Gentry v Miller & Anor

This appeal raises the question of how the court should approach the grant of relief from sanctions in a case where the defaulting party has delayed in applying for relief but is able to point to evidence that enables it to allege that the claim is a fraudulent one. The claimant and appellant, Mr Stuart Gentry, contends that the full rigours of the tests in Mitchell v. News Group Newspapers Ltd [2013] EWCA Civ 1537, [2014] 1 WLR 795 (“Mitchell”), as explained in Denton v. TH White Ltd [2014] EWCA Civ 1298, [2014] 1 WLR 3926 (“Denton”), should be applied so as to refuse to set aside a default judgment, whilst the 2^nd defendant and respondent insurance company, UK Insurance Limited (the “insurer”) maintains that the district judge and the Recorder on appeal were right to set aside the default judgment notwithstanding the delay in making the application.

The question that we have to determine is necessarily somewhat fact-intensive, so I shall start by summarising as briefly as possible the chronological events that have given rise to the appeal.

On 17^th March 2013, the appellant claimed that he was involved in a night-time road accident with the 1^st defendant, Mr Lee Miller (“Mr Miller”), in circumstances in which it was possible for the appellant to allege that Mr Miller had caused the accident, and that he (the appellant) had sustained substantial losses including personal injuries, the write-off of his Range Rover car and recovery, storage and credit hire charges.

The appellant quickly submitted a claims notification form through the Ministry of Justice portal utilising the then current Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents, which was then available for claims valued by the claimant at under £10,000. Equally quickly, on 2^nd April 2013, the insurer admitted liability and paid the appellant’s stage 1 costs, but the insurer’s claims department, operating under the trade name “Privilege Insurance Claims”, did not follow up that admission with a substantive settlement offer. On 8^th April 2013, the appellant’s solicitors sent the insurer a copy of its engineer’s report asking for a cheque for the pre-accident value of the appellant’s car, said to be £16,000. The letter asked the insurer to note that “[o]ur client is hiring a replacement vehicle under a credit hire facility and will continue to do so until receipt of your cheque”. The appellant’s solicitors chased the insurer’s response in no fewer than 5 letters dated 17^th April, 2^nd May, 17^th May, 3^rd and 5^th June 2013 asking on each occasion for £16,000 immediately in respect of the vehicle, and reiterating the warning about continuing hire charges. They followed up with a telephone call to the insurer on 28^th May 2013, the response to which was that the insurer was not taking calls that day and was only dealing with their policyholders. On 14^th June 2013, the appellant’s solicitors wrote again to the insurer saying “[w]e can only assume that this is a complex matter and advise that our file is now being transferred to our pre-litigation department to bring proceedings”. The appellant sent the insurer notice of intention to issue proceedings on 19^th June 2013. On 2^nd July 2013, the insurer wrote to the appellant’s solicitors asking why they were issuing proceedings “as we are still awaiting the Personal Injury claim from yourselves”. The response was to send the insurer a medical report on 15^th July 2013, repeating the previous warnings and asking for an interim payment by return. The proceedings against Mr Miller alone were issued on 3^rd July 2013 and served by post on him on 3^rd July 2013. The appellant entered a judgment in default of acknowledgement of service against Mr Miller on 8^th August 2013. It will be observed that throughout this period, the insurer neither instructed solicitors nor took any steps to protect its position, despite the fact that it had admitted liability on behalf of Mr Miller some months before. Moreover, the insurer was on notice that hire charges were escalating at a rate that it would have been in a good position to estimate. Despite what the insurer later claimed, it cannot have been in any doubt, had it considered the matter, that the claim had ceased to be a low value claim under £10,000, because of the high value of the appellant’s car and the accumulating hire charges. Moreover, whilst the insurer contests that it received all these communications from the appellant’s solicitors, it has produced no evidence to substantiate that contention.

Later, in August 2013, the insurer made a voluntary interim payment directly to the appellant in the sum of £14,000. It made a CPR Part 36 offer of £1,870 by letter dated 22^nd August 2013 – no doubt in respect of the personal injury claim. On the appellant’s application for a further interim payment, DJ Henthorn ordered a further sum of £2,000 on 26^th September 2013, which was duly paid by the insurer together with the costs that had also been awarded by cheques dated 15^th October 2013.

