Credico Marketing Limited & Anor. v Benjamin Gregory Lambert & Anor.

Admission of fresh evidence on an interlocutory appeal may be approached less strictly, but evidence that could and plainly should have been produced below weighs heavily against admission. A party relying on impecuniosity to resist an unless order must provide detailed, cogent and properly supported evidence of financial position and ability to raise funds. Bare assertions and general indications of poverty are insufficient. The court may consider litigation conduct, including an unexplained ability to fund other litigation expenses while leaving ordered costs unpaid. A later appellate ruling that one restraint was unenforceable does not make a default judgment on wider economic tort claims inconsistent where liability rests on other pleaded bases. The ruling may still be relied on at the assessment of causation or damages. Permission to appeal and permission to adduce fresh evidence were refused.

Credico pursued claims against the defendants arising from alleged breaches of restrictive covenants and an alleged scheme involving the disruption or takeover of part of Credico’s marketing network. The wider claims were for unlawful means conspiracy and unlawful interference with business.

After the defendants failed to comply with an unless order requiring payment of costs and provision of further information, Martin Spencer J refused an extension of time. The Amended Defence was struck out and judgment on liability was entered.

In an earlier appeal, the Court of Appeal held that the post-termination restraint in clause 21.2 was unenforceable: [2022] EWCA Civ 864. The defendants applied for permission to appeal against the unless-order decision and for permission to adduce fresh evidence concerning Mr Lambert’s impecuniosity. The central issues were whether that evidence should be admitted and whether the earlier appellate ruling created an inconsistency with the judgment on liability.

1. Applications refused. Lord Justice Underhill refused both permission to appeal and permission to adduce fresh evidence.

2. Fresh evidence and impecuniosity. The court treated the extension of an unless order as substantially analogous to relief from sanctions where impecuniosity is relied upon. Michael Wilson v Sinclair [2017] EWHC 2424 (Comm) supported the requirement for detailed and properly supported evidence of the applicant’s financial position and prospects of raising funds. The factors in Ladd v Marshall could be applied less strictly in an interlocutory context, but the evidence could and plainly should have been provided to the judge. No adequate explanation for its absence was given. The new and earlier witness statements lacked sufficient detail and documentary support, and did not explain why Mr Lambert could fund legal representation, security for costs and other litigation expenses but not the relatively modest ordered costs. Admission of the evidence was therefore refused.

3. Permission to appeal. On the material before Martin Spencer J, there was no real prospect that he had erred in refusing a further extension. Bare assertions of impecuniosity and the fact that the defendants had sometimes acted in person did not suffice. The history and conduct of the litigation were relevant to the exercise of discretion. Ground 4, concerning further information, required no determination because the judge had indicated that an extension would have been granted if the costs had been paid.

4. Effect of the earlier appeal. Applying the principles summarised in Pugh v Cantor Fitzgerald International [2001] EWCA Civ 307, the court held that there was no necessary inconsistency between the default judgment on liability and the earlier finding that clause 21.2 was unenforceable. The economic tort claims were not pleaded on a basis dependent only on that restraint. The defendants could rely on the earlier finding on causation or quantum at the assessment of damages, subject to Credico’s argument that the finding might not apply to equivalent covenants in other contracts. No variation of the order was necessary.

5. The application to adduce fresh evidence and permission to appeal were refused. Costs were summarily assessed at £15,000, payable within 14 days.

• Court of Appeal (Civil Division) — [2023] EWCA Civ 262: refused permission to appeal and permission to adduce fresh evidence; costs ordered.
• High Court of Justice, Queen’s Bench Division — Martin Spencer J refused an extension of time under the unless order, resulting in strike-out of the Amended Defence and judgment on liability for the claimants.