Priestley v Dunbar & Co (a firm) [2015]

In Priestley v Dunbar & Co (a firm) [2015] EWHC 987 (Ch) (30 April 2015) the case involved an appeal by the Defendants concerning a decision made by District Judge Giles on the 29th April 2014 where he dismissed their application to set aside a default judgment in an action for professional negligence.  Judgement had been entered in default of a defence.

The District Judge had principally refused to set aside the judgment based on the Defendants lack of promptness in making their application.

The Defendant’s counsel contended that the District Judge made an error in his decision not to set aside judgment because of his emphasis on promptness whereby Claimant’s Counsel contended this was a matter for the District Judge, at his discretion.

The Claimant was a Neuropsychologist practising in England but residing in France and the Defendants were a firm of Accountants who acted for him between 1977 and 2010. In the tax years 2007/2008 and 2008/2009 and 2009/2010 the Defendants did not file the Claimants tax returns on time or reply to letters from his new accountants in 2010, who he had engaged after receiving penalty notices and respond to enquiries from HRMC. The Claimant eventually had to sell a house in France, accepting a very low offer, at 375,000 euros whereas it had originally been valued at 700,000 euros.

CPR 13.3. provides for power to set aside a default judgment and promptness is specifically referred to in (2) where the Court will look at whether the person making the application to set aside the judgment did so promptly.

His Honour Judge Behrens, in considering the decisions made under CPR13.3., likened an application to set aside a default judgment to that of a relief against sanctions, of which CPR3.9(1) is applicable, which falls within the guidance set out in Mitchell v Newsgroup Newspapers Ltd (2014) and Denton and Others v T.H. White Limited.

He expressed sympathy for the District Judge as he had been sitting late and had tried to accommodate the parties by delivering his judgment to them. HHJ Berens considered that it would have been better if he had reserved his judgment and delivered it at another date thus allowing him time to give consideration to the issues that had arisen and which had involved him using his discretion. He agreed with the District Judge that the application had not been made promptly, 11 weeks from the 7th January.

His Honour Judge Behrens believed it was necessary to know how much delay there had been so as to apply the three stage test in Denton. He observed for a breach to be determined as to its seriousness or significance it was important to know how far that breach went.

He believed the District Judge was entitled to consider that the breach was serious and significant since the application should have been made much earlier. His concern with the District Judge’s judgment was that he had not taken into account all the surrounding circumstances of the case especially the relief against sanctions to which CPR 3.9 is applicable.

He considered that the District Judge’s appraisal of the situation in paragraph 20 of his judgment was flawed, he had not considered the effect of the claim in excess of £80,000 possibly up to £300,000 and its effect on a small accountancy firm or, that the proper sanction would have been to grant an order setting aside the judgment on terms.

There had been a delay of some 19th months between the preliminary notice and pre-action protocol letter with another 9 months before service of proceedings which did not point to urgency on behalf of the Claimant.

HHJ Behrens concluded that the District Judge had made an error in exercising his discretion and therefore he was able, in substitution, to exercise his own discretion. He did consider the delay significant and that he had to consider all the surrounding circumstances of the case together with CPR3.9.

After weighing up all the circumstances HHJ Behrens believed that it was his duty to deal with the matters justly. He found that the lack of promptness did not justify the application being dismissed.

He did not consider the waste of costs would be very great as a result of not acting promptly and looking at the case as a whole, where the time gap was 2 year 3 months between notification of the claim to service of the proceedings, he thought it would be unreasonable to refuse to set aside the judgment on those grounds.

He continued that the lack of promptness by the Defendants in bringing the application before the District Judge would make them responsible for the costs but that other considerations should apply to the costs of the appeal. He accordingly allowed the appeal.

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