APPLYING TO SET ASIDE DEFAULT JUDGMENT: A DRAFT DEFENCE IS NOT MANDATORY, BUT ITS ABSENCE MAY WELL BE TELLING

In Alli-Balogun v On the Beach Ltd & Ors [2021] EWHC 1702 (QB) Mr Justice Jacobs considered the relevant criteria for a party seeking to set aside a default judgment on the merits.  The defendant in this case did not file a draft defence to set out its case.  Whilst this was not necessarily fatal to the application the absence of a defence highlighted the weaknesses of the defendant’s case. The application to set aside was unsuccessful.

“A draft defence is potentially important, however, because it would enable the court to see clearly what, if any, facts are relied upon by a party in support of its defence. That is in turn important because, as the authorities make clear, the assessment of “real prospect of success” does not require the court to accept at face value the factual case advanced by a party: the court can assess whether that factual case itself has a reasonable prospect of success.”

THE CASE

The claimant child was  seriously injured whilst swimming in a hotel in Spain.   She brought proceedings against five defendants. The fourth defendant was the company that provided lifeguard services to the hotel, the fifth defendant is the fourth defendant’s insurer.  Proceedings were served and a default judgment entered against the fourth and fifth defendant.   The fifth defendant made an application to set aside judgment on the merits.

THE CRITERIA TO SET ASIDE JUDGMENT

The judge considered the relevant criteria.

1. 1. There was no dispute as to the applicable principles. CPR 13.3 provides:

“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.’

1. 1. The burden is on the applicant to show a good reason why judgment regularly obtained should be set aside, see ED&F Man Liquid Products v Patel [2003] EWCA Civ 472, para [9] per Potter LJ.

1. 1. The starting point is whether the defendant has established that it is has a “real prospect” of successfully defending the claim. This means more than ‘merely arguable’. The distinction between a real and fanciful prospect of success is that the defence sought to be argued “must carry some degree of conviction”: ED&F Man para [8]. The notes to CPR 13.3 in the White Book describe the “major consideration” on an application to set aside as being whether the defendant has shown a real prospect of successfully defending the claim or some other good reason why the judgment should be set aside

1. 1. A frequently-cited statement of the relevant principles concerning “real” or “realistic” prospect is set out in the judgment of Lewison J. in Easyair v Opal [2009] EWHC 339 (Ch) in the context of applications for summary judgment:

“i) The court must consider whether the claimant has a “realistic” as opposed to a “fanciful” prospect of success: Swain v Hillman [2001] 2 All ER 91;

ii)  A “realistic” claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]

iii)  In reaching its conclusion the court must not conduct a “mini-trial”: Swain v Hillman.

iv)  This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]

v)  However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;

vi)  Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;

vii)  On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent’s case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant’s case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.”

1. It is not necessarily enough to show that there are real prospects of defending the claim. The decision as to whether a judgment should remain in place is a discretionary decision. An important factor, which is given prominence by CPR13.3(2), is the promptness of the application. The Courts have considered delay in various cases, but there is no defined outer limit and what is considered ‘prompt’ depends on the circumstances of the case. The authorities suggest that, since the advent of the CPR, a claimant will not be lightly deprived of a default judgment; see Standard Bank Plc v Agrinvest International [2010] EWCA Civ 1400.

THE FACTUAL EVIDENCE IN SUPPORT OF THE FIFTH DEFENDANT’S APPLICATION (AND THE ABSENCE OF A DRAFT DEFENCE)

The judge found that the absence of a draft defence was not fatal to the defendant’s application. However it did indicate the weakness of that defendant’s position.

1. 1. There is limited factual evidence served by the 5^th Defendant in relation to the application. There are no statements from the lifeguard or any other person within the 5^th Defendant’s assured. Some evidence has been served by Mr. Hey on behalf of the 5^th Defendant, and I refer to its material parts below. However, that evidence is not based on any information given to the 5^th Defendant by its assured, nor based on any evidence from anyone else with knowledge of the relevant events. I was told in the course of Mr. Chapman’s submissions that there had been a lack of co-operation on the part of the 4^th Defendant with its insurer.

