Football Dataco Ltd and others v Smoot Enterprises Ltd and others – relevance of merits of claim [2011] EWHC 973 (Ch) www.bailii.org/ew/cases/EWHC/Ch/2011/973.html

Even where the claimant is required to make an application to the court for default judgment, rather than a request, the court is not concerned to address the merits of the claim and will grant the application as long as it is not obviously bad in law.

The claimants organise the football leagues in England and Scotland and publish lists of forthcoming matches and match information. They allege that the defendants have committed infringements of their copyright and database rights by publishing this data on websites serviced within England without their consent.

The defendants are Cypriot companies and were served out of the jurisdiction without the court’s permission pursuant to CPR 6.33(1). Neither acknowledged service.

CPR 12.4(1) enables the claimant to request judgment in default where the claim is for a liquidated sum, damages to be assessed or for delivery of goods. CPR 12.4(2) requires the claimant to make an application under CPR 23 where he seeks any other remedy.

The claimants were unable to obtain judgment in default by filing a request under CPR 12.4(1) because, in addition to an order for damages to be assessed, they sought permanent injunctions against the defendants restraining them from publishing this data in the future.

The claimants were also required to make an application by CPR 12.11 because the defendants were served with the claim form out of the jurisdiction. This rule provides:

“Where the claimant makes an application for a default judgment, judgment shall be such judgment as it appears to the court that the claimant is entitled on his statement of case.”

In deciding whether to enter default judgment, the judge considered the effect of a reference to the European Court of Justice (ECJ) in similar proceedings brought by the claimants against Yahoo! UK Ltd and others. In the Yahoo proceedings Floyd J held as a preliminary issue that the claimants did enjoy copyright in the fixture lists as a database pursuant to s3A of the Copyright Designs and Patents Act 1988, introduced to implement Article 3 of the Database Directive. On appeal, the Court of Appeal referred various questions to the ECJ concerning the interpretation of Article 3. A decision from the ECJ is not expected for up to two years.

The judge held that the reference to the ECJ did not prevent him from allowing the application for default judgment. He considered two points of principle.

Firstly, default judgment is not a judgment on the merits, whether as a matter of fact or law. The rules which require an application to be made are not triggered by reference to anything connected with the legal foundation for the cause of action but rather by aspects of the relief sought (such as an injunction) or the manner in which the defendant has been served out of the jurisdiction.

Secondly, the existence of an adjourned appeal in a case on similar facts pending a reference to the ECJ on a point of law which goes to the claimants’ cause of action does not affect the claimants’ entitlement to judgment. The general position under English law is that pending appeals do not deprive the litigant of the fruits of his judgment, nor does the decision that is being appealed lose its binding authority (if it is a Court of Appeal decision) or its persuasive effect (if it is a first instance decision).

Comment

This is a welcome clarification of the approach the court should take to applications for default judgment. The judge gave an example to illustrate the distinction between a default judgment and a judgment on the merits. Where a claim is based upon an assertion as to the true construction of a written agreement between the parties, the claimant can obtain judgment in default of an acknowledgment of service or defence without the court being called upon to address the strength of the claimant’s case on construction, a question of law. The defendant’s failure to acknowledge service or to file a defence is a sufficient reason for the court to give judgment in default.

The judge concluded that the same approach should be taken where the claimant is required to apply for judgment in default rather than merely to request it as an administrative step under CPR 12.4(1). As he put it, “where the particulars of claim disclose a cause of action which is not obviously bad, the court gives judgment because the defendants do not take the basic steps to challenge it, rather than because the court needs to, and does, resolve every underlying legal or factual uncertainty”.

The reference to the effect of pending domestic appeals or references to the ECJ, and the status of the decisions in question in the meantime is also helpful. The judge noted that there may be circumstances where the existence of a pending appeal in one case leads the court to adjourn or stay proceedings in another case, or to delay giving judgment, where the decision of the appeal court is imminent. Test cases are an obvious example. Reducing costs and saving the court’s resources in accordance with the overriding objective and the speedier resolution of claims since the introduction of the CPR can make it easier to obtain a stay under CPR 3.1 but this will not always be the case – see, for example, Littlewoods Retail Limited v HMRC where HMRC was refused a stay pending the outcome of ongoing group litigation concerning compound interest following the House of Lords’ decision in Sempra Metals Ltd v HMRC. The position is not the same in the early stage of a reference to the ECJ, where the stay or adjournment of a related claim could lead to very substantial delay.