FXF v 1) English Karate Federation Limited & 2) The Ishinryu Karate Association [2023] EWCA Civ 891 has provided clarification on applications for relief from sanctions in respect of setting aside default judgment.
Background and Chronology
The claimant had sought damages for personal injury for alleged serious sexual abuse by her karate coach between 2008 and 2014. Both defendants were said to be vicariously (for the abuse) and directly liable (for failing to discharge their own duty of care towards the claimant). The alleged abuser was alleged to have been a member of the second defendant’s organisation.
A brief chronology:
- 15 August 2019 – the claim form was issued.
- 6 December 2019 – an order for alternative service was provided (due to the second defendant’s sole representative residing in Thailand), the claim form and Particulars of Claim dated 12 December 2019 being then served (the second defendant’s solicitors informing the claimant they had been instructed for the second defendant on 13 December 2019).
- There was a stay to allow the second defendant to complete the steps required by the pre-action protocol and two agreed extensions for the second defendant’s filing of a Defence (until 21 July 2020 at the latest).
- 1 September 2020 – in absence of a Defence from the second defendant, the claimant requested judgment in default.
- 9 September 2020 – the second defendant’s solicitors filed a notice of acting. The claimant informed them on 21 September 2020 that they had already requested default judgment.
- 22 September 2020 – the court granted default judgment. The claimant informed the second defendant’s solicitors of this on 23 September 2020.
- 17 November 2020 – the second defendant issued its application to set aside.
- 2 December 2021 – default judgment was set aside after a hearing before Master Thornett. This decision was appealed by the claimant.
- 14 November 2022 – it was ordered for the appeal to come to the Court of Appeal.
Issues and Relevant Guidance
The question for the court was whether the three-stage test in Denton v TW White Ltd [2014] EWCA Civ 906 applied to applications to set aside default judgment per CPR 13.3.
CPR 13.3 provides as follows:
(1) In any other case, the court may set aside or vary a judgment entered under Part
12 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 reason why –
(i) the judgment should be set aside or varied; or
(ii) the defendant should be allowed to defend the claim
(2) In considering whether to set aside or vary a judgment entered under Part 12, the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly.
CPR 3.9 provides as follows (under “Relief from sanctions”):
(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –
(a) for litigation to be conducted efficiently and at proportionate cost; and
(b) to enforce compliance with rules, practice directions and orders.
(2) An application for relief must be supported by evidence.
The three-stage test in Denton [24-38] is as follows:
- The first stage is to identify and assess the seriousness and significance of the “failure to comply with any rule, practice direction or court order” which engages rule 3.9(1). If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages.
- The second stage is to consider why the default occurred.
- The third stage is to evaluate “all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b) of CPR 3.9 (1) above].
Readers may also want to consider CPR 3.8, CPR 12, and CPR 15 in addition to the above as well as Mitchell v. News Group Newspapers Ltd [2013] EWCA Civ 1537 [34-39].
Decision, Discussions
The Court confirmed that the Denton tests do apply to an application to set aside judgment and that the Master had understood that and exercised their discretion appropriately. The appeal was dismissed.
After considering the apparently competing authorities on the point, the Court of Appeal firstly set out three categories of case in this scenario:
- cases where the rule or order expressly provides for the sanction that will apply on non-compliance (e.g. failure to file witness statements on time);
- cases where the rule does not expressly state the sanction which applies for non-compliance, but permission of the court is needed to proceed (e.g., failure to file a notice of appeal on time); and
- cases where a further step is taken in consequence of the non-compliance, such as the entry of a default judgment (as in this case) or the striking out of a claim for non-attendance at trial.
They confirmed Denton squarely applied to (1) and that the facts of this case fell within (3). In then confirming that Denton principles also applied to (3), the following points were made:
Previous authorities were clear that the Denton tests applied to situations such as (3);
They distinguished the case of The Attorney General for Trinidad and Tobago v. Matthews [2011] UKPC 38 (as it was not a case about setting aside a default judgment) and there was a difference in the Trinidad and Tobago CPR in contrast to our CPR (and the reasoning behind the amendment of CPR 3.9 as explained in Denton and Mitchell);
The Denton tests are appropriate to the exercise of discretion required once the above in CPR 13.3. have been considered;
The case of Gentry v Miller [2016] EWCA Civ 141 was a good example of how the exercise of discretion under CPR 13.3 and the application of the Denton tests ought to be undertaken (i.e., consider merits first, then any delay in making the application to set aside, then consider the Denton principles, considering any pre-judgment delay and the excuses for it, and all the circumstances of the case to enable the Court to deal justly with the application, this including CPR 3.9 (a-b) as above in particular and the overriding objective if required); and
Judgments in Cunico Resources NV v. Daskalakis [2018] EWHC 3382 (Comm) and d PXC v. AB College [2022] EWHC 3571 (KB)were criticised for being unduly academic in their approach (the later being overruled and the dicta in the former no longer to be relied upon).
In dismissing the appeal, the Court approached the matter as in Gentry in confirming they would have reached the same conclusion as the Master did (albeit the tests not being stated as expressly as would have been preferred). Their summary is at [71]:
(i) “there is and was no doubt in this case that the IKA has a real prospect of successfully defending this claim;
(ii) the IKA did not make its application to set aside promptly, but that factor did not inconvenience other court users, and I agree with the Master that the unexplained delay did not, in this particular case, eclipse the merits of the proposed defence;
(iii) the delay in filing the defence was obviously serious and significant
(iv) despite counsel for the IKA’s best efforts, the insurance issues and investigation of liability did not provide an adequate explanation for the delay;
(v) the stage 3 Denton test allows the court to consider the justice of the case and the effect of the case on other court users, including the need to enforce compliance with the rules; whilst these factors, alongside the unexplained delay militate against setting aside the Judgment, the unusual situation of the IKA itself and its somewhat tenuous connection to the tortfeasor reinforce the fact that the IKA seems to have a real case on the merits that deserves to be tried.”
To conclude, is clear now that Denton principles fully apply to applications to set aside default judgments.
Parties going forward are again reminded of the important of compliance with the CPR, with closing remarks from the Court as follows: “the IKA should regard itself as extremely fortunate that its solicitors’ serious delay has not, in the result, led to judgment against it without consideration of the merits of its case. In future, parties would be well advised to make absolutely sure that they comply with the rules in the CPR. They may expect no indulgence from the court if they do not.”
The civil team at Becket Chambers provides representation across the full range of civil law matters, including making and responding to applications such as the above. If you require advice or assistance, do not hesitate to contact our team at clerks@becket-chambers.co.uk.
