Leadingway Consultants Limited v Ayoub Farid Michel Saab & Anor

Relief from a sanction imposed by an unless order remains a discretionary, fact-sensitive exercise. The court must assess the particular breach, its cause and effect, and all the circumstances. A solicitor’s innocent counting error may justify relief, especially where the order failed to state the precise compliance date, even though such relief is unusual.

For default judgment, an arguable defence is not enough. Promptness is an expressly required consideration and carries substantial weight. Continuation of proceedings against a co-defendant does not create a general exception. Reduced weight is justified only where the same issues will necessarily be tried and the default judgment would not produce meaningful finality.

The claimant sought damages from the first defendant and the estate of his deceased brother under alleged agreements concerning repayment of loans made to a company controlled by the brothers.

The first defendant was served with the proceedings but failed to respond in time, and default judgment was entered against him. The second defendant was served later and agreed to an Unless Order requiring a jurisdiction challenge within 21 days. His application was filed one day late.

Knowles J granted the second defendant relief from sanctions and set aside the first defendant’s default judgment. The claimant appealed both decisions. The central issues were whether relief was properly granted for the late jurisdiction application and whether the first defendant’s delayed application to set aside judgment should succeed under Civil Procedure Rules 1998 rule 13.3.

Disposition. The appeal was allowed in relation to the first defendant’s default judgment and dismissed in relation to the second defendant’s relief from sanctions. Lord Justice Phillips gave the judgment, with Lord Justices Moylan and Bean agreeing.

1. Relief from sanctions. The three-stage approach in Denton and others v TH White Ltd [2014] EWCA Civ 906 required assessment of the seriousness and significance of the breach, the reason for it, and all the circumstances. Non-compliance with an unless order is ordinarily serious or significant, but that does not make the stipulated sanction conclusive.
2. The court considering relief may assess the nature and effect of the particular breach and whether relief is just in the circumstances. Marcan Shipping (London) Ltd v Kefalas [2007] EWCA Civ 463 supported that approach. The fact that the sanction was agreed, or was proportionate when imposed, did not prevent an application for relief.
3. Representative error is generally attributed to the party. Well-intentioned incompetence without good reason will not usually justify relief, as recognised in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537 and Trading in Compliance Ltd v Dewse [2001] C P Rep 46. It was nevertheless open to the judge to grant relief where the default was only one day late, caused no significant disruption, and resulted from an innocent counting mistake.
4. The Unless Order also failed to comply with CPR PD40 para 8.2 because it did not state the specific compliance date. That lack of clarity probably contributed to the error and was a significant factor supporting relief, although responsibility for the defect was shared. Relief was therefore within the reasonable scope of the judge’s discretion.
5. Under CPR 13.3, promptness carries much greater weight than previously. The first defendant had waited 16 months without good reason, notwithstanding his arguable defence. Standard Bank plc & Anr v Agrinvest International Inc & Ors [2010] EWCA Civ supported the conclusion that marked delay may justify refusal of relief despite a possible successful defence.
6. Hussain v Birmingham City Council and anor [2005] EWCA Civ 1570 did not establish a general co-defendant principle. Its reduced weight for delay depended on the same issues necessarily being tried and the absence of meaningful finality. Those circumstances did not exist here, so the first defendant’s default judgment should not have been set aside.

1. Court of Appeal (Civil Division): In [2025] EWCA Civ 582, allowed the appeal concerning the first defendant and dismissed the appeal concerning the second defendant.
2. Commercial Court, King's Bench Division: On 17 June 2024, Knowles J granted the second defendant relief from sanctions, dismissed the claimant’s application for default judgment against him, and set aside the first defendant’s default judgment. The judge also extended the first defendant’s time to challenge jurisdiction. The jurisdiction challenge was subsequently rejected, with no appeal from that decision.