Is a Judgment on Admission capable of being revoked?

The question of whether the Court has discretion to revoke judgments obtained on admission is curiously a legal gray area, and one of which that has previously been described as a ‘vexed question’ and a ‘knotty problem’ in Madison CF Uk v Various [2018] EWHC 2786.

Unlike Civil Procedure Rule 1998 (“CPR”) Part 13 of which sets out grounds upon which judgments entered in default can be set aside, the CPR does not explicitly afford the Court jurisdiction, let alone discretion, to revoke judgments entered on admission. Instead, any such jurisdiction of the Court may be alluded to be found under CPR Part 3.

In particular, CPR Part 3.1(7) provides that:

However, as acknowledged in Madison, CPR Part 3.1(7) does not, on the face of it, explicitly confer the Court such jurisdiction as there is the issue of public interest in the finality of orders as well as whether its scope extended to final orders, being the nature of a judgment entered on admission.

Madison

Rather exceptionally, in Madison it was the Claimant who applied for its judgments to be either set aside or revoked.

In brief, the application concerned a number of judgments entered in separate proceedings and either in default or on admission. For context, all judgments arose from the debtors defaulting on loan agreements of which were regulated by the Consumer Credit Act 1974 (“CCA”).

However, it later transpired that as a result of various defects, the loan agreements were, respectively, and at all material times, unenforceable under the CCA. In turn, the judgments should never have been obtained. In acknowledgement of its own failings, the Claimant/applicant then sought to set aside its own judgments entered in default, and revoke those judgments entered on admission.

Judgments in Default

In finding that the loan agreements were non-compliant with the CCA and, in turn, those judgments being unenforceable, the Court saw no real difficulty in ordering that those judgments entered in default be set aside in accordance with CPR Part 13.3.

The Court did, however, express some discomfort in doing so by acknowledging the significant delay and lack of promptness in the applications. Indeed, applications elsewhere seeking the set aside of default judgments have been dismissed if only on lack of promptness. On balance, the Court in Madison accepted that if such delay was to defeat the applications, that would cause detriment to all parties. Ultimately, the Court ordered those judgments entered in default to be set aside.

Judgments on Admission

As to those judgments entered on admission, the Court were posed with the legal question of whether the Court has jurisdiction to revoke such judgments and, in particular, whether the scope of discretion under CPR Part 3.1(7) extended to final orders, otherwise referred to as a judgment.

On the first issue, the Court quickly acknowledged that it did have jurisdiction, but its discretion should be treated as limited by reason of the overriding public interest in finality of orders.

Turning to the question of discretion, the Court was referred to previous caselaw suggesting that the Court does, on the ground of interest in finality, have limited discretion to revoke judgments entered on admission, however save in truly exceptional circumstances. On balance, the Court also recalled caselaw that adopted a less strict approach.

In resolving the issue, the Court considered that its powers under CPR Part 3.1(7) does extend to a final order and thus to a judgment entered on admission; although, that such discretion may be exercised in truly exceptional circumstances.

In application of the above, the Court emphasised that the judgments on admission in Madison were entered administratively in block, as opposed to going before a judge. The Court also noted that it was the Claimant who sought the judgments to be revoked, and whilst potentially being curable, did not seek a curative order. In turn, the Court considered that the overriding public interest in finality of the judgments were outweighed by such exceptional circumstances. In support, the Court noted that not only was this overriding objective outweighed to ensure that the CCA is not finessed by way of an unintentional misrepresentation to the Court, the Financial Conduct Authority approved of the revocation. It follows that those judgments on admission were ordered to be revoked.

Comments

The circumstances in Madison of which amounted to the Claimant seeking to revoke its own judgments entered on admission is truly irregular, and somewhat unprecedented. Madison does, however, offer some authority to suggest that the Court does have jurisdiction and, in turn, discretion under CPR Part 3.1(7), to revoke a judgment entered on admission.

Moreover, Madison does also suggest that any such discretion may be limited to cases of fraud, otherwise in cases of truly exceptional circumstances. The available guidance as to what would amount to exceptional circumstances is limited. However, by reference to Madison, these circumstances may include judgments on admission that were entered administratively in block; where the Claimant is the applicant; where the FCA approve of the proposed revocation; and/or where the Claimant does not seek a curative order.

Of course, Madison amounts from a niche set of circumstances which may not be repeated, or at least anytime soon. That is not to say however that other surrounding circumstances may not be considered exceptional enough for the Court to exercise its discretion and revoke judgments entered on admission.

Against the above, whilst Madison offers some guidance, the scope of the Court’s discretion in revoking judgments on admission remains somewhat a legal gray area.

How can Ellis Jones help?

If you have any questions, or require advice, on any issue relating to the above, please contact our Dispute Resolution team on 01202 525333 or by emailing resolution@ellisjones.co.uk who can advise on the best approach.