[2025] EWHC 2107 (Comm)

If the First and Second Defendants’ application under CPR rule 13.2 had not succeeded, they applied for an order for the setting aside of the default judgments pursuant to CPR rule 13.3, which provides that:

“(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.”

The First and Second Defendants bear the burden of establishing that they have a real prospect of successfully defending the claim.

CPR rule 13.3 refers to two express matters which the Court must address in order to dispose of an application to set aside a default judgment, namely (1) the merits of the defendant’s defence in the sense of whether the defendant has a real prospect of success in defending the claim and (2) whether the defendant made the application to set aside the default judgments promptly. The first of these matters is one of the jurisdictional requirements that must be satisfied before the Court considers exercising a discretion to set aside the default judgment (the other - alternative - jurisdictional requirement is whether it appears to the Court that there is some other good reason to set aside the default judgment or to allow the defendant to defend the claim). The merits of the defendant’s defence are also a matter to consider in the exercise of the discretion granted under CPR rule 13.3.

However, the exercise of the discretion under CPR rule 13.3 must be undertaken together with a consideration of the factors identified by the Court of Appeal in Denton v TH White Ltd (Practice Note) [2014] EWCA Civ 906; [2014] 1 WLR 3926, because it has been held that an application to set aside a default judgment is an application for relief from sanctions, as the default judgment is entered by reason of the defendant’s non-compliance with the Civil Procedure Rules in not filing an acknowledgment of service or serving a defence. The Denton approach is a three-stage approach to disposing of an application for relief from sanctions and requires the Court to:

The fact that the discretion to be exercised under CPR rule 13.3 having regard to the approach adopted in Denton was confirmed by the Court of Appeal in FXF v English Karate Federation Ltd [2023] EWCA Civ 891; [2024] 1 WLR 1097. The issue before the Court was whether the three-stage test described in Denton should be applied by the Court when it is considering whether to set aside a default judgment under CPR rule 13.3. The Court of Appeal concluded that the Denton approach should be applied. Sir Geoffrey Vos MR said at para. 59-68:

“59.

I hope that I have now dealt with all the truly relevant authorities. I have done so at some length, because they show a difference of approach that requires resolution by this court. As Birss LJ explained in argument, there are really three categories of case: (i) cases where the rule or order expressly provides for the sanction that will apply on non-compliance (e g failure to file witness statements on time), (ii) cases where the rule does not expressly state the sanction which applies for non-compliance, but permission of the court is needed to proceed (e g failure to file a notice of appeal on time), and (iii) cases where a further step is taken in consequence of the non-compliance, such as the entry of a default judgment (as in this case) or the striking out of a claim for non-attendance at trial …

61.

This case falls squarely into Birss LJ’s third category, and I shall, therefore, concentrate on that category, and particularly on applications to set aside default judgments …

63.

In my judgment, the Denton tests do, as I have said, apply to applications to set aside default judgments under CPR r 13.3. There are a number of reasons for this …

66.

Thirdly, the Denton tests are actually peculiarly appropriate to the exercise of the discretion required once the two specific matters mentioned in CPR r 13.3 (merits and delay in making the application to set aside) have been considered. The first two tests focus attention on the delay in complying with the requirements of CPR r 15.2, which provides that “a defendant who wishes to defend all or part of a claim must file a defence”, and the third test brings into consideration all the circumstances of the case including the two critically important stated factors. What we said at para 34 in Denton bears repetition:

“Factor (a) makes it clear that the court must consider the effect of the breach in every case. If the breach has prevented the court or the parties from conducting the litigation (or other litigation) efficiently and at proportionate cost, that will be a factor weighing in favour of refusing relief. Factor (b) emphasises the importance of complying with rules, practice directions and orders. This aspect received insufficient attention in the past. The court must always bear in mind the need for compliance with rules, practice directions and orders, because the old lax culture of non-compliance is no longer tolerated.”

67.

Fourthly, as I indicated at para 51 above, Gentry actually provides an example of how the exercise under CPR r 13.3 and the application of the Denton tests ought to be undertaken. The merits are dealt with first at para 28. Next, the delay in making the application to set aside is dealt with at para 29–35. I turned then to consider the Denton tests, dealing with the pre-judgment delay and the excuses for it at para 36, and “all the circumstances of the case, so as to enable [the court] to deal justly with the application, including [factors (a) and (b)]” at para 37. In some—perhaps many—cases, additional factors included in the overriding objective (or even other relevant factors) will need to be considered at this stage when the court is exercising its discretion. The relevant factors are not closed. What is critical, however, I can repeat once again for yet further emphasis, is the need to focus on whether the breach has prevented the court or the parties from conducting the litigation (or other litigation) efficiently and at proportionate cost, and the need to enforce compliance with rules and orders …”

I should make it clear that I was not referred to the Denton requirements during the hearing of the application.