CPL Mechanical & Pipe Installation Specialists Ltd v DURR Industries Incorporated

Under Part 13 of the Civil Procedure Rules, an applicant seeking to set aside a default judgment must show a proposed defence with a real prospect of success, not merely an arguable issue. The court retains a discretion and must consider whether the application was made promptly. Delay remains relevant even where it caused no additional prejudice. Relief may be refused despite a partial prospect of success where serious and inexcusable delay outweighs the merits. A judgment will not ordinarily be reopened on appeal merely because a document was overlooked below and hindsight suggests that the arguments might have been presented differently.

CPL Mechanical & Pipe Installation Specialists Ltd claimed sums under a subcontract against DURR Industries Incorporated, which brought a counterclaim alleging defective performance. After CPL failed to serve a defence to the counterclaim, Durr obtained judgment in default for damages to be assessed.

CPL later applied to set aside the judgment. The High Court dismissed the application, although CPL had shown a real prospect of defending three counterclaim items. CPL then renewed its application for permission to appeal. The central issues were the application of Rule 13.3, the significance of delay and absence of prejudice, and whether an overlooked contractual document justified reopening the decision.

Disposition. Lord Justice Jonathan Parker delivered the first judgment, with Lord Justice Sedley agreeing. The renewed application for permission to appeal and the application for permission to rely on further evidence were refused.

1. Under Rule 13.3, the applicant must demonstrate that the proposed defence has a real prospect of success. It is insufficient merely to show an arguable issue. The judge was entitled to form a provisional view of the merits; doing so did not turn the application into a mini-trial or impose an inappropriate trial burden of proof.
2. Rule 13.3 confers a discretion whether to set aside the default judgment. The court must take account of promptness under Rule 13.3(2). Delay must be considered whether or not it has caused additional prejudice to the respondent. Absence of substantial prejudice does not make setting aside automatic.
3. The judge had correctly balanced the relevant factors. CPL had shown a real prospect of defending three items worth just over £18,000, but its delay of about 14 months, or 10 months on its own account, was inexcusable. The judge was entitled to treat that delay, together with the possible dispersal of witnesses, as decisive despite the limited prejudice found.
4. The later-discovered scope of works document did not justify permission to reopen the judgment. Neither advocate was at fault, but the lower court had made a proper discretionary decision on the arguments presented to it. The possibility that different arguments might have produced a different result was insufficient, with hindsight, to warrant reopening the matter.
5. The default judgment was for damages to be assessed, so quantification remained open for a further hearing. That did not justify reopening liability on the proposed appeal.

• Court of Appeal (Civil Division): In CPL Mechanical & Pipe Installation Specialists Ltd v DURR Industries Incorporated [2001] EWCA Civ 89, the renewed application for permission to appeal and the application for permission to rely on further evidence were refused.
• High Court of Justice, Queen's Bench Division, Technology and Construction Court: On 13 October 2000, Her Honour Judge Kirkham dismissed CPL's application to set aside the default judgment entered on Durr's counterclaim.