In Core-Export Spa -v- Yang Ming Marine Transportation Corp [2020] EWHC 425 (Comm) HHJ Pelling QC (sitting as a High Court Judge) refused an application to set aside a default judgment.  The defendant had an arguable defence, however its history of delay prior to issue,  the absence of any good reason for the failure to respond to proceedings, coupled with the delay in making the application, weighed against setting aside the regular judgment.  The judgment also emphasises the need to be “prompt” when making an application to set aside judgment. In this case a delay of 23 days was found not to be prompt.


“In the circumstances, the existence of a realistically arguable defence is clearly outweighed by the history of delay, inaction, and non-engagement that is regrettably a feature of the way in which this litigation has been conducted and the pre-litigation interchanges as well.”


The claimant issued proceedings against two defendants on a cargo claim with a value of about £25,000. The second defendant did not file an acknowledgement of service. The claimant entered judgment in default and informed the second defendant of this on the 30th September 2019. The second defendant made an application to set aside that judgment on the 23rd October 2019.


Applications to set aside judgment are dealt with under CPR 13.3 and with a consideration of the Denton principles.

“The applicable principles are not in serious dispute. Under CPR 13.3, the defendant applying to set aside the judgment must show that it has a real prospect of successfully defending the claim and in deciding whether to set aside the judgment, the court must have regard to whether the person seeking to set aside the
judgment made the application to do so promptly.
2 It is common ground between the parties that the application engages the Denton three stage process, which involves the court deciding (a) whether the failure which gave rise to the judgment was serious or significant, (b) whether there was a good reason for the default or failure and (c) whether, in all the circumstances of the case, the default judgment ought to be set aside. The defendant maintains that it has a real prospect of defending the claim because
it is plain, or at least realistically arguable, that the second defendant was not the correct defendant and because, it has a real prospect of defending the claim on its merits. “


The judge  found that there were issues that could give rise to an arguable defence. However he went on to consider the question of promptness.  There had been a history of the second defendant failing to reply to correspondence prior to issue.

“It is next necessary to consider whether the application to set aside has been made promptly. In my judgment, this issue and the further issues concerning the correct application of the Denton criteria create significant issues in the way of the second defendant. In my judgment, in deciding whether the application has been made promptly, it is necessary to view the speed with which the application has been made in the context of what has gone before. What may be prompt where there is no history of earlier delay may not be so if there has been such delay – see Regency Rolls Limited & Anor v Carnall [2010] WLUK [2017] EWHC 1223 (TCC) at [69].
9 The delay between the second defendant being notified of the judgment on 30 September 2019 and the application that I am now considering being issued on 23 October 2019 was 23 days. That of itself is not prompt. The only explanation offered is that there was a need to investigate the claim. The background to this is instructive. The claim was first presented to the defendants as long ago as 30 January 2019. Unless the claim was simply ignored from that point until judgment was entered, the second defendant had the opportunity to investigate what on any view is an apparently straight forward claim for 9 months.
10 There were repeated chasing emails through March and all the way to mid-June 2019 with no response being received from either defendant. A request to extend the limitation period was ignored and it was ignored when it was repeated after solicitors became involved and was ignored until 2 August 2019 when the defendants, or at least the first defendant on behalf of the defendants, declined to extend limitation. This led to the issue of the claim form on 5 August 2019. It was sent to the defendants informally but was ignored by the defendants until, in the end, the claim was served on 28 August 2019. The claim continued to be ignored, it is regrettable to say, and ultimately it was that which led to the default judgment. Delay of this sort is frequently encountered in low value cargo claims, perhaps in the hope by the defendant that if it is ignored it will not be pressed particularly as costs increase. This is conduct that ought to be discouraged.”

The judge found that, against that background, the application to set aside judgment had not been made promptly.


The judge went on to consider the Denton criteria.  He found that this was a serious default.

“I now turn to the Denton criteria. It is obvious, in my judgment, that the failure to acknowledge service was, in the circumstances, both serious and significant and the delay in issuing the application equally so. The failure to acknowledge service was serious in itself because both the Commercial Court and the Circuit Commercial Court Guides require that acknowledgement of service be filed in all cases and in all circumstances. It was all the more serious and significant in the circumstances of this case given what had happened prior to the issue of proceedings and thereafter as described in the quoted parts of the witness statement referred to earlier.”


