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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Mullock v Price (t/a the Elms Hotel Restaurant) [2009] EWCA Civ 1222 (15 October 2009) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2009/1222.html Cite as: [2010] CP Rep 10, [2009] EWCA Civ 1222

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MOLD COUNTY COURT
(SITTING AT CHESTER COUNTY COURT)
(HIS HONOUR JUDGE PHILIP HUGHES)

		Royal Courts of Justice Strand, London, WC2A 2LL
		15th October 2009

Lord Justice Ward:

1. When considering whether to set aside a default for judgment, the matters to which the court must, pursuant to CPR 13.3(2), have regard include "whether the person seeking to set aside the judgment made an application to do so promptly". The issue in a nutshell in this case is whether the defendant acted promptly in circumstances where he knew that judgment had been entered against him shortly after that order had been made but, having throughout denied but did nothing about it because he relied for almost two years on his insurance brokers to protect his interest and learnt of their deplorable failure to do so, applied to set the judgment aside a matter of a few weeks later.
2. 'Promptly' is an ordinary English word which I would have thought had a plain and obvious meaning, but if we need to be told a bit more about what it means we do have the authority of this court in the case of Regency Rolls Limited v Carnall [2000] EWCA Civ 379, where Arden LJ pointed out that the dictionary meaning of 'promptly' was 'with alacrity'. Simon Brown LJ said:

"I would accordingly construe "promptly" here to require, not that an applicant has been guilty of no needless delay whatever, but rather that he has acted with all reasonable celerity in the circumstances."

And so the issue here is whether this defendant did act with all reasonable celerity.

3. The background facts are these. Mrs Violet Mullock, the claimant, who is a lady who will not like my revealing that she is 69 years of age, enjoyed a convivial evening with her friends from the Willows Nursing Home at some party being held at The Elms Hotel in Chester. The hotel is owned by Mr Thomas Price, the defendant. Mrs Mullock was in the car park waiting for a lift home when Molly, a boisterous nine-month-old black Labrador, bounded up and knocked her over. Unfortunately poor Mrs Mullock sustained quite serious injuries to her left knee.
4. Molly was owned by Mr David Kidd, a barman employed by Mr Price. Molly had been left in his car and Mr Kidd had let her out to relieve herself. That unfortunate accident led to Mrs Mullock bringing a claim against the hotel for damages. The chronology in that action is of course important and I must spend a few moments detailing the relevant events.
5. In November of 2003, so shortly after the accident, there was a letter of claim addressed to the hotel by solicitors for the claimant in accordance with the protocol. The defendants acknowledged that letter by passing it on to their insurance brokers, a company having the wholly inappropriate name of Ideal Insurance: as the District Judge later was laconically to record, they were anything but ideal. It is clear Ideal Insurance took a full statement from Mr Price because they sent it to the claimant's solicitors and stated that they would await the claimant's response. In due time the claimant's response came with the issue of proceedings.
6. After some delay, and it might be said that the delay is explained by the fact that there were complications in the treatment of Mrs Mullock and some uncertainty as to quite how serious the injuries were, the claim was issued on 30 June 2006 and it was sent by the defendant Mr Price to his brokers. He gave this explanation for their involvement. He said in his witness statement in these proceedings that a Mr Wilson, one of the directors of Ideal Insurance, when told of the claim said that everything would be dealt with by Ideal Insurance, and reading from that witness statement but going further forward into the chronology, Mr Price says:

"We received numerous communications from Mold County Court, and on each occasion we telephoned Ideal Insurance and faxed copies immediately to them we were always told that they were dealing with the situation and we need not do anything."

Nothing was done, and as a result judgment was entered by default of an appearance having been entered, that judgment being signed on 18 August 2006. That is the first crucial date in this chronology.

7. There is no doubt that that judgment was received by the defendant and I have likewise no doubt that he sent it on to the brokers.
8. From the claimant's point of view the action continued and on 16 October 2006 there was an application for interim payment. It was served on the defendant. The claimant's solicitors have exhibited to a witness statement all the correspondence that passed between them and the defendant. That exhibit is conspicuous for the absence of any reply at all from Mr Price, doubtless because he expected the brokers to act on his behalf.
9. On 15 November 2006 the court ordered that the defendant make an interim payment of some £3,000 or thereabouts to the claimant. That was referred by the claimant's solicitors to the defendant under cover of a letter of that date in which they write:

"You should have already received a copy of this from the court yourself and we confirm we have also served a copy of the same upon your insurers."

