Is a default judgment binding on the other defendants to an action?
The principal issue in dispute in this case was phrased by the judge as follows: “Does a default judgment obtained against one defendant (defendant A) preclude another defendant in the same proceedings (defendant B) from advancing, by way of defence to a claim against it (defendant B), a case which is inconsistent with the default judgment which has been obtained (against defendant A)?” He concluded that it does not. Most importantly, the need to avoid inconsistency between judgments (especially when those judgments are within the same proceedings) is outweighed by the “overriding” need to ensure that a co-defendant (i.e. defendant B) is able to put forward the case which it wants to advance. Furthermore, there was no reason why defendant B should be bound by defendant A’s decision not to acknowledge service of the proceedings and the effect of the default judgment should only affect defendant A.
Furthermore, CPR r12.8(2)(a) provides that where a claim can be dealt with separately, the court can continue proceedings against other defendants who are not the subject of a default judgment. That was the position here. Even if that was not correct, CPR r12.8(2)(b) would apply instead. This provides that where a claim cannot be dealt with separately (and here the court is looking at the claim against defendant A and not that against defendant B), the court will not enter default judgment but will instead “deal with the application [for default judgment] at the same time as it disposes of the claim against the other defendants”.
One further point discussed in the case was an application to set aside a default judgment under CPR r13.3. In Mid-East Sales (see Weekly Update 18/14), Burton J disagreed with Silber J in an earlier decision and held that applications under CPR r13.3 (and CPR r3.9 - applications for relief from sanction)”may allow different or wider considerations to be taken into account, or more than trivial delays to be addressed”. That approach was supported in this case. The judge also said that it would be wrong to apply CPR r3.9 in this case in any event, since defendant B was not the party in default.