Judgment, in default of appearance, was set aside as the defendant had not been properly served and had established a real prospect of successfully defending the claimant's allegation of negligence.Appeal by the defendant ('C') from a decision refusing his application to set aside judgment entered in default of appearance. C was the claimant's ('M') solicitor, from whom she sought damages for negligent advice in connection with a property transaction and investment of funds. C denied negligence, arguing that his retainer had been limited to translation of legal documents and did not extend to the giving of legal advice on their contents or effect, and that M was well aware of that limitation. The Law Society intervened in C's practice. C left and the practice was taken over by another firm ('N'). C arranged for all correspondence addressed to him to be returned to sender. The claim form was sent to C's firm's address but returned by N. An order for substituted service was made and the claim form served at N's offices when it was discovered that C's wife worked there and would pass on all private mail addressed to C. The claim form was still not received by C and M obtained default judgment for N's office and opened in error. N returned it to the court but also sent a copy to C. C argued that this was the first time he had become aware of the proceedings and that he had not known of the order for substituted service and since the claim had not been properly served he believed that he would have an automatic right to set aside the judgment. His solicitors advised obtaining counsel's opinion on the point and in the meantime M obtained an order assessing damages. C then applied for setting aside. The judgment was not set aside but the order quantifying the damages was set aside. The grounds were that, despite conflicts of fact between the parties' evidence as to the scope of C's retainer, M's claim was virtually certain to succeed to some extent as there was no defence to a negligence claim even though there were triable issues concerning quantum. C's grounds of appeal were that his evidence was apparently credible, was supported by contemporary documents and disclosed a real prospect of a successful defence to the negligence claim or, if negligence were proved, a real prospect of establishing that it had not caused M's loss. Further, he argued that M's evidence was inconsistent with those contemporary documents and that the documents had not been referred to at the default judgment hearing. M argued that, on any view of the facts, C must have been negligent as any reasonably competent solicitor would not have acted as C had, and he therefore had no real prospect of defending the claim.HELD: C had satisfied the test under CPR 13.3 to have the judgment set aside. He had a real prospect of successfully defending the issue of liability in the negligence claim and the default judgment was to be set aside. Considering the parties' respective cases, the extent and nature of the disputed facts was striking and every significant aspect of the events was in dispute. It was therefore impossible to say that C had no real prospect of establishing the basic factual case advanced in his draft defence. That was a matter that could only be properly explored at trial after disclosure of documents, oral evidence and cross-examination. The fact that the order assessing quantum had been set aside suggested that there was a reasonable prospect of C succeeding in establishing his factual case for the purposes of assessing damages, and it followed from this that the same facts provided C with a reasonably arguable case that he was not liable for negligence.Appeal allowed. Default judgment set aside.

[2002] EWHC 401 (Ch)