In the recent High Court case of Zambia -v- Meer Care & Desai (a firm) & Ors a judgment entered against a defendant for offences related to fraud and corruption was set aside partly as a result of the failure of the Claimant to send a letter before action.
The Republic of Zambia brought proceedings in October 2004 against 16 defendants in order to recover sums said to be the proceeds of fraud and corruption. One of the defendants, Mr Basile, was a Swiss resident and had already given evidence and provided invoices to the Swiss authorities in relation to sums he had received from the Zambian government.
A central allegation of the English High Court claim was that the sums Mr Basile had received from the government of Zambia exceeded the value of the invoices he had produced. It was therefore alleged that Mr Basile was liable to pay back those sums as the proceeds of fraud and corruption. However, crucially no letter before action was ever sent to Mr Basile explaining the case against him or offering him the opportunity to explain this shortfall.
Mr Basile was served with a copy of the claim form and response pack plus three lever arch files containing the Particulars of Claim and annexes. Other documents and correspondence were also served on Mr Basile through the course of the High Court proceedings. Mr Basile never acknowledged service of the proceedings and did not attend trial. He did not take any step in respect of the proceedings.
Judgment was accordingly entered against Mr Basile and he was served with the trial judge’s orders. It was only at this point that he sought legal advice and subsequently applied for an extension of time to appeal as well as permission to adduce additional evidence under CPR 52.11(2). Mr Basile claimed that until the orders had been served on him he had not realised he was a defendant in the case and had thought he was a witness only.
The Court of Appeal approached Mr Basile’s application by first considering whether under CPR 39.3(5) there were sufficient grounds to set aside the judgment against him. The Court found in Mr Basile’s favour, holding that there were grounds to set aside the judgment on a limited basis and for the case against Mr Basile to be reconsidered.
A key factor that led the Court of Appeal to decide in Mr Basile’s favour was that, in contravention of paragraph 4 of the CPR Practice Direction – Protocols, the Claimants’ former solicitors had failed to send a letter before action. The Court of Appeal ultimately decided that Mr Basile’s explanation of why he did not attend trial (that he did not realise he was being sued) was “capable of belief”. However, tellingly, Lord Justice Lloyd commented that Mr Basile’s failure to respond to service of proceedings would have been seen in a different light if the Claimants former solicitors had taken the elementary step, as required by the Practice Direction:
“of writing to Mr Basile … to ask him to account for the discrepancy between the invoices produced to the magistrate and the amount known to have been paid to him, and to inform him that, in the absence of a proper explanation, he was at risk of being sued for the difference”
Further points in Mr Basile’s favour were that, of the three files of documents served, only the Claim Form and Response Pack had been translated (Mr Basile was a native French speaker). Further, the Claim Form was lengthy and “far from self-explanatory” and although the Particulars of Claim was hundreds of pages long, no attempt had been made to draw Mr Basile’s attention to the six pages of specific relevance to him.
This case clearly highlights the essential role a letter before action plays in the post-Woolf litigation landscape. It also highlights the care that must be taken when serving proceedings to clearly signpost voluminous documents, particularly when large sections are irrelevant for particular defendants. Claimants should also take care to provide full translations of all relevant documents. Practitioners who neglect to take any of these steps risk causing their clients to incur significant further costs should judgments be overturned and claims need to be reheard.