[2025] EWHC 2107 (Comm)

I now approach the exercise of the discretion under CPR rule 13.3, noting that in so doing I am to apply the Denton approach, bearing in mind that any order made setting aside the default judgment is in reality the grant of relief from sanctions.

For this purpose, I therefore consider the following matters:

As regards the merits of the First and Second Defendants’ defence, I can say no more than that, based on the evidence currently available to me, the First and Second Defendants have a real prospect of successfully defending the claim. I am not in a position to evaluate the merits of the defences beyond this. The fact that a defendant has a real prospect of successfully defending a claim is, of course, not a matter which will entitle the defendant to relief. It is nevertheless an important consideration and if there are no other matters which rendered it unjust to set aside the default judgment, the Court should normally accede to such an application.

As regards the promptness of the application, I have addressed this above. In my judgment, the application was made promptly, but if it was not, the delay was not substantial.

As regards the seriousness and significance of the First and Second Defendants’ failing to acknowledge service or serving a defence in accordance with the requirements of the Civil Procedure Rules, such non-compliance is of course serious and significant given that the consequence of such non-compliance is the entry of a default judgment. However, in circumstances where the evidence of the First and Second Defendants were not aware of the service of proceedings on Law Debenture until 4th September 2024, by which time the default judgments were entered, the non-compliance was an unwitting one on the part of the First and Second Defendants. In this regard, the non-compliance is not concerned with the delay in making the application to set aside the default judgments (Gentry v Miller (Practice Note) [2016] EWCA Civ 141; [2016] 1 WLR 2696, para. 25).

That brings me to the next consideration, namely the explanation for the non-compliance. As mentioned, the First and Second Defendants were not aware of the default judgments prior to 13th September 2024. Accordingly, there was no deliberate decision or negligent error on the part of the First and Second Defendants in not filing an acknowledgment of service or serving a defence.

Pausing there, the circumstances are such that I would have exercised my discretion to set aside the default judgments.

There is nothing else in the circumstances which militate against the exercise of the Court’s discretion in this way. In so deciding, I have had regard to:

For these reasons, I would have exercised the Court’s discretion to set aside the default judgments entered against the First and Second Defendants under CPR rule 13.3, had they not succeeded in their application under CPR rule 13.2.