Sir John Fitzgerald Ltd v Macarthur [2009] EWHC 2659 (QB)

[2009] EWHC 2659 (QB)

Case No CC/2008/PTA/0058

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

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

Date 28 October 2009

Before

THE HONOURABLE MR JUSTICE STADLEN

Between

SIR JOHN FITZGERALD LIMITEDClaimant

HUGH MAXWELL MACARTHURDefendant

DAMIAN MURPHY (instructed by SAMUEL PHILLIPS & CO) for CLAIMANT

DANIEL HUBBARD (instructed by FIELD SEYMOUR PARKES) for DEFENDANT

Hearing Hearing dates: 3, 6 and 8 July 2009

Judgment

[1]This is, at least on paper, an appeal against decisions and orders made on 3 September 2007 by His Honour Judge Elly sitting at the Reading County Court. The decisions and orders appealed against were the striking out of the second defendant’s defence under CPR part 39.3(1)(c) upon his failure to attend, the entering of judgment for the claimant in the sum of £85,744 and interest and an order that the second defendant pay the claimant’s costs on an indemnity basis in the amount of £19,217.13.

The Claim

[2]The claimant in the action and respondent to the appeal is a company which owns and operates bars and restaurants in the north of England. Its managing director is Mr David Horgan. The first defendant was a company specialising in the sale of Mercedes-Benz G-Wagen model cars. The second defendant, Mr Macarthur, was a director of the first defendant.

[3]By an exchange of faxes dated 1 November 2005 and 9 November 2005 between Mr Horgan on behalf of the claimant and Mr Macarthur on behalf of the first defendant the claimant ordered and the first defendant agreed to supply a new Mercedes-Benz G55AMG built to the claimant’s specifications. The purchase price was £112,744 with provision for a deposit payable in the sum of £33,823. On 11 November 2005 the claimant paid £33,823 to the first defendant by way of deposit. On 14 March 2006 the claimant paid the first defendant £51,921, being the balance of the purchase price after deduction of credit for a part exchange of Mr Horgan’s existing G-Wagen.

[4]The new Mercedes G-Wagon was never delivered and on 22 August 2006 the first defendant went into creditors’ voluntary liquidation. On 22 February 2007 the claimant obtained judgment against the first defendant in the sum of £89,164 (being £85,744, that is the agreed purchase price less the exchange value of Mr Horgan’s existing car, plus interests and costs).

[5]As against Mr Macarthur the claimant claimed damages for fraudulent or alternatively negligent misrepresentation or inducing breach of contract. The damages claimed were in the same amount that is to say £85,744. In addition interest was claimed in the sum of £7,506.72 to 28 February 2007 and continuing.

[6]In the Amended Particulars of Claim three alleged representations were relied on in the claim against Mr Macarthur. The first is said to have been made in the fax of 9 November 2005 in which it is alleged that Mr Macarthur represented that the first defendant had ordered the G-Wagon from the supplier, that the supplier required a deposit from the first defendant in the sum of £33,823 and that the first defendant had already paid that sum to the supplier or would do so when the claimant paid that sum to the first defendant. The second representation is alleged to have occurred in a telephone conversation between Mr Macarthur and Mr Horgan in February 2006 in which it is alleged that Mr Macarthur represented that the first defendant had ordered the G-Wagen from the supplier and that it would be available for delivery in or about late March 2006. The third representation is alleged to have been made in a fax dated 13 March 2006 in which Mr Macarthur sent the claimant an invoice for the balance due. The invoice stated:

“2 date of registration: 1 March 2006…in order to arrange a delivery within 10 working days payment should be made direct to our bank”

. That is said to have constituted a representation that the G-Wagen had been registered, that it was available for delivery within 10 working days of 13 March 2006 and by inference that it was in the first defendant’s custody and control. It was alleged that the claimant was induced by the first representation to pay the first defendant the sum of £33,823 and by the second and third representations to pay the sum of £51,921.

[7]The first representation was said to have been false in that as at 9 November 2005 the first defendant had not ordered the G-Wagen from Mercedes-AMG GMBH, that as at that date the first defendant was not obliged to pay Mercedes-AMG GMBH a deposit, that the first defendant had not paid Mercedes-AMG GMBH a deposit in respect of the G-Wagen and that Mr Macarthur knew that he intended to cause the first defendant to dissipate any monies paid by the claimant.

[8]The second representation was alleged to have been false in that as at February 2006 the first defendant had not ordered the G-Wagen from the supplier, there was no prospect at that time of it being available for delivery in late March 2006 and that Mr Macarthur had caused the first defendant to dissipate the sum of £33,823 paid to it in November 2005.

[9]The third representation was said to have been false in that as at 13 March 2006 the first defendant had not ordered the G-Wagon from the supplier, there was no prospect of it being available for delivery within 10 days, it had not been registered, it was not in the first defendant’s custody and control and Mr Macarthur knew that he intended to cause the first defendant to dissipate any monies paid by the claimant under the invoice.

[10]It was alleged that Mr Macarthur was the controlling hand and mind of the first defendant, as well as being a director of it and that it was his creature.

Procedural history: events leading up to the County Court judgment

[11]On 19 July 2006 the claimant issued proceedings against both defendants in the Newcastle-upon-Tyne County Court. On 6 February 2007 District Judge Large ordered that disclosure should take place by 19 February 2007 and that witness statements of fact should be exchanged by 19 March 2007. On 6 March 2007 the trial was listed to take place at the Newcastle-upon-Tyne County Court on 15 May 2007.

[12]On 28 March 2007 Deputy District Judge Matharu sitting at the Newcastle-upon-Tyne County Court transferred the case to the Reading County Court. Among the orders he made were for disclosure to take place by 4 May 2007, witness statements to be exchanged by 31 May 2007, the trial fixture date of 15 May 2007 at Newcastle to be vacated, and not less than 7 clear working days before the trial the claimant to serve two indexed and paginated bundles of documents at Court and a copy thereof on the second defendant.

[13]On 28 March 2007 the claimant served Amended Particulars of Claim wholly replacing those originally attached to the claim form. They were supported by a Statement of Truth signed by Mr Horgan stating that the facts stated in the pleading were believed by him to be true. On 16 April 2007 Mr Macarthur and his family emigrated to Australia. On 23 April 2007 the Reading County Court ordered the trial to take place on 3 September 2007 with a time estimate of 2 days. On 27 April 2007 (that is 9 days after Mr Macarthur emigrated to Australia) Mr Macarthur served an amended defence settled by counsel with a statement of truth signed by a solicitor.

[14]On 21 May 2007 Mr Macarthur gave standard disclosure by list. On 18 June 2007 Mr Winter, a solicitor with the claimant’s solicitors Samuel Phillips sent a letter to Mr Macarthur’s solicitors, Field Seymour Parkes enclosing the claimant’s listing questionnaire proposing a delayed exchange of witness statements for 29 June 2007 and disclosure on 22 June 2007 (notwithstanding that the defendant had already given disclosure on 21 May 2007). It also specified the need for facilities at court during the trial for live video evidence from a witness in Germany.

[15]By a letter dated 20 June 2007 Field Seymour Parks replied noting that the claimant’s completed listing questionnaire made reference to a trial date fixed for 3 September 2007 stating that that was news to them since they had received nothing from the Reading County Court. The letter stated that they had not yet received the claimant’s list of documents. It pointed out that the order of 28 March 2007 envisaged a gap of just under 4 weeks between the dates for disclosure and mutual exchange of witness statements adding that if the claimant’s list of documents were served on 22 June 2007, as anticipated in the listing questionnaire, that would point to a date of 18 July 2007 for exchange of witness statements.

[16]On 22 June 2007 Samuel Phillips served the claimant’s list of documents, by now some seven weeks late. and, “in view of the late service” the documents themselves. They also enclosed the notice of trial date from the Reading County Court and agreed that witness statements should be exchanged on 18 July 2007. The letter expressed concern about Mr Macarthur emigrating to Australia and sought confirmation as to whether or not he intended to return to England for the trial.

[17]In a letter dated 9 July 2007 to the district Judge at the Reading County Court copied to the claimant’s solicitors Mr Macarthur notified the Court that he had had to disengage his solicitor as he could not afford to pay him having “lost virtually everything”. He stated that he had now emigrated from the UK but that he could not reveal his new address to the court for fear of reprisal from the director of the claimant company and his wife, both of whom it was alleged had previously threatened Mr Macarthur, his wife and then 7 year old daughter, the facts said to have been known to the Thames Valley Police. He stated that although they no longer lived within the EEC his wife was frightened that Mr and Mrs Horgan or “their people” might very well come looking for them and was thus not prepared to disclose his address. He gave an address at the top of the letter at Hodmore Farm, Mapledurham Berkshire which he stated was prepared to act as a mailbox for him for the purposes of the litigation. The letter enclosed a formal notice of change of solicitors giving Hodmore Farm as the address to which documents about the claim should be sent.

[18]Neither party complied with the agreed extended date of 18 July 2007 for exchange of witness statements. On 17 August 2007 Mr Macarthur wrote to the district Judge enclosing a copy of his letter of 9 July 2007 saying that he had not received a reply or acknowledgment either from the Court or from the claimant’s solicitor. He said that the case was due to be heard on 3 September 2007, “that is in seventeen days time”. He said that his defence had been entered and he had so far complied with all of the court’s requirements ( this was only partially correct given that he had not exchanged his witness statement by 18 July 2007) but that there had been no response from the claimant whatsoever since the letter of 22 June 2007. He continued:

“I have emigrated from the UK and now live on the other side of the world and therefore making arrangements to attend this court hearing and managing to pay for the trip are extremely difficult for me at the best of times. I do feel that this is an intolerable situation for both me and your Honourable Court and I do not see how this case can proceed. (at least, not on the 3 September). I would be most grateful if the court could write to me care of the above postal address, it will then be forwarded to me by email. As I explained in my letter of the 9 July I can not disclose my current address but I will receive correspondence via Hodmore Farm as above. I look forward to hearing from you.”

(emphasis added).

[19]On 21 August 2007 the claimant says that it sent its witness statements to the mailbox address given by Mr Macarthur. This was nearly 5 weeks after the agreed date for exchange of witness statements. Mr Macarthur in his Grounds of Appeal says he did not receive it (unsigned) until 30 August, the Thursday before the Monday on which the trial was scheduled to begin. Support for this contention is to be found in his letter dated 1 September 2007 to the District Judge in which he relied on this late service as confirming his belief that the case was not ready to go to trial.

[20]On 23 August 2007 the claimant’s solicitors issued an application notice seeking an urgent pre-trial review on the ground that Mr Macarthur’s solicitors had come off the record, he was now a litigant in person and they understood that he had emigrated to Australia. The application was supported by a witness statement from Mr Winter, the solicitor who had conduct of the case for the claimant.. The statement purported to summarise the position of the parties at present. It referred to the agreement by correspondence to delay the exchange of witness statements until 18 July 2007, noted that Mr Macarthur had emigrated to Australia and referred to a letter from Field Seymour Parkes dated 26 June 2007 apparently stating that they did not know whether Mr Macarthur intended to return for the trial.

[21]Mr Winter confirmed that he had received Mr Macarthur’s letter dated 9 July 2007 and his letter to the court dated 17 August 2007. He stated “we have not been in a position to agree a date for the exchange of witness statements with Mr Macarthur.” This is a somewhat curious statement since, as he himself recorded, the date for that exchange had already been agreed as being 18 July 2007 and indeed had passed. He said that the claimant had sent its own witness statements to the mailbox address given by Mr Macarthur in the hope that he would respond in time and that those had been despatched on 21 August 2007. He said that he had received no direct contact from Mr Macarthur since his solicitors came off the record.

[22]Mr Winter said that the claimant now faced some difficulty. The cost of preparing for and attending trial would run to many thousands of pounds. It was by no means certain that Mr Macarthur intended to attend and the claimants were concerned as to the implications if that was the case. The judge might choose still to hear the trial or might be minded to vacate it on the basis of further last minute correspondence that the court might yet receive from Mr Macarthur.

