Humber Work Boats Ltd v "Selby Paradigm", Owners of MV & Ors

The court may join an underwriter to an action after default judgment where the underwriter has a defence with a real prospect of success and joinder is desirable to resolve the matters in dispute fairly. The existence of the default judgment does not itself extinguish the jurisdiction to join parties or prevent the defence from being advanced. In setting aside a judgment in an action in rem, the relevant threshold is whether justice requires relief and the applicant clearly establishes a real prospect of successfully defending the claim. The threshold is not equivalent to that imposed on an appellant. Delay remains relevant, but relief may be granted where the delay is adequately explained and causes no material prejudice.

The claimant sought remuneration for raising the barge “Selby Paradigm” after it sank in the River Hull. Default judgment and an order for sale of the vessel were obtained against the owners on 23 May 2003.

The vessel’s underwriters later applied to intervene and be joined as defendants under the Civil Procedure Rules 1998, to set aside the default judgment, and to defend the claim. They disputed the policy’s validity but wished, if necessary, to defend the salvage claim on the owners’ behalf. The central issues were whether joinder and relief were available after default judgment, whether there was an arguable defence, and whether the underwriters’ delay barred relief.

1. Joinder. The court had jurisdiction under CPR Part 19.2(2) to join the underwriters despite the existing default judgment. The rule had to be considered on the assumption that the proposed defence had a real prospect of success. Otherwise, reliance on the default judgment to prevent the defence would be circular. The overriding objective and natural justice supported allowing persons liable to satisfy the judgment an opportunity to be heard. The approach was consistent with Gurtner v Circuit [1968] 2 QB 587.
2. Setting aside. The power to set aside a judgment under CPR Part 61 was governed by the justice of the matter. Subject to delay and prejudice, the applicant had to clearly establish a real prospect of success in defending the claim. The burden was not equivalent to that imposed on an appellant.
3. Merits. The underwriters satisfied that threshold. The salvage claim faced substantial difficulties concerning the modest salved value of the vessel, the inclusion of cargo’s proportion, the identity of the party engaging the claimant, and the asserted contractual tariff, which apparently did not exist.
4. Delay. The delay did not justify refusing relief. The claimants had obstructed access to the documents supporting the default judgment, and the remaining delay resulted from obtaining instructions and evidence. No material prejudice was established.
5. The applications for joinder, setting aside the default judgment and permission to defend were therefore granted.