Sikka v Davidson

A conditional order granting leave to defend must not operate as a disguised judgment for the claimant. If the required payment is one which the defendant could never make, imposing it may constitute a wrongful exercise of discretion. Where later evidence indicates that the defendant cannot comply, the court may need to reconsider whether the condition remains appropriate. An arguable issue as to that jurisdiction, or as to whether the original judge misdirected himself, is sufficient to justify permission to appeal.

District Judge Raeside granted summary judgment to Edith Davidson for £60,000 plus interest. On appeal, Judge Hull considered that Parveen Sikka had an arguable defence concerning the construction and conditional nature of an agreement, and was prepared to allow the claim to be defended only if £75,000 was paid into court.

Sikka later sought to vary that condition, explaining that he could raise only £20,000. Judge Hull dismissed the application and allowed the original order to take effect, considering that he could not revisit it. The central issue before the Court of Appeal was whether that approach involved a misdirection or an erroneous view of the court’s power to reconsider conditions attached to leave to defend.

1. Permission and ancillary relief. Permission to appeal was granted. Time was extended and a stay of execution followed from the grant of permission.

2. Impecuniosity and conditional leave to defend. The principle stated in York Motors [1982] 1 WLR 444 is that imposing a payment as a condition of leave to defend may be a wrongful exercise of discretion where the defendant could never pay it. Such an order would effectively give judgment for the claimant despite the court’s view that an issue ought to be tried.

3. Arguable misdirection. It was arguable that Judge Hull approached the matter by treating the defence as sufficiently arguable only if £75,000 was paid, but not if approximately £25,000 was available. That approach potentially confused the merits of the defence with the defendant’s ability to satisfy the condition.

4. Power to reconsider. It was also arguable that Judge Hull wrongly considered himself unable to vary the condition before the time for compliance had expired. The Court of Appeal left the issue for determination by a three-judge constitution, noting its practical importance where a defendant’s ability to provide security changes unexpectedly.

• Court of Appeal (Civil Division): Permission to appeal from orders made by Judge Hull Q.C. in the Epsom County Court was granted. Time was extended and a stay of execution was allowed.
• Epsom County Court: District Judge Raeside granted summary judgment for £60,000 plus interest. Judge Hull considered an appeal against that decision and imposed £75,000 as a condition of defending the claim, later refusing to vary the condition.