Intense Investments Ltd v Development Ventures Ltd

A default judgment must be obtained under the procedure applicable to the remedies claimed. Where a claim includes remedies beyond those permitted for judgment by request under Civil Procedure Rules 1998, Part 12, the claimant must use the application procedure in Part 23. Failure to do so makes the judgment irregular. Alternatively, the court may set aside a regular default judgment where the defendant has shown good reason or a real prospect of successfully defending the claim. Prompt steps to obtain an extension, an absence of culpable delay, and a properly arguable defence may justify relief.

The claimant sought a declaration, an account and payment of profits allegedly due under a sealed agreement. Judgment in default of defence was entered after the defendants’ solicitors sought an extension of time and applied to adjourn the case management conference. The defendants then served a defence and counterclaim and applied promptly to set aside the judgment.

The court considered whether the judgment was irregular, whether the defendants’ conduct provided a good reason for relief, and whether they had a realistic prospect of successfully defending the alleged agreement and profit-sharing claim.

1. Application granted. The default judgment was set aside as of right because the claim included a declaration, an account, inquiries, delivery up of documents, damages and interest. It therefore did not fall within the limited categories in Civil Procedure Rules 1998, rule 12.4(1). The claimant was required to apply under Part 23 under rule 12.4(2), unless the additional remedies had been abandoned. They had not been abandoned. The use of the wrong procedure deprived the defendants of notice and gave the claimants an unfair procedural advantage.
2. The court regarded the judgment as irregular and therefore incapable of standing. It was unnecessary to decide the other jurisdictional objections. The court nevertheless observed that the absence of a certificate of service might independently have made the judgment irregular, since rule 6.14 made the certificate mandatory.
3. Alternatively, the defendants satisfied Civil Procedure Rules 1998, rule 13.3(1)(b). They had sought an extension before expiry, attempted to resolve the issue with the claimants’ solicitors, warned of the risk of default judgment, served a detailed defence promptly and applied to set aside without delay. These matters constituted good reason to allow the claim to be defended. Routine entry of judgment while an extension application was awaiting determination could improperly usurp the court’s jurisdiction.
4. The defendants also satisfied rule 13.3(1)(a). The documents disclosed a realistic prospect that no binding agreement in the alleged terms had been made. The correspondence supported an arguable case that the parties continued to negotiate and that the claimants themselves remained concerned that no binding profit-sharing agreement existed.
5. The court considered that the claimants would suffer no disproportionate prejudice. A preliminary issue hearing was intended to determine whether a contract existed.