DELAY AND SETTING ASIDE DEFAULT JUDGMENT: BALD ASSERTIONS IN AN EXPERT’S REPORT

The result in Gahir -v- Bansal [2016] EWHC 2041 (QB) (Sir David Eady) is perhaps surprising given the strength of the judge’s observations as to the defendant’s conduct. Despite major unjustified delay an application to set aside a default judgment was successful. One important factor was the somewhat sparse reasoning in an expert report which was essential to the claimant’s case.

“… I think the weakness of, and the unanswered questions about, the Claimant’s expert report indicate to me, on the evidence as it now stands, that the Defendant at least has a real prospect of success”

KEY POINTS

  • The court exercised its discretion to set aside a default judgment even though there had been unjustifiable delay on the part of the defendant.
  • The fact that the claimant’s expert report  on the key issue in the case consisted of bald assertions was an important factor.
  • Since the purpose of a defamation action was to obtain vindication of reputation the court could bear in mind that a default judgment may not obtain this if a default judgment remained in place.

THE CASE

The claimant brought an action alleging libel based on two letters. Proceedings are issued and a default judgment entered on the 5th April 2016.  The defendant made an application to set aside judgment.

THE JUDGMENT

  1. Courts are now undoubtedly less tolerant of delay and wasted costs, and correspondingly more strict in the application of the relevant criteria, when exercising the discretion whether or not to set aside a judgment which has been regularly obtained: see e.g. Gentry v Miller (Practice Note) [2016] 1 WLR 2696; Denton v TH White (Practice Note) [2014] 1 WLR 3926; and Dexia Crediop SpA v Regione Piemonte [2014] EWCA Civ 1298. There are no hard and fast rules, but it is against this background that judges now have to weigh the competing considerations when they come to apply them to the circumstances of the particular case in hand.
  2. The relevant provisions are to be found in CPR 13.3(1)(a). The court may set aside a default judgment where the defendant can demonstrate a real prospect of successfully defending the claim. This requirement obviously goes beyond merely showing an arguable case: the test is similar to that applied when addressing summary judgment in accordance with CPR Part 24. Nevertheless, even if that test is satisfied, such an order will not be granted lightly and certainly not as a matter of formality. It is clear that it will generally be a factor of considerable significance whether or not the application has been made promptly: CPR 13.3(2). Indeed, if there has been a marked failure to make the application with a proper sense of urgency, the court may well be justified in refusing relief, notwithstanding the possibility that the defendant might succeed at trial: per Moore-Bick LJ in Standard Bank Plc v Agrinvest International Inc [2010] EWCA Civ 1400, at [22]. It has been said that an applicant must act “with all reasonable celerity in the circumstances”: Regency Rolls Ltd v Carnall, unreported, 16 October 2000, CA, at [45] per Simon Brown LJ. Ultimately, however, the authorities can only offer general guidance: each case turns on its own facts and the judge must take all those individual circumstances into account in arriving at what seems to be the just outcome.
  3. The Claimant’s solicitors sent a letter of claim dated 29 July 2015 and called upon the Defendant to respond by 5 August, which he failed to do. A further letter was sent on 10 August but that too was ignored. There was then a delay of six months until the claim form was issued on 19 February of this year and served together with particulars of claim and a response pack. The deemed date of service was 29 February, by which time some nine months had elapsed since the publications took place. The Claimant had in his possession an expert report dated 18 May 2015 expressing the opinion that one of the defamatory letters had been written by the Defendant. Mr Dhillon emphasises, therefore, that delay had not all been on one side; moreover, the rather leisurely progress of the litigation itself cannot be attributed solely to his client’s failure to engage.
  4. It was only on 9 March of this year that the Claimant’s solicitors finally received a brief letter acknowledging that the Defendant had received their earlier communications. It expressly denied that he was “party to any such activity” and claimed that he had no “knowledge of the parties involved”. He also accused the solicitors of unprovoked harassment. The next day they drew his attention once again to the response pack, which explained what was required of him, and recommended that he take independent legal advice. He did not respond. By this time, it seemed clear that he was he was in serious and significant default and without any reasonable excuse. Accordingly, on 15 March a request for judgment in default of acknowledgement of service was filed. Judgment was duly entered on 5 April and served on the Defendant three days later. He was at the same time notified of a hearing that was listed for directions before the Master on 24 May. Again, no response.
