There have historically been contrasting decisions on the Court's interpretation of CPR 12.3 determining when default judgment can be granted. It is hoped that new changes to the rule can provide some much-needed clarity.
What is default judgment?
CPR 12 provides that where an Acknowledgment of Service ("AoS") or Defence is not filed within the applicable time limits, a Claimant may request a default judgment. This acts as an enforceable judgment against the Defendant and disposes of the proceeding at an early stage.
What has changed?
CPR 12.3, which sets out the conditions to be satisfied, has been amended to now read:
"(1) The claimant may obtain judgment in default of an acknowledgment of service only if at the date on which judgment is entered:
(a) the defendant has not filed an acknowledgment of service or a defence to the claim (or any part of the claim); and
(b) the relevant time for doing so has expired.
(2) Judgment in default of defence may be obtained only-
(a) where an acknowledgement of service has been filed but at the date on which judgment is entered a defence has not been filed;
(b) in a counterclaim made under rule 20.4, where at the date on which judgment is entered a defence has not been filed,
and, in either case, the relevant time limit for doing so has expired."
The effect of this change, which came into force on 6 April 2020, is that an AoS or Defence that is filed after the deadline, but before the Court enters judgment may prevent the granting of default judgment. The Court will look at the date on which a late AoS or Defence was filed to determine whether the default judgment should be granted. The amendment may also allow Defendants to successfully set aside the judgment under CPR 13.2 in circumstances where it can be shown that the filing preceded the request.
The change means that it is now more important than ever to ensure a request or application for default judgment is filed as soon as possible after the deadline for filing an AoS or a Defence.
The amended test appears to favour a late Defendant and many Claimants may see this as granting an unwarranted extension of time. Conversely, it provides Defendants with some reassurance provided they are able to file an AoS or Defence before judgment is actually granted. The making of any judgment will be dependent in part on the response time of the Courts, which will need to efficiently deal with requests to avoid prejudicing Claimants.
Also in this area, it is hoped that the Court will provide greater clarity for the circumstances in which a late Defence may lead to a default judgment being set aside, following various conflicting approaches . A recent case where a default judgment was set aside due to a defence that was filed three months late is to be heard in the Court of Appeal later this year and it will be interesting to see what approach the Court takes in light of the new test under CPR12.3.