| 1. |
LORD JUSTICE BROOKE: This is an appeal, by leave of the judge, by the
defendants, Thorn Plc, from an order of Judge Trigger in the Birkenhead
County Court on 30th March 1999, when he dismissed their appeal from an
order of District Judge Travers on 16th March 1999, who had declined to
set aside an interlocutory judgment in default of defence which had
been entered by the claimants on 29th January 1999.
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| 2. |
The action is a claim for damages for personal injury. It arises
from a road traffic accident in Liverpool on 25th September 1998, in
which the defendants' van was said by the claimants to have collided
with the rear of Mr McDonald's motorcar, which was being driven by his
wife. His wife suffered injuries as a result of the collision.
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| 3. |
The summons, to which the particulars of claim were attached, was
issued on 7th January 1999. In the absence of any defence, the
claimants' solicitors entered interlocutory judgment for damages to be
assessed on 29th January.
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| 4. |
On 10th February the defendants' solicitor listed their present
application, seeking to have the judgment set aside.
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| 5. |
The history of events since the accident ran along the following
lines. On 6th October 1998 the claimants' solicitors wrote a letter
before action to the defendants. They invited them to pass the letter
to their insurers and to authorise them to deal directly with those
insurers. They sent them a form to complete, which would assist that
process.
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| 6. |
On the same day, the claimants' solicitors also wrote direct to
the defendants' insurers, Guardian Insurance Company ("The Guardian"),
whose details they had, and invited them to state within seven days
whether liability was in dispute.
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| 7. |
The claimants' solicitors wrote follow-up letters to the Guardian
on 21st October and 26th November. The Guardian wrote holding
acknowledgments on 16th and 23rd October. On 21st December the
claimants' solicitors sent the Guardian a copy of the particulars of
claim, which they intended to issue. On 29th December the Guardian
acknowledged receipt of the letter dated 26th November, and said they
were still awaiting a completed claim form from the defendants.
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| 8. |
The original summons which had been sent to the court for issue
contained an error of some kind. It was ultimately issued and served
by post on the defendants at their registered office on 9th January
1999. Nothing was heard from the defendants, from the Guardian, or
from anyone else on the defendants' behalf until after the default
judgment was entered on 29th January 1999.
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| 9. |
On the same day, the Guardian sent a letter of instruction to the
defendants' solicitors, who received this letter on 1st February 1999.
On the same day those solicitors sent the claimants' solicitors a form
of defence which put liability and quantum in issue. The defendants'
solicitors were unaware that an interlocutory judgment had been entered
three days earlier.
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| 10. |
The affidavit evidence which the defendants put before the judge
did not explain why the defendants had acted or not acted in the way
they did, in failing to send a completed claim form to their insurers,
or in failing to take prompt steps following service of the summons to
ensure that a defence was delivered to the court within the time
permitted in the summons.
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| 11. |
When the judge summarised the facts, a point is taken that he
incorrectly said, at page 2 of his judgment, that no response was
received by the end of the year to the letter of 6th October 1998,
whereas the evidence shows that holding responses were sent in the
manner I have described by the defendants' insurers.
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| 12. |
The judge then reminded himself that under County Court Rule
Order 37, Rule 4, a wide discretion was given to the court to set aside
even a regular interlocutory judgment. He directed himself that if the
judgment is regular, the court should consider whether the defendant
had a defence on the merits, the defendant's explanation of his default
and the prejudice involved to the plaintiff if the judgment were set
aside.
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| 13. |
On the first of these issues, he considered that the defendants
did appear to have a triable defence, because the driver was saying
that his vehicle was stationary, and that a very minor impact must have
occurred because the claimants' vehicle rolled backwards into it. This
appears from the affidavit evidence served on behalf of the defendants.
An error was made in this connection in the defence which the
solicitors delivered on 1st February.
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| 14. |
On the third of these issues, the judge considered that the
prejudice to the claimants, if the order was set aside, was
comparatively minimal, and it did not outweigh the fact that the
defendants, who appeared to have a triable defence, should be entitled
to have that defence fully argued.
