Richmond & Anor v Burch & Ors [2006] EWHC 921 (Ch)

Case No HC04C00619

[2006] EWHC 921 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 7 April 2006

Before

MR GEORGE BOMPAS QC

sitting as a Deputy Judge of the High Court

Between

Peter Norman RichmondClaimant

Alpine Taxis LimitedClaimant

David Richard BurchDefendant

Praisecover LimitedDefendant

Elizabeth Ann BurchDefendant

Reuben Comiskey (instructed by Messrs Paul Robinson Solicitors) for the

Appellants/Claimants

David Burch in person for himself and the Second Defendant

Hearing Hearing date: 22 March 2006

Judgment

The Deputy Judge:

[1]This is an appeal against the Order dated 22 August 2005 of Master Moncaster by which he set aside a judgment in default of acknowledgement of service ordered by Lewison J on 16 June 2004, and declined to make any order on an application for directions to progress the assessment of damages ordered by the default judgment.

[2]For present purposes the action can be briefly summarized. i) The Second Claimant, Alpine Taxis Ltd (“Alpine”) is a taxi company. Each of the First Claimant, Mr Richmond, and the First Defendant, Mr Burch, were shareholders in and director’s of Alpine. The Second Defendant, Praisecover Ltd (“Praisecover”) is a taxi company owned by Mr Burch and his wife. Alpine’s area of operations was that within the area covered by Rochford District Council, while Praisecover’s lay within Southend on Sea”. ii) At the end of 2003 and beginning of 2004 Mr Burch is alleged to have sought to damage Alpine’s business and to further the business of Praisecover. iii) This action was started, in February 2004, when Mr Burch and Praisecover were subjected to interim injunctive relief ordered by Patten J. This broadly speaking restrained Mr Burch and Praisecover from soliciting or advertising for taxi business in the Rochford area, from interfering with Alpine’s contracts for the provision of taxi services for Essex County Council or Southend Council, from interfering with Alpine’s occupation of offices at Hockley Station, and from interfering with Alpine’s telephone numbers and radio system. The title to the Hockley Station offices (“the Regency Court property”) is held by Praisecover, but in the action Mr Richmond has claimed various rights for Alpine in relation to these offices. iv) The Order made by Patten J was expressed to give the injunctive relief “until after the hearing of this application or further order in the meantime”. However there was no substantive heating of the application for the continuation of the injunction, so far as I have been told. What happened was that on 8 June 2004 Mr Richmond applied for judgment in default of acknowledgement of service against Mr Burch and Praisecover, and after a contested hearing at which Mr Burch was represented by Counsel Lewison J made his Order of 16 June 2004. The Order contained a declaration as to the Regency Court property, judgment for damages to be assessed, and an order for there to be a detailed assessment ofMr Richmond’s costs (if not agreed) with those costs to be paid by Mr Burch and Praisecover. Most materially the Order contained also an order that “the injunctive relief granted pursuant to the Order of the Honourable Mr Justice Patten on 27 February 2004 be made final”; and a copy of Patten J’s Order was appended to Lewison J’s Order. v) On 13 June 2005 the Claimants made their application for directions in relation to the assessment of damages. Until this time the Claimants had taken no steps on the default judgment, whether as regards the damages or costs. What had happened, however, was that divorce proceedings had started between Mr Burch and his wife, the Third Defendant, in the course of which Mrs Burch’s solicitors had in the second half of May 2005 been in touch with the Claimants’ solicitors to enquire about the position in this action and had been told that application was shortly to be made to progress the assessment of damages and the costs. vi) On 29 June 2005 Mr Burch and Praisecover made their application to have the default judgment set aside, this being supported by a witness statement made by Mr Burch on 1 July 2005. The application, made by solicitors, requested an order that “the Judgment dated 16th June 2004 be set aside and for the discontinuance of the Injunction dated 16th June 2004”. On 7 July 2005 Deputy Master Nurse made an order for directions on the assessment of damages application, provision being made for an exchange of evidence followed by a further hearing during the second half of August. On 12 July 2005 Mr Burch made a lengthy witness statement in response to that of Mr Richmond dealing with the assessment of damages, but dealing also with matters relevant to the set-aside application. Both applications, that is the further hearing of the assessment application and the set-aside application, were heard by Master Moncaster on 22 August 2005.

