Taha Pharmaceuticals v Capsugel Belgium: Court of Appeal Confirms a Bona Fide Claim Won’t Save You From Strike-Out for Breaching an Unless Order

Key Takeaways

1. The Court of Appeal has confirmed that a genuine or bona fide claim will not automatically protect you from strike-out if you breach an unless order in commercial litigation.
2. Failure to comply with an unless order to provide security for costs or other directions will result in automatic sanctions, typically dismissal of your claim, unless you promptly secure relief from sanctions.
3. Relief from sanctions after breaching an unless order is governed by the strict three-stage Denton test, considering the seriousness of the breach, the reasons for default, and all surrounding circumstances.
4. The court expects a formal application for relief from sanctions to be made without delay, and proactive steps before the deadline greatly improve your chances.
5. Doing nothing after missing a deadline can be fatal to your claim. Courts will rarely grant relief if you wait or provide excuses late.
6. Courts now prioritise procedural compliance, so failing to engage or communicate transparently can undermine even a strong case.
7. Prior delays, previous breaches, or unpaid costs orders will weigh heavily against you when the court considers whether to grant relief after an unless order breach.
8. Proportionality arguments about the fairness of the unless order itself must be raised at the time the order is made rather than after default.

If you face an unless order or risk procedural strike-out, book a free consultation with our commercial litigation solicitors for urgent, practical guidance.

When a Good Claim Isn’t Enough

Many business owners believe that if their claim is strong, the courts will always let the dispute proceed, even after a missed deadline or order. The reality is far stricter. The Court of Appeal has confirmed in Taha Pharmaceuticals v Capsugel Belgium NV [2026] EWCA Civ 38 that even a genuine, bona fide claim will not protect you from strike-out if you breach an unless order, especially one requiring security for costs. Procedural discipline is now as important as the merits.

A Tunisian pharmaceutical company’s breach-of-contract claim was struck out—not because it lacked substance, but because the company failed to provide court-ordered security for costs by the deadline. Permission to appeal was refused, with the Court holding that “the mere fact that a claim is bona fide will not necessarily be sufficient to avoid strike-out for procedural failures.” The Court summed up:

Otherwise, a party could be ordered to provide security, refuse to comply with the order and/or delay endlessly, and always be able to resist the striking out of its claim, because that would be disproportionate. This would make the entire security for costs regime redundant.

This article unpacks exactly how the relief from sanctions unless order process operates, why a genuine claim is no longer a shield, and what directors and companies must do to avoid catastrophic strike-out. It covers the practical application of the three-stage Denton v White [2014] EWCA Civ 906 test, urgency requirements, and the consequences of delay or misrepresentation in modern English commercial litigation.

The Facts of Taha Pharmaceuticals

The Dispute

The claimant, a Tunisian pharmaceutical company, alleged it purchased a defective capsule-sealing machine (the “LEMS70”) from the defendant, a Belgian manufacturer, in March 2017. The claim rested on breach of contract (the machine was used and in poor condition) along with alternative dishonest misrepresentation claims.

The Procedural History

The claim was issued in February 2023, just one month before limitation expired. By 2026, the litigation had not progressed beyond initial pleadings due to repeated delays by the claimant. Notably, the claimant failed to comply with a security for costs order made in January 2024 (Eyre J), only partly providing £200,000 of a larger sum. There were ongoing breaches and £139,000 remained in unpaid costs orders.

The Unless Order (21 January 2025)

Deputy High Court Judge Alan Bates ordered the claimant to provide £800,000 security by 21 May 2025—either by payment into the Court Funds Office, a solicitor’s undertaking, or a bank guarantee. The order also allowed for £50,000 interim security and an application for extension. If these steps were not taken, the claim would be struck out.

The judge carefully balanced the company’s difficulties, especially Tunisian currency controls needing Ministry of Finance consent, against the defendant’s right to protection and the claimant’s track record of delay. The judge stated:

If the evidence had showed that the applicant was doing the very best it could to progress matters with the Ministry of Finance then he might have been inclined to grant a period of time simply for enquiries to be made (and therefore not to make an unless order). But he went on at [19] to find that that was simply not the case here. He said that the correspondence showed that the applicant had been slow to engage with the question of security and slow to advance positive proposals.

Breach and Strike-Out (May to June 2025)

The claimant failed to comply by the 21 May deadline. On the day itself, its solicitors sent a few pages of correspondence with the Tunisian authorities to the court, asking the judge to “consider” them. There was no formal extension application, no interim payment, and four months had passed without contacting the court or defendant.