[23]Mr Winter said that the claimant was anxious to bring these matters to the attention of the court prior to the commencement of the trial. If the pre-trial review were listed on the first morning of the two day trial i.e. on 3 September 2007 that would put the claimant in particular difficulty since Mr Horgan and a solicitor and Counsel would need to be prepared for the trial to go ahead and travel to Reading the night before. “The claimant would also need to prepare the trial bundle.” It is apparent from that statement that as of 23 August 2007 the trial bundle had not yet been prepared let alone filed at Court or served on Mr Macarthur. Mr Winter did not mention in his witness statement that one of the orders made by deputy District Judge Matharu as long ago as 28 March 2007 was that the claimant should file at court and serve a copy on Mr Macarthur of two indexed and paginated bundles of documents not less than 7 clear working days before the trial, that is to say the very next day 24 August 2007.

[24]Mr Winter stated that at the pre-trial review there were a number of options open to

the Judge “upon which the claimant makes the following brief submissions:

“(i) An unless order against the second defendant debarring him from filing his witness statement unless it is filed by a date to be agreed (ii) An order that the trial will proceed in any event irrespective of any further communication that the court or claimants may receive from the second defendant (iii) Orders relating to the trial bundle (iv) Vacate the trial and issue fresh directions. It would be most helpful if this application could be listed as a telephone hearing as the claimant and their solicitors are based in Newcastle-upon-tyne we have no operable telephone number for Mr Macarthur, so it would seem that the hearing of this application can only go ahead without his participation.”

It is not clear what submissions Mr Winter was referring to unless it was the request for the pre-trial review to be listed as a telephone hearing without the participation of Mr Macarthur. It is to be noted that the suggestion that at a pre-trial review the court might make orders relating to the trial bundles was, no doubt unintentionally, misleading in that it gave the impression that no such order had as yet been made which as already mentioned was incorrect. It would be most helpful if this application could be listed as a telephone hearing as the claimant and their solicitors are based in Newcastle-upon-tyne we have no operable telephone number for Mr Macarthur, so it would seem that the hearing of this application can only go ahead without his participation.”

[25]On 23 August 2007 Mr Winter sent a letter to Mr Macarthur at Hodmore Farm attaching a copy of the application and asking him to make contact with his office as a matter of urgency. He also enclosed what was described as “the signature page of the statement which was missing from our earlier correspondence.” It appears that this is a reference to the unsigned witness statement of Mr Horgan which was sent on 21 August 2007 to Mr Macarthur at the mailbox address.

[26]On 26 August 2007 Mr Macarthur wrote to the district Judge with a copy to Samuel Phillips. He stated that he had received by email the previous night (presumably from someone at Hodmore Farm) copies of correspondence from Samuel Phillips asking the court for an urgent pre-trial review to be listed prior to the trial. He pointed out that this was the first and only correspondence that had been sent to him since he had notified the court and Samuel Phillips that he had disengaged his solicitor on 9 July 2007. He asserted that during the time that Field Seymour Parks had been instructed by him all of the requisite exchanges of documents had taken place well within the allotted time frame but that he understood that that had not been the case as far as the claimant’s solicitors were concerned. He confirmed that he had now emigrated to Australia and that therefore even if the case had been correctly prepared and there had been an exchange of witness statements which there had not (his having been ready for many weeks) “it would be impossible to attend court prior to the 3 September for a pre-trial review”.The letter continued:

“I note the advice that Messrs Samuel Phillips seem to be giving to the Judge in their application for this review (paragraph 10, (i) (ii) (iii) and (iv)). (i) Is it fair that I should be debarred from filing my witness statement when the claimant has yet to file his own? (ii) Is it fair that the trial should proceed irrespective of any further communication from me when the claimant has had ample time since 9 July to communicate with me or the court but until now has failed to do so? (iii) I am not sure what this entails. (iv) If the trial is to be vacated and fresh directions issued which seems to me to be the only realistic and fair option within those mentioned by Samuel Phillips then I trust that any costs involved in this process would be borne by each side at least, as I do not consider it fair for me to be liable, should there be a cost involved. I most certainly do not think that it would be fair or reasonable for the claimant to expect or be granted an “urgent pre-trial review” during the coming week and citing the fact that my solicitors have come off the record that I’m a litigant in person and that I have emigrated to Australia as the reason why they want the said review. They were notified of the change of solicitor on 9 July and of my immigration on 20 June so why leave it until 23 August to apply for such a review or indeed anything to do with this case. As I explained in my letter of 9 July and reiterated on 17 August and by telephone to the Court on 24 August I am unable to disclose my new address for fear of reprisal against my family. The UK correspondence address above will function thanks to the assistance of a friend and if so desired I can be contacted by email at [ he then gave a hotmail email address]. May I take this opportunity of thanking the Judge and the court of their consideration in this matter and I look forward to your reply”

(emphasis added). (i) Is it fair that I should be debarred from filing my witness statement when the claimant has yet to file his own? (ii) Is it fair that the trial should proceed irrespective of any further communication from me when the claimant has had ample time since 9 July to communicate with me or the court but until now has failed to do so? (iii) I am not sure what this entails. (iv) If the trial is to be vacated and fresh directions issued which seems to me to be the only realistic and fair option within those mentioned by Samuel Phillips then I trust that any costs involved in this process would be borne by each side at least, as I do not consider it fair for me to be liable, should there be a cost involved.

[27]On 29 August 2007 Mr Macarthur wrote again to the district Judge copied to Samuel Phillips. He stated that he had spoken to “your court clerks” on the telephone on two occasions in an endeavour to establish whether or not there was likely to be a “hearing of this matter” on the 3 September. The 29 August was the Wednesday before the trial was due to begin the following Monday. Having referred to a telephone conversation with Mr Horgan in which a without prejudice offer had been declined he continued:

“In view of the situation and bearing in mind that I now live in Australia and it would be virtually impossible for me to be in Reading next Monday, may I request that the matter be discussed via the telephone at least to establish where the case is going. For reasons that I have previously mentioned I’m not able to disclose my whereabouts exactly, however I am quite prepared to telephone the court at a predetermined time to attempt to reach a conclusion.”

He then stated that he could be contacted at the email address which he had given in his letter dated 26 August 2007 or by fax by a telephone number in the United Kingdom which he gave or by mail at Hodmore Farm. The reference to the two telephone conversations appears to include a reference to the telephone conversation on 24 August 2007 referred to in his letter of 26 August 2007.

[28]At the hearing on 3 September 2007 his HH Judge Elly said that he had received Mr Macarthur’s letter dated 29 August 2007 by fax and that it had been replied to by the court by a Miss White who he did not think copied the letter to the claimant’s solicitors. He said that in the reply Miss White indicated that it would not be possible “for this hearing to take place before me by telephone because the provisions are not here for it and in any event it would be hopeless, but that is by the bye. Also she indicated that if there were any further documents which he wished me to take into consideration at the hearing would he please fax those over to us urgently... I do not know whether that reached him or not because I do not know what arrangements he makes for that purpose.” As appears from the text of Mr Macarthur’s letter dated 29 August 2007 he did not in fact indicate that he would not be attending court on 3 September. What he did state was that it would be virtually impossible for him to be in Reading the following Monday and he requested that the matter be discussed by the telephone at least to establish where the case was going.

[29]On 30 August 2007 Miss White did indeed reply to Mr Macarthur’s fax dated 29 August 2007 saying that he would not be able to appear by telephone at the hearing on Monday 3 September as there were no provisions for hearings to take place by telephone “in these chambers”. She thus appears to have interpreted Mr Macarthur’s request as being for a discussion by the telephone on 3 September whereas the letter in fact does not make clear whether it was seeking such a discussion before 3 September or on 3 September or either. Miss White asked Mr Macarthur to fax any documents he wished the Judge to take into consideration at the hearing on 3 September 2007 as soon as possible so that they might be added to the file in time for that hearing.

[30]Also on 30 August 2007, as already mentioned, Mr Macarthur received from the claimant’s solicitor the witness statement of Mr Horgan which under the agreed extension to the court order should have been exchanged on 18 July 2007.

[31]On 31 August 2007 there was an exchange of emails between Mr Winter and Mr Macarthur at the hotmail address which he had given in his letter dated 26 August 2007. In an email timed at 09:51am Mr Winter said that Mr Macarthur would by then have received the claimant’s application, witness statement and trial bundle. He said that the claimant had yet to receive his witness statement and asked for urgent confirmation as to whether he intended to attend the trial on 3 September 2007. In a reply timed at 10:13am Mr Macarthur said that he had received Mr Winter’s witness statement the day before and that his was on its way to Mr Winter who might have received it by then. He confirmed receipt of correspondence from the court, which I take to be a reference to Miss White’s letter dated 30 August 2007. He said that he would not be attending court on the Monday. “As everything had [sic] been left to the last minute it would now be physically impossible for me to get there in time. I have also sent a copy of my witness statement to the court and I did request a hearing by telephone, however the court have said that they are not able to do that. I trust that as the case has not been properly presented by either side the hearing will at least be adjourned, but I suppose that remains to be seen.” There is no evidence as to whether an actual trial bundle in the sense of hard copies of documents was attached to Mr Winter’s email or only the trial bundle index or both or neither. A copy of a trial bundle index was in the papers before me which referred to some 388 pages of documents.

[32]On 1 September 2007 Mr Macarthur sent a further letter to the district Judge with a copy to Samuel Phillips. He said that he was writing because he had received that morning (the Saturday before the Monday when the trial was due to begin) an email from Mr Winter dated 31 August and sent at 12:33. A copy of that email was not before me. According to Mr Macarthur it purported to be an unsigned statement by Mr Winter including “the quoted statement of a new witness who seems to be being introduced into the case”. That appears to be a reference to the unsigned witness statement of Mr Winter which was successfully sought to be introduced into evidence at the hearing on 3 September 2007 by the claimant’s counsel. That statement referred to conversations with a representative of Mercedes relating to issues in the case. Mr Macarthur in his letter stated that Mr Winter was aware that he lived in Australia and that because of the time difference his email was not going to be received by Mr Macarthur until the Friday evening. He reminded the district Judge that he had said in previous correspondence that the case seemed to be ill prepared and submitted that this latest email and witness statement should surely have been presented weeks before the trial rather than a few hours before it.

[33]Mr Macarthur stated that he had confirmed to Mr Winter that he would not be attending the trial on Monday as it would be physically impossible for him to do so at that late stage. He pointed out that he had only received the claimant’s witness statement on Thursday 30 August 2007 and felt that that once more confirmed his belief that the matter was not ready to go to trial. He concluded by saying that he looked forward to hearing the judge’s decision.

[34]On Monday 3 September 2007 the claimant’s counsel attended in front of HH Judge Elly at the Reading County Court. Mr Macarthur did not attend and was not represented. A transcript of that hearing was before me. It began with Judge Elly addressing the claimant’s counsel. He said that he had read the trial bundle and some documents handed in by the claimant’s counsel that morning, namely a further statement from Mr Winter, counsel’s outline submissions and various attachments thereto. He then referred to Mr Macarthur’s faxed letter dated 29 August 2007, Miss White’s reply dated 30 August 2007 saying that he did not know whether Mr Macarthur had received it and Mr Macarthur’s letter dated 1 September 2007.

The Judge then said that he did see that there was any good reason for adjourning the hearing:

“Mr Macarthur has made it quite clear that he has left the country and that he does not intend to come back for the hearing. There is no suggestion in his letter that if the matter were adjourned he would be able to attend. As far as I can see his actions are just designed to try to ensure that he is beyond the reach of the court and the claimants. His failure to disclose his address in Australia only confirms my view as to what he is attempting to do. Again, apart from raising the question as to whether the case is ready for trial he does not specifically suggest that he would be available to attend trial, even in this latest letter of 1 September. So I’m afraid that I do not take the view that an adjournment is necessary in the interest of justice to enable him to attend to put his case.”

[36]He then turned to the question of Mr Winter’s statement. He acknowledged that it had been served very much at the last minute but said that it was clear from the body of the statement that every effort had been made to try to obtain the information contained in it from Mercedes at a much earlier stage but that Mercedes had been unwilling to cooperate. He did not see that there was anything further that could sensibly have been done and since he did not think there was anything in the statement which was contentious in that it only confirmed by some specific dates what was already contained within the evidence that had already been filed, in so far as it was necessary to do so he gave leave for it to be adduced in evidence that day.

