Consult II SRO & Ors v Shire Warwick Lewis Capital Ltd & Ors

Relief from sanctions requires a structured assessment of the breach, its cause and all the circumstances. A serious and continuing failure to comply with a consent unless order, particularly an order requiring payment of costs, will ordinarily require compelling, detailed and frank evidence explaining the default. Litigants in person remain subject to the same procedural standards as represented parties, although their position may affect the weight given to other factors. The merits of the underlying case generally have limited relevance. Where the defaulting party provides inadequate evidence of inability to pay, and the breach has delayed proceedings and increased costs, enforcement of the sanction may be necessary to uphold compliance and deal justly with the application.

The defendants applied under CPR 3.9 for relief from sanctions imposed by an unless order made by consent by Moulder J. The order required payment of £102,700 in costs ordered by Jacobs J following an unsuccessful challenge to a freezing injunction. Failure to pay would debar the defendants from defending the claim and permit judgment in default.

The costs remained unpaid. The defendants relied on alleged difficulties caused by the freezing injunction and proposed sources of funding, but supplied limited supporting evidence. The issue was whether, applying the three-stage approach to relief from sanctions, it was just to grant relief.

1. Application dismissed. The sanctions imposed by Moulder J took effect. The court provisionally considered that related measures in Teare J’s order should also apply.
2. Under CPR 3.9, the court considered: first, the seriousness and significance of the failure; secondly, why it occurred; and thirdly, all the circumstances, including efficient and proportionate litigation and enforcement of compliance. This was the approach stated in Denton v TH White Ltd [2014] EWCA Civ 906.
3. The breach was serious and significant. It concerned a substantial unpaid costs order, remained ongoing for almost three months after the unless-order deadline, and followed an order made by consent while the defendants were represented. The purpose of such an order included discouraging irresponsible interlocutory applications and resistance to successful applications.
4. The application was required to be supported by evidence explaining the default. The guidance in Michael Wilson & Partners v Sinclair [2017] EWHC 2424 required detailed, cogent and proper evidence of financial position, available assets and prospects of raising funds. The defendants failed to provide full and frank evidence concerning the alleged Strom transaction, the PTC position, funds said to be en route, or further third-party funding.
5. Litigants in person are not generally entitled to a lower standard of compliance with rules or orders. The court applied the principles discussed in Elliott v Stobart Group Ltd [2015] EWCA Civ 449 and Barton v Wright Hassall LLP [2018] UKSC 12.
6. The merits of the underlying claim or proposed defence had, at most, limited relevance. Following Global Torch Ltd v Apex Global Management Ltd (No 2) [2014] UKSC 64, assessing merits at this stage would risk disproportionate satellite litigation. The defendants’ failure had delayed the proceedings, increased costs and followed a poor record of compliance. Relief would not be just.

The judgment was a first-instance decision on the defendants’ application for relief from sanctions. It records earlier interlocutory orders by Popplewell J, Picken J, Jacobs J, Moulder J, Teare J and Cockerill J, including the freezing injunction, the costs order and the unless order.