Denton and applications to set aside default judgments

The Court of Appeal has settled the uncertainty around whether the ruling in Denton applies to applications to set aside a default judgment, writes Alastair Cantor.

What you need to know

The evidence and arguments in support of an application for default judgment to be set aside need to address both CPR 13.3, and the test for relief from sanction in CPR 3.9/Denton.

Precis

Where judgment has been entered in default against a party who has been validly served but failed to file and serve any defence, they may apply under CPR 13.3 for judgment to be set aside. That rule affords the court a discretion to set aside or vary a default judgment if the defendant has a real prospect of successfully defending the claim, or there is some other good reason for doing so. The question of whether or not the three-stage Denton test also applies to such applications has been the subject of controversy between litigants and in the courts for a number of years.

The controversy centred on whether, once the test in CPR 13.3 had been surmounted, any applicant then had to satisfy the court the Denton test was met, on the basis that the court would be exercising a discretion to grant relief from sanction by setting aside the default judgment. There were conflicting lines of authority, both for (chief amongst them, Regione Piemonte v Dexia Crediop SpA [2014] EWCA Civ 1298 and Gentry v Miller [2016] EWCA Civ 141; [2016] 1 W.L.R. 2696), and against (most recently, PXC v AB College [2022] EWHC 3571 (KB)).

The Court of Appeal have now settled the debate in FXF v English Karate Federation Ltd & Anr [2023] EWCA Civ 891. The court has conclusively stated that applications under CPR 13.3 constitute applications for relief from sanctions, and as such the Denton test must also be satisfied for a successful outcome (paragraphs [63-68] of the judgment).

Comment

As a matter of principle, I think this an unwelcome development. The Court of Appeal has perhaps taken an overly stern view of the seriousness of failing to file a defence on time (contrast breaches which actually waste significant court time, such as by risking adjournments of hearings), and created a bear-trap for unwitting litigants-in-person by adding a further test to applications under CPR 13.3 not stated in the rule itself. In my view, the Civil Procedure Rules Committee should consider whether CPR 13.3 should be amended so that it accurately states the test that will be applied.

Nonetheless, this is binding authority and in lieu of any further developments litigants will need to comply with it. Evidence and argument on applications to set aside default judgments under CPR 13.3 will need to address not only the test under that rule but also that under CPR 3.9. Case law relevant to the latter, including but not limited to Denton, will also have to be taken into account.

Alistair Cantor is a barrister at Cornerstone Barristers, specialising in commercial and regulatory, property and housing law. He undertakes a broad range of drafting, advisory and advocacy work for private litigants and public authorities.