WHEN THE COURT FAILS TO SERVE: AN IRREGULAR JUDGMENT MUST BE SET ASIDE

In Tanir -v- Tanir [2015] EWHC 3363 (QB) Mr Justice Garnham found that the court had failed to serve the claim form and, consequently, a judgment had to be set aside. The court had no discretion to act otherwise.

“The Rules Committee has not yet introduced any new rule so that Rule 13.2 remains in mandatory terms: “the court must set aside a judgment entered under Part 12 if judgment was wrongly entered…””

KEY POINTS

  • The judge was not satisfied that the court had served the claim form.
  • In the absence of service the defendant was entitled to have judgment set aside as of right.
  • There is no residual discretion available to the court to refuse to set aside judgment in these circumstances.

PRACTICE POINTS

  • Be aware that, although the failure to serve lay with the court, it was the claimant who suffered the consequences.
  • Given the facts of this case it may be prudent to consider whether it is always prudent to allow court service.

THE CASE

The claimant issued proceedings claiming sums due under a foreign judgment. Judgment was entered in default. The defendant made an application to set aside the judgment. That application was dismissed by the Master.

WERE THE PROCEEDINGS EVER SERVED? AN APPELLATE COURT CAN TAKE A VIEW

There were problems with the Court record which had omissions in relation to recording the fact and date of service of proceedings. The judge held:
  1. In my judgment, it is far from certain on this occasion that the Court did serve the claim form by post on this occasion. Had it done so it can reasonably be assumed that the Notice of Issue form, form N205A, would have been properly completed so as to indicate the date on which the Court sent the claim form to the Defendant, the date on which it was deemed to be served and the date by which the Defendant had to reply to it. All of that information was omitted from the form. It seems to me unlikely in the extreme that each of those entries would have been omitted if the form had indeed been posted.
  2. There is furthermore no extraneous evidence to support a conclusion that the claim form was posted to the Defendant. He certainly denies ever receiving it. It is notable that when he did receive notification of the claim in February, Erol responded quickly and properly; there is nothing to suggest he made any response at all during January 2015. In those circumstances, I regret to say that I see no basis upon which the Master could properly have concluded that this claim form was ever sent to the Defendant by the Court.
  3. That it may be legitimate for a Court hearing an application to set aside a Judgment entered into Default of Acknowledgement of Service, or a Court hearing an appeal from a refusal to set aside such a Judgment, emerges from the Court of Appeal’s decision in Patel v Smeaton [2000] unreported, a copy of which has been made available to me by Counsel. In that case proceedings were issued by a Landlord’s solicitor who wrote to the County Court enclosing a Possession Summons in triplicate and asking for one sealed copy to be returned to them. The Landlord attended the hearing but the Tenant did not. The County Court Judge made an order for possession. The Tenant’s case was that the first he had heard of the proceedings was when he received the possession order. He then applied for the order to be set aside. The matter came before His Honour Judge Krikler. His judgment read
“The Tenant asked to have the judgment set aside on the basis that he did not receive notice of proceedings in this matter. I am not satisfied with this as it is assumed that if service of proceedings is the Court’s job then they will have served the relevant documents to the parties involved.”
  1. The Court of Appeal called for the court file. It was discovered that the court file contained the summons in triplicate, there was no endorsement on the top copy indicating how and when the summons had been served. There was no computer record that the summons was ever served.
  2. Hale LJ (as she then was) concluded:
“It is of course the case that, if there is evidence something has been posted, then it is for the addressee to show that it has not been received. But where, as here, there is no evidence that the Court did in fact serve the summons and each of the indications that one would have expected had they done so is absent, then there can be no presumption – and no evidence indeed – that it was served. I for my part, simply cannot accept that there is a presumption that, if service of proceedings is the Court’s job, then it will have been done. There has to be at least some record to indicate that that has indeed been done.”
  1. In those circumstances the appeal was allowed and the possession order set aside.
  2. The position seems to me similar in the present case. There is nothing to indicate that the Court had done as it should have done and posted the claim form to the Defendant.

