Photobooth Props Limited & Anor. v NEPBH Ltd & Ors.

An ‘unless’ order for non-payment of interim costs is discretionary. The court must consider the overriding objective and all relevant circumstances, including the policy behind early costs orders, potential engagement of Article 6(1) ECHR, alternative enforcement methods, the appropriateness of requiring payment before trial, and the quality of evidence concerning impecuniosity.

In IPEC proceedings, interim costs orders are exceptional. That context may reduce the weight of the policy favouring enforcement. An automatic loss of the right to defend is not ordinarily justified where the debtor’s financial evidence has not been substantively assessed and enforcement mechanisms remain available.

The claim concerned copyright infringement, breach of contract and fraudulent misrepresentation. At an earlier case management conference, the court ordered the defendants to make an interim payment on account of the claimants’ costs arising from successful interim applications, pending assessment after trial.

The defendants failed to pay by the specified date. The claimants sought an ‘unless’ order requiring payment within seven days, failing which all defences would be struck out. The central issue was whether non-payment justified that sanction in the procedural and financial circumstances.

1. Application dismissed. The court declined to order that the defendants’ defences be struck out unless the interim costs payment was made.
2. The imposition of a sanction for non-payment of a costs order involved the exercise of the court’s discretion under its inherent jurisdiction. The relevant considerations included the policy discouraging irresponsible interlocutory applications, potential applicability of Article 6(1) ECHR, alternative enforcement mechanisms, the appropriateness of making costs payable before the proceedings concluded, and the quality of evidence concerning inability to pay.
3. The IPEC regime materially affected the balance. Costs of interim hearings were ordinarily reserved until trial, so an interim costs payment was exceptional. The policy supporting early payment therefore carried reduced weight. An ‘unless’ order would automatically deprive the defendants of their right to defend the action, an outcome unlikely to have been contemplated by the IPEC costs rules.
4. The possible engagement of Article 6(1) weighed to some extent against the sanction. The defendants had not previously been warned that non-payment might result in loss of their right to defend. Alternative enforcement methods were available, although their availability did not by itself preclude an ‘unless’ order in an appropriate case.
5. The defendants had produced evidence of limited means, but it had not been substantively assessed or rejected. The claimants had repeatedly resisted detailed consideration of that evidence. It was therefore inappropriate to impose a strike-out sanction without first determining the defendants’ financial position in an appropriate enforcement process. The defendants’ premature use of form N245 did not, on the evidence, amount to an abuse of process.
6. The interim payment order remained valid and enforceable as a money judgment. Future non-compliance with other orders might justify an ‘unless’ order, but the proportionate and just order in the present circumstances was dismissal of the claimants’ application.