Albesher v Ryan & Ors

On an application to set aside a regular default judgment, the defendant must show a real, rather than fanciful, prospect of successfully defending the claim, or some other good reason. The assessment is not a mini-trial, but the court may analyse the evidence and reject factual assertions which plainly lack substance. Promptness under Civil Procedure Rules 1998, rule 13.3(2), principally concerns the period after judgment and before the set-aside application; earlier default remains relevant to the overall discretion. The court should weigh all the circumstances, including the seriousness of the default, the explanation for it, compliance after judgment, the merits of the proposed defence, and the effect on efficient and proportionate litigation. A detailed draft defence is not indispensable where the evidence clearly identifies the factual case to be advanced.

The claimant brought proceedings alleging deceit, unlawful means conspiracy and related equitable and contractual liabilities concerning payments made for a proposed property development. A regular default judgment was entered against the second defendant, Ryan Corporation (UK) Limited, after it failed to acknowledge service. The company applied under the applicable procedural rules to set aside that judgment, relying principally on Mr Ryan’s witness statements, which denied the alleged fraud and conspiracy and asserted a different agreement concerning funding.

The claimant argued that the evidence contained false factual assertions, that the application was not prompt, and that the absence of a draft defence justified refusal. The central issues were whether the proposed defence had a real prospect of success and, if so, whether the court should exercise its discretion to set aside the judgment.

1. Application granted. The regular default judgment against Ryan Corporation (UK) Limited was set aside, without imposing a condition that the company pay the claimant’s application costs.
2. Under Civil Procedure Rules 1998, rule 13.3(1), the court had a discretion because the proposed defence had a real prospect of success. The test required a realistic prospect, not a fanciful one. It was not a mini-trial, but the court was not required to accept every factual assertion without analysis.
3. The claimant’s attempts to show that Mr Ryan’s evidence was demonstrably false did not justify refusing relief at this stage. The explanations given for the disputed emails, the funding evidence, the payment of £10.4 million, the frozen £12 million and the unexplained £5 million were not incapable of belief. The court could not reliably resolve the central disputes without a full trial and oral evidence.
4. The proposed defence directly addressed the principal allegations, including the alleged oral misrepresentation and conspiracy. The absence of a draft defence was relevant to discretion, but was not decisive because the witness evidence provided more factual detail than might ordinarily be expected in a statement of case and identified the issues to be advanced.
5. Promptness under rule 13.3(2) concerned the period between entry of the default judgment and the application to set it aside. Ryan Corp applied within the period allowed by the earlier order and had acted sufficiently promptly. Its earlier failure to acknowledge service was significant and serious, and had no good reason, but was not deliberate.
6. Applying the three-stage approach in Denton v TH White Ltd [2014] EWCA Civ 906, the balance strongly favoured setting aside the judgment. The default and wasted costs weighed against relief, but the company had since acted promptly, had a real prospect of defending grave allegations, and its participation would not materially prolong the proceedings against the other defendants.