Setting Aside Default Judgment – Delay Can Be Deadly

“Setting aside default judgment is not an easy application and it should be prepared carefully. Delay making the application can be deadly.”

An Application To Set Aside Judgment Needs To Be Made Quickly

If the Defendant to a claim fails to file and serve his defence within the time available under the court rules, the Claimant is entitled to ask the court for judgment in default.

Judgment in default is an order by the court ordering the Defendant to do whatever the Claimant is seeking in the claim form, so usually to pay the sum of money claimed, plus court fees. Effectively, failure to file a defence is accepting that the Claimant is entitled to whatever it is asking for.

If a Defendant wants to set aside a judgment in default, it can apply to the court using form N244 which can be found on the Justice website. It is a general application form and the detail needs to be added as to what the Defendant is asking the court to do.

There are two main groups and arguments which can be raised when setting aside default judgment.

Defective Service Or Not Entitled To Judgment

The first is to prove to the court that service of the claim form was defective. If this can be proven, the court must set aside the default judgment. It is a mandatory order so should not involve the Judge exercising its discretion.

Service of the claim form is a technical issue. The Claimant must specify an address for service for the Defendant to post the claim form. Generally, the address for service is the last known residence, place of business or registered office of the Defendant.

For example, if the Claimant specified an address for the Defendant at which it had no connection (meaning the Defendant never received the papers), a default judgment should be set aside.

The court might find the Claimant was not entitled if for example an acknowledgment of service or defence had been filed at court in time.

Some Real Prospect Of Defending Or Some Other Good Reason

The second basis for setting aside default judgment is discretionary. This means that the Judge dealing with the application must decide whether it considers the court rules apply and whether it is reasonable to set the judgment aside.

Generally, when asking the court to exercise its discretion, the defendant must show that he has a real prospect of successfully defending the claim or some other good reason why the default judgment should be set aside, varied or the defendant should be allowed to defend the claim.

To be able to satisfy the judge that you have a real prospect of successfully defending the claim, best practice is to attach a copy of the defence you intend to rely upon to your application.

Whether there is a real prospect generally means that the chance must not be false, fanciful or imaginary. It should not be enough to just show an arguable defence.

One of the key factors the court will consider when deciding an application to set aside default judgment, is whether is the application has been made promptly. The court will expect a defendant to make the application very quickly after discovering the default judgment. The court expects action within days, rather than weeks or months. The longer you delay issuing an application to set aside judgment, the less chance there is of it being successful. If you have delayed, you will need to provide good reasons to the Judge for that delay.

The courts have decided that not receiving the claim form can fall within the “good reason” provision in the court rules.

A Judge may decide to impose conditions when setting aside default judgment, such as paying a sum into court or paying something towards the other side’s legal costs.

It depends upon the outcome of the application and the reason the judge provides, as to who should pay whose legal costs of the application. Costs are always at the discretion of the judge. A claimant facing an application to set aside judgment should therefore think carefully whether to defend it or not.