Tanir v Tanir

On 18^th September 2012 the Istanbul Fourth Court of First Instance gave judgment for Mr Osman Tanir in an action for the recovery of a loan €115,000 it was alleged was made by Mr Tanir to his son Erol. The Judgment was for the principal sum of €115,000 together with TL (Turkish Lira) 79,998.60 for “collection refusal compensation” and 11,879.79TL for reimbursement of court fees.

Mr Tanir Senior (who for convenience was called by his first name, “Osman”, during the course of the hearing before me) commenced proceedings in England for enforcement of that Judgment. A claim form was issued on 15^th December 2014. In the absence of any Acknowledgement of Service, Judgment in Default was entered on 20^th January 2015. The Defendant, Erol Tanir (who has been referred to as “Erol”) issued an application to set aside the default judgment on the 17^th February 2015. On the 11^th June 2015, following exchange of witness statements and Turkish law expert reports, the hearing of the application to set aside the default judgment came on before Master Leslie.

Master Leslie gave an ex tempore judgment that same day dismissing the application to set aside the judgment. He continued interim charging orders that had been issued and ordered the Defendant to pay the Claimant’s costs.

Erol Tanir gave notice of his intention to appeal Master Leslie’s order on the 2^nd July 2015. Four days later, Edis J made an order staying the enforcement of the judgment pending the hearing of this appeal and requiring Counsel to prepare a note setting out how the issues relating to service of the proceedings were determined at the hearing before the Master.

At the hearing before me, Erol Tanir was represented by Mr Louis Weston and Osman Tanir by Mr Robert Avis. I am grateful to both of them for their clear and helpful written and oral submissions. By the time this appeal came on for hearing, Erol’s arguments had become somewhat refined from how they were first advanced. A number of untenable arguments were abandoned.

Erol’s primary contention was that the claim form had never been served on him and that accordingly the judgment was irregular and ought to have been set aside under CPR 13.2. His secondary submission, if that argument did not succeed, was that the Master should have set aside the Judgment under CPR 13.3 on the basis that he had a real prospect of successfully defending the claim. In support of the latter contention Mr Weston advanced three arguments; first he said that the Turkish judgment had been obtained by fraud; second he said that the award of collection refusal compensation amounted to a penalty which it was contrary to public policy to permit the Claimant to enforce. Third, he argued that he should have been permitted to prosecute his counter-claim in respect of 57,250TL, which he had been awarded by the Turkish courts in separate proceedings in relation to legal expenses incurred by him.

Mr Avis for Osman Tanir contended in reply that the Master was entitled to conclude that this was a regular judgment and was right to reject the argument that there was a real prospect of the Defendant resisting the claim on any of the other grounds. I deal with the grounds of appeal in the same order as Counsel, but first I set out the relevant rules of court and the relevant parts of Master Leslie’ decision.

CPR 6.18 provides;

“6.18

(1) Where

(a)

the court serves the claim form by post; and

(b)

the claim form is returned to the court

the court will send notification to the claimant that the claim form has been returned.

(2)

The claim form will be deemed to be served unless the address for the defendant on the claim form is not the relevant address for the purposes of rules 6.7 to 6.10”

The time for acknowledging service is prescribed by Rule 10.3:

“10.3(1) The general rule is that the period for filing an acknowledgment of service is –

(a)

Where the Defendant is served with a claim form which states that particulars of claim are to follow, 14 days after service of the particulars of claim and

(b)

In any other case, 14 days of service of the claim form.”

CPR 12.3 provides (as material):

“12.3(1) The Claimant may obtain judgment in default of an acknowledgment of service only if –

(a)

The Defendant has not filed an acknowledgement of service or defence to the claim (or any part of the claim); and

(b)

The relevant time for doing so has expired.”

CPR 13 provides:

“2.

The Court must set aside a judgment entered under Part 12 if judgment was wrongly entered because –

(a)

In the case of a judgment in default of an acknowledgement of service, any of the conditions in Rule 12.3(1) and 12.3(3) was not satisfied.

3.

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

(b)

It appears to the court that thee is some other good reason why (i) the judgment should be set aside or (ii) the defendant should be allowed to defend the claim.”

A note of the judgment of Master Leslie was prepared by Counsel after the hearing and approved by the Master on 9^th July 2015. It is relevant to Erol’s alternative argument to the effect that he has real prospect of successfully defending the claim and I consider it when addressing that issue.