[3]The Master made the Order appealed against pursuant to CPR Part 13, the Part that applies to the setting aside of default judgments. The applicable rule is Rule 13.3. This, by paragraph (1), allows “the court” to set aside or vary a default judgment which was correctly entered, but only if either “the defendant has a real prospect of successfully defending the claim”, or “it appears to the court that there is some other good reason why the judgment should be set aside or varied; or (ii) the defendant should be allowed to defend the claim”.

[4]On behalf of the Appellants/Claimants Mr Comiskey puts forward as his first ground of appeal the argument that the Master did not have jurisdiction to set aside Lewison J’s Order. Secondly, and substantively, Mr Comiskey argues that the Order should not have been set aside, or that if it was to be set aside the grant of that relief ought to have been made conditional on a payment into Court by the Defendants. Thirdly Mr Comiskey argues that the costs orders made by the Master were wrong.

[5]I deal with each of these points in turn.

Jurisdiction

[6]At the heart of the argument concerning the Master’s jurisdiction lies(a) the terms of Lewison J’s Order and

(b) the impact which the Master’s Order was to have. Shortly stated, it is said that the Master was varying or discharging an injunction, when that lies beyond his jurisdiction. I have already described the way in which the injunction was framed in Lewison J’s Order.

[7]The Master’s Order, on the other hand, provided for(a) “the default judgment of 16th June 2004 [to] be set aside”,

(b) directions for the further trial of the action, including transfer to the Central London County Court,

(d) “there [to] be no order as to either of the applications before the Master” (para 5of the Order). I discuss later, in connection with the costs appeal, the import of paragraphs 4 and 5 of the Master’s Order.

[8]It will be noted that the Master’s Order contained no provision dealing in terms with any injunctive relief. As to this the Master expressed the view in his Judgment that the effect of setting aside Lewison J’s Order was that “the injunction will continue in place, but only as an interim injunction until trial”.

[9]Section 19(3) of the Supreme Court Act 1981 states that in the High Court any jurisdiction of the court shall be exercised only by a single judge of that court, except in so far as it is by rules of court made exercisable by a Master, district judge or other officer of the court, or by any other person. Section 37(1) gives the High Court power to grant injunctions, whether interlocutory or final. CPR 2.4 provides as follows:

“2.4 Where these Rules provide for the court to perform any act then, except where an enactment, rule or practice direction provides otherwise, that act may be performed - i) in relation to proceedings in the High Court, by any judge, Master or district judge of that court…” i) in relation to proceedings in the High Court, by any judge, Master or district judge of that court…”

[10]Practice Direction - Allocation of Cases to Levels of Judiciary (“the Practice Direction”), refers in paragraph l.1 to Rule 2.4 of the CPR. It continues, so far as relevant, “…this Practice Direction sets out the matters over which Masters and District Judges do not have jurisdiction or which they should deal with only on certain conditions…” For present purposes the critical provisions are paragraphs 2.2 to 2.4. These read as follows: “2.2 Except where paragraphs 2.3 and 2.4 apply, injunctions and orders relating to injunctions, including orders for specific performance where these involve an injunction, must be made by a Judge. 2.3 A Master or District Judge may only make an injunction:(a) in terms agreed by the parties;

(b) in connection with or ancillary to a charging order;

(d) in proceedings under RSC Order 77, rule 16 (order restraining person from receiving sum due from the Crown). 2.4 A Master or District Judge may make an order varying or discharging an injunction or undertaking given to the court if all parties to the proceedings have consented to the variation or discharge.” (a) in terms agreed by the parties; (b) in connection with or ancillary to a charging order; (c) in connection with or ancillary to an order appointing a receiver by way of equitable execution; or (d) in proceedings under RSC Order 77, rule 16 (order restraining person from receiving sum due from the Crown).

