PDVSA Servicios SA v Clyde & Co LLP & Anor

In deciding costs after an unsuccessful joinder application, the court must assess the substance of the outcome rather than treat the party resisting joinder as automatically successful. All relevant circumstances, including pre-application conduct, must be considered.

A party cannot generally use CPR 19.2 to compel the National Crime Agency to explain a confidential disclosure and consent process. In an appropriate case, joinder may be possible where the court needs to understand the agency’s position and the consequences of an order. Delay and ambiguity by the agency may justify departing from the general costs rule.

The judgment determined costs following an application by Petrosaudi Oil Services (Venezuela) Limited to join the National Crime Agency to related Chancery Division proceedings concerning payments from an escrow account. The application arose amid uncertainty about the effect of a Malaysian freezing order, a proposed English prohibition order and Part 7 of the Proceeds of Crime Act 2002.

The court had previously refused joinder and later vacated a mandatory payment hearing after the relevant payments were made. The issue was how the costs of the joinder application should be allocated between the parties.

1. Outcome. There was no order as to costs between POS and the National Crime Agency, or in relation to Clyde & Co’s participation. No order was made as to PDVSA’s costs.
2. The fact that joinder did not occur did not make the National Crime Agency the successful party. The general rule in CPR r.44.2(2) was not applied mechanically. The court considered the whole outcome and the parties’ conduct under CPR r.44.2(4)(a) and (5)(a).
3. A party who believes that payment is being blocked by the DAML process cannot generally invoke CPR 19.2 merely to require the National Crime Agency to explain itself. The statutory process is intended to maintain confidentiality and facilitate investigation.
4. Joinder against the agency’s will may nevertheless be possible where it is desirable for the court to understand the agency’s position and the consequences of a payment order. The example identified in N v RBS [2017] 1 WLR 3938 supported possible intervention where payment is genuinely urgent and the agency fails to determine consent promptly. Joinder was not the proper means of resolving the separate prohibition-order issue.
5. The agency’s delay and ambiguous communications were material. Once it indicated that it would seek a prohibition order, the effect of the Malaysian order in England depended on the terms sought by the agency. The agency could have sought an exception for operating and legal expenses and should have clarified its position.
6. The court rejected the agency’s contention that Part 7 of the Proceeds of Crime Act 2002 was not engaged. In light of the allegations of criminality and the intended prohibition-order application, the money-laundering regime presented an obstacle to proposed payments, although the consent process remained transaction-specific.
7. POS’s application was understandable but procedurally inappropriate in part. Neither POS nor the agency was clearly more at fault or more deserving of costs. Clyde & Co’s involvement was essentially neutral.

First-instance costs determination following the court’s earlier refusal to join the National Crime Agency, reported as [2020] EWHC 2322 (Ch). The judgment also records a later decision discharging the injunction and granting summary judgment, reported as [2020] EWHC 2819 (Ch).