Justice Investments Limited v Visalia Energia SL t/a NACE & Ors

A strike-out application is a draconian remedy and should be used as a last resort. A provisional defence may disclose reasonable grounds where it represents the defendants’ present knowledge and may be supplemented after disclosure. Questions concerning document authenticity, metadata and the weight of expert evidence ordinarily require a fuller investigation at trial.

Where assessment of damages against defaulting defendants substantially overlaps with contested issues against co-defendants, the court may adjourn the assessment to avoid prejudice, inconsistent findings and disproportionate use of resources. Security for costs may be ordered where there is reason to believe that a company will be unable to pay an adverse costs order and the claimant does not provide full, frank, clear and unequivocal evidence that security would stifle the claim.

The claimant pursued contractual and economic tort claims arising from loans and related commercial arrangements involving the defendants. Default judgment had been entered against the third, fourth and fifth defendants, with damages to be assessed. The claims against the first and second defendants remained contested.

Mrs Justice Eady determined several interlocutory applications: a second application to strike out the first and second defendants’ amended defence; an application to restore the damages disposal hearing against the defaulting defendants; an application to restrict the claimant’s use of disclosed documents and hearing transcripts; applications concerning expert and witness evidence; and an application for security for costs.

1. Strike out. Applying Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch), as confirmed for strike-out purposes by Begum v Maran (UK) Limited [2021] EWCA Civ 326, the court must consider whether the defence has a realistic prospect of success without conducting a mini-trial. Critical analysis of the evidence is permissible, but the court must not determine disputed facts or assess relative evidential weight prematurely. The defence’s provisional account of the loan arrangements did not make it incoherent or fanciful. Issues concerning execution dates, missing metadata and alleged manipulation required fuller investigation. The second strike-out application repeated matters previously determined and was dismissed as wholly without merit.

2. Assessment of damages. Although a judgment in default is conclusive on liability, damages remain to be proved. The proposed assessment against the defaulting defendants substantially overlapped with factual and legal issues in the contested claims against the first and second defendants. Adjourning the assessment to the trial would avoid one-sided findings, inconsistent judgments and wasteful use of court resources, consistent with CPR 1.1(e) and 1.4(i). The disposal hearing application was dismissed, with liberty to apply if the claims against the first and second defendants were withdrawn, compromised or dismissed.

3. Restriction on use of documents. The selective and inaccurate presentation of court transcripts and disclosed documents to named third parties constituted an abuse of process. The court’s inherent jurisdiction permitted a targeted restriction. The order represented a proportionate and minimal derogation from open justice because it addressed the specific misuse without preventing a fair trial.

4. Security for costs. Under CPR 25.27, the threshold conditions are matters of fact, followed by a discretionary assessment of whether security is just. The first and second defendants established a reason to believe that the claimant would be unable to pay their costs if ordered to do so. The claimant had effectively no presently liquid assets, and the recoverability of its anticipated assets was uncertain. The claimant failed to provide full, frank, clear and unequivocal evidence that an order would stifle the claims. Having regard to the evidence, the court ordered security of £250,000, payable within 42 days, and stayed further proceedings until payment.

5. The Nardello report was admitted as expert evidence. The application to rely on the ninth witness statement of Mr Copping was refused because the evidence was unreliable and added little of certain weight.