1. 1. There was no evidence of what the lifeguard said at the time of the events in question, or when they were investigated, except as described below. Such evidence as does exist clearly does not suggest that the lifeguard is a reliable witness in relation to the events which took place. Mr. Steinberg referred me to a police report produced in November 2015 which followed the opening of proceedings by an examining magistrate in Spain. The report contains a number of statements from individuals to whom the police spoke. It includes the following in relation to Mr. Zabala, the lifeguard:

“REPORT PROCEEDINGS to record that obtaining a witness statement from Mr Mikel Angel ZABALA CABEZAS, holder of Spanish national identity card number 78982157L was extremely difficult. He incurred a lot of contradictions, incoherence and statements that did not seem true. It does not seem true that he had not seen the child at any moment, if that is not the case, it is not very professional.

Nor is it very professional for him to leave the resuscitation to someone who “said” he was a doctor, that being an obligation for him due to his post.

Nor is it very professional for him not to see fit to fully check the pool but, on the other hand, spend time looking in other parts of the building which are not his remit and where it would be hard for the girl to be at risk.

We must add that this reporting officer considers that the way Mr Zabala expressed himself and explained the events was not that of a normal witness statement. He appeared to be very nervous, insecure, stubbornly insisting on blaming the father, evasive and contradictory.”

1. 1. No defence has been served, even in draft, which would enable the court to see whether there are any particular facts on which the 5^th Defendant is relying by way of defence. In his skeleton argument, Mr. Chapman indicated that the 4^th and 5^th Defendant’s factual case will follow (in essence) the same course as that plotted by the 1^st and 3^rd Defendants. However, the claim against those parties (the tour operator and the hotel) is not made on exactly the same basis as the claim against the lifeguard company and its insurer. It is also clear that the defences advanced by the 1^st and 3^rd Defendants raise issues which would not be relevant or available to the claim against the 4^th Defendant. The fact that summary judgment has not been sought against the 1^st or 3^rd Defendants does not therefore lead to the conclusion that the 4^th Defendant has a defence with a real prospect of success.

1. 1. As far as the facts relied upon by those parties are concerned, the position can be summarised as follows. The 1^st Defendant does not set out any real factual case. Paragraph 16 of the 1^st Defendant’s defence pleads that it has no knowledge of any of the relevant matters relating to the incident, and in fact makes no admission as to whether the Claimant was injured in the pool at all. Paragraphs 16 – 18 make various points by reference to the Claimant’s case pleaded in the Particulars of Claim. In so far as facts are set out in paragraph 36 (g) – (j), such facts are also essentially comment on the factual case advanced by the Claimant in the Particulars of Claim.

1. The 3^rd Defendant’s defence does admit that the accident occurred on the date alleged. The defence does set out certain facts, essentially relating to the conduct of the Claimant’s father, not the Claimant herself. It does not address the conduct of the lifeguard. The 3^rd Defendant’s essential case is that it took steps to ensure that there was a safe swimming environment, including contracting with a specialist lifeguard company. The 3rd Defendant specifically reserved its right to claim indemnity or contribution from the 4^th or 5^th Defendants.

THE CONCLUSION

1. 1. I do not accept Mr. Steinberg’s argument that the absence of a draft defence is fatal to the present application. Paragraph 13.4.1 of the commentary in the White Book indicates that is preferable to exhibit a draft defence. However, there is no requirement to do so. A draft defence is potentially important, however, because it would enable the court to see clearly what, if any, facts are relied upon by a party in support of its defence. That is in turn important because, as the authorities make clear, the assessment of “real prospect of success” does not require the court to accept at face value the factual case advanced by a party: the court can assess whether that factual case itself has a reasonable prospect of success.

1. 1. The absence of a draft defence in the present case reflects, at least in part, the fact that the 4^th/ 5^th Defendants have not been able to set out a factual case as to what happened. The evidence of the police report indicates that there has not been a coherent account from the lifeguard as to what happened. There is no realistic prospect that any such account will now be forthcoming, some 6 years after the incident, particularly bearing in mind the lack of cooperation to which Mr. Chapman referred. In so far as any account was given by the lifeguard, it appeared that he blamed the Claimant’s father. (He did not blame, for example, any visual difficulties caused by the barrier in the pools referred to by Mr. Hey in his statement). However, as discussed below, whether one is looking at the barrier in the pools, or the actions of the Claimant’s father, these would at best give rise to possible contribution claims identified in Mr. Hey’s witness statement.