THERE IS NO RESIDUAL DISCRETION FOR THE COURT TO REFUSE TO SET ASIDE JUDGMENT

The judge rejected an argument that the court had a residual discretion to refuse to set aside a default judgment in these circumstances.
  1. Given the wording of Rule 13.2, it might be thought that that would be enough to dispose of this appeal. However Mr Avis advances a further argument. Mr Avis contends that despite the wording of Rule 13.2 – “the Court must set aside a judgment… if… wrongly entered“, a claimant is not entitled, as a matter of law, to have it set aside. He points out that Osman’s claim is for enforcement of a foreign judgment at common law and that is typically brought by way of summary judgment. He says that Osman was unable to apply for summary judgment because of the failure of Erol to acknowledge service. He says that if the Judgment is set aside under Rule 13.2 Osman will have to apply for summary judgment as soon as service is regularised.
  2. Mr Avis contends that that outcome is inconsistent with the overriding objective, set out in CPR Rule 1.1, to deal with cases justly and at proportionate cost. Mr Avis has referred me to the Court of Appeal decision in Nelson v Clearsprings (Management) Limited [2007] 1 WLR 962. In that case the Claimants filed a County Court possession claim against the Defendant company. The claim form gave notice of the date of the hearing but misstated the Defendant’s address. The claim form and particulars of claim were approved for postal service by the Court and deemed served. The Defendant failed to appear at the hearing and a possession order was granted in its absence.
  3. Relying on CPR Rule 39.3(5), the Defendant applied to set aside the Judgment on the ground that it was unaware of the proceedings. The District Judge rejected the contention that the defendant was entitled to have the Judgment set aside as of right. When the case reached the Court of Appeal, it was common ground that the judgment in question was not a default judgment under CPR Part 12 but one obtained following a hearing under CPR Part 55, so that the set aside provisions of CPR Part 13 did not apply.
  4. The ratio of the Court of Appeal’s decision was that Rule 39.3 contemplated a trial in the absence of a party who had been served, or in respect of whom service had been dispensed with. It did not apply to an application to set aside an irregular judgment. Accordingly the Judge was right to hold that 39.3(5) did not apply. Sir Anthony Clarke MR gave the judgment of the court. At paragraph 42 he said that having held that 39.3(5) did not apply the appeal must be dismissed. However he went on:
It does not, however, follow that under the CPR the defendant is entitled to have the judgment set aside as a right, ex debito justitiae, or indeed that, if there is a discretion it can be exercised in only one way. It was pressed upon us that such an extreme approach is inconsistent with the overriding objective of dealing with cases justly and that, on an application to set aside a judgment (albeit irregularly obtained), a claimant might be able to demonstrate that there will be no point in setting aside the judgment and requiring the claimant to issue and serve new proceedings…
44. The question is whether the CPR permits such an approach. In our judgment, there are procedural ways in which to achieve that result. It was suggested in argument that there are a number of provisions of the CPR which, in combination, could be deployed to achieve it. They are CPR rr 6.9, 3.1(2)(m), 3.1(7) and 3.10.
  1. The Master of the Rolls then set out those three rules and discussed each. He continued at paragraph 50:
That is not to say that on the application to set aside a judgment in a case of this kind the just order will not almost always be to set aside a judgment. In a case where the proceedings have not been served on the defendant and service has not been dispensed with before the full judgment, a court could only properly refuse to set aside a judgment where there is no prejudice to the defendant… As we see it, that will ordinarily involve the claimant persuading the court that there is no prejudice to the defendant in dispensing with service and that the defendant is not otherwise prejudiced. We do not at present see how that will be possible in a case where the judgment includes a money judgment of an aggregate sum inclusive of interest and costs… Nor do we see how it will be possible where the judgment ordered the defendant to pay the costs… However each case depends upon its own facts.
  1. On the facts of the case before them, the Court of Appeal dismissed the appeal on the ground that the Judge was correct to hold that Rule 39.3(5) did not apply. The Master of the Rolls ended his Judgment as follows:
We hope that the Rules Committee may introduce a new rule to provide expressly for those cases where the judgment has been entered even though the defendant has never been served with the claim form at all. Until a new rule is introduced we believe it may be helpful if we summarise the general effect of this judgment. (1) If the defendant can show that he has not been served (or is not deemed to have been served) with the claim form at all then he would normally be entitled to an order setting the judgment aside and to his costs in making the application. (2) If, when the claimant is served with an application to set aside such a judgment, he believes that he can show the defendant has no real prospect of successfully defending the claim, then he may apply to the court for orders dispensing with service of the claim form, permission (under CPR R 24.4(1) to apply forthwith for summary judgment, and for summary judgment on his claim. (3) If such an application and cross application are made the court should make such order as it considers just. (4) If the claimant can show the defendant has been guilty of inexcusable delay since learning that the judgment has been entered against him, the court would be entitled to make no order on the defendant’s application for that reason. The judgment will then stand (subject to any direction made by the court whether in relation to statutory interest accruing due on the judgment or otherwise).
  1. Mr Avis invites me to adopt such an approach here. I decline to do so. The Rules Committee has not yet introduced any new rule so that Rule 13.2 remains in mandatory terms: “the court must set aside a judgment entered under Part 12 if judgment was wrongly entered…” Furthermore, the Claimant here has not made an application to the Court for orders dispensing with service of the claim form or for permission to apply forthwith for summary judgment or for summary judgment on his claim. All that he has done is referred to the possibility of making such claims in his skeleton arguments. In fact, the argument now advanced was touched on only in passing in paragraph 13 of the skeleton argument before the Master and, according to the note of the hearing approved by the Master not referred to at all orally.
  2. In my judgment it would be entirely inappropriate to permit the Respondent in circumstances such as these to dispense with the steps contemplated by the Court of Appeal in Nelson in order to fashion a mechanism to get round the apparently mandatory words of Rule 13.2.
  3. Furthermore, I note that the Default Judgment includes an order that the Defendant pay the Claimant his costs, a circumstance referred to by the Master of the Rolls in Nelson as being one where it would not be possible for the sort of approach advocated by Mr Avis to be adopted. Finally, I am far from persuaded that to take the course urged upon me by Mr Avis would not cause the Defendant, Erol, unjustified prejudice; the procedural protections available for a defendant faced with a summary judgment application are there for good reason and should not lightly be set aside.
  4. In those circumstances, I grant permission to appeal on the Rule 13(2) grounds and I allow the appeal.

IF THIS HAD BEEN A REGULAR JUDGMENT THEN THE APPLICATION TO SET ASIDE WOULD HAVE BEEN REFUSED

The judge made it clear if he had been considering the merits of defence under CPR 13(3) then the application would have been refused.

 

 

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