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Judgment set aside to prevent Claimant obtaining advantage from COVID-19 health emergency

  • Market Insight 1 July 2020 1 July 2020
  • UK & Europe

  • Insurance & Reinsurance

The High Court has set aside a judgment obtained in the initial stages of the lockdown period, where the Defendant did not file an Acknowledgment of Service after proceedings were served on an empty office. In the view of the Court, the Claimant had not taken obvious steps to ensure that service was “possible and feasible” in the manner previously agreed.

Judgment set aside to prevent Claimant obtaining advantage from COVID-19 health emergency

Melanie Stanley v London Borough of Tower Hamlets [2020] EWHC 1622 (QB)

Mr Justice Knowles found that it would be unconscionable to have allowed the Claimant to benefit from an unprecedented health emergency. It was noted that whilst the Claimant had not acted deliberately to gain a procedural advantage, they had “exercised poor judgement”. However, in setting aside the judgment, the decision makes clear that obtaining an advantage over other parties to the litigation as a result of the unusual circumstances in which we find ourselves will not be tolerated by the Court.

The Court dismissed suggestions that the Defendant had not responded adequately prior to the issue of litigation, and there was a pattern of consistent dilatoriness on their part. This alleged “cavalier” attitude was not the reason for the Defendant’s failure to file an AOS.

Background

The Claimant instructed solicitors to pursue a claim against the Defendant after it disclosed her medical records without consent to various parties following a child protection meeting. Protective proceedings were issued by the Claimant in late 2019, and the Defendant was informed that Particulars of Claim would be served. The Claimant was informed that service by email would not be accepted and that service of proceedings should be served by post.

Following the decision of the UK Government, the country went into lockdown on 23 March 2020. In accordance with official guidance, the Defendant closed its offices with staff working remotely from date. A ‘skeleton staff’ continued to work in the office after 23 March but were unfamiliar with court proceedings.

On 25 March 2020, proceedings were sent to the Defendant by post, the deemed date of service being 27 March 2020, and an Acknowledgment of Service due by 10 April 2020. The Claimant applied for default judgment on 15 April 2020. This was granted on 17 April 2020.

Application to set aside

The Defendant’s solicitor was not instructed until 27 April 2020, then advising she was instructed to accept service of proceedings. The Claimant’s solicitor replied that judgment in default had already been entered.

The Defendant applied to have judgment set side, and for relief from sanctions.

The Defendant argued that per CPR 13.3(1)(b), there was good reason to set aside the judgment because the proceedings were served on a closed office, and the Claimant had not ascertained whether there was anyone who could deal with the proceedings during an unprecedented health emergency. Further, the Claimant’s approach was contrary to the overriding objective.

The Defendant also made it clear that it intended to defend the claim, and that pursuant to CPR 13.3(1)(a), it had a real prospect of successfully defending the claim. It was accepted there had been a serious and significant breach but that the circumstances overall meant that relief from sanctions should be granted.

In response, the Claimant argued that the alleged breach of data protection had already been admitted in the Defendant’s response to the Claimant’s initial complaint. Accordingly there was no real prospect of the claim being successfully defended. The Claimant submitted that proceedings had been served by post in accordance with the Defendant’s instructions in February 2020.

Furthermore, it was argued that the Defendant had failed to respond to correspondence prior to the service of proceedings, suggesting a continued inability to acknowledge the ongoing claim. Therefore, it was submitted, Mr Justice Knowles should be sceptical about accepting that the lockdown was the reason for the failure to file and Acknowledgment of Service.

Outcome

Mr Justice Knowles accepted the Defendant had real prospects of defending the claim and CPR 13.3(1) was made out. Although the Defendant had responded to the Claimant’s complaint in January 2019 admitting a data protection breach, it had not accepted there had been any loss and this was for the Claimant to prove.

The judge was also satisfied there was good reason to set aside the default judgment. The Claimant’s solicitor’s witness statement was “entirely silent as to why he thought it appropriate to post documents to the [Defendant’s] offices when he knew or should have known they were shut and the [Defendant] was highly unlikely to be in a position to respond”.

It was inadequate in the circumstances for the Claimant’s solicitor to take no steps to ascertain the proceedings had been received; the “world shifted on its axis” since he was told to serve by post.

Considering whether or not to grant relief from sanctions the judge found that “unique circumstances” led to the default and the reason was the COVID-19 crisis. Had the Defendant's office been open, the Court was satisfied that it “would have responded in time to the Claimant’s claim”.

Mr Justice Knowles concluded it was in the interests of justice for judgment to be set aside and it would be “unconscionable” for the Claimant to benefit from the unprecedented health emergency.

What can we learn

  • The decision makes clear that obtaining a procedural advantage as a result of the unique circumstances resulting from the pandemic will not find favour with the Court, even where the advantage was not obtained deliberately. This outcome can be compared to Woodward v Phoenix Healthcare, where the Court of Appeal confirmed that solicitors are under no duty to alert their opponents to mistakes.

    In hypothetical circumstances where the Defendant had elected to work remotely on a full-time basis, and failed to provide an email for service, then Woodward would have likely applied. However, the failure in the index matter was a result of unique circumstances in which the country was “grinding to a halt” with every employer and business across the world “having to develop new ways of working”.
  • The effective conduct of claims should remain at the forefront of the parties’ minds at the moment despite the need for compliance with the rules. Given the specific circumstances, Mr Justice Knowles stated it was “incumbent on [the Claimant’s solicitor] as a responsible solicitor and an officer of the court to contact the [Defendant] to acknowledge that the situation had changed, and to discuss how proceedings could best and most effectively be served”.

    Therefore, parties should be aware that where a method of correspondence has previously been agreed between the parties prior to the lockdown, the current circumstances dictate that clarification and accommodation of the needs of the other party may be necessary. The Claimant’s solicitor was at fault for not checking whether postal service was still “possible and feasible”, and this “was an obvious step which he should have taken”.

End

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