Pathfinder Minerals Plc & Ors v Velso & Ors

A court may refuse to hear a party who is in deliberate contempt of its orders, including by dismissing an application for permission to appeal. Relevant considerations include the seriousness and persistence of the contempt, its effect on the administration of justice, the contemnor’s intention to continue defying the court, and whether refusal is proportionate to securing compliance.

Where an appellant alleges that security for costs would stifle an appeal, the proposed appellant bears the burden of proving it. Unsupported assertions and inadequate financial disclosure will not discharge that burden.

The defendants sought permission to appeal from a judgment of Field J in the Commercial Court dated 19 October 2012. The judgment had declared agreements concerning shares in a Mozambican mining company valid and enforceable and had restrained interference with the claimants’ rights. The defendants’ defence and counterclaim had previously been struck out following non-compliance with court orders.

The Court of Appeal had directed security for existing liabilities and costs as a condition of proceeding. The defendants provided no security, ceased to instruct their lawyers and indicated that they would not attend. The claimants applied to dismiss or strike out the permission application. The central issue was whether the defendants could invoke the appellate process while remaining in deliberate breach of court orders and intending to continue challenging them in Mozambique.

Disposition and governing principles

1. Permission to appeal dismissed. The Court of Appeal unanimously dismissed the defendants’ application for permission to appeal. The defendants’ continued conduct amounted to a cynical abuse of the court’s process. The court’s observations on the merits were not a determination of the appeal, since no oral argument on the merits had been heard.
2. The court has a discretion to decline to hear a party in contempt. The discretion may extend to refusing to entertain an application for permission to appeal. Its exercise requires attention to the interests of justice and to the paramount importance of prompt and unquestioning compliance with court orders. The exercise, where appropriate, is compatible with article 6 of the European Convention of Human Rights.
3. Relevant considerations included whether the contempt was deliberate and contumelious, whether it impeded the course of justice or abused the court’s process, and whether refusal to hear the contemnor was proportionate to securing compliance. In an appeal, particular weight attaches to a clear intention to continue defying the court’s authority if the order were affirmed, since putting the opposing party to the expense of such an appeal is itself abusive. The court also had to pay particular regard to the rule-of-law importance of compliance, especially where non-compliance followed a conscious decision. These principles were considered in X Ltd v Morgan-Grampian [1991] 1 AC 1, Arab Monetary Fund v Hashim (unreported 21 March 1997), JSC BTA Bank v Ablyazov, Stolzenberg v CIBC Mellon Trust and Hytec v Conventry City Council [1997] 1 WLR 1666.
4. The defendants had deliberately and persistently breached several orders, including anti-suit, costs and payment orders, and continued proceedings in Mozambique designed to relitigate matters decided in England. They had not purged their contempt, offered compliance or apologised. There was no appeal against several of the orders breached, and the defendants made clear that they intended to continue defying the English court. Those circumstances strongly justified refusing them access to the appeal process.
5. The defendants had produced no satisfactory evidence that the security requirement would stifle the appeal and had given inadequate disclosure of their assets. Under Societe Generale SA v Saad Trading [2012] EWCA Civ 695, the burden lay on the proposed appellant. The security order was proportionate.

Additional observation. Leveson LJ emphasised that the overriding objective requires those conducting civil litigation to keep the court promptly informed of developments likely to affect its work. The late notification that the defendants would not provide security or participate was improper. The defendants were ordered to pay the claimants’ costs of the permission application on the indemnity basis and to make an interim payment of £150,000.

• Court of Appeal (Civil Division). On 22 April 2013, the court dismissed the defendants’ application for permission to appeal and made consequential costs and interim-payment orders: [2013] EWCA Civ 505.
• Queen’s Bench Division, Commercial Court. Field J’s judgment dated 19 October 2012 declared the relevant agreements valid and enforceable and granted an injunction protecting the claimants’ rights. The defendants sought permission to appeal that judgment.