Praetura Asset Finance Ltd v Hood

Under CPR 13.3, a regularly entered default judgment may be set aside or varied where the defendant has a real prospect of successfully defending the claim or there is another good reason to do so. The court must have regard to promptness, the seriousness and explanation of the procedural default, the need to enforce the Civil Procedure Rules, and all the circumstances. A mistake about the procedural route does not remove the requirement for a prompt application where the defendant knew of the judgment. A defence based on an alleged representation may satisfy the real-prospect test even if other proposed defences do not. The court may set aside judgment where sale proceeds are secured but not yet received, particularly where they may later be payable to the claimant.

The claimant sought more than £1.5 million under an unregulated hire purchase agreement. After particulars of claim were served with the claim form, the defendant failed to file a defence, and the claimant obtained a regular default judgment for £1,580,345.41.

The defendant applied under CPR 13.3 to set aside the judgment. He relied on an alleged representation that only £1.34 million was owing, the treatment of proceeds from the sale of a Jaguar, an estoppel defence, Consumer Credit Act 1974 provisions, and a proposed counterclaim and set-off. The central issues were whether the application had been made promptly, whether there was good reason for the procedural default, whether any proposed defence had a real prospect of success, and how the sale proceeds should be treated.

1. Application granted. The default judgment was set aside. The defendant’s failure to file a defence was a serious procedural default, there was no good reason for it, and the application was not made promptly. The defendant and his solicitors knew of the judgment by about 29 March 2019, although the application was not issued until 12 July 2019. Their mistaken belief that the judgment was irregular and should be challenged under CPR 13.2 did not avoid the promptness requirement under CPR 13.3(2).
2. CPR 13.3 required consideration of the three-stage Denton approach, promptness, enforcement of the Rules, proportionate and efficient litigation, and all the circumstances. The court also had to consider whether the proposed defence had a real prospect of success, a test requiring more than an merely arguable defence.
3. The alleged representation that only £1.34 million was due raised a triable issue with a real prospect of success. The claimant’s actual receipt of £890,000 from the Jaguar sale had to be credited. The further £450,000 held in an escrow retention account was not yet in the claimant’s hands, but appeared likely to be paid to it if the asserted vendor’s lien failed. It would therefore be wrong to allow the judgment to stand while that security remained in place.
4. The proposed defence requiring credit for the full sale proceeds failed at this stage. The Consumer Credit Act 1974 allegations disclosed no independent credible defence or unfair relationship, and the proposed counterclaim and set-off had no real prospect of success.
5. The appropriate costs order was costs in the case. Although the defendant succeeded in setting aside the judgment, his failure to serve a defence caused the application, the application was made late, and several proposed grounds failed.

Not an appellate decision. No prior decision or appeal is stated in the judgment.