FXF v English Karate Federation Ltd
| Jurisdiction | England & Wales |
| Judge | Sir Geoffrey Vos,Lady Justice Nicola Davies,Lord Justice Birss |
| Judgment Date | 26 July 2023 |
| Neutral Citation | [2023] EWCA Civ 891 |
| Court | Court of Appeal (Civil Division) |
| Year | 2023 |
| Docket Number | Appeal No: CA-2022-002220 |
[2023] EWCA Civ 891
Sir Geoffrey Vos, MASTER OF THE ROLLS
Lady Justice Nicola Davies
and
Lord Justice Birss
Appeal No: CA-2022-002220
Case No: QB-2019-002930
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
Master Thornett
Royal Courts of Justice
Strand, London, WC2A 2LL
James Counsell KC and Olinga Tahzib (instructed by Leigh Day) for the appellant/claimant (FXF)
Katie Ayres (instructed by Keoghs LLP) for the respondent/2 nd defendant (the IKA)
Hearing date: 13 July 2023
Sir Geoffrey Vos, Master of the Rolls:
Introduction
This case highlights a controversial procedural issue that has arisen in the wake of this court's decision on relief from sanctions in Denton v. TH White Ltd [2014] EWCA Civ 906, [2014] 1 WLR 3926 ( Denton). The question is whether the three-stage test described in Denton should be applied by the court when it is considering whether to set aside a default judgment under CPR Part 13.3. There are authorities that are said to point both ways.
The claimant (who is the subject of an anonymity order) seeks damages for personal injury for alleged serious sexual abuse by her karate coach over an extended period between 2008 and 2014. Each of the first defendant and the second defendant (the IKA) is said to be (a) vicariously liable for the abuse, and (b) directly liable for failing to discharge their own duty of care towards the claimant. The alleged abuser is alleged to have been a member of the IKA, to pay the IKA an annual licence fee, and to have been authorised to use the Ishinryu branding and training syllabus.
After an order for alternative service of the proceedings had been made, the parties initially agreed extensions of time for the filing of the IKA's defence. When time ran out, no defence was filed and the claimant requested and, on 22 September 2020, obtained default judgment for “an amount which the court will [decide]” under CPR Part 12.4 (the Judgment). On 17 November 2020, the IKA issued an application to set aside the default judgment under CPR Part 13.3. Master Thornett (the Master) set aside the Judgment after a hearing on 2 December 2021. He gave his reasons orally, but we have a note of what he said. The High Court ordered on 14 November 2022 that the appeal from the Master should come directly to this court.
The Master set aside the Judgment dealing specifically with the two factors mentioned in CPR Part 13.3, namely the merits and delay in applying to set aside. He held that (i) the IKA had a real prospect of successfully defending the claimant's case on vicarious liability: the defence was “arguable and sophisticated”, and (ii) the application to set aside had not been made promptly and there was no good reason for the delay. In relation to Denton, he said in his judgment:
However, I turn to the express primary requirements of 13.3(1). Mr Tahzib [counsel for the claimant] refers appropriately to Denton and its criteria. But the familiar criteria of Denton are qualified because of necessary incorporation into the context and the express criteria under CPR 13.3: in particular, the criterion of “real prospect of successfully defending the claim”.
Against this background, the claimant contends that the Master was wrong to set aside the Judgment. Her sole ground of appeal is that the Master failed to “apply Denton to the exercise of his discretion”, when I had said in Gentry v. Miller [2016] EWCA Civ 141, [2016] 1 WLR 2696 ( Gentry) at [24] that “[s]ince the application is one for relief from sanctions, the Denton tests then [after consideration of the express requirements of CPR Part 13.3] come into play”. Had the Master properly applied the Denton tests, the claimant contends that he would have concluded that the Judgment should stand.
