Khan v Edgbaston Holdings Ltd

On an application under Part 13.3 of the Civil Procedure Rules 1998, the court must have regard to whether the applicant acted promptly. Acting promptly requires all reasonable celerity in the circumstances, and unexplained delay may justify refusing relief. A proposed defence must have a real, evidenced prospect of success rather than a merely fanciful possibility. A director’s denial that he attended negotiations may be insufficient where the evidence accepts that the company’s agent conducted the negotiations and does not challenge the agent’s representations or authority. The Court of Appeal refused permission where the first-instance judge was entitled to reject both promptness and the merits of the proposed defence.

Edgbaston sought permission to appeal against His Honour Judge Coulson QC’s refusal on 17 October 2007 to set aside a default judgment entered after it failed to acknowledge service of a claim alleging fraudulent or negligent misrepresentations in property sales. The issues were whether the application had been made promptly, whether Edgbaston had a real prospect of successfully defending the claim, and whether wider justice considerations required the judgment to be set aside. The respondent did not appear or was represented.

1. Disposition. The renewed application for permission to appeal was refused. There was no realistic prospect of upsetting the judge’s conclusions.
2. Promptness. Part 13.3 of the Civil Procedure Rules 1998 requires the court, when considering whether to set aside a default judgment, to have regard to whether the application was made promptly. The relevant standard is acting with all reasonable celerity in the circumstances, as explained in Regency Rolls Ltd v Murat Carnall [2000] EWCA Civ 379. Edgbaston learnt of the judgment in December 2006 but did not clearly express its wish to apply to set it aside until 22 May 2007. The explanations based on legal advice, funding difficulties, solicitor involvement, Christmas, travel and ill-health were unsupported or inadequate. The judge was therefore entitled to find that the application was not prompt.
3. Prospect of defending the claim. Although the pleaded case alleged joint representations by Mr Ahmed and Mr Wasim, Mr Ahmed’s evidence was too sparse to establish a sound basis for a defence. The possibility that Mr Ahmed was absent from the meetings did not exclude meetings at which Mr Wasim made the alleged representations. The defence accepted that Mr Wasim conducted the relevant negotiations, did not challenge the making of the representations, and offered no material supporting the bare assertion that he acted beyond his authority. The absence of evidence from Mr Wasim further weakened the application. The judge was entitled to conclude that there was no real prospect of a successful defence.
4. Wider considerations. The matters considered under the Part 3.9 checklist, including the size of the claim, did not justify setting aside the judgment. The size of the claim alone was insufficient.

1. Court of Appeal (Civil Division): On 17 January 2008, refused the renewed application for permission to appeal.
2. High Court of Justice, Queen’s Bench Division: His Honour Judge Coulson QC refused on 17 October 2007 to set aside the default judgment entered on 11 December 2006.