[11]The question is whether the combined effect of CPR Rule 2.4 and the Practice Direction was torequire any application to have Lewison J’s Order set aside to be made to a Judge, the Master not having jurisdiction to set that Order aside. None of the conditions in either of paragraphs 2.3 or 2.4 of the Practice Direction were satisfied so as to take the case out of the requirement set out in paragraph 2.2 of the Practice Direction, if those requirements applied at all in the circumstances of the case.

[12]It is clear, in my judgment, that an order varying or discharging an injunction is one “relating to” an injunction for the purposes of paragraph 2.2. Paragraph 2.2 is expressed to be subject to paragraph 2.4. This expressly gives jurisdiction to the Master to vary or discharge an injunction, but only if there has been consent by all parties to the proceedings. Given that the general prohibition in paragraph 2.2 is subject to paragraph 2.4, the inference is that an order varying or discharging an injunction falls within the general words of prohibition in paragraph 2.2 as “relating to” aninjunction.

[13]The Master rejected a submission that he lacked jurisdiction. In his Judgment he reasoned that the injunction granted by Patten J and made final by Lewison J would continue “on the same terms as it was before the order [of Lewison J] was made”. By his own order the Master concluded, he was not “varying” the injunction ordered by Lewison J, as that had been ordered by Lewison J in exactly the same terms as ordered by Patten J and would remain “exactly as set out in the default judgment and in Patten J’s order. He recognised that of course the otherwise permanent injunction granted by Lewison J was being made interlocutory only. But he concluded that this was not a variation of the injunction within the meaning of paragraph 2.4 of the Practice Direction: in his judgment such a variation would have to be to the terms of the injunction; the substitution of an interim injunction for a final one would not be a “variation”.

[14]The Master’s decision on this point has certain practical good sense. If he is correct, applications to set aside default judgments containing injunctions may be dealt with substantively by a Master and need not be made only to a Judge. I strongly suspect that before the Rules of the Supreme Court were replaced by the CPR it would have been open to a Master to set aside such a default judgment, the relevant limit on jurisdiction being only as regards the granting of injunctions (see, in particular, RSC Order 1 r.4(2) and Order 32 r.14, and Chancery Practice Directions 13.B(A)). In the instant case the application came before the Master in August, and the Master took it as axiomatic that if he adjourned the application to be heard by a Judge it would not be heard before October.

[15]Nevertheless, whatever the position before the introduction of the CPR, I conclude that the Master should not have made the Order. As it seems to me, the Master’s Order has discharged the injunction ordered by Lewison J, without expressly reinstating any injunction in its place. It is by no means clear to me that on the discharge of the injunction ordered by Lewison J there remains in place any injunction at all. But, even if that is wrong, the Master’s Order must have varied, or at the least changed, a final injunction by making temporary that which was previously permanent. Either way the Master’s Order was in my judgment one “relating to” an injunction within paragraph 2.2 of the Practice Direction.

[16]The point concerning the discharge of an injunction may be developed a little further. To my mind Lewison J’s Order operated as a further order which itself discharged the injunction granted by Patten J and in its place substituted a final injunction on the same terms. As to this, it will be remembered that Patten J’s Order granted the injunction only until after the hearing of the application or further Order. Lewison J’s Order was, I think, just such an

[17]Assuming that the Order setting aside Lewison J’s Order was effective in accordance with its terms, a possible consequence was that Lewison J’s Order ceased to have effect and with that the final injunction was discharged. But it does not follow from the fact that Lewison J’s Order was discharged that it had never been made or and had never had effect.

[18]Assuming, alternatively, that the point made in the previous paragraph is wrong, and that (as the Master thought) with the setting aside of the Order of Lewison J the previously existing state of affairs revived, so that Patten J’s Order stood as though nothing had take place between June 2004 and August 2005, still the effect of the Master’s Order was to replace a permanent injunction with only a temporary one. On the assumption that this did not involve the discharge of a permanent injunction and the grant of a fresh, temporary, injunction, the Order nevertheless made a change to the permanent injunction granted by Lewison J. I think that was a variation of the injunction as that expression is used in paragraph 2.4 of the Practice Direction. But even if that is wrong, in my judgment an order making a change to an injunction is an order “relating to” an injunction within paragraph 2.2.

