GLAS SAS (London Branch) v European Topsoho SARL & Ors

A court attaching conditions to an order under rule 3.1(3) of the Civil Procedure Rules must identify their purpose and decide whether they are a proportionate and effective means of achieving it. The conditions must be a proper price for the relief granted and must not circumvent another specific procedural rule.

Even a short case-management ruling must record the critical elements of the decision. It should identify the decisive issues and explain why the losing party’s case was rejected. An appellate court may nevertheless remake the decision where it has the necessary material and remittal would cause needless delay and expense.

The claimant bond trustee challenged a transfer of shares made after the bond issuer’s default. The appellant asserted that another defendant held those shares as its nominee. That defendant had been barred from defending after failing to make a payment into court and had subsequently disobeyed an order requiring return of the shares.

After the appellant was joined, it filed its defence six weeks late. Stephen Houseman KC granted relief permitting it to defend only if it procured return of the shares and paid €10m into court. The appellant challenged both conditions and the adequacy of the judge’s reasons.

The central questions were whether the ruling contained adequate reasons and, if not, whether the conditions were nonetheless proper under rule 3.1(3) of the Civil Procedure Rules.

1. Appeal dismissed. The judge had failed to give adequate reasons. Even in a busy applications list, the ruling had to record the critical elements of the decision so that the parties and an appellate court could understand the result. The references to earlier judgments, procedural dignity, surreality and scepticism did not explain why these particular conditions were justified or answer the appellant’s case. Since the Court of Appeal had heard full argument and possessed the necessary material, it remade the decision instead of ordering a costly and delaying remittal.

2. Rule 3.1(3) of the Civil Procedure Rules permits the court to make an order subject to conditions, including payment into court. The condition must attach to relief being granted. The court must identify its purpose and determine whether it is a proportionate and effective means of achieving that purpose. It must represent a proper price for the relief and cannot be used to circumvent another specific procedural rule.

3. The order should formally have granted relief from sanctions for the late defence subject to conditions. The relevant purpose was to prevent the appellant from pursuing unconditionally a weak defence previously advanced through its nominee, while avoiding responsibility for that nominee’s delays and defaults. The evidence showed aligned interests, common representation and funding, and reliance on witnesses employed by the appellant. The appellant’s own case that the other defendant held the shares as its nominee made its reliance on separate corporate personality and alleged inability to direct a transfer unreal.

4. The €10m payment was proportionate. The defence had substantial weaknesses, the appellant was responsible in practical terms for the earlier defaults, and the payment operated as earnest money rather than a precise estimate of loss. The continued uncertainty over the shares and concerns about their value supported a figure exceeding the €9m previously required from the nominee.

5. The transfer condition was also proportionate. It was not a mandatory injunction because the appellant retained a choice whether to comply. Return of the shares reversed the nominee’s invalid acquisition but did not determine the appellant’s asserted beneficial entitlement, which it could still pursue if permitted to defend. The burden of proving an inability to comply rested on the appellant, which had produced no such evidence. The order also allowed it to apply on evidence if compliance proved impossible.

1. Court of Appeal (Civil Division): In [2025] EWCA Civ 933, the court held that the Deputy High Court Judge’s reasons were inadequate but remade the discretionary decision, upheld both conditions and dismissed the appeal.

2. Commercial Court: On 13 December 2024, Stephen Houseman KC, sitting as a Deputy High Court Judge, barred the appellant from defending unless it filed its defence, procured the transfer of specified shares and paid €10m into court. No neutral citation for that ruling was stated.

3. Commercial Court: Bright J had earlier imposed payment conditions on two other defendants in [2024] EWHC 83 (Comm). Robin Knowles J subsequently ordered the return of the shares. Those were earlier stages of the same proceedings and informed the conditions under appeal.