England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MAYOR'S AND CITY OF
LONDON COURT
Judge Marr-Johnson
District Judge Wright

		Royal Courts of Justice Strand, London, WC2A 2LL
		16th July 2003

Lord Justice Brooke :

1. This is an appeal by the defendant Robert Driscoll against an order made by Judge Marr-Johnson in the Mayor's and City of London Court on 15th October 2002 whereby he dismissed his appeal against the order of District Judge Wright made on 7^th February 2001 whereby she had refused to set aside the order for possession made against him on 27^th November 1996. This appeal is therefore a second appeal, brought by permission of this court because it raises an important point of practice.
2. In 1991 the defendant had become the owner of a long leasehold interest in premises at 5 Glendown House, Amhurst Road, Hackney after exercising his rights under a statutory right to buy scheme. The claimant council, who were his former landlords, advanced him a mortgage loan of £30,000. Arrears accrued under the mortgage, and eventually the claimants issued proceedings claiming possession of the premises by reason of the mortgage arrears. The court served the claim form on the defendant at 5 Glendown House, but he was no longer living at that address. In 1995 he had let those premises to a tenant, and he was now living in Plumstead. He maintains that he told the claimants about this move, and they are not in a position to dispute this. The claimants were unable to locate the mortgage deed, so that they were unable to rely on any agreed terms as to service of documents which may have appeared on the deed. Indeed Mr Robb, who appeared for Hackney, told us that it was not his clients' practice to include such a provision in their mortgage deeds.
3. In due course Mr Driscoll became aware that proceedings had been started against him, and he attended court on 22^nd July and 15^th August 1996 for procedural hearings in connection with the matter. On the latter occasion the claimants obtained an adjournment because they had lost the charge certificate. They then obtained a replacement certificate, and the court gave the parties notice of a new trial date of 27^th November 1996 pursuant to CCR O13 R3. The court sent this notice to him at 5 Glendown House: it is not clear whether the claimants had told the court of the new address. At all events, he did not attend the hearing on 27^th November, when an order for immediate possession was made in his absence.
4. In due course the claimants evicted the defendant's tenants, regained physical possession of the premises, and sold them at a public auction on 10^th July 1997 for a sum which for all practical purposes cleared off the mortgage debt.
5. The defendant heard that the claimants had recovered possession of the premises some time before Easter 1997, but by this time he was suffering from a severe mental illness. He remained under hospital care for his schizophrenia either as an in-patient or as an out-patient until he was discharged from hospital care whilst on leave on 24^th August 1999.
6. He told the judge that although he had a number of telephone conversations with the claimants in 1999 in an attempt to discover what had happened to his property, he was not able to find a solicitor willing to assist him, and the court could not help him if he was unable to provide a case number. A considerable time then elapsed before he found a case number among his papers. Eventually on 26^th January 2001 he applied for an order setting aside the possession order. Both the district judge and the circuit judge refused his application, being unwilling to exercise discretion in his favour under CPR 39.3(5). There was a gap of nearly two years between these two hearings because an earlier decision by a circuit judge had been set aside by this court, which directed a rehearing.
7. The central issue on this appeal is whether Mr Driscoll should have obtained an order setting aside the possession order as of right because he was not given notice of the hearing date. Heavy reliance is placed in this regard on the decision of this court in White v Weston [1968] 2 QB 647.
8. It is convenient to start the legal analysis of this case by referring to CPR3.10 (which applied to this case in 2001: see the practice direction to CPR Part 51) and CPR39.3. CPR 3.10 provides:

"Where there has been an error of procedure such as a failure to comply with a rule of practice direction –

(a) the error does not invalidate any step taken in the proceedings unless the court so orders; and

(b) the court may make an order to remedy the error."

9. CPR39.3 provides, so far as is relevant, that:

"(1) The court may proceed with a trial in the absence of a party …

(3) Where a party does not attend and the court gives judgment or makes an order against him, the party who failed to attend may apply for the judgment or order to be set aside.

(5) Where an application is made under paragraph … (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 … enter judgment … against him;

(b) had a good reason for not attending the trial; and

(c) had a reasonable prospect of success at the trial."

10. The district judge accepted that the second criterion was satisfied, but she found against Mr Driscoll on the first and third. In particular she said that even if he had attended on 27^th November she did not think that the court would have made any other order than the order it did in fact make. Criterion (c) was therefore not satisfied.
11. After the judge found that he, too, should apply the criterion set out in CPR 39.3(5), he came to exactly the same conclusion on each point as the district judge. In particular he said:

"Having regard to his previous poor payment record I have no doubt that even if the defendant had attended the hearing in November 1996 an outright order for possession of the property would still have been made, and I note that this is also the conclusion of District Judge Wright who is very experienced in these matters. I am unable to conclude therefore that the defendant would have any reasonable prospect of success if the matter were now to be retried."