  5. There was eventually a telephone call to the solicitors, less than three working days before the Master’s appointment, in which Mr Sandhu of Askews introduced himself as having been instructed by the Defendant. He asked that the Claimant consent to adjourn the hearing because it was the Defendant’s intention to apply to set the default judgment aside. An email followed shortly afterwards. But no explanation was offered for his failure to engage with the legal process up to that point; nor were any grounds given for setting aside. In the circumstances, the Claimant’s consent was not forthcoming.
  6. At the hearing on 24 May, Mr Dhillon represented the Defendant and asked that the remedies hearing should be put back to enable his application to be heard – even though it had still not been issued. The Master declined and indicated that it was for the Defendant to make his application. She added the warning: “The later the Defendant leaves it, the more points will be taken against him regarding the timetable”. She was making clear his obligation to proceed promptly. Yet, for whatever reason, it was not in fact issued until 18 July and was then sent to the Claimant’s solicitors by email on 22 July (five days before the date fixed for the remedies hearing). Both hearings were therefore listed before me on 28 July. This meant, of course, that the Claimant had to incur the costs of preparing for the remedies hearing and was ready to proceed by the time his solicitors actually received the application to set aside. Also, his opportunity for redress, by way of compensation and vindication, has been unnecessarily delayed while he has been left in a state of uncertainty. (This was in addition of course to the earlier delay caused by the Defendant’s failure to engage.)
  7. The Defendant’s delay has clearly been inordinate and could readily be judged, by modern standards, as being beyond the limit of what is acceptable. It is true that his wish to apply was voiced on a number of occasions (e.g. via Mr Sandhu on 19 May and through Mr Dhillon on 24 May before the Master). On the other hand, the delay between being informed of the default judgment (on or about 8 April) and actually issuing the application (on 18 July) was more than three months. Does this mean that it must be rejected without further ado? Clearly not. There is a discretion still to be exercised in the light of all the circumstances, including the merits of any defence there may be.
“…The court is engaged in an exercise of weighing delay against merits, which will include considering the nature and extent of the delay, the reason and any justification for it, the strength of the supposed defence and the justice of the case. The stronger the merits (and any justification for the delay) the more likely it is that the Court may be prepared to exercise its discretion to set aside a judgment regularly obtained despite the delay and vice versa. That is not to say that a real or even a good case on the merits will usually lead to the judgment being set aside despite significant delay since delay is now a much more potent factor than heretofore. If there is a marked and unjustified lack of promptness, that, itself, may now justify a refusal of relief because the delay is a factor that outweighs the defendants’ prospect of success …”: per Christopher Clarke LJ, in the Piemonte case, cited above, at [36].
  1. This guidance reminds judges of the nature of the exercise and of the wide range of factors that need to be considered but, in the end, it simply confirms that a judge must attempt to do justice in the light of the particular facts. It is fair to say, however, that it does underline the fact that there has been a change of climate following the advent of the CPR, such that long delays and the incurring of unnecessary expenditure will be less readily indulged than in the past. Indeed, his Lordship went on to illustrate that very point by reference to what Moore-Bick LJ had said in theAgrinvest case, cited above, some four years earlier.
  2. There is very little to be said by way of explaining or justifying the delay in this case. I am told that (i) the Defendant hoped the case would simply go away; (ii) he has no spare funds to spend on lawyers or litigation; and (iii) he is the sole carer for his invalid wife (who suffers from kidney disease and requires regular treatment three times a week). While those factors do not provide an excuse for his failure to engage with the court process, they still need to be borne in mind (to a greater or lesser extent) as part of the background circumstances.
  3. I must turn to the prospects of successfully defending the claim. Is there a realistic prospect of success? It is fair to say that the court cannot come to an informed assessment as to the strength of his case, which is very simple: he says he did not write or publish these letters. Either he did or he did not. The matter would surely turn on whether he is believed at the trial. There is the additional element here of expert evidence. A report dated as early as 18 May 2015 was obtained from Mr James McInally at the behest of the Claimant “on behalf of the President and Committee Members of the Ramgarhia Sikh Temple, Coventry”. The Defendant has accepted that the sample handwriting on the documents submitted to the expert for comparison purposes was indeed his.