[19]Given my conclusion that the setting aside of Lewison J’s Order lay outside the Master’s jurisdiction by reason of the change made to what had been ordered by Lewison in relation to the injunction, it is strictly speaking unnecessary to reach any conclusion on a further submission made by Mr Comiskey concerning the declaration made by Lewison in the same Order. In summary Mr Comiskey argued that the Master’s jurisdiction did not allow him to set aside such a declaration. Certainly, paragraph 5.1(b) of the Practice Direction prevents a Master from making a declaration in proceedings in the Chancery Division except either with the consent of the Vice-Chancellor (now the Chancellor of the High Court) or in a plain case. But the limit on the power to make declarations set out in paragraph 5 of the Practice Direction does not expressly, and in my judgment does not by implication, prevent a Master from setting aside an order containing a declaration where otherwise he has jurisdiction to set aside the order. Accordingly my view, in agreement with the Master, is that there is nothing in this argument on behalf of the Claimants, and that it would have been open to the Master to set aside Lewison J’s Order, had the Order not contained the injunctive relief which it did.

[20]My conclusion concerning the Master’s jurisdiction is of only indirect significance. For present purposes I do not need to decide, and do not decide, whether or not Mr Burch and Praisecover remain subject to any injunctive relief: that would only become material if it were later to be claimed that either has been in breach of the injunction. But I do think it right that any order I make disposing of the present appeal should make it clear that those two defendants remain subject to an injunction prohibiting the acts prohibited by Patten J and subsequently Lewison J.

[21]Where the jurisdiction point does matter is in relation to the approach which I should take towards this appeal. Considering, as I do, that as a matter of jurisdiction the Master was wrong to have made the order which he did, the right course is to proceed as if this were a re-hearing of the set-aside application. With this I turn to the second ground of appeal and to the substance of the application.

The substantive order

[22]I have already referred to Rule 13.3 of the CPR. To satisfy the Court that a regularly obtained default judgment should be set aside the applicant must show that one or other of the grounds in paragraph (1) of that Rule is met. These grounds are set out in paragraph 3 of this judgment. However paragraph (2) of the Rule provides that in considering whether to set aside or vary a default judgment the matters to which “the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly”.

[23]As it seems to me the correct approach is first to decide whether or not the applicant has satisfied the threshold requirements in paragraph (1) of Rule 13.3. If that requirement has been met, the court nevertheless has a discretion. As to this, the Master pointed out in his judgment that the overriding objective is to do justice; in other words, to deal with cases justly. So a relevant consideration, one which the court is by Rule 13.3(2) bound to consider, is whether or not the application was made promptly; that is, whether or not the applicant has acted with all reasonable celerity in the circumstances. But the precise lapse of time between the time when first the applicant could reasonably have made the application and the time when the application was in fact made is only one aspect of the question. Plainly the court will need to take account of such circumstances as the reasons for the lapse of time, any prejudice which would be suffered by the respondent or a third party brought about by the lapse of time, and the strength of the applicant’s defence and of any other reasons which have led to the Rule 13.3(1) threshold being passed. No doubt CPR Rule 3.9 sets out types of matter which should be borne in mind.

[24]I therefore now consider whether or not Mr Burch and Praisecover have satisfied the threshold requirements in Rule l3.3(1). This requires some further examination of the underlying disputes between the parties.

[25]In late 2003 there was a falling out between Mr Richmond and Mr Burch in relation to Alpine. The details are obscure. The immediate cause seems to have been a wish on the part of Mr Burch to introduce a computerised call-handling and dispatching system to be used by Alpine for its drivers. It may be that this was planned to be run in conjunction with, and perhaps operated by and from the premises of, Praisecover. However Mr Richmond did not agree with what Mr Burch wanted. Until this time Mr Burch had left Mr Richmond to his own devices in running Alpine. But in late 2003 Mr Burch says that he became suspicious of Mr Richmond’s reluctance to agree to the implementation of the new system, thinking that Mr Richmond might have been diverting Alpine’s income.