12. If this was all there was to the case, there would have been no question of a second appeal to this court. The reason why we are hearing this appeal is that it is necessary to clear up once and for all the question whether the principles set out by this court in White v Weston [1968] 2 QB 647 apply not only to a case where a defendant had no notice of the proceedings at all, but also to a case where he knew about the proceedings and had attended court twice in connection with them but received no notice of the date appointed for the trial.
13. In White v Weston the county court directed service of the ordinary summons by post to the address where the defendant was believed to be living. In fact he had moved house six months earlier, and the summons was returned to the court some time later. In the meantime a judge had conducted the trial and awarded damages against him. The defendant heard about the judgment by chance, and the question arose whether he was entitled to have the judgment set aside as a matter of entitlement or as a matter of discretion.
14. Russell LJ found on the facts that the defendant had not been served with the proceedings. He said at p 659A-B and p 659E:

"I do not myself attach importance to the question whether it is proper to label a judgment obtained in circumstances such as this 'irregular' or 'a nullity'. The defect is in my judgment so fundamental as to entitle the defendant as of right ex debito justitiae to have the judgment set aside…

In my view the county court judge misdirected himself in considering that he had any power to visit, even contingently, on the defendant the plaintiff's costs of a hearing that, as against this defendant, should never have taken place at all, and to which he was a stranger."

15. Sachs LJ, for his part, reminded himself at the outset of his judgment of the well-known dictum of Denning LJ in R v London County Quarter Sessions Appeals Committee ex p Rossi [1956] 1 QB 682, 691:

"[I]t is a fundamental principle of our law that no one is to be found guilty or made liable by an order of any tribunal unless he has been given fair notice of the proceedings so as to enable him to appear and defend them."

16. Like Russell LJ, he approached the case on the basis that the plaintiff had obtained judgment despite the fact that there had been no service of process on the defendant, and he agreed that in those circumstances the defendant was quite plainly entitled to have the judgment set aside ex debito justitiae (see p 662D-E). At p 662C-D he distinguished the different situation where a summons was sent by post to the wrong address but it reached the defendant 14 clear days before the return day.
17. In White v Weston the court did not have to consider whether the result would have been different if the defendant had waited a very long time between hearing about the judgment and taking effective steps to have it set aside: in other words whether the court could exercise its discretion not to grant him relief because he had delayed so long that there could no longer be as fair a trial as before because witnesses had died or disappeared, documents had been destroyed, or memories had faded.
18. Modern examples of the application of the rule in White v Weston are to be seen in the decision of this court in Willowgreen Ltd v Smithers [1994] 2 All ER 533 and Al-Tobasishi v Aung (CAT 21^st February 1994).
19. The second of these cases is particularly instructive in the present context. The plaintiff lived in Senegal, and his English solicitors effectively came off the record on 16^th July 1991. On 24^th June 1991 the defendant's solicitors served on them a summons seeking an "unless" order following a failure to supply copies of documents identified on their client's list. The "unless" order was made on 26^th July 1991 and judgment was duly entered on the counterclaim when the plaintiff failed to comply with it within the period set out in the order or at all. The plaintiff was unaware of what had happened until February 1992 when he acted promptly to have the judgment set aside.
20. Stuart Smith LJ, with whom Kennedy LJ agreed, held on the facts that the order dated 26^th July 1991 had never been served on the plaintiff. After quoting from White v Weston and Willowgreen Ltd v Smithers he said (at p 18 of the transcript):

"Whether it is entirely right to say that there is no discretion in the matter or whether, as it seems to me, the Court of Appeal in White v Weston said that there may be a discretion but it can only be exercised one way, is I think immaterial. If it is an exercise of discretion, where there has been no service at all, the discretion can only be exercised in one way as appears to have been the view of the court in the Goldean Mariner [1990] 2 Lloyd's Rep 215."

