In the case of Samara v (1) MBI & Partners UK Limited (2) AJWA RMTI CO [QB/2013/0436] the First Defendant appealed the decision of Master Fontaine in the Queen’s Bench Division not to set aside the default judgment entered by the Claimant. This appeal considers how the Jackson reforms and Mitchell judgment affect applications to set aside default judgment. The outcome ought to be welcome news for Claimants and their legal representatives.
The Claimant brought a claim against the Defendants in connection with his employment contracts with both of the Defendants. Following service of the claim, no Defence was filed by the First Defendant and the Claimant’s solicitors requested judgment in default against it. A hearing was listed on 13 February 2012 and notice of this hearing was given to the First Defendant on 20 January 2012. The hearing was attended by both sides’ legal representatives, at which judgment was entered against the First Defendant for damages and payment of the Claimant’s costs.
The First Defendant then informed the Claimant’s solicitors they were considering an application to set aside the default judgment, but took no steps to make any such application. The Claimant sought to enforce the judgment via High Court Enforcement Officers on 16 May 2013. This prompted the First Defendant to make an application to set aside the default judgment on 21 May 2013.
CPR 13.3 is entitled “Cases where the court may set aside or vary judgment entered under Part 12” and says:
(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 good 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.
The application to set aside the default judgment was accompanied by a draft Defence to support the assertion that the First Defendant had real prospects of defending the claim. The First Defendant successfully established that a defence on the basis that the claim was statute-barred had a real prospect of success.
Master Fontaine then went on to consider the issue of delay as per CPR 13.3(2), noting that the Court was entitled to exercise its discretion to refuse to set aside a judgment in circumstances where the application had not been made promptly, even though there was a real prospect of success in defending the claim. Master Fontaine considered the First Defendant to have delayed making their application for 16 months (having found out about the default judgment in January 2012 and having made the application to set aside in May 2013) and as such, she refused to exercise the court’s discretion to set aside the default judgment.
The First Defendant sought to appeal Master Fontaine’s decision on a number of grounds, including: error in the finding that there had been excessive delay on the First Defendant’s part and in using this as a decisive factor in the decision; insufficient weight attached to the Claimant’s own delay in bringing the claim; and arguments as to prejudice and justice.
Mr Justice Silber considered the appeal under the old and new regimes, pre and post-Jackson, before forming his decision, which was handed down on 4 March 2014.
Firstly, did the Jackson reforms apply to applications to set aside default judgment? He concluded that they did. This was on the basis that nothing expressly excluded CPR 13 from the new regime, and the overriding objectives (which had been changed) applied to all parts of the CPR. He also turned to the guidance contained in the Mitchell decision, handed down by Master of the Rolls, which he considered to have universal application, and found it to be “very clear that in the new regime, the need for promptness has even greater significance than it had previously”.
Secondly, he considered the nature and extent of the delay in the underlying case. Mr Justice Silber found “a clear case of a serious, sustained and inexcusable failure by the First Defendant and its legal adviser Mr. Salfiti to comply with the well-known and important obligations to make a prompt application to set aside judgement entered in default probably as a result of inefficiency on the First Defendant’s part.”
He then considered whether the appeal ought to be allowed under the new regime, given that relief would only usually be granted for defaults which are trivial in nature and if there is good reason for the failure (rather than inefficiency). Mr Justice Silber came to the conclusion that the First Defendant could not show that their case fell within either of these exceptions.
For the sake of completeness, Mr Justice Silber also considered whether the appeal ought to be allowed under the old regime (pre-Jackson). He concluded that “the totally unexplained and lengthy delay would trump by a substantial margin the countervailing factors relied on by Mr. Dale and in particular the alleged absence of prejudice which would be suffered by the Claimant if the appeal was allowed.”
In summary, the new regime will make it even harder for Defendants to succeed in applications to set aside default judgment. The real emphasis must be on avoiding default judgment being entered at all, but if this does arise, no matter what the merits of the prospective Defence (as here where the First Defendant had a potentially strong defence to the claim), Defendants must make sure their applications to set aside are made promptly. Even then, the court may not entertain such an application unless the default was trivial in nature.