Setting Aside Default Judgment

Question 1

When MUST the court set default judgment aside?

Answer 1

When C has obtained the judgment improperly. For example, if they jumped the gun by not giving D enough time to respond.

The court also must set aside a judgment wrongly entered in circumstances where D has payed the whole claim before judgment was entered.

Question 2

What MAY the court do, even when the judgment was regular?

Answer 2

Set aside the default judgment, exercising its discretion under Rule 13.3.

Question 3

Is the discretion under Rule 13.3 wide or narrow?

Answer 3

Wide

Question 4

What is the guiding principle of the Rule 13.3 discretion?

Answer 4

Justice should be seen to be done.

Question 5

Stages of test that court applies in exercising Rule 13.3 discretion.

Answer 5

D must show either (1) They have a real possibility of defending the claim (“real prospect of success”); or (2) That there is some other good reason why they should be allowed to defend the claim or the judgment should be set aside or varied.

AND (3) D must also show that they acted promptly in bringing the application to set aside before the court.

(4) Because application to set aside a default judgment is treated as if it were an application for release from sanctions, the court will consider the three stages of the Denton test.

Question 6

Limbs of the Denton test

Answer 6

1. Identify and assess the serious and significance of the breach (i.e. of a rule or practice direction or court order).
2. Consider why default occurred.
3. Evaluate all circumstances of the case to enable the court to deal justly with it. Includes evaluation of need for litigation at proportionate cost and to enforce compliance with rules, PDs, and orders.

Question 7

How high is the bar for “real prospect of success”?

Answer 7

Low. Means ‘more than merely arguable’/’some degree of conviction’. This is because the court is not in the position to make findings of fact via a ‘mini trial’.

Question 8

Where is the BOP in relation to “real prospect of success” in summary judgment cases?

Answer 8

On C, to prove there isn’t.

Question 9

Where is the BOP in relation to “real prospect of success” in default judgment cases?

Answer 9

On D, to prove there is.

Question 10

Effect of the two different BOPs in relation to “real prospect of success”

Answer 10

The court may be less receptive to D in default judgment cases as opposed to summary judgment.

Question 11

Describe the court’s discretion in relation to “some other good reason”

Answer 11

Wide

Question 12

Cases where there might be “some other good reason”

Answer 12

If there’s an inherent unfairness in how judgment’s been obtained, perhaps because of overly aggressive conduct of D’s solicitors.

Because the nature of the allegations are so serious, perhaps they could amount to criminal conduct and so it should be decided on the merits by the court.

Where the circumstances show there should be a public hearing, such as in a libel case, in order to vindicate the party’s reputation.

Because of an important procedural irregularity such as C’s failure to serve a response back with PoC.

Question 13

Specific “some other good reason” case - Foreign defendant in defamation case.

Answer 13

Foreign defendant in a defamation claim filed an acknowledgement of service that was defective because it did not contain an address for service. Judge had regard to fact that D had no notice of the claim until service of the claim form.

Question 14

Even where the applicant was not but should have been given notice of the hearing…

Answer 14

…court may decide not to set aside the default judgment.

Question 15

Can failure to serve a response pack constitute “some other good reason”?

Answer 15

Potentially

Question 16

Case involving lulling into false sense of security

Answer 16

C’s failure, after an 18 month delay, to warn D that a claim form had been issued or to invite D to accept service of it lulled D into believing that the claim was not being pursued or at least induced him to forget all about it. This was a factor of some weight to be taken into account by the court.

Question 17

Case where judgment in another jurisdiction cancelled

Answer 17

If judgment in another jurisdiction cancelled, this is not necessarily basis for an application to set aside judgment in this jurisdiction. This might be the case when there are departures from principle in the judgment in the other jurisdiction.

Question 18

When will promptness be considered?

Answer 18

Always; it will always be a factor of considerable significance.

Question 19

How will the court consider promptness?

Answer 19

Significant delay not necessarily good reason to refuse the application. Court will look carefully at what has happened in the litigation, what has happened since default judgment was entered, and effect on parties if judgment is or is not set aside.

Question 20

Case where court let judgment be set aside even when there was excessive delay

Answer 20

Judgment entered several years earlier. There were very serious conflicts of evidence between the parties and D alleged she was the victim of fraud; and the case had not lain buried since the judgment was entered, it had continued for some time.

Question 21

Relevance of fact that damages have been assessed and final judgment entered to decision on promptness

Answer 21

Fact that damages had been assessed and final judgment entered did not deprive court of jurisdiction to set aside default judgment, but was a highly relevant aspect of the question of delay. Could not be safely assumed in every case the any prejudice to C could be met by putting D on terms to pay the costs thrown away by the assessment hearing.

Question 22

Promptness and incompetence

Answer 22

Judge’s discretionary power is not the be exercised to punish a party for incompetence, but the further the overriding objective.

Question 23

Promptness and debtor’s abuse of process

Answer 23

Case where a debtor who did nothing until creditor sought to enforce the judgment then applied to set aside was refused permission to set aside, it being held that the debtor’s conduct amounted to an abuse of process.

Question 24

Promptness and D’s inability to attend the hearing

Answer 24

Case where there was a 4.5 month delay, and court refused D’s application to set aside on the basis of his inability to attend the hearing because the delay was too long.

Question 25

Promptness and the nature of proceedings up to that point

Answer 25

One case where 30 days was too long ‘having regard to the long, and generally unsatisfactory, history of proceedings to that point’.

Question 26

Case where delay was 59 days

Answer 26

59 days ‘very much at the outer limit of what could possibly be acceptable’. In a case where the applicant was not legally represented and solicitors ‘unnecessarily aggressive’, default judgment would not bring finality to proceedings as a whole.

Question 27

Promptness and default of D’s representatives

Answer 27

Duty to act promptly on D personally; can’t rely on the default of representatives (unlike in relief from sanction cases).

Question 28

Electronic service 5 days late…

Answer 28

…can be treated as valid.

Question 29

What is the major consideration?

Answer 29

Although the court must apply the three factors and then Denton principles, the major consideration is whether the defence has real prospects of success.

Question 30

Procedure

Answer 30

D issues application notice under Part 23
Must be supported by evidence (written evidence with statement of truth)
Typically witness statement but can be in application notice itself.
Usual to exhibit draft defence. If you have a signed statement of truth on witness statement, claimant will see how D will answer the claim on a point by point basis and so can assess more easily whether D has a real prospect of success.

Question 31

Where a condition with which a party is unable to comply is imposed as a condition for setting aside a default judgment…

Answer 31

…the court’s decision is tantamount to a refusal to set aside. Therefore, imposing the condition should not be regarded as simply a case management decision.

Question 32

Can you apply again after judge refuses?

Answer 32

A decision made by a judge not to set aside is a final decision and can not be the subject of a second application: the only way forwards is an appeal.

Question 33

Can someone who is not a party apply to set aside a default judgment?

Answer 33

A person who is not a party but is directly effected by a judgment or order may apply to have it set aside. This applies to default judgments.