INCE GORDON DADDS LLP v MELLITAH OIL & GAS BV

An application to set aside a regular default judgment under CPR 13.3 is an application for relief from a sanction. Once a jurisdictional gateway is established, the court must exercise its discretion in accordance with the overriding objective and have regard to the Denton principles, including promptness, compliance and all the circumstances. The applicant must show a real prospect of successfully defending the claim, with evidence giving the merits some degree of conviction; the court must avoid a mini-trial but need not accept bare assertions. A statutory assessment of solicitors’ bills may remain available where the statutory test is met, even though the default judgment is not set aside.

Ince Gordon Dadds LLP obtained a default judgment against Mellitah Oil & Gas BV for unpaid legal invoices. MOG applied under CPR 13.3(1)(a), asserting a real prospect of defending the invoice claim through a statutory assessment and a counterclaim or set-off based on alleged professional negligence. In submissions it also relied on CPR 13.3(1)(b), arguing that the claimant’s pre-action and service conduct supplied some other good reason. The central issues were whether either gateway was satisfied and, if so, whether the default judgment should nevertheless be set aside.

1. Application dismissed, subject to variation. The default judgment was not set aside. The judgment sum was reduced to US$1,201,491.91 to reflect sums MOG had paid directly to experts. MOG remained free, if the statutory requirements were met, to seek an assessment of the solicitors’ bills under the Solicitors Act 1974, and to bring any fresh claim it considered appropriate.
2. CPR 13.3 must be read with CPR 3.9 and the overriding objective. An application under CPR 13.3 is relief from a sanction, so the court should apply the three-stage Denton approach in exercising its discretion.
3. Under CPR 13.3(1)(a), the applicant bears the burden of showing a real prospect of defending the claim. The merits must be more than merely arguable and carry some degree of conviction. The court must avoid a mini-trial, but may analyse the evidence and draw an adverse inference where reasonably available supporting evidence has not been produced.
4. MOG just passed the merits gateway. Its complaints about the invoices raised a thin possibility that special circumstances might justify an assessment under section 70 of the Solicitors Act 1974. The proposed counterclaims were otherwise shadowy or lacked any real prospect of success.
5. The application was prompt, but the original default was serious and significant, MOG’s internal disorganisation was not a good reason for it, and later delay, failure to prosecute the application and breach of an undertaking weighed heavily against relief.
6. The recusal application was refused. A fair-minded and informed observer, taking account of the judicial oath, training and experience, would not regard a historic unpaid fee owed to the judge by a predecessor firm, combined with limited criticism of that firm’s conduct, as creating a real possibility of bias.