What is a Default Judgment?
A default judgment is where the court issues a judgment against a Defendant without the merits of the claim being heard and without a response from the Defendant.
A Claimant can apply for a default judgment where the Defendant fails to file an acknowledgment of service within 14 days, or if an acknowledgment of service has been filed the Defendant has not filed a defence on time.
Once a default judgment has been obtained, the Claimant can take enforcement action to recover the judgment sum by, for example, instructing bailiffs, applying for an attachment of earnings order or obtaining a charging order over the Defendant’s home.
Usually a Defendant only realises that they have a default judgment when they check their credit history, or they have applied for credit and are refused.
The usual reason for the creditor or debt purchaser obtaining default judgment is that the Defendant didn’t receive the claim form, was unaware that a claim had been issued and so was unable to respond to the court. Then subsequently the Defendant didn’t receive the judgment and was therefore unable to pay it in the 30 days allowed before it is registered on their credit record.
How is the default judgment set aside?
An application to set aside a default judgment is made using the Court Form N244 (application notice), which is available from the court’s website https://www.justice.gov.uk/courts/procedure-rules/civil/rules
There is a court fee payable of £255.00 for the application, unless both parties consent to the application before it is made in which case the court fee is reduced to £100.00. The application must be made promptly and should be supported by a witness statement providing an explanation why the Defendant did not respond to the claim form and whether you are likely to have a good defence to the claim.
There are two ways a default judgment can be set aside. If the default judgment has been wrongly entered, under Rule 13.2 of the Civil Procedure Rules the court must set aside the judgment.
If the default judgment has been entered correctly, i.e served at the correct address or last known address of the Defendant then under Rule 13.3 of the Civil Procedure Rules the court has discretion to set aside the judgment, providing certain criteria have been satisfied.
Mandatory set aside of a default judgment
If the Claimant makes an application for a default judgment on the basis that no acknowledgment of service or defence has been filed within the required time periods and this is wrong, the court must under CPR 13.2 set aside the default judgment. This is the case even if there is no defence on the merits.
Discretionary set aside of a default judgment
The court may exercise its discretion to set aside a default judgment in the following circumstances:
- 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.
To succeed on the ground that a Defendant has a ‘real prospect of successfully defending the claim’ the Defendant must have more than an arguable defence and the defence cannot be fanciful, false, or make-believe.
Even if the Defendant does not have a defence with a real prospect of success, the court can exercise its discretion and set aside the judgment if it considers that there is a good reason to. A good reason may be the value or seriousness of the claim or the claimant has not provided sufficient evidence to support its claim at the hearing of the set aside application.
Another reason is that the claim form had not been received within the time limits to respond to it. There are a number of reasons why the Defendant may not have received the claim form.
- The claim form was sent by the court to an address the defendant is no longer living at. If this was the last address known to the claimant, the judgment will be valid unless the Claimant had reason to believe the Defendant had moved.
- The claim form was sent by the court to the correct address but arrived at a time when the Defendant was away on a long holiday or working abroad.
- The claim form was sent by the court to the correct address, but it was, for example, a block of flats with a communal hall where the post for all flats is left.
In exercising its discretion, the court will consider how promptly the Defendant made the application to set aside. This normally means no later than 28 days from finding out about the default judgment. Undue delay can mean the court decides not to exercise its discretion in favour of the Defendant.
If the application is made under the mandatory ground of CPR 13.2 and succeeds, then the Claimant would normally be ordered to pay most of the Defendants costs. If the application doesn’t succeed, then it is likely that the Defendant will be ordered to pay the Claimant’s costs.
If the application is made under the discretionary ground of CPR 13.3 and succeeds the court may order the Defendant to pay costs because the Claimant had been entitled to obtain default judgment. However, the Claimant may be ordered to pay the Defendant’s costs if the court considers that it was unreasonable in defending the application.
It is sensible to see if the Claimant will agree to the set aside of the default judgment by consent, rather than have a contested hearing. If the claimant consents to the judgment beings set aside, both parties can sign a court document known as a consent order. The court still has the discretion whether to agree to the set side of the default judgment, but a consent order makes it more likely. The consent order can be filed at court before or after the application to set aside judgment has been made. Claimants will normally wait to see if you will make the application before agreeing to a set aside.
What happens next if Default Judgment is Set Aside?
If the judge grants an order to set aside a default judgment it is likely directions will be given for the claim to progress to trial.
What happens next if Default Judgment is not Set Aside?
If the judge refuses to to set aside the default judgment, the Claimant will be able to proceed with enforcement of the judgment.
A Defendant only realistically has the one opportunity to apply to set side the default judgment. If the application fails, there is the possibility of an appeal but if the initial application is weak that would be unlikely to succeed unless there was new evidence not available at the time.
It is therefore important to obtain legal advice promptly if you have received a default judgment.