Intesa Sanpaolo SPA v Regione Piemonte

A defendant seeking to set aside a regularly obtained default judgment must show a real prospect of successfully defending the claim or some other good reason. The application must also be made promptly. Promptness is fact-sensitive, but substantial unexplained delay may itself justify refusal, even where a possible defence is advanced. The court should avoid a mini-trial, but a defendant should normally provide a properly formulated draft defence and adequate evidence. Contractual representations may create a contractual estoppel preventing a party from asserting a contrary factual case, particularly where the parties contracted as principals. A public authority’s capacity must be considered by reference to the particular transaction and its features, but allegations concerning bargaining inequality, reliance or misunderstanding do not necessarily establish incapacity.

The Banks obtained default declarations from Cooke J in July 2012 that derivative transactions entered into with Regione Piemonte were valid, binding and enforceable. Piemonte deliberately did not engage with the English declaratory proceedings, pursuing related self-redress proceedings in Italy instead. It later applied under CPR 13.3 to set aside the default judgment and opposed the Banks’ applications for summary judgment for unpaid sums. The central issues were whether the applications to set aside had been made promptly, whether Piemonte had a real prospect of defending the claims or another good reason for relief, and whether the Banks were entitled to summary judgment.

1. Applications to set aside. The applications were dismissed. Under CPR 13.3, the burden lay on Piemonte to establish a real prospect of successfully defending the claims or some other good reason. The court accepted that promptness is fact-sensitive and that there is no arbitrary time limit, but the 11-month delay was a very strong factor against relief. Piemonte had deliberately ignored proceedings properly served in England despite the parties’ express choice of English law and jurisdiction. Its later delays, even if attributed to internal processes, remained unacceptable.
2. Piemonte had not served a defence, even in draft form, and its evidence merely identified matters which might feature in future defences. The court applied the principle in First Discount Ltd v Cranston [2002] EWCA Civ 71 that a defendant seeking to raise an unpleaded defence should come to court with a draft pleading. The court did not conduct a mini-trial, but the evidence was too vague and insufficiently developed to establish a real prospect of success.
3. The capacity argument was not sufficiently arguable. Capacity had to be examined by reference to each transaction and its specific features. However, the allegations principally concerned bargaining inequality, reliance, advice and understanding. Those matters related more naturally to internal management powers than capacity as such. The court accepted in principle that an established incapacity under Italian law might provide a good reason for setting aside, but the evidence did not establish it.
4. The fiduciary-duty, secret-profit, misselling and qualified-investor arguments did not justify relief. The parties acted as principals, which pointed against a fiduciary relationship. The contractual representations in the transaction documents created a contractual estoppel in accordance with Springwell v JP Morgan [2010] EWCA Civ 1221, a principle which the judge respectfully agreed with and applied. No fraud was alleged.
5. The Banks were entitled to summary judgment for the unpaid sums plus interest. Piemonte had ample opportunity to challenge the figures and had not shown any sufficiently meritorious counterclaim. Consequential matters, including costs and any application for permission to appeal, were adjourned for further consideration.

The judgment concerned applications made after Cooke J granted default declarations in July 2012. The judgment states that Cooke J’s decision had not been appealed and was final and binding. It was not itself an appeal.