Stanley v London Borough of Tower Hamlets

An application to set aside default judgment under CPR r 13.3 requires the defendant to show a real prospect of successfully defending the claim or some other good reason. If that threshold is met, the discretion must be exercised in light of all the circumstances, the overriding objective and the Mitchell/Denton considerations. Promptness is mandatory and important. The COVID-19 pandemic may constitute a good reason for default and is a relevant circumstance when considering relief from sanctions. A claim for psychological distress is a claim for personal injuries. Where actionable loss is disputed, medical evidence may be necessary, and an admission of a data-protection breach does not necessarily admit liability for loss.

The claimant sought damages of up to £10,000 against the defendant local authority for alleged disclosure of sensitive medical information, relying on data-protection legislation, breach of confidence, misuse of private information and article 8 of the European Convention on Human Rights. Default judgment was entered after the defendant failed to file an acknowledgment of service following service by post during the first days of the COVID-19 lockdown.

The defendant applied under CPR r 13.3 to set aside the judgment and sought relief from sanctions. The central issues were whether the defendant had a real prospect of successfully defending the claim or some other good reason to set aside the judgment, and whether relief should be granted under CPR r 3.9.

1. Threshold under CPR r 13.3. The court applied the approach in Dexia Crediop SpA v Regione Piemonte [2014] EWCA Civ 1298, approved in Gentry v Miller [2016] 1 WLR 2696. The defendant had to establish a real prospect of successfully defending the claim or some other good reason. If either limb was satisfied, the discretion had to be exercised having regard to all relevant circumstances, the overriding objective and CPR r 3.9.
2. The defendant had a real prospect of defending the claim. The claimant’s claim for psychological distress was a claim for personal injuries within CPR r 2.3. The claimant had supplied no medical evidence or schedule of losses, and there was presently no evidence of actionable loss. Without loss, there was no cause of action. The authority’s admission that a data-protection breach had occurred did not amount to an admission that the claimant had suffered loss or that the claim was admitted.
3. There was independently a good reason to set aside the judgment. The proceedings had been posted when the defendant’s offices had closed because of the unprecedented national health emergency. The claimant’s solicitor should have checked whether postal service remained feasible and discussed an effective method of service. His failure was poor judgment, although it did not amount to sharp practice.
4. The failure to file an acknowledgment of service and defence was serious and significant. Applying the three-stage Mitchell/Denton test, the court accepted that the reason for default was the COVID-19 crisis, that the defendant acted promptly once aware of the proceedings, and that CPR PD 51ZA required the pandemic’s impact to be taken into account. The interests of justice favoured relief.
5. The default judgment was set aside. Relief from sanctions was granted, and the defendant was permitted to file and serve an acknowledgment of service and defence within 14 days of the order.