Cancrie Investments Limited v Zulfiqur al Tanveer Haider (Costs)

On a continuation application for a worldwide freezing injunction, the ordinary costs approach is that the unsuccessful respondent pays the costs of the contested continuation hearing, while the costs of the original without-notice application are reserved. This differs from the usual approach to interim injunctions based on the American Cyanamid balance of convenience, because a freezing injunction is ancillary to the substantive relief and there is no final freezing order. The court retains a discretion. It may make a different order where the circumstances justify it, including where the respondent unsuccessfully contests good arguable case, full and frank disclosure, or risk of dissipation. Costs may therefore be determined at the continuation hearing even where some evidence overlaps with the eventual trial.

The claimant had obtained a worldwide freezing order. The defendant subsequently made strike-out and summary judgment applications, and opposed the claimant’s application to continue the freezing order. The defendant’s applications were dismissed and the continuation application was granted.

The parties agreed that the defendant should pay the claimant’s costs of the strike-out and summary judgment applications. They disagreed about the costs of the continuation application and the amount to be paid on account. The central issues were whether continuation costs should be reserved, and whether the claimant should receive £209,000 on account.

1. Costs of the continuation application. The claimant was entitled to its costs of the continuation application, assessed on the standard basis if not agreed. Costs up to and including the first return date before Dias J were reserved.
2. The general principle for an interim injunction is to reserve costs until determination of the substantive issue. That approach is discretionary and is particularly associated with injunctions granted on the American Cyanamid balance-of-convenience test: Melford Capital Partners LLP v Wingfield Digby [2021] 1 WLR 1553 (CA).
3. The balance of convenience is not part of the test for a freezing injunction. The court must consider whether it is just and convenient to grant the order, which is a different exercise. The fact that both jurisdictions derive from Senior Courts Act 1981, s 37 does not require the same costs approach.
4. A freezing injunction is ancillary to the substantive relief and the enforceability of any eventual judgment. It does not confer a substantive right pending trial, and there is no such thing as a final freezing order. A finding at trial that the claim fails is not necessarily inconsistent with an interlocutory finding that there was a good arguable case.
5. The court therefore preferred the reasoning in Bravo v Amerisur Resources plc [2020] Costs LR 1329, Kumar v Sharma [2022] Costs LR 1029 and Harrington & Charles Trading Ltd v Mehta [2023] EWHC 609 (Ch) to that in Al Assam v Tsouvelekakis [2022] EWHC 2137 (Ch). An unsuccessful respondent who chooses to contest continuation, and fails on good arguable case or disclosure issues, may properly be ordered to pay those costs immediately.
6. Payment on account. The defendant was ordered to pay £209,000 on account. The applications were substantial, the defendant’s case changed late, the summary judgment application was issued late, and the claimant had to address extensive evidence and points which were later abandoned or conceded. The court found no sufficient basis at this stage to discount counsel’s fees or the costs of the relevant evidence.