Make no mistake: the judicial tide has turned against setting aside default judgment.

October 2, 2017

The spread of evil is the symptom of a vacuum. whenever evil wins, it is only by default: by the moral failure of those who evade the fact that there can be no compromise on basic principles. (Ayn Rand Capitalism: The Unknown Ideal, 1966)

Even those Claimants not motivated solely by evil may be expected to apply for judgment in default of a defence. Toby Bishop reviews how the Court’s approach to default judgment has evolved recently. Prior to the summer of 2016 the matter would usually proceed as follows:

  1. If the Defendant filed their defence before judgment was entered the Claimant would lose its entitlement default judgment; or
  2. If judgment was entered, after which the Defendant acted “with alacrity” (Regency Rolls) in bringing its CPR 13.3 application and had a real prospect of success, it might feel optimistic the judgment would set aside.

In respect of point 1 above, in Billington v Davies [2016] EWHC 1919 (Ch), Deputy Master Pickering applied the doctrine of implied sanction from Sayers v Clarke Walker [2002] 1 WLR 3095 and held that the pre-condition to default judgment imposed by rule 12.3 is that no defence has been filed within the relevant time. Therefore, an entitlement to enter default judgment survives the late filing of a defence (the view of the editors of the White Book is that the point remains controversial (para 15.4.2)).

The exercise of the discretion to set aside (point 2 above) is now guided by the Court of Appeal’s decision in Gentry v Miller [2016] EWCA Civ 141. An application to set aside default judgment is an application “for relief from any sanction” within the meaning of rule 3.9 and the usual test will be engaged (Denton v TH White Ltd (Practice Note) [2014] EWCA Civ 906; [2014] 1 W.L.R. 3926, CA). Gantry was underreported and not referred to in part 13 of the White Book 2017, until the summer supplement. That change was expressly recommended in the judgment of Coulson J in Redbourn Group Ltd v Fiargate Development Ltd [2017] EWHC 1223 (TCC). Coulson J went on to highlight the need for a solicitor to file evidence explaining the delay and drew an analogy with the judicial trend in respect of late amendments (see article http://fieldcourt.co.uk/publication/late-amendments-statements-case-special-circumstances/ ) here endorsing the approach of Carr J in Su-Ling v Goldman Sachs International [2015] EWHC 759 (Comm), in which she made plain that the absence of a proper explanation for delay will often, without more, lead to the application’s failure.

The procedural landscape has now changed: finality and the compulsion of adherence to the rules have subordinated the balance of prejudice. A defaulting party must act very swiftly and ensure they explain their good reason for the default fully in evidence, failing which it is will be rare for applications to set aside to succeed.