Impecunious parties: A sad fact of legal life that they must continue
An impecunious defendant seeking to stay an action because they cannot afford legal representation must show they are trying to rectify the situation, a High Court master has said.
Deputy Master Bowles ruled that “to say, ‘Oh dear, we are very poor, and we cannot afford lawyers’, is not, in itself, an answer to anything”.
“In the modern world, persons without the necessary funding for litigation, nonetheless, must – to the best of their ability, and with such assistance as the court can give – carry on their litigation. It is a sad fact of legal life.
“Accordingly, if there is to be a stay because of impecuniosity, or the like, then the stay only has a function if something can be done, in order to deal with the situation, remove the problem, secure the funding, and, ultimately, secure the representation.”
In the case before him, Manolete Partners PLC v Karim & Ors [2024] EWHC 549 (Ch), there was no evidence of this.
“I have been shown – to use my own phrase – no light at the end of the tunnel, no suggestion of any substance about what the assets are which could be sold, what the equity arising out of the sale of the assets might be, when it might be available, what legal representation it might procure. Simply nothing at all.”
There was no suggestion of “any urgent efforts, or indeed any real efforts, at all, to do anything about the financial predicament”.
The claimant is a well-known insolvency litigation funder that typically buys claims. The defendants are accused of breaching their fiduciary duties to their business by taking out money for improper purposes.
The master added that, while representation “would assist”, this was not a legally complicated case.
“It actually simply requires the defendants to give honest evidence and, insofar as they can, produce the material documents, such as to explain what they did in relation to certain transactions and why it was a legitimate thing for them to do.
“Of course, representation would help. But again, they have had, when it comes to setting up the bones of their defence, good representation, so that the shape of the case is there for all to see.”
The defendants sought a stay also on the basis of the first defendant’s health problems.
But Deputy Master Bowles was not persuaded that there was anything in his medical or psychiatric condition “to either affect his capacity, or to render it impossible or even particularly difficult, for him to take the necessary steps to substantiate his case”.
He added that there also had to be “a purpose behind the stay, other than kicking a can down the road, or putting off the evil hour”.
The judge went on to make an unless order in relation to the defendants’ disclosure, breach of which would lead to the defences being struck out.
“The sad fact is that because there has been – and I am afraid it is the responsibility of the defendants – a substantial non-compliance or non-cooperation with the court and with their opposing party, there has been a hiatus in this case of moving towards a year and, as a result, everything is now going to have to be squeezed into a very short span of time.”
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