10. There can be no doubt that the insurers knew that a judgment of an interim payment had also been entered. The claimant sought to enforce it. She issued a warrant in respect of it and the bailiffs in time knocked on the hotel door to the consternation and embarrassment of Mr Price. He in the presence of the bailiff referred the matter to Ideal Insurance. They begged for a day or two to make a payment, and it seems that in fact it was Ideal Insurance who paid the sums due under that interim judgment. That was some time in April 2007.
11. This claim was not the only one which the hotel had referred to Ideal Insurance. There was another claim in respect of which bankruptcy proceedings appear to have been issued against the unhappy Mr Price and that was referred back to Ideal Insurance, according to the correspondence we have, some time in December of 2007. Meanwhile this action rumbled on and the claimant sought a judgment on the quantum of the damages she had suffered. For that purpose a trial bundle was prepared and was sent by her solicitors to the defendant, and once again the request was made by the claimant's solicitors that Mr Price pass that trial bundle to the insurers at his earliest convenience.
12. The disposal hearing took place on 8 January and judgment was entered against the defendant in the sum £13,134.08, and the costs allowing for 100 percent mark up amount to nearly double that sum, £25,490.77. That must have alarmed Mr Price, because on 15 January 2008 he wrote to Ideal Insurance saying that he had tried unsuccessfully by telephone several times last week to give them advance notice that following the County Court hearing those sums had been awarded to the claimant. He said that:

"The Elms Hotel will be issued with a demand for this amount within the next two weeks and this will be forwarded to your office for payment under the terms of our insurance with you. I would be grateful if you will acknowledge receipt of this letter and let me know of any delays which might occur with the payment. I think you will appreciate we are anxious to avoid any legal action being instigated as has happened in the past with claims for payment forwarded to your office."

13. It seems that not much was done about that. In February the defendant's solicitors received a telephone call from Mr Wilson stating that he had applied to the insurers for payment of the damages and costs and assuring her that everything was being dealt with and there would be no problem with the claim being paid.
14. Then came a bombshell. On 24 April Ideal Insurance wrote to Mr Price to tell him that his insurance policy would be cancelled with effect from 1 May. That was followed on 15 May by a letter from the City of London Police who informed Mr Price that the police were investigating Ideal Insurance Services Limited in relation to fraudulent insurance policies and that he may be one in possession of a false policy. It was that event which I suppose triggered the first appointment that Mr Price made with his solicitors some time in April of 2008.
15. Another insurance broking firm, Brian Thornhill, was asked to take over some of the work of Ideal Insurance and there was correspondence between the defendant's solicitors and that firm in which the solicitors referred to the judgment and indeed enclosed a copy of the judgment made on the disposal hearing in January. The solicitors were anxious about the validity of the policy because their contact with the Arab German Insurance Company in the Middle East met with no adequate response. By now the Financial Services Authority were involved and the Senior Claims Officer of the compensation scheme wrote to say that there was a fund at last resort which deals with claims for compensation against firms that were no longer trading and cannot honour their own claims. There are apparently rules governed by the Financial Services Authority, but those rules have not been produced to us and we do not know in what circumstances they will meet such a claim. We have been told from the Bar that this claim would be treated as a matter of priority but we know little of what has passed since 24 June and today.
16. Faced, therefore, with the failure of Ideal to indemnify them, faced with this judgment, application to set aside the judgment was eventually made on 24 July 2008. That application was heard at first by the District Judge, District Judge Reeves, who on 12 August 2008 gave judgment on the application and it was refused. The District Judge dealt with CPR 13.3 and was not persuaded that there was a real prospect of successfully disputing the claim, but dealing with the question of delay said this in paragraph 10 of his judgment:

"Was the application made promptly? Well, I accept the historical calendar, as it were, that Mr Price's counsel Mr Moffat puts before me and I do accept that once all the facts were known to him and more particularly to the solicitor, Mr Partington, who has also made a statement, when all of these facts, these quite horrific facts so far as Mr Price is concerned I am happy to accept were made known to him, he has made this application promptly so he has got over the hurdle and of course the hurdle that he has is set out in the Civil Procedure Rules 13.3, but he has to persuade me he has a real prospect of successfully defending the claim before I can set it aside."

And as I have said, having found that, he refused to set the judgment aside.