The matter then came before Deputy DJ Benson at a disposal hearing on 17^th October 2013 at which he awarded the appellant damages in the sum of £75,089 against Mr Miller together with costs summarily assessed at £12,945. This large sum by way of damages was made up mostly of hire and other charges. Notice of that hearing had been sent by the appellant’s solicitors to Mr Miller, but not to the insurer, although the appellant’s solicitor claims to have sent the insurer a costs schedule on 19^th September 2013 and a hearing bundle (which it expressly denies receiving) on 11^th October 2013.

After the 17^th October 2013 hearing (which neither Mr Miller nor the insurer had attended), the appellant’s solicitors wrote to the insurer on 25^th October 2013 notifying it of the award of damages and costs, but not enclosing copies of any orders. On receipt of that notification, the insurers instructed solicitors, Keoghs LLP (“Keoghs”), who, on 13^th November 2013, intimated that they would apply to set aside the judgment, and asked the appellant’s solicitors for the claim form, the orders that had been made and other documents, but (despite chasing by email on 20^th November 2013) were not provided with them. On 25^th November 2013, Keoghs, acting for Mr Miller, issued an application under CPR Part 13.3(1)(a) to set aside the judgment “entered on 26/09/13”, and seeking permission to serve and file a defence within 14 days. A witness statement of Mr Gary Herring of Keoghs was served with the application making it clear that the insurer was aware that the appellant had “obtained a judgment in the sum of £74,034”, but giving the date of the interim payment order, namely 26^th September 2013. Mr Herring complained that he had not been provided with the orders that he had sought, but said that he was making the statement “in support of my application to set aside the judgment pursuant to CPR 13.3”, which rule he then set out, thus making it clear that he was applying to set aside a default judgment entered under CPR Part 12. At that stage no fraud was alleged, but it was suggested that Mr Miller had not been correctly served with the proceedings and that the insurer could defend the quantum of the hire charges.

On 7^th February 2014, Ms Jessica Morgan of the appellant’s solicitors made a lengthy statement responding to the 25^th November 2013 application, and exhibiting a copy of the default judgment, but not the 17^th October 2013 order. On 10^th February 2014, Keoghs issued a further application seeking (i) that they should cease to act for Mr Miller pursuant to CPR Part 42.3(1), (ii) that the insurer be joined as 2^nd defendant pursuant to CPR Part 19.2(2)(a), and (iii) that Mr Miller’s application to set aside judgment be adjourned. Mr Herring made a second statement in support of that application, for the first time expressing concerns that the appellant and Mr Miller were well known to one another before the accident and that the claim was fraudulent.

On 11^th February 2014, Deputy DJ Brown dismissed the application to set aside the judgment because Mr Miller was not there to pursue it, but made the other orders sought at (i) and (ii) in paragraph 8 above. He stayed enforcement of the judgment dated 17^th October 2013 pending a further application to set it aside until 4^th March 2014. On 26^th February 2014, the insurer duly applied to set aside the default judgment dated 8^th August 2013 and the damages judgment dated 17^th October 2014 and for other relief.

On 17^th March 2014, DJ Henthorn set aside both judgments against Mr Miller. On 4^th February 2015, Mr Recorder Gregory (now HH Judge Gregory) dismissed the appellant’s appeal. On 15^th May 2015, Lewison LJ granted the appellant permission to bring a second appeal.

The district judge set out the history of the litigation and said that the insurer now contended that the claim was fraudulent and that the appellant and Mr Miller knew each other before the accident and had taken part in running races together. The insurer had served a detailed defence, and the appellant had filed a statement in response. The district judge referred to the decisions of Mitchell and Durrant v. Chief Constable of Avon and Somerset Constabulary [2014] EWCA Civ 14 and other recent decisions “on the need to comply with the rules” and the need to give reasons for relief being sought. He also referred to the “potentially conflicting views” expressed in Hussain v. Sarkar & another [2010] EWCA Civ 301 and other cases to the effect that, where there is a real suspicion that the claim is fraudulent, the court should not use failure to comply with the rules as a reason for not permitting a trial. He contrasted the effect of delay under CPR Part 13.3 with its effect under CPR Part 39.3 saying that it was not fatal under the former rule where it would be under the latter. He directed himself to consider the application to set aside the default judgment under CPR Part 13.3 first as, if that was set aside, the money judgment would follow automatically.

