ON APPEAL FROM THE HIGH COURT
Mr Justice Haddon-Cave
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE RYDER
SIR JOHN CHADWICK
| SOPHIE DE FERRANTI
VALENS GOLDBERG LIMITED
|- and -
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
The Appellants did not appear and were not represented
Hearing date: 8 March 2013
Crown Copyright ©
Sir John Chadwick:
The claims in these proceedings
"Thank you for your email.
Unfortunately I would be unable to include the broader search under our current engagement terms as it would mean re-focussing my team who are also involved in another boutique retained mandate which is producing significant revenue.
What I am able to do however is to exclusively engage my own consulting limited company, Valens Goldberg Limited, to conduct a specific research map and candidate shortlist to produce 10 candidates to fulfil your 3 week timeframe. This would include up to 5 target banks to be identified by you as the client.
I am very happy to discuss a fee on this and would front the assignment myself as MD. I would also be able to structure a very competitive upfront fee terms and drop the final engagement fee hire to 20% flat fee of first year base compensation.
Given the urgency, and to initiate the assignment by end of this week (19th), I would be happy to negotiate an upfront fee in the region of £30k for 5 banks, and given that we have already produced a benchmark presentation on the level and depth of detail that we can achieve.
I do believe this will bring to light the talent that UBS is seeking and also provide you with significant intelligence as to compensation and AuM.
Do let's please discuss as soon as possible and I can earmark resources to focus wholeheartedly on UBS."
That e-mail was sent by Ms de Ferranti as "Managing Director, Head of Private Wealth Management, Execuzen Limited". It is alleged by the claimant that, by an e-mail reply of the same date, UBS engaged Ms de Ferranti and/or Valens Goldberg on terms subsequently negotiated between the parties; and that, accordingly, UBS did not engage Execuzen to carry out the project to which Ms de Ferranti's e-mail had referred.
The procedural history
"The claimant seeks default judgment. All I have before me is an application notice. CPR 12.4(2) provides that a claimant seeking a remedy other than money or delivery of goods must proceed under CPR 23. The claimant seeks an order for the delivery of documents containing confidential information. It must therefore proceed under CPR 23. Generally speaking that requires an application notice which, at the least, explains why the order is being sought. There is no explanation here except that the claim remains unsatisfied. Moreover, there must be a hearing unless the court considers that a hearing is unnecessary: CPR 23.8(c). Given that there is no explanation I do not consider that a hearing can be dispensed with."
A copy of that order was sent by the Queen's Bench Listing Office to the claimant's solicitors on 29 October 2010. Also sent with the order was the application notice itself, with a request that it be returned to the court with a further hearing fee, a time estimate and dates to avoid when listing. The copy of the application notice which is in our bundle suggests that it was received back by the Listing Office on 11 November 2010. It was then endorsed with a note that the matter would be listed for hearing on 14 December 2010.
"2. . . . Now, the position is that the case was listed to be called on either Wednesday, Thursday or Friday of this week (which in terms is 23, 24 or 25 February 2011) and on 21 February a letter was produced by the defendant, Ms de Ferranti, and it gives an address in Brussels. I am told by Mr Brown, counsel for the claimant, that this firm does, in fact, have an address in London. It is an address which has been used for communication and, indeed, service of proceedings and there are at least one or two people employed by the second defendant who apparently do work from that office or from those premises. What she says in her letter is this:
'I would like to confirm that I, the First Defendant, will be acting in person in this case for financial reasons. The Defendants respectfully request the Court's consent to an adjournment of the forthcoming Quantum Trial listed for the week commencing 21 February 2011. As the First Defendant, I am currently residing in Belgium and it has only very recently come to light that a backdated bundle of documents in the above case have been served at the registered office of the Second Defendant's registered company address Orbis Wharf, Bridges Court Road, London SW11 3GW. There are only two employees of ValensGoldberg Ltd (sic), both of whom are not in the main residing full time in the United Kingdom. The First and Second Defendant have therefore not had the opportunity to serve an Acknowledgement of Service or indeed respond to the Claimant's Particulars of Claim. Further, the Defendants wish to promptly submit an application to have the Judgment set aside. The listing date for the Quantum Trial has been set in a very short timeframe and the First Defendant is currently in Israel, due to return to the United Kingdom on Thursday 24 February.'
