DENTON PRINCIPLES DO NOT APPLY TO AN APPLICATION TO SET ASIDE A DEFAULT JUDGMENT: NO UNIVERSAL JUDICIAL VIEW HERE
There is a brief report on Lawtel of the case of C-v- D  WLUK 99 where Dexter Dias QC, sitting as a Deputy High Court judge, did not agree with the proposition that Denton principles applied to an application to set judgment aside. A summary is below and a case note, kindly provided by David Platt QC gives more detail immediately below.
The claimant brought an action for personal injuries. The third defendant failed to acknowledge service and the claimant entered judgment in default.
The judge set aside the default judgment. There had been unjustified delay, however the exercise of the power was not to be exercised to punish a party for incompetence but to further the overriding objective. The defendant had produced evidence to show that at the relevant it had no connection with the premises in question.
The judge did not accept that the Denton principles ran alongside the rules relating to setting aside default judgments. There had been suggested by the Court of Appeal in obiter dicta. There were conflicting first instance decisions on the point and the judge preferred the view that the Denton principles did not apply.
This approach to the Denton criteria applying contrasts with the decision in Ince Gordon Dadds LLP v Mellitah Oil & Gas BV  EWHC 997 (Ch), discussed here, where it was found that Denton principles were part of the factors to be considered in an application to set aside default judgment.
CASE NOTE PROVIDED BY DAVID PLATT QC
C. v. Richmond Borough Council
Case Note 12 May 2022
 5 WLUK 99
The High Court has recently delivered judgment in C. v Richmond Borough Council (6.5.22, Dexter Dias QC, sitting as a Deputy High Court Judge)
It considered two important questions in relation to applications to set aside judgment:
(1)What is the test which should be applied to applications under CPR 13.3 to set aside judgment? In simple terms, is it an application for relief from sanction, thus triggering the application of the Denton criteria?
(2)What approach should the Court take when faced with a possibly irrefutable defence weighed against excessive/inexplicable delay and
inaction on the part of the Defendant?
The Court held:
(1) An application under CPR r.13.3 to set aside a default judgment did not engage the regime for relief from sanctions and the three-stage test in Denton v TH White Ltd  1 W.L.R. 3926. The Court preferred the line of authority demonstrated by Cunico Resources NV v Daskalakis  1 W.L.R. 2881 and Attorney General of Trinidad and Tobago v Matthews  UKPC 38.
(2) The strength of the Defence outweighed the procedural defaults by the local authority when taken alongside the requirements of the overriding objective and the adverse impact on the Claimant. The claim was of very high value. The default judgment was therefore set aside to avoid injustice to the Defendant.
Richmond Borough Council applied to set aside a default judgment entered against it some 9 months previously. Damages remained to be assessed. If that application failed, the local authority applied to adjourn the assessment of damages listed for the same day. It wished to have permission to call evidence on quantum, including forensic accountancy expertise.
The claimant was in his late 40s and had been diagnosed with mesothelioma. He had brought a personal injury claim against a number of defendants alleging that they had been tortiously responsible for exposing him to asbestos dust. The proceedings against those other defendants had either not been continued or (in the case of one)been stayed.
The claim was for in excess of £6 million and thus very much at the higher end of mesothelioma claims. The claimant was relatively young and claimed to have been a successful entrepreneur. At the time of the application he remained alive.
He alleged that he had been employed part-time at Richmond Ice Rink when a teenager in the 1980s and that Richmond BC was therefore liable for his alleged exposure during that period. It was alleged that he was exposed to material quantities of asbestos arising from poorly lagged pipework (via both ambient and secondary exposure).
The local authority engaged with the claim pre-action, but subsequently and inexplicably failed to deal with the case after service of proceedings upon it in June 2021. It failed to instruct solicitors or inform its insurers until a week before the scheduled assessment of damages. Accordingly the Claimant obtained a default judgment against the local authority in July 2021. The local authority’s application
to set aside judgment was listed on the same day as the assessment of damages (i.e. 5 May 2022).
The local authority argued that, although there had been inexcusable and unexplained delay for the purposes of r.13.3(2), it had a real prospect of successfully defending the claim within r.13.3(1)(a) because it had not owned, occupied or managed Richmond Ice Rink. It had not employed him. It adduced evidence from publicly available sources to demonstrate that the Rink had been owned and operated
by a variety of private individuals and companies since the Great War. The Claimant had not adduced any positive evidence of ownership or occupation in his witness statement nor by way of documentary corroboration. Any prejudice to the Claimant could be mitigated by an adverse award of costs and/or (given his life expectancy)by evidence on commission.