Following the order of Edis J of 6^th July 2015 Counsel who had appeared before the Master prepared a Supplementary Note setting out what had occurred at the hearing relevant to the issue of service of the claim form. That Note included the following:

“Master Leslie agreed that a form N205A was prima facie sufficient evidence of service for the purposes of entering default judgment.

Master Leslie observed that the claim form was endorsed “served by the Court”. It was not in dispute that the correct address for the Respondent was shown on the claim form. Master Leslie requested that the court file be brought up.

Upon examining the file Master Leslie noted that there was not a note on the file as to how the claim form had been served.

Master Leslie asked the court staff to make further inquires. The court staff returned with a print out from a court database; a complete copy of the screenshots (or computer print-outs) is attached to this note. The print out did not indicate the date or address of service. Moreover, it did not indicate the service had been effected by the Court. In particular it declares that, by an entry dated 17^th December 2014, “service method amended”.

Master Leslie confirmed that the computer record he had been provided with was entirely unsatisfactory, as it failed to confirm the date on which service took place together with any relevant details. Moreover, there should have been a document on the court file giving a date of service. The court staff were directed to draw this issue to the attention of Edward Boswell and that there was a need for something to appear on the court file as one did not know the date when service was completed, the address sent to (which was assumed to be the address on the claim form). Master Leslie confirmed that the documents had not been returned. Noting that (in accordance with CPR Rule 6.18 “notification of outcome of postal service by the Court”) therefore the database indicated the service had been effected by the Court, Master Leslie decided that CPR Rule 13.2 was not engaged and that he would proceed to hear the Appellant’s application under CPR Rule 13.3.”

As noted in the Note, there was produced to the Master a copy of the Notice of Issue, form N205A. That was issued by the Court to the Claimant’s solicitors, Brian Harris & Co. It read as follows:

“Your claim was issued on 15^th December 2014. The Court sent it to the Defendant by first class post on and it will be deemed to be served on The Defendant has until to reply.”

As will be apparent, Court staff had inserted on the N205A form the date on which the claim was issued but not the date on which it was posted, nor the date on which it was deemed to be served, nor the date by which the Defendant was to be required to reply.

The claim form itself, which had been prepared by Osman’s solicitors, was sealed by court staff and a Claim number entered on it. It had been date stamped to indicate that the claim form was issued on 15 December 2014. That is consistent with the indication set out in the notice of issue. The claim form also contains two endorsements. The first reads “served by the Court”; the second reads “Assigned to Master Leslie”. The indication that the form was served by the Court is consistent with CPR r6.4 which sets out the circumstances in which the court will serve the claim form.

On 13^th January 2015 HM Courts and Tribunal Service wrote to Brian Harris & Co. solicitor for Osman, referring to the case of Tanir v Tanir. The letter reads “Your judgment dated 8 January 2015 has been returned to you for the following reason: You must file a Certificate of Service”.

As noted above, during the course of the hearing before him, Master Leslie called for and examined the court file. That file included a screen print which sets out the “Event Form” in relation to this case. The Event Form records (in reverse order) the following events:

It is impossible precisely to correlate those entries on the Event Form with the documents to which I have referred. However, the entry for the 16^th December 2014 referring to the Notice of Issue is presumably a record made on the 16^th December of the fact that the previous day form N205A, the Notice of Issue, was drafted ready for transmission to the solicitors. Neither the Master nor Counsel were able to explain to what the reference to “Service Method Amended” on the 17^th December refers. In might reasonably be thought that the reference in the Event Form to “Let Returning Papers” of 13^th January 2015 is a reference to the letter from HMCTS to Brian Harris & Co. of the 13^th January returning the judgment.

Quite what the “judgment” referred to in the letter of 13^th January and the Event Form entry of the same date is, is not apparent to me; the Judgment in Default in this case was not issued until 26^th January 2015.

Against that background it seems to me that the Master was entirely justified in observing that “the computer record he had been provided with was entirely unsatisfactory, as it failed to confirm the date on which service took place to go with any relevant details”. Master Leslie referred to CPR 6.18. As he observed, “the claim form will be deemed to be served unless the address for the Defendant on the claim form is not the relevant address…” In my view, the Master was entitled to find that there was prima facie evidence of service in the fact that the court sent the Notice of Issue to Osman.

