Earl Hodge Respondent/Claimant v Albion Hodge Applicant/Defendant

• Jurisdiction: British Virgin Islands
• Judge: HARIPRASHAD-CHARLES J
• Judgment Date: 21 March 2008
• Judgment citation (vLex): [2008] ECSC J0321-1
• Court: High Court (British Virgin Islands)
• Docket Number: Claim No. BVIHCV2007/0098
• Date: 21 March 2008

[2008] ECSC J0321-1

THE EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

(CIVIL)

Claim No. BVIHCV2007/0098

Between:

Earl Hodge

Respondent/Claimant

and

Albion Hodge

Applicant/Defendant

Appearances:

Mr Malcolm Arthurs of O'Neal Webster for the Applicant/Defendant

Dr Joseph S. Archibald Q.C. and Mr Duane Jn Baptiste of J.S. Archibald & Co. for the Respondent/Claimant

HARIPRASHAD-CHARLES J

1 This is an application by the Defendant to set aside the judgment in default of defence ("the default judgment") obtained by the Claimant on 19 June 2007. The application is made pursuant to Part 13.3 of the Civil Procedure Rules 2000 ("the CPR"). It identifies four (4) grounds namely:

• 1. The Defendant has a real prospect of successfully defending the claim as appears from the evidence in support of this application;

• 2. The Defendant has a good explanation for failing to file a defence in the time presented by the CPR;

• 3. The Defendant has applied to the Court as soon as reasonably practicable after finding out that the judgment has been entered; and

• 4. It is in the interest of the overriding objective of the CPR that judgment be set aside.

2 For all intents and purposes, the grounds are merely a reproduction of the factors identified in CPR 13.1 which the Court ought to consider in determining whether or not to set aside a regularly obtained default judgment.

The background

3 On 1 May 2007, the Claimant instituted these proceedings alleging that the Defendant owed him the sum of $1,916,656.00 being the amount due by the Defendant to the Claimant on account stated between them dated 19 September 2005; interest and costs. The Claim Form and Statement of Claim were personally served on the Defendant on either 16 or 17 May 2007. On 31 May 2007, the Defendant filed an Acknowledgement of Service which indicated his intention to defend the claim. The time limited for filing the defence was either 14 or 15 June 2007.

4 The Defendant failed to file a defence within the time limited for doing so. On 19 June 2007, the Claimant applied for and obtained judgment in the sum of $1,919,165.60 which included legal practitioner's fixed costs on issue. The default judgment was served on the Defendant on 3 July 2007.

5 On or about 9 July 2007, the Defendant retained the law firm of O'Neal Webster. On 16 July 2007, the Defendant applied to set aside the default judgment which was regularly obtained. The application was supported by an affidavit of the Defendant sworn to on the same date.

CPR 13.3

6 CPR 13.3 (1) deals with cases where the court may set aside or vary default judgments. It states:

"If rule 13.2 does not apply, the court may set aside a judgment entered under Part 12 only if the defendant-

• a) applies to the court as soon as reasonably practicable after finding out that judgment had been entered;

• b) gives a good explanation for the failure to file an acknowledgment of service or a defence as the case may be; and

• c) has a real prospect of successfully defending the claim."

7 The present application to set aside is made pursuant to CPR 13.3. The use of the word "may" in CPR 13.3 connotes that the Court has a discretion whether to set aside a default judgment which was regularly entered. This was even the case prior to the advent of the CPR. In Evans v Bartlam, Lord Atkin stated:

"The principle obviously is that unless and until the Court has pronounced a Judgment upon the merits or by consent, it is to have the power to revoke the expression of its coercive power where that has only been obtained by a failure to follow any of the rules of procedure."

8 In the exercise of such discretionary power, the Court has to have regard to all the factors stated in CPR 13.3 (1).

Whether the Defendant acted as soon as reasonably practicable?

9 The Defendant was personally served with the default judgment on 3 July 2007. The Notice of Application to set aside the default judgment was filed on 16 July 2007. In effect, there was a delay of 13 days.

10 Learned Queen's Counsel for the Claimant, Dr Archibald argued that a period of 13 days was far more time than was reasonably practicable to instruct Counsel to apply to set aside the judgment.

