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Motion made,

Hon. Members: Object.

12 Jul 2000 : Column 1036

Default Judgments

Motion made, and Question proposed, That this House do now adjourn.--[Mr. Mike Hall.]

2.40 am

Mrs. Anne Campbell (Cambridge): I am pleased to have this opportunity to raise the case of my constituent, Derek Birch, and to tell the House how he has been disadvantaged and prevented from seeking justice because of the way in which the law on default judgments is currently framed; he now faces ruin, with payment of all costs. I shall begin by filling in the background to the case. I should make it clear that I do not expect my hon. Friend the Minister to comment on an individual case. I raise Mr. Birch's case to illustrate a specific point in law that my hon. Friend might want to reconsider in the light of events.

Mr. Birch has a lifelong dream of owning a horse, and he has a passionate and consuming interest in dressage and drag hunting. In early 1996, his trainer, Angela Niemayer, told him that she had found just the horse for him and strongly urged him to inspect the horse--Waltrap--at the Russian Horse Society in Epsom. Mr. Birch made it plain that he was looking for a horse trained in and skilled at dressage. He was told that the previous owner, a Cambridge lawyer, Mr. Duncan Samuel, was too busy to ride the horse himself.

Susan Hodges, a friend of Mr. Birch, accompanied him when he inspected the horse. The woman from the RHS who sold him the horse is called Mrs. Lansley, and Mr. Ron Meddes, a director of the RHS, was also present. According to Miss Hodges, Mrs. Lansley understood very well that Mr. Birch was looking for a dressage horse and she went to some lengths to convince both Mr. Birch and Miss Hodges that Waltrap would be entirely and eminently suitable for Mr. Birch's purposes.

In 1996, Mr. Heathcote, a veterinary practitioner, examined Waltrap for the purpose of ascertaining the horse's suitability for Mr. Birch's purposes. The horse was passed fit for

Letters from Mr. Heathcote confirmed that he discussed Mr. Birch's needs at length with the RHS, especially with Mrs. Lansley. In August 1996, Mr. Birch entered a contract with Duncan Samuel and/or the RHS for the purchase of the horse for £5,500. His cheque paying for the horse was made payable to Regine Lansley of the Russian Horse Society. The horse's previous owner, Mr. Samuel, was company secretary to the society at the time of the sale.

Unfortunately for my constituent, it transpired that five months prior to the sale, in March 1996, the horse had been diagnosed as osteoarthritic, osteochondritic and a false rig. I understand that the latter term applies to a horse that is castrated late and badly, which can make the horse dangerous and often results in the horse having to be destroyed. Mr. Alan Heath, a veterinary surgeon employed by Mr. Duncan Samuel, made the diagnosis, but that was, of course, not revealed to my constituent until some time later. The revelation took the form of a statement made by Mr. Heath to Surrey trading standards officers.

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Waltrap was clearly not worth £5,500 and was not at all suitable for drag hunting or dressage. There is evidence suggesting that, under Mr. Samuel's ownership, the horse had never been formally schooled; it had never attended formal instruction, never hunted and never hacked, nor even left the yard. Mrs. Niemayer, who had recommended to Mr. Birch that he should buy the horse, later admitted that she had received a commission on the sale, although she refused to disclose how much she had been paid.

According to both counsel and solicitors, that would appear to prove that the vendor and his agent knew at the time of the sale that the horse was unsound and unsuitable for Mr. Birch's purposes. However, no mention was made of the conditions from which the horse was suffering. It should be made clear that the conditions do not necessarily give rise to continuous symptoms and that they are quite likely to escape detection during an inspection, especially if the horse has been doctored. There is evidence to show that Waltrap had been diagnosed and treated with a palliative drug of long-term effect while it was still in Mr. Samuel's ownership.

I know little about horses, but I am told that the degenerative joint diseases with which the horse had been diagnosed are progressive and incurable. The treatment that had been given to the horse did nothing and could do nothing to stop or slow down the progress of the disease. However, the drug that was administered made it difficult for even a qualified vet to diagnose the condition.

Following the discovery that Waltrap was unsuitable for the purpose for which he had been purchased, my constituent complained to the trading standards officers in Cambridge. They referred the complaint to Surrey trading standards officers, as that was where the Russian Horse Society was based.

Following a lengthy investigation, Surrey trading standards officers decided not to prosecute. The reasons for that were interesting in the circumstances. A letter from Mr. Ray Tapping, the legal manager of Surrey trading standards--I think that he still is--to Mr. Birch in June 1999 indicated that, in the absence of interviews with Mrs. Lansley and Mr. Meddes, and evidence from Mrs. Niemayer, there were too many questions and doubts.