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| 15. |
What weighed with the judge in the exercise of his discretion was
the absence of any reason for the delay that occurred between the time
when the letter before action was sent and the time when interlocutory
judgment was entered. He accepted that the delay between the time the
judgment was entered and the time when the application was made to set
it aside was very short, but he considered that he was entitled to take
into account the much longer earlier period of delay, and particularly
that which was allowed to elapse, before the summons was issued.
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| 16. |
Mr Gilmour QC's principal contention before us is that any delay
between the date of the letter before action and the commencement of
proceedings is wholly irrelevant in this context. On the rules, as
they stood at the time of the hearing before the judge, Mr Gilmour
submits that he should have adopted the following principles.
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| 17. |
The primary consideration should have been whether the defence had
merits, in the sense that there was a real prospect of success. For
that proposition he cites Alpine Bulk Transport Co Inc v Saudi Eagle Shipping Co Inc [[1986] 2 Lloyds Law Reports 221 at page 223]. Mr
Gilmour notes that the judge correctly held that the defence did have
merit.
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| 18. |
The judge should then have asked himself whether setting aside the
judgment prejudiced the claimants. Mr Gilmour noted that the judge
correctly held that any prejudice would be minimal. The third step Mr
Gilmour feels the judge ought to have followed was to consider that
the overriding principle was that justice should be done.
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| 19. |
For that principle, which was not expressly set out in Judge
Trigger's judgment, Mr Gilmour relies on the well-known guideline
judgment of this court in Mortgage Corporation v Sandoes [Court of
Appeal transcript 26th November 1996]. For some reason, although
summarised in The Times on 27th December 1996, that important decision
has not found its way into either of the regular series of reports.
Lord Justice Millett said in that case that the Master of the Rolls and
the Vice Chancellor as Head of Civil Justice, had approved certain
guidance as to the future approach which litigants could expect the
court to adopt to the failure to adhere to time limits contained in the
rules or directions of the court. The second of those guideline
principles was that the overriding principle was that justice must be
done.
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| 20. |
Fourthly, Mr Gilmour submitted that the time requirements laid
down by the rules should be observed, so that the length of delay and
the reasons for not delivering the defence to the court within
prescribed period were relevant considerations for the court to take
into account. He submitted, however, that any delay in responding to
pre-action correspondence was irrelevant.
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| 21. |
Finally, he submitted that the judge should have reminded himself
that a failure to provide any good explanation for the delay is not
always in itself sufficient to justify a court in refusing to exercise
its discretion in a defendant's favour. For that proposition he relied
on the judgment of Lord Justice Hirst in Finnegan v Parkside Health Authority [[1998] 1 WLR 411 at pages 420 to 421].
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| 22. |
Mr Gilmour, therefore, submitted that the judge approached the
defendant's application in a way that was wrong in principle. In those
circumstances, he said that this court is entitled to set the judge's
exercise of his discretion aside and that it should exercise its own
discretion in determining this application.
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| 23. |
Mr Lawrence, for his part, relied very heavily on the defendants'
failure to give any explanation for the delay which had infected their
conduct of their defence ever since the letter before action was
delivered. He said that the District Judge had expressly given the
defendants' solicitors an opportunity to explain this delay. That
opportunity was not taken up. He also submitted that, notwithstanding
the decisions of this court in Mortgage Corporation v Sandoes and
Finnegan v Parkside Health Authority, the judge had a wide discretion
to do justice under order 37, rule 4.
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| 24. |
If he considered that justice demanded, in a case in which the
defendants had been so dilatory before the action was brought, that
they should not be given the opportunity to have a default judgment set
aside, it was open to the judge so to decide. Mr Lawrence relied
heavily in this context on the decision of this court in Savill v Southend Health Authority [[1995] 1 WLR 1254], and the cases which
preceded it, in support of his contention that if a defendant gave no
reason why there had been delay, there was no material on which a judge
could exercise his discretion to excuse the consequences of that
delay.
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| 25. |
Accordingly, he said that the judge's decision in the exercise of
his discretion could not be successfully impugned. He reminded us of
the well-known decision of the House of Lords in G v G [[1985] 1 WLR
647], which makes clear the broad ambit of the discretion which is given
to a judge when exercising a discretionary jurisdiction.
