Mullock v Price (t/a the Elms Hotel Restaurant)

An applicant seeking to set aside a default judgment must act with all reasonable celerity in the circumstances. Promptness is assessed from the applicant’s awareness of the judgment. Reliance on an insurance broker or other representative does not postpone that obligation, because responsibility for conducting litigation expeditiously rests personally on the party.

When exercising its discretion, the court must consider all the circumstances. The absence of culpable delay may attract sympathy, but it does not establish promptness. The court may give decisive weight to delay’s effect on the litigation, prejudice to the successful party, the finality of judgments and the proper allocation of court resources.

The claimant obtained default judgment against a hotel proprietor for injuries caused when an employee’s dog knocked her over. The defendant knew about the judgment but relied for almost two years on insurance brokers who repeatedly claimed to be handling the proceedings. After discovering that the insurance arrangements might be fraudulent, he applied to set the judgment aside.

A district judge refused the application. On appeal, His Honour Judge Philip Hughes found a real prospect of successfully defending the claim and accepted that reliance on the brokers explained the delay. The claimant obtained permission to appeal on the question whether the defendant had acted promptly for the purposes of CPR 13.3(2). The central issues were whether reliance on a representative could postpone the obligation to act promptly and whether the judgment should nevertheless be set aside in the exercise of discretion.

1. Appeal allowed unanimously. The circuit judge’s order was set aside and the district judge’s dismissal of the application to set aside the default judgment was restored.

2. Ward LJ held that “promptly” in CPR 13.3(2) requires an applicant to act with all reasonable celerity in the circumstances. The applicant’s obligation arose when he knew that default judgment had been entered. A delay of almost two years could not satisfy that requirement.

3. The circuit judge had taken account of an irrelevant consideration by treating the defendant’s reliance on his insurance brokers as postponing the requirement of promptness. CPR 13.3 focuses on the conduct of the person seeking relief. CPR 1.3 also imposes on parties a personal duty to help the court further the overriding objective, including the expeditious disposal of proceedings. As a general rule, a representative’s action or inaction is treated as that of the party, consistently with Training in Compliance Ltd v Dewse [2001] CP Rep 46.

4. The Court therefore exercised the discretion afresh. The defendant’s reliance on the brokers was understandable and his delay was not regarded as culpable. He faced substantial financial hardship, although there remained a real prospect of compensation through the Financial Services Compensation Scheme.

5. Those considerations were outweighed by the prejudice to the claimant. Setting aside the judgment would require the elderly claimant to recommence litigation many years after the accident, when memories and evidence might have deteriorated. A possible claim against the employee had also become time-barred. The public interest in finality, the need for expedition and the proper allocation of court resources reinforced the conclusion that the judgment should stand.

6. Sedley LJ and Smith LJ agreed that an absence of blame did not make the application prompt. Both agreed that, on balancing the consequences of the delay, the discretion had to be exercised in the claimant’s favour.

1. Court of Appeal (Civil Division): The claimant’s appeal was allowed unanimously. The circuit judge’s order was set aside and the district judge’s dismissal of the application to set aside the default judgment was restored: [2009] EWCA Civ 1222.

2. Mold County Court: His Honour Judge Philip Hughes allowed the defendant’s appeal on 26 January 2009. He found a real prospect of successfully defending the claim and upheld the finding that the defendant had acted promptly.

3. District Judge: District Judge Reeves refused the application on 12 August 2008. He accepted that the defendant had acted promptly once the full facts about the brokers were known, but found no real prospect of successfully defending the claim.