Dalton v Gough Cooper & Company Ltd

On an application to set aside default judgment under CPR 13.3, a defendant satisfies the principal threshold where it has a real prospect of successfully defending the claim. The court must assess the evidence supporting the proposed defence, rather than restrict its consideration artificially to formal non-admissions in the Defence. Lack of promptness is a factor to which the court must have regard, but it is not necessarily fatal where the defence has real prospects of success. The appellate court reviewing the decision must respect the lower court’s exercise of discretion, but may intervene where relevant matters were left out of account or the lower court erred in principle. The discretionary power to set aside arises only if one of the conditions in CPR 13.3(1)(a) or (b) is satisfied.

The claimant, suing as executrix of her late husband’s estate, alleged negligence and breach of statutory duty arising from asbestos exposure during employment. Gough Cooper was substituted as defendant after an earlier claim against Clarke & Epps was abandoned. Gough Cooper served its Defence late, and the claimant obtained default judgment on 3 December 2013.

Master McCloud refused Gough Cooper’s application under CPR 13.3 to set aside the judgment, holding that the Defence disclosed no real prospect of success and that the application had not been made promptly. Gough Cooper appealed. The central issues were whether the proposed defence had a real prospect of success, whether delay required the application to fail, and whether the Master had omitted relevant evidence.

1. Appeal allowed. The default judgment entered on 3 December 2013 was set aside. Costs were reserved for agreement or further submissions.
2. Under CPR 13.3(1)(a), the question was whether Gough Cooper had a real prospect of successfully defending the claim, not whether its defence was bound to succeed. The claimant’s own evidence did not positively support the allegation that Mr Dalton was employed by Gough Cooper when he worked at the boiler house. That evidence gave Gough Cooper at least a real prospect of resisting liability.
3. The Master had focused on the formal Defence, which consisted largely of non-admissions, and had failed to consider material evidence and correspondence showing the conflict about Mr Dalton’s employer and the work allegedly undertaken. That omission was material. It justified appellate intervention under the principles discussed in Roache v News Group [1998] EMLR 161.
4. The appeal was a review rather than a rehearing under CPR 52.11(1). Appropriate respect was therefore due to the Master’s decision, particularly on discretionary matters. Nevertheless, the failure to take relevant matters into account, or alternatively an error in principle, permitted intervention.
5. The application had not been made promptly, and the explanation for the delay was inadequate. However, CPR 13.3(2) required promptness to be taken into account; it did not make delay automatically fatal where the defendant had a real prospect of successfully defending the claim. The procedural approach in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537 did not produce a different result.
6. There was no separate “other good reason” under CPR 13.3(1)(b). The change of insurers and solicitors did not satisfy that requirement. The real prospect ground was sufficient, however, and the default judgment was set aside.

• High Court (Queen’s Bench Division): allowed the appeal against Master McCloud’s order of 10 January 2014 and set aside the default judgment entered on 3 December 2013.