11 Mr Arthurs, who appeared as Counsel for the Defendant argued that the Defendant acted with all reasonable promptness in contacting his firm and thereafter, the Defendant had to properly instruct counsel.

12 A requirement that a defendant who seeks to have a judgment set aside must apply as soon as reasonably practicable after becoming aware that default judgment has been entered is in keeping with the overriding objective of the CPR that cases are to be dealt with expeditiously and justly.

13 In Chastenet ets a Teissedre Bordinet Export v Stanley Leonaire trading as LNJ Trading Food Distributors, the Defendant took 4 1/2 years before applying to set aside the default judgment. I held that such inordinate delay could not pass the test of "as soon as reasonably practicable" as required by CPR 13.3 (1) (a). In Louise Martin (as widow and executrix of the Estate of Alexis Martin, deceased) v Antigua Commercial Bank, Thomas J. [as he then was], accepted that no specific time period is given in the rules and stated that reasonableness, therefore, deposes on the facts of the case. He then found that the period of 15 days between service of the judgment and the filing of the application to set aside the judgment was "as soon as reasonably practicable."

14 In my judgment, the delay of 13 days between service of the judgment and the filing of the application to set aside the default judgment was reasonable. The Defendant has therefore satisfied the threshold requirement of CPR13.3 (1) (a).

Whether the Defendant gave a good explanation for his failure to file a defence

15 The Defendant averred that he failed to file a defence in this matter because:

• i) The individual who was assisting him was in the middle of relocating his office;

• ii) That a computer which was being used to prepare drafts of the relevant documents became inoperative;

• iii) During the period when the defence should have been filed, the Defendant was in discussions with one of the Claimant's agents with a view to settling the claim.

16 The Claimant contended that the reasons do not constitute a good explanation for failure to file a defence as there is no explanation as to what part the individual who was assisting the Defendant played in preparing the intended defence and that the defence and counterclaim contains no information of such a complex or obscure nature that it would be unavailable to the Defendant or his agents on account of a malfunctioning computer. I hasten to add that I agree with Dr Archibald QC that the Defendant should have requested a consensual extension of time for filing his defence or applied to the Court for such extension if there was a difficulty in preparing the defence.

17 It was argued by Counsel for the Defendant that despite the clear procedural error on the part of the Defendant, the primary considerations at this time are the administration of justice and the merits of the proposed defence. He argued that the reasons for failing to file the defence are reasonable to grant the application if the court considers that there is real merit in the proposed defence.

18 Even before the CPR, the Old Rules of Court gave an unconditional discretionary power to a Judge to set aside a default judgment. The Courts have laid down rules to guide them in the normal exercise of their discretion and also matters to which the Courts will have regard in exercising their discretion. One of the matters to which the Court should have regard is the reason, if any, for allowing judgment and thereafter applying to set it aside. Lord Russell of Killowen succinctly stated the principle when he said:

"The contention no doubt contains this element of truth, that from the nature of the case no judge could, in exercising the discretion conferred on him by the rule, fail to consider both (a) whether any useful purpose could be served by setting aside the judgment, and obviously no useful purpose would be served if there were no possible defence to the action, and (b) how it came about that the applicant found himself bound by a judgment regularly obtained to which he could have set up some serious defence But to say that these two matters must necessarily enter into the judge's consideration is quite a different thing from asserting that their proof is a condition precedent to the existence or exercise of the discretionary power to set aside a judgment signed in default of appearance."

19 It appears from Evans v Bartlam and the plethora of cases that have been decided under the Old Rules that even though both factors have to be considered, the major consideration is whether there are merits in the defence. Lord Wright in Evans v Bartlam stated at page 489:

"In a case like the present there is a judgment, which, though by default, is a regular judgment, and the applicant must show grounds why the discretion to set it aside should be exercised in his favour. The primary consideration is whether he has merits to which the Court should pay heed; if merits are shown the Court will not prima facie desire to let a judgment pass on which there has been no proper adjudication.

…the Court might also have regard to the applicant's explanation why he neglected to appear after being served, though as a rule his fault (if any) in that respect can, be sufficiently punished by the terms as to costs or otherwise which the Court in its discretion is empowered by the rule to impose."

20 The question is; 'have the Rules change the old position?" In England, it appears not. In McDonald and Another v Thorn plc, a letter before action was sent to the defendant's insurers on 6 October 1998, in respect of a traffic...