When things do not quite go to plan for members and they end up with a default County Court Judgment (CCJ), many will be cognisant that one possible way to get a CCJ removed is if you successfully apply for the judgment to be set aside.
However, many do not realise what this entails beyond the fact that CCJs are added to the Register of Judgments from which credit reference agencies such as Experian, Equifax, and Call Credit take the information to add to your credit report.
When it comes to an application for a judgment to be set aside, it cannot be overemphasised how time is truly of the essence for various reasons.
Applications of this nature are considered to be requests to be relieved from sanctions by the court, and in some cases, be given another opportunity to defend the claim and would normally be made under Section 13.3 of the Civil Procedure Rules (CPR).
Separately, applications for relief from breach of sanctions, often resulted in harsh decisions and unjust consequences as highlighted in the well-known case, Denton v TH White Limited [2014], which Denton sought to address by allowing for such applications to be reviewed in a more proportionate and just manner. This case introduced a three-stage test, which requires the court to:
1) identify and assess the seriousness and significance of the non-compliance
2) consider why the breach occurred
3) evaluate all circumstances of the case so the application is dealt with fairly
Stage 1
This stage allows judges to exercise great discretion to ascertain whether the breach is serious or significant. In other words, judges look at whether the failure to submit a defence is serious and significant enough to not overturn the default judgment. If it is decided at this stage that the failure to submit a defence is neither serious nor significant, then there is no need to consider the other two stages or to issue an application.
Stage 2
If the failure to submit a defence is considered serious or significant, the second stage will assume greater importance and the judge will assess why the defending party failed to respond to the claim. Trivial reasons like simple mistakes, forgetting the deadline date, going on holiday around the time of the deadline, etc., are unlikely to be seen as good enough reasons for the judge to overturn the default judgment.
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Stage 3
At this stage, the court considers all circumstances of the case such as whether the refusal to allow a defence is proportionate, how long past the deadline before the application for relief from sanctions was made, and whether there are any current or have been previous breaches committed by the defendant.
This brought some much needed guidance for lawyers to know how applications would be assessed in court even though the outcomes remain fairly unpredictable due to considerable discretion afforded to judges.
Last October, in a thorough and strongly worded judgment binding on all lower courts, the Court of Appeal confirmed that the Denton test will be rigorously applied in applications to set aside default judgments in addition to CPR 13.3.
In practice, this means that in addition to having to demonstrate that the defence to be submitted has merits and good prospects of succeeding at trial, the defendant must act promptly in applying for relief and also focus on explaining the reasons for their non-compliance leading to the default judgment.
At the end of its judgment, the Court of Appeal left a warning that “parties would be well advised to make absolutely sure that they comply with the rules in the CPR. They may expect no indulgence from the court if they do not.” This makes clear that their objective in applying the Denton principles to CPR 13.3 is to make all parties take default judgments more seriously by using the Denton test in full force to any applications to set them aside and catching out any applications that they do not consider to be prompt, well-reasoned, and procedurally compliant.
Aside from ensuring that any claims are promptly brought to Lawgistics’ Litigation team to provide the appropriate assistance and limit the prospects of having to deal with a default judgment in the first place, it is imperative that where things do not go to plan, members act quickly and decisively because it is now much more difficult for late applications for relief from sanctions to set aside to succeed against default judgments.
