Factual and Procedural Background
This appeal concerns an order made by District Judge Hay on 28th July 2015, which set aside an earlier order by Deputy District Judge Paul dated 26th February 2015. The original proceedings were initiated in December 2012 by the Appellant trustees in bankruptcy regarding a property registered in the name of the bankrupt (the first Respondent) and his spouse or former spouse (the second Respondent). The Paul order was made after a hearing on 26th February 2015, which the second Respondent did not attend. DJ Hay set aside the Paul order on the basis that there was no good reason for the non-attendance but found that the second Respondent had a real prospect of success at trial and that a miscarriage of justice might occur if the Paul order were not set aside.
The underlying application concerned declarations and orders related to possession and sale of the property under insolvency legislation and the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA). The trustees sought declarations of beneficial ownership, orders for sale, and termination of occupation rights. Procedural steps included directions for evidence, disclosure, and cross-examination, with the matter listed for a two-day final hearing initially scheduled for February 2014 but later adjourned to 26th February 2015.
Throughout the proceedings, the second Respondent made various applications, including a Part 8 claim under section 14 of TOLATA and attempts to adjourn hearings, some of which were struck out or dismissed for procedural failings. The hearing on 26th February 2015 was intended to be a final determination of the dispute, with both parties having undergone pre-trial procedural steps.
Legal Issues Presented
- Whether the hearing before Deputy District Judge Paul on 26th February 2015 constituted a "trial" within the meaning of Civil Procedure Rule (CPR) 39.3;
- If it was a trial, whether the second Respondent had a good reason for not attending;
- If there was no good reason for non-attendance, what the consequences should be;
- If the hearing was not a trial, what different legal considerations apply.
Arguments of the Parties
Appellant's Arguments
- The hearing was listed for two days and intended as a serious, substantive occasion to resolve the dispute definitively, with procedural orders for evidence and cross-examination, all attributes of a trial.
- The matter was governed by insolvency proceedings and CPR rules applied accordingly, making the hearing a trial within CPR 39.3.
- Since the hearing was a trial and the second Respondent had no good reason for non-attendance (as found by DJ Hay), the order setting aside the Paul order was incorrect.
Second Respondent's Arguments
- The proceedings were not insolvency proceedings in substance but akin to an application under section 14 of TOLATA.
- The hearing was not a trial but a final hearing under Part 8 or Part 23 CPR applications, with broader discretion to set aside orders made in absence under CPR 23.11.
- The absence of pleadings and procedural form indicated the matter was not a trial under Part 7 or Part 29 CPR.
- The order for directions requiring cross-examination attendance did not imply a trial, as such orders would be unnecessary if it were a trial.
- The second Respondent claimed she did not receive notice of the hearing date and therefore had a good reason for non-attendance.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Forcelux Ltd v Binnie [2009] EWCA Civ 854 |
Clarification of what constitutes a trial under CPR 39.3; first possession hearings generally not trials. |
Used to distinguish possession hearings from trials and to analyze the application of CPR 39.3 and CPR 3.9 in setting aside orders made in absence. |
| Bank of Scotland v Pereira [2011] EWHC Civ 241 |
Requirement that all three conditions in CPR 39.3(5) (promptness, good reason for non-attendance, and reasonable prospect of success) must be met to set aside an order made in absence. |
Referenced to support the strict application of CPR 39.3 in determining whether an order can be set aside. |
| Hackney LCB v Findlay [2011] EWHC Civ 8 |
Application of CPR 39.3 by analogy to possession orders; discretion under CPR 3.1(2)(m) and CPR 3.9; consideration of social context and best practice. |
Applied to explain the court’s discretion and the context in which CPR 39.3 requirements may be relaxed for possession cases. |
| Riverpath Properties Ltd v Brammall [2000] WL 463 |
Discretion to set aside orders made in absence under CPR 23.11 is very flexible but to be exercised sparingly. |
Used to contrast the broader discretion under CPR 23.11 with the stricter rules under CPR 39.3. |
| Yeganeh v Freese and others [2015] EWHC 2032 (Ch) |
Reaffirmed the sparing exercise of discretion under CPR 23.11, with regard to court resources and overriding objective. |
Supported the approach to applications to set aside orders made in absence under CPR 23.11. |
| MA Lloyd & Sons Ltd v PPC International Ltd [2014] 2 Costs LR 256 |
Exercise of court’s power under CPR 23.11 to re-list applications proceeded in absence is likely to be sparing and mindful of court resources. |
Reinforced the cautious approach to setting aside orders under CPR 23.11. |
Court's Reasoning and Analysis
The court considered the nature of the hearing on 26th February 2015, focusing on whether it constituted a "trial" within CPR 39.3. The court emphasized that the determination depends on context, the hearing’s purpose, and procedural history rather than the formal procedural label applied to the proceedings. The hearing was listed for two days, involved procedural orders for disclosure, evidence, and cross-examination, and was intended to be a final determination of the dispute. Both parties expected a final decision, and the order would be res judicata if uncontested.
Accordingly, the court concluded that the hearing was a trial within CPR 39.3. This finding meant that the strict requirements of CPR 39.3(5) applied to any application to set aside the order made in the absence of the second Respondent. The court examined the second Respondent’s evidence regarding her non-attendance, particularly her claim of not receiving notice of the hearing dated 20th February (an erroneous date on the order) and her belief that mediation might occur instead of a hearing.
The court found that the second Respondent’s reasons for non-attendance were spurious and inadequate. She was aware that the hearing was scheduled for 26th February 2015 and did not provide any credible explanation for failing to attend on that date. The court rejected any suggestion that the second Respondent had a good reason for non-attendance as required by CPR 39.3(5)(b).
On the merits, the court accepted that the second Respondent had a reasonable prospect of success, satisfying CPR 39.3(5)(c). However, the lack of a good reason for non-attendance was dispositive. The court considered the overriding objective, including the efficient use of court resources and finality of proceedings, noting that a fresh trial would cause delay and expense, but also recognized the need for fairness to both parties.
Balancing these factors, the court determined that the appeal should succeed, reinstating the Paul order and emphasizing the importance of finality, fairness to the trustees, and proportional use of court time.
Holding and Implications
The court’s final decision was to allow the appeal, thereby setting aside the order made by District Judge Hay and reinstating the order of Deputy District Judge Paul made on 26th February 2015.
Holding: The hearing on 26th February 2015 was a trial within the meaning of CPR 39.3; the second Respondent did not have a good reason for non-attendance; accordingly, the order made in her absence should not have been set aside.
Implications: This decision restores the original order for possession and sale of the property, bringing the proceedings closer to final resolution. The ruling underscores the strict application of CPR 39.3 where a party fails to attend a trial without good reason, reinforcing the principle of finality in litigation. No new legal precedent was established beyond the application of existing procedural rules to the facts.