Gentry v Miller & Anor

An allegation that a claim is fraudulent does not exempt an applicant from the requirements for relief from sanctions. On an application to set aside a default judgment under CPR Part 13.3, the court must first address the rule’s express requirements, including promptness, and then apply the Denton three-stage approach. The relevant breach is the default that produced the judgment, not delay in applying to set it aside; but delay remains material to promptness and to all the circumstances.

The same approach applies to CPR Part 39.3, after its three mandatory conditions have been met. A professional insurer directly affected by proceedings must protect its position diligently. Where it has sufficient knowledge to act but delays without adequate explanation, finality and compliance with rules may require refusal of relief, leaving any fraud claim to a fresh action.

The claimant obtained a default judgment against the insured driver after a road-traffic claim, followed by an assessment of damages of more than £75,000. The insurer had admitted liability, received repeated warnings that hire charges were increasing, and later alleged that the claim was fraudulent.

A district judge set aside both the default judgment and the damages order. On the claimant’s appeal, the Recorder upheld that decision, treating the alleged fraud as sufficient to justify relief. The claimant brought a second appeal to the Court of Appeal.

The central issue was whether the insurer’s fraud allegation justified setting aside the judgments despite its failures and delay in protecting its interests.

1. Appeal allowed. The district judge had erred in treating alleged fraud as an exception to the requirements derived from Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537 and Denton v TH White Ltd [2014] EWCA Civ 1298. The Recorder also erred by asking only whether the district judge’s conclusion fell within the generous ambit of discretion. The Court of Appeal therefore exercised the discretion afresh.

2. For a CPR Part 13.3 application, the court must first determine whether the defendant has a real prospect of defending the claim or another reason to set aside the judgment, having regard to promptness. It must then apply the Denton approach. The serious or significant breach is the default leading to default judgment, rather than delay in seeking relief. Delay in applying remains relevant both under CPR Part 13.3(2) and at the third Denton stage.

3. The insurer had a real prospect of defending the claim, but had not acted promptly. It had known of the risk of proceedings, had admitted liability, and could with reasonable diligence have discovered enough to apply by September 2013. Its unexplained delay until 25 November 2013, together with its failure to protect its interests, meant that relief from the default judgment should be refused.

4. For CPR Part 39.3, the applicant must first satisfy all three mandatory conditions and then obtain relief under the Denton principles. The insurer, though not originally a party, could not occupy a better position than its insured. It delayed about four months after learning of the damages order and failed the promptness condition. The application to set aside that order therefore also failed.

5. Fraud allegations do not automatically displace finality or the need to obey rules and orders. On these facts the insurer had missed every opportunity to investigate and protect its position. It had to pursue any available remedy by a fresh fraud action. The insurer’s application of 26 February 2014 was dismissed.

1. Court of Appeal (Civil Division): Allowed the claimant’s second appeal and dismissed the insurer’s applications to set aside the default judgment and damages order: [2016] EWCA Civ 141.

2. County Court at Liverpool (Recorder): Dismissed the claimant’s appeal from the district judge and upheld the setting aside of both judgments.

3. County Court at Liverpool (District Judge): Set aside the default judgment and the subsequent damages judgment.