COVID REPEATS 48: REPLIES AND DEFENCE TO COUNTERCLAIM: A PRIMER
Today we are taking a look back at what turned out to be the second most read post on this blog in 2016. The basic rules about when to file a Reply and, more importantly, a defence to counterclaim.
If the Defence does not contain a counterclaim a Reply is not mandatory. There is no guidance in the rules relating to when and whether to file a Reply.
THE RULES RELATING TO A REPLY
“Reply to defence
15.8 If a claimant files a reply to the defence, the claimant must
(a) file the reply with a directions questionnaire; and
(b) serve the reply on the other parties at the same time as it is filed.
(Rule 26.3(1) and (6) requires the parties to file directions questionnaires and specifies the period for doing so).
(Part 22 requires a reply to be verified by a statement of truth)”
Reply to defence
(1) A claimant who does not file a reply to the defence shall not be taken to admit the matters raised in the defence.
(2) A claimant who –
(a) files a reply to a defence; but
(b) fails to deal with a matter raised in the defence, shall be taken to require that matter to be proved.
(Part 22 requires a reply to be verified by a statement of truth)
A DEFENCE TO COUNTERCLAIM
If the Defence contains a counterclaim, however, then a Defence to the Counterclaim is mandatory. A failure to file a Defence to the counterclaim gives the Defendant a right to apply for judgment in default. As we have seen recently there is no guarantee that a court will exercise its discretion to set the default judgment aside.
THE RULES RELATING TO DEFENCE TO COUNTERCLAIM
The rules here are more complex.
Defendant’s counterclaim against the claimant
(1) A defendant may make a counterclaim against a claimant by filing particulars of the counterclaim.
(2) A defendant may make a counterclaim against a claimant –
(a) without the court’s permission if he files it with his defence; or
(b) at any other time with the court’s permission.
(Part 15 makes provision for a defence to a claim and applies to a defence to a counterclaim by virtue of rule 20.3).
(3) Part 10 (acknowledgment of service) does not apply to a claimant who wishes to defend a counterclaim.
THE OBLIGATION TO FILE A DEFENCE TO THE COUNTERCLAIM
CPR 20.3 states
(1) An additional claim shall be treated as if it were a claim for the purposes of these Rules, except as provided by this Part.”
Significantly 20.3(3) states
“(3) Part 12 (default judgment) applies to a counterclaim but not to other additional claims.”
So Part 12 (default judgment) applies to counterclaims.
TIME FOR SERVICE OF THE DEFENCE TO COUNTERCLAIM
A party filing a Defence to a Counterclaim is under more pressure than the original defendant. There is no acknowledgment of service stage. The Defence to Counterclaim must be served within 14 days of service of the Counterclaim (20.3.3).
Further it is clear from the judgment of Master Matthews in Muhammad -v- ARY Properties Limited EWHC 1698 (Ch) that a Defence to Counterclaim is not a formality and a full and detailed Defence to the points made in the Counterclaim is required.
Further there are examples where a defendant has entered judgment in default on a counterclaim and the court has refused to set aside that default judgment, even when there was an arguable defence. See the judgment of Master Matthews in Goldcrest Distribution Ltd -v- McCole  EWHC 1571 (Ch) where the claimant’s application failed, essentially, because of the Denton criteria.
OTHER POINTS ABOUT THE REPLY AND DEFENCE TO COUNTERCLAIM
Practice Direction 15 contains important provisions about the nature of a Reply and Defence to Counterclaim.
- A Reply and Defence to Counterclaim should normally form one document.
- There are different time limits for the filing of a Reply and the Defence to Counterclaim. Consequently the court will normally order that the Reply and Defence to Counterclaim be filed at the same time.
- However a defendant cannot rely on a court making such an order. Where the court does make an order the Reply and Defence to Counterclaim can form separate documents.