The Claimant argued that the application was made too late, that the evidence of ownership was in no way conclusive, that the Claimant was prejudiced and that in order to succeed on its application to set aside the Defendant had to satisfy not only the requirements of r.13.3 but also to obtain relief from sanctions applying the three stage test in Denton v TH White Ltd   1 W.L.R. 3926.
The application to set aside judgment was granted.
1. The Relevant Test
There were parallel lines of authority considering whether an application to set aside default judgment was an application for relief from sanction.
The Court preferred that line of authority represented by Andrew Baker J in Cunico Resources NV v Daskalakis  1 W.L.R. 2881 and the reasoning of Lord Dyson in Attorney General of Trinidad and Tobago v Matthews  UKPC 38. Using the procedural machinery of r.13.3 was not an application for relief from sanctions.
A default judgment under Part 12 carried with it the availability of an order under Part 13 setting such judgment aside and to that extent was a self-contained procedure. It could not have been intended that in addition to the CPR requirements an applicant would have to satisfy the additional and different requirements of the Denton test or, in other words, that if the requirements of r.13.3 were satisfied, the application could nevertheless be refused on grounds not set out in that rule, save for the operation of the overriding objective and CPR 1.
The alternative line of authority was not followed and/or was distinguishable. Dicta from the Court of Appeal in Regione Piemonte v Dexia Crediop SpA  EWCA Civ 1298 and Gentry v Miller  1 W.L.R. 2696 (and therefore in later authorities) were strictly obiter. The recent decision of Mr. Hugh Sims QC in Ince Gordon Dadds LLP v Mellitah Oil and Gas BV  EWHC 997 (Ch) was not binding but persuasive. Ultimately the court was not persuaded by the latter’s reasoning and Ince was not followed. The better view was accordingly that of
Andrew Baker J in Cunico.
2. Setting Aside Default Judgment
A default judgment under Part 12 was an administrative and not a judicial act. The discretion to set aside a regularly obtained default judgment had to be exercised in accordance with the overriding objective and the purpose of the power was to prevent injustice. The applicant had to show a real prospect of a successful defence, by analogy with the familiar test for summary judgment. Failure to act promptly could lead to refusal of relief, notwithstanding the possibility of a successful defence, Standard Bank Plc v Agrinvest International Inc  EWCA Civ 1400 considered. However, a judgment could be set aside even where there had been excessive delay, Barons Bridging Finance Plc v Nnadiekwe  EWHC 2817 (Comm) considered. The power was not to be exercised to punish a party for incompetence, but to further the overriding objective, Hussain v Birmingham City Council  EWCA Civ 1570, considered.
The local authority had produced a significant amount of cogent historical material to show that at the relevant time it was not the owner, occupier or manager of the Ice Rink where the Claimant had worked. That had to be balanced against the Claimant’s allegation that he had worked at the premises and that Richmond BC was responsible for them. However the Claimant had adduced no positive evidence of such
involvement at the hearing.
Without conducting a mini trial or coming to a definitive decision, the court was satisfied that the local authority had demonstrated a real prospect of successfully defending the claim on the basis that it was the wrong defendant and owed no duty to the Claimant in respect of his employment at those premises.
There had been an inexcusable delay of nine months prior to the application to set aside and that was a significant factor. It was a very high value claim and important to both sides, including to the council taxpayers of Richmond.
Considering all the relevant factors it was right to set aside the default judgment. The purpose of the civil litigation system was the just disposal of claims after trial and it would be wrong to impose a liability of millions of pounds on a local authority where, despite the delay, there was sufficient plausible material indicating that it had no liability; that would be to punish the local authority for the delay: Riley v Reddish LLP  considered. To be fair to all parties and avoid injustice the default judgment against the local authority was set aside.
Leave to appeal was refused. The Claimant has indicated his intention to seek leave from the Court of Appeal as a matter of urgency.
For the Claimant: Patrick Kerr (RWK Goodman)
For the Defendant: David Platt QC (Kennedys).
Note: the transcript currently unavailable and still in the course of preparation. There is an anonymity order in force in respect of the Claimant.