Setting aside default judgment: promptness – a cautionary tale

Recently, the Court of Appeal in Leadingway Consultants Ltd v Saab [2025] EWCA Civ upheld relief for a defendant who was one day late in complying with an unless order, however was not so sympathetic to the other defendant’s 16-month delay in applying for the set aside of default judgment.

Background

The First Defendant (“D1”) was served personally with proceedings in Cyprus on 24 March 2022. In the absence of neither an acknowledgement of service nor defence, on 4 August 2022 the Claimant entered judgment in default against the D1.

The Second Defendant (“D2”) was served with proceedings on 30 August 2023. Unlike D1, D2 acknowledged service and set out to challenge jurisdiction.

An Unless Order agreed between the Claimant and D2 would later follow on 29 November 2023:

The Unless Order was dated 29 November 2023 and sealed by the Court on 30 November 2023.

D2, however, miscalculated the 21-day deadline, incorrectly using the seal date (30 November) instead of the order date (29 November) and filed his application pursuant to CPR Part 11 on 21 December 2023 (making it one day late).

On 21 December 2023, D1 filed an application to set aside the default judgment and challenge the Court’s jurisdiction.

D2 followed on 29 December 2023 with an application for relief from sanction imposed by the Unless Order and a retrospective extension of time to file his jurisdiction challenge.

The High Court granted both D1 and D2’s applications and the Claimant appealed.

D2’s application for relief is purposely not considered further for the purpose of this blog and instead D1’s application for the set aside of default judgment will take primary consideration.

Decision

Per CPR Rule 13.3(2), the Court must have regard to whether the application seeking the set aside of a default judgment was made ‘promptly’.

In the first instance, the Judge granted D1 the set aside of the default judgment for reasons which on appeal D1 argued was in application of the “Co-Defendant principle” derived from Hussain v Birmingham City Council [2005] EWCA Civ 1570. Briefly, Hussain suggests that the Court should attach less weight to ‘promptness’ when considering whether to set aside a default judgment in circumstances where the same claim would continue against a co-defendant in any event – of which arguably is the case here in Leadingway.

On appeal, the Claimant argued that in doing so, the Judge in the first instance did not attach “any or any adequate weight” to the question of ‘promptness’ when applying CPR 13.3(2) before granting the set aside of default judgment against D1. The Claimant’s argument that the Judge had not taken D1’s delay into account was, however, not accepted by the Court of Appeal. Instead, the alternative argument that inadequate weight had been applied when balancing CPR Rule 13.3(2) had more force.

The Court of Appeal did not uphold D1’s argument on the “Co-Defendant principle”. Instead, it was held that Hussain merely indicated that the weight of ‘promptness’ would be reduced where a trial for the very same issues would take place against the co-defendant, but still even then may outweigh all other considerations.

The procedural chronology that led to default judgment being entered in Hussain and those in Leadingway could, however, be distinguished. Unlike Hussain, in Leadingway default judgment was entered against D1 at a time when D2 had not been served with the Claim Form. Further, at a time when D1 had filed its application, some 16 months after default judgment was entered, D2 had only reached a point of a jurisdiction challenge.

As the Court of Appeal observed:

And further held:

Whilst the Court of Appeal acknowledged that the Judge’s decision in the first instance to set aside the default judgment against D1 was made in the exercise of his discretion, the Judge had not identified any factor reasonably capable of outweighing D1’s delay.

The appeal against the setting aside of the default judgment against D1 was allowed.

Key takeaways

Leadingway provides a clear message in that irrespective of any merit in a defendant’s proposed defence, considerable and unexplained delay in applying to set aside default judgment can prove fatal to the application. Equally, the so called “Co-Defendant principle” does not automatically excuse the need for ‘promptness’ in an application.

How can Ellis Jones help?

Our Dispute Resolution experts at Ellis Jones are regularly instructed to deal with the setting aside of default judgments and the removals of CCJs. For advice and assistance, please get in touch with our experts on 01202 525333 or by emailing resolution@ellisjones.co.uk if you have any queries relating to this article.