DEFENDANT UNSUCCESSFUL IN SETTING ASIDE DEFAULT JUDGMENT: NO REASONABLE PROSPECT OF SUCCESS: DELAY WOULD HAVE LED TO APPLICATION BEING REFUSED IN ANY EVENT

In Al Nasser & Al Masri Trading Company WLL Ltd Co v Munir [2022] EWHC 1174 (QB) Master Sullivan refused an application to set aside a default judgment. This case shows the importance of having detailed evidence available if a party wishes judgment to be set aside on the basis that a defence has a reasonable prospect of success.   The application would have failed under the court’s general discretionary powers given the defendant’s delay in pursuing the application and notifying the claimant that he was seeking to set aside the judgment.

THE CASE

The claimant had obtained a default judgment based on a judgment obtained against the defendant in Abu Dhabi.  The default judgment was obtained on 14 September 2020.  On the 29th September 2020 the defendant made an application to set judgment aside.  The applications were not accepted by the court.  None of the applications were served on the claimant.

Nothing further happened until May 2021 when the claimant made an application for charging orders.  This led to the court considering the defendant’s application.

THE ISSUE ON THE MERITS

The Master found that the defendant’s application failed on the merits.  He had not satisfied the court that the defence put forward had a real prospect of success.  The original claim was based on dishonoured cheques. The defendant’s argument was that those cheques was handed over as security during the course of the hire of scaffolding from the claimant, they were never meant to be used.  The evidence in support of this was scanty.

1. 1. The question I have to determine is whether the defendant’s case has a real prospect of success or is fanciful. It seems to me that I should take into account when looking at the test, that the evidence required in order to establish fraud has to be cogent.

1. 1. The defendant has not provided any evidence or any detail of when he says the scaffolding was hired, when the hire ceased, the cost of the hire or when it was paid for and when and by what method did he ask for the cheques to be returned. There is in fact no express assertion that the scaffolding was returned before the cheques were presented, although I am asked to infer that from what is said, and there is no reference to the payment having been made for the hire of scaffolding prior to any requests for the return of the cheques. Without payment for the hire, the claimant’s submission that the defendant’s case has to be that the cheques would never in fact be called on, and that makes no logical sense, must be right.

1. 1. The claim that these were undated cheques given as security against scaffold hire which should have been returned which the claimant knowingly misinformed the court about appears to be a fanciful one put in the context of what is required in order to successfully plead fraud. Whilst it is correct that further evidence would be provided for if I was to set aside judgment, these are matters which would be expected to be within the defendant’s knowledge in order to be able to plead a fraud claim. They do not appear or appear consistently in the numerous witness statements thus far. Some required elements are not referred to at all. Without those details there is no real prospect of the defendant succeeding in the face of signed, dated cheques.

1. 1. On that basis I do not accept that there is a real as opposed to fanciful prospect of success.

1. 1. There was also an argument set out in Mr van Heck’s skeleton argument that the claimant knew the defendant’s residential address at the time of the issue of the claim in Abu Dhabi, and failing to inform the court of that was also fraud. That argument was on instructions. There is no evidence of the address referred to or any witness evidence in support.

THE COURT WOULD NOT EXERCISE ITS DISCRETION TO SET JUDGMENT ASIDE

Further the Master stated that the judgment would not be set aside in any event under the court’s discretion. The initial application may have been made promptly, but nothing was done to ensure that the applications were properly lodged. Further the claimant was not informed that the application had been made for a year.

Discretion

1. 1. Even if I was to have found the fraud or natural justice exceptions applied, the court has to consider whether, in its discretion, the judgment should be set aside in any event. In this case the default judgment was sealed on 18^th September 2020 and whilst the defendant contacted the court promptly in September and early October 2020, the application was not successfully filed. The defendant then did nothing until the charging order applications in October /November 2021.

1. 1. He did not serve a copy of the application on the claimant in September 2020, or until over a year later, or notify the claimant he was making an application.

1. 1. The Defendant’s position is that the claimant did act promptly once he knew about the default judgment by sending his application to the court and paying the court fee. The test requires the defendant to make an application promptly. He sent the application to court 3 times in short succession. He was a litigant in person and there is no reason for him to think it had been rejected. He therefore acted promptly.

1. 1. In the first witness statement of Shahzad Munir dated October 2021, I note that he says he still did not know if his application had been accepted. The last email he exhibits was dated 19^th October 2020. There was no follow up.

1. In exercising my discretion, I do take into account the failure to follow up on the application to ensure it had been issued. I am not confined to considering whether the defendant has sent an application to the court promptly. This was an application where the defendant knew there was some difficulty in the court accepting it. In my judgment, there was an onus on the defendant to ensure both that the application had been issued, and to notify the claimant of the application. The Defendant did neither for a year.