Following the landmark decision of the Court of Appeal in Andrew Mitchell MP v News Group Newspapers Limited  EWCA Civ 1537, it is now trite law that parties must strictly comply with all rules, practice directions and court orders.
However, this understanding was challenged by the first defendant in Samara v MBI & Partners UK Limited  EWHC 563 who purported to argue that the new, strict regime which followed the Jackson reforms did not apply to the rules concerning setting aside default judgment (CPR 13.3).
The claimant in Samara commenced proceedings against the defendants, alleging that the defendants were in breach of contract in failing to make various payments to him. Although the claimant had filed and served his claim form, the first defendant did not file an acknowledgement of service. Nor did it file a defence by the requisite deadline of 11 August 2011.
On 24 August 2011, the court gave the claimant’s solicitors permission to enter judgment in default against the first defendant. Following a request by the claimant’s solicitors, a hearing date was fixed to assess their costs and notice of the hearing was given to the first defendant’s in-house lawyer, Mr S. At the hearing on 13 February 2012, judgment was entered in favour of the claimant.
There then followed a series of email and telephone correspondence between the claimant’s solicitors and Mr S during which Mr S indicated that he intended to make an application to the court to set aside the default judgment and invited the claimant’s solicitors to agree to his application. The claimant’s solicitors made it clear that they would take their client’s instructions but that it was a matter for Mr S whether to make the application or not and, if so, when.
Nothing further happened for over a year until 16 May 2013 when the High Court enforcement officers attended the offices of the first defendant to take steps to enforce the judgment. Following discussions on the same day between Mr S and the claimant’s solicitors, the claimant’s solicitors agreed to instruct the enforcement officers to take no further steps in relation to the enforcement of the judgment on the understanding that the first defendant would make an application to set aside the default judgment and that he would serve it on 21 May.
However, on the same day Mr S made an application for a stay of enforcement and for a stay of the default judgment. Singh J then heard a without notice application for the first defendant for an injunction preventing the claimant from enforcing the judgment. The injunction was granted (later criticised on appeal as the incorrect procedure).
On 21 May, the solicitors then acting for the first defendant were instructed and they made the application to set aside the default judgment under rule 13.3. In its application and draft defence the first defendant argued that, inter alia, it had a real prospect of successfully defending the claim because the claim was statute-barred under Saudi law, which was the applicable law under the contract, and that, in any event, over six years had lapsed to bring a claim under English law.
The master hearing the application accepted these submissions but did not hesitate in dismissing the first defendant’s submissions on the question of delay.
The master refused to accede to the application to set aside the judgment and explained: ‘The delay in this case is so long and so unexplained, in particular where there was an attendance at the hearing in February 2012 but no action taken at all, that I do not consider it appropriate to exercise the court’s discretion to set aside judgment. That is the case even where I have concluded that one ground of defence has a real prospect of success… there is no denial of access to justice.’
The first defendant appealed the master’s decision and the matter came before Silber J (pictured).
Counsel for the first defendant contended that the appeal should be allowed because the master erred in finding that there was excessive delay and in holding that it was a decisive factor; insufficient weight was attached to the claimant’s delay in bringing the claim which was extraordinary, unaccountable and also unaccounted for; the claimant and his solicitors knew that the first defendant was seeking to set aside the default judgment and was seeking to obtain the claimant’s consent; and the first defendant will suffer very considerable injustice unless the appeal is allowed and the judgment is set aside.
Counsel for the claimant contended that none of these points had any validity, especially in the light of the new regime that implemented the proposals of Sir Rupert Jackson. Counsel for the first defendant countered by arguing that special considerations apply in relation to setting aside default judgments. Not least, the entry of a default judgment is not subject to prior scrutiny of the court under rule 13.
Turning his attention first to the impact of the new regime, Silber J correctly noted that the regime had universal application to all rules in the CPR and was underpinned by the changes to the overriding objective in rule 1.1.
Silber J explained that the additional obligations under rule 1.1 to further the overriding objective ‘at proportionate cost’ and reference in 1.1(2)(f) to the obligation on the courts to enforce rule compliance, meant that the new regime applied to all rules, practice directions and court orders.
There was no express statement in the CPR (nor in any case, whether expressly or impliedly) that rule 13 or any part of it was excluded from the overriding objective. Further, there was no theoretical justification to exclude rule 13.1 from the new regime which was described in very general terms by Lord Dyson MR in Mitchell.
The nature and extent of the delay were then considered. Counsel for the first defendant contended that the delay which was to be considered pursuant to rule 13.3(2) was the delay between the entry of the judgment and the time when an application is made to set aside the judgment. It followed, therefore, that the master erred in considering the period from August 2011 as though it were relevant to rule 13.3(2) and in criticising the first defendant for not making an application to set aside a judgment which had not yet been entered.
This line of argument was dismissed by Silber J. It was clear that the first defendant had taken no steps to deal with the claim until 20 January 2012, when notice was given by the claimant’s solicitors to the first defendant of the costs assessment hearing. Thus, 16 months had elapsed, with the bulk of that period of delay unexplained and this justified the master’s decision not to set aside the default judgment.
Counsel for the first defendant also argued that the master had adopted an incorrect approach in applying rule 13.3(2) when she stated that the first defendant should have ‘immediately’ made an application to set aside the judgment. Rather, rule 13.3(2) required prompt action once default judgment had been entered. Again, this argument was dismissed by Silber J, who held that the master had previously made reference to the need for the first defendant to have acted ‘promptly’ and there was no error in law in the master’s approach.
By using the word ‘immediately’, the master was, Silber J clarified, making reference to the need for the first defendant to make an immediate application in light of the previous delay. Finally, the argument that the first defendant was relying on the claimant’s solicitors to revert to it with their client’s instructions, which was not done, was not a justifiable explanation for the delay. In this regard, it was an obligation on the parties to make prompt applications.
Should the appeal be allowed under the new regime? Silber J said no. A party against whom a judgment in default has been entered had a clear obligation to apply promptly to set aside judgment – made clear in CPR rule 13.3(2). There was no excuse for any delay to wait to see if the claimant will agree to the discharge of judgment.
The decision in Samara provides categorical authority that the new regime of strict rule compliance applies to the whole of the CPR, including the rules concerning rule 13.3(2) and this clearly makes sense. The overriding objective pervades all of the rules within the CPR because it is, as intended by Lord Woolf, the central plank upon which the rules rest.
To do otherwise would introduce uncertainty, create costly satellite litigation and generally undermine the civil justice process.
Masood Ahmed, University of Leicester