Blockchain Optimization S.A. & Anor v LFE Market Ltd & Ors

A party’s failure to pay crystallised costs orders may justify an unless order debarring it from defending proceedings. The court must consider all relevant circumstances, including the availability of alternative enforcement, the party’s financial evidence, access to justice and the importance of securing compliance with court orders. A claim of impecuniosity requires detailed, cogent and full evidence of the party’s financial position and prospects of raising funds. Anticipated future costs recoverable from the opposing party do not excuse non-payment of existing orders. Where the breach is serious and repeated, indemnity costs may be appropriate.

The claimants sought an order requiring the first, second and fourth defendants to pay £51,000 due under two outstanding costs orders. Failing payment, the defendants’ defences were to be struck out and they were to be debarred from defending claims concerning alleged fraudulent misrepresentations, breach of contract and unlawful means conspiracy arising from a cryptocurrency project.

The defendants relied principally on the effect of an earlier freezing order, anticipated future costs orders in their favour, and alleged impecuniosity. They had not provided detailed evidence of their financial position or funding. The central issue was whether those circumstances justified an unless order and debarring sanction.

1. Unless order granted. The first, second and fourth defendants had remained in breach of two costs orders, due on 11 August and 13 November 2020. They were ordered to pay the unpaid costs by 4 pm on 28 December 2020, failing which their defences would be struck out.
2. Under CPR 3.1(3), the court may make an order subject to conditions and specify the consequence of non-compliance. The caution in Marcan Shipping v Kefalas [2007] EWCA Civ 463 required the sanction to be justified in all the circumstances because striking out a statement of case is a powerful case-management tool.
3. Maintaining public confidence in the court’s ability to secure compliance with its orders is a legitimate objective of an unless order: Orb ARL v Ruhan [2016] EWHC 850. The principles in Michael Wilson v Sinclair [2017] EWHC 2424 were applicable. They required consideration of access to justice, alternative enforcement, the circumstances of the original costs order, and the quality of any evidence of impecuniosity.
4. The defendants’ evidence fell far short of the detailed, cogent and full disclosure required to establish inability to pay. Their substantial disclosed assets, continued funding of their solicitors and refusal to identify their funder supported the conclusion that they could pay. The absence of known assets in the jurisdiction and the lack of proper impecuniosity evidence justified requiring payment as the price of continuing to defend.
5. Potential future costs orders in the defendants’ favour were no reason to refuse enforcement of crystallised costs orders. There was no practical alternative enforcement mechanism and no evidence that payment would deny access to justice.
6. The claimants were awarded £15,000 costs of the application on the indemnity basis, payable by 4 pm on 31 December 2020. The defendants’ repeated and serious breaches justified that order.