Soir Contracting & Ors v Desai

On an application to set aside a regularly obtained default judgment under Civil Procedure Rules 1998, Part 13(3), the question is whether the evidence shows a real prospect of successfully defending the claim or another good reason to set the judgment aside. A clear, signed statement of account and acknowledgment of debt may leave no real prospect of disputing liability where the alleged explanation is unsupported by evidence of misleading conduct. Evidence of payments made after the acknowledged debt date does not reduce that liability unless there is material showing that the payments related to earlier debts.

The claimant obtained judgment in default of acknowledgment of service for US$706,300 plus interest, based on documents signed by the defendant which recorded the account and acknowledged the debt. The defendant later applied for an extension of time and to set aside the judgment. She denied contractual dealings with the claimant and asserted that the documents merely recorded jewellery held for another trader’s family. She also relied on alleged dishonesty by a person involved in preparing the documents and on payments made after the acknowledgment.

Master Fontaine dismissed the application on 11 February 2005. Gray J dismissed the appeal on 27 June 2005. The Court of Appeal considered whether the defendant had shown a real prospect of defending the claim or another good reason for setting aside the regular default judgment.

1. Appeal dismissed. The Master and Gray J had reached the correct conclusion under CPR Part 13(3).
2. The relevant test was whether the defendant had shown a real prospect of successfully defending the claim, or some other good reason for setting aside or varying the judgment and allowing a defence. The court was entitled to decide the application on the documentary material without treating the matter as requiring a trial merely because oral evidence and cross-examination were proposed.
3. The documents signed by the defendant were straightforward. The 28 July document was a statement of account, not an inventory, and the 30 July document was a clear acknowledgment of debt. The defendant admitted signing both documents and did not allege facts explaining how she had been misled as to the nature of the acknowledgment. The absence of fuller underlying records and evidence of prior dishonesty did not materially undermine the documents. A further signed statement of account from 1994 was consistent with the claimant’s case and inconsistent with the defendant’s account.
4. The defendant’s asserted payments after July 1997 did not undermine the acknowledged liability. On both parties’ account, the obligation to account arose when jewellery was sold and the sale price received. The payments therefore related, on the defendant’s own evidence, to post-July 1997 trading. There was no material showing that they were payments for pre-July 1997 debts.
5. Gray J had made an inaccurate observation suggesting that the defendant had typed the acknowledgment wording. The wording was not shown to have been typed by her, but the error did not affect the decision and provided no basis for allowing the appeal.

The appeal was dismissed.

1. Court of Appeal (Civil Division): [2006] EWCA Civ 245 — appeal dismissed.
2. High Court, Queen’s Bench Division (Gray J): decision dated 27 June 2005 — appeal from the Master dismissed.
3. Master Fontaine: decision dated 11 February 2005 — application to set aside the regular default judgment dismissed.