[26]There is no doubt that over the end of 2003 and early 2004 Mr Burch took a variety of steps which he now seeks to justify as having been self-help, attempting to preserve the business of Alpine from Mr Richmond. Mr Richmond’s case is that these steps were in fact attempts by Mr Burch to divert the business of Alpine to Praisecover and to destroy Alpine, in the process causing serious financial damage to Praisecover and Mr Richmond.

[27]The Particulars of Claim plead out the steps referred to in the previous paragraph as particulars of breach of director’s fiduciary duty owed by Mr Burch, of tortious interference with Alpine’s contracts with drivers and customers, and of passing off; and there are given particulars of losses said to have been caused by these steps. The evidence put forward by the Claimants on the assessment application is that the quantum of damages is in excess of £50,000.

[28]On behalf of the Claimants Mr Comiskey has submitted that Mr Burch has either admitted the various steps alleged by the Claimants, putting forward explanations which provide no defence, or has made bald denials which are not to be believed.

[29]There are 12 specific things which Mr Burch is alleged to have done, these being pleaded as particulars of wrongs by him and Praisecover. In this context it is alleged that the things were not done by Mr Burch in good faith. I agree with Mr Comiskey that Mr Burch can be taken to have admitted doing several of these things, whether the admission is direct on is an admission of other acts which are in truth those alleged. However, I am not prepared to reject as necessarily untruthful Mr Burch’s denials, or his assertions of his good faith, weak though I believe his and Praisecover’s case to be and likely though it appears at present that cross-examination will show the denials and assertions to be untrue.

[30]Nevertheless, if this application turned only on the question whether or not Mr Burch’s defence was better than fanciful and therefore met the requirement of having a real prospect of success, I would find the decision to be finely balanced. But it seems to me that Mr Burch has met the threshold condition in Rule 13.3(l)(b). There do appear to me to be good reasons why Lewison J’s judgment should be set aside.

[31]A factor, but only one factor, is that Mr Burch and Praisecover do have some prospect, albeit remote, of successfully defending the action; that is, of avoiding altogether an adverse judgment.. More weighty, in my judgment, are other factors which appeared to the Master to be relevant in leading to a conclusion that Lewison Js Order should be set aside. These I explain briefly, in no particular order and with less detail than the Master. In truth I think the Master right as to these factors for the reasons he gave.

[32]First, bound up in the action is the dispute about the Regency Court property. The claim put forward by Mr Richmond and Alpine is that the price was contributed as to half by Mr Richmond, it having been orally agreed at the time of acquisition in 1998 that “the parties”, that is Mr Richmond, Mr Burch and Praisecover, would purchase the Property, Mr Richmond and Praisecover paying half each, and that “while title would be registered in the sole name of [Praisecover] … the Regency Court property would be used as Alpine Taxis’ office premises, Alpine Taxis would have the exclusive use of the Regency Court property, and Alpine Taxis would pay no rent for the use of the Regency Court property” but would maintain the property and pay outgoings. The claim made in the Particulars of Claim is that Alpine is entitled to a declaration that it “is the sole beneficial owner of the Regency Court property, alternatively, that Alpine Taxis is a contractual licensee .... such licence being terminable solely on Alpine Taxis’ ceasing to trade”.

[33]Mr Burch and Praisecover admit that the Regency Court property was purchased in 1998 in the name of Praisecover. It seems to be accepted that Mr Richmond contributed about half of the purchase price. What is denied is that there was any agreement that Alpine should have exclusive use of the property.

[34]The declaration made by Lewison J in relation to the Regency Court property cannot be sufficient to resolve the dispute between the Claimants and the Defendants as to that property: what was declared was simply that Alpine “is a contractual licensee of the” Regency Court property. The declaration leaves undecided both(a) the beneficial ownership of the Regency Court property (a matter put in issue in this action), and

(b) the terms of Alpine’s contractual licence (again a matter put in issue). Plainly these are questions which will need to be resolved. The present proceedings are the appropriate forum. It would be unfortunate if fresh proceedings needed to be started and then to be decided in the light of the declaration already made in this action.