17. The defendant appealed and the appeal was heard by HHJ Hughes sitting in the Mold County Court on 26 January 2009. The County Court judge disagreed with the District Judge because in his view there were real prospects of successfully defending the claim, both because there was some doubt as to whether Mr Kidd, the barman, was actually still employed at that hour of the night and/or whether he was acting on a frolic of his own.
18. Importantly for us, however, was his conclusion expressed in paragraph 20 of that judgment in which he said this:

"My conclusion therefore is that this most experienced District Judge, despite his careful and through analysis of the competing arguments, nevertheless fell into error and consequently his decision to dismiss the application was wrong. There is it seems to me a real prospect of a successful defence to this claim. In considering whether the defendant has disqualified himself by not acting promptly enough, I think the District Judge was right about that and I agree with him. There was no delay because of the circumstances to which I earlier referred."

Those circumstances being the reliance on the insurance brokers.

19. Goldring LJ gave limited permission to appeal, limited only to the ground whether the circuit judge was correct in upholding the decision that the defendant did act promptly. That is therefore the only issue before us.
20. CPR 13.3(2) is in terms not dissimilar from CPR 39.3 which allows a judgment to be set aside if the party failed to attend the trial. Under that rule, as expressed in 39.3(5)(a), the court may grant the application to set aside only if the applicant:

"a) acted promptly when he found out that the court had exercised its power to strike out or to enter judgment or make an order against him;"

So there we do find that the Rules provide for prompt action after a certain event, namely his finding out that judgment had been entered. Those words are absent from CPRT 13.3(2), and the question is whether a similar meaning should be given to 13.3(2) or whether it can extend more widely than that. The issue is really whether a party can rely on the actions or inactions of those who represent him.

21. In that regard there is a contrast to be drawn between these rules and CPR 3.9 permitting relief from sanction where the court will consider all the circumstances including under subparagraph (b) whether the application for relief has been made promptly, but under that rule the court can also have regard to whether the failure to comply was caused by the party or his legal representative, which suggests that a failure by the legal representative may provide adequate excuse.
22. I am not satisfied that that is to be imported into 13.3. I note that in the case of Training in Compliance Ltd v Dewse [2001] CP Rep 46 Peter Gibson LJ said in paragraph 66, as is noted incidentally in the notes to CPR 3.9(2):

"Of course, if there is evidence put before the court that a party was not consulted and did not give his consent to what the legal representatives had done in his name, the court may have regard to the fact, though it does not follow that that would necessarily, or even probably, lead to a limited order against the legal representatives. It seems to me that, in general, the action or inaction of a party's legal representatives must be treated under the Civil Procedure Rules as the action or inaction of the party himself. So far as the other party is concerned, it matters not what input the party himself has made into what the legal representatives have done or have not done. The other party is affected in the same way; and dealing with a case justly involves dealing with the other party justly. It would not in general be desirable that the time of the court should be taken up in considering separately the conduct of the legal representatives from that which the party himself must be treated as knowing, or encouraging, or permitting."

I respectfully agree. It seems to me wrong that a party should shield behind his representatives.

23. I say that it is wrong essentially for two reasons. First, the language of CPR 13.3 is explicit: it requires "the person seeking to set aside the judgment" to make the application promptly. So it focuses on that person's action. Secondly, the Civil Procedure Rule in fact impose duties on the parties to the litigation, and it seems to me that must mean the parties themselves irrespective of the help and advice they are or are not receiving. Their duty under CPR 1.3 is this:

"The parties are required to help the court to further the overriding objective."

One of those objectives is of course to ensure that the case is dealt with expeditiously, and I am therefore quite satisfied that it was the duty of Mr Price, a personal duty, to ensure that the case was dealt with expeditiously and in the particular circumstances of this case to act promptly to set aside any judgment entered in default of his having put in his appearance.

