The judgment of Master Kaye in  Penta Ultimate Holdings Ltd & Anor v Storrier [2020] EWHC 2400 (Ch) is a reminder that a party attempting to set aside a regular judgment has two hurdles to clear: the test set out in CPR Part 13 and then the Denton criteria.  As the judgment observes there are examples of an applicant succeeding on the first but failing on the second.


The claimant had obtained a judgment against the claimant in default of defence. The claimant applied to set aside that judgment and for specific disclosure.


The judgment at this part has a useful “cut out and keep” summary of the relevant principles considered by the court when an application is made to set aside a regular judgment.

Legal Principles
    1. The starting point on an application to set aside a judgment is CPR Part 13. Unless the judgment was wrongly entered such that the court must set it aside CPR13.3 provides a discretion to the court to set aside or vary a judgment in default:

“13.3 (1) In any other case, the court may set aside or vary a judgment entered under Part 12 if –

(a) the defendant has a real prospect of successfully defending the claim; or

(b) it appears to the court that there is some other good reason why –

(i) the judgment should be set aside or varied; or

(ii) the defendant should be allowed to defend the claim.

(2) In considering whether to set aside or vary a judgment entered under Part 12, the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly.

(Rule 3.1(3) provides that the court may attach conditions when it makes an order)”

    1. The Defendant therefore first needs to overcome the threshold test set out in CPR 13.3(1)(a) and (b), that there is a real prospect of successfully defending the claim or there is some other good reason why a judgment, validly obtained, should be set aside. Further pursuant to CPR 13.3.2 the Court must have regard to whether the application was made promptly.
    2. The test to be applied in respect of CPR13.3(1)(a) is broadly the same as the test for summary judgment save that the burden of proof reverses. Thus, I remind myself that in considering the application for summary judgement the court must consider whether the Defendant has a real prospect as opposed to a fanciful prospect of defending the claim. A realistic defence is one which carries some degree of conviction that is it is more than merely arguable. To reach that conclusion I must not conduct a mini trial. However, that does not mean the court must take at face value without analysis everything the Defendant says. I should take into account not only the evidence actually before me but also evidence that can reasonably be expected to be available at trial.
    3. CPR13.3(1)(b) is a free-standing alternative ground for setting aside default judgment. It has been held to be a broad test, Berezhovsky v Russian Television and Radio Broadcasting Co [2009] EWHC 1733 (QB).
    4. An application to set aside default judgment is recognised to be an application for relief from sanctions (Regione Piemonte v Dexia Crediop SpA [2014] EWCA 1298) and so also engages the three-stage test in Denton v TH White Ltd [2014] 1 WLR 3926 (“Denton“).
    5. In Gentry v Miller [2016] EWCA Civ 141 (“Gentry“), Vos LJ explained how the test in Denton should be applied to an application to set aside or vary a default judgment as follows:

24. The first questions that arise… in dealing with an application to set aside a judgment under CPR r 13.3 are the express requirements of that rule, namely whether the defendant has a real prospect of successfully defending the claim or whether there is some other reason why the judgment should be set aside, taking into account whether the person seeking to set aside the judgment made an application to do so promptly. Since the application is one for relief from sanctions, the tests in Denton’s case then come into play. The first test as to whether there was a serious or significant breach applies, not to the delay after the judgment was entered, but to the default in serving an acknowledgment that gave rise to the sanction of a default judgment in the first place. The second and third tests then follow, but the question of promptness in making the application arises both in considering the requirements of CPR r 13.3(2) and in considering all the circumstances under the third stage in Denton’s case.”

      1. Therefore, after considering whether the threshold test of CPR 13.3 is met, the Court should consider and apply the three-stage test in Denton in respect of which the factors in CPR 3.9 (1) should be given particular weight.
    1. CPR 3.9 provides:

“(1) 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.

(2) An application for relief must be supported by evidence.”