The address on this claim form was the relevant address. In my judgment the premise for the operation of the deeming provision in 6.18(2), which is set out above, is that referred to in 6.18(1), namely where the Court serves the claim form by post. That certainly seems to me the natural reading of the Rule and is consistent with the commentary in the notes at 6.18.1; “Presumably it is intended that that paragraph (paragraph 2) takes effect in the circumstances referred to paragraph (1)”. If that is right it must be established that the Court has in fact served the claim form by post, or at least that the surrounding facts do not give grounds for doubting that that has occurred.

In my judgment, it is far from certain on this occasion that the Court did serve the claim form by post on this occasion. Had it done so it can reasonably be assumed that the Notice of Issue form, form N205A, would have been properly completed so as to indicate the date on which the Court sent the claim form to the Defendant, the date on which it was deemed to be served and the date by which the Defendant had to reply to it. All of that information was omitted from the form. It seems to me unlikely in the extreme that each of those entries would have been omitted if the form had indeed been posted.

There is furthermore no extraneous evidence to support a conclusion that the claim form was posted to the Defendant. He certainly denies ever receiving it. It is notable that when he did receive notification of the claim in February, Erol responded quickly and properly; there is nothing to suggest he made any response at all during January 2015. In those circumstances, I regret to say that I see no basis upon which the Master could properly have concluded that this claim form was ever sent to the Defendant by the Court.

That it may be legitimate for a Court hearing an application to set aside a Judgment entered into Default of Acknowledgement of Service, or a Court hearing an appeal from a refusal to set aside such a Judgment, emerges from the Court of Appeal’s decision in Patel v Smeaton [2000] unreported, a copy of which has been made available to me by Counsel. In that case proceedings were issued by a Landlord’s solicitor who wrote to the County Court enclosing a Possession Summons in triplicate and asking for one sealed copy to be returned to them. The Landlord attended the hearing but the Tenant did not. The County Court Judge made an order for possession. The Tenant’s case was that the first he had heard of the proceedings was when he received the possession order. He then applied for the order to be set aside. The matter came before His Honour Judge Krikler. His judgment read

“The Tenant asked to have the judgment set aside on the basis that he did not receive notice of proceedings in this matter. I am not satisfied with this as it is assumed that if service of proceedings is the Court’s job then they will have served the relevant documents to the parties involved.”

The Court of Appeal called for the court file. It was discovered that the court file contained the summons in triplicate, there was no endorsement on the top copy indicating how and when the summons had been served. There was no computer record that the summons was ever served.

Hale LJ (as she then was) concluded:

“It is of course the case that, if there is evidence something has been posted, then it is for the addressee to show that it has not been received. But where, as here, there is no evidence that the Court did in fact serve the summons and each of the indications that one would have expected had they done so is absent, then there can be no presumption – and no evidence indeed – that it was served. I for my part, simply cannot accept that there is a presumption that, if service of proceedings is the Court’s job, then it will have been done. There has to be at least some record to indicate that that has indeed been done.”

In those circumstances the appeal was allowed and the possession order set aside.

The position seems to me similar in the present case. There is nothing to indicate that the Court had done as it should have done and posted the claim form to the Defendant.

Given the wording of Rule 13.2, it might be thought that that would be enough to dispose of this appeal. However Mr Avis advances a further argument. Mr Avis contends that despite the wording of Rule 13.2 – “the Court must set aside a judgment… if… wrongly entered”, a claimant is not entitled, as a matter of law, to have it set aside. He points out that Osman’s claim is for enforcement of a foreign judgment at common law and that is typically brought by way of summary judgment. He says that Osman was unable to apply for summary judgment because of the failure of Erol to acknowledge service. He says that if the Judgment is set aside under Rule 13.2 Osman will have to apply for summary judgment as soon as service is regularised.

Mr Avis contends that that outcome is inconsistent with the overriding objective, set out in CPR Rule 1.1, to deal with cases justly and at proportionate cost. Mr Avis has referred me to the Court of Appeal decision in Nelson v Clearsprings (Management) Limited [2007] 1 WLR 962. In that case the Claimants filed a County Court possession claim against the Defendant company. The claim form gave notice of the date of the hearing but misstated the Defendant’s address. The claim form and particulars of claim were approved for postal service by the Court and deemed served. The Defendant failed to appear at the hearing and a possession order was granted in its absence.

