Redbourn Group Ltd v Fairgate Development Ltd

When deciding an application to set aside a regularly entered default judgment, the court must first consider whether the defendant has a real prospect of successfully defending the claim or whether there is some other good reason under CPR r.13.3. The application must also have been made promptly. Because setting aside default judgment provides relief from a sanction, the three-stage Denton approach applies: the seriousness and significance of the breach, the reason for it, and all the circumstances of the case. A defendant must support its proposed defence with evidence and coherent particulars. Bare denials, unexplained delay and reliance on further material produced only shortly before the hearing may justify refusal of relief.

Fairgate Development Ltd applied under CPR r.13.3 to set aside a regularly obtained default judgment entered after it failed to serve a defence and counterclaim. Redbourn Group Ltd claimed unpaid contractual fees and damages for alleged repudiation of a development and project management contract.

The defendant relied on proposed contractual and repudiation defences. The court considered whether those defences had a realistic prospect of success, whether there was some other good reason to set aside judgment, whether the application was prompt, and whether relief from sanctions should be granted under CPR r.3.9.

1. Application refused. The default judgment was not set aside. Issues concerning the precise fees due and assessment of damages could be dealt with at a later quantum hearing.
2. Under CPR r.13.3, the court first considers the express requirements that the defendant has a real prospect of successfully defending the claim or that there is some other good reason to set aside the judgment. The realistic prospect test is the same as on summary judgment: the proposed defence must carry some degree of conviction and be more than merely arguable. The court must avoid a mini-trial but may test assertions against the evidence and contemporaneous documents.
3. Fairgate had no realistic prospect of defending the fee claim. Its proposed reliance on the absence of planning permission was irrelevant to the fixed monthly fee claimed. The only defence to a further invoice failed because the relevant leases had since been surrendered.
4. Fairgate also had no realistic prospect of establishing repudiatory breaches. The allegations concerning planning, the Network Rail lease, the viability of a reduced development scheme and the timing of lease surrenders were unsupported, inconsistent with the contract or contemporaneous evidence, or incapable of establishing breach or loss. No separate argument under the alternative “some other good reason” limb was identified.
5. Although the application was issued five days after judgment, the court assessed promptness in the wider context. Fairgate did not provide its draft defence and counterclaim until 11 May 2017, shortly before the hearing, and gave no adequate explanation for the delay. It therefore had not acted promptly for the purposes of CPR r.13.3(2).
6. In any event, the failure was serious, there was no satisfactory explanation, and the circumstances of the case favoured Redbourn. Applying the three stages identified in Denton v TH White Limited and Gentry v Miller, relief from sanctions under CPR r.3.9 was refused.

First-instance application under CPR r.13.3. No prior appellate decision is stated in the judgment.