Rushworth v Harvey

In Mercantile Court proceedings, failure to comply with requirements concerning a response pack or an indication that particulars of claim will follow does not necessarily invalidate service of a claim form. A defendant must still file an acknowledgement of service within the period specified by the rules. A procedural defect in an application for default judgment may be treated as a technical irregularity where the substance of an application was placed before and considered by a judge. Default judgment should nevertheless be set aside where the defendant has a real prospect of successfully defending the claim. A claimant cannot recover remuneration where the alleged agreement made payment conditional on an event that did not occur, or obtain a quantum meruit inconsistent with that agreed basis.

The claimant obtained default judgment for a claim concerning services allegedly provided to the defendant and his former wife in connection with their shareholding and attempts to regain control of a company. The defendant applied to set aside the judgment, arguing that the claim form had not been validly served because it lacked particulars of claim, the required statement concerning later service of particulars, and a response pack. He also challenged the form of the application for default judgment and relied on his real prospect of defending the claim.

The court had to determine whether the default judgment was wrongly entered or should be set aside discretionally, and whether the pleaded claim disclosed a reasonable basis for recovery.

1. Default judgment. The claim form had been served, although the requirements of Civil Procedure Rules 1998 rule 59.4 had not been complied with. Rule 59.5(1) stated unequivocally that a defendant must file an acknowledgement of service in every case, and rule 59.5(2) made the period 14 days after service of the claim form. Nothing in rule 59 deemed service not to have occurred because of non-compliance with rule 59.4. The condition in rule 12.3(1) was therefore satisfied.
2. The claimant should have used a Part 23 application notice, but he had in substance applied for default judgment. The incorrect form was a technical procedural irregularity. The application had been considered by a judge, and the irregularity did not invalidate the judgment.
3. In the exercise of discretion under rule 13.3(1), the judgment was set aside because the defendant had a real prospect of successfully defending the claim. The court did not need to decide whether the procedural defects constituted some other good reason.
4. On the pleaded case, remuneration was conditional on regaining control of the company and completing a sale. Those events did not occur, so no fee became payable. An alleged promise to reward the claimant very well was too uncertain to constitute a binding agreement. A quantum meruit was unavailable because the parties’ alleged agreement identified a different, conditional basis of remuneration.
5. The defendant admitted liability for the claimant’s £350 airfare. Judgment was entered for that amount and the remainder of the claim was struck out. There was no order as to costs because the defendant’s procedural approach had materially prolonged the proceedings.

The judgment concerns an application in the High Court to set aside a default judgment previously entered in the same proceedings. No appellate history is stated.