The district judge then concluded that “claims of alleged fraud are the one type of claim which should now be exempt from the strictures of the current CPR rules and the views of the Court of Appeal in Mitchell and other recent cases”. He said that there were faults on the insurer’s side which he described as (i) the ignoring of correspondence up to the disposal hearing, and (ii) the absence of a real explanation as to why it took until the latter part of 2013 or early 2014 for the alleged fraud to be investigated, since by 25^th November 2013 the insurer was considering refusing an indemnity. He then balanced the windfall to the appellant if the judgment was not set aside and the claim was fraudulent, against the delay in getting paid if the claim was genuine, and decided that the interests of justice required the judgment to be set aside, the defence having reasonable prospects of success.

The Recorder set out the chronology and the arguments that each side had advanced. On the facts, he found that Mr Miller was “not cooperating with the [respondent insurer] in the way one normally would expect”, so that there were reasonable grounds for suspecting that the appellant and Mr Miller were colluding in a fraud, and Mr Miller and the insurer could not be treated as having an identity of interest. He concluded that both applications were, in context, made promptly by the insurer once it had the relevant information available. Moreover, he decided that the insurer had shown that it had a good reason for not attending the disposal hearing and had a reasonable prospect of success at trial, so that all three requirements of CPR Part 39.3(5) were satisfied. In the circumstances, the District Judge had not applied the three-stage test in Denton because that case had not been reported at the time of his decision, and had not expressed himself felicitously, but had been entitled to take into account the prima facie evidence of fraud in reaching a conclusion that was within the generous ambit of his discretion.

CPR Part 3.9 provides as follows:-

“(1)

On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the applications, including the need –

(a)

for litigation to be conducted efficiently and at proportionate cost; and

(b)

to enforce compliance with rules, Practice Directions and Orders …”

CPR Part 13.3 provides as follows:-

“(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

CPR Part 39.3 provides as follows:-

“(3)

Where a party does not attend and the court gives judgment or makes an order against him, the party who failed to attend may apply for the judgment or order to be set aside. …

(5)

Where an application is made under paragraph … (3) by a party who failed to attend the trial, the court may grant the application only if the applicant –

(a)

acted promptly when he found out that the court had exercised its power to strike out or to enter judgment or make an order against him;

(b)

had a good reason for not attending the trial; and

(c)

has a reasonable prospect of success at the trial”.

CPR Part 40.9 provides that “[a] person who is not a party but who is directly affected by a judgment or order may apply to have the judgment or order set aside or varied”.

The appellant points to the district judge’s finding that the insurer’s applications were not made promptly, and contends that those findings were wrongly overturned by the Recorder. The appellant then submits that the district judge was wrong in law to hold that the fraud defence provided an exception to the principles to be extracted from Mitchell and Denton. This latter point is, I should say, not contested by the insurer. The appellant then submits that the Recorder was wrong to suggest that the applications were made “promptly in context” and then not to apply his mind properly to the Denton criteria. He afforded greater weight to the need for a trial of the alleged fraud and not enough weight to the importance of enforcing compliance with rules, practice directions and Orders. Finally, the appellant relies on the possibility of the insurer bringing a separate fraud action against the appellant, which means that there was no imperative to set aside either the default judgment or the assessment of damages (see the tests at paragraph 106 in the judgment of Aikens LJ in RBS v. Highland Financial Partners & others [2013] EWCA Civ 328).

The insurer accepts that both the applications under CPR Parts 13.3(1)(a) and 39.3(3) are applications for relief from sanctions under CPR Part 3.9. Mr Nicholas Hinchliffe QC, counsel for the insurer, points out that there were two applications which ought to be treated separately. The question of promptness should be judged not from the date of the judgment or order, but from the date when the person applying to set aside first had knowledge of it. That is made expressly clear by the terms of CPR Part 39.3(a) which enjoins the court only to grant the application if the applicant “acted promptly when he found out that the court had exercised its power to … enter judgment or make an order against him”. In relation to CPR Part 13.3(2) which does not include such an express reference, Mr Hinchcliffe relies on the Court of Appeal’s recent decision in Blakemores LDP v. Scott [2015] EWCA Civ 999, where I said at paragraph 59 that a defendant had a reasonable excuse for the delay up to the date upon which he became aware of the proceedings.

In relation to the application of the Denton 3-stage process, the insurer accepts that the breach was significant, but submits that, in considering why the default occurred, the court should conclude that the insurer had a reasonable excuse for its conduct, because it is reasonably arguable that the appellant was colluding with Mr Miller to keep it in the dark. In considering all the circumstances of the case and factors (a) and (b) from CPR Part 3.9 (the need for litigation to be conducted efficiently and at proportionate cost, and to enforce compliance with rules, Practice Directions and Orders), the alleged fraud and its merits fall to be considered.

