KB-2023-003510 - [2025] EWHC 1755 (KB)

The applicable legal principles

Mr Laddie submitted that the applicable principles relating to unless orders of the kind sought by TCG could be traced back to the decision of Sir John Chadwick made on an application for permission to appeal against an Order of Patten J in Crystal Decisions (UK) Limited v Vedatech [2008] EWCA Civ 848. Sir John Chadwick said at [17]:

“…the court’s ability to make interlocutory costs orders following, in particular, the Access to Justice reforms in 1998, is a sanction which is available to it in order to encourage responsible litigation. The court marks what it regards as an irresponsible application by an immediate order for the payment of costs. That is intended to bring home to a party – when considering whether to make an application – that an unsuccessful application may carry a price which will have to be paid at once. If the court is not in a position to enforce immediate interlocutory orders for the payment of costs which it was thought right to make, then the force of that sanction is seriously undermined. It is important that, in cases where the court thinks it right to make an order for immediate payment on an interlocutory application, that it does have the power – and can exercise the power – to ensure that order is met. For the reasons which Patten J explained, the only effective sanction in a case of this nature is to require payment of interlocutory costs as the price of being allowed to continue to contest the proceedings. Unless the party against whom an order for costs is made is prepared to, or can be compelled to, comply with, that order, the order might just as well not be made.”

At first instance, in Crystal Decisions UK Ltd v Vedatech Corp [2006] EWHC 3500 (Ch) Patten J had said at [16]:

“In any event I take the view that orders of the court, even in relation to interim costs, require to be complied with and that, unless there is some overwhelming consideration falling within Article 6 [ECHR] that compels the court to take a different view, the normal consequence of a failure to comply with such an order, is that the court, in order to protect its own procedure, should make compliance with that order a conditionof the party in question being able to continue with the litigation.”

With regard to those observations, Sir John Chadwick said at [18]:

“For my part, I would hold that – whether or not a statement in such general terms can be supported – the proposition can be supported in a case (such as the present) where there is no other effective way of ensuring that the interim costs order is satisfied. That, of course, is always subject to what the judge referred to as the overwhelming consideration falling within Article 6: that orders requiring payment of costs as a condition of proceeding with litigation are not made in circumstances where to enforce such an order would drive a party from access to justice. But, for the reasons that the judge explained and towhich I have already referred, this was not such a case.”

Mr Laddie relied on the statement of Saini J in Siddiqi v Aidiniantz [2020] EWHC 699 (QB), at [30(ii)], that “the ‘working’ or ‘default rule’ is that a litigant should not be able to continue with his or her claim without satisfying an existing and non-appealed final costs order, and the court should impose a condition requiring compliance”.

Mr Laddie drew my attention to the fact that although orders were made in the following cases (i) Peak Hotels and Resorts Limited v Tarek and others [2016] EWHC 690 (Ch), where Asplin J granted an unless order, and (ii) Michael Wilson & Partners v Sinclair & Ors [2017] EWHC 2424 (Comm), where Sir Richard Field made an unless order, breach of which would lead to the defendants being debarred from participating in the litigation, as well as (iii) Siddiqi v Aidiniantz [2020] EWHC 699 (QB), where Saini J made an unless order breach of which would mean that the proceedings were stayed, nevertheless in (iv) J Robbins Capital Partners Ltd v Zamsort & Ors [2024] EWHC 1990 (Comm), Mr Paul Stanley KC declined to order a stay. Mr Laddie informed me that this last case was the only case of which TCG’s legal team were aware in which the Court had declined to make an unless order in the face of non-compliance with an interim costs order. He submitted that the explanation for the refusal of an order in that case was as follows: (a) it was not in dispute that the claimant company had provided cogent, detailed and frank evidence that it was not in a position to pay the sums that had been ordered, as well as evidence to like effect that funds were not available from third parties, and (b) the Court was struck by the disparity between the unpaid costs orders (c.£60,000) and the pleaded value of the claims (c.£24 million), which led to concerns about the disproportionality of striking out (see Robbins at [18]).

Both Mr Laddie and Mr Dowding relied upon the following summary of the applicable principles contained in the judgment of Sir Richard Field in Michael Wilson & Partners v Sinclair & Ors [2017] EWHC 2424 (Comm), [2017] 5 Costs LR 877 at [29]:

“(1)

The imposition of a sanction for non-payment of a costs order involves the exercise of a discretion pursuant to the court’s inherent jurisdiction.

(2)

The court should keep carefully in mind the policy behind the imposition of costs orders made payable within a specified period of time before the end of the litigation, namely, that they serve to discourage irresponsible interlocutory applications or resistance to successful interlocutory applications.

(3)

Consideration must be given to all the relevant circumstances including: (a) the potential applicability of Article 6 ECHR; (b) the availability of alternative means of enforcing the costs order through the different mechanisms of execution; (c) whether the court making the costs order did so notwithstanding a submission that it was inappropriate to make a costs order payable before the conclusion of the proceedings in question; and where no such submission was made whether it ought to have been made or there is no good reason for it not having been made.

(4)

A submission by the party in default that he lacks the means to pay and that therefore a debarring order would be a denial of justice and/or in breach of Article 6 of ECHR should be supported by detailed, cogent and proper evidence which gives full and frank disclosure of the witness’s financial position including his or her prospects of raising the necessary funds where his or her cash resources are insufficient to meet the liability.

(5)

Where the defaulting party appears to have no or markedly insufficient assets in the jurisdiction and has not adduced proper and sufficient evidence of impecuniosity, the court ought generally to require payment of the costs order as the price for being allowed to continue to contest the proceedings unless there are strong reasons for not so ordering.

(6)

If the court decides that a debarring order should be made, the order ought to be an unless order except where there are strongreasons for imposing an immediate order.”