HARRINGTON & CHARLES TRADING LIMITED & Ors. v JATIN RAJNIKANT MEHTA & Ors.

Costs of freezing-order applications are not subject to the general approach applicable to ordinary interim injunctions. A freezing order protects assets in aid of substantive relief and may properly attract an immediate costs order where a respondent unsuccessfully contests its continuation or seeks its discharge. The applicable test for the freezing order is distinct from the test at trial. Costs of a without-notice application may nevertheless be reserved where the respondent had not yet had a fair opportunity to decide its position. The court may identify a watershed date from which the respondent became at risk as to costs.

The court determined costs arising from without-notice freezing-order applications, applications for continuation of the orders, and applications for their discharge. The parties also disputed whether those costs should be reserved to the trial or strike-out judge, and whether an earlier failure to disclose a report should affect the costs order.

The principal issue was whether the ordinary rule that costs of interim injunction applications are reserved applied equally to freezing orders, including contested continuation and discharge applications.

1. General approach. CPR rule 44.2 confers a discretion as to costs, subject to the general rule that the unsuccessful party pays. The ordinary approach to interim injunctions does not require costs of freezing-order applications to be reserved.
2. Nature of a freezing order. A freezing order is ancillary relief intended to prevent a successful claimant being unable to enforce its judgment because assets have been dissipated. It holds the ring differently from an ordinary interim injunction, which commonly permits reliance on a right or obligation that remains to be established at trial. The good arguable case test for a freezing order is also distinct from the test governing success at trial.
3. Continuation and discharge applications. Where a respondent chooses to contest continuation of a freezing order or launches an unsuccessful discharge application, the starting principle is that it should pay the costs of that contest. A non-disclosure challenge is assessed principally by comparing what was disclosed with what should have been disclosed at the return date, rather than by waiting for the trial outcome.
4. Al Assam. The court declined to follow the reasoning in Al Assam v Tsouvelekakis. The case was distinguishable because it did not involve a discharge application, and its approach was not accepted as requiring reservation of costs. Judicial comity between first-instance judges was a practice, not a binding rule.
5. Application to the costs. The defendants had to pay the claimants’ costs of the discharge and continuation applications. The costs of the without-notice applications were reserved to the trial judge. 6 July 2022 was fixed as the watershed date: costs incurred before that date were reserved, while relevant costs incurred after it were payable by the defendants. The earlier failure to disclose the Kroll 2014 report did not justify reducing the costs order because it had not affected the substantive decisions.