Ana Tomic & Anor v The Residences by Damoor Limited & Anor

The High Court may enforce a court undertaking under Senior Courts Act 1981, section 37. It takes the undertaking as its starting point and need only determine whether there is sufficient arguability of breach to justify policing it. Costs may be assessed separately for different stages of an application. Indemnity costs are justified where conduct or other circumstances take the case out of the normal run of litigation. The court must nevertheless consider proportionality, the parties’ conduct, partial success and whether issues were reasonably pursued. Even where an applicant succeeds in securing compliance, unreasonable or oppressive steps may justify standard costs for a later period.

The claimants sought orders enforcing an undertaking given by the second defendant after their unsuccessful freezing-injunction application. The undertaking concerned the treatment of proceeds from the sale of a property. The defendant failed to place the proceeds in the specified account, did not respond adequately to repeated requests for information, made withdrawals exceeding the permitted allowance and provided incomplete explanations. The claimants applied for information, bank statements and transfer of the remaining proceeds into escrow. The first two elements were resolved and a modified undertaking was agreed before the hearing. The remaining issue was the costs of the application, including whether they should be assessed on the indemnity or standard basis.

1. The court accepted that the liberty to apply provision and section 37 of the Senior Courts Act 1981 gave jurisdiction to police and enforce the undertaking. Following Koza Limited v Koza Altin Isletmeleri [2020] EWCA Civ 1018, the undertaking was the starting point. The court did not revisit whether it had been properly given and proceeded on sufficient arguability rather than trying the ultimate question of breach.

2. Under CPR 44.3 and 44.4, the court retained discretion as to whether costs were payable, their amount and timing. The general rule was that the unsuccessful party paid the successful party’s costs, subject to all the circumstances, including conduct and partial success. Costs were to be assessed on the standard or indemnity basis, with proportionality applying on the standard basis.

3. The indemnity-basis test stated in Excelsior Commercial and Industrial Holdings Ltd [2002] EWCA Civ 879 was satisfied for the first two periods. The defendant and his solicitors had ignored reasonable requests for information, delayed disclosure, and provided incomplete and inaccurate explanations. The conduct was unreasonable to a high degree and outside the normal run of litigation. Schedule 1 was assessed at £7,000 and Schedule 2 at £4,000, both on the indemnity basis.

4. The third period was assessed on the standard basis. By then the defendant had apologised, instructed a constructive legal team and taken steps to restore the account. However, the claimants had pursued unreasonable escrow terms, advanced a bad argument concerning legal expenses, used excessive evidence and pursued the application after it had become disproportionate. Schedule 3 was assessed at £10,000.

5. The total costs payable by the second defendant arising from and incidental to the application were summarily assessed at £21,000.