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High Court distinguishes approach to costs of a freezing order from other interim injunctions

  • United Kingdom
  • Financial services disputes and investigations
  • Litigation and dispute management - Freezing Orders

28-09-2020

Bravo & Ors v Amerisur Resources Plc [2020] EWHC 2279 (QB) (19 March 2020)

High Court orders interim payment on account in respect of the costs of a freezing order application

Facts of the case

  • The claimants (“Cs”) were rural residents of Putumayo, Colombia. The defendant (“D”) was a UK company operating in the oil industry.

  • The Cs alleged that they had suffered loss due to environmental contamination caused by D.

  • As D was to be acquired by another company, to mitigate against the risk of its assets being dissipated or it ceasing to exist, the Cs applied on notice to D for a freezing order.

  • The freezing order was granted by Steyn J at an on notice hearing. Following two further on notice hearings in relation to variations to the order, the issue of costs of those hearings came before Spencer J.

  • The Cs argued for the costs of the application to be paid immediately, while D argued for the costs to be reserved pending the full trial (as is typical with other interim injunctions).

The decision

  • Spencer J held that as freezing orders are not based on the balance of convenience test (unlike other interim injunctions), reserved costs would not be appropriate as the evidence on which they are determined is unlikely to be subject to significant re-evaluation a trial.

  • Nevertheless, he found that he was also not in a position to make a forthwith assessment given (i) the complexity of the matter and (ii) that there would be issues as to whether the costs of the freezing order overlapped with or are extinguished by costs relating to the claim as a whole.

  • In Spencer J’s judgment, the proper time for determining (ii) would be at the final assessment, assuming that the Cs were successful at trial.

  • Spencer J accordingly adopted a hybrid approach, ordering an interim payment on account based on an assessment of the likely costs.

Analysis and practical advice

  • This decision is borne of the different tests for merits as between freezing orders and interim injunctions. The good arguable case test for freezing orders means that if at the subsequent trial the claim fails on the basis of the evidence then available, it does not follow that the court was wrong to find that there was a good arguable case. Accordingly, the judge at trial is unlikely to be in a better position than the judge at the return hearing to determine the question of costs of the application.

  • However, as always with costs, it is important to remember the court has a wide discretion and that any award will turn on the particular facts of the case, which includes the respective conduct of the parties. For example, it may be that in less complex matters, the judge at the return hearing would be in a position to be able to make a forthwith assessment, rather than having to adopt Spencer J’s hybrid approach.

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