The question of whether CPR 3.9 and the Mitchell criteria apply to applications to have judgment set aside is an issue that has been considered several times on this blog. In a decision yesterday Newland -v- Trading FZC (& other) [2014] EWHC 1986 (Comm) Mr Justice Males was clear that CPR 3.9 applies to applications under  CPR 13.3.


The application was by the Third Defendant to set aside a default judgment for US $6,605,673. It was conceded that the application had to be heard under CPR 13.3. The defendant had to show that they had a real prospect of successfully defending the claim and the court has to have regard to whether the application had been made promptly.


  1. Further, at least at first instance, it is established (and was common ground before me) that an application to set aside a default judgment pursuant to CPR 13.3 is an application for relief against sanctions: see Samara v MBI & Partners UK Ltd [2014] EWHC 563 (QB) (Silber J); and Mid-East Sales Ltd v United Engineering & Trading Company (PVT) Ltd [2014] EWHC 1457 (Comm) (Burton J). The analysis here is that CPR 10.3 requires a defendant served with a claim form to file an acknowledgement of service within a specified period and that CPR 10.2 provides, as a sanction, that if the defendant fails to do so the claimant may enter judgment.
  1. CPR 3.9(1) provides that:

“On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need—

(a) for litigation to be conducted efficiently and at proportionate cost; and

(b) to enforce compliance with rules, practice directions and orders.”

  1. As is now well known, CPR 3.9 must be applied in accordance with the guidance set out in  Mitchell  v News Group Newspapers Ltd [2013] EWCA Civ 1537[2014] 1 WLR 795, delivered on 27 November 2013 two weeks after Field J ordered that judgment be entered against Mr Rahbarian in this case. As Mr Alan Maclean QC who represented the claimant observed, that judgment went round the English legal profession like wildfire. It is possible, however, that its full implications were not pored over with the same intensity in Iran where Mr Rahbarian resides, he being at that time unrepresented in this action.

7.  Mitchell  has, to say the least, proved to be a controversial decision, but until it is reversed or modified by a higher court it is binding on first instance judges. The guidance which it contains has now been considered (I was told) in over 40 reserved judgments available on the internet. This, I suppose, will make one more.”


The judge considered the general guidance given by the Court of Appeal but also considered the relevance of being able to impose conditions when a judgment was being set aside.

  1. In addition to this general guidance which applies to relief against sanctions for any kind of failure to comply with rules or court orders, CPR 13.3 cross-refers to CPR 3.1(3), thereby drawing attention to the court’s power to attach conditions to any order which it may make to set aside a judgment. That indicates, to my mind, that when considering the exercise of discretion under CPR 13.3, the court should bear in mind that the entry of a default judgment may operate as an extreme sanction and that justice may be done by making the setting aside of such a judgment subject to conditions, for example as to the provision of security for some or all of the claim. That may represent a more proportionate sanction, requiring a defendant who has hitherto ignored the proceedings to demonstrate his commitment to them by, as it were, putting some of his money where his mouth is. But as ever, what is appropriate will always depend on the particular circumstances of the case.


  • The judge found that the defendant’s failure to acknowledge service was a deliberate decision. The defendant’s failure was not trivial and there was no good reason for it.
  • The application to have judgment set aside was not made promptly

The judge then considered the principle that there is a “usual expectation that the sanction will apply.

  1. Having found that the non-compliance was not trivial, that there was no good reason for it, and that there has been some (albeit limited) delay in making this application, I must next consider the “expectation” that the sanction will apply on the ground that the need to conduct litigation efficiently and at proportionate cost, and to enforce compliance with the rules, will “usually trump other circumstances”. However, the weight to be attached to that expectation must depend not only on the nature of the non-compliance with the rules, but also on the nature of the sanction and the impact of the non-compliance on the action as a whole. It remains the case that the sanction must be proportionate to the non-compliance and its consequences.
  1. The sanctions with which CPR 3.9 is concerned may vary widely in their effect. In  Mitchell  itself the relevant sanction, contained in CPR 3.14 (which applied in that case not directly but by analogy), was that the claimant could not recover his costs even if he was successful in the action. That was no doubt a grievous blow to the claimant (or more likely in practice, his solicitors) but did not necessarily mean that the action could not proceed. In Chartwell the relevant sanction was that witness statements could not be served which, on the facts of that case (though not in every case), would have meant the end of the action. That was a factor which Davis LJ at [50] expressly held that the judge was entitled to take into account. So here. If the judgment stands, that is by definition the end of the case against Mr Rahbarian. The sanction in play here can therefore be regarded as an extreme one.
  1. Of course, it may be said that this is the very sanction provided by the Rules for failure to acknowledge service as the claimant is then entitled to enter a default judgment. I see the force of that point, although the Rules also provide that such a judgment is liable to be set aside pursuant to the exercise of the court’s discretion under CPR 13.3, a specific provision dealing with this situation in addition to the court’s general power to grant relief from sanctions contained in CPR 3.9. It is, therefore, not a complete answer to the point that the sanction of judgment in default is an extreme sanction to say that it is the sanction for which the Rules provide.
  1. As for the effect of the non-compliance on the overall conduct of the action, as noted above there should be no difficulty in aligning the claim against Mr Rahbarian with that against Mr Taheri. That the trial date would not be lost if relief against sanctions were granted and that a fair trial could still be had without significant extra cost were regarded as relevant considerations in Chartwell (see [50] of Davis LJ’s judgment). That reasoning also applies here, with greater force as the proceedings against Mr Taheri are not well advanced and no trial date has been set for the claim against him.