Those potential witnesses had exercised their right to remain silent, so making it difficult for Surrey trading standards officers to investigate Mr. Birch's allegations properly. Mr. Birch is disappointed that the lengthy negotiations with Surrey trading standards officers led nowhere, and he is still keen that they should resume their investigations and commence proceedings under the Trade Descriptions Act 1968.

Mr. Tapping also advised that that best venue for deciding the matter was the civil courts, and indicated that he would be willing to release the evidence obtained by the Surrey trading standards investigating officer, subject to the necessary witness order by a court.

That is what happened, and after proceedings were issued, an attempt was made to dissolve the Russian Horse Society, which had transformed itself into Russian Horses Ltd. in August 1998. That was obviously done to escape the civil proceedings which Mr. Birch had commenced against it. However, he managed successfully to avert that

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action by contacting Companies House. It is worth mentioning that the company is also known as Alex Crown Ltd., Eurovet Ltd., Anglo-Russian Export Ltd. and possibly other names as well. Mr. Birch's solicitors issued proceedings in September 1998 against three defendants--Duncan Samuel, the Russian Horse Society and Angela Niemayer Eastwood.

Judge Blomfield sat in judgment on the case. He said that he would like the action to be tried on its merits because it seemed clear that there were triable issues against Samuel, but he could not allow the case to be brought. There had been an election to pursue the second defendant. That choice was a bad one, as that defendant, the Russian Horse Society, had no assets as by that time they had been transferred to one of its sister companies, Eurovet Ltd. That defendant was therefore incapable of meeting a claim for compensation, however justified that would have turned out to be.

Under the provisions of the civil procedure rules, part 13.3(1)(b), the judge had the discretion to set aside the default judgment against the second defendant and had he done so, Mr. Birch's lawyers would then have been able to pursue the other defendants in the case. However, it was obviously a tactical error to choose the second defendant rather than the first. The judge said that the only reason for setting that default judgment aside was to enable the first defendant to be pursued. He said that he was persuaded that, if he did so, it would run counter to the underlying ethos of the Woolf reforms. It would also have the effect of prolonging litigation and adding uncertainty where Woolf seeks to provide a greater degree of certainty and clarity.

Unfortunately for my constituent, therefore, the judge had to strike out the case not only against the Russian Horse Society, but against the other defendants as well. Under part 13 of the new civil procedure rules, that also means that no other defendant could be tried. My constituent is therefore unable to seek redress for the expenses that he has incurred.

It is clear that my constituent has been badly advised by his solicitors in electing to pursue the Russian Horse Society. One course of action is open to him--to sue his solicitors for failing to check that the Russian Horse Society or Russian Horses Ltd., now Eurovet, was still a going concern, and for failing to warn him of the consequences of electing that defendant.

Mr. Birch finds it somewhat ironic that had he been a litigant in person, the court would have been duty bound to warn him of the consequences of the action that he pursued. Unfortunately, he now has no resources left to pursue his claim against his previous solicitors. He owes many thousands of pounds in court costs and is a long way from finding the justice that he deserves.

The purpose of this Adjournment debate is to ask my hon. Friend to look again at the procedure in default judgments in the light of this unfortunate case. Will he see whether the rules for discretion could be widened to allow a judge to set aside a default judgment when he feels that there is clearly an action that should be tried, as in this case?

I am well aware that if my hon. Friend can accede to this request, it will unfortunately not help Mr. Birch. However, there are several ways in which he could be helped. One would be for Surrey trading standards officers to re-open their investigation against the Russian

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Horse Society and Duncan Samuel. I know that that is not likely at present, but if new evidence emerges, I hope that they will be encouraged to do so.

There have been allegations that witnesses have complained of threats and intimidation from Samuel. The Office for the Supervision of Solicitors has been asked to investigate, and Mr. Birch has submitted copies of letters from witnesses. However, the response has not been encouraging, and the OSS says that it will take some time to allocate a caseworker to the case. It is clear to me and to many other people that self-regulation of the legal profession is not working well at present, and that there needs to be another body to which people can complain.

I hope that my hon. Friend will be able to respond in a way that recognises the truly awful situation of my constituent, Derek Birch, and offers him some hope of a full investigation. I also ask my hon. Friend to consider whether there is a case for revising the guidelines concerning the new civil procedure rules in the light of this case.

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