[37]The Judge then said there were two ways forward. Mr Macarthur having failed to appear it seemed to him that the claimant was on that basis alone entitled to judgment. If on the other hand counsel wanted him to adjudicate on the issues he would be prepared to do so. After a short adjournment to enable counsel to take instructions, the claimant’s counsel invited the judge to exercise his powers under CPR part 39.2(1) [(sic) I take this to be a mistake for 39.3(1)] and to strike out Mr Macarthur’s defence. He also invited him to enter judgment in favour of the claimant for the amount in the particulars of claim together with interest. He added that even though the defence might be struck out the claimant would still have to prove his or her claim although that would normally only entail reference to the statements of case or tendering witness statements. He said that that was a matter for the judge’s discretion adding that he would simply ask that everyone could get back on the motorway or train and that judgment would simply be entered.

[38]The judge then said that he had had the opportunity of reading the various documents including the witness statements and the written submissions of the claimant’s counsel and that he was satisfied that on the basis of what he had read and on the basis that there was no other evidence produced by Mr Macarthur or for that matter from the first defendant to gainsay the evidence which had been filed on behalf of the claimant on the face of it Mr Macarthur had acted fraudulently in this particular matter.

The judge then said this:

“The only issue it seemed to me that was a live issue was the question raised by the defence as to whether or not this induced the claimant to enter into the contract. It seems to me that on the face of it they have a good point to make as to that, but that does not seem to me to answer the point that so far as the payment of money is concerned (albeit that there was a contract between the claimant and the first defendant) nevertheless the fraudulent representation made by the second defendant to the effect that the first defendant needed the money to pay the deposit of 30% and also needed the money to pay the balance that was due, leading to the immediate collection of the car (all of which was clearly untrue and must have been known by the second defendant to have been untrue) seems to me to prove the case. This man has acted by means of a fraudulent misrepresentation in this particular case. So I am quite satisfied on the evidence that had been produced and the submissions that have been made. In those circumstances then I will, as requested, strike out the defence on failure of the second defendant to attend. Secondly I will enter judgment for the claimant in the sum of £85,744 plus interest.”

Procedural history: events after judgment was entered for the claimant on 3 September 2007

[40]On 24 October 2007 Mr Macarthur filed an Appellant’s Notice. Mr Macarthur filled in and prepared the Appellant’s Notice himself in Australia without legal assistance. He ticked a box incorrectly stating that he did not need permission to appeal. He applied for a stay of execution because “I do not believe this case was heard properly as I was unable to attend or be represented and I do not believe that more than one of my letters was read out.” In support of that application he stated that he wished to rely by way of evidence on most of the correspondence to which I have referred above together with an additional letter from a Ms Murphy of the Court Service dated 29 August 2007. He stated that he had more evidence should it be required.

[41]In his Grounds of Appeal Mr. Macarthur stated that he had emigrated to Australia where he had been living since April 2007 so that travelling to Reading was not only difficult but extremely expensive. It was his opinion that the case had not been properly prepared by the claimant in as much as he had not received the claimant’s unsigned witness statement until 30 August 2007, the Thursday before the hearing on Monday 3 September 2007. Further he had received another unsigned statement from Mr Winter introducing evidence from “a new” witness on the Saturday morning prior to the trial.

[42]He said that he had adopted a reasonable course of action given that the claimant was by then in breach of an order of the court. He had communicated with the court by letter, email, telephone and fax as it had been clearly impossible for him then even if he had still been living in Reading to prepare himself for that very late filing of information let alone now that he lived many thousands of miles away in Australia.

[43]Next he stated that in view of the history of events he did not consider it possible for a fair trial to take place whereby the defence was not able to be represented and even if he had still been able to instruct a solicitor he or she would not have been in possession of the facts of the claimant’s case until the morning of the trial. Fourth he stated that although he had requested a transcript of the trial he had yet to receive one or any information as to how to achieve one and therefore did not know what had been said in court on 3 September 2007. His understanding from reading the order was that the judge had only been shown one of his letters and had perhaps not been completely aware of his efforts to bring the matter to a fair hearing.

[44]Finally he said that whereas it is usually up to the claimant to be the driving force in terms of production of evidence and statements and that was most definitely not the case towards the trial date he accepted that since having to dispense with the services of Field Seymour Parkes for financial reasons he may have been less efficient in responding to matters relating to the case but that was due to his own lack of ability not being a professional.

[45]Pursuant to Part 52.4(2) the Appellant’s Notice should have been filed within 21 days after the date of his His Honour Judge Elly’s decision. It was thus out of time. In a witness statement dated 30 June 2009 Mr Macarthur stated that the judgment appears to have been drawn up on 5 September 2007 and was then posted to Hodmore Farm. He said it was then sent on to him by the occupier of Hodmore Farm, a James Lafferty, who might well have faxed it to him but he no longer had any record of that. He did however have the hard copy which Mr Lafferty posted to him and said that he would in any event not have received the judgment before approximately 10 September 2007. On receipt of the judgment he said that he contacted the Court and asked if he could have a transcript of the trial as he needed to know what had been said before launching his appeal. On 18 September 2007 a letter was written by HMCS in Reading explaining that if he wanted a transcript he had to deal with the transcriber and providing him with a list of organisations offering that kind of service. He stated that he chose Beverley Nunnery and contacted them as soon as he received the court’s letter. Some weeks later the transcript had still not arrived and on 24 October 2007 he filed his Appellant’s Notice.

[46]On 30 April 2008 Mr Macarthur’s Appellant’s Notice was sent to the listing office for referral to a High Court Judge for permission to appeal to be considered on paper. On 14 May 2008 permission to appeal was refused by Swift J. The reasons given were that Mr Macarthur had not referred to any specific evidence or other material which, as a result of his absence from the court, was not before the court at the hearing and which might have affected the outcome of the case. (2) It appeared from the transcript of the court proceedings that the “new witness evidence” to which he referred was not material to the judge’s decision. (3) Mr Macarthur had advanced no argument in relation to the substance of the case that would or might have affected the outcome.

[47]On 21 November 2008 Mr Macarthur received a notice of dismissal of his application for permission to appeal. On 12 December 2008 Cranston J gave Mr Macarthur permission to apply for an oral hearing of his application for permission to appeal out of time on the basis that given the sum of money involved and his absence from the hearing he should have a last chance. On 29 April 2009 Holroyde J ordered that execution of the judgment of 3 September 2007 be stayed pending the hearing of his oral application for permission to appeal on 12 May 2009. His reasons were that Mr Macarthur was flying from Australia to attend the hearing on 12 May 2009 at which he was to seek permission to appeal against the judgment given in his absence. It would in his view be unjust if the judgment which dated back to September 2007 were enforced shortly before that hearing and there would be no prejudice to the claimant in the event of a short adjournment.

[48]On 12 May 2009 Roderick Evans J granted Mr Macarthur permission to appeal against the order of HH Judge Elly and extended the stay of execution until determination of the appeal.

Analysis

[49]In the course of oral argument there was much discussion of a number of procedural issues. These largely related to the relationship between the rules governing the power of the court to set aside an order or judgment made against a party who fails to attend a trial and the rules governing appeals.

[50]The discussion arose for a number of reasons.

[51]First there was not a complete overlap between the orders identified in the Appellant’s Notice as being those against which Mr Macarthur wished to appeal and those identified in the skeleton argument of Mr Hubbard who appeared for him before me. Mr Hubbard identified three grounds of appeal and points upon which he wished to rely:(i) “The failure of the court at first instance to have allowed the appellant to make representations by telephone and/or to have accommodated his request that he be allowed to do so, amounted to a serious procedural irregularity. This meant that the decision of the lower court was unjust within the meaning of Rule 52.11 (3)(b).

(ii) In all the circumstances HHJ Elly was wrong to have exercised his discretion so as to have struck out the Appellant’s Defence and allowed the trial to go ahead in his absence and/or the judgment should be set aside pursuant to Rule 39.3(3)

(iii) HHJ Elly was wrong to have given judgment for the respondent in any event.”

[52]It will be noted that in contrast to the Appellant’s Notice ground(a) was directed against the failure of the court to allow Mr Macarthur to make telephone representations and ground

(b) sought in the alternative to an appeal an order that HH Judge Elly’s judgment should be set aside pursuant to Rule 39.3(3).

[53]Second Mr Hubbard in his skeleton argument acknowledged that because the judge exercised his discretion under Part 39.3(1) to allow the trial to proceed in the absence of Mr Macarthur and went on to strike out his amended defence and enter judgment against him Mr Macarthur ought to have followed the procedure set out in Part 39.3(3) and applied for the judgment to be set aside under that rule rather than appealing against those decisions under Part 52. That is because of a dictum by Jack J in Tennero Limited v Arnold

[2006] EWHC 1530

that: “It is an abuse of the court’s procedures for a defendant to appeal against the refusal of an adjournment in a situation where he also has the opportunity to apply under CPR 39.3(3). I think that it is the better view that he does not have a choice because a specific provision of the Rules, CPR 39.3(5) provides for the appropriate course of action in the circumstances: that should override the general right of appeal. Further CPR 39.3(5) enables the court to reconsider the question whether the party has a good reason for not attending with him present and having had the opportunity to put in further evidence. To appeal the decision to adjourn could be a way of side stepping that process, a process which the Rules Committee has considered appropriate.” (paragraph 17).

[54]Mr Hubbard explained the reason why Mr Macarthur’s application had been made by way of an appeal under Part 52 rather than an application to set aside under Part 39.3 as follows. From June 2007 until April 2009 he was not legally represented and was unaware of the requirements of Part 39. His Appellant’s Notice which was lodged on 24 October 2007 was not considered by the Court until 14 May 2008. In her order refusing permission to appeal Swift J did not refer to CPR Part 39 or to the fact that Mr Macarthur should have followed the procedure set out therein. Mr Macarthur did not receive notice of the refusal of his permission to appeal on paper until 21 November 2008 when he received a fax from the court. That was explained in his letter to the appeals office dated 25 November 2008 in which he requested an oral permission hearing. On 2 April 2009 he was notified by letter from the court that the oral permission hearing would take place on 12 May 2009. It was then that he instructed solicitor. By that time, given the imminence of the oral permission hearing, it was not thought sensible to discontinue the appeals process and issue a fresh application to set aside the judgment. Moreover Mr Macarthur had other grounds of appeal which it was submitted do not concern Part 39.

[55]The third factor which contributed to the procedural discussion was that an issue arose as to whether this court had jurisdiction to entertain an appeal against all parts of the Judge’s judgment and order. This turned on an analysis of what precisely the judge decided on 3 September 2007. Mr Murphy who appeared on behalf of the claimant submitted that Mr Macarthur’s third ground of appeal appeared to be an appeal against the final decision of the judge specifically in relation to whether or not he was right to give judgment based on the evidence before him. In so far as that is what it was, Mr Murphy submitted that that part of the judge’s decision was a final decision and as such one in respect of which only the Court of Appeal has jurisdiction to entertain an appeal. He referred me in this regard to a dictum of Jack J in Tennero which he submitted seemed to see the route of appeal against an order made at trial in the defendant’s absence as being to the Court of Appeal (see paragraph 10). Not surprisingly the claimant had no desire for further costs to be incurred in this matter and therefore did not seek that part of the appeal to be transferred to the Court of Appeal but quite properly it had concerns as to jurisdiction which Mr Murphy no less properly felt duty bound to air to the court.

[56]As it transpired in the course of argument these are areas of procedure by no means devoid of complexity not to say some opacity. However, by the end of the hearing, matters had developed in such a way that in my view it is unnecessary to resolve most of the procedural issues raised. In essence this is principally because, as reflected in Mr Murphy’s supplemental written submissions, the claimant not only agreed that I could treat ground two of Mr Macarthur’s appeal as an application to set aside the judge’s judgment pursuant to Part 39.3 but positively submitted that I should do so.

