Bank of Ireland & Anor v Rafiq

When deciding whether to extend time for a defence served substantially late, the court must consider all the circumstances and apply the overriding objective and the factors in CPR 3.9. There is no rule that an apparently bona fide and arguable defence must ordinarily be admitted. The merits are relevant, but the court must assess them rather than take the draft defence at face value. Deliberate and excessive delay, absence of a good explanation, and failure to act promptly may outweigh the injustice of preventing a defendant from defending the claim. A defendant cannot impose a leisurely timetable of their own choosing. Where the defendant remains in default, default judgment must be entered for the judgment to which the claimant appears entitled under CPR 12.11(1).

The claimants sought default judgment against a former employee in respect of allegedly dishonest payments totalling £919,708.25. The defendant had been served with the proceedings but neither acknowledged service nor served a defence. She later produced a draft defence and sought an extension of time, relying principally on her personal circumstances, lack of legal representation and the arguability of the proposed defence.

The court had to determine whether to extend time under CPR 3.1(2)(a), thereby removing the defendant’s default, and, if not, whether default judgment should be entered under CPR 12.11(1).

1. Default judgment and extension of time. CPR 12.11(1) did not confer a discretion as to the judgment to which the claimants were entitled on their statement of case. The real issue was whether the defendant should be permitted to serve a defence out of time under CPR 3.1(2)(a).
2. Applicable approach. Following Sayers v Clarke Walker [2002] 1 WLR 3095, the court had to apply the overriding objective and, in a case of this complexity, consider the matters in CPR 3.9. The checklist was not a box-ticking exercise. It required a balancing assessment of all the circumstances, without assigning automatic priority to any single factor.
3. No rule of thumb. The observations in Coll v Tattum and Lexi Holdings plc (in administration) v Shaid Luqman & Others [2007] EWHC 2497 (Ch) did not establish a rule requiring admission of a defence which appeared bona fide and arguable after a long delay. The merits were relevant: a strongly arguable defence would favour relief, while a shadowy defence would point against it. The court should not simply accept the draft defence at face value.
4. Application. The defendant’s failure was deliberate, substantially excessive and unsupported by a good explanation. She had been told the applicable time limits and had consciously chosen not to engage with the proceedings. Her personal difficulties did not remove her ability to reason, and she did not act promptly once those difficulties had eased. The court also took account of the administration of justice and the need for compliance with the Rules, as emphasised in Fred Perry (Holdings) Ltd v Brands Plaza Trading Limited [2012] EWCA (Civ) 224 and Tinkler v Elliott [2012] EWCA (Civ) 1289.
5. The prejudice to the defendant from being unable to defend was outweighed by the other circumstances, including her deliberate decision to allow the time limits to pass. The application for an extension of time and relief against sanctions was refused. Default judgment was entered for £919,708.25, with interest and costs to be addressed separately.