- whether a defendant who had been ordered to face cross-examination on his assets disclosed pursuant to a freezing order should be ordered to pay the costs of the cross-examination itself, and if so whether on a standard or indemnity basis;
- whether further affidavit evidence should be ordered as to assets and, if so, the scope of such evidence; and
- whether a passport order made against the defendant should continue.
Cross-examination as to assets can be seen as a useful means of pressuring a defendant, but as the court pointed out here, as far as the court is concerned, the cross-examination should be limited to establishing assets for the purpose of the freezing injunction. But often that can be intermingled with an examination of the factual position of the underlying dispute which is why the remedy is popular among claimants.
On the central question as to whether a defendant should be ordered to pay the costs of the cross-examination itself, the court said it was a discretionary question to be decided on the facts of each case. Factors to take into account include:
- whether the examination elicits information which should have earlier been given;
- whether the defendant has been cooperative or evasive;
- whether the claimant has conducted the cross-examination proportionately and properly directed it at the true objective of cross-examination at this stage; and
- overall, whether the examination has been profitable in meeting the objective of assisting the policing of the freeze.
On the issue of the test to obtain indemnity costs in this hearing, the court would need to conclude that the defendant did not engage in good faith, was obstructive (not merely evasive) and actually intended to avoid justice. The court emphasised that the hurdle was, properly, a high one. Caution needs to be exercised before reaching that conclusion at an interlocutory stage.
On the issue of further evidence, the court has to be persuaded there is practical utility to it and must be vigilant to protect against the abuse of seeking further evidence for other purposes such as pressure or to advance the underlying case. Further evidence has to be also proportionate.
In this case, the defendant was ordered to pay 80% of the costs of the cross-examination on a standard basis. The high hurdle for indemnity basis had not been reached. The reduction to 80% appeared to reflect some unease with the way the cross-examination was conducted. Further evidence was allowed, but as to limited specific issues including how the defendant had funded his living expenses. Whilst the door was not entirely closed on further cross-examination, the court was not disposed towards it. Finally the passport order remained in place until the process was completed.
A factor in the court’s thinking here appears to have been that this was a case of the English court’s providing assistance to a foreign court (and indeed providing remedies which the foreign court would not itself order) in respect of proceedings which otherwise it has no control. The court is clearly reluctant to become as deeply involved in a matter where it is playing an ancillary role.
JSC Mezhdunarodniy Promyshlenniy Bank and another v Pugachev  EWHC 1694 (Ch)