Rajval Construction Ltd v Bestville Properties Ltd

Failure to serve a response pack under the Civil Procedure Rules 1998 does not add a condition to the mandatory rules governing entry or setting aside of default judgment. It may nevertheless amount to some other good reason for setting aside under CPR 13.3(1)(b), independently of whether the defendant has a real prospect of successfully defending the claim. The failure is particularly weighty where the defendant is a litigant in person, the defendant has acted sufficiently promptly, and the defendant’s conduct is not blameworthy. In such circumstances, the judgment may be set aside without conditions. A substantial payment condition may be tantamount to refusing to set aside the judgment if the defendant cannot raise the required sum.

Bestville Properties Ltd appealed against an order of the Technology and Construction Court setting aside a default judgment only on condition that £75,000 was paid into court. Rajval Construction Ltd had served the claim form and particulars of claim without the response pack required by CPR 7.8. Bestville consequently failed to acknowledge service within the relevant period, and judgment was entered in default. The appeal concerned whether the failure to serve the response pack affected the conditions for obtaining default judgment, whether it constituted a good reason for discretionary relief under CPR 13.3(1)(b), and whether the conditional order was justified.

1. Disposition. Longmore LJ delivered the leading judgment. Patten LJ and Ward LJ agreed. The appeal was allowed and the default judgment was set aside without conditions.
2. Mandatory setting aside. The conditions in CPR 12.3(1) were satisfied because the relevant time had expired and Bestville had filed neither an acknowledgment of service nor a defence. The court declined to read the response-pack requirement in CPR 7.8(1) into CPR 12.3(1). Accordingly, CPR 13.2(a) did not require the judgment to be set aside.
3. Discretionary setting aside. CPR 13.3(1)(a) and (b) are disjunctive. The alternative ground of some other good reason does not depend on proof of a real prospect of successfully defending the claim. The principle identified in Godwin v Swindon Borough Council [2002] 1 WLR 997, and not dissented from in Anderton v Clwyd County Council (No 2) [2002] 1 WLR 3174, was capable of extending to documents required by CPR 7.8. Hughes v Alan Dick & Co Ltd [2008] EWHC 2695 (QB) provided a further illustration of the absence of a response pack and resulting confusion constituting good reason.
4. Application. The breach of CPR 7.8 was a very weighty matter because Bestville was a litigant in person. The court accepted that the director’s evidence should not be disbelieved without cross-examination and that forwarding the claim form to solicitors within eight days was sufficiently prompt in the circumstances. Since Rajval had breached the rules and Bestville’s conduct was not inappropriate, there was a good reason to set aside the judgment regardless of the merits of the proposed defence.
5. Conditional order and recording of hearings. A condition requiring payment of a substantial sum, which the defendant cannot in fact raise, is tantamount to refusing relief and is not purely a case-management decision. Longmore LJ also directed that TCC proceedings should be recorded, including Friday hearings and case-management decisions, so that proper transcripts are available. Ward LJ expressly endorsed that guidance.

1. Court of Appeal (Civil Division): Appeal allowed. The default judgment was set aside without conditions.
2. Technology and Construction Court: The default judgment was set aside on condition that £75,000 be paid into court.