[35]Secondly, as the Master pointed out, on the assessment of damages there is a question of causation which is at large. Mr Burch wishes to argue that insofar as Alpine did in fact suffer the claimed losses, the cause was not anything done by him or Praisecover. For a court trying the assessment the default judgment would cause practical difficulty. While the default judgment would have established that there had breach of fiduciary duty by Mr Burch, and that there had been the torts of inducing breach of contract and passing off by both him and Praisecover, it is uncertain whether the Court is bound to assume that each and every one of the pleaded particulars had been established, or whether Mr Burch and Praisecover could deny any of the specific acts or their inclusion as particulars of the wrong. But it would be wrong for the Court now to make an order which caused all the pleaded acts to be deemed to be established as wrongs, when in some cases they may not have been done at all. Further, it would be unfortunate if the judge dealing with the assessment had to try out questions of causation by reference to assumed facts, especially where there is uncertainty as to the line between the facts to be assumed and those to be established on the assessment.

[36]Given that it is open to the court to set aside Lewison J’s Order, it is still necessary to decide whether to exercise the power and if so whether to do so only on terms.

[37]In relation to this question the Claimant has, naturally, laid great stress on the fact that there was over a year between the default judgment and the application to set aside Lewison J’s Order. As the CPR in general, and Rule 13.3(2) in particular, convey that litigants should act promptly, especially when in default and seeking any sort of indulgence, the year’s lapse of time is at first blush a very powerful point against Mr Burch and Praisecover.

[38]Again in agreement with the Master for the reasons he gave, and setting out my reasons in less detail than he did, I think that the lapse of time is not conclusive in favour of the Claimants.

[39]There is evidence that when the default judgment was given Mr Burch took steps to have it set aside. Certainly by 10 July 2004 Counsel who had appeared before Lewison J had given advice and had settled a defence. Mr Burch says in his written evidence that he gave his then solicitor, Mr Hawker, instructions to make the application, assumed that he was dealing with the application and had everything in hand, and that he left it to him to move things forward. He also says that he was himself ill with heart problems, having heart surgery in November 2004 and being convalescent until the Spring of 2005. In his oral address to me Mr Burch went further and stated that at some time he was told by Mr Hawker that the application had succeeded.

[40]So far as I can reach a conclusion on this material it is that Mr Burch was willing to let a sleeping dog lie. He had engaged Mr Hawker to deal with the matter. He must have known from experience that Mr Hawker was not reliable in his conduct of proceedings; after al1 Mr Hawker’s failure had led to the default judgment in the first place. But he was not concerned to exert or involve himself, while there seemed to be no trouble. So far as can be told, he thought his lawyer had the matter in hand; and there is no reason to doubt the fact that Mr Hawker let him down (a matter which it would seem, by Rule 3..9(l)(f), the court may properly take into account). And it is a fact that the Claimants did not give any impression of being anxious themselves to proceed further with the litigation, appearing to be satisfied with the injunctive and declaratory relief they had obtained and the status quo in the splitting up of the Alpine business. This state of affairs continued until late May 2006.

[41]In my judgment down to May 2005 Mr Burch’s behaviour, while not sensible or commendable, is not such as of itself and without more to disqua1ify him and Praisecover from obtaining relief on their application. Most materially, the Claimants cannot and do not point to any real prejudice caused to them by the delay.

[42]At the end of May 2005 Mr Burch became aware that the default judgment was extant and that the Claimants were intending to proceed on it. On 7 June 2005 he wrote to Mr Hawker asking for information, commenting in particular that “you advised me that once the judgement had been set aside the onus would be on Mr Richmond to pursue the matter further”. On 15 June 2005, when the Claimants had translated their intention to action, he approached new solicitors (as he told me). On 29 June 2005 they made the set-aside application.

[43]Mr Comiskey submitted that even if Mr Burch could be excused for having failed to make the set aside application before the end of May 2005, his delay thereafter was unreasonable. Although it is unsatisfactory that it was only the actual making of the Claimants’ assessment application which led Mr Burch make his set-aside application, I do not think that Mr Burch’s conduct was so unreasonable that the set-aside application should be dismissed out of hand. It is clearly a weighty factor which is to be brought into the balance, particularly having regard to what had gone before and having regard to the weakness of Mr Burch’s case. Although I have found this point particularly disturbing, I have nevertheless reached the clear view that the factor is not decisive.