[57]The material provisions of Part 39.3 are in these terms:

“39.3 (1) The court may proceed with a trial in the absence of a party but - … (c) if a defendant does not attend, it may strike out his defence or counter claim (or both). (2) Where the court strikes out proceedings, or any part of them, under this rule, it may subsequently restore the proceedings, or that part. (3) Where a party does not attend and the court gives judgment or makes an order against him, the party who failed to attend may apply for the judgment or order to be set aside. (4) An application under paragraph (2) or paragraph (3) must be supported by evidence. (5) Where an application is made under paragraph 2 or 3 by a party who failed to attend the trial, the court may grant the application only if the applicant – (a) acted promptly when he found out that the court had exercised its power to strike out or to enter judgment or make an order against him; (b) had a good reason for not attending the trial;and (c) has a reasonable prospect of success at the trial.” (c) if a defendant does not attend, it may strike out his defence or counter claim (or both). (a) acted promptly when he found out that the court had exercised its power to strike out or to enter judgment or make an order against him; (b) had a good reason for not attending the trial;and (c) has a reasonable prospect of success at the trial.”

[58]Thus the jurisdiction to set aside a regular judgment depends upon the party seeking to have the order set aside satisfying all three requirements in Part 39.3 (5) (see Regency Rolls Limited v Carnall

[2000] EWCA Civ 379

October 16, 2000 CA unreported per Simon Brown LJ). I would add that the language of Part 39.3 (5), although not explicit on the point, in my opinion suggests that satisfaction of the three requirements is a necessary but not sufficient condition for granting the application to set aside the judgment or order, the court having a discretion as to whether or not to grant the application.

[59]Mr Murphy accepted that Mr Macarthur satisfies the condition in 39.3(5)(c) in that he has a reasonable prospect of success at trial. That appeared to be because he considered that the judge recognised that there was a reasonable prospect of the defence succeeding in that he recognised a triable issue in relation to inducement. This is a reference to the judge stating that the only issue in his opinion which was live was the question raised by the defence as to whether or not the representations induced the claimant to enter into the contract, in relation to which he said that on the face of it he considered they had a good point to make. In the light of the fact that the claimant did not contest Mr Macarthur’s submission that he satisfies the requirement of showing a reasonable prospect of success it is unnecessary for me to decide this issue.

[60]I would however observe that I found the judge’s comments somewhat puzzling. The acts of reliance on the part of the claimant which it alleged in the Amended Particulars of Claim were induced by Mr Macarthur’s representations were not the entering into of the contract but rather the payment of the deposit and the balance. The judge appeared to consider that what he apparently viewed as the open question as to whether the claimant was induced to enter the contract by the alleged representations did not answer “the point that so far as the payment of money is concerned (albeit that there was a contract between the claimant and the first defendant) nevertheless the fraudulent representation made by the second defendant to the effect that the first defendant needed the money to pay the deposit of 30% and also needed the money to pay the balance that was due, leading to the immediate collection of the car (all of which was clearly untrue and must have been known by the second defendant to have been untrue) seems to me to prove the case. This man has acted by means of a fraudulent misrepresentation in this particular case. So I am quite satisfied on the evidence that has been produced and the submissions that have been made.”

[61]In that passage the judge did not explicitly refer to the allegation of inducement, but it may be that he intended to do so by implication. The Amended Defence did indeed deny that the payments were induced by the alleged representations and it may be that the judge considered that Mr Macarthur had a good point to make or reasonable prospect of succeeding on that issue even though on the balance of probabilities he found against him on it. It is the case, albeit not referred to by the judge, that in his witness statement which appears to have been read by the judge Mr Horgan did not explicitly say that in making the two payments he acted in reliance on the representations. There was, however, a statement of truth at the end of the Amended Particulars of Claim which did make that allegation and since the judge appears to have decided the case in favour of the claimant on the evidence he must have taken the view that that was sufficient to prove the issue of inducement. It may be that he considered that the gap in Mr Horgan’s evidence gave rise to a triable issue on inducement albeit one that was resoluble in favour of the claimant on the balance of probabilities on the basis that the allegation in the Amended Particulars of Claim of inducement in relation to the payments was proved by the statement of truth by Mr Horgan.

[62]The requirement under part 39.3(5)(a) to act promptly on finding out that the court has exercised its power to strike out or enter judgment against the applicant was considered in the Regency Rolls case. In that case Arden LJ pointed out that the dictionary meaning of ‘promptly’ is ‘with alacrity’ and Simon Brown LJ said “I would accordingly construe ‘promptly’ here to require, not that an applicant has been guilty of no needless delay whatever, but rather that he has acted with all reasonable celerity in the circumstances.” It is, in my view, self evident that the question whether in any particular case the applicant has acted with all reasonable celerity in the circumstances is to be answered in the context of an assessment of the relevant circumstances and what if any impact they had on the time it took the applicant to act. That this is so and in particular that there is no arbitrary rule of thumb as to a particular period which will mark the dividing line between what is and what is not prompt is illustrated by the fact that in the Regency case an application to set aside made 4 weeks after the hearing was held not to have been made promptly, whereas in Watson v Bluemoor Properties Limited

[2002] EWCA Civ 1875

, December 10 2002 the Court of Appeal held that a company did act promptly when, in a case involving ‘a considerable amount of documentation’, an application to set aside was issued 6 weeks after judgment.

[63]In this case the starting point, as it seems to me, is that the claimant agrees that the appeal at least in relation to ground two should be treated as an application under CPR 39.3(3) to set aside rather than as an appeal under CPR 52. This no doubt reflects the fact that when Mr Macarthur issued his Appellant’s Notice on 24 October 2007 he genuinely believed that he was taking the necessary first step in the process of having the orders of 3 September 2007 set aside. He was living in Australia and was not at that time legally represented. He was a litigant in person. Technically it is the case that it was not until Mr Hubbard’s skeleton argument that the relief sought was put forward as an order to set aside the judgment under part 39.3(3) rather than an appeal pursuant to part 52 against the decision to strike out his defence and enter judgment against him. But the reality is that in substance, if not in form, the relief sought was the same, namely an order setting aside the judge’s orders.

[64]Thus in the particular circumstances of this case in my view the relevant question is whether Mr Macarthur acted promptly in all the circumstances in filing his Appellant’s Notice on 24 October 2007 rather than in seeking to amend his application to one seeking an order under Part 39 in Mr Hubbard’s skeleton argument dated 25 June 2009. That this is the relevant question was implicitly recognised by Mr Murphy who directed his submission on this point to the fact that Mr Macarthur made his application over 6 weeks after the judgment. No doubt with the fact that the Court of Appeal in Watson held that in that case 6 weeks did not offend the requirement of promptness in mind, Mr Murphy submitted, rightly in my view, that this case was not one involving a considerable amount of documentation.

[65]He further submitted that Mr Macarthur’s presence in Australia should not be a relevant consideration when he had a manned correspondence address within the jurisdiction and when modern information technology renders geographical distance all but irrelevant for the purposes of submission of documentation. While I would see the force of that submission in the context of an applicant who sought to rely on his presence overseas as explaining delay in posting a document to the court, that was not the factor relied on by Mr Macarthur as explaining the time it took him to issue his Appellant’s Notice.

[66]As appears from the chronology of events referred to above, he accepted that he would have received the judgment on or sometime shortly after 10 September 2007. The reason for the subsequent delay put forward by Mr Macarthur was that he believed that he needed to know what had been said at the hearing on 3 September 2007 before launching his appeal. That was, in my view, not an unreasonable belief for him to have had. In the last minute flurry of correspondence emails and telephone calls leading up to that hearing, there was no small degree of confusion. Particularly to a litigant in person it was not immediately apparent from the terms of the judge’s order what had led up to it and in particular what kind of hearing had taken place on 3 September 2007. Had there been a full trial with oral testimony or merely a procedural hearing with submissions?

[67]According to his witness statement dated 30 June 2009 Mr Macarthur contacted the court immediately on receipt of the judgment and asked if he could have a transcript of the trial as he needed to know what was said before launching his appeal. On 18 September 2007 a letter was written by HMCS in Reading explaining that if he wanted a transcript he had to deal with a transcriber and providing him with a list of organisations offering that kind of service one of which he choose and contacted as soon as he received the court letter. That transcript had still not arrived some weeks later whereupon he filed his Appellant’s Notice in any event. The accuracy and truthfulness of this account were not challenged by the claimant. There is no suggestion that either when he contacted the court presumably by telephone on receipt of the judgment or in the letter from HMCS Mr Macarthur was warned that waiting to receive a transcript was not or might not be considered by the court to be an acceptable reason for delaying the issue of any Appellant’s Notice or other application he might wish to bring to set aside the orders made by HH Judge Elly.

[68]In my view in these circumstances the requirement of part 39.3(5)(a) has been satisfied. It seems to me that Mr Macarthur’s approach to the litigation both after and in the period leading up to 3 September 2007 cannot be categorised as one of delay. On the contrary in my view it is to be inferred from his conduct that he was generally conscious of the need to act with expedition and sought to do so.

[69]The key issue at the heart of this application is whether Mr Macarthur satisfies the requirement in Part 39.3(5)(b). Did he have a good reason for not attending the trial? That is not the question which the judge appeared to ask himself. The question he did appear to ask himself was whether he should adjourn the hearing. He concluded that there was no good reason for an adjournment. That conclusion was, in my judgment, flawed in a number of respects.

[70]First his conclusion appears to have been significantly influenced by his view that all of Mr Macarthur’s actions were “just designed to try to ensure that he is beyond the reach of the court and the claimant. His failure to disclose his address in Australia only confirms my view as to what he is attempting to do.” The Judge did not identify which of Mr Macarthur’s actions (in addition to his failure to disclose his address in Australia) struck him as having that purpose. Nor did he explain why he reached that conclusion or by reference to what evidence. In my judgment not only was there no evidence to justify that conclusion, but there was significant evidence pointing in the opposite direction.

[71]It is striking that it was Mr Macarthur and not the claimant who initiated contact with the court on 9 July 2007 and that his letter was not prompted by any communication from either the court or the claimant. In his letter of that date he informed the court that he had emigrated from the UK and gave an address which was prepared to act as a mailbox for him for the purposes of the action. That is, in my view, on its face not an action designed to ensure that he was beyond the reach of the court and the claimant. Moreover the reason given for not revealing his address to the court, namely a fear of reprisals from Mr Horgan and his wife, both of whom were alleged previously to have threatened his wife and his then seven year old daughter and himself, a fact which was allegedly known to Thames Valley Police, was not subsequently contradicted by the claimant or by Mr Winter in his witness statement dated 23 August 2007. There was no evidence before the court which in my view justified a conclusion that Mr Macarthur was lying.

[72]By the same token Mr Macarthur’s letter to the court dated 17 August 2007 was unsolicited and not prompted by any communication from either the claimant or the court. In it he pointed out that he had entered his defence, asserted that he had so far complied with all of the court requirements and pointed out that there had been no response from the claimant since their last letter of 22 June 2007. In fact Mr Macarthur had not complied with the agreed extension until 18 July 2007 for exchange of witness statements. But then neither had the claimant. He had however served an amended defence and given standard disclosure by list over a month before the claimant gave its disclosure. It was, in my view, not unreasonable for him to submit in that letter that with a trial date 17 days away, having had no response from the claimants since 22 June it was hard to see how the case could proceed on 3 September. He had still not received any witness statements from the claimant which was thus 4 weeks late and in breach of the extended consent order. He again invited the court to write to him at the correspondence address which would email the correspondence to him.

[73]In his letter dated 26 August 2007 to the court he again pointed out that during the time that Field Seymour Parks were instructed by him all of the requisite exchanges of documents had taken place well within the allotted time frame which had not been the case as far as the claimant’s solicitors were concerned. In particular he had still not received any witness statements from the claimant. He referred to the notice he had received of the claimant’s application dated 23 August 2007 seeking a pre-trial review to be listed prior to the trial on 3 September 2007 and pointed out, not in my view unreasonably, that since he had emigrated to Australia it would not be possible for him to attend court for a pre-trial review before 3 September. Since there was only one working week prior to 3 September and no date had been suggested for the pre-trial review this was not, in my view, indicative of any attempt on the part of Mr Macarthur to put himself beyond the reach of the court.

