Kerry Underwood

SET-OFF OF INTERIM COSTS ORDER AGAINST JUDGMENT SUM

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Ridley v Dubai Islamic Bank PJSC [2020] EWHC 2088 (Comm) (31 July 2020)

the court refused an application by the defendant bank for set-off of a costs order made in the proceedings in favour of the claimant, against a judgment debt the claimant owed to the bank from a previous action; the court has a discretion to order set-off of judgment sums, CPR 40.13 and inherent jurisdiction, and the test is whether it is just and equitable – see

Fearns v Anglo Dutch Paint and Chemical Company Ltd [2010] EWHC 2366 (Ch).

The judgment debt had been outstanding for several years but the application had to be considered in light of the circumstances in which the costs award had arisen.

The claimant had brought the proceedings to challenge his continued imprisonment in Dubai, which he claimed was the result of the wrongful actions of the bank and arose out of the underlying facts giving rise to its judgment debt.

The costs award had resulted from an unsuccessful protracted challenge by the bank to an order for service out which had delayed the substantive proceedings for over a year.

The court also had to consider whether set-off could adversely affect the just conduct of the proceedings.

Although the bank submitted that an order for set-off would not set a precedent, the judge doubted that and felt that if she ordered set-off, the bank would use that to support subsequent applications.

The risk of an adverse costs order was one of the few sanctions which could deter parties in litigation from bringing unmeritorious applications; that could be weakened or removed here, given the parties’ relative financial resources.

The bank would be able to resist the claimant’s claim, regardless of cost constraints, in circumstances where it had no apparent interest in pursuing its defence to the proceedings expeditiously.

It would not be consistent with the overriding objective to allow the bank not to pay the costs order for an unsuccessful application as the overriding objective requires the court to ensure that the parties are on an equal footing so far as practicable and that litigation is dealt with expeditiously and fairly.

The bank would suffer no prejudice if set-off was refused as the amount of the costs award was relatively modest, compared to the judgment debt, and the bank had some security over land.

Written by kerryunderwood

August 11, 2020 at 8:02 am

Posted in Uncategorized

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