Barrister Chris McGeever considers whether applications under CPR r.13.3 to set aside regular default judgments are also applications for relief from sanctions.
There is a growing body of case law which shows the variance in judicial approach to the question whether the Mitchell/Denton principles (and CPR r.3.9) apply to applications to set aside default judgments under CPR r.13.3.
High Court Judges have expressed divergent views on the question, whilst the Court of Appeal has previously given judgments wherein the position (that the Denton tests do apply) was acknowledged to be common ground between the parties and therefore was not in issue on appeal.
A brief review of the cases follows below.
Court of Appeal Judgments
Hussein v Birmingham City Council [2005] EWCA Civ 1570 per Chadwick LJ at [30] – this was a case decided prior to both Mitchell and Denton.
As well as CPR r.13.3, there were ‘of course’ other provisions of the CPR which were of relevance, including ‘by analogy’ the guidance in CPR r.3.9(1) and in CPR r.39.3(5).
Regione Piemonte v Dexia Crediop Spa [2014] EWCA Civ 1298 – at [39–40] per Lord Justice Christopher Clarke, with whom Jackson and Lewison LJJ agreed.
This section of the judgment was headed, ‘The effect of Mitchell’. It is notable that in this case, the Defendant had argued for the proposition that the Mitchell/Denton principles did not apply to an application to set aside a default judgment. The Court of Appeal disagreed.
Blakemores LDP v Scott & Anor [2015] EWCA Civ 999 per Vos LJ (with whom Underhill and Moore-Bick LJJ agreed) at [58] – it was common ground that the principles from Mitchell/Denton are properly applicable to an application to set aside a default judgment. The Court started by considering CPR r.13.3 before moving to consider Mitchell/Denton.
Gentry v Miller [2016] EWCA Civ 141 per Vos LJ (with whom Beatson and Lewison LJJ agreed) at [23–24] – both sides accepted that it ‘was now established’ that the tests in Denton were to be applied to applications under CPR r.13.3. First the express requirements of that rule must be considered. “Since the application is one for relief from sanctions, the Denton tests then come into play.”
This section of the judgment was headed, ‘The applicable law’.
Privy Council Judgment
The Attorney General v Keron Matthews [2011] UKPC 38 per Lord Dyson at [17–20]
Whilst the decision has strong persuasive force, being a Privy Council case, it is not binding in English law.
Lord Dyson, in considering analogous procedural rules from Trinidad, held that satisfying the conditions spelt out in r.13.3 should be sufficient for the application to succeed, and it could not have been the intention of the draughtspersons that further conditions not set out within that rule would also apply.
High Court Judgments
Mid-East Sales v United Engineering and Trading Co (PVT) Ltd [2014] EWHC 1457 per Burton J at [85]. The Judge was “satisfied, as was Silber J in Samara, that the new approach described by Lord Dyson's Implementation Lecture and exemplified in Mitchell is intended to be of universal effect, i.e. across the board in relation to the CPR”.
The Judge considered Matthews distinguishing it at [60], and stating at [50], “Whether or not that is right in Trinidad, in England and Wales there is Court of Appeal authority to the contrary, and there seems nothing lacking in commonsense about it.”
Redbourn Group Ltd v Fairgate Development Ltd [2017] EWHC 1223 (TCC) – per Coulson J at [17–18], there had been some debate in the parties’ skeleton argument as to whether r.3.9 was relevant to an application under r. 13.3; each party contended for the opposite conclusion. The Judge’s view prior to considering any cases was that r.3.9 was ‘plainly relevant to any application to set aside’ and that there was ‘no greater sanction than judgment being entered in default of a defence, and no more important relief from sanction than being allowed to set aside that judgment, so as to be able to put forward a defence.’
The Judge further considered that Gentry from the Court of Appeal was ‘an important authority’ which – at the time – needed to be included in the White Book at paragraph 13.3.5; the case has indeed been included in said paragraph in subsequent editions of the White Book.
Cunico Resources NV v Daskalakis [2018] EWHC 3382 (Comm) – per Andrew Baker J at [38–41] – the Judge was not adjudicating an application under CPR r.13.3, but considered the question, expressing the view that, “To make an application to set aside under CPR 13.3, accepting and seeking to discharge that burden, to my mind is to accept and operate under the CPR sanction for the original procedural default, not to ask for relief from it.”