[44]Against this factor is the consideration that the grounds on which Mr Burch and Praisecover come within Rule 13.3(1) in the first place point to Lewison J’s Order being set aside. As it seems to me the consequences of not setting aside that Order are potentially serious for Mr Burch and Praisecover; and the position is likely to be unsatisfactory for the Court and for the Claimants as well. The better course is to allow Mr Burch and Praisecover to continue to defend the action. This defence will be in the Central London County Court, as the Master has directed. At the trial the Court will be able to go into questions of causation having regard to any substantive wrongs which may be established on the evidence, as well as resolving the dispute about the Regency Court property.

[45]I should add that I accept that the Claimants can be said to have been prejudiced by Mr Burch’s delay after the end of May 2005, in that they incurred the costs of the assessment application. But this prejudice is remediable by an appropriate costs order.

[46]Should the order setting aside Lewison J’s Order require the setting aside to be conditional upon Mr Burch and Praisecover making a payment into court? This was a submission made on behalf of the Claimants. In effect the Claimants would be obtaining security for or towards the damages which they are claiming. To this end Mr Comiskey submitted that an appropriate payment should be £25,000.

[47]I have given this point anxious consideration. Unquestionably there are factors which point towards any order setting aside Lewison J’s Order being conditional. However I have decided that the better course is not to impose any condition. I would not have felt it appropriate to set any ordered payment at anything like Mr Comiskey’s suggested £25,000; and I think that to order a modest sum only would have the potential for further delay and dispute without serving a sufficiently worthwhile purpose. i) First, while I can see that success in the action (assuming that the Claimants do succeed) is likely to lead to some recovery being made by the Claimants, I feel unable to predict with any confidence what sort of level of recovery is likely. ii) Secondly, I was pressed by Mr Burch with the fact that he and Praisecover will be unable to pay any significant sums, being seriously restricted in what they can pay, difficulties being caused by the matrimonial dispute with his wife. I do take this submission with a degree of scepticism, as Mr Burch gave no evidence as to his or Praisecover's financial position to support this submission.. A modest payment should be within their reach. iii) Thirdly, it seems to me that it will be of more use to the Claimants if such sums as Mr Burch and Praisecover can raise are applied in meeting the costs orders which are likely to result from this appeal, and to which I refer below. I would not wish the further conduct of the action in the Central London County Court to be delayed while Mr Burch and Praisecover are seeking to meet, or to obtain extra time for meeting, a condition for having Lewison J’s Order set aside.

The costs orders

[48]The third matter is the question of costs. Earlier in this judgment I set out paragraphs4 and 5 of the Master’s Order which dealt with this aspect.

[49]I am not at all sure that paragraphs 4 and 5 of the Order were correctly drawn up to reflect whatever it was that the Master had ordered. The point can be seen when it is borne in mind that at the hearing on 22 August 2005 the Master had before him not only the application of Mr Burch and Praisecover by notice of 5 July 2005 to set aside the default judgment, but also the application by the Claimants, adjourned from Deputy Master Nurse, to progress the assessment of damages ordered by Lewison J. Paragraph 4 of the Order in terms deals only with the costs of the default judgment application to Lewison J. Paragraph 5, then, must be dealing with both the applications before the Master. As regards the set-aside application it must be purporting, in making no order, to be making no order only as to costs. This is because other paragraphs of the Order have plainly made orders on the set-aside application. On the other hand, as regards the assessment application the Master may well have intended that there should be no order; but this would be not only as to the substance of the application but also as to the costs of the application.

