Judgement Entered After Defence Was Filed – Still Judgment in Default? Smith v Berrymans Lace Mawer Service Co. & Anor [2019] EWHC 1904 (QB)

In this article, we analyse a High Court ruling on default judgment, which was not ‘directly covered by binding authority’, owing to a ‘unique’ set of facts.[i]

The individual facts of the case were as follows.

The claimant served particulars of claim on the defendants, relating to a £3 million personal injury claim. It was therefore necessary for the defendants to respond to the claim by filing a defence, within the period specified by CPR 15.4.

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Before the period for filing ended, the defendants submitted an application (dated 29 September) on 30 September 2018, which sought a 1-month extension of time for filing the defence, as well as a 25-minute telephone hearing on the matter.

However, Court staff returned the application unissued and asked for a Private Room Appointment (PRA) form to be provided. The PRA form was received at Court on 21 November and, 5-days later, Court staff issued the application for the defendants’ desired extension.

During the 2-month period between the defendants having submitted their initial application and the Court issuing said application, the parties’ agreed time for filing the defence expired (4 October) and, on 17 October, the claimant requested judgment in default of defence.

On the same day that the application was issued (26 November), a note was produced by the Court staff for Master McCloud, which made her aware that the defendants had had their application returned unissued, while the claimant had made an application to enter judgment.

However, between 21 December and 28 December, the defence was received at Court and, in the interim, Court staff had listed a hearing date for the defendants’ application. Nevertheless, the existence of the defence was not recorded on the Court computer until February 2019 and not at all recorded on file.

On 2 January 2019, the Master directed judgment in default, having received the Court staff’s note (dated 26 November) sometime (date unknown) before.

Judgment in default was entered on 15 January.

Although the facts of the case are somewhat confusing, it is unambiguous that when judgment in default was entered, the belated defence had, unbeknown to Master McCloud, been received by the court.

In these circumstances, was the ‘judgment in default’ fundamentally a ‘regular judgment’? And if so, could the judgment be set aside?

Master McCloud considered this to be a procedural decision of ‘some significance’, as it dealt with issues of interpretation of the Civil Procedure Rules. Further, these issues of interpretation had previously been raised and considered by Baker J, in Cunico Marketing v Daskalakis [2018] EWHC 3382 (Comm), who considered the various ways that CPR 12.3(1), specifically, could be construed:

  1. Default judgment may only be granted where, ‘at the time of judgment, there is no acknowledgment of service and the time for acknowledging service has expired’.
  2. Default judgment may only be granted where, ‘at the time the request or application for default judgment is filed, there was no acknowledgment of service and the time for acknowledging service has expired’.
  3. Default judgment may only be granted where ‘timely acknowledgment of service was not filed, irrespective of any acknowledgment of service later filed’.

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For the purposes of this case, Master McCloud reworked interpretations (1) to (3) and replaced references to the acknowledgment of service with references to the defence, i.e.:

  1. Default judgment may only be granted where, at the time of judgment, there is no filed defence and the time for filing a defence has expired.
  2. Default judgment may only be granted where, at the time the request or application for default judgment is filed, there was no defence and the time for filing the defence expired.
  3. Default judgment may only be granted where the defence was not filed in a timely fashion, irrespective of any defence later filed.

On this occasion, Master McCloud ruled that interpretation (1) should prevail.

Accordingly, she found in favour of the defendants. The court did not have jurisdiction to enter judgment and judgment was set aside. She reasoned, at paragraphs 23 and 24, that:

‘The language of CPR 12.3(1) naturally conveys the first meaning, and to say that the claimant may obtain judgment ‘only if the defendant has not filed’ naturally conveys that the court may not enter judgment if filing has taken place prior to entry of judgment. The way in which the rule is structured means that it is not relevant when the time for doing so expired, if the court finds (as is the case here) that a defence was filed. Further, I note, as did the court in Cunico, that CPR 3.10 provides that an error of procedure does not invalidate any step in the proceedings unless the court so orders. A late filed defence is in my judgment not by reason of its lateness alone fall to be treated as if not validly filed. A defence, within rule 12.3, does not have to be a timely defence.

... Default judgment can be a useful and proper device where claims are not disputed, but in my judgment an overly strict reading which would tend to shut out genuinely defended cases simply for lateness of defence would be disproportionate if it was relied on as a species of ‘encouragement’ to comply with court rules’.

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In the judgment postscript, the Master informed the parties that the Civil Procedure Rule Committee (CPRC) may make changes to CPR 12.3 to clarify the position (potentially giving effect to judgment in Smith), but to-date, ‘no statutory instrument has been passed containing such a rule change’ and as such, a rule change cannot be guaranteed.

N.B. An appeal was ‘pre-empted’ at the outset and the judge granted permission for the claimant to do so.

Full text judgment can be accessed here.

 

[i] Nick Hilborne, ‘High Court sets aside default judgment in £3m PI claim’ (14 August 2019 Litigation Futures) <https://www.litigationfutures.com/news/high-court-sets-aside-default-judgment-in-3m-pi-claim> accessed 15 August 2019.