Issued With A Default Judgement: What Can You Do?

A County Court Judgment also known as a ‘Default Judgment’ can be granted against a Defendant as a result of either a Defence or an Acknowledgement of Service not being filed on time or at all following a Claim being issued in the County Court. However, a Defendant may be unaware that a claim was issued against them, until it is too late.

Often Defendant’s only become aware of a claim being issued against them until it is too late. Many Defendant’s only realise that such a judgment has been entered into when it affects their credit rating or it appears on their credit record.

A Defendant may be entitled to apply to set aside the Default Judgment when they become aware that such a judgment has been obtained against them.

Setting a judgment aside

Part 13 of the Civil Procedure Rules govern and set out the procedure for setting aside or varying a Default Judgment.

Under Rule 13.2 the Court must set aside a Default Judgment where a claim has not been served correctly. This may be because the claim was served at the wrong address. However, if the claim form was served at the Defendant’s last address known to the Claimant after making reasonable enquiries an application to set aside will have to be made under Rule 13.3.

When making an application under Rule 13.3, the applicant must convince the Court of the following issues:

1. Reasonable Prospect of Success

The Defendant must prove that they have a reasonable prospect of successfully defending the claim. This means that any defence must carry some chance of success. It cannot be false and must be more than merely arguable.

In determining whether the Defendant has a reasonable prospect of success, the Court will analyse the issues brought by the application to the Courts attention.

2. Any other good reason it should be set aside or that the Defendant should defend the claim

The Court may consider the three stage process set out in the case of Denton v TH White Ltd [2014].

The Court will decide:

1. Whether the failure which gave rise to the sanction was serious or significant;

2. Whether there was a good reason for the default or failure; and

3. Whether, in all the circumstances of the case, the sanction should be set aside.

In determining the application, the Court will take into consideration the circumstances of the case which resulted in the Default Judgment being issued. The applicant must show there was a good reason for the default.

In addition to the overall consideration of all circumstances of the case, the Court will include consideration of the need to manage the case efficiently, fairly and at a proportionate cost.

The need to act ‘Promptly’

A Defendant seeking to set aside a Default Judgment must act promptly. It is imperative that there is no delay in the making of the application.

In Points of View v Erre DB Group SA [2021] 2 WLUK 70 it was held that 26 days was too long to make the necessary application to set aside. This was despite the court accepting that the defendant had established its defence had a real prospect of success. The court held that the application to set aside had not been made ‘promptly’ enough.

However, in Barons Bridging Finance Plc v Nnadiekwe [2012] EWHC 2817 (Comm) the court set aside a judgment entered several years earlier, due to severe conflicts of evidence between the parties, including the defendant alleging that she was the victim of fraud. The court decided that the facts, in this case, permitted the application.

LJ Popplewell confirmed in Avanesov v Shymkentpivo [2015] EWHC 394 (Comm) that applications should be made ‘as soon as could reasonably be expected’, 8 months was deemed too lengthy in this case.

The Process

A Form N244 needs to be filed with the Court where the judgment was issued. Written evidence must be enclosed detailing reasons why the Default Judgment should be set aside.

If the application to set aside the Default Judgment is successful then you may be entitled to recover your costs of the application depending on the reason the application is being made and whether the judgment is over £10,000.

However, if the Court dismisses the application, the Claimant may be entitled to seek an order of their costs in defending the application.

Conclusion

When deciding whether to make an application to set aside a default judgment, it is important to consider the merits and costs risks associated with such a claim. Each case turns on its particular facts but you should act promptly and seek advice at the earliest possible stage.