Inner Mongolia King Deer Cashmere Company Limited v Haian Ma

For an application under CPR 13.3 to set aside a default judgment, the court considers the merits, promptness and all the circumstances. The Denton relief-from-sanctions criteria apply to the default. Promptness runs from entry of the default judgment, because that is the sanction challenged, rather than from the earlier defence deadline. A short delay, an arguable defence and understandable reasons for failing to file a defence can outweigh earlier procedural failings. Costs already paid and court-user inconvenience remain relevant, but are not necessarily decisive. Disputed medical evidence and allegations about the defendant’s conduct should not be resolved summarily where the court has not heard the experts. The default judgment was set aside, with conditions and related applications left for further determination.

The claimant sued Mr Ma over sums allegedly retained from an agency arrangement for cashmere sales to Marks & Spencer. A default judgment was entered after he failed to file a defence. He applied under CPR 13.3 to set it aside, relying on an arguable defence, promptness and illness. The claimant relied on delay, earlier procedural defaults, unpaid costs and alleged lack of candour. The court considered the correct starting point for promptness, the application of the Denton criteria and the effect of disputed medical evidence. The set-aside application was determined first; the freezing-order and other related applications remained to be addressed.

Application granted in principle. The court concluded that the default judgment should be set aside. Conditions and the parties’ other applications were left for further hearing.

1. Under CPR 13.3(1), the relevant merits question was whether the defendant had a real prospect of successfully defending the claim. The claimant accepted that Mr Ma had an arguable defence, including issues concerning limitation and set-off. It was unnecessary to resolve those issues at this stage.
2. For promptness under CPR 13.3(2), the relevant starting point was entry of the default judgment, not the earlier deadline for filing the defence. The default judgment was the sanction from which relief was sought, and an application to set it aside could not be made before it existed. The relevant delay was therefore 18 days and was clearly prompt. Earlier delay could be considered at the later all-circumstances stage.
3. The court applied the approach confirmed in FXF v English Karate Federation [2023] 1 WLR 1097 (CA). The three-stage Denton v TH White [2014] 1 WLR 3926 (CA) inquiry required consideration of the seriousness and significance of the default, the reason for it, and all the circumstances so as to deal justly with the application.
4. Relevant circumstances included the effect on court users, prior procedural delay, compliance with orders and the costs of the unsuccessful jurisdiction application. The jurisdiction costs had been paid with interest, making the claimant whole in that respect. Court-user inconvenience remained relevant, but these matters did not outweigh the arguable defence, prompt application and short, understandable delay.
5. The court declined to resolve disputed allegations about Mr Ma’s conduct or the reliability of the medical evidence on a summary assessment. The evidence of illness tempered criticism of his earlier conduct, particularly where the court had not heard the experts. The default judgment was accordingly to be set aside, subject to submissions on conditions under CPR 13.1.

not stated in the judgment.