3. I have indicated to Mr Brown in open court that, via the clerk to the listing, I received an email this morning which I am not able to print out but which was to similar effect to the letter. I seem to recall that the indication was that she was picking up her emails whilst away and, in fact, was coming back something like 10.30pm this evening, but that is entirely from my own memory."
"5. The major problem for these defendants is the fact that, shortly after 14 December, they must have known that judgment had been entered. I do not have the slightest doubt that, at the very least, whether they received the order in a timely fashion or not, the claimant's solicitor would have been anxious to draw attention to the fact that they had in terms succeeded. They were also ordered to do various things, if necessary to produce a witness statement and, as a matter of law and fact, to pay the costs assessed by Ramsey J in the sum of £14,500 and also to the fact that he set the date as the first available date after 10 February. So it does not, in my judgment fall well for the defendant to be saying that the trial was set in a very short timeframe because she knew that, in fact, it was due to be listed as soon as reasonably practical after 10 February.
6. The plain fact of the matter is that these defendants therefore have done absolutely nothing with regard to the progression of this claim. I do not think I have ever seen a claim go as far as this one and so little done by one party. It is quite plain that if they do require (and the 'they' refers to the company and the first defendant herself) to set aside the default judgment, then they must (and it is CPR13.3 that applies) show that they have a very real prospect of successfully defending the claim or they can persuade the court that there is some other agreement (sic). It says quite specifically at CPR13.3 (2):
'In considering whether to set aside or vary a judgment entered under Part 12, the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly.'
7. It seems to me that although reference is made there to making an application to set aside judgment, on the face of it, it cannot be prompt, given that judgment was entered in excess of two months ago and so it seems to me that, so far as the judgment is concerned, the defendant has a mountain to climb.
8. But so far as the application to adjourn today is concerned, it seems to me that this is yet another chapter in a story of failure to engage with litigation. What litigants have to appreciate is that when a court adjourns a case, not only does it increase the cost but it has a knock on-effect on the court's workload. I am available today to hear this case. Counsel has been instructed to attend. He is here. The solicitors are here, the clients are here and, if the case has to be adjourned then, in fact, the result is that a great deal of time and money are wasted, not only by those representing the claimants and the claimants themselves but also the court time, which is becoming increasingly more valuable and pressed as a result of the cuts that are coming to the Court Service. The time has to be utilised to the greatest effect.
9. It seems to me that this litigant has simply not done anything to progress this litigation. She applies for an adjournment at the last moment. It puts the claimants and the court in great difficulty but she has actually taken no steps, I think, apart from writing to the court about it to further this litigation. I also have to have regard to the fact that this claim (and I have read the bundle in some detail) does actually allege dishonest activity on the part of the defendant and I have to look at whether there is genuine merit behind it. There is no doubt if she had engaged with the process and, for example, paid some of the costs to date or even made a timely application to set aside, then I would have had the gravest difficulty in perhaps not allowing an adjournment.
10. But quite simply to write to the court really on the eve of the trial, I appreciate this was on the Monday and here we are on the Wednesday, with what appears to be an inconsistent account, both in the letter and on the email that I can recall; namely the return date was tomorrow in the letter and tonight in the email, but I may be wrong about that. It seems to me that the late application is really, in my judgment, groundless. This lady does not appear to have evinced any intention at all of engaging with the litigation process.
11. In those circumstances, it seems to me that it would be quite wrong to adjourn this case. Had she put in, for example, a witness statement indicating she would like to take certain issues with the witness statements of the gentleman who has sworn statements on behalf of the claimant, then so be it; but she has done absolutely nothing. Simply to allow an adjournment when there is little prospect, as I see it, of seeing anything being done, it seems to me that I have really no option but to continue hearing the case. It would, in my view, be an injustice not to do so."
