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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Black Arrow Finance Ltd v Four Seasons Dry Cleaning Ltd & Anor [2001] EWCA Civ 430 (8 March 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/430.html Cite as: [2001] EWCA Civ 430

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION) B1/2000/2551
APPLICATION FOR PERMISSION TO RELY ON
FURTHER EVIDENCE ON APPEAL FROM ORDER
OF HIS HONOUR JUDGE RUDD
(Southampton County Court)

		Royal Courts of Justice Strand London WC2
		Thursday, 8th March 2001

1. LORD JUSTICE LONGMORE: This is an appeal by the second defendant, Mr Simon Wills, who is sued in his personal capacity on a guarantee, which the claimants have alleged that he signed, of the first defendant's liability. The original agreement between the claimant and the first defendant was a leasing agreement for some dry cleaning equipment made on 15th January 1999. On the same day Mr Wills signed a guarantee of the company's liabilities under the leasing agreement, the first clause of the guarantee providing:

"In consideration of Black Arrow Finance Ltd (hereinafter called `the Lessor') at my/our request hereby made entering leasing agreement/rental agreement (`The Leasing Agreement') with Four Seasons Dry Cleaning Limited [address] in respect of the equipment specified in the first schedule thereto. I/we hereby (jointly and severally) guarantee upon demand being made to me/us by the Lessor the payment by the Lessee of all sums due under the Leasing Agreement and the due performance of all the Lessee's obligations thereunder."

2. Payments fell behind and the claimants instituted proceedings on 12th November 1999. On 28th January they obtained a default judgment against both defendants in the absence, so they maintain, of any defence having been served. Mr Wills however on 1st February 2000 wrote to the Brentford County Court where the proceedings had been instituted in the following terms:

"I am very concerned in having received a judgment for the claimant in default. The reason states that `You have not replied to the claim form.'

This is totally incorrect and please accept copies of correspondence forwarded via post to the Brentford County Court together with a confirmation receipt of a facsimile of the papers."

3. The letter continues about confirmation made by various members of the court staff. With that letter he enclosed what he called the fax confirmation report and the two defences which he asserts he had sent and also a covering letter of 21st December 1999 addressed to Mrs Jassal of the Brentford County Court. That was in the form of a fax and said on its face that the number of pages, including this cover page, was two. The fax was addressed to Mrs Jassal at Brentford County Court, saying:

"Further to our telephone conversation of today's date please accept a copy of the statement forwarded to the court for attachment to our acknowledgement of Service.

As discussed we wish to defend the claim, as does Mr Wills in his personal capacity and together we also seek the court's permission to change the jurisdiction of the case.

Would you kindly make sure that a copy of this facsimile is attached to the papers relating to this case. An additional hard copy is being posted today."

4. Mr Wills accepts that he did not post any copies of the defences or of that fax to the Brentford County Court but he maintains that he did fax copies of the defences to the Brentford County Court and reminds us that a facsimile service of a court document such as a defence is now permissible.
5. The statement referred to in the fax of 21st December was enclosed and made clear that he wished, in his personal capacity as director of the first defendant, to deny liability, deny that he was indebted in his personal capacity and wished to defend all the claims. That was dated 15th December 1999. The defences which Mr Wills says he sent to the court are also dated 15th December 1999.
6. The matter proceeded on Mr Wills' application to set aside the default judgment which came before Deputy District Judge Beith in Southampton - the court to which the matter was transferred in the light of the fact that Mr Wills has his residence there -on 18th May. That deputy district judge was unable to find in the file any evidence that the defences had been served and he refused to set aside the default judgment. Mr Wills appealed that judgment. That appeal came on before His Honour Judge Rudd in the County Court in Southampton. His Honour Judge Rudd dismissed the appeal, saying that he had searched with care through the file and could not find any document on the file that satisfied him that there was an original document received by the court which was a defence. Both Deputy District Judge Beith and His Honour Judge Rudd went on to consider the question as to whether there was a fairly arguable defence, and, having concluded that there was not, they let the judgment stand.
7. Mr Wills appeals to this court. This court has admitted further evidence, particularly evidence from Mr Bones in the Brentford County Court. The only evidence before His Honour Judge Rudd from Mr Bones was a letter dated 9th June 2000. That stated that having inspected the papers he was satisfied that there were documents filed at the court which appear on the file, that is, Mr Wills' letter of 21st December and the defences of both defendants. It continues:

"I would like to take the opportunity to offer my sincere apologies for this error."

8. That letter did not cut much ice with His Honour Judge Rudd who said he did not know for what error Mr Bones was apologising.
9. We have admitted a witness statement from Mr Bones stating 5th January 2000 but which must be 5th January 2001. In that witness statement he said that the documents he referred to in his letter of 9th June should have been referred to as copy documents received in February. In the light of that Mr Falkowski, on behalf of the claimants, submitted that no defences were received in the Brentford County Court. However we have also admitted a second witness statement from Mr Bones, his third opportunity to assist the court in what actually happened at Brentford. I summarise that second witness statement by saying that Mr Bones now says (this being a statement of 5th February 2001) that it is impossible to tell from the files that he keeps at Brentford County Court - and this file in particular - whether or not faxes have been received. He instances various examples of faxes which have been received but are not recorded in the records of the court. His final sentence is:

"Having now inspected the file and computer records, I cannot say whether or not a defence was ever received by the court."

