Setting Aside Judgment After Failing to Attend Trial: The Court of Appeal’s interpretation of CPR 39.3

Lawyers are repeatedly reminded of the need to comply carefully with the various (and often onerous) requirements of the Civil Procedure Rules. Any deviation from their path can lead to heavy sanctions for the defaulting party and a stern telling off in Court.  The Court of Appeal’s approach when considering the application of CPR 39.3 was therefore somewhat unusual: instead of restating the need for a strict approach to the Rules, the Court instead determined that they can sometimes be applied too rigorously.  The case provides crucial guidance on the test to be followed when considering an application under CPR 39.3 but is also a reminder that when it comes to civil procedure “context can be king”.

Caselaw

In TBO Investments Ltd v Mohun-Smith [2016] EWCA Civ 403 the Court of Appeal considered the issue of when judgment should be set aside after a party’s non-attendance at trial.  The case arose from the provision of financial advice by TBO Investments to Mr & Mrs Mohun-Smith.  The couple were unhappy with investments made on their behalf by TBO and issued proceedings against the company for some £2 million.  As the matter approached trial and the costs continued to mount, one of the company’s two directors took over the litigation himself and prepared the matter for trial.  However the pressure of the proceedings led to the director, Mr Robinson, becoming ill and ultimately being signed off work by his GP.

The 7-day trial was listed in the High Court in June 2014 but Mr Robinson did not attend, a sick-note instead being handed in on his behalf together with an application to adjourn the trial on grounds that he was too ill to attend court. The Judge took a rather dim view of the application and refused it, instead striking out the defence and entering judgment for the Mohun-Smiths to the tune of £2.1 million.

3 weeks later TBO submitted an application under CPR 39.3 and requested that the Court set aside the judgment. Under this rule the Court can use its discretion to set aside judgment if it finds that the applicant party had reasonable prospect of success at trial, had a good reason for non-attendance at trial and acted promptly in making the application. All three of these requirements, set out in CPR 39.3(5), must be met for an application to be successful.

The grounds for TBO’s application were, to all intents and purposes, the same as those for the initial application to adjourn the trial. The Court once again did not look kindly upon TBO’s position and refused the application, stating that whilst there had been reasonable prospects of success for the company at trial there had been a delay in making the application and in any event the medical evidence relied upon was “insufficient.

TBO successfully appealed to the Court of Appeal, Lord Dyson MR giving the lead judgment. In a change to the usual judicial stance, the Court found that on this occasion the first instance Judge had applied the CPR rather too rigorously and that more leniency was required under CPR 39.3.  As long as a party can establish that their case had had a reasonable prospect of success, said the Court of Appeal, the other requirements under the rule should not be applied too strictly.  Therefore, and whilst there were shortcomings in the medical evidence relied upon, the court at first instance should have found that there had been a good reason for Mr Robinson failing to attend the trial.

On the issue of delay, it was the Court of Appeal’s conclusion that the question of promptness is a matter of context and that the complexity of the case (rather than simply the number of days between notification of judgment and the application) was a relevant factor for the court to consider. Accordingly promptness should not be calculated according to a set number of days and no set rules should be applied.

Guidance

The Court of Appeal’s clear message in this case was that whilst a failure to obtain an adjournment of trial may lead to a disadvantage for the applicant party, the consequences are unlikely to be as grave as those faced by a party failing under CPR 39.3. One can perhaps see the Court’s logic:  if an application to adjourn a trial fails the applicant still has the prospect of persuading the court of the merits of their case even if they will face some disadvantage in doing so. This is to be contrasted with the position of a party who was unable to present their case in court at all.  Therefore the manner in which CPR 39.3 is applied by the courts should not be too draconian and as long as there had been a reasonable prospect of success at trial the other specific requirements under CPR 39.3(5) should not be applied too rigorously.

The case is also interesting because of its emphasis on the importance of considering the general context of a case, including the consequences to the applicant of failing to succeed under CPR 39.3 and the context of the circumstances which gave rise to the application in the first place.