Inovatech EMEA Ltd & Anor v Nuttall [2010] EWHC 226 (TCC)

[2010] EWHC 226 (TCC)

Case No HT-09-215

IN THE HIGH COURT OF JUSTICE

TECHNOLOGY AND CONSTRUCTION COURT

Venue Royal Courts of Justice

Date Friday, 22 nd January 2010

Before

MR. JUSTICE AKENHEAD

B E T W E E N:

Between

INOVATECH EMEA LIMITEDClaimants

POWERNET COMMUNICATIONS (PTY) LIMITEDClaimant

RICHARD NUTTALLDefendant

John A David appeared for Claimants

Richard Sage instructed by Irena Spence & Co appeared for Defendant

J U D G M E N T

[1]The background to this case is that the Claimants were involved in the development of a telecommunications project, known as the ‘Burwood Estate Project’ in South Africa. There seems to be no issue between the parties that Mr. Nuttall was engaged either as an employee, consultant, contractor, (and I make no findings on that), by the First Claimant, InovaTech, in mid 2007. It appears that he was involved on the technological side of that project for a period of two to three months. It is said that there was agreement between the parties as to the amount of remuneration to which he was entitled. For one reason or another, the relationship appears to have broken down in or about October 2007, and Mr. Nuttall, who is British and lives in Cambridgeshire, returned to this country.

[2]Mr. Nuttall raised an invoice for his services, which was not satisfied, apparently, and on 25 March 2008 he issued a claim against InovaTech in the Cambridge County Court in respect of what was said to be the outstanding payment. It is said, and again I make no findings on this, that the court documentation was effectively served on InovaTech, although that is very much in issue, in this country. In any event, no Acknowledgment of Service or Defence was served within the requisite period, and default judgment was entered for the sum of £42,674.84 on 16 April 2008.

[3]By one means or another, notification of that judgment was received by Mr. David, one of the directors of InovaTech, in early May 2008, and at that stage InovaTech had solicitors who were advising them. That judgment in default has not been honoured, and it appears that no steps of any sort were taken by InovaTech to have that judgment set aside, although it became clear part way through last year that the Claimant, InovaTech, regard the judgment in default as having been improperly obtained. That was on the grounds that the service address was not the proper address of Mr. David, and more recently another ground has been advanced that in any event service, even if it was properly effected on Mr. David personally, was insufficient service under the rules, given that InovaTech is a company registered in the British Virgin Islands.

[4]Be that as it may, on 1 June 2009 InovaTech issued proceedings in the TCC in London to pursue a claim against Mr. Nuttall, which was put on a number of different bases, but the primary basis was that Mr. Nuttall had not properly performed his contractual obligations. The pleadings at that stage put forward by InovaTech and its associated South African company, PowerNet Communications, also included claims for fraud and conversion.

[5]The first case management conference in these proceedings took place on 6 November 2009 after a defence had been served. At that hearing Mr. David, who appeared in person on behalf of the Claimants, InovaTech and PowerNet, sought to persuade the court that it was appropriate to have the County Court proceedings transferred to the TCC, including, in effect, the application to set aside the judgment in default which had been obtained some 17 or 18 months before. At that hearing Mr. Sage of counsel, who appeared for Mr. Nuttall, put in a detailed note and, in effect, sought to complain about the pleadings put in by the Claimants at that stage, and and, in effect, sought to strike out all or part of the particulars of claim.

[7]I declined to do that at stage. I took the view that setting aside the County Court judgment should, in general terms, be dealt with by the County Court, and although the judgment had been obtained in the Cambridge County Court matters had been transferred to the Wandsworth County Court in London, I suspect, because that was the area in which Mr. David lived and because it was thought appropriate to do so. It seemed to me, in practical terms, the County Court was best placed to decide whether this was a judgment which should be set aside.

[8]What I said in clear and unequivocal terms to Mr. David on 6 November was that I was not going to strike out the Particulars of Claim, although it was not in many respects a proper pleading, but that I expected an application to amend the Particulars of Claim, prepared in a comprehensible and comprehensive form, to be provided promptly, and, secondly, that the application to set aside the judgment, which at that stage had not been made but had only been intimated, should be pursued expeditiously. With that I mind I fixed today’s hearing, 22 January, as a time by which, if reasonable expedition was maintained by the Claimants, the Wandsworth County Court would and should have been in a position to deal with the application, either to allow it or to refuse it.