[74]In response to the four points made in Mr Winter’s statement in support of the pre-trial review application Mr Macarthur submitted that vacating the trial date and issuing fresh directions, which was one of the options canvassed by Mr Winter was the only realistic and far option of those put forward by Samuel Phillips. Indeed it is in my view not unreasonable to read that part of Mr Macarthur’s letter as in effect an application to vacate or adjourn the trial date on the ground that the claimant had failed to exchange its witness statements. Although he did not explicitly state that their failure to do so was a breach of the agreement to extend until 18 July 2007 the time previously ordered by the court for service of witness statements, he did make the general point that the claimant’s solicitors had not complied with the allocated time frame for procedural steps in the action.

[75]He further made the point that it would be neither fair nor reasonable for the claimant to be granted an urgent pre-trial review during the following week in reliance on the fact that his solicitors had come off the record and that he had emigrated to Australia. As he pointed out the claimant had been notified of the change of solicitors on 9 July 2007 and of his emigration as of 20 June 2007. There was thus no good reason for the claimant to leave until 23 August 2007 the making of such an application or indeed the doing of anything else to do with the case. These were all matters which, in my view, pointed if anything to the existence of reasonable ground for an adjournment and certainly not as evidencing an attempt to try to ensure that he was beyond the reach of the court and the claimants. It is of note that in that letter Mr Macarthur volunteered a further means of instant communication in the form of his hotmail email address. He also said that he was looking forward to a reply from the court.

[76]The Judge described Mr Macarthur’s faxed letter dated 29 August as indicating that he would not be attending court on 3 September, that he had gone to live in Australia and that he was not willing to disclose his address but gave an address for service in this country. That seems to me to be an inaccurate and less than comprehensive description of the letter. Mr Macarthur did not say that he would not be attending court on 3 September. What he said was that bearing in mind that he now lived in Australia it would be virtually impossible for him to be in Reading on 3 September. What the judge omitted from his summary of the letter was that Mr Macarthur referred to the fact that he had twice spoken to court clerks on the telephone to seek to establish whether there was likely to be a hearing on 3 September, that both sides had apparently admitted that the case was not properly prepared for court but that it appeared nonetheless that the case would still go ahead. In those circumstances he requested that the matter be discussed by the telephone to establish at least where the case was going. He offered to telephone the court at a predetermined time to attempt to reach a conclusion, he repeated the email address and correspondence address and added a telephone number where he could be contacted. The fact that he was living in Australia was not new either to the claimant or to the court. It had been referred to in Field Seymour Parkes’ letter dated 20 June 2007 and Mr Winter’s witness statement dated 23 August 2007.

[77]As to Mr Macarthur’s letter dated 1 September 2007 as well as complaining about the very late service of Mr Winter’s unsigned witness statement Mr Macarthur also pointed out that he had only received Mr Horgan’s witness statement on 30 August which he said confirmed his belief that the matter was not ready to go to trial. The judge made no reference to the late service of Mr Horgan’s witness statement and referred to Mr Macarthur’s belief that the matter was not ready to go to trial as merely “raising the question as to whether” the case was ready for trial. The judge’s overall conclusion was expressed in these terms:

“Mr Macarthur has made is quite clear that he has left the country and that he does not intend to come back for the hearing. There is no suggestion in his letter that if the matter were adjourned he would be able to attend. As far as I can see, his actions are just designed to try to ensure that he is beyond the reach of the court and the claimants. His failure to disclose his address in Australia only confirms my view as to what he is attempting to do. Again, apart from raising the question as to whether the case is ready for trial he does not specifically suggest that he would be available to attend trial, even in this latest letter of 1 September. So I am afraid I do not take the view that an adjournment is necessary in the interests of justice to enable him to attend to put his case.”

[78]The judge appears to have linked together the two facts that Mr Macarthur had made it quite clear that he had left the country and that he did not intend to come back for the hearing. In my judgment the correspondence and the history of the matter do not warrant such a linkage. While it is true that in the letter dated 1 September 2007 Mr Macarthur did not ‘specifically’ to use the judge’s word suggest that he would be available to attend trial on a later date, he had in his letter dated 26 August 2007 submitted that the only realistic and fair option was to vacate the trial date and issue fresh directions. In my view a fair reading of that is that if an adjournment were granted with a reasonable timetable Mr Macarthur intended to continue to participate in and defend the action. There is no reason to suppose that he did not thereby intend to include attendance at trial. All his activities starting on 9 July 2007 appeared to be designed to find out if the claimant was intending to continue with the claim and if so to ensure that there was a timetable which would enable him fairly to participate.

[79]In my view the judge’s decision to refuse an adjournment was also flawed by his failure to take into account or at any rate to record the fact that the claimant was not only late in three critical procedural steps but was actually in breach of court orders in that regard. That is not a criticism of the judge because there is no indication that he was aware that the claimant had given disclosure over 5 weeks later than had been ordered or that Mr Macarthur had not been sent a copy of the trial bundle seven days before the trial date again in breach of a court order. Although it was apparent from the face of Mr Winter’s witness statement dated 23 August that the claimant sent its first witness statement as late as 21 August 2007 more than four weeks after the agreed extended date on which it had been ordered, it is not clear from the transcript of the 3 September 2007 hearing whether the judge read that witness statement.

[80]What was read by the judge was Mr Macarthur’s letter dated 1 September 2007 which explicitly said that he had only received the claimant’s witness statement on Thursday 30 August 2007 (that is one working day before the trial was due to begin) and that that confirmed once more his belief that the matter was not ready to go to trial. The judge addressed Mr Macarthur’s separate complaint in that letter that Mr Winter’s witness statement had only been received that morning and concluded that it was not contentious. But he failed altogether to address Mr Macarthur’s complaint about the very late service of Mr Horgan’s witness statement which was contentious and indeed on which he went on to rely in part and it may well be in large part in concluding that Mr Macarthur had acted fraudulently and that the claimant had proved its case. In my view that was a material error. If the judge did not know when the statement had been ordered to be served in my view he should have asked the claimant’s counsel or found out from the trial bundle or, if the court order was not in it, from the court file. If he did know, in my view he should have taken that into account and given his reason for concluding that it was not a reason why he should give an adjournment.

[81]Further in my view if the judge had taken into account all the facts and matters to which I have referred he should have granted Mr Macarthur an adjournment.

[82]The question whether the judge was wrong to refuse an adjournment is not the same question as whether Mr Macarthur had a good reason for not attending the trial on 3 September. The former would arise directly on an appeal under Part 52 (assuming such an appeal were not an abuse of process) against the decision of the judge to strike out Mr Macarthur’s defence and proceed with the trial. The latter is the question which the court must answer in order to decide whether Mr Macarthur satisfies the requirement imposed by part 39.3(5)(b) and thus, in the light of the claimant’s submission that I should treat Mr Macarthur’s application under Ground two of his Grounds of Appeal as an application under Part 39.3, is the question which I have to answer.

[83]In Brazil v Brazil

[2002] EWCA Civ 1135

Mummery LJ, in a judgment with which Hale LJ agreed, set out what should be the court’s approach to deciding whether the existence of a good reason for not attending the trial has been made out: “I agree with Hart J that, although the court must be satisfied that the reason is an honest or genuine one, that by itself is not sufficient to make a reason for non-attendance a ‘good reason’. The court has to examine all the evidence relevant to the defendant’s non-attendance, ascertain from the evidence what, as a matter of fact, was the true ‘reason’ for non-attendance, and, looking at the matter in the round, ask whether that reason is sufficient to entitle the applicant to invoke the discretion of the court to set aside the order. An over analytical approach to the issue is not appropriate, bearing in mind the duty of the court, when interpreting the rules and exercising any power given to it by the rules, to give affect to the overriding objective of enabling it to deal with cases justly. The perfectly ordinary English phase ‘good reason’ as used in CPR 39.3(5) is a sufficiently clear expression of the standard of acceptability to be applied to enable a court to determine whether or not there is a good reason for non-attendance.” (paragraph 12).

[84]Mr Murphy submitted that it appeared that the ‘good reason’ relied on by Mr Macarthur was that he left it too late to make arrangements when he finally accepted that the hearing would be proceeding on 3 September 2007. That he submitted was not a good reason at all. In my judgment that is not a realistic characterisation of what occurred. It is in my judgment necessary to look at Mr Macarthur’s decision not to attend the hearing, which was communicated for the first time in his letter dated 1 September 2007, in the context of the background events to which I have already referred.

[85]The essential features of that background are in my view as follows. First there is no evidence that Mr Macarthur did not comply fully with the orders of the court prior to his emigration to Australia. Second there was complete radio silence from the claimant and its solicitors between 22 June 2007 and the application for an urgent pre trial review 23 August 2007 which was received by Mr Macarthur on 25 August 2007. That was not withstanding the facts that they had known that Mr Macarthur had emigrated to Australia since June 2007, and that he had communicated both with them and with the court on 9 July 2007 and 17 August 2007 giving a contact address which would forward correspondence, in the latter case pointing out that he had received no response to his letter dated 9 July and that he did not see how the case could proceed on 3 September. It was also notwithstanding the fact that, having already been very late in giving disclosure and in breach of the relevant court order, the claimant was also already a month out of time and in breach of a court order in serving its witness statements for trial. Third there had also been no response from the Court to Mr Macarthur’s letters dated 9 July 2007 and 17 August 2007.

[86]Thus as late as 25 August 2007, only one working week before the trial had been fixed to begin, in my view Mr Macarthur was reasonably entitled to entertain very serious doubts as to whether the claimant was intending to proceed with its claim and if it was whether the trial was going to be effective. He had by then received from the claimant neither the witness statements which should have been exchanged on 18 July 2007 nor any indication as to when if at all it would be ready to exchange them nor the trial bundle which the claimant had been ordered to serve on him by 24 August nor any indication as to when if at all it intended to do so.

[87]Fourth Mr Macarthur did not receive Mr Horgan’s witness statement until 30 August 2007, that is one working day before the trial was due to begin and there was no evidence that he ever received the trial bundles let alone on 24 August 2007 which was the date ordered by the court. Fifth having put down the marker on 17 August 2007 after two months of not hearing from the claimant that he did not see how the case could proceed on 3 September, when he received the claimant’s application for an urgent pre-trial review referring to a possible order that the trial be vacated he wrote to the court and the claimant in effect submitting that the trial should be adjourned with fresh directions to be issued.

[88]Sixth despite contacting the court officials by telephone, it was not until 29 August 2007 that Mr Macarthur learned not by reference to any court order but apparently from a court official, that the trial was to be heard on 3 September 2007. However there is no indication that he was told even then or indeed ever either by the claimant or by the court what had become of the claimant’s application for a pre-trial review. Thus certainly until 29 August (two working days before the trial was due to start) and arguably even after then there remained the possibility that a judge might adjourn the trial in response to the claimant’s application for a pre-trial review. I would add that in my view receipt by Mr Macarthur of the claimant’s application for an urgent pre-trial review and Mr Winter’s accompanying witness statement added significantly to the confusion and uncertainty as to whether the trial would go ahead on 3 September 2007. Mr Macarthur took steps to find out what impact that application was going to have on the trial date and when it was going to be heard, but while the position remained uncertain it was in my view reasonable for him not to put in hand arrangements for attending a trial which had every prospect of being adjourned either as a result of the claimant’s application for a pre-trial review or in response to Mr Macarthur’s own request in his letter dated 26 August 2007.

[89]Seventh even as late as 29 August 2007 Mr Macarthur did not indicate that he could not attend the trial on 3 September, although he said it would be virtually impossible for him to be in Reading the following Monday. He did however request that the matter be discussed by telephone to establish where the case was going given that, as he again reiterated, the case had not been properly prepared for court.

