A case of this kind was dealt with recently by the Court of Appeal, on second appeal from a district judge: Akram v Adam [2004] EWCA Civ 1601.  Since this type of application crops up frequently in practice in the County Courts, I devote the whole of this week’s column to it.

Where a defendant who applies to set aside a default judgment can make some kind of a case or some reasonable argument, the court will usually set aside the judgment, and give the defendant his day in court, either under CPR 13.3(1)(a) (‘real prospect of successfully defending the claim’) or (b) (‘some other good reason.’). In Akram v Adam the defendant’s case was very weak, but the district judge set aside the order on the ground that it was perfectly clear that the claim never came to the attention of the defendant, and so had not been properly served. The circuit judge on appeal reversed the decision to set aside the judgment, and on further appeal the Court of Appeal (per Brooke LJ) upheld the circuit judge, and said that the fact the defendant did not know about the proceedings did not, as a matter of principle, prevent the service being good according to the CPR.

In Akram v Adam the claimant, Mr. Akram, had bought and moved into a house where Mr. Adam had enjoyed a protected tenancy of one room. Mr. Akram had spent years trying to get the defendant, Mr Adam, to leave, and had offered him alternative accommodation. Mr Adam, did not in fact know about these particular possession proceedings for his room (he had defended earlier proceedings in the same dispute). The defendant accused the claimant of actively intercepting or suppressing his mail. The claimant (who was of course at the same address as the defendant) insisted that he had in fact pushed all the mail under the defendant’s door as a way of stopping his own nephews and nieces from ripping it up. The district judge did not make a finding either way on the various allegations about what happened to the defendant’s mail. Mr Akram could have made sure Mr Adam knew of any claim by sending it to Mr Adam’s sister (a procedure the court had informally approved), but with this claim he chose not to do that.

As far as one can tell, the claimant knew that Mr Adam was unaware of the proceedings, but went ahead and entered default judgment anyway, then executed it (by changing the locks in the defendant’s absence). In any event, the claimant found out later that Mr Adam had been unaware of the proceedings. Under those circumstances, a sense of fairness might indicate that Mr Akram should have been deprived of his default judgment. However, the Court of Appeal followed the logic their decisions in Cranfield v Bridgegrove Ltd [2003] EWCA Civ 656, [2003] 1 WLR 2441, and ultimately the leading case of Godwin v Swindon Borough Council [2001] EWCA Civ 1478, [2002] 1 WLR 997, on the deemed date of service. The logic of Godwin is, that CPR means exactly what it says about deemed date of service, regardless of whether the defendant has actual notice. It followed that CPR also means exactly what it says when it says that service at the last known address of an individual is good service (provided of course that no solicitor’s address for service had been given). In the absence of a clear finding by the district judge that Mr. Akram was actively suppressing Mr Adam’s mail, it was good enough that the letter had been posted to Mr. Adam’s ‘last known address’ (which happened to be the same as Mr. Akram’s address). It did not matter whether the defendant knew about the proceedings, and it did not seem to matter even if the claimant knew the defendant did not know about proceedings, and choose not to correct the defendant’s ignorance. The default judgment should not have been set aside.

From the point of view of a practical lawyer, the decision is, with respect, very sensible. The court does no one a favour by setting aside a judgment which cannot survive the ‘real prospect of success’ test – to do so will just lead to further costs, perhaps in a summary judgment application. However, many laymen will, like Mr. Adam, think that their human rights must have got lost somewhere along the way, if a claimant can get default judgment knowing full well that the defendant had no knowledge of the proceedings, and then enforce it.

In fact Mr. Adam, who appeared in person, advanced arguments on paper alleging non-compliance with Convention Art 6, but they were not argued because he had not given Mr. Akram’s Counsel notice of them. In the event, Brooke LJ (with whom Jonathan Parker and Keene LJJ agreed) had no difficulty in saying that he saw no breach of Art. 6. The ground for that view was that access to a court is only required, under Art. 6, where there is some real basis for a dispute (so does not arise where the claim is one which the defendant has no real prospect of successfully defending). For this proposition reference is made to James v United Kingdom (1986) 8 ECHR 123. In that case the trustees of the Dukes of Westminster’s estate argued against the right to buy under the Leasehold Reform Act 1967, and one of their subsidiary arguments was that the Act was not compliant with Art. 6 because it gave no mechanism to challenge the right to buy in court. The court said, at para. 81, in words which Brooke LJ quotes in Akram v Adam, that:

"Article 6 para. 1 (art. 6-1) extends only to "contestations" (disputes) over (civil) "rights and obligations" which can be said, at least on arguable grounds, to be recognised under domestic law; it does not in itself guarantee any particular content for (civil) "rights and obligations" in the substantive law of the Contracting States."

So Article 6 is not even engaged if the defendant has no case (i.e. no real prospect of successfully defending the claim). That seems reasonable. On the other hand the intuitive sense of injustice with which the case will leave many lay persons should concern lawyers, and merits closer attention. I suspect that many lay persons will feel the decision is unjust. It is submitted that underlying that sense of injustice will be, in a part, an assumption (however unarticulated, and half-understood) that in seeking to set aside a default judgment the burden of proof is on the applicant. In other words, the lay person might assume that by ‘fixing it’ so that the defendant is technically served without actually knowing it, a crafty claimant can mange to avoid trial, where he has the burden of proof, and instead face only an application to set aside default judgment where (quite apart from the lack of live witnesses) the burden is on the defendant.

The lay-person who suspected that would be right. The burden of proof on an application to set aside a default judgment, under RSC, was on the applicant. For some time the burden of proof for a summary judgment application under CPR was uncertain, and that might have affected the way the court approached an application to set aside default judgment. However, in ED&F Liquid Products Ltd v Patel [2003] EWCA Civ 472, the Court of Appeal, per Potter LJ (with whom Peter Gibson LJ agreed; it was a two-judge tribunal) disposed of the question in the clearest possible language I quote paragraph 9:

"In my view, the only significant difference between the provisions of CPR 24.2 and 13.3(1), is that under the former the overall burden of proof rests upon the claimant to establish that there are grounds for his belief that the respondent has no real prospect of success whereas, under the latter, the burden rests upon the defendant to satisfy the court that there is good reason why a judgment regularly obtained should be set aside. That being so, although generally the burden of proof is in practice of only marginal importance in relation to the assessment of evidence, it seems almost inevitable that, in particular cases, a defendant applying under CPR 13.3(1) may encounter a court less receptive to applying the test in his favour than if he were a defendant advancing a timely ground of resistance to summary judgment under CPR 24.2."