Alpine Bulk Transport Company Inc. v Saudi Eagle Shipping Company Ltd
| Jurisdiction | England & Wales |
| Judge | SIR ROGER ORMROD |
| Judgment Date | 01 July 1986 |
| Judgment citation (vLex) | [1986] EWCA Civ J0701-8 |
| Docket Number | 86/0632 |
| Court | Court of Appeal (Civil Division) |
| Date | 01 July 1986 |
[1986] EWCA Civ J0701-8
Lord Justice O'Connor
Sir Roger Ormrod
86/0632
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
MR A. P. CLARKE, Q.C., and MR S. P. N. RAINEY, instructed by Messrs Denby & Co., appeared for the Appellants (Defendants).
MR A. E. J. DIAMOND, Q.C., and MR GRAHAM DUNNING, instructed by Messrs Holman Fenwick & Willan, appeared for the Respondents (Plaintiffs).
This is the judgment of the court.
The problem in this case is to apply the propositions or guidelines set out by the House of Lords in the leading case of Evans v Bartlam (1937) A.C. 473 and applied recently in this court in ( Vann v Awford 15th April 1986, unreported) to the entirely different factual situation with which we are confronted in the present case.
In Evans v Bartlam the defendant Evans owed the plaintiff Bartlam a substantial sum of money for unsuccessful betting transactions. The plaintiff sued the defendant on an alleged new contract of the Hyams v Stuart King (1908) 2 K.B. 696 type. The defendant did not enter an appearance and the plaintiff signed judgment in default. Thereafter, the defendant asked for time to pay and the plaintiff's solicitors gave him a further seven days. Before the expiry of the seven days the defendant applied to the master to set aside the default judgment. The master dismissed the application but the judge in chambers (Lord Justice Greaves) allowed the appeal on terms as to costs. The Court of Appeal, by a majority, allowed the appeal on the ground that the judge had, as a matter of law, no discretion in the matter because the defendant, in asking for and receiving an extension of time, had elected to accept the validity of the default judgment or alternatively had approbated it and was bound in law to submit to it. The House of Lords held that there was no such rule of law and that consequently the Court of Appeal's order could not be supported. The appeal was therefore allowed and the judge's order restored. The House considered his reasons for setting aside the default judgment and agreed with them without giving details.
In Vann v Awford the plaintiffs, who were building owners, sued a firm of architects and the builder, Blunden. Blunden, though properly served, did not give notice of intention to defend. The plaintiffs signed judgment in default and later obtained an assessment of damages in the sum of £53,783 plus interest and costs. Blunden still did nothing. But when the plaintiffs took garnishee proceedings and obtained charging orders on Blunden's property, he reacted and applied for the assessment of damages and the default judgment to be set aside. He put forward a wholly dishonest explanation for his failure to give notice of intention to defend. The judge refused to set aside either the assessment or the judgment on the ground that it was too late and that no extension of time should be granted unless the defendant put forward a reasonable explanation, which he had failed to do. This court held that this was a misdirection and that the judge had fettered his discretion by adopting a rigid rule which was directly contrary to the principle laid down in Evans v Bartlam. This court then reviewed the circumstances and found that, as was to be expected in a building dispute, there were a great many items in dispute, and there was an arguable defence. The appeal was therefore allowed and the judgment set aside.
The present case arises out of a charterparty, the plaintiffs being the charterers, the defendants the shipowners. It is a claim for damages for breach of contract by the defendants who refused to load the cargo. The breach took place in November 1981. On 29th October 1982 the plaintiffs arrested the defendants' ship (the "Saudi Eagle") at Rotterdam. The defendants then gave security in the form of a bond from the Amsterdam/Rotterdam bank and obtained the release of the ship. A year later the plaintiffs issued, with leave, a writ for service out of the jurisdiction. This was served ten months later in August 1984 in Saudi Arabia. No notice of intention to defend was given and interlocutory judgment was signed on 1st October 1984. An order for assessment of damages was made and damages were assessed on 18th April 1985. Final judgment was given in U.S. $49,000 and costs in the sum of £3,000. It is common ground that a deliberate decision was made in August 1984 not to defend the plaintiffs' claim because the defendant company had no assets, having sold its only ship in July 1984. Shortly after final judgment had been given someone on the defendants' side remembered that the plaintiffs had obtained security in Rotterdam in 1982 and were holding the bond. So the plaintiffs' judgment was not barren as had been, supposed. Application was then made to Mr Justice Staughton to set aside the judgment and for leave to defend. At that stage the only defence suggested was that the plaintiffs had sued the wrong defendant. The judge dismissed the application. He directed himself on the lines laid down in Evans v Bartlam, carefully avoiding any rigid rules or fetters, but in the course of his extempore judgment he gave two reasons for refusing to exercise his discretion in favour of the defendants. He said that the proposed defence was "not by any means a meritorious one although technically it has merits…I can see it is an arguable point that the plaintiffs should have sued Saudi Ambassador Shipping Co. Ltd or Saudi International Shipping Co. and not Saudi Eagle Shipping Co. Ltd". He then turned to the reasons given for the default and concluded that the defendants had deliberately allowed the plaintiffs' claim to go by default, believing that all they could get would be a barren judgment, until they remembered about the security. This the judge described as "insouciance" and said that the defendants had treated the court "with contempt and therefore, the Defendants are not deserving of the court's exercise of its discretion in their favour".
With great respect to the learned judge, and making full allowance for the difficulty of putting into words, particularly extempore, the reasons for making a discretionary decision, we do not think that his decision can be supported on these grounds although, as will appear, we are in agreement with him, though for different reasons, that the defendants' application for an order setting aside the judgment should be dismissed. His reasons seem to "be a two-pronged moral judgment on the behaviour of the defendants to the court rather than an...
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