Paratus AMC Ltd v Lewis

A party must obey a court order unless and until it has been varied. A party which considers an order erroneous should apply for variation, or comply first and then seek repayment. Contempt may justify sanctions, but the court should not ordinarily deprive a party of a clear contractual entitlement merely as a penalty where correcting the order produces the just outcome. The court may also impose consequential sanctions, including a pro bono costs order and appropriate publicity, for serious and repeated breaches of court orders.

Paratus AMC Limited held security over property owned by Mr Lewis. An earlier order required Paratus to pay surplus sale proceeds into court. The calculation omitted two items of security-realisation costs which Paratus was contractually entitled to deduct. Paratus failed to comply with the order, paid a lesser sum, and also failed to comply with a later order requiring payment of the balance pending determination of its variation application.

The application concerned whether the earlier order should be varied to correct the calculation despite Paratus’s repeated contempts, and what consequential costs and publicity orders should be made.

1. Paratus was in breach of the order requiring payment of £181,461.46 into court. Its proper course was to seek variation before the order took effect or to comply and then apply for repayment. It was not entitled to decide for itself that the order could be ignored. The same applied to the later order requiring payment of the balance.

2. Paratus nevertheless had a contractual right under its security to deduct the further costs of £2,460 and £6,060.60 from the sale proceeds. Although its conduct was woeful and deserved strong criticism, refusing to correct the calculation would improperly penalise Paratus by depriving it of that contractual right.

3. The order of Mr Justice Norris was therefore varied. The sum required to be paid into court was reduced to £173,007.66, reflecting the corrected calculation. Paratus was required to pay the remaining £4,281 into court forthwith.

4. Under Civil Procedure Rules 1998 Part 46.7(1)(b), a pro bono costs order was appropriate. The court summarily assessed the payment at £400, representing two hours of pro bono work. Mr Lewis was entitled to contest the application because Paratus had acted in repeated contempt and had delayed in seeking correction.

5. It was also appropriate to require a transcript of the ruling to be prepared at Paratus’s expense and submitted for publication on BAILII. Publicity was a proper sanction for the serious and repeated failures by Paratus and its solicitors to respect binding court orders.

First-instance decision. The judgment states no further appellate history.