Joint defendants, default judgments and the limits of issue estoppel
In proceedings with multiple Defendants in which the Claimant had obtained default judgment against Defendant A, another Defendant, B, (which had statutory joint liability for A's actions) was not bound by an issue estoppel raised by the default judgment against A.
Furthermore, B was entitled (notwithstanding substantial delay on its part) to set aside the default judgment which had been obtained against A.
John Page –v- Champion Financial Management & Others, concerns complaints about the mis-selling of financial products to the claimant, Mr Page. Page alleges that two collective investment schemes were mis-sold to him in 2006 by Champion. Champion was an intermediary, and had marketed two products of Park Row Associates Limited (Park Row) to Page. Champion was not itself a regulated entity, i.e. it was not an "authorised person" under the regulatory regime imposed on the UK's financial markets by the Financial Services and Markets Act 2000 (FSMA). Champion was only able to carry out its activities of selling Park Row's products (to Page and presumably others) as an "exempt person" by virtue of the provisions of Section 39(1) of FSMA.
Park View entered a defence to Page's claim; Champion, however, failed to do so because it ceased to trade in 2008 and presumably it had no assets to defend. Page applied for, and obtained, default judgment against Champion. Champion did not seek to set aside this default judgment, so from Page's perspective all that remained was to determine the quantum of his claim against Champion. The real prize he was seeking, however, was then to enforce that judgment against Park Row. Whilst Park Row was in liquidation it presumably still had a better asset position than Champion.
The issue, then, was what the effect was of this default judgment vis-à-vis Park Row. Park Row had accepted "responsibility" for Champion's actions – did this mean it was bound by and liable to pay the sums due under the default judgment against Champion?
For the full details of the case, including the decision and case comment, please click here.