A Bristol firm that sought to recover money wrongly paid to a former client has won a key High Court battle. The defendant in Wards Solicitors v Hendawi had sought to set aside a default judgment from January 2007, which awarded the firm around £36,000.
But His Honour Judge Paul Matthews dismissed the application, finding no good reason to vary the judgment and ruling the money should be paid.
The firm had claimed for £33,050, with interest, after making a payment to the defendant of £177,000 in December 2005. The reason for the mistake was not explained. Within four days of the mistaken payment, the defendant, whose company had been a client of the firm, was notified and subsequently repaid £143,975, leaving the £33,000 shortfall.
Nothing further substantive in the matter occurred for more than 10 years, when the firm issued a statutory demand under the Insolvency Act in August 2017, addressed to the defendant at the same address. In March 2018, the defendant issued the present application notice to set aside the now 11-year-old default judgment. A bankruptcy petition is set to be heard next month.
HHJ Paul Matthews held there was good service of the claim form, as the claimant was given no ‘reason to believe’ the defendant had moved away.
The defendant submitted that at the time of the mistaken payment he had a temporary overdraft facility from his bank with a limit of £8,000: the bank allowed the facility on condition that when the funds arrived they would first be used to clear the overdraft in full, and the facility would then be withdrawn.
The judge said the defendant had a financial obligation which he could not satisfy in any case, and the mistaken payment did not pay off the borrowed sum.
On the question of good reason for setting aside the judgment, the judge said it was ‘not enough’ that the defendant never received the claim form. Extra warning of the possibility of the threat of bankruptcy would not have helped Hendawi, the court ruled, nor was there any indication he would have paid straight away.
The judge said it was not a good reason that the claimant had delayed so long before seeking bankruptcy. Indeed, the judge was critical of the defendant for waiting nine months to make the application to set aside, and he stressed the rules were drafted to ensure ‘some finality’ in litigation of this kind.