I recently represented a claimant defending an application to set aside default judgment. The claimant obtained default judgment for a sum in the region of £2,000 in September 2018 and sought to enforce the judgment in January 2019. The defendant applied to set aside the default judgment in November 2019.
The defendant submitted that they were unaware of the proceedings against them until enforcement of the judgement in January 2019, despite having responded to correspondence at address X where the claim form and particulars of claim had been delivered. The judge was satisfied that service of the claim form and particulars of claim were effective.
We then turned to the issue of delay. The defendant justified the delay in applying to set aside default judgment by stating that he was unaware of the judgment initially, changed solicitors in April 2019 and then had to obtain documents in support of his application.
I submitted that even if January 2019 was used as the ‘notification date’, the application was issued nearly 11 months later in November 2019 and that changing solicitors and obtaining very basic documents (that should already be within his possession) were not adequate reasons for such a delay in the context of the case.
The Judge agreed, she stated that the defendant did not need the documents in order to issue the application and changing solicitors was not an adequate reason for an 11-month delay. Despite there being a real prospect of success, she dismissed the application to set aside default judgment.
The Test to Be Applied
The rules regarding applications to set aside default judgment are contained within CPR 13.3 and the court may set aside judgment if:
(a) the defendant has a real prospect of successfully defending the claim; or
(b) it appears to the court that there is some other good reason why –
(i) the judgment should be set aside or varied; or
(ii) the defendant should be allowed to defend the claim.
In considering whether to set aside judgment, the court must have regard to whether the application was made promptly, CPR 13.3(2).
The principles to be considered when deciding an application to set aside judgment were considered in Denton v TH White Ltd and another, Decadent Vapours Ltd v Bevan and others and Utilise TDS Ltd v Davies and others  EWCA Civ 906, which dealt with the analogous and often linked circumstances of an application for relief from sanctions under CPR 13.3. This gave rise to the following 3 stage test:
(a) whether a failure, which gave rise to the judgment, was serious or significant
(b) whether there was a good reason for the default or failure
(c) whether, in all the circumstances of the case, the default judgment ought to be set aside
Core-Export Spa v Yang Ming Marine Transportation Corp  EWHC 425 (Comm)
The recent case of Core-Export Spa v Yang Ming Marine Transportation Corp  provides further guidance on the relevant principles, in particular promptness, when considering whether to set aside default judgment.
The claimant issued a cargo claim with a value of £25,000 against two defendants, one of whom did not file an acknowledgement of service. The claimant obtained default judgment and notified the defendant on 20 September 2019. The defendant made an application to set aside default judgment on 23 October 2019, 23 days after notification.
The defendant maintained that it had a real prospect of defending the claim as he was not the correct defendant and because, it has a real prospect of defending the claim on its merits.
The Judge considered the issue of promptness, “it is necessary to view the speed with which the application has been made in the context of what has gone before”. The defendant had a history of failing to respond to correspondence prior to issue and this proved to be a significant issue for them as “what may be prompt where there is no history of earlier delay may not be so if there has been such delay” Regency Rolls Limited & Anor v Carnall  WLUK  EWHC 1223 (TCC) .
The only explanation offered for the 23-day delay was that the defendant needed to investigate the claim. The claim was first presented to the defendants circa 30 January 2019. The Judge considered this and “unless the claim was simply ignored from that point until judgment was entered, the second defendant had the opportunity to investigate what on any view is an apparently straight forward claim for 9 months”.
The judge considered the history of ignored emails, an ignored request to extend the limitation period and the lack of any response when the claim form was issued. The judge concluded that the defendant continued to ignore claim “and ultimately it was that which led to the default judgment”.
The judge found that failure to acknowledge service was both a serious and significant default, and the delay in issuing the application was a second serious and significant default. The judge made particular reference to the circumstances of the case prior to issuing the claim making the defaults even more serious and significant.
The failure to acknowledge service was serious in itself as acknowledgement of service is required to be filed in all cases and in all circumstances as per the Commercial Court and the Circuit Commercial Court Guides.
The judge found that the existence of a realistically arguable defence is “clearly outweighed by the history of delay, inaction, and non-engagement that is regrettably a feature of the way in which this litigation has been conducted and the pre-litigation interchanges as well”.
HHJ Pelling QC commented obiter dictum that having a realistically arguable defence cannot trump the other factors of consideration otherwise the purpose of the Denton 3 stage test would be defeated. As with both cases mentioned above, regard must be had for the parties to engage promptly and in a meaningful way because the costs that can be generated by granting the application to set aside and any further proceedings may far exceed the actual value of the claim.
Promptness will always be a significant factor to consider and particular attention must be paid to the facts of each case as default judgments have been set aside even where there has been excessive delay.
If you are notified of a default judgment against you or your company it is important to obtain immediate specialist legal advice from either a solicitor, the Citizens Advice Bureau or a suitable direct access barrister to ensure that the correct action is promptly taken.