[90]Eighth in the absence of confirmation from the court that it would accede to his request for a telephone hearing, on 1 September 2007 Mr Macarthur wrote to the court confirming that he had confirmed to Mr Winter the day before that he would not be attending the trial since it would be physically impossible for him to do so at that late stage. He also pointed out that he had only as late as Thursday 30 August received the claimant’s witness statement and only the day before had he received Mr Winter’s unsigned witness statement and he reiterated his belief that this confirmed that the matter was not ready to go to trial. This was by now the Saturday before the Monday on which the trial was due to begin.

[91]I have already expressed my view that against that background Mr Macarthur had reasonable ground for requesting an adjournment of the trial given in particular the very late service of the claimant’s principal witness statement, its even later service of Mr Winter’s statement (both in breach of the court’s order) and its failure, also, in breach of the court’s order to serve on Mr Macarthur a trial bundle. When he received the claimant’s application for a pre-trial review he immediately wrote to the court and the claimant’s solicitors in effect seeking an adjournment and fresh directions and giving an email address at which he could be contacted. When he learned on 29 August 2007 from a court official that it appeared that the case was going to go ahead he requested an opportunity to discuss where the case was going by telephone adding a telephone number where he could be contacted. He had by that late stage still received no witness statements from the claimant. When on 30 August 2007 he finally received Mr Horgan’s witness statement and Miss White’s letter saying that it would not be possible to have a telephone hearing, he wrote for the first time on 1 September 2007 that he would not be attending the trial as it would be physically impossible for him to do so at that late stage. He also reiterated in that letter his belief that the case was not ready for trial and said that he looked forward to the judge’s decision in effect repeating his application for an adjournment.

[92]On a narrow view it might be said that the reason he did not attend the trial on 30 September 2007 was that he left the arrangements for doing so until 1 September 2007 by which time it was physically too late. In my view that is a wholly artificial way of looking at matters. In my view it is necessary to ask first whether it was reasonable for Mr Macarthur to delay making arrangements to attend the trial until he had received the claimant’s witness statements and learned of the response to the request for an adjournment which he made on 26 August 2007 and whether it was reasonable for him to have made that request in the first place. In my view the answer to both these questions is in the affirmative. Having heard nothing from the claimant’s solicitor for over two months, not withstanding two letters to them and the court, it was in my view not unreasonable for Mr Macarthur until he heard from the claimant’s solicitors on 25 August 2007 to assume that there was at least a very real prospect that the trial date would be ineffective, not least because over a month had elapsed from the date on which the claimant had been ordered to exchange its witness statements and a day had elapsed since it had been ordered to serve the trial bundle on him. On hearing for the first time from the claimant’s solicitors on 25 August 2007, in my view Mr Macarthur acted reasonably in seeking to ascertain from the court what was going on and to seek an adjournment. The uncertainty as to whether the trial would be effective was contributed to by(1) the claimant’s late application for a pre-trial review in which Mr Winter himself canvassed the possibility that the court might adjourn the trial

(2) the fact that there was no return date to the application

(3) the fact that the claimant had still failed to comply with the court orders for exchange of witness statements and service of the trial bundle and

(4) the fact that there is no evidence that Mr Macarthur was ever notified as to whether the claimant’s application had been judicially considered or remained outstanding.

[93]In my view up to 25 August it was not unreasonable for Mr Macarthur to have delayed making arrangements and incurring the costs, including the considerable expense of booking a plane ticket, of arranging to attend the trial. That remained the position on 25 August on receipt of the claimant’s application for a pre-trial review. Both that application and his own application in his letter dated 26 August carried a significant prospect of success not least given that he still had neither witness statement nor trial bundle. In my view it remained the position until his receipt on 30 August of Mr Horgan’s witness statement and also up to and including 1 September, by which time he had still not received the trial bundle and there had still been no judicial determination on the merits of either his application for an adjournment or the claimant’s application for a pre-trial review which also canvassed the possibility of an adjournment.

[94]If in those circumstances he had flown to London in order to attend the trial on 3 September 2007 he would no doubt have renewed or formally made his adjournment application. If the court had granted the adjournment, he would have flown half way round the world and spent a considerable sum of money for what would have been a very brief interlocutory application. If the court had rejected the application, he was in no position to present his defence and thus no useful purpose would have been served by his attendance. The alternative course, which he adopted, to reiterate in writing his submission that the case was not ready to proceed was in my view not unreasonable in the circumstances.

[95]It was suggested by Mr Murphy that there was nothing to stop Mr Macarthur instructing local solicitors and/or counsel to attend the trial. I have considered this point very carefully. It is of course true that Mr Macarthur could have attended the trial through lawyers without incurring the expense of flying to England. However the reality in my view is that had he done so they would have been wholly unequipped to present his defence in the event of an adjournment application failing. At any rate it would not have been unreasonable for him to form that view. Between 29 August when Mr Macarthur learned that the trial was to go ahead and the commencement of the trial there were only two working days. He did not have a trial bundle and he did not even yet have Mr Horgan’s witness statement and indeed did not know what evidence was coming from the claimant or how many witness statements would be coming. On 30 August when he received Mr Horgan’s witness statement he still did not have the trial bundle and there was one working day before the trial. Nor did he have Mr Winter’s witness statement which he only received in unsigned form on Saturday 1 September.

[96]Overall having regard to all the circumstances which I have carefully considered I have come to the conclusion that Mr Macarthur had a good reason which was both genuine and honest for not attending the trial which is sufficient to entitle him to invoke the discretion of the court to set aside the orders striking out his defence and entering judgment against him. That reason was not, as found by the judge, a desire to put himself beyond the reach of the court and the claimant. Rather it was, as set out in the Grounds of Appeal, a belief that because of the claimant’s lack of proper preparation and late service of evidence it would have been impossible for him, even if he had still been living in Reading, let alone in Australia, to respond to that late evidence and prepare for the trial or for a fair trial to take place even if he had been able to instruct a solicitor given that the solicitor would not have been in possession of the claimant’s case until the morning of the trial and in those circumstances it would have been unreasonable to be expected to incur the expense of flying to England when no useful purpose would have been served thereby. My view that it is sufficient to entitle him to invoke the discretion of the court to set aside the orders striking out his defence and entering judgment against him is informed by all the matters to which I have drawn attention above.

[97]In my view therefore all three requirements of part 39.3(5) are satisfied and the court thus has jurisdiction to set aside the judge’s orders striking out the amended defence and entering judgment for the claimant. The question therefore arises whether I should exercise the discretion to do so and if so subject to what if any conditions.

[98]In his written submissions Mr Murphy submitted that if Mr Macarthur’s appeal (which I took to include his application to set aside under part 39.3) should succeed, I should consider making any order for a re-trial subject to security for the claimant’s costs of any re-trial under the powers given by CPR 3.1(5) or 3.1(3). He relied on the judgment of Clarke LJ in Ali v Hudson

[2003] EWCA Civ 1793

at paragraph 40 and submitted that it would be appropriate to make any order setting aside the judgment subject to compliance by Mr Macarthur with an order for security of the claimant’s costs of a re-trial. Such an order was said to be appropriate because Mr Macarthur is resident in Australia at an undisclosed address making enforcement uncertain and expensive and he has regularly flouted proper court procedures in that he(1) failed to file or serve his witness statement for the trial

(2) failed to make any proper applications either to adjourn the trial or for a telephone hearing and

(3) failed to make his application to set aside the judgment of Judge Elly under CPR 39.3(5) thus bringing all the parties before the Court of Appeal (sic) as opposed to before the Judge in Reading. (In fact, whatever the position ought to have been, the appeal was brought before the High Court and not the Court of Appeal.) In addition it was submitted that it appeared unlikely that an order would stifle Mr Macarthur’s defence in circumstances where he had sufficient funds to instruct solicitors and counsel for the purpose of the appeal.

[99]In supplemental written submissions Mr Murphy elaborated on and expanded the respects in which he submitted that Mr Macarthur had flouted court procedures and in doing so demonstrated a want of good faith. In relation to the non service of his witness statement he relied on the fact that Mr Macarthur had said in his letter dated 26 August 2007 that his witness statement had been ready for many weeks and had said in his email dated 31 August 2007 that it had been filed and served. In addition Mr Murphy submitted that Mr Macarthur had failed to support his application under CPR 39.3(3) with evidence as required under CPR 39.3(4) other than his statement dealing with delay dated 30 June 2009. He further relied on the fact that Mr Macarthur’s appeal was out of time, that he did not seek an order extending the time limit under CPR 52.6, that he failed to pay the judgment sum and costs despite no stay being in place until Holroyde J granted a stay on 29 April 2009, that he failed to make his request for an oral permission hearing within 7 days after service of the notice that permission had been refused, permission having been refused on paper by Swift J on 14 May 2008 and Mr Macarthur having made his request out of time on 25 November 2008 explaining his delay but not explaining whether notice had been received at his address in England. Finally Mr Murphy submitted that Mr Macarthur had taken no steps to find out the result of the trial or his effort to adjourn despite being aware that the trial might well go ahead in his absence.

[100]In his supplemental written submissions Mr Murphy further submitted that the shadowy nature of the defence is another factor supporting the making of a conditional order. In that regard he accepted again that Judge Elly had identified inducement as a live issue and that in that regard the defence appeared at trial to have a reasonable prospect of success. However he submitted that in relation to the representations themselves the defence remained shadowy. This was a one man company, the company’s knowledge was Mr Macarthur’s knowledge. No one other than Mr Macarthur could provide an explanation of the representations that he made. Despite it lying within his power to provide such an explanation:(i) He had not explained how the first representation “unfortunately we have to put down a 30% deposit” was anything other than deliberately untrue in circumstances where he confirmed that Mercedes did not require a deposit;

(ii) Mr Macarthur had not explained what happened to the £33,823 deposit paid save that it was not paid to Mercedes;

(iii) Mr Macarthur accepted that he lied when saying that the vehicle was on its way and was to be delivered;

(iv) Mr Macarthur failed to explain in relation to the third representation which was an invoice for the balance of £51,921 how payment of the balance was required in order to arrange delivery within 10 working days in circumstances when, at the time he made the statement, he knew full well that Mercedes had not been paid anything and that he had used the deposit for some other unexplained purpose;

(v) Mr Macarthur had failed to explain what the registration date of 1 March 2006 meant and why it was true that the car had been registered when Mercedes had not been paid in full.

[101]In oral argument it appeared that in relation to the allegedly shadowy defence Mr Murphy was seeking to expand the nature of the condition for which he contended to include a payment towards the amount claimed by the claimant as well as or instead of an order securing the claimant’s costs of a re-trial. In support of this expanded relief, Mr Murphy submitted that Mr Macarthur should have explained his account of the facts in issue in a witness statement after receiving the claimant’s witness statements and that in support of his appeal he should have set out his defence on the merits. However he accepted that it would be hard for the claimant to argue that there should be an order for a payment into court if the judgment were to be set aside on the basis that the judge was wrong to refuse an adjournment and that the judge’s failure to grant an adjournment could not be shown to be Mr Macarthur’s fault.

[102]In Ali Clarke LJ, as he then was, cited with approval as giving important guidance as to the correct approach to be adopted to orders for security of costs an extract from the judgment of Simon Brown LJ, as he then was, (with whom Dyson LJ agreed) in Olatawura v Abiloye

[2002] EWCA Civ 998

. In that extract Simon Brown LJ held that before ordering security for costs in any case the court should be alert and sensitive to the risk that by making such an order it may be denying the party concerned the right of access to the court. Whether or not the person concerned has (or can raise) the money will always be a prime consideration, not least since

Article 6 of ECHR

became incorporated into domestic law. Obviously relevant considerations besides the ability of the person concerned to pay will be(a) his conduct of the proceedings (including in particular his compliance or otherwise with any applicable rule, practice direction or protocol) and

(b) the apparent strength of his case (be it claim or defence). That however is by no means to say that the court should ordinarily penalise breaches of the rules and the like by making orders for payment into court under Rule 3.1(5). Quite the contrary. A party only becomes amenable to an adverse order for security under Rule 3.1(5) (or perhaps 3.1(2)(m)) once he can be seen either to be regularly flouting proper court procedures (which must inevitably inflate the costs of the proceedings) or otherwise to be demonstrating a want of good faith – good faith for this purpose consisting of a will to litigate a genuine claim or defence as economically and expeditiously as reasonably possible in accordance with the overriding objective.