"(1) The Learned Judges erred in law and misdirected themselves in fact due to the following:
(i) In having regard to the case of Ladd v Marshall  3 All ER 745, it is expedient and in the interests of justice, that the Court admit fresh evidence of the first Appellant/defendant's psychiatric illness and set aside the judgments of Mr Justice David Mitchell (sic) made on 23rd February 2011 and the judgment of Mr Justice Vivian Ramsey made on 14th December 2010
(ii) The Appellants reserve their position to expand or amended (sic) these grounds once the transcripts of both hearings of 14th December 2010 and 23rd February has been received and considered by Counsel."
The application notice contains a statement that "a witness statement will follow in 14 days which will be supported with evidence of being out of the UK until 12 March 2011 and the steps taken to obtain a copy of the claim form dated 15 September 2010 and order of 14.12.10 never seen prior to 12 March 2011". There has been included in the bundle provided for use by this Court an undated witness statement, which appears to have been signed by Ms de Ferranti. Attached to that witness statement and included in the bundle is a copy of a medical report, addressed to the solicitors and dated 10 October 2011. The author of the report states that he is Ms de Ferranti's general practitioner. Also attached to the witness statement is an email sent by "VG Ltd's officially appointed accountant" to an addressee at Valens Goldberg's email address which is dated 7 October 2011. On the face of those documents it appears that the undated witness statement was prepared and signed (at the earliest) in October 2011: that is to say, some seven months after the date of the application notice and some eight months after the date of the Quantum Trial before Judge David Mitchell. That conclusion is consistent with a document described as "Draft Skeleton Argument of the Defendant", which appears to have been signed by counsel and to have been prepared at about the same time as the witness statement. That document bears the date 10 October 2011.
"16. Peters and Peters (the solicitors instructed by the claimant) claim to have sent all correspondence in duplicate by email to me at a googlemail address which is often not checked, and VG Ltd at a ValensGoldberg email address. Due to the necessary spam and webmail security filters put in place by VG Ltd, certain emails containing attachments would have been, by default, captured as junk mail and would therefore not have been accessed by myself on my blackberry. (Can we please refer to the legal procedures relating to service of documents via email I seem to recall us discussing that there had been recent changes).
17. It is unreasonable therefore for the Claimant to seek to uphold the claim for failure to acknowledge service as I, and VG Ltd, never received the claim form in hard copy. Any emails sent with large attachment could not also have been accessed.
18. In relation to service of documents in person, the Claimant and/or his agent had attempted to hand deliver various documents to Orbis Wharf without success (my UK address). On several occasions the building concierge for Orbis Wharf, (at that time a Mr Daniel Foster) had informed the Claimant's agent (presumably a junior employee) that I was overseas travelling."
"In the section headed "Quantum Trial of 24 February 2011, she stated:
"22. Attached at Appendix 5 is a hand-delivered (and receipted) letter dated 21 February 2011 written by myself informing the Court that I had only just received the bundle of documents, that I was not legally represented and that I would not be in the United Kingdom to attend the Quantum hearing scheduled for a floating trial on 23, 24 or 25 February 2011. I also telephoned and emailed a Mr James Tipp, Listings Clerk, directly informing him that I would be seeking an adjournment to enable me to attend the hearing in London on my return from Israel on 24 February. Peters and Peters then informed the Court immediately that I had allegedly 'fled the country' which is wholly untrue and unfounded. Peters and Peters then pressed ahead in my absence and Mr Justice Ramsey (sic) therefore subsequently proceeded on 23 February 2011 and ordered that the full claim plus costs be paid. Despite having informed both the Claimant's solicitors and the Court in a hand delivered letter, the decision was taken to proceed therefore not allowing me or VG Ltd a fair opportunity to put our defence forward."
