Hanson & Ors v Carlino & Anor

Judgment in default of defence may be entered where an acknowledgement of service has been filed, no defence has been filed, and the time for filing a defence has expired. A pending application for an extension of time must nevertheless be considered. The court should assess the seriousness and significance of the default, the reasons for it, and all the circumstances, including proportionality, prejudice, court resources and the party’s conduct throughout the proceedings. A history of deliberate or sustained non-engagement may justify judgment in default even where the allegations are serious and no individual hearing has been imperilled. The court need not decide whether judgment in default of acknowledgement of service is available where judgment in default of defence provides a sufficient alternative.

The claimants sought remedies concerning an alleged misappropriation of more than £2 million from joint venture companies. They applied for judgment in default against the first defendant, who had been personally served with the claim form and particulars of claim but had filed neither an acknowledgement of service within time nor a defence.

A late acknowledgement of service was filed after the default judgment application. The first defendant then applied retrospectively to extend time for acknowledging service and prospectively to extend time for serving a defence. The central issues were whether judgment in default of defence could be entered under CPR 12.3(2), and whether the court should defer judgment pending the extension applications.

1. Disposition. The court entered judgment in default of defence, dismissed the first defendant’s application for an extension of time, and made no order on the claimants’ application to set aside the late acknowledgement of service. It was unnecessary to decide whether judgment in default of acknowledgement of service was also available.
2. Under CPR 12.3(2), judgment in default of defence may be obtained where an acknowledgement of service has been filed, no defence has been filed, and the relevant time limit has expired. Those conditions were satisfied because no defence had been filed and 28 days had expired from service of the original and amended particulars of claim. The late acknowledgement of service did not prevent judgment in default of defence.
3. The court was required to consider the pending applications for extensions of time before deciding whether to enter judgment. Applying the principles in Denton v White [2014] EWCA Civ 906, the court considered the seriousness and significance of the default, the reasons for it, and all the circumstances. Similar proportionality considerations applied when exercising the power under CPR 3.10, consistently with Walsham Chalet Park Ltd (t/a the Dream Lodge Group) v Tallington Lakes Ltd [2014] EWCA Civ 1607.
4. The default was serious and significant when viewed against the whole procedural history. The first defendant had known of the claim, initially denied service despite evidence proving it, failed to engage with the proceedings, appeared only after a bench warrant was issued, provided limited information, and caused substantial expenditure and repeated demands on court resources. The seriousness of the allegations and the absence of an immediately imperilled hearing did not outweigh those circumstances.
5. The court observed that CPR 13.3 provided a proper route to seek the setting aside or variation of the default judgment by showing a real prospect of successfully defending the claim or some other good reason. The immediate question, however, was whether judgment should now be entered.