MITCHELL CRITERIA AND SETTING ASIDE DEFAULT JUDGMENTS

March 27, 2014 · by · in Applications, Civil Procedure, Relief from sanctions

There is a discussion of the Mitchell criteria in the context of setting aside a default judgment in the case of Mole -v- Hunter [2014]  EWHC 658 QB. (Tugendhat J).

THE FACTS

Judgment in default had been entered on a counterclaim in circumstances where the claimant (against whom judgment had been entered) was unaware of the orders made because the court was communicating with the wrong address (despite the claimant having told the court of the change of address).

The judge was considering the application to set judgment aside.

“THE APPLICATION TO SET ASIDE THE JUDGMENT IN DEFAULT

  1. Provision for entry of judgment in default is made in the CPR rr.12.3 and 12.4. They apply to a counterclaimant as they do to a claimant. So far as material they provide as follows:

 

“12.3 (2) Judgment in default of defence may be obtained only … (b) in a counter claim made under rule 20.4 where a defence has not been filed, and … the relevant time limit for doing so has expired…

(3) The Claimant may not obtain a default judgment if

(a) the Defendant has applied (1) to have a Claimant’s statement of case struck out under rule 3.4. and … that application has not been disposed of …

12.4(1) Subject to paragraph (2), the Claimant may obtain a default judgment by filing a request in the relevant practise form where the claim is for (a) a specified amount of money; (b) an amount of money to be decided by the court; … or (d) any combination of these remedies…”

  1. Ms Hunter submits that Ms Mole had been in default in failing to serve a defence within the 14 days (prescribed by CPR r.15.4(1)(a)) of the service of the Counterclaim on 27 November 2012. So r.15.3 gave her a right to enter judgment.

 

  1. In a witness statement dated 18 December 2013 Ms Hunter states that she applied for judgment in default of defence on the following dates: 18 January, 26 February, 12 March, 28 July and 23 August 2013. However the only request for judgment under CPR r.15 that I have seen is the one she issued on 23 August.

 

  1. In my judgment Ms Mole was not in default for failing to serve a defence to a counterclaim for defamation when the County Court had no jurisdiction to entertain such a counterclaim. She could not be in default until the counterclaim had been brought in the right court, namely the High Court. The order for transfer was not until 1 March 2013. It is regrettable that the order for transfer was not made for three months, but I have no information as to why that delay occurred, or as to who, if anyone, was responsible for the delay.

 

  1. It follows that if Ms Hunter did make a request for judgment in default before 1 March 2013 it could not have succeeded. The County Court had no jurisdiction to grant a judgment on a counterclaim in defamation, and there was no claim pending in the High Court. Ms Mole has submitted that the County Court did have jurisdiction, relying on Halsbury’s Laws of England Vol 32 (2012) 5th edition. The editors state that “A libel or slander claim may arise by way of counterclaim within proceedings otherwise within the county court’s jurisdiction. These cases would appear to fall within the general ancillary jurisdiction of the Count Court”, and the footnotes refer to Vol 11 (2009) 5th edn para 58 and the County Courts Act 1984 s.38. I have not heard adversarial argument on this point. And I can find no similar suggestion in Gatley on Libel and Slander 12th edn. The suggestion appears to me to give an impossible interpretation to s.38, and to be contrary to the clear words of s.15(2). An action for libel or slander may be transferred to the County Court pursuant to s.40, but s.38 relates only to remedies. It appears to me to give no “ancillary jurisdiction”. The jurisdictional provision in the Act reads:

 

“s.15(2) A county court shall not, except as in this Act provided, have jurisdiction to hear and determine – … (c) any action for libel or slander.”

  1. As soon as the order for transfer to the High Court had been made Ms Mole wrote her letter of 5 March 2013. But no application notice was issued. If an application notice had been issued, then, by CPR 12.3(3)(a), the time for service of a defence would not have run and she would not have been in default. In the draft judgment of this judgment circulated to the parties I stated that Ms Mole had offered no explanation for not issuing an application notice. Having received the draft she submitted to the court a receipt from the Post Office for a postal order payable to HM Courts and Tribunal Service in the sum of £80 (the amount of the fee) and a Certificate of posting of a letter to the Court, namely her letter dated 5 March. She has received no receipt and no refund of the fee. On 12 March HM Courts and Tribunal Service replied saying that her application had been referred to the Judge and that he had directed that the application be directed to the High Court. So it is not clear why no application notice was issued, but the error appears most likely to lie with the court.