In a section headed "Circumstances surrounding Resignation", Ms de Ferranti stated:
"26.The Claimant alleges that both I and VG Ltd have diverted business away by continuing to work for UBS Wealth Management (the private banking arm of UBS Investment Bank) despite the six-month non-compete clause. I refute this allegation as I have had no dealings with UBS Wealth Management whatsoever and have not benefitted from any revenues that could or would otherwise have been generated. Furthermore, if the Claimant had in fact suffered any financial loss as a service supplier this would have been due to the fact that the key HR representative at UBS Wealth Management resigned in or around June 2010 to join Credit Suisse (namely a Kirsty How) thereby breaking the relationship. It would not have been due to my or VG Ltd soliciting business away."
The witness statement offers no explanation for - and does not refer to the email of 16 March 2010 sent by Ms de Ferranti to Ms Kirsty How at UBS; upon which the claimant relies in support of its "loss of business" claim.
"13 On 17 December 2010 the Order of 14 December 2010 was served by hand on each of the Defendants at the London Address [73 Orbis Wharf, Bridges Court Road, Battersea, London SW11 3GW]. Copies of the letters and enclosures were also sent to the First Defendant's email address [firstname.lastname@example.org] . . .
14. On 6 January 2011 letters were sent by first class post to each of the Defendants at the London Address and a copy was also sent to the First Defendant's email address enclosing a listing notice requiring them to attend at Court on 1 February 2011 to fix a date for the quantum trial. . . .
15. On 14 January 2011 letters were delivered by hand to each of the Defendants at the London Address and a copy was sent to the First Defendant's email address enclosing the List of Documents for the Quantum Trial. . . . I am informed by Mr Lee Quickenden that he gave the letters to a lady who identified herself as Julia Reece, an employee of the Second Defendant, who confirmed that she would ensure safe receipt by the First Defendant who was abroad.
16. On 28 January 2011 letters were delivered by hand to each of the Defendants at the London Address and a copy was sent to the First Defendant's email address enclosing the Second Witness Statement of Adrian Ezra . . .
17. On 18 February 2011, letters were sent by first class post to each of the Defendants at the London Address and a copy was sent to the First Defendant's email address notifying them of the date of the quantum trial which was fixed to take place on either 23, 24 or 25 February 2011 . . .
. . .
19 On the evening of 21 February 2011, the First Defendant telephoned Ms Nash [Amy Nash, a colleague of Ms Gabriel] from a UK telephone number. During the course of the call, she confirmed that she had received the letter before action [sent to the London Address on 28 May 2010], that she had just returned to the UK and received a bundle of documents at the London address and that she understood that the a quantum trial was to take place that week. The First Defendant said that she had had no opportunity to submit an acknowledgement of service or a counterclaim and confirmed that she would be seeking an adjournment of the quantum trial and would be acting for herself."
Ms Gabriel attached to her witness statement copies of the letters and other documents to which she referred.
"2. . . . The hearing was fixed to suit the convenience of leading counsel who was then due to appear on her [Ms de Ferranti's] behalf. That was at the request of solicitors on the record. On the morning nobody turned up. The solicitors were contacted and said they were no longer on the record. No intimation had been given to the Court. . . .
3 The consequence was that the hearing had to be relisted. I understand that Ms de Ferranti was at some stage told about it orally, but no letter had been sent to her. Today she did not appear and on enquiry being made said that she was unaware of the hearing date.
The judge's reasons
"Looking at both those rules, they are . . . (1) very broad and (2) there is nothing in them to limit the scope of the power of the court to remedy defects under 3.10 or dispense with service under 6.28."
He referred to the witness statement of Sarah Gabriel - expressing the view that the reasons and rationale set out in that witness statement were powerful and correct - and concluded (at paragraphs 33 and 34):
"33. . . . even if Master Eyre did not have the power to make the order he made, it seems to me that the order he made, on the basis of the evidence that he had before him that I have before me now, was absolutely correct. The court must take a practical view of this sort [of] litigation and be fair to both parties, including the claimant, and it seems to me very clear that the claimant has been given the run around here and the defendants have chosen not to engage in litigation unless and until it suited them. The defendants utterly failed to take the relevant steps that were open to them, and allowed the matter to languish for a very long period of time indeed. There is not even . . . a draft defence some two-plus years after the Particulars of Claim were served on 15 September 2010.