  1. It is at that stage that the court engages in the consideration of the exercise of its discretion. In doing so the court must have regard to the overriding objective and all the circumstances including the need to deal with cases justly and at proportionate cost. This includes considering the prejudice to both the Defendant if judgment is not set aside and the prejudice to the Claimant, who has a validly obtained default judgment if judgment is set aside.
  2. Mr Hext referred me to the recent decision of HHJ Pelling QC (sitting as a Judge of the High Court) in Core Export SpA v Yang Ming Marine Transportation Corp [2020] EWHC 425 (Comm) (“Core Export“) in which he applied the approach in Gentry. HHJ Pelling QC refused an application to set aside default judgment notwithstanding the fact that the defendant had a real prospect of successfully defending the claim. He found on the facts of that case, that the failure to file an acknowledgment of service was serious and significant, there was no good reason for it and in all the circumstances the existence of a realistically arguable defence was outweighed by the history of delay, inaction and non-engagement.
  3. Gentry sets out the approach to be adopted by the court on an application to set aside Judgment in Default. Core Export is an example of the application of that approach to the facts of a specific case. Each case will turn on its own specific facts. The exercise of the courts’ discretion is not confined or limited by fact specific authorities.
  4. The Court may attach conditions if it makes an order setting aside default judgment (CPR 13.3(1)(3)). The court’s discretion on the imposition of conditions derives from its general case management powers. It is broad and would include consideration of factors such as any delay in making the application, the Defendant’s conduct, affordability, and the overriding objective.
  5. Mr Hext suggests that in this context the approach of the court in the making of a conditional order under CPR 24 may be influential. Such an order may be made where it appears to the court that, in respect of some defence or issue, it is possible that the defence may succeed but it is improbable that it will do so. A conditional order would normally require the defendant to pay a sum of money into court. (CPR PD 24 paras 4 and 5.2).
  6. I consider the Defendant’s application against that legal framework.


There had been a delay of 15 days after service of the default judgment on the defendant before the application to set aside was made. The Master held that in these circumstances this was “prompt”.

  1. In considering the question of promptness a period of just over 2-weeks to issue a substantive application is in my view prompt in the context of the complex claim being raised against the Defendant and sufficiently prompt to meet the requirements of CPR 13.3(2).”


The Master held that the Defendant had shown that there was a potential defence that overcame the threshold test for setting aside default judgment.  There were serious issues to be tried on liability.



    1. The threshold test pursuant to CPR 13.3(1)(a) having been overcome I need to consider the three-stage test in Denton and then all the circumstances at which stage the free-standing good reason ground re-emerges.
Serious and Significant:
    1. Plainly a failure to serve a defence, particularly where it results in default judgment, is serious and significant. It is a failure to comply with a rule, it delays the progress of the claim, it takes up the time and resources of the parties and the court.
    1. The Defendant relies on his poor mental health and the lack of documents. Neither of these is a good reason for failing to file a defence on the facts of this case. The Defendant has simply buried his head in the sand. His evidence of his poor mental health is unsupported by any up to date evidence but even accepting it at face value it does not explain the failure to engage with his own insurers at an earlier stage that might have avoided the judgment in default. The absence of the provision of documents is no explanation at all for the failure to either file a defence or seek an extension of time in which to do so. At this stage, the court should be considering the reason for the breach for which relief from sanction is being sought. The breach is the failure to file the defence having filed an acknowledgment of service indicating an intention to defend. There is no good reason.
All the Circumstances:
  1. It is at this stage of the exercise that all the other factors are taken into account. This includes consideration of the overriding objective and the need to manage cases efficiently, fairly and at proportionate cost having regard to the complexity, importance, and value of the case. There are a number of competing factors to consider at this stage of the exercise.
  2. Many of the factors considered as part of the threshold stage come back into consideration at stage three of the Denton test which overlaps with the exercise of the court’s discretion pursuant to CPR13.3(1)(a) and (b).
  3. As part of the overall consideration the court needs to reconsider promptness in its broader context and not limited to the issuing of the application.
  4. Whilst for the reasons set out above, I am satisfied that the application to set aside judgment was itself prompt there is a broader consideration at this stage. I note that the draft defence was only provided shortly before the hearing which is further evidence of delay in progressing the defence.
  5. It is suggested by the Defendant that Covid-19 played a part in the delay because Mr Clarke’s witness statement was only served on 9 March 2020. I acknowledge that there was a national lockdown on 24 March 2020 which may at the margins provide some explanation for the draft defence and second witness statement only being served on 2 April. However, that appears to provide limited assistance to the Defendant overall since his solicitors had been instructed since October 2019.
  6. I need to factor into the balancing exercise the Defendant’s failure to engage after receipt of the letter of claim and the delays overall caused by his failure to engage with the dispute when he now seeks the indulgence of the court to let him back into the proceedings.
  7. Against that I balance the fact that the Claimants on their own case appear to have spent some 10-months on the rewrite of the 2017 Accounts with full access to all the documents before preparing a detailed letter of claim. However, the letter of claim did not provide any significant documents to support it when the Claimants knew that the Defendant did not have access to any documents.
  8. The Claimants were aware of the Defendant’s work-related stress issues in 2018 prior to his resignation so were, so far as they could be, on notice of a potential issue in relation to the Defendant’s mental health. I accept that they sought to encourage the Defendant to notify his insurers and that whilst they sought a quick response to the letter of claim did not in fact issue the claim until 3 months later. Mr Singla criticises the Claimants for not using the Professional Negligence pre-action protocol nor providing a copy of it to the Defendant but did not identify what difference it would have made to the Defendant’s pre-action conduct on the facts of this case.
  9. Despite having 6-months to do so the Defendant has not produced any substantive or current evidence to support his evidence that poor mental health was a factor in his non-engagement. Many litigants find litigation both stressful and distressing. It is not without more an explanation or excuse for non-engagement over an extended period of time.
  10. As I have identified above to my mind the Defendant is, to some extent, the author of his own misfortune. This is a case in which he received the letter of claim and the proceedings but simply did not respond in time. Although his mental health issues are prayed in aid the evidence supporting that is sparse and does not excuse his failure to engage over an extended period of time. He has been dilatory in engaging in this dispute and has caused the proceedings to become delayed and protracted and that is not consistent with the overriding objective.
  11. However, I do take into account that this is a negligence claim against a professional man and the issues of causation and loss will not be simple or straightforward. The fact that the court will have to engage with the evidence necessary for the Claimants to meet the challenge of proving causation and loss is an important factor in this application and in the consideration of the exercise of discretion. Further, it seems to me that the absence of access to documents has in my view impacted adversely on the Defendant’s ability to fully plead to the allegations against him.



