Application to set aside default judgment and relief from sanctions/the effect of delay

http://www.bailii.org/ew/cases/EWHC/Comm/2014/1457.html

The defendant applied to set aside an order granting leave to serve out the jurisdiction (made more than six years ago) and to set aside default judgment (ordered more than three years ago). The default judgment was served two years ago and the defendant delayed 5 and a half months before making its application.

Following an extensive review on the caselaw on delay in making an application, Burton J held as follows:

  1. CPR r3.9 (applications for relief from sanctions for failure to comply with any rule or court order) applied in relation to the order granting leave to serve out because the defendant was seeking an extension of time to challenge the English court’s jurisdiction. Here, a sanction had been imposed because judgment in default had been entered in the absence of an earlier challenge. Accordingly, the judge said he was not required to consider whether there had been an “implied sanction” in this case (earlier caselaw has suggested that CPR r3.9 can sometimes apply even if a sanction has not been expressly imposed by the very rule which has been breached (for example, where an extension of time to file an appeal is refused, resulting in the “implied sanction” that an appeal will not be possible)). In view of the new approach under Mitchell, Burton J held that, given the substantial delay in bringing the application (which was at least in part the result of a tactical decision), he would refuse relief from sanctions.
  2. However, he was prepared to set aside the default judgment (under CPR r13.3), notwithstanding the delay in bringing the application: “It seems to me clear that, although applications under CPR 13.3 do fall to be considered by reference to the new approach, there needs to be… a somewhat different approach from that in relation to a case, as in Mitchell, falling within CPR 3.8. A sanction set out by the Rule itself for breach may be said to be pre-estimated as the appropriate course, absent good reason. But a sanction imposed pursuant to CPR 3.9 or an application by reference to CPR 3.9 and 13.3, may allow different or wider considerations to be taken into account, or more than trivial delays to be addressed”. 

COMMENT: This quote from the judgment is difficult to understand since it appears to draw a distinction between a sanction imposed by a rule or court order (and which falls within the scope of CPR 3.8) and a “sanction imposed pursuant to CPR 3.9”. However, CPR 3.9 does not impose sanctions – it instead deals with applications for relief from sanctions (which fall within CPR 3.8). It may be that the judge is supporting the view that an “implied sanction” can be imposed, notwithstanding that that view was disapproved by Lord Dyson in the Privy Council case of A-G v Matthews [2001]. Nevertheless, the judgment does give clear support to the view that applications to set aside default judgment should be given a “wider consideration” than applications where a sanction has been expressly provided for by a rule or court order. In particular, even a substantial delay may not be fatal to the application to set aside default judgment.