[9]What has happened since then is in fact very little, and I will deal with it briefly. In simple terms, on or about 8 January, possibly 11 January 2010, the First Claimant issued its application in the Wandsworth County Court to set aside the County Court judgment made against it as defendant. It is supported by a written statement from Mr. David, and I notice in that that there is little (if any) explanation as to why the application to set aside the judgment had taken, by then, almost 20 months or so to bring on. Having read it, however, it does go into articulate and comprehensible detail, as to the grounds for seeking to set aside the judgment in relation to what is said to be inadequate, ineffective, or improper service on him at an address which was not said to have been his.

[10]It is slightly odd that the written statement is not dated, but I assume that it was signed at about the time that the application was lodged at the Wandsworth County Court. Unsurprisingly, the Wandsworth County Court had not been able to process that application in any final sense between 8 or 11 January and today’s date, particularly in circumstances when that application is likely to be opposed. I should also indicate that I had made it clear that, if the Claimants wished and asked, the TCC in London, the High Court, could use its good offices to try to secure an expedited hearing of the application to set aside. No such assistance has yet been requested, albeit that Mr. David says that, unless and until one sees what the County Court are likely to do, there was no point in seeking expedition.

[11]The second thing that has happened, and it happened after close of business hours last night, is that the Claimants prepared what is called an ‘Amended Particulars of Claim’. Having indicated that they were proposing to instruct Counsel, this is a document that clearly has not been drafted by counsel, but it is also, in terms of what is put forward, articulate and comprehensible. I do not by that mean that it satisfies the rules and I make no comment on whether it satisfies the rules, whether it has been pleaded with adequate particularity and whether it contains matters which should not be pleaded. But at least it is comprehensible and one can follow it on a paragraph by paragraph basis. There is no application as such to amend the Particulars of Claim in accordance with this draft, but it has been put together by Mr. David and his co-director, Mr. Jago, who is based in Australia, to articulate their claim against Mr. Nuttall. It has a number of annexures, one of which is a nine page schedule which seeks to explain what is due to it, allowing for what it is said is due to Mr. Nuttall, as far as I can understand it.

[12]Mr. David in his witness statement before me, which I received yesterday evening, by e-mail yesterday evening, explains in great detail the chronology since the last case management conference. Although he seeks to explain on a day by day or week by week basis what he and his co-director were up to, the fact of the matter is that, although explanations are given, I am satisfied that ultimately this explanation does not provide much by way of excuse for the delay which has happened. The explanations are that contact was made with Clifford Chance, who are one of the top solicitors firms in the country, with a view to getting recommendations for an appropriate firm of solicitors to set aside this County Court judgment, and that various solicitors firms were looked at. One particular firm was called Murray Hay, who it is said, in effect, took some time before indicating that they would not have the expertise to deal with the application to set aside. Mr. David has explained that he contacted a number of other firms of solicitors, all of whom, for one reason or another, felt unable to act for the Claimants on this case.

[13]Mr. David says that it was on 8 December 2009 that he contacted Morrisons, a reasonably well known firm of solicitors, and between 8 December and 21 December 2009 it does not appear that they did anything, but by 21 December 2009 Mr. David signed their letter of engagement. It appears that between Christmas and 5 January Morrisons did move reasonably promptly, given the Christmas break, with the result that the application to set aside was faxed to the Wandsworth County Court on 8 January and the documents were formally lodged at the Wandsworth County Court on 11 January 2010.

[14]The story then continues. Unsurprisingly, because Mr. Nuttall and his solicitors had not heard what was going on, they wrote to the court on 11 January 2010 saying this: “We note that we have not heard anything since the hearing on 6November and we would be grateful if you would confirm the arrangements for the adjourned hearing on 22 January 2010. We are very keen to preserve the case management conference on 22 January 2010 as there has already been a significant delay in progressing this matter”.

