Credit Agricole Indosuez v UNICOF Ltd. & Ors

A default judgment must be set aside under CPR Part 13.2 where a required condition for entering judgment was absent, including where the claim form was not served. The court cannot treat service as having occurred merely because the proceedings came to the defendant’s attention when no proper service took place. Independently, CPR Part 13.3 may justify setting aside a judgment where it was obtained on a false basis as to service, particularly if maintaining it would deprive the defendant of an opportunity to challenge jurisdiction. A real prospect of defending the claim is an additional, sufficient ground, but the court may set aside the judgment even where the defence is uncertain.

Credit Agricole Indosuez obtained a Part 12 default judgment against SDV Transami (Kenya) Ltd for US$1,579,705.90 plus interest. SDV applied to set it aside, contending that the proceedings had not been served, that it had a real prospect of defending the claim, and that there was good reason to set aside the judgment because the evidence relied on for service was false and the judgment had been entered prematurely.

The claim concerned alleged breaches of undertakings relating to coffee held in Kenya, together with claims in deceit and conspiracy. The central issues were whether service had occurred, whether the mandatory requirements of CPR Part 13.2 were satisfied, and whether the discretionary grounds in CPR Part 13.3 applied.

1. Service and CPR Part 13.2. The claim form had not been served on SDV. The evidence did not establish personal service on the company secretary, leaving the claim form at SDV’s registered office, service on SDV’s lawyers, or effective postal service. CPR Part 13.2 was mandatory, and the default judgment had therefore been wrongly entered and had to be set aside.
2. The court rejected the submission that it could deem proper service to have occurred because the proceedings had come to SDV’s attention. The court might be able to overlook a defect in documents where service had in substance been effected, but there was no scope to find that service had occurred when there had been no proper service at all.
3. Real prospect of defending the claim. SDV had a real prospect of defending the claim relating to the undertakings. The claim was framed in negligence or negligent breach of undertaking, and issues arose concerning the applicable obligations, the disappearance of the coffee, the timing and circumstances of that disappearance, negligence, discharge, estoppel by convention, and the amount of loss. The judgment also appeared to have been entered for a fixed sum when the amount should have been determined by the court.
4. Other good reason. Even if service by another method had satisfied CPR Part 13.2, the judgment would have been set aside under CPR Part 13.3. It had been obtained on a false basis as to service, although the court did not find that the process server deliberately misled it. SDV would also suffer real prejudice because it would lose the opportunity to challenge jurisdiction, a challenge of which CAI was aware.
5. The allegation that CAI had included claims against other defendants merely to obtain permission to serve SDV out of the jurisdiction did not, standing alone, justify setting aside the judgment. The court accepted CAI’s solicitor’s evidence that those claims were intended to be pursued.
6. The default judgment was set aside. The court reserved the appropriate form of order and ancillary matters for further hearing.