Andrew Hicks Engineering Limited v Jenk Associates Limited & Anor

Where proceedings are settled before trial, the court must first decide whether it has a proper factual basis for making any costs order. If the facts remain disputed and the settlement does not establish which party succeeded, the proper order may be no order as to costs.

For an interim injunction dealt with on the American Cyanamid balance of convenience, including by undertakings, costs will normally be reserved or left without order. A costs order may nevertheless be made where the merits are so clear that resisting the application was unjustified, or where other special factors exist. A claim seeking to relitigate matters already compromised is an abuse of process and cannot raise a serious issue to be tried.

The claimant had previously brought proceedings concerning rights over an industrial estate. Those proceedings were compromised when the defendants accepted a Part 36 offer for £500,000 and the freehold of the claimant’s unit was transferred to the first defendant.

The claimant later issued fresh proceedings alleging interference with leasehold rights and applied for an interim injunction. The defendants gave undertakings, and the injunction application was adjourned with liberty to restore, with costs reserved. The parties subsequently agreed a surrender of the lease. The claimant sought its costs of the injunction application; the defendants contended that the fresh claim was abusive and that no costs order should be made.

The central issues were whether the fresh claim raised a serious issue to be tried and whether the court had a proper basis for deciding the costs of an injunction application concluded by undertakings.

1. Outcome. The second proceedings were an abuse of process. The claimant was ordered to pay the defendants’ costs of the interim injunction application.
2. The rights asserted in the second proceedings had substantially been raised and disputed in the first proceedings. Acceptance of the Part 36 offer compromised those disputed claims. No further declaration was required to record that consequence. The fresh claim therefore sought to relitigate matters already settled.
3. Because the claim was abusive, there was no serious issue to be tried for the purposes of the American Cyanamid test. No interim injunction would have been granted.
4. The claimant’s inability, if established, to meet the cross-undertaking in damages would not have been an absolute bar to relief. It was only a factor in assessing the balance of convenience. The point did not need to be determined.
5. Costs are discretionary and must be exercised judicially. The court must have a proper basis, consisting of found, admitted or properly inferred facts, before making a costs order. Where an interim injunction is granted, or undertakings are accepted, on the balance of convenience, the court will normally lack a sufficient basis to identify a successful party or determine costs. The proper order is normally no order as to costs or reservation of costs.
6. The present case was different because the court could determine that the claim was abusive and that no serious issue existed. The defendants were therefore entitled to their costs. The claimant was also required to discontinue the claim, but the court did not itself order discontinuance.

Not an appeal. The judgment determined costs issues arising in proceedings which the parties agreed should be brought to an end.