On 4 June 2025, the judge struck out the claim, finding the claimant had shown “dilatory” conduct, misled the Ministry of Finance (describing the defendant as “the opposing party which defrauded” the claimant and wrongly stating the £800,000 would be paid to the defendant), and had not exhibited genuine diligence in meeting the order.

The Relief From Sanctions Application

After strike-out, the claimant applied under CPR 3.5 and CPR 3.9 for relief from sanctions, arguing it had acted diligently and was prevented by “external sovereign regulatory constraints beyond its control.”

Evidence included a letter from the Central Bank of Tunisia dated 22 May 2025 (one day after the deadline) refusing authorisation. Reasons included the machine’s purchase price being €570,000 (less than the security required), payment of £350,000 in legal fees already, the £800,000 guarantee exceeding the value of the machine, and lack of information on conditions for refund.

The judge refused relief on the papers (1 August 2025), applying the Denton three-stage test:

1. Seriousness of breach: The breach was “serious and significant to a high degree”—a point the claimant conceded. The judge observed, “this case should have been concluded by the end of 2024. That it was not, and that instead the case has not gone beyond the pleading stage, is entirely the fault of the applicant.”
2. Why it occurred: The judge rejected any “genuine impossibility” and found a lack of diligence. The claimant was slow to engage, misrepresented the dispute in letters to the Ministry, failed to explore alternatives or keep the court/defendant informed, and tried to recast itself as a “diligent victim” of external forces.
3. All the circumstances: There was “no good reason to grant relief” due to wholesale delays, breaches of orders, and evidence the claimant sought “risk-free litigation.” The judge noted that the bona fide nature of the claim had already been factored in both when making the unless order and when refusing relief, but it did not outweigh ongoing non-compliance.

A request to vary or revoke the order (filed on 13 August 2025) was also refused.

The Court of Appeal Decision: Bona Fide Claims Are Not a Get-Out Card

The claimant sought permission to appeal, conceding the seriousness of the breach but challenging the reasoning at stages 2 and 3 of the Denton test.

Key Holdings

• Stage 2 (why the default occurred):
  • The judge was right—this was not genuine impossibility. The claimant’s lack of diligence, misrepresentations to the Ministry (describing payment as going to the defendant, using fraud allegations), and failure to communicate with the court or opposing party undermined any claim to good faith.
  • The Court found the claimant likely wanted the authorisation refused to avoid providing security and keep litigating without real risk:

  The only possible explanation for these misrepresentations to the Central Bank/Ministry is that the applicant wanted the authorisation to be refused, in order that it could continue to litigate without having to find the necessary security for costs.

  • The claimant’s witness, Dr Zghidi, gave an unsatisfactory statement, omitting to mention that the applicant itself had started criminal proceedings overseas, which made provision of security harder.
• Stage 3 (all the circumstances and proportionality):
  • The judge had balanced all factors. The bona fide nature of the claim was considered but was not determinative.
  • The Court of Appeal made this clear:

  It is wrong to assume that, merely because the claimant had a bona fide claim, it automatically follows that it would be disproportionate to strike it out. Otherwise, a party could refuse security, delay endlessly, and always resist strike-out on grounds of disproportionality. This would make the entire security for costs regime redundant.

  • The judge’s repeated references to the genuineness of the claim showed it was weighed appropriately, but the record of “wholesale delays, breaches of orders, repeated dilatory conduct, and evidence that strongly suggested… deliberate attempt to conduct risk-free litigation” ruled out any real prospect of success.

  This was not a case of an isolated breach, or a breach that was not very serious or significant. This was a case of wholesale delays, breaches of orders, repeated dilatory conduct, and evidence that strongly suggested that the claimant’s failure to provide security was a deliberate attempt to conduct risk-free litigation. Consequently, the result of any balancing exercise was never going to be in the claimant’s favour.

• Practical Futility: Even had relief been granted, the claimant had not shown it could or would comply in future. Reinstating the claim would simply prolong limbo with no real prospect of progress.
• Proportionality Not Re-Opened: The proportionality of the unless order itself was not open for re-examination. Citing Abdulle v Commissioner of Police [2015] EWCA Civ 1260 at [15], the Court made clear:

The court will not reconsider or re-open any question about the proportionality of the Unless Order itself when considering an application for relief from sanctions.

The Denton v White Test: A Refresher for Commercial Litigants

The Denton three-stage test is the foundation for all relief from sanctions applications in modern commercial litigation.

Stage 1: Is the Breach Serious or Significant?

The court asks whether the breach disrupts the efficient conduct of the case or impacts the administration of justice. Minor or trivial breaches (such as a document filed minutes late with no material consequence) may be excused, but where deadlines are missed and trial dates imperilled, the breach is likely serious.

