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Relief from Sanctions denied with US$10 million claim remaining struck out.

The Isle of Man High Court, in a judgment delivered by His Honour Deemster Corlett on 26 February 2025, has refused an application for relief from sanctions by the Claimants, Ballacorey Wheat Limited and GEM Global Yield Fund Limited. The case has been a longstanding legal dispute, culminating in the Court’s enforcement of its Order regarding security for costs.

Background

In May 2024 the Claimants were ordered to provide security for costs in the sum of £1.2 million to be paid into Court in respect of their claims against all five defendants to the claim, including £455,250 as security for the First Defendant’s costs. The order was explicit that failure to comply would result in the automatic striking out of the claims.

Failure to Comply and Automatic Strike Out

Despite the Court’s clear order, the Claimants failed to make the required payment by the stipulated deadline. Given this failure, the Claimants’ claims against all defendants were automatically struck out as of 29 July 2024, however, the Claimants subsequently sought relief from sanctions under Rule 2.59 of the 2009 Rules of Court in an attempt to revive their claim, although they only sought to reinstate their claims against the First Defendant. The essence of their application was that an ATE Insurance Policy should stand in place of the in place of the payment into Court of cash.

The Court’s Decision

At the hearing, Callin Wild’s Fletcher Craine appeared for the First Defendant and successfully opposed the application.

Deemster Corlett, in his reserved judgment, upheld the strict application of procedural rules and refused the Claimants’ request for relief. No good reason was adduced by the Claimants in respect of their failure to comply with the security for costs order and there had been no material change to their circumstances since the order was made. Further, there was evidence that the Claimants could make payments when they wished to.

The judgment reinforces the principle that court orders, particularly those concerning security for costs, must be adhered to strictly and that non-compliance carries severe consequences.

Key Points

• Strict Enforcement of Security for Costs Orders: The judgment underscores that failure to comply with an order for security for costs will likely result in a claim being struck out.
• Limited Scope for Relief from Sanctions: The Court’s refusal to grant relief highlights the high threshold that must be met to justify any departure from procedural rules. Whilst relief may be granted for more minor breaches (and if the breach is trivial then it should be agreed), if a breach is significant and serious then the applicant must explain why the breach occurred and give good reason for doing so. The Court will then evaluate all the circumstances of the case so as to enable the court to deal with the application justly.
• Finality in Litigation: The decision reinforces the principle that litigation must have an endpoint, and non-compliance with court orders can bring a case to a definitive close.

This case serves as a crucial reminder for litigants of the importance of complying with procedural orders, particularly those concerning security for costs. Failure to do so can result in the irreversible dismissal of claims, leaving parties without recourse. For legal practitioners, this judgment further affirms the Isle of Man High Court’s commitment to upholding procedural discipline and ensuring that litigation proceeds in an orderly and fair manner.

The judgment can be found here: BWL & Other v Brown & Others - 26 February 2025

For further legal insights or assistance regarding security for costs, our expert team at Callin Wild is available to provide guidance and representation.