If you are a Claimant in the High Court or County Court you should be aware that a fast and easy way of getting your money from a Defendant that you are claiming against is for you to get from the court a judgment in default of Defence or Acknowledgment of Service.
T he Defendant has to comply with strict time limits to file and send their Defence and Acknowledgment of Service of the claim to you. If they do not comply with these time limits the Claimant has the chance to use an element of surprise by getting judgment without the Defendant having the opportunity of defending the claim.
The Defendant that is caught out in this way can apply to have the judgment in default of Defence or Acknowledgment of Service set aside in certain circumstances. These are described below.
CPR 13.3 (1) permits the court to set aside a default judgment on two grounds;
- that the Defendant has a real prospect of successfully defending the claim,
- that there is some other reason that why the judgment should be set aside or varied or the defendant should be allowed to defend the claim.
DEFENCE HAS NO REAL PROSPECTS OF SUCCESS
Burden of proof
The Defendant must show that the Defendant has a real prospect of successfully defending the claim (CPR 13.1). It is not enough for the Defendant to show it has an arguable defence. (CPR 13.3.1). In the case of ED& F Man Liquid Products Limited v Patel  EWCA Civ 472 it was decided that under CPR 13.3 (1) the burden is on the Defendant to satisfy the court that there is good reason why judgment properly obtained should be set aside.
In the case of Swain v Hillman  1 All E.R. 91 it was decided that the judge has to be satisfied that there is no realistic chance of the case succeeding. It is not however necessary to show that the case is “bound to fail”. The Defendant that has had judgment entered against them faces an uphill struggle to get an order setting aside judgment in default. An example of this is the unreported decision of Sharon Hockley -v- North Lincolnshire and Goole HHS Foundation Trust The Combined Court Centre Lowgate Kingston upon Hull September 2014 where the court decided that where the filing of he Acknowledgement of Service was 13 days late judgement was not to be set aside. The decision is illustrative of the manner in which the courts have interpreted the case of Denton (see below). At paragraph 57 of the judgment it was concluded that “the filing of the Acknowledgment Of Service is not a trivial or unimportant step in the litigation. A failure to file the Acknowledgment Of Service means a default judgment may be entered without more reveals the calibration of default to be of a high order”.
The court at paragraph 76 of the judgment highlighted the following as to be of importance:
- Compliance with the rules is not an end in itself, but an important aspect of the court’s overriding objective;
- There is a tougher approach to compliance,
- In default judgement cases involving the good reason ground in CPR Part 13.3 (1) (b) THE court must consider how serious the default is and why it occurred.
In deciding upon whether or not to allow an application to set aside judgment the court will apply the relief from sanctions rules, which are used when a party that has had its claim or defence struck out can apply for relief under CPR 3.9 (1) and (2) and for the claim or defence to be reinstated.
Civil Procedure Rule 3.9 (1) and (2)
(1) On an application for relief from sanctions 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 must be supported by evidence.
The effect of CPR 3.9 and relief from Sanctions post Mitchell -v- News Group Newspapers  EWCA Civ 1537
In Mitchell v News Group Newspapers Ltd  EWCA Civ 1537 the Court of Appeal decided that the need for litigation to be conducted efficiently at proportionate cost and to enforce compliance with rules, practice directions and court orders reflected a deliberate shift of emphasis towards a strict approach by the courts where there has been a failure to comply with court rules and procedures.
The Court of Appeal in Mitchell gave the following guidance:
1) If a breach is trivial the court will usually grant relief,
2) If the non-compliance is not trivial then the defaulting party must persuade the court to grant relief,
3) Later developments in the case are likely to be a good reason if they show that the period for compliance originally imposed was unreasonable,
4) The mere overlooking of a deadline, whether on account of overwork is unlikely to be a good reason,
5) The overwork of solicitors will rarely be a good reason,
6) Applications for extensions of time made before time has expired will be looked on more favourably than applications made after the event,
7) If there is a good reason for the failure, relief will be given. The weaker the reason, the less likely that relief will be granted,
8) Applications for relief from sanctions presupposes that it was properly imposed,
This strict approach towards applications for relief from sanctions contained in the Mitchell decision has been softened by the case of Denton -v- TH White  EWCA Civ 906 where the Court of Appeal decided that some Judges were being unduly draconian in their application of Mitchell. In future the Judges were to adopt a three stage approach in applying Mitchell
- Significant impact on the litigation – they had to assess the seriousness and significance of the relevant failure. Triviality was not part of that stage and there were degrees of seriousness and significance. The assessment ought not to involve consideration of past unrelated failures, only the seriousness and significance, relief would usually be granted and there would be no need to spend too much on the second and third stages,
- Good reason for default – the court had to determine why the failure occurred,
- Whether particular need to enforce compliance – the court is required to consider all the circumstances of the case. A serious breach for no reason was not automatically prevented from attracting relief. If the effect of the breach was to prevent the efficient and proportionate conduct of litigation, that would weigh against relief being granted
The Claimant can gain a tactical advantage in getting a judgment in default of Defence or Acknowledgment of Service because the Defendant is then faced with the uphill struggle of applying to have it set aside before it can defend the claim. If you are on the end of a judgment in default it may need some skilful navigating before you are able to re-open the case and defend it at trial or, if you are a Claimant, to successfully drive home the claim by having the application to set aside judgment dismissed by the court.