Mullock v Price (t/a the Elms Hotel Restaurant) – default of lawyer or agent [2009] EWCA 1222

http://www.bailii.org/ew/cases/EWCA/Civ/2009/1222.html

In general, the action or inaction of a party's legal representatives must be treated under the CPR as the action or inaction of the party himself. A party should not be able to hide behind his representatives. When considering an application to set aside a default judgment under CPR 13.3(2), where the court must have regard to "whether the person seeking to set aside the judgment made an application to do so promptly", the defendant cannot excuse his inaction by saying he was relying on his insurance brokers to act for him.

The defendant owned a hotel. The claimant, described by Ward LJ as “a lady who will not like my revealing that she is 69 years of age”, was injured when the barman’s Labrador knocked her over in the hotel car park after a convivial evening with her friends from the Willows Nursing Home. The defendant referred the claim which followed to his insurance brokers, the inaptly-named Ideal Insurance Services Ltd, currently under investigation concerning fraudulent insurance policies.

The defendant passed all communications to do with the claim to Ideal Insurance which failed to deal with it properly. Judgment was entered against him in August 2006. An order for an interim payment was made in November 2006, and when the bailiffs came to enforce it against him, Ideal Insurance paid it. The disposal hearing took place in January 2008.

The defendant was aware of the judgment against him but took no steps to set it aside for almost two years. The Court of Appeal said that it was his obligation to deal expeditiously with the matter and that his understandable reliance on his brokers did not absolve him from this responsibility. The application to set aside the judgment failed.

Comment: the question of whether a party can enjoy greater leniency from the court where he has relied on lawyers or others to act in his interests has been long debated. It arises most frequently in the context of applications for relief from sanctions under CPR 3.9 because one of the relevant factors for the court is whether the failure to comply was caused by the party or his legal representative. This suggests that a failure by the legal representative may provide an adequate excuse but was held not to by the Court of Appeal Training in Compliance Ltd v Dewse (2000). The Court of Appeal agreed with this approach in the present case, both as a general rule under CPR 3.9 and particularly under CPR 13.3.

The problem with this approach is that it ignores the wording of CPR 3.9(1)(f). To avoid confusion, this part of the rule should be deleted to reflect what is now the law. There has been some dispute about the effect of this rule in the past. In Daryanani v Kumar (2000) the Court of Appeal approved the Training in Compliance stance and discouraged attempts to distinguish between the fault of the party and their lawyers in all but exceptional circumstances. However, in Whittaker v Soper (2001) the Court of Appeal held that where the fault is the solicitor’s alone, this makes relief more likely, but the court did not refer to the decisions the year before. The present decision is therefore the third from the Court of Appeal to say that parties cannot hide behind their lawyers, their remedy being a professional negligence claim where they suffer loss as a consequence of their lawyers’ negligence. Where the fault is that of an expert and the party’s lawyers have done their best to avoid delay, Lowther v Kapur indicates that the court is more likely to give relief. This will not be the case though where the fault is that of the party’s representative, whether it be a lawyer, broker or insurer.