Case Alert ‐ [2017] EWHC 2424 (Comm)

When a court will make an unless order if costs orders have not been paid

Various costs orders were made against the defendants (for example, the costs of a failed strike-out application). The issue in this case was whether the court should therefore make an unless order against them, so that if they failed to pay the costs due within 14 days, they would be debarred from defending the claim.

The judge summarised the principles applicable to an application for an unless order in these circumstances:

(1) When exercising its discretion, the court should bear in mind that such orders are intended to discourage irresponsible interlocutory applications (or resistance to successful interlocutory applications).

(2) The court should also bear in mind the potential applicability of Article 6 of the ECHR (right to a fair trial); whether the costs order can be enforced in a different way (unlikely where, as here, the defendants are not resident in the jurisdiction and have no assets here); and whether any submission was (or should have been) made that it would be inappropriate to make a costs order payable before the conclusion of the proceedings in question.

(3) If a party claims that he lacks the means to pay (and so the unless order will breach Article 6 or deny him justice), he must support that claim with detailed, cogent and proper evidence. The defendants in this case had failed to do that.

The judge noted that the defendants had been represented by experienced legal counsel when they made the strike-out application, and so it should be "readily inferred" that they must have appreciated the risk of a costs order being made. Nor was this a case of equitable set-off and so defaults by the claimant could not be taken into account: "there is no justification on the facts of this case for substituting a vague notion of fairness for the doctrinal requirements of equitable set-off".

Accordingly, the unless order was granted.