21. In my judgment the answer in that case was obvious, and it could be reached without reference to White v Weston. If an order is made which contains a sanction if it is not complied with, and the other party has no knowledge of that order and was never served with it, then of course the sanction cannot take effect in the event of non-compliance with the order.
22. During the course of the hearing we were reminded of the wording of RSC O2 rules 1 and 2 and CCR O37 R2, which were in a certain sense the lineal predecessors of CPR 37.3. The former abolished the old distinction between a step in the proceedings which was a nullity and a step which was an irregularity. Any failure to comply with the requirement of the rules "whether in respect of time, place, manner, form or content or in any other respect" was to be treated as an irregularity (RSC O2 R1(1)). The court had power to set aside the irregularity "on such terms as to costs or otherwise as it thinks just" (RSC O2 R1(2)), provided that the relevant application was made "within a reasonable time" (RSC O2 R2(1)). The comparable county court rule which related to "setting aside judgment given in party's absence" was very much simpler:

"CCR O37 R2(1). Any judgment or order obtained against a party in his absence at the hearing may be set aside by the court on application by that party on notice."

A long note in the old County Court Practice headed "Discretion to set aside" set out the principles to be derived from the relevant caselaw.

23. Mr Gumbiti-Zimuto submitted that the judge had been wrong to make a distinction between a case in which a party had no knowledge of the proceedings at all and a case in which he had no knowledge of the date fixed for a hearing. He said that exactly the same principle was in issue in each case. This was the principle articulated by Denning LJ in ex p Rossi (see para 15 above). He accepted that the court would be entitled to dismiss an application to set aside a judgment in these circumstances if a defendant had delayed so long after hearing about it that he could be said to have affirmed it (although he did not accept that the application of this principle should penalise his present client). But he argued strenuously that if the application did not fall foul of that principle, and if there was a good reason (as there was here) why the defendant did not attend the hearing, then the court was not entitled to go on to consider whether he had a reasonable prospect of success at the trial. He was entitled to have his "day in court" even if he had no reasonable prospect of success.
24. Mr Gumbiti-Zimuto did not submit that CPR 39.3(5)(c) was ultra vires in the present context or adduce any arguments under the Human Rights Act 1998 to try and persuade us to give that sub-rule a distinctive interpretation. He simply argued that the principle enunciated by this court in White v Weston was so powerful that in a case where the court had proceeded with a trial in the absence of a party because that party had not been notified of the hearing date, then a judge should not regard himself as bound to take into account all the criteria set out in CPR 39.3(5). Provided that the applicant had acted promptly and he had a good reason for not attending the trial, then he should be entitled to have the judgment set aside as of right.
25. For my part I would prefer to express no views about the correct legal analysis when a "defendant" avers that he had no notice of the proceedings against him at all, so that he might be regarded as a "stranger" to them (see the quotation from Russell LJ's judgment in White v Weston in para 14 above). The resolution of that issue will have to await another day. I consider, however, that the judge was correct to make the distinction which Mr Gumbiti-Zimuto challenges. Once a defendant knows about the proceedings and participates in them, the court has the necessary jurisdiction to make an order affecting him. This judgment is therefore concerned only with the latter situation.
26. We asked Mr Gumbiti-Zimuto whether he was submitting that even if the failure to give notice was the fault of the court and not of the claimant, and the claimant had attended court with his lawyers and all his witnesses and proved his case, the court was nevertheless obliged to set aside the judgment as a matter of the defendant's entitlement even if it considered the defendant's prospects of success to be only "fanciful", so that the claimant would be put to the expense of proving his case all over again. He said "yes" unequivocally. When we asked him who should pay the costs thrown away on the first occasion when the error had been made by the court, we did not receive a very clear answer. It is not easy to see why the taxpayer should pay this bill when the defendant by definition has no reasonable prospect of success at the re-hearing that has to be arranged.
27. In my judgment the judge and the district judge were right to apply CPR 39.3(5) to the solution of this problem. The criteria set out in sub-rules (a) and (b) merely reproduce the effect of the former practice. The criterion set out in (c) is new, but I do not consider that it offends any fundamental principle of justice or any principle of Strasbourg jurisprudence. The rule gives the absent party the opportunity of explaining why he had a reasonable prospect of success, and if he fails to persuade a lower court judge, he can seek permission to appeal against that ruling if it appears to be perverse. It also gives the party in whose favour the judgment was given the chance of not having to prove his case all over again, with all the attendant expense that this will involve (which will very often be irrecoverable in practice), if a court is satisfied that there is in truth no reasonable prospect that the judgment would be reversed.
28. For these reasons I would dismiss this appeal.

Mr Justice Holman:

29. I agree.

Lord Justice Kennedy:

30. I also agree.

Order; Appeal dismissed

(Order does not form part of the approved judgment)