Axnoller Events Ltd v Brake and another

Property – Freezing order – Costs – Court making freezing order in connection with possession and eviction proceedings – Judge being asked to decide question of costs – Whether appropriate to decide question of costs relating to freezing injunction before quantum of damages claim in possession proceedings and appeal in eviction proceedings concluded – Costs determined accordingly The claimant company claimed to be the legal owner of the fee simple estate in West Axnoller Farm, near Beaminster in Dorset, which included the main house and associated equestrian facilities. In 2017, the claimant had been sold to another company (Chedington) owned by G and his wife (the “Guy parties”). The defendants did not challenge the claimant’s title to the farm, but resisted the claim to possession, asserting various forms of licence or tenancy. The court held that the claimant was entitled to possession of the farm: [2022] EWHC 365 (Ch). The defendants’ claim for possession of a cottage on the farm, based on their alleged unlawful eviction, failed: [2022] EWHC 366 (Ch). In April 2022, on the Guy parties’ application, the court continued a freezing injunction covering the defendants’ worldwide assets: [2022] EWHC 444 (Ch). The court was asked to deal with the costs. The defendants argued that it was inappropriate to decide the question of costs relating to the freezing injunction until both the quantum of damages claim in the possession proceedings and an appeal in eviction proceedings were concluded. The costs were ongoing, as the administration of the freezing order continued. Rather than have a series of applications for further costs orders, it would be better to reserve all those costs until the quantum hearing in the possession proceedings. The Guy parties agreed that the costs of the administration of the freezing injunction should be decided at a later stage, with liberty to apply. Held: The costs were determined accordingly. (1) Where an ordinary injunction was granted on the basis of the test of balance of convenience, there was necessarily a serious case to be tried, but it was usual, though not invariable, to reserve the question of costs to the trial judge. The court was not at that stage making any assessment of the merits of the claim, and was therefore unable to decide who was, in any meaningful sense, the successful party: Digby v Melford Capital (Holdings) LLP [2021] 1 WLR 1553 considered. However, the present case was concerned with a freezing injunction, which had a higher threshold than a “serious issue to be tried”. In freezing order cases, the court had regard to the question of whether there was “a good arguable case” on behalf of the claimants or not. That was sufficient to determine whether a freezing order should be made and, even if at the subsequent trial it turned out that the claims failed on the basis of the evidence due to that trial, it did not follow that the court was wrong to find that there was a good arguable case. The question was whether it was just and convenient to make an order: Bravo v Amerisur Resources plc [2020] EWHC 2279 followed. (2) The fact that this was a post-judgment application, and that the court’s assessment of the merits of the claims for costs (in relation to both cases) and damages (in the possession claim) was that those claims were strong, took the case even further away from the ordinary injunction case. However the further claims ultimately turned out, there was no real prospect of the court being satisfied at some point in the future that there was not a “good arguable case”, at least in relation to the possession proceedings. As permission to appeal in the eviction proceedings had been given, the court’s order at first instance might thereafter be varied or overturned. The proper course was for the judge either to reserve the costs of an interim injunction to the trial judge or, in appropriate circumstances (such as might arise in a freezing injunction), decide the question straightaway. In the latter case, the paying party could seek a stay on the order by reason of the appeal, either from the lower or the appellate court. In the present case, it was appropriate to make a costs order relating to the two hearings for the freezing injunction at this stage. The court was dealing with a single application made in relation to two sets of proceedings. The costs concerned were the costs of that application. (3) There was no merit in attempting to apportion the costs between the two sets of proceedings. The appeal problem arose in relation to the injunction only so far as it concerned the costs of the eviction proceedings. The costs of applying for the injunction in relation to costs and damages in the possession proceedings alone would not be significantly less than the costs of a single application in relation to both sets of proceedings: Brake v Lowe [2020] EWHC 1324 (Ch) considered. Under CPR rule 44.2(8), the court had to make an order for such an interim payment “in a reasonable sum… unless there is good reason not to do so”. Their statement of costs for the two hearings showed total costs of £64,298.80. The Guy parties sought an interim payment of £35,000 (about 55% of the total). (4) The questions for the court were whether there was a good reason for not ordering an interim payment and, if there was not, what was a reasonable sum on account of costs. What was a reasonable sum would depend on the circumstances, the chief of which was that there would, by definition, have been no detailed assessment and thus an element of uncertainty, the extent of which might differ widely from case to case as to what would be allowed on detailed assessment. A reasonable sum would often be one that was an estimate of the likely level of recovery subject to an appropriate margin to allow for error in the estimation. That could be done by taking the lowest figure in a likely range or making a deduction from a single estimated figure or perhaps from the lowest figure in the range if the range itself was not very broad. Where, as here, there were no budgeted costs, and costs were awarded on the standard basis, the court had to be cautious. In all the circumstances, the court would award the sum of £35,000 sought by the Guy parties, to be paid within 14 days. The costs of the administration of the freezing injunction would be reserved with liberty to apply. The costs were determined on written representations. Eileen O’Grady, barrister Click here to read a transcript of Axnoller Events Ltd v Brake and another