Relief from sanctions – setting aside default judgment

So I have my first real ‘head-scratcher’ following the decision in Mitchell.

From a tactical point of view, it makes sense to allow the defendant to set aside the default judgment we have against them. This is because their reason for failing to respond to the statement was due to an error in passing on our pleadings and the Order for judgment in default.

The background and main issue is summarised as follows:

  • We need the defendant to have public liability insurance coverage for the incident;
  • Due to their failure to pass on the documents correctly, their insurer is looking to avoid covering them due to a co-operation / notification clause (we have not seen their contract to confirm if this is accurate);
  • Their solicitor is arguing that if we agree to set aside judgment then the insurer is likely to cover them, but if not, the insurer will seek to not indemnify the defendant.; and
  • If there is no insurance then we are unlikely to be able to enforce any judgment for damages.

 

Putting to one side what their solicitor is saying is complete nonsense and really amounts to a threat, which was very silly of him to write in open correspondence on 2 occasions…

I think we have reasonable prospects of opposing their application, should they make one (they should have made an application already as the clock is ticking). It would be interesting to see first-hand how the County Courts are interpreting the strict approach post-Mitchell. I have read a number of updates from different firms who have recorded their recent experiences of unreported decisions – it is really a coin toss.  The general feeling is that they are being strict but not overly strict, such as allowing relief from sanctions but with heavy cost consequences.

Counsel’s opinion in our case is that we should probably let the defendant set aside judgment by consent in exchange for confirmation that insurance cover will be in place and no reservation of rights has been applied. It’s sensible advice.

As a litigator it is always hard to walk away from a fight, particularly as the key issues before the Court will be, if applying Mitchell and following Adlington & Ors v ELS International Lawyers LLP:

(1) “the new more robust approach” (see paragraph 46 of the Mitchell judgment); and

(2) the “wide range of interests” (referred to in paragraph 51 of Mitchell).

Comparing both Mitchell and Adlington, it is a high risk approach to fight it out. If I had my “pub hat” on rather than my “lawyer hat” then I would probably say it’s a complete bloody lottery. How can you predict to your client whether you will get a District Judge wearing a “TEAM JACKSON” t-shirt under his robes, or instead be in front of a more liberal Adlington Judge?  

If you have a bad first instance decision then you can always appeal and hope that you will get the Jackson Five to hear your case. Then again, they might make your claim another horror story such as the one doing the rounds about the costs schedule that was struck out for having incorrectly shaped brackets used (i.e. (  ) vs [   ] ) or the costs budget struck out for not having the correct statement of truth.

It would be lovely if the next CPR update had a phonebook sized Practice Direction solely for CPR 3.9 !!

 

Over and out.

Legal Orange.

 

 

 

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One thought on “Relief from sanctions – setting aside default judgment

  1. Pingback: CIVIL PROCEDURE, COSTS & SANCTIONS: LINKS TO RECENT ARTICLES AND POSTS | Civil Litigation Brief

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