The 7 facts you need to know about setting aside a default judgment

When a default judgment is given against a business or individual, they have the right to ask that it be set aside. We look at what a default judgment is and how to make a successful application to have it removed.

What is a default judgment?

When a civil or commercial claim is brought in the County or High Court and the defendant fails to either acknowledge service of the claim or file a defence, the court can make an order for default judgment against them.

It is a judgment made without the hearing of any evidence, without any judicial decision and without a trial. In the absence of any communication from the defendant, it is an administrative solution.

The claimant can take steps to enforce the default judgment in various ways including but not limited to instructing a bailiff for collection of money or goods, obtaining a charging order and commencing insolvency proceedings.

If the defendant believes they have a chance of successfully defending the claim, then they can apply to have the judgment set aside. This means that the case will go to a hearing and they will have the opportunity to present their defence.

When will a court agree to set aside a judgment made in default?

If a default judgment has been wrongly entered then the court has to set it aside. This includes where the defendant had correctly filed an Acknowledgement of Service, where the defendant had applied for summary judgment or satisfied the claim before a default judgment was entered or where the defendant had filed an admission and made a request for time to pay.

In addition, the court has discretion to set aside a default judgment in certain circumstances as follows:

• Where the defendant can prove that they have a real prospect of defending the claim; or
• Where there is another good reason to set the judgment aside or the defendant should be allowed to defend the claim.

The importance of acting quickly on receipt of a default judgment

When considering whether to set aside a default judgment, the court will look at how promptly the defendant has acted. It is essential to make any application to set aside a judgment as quickly as possible. While a delay won’t necessarily mean that the application will fail, the court will look more favourably at a prompt response.

How to apply to have a default judgment set aside

As soon as notice of the default judgment is received, the defendant should take action if they wish to have it set aside.

Even if you are not able to provide the court with full evidence immediately, filing an application straight away demonstrates an attempt to deal with the case in a timely fashion. A full statement can follow once it has been prepared.

To persuade the court to set aside the judgment you will need to clearly show that you have a real prospect of successfully defending the claim. The statement accompanying the application is your chance to explain why the judgment should be set aside. Include a draft of your proposed defence to the action. Remember that for an application to succeed, it must show that your defence has a real prospect of success and not merely be an argument against the claim. A genuine factual dispute is usually enough to satisfy this point.

To ensure that you have the best possible chance of success, it is always advised to seek legal advice when drafting a statement in defence of a claim. At Lincoln & Rowe, we have wide experience in all civil and commercial claims and we understand the need to deal with them quickly and efficiently so that you can carry on your business without interruption.

If you would like to talk to an expert ring us on 020 3968 6030 and we’ll be happy to advise you.

What to do after applying for a default judgment to be set aside

As soon as the application has been made, send the outline defence to the claimant and ask them to consent to the setting aside of the judgment. Where you have acted promptly and can show that you have a realistic defence, they may agree to allow the judgment to be set aside to avoid delay and costs in defending the application.

Give them a deadline for their response and follow up if need be. If you are able to show the court that you attempted to resolve the matter with the claimant, any costs order may be more favourable.

How to avoid a default judgment

Being organised is the best way to avoid a default judgment. Make sure your company’s contact details are kept up to date and deal with any paperwork as soon as it is received.

While a default judgment can be set aside, it will simply add to your workload. Having the judgment set aside does not mean that the matter will go away. If the judge consents to set the matter aside, then the claimant’s case will still go ahead and you will be required to answer it and provide evidence in support of your defence.

If you are served with court papers, it is advisable to speak to a solicitor as soon as you can. They will be able to assess the strength of the claim and help you put together a strong defence. It is often the case that the more quickly a case is dealt with, the lower the costs will be.

By preventing a default judgment, directors can avoid the risk to their company’s credit rating that would arise from having a judgment made against them.

Know the dates

The best way to avoid a default judgment is to pay careful attention to the time limits imposed by law.

When proceedings are issued, the claimant or the court will serve the particulars of claim on the defendant, who then has 14 days from the deemed date of service to file a defence or an acknowledgment of service, with a further 14 days allowed if the defendant is based in England or Wales.

The acknowledgment can admit all or part of the claim or alternatively deny it. The defence also needs to be filed within 28 days of service of the particulars of claim if an acknowledgment of service is filed.

If for any reason you haven’t managed to file an acknowledgment of service promptly and you are running out of time, you can ask the claimant for an extension. The court needs to be notified of the extension to avoid the entering of a default judgment.

The extra time may allow you to reach an agreement with the claimant and avoid the need for a trial, or alternatively it will allow you to prepare a formal defence.

If the claimant refuses to agree to an extension of time, then a formal application can be made to the court. Providing you have good reason to request an extension, it is often easier to obtain this than having to subsequently make an application to the court to set aside a default judgment.

At Lincoln & Rowe we understand the importance of helping our clients keep their businesses running smoothly. We have wide-ranging experience in commercial law and were named as the ‘Best Firm for Commercial Disputes in London’ in the 2019 SME Legal Awards programme.

If you would like to talk to one of our expert legal team about the best way to deal with a claim or default judgment against you, contact the author, Sophie Jerry, call the team on 020 3968 6030 or email us on enquiries@lincolnandrowe.com and we’ll be happy to help.

The above information is for general guidance on your rights and responsibilities and is not legal advice. If you need more details on your rights or legal advice about what action to take, please contact an adviser or solicitor.