Bank of Scotland Plc v Hurst

This is a renewed application for permission to appeal from an order of HHJ Harris QC by which he allowed an appeal against an order of District Judge Matthews and restored a default judgment entered by the claimant bank against the defendant, Mrs Hurst.

The proceedings concerned a claim by the bank for money owed under a loan agreement. The key part of the history is this. The defendant failed to comply with an order requiring the parties to give disclosure by 26 April 2013. This resulted in an unless order that, unless she gave standard disclosure by 5 July 2013 the defence was to be struck out and judgment entered. She failed to comply with the unless order despite several reminders from the claimant’s solicitors. Judgment in default was then entered against her on 18 July 2013 and applications were made thereafter for charging orders.

On 23 September 2013, the day before the hearing of those applications, the defendant applied for the judgment to be set aside. That application was well outside the 14-day time limit specified in CPR rule 3.6. The application was one to which CPR rule 3.9 applied, that is to say that in order to get the judgment set aside the defendant had to satisfy the normal rules relating to relief from sanction. I do not need to recite the terms of rule 3.9 or the leading cases on it, notably Mitchell and Denton.

The district judge referred to Mitchell; his decision pre-dated Denton. He listed six circumstances that led him to grant relief from sanction, but without saying how they were factored in so as to produce the conclusion he reached.

By the time the appeal against the district judge’s decision was heard by Judge Harris, Denton was available. Judge Harris went through the three-stage test in Denton. It was conceded by the defendant’s counsel that the breaches of the order were significant. The judge held that the district judge had failed to give proper consideration to why the default occurred. He found, for his part, that there was no good reason for the breach: the defendant had provided no explanation for why she failed to comply with the unless order or why she failed to apply promptly to set aside the default judgment. As to consideration of all the circumstances of the case, the third stage in Denton, the judge examined the matters relied on by the district judge and considered them to be either irrelevant or of no assistance to the defendant. He came to the clear conclusion that the district judge’s decision fell outside the ambit of a proper exercise of discretion. Exercising his own discretion afresh on the basis of the reasons he had given, the judge concluded that the default judgment should not have been set aside and that the appeal should be allowed accordingly.

The grounds of appeal to this court and the skeleton argument in support of the application for permission to appeal against the judge’s order argue at some length that the judge failed to take into account relevant circumstances or to give sufficient weight to them, and they advance various other criticisms of the judge’s reasoning.

In refusing permission to appeal on the papers, Lewison LJ gave the following reasons:

“(1)

Neither the grounds of appeal nor the skeleton argument advance any important point of principle or practice sufficient to satisfy the second appeal’s test and there no compelling reason for the Court of Appeal to hear the appeal.

(2)

On the contrary, the judge’s decision was plainly right; he went through the three stages mandated by Denton; it was conceded, as was obvious, that the failure to comply was serious, not least because it was a breach of an unless order, and the failure took place in the face of reminders of the importance of compliance.

(3)

At stage two the judge considered the medical evidence and decided that it did [not] support any argument that the defendant’s medical condition contributed to the failure. There was no other explanation; he was entirely right to say that the district judge considered a number of irrelevant factors.

(4)

Having decided stages one and two in the way that he did, stage three almost inevitably followed.

(5)

Since the judge was entitled to substitute his own discretion for that of the district judge, any further appeal is an appeal against the judge’s exercise of discretion. Complaints that he attributed too much or too little weight to particular factors are quite inadequate to raise arguable grounds of appeal.

(6)

Quite apart from anything else, an application to set aside a judgment entered after non-compliance with an unless order must be made within 14 days of the judgment … and this application was itself seriously out of time.”

Those reasons have been addressed in turn by Mr Shiebert, appearing as solicitor advocate for the defendant, both in his written renewal statement and in his oral submissions today. He has emphasised before me how critical this application is for the defendant and her husband, whose home the bank will repossess if the defendant fails on this application; and he relies on this as showing the effect on them of refusal to grant relief against sanction. He submits that the district judge was making a case management decision that fell well within the ambit of his discretion, that there had been a single failure to comply with an unless order, a failure which was explained by the defendant’s total reliance on her husband and his failure in turn to deal properly with matters. Mr Shiebert addressed some of the factors relied on by the district judge, arguing that Judge Harris was wrong to treat those factors as irrelevant or of no help, and submitting further that the judge failed to set the breach in its proper context. He submitted that he delay of two-and-a-half months in applying to set aside the default judgment was not very long in the context of these proceedings or when compared with the delay that has not precluded the grant of relief in some other cases.

Those are but a few of the points emphasised this morning and in the written renewal statement. I have considered all the matters raised. Despite those matters, I am not persuaded that this is a case meeting the criteria for the grant of permission to appeal. I will come back to paragraph 1 of Lewison LJ’s reasons in a moment. As to paragraph 5, the judge was plainly correct, in my view, for the reasons he gave, that the district judge’s decision fell outside the ambit of a reasonable exercise of discretion. The district judge did not address the issues in a properly structured manner and he failed in consequence to factor relevant matters into his decision. It seems to me that the district judge’s decision was not a proper application of the principles laid down in Mitchell, let alone the refinement of those principles, or restatement of those principles, that one sees in Denton – a decision, I acknowledge, that post-dated the district judge’s decision. I am therefore satisfied that Judge Harris was entitled to substitute his own decision for that of the district judge, exercising a fresh discretion.

It follows that the issue on an appeal in this case would be whether the judge’s fresh exercise of discretion was flawed. As to that, I agree with what Lewison LJ says at paragraphs 2 to 4 of his reasons and also at paragraph 6. It seems to me that the judge in this case did adopt the correct approach, going through the three-stage test laid down by Denton. The failure to comply with the unless order was on any view significant, as was conceded, whether or not it can also be labelled “serious”, as Lewison LJ refers to it. The judge was fully entitled to find that the reasons put forward, which related essentially to the defendant’s reliance on her husband and his reliance in turn on his long relationship with the bank and his hope of settling the claim, did not provide a good reason for the non-compliance. The judge gave proper consideration to all the circumstances of the case. Despite Mr Shiebert’s submissions, I see no error of law in the judge’s approach to questions of relevance, specifically the relevance, or lack of relevance, of the circumstances relied on by the district judge. Questions of weight were indisputably for the judge. Moreover, as Lewison LJ observed, the defendant’s lack of promptness in applying to set aside the default judgment was itself a factor properly taken into account as telling against her.

Accordingly, even if this were a first appeal, I do not consider that it would have a real prospect of success and I would feel constrained to refuse the grant of permission to appeal. But it is a second appeal, which must meet the stricter criteria relating to such appeals. In my judgment, it does not involve any important point of principle or practice: the relevant principles have been laid down by Mitchell and Denton. Nor is there any other compelling reason why an appeal should be heard. The defendant and her husband are at risk of losing their home, and that is a point for which one cannot fail to have sympathy; but that, I am afraid, does not provide a compelling reason for an appeal against an order that, for the reasons I have outlined, appears to me to have been properly made.

The renewed application for permission to appeal must therefore be refused.