ESR Insurance Services Ltd. v Clemons & Ors

Default judgment is available where defendants have been duly served, have not acknowledged service or defended the claim, and the relevant period has expired. In a commercial-list Part 7 claim, particulars of claim need not be served before an application for default judgment where the defendant has failed to file an acknowledgment of service. The judgment remains confined to the claimant’s statement of case. Where a defendant files an acknowledgment late, the court may extend time if fairness requires it. Relevant considerations include the defendant’s lack of informed legal advice, the need for a proper opportunity to assess the proposed defence, and the interests of efficient and proportionate case management.

The claimant, an insurance broker in administration, alleged that the defendants were involved in fraudulent representations concerning authority to arrange surety bond insurance and reinsurance. The amended claim form was served on 12 June 2008, with 22 days allowed for a response. The first, third, fourth, fifth, sixth and seventh defendants, all outside the jurisdiction, failed to acknowledge service or defend the claim. The second defendant, who was within the jurisdiction, filed an acknowledgment of service approximately three weeks late and sought an extension of time. The issues were whether default judgment should be entered against the non-responding defendants and whether time should be extended for the second defendant.

1. The application for default judgment succeeded against the first and third to seventh defendants. They had been duly served, had filed neither acknowledgments of service nor defences, and the relevant period had expired. Judgment was entered for the claimant in the principal sum of £2,661,892.24, with interest calculated at 8 per cent from the dates of the relevant premium payments. The interest calculated to 11 August 2008 was £595,060.93.
2. Under CPR Part 58.8, because this was a Part 7 claim in the commercial list, the claimant was not required to serve particulars of claim before applying for default judgment where a defendant had failed to file an acknowledgment of service. Any default judgment remained restricted by CPR Part 12.1 to the claim set out in the statement of case.
3. Although the second defendant’s acknowledgment was late, it was appropriate to extend time. He had acted under a misunderstanding, had only recently obtained legal advice, and required a realistic opportunity to decide whether the proposed claim, if limited to breach of fiduciary duty and a reduced amount, could properly be defended. It would have been unfair to enter judgment in default in those circumstances.
4. The claimant was permitted to issue summary judgment proceedings promptly. Directions allowed four weeks for the second defendant’s evidence, followed by two weeks for responsive evidence from the administrators.

Not an appeal. The judgment is a first-instance decision on an application for default judgment and an extension of time.