Ince Gordon Dadds LLP v Mellitah Oil & Gas BVe
| Jurisdiction | England & Wales |
| Judge | Mr Hugh Sims |
| Judgment Date | 03 May 2022 |
| Neutral Citation | [2022] EWHC 997 (Ch) |
| Docket Number | Case No: BL-2020-002255 |
| Court | Chancery Division |
[2022] EWHC 997 (Ch)
Mr Hugh Sims QC (sitting as a Deputy Judge of the High Court)
Case No: BL-2020-002255
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Patrick Lawrence QC (instructed by Reynolds Porter Chamberlain LLP) for the Claimant
Mr Eoin O'Shea, of CMS Cameron McKenna Nabarro Olswang LLP for the Defendant
Hearing dates: 28 and 29 April 2022
APPROVED JUDGMENT
This judgment was handed down remotely by circulation to the parties or their representatives by email and by release to The National Archives. The date and time for hand-down is deemed to be Tuesday 3 May 2022 at 10:30am.
Mr Hugh Sims QC:
Introduction
This is an application by the defendant, Mellitah Oil & Gas BV (“MOG”), to set aside a default judgment entered by Master Pester on 25 January 2021. Judgment was entered in default of a defence under CPR Part 12, requiring MOG to pay the claimant, Ince Gordon Dadds LLP (“IGD”), the sum of US$1,412,296.43.
The application was made on 17 March 2021, with a statement in support from Mr Muhammad Shamaka of the same date, and seeks an order that the judgment be set aside under CPR 13.3(1)(a), on the basis that MOG has a real prospect of successfully defending the claim. CPR 13.3 provides as follows:
“13.3—Cases where the court may set aside or vary judgment entered under Part 12
13.3(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 good 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.
(Rule 3.1(3) provides that the court may attach conditions when it makes an order.)”
MOG did not, in its application notice, state there was some other good reason why the judgment should be set aside, or it should be allowed to defend the claim, which is the other potential jurisdictional gateway for setting aside a default judgment under CPR 13.3(1)(b). MOG did however seek to raise this point in its submissions, and I will address it below. The wording at the start of CPR 13.3, and the use of the word “may”, makes it clear that if one of those gateway tests are met then the court has a discretion to set aside or vary the judgment. CPR 13.3(2) provides that, in considering whether to set aside or vary, the matters to which the court must have regard include whether the application has been made promptly.
It is generally accepted, and was accepted by MOG before me, that an application under CPR 13.3 to set aside a judgment entered in default of defence is an application for “ relief from any sanction” within the meaning of CPR 3.9. It therefore requires, when exercising a discretion, the consideration of the three stage test as laid down in Denton v TH White (Practice Note) [2014] EWCA Civ 906. The application of the Denton principles, to an application to set aside under CPR 13.3, was challenged before the Court of Appeal in Regione Peimonte v Dexia Crediop SpA [2014] EWCA Civ 1298 and rejected: see at [39]–[[40] per Christopher Clarke LJ, with whom Jackson and Lewison LJJ agreed. The application of the Denton principles to an application under CPR 13.3 was accepted, and the three stage test was applied, by the Court of Appeal in Gentry v Miller (Practice Note) [2016] EWCA Civ 906. However, in Cunico Marketing FZE v Daskalakis and another [2018] EWHC 3382 (Comm) at [39] Andrew Baker J raised the question of whether this is right, because the availability of a judgment under Part 12 carries with it the availability of an order under Part 13 setting such judgment aside. He noted at [40] the contrary view of the Court of Appeal in Regione Peimonte and Gentry v Miller above, but concluded this was not binding on him because in the former case the view was obiter and in the latter case the point was conceded. He also referred to other first instance decisions, one preceding those decisions when a different view was taken, and one after, which adopted the same view as the Court of Appeal in the two above cases. He reasoned at [41] that there was no authority binding on him, but concluded it was not necessary to decide the point, and did not do so. Whilst MOG did not seek to persuade me to adopt this reasoning it nevertheless is a point I need to address in order to satisfy myself as to how I should proceed with this application.
