal.