Jitendra Bhailbhai Patel v. Dilesh Patel.
(England and Wales) Supreme Court of Judicature (Court of Appeal), Lord Woolf
MR, Otton, Ward LJJ., 24th March 1999.
Application to stay proceedings pending arbitration - s. 9(3) Arbitration Act 1996 - whether application to set aside default
judgement, for leave to defend and counterclaim and for consequential directions was a step in the proceedings to answer the substantive claim - whether stay should be granted.
Facts:
The plaintiff commenced proceedings against the defendant by writ and subsequently issued a default judgement, no defence having been served. The defendant applied to set aside the default judgement, for leave to defend the action and counterclaim therein, and for consequential directions. The defendant subsequently made two affidavits in support of its application. The first of these stated that he required the judgement to be set aside and dealt with the merits. The second indicated that he wished to stay the proceedings pursuant to the Arbitration Act 1996.
The plaintiff successfully resisted the defendant's application for a stay on the grounds that by applying to set aside the default judgement and seeking leave to defend and counterclaim, the defendant has taken a step in the proceedings to answer the substantive claim. The defendant appealed.
Held:
The appeal would be allowed. Under the old law it was clearly established that if a person, at the same time as he swore an affidavit, indicated that he wished a stay, the swearing of an affidavit dealing with the merits would not prevent him being entitled to a stay. The same principle undoubtedly applied under the new law as well.
As to whether the summons was a step in the proceedings to answer the substantive claim, the words in s. 9(3) of the Arbitration Act 1996, this turned on the language used in the application. The fact that the defendant applied to set aside the default judgement did not assist the plaintiff, as until there was an application to set aside the default judgement there was nothing to stay. Neither did the request that the judgement be set aside unconditionally assist the plaintiff or the request for consequential directions, as this was ambivalent. The words requesting leave to defend and counterclaim might cause problems but, since the defendant did not need to apply for leave, as he was be entitled to defend and counterclaim if the judgement were set aside, these words were otiose to the relief he needed and, unlike the affidavit, did not deal with the substance of the dispute. In consequence, they did not prevent him seeking a stay.
For the Appellant: Mr M Raeside (instructed by Messrs
Manis).
For the Respondent: Mr A Chambers (instructed by Messrs Myers Ebner
Deaner).
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