The Master set aside the default judgment but imposed  a condition as to payment.

  1. However, it seems to me that the purpose of conditions in relation to an application to set aside judgment in default is not dissimilar to the purpose of conditions on a summary judgment application. It is a case management tool to enable the court to take a proportionate approach to, for example, a particularly weak aspect of a defence as well as in cases where there is evidence of failure to comply with court procedures. CPR 3.1(3) enables the court to impose conditions in accordance with the overriding objective for the purpose of conducting cases efficiently, justly, fairly and at proportionate cost. The court has regard to the overriding objective and its case management powers when considering the use of the courts’ resources.
  2. The Claimants made it clear on 25 March 2020 that they would seek to ask the court to impose conditions in the event that the court set aside judgment. This was, as I say a week before the Defendant filed his second witness statement and his draft defence. It cannot be said that the Defendant was not on notice of the Claimants’ intention to ask the court to impose conditions. Neither in that witness statement nor in correspondence thereafter did the Defendant’s legal team address the question of conditions.
  3. The court should not impose a condition on the Defendant which would have the effect of stifling his defence but the burden of satisfying me in relation to the suggestion that any condition would stifle the claim is on the Defendant. There are no hard and fast rules about the circumstances in which the court can impose conditions provided it does so in a manner consistent with the overriding objective.
  4. In this case, I have found that in relation to the Directors Loan Account the defence though arguable is improbable. The amount of the Directors Loan is a sum which the Defendant admits is due to the Claimants but argues is not repayable until 2027. I have found that the Defendant’s conduct was dilatory in relation to both his pre-action conduct and the proceedings albeit that I have accepted that the application to set aside judgment was itself made promptly. I have noted the continued delay in engaging fully with the claim with the late provision of the draft Defence, only a week before the hearing. These are all factors that weigh in the balance against the Defendant and in favour of the court imposing some condition on the Defendant both to provide a measure of security in relation to the improbable defence and to encourage efficient case management in the future.
  5. It is my intention therefore to direct that the Defendant pays into court as a condition of the Default Judgment on liability being set aside the total amount of the Directors Loan which is approximately £51,000. This is a relatively modest sum in the context of the claim as a whole and represents a sum which the Defendant accepts he will have to repay at some point. It therefore seems to me to meet the balance between imposing a condition, which for the reasons set out above seems to me to be a matter of good case management in this case, but setting it at a level which is reasonable and proportionate in the context of the claim as a whole.