10. In the light of that evidence Mr Wills invites us to conclude that the defences were received or, at any rate, the claimant who has entered judgment in default cannot show, as he has to, that no defence was received by Brentford County Court. We find ourselves, unfortunately, unable to take that view. The critical feature, in our judgment, is that the fax of 21st December 1999 says very clearly that the number of pages, including the cover page, is two. The natural inference is that the cover page and the statement were included, but, no doubt by oversight, the two defences dated 15th December were not. Mr Wills says in this court for the first time it may well be that they were in the sense that they could both have been incorporated on the page which sets out the statement that undoubtedly he did send to Brentford County Court at that time.
11. As it emerges, the point taken by the claimants in support of their default judgment is one of the utmost technicality. They shrank from the suggestion that the letter of 1st February 2000 was a deliberate deceit on the part of Mr Wills. What appears to have happened is that Mr Wills did communicate with the court and made clear, as he had done in his statement of service, that he wished to defend the claim against him and wanted the matter to be transferred to Southampton. Owing to an unfortunate error it seems that, on the balance of probabilities, it is unlikely that he did send the defences at the same time as he communicated with the court on 21st December.
12. The defence with which we are concerned is meagre in the extreme. It says:

"As the defendant in this case I deny that I have a personal guarantee and indemnity as claimed by the claimants in their particulars of claim and that there should be no claim against me personally."

13. As it has emerged in the course of argument, the document on which the claimants sue is an "on demand" guarantee. No demand is pleaded in the particulars of claim and, as far as I can see therefore, the particulars of claim have not pleaded a cause of action. The question thus arises whether, where there is merely an unfortunate error and the claimants themselves are relying on that unfortunate error in order to endeavour to maintain their judgment in default of defence, they are entitled so to do. In my judgment, not having pleaded the demand in their particulars of claim, there is no cause of action shown in the particulars of claim. Therefore it would be entirely inappropriate for the judgment in default of defence to remain.
14. In my view, on this new point which was not before His Honour Judge Rudd, it seems to me right that the defence should be that judgment in default of defence should be set aside. That would leave it open to claimants to apply for leave to amend to constitute a cause of action in the particulars of claim and, if so advised, to pursue an application for a summary judgment.
15. Mr Wills has now sought leave to put ion a new defence raising a defence that there was a misrepresentation made to him when he signed the guarantee that there was no other guarantor. He wishes to submit that that representation is false because there was a buy-back guarantee arrangement made with the owner of the machine, Duval. The fate of that defence would have to await any application for summary judgment. In my view, as matters stand at present, this appeal must be allowed and the judgment in default of defence be set aside.
16. LORD JUSTICE BROOKE: I agree. I only add a few words of my own because the history of this case provides a vivid illustration of the problems confronting many county courts in England and Wales today which are struggling to administer the new Civil Procedure Rules with insufficient resources.
17. This was a claim for no less than £176,000. If a defence was not filed at the court within 28 days, or at any rate before application was made to enter default judgment, a court judgment for £176,000 would come into being and be enforceable. Under the Civil Procedure Rules a new practice direction recognises the value of modern technology. The practice direction to Civil Procedure Rules Part V reads in paragraph 5.1 and following:

"5.1 The date on which a document was filed at court must be recorded on the document. This may be done by a seal or a received stamp.

5.2 Particulars of the date of delivery at the court office of any document for filing and the type of proceedings in which a document is filed shall be entered in court records or the court file or on a computer kept in the court office for the purpose. Except where a document has been delivered at the court office through the post the time of delivery should also be recorded.

5.3 (1) Subject to paragraph 6 below a party may file a document at court by sending it by facsimile (fax).

(2) Where a document is filed by fax the party filing it is not required in addition to send the court a copy by post or document exchange.

(3) A party filing a document by fax should be aware that a document not filed at court until it is delivered by the court's fax machine whatever time it is shown to have been transmitted from the filer's machine.

(4) The time of delivery of the fax document will be recorded on it in accordance with paragraph 5.2."

18. Accordingly, there is a duty on every court which is concerned with the operation of the Civil Procedure Rules to have in being effective measures to ensure that if a defence is sent to the court by fax there are effective procedures in being for recording the time when that document was received.
19. Mr Bones is the court manager of the Brentford County Court. The material events in this case took place less than eight months after the Woolf Reforms came into force. I have no reason to suppose that county courts are not suffering from the same difficulties that Mr Bones describes even today, nearly two years after the Woolf Reforms have come into force.
20. Lord Justice Longmore has summarised the effect of Mr Bones' statement but I judge it helpful to put much of his statement into the record of the judgment of the court. He said:

"3 I understand that the main issue between the parties which is the subject of appeal to the Court of Appeal is whether or not defences were received at the Brentford County Court prior to judgment being entered in default. I and the other staff at Brentford County Court are very busy and we receive many items of correspondence and other Court documents by fax, post and DX. I have no personal knowledge as to whether the defences in this case were received before judgment was entered.

