Francesco Corallo & Ors v Giuseppe Pinelli & Ors

The court has a discretion as to costs. Although the usual rule is that the unsuccessful party pays the successful party’s costs, a proportionate reduction may be appropriate where the successful party abandoned an issue, failed on a substantial argument, or engaged in relevant but limited misconduct. Such reductions should reflect the costs consequences and the circumstances viewed in the round.

Where a defendant gives undertakings which are, in substance, equivalent to injunctive relief, the claimant should ordinarily provide the corresponding cross-undertakings. The voluntary character of the undertakings does not remove that requirement where the court has accepted them in lieu of coercive relief.

The judgment concerned consequential matters following the court’s earlier decision on the claimants’ application for injunctive relief, reported at [2025] EWHC 3211 (Ch). The parties agreed that costs and the need for cross-undertakings should be decided on written submissions.

The defendants had successfully resisted a freezing order against the first defendant, while giving undertakings affecting the assets and corporate powers of the second and third defendants. The issues were whether the defendants should recover their costs, in what amount and on what basis, and whether the claimants should give cross-undertakings in damages and related standard-form undertakings.

1. Costs. Under CPR r 44.2(2)(a), the defendants were the successful parties because the first defendant resisted the freezing order. The general rule that the unsuccessful party pays the successful party’s costs therefore applied, subject to the court’s discretion under CPR 44.2(4).
2. The court rejected a substantial issue-based reduction based solely on the defendants’ failure on the “good arguable case” issue. A successful party is not deprived of costs merely because it fails on every argument. The issue could not realistically be separated from the assessment of dissipation risk, the merits and the balance of convenience, and the hearing would probably have required substantially the same time.
3. A modest reduction was nevertheless appropriate. The defendants had raised and abandoned reliance on insurance, had unsuccessfully advanced a wide-ranging challenge to the existence of a good arguable case, and had failed fully to disclose assets in 2024. Those matters were assessed proportionately and in the round. The claimants were awarded 75% of the defendants’ costs, assessed summarily at £32,500 on the standard basis.
4. Parties opposing freezing-order applications should take a realistic approach to the points advanced. The good arguable case threshold is low, and the hearing should not become a mini-trial of detailed merits.
5. Cross-undertakings. The defendants’ undertakings were, in substance, equivalent to freezing or proprietary injunctive orders against the corporate defendants. They were supported by penal notices and by an undertaking concerning the first defendant’s powers as director, officer or shareholder. If such relief had been ordered coercively, cross-undertakings would have been required.
6. The same protective purpose applied despite the undertakings being offered voluntarily. Cross-undertakings in damages protect defendants and third parties if the underlying basis for the relief proves absent, while the other standard undertakings address notification to third parties and enforcement abroad. The claimants’ cross-undertakings therefore remained in the order.