The firm's Dispute Resolution team led by Robert Dougans, head of Dispute Resolution, supported by Associate, Ewelina James acted successfully for the defendant, Mr Gavin Woodhouse, in defeating an application for an unless order. The claimants sought an order that unless the defendant paid an outstanding costs order his defence would be struck out and the judgment entered for the claimants in the total sum of £5.2 million plus interest. To set out the background, a claim was brought by the claimants (who are the administrators of certain companies) against the defendant in respect of alleged breaches of director's duties of both claimant companies which the defendant was the sole director of. The companies are now in administration and are controlled by and act by the joint administrators.
The High Court was satisfied on the defendant's evidence and despite the claimants' submissions, that the making of an unless order would probably stifle the defendant's defence of the claim.
Master Brightwell rejected the claimants' submissions in a threefold manner. Firstly, the claimants asserted that the defendant has fallen short of showing impecuniosity which the judge disagreed with, finding on a balance of probabilities, that the defendant does not have the assets available to meet the costs order. Secondly, the claimants didn't convince Master Brightwell in their submission that the defendant failed to apply to vary a freezing injunction to release funds from a property with disputed ownership, with the judge citing 'illogicality' in their submission. Finally, the judge found that the defendant established that he is unable to raise the funds necessary to pay the costs orders, contrary to the claimants' submissions.
The basic point is that Master Brightwell accepted that the defendant could not pay the costs orders, and that requiring him to pay them would prevent him from defending the claim.
The judgment is important as it clearly shows the legal test a party needs to meet to succeed when arguing that they cannot pay an interim costs order or make a payment for security for costs. The judgment is also helpful for legal practitioners in the context of navigating human rights in the business of litigation and it shows the Court's willingness to ensure justice is served especially when parties are not on an equal footing.
The full judgment can be read here.