Default judgment, response packs and Denton

Default judgment, response packs and Denton

In Erol v Global Fashion Links, a judge in the Intellectual Property Enterprise Court (IPEC) allowed an application pursuant to CPR 13.3 to set aside a judgment in default of acknowledgment of service and defence on the basis that the defendant had, on the evidence presented, a real prospect of success at trial. Judge Macon also stated that the claimant’s failure to send a response pack with his claim form and particulars of claim would, by itself, have been a good enough reason to set aside the court’s order for default judgment. In this article we discuss the decision, including the judge’s approach to the Court of Appeal’s decision in Denton.

Practical implications

The court's decision reinforces the need for a claimant to ensure that a response pack is served with the claim form and particulars of claim. Failure to do so may provide the court with a 'good reason' pursuant to CPR 13.3(1)(b) to set aside any default judgment ordered. This aspect of the decision is discussed in greater detail below.

One particularly interesting aspect of the decision is Judge Macon's treatment of the Court of Appeal's decision in Denton. Counsel for the claimant submitted that since an application under CPR 13.3 is for relief against sanctions, CPR 3.9 applies and that the judge was required to take into account the relevant case law on relief from sanctions, including the decision in Denton. Whilst the judge stated that he would 'take that into account' he continued that 'since CPR 13.3 expressly states that matters which the court must consider in an application to set aside a default judgment I think I should primarily have regard to the matters set out in that Rule'.

Whilst the judge's approach did not appear to cause any injustice to the parties in this case, it appears to fall short of the approach set out in the decision of the Court of Appeal in Regione Piemonte, where it was held that the three stage test in Denton should be applied by the court on applications to set aside default judgment.

What was the background to the application?

The proceedings concern the alleged infringement of a registered design and a registered trademark (UK registrations owned by the claimant) as well as a claim for passing off.

Following a letter before claim, the claim form was issued and then served (along with the particulars of claim) on the defendant's registered address. The defendant contended that it was not aware of the claim until a few weeks after deemed service when they reached the defendant's trading address (which was located elsewhere). The defendant failed to acknowledge service in time. The defendant also claimed that no response pack was included with the claim form and particulars of claim.

Discussions of some form then took place between the parties. The defendant contended that the claimant represented that no further action would be taken so long as discussions continued. In any event, the claimant filed an application notice for judgment in default (not served on the defendant, but was received as sent by the court). The defendant failed to respond, and by order dated 4 July 2014 Judge Hacon gave judgment in default under CPR Part 12.

On what grounds did the defendant apply to have default judgment set aside?

The defendant submitted that the court should exercise its discretion pursuant to CPR 13.3(1) to set aside the default judgment because:

  • the defendant had a 'real prospect' of successfully defending the claim (CPR 13.3(1)(a))
  • there were three 'other good reason[s]' why the court should set the order aside (CPR 13.3(1)(b)), namely:
    • the claimant's failure to service a response pack (Ground 1)
    • the application for judgment in default was made at a time when there were ongoing settlement negotiations according to which the defendant understood no further action would be taken (Ground 2)
    • that the claimant was in the habit of misappropriating the IP of third parties (Ground 3)

Note: this wasn't a case in which the court was obliged to set aside judgment in default under CPR 13.2.

What did the judge decide?

Having considered the evidence, the judge decided that his order for default judgment should be set aside pursuant to CPR 13.3(1)(a) as he was 'not prepared to say that cumulatively the defendant's evidence [fell] below the threshold of supporting the defendant's argument that it [had] a real prospect of success at trial'.

Although not strictly required to (as CPR 13.3(1)(a) and CPR 13.3(1)(b) provide two alternative bases on which a court may set aside default judgment, although the judge recognised that it will be rarely appropriate for a court to exercise its discretion to set aside under CPR 13.3(1)(b) where the defendant does not have a real prospect of successfully defending), the judge went on to consider whether the defendant's arguments in relation to CPR 13.3(1)(b) (set out above) would succeed. The judge didn't find that Grounds 2 and 3 held any water, but gave more detailed consideration to Ground 1.

Did the claimant's failure to serve a response pack amount to an 'other good reason' for the court to set aside the default judgment?

In short, yes.

The defendant relied on the decision of the High Court in Gulf International Bank, where Simon J treated the failure of the claimant to serve a response pack as being the most significant ground put to him and the basis on which the default judgment would be set aside. In that decision, Simon J stated:

'It seems to me particularly important when dealing with defendants who are not represented by English solicitors, as these defendants were not at the time, and whose understanding of English procedural law may be less than those who habitually practise in the English Court, that the means of avoiding a default judgment should be made available, as the rules require.'

The defendant submitted that the same approach should be taken where the defendant has no legal representation at all, which was the case here.

The judge referred to the decision of the Court of Appeal in Henriksen and stated, in effect and obiter, that it was authority for the principle that a failure to serve a response pack is potentially good enough reason by itself to set aside a judgment in default.

On the facts of this case, the delay of three weeks in making the application to set aside during the time that the defendant was seeking legal advice did not amount to excessive delay so as to override the significance of the claimant's failure to serve a response pack.

Court and judgment details

Judge Hacon heard the application in the IPEC (Chancery Division of the High Court). Judgment was handed down on 9 December 2014.

Further guidance

With so many different sources for cases, do you know the status that the court attributes to them for use in court proceedings? For an understanding of the hierarchy of the available reports as well as dealing with ex tempore (oral) judgments and explaining neutral citations download our free Practice Note Law reports: Hierarchy and status of authorities [PDF].

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About the author:

Barry specialises in international arbitration and commercial litigation. He trained and practised at Jones Day before joining Pinsent Masons. At LexisNexis, Barry is Head of Arbitration and Head of the Lexis®PSL Dispute Resolution Group.

In practice, Barry’s work included commercial, aviation and technology arbitrations pursuant to international arbitral rules, involving UK and international clients. He also has a background in general commercial, civil fraud and IT litigation, including experience before the High Court. While in private practice, Barry worked with a broad range of clients from the private and public sectors.

At LexisNexis, when not focused on the strategic development and operational requirements of the Dispute Resolution Group, Barry’s content work focuses on the law and practice of international commercial arbitration and investment treaty arbitration. In addition to his work for Lexis®PSL, Barry contributes to the LexisNexis Dispute Resolution Blog and New Law Journal on litigation and arbitration matters