TBO Investments Ltd v Mohun-Smith & Anor

On an application under Civil Procedure Rules r 39.3, the requirements of promptness, a good reason for non-attendance, and a reasonable prospect of success are cumulative. If they are met, refusal to set aside a judgment given in a party’s absence will be exceptional.

The assessments of good reason and promptness are fact-sensitive. Where a party has an arguable defence, the court should not apply either requirement with undue rigour. Strict scrutiny of medical evidence is appropriate on an application to adjourn a trial, but it must not be imported uncritically into a later application to set aside a judgment entered without a merits hearing.

The claimants sought about £2 million from TBO Investments Ltd for professional negligence. TBO’s solicitors ceased acting shortly before trial because it could not fund counsel. Its director, Mr Robinson, was said to be the only person able to conduct the defence, but was medically certified as unfit to work during the trial week.

When TBO did not attend the trial, HH Judge Seymour QC refused an adjournment, struck out its defence, entered judgment for the claimants, and assessed damages at £2,135,676. He later refused TBO’s application under Civil Procedure Rules r 39.3 to set aside that order, holding that TBO lacked a good reason for non-attendance and had not acted promptly.

TBO appealed. The central issue was whether the judge had applied the correct approach to those two conditions.

1. Appeal allowed. The Master of the Rolls, with whom Lady Justice Macur and Lord Justice Lindblom agreed, held that TBO had satisfied all three cumulative conditions in CPR r 39.3(5). There was no exceptional circumstance justifying refusal to set aside the judgment.

2. The judge had no evidential basis for finding that TBO could have attended and conducted its defence through its other director. The relevant issue under r 39.3(5)(b) was whether the company could attend the trial to conduct its case, rather than whether another person could attend merely to seek an adjournment.

3. The judge also applied an unduly rigorous standard to the medical evidence. The guidance in Bank of Scotland Plc v Pereira [2011] 1 WLR 2391 required a fact-sensitive approach informed by the overriding objective and article 6 of the Convention. The medical evidence had shortcomings, but the doctor’s examined and confirmed opinion was that Mr Robinson was unfit to attend. In a substantial claim where the defence had reasonable prospects, that evidence established a good reason.

4. The stringent scrutiny of medical material discussed in Levy v Ellis-Carr [2012] EWHC 63 (Ch) remained applicable to an application to adjourn a trial. A refusal of an adjournment normally still permits a merits trial. By contrast, failure of a r 39.3 application deprives the absent party of any merits adjudication. That distinction justified the less rigorous approach required on the set-aside application.

5. TBO had acted promptly. Promptness meant reasonable celerity in the circumstances, not the absence of every needless delay. Given the complexity and value of the claim, and a delay of only days before the application, the judge could not reasonably conclude otherwise.

6. Lady Justice Macur added that the less rigorous approach does not displace the civil standard of proof where a genuine or honest reason for non-attendance is disputed.

• Court of Appeal (Civil Division) — allowed TBO’s appeal and held that the judgment entered in its absence should be set aside: [2016] EWCA Civ 403.
• High Court, Queen’s Bench Division — HH Judge Seymour QC refused TBO’s application under CPR r 39.3 to set aside the judgment entered after it failed to attend trial. The original order had struck out TBO’s defence, entered judgment for the claimants, and assessed damages.