Hamza Lakhany v Danyaal Hasan

An indemnity costs order requires conduct or circumstances taking the case out of the norm. Serious failures in a without-notice application, including breach of the duty of full and frank disclosure, may satisfy that test where they interfere with the administration of justice. The court may resolve doubts about whether costs were reasonably incurred or reasonable in amount in favour of the receiving party on an indemnity assessment. That does not require acceptance of every item claimed: individual elements of the bill must still be assessed for reasonableness.

The judgment concerned costs following an earlier application to discharge a freezing injunction. The claimant accepted that he should pay the defendant’s costs, but disputed indemnity assessment and the amount claimed. The defendant sought £40,581, covering the adjourned discharge hearing and the earlier hearing. The central issues were whether the claimant’s conduct was sufficiently outside the norm to justify indemnity costs and what sum should be awarded.

1. The costs were awarded on the indemnity basis. The applicable question was whether the circumstances or conduct took the case out of the norm, as stated in Excelsior Commercial and Industrial Holdings Limited v Salisbury Hamer Aspden & Johnson [2002] EWCA Civ 879.
2. The claimant’s conduct met that standard. The application had been made without notice; the duty of full and frank disclosure had not been complied with; there was unexplained delay; publicly available information about ownership and control of the relevant property was not disclosed; the defendant’s move to Pakistan was not fairly presented; and the order obtained was wider than the hearing and judgment indicated.
3. These were serious faults which interfered with the administration of justice. The court also emphasised the need for appropriately high proof before a freezing order is granted, having regard to its serious consequences, as stated in JSC Mezhdunarodniv Promyshlenniy Bank v Pugachev [2014] EWHC 4336 (Ch).
4. On an indemnity assessment, doubts as to whether costs were reasonably incurred or reasonable in amount were resolved in favour of the receiving party under Civil Procedure Rules 1998, rule 44.3(3). The court nevertheless reduced counsel’s fees for the two hearings as unreasonable.
5. The defendant was awarded £35,581, payable within 14 days of the order. Any assessment arising from a hearing lasting less than a day was to be summary under rule 44SC.2(b).