FXF v English Karate Federation Limited & Anor

An application to set aside a default judgment under Civil Procedure Rules 1998 r 13.3 is an application for relief from sanctions. The Denton three-stage approach applies in full, after the court has considered the express matters in r 13.3.

The first two stages concern the default which led to judgment, ordinarily the failure to file a defence. Promptness in applying to set aside is a distinct mandatory consideration under r 13.3(2), and is also relevant at the third stage. At that stage, the court must assess all the circumstances, including efficient and proportionate litigation and the need to enforce compliance. A real prospect of a defence may nevertheless justify setting aside judgment where the overall discretion so requires.

The claimant sought damages for alleged sexual abuse by her karate coach. She alleged that the second defendant, an unincorporated karate association, was vicariously liable and directly liable for breach of duty.

After the association failed to file a defence within agreed extensions, the claimant obtained a default judgment for damages to be assessed. The association applied to set it aside. Master Thornett set aside the judgment, finding a real prospect of a defence but an unprompt application without good reason for the delay.

The claimant appealed directly to the Court of Appeal. The central issue was whether the Denton test for relief from sanctions applied to an application under CPR r 13.3, and whether the Master had applied the correct approach.

1. Appeal dismissed. The Master’s order setting aside the default judgment stood. Lady Justice Nicola Davies and Lord Justice Birss agreed with the Master of the Rolls.

2. An application under CPR r 13.3 to set aside a default judgment is an application for relief from sanctions. The Denton test applies in its full rigour. This accords with the established Court of Appeal authorities, including Regione Piemonte v Dexia Crediop SpA [2014] EWCA Civ 1298 and Gentry v Miller [2016] EWCA Civ 141.

3. The court must first address the express matters in CPR r 13.3: whether the defendant has a real prospect of successfully defending the claim, or another good reason to set aside judgment, and whether the application was made promptly. It must then apply Denton. The first and second stages concern the seriousness of, and reason for, the pre-judgment default that led to judgment, not the later delay in applying to set it aside. The third stage requires an evaluation of all the circumstances, including the efficiency and proportionality of litigation and enforcement of compliance.

4. The Master had sufficiently applied that approach, although a more express analysis would have been preferable. The association had a real prospect of defending the serious claim. Its failure to file a defence was serious and significant, and it lacked an adequate explanation. Its application was also unprompt. Nevertheless, the delay had not inconvenienced other court users, and the merits of the proposed defence justified setting judgment aside on the particular facts.

5. PXC v AB College [2022] EWHC 3571 (KB), which held that Denton did not apply to default-judgment applications, was overruled. The contrary dicta in Cunico Resources NV v Daskalakis [2018] EWHC 3382 (Comm) were no longer to be relied upon.

• Court of Appeal (Civil Division): In [2023] EWCA Civ 891 , dismissed the claimant’s appeal and upheld the order setting aside the default judgment.
• High Court of Justice, King’s Bench Division: Master Thornett set aside the default judgment under CPR r 13.3. The High Court later ordered that the appeal from the Master proceed directly to the Court of Appeal.