Attorney General v Universal Projects Ltd
| Jurisdiction | UK Non-devolved |
| Judge | LORD DYSON |
| Judgment Date | 20 October 2011 |
| Neutral Citation | [2011] UKPC 37 |
| Date | 20 October 2011 |
| Docket Number | Appeal No 0067 of 2010 |
| Court | Privy Council |
[2011] UKPC 37
Lord Phillips
Lord Brown
Lord Kerr
Lord Dyson
Sir Patrick Coghlin
Privy Council
Appellant
Peter Knox QC
David di Mambro
(Instructed by Charles Russell LLP)
Respondent
James Guthrie QC
Mr. Neal Bisnath
(Instructed by Bankside Commercial Solicitors)
The principal issue that arises on this appeal is whether an application by a defendant to set aside a judgment following non-compliance with a court order extending time for filing a defence in default of which permission is given to the claimant to enter judgment is (i) an application to set aside judgment under CPR 13.3 (as is contended by the Attorney General) or (ii) an application for relief from sanctions under CPR 26.7 (as contended by Universal Projects Limited).
The facts
By a claim form filed on 16 December 2008, the claimant claimed a sum a little in excess of $31million from the defendant as money due under an engineer's certificate issued under a contract for the improvement of the Churchill Roosevelt Highway. The claim form was served on the Solicitor General's Department ("the Department") on the same day. Deborah Jean-Baptiste-Samuel is the attorney who has had the conduct of these proceedings since receipt of the claimant's pre-action protocol letter on 14 November 2008. On 8 December, Ms Baptiste-Samuel obtained a bundle of papers from the Ministry and passed them on to the advocate attorneys at the Department who were assigned to the case. The attorneys were of the opinion that they could not act without formal instructions from the Ministry (which had its own in-house attorneys). Instructions were received on or about 13 January 2009. Neither of the attorneys was aware of the claim form. The document (and it seems other relevant papers) had been stored by inexperienced staff in a vacant office. They were discovered by chance on 30 January.
Meanwhile, on 16 January the claimant had applied for permission to enter judgment in default of an appearance and defence. Under rule 12.2(2), a claimant may not obtain a default judgment against the State without the permission of the court. The application was served on the Department on 23 January. On 2 February, the case was assigned to Ms Renessa Tang Pack, an attorney in the Department. When it was discovered within the Department that the case had previously been assigned to Ms Baptiste-Samuel, on 10 February it was reassigned to her. On the same day, the defendant entered notice of appearance.
By now, the time for filing a defence had expired. On a date between 10 and 20 February, Ms Baptist-Samuel received a telephone call from the Judicial Support Officer to Delzin J to the effect that the "Universal Projects Limited matter" would be listed before that judge for hearing on 11 March. She assumed that this would be for a case management conference, since she had not seen the application for permission to enter a default judgment. By chance, on 20 February Ms Baptiste-Samuel was in court before Gobin J on a different matter. She discovered (to her surprise) that the "matter of Universal Projects Limited" was listed before Gobin J that very day for an application for judgment in default of an appearance and defence. It transpired that the case listed before Delzin J on 11 March was a different case. Ms Baptiste-Samuel made an oral application to Gobin J for an extension of time for service of the defence in the present case. The judge made an order extending the time for service of the defence by 21 days until 13 March adding "in default leave is granted to the claimant to enter judgment against the defendant." In her affidavit sworn on 1 April, Ms Baptiste-Samuel says that she did not recall the judge "having guarded the order for the delivery of the defence or having imposed an unless order that there be judgment for the claimant in default of delivery of the defence by 13 March".
The defendant did not file its defence by 13 March. According to the evidence of Ms Baptiste-Samuel, the advocate attorneys took the view that outside counsel should be retained and that authorisation for this course should be obtained from the Solicitor General. This took time because there was no Solicitor General and the approval of the Attorney General was required. In the result, outside counsel were not instructed until 10 March. On 13 March, Ms Baptiste-Samuel wrote a letter to Gobin J informing her that counsel were examining the documents in their briefs "feverishly" and that they required additional time to absorb their instructions and advise the Attorney General. It would not be possible to file a defence that day. The letter included this: "Senior and Junior Counsel have undertaken to complete as much of the review of their briefs as is possible over this weekend and to this end, we write respectfully to notify the Honourable Judge that it is our intention to file the necessary applications early next week."