[103]In relation to the significance of the strength or weakness of a party’s case Simon Brown LJ said this: “26. Similarly it is not to be thought that an order for security for costs will be appropriate in every case where a party appears to have a somewhat weak claim or defence. The last thing this judgment should be seen as encouraging is the making by either side of exorbitant applications for summary judgment under Rule 24.2 in a misguided attempt to obtain conditional orders providing security for costs. On the contrary, the court will be reluctant to be drawn into an assessment of the merits beyond what is necessary to establish whether the person concerned has “no real prospect of succeeding” and the occasions when security for costs is ordered solely because the case appears weak may be expected to be few and far between”.

[104]Clarke LJ in Ali held that the principles laid down in by Simon Brown LJ showed that the power to order security for costs in a case of the kind with which he was dealing should be exercised with great caution:

“The correct general approach may be summarised as follows: (i) It would only be in an exceptional case (if ever) that a court would order security for costs if the order would stifle a claim or an appeal; (ii) In any event (a) An order should not ordinarily be made unless the party concerned can be shown to be regularly flouting proper court procedures or otherwise to be demonstrating a want of good faith; good faith being understood to consist (as Simon Brown LJ put it) of a will to litigate a genuine claim or defence or appeal as economically and expeditiously as reasonably possible in accordance with the overriding objective; and (b) An order will not be appropriate in every case where a party has a weak case. The weakness of a party’s case will ordinarily be relevant only where he has no real prospect of succeeding.” (i) It would only be in an exceptional case (if ever) that a court would order security for costs if the order would stifle a claim or an appeal; (ii) In any event (a) An order should not ordinarily be made unless the party concerned can be shown to be regularly flouting proper court procedures or otherwise to be demonstrating a want of good faith; good faith being understood to consist (as Simon Brown LJ put it) of a will to litigate a genuine claim or defence or appeal as economically and expeditiously as reasonably possible in accordance with the overriding objective; and (b) An order will not be appropriate in every case where a party has a weak case. The weakness of a party’s case will ordinarily be relevant only where he has no real prospect of succeeding.”

[105]Clarke LJ referred to the judgment of Peter Gibson LJ in CIBC Mellon Trust Co v Mora Hotel The Corp NV [2002] EWA Civ 1688 at paragraph 38 where he said that it is only appropriate for the court to exercise its powers under CPR part 3 to require a payment into court in limited circumstances and that the court should not do so in the absence of a want of good faith on the part of the party against whom the order is sought:

“That consideration is reinforced by the greater significance, since the Human Rights Act 1998 came into force which the court attaches to not impeding access to justice.”

Clarke LJ also held that there was some force in a submission made in Ali by counsel that before an order of this kind is made the court should ensure by appropriate enquiry that the party concerned has the means to pay the costs concerned. (paragraph 45).

[106]As set out in the White Book Part 3.1(3) provides that when the court makes an order, it will –(a) Make it subject to conditions, including a condition to pay a sum of money into court;… Part 3.1 (5) provides that the court will order a party to pay a sum of money into court if that party has, without good reason, failed to comply with a rule, practice direction or a relevant pre-action protocol. Part 3.1 (6) provides that when exercising its power under paragraph (5) the court must have regard to – (a) the amount in dispute; and

(b) the costs which the parties have incurred or which they may incur. It is to be noted that, in contrast to the form of Rule 3(3) and (5) as set out in Clarke LJ’s judgment where the operative word was “may”, the operative word in the version of the CPR as set out in the White Book is “will”. It was not, however suggested by Mr Murphy that this is indicative of a mandatory obligation on the part of the court under Rule 3(3) to make every order it makes subject to conditions including a condition to pay a sum of money into court or under Rule 3(5) to order a party to pay a sum of money into court on every occasion when that party has been held without good reason to have failed to comply with a rule, practice direction or relevant pre-action protocol. Mr Murphy was, in my judgment, correct to make no such suggestion. Rule 3.1(1) describes the content of Rule 3 as a “list of powers”. It would appear from a comparison of the version set out in the White Book with the versions set out in the Green Book and the Ministry of Justice website in both of which the operative word is “may” that the word “will” in the White Book is a mistake. When assessing the list of respects in which Mr Murphy submitted that Mr Macarthur has flouted court procedures it is in my judgment necessary to remind myself that it is plain from Clarke LJ’s statement of general principle that mere breach of or failure to observe court procedures does not of itself amount to “flouting” them. What is required in addition is proof that the failures or breaches were regular and amounted to a want of good faith in the sense of an absence of a will to litigate a genuine defence as economically and expeditiously as reasonably possible in accordance with the overriding objective. That is in my view implicit in the use by Clarke LJ of the words ‘or otherwise to be demonstrating a want of good faith.’(emphasis added). I have considered the list of matters relied on by Mr Murphy very carefully and come to the conclusion that although they demonstrate a failure on the part of Mr Macarthur on a number of occasions and in a number of respects to observe proper court procedures they do not demonstrate an absence of good faith and cannot fairly be characterised as “flouting”. It is true that Mr Macarthur did not serve his witness statement by 18 July 2007 as agreed with the claimant’s solicitors. However given the context, namely that the claimant had not served its witness statements either or even approached him with a view to suggesting a date for exchange, and given that for over 2 months between 22 June 2007 and 23 August 2007 he had heard nothing either from the court or from the claimant’s solicitors, I do not consider that this is evidence of a want of good faith on his part. By the time he received Mr Horgan’s witness statement on 30 August there was only one court day before the hearing. As to the lack of formality of his applications for a telephone hearing or an adjournment, in my judgment given that he made clear the nature of his applications in correspondence to the court nothing material turns on that omission, not least since he was a litigant in person resident in Australia. In relation to the alleged lack of evidence in support of his application under CPR 39.3(3) as required by 39.3(4) this needs to be seen in the context of the fact that the procedure he followed was that of an appeal under part 52 rather than an application to set aside under part 39. The latter is in my view explicable by the fact that he was then a litigant in person resident in Australia. As to the former Mr Macarthur did in fact say in his Appellant’s Notice that he was relying on the correspondence identified therein which contained most of the material relied on in support of what became the Part 39 application so far as good reason was concerned. In relation to the issue of promptness, he subsequently adduced a witness statement. It is true that he did not adduce evidence seeking to demonstrate a reasonable prospect of success on the merits of his defence. However the existence of such a reasonable prospect of success was conceded by Mr Murphy on behalf of the claimant. In addition Mr Hubbard on his behalf relied in relation to the merits on a submission that the Amended Particulars of Claim disclose no cause of action and on the absence in Mr Horgan’s witness statement of any evidence of reliance or inducement. This is the omission which has caused me greatest pause for thought.

[107]In considering whether Mr Macarthur’s failure to adduce evidence on the merits demonstrates a lack of good faith, it is instructive to see Mr Hubbard’s response to the detailed points on the merits made in Mr Murphy’s supplemental submissions.

[108]In support of his first point Mr Murphy relied on a note of the first defendant’s creditors meeting on 22 August 2006 at which Mr Macarthur was recorded as stating that no deposit was required by Mercedes. In support of his third point he relied on a statement which Mr Macarthur was recorded as making at that meeting in answer to the question “You kept saying my vehicle was on its way and was to be delivered but it was not. This was a lie”:

“yes I accept it was a lie.”

In my view the former reference is more telling than the latter.

[109]In answer to Mr Murphy’s five points, Mr Hubbard’s response in his supplemental skeleton argument can fairly be described as somewhat weak. In relation to points one and three he submitted that the notes of the creditors meetings as hearsay evidence do not carry great weight and the court has not seen Mr Macarthur’s response. Moreover these were not points raised by Mr Horgan in his statement on behalf of the claimant. In relation to Mr Murphy’s second point he submitted that the allegation does not go to the truth or otherwise of any representation. In relation to Mr Murphy’s fourth and fifth points he accepted that they raised issues which Mr Macarthur would have to answer but submitted that they do not make his defence “shadowy” nor without more do they justify an order that Mr Macarthur should pay money into court. In my judgment Mr Murphy’s points raise question marks as to significant parts of Mr Macarthur’s defence. The question is whether those question marks justify the imposition of a requirement for security for costs or a payment into court in respect of the claim. I draw attention to a number of factors.

[110]First Mr Murphy did not contest that Mr Macarthur satisfied the requirement showing a reasonable prospect of success for the purpose of part 39.3(5)(c). This raises the question whether a defence can be shadowy such as to justify the imposing of a condition if it is accepted that it has a reasonable prospect of success. In the ordinary run of cases one would expect the answer to that question to be in the negative. However in this case the basis on which Mr Murphy did not contest the existence of a reasonable prospect of success was, as already mentioned, the dicta of the Judge on the issue of inducement. I have already explained my puzzlement on those dicta. However it is notable that the only basis on which reasonable prospect of success was not challenged by the claimant was the issue of inducement, which is a matter involving Mr Horgan’s state of mind, and it may be that at trial it will emerge that his failure to confirm his reliance on the representations in making the payments to the first defendant was an oversight and that he will confirm the assertions of inducement and reliance in the Amended Particulars of Claim as to his belief in which he has already signed a statement of truth.

[111]By contrast the serious question marks in relation to Mr Macarthur’s amended defence to which I have drawn attention relate to his state of mind. Although his failure to serve a witness statement prior to the 3 September 2007 may have an innocent explanation (and in my view the reverse has not been demonstrated) he had the opportunity before the hearing of his appeal and application under part 39 to adduce evidence on the merits of his defence. Indeed he served a witness statement on the issue of promptness. Inevitably this raises the question why he did not in that witness statement include evidence as to the merits. But for one fact that failure might give rise to a sinister inference. That fact is that it is apparent from his witness statement that he had had sight of Mr Murphy’s skeleton argument which was dated 28 June 2009, that is two days before the witness statement was signed. It was expressed to be made in response to the suggestion in that skeleton argument that he had failed to act promptly. It was in that same skeleton argument that Mr Murphy recorded that Judge Elly recognised that there was a reasonable prospect of success when he entered judgment and confirmed that the claimant does not contest that Mr Macarthur had a reasonable prospect of success.

[112]In my judgment that is a crucial point. Given that by the time his witness statement came to be made it was designed to support an application under part 39.3(3) it seems to me that his awareness and that of his lawyers of the concession made by the claimant on the issue of reasonable prospect of success provides an innocent explanation for the failure of the witness statement to set out Mr Macarthur’s case on the merits. It is further of relevance that it was only in Mr Murphy’s supplemental submissions in relation to conditional orders dated 5 July 2009, that is six days after Mr Macarthur’s witness statement and two days after the commencement of the hearing, that the claimant set out his detailed points in support of his submission on the shadowy nature of the defence.

[113]It is also material that in Mr Murphy’s original written submissions dated 28 June 2009 there was no indication that the claimant would be seeking a payment into court in respect of its claim as distinct from security for costs. Nor was there any indication that it would be relying in support of any conditional order on any arguments based on the weakness of the defence or the failure of Mr Macarthur in support of his application to set aside to adduce evidence in relation to the merits. This further weakens the suggestion that a sinister inference should be drawn from Mr Macarthur’s failure to deal with these matters in his witness statement.

[114]I also bear in mind Simon Brown LJ’s warning that the court will be reluctant to be drawn into an assessment of the merits beyond what is necessary to establish whether the person concerned has “no real prospect of succeeding” and that the occasions when security for costs is ordered solely because the case appears weak may be expected to be few and far between. It is true that those dicta were made in the context of his saying that the last thing his judgment should be seen as encouraging was the making of exorbitant applications for summary judgment under Rule 24.2 in a misguided attempt to obtain conditional orders providing security for costs. In this case the issue arises not in the context of a Part 24 application on the part of the claimant but in his resisting a Part 39 application by the defendant. Nonetheless it seems to me that the warning is not out of place in the current context where it has been explicitly accepted by the claimant that the defendant has a reasonable prospect of success.

