Urania Shipping Company Ltd v Nordtrade Sia & Anor

On an application under Civil Procedure Rules 1998 Part 13.3, the defendant must show a realistic, rather than fanciful, prospect of successfully defending the claim. The court applies the summary-judgment approach without conducting a mini-trial, while considering evidence reasonably expected to be available at trial.

The application is also an application for relief from sanctions. The court must apply the three-stage Denton criteria, together with the specific requirements of Part 13.3, including promptness. Documentary inconsistencies, disputed authority, and competing explanations may establish a realistic prospect of success where they raise triable issues requiring fuller investigation.

The claimant sought damages against two companies in the Nordtrade group for alleged breach of warranty of authority and deceit arising from a voyage charterparty purportedly concluded with BFT. A default judgment was entered against the second defendant after the claimant treated service at its Turkish registered office as effective.

The second defendant applied under Civil Procedure Rules 1998 Part 13.3 to set aside the judgment. It contended that the alleged warranty was given by the first defendant, not the second, and that BFT had authorised or ratified the charterparty. The central issues were whether the second defendant had a real prospect of successfully defending the claim, whether its application was prompt, and whether relief from sanctions was just.

1. Application allowed. The default judgment against the second defendant was set aside, subject to consideration of a possible condition requiring a joint defence by both defendants. Consequential directions were reserved.
2. Under Civil Procedure Rules 1998 Part 13.3, the real-prospect test is the same as the summary-judgment test, but the burden lies on the defendant. The court must distinguish a realistic claim carrying some degree of conviction from a merely fanciful or arguable claim. It must avoid a mini-trial, while not accepting unsupported factual assertions without analysis and while considering evidence reasonably expected to be available at trial.
3. The second defendant had a realistic prospect of defeating the warranty-of-authority claim. The natural interpretation of communications sent on behalf of “Nordtrade Ltd” was that they referred to one entity. The evidence provided a reasonable basis for treating that reference as the first defendant rather than the second defendant. The later charterparty and the use of the second defendant’s bank account raised competing issues about the identity of the broker and could not fairly be resolved summarily.
4. The second defendant also had a realistic prospect of defeating the allegation that BFT lacked authority. The signed and stamped charterparty and letter of indemnity, the documentary evidence concerning BFT’s role in the cargo, the possible explanation for BFT’s later declarations, and the parties’ previous course of dealing raised triable issues concerning actual, ostensible, or ratified authority. The absence of a draft defence and witness evidence from the relevant individual did not make the defence fanciful.
5. The application was made promptly after the default judgment came to the defendant’s attention. Applying the relief-from-sanctions approach required by FXF and Denton, the failure to acknowledge service was serious, but the evidence supported a good reason for the lack of actual awareness. Considering all the circumstances, including the delay, the unserved first defendant, and the continuing possibility of an efficient and proportionate trial, justice required the judgment to be set aside.

First-instance application; no appellate history is stated in the judgment.