Law REPORT: 6 may 1998; Judgment in default of defence would be set aside

Anson (T/A Party Planners) v Trump; Court of Appeal (Lord Woolf, Master of the Rolls, Lord Justice Otton and Lord Justice Robert Walker) 7 April 1998

THE COURT of Appeal allowed the appeal of the defendant against an order dismissing her summons to set aside a default judgment which had been entered against her.

The plaintiff was in the business of organising parties for the rich and famous. The defendant, a prominent international businesswoman and socialite, had approached the plaintiff, who had agreed to organise a party which involved hiring an exclusive hotel and restaurant over a weekend. The defendant had paid a deposit of pounds 10,000. The plaintiff had subsequently rendered her bill for the balance of pounds 26,497.32, making a total of about pounds 36,500.

The defendant asserted that the agreement had been that the party would cost a little under pounds 25,000 or, alternatively, that the total bill was excessive.

Michael Roberts (McNulty & Co, Hants) for the defendant; Andrew Burns (Radcliffe Crossman Block) for the plaintiff.

Lord Justice Otton said that the appeal was concerned primarily with procedural matters. In May 1996 the plaintiff had been allowed to amend her statement of claim by substituting a new statement of claim. At the same time it had been ordered that the defence should be struck out, and that a new defence should be served within 21 days of service of the amended statement of claim.

The amended statement of claim had been duly served in June 1996, but no defence had been served within the 21-day time limit. The plaintiff's solicitors had warned the defendant's solicitors that they intended to enter judgment for the original sum claimed on 22 November, pursuant to Order 19 rule 2 of the Rules of the Supreme Court. They had done so shortly after the opening of the court offices. On the same morning, shortly before the judgment had been signed, the defendant's solicitors had faxed a defence to the plaintiff's solicitors.

The first issue on the appeal was whether a default judgment could be entered under Order 19 rule 2 where a defence had been served outside the 21-day time limit but prior to the entry of judgment.

The judge had correctly interpreted the rule to mean that once a time limit for service of a defence had expired, a judgment thereafter signed by the plaintiff was a regular judgment, and that a defence served after expiry but before judgment, although not a nullity, had been irregularly served. That reading of the rule would cause no hardship to defendants, since it would be open to them to apply for leave to serve late or to apply to have judgment set aside if a plaintiff had known full well that there was a defence, albeit an irregular one.

The second issue concerned the way in which pleadings faxed to the other side were to be treated. Order 65 rule 5 provided for service of documents by fax in accordance with paragraph (2B), ie where it was effected by transmission to the business address of a solicitor. The judge had taken the view that in order to make the rule work, there must be implied into it a reasonable time between the actual arrival of the fax in the fax machine, and a communication to someone in the office who knew about the matter in question.

There was, however, no scope within the rules to import a gloss of reasonableness or reasonable lapse of time. "Transmission" meant the transmission process from the moment that the document was despatched to a time when the complete document had been received in to the recipient's fax equipment.

The third issue concerned the merits of the defence. The court had decided that it should consider afresh the exercise of the discretion to set aside the judgment, and had concluded that the defendant should be given the opportunity to defend the claim as to the outstanding balance.