PROVING THINGS 250: FAILING TO PROVE IMPECUNIOSITY: A BARE ASSERTION IS NOT ADEQUATE

The judgment  of Lord Justice Underhill (refusing permission to appeal) in Credico Marketing Ltd & Anor v Lambert & Anor [2023] EWCA Civ 262 relates a party who failed to adduce sufficient evidence to show impecuniosity.

No evidence of Mr Lambert’s impecuniosity was adduced before Martin Spencer J beyond a bare assertion in the witness statement of his solicitor, Mr Seligman. The judge did not regard that as adequate,”

THE CASE

The defendants had been subject to a peremptory order that they provide further information and pay outstanding costs. They failed to comply.  They sought an extension of time to comply with the order, they did not make any application for an extension of time to pay the costs. The costs remain unpaid. The judge refused the application.  The defendants then applied for permission to appeal.  They also applied for permission to rely on new

    1. Martin Spencer J made it clear that he was refusing the application for an extension because no good reason had been advanced for why the defendants could not pay the costs ordered by Judge Coe. He did not do so on the basis of the failure to supply the further information; if the latter had been the only issue, he said he would have been prepared to grant an extension. We are thus only concerned with the issue of non-payment. As to that, the defendants’ case before the judge was that they had not paid because they were impecunious. That was in practice accepted by Credico as regards the second defendant, but not as regards Mr Lambert.
    1. No evidence of Mr Lambert’s impecuniosity was adduced before Martin Spencer J beyond a bare assertion in the witness statement of his solicitor, Mr Seligman. The judge did not regard that as adequate, referring in particular to paragraph 29(4) of the judgment of Sir Richard Field in Michael Wilson v Sinclair [2017] EWHC 2424 (Comm) which reads:
“A submission by the party in default that he lacks the means to pay and that therefore a debarring order would be a denial of justice and/or in breach of Article 6 of ECHR should be supported by detailed, cogent and proper evidence which gives full and frank disclosure of the witness’s financial position including his or her prospects of raising the necessary funds where his or her cash resources are insufficient to meet the liability.”
    1. Martin Spencer J acknowledged, correctly, that this was not a case where the applicant was seeking relief from sanctions following a default, but he took the view that the situation was substantially similar, in view of the fact that what was being sought was an extension to an unless order. He also referred to the history of the litigation generally. The relevance of this went beyond the simple fact of prolonged non-payment. It included the fact that Mr Lambert had apparently found funds to instruct solicitors in the appeal to the Court of Appeal, which had by then been heard, and indeed for security for costs, but not to pay the (by comparison) fairly small sums which had been ordered to be paid to Credico. The judge also referred to an Instagram post by Mr Lambert in which he appeared to be crowing over the costs which he had caused Credico to incur for no result. He said at paragraph 61 of his judgment:
“The defendants have, in my judgment, been playing fast and loose with both the claimants and the courts in relation to these matters and in the process have been causing the claimants to incur more and more costs in reasonably resisting applications which have been made by the defendants. We thus have the costs of meeting the application of 30 March, the costs of meeting the application of 3 May and the costs of today’s application. In my judgment, it is simply inappropriate for the defendants to conduct litigation in this way and that, as Mr Mehrzad submitted, enough is enough and the time has come to put an end to this.”
    1. The defendants’ grounds of appeal, developed in a clear and helpful skeleton argument from Mr Shipley, largely focus on an application now to adduce evidence of Mr Lambert’s impecuniosity in the form of a witness statement from him dated 15 June 2022. I believe that that application must be refused for essentially two reasons.
    1. First, the witness statement contains no explanation of why it, or a statement to the same effect, was not put before the judge at the hearing on 19 May. It should have been perfectly apparent that such evidence was essential if the judge was going to be persuaded to grant further time following the making of the unless order. That is not simply a result of the general law as expressed in the judgment of Sir Richard Field which I have quoted. It should also have been particularly evident to the defendants because of observations which had already been made in this Court. On 30 January 2022 Master Bancroft-Rimmer made an order for security for costs in the sum of £10,000 in relation to the pending appeal (which, as I have already noted, the claimant found the funds to pay) and in that context made some strong observations about the inadequacy of Mr Lambert’s disclosure about his means. Shortly afterwards, in connection with an application to this Court for a stay of payment of the costs which the defendants were ordered to pay in relation to that security for costs application, I noted that the Master had found that Mr Lambert had been less than fully frank in his disclosure and said:
