Clarity Provided On Bermuda Court's Discretionary Power To Set Aside Regular Default Judgments

• Published date: 08 February 2021
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Carey Olsen
• Author: Mr Keith Robinson and Sam Stevens

In two recent judgments Bermuda's Chief Justice Narinder Hargun has clearly articulated the applicable Bermuda law principles which the Court should apply when considering an application by a defendant to set aside a regular default judgment.

The key principles to note are as follows:

1. In making the application it is a defendant's burden to establish that its defence to the claim has a realistic prospect of success, which is one that carries some degree of conviction and is more than merely arguable.
2. The burden is discharged by a defendant filing credible affidavit evidence in support of its application which demonstrates a real likelihood that it will successfully defend the claim.
3. While (2) above will be the dominant factor in considering an application to set aside a regular default judgment, the Court can also take into account other factors in exercising its discretion including (i) the precise reason why the defendant did not enter an appearance and/or file a defence within the requisite timeframe and (ii) any undue delay in bringing an application to set aside.

In both Gibbons and Heyrana v DeSilva [2020] SC (Bda) 43 Civ (6 October 2020) and A et al v Cumberbatch [2020] SC (Bda) 50 Civ (10 Nov 2020) the Chief Justice refused applications to set aside regularly obtained default judgments on the basis that the defendants' affidavit evidence did not demonstrate that there was a real likelihood of their defences succeeding at trial.

Why is this important?

Both judgments bring in to stark relief the challenges and risks that confront defendants who do not comply with their obligations in responding to claims made against them by plaintiffs in the Bermuda Supreme Court and then have default judgment entered against them as a result.

While the general rule in commercial and civil matters is that it is a plaintiff's burden to prove the merits of its case against a defendant on the balance of probabilities, once a regular default judgment has been entered the burden of proof switches entirely to a defendant, which burden requires the defendant not just to show that it has an arguable defence, but that there is a real likelihood that its defence is likely to succeed at trial.

In short, by allowing a regular judgment in default to be entered a defendant in effect forfeits the right to require a plaintiff to prove its case on the merits until such time as the default judgment is set aside.

What is a regular default judgment?

A regular default judgment is one...