Inovatech EMEA Ltd & Anor v Nuttall

A court should not strike out proceedings prematurely where the claimant has a subsisting right to apply to set aside a default judgment and the claim raises issues within the specialist court’s jurisdiction. Those rights remain subject to the overriding objective and the need for expeditious, proportionate litigation. Unreasonable delay may justify an indemnity costs order and a conditional stay, even where the substantive merits have not been determined.

The claimants brought TCC proceedings against the defendant concerning alleged failures in a telecommunications project. The defendant had previously obtained a default judgment against the first claimant in County Court proceedings for unpaid remuneration. The claimants delayed in applying to set aside that judgment and failed to progress the TCC proceedings in accordance with directions given at an earlier case management conference.

The defendant applied to strike out the claim under CPR 3.4(2)(a) and/or (b), and alternatively under CPR Part 24. The central issues were whether the proceedings should be struck out at that stage and what procedural and costs consequences should follow from the claimants’ delay.

1. The strike-out application was refused. The claimants retained a right to apply to set aside the default judgment, and the County Court was the appropriate forum to determine that application. The claimants also had a right to issue proceedings concerning the defendant’s alleged performance, subject to compliance with the rules and the overriding objective.
2. Strike-out was premature. The claim concerned the technical performance of a telecommunications project and was properly capable of being TCC business. The court would not determine the merits or predict the outcome of the application to set aside the default judgment.
3. The claimants’ delay was unacceptable. The explanations given did not justify the failure to issue and progress the set-aside application promptly, or the late production of amended pleadings.
4. The delay had made the earlier and present hearings abortive. The claimants were therefore ordered to pay the costs of and occasioned by both hearings on an indemnity basis.
5. The action was stayed unless and until the assessed costs were paid. The costs were summarily assessed at £4,197.68, payable within seven days of the postscript, with the claim stayed if payment was not made by 25 February 2010. A further case management conference could be sought after payment.

This was a first-instance case management decision. No appeal history is stated in the judgment.