Stage 2: Was There a Good Reason?

The court then considers whether there is a genuine, substantiated explanation for the default. External and unforeseeable events, such as urgent hospitalisation or credible regulatory impossibility, may constitute good reasons. Overwork, oversight, tactical delay, or internal inertia rarely do.

Denton itself makes clear at [41]:

Solicitors cannot take on too much work and expect to be able to persuade a court that this is a good reason for their failure to meet deadlines.

Failure to apply for an extension before breaching the order, lack of evidence, or misrepresentation actively harm your prospects.

Stage 3: Do All the Circumstances Justify Relief?

Finally, the court weighs all relevant factors, including:

• The need to conduct litigation efficiently and at proportionate cost
• The need to enforce compliance with rules and orders
• The merits of the claim (but a bona fide claim alone does not carry the day)
• The party’s prior conduct, including previous delays and compliance record
• The impact on both sides

It is crucial to note that at this stage, the proportionality of the original unless order cannot be re-argued—parties are expected to raise such issues at the time the order is made, not after breach (Abdulle).

Key Takeaways for Commercial Claimants and Defendants

For Claimants

• Genuine claims do not protect against strike-out. The Taha decision confirms procedural discipline trumps the merits once you are in default.
• Diligence and early engagement are essential. Foreign regulations, funding issues, and similar obstacles must be raised with the court and the other side at the earliest opportunity.
• Applications to extend or vary deadlines must be made before breach. Courts are far less forgiving of post-deadline requests. In Taha, radio silence for four months was fatal.
• Provide interim compliance where possible. If you cannot comply in full, partial payments or steps taken in good faith are looked upon favourably.
• Explore every alternative. Solicitor’s undertakings, bank guarantees, third-party funding, and payment plans may be preferable—and courts expect evidence of such exploration.
• Never misrepresent your circumstances. Misleading the court, opposing parties, or authorities ruins credibility and makes relief unlikely.
• Prior compliance record heavily influences the result. Unpaid costs, repeated delays, and earlier missed deadlines severely diminish your prospects if you later breach an unless order.

For Defendants

• The Taha judgment strengthens your security for costs position. Courts will robustly enforce unless orders and are unlikely to renew mercy for repeated claimant defaults.
• Monitor compliance and document non-compliance. Maintain clear, dated records of communications, missed deadlines, and costs orders unpaid or breached.
• When seeking security, present evidence of financial risk and past delays. Applications are more likely to succeed, and unless orders may follow if the claimant falls short.
• Consider seeking an unless order if previous orders are not met. Courts look favourably on parties who are proactive in controlling procedural drift.

Security for Costs: The Regime in a Nutshell

What is Security for Costs?

Under CPR 25.12 to 25.15, security for costs is an order requiring a claimant to provide a sum of money (or equivalent security) to ensure the defendant can recover its legal costs if the claim fails. This security is typically lodged with the Court Funds Office, secured by a solicitor’s undertaking, or provided through a recognised financial guarantee.

When is it Ordered?

Jurisdictional grounds for such an order (CPR 25.13) include:

• Claimant is outside England and Wales and not in a state with reciprocal enforcement of judgments
• Claimant is a company where there is reason to believe it cannot pay the defendant’s costs if ordered
• Other grounds (e.g. claimants changing addresses to avoid enforcement)

The court has discretion to make the order even if these grounds are met and must balance the risk to defendants against the possibility of stifling a legitimate claim. However, as Taha shows, the existence of a genuine claim does not override the need for compliance.

How Much is Ordered?

Usually, the defendant’s estimated costs to trial or another case management milestone are the guiding figure, sometimes divided into tranches.

How is it Enforced?

Unless orders are the main mechanism. Non-compliance with a security for costs unless order will almost always result in automatic strike-out.

Go Legal’s Role:

Our solicitors act for both defendants seeking protection and claimants defending or complying with security for costs applications. We navigate the discretionary factors, maximise your procedural position, and ensure compliance to prevent catastrophic sanctions.

Practical Steps: How to Avoid Strike-Out

Ordered to Provide Security for Costs?

1. Calendar the Deadline and Work Backwards.
   • Allow for internal approvals, banking or regulatory permissions, and documentation.
2. If Challenges Arise, Notify Immediately.
   • Inform the court and the opposing solicitor right away. Apply for an extension with evidence, before the deadline.
3. Provide Interim Security Where Possible.
   • Even partial payment or partial compliance demonstrates good faith and may preserve your position.
4. Explore All Alternatives.
   • Solicitor’s undertakings, bank guarantees, bonds, or third-party funding.
5. Keep a Dated File of Your Actions.
   • Track all communication with banks, authorities, and the court for proof of diligence.
6. Accurately Present Your Situation.
   • Do not exaggerate or downplay your difficulties.