As regards the disposal hearing, the respondent also accepts that it has to show that it was not aware of the date, but it contends that the evidence in this regard is clear. Once it was aware of the substantial judgment, it informed the appellant of its intention to set aside and acted promptly to investigate. The Recorder applied the correct principles.

It was not disputed by either side that the district judge had been wrong to regard the allegations of fraud as providing an exemption from either the rules or the tests adumbrated in Mitchell and Denton. I agree. Accordingly, the Recorder ought to have exercised his discretion afresh on the correct principles. He did not, however, do so, as he made clear in the final paragraph of his judgment when he said that he was satisfied that the district judge had made a decision that was within “the generous ambit of his discretion”. In these circumstances, it seems to me that this court must consider the matter again and exercise its own discretion as to whether or not to set aside each of the default judgment and the order of 17^th October 2013.

It is useful to start by enunciating the applicable principles. Both sides accepted that it was now established that the tests in Denton were to be applied to applications under CPR Part 13.3 (see paragraphs 39-40 of the judgment of Christopher Clarke LJ in Regione Piemonte v. Dexia Crediop Spa [2014] EWCA Civ 1298, with whom Jackson and Lewison LJJ agreed). It seems to me equally clear that the same tests are relevant to an application to set aside a judgment or order under CPR Part 39.3.

The first questions that arise, however, in dealing with an application to set aside a judgment under CPR Part 13.3 are the express requirements of that rule, namely whether the defendant has a real prospect of successfully defending the claim or whether there is some other reason why the judgment should be set aside, taking into account whether the person seeking to set aside the judgment made an application to do so promptly. Since the application is one for relief from sanctions, the Denton tests then come into play. The first test as to whether there was a serious or significant breach applies, not to the delay after the judgment was entered, but to the default in serving an acknowledgement that gave rise to the sanction of a default judgment in the first place. The second and third tests then follow, but the question of promptness in making the application arises both in considering the requirements of CPR Part 13.3(2) and in considering all the circumstances under the third Denton stage.

I do not think that any different analysis applies under CPR Part 39.3. The court must first consider the three mandatory requirements of CPR Part 39.3(5), before considering the question of whether relief from sanctions is appropriate applying the Denton tests. Again, the sanction from which relief is sought is the order granted when the applicant failed to attend the trial, not the delay in applying to set aside the resulting judgment. The promptness of the application is a pre-condition under CPR Part 39.3(5)(a) and is considered as part of all the circumstances under the third Denton test.

The next question that arises is the appropriate approach to a case where an insurer wishes to set aside a judgment because it has ascertained that there is a viable allegation that the claim was brought fraudulently. The competing considerations here are the finality of litigation set against the desirability of allowing the allegation of fraud to be tried out. In the context of an application after trial to adduce new evidence, this was considered by the Court of Appeal in Owens v. Noble [2010] EWCA Civ 224, [2010] 1 WLR 1489. There, the court determined that the true principle was that “where fresh evidence is adduced in the Court of Appeal tending to show that the judge at first instance was deliberately misled, the court will only allow the appeal and order a retrial where the fraud is either admitted or the evidence of it is incontrovertible. In any other case, the issue of fraud must be determined before the judgment of the court below can be set aside” (see paragraph 27 of Smith LJ, paragraph 50 of Elias LJ, and paragraph 72 of Sedley LJ).

An application to set aside a default judgment is not entirely analogous to an application to adduce new evidence of fraud after a trial, because CPR Part 13.3(1)(a) expressly sets the level of proof necessary by providing that the defendant must show a “real prospect of successfully defending the claim” rather than that the evidence is incontrovertible. But nonetheless, it is axiomatic that there must be finality to litigation and the rules of court must be obeyed, so a default judgment cannot be set aside as a matter of course just because an arguable fraud is alleged, however long after that judgment the application is made. At some point, the court must leave the applicant to seek to vindicate its rights by bringing a fresh action based on the fraud as envisaged by the decision in RBS supra. The question of precisely when that point arises will depend on all the circumstances of the particular case, and can be resolved by the application of the CPR and the rules that I have already summarised.

