Judgment in default of defence – Application to set aside – CPR 13.3 – Extensions of time granted for service of defence – Claimant obtaining judgment in default when extensions expiring without defence being served – Claimant applying to have damages assessed – Defendants seeking to have judgment in default set aside – Whether real prospect of defending claim – Whether arbitration clause in NHBC rules providing other grounds why judgment should be set aside – Application refused
The second defendant was a development company that had registered with the claimant. The third and fourth defendants were directors of the second defendant. They had provided indemnities in respect of any liability that the claimant might incur as a result of the second defendant’s failure to comply with its obligations under the rules of membership and the Buildmark insurance cover that the claimant provided to homeowners. Between 1997 and 1998, the defendants converted a Victorian property into separate dwellings. Following the conversion, various complaints were made regarding defects. The situation was not resolved and, in September 2008, the claimant brought proceedings against the second to fourth defendants.
The claimant served detailed particulars of claim with the claim form, listing the alleged defects. The defendants issued an acknowledgment of service but failed to serve a defence by the January 2009 deadline. Various extensions of time for serving a defence were given by consent and by application to the court. In April 2009, when the extensions had expired and no defence had been served, the claimant applied, under CPR 12, for judgment in default of defence. The court deferred the signing of the judgment in default for a few days to allow for the possibility of a further application for an extension of time, but none was received and judgment was entered accordingly. The defendants were informed of the judgment.
Seven weeks later, the claimant applied for an assessment of its damages. However, on the evening before the hearing, the defendants applied to have the default judgment set aside under CPR 13.3, so as to enable them to apply to refer the dispute to arbitration under section 9 of the Arbitration Act 1996.
Held: The application was refused.
The defendants had not discharged the burden of establishing that they had a real prospect of defending the claim within the meaning of CPR 13.3(1), nor had their application to set aside been made promptly within the meaning of CPR 13.3(2). The question of the existence of an arbitration agreement between the parties was irrelevant, within CPR 13.3(1)(a), to a defendant’s prospects of successfully defending a claim. Although it might bring a case within the residual grounds in CPR 13.3(1)(b) as providing “some other good reason why the judgment should be set aside”, that ground had not been made out in the instant case. The arbitration clause under the NHBC rules was limited; it did not cover all disputes but applied only to disputes under rr 26 and 27. Rule 26 was not relevant to the instant case. Although some elements of the claimant’s claim related to what was, in effect, a liability under rr 27, the arbitration envisaged by that rule involved a dispute between the claimant and a builder as to whether any additional works of which the claimant had notified the builder should be undertaken, with the dispute arising before the works were carried out. In the instant case, that was unlikely to be the substance of the dispute between the parties and its reference to arbitration would not materially progress the matter. Further, there was some reason to doubt whether, as a company, the second defendant was worth anything; that was a matter that the court was entitled to take into account in exercising its discretion to dismiss the application. The case should therefore proceed to the assessment of damages.
Jonathan Selby (instructed by BP Collins & Co, of Gerrards Cross) appeared for the claimant; Alan Steynor (instructed by CKFT) appeared for the second, third and fourth defendants; the first defendant did not appear and was not represented.
Sally Dobson, barrister