Beech Hill Capital Limited v Lucas Duplan & Ors

The court may restrict a party’s ability to issue or pursue applications when the party has failed to pay costs orders made in the same proceedings. The jurisdiction is a case-management power arising from the court’s inherent jurisdiction and the Civil Procedure Rules. It requires a judicial discretion based on all the circumstances, including enforcement alternatives, procedural behaviour, Article 6 rights, access to justice, stifling, proportionality and the connection between the unpaid costs and the pending litigation. There is no rigid rule requiring a sanction whenever costs remain unpaid. Ordinarily, however, conditions may be appropriate where non-payment is unexplained and appears wilful. Any order should generally be proportionate and made on an unless basis.

The claimant brought proceedings concerning financing agreements, an alleged personal guarantee, claims against a corporate defendant and an alleged conspiracy. The defendants applied for permission to amend, strike out or obtain summary judgment, declarations concerning jurisdiction and cause of action, variation of an earlier order and a stay. The claimant applied to prevent the defendants from advancing applications until they complied with outstanding costs and payment orders.

The defendants accepted that the relevant orders had not been paid, that the second defendant was in contempt, and that they did not rely on impecuniosity, stifling, Article 6 or access to justice. The central issue was whether the court should exercise the Hadkinson jurisdiction or its case-management jurisdiction to debar applications.

1. Jurisdiction. The relief was better characterised as arising under the court’s case-management jurisdiction than under the Hadkinson jurisdiction. Hadkinson orders address an impediment to the course of justice and may involve refusing to hear a party. The present application instead concerned the failure to pay prior costs orders and could be determined under the case-management authorities.
2. The court has power under its inherent jurisdiction and CPR rules 3.1(3)(b) and 3.4(2)(c) to impose conditions on a party who fails to pay one or more costs orders made in the same proceedings. The power is discretionary and requires consideration of all the circumstances.
3. Relevant matters included the policy supporting prompt payment of interlocutory costs, the importance of compliance with court orders, all enforcement options inside and outside the proceedings, the defaulting party’s procedural behaviour, Article 6 and access to civil justice, any claim of stifling supported by proper financial evidence, and the connection between the unpaid costs and the claim or applications.
4. There was no rigid rule that non-payment automatically results in a sanction. The balance will ordinarily favour conditions where payment has not been made, no satisfactory explanation is offered, and the failure reasonably appears wilful. If relief is granted, an unless order will usually be preferable to an immediate sanction.
5. The defendants had failed to pay substantial outstanding orders, offered no explanation, had not alleged inability to pay or stifling, had pursued a series of largely unprogressed applications, and had identified no assets in the jurisdiction. The proposed restriction was connected with the litigation and did not prevent substantive participation in the defence.
6. A limited debarring order was therefore reasonable and proportionate. Each defendant was prohibited individually from issuing or pursuing applications unless and until that defendant discharged the orders made against it. The parties were given liberty to apply after a material change of circumstances, subject to notice and limits preventing repetition of applications covered by the debarring order.

Not stated in the judgment.