Applying To Set Aside A Default Judgment Is Not An Application For Relief From Sanctions (PXC V AB College And Anor)

• Jurisdiction: European Union
• Law Firm: Gatehouse Chambers
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Contracts and Commercial Law, Arbitration & Dispute Resolution
• Author: Mr Phillip Patterson
• Published date: 25 April 2023

Dispute Resolution analysis: This decision has highlighted, without comprehensively resolving, a schism which has arisen in the authorities about whether the Denton principles are relevant to an application under CPR Part 13 to set aside a default judgment. This judgment expresses the view that the principles are not applicable, however, until the question is subject to a binding decision of the Court of Appeal, the debate is likely to continue.

PXC v AB College and anor [2022] EWHC 3571 (KB)

What are the practical implications of this case?

The most significant practical implications of this judgment concern its analysis of the relationship between the Denton principles applicable to applications for relief from sanctions under CPR, r.3.9 and the principles applicable to applications to set aside a default judgment. This case highlighted the extent to which two different camps had emerged in the authorities. The first camp, represented by a number of decisions of the Court of Appeal, such as Regione Piemonte v Dexia Credop SpA [2014] EWCA Civ 1298, concluded that an application under Part 13 was an application for the relief of any sanction (and the Denton principles therefore applied). These authorities had been followed at first instance in Ince Gordon Dadds LLP v Mellitah Oil and Gas BV [2022] EWHC 997 (Ch). The second camp, comprising the decision of Andrew Baker J in Cunico Resources NV v Daskalakis [2018] EWHC 3382 (Comm) and the decision of the Privy Council in Attorney General of Trinidad and Tobago v Matthews [2011] UKPC 38 (applying similar procedural rules in Trinidad), took the view that the Denton principles did not apply. The Court in this case favoured the second camp, reasoning that the Court of Appeal decisions were, on this point, obiter and that it was not bound to follow the decision in Ince, being a decision of the same judicial level, which it found to be unpersuasive. The Court concluded at [32] and [33]:

I have concluded that PXC's case is not a relief from sanctions case. Why? Most obviously because there is no reference to CPR 3.9 in Part 13. But also because there is an existential question about the nature and function of a regime under Part 13.3. I judge that the purpose of Part 13.3 is to promote justice. That is its goal. More acutely, as the White Book says at 13.3.1: "to avoid injustice." What does that mean? It should surely include, where possible, that the "right" or "just" result is reached. That is, that a party...