Parsdome Holdings Limited v Plastic Energy Global S.L.

An order requiring payment into court by a specified date, while permitting payment by cheque, is ordinarily satisfied when the cheque is received by the Court Funds Office by the deadline and later clears. The absence of cleared funds by the deadline alone does not establish breach. But, under r 25.12(3) of the Civil Procedure Rules 1998, the court may require cleared funds to be received by a specified date, particularly where time is critical. A paying party may use bank transfer to provide greater certainty. The court may fashion such an order despite an earlier consent order where circumstances require it. The appeal was dismissed because the unless order was within the case-management discretion and proportionate.

Parsdome, a British Virgin Islands company, brought proceedings alleging that Plastic Energy induced it by fraudulent misrepresentations to enter a deed of novation of a convertible loan agreement.

After earlier security-for-costs orders had been complied with, further orders required payment of security into the Court Funds Office. Parsdome attempted to comply by cheque, but the cheques were late, defective, not received, or never cleared.

Foxton J held that no security had been provided and ordered that the claim be struck out unless cleared funds were paid by 20 February 2024. He later granted permission to appeal after recognising that part of his reasoning was inconsistent with ENE Kos. The appeal concerned the construction of the consent order, the court’s power to require cleared funds, and the proportionality of the sanction.

Appeal dismissed. The Court of Appeal unanimously upheld Foxton J’s order, although it corrected part of his reasoning.

1. Construction of the payment obligation. The primary basis of ENE Kos 1 Ltd v Petroleo Brasilieiro SA [2009] EWCA Civ 1127, namely the then-applicable Court Fund Rules, no longer applied because the Court Fund Rules 2007 had been replaced by the Court Fund Rules 2011. Its supporting reasoning based on the general law of cheques remained applicable. An order requiring payment by a specified date, and permitting payment by cheque without more, is complied with if the cheque reaches the Court Funds Office by the deadline and subsequently clears. The Calver J Order therefore did not require cleared funds by 22 January 2024, but eventual clearance was necessary.
2. Power to require cleared funds. Under r 25.12(3) of the Civil Procedure Rules 1998, the court may direct the manner and time within which security is given. It may require cleared funds to be received by the deadline, particularly where time is of the essence. Although payment by cheque may leave compliance partly outside the paying party’s control, bank transfer remains available and the need for the opposing party to be secured outweighs that uncertainty.
3. Consent order and case management. The prior agreement reflected in the Calver J Order did not prevent Foxton J from making a different order to meet the circumstances before him. Parsdome had clearly breached the order by waiting until the deadline to post a cheque from Guatemala.
4. Proportionality and appellate review. The first-instance judge had applied the three-stage approach in Denton v T H White Limited [2014] EWCA Civ 906 and separately considered proportionality. A case-management decision should not be disturbed unless plainly wrong and outside the generous ambit of reasonable disagreement: Broughton v Kop Football (Cayman) Ltd [2012] EWCA Civ 1743. Given the repeated breaches, absence of security, imminent trial, lack of evidence that the cheque would clear, and the time needed for clearance, the unless order was within that ambit and was the only order meeting the justice of the case.

1. Court of Appeal (Civil Division): dismissed the appeal against the order of Foxton J.
2. High Court, Commercial Court: on 14 February 2024, Foxton J ordered that the claim be struck out unless cleared funds were paid into the Court Funds Office by 4pm on 20 February 2024. On 21 February 2024 he granted permission to appeal.