The IKA submits that what this court said in Gentry is not binding authority because the parties in that case agreed that the Denton tests were applicable. Moreover, the other cases to a similar effect were all obiter. The IKA is, at first sight anyway, supported by some carefully reasoned first instance decisions and by the persuasive authority of the Privy Council in The Attorney General for Trinidad and Tobago v. Matthews [2011] UKPC 38 ( Matthews). The IKA submits that: (i) the application to set aside a default judgment is in a unique procedural category and is not an application for relief from sanctions at all, and (ii) the discretion under CPR Part 13.3 is broad and unconstrained and brings in all the factors under the overriding objective including the ethos of Denton, even though its specific tests are not applicable. The Master, it is submitted, understood all that and exercised his discretion appropriately. This court should not, therefore, interfere.
I have decided, in essence, that the Denton tests do apply to an application to set aside judgment, but that the Master understood that and exercised his discretion appropriately. Accordingly, the appeal should be dismissed.
I will now proceed to explain my reasons by dealing with (i) the essential chronological background, (ii) the applicable provisions of the CPR, (iii) the Master's decision, (iv) the authorities in chronological order, and (v) a discussion of my detailed reasons for these conclusions as to, first, the law, and then the facts.
The essential chronological background
As I have said, the alleged grooming and serious sexual assault of the claimant took place between 2008 and 2014.
The claim form was issued on 15 August 2019. On 6 December 2019, an order for alternative service on the IKA was made. The IKA was difficult to serve because Mr Donovan, the only representative of the IKA, lives in Thailand. The claim form and detailed Particulars of Claim dated 12 December 2019 were duly served on the IKA, and the IKA's solicitors, Keoghs, wrote to the claimant's solicitors on 13 December 2019 saying they had been instructed for the IKA.
On 28 January 2020, the claim against the IKA was stayed by consent until 31 March 2020 to allow the IKA to complete the steps required by the pre-action protocol. There were then two agreed extensions of the stay terminating on 26 May 2020. A further extension of the stay until 26 June 2020 was agreed and encapsulated in a signed consent order, which was lodged at court but, for unknown reasons, never sealed by the court. No further extensions were agreed, so the IKA ought to have filed its defence by 21 July 2020 at the latest. The claimant contends that formally the defence should have been filed by 23 June 2020 because the consent order was never sealed, but it seems to me that it would be harsh to consider the delay as starting before 21 July 2020. Moreover, the Master dealt with the matter on the basis that the defence was due on 21 July 2020.
On 1 September 2020, the claimant filed its request for judgment in default. On 9 September 2020, Keoghs filed their notice of acting on behalf of the IKA. On 21 September 2020, Leigh Day, the claimant's solicitors, informed Keoghs that the claimant had requested a default judgment against the IKA. On 22 September 2020, the court granted the Judgment. On 23 October 2020, Leigh Day informed Keoghs of the Judgment, and on 17 November 2020, the IKA issued its application to set aside.
The applicable provisions of the CPR
CPR Part 13.3 provides as follows:
(1) In any other case, the court may set aside or vary a judgment entered under Part 12 if –
(a) the defendant has a real prospect of successfully defending the claim; or
(b) it appears to the court that there is some other reason why –
(i) the judgment should be set aside or varied; or
(ii) the defendant should be allowed to defend the claim
(2) In considering whether to set aside or vary a judgment entered under Part 12, the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly.
CPR Part 3.8 includes the following under the heading “Sanctions have effect unless defaulting party obtains relief”:
(1) Where a party has failed to comply with a rule, practice direction or court order, any sanction for failure to comply imposed by the rule, practice direction or court order has effect unless the party in default applies for and obtains relief from the sanction.
(Rule 3.9 sets out the circumstances which the court will consider on an application to grant relief from a sanction)
CPR Part 3.9 includes the following under the heading “Relief from sanctions”:
(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –
(a) for litigation to be conducted efficiently and at proportionate cost; and
(b) to enforce compliance with rules, practice directions and orders.
(2) An application for relief must be supported by evidence.
CPR Part 15.2 provides under the heading “Filing a defence” that “[a] defendant who wishes to defend all or part of a claim must file a defence”.
CPR Part 15.3 provides under the heading “Consequence of not filing a defence” that “[i]f a defendant fails to file a defence, the claimant may obtain default judgment if Part 12 allows it”.
CPR Part 15.4 provides under the heading “The period for filing a defence”:
(1) The general rule is that the period for filing a defence is — (a) 14 days after service of the particulars of claim; or (b) if the defendant files...
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