I have hesitation in concluding that what was said by Christopher Clarke LJ in Regione Peimonte can necessarily said to be obiter. The judge at first instance declined to set aside on the basis he was not satisfied that the applicant had real prospects, and this was challenged in the Court of Appeal. In concluding his judgment at [126] Christopher Clarke LJ said as follows:
“I do not regard Piedmont as having established that the judge's refusal to set aside the default judgment or his grant of summary judgment on the monetary claims were in error. Whilst in limited respects I have found that there was a realistic prospect of establishing non-compliance with Italian law that is not sufficient to justify setting aside the judgment. In my view the extent and character of the delay alone afforded, in this case, good grounds to refuse to set the judgment aside even if the defence had a real prospect of success. In the light of the character and extent of that delay it would require a defence of some considerable cogency, based on pretty convincing evidence, particularly on the question of capacity, to justify setting the default judgment aside. The judge was entitled to take the view that there was no real prospect of Piedmont succeeding or, at any rate, none with a sufficient degree of conviction to justify setting aside the default judgment in the circumstances of the present case.”
It seems to me at least arguable that a critical part of the reasoning did not depend on the conclusion that the judge was entitled to take the view that there was no real prospect of the applicant succeeding, but included reasoning as to the character and extent of delay, which was informed by the earlier conclusion as to the application of Denton principles at [40]. It might be thought that the third sentence is offering that point as a first line of reasoning, though the point is open to some debate as the last sentence might be said to put it the other way round.
I am also not persuaded that the approach to the interpretation of CPR 13.3 and 3.9 suggested by Andrew Baker J at [39] in Cunico Marketing FZE is the correct one, assuming for present purposes I would be free to depart from the above Court of Appeal decisions. As noted by Christopher Clarke LJ at [40] in Regione Peimonte, since the overriding objective of the rules is to enable the court to deal with cases justly and at proportionate cost, and since under the new CPR 1.1(2)(f) this includes enforcing compliance with rules, practice directions and orders, it is to be expected that the considerations set out in CPR 3.9 are to be taken into account in the exercise of discretion. This might be thought to be especially so as CPR 3.9 applies on an application for relief from “any sanction”. The argument which Andrew Baker J appears to have been attracted to is that the sanction under CPR 12 came with the ability to apply for relief under CPR 13.3 such that an application to set aside should not be viewed as being an application for relief from a sanction at all. Thus, so the argument goes, subject to overcoming the jurisdictional gateway, and subject to the requirement to have regard to promptness, the discretion to set aside is unfettered. The argument, moreover, is it ought not to be fettered by the further application of another layer, based on Denton principles. However, simply because the sanction under CPR 12 comes with the bespoke ability to apply to have it set aside under CPR 13.3, it does not necessarily follow that it is not an application for relief from sanction.
I read the Court of Appeal's decision in Regione Peimonte as being based on a conclusion that the rules have to be read in accordance with the overriding objective, and it would be consistent with the overriding objective to require applications under CPR 13.3 to be scrutinised not only having regard to the framework laid down within CPR 13.3 but also, in addition, with regard to the Denton principles. Gentry v Miller is to much the same effect, emphasising at [24] (per Vos LJ, with whom Beatson and Lewison LJJ agreed) that the question of promptness is relevant both in considering the requirements of CPR 13.2(2) and also when considering all the circumstances under the third stage in Denton.
When it comes to considering the discretion to be exercised under CPR 13.3 I consider that is the correct approach for me to take. I do so because I think it is likely to be binding on me and also because I see no reason why a different and perhaps less strict approach should apply to applications to set aside default judgments than other types of default which may be no less terminal for the defaulting party. I see no reason why, simply because the rule makers have spelt out certain requirements within CPR 13.3, including a jurisdictional gateway, and then a particular discretionary factor which needs to be taken into account, the discretion (assuming that stage of the test is reached)...
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