A default judgment is often applied for early on in proceedings, where one party has failed to take an action they are required to, bringing the proceedings to an end. It is common in claims for payment of money for a claimant to obtain a default County Court judgment against a defendant who has failed to either pay the debt or file an admission or defence within the prescribed court rule deadlines (usually within 14 days, or 28 days if an acknowledgment of service has been filed). A defendant can also apply for a default judgement for the value of their counterclaim if the claimant doesn’t file a defence to the counterclaim within 14 days.
Ordinarily a default judgment can be obtained without a court hearing and without any further notice being given to the debtor. The judgment will be for payment of the sum claimed together with interest and costs claimed. Once a judgment is obtained the claimant can take immediate steps to enforce it if the date for compliance passes without payment.
Can a default judgment be set aside?
A debtor may have a defence to the claim and would, had the time limits been complied with, have been able to enter a defence to the claim. Therefore, the court rules do allow a debtor to make an application to set aside a default judgment in certain circumstances.
In deciding whether to set a judgment aside the court can consider the following:
1. Is the judgment an irregular judgment?
The court must set aside a default judgment if it has been “wrongly entered” (an irregular judgment), even if there is no defence. For example, where a claimant indicates that no response was received, but the debtor has in fact replied to the proceedings within the time limits.
2. Is the judgment a regular judgment?
If the judgment has been validly entered, then the court may set aside or vary a default judgment at its discretion if:
the defendant has a real prospect of successfully defending the claim; or
it appears to the court that there is some other good reason why the judgment should be set aside or varied, or the defendant should be allowed to defend the claim.
When considering such an application, the court will also have regard to whether or not the defendant’s application was made promptly. The court may not set aside a default judgment even if the debtor has a real prospect of successfully defending the claim if the application has not been made expeditiously.
What happens if a default judgment is set aside?
If a default judgment is set aside, the claimant will lose its right to enforce it and the claim will proceed as a defended claim with the court giving directions for the claim to progress to trial. A claimant should be wary of unreasonably refusing to consent to an application to set aside judgment as the court has a wide discretion in relation to costs. If it considers the claimant should have consented to the application there is a real risk that the court will make an adverse order for costs in the defendant’s favour. Alternatively, the claimant may be successful in ensuring the defendant pay its costs of and incidental to the application, even in cases where it agrees that the judgment should be set aside.
How can a default judgment be enforced?
A default judgment will usually state a date by which payment must be made. If that date passes without payment, the claimant can take steps to enforce it. Therefore, if you have a default judgment issued against you, any application to have it set aside should be considered quickly as the claimant has various enforcement options available including the following:
instructing the High court Enforcement Officer or County Court bailiff (depending upon the value of the default judgment),
placing a charge over the debtor’s property, or,
in some cases, even issuing insolvency proceedings.
Default judgments can result in time and money being saved by claimants by bringing an end to a claim at an early stage. They also provide a claimant with the legal backing necessary to take enforcement action against a defendant who has failed to engage with a claim. However, if applied for vexatiously, or in circumstances where a defendant otherwise has a strong defence, they can result in costs being incurred unnecessarily.
As applications to set aside a default judgment can be complex, and often result in attendance at a court hearing, if you are served with such an application, it is important to seek legal advice promptly. You should ensurethat the application is dealt with in a timely manner and in the most appropriate way.
The specialists in Boyes Turner’s Dispute Resolution group deal with such applications on a regular basis acting for both claimants and defendants. They will be able to guide you through the process, provide you with advice on the merits of making/defending an application and on the most appropriate next steps.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.