Bank of Scotland Plc v Hurst

Relief from sanction under CPR rule 3.9 requires a structured application of Denton’s three stages: the seriousness or significance of the breach, the reason for default, and all the circumstances. An unexplained breach of an unless order and delay in seeking relief may weigh against the application. Where a first-instance decision fails to address those matters in a properly structured way, an appellate judge may substitute a fresh exercise of discretion. On a second appeal, permission requires an important point of principle or practice, or another compelling reason. Sympathy arising from the risk of losing a home is not, without more, compelling.

The claimant bank sought money owed under a loan agreement. Mrs Hurst failed to give disclosure, despite an unless order requiring standard disclosure by 5 July 2013. Default judgment was entered on 18 July 2013. She applied to set it aside on 23 September 2013, outside the 14-day time limit.

The District Judge granted relief from sanction. HHJ Harris QC allowed the bank’s appeal and restored the default judgment, holding that the District Judge had not properly applied the relevant principles and that there was no good reason for the default or delay. Mrs Hurst renewed her application for permission to bring a second appeal. The central issues were whether HHJ Harris was entitled to exercise the discretion afresh and whether the stricter second-appeal criteria were met.

1. Renewed application refused. The application for permission to bring a second appeal was refused.
2. HHJ Harris QC was entitled to substitute his own discretion for that of the District Judge. The District Judge’s decision fell outside the reasonable ambit of discretion because it did not address the relevant issues in a properly structured way or explain how the identified circumstances supported relief.
3. The correct approach under CPR rule 3.9 was the three-stage test in Denton. The breach of the unless order was significant. The explanations based on reliance on the defendant’s husband did not provide a good reason for non-compliance. The judge also considered all the circumstances, including the defendant’s lack of promptness in seeking to set aside the judgment. There was no error of law in his treatment of relevance or weight.
4. The proposed appeal was a second appeal and therefore had to involve an important point of principle or practice, or another compelling reason. The applicable principles had already been established in Mitchell and Denton. The risk that the defendant and her husband might lose their home was sympathetic but did not constitute a compelling reason for a further appeal.

• Court of Appeal (Civil Division): The renewed application for permission to appeal was refused: [2015] EWCA Civ 1451.
• High Court, Queen’s Bench Division: HHJ Harris QC allowed the bank’s appeal against the District Judge’s order and restored the default judgment.
• District Judge Matthews: Granted relief from sanction and set aside the default judgment.