Training In Compliance Ltd t/a Matthew Read v Dewse t/a Data Research Company

A payment into court may properly be ordered as a case-management condition where a party has failed to plead an effective defence or counterclaim and the order is directed to securing the fair and efficient conduct of the litigation. The court is not required generally to distinguish between a party and his legal representatives: their action or inaction will ordinarily be treated as the party’s action or inaction.

Where a payment into court is otherwise proper, the party seeking relief from it bears the burden of showing that payment is impossible, rather than merely difficult, and that the defence or counterclaim has sufficient prospects to justify allowing the litigation to continue. The introduction of the Civil Procedure Rules did not displace that principle.

The proceedings concerned a claim for unpaid commission and an unpleaded counterclaim arising from the parties’ business dealings. Master Eyre refused permission to rely on an ineffective amended defence and ordered the defendant to pay £200,000 into court as a condition of pursuing the counterclaim. Curtis J reduced the amount to £100,000 and permitted the amended defence and counterclaim subject to payment.

The defendant appealed to the Court of Appeal. A separate application sought permission for a second appeal from His Honour Judge Mackay, who had upheld the refusal to reduce or remove the payment-in requirement. The central issues were whether the orders were within the courts’ case-management jurisdiction, whether they were disproportionate or punitive, and whether the traditional test concerning an order that might stifle an arguable defence remained applicable.

1. Appeal dismissed. The order requiring £100,000 to be paid into court was within the jurisdiction conferred by the Civil Procedure Rules. The Master was entitled to refuse permission for an ineffective defence and to impose payment-in terms while allowing time for the counterclaim to be properly pleaded.
2. The payment-in order was not a free-standing disciplinary or punitive sanction. It arose from the state of the pleadings, the delay in advancing the counterclaim and the need to protect the proper progress of the litigation. The court was entitled to take account of the conduct of the case and to require payment as a condition of serving an amended pleading.
3. The fact that Mr Read was not then a party did not invalidate the order. The objection was technical, and joinder could have been effected. The Master was entitled to proceed on the basis that the pleaded case and earlier admission identified money as owing to Mr Read.
4. The Court of Appeal’s role was limited to deciding whether the lower courts had erred in law. It was not entitled simply to substitute its own discretion for theirs. No such error was shown.
5. Where payment into court is otherwise proper, the principles in Allen v Jambo Holdings [1980] 1 WLR 1252 and Yorke (M.V.) Motors v Edwards [1982] 1 WLR 449 continued to apply. The paying party had to show that payment was impossible, not merely difficult, and that there were sufficient prospects of success in the defence or counterclaim to justify allowing the action to continue. The Civil Procedure Rules and proportionality principle did not displace that approach.
6. The defendant had not provided the necessary full and frank disclosure, and Judge Mackay had applied the correct test. The statutory threshold for a second appeal was not met, so permission to appeal was refused.
7. In general, the conduct of legal representatives is treated under the Civil Procedure Rules as the conduct of the party. The court may consider evidence that the party was not consulted or did not consent, but that does not ordinarily require the order to be directed only against the representatives.
8. The sealed order of Curtis J required correction so that the £100,000 payment-in requirement operated in substitution for, rather than in addition to, the Master’s £200,000 order. The appeal was dismissed with costs, subject to detailed assessment, with £12,500 payable on account within 14 days.

• Court of Appeal (Civil Division): appeal from Curtis J dismissed. The order was to be corrected so that the £100,000 payment-in requirement replaced the Master’s £200,000 order. Permission to pursue the second appeal from Judge Mackay was refused.
• Queen’s Bench Division: His Honour Judge Mackay dismissed the appeal from Master Eyre and upheld the refusal to vary the payment-in requirement.
• Queen’s Bench Division: Curtis J reduced Master Eyre’s payment-in order from £200,000 to £100,000 and permitted the amended defence and counterclaim subject to payment.
• Master Eyre: ordered payment of £200,000 into court as a condition connected with the proposed amended defence and counterclaim.