Kazakhstan Kagazy Plc & Ors v Zhunus & Ors

When awarding an interim payment on account of costs, the court must assess recoverable costs objectively. The relevant measure is the lowest sum reasonably required to conduct and present the case proficiently, not the amount a party considered advantageous to spend.

Where detailed assessment has not occurred, the court may make a broad estimate of the likely recoverable amount. It should apply a conservative discount for uncertainty and err on the side of awarding less than the likely final recovery. The size or disproportionality of costs claimed does not justify refusing an interim payment.

The claimants alleged substantial fraud by their former controllers and had obtained a worldwide freezing injunction. They unsuccessfully applied to amend their particulars of claim to add a further alleged fraud and a proprietary tracing claim against two further defendants.

The claimants were ordered to pay the defendants’ costs of that amendment application and Mrs Arip’s costs of an application to clarify the freezing order. The orders allowed written applications for interim payments on account of costs under the Civil Procedure Rules 1998.

The defendants claimed approximately £945,000 in total. The issues were whether payments on account should be ordered, whether execution should be stayed pending a proposed appeal, and what conservative interim sums were appropriate before detailed assessment.

1. Applications granted in part. The claimants were ordered to pay £100,000 on account of Mr Zhunus’s costs of the amendment application, £100,000 on account of the costs of Mr and Mrs Arip and Ms Dikhanbayeva for that application, and £20,000 on account of Mrs Arip’s costs of the freezing-order application. Payment was allowed within 28 days.
2. The court refused any application to stay an interim-payment order pending the claimants’ proposed appeal. A stay required solid grounds, such as that payment would stifle the appeal. No such grounds had been advanced.
3. Recoverable costs must be judged objectively. A party may reasonably choose to spend heavily where the sums at stake are large, but that does not make all such expenditure recoverable from the opponent. The proper touchstone is the lowest sum reasonably required to conduct and present the case proficiently. Excess expenditure is for the incurring party’s own account.
4. The costs claimed by the main defendant group were plainly neither reasonable nor proportionate. Their precise reduction could properly be determined only on detailed assessment. For an interim award, the judge could estimate the likely recoverable amount broadly from knowledge of the case and commercial-litigation costs, then discount it to reflect uncertainty and the principle that an interim award should err low.
5. The defendants’ high and disproportionate claims did not justify ordering no payment on account. Nor was a further oral hearing proportionate where the parties had agreed that the issue would be determined on paper.

not stated in the judgment.