Almond & Ors v Medgolf Properties Ltd & Ors (2)

On an application for default judgment, the court must be satisfied that the claimant is entitled to the judgment sought, but need not conduct a full merits determination. The requirement permits the court to scrutinise the application where the relief requires particular attention and to tailor the relief to the cause of action. Rescission may be granted by default where the pleaded case establishes entitlement and the circumstances make it an appropriate discretionary remedy. Assignment of contractual benefits to banks did not prevent rescission as against the non-appearing developers, particularly where the banks’ alleged knowledge or involvement meant that their rights could not operate as an innocent third-party bar.

Certain claimants in two actions applied for default judgment against developer defendants. The applications sought rescission of contracts. Some contractual benefits had been assigned to bank defendants, raising a potential issue as to whether assignment prevented rescission. Two defendants in one action raised no further substantive opposition and wished to preserve their position on jurisdiction.

The court considered whether the requirements in paragraphs 4.1 and 4.3 of the Practice Direction to CPR Part 12 were satisfied, including service, failure to acknowledge service, expiry of the relevant period, non-satisfaction of the claims and absence of formal admissions. The central issue was whether default judgment for rescission was appropriate despite the contractual assignments and the discretionary nature of rescission.

1. Default judgment requirements. The court was satisfied that the claim forms and Particulars of Claim had been served, that the defendants had not filed acknowledgments of service within the relevant period, and that the claims had neither been satisfied nor formally admitted. The court was also satisfied that it had jurisdiction and that the claimants were entitled to judgment.
2. Scope of the court’s scrutiny. Applying the approach in Football Bataco Ltd v Snoot Enterprises [2011] 1 WLR 1978, the requirement that it appear to the court that the claimant is entitled to judgment did not require the court to second-guess the pleaded assertion that the facts disclosed a cause of action. It permitted the court to scrutinise the application where appropriate and to tailor the relief to the cause of action.
3. Rescission despite assignment. The contracts’ assignment to certain banks did not prevent rescission as against the non-appearing developers. The rescission judgment would not necessarily bind the banks, which could maintain that the contracts remained effective in their hands, but the developers would be bound to recognise the order.
4. The assignment also did not make rescission inappropriate because restitution by the developers would in practice benefit the banks. Further, third-party rights could operate as a bar only where the third party was innocent. The pleaded case alleged that the banks had knowledge of, procured or instigated the misrepresentations, or had made similar misrepresentations themselves.
5. The court noted that Taylor involved the grant of rescission by default judgment in similar circumstances. Rescission was therefore granted as the appropriate discretionary remedy. The draft order was to be revised to clarify that certain Dubai-based claimants did not seek default judgment.