Setting aside a default judgment: danger for foreign defendants

This blog post draws attention to a short practice point which was commented on by the judge in Alli-Balogun v On the Beach Ltd & Ors [2021] EWHC 1702 (QB).

The decision related to an (unsuccessful) attempt by a Spanish insurer to set aside a default judgment entered in relation to a claim by a child who had suffered catastrophic injuries in a swimming pool whilst on holiday in Spain.

Harry Steinberg QC of 12 King’s Bench Walk represented the Claimant.

The point I want to draw attention to is a danger which arises where a party wishes to dispute the court’s jurisdiction and, alternatively, to set aside a default judgment.

The judge pointed out that the best practice is to issue an application under Part 11 first and not to combine this with an alternative application under Part 13 to set aside the judgment.

As had already been explained by Sara Cockerill QC in the earlier case of Newland Shipping & Forwarding Ltd v Toba Trading FZC [2017] EWHC 1416 (Comm), succeeding on jurisdiction would invalidate the default judgment without the need for a further application:

Further I do not accept the submission that if the Fifth Defendant succeeds the default judgment stands. If the service of the Claim Form is set aside the basis for the judgment is removed, a fortiori if the Claim Form is itself set aside.

In Alli-Balogun, the judge pointed out that combining an application under Part 11 with one under Part 13 actually risks giving rise to a submission to the English court’s jurisdiction.

The application made by the 5^th Defendant at that time was confined to the jurisdictional application under CPR Part 11: there was no alternative application to set aside the default judgment in reliance on CPR 13.3. This was a justifiable approach by the 5^th Defendant. If the jurisdictional application had succeeded, then it would result in the proceedings as a whole (including the default judgment) being set aside: see Newland Shipping & Forwarding Ltd v Toba Trading FZC [2017] EWHC 1416 (Comm), para [19] (Ms Sara Cockerill QC, as she then was). Accordingly, the default judgment was effectively being challenged through that route. The decision in Newland Shipping (at para [18]) also supports the proposition that an application which combined a jurisdictional challenge under CPR Part 11 with an alternative application to set aside a default judgment under CPR 13.3 would run the risk of an argument that the defendant had submitted to the jurisdiction, thereby negating the challenge on jurisdictional grounds.

The judge later made clear that the “delay” in making an application under CPR r. 13.3 associated with the making of the first application under Part 11 would not count against the relevant party.

This approach reflects what was said in the Newland Shipping case referred to above.

I do not accept the argument that the Fifth Defendant is making the wrong application; the authorities, including the excerpts from Briggs and Dicey cited by Mr Abraham in his second witness statement, make clear the very great degree of caution which a party who is challenging jurisdiction must exercise. The point appears to be open; neither party referred me to authority which dealt with this point in terms. It certainly seems possible that an argument that challenging the default judgment in partnership with a jurisdictional challenge might be said to amount to a submission to the jurisdiction in circumstances where the authorities tend to suggest that taking any step in relation to the merits of the claim can amount to a submission … Accordingly it seems to me that the Fifth Defendant was entitled to form the view that it was unsafe to apply to set aside the default judgment now and the course of action taken cannot fairly be described as wrong. On the contrary, challenging jurisdiction was logically the first step, whether or not it might have been combined with a very cautiously worded challenge to the default judgment.