Darnitsa v Metabay Import/export Ltd

Where disputed issues concerning a freezing order have been resolved, the ordinary approach is to make a costs order rather than reserve costs. Costs specifically attributable to an earlier ex parte hearing may properly be severed and reserved where the same preparation and evidence were later used inter partes. A reasonable offer intended to avoid a discharge hearing may justify indemnity costs where it is ignored and the recipient thereby acts unreasonably and out of the norm. An order affecting persons alleged to act for a company should identify the company’s conduct through those persons without determining disputed agency or beneficial-ownership issues.

The judgment recorded consequential orders following the claimant’s success on an application concerning a freezing order. The claimant had established a good arguable case based on the cause of action in Ukrainian proceedings, a risk of dissipation, and no failure of full and frank disclosure. The court determined costs, the effect of a without-prejudice save-as-to-costs offer, and the proper description of the claimant’s proposed order in relation to the defendant’s alleged beneficial owners.

The court also refused permission to appeal, concluding that there was no prospect of success.

1. Costs. The claimant had succeeded on all disputed issues. The general presumption under the CPR was that costs should be ordered when issues had been disputed and resolved. The court applied the reasoning in Bravo v Amerisur Resources plc [2020] Costs LR 1329, that costs of a contested freezing-order application should ordinarily be assessed rather than reserved.
2. The fact that the order was made under section 25 did not justify a different approach. However, costs specifically attributable to the ex parte hearing were severed and reserved. The remaining costs, including those of the inter partes hearing, were to be assessed and paid by the unsuccessful defendant, because the preparation and evidence for the ex parte hearing had also been used later.
3. Indemnity costs. The claimant’s offer to continue the freezing order and withdraw the discharge application, with no order as to the discharge-application costs, was reasonable and designed to save costs and court time. The defendant’s complete failure to respond was unreasonable and out of the norm. Indemnity costs were therefore ordered from 14 May 2021, allowing time for the offer to be considered.
4. Form of order. The court did not determine whether the defendant’s alleged beneficial owners were its agents or whether they were beneficial owners. The order instead stated that the defendant must not act by its agents, or by the named individuals, or in any other way. A positive obligation imposed on the defendant was amended so that it did not appear to impose that obligation directly on those individuals.
5. Permission to appeal was refused because there was no prospect of success.

The judgment recorded that permission to appeal was refused because there was no prospect of success. The consequential matters followed the court’s earlier judgment, cited as [2021] EWHC 1441 (Comm).