Bank of Scotland v Pereira & Ors

A party absent from trial should normally seek relief under Civil Procedure Rules 1998 r 39.3 where it reasonably believes it can meet the three cumulative conditions. The separate right to appeal the original order remains available in principle, particularly for distinct grounds unconnected with the absence.

However, a failed r 39.3 application cannot normally be circumvented by an appeal seeking a retrial or fresh evidence merely because the party did not attend. Evidence that could have been adduced at trial will ordinarily fail the applicable appellate criteria. Whether to extend time for an appeal requires all relevant circumstances to be balanced, including delay, finality, prejudice and the merits.

The Bank brought possession proceedings concerning a property transferred by Mr and Mrs Pain to Ms Pereira as nominee purchaser, with the Bank holding a registered charge. The Pains counterclaimed for rescission, rectification and damages arising from a fraudulent scheme involving Mr James. Ms Pereira did not attend the 2007 trial before Judge Milligan, who made orders including rescission and an assessment of damages against her.

In 2009 Judge Ellis, sitting in the Croydon County Court, refused Ms Pereira’s application under CPR r 39.3 to set aside the rescission and damages parts of that order. He held that she lacked a good reason for non-attendance and had not acted promptly. Ms Pereira appealed that refusal and sought, more than two years late, permission to appeal Judge Milligan’s order. The central issue was the relationship between the r 39.3 procedure and a direct appeal by a party absent from trial.

1. The appeal and applications were dismissed. The court upheld Judge Ellis’s refusal to set aside Judge Milligan’s order and refused an extension of time and permission to appeal that order.

2. Under CPR r 39.3(5), the conditions of promptness, a good reason for absence, and a reasonable prospect of success are cumulative. As explained in Regency Rolls Ltd v Carnall [2000] EWCA Civ 379, the rule does not confer a broad residual discretion once a condition is unsatisfied. If all conditions are met, an order would ordinarily be set aside because fair hearing is fundamental; but the conditions are fact-sensitive and are applied consistently with the overriding objective.

3. The court gave guidance on the relationship between an appeal and CPR r 39.3. The r 39.3 procedure is normally the appropriate route where an absent party seeks a new trial and reasonably believes the conditions can be met. It does not, however, remove the party’s direct right of appeal on a distinct, appealable ground. A failed r 39.3 application does not normally permit the party to obtain, through an appeal, a retrial or reliance on evidence which was available at the trial and is sought only because of the absence.

4. The appellate court should be slow to disturb a first-instance r 39.3 decision involving factual assessment. Oral evidence and cross-examination are exceptional on such an application. The judge may decide it on written evidence where the application fails even if that evidence is accepted, or where the evidence is inconsistent or inherently improbable.

5. Judge Ellis was entitled to find that Ms Pereira knew of the hearing and, in any event, that the long delay before her application was not prompt. The proposed fresh evidence for a direct appeal was available had she attended trial and did not satisfy the Ladd v Marshall criteria. The factors relevant to an extension of time, especially the extraordinary delay, finality and limited practical prejudice, also weighed against relief.

6. Lloyd LJ, in reasoning accepted by the Master of the Rolls for the merits assessment, observed that a known nominee purchaser might have an arguable defence to damages for deceit if unaware of the principal’s fraud. That issue did not justify reopening this case.

• Court of Appeal (Civil Division): dismissed Ms Pereira’s appeal against Judge Ellis’s refusal to set aside the order and refused her late application for permission to appeal Judge Milligan’s order: [2011] EWCA Civ 241.

• High Court / Court of Appeal route: Peter Smith J granted permission to appeal Judge Ellis’s decision to the High Court. That appeal was stayed and, by direction under Access to Justice Act 1999 section 57, was heard with the Court of Appeal application.

• Croydon County Court: on 6 August 2009, Judge Ellis refused Ms Pereira’s CPR r 39.3 application to set aside parts of Judge Milligan’s order.

• Poole County Court: on 21 June 2007, Judge Milligan made possession, rescission, rectification and damages orders following a trial at which Ms Pereira did not attend.