Ronnie Ambimbola Decker & Anor v International Medical Supplies Limited

Under Civil Procedure Rules 1998, Part 13.3, a regularly obtained default judgment may be set aside where the defendant shows a realistic prospect of successfully defending the claim, or another good reason. The court must also consider promptness and apply the three-stage Denton approach. Delay may be relevant both specifically to the application and more broadly to all the circumstances. A strong defence does not by itself overcome serious procedural default or delay. Where liability is unlikely to be defended but quantum has a realistic prospect of challenge, the judgment may be varied to permit that limited defence, subject to appropriate conditions.

International Medical Supplies Limited claimed more than $10 million under a repayment agreement involving Globus Industries Inc. and Ronnie Decker. The agreement purported to secure repayment through a charge over a Cypriot hotel, and Mr Decker had signed on behalf of Globus and Princess Hotels Development Limited.

After default judgment was entered, Mr Decker applied under Part 13.3 of the Civil Procedure Rules 1998. He ultimately accepted proper service and accepted that he lacked a valid power of attorney, but relied on alleged actual authority and challenged the amount recoverable for breach of warranty of authority. The central issues were whether he had a realistic prospect of defending liability or quantum, whether there was a good reason for his procedural default, and whether the judgment should be set aside or varied in the circumstances.

1. Applicable approach. The application engaged the general discretion under Part 13.3 of the Civil Procedure Rules 1998. The defendant bore the burden of showing a realistic, rather than fanciful, prospect of successfully defending the claim. Under the approach confirmed in FXF, promptness under Part 13.3.2 and delay as part of the third stage of Denton were distinct but overlapping considerations. The court also had regard to efficient and proportionate litigation and compliance with procedural rules under Part 3.9.
2. Liability. The board resolution relied upon did not establish continuing authority nearly 20 years later. There was no adequate evidence of its scope, continuation or the relevant corporate circumstances. The expert evidence on Cypriot law was materially limited by the failure to provide the Articles of Association and by the expert’s lack of information about the transaction for which the resolution had been made. No estoppel or ostensible authority arose because the resolution had not been shown to the claimant before the repayment agreement was signed. The indoor management rule could not assist where the agent lacked authority in the first place. The provision of Cypriot law relied upon concerning revocation did not operate as a defence against the claimant. Mr Decker therefore had no realistic prospect of defending liability.
3. Quantum. There was, however, a realistic prospect of challenging the amount of damages. The relevant comparison was between the claimant’s actual position and the position it would have occupied had the repayment agreement bound Princess. Since the agreement itself did not create security, the claimant would need to establish what security could have been obtained and what would have been recoverable on enforcement.
4. Procedural default and discretion. The court was prepared to assume that Mr Decker had not seen the claim form and particulars of claim, providing a good reason for failing to acknowledge service. His delay in applying was borderline but not excessive in the circumstances, including funding difficulties, the Christmas period and the need to investigate Cypriot law. Balancing all the circumstances, the judgment was varied to allow the quantum issue to be reopened, subject to conditions including payment of specified costs and provision of security as ordered.