4 On receiving a request for default judgment, judgment is entered if there is no indication on the Court's computer records that a defence has been filed within the time periods provided for by the Civil Procedure Rules. At page 2-5 of my first Statement I exhibited a copy of the Court's computer records relating to this case. Under the heading of `Case History' on page 4 are details of certain events. As there was no indication there that defences had been filed following the filing of Acknowledgement of Service forms on 2nd December 1999, judgment in default was given on 28th January 2000.

5 The fact that a defence or other document is not recorded on the Court's computer system does not necessarily mean that those documents have not been received by the Court. All main events such as defences, entry of judgments, orders of the Court, files being referred to a judge, should be recorded on the computer system. Some correspondence may not be recorded. Sometimes errors are made due to pressures of work. There are some examples in this case where documents have been received by the Court and are on the Court file but they do not appear on the computer records.

6 The Court does maintain a manual log of incoming faxes. I attach, at pages 1 to 13, a copy of the front page of that log together with copies of certain pages which are relevant to the matters in issue.

7 I should say, at the outset, that entries are made into the log spasmodically. Entries are not made on a daily basis as is apparent from the extracts attached to this statement. Sometimes a week or more may pass before entries.

8 I understand that the Appellants allege that the defences were sent to the Court by fax on 22nd December 1999. I have attached to this statement the entries in the log for that date together with the previous entry on 16th December 1999 and the subsequent entry on 6th January 2000. The entry immediately preceding 22nd December 1999 was nearly one week earlier and the entry immediately following 22nd December 1999 was two weeks later. There are many reasons why not all incoming facsimiles are not recorded in the log book. Owing to pressures of work the log is only updated every now and again. Often facsimiles are urgent and are needed for Court hearings and are placed on the Court file and referred to the District Judge without being entered into the logbook.

9 I have checked and there is no entry in the log book to suggest that a facsimile was received from the Appellants on 22nd December 1999 but, for the reasons mentioned above, that does not necessarily mean that their defences were not received by facsimile. Because of the nature of the way in which incoming facsimiles are recorded in the log book it is impossible to say, with any degree of certainty, whether defences were received from the Appellants by facsimile on 22nd December 1999.

10 During the course of my reviewing the Court file again on 30th January 2001 I discovered several anomalies. On the file is a facsimile received from the respondent on 11th February 2000 which is stated to include four pages (including the cover sheet). Those four pages are a copy letter from Mr Wills to the respondent dated 11th February 2000 and its enclosures (copies of the default judgments dated 28th January 2000). I attach, at pages 14 to 20, a copy of that facsimile as it appears on the Court file. It can be seen that behind the cover sheet are three pages of an Allocation Questionnaire received from a firm called Aslam & Co. also on 11th February 2000. This clearly relates to another case and has been filed on the file relating to this case in error. I cannot find any Case Number on the Allocation Questionnaire so I have not been able to check that Court file to see whether any papers from this case including, possibly, the defences have been filed on the file for that other case in error. This does demonstrate that papers do from time to time, get misfiled.

.....

12 Mrs Wilkinson responded by letter to Mr Wills on 9th February 2000. A copy of that letter is at page 1 of SPW1 exhibited to Mr Wills' first statement. We, therefore, clearly had received the facsimile from Mr Wills dated 1 February 2000 and yet that facsimile is not on the Court file. I can only conclude that it must have been mislaid or misfiled. However, it should be said that this file has now been referred numerous times and has been backwards and forwards to Southampton County Court."

21. I have recited that extract from Mr Bones' statement in this judgment because it illustrates vividly the problems facing Mr Bones and other court managers up and down the country when they are endeavouring to put into operation the intention of the Civil Procedure Rules, while the practice direction shows how the Civil Procedure Rules should be operated in this technological age. It is quite clear that the operation at Brentford County Court fell far below the standards that should be expected of it. It was no doubt not equipped with the resources to enable it to comply with those standards. As a result of this default the unfortunate litigants in this case have been subjected to four bouts of hearings, one before a deputy district judge, one before a district judge, one before a circuit judge and one before the Court of Appeal, simply because the Brentford County Court does not have adequate records. If the Brentford County Court did have within its court file the record of the in-coming file message on 22nd November and the documents sent to the court by fax that day, as they undoubtedly were, and if the matter had been properly recorded on the court computer, then none of this expense to the parties would have been incurred.
22. Unhappily, this court sees disasters of this kind afflicting litigants on a number of occasions. They usually cost the taxpayer a considerable of money in the form of the compensation that has to be paid to litigants by reason of faults in the court system.
23. I am quite satisfied that for the reasons given by my Lord the best course is to set aside the default judgment and to allow the appeal.
Order: Appeal allowed