“It is unsatisfactory that the appellant’s assertion that he is unable to pay the amount due is not made in a witness statement or supported by documentary evidence.”
The importance of that observation is not lessened by the fact that for particular reasons I was prepared to order the stay sought.
    1. Mr Lambert had in fact already produced a witness statement claiming that he was impecunious: that was in July 2021 in connection with an application to this court as part of his first appeal. That statement would have been rather out of date if relied on before Martin Spencer J; but it could at least have formed the basis of a witness statement for the purpose of the hearing before him, as indeed it does in the statement now sought to be adduced.
    1. As regards the absence of any such evidence before the Judge Mr Shipley pointed out that the defendants had until fairly recently been unrepresented. However, Brandsmiths were instructed for the purpose of the hearing and had been on the record for at least three weeks. They were apparently acting at that stage on a no charge basis, but that does not affect the fact that they were now acting for the defendants and in a position to advise on what was required. Mr Shipley submitted, and I accept, that the Ladd v Marshall factors can be applied rather less strictly in an interlocutory context. Nevertheless, the fact that the defendants could, and plainly should, have adduced this evidence before the judge must weigh heavily in the balance against its being admitted now.
    1. Second, while the witness statement and the 2021 witness statement to which it refers do indeed give some basic information about Mr Lambert’s financial situation, they do not satisfactorily establish that he could not have paid the £14,000-odd that became payable in March 2022 and was the subject of the unless order. They are very short both on detail and on documentary support for the statements made. A number of obvious deficiencies are helpfully identified in paragraph 5 of the paragraph 19 representations filed by Credico. I need not set them out here, not only in the interests of brevity but also because Mr Shipley sensibly did not attempt to deal with them one by one. Rather, his position was that, while there were no doubt deficiencies in the evidence, they were not such as to undermine the basic picture which it painted of a defendant who was indeed impecunious. However, even if the broad picture painted is that the defendant is short of funds, the statements offer no satisfactory explanation of why, if he was able to find the funds for his own legal representation in the Court of Appeal and for security for costs there, and indeed in relation to the drafting of his Amended Defence, he was not able to find the comparatively modest amounts with which we are concerned here.
    1. Taking those two points together, I do not think it would be right for me to take the exceptional course of allowing the defendants to adduce for the first time on this appeal evidence that could and should have been made available before the judge.
    1. The refusal of that application disposes of most of grounds 1–3 of the defendants’ grounds of appeal, since they all depend principally on the submission that the judge should have proceeded on the basis that they were unable to pay the costs ordered, and that it would accordingly be wrong in principle, and indeed in breach of their article 6 rights, to prevent them from defending the claim.
  1. Mr Shipley submitted that even without detailed evidence of Mr Lambert’s means there were obvious indications before the court that he was in truth impecunious, most obviously that he had been acting for some time in person and that Brandsmiths were at the time, as he told the judge, acting without charge; and that that was sufficient to support otherwise bare assertion in Mr Seligman’s witness statement. I cannot accept that submission. I do not believe that there is a real prospect that if this appeal were to proceed this Court would find that the judge had been wrong on the material before him, including the view which he took about Mr Lambert’s attitude to the litigation, to refuse a further extension. The same goes for Mr Shipley’s submission that the judge should at least have given the defendants a short further period to submit proper evidence of impecuniosity (although he in fact acknowledged that that was not a course which he had invited him to take).