24. Here it is beyond question that the defendant knew that judgment had been entered against him, he knew that there was an order for interim payment, he had as I said had the bailiffs there to enforce that order and he knew that it had been paid by the brokers. Furthermore he knew that application was being made and had been made successfully to enter a final judgment against him. In my judgment it behoved him to act promptly from the time that he was aware of the judgment having been entered against him. That was his obligation, to deal expeditiously with the matter. To delay for two years, or almost two years, can by no stretch of the imagination be a prompt application to set aside the judgment.
25. I am thus quite satisfied that the circuit judge was wrong. He took into account an irrelevant factor, namely the reliance on the brokers. His error therefore entitles this court to interfere with the exercise of discretion he otherwise made and which might in other circumstance have been appealable. In the exercise of my discretion I would allow the appeal against his order and restore the District Judge's dismissal of the application to set this judgment aside.
26. I do so having had regard to all the circumstances of the case, as one is required to do. In essence that involves in particular a balance to be struck between the effect of allowing this application on the parties and the effect of not allowing it. From Mrs Mullock's point of view, to allow this application would require this lady not in the first flush of youth to endure all the anxiety of uncertain litigation all over again. She has the worry of having to pay back sums of money which have been paid, and I should mention, for I omitted to mention it earlier, there was indeed a further payment of £2,000 made by Mr Price in, I think, July, shortly before his application to set the judgment aside, made because there was a threat of seeking some charge on his property. There are other disadvantages which Mrs Mullock faces. If this has to be tried all over again it will be perhaps seven years since the date of the accident, during which time memory will have faded and there may be difficulty in gathering the evidence together to present her case. Moreover, given the denial of liability by the hotel and their denial of responsibility for Mr Kidd's actions, any claim which might be brought against him would have become time-barred and she would need the exercise of the court's discretion to allow her to bring this statute-barred claim, a further uncertainty which would have been avoided had that defence been ventilated shortly after judgment had been entered. So the effect on her is considerable.
27. From the defendant's point of view, the first fact I would bear in mind is that his reliance on his brokers is in many ways wholly understandable and forgivable. He is not the biggest businessman. He runs a small hotel, he had insurance, he passed the matters to his insurers, he believed that they would indemnify him, he remained in the belief that they would indemnify him right up until the very end in the spring of 2008. To allow this judgment to stand, a judgment amounting to £40,000 plus all the costs that have since been incurred, will undoubtedly be a hardship for an ordinary man running a small hotel and not on the face of it a man of any great wealth. The effect on his financial position is a relevant factor in considering the proportionality question, which we are required to do by the overriding objective. One of the matters to bear in mind is the financial position of each party and I am prepared to assume that it would be difficult for him to meet this judgment, though I also accept there is a real as opposed to fanciful chance that he will be indemnified under the Financial Services Compensation Scheme.
28. But balancing the prejudice in that way, much the greater unfairness will in my judgment be caused to the claimant if this judgment is set aside than to the defendant if the judgment stands. I acknowledge he has laboured under the disadvantage of being in person so that the parties are not on equal footing, but that is not a factor of great weight. The factor which is of great weight is the very element which is highlighted specifically by CPR 13.3(2), the need to act promptly. And because there is a public interest in the finality of judgments, and because there is a need under the CPR to act expeditiously, because we are to have regard to the proper allocation of courts' resources, those factors overwhelmingly drive me to conclude that discretion must be exercised in favour of the claimant and consequently her judgment should stand.
29. I would allow the appeal accordingly.

Lord Justice Sedley:

30. For the reasons as given by my Lord, the defendant cannot possibly be said to have acted prompted after receipt of the default judgment, but given the peculiar history of the case and the silent default of his insurance brokers I am not prepared to blame either him or his solicitor for it. It is quite understandable that the defendant will have thought that his insurers were taking care of the claim, especially when the brokers paid £3,100 towards it. This is in my judgment enough to take the sting out of the defendant's lack of promptness in applying to set aside the default judgment. But that is a long way from the end of the road. We have consequently to consider for ourselves whether, albeit in the absence of culpable delay, it is right and fair to set aside the judgment. When one considers the effects of unravelling the judgment and the award and compelling the claimant to start again from scratch, this time possibly against the waiter as well as against Mr Price, and especially when one observes that the costs in what was an undefended claim have already come to twice the amount of the damages, and when one balances all this against leaving the defendant to seek indemnity or compensation from the Financial Services Compensation Scheme (a factor which in my view is of real importance in this case) there really is only one sensible answer and that is the one given by my Lord. So I too would allow the appeal.

Lady Justice Smith:

31. I agree that the appeal must be allowed. I agree with what Ward LJ and Sedley LJ have said about the interpretation of CPR 13.3(2). In view of the time that elapsed, it cannot be said that the applicant acted promptly. Accordingly I agree that the circuit judge's decision must be set aside and we must exercise our discretion afresh. I, like Sedley LJ, have much sympathy with Mr Price's position and indeed that of his solicitor and would not regard their actions and their delay as culpable. Nonetheless, when one considers the effect of the delay on the litigation I agree with the reasoning of Ward LJ and Sedley LJ that discretion must be exercised in favour of the claimant.

Order: Appeal allowed