RS v LS & LMP

Failure to serve a response pack with particulars of claim may provide some other good reason to set aside a default judgment under the Civil Procedure Rules 1998, but it does not make the judgment automatically irregular. The court must exercise its discretion in accordance with the overriding objective, considering the proposed defence, the promptness of the application and the circumstances of the procedural failure. A judgment may be set aside in part where the defendant has a realistic prospect of defending one element of the claim but accepts, or has no arguable defence to, another. The court may accordingly replace the default judgment with judgment for the admitted or indefensible sum and stay enforcement of that sum.

LS applied to set aside a default judgment obtained by her former solicitors, Levison Meltzer Pigott, for £107,361.07. The claim arose from unpaid professional fees and contractual interest incurred during financial remedy proceedings between LS and RS. LS accepted liability for the principal costs sum of £69,906 but argued that a subsequent fixed-fee arrangement had waived or modified the contractual interest provisions.

LS contended that she had not been served with the response pack required by Civil Procedure Rules 1998 r 7.8(1). She also relied on her delay in applying to set aside the judgment, explaining that she had been unaware of the judgment until shortly before applying. The central issues were whether the procedural defect, the merits of the proposed defence and the delay justified relief under CPR r 13.3.

1. Application granted in part. The default judgment was varied and replaced by judgment for LMP in the reduced sum of £69,906. Enforcement of that judgment was stayed until 9 March 2018, subject to further directions.
2. Under Civil Procedure Rules 1998 rr 12.3 and 13.3, failure to serve the response pack required by r 7.8(1) does not automatically invalidate a default judgment. The conditions for entering judgment in default were otherwise satisfied. The defect may, however, constitute some other good reason for setting aside or varying the judgment.
3. The discretion under r 13.3 must be exercised in accordance with the overriding objective and so as to avoid injustice. The court must consider, in the circumstances of the case, the merits of the proposed defence, the explanation for and promptness of the application, and the effect of the procedural failure. The relevant considerations are not applied mechanically.
4. LS had a realistic prospect of defending the claim for interest. The March 2014 correspondence established a new fixed-fee arrangement, but it remained genuinely arguable whether the earlier contractual entitlement to interest had been carried into that arrangement or had been waived. LMP had not yet had a proper opportunity to answer LS’s developed case, so the issue required a substantive hearing.
5. LS had no arguable defence to the principal sum of £69,906. Her costs order against RS did not displace her contractual liability to LMP. The appropriate course was therefore partial relief rather than setting aside the judgment in full.
6. Although the application was made long after service of the claim, LS acted promptly after learning of the default judgment. The surrounding appeal and enforcement proceedings provided some support for her explanation, and the delay did not outweigh the risk of serious injustice if an arguable interest defence were shut out.

First-instance application in the High Court (Family Division). The debt recovery proceedings had previously been transferred from the Queen’s Bench Division and consolidated with related matrimonial financial remedy proceedings. No appeal from the decision is stated in the judgment.