1. 1. Although I do not accept that the absence of a draft defence is fatal, I accept his submission that – essentially for the reasons which he gave and which are summarised above – the 5^th Defendant has failed to show that a real prospect of a defence on the issue of the liability of the 4^th Defendant.

1. 1. I accept that the Spanish case-law shows that the mere fact that a person has drowned in a swimming pool, when a lifeguard is on duty, does not automatically mean that the lifeguard is at fault/negligent. The question of liability depends on the particular facts of the case. However, it does not follow that because liability depends on the facts, a lifeguard’s proposed defence must have a real prospect of success on the basis that the full facts will not be known until they are investigated at trial. In the present case, there are sufficient facts which have been pleaded in the Particulars of Claim (evidenced by a Statement of Truth) which give rise to the legitimate question: what exactly is the defence which it is said to have a real prospect of succeeding at trial?

1. 1. Here, a young child almost drowned whilst the lifeguard was on duty, whilst “on his watch” (as Mr. Steinberg put it), and suffered catastrophic injuries in consequence. One feature of the case, which does not appear to be substantially disputed, is that the lifeguard at one point was not carrying out his responsibility for the safety of all those who may have been in the pool, including the Claimant, because he was inside the hotel looking for the Claimant at the request of her father. Another feature of the case, pleaded in the Particulars of Claim and not positively denied by the 5^th Defendant, is that the Claimant was discovered by other guests who were using the pool (ie not by the lifeguard) who then pulled her out.

1. 1. Mr. Hey’s argument is that the Claimant’s pleaded case gives rise to little (if any) basis for criticising the conduct of the lifeguard. That submission is, as Mr. Steinberg submitted, unrealistic. It seems to me that the grounds for criticism are obvious. There are two possibilities, canvassed in the arguments of counsel. The first (which Mr. Steinberg suggested was inherently more probable) was that the Claimant was already in the pool and in difficulty when her father alerted the lifeguard that he could not see her, and that she was then missed. On this basis, the lifeguard failed, as pleaded, to notice the Claimant sinking to the bottom of the pool and failed to check or properly check the pool when he was told that the Claimant was missing. The second (which Mr. Steinberg said was unlikely, but which appeared to be the case advanced for the 5^th Defendant) was that the Claimant got into the pool, and started to sink, when the lifeguard had left the poolside after being told that the Claimant was missing. On this basis, the Claimant’s catastrophic injuries occurred when the pool was completely unguarded, notwithstanding that the lifeguard had responsibility for guarding the pool.

1. 1. On either basis, there is in my view an obvious case against the 4^th Defendant, and there is no defence which carries any degree of conviction. The Claimant was either in the pool in difficulty when her father came back and alerted the lifeguard, in which case no explanation has been provided as to why she was not seen at that time or earlier when getting into difficulty. The obvious explanation, as Mr. Steinberg submitted, is inattention. Alternatively, the relevant events all happened when the lifeguard had left his post notwithstanding that he was the person with responsibility for the safety of not only the Claimant but others who might get into the pool. The proposed defence, that the lifeguard was acting reasonably in effectively abandoning his lifeguard duties at that time, carries no conviction. As the police report says, it was not “very professional for him not to see fit to fully check the pool but, on the other hand, spend time looking in other parts of the building which are not his remit and where it would be hard for the girl to be at risk”.

1. 1. Mr. Chapman’s summary of what might be said in a defence consisted of little more than putting the Claimant to proof. Against the background described above, a defence which simply puts the Claimant to proof is, in the light of the above matters, not a defence which carries any degree of conviction.

1. 1. In reality, it seems to me that the defence largely consists of the 4^th/5^th Defendant blaming others: see paragraphs 23 – 25 of Mr. Hey’s second witness statement set out above. However, in view of the joint liability that exists under Spanish law, it is no answer to the claim for the 4^th/5^th Defendants to say that others were also responsible. It does not absolve them of the fault/negligence of the lifeguard.

1. In all the circumstances, the 5^th Defendant has no defence which has a realistic prospect of success, and the default judgment should remain in place.