[50]There has certainly been confusion at the hearing before me as to the import of the last two paragraphs of the Master’s Order. The Claimants have understood that paragraph 4 was dealing with the costs of the set-aside application, not the default judgment application made to Lewison J. That is how the point was argued before me. In his Skeleton Argument and oral address Mr Comiskey has submitted that the Master ordered the costs of the set aside application to be the Claimants’ costs in the case. If, however, paragraph 4 of the Order does not deal with the set-aside application and paragraph 5 does, the Master’s Order is much less favourable from the Claimants’ perspective in that it seems to direct that no order should be made as to the costs of either the set aside application or the assessment application. That I take to be the effect of paragraph 5. What has apparently been ordered to be the Claimants’ costs in the case is only the costs of the default judgment application made to Lewison J: this is set out in paragraph 4.

[51]While Mr Comiskey has argued that the Master was wrong to make no order for the costs of the assessment application, no separate argument was addressed to me as to the question of the appropriate costs order as regards the default judgment application made to Lewison J, making the assumption that Lewison J’s Order was to be set aside. However, as at present advised, I cannot see any basis for depriving the Claimants of their costs of the default judgment application if they fail in the action: the default judgment was regular; it was brought about by the failure of Mr Burch and Praisecover on their professional advisers; in the circumstances it was reasonable for the Claimants to make the application for the default judgement; and Lewison J’s decision that Mr Burch and Praisecover shou1d pay those costs ought to be left undisturbed. Provisionally, therefore, I am minded to make an order to that effect. However, if Mr Burch wishes, I will hear further argument on the point when this judgment is handed down.

[52]However, as to the costs of the two applications which were before the Master, I think the right course cannot be to make no order at all. I have reminded myself of CPR Rule 44.3, and in particular of the general rule set out in paragraph (2)(a) that if the court decides to make an order about costs the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party. Nevertheless, in my judgment: i) There is no justification for refusing to allow the Claimants their costs of the damages assessment application. On this point I agree with Mr Comiskey. The Claimants were perfectly entitled to bring that application, having a regular default judgment which had stood without any challenge for a year. Certainly, the setting aside of the default judgment put paid to the assessment application. But the assessment application was made first, the set-aside application being made only two days before the first hearing of the assessment application. Even then the Claimants had only been provided with an unissued form of application, and on enquiry of the Court had been told that the set-aside application had not been issued; and at that first hearing Deputy Master Nurse proceeded on the basis that there was no set-aside application before him and that it was right to make substantive directions. Under the circumstances the appropriate order in my judgment is to require Mr Burch and Praisecover to pay the costs of the application. ii) As to the costs of the application by Mr Burch and Praisecover to set aside the default judgment, I am also satisfied that to deny the Claimants any costs, no matter what the outcome of the action, would be wrong. I can see a possible justification for an order that the Claimants’ costs of the application should be in the case. But that was not the order made, at any rate according to the Order as entered. The costs order that I would make would be for the Claimants to be paid their costs in any event by Mr Burch and Praisecover. Given the way in which the application had come to be made and the weakness of the case which Mr Burch is seeking to advance, I think the Claimants were justified in their opposition to an application which had in any case been made necessary by the default of Mr Burch and Praisecover. In reaching my conclusion as to the costs of that application I have particularly in mind the fact that the Claimants did indeed attempt to have the application brought before the Judge rather than the Master, considering, as I think correctly, that it lay outside the Master’s jurisdiction to set aside the injunction ordered by Lewison J.

Conclusion

[53]I therefore propose to allow the Claimants’ appeal to the extent of varying the Master’s orders as to costs. I think, any rate provisionally, that Mr Burch and Praisecover should be ordered to pay the costs of the application to Lewison J. In my judgment they should pay the costs of the assessment application and the costs of the set aside application to the Master. Provisionally my view is that Mr Burch and Praisecover should be ordered to pay an interim sum on account of those costs; but I will hear argument, at the time when this judgment is handed down, as to whether there should be such an interim payment and if so in what amount. I shall also hear argument as to the costs order to be made on this appeal.

[54]As mentioned, the order to be made on this appeal will expressly include an order for the continuation of the injunction; but I am willing to hear argument as to such matters as the period over which the injunction should be granted. I also think it right that the further conduct of the action should be in the Central London County Court, as the Master ordered.

Order

it dealt in terms with what was to happen for the future as regards the injunction ordered by Patten J.