 

  1. If Ms Hunter did make a request for judgment in default on 12 March in the High Court, then there might have been other issues that would have had to be resolved. The court might have had to consider whether the service of the Counterclaim on 17 November 2012 was valid service (notwithstanding that it was in a court which had no jurisdiction to entertain it). In the event it appears that no order was made by the court in respect of any request for judgment in default made on 12 March, and I have not had to determine what the position would have been.

 

  1. After that, on 7 August, any uncertainty as to what the position was following the transfer was resolved. The effect of the order of 7 August 2013 was that service of the Counterclaim was being treated as valid as from that date, and the time for service of the Defence was set at 23 August 2013.

 

  1. It follows in my judgment that Ms Mole was in default in failing to serve a Defence, but not before close of business on 23 August. In her application made on 2 October 2013 to set aside the judgment in default Ms Mole did not refer to CPR 12.3(3)(a), or claim that her application of 5 March had been issued, and I can find no copy of it on the Court file. If she had relied on that point, then it might have provided an additional argument, although in the event she did not need that additional argument.

 

  1. Ms Hunter submits that Ms Mole’s application to set aside the judgment in default pursuant to CPR 39.3(5) is misconceived because that rule applies to trials, and there had been no trial. That may well be correct as a matter of law, but it does not assist Ms Hunter. As is explained in Forcelux Ltd v Binnie [2009] EWCA Civ 854 at para 52, CPR r.3.1(2)(m) (on which Ms Mole also founded her application) provides for the court to have case management powers including to: “take any other step or make any other order for the purpose of managing the case and furthering the overriding objective.”

 

  1. Ms Hunter submits that the factors set out in r.39.3(5) are not relevant under r.3.1(2)(m). CPR r.39.3(5) reads:

 

“(5) Where an application is made under paragraph (2) or (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.”

  1. She submits that the court must now proceed in accordance with CPR rr. 3.8 and 3.9, in the form in which they been since 1 April 2003, namely:

 

“3.8 (1) Where a party has failed to comply with a rule, practice direction or court order, any sanction for failure to comply imposed by the rule, practice direction or court order has effect unless the party in default applies for and obtains relief from the sanction….

3.9 (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 application, 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.”

  1. Ms Hunter relies on the new approach exemplified by cases such as Fred Perry v Brands Plaza Trading [2012] EWCA Civ 224. In giving the judgment of the court, Lewison LJ cited with approval paragraph 6.5 of the Jackson report, which said:

 

“… courts at all levels have become too tolerant of delays and non-compliance with orders. In so doing they have lost sight of the damage which the culture of delay and non-compliance is inflicting on the civil justice system. The balance therefore needs to be redressed.”

  1. The amendments to the CPR include the addition of the reference to “proportionate cost” in the overriding objective, r.1.1, which now reads:

 

“These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.”

  1. In my judgment “all the circumstances of the case” are words that are wide enough to embrace the matters which are listed in r.39.3(5), but in applying r.3.1(2)(m) the court is not limited to those matters. I accept that the court must have regard to the guidance of the Court of Appeal, including the guidance in cases following  Mitchell  v News Group Newspapers Ltd [2013] EWCA Civ 1537 endorsing a “tougher, more robust approach to rule-compliance and relief from sanctions”.

 

  1. Ms Hunter submitted that Ms Mole did know the date fixed for the CMC, because, so she said, Ms Mole had written to her notifying her of the CMC. It is true that Ms Mole had written to Ms Hunter saying there would be a CMC. That is the letter dated 15 July 2013. But that letter does not give a date for the CMC.

 

  1. I accept that the reason why Ms Mole did not serve a Defence, or alternatively, apply to the Master for some other order, before 23 August is that she was not informed that of the date the CMC was to take place, and she was not informed of the order made on that date until 3 September. The reason she did not know is that the Court erroneously wrote to her at an address at a time when she had notified the court of her correct address.

 

  1. Ms Mole learnt of the order of 7 August on 3 September, and of the default judgment entered on 12 September 2013 on 1 October. On 2 October Ms Mole issued the application notice. She could have issued an application notice on 5 September, instead of writing the letter she did write on that date. But she did not know that an application notice was required until she learnt of the default judgment entered on 12 September. The order of 7 August 2013 at para (8) included permission to restore the CMC, and that letter of 5 September was sufficient as an application to restore. So her application notice of 2 October was as prompt as it could have been. And although she was in default, she was not at fault.

 

  1. The fact that an application to set aside is made promptly is not enough. It would not be just to set aside a default judgment if the defendant to a counterclaim had no real prospect of defending the counterclaim.