[15]My Clerk on my behalf wrote back to Mr. Nuttall’s solicitors on 12 January 2010, saying that the hearing on 22 January was in the diary and it was now listed at 9.00 a.m., and:

“Your letter to the court does not appear to have been copied to the Claimants. The order of 6 November 2009 and this letter should, as a matter of urgency, be served by you on the Claimants at as many relevant places by e-mail, fax, post, or otherwise, as practicable and as promptly as possible. If you wish to pursue your applications made on 6 November 2009 you should give prompt notice to the Claimants in the same way”

. It appears that that direction was complied with promptly by Mr. Nuttall’s solicitors.

[16]On 13 January 2010 Mr. Nuttall’s solicitors issued the application which I consider today, which is effectively to strike out the Claimants’ claims in the TCC pursuant to CPR 3.4(2)(a) and/or (b), and on the basis that the claims are an abuse of the court process and/or disclose no reasonable grounds for bringing them under or pursuant to CPR Part 24 on the basis that they have no reasonable prospects of success. That is supported by a written statement from Ms. Harvey, and it is clear that that was effectively served on the Claimants.

[17]Mr. Jago heard about this. On 18 January 2010 he wrote by e-mail to my clerk indicating that his company is aware that – I use his words, not mine:

“…Mr. Justice Akenhead advised Mr. David on 6th November to seek advice from counsel, make an application to the County Court to set aside the judgment and transfer proceedings, and have the statement of claim re-drafted by counsel”

. Mr. Jago said:

“We have acted on this advice and taken steps without delay to make application to the County Court. We have briefed counsel to appear and hope that the application will be dealt with for 22 January”

. In effect, he asked whether I would consider an adjournment of the CMC, whether I required formal representations on the question of the adjournment, and he asked for the earliest date after 22 January when I would be available to hear the second case management conference on this matter. It is not clear that that was copied directly to Mr. Nuttall’s solicitors, but certainly my clerk passed it on to Mr. Nuttall’s solicitors, who responded later the same day strenuously objecting to a postponement of the hearing on 22 January 2010. So it is that I decided that in the light of that opposition to any adjournment that this case management conference should go ahead. That is the background.

[18]I bear in mind the Overriding Objective, which includes trying to keep costs to a reasonable minimum and to ensure that matters are proceeded with expeditiously. I do very much bear in mind that the Claimants in the TCC, and the Defendant in the County Court proceedings, has a right, at least, to apply to set aside the judgment in default. Even if the grounds are good, or bad, and, in practice, no matter how late the application to set aside the judgment, it is their right to apply to do so. What the court does with the application will be a matter for the Wandsworth County Court. Similarly, the Claimants have a right to issue proceedings in any court in this country to have their complaints about the Defendant’s performance heard. Whether those complaints are good or bad as a matter of fact or law, they have a right to issue proceedings and to have a fair trial, but those rights, of course, are circumscribed reasonably by the rules of court, which seeks to ensure the fair and just and expeditious disposal of proceedings.

[19]The Defendant in these proceedings, Mr. Nuttall, applies to strike out these proceedings on the basis that the Claimants have not complied with the directions given by me on 6 November, there has been no expedition, a draft amendment by counsel has not yet been produced, or when it was produced, not drafted by counsel, and at a very late stage. I form the view that it is not yet, and I emphasise the word ‘yet’, appropriate to strike out these proceedings. The Claimants should be given the opportunity to pursue their application to set aside the judgment in default, and that will be dealt with by the County Court. Again, if there is any problem in having that matter brought on promptly by the County Court, I will extend, as I did before, the offer to use the good offices of this court to seek to persuade the County Court to bring the matter on more promptly.

[20]Secondly, complaints made by the Claimants against Mr. Nuttall, relating, as they do, to the nuts and bolts of a telecommunications project, is one which can properly be described as TCC business. That is not to say that the Wandsworth County Court would not be competent to deal with this, but the TCC has particular expertise in dealing with cases of that sort. I do not think it is yet an appropriate case for this to be struck out.

[21]The outcome of the setting aside proceedings can only produce one of two results. One is that the judgment is set aside, at which stage this court or the County Court can consider whether or not to consolidate the proceedings, or the application to set aside will fail. Again, I do not in any way seek to predict the outcome. But if it fails then there will be a valid judgment in favour of Mr. Nuttall, which has not been honoured, and it may well be the case, I know not, that this Court would entertain an application that these proceedings be stayed pending the payment to Mr. Nuttall of that judgment sum. Again, I am not seeking to pre-determine that, but certainly a court would listen to an application along those lines. So I am not willing to strike out at this stage.

