PDVSA Servicios SA v Clyde & Co LLP & Anor

Where interlocutory costs have been reserved, the later costs judge should consider the subsequent course of the litigation and the overall justice of the matter, rather than rehearing the earlier application in detail. Applications arising directly from an improperly framed injunction may properly be treated as costs of the action. A separate issue arising from an independent restraint should remain subject to the earlier reservation. An interim payment on account should reflect a reasonable estimate of likely recovery, allowing for uncertainty, proportionality and recoverability, but should not be reduced to the irreducible minimum.

This was a consequential judgment following the determination of PDVSA Servicios SA’s Part 8 claim in [2020] EWHC 2819 (Ch). The court addressed costs between PDVSA and each defendant, interim payments on account, the form of the order discharging an injunction, and permission to appeal.

The principal disputes concerned whether reserved interlocutory costs should be treated as costs of the action, whether indemnity costs were justified, the appropriate interim payments, and whether there was a real prospect that the main judgment was wrong in law or affected by serious procedural irregularity.

1. Reserved interlocutory costs. Where the outcome of an interim application is driven by practical considerations and costs are reserved, the later costs judge should take account of the overall course of the proceedings. The judge need not rehear the detail of the earlier application unless particular features make a separate costs order just.
2. The applications concerning continuation of escrow arrangements and the scope of monies affected by the injunction arose directly from the terms of the injunction obtained without notice. They were therefore part of the costs of the action. The joinder application concerning the NCA arose from an independent restraint imposed by the Malaysian court and remained reserved to Snowden J.
3. Costs between the parties. PDVSA was ordered to pay Clyde’s and POS’s costs of the action, excluding the costs reserved to Snowden J. Clyde’s costs were to be assessed on the indemnity basis because of the contractual indemnity. POS’s costs were not sufficiently outside the norm to justify indemnity assessment.
4. Payments on account. Applying Excalibur Ventures LLC [2015] EWHC 566 (Comm), the court assessed a reasonable sum on account by estimating likely recovery, allowing a margin for error, and considering the parties’ means, the timing of assessment and recoverability of any overpayment. PDVSA was ordered to pay Clyde £89,685 and POS £350,000 on account.
5. The injunction was ordered not to continue and was discharged. The cross-undertakings were not separately continued by the order, although POS could seek compensation for loss caused by the injunction.
6. Permission to appeal was refused. The court considered that there was no real prospect of showing an error of law or serious procedural irregularity. The judgment had been based on the argued grounds, while the parties had received a fair opportunity to address additional Court of Appeal authorities.

Consequential judgment following the court’s Part 8 determination in [2020] EWHC 2819 (Ch). Permission to appeal from that determination was refused.