Cunico Resources NV & Ors v Daskalakis & Anor

Under the Civil Procedure Rules 1998, a late acknowledgment of service filed before default judgment is obtained remains an acknowledgment of service unless set aside. Default judgment cannot therefore be entered merely because the acknowledgment was filed out of time. The court rejected the third proposed construction of rule 12.3(1) and followed Unilever plc v Pak Supermarket ([2016] EWHC 3846 (IPEC)). A timely acknowledgment remains a procedural precondition to a jurisdiction challenge under rule 11(2), although that requirement may be waived or extended. On the facts, relief was granted by waiving rule 11(2), while the default judgment application was dismissed.

The judgment concerned applications in the 2018 Claim brought by Cunico Marketing FZE against Konstantinos Daskalakis and Arvind Mundhra. Marketing sought default judgment against Mr Daskalakis. He had filed an acknowledgment of service 28 days late, but one hour before Marketing issued its default judgment application. He applied retrospectively for an extension of time and, alternatively, relief from sanctions.

The central issue was whether a late acknowledgment filed before the request or application for default judgment prevented judgment under rule 12.3(1). A related issue was whether Mr Daskalakis could challenge jurisdiction under rule 11(1) without a timely acknowledgment of service.

Applications dismissed in part and relief from sanctions granted in part.

1. Rule 12.3(1) contained two cumulative conditions. The court rejected the third proposed meaning, under which only a timely acknowledgment counted. A late acknowledgment filed before judgment was still an acknowledgment for the rule unless the court ordered that it be set aside. The court did not need finally to choose between the first and second meanings.
2. The wider discussion supported the first meaning as the natural reading of rule 12.3(1), because the conditions were assessed when judgment was entered. That discussion was expressly treated as obiter. The default judgment regime was intended principally for defendants who were not participating in the proceedings. Procedural abuse could instead be addressed by setting aside a late filing under rule 3.10.
3. The court followed Unilever plc v Pak Supermarket ([2016] EWHC 3846 (IPEC)) and declined to follow McDonald & McDonald v D&F Contracts Ltd ([2018] EWHC 1600 (TCC)) if that decision supported the third meaning. Since Mr Daskalakis had filed an acknowledgment before the application, the conditions for default judgment were not satisfied.
4. A timely acknowledgment filed in accordance with Part 10 was a procedural precondition to a jurisdiction application under rule 11(1), pursuant to rule 11(2). A late acknowledgment therefore required an extension or waiver for that purpose.
5. Marketing had agreed that the jurisdiction challenge in the 2018 Claim should be determined by the outcome of the related challenge in the 2017 Claim. The fair course was to waive rule 11(2), granting relief from sanctions limited to permitting the jurisdiction challenge. The question of an extension of time consequently did not arise.
6. Obiter, if an extension had been necessary, the court would have refused it under the principles in Denton v TH White Ltd ([2014] EWCA Civ 906). The default was substantial, entirely Mr Daskalakis’s fault, and aggravated by his unreasonable refusal to arrange service through his solicitors.