Judge confirms test for ordering the costs of a cross-examination hearing relating to a freezing order


The claimants obtained a freezing order against the defendant in aid of Russian proceedings. The claimants sought their costs, on an indemnity basis, of a cross-examination hearing intended to assist the policing of the order by obtaining evidence from the defendant as to his assets. The claimants argued that they were entitled to these costs because the defendant had been evasive and dishonest. Hildyard J held that the court should take into account the following factors (amongst others) when deciding whether an order for costs against the defendant should be made in such circumstances:

  1. Whether the cross-examination elicits information which should previously have been disclosed;
  2. Whether the defendant has been cooperative or evasive;
  3. Whether the cross-examination has been proportionate;
  4. Whether overall the cross-examination has proved to be a profitable exercise.

On the facts of this case, the judge held that costs should be awarded in favour of the claimants on the standard basis. He rejected an argument that costs should be awarded on the indemnity basis though: the claimant was unable to meet the "particularly high" standard required ie that the defendant was not merely evasive but had actually intended to obstruct justice (ie by giving plainly and obviously false answers).

The judge also considered the test for whether further affidavit evidence should be ordered from the defendant. He said that the court must be persuaded that there is "practical utility" in requiring such evidence and it should prevent the abuse of seeking further evidence for some other purpose (eg unduly pressurising a defendant or seeking ammunition for a contempt application).

The claimants had sought to argue that it is implied into every disclosure order that the defendant must "make all reasonable enquiries". Hildyard J held that although the defendant must take reasonable steps to investigate the truth of his answers, there is no requirement that he make enquiries of persons in relation to assets in which he says he has no interest. As to whether the defendant's obligation of disclosure can be delegated (eg to his solicitors), it was held that: "In a complex case, where the process of disclosure involves detailed investigations of corporate and/or trust structures and interests of an indirect or derivative nature, as well as more obvious and easily ascertainable assets, a measure of delegation as regards the enquiries is almost inevitable. However, the obligation of disclosure remains personal; and a casual approach, even if honest, will not suffice".

COMMENT: Although it is helpful to have a list of factors that the court will take into account on such applications, it might be noted that some of these factors cannot be assessed by the claimant in advance and hence it will be difficult to predict whether its costs will be awarded.