Factual and Procedural Background
The Plaintiff commenced proceedings alleging that in March 2017 it bought from the Defendant a LEMS70 capsule sealing machine which was supplied with used or worn components; alternatively the Plaintiff pleaded dishonest representations that the machine was new. The claim form was issued on 20 February 2023.
There were extensive delays by the Plaintiff, an ongoing dispute about security for costs, and a prior order by Judge Eyre that the Plaintiff provide security. On 21 January 2025 Deputy Judge Bates made an Unless Order requiring further security of £800,000 (with a fallback requirement to provide £50,000 and apply for an extension by 21 May 2025), and stayed the claim pending compliance.
The Plaintiff did not comply with the Unless Order and on 4 June 2025 the judge struck out the claim. The Plaintiff applied to set aside that order (the "Reinstatement Application") and alternatively sought relief from sanctions under CPR 3.9; that application was refused by order dated 1 August 2025 with reasons. The Plaintiff then applied to vary/revoke the 1 August order (the "Revocation Application"); that was refused by order dated 13 August 2025. The Plaintiff seeks permission to appeal the orders of 1 August and 13 August 2025.
Legal Issues Presented
- Whether permission to appeal should be granted against the judge's refusal of the Reinstatement Application (relief from sanctions under CPR r.3.9) and against the refusal of the Revocation Application.
- Whether the judge correctly applied the three-stage test in Denton & Others v TH White Limited [2014] 1 WLR 3926 when deciding the application for relief from sanctions.
- Whether the Plaintiff's failure to comply with the Unless Order was occasioned by matters beyond its control (actions of the Central Bank/Ministry) or by lack of diligence/misconduct on the part of the Plaintiff.
- Whether the judge failed at stage three of Denton properly to balance all the circumstances (including proportionality and the bona fides of the claim), or otherwise closed his mind to relevant considerations.
Arguments of the Parties
Plaintiff's Arguments
- The Plaintiff (represented on appeal by Attorney Lambert) contended that the default resulted from the Central Bank/Ministry's refusal to authorise transfers and so was beyond the Plaintiff's control, justifying relief from sanctions.
- The Plaintiff argued the judge erred at stage three of Denton by failing to balance all circumstances, particularly proportionality and the bona fides of the claim, and that the judge closed his mind to alternatives to striking out.
- The Plaintiff also raised criticisms of its solicitors' conduct and sought to attribute procedural failings to them.
Defendant's Arguments
- The Defendant (and its solicitors, Company C) relied on the Plaintiff's protracted and repeated delays, previous non-compliance with an order of Judge Eyre, and the Plaintiff's failure to take available alternative routes to provide security (eg bank guarantees, solicitor's undertakings).
- The Defendant emphasised correspondence in which the Plaintiff mischaracterised the purpose of the payment and described the Defendant as having "perpetrated a fraud", undermining the Plaintiff's claim that the Ministry's refusal was an innocent external impediment.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| The Commissioner of Police of the Metropolis v Abdulle [2015] EWCA 1260 |
General rule that the proportionality of an Unless Order is not revisited when considering relief from sanctions. |
Cited to support the proposition that the court should not re-open proportionality of the Unless Order when deciding relief from sanctions; the judge's Unless Order was not challenged on proportionality. |
| Michael Wilson & Partners v Sinclair [2015] EWCA Civ 774 |
Referenced in relation to authority; noted not to be to the contrary of Abdulle. |
Not relied upon by the Plaintiff; the court observed it did not conflict with the cited principle. |
| Denton & Others v TH White Limited [2014] 1 WLR 3926 |
The three-stage test for applications for relief from sanctions (identify seriousness of breach; why default occurred; evaluation of all circumstances including r.3.9 factors). |
The judge applied the Denton test: stage one conceded as serious; stage two found lack of diligence and misrepresentations by the Plaintiff; stage three balanced all circumstances and concluded relief should be refused. |
| Michael v Lillitos [2019] Costs LR 1615 |
Application of Denton at first instance; example where breach was at bottom of seriousness range and relief was granted. |
Distinguished on the facts: the court found the present breach was of a much higher degree of seriousness and significance than in Michael. |
Court's Reasoning and Analysis
The appellate judge reviewed the factual matrix and the procedural timeline provided in the judge's earlier reasons. The judge's Unless Order of 21 January 2025 aimed to balance doing substantive justice and preventing continued delay; the judge recorded concerns that the Plaintiff had been slow and dilatory and that Tunisia's currency controls (requiring Ministry authorisation) were a known factor.
The court accepted that the Denton three-stage test applied. Stage one was conceded: the breach was serious and significant because failure to provide security impeded efficient conduct of the litigation for years and there had been prior non-compliance with Judge Eyre's order.
On stage two the court upheld the judge's findings that the default resulted from lack of diligence by the Plaintiff, not impossibility. The court relied on contemporaneous correspondence showing intermittent contact with the Ministry, a troubling letter in which the Plaintiff described that the security "shall be paid to the opposing party which defrauded the company Company A", and misleading statements that funds would be paid directly to the Defendant rather than into court. The court observed that the Plaintiff had not attempted obvious alternative forms of security listed in the Unless Order (eg bank guarantees, solicitor's undertakings), nor sought to provide the fallback £50,000 to trigger the extension mechanism.
On stage three the court carried out the required balancing of all circumstances (including CPR r.3.9(a) and (b)). The court found that the judge had considered the bona fides of the claim but that no other factor in the Plaintiff's favour existed. The court rejected criticisms that the judge had closed his mind or ignored proportionality, noting that proportionality had been considered when the Unless Order was made and could not be re-opened in this relief application. The court also rejected the submission that solicitors' failures absolved the Plaintiff, treating solicitors as agents whose failures are generally attributable to the client; moreover, key correspondence had been conducted by the Plaintiff itself.
The court further reasoned that if relief were granted there was no convincing evidence the Plaintiff could or would comply with the Unless Order in future, meaning the litigation would remain stayed indefinitely, which would be unjust and disproportionate.
Holding and Implications
PERMISSION TO APPEAL: REFUSED
Holding: The application for permission to appeal the orders of 1 August 2025 and 13 August 2025 was refused. The appellate judge concluded the judge below correctly applied the Denton test and was entitled to refuse relief from sanctions; Judge Lewison agreed.
Implications: The direct effect is that the Plaintiff's claim remains struck out and the Plaintiff has no permission to appeal. The court found no real prospect of success on appeal. The opinion does not purport to create a new precedent; it applies established principles (CPR r.3.9 and Denton) to the facts of this case.