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| 26. |
In my judgment, Mr Gilmour's submissions are soundly founded. It
is well known that the decision of this court in Savill caused a good
deal of difficulty at the time and that those difficulties were
resolved by the guideline judgment in Mortgage Corporation v Sandoes,
followed by the particular judgment of Lord Justice Hirst in Finnegan v Parkside Health Authority, to which I have referred.
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| 27. |
I cannot help thinking that if the judge had had the full text of
the judgment in Finnegan before him, let alone the text of the judgment
in the Mortgage Corporation case, which did not appear fully in the
summary of the judgment in Finnegan with which he was supplied, he
would have exercised his discretion on a different basis.
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| 28. |
In Finnegan Lord Justice Hirst, after identifying the problem with
which this court had been concerned in recent years, faced with two
apparently conflicting lines of authority, said at page 420H:
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| 29. |
| |
"If there was any doubt as to the strength and breadth of guidance
given by Costelloe's case in the general application of RSC Ord 3, r 5,
that in my judgment was finally laid to rest by Mortgage Corporation v Sandoes [the Times 27th December 1996], which follows precisely the same
line of principle and again expressly rejects the notion that the
absence of a good reason is always and in itself sufficient to justify
the court in refusing to exercise its discretion; that case moreover
lays down clear guidelines requiring to court to look at all the
circumstances, and to recognise the overriding principle that justice
must be done."
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|
| 30. |
The default with which the judge was concerned was a failure by
the defendants to deliver a defence within the 14 days permitted by the
County Court rules. It was not any other default; it was not any
pre-action default in not responding to pre-action correspondence. It
was a default in failing to deliver a defence within 14 days, and
instead to purport to deliver its defence within 23 days. That was the
default which the judge had to consider. He had then to consider the
effect of the nine days' delay, given that the defendants had set up
what appeared to be a triable defence and that the claimants could only
be said to be minimally prejudiced by this short delay. If reasons
were given for the delay, he had to take into account those reasons.
If no reasons for the delay were given, he was entitled to take this
into account in the exercise of his discretion.
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| 31. |
What he was not entitled to do, in my judgment, was to add to this
nine-day delay the pre-action delay. Nor was he entitled to
consolidate all that delay and direct himself, as he did at page 9 of
the transcript:
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| 32. |
| |
"If the defendants have not shown reasons, or substantial reasons, for
that delay I am entitled to bear that as a factor, and as an important
factor, in deciding whether or not to grant them what is, after all,
the indulgence they seek."
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|
| 33. |
It appears to me that the judge was not only over-influenced by
the decision of this court in Savill: he was also taking into account
a consideration which he should not have taken into account, which was
the delay which took place before the summons in this action was
issued.
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| 34. |
For those reasons, I am satisfied that the judge misdirected
himself and that this court is entitled to consider the matter afresh.
Considering the matter afresh, bearing in mind that the defendants have
shown on the face of it a triable defence, that the claimants would
suffered minimal prejudice, and that the delay was only a delay of nine
days, and also taking into account the fact that the defendants have
given no reason for that nine-day delay, I am completely satisfied that
justice demands that this default judgment is set aside and the appeal
allowed.
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| 35. |
There is one further matter on which Mr Gilmour has invited the
court to make observations. We are now in a world which is ruled by
the new Civil Procedure Rules and not by the County Court Rules or the
Rules of the Supreme Court, or by guideline decisions by this court or
indeed by the House of Lords as to how the court's discretion should be
exercised under the old rules.
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| 36. |
Mr Gilmour has told me that his clients would like to have the
court's assistance because the present claimants' solicitors conduct a
very large volume of personal injury litigation out of the Birkenhead
County Court. Delays may occur in the handling of summonses which are
sent to lay defendants in personal injury cases, and, however well
insurance companies who are insuring those defendants may set up their
administrative processes, delays may occur between the time that the
lay defendants are served with process and the time when the matter
comes to the attention of the appropriate officer in the insurance
company.
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| 37. |
In the present case the summons was sent to the lay defendants.
It arrived one day in their legal department; it arrived the following
day in their transport department. We do not know what happened to it
after that. Mr Gilmore has told us that delays while the 14 days are
running, before the case papers come to insurers, are events which do
occur from time to time however much the insurers try to prevent them.