Like the district judge, I think we should start with the application to set aside the default judgment. The first question is whether the insurer has shown that it has a real prospect of successfully defending the claim. That was quite rightly not disputed by Mr Andrew Hogan, counsel for the appellant. It is to be noted, however, that the insurer adduced no evidence that the claim was fraudulent until 10^th February 2014. It seems only to have started investigating the matter after Keoghs were instructed on 12^th November 2013. The period for such an investigation may not, in itself, be unreasonable (two months including the Christmas period), but there has been no explanation whatsoever as to why the insurer took so long either to instruct solicitors or to commence the investigation. The starting point nonetheless is that the insurer has satisfied Part 13.3(1). I must turn then to consider the promptness of the application under CPR Part 13.3(2).

The original application on 25^th November 2013 was made on Mr Miller’s behalf, but that application was not unequivocally an application to set aside either the default judgment or the order of 17^th October 2013. It referred mistakenly to the interim payment order, rather than the default judgment. In my view, however, it is reasonable to treat the application as one to set aside the default judgment, since Mr Herring made clear that was what he thought he was doing by referring to CPR Part 13.3 in his first statement. Moreover, paragraph 2 of the application itself sought permission to serve a defence, which made no sense if Mr Herring was applying to set aside an order for an interim payment. In these circumstances, the promptness of the application should, I think, be considered up to the time of the application of 25^th November 2013, and not up to the date of the second application of 26^th February 2014. The fact that Mr Herring could perhaps have obtained the orders from the court or could have worked out more of what had happened from his own file, should not be held against the insurer, when it made perfectly clear to the appellant by the letter of 13^th November 2013 and in its application and evidence of 25^th November 2013 at the latest that it intended to apply to set aside the default judgment.

The question then arises as to whether the insurer is to be regarded as having acted promptly in making the application of 25^th November 2013. I do not think it matters for these purposes that the insurer was at that stage applying on behalf of Mr Miller, nor that that application was later, in effect, replaced with the application of 26^th February 2014 made in the insurer’s own name.

In my judgment, the insurer did not make its application promptly. It delayed inexcusably. And as a matter of fact the insurer has made no attempt to justify its delays up to 25^th November 2013 save to say that it did not receive some of the documentation from the appellant’s solicitors. It has failed to provide any evidence of the procedures that it adopts in dealing with its post or give any reason why the numerous letters sent to it that I have described above might have failed to reach its file. Indeed, in my judgment, the suggestion that the insurer did not know the risks it was running or what, in broad terms, was going on, is falsified by its own actions.

The insurer admitted liability on 2^nd April 2013. From then on, it knew that it was at risk of proceedings, a judgment in default or on an admission and an assessment of damages if it did not settle or defend the claim. But it made no real effort to do so. It did not instruct solicitors to consider whether fraud should be alleged either before it admitted liability or for 7 months afterwards. It paid the interim payment awarded against it, showing that by that time it was fully aware that proceedings had been issued. Yet, it still did not appoint solicitors to protect its position. The insurer’s argument that it thought the claim was a small one that was impliedly not worth investigating, is falsified by the fact that it was repeatedly warned that hire charges were escalating. It was in the best position to know what it costs to hire a replacement Range Rover for months on end; yet it repeatedly ignored the requests to pay for a replacement vehicle to be purchased in respect of a claim it had long since admitted. It thereby allowed the claim rapidly to grow.

The default judgment was entered on 8^th August 2013 and it is true that a copy of it was not immediately served on the insurer as, prudently, it should have been. The first question is, therefore, when the insurer either actually received the default judgment in question, or had or could with reasonable diligence have obtained a sufficient knowledge of it to enable it to apply to the court to set it aside. As both counsel accepted, a person cannot be criticised for failing to make an effective application to set aside before that stage is reached.

Despite not being provided with a copy of the default judgment, the insurer was kept informed about a number of other steps that were being taken. On 2^nd July 2013, the insurer wrote asking why proceedings were being issued, but still did nothing to instruct solicitors on behalf of its insured. On 15^th July 2013, the insurer was asked for, I think, the 7^th time to pay the value of the car, was warned for the 7^th time that hire charges were mounting up, and was asked for “an interim payment by return”. After the default judgment, on 22^nd August 2013, the insurer made a CPR Part 36 offer, which seems to confirm that it realised proceedings were on foot. At that stage, it could have inquired at court what orders had been made, but did not do so. On 19^th and 23^rd September 2013, the insurer was sent costs schedules “ahead of the upcoming application hearing”. It still did nothing; it did not even enquire what the “upcoming hearing” was about. In my judgment, by that time, at the very latest, the insurer could with reasonable diligence have obtained a sufficient knowledge of the default judgment to have enabled it to apply to the court to set it aside. The court cannot ignore that insurers are professional litigants, who can properly be held responsible for any blatant disregard of their own commercial interests. This insurer had known since April 2013 that it was at risk of proceedings being commenced and being served on its insured, yet it did nothing to ensure its position was protected.