  4. One can conceive of a report from a handwriting expert which, unanswered, could tilt the balance against a defendant relying on a bare denial. This report is, however, unsatisfactory in a number of respects (which may perhaps explain why it was not triumphantly presented to the Defendant from the outset). It is true that he was told, in the initial letter of complaint a year ago, that an expert view had been expressed that the handwriting on one of the letters was his. But the report itself was not handed over until June of this year. There are various points to be made.
  5. First, it is not clear to me (nor, it emerged to counsel either) whether the expert examined both letters or only one of them. In either event, one can say that he only attributes authorship of one of the letters to the Defendant. The letter of complaint dated 29 July 2015 stated that “our client instructed a handwriting expert to compare and analyse the publications against copies of two documents which were written by you”. The solicitors at least, therefore, seem to have been under the impression that both of the offending letters (i.e. “the publications”) were submitted to the expert, but that does not emerge clearly from the report itself. This refers only to “document I”.
  6. Secondly, the report consists of little more than bare assertion: there is set out virtually nothing by way of specific analysis or reasoning. As it stands, it is plainly inadequate.
  7. Thirdly (albeit of less significance), an obvious question that needs to be answered is whether the expert has any experience of assessing handwriting in Punjabi or, at least, whether that factor makes any difference. It may not, but the point at least needs to be addressed. Mr McInally only refers in general terms to the well known fact that the examination of handwriting “… involves the assessment and significance of handwriting characteristics and features such as structure, shape, slope and relative heights of the letters/numbers comprising the handwriting”. He then adds: “These variable features will be evident in the handwriting in any language”. This implies that he could examine handwriting in any language, familiar or not, and come to equally valid conclusions, but I am by no means sure that he is going this far.
  8. I am not, in all the circumstances, persuaded that the report enables me to conclude that the Defendant has no real prospect of succeeding in his proposed defence. That conclusion is expressed by way of a double negative. I bear in mind, of course, that it is for him to show that he has such a prospect, but this is not a case in which he can do much more than proffer his bare denial. He is not (I must assume) in a position to prove who did write the letters.
  9. The Defendant has asserted on several occasions that an expert could immediately tell that the handwriting on the documents is not his, but he has made no attempt to make the point good. Again, of course, he says that he is short of funds. On the other hand, if what he claims is true, it would have been a good investment which would, almost certainly, have stopped the claim in its tracks.
  10. The position is unsatisfactory, to say the least, but I think the weakness of, and the unanswered questions about, the Claimant’s expert report indicate to me, on the evidence as it now stands, that the Defendant at least has a real prospect of success – it simply depends on whether his denials are believed at trial. The remaining question, therefore, is whether the delays on the Defendant’s part must put him out of court despite that. There may well be circumstances in which a judgment will not be set aside notwithstanding “a real or even a good case on the merits”; not least because, as Christopher Clarke LJ has made clear, “delay is a much more potent factor than heretofore”. Is this such a case? In my judgment, the determination of that question is finely balanced.
  11. Mr Dhillon drew my attention to the decision of Warby J in S v Beach [2015] 1 WLR 2701, at [83]-[85], and especially to the list of factors he took into account in deciding, on the facts of that case, to set aside a default judgment despite the defendant’s “serious default and unwarranted delay and the improbability of his answers to the claims”. It was pointed out by Mr Santos, however, that this case pre-dated that of the Court of Appeal inGentry v Miller, cited above, and the important guidance there given; not least, the reminder by Vos LJ, at [42], of “the need for litigation to be undertaken efficiently and at proportionate cost, and for the rules and orders of the court to be obeyed”. It is also true that the Piemonte case was not cited before him (having been handed down less than two weeks before the hearing). It is manifest nonetheless, from the terms of his detailed and careful judgment, that Warby J had these factors well in mind from his consideration of earlier authorities. He noted, at [82] in particular, that “[t]he need for efficiency and proportionate cost and the need to ensure that rules are complied with count against [the applicant]”. Nevertheless, there were six matters, specific to that litigation, which tipped the scales in favour of setting the judgment aside.
  12. Mr Dhillon submits that two of those factors are of some relevance here too as part of the circumstances to be taken into account. The first is that enforcing the judgment will impose on the Defendant a very large costs liability when he may have a meritorious defence. There would also be an award of damages here, quite possibly running to five figures. The court would have to proceed on the basis that he had written the letters despite his denials (and therefore was a liar). The assumption would also have to be made on the facts of this case that he had aggravated the damages in various ways and, in particular, by accusing the Claimant of having forged the letters himself. It is a factor which could add significantly to the overall sum awarded. Yet, for all I know, the Defendant may well not have written either of the relevant letters, in which case he ought not to be liable for any damages (aggravated or otherwise). The consequences would thus almost certainly be devastating for him.
  13. Secondly, the only issue raised by the Defendant relates to his responsibility for publication, which should be relatively confined and capable of resolution without enormous expenditure.
  14. I would also emphasise that, unlike Warby J, I am not even in a position to infer that this Defendant’s answer to the claim is inherently “improbable”. It would depend on the trial judge’s view of his credibility.
  15. Another point was addressed in the notes in the White Book, at p.482, by reference to Terluk v Berezovsky [2009] EWHC 1733 (QB), at [18]. It has particular relevance to defamation proceedings, in which the primary object is to achieve vindication of the relevant claimant’s reputation. If the only judgment obtained is by way of default, those ill disposed to a claimant may find it easier to dismiss the outcome and undermine the effectiveness of the vindication. People are likely to draw attention to the fact that the merits were not addressed, and hint perhaps that there might have been evidence to support the truth of the defamatory allegation(s). No defence or draft defence has so far been produced, unfortunately, but there has been no suggestion that the Defendant wishes to put forward a defence of truth: the only case advanced has been based on his denial of responsibility. Nevertheless, he has taken the opportunity to attack the Claimant in various ways that are relied upon by way of aggravation of damages. I will not spell them all out, for obvious reasons, but the point can be illustrated by reference to one example only; namely, the implausible charge that it was the Claimant himself who created the offending documents – so that he could (ex hypothesi) make a fraudulent claim against the Defendant.
  16. The concern expressed in the Berezovsky case, therefore, undoubtedly carries less weight here; but the general point remains that judgments in default are more easily dismissed and accordingly less effective by way of vindication. The point is not of great significance, however, since the Claimant would almost certainly grasp the opportunity of such vindication as a default judgment offers rather than have to pursue the much more expensive course of proceeding to trial.
  17. By the narrowest of margins, I have decided that I should exercise the court’s discretion in favour of setting aside the default judgment. I have no sympathy for the plight in which the Defendant now finds himself in this litigation. He should have engaged with the pre-trial protocol at the outset. So too, when sued he should have entered an acknowledgment of service and, in due course, served a defence. It needed only to be the briefest of documents. It would also have been desirable, in the light of his denial of responsibility, to engage the services of a handwriting expert at the earliest opportunity (as he himself appeared to recognise). Instead, he has procrastinated and caused the Claimant to incur unnecessary expenditure throughout the process.
  18. Even though justice requires in my view that his defence should have a chance of being properly evaluated before the court, I believe it is important that the Claimant should be compensated so far as possible in respect of the wasted costs he has had to incur, and protected also for the future by efficient case management with a view to an early resolution of his claim. Like Warby J in S v Beach, at [85], I would intend that the Defendant should be put on the strictest terms as to the future conduct of this litigation. There should be a properly pleaded defence as soon as possible, and a proportionate timetable for the case to come to trial in the most cost effective way. This would make provision for the service of further expert evidence by both sides (if so advised), since it would appear at the moment that this is likely to be central to the resolution of the main issue. In so far as the Defendant wishes to pray in aid his impecuniosity, for any purpose, he should produce full and clear evidence of his financial position. It should not be assumed that bare assertions will be taken at face value.”

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