The judge was not impressed with the second defendant’s explanation for the default.

“There was and is no good reason offered for this failure. The best that the claimants can offer is what is set out in paragraphs 14 to 15 of the witness statement of Mr Dominic Mills,a barrister employed by Gateley PLC, who says the following:
“The judgment in default was entered on 19 September 2019 and
communicated to the second defendant on 30 September 2019. Until that
time, the claimants had been dealing exclusively with the first defendant.
Accordingly, the second defendant believed when it received the claim form
that was served on it on 30 August 2019 that the first defendant would
attend to the matter while the first defendant was not, in fact, aware that
proceedings had been served. This is offered by way of an explanation for
the failure to file an acknowledgement of service even if it does not amount
to a justification.”
16 It is plainly not a good reason and, on the contrary, is equally plainly a bad reason. It is a bad reason because there is nothing within the evidence from which I quoted which justifies the conclusion by the second defendant that it was entitled to assume that the claim was being dealt with by the first defendant. The first and second defendants are both companies within the same group. If there had been communication that supported the supposed belief then it is to be expected that it would be deployed in a statement of this kind. The fact that this very carefully worded statement does not allude to any communication of any sort
between the first and second defendants merely serves to emphasise the absence of any good reason for what had happened. |As things stand, what is described as a “belief” is at best an assumption.”


The judge considered the final factor in Denton and concluded that the defendant should not be granted relief.
“That brings me therefore to the final issue which arises when applying the Denton criteria, namely whether, in all the circumstances, the judgment should be set aside and the time for acknowledging service extended. This obviously requires a balance to be struck between the various different considerations, each of which I have referred to earlier in this judgment. First, as I have said, the second defendant has shown that it has a realistically arguable defence to the claim based at least on the question of whether or not it was a party to the relevant contract at all. However, that in itself is a relatively weak point when weighed with the other relevant considerations each of which I have already identified at some length in this judgment. They are, in summary, that the second defendant has deliberately failed to
engage in resolving a low value claim by negotiation prior to the issue of the claim or indicate that the case could not be settled so that the claimant could understand the second defendant’s position, notwithstanding numerous chasers. The second defendant continued with that approach both after the issue of proceedings, when informed that proceedings had been issued and after proceedings have been served. I am satisfied that in those circumstances, the true cause of the application being issued was the threat to issue an application for the assessment of damages and that but for that, matters would have been allowed to drift still further.
18 I am required to have particular regard to the failure to comply with rules, directions, and orders. As I have already said, the Circuit Commercial Court Guide requires acknowledgements of service to be filed in all cases. There is no good excuse for why that was not complied with in the circumstances of this case. I am also required to have regard to the need for the efficient disposal of proceedings. Inevitably, that involves a consideration of the fact that this claim is a relatively low value claim as well as the use of court resources and the inconvenience to others caused by the failure by the second defendant to engage with the process.
19 In my judgment these factors point towards refusing to set aside the judgment. In the circumstances, the existence of a realistically arguable defence is clearly outweighed by the history of delay, inaction, and non-engagement that is regrettably a feature of the way in which this litigation has been conducted and the pre-litigation interchanges as well. Although, as I have said, I am satisfied that the second defendant has a realistically arguable defence, in particular, based upon the true parties to the contract, that cannot trump the other factors since otherwise, the purpose of approaching applications of this sort using the Denton criteria would be defeated and it would amount to a failure properly to address the requirement for applications to be made promptly as well.
20 In those circumstances, I conclude that this application was not made promptly having regard to what had gone before and applying the Denton criteria, that the failure which led to the default judgment being entered was serious and significant in circumstances, there was no good reason for it and in all the circumstances setting aside the judgment is inappropriate having regard to all the various factors to which I have referred and which I am required to have regard. This is all compounded by the fact that the application was not made promptly. In cases of this sort, there is a pressing necessity for all parties to engage
quickly and effectively because the costs generated by them will far outstrip the value of the claim.
21 In those circumstances, I refuse the application”