This section of the judgment was headed, ‘CPR Provisions’. Notably, the Judge stated at [41] that he took “this aspect no further in this judgment, however, as it is not necessary to resolve it”. In other words, the analysis was obiter.
Penta Ultimate Holdings Ltd & Anor v Storrier [2020] EWHC 2400 (Ch) per Master Kaye at [10–12]. The Judge said that, “An application to set aside default judgment is recognised to be an application for relief from sanctions” and cited Regione as authority for this proposition. Gentry was then cited for guidance on how to apply the tests to such an application – firstly the express requirements in r.13.3, then the Denton tests, sequentially.
Core-Export SpA v Yang Ming Marine Transportation Corp [2020] EWHC 425 (Comm) – per HHJ Pelling QC at [2] and [7–8]. The Judge stated it was common ground between the parties that the application engages the Denton three stage process. Although it was held that a real prospect of successfully defending the claim existed, promptness and the application of the Denton test defeated the application to set aside.
Ince Gordon Dadds LLP v Mellitah Oil & Gas BV [2022] EWHC 997 (Ch) per Mr Hugh Sims QC at [4–9]. The Judge saw “no reason why a different and perhaps less strict approach should apply to applications to set aside default judgments than other types of default which may be no less terminal for the defaulting party.”
He read the Court of Appeal’s decision in Regione as being ‘based on a conclusion that the rules have to be read in accordance with the overriding objective’ and held that applying both r.13.3 and Denton to applications to set aside regular default judgments was consistent with the overriding objective.
C v Richmond Borough Council [2022] 5 WLUK 99 per Dexter Dias QC – the Claimant’s anonymity is protected by Court Order and the Judgment transcript has not yet been released; a summary is available here and on Westlaw UK using the WLUK citation.
The Judge considered the competing lines of authority, held that the Court of Appeal dicta in Regione and Gentry were obiter, and preferred the approach adopted in Cunico to that taken in Ince – the latter being non-binding albeit persuasive, and not being followed in this case.
The reasoning in Matthews was applied. The Judge held that it could not have been intended an applicant would have to satisfy the additional and different requirements of the Denton test or, in other words, that if the requirements of r.13.3 were satisfied, the application could nevertheless be refused on grounds not set out in that rule, save for the operation of the overriding objective.
Discussion
Whilst there has been argument at both the High Court and the Court of Appeal, none of the Court of Appeal Judgments have invariably been considered at High Court level to be binding. Two areas of disagreement have arisen. Firstly, there is the question of whether a default judgment is indeed a sanction from which relief is to be sought, or whether instead the machinery of CPR 12 and 13 operate discretely, such that it is unhelpful to conflate default judgment with a sanction to which CPR r.3.9 applies.
The latter was the view taken in Cunico and C v Richmond BC. In the second of those cases, the Judge held that a default judgment under Part 12 carried with it the availability of an order under Part 13 setting such judgment aside and to that extent was a self-contained procedure.
The Judge in Ince was not persuaded that the approach of Andrew Baker J at [39] in Cunico was correct, and concluded at [7] that, “simply because the sanction under CPR 12 comes with the bespoke ability to apply to have it set aside under CPR 13.3, it does not necessarily follow that it is not an application for relief from sanction.”
The Judge in Redbourn considered that there was ‘no greater sanction’ than a default judgment and ‘no more important relief from sanction than being allowed to set aside that judgment’.
The second issue is whether the Court of Appeal’s dicta heretofore were obiter or binding; the Judges in Cunico and C v Richmond BC considered them to be obiter.
By contrast, the Judge in Ince at [5] had ‘hesitation in concluding that what was said by Christopher Clarke LJ in Regione Piemonte can necessarily said to be obiter.’ He gave an analysis at [6] as to the reasoning in Regione at [126] arguably resting on the assumption that Denton did apply to an application under r.13.3. He stated that he thought the Court of Appeal dicta were ‘likely to be binding on me’.
The Judge in Mid-East Sales also considered the Court of Appeal cases to be authorities.
Conclusion
The answer to the question remains unsettled at common law. What is clear is that, if it is held to be necessary, any application of Denton would follow express consideration of CPR r.13.3 itself; the cases which have applied both tests have done so in that sequence – r.13.3, then Denton.
Unless and until the question is given treatment explicitly as part of the ratio decidendi in a Court of Appeal judgment, there will continue to be a school of thought which treats as obiter dicta the previous indications from that Court, and Judicial approach will continue to vary.