  1. Moreover, by its express reference to the court’s power to impose conditions, CPR 13.3 invites the court to take account of the possibility that a conditional order may be appropriate. No doubt the conditions which may be appropriate may vary widely from case to case, although one obvious possibility is to require the defendant to provide security for some or all of the claimant’s claim. That will often be appropriate, particularly in a case where the defendant’s merits are thin, where a judgment may be difficult to enforce, or where there is some reason to suppose that the defendant has failed to comply with his obligations in the past, for example by failing to pay his solicitors’ fees.
  1. As the possibility that conditions may be attached to any order setting aside a judgment pursuant to CPR 13.3 is expressly referred to in the Rule, and as a condition that security be provided is an obvious candidate, it is incumbent on a defendant who seeks to contend that he could not comply with such a condition, which condition would therefore have the effect of stifling any defence, to provide convincing evidence to that effect. In the absence of such evidence the court is entitled to proceed on the basis that the defendant would be able to comply with such a condition. It would not be fair for the defendant to wait and see whether the court is minded to impose conditions, and only then to contend that he is unable to provide security. If faced with the stark choice between setting the judgment aside unconditionally and allowing it to stand, the court may decide, particularly in the case of a deliberate and material non-compliance, that the latter course is preferable.
  1. In the present case Mr Ferrer had no instructions to offer any conditions, but there was no evidence to suggest that Mr Rahbarian would be unable to comply with any reasonably foreseeable conditions which I might impose. Accordingly I proceed on the basis that he would be able to do so.


The judge set judgment aside, but only on the basis of very strict conditions.  In particular paying into court $4.75 million and payment of outstanding costs and the  costs of the application.

  1. Drawing the threads together, I take into account the fact that the non-compliance in this case was non-trivial and deliberate, that Mr Rahbarian has been guilty of some delay in making this application, and that although I have held that he has a prospect of defending the claim successfully, that is at best a borderline decision so far as liability is concerned. On the other hand, the claim against him involves serious allegations of dishonesty, to maintain the judgment in default deprives him of any prospect of vindicating his defence and clearing his name, and importantly the judgment may well be for an excessive sum to which the claimant is not fully entitled. Setting the judgment aside will have no real adverse impact on the overall progress of the action in circumstances where the claimant is proceeding against the second defendant but that claim is not well advanced and no trial date has been fixed.
  1. In all these circumstances I consider that this is a case where the “usual expectation” referred to in  Mitchell  should not apply and that justice is best served not by dismissing this application (as the claimant urged) but by the making of a conditional order. The conditions which I propose to impose will ensure that the claimant is secured, at any rate for its claim for the value of the “TETI” cargo and that the costs orders made in its favour so far are satisfied.
  1. Accordingly the default judgement against Mr Rahbarian will be set aside provided that:


(1) within 28 days from the date of this judgment, he pays into court the sum of US $4.75 million or otherwise provides security in that sum to the reasonable satisfaction of the claimant’s solicitors;

(2) within 21 days from the date of this judgment, he makes payment of any outstanding unpaid costs ordered to be paid by him pursuant to the order of Hamblen J; and

(3) within 21 days from the date of any order for costs made on this application, he pays to the claimant any costs of this application which I may order him to pay.

  1. If any of these conditions is not complied with within the time specified, the default judgment will stand.|


  1. Finally, I should mention that I was told by counsel that the Court of Appeal is currently hearing some conjoined cases in which the  Mitchell  guidance is due to be considered further. Neither party requested me to defer delivery of this judgment until after the Court of Appeal has given judgment in those cases. There is, therefore, a risk that the legal framework by which I have determined this application may be, if not dismantled, at least reassembled in the near future, but that is a risk which the parties have agreed to take.


We have had not a number of cases where the defendant’s delay has been lengthy (and far from trivial); where the breach has been deliberate and where there has been no good reason for the default. Despite all of this judgment has been set aside. It is difficult to imagine such relative leniency being applied in other areas of procedure.