Article by Jamie Hughes

The Court of Appeal in FXF v English Karate Federation Ltd & Anor [2023] EWCA Civ 891 has determined and reiterated in no uncertain terms that the Denton principles apply in full to applications to set aside a default judgment.

It had previously been thought that this issue had been put to bed decisively by the Court of Appeal in a string of cases including Gentry v. Miller [2016] EWCA Civ 141. This principle was applied by the High Court in Redbourn Group Ltd v. Fairgate Development Ltd [2017] EWHC 1223 (TCC) and later by the Court of Appeal in Family Channel Ltd v. Fatima [2020] EWCA Civ 824 to the set aside of a judgment entered for non-attendance under CPR 39.3.

However, obiter comments made in Cunico Resources NV v. Daskalakis [2018] EWHC 3382 (Comm) by Andrew Baker J and the decision in PXC v. AB College [2022] EWHC 3571 (KB) cast some unusual doubt on the subject. In particular, in PXC, the abstract reference to the purpose of CPR 13.3 being “to promote justice” did not aid in providing clarity of thought.

Thankfully, FXF provides very clear (and hopefully definitive) authority on the point. The judgment provides a more detailed background of the law which it is not necessary to repeat here but is useful reading for practitioners. In analysing the law, the judgment reads:

“59. I hope that I have now dealt with all the truly relevant authorities. I have done so at some length, because they show a difference of approach that requires resolution by this court. As Birss LJ explained in argument, there are really three categories of case: (i) cases where the rule or order expressly provides for the sanction that will apply on non-compliance (e.g. failure to file witness statements on time), (ii) cases where the rule does not expressly state the sanction which applies for non-compliance, but permission of the court is needed to proceed (e.g. failure to file a notice of appeal on time), and (iii) cases where a further step is taken in consequence of the non-compliance, such as the entry of a default judgment (as in this case) or the striking out of a claim for non-attendance at trial.

61. This case falls squarely into Birss LJ’s third category, and I shall, therefore, concentrate on that category, and particularly on applications to set aside default judgments.

63. In my judgment, the Denton tests do, as I have said, apply to applications to set aside default judgments under CPR Part 13.3. There are a number of reasons for this.”

Providing the lead judgment, Sir Geoffrey Vos, Master of the Rolls, outlined five reasons for his determination that the Denton rules apply to setting aside a default judgment:

“64. First, just as Moore-Bick LJ held analogously in Hysaj, it is now far too late to depart from the position enunciated clearly by the Court of Appeal in Hussain, Piemonte, Gentry, and Family Channel. Piemonte was a default judgment case and decided expressly that the Denton tests applied. The words at [40] in Piemonte that I have just mentioned did not detract from that decision. “All the circumstances” and the overriding objective are directly relevant at the third stage of the Denton analysis.

65. Secondly, Matthews was not a case about setting aside a default judgment. Rule 26.7 of the Trinidad and Tobago CPR is in a different form from our CPR Part 3.9…CPR Part 3.9 was amended for the reasons and in the manner explained in Denton and Mitchell. It was intended to send a general signal to the legal community that there would be a “tougher, more robust approach to rule-compliance and relief from sanctions” in support of the revised overriding objective. This was the origin of the Denton tests deriving, as they do, from the express words of CPR Part 3.9. Accordingly, I do not think that this court would now be justified in preferring the reasoning in Matthews to that, taken together, in the 6 forceful decisions of this court in Hussain, Mitchell, Denton, Piemonte, Gentry, and Family Channel.

66. Thirdly, the Denton tests are actually peculiarly appropriate to the exercise of the discretion required once the two specific matters mentioned in CPR Part 13.3 (merits and delay in making the application to set aside) have been considered. The first two tests focus attention on the delay in complying with the requirements of CPR Part 15.2, which provides that “[a] defendant who wishes to defend all or part of a claim must file a defence”, and the third test brings into consideration all the circumstances of the case including the two critically important stated factors. What we said at [34] in Denton bears repetition:

Factor (a) makes it clear that the court must consider the effect of the breach in every case. If the breach has prevented the court or the parties from conducting the litigation (or other litigation) efficiently and at proportionate cost, that will be a factor weighing in favour of refusing relief. Factor (b) emphasises the importance of complying with rules, practice directions and orders. This aspect received insufficient attention in the past. The court must always bear in mind the need for compliance with rules, practice directions and orders, because the old lax culture of non-compliance is no longer tolerated.

68. Fourthly, as I indicated at [51] above, Gentry actually provides an example of how the exercise under CPR Part 13.3 and the application of the Denton tests ought to be undertaken. The merits are dealt with first at [28]. Next, the delay in making the application to set aside is dealt with at [29]-[35]. I turned then to consider the Denton tests, dealing with the pre-judgment delay and the excuses for it at [36], and “all the circumstances of the case, so as to enable [the court] to deal justly with the application, including [factors (a) and (b)]” at [37]. In some – perhaps many – cases, additional factors included in the overriding objective (or even other relevant factors) will need to be considered at this stage when the court is exercising its discretion. The relevant factors are not closed. What is critical, however, I can repeat once again for yet further emphasis, is the need to focus on whether the breach has prevented the court or the parties from conducting the litigation (or other litigation) efficiently and at proportionate cost, and the need to enforce compliance with rules and orders.

69. My fifth reason must be stated without it being meant to be unduly critical. The judges in Cunico and PXC seem to me to have adopted an unduly academic approach to the problem with which they were faced. The default judgment entered under CPR Parts 15.3 and 12.3 is obviously a sanction “imposed for any failure to comply with any rule”, in the sense that it would not have been granted if the defendant had filed its defence in compliance with the mandatory provisions of CPR Part 15.2. These decisions took an unduly nit-picking approach to what has been deliberately intended to change the culture of civil litigation. Parties to civil proceedings and their solicitors need fully to understand that flouting rules and court orders will simply not be tolerated.”

Thanks to the Court of Appeal’s helpful analysis of all previous authorities on the point as well as a very clear and rational conclusion, we should now hopefully be able to expect no further litigation on this question.

As bears remembering in all litigation, the judgment ends with a stark reminder from the Court of Appeal that “parties would be well advised to make absolutely sure that they comply with the rules in the CPR. They may expect no indulgence from the court if they do not.” It is clear the objective in applying the Denton principles to CPR 13.3 that the Court regards default judgments as serious and the Denton test will be applied in full force to any applications to set them aside.