He is anxious, given that interlocutory judgments tend to be entered by
these solicitors at the earliest opportunity afforded to them by the
rules, which is on the expiry of 14 days after service of the
particulars of claim, or, if an acknowledgment of service is filed, on
the expiry of 28 days after service, that judges, under the new regime,
will be concerned to know whether the failure to give any reasons for a
delay is going to be a knockout blow to any application to set aside
the judgment.
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| 38. |
The relevant rules are, first, CPR rule 15.4(1):
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| |
"(1) The general rule is that the period for filing a defence is-
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| |
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(a) 14 days after service of the
particulars of claim; or
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(b) if a defendant files an
acknowledgment of service under part
10, 28 days after the service of
particulars of claim."
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|
| 39. |
Next, rule 10(3):
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"A defendant may file an acknowledgment of service if -
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(a) he is unable to file a defence
within the period specified in
rule 15.4 ..."
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|
| 40. |
Rule 10.2 provides if that:
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| |
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"(a) a defendant fails to file an acknowledgment of service within the
period specified in rule 10.3, and
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(b) does not within that period file a defence in accordance with Part
15 or serve or file an admission in accordance with Part 14, the
claimant may obtain default judgment if Part 12 allows it."
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|
| 41. |
Rule 13.3 provides:
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"(1) In any other case the court may set aside or vary a judgment
entered under Part 12 if --
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(a) the defendant has a real prospect of
successfully defending the claim; or
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(b) it appears to the court that
there is some other good reason why ... the judgment should be set aside
or varied. ...
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(2) In considering whether to set aside or vary a judgment entered
under Part 12, the matters to which the court must have regard include
whether the person seeking to set aside the judgment made an
application to do so promptly."
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| 42. |
It is well known that part 1 of the Civil Procedure Rules
identifies an overriding objective, to which the court must seek to
give effect when it exercises any power given to it by the rules or
interprets any rule: see rule 1.2.
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| 43. |
The overriding objective is to be found in rule 1.1(1), which
provides:
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| |
"These Rules are a new procedural code, with the overriding objective
of enabling the court to deal with a case justly."
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| 44. |
Five important principles are set out in rule 1.1(2) by way of
explaining what "dealing with a case justly" means. These include:
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"d) ensuring it is dealt with expeditiously and fairly."
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| 45. |
These are the principles that the court must take into account
when deciding whether to exercise its discretion under rule 13.3.
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| 46. |
This court, in my judgment, would be doing nobody any service in
seeking to reintroduce into the interpretation of these rules judgments
of courts which were given under the old regime, in so far as the new
regime has taken over from the old regime. I can see nothing in rule
13.3 or in the overriding objective in part 1 to suggest that, if a
defendant does not give a reason for the delay, that is somehow or
other a knockout blow, on which a claimant is entitled to rely in
support of an irresistible submission that there is no material on
which the court can exercise its discretion in the defendants'
favour.
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| 47. |
The fact that the defendants have given no reason for a delay is,
of course, one of those matters which the court may wish to take into
account if there is a long, unexplained delay, and if the claimants
would be prejudiced if a judgment were set aside. This court should,
however, in my judgment refrain from being prescriptive about the way
Circuit Judges and District Judges in the exercise of their discretion
should apply rule 13.3. We are operating a new procedural code (rule
1.1) and we must not be tempted to return to earlier judgments decided
under the previous rules and have them cited all over again, with
attempts to distinguish one conflicting decision from another. As I
have said, the new rules form a new procedural code. Judges in the
lower courts are given ample scope to decide justly, having their eyes
on the overriding objective, how to exercise their discretion in
different situations. From time to time it may be that this court will
have to give further guidelines, but this is not, in my judgment, such
an occasion.
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| 48. |
These closing comments of mine must, as Mr Gilmour accepted, be
treated as obiter dicta. It appeared to me, however, that a serious
practical problem existed on which it was desirable for this court to
give an indication to the lower courts about the appropriate route by
which they should set out to solve it. For that reason I have included
this final passage in my judgment.
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| 49. |
For the reasons I have given, I would allow this appeal and we
will now hear counsel in due course as to the consequential directions
we should make.
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| 50. |
LORD JUSTICE WALKER: I agree that this appeal should be allowed for
the reasons stated by my Lord.
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