High Court sets aside a default judgment obtained following a claim form served while defendant’s office closed during Covid-19 lockdown

The court has discretion under the CPR to allow an application by a defendant to set aside a default judgment. In the case of Melanie Stanley -and- London Borough of Tower Hamlets [2020] EWHC 1622 (QB), the court considered an application by a defendant to set aside a default judgment obtained by a claimant whose claim form and particulars of claim had been served very soon after the start of the Covid-19 lockdown while the defendant’s office had been closed and to which the defendant had failed to respond in time.

Case facts

The claimant (“C”) complained to the council (“D”) about an alleged breach of data protection legislation and regulations, breach of confidence, misuse of private information and breach of the European Convention on Human Rights arising from D’s disclosure of C’s medical records without her consent. D acknowledged that there had been a data protection breach and apologised to C.

C later claimed compensation from D. On 4 December 2019 C’s solicitors issued a protective claim form claiming damages up to £10,000 for “psychological distress, stress, inconvenience and financial loss”. The particulars of claim did not attach a medical report or schedule of special damages.

C’s solicitors sent a letter before claim to D on 23 January 2020 pursuant to the pre-action protocol. Having received no response to this and a subsequent letter, on 13 February 2020 C’s solicitors emailed D’s case handler and asked if D would accept service of proceedings by email. D’s case handler replied that service had to be by post and service by email would not be accepted.

C’s solicitor posted the claim form and particulars on 25 March 2020. D did not file a defence or acknowledgement of service within time. C applied for judgment in default and judgment was granted on 17 April 2020.

Application to set aside default judgment

In D’s application to set aside the judgment, D’s solicitor confirmed that D’s offices had been closed on 23 March 2020 in accordance with the Covid-19 lockdown imposed by the government. A skeleton staff had been working at D’s offices but they were not familiar with court proceedings and the legal services department had not received the court papers. She also confirmed that D intended to defend the claim and noted that there was no medical evidence and no schedule of special damages in breach of CPR 16. She stated that C had not shown that the information in her medical records was not already known to the recipients, and if so, there had been no breach as pleaded.

Under CPR 13.3(1), the court may set aside a default judgment if: (a) the defendant has a real prospect of successfully defending the claim; or (b) it appears to the court that there is some other good reason why: (i) the judgment should be set aside; or (ii) the defendant should be allowed to defend the claim. Under CPR 13.3(2) the court must have regard to whether the application to set aside was brought promptly.

D submitted that the court should set aside under either or both limbs of CPR 13.3(1); under (a) since as currently pleaded there was no evidence that D had caused C any loss and under (b) since C’s solicitor had served court papers on an office that he knew was closed and did not ascertain whether there was anyone there who could deal with the matter during the Covid-19 lockdown.

C argued that D had admitted a breach of data protection and that there was therefore no real prospect of successfully defending the claim. It also submitted that D had not adequately explained why the Covid-19 had caused it to fail to file an acknowledgment of service and that the council ought to have had a system in place so that appropriate steps could have been taken to deal with the proceedings timeously.

Judgment

The Judge allowed D’s application to set aside the judgment.

The Judge found that both limbs of CPR 13.3(1) were satisfied. He was content that D had reasonable prospects of defending the claim as there was presently no evidence that the C had suffered any actionable loss as a result of D’s alleged unlawful conduct. D’s acknowledgement that there had been a data breach did not amount to an admission that C had suffered any loss.

As to the second limb, the Judge held that there was good reason to set aside the judgment, namely what he described as the “unprecedented national health emergency which was unfolding at precisely the time [C’s solicitor] posted his documents to [D]. "The Judge remarked on C’s solicitor’s witness statement which did not explain “why he thought it appropriate to post documents to [D’s] offices when he knew or should have known they were shut and [D] was highly unlikely to be in a position to respond.”

The Judge noted that C’s solicitor had not enquired whether the papers had been received and were being processed. The Judge did not accept C’s point that D had insisted on service by post and that he had acted accordingly since this confirmation by D had been given 5 weeks before the Covid-19 lockdown. He remarked that “the world shifted on its axis since 23 March 2020” and that it was incumbent on C’s solicitor to contact D to acknowledge that the situation had changed and to discuss how the papers could best and most effectively be served. The Judge found that C’s solicitor had exercised poor judgement and that “it was not fair or reasonable for him simply to place papers in the post to an office that he knew or should have known had been closed down two days before because of a national emergency.”

As to relief from sanctions, the Judge found that there had been a serious and significant default but that he should grant relief from sanctions under the second and third stages of the test (i.e. the reason for the default and all the circumstances of the case). This included consideration of CPR PD 51ZA which provides that court will take into account the impact of Covid-19 when considering applications including applications for relief from sanctions.

He found that the reason for D’s default was the Covid-19 crisis and that but for its office being shut, D would have responded in time. He also found another relevant circumstance to be that C’s solicitor “was at fault for not checking whether service by post was still possible and feasible. That was an obvious step which he should have taken.” He further found that “it would be unconscionable in my view for [C] to benefit from the unprecedented health emergency which prevailed at the end of March (and which is still subsisting today).” The Judge also found that the application had been brought promptly by D.

Comment

It is notable that the court placed emphasis on the onus upon the claimant’s solicitor in the circumstances of this case to have liaised with the defendant on how best to serve the claim form and particulars rather than simply proceeding to serve the documents by post in the ordinary way and without taking account of the potential effect of the disruption on the defendant and its operations. Claimants will need carefully to consider the impact of the continuing Covid-19 lockdown on a particular defendant party when serving its claim form and particulars and depending on the circumstances it may be necessary to confer with the defendant in relation to service of proceedings.