34. For all these reasons, it seems to me that, applying the overriding principle of proportionality and fairness to both sides, it is plain that the court today should decide these matters and my decision is: (1) The application to remit to Master Eyre is refused. (2) The court today refuses to set aside or vary the order of Master Eyre dated 22 December 2011. (3) If and so far as necessary, the court grants afresh an order in the same terms as made by Master Eyre, that service of the claimant's application for default judgment in these proceedings be retrospectively dispensed with on the basis of the evidence and the witness statement of Sarah Gabriel (i.e. granting the application made in the claimant's application notice dated 22 December 2011, under CPR 3.10 and CPR 6.28). (3) (sic) The defendants' application dated 16 March 2011, which is returnable today, is dismissed. There is no merit in it whatsoever in circumstances where the defendants have delayed for so long to seek to set aside the judgment (and, having engaged at least in knowledge of the quantum hearing they may have waived their rights in any event)."
The defendants' application to adjourn the hearing of this appeal
"There is a hearing listed for Friday 8 March in the above matter.
I have sent the papers to John Benson QC (who prepared the Skeleton Argument) and am awaiting his availability for Friday's Hearing.
I will contact the court latest tomorrow to confirm availability."
The Listing Office responded on the same day, confirming that the Court would be hearing the appeal on Friday 8 March 2013; and pointing out that that date had been agreed by the parties in January.
"I write in reference to tomorrow's hearing which I am unable to attend for medical reasons. I will be sending to the Court within the next 24 hours confirmation to this effect from my medical practitioner. In the meantime, I also attach a recent letter from my GP, Dr Edward Barnes, under whose supervision I have been throughout the duration of this highly stressful case. As a result of this case, the high dose of medication I am currently prescribed and the associated mental and physical stress of this case (almost 3 years now), I have been advised that I am not well enough to attend the hearing tomorrow, listed for Friday 8 March."
She went on to complain that she had still to receive, from the claimant's solicitors, a copy of the claimant's bundle; and that: "Consequently, I have not been able to provide the bundle to John Benson QC whom I intend instructing in this matter." She asked that the Court "afford her the opportunity to (i) obtain the Appeal Bundle; (ii) instruct John Benson QC; and (iii) arrange private funding via my family". She provided the court with a copy "of the draft Defence I submitted back in 2011"; and requested that that document and medical documents be put before the Court "with a view to seeking an adjournment to tomorrow's hearing".
Determination of the appeals
Setting aside the default judgment
"(a) in the case of a judgment in acknowledgment in default of acknowledgment of service, any of the conditions in rule 12.3(1) and 12.3(3) was not satisfied; . . ."
The conditions in CPR 12.3(1) are that a claimant may obtain a judgment in default of acknowledgement of service only if (a) the defendant has not filed an acknowledgement of service . . .; and (b) the relevant time for doing so has expired. Those conditions were satisfied in the present case. CPR 12(3) sets out circumstances in which a claimant may not obtain a default judgment. None of those circumstances exist in the present case. It follows that the case does not fall within CPR 13.2: it is not a case where the court was required, by that rule, to set aside the default judgment entered on 14 December 2010.
"In any other case [that is to say, in any case not falling within rule 13.2], the court may set aside or vary a judgment obtained under Part 12 if
(a) the defendant has a real prospect of successfully defending the claim; or
(b) it appears to the court that there is some other good reason why
(i) the judgment should be set aside or varied; or
(ii) the defendant should be allowed to defend the claim.
CPR 13.3(2) requires that, in considering whether to set aside or vary a judgment entered under Part 12, the matters to which the court must have regard include whether the person seeking to set aside the judgment made the application to do so promptly.
"Where an application is made under paragraph (2) . . . 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(GL) 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."
