Applying to set aside a default judgment is not an application for relief from sanctions (PXC v AB College and anor)

11 Apr 2023

Dispute Resolution analysis: This decision has highlighted, without comprehensively resolving, a schism which has arisen in the authorities about whether the Denton principles are relevant to an application under CPR Part 13 to set aside a default judgment. This judgment expresses the view that the principles are not applicable, however, until the question is subject to a binding decision of the Court of Appeal, the debate is likely to continue.

PXC v AB College and anor [2022] EWHC 3571 (KB)

What are the practical implications of this case?

The most significant practical implications of this judgment concern its analysis of the relationship between the Denton principles applicable to applications for relief from sanctions under CPR, r.3.9 and the principles applicable to applications to set aside a default judgment. This case highlighted the extent to which two different camps had emerged in the authorities. The first camp, represented by a number of decisions of the Court of Appeal, such as Regione Piemonte v Dexia Credop SpA [2014] EWCA Civ 1298, concluded that an application under Part 13 was an application for the relief of any sanction (and the Denton principles therefore applied). These authorities had been followed at first instance in Ince Gordon Dadds LLP v Mellitah Oil and Gas BV [2022] EWHC 997 (Ch). The second camp, comprising the decision of Andrew Baker J in Cunico Resources NV v Daskalakis [2018] EWHC 3382 (Comm) and the decision of the Privy Council in Attorney General of Trinidad and Tobago v Matthews [2011] UKPC 38 (applying similar procedural rules in Trinidad), took the view that the Denton principles did not apply. The Court in this case favoured the second camp, reasoning that the Court of Appeal decisions were, on this point, obiter and that it was not bound to follow the decision in Ince, being a decision of the same judicial level, which it found to be unpersuasive. The Court concluded at [32] and [33]:

I have concluded that PXC’s case is not a relief from sanctions case. Why? Most obviously because there is no reference to CPR 3.9 in Part 13. But also because there is an existential question about the nature and function of a regime under Part 13.3. I judge that the purpose of Part 13.3 is to promote justice. That is its goal. More acutely, as the White Book says at 13.3.1: “to avoid injustice.” What does that mean? It should surely include, where possible, that the “right” or “just” result is reached. That is, that a party which is liable in law is held liable in law; that a party that is not liable in law, because it never had a duty to the claimant, is not held liable. A default judgment, unless disturbed, is terminatory on liability. A defaulting defendant carries the weight of such judgment, whether objectively liable or not. If such defendant is not actually liable, it can seek to set aside that judgment. It can avoid that ‘injustice’. There are three steps to such rebalancing of the scales. First, it must demonstrate for CPR 13.3 purposes that it has a real prospect of succeeding in its ambition of defending the claim. Second, it must persuade the court that, weighing all the factors, including the character and extent of the delay and its impact on the claimant/respondent, the court’s discretion should be exercised in favour of set aside. Third, lest it be forgotten, even if granted the set aside desired, it must still prevail at trial. It may or may not.

I take the policy of Part 13 to avoid injustice as an expression of the overriding objective requirement to deal with the case justly and fairly. Fairly includes ensuring the rights of parties are respected procedurally; justly includes substantive justice, that someone who is not legally ‘responsible’ is not held legally responsible. How does it accomplish this objective?

What was the background?

The Claimant in this matter, granted anonymity and referred to in the judgment as “PXC” is a relatively young man with a young family who is terminally ill with mesothelioma. PXC issued proceedings against his former school (the identity of which was also protected to avoid jigsaw disclosure of the identity of PXC) and the London Borough of Richmond upon Thames (the “Council”) for personal injury arising out of his exposure to asbestos which allegedly caused his mesothelioma. Due to his age and the successful business he had set up, the sums claimed are large for a claim of this sort, being in excess of £6 million. Default judgment was obtained against the Council and a hearing was listed for the assessment of damages to be awarded to PXC. Prior to that hearing, the Council applied to set aside the default judgment and for an adjournment of the hearing for the assessment of damages. It was conceded on the part of the Council that it had failed to act promptly in applying to set aside the default judgment and was unable to advance any good reason why it had failed to act promptly. The Council, nevertheless, strongly argued, and adduced contemporaneous evidence in support of the proposition that, at the material times, it did not own, occupy, manage or control the ice rink at which PXC alleged that the exposure to asbestos had occurred. This judgment considered those two applications.

What did the court decide?

The Court, with expressed reluctance, set aside the default judgment. That ruling necessarily required the adjournment of the hearing for the assessment of damages and the giving of directions for the claim against the Council to proceed to trial. The Court was satisfied that the evidence adduced by the Council all pointed to the conclusion that the Council did not own, occupy, manage or control the ice rink. The only evidence to the contrary was the unsupported assertion made by PXC that it did. There was, therefore, a realistic proposition that the Council enjoyed a viable defence to the claim which it should be entitled to raise at trial. Whilst it was true that the Council had failed, without good reason, to apply promptly to set aside the default judgment and the Court considered this to be a mandatory and important factor in weighing its discretion, the appropriate disposal overall was that the default judgment should be set aside. This was so, even though it meant as a likely consequence that PXC would die before the matter came to trial. The Court noted the fairly slim prospects of the Council obtaining an insurance pay-out in respect of the claim and the likelihood that the damages would be borne by the Council taxpayers of the London Borough. It is noteworthy that, despite the significant views expressed in the judgment and analysed above about the relationship of the Denton principles to applications to set aside default judgments, it appears that the disposal would have been the same even if the Denton principles had been applied.

Case details

  • Court: High Court of Justice, Queen’s Bench Division
  • Judge: Dexter Dias KC (sitting as a Deputy High Court Judge)
  • Date of judgment: 6 May 2022

Article by Phillip Patterson – first published by LexisNexis


Phillip Patterson

Call: 2008


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