Relying on CPR Rule 39.3(5), the Defendant applied to set aside the Judgment on the ground that it was unaware of the proceedings. The District Judge rejected the contention that the defendant was entitled to have the Judgment set aside as of right. When the case reached the Court of Appeal, it was common ground that the judgment in question was not a default judgment under CPR Part 12 but one obtained following a hearing under CPR Part 55, so that the set aside provisions of CPR Part 13 did not apply.

The ratio of the Court of Appeal’s decision was that Rule 39.3 contemplated a trial in the absence of a party who had been served, or in respect of whom service had been dispensed with. It did not apply to an application to set aside an irregular judgment. Accordingly the Judge was right to hold that 39.3(5) did not apply. Sir Anthony Clarke MR gave the judgment of the court. At paragraph 42 he said that having held that 39.3(5) did not apply the appeal must be dismissed. However he went on:

“It does not, however, follow that under the CPR the defendant is entitled to have the judgment set aside as a right, ex debito justitiae, or indeed that, if there is a discretion it can be exercised in only one way. It was pressed upon us that such an extreme approach is inconsistent with the overriding objective of dealing with cases justly and that, on an application to set aside a judgment (albeit irregularly obtained), a claimant might be able to demonstrate that there will be no point in setting aside the judgment and requiring the claimant to issue and serve new proceedings…

44.

The question is whether the CPR permits such an approach. In our judgment, there are procedural ways in which to achieve that result. It was suggested in argument that there are a number of provisions of the CPR which, in combination, could be deployed to achieve it. They are CPR rr 6.9, 3.1(2)(m), 3.1(7) and 3.10.”

The Master of the Rolls then set out those three rules and discussed each. He continued at paragraph 50:

“That is not to say that on the application to set aside a judgment in a case of this kind the just order will not almost always be to set aside a judgment. In a case where the proceedings have not been served on the defendant and service has not been dispensed with before the full judgment, a court could only properly refuse to set aside a judgment where there is no prejudice to the defendant… As we see it, that will ordinarily involve the claimant persuading the court that there is no prejudice to the defendant in dispensing with service and that the defendant is not otherwise prejudiced. We do not at present see how that will be possible in a case where the judgment includes a money judgment of an aggregate sum inclusive of interest and costs… Nor do we see how it will be possible where the judgment ordered the defendant to pay the costs… However each case depends upon its own facts.”

On the facts of the case before them, the Court of Appeal dismissed the appeal on the ground that the Judge was correct to hold that Rule 39.3(5) did not apply. The Master of the Rolls ended his Judgment as follows:

“We hope that the Rules Committee may introduce a new rule to provide expressly for those cases where the judgment has been entered even though the defendant has never been served with the claim form at all. Until a new rule is introduced we believe it may be helpful if we summarise the general effect of this judgment. (1) If the defendant can show that he has not been served (or is not deemed to have been served) with the claim form at all then he would normally be entitled to an order setting the judgment aside and to his costs in making the application. (2) If, when the claimant is served with an application to set aside such a judgment, he believes that he can show the defendant has no real prospect of successfully defending the claim, then he may apply to the court for orders dispensing with service of the claim form, permission (under CPR R 24.4(1) to apply forthwith for summary judgment, and for summary judgment on his claim. (3) If such an application and cross application are made the court should make such order as it considers just. (4) If the claimant can show the defendant has been guilty of inexcusable delay since learning that the judgment has been entered against him, the court would be entitled to make no order on the defendant’s application for that reason. The judgment will then stand (subject to any direction made by the court whether in relation to statutory interest accruing due on the judgment or otherwise).”

Mr Avis invites me to adopt such an approach here. I decline to do so. The Rules Committee has not yet introduced any new rule so that Rule 13.2 remains in mandatory terms: “the court must set aside a judgment entered under Part 12 if judgment was wrongly entered…” Furthermore, the Claimant here has not made an application to the Court for orders dispensing with service of the claim form or for permission to apply forthwith for summary judgment or for summary judgment on his claim. All that he has done is referred to the possibility of making such claims in his skeleton arguments. In fact, the argument now advanced was touched on only in passing in paragraph 13 of the skeleton argument before the Master and, according to the note of the hearing approved by the Master not referred to at all orally.