It is difficult to see how the defendants could have hoped to persuade the court that they had acted promptly in seeking to set aside the judgment served upon them on 17 December 2010 by an application made in March 2011 (after the Quantum Trial).
"We do not think that the draftsman of the CPR can have intended to introduce what the editors [of the White Book] call the more stringent requirements of rule 39.3(5) into applications to set aside judgments irregularly obtained, in the sense of being obtained without service of the claim form in accordance with the rules. In our judgment, the whole of rule 39.3 contemplates a trial in the absence of a party who has been served under the rules or in respect of whom service has been dispensed with."
The January 2012 application
"It is we think clear that, if this case had occurred before the CPR, the court would have set aside the judgment. In Akram v Adam  EWCA Civ 1601,  1 WLR 1762, Brooke LJ observed at  that under the pre-CPR practice there was a difference between an irregular judgment, which could be set aside as of right, and a regular judgment, where the defendant had to show that he had a defence on the merits before the court would be prepared to have the judgment set aside. This was the practical effect of the pre-CPR cases to which we have referred. The question in this appeal is whether the position is the same or different under the CPR."
But, as the Court held, the position had been altered by the Civil Procedure Rules. At paragraph 43 it observed that:
"It does not, however, follow that under the CPR the defendant is entitled to have the judgment set aside as of right, ex debito justitiae, or indeed that, if there is a discretion it can be exercised in only one way. It was pressed upon us that such an extreme approach is inconsistent with the overriding objective of dealing with cases justly and that, on an application to set aside a judgment, (albeit irregularly obtained) a claimant might be able to demonstrate that there would be no point in setting aside the judgment and requiring the claimant to issue and serve new proceedings."
The question was whether the CPR permitted such an approach. The Court held that it did.
Did the judge err in refusing to set aside the default judgment
"There is no merit in it whatsoever in circumstances where the defendants have delayed for so long to seek to set aside the judgment (and, having engaged at least in knowledge of the quantum hearing they may have waived their rights in any event)."
He should have asked himself at the least whether the defendants had a real prospect of successfully defending the claims against them; and, if so, whether the defence was of such merit that the defendants should be allowed to pursue it notwithstanding the quite exceptional delays which had occurred in these proceedings. He did not do so: understandably, perhaps, in the circumstances that he had no formal defence before him on 19 January 2012. But, in failing to do so, he fell into error.
Should this Court allow the appeal from the judge's refusal to set aside the default judgment
"22. The Claimant alleges that both the First and Second Defendants have diverted business away by continuing to work for UBS Wealth Management (the private banking arm of UBS Investment Bank) despite the six month non-compete clause. The First and Second Defendants refute these allegations as have had no dealings with UBS Wealth Management whatsoever and have not benefitted from any revenues that could or would have been generated.
. . .
29. Following the First Defendant's termination of employment the First and Second Defendant had no further dealings with UBS Wealth Management due to the ongoing reputational damage suffered by the Swiss bank during the financial crisis. The well publicised tax evasion claims and whistle blowing cases further affected UBS Wealth Management's ability to hire new employees. UBS Wealth Management (as opposed to UBS' Investment Bank) suffered a significant outflow of client assets which further reduced the private bank's hiring budget on a global scale."
It is striking that there is no denial that Ms de Ferranti did send the e-mail of 16 March 2010 to the Head of Wealth Management UK at UBS AG (an existing client of Execuzen); that she did send that e-mail in her capacity as "Managing Director, Head of Private Wealth Management, Execuzen Limited"; or that the e-mail was intended to divert business from the claimant to Valens Goldberg. It is striking, also, that there is no denial that, on 6 May 2010, Ms de Ferranti sent from her e-mail account at Execuzen to Valens Goldberg a number of e-mails containing confidential information including client names, client contact details, curricula vitae of executives who were considering career changes, client enquiries and requests and details of meetings and appointments.
Staying enforcement of the award of damages
Lord Justice Ryder
Sir Bernard Rix