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Unpaid court costs orders could cost you

The trial of an unfair prejudice petition (the Petition) has been vacated and the petition stayed for a year pending satisfaction of unpaid costs orders. Anthony King and others v Kings Solutions Group Ltd and others [2022] EWHC 2878 (Ch), provides a helpful analysis of what sanctions may be available if costs orders relating to interim applications remain unpaid in the run up to trial. 

In early 2022, we wrote about the successful application made by Primekings Holding Ltd and others (the Respondents) to the Court of Appeal resulting in a significant number of paragraphs of the Petitioners’ statement of case being struck out. Subsequently the Respondents successfully applied for further paragraphs of the Petitioners’ statement of case to be struck out.

The Petitioners were ordered to pay the Respondents’ costs of the successful strike out applications. The costs were unpaid. The Respondents therefore sought an order that unless those outstanding costs were paid, the Petition should be struck out or stayed. Granting the application in November 2022, the court vacated the previously fixed trial date of 2023 and stayed the petition for a year pending payment of the outstanding costs.

The court considered the principles applicable to deciding how to deal with unpaid costs orders and accepted that it had jurisdiction to make such an order. The key question for the court was whether making an order for the costs orders to be paid would deny access to justice.

The Petitioners argued that they did not have sufficient funds at present to meet the costs order, but striking out the Petition would violate their right to access to justice. The Respondents submitted that they would have to spend a lot more of their own funds with no prospect of recovering their legal costs even if successful, or defend the Petition themselves without legal representation, or the same level of legal representation. The Respondents also argued that the Petitioners had had access to justice particularly given that they had been involved in a number of claims against certain of the Respondents, all of which the Petitioners had lost.

The court found it compelling that the reason for the costs orders was the unsuccessful attempts by the Petitioners to resist the strike out of allegations which had no real prospect of success or were an abuse of process. The Petitioners could have avoided those costs by accepting the Respondents’ invitation to amend their statement of case as appropriate, but they chose instead to contest the strike out fiercely. It was also relevant that the Petitioners had a track record of not paying significant costs orders made against them in various related claims which they had lost against the same or similar parties.

There was a need to balance the respective interests of the Petitioners and the Respondents. In the circumstances, the court determined that the Respondents’ interests prevailed. The Petition was therefore stayed to give the Petitioners the opportunity to raise funds to meet the costs orders. If the costs orders are not then met by November 2023, the Petition will be struck out. The judge noted and had in mind that the Petitioners had failed in every claim they had made to date. Finally, the judge also noted that the interests of other court users are relevant. The court had devoted significant time already to the Petitioners’ claims and it was “no longer possible to indulge the Petitioners at the expense of other court users unless they comply with the costs orders made against them.

James Popperwell, Ed Llewelyn-Evans, Alex Douty, and Carrie Gothard instructing Catherine Addy KC of Maitland Chambers and Joe Sullivan of Quadrant Chambers, acted for the successful applicants.

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litigation

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