M Rohde Construction v Markham-David

A default judgment should be set aside under CPR 13.3 where the defendant has a real prospect of successfully defending the claim and, having regard to all the circumstances, the interests of justice favour reopening the case. Promptness is assessed from when the defendant became aware, or should reasonably have become aware, of the judgment. In adjudication enforcement, the courts generally enforce decisions, but may refuse enforcement in rare cases where the adjudication was conducted in breach of natural justice, including where a party was deliberately deprived of the opportunity to make representations.

The claimant sought to enforce an adjudicator’s award for unpaid construction work. A default judgment was entered after proceedings were served by an alternative method. The defendant later applied under CPR 13.3 to set it aside, alleging that he had been unaware both of the adjudication and of the court proceedings.

The proposed defence challenged the contract’s compliance with section 107 of the Housing Grants, Construction and Regeneration Act 1996, the timeliness of the adjudicator’s decision, and the fairness of the adjudication process. The central questions were whether the defendant had a real prospect of successfully defending the claim and whether the judgment should be set aside in the court’s discretion.

1. Real prospect of success. The defendant’s proposed challenge under section 107 of the Housing Grants, Construction and Regeneration Act 1996 was unlikely to succeed because the contractual documents appeared to contain the essential terms. The challenge based on late delivery of the adjudicator’s decision was also unlikely to succeed. A slight delay would not necessarily invalidate an adjudication decision.
2. Natural justice and enforcement. Adjudication decisions should ordinarily be enforced. The guidance in Carillion Construction Ltd v Devonport Royal Dockyard [2005] EWCA Civ 1358 recognised that intervention should be rare, but left open the possibility of refusing enforcement where the claimant had deliberately deprived the defendant of the opportunity to make representations. The evidence raised a serious issue as to whether the defendant could readily have been contacted through his business address and whether that means was deliberately withheld.
3. Discretion to set aside. Under CPR 13.3, the court had to consider the real prospect of a defence, promptness, prejudice, the interests of justice and all the circumstances, having regard to the overriding objective. Although four years had passed since judgment, the court proceeded on the basis that the defendant had been unaware of the litigation until October 2005. His application was therefore made with reasonable promptness after discovery.
4. The risk of injustice to the defendant if the judgment stood outweighed the prejudice to the claimant if it were set aside. The default judgment was set aside and the action was permitted to proceed to trial. No binding findings were made on the disputed facts or the underlying legal issue.