Victoria Capital Trust v Aaron John Emmett & Anor

A regular default judgment may be set aside under CPR r.13.3 where the defendant has a real prospect of successfully defending the claim or there is some other good reason to do so. The discretion is exercised in accordance with the Denton principles, and the defendant must act promptly.

At the application stage, the court may evaluate factual assertions where they have no real substance or are contradicted by contemporary documents, while avoiding a mini-trial. A defence based on presumed undue influence requires proof of a relationship of trust and confidence concerning financial affairs, a transaction calling for explanation, and actual or constructive notice by the creditor. Independent legal advice and compliance with the Etridge protocol may defeat the defence.

Victoria Capital Trust obtained a regular default judgment against Anita Emmett, now known as Anita Bandak, for £1,276,033.09 under a personal guarantee of borrowing by Corben Mews.

Mrs Bandak applied under CPR r.13.3 to set aside the judgment. She relied on a real prospect of defending the claim through presumed undue influence by her former husband, of which the lender allegedly had constructive notice. Alternatively, she argued that she had not become aware of the claim form until after judgment and that this constituted some other good reason.

The central issues were whether the proposed undue-influence defence had a real prospect of success and whether the circumstances justified exercising the discretionary power to set aside the regular default judgment.

1. Application refused. The default judgment was regular, and Mrs Bandak was ordered to pay Victoria Capital Trust’s costs, to be assessed if not agreed.
2. Under CPR r.13.3, the discretion to set aside a default judgment is exercised according to the Denton principles and to avoid injustice. The court should not lightly interfere with a regularly obtained judgment. The defendant bears the burden of showing a real prospect of successfully defending the claim or some other good reason. Promptness is a mandatory consideration.
3. The real-prospect test is materially the same as the summary-judgment test. The court must avoid a mini-trial, but may reject factual assertions lacking real substance, especially where contradicted by contemporary documents. It may also consider evidence reasonably expected to be available at trial.
4. For presumed undue influence, the defendant must establish a relationship of trust and confidence concerning management of the defendant’s financial affairs, and a transaction which calls for explanation because it is immoderate, irrational or not readily explicable by ordinary motives. The defendant must also show that the lender had actual or constructive notice of the circumstances said to give rise to the presumption. The limbs must not be conflated.
5. Mrs Bandak had no realistic prospect of proving the required relationship or that the guarantee was to her manifest disadvantage. The parties were divorced, had entered into a comprehensive financial remedy settlement, and remained involved in a family property business. The contemporary documents contradicted her account and showed that the refinancing could protect her substantial interests in the group.
6. The lender was not put on inquiry on the evidence. In any event, the solicitor’s certificate showed that she received independent face-to-face advice, understood the nature and risks of the transaction, had a choice whether to proceed, and signed ten days later. The lender was entitled to proceed on the basis that the solicitor had done his job properly.
7. Although the court recognised that lack of knowledge of proceedings may constitute some other good reason, that ground did not assist Mrs Bandak. She had received demands and a pre-action letter warning that proceedings might be issued without further notice, but had taken no steps to protect her position.

This was a first-instance application to set aside a regular default judgment entered on 24 April 2024. The application was refused.