The High Court has recently considered how the Court’s attitude to applications to set aside a judgment entered in default has been altered by the recent reforms to the Civil Procedure Rules (“CPR”) and the resulting decision of the Court of Appeal in Mitchell v News Group Newspapers Ltd  EWCA Civ 1537 (“Mitchell”).
Mr Samir Samara (the “Claimant”) was employed by MBI & Partners UK Ltd and another. The Claimant contended that MBI & Partners UK Limited (the “First Defendant”) had not paid sums due to him under an employment contract. The Claimant claimed from the First Defendant the sum of £235,376.60.
The Claimant issued a Claim Form on 29 March 2011 and filed and served Particulars of Claim on 27 July 2011. The First Defendant did not file an Acknowledgment of Service or a Defence within the time limits prescribed by the CPR or at all.
The Claimant requested judgment in default owing to the First Defendant’s failure to acknowledge service and file a Defence. At a hearing on 13 February 2012, Master Fontaine entered judgment against the First Defendant in favour of the Claimant in the sum of £363,421.47 (including interest together with costs which were summarily assessed).
In May 2013, the First Defendant made an application to set aside the default judgment. After considering the merits of the First Defendant’s application, the Master considered the overriding objectives and found that the First Defendant had “become aware of the judgment against it when it was represented at the hearing on 13 February 2012 when judgment had been entered into”. Accordingly, the Master concluded that the First Defendant had failed to comply with the overriding objectives, noting that the “delay in this case is so long and so unexplained”. The First Defendant’s application to set aside the judgment entered in default was therefore refused.
The First Defendant appealed the decision, contending that the Master had erred in finding that there was an excessive delay and that it had been seeking the Claimant’s consent to set aside the judgment during this time. The Claimant contended that the First Defendant’s position did not have “any validity” especially in light of the new CPR regime. It was the First Defendant’s submission, however, that “special considerations apply” in relation to the setting aside of default judgments because the entry of a default judgment is not subject to prior scrutiny of the court under CPR Part 13.
It fell to be determined whether:
the new CPR regime had an impact on the approach to CPR 13.3; and
whether the Master had erred in refusing the First Defendant’s application to set aside the default judgment.
Silber J, referring to the new overriding objective in CPR 1.1, found that the new civil procedure regime had “universal application to all rules of the CPR”. It was therefore found that there was no theoretical justification for excluding CPR Part 13 from the new regime and the new underlying objectives.
The Court then considered whether the First Defendant’s appeal should be allowed. Silber J found himself in agreement with the Master’s decision to refuse the application, noting that “a party against whom a judgment in default has been entered has a clear obligation to apply promptly for the discharge of judgment”. The First Defendant’s submission that it had sought the Claimant’s agreement to discharge the judgment before applying formally to the Court was rejected.
In accordance with the Court of Appeal’s decision in Mitchell, Silber J recognised that “relief should usually… only be granted under the new regime if the default is trivial and there is good reason for the failure and not because of inefficiency”. In the circumstances, Silber J found that there was no justification for the delay of the First Defendant in bringing its application to set aside the default judgment. The First Defendant’s appeal was therefore dismissed.
This decision is an ardent reminder that the obligation to deal with a case justly and at proportionate cost applies to all areas of the CPR. This case is a further example of the severe consequences which can follow should court deadlines and the overriding objective be flouted.
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