Will the Court accept a defence which has been served on a date outside the time limits laid down by the Civil Procedure Rules 1998 (“CPR”)? That was the question which the High Court considered recently in the case of Billington V Davies & Soane Capital Ltd .
During the period September 2013 to June 2015 Billington made 9 payments totalling £1,652,320 to the defendants believing he was investing in the development of 4 properties in Surrey. He alleged that the monies had been misapplied and he had been the victim of a substantial fraud perpetrated on him by the first and/or second defendant.
On 23 November 2015 Billington issued a claim against the defendants. Particulars of Claim were filed and served on 7 December 2015. On 9 December 2015 the first defendant served an acknowledgement of service form. It was common ground before the Court that accordingly the date for filing of his defence was 4 January 2016.
No defence was served by Davies and no response at all was made by the second defendant. It appeared that Davies’ reasoning for not serving a defence was partly due to a lack of funding and partly due to the fact that without prejudice negotiations were taking place between the parties. As a result, on 11 April 2016 Billington issued an application for judgment in default. That application was listed to be heard on 18 May 2016. In the meantime, on 17 May 2016, the day before the hearing, Davies filed and served a defence. A witness statement from his solicitor was filed shortly thereafter setting out the reasons for the delay in filing and serving the defence.
The First Hearing
The matter was initially listed to be heard before Master Bowles. At the hearing it transpired that the Master knew Davies’ solicitor socially and so the matter had to be adjourned. In the meantime, the Master directed that Davies should issue an application for an extension of time for service of his defence.
The Second Hearing
On 14 June 2016 Davies’ solicitor filed and served a further witness statement. On 15 June 2016 the matter came before Newey J who, amongst other things, made an order requiring Davies’ solicitor to attend for cross-examination.
The Third Hearing
At the third hearing, Davies’ counsel contended that Billington’s application for judgment no longer had merit in view of the defence filed by Davies. He referred the Deputy Master to CPR 12.3(2) which provides:
“(2) Judgment in default of defence may be obtained only (a) where an acknowledgement of service has been filed but a defence has not been filed … and … the relevant time limit for doing so has expired.”.
Davies’ counsel argued that on a literal reading of the rule by filing and serving his defence, albeit out of time, it followed that the pre-condition could no longer be met. In other words, any application for judgment in default would automatically be defeated whenever a defendant files a defence before judgment is granted, however late.
In support of his argument, Davies’ counsel relied on the case of Coll V Tattum  in which Neuberger J observed that the provisions of the CPR on this point were “not entirely clear” and that “the footnotes to the Rules appear to point in different directions”.
The Deputy Master rejected this argument stating that in his view the reference to a “defence” in CPR 12.3(2)(a) must be a reference to a defence which has either been served within the time permitted by the Rules or in respect of which an extension of time has been granted. He held that where a defence is served late, unless and until an extension has been granted, a document purporting to be a defence is not in fact a defence for the purposes of CPR 12.3(2)(a). To this extent, he said the note at 15.4.2 of the 2016 edition of the White Book was in his view wrong.
Having rejected Davies’ counsel’s initial argument, the Deputy Master went on to consider the application for an extension of time. Applying the relevant three stage test for applications for relief from sanctions (the details of which are beyond the scope of this article), the Deputy Master found that this was not an appropriate case where he should exercise his discretion to extend time and accordingly, he dismissed the application and went on to deal with Billington’s application for judgment.
This case serves as a useful reminder for all practitioners of the perils of ignoring time limits laid down in CPR. Davies’ actions in making a conscious decision not to file his defence, albeit due largely to concerns as to funding, resulted in an inability to defend the proceedings, leaving Billington free to seek judgment from the Court. Although the judgment does not make it clear it is likely that Davies may also have ended up having to pay Billington’s costs incurred in relation to his application – certainly Billington would have been in a position to seek an order in such terms.
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