Taha Pharmaceuticals v Capsugel Belgium NV

Relief from sanctions after breach of an unless order requires the three-stage inquiry established in Denton: seriousness and significance, the reason for default, and all the circumstances. The proportionality of the unless order itself will not ordinarily be reopened at the relief stage. A bona fide claim does not automatically make striking out disproportionate. The court must balance the claimant’s interest in pursuing the claim against the need to protect the defendant and enforce compliance with orders under the Civil Procedure Rules 1998. External regulatory obstacles will not justify relief where the claimant lacked diligence, misrepresented the position, failed to seek available alternatives, or could not show a realistic prospect of future compliance.

The applicant’s claim concerned an allegedly defective capsule-sealing machine and alternative allegations of dishonest misrepresentation. The High Court made an Unless Order requiring further security for costs, including £800,000 by 21 May 2025, with a route for interim security and an application for an extension of time. The claim was struck out on 4 June 2025 after non-compliance. The High Court refused reinstatement and relief from sanctions on 1 August 2025, and refused revocation on 13 August 2025. The applicant sought permission to appeal, arguing that the judge had failed properly to apply the Denton stages, assess proportionality, consider sovereign regulatory constraints, and take account of the applicant’s bona fide claim and its solicitors’ conduct. The central question was whether relief from sanctions had any real prospect of being justified.

Lord Justice Coulson gave the judgment of the court, with Lord Justice Lewison agreeing.

1. Disposition. Permission to appeal was refused. The High Court judge had been entitled to strike out the claim, and the proposed appeal had no real prospect of success.
2. Applicable principles. The court applied the three-stage test in Denton & Others v TH White Limited [2014] 1 W.L.R 3926. The court must assess the seriousness and significance of the breach, identify why the default occurred, and evaluate all the circumstances so as to deal justly with the application, including the factors in Civil Procedure Rules 1998 r.3.9.
3. Stage two. The applicant’s failure was serious and significant. It had delayed the litigation, previously failed to comply with a security order, failed to keep the court and defendant informed, and provided only desultory evidence of efforts to obtain authorisation. Its description of the dispute as a fraud case and its misleading suggestion that security would be paid directly to the defendant further undermined its explanation. The refusal by the Tunisian authorities was foreseeable and did not make compliance impossible. The applicant had not explored other available forms of security or sought authorisation for the £50,000 interim sum.
4. Stage three. The judge had considered the whole history and had not closed his mind after stage two. A bona fide claim was a factor in the applicant’s favour, but it did not automatically make strike-out disproportionate. The court had to balance the possibility that the claim might be lost against the defendant’s entitlement to protection under the security-for-costs regime. The proportionality of the Unless Order could not ordinarily be reopened at the relief stage: The Commissioner of Police of the Metropolis v Abdulle [2015] EWCA 1260. Michael Wilson & Partners v Sinclair [2015] EWCA Civ 774 did not establish otherwise.
5. Other matters. Procedural failures by solicitors are generally attributed to the applicant, and there was no evidence of material default by Kennedys. Reinstatement would in any event have left the claim stayed in legal limbo because the applicant could offer no realistic evidence of future compliance. Relief was therefore neither just nor proportionate.

1. Court of Appeal (Civil Division). On 29 January 2026, permission to appeal against the orders of 1 August and 13 August 2025 was refused. The court held that the proposed appeal had no real prospect of success: [2026] EWCA Civ 38.
2. High Court of Justice, Technology and Construction Court. Mr Alan Bates, sitting as a Deputy High Court Judge, struck out the claim on 4 June 2025, refused reinstatement and relief from sanctions on 1 August 2025, and refused revocation on 13 August 2025.