In my judgment it would be entirely inappropriate to permit the Respondent in circumstances such as these to dispense with the steps contemplated by the Court of Appeal in Nelson in order to fashion a mechanism to get round the apparently mandatory words of Rule 13.2.

Furthermore, I note that the Default Judgment includes an order that the Defendant pay the Claimant his costs, a circumstance referred to by the Master of the Rolls in Nelson as being one where it would not be possible for the sort of approach advocated by Mr Avis to be adopted. Finally, I am far from persuaded that to take the course urged upon me by Mr Avis would not cause the Defendant, Erol, unjustified prejudice; the procedural protections available for a defendant faced with a summary judgment application are there for good reason and should not lightly be set aside.

In those circumstances, I grant permission to appeal on the Rule 13(2) grounds and I allow the appeal.

I also heard arguments on the position that would obtain if I had held that the judgment was regular so that it could only be set aside, in accordance with Rule 13.3, if the Defendant had real prospects of successfully defending the claim or there was some other good reason why the judgment should be set aside or varied or the Defendant allowed to defend the claim.

Given the conclusion I have reached in respect of Rule 13.2, this point is now academic. However, out of courtesy to the arguments I heard on the issue, I will set out, briefly, the conclusions I would have reached.

In my judgment the Master’s approach and reasoning, as set out in the note of the judgment approved on 9^th July 2015, was correct and I would not have allowed the appeal on this alternative basis.

Mr Weston, for Erol Tanir, advances three grounds on which he says he would have a substantial defence. He says that the Master “far too readily dismissed” the allegation of fraud. The fraud is said to lie in alleged interference with witnesses in the Turkish proceedings. Mr Weston points out that the debt owed by his client to Osman Tanir, which is the foundation of these proceedings, was based on an alleged oral transaction in 2006. He says that his client denies that any such loan agreement was ever entered and relies on evidence of fact from Susan Tanir, his mother, Dolores Tanir, his wife and his own testimony.

It is apparent that there was a stark conflict of factual evidence between those witnesses and the witnesses called on behalf of Osman Tanir. However this was at the heart of the matter heard by the Turkish Courts and, in my judgment, it takes much more than a conflict of factual evidence of that sort to justify allegations of fraud. As Master Leslie observed it cannot be said that the fact that the Turkish Courts rejected the evidence called by Erol “was indicative of fraud or a judgment obtained by fraud. At the Court of First Instance the evidence was taken into account and it worked in Erol’s favour, but it did not work the second time around… I do not see that the Defendant has any real prospects of… establishing that there was fraud”.

Mr Weston makes reference to the decision of Eady J in the case of Berezovsky v Russian Television and Radio Broadcasting Company [2009] EWHC 1733 (QB). He says that this case is comparable to Berezovsky and provides “some other good reason” within the meaning of that expression in CPR 13.3(1)(b) when read with the allegations of fraud. In my judgment Berezovsky was a very different case and I see no possible basis upon which it could be said that this case is comparable.

Next Mr Weston says that the “collection refusal compensation” element of the Turkish Judgment constituted a penalty which it would be contrary to public policy to enforce. On that issue I would accept the argument of Mr Avis that collection refusal compensation appears “functionally identical” to the French Law concept of “resistance abusive” discussed by the Court of Appeal in SA General Textiles v Sun & Sand Limited [1978] 1 QB 279 (and in particular in the conclusions of Lord Denning MR at page 299H-300B). I see no grounds to disturb the Master’s decision in that regard.

Finally, Mr Weston suggested that he has a potentially sound counter-claim in regard to attorney’s fees in other litigation between the parties. He points out that there is a stark conflict on this issue between the Turkish Law experts called by the two parties. For my part, I see no grounds for taking a different approach to that of the Master on that issue: “Expert evidence on Erol’s side is entirely unsatisfactory. Osman’s expert evidence is clear and refers to the relevant statutory authority cited. The debt created is payable directly to the attorney, not as an indemnity as here in England and Wales. It is not due to the individual, but to the lawyer, as primarily liable for the fees. It is a claim that can only be made by the attorney herself and not by the defendant”. That seems to me a conclusion the Master was entitled to reach on the material before him.

In those circumstances I would refuse permission to appeal on the Rule 13(3) ground.

Had this been a case where judgment had been regular, I would have refused leave. As it is, I have found the judgment was irregular and the appeal must be allowed.