On 16 March, the claimant entered judgment in the sum of $32,811,582.31 (inclusive of interest and costs). On 23 March, the defendant applied for (i) a stay of the action pending arbitration and alternatively (ii) an extension of time to file its defence and (iii) summary judgment against the claimant. On 25 March, Ms Baptiste-Samuel received a letter from the claimant's attorney enclosing a copy of the default judgment dated 16 March. On 1 April, the defendant filed a notice seeking permission to amend the application of 23 March to include an application for an order that the default judgment be set aside.
On 16 April, Gobin J granted the defendant permission to amend its application, but said that the application to set aside the judgment was misconceived and that what was required was an application for relief from sanctions under CPR 26.7. She then treated the application as if it had been made under that rule and dismissed it for reasons which it will be necessary to consider. On 26 February, the Court of Appeal (Archie CJ, Kangaloo JA and Jamadar JA) dismissed the defendant's appeal. The defendant now appeals to the Board with the permission of the Board.
Part 1 deals with the "overriding objective". It is defined in rule 1.1. Rule 1.2(2) provides that the court must seek to give effect to the overriding objective when it interprets any rule. Rule 12 deals with defaults judgments. It provides that, if requested to do so by the claimant, the court must enter judgment if the defendant fails to enter a defence within the period prescribed by the rules.
Part 13 deals with setting aside and varying default judgments. Rule 13.3 provides:
"13.3 (1) The court may set aside a judgment entered under Part 12 if-
(a) the defendant has a realistic prospect of success in the claim; and
(b) the defendant acted as soon as reasonably practicable when he found out that the judgment had been entered against him.".
Rule 26 is headed "Case Management-the Court's Powers". It is necessary to set out Parts 26.6 and 26.7 in full:
" Court's powers in cases of failure to comply with rules, orders or directions
(1) Where the court makes an order or gives directions the court must whenever practicable also specify the consequences of failure to comply.
(2) Where a party has failed to comply with any of these Rules, a direction or any court order, any sanction for non-compliance imposed by the rule or the court order has effect unless the party in default applies for and obtains relief from the sanction, and rule 26.8 shall not apply.
(Rule 26.7 deals with the circumstances in which the court may grant relief from a sanction. Part 66 deals with the power to make orders as to costs by way of sanction)
Relief from sanctions
(1) An application for relief from any sanction imposed for a failure to comply with any rule, court order or direction must be made promptly.
(2) An application for relief must be supported by evidence.
(3) The court may grant relief only if it is satisfied that-
(a) the failure to comply was not intentional;
(b) there is a good explanation for the breach; and
(c) the party in default has generally complied with all other relevant rules, practice directions, orders and directions.
(4) In considering whether to grant relief, the court must have regard to-
(a) the interests of the administration of justice;
(b) whether the failure to comply was due to the party or his attorney;
(c) whether the failure to comply has been or can be remedied within a reasonable time; and
(d) whether the trial date or any likely trial date can still be met if relief is granted.
(5) The court may not order the respondent to pay the applicant's costs in relation to any application for relief unless exceptional circumstances are shown."
Was the application to set aside the default judgment an application under Part 13 or an application for relief from sanctions under Part 26.7?
In a detailed and skilful argument, Mr Knox QC submits that the application was made under Part 13.3. This is not a point that was taken in the Court of Appeal. The following is a summary of his principal submissions. First, Part 13 is a complete code for setting aside default judgments. This is clear from the language of Part 13.1. But if rule 26.7 can be pressed into service in relation to the setting aside of default judgments, Part 13 is not a complete code at all. Secondly, rules 13.3 and 26.7 do not fit together. If they are read together, rule 13.3 is misleading. It suggests that there are only two preconditions before the discretionary power to set aside a default judgment may be exercised, whereas rule 26.7 specifies different preconditions before the discretionary power to grant relief from sanctions may be exercised.
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