On this analysis, the relevant period of delay is, at the least, from 19^th September (almost a month after the insurer made its CPR Part 36 offer) to 25^th November 2013, a period of more than 2 months. The insured cannot, in the context of the history I have described, be regarded as having made its application to set aside the default judgment promptly. CPR Part 13.3(2) enjoins the court to have regard to that lack of promptness in exercising its discretion as to whether or not to set aside the judgment.

At this point, the analysis continues by reference to the Denton tests. It was common ground that the default that allowed the default judgment to be entered in the first place – in failing to file an acknowledgement of service – was serious or significant, although it needs to be borne in mind that that was not a default of the insurer, which was not served with the proceedings. In these circumstances, there was some reasonable excuse or explanation for the failure, albeit not a complete one. The insurer could and should have protected itself when it knew proceedings were being issued by appointing solicitors to accept service on behalf of Mr Miller.

Finally, the court has to consider “all the circumstances of the case, so as to enable it to deal justly with the applications including” factors (a) and (b), which are to be accorded particular weight (see paragraphs 31-38 in Denton). Factor (a) points to the need for litigation to be conducted efficiently and at proportionate cost. Factor (b) refers to the need to enforce compliance with rules and orders. Here, insurers are in a particularly good position to conduct litigation efficiently and proportionately and to comply with rules and orders. It cannot avail an insurer in this position to say it was not a party to the claim at that stage. It was directly affected by it and knew that it had to protect its interests from the moment liability was admitted. It was able at any stage to conduct Mr Miller’s defence.

In my judgment, therefore, the insurer’s application to set aside the default judgment ought to have been refused.

I can deal with this application more briefly. The insurer has first to show that it satisfies the 3 conditions in CPR Part 39.3(5). There is an anomaly in the conditions, because they apply to “a party who failed to attend the trial” and the insurer was not such a party. But in a case of this kind, it seems to me that the insurer cannot be regarded as being in a better position than its insured. I understand that it says that its insured was working against its interests, but the fact remains that it was in a position to protect its own interests and failed to do so. If the insured failed to protect the insurer’s interests, that is a matter between insurer and insured. Here, the insurer is seeking the indulgence of the court in applying to set aside the judgment of 17^th October 2013. It needs to show that it can satisfy CPR Part 39.3(5).

It seems to me that the insurer as applicant did not act promptly when it found out that the court had exercised its power to enter judgment or make an order against Mr Miller, by which it was directly affected. On 25^th October 2013, the insurer was told that sums were outstanding in respect of damages. Its response was to ask for the orders. It could have sought the orders from the court. Instead, it delayed until 26^th February 2014 before it made any application to set aside that order. That is a delay of 4 months on top of its previous delays and failures. In those circumstances, even if the insurer could show a good reason for not attending court and a reasonable prospect of success (which it probably could), it could not satisfy the first condition which makes it clear that the application may only be granted if the applicant has acted promptly when it found out about the order. It did not do so in this case.

In my judgment, therefore, the second application fails at that stage. It would anyway, I think, have failed when the third stage of the Denton test came to be considered, for similar reasons to those I have given in relation to the default judgment. This is a case where the insurer will have to pursue what remedies it can by way of a new fraud action.

I should not leave this aspect of the case without commenting on what may seem a harsh decision. In my judgment, Mitchell and Denton represented a turning point in the need for litigation to be undertaken efficiently and at proportionate cost, and for the rules and orders of the court to be obeyed. Professional litigants are particularly qualified to respect this change and must do so. Allegations of fraud may in some cases excuse an insurer from taking steps to protect itself, but here this insurer missed every opportunity to do so. It admitted liability before satisfying itself that the claim was genuine, perhaps because it mistakenly thought the claim was a small one. That does not excuse the months of delay that then followed. The insurer must in these circumstances face the consequences of its own actions.

I would allow the appeal and dismiss the insurer’s application of 26^th February 2013.

I agree.

I also agree.