WHAT CAN A DEFENDANT ARGUE ABOUT DAMAGES WHEN ITS DEFENCE IS STRUCK OUT? NOTHING

Mediatelegal

What is the position of a defendant whose action has been struck out?  This was the question considered by Mr Justice Soole in Michael -v- Phillips [2017] EWHC 1984 (QB). The short answer is the defendant cannot dispute any aspect of the claim for damages.

THE CASE

The claimants brought an action alleging breach of management agreements in relation to the running of a taxi firm. The defendant had failed to preserve documents in accordance with a court order.  As a result the defence was struck out.  (See the earlier post on the case).

THE SUBSEQUENT CMC

At a CMC following the strike out the claimant applied to amend the pleadings. This was opposed by the defendant.  The judge allowed the amendments stating that the defendants could not be in any better position because their defence was struck out.

WHAT ROLE COULD THE DEFENDANT PLAY AT TRIAL?

The judge considered the authorities on the subject. He rejected the idea that the defendant could attempt to dispute damages,

19. In my judgment, there is no good reason to draw a distinction between issues of liability and quantum. The order debars the first and second defendants from defending the claim. A claim involves issues of both liability and quantum. I can see no principled distinction between the two. In some cases the issues of liability may be relatively straightforward whereas the issues of quantum are extremely complicated. It would not make sense if, notwithstanding a debarring order the defendant was nonetheless able to participate in what was really the meat of the claim. Nor can the matter be dealt with by the more limited form of involvement that Mr Beresford proposes. Challenges to the cogency of factual and expert witnesses by crossexamination and submission are a major participation in the trial and would be contrary to what the court has decided should not happen. There would be great difficulties for the trial judge in determining where the boundaries lay between such questions and submissions and putting forward an alternative case.
20. The authorities do not provide support for any such distinction. From the limited available extracts of Sales’s J judgment it is not clear how the distinction arose in that particular case. There is nothing in the Court of Appeal decisions to support a general distinction.
 21. The Apex trial is an example of where a debarring order meant what it said and precluded participation in both liability and quantum. As to Rubin the judge’s remarks, “but they have a right in my view to require the Petitioners to prove their case”, were saying no more than that. Where defendants are debarred from defending, the claimants must still prove their case to the satisfaction of the court. The only exception is in those circumstances where default judgment is permitted. That is not this case.
22. My conclusion is that the first defendant should not be permitted to participate in the trial on either liability or quantum. In the light of the concession by Mr Hornett, I think it right to limit that order to the trial and not to extend it to any subsequent accounts and enquiries. The trial judge can then decide what is the best way forward if he or she decides that further accounts or enquiries are necessary.
23. As to costs, in principle I consider that these are part of the ‘claim’, as exemplified by paragraph 12 of the prayer for relief. However, Mr Hornett made it clear that the claimants were willing to place costs in a different category. On the basis of that sensible and pragmatic concession, I would exclude the issues of costs from the terms of the order.!

THE RESULT

The defendant, understandably, decided not to attend the trial on damages. It is notable that the claimant did not get everything they sought (but did recover substantial damages),

THE POSITION AFTER STRIKING OUT COMPARED TO THE POSITION AFTER A DEFAULT JUDGMENT?

The position is different where the claimant has a default judgment. Here the defendant is not barred from contesting every aspect of the case on damages. Here the case is governed by the decision in  Lunnun -v- Singh [1999] CPLR 587 which was considered in the context of the civil procedure rules by Master Matthews in Merito Financial Services Limited -v- David Yelloly [2016] EWHC  2067 (Ch)

 

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