Candy Ventures SARL v Aaqua BV & Ors

On an application to strike out for non-compliance with court orders, the court must assess the seriousness of the breaches, the reasons for them, and all the circumstances so as to deal with the application justly. Impecuniosity and prospective litigation funding will not generally justify non-compliance. Strike out may be proportionate even where the breached order was not an unless order, if the order clearly warned of the possible consequence, substantial time has elapsed, prejudice has resulted, and prompt compliance remains speculative.

The Part 20 Claimants sought damages in an inquiry arising from worldwide freezing orders which had been wrongly obtained in 2022. The claim had been stayed after the Claimants failed to pay costs and review and disclose outstanding documents, contrary to conditions imposed by a debarring order. The Part 20 Defendants applied for strike out under CPR 3.4 and, alternatively, summary judgment under CPR 24. The central issues were whether the continuing breaches justified strike out and whether the damages claim was obviously unwinnable or abusive.

1. Strike out for non-compliance. The Part 20 Claim was struck out under CPR 3.4(2)(c). Applying the three-stage approach in Denton v TH White Ltd [2014] EWCA Civ 906, the breaches were of the utmost seriousness. They had caused the trial to be vacated and continued despite an automatic stay, a clear timetable, and additional time before the application was heard.
2. The asserted lack of funds was not a good reason. Inability to pay for representation, impecuniosity, and hoped-for litigation funding do not generally justify breach of court orders requiring payment of adverse costs or compliance with disclosure obligations. The approach was consistent with R (Hysaj) v SSHD [2014] EWCA Civ 1633 and Fletcher and Macpherson v Razeem [2024] 7 WLUK 886.
3. All the circumstances favoured strike out. The wrongful obtaining of the freezing orders was relevant, but did not prevent that outcome. The court considered efficiency, proportionality, enforcement of orders, prejudice caused by unreimbursed costs and continuing uncertainty, and whether a further opportunity on unless terms was necessary. It was not.
4. The court did not determine the underlying causation or valuation issues for the CPR 3.4(2)(c) application. It proceeded on the basis that the Part 20 Claimants had at least a realistic prospect of recovering substantial damages.
5. The alternative applications were refused. The claim was not shown at this stage to be obviously ill-founded and unwinnable under CPR 3.4(2)(a), because it was arguable that findings in the earlier fraud judgment were collateral or evidentiary rather than necessary ingredients of that cause of action. The abuse argument added nothing material, and summary judgment would not have been granted if considered alone.

The court invited the parties to agree an order reflecting the decision.