Home Information Cases Energy Venture Partners Ltd v Malabu Oil and Gas Ltd (2012)

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Energy Venture Partners Ltd v Malabu Oil and Gas Ltd (2012)

Summary

A bank was entitled to recover its substantial costs of complying with a freezing injunction as the funds expended had been justified in order to determine whether the injunction caught assets it held on deposit.

Facts

The applicant bank (B), not a party to the substantive proceedings, applied for an assessment of its costs of complying with a freezing injunction.

The freezing injunction had been made in the context of an action by the respondent (E) against the defendant in the substantive proceedings (M) for recovery of a $215 million fee M allegedly owed E in relation to the sale of an interest in a Nigerian oil prospecting licence. E alleged that the freezing injunction caught a $1.1 billion account on deposit with B, which had allegedly been deposited from escrow following sale of the licence. The freezing injunction had provided that E undertook to pay B's reasonable costs incurred investigating whether M had an interest in the account. The named account holder, however, had been the Nigerian government, and B had not had any evidence that M had an interest in the account. E had informed B that the entire $1.1 billion was nevertheless caught by the freezing injunction because E was entitled to take the full balance, deduct its $215 million fee, and then pay the remainder to M. M, on the other hand, had informed B that it had no interest in the account. B then began to receive instructions to make payments out of the account, but rejected the instructions as not being in accordance with the Nigerian government's deposit agreement. B took legal advice and applied to the court for clarification of the effect of the freezing injunction, in particular whether funds could be paid out if B received valid instructions from the account holder. At the hearing on that application it was determined that B would pay $215 million from the account into the court to cover E's claim, and could pay out the balance in accordance with valid instructions from the Nigerian government. B then sought costs of £181,000.

E submitted that B's claimed costs were excessive, arguing that all B had to do was locate funds caught and secure them, and had not been justified in its aggressive and over-extended response to the freezing injunction in which it argued unnecessary points and entered the litigation arena instead of staying on the side.

Held

B's actions had been justified, and it was entitled to its costs. Difficult questions had arisen for which B had been fully justified in taking advice from solicitors and counsel. The account of a sovereign state was said to be caught by a freezing injunction and the bank had no evidence that the account belonged to anyone else. Issues of sovereign immunity had arisen and the bank had been receiving instructions to make payment out of the account. Given E's stance, without supporting evidence or reason, that it had a proprietary interest in the whole of the account, B had no option but to seek legal advice and go to court for clarification. The requested £181,000 in costs was a substantial figure, however, so B would have the option of accepting a summary assessment of £140,000 or a detailed assessment.

Costs determined

Queen's Bench Division
Cooke J
Judgment date
15 March 2012
References

​LTL 16/3/2012