Hussain v Birmingham City Council & Ors

When considering whether to set aside a default judgment under rule 13.3 of the Civil Procedure Rules 1998, the court must apply the overriding objective and assess all the circumstances. A real prospect of successfully defending the claim is essential. Lack of promptness remains material, but its weight depends on the consequences of leaving the judgment undisturbed.

Discretionary case-management powers serve the interests of justice rather than punishment. Where a trial will occur in any event, the defaulting party has a good defence, the proceedings may have named the wrong defendant, and the disputed issue must still be determined, the risk of injustice may justify setting aside the judgment despite serious and unexplained delay.

A child suffered serious injuries after falling from a window at premises used for a karate class. He sued Birmingham City Council and the instructor. The Council alleged that responsibility for the premises lay with the governors or governing body of a grant-maintained school.

Default judgments were entered against the Governors in the Council's Part 20 claim and the claimant's main claim. His Honour Judge MacDuff QC accepted that they had a real prospect of defending the claims but refused to set aside the judgments because they had failed to act promptly and had no good explanation for their inactivity.

The Governors appealed shortly before the liability trial. The central issues were whether the default judgments should remain in force despite the apparent defence and uncertainty over the identity of the proper defendant, and whether the impending trial should be adjourned.

1. Appeal allowed by consent. The default judgments were set aside and the liability trial was adjourned. Chadwick LJ delivered the judgment of the court. Rix and Keene LJJ agreed.

2. Rule 13.3(1)(a) of the Civil Procedure Rules 1998 permits a default judgment to be set aside where the defendant has a real prospect of successfully defending the claim. That condition was satisfied. Although rule 13.3(3) required the court to consider promptness, the Governors' substantial delay carried less weight than it would have done if the default judgments had produced finality. A trial involving the claimant, the Council and the instructor remained necessary, and the court would still have to decide who bore responsibility for the premises under the Occupiers' Liability Act 1957.

3. The discretion under rule 13.3 had to be exercised consistently with the overriding objective. The guidance in rules 3.9(1) and 39.3(5) was relevant by analogy. The Governors' failures were incompetent rather than deliberately contumacious, but they were not prompt and had no good explanation. Those considerations did not make punishment a proper purpose of the discretion. The essential question was whether the injustice of excluding a party with a good defence outweighed the injustice to the other parties if participation were permitted.

4. There was serious doubt whether the named Governors, particularly those holding office in 2004 or 2005, were proper defendants. The claim had probably been brought against the wrong party, while the party which should have been sued was likely to possess a good defence. All participating parties therefore agreed that the judgments should not stand.

5. Adjournment was inevitable. The parties needed to identify whether the claim should proceed against particular governors or the corporate governing body, and the resulting issues might require further disclosure and evidence. The matter was remitted to the trial judge for future case-management directions. The governing body's insurers undertook to meet specified costs arising from the application, appeal and abandoned trial date.

1. Court of Appeal (Civil Division): The appeal was allowed by consent. The default judgments were set aside, the liability trial was adjourned and the proceedings were remitted for further case-management directions: [2005] EWCA Civ 1570.

2. High Court, Queen's Bench Division, Birmingham District Registry: His Honour Judge MacDuff QC, sitting as a deputy High Court judge, dismissed the Governors' applications to set aside the default judgments and refused permission to appeal.

3. District Judge: The Governors were deemed to admit the Council's Part 20 claim under rule 20.11(2) of the Civil Procedure Rules 1998. A later default judgment was entered against them in the claimant's main action.