Mark Reynolds & Anor v Priyesh Parekh (Re SP Commodities Limited)

Costs of a contested interlocutory application which is decided on its merits will generally follow the event under Civil Procedure Rules 1998, rule 44.2. There is no requirement that the application must have been opposed "tooth and nail" before costs can be awarded.

A freezing injunction is materially different from an interim injunction governed by the American Cyanamid approach. Once the court is satisfied that there is a good arguable case, a real risk of unjustified dissipation and that relief is just and convenient, the freezing order is granted on the merits and costs will generally not be reserved to trial. The costs of the initial application and return hearing should ordinarily be dealt with together.

Joint liquidators applied for an order that the respondent pay the costs of three related applications: an initial freezing-order application, an application for substituted service, and the return hearing of the freezing-order application.

The respondent accepted liability for the substituted-service costs but argued that there was no general rule requiring the successful applicant for a freezing order to receive its costs. He also argued that the application had not been opposed with sufficient intensity and that the initial hearing should be treated separately.

The court considered the effect of Dos Santos v Unitel SA and the proper approach to costs for freezing injunctions.

1. The respondent was ordered to pay all three sets of costs. The applicants were entitled to immediate assessment.

2. Under [2024] EWCA Civ 110, a contested interlocutory or procedural application decided on its merits will generally attract an order that the successful party’s costs be paid by the unsuccessful party. The discretion under rule 44.2 remains fact-sensitive. The phrase "tooth and nail" does not impose a rigid precondition to an award of costs.

3. The court distinguished a freezing injunction from an interim injunction under the American Cyanamid principle. A freezing injunction is granted where the applicant establishes a good arguable case on the merits, a real risk that a future judgment will not be met because of unjustified dissipation of assets, and that it is just and convenient to grant the injunction. It is not an injunction granted merely to hold the ring pending determination of an unestablished right.

4. Because the freezing-order decision is merits-based, the fact that the underlying claim may later fail does not mean that the order was wrongly granted. The costs of the initial freezing-order application should ordinarily be dealt with at the return hearing, and no separate distinction was required here.

5. On the facts, the respondent had not consented to the order and had sought to oppose it, albeit without sufficient evidence. His evasive conduct and failure to engage with notices and correspondence justified awarding the applicants all three sets of costs. The limited undertaking in damages did not alter that conclusion.