 

  1. In support of her application to set aside the judgment against her in default of defence Ms Mole stated as follows in the Application Notice:

 

“c) I believe I have a good prospect of success at trial. As my defence to counter claim makes clear I say (and my draft defence to counterclaim shows I have always said) the allegations of defamation against me have no substance. In summary, the first allegation is that my flatmate (not me) protested to the defendant that she had entered the house without proper notice while a prospective tenant was in earshot. That is trivial and cannot amount to defamation. The second allegation concerns a website that (it seems) said the defendant is a bad landlady. I do not deny that the defendant is a bad landlady but I do emphatically deny that the website had anything to do with me. Since it did not, the defendant can have no evidence at all that it did. I have asked more than once for particulars of her allegations, but received no answers.”

  1. Ms Mole’s draft Defence to Counterclaim includes the following:

 

“1…the claimant and Ms Benfield did protest to [Ms Hunter] that she needed their permission to enter without that notice. The Claimant and Ms Benfield did complain to the local council housing department. The complaint was true and justified. The Claimant and Ms Benfield had a proper lawful right to complain to the Council and the Council had an interest in hearing the complaint [I interpose to say this is a plea of a defence of qualified privilege].

…

4. Ms Benfield did challenge the Defendant about her conduct on an occasion when the Defendant was outside the house and, apparently, proposing to enter it. It’s not admitted that the Defendant was “waiting for a client” nor that any third party heard what was said. Ms Benfield did not address any remarks to anybody but the Defendant… Ms Benfield did tell the Claimant and other tenants of the house directly and by email what had happened. They had an interest in knowing and she gave them an honest account of what had happened… [This too is a plea of a defence of qualified privilege].

5. It is admitted that there was a website which made a number of criticisms of the Defendant. It is admitted that in broad terms the website said the Defendant was a bad landlady. The Claimant does not know the particulars of the specific criticisms that were made against the Defendant. This website had nothing at all to do with the Claimant or Ms Benfield. The Claimant and Ms Benfield took no part whatsoever in setting up or contributing to any such website in any way. Neither did the Claimant or Ms Benfield encourage or influence anybody else to do so.

6. The allegations of harassment and defamation are without substance and unsupported without any evidence…”

  1. I accept that Ms Mole has a real prospect of success in defending the claim, and that she had notified Ms Hunter of this by sending to her a draft Defence, which she did by letter sent on 15 July 2013. She also sent a request for Further Information.

 

  1. The draft Defence in respect of the alleged slanders to the Council and to her fellow tenants included defences of qualified privilege. As to the alleged slander to a publishee standing outside the house, Ms Mole’s draft defence pleads that there was no third party heard what was said (para 4). As to the website, she denied that she had any part in the publication (para 5). The defence of qualified privilege is substantially a matter of law, and Ms Mole had a strongly arguable case that a complaint made to the Council, and to her fellow tenants, about the conduct of her landlord was an occasion of qualified privilege. The other two defences are issues of fact on which I can form no view one way or the other on the papers.

 

  1. In addition, and no less important, Ms Mole had, as long previously as 5 March 2013, stated that she would ask the court to strike out the Counterclaim. I consider the strength of these points below.

 

  1. But even if Ms Mole had not raised the points she did raise on 5 March, I would in any event have considered that the overriding objective required that the default judgment be set aside in the circumstances of this case. That is because the Counterclaim is so defective that I would not be able to assess the damages justly.

 

  1. The Counterclaim does not set out the words or meanings complained of, and it does not set out any facts upon which I could properly arrive at a finding that there had been any material publication of the website. Para 43 of the Counterclaim suggests that there might be such evidence from which the court could infer substantial publication, but no more.

 

  1. These defects in the Counterclaim are not made good in the witness statements that Ms Hunter served on 18 December 2013 and 21 February 2014. So Ms Mole did not come to court forewarned of the case which Ms Hunter in fact advanced. It was not until the hearing before me that Ms Hunter produced the print outs from the web she complains of, and explained why she asked the court to infer that Ms Mole was responsible for the publication (the similarity between the complaints made by Ms Mole and the complaints on the website), and that there were probably some prospective tenants who read it (see para 89 below). I could not fairly have embarked on an assessment of damages in these circumstances. Ms Hunter had been directed to serve her evidence in advance, and what she served did not include evidence on these vital aspects of her case.

 

  1. Accordingly I conclude that in all the circumstances of this case dealing with the case justly requires that I grant the application to set aside the judgment in default.

 

  1. In these circumstances I cannot proceed to the assessment of damages, but must make directions for the further prosecution of the action. It is convenient at this stage to consider the merits of the points made by Ms Mole in her letter of 5 March 2013 and the accompanying grounds for her application to strike out the Counterclaim.”
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