[22]That said, it seems to me absolutely clearly that the reason that these proceedings have not been proceeded with expeditiously is the failure of the Claimants to proceed expeditiously. I do not accept that a two month delay in issuing an application to set aside a judgment is reasonable, even with the explanations from Mr. David as to what has happened. It is clear that Mr. David and his associate director, Mr. Jago, are highly intelligent and articulate, and it is certain in Mr. Jago’s case that he is a qualified Australian solicitor, and they are both aware of the need for expedition. I simply find it unacceptable that it has taken, in effect, six weeks after the hearing of 6 November for a solicitor with appropriate expertise to be found and appointed. There are numerous competent solicitors who could handle what is a relatively standard application to set aside a judgment. There is no good excuse, in my view, for the delay which has happened.

[23]That means, in effect, that the 6 November hearing, at which I effectively reserved the costs, and today’s hearing, have been abortive. Therefore, the Claimants’ delays have led to abortive costs. It seems to me that this is a case in which it is appropriate that I order that the Claimants should pay the costs of and occasioned by the two hearings, that is on 6 November and today, to be paid by the Claimants on an indemnity basis, and that this action should stand stayed unless and until the sum which I will summarily fix by way of costs for those two hearings is paid. It seems to me that it is not right, whatever the merits of the complaints against Mr. Nuttall, that the Claimants should waste time and money, as in my view they have done. I was indulgent, properly so, to the Claimants in November, and I am, to some extent, being indulgent now in refusing to strike out, but I do not see why the Defendant, who is an individual, should have to pay the costs of and occasioned by these two abortive CMC’s.

[24]So far as the summary assessment of these costs is concerned, I will order Mr. Nuttall to, obviously through his solicitors, to put in a summary bill of costs. That is to be served on Mr. David by Tuesday of next week, by close of business on 26 January. If there are any submissions which the Defendant wants to put in with those then obviously he can do so, but usually it is just a summary bill of costs. The Claimants should respond to that in writing by close of business on 29 January, with copies to both the Defendant’s solicitors and to this court. The Defendant should respond to any of the points raised no later than 4.00 p.m. on 2 February, and I will rule on the matter by the end of the week. The order should just leave blank how long is required for the costs to be paid, but I will almost definitely order they be paid within seven days after my decision on what the costs should be. If those costs are paid then the Claimants can take out another case management conference application. I am not going to fix one because the action is going to be stayed until those costs are paid.

[25]I am going to ask the Defendant to draw up the order. Obviously, the costs of and occasioned by drawing up the order for today will be part of the costs of today. In fact, the draft of that should be served on Mr. David as well so he can check it before I confirm it. At any resumed CMC I will look at any application to amend the Particulars of Claim, either in the form that has already been put before the court late yesterday evening or in a form drafted by counsel. I have already averted to the fact that if there is no contract between the Defendant and the Second Claimant it may be inappropriate, I make no findings, for a case for breach of contract to be pleaded by the Second Claimant against Mr. Nuttall. I am certainly not expressing any concluded view about that. It may be that there are other deficiencies in the draft Amended Particulars of Claim put before the court but because it arrived so late neither Mr. Sage, on behalf of the Defendant, or I have been able to review it in sufficient detail to indicate the extent to which it is, or may be, inadequate. Postscript on costs

[26]Pursuant to my order, the Defendant’s solicitors served upon the Claimants their summary bill of costs in the total sum of £4197.68. There has been no response formal or informal from the Claimants in relation to this bill will stop having considered the bill, it seems wholly reasonable and indeed modest. I can see no reason to reduce it by way of summary assessment, particularly given that the costs are to be on an indemnity basis, and accordingly I order, by way of summary assessment, that the Claimants should pay to the Defendant the sum of £4197.68. These costs should be paid within seven days of this post script (11 February 2010) and, as the Order which I have already signed states, unless the Claimants pay these costs by 25 February 2010, the Claim by them shall be stayed. ____________