The Lord Chancellor (as Successor to the Legal Services Comission) v Halberstadt-Twum (t/a Cleveland Solicitors) & Anor

An application to set aside a regular default judgment under CPR 13.3 requires the applicant to show a real prospect of successfully defending the claim or another good reason for relief. The court must also consider promptness. The three-stage approach in Denton v TH White applies.

A party remains personally responsible for complying with procedural obligations. Failures by legal representatives ordinarily count as failures by the party. In the Queen’s Bench Division, an applicant must actively progress an application to a listed hearing; delay caused by failing to provide the required listing information may itself be relevant to promptness. Serious default, prolonged unexplained delay and the absence of a properly articulated defence justified refusing relief.

The claimant obtained default judgment against the defendants for sums arising from alleged fraud, breach of contract, overpayments and unjust enrichment under legal aid contracts. The defendants had acknowledged service through solicitors, but no defences were filed by the extended deadline.

They applied under CPR 13.3 to set aside or vary the judgment. They argued that the judgment was irregular because the claimant’s request for judgment had not been served, and alternatively relied on proposed defences, including limitation, contractual points and the possible appeal of their criminal convictions. The central issues were whether the judgment was regular, whether the proposed defences had realistic prospects, and whether the application had been made promptly.

1. Regularity of judgment. The default judgment was regular. For a claim for specified sums of money, CPR 12.4 permits judgment by request using the standard form. No notice or Part 23 application was required because the claim did not include another remedy and did not fall within CPR 12.9 or 12.10. The defendants’ late attempt to recast the application on an irregularity basis was rejected.
2. Applicable test. CPR 13.3 and the relief-from-sanctions principles in Denton v TH White overlap and complement one another. The court considered whether the failure to file defences was serious and significant, whether there was a valid explanation, and whether relief was justified in all the circumstances, including efficient and proportionate litigation and compliance with rules and orders.
3. Responsibility and promptness. Under Mullock v Price, a party cannot generally shield behind legal representatives. The defendants remained answerable for the failure to file defences, the month-long delay before applying, and the subsequent failure to progress the application for over a year. In the Queen’s Bench Division, an applicant must provide the required Private Room Appointment information and secure listing. The application remained ineffective because the defendants failed to do so.
4. Prospects of defence. The proposed criminal appeal did not itself establish a realistic defence to the civil claim. The limitation argument failed because preliminary investigation of irregularities did not amount to discovery of the alleged fraud under section 32 of the Limitation Act 1980. The contractual arguments failed because the contract preserved accrued rights and expressly permitted recovery of overpayments after termination. The claim was also pleaded in restitutionary and other causes of action, not solely as a claim for post-termination contractual breaches.
5. The defendants had not produced a proper defence or shown realistic prospects of success. The application was dismissed. Costs remained to be determined, subject to further submissions, and any agreed arithmetical credit did not alter liability.

The judgment records that default judgment was entered by order sealed on 21 August 2019. The defendants then applied under CPR 13.3 to set it aside or vary it. The High Court dismissed that application and left the default judgment standing.