[115]In those circumstances not withstanding the obvious question marks which Mr Murphy raised on some of the issue of falsity and knowledge in my judgment they are not such as to take this case out of the ordinary approach laid down by the Court of Appeal in Olatawura and Ali. I would add that I do not consider that the other aspects of Mr Macarthur’s conduct relied on my Murphy after the hearing on 3 September 20007 evidence deliberate flouting of the Rules such as to demonstrate a want of good faith. They are in my view largely explicable by the fact that he was a litigant in person resident in Australia and must be seen against the background of my findings in relation to his earlier conduct. In these circumstances, not without some misgivings, I do not consider it appropriate to impose as a condition for setting aside the orders of Judge Elly a requirement that Mr Macarthur pay into court money either as security for costs or as security for the sums claimed by the claimant.

[116]In these circumstances it is not necessary for me to lengthen this judgment by addressing the question as to Mr Macarthur’s ability to meet any such requirement. Although through Mr Hubbard he asserted a general lack of means, there was no evidence to support that assertion and had I thought it appropriate to impose a requirement of security for costs or a payment into court it would have been necessary to make further enquires and possibly to give him an opportunity of adducing evidence as to ability to pay or raise money.

[117]It remains for me to deal with the first and third grounds of appeal in Mr Hubbard’s skeleton argument referred to earlier in this judgment. I can do so briefly.

[118]The first ground was that the failure of Judge Elly to have allowed Mr Macarthur to make representations by telephone and/or to have accommodated his request that he be allowed to do so amounted to a serious procedural irregularity which meant that his decision was unjust within the meaning of Rule 52 11(3)(b). This is a reference to Mr Macarthur’s request in his faxed letter dated 29 August 2007 to District Judge “that the matter be discussed via the telephone, at least to establish where the case is going.” This was said to be in the context of the general situation and the fact that Mr Macarthur was living in Australia and it would be virtually impossible for him to be in Reading the following Monday.

[119]As already mentioned Ms White from the back office at the Reading County Court replied with a faxed letter dated 30 August 2007 in these terms:

“Unfortunately you will not be able to appear by telephone at the hearing on Monday 3 September. Your case is listed before a circuit Judge and there are no provisions for hearings to take place by telephone in these chambers.”

Thus Miss White appears to have interpreted Mr Macarthur’s request as a request to appear by telephone at the hearing on 3 September 2007 rather than before the day of the hearing. According to the transcript HH Judge Elly said that he did not think that Miss White had copied the letter to the claimant’s solicitor and added that “in any event it would be hopeless but that it by the bye”.

[120]I have already expressed the view that HH Judge Elly should in all the circumstances have granted an adjournment of the trial. However the complaint in this ground of appeal is not that he failed to grant an adjournment. It is that there should have been a telephone hearing. The short answer to this point in my view is that facilities for a telephone hearing did not exist in the Reading County Court. The request it is to be inferred was received by the court office on Wednesday 29 or Thursday 30 August. The claimant and his solicitor lived a long way from Reading and I do not consider that either the court office of Judge Elly can be criticised for not having made between 30 August and 3 September arrangements for Mr Macarthur to make representations by telephone when such provisions did not exist. Nor can such a criticism be made on the day of the hearing. Mr Macarthur had left no telephone number in Australia where he could be reached and it was in any event presumably past office hours in Australia by the time the hearing began. (The judge referred to Mr Macarthur having telephoned earlier that day but there is no indication that he left a number or who he spoke to or when he rang.) Part 3.1(2)(d) gives the court the power to hold a hearing and receive evidence by telephone but it is plainly a matter for the discretion of the court whether to exercise it and in reaching its decision the court is in my view plainly entitled to take account of all the relevant circumstances including the logistical practicalities. It may or may not be that another judge might have sought to make enquires as to the availability of alternative facilities. However there is no evidence as to whether such alternative facilities were in fact available. Mr Macarthur’s complaint does not seem to me to fall within the approach suggested by Lord Fraser in G v G(minors: custody appeal)

[1985] 1 WLR 647

652:

“The appellate court should only interfere when they consider that the judge of first instance has not merely preferred an imperfect solution which is different from an alternative imperfect solution which the Court of Appeal might or would have adopted, but has exceeded the generous ambit within which a reasonable disagreement is possible.”

[121]In the light of my conclusions on ground two nothing of significance turns on my conclusion in relation to ground one. If there is a criticism to be made of the Judge’s approach, it is in my view that he failed to grant an adjournment, not that he failed to entertain telephone representations. The former would have arisen as an issue if ground two had been pursued as an appeal under Part 52. As it is ground two was pursued as a part 39 application and turned principally on the related but different question of whether Mr Macarthur had a good reason for not attending the trial.

[122]The third ground of appeal was that Judge Elly was wrong to have given judgment for the claimant in any event. It is necessary to address the preliminary issue of jurisdiction which was raised by Mr Murphy. It is apparent from the transcript of the hearing as well as from the terms of Judge Elly’s order that he made two separate orders. The first was an order striking out the amended defence under CPR 39.3(1) on Mr Macarthur’s failure to attend. The second was an order giving judgment for the claimant in a monetary sum together with interest.

[123]In order to identify whether this court has jurisdiction to entertain an appeal against the second of those orders it is necessary to have regard to the Practice Direction to Part 52. Paragraph 2A.1 of the Practice Direction provides that the court or judge to which an appeal is to be made (subject to obtaining any necessary permission) is set out in the tables set out thereafter. Table 1 prescribes that in the case of an appeal against an interim decision of a circuit judge on a Part 7 claim the judge to whom an appeal is to be made is a single judge of the High Court. It further provides that in respect of an appeal against a final decision of a circuit judge in respect of a Part 7 claim allocated to the multi-track the court to which an appeal is to be made again subject to obtaining any necessary permission is the Court of Appeal.

[124]Paragraph 2A.2 provides that ‘a “final decision” is a decision of the court that would finally determine (subject to any possible appeal or detailed assessment of costs) the entire proceedings whichever way the court decided the issues before it. Decisions made on an application to strike-out or for summary judgment are not final decisions for the purpose of determining the appropriate route of appeal (Article 1 Access To Justice Act 1999 (Destination of Appeals) Order 2000). Accordingly: …(4) a striking out are not final decisions for this purpose.’

[125]In my judgment it follows that an appeal against a decision by a circuit judge to strike-out a defence to a Part 7 claim would, subject to a question of abuse of process, be to a single judge of the High Court. My reference to abuse of process is to the issue raised in the Tennero case as to whether it is an abuse to appeal against a decision to strike-out a defence pursuant to Part 52 where it is possible instead to apply to set aside the order striking out the defence pursuant to Part 39. Jack J in that case, as I have mentioned, held, obiter in my view, that it would be an abuse of process to pursue the avenue of appeal rather than an application to set aside where both avenues are available. It has not been necessary for me to decide that question in the light of the claimant’s submission that I should treat ground two of Mr Hubbard’s grounds of appeal as an application to set aside pursuant to Part 39.

[126]In relation to Mr Hubbard’s ground three it is necessary in order to identify the appropriate appellate court to analyse whether HH Judge Elly’s decision to enter judgment against Mr Macarthur was a final decision as defined by paragraph 2A.2.

[127]Rule 39.3 does not in itself in terms lay down the procedure to be followed by the court after it has struck out a defence. 39.3(3) makes provision for an application to set aside a judgment where a party does not attend and the court gives judgment or makes an order against him. It thus contemplates that following the striking out of a pleading a judgment may be entered thereafter. It is however silent as to the procedure leading up to the giving of such judgment.

[128]The Practice Direction to Part 39 provides as follows:

“2.2 The court may proceed with a trial in the absence of a party. In the absence of: (1) “the defendant, the claimant may- (a) prove his claim at trial and obtain judgment on his claim and for costs…”

The Notes to part 39.3 state:

“The Practice Direction, para 2.2 (see para. 39 PD.1) envisages that even though a defence may be struck out, the claimant will still have to prove his or her claim, although this will normally only entail referring to the statement of case (with statement of truth) or tendering witness statements: see Rule 32.6(2) and Rule 22.1(1)(a). (1) “the defendant, the claimant may- (a) prove his claim at trial and obtain judgment on his claim and for costs…”

[129]Part 32.2 provides: “The general rule is that any fact which needs to be proved by the evidence of witnesses is to be proved –(a) At trial, by their oral evidence given in public; and

(b) At any other hearing, by their evidence in writing. (2) This is subject - (a) to any provision to the contrary contained in these Rules or elsewhere; or (b) to any order of the court.

[130]Thus the matters required to be proved for example by Mr Horgan’s evidence would at a trial be required to be proved by his oral testimony given in public unless the court ordered otherwise. At any hearing other than a trial it would be capable of being proved by his evidence in writing, in this case his witness statement.

[131]According to the transcript, having indicated that he did not consider an adjournment to be necessary to enable Mr Macarthur to attend to put his case, the judge gave leave for Mr Winter’s witness statement to be adduced in evidence “today”. He then said:

“There then moves the question of what you want me to do about it. It seems to me that there are two ways forward. I appreciate that we are only concerned with the second defendant. He having failed to appear, it seems to be that on that basis alone you are entitled to your judgment. If on the other hand you want me to adjudicate on the issues, then obviously I will do so.”

[132]After a short adjournment the claimant’s counsel referred to the Practice Direction envisaging that even though the defence may be struck out the claimant will still have to prove his or her claim although this will normally only entail reference to the statements of case or tendering witness statements. He said it was a matter ultimately for the judge’s discretion. “I would simply ask you that we can all get on the motorway or train (in our case) and judgment is simply entered.”

[133]The judge then said that he had had the opportunity of reading the various documents including the witness statements and also the claimant’s submissions. He then said:

“I am satisfied that on the basis of what I have read and on the basis that there is no other evidence produced by the second defendant, or for that matter the first defendant, to gainsay the evidence which has been filed on behalf of the claimant, on the face of it the second defendant has acted fraudulently in this particular matter.”

He then proceeded to consider the issue of inducement in the passage to which I have already referred and concluded that “…..the fraudulent representation made by the second defendant… seems to me to prove the case. This man has acted by means of a fraudulent misrepresentation in this particular case. So I’m quite satisfied on the evidence that has been produced and the submissions that have been made. In the circumstances then I will as requested strike-out the defence on the failure of the second defendant to attend. Secondly I will enter judgment for the claimant in the sum of £85,744 plus interest.”

[134]In my judgment, although the judge did not explicitly state that he was proceeding with the trial of the action that is what he did. He certainly decided that the claimant had proved its case on the evidence before him. He did not hear Mr Horgan’s oral testimony but read his witness statement. If what took place was a trial, it would appear that in order for Mr Horgan’s witness statement to be admissible it would have had to be by reference to another Rule or an order of the court. The judge did not explicitly make an order to that effect. It may, however, be inferred that that is at least by implication what he did or intended to do. If he did not make such an order, that might be a ground on which his judgment could be challenged on appeal. However it seems to me clear that the decision made by the judge was that having regard to the evidence before him the claim had been proved on the balance of probabilities.

[135]That being so it was in my judgment a final decision within the definition of paragraph 2A.2. If, having read the evidence and amended particulars of claim and submissions, the judge had concluded either that it disclosed no reasonable cause of action or that on the balance of probabilities the claim was not proved by the evidence he would have been bound to dismiss the claim and enter judgment for Mr Macarthur. Thus having embarked on the process of reading the evidence and submissions his decision would have finally determined (subject to any possible appeal or detailed assessment of costs) the entire proceedings whichever way he decided the issues before him.

[136]It follows that in my judgment Mr Murphy was right to suggest that any appeal against the decision of the judge that the claimant had proved its case and was therefore entitled to judgment would have to be made to the Court of Appeal. Not withstanding the claimant’s natural desire to avoid costs by the matter not being determined by me, it seems to me that I have no jurisdiction to entertain the appeal under ground three against that decision. Accordingly I do not entertain it and make no decision on it. In the light of my conclusion in respect of ground two this has no immediate practical effect.

[137]It follows that in my view the decisions of judge Elly to strike out the defence and enter judgment for the claimant should be set aside pursuant to Part 39. It will now be necessary for steps to be taken to bring this matter to trial with all due expedition.