Estate Acquisition and Development Ltd v Wiltshire & Anor

An applicant who seeks to set aside a judgment given following non-attendance must satisfy each condition in rule 39.3(5) of the Civil Procedure Rules 1998. Whether there was a good reason for non-attendance requires a practical assessment of all relevant evidence.

A person who knows that proceedings exist or are imminent will ordinarily be expected to arrange to receive litigation communications. A person who has no notice of existing or imminent proceedings has no general obligation to make himself amenable to potential claims. Failure to attend proceedings of which that person was unaware therefore provides a good reason for non-attendance.

Valid deemed service does not amount to deemed knowledge when the court determines the reason for non-attendance.

The claimant landlord obtained an order forfeiting the defendants’ valuable lease for rent arrears after proceedings had been validly served at the demised property. The defendants had moved away and neither received the claim form nor knew of the hearing.

District Judge Wicks set aside the order under rule 39.3(5) of the Civil Procedure Rules 1998. He found that the defendants had applied promptly, had a good reason for their non-attendance and had reasonable prospects of obtaining relief from forfeiture. Judge Knowles allowed the claimant’s appeal because the defendants had not adequately explained their failure to arrange for receipt of post or notify the claimant of their address.

The defendants brought a second appeal. The central issue was whether ignorance of proceedings, arising where no system existed for receiving communications at the address for service, constituted a good reason for non-attendance.

1. Appeal allowed unanimously. Judge Knowles adopted the wrong approach to rule 39.3(5)(b) of the Civil Procedure Rules 1998. On the facts found by the district judge, the defendants had a good reason for not attending the hearing.

2. A court deciding whether there was a good reason must identify the true reason for non-attendance from all the relevant evidence and assess it in the round. An honest or genuine reason is necessary but is not invariably sufficient. An over-analytical approach is inappropriate because the rule must operate consistently with the overriding objective and the right to a fair hearing under article 6 of the European Convention on Human Rights.

3. Where a person says that he did not know of the hearing, the court will usually need to ask why. A person who knows that proceedings have been served must expect further communications and hearing notices. Unless represented by a solicitor, that person will ordinarily need a practicable system for receiving them. Deliberate avoidance of litigation communications will make it particularly difficult to establish a good reason.

4. A different principle applies where the person knows neither that proceedings exist nor that they are imminent. The existence of a continuing contractual or proprietary relationship does not itself impose a general-law duty to maintain arrangements for receiving documents relating to possible litigation. A person is under no obligation to make himself amenable to potential claims of which he has no notice. Failure to attend unknown proceedings therefore provides a good reason.

5. Compliance with rule 6.5(6) establishes good service regardless of actual receipt. It does not deem the recipient to know about the claim when the court assesses the reason for non-attendance under rule 39.3(5)(b).

6. The district judge was entitled to find that an application made approximately three weeks after discovery of the order was prompt. The defendants also had reasonable prospects of obtaining relief from forfeiture because their unencumbered lease enabled them to raise the comparatively small sum required. The financial importance of the case was irrelevant at the threshold stage, although it could become relevant to discretion after the threshold conditions were satisfied.

1. Court of Appeal (Civil Division): The defendants’ second appeal was allowed unanimously. The court restored the conclusion that the defendants had a good reason for non-attendance.

2. Wandsworth County Court, Her Honour Judge Knowles: The claimant’s appeal was allowed. The judge held that the defendants had not shown a good reason for failing to know about and attend the hearing.

3. Wandsworth County Court, District Judge Wicks: The defendants’ application to set aside the possession and forfeiture order was granted. The district judge found that all three conditions in rule 39.3(5) of the Civil Procedure Rules 1998 were satisfied.

4. Wandsworth County Court, District Judge Wicks: In the defendants’ absence, the court ordered possession and forfeiture of the lease, payment of rent arrears and costs.