Received an Unless Order?

• Treat it as the final warning. Missing the deadline triggers immediate sanction.
• Do not assume the court will rescue you. Be pro-active—apply to vary or extend before the deadline, not after.
• Engage specialist commercial litigation solicitors for urgent risk mitigation and strategic support if you are at risk of breach.

General Discipline:

Always comply with case management orders, respond promptly to correspondence, pay costs orders, and maintain a record of all steps taken.

Broader Implications: The Post-Jackson, Post-Denton Litigation Culture

The Taha case exemplifies the post-Jackson reforms (CPR amendments from April 2013) and the line of authority from Mitchell and Denton onward—a decisive shift to strict enforcement of Civil Procedure Rules and case management orders across commercial litigation in England and Wales.

Before Jackson:
Courts often prioritised substantive justice. Procedural errors were often forgiven if prejudice could be addressed, usually through costs. Getting to trial on the merits was the dominant goal.

After Jackson and Denton:
Procedural compliance is now at the heart of doing justice. The overriding objective (CPR 1.1(2)(f)) specifically includes enforcing compliance with rules, practice directions, and court orders. CPR 3.9 (relief from sanctions) makes efficiency and compliance paramount.

Courts emphasise that solicitors and parties are personally responsible for procedural discipline. Tactical delay, late excuses and poor communication rarely succeed.

Taha, alongside:

• Mitchell v News Group Newspapers [2013] EWCA Civ 1537
• Denton v White [2014] EWCA Civ 906
• Durrant v Chief Constable [2013] EWCA Civ 1624
• Abdulle v Commissioner of Police [2015] EWCA Civ 1260

confirms that neither the merits of your claim nor fairness arguments alone will shield you from procedural discipline. Effective, compliant litigation practice and timely, credible communication are as vital as the law and facts of your case.

FAQs

What is an unless order?

An unless order is a court order imposing an automatic sanction, such as strike-out or debarring evidence, if a party fails to comply by a specific deadline. The sanction takes effect automatically unless the court grants relief under CPR 3.9.

Can the court grant relief from sanctions if I miss an unless order deadline?

Yes, but the threshold is high. The court applies the three-stage Denton test, asking how serious the breach was, why it occurred, and whether relief is justified overall. As Taha shows, repeated delay and lack of diligence will usually result in relief being refused—even if your claim is genuine.

Will the court consider my claim’s merits?

Yes, the merits are relevant, but a bona fide claim alone will not save you from strike-out for procedural failures. The Court of Appeal in Taha found that prioritising the existence of a genuine claim over compliance would undermine the security for costs regime.

What if I realise I cannot comply with an unless order deadline?

Act immediately. Notify the court and all parties in writing, explain the reasons, and make a formal application for extension or variation before the deadline expires. Partial compliance and full evidence of challenges will help your case. Applications for relief are much harder to win if made after the deadline.

Can I challenge the proportionality of an unless order after breach?

No. The Court of Appeal in Abdulle held that proportionality must be argued at the time the order is made, not after you have breached it. At the relief stage, the court will not reconsider whether the order was fair.

What is security for costs, and when is it ordered?

Security for costs under CPR 25.12 to 25.15 requires a claimant to deposit money or offer security to guarantee payment of the defendant’s costs if the claim fails. Orders are commonly made if the claimant is overseas or unlikely to pay costs if defeated.

If my company is based abroad, do we automatically need to provide security?

Not automatically, but being outside England and Wales (and outside states with reciprocal judgment enforcement) is grounds for an order. The court uses its discretion, taking into account your financial position, assets, the merits, stifling effect, and your record of compliance. If the order is made and breached, your claim is likely to be struck out.

Conclusion

The landmark ruling in Taha Pharmaceuticals v Capsugel Belgium NV [2026] EWCA Civ 38 is a clear warning that procedural discipline is non-negotiable in English commercial litigation. Even a strong underlying case on the merits will not save you if you do not comply with unless orders and security for costs directions.

The lessons are plain: apply for extensions before deadlines expire, stay diligent and candid, provide evidence as issues arise, and never misrepresent your situation. Repeated delays, unexplained silence, or factual exaggeration will almost always lead to your claim being struck out, as the Court of Appeal intended the rules to have real teeth.

If you are facing or defending a dispute involving unless orders, security for costs, or complex procedural compliance, our specialist commercial litigation team at Go Legal is ready to help you navigate the risks. We offer a free initial consultation, a range of flexible engagement options, and the experience you need to protect your position in high-value litigation across England and Wales.