Solid Capital Markets (UK) Limited v Little Rock Mining Inc

Under Civil Procedure Rules Part 13.3(2), promptness is a mandatory consideration when seeking to set aside a default judgment. A delay of about 12 months may, by itself, justify refusal, even though the merits have not been tried. The court may exclude a late witness statement raising a possible defence where finality requires it. Materially harmless pleading inaccuracies do not justify setting aside judgment where there was no attempt to mislead. An agent may recover expenditure incurred on a principal’s instructions, including where a related company incurred the immediate liability. The overriding objective does not support setting aside on a technical ground lacking merit.

The claimant, a stockbroker, sought payment for shares acquired on the defendant company’s instructions. The defendant did not file a defence, and default judgment was entered on 30 November 1999. About 12 months later, applications were made to set aside the judgment.

The defendant relied on alleged pleading and accounting defects, possible negligent misrepresentation, and the claimant’s status as agent for a related company. His Honour Judge Bowers refused the applications in the Queen’s Bench Division. The Court of Appeal considered whether the delay, late evidence, alleged substantive defences and procedural criticisms justified setting aside the judgment.

Application dismissed. Costs were ordered against both applicants, subject to detailed assessment.

1. Under Civil Procedure Rules Part 13.3(2), the court had to consider whether the application was made promptly. A delay of approximately 12 months was extraordinary and, by itself, entitled the judge to refuse the application. The absence of a trial on the merits did not remove the need for finality in litigation.
2. The court properly refused to admit an extensive witness statement served only towards the end of October 2001. The proposed explanation for not filing a defence was inadequate, and the statement raised allegations which could have been advanced earlier.
3. The claimant’s short-form claim described a sale, but the particulars of claim set out the substance of an agent’s claim against its principal. The alleged inaccuracies were immaterial, did not suggest an attempt to mislead the court and did not affect the merits. An agent was entitled to reimbursement for sums expended on its principal’s instructions, including where the expenditure was reflected in a continuing liability to a related company.
4. A possible negligent-misrepresentation defence could not be assumed merely because it had been mentioned in correspondence. Since it had not been properly particularised in evidence before the judge, it was rightly disregarded.
5. Although statements of truth had to be accurate, the overriding objective in Civil Procedure Rules rules 1.1 and 1.1(2) did not support setting aside judgment on a highly technical ground lacking merit.

• Queen’s Bench Division: His Honour Judge Bowers refused the applications to set aside the default judgment entered on 30 November 1999.
• Court of Appeal (Civil Division): Mantell LJ and Arden LJ dismissed the application for permission to appeal. [2001] EWCA Civ 2104