PROVING THINGS 184: PROVING YOU CAN’T A CLAIM WILL BE “STIFLED” REQUIRES A DETAILED EXPLANATION

In National Tourism Council of Qatar v Mehdiyev [2020] EWHC 2638 (Ch) Deputy Master Hansen considered the defendant’s evidence as to means when deciding whether or not to impose terms when setting aside a judgment.  It is important to note that detailed evidence will be needed if a party is attempting to argue a condition will stifle the claim.  Vague assertions are not sufficient.

“I am satisfied that there is no question of stifling here. The defendant has had every opportunity to put in evidence about his means, but has chosen to say no more than this: “I am an ordinary individual of modest means”. That, plainly, will not do and provides no evidential foundation for a stifling argument.”

THE CASE

The defendant was seeking to set aside a regular judgment. It was common ground that the defendant had shown a real prospect of successfully defending the claim, the primary issue was what terms should be imposed on the setting aside and whether security for costs should be ordered.

THE JUDGMENT ON THIS ISSUE

The Master was less than impressed with the quality of the evidence that the defendant put forward in relation to his means.

1. I shall deal then with each of the proposed conditions, dealing first with costs. As to costs, it seems to me that the set aside should be on terms that the defendant pays the costs of the default judgment and the costs of this application, but not the costs of the service out application. Given that the judgment was regular and was caused by the defendant’s complete failure to respond to the English proceedings, there is no basis upon which the defendant can sensibly resist paying the costs associated with obtaining that default judgment. Indeed, Mr. Malam, who appears for the defendant today, realistically, it seems to me, accepted that point in argument although it had not previously been accepted by or on behalf of the defendant.

2. It follows from what I have just said that the defendant should also pay the claimant’s costs of this application given his previous position that the claimant should pay his costs. In addition, it seems to me that this is the right order in any event because the judgment was a regular one and because I have, for the reasons that follow, rejected in clear terms the suggestion that the set aside should be unconditional, but have in fact imposed stringent conditions, albeit not exactly in the terms proposed by the claimant. I decline to include the costs of the service out application as it seems to me that those are costs of the action and should be in the case in the normal way notwithstanding the defendant’s lack of engagement particularly at the pre-action stage.

3. Turning then to the second condition and the proposed security for costs, I have concluded that the defendant should be ordered to pay security but not in the sum claimed. I consider that the figure for each phase should be 70% of the sum claimed payable according to the claimant’s proposed timetable, so that the total amount of security is £175,000 not £250,000. Whilst I am satisfied that it is appropriate in all the circumstances to order security and that by doing so I will not be stifling the defendant’s defence, it seems to me, particularly having regard to the fact that this claim is proceeding under the Shorter Trials Scheme, that the appropriate figure is £175,000.

4. Mr. Malam, in resisting security, submitted that I should be astute not to stifle any defence and that an order for security in these circumstances, i.e. under CPR 3.1(5), was an exceptional order only to be made when it can be shown that a party is not acting in good faith; good faith being understood to consist of a will to litigate a genuine defence as economically and expeditiously as reasonably possible in accordance with the overriding objective: see White Book at 3.1.16 and the cases there referred to.

5. I am satisfied that there is no question of stifling here. The defendant has had every opportunity to put in evidence about his means, but has chosen to say no more than this: “I am an ordinary individual of modest means”. That, plainly, will not do and provides no evidential foundation for a stifling argument.