National Tourism Council of Qatar v Mehdiyev

Where a regular default judgment is challenged and the defendant has a real prospect of successfully defending the claim, setting aside remains discretionary. The court may impose conditions that fairly address the consequences of the defendant’s failure to engage with the proceedings.

Those conditions may include payment of the costs of obtaining the default judgment and the set-aside application, security for costs, and reliable identity and address documentation. Security must not stifle a genuine defence. A bare assertion of modest means provides no evidential foundation for such an argument. Previous non-compliance, lack of good faith, uncertainty about the defendant’s address and enforcement concerns may justify an exceptional security order.

The claimant brought a passing off claim concerning the defendant’s use of the signs “VISIT QATAR” and “VISITQATAR”. A regular default judgment was entered after the defendant failed to respond to the English proceedings.

The defendant accepted that he had a real prospect of successfully defending the claim and applied to set aside the default judgment unconditionally. The claimant accepted that the judgment could be set aside but sought conditions including payment of past costs, security for future costs, and identity documentation to facilitate enforcement. The central issue was the appropriate terms on which the regular default judgment should be set aside.

1. The defendant’s application to set aside the regular default judgment was granted on stringent conditions. The defendant had a real prospect of successfully defending the underlying passing off claim, but the court retained a discretion as to whether to set aside the judgment and on what terms.
2. The defendant was ordered to pay the costs of obtaining the default judgment and the costs of the present application. The costs of the service-out application were excluded because they were costs of the action and should remain in the case in the ordinary way.
3. Security for costs was appropriate under CPR 3.1(5). The order was exceptional, but it would not stifle the defence. The defendant had been given an opportunity to provide evidence of his means and had supplied only the assertion that he was an ordinary individual of modest means. That was insufficient evidence to establish stifling.
4. In assessing the appropriateness of security, CPR 25.13 could be considered by analogy. Relevant circumstances included the defendant’s failure to engage with the proceedings, prior non-compliance with the default judgment, evidence suggesting that his previous address could not be located, uncertainty about his current address, and conduct concerning attempts to sell the domain name. These matters demonstrated a want of good faith in relation to the proceedings.
5. The amount of security was set at 70% of the claimant’s proposed figure for each phase, producing a total of £175,000 rather than £250,000. The reduced amount reflected the circumstances and the fact that the claim proceeded under the Shorter Trials Scheme.
6. The order also required the defendant to provide suitable identity documentation, including his patronymic and address. Certainty as to the defendant’s full identity and address was necessary as the